A Project Report On Overview of Indian Stock Market

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A project report on overview of indian stock market
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Sir can you please mail this report to me at kumarvkship@gmail.com.I will be very thankful to
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dear sir i need to a summer internship project report h.d.f.c bank please send me a copy to
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1. Projectsformba.blogspot.com A Project Report On AN OVERVIEW OF INDIAN STOCK MARKET
Submitted in Partial fulfillment for the award of the degree MASTER IN BUSINESS
ADMINISTRATION. (Batch2008-2010)Under Guidance Of, Submitted By, (faculty in finance) Roll
Vishal Kumar at SHIPPING COMPANY-DUBAI
Chweet Anush at Student
Gauree Awasare at SHRIRAM TRANSPORT FINANCE COMPANY LIMITED
Piyush Gupta
Hemanth CRPatna, Campaign Manager at Google India Pvt. Ltd.,
Vm Praveen at Student
Vm Praveen at Student
Yogendra Dubey
bigprofit buzz, Indian stock market, NSE & BSE tips BigProfitbuzz.com at Share Group
Ashok Chowdary
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No- MBA 6th trimester ASTHA SCHOOL OF MANAGEMENT,BBSRProjectsformba.blogspot.com 1
2. Projectsformba.blogspot.com ORISSA CANDIDATE DECLARATION I solely declare that the report
titled An Overview Of Indian Stock Marketis a bonafied record of work carried by me, submitted
partial fulfillment of requirement for theaward of degree Master Of Business administration under the
guidance of(FINANCE FACULTY OF ASTHA SCHOOL
OFMANAGEMENT) This research is solely the work of me based upon questionnaire, printed material
given inbibliography. The matter embodied in this report has not been submitted for the award of
anyother degree.DatedProjectsformba.blogspot.com 2
3. Projectsformba.blogspot.com ACKNOWLEDGEMENTDissertation Report is a bridge connecting the
educational and professional use. It is the pathleading to success by shouldering responsibilities under the
careful guidance of seniors andexperienced personnel without fear and failures.It gives me immense
pleasure to take the opportunity to remember and thanks to thepersonalities who are involved with this
project work during its study stage during my days ofhard work. I feel that it is my duty to express
thanks and deep gratitude to everyone who isdirectly or indirectly associated in the completion of this
Dissertation ReportWith deep reverence, I offer my deepest regards gratitude to
who is my financefaculty and , finance faculty of Astha School Of
Management, without whomthis Report could not have been fulfilled. Astha school of
managementProjectsformba.blogspot.com 3
4. Projectsformba.blogspot.com Executive SummaryIndian securities markets have undergone many
changes during the last decade.Exponential growth in trading volumes is pushing existing trading systems
andprocesses to capacity and increasing settlement risk. With Indian market movingto a T+3 rolling
settlement cycles in line with global markets, SEBI is continuingits efforts to increase the efficiency and
transparency in Indian markets. Indeed ithas been SEBI endeavor to make the Indian markets, one of the
mostcompetitive and efficient markets of the world.Income, Savings mobilization and promotion of
investment are functions of thestock and capital markets which are a part of the organized financial
system inIndia.This Project titled An Overview of Indian stock market is an attempt tounderstand the
stock market and role played by Indian retail Brokerage Firms instock market. The objective of brokerage
firms is to help the investor to minimizethe risk involved in investment and maximize the return. Some of
the maincharacteristics of the brokerage industry include growth in e-broking; growingderivatives
market, decline in brokerage fees etc. An endeavor was also made tounderstand the role played by
Indiabulls Securities compared to its competitors inIndian retail brokerage market.The role played by
Indian retail brokerage industry is of immense significance,taking into account the health of the capital
markets and the intensity ofcompetition among the brokerage companies.Projectsformba.blogspot.com 4
5. Projectsformba.blogspot.com Table of ContentsParticularsChapter 1 Outlook on Indian Stock
market...........................Chapter 2 Overview of Indiabulls..........................................Chapter 3
Overview of Indiabulls Securities.........................Chapter 4 Financial
Analysis..................................................Chapter 5 Understanding Capital
market..............................Chapter 6 Derivatives............................................................Chapter 7
Competitors..........................................................Chapter 8 Competitive
Analysis.............................................Chapter 9 SWOT
Analysis......................................................Chapter 10 Research Methodology
Chapter 11 Findings &
Suggestions.......................................Questionnare
Conclusion
Bibliography..........................................................................Appendix...............................................................................Projectsformba.blogspot.com
5
6. Projectsformba.blogspot.comChapter 1 OUTLOOK ON INDIAN STOCK MARKET1.1
IntroductionIndian Stock Markets is one of the oldest in Asia. Its history dates back to nearly200 years
ago. The earliest records of security dealings in India are meager andobscure. The East India Company
was the dominant institution in those daysand business in its loan securities used to be transacted towards
the close of theeighteenth century.By 1830s business on corporate stocks and shares in Bank and Cotton
pressestook place in Bombay. Though the trading list was broader in 1839, there wereonly half a dozen
brokers recognized by banks and merchants during 1840 and1850. The 1850s witnessed a rapid
development of commercial enterprise andbrokerage business attracted many men into the field and by
1860 the number ofbrokers increased into 60. In 1860-61 the American Civil War broke out andcotton
supply from United States to Europe was stopped; thus, the ShareMania in India began. The number of
brokers increased to about 200 to 250.At the end of the American Civil War, the brokers who thrived out
of Civil War in1874, found a place in a street (now appropriately called as Dalal Street) wherethey would
conveniently assemble and transact business. In 1887, they formallyestablished in Bombay, the "Native
Share and Stock Brokers Association,which is alternatively known as The Stock Exchange". In 1895,
Need of financial advisors for
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Indiabulls greens property
09999684955 Panvel Mumbai
the StockExchange acquired a premise in the same street and it was inaugurated in 1899.Thus, the Stock
Exchange at Bombay was consolidated.Projectsformba.blogspot.com 6
7. Projectsformba.blogspot.comThe Indian stock market has been assigned an important place in
financing theIndian corporate sector. The principal functions of the stock markets are enabling
mobilizing resources for investment directly from the investors providing liquidity for the investors and
monitoring Disciplining company management.The two major stock exchanges in India are National
Stock Exchange (NSE)and Bombay Stock Exchange (BSE).1.2 National Stock ExchangeWith the
liberalization of the Indian economy, it was found inevitable to lift theIndian stock market trading system
on par with the international standards. Onthe basis of the recommendations of high powered Pherwani
Committee, theNational Stock Exchange was incorporated in 1992 by Industrial DevelopmentBank of
India, Industrial Credit and Investment Corporation of India, IndustrialFinance Corporation of India, all
Insurance Corporations, selected commercialbanks and others.The National Stock Exchange (NSE) is
Indias leading stock exchangecovering various cities and towns across the country. NSE was set up by
leadinginstitutions to provide a modern, fully automated screen-based trading systemwith national reach.
The Exchange has brought about unparalleled transparency,speed & efficiency, safety and market
integrity. It has set up facilities that serveas a model for the securities industry in terms of systems,
practices andprocedures.NSE has played a catalytic role in reforming the Indian securities market in
termsof microstructure, market practices and trading volumes. The market today usesstate-of-art
information technology to provide an efficient and transparentProjectsformba.blogspot.com 7
8. Projectsformba.blogspot.comtrading, clearing and settlement mechanism, and has witnessed
severalinnovations in products & services viz. demutualization of stock exchangegovernance, screen
based trading, compression of settlement cycles,dematerialization and electronic transfer of securities,
market of debt andderivative instruments and intensive use of information technology.Trading at NSE can
be classified under two broad categories: Wholesale debt market Capital marketWholesale debt market
operations are similar to money market operations -institutions and corporate bodies enter into high value
transactions in financialinstruments such as government securities, treasury bills, public sector unitbonds,
commercial paper, certificate of deposit, etc.Capital market: A market where debt or equity securities are
traded.There are two kinds of players in NSE: Trading members ParticipantsRecognized members of
NSE are called trading members who trade on behalf ofthemselves and their clients. Participants include
trading members and largeplayers like banks who take direct settlement responsibility.Trading at NSE
takes place through a fully automated screen-based tradingmechanism which adopts the principle of an
order-driven market. Tradingmembers can stay at their offices and execute the trading, since they are
linkedthrough a communication network. The prices at which the buyer and seller arewilling to transact
will appear on the screen. When the prices match theProjectsformba.blogspot.com 8
9. Projectsformba.blogspot.comtransaction will be completed and a confirmation slip will be printed at
the officeof the trading member.NSE has several advantages over the traditional trading exchanges. They
are asfollows: NSE brings an integrated stock market trading network across the nation. Investors can
trade at the same price from anywhere in the country since inter-market operations are streamlined
coupled with the countrywide access to the securities. Delays in communication, late payments and the
malpractices prevailing in the traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations, with the support of total
computerized network.NSE NiftyS&P CNX Nifty is a well diversified 50 stock index accounting for 22
sectorsof the economy. It is used for a variety of purposes such as benchmarking fundportfolios, index
based derivatives and index funds.NSE came to be owned and managed by India Index Services and
Products Ltd.(IISL), which is a joint venture between NSE and CRISIL. IISL is Indias firstspecialised
company focused upon the index as a core product. IISL have aconsulting and licensing agreement with
Standard & Poors (S&P), who are worldleaders in index services. CNX stands for CRISIL NSE Indices.
CNX ensurescommon branding of indices, to reflect the identities of both the promoters, i.e.NSE and
CRISIL. Thus, C stands for CRISIL, N stands for NSE and X stands forExchange or Index. The S&P
prefix belongs to the US-based Standard & PoorsFinancial Information
Services.Projectsformba.blogspot.com 9
10. Projectsformba.blogspot.com1.3 Bombay Stock ExchangeThe Bombay Stock Exchange is one of the
oldest stock exchanges in Asia. Itwas established as "The Native Share & Stock Brokers Association"
in1875. It is the first stock exchange in the country to obtain permanentrecognition in 1956 from the
Government of India under the Securities Contracts(Regulation) Act, 1956. The Exchanges pivotal and
pre-eminent role in thedevelopment of the Indian capital market is widely recognized and its
index,SENSEX, is tracked worldwide.SENSEXThe Stock Exchange, Mumbai (BSE) in 1986 came out
with a stock index thatsubsequently became the barometer of the Indian stock market.SENSEX is not
only scientifically designed but also based on globally acceptedconstruction and review methodology.
First compiled in 1986, SENSEX is abasket of 30 constituent stocks representing a sample of large, liquid
andrepresentative companies. The base year of SENSEX is 1978-79 and the basevalue is 100. The index
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is widely reported in both domestic and internationalmarkets through print as well as electronic mediaThe
Index was initially calculated based on the "Full Market Capitalization"methodology but was shifted to the
free-float methodology with effect fromSeptember 1, 2003. The "Free-float Market Capitalization"
methodology of indexconstruction is regarded as an industry best practice globally. All major
indexproviders like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-floatmethodology.Due to is
wide acceptance amongst the Indian investors; SENSEX is regarded tobe the pulse of the Indian stock
market. As the oldest index in the country, itprovides the time series data over a fairly long period of
time. Small wonder, theProjectsformba.blogspot.com 10
11. Projectsformba.blogspot.comSENSEX has over the years become one of the most prominent brands
in thecountry.The SENSEX captured all these events in the most judicial manner. One canidentify the
booms and busts of the Indian stock market through SENSEX.The launch of SENSEX in 1986 was later
followed up in January 1989 byintroduction of BSE National Index (Base: 1983-84 = 100). It comprised
of 100stocks listed at five major stock exchanges. The Exchange launched dollar-linkedversion of BSE-
100 index i.e. Dollex-100 on May 22, 2006.In order to fulfill the need of the market participants for still
broader, segment-specific and sector-specific indices, the Exchange has continuously beenincreasing the
range of its indices. The launch of BSE-200 Index in 1994 wasfollowed by the launch of BSE-500 Index
and 5 sectoral indices in 1999. In 2001,BSE launched the BSE-PSU Index, DOLLEX-30 and the countrys
first free-floatbased index - the BSE TECK Index. The Exchange shifted all its indices to a free-float
methodology (except BSE PSU index) in a phased manner.The values of all BSE indices are updated
every 15 seconds during the markethours and displayed through the BOLT system, BSE website and
news wireagencies.All BSE-Indices are reviewed periodically by the "Index Committee" of
theExchange.Projectsformba.blogspot.com 11
12. Projectsformba.blogspot.comChapter 2 OVERVIEW OF INDIABULLS2.1 IntroductionIndiabulls is
Indias leading Financial and Real Estate Company with a widepresence throughout India. Indiabulls
Financial Services Limited was establishedin the year 2000 by three promoters all of whom are engineers
from IndianInstitute of Technology, New Delhi, and has attracted over Rs 700 million ofinvestments
from venture capital firms, private equity funds and institutionalinvestors.History Indiabulls Financial
Services Limited was incorporated on January 10, 2000 as Orbis Infotech Private Limited at New Delhi.
