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This project has been a great learning experience for me and at the same time it gave me enough
scope to implement my analytical ability. The project in Globe is to figure out the potential
brokerage plans, which can undertake the various products and services offered by the Globe.
With the advent of the internet, investors can now enter orders directly online, or even trade with
other investors via ECN's (electronic communication networks). So, most of the brokerage
houses have started providing the facility of online trading to the customers. Today even the
banks with the view of expansion and large number of customers has started providing the online
trading terminal to the customers.
As the competition from big players of online trading like Share khan, Kotak Mahindra, ICICI
Direct etc is rising Globe intends to built up a loyal customer base , the project is a step towards
the same. In this era of competition it's becoming difficult for the organizations to acquire and
retain the customers. Hence, for Globe it is of utmost importance to have satisfied existing
customers as well as to attract the other customers.
With the help of this project Globe Securities Ltd could tap the Customers potential in
investment and which would provide them various opportunities of increasing the customer base.
"Customer Relationship and Branch Operations" believes that "They would not remember what
you did but they will always remember what you said".
INTRODUCTION
Globalization has proved to be a boon for the Indian economy. After globalization there has been
a tremendous growth in the Indian economy.
Every sector of the economy has shown an outstanding performance after globalization.
The project was under taken as to study the Indian online trading. Earlier Trading was confined
in limited boundaries but now the scenario has been totally different after the entrance of online
trading. There is a cut throat competition between the broking houses. Now the brokers are more
concerned about their customers to improve their performance. The sector is undergoing
fundamental changes that have diluted its traditional role of protecting small deposits against
capital and income risk and facilitating the conversion of Savings into investment.
Also there have been a drastic increase in the volume of share traded on stock exchange and with
that the online trading has shown Bull Run.
(USD mn)
300,000
265140
250,000
200,000
137153
150,000
100,000
42538
50,000
4318
19653
FY 03
FY 04
FY 05
FY 06
FY 07
(Graph 1)
Majority of the broking firms entered the business post 1990. A majority of members
have memberships in more than one stock exchange and across equities, equity derivatives and
commodities futures in domestic and International stock exchange.
On the back of growing equity culture broking activity is spreading in Tier lI and Tier III
cities in India.
Deepening financial system and economic growth has provided growth and expansion
opportunities to broking firms. Access to public equity markets and growing international
investor's interest has enabled them to raise resources.
Although there are more than 9000 brokers registered with SEBI 80% of the turnover in
NSE and BSE is accounted by about 100 brokers.
Majority of branches are located in the North, i.e. around 40%. West has 31%, 24% are
located in South and 5% in East
In terms of sub-brokers, around 55% arc located in the South, 29% in West, 11 % in
North and 4% in East
In terms of various areas of growth, 84% firms have expressed interest in expanding their
institutional clients, 66% firms intend to increase FII clients and 43% are interested in setting up
JV in India and abroad
In terms of IT penetration, 62% firms have provided their website and around 94% firms
have email facility
% of Sub-brokers present in each region
60
55
50
40
29
Companies % 30
20
11
10
0
South
West
North
East
31
24
30
20
10
0
East
South
West
North
Region
One of the oldest trading industries that have been around even before the establishment of BSE
is the Indian Broking Industry. Post liberalization there have been number of changes, despite
this the stock broking industry was at its pace and retained its sustainable growth.
To study the trend in the stock broking industry, if we take the database of over 394 broking
firms. All the data for the study was collected through responses received directly from the
broking firms. The insights have been arrived at through an analysis on various parameters,
pertinent to the equity broking industry, such as region, terminal, market, branches, sub brokers,
products and growth areas.
Some key characteristics of the sample 394 firms are:
On the basis of geographical concentration, the West region has the maximum
representation of 52%. Around 24% firms are located in the North, 13% in the South and
10% in the East.
3% firms started broking operations before 1950, 65% between 19501995 and 32% post
1995.
On the basis of terminals, 40% are located at Mumbai, 12% in Delhi, 8% in Ahmadabad,
7% in Kolkata, 4% in Chennai and 29% are from other cities.
40 In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade at
both exchanges. In the derivative segment, 48% trade at NSE, 7% at BSE and 45% at
both, whereas in the debt market, 31% trade at NSE, 26% at BSE and 43% at both
exchanges.
SENSEX
SENSEX is not only scientifically designed but also based on globely accepted construction and
review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks
representing a sample of large, liquid and representative companies. The base year of SENSEX
is 1978-79 and the base value is 100. The index is widely reported in both domestic and
international markets through print as well as electronic media.The index is calculated on the
"Free-float Market Capitalization" methodology. The "Free-float Market Capitalization"
methodology of index construction is regarded as an industry best practice globely. All major
index providers like NIKKEI, NASDAQ and DOW JONES use the free float methodology.
9
The growth of equity markets in India has been phenomenal in the decade gone by. Right from
early nineties the stock market witnessed heightened activity in terms, of various bull and bear
runs. The SENSEX captured all these events in the most judicial manner. One can identify the
booms and busts of the Indian stock market through SENSEX.
10
Today, with number of trades touching 2.5 million a day and turnover touching turnover touching
Rs 100 billion in value terms, NSE towers over all the other stock exchanges in the country.
In a ten-year period (NSE completed a decade on June 30, 2004) the National Stock Exchange
has tilted the market system in favor of investors and away from a significant bias in favor of
intermediaries. For a mass of investors across the country, the NSE is now the focal point for
trading in stocks, and futures and options.
The Stock Exchange, (NSE) came out with a stock index that subsequently became another
barometer of the Indian stock market known as NIFTY.
Nifty been the focal point of investors, as it provides trading the shares as well as index in
futures and options. Before Nifty came into existence trading of index concept was not present it
was introduced by Nifty and is present in it only, till date.
11
12
OPTIONS - Option is a contract where the investor has two options to deal with CALL and
PUT. The concept of call and put is opposite to each other call is the contract where the investors
believe that the market is going to be BULLISH in near future and put option is taken when he
thinks that the market is going to be BEARISH in the future.
In the call option investors is benefited if market drives up in future and input will, be benefited
if it slips down.
