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SUMMER TRAINING REPORT

ON

INVESTMENT PATTERN IN INDIAN MARKET

Submitted in partial fulfillment of the requirements for the award of the degree of
BACHELOR OF BUSINESS ADMINISTRATION

Under the Guidance of


Dr. Nikita Aggarwal
Faculty, VIPS

Submitted By
Aayush Batra
Enrollment no. 00417701715

Vivekananda Institute of Professional studies


Guru Gobind Singh Indraprastha University
Delhi
2017
STUDENT UNDERTAKING

This is to certify that I have completed the project titled INDIABULLS AND
INDIAN STOCK MARKET under the guidance of Dr. Nikita Aggarwal in partial
fulfillment of the requirement for the award of degree Bachelor of Business
Administration (Banking & Insurance) at Vivekananda Institute of Professional
Studies, Vivekananda School of Business Studies, New Delhi. This is an original
piece of work and has not submitted elsewhere.

Aayush Batra

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CERTIFICATE

(On Institutes Letter Head)

This is to certify that Aayush Batra, a student of Bachelor of Business


Administration (Banking & Insurance), a class of 2013, Vivekananda Institute of
Professional Studies, Affiliated to GGS.IP. University bearing Enrolment No.
00417701815 has undertaken the Summer Internship Training at Indiabulls During
5th June 2017 till 4th August 2017 under my supervision & guidance. She has
conducted a study & completed the Project on Indiabulls and Indian Stock Market.

Dr. Nikita Aggarwal

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ACKNOWLEDGEMENT

The present work is an effort to throw some light on Indiabulls and Indian Stock
Market. The work would not have been possible to come to the present shape
without the able guidance, supervision and help to me by number of people.

With deep sense of gratitude I acknowledged the encouragement and guidance


received by my organizational guide Ms. Nikita Aggarwal and other staff.

I convey my heartful affection to all those people who helped and supported me
during the course, for completion of my Project Report.

Aayush Batra
Enrolment No.: 00417701715

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EXECUTIVE SUMMARY

Investing in equities in a market like India is speculative and involves risk that may be
greater than other types of investment strategies. Before investing an Investor should
be careful enough about him investment decision to avoid erosion of wealth. As seen
in the recent times the volatility of market is more detrimental to the retail investors as
it seems to be lucrative for speculative gains of short duration of time. Hence an
investor has to evaluate his options carefully for a prudent investment, keeping long-
term horizon in mind.

The report has tried to bring out the parameters those are of paramount importance to
general public dealing in an equity trading on day-to day and delivery base trading.
The working methodology has been discussed i.e. the data collection methods,
sampling methods and the survey questionnaire methods. Thee questionnaire
prepared is designed so as to cover a wide range of customer touch points

The report given a view about the investors perception that what thy think while
making investments in shares.

A sample of 100 people was selected randomly and survey was done as per the
parameters of the questionnaire. The results of every parameter have been included in
this report and shown graphically (Pie Charts, bar graphs etc.) A complete structure of
the research design has been included.

Apart from above discussed points the brief history of India bulls Securities Ltd, its
business diversification and a brief introduction about the concept of share trading.

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TABLE OF CONTENTS
1). INDUSTRY PROFILE
1-41

INTRODUCTION

PHILOSOPHY

HISTORY AND OTHER CORPORATE MATTERS

PRODUCTS AND SERVICES

SWOT ANALYSIS

2) RESEARCH METHODOLOGY 42
RESEARCH OBJECTIVES

RESEARCH DESIGN
DATA SOURCES
QUESTIONNAIRE DESIGN FORMULATION
SAMPLE DESIGN
LIMITATIONS OF THE RESEARCH

3) EQUITY AND DERIVATIVES 51

4) FINDINGS AND ANALYSIS


69

5) CONCLUSION
71

RECOMMENDATIONS
78

BIBLIOGRAPHY
84

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INTRODUCTION

HISTORY OF STOCK EXCHANGE

The only stock exchanges operating in the 19th century were those of Bombay set up
in 1875 and Ahemadabad set up in 1894. These were organized as voluntary non-
profit making organization of brokers to regulate and protect their interests. Before the
control on securities trading became a central subject under the constitution in 1950, it
was a state subject and the Bombay securities contract (CONTROL) Act of 1952 used
to regulate trading in securities. Under this Act, the Bombay stock exchanges in 1927
and Ahemadabad in 1937.

During the war boom, a number of stock exchanges were organized in Bombay,
Ahemadabad and other centers, but they were not recognized. Soon after it became a
central subject, central legislation was proposed and a committee headed by A.D.
Gorwala went into the bill for securities regulation. On the basis of committees
recommendations and public discussions the securities contracts (regulations) Act
became law in 1956.

DEFINITION OF STOCK EXCHANGE


Stock exchange means anybody or individuals whether incorporated or not,
constituted for the purpose of assisting, regulation or controlling the business of
buying, selling or dealing in securities.

It is an association of member brokers for the purpose of self regulation and


protecting the internets of its members. It can operate only if it is recognized by the
Govt. under the securities contract (regulation) Act, 1956 the recognition is granted
under section 3 of Act by the Central Govt. ministry of finance.

BYELAWS

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Beside the above act, the securities contract (regulation) rules were also made in 1975
to regulate certain matter of trading on Stock Exchange. These are also byelaws of the
exchanges, which are concerned with following subjects.

Opening/Closing of the Stock Exchange, timing of trading, regulation of blank


transfer, regulation of Badla or carryover business, control of statement, and other
activities of stock exchange, fixation of margins, fixation market price or making
price, regulation of intraday (jobbing), regulation of broker trading, brokerage
charges, trading rules on exchanges, attribution and settlement of disputes, settlement
and clearing of the trading etc.

REGULATION OF STOCK EXCHANGE


The securities contract (regulation) is the basis of the stock exchange in India. No
exchange can operate legally without the Govt. permission or recognition. Stock
exchanges are given monopoly in certain areas under section 19 of the above Act to
ensure that the control and regulation are facilitated. Recognition can be granted to a
stock exchange provided certain condition are satisfied and the necessary information
is supplied to the government. Recognition can also be withdrawn, if necessary.
Where there are no stock exchanges, the government can license some of the brokers
to perform the function of stock exchange in its absence.

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SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

SEBI was setup as an autonomous regulatory authority by the Government of India in


1988 to perform the interest of investors in the securities and to promote the
development of, and to regulate the securities market and for matters connected
therewith or incidental thereto. It is empowered by two Acts namely the SEBI act,
1992 and the securities contract (regulation) Act 1956 to perform the function of
protecting investors right and regulating the capital market.

