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ON
AT
By
VAIBHAV VERMA
1
DECLARATION
(VAIBHAV VERMA)
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ACKNOWLEDGEMENT
If words are considered as a symbol of approval and token of appreciation then let
the words play the heralding role expressing my gratitude
The world of capital market war far from me but I got an opportunity to
understand the capital market at LSE. While training I learnt many things about
capital market and its structure. So I am very thankful to Ludhiana Stock
Exchange association limited for giving me such opportunity.
First of all I thank to that Gracie god who blessed me with all kinds of facilities that
had been provided to me for completion of my report.
I want to express my sincere gratitude to all the staff members of LSE for
spending their precious time and sharing the value able information with me and
in helping my project to be a success.
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PREFACE
achieve positive and concrete results, along with theoretical concepts, the exposure of
real life situation existing in corporate world is very much needed. To fulfill this need, this
get training in a very healthy atmosphere. I got ample opportunity to view the overall
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CONTENTS
S.NO.
Page no.
DECLARATION………………………………………………… 2
ACKNOWLEDGEMENT………………………………………..3
PREFACE………………………………………………………….4
CHAPTER-1
INTRODUCTION OF STUDY………………………………………………...5
CHAPTER-2
• LITERATURE REVIEW………………………………………9
CHAPTER-3
• COMPANY PROFILE…………………………………………55
CHAPTER-4
CHAPTER-5
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• CONCLUSIONS…………………………………………………72
• SUGGESTIONS…………………………………………………73
CHAPTER-6
BIBLIOGRAPHY………………………………………………………………..75
Questionnaire………………………………………………..76
CHAPTER – 1
INTRODUCTION TO STUDY
DEMATERIALIZATION:
Dematerialization is the process of converting the physical form of shares into electronic form.
Prior to dematerialization the Indian stock markets have faced several problems like delay in the
transfer of certificates, forgery of certificates etc. Dematerialization helps to overcome these
problems as well as reduces the transaction time as compared to the physical segment. The article
discusses the procedures, advantages and problems of dematerialization.
The Indian Stock markets have seen a major change with the introduction of depository system
and scrip less trading mechanism. There were various problems like inordinate delays in the
transfer of share certificates, delay in receipt of securities and inadequate infrastructure in
banking and postal segments to handle a large volume of application and storage of share
certificates .To overcome these problems physical dealing in securities should be eliminated . The
Indian stock market introduced the system of dematerialization recognizing the need for scrip less
trading.
According to the Depositories Act, 1996, an investor has the option to hold shares either in
physical or electronic form .The process of converting the physical form of shares into electronic
form is called dematerialization or in short demats. The converted electronic data is stored with
the depository from where they can be traded. It is similar to a bank where an investor opens an
account with any of the depository participants. Depository participant is a representative of the
depository .The DP maintains the investors securities account balances and intimates him about
the status of holdings.
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ONLINETRADING
Online Trading is an easy way to buy and sell shares from the comfort of one’s place instead of trading
through individual stockbroker and broking firms, the customer can transact with the help of mouse
click and his visits to the neighborhood broker will become a thing of the past. Even the older
generation is adapting the online trading route.
Find the right depository to provide with an online trading account can be difficult, but many banks and
companies offer excellent services for online trading. Our needs will determine which online broker is
best for us. Online trading brings in total transparency between broker an investor in case of secondary
marketoperation.Whether we are buying a mutual fund, investing in commodities market or any other
transaction can be performed with minimal fuss. In India presently online trading can take place
through order routing system, which will route client orders to exchanges trading system for execution
of trade on stock exchange (NSE and BSE).
One of the measure attractions of online trading is the wealth of free commentary and analysis about
stock market and global economy. Any investor with an ounce of market saviness can extract all the
data needed to make trading decisions and complete the trades. An important catalyst behind the
emergence of thriving online brokerage system has been the buoyant stock market. One can trade
online with e-brokerage such as ICICI Direct, HDFC Securities, India Bulls, Kotakstreet and India Info
line’s 5paisa.com.
NEED OF STUDY:
With the emergence of the internet in everyday business, the significance of the online stock
market trading broker has gone up.
• It can be done from home at any desired fixed hours of the investor.
• The processing of the order is executed at proper timings as the servers of the online trading
portal are linked to the selected banks and stock exchanges though out twenty four hours.
• The investments made are safe and secured and profit is earned at proper time without any
dispute.
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• Online trading updates are also provided to the investors and also about the present grade of
their orders either through the interface or e-mail.
OBJECTIVES OF STUDY:
The data collection methods include both the primary and secondary collection
methods
Primary collection methods: This method includes the data collection from the
personal discussion with the authorized clerks and members of the Net worth.
Secondary collection methods: The secondary collection methods includes the
lectures of the superintend of the department of market operations and so on.
Also the data collected from the news, magazines of the Net worth and
different books issues of this study.
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SCOPE OF STUDY:
The study is limited to “Demat and Online Trading”.
And since the year 2000, a big boom has been witnessed in the Indian stock Market when the market
showed the coming up of Online Trading System. Many Online stock trading companies came but
initially due to lack of Online Trading some Companies Vanished and some survived. The Companies
which are survived are getting the handsome returns also attracting the foreign Investment
Companies. Now a days this sector is facing cut-throat Competition. And also provides huge growth
prospects.
LIMITATIONS OF STUDY:
A good report tells us the results of the study. But every project has its own Limitations. These
• There is lack awareness among people about investing in stock market. So people who are
aware of such things were found in specific areas for survey purposes.
• Most people are comfortable with traditional system in small towns and like to trade from their
respective brokers, hence not providing their true opinions.
• Most of people are not using technology and Internet is growing still it is not at the required
level.
• Some of the respondents who did not do Online trading were able to respond only to some
questions.
• Limitations towards Demat and online trading confined to keep the
study in manageable limits.
CHAPTER – 2
REVIEW OF LITERATURE
INTRODUCTION
1
India Financial Market the India Financial market comprise of talks about the
primary market, FDIs, alternative investment options, banking and insurance
and the pension sectors, asset management segment as well. With all these
elements in the India Financial market, it happens to be one of the oldest
across the globe and is definitely the fastest growing and best among all the
financial markets of the emerging economies. The history of Indian capital
markets spans back 200 years, around the end of the 18th century. It was at
this time that India was under the rule of the East India Company. The capital
market of India initially developed around Mumbai; with around 200 to 250
securities brokers participating in active trade during the second half of the
19th century.
Scope of the India Financial Market –The financial market in India at present is
more advanced than many other sectors as it became organized as early as
the 19th century with the securities exchanges in Mumbai, Ahmedabad and
Kolkata. In the early 1960s, the number of securities exchanges in India
became eight – including Mumbai, Ahmedabad and Kolkata. Apart from these
three exchanges, there was the Madras, Kanpur, Delhi, Bangalore and Pune
exchanges as well. Today there are 23 regional securities exchanges in India.
The NSE provides exposure to investors into two types of financial Markets:
1. Capital market.
2. Money market.
Capital market:
Refers to all the facilities and Institutional arrangements for borrowing and lending of term
funds. It does not deal in capital goods but is concerned with the raising of money capital. It
consists of term lending institutions and investing Institutions which mainly provide long
term funds.
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1) Gilt-edged Securities Market
4) Financial Services.
Industrial Securities Market has been further divided into two markets they are:
A. Primary Market.
B.Secondary Market.
Primary Market: Refers to the raising of new capital in the form of shares and
debentures, while Secondary Market deals with securities already issued by companies.
Both the markets are important, but the new issues market is much more important from the
point of view of economic growth.