The name of the Company was changed to Indiabulls Financial Services Private Limited on March 16,
2001 due to change in the main objects of our Company from Infotech business to Investment &
Financial Services business. It became a Public Limited Company on February 27, 2004 and the name
of the Company was changed to Indiabulls Financial Services Limited. Indiabulls has over 640 branches
all over India. The customers of Indiabulls are more than 4,50,000 which covers from a wide range of
financial services and products from securities, derivatives trading, depositary services, research &
advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing
finance. The company employs around 4000 Relationship managers who help the clients to satisfy
theirProjectsformba.blogspot.com 12
13. Projectsformba.blogspot.com customized financial goals. Indiabulls entered the Real Estate business
in the year 2005 with its group of companies. Indiabulls Financial Services Ltd is listed on the National
Stock Exchange, Bombay Stock Exchange and Luxembourg Stock Exchange. The market capitalization
of Indiabulls is around USD 2500 million (29th December 2006). Indiabulls and its group companies have
attracted USD 500 million of equity capital in Foreign Direct Investment (FDI) since March 2000. Some
of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity
Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.2.2 Growth of
IndiabullsYear 2000-01:One of Indias first trading platforms was set up by Indiabulls Financial
ServicesLtd. with the development of an in-house team.Year 2001-03: The service offered by Indiabulls
was increased to includeEquity, F&O, Wholesale Debt, Mutual fund, IPO Financing/Distribution and
EquityResearch.Year 2003-04: In this particular year Indiabulls ventured into Distribution
andCommodities Trading business.Projectsformba.blogspot.com 13
14. Projectsformba.blogspot.comYear 2004-05: This was one of the most important years in the history
ofIndiabulls. In this year: Indiabulls came out with its initial public offer (IPO) in September 2004.
Indiabulls started its Consumer Finance business. Indiabulls entered the Indian Real Estate market and
became the first company to bring FDI in Indian Real Estate. Indiabulls won bids for landmark
properties in Mumbai.Year 2005-06: The world renowned investment banks like Merrill Lynch
andGoldman Sachs increased their shareholding in Indiabulls. It also became amarket leader in securities
brokerage industry, with around 31% share in OnlineTrading. The worlds largest hedge fund, Farallon
Capital and its affiliatescommitted Rs. 2000 million for Indiabulls subsidiaries Viz. Indiabulls
CreditServices Ltd. and Indiabulls Housing Finance Ltd. In the same year, the SteelTycoon Mr. LN Mittal
promoted LNM India Internet venture Ltd. acquired 8.2%stake in Indiabulls Credit Services Ltd.Year
2006-07: In this year, Indiabulls Financial Services Ltd. was included inthe prestigious Morgan Stanley
Capital International Index (MSCI). The companyalso received an in principle approval from
Government of India fordevelopment of multi product SEZ in the state of
Maharashtra.Projectsformba.blogspot.com 14
15. Projectsformba.blogspot.com Diversified Business Group of Indiabulls Securities & Secured
Derivatives Financing Broking Mortgage & Financial Housing Products Finance Distribution Consumer
Financing Fig 2.1: Diversified Business Groups of Indiabulls2.3 IndiaBulls SubsidiariesIndiabulls
securities limited: business comprises of Securities & Derivativesbroking.Indiabulls Credit services
limited: business comprises of personal loans,secured and unsecured loans, and housing and auto
loans.Projectsformba.blogspot.com 15
16. Projectsformba.blogspot.comFinancial products distribution: distribution of mutual funds and
insuranceproducts.Indiabulls commodities Pvt ltd: deals with commodity brokerage businessIndiabulls
Realities limited: is into development of Real estate and mining.Indiabulls housing loans: is into mortgage
of properties and housing loanbusiness.2.4 Organizational Structure of IndiabullsThe organizational
structure of Indiabulls is Functional, which consist of severaldepartments.Functioning Online: serving
clients primarily through an Internet basedrelationship targeted towards clients who value anytime,
anywhere access andcan be serviced at low incremental costs.Functioning Offline: serving clients
primarily through an office basedrelationship targeted towards clients who value physical
interaction.Online & offline business consist of following departments Administration Operations &
Service quality Technology Finance Corporate affairs Human resources Marketing Corporate
communications LegalProjectsformba.blogspot.com 16
17. Projectsformba.blogspot.com Department based Organizational Structure: Director-Online Director-
Offline Operations Corporate Technolog Corporate HumanAdministration & Finance Communi Legal y
Affairs Resources cation Service Customer Recruitment Marketing Training Service Sr. Vice President
Regional Manager Branch Manager Relationship Manager Projectsformba.blogspot.com 17
18. Projectsformba.blogspot.comFigure 2.2 Department based organizational Structure
ofIndiabullsRegional Hierarchy of IndiabullsProjectsformba.blogspot.com 18
19. Projectsformba.blogspot.com Senior Vice President Regional Manager Branch Manager Senior Sales
Manager Support System Sales Function RM/SRMBack Office Local Compliance Executive Officer
ARM Dealer Projectsformba.blogspot.com 19
20. Projectsformba.blogspot.com Figure 2.3 Regional hierarchies of IndiabullsKey Positions Chairman
CFO & President Securities Consumer Finance Real Estate Chief Executive Executive Director Executive
Director Officer Figure 2.4 Key PositionsProjectsformba.blogspot.com 20
21. Projectsformba.blogspot.com2.5 Products and Services of IndiabullsIndiabulls offer the following
products and services in the financial markets: Stocks Options and Futures Depository Services
Commodities Insurance Products Mutual Funds Bonds and Debt ProductsServicesCommercial
Vehicle Loans:In April 2006 Indiabulls started Commercial Vehicle Finance under the flagship ofIndiabulls
Credit Services Ltd. in order to provide refinance to its commercialvehicle clients. Their fundamentals,
competent management and expertise infinancing the transporters are pretty sound. The companys
unique marketposition enables it to excel in client contentment, quick service and growth
ledprofitability.Projectsformba.blogspot.com 21
22. Projectsformba.blogspot.com.Mortgage Loans:Indiabulls Housing Finance Ltd. which is a flagship of
Indiabulls has startedlending of Mortgage Loans to prospective customers. This company enables
thehome-seekers to access finance to buy their homes. They provide different typesof loans like plot
loans, Loan against Residential, Commercial and RentalProperty, thereby enabling the borrower to
leverage the property owned to fundany genuine needs be it Business Expansion, Childs Education, Childs
Marriageor for Holiday Abroad.Consumer Finance:Indiabulls is a retail focused organization that fulfills
the credit needs of a largepercentage of population in India. The key aspect of Indiabulls business model
isto provide an extremely unique customer experience.Projectsformba.blogspot.com 22
23. Projectsformba.blogspot.comChapter 3 OVERVIEW OF INDIABULLS SECURITIES LTD3.1
IntroductionIndiabulls Securities Ltd is engaged in the business of Internet based trading andis registered
with SEBI as a stockbroker, trading and clearing member of NSE,member of BSE and as a depositary
participant with National SecuritiesDepository Limited (NSDL) and Central Depository Services (India)
Limited(CDSL). ISL is also a member of the National Securities Clearing
CorporationLimited.HistoryIndiabulls Securities Limited (ISL) was incorporated as GPF Securities
PrivateLimited on June 9, 1995.The name of the company was changed to Orbis Securities Private
Limited onDecember 15, 1995 to change the profile of the company and subsequently dueto the
conversion of the company into a public limited company; the name wasfurther changed to Orbis
Securities Limited on January 5, 2004.The name of the company was again changed to Indiabulls
Securities Limited onFebruary 16, 2004 so as to capitalize on the brand image of the term Indiabullsin
the company name. ISL is a corporate member of capital market & derivativesegment of The National
Stock Exchange of India Ltd.Projectsformba.blogspot.com 23
24. Projectsformba.blogspot.com Trading With IndiabullsThis section will introduce us about the process
and instruments used to help a customeror a client to trade with Indiabulls securities. This process is
almost similar to any othertrading firm but there will be some difference in the cost of brokerage
commission.Trading: It is a process by which a customer is given facility to buy and sell share thisbuying
and selling can only be done through some broker and this is where Indiabullshelp its customer.A
customer willing to trade with any brokerage house need to have a demat account,trading account and
saving account with a brokerage firm. Any one having followingdocument can open all the above
mentioned account and can start trading.Document Required 3 photographs ( signed across) Photo
Identification Proof - any of the following - Voter ID/Driving License/Passport. Address Proof any of
the following - Voter ID/Driving License/ Passport/ Bank statement or pass book sealed and attestation
by bank official/ BSNL landline bill. A crossed Cheque favoring India bulls Securities Ltd. of the
required amount. The amount for Demat as well as trading will be Rs. 900/-(free Demat +900 Trading
Account) the minimum amount being Rs. 900 a cheque can be given for a larger amount. Copy of PAN
Card is mandatory. Registration Kit CDSL Demat Kit Bank and address proof declaration. (Master
undertaking)Projectsformba.blogspot.com 24
25. Projectsformba.blogspot.com PAN name discrepancy form These documents may not be consumer
friendly but it is to avoid illegal transaction and to prevent black money this ensures that money invested
is accounted.3.2 Business Model & Operations of Indiabulls Securities LtdThe three distinct internal
business segments are: Online business Offline business Other SalesOnline business: serving clients
primarily through an Internet basedrelationship targeted towards clients who value anytime, anywhere
access andcan be serviced at low incremental costs. The Online sales force sells all productsand services
and follows the relationship manager model.Offline business: serving clients primarily through an office
based relationshiptargeted towards clients who value physical interaction and are typically largeraccounts.
The Offline Sales force sells all products and services and follows therelationship manager model. The
Institutional business serving clients such asmutual funds and pension funds is considered part of the
offline business due tolargely similar client servicing and channel needs as required for high net
worthclients. Indiabulls Securities Limited has established relationships with some largeinstitutional
players in India and is qualified broker for Equities, F&O and Debtmarkets for 145 such institutional
clients.Other Sales: includes insurance, research services and other
offeringsProjectsformba.blogspot.com 25
26. Projectsformba.blogspot.com3.3 Basic Requirement for doing Trading Trading requires Opening a
Demat account. Demat refers to a dematerializedaccount.You need to open a Demat account if you want
to buy or sell stocks. So it is justlike a bank account where actual money is replaced by shares. We need
toapproach the Depository Participants (DP, they are like bank branches), to openDemat account.A
depository is a place where the stocks of investors are held in electronic form.The depository has agents
who are called depository participants (DPs).Think of it like a bank. The head office where all the
technology rests and detailsof all accounts held is like the depository. And the DPs are the branches
thatcater to individuals.There are only two depositories in India The National Securities Depository
Ltd (NSDL) and the Central Depository Services Ltd (CDSL).Projectsformba.blogspot.com 26
27. Projectsformba.blogspot.com3.4 Trading Products of Indiabulls Securities Indiabulls Securities Cash
Account Intraday Account Margin Trading Fig showing 3.1 Trading Products of Indiabulls
securitiesIndiabulls Securities provide three products for trading. They are Cash account Intraday
account Margin trading (Mantra)Projectsformba.blogspot.com 27
28. Projectsformba.blogspot.comCash account provides the client to buy 4 times of cash balance in his
tradingaccount.Intraday product provides the client to buy 8 times of his cash balance in thetrading
account.Mantra account called as margin trading, is a special account to buy on leverage for alonger
durationChapter 4 FINANCIAL ANALYSIS OF INDIABULLS SECURITIES4.1 Income: Indiabulls
Securities Ltd income unit has the following componentsIncome from Online business : The contribution
of revenue from Onlinebusiness have grown from Rs. 31.85 million in FY 2002 to Rs. 242.26 million in
FY2004 and from 24.05% of total business in FY 2002 to 34.85% of business in FY2004. The rapid
growth of the online business is driven by growth in total clients,increasing product flexibility and quality,
enhanced online-only features such asportfolio analysis and updates, streaming tickers, enhanced product
offering ofPower Indiabulls. Brokerage Equities F&OIncome from Offline Business: The offline
business unit has one of the widestbranch networks in India with a pan India presence with large market
share. TheProjectsformba.blogspot.com 28
29. Projectsformba.blogspot.comrevenues have grown from Rs. 96.02 million in FY 2002 to Rs. 447.25
million inFY 2004 and have changed from 72.52% of total business in FY 2001 to 64.34%of business in
FY 2004. The rapid growth of the Offline business is driven bygrowth in total clients, increased
geographical presence. Brokerage Equities F&O Wholesale Debt MarketsBrokerage
IncomeBrokerage Income comprises revenues earned from Equities, F&O and Wholesaledebt markets on
all stock exchanges. The income from brokerage services is driven primarily by the number of active
clients. The rapid growth in total clients is driven primarily by increased geographical presence.
