wd

CHAPTER- 1 INTRODUCTION
Introduction
India is a developing economy, its prospering in all spheres. Share Market is a compelling determinant of the economy and the financial situation of a country. Every since the liberalization, privatization and globalization, the foreign investment in our country is booming. Share Market is a clear indicator of the developing trend prevailing in our country. Statistics reveal that the trade volume has been increasing continuously, coupled with the ups & downs which is a nature of share trading. We are living in a interlinked world. With growing volume of trade, it has become a necessity that people are aware of the intricacies of the web world. SENSEX the benchmark indicator of share trading has more than tripled ever since on-line share trading commenced. It has become imperative to be a participate of this mode of trading. Recently, the crises in the financial market resulted in global inflation. The share market was a clear indicator of the prevailing prices.

1.1 Stock Market: An Introduction
A stock market or equity market is a public market (a loose network of economic transactions not a physical facility or discrete entity) for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market was estimated at about $36.6 trillion US at the beginning of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an

1

actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The stock market in the United States is NYSE while in Canada, it is the Toronto Stock Exchange. Major European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche Börse. Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock Exchange,the Bombay Stock Exchange and the Karachi Stock Exchange. In Latin America, there are such exchanges as the BM&F Bovespa and the BMV.

Trading
Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order. Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders. Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.) When the bid and ask prices match, a sale takes place, on a first-come-first-served basis if there are multiple bidders or askers at a given price.

2

The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing a marketplace (virtual or real). The exchanges provide real-time trading information on the listed securities, facilitating price discovery. The New York Stock Exchange is a physical exchange, also referred to as a listed exchange — only stocks listed with the exchange may be traded. Orders enter by way of exchange members and flow down to a floor broker, who goes to the floor trading post specialist for that stock to trade the order. The specialist's job is to match buy and sell orders using open outcry. If a spread exists, no trade immediately takes place--in this case the specialist should use his/her own resources (money or stock) to close the difference after his/her judged time. Once a trade has been made the details are reported on the "tape" and sent back to the brokerage firm, which then notifies the investor who placed the order. Although there is a significant amount of human contact in this process, computers play an important role, especially for so-called "program trading". The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer network. The process is similar to the New York Stock Exchange. However, buyers and sellers are electronically matched. One or more NASDAQ market makers will always provide a bid and ask price at which they will always purchase or sell 'their' stock. The Paris Bourse, now part of Euro next, is an order-driven, electronic stock exchange. It was automated in the late 1980s. Prior to the 1980s, it consisted of an open outcry exchange. Stockbrokers met on the trading floor or the Palais Brongniart. In 1986, the CATS trading system was introduced, and the order matching process was fully automated. From time to time, active trading (especially in large blocks of securities) have moved away from the 'active' exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and Credit Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges to their internal systems. That share probably will increase to 18 percent by 2010 as more investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities themselves, according to data compiled by Boston-based Aite Group LLC, a brokerage-industry consultant.[5]

3

Now that computers have eliminated the need for trading floors like the Big Board's, the balance of power in equity markets is shifting. By bringing more orders in-house, where clients can move big blocks of stock anonymously, brokers pay the exchanges less in fees and capture a bigger share of the $11 billion a year that institutional investors pay in trading commissions as well as the surplus of the century had taken place

Market participants
A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, with long family histories (and emotional ties) to particular corporations. Over time, markets have become more "institutionalized"; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds, investor groups, banks and various other financial institutions). The rise of the institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for "fixed" (and exorbitant) fees being markedly reduced for the 'small' investor, but only after the large institutions had managed to break the brokers' solid front on fees. (They then went to 'negotiated' fees, but only for large institutions.

History
In 12th century France the courratiers 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. A common misbelieve is that in late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurze, and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp where those gatherings occurred;[6] the Van der Beurze had Antwerp, as most of the merchants of that period, as their primary place for trading. The idea quickly spread around Flanders and neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam. In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351 the Venetian government outlawed spreading rumors

4

intended to lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in 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 share on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we know them". There are now stock markets in virtually every developed and most developing economies, with the world's biggest markets being in the United States, United Kingdom, Japan, India, China, Canada, Germany, France, South Korea and the Netherlands. Indian Share Market Indian Share Market Indian Share Market started functioning from 1875. The name of the first share trading association in India was Native Share and Stock Broker's Association which later came to be known as Bombay Stock Exchange (BSE). This association kicked of with 318 members. Indian Share Market mainly consists of two stock exchanges:Bombay Stock Exchange (BSE) Bombay Stock Exchange is the oldest stock exchange not only in India but in entire Asia. Its history is synonymous with that of the Indian Share Market history. BSE started functioning with the name, The Native Share and Stock Broker's Association in 1875. It got Government of India's recognition as a stock exchange in 1956 under Securities Contracts (Regulation) Act, 1956. At the time of its origin it was an Association of Persons but now it has been transformed to a corporate and demutualised entity.

5

BSE is spread all over India and is present in 417 towns and cities. The total number of companies listed in BSE is around 3500. Bombay Stock Exchange's trading system is popularly known as BOLT (BSE's Online Trading System). It makes the trade efficient, transparent and time saving. In BSE, the trades that take place are:• • •

Equity or Shares Derivatives (Futures and Options) Debt Instruments

The main index of BSE is called BSE SENSEX or simply SENSEX. It is composed of 30 financially sound company stocks which are liable to be reviewed and modified from timeto-time. The index calculation is done on the methodology of “Free-float Market Capitalization” method. This method is also followed by the leading bourses like DowJones. During early 1990s it was at 1000 mark, 5000 in 1999, and 8000 in September 2000 but at the time of writing the article (30.05.07) it is hovering around 14500. The credit behind this meteoric rise of the Indian bourse goes to the pro-market New Economic Policy adopted by the government in July, 1991. This momentum of SENSEX reflects the splendorous performance of Indian Inc. and the consequent success story of the Indian economy. National Stock Exchange (NSE) National Stock Exchange (NSE) is the leading most stock exchange in India in terms of total volume traded. It is based in Mumbai but has its presence in over 1500 towns and cities. In terms of market capitalization, NSE is the second largest bourse in Sought Asia. National Stock Exchange got its recognition as a stock exchange in July 1993 under Securities Contracts (Regulation) Act, 1956. The products that can be traded in NSE are:• • • • •

Equity or Share Futures (both index and stock) Options (Call and Put) Wholesale Debt Market Retail Debt Market 6

NSE provides its customers with a fully automated screen based trading system known as NEAT system with speedy, efficient and transparent transactions. The stocks are hold in a demutualised format helping in fast, transparent and efficient preservation and transactions. The risk management system of National Stock Exchange is of highest quality and can be used as a benchmark for other bourses. NSE's leading index is Nifty 50 or popularly Nifty and is composed of 50 diversified benchmark Indian company stocks. Nifty is constructed on the basis of weighted average market capitalization method. Regulatory Authority of Indian Share Market SEBI or Securities and Exchange Board of India is entitled to protect the investors' interests, regulate and develop securities market in India. It passes laws for streamlining the Indian share market for efficient outcomes. Portfolio investments of the Foreign Institutional Investors (FIIs) are increasing steadily which shows increasing reliance of the FIIs on the Indian Share Market. The upbeat mood of the Indian bourses got a trip because of the infamous Harshad Mehta Scam. He had fraudulently diverted huge sum of money from the banks and manipulated 270 million shares and causing mayhem for the small investors and BSE was on its knees shedding 570 points in a day. But with the introduction of online trading system and high end risk management facilities the chances of scams and fraudulent practices has been reduced sharply. This has led to increased investor confidence on the market and consequently helped in mopping up the volume of trade of the Indian bourses. Indian Share Market is the reflection of the overall performance of the Indian Corporates and is seeing new highs regularly. So, it is in an upbeat mood. Economists predict that the economy will be growing around 10% in the near future and we hope to see more and more

7

bullish trends in the due course of time. Hence, Indian Share Market along with the Indian Inc. is signaling positive signs to the investors for a robust growth trajectory. Stock Exchanges in India 1. Bombay stock exchange 2. National stock exchange (Mumbai) 3. Banglore stock exchange 4. Utter Pradesh stock exchange (Kanpur) 5. Magadh stock exchange (Patna) 6. Ahmedabad stock exchange 7. Vadodara stock exchange (Baroda) 8. Bhubaneswar stock exchange 9. Calcutta stock exchange (kolkata) 10. Madras stock exchange 11. Cochin stock exchange 12. Coimbatore stock exchange 13. Gauhati stock exchange 14. Hydrabad stock exchange 15. Madhya Pradesh stock exchange (Indore) 16. Jaipur stock exchange 17. Ludhina stock exchange 18. Mangalore stock exchange 19. Pune stock exchange 20. Saurashtrakutch stock exchange

1.2 Stock Exchange
“A common platform where buyers and sellers come together to transact in stock and shares. It may be a physical entity where brokers trade on a physical trading floor via an “open outcry” system or a virtual environment” A stock exchange is an entity which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. 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 traded on a stock exchange include: shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. 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. Trade on an exchange is by members only. 8

The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks.

1.3 Terminology Electronic Trading
Electronic trading eliminates the need for physical trading floors. Brokers can trade from their offices, using fully automated screen-based processes. Their workstations are connected to a stock exchange’s central computer via satellite using very small Aperture Terminus (VSATs). The orders placed by brokers reach the exchange’s central computer and are matched electronically.

Index
An Index is a comprehensive measure of market trends, intended for investors who are concerned with general stock market price movements. An index comprises stocks that have large liquidity and market capitalization. Each stock is given a weightage in the index equivalent to its market capitalization. At the NSE, the capitalization of Nifty (fifty selected stocks) is taken as a base capitalization, with the value set at 1000. Similarly, BSE sensitivity index or Sensex comprises 30 selected stocks. The index value compares the day’s market capitalization vis-à-vis base capitalization and indicates how prices in general have moved over a period of time.

Stock
The word stock simply refers to a supply. You may have a stock of T-shirts in your closet or a stock of pencils in your desk. In the financial market, stock refers to a supply of money that a company has raised. This supply comes from people who have given the company money in the hope that the company will make their money grow.

9

A market is a public place where things are bought and sold. The term “stock market” refers to the business of buying and selling stock. The stock market is not a specific place, though some people use the term “Wall Street”- the main street in New York City’s financial district- to refer to the U.S. stock market in general.

Bears and Bulls
Bear are cautious animals who don’t like move too fast. Bulls are bold animals who might charge right ahead. An investor is said to be “bearish” if he or she believes the stock market will go down. A “bearish investor” will buy stock cautiously. A “bullish investor” believes the market will go up. He or she will charged ahead and put more money into the market. An investor can be bearish or bullish about a particular kind of stock. “bull market” is a period when stock prices are generally rising. Likewise the term “bear market” describes a time when stock prices have been falling on the whole. A

Short Selling – The Basics what is short Selling?
Short selling is selling the shares which you do not own. The term “short” here signifies that you do not hold the shares being sold. The first thought popping up in your mind would be – where do these shares come from which you are selling without possessing them in your portfolio of stocks. These come from your broker/brokerage firm that lends you the shares in lieu of your investment as collateral. You short sell these shares but subsequently you have to close the short by buying back the shares from market and then return it to your broker/brokerage firm. You are also charged some interest for the loan of shares you have taken. Below diagram describes the flow of shares involved in short selling

10

Short Selling Looking at the flow of shares in above flowchart, one would ponder why to borrow shares for selling in market and then transfer them back to the lender? The logic behind shorting is very simple; earning profit margin. Let’s see how?? If you think a stock is overvalued and expect that the price would come down in future for sure; you would wish to sell the shares at current levels at higher price. So you borrow the shares and sell them at higher price. And when the stock actually falls as you had speculated; you buy it from market at lower price and return it to the lender and the difference between the selling price (higher) and buy price (lower) is what you earned in the deal. So at the end you must close the short by paying back the shares and this is called as “covering the short”. Concluding this, investors who anticipate fall in the stock price go short to take advantage of market fall. An investor can hold the short for as long as he wants but he is charged an interest as it is similar to a loan taken in the form of shares. Also if during the course of loan, the company declares dividend or rights issue, it must be paid to the lender who is the actual owner of shares because you are just a borrower. Short selling is considered to destabilize markets directly or indirectly. In 2001, the stock prices crashed heavily owing to short selling by big operators after which SEBI banned it. After a gap of 6 years in December 2007 SEBI came up with updated norms of short

11

selling to cover the loopholes and ultimately institutional investor were also permitted to short sell. Concluding this, short selling no doubt gives you an opportunity to earn profit by taking advantage of downturn of markets, it might bring in huge loss to your investment if stock price moves up. Because in real sense, shorting is a bet against the current market trend. When stock is at current higher levels, you are expecting it to fall down and entering the arena. Speculation is what makes shorting a riskier job.

1.4 Why Companies issue stocks
If a company wants to grow- maybe build more factories, hire more people, or develop new products- it need money. By issuing stock, a company can raise money without going into debt. People who buy the stock are giving the company the money it needs to grow. Not every company can issue stock. A business owned by one person (a proprietorship) or a few people (a partnership) cannot issue stock. Only a business corporation can issue a stock. A corporation has a special legal status. Like a school, its existence does not depend on the people who run it. Under the law it is separate from the people associated with it, and has special legal rights and responsibilities as well as its own unique name.

1.5 Why people buy it
Owning stock in a company means owing part of that company. Each part is known as a share. If a company has issued 100 shares of stock, and you bought one, you own 1% of that company. People who own stock are called stockholders, or shareholders. Stockholders hope the company will earn money as it grows. If a company earns money, the stockholders share the profits. Over time, people usually earn more from owning stock than from leaving money in the bank, buying bonds, or making other investments.

12

1.6 Comparison of bull market and bear market
There are two ways to describe the general conditions of the stock market: it can be a bull market or a bear market. A bear market indicates the continuous downward movement of the stock market. Conversely, a bull market indicates the constant upward movement of the stock market. A particular stock that seems to be increasing in value is described to be bullish while a stock that seems to be decreasing in value is described to be bearish. The bull and bear terms do not refer to the short term fluctuations in the stock market. A bear market is the stock market wherein the prices of the key stocks have fallen by 20% or more over a period of at least two months. Prices, even during a bear market, may temporarily increase. Bull markets, being the opposite of bear markets, indicate a rise in the prices of the key stocks over a certain period of time. The economical state of a country is usually reflected through the stock market conditions. The stock market of an economy with reasonable interest rates and low unemployment rates is considered to be bullish since it is doing just well. Bear markets, on the other hand, usually occur during a slowdown in an economy. The investors tend to lose their confidence and the companies begin to lay off their workers. An exaggerated bear market will eventually lead to a crash that is brought on by panic selling while an exaggerated bull market will actually result to a market bubble that is brought on by investor overenthusiasm. Even if most money can be made during bull markets, bear markets also present a lot of financial opportunities. Investors use their knowledge of the characteristics of each type of market as an investment strategy. It is expected that a bullish market will generate a huge number of investors who wish to buy some stocks. Because a bullish market could also mean that the economy is doing well, there will be a lot of people interested in buying stocks since they have the extra money to spend. This kind of situation will cause an increase in the prices of the stocks because there will be a shortage in the supply of stocks. During bear markets, it is expected that a lot of investors will have the desire to unload their stocks and put their money in fixed-return instruments like bonds due to the continuous decrease in the prices of the stocks. Supply tends to exceed demand as money is 13

withdrawn from the stock market. This causes the prices of the stocks to lower even further. It is easier to make money during bull markets. In a bull market, all dips are temporary and they are going to be corrected any time soon. Since the upward rising of the prices cannot go on forever, the investors need to sell their stocks when the market reaches its peak. Bear markets are considered to be opportunities of picking up stocks at bargain prices. Approaching the end of a bear market will offer the greatest chance to generate some profit. Since the prices will most likely fall before they recover, the investors have to be prepared for some short-term loss. One investment strategy used during bear markets is short selling. It involves the selling of the stocks that they do not own in the anticipation of further decrease in prices. This strategy gives the investors a chance to buy the stocks for a price that is lower than their previous selling price. During bear markets, fixed-return investments such as CAs and bonds can also be used to generate income. Defensive stocks, which include government-owned utilities that provide necessities despite the current economic state, are also safe to buy even during bear markets.

1.7 Volatility of Stock Markets and its causes
Volatility is one of the best phenomenon without which stock markets will loose its charm. It is the tendency of fluctuation of market indices over a period of time; more is the fluctuation, higher is the volatility. The ups and downs of stock prices is what that adds spice to the market behavior. This see-sawing effect has its own implications, both good and bad. Good, because prudent investors taking advantage buy on dips and sell on highs for profit booking. On the flip side, greater volatility lowers investor’s confidence in the market prompting them to transfer their investment in less risky options due to unexpected market behavior.

14

Having observed the past major events of volatility, one can realise the root cause as “unanticipated information” breaking out in the market. When this news stabilises, volatility vanishes because the uncertainty related dies out. Few examples from recent past: • Govt announced buying of shares/bonds of Indian companies through participatory notes (PN). • CRR and repo rates hike by RBI. • Satyam fiasco and Lehman’s bankruptcy news. • Stringent IPO regulations. • US recession fear. Jan 21, 2008 saw biggest ever fall of 1408 points due to volatility on account of US fears of recession. Now the question arises how this uncertainty leads to such aftershocks in market. Firstly, investments by FIIs have a major influence on movement of SENSEX which came into limelight during general elections of 2004. Owing to fear of reforms due to new government there was continued selling pressure by FIIs resulting in sharp decline in the index. Later on when the news regarding these reforms stabilised, FIIs started buying back the shares they sold earlier. Thus aiming at profit booking and balancing the portfolio, FIIs keep relocating their funds from time to time. For example if they find govt policies not in their favour, they would withdraw their investments from Indian markets and invest in some other market leading to sudden crash in index. Secondly, Indian markets are sensitive to global markets. It has been observed that many times if NASDAQ closes high, SENSEX opens in green. So an unwanted news broke out in US may show its effects in Indian markets leading to intra-day volatility. Thirdly, company specific news may cause volatile sessions in the market. From recent example of Satyam computers ltd, markets were highly volatile due to investor’s sentiment being in dilemma and anticipations about the future of company and related conglomerates.

15

Fourthly, Political news and news related to finance tend to affect market sentiment. Like RBI declaring CRR hikes, lowering interest rates prompt investor to relocate their investments accordingly. Likewise, news related to scams and frauds also create panic amongst investors making the markets volatile. Volatility in acceptable limits is a sign of healthy markets as it leads to correction if there is overvaluation of prices. At the same time there is huge risk associated. The crux is that whatever you have in your portfolio of stocks, wind may start blowing against you anytime. So to play safe keep a margin to bear the volatility risk and don’t put all your eggs in same basket as the basic rule of portfolio management says.