Funds mobilized in primary market rose to Rs l, 74,143 cr through 558 issues in 2007-08
against Rs 55,654 cr through 451 issues in 2006-07. Out of this Rs 87,029 cr were raised
through 124 public and right issues against Rs 33,508 cr through 124 issues in 2006-07.
Total of Rs 42,595 cr was raised through 85 IPOs in 2007- 08 against Rs 28,504 cr raised
through 77 IPOs in 2006-07.
Net resource mobilization by mutual funds grew to Rs 1, 53,801 cr in 200708 with a 63%
rise from Rs 93,984 cr in 2006-07. Cumulative Assets under management rose to Rs 5,
05,152 in March 2008 from Rs 3, 26,292 in March2007.
13
19
9487
4183
44073
Brokers (Derivatives)
1442
FII
1319
Custodians
15
Depositories
Merchant Bankers
155
Bankers to an Issue
50
Underwriters
35
Mutual Funds
40
(Table 1)
14
Stock Trading
Traditionally stock trading is done through stock brokers, personally or through telephones. As
number of people trading in stock market increase enormously in last few years, some issues like
location constrains, busy phone lines, miss communication etc start growing in stock broker
offices. Information technology (Stock Market Software) helps stock brokers in solving these
problems with Online Stock Trading.
Online Stock Market Trading is an internet based stock trading facility. Investor can trade shares
through a website without any manual intervention from Stock Broker.
In this case these Online Stock Trading companies are stock broker for the investor. They are
registered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades in
BSE and NSE.
There are two different type of trading environments available for online equity trading.
Installable software based Stock Trading Terminals
These trading environment requires software to be installed on investors computer. This
software is provided by the stock broker. This software's require high speed internet
connection. These kind of trading terminals are used by high volume intraday equity
traders.
Advantages:
Orders directly send to stock exchanges rather than stock broker. This makes order
execution very fast.
It provide almost each and every information which is required to a trader on a single
screen including stock market charts, live data, alerts, stock market news etc.
15
Disadvantages:
Location constrains - You cannot trade if you are not on the computer where you have
installed trading terminal software.
It requires high speed internet connection.
These trading terminals are not easily available for low volume share traders.
16
17
1200
800
400
1575
1464
Locations
459
Cities
330
455
465
110
0
FY 06
FY 07
FY 08
1Q FY09
(Graph 4)
18
Recently acquired Hichens, Harrison & Co. ("Hichens") one of the oldest broking firms in
London, for a sum of GBP 55.5 million.
Acquisition to boost the institutional and investment baking operations of Globe and extend its
geographical reach to London, South Africa, Argentina, Brazila, Dubai, Qatar, Singapore,
Malaysia and Indonesia..
Geographical Distribution
Mumbai; 9%
Gujarat; 11%
North; 31%
Maharashtra; 12%
East; 13%
South; 24%
19
20
Pan India presence expanded to 1,575 location in 465 cities across India
Quarterly Total Revenue recorded al Rs. 2,887.49 run, EBIDTA at Rs. 1,184.17 mn and
Profit after tax at Rs. 36.68 mn
21
firm in India.
Major activities and offerings of the company include equity broking both offline and
Services
Depository Services
Globe Securities Limited (GSL) is a leading equity and securities firm in India. The company
currently handles sizeable volumes traded on NSE and in the realm of online trading and
investments it currently holds a reasonable share of the market. The major activities and
offerings of the company today are Equity broking, Depository Participant Services, Portfolio
Management Services, Institutional Brokerage & Research, Investment Banking and Corporate
Finance.
GSL is a member of the National Stock Exchange of India, Bombay Stock Exchange of India,
Depository Participant with National Securities Depository Limited and Central Depository
Services (I) Limited, and SEBI approved Portfolio Manager. Globe has been constantly
innovating in terms of product and services and to offer such incisive services to specific user
segments it has also started the NRI, FII, HNI and Corporate Servicing groups. These groups
take all the portfolio investment decisions depending upon a client's risk / return parameter.
Globe has a very credible Research and Analysis division, which not only caters to the need of
our Institutional clientele, but also gives their valuable inputs to investment dealers. Globe is also
providing in-house Depository services to its clientele and is one of the leading depository
service providers in the country.
Globe Capital is one of the largest growing investment solutions companies that provide a wide
range of services to its vast and diversified client base.The company has its corporate office in
New Delhi with regional offices in Mumbai, Kolkata & Jaipur and growing network of more
than 500+ representative offices across 150+ locations in India with overseas office in London
and Dubai.Globe Capital accounts for more than 10% of NSE clearing volumes in its F&O
segment.
In 2008, Globe Capital Market Ltd. attracted US$ 42 million of equity capital in Foreign Direct
Investment (FDI) from Citi Group and its representative is also on the Board of the Company.
23
Promoted by a group of professionals, Globe Capital has grown consistently since inception
HISTORY
1994
Globe became the member of National Stock Exchange.
1999
Globe became the depository participant of NSDL.
2000
Globe acquired Trading as well as Clearing membership of NSE F&O.
2000
Globe became the depository participant of CDSL.
2003
Globe group acquired the membership of NCDEX, MCX and NMCE.
2006
Globe group expanded globely and acquired the Trading & Clearing Membership of Dubai Gold
and Commodity Exchange (DGCX)
2007
Globe became the member of Bombay Stock Exchange and trading cum clearing member in its
F&O segment.
2008
Citi bank venture capital invested for a minority stake in the company.
Globe became clearing cum trading member of Currency Derivatives in NSE, BSE and MCXSX Acquired the membership of National Spot Exchange (NSEL)
2009
Globe
begin
it's
lending
Acquired Clearing cum trading membership in Indian commodity Exchange (ICEX)
business
2010
24
Acquired clearing and trading membership in ACE in Commodity segment and the United Stock
Exchange in Currency segment
2011
Globe commenced the corporate finance and International Broking business in London
Globe became the Clearing Member for National Spot Exchanges for clearing of E-series
products
2012
Globe became the member of MCX Stock Exchange and trading cum clearing member in its
F&O segment.