Equities constitute the largest portion of brokerage business. F&O brokerage is becoming an
increasingly important component of its revenues as Futures & Options trading gains more acceptance.
Wholesale Debt market is focused on institutional clients.Income from transaction and service charges
and interestincomeProjectsformba.blogspot.com 29
30. Projectsformba.blogspot.comRelated income comprises revenues earned from market related
activities such astransaction charges, service charges and interest levied on customertransactions. These
charges are dependent on trading volume, number oftransactions completed and any ledger debit amount
in the client account.Income from other Sales including Insurance, Mutual FundSales and Other
ProductsOther income comprises revenues earned from sale of third party products suchas Insurance,
Mutual Funds and new services such as Research Services.Revenues are a function of volume of mutual
funds sold, the type of fund sold(active managed equity, passive fixed income etc.) and the commissions
paid onthe funds sold.Brokerage Income of Indiabulls SecuritiesProjectsformba.blogspot.com 30
31. Projectsformba.blogspot.com Brokerage Income of Indibulls Securities of 3 Years( in Crore) 300
261.11 250 Brokerage Income 200 150 99.65 100 47.2 50 0 2004 2005 2006 Years Mar-04 Mar-05 Mar-
06 Bar Chart 4.1 Brokerage Income of Indiabulls Securities (in Crore)Segment wise Sales of Indiabulls
securities for March 2005(in Crore)Projectsformba.blogspot.com 31
32. Projectsformba.blogspot.com Segmentwise Sales of Indiabulls Securities For March 2005(in Crore)
9.88, 9% 2, 2% 1.93, 2% 0.84, 1% Brokerage Income 99.65, 86% Income From Depository Service
Income From other Financial Activity Interest Transaction ChargesPie Chart 4.2 Segment wise Sales of
IndiaBulls Securities for year 2005Segment wise Sales of Indiabulls securities for March 2006(in
Crore)Projectsformba.blogspot.com 32
33. Projectsformba.blogspot.com Segmentwise sales of Indiabulls Securities For March 2006(in Crore)
21.16, 7% 23.06, 7% 9.08, 3% 3.57, 1% 261.11, 82% Brokerage Income Income From Depository
Service Income From other Financial Activity Interest Transaction Charges4.2 Financial Ratio Analysis
of Indiabulls Securities LtdProjectsformba.blogspot.com 33
34. Projectsformba.blogspot.com Profitability ratios:Projectsformba.blogspot.com 34
35. Projectsformba.blogspot.com Indiabulls Securities Ltd. Mar 2004 Mar Mar 2006 2005 Per cent
(Non-Annualized) 12 months 12 12 months months - Margins ratios (%) - As % of operating income
PBDT 43.05 44.75 58.76 PBT 41.45 42.87 56.7 PAT 25.92 27.25 37.49 PBDT (NNRT) 43.01 44.52
58.72 PBT (NNRT) 41.41 42.63 56.66 PAT (NNRT) 25.88 27.02 37.45 - Corporate tax as per cent of
PBT 35.83 33.69 32.47 - Returns ratios (%) - As % of total assets PBDT 18.95 31.35 PBT 18.15 30.25
PAT 11.54 20 PAT (NNRT) 11.44 19.98 Operating cash flow 77.78 65.19 - As % of net worth PBDT
53.48 128.77 PBT 51.23 124.25 PAT 32.57 82.16 PAT (NNRT) 32.29 82.07 Operating cash flow
219.53 267.75 - As % of capital employed PBDT 47.39 58.11 PBT 45.39 56.06 PAT 28.86 37.07 PAT
(NNRT) 28.61 37.03 Operating cash flow 194.53 120.82 - Appropriation of profits (as % of PAT)
Dividends 3.89 19.66 0.52Projectsformba.blogspot.com 35
36. Projectsformba.blogspot.com Equity dividends 0.44 2.27 0.07 Preference dividends 3.44 17.39 0.45
Retained profits 96.11 80.34 99.48 - Dividends / net worth 6.4 0.43 Equity dividends / equity capital 3.98
0.45 Equity dividends / equity cap. & sh. 3.98 0.45 prem. Liquidity ratios: Indiabulls Securities Ltd. Mar
2004 Mar 2005 Mar 2006 Times (Non-Annualized) 12 months 12 months 12 months - Short term
liquidity - Cash / current liabilities & provisions 0.67 0.86 1.7 Quick ratio 1.6 0.86 1.89 - Medium to long
term liquidity - Current ratio 1.776 1.141 2.137 Solvency ratio 1.567 1.561 1.269 Debt equity ratio 1.237
0.848 2.056 - Interest incidence (%) 11.42 19.13 11.67 - Interest cover - PBIT / interest 3.63 4.01 5.2
PBIT (NNRT) / interest 3.63 4 5.2 Operating cash flow / interest -2.99 11.97 8.91 - (Rs. Crore) Current
assets 231.47 261.19 914.49 Current liabilities 130.34 228.86 427.87 Working capital 101.13 32.33
486.62 Net worth 83.34 108.43 181.77 Reserves & surplus 20.24 45.33
163.94Projectsformba.blogspot.com 36
37. Projectsformba.blogspot.com Asset utilization ratios Indiabulls Securities Ltd. Mar Mar 2005 Mar
2006 2004 Times (Non-Annualized) 12 12 12 months months months - Efficiency ratios - Operating
cash flow / total assets 0 0.78 0.65 Operating cash flow / gross fixed 0 17.46 14.15 assets Operating
cash flow / capital 0 1.95 1.21 employed - Operating income / total assets 0.42 0.53 Operating income /
GFA / leased 9.51 11.58 assets Operating income / capital employed 1.06 0.99 - PBDT (NNRT) / total
assets 0.19 0.31 PBDT (NNRT) / gross fixed assets 4.23 6.8 PBDT (NNRT) / capital employed 0.47
0.58 - PBT / total assets 0.18 0.3 PBT / gross fixed assets 4.05 6.56 PBT / capital employed 0.45 0.56 -
PAT / total assets 0.11 0.2 PAT / gross fixed assets 2.57 4.34 PAT / capital employed 0.29 0.374.3
Interpretation:Projectsformba.blogspot.com 37
38. Projectsformba.blogspot.comProfitability Ratios: Profitability is the net result of a number of policies
anddecisions. The ratios examined thus far provide useful clues to the effectivenessof firms
operations.Liquidity Ratios: liquidity ratios deal with firms ability to pay off its debts. Itincludes Current
ratio: The current ratio is calculated by dividing current assets by current liabilities. The current ratio of
Indiabulls securities is 1.776, 1.441, & 2.137 for year 2004, 2005 & 2006 respectively. Current ratio =
Current assets Current Liabilities Quick ratio (acid test ratio): The quick ratio is calculated by deducting
inventories from current assets and then dividing the remainder by current liabilities. The quick ratio is a
measure of the firms ability to pay-off the short-term liabilities. A large part of the firms current assets
are tied up in slow paying debts. The industry average for Acid test ratio is 2.1, but for Indiabulls
securities quick ratio is 1.6, 0.86 & 1.89 for year 2004, 2005 & 2006 respectively, which is less than
Industry average. The quick ratio should be high which indicates the companys ability to pay-off short
term obligations.Debt equity Ratio:Projectsformba.blogspot.com 38
39. Projectsformba.blogspot.comDebt equity ratio is the related contribution of creditors and owners of
thebusiness in its financing.4.4 Financial performance Year on Year (1) Increasing Market Share of
Indiabulls on NSE Trading Volumes 35 % 30.7 30 % 25 22.3 % 21.9 18.8 % 20 % 17.5 15 10 5.5 5 3.4
% % 1.1 1.9 2.2 % % 0 (1) FY200 FY200 FY200 FY200 FY200 Share in Online Share in Total(1)
Source: NSE data from NSE website (Equity Segment)Projectsformba.blogspot.com 39
40. Projectsformba.blogspot.comGraph 4.3 Market share of Indiabulls on NSE trading Volumes Market
Shares of Top Brokers on NSE (2)40% 35%35%30% 24%25% 20%20% 14%15% 12%10% 7%5%0%
Top 5 Top 10 Top 25 FY02 FY05 UNDERSTANDING CAPITAL
MARKETProjectsformba.blogspot.com 40
41. Projectsformba.blogspot.com 5.1 Project Framework An Outlook on Indian Stock Market Capital
Market Derivative SegmentIntraday Delivery Futures Options Figure 5.1 Project Framework
Projectsformba.blogspot.com 41
42. Projectsformba.blogspot.comThe Indian capital markets have witnessed a transformation over the
last decade.India now finds its place amongst some of the most sophisticated and largestmarkets of the
world. With over 20 million shareholders, India has the thirdlargest investor base in the world after the
USA and Japan. The Indian capitalmarket is significant in terms of the degree of development, volume of
tradingand its tremendous growth potential.Over the past few years, the capital markets have also
witnessed substantialreforms in regulation and supervision. Reforms, particularly the establishmentand
empowerment of SEBI, market-determined prices and allocation ofresources, screen-based nation-wide
trading, dematerialization and electronictransfer of securities, rolling settlement and derivatives trading
have greatlyimproved both the regulatory framework and efficiency of trading and settlement.5.2 Indian
Capital markets - Chronology 1994- Equity Trading commences on NSE 1995- All Trading goes
Electronic 1996- Depository comes in to existence 1999- FIIs Participation- Globalization 2000- over
80% trades in Demat form 2001- Major Stocks move to Rolling Set 2003- T+2 settlements in all
stocks 2003 - Demutualization of Exchanges5.3 Capital Market Participants Banks
ExchangesProjectsformba.blogspot.com 42
43. Projectsformba.blogspot.com Clearing Corporations Brokers Custodians Depositories
Investors Merchant Bankers5.4 Types of Investors Institutional Investors- MFs / FI / FIIs / Banks
Retail Investors Arbitrageurs / Speculators Hedgers Day traders/Jobbers5.5 Cash MarketThe Spot
Market or Cash Market is a commodities or securities market inwhich goods are sold for cash and
delivered immediately. Contracts bought andsold on these markets are immediately effective. Spot
markets can operatewherever the infrastructure exists to conduct the transaction. The Spot marketfor
most securities exists primarily on the internet. The trading in this cashmarket can be further divided into
Intraday and Delivery.5.6 Key Terms Intraday refers to buying or selling stocks today with an
obligation to sell or buy the stock on the same day. It means completing the trading cycle in the same
day. Here the stocks do not come to the Demat account.Projectsformba.blogspot.com 43
44. Projectsformba.blogspot.com Delivery refers to buying stocks today with a plan of selling it in
future. In India there is a concept of T+2 settlements. Which means a stock bought on trade day is
credited to your Demat account (or delivered) into your Demat account after 2 days. Square off-
making the position nil. Say selling off the stocks. (or buying back in case of short selling) Short
selling- selling without having the possession of the stocks (possible in intraday trade). Selling the stocks
initially and buying them back later. It is a concept used in the falling markets. Demat Account- the
account where in the shares are delivered. Every Demat account is linked to a trading account and a
savings bank account. Demat account are provided by CDSL (central depository services limited) and
NSDL (national securities depository limited). Indiabulls is a depository participant which links the
depository to the beneficial owner of the account (client). Trading pool/margin account- the place
where the stock is received after the trade, it is the brokers account called the broker pool account.