1.8 Share market basics
Before investing, it is always wise to learn the Basics of Stock Market. In India Bombay Stock Exchange (BSE), National Stock Exchange (NSE), London Stock Exchange (LSE) or New York Stock Exchange (NYSE), trading terms or more or less similar Investing in Stocks Many of us would like to try our luck in the Stock markets. Yes, Why Not? Trading stocks is one of the most lucrative methods of making money. Here's why: 1. You do not need a lot of money to start making money, unlike buying property and paying a monthly mortgage. 2. It requires very minimal time to trade - unlike building a conventional business. 3. Its ‘fast’ cash and allows for quick liquidation (You can convert it to cash easily, unlike selling a property or a business). 4. it’s easy to learn how to profit from the stock market. But you need to have your basics clear. Unless you do….you will be wasting your time and loosing money. You need to be crystal clear of each and every aspect of Investments, stock

16

options, Stock Trading, Company, Shares, Dividend & Types of Shares, Debentures, Securities, Mutual Funds, IPO, Futures & Options, What does the Share Market consist of? Exchanges, Indices, SEBI , Analysis of Stocks – How to check on what to buy?, Trading Terms (Limit Order, Stop Loss, Put, Call, Booking Profit & Loss, Short & Long), Trading Options – Brokerage Houses etc.

1.9 Methods of buying and selling of shares
Given below are the types of orders which are used for buying and selling of shares. Market order: When you put buy or sell price at market rate then the price gets executed at the current rate in the market. The market order gets immediately executed at the current available price. In market order there is no need to mention the price; the shares will get executed at the best current available price. If you wish to buy or sell shares at any specific price, i.e. market order is not suitable for you then you have to go for limit order. Market order is for those who want to buy or sell immediately at the current available price. Limit order: It’s totally different from market order. In this, the buying or selling price has to be mentioned and when the share price comes to that price your order will get executed at the price mentioned by you. But here it’s not sure that the price will come to your limit order. In day trading it’s risky because you have to close all your transactions before 3.30 pm and if in case the price doesn’t reach to your limit order, your order will be open and then you have to go through (bare) heavy penalties. Importantly, limit order and stop loss trigger price are used together.

17

Stop loss trigger price: Stop loss and trigger price are used to reduce the losses. This is a very important term especially if you are day trading (intraday). Stop loss, as the name indicates, is used to reduce the loss. You can use a pivot calculator for simple stop loss calculation for delivery based trading and intraday stop loss depends on how much you are ready to lose – the maximum amount you are ready to lose- it also depends on the price movements of the scrip for that particular day

1.10 Share Trading
“Money is better than poverty, if only for financial reasons” – Woody Allen Woody Allen’s quip sums up this beginners guide to investing in shares. This is a good start to your education on investing – putting your money where it can gain greater returns than just earning interest in a high-interest account. Investments in shares or stocks (called stocks in the USA) can be daunting as there is vast and various amounts of information on investments and everyone is ready and willing to take your money. But in this guide, investing is not as complex as you’d think. This is also proven by the fact that Australia has the highest personal share investment in the world. This guide hopes to give you better information in which you can make individual tailored investment decisions, while also covering some basic finance concepts. Doing all the research for this guide has also illustrated the amount of short rule-type guides to get rich quick. There are a plethora of guides; some of the ones I’ve seen are 5 Ways to Make Saving and Investing Easier, Six Steps to Retire Rich, 7 Rules of Wealth Building and Eight Secrets to Improving Your Portfolio Returns. Sure, you can read a guide which is a page long on how to invest your entire savings, but what you put in is what you get out. If you believe that reading a few of these guides will prepare you for investment then you should read this guide before you go any further. Investing is not as simple as these guides make it out to be, but you don’t need a PhD in quantitative statistics to figure it out.

18

This guide hopes to break down the jargon and seeming complexities of investing in the financial markets by making things as simple as possible. I will try my best to remove all the cheesy quips used by the media and to demystify the financial markets, which almost has as much jargon as it does quick rich schemes. This guide is broken up into sections which should make it easier for you to get some answers and find specific information for the knowledge you need to start investing, shorting before you actually go for it!

1.11 Trading Basics
Trading stocks. You hear that phrase all the time, although it really is wrong – you don’t trade stocks like baseball cards (I’ll trade you 100 IBMs for 100 Intel). Trade = Buy or Sell To “trade” means to buy and sell in the jargon of the financial markets. How a system that can accommodate one billion shares trading in a single day works is a mystery to most people. No doubt, our financial markets are marvels of technological efficiency. Yet, they still must handle your order for 100 shares of Acme Kumquats with the same care and documentation as my order of 100,000 shares of MegaCorp. You don’t need to know all of the technical details of how you buy and sell stocks, however it is important to have a basic understanding of how the markets work. If you want to dig deeper, there are links to articles explaining the technical side of the markets. Two Basic Methods There are two basic ways exchanges execute a trade:
• •

On the exchange floor Electronically

19

There is a strong push to move more trading to the networks and off the trading floors; however this push is meeting with some resistance. Most markets, most notably the NASDAQ, trade stocks electronically. The futures’ markets trade in person on the floor of several exchanges, but that’s a different topic. Exchange floor Trading on the floor of the New York Stock Exchange (the NYSE) is the image most people have thanks to television and the movies of how the market works. When the market is open, you see hundreds of people rushing about shouting and gesturing to one another, talking on phones, watching monitors, and entering data into terminals. It could not look any more chaotic. Yet, at the end of the day, the markets workout all the trades and get ready for the next day. Here is a step-by-step walk through the execution of a simple trade on the NYSE. 1. You tell your broker to buy 100 shares of Acme Kumquats at market. 2. Your broker’s order department sends the order to their floor clerk on the exchange. 3. The floor clerk alerts one of the firm’s floor traders who find another floor trader willing to sell 100 shares of Acme Kumquats. This is easier than is sounds, because the floor trader knows which floor traders make markets in particular stocks. 4. The two agree on a price and complete the deal. The notification process goes back up the line and your broker calls you back with the final price. The process may take a few minutes or longer depending on the stock and the market. A few days later, you will receive the confirmation notice in the mail. Of course, this example was a simple trade, complex trades and large blocks of stocks involve considerable more detail. Electronically

20

In this fast moving world, some are wondering how long a human-based system like the NYSE can continue to provide the level of service necessary. The NYSE handles a small percentage of its volume electronically, while the rival NASDAQ is completely electronic. The electronic markets use vast computer networks to match buyers and sellers, rather than human brokers. While this system lacks the romantic and exciting images of the NYSE floor, it is efficient and fast. Many large institutional traders, such as pension funds, mutual funds, and so forth, prefer this method of trading. For the individual investor, you frequently can get almost instant confirmations on your trades, if that is important to you. It also facilitates further control of online investing by putting you one step closer to the market. You still need a broker to handle your trades – individuals don’t have access to the electronic markets. Your broker accesses the exchange network and the system finds a buyer or seller depending on your order.

1.12 Trading Types – Day Trading, Swing Trading and Position Trading
Share Market Trading can be classified into either of these categories - Day Trading, Swing Trading and Position Trading. However, the common factor among all types of traders is that Stock market traders keep up with the news. The businesses and industries react to government actions, changes in oil prices, economic forecasts and world events. The successful stock market trader stays informed about the circumstances outside a company that could cause price fluctuations for the stock. Day trading conditions the most intense approach to stock market trading. To be on top of the fluctuations in stock prices, day traders spend hours together in monitoring the market. Day traders could make dozens of trades any day, sometimes in a matter of minutes hoping to grab the wave of price change. They avoid the risks of long term buy and hold. Day trading could be exciting, the fast pace attracting risk takers. Yet this strategy for stock market trading is only effective for day traders, who apply analysis rather then emotion to

21

trading decision. Savvy day traders could turn profits quick. Emotional traders usually lose fast and leave disenchanted. Swing trading uses a slightly longer time horizon than day trading, watching a stock for weeks or months before trading. This type of stock market trading relies on careful monitoring of fundamental and technical analysis. Swing traders often specialize in a certain business or industry so that they become experts in the movement within those stocks. They also have more time to study the company financial reports and industry forecasts. Since swing trading does not require hours of daily monitoring, it is a good strategy for the trader who wants to make money from stock market trading without turning it into a full time job. Even the study of reports could be done during the daily commute or lunch hour so that the swing trader stays well informed. Position trading works well for investors who want to be involved in the stock market trading, but run short of time. Stocks are being held for months awaiting any changes in the trend. Position traders keep up with the fundamental and technical analysis as well as news events but apply a long term strategy to their stock market trading.

1.13 All about Day Trading
What is day trading? Day Trading is the act of buying and selling securities intra-day with the expectation of making fast profits within minutes to hours. Popularized during the bull market of the late 1990s, day trading is the practice of buying and selling stocks over a very short period of time, typically one day. Once the domain of floor traders and investment banks, the availability of inexpensive computers and fast Internet access has brought day trading to the masses. Day traders come in all shapes and forms, using mechanical to systematic day trading systems, and can place anywhere from one to thousands of trades per day.

22

Day trading strategies typically follow one of two approaches: beating the spread or attempting to catch short term trends. The spread is the difference between what is being offered for a stock (the bid) and the price being asked for the stock (the ask). Spread trading attempts to buy at the bid and sell at the ask, over and over again. Spread traders may make hundreds or even thousands of such trades a day. With the advent of spreads as low as one penny, spread trading has become much less profitable than it once was. Counter-trend traders will look for signs that a stock is topping or bottoming out before they place a trade in the opposite direction. For example, reversal traders use tools such as the TICK, TICKI, Put Call Ratio, volume, etc. to anticipate a change in trend. The term “day trading” is a widely misused and misunderstood term. Real day trading means not holding on to your stock positions beyond the current trading day; in other words, not holding any position overnight. This is really the safest way to do day trading because you are not exposed to the potential losses that can occur when the stock market is closed due to news that can affect the prices of your stocks. Unfortunately, many people who claim to be “day trading,” hold stocks overnight because of fear or greed, thus setting themselves up for the catastrophic elimination of their capital. When day trading currencies, the term “day trading” changes slightly. Since currencies can be traded 24-hours-a-day, there is no such thing as “overnight” trading. Thus, you can have open positions for longer than a day with active stop losses that can be activated at any time. Day trading is an investment tactic that does online daily stock trading with a relatively short investment. Those who do day trading usually buy and sell securities during the same market day and, as a general rule, do not hold stocks overnight. Many day traders make dozens of trades every market day hoping to capture profits that arise from small intraday price fluctuations.. You basically watch the stock market all day long, buy and sell multiple times throughout the day, trying to buy it low and selling it high and then rebuying it when it drops back 23

down, etc. Very dangerous, and hard to do. Studies have shown day traders do worse in the long run than buying stocks and holding onto them for longer terms. Plus you have to pay commission or fees every time you buy and sell, and taxes on your capital gains are higher for stocks held for less than a year.

1.14 Stock Market - Clearing and Settlement Process
Clearing & Settlement Process in stock markets: As we all know, Stock Exchange is an entity which facilitates dealing in securities. Dealing in stock exchanges is done through registered members (also called brokers), who transact business primarily on behalf of their clients (or investors). For those who are actively involved in stock market trading, it's always advisable to know the processes involved in it. Clearing and Settlement activity constitutes the core part of equity trade life cycles. After any equity deal is confirmed (when equities are obliged to change hands), the broker who is involved in the transaction issues a Contract Note to the Investor which has all the information about the transactions in detail, at the end of the trade day. In response to the Contract Note issued by broker, the investor now has to settle his obligation by either paying money (if his transaction is a buy transaction) or deliver the shares (if it is a sell transaction). Clearing House is an entity of the stock exchange through which settlement of equities happens. The details of all transactions performed by the brokers are made available to the Clearing House by the Stock Exchange. The Clearing House gives an obligation report to Brokers and Custodians who are required to settle their money/securities obligations with the specified deadlines, failing which they are required to pay penalties. This obligation report serves as statement of mutual contentment. Settlement cycle is the period for which equities are traded in Exchange. For Indian stock exchange NSE, the cycle starts on Wednesday and ends on the following Tuesday, and for BSE the cycle starts on Monday and ends on Friday. At the end of this settlement cycle period, the obligations of each broker are calculated and the brokers then settle their

24

respective obligations according to the guidelines, laws and regulations institutionalized by the Clearing agency Pay-In is a process where by a stock broker and Custodian (in case of Institutional deals) brings in money and/or securities to the Clearing House. This forms the first phase of the settlement activity Pay-Out is a process where Clearing House pays money or delivers securities to the brokers and Custodians. This is the second phase of the settlement activity The whole set of money transaction is performed by a bank in the Stock Exchange premises. Exchange appoints this bank to handle the money part of the transaction. All the above information is mostly in relation to the Indian Stock market. Sometimes in different countries processes may have some deviation from it, but the basic fundamentals behind the whole process remains same. In India, the Pay-in of securities and funds happens on T+ 2 by 11 AM, and Pay-out of securities and funds happen on T+2 by 3 PM.

CHAPTER- 2 CONCEPTUAL FRAMEWORK

25

2.1 On-line Share Trading: The Definition
The increasingly popular activity of buying and selling securities over the internet, or to a lesser extent, through a broker's proprietary software. Buying and selling securities using the Internet or broker-provided proprietary software that works through the Internet. Online trading is distinguished from Wireless Trading, a nascent area of service where brokerage customers can trade via cell phones, pagers, and hand-held organizers. The use of online trades has increased the number of discount brokerages because internet trading allows many brokers to further cut costs and part of the savings can be past on to customers in the form of lower commissions. Another benefit of online trading is the improvement in the speed of which transactions can be executed and settled, because there is no need for paper-based documents to be copied, filed and entered into an electronic format.

2.2 Introduction to Online Share Trading
Online share trading has become very familiar to every one because of internet, there are so much resources now available to learn about stocks and trade and it has opened a new world for individual investors. Online trading has changed the average investors' involvement in trading their own stocks. Access to company’s information has became very easy and only clicks away from you after logging on to your computer. Researching and finding about what to buy and sell has made individual investors life very easy. If you want to buy a stock for long term it means that you want to own part of company and you are damn sure that company will be profitable in the future, now its a simple theory if company goes well stock's price will rise and if company fails it will surely affect on your stock and it price will be down and goes in loss. Companies will list their stocks on many stock exchanges in the world. The stock exchanges actually compete with each other for these listings, since companies that attract more trading make more money for the stock exchange that listed it, simple as that lolz. Company stocks are assigned a "ticker” or trading symbol by the listing exchange. You

26

may notice some well-chosen tickers that are easy to remember, like "DNA" for the company Genentech, a biotechnology firm. Or some companies' ticker is the same as its name, Nike for example. So it means companies should have a ticker which should be easy to remember so it will give them more benefit with some extra money. You must know the ticker of a stock in order to access information about the stock and eventually trade it., let me give an example how you can go to a place without knowing where it is located in this bloody world so same applies on online stock trading as well.

2.3 History of Online Share trading
It's hard to believe that at one time, no one placed an order without talking to a broker. It's even harder to imagine that the average person had no access to the web for their personal use before 1979. Businesses used it, in fact, CompuServe became a leader in providing services to the financial industry by linking commercial feeds together to provide a quote system and financial information to Wall Street. History Before 1979, when CompuServe marketed MicroNET to consumers, no individual used the net, just businesses. MicroNET, the retail branch of CompuServe, found an outlet at Radio Shack and soon gained wide appeal and it accounted for over 50 percent of the company's income by the year 1987 when it took back the parent name, CompuServe. The Source, its competitor that also started in 1979, grew rapidly. However, CompuServe bought them out in 1989. Time Frame Imagine the enthusiasm of Bernie Newcomb when Phil Porter shared his idea about trading stock on a personal computer back in 1980. Newcomb understood programming and developed the necessary one to successfully trade a stock. A dentist in Michigan made the first stock trade on July 11, 1983. This was the first trade for the company Trade*Plus. It took 9 more years before the company was named the fastest growing company in Silicon Valley and by 1996, Trade*Plus received the new name E-Trade Group.

27

Features Other companies entered the market for consumer stock trading. First Omaha Securities, Inc. became a clearing broker in 1983. It changed its name to Accutrade. Later when they were part of a holding company in 1987 the name changed again to TransTerra Company Inc 1987 and eventually became AmeriTrade in 1996. It offered the first order system via the touch-tone phone in 1988. Slowly the necessity of the broker started to seem less important. Considerations Bernie Newcomb and Phil Porter split as partners and Porter started a new company, ETrade Group. E-Trades Securities was a subsidiary, and the primary reason for the company. It offered services to the public that allowed trading on both America Online and CompuServe. Later when the firm grew dramatically, by 1996, it went public and the changed the name to E*Trade Financial. Effects The market gets bullish for the 1990's. This fact, coupled with the lower cost of Internet access started to drive the uses of the Internet. Communication via email and total access to the web made the transition easy for millions of people. Now, they no longer had to call a broker or schedule an appointment. The Web was open 24 hours a day and the market was hot. By January of 1996, AmeriTrade introduced "Accutrade for Windows" and developed the first eBroker. Benefits Discount brokerage houses grew, as did online trading. Schwab, one of the innovators of discount brokerage services, offered the first 24-hour quotation service to clients in 1980. By the year 1996, they offered live trading on the web. Other companies also jumped into the action. The American public fell in love with online trading because even an idiot could make money in the stock market during the excessively bullish 1990's. The cost of a trade was dramatically lowered. At first, a $24 trade was magnificent. However, as companies grew more web-based the price dropped. When the market went south in 1999 and early

28

2000, web brokers slashed even more at the cost of the trade to maintain their clients. Today, Online stock trading accounts are owned by most people that invest. Even if they use the services of a broker, they normally have the option of trading stock on their own, via the Internet.

2.4 Nine Simple Rules for Trading Stocks Online
Here are nine simple rules for online trading success. 1) Trade With The Trend. You can't change the weather, but you can set your sails to take advantage of whichever direction the market wind is blowing. Trade what you see, regardless of what you'd like to see. 2) Buy Strength, Sell Weakness. Stocks trading at 52-week highs usually go higher. Stocks trading at 52-week lows usually go lower. 3) Base Your Trading Decisions On Logic And Reason. Respect the power of your feelings to influence your behavior. Keep your emotions under control while trading. 4) Plan Every Trade. Trading blind is senseless. Know exactly what you will do if a stock goes up or down BEFORE you put money on the table. 5) Stick With An Online Trading Method You Have Confidence In. Realize that you don't have to be "right" on every trade. A few losers do not mean your trading system is defective. 6) Manage Online Trading Risk. Take small trading losses rather than let them become large losses. Never add to a losing position. 7) Keep A Trading Log. Even if you never use it for analyzing your trades, a journal provides a written reminder of your ability to stick with your trading plan. To boot, it's in your own handwriting, which can be pretty persuasive if self-doubt starts to creep in while you're in a trade.

29

8) Measure Your Results. You're trading online to make a profit. If your figures don't add up, stop putting money at risk until you know why your stock trading method isn't working. 9) Invest in your online trading education. The victory goes to the prepared, so prepare for success. Get good training and instruction. As the saying goes, "If you think education is expensive, try ignorance . . ."