Secondary Market: The market where securities are traded after they are initially
offered in the primary market. Most trading is done in the secondary market. To
explain further, it is trading in previously issued financial instruments. An
organized market for used securities. Bombay Stock Exchange (BSE), National
Stock Exchange NSE, bond markets, over-the-counter markets, residential
mortgage loans, governmental guaranteed loans etc
Secondary Market refers to a market where securities are traded after being
initially offered to the public in the primary market and/or listed on the Stock
Exchange. Majority of the trading is done in the secondary market. Secondary
market comprises of equity markets and the debt markets. For the general
investor, the secondary market provides an efficient platform for trading of his
securities. For the management of the company, Secondary equity markets serve
as a monitoring and control conduit—by facilitating value-enhancing control
activities, enabling implementation of incentive-based management contracts,
and aggregating information (via price discovery) that guides management
decisions.
Money market: Money Market is a market for short-term funds, which can be used for
overnights to one year duration. It also deals with the financial assets that constitute near
money which means that the assets can be converted into cash quickly with minimum
transaction cost and without a loss in value. It consists of commercial banks, co-operative
banks and other agencies which supply only short term funds. It consists of
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• Organized Money Markets. And Un Organized money markets
• The Call Money Market, Treasury Bill Market, Collateral Money market,
Commercial paper and Certificate of deposits.
INDIAN
CAPITAL 18 Trading of shares of east India company in
00 Kolkata And Mumbai
MARKET
AT 18 Joint stock company came into existence
GLANCE 50
19 Scam of MS Shoes
91
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19 HARSHAD MEHTA Scam
95
19 CRB scam
97
21 st century
1
200 Sexsex saw its down trend & highest ever loss
9 because of Satyam case.
Stock exchange is an organized market place where securities are traded. These securities
are issued by the government, semi-government bodies, public sector undertakings and
companies for borrowing funds and raising resources. Securities are defined as any
monetary claims (promissory notes or I.O.U) and also include shares, debentures, bonds and
etc., if these securities are marketable as in the case of the government stock, they are
transferable by endorsement and alike movable property. They are tradable on the stock
exchange. So are the case shares of companies.
Under the Securities Contract Regulation Act of 1956, securities’ trading is regulated
by the Central Government and such trading can take place only in stock exchanges
recognized by the government under this Act. As referred to earlier there are at present 23
such recognized stock exchanges in India. Of these, major stock exchanges, like Bombay
Stock Exchange National Stock Exchange,Inter-Connected Stock Exchange, Calcutta,
Delhi, Chennai, Hyderabad and Bangalore etc. are permanently recognized while a few are
temporarily recognized. The above act has also laid down that trading in approved contract
should be done through registered members of the exchange. As per the rules made under
the above act, trading in securities permitted to be traded would be in the normal trading
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hours (09:15 A.M to 3.30 P.M) on working days in the trading ring, as specified for trading
purpose. Contracts approved to be traded are the following:
A. Spot delivery deals are for deliveries of shares on the same day or the next day as the
payment is made.
B. Hand deliveries deals for delivering shares within a period of 7 to 14 days from the
date of contract.
C. Delivery through clearing for delivering shares with in a period of two months from
the date of the contract, which is now reduce to 15 days.(Reduced to 2 days in demat
trading)
D. Special Delivery deals for delivering of shares for specified longer periods as may be
approved by the governing board of the stock exchange.
Except in those deals meant for delivery on spot basis, all the rest are to be
put through by the registered brokers of a stock exchange. The securities contracts
(Regulation) rules of 1957 laid down the condition for such trading, the trading hours, rules
of trading, settlement of disputes, etc. as between the members and of the members with
reference to their clients.
The origin of the Stock Exchanges in India can be traced back to the later half of 19th
century. After the American Civil War (1860-61) due to the share mania of the public, the
number of brokers dealing in shares increased. The brokers organized an informal
association in Mumbai named “The Native Stock and Share Brokers Association in
1875”.later evolved as Bombay stock exchange.
Increased activity in trade and commerce during the First World War and
Second World War resulted in an increase in the stock trading. The Growth of Stock
Exchanges suffered a set after the end of World War. World wide depression affected them
most of the Stock Exchanges in the early stages had a speculative nature of working without
technical strength. After independence, government took keen interest to regulate the
speculative nature of stock exchange working. In that direction, securities and Contract
Regulation Act 1956 was passed, this gave powers to Central Government to regulate the
stock exchanges. Further to develop secondary markets in the country, stock exchanges
established at Mumbai, Chennai, Delhi, Hyderabad, Ahmedabad and Indore. The
Bangalore Stock Exchange was recognized in 1963. At present there are 23 Stock
Exchanges.
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Till recent past, floor trading took place in all Stock Exchanges. In the floor trading
system, the trade takes place through open outcry system during the official trading hours.
Trading posts are assigned for different securities where by and sell activities of securities
took place. This system needs a face – to – face contact among the traders and restricts the
trading volume. The speed of the new information reflected on the prices was rather than
the investors.
The Setting up of NSE and OTCEI (Over the counter exchange of India with the screen
based trading facility resulted in more and more Sock exchanges turning towards the
computer based trading. BSE introduced the screen based trading system in 1995, which
known as BOLT (Bombay on – line Trading. System).
Maintain Active Trading: Shares are traded on the stock exchanges, enabling the
investors to buy and sell securities. The prices may vary from transaction to transaction. A
continuous trading increases the liquidity or marketability of the shares traded on the stock
exchanges.
Fixation of Prices: Price is determined by the transactions that flow from investors
demand and the supplier’s preferences. Usually the traded prices are made known to the
public. This helps the investors to make the better decision.
Ensures safe and fair dealings: The rules, regulations and bylaws of the Stock
Exchanges provide a measure of safety to the investors. Transactions are conducted under
competitive conditions enabling the investors to get a fair deal.
Aids in financing the Industry: A continuous market for shares provides a favourable
climate for raising capital. The negotiability and transferability of the securities, investors
are willing to subscribe to the initial public offering (IPO). This stimulates the capital
formation.
Performance Inducer: The prices of stocks reflect the performance of the traded
companies. This makes the corporate more concerned with its public image and tries to
maintain good performance.
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Self-regulating organization: The Stock Exchanges monitor the integrity of the members,
brokers, listed companies and clients. Continuous internal audit safeguards the investors
against unfair trade practices. It settles the disputes between member brokers, investors and
brokers.
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REGULATORY FRAME WORK
This Securities Contract Regulation Act, 1956 and Securities and Exchange board of
India (SEB1) Act, 1992, provides a comprehensive legal framework. A 3-tier regulatory
structure comprising the ministry of finance, SEB1 and the Governing Boards of the Stock
Exchanges regulates the functioning of Stock Exchanges.
Ministry of finance: The Stock Exchange division of the Ministry of Finance has
powers related to the application of the provision of the SCR Act and licensing of dealers in
the other area. According to SEBI Act, The Ministry of Finance has the appellate and the
supervisory power over the SEBI. It has powered to grant recognition to the Stock Exchange
and regulation of their operations. Ministry of Finance has the power to approve the
appointments of executives chiefs and the nominations of the public representatives in the
government Boards of the Stock Exchanges. It has the responsibility of preventing
undesirable speculation.
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The Securities and Exchange Board of India even though established in the year
1988. Received statutory powers only on 30th January 1992. Under the SEBI Act, a wide
variety of powers are vested in the hands of SEBI. SEBI has the powers to regulate the
business of Stock Exchanges, other security and mutual funds. Registration and regulation of
market intermediaries are also carried out by SEBI. It has responsibility to prohibit the
fraudulent unfair trade practices and insider dealings. Takeovers are also monitored by the
SEBI has the multi pronged duty to promote the healthy growth of the capital market and
protect the investors.The Governing Board of stockexchanges: The Governing Board of the
Stock Exchange consists of elected members of directors, government nominees and public
representatives. Rules, by laws and regulations of the Stock Exchange substantial powers to
the executive director for maintaining efficient and smooth day-to day functioning of Stock
Exchange. The Governing Board has the responsibility to maintain and orderly and well-
regulated market.