T+2= Transaction + 2 daysProjectsformba.blogspot.com 44
45. Projectsformba.blogspot.comChapter 6 DERIVATIVESBy far the most significant event in finance
during the past decade has been theextraordinary development and expansion of financial derivatives.
Theseinstruments enhance the ability to differentiate risk and allocate it to thoseinvestors most able and
willing to take it6.1 Definition:Derivatives are instruments whose value is derived, in whole or in part,
from thevalue of one or more underlying assets.History of DerivativesThe history of derivatives is
surprisingly longer than what most people think.Some texts even find the existence of the characteristics
of derivative contracts inincidents of Mahabharata. Traces of derivative contracts can even be found
inincidents that date back to the ages before Jesus Christ. However, the advent ofmodern day derivative
contracts is attributed to the need for farmers to protectthemselves from any decline in the price of their
crops due to delayed monsoon,or overproduction.Projectsformba.blogspot.com 45
46. Projectsformba.blogspot.comThe first futures contracts can be traced to the Yodoya rice market in
Osaka,Japan around 1650. These were evidently standardized contracts, which madethem much like
todays futures.The Chicago Board of Trade (CBOT), the largest derivative exchange in theworld, was
established in 1848 where forward contracts on various commoditieswere standardized around 1865.
From then on, futures contracts have remainedmore or less in the same form, as we know them
today.Derivatives have had a long presence in India. The commodity derivative markethas been
functioning in India since the nineteenth century with organized tradingin cotton through the
establishment of Cotton Trade Association in 1875. Sincethen contracts on various other commodities
have been introduced as well.Exchange traded financial derivatives were introduced in India in June 2000
atthe two major stock exchanges, NSE and BSE. There are various contractscurrently traded on these
exchanges. National Commodity & DerivativesExchange Limited (NCDEX) started its operations in
December 2003, to provide aplatform for commodities trading.The derivatives market in India has grown
exponentially, especially at NSE. StockFutures are the most highly traded contracts on NSE accounting
for around 55%of the total turnover of derivatives at NSE, as on April 13, 2005.6.2 Understanding
DerivativesProjectsformba.blogspot.com 46
47. Projectsformba.blogspot.comThe primary objectives of any investor are to maximize returns and
minimizerisks. Derivatives are contracts that originated from the need to minimize risk.The word
derivative originates from mathematics and refers to a variable, whichhas been derived from another
variable. Derivatives are so called because theyhave no value of their own. They derive their value from
the value of some otherasset, which is known as the underlying.Derivatives are specialized contracts
which signify an agreement or an option tobuy or sell the underlying asset of the derivate up to a certain
time in the futureat a prearranged price, the exercise price. The contract also has a fixed expiryperiod
mostly in the range of 3 to 12 months from the date of commencement ofthe contract. The value of the
contract depends on the expiry period and also onthe price of the underlying asset.For example, a farmer
fears that the price of soybean (underlying), when his cropis ready for delivery will be lower than his
cost of production.Lets say the cost of production is Rs 8,000 per ton. In order to overcome
thisuncertainty in the selling price of his crop, he enters into a contract (derivative)with a merchant, who
agrees to buy the crop at a certain price (exercise price),when the crop is ready in three months time
(expiry period).In this case, say the merchant agrees to buy the crop at Rs 9,000 per ton. Now,the value
of this derivative contract will increase as the price of soybeandecreases and vice-a-versa.If the selling
price of soybean goes down to Rs 7,000 per ton, the derivativecontract will be more valuable for the
farmer, and if the price of soybean goesdown to Rs 6,000, the contract becomes even more
valuable.Projectsformba.blogspot.com 47
48. Projectsformba.blogspot.comThis is because the farmer can sell the soybean he has produced at Rs
9000 perton even though the market price is much less. Thus, the value of the derivativeis dependent on
the value of the underlying.6.3 Difference between Commodity Derivative & Financial DerivativeIf the
underlying asset of the derivative contract is coffee, wheat, pepper, cotton,gold, silver, precious stone or
for that matter even weather, then the derivative isknown as a commodity derivative.If the underlying is a
financial asset like debt instruments, currency, share priceindex, equity shares, etc, the derivative is
known as a financial derivative.Derivative contracts can be standardized and traded on the stock
exchange. Suchderivatives are called exchange-traded derivatives. Or they can be customized asper the
needs of the user by negotiating with the other party involved.Such derivatives are called over-the-
counter (OTC) derivatives. Continuing withthe example of the farmer above, if he thinks that the total
production from hisland will be around 150 quintals, he can either go to a food merchant and enterinto a
derivatives contract to sell 150 quintals of soybean in three months time atRs 9,000 per ton. Or the
farmer can go to a commodities exchange, like theNational Commodity and Derivatives Exchange
Limited, and buy a standardcontract on soybean.Projectsformba.blogspot.com 48
49. Projectsformba.blogspot.comThe standard contract on soybean has a size of 100 quintals. So the
farmer willbe left with 50 quintals of soybean uncovered for price fluctuations.However, exchange traded
derivatives have some advantages like low transactioncosts and no risk of default by the other party,
which may exceed the costassociated with leaving a part of the production uncovered.In India we have
several derivatives, two of the most famous derivatives tradedon National stock exchange are Futures
Option Futures and options are traded on the NSE platform, with a normal IndiaBulls trading account the
client get the access to trade in the F&O contracts.6.4 Futures and ForwardsAs the name suggests,
futures are derivative contracts that give the holder theopportunity to buy or sell the underlying at a pre-
specified price some time in thefuture.They come in standardized form with fixed expiry time, contract
size and price.Forwards are similar contracts but customizable in terms of contract size, expirydate and
price, as per the needs of the user.6.5 OptionsProjectsformba.blogspot.com 49
50. Projectsformba.blogspot.comOption contracts give the holder the option to buy or sell the underlying
at a pre-specified price some time in the future. An option to buy the underlying is known as a Call
Option. An option to sell the underlying at a specified price in the future is known as Put Option.In the
case of an option contract, the buyer of the contract is not obligated toexercise the option contract.
Options can be traded on the stock exchange or onthe OTC market. 6.6 Futures Terminology Spot
Price: the price at which an asset trades in the spot market. Futures Price: the price at which the futures
contract trades in the futures market Contract Cycle: The period over which the contract trades. The
index futures contracts on the NSE have a one-month, two-month and three- month expiry cycles which
expire on the last Thursday of the month. On the Friday following the last Thursday, a new contract
having a three-month expiry is introduced for trading. Expiry Date-the date specified in the futures
contract. It is the last Thursday of the month Contract Size: the amount of asset that has to be delivered
less than one contract. For instance, the contract size on NSE futures market is 100 Niftiest. It is
prescribed by NSE for stocks. Each stock had a different lot size. Basis the futures price minus the
spot price. There will be a different basis for each delivery month for each contract. In a normal
market,Projectsformba.blogspot.com 50
51. Projectsformba.blogspot.com basis will be positive. This reflects that futures prices normally exceed
spot prices. Cost of Carry the storage cost plus the interest that is paid to finance the asset less the
income earned on the asset. Initial Margin the amount that must be deposited in the margin account at
the time the futures contract is first entered into. These margins are prescribed by the exchange. It varies
from stock to stock. Marking to Market the adjustment made at the end of each trading day to the
investors margin account to reflect the investors gain or loss depending upon the futures closing price.
It is the difference between todays closing price and yesterdays closing. The MTM profit /loss are
credited to the client account on day to day basis. Thus we call this a T+0 settlement. Maintenance
Margin somewhat lower than the initial margin; the balance in the margin account must never become
negative and in case it does, the investor receives a margin call that must top-up the account to the initial
margin level before trade commences the following day. Difference between Long Position & Short
Position A long position is an agreement to buy. You take a long position on a stock when you are bullish
or have a feeling that the stock will move up. LONG => BUY A short position is an agreement to sell.
You take a short position on a stock when you are bearish or have a feeling that the stock will move
down.Projectsformba.blogspot.com 51
52. Projectsformba.blogspot.com SHORT => SELL There are around 152 companies which are
underlying for future and options in NSE. There are index Futures (Nifty futures, Bank Nifty, CNX IT
futures) Stock Futures (Infosys futures. ITC futures, etc linked to specific stocks) Index options
(linked to indices) Stock option (linked to specific stocks).6.7 Option Contracts: The owner of an
option has the OPTION to buy or sellsomething at a predetermined price. Option provides the buyer of
the contractthe right but not the obligation to exercise. Right to BUY / OWN CALL OPTION Or Right
to SELL / WRITE PUT OPTION You buy a call option when you are bullish or have an upward target.
You buy a put option when you are bearish or have a downward target.6.8 Options Terminology Stock
options options on individual stocks. A contract gives the buyer the right to buy or sell shares at the
specified price Buyer of an option the one who by paying price (premium) buys the right but not the
obligation to exercise his/her option on the seller/writer Writer of an option the one who by receiving
premium, is obliged to sell/buy the asset if the buyer exercises on himProjectsformba.blogspot.com 52
53. Projectsformba.blogspot.com Call Option gives the buyer the right but not the obligation to buy an
asset by a certain date for a certain price Put Option gives the buyer the right but not the obligation to
sell an asset by a certain date for a certain price Spot Price the price at which an asset trades in the
spot market. Strike Price the target price or the expected price. Contract Cycle the period over
which the contract trades. There are three month contracts just like the futures. Expiry Date the date
specified in the option contract. It is the last Thursday of the month, just as in futures. Contract Size
the amount of asset that has to be delivered under one contract. In-The-Money Option (ITM) an
option that would lead to a positive cash-flow to the holder if it were exercised immediately. A call
option on the index is said to be ITM if the current index stands higher than the strike price (Spot Price >
Strike Price). A put option is ITM if the index is below the Strike price (Spot Price < Strike Price). At-
The-Money (ATM) an option that would lead to zero cash flows to the holder if it were exercised
immediately. Out-Of-The-Money Option (OTM) an option that would lead to a negative cash-flow to
the holder if it were exercised immediately. A call option on the index is said to be OTM if the current
index stands at a level which is less than the strike price (Spot Price < Strike
Price).Projectsformba.blogspot.com 53
54. Projectsformba.blogspot.comChapter 7 THE COMPETITORS7.1 Major Competitors of Indiabulls
Securities LtdIndiabulls Securities faces significant competition from companies seeking toattract client
financial assets, including traditional and online brokerage firms,mutual fund companies and institutional
players having wide presence and astrong brand name. They are; ICICI Securities Ltd. Kotak
Securities Ltd. India Infoline SSKI Ltd. Motilal Oswal Securities Karvy Geojit Securities HDFC
Securities7.2 India Infoline LtdProjectsformba.blogspot.com 54
55. Projectsformba.blogspot.com India Infoline Ltd is listed on both the leading stock exchanges in
India,viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE).The India Infoline
group, comprising the holding company, India Infoline Ltd andits subsidiaries, straddles the entire
financial services space with offerings rangingfrom Equity research, Equities and derivatives trading,
Commodities trading,Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits
andother small savings instruments to loan products and Investment banking. IndiaInfoline also owns and
manages the websites, www.indiainfoline.com andwww.5paisa.com .India Infoline Securities Pvt
LtdIndia Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, whichis engaged in the
businesses of Equities broking and Portfolio ManagementServices. It offers broking services in the Cash
and Derivatives segments of theNSE as well as the Cash segment of the BSE.A choice of technologically
advanced trading that is with the help of 5paisa.com.5 paisa also represents the availability of world class
service to investors at thelowest possible rate - 5 paisa for every trade of Rs100, i.e., a brokerage rate
of0.05%.Features of 5 paisa.com:Paisa sense - They offer a good value for money proposition. Their
brokeragerates are very competitive, charging only 5 paise for Rs100 of trade done, whichis 0.05%
brokerage. They offer the most reasonable rates, independent of yourProjectsformba.blogspot.com 55
56. Projectsformba.blogspot.comnet worth or volumes. In case of trades that result in delivery, they
charge anadditional 0.20% for back office and securities handling.Personalized service - At 5paisa.com,
they are committed to provide you withunparalleled service, using e-mail, call centers and support staff.