2.5 Things to do before opening Online Share Trading Account
1. Ask for Demo: Contact the broker who provide online trading service and ask him to give you a demo of product. 2. Check if the broker trades in multiple stock exchanges. Usually most of the Online Trading Websites trade in NSE and BSE in India. 3. Check the integration of Brokerage account, Demat account and Bank account. 4. Compare brokerages with other peer companies. Standard document require opening an Online Trading Account: 1. Proof of residence (Address proof)
o o o o o o o

Driving license Voter's ID Passport Photo credit card Photo ration card Utility Bill (Telephone, Electricity etc) Bank Statement

2. PAN Card 3. Proof of identity
o o o o

Driving license Voter's ID Passport Photo ration card

30

4. 4. Two photographs

2.6 How to Trade Stocks Online
Trading stocks online is rapidly becoming more popular than ever before, due to the convenience and accessibility online trading allows. However, with anything that requires an investment, knowledge is the key, and trading stock online is no exception. Read on to learn how to trade stocks online. Things you’ll need:
• • • •

A stockbroker Account Stocks Portfolio

Step 1 Decide on a broker: With hundreds of online trading brokers it is vital to choose a skilled, reputable broker with the necessary experience and expertise in stock trading. A stockbroker will assist you in meeting your investment goals by recommending stocks to buy and sell. There are also discount brokers who only take orders over the internet or by phone; their only objective is to take your stock trading orders. Step 2 Be prepared to invest the required funds into opening an account with your broker of choice. If you are not prepared to immediately invest funds to open an account there is a practice account that can be utilized where you would set up stocks and track the price progression for a few weeks. Step 3 Decide on stocks that you believe would be a good investment. Research the company’s cash flow prior to buying stock as this will determine the best stocks to buy. You also need to know how much cash it takes for the company to function, know the company’s management relationship with its shareholders; a bad relationship with shareholders is a red flag, it is important to make sure the company’s management is forth coming with information on the company’s rate of return on stocks because this shows loyalty to the shareholders and will result in a higher yield for the stock trader. 31

Step 4 Once you have decided on a reputable online stock trading broker, opened your account and made an informed decision on the stock you want to trade, you are now ready to create a portfolio consisting of the stocks you have purchased and manage it wisely by tracking your portfolio progression

2.7 Online Trading – Do’s And Don’ts
Trading online has become very popular in today’s time when you just need a trading account and after that you can trade comfortably while sitting at your home. Apart from comfort of trade it provides various facilities like: • Ease of buying and selling of shares. • Online receipt of contract notes/ trade statement for the transactions. • Direct deposits of dividends/ bonus amount etc to account. • Various trading tools for ease of making investment decision. One click of mouse button is of ample importance while trading online because sometimes it is what that draws a line between your winning or loosing the game. Trading online is very interesting but you have to be a bit careful as well. The process of trading is very easy but making money is a bit tricky. All you need is a trading account and a little bit of caution to operate the same. Below are some do’s and don’ts while trading online: Prices change at the blink of eye and the transactions are not always in real time. Moreover the speed of your internet might cause delay. So always make sure not to change your decision until the last moment. Take time examining the stock and make decision ahead of time so that you don’t loose while in panic. An important feature of stock markets is volatility. So if you don’t keep a close eye on how your stocks move while placing an order, you might land up in losses. Online trading is a matter of trust between you and your broker because there is no in-person contact. But you can’t leave everything on trust. Make sure your broker provides you detailed email statements and contract notes of executed trades. Online trading provides facility to place limit orders. If you don’t have sufficient time to keep track of the stock prices, fix up a buy/sell price based on your judgement and

32

go for limit orders. Moreover limit orders help you take ample advantage of volatile session during the day. In addition to the brokerage rate being paid, prudent investor should always be well aware of the various Fees and commissions charged by the broker for various services offered like Mobile services, buy sell alerts, reporting, chart and other tools to facilitate easy trade as they really affect your net earnings. For novice traders, it’s a suggestion to always trade with stop losses. Set your stop loss to level to avoid the risks associated. Even though chances of default by a good brokerage firm are nil but a smart investor should always keep track of credit/debit of money in their bank accounts or transfer of shares to/from the de-mat account accordingly for each trade executed because technical reasons might lead to discrepancy which cannot be avoided. Prevention is always better than cure. Security is another important factor for online traders. It is advisable always to follow security measures related to passwords and other personal information while login into the websites to eliminate chances of theft of identity and information.

2.8 Follow these Basic Rules while Investing
Most of us are confused where to put in our money and where not to invest our hard earned money. I fount the rules mentioned below quite helpful. My suggestion is just follow the directions given below and I am sure, some of you may save lot of money going down the drain. Here it is:

Rule 1: Don’t buy unlisted shares There are over 20,000 public limited companies in India, of which only around 7,000 are listed on the country’s various stock exchanges. The first rule of profitable share investment is to confine your buying to these 7,000 listed companies only.

33

Stock exchanges do not permit trading in unlisted shares, nor do they permit their registered members, i.e. brokers to deal in unlisted shares. Therefore, if you want to buy unlisted shares you won’t get the protection of the stock exchange authorities; nor will you be able to use the services of your stockbroker in handling such transactions. Moreover, in the absence of stock exchange quotations you won’t be able to assess what the market price of an unlisted share should be. All these factors create complications and risks, which you are not likely to be in a position to handle. As a basic rule, therefore, you should avoid investing in shares of unlisted companies. How does one know whether a share is listed or not? It’s simple; all shares whose prices are quoted in daily newspapers or websites are listed shares. Unlisted shares are quoted. Therefore, the fact that a share is quoted means that it must be listed. This is the easiest and surest way of fining out whether a particular share is listed or not. Rule 2: Don’t buy inactive shares Active shares are those in which transactions take place every day, or almost every day, on the stock exchange. At the other extreme are shares in which transactions take place rarely, if ever. The latter are called inactive shares. In this book, an inactive share has been defined as one, which is transacted less than two times a month, or not at all. The main reason why shares are inactive is because there are no buyers for them. They are mostly shares of companies which are not doing well and whose future prospects appear to be dim. Naturally, nobody wants to buy their shares. As a result, existing shareholders of these companies find it difficult to get rid of their shares, even at very low prices. And, if nobody wants to buy these shares, why should you? Why should you allow yourself to get stuck with an investment, which you can’t offload at will, whenever you want to? We would strongly advise you to avoid investing in inactive shares. How does one find out whether a particular share is inactive or not? The simplest way is to regularly scrutinize the stock market quotations, which appear in the daily newspapers. If you find that a particular share has not been quoted for a long time, you can presume it is inactive. Some newspapers, like The Financial Express not only indicated the last quoted price of each of share, but also the

34

date when it was last transacted. This information can help you to confirm whether a particular share is inactive. Check out BSE or NSE Websites Inactive shares can generally be bought at very low prices. This is obvious since such shares generally find no buyers. Inexperienced investors looking for bargains are often attracted to such shares by virtue of their low prices. This is how beginners are normally trapped in to making disastrous investments, Beware of such bargains! If you come across a bargain, remember there has to be catch in it somewhere. It is better to hunt for value, and pay a fair for it than to look for such apparent bargains. Every time you buy a share, you must remember that one day you will want to sell it. If you are likely to face difficulty in selling it – don’t buy it! This is a sound investment principle, which you should never lose sight of, no, matter how cheap or attractive a particular investment may appear to be. Never allow yourself to get caught with illiquid share. They are only pieces of paper without any value. Shares have value only when they are readily encashable. Of course, it is possible that a share, which is inactive today, could become active tomorrow; just as a share, which is active today, could become active tomorrow. It all depends upon the degree of buying interest in a particular share. If buying interest builds up in a share, it can easily move from the inactive to the active category. Rule: 3 Don’t buy shares in closely held companies: Whether a company is widely held or closely held depends upon the number of shareholders it has. In this book, we will draw the line at 5,000 shareholders. Companies with less than 5,000 shareholders will be considered as closely held. Shares of closely held companies tend to be less active than those of widely held ones since they have a fewer number of shareholders and, thus, a smaller floating stock of shares. Shares of such companies tend to be ignored by the general public. Large institutional investors also tend to avoid closely held companies. As a result their shares do not get sufficient price support, which they would otherwise have got if they had been widely held. Moreover, it is always much easier to manipulate the share prices of a closely held company than those of a widely held one.

35

Share prices of closely held companies also tend to be more volatile than others. When they rise they rise very fast, and to a very high level. Conversely, when they fall they do so very fast and to a very low level. As a result, it is generally very difficult to buy shares in a closely held company when prices are rising, and very difficult to sell them when prices are falling. Investing in such shares requires a high degree of expertise, knowledge, alertness and quick thinking, which take years of active investing to acquire. We would, therefore, strongly urge you to keep away from such shares.

2.9 The Basics of Online Share Trading
How do you succeed with trading shares online? The fact is that most of the principles that apply to playing the share market online and winning are much the same as those you use offline. You need to really understand your market and be constantly learning, you also need to be patient, develop a good system and see the big picture. Learn as Much as Possible The first step to being successful at online share trading is to spend time researching the market. Any business that you get involved in requires understanding of your market and what needs to be done in order to succeed in it, online share trading is no different, you have to invest in your education, whether this means investing time, money or both. Constantly be learning and growing and be prepared to adapt as situations change. Develop a System of Online Share Trading There is no ideal system that always wins, but all successful online share traders have some system that they use to determine whether to invest in certain shares or not and when to sell. You should work on creating a system that works for you and stick to it even if there are sometimes failures. The system you develop should set limits of when you will cut your losses and how much risk and loss you are prepared to accept before selling out. Be Patient Developing patience and learning to wait for the right deals is another step to playing the online share market to win. Don't take trades that are too risky simply because you feel you need to remain in the market at all times. Learn to be patient and wait for the best trades.

36

Learn to See the Big Picture Online share trading is a mixture of understanding the details, as well as seeing the big picture. It is important to understand the big picture so that individual losses do not lead to you giving up when you could still see a profit from sticking with it. Being successful at online share trading means that you should constantly be learning and growing and investing in your education and personal development. You should also learn to be patient and see the big picture so that individual losses do not stop you making along term profit and so that you only accept the best trades. Develop a system that determines when you buy and sell and be disciplined in keeping to this system.

2.10 A Guide for Selecting Online Stock Trading Brokers
Stock markets all over the world are booming once again and it is but natural that you must have started receiving tons of marketing calls, emails and SMSes from different stock trading companies and online stock brokers. With thousands of stock trading firms, picking the right broker is often a daunting task especially if you are just beginning to trade in the stock markets. Here is a guide that will help you in focusing exactly what you should look before you take the decision to open stock trading account. 1. Account opening charges and documentation Find out what are the one-time charges for opening a trading account and a DEMAT account. Make sure that you can fulfill the documentation part, that is, you have the PAN card and address proof. Besides, you have to sign couple of legal documents such as broker-client agreements and POA (Power of Attorneys), which mandate court stamp fees. Therefore, ask your broker what are the extra charges (if any) for the documentation.

2. Charges – Brokerage, DEMAT and other statutory charges Ask for detailed information about brokerage charges for intra-day, delivery, future and options transactions. Nowadays, with fierce competition, you could easily negotiate brokerage charges. For day trading, Future and Options, you might fetch brokerage @ 0.005 to 0.05% and for delivery transactions @ 0.2 to 0.5% depending the volume of 37

transactions. Check out what is the minimum brokerage amount payable by you, as many brokers levy minimum brokerage to the tune of Rs.10-25 for the transactions less than certain specific amount. Insist on a separate sheet that spells out all the necessary statutory charges such as ST (service tax), STT (Securities Transaction tax), Turnover Tax, Stamp Duty and Exchange Transaction Charges. Find out what are the various types of charges for DEMAT account, which could include Annual Folio Maintenance charges and transaction charges. You must be aware about all these charges because it can add substantially to your expense side and hence reduce your profits. 3. Minimum account opening balance Most of the brokers insist on a minimum amount with which you can start trading. Check out what is the minimum amount and find out whether you need to maintain the minimum balance or you can withdraw the same after account opening. 4. Margin System Many brokers allow you to take exposure in the markets for day trading just by paying a small amount, which is called as margin money. Depending upon the broker, you can get exposure from four to six times the margin amount. Some of the online stock brokers also give you a facility to trade against your shares, which are lying in your DEMAT account opened with them. 5. Online Trading Platform Nowadays, online stock trading has become very common and popular. However, there are different methods of online trading, ranging from simple web-based applications to highend EXE files based stock trading platforms. Most of the brokers allow you free online trading with their web-based applications but they may charge you software license fee, (monthly or one-time) for allowing you to trade through their state-of-the-art online trading platforms. If you are going for trading software, you should ask for a demo of online stock trading system. You might as well request the broker to give you a dummy trading id and password for 1-2 days to get an idea about various features and tools of the online trading

38

software. Some of the latest online trading platforms provide you multiple market watch, market depth, top gainers/losers/volume, real-time charts and many other analytical tools and calculators. 6. Funds and Securities Pay In and Pay Out System Make sure that the broker has a completely online back office, which is essential for monitoring your funds and stocks and for checking the historical reports about your transactions. Look out for the brokers that provide the facility of real-time funds transfer and online funds withdrawal. Check out if the broker has tie-up with your bank so that it becomes easier for you to manage your funds. Ensure that all the debits and credits from and to your DEMAT accounts are done automatically through online mechanism so that you do not have to visit broker’s office for issuing signed ‘Delivery Instruction Slips’ every time you sell shares. 7. Contract Notes SEBI has made it mandatory to issue contract notes in the specified formats. Find out how your broker will provide you the contract notes. Most of the online brokers provide ECN (Electronic Contract Notes) free of charges; however, many brokers will levy some charge for delivering physical copies of contract notes. 8. Other facilities Along with online stock trading, you might like to invest online in the upcoming IPO, Debentures, Bonds and Mutual Funds. Many brokers provide online facilities for investment in various types of financial instruments.

2.11 The Best Online Stock Trading Brokers in the world
Online stock brokers can offer you more convenient access to the same stock trading resources as professional brokers. Many of them provide similar services with alerts, watch lists, third-party analyst reports, option chains, investment calculators and virtual trading, but there are a few brokers that are consistently ranked at the top as the best. 39

Thinkorswim With a number of features and tools, think or swim offers a valuable education to clients about the stock market and financial products for the self-directed investor. It is very easy to manage your account through its website, and it offers several features including mobile applications, free Internet tools to monitor quotes and orders, and flat fee trading at $9.95. There is live chat support for accounts, trading and technical support. Customer service can also be reached easily through email or telephone. It was rated the # 1 online broker by Barron's ranking of brokers in 2009. E*Trade E*Trade is probably best for those who have larger accounts and trade frequently since it charges a $40 per quarter maintenance fee for less than $10,000 in assets. If you have over $10,000 in assets, you don't have to pay a maintenance fee but will pay a normal commission that runs anywhere from $6.99 to $9.99 depending upon your trades per quarter. Nonetheless, it can still be appealing to casual investors or traders owing to its range of services like banking and mutual funds. With applications for BlackBerries and iPhones, plus an easy to use website with tutorials about how everything works, E*Trade is among the elite. Fidelity Competitive prices place Fidelity a bit on the expensive side, but excellent customer service and quality research makes it one of the best ways to go in online investment. Fidelity offers investment stocks, options, mutual funds and exchange traded funds. The website is very easy to navigate with a search box that can pull up a number of different resources and articles depending upon an entered keyword. Also included are a number of tools like charts, graphs and quotes. With several brick-and-mortar investment centers all over the nation, investors can also talk to Fidelity advisers in person. Commissions are based on one of three levels a client will fall into: gold, silver or bronze. For gold clients, the commission will be $8.00 an order. Silver and bronze clients pay $10.95 and $19.95 an

40

order, respectively. In order to maintain your account, you must have a minimum balance of $2,500. Charles Schwab Charles Schwab offers decent prices with only $1,000 needed to open an account and no account service fees. From traditional banking features to retirement options, there is a wide range of investment opportunities with the help of several investment tools and educational resources. Commission is based upon your balance or the number of trades in a year. If you make over 120 trades a year, you'll pay $8.95 per trade. For less than 120, the commission will be $12.95 per trade. The rates are reasonable with a base rate of 6.50 percent, running anywhere from the base rate plus 2 percent to the base rate minus 0.5 percent. Schwab offers very convenient customer service with offices that are nationwide and representatives who are easy to get in touch with either through email or telephone.

2.12 Online Stock trading in India
In India as the usage of internet has reached almost everyone, and broadband allows data transfer at incredible speed many Indians today are trading online in Indian Stock Markets. Share Trading through Internet With the help of better personal computers which can process large amount of data almost immediately. Indians have started to trade on the internet either alone or in conjunction with a broker or an investment adviser. While the broker will get a part of your profits that you make on all trades, the adviser will give you inputs about the market for a predetermined rate. It is always sensible that you get some guidance at the beginning of your trading days to get the feel of it. For trading online in BSE or NSE, there are a few things that you should be cautious about. Time Lag in online share trading It doesn’t matter how fast your internet connection is, and whatever software and hardware you are using there will be some time lag between the time you click to place your order 41

and the actual time when your order gets processed and registered. This time lag, depending on how long it is can seriously alter your final profits or losses. Take care that the time-lag is kept to a minimum. This can be possible if you have the best system and your broker provides its subscribers with the best service. Get Real time Stock Quotes While trading online, make sure that you get real time updates and stock quotes from your online broking firm. If it is delayed then you will be placing orders for rates which are old. This will take further time to complete your order. You will finally get is something a lot diverse from what you were expecting. So the feeds have to be live and real time stock quotes are very important for online trading. Broker Charges In India There are many online brokerage firms in India offering online share trading in NSE and BSE. They charged different different brokerages. It founds that if the current broker charged right brokerage for the stock trading they should going for. And if broker didn’t charged right rates then they may change their broker who will offer better rates. Other trading Charges Apart from brokerage fees there are service fees & taxes, which investor have to pay for each trade. Brokers commission rates and transaction fees. It will have an effect on your final profits. Share trading is not new to India; it has been going on for many years from now. Indian Share market has seen many ups and downs.

2.13 Online Stock Brokers in India
Below is the detail comparison of major Online Stock Market Trading websites in India. This comparison is to help investor to take calculated decision while searching for new trading portal.

1. ICICI Direct
42

http://www.ICICIDirect.com

ICICIDirect (or ICICIDirect.com) is stock trading company of ICICI Bank. Along with stock trading and trading in derivatives in BSE and NSE, it also provides facility to invest in IPOs, Mutual Funds and Bonds. Trading is available in BSE and NSE. Type of Account ICICI Direct offers 3 different online trading platforms to its customers: 1. Share Trading Account Share Trading Account by ICICIDirect is primarily for buying and selling of stocks in BSE and NSE. This account allows Cash Trading, Margin Trading, Margin PLUS Trading, Spot Trading, Buy Today Sell Tomorrow and Call and Trade on phone. ICICIDirect.com website is the primary trading platform for this trading account. They also provide installable application terminal based application for high volume trader. 2. Wise Investment Account Along with stock trading and IPO investing in BSE and NSE, Wise Investment account also provide options to invest in Mutual Funds and Bonds online. Online Mutual funds investment allows investor to invest on-line in around 19 Mutual Fund companies. ICICI Direct offers various options while investing in Mutual Funds like Purchase Mutual Fund, Redemption and switch between different schemes, Systematic Investment plans, Systematic withdrawal plan and transferring existing Mutual Funds in to electronic mode. This account also provides facility to invest in Government of India Bonds and ICICI Bank Tax Saving Bonds.