A. Six members of the Stock Exchange are elected by the members of the Stock
Exchange.
B. Central Government nominates not more than three members.
C. The board nominates three public representatives.
D. SEBI nominates persona not exceeding three and
E. The Stock Exchange appoints one Executive Director.
One third of the elected members retire at annual general meeting (AGM). The
retired member can offer himself for election if he is not elected for two consecutive years. If
a member serves in the governing body for two years consecutively, he should refrain
offering himself for another two years.
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The members of the governing body elect the president and vice-president. It needs
to approval from the Central Government or the Board. The office tenure for the president
and vice-president is on year. They can offer themselves for re-election, if they have not held
for two consecutive years. In that case they can offer themselves for re-election after a gap of
one-year period.
» Ahmedabad
» Bangalore
» Bhubaneshwar
» Calcutta
» Cochin
» Coimbatore
» Delhi
» Guwahati
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» Hyderabad
» Jaipur
» Ludhiana
» Madhya Pradesh
» Madras
» Magadh
» Mangalore
» Meerut
» OTC Exchange Of India
» Pune
» Saurashtra Kutch
» UttarPradesh
» Vadodara
AMONG THESE STOCK EXCHANGES THERE ARE TWO IMPORTANT, THEY ARE:
1) NSE
2) BSE
The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced
exchange with 1016 companies listed and 726 trading members. Capital market reforms in India and
the launch of the Securities and Exchange Board of India (SEBI) accelerated the incorporation of the
second Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a few years of
operations, the NSE has become the largest stock exchange in India
Three segments of the NSE trading platform were established one after another. The Wholesale Debt
Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was
opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today
the NSE takes the 14th position in the top 40 futures exchanges in the world.
In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that
make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50 stocks from 25
different economy sectors. The Indices are owned and managed by India Index Services and Products
Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor's.
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In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India
that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian
financial market by gaining many awards such as 'Best IT Usage Award' by Computer Society in India
(in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
The NSE is owned by the group of leading financial institutions such as Indian Bank or Life Insurance
Corporation of India. However, in the totally de-mutualized Exchange, the ownership as well as the
management does not have a right to trade on the Exchange. Only qualified traders can be involved in
the securities trading.
The NSE is one of the few exchanges in the world trading all types of securities on a single platform,
which is divided into three segments: Wholesale Debt Market (WDM), Capital Market (CM), and
Futures & Options (F&O) Market.
1). To establish a nation wide trading facility for equities, debt and hybrid instruments
2). To ensure equal access investors all over the country through appropriate communication
network.
3). To provide a fair, efficient and transparent securities market to investors using an electronic
communication network.
4). To enable shorter settlement cycle and book entry settlement system.
5). To meet current international standards of securities market.
Promoters of NSE: IDBI, ICICI, IFCI, LIC, GIC, SBI, Bank of Baroda. Canara Bank, Corporation
Bank, Indian Bank, Oriental Bank of Commerce. Union Bank of India, Punjab National Bank,
Infrastructure Leasing and Financial Services, Stock Holding Corporation fo India and SBE capital
market are the promoters of NSE.
NSE Nifty:
The S&P CNX Nifty (nicknamed Nifty 50 or simply Nifty), is the leading index for large companies on
the National Stock Exchange of India. S&P CNX Nifty is a well diversified 50 stock index accounting
for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund
portfolios, index based derivatives and index funds.
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Nifty was developed by the economists Ajay Shah and Susan Thomas, then at IGIDR. Later on, it 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 India's first specialized company focused upon the index as a core
product. IISL have a consulting and licensing agreement with Standard & Poor's (S&P), who are world
leaders in index services.
CNX stands for CRISIL NSE Indices. CNX ensures common 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 for Exchange or Index. The S&P prefix belongs to the US-based Standard & Poor's
Financial Information Services.
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The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly called The
Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. It is located at Dalal Street,
Mumbai, India.
Bombay Stock Exchange was established in 1875. There are around 5,600 Indian companies listed with
the stock exchange, and has a significant trading volume. As of October2006, the market capitalization
of the BSE was about Rs. 33.4 trillion (US $ 730 billion). The BSE SENSEX (Sensitive index), also
called the BSE 30, is a widely used market index in India and Asia. As of 2005, it is among the 5
biggest stock exchanges in the world in terms of transactions volume.
History:
An informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of
Bombay from the mid-1850s, 1875, was formally organized as the Bombay Stock Exchange (BSE).In
January 1899, the stock exchange moved into the Brokers’ Hall after it was inaugurated by James M
MacLean. After the First World War, the BSE was shifted to an old building near the Town Hall. In
1956, the Government of India recognized the Bombay Stock Exchange as the first stock exchange in
the country under the Securities Contracts (Regulation) Act.1995, when it was replaced by an electronic
(eTrading) system named BOLT,or the BSE Online Trading system. In 2005, the status of the exchange
changed from an Association of Persons (AoP) to a full fledged corporation under the BSE
(Corporatization and Demutualization) Scheme , 2005 (and its name was changed to The Bombay
Stock Exchange Limited).
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BSE Sensex:
The BSE SENSEX (also known as the BSE 30) is a value-weighted index composed of 30 scrips, with
the base April 1979= 100. The set of companies which make up the index has been changed only a few
times in the last 20 years. These companies account for around one-fifth of the market capitalization of
the BSE.
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. More
recently, the bourses in India witnessed a similar frenzy in the 'TMT' sectors. The SENSEX captured all
these happenings in the most judicial manner. One can identify the booms and bust of the Indian equity
market through SENSEX.
The values of all BSE indices are updated every 15 seconds during the market hours and displayed
through the BOLT system, BSE website and news wire agencies.
SENSEXcalculation:
SENSEX is calculated using a "Market Capitalization-Weighted" methodology.
As per this methodology, the level of index at any point of time reflects the total market value of 30
component stocks relative to a base period. (The market capitalization of a company is determined by
multiplying the price of its stock by the number of shares issued by the company). An index of a set of
combined variables (such as price and number of shares) is commonly referred as a 'Composite Index'
by statisticians. A single indexed number is used to represent the results of this calculation in order to
make the value easier to work with and track over time. It is much easier to graph a chart based on
indexed values than one based on actual values. .
Apart from BSE SENSEX, which is the most popular stock index in India, BSE uses other stock
indices as well:
• BSE 500
• BSE PSU
• BSE MIDCAP
• BSE SMLCAP
• BSE BANK
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The Securities and Exchange Board of India
The Securities and Exchange Board of India even though established in the year
1988. Received statutory powers only on 30th January 1992. Under the SEBI Act, a
wide variety of powers are vested in the hands of SEBI. SEBI has the powers to
regulate the business of Stock Exchanges, other security and mutual funds.
Registration and regulation of market intermediaries are also carried out by SEBI.
It has responsibility to prohibit the fraudulent unfair trade practices and insider
dealings. Takeovers are also monitored by the SEBI has the multi pronged duty to
promote the healthy growth of the capital market and protect the investors.
One third of the elected members retire at annual general meeting (AGM). The retired member
can offer himself for election if he is not elected for two consecutive years. If a member serves in the
governing body for two years consecutively, he should refrain offering himself for another two years.
The members of the governing body elect the president and vice-president. It needs to approval
from the Central Government or the Board. The office tenure for the president and vice-president is on year.
They can offer themselves for re-election, if they have not held for two consecutive years. In that case they
can offer themselves for re-election after a gap of one-year period.