BOMBAY STOCK EXCHANGE


The stock exchange, Mumbai, popularly known as BSE was established in 1875 as
The Native share and stock broker association, as a voluntary non-profit making
association. It has an evolved over the year into its present status as the premiere stock
exchange in the country. It may be noted that the stock exchanges the oldest one in the
Asia, even older than the Tokyo Stock Exchange, which was founded in 1878.

The Exchange, while providing an effective and transparent market for trading in
securities, uphold the interest of the investors and ensure redressed of their
grievances, whether against the companies or its own member brokers. It also strives
to educate and enlighten the investors by making available necessary informative
inputs and conducting investor education programmes.

A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public


representatives and an executive director is the apex body, which decides the policies
and regulates the affairs of the exchanges.

The executive director as the chief executive officer is responsible for the day today
administration of the exchange. The average daily turnover of the exchange during
the year 2006-07 (April-March) was Rs. 6984.19 crores and average number of daily
trades 15.69 lakhs.

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BSE INDICES

In order to enable the market participants analysis etc., to track the various ups and
downs in the Indian stock market, the Exchange has introduced in 1986 an equity
stock index called BSE-SENSEX that subsequently became the barometer of the
moments of the share prices in the Indian Stock market. It is a Market capitalization
weighted index of 30 components stocks representing a sample of large, well-
established and leading companies. The base year of Sensex is 1978-79. The Sensex
is widely reported in both domestic and international markets through print as well as
electronic media.

Sensex is calculated using a market capitalization weighted method. As per this


methodology, the level of the index reflects the total market value of all 30-
component stocks form different industries related to particular base period. The total
market value of a company is determined by multiplying the price of its stock by the
number of shares outstanding. Statisticians call an index of a set of combined
variables (such as price and number of shares) a composite Index. An Indexed
number is used to represent the results of this calculation is order to make the value
easier to work with the track over a time. It is much easier to graph a chart based on
Indexed values than one based on actual values world over majority of the well-
known Indices are constructed using Market capitalization weighted method.

In practice, the daily calculation of SENSEX is done dividing the aggregate market
value of the 30 companies in the Index Divisor. The keeps the Index comparable over
a period or time and if the reference point for the entire Index maintenance
adjustments. SENSEX is widely used to describe the mood in the Indian Stock
Markets. Base year average is changed as per the formula new base year average =
old base year average* (new market value/old market value).

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NATIONAL STOCK EXCHANGE

The NSE was incorporated in Now 1992 with an equity capital of


Rs. 25 crores. The international securities consultancy (ISE) of Hong Kong has
helped in setting up NSE. ISE has prepared the detailed business plans and
installation of hardware and software systems. The promotions for NSE were
financial institutions, insurance companies, banks an SEBI capital market ltd.,
Infrastructure leasing and financial services ltd. and stock holding corporation ltd.

It has been set up to strengthen the move towards professionalisation of the capital
market as well as provide nation wide securities trading facilities to investors.

NSE is not an exchange in the traditional sense where brokers own and mange the
exchange. A two tier administrative set up involving a company board and a
governing abroad of the exchange is envisaged.

NSE is a national market for share PSU bonds, debentures and government securities
since infrastructure and trading facilities are provided.

NSE-NIFTY
The NSE on April 22, 1996 launched a new equity Index. The NSE-50. The new
index, which replaces the existing NSE-100 index, is expected to serve as an
appropriate Index for the new segment of futures and options.Nifty means National
Index for Fifty Stocks.The NSE-50 comprises 50 companies that represent 20 board
Industry groups with an aggregate market capitalization of around Rs. 5,70,000
crores. All companies included in the Index have a market capitalization in excess of
Rs. 1000 crores each and should have traded for 85% of trading days at an impact cost
of less than 1.5%.

The base period for the close of prices on Nov 3, 1995, which makes one year of
completion of operation of NSEs capital market segment. The base value of the
Index has been set at 1000.

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NSE-MIDCAP INDEX

The NSE madcap Index or the Junior Nifty comprises 50 stocks that represents 21
abroad Industry groups and will provide proper representation of the madcap segment
of the Indian capital Market. All stocks in the index should have market capitalization
of greater than Rs. 600 crores and should have traded 85% of the trading days at an
impact cost of less 2.5 %.

The base period for the index is Nov 4, 1996, which signifies two years for
completion of operations of the capital market segment of the operations. The base
value of the Index has been set at 1000.

Average daily turn over of the present scenario 258212 (Laces) and number of
averages daily trades 2160 (Laces).

At present, there are 24 stock exchanges recognized under the securities contact
(regulation) Act, 1956

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INDUSTRY PROFILE

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INTRODUCTION TO INDIABULLS

Indiabulls is India's leading retail financial services company with over 414 locations
in more than 124cities. While our size and strong balance sheet allow us to provide
you with varied products and services at very attractive prices, our over 5400 Client
Relationship Managers are dedicated to serving your unique needs.
Indiabulls is lead by a highly regarded management team that has invested crores of
rupees into a world class Infrastructure that provides our clients with real-time service
& 24/7 access to all information and products. Our flagship Indiabulls Professional
Network offers real-time prices, detailed data and news, intelligent analytics, and
electronic trading capabilities, right at your finger-tips. This powerful technology is
complemented by our knowledgeable and customer focused Relationship Managers.
Indiabulls offers a full range of financial services and products ranging from Equities
to Insurance to enhance your wealth and hence, achieve your financial goals.
Indiabulls Client Relationship Managers are available to you to help with your
financial planning and investment needs. To provide the highest possible quality of
service, Indiabulls provides full access to all our products and services through multi-
channels.

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INNOVATION IS THE KEY TO SUCCESS- PROVED BY
INDIABULLS

Sameer Gehlaut and Rajiv Rattan

Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal, friends got together to start the

company. For some years they worked in the oil field services industry. The idea to

start their own outfit on a technology platform was born in 1999 when Gagan Banga

joined the three IIT-Delhi engineers who promoted the company. These first

generation entrepreneurs knew very well that nothing small works. They didnt want

to build a small business which would get overnight success and shut down; rather

they wanted to build a sustainable profitable business.


This idea was to target the huge untapped retail segment of the market. The first task
of course was to work out a sound business model, which was sustainable and
profitable. They soon realized the implicit strength of their model. India was toying
around with the idea of brokerage getting done through the internet and clients

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directly managing their accounts. Around the middle of 1999, the core promoters had
got together and acquired a shut down brokerage firm from its promoters at that time.
The whole idea was to get a brokerage license from the stock exchange and a
membership of the stock exchange.