They have alsoinvested in physical infrastructure.Protection All transactions of 5paisa.com are secure
and confidential. Theorders are electronically routed via sophisticated trading systems for execution.They
follow a world class security system that enables them to protect from anyfraud or hacking.Pedigree -
5paisa.com is a brand renowned for quality of information andservices, they are professionally managed,
with a skill set which is of highstandard. Their top management has years of experience in financial
serviceswith leading banks and institutions.7.3 Sharekhan SecuritiesSharekhan was created when SSKI
Investor Services Pvt. Ltd., a company in thesecurities and equities segment decided to harness the
power of the Internet andoffer services to its customers through an online stock trading portal.
Sharekhanbrings and provides a user-friendly online trading facility. They also have anextensive all-India
ground network of franchisees across the country.Projectsformba.blogspot.com 56
57. Projectsformba.blogspot.comThe company offers its services through a combination of online and
offlinechannels. The online model comprises a portal, chat facilities, and speed tradeterminals. And the
offline model uses a combination of an IVR infrastructure anda team of customer agents to receive
orders over the telephone.7.4 Motilal OswalMotilal Oswal Securities Ltd. was founded in 1987 as a small
sub-broking unit,with just two people running the show. Motilal Oswal Securities Limited hasestablished
itself as the Best Local Brokerage House in India (Asia Money BrokersPoll 2005). Their Institutional
Equities Division combines the efforts of theResearch and Sales & Trading departments to best serve
clients needs.Consistent delivery of high quality advice on individual stocks, sector trends andinvestment
strategy has established them as a reliable research unit amongstleading Indian as well as international
investors.Their sales & trading team, comprising top equity professionals, translates theresearch findings
into actionable advice for clients, based on their specific needs.Sophisticated computerized tools are used
to understand client investment profileand objectives, which ensures proactive and timely
service.FEATURESIntegrity: A company honoring commitment with highest ethical and
businesspractices.Projectsformba.blogspot.com 57
58. Projectsformba.blogspot.comTeam Work: Attaining goals collectively and
collaboratively.Meritocracy: Performance gets differentiated, recognized and rewarded in anapolitical
environment.Passion & Attitude: High energy and self motivated with a Do It attitude.Excellence in
Execution: Time bound results within the framework of thecompanys value system.7.5 KarvyThe birth
of Karvy was on a modest scale in the year 1982. It began with thevision and enterprise of a small group
of practicing Chartered Accountants basedin Hyderabad, who founded Karvy. They started with
consulting and financialaccounting automation, and then carved inroads into the field of Registry
andShare Transfers. Karvy has built a reputation as an integrated financial servicesprovider, offering a
wide spectrum of services for over 20 years.In 1982, a group of Hyderabad-based practicing Chartered
Accountants startedKarvy Consultants Limited with a capital of Rs.150, 000 offering auditing andtaxation
services initially. Later, it forayed into the Registrar and Share Transferactivities and subsequently into
financial services.Karvy made inroads into a host of capital-market services, - corporate and retail -which
proved to be a sound business synergy. In January 1998, Karvy becamethe first Depository Participant in
Andhra Pradesh.Projectsformba.blogspot.com 58
59. Projectsformba.blogspot.comKarvy Securities LimitedDeals in distribution of various investment
products, viz., equities, mutual funds,bonds and debentures, fixed deposits, insurance policies for the
investor.7.6 Kotak SecuritiesKotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the
stockbroking and distribution arm of the Kotak Mahindra Group. Kotak Mahindra is oneof Indias leading
financial institutions, offering complete financial solutions thatencompass every sphere of life. From
commercial banking, to stock broking, tomutual funds, to life insurance, to investment banking, the
group caters to thefinancial needs of individuals and corporate.Kotak Securities was set up in 1994.
Kotak Securities is a corporate member ofboth The Bombay Stock Exchange and the National Stock
Exchange of IndiaLimited.Its operations include stock broking and distribution of various financial
products- including private and secondary placement of debt and equity and mutualfunds. Currently,
Kotak Securities is one of the largest broking houses in Indiawith wide geographical reach. The company
has four main areas of business: Institutional Equities, Retail (equities and other financial products),
Portfolio Management and Depository Services.Kotak Securities Ltd is also a depository participant with
National SecuritiesDepository Limited (NSDL) and Central Depository Services Limited
(CDSL),Projectsformba.blogspot.com 59
60. Projectsformba.blogspot.comproviding dual benefit services wherein the investors can use the
brokerageservices of the company for executing the transactions and the depositoryservices for settling
them.Kotak Securities has 195 branches servicing more than 2, 20,000 customers andcoverage of 231
Cities. Kotaksecurities.com, the online division of KotakSecurities Limited offers Internet Broking
services and also online IPO and MutualFund Investments.Features of Kotak Securities AKSESS Kotak
securities Electronic Search Service: AKSESS offers you an easy way to get to Kotak Securities
institutional research. On this online archive you will be able to access estimates, company reports,
sector reports, strategy reports and a bunch of other products including the daily India Market Flash
produced by Kotak Securities. High Quality of software (KEAT): K.E.A.T is special software that
Koataksecurities.com provides its customers using which they can view live market rates of scrips on
both the NSE and BSE. Research Reports: Kotak Securities provide Different reports to investors which
include Intraday calls Daily Technical View Daily Morning Brief Weekly Technical Report Sectoral
Reports Stock Ideas Derivative Reports SMS Alerts: Kotak Securities also provides SMS alerts to
customers providing useful tips about stocks & shares.Projectsformba.blogspot.com 60
61. Projectsformba.blogspot.com7.7 ICICI SECURITIESICICI Securities, A subsidiary of ICICI Bank,
was set up in February 1993 toprovide investment-banking services to investors in India. As on date
ICICI Bankholds 99.9% of the share capital of ICICI Securities.ICICI Securities Limited is Indias
leading full service investment bank with adominant position in all segments of its operations
Corporate Finance Fixed Income and Equities.Features of ICICI securities ICICI provides multiple
channels in banking like,which is unique feature. Internet Banking Mobile Banking ATM banking
Phone Banking ICICI Securities is amongst the largest arranger of funds in Debt and Equity segments
and also amongst the leading advisors in Mergers and Acquisitions.Projectsformba.blogspot.com 61
62. Projectsformba.blogspot.comChapter 8 COMPETITIVE ANALYSIS FOR INDIABULLS
SECURITIES8.1 Indian Retail Brokerage MarketThe Indian retail brokerage industry consists of
companies that primarily act asagents for the buying and selling of securities (e.g. stocks, shares, and
similarfinancial instruments) on a commission or transaction fee basis.It has two main interdependent
segments: Primary market and theSecondary market. Indian Retail Brokerage Market Interdepende
ntProjectsformba.blogspot.com 62 Segments
63. Projectsformba.blogspot.com Primary Market Secondary Market Figure 8.1 Interdependent
Segments of Brokerage MarketObjective: The main objective is to Analyze retail brokerage industry
taking into account the health of the capital markets, Derivative Market and the intensity of competition
among the brokerage companies. Doing Competitive Analysis for Indiabulls 8.2 Major growth drivers
for brokerage revenue and trading volume are: Continuous fall in brokerage fees Adoption of
technology screen-based trading, electronic matching, and paperless securities. Centralized
operations, effective risk management, and control on large interconnected operations spanning multiple
locations, which is enabled by telecom connectivity and low costs Increasing access to capital and the
ability to provide margin financeProjectsformba.blogspot.com 63
64. Projectsformba.blogspot.com8.3 Parameter Assessment for Doing Competitive analysisA
differentiating aspect is a comparative assessment of the top retail brokerageson various value indicators,
comprising of Product Pricing Service Competitive analysis Product Price Service Value Proposition
Unique Value proposition.Projectsformba.blogspot.com 64
65. Projectsformba.blogspot.com8.4 Customers need to analyze the Brokerage Firms Based on these
5Parameters. Brokerage & Miscellaneous charges Quote Software Execution Platform Demat
Account, and finally Back office Support.Brokerage & Miscellaneous charges: This accounts for all the
charges thatyou incur for your trading/investing. A few examples would be: Demat Accountmaintenance,
Brokerage, Annual account Fee, Telephone based trading charges,trading software usage charges,
etc.Quote Software: This is used mainly for technical study and for live quotes.Many people dont
evaluate quote software. Some Investors dont pay attentionto the quality of data (how accurate it is). Or
how fast and often it refreshes.Does it allow us to back test our strategy? Does it allow customizing
technicalsignals/parameters?? Does it allow us to see historic data? For, what period
isProjectsformba.blogspot.com 65
66. Projectsformba.blogspot.comintra day data available? They might need all this information. They
should beclear on what they need and ensure quote software provides it all.Execution Platform: Its
nothing but a platform that allows us to execute ourtrade fast. It should automate trade management and
execution, and shouldautomatically give protection against human errors.Demat Account: Demat account
should only be opened with a well known andestablished brokerage firm in the market.Back office
Support: People while trading face lots of problem because of lackof good back office support.
Relationship Managers trading without their clientsknowledge, funds not being transferred, trades not
being executed, slowexecution etc are a few examples. 8.5 Brokerage Charges Intraday Brokerage
charges of the Competitors of Indiabulls Securities LtdProjectsformba.blogspot.com 66
67. Projectsformba.blogspot.com Intraday Brokerage Charges 0.3 0.25 0.25 0.2 Charges 0.15 0.1 0.1
0.1 0.1 0.1 0.05 0.05 0.05 0 Indiabulls Kotak India-infoline ICICI direct Karvy Motilal Sharekhan
Securities oswal Financial Brokerage Firms Indiabulls Kotak Securities India-infoline ICICI direct Karvy
Motilal oswal Sharekhan Graph 8.2 Intraday Brokerage Charges Delivery Brokerage charges of the
Competitors of Indiabulls Securities LtdProjectsformba.blogspot.com 67
68. Projectsformba.blogspot.com Delievery Brokerage Charges 0.8 0.75 0.7 0.6 0.5 0.5 0.5 0.5 0.5 0.5
0.45Charges 0.4 0.3 0.2 0.1 0 Indiabulls Kotak India- ICICI Direct Karvy Motilal oswal Sharekhan
Securities infoline Financial Brokerage Firms Indiabulls Kotak Securities India-infoline ICICI Direct Karvy
Motilal oswal Sharekhan Graph 8.3 Delivery Brokerage Charges 8.6 Analyzing the Blogs from Web Site
Traderji.com (online community for Indian Investors & Traders) Projectsformba.blogspot.com 68
69. Projectsformba.blogspot.comWe were interpreting the blogs written by customers, their experiences
and theirreview on brokerage firms.In this web site they have conducted opinion poll on broker
preferences ofcustomers & reasons for choosing the particular brokerage firm. In this pollopinion,
customers have shared their viewpoint about pros & cons of differentbrokerage firms.Experiences of
CustomersPoll OptionsWhich online broker u prefer and why - chose one5paiseShareKhanMotilal
OswalICICI DirectHDFCIndia BullsKotakAny other (mention name)View Poll Results Poll Results of
Blogs: Total Number of Voters =457 Which Online Broker You Prefer? Poll Results of Blog(Voters 457)
Any other Mention, India-Infoline(5paisa), (58), 13% (68), 15% Kotak, (34), 7% Sharekhan, (83), 18%
Indiabulls, (75), 16% Motilal Oswal, (16), 4% ICICI direct, (109), 24% HDFC, (14),
3%Projectsformba.blogspot.com 69 India-Infoline(5paisa) Sharekhan Motilal Oswal ICICI direct HDFC
Indiabulls Kotak Any other Mention
70. Projectsformba.blogspot.com Pie chart 8.4 showing Poll results8.7 Competitive Strength of
Indiabulls SecuritiesIndiabulls securities Ltd have a distinct set of competitive advantages that makeit
uniquely capable of winning in the marketplace against its competitors Diverse Branch Network
Bouquet of financial products and services Advanced technology team that delivers market leading
product innovation Strong sales and marketing teams with continuous reinvestment and training
Strong cross-selling opportunities. Strong and experienced promoters Leading product innovation and
marketing strategies Well capitalized player, with strong banking relationships and credit ratings Ability
to combine people and technology in unique ways Strong market presence and increased market share
leading to a virtuous cycle of growth and Profitability.Core pillars of Business strategy Increase the
number of Client Relationships. Offer Diversified Financial Products & Services. Multiple Channels
Enhance Customer Experience and Opportunities. Low cost and highly scalable business.Merits of
Indiabulls Securities Low brokerage charges (Competitive) with 0.10 for Intra-day and 0.50 % for
delivery.Projectsformba.blogspot.com 70
71. Projectsformba.blogspot.com Indiabulls securities provide 8 times margin for Intra-day and 4 times
margin for delivery. Indiabulls is suitable for both Day trading & Long term investment IndiaBulls has
software called Power IndiaBulls. It is a Java based application, with real-time streaming quotes. It is fast
in terms of speed and execution Research reports are free of cost to trading members. They Provide 3
in 1 interface, i.e. Demat Account, Trading account & bank account all are linked in one interface.De-
Merits of Indiabulls Securities You have to open a bank account with the banks mentioned in Indiabulls
site for Credit/ Debit Facility as they dont have their own bank. And In ICICI direct , you have a direct
debit/credit facility with the bank Most customers feel that it is difficult to understand the ledger reports
of Indiabulls securities, so proper customer guidance should be given. Lack of Banking arm Rural
market is yet to be tapped. More importance should be given to promotions & advertisements.Value
Proposition of Indiabulls Securities ISL provide a very good Trading tools like Power Indiabulls &
Indiabulls market trader. Power Indiabulls: A desktop Trading application offering clients sophisticated
trading tools accessible at lightning fast speed.Projectsformba.blogspot.com 71
72. Projectsformba.blogspot.com Indiabulls Market Trader: Browser based trading application built for
retail investor. Indiabulls Equity Analysis: Premium research on 400 plus companies. Indiabulls
Professional Network: Offers real-time prices, detailed data and news, intelligent analytics and electronic
trading capabilities. Relationship manager: Indiabulls securities robust technology is integrated with
knowledgeable and customer-focused relationship managers who are available 24X7 to assist the clients.