1
The Securities and Exchange Board of India even though established in the
year 1988. Received statutory powers only on 30th January 1992. Under the
SEBI Act, a wide variety of powers are vested in the hands of SEBI. SEBI has the
powers to regulate the business of Stock Exchanges, other security and mutual
funds. Registration and regulation of market intermediaries are also carried out
by SEBI. It has responsibility to prohibit the fraudulent unfair trade practices
and insider dealings. Takeovers are also monitored by the SEBI has the multi
pronged duty to promote the healthy growth of the capital market and protect
the investors
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Trading on stock exchanges is officially done in the ring for a few hours from 11.00 A.M to 2.30P.M.
Trading before or after official hour is called KERB TRADING. In the trading ring space is provided for
specified and non-specified sections. The members of their authorized assistants have to wear a badge or
carry with them identify cards given by the exchange to enter the trading ring. They carry a Sauda book or
confirmation memos duly authorized by exchange. The stock exchanges operations at floor level are highly
technical in nature. Non-members are not permitted to enter into stock market. Hence, various stages have to
be completed in executing a transaction at a stock exchange. The steps involved in the methods of trading
have been given below:
A.CHOICE OF BROKER:
The prospective investor who wants to buy shares or the investor who wants to sell his shares cannot enter
into hall of the exchange and transact business. They have to act through only member brokers. They can also
appoint their bankers for this purpose. Since, bankers can become members of stock exchange as per the
present regulations.
So, the first task in transacting business on stock exchanges is to choose a broker of repute or banker. Such
people’s can ensure prompt and quick execution of a transaction at the possible price.
At present there are 4500 authorized brokers in ISE.
PLACEMENT OF ORDER:
The next step in planning of order for the purchase or sale of Securities with the broker. The order
is usually by telegram, telephone, letter, fax etc., or in person. To avoid delay it is placed generally over the
phone. The orders may take any one of the forms such as at best order, limit order, immediate or cancel order,
discretionary order, limited discretionary order, open order and stop loss order.
ENTRY OF ORDER INTO THE BOOKS:
After receiving the order, the member enters them in his books and the purchase and sale orders
are distributed among his assistants to handle them separately in non-specified and odd-lots.
EXECUTION OF ORDER:
Big brokers transact their business through their authorized clerk. Small ones out their business
personally. Orders are executed in the trading ring of the ISE.Thisworks from 12:00 noon to
2:00 p.m discretionary order on all working days from Monday to Friday and a special hour session on
Saturday.
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The floor of the stock exchange is divided into number of markets (pits) according to the nature
of security deal in. The authorized clerk/broker goes to the pit and jobbers offer two way quotes for the scrips
they deal in. they act as market makers and provide liquidity to the market. The system has been designed to
get the bet lids and offers from the jobber’s book as well as the best buy and sell orders from the book. If the
quotation is not acceptable to the brokers, he may make a counter bid/offer.
Ultimately the bargains may be closed at a price mutually acceptable to both the parties. In case
the quotation is not acceptable to him, the broker may go to another dealer and make a bargain. All bargains
on the stock exchanges are settled by word of mouth and there is no written contract signed immediately by
the parties concerned. Once the transaction is finalized, the deals are recorded in a Chaupri Rough notebook
or transaction note or confirmation memos. Soudha block books or confirmation memos are provided by the
stock exchange. The details are recorded in these books also. The prices at which different scrips are traded
on a particular day published on the next day in the newspapers. An authorized representative of the stock
exchange is also present in the hall to supervise the trading.
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“Buy 1000 XYZ ltd.”, it does not specify any price. It means buy XYZ Ltd. Securities at the prevailing
market price. These are executed very fast as there is no price limits.
LIMIT ORDER:
“Buy 100 XYZ Ltd. At Rs 100”, it is an order for the purchase of shares at a specified price by the client.(Rs
100)
OPEN ORDER:
It is an order to buy or sell without fixing any time or price limit on the execution of the order.
STOP LOSS ORDER:
“Buy 100 XYZ Ltd. @ Rs 12 to stop Rs 10”. It means buy 100 XYZ Ltd securities at the market rate of Rs.
12 but if on the same day the price falls to Rs. 10 immediately sell of the securities /shares. Thus an attempt is
made to limit the loss of sudden unfavorable shift in the market.
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3) Business can see itself in fines and penalties if records are lost
4) Manual records are easier to be falsified, modified, altered or vanished, as compared
to computerized records which become very safe when using passwords, firewalls,
and back-ups.
DEPOSITORY SYSTEM:
A "Depository" is a facility for holding securities, which enables securities transactions to be processed by
book entry. To achieve this purpose, the depository may immobilize the securities or dematerialise them (so
that they exist only as electronic records).India has chosen the dematerialisation route. In India, a depository
is an organisation, which holds the beneficial owner's securities in electronic form, through a registered
Depository Participant (DP). A depository functions somewhat similar to a commercial bank. To avail of the
services offered by a depository, the investor has to open an account with a registered DP.
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NSDL: NATIONAL SECURITY DEPOSITORY LIMITED
Although India had a vibrant capital market which is more than a century old,
the paper-based settlement of trades caused substantial problems like bad
delivery and delayed transfer of title till recently. The enactment of
Depositories Act in August 1996 paved the way for establishment of NSDL, the
first depository in India. This depository promoted by institutions of national
stature responsible for economic development of the country has since
established a national infrastructure of international standards that handles
most of the securities held and settled in dematerialized form in the Indian
capital market.
Using innovative and flexible technology systems, NSDL works to support the
investors and brokers in the capital market of the country. NSDL aims at
ensuring the safety and soundness of Indian marketplaces by developing
settlement solutions that increase efficiency, minimize risk and reduce costs.
At NSDL, we play a quiet but central role in developing products and services
that will continue to nurture the growing needs of the financial services
industry.
Promoters/Shareholders
NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest development
bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and National Stock Exchange
of India Limited (NSE) - the largest stock exchange in India. Some of the prominent banks in the
country have taken a stake in NSDL.
Promoters
Other Shareholders
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• State Bank of India
• Oriental Bank of Commerce
• Citibank NA
• Standard Chartered Bank
• HDFC Bank Limited
• The Honkong and Shanghai Banking Corporation Limited
• Deutsche Bank
• Dena Bank
• Canara Bank
• Union Bank of India
A Depository facilitates holding of securities in the electronic form and enables securities transactions
to be processed by book entry by a Depository Participant (DP), who as an agent of the depository,
offers depository services to investors. According to SEBI guidelines, financial institutions, banks,
custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner
(BO) has to open a demat account through any DP for dematerialization of his holdings and transferring
securities.
The balances in the investors account recorded and maintained with CDSL can be obtained through the
DP. The DP is required to provide the investor, at regular intervals, a statement of account which gives
the details of the securities holdings and transactions. The depository system has effectively eliminated
paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries.
CDSL offers an efficient and instantaneous transfer of securities.CDSL was promoted by Bombay
Stock Exchange Limited (BSE) jointly with leading banks such as State Bank of India, Bank of India,
Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank.
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4 State Bank of India 1,000.00 9.57
5 HDFC Bank Limited 1,500.00 14.36
6 Standard Chartered Bank 750.00 7.18
7 Canara Bank 674.46 6.45
8 Union Bank of India 200.00 1.91
9 Bank of Maharashtra 200.00 1.91
10 The Jammu and Kashmir Bank 200.00 1.91
Limited
11 The Calcutta Stock Exchange 100.00 0.96
Association Limited
12 Others 0.08 --
TOTAL 10,450.00 100.00
•
•
• DEMATERIALIZATION
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Dematerialization is a process by which physical certificates of an investor are taken
back by the company/registrar and actually destroyed and an equivalent number of
Securities are credited in the depository account of those investors. A Depository
Participant is investor’s agent in the system. He maintains investor’s Securities
account and intimates the status of holdings from time to time to the investor.