In 1999-2000, there was dotcom boom, there were a lot of dotcoms coming into
being, lot of venture capitalists were funding the dotcoms business but none of the
dotcom had any revenue model so the scope of a dotcom business was immense.
Indiabulls came into existence to take advantage of this. The three promoters got
together and took over a defunct brokerage company Orbis Securities- the whole
idea was to get a brokerage license and a membership of the stock exchange. This
brokerage firm was restarted and it started making miniscule amount of revenue for
the company it basically catered to the HNIs - High Networth Individuals(?).
Immediately after this the venture capitalists were contacted. In this there were
several models, which were discussed including involving a strategic investor.
Initially the company was promoted as a dotcom company. The promoters chose the
famous Charles Schwab model, which perfectly addressed their need to have the
business on a technology platform. The idea was that since it worked in other parts of
the world, it would work here also. The company thus had clear-cut revenue model. It
was very clear in the minds of the promoters that revenue was very important.
Profitability is the key to the entire thing. The emphasis on profitability was there
from day one. Indiabulls has been profitable for every financial year beginning 2000-
01 the only financial year it has not been profitable has been 1999-2000. The
company focused on the retail segment and used Internet to exploit the massive scope
in the retail segment. The company also enjoyed the first mover advantage, as at that
time there was no company catering to the needs of retail segment through Internet
Sameer Gehlaut, took over as chairman and CEO, and now looks after sales,
marketing and external relationships, while Rajiv Rattan, in the role of CFO and
president, manages operations, finance and back office.

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THE INDIABULLS PHILOSOPHY
YOU COME FIRST
We have created a unique organization that is designed for you the Smart Investor
. We passionately believe in the Smart Investor who wants to make his own educated
investment choices and demands world class access to a full range of services and
products ranging from Equities to Insurance, combined with the highest level of
integrity, service and professionalism.

Indiabulls is a full service investment firm offering clients access to a tremendous


range of financial services from 414 locations across 124 cities. We have a strong
team of over 4400 Client Relationship Managers focussed on serving your unique
needs. Our world class infrastructure, built with tens of crores of investment, provides
our clients with real-time service, multi-channel & 24/7 access to all information and
products. As we've expanded and developed to serve the needs of all kinds of
investors, we've been guided by one underlying philosophy: You come first.

We are proud to introduce to you Indiabulls Professional NetworkTM that offers real-
time prices, equity analysis, detailed data and news, intelligent analytics, and
electronic trading capabilities, right at your finger-tips. This powerful technology is
complemented by our knowledgeable and customer focussed Relationship Managers
who are available to help with your financial planning and investment needs.

We invite you to learn more about Indiabulls by calling 1600 11 1130 (toll free) or
visit our 135 Indiabulls Offices Nationwide or explore the services we offer through
the Indiabulls Market Trader.TM

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HISTORY AND OTHER CORPORATE MATTERS
OVERVIEW

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s
Orbits InfoTech Private Limited at New Delhi under the Companies Act, 1956 with
Registration No. 55 103183. The name of the Company was changed to M/s.
Indiabulls Financial Services Private Limited on March 16, 2007 due to change in the
main objects of the Company from Infotech business to Investment & Financial
Services business. It became a Public Limited Company on February 27, 2006 and the
name of Company was changed to M/s. Indiabulls Financial Services Limited.
Company was promoted by three engineers from IIT Delhi, and has attracted more
than Rs.700 million as investments from venture capital, private equity and
institutional investors such as LNM India Internet Ventures Ltd., Transatlantic
Corporation Ltd., Farallon Capital Partners, L.P., R R Capital Partners L.P., and
Infinity Technology Trustee Pvt. Ltd. and has developed significant relationships with
large commercial banks such as Citibank, HDFC Bank, Union Bank, ICICI Bank,
ABN Ambro Bank, Standard Chartered Bank, Lord Krishna Bank and IL&FS.
Company and there subsidiaries have facilities from the above mentioned banks and
financial institutions aggregating to Rs. 1760 million. Companies headquarters are co-
located in Mumbai and Delhi, allowing it to access the two most important regions for
Indian financial markets, the Western region including Mumbai, rest of Maharashtra
and Gujarat; and the Northern region, including the National Capital Territory of
Delhi, nearby cities, parts of Haryana, Uttar Pradesh and Punjab; and access the
highly skilled and educated workforce in these cities. The Marketing and Sales efforts
are headquartered out of Mumbai; with a regional headquarter in Delhi; and its back
office, risk management, internal finances etc. are headquartered out of Delhi,
allowing our Company to scale these processes efficiently for the nationwide network.

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MAIN OBJECTS OF THE COMPANY

The main objects to be pursued by the Company on its incorporation are:

1. To hold investments in various step-down subsidiaries for investing, acquiring,


holding, purchasing or procuring equity shares, debentures, bonds, mortgages,
obligations, securities of any kind issued or guaranteed by our Company.

2. To provide financial consultancy services; to provide investment advisory


services on the internet or otherwise; provide financial consultancy in the area of
personal and corporate finance; publish books and CD ROMs and any other
information related to the above.

3. To conduct the business of sale, purchases, distribution and transfer of shares,


debts, instruments and hybrid financial instruments and to perform all related,
incidental, ancillary and allied services.

4. To conduct depository participant services; to conduct de-materialization and re-


materialization of shares; set up depository participant centers at various regions
in India and to perform all related, incidental, ancillary and allied services.

5. To receive funds, deposits and investments from the public, Government


agencies, financial institutions and Corporate bodies; grant advances and loans;
conduct advisory services related to banking activities, project financing, funding
of mergers and acquisition activities; fund management and activities related to
money market operations.

6. To carry on the business of portfolio management services, investment advisory


services; custodial services; asset management services; leasing and hire
purchase; mutual fund services and to act as brokers of real estate and financial
instruments.

7. To carry on the business of financing; provide lease and hire purchase services; to
provide consultancy in the area of lease and hire purchase financing.

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8. To operate mutual funds; receive funds from investors; equity or debt instrument
research activity instrument in debt and/or equity instruments.

CREDIT RATING
The company ranks at 82nd position in the list of most valuable companies in India
has a market capitalization of approx US $ 800 million. The consolidated net worth of
the company is approx US $ 400 million.

Indiabulls Securities Limited has been granted PR1+ rating for its unsecured short
term borrowing program of Rs. 300 million. Vide letter dated May 5, 2007 the rating
agency has increased the unsecured short term borrowing limit to Rs. 350 million
maintaining the PR1+ rating. ISL also enjoys A+ rating for medium to long term
unsecured borrowing program of Rs. 300 million. The Rating to the company has
been assigned by Credit Analysis Research Limited. As for the present issue of equity
shares of our Company, credit rating is not required.