Services
Being a trusted name in the broking circle we are members of all the major stock exchanges
in India. We also hold membership for DGCX, Dubai. We also offer Clearing Services to the
Trading Member in the F&O segment and are responsible for a significant chunk of the total
clearing activities as high as 10% of the total clearing process.
The Group through Globe Capital Market Limited (GCML) offers trading facilities in the
Capital Market and Futures Options (F&O) segments of NSE as well as of BSE. Through
our Group company, Globe Commodities Limited, we have membership and trading
facilities for all major Commodities Exchanges in India: MCX, NCDEX and NCME. Globe
Comex International DMCC is exclusively responsible for trading on Dubai Gold and
Commodities Exchange.
Globe also holds membership of two major Depositories in the country i.e. NSDL and CDSL
and are catering to over 65000 accounts.
To address varying investment preferences Globe offers Portfolio Management services (PMS).
As a focused service, PMS pays attention to details, and portfolios are customized to suit the
unique requirements of investors. Equities as an asset class outperform almost any other
investment vehicle over a longer time period. PMS aims at providing the same by investing on
behalf of clients on the basis of well-conducted research, experience and expertise of our Fund
Manager,
well
supported
by
our
research
team.
25
Globe Capital Market is the # 1 clearing member for both NSE FX and MCX SX in currency
trading. At Globe Capital Market we offer currency trading on both NSE FX and MCX SX and is
supported by valued research. We offer expert advice on Currency Arbitrage and Hedging
strategies to our individual and corporate customers.
Globe Presence
Dubai
The Globe Group Company, Globe Commodities Limited, a wholly owned subsidiary of
Globe Capital, has membership and trading facilities for all major Commodities
Exchanges in India: MCX, NCDEX and NCME. Globe Comex International DMCC,
which is a subsidiary of Globe Commodities Limited, the Indian arm, is devoted to
trading on Dubai Metals and Commodities Exchange.
26
GLOBE MEMBERSHIPS
27
RMS Policy
Globe Capital Market Ltd.
RMS PROCESS
RMS stands for Risk Management System - To manage the risk of the company from
the volatility of the market.
(1) RMS works on the following concepts:
1.1) Cash: The clear balance available in the customers ledger account in our books.
1.2) Margin: The underlying stake provided by the customer in the form of cash, FDR
and/or stock to mitigate market (price) or settlement (auction) risk
1.3) Exposure: The aggregate of the customers obligations arising out of buy + sell
trades awaiting settlement in the cash segment and profit/ loss amounts that are yet to be
settled on the closed positions.
1.4) Exposure multiple: The number of times that exposure is allowed on the underlying
margin on the cash segment would have to be made either on the availability of cash
margin or on the availability of the stocks (which are to be sold) in our margin account,
by executing a transfer before any order is initiated.
1.5) Stock qualifying for margin in cash segment transactions: Securities in the
28
33,75,000/- . Margin
on position is Rs.675000/- (3375000 X 20%) and he has to make payment of Rs.
28,75,000/(exposure less Ledger credit balance) before the T+2 day
30
While Rally deals with offline facilities, Race provides for complete online package and facility.
There is difference between both offline and online modes of trading. The difference lies on
account of its schemes, platforms and facilities provided. Initially the clients used to go for
offline modes of trading, but now with increasing use of internet online mode has become the
preference.
Type of Account
R-ACE (Basic)
It's the basic online trading account provided by Globe. Investor can trade and access their
account information online and over the phone as well. This account comes with a browser based
online trading platform and no additional software installation needed.
This account also provides Lifetime free DP account with no annual maintenance charges.
R-ACE Lite (Advanced)
31
It's the advanced account option for the investor with Globe. This trading account provides the
entire feature of R-ACE (Basic) account. In addition it also provides real-time streaming stock
quotes and alerts. This trading platform is also browser based and no software installation is
needed.
R-ACE Pro (Professional)
As the name indicates this account is for high volume traders. Along with the features from
above 2 accounts, this account also comes with a Trading Terminal, software which needs to
install on your computer. This terminal directly connects the investor to stock market and having
all industry standard Treading tenninal features including technical charting (intra-day and
EOD), multiple watch list, advanced hot-key functions for faster trading, derivative chains,
futures & options calculator. As in basic and advance account, trading is available online through
internet and offline though phone.
R-ACE Lite
Account activation charges Rs.499/-..
2.
R-ACE Pro
Account activation charges Rs.999/-.
32
3.
4.
5.
Brokerage at Globe
On the basis of volume and frequency of trading; Globe provide different options for
brokerages. On the broader way they divided into three categories:
Advantages of Globe
Globe gives interest on unutilized cash when investor is waiting to make next trade or
online investment.
Globe Allow their investor to trade without having to worry about cash margin. Investor can
get exposure (on cash segment) as high as 20 times for intraday trades.
33
Online client base of over 78,500 clients, recorded an increase of 20% in last
quarter
Online brokerage for the quarter accounted for Rs. 32 mn
34
35
SWOT ANALYSIS
STRENGTHS
WEAKNESS
Strong corporate
relationship
Collaborations
with
highly
Strong
network
throughout
OPPORTUNITIES
THREATS
Even the strong players in the Competition from major players like
market holds 6% of market share,
growth
36
The Competitors
The existing major players in the stock broking industry besides Globe Securities ltd. are:
1.
ICICI Direct
2.
India Bulls
3.
Share Khan
4.
5.
Kotak
37
ICICI DIRECT
ICICI Direct (or ICICIDirect.com) is stock trading company of ICICI Bank. Along with stock
trading and trading in derivatives in BSE and NSE, it also provides facility to invest in Mutual
Funds and Bonds. Trading is available in BSE and NSE.
Trade In: BSE and NSE
Type of Account
ICICI Direct offers 3 different online trading platforms to its customers:
1. Share Trading Account
Share Trading Account by ICICI Direct is primarily for buying and selling stocks in NSE and
BSE. This account allows Cash Trading, Margin Trading, Margin PLUS Trading, Spot Trading,
Buy Today Sell Tomorrow and Call and Trade on phone.
ICICI Direct.com website is the primary trading platform for this trading account. They also
provide installable application terminal based application for high volume trader.