FEATURES OF DEMAT:
• In case you want to convert your existing shares into Demat format, you can view securities
available for Demat
• You can view the details of your transactions including settlement date, pay in date, pay out
date using the View Settlement calendar option
Approach a DP.
Fill up an account opening form.
Sign on an agreement with the DP.
Application is forwarded to NSDL by DP.
NSDL allots a number identified as CM-BP-ID.
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• After opening an account with the DP the investor should surrender the physical certificates
held in his name to a depository participant. These certificates will be sent to the respective
companies where they will be cancelled after dematerialization and will credit the investors
account with the DP. The securities on dematerialisation will appear as balances in the
depository account. These balances can be transferred like the shares held in physical
form. Dematerialised shares are in the fungible form and do not have any distinctive or
certificate numbers .The securities in the demat can again be converted into physical form
which is called as rematerialisation.
* The investors account will be credited/debited by the DP only on the basis of valid instruction
from the client.
* The system driven mandatory reconciliation is done between the DP and NSDL.
* The data interchange between NSDL and its business partners is protected by standard
protection measures such as encryption.
* No direct communication links exist between two business partners and all communications are
routed through NSDL.
* The investor has the right to approach NSDL if the grievances of the investors are not resolved
by the concerned DP.
Advantages of dematerialization:
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• - Reduction in transaction cost;
- No odd lot problem, even one share can be sold;
• - Nomination facility;
• - Change in address recorded with DP gets registered with all companies in which investor
holds securities electronically eliminating the need to correspond with each of them separately;
• - Transmission of securities is done by DP eliminating correspondence with companies;
• - Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger
etc.
• - Holding investments in equity and debt instruments in a single account.
1. Investor instructs DP to receive credits into his account in the prescribed form.
There may be one time standing instruction or separate instruction each time to
receive credits.
2. Investor purchases securities in any of the stock exchanges linked to depository
through a broker.
3. Broker receives payment from investor and arranges payment to clearing
corporation.
4. Broker receives credit to securities in clearing account on the payout day.
5. Broker gives instructions to DP to debit clearing account and credit client’s
account. Investor receives shares into his account by way of book entry.
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number of securities sold by him and credit the brokers clearing account. The procedure
for selling dematerialized securities is given below:
An online stock broker is an investor’s means of buying and selling shares via the Internet, just like a
regular stock broker, wherein an individual or a brokerage firm acts as one’s link to the stock
exchange. Are such services necessary? Is it, after all, not true that anyone can engage in online
trading today, and that it is possible to invest in stocks with one’s own computer?
The fact is, only a registered (SEBI) stock broker can buy and sell shares in the stock market. Such an individual
is registered on one or many stock exchanges and is authorized to transact on behalf of others. Apart from
that, an online stock broker is very valuable to investors who are not technically inclined and have no
or little prior knowledge of stock trading. Such investors can use their own online stock trading
accounts to obtain necessary information and place online trades at any time of the day. Others,
however, still require a human interface - a real person who will place trades on their behalf.
INTRODUCTION TO ONLINETRADING
The Internet revolution has been changing the fundamentals of our society. It shapes the way we
communicate and the way we do business. It brings us closer and closer to vital sources of information.
It provides us with means to directly interact with service-oriented computer systems tailored to our
specific needs; therefore, we can serve ourselves better by making our own decisions. This prevailing
shift of the business paradigm is reshaping the financial industry and transforming the way people
invest.
In the old days, because of the limitations of communications technology, Wall Street was the center
for most of the Stock Exchange and Brokerage firms. Today, at this millennial transition, investors can
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use revolutionary Internet Client-Server technology to trade stocks nearly anywhere, anytime,
independent of brokers' fees and service limitations.
The act or practice of buying and selling securities over the Internet. Generally
speaking, online trading occurs when an investor makes an order to a broker
online; the broker then executes the order through the ordinary means. Online
trading became more common in the 1990s as more brokerages offered their
services online, often for a small fee rather than a commission on the trade.
Varieties of financial products and services of the online trading are available in India such as:
• Life insurance
• Equities,
• Portfolio management
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• Mutual funds
• Loans
• General insurance
• Share trading
• Commodities trading
• Financial planning.
National stock exchange and Bombay stock exchange: In spite of many private stock houses
at present involved in online trading in India, the NSE and BSE are among the largest exchanges. They
handle huge daily trading volumes, supporting large amounts of data traffic, and possessing a
countrywide network. The automated online systems used for trading by the national stock exchange
and the Bombay stock exchange are the NIBIS or NSE's Internet Based Information System and NEAT
for the national stock exchange and the BSE Online Trading system or BOLT for the Bombay stock
exchange.
• Customers willing to purchase the product should provide the credit card details and personal
contact information online and once the payment is being made the product is shipped to the
address of the customer as provided earlier generally after two business days.
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:: Bonanza Online Trading :: Mansukh Securities Online Trading
Features of information.
The Internet can provide a new sense of control over your financial future. The amount of
investment information available online is truly astounding. It's one of the best aspects of
being a wired investor. For the first time in history, any individual with an Internet
connection can:
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argue with the broker about the order; and hope that the transaction is
executed instantly.
Access to Market:
At the most basic level, an online trading account gives you more agility in buying and
selling stocks. This is through sophisticated information streams, dedicated trading
platforms and sophisticated tools for accessing the markets.
Every broker house aims at providing the investor with the best price available. Also due
to the high level of transparency with regard to display of information relating to the
specific stocks
and company profiles, you will be able to get the best quote for your orders.
Online trading offers you greater transparency by providing you with an audit trail. This
involves a complete integrated electronic chain starting from order placement, to clearing
and settlement and finally ending with a credit into your depository account. All these
stages are subject to inspection, thus bringing in transparency into the system.
Online trading integrates your bank account, your trading account and your demat
accounts, which leads to easy and paperless trading for you.
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You as an Investment online customer will be able to execute the entire trading
transaction, right from logging on to our site, to the execution and settlement of your
bank account, in a very short period of time.
Trading on the net, gives even the smallest retail investor access to information that
earlier was available only to the big traders. This provides a level playing field for all
investors in the securities market.
This method of trading reduces the settlement risk for the investor, as in this case all
short sell orders are squared off at the specified cut-off time and not allowed to be carried
forward.
In the case of a demat account your demat account is checked by us before executing
your sell transaction. This reduces the settlement risk for the buyer, who is assured of the
delivery of the securities and for you as a seller of the securities
Every trade is confirmed immediately and you will receive an on-screen confirmation
following every trade with full details for your records. This avoids costly errors that would
have been discovered when it is too late.
Your Bank, Depository and online account are integrated for your convenience. Various
broking houses provide access to many of the popular banks.
Broking houses work hard to keep our account and personal information secure. From
updated security technology to advanced fraud prevention measures, they have the
people and tools in place to provide a strong defense against electronic scams and fraud.
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BENEFITS OF ONLINE BROKING
1) Less Costly:
The most significant advantage of the Online broking is the cost reduction in the
brokerage. Due to the power of the Internet one has the privilege of becoming the clients
of really large brokerages with the benefits of enjoying the low charges hithelio before
enjoyed only by the big players. As the DP account has got linked to the trading account
most players do not charge a minimum transaction cost thus truly allowing one to buy a
single share and achieve meaningful rupee price averaging whatever be your buying
power.
2) Peace of Mind:
One can never have complete peace of mind but online investing does away with the
hassles of filling up instruction slips, visits to the broker for handing over these slips and
consequent costs.
3) Keeping Records:
The site one trades on keeps a record of all transactions down to unexecuted orders and
cancelled orders thus keeping one abreast of all your transactions 24 hours a day. No
paperwork means more time at one’s disposal for research and analysis.