43

ICICIDirect.com website is the primary tool to invest in Mutual Funds, IPOs, Bonds and stock trading. 3. Active Trader Account Active Trader account gives more personalized investment options to the investors. It allows investor to use online and offline stock trading. It also provides with independent market expertise and support through a dedicated Relationship Manager from ICICI. Active Trader also provides commodity trading. Brokerage and fees 1. Account opening fees : Rs 750/- (One time non-refundable) 2. Brokerage: ICICIDirect.com brokerage varies on volume of trade and inclusive of demats transaction charges, service taxes and courier charges for contract notes. It ranges from 0.1% to 0.15% for margin trades, 0.2% to 0.425% for squared off trades and 0.4% to 0.85% on delivery based trades. How to open account with ICICIDirect? For Online Stock Trading with ICICI, investor needs to open 3 accounts...ICICI Bank Account, ICICI Direct Trading Account and ICICI Demat Account (DP Account).

Note: If Investor already have a bank account or demat account with ICICI, you could link it with new ICICIDirect trading account. Opening trading account with ICICI is easy. Investor could use one of the following options to open account with ICICIDirect.
• •

Visit ICICIDirect.com and fill the "Open an Account" form. Investor can call ICICI and tell them to open an account.

44

In both the cases ICICI representative contact to investor in a day or two and tell them about the procedure to open the account. They usually send somebody to investors home to collect documents, signature and for demo if required. Advantages of ICICIDirect 1. 3-in-1 account integrates your banking, broking and demat accounts. All accounts are from ICICI and very well integrated. This feature makes ICICI the most interesting player in online trading facility. There is absolutely no manual interfere require. This is truly online trading environment. 2. Unlike most of the online trading companies in India which require transferring money to the broker's pool or towards deposits, at ICICIDirect you can manage your own demat and bank accounts through ICICIdirect.com. Money from selling stock is available in ICICI bank account as soon as the ICICIDirect receive it. 3. 4. Investment online in IPOs, Mutual Funds, GOI Bonds, and Postal Savings Schemes all from one website. General Insurance is also available from ICICI Lombard. Trading is available in both BSE and NSE.

Disadvantages of ICICIDirect 1. Getting access to ICICIDirect.com website during market session can be frustrating. 2. ICICIDirect brokerage is high and not negotiable. 3. Not all stocks are available under Margin Plus.

2. Sharekhan

45

http://www.ShareKhan.com

Sharekhan is online stock trading company of SSKI Group, provider of India-based investment banking and corporate finance service. ShareKhan is one of the largest stock broking houses in the country. S.S. Kantilal Ishwarlal Securities Limited (SSKI) has been among India’s leading broking houses for more than a century. Sharekhan's equity related services include trade execution on BSE, NSE, Derivatives, commodities, depository services, online trading and investment advice. Trading is available in BSE and NSE. Along with Sharekhan.com website, ShareKhan has around 510 offices (share shops) in 170 cities around the country. Share khan has one of the best state of art web portal providing fundamental and statistical information across equity, mutual funds and IPOs. You can surf across 5,500 companies for in-depth information, details about more than 1,500 mutual fund schemes and IPO data. You can also access other market related details such as board meetings, result announcements, FII transactions, buying/selling by mutual funds and much more. Type of Account ShareKhan Classic account Allow investor to buy and sell stocks online along with the following features like multiple watch lists, Integrated Banking, demat and digital contracts, Real-time portfolio tracking with price alerts and Instant credit & transfer. a. Online trading account for investing in Equities and Derivatives, free

trading through Phone (Dial-n-Trade)

46

• • • •

Two dedicated numbers for placing your orders with your cell phone or Automatic funds transfer with phone banking (for Citibank and HDFC bank Simple and Secure Interactive Voice Response based system for authentication After hours order placement facility between 8.00 am and 9.30 am b. Integration of: Online trading + Bank + Demat account c. Instant cash transfer facility against purchase & sale of shares d. IPO investments e. Instant order and trade confirmations by e-mail f. Single screen interface for cash and derivatives

landline. customers) get the trusted, professional advice of our telebrokers

2. Speed Trade account. This accounts for active traders who trade frequently during the day's trading session. Following are few popular features of Speed Trade account. a. Single screen interface for cash and derivatives b. Real-time streaming quotes with Instant order Execution & Confirmation c. Hot keys similar to a traditional broker terminal d. Alerts and reminders e. Back-up facility to place trades on Direct Phone lines Brokerage: Some stock trading companies charge direct percentage while others charge a fixed amount per Rs 100. Sharekhan charges 0.5% for inter day shares and 0.1% for intra day or you could say Sharekhan charges 50 paisa per Rs 100.

47

Advantages of Sharekhan: 1. Online trading is very user friendly and one doesn't need any software to access. 2. They provide good quality of services like daily SMS alerts, mail alerts, stock recommendations etc. 3. Sharekhan has ability to transfer funds from most banks. Unlike ICICI Direct, HDFC Sec, etc., so investor not really needs to open an account with a particular bank as it can establish link with most modern banks. Disadvantages of Sharekhan: 1. They charge minimum brokerage of 10 paisa per stock would not let you trade stocks below 20 Rs. (If you trade, you will loose majority of your money in brokerage). 2. Lots of hidden rules and charges. 3. They do not provide facility to book limit order trades during after-hours. 4. Classic account holders cannot trade commodities. 5. Cannot purchase mutual funds online.

3. Indiabulls

http://www.indiabulls.com

Indiabulls is India's leading Financial Services and Real Estate Company having presence over 414 locations in more than 124 cities. Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock Exchange. Type of Account Indiabulls Equity Trading Account

48

Indiabulls Equity Trading Account is standard Online trading account from Indiabulls and along with online trading it also provides priority telephone access that gives you direct access to your Relationship Manager and full access to 'Indiabulls Equity Analysis. 2. Application Trading Terminal (Need Installation) Power Indiabulls Power Indiabulls trading terminal is the most advanced new generation trading platform with great speed. This trading terminal is built in JAVA. Power Indiabulls is extremely reach in features including Live Streaming Quotes, Fast Order Entry and execution, Tic by Tic Live Charts, Technical Analysis, Live News and Alerts, Extensive Reports for real time accounting. Document required to open Equity Trading Account with Indiabulls 1. One passport size photograph. 2. Proof of bank account 3. Copy of PAN card. 4. 5. Identity proof - copy of passport or PAN card or voter ID or driving license or ration card. Address proof - copy of driving license or passport or ration card or voter card or telephone bill or electricity bill or bank statement. Brokerage and fees: Account opening fees : Rs 1200/- (One time non-refundable) as below: 250/- Equity Trading Account opening charge 200/- Demat Account opening charge 750/- Software changes Advantages of Indiabulls Equity Trading Account 1. Brokerage is less compare to other online trading companies.

49

2. Provide trading terminal 'powerbulls', a java based software. It's very fast in terms of speed and execution.

4. 5Paisa

http://www.5paisa.com

5paisa is Online Stock Trading Company of India Infoline Securities Private Ltd., Owner of popular business portal Indiainfoline.com. Besides high quality investment advice from an experienced research team, the site offers real time stock quotes, market news and multiple tools for technical analysis. Trade In: BSE and NSE Trading Terminals: 5Paisa offers 2 different online trading terminals to its customers: Investor Terminal (IT) Investor Terminal is 5Paisa's equity trading terminal for low volume trader. This is web based terminal and could access from anywhere. This product provides limited features in comparison of Trader Terminal, which is another product provided by 5Paisa. Trader Terminal (TT)

50

Trader Terminal is design for high volume equity traders or day traders. Trader Terminal provides high volume trading with powerful interface and fast order execution. Few popular features of trader terminal are:
o o o o o o o o o o o o o

Fast trade execution with instant trade confirmation. Live streaming quotes and price watch on any number of stocks. Intra day charts, updated live, tick-by-tick. Live margin, position, marked to market profit & loss report. Set any number of price alerts on any number of scrips. Flexibility to customize screen layout and setting. Facility to customize any number of portfolios & watch lists. Facility to cancel all pending orders at one click. Facility to square off all transactions at one click. Top Gainers, Top Losers, Most Active, updated live. Index information; index chart, index stock information live. Market depth, i.e. Best 5 bids and offers, updated live for all stocks. Online access to both accounts and DP to check live updated Order and Facility to place after market orders. Online fund transfer facility from leading Banks including ICICI, HDFC, Online intra-day technical calls. Historical charts and technical analysis tools. India Infoline's world - acclaimed news service and research.

Trade Book.
o o

CITI and UTI banks.
o o o

Brokerage and Account opening fees: 1. Account opening fees: Rs 500/- one time non refundable. 2. 5 paisa offer competitive rates. They charge only 5 paisa for Rs 100 of trade done, which is 0.05%. Brokerage. In case of trade that result in delivery, they charge an additional 0.20% for back office and securities handling.

51

How to open account with 5Paisa There are few steps to open an account with 5paisa. 1. First log on to their site and fill the registration form. Once you fill the form they will give you 2 options. Either you can receive the form by mail or one of their agent visit you personally. Personal visit is not available in all cities. 2. After registration, you will be required to deposit a certain amount of initial margin deposit with them. The deposit can be of any amount, but it should not be less than Rupees Five Thousand. 3. When your account is activated, you will receive a welcome kit, which contains details about your account, your username and password, and the user's manual. The kit will also include a CD ROM which will allow you to install trading software. 4. 5. It will take approximately 15 days to complete the formalities if all the correct documents are sent and the forms are correctly filled. Documents required are 2 latest passport size photos, proof of identity and address i.e. say electricity/ telephone bill, passport photocopies and PAN number. Advantages of 5paisa 1. Very fast execution speed. 2. Rates are very competitive then other providers. 3. Easy online fund transfer facility from leading Banks including ICICI, HDFC, CITI and UTI banks. 4. Free facility of subscribing to mutual funds, equity IPOs and other investment products. Disadvantages of 5paisa 1. No intra-day tick by tick charts in Investor Terminal (IT). 2. Investing in IPO and Mutual Funds is not so easy like in ICICIDirect. 3. Learning 5paisa Trading Terminal is little hard.

52

IPO / Mutual Funds investment through 5Paisa (IndiaInfoLine) 1. 5Paisa provides free facility of subscribing to mutual funds, equity IPOs and other investment products using internet banking account of ICICI, HDFC, CITI and UTI banks. 2. Registered users with 5Paisa can logon to following website to apply in an IPO: 3. While applying for IPO shares online through 5Paisa, Investor are taken to there corresponding banks homepage. Investors can use there net banking user id & password & transfer funds directly using any of these banks. 4. 5Paisa members can use the similar steps to invest in Mutual Funds online.

5. Motilal Oswal Securities

http://www.motilaloswal.com

Incorporated in 1987, Motilal Oswal Securities Ltd is a well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies. Company has a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. They are headquartered in Mumbai and as of September 30th, 2009, had a network spread over 576 cities and towns comprising 1,257 Business Locations operated by them. As at September 30th, 2009, company had 5,80,667 registered customers. Type of Account MOSt E-Broking

53

MOSt E-Broking is complete online stock trading solution for Indian stock market. Following are the features of MOSt E-Broking account: • • Easy single screen trader with instant trade confirmation similar to exchange based trading terminals. Access to various online reports like margin report, Demat A/c details, and trades executed, turnover report, net position report with mark to market profit/loss and realized profit. • Online transfer funds through HDFC Bank.

List of documents required to open an account with MOSt 1. Proof of Identity – Copy of PAN Card 2. Proof of Address – Copy of any one of the following (Self Attested)
o o o o o o o

Passport Ration card Voter’s ID Driving license Electricity bill (not more than 2 months old) Landline Telephone Bill (not more than 2 months old) Bank Pass Book

3. Bank Proof – Copy of Bank Pass Book or Personalized Cheque leaf (For Existing Bank Account Holders Only) 4. 3 Photographs Awards 1. 2005, Asiamoney Brokers ranked MOSt the best Indian brokerage firm in India. 2. March 2006, AQ Research declared MOSt the best research house for Indian stocks.

6. HDFC Securities

54

http://www.hdfcsec.com

HDFC Securities (HDFCsec) is Equity Trading Company of HDFC Bank. HDFC Securities provide both online trading and trading on phone. The HDFC Securities trading account has a unique 3-in-1 feature that integrates your HDFC Securities trading account with your existing HDFC bank savings account and existing Demat account. Funds / shares are seamlessly moved from the linked Demat/Bank account to execute the transactions. HDFCsec provides Cash-n-Carry on NSE and BSE, Day trading on both NSE and BSE; Trade on Futures & Options on the NSE and Online IPO Investment. Features on HDFC Securities online trading 1. Seamless Transactions - By integrating your accounts, we ensure minimal waste of time during movement of your funds and shares. 2. Speed - Orders are placed electronically, so proceeds are available instantly. 3. No manipulation - To prevent any mismanagement, we will send you an email confirmation, the minute your order is executed. 4. Safety and Security - HDFC Securities offer the highest level of security such as 128-bit encryption technology. 5. Dedicated and Separate contact numbers - for trading over the phone as well as for customer care. Document required opening account with HDFCsec: Any Indian resident/non resident individual NRI (except for the US NRIs) or an Indian Corporate can register with HDFCsec. However, to become a member, you will have to open savings/current and demat accounts with HDFC Bank. Following documents are required to open account with HDFCsec 1. One passport size photograph.

55

2. Copy of PAN card. 3. Identity proof - copy of passport or PAN card or voter ID or driving license or ration card. 4. Address proof - copy of driving license or passport or ration card or voter card or telephone bill or electricity bill or bank statement. Brokerage and fees: 1. Rs. 799/- (Including trading account, bank account and DP account with HDFC) Please note: HDFC Bank savings account required a quarterly minimum balance of Rs. 2,500/-. If you already have saving account or DP account with HDFC, you could link them with trading account.

7. Reliance Money

http://www.relianceMoney.com

Reliance Money, A Reliance Capital Limited Company, is the financial services division of Reliance Anil Dhirubhai Ambani (ADA) Group. Reliance ADA group is among top 3 business houses in India with wide range of presence across various sectors. Group’s major interests ranges from communications (Reliance Communications) and financial services (Reliance Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and entertainment. Reliance Money has over 22 lakhs customers and more then 10'000 branches in around 5000 cities in India. Company is among the largest broking and distribution house of financial products and having share of more then 3% of total stock market volume at BSE & NSE.

56

RelianceMoney.com is the web based investment portal (with Online Stock Trading) from Reliance Money. This website enables its customer to invest & manage most of the services provided by Reliance Money including Equity (Stock) Trading, Commodity Trading, Derivatives, Mutual Fund Investment, IPO Investment, Life Insurances, General insurances, Money Transfer, Forex exchange, Gold Coins and Credit Cards Services. Company recently entered in to Wealth Management with tools like investment in equitylinked portfolio management services, structured products, insurance and mutual funds. The Reliance Money stock trading websites uses special security features 'Security Token', which makes your online trading experience more secure without complexity. Stock Trading through RelianceMoney.com is available for BSE and NSE stock exchanges. Offline trading is also available through Reliance Money partners in more then 5000 city across India and through phone by dialing 022-39886000. Investment Options The investment options available with Reliance Money online portal are as below: 1. Equity (Stock) Trading at BSE, NSE and NSE F&O 2. IPO Investment 3. Derivatives Trading 4. Forex Trading 5. Commodity Trading(Gold, Silver, Crude etc....) at MCX, NCDEX and NMCE (FAQ's) 6. Mutual Fund Investment 7. Life & General Insurance 8. 'Pure Swiss' Gold Coins (99.99% pure, 24 carat) Trading Platforms Reliance Money provides 3 different trading platforms for equity trading: 1. Insta Trade

57

2. Fast Trade 3. Easy Trade Reliance Money Technical Analysis (A paid service) Reliance Money offers a simplified, automated, sophisticated technical analysis to Indian retail broking consumers with the help of Recognia Technical Analysis tools. Recognia, a Canada based company, has proprietary pattern recognition technology capable of recognizing patterns in the price charts of any publicly traded financial instrument including stocks, bonds, funds, commodities, currencies and indexes. The technical services are available for introductory free 7-day trail period to Reliance Money users. Post the trail period, this service is available to users at a nominal subscription of Rs. 99 for 3 months/ Rs. 179 for 6 months/ Rs. 299 for a year, i.e., less than Re 1 a day. Reliance Money Brokerage and fees: Reliance Money offers lowest brokerage rates in today's online stock trading industry in India. The brokerages are as low as 0.075% for delivery based trading and 0.02 for now delivery. For more detail about Reliance Money’s brokerage and fees visit the below section of this webpage. Reliance Money Demat Account Charges: Fee Head Annual Services Charges - For Individuals / HUFs / Trust Annual Services Charges - For NRIs / Foreign Nationals, Corporate / Others Transaction Charges - SELL (Market & Off Market) For instructions given in physical form. Transaction Charges - SELL (Market & Off Market) For instructions received through Internet/ online trading through Reliance Securities Ltd. DP Charges Rs. 50/Rs. 1000/Rs. 25/-

Rs. 12/-

58

How to open account with Reliance Money? Opening online stock trading account with Reliance Money is easy. Simply fill a form online and somebody from Reliance Money will contact you. Advantages of Reliance Money 1. Extra security features with 'Security Token'', which is the most secure and tested technology in computer world. 2. Simple, easy and fast online stock trading. 3. Almost all investment options are available under one account including Equity Trading, Derivatives, Forex, Commodity, IPO, Mutual Funds and Insurance. 4. Branches are available in all major cities and the number is growing.

8. IDBIPaisaBuilder

http://www.idbipaisabuilder.in/

Idbipaisabuilder.in is a multipurpose online stock trading website from IDBI Capital Market Services Ltd., a leading provider of financial services in India and is a 100% subsidiary of Industrial Development Bank of India (IDBI). Idbipaisabuilder.in allows investing in equity shares, derivatives (futures & options) mutual funds & IPO's in India Stock Markets. You can buy or sell securities on NSE and BSE Stock exchanges. Type of Account 1. Paisa Power Classic Account

59

Paisa Power Classic Account is online stock trading account for beginners and low volume traders in India Stock Market. It allows investor to invest in Equity, Mutual Funds and IPOs online. Following are few popular features of this account: a. b. c. d. e. IPOs. f. g. Integration of: Online trading + Bank + Demat account Trading is available in both BSE and NSE. Online trading account for investing in Equities and Derivatives. Short learning curve helps you to start quickly. Easy to use features. Evaluate & buy mutual funds schemes online and check on fund rankings Apply for IPO’s online. No paper work or check required for applying in

through our performance map.

2. Paisa Power Streaming Account Paisa Power Streaming Account for online trading is for high volume and frequent equity traders. As classic account this account also provides investment options in Stocks, Mutual Funds and Initial public offers online. Following are few popular features of this account: a. b. c. d. e. f. Live refreshing equity prices, which enable you to keep track of every price Setting price alerts on the scripts in order to notify you as soon as your scrip Multiple market watches, message window and trading window. Evaluate & buy mutual funds schemes online and check on fund rankings Apply for IPO’s at the click of a button without any of the hassle of tedious Trading is available in both BSE and NSE.

movement as soon as it takes place. reaches a particular price point.

through our performance map. paperwork and processes involved in an offline IPO application.