SHAREHOLDERS AGREEMENT
Shareholders Agreement was entered into by and among our Company (formerly
Orbis Infotech Private Limited), Infinity Technology Trustee Private Limited as the
trustee of Infinity Venture India Fund, LNM India Internet Ventures Limited,
Transatlantic Corporation Limited (together the VC Investors) and the Promoters
dated November 2, 2006. The VC Investors invested an aggregate amount of Rs.
206,000,000 in our Company for which they were issued 55,425 equity shares at an
average price of Rs. 3,716.73 per equity share. Pursuant to a letter agreement (the
Letter Agreement) dated May 27, 2006 between the parties to the Shareholders
Agreement, each of the VC Investors have agreed not to enforce rights that have
accrued to them before the said Letter Agreements and have agreed that the
Shareholders Agreement, together with all the rights and obligation on the parties will
stand terminated immediately upon the listing of the shares of our Company and
consequent to the listing, the rights of the Shareholders Agreement, including the
rights that have arisen prior to such termination shall be terminated. A copy of the
Shareholders Agreement, and a copy of the Letter Agreement terminating the

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Shareholders Agreement are available for inspection as material documents at the
corporate offices of our Company.

Key Competitive Strengths

DIVERSE BRANCH NETWORK

Since Company inception in FY 2006 Company and its subsidiaries have grown from
a single location to a nationwide network spread over 414 Offices in 124 cities. They
have a pan India distribution networks for the purpose of distribution of financial
products and services. Such a diverse and integrated network provides a centralized
platform to there clients.

BOUQUET OF FINANCIAL PRODUCTS AND SERVICES

Company and its subsidiaries offer various financial services and products ranging
from equity, F & O and wholesale debt, mutual fund, insurance and IPO distribution,
equity research analysis, depository services to cater to the specific needs of the retail
and institutional investors thus providing all these services in a single platform.

Advanced Technology team that delivers market leading product innovation

There ongoing investment in technology is a key element in expanding there product


and service offerings, enhancing there delivery systems, providing fast and consistent
client service, reducing processing costs, and facilitating there ability to handle
significant increases in client activity without a corresponding rise in risk and staff.
Company and its subsidiaries have an in-house technology team of 27 people
comprising of several engineers. The in-house technology team has been responsible
for developing the technology products for operating at a large scale with efficient
back office systems. The application of technology allows Company and its
subsidiaries to build scaleable product and service offerings. The in-house technology
team developed one of the first Internet trading platforms in India, one of the first in-
house real-time CTCL link with NSE. Company and its subsidiaries introduced

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integrated accounts with automated gateways with client bank accounts so that they
can transfer funds to and from their bank account to their brokerage account with the
Company. This has enhanced customer ability to access their funds for market related
activities. The in-house technology team has good expertise to create mission critical
applications and in the maintenance and upkeep of high transaction processing of
there web-site.

Strong Sales and Marketing Teams with continuous reinvestment and training

Companys relationship manager channel (through a team of 4400 Relationship


Managers as on july 30, 2007) offers a single point contact to retail customers
whereby their high net worth clients have separate relationship managers catering to
them. These managers offer personalized services to the customers helping build
strong and continuing relationships with them. Also, our marketing associate channel
helps Company and its subsidiaries in client acquisitions at minimal costs with client
loyalty. The marketing associates channel also helps Company and its subsidiaries in
increasing their penetration in smaller town and cities.

STRONG CROSS SELLING OPPORTUNITIES

With 414 branches spread over 124 cities all over India and variety of financial
products and offerings coupled with online, relationship manager & marketing
associate channels, Company and its subsidiaries have strong cross product selling
opportunities thus providing a multi-channel delivery systems to there diverse client
base of 3,25,000 clients as on July 10, 2007.

STRONG TEAM OF EXPERIENCED PROMOTERS

Indiabulls has a strong team of promoters who are engineers from Indian Institute of
Technology and have several years experience in financial services industry. They
believe that their strong technical experience will help them in achieving our key
business strategies.

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LEADING PRODUCT INNOVATION AND MARKETING
STRATEGIES

Management is innovative and nimble and has historically introduced many new and
innovative products to the market place that have played a significant role in their
growth. Companys relationship manager model has introduced private banking
experience to the clients. The relationship managers are trained and incentives to work
with their client base and enhance ability to cross sell and leverage the large client
base. Indiabulls have launched marketing associate model, which replaces the
traditional sub-broker model with an authorized person that client can appoint
independently and provide them with the benefit of their trading, clearing and
servicing strengths. Its equity analysis product provides clients with unbiased
research. Company plans to continuously innovate and introduce market leading
products and services to add to its competitive advantage.

WELL CAPITALIZED PLAYER, WITH STRONG BANKING


RELATIONSHIPS AND CREDIT RATINGS

Indiabulls consolidated net worth is Rs. 1023.19 million making us a well capitalized
companies. The Company and ISL have received sanctioned facilities of Rs. 1760
million from 11 leading commercial banks and financial institutions. The details of
the banking relationships as of June 24, 2007 are as follows:

ABILITY TO COMBINE PEOPLE & TECHNOLOGY IN UNIQUE


WAYS

They provide multiple distribution channels by combining people and technology.


Clients can visit one of the 414 offices in 124 cities or access via telephone, call
centre or online channel. Web enabled tools such as technical analysis, information,
news, interactive web based programs and tools and back office solutions for clients
and marketing associates; Power Indiabulls an order entry, routing and management
technology through technology platform, for actively- trading investors.

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Strong market presence and increased market share leads to virtuous cycle of
growth and profitability

Theyre growing client base and market share have increased their market presence,
brand recognition enhanced their profitability and increased the available credit
facilities from the banks further strengthening its strong balance sheet. Companys
brand and profitability allows them to recruit good and efficient employees,
compensate them attractively and provides the flexibility toes for investments in the
business and technology systems. These attributes in turn have a positive effect on the
growth of its client base thereby increasing its market share, leading to higher profits
and credit facilities and thus forming a virtuous circle.

KEY BUSINESS STRATEGIES

Their focus on the client has allowed Company and its subsidiaries to offer a range of
services that have changed the investing landscape and created a new model of
financial services that melds people and technology to provide an integrated human
assisted technology interface service for investors who range from self-directed full-
time active investor to those who prefer to deal with through a marketing associate in
smaller towns and cities. Their key strategies include:

Defend and maintain their differentiation as the firm that delivers ethical and
useful services

Build and expand investing insight through product offerings such as Equity
Analysis which is objective,

Uncomplicated and not driven by commission

Give clients new levels of choice tailored to their desire for help, tools for
investing their assets, their willingness to pay for additional services and the level
of business they can do with the company.

Provide clients with tools, relationship managers and choices that support their
desired investment outcomes. Indiabulls has developed a client specific approach
as a core element of its business strategy and are constantly focusing on acquiring

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new clients and expanding their customer base. They believe that the strong
secular growth of the Indian financial Markets, due to increased household
penetration of financial assets; increasing liquidity and market capitalization of
Indian Markets, led by the listing of many public sector entities; and the
increasing affluence of Indian households and savers provides an impetus to the
growth perspective.