Most online investing sites have a wealth of information for their registered members.
This includes research reports, results, analysis and even gossip and the buzz in the
market.
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The. bank account linked with the trading account invariably has an A TM free. Most
partner banks offer Internet banking as well. This results in one’s money becoming
available to him whenever he like from his trading account. Conversely in case he spot an
opportunity in the market he can immediately allocate money from his savings account to
Most sites are secure using 128-bit algorithms -highest available commercially anywhere
in the world. Moreover even if somebody broke in and tampered with one’s account the
money from the stocks he sold or the stock bought from the money in his account is in his
account only.
This method of trading reduces the settlement risk for the investor, as in this case no
Short sale is possible i.e. the seller will not be able to sell the securities unless he has
their actual possession. In the case of a demat account (required for an online
transaction), when a seller wants to sell the securities, his demat account is checked by
the Depository Participant before executing the sale transaction. This reduces the
settlement risk for the buyer, who is assured of the delivery of the securities.
Online trading gives greater transparency to the investors by providing them an audit
trail. This involves a complete integrated electronic chain starting from order placement,
to clearing and settlement and finally ending with a credit to the depository account of
the investor. All these stages are subject to inspection, thus bringing in transparency into
the system.
It is the ease of doing the trade through net, with a click of mouse, one can buy or sell
any share that is dematerialized.
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Other than the above-mentioned advantages, Internet trading provides some additional
advantages to the investors, brokers and also helps the nation to channelize the
resources. Net trading would increase competition in the market hence increase in the
bargaining power of the investors. The entire communication between the investor,
Chart
Source:- www.lse.co.in
23% people says that online trading is more costly than manual trading.
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This may appear on one’s screens when he is desperately trying to get out of an
unprofitable position. Some of the online sites are providing a telephone number for use
in case their sites are overloaded or their server down.
Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours
during trading hours. This problem is rare but be alive to its possibility.
In the event of a malicious attack on the systems of one’s broker he is protected only if
the company is taking proper precautions against such attacks and if proper backup is
regularly been taken. He may like to choose a brokerage that has a stated security policy
and contingency plan in place.
As a client one will access the NSE through a server of the online brokerage and this may
involve queuing delays. If a number of client access the server the server takes its own
time sending the orders to the NSE server. He must check out the seamlessness of this
interface before selecting an online brokerage. The faster the orders are processed the
more seamless is the interface.
If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If
he want advice on a particular stock in his portfolio he may not even be able to get that.
6.) Margin:
If Internet trading alone is not fast and furious enough; many people are trading on
margin. That is where the brokerage firm lends you money by leveraging his account,
allowing him to buy a large amount of securities by putting up only a small amount of
money. He may have forgotten what he read in the small print of his agreement, but the
brokerage firm has the right to change the maintenance margin requirements without
any warning or notice to him. In fact, the firm has the right to liquidate his securities
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holdings (and it can pick and choose which ones) without any notice to one if he fail to
meet the margin call. And there he was leveraged to the hilt, hoping to hit a home run
when he discovered that he is required to make a large deposit that he cannot make. The
next thing one know, the firm is selling off his securities at a point in time that is not the
best for him. These are the perils of trading on margin.
The advisory services being promised by the brokers would be of little use to investors
looking for an insight into the market. Many would not like to rely on research reports,
which are there for all. So, net investors will have to do their own research and take their
own decision, whether wild or wise.
Some of the brokers are of the view that they would have to provide advisory services to
the customers. But with increased volumes, they will have to follow the international
practice of charging a little more than the normal charges from a customer looking for
personal advice.
Several broking houses now offer online trading facilities. You can trade online with e-
brokerages such as ICICI Direct, Kotakstreet, India bulls, India info line’s 5paisa.com and
HDFC securities.
If you are already comfortable trading with your regular broker, here are few reasons why
you may consider switching to trading online, or at least another avenue of trading. an
obvious advantage of online trading is that your transaction would be virtually paperless.
Your trading account would be linked to your demat and bank account, ensuring a smooth
transaction process. This is especially helpful in the extent T+2 settlement system, where
you have just two days to settle your transaction.
The normal process of issuing of delivery note, in case of a sale, or arranging for a
payment in case of purchaser of shares, is all taken care of the minute your order is
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executed online. The absence of manual intervention ensures that you are completely in
control of all transaction.
There is also little room for error, as your order is always confirmed before it is executed.
You can also make better decision as you have a clear record of all your previous
transaction. When you trade offline, a demat statement is normally sent to you only on a
quarterly basis .keeping track of your portfolio can be a hassle in such a case. The inter
net can provide a new sense of control over your financial future. The amount of
investment information available online is truly astounding. Its one of the best aspect of
being a wired investor for the first time in history, any individual with an internet
connection can:
At investsmart you can get real-time stock quotes, daily roundups of the stock market,
experts commentary, and a deep community of fellow investors.
Convenience is probably the greatest advantage online trading offers investors. if don’t
have time to trade during market hours ,perhaps you are at work, you can log on the
web-trading site and place your order offline, during off market hours. Your order would
join the queue and be expected the next day. You would need to enjoy a good
relationship with your broker, for you to be able to reach him in the late hours. For non-
resident Indians (NRI), trading online is perhaps their easiest option to invest in the Indian
stock markets.
What is more, the time difference, in some cases, can work to their advantage .Antony,
an NRI-based in New York, places his order in the evening after work, when it is day time
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India and the markets are open. We also have access to considerable information online.
By just logging on to ICICI direct online, for instance, we can get the latest news, market
information and company research.
Moreover, if our connection is maddeningly slow and we want to get your order executed
immediately, most e-brokerages also provide a facility to trade offline by placing our
order via the phone.
An Investor interesting in trading through Internet shall such as filling the account
opening form of -broker, copies of identity proof have to, firstly register himself
with an Internet brokerage firm. Some formalities, copy of residence proof are
made to register himself with the e-trader. Secondly, the investor would be
required to open a bank account with a scheduled bank and sufficient balance
should be kept in the account. Thirdly he would be required to open account with
a depository participant because only dematerialized shares can be traded on
Internet.
Broker’s site.
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The broker makes the payment either directly via the client
bank account or pays through its own account and recovers
it later from the client.
So, generally following steps are followed while doing the trading through the
Internet:
Step-I:
Those investors interested in doing the trading over Internet system, that is,NEAT
- ISX (NSE), should approach the brokers and register with the Stock Broker.
Step-2:
After registration, the broker will provide to them a login name, password and a
personal identification number (PIN).
Step-3:
Actual placement of an order, Using the place order window as under can then
place an order:
(a) First by entering the symbol and series of stock and other parameters such as
quantity and price of the scrip on the place order window.
(b) Second, fill in the symbol, series and the default quantity.
Step-4:
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It is the process of review. Thus, the investor has to review the order placed by
clicking the review option. He may also re-set to clear the values.
Step-5:
After the review has been satisfactory; the order has to be sent by clicking on the
send option.
Step-6:
The investor will receive an "Order Confirmation" 'message along with the order
number and the value of the order.
Step- 7:In case the order is rejected by the Broker or the Stock Exchange for
certain reasons such as invalid price limit, an appropriate message will appear at
the bottom of the screen. At present, a time lag of about ten seconds is there in
executing the trade.
Step-8:
It is regarding charging payment, for which there are different modes. Some
brokers will take some advance payment from the, investors and will fix their
trading limits. When the trade is executed, the broker will ask the investor for
transfer of funds by the investor to his account.
Online trading started in India in February 2000 when a couple of brokers started offering
an online trading platform for their customers.