60

Brokerage and fees: 1. 2. Account opening fees: Rs 500/- one time non refundable. Idbipaisabuilder offer competitive rates. They charge only 5 paisa for Rs

100 of trade done, which is 0.05%. Brokerage. In case of trade that result in delivery, they charge an additional 0.20% for back office and securities handling. Advantages of IDBIPaisaBuilder 1. Idbipaisabuilder.in enables you to set up a single integrated 3-in-1 account that links your Bank, Demat and Trading accounts. 2. All your transactions are online which means absolutely no paperwork involves. 3. You can invest anywhere, at absolutely anytime, even when the market is closed. All your orders are confirmed immediately with no delays. 4. Trade over Phone (ToP) facility is available in addition to internet trading. ToP allows you to place orders or check order status on phone. 5. Idbipaisabuilder.in website is 'Verisign Certified', which ensures complete confidentiality of your transactions with highest security. 6. Help documents and demos are available to invest in equity, mutual funds and IPO’s which helps you to get familiar with the process on investing through Idbipaisabuilder.

9. Religare

www.religareonline.com

Religare Enterprises Limited is Ranbaxy Laboratories Limited promoted financial product and service Provider Company. Religare provide its service in three different segments including Retail, Wealth management and the Institutional spectrum. Company offers wide range of services 61

including equities, commodities, insurance broking, wealth advisory, portfolio management services, personal finance services, Investment banking and institutional broking services. Religare retail network has more than 900 locations in 300 cities and towns in India. Religare provides the online gateway to their investors so investor can trade online in Equities, Commodities, apply for IPOs, invest in Mutual Funds, and buy Insurance. Religare Securities Limited (RSL) is a subsidiary company of Religare Enterprises Ltd and involve in equity related services include online trading at BSE and NSE, Derivatives, commodities, IPO, Mutual fund, Investment banking and institutional broking services. People who wonder where Religare word came from, it's a Latin word meaning 'to bind together'. Type of Account Religare offers its wide range of financial services though a sophisticated and customized trading platform - R-ACE (Religare Advanced Client Engine). Below are 3 flavors of RACE accounts available to the investors. 1. R-ACE (Basic) R-ACE (Religare Advanced Client Engine) the basic online trading account provided by Religare. Investor can trade and access their account information online and over the phone as well. This account comes with a browser based online trading platform and no additional software installation needed. 2. R-ACE Lite (Advanced) R-ACE Lite is the advanced trading platform for the investor of Religare. This trading account provides the entire feature of R-ACE (Basic) account. In addition it also provides real-time streaming stock quotes and alerts. This trading platform is also browser based and no software installation is needed.

62

3. R-ACE Pro (Professional) As the name indicates this account is for high volume traders. Along with the features from above 2 accounts, this account also comes with Trading Terminal software which needs to install on your computer. This terminal directly connects the investor to stock market and having all industry standard Treading terminal features including technical charting (intraday and EOD), multiple watch list, advanced hot-key functions for faster trading, derivative chains, futures & options calculator etc. As in basic and advance account, trading is available online through internet and offline though phone. Brokerage and Account opening fees: Religare offers three kinds of accounts as above. Below are detail about fees and activation charges for each account: 1. R-ACE Account activation charges Rs.299/-. Minimum margin of Rs.5000/- required. 2. R-ACE Lite Account activation charges Rs.499/-. Minimum margin of Rs.5000/- required. 3. R-ACE Pro Account activation charges Rs.999/-. Minimum margin of Rs.10,000/- required. Brokerage at Religare On the basis of volume and frequency of trading, Religare provide different options for brokerages. On the broader way they divided into three categories:

63

o

Classic Account

Intraday brokerage varies from 0.03% to 0.05%. Delivery brokerage varies from 0.30% to 0.50%. Derivatives brokerage varies from 0.3% to 0.5%.
o

Classic Plus

Fees: Rs 600 Validity Period 6 Months Intraday brokerage varies from 0.03% to 0.05%. Delivery brokerage varies from 0.30% to 0.50%.
o

Freedom Account

In this payment plan, investor has to pay a fix amount in advance for Monthly (Rs 500), Quarterly (Rs.1400), Half-yearly (Rs 2500) or Annual Subscription (Rs 4000). This one time payment enable account holder to trade for Rs. 3,00,000 intraday & derivative trading and Rs. 40,000 of delivery based trading for zero brokerage.
o

Trump Account

Trump account has four payment options, Trump Plus, Trump Super, Trump Star and Trump Super Star plan.


Trump Plus has annual subscription fees of Rs 2,500, Brokerage on Delivery Trades is 0.25% and Brokerage on Intraday Trades & F&O Trades is 0.025%. Trump Super has annual subscription fees of Rs. 15,000, Brokerage on Delivery Trades is 0.15% and Brokerage on Intraday Trades & F&O Trades is 0.015%. Trump Star has annual subscription fees of Rs. 50,000, Brokerage on Delivery Trades is 0.10%, Brokerage on Intraday Trades is 0.01% and Brokerage on Future Trades is 0.008%. 64







Trump Super Star has annual subscription fees of Rs. 1,00,000, Brokerage on Delivery Trades is 0.10% and Brokerage on Intraday Trades & F&O Trades is 0.005%.

Advantages of Religare 1. Religare gives interest on unutilized cash when investor is waiting to make next trade or online investment. 2. They provide intraday reports and historical charting. 3. Varity of fee structure to fulfill need of different type of investors.

10. Geojit

http://www.geojitbnpparibas.com/

Incorporated in 1987, Geojit BNP Paribas (Geojit) is one of the major stock brokers based in India. Geojit is based in Kochi, Kerala and has the strong presence in Gulf. Geojit BNP Paribas is cash equity and derivatives broker with extensive experience in Portfolio Management Services and the distribution of financial products: mutual funds and life insurance.Geojit provides stock trading at NSE and BSE stock exchanges through a strong network of around 500 branches and its state of art online trading portal. Geojit BNP Paribas is a stock market listed company and its stock are traded at NSE (GEOJIT) and BSE (532285). Over the years the name of the company got changed from Geojit Securities Ltd. to Geojit Financial Services Ltd. (GFSL) and finally to Geojit BNP Paribas Financial Services LTD in April 2009. Online Stock Trading Platforms: Geojit offers 2 different online trading platforms to its customers:

65

1. Gold Platform Gold Platform is an online browser based (website) stock trading platform provided by Geojit BNP Paribas. This platform is suitable for low volume stock market investors who want flexibility to trade any where they go. This Platform is offered absolutely FREE to all online customers. Gold Platform is ideal for those investors who are generally on move and may not be able to use their own computer for trading. Stock quotes in this web based application refreshes every second and provide latest update from the market. 2. Platinum Platform Platinum Platform is an Installable terminal based trading platform provided by Geojit BNP Paribas. This trading terminal is suitable for high volume intraday traders, who take advantage of minor movements in the price. Quotes are refreshes and orders are executed much faster then other browser based trading websites. Brokerage and Account opening fees: Account opening fees: Rs 600/- one time non refundable Dematerialisation charges - Nil + courier charges @ Rs.35 Rematerialisation charges - Rs.10 for every hundred securities or part thereof ;} or Rs.10 per certificate, whichever is higher} + courier charges Rs.35 per scrip Custody Charges – Nil Brokerage: 1. For delivery based trading, Geojit brokerage is from 0.10% to 0.30%. 2. For Intra-day trading, Geojit brokerage is 0.01% to 0.03%. 3. For F&O trading, Geojit brokerage is Rs 30 to Rs 75 per lot. Document required to open Geojit Trading Account For opening a Trading and Demat a/c, Individual Investors require following documents:

66

• •

Photograph - Two recent passport size Proof of Bank Account (Copy of Bank Statement / Copy of first page of the Bank Pass Book / A cancelled cheque) Proof of Address (Passport, Driver's License, Ration Card, Voter's Identity card, Telephone bill, and Electricity bill, Bank Passbook / Bank Statement or Rent Agreement)

•

•

Proof of Identity (PAN Card)

Advantages of Geojit BNP Paribas 1. Investors can place orders via phone by calling customer care (Toll free) or through respective branch. 2. Company has list of preferred backs including HDFC Bank, ICICI Bank, Citibank & Federal Bank, Punjab National Bank, Union Bank of India, Bank of India and IDBI Bank. 3. Facility to place online orders in Post-close session of NSE and BSE. 4. Daily market calls, Research Reports, Demat Holdings, change of Platform, etc are available though SMS. Disadvantages of Geojit BNP Paribas 1. Company doesn’t offer 3 in 1 trading account like other popular brokers. Investor has to use banking services from other banks. 2. Slow website response time.

11. Networth Stock Broking

www.networthstock.com/online_trading.aspx

67

Bokers in India. Networth offers premium financial services and information. NSBL is a member of the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). NSBL provide the retail broking services all over the India, Middle East, Europe and America. NSBL has 156 branches across the India. They are growing exponentially because of their strong support; technology drives operations, research team and network of experts. Online trading is one of the important platforms provided by NSDL. Online Stock Trading Platforms: Networth offers 2 different online trading platforms to its customers: 1. N-Easy (Website based trading) It is a powerful and user friendly browser based online stock trading platform. This website based trading platform is for delivery based low volume trader or investor who keeps moving from one place to another. As this is a website based trading environment, there is no need to install any software and trading can be done absolutely anywhere there is internet. Website for N-Easy account: http://www.clicknetworthstock.com 2. N-Swift (Installable software based trading) It is an advanced and interactive online stock trading platform. This platform requires installation based application which is made available by Networth. User has to install this software application on his computer. It’s mostly suited for high volume traders. Trader can watch market prices while they trade. The application is highly integrated which enables the user to place orders in live environment. The user screen is fully customizable by the user to display information based upon his preferences.

68

Features: 1. User can customize ‘Market Watch’ windows on computer screen as per his/her needs. They can be set to be viewed vertically, one on top of each other, or side by side so user can view NSE and BSE on the same horizontal line. 2. They offers the features such as Lock the Screen, Top 20 by Most Active Volume, Gainers, Losers, Market Movement and more that help you customize your trading platform according to your specific focus. Service charges: 1. N-Easy Trading:
o

View Only Account: Charges are Rs. 500 per month, Rs. 1200 per Qtr or Rs 4500 p.a. Trading Account: Free but user access charge of Rs. 150 pm, applied if brokerage from the client in a month is < Rs. 1250.

o

2. N-Swift Trading:
o o

View Only Account: Rs. 750 per month, Rs. 2000 per Qtr or Rs 6000 p.a Trading Account: Free but user access charge of Rs. 300 pm, applied if brokerage from the client in a month is < Rs. 5000.

Advantages of Networth 1. Trader can make off-market orders entry even while the market is closed. Orders will be released as soon as the market opens on the following day. 2. Brokerage rates are negotiable. 3. No demat account transaction fees. 4. No annual account maintenance charges for demat and trading account. (Hence your account maintenance charges are NIL compared to India bulls, ICICI Direct, HDFC Securities etc.) 5. They provide facility to apply online for IPO’s and Mutual Funds.

69

12. Kotak Securities

http://www.kotaksecurities.com

Incorporated in 1994, Kotak Securities Limited, the leading stock broking house of India is 100% subsidiary of Kotak Mahindra Bank. Company offering includes stock broking through the branch and Internet, Investments in IPO, Mutual funds and Portfolio management service. It also offers portfolio management services to high net worth individuals and corporate customers. Kotak securities also distributes a range of financial products, including company fixed deposits, mutual funds, initial public offerings, secondary debt, equity, and small savings schemes. Most of the services provided by the company are available though its internet portal. In early 2009 company launched Saxo's global trading platform in India. This platform provide direct access to equities, ETF's and REITS spanning 24 stock exchanges across the USA, Europe, Asia and Australia. Kotak Securities is a corporate member of both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Currently, Kotak Securities is one of the largest broking houses in India with wide geographical reach. The company has four main areas of business: (1) Institutional Equities, (2) Retail (equities and other financial products), (3) Portfolio Management and (4) Depository Services. 1. Institutional Business This division primarily covers secondary market broking. It caters to the needs of foreign and Indian institutional investors in Indian equities (both local shares and GDRs). The division also incorporates a comprehensive research cell with sectoral analysts who cover all the major areas of the Indian economy.

70

2. Client Money Management This division provides professional portfolio management services to high net-worth individuals and corporate. Its expertise in research and stock broking gives the company the right perspective from which to provide its clients with investment advisory services. 3. Retail distribution of financial products Kotak Securities has a comprehensive retail distribution network, comprising 870 offices (own and franchisees) across 309 cities and towns, servicing 590,000 customers. This network is used for the distribution and placement of a range of financial products that includes company fixed deposits, mutual funds, Initial Public Offerings, secondary debt and equity and small savings schemes. 4. Depository Services Kotak Securities is a depository participant with the National Securities Depository Limited and Central Depository Services (India) Limited for trading and settlement of dematerialized shares. Since it is also in the broking business, investors who use its depository services get a dual benefit. They are able to use its brokerage services to execute transactions and its depository services to settle these. Kotak Securities' width, volume and quality of offerings regularly earn it accolades from industry monitors. In recent times, these have included:
•

Asia money 2008 Brokers Poll: Kotak Securities was voted the Best Brokerage in India and Sanjeev Prasad was ranked India’s Best Analyst by investors Finance Asia: Best Broker (2009)

•

Investment Solutions
1. Products includes • Equities 71

For those who are interested in investing in stocks directly, Kotak Securities provides Equity Services. Investors have the choice to select the type of account from our vast range of offerings. Our research analysts and advisors guide you so that you can help your clients in making prudent investment decisions. • Derivatives Derivatives are good investment option for aggressive investors. Trading of these investment products requires a high degree of discipline. We, at Kotak Securities, strive to make investing in derivatives simple. Our Derivatives seminars educate new entrants as well as existing traders in the derivatives market to be more equipped with the required knowledge and techniques. • Mutual Funds Investing in over 3000 different Mutual Fund schemes through us is very simple. And to choose between the various schemes for investment, we offer you our exclusive research. Your customers can invest in Mutual Funds via internet, phone or by simply filling up a form. • IPOs Investing in IPOs is not complex process anymore. Kotak Securities has made investing in IPOs very simple. Your clients can now invest by simply making a phone call to us. We also provide you with news on IPOs, updates on forthcoming IPOs and lots more that you can share with your clients. • Structured Products Structured products are an ideal investment tool to meet specific investment needs that cannot be met by standardized financial instruments. We offer you a variety of structured products that might help in reducing your exposure to risk considerably.

72

2. Services • Central Risk Management At Kotak Securities, Risk Management seeks to generate business, not constrain. Our Risk Management Team comprises of members who have implemented systems in different areas and structured the Risk Management Cell primarily managing online risk, Market risk and Operational risk. • Centralized Back Office To handle large operations, an efficient back office is essential. While most broking firms worked with decentralized back offices, we were responsible to set the trend of a centralized back office. Today, we have a dedicated centralized back office in Mumbai with strength of hundreds of people. • Leading Edge Technology We believe, technology plays an indispensable role in increasing productivity. A robust technology platform is vital in acquiring and managing customers in the broking business. This belief supported by our scalable technology platform helps us address the ever growing investment needs. 3. Marketing Support Kotak Securities has a centralized marketing team based at Mumbai, dedicated to support the franchisees in their marketing activities. Marketing support that you will receive from Kotak Securities are as follows. • Marketing Collaterals We provide various types of marketing collaterals like Brochures, Pamphlets, Canopies, Banners, Posters, Danglers etc. All of these materials are co-branded. • Seminars & Events 73

Kotak Securities organizes research seminars and other events on behalf of Sub-brokers. These seminars & events help you to acquire and retain clients. Support is extended completely in terms of planning and execution. Planning of the entire event, designing & printing of invites and collaterals, branding at venue is done by us. • Designing & Execution Support If you want to create any collateral, material or advertisements exclusively, our marketing team will help you completely in designing of the same. • Outdoor Signage To generate more business it is very important to make your presence felt in the location where you conduct your business. Kotak Securities helps you by providing high standard backlit co branded signage’s to make your presence more prominent. • Biz-Quiz It is an ongoing quiz contest organized especially for sub-brokers. Stock markets, finance, entertainment & sports are some of the topics covered in this quiz. This quiz helps you showcase your knowledge and gives you a chance to win lots of gifts. 4. Training Support Given below are a list of training programs that kotak provide to their Business Associates: • Product Training: Module that offers in-depth understanding of the products offered by us. It equally focuses on effective application of product knowledge. • • • Systems Training: An essential guide on Trading and Data Repository Systems. Operations Training : Daily Operations Process Training Sales Training: Focuses on the skills required to increase sales and profitability.

74

Account Types: Kotak offers different account types according to users requirement: 1. Super Derivatives Super Derivatives account is specially made for those investors who are averse to taking risks and trade high volumes in futures and options. Risk would be reduced in this account as account is mainly focused on derivative investments. Kotak has dedicated teams for technical and derivative analysis. Kotak’s analyzing team analyzes various parameters of derivative data, so investor need not to waste their time on data analyzing. An investor gets access to both dealers and experts so they can speak to them directly via phone/chat. This opportunity gives investor to know the rationale behind a particular position or strategy at all times, identify opportunities and know details on market movements etc. In Super Derivatives account an investor also will be able to use advanced strategies. Kotak’s experts suggest strategies to their investor’s positions where the risk return ratio is much lower. One can activate Kotak securities Super Derivatives account with minimum amount Rs. 25 lakh as margin, by way of cash or stock. For Derivative brokerage - Futures is .05% both sides and for Derivative brokerage - Options is 0.05% or Rs 150 per contract whichever is higher (both sides). Delivery Brokerage is 0.45%. 2. AutoInvest AutoInvest is a unique Online Trading Account which provide investment planning in Gold ETFs (Exchange Traded Funds), Equities and Mutual Funds to their customers. Gold ETFs are mutual fund schemes that will invest the money collected from their investors in standard gold bullion. Kotak's advisor gives the recommendation according to investor's risk capability and investment plans. Minimum investment of Rs 5000 required for AutoInvest account.

75

3. Kotak Gateway Kotak Gateway account opens the gateway to a world of investing opportunities for beginners. Kotak Gateway user can trade anywhere, anytime using internet. Kotak also offers call and trade facility. Kotak Securities provide SMS alert, research report, free news and market updates to the account holders. Best feature of Kotak gateway is call and trade facility. Anybody can activate Kotak Gateway account with any amount between Rs 20,000 to 5, 00,000. This can be in form of cash deposit or the value of the shares you buy. Brokerage will be charged based on the account type. For intraday trading brokerage is .06% both sides for less then 25 lakhs and .023% for more then 25 crores. 4. Kotak Privilege Circle Kotak Privilege Circle is the premium investment account offed by Kotak Securities. Along with Kotak Gateway account benefits Kotak provides independent market expertise and support through a dedicated relationship manager and a dedicated customer service desk which provides assistance in opening accounts, handling day-to-day problems, and more. They provides KEAT premium which is an exclusive online tool that lets you monitor what is happening in the market and view your gains and losses in real-time. One can activate Kotak Privilege Circle account with any amount more than Rs. 10,00,000 as margin, by way of cash or stock. For intraday trading brokerage is .06% both sides for less then 25 lakhs and .03% for more then 25 crores. Other then above 4 accounts, Kotak Securities also provide following accounts: 1. 2. 3. 4. Kotak Freedom for Mutual Fund Investments. Kotak Super Saver, a Flat Brokerage and a Low Margin account. PMS (Portfolio Management Service), an account for people who need an expert to help to manage their investments. NRI Account, an online trading an investment account for NRI investors.