They believe that this diversification and growth strategy will continue to produce
results and allow Company and its subsidiaries to grow business at a rapid pace
irrespective of market conditions. In addition, management believes that the growth of
the Indian financial markets, due to increased household penetration of financial
assets; increasing liquidity and market capitalization of Indian markets, led by the
listing of many public sector entities; and the increasing affluence of Indian
households and savers, favors our long term growth outlook.

The table below encapsulates the financial metrics on an annual basis, and compares
that with the Market trading volume.

(NSE Yearly Trading Volume is taken as representative of Market activity).

The core pillars of our business strategy are discussed below:

Increase the number of Client Relationships

They are focused on increasing the number of client relationships through a wide
network of offices throughout India and having more number of relationship
managers to service these relationships. They plan to grow their business by growing
the number of client relationships. During a downturn of the markets they believe that
increased number of client relationships will add stability to their earnings.

Offer Diversified Financial Products & Services Capture Greater Share of


Wallet

Company and its subsidiaries offer to their clients a wide range of financial services
and products allowing the clients to leverage their relationship with Indiabulls and get
products suiting their varied needs. This strategy allows them to gain share of wallet

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of the clients consumption of financial services. They offer to the client a
comprehensive product offering and are able to increase their revenues per client by
selling different products to the same client. Indiabulls offer equity, debt & derivatives
brokerage, IPO distribution, mutual funds and insurance products. Their strategy is to
increase the number of client relationships and then leverage those client relationships
into offering in a whole suite of financial products.

Multiple Channels Enhance Customer Experience and Opportunities to


interact with us

Companys clients can access their products and services through 414 offices spread
across 124 cities; through operator assisted call Centers; or through their website
www.indiabulls.com; or through their respective relationship managers or through
marketing Associates. These multiple channels provide flexibility to the clients and
allow them to utilize their existing business Relationship with them through any
channel from any part of India. Companys strategy is to provide the most convenient,
efficient and value added channel to the client at the lowest possible cost, and allow
the clients with choice and varied access points. Indiabulls believe that their multiple
channel strategy has been particularly effective in the affluent segment where many
sophisticated clients like to have a close-by office they can access and yet have the
flexibility of Internet account management, transactions and electronic funds transfer
and settlement.

Relationship Manager driven sales model, provide high quality service and
exploit cross-sell opportunities

Companys clients benefit from the personal attention and advice of the trained and
motivated relationship managers. All its relationship managers are qualified and
educated professionals, who have been extensively trained in-house to provide the
products and services to the clients. These relationship managers are encouraged to
develop long-term relationships with the clients and can access a variety of resources
within the Company, such as insurance specialists, research services and others to add
value to their clients. Most of the clients have dedicated relationship managers
irrespective of the channel they use.

26
LOW COST AND HIGHLY SCALABLE BUSINESS

Indiabulls has utilized the technologies available and have constantly invested in
products and innovations to provide an enhanced experience to its customers. The
benefits of such infrastructure include integrated customer trading account with
depositary services; electronic gateway for instant funds transfer to and from the bank
to the brokerage account; and comprehensive client systems that track all activity in
various segments. They believe that technology and systems are one of the key
competitive edges in terms of lowering their operating costs; managing the business;
reducing risk and providing an enhanced experience to the clients with superior
service standards.

BROKERAGE OFFERING

Companys retail equity business primarily covers secondary market equity broking.
It caters to the needs of individual Indian and Non-resident Indian (NRI) investors.
They offer broker assisted trade execution and automated online investing and trading
facilities to their customers. Automated online investing and trading includes
automated order placement and execution of market and limit equity orders; and
advanced trading platforms for active traders. All investors have full access to real -
time quotes, personalized portfolio tracking, charting and quote applications, real-time
market commentary, real-time quotes and news.

ONLINE AUTOMATED CHANNEL

Automated Online Business contributes more than 34.6% of its overall revenues.
They control more than 20% market share in the online business. Clients are able to
obtain financial information and execute trades on an automated basis through their
online channel using product offerings like Power Indiabulls and Indiabulls Market
Trader. This channel is designed to provide added convenience for clients and
minimize its costs of responding to and processing routine client transactions. Online
channels include the Indiabulls Group Professional Network that provides access via
their web-site www.indiabulls.com to information and trading service on the Internet.
Additionally, Power Indiabulls online trading system is designed for the high volume

27
trader and provides enhanced trade information and order execution integrated
software-based trading platforms. While most client transactions are completed
through the online channel, they continue to stress the importance of blending the
power of the Internet with personal service to create a full-service client interface.
They offer an online portal where the clients can execute securities purchase and
sales transactions through the Internet.

This covers the Equity, Debt & Derivatives segment in the Indian securities market.
With an objective of assisting our customers in taking investment decisions, the portal
also provides financial information on various companies listed. For executing a
transaction clients can directly log on to our website without requiring any assistance
from offline intermediaries

THIRD PARTY FINANCIAL PRODUCTS OFFERING

They distribute third party products and services through our comprehensive retail
distribution network. The products offered include third party insurance, mutual funds
and initial and secondary public offerings. They have a pan India retail distribution
network, comprising 7000 relationship managers and 414 branches spread over 124
cities

SOME OF THE UNIQUE FEATURES ARE:


Trading via branch network, telephones and Internet account. That is Both
online and offline (by telephone).
Automated Extended Margin Trading Facility.
Integrated Trading and Depositary Account.
Technology transforming desktop into NEAT like terminal for Internet
trading.
One Screen for both Cash and Derivatives Trading.
Facility to Buy Today & Sell Tomorrow itself.
Equity Research Department which studies the market and provides
information.
Up-to-date news, data and analysis via Indiabulls.com.
Equity Analysis Report to support your investment decisions.

28
PRODUCTS AND SERVICES

29
FUNCTIONAL AREAS OF INDIABULLS
The product range offered by Indiabulls includes

Equity Analysis

Equities & Derivatives


Depository Services
Commodities
Loans
Real Estate

A. INDIABULLS EQUITY ANALYSIS


Building and maintaining your ideal portfolio demands objective, dependable
information. Indiabulls Equity Analysis helps satisfy that need by rating stocks
based on carefully selected, fact-based measures. And because we're not focused
on investment banking, we don't have the same conflicts of interest as traditional
brokerage firms. This objectivity is an important difference in our ratings.

What is Indiabulls Equity Analysis?


An Equity Rating approach is objective and easy to understand
Indiabulls Equity Analysis provides clients with an objective stock rating
system for more than 500+ stocks
An unbiased approach to help in deciding which shares to buy and sell.
Includes third party opinions to facilitate more informed investing decisions.