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THE MECHANICS OF ONLINE TRADING
Exchange
The client is
though his owns
intimated about Receives the
account and
the execution of money and
receives it from
the deal by e-mail. completes the
the client
Pays the broker settlement
account.
pending physical
delivery.
a) Independence and freedom due to enjoyed by an individual access to the markets: This is
conceivably the greatest advantage of online brokerages. A novice investor with an Internet connection
can know there all time stock quotes, historical stock price trends, have a handle on market events,
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access vast amounts of economic and market analysis, do research on firms, and interact with other
investors via forums or chat rooms. This, in combination with time, can transform even the most novice
investor with an active interest in investments into a knowledgeable and powerful investor.
f) Diverse range of investment products and choices: Online brokerages are offering more
Products to the consumer, so as to give the consumer a wider choice and also to accommodate
consumers that have niche tastes. Investors can invest in stocks, bonds, mutual funds, mortgages.
g) Speed of trade execution: Keeping time in mind, online trading is much quicker – as far as
accessibility and availability to investment information and execution of trades areconcerned. Online
have decreased the time for total completion of a trade from the regular T+3 days to a matter of
minutes.
a) Technical Reliability: The greatest disadvantage of online trading is the inability of a network to be
fail-safe. Computers in spite of the technological advances are by no means perfect. There are various
things that could go wrong like failure to log on to the network, network blackout due to failure power,
server crash resulting in site failure, traffic overload thus
causing site freeze. Site freeze can happen on extremely demanding days with large amounts of orders
going over the networks.
b) The investor is alone: Another disadvantage may be the penalty of a bad investment.
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The do it yourself attitude that empowers the investor over his own money, can give a sense of
autonomy previously not experienced when dealing with traditional brokerages. But it can also
spell investment failure.
Firstly, because of the sheer size of resources and contacts, institutional investors almost always get
exclusive access to the hottest Initial Public Offering (IPO) deals before it goes into the markets.
Individual investors usually gain access to these stocks after the initial price gain is already lost. Online
brokerages do offer IPO deals –provided the trading account has between $100,000 to $500,000.
The stock Exchange must ensure that brokers have sufficient, verifiable information
about clients, which would facilitate risk evaluation of clients.
Brokers must enter into an agreement with clients spelling out all obligations and rights.
This agreement should also inter alia, the minimum service standards to be maintained
by the broker for such service specified by SEBI/Exchange for the internet based trading
from time to time. Exchange will prepare a model agreement for this purpose. The broker
agreement with clients should not have any clause that is less stringent/contrary to the
conditions stipulated is the model agreement.
Investor Information:
The broker web site providing the internet based trading facility should contain
information meant for investor protection such as rules and regulations affecting client
broker relationship arbitration rules, investor protection rules etc. The broker web site
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providing the Internet based trading facility should also provide and display prominently,
hyper link to the web site/page on the web site of the relevant
Order/Trade Confirmation:
Order/Trade confirmation should also be sent to the investor through email at client’s
discretion at the time specified by the client in addition to the other made of display of
such confirmation of real time basis on the broker web site. The investor should be
allowed to specify the time interval on the web site itself within which he would like to
receive this information through email. Facility for reconfirmation of orders which are
larger than that specified by the member's risk management system should be provided
on the internet based system.
Risk Management:
Exchanges must ensure that brokers have a system-based control on the trading limits of
clients, and exposures taken by clients. Brokers must set predefined limits on the
exposure and turnover of each client. The broker systems should be capable of assessing
the risk of the client as soon as the order comes in. The client should be informed of
acceptance/rejection of the order within a reasonable period. In case system based
control rejects an order because of client having exceeded limits etc., the broker system
may have a review and release facility to allow the order to pass through.
Contract Notes:
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Contract notes must be issued to clients as per existing regulations, within 24 hours of
Cross Trades:
As a matter of abundant precaution, the committee seeks to reiterate that as III the case
of existing system, brokers using Internet based systems for routing client orders will also
not be allowed to cross trades of their clients with each other. All orders must be offered
to the market for matching.
Enforcement: A separate working group has been set to look into the surveillance
and enforcement related issues arising due to Internet based securities trading. However,
general anti-fraud provisions (SEBI Fraudulent and Unfair Trade Practices Regulations,
1995) would apply to all transactions involving securities or financial services, regardless
of the medium.
The major events that will take place in the Indian Capital Market are introduction of
index-based futures trading on internet. Trading on internet means that the investor’s will
actually buy and sell the stocks on-line through the net. A committee was setup by SEBI
to develop regulatory parameters for use internet trading. SEBI approved the report on
the committee. SEBI decided that internet trading could take place in India within the
existing legal framework through use of order routing system, which will route order from
client to brokers, for trade execution on registered stock exchanges. The broad also took
note of the recommended minimum technical standards for ensuring safety and security
of transaction between clients and brokers, which will be forced by the respective stock
exchanges.
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Easier transaction processing
Profit in time: Investor can make profits by selling shares when the going is good. They do
not have to instruct their brokers on the cut off price to sell shares.
Ease and transparency: Since the broking, bank and demat account are all electronically
connected, all transaction get updated, demat account shows the latest stockholding
statement while the bank account shows the balance amount after buying or selling of
shares.
Precaution: Check for hidden costs of broker’s age. Beware of net seamstress. Never
double click the mouse during execution of trade avoids cyber cafes and change
password regularly.
Less fees: shares traded online require no human intervention to match buys and sells.
This means that commission costs are cut dramatically for the frequent investor.
Market timings:
Trading on the derivatives segment takes place on all days of the week (except
Saturdays and Sundays and holidays declared by the Exchange in
advance). The market timings of the derivatives segment are:
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Internet based trading on conventional exchanges, uses the Internet as a medium for
communicating client orders to the exchange, through broker web sites. Broker’s web
sites may serve a variety of functions. These may include;
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CHAPTER – 3
COMPANY PROFILE
Bonanza a leading Financial Services & Brokerage House working diligently since 1994
can be described in a single word as a "Financial Powerhouse". With acknowledged
industry leadership in execution and clearing services on
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Exchange Traded Derivatives and cash market products. Bonanza has spread its
trustworthy tentacles all over the country with more than 1025 outlets spread across 340
cities.
ACHIEVEMENTS
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The company has Corporate Tie ups with Birla Sunlife ,Bajaj Allianz, ICICI Prudential,
SBI , Aviva , Kotak Mahindra and Reliance for Life Insurance and General Insurance.
EXPERIENCE
Bonanza Portfolio ltd has more than eight decades of trust and credibility in the
Indian stock market. In the Asia Money broker’s poll held recently, SSKI won the
‘India’s best broking house for 2004 award. Ever since it launched Sharekhan as
its retail broking division in February 2000, it has been providing institutional-level
research and broking services to individual investors.
TECHNOLOGY
With our online trading account you can buy and sell shares in an instant from any
PC
with an Internet connection. You will get access to our powerful online trading
tools that
will help you take complete control over your investment in shares.
ACCESSIBILITY
Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for
investors. These services are accessible through our centers across the country
(over
250 locations in 123 cities), over the internet (through the website
www.sharekhan.com) as well as over the voice tool.
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KNOWLEDGE
In a business where the right information at the right time can translate into direct
profits, you get access to a wide range of information on our content-rich portal,
sharekhan.com. You will also get a useful set of knowledge-based tools that will
empower you to take informed decisions.
CONVENIENCE
You can call our Dial-N-Trade number to get investment advice and execute your
transactions. We have a dedicated call-centre to provide this service via a toll free
number from anywhere in India.
CUSTOMER SERVICE
Our customer service team will assist you for any help that you need relating to
transactions, billing, Demat and other queries. Our customer service can be
contracted via a toll-free number, email or live chat on sharekhan.com.
INVESTMENT ADVICE
Sharekhan has dedicated research teams for fundamental and technical research.