In Depth Market Analysis and Research Their special research cell bring you intensive research reports
on how the stock market is faring, when is the right time to invest, when to execute your order and
more. Depending on what kind of investor you are, they bring you fundamental or basic research and
technical research. 8.8 Number of Branches of Competitors compared with Indiabulls securities
Branches of Competitors of Indiabulls as per the Year 2005-06 800 750 Number of Branches 700 667
600 500 500 400 400 306 257 300 250 200 100 0 Kotak Indiabulls ICICI Sharekhan India- Motilal-
Karvy Infoline oswal Competitors Kotak Indiabulls ICICI Sharekhan India-Infoline Motilal-oswal
KarvyProjectsformba.blogspot.com 72
73. Projectsformba.blogspot.com Number of Customers of competitors compared with Indiabulls
Number of Customers Using Online Trading Terminal as per Year 2005 800,000 Number of Customers
using Online Trading 675,000 700,000 600,000 500,000 400,000 Terminal 300,000 140,000 200,000
75,000 60,000 90,000 100,000 0 es es e s es lin ie iti i rit i rit rit fo ur cu cu cu In ec Se a- Se Se Is di IC
ak l ls n In ha IC t u Ko ab ek di ar In Sh Brokerage Firms8.9 Merits & De-merits of CompetitorsICICI
securities: It provides products & services in fixed income, equity &corporate finance.Merits of ICICI
Securities ICICI Direct is considered best for long term investment.( Indiabulls is suitable for both Day
trading & Long term investment) A direct debit/credit facility with the bank. All facilities available
under one umbrella. BTST (Buy today & sell tomorrow) is available; this facility is available only in
ICICI Direct. Can apply for IPO online (we cant do this in Indiabulls).Projectsformba.blogspot.com 73
74. Projectsformba.blogspot.com Can apply for mutual funds online and can also sell them online.
Internet banking demo which gives customers an opportunity to learn.De-Merits of ICICI Securities
Brokerage charges are high - intraday 0.3% and 0.75% delivery compared to other brokerage firms (is
considered as highest in the market). Day trading is a night mare in ICICI because of Web based
terminal, which is very slow. Orders placed at or around 10.00 hrs may be queued for a while. So intra-
day Margin trading could be annoying now & then. Its not much of a hassle for Cash trading though.
(Indiabulls offers you a trading terminal powerIndiabulls, which is java based software. It is fast in terms
of speed and execution). ICICI Direct brokerages are not negotiable ( Where as Indiabulls Brokerage
Charges are negotiable) While opening Demat account, three accounts are opened ,the saving bank
account, trading account and Demat account and you have to maintain minimum of rs5000 in case if it is
not a salaried account. (That Rs5000 sleeps without earning any money) Other banks account cannot
be linked with the ICICI trading account. They charge an annual maintenance charges are Rs540.Value
Proposition of ICICI Securities E-Instructions: You can transfer securities 24 hours a day, 7 days a
week through Internet & Interactive Voice Response (IVR) at a lower cost. Now with "Speak to
transfer", you can also transfer or pledge instructions through our customer care
officer.Projectsformba.blogspot.com 74
75. Projectsformba.blogspot.com Mobile Request: Access your Demat account by sending SMS to
enquire about Holdings, Transactions, Bill & ISIN details. The equities research team tracks over 15 key
sectors of the Indian economy and publishes in-depth research reports every year. The equities team at
ICICI Securities comprises of research desk, sales desk and the trading desks.ShareKhanMerits of
ShareKhan Securities Low brokerage charges, intraday 0.1% and 0.5% for delivery. Live streaming
quotes Customer support is good No monthly charges Can trade in both BSE and NSEDe-Merits of
ShareKhan SecuritiesNo BTST (buy today sell tomorrow), in ShareKhan you cant sell a share
todaywhich you bought yesterday. You have to open a bank account with the banks mentioned in
ShareKhan site. Streaming quotes requires JVM (Java Virtual Machine); this may be big headache for
customers. Annual charges are Rs330. Their trading terminals are certainly not for "investors", only
for active traders. That is because, you have to trade a certain volume every month, otherwise you end
up paying a fine Comparing ShareKhan & ICICI DirectProjectsformba.blogspot.com 75
76. Projectsformba.blogspot.com Sharekhan ICICI Securities Live Streaming quotes No live streaming
quotes but streaming quotes require JVM No BTST facility BTST facility is available (Buy today sell
tomorrow) Annual Maintenance charge Rs 330 Annual Maintenance charge Rs 540 You have to open a
bank account other banks account cannot be With the banks mentioned in ShareKhan linked with ICICI
trading accountsite Can apply IPO online Can apply IPO online Not necessary while opening a Demat
account you Need to maintain a minimum of Rs 5000 Can trade in BSE & NSE Can Trade in BSE & NSE
No Monthly Charges No Monthly Charges Cannot apply can apply mutual funds onlineIndia
InfolineMerits of India Infoline (5 Paisa.com) SecuritiesProjectsformba.blogspot.com 76
77. Projectsformba.blogspot.com Low brokerage charges, intraday 0.10% and 0.50% for delivery and
it is negotiable. Minimum brokerage per share will be 1 paisa for trading transactions and 5 paisa for
delivery based transactions. 5 paisa provides 6 times margin for Intraday & 8 times margin for
Delivery. All customers will get Digital Contract Notes. Physical contract notes could be provided on
request which would entail a nominal charge.De- Merits of India Infoline (5 Paisa.com) Securities
Registration Fees (one time) Rs.500/ and is non-refundable. Software License Fee Rs.799/- per month
or 7999/- per annum and is non- refundable. There is lot of Hidden costs. Annual Service Charges
Rs.250. Customers who just want to have a depository relationship will be required to pay Rs.1000/-,
for each Demat account, which will be adjusted against service charges. The information in their web
based terminal is too much compressed in one screen. Trader terminal is good, but the interface is too
complicatedKotak SecuritiesMerits They provide streaming quote software free. Low Brokerage
charges with 0.05% for Intra-day & 0.45% for delivery. Kotak Securities will offer small-time retail
investors with invest able surpluses as low as Rs.5, 000 a chance to invest in capital
markets.Projectsformba.blogspot.com 77
78. Projectsformba.blogspot.com Transactions are transparent with effective back office support.
They provide Simple Ledger reports, which customers feel easy to understand than any other brokerage
firms. Mutual fund & IPO facility is available online. Flexibility of products - Once you invest with
Kotak Securities, you can enjoy access to a wide range of products and services to help you make the
most of your investments.De-Merits Unethical act: Geojit Securities Ltd has accused kotak securities
stock broking firm of hacking into its account to steal critical business information and blocking
information access. (Report: dated 2002, Ref: www.domain-b.com). Some investors have bad
experience with accounts opening & they complain that it takes a long time for opening accounts. Some
customers are not happy with customer care of Kotak securities.Value Proposition of Kotak Securities
Kotak Securities have a definite policy on brokerage, and they have different slabs for different clients
based on their turnover. You can always choose your brokerage based on your style and quantum of
trading.Projectsformba.blogspot.com 78
79. Projectsformba.blogspot.com High Quality of software (KEAT) K.E.A.T is a special software that
Koataksecurities.com provides its customers using which they can view live market rates of scrips on
both the NSE and BSE, create a watch list and simultaneously place orders, view order reports, research
companies etc. It is a complete online trading terminal. Mobile trading The facility is exclusively
designed to give you instant access to the stock market through mobile phone. Phone Trading Call
and Trade Call & Trade is a service offered by Kotak Securities for its customers, which provides
customers with a facility to trade over the phone. Kotak Securities provides you a toll free number that
you can call from anywhere in India.Chapter 9 SWOT ANALYSIS OF INDIABULLS
SECURITIESProjectsformba.blogspot.com 79
80. Projectsformba.blogspot.com9.1 STRENGTHS Integrated technology platform: - Since the launch
of their website, www.indiabulls.com their online trading platform, they have invested in building a
technology platform. They have also developed software called power Indiabulls. Their trader terminal
is an application which allows customers to trade on both the BSE and the NSE, has features like live
intra-day tick by tick charts, historical charts, price alerts and other features. The features allow them to
seamlessly integrate across delivery channels, online or offline through branches or telephone. Pan India
distribution network: - They have 640 branches across India. These branches help in customer
acquisition as well as customer service. Their distribution network is well spread to capture the target
audience and cater to the needs of their potential customers. Relationship manager facility: - This is one
of the unique services that Indiabulls offers its customers. Every customer is provided with a
relationship manager, where in the customers can contact these managers at anytime of the day to get
information on the market or get their queries clarified. Growth rate: - The Company is growing at a
very rapid rate, from 25 branches in the year 2003 it has grown to 650 branches in the beginning of
2007. Not only has it seen a fast growth rate in the number of branches but also it has grown in the
number of clients and the employee strength. They have a customer base of more than 450,000 and over
4500 relationship managers. Indiabulls has been rated as the Fastest Growing Large Cap Company in
India in a report by Business Today magazine in April, 2006. Power Indiabulls has developed into
brands: - Indiabulls.com and power Indiabulls which is their software are well known brands amongst
retail investors across India. In all the cities that they have expanded into,Projectsformba.blogspot.com
80
81. Projectsformba.blogspot.com they have been able to leverage upon brand awareness and have
established a customer base. Strong sales and marketing teams that deliver market leading product
innovation: - their relationship manager channel offers a single point contact to all their retail customers.