FEATURES OF INDIABULLS EQUITY ANALYSIS


This feature of Equity Analysis provides its clients in short and precise the companys
background, stock price, asset class, ratings along with the 3rd party opinions.
Following are the parameters:

30
OVERVIEW:
Contains precise information about the industry (cement, pharmaceutical, IT, etc),
current stock price, asset class (large cap; mid cap; small cap) and 52 week high-low.

COMPANY BACKGROUND /DETAILS:


Services and products offered
Client profile
Core competency
Achievements and its relative position (market share) in the industry.

1. EQUITY RATINGS:
Ratings are based on a set of parameters, which are as follows:
Fundamentals - Assessed on parameters like net profit margin and ROE
(Return on Equity).
Valuation - Assesses the attractiveness of a particular stock. Higher the
current value of the company, lower is its future attractiveness.
Risk - Assessed on parameters like price volatility, liquidity of the stock,
debt/equity ratio, etc.
Momentum - Assesses the potential of the stock to keep performing at a
stronger than market level in the future. The more the number of buy/buy-hold
recommendation the better the momentum rating for the company.

2. CURRENT CONSENSUS OPINION:


Perspective from the viewpoint of the Analyst which are used to generate ratings for
each company (scrip wise). This includes the following:
Third party opinions
Only for companies researched by some analysts
Parameters include Buy, Buy/Hold, Hold, Weak/Hold, Sell, No opinion

31
3. FUNDAMENTAL INFORMATION :
Under this parameter the companys share is compared with the industry and market
which is based on the following parameters:
Revenue: Income generated from sales of the product.
Market capital : Number of shares * market price
Price/sales: Stock's current price / revenue per share
Profit margin(%): This parameter is an indicator of profitability which is
calculated as: Net earnings after taxes/revenues
ROE (%) Return on Equity : This is useful in comparing the profitability of
a company to other firms in the same industry and this calculated as: Net
income/shareholders equity
Long Term Debt/Equity: A measure of financial leverage indicating the
proportion of equity and debt used by the company to finance its assets.

4. PEER ANALYSIS:
The Scrip is compared with it peers with respect to various parameters like revenue,
growth P/E and the analyst Consensus.
This includes the following:
Revenue: Income generated from sales compared to its peers.
Growth %: Growth measured in terms of percentage which is compared to its
peers in the same industry.
P/E: PE Ratio is calculated as the current market price of a share divided by
the earnings per share (EPS). Higher P/E multiple would indicate the
investors willingness to pay more for the stock relative to its earnings which
is reflected in a high growth %.
Analyst consensus: The Analyst views are mentioned under this category.

5. GROWTH EXPECTATIONS AND VALUATION MEASURES


This parameter is based on the following valuations:
Annual EPS Trend
Current P/E multiples
Valuing Potential Growth

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ANNUAL EPS TREND:
EPS: The EPS is arrived by dividing the net profit by the number of shares in
the company. The ratio shows the kind of price that investors are willing to
pay for each rupee of earnings.

Indiabulls Equity Analysis provides the clients with a measure of the


companies future profitability with the help of forecasted EPS, which is
derived from historical data.
It shows the trend of the annual EPS generated.

CURRENT P/E MULTIPLES


P/E: It measures the stock price relative to its earnings. PE Ratio is
calculated as the current market price of a share divided by the earnings per
share (EPS).
It includes trailing data, which indicates last 4 quarters along with the
estimated financials.
Here the higher P/E multiple would indicate the investors willingness to pay
more for the stock relative to its earnings which is reflected in a high growth
%.
It is useful to compare the P/E ratios of companies in the same industry,
market, or against the company's own historical P/E. This explains the use of
this ratio in case of peer analysis and the comparative analysis with respect to
the industry and the market as a whole.

VALUING POTENTIAL GROWTH


PEG: The PEG (price/earnings to growth) ratio is a tool that can help investors
find undervalued and overvalued stocks.
(a). If PEG =1 - then market is pricing the stock to fully reflect the stock's EPS
growth.
(b). If PEG > 1 - then the stock is possibly overvalued or that the market expects
future EPS growth to be greater than what is currently in the market.

33
(c). If the PEG < 1 - it is a sign of a possibly undervalued stock or that the market
does not expect the company to achieve the earnings growth that is reflected in the
market.

B. DEPOSITARY SERVICES

Indiabulls is a depository participant with the National Securities Depository Limited


and Central Depository Services (India) Limited for trading and settlement of
dematerialized shares. Indiabulls performs clearing services for all securities
transactions through its accounts. We offer depository services to create a seamless
transaction platform execute trades through Indiabulls Securities and settle these
transactions through the Indiabulls Depository Services. Indiabulls Depository
Services is part of our value added services for our clients that create multiple
interfaces with the client and provide for a solution that takes care of all your needs.

SCHEDULE OF CHARGES

NSDL

CDSL

C. PERSONAL LOANS
Offers the shortest route to a loan with minimum paperwork and procedures. With
Easymoney, you can avail of easy loans for a minimum of Rs.10, 000 to a maximum
amount of Rs.1,00,000.

FEATURES OF EASYMONEY ARE:


Flexible loan tenor of up to 4 years (i.e. 1 month to 48 months).

Loans available from a minimum of Rs.10,000 up to a maximum of Rs.100,000.

Easy monthly repayment through equated monthly installments (EMI).

Mediclaim Insurance bundled with every loan you avail.

Easy documentation and quick disbursal.

You take today and you can pay it tomorrow with no penalties

34
DOCUMENTS REQUIRED:

Residence Proof

Identity Proof

Income Proof

D. EQUITY & DERIVATIVE


Equity Business caters:
Needs of independent investors.
Active traders
Non-Resident Indian (NRI) investors.

INDIABULLS OFFERS:
Broker assisted trade execution
Automated online investing
Access to all IPO's.

Indiabulls offers the purchase and sale of securities, which includes Equity,
Derivatives and Commodities Instruments listed on National Stock Exchange of India
Ltd (NSEIL), The Stock Exchange, Mumbai (BSE) and NCDEX.

TYPES OF ACCOUNTS
Indiabulls Signature Account - Comprehensive services including research
and investing guidance for independent investors.

Power Indiabulls - Indiabulls is dedicated to empower Active Traders through


personal service and advanced trading technology.

35
Non-Resident Indian (NRI) Investor Services - With an extensive range of
investment products, you will discover an unwavering commitment to helping
you invest in India.

All of this comes to you backed by your Relationship Manager available to you 24x7.
Indiabulls is India's leading retail financial services company with 414
locations spread across 124 cities.
Over 4400 Client Relationship Managers are dedicated to serving your unique
needs.
Is complemented by our knowledgeable and customer focussed Relationship
Managers.
Provides our clients with real-time service & 24/7 access to all information
and products.
Indiabulls offers a full range of financial services and products ranging from
Equities to Insurance to enhance your wealth and hence, achieve your
financial goals.