76

Brokerage and Account opening fees 1. For Intra-day trading, Kotak brokerages are from 0.02% to 0.06% both sides. 2. For delivery trading, Kotak brokerages vary from 0.18% to 0.59% based on the amount of total trades. Document required to open Kotak Securities Trading Account Individual Investors require following documents to open an account with Kotak: 1. Photograph 2. Proof of Address (Passport, Driver's License, Ration Card, Voter's Identity card, Telephone bill, and Electricity bill, Bank Passbook / Bank Statement or Rent Agreement) 3. Proof of Identity (Passport, PAN Card, Voter's Identity Card, Driver's License or MAPIN UID Card) 4. Signature Verification Advantages of Kotak Securities Online Trading 1. Through its web portal company provides a single platform for investments in equities, Mutual Funds and currency derivatives. Available margin can be used for any of the three segments. 2. Saxo's global trading platform provided by the company allows direct access to equities, ETF's and REITS spanning 24 stock exchanges across the USA, Europe, Asia and Australia. 3. In late 2008 company launched an interesting ‘Smart Order’ feature to its online trading portal. While placing an order to buy or sell stocks at BSE and NSE, customer can choose this option. Once selected, this option offers customers the best available price between BSE and NSE. This option is available to all the customers of the company. 4. Kotak also provides a Call & Trade facility to its customers wherein they can place and track their orders through phone when they are away from home.

77

5. Kotak Securities provide daily SMS alerts, market pointers, periodical research reports, stock recommendations etc. 6. Kotak provides exclusive online tool to monitor what is happening in the market and also investor can view gains/losses in real-time. 7. Customer support chat helps customers to resolve issues faster. 8. Kotak securities have Citibank, HDFC Bank, UTI Bank and Kotak Mahindra Bank as designated banks for its trading account. Investors holding account with these banks can easily integrate the brokerage account with Kotak. Disadvantages of Kotak Securities Online Trading 1. Slow website response time. 2. Demo of the online trading portal is not available.

Leadership Edge
Kotak Securities is one of the best stock broking houses in the country. We have been the pioneers in introducing the sub-broker model in the Stock Broking business. • • • Some of the facts about Kotak Securities are mentioned below. AUM of Rs.2599 crores Over 15 years of experience • • • • • Kotak Securities is one of India’s oldest and largest Portfolio Management service provider Introduced the flat brokerage fee structure model in India Pioneer to launch Portfolio Management Services for retail customers Pioneer to introduce margin trading option for broking customers Pioneer to enable investing in IPO/Mutual Funds over the phone

Awards and Accolades
• Best Brokerage Firm in India for 2009 by Finance Asia

78

• • • •

Best Performing Equity Broker in India - CNBC TV 18" – Optimix Financial Advisory Awards, 2008

Best Brokerage Firm in India" - Asia money, 2007 The Leading Equity House in India" - Thomson Extel Surveys Awards, 2007 Best Provider of Portfolio Management : Equities" - Euro money Awards, 2007 • Avaya Global Connect Customer Responsiveness Awards in Financial Service Sector, 2007

13. Standard Chartered-STCI Capital Markets Ltd

www.standardchartered-wealthmanagers.co.in

Standard Chartered – STCI Capital Markets Limited (formerly UTI Securities Ltd), is a leading broking company in India, provides a wide range of financial services including Investment Banking, Institutional Equity & Derivative Broking, Fixed Income, Research, Retail Equity, Portfolio Management, Distribution of financial products and Depository services. On 11 January 2008, Standard Chartered Bank Ltd (SCBM) acquired 49% stake in UTI Securities Limited from Securities Trading Corporation of India (STCI). Accordingly, the name of the company was changed from ‘UTI Securities Limited’ to ‘Standard Chartered – STCI Capital Markets Limited’. Standard Chartered – STCI Capital Markets Limited is registered as a trading and clearing member with Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE) and MCX Stock Exchange Limited. The Company is also registered as Depository Participant with Central Depository Services (India) Limited (CDSL) as well as National Securities Depository Limited (NSDL).

79

Type of Platforms: STCI offers 3 different online trading platforms to its customers: 1. Easy Trade: Easy Trade is a powerful and user friendly browser based online trading website for beginners. It provides unique integrated account which link banking, broking, and demat accounts. Trader can get the latest stock quotes, unlimited access to trading history, current order status, access to all back end reports and data. 2. Advanced Trade: Advance Trade is an Applet-based system, designed specially for active traders. Advance Usec gives access to their traders to view live streaming quotes which enables them to keep track of real-time price movement. Multiple market watch, message window and trading window, all in one screen help customers to track individual stocks and make timely trades when investing online. 3. Super Trade: Super Trade is an advanced, customizable online trading platform built exclusively for active traders. It offers professional and complimentary tools which enable their user to view streaming, intraday, daily and weekly charts, personalized quick stock quote lists and real-time updates. Brokerage and Account opening fees: STCI Capital Markets offers three kinds of platforms as above. Below are detail about fees and activation charges for each account: 1. Easy Trade: Account activation charges Rs.499/-.

80

2. Advance Trade: Account activation charges Rs.799/-. 3. Super Trade: Account activation charges Rs.2499/-. Advantages of STCI Capital Markets Ltd 1. They provide intraday reports and historical charting. 2. Varity of fee structure to fulfill need of different type of investors. 3. User can access sector-wise information to track sectors and individual scrips within the sector. 4. STCI provides "Quick Mail" tool so user can resolve all the problems online.

14. Angel Trade

http://www.angeltrade.com

Angel Group has emerged as one of the top 3 retail broking houses in India. Incorporated in 1987, it has memberships on BSE, NSE and the two leading commodity exchanges in India i.e. NCDEX & MCX. Angel is also registered as a depository participant with CDSL. Angel's retail stock broking house offering a gamut of retail centric services.
• • • • •

Ebroking Investment Advisory Portfolio Management Services Wealth Management Services Commodities Trading

81

Trading Platforms: Angel Trade provides 4 trading platforms, 2 are browser based & 2 are application based. 1. Angel investor

It is a browser based trading platform. The rates are updated on clicking the refresh button. This facility ensures it is not blocked by firewall. Thus it is useful for investor who needs to access information from places where firewall blocks such data. 2. Angel Trade

It is a browser based trading platform. The rates are updated automatically. This platform is useful for investors & traders to access market from different terminals. 3. Angel Diet

It is an application based trading platform where rates are updated automatically. All segments are available on a single screen. This is ideal platform for the daily traders. 4. Angel Anywhere

It is an application based trading platform where rates are updated automatically. This is ideal for investors & traders who are inclined towards trading based on charts & technical tools. Brokerage and fees: 1. Account opening fees: Stock trading account - Rs 575/Demat account - Rs 200/Commodity trading - Rs 625/2. Brokerage: For trade up to the range of Rs 1 - 3 Crore: Cash Based: 0.50% 82

Day trading: 0.05% Derivatives: 0.05% For trade more than Rs 3 Crore, brokerage is about 0.03%. Advantages of Angel Trade 1. User friendly browser-based / application based online trading platform. 2. The auto square off time is at 3:15 and an investor can buy up to 4 times the value in his account. 3. Trading account can be linked with popular private banks like HDFC Bank, ICICI Bank, UTI bank etc. 4. Trading is available in both BSE and NSE. Disadvantages of Angel Trade Online money transfer from trading account to bank account is not available: Trading account can be linked with popular private banks like HDFC Bank, ICICI Bank, UTI bank etc. A trader can transfer money from his bank to the trading account online. But the reverse transactions are not yet available online. This means money, a trader gets after selling shares doesn’t get credited in his bank account directly. The trader has to call Angel Trade and request for the deposit. This takes couple of working days. This way angel trade is kind of behind with ICICIDirect where 3 accounts (Bank account, trading account and demat account) are connected so seamlessly that no manual interfere requires. In ICICIDirect, a trader gets the money back into his ICICI Bank account as soon as the trader settles down.

15. HSBC InvestDirect

http://www.hsbcinvestdirect.co.in

83

HSBC InvestDirect (India) Limited (HIL) is one of the India's leading financial services organizations providing varied range of services through its subsidiaries to Individual and Corporate customers. HIL is listed on the Bombay Stock Exchange Limited (BSE) and National Stock Exchange Limited (NSE). HSBC InvestDirect offers various services that include equity broking, wealth management, IPO distribution and portfolio management services. HSBC InvestDirect has around 240 offices in 80 cities around the country. Online Stock Trading Platforms: HSBC InvestDirect offers 3 different online trading platforms to their customers: 1. SmartSTART SmartStart is a powerful browser based Trading platform for beginners. SmartStart trading platform allows their investor to flexibility of trading on both the NSE & BSE via a single screen. Features: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Trade on NSE & BSE Simple order entry for Equity & Derivatives Fully Customizable display User friendly Get Quote screen Seamless 3-in-1 proposition Live order status Track your orders real-time Dynamic buying power Works behind a Proxy Back office access

84

2. SmartINVEST SmartInvest is a browser-based trading platform for customers who transact occasionally. It is ideal for investors who believe in the Buy and Hold approach towards investment in equities. It gives the benefit of real-time streaming data with the flexibility of trading on any Internet capable system. Features: 1. 2. 3. 4. 5. 6. 7. 8. 9. 3. Instant access to account with no wait time Works behind a Proxy Live Streaming quotes Multiple Watch lists NSE & BSE Access Single order form for Cash and FnO Point and Click order entry Hot Key Functions Back Office access SmartTRADE SmartTrade is an EXE based desktop software designed for active traders who transact frequently to capture short-term price movements. This platform gives more personalized investment options to the investors. Following are few popular features of SmartTrade account. Features: 1. Fully Customizable display 2. Dynamic Charts with Indicators 3. EOD Charts 4. Real-Time market data 5. Advanced Alert capabilities

85

6. Live order status 7. Track your orders real-time 8. Real time position updates 9. Dynamic buying power 10. Message window docking Document required to open HSBC InvestDirect Trading Account For opening an account an Investors require following documents:
• •

Photograph - Two recent passport size Proof of Bank Account (Copy of Bank Statement / Copy of first page of the Bank Pass Book / A cancelled cheque) Proof of Address (Passport, Driver's License, Ration Card, Voter's Identity card, Telephone bill, and Electricity bill, Bank Passbook / Bank Statement or Rent Agreement)

•

•

Proof of Identity (PAN Card)

2.14 Online Stock Trading: Comparison of Brokerage Charges in India
With the advent of online stock trading, many companies have entered into online stock trading business, because of which, stock broking has become a highly competitive segment. In India, there are a couple of big names in the online retail stock broking services including HDFC Securities, India Bulls, ICICI Direct, Angel Broking, Motilal Oswal, Religare, Reliance Money, Bajaj Capital, Enam Securities, Asit C Mehta (Investmentz.com), India Infoline (5paisa.com), Kotak Securities, Sharekhan, and Geojit, among others. Apart from the big names in stock broking industry, hundreds of mid-scale stock brokers offer online stock trading at local, regional and national levels. Based on my personal experience of online trading with few of the above big names and based on the study of individual websites, I have concluded that for the retail investors, there cannot be a sure shot answer as to which one is the best. In fact, making a comparison

86

table of various brokerage houses just on the basis of brokerage charges turns out to be a fruitless exercise, as different brokers follow different policies for different segments (cash, intra-day, delivery, futures and options). Depending upon the turnover, initial deposit amount, frequency of trading, trading volume, types of trading etc, there are different schemes and different online trading accounts. Just look at few of the common names of online trading accounts – advanced brokerage account, super saver account, classic account, premium account, trump account, 3-in-1 account, limit card account, light account, active account, professional account, freedom account, gateway account, and high trade account, to name the few. If you are an investor (not the trader) and especially the first-timer, I am sure that you will find it tough to take the right decision. I would suggest you to keep in mind the following most important points related with stock broking charges if you want to open an online stock trading account. 1. Most of the brokers will charge you one-time account opening fees varying from Rs. 200-800 2. As per SEBI guidelines, a broker can charge maximum 2.5% brokerage, regardless of intra-day, delivery or F&O 3. As a retail investor, you will generally be interested in trades involving delivery, therefore look for the lowest delivery brokerage. 4. In most of the cases, average rate for delivery brokerage is around 0.5%. 5. Although many brokers offer variable brokerage (higher the turnover, lower the brokerage rate) but to be able to claim substantially lower rates (around 0.25%), you might have to do a trading turnover of more than one crore every year, which I doubt if any of you must be doing. 6. In addition to the brokerage, you have to pay various statutory charges connected with stock trading and you have to pay demat transaction charges. You may also refer my article “Statutory Charges Payable on Equity and Derivative Trading” and “An overview on Demat Charges” 7. Unless and until you thoroughly understand the intricacies of various brokerage plans, limit card plans, advance brokerage plans, brokerage rebate plans, annual

87

subscription plans or any other plans, by whatever name they are called, you should stay away from such fancy-sounding trading accounts. Such accounts are generally suitable only for the sub-brokers, franchisees and HNI (high net worth investors) traders. 8. Apart from lower brokerage rates, look out for the account that gives you lowest or zero fixed charges. That is, you do not have to pay any charges or fees other than the brokerage charge as and when you carry out any trades. 9. Go for the trading account in which you do not have to commit certain fixed turnover (trading volume) every day, month or year. Besides the brokerage rates, you have to check out many other factors such as charges for online trading platform, web-based trading, call trading charges, convenience of funds and securities transfer, back office reports, contract notes etc.

2.15 Online Trading – some questions
Many Investors in India prefer dealing in shares through their brokers over the Telephone and not trade online because of the security Concerns. While concerns about online security will always be there, rest assured that the brokerages themselves have a very, very high stake in making you feel comfortable about the level of security being used. All online brokerages have a portion of their website devoted to explaining the measures they employ to protect your transactions. Here are a few questions that you may have regarding Online Trading in Stocks. Is trading through the Internet safe? The safety of transactions on the Internet depends on the encryption system used. The better this transaction system, the more difficult it is for any person to hack the site. Internationally, the best system available today is the 128-bit encryption. Secondly, you too can ensure the safety of the transactions online. You normally get a secured user id and password, the secrecy of which is to be maintained entirely by you.

88

Thirdly, if the transaction system requires no manual intervention, you further improve the safety in the transactions. Among Indian sites, very few are fully integrated online trading sites. This enables the elimination of the possibility of any manual intervention, which means orders are directly sent to the exchange ensuring that you get the best and right price. Is trading through Internet Difficult? The experience of trading through Internet depends a great deal on the type of product offered by the site. Say, for example, one of the issues bothering you may be getting tired of the paperwork involved after every trade, in writing cheques. In online trading sites, the greater the back-end integration of the system, the greater the amount of work the sites do for you, therefore greater the convenience available to you. In big financial institutions your broking account, bank account and Demat account are linked electronically. So when you punch in a buy or sell order, the system checks the funds/shares availability and automatically credits/debits the accounts once the order is executed by the exchange. Is trading through Internet a costly affair? The convenience provided by online trading is even then worth the costs involved. And online trading sites are not that costly. For example, a trader can trade shares on margin at rates as low as 0.10% and if one wishes to trade in cash, then the rates applicable are as low as 0.4%. However, it is important to compare various online trading sites on brokerage rates, inclusive of all sub-charges.

2.16 Advantage of online share trading
89

The overwhelming advantage of online share trading is convenience. While normally, investor deal with a broker and own paper shares, with online trading everything is very simple, fast, and efficient. Investors are also in complete control of whatever actions he takes. Unmatched convenience and efficiency: One reason many people are never seriously interested in share trading apart from the risk is that although they are curious, they know it is a hassle to go some place to trade and handle all those paper certificates. Also, many don't have the time for all this. Online trading eliminates both these hassles: First by making your transaction virtually paperless and second by enabling investor to buy and sell shares anytime anywhere where there is Internet access. In fact investor can even place a sell or buy order by specifying its order value during non-market hours. Which broker can talk to place a buy order in the middle of the night? With online trading, this is easily possible. It can be investors home, office or Internet cafe: They are ready to go to their account to buy or sell shares or to just watch how your portfolio is performing. There is absolutely no paper involved whatsoever except for the initial application they sign and give for the purpose of taking a web trade account. Linked to Investors bank account: Only thing investor would need to do is send your money to the bank account so that they have the money in the account to be able to buy their favorite stocks. Their share trading system will be linked to their bank account and once they have the money in the account it can be made immediately available for purchase of shares. Major advantages of online share trading: 1. Paperless transactions – Investors share certificates get deposited in electronic form (DMAT) in their web trade account. 2. Orders can be also placed offline during non-market hours. 3. For NRIs this is the easiest option to invest in Indian markets.

90

4. There is no limit to information available online in sites such as www.icicidirect.com and www.hdfcsec.com 5. Record of all transactions are available at their fingertips. Advantages of online trading: • • Lower brokerage and fees (in almost all cases). Fees can be even lower if they are a frequent trader. More control on their transactions. They can decide exactly what price and time they wish to buy, down to the fraction of a second, as well as change their order whenever they feel like. No waiting on the phone or having to go in person to a branch. • • • • More flexibility in terms of being able to see what options are available to their and scan the market. With online trading, investors often have access to lower-fee mutual fund products since they are their own advisor and nobody gets a cut along the way. Handy tools to model interest earned, yield, returns etc., as well as financial screeners to research stocks and bonds. Good research tools and news feeds on each stock, which investors can delve deeper into in their own time. A conventional offline broker may not always be able or willing to offer them all of these. They can also get many of these for free from sites like Market watch, Fool.com etc. • If investor’s online broker offers Level 2 quotes in real time, they can actually see what the bid and ask prices and volumes are and get a sense of where and how their order will fit in. • • Some online brokerages have access to research reports prepared by Standard and Poors and such, and these can give them some really good insight. Real-time values of your portfolio.

91

2.17 Disadvantages of Online share trading
• • • Investors are on their own; they have to decide if it's a good or bad buy/sell. They have no advisor to help them. If they are not a pro, their risks may be higher. If they are not careful, they could end up trading too much just because it's so easy too (I've made that mistake) but it's in your hands to control. The advantages and independence of online trading far outweigh the disadvantages, but start slow, find a good brokerage with a good reputation and take it a step at a time till you feel confident enough and know the risks and rewards well. There's no reason why you shouldn't have a mix of online and offline holdings in the transition period.