Our
analyst constantly track the pulse of the market and provide timely investment
advice to you in the form of daily research emails, online chat, printed reports and
SMS on your phone.
BENEFITS
• Secure Order by Voice Tool Dial-n-Trade.
• Automated Portfolio to keep track of the value of your actual purchases.
• 24x7 Voice Tool access to your trading account.
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• Personalized Price and Account Alerts delivered instantly to your cell phone &
email address.
• Special Personal Inbox for order and trade confirmations.
• On-line customer service via web chat.
• Anytime Ordering
1. Mutual Funds
2. Insurance
• Life Insurance
• General Insurance
3. PMS
4. Share Broking
5. IPO
6. Currency Derivatives
7. Share Broking
8. Commodity Broking
COMPETITORS
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RESEARCH METHODOLOGY
use in decision making. Research can be defined as the systematic and objective
process of gathering, recording and analyzing data for aid in making business
decisions.
Primary Data.
Secondary Data.
other than the one at hand. It is gathered and recorded by someone else prior to
current needs of the researcher. It is less expensive than the primary data.
SECONDARY DATA
Scope of study:
The study is limited to Ludhiana Stock Exchange , Firoz Gandhi Market Ludhiana
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Data Collection:
2) www.nseindia.com
3) www.bseindia.com
4) www.on-linetrading.com
For the successful research the manipulation of certain things, concepts, and
symbols for the purpose of generalization is inevitable. Research is simply the pursuit of truth
with the help of the study.
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According to this survey we find that 44% people says that we are investing
the money online from one year and 26% people says that we are investing
the money online from 2 years and 19% to 11% people says that we are
investing money online from 3 to 4 year. so we can say that now online
trading is very popular in the modern market.
2. How will you describe your experience with on-line trading till date?
According to this survey we find that 60% of people find very easy to
operate and 15% people find diffcuilt two operate and 10% and 15% people
find no secure and any other. so we can say that online trading is very
simple to operate and easy to understand.
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3. what amount of money you invest normally ?
40
30
20 50000
100000to150000
10
150000to200000
0
Money
According to this survey we find that 10% of people do trade Daily and
40% people do trade weekly and 32% and 18% people do trade month
and more than month. So we can say that people are generally invest in
stock market weekly basis.
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5. which trading you prefer?
(c) Both
According to this survey we find that 20% people prefer online trading
and 32% people prefer offline trading rest of 48% people prefers both. So
we can say that mostly people are awareness about the on line trading
and because of this reason the mostly people are optimizing offline
trading.
According to this survey we find that 30% people says yes and 70%
people says no. so we can find that on line trading is not settled in the
Indian psyche because some people are not experience towards online
trading.
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7. What shortcomings do you feel in Indian On-Line trading ?
According to this survey we find that 55% people Prefer T.V and 25% people
prefer newspaper and 10% people prefer magazines and 10% people prefer
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journals. So we can suggest that mostly people are very easily grapped the
knowledge through T.V.
FINDINGS
According to this survey we find that 44% people says that we are
investing the money online from one year. 11% people says that we
are investing money online from 4 year. so we can say that now online
trading is very popular in the modern market.
2. How will you describe your experience with on-line trading till date?
According to this survey we find that 60% of people find very easy to
operate. and15% people find no secure. so we can say that online trading is
very simple to operate and easy to understand
According to this survey we find that 10% of people do trade Daily. 18%
people do trade more than month. So we can say that people are
generally invest in stock market weekly basis.
According to this survey we find that 20% people prefer online trading
and 32% people prefer offline trading. So we can say that mostly people
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are awareness about the on line trading and because of this reason the
mostly people are optimizing offline trading.
According to this survey we find that 30% people says yes and 70%
people says no. so we can find that on line trading is not settled in the
Indian psyche because some people are not experience towards online
trading.
According to this survey we find that 41% people Prefer T.V and
39% people prefer newspaper and 20% people prefer magazines. So we can
suggest that mostly people are very easily grapped the knowledge through
T.V.
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10. The USP of Bonanza Portfolio Ltd.
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12.The most preferred product at Bonanza
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14. How often do you attend the training Session organized in the company?
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15. The Reasons for not attending the Training Sessions
CONCLUSION
Online trading is the new concept in the stock market. In India, online trading is
still at its infancy stage. Online trading has made it easy to trade in the stock
market as now people can trade while sitting at their home. Now stock market is
easily accessible by the people. There are some problems while doing the trade
through the internet. Major problem faced by online trader is that the investors
are loyal to their traditional brokers, they rely upon the suggestions given by their
brokers. Another major problem is that the people don't have full knowledge
regarding online trading. They find it difficult to trade themselves, as a wrong
entry made by them, can bring them huge losses.
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Nevertheless to say that online trading has the bright future as the percentage of
the trade done through online trading is increasing day by day.
LIMITATIONS
Despite of the training my level best, there were still some limitation which I
think remains there to draw fruitful conclusion. There were some practical
problem which come across and could not be properly death with
As a client one will access the NSE through a server of the online
brokerage and this may involve queuing delays
If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be
able to do so. If he want advice on a particular stock in his portfolio he may
not even be able to get that.
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Suggestions
The introduction of the Internet has surprisingly changed our way of life as a
society. It has defined the way we do business and the way we correspond. The
Internet has opened many opportunities for online trading. The financial industry
revolves around the Internet. Every thing is just a few clicks away. This makes
online trading most convenient. But there are still investors who prefer the old
fashion way of offline trading and they mainly prefer offline trading for security
reasons.
Internet has introduced a way for consumers to manage their money online. Not
to mention, Internet has transformed the way investment companies operate their
business and has made it easy for private investors to gain straight access to a
range of different markets and online tools that were at one point only reserved
by the use of investment professionals. Consumer investing and online trading
has dramatically changed over the last decade. Online trading dynamically
continues to be redefined. Services have expanded to include integrated
management of additional financial accounts. Not to mention, it has subsequently
expanded in conjunction with ground-breaking improvements to the traditional
trading interface, such as telephone interface systems.
Of course, online trading has many pros. There are several wonderful reasons to
invest online and consider online trading
1. Money saving opportunities The amount of money you save depends primarily
on the online brokerage firm that you choose. No two firms are the same. There
may be different regulations, similar to bank regulations. There are minimum
deposits required that must be maintained. As mentioned above, this will depend
on the online brokerage firm.
2. Instant online access You can gain instant access to your account, the value of
your portfolio updates immediately before your eyes.
3. Enter online trades at anytime You can enter online trades at anytime and from
anywhere. This is very convenient if you live in a different time zone than the
country you are trading in. Not to mention, it is especially fit for investors with
busy schedules.
4. With online trading you are in charge You are in control of your investments. No
sales pitches and no hassle. You decide where to invest your money.
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BIBLIOGRAPHY
BOOKS
• C. R. Kothri, Research Methodology, Vishwa Prakshan
MAGAZINES
• Business World
• LSE’s Magazine
INTERNET SITES
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• http:// www.nseindia.com
• http://www.bseindia.com
• http:// www.on-linetrading.com
• http://www.sebi.gov.in
• http://www.lse.co.in
• http://www.bonanzaonline.com
• http://www.moneycontrol.com/stocksmarketsindia/
• http://www.amfiindia.com/
• http://www.bseindia.com/
• http://www.valueresearchonline.com
• http://www.reliancemutual.com
• http://jobfunctions.bnet.com/abstract.aspx?docid=114221
• http://www.ici.org/pdf/per09-03.pdf
Questionnaire
Name…………………………………….
Age…………………….
Occupation………………………………………………………..
Address……………………………………………………………
……………………………………………….
1. For how long you have been trading with on line-trading?
2 .How will you describe your experience with on-line trading till date?
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(c) not secure
(c) Both
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