POST REGISTRATION SERVICES:


Deliver and receive cheques and securities
Obtain market information
Place orders
Get access to IPOs via the Book Building route as well as to all the fixed price
issues.

36
DOCUMENTS REQUIRED FOR TRADING ACCOUNT AND D-
MAT A/C
2-passport size photograph.
Photocopy of Income Tax Permanent Account Number (PAN) Card - If you do
not have a PAN, then you would be required to give a declaration to that effect
and fill form 60.

IDENTITY PROOF - PHOTOCOPY OF ANY OF THE


FOLLOWING:
Passport
PAN Card
Voter ID
Driving License
Ration Card
Address Proof - Photocopy of any one of Driving License / Passport/Ration
Card/Voter Card/ Bank Statement.

FEATURES OF POWER INDIABULLS


(It is a unique offering by the company which helps an investor to trade online).
An investor can avail this feature by paying a fee of Rs. 750; with this he can track all
the listed scripts at NSE.
The features include:
Live Streaming Quotes
Fast Order Entry
Tic by Tic Live Charts
Technical Analysis
Live News and Alerts
Extensive Reports for Real-time Accounting

37
E. INDIABULLS RESOURCES LTD

Indiabulls Resources Ltd, a 100 per cent subsidiary of Indiabulls Financial Services
Ltd., has been established with the objective of evolving as an independent oil
company over time. The immediate short-term goal is to partner with oil companies
who are willing to come to India and bid in the current NELP-6 round.

Through its group companies, Indiabulls is also engaged in real estate development.
The company is in the process of developing modern commercial complexes in the
heart of Mumbai. Indiabulls Estates Pvt Ltd. the real estate arm of Indiabulls
Financial Services, will set up an integrated township spread across 100 acres in
Sonepat, 15 km from Delhi.

38
SWOT ANALYSIS

39
SWOT ANALYSIS

STRENGTHS
The `do-it-yourself' framework of online share trading offers retail investors the three
benefits of transparency, access and efficiency. Paperwork diminishes significantly,
and no more painful trips to your broker to check if everything's in order. Online
trading has made it possible to universalize access to retail investors. This was earlier
very difficult, as the cost of servicing often-outweighed transaction volumes. Online
brokerage ranges between 0.05-0.20 per cent of the value of transactions for non-
delivery-based trades, and between 0.25-0.95 per cent for delivery-based trades. Once
major investments in online infrastructure are over and done with - and with the
economies of scale coming into play - it is expected that brokerage rates would head
further downwards.

WEAKNESSES
Every thing in the world has a flip side to it - Transaction velocity is crucial. And
more often than not, connections are lousy. There's also a degree of investor
skepticism about online payment and settlement mechanisms in spite of all the
encryption and fire walling brought into play. Time and technology will soon assuage
these concerns, which hark back to the `physical' days.

OPPORTUNITIES
You have some money to dabble with. Trading shares on BSE/NSE has always been
your dream. When will you ever find the time? And besides, the hassle of finding a
broker is not easy. This is your main opportunity.
Realizing there is untapped market of investors who want to be able to execute their
own trades when it suits them, brokers have taken their trading rooms to the Internet.
Known as online brokers, they allow you to buy and sell shares via Internet.

40
THREATS
On to some threat perception - Domestic funds, foreign institutional investors and
operators comprise the three main market constituents. And all three include term
investors as well as opportunists in their pecking order. Some, for instance, hitch their
fate with what the FIIs are up to.

41
RESEARCH METHODOLOGY

The methodology section is the blue print for researcher activity and specifies bow the
investigator intents to study the people or describe social settings. In other words the
methodology section make explicit the study desire and constitutes the how to do it
phase.

The project study has been conducted by collecting primary data using structured
questionnaire and secondary data.

I have put my best possible effort to do this research and collect the necessary
information to learn about this topic thoroughly.

42
DATA COLLECTION
The data collected was a primary & secondary in nature. Primary data was collected
using structured questionnaire. The questionnaire has been designed for the target
group to get the best amount of data possible keeping in view the importance and
authenticity of the information and convenience of the respondent. The selection of
investor was predetermined in nature Personal contacts were established to conduct a
face-to-face interview. Interview was conducted under strict supervision to maintain
the standards of the data collected.

Type of Research: - Descriptive research


Descriptive research includes Surveys and fact-finding enquiries of different kinds.
The main characteristic of this method is that the researcher has no control over the
variables; he can only report what has happened or what is happening.

DATA SOURCES
There are two types of data.
Primary Data The data that is collected first hand by someone specifically for the
purpose of facilitating the study is known as primary data. So in this research the data
is collected from respondents through questionnaire.
Secondary Data For the company information I had used secondary data like
brochures, web site of the company etc. The Method used by me is Survey Method as
the research done is Descriptive Research.
RESEARCH INSTRUMENTS
Selected instrument for Data Collection for Survey is Questionnaire.

QUESTIONNAIRE DESIGN/FORMULATION
Questionnaire: - A questionnaire consists of a set of questions presented to respondent
for their answers. It can be Closed Ended or Open Ended
Open Ended: - Allows respondents to answer in their own words & are difficult to
Interpret and Tabulate.
Close Ended: - Pre-specify all the possible answers & are easy to Interpret and
Tabulate.

43
IMPORTANCE SCALE
A scale that rates the importance of some attribute.

RATING SCALE
A scale that rates some attribute from highly satisfied to highly unsatisfied and
very inefficient to very efficient

SAMPLING UNIT: -
Who is to be surveyed? The marketing researcher must define the target population
that will be sampled. The sample Unit taken by me;General public of different age
group, different gender and different proffesion

SAMPLING FRAME:-
The source from which the sample is drawn
Sampling Technique: -
How should the respondent be chosen? In the Project sampling is done on basis of
Probability sampling . Among the probability sampling design the sampling design
chosen is stratified random sampling. Because in this survey I had stratified the sample
in different age group, different gender and different proffesion

Sample Size/ Population Size: - How many people should be surveyed?


My sample size is 100

44
RESEARCH DESIGN
Research design is a specification of methods and procedures for acquiring the
information we need to solve the problems. Research design was adopted for the
purpose of collection and analysis of data in a manner aimed at getting relevant
information. It was conceptual structure within which research was conducted,
collected, measured and analyzed.

RESEARCH IDEA

To know the market scene of trading and Investment in equities through Indiabulls
securities Ltd.

RESEARCH QUESTION

What is the market trend regarding investment? What difficulties and challenges
investors are facing while making investments?

RESEARCH DESIGN

To get an insight into the mind of investors regarding trading and investment in
Equities

To get an insight into the mindset of investors regarding the importance assigned to
different attributes such as risk, return, liquidity etc. of various investment channels
such as equities. In the report this tries to understand the investors behavior while
trading.