38
Systematic withdrawal plan and transferring existing Mutual Funds in to electronic mode. This
account also provides facility to invest in Government of India Bonds and ICICI Bank Tax
Saving Bonds. ICICIDirect.com website is the primary tool to invest in Mutual Funds, IPOs,
Bonds and stock trading.
3. Active Trader Account
Active Trader account gives more personalized investment options to the investors. It allows
investor to use online and offline stock trading. It also provides with independent market
expertise and support through a dedicated Relationship Manager from ICICI. Active Trader also
provides commodity trading.
2.
39
3-in-1 account integrates your banking, broking and demat accounts. All accounts are from
ICICI and very well integrated. This feature makes ICICI the most interesting player in
online trading facility. There is absolutely no manual interfere require. This is truly online
trading environment.
2.
Unlike most of the online trading companies in India which require transferring money to
the broker's pool or towards deposits, at ICICI Direct you can manage your own Demat and
bank accounts through ICICI direct.com. Money from selling stock is available in ICICI
bank account as soon as the ICICI Direct receive it.
3.
Investment online in IPOs, Mutual Funds, GOT Bonds and Postal Savings Schemes all from
one website. General Insurance is also available from ICICI Lombard.
4.
ICICI Direct brokerage is high and not negotiable. 3. Not all stocks are available under
Margin Plus.
40
INDIA BULLS
India bulls is Indus leading Financial Services and Real Estate Company having presence over
414 locations in more than 124 cities. India bulls Financial Services Ltd is listed on the National
Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock
Exchange.
Type of Account
India bulls Equity Trading Account
India bulls Equity Trading Account is standard Online trading account from India bulls and along
with online trading it also provides priority telephone access that gives you direct access to your
relationship Manager and full access to ' India bulls Equity Analysis'.
41
42
SHARE KHAN
Share khan is online stock trading company of SSKI Group, provider of India-based investment
banking and corporate finance service. Share Khan is one of the largest stock broking houses in
the country. S.S. Kantilal Ishwarlal Securities Limited (SSKI) has been among India's leading
broking houses for more than a century.
Share khan's equity related services include trade execution on BSE, NSE, Derivatives,
commodities, depository services, online trading and investment advice. Trading is available in
BSE and NSE. Along with Sharekhan.com website, Share khan's has around 510 offices (share
shops) in 170 cities around the country.
Share khan has one of the best states of art web portal providing fundamental and statistical
information across equity, mutual funds and IPOs. You can surf across 5,500 companies for indepth information, details about more than 1,500 mutual fund schemes and IPO data. You can
also access other market related details such as board meetings, result announcements, FII
transactions, buying/selling by mutual funds and much more.
43
Type of Account
I.
the
Banking,
tracking
and
Derivatives
b.
I.
Two dedicated numbers for placing your orders with your cell phone or landline.
11.
Automatic funds transfer with phone banking (for Citibank and HDFC bank
customers)
111. Simple and Secure Interactive Voice Response based system for authentication
IV.
V.
c.
d.
e.
IPO investments
f.
Instant order and trade confirmations by e-mail g. Single screen interface for cash and
derivatives
2.
This accounts for active traders who trade frequently during the day's trading session. Following
are few popular features of Speed Trade account.
a.
b.
44
c.
e.
Brokerage:
Some stock trading companies charge direct percentage while others charge a fixed amount per
Rs 100. Share khan charges 0.5% for inter day shares and 0.1% for intraday or you could say
Share khan charges 50 paisa per Rs 100.
Advantages of Share khan:
A.
Online trading is very user friendly and one doesn't need any software to access.
B.
They provide good quality of services like daily SMS alerts, mail alerts, stock
recommendations etc.
C.
Share khan has ability to transfer funds from most banks. Unlike ICICI Direct, HDFC Sec,
etc., so investor not really needs to open an account with a particular bank as it can
establish link with most modern banks.
They charge minimum brokerage of 10 paisa per stock would not let you trade stock below
20 Rs. (If you trade, you will loose majority of your money in brokerage).
B.
C.
They do not provide facility to book limit order trades during after-hours.
D.
E.
45
PROJECT PROFILE
Globaliization has proved to be a boon for the Indian economy. After globalization there has
been a tremendous growth in the Indian economy.
Every sector of the economy has shown an outstanding performance after globalization.
The project was under taken as to study the Indian online trading. Earlier Trading was confined
in limited boundaries but now the scenario has been totally different after the entrance of online
trading. There is a cut throat competition between the broking houses. Now the brokers are more
concerned about their customers to improve their performance. The sector is undergoing
fundamental changes that have diluted its traditional role of protecting small deposits against
capital and income risk and facilitating the conversion of Savings into investment.
Also there have been a drastic increase in the volume of share traded on stock exchange and with
that the online trading has shown Bull Run.
46
47
48
REVIEW OF LITERATURE
The Indian capital market has changed dramatically over the last few years, especially since
1990. Changes have also been taking place in government regulations and technology. The
expectations of the investors are also changing. The only inherent feature of the capital
market, which has not changed is the 'risk' involved in investing in corporate securities.
Managing the risk is emerging as an important function of both large scale and small-scale
investors. Risk management of investing in corporate securities is under active and
extensive discussion among academicians and capital market operators. Surveys and research
analyses have been conducted by institutions and academicians on risk management. The
mutual fund companies in India have conducted specific studies on the 'risk
element' of investing in corporate securities.
Grewal S.S and Navjot Grewall (1984) revealed some basic investment rules and rules
for selling shares. They warned the investors not to buy unlisted shares, as Stock Exchanges
do not permit trading in unlisted shares. Another rule that they specify is not to buy inactive
shares, ie, shares in which transactions take place rarely. The main reason why shares are
inactive is because there are no buyers for them. They are mostly shares of companies, which
are not doing well. A third rule according to them is not to buy shares in closely-held
companies because these shares tend to be less active than those of widely held ones since
they have a fewer number of shareholders They caution not to hold the shares for a long
period, expecting a high price, but to sell whenever one earns a reasonable reward.
Jack Clark Francis (1986) revealed the importance of the rate of return in investments and
reviewed the possibility of default and bankruptcy risk. He opined that in an uncertain
world, investors cannot predict exactly what rate of return an investment will yield.