These managers offer personalized services to their customers and help to build strong and continuing
relationships with them. The marketing associates help the company in client acquisition at minimal cost
and they also help the company and its subsidiaries in increasing their penetration into smaller towns and
cities. Strong banking relations and credit ratings: - Indiabulls has banking relation with some of the
major banking institutions in the country such as HDFC Bank, ICICI Bank, Standard Chartered Bank, etc,
for easy mobilization of funds of the customers. Strong market presence and increased market share: -
Their growing client base and market share have increased their market presence and brand recognition
has enhanced their profitability. Their brand and profitability allows them to recruit good and efficient
employees, compensate them attractively and provides the flexibility for them to invest in the business
and technology systems these attributes in turn has a positive effect on the growth of the company.9.2
WEAKNESSES Lack of a banking arm: - Indiabulls does not have a banking arm of its own which
otherwise would have helped the company to a large extent.Projectsformba.blogspot.com 81
82. Projectsformba.blogspot.com Whereas a few of its competitors like HDFC securities, ICICI
securities, Kotak securities, etc have their own banking arms which make the transactions easier and
simpler. Loss of relationship managers leads to loss of clients: - Their business is dependent on the team
of relationship managers who directly manage client relationships. Any events that harm these
relationships including the loss of their relationship managers may lead to the loss of client.9.3
OPPORTUNITIES Changing demographics with higher disposable income: - India is one of the fastest
growing economies in the world. It has a large and rapidly growing middle class of 300 million people
with increasing levels of discretionary income available for consumption and investment purposes. The
options they have for investments are fixed deposits, post office deposits etc,. This gives them a limited
interest rate on their investment; where as the stock market provides a good scope for making good
returns. The evolution in Indias demographic setup with a median age of 24 years and higher
consumption expenditure is expected to have a virtuous cycle effect by improving the economic growth
and per capita income which would result in higher savings and investments. Rapid penetration of
internet and computers: -Technology is vastly used in stock market trading. Now, with the use of the
computers and internet the stock market trading has become fast. The traders can
placeProjectsformba.blogspot.com 82
83. Projectsformba.blogspot.com orders through the internet and execute them. This saves the time of
the investors, who earlier had to make calls to their brokers in order to trade. These people are willing to
use advanced communication tools, such as computers and telephones, and want to take charge of their
personal investment decisions. The use of technology is influencing more people to invest in the stock
market. Market size and Characteristics: -India is a large and growing economy with rapidly expanding
financial services sector. The sector has witnessed a transformation over the last decade as a result of
the economic liberalization which started in 1991. India is the worlds 12th largest economy in dollar
terms and the 4th largest in PPP terms. The projected growth rate of real GDP is greater than 9% per
annum with higher growth in many sectors such as financial services. Indian financial sector presents a
huge retail finance opportunity. As a result of falling interest rates, bank deposits, other traditional
investment opportunities are losing their attraction. Thus, Indian investors are getting attracted towards
alternate investments such as the equity markets and are looking for newer financial products.
Diversified business model: -Our Company and our subsidiaries offer various financial services and
products ranging from equity, F & O and wholesale debt, insurance and IPO distribution, depository
services to cater to the specific needs of the retail and institutional investors thus providing all these
services in a single platform. Thus Indiabulls is not dependent on any single of its subsidiary for survival
and failure of any one subsidiary will not have an adverse effect on the company as a whole.9.4
THREATSProjectsformba.blogspot.com 83
84. Projectsformba.blogspot.com Economic slowdown: - Terrorist attacks and other acts of violence or
war, including those involving India or other countries could adversely affect national economy or world
economy as a whole. Such act may also result in a loss of business confidence. Travel restrictions as a
result of such incidents may have adverse affect on the ability to operate effectively. This will result in an
economic slowdown (example: the 9/11 attack on the World Trade Centre, New York). Political
instability in the country: - The government of India has pursued the policy of economic liberalization,
including relaxing restriction on the private sector. With the change in government, there is no assurance
that these liberalization polices will continue in the future. Any political instability could delay the
economic reforms and could have adverse effect on the market. Volatile movement in market indices: -
The Indian stock market is very volatile in nature and is capable of shedding or gaining several points in a
single day. Unless and until the market stabilizes the investors will be very hesitant to invest in the market.
Stock market falls will have a cascading effect on the investors and economy of the country.
Competition: - Indiabulls faces significant competition from companies seeking to attract clients financial
assets, including traditional and online brokerage firms, mutual fund companies, etc, which are having a
wide presence and strong brand name. As the company enters new markets their bound to face additional
competition from those who have longer operating history have grater retail and brand presence than
Indiabulls. If the company is unable to manage its business it might impede their competitive position and
their profitability.Projectsformba.blogspot.com 84
85. Projectsformba.blogspot.com Substitutes: - Various alternative forms of investment including fixed
deposits with banks and post offices etc act as substitutes to retail broking products and services. The
stock market is very unpredictable with fluctuations; this may prompt many people to invest in fixed
deposits, posy office deposits, etc in order to avoid risk. Low product differentiation: - The retail
broking services provided by the various companies are homogeneous with very low product
differentiation. This does not allow the company to freely fix their prices due to the threat of competition,
which in turn reduces their profit.CHAPTER 10 RESEARCH
METHODOLOGYProjectsformba.blogspot.com 85
86. Projectsformba.blogspot.com Research in common paralance refers to a search for knowledge. One
canalso define research as a scientific and systematic search for pertinentinformation on a specific topic.
Research is an art of investigation. The AdvanceLearners Dictionary of Current English lays down the
meaning of research as acareful investigation or inquiry especially through search for new facts in
anybranch of knowledge . Some people consider research as a movement, amovement from known to
unknown .it is actually a voyage of discovery Research methodology mean whats method apply to do
any type ofresearch and. how can you collect the data from the field. Before conducting anytype of
research and analysis and inference based on it, the first and the foremostthing is to collected the date
and after the proceeding in a systematic manner tofinally reach at result. There are the various steps to be
followed such as: What should be the sample size? From where it can be taken? Compilation of
data Presentation of data Analysis and presentation of data Making inferenceResearch can be
conducted by researcher by:-1. UNDERSTANDING THE ORGANIZATION:An in depth study of the
Organizations working was done. The motive was toknow the working of the Organization and why
INDIA BULLS is considered asnumber one. Current status of the competitors is considered as to analyse
theircompetitive situation.2. DEVELOP A SURVEY QUESTIONNAIRE:Projectsformba.blogspot.com 86
87. Projectsformba.blogspot.comA questionnaire was developed to understand the comfort and
investment level ofcustomer in any Security and stock Market and his preference with theOrganization.
To know the areas where INDIA BULLS lack so that theOrganization can improve upon its weak areas
and be able to extract bestbusiness.3. CONDUCT SURVEY:After finalizing the sample, who may be old
or new, meetings were scheduled andsurvey conducted. We contacted the Customers, fixed appointment
with themand collected data. Data obtained was then analyzed.4. ANALYSIS AND INTERPRETATION
OF INFORMATIONThe collected data should be properly analysed ,so that some fruitful informationcan
be yield out of it. The data must then be interpreted in a manner that theanalysis may be easily presented
before anyone and easy to understand.TYPES OF RESEARCH:-1. Descriptive and Analytical Research:-
Projectsformba.blogspot.com 87
88. Projectsformba.blogspot.com Descriptive research include survey and fact finding enquiriesof
different kinds. In analytical research, the research has to use facts orinformation already available, and
analyze these to make a critical evaluation ofthe material.2. Applied and fundamental Research:- Applied
research aim at finding a solution for an immediateproblem facing a society or an industrial /business
organization. Fundamental research is mainly concerned withgeneralizations and with the formulation of a
theory.3. Quantitative and Qualitative Research:- Quantitative research is based on the measurement
ofquantity or amount. Qualitative research is concerned with qualitativephenomenon, i.e., phenomena
relating to or involving quality or kind.4. Conceptual and Empirical Research:- Conceptual research is
used by the philosophers and thinkersto develop new concepts or to reinterpret existing ones. Empirical
research relies on experience or observation alone,often without due regards for system and theory. The
type of research adopted to perform the project work is DescriptiveResearch as the information is
collected through survey by questionnaire, withoutgiving regards to any theory and concepts. The need
of primary informationrequired for the project topic can be done through Descriptive Research.
TheProjectsformba.blogspot.com 88
89. Projectsformba.blogspot.comfacts and information was surveyed and various fact finding enquiries
of differentkinds. The description of current state of affairs in the current situation of thestock market
may be analysed. The comparison of INDIA BULLS and other stock market companiesdepends on the
customers investment criteria and not in the hands of thecompany itself. The performance of share
market do not depends on thecompanies wish to earn profit, but the investors wish to invest in share
marketand to earn profits. The secondary information required to support the project topic findings
isbeing colleted through Analytical Research, in which the researcher has to usefacts and information
already available, and analyse these to make a criticalevaluation of the material. In analytical research, the
research has to use facts orinformation already available, and analyze these to make a critical evaluation
ofthe material. The data colleted to conduct this type of research has been prepared fromMagazines ,
newspaper annual and weekly issues, books on stock exchanges.Websites:-Bombay Stock Exchange"
Bseindia. 20 Mar. 2007 <http://www.bseindia.com>.Projectsformba.blogspot.com 89
90. Projectsformba.blogspot.com" Indiabulls Securities Indiabulls.Com. 15 Mar. 2007
<http://www.Indiabulls.com>."National Stock Exchange nseindia. 25 Mar. 2007
<http://www.nseindia.com>."Share khan Securities Sharekhan.Com. 25 Mar. 2007
<http://www.sharekhan.com>.India Infoline Securities India-Infoline.Com. 26 Mar. 2007
<http://trade.indiainfoline.com>." India Infoline Securities 5paisa.Com. 26 Mar. 2007
<http://www.5paisa.com>." Kotak Securities kotak securities.Com. 26 Mar. 2007
<http://www.kotaksecurities.com>."ICICI Securities ICICI securities.Com..25 Mar. 2007
<http://www.ICICIsecurities.com>." Karvy Karvy.Com. 25 Mar. 2007
<http://www.karvy.com>.Online Investors & Traders 2 Apr. 2007 <http://www.traderji.com>."
Motilal Oswal Securities . 25 Mar. 2007 <http://www.motilaloswal.com>.Projectsformba.blogspot.com
90
91. Projectsformba.blogspot.com METHOD AND PRINCIPLE USED:INFORMATION REQUIRED IN
DETAILPRIMARY INFORMATION:To know why INDIA BULLS is standing at a reputative position
among stockexchanges and its competitive advantage. The competitor companies were alsoanalysed to
find out their current status and how close competition exists.SECONDARY INFORMATION:To present
the specialities of INDIA BULLS which are shown through secondarydata analysis.METHOD OF DATA
COLLECTION The task of data collection begins after research problem has been definedand research
design /plan checked out. While deciding about the method of datacollection to be used for the study, the
researcher should keep in mind the twotypes of data viz. primary and secondary..Primary DataThey are
those which are collected a fresh and for the first time, and thushappened to be in original in character.
Data is collected by:- -Survey -Observation method -Interview Methodpersonal interview, telephonic
interview.Projectsformba.blogspot.com 91
92. Projectsformba.blogspot.comSecondary DataAre those which has already been collected by someone
else and which havealready been past through the statisal process. Data is collected by:- -Publications of
central state and local govt. -Publication of foreign. -Journal -Books, magazines and newspaper -Reports
and publication of business house -Reports and publication of scholars and universities. -Public
recordsRESEARCH INSTRUMENT USED IN DETAIL:PRIMARY Questionnaires: A formal list of the
questions answered by the people who are thought to have the desired information and later analyzing the
responses is the questionnaire method. It can be used to get some data relative to most problems. We
have used structured questionnaires as a formal list of questions produces more reliable results. For
collecting the data we used questionnaire method. The questionnaire wasdesign mainly of objective nature
and partially of descriptive nature to getsuggestion regarding housing finance compares. We visited
various governmentdepartment and business organization and also to individuals for requiredinformation
according to our Performance knowing the views of the people andget their
suggestions.Projectsformba.blogspot.com 92
93. Projectsformba.blogspot.com Personal Interviews: Personal interview is the most versatile and
flexible kind of technique. Direct face-to-face conversation helps in getting accurate data. Personal
interview were done with the people in order to get the required information.SECONDARY Websites.