To study the preferences and perceptions of investors regarding various financial


products from the stable of Indiabulls Securities Ltd. so that the firm can benefit from
the findings of the report in launching any new investment product in future.

45
INTRODUCTION AND CONCEPT OF SHARE TRADING

Trading in shares is old phenomena its regulation had been started when securities
contract act had been formed in 1956. Transfer of resources from those with idle
resources to others who have a productive need for them is most efficiently achieved
through the securities market. It provides a channel for reallocation of savings to
investments.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) is a regulatory


governing body of security market. The SEBI Act 1992 was enacted to empower
SEBI with statutory powers for:

(a) Protecting the interests of investors in securities.

(b) Promoting the development of the securities market

(c) Regulating the securities market

Its regulatory jurisdiction extends over corporate in the issuance of capital and
transfer of securities. It has powers to register and regulate all the market all market
intermediaries and also to penalize them in case of violations of the provisions of the
ACT, rules and regulations made there under. SEBI has a full autonomy and authority
to regulate and develop an orderly securities market.

The share market can be segmented in two parts one is Primary Market another is
Secondary Market.

46
Finnancial market can be dvided into following four sub-markets

Financial Market

Financial Market

Money Market Capital


Market

Primary capital Secondary capital

Market
Market

Primary Money Secondary Money

Market Market

47
PRIMARY MARKET

It provides opportunity to issuers of securities government as well as corporate to


raise resources to meet their requirements of investments. In this market companies
issue fresh security sin exchange of funds through public issues or private placements.
The market design for primary market is provided in the provision of Companies Act,
1956 which deals with issues, listing and allotment of securities. The investors have to
apply the shares by filling the application form issue by the company along with the
application money. According to Disclosure and Investor Protection guidelines of
SEBI, 1992 company has to disclose all the necessary information regarding pricing
of issues, listing requirements, disclosure norms lock-in-period for promoters
contribution, contents of offer documents pre and post issue obligations etc.

Company can issue shares at face value, at premium or at discount. Another method
of pricing which is now days common is issuing the securities through online system
of the stock exchange has to comply with the section 55 to 68a of the companies Act,
1956 and SEBI guidelines 2007. The company is required to enter in to an agreement
with the stock exchanges which have the requisite system for online offer of
securities. The advantages for this new system are:-

(a) The investors part with money only after allotment.

(b) It eliminates refunds except in case of direct applications.

(c) It reduces the time taken for issue process

SECONDARY MARKET

48
Secondary market is the place for sale and purchase of existing securities. It enables
an investor to adjust his holdings of securities in response to changes in his
assessment about risk and return. It enables him to sell securities for cash to meet his
liquidity needs. It essentially comprises of the stock exchanges which provide
platform for trading of securities and a host of intermediaries who assist in trading of
securities and clearing and settlement of trades. The securities are traded, cleared and
settled as per prescribed regulatory framework under the supervision of the exchanges
and oversight of SEBI.

TRADING MECHANISM

Earlier trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of trades.
This was time consuming and inefficient. This imposed limits on trading volumes and
efficiency. In order to provide efficiency, liquidity and transparency National Stock
Exchange introduced a nation wide on line fully automated screen based trading
system where a member can punch in to the computer quantities of securities and the
prices at which he likes to transact and the transaction is executed as soon as it finds a
matching sale or buy order from a counter party. Screen based trading electronically
matches orders on a price/time priority and hence cuts down on time, cost and risk of
error, as well as on fraud resulting in improved operational efficiency. It enables
market participants, irrespective of their geographical locations to trade with one
another and it provides equal access to everybody.

NSE has main computer which is connected through Very Small Aperture Terminal
(VSAT) installed at its office. The main computer runs on a default tolerant
STRATUS mainframe computer at the exchange. Brokers have terminals installed at
their premises which are connected through VSATs. An investor informs a broker to
place an order on his behalf.

49
EQUITY MARKET AND DERIVATIVE MARKET

What is equity ?
Financing a company through the sale of stock in a company is known as equity
financing. Alternatively, debt financing (for example issuing Bonds) can be done to
avoid giving up shares of ownership of the company. Unofficial financing known as
trade financing usually provides the major part of a company's working capital (day-
to-day operational needs). Trade financing is provided by vendors and suppliers who
sell their products to the company at short-term, unsecured credit terms, usually 30
days. Equity and debt financing are usually used for longer-term investment projects
such as investments in a new factory or a new foreign market. Customer provided
financing exists when a customer pays for services before they are delivered, e.g.
subscriptions and insurance.

EQUITY MARKET
Public equity markets are those where corporates raise resources through IPOs by
getting listed in the stock exchanges. Public equity markets are subjected to a wide
range of governance, disclosure, transparency and compliance norms set by the
securities exchanges commissions/government agencies and also the self-regulatory
functions set by the exchanges themselves. Institutional and retail investors mostly
use this channel.

The distinct advantages of the public equity capital are:


a. Lower cost of capital for the firm
b. Provide liquidity for current stockholders
c. Shift monitoring costs for private lenders

50
d. Firm can learn from information contained in the stock price movements.

However, public equity capital has some costs too. These include
a. Disclosure of proprietary information
b. Agency costs of outside equity
c. Costs of reporting/filing with regulators/exchanges
d. Costs of corporate control
e. Under-pricing

A few features generally observed in the respect of the IPO markets include:
Typically, IPO prices are below the level that they reach on the market a
few days or weeks later, when more public information is available (under
pricing). However the extent of under-pricing will narrow with several
companies coming up for listing.
Each IPO generates beneficial information externalities for other
companies that are about to go public.
Privatized companies tend to list in public equity markets that offering
better legal protection of shareholders.
The decisions to go public are affected by firms ownership structure.
When company has only one owner or when banks holds majority shares,
companies are less likely to prefer public equity.

PUBLIC EQUITY CAPITAL


Governments:
The scope of government in further development of public equity markets could
consist of:
Extend the realm of regulation to other markets as well
Extend fiscal support to corporates accessing public equity markets
Evolve policy framework that will streamline compliance requirements and
thereby costs of regulation

51
Refine regulation so as to make it cohesive, comprehensive and more
integrated.
Choice of public equity markets in case of privatization and divestment
process of government stake.

DERIVATIVE MARKET
A derivative security can be defined as a security whose value depends on the values
of other underlying variables. Very often, the variables underlying the derivative
securities are the prices of traded securities. In fact, a derivative transaction helps
cover risk, which would arise on the trading of securities on which the derivative is
based and a small investor, can benefit immensely.

Let us take an example of a simple derivative contract:

Ram buys a futures contract.

He will make a profit of Rs 1000 if the price of Infosys rises by