92

CHAPTER- 3 REVIEW OF LITERATURE
1. DAS GUPTA SOUTIMAN, NOV.2002 The emergence of online exchanges has facilitated faster transaction by providing online trading portals and brokerage house ease and flexibility. The Internet has indeed opened up new opportunities for conducting the business. The worldwide stock exchanges has made a major shift from the traditional method of trading and now conduct a bulk of its business online through its brokers and partners. In the developed countries majorly all the exchange transaction are conducted online. The trend took off slowly in India and the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) two of the largest exchanges in India have been conducting online trades successfully for some time. The Indian exchanges and brokering houses have been very slow in moving their transactions online and the major reason has been the lot government regulations. The initial delay was de to laying down the specification for creating Closed User Groups (CUGs). This issue was resolved between the Departments of Telecommunications (DoT) and the Finance Ministry around 1998 and after the soon came the online trading portals like ICICIDirect.com, motilaloswal.com, sharekhan.com and smartjones.com. Connectivity related issue was perhaps the most important technological factor. Through online trading everyday large volumes of data is being transacted. The NSE and BSE are among the largest exchanges in the country handling vary large daily trading volumes, support large amount of data traffic, and have a very large nationwide network. The trading volumes in year 2000 was huge with the average daily turnover in the capital markets segment at NSC is around Rs 2300 crore and in the derivative segment, around Rs 1300 crore. The average daily traffic volume was around one million traders per day in the capital market segment and around 50,000 traders per day in the derivatives segment and there were around 13,000 registered users in both segment and an average of around 9500 users is logged in at a time. At BSE the daily turnover in

93

2004-05 (April-March) was Rs 1244.10 crore and the number of awareage daily traders was Rs5.17 lakh. 2. SHENOY G.M. (NOV 2002) Any online exchange should always be-on, safe, secure, redundant and should have adequate backup & recovery processes. The Vice President of NSE-IT G.M.SHENOY tells that the basic design objective of NSE was to provide fair, equal and transparent access all NSE nation wide location and to provide connectivity to the trading members as soon as possible. The telecom sector is fairly liberal nowadays but way back in 1993 the technology was maturing and was very costly. The cost of lease lines was almost ten times as much as it is today. Satellite technology was very costly. The cost of lease line was almost ten times as much as it is today. Satellite technology was a bin since it allowed quicker deployment then leased lines. Today NSE has the country’s largest VSAT network with over 3000 VSATs and exports to grow to more than 4000 VSATs very soon. 3. MALHOTRA, HARISH (2002) "The portal should be simple to navigate, full of useful and relevant information which is available with the lowest number of clicks, and should be personalized." However a very important aspect is that the systems should be able to interface directly with that of the online exchanges without incompatibility issues. ICICIdirect.com uses 128-bit encryption enabled Secure Socket Layer (SSL) to ensure that the information transmitted across the Internet is safe and cannot be accessed by a third party. Users are usually given options to link their bank accounts, Demat accounts, and brokerage accounts into a single interface. There is also a single window for all exchanges and a single screen for the complete order routing mechanism. The hardware used comprises Web and application servers, switches, routers, firewalls and security devices, and specialized appliances.

4. THIAGARAJAN KRISHNAN, (SEPT. 2000)

94

Individual investors compare the brokerage provided by various online traders. Brokerage can be a key differentiation among different scheme offered by ebrokers in the present competitive market place. For example icicidirect.com was the first to enter into e-broking and charge the highest brokerage (for delivery transaction) at 0.85 per cent per trade as compared to Invest Smart which charge 0.75 per cent and many more e-broking sites having different brokerage charge.

5. B. KRISHNAMOORTHY, (2005)
According to an article by Krishnamoorthy B in 2005 after inception of online trading in India in the year 2000 online trading is gained momentum with trading volumes growing by 150 percent per annum in the years 2003-2005. The volume of all trades executed through the Internet on the National Stock Exchange had grown from less then Rs 100 crore (Rs 1 bilion) in june 2003 to over Rs 700 crore (Rs 7 billion) in july 2005 which was a handsome growth. 6. RANGNATHAN KAVITHA, (2006) Consumer behavior from the marketing world and financial economics has brought together to the surface an exciting area for study and research: behavioral finance. The realization that this is a serious subject is, however, barely dawning. Analysts seem to treat financial markets as an aggregate of statistical observations, technical and fundamental analysis. A rich view of research waits this sophisticated understanding of how financial markets are also affected by the 'financial behavior' of investors. With the reforms of industrial policy, public sector, financial sector and the many developments in the Indian money market and capital market, Mutual Funds which has become an important portal for the small investors, is also influenced by their financial behavior.

7. VASI NAZIA (OCT 2005)

95

Online trade in India is growing fast. Value of trades via Net on NSE has grown more than seven times in two years, from Rs 100 crore to Rs 772 crore by August 2005. Mumbai: Online trading is on a bull run. The process of trading shares on the net is a rage in India with both retail and day traders buying and selling stocks through websites such as sharekhan, icicidirect, Kotak securities and India bulls. In fact, equity and derivative trading online has become so popular across segments that Sharekhan is planning to start online trading in commodities (NCDEX and MCX) in three to six months. Till now, India has logged in 1.054 million online accounts, since the NSE first allowed online trades in 2000. While the online trade industry is growing by 150% year-on-year, the value of all trades executed through the internet on the NSE has grown more than seven times in two years (from Rs 100 crore to Rs 772 crore crore by August 2005). Notwithstanding the recent bull run and almost everyone -from the pimply teenager to the pot-bellied businessman - trying to cash in on the soaring stock market, investors are increasingly logging on the internet for the independence, ease and... 8. GUPTA AMITABH (AUG. 2006) Empirical research in finance has vigorously explored the apparent anomalies in stock returns behavior. Many studies document that the average return on Friday is abnormally high and the average return on Monday is abnormally low. This is popularly known as the “weekend effect” or “day-of-the-week effect” phenomenon. This paper re-examines the day-of-the- week effect on the Indian stock market after the introduction of the compulsory rolling settlement for a three year period, i.e. 2002-05. The study uses a non parametric test to provide mixed inference on the existence of the phenomenon. The results show the returns to be the highest on Friday for all the indices and provide evidence of the day of the week effect for BSE 100 and S&P CNX500 index for the Indian stock market.

9. THOMAS PRAMOD (SEPT 2009)

96

INDIA IS a traditional country. Indians are conventional in nature. When it comes to technology, we are far behind to the rest of the world. Although we had tradition for centuries, we are enjoying freedom only for 62 years. Our culture is unique and we celebrate unity in diversity. India is forerunner among developing countries. Economically, we are more fit. India also holds a unique stature in the world, we are the youngest country in the world. Half of our population is in between the age bracket of 18 to 23. Which means we have huge potential in terms of growth? Some online statistics Online world is another world. As they showed us in Matrix, we will be confused which one is real. Internet offers so many facilities to its users. There may be difference in opinion but one thing is sure that once online world will become more prominent than the real world. Two years before the Internet using population in the world crossed the mark of one billion. Which simply means one in every six of world's population is using Internet and the number is going up every day. In India, 50 million people use Internet and it grows like anything. By 2012, the number will be 81.3 million. Indian union also taken steps to encourage students to be online, Internet education is a part of curriculum in almost all the states. Share trading in India Now a day, everyone in India is aware about bull and bear (at least they can identify these terms as clinches related to stock market). More and more people in India, especially young ones, are turning towards stocks for investment. But statistics says that out of its massive population, only less than 10 per cent is involved in any kind of investment. The capital market investment population in India is less than two crore. It seems more and more literacy is needed in this avenue of investment. The rest 113 crore of the people may or may not invest but they do not invest in stock markets as of now, but in the future we will be forced to redraw the picture for sure. Online share trading During the early years of 90s, National Stock Exchange of India started trading using v-sat connections. Those days it was a revolutionary change and was referred as online trading. In late 90s, Internet became popular in India and when 20th century became past Internet use in India increased at it's maximum pace.

97

With the emergence of new generation jobs, people looked for new venues for investing and stock markets came first in the list. In 2004, when United Progressive Alliance government came into power, stock markets in India gained more popularity. The traditional way of trading by visiting the branch, calling a call centre executive etc is called offline trading in which you need a person's assistance. Internet trading removed the second person and you can trade as your own. This is the easiness that has been provided to the customer. If your bank also associated with some brokers things become easier. You don't want to step into a brokers office, you can do share trading at your home/office in your PC with Internet connection. In future each bank will be associated with more stock brokers, customer can select suitable brokers. Within just three years, online share trading in NSE increased to an unbelievable 13 per cent. It is believed that the number will be double in three years. On an average 34 per cent of booking in railway is done through Internet and 80 per cent of airline booking have also gone online. Reliance money, ICICI Direct, India Infoline, Geojit BNP Paribas, Sharekhan, Kotak Securities are the major brokers who offer online share trading facility to their clients. High speed execution, greater flexibility and control are the main advantages of online share trading. The brokerage charges are less in online trading compared to offline trading. Customer can place orders even after the trading hours is another advantage. Real time tracking of stock prices is also possible in online share trading. Any disadvantages When some big rise or fall in the stock market happens the brokers server will be down and the beloved customer will be at sea, staring at the monitor. The customer needs specific browsers and web configurations to view all the facilities provided by the broker like charts etc is another drawback. In this fast forward life, online share trading is the need of the hour. The Internet using community will increase day by day. Online share trading is aiming a long innings for sure. When mobile and Internet convergence take place things will change drastically. Mobile share trading will function in full swing within years. Convergence of technology only means advantage to the common man. 10. PATULLO DAVID (MARCH 2010)

98

Trading stocks is something that more an more people are doing. At one time only those that worked on Wall Street and the very wealthy invested in stocks. Today though more and more people are making trades. As a result the option of online share trading is a service that has a sustaining demand. Among the masses that are making the market part of their lives are those that include stocks in their retirement savings. Some of these individuals prefer to have others manage their portfolios. This allows them to focus on other things and often benefit from professional management. There are often fees involved in such hands-on guidance though. For this and other reasons, some people may choose to select the stocks for themselves. Online share trading allows individuals to place the orders themselves. This means that in the comfort of their homes they have the opportunity to do research and place orders. It is true that in most retirement portfolios there simply is not a lot of activity. Retirement investments are typically long-term investments. These lengthy investments have long-term growth potential and the promise of either a significant profit or a sustainable income in the post-retirement period. There are individuals that more frequent and short-term trades though. Another class of trader that has grown in numbers recently is the professional trader, and they are not all located on Wall Street today. These individuals trade stocks to create their primary income. This sort of trading typically requires more trades and may involved shortterm trades. It is not uncommon to find professional traders that execute trades on a nearly daily basis. Some even trade outside of standard market hours and on multiple markets. A number execute what are termed day trades. These trades are basically a purchase and sell of the same stock in the same trading day. The term also has a legal significance and this should not be construed as a legal definition. Online share trading allows these individuals to execute the trades that they need to make from home. It also supplies them with a lower commission in most cases. This is because they are able to place the trade without speaking to a professional broker.

99

Professional trading is not for everyone. Similarly online share trading is not something that everyone needs in their life. You can begin to determine if online share trading is for you by assessing your existing trading activity. If you trade based on research that you do not on the advice of a professional broker then you may want to consider your online options. Many brokerage accounts include online trading capabilities. You may actually be able to place the same trades at lower costs. 11. MEHTA C. (2010) In order to start share trading in India three types of accounts are necessary, a trading account with a broker, a Beneficial Owner account with a Depository Participant and a bank account. Online share dealing is possible through banks that offer online banking facilities. The account opening form of the broker has four components. The Know Your Client (KYC) Form, separate agreements for share trading on BSE and NSE, Risk Disclosure Document and certain power of attorneys that are given. Ensure you read the power of attorney carefully and you are authorizing only for delivering shares to exchange on your behalf against your sale trades and not for any thing else. The KYC form captures your contact details and your financial worth. This Form is also accompanied with Proof of your identity, proof of your residence and Permanent Account Number (PAN) card. Proof of identity can be given by submitting a copy of your Passport, Voters card etc. You need to get your photograph attested by your banker. Proof of address is ration card, latest electricity bill etc. All documents should be produced in original for verification. The next document is a set of agreements between the share broker and the client. This agreement has to be separately signed for BSE and NSE. Both the agreements are identical and have been prescribed by SEBI. There is also a separate agreement for Depository operation between the Depository Participant and the beneficial owner. If you are working through a sub share broker then there is a tripartite agreement between the share broker,

100

sub share broker and client. This agreement allows you to do only cash market trades; in case you want to deal on derivatives market then a bipartite agreement is required. All these agreements have to be stamped. Make sure you read the risk disclosure document before signing and submitting to the share broker. This document will explain the different risk involved with your transaction for which you will be responsible. There is an inherent risk of price variation (volatility) of the securities you have dealt in, risk due to low liquidity in a particular company, risk due to more than normal difference between a person wanting to buy and another wanting to sell. The document also explains certain risk mitigation measures that can be used by you. On submitting the completed set of document the broker will scrutinize and if found everything in order will allot a code normally referred to as client code to you. You may need to furnish this code every time you want to transact. In case you have opted for Internet based account you will also be allotted a password against your login id that will be mapped to your client code. Normally you will be forced to change the password immediately on the first log in. You must take care not to part with your log in ID and password to anybody including any person from your broking office to avoid misuse of your account. Having got your client code you can share dealing or trading. However you need to ensure you have paid the requisite margin money as stipulated by your broker to place any transaction. Initially you start with placing orders in small quantity between 1 to 10 shares. Once you have understood the system in full you may gradually increase the size of your transaction. On mastering investing in equity cash segment then you may gradually look at derivative segment to gear your capital and for hedging your portfolio

12. KALU KALAN, (APRIL 2010)

101

The revolutionary boom in internet has changed the very facet of today's business world. Today, internet has made online trading a reality. Now, investors from any corner of the globe can engage in online share trading. Online trading has done away with the time and efforts earlier required for visiting a stock broker in person or visiting the stock office to review the charts for shares trading. Moreover, it has made it easy for part-time investors to trade from the comfort of their houses, as they can view and read about the current market conditions, figures at the stock exchange, the gainers and the losers, current share prices, about mutual funds, and can access a lot more information about the market of shares by just a click of the mouse. You only require a laptop or a personal computer with an internet connection. To engage in online trading, first you are required to open your Demat account along with some funds in it. You can take the guidance of a stock broker to complete the process. Choose a reputed broker to handle your share trading operations. After your account is opened, your stock broker will guide you to buy shares at the best time, and then will sell them at apt opportunity. The amount you get from selling your share will automatically get transported and credited to your account, based on the cost of your shares and profit or loss respectively. A beginner in online trading should be well equipped with the basics of share market along with some good trading tips, so that the hard earned investments don't go down the drain. In share market, lack of essential knowledge and its basics can actually have you end up incurring major losses rather than any speck of profits. Wise investment in market of shares requires careful and meticulous planning, regular scrutinizing of the market, and religious following few trading tips by experts. Do not worry while trying to step in this new field. When you have the WWW at your disposal, why worry? Just hunt down the web pages regarding information on trading tips and basics. Besides, it is also advisable to equip yourself with A-Z knowledge of the stock

102

business world. These might include news about the market, top losers, share prices, charts, etc. These tips are offered by various online trading websites and are analyzed by expert traders. These experts have studied the market sentiments, conducted technical scrutiny, studied past experiences of various companies and related regalia, and only then they do guide the visitors by sharing the right trading tips. It is advisable for beginners to register at one of the popular online platforms on online trading, so that they can benefit with updates on market conditions, get expert advices, etc.; after subscribing, you can avail all this information right in your mailbox or SMS inbox. Today, because of online trading, stock world is not restricted to professional investors only, but part time investors from different vocational backgrounds can make their luck in it, which includes housewives and retired employees too. 13. KUMAR NIRMAL (MAY 2010) When there are thousands of stocks sold in the NSE market and BSE market, selecting the right stock seems a difficult task. Not all traders are equipped with knowledge about stock market trading. In actuality, only a few sections of investors are educated about the factors that govern the markets whether it is NSE market or BSE market. This is the reason why there is a big difference in the ratio of profits and losses. Obviously the knowledgeable and those who stay updated with the latest market trends and fluctuations do reap the benefits while others incur losses. Had all investors been highly wise enough to invest, the loss factor would have hardly dominated the scenario! Again taking the services of an expert share broker also matters. Though the final buying decisions solely rest on you yet you can consider the suggestions provided by your expert share broker to stay at a competitive advantage. If you think methodical analysis is required for finding out the potential stocks to invest, you are right. And if you are a beginner, you may lack the knowledge of fundamental and technical analysis of stocks. In such a case, you can take tips from your share broker and

103

other market experts who have years of experience behind them. Now, the question is where do you get these expert tips or meet a reliable share broker online? Well, it is an online share trading platform. Gone are the days when investors relied on brokers over the phone and personally meeting them in their offices in order to take trading decisions. Today, you can avail all from the comfort of your space. Just get registered at an online share trading platform and the rest will automatically happen for you. You need not exert that much effort to search relevant information on stock market trading. So, if you are not yet a member of an online share trading pedestal, join one immediately and start reaping the benefits. The BSE market is the base of stock market trading in India as it is the BSE that laid the foundation of the Indian capital market. The BSE was originally formed as The Stock Broker Association & Native Share by 22 share brokers; it was permanently accredited by the Government of India in the year 1965. The NSE market is another significant funds generator in India, also playing a vital role in the countries capital growth saga. There are thousands of companies in both the NSE market and BSE market. Both the markets are no doubt full of risks and unless you manage your risks, it will be difficult for you to survive in the fluctuating market. Understanding the pulse of the stock market before investing matters a lot otherwise there is high chance of losing your hard earned money. Because it is not for incurring losses that you have ventured in the stock market. Proper research and analysis is a must; follow a speculative approach to reap continuous profit in stock market trading.

CHAPTER-4
104

RESEARCH METHODOLOGY

Statement of the problem: Share trading is a way for faster earning and losing money. In the recent years, a volatile market could be witnessed. In the desire to earn money in a quick manner, more and more people have ventured out into share trading. Lack of awareness of many investors has made them loose lakhs of money in the Stock Market. Wise plays by many others have made them earn in crores. At such a time, it would be interesting to know the attitude of the players and the conditions in the market. A survey about investors and share market in such a time would be educative to tomorrow’s investors. It could also lead to improvements in the condition prevailing in Chittorgarh that would facilitate increase in the share trading. Several website provide information about the stock market. They educate people about share trading and guide them through each step. On-line share trading has become so common. Still, many of them are unaware of the intricacies involved in share trading. Objective of the study: Primary objectives • • To understand the attitude of the online share traders in chittorgarh. To measure the effectiveness of broking sites in chittorgarh.

Secondary objectives • • • To conduct an enquiry among the share trading public in chittorgarh about their experience with broking sites. To suggest some improvements in these sites if need be. To understand the depth up to which the on-line share traders are clear and aware of on-line share trading.

105

Project Title

“A study on customer satisfaction towards On-line share trading with special reference to Chittorgarh” 45 Businessman (Middle and High) and Service Persons

Sample Size Sample Unit

Sampling Procedure Research Design Data Collection Method Research Instrument Area Covered

Judgment Sampling Analytical Survey Questionnaire Chittorgarh

106

CHAPTER- 4 DATA ANALYSIS AND INTERPRETATION
The data collected from the customers were systematically applied and they are presented as tables under various headings in the following pages. They are also arranged in such a way that a detailed analysis can be made so as to present suitable interpretations for the same.

107

1. Age

TABLE-1 TABLE SHOWING AGE GROUP OF RESPONDENTS

S. No.
1 2 3

Age
Below 30 years 30 – 50 years Above 50 years

No. of Respondents
23 21 1 45

Percentage
51% 47% 2% 100%

TOTAL

No. Of Respondents
60% 51% 50% 40% 30% 20% 10% 0% Below 30 years 30 – 50 years Above 50 years 2% 47%

Interpretation: The above table and graph indicates that out of the total number of respondents, 51% of the respondents were below 30 years of age, 47% of the respondents were between 30 years and 50 years and 2% of the respondents were above 50 years of age. It shows that majority of the respondents were below 30 years.