Brochures and Company Magazines.CANOPY PROGRAMThe conducted a five days canopy
program in which we were asked getquestionnaire filled by the individuals. The activity was conducted in
groups. Eachgroup was allotted a definite area for its work .Every evening the response of theday was
given to the reporting officer in INDIA BULLS. The reporting officer wasMr. Maya Sarin (Relationship
Manager).The data collected from it was of 50 persons (in round figures). The area allottedto us was at
Noida, Greater noida, and in delhi at Lakshmi nagar.The responsewas good. This program enabled them
as a feedback program which would helpthem in further innovation and make nessary
changesProjectsformba.blogspot.com 93
94. Projectsformba.blogspot.comRESEARCH DESIGNThe formidable problem that follows the task of
defining the research ispreparation of the design of the research project, popularly known as
researchdesign. Decisions regarding what, where, when, how much by what meansconsidering an
inquiry or research study constitute a research design .Types:-Research Design in case of exploratory
research study .Research Design in case of descriptive and diagnostic research study.Research Design in
case of hypothesis-testing research study.RESEARCH STUDIES CONSIDERED :- EXPLORATORY
RESEARCHExploratory research is based on secondary data and survey of knowledgeablepersons., This
research is usually designed to obtain the investigations of theinvestors prospective of comparing the
stock exchanges for his investmentdecision.Wide-ranging and versatile approaches are employed.
Exploratoryresearch is appropriate for situations where Management is searching forsolutions and seeks
new insights regarding the situation or desires a moreprecise formulation of the problem. We have made
use of exploratory research inour project because it served our purpose to the maximum information.A
newknowledge is being discovered ,although it exists in the environment.Projectsformba.blogspot.com
94
95. Projectsformba.blogspot.com DESCRIPTIVE RESEARCHDescriptive research studies are those
studies which are concerned withdescribing the characteristics if a particular individual ,or of a
group.this type ofstudy is concerned with specific predicitions, with narration of facts andcharacteristics
considering individual and groups. The decision regarding what tomeasure and find adequate method of
measuring along with the clear cutdefinition of population. As data collected, they should be examined
forcompleteness, comprehensibility, consistency and reliability.This type of research design is adopted
since it takes into account all the stepsinvolved in a survey concerning a phenomenon to be studied. This
type of studymakes enough provision for protection against bias and must maximize
reliability.Projectsformba.blogspot.com 95
96. Projectsformba.blogspot.com SAMPLING PLAN Research is basically depend up on the data and
that data depend uponthe size of sample we want. So deciding of sample size is mainly based on
thenature of objective of the research. Sample size has to . confirm the objective oneach and every
respect.Suppose we are going to decide any effective decisionon the base of this report or set up any
new facts. On that position we haverequire large size of sample on comparison to find out a trend.Here
our objective is simply go to "comparative analysis and make an overview ofIndian Stock Market "So we
preferred to go with a sample size of only 250 data.SAMPLING TECHNIQUES USED Systematic
Sampling In some instances , the most practical way of sampling is to select everynext item on the list.
Sampling of this type is known as systematic sampling. Anelement of randomness is introduced into this
kind of sampling by using randomnumbers to pick up the unit with which to start. In the project the
samples are drawn from different zone including 50persons in each zone constituting 250 persons all
together. Stratified Sampling If a population from which as ample is to be drawn does not constitute
ahomogenous group stratified sampling technique is generally applied in order toobtain a representative
sampling. Under stratified sampling the poplation isdivided into several sub population that are individually
more homogenous thanthe total population (the different sub population are called STRATA and then
weselect item from each stratum to constitute a sample.Projectsformba.blogspot.com 96
97. Projectsformba.blogspot.com In the project ,the population was selected randomly from each
zonehaving equal chances to be selected as a sample. The population in each zone iscalled strata which
includes 25 persons from each zone. Sequential SamplingThis sampling design is somewhat complex
sample design the number of sampleone more than two but it is neither certain nor decided in advance
this type ofsystem is often referred to as sequential sampling. thus in brief we can say that insequential
sampling one can go on taking samples one after another as long asone desire to do so. In the project, the
samples are being surveyed in a sequential manner fromevery zone.Projectsformba.blogspot.com 97
98. Projectsformba.blogspot.comSAMPLE DESIGNThe selected respondents constitute what is
technically called a sample and theselection process is called sampling technique. the survey so
conducted is knownas sample survey. Researcher must prepare a sample design for his study i.e., he
must planhow a sample should be selected and of what size such a sample would be.1. Types of
universe: - The sample design is clearly define the set of objects,technically called the universe. The total
population of India is universe for INDIABULLS. The population of the whole country may be
considered as the samplingpopulation.2. Sampling unit: - Sapling unit may be a geographically one such
as state,district, village, etc. The sampling unit is decided by dividing into central, eastern,western,
northern and southern zones3. Source list: - It is also known as sampling frame from with sample is to
bedrawn. It is decided by considering the people who know about SHAREMARKET.4 Size of sample: -
This refers to the number of items to be selected from theuniverse to constitute a sample size. The
sample size chosen by me is 125persons, 25 persons in every zone.5. Sampling procedure:-It decides
about the technique to be used in selectingthe items for the sample. The procedure of deciding the sample
is done zonewise.Projectsformba.blogspot.com 98
99. Projectsformba.blogspot.comMeasurement and Scaling TechniquesMeasurement is relatively
complex and demanding task, specially so when itconcerned qualitative and abstract phenomena. By
measurement we mean theprocess of assigning numbers to objects or observation, the level
ofmeasurement been a function of the rules under which the numbers areassigned. Measurement is a
process of mapping aspects of the domain ontoother aspects of a range according to some rules of
correspondence. The method used to represent the collected data is tables, graphs, charts,pie charts, bar
graphs, supported by written statement. Measurement technique are deliberately selected by the
researcher.Duringthe research the researcher has to be quite alert about this aspect whilemeasuring
properties of objects or of abstract concept.Projectsformba.blogspot.com 99
100. Projectsformba.blogspot.comChapter 11 FINDINGS & SUGGESTIONSAggressive Promotions:
Indiabulls Securities compared to its competitorsconcentrates less on advertising and promotions,
especially through electronicmedia. Its competitors like Sharekhan, ICICI and Kotak are
advertisingaggressively through media. Hence Indiabulls should concentrate more onadvertising through
print and electronic media.Tapping Rural Market: The Indian rural investors market are
relativelyuntapped, with only small and private firms meeting the current demand.Indiabulls Securities can
gain the First Mover Advantage over its competitors,especially in areas were commercial crops are
grown and the standard of living ishigh. These people do not have much option to invest other than banks
and postoffices.Reduce the initial account opening charges: The charge for opening atrading and demat
account in Indiabulls securities is high compared to itscompetitors. This influences the potential investors
to open their account withanother company which provides the same at lower prices. Thus it acts as
amental barrier for potential customers, who tend to overlook all other benefitsoffered by Indiabulls.
Hence Indiabulls should consider reducing their accountopening charges.Bring in more product
differentiation: Product differentiation here meansthat Indiabulls securities should bring in more
customized services and morevalue proposition for large investors. It can reduce the brokerage charges
forlarge investors which will encourage them to invest more in the
company.Projectsformba.blogspot.com 100
101. Projectsformba.blogspot.comInvest more on R&D: Indiabulls should concentrate on its research
anddevelopment since most of its competitors are investing on R&D. This will helpthe company to read
the market better and will also be in a better position tounderstand the needs of the customers. This can
be extremely beneficial forIndiabulls in the long run.Projectsformba.blogspot.com 101
102. Projectsformba.blogspot.com APPENDIXProfit & loss Summary Mar Mar 2004 2005 Mar 2006
12Rs. Crore (Non-Annualized) 12 months months 12 months-Income 69.48 114.59 317.97 Leasing &
hire services 0 0 0 Security transactions 0.18 0 0 Dividend income 0 0.29 0 Interest income 15.36 1.93
21.16 Others 53.94 112.37 296.81Other income 0 0 0Non-recurring income 0.03 0.27 0.13-Expenditure
Loss on securitytransactions 0 0.28 0.04 Other operating expenses 3.58 7.92 13.84 Personnel cost 10.72
20.88 50.24 Other expenses 11.33 13.71 21.24 Finance charges 13.97 21.48 46.7 Lease rent 2.19 3.89
3.08 Less: expensescapitalized 0 0 0 Non-recurring expenses 0 0 0-Profits / lossesPBDT 29.91 51.28
186.85 Depreciation 1.11 2.16 6.57Projectsformba.blogspot.com 102
103. Projectsformba.blogspot.comPBT 28.8 49.12 180.28 Tax provision 10.79 17.89 61.06PAT 18.01
31.23 119.22-Appropriation of profit Dividends 0.7 6.14 0.62 Retained earnings 17.31 25.09
118.6Projectsformba.blogspot.com 103
104. Projectsformba.blogspot.com QUESTIONNAIRE Format of Questionnaire For Doing
PromotionsThe format of Questionnaire given to people is as follows:Name of Person:Contact Number:E-
mail IdAre you interested in Share Market? Yes NoDo you invest in Share market? Yes NoAre you aware
of Indiabulls? Yes NoDo you have a Demat Account? Yes NoPresently in which security are you trading?
SignatureProjectsformba.blogspot.com 104
105. Projectsformba.blogspot.com Brokerage & Tax break up format of Indiabulls (For Security reasons
all data are not revealed) Intraday (%) Delivery (%) Futures(%) Buy Sell Buy Sell BuySellBrokerage
Charges 0.1 0.1 0.5 0.5 0.10.1Security Transaction 0 0.025 0.125 0.125 0 0.017Tax (STT)Service Tax
(12.24% on brokerage)Turn over Tax (TOT)Stamp dutyTotalProjectsformba.blogspot.com 105
106. Projectsformba.blogspot.com CONCLUSIONIndiabulls faces significant competition from
companies seeking to attract clientsfinancial assets including traditional and online brokerage firms,
mutual fundcompanies and institutional players, having wide presence and a strong brandname. As
Indiabulls enter newer markets, they are likely to face additionalcompetition from those who may be
better capitalized, have longer operatinghistory, have greater retail and brand presence, and better
management thanIndiabulls. As new players like Reliance Money enters the market the competitionwill
only get more intense. If they are unable to manage their business it mightimpede their competitive
position and profitability.Hence they should continue to compete vigorously to capture more market
shareand should add more management personnel to manage their growth in anoptimal way.Post
economic liberalization in 1991 the Indian financial services industry hasexperienced significant growth.
Exposure to global practices has made the Indiancustomer more demanding. As a result of falling interest
rates, bank deposits,other traditional investment opportunities are losing their attraction. Thus,
Indianinvestors are getting attracted towards alternate investments such as the RetailSecurity Market and
are looking for newer financial products. As the Indian Retail Security Market is still in a nascent stage
and as a lot ofpotential for growth, its a very good opportunity for companies like Indiabulls toincrease
their market presence. They will have to concentrate more on theResearch and Development and come
up with strategies which are beneficial forthe company. Thus for the purpose of Applied Research
Projects in the company,Projectsformba.blogspot.com 106
107. Projectsformba.blogspot.comthey can do more research on the market and identify the major
factors whichwill drive the market in the future. BIBLIOGRAPHYBombay Stock Exchange" Bseindia.
20 Mar. 2007 <http://www.bseindia.com>." Indiabulls Securities Indiabulls.Com. 15 Mar. 2007
<http://www.Indiabulls.com>."National Stock Exchange nseindia. 25 Mar. 2007
<http://www.nseindia.com>."Share khan Securities Sharekhan.Com. 25 Mar. 2007
<http://www.sharekhan.com>.India Infoline Securities India-Infoline.Com. 26 Mar. 2007
<http://trade.indiainfoline.com>." India Infoline Securities 5paisa.Com. 26 Mar. 2007
<http://www.5paisa.com>." Kotak Securities kotak securities.Com. 26 Mar. 2007
<http://www.kotaksecurities.com>."ICICI Securities ICICI securities.Com..25 Mar. 2007
<http://www.ICICIsecurities.com>." Karvy Karvy.Com. 25 Mar. 2007
<http://www.karvy.com>.Online Investors & Traders 2 Apr. 2007 <http://www.traderji.com>."
Motilal Oswal Securities . 25 Mar. 2007 <http://www.motilaloswal.com>.Projectsformba.blogspot.com
107
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A Project Report On Overview of Indian Stock Market

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