However he suggested that the investors can formulate a probability distribution of the possible
rates of return. He also opined that an investor who purchases corporate securities must face
the possibility of default and bankruptcy by the issuer. Financial analysts can foresee
bankruptcy. He disclosed some easily observable warnings of a firm's failure, which could be
noticed by the investors to avoid such a risk.
49
Preethi Singh (1986) disclosed the basic rules for selecting the company to invest in. She
opined that understanding and measuring return m d risk is fundamental to the investment
process. According to her, most investors are 'risk averse'. To have a higher return the
investor has to face greater risks. She concludes that risk is fundamental to the process of
investment. Every investor should have an understanding of the various pitfalls of
investments. The investor should carefully analyse the financial statements with special
reference to solvency, profitability, EPS, and efficiency of the company.
David.L.Scott and William Edward (1990) reviewed the important risks of owning
common stocks and the ways to minimise these risks. They commented that the severity of
financial risk depends on how heavily a business relies on debt. Financial risk is relatively
easy to minimise if an investor sticks to the common stocks of
companies that employ small amounts of debt. They suggested that a relatively easy way to
ensure some degree of liquidity is to restrict investment in stocks having a history of
adequate trading volume. Investors concerned about business risk can
reduce it by selecting common stocks of firms that are diversified in
several unrelated industries.
Lewis Mandells (1992) reviewed the nature of market risk, which according to him is very
much 'globe'. He revealed that certain risks that are so globe that they affect the entire
investment market. Even the stocks and bonds of the well-managed companies face market
risk. He concluded that market risk is influenced by factors that cannot be predicted accurately
like economic conditions, political events, mass psychological factors, etc. Market risk is the
systemic risk that affects all securities simultaneously and it cannot be reduced through
diversification.
Nabhi Kumar Jain (1992) specified certain tips for buying shares for holding and also for
selling shares. He advised the investors to buy shares of a growing company of a growing
industry. Buy shares by diversifying in a number of growth companies operating in a
different but equally fast growing sector of the economy. He suggested selling the shares the
moment company has or almost reached the peak of its growth. Also, sell the shares the
moment you realise you have made a mistake in the initial selection of the shares. The only
option to decide when to buy and sell high priced shares is to identify the individual merit or
demerit of each of the shares in the portfolio and arrive at a decision.
50
Carter Randal (1992) offered to investors the underlying principles of winning on the
stock market. He emphasised on long- term vision and a plan to reach the goals. He advised the
investors that to be successful, they should never be pessimists. He revealed that though
there has been a major economic crisis almost every year, it remains true that patient
investors have consistently made money in the equities market. He concluded that investing in
the stock market should be an un-emotional endeavour and suggested that investors
should own a stock if they believe it would perform well.
L.C.Gupta (1992) revealed the findings of his study that there is existence of wild
speculation in the Indian stock market. The over speculative character of the Indian stock
market is reflected in extremely high concentration of the market activity in a handful of
shares to the neglect of the remaining shares and absolutely high trading velocities of the
speculative counters. He opined that, short- term speculation, if excessive, could lead to
"artificial price". An artificial price is one which is not justified by prospective earnings,
dividends, financial strength and assets orwhich is brought about by speculators through
rumours,manipulations, etc. He concluded that such artificial prices are bound to crash
sometime or other as history has repeated and proved.
Yasaswy N.J. (1993) disclosed how 'turnaround stocks' offer big profits to bold investors and
also the risks involved in investing in such stocks. Turnaround stocks are stocks with
extraordinary potential and are relatively under priced at a given point of time. He also revealed
that when the economy is in recession and the fundamentals are weak, the stock market, being a
barometer of the economy, also tends to be depressed. A depressed stock market is an
ideal hunting ground for 'bargain hunters', who are aggressive investors. Sooner or later
recovery takes place which may take a very long time. He concluded that the investors' watch
work is 'caution' as he may lose if the turnaround strategy does not work out as anticipated.
Sunil Damodar'o (1993) evaluated the 'Derivatives' especially the 'futures' as a tool for shortterm risk control. He opined that derivatives have become an indispensable tool for finance
managers whose prime objective is to manage or reduce the risk inherent in their portfolios.
He disclosed that the over-riding feature of 'financial futures' in risk management is that these
instruments tend to be most valuable when risk control is needed for a short- term, ie, for a
year or less. They tend to be cheapest and easily available for protecting against or
benefiting from short term price. Their low execution costs also make them very suitable for
frequent and short term trading to manage risk, more effectively.
51
Yasaswy J.N." (1993) evaluated the quantum of risks involved in different types of
stocks. Defensive stocks are low risk stocks and hence the returns are relatively low but
steady. Cyclical stocks involve higher risks and hence the rewards are higher when
compared to the growth stocks. Growth stocks belong to the medium risk category and they
offer medium returns which are much better. than defensive stocks, but less than the cyclical
stocks. The market price of growth stocks does fluctuate, sometimes even violently during short
periods of boom and bust. He emphasised the financial and organisational strength of
growth stocks, which recover soon, though they may hit bad patches once in a way.
Donald E Fischer and Ronald J. Jordan (1994) analysed the relation between risk, investor
preferences and investor behaviour. The risk return measures on portfolios are the main
determinants of an investor's attitude towards them. Most investors seek more return for
additional risk assumed. The conservative investor requires large increase in return for
assuming small increases in risk. The more aggressive investor will accept smaller increases
in return for large increases in risk. They concluded that the psychology of the stock
market is based on how investors form judgements about uncertain future events and how
they react to these judgements.
R.Venkataramani.l" (l994) disclosed the uses and dangers of derivatives. The derivative
products can lead us to a dangerous position if its full implications are not clearly understood.
Being off- balance shekt in nature, more and more derivative products are traded than the cash
market products and they suffer heavily due to their sensitive nature. He brought to the notice
of the investors the 'Over the counter product' (OTC) which are traded across the counters of a
bank. OTC products (eg. Options and futures) are tailor made for the particular need of a
customer and serve as a perfect hedge. He emphasised the use of futures as an instrument of
hedge, for it is of low cost.