108

2. Gender

TABLE-2 TABLE SHOWING THE GENDER RATIO OF THE RESPONDENTS

S. No.
1 2

Gender
Male Female

No. of Respondents
36 9 45

Percentage
80% 20% 100%

TOTAL

No. of Respondents

20%

1 Male 2 Female

80%

Interpretation: The above table table and chart indicates that out of the total respondents, 80% of the respondents were Male and Female.

109

3. Education Qualification

TABLE-3 EDUCATION QUALIFICATION

S. No.
1 2 3 4

Qualification
School level Diploma Under graduate Post graduate

No. of Respondents
2 9 12 22 45

Percentage
4% 20% 27% 49% 100%

TOTAL

No. Of Respondents
60% 50% 40% 30% 20% 10% 0% School level 1 Diploma 2 Under graduate 3 Post graduate 4 4% 20% 27% 49%

Interpretation: The above table shows that out of 45 respondents 2 have school level education. 9 having Diploma, 12 of the under graduates and 22 of them hold Post graduate level education.

110

4. Income

TABLE-4 INCOME

S. No.
1 2 3 4

Income
Below 10,000 P.M. 10,000 – 20,000 P.M. 20,000 – 30,000 P.M. Above 30,000 P.M. TOTAL

No. of Respondents
6 23 6 10 45

Percentage
13% 51% 13% 23% 100%

No. of Respondents

52%

13%

Below 10,000

P.M.

10,000 – 20,000 P.M. 20,000 – 30,000 P.M. 22% 13% Above 30,000 P.M.

Interpretation: The above table and chart indicates that out of the total respondents, 13% of the respondents had an income below Rs. 10,000 per month, 51% of the respondents had income in the range of Rs. 10,000 and Rs. 20,000, 13% of the respondents had income in the range of the 20,000 and 30,000 and 23% of the respondents had income above Rs. 30,000

111

5. Marital Status

TABLE-5 MARITAL STATUS

S. No.
1 2

Marital Status
Married Unmarried

No. of Respondents
25 20 45

Percentage
56% 44% 100%

TOTAL

No. Of Respondents
60% 50% 40% 30% 20% 10% 0% Married Unmarried 56% 44%

Interpretation: The above table and graph indicates that most of the 56% investors are Married and 44% investors are Unmarried.

112

6. What induced you to begin on-line share trading?

TABLE-6 INDUCING FACTOR

S. No.
1 2 3

Inducing Factor
Reference by friends On-line Advertisement Financial Consultants

No. of Respondents
24 3 18 45

Percentage
53% 7% 40% 100%

TOTAL

No. Of Respondents
60% 50% 40% 30% 20% 10% 0% Reference by On-line Advertisement Financial Consultants 7% 40% 53%

Interpretation: The above table indicates that of the total respondents, 53% of the respondents were induced by Friends into On-line share trading, 7% of the respondents were induced by Online advertisements and 29% of the respondents were induced by Financial Consultants. 7. Were you doing share trading before choosing online?

113

TABLE-7

Before Choosing Online

S. No.
1 2

Before Choosing Online
Yes No

No. of Respondents
30 15 45

Percentage
67% 33% 100%

TOTAL

No.of Respondents

33% 1 Yes 2 No 67%

Interpretation: The above table and chart indicates that Out of total Respondent ,67% investors are doing share trading before choosing online and 33% investors are not doing share trading before choosing online.

8. Where do you access the internet? 114

TABLE-8 INTERNET ACCESS

S. No.
1 2 3

Internet Access Place
Home Stock broker office Browsing centre

No. of Respondents
20 24 1 45

Percentage
44% 53% 3% 100%

TOTAL

No. of Respondents

2%

44% 54%

1 Home 2 Stock broker office 3 Browsing centre

Interpretation: The above table and chart indicates that out of the total respondents, 44% of the respondents were accessing Internet for share trading at Home, 53% of the respondents were accessing Internet for share trading at the Share Broker’s office and 3% of the respondents were accessing Internet for share trading at Browsing center.

9. How often do you do on-line share trading?

115

TABLE-9 TRADING PERIODICITY

S. No.
1 2 3 4

Trading Periodicity
Daily basis Weekly basis Monthly basis Irregular TOTAL

No. of Respondents
16 4 5 20 45

Percentage
36% 9% 11% 44% 100%

No. of Respondents

36% 44%

Daily basis Weekly basis Monthly basis Irregular

9% 11%

Interpretation: The above table and chart indicates that out of the total respondents, 36% of the respondents were doing On-line share trading on a Daily basis, 9% of the respondents were doing On-line share trading on a Weekly basis, 11% of the respondents were doing On-line share trading on a Monthly basis, 44% of the respondents were doing On-line share trading on a an irregular basis. 10. Are you a professional trader? 116

TABLE-10 PROFESSIONALISM

S. No.
1 2

Professionalism
Yes No

No. of Respondents
8 37 45

Percentage
18% 82% 100%

TOTAL

No. of Respondents

18%

1 Yes 2 No

82%

Interpretation: The above table and chart indicates that out of total respondents, most of 82% investors are a professional trader and only 18% investors are not a professional trader.

11. Which site do you use for trading?

117

TABLE-11 SHARE BROKING COMPANY

S. No.
1 2 3 4 5

Share Broking Company
Anand Rathi Kotak Sec. Ltd. Arihant Capital Reliance Money Others TOTAL

No. of Respondents
2 23 5 1 14 45

Percentage
4% 51% 11% 2% 32% 100%

No. Of Respondents
60% 50% 40% 30% 20% 10% 0% Anand Rathi Kotak Sec. Ltd. Arihant Capital Reliance Money Others 4% 11% 2% 32% 51%

Interpretation: The above table and graph indicates that out of the total respondents, 4% of the respondents choose Anand rathi as their broker to do on-line share trading, 51% of the respondents choose Kotak securities Ltd. As their broker to do online share trading, 11% of the respondents choose Arihant capital as their broker to do online share trading, 2% of the respondents choose Reliance Money as their broker to do online share trading, 32% of the respondents choose other firms like Shilpa brokers, Motilal oswal, Angle broking as their broker to do online share trading. 12. Does the site guide you on on-line trading? 118

TABLE-12 GUIDING FOR TRADING

S. No.
1 2

Guiding trading
Yes No

for No. of Respondents
39 6 45

Percentage
87% 13% 100%

TOTAL

No. of Respondents

13%

1 Yes 2 No

87%

Interpretation: The above table and chart indicates that out of total respondents, most of 82% investors are a professional trader and only 18% investors are not a professional trader.

13. Is the information provided by your on-line stock broker sufficient?

119

TABLE-13 SUFFICIENCY OF INFORMATION

S. No.

SUFFICIENCY OF INFORMATION
Yes No

No. of Respondents

Percentage

1 2

33 12 45

73% 27% 100%

TOTAL

No. of Respondents

27%

1 Yes 2 No

73%

Interpretation: The above table and chart indicates that Out of total Respondent 73% investors are said that they are Satisfy with the information provide by their on-line stock broker for share trading and 27% investors are said that they are not satisfy with the information provide by their on-line stock broker for share trading.

14. If no, are you interested in getting more information?

120

TABLE-14

Getting more Information S. No.
1 2

Getting more Information
Yes No

No. of Respondents
10 2 12

Percentage
83% 17% 100%

TOTAL

No. of Respondents

17%

Yes No

83%

Interpretation: 12 investors are said that they are not satisfy with the information provide by their on-line stock broker for share trading and 83% of 12 respondents interested in getting more information, and 17% of 12 respondents not interested in getting more information.

15. How would you rate the internet and telecommunication facility in Chittorgarh?

121

TABLE-15 INFRASTRUCTURE OPINION

S. No.
1 2 3

Rating
Poor Average Good

No. of Respondents
1 30 14 45

Percentage
2% 67% 31% 100%

TOTAL

No. Of Respondents
80% 70% 60% 50% 40% 30% 20% 10% 0% Poor Average Good 2% 31% 67%

Interpretation: The above table and chart indicates that out of the total respondents, 2% of the respondents rate the Telecommunication and Internet facility in Chittorgarh city as Poor, 67% of the respondents rate the Telecommunication and Internet facility in Chittorgarh city as Average and 31% of the respondents rate the Telecommunication and Internet facility in Chittorgarh city as Good.

122

16. Does your broker site provide you with up-to-date news about IPO’s (Initial Public Offer)?
TABLE-16 NEWS AND TIPS

S. No.
1 2

NEWS AND TIPS

No. of Respondents
37 8 45

Percentage
82% 18% 100%

Yes No

TOTAL

No. of Respondents

18%

CCCC

1 Yes 2 No

82%

Interpretation: This table and chart shows that out of the total respondents only 18% investors said that the broker site provided up-to-date news about IPO’s (Initial Public Offer) and most of 82% investors said that the broker site not provided up-to-date news about IPO’s (Initial Public Offer)

123

17. How would you grade the bank associated activities of the site?

TABLE-17 BANK RELATED ACTIVITIES

S. No.
1 2 3 4

Rating
Very Good Good Average Not Satisfactory TOTAL

No. of Respondents
1 27 15 2 45

Percentage
2% 60% 34% 4% 100%

NO. Of Respondents
70% 60% 50% 40% 30% 20% 10% 0% Very Good Good Average Not Satisfactory 2% 4% 34% 60%

Interpretation: The above table and graph indicates that out of the total respondents, 2% of the respondents grade the Bank related activities of their share broking company as very Good, 60% of the respondents grade the Bank related activities of their share broking company as Good, 32% of the respondents grade the Bank related activities of their share broking company as Average and 4% of the respondents grade the Bank related activities of their share broking company as not Satisfactory. 124

18. Do you feel that there is more transparency in on-line share trading?

TABLE-18 MORE TRANSPARENCY

S. No.
1 2

More Transparency
Yes No

No. of Respondents
41 4 45

Percentage
91% 9% 100%

TOTAL

No. of Respondents

9%

Yes No

91%

Interpretation: The above table and chart that indicates that out of the total respondents 91% investors said that there is more transparency in on-line share trading.

125

19. Is the commission charged by the trading site reasonable?

TABLE-19 REASONABILITY

S. No.
1 2

Reasonable Charges
Yes No

No. of Respondents
28 17 45

Percentage
62% 38% 100%

TOTAL

No. of Respondents

38% 1 Yes 2 No 62%

Interpretation: The above table and chart that indicates that out of the total respondents, 62% investors said that commission charged by the trading site are reasonable, 38% investors said that commission charged by the trading site are not reasonable

126

20. Are you aware of T+2 method of trading?

TABLE-20 AWARNESS ABOUT T+2

S. No.
1 2

Awareness About T+2
Yes No

No. of Respondents
21 24 45

Percentage
47% 53% 100%

TOTAL

No. of Respondents

47% 53%

1 Yes 2 No

Interpretation: The above table and chart indicates that out of total respondents 53% investors are aware of T+2 method of trading and rest of no knowledge of T+2 method of trading.

127

21. Is On-line trading simple?

TABLE-21 SIMPLICITY OF TRADING

S. No.
1 2

Simplicity Of Trading
Yes No

No. of Respondents
41 4 45

Percentage
91% 9% 100%

TOTAL

No. of Respondents

9%

Yes No

91%

Interpretation: The above table and chart indicates that 91% investors are said that On-line trading is simple, 9% investors are said that On-line trading is not simple.

128

22. Do you feel that the trading volume will increase in near future?

TABLE-22 FUTURE EXPECTATIONS

S. No.
1 2

Future Expectations
Yes No

No. of Respondents
36 9 45

Percentage
80% 20% 100%

TOTAL

No. of Respondents

20%

Yes No

80%

Interpretation: The above table and chart indicates that 80% investors are think that the trading volume will increase in near future, 20% investors are think that the trading volume will not increase in near future.

129

23. Does these affect you?

TABLE-23 AFFECT OF FUTURE TRADING VOLUME

S. No.
1 2 3

Rating
Money getting blocked Delay in receiving share certificates No troubles

No. of Respondents
12 4 29 45

Percentage
27% 9% 64% 100%

TOTAL

No. Of Respondents
70% 60% 50% 40% 30% 20% 10% 0% Money getting Blocked Delay in Receiving Share Certificate No. Of 9% 27% 64%

Interpretation: The above table and chart indicates that if trading volume will increase and will not increase in near future 27% of respondents thinks that their money will be getting blocked, 9% of respondents thinks that delay in receiving share certificate and 64% of respondents thinks there should be no trouble.

130

CHAPTER- 5 FINDINGS AND CONCLUSIONS
Findings: The study has revealed the nature of the share investors, share broking firms, and investment atmosphere in chittorgarh. • • • • • • • • • • • • • • It’s good to note that the younger generation is more involved in online share trading. Men are more into this investment mode. Post graduate investors are found to be more in this study. People in the beginning of their earning life seem to be more involved in on-line share trading. Married men and women have found on-line share trading as a source for extra income. Friends have been the major inducing factor towards on-line share trading. Most of the respondents access the internet at the stock broker’s office and they access it on all business days. Only less than 1/3rd of investors are professionals. Investors show equal consideration towards the trading sites. 50% of the online share trading respondents here rates the infrastructure facility in this town as average. Majority of the respondents grade the bank associated activities of their on-line trading site as good. 44% of the online share traders are irregular. They don’t trading at all working days. Most of the respondents think that there is no trouble in near future if trading volume will be increase or not. Most of the respondents are happy with their current commission charges taken by

131

broking sites. They feel charges are reasonable. • • • • • • • 91% respondents are agreeing that online trading is simple. It founds that maximum respondents are satisfy with their broker site which provide them with up-to-date news about IPO’s (Initial Public Offer) 27% of the respondents are not satisfied with information provided by broker and among them 83% wants to getting more information. It founds that maximum respondents satisfy that broking sites guide them for online trading. It founds that 51% of respondent’s usage kotak securities ltd. as there broking site for online trading. Most of the respondents are not professional traders. 33% respondents didn’t doing share trading before choosing online?

Conclusions: The purpose of this study is well achieved. The day is not far when there would be free internet access in this city. Its delightful to not that the investors are eager to be updated about the market situation. Considering the ongoing trend in Chittorgarh city, the infrastructure for on-line share trading will improve in the city and there would be hike in volume of share trading.

132

CHAPTER- 6 SUGGESTIVE FRAMEWORK
Share trading in Chittorgarh city seems to be good. To improve the volume of share trade in Chittorgarh city, these could be implemented. a) Conducting more awareness among the public through local media. b) Training campus on the methods of on line trade could be conducted. c) Telecommunication and internet provision could be further enhanced. d) Share trading could be highlighted as a means to earn income for the commerce graduates. e) House wives could be educated in ladies club etc. f) g) h) i) j) k) l) market. Proper media should be there so that investors can get all information regarding stock Awareness should be organized. There must be some person who has their knowledge about on line trading system. Adequate margins for trading should be there minimize risk. Investors should try to minimize transaction cost in online share trading. The internet facility should be providing at free basis for online trading. Training should be provided to the investors or the ordinary public about the online market & about price fluctuations.

stock trading so that their knowledge & interest can be developed & they can invest in stock

133

BIBLIOGRAPHY
Journals & Magazines:       Books:      Gupta Amitabh.”The icfai journal of applied finance”(August 2006) .Jenks phillips, “Investing rules from masters”(2007) Gujral Ashwani, “How to make money trading with charts”(2008) Shah Khantil, “Dalal street Journal’s Stock Market Book”(August 2008) Yasaswy N.J. “Intelligent stock market investing”(2009) Newspapers:   Economic Times Business Standard www.tradersplace.in www.kotaksec.com www.scribd.com http://www.sharemarketbasics.com/ http://www.articlesnatch.com http://www.ehow.com/about_4672645_history-online-stock-trading.html http://www.chittorgarh.com/newportal/online-stock-brokers-list.asp Business World Business India Business Today Capital Market The Economic times Business Lines

Websites:       

134

ANNEXURE “A STUDY ON CUSTOMER SATISFACTION TOWARDS ON-LINE SHARE TRADING WITH SPECIAL REFERENCE TO CHITTORGARH”

Name___________________________________________________________ Contact No_____________________ Email Id___________________________

1. Age: i) Below 30 ii) 30 - 50 iii) Above 50 [ ] [ ] [ ]

2. Gender: i) Male ii) Female [ ] [ ]

3. Education Qualification: i) School level ii) Diploma [ ] iii) Under Graduate [ ] iv) Post Graduate v) Others - please specify ________________ 4. Income: [ ] [ ]

135

i) Below 10,000 ii) 10,000 - 20,000 per month iii) 20,000 – 30,000 per month iv) Above 30,000 5. Marital Status: i) Married ii) Unmarried 6. What induced you to begin on-line share trading? i) Reference by friends ii) On-line advertisements iii) Advice by financial consultants

[ [ [ [

] ] ] ]

[ ] [ ]

[ ] [ ] [ ]

7. Were you doing share trading before choosing online? i) Yes ii) No 8. Where do you access the internet? i) Home ii) Stock broker office iii) Browsing centre [ ] [ ] [ ] [ ] [ ]

9. How often do you do on-line share trading? i) Daily basis ii) Weekly basis iii) Monthly basis iv) Irregular 10. Are you a professional trader? i) Yes ii) No [ ] [ ] [ ] [ ] [ ] [ ]

136

11. Which site do you use for trading? i) Anand rathi [ ] ii) Kotak Securities Ltd. [ ] iii) Arihant Capital [ ] iv) Reliance Money [ ] v) If others, please state ______________________ 12. Does the site guide you on on-line trading? i) Yes ii) No [ ] [ ]

13. Is the information provided by your on-line stock broker sufficient? i) Yes ii) No 14. If no, are you interested in getting more information? i) Yes ii) No [ ] [ ] [ ] [ ]

15. How would you rate the internet and telecommunication facility in Chittorgarh? i) Poor ii) Average iii) Good [ ] [ ] [ ]

16. Does your broker site provide you with up-to-date news about IPO’s (Initial Public Offer)? i) Yes ii) No [ ] [ ]

17. How would you grade the bank associated activities of the site? i) Very Good ii) Good iii) Average [ ] [ ] [ ]

137

iv) Not satisfactory

[ ]

18. Do you feel that there is more transparency in on-line share trading? i) Yes ii) No [ ] [ ]

19. Is the commission charged by the trading site reasonable? i) Yes ii) No 20. Are you aware of T+2 method of trading? i) Yes ii) No 21. Is on-line trading simple? i) Yes ii) No [ ] [ ] [ ] [ ] [ ] [ ]

22. Do you feel that the trading volume will increase in near future? i) Yes ii) No 23. Does these affect you? i) Money getting blocked ii) Delay in receiving share certificates iii) No troubles [ ] [ ] [ ] [ ] [ ]

24. What are your suggestions to develop share trading in Chittorgarh? _________________________________________________________________________ _________________________________________________________________________

138

_________________________________________________________________________ _____________________________________________________________________ Date: / / 2010 Respondent’s Signature _____________________

139