K.Sivakumar. '" (1994) disclosed new parameters that will help investors identify the best
company to invest in. He opined that Economic Value Added (EVA) is more powerful than
other conventional tools for investment decision making like EPS and price earning ratio. EVA
looks at how capital raised by the company from all sources has been put to use. Higher the
EVA, higher the returns to the shareholder. A company with a higher EVA is likely to show a
higher increase in the market price of its shares. To be effective in comparing companies, he
suggested that EVA per share (EVAPS) must be calculated. It indicates the super profit per
share that is available to the investor. The higher the EVAPS, the higher is the likely
appreciation in the value in future. He also revealed a startling result of EVA calculation of
companies in which 200 companies show a negative value addition that includes some blue
chip companies in the Indian Stock Market.
52
Pattabhi Ram.V. (1995) emphasised the need for doing fundamental analysis'and doing
Equity Research (ER) before selecting shares for investment. He opined that the investor should
look for value with a margin of safety in relation to price. The margin of safety is the gap
between price and value. He revealed that the Indian stock market is an inefficient market
because of the absence of good communication network, rampant price rigging, the absence of
free and instantaneous flow of information, professional broking and so on. He concluded that
in such inefficient market, equity research will produce better results as there will be frequent
mismatch between price and value that provides opportunities to the long-term value oriented
investor. He added that in the Indian stock market investment returns would improve only
through quality equity research.
Philippe Jhorion and Sarkis Joseph Khoury (1996) reviewed international factors of risks
and their effect on financial markets. He opined that domestic investment is a subset of the
globe asset allocation decision and that it is impossible to evaluate the risk of domestic
securities without reference to international factors. Investors must be aware of factors
driving stock prices and the interaction between movements in stock prices and exchange
rates. According to them the financial markets have become very much volatile over the
last decade due to the unpredictable speedy changes like oil price shocks, drive towards
economic and monetary unification in Europe, the wide scale conversion of communist
countries to free market policies etc. They ekphasized the need for tightly controlled risk
management measures to guard against the unpredictable behaviour of financial markets.
S.Rajagopal. (1996) commented on risk management in relation to banks. He opined that
good risk management is good banking. A professional approach to Risk Management will
safeguard the interests of the banking institution in the long run. He described risk
identification as an art of combining intuition with formal information. And risk
measurement is the estimation of the size, probability and timing of a potential loss under
various scenarios.
Charles.P.Jonesl (1996) reviewed how to estimate security return and risk. To estimate
returns, the investors must estimate cash flows the securities are likely to provide. Also,
investors must be able to quantify and measure risk using variance or standard deviation.
Variance or standard deviation is the accepted measure of variability for both realised returns
and expected returns. He suggested that the investors should use it as the situation dictates.
He revealed that over the past 12 years, returns in stocks, bonds, etc. have been normal.
Blue chip stocks have returned an average of more than 16% per year. He warned that the
investors who believe that these rates will continue in the future also, will be in
trouble. He also warned the investors not to allow themselves to become victimised by
"investment gurus".
53
HYPOTHESIS
Hypothesis is an assumption about the population. Consider a study relating to the buyers
behavior. A hypothesis is formulated for a situation where the interference is not explicit.
THEIR ARE TWO TYPES OF HYPOTHESIS:
NULL (HO): Null hypothesis is a hypothesis which a researcher tries to disprove. Normally, the
null hypothesis represents the current view/explanation of an aspect of the world that the
researcher wants to challenge.
54
RESEARCH METHODOLOGY
DESCRIPTIVE RESEARCH DESIGN
The research design adopted in this study is DESCRIPTIVE RESEARCH DESIGN. A
descriptive research design is the one which is description of the state of affairs as it exists at
present. It includes survey and fact finding enquiries of different kinds. The researcher has no
control over the variables. The researcher used this research design to find out the respondents
attitude and opinion about ULIP policies offered.
SAMPLING DESIGN
A sample design is a definite plan for obtaining a sample from a given population. It refers to the
techniques or procedures the researcher would adopt in selecting items for the sample.
CONVENIENCE SAMPLING
The researcher adopted convenience sampling. It is the non probability sampling is that sampling
procedures does not any basis for estimating the probability that each item in the population has
of included in the sample. The researcher selects the people according to their convenient.
SAMPLE SIZE
A sample of 100 people was taken for the survey. The required data collected through
questionnaire.
55
Sample Design
DETAILS OF THE SURVEY CONDUCTED
Sample Size
100
20-30 years
30-40 years
Target Population
40-50 years
above 50 years
Jaipur, Malviya Nagar, Vaishali Nagar.
Location
Type of questionnaire
Structured
15
56
DATA COLLECTION
The information required for our project was collect mainly from the primary sources and even
from secondary sources. The primary source consists of the data analyzed from questionnaire
and interaction with the user at that time only. And internet is used as secondary source.
thus happen to
be original in character Collection of primary data. There are several method of collecting
primary data, particularly in surveys and descriptive researches.
>Observation Method
>Interview Method
>Through Questionnaires
Questionnaire
This method of data collection is quite popular, particularly in case of big enquires. In this
method a questionnaire is sent to the persons concerned with a request to answer the questions
and return the questionnaire.
57
Secondary Data:
Secondary data are those which already been gathered early for some other purpose are
secondary data in the hands of the marketing researcher. In contrast, those data which are
collected at the first hand either by the researcher or by someone else especially for the purpose
of the study are known as primary data. Thus, primary data collected by one person may become
the secondary data for another. Secondary data saves much of time, cost of the project.
Research is totally based on Primary Data. Secondary Data can be used for the reference.
Research has been done by Primary Data, and primary data has been collected by meeting with
the employees in the hotel. Data collection has been done through by giving structured
questioner and through personal interview. This study will be based on sampling. This is an
Exploratory Type of research.
1.
0-10%
b. 10-20%
c.
20-30%
d. 30-40%
e.
others
Particulars
0-10%
10-20%
20-30%
30-40%
Others
No. Of respondents
16
38
22
18
6
30-40%; 18%
22%
0-10% 20-30%;
10-20%
Other; 6%
Percentage
16%
38%
22%
18%
6%
0-10%; 16%
20-30%
10-20%;
30-40% 38%
Other
ANALYSIS:
Among the 50 questionnaires filled, it was clear that among them maximum people invest in the
category of 10-20%. Thus Globe has the opportunity to capture this segment. But people are not
aware of the services so here Globe has to work in this area.
Securities
(b)
Mutual fund
59
(c)
Commodities
(d)
Insurance
(e)
Other Instruments
Particulars
Securities
Mutual fund
Commodities
Insurance
Other Instruments
No. of respondents
10
10
25
25
10
Percentage
10%
10%
25%
25%
10%
6
4
7
Securities
Insurance
18
Mutual Funds
Commodities
Other Instruments
15
ANALYSIS:
The above observation speaks about the financial instruments in which the people invest; most of
the people invest in the securities through share market and then invest in the insurance. Thus
more focus should be made on securities so that company has the maximum investment. This
would ultimately increase the profits..
3.
YES
(b) NO
60
Particulars
Yes
No
No. of respondents
58
42
Percentage
58%
42%
No; 42%
Yes; 58%
Yes
No
ANALYSIS:
It can be seen that among the whole population around 58% people either invest in stock market
or they are actually interested, but don't have a good knowledge about it. So these people can
actually become Globe's target market but globe has to provide them the better services and
brokerage plans and also, providing them the initial platform of online trading.
4.
YES
(b)
NO
Particulars
Yes
No. of respondents
80
Percentage
80%
61
No
20
20%
20
Yes
No
80
ANALYSIS:
Among100 respondents 80 actually have a demat account and are aware of the dealings in stock
trading. The rest 20 are still in the other category. so strategies should be made to convert these
people in to our potential customers.
5.
Online
(b)
Offline
Particulars
No. of respondents
Percentage
62
Online
Offline
30
70
30%
70%
30
70 Online
Offline
ANALYSIS:
Among 100 respondents 70 had a Demat account of these 70 have their demat account offline
and rest 30 have their Demat accounts online. As online broking is still at a premature stage in
India. Thus more awareness should be made about the online broking services.
6.
(c) Kotak
(d)
Globe
(g)
Others
Particulars
No. of respondents
Percentage
63
10
15
10
35
5
15
10
10
10
10%
15%
10%
35%
5%
15%
10%
15
10
globe5
Indiabulls
Sharekhan
15
ICICI direct
35
Indian Foline
Kotak
Others
ANALYSIS:
Among these 35 people most of them have their Demat account with Share Khan and India bulls.
Thus these two are Globe's biggest competitors. Also ICICI Direct gives a good competition to
Globe. These brands have a good brand recall as compared to Globe.
7.
Yes
(b)
No
Particulars
Yes
No. of respondents
37
Percentage
37%
64
No
63
63%
37%
63%
Yes
No
ANALYSIS:
It can be seen that among the population who invest in stock market, around 37% people either
trade in future or they trade in option. So these people can actually become Globe's target market
as they generate heavy brokerage for the company. Globe has to provide them the better services
and brokerage plans and also, providing them the initial platform of online trading.
8.
Everyday
(c)
Particulars
No. of respondents
Percentage
65
Everyday
2-3 days a week
12-18 days a month
2-3 days a month
64
19
11
6
11%
64%
19%
11%
6%
6%
19%
Everyday
64%
ANALYSIS:
The above observation speaks about the; most of the people do trading every day. Thus more
focus should be made on the traders which are every day traders. The company should also focus
on the others also because they are the traders for the long terms investment and also, provide
heavy brokerage to the company.
9.
Yes
(b)
No
Particulars
Yes
No
No. of respondents
83
17
Percentage
83%
17%
66
17%
Yes
83%
No
ANALYSIS:
A good percentage of people give the annual maintenance charge to the company, Globe can
have the advantage of attracting their customers as they don't charge the AMC on its brokerage
plans and which will work to generate sales.
10.
(0.01-0.02) %
(b) (0.02-0.03) %
(c)
(0.03-0.04) %
(d) (0.04-0.05) %
(e)
0.05 % or more
Particulars
0.01-0,02%
0.02-0.03%
0.03-0.04%
No. of respondents
3
26
26
Percentage
3%
26%
26%
67
0.04-0.05%
0.05% or more
18
27
27%
(0.01-0.02)%
(0.02-0.03)%
18%
18%
27%
3%
26%
(0.03-0.04)%
(0.04-0.05)%
26%
0.05% or More
ANALYSIS:
It can be seen that the companies are charging brokerage according to their own means. So, the
companies are creating biasness between the customers, Even if the customers portfolio is the
same then also the brokerage may vary from the person to person. So Globe has the best feature
of providing less brokerage and according to the customers wants.
11.
(0.1-0.2) %
(b) (0.2-0.3) %
(c)
(0.3-0.4) %
(d) (0.4-0.5) %
(e)
0.5 % or more
Particulars
0.01-0.02%
0.02-0.03%
0.03-0.04%
0.04-0.05%
0.05% or more
No. of respondents
1
24
31
19
25
Percentage
1%
24%
31%
19%
25%
68
25%
(0.01-0.02)%
19%
(0.02-0.03)%
1%
(0.03-0.04)%
24%
(0.04-0.05)%
31%
0.05% or More
ANALYSIS:
Here also you can see that the long term investors have to give brokerage according to what the
company wants. So, here also the biasness is created in the mind of the customers. So, Globe got
a great opportunity to attract the customers by giving the brokerage plans according to what the
customer want.
12.
Yes
(b)
No
Particulars
Yes
No
No. of respondents
64
36
Percentange
64%
36%
69
36%
Yes
No
64%
ANALYSIS:
It can be seen from the observations that there are customers who are not satisfied by the services
given by the brokerage companies can be converted by providing better services to them.
Sometimes even if the customers have the same or more investment then also, he is getting fewer
services than the other one. So, Globe can convert them by providing better services to them.
Particulars
No. of respondents
Percentage
Trading a/c
40
40%
Fixed deposits
60
60%
70
40
60
Trading A/C
Fixed deposits
Analysis
As we can see from the pie chart that the people are most interested in investing their money on
fixed deposits as the saving for them rather than on trading a/c..
People invest in share market as they want to earn money from the share market and the most
preffered type of investment for the savings is fixed deposits..
(b) No
No. of respondents
59
41
Percentage
59%
41%
71
41
59
Yes
No
Analysis :
It can be seen from the observation that the 41% people are not satisfied with their present
broking firm..So, they can change their broking firm in order to earn high incomes or they can
suggest some measures to the firm so as to increase the productivity of the firm.
Particulars
Share Khan
Icici Direct
No. of respondents
25
20
Percentage
25%
20%
72
Globe Capital
Others
30
25
25
30%
25%
25
Share khan
ICICI Direct
30
22
Globe Capital
Others
ANALYSIS:
From the above chart we can see that the 30% people are more interested in investing their
money in Globe capital as compared to other broking firms..This might be is because of the
goodwill or the value services of the Globe capital..There is a tough competition in the other
broking firms also.
FINDINGS
According to the survey most of the customers say that Globe
Capital is a pocket friendly.
People want to invest their money in the security market but they
do not have the proper knowledge .
Commodity market is less preferred by the investors .
The main purpose of investments are returns and the liquidity .
73
The traders pay more emphasis on the brokerage than the services
provided by the brokerage firms .
Investors take risk as well as returns into their mind while making
the investments .
Most of the people trade according to themselves.
Company growth and annual result plays a crucial role.
Hence , by the analysis the alternative hypothesis is proved i.e ,
there is a significant difference between the level of satisfaction
and dissatisfaction of people who wish to invest their money in the
share market with Globe securities.
CONCLUSION
You can make a lot of money investing in stocks or trading in the stock
market, but it is not something for the new investors.
Care must be taken when it comes to stock investments. The investor must
have a solid understanding of stocks and how they trade in the market or risk
losing money in a volatile type of investment.
74
Some trading strategies proved to be more profitable than others. This may
have only been a result of the time frame that the trades and investments
took place, or it could have been a general indication that certain strategies
are in fact more successful than others.
Since the time frame was so short, and investors can be in the stock market
for years, it is difficult to assume which would be the be style of trading;
however, based on our results, the style that produced the most profit was
that of the successful share market.
The long term trend following strategy proved most profitable. Investment
in a company before release of a new product resulted in a large increase in
stock value, such as the investment in Globe capital. prior to the release of
their new product.
It is information like this that makes the big profits; however, others did well
in the simulation too.
The overall conclusion resulting from this simulation is that the stock
exchange is a completely unpredictable market. It can be very dangerous at
times, yet very rewarding as well.
One day might be a huge loss, and then the next day the investor could
make all the money back and then turn over a profit. We all started from
scratch not knowing anything about the Market, and we made a decent
profit.
Although it seems that those who research and know the stock market
before they invest have the best luck with it,even those who dedicate their
careers to this potentially lucrative industry can wind up bankrupt..
75
RECOMMENDATIONS
On the basis of these findings and analysis, It has can be surely said that in stock broking
industry, differentiation can become the key to higher revenues. Better service, straight through
processing (STP), immediate execution, portfolio services, investment advisors and telephone
call centers or branch investment offices are needed to retain customers and to increase the
revenue base. As more number of people will get comfortable with internet/technology, broking
(especially online broking) will have a completely new meaning with more fringes coming into
the picture and more firms will offer umbrella services to their clients. Thus more of strategies
should be undertaken
Providing better plans and schemes than our competitors like Share khan, India bulls, and
ICICI direct are providing in terms of brokerage and subscription.
Formulation of more corporate schemes for employees of organizations falling under
Globe's corporate category. Drafting a website which is both professional and user
friendly Associating Globe with Ranbaxy to make it a power brand. Taking Globe from
the brand recognition stage to brand insistence stage.
Globe should make its brokerage structure more flexible to give a good competition to
the investors
D Some more collaboration with international firms and increasing its outlets not only in
India but also outside the world
D Also, to attract the NRIs so, that to increase its share in the stock exchanges as they
provide the largest shares in terms of the investment.
76
Limitations:
The study could not be generalized due to the fact that researcher adapted
personal interview method.
Employer, customer and associate trio is not there and hence the study is
associate biased.
As we have used non probability sampling as well as taken only Jaipur
Globe into consideration, hence the study cannot be generalized to whole of
Globe group.
We considered only intrinsic factors and hence the moods and personality of
stock holders or consumers can change the results.
Study is done within 2 months and hence it lacks the temporal variations.
Language can also be the constraint.
Researchers are not familiarized with the associates and hence they cannot
REFERENCES
BOOKS
77
1.
2. Ashwathapa K., Market share (third edition), Tata Mc Graw Hill Publication
Company Ltd. Page no. 81-136,171,179,267,284.
3. Chhabra. , T. N. Brokerage plans, Dhanpat Rai $Co (P) Ltd. India ,ninth
edition.
4. Monnapa Arun., Market share, Tata Mc Graw Hill Publication Company Ltd.
5. Ashwathapa K., Brokerage plans (third edition), Tata Mc Graw Hill
Publication Company Ltd.
WEBLIOGRAPHY
1) www.researchandmarkets.com
2) http://www.slideshare.net/hemanthcrpatna/a-project-report-on-market-share
3) www.business.mapsofindia.com
4) http://en.wikipedia.org/wiki/brokerage-plans
5) http://www.slideshare.net/hemanthcrpatna/a-project-report-on-brokerage-plansof-globe-capital
ANNEXURE
QUESTIONNAIRE
78
NAME:
GENDER:
AGE:
OCCUPATION:
ANNUAL INCOME:
1.
(b) 10 - 20%
(c) 20 - 30%
(d) 30 - 40%
(e) Others
2.
(c) Commodities
(d) Insurance
3.
4.
5.
(b) NO
6.
(b) NO
(b)
Offline
(b)
India Bulls
79
(c) Kotak
(d)
Globe
(f)
Share khan
(g) Others
7.
8.
9.
10.
(b) No
11.
80
12.
(b) No
(b) No
Sharekhan
ICICI Direct
Globe Capital
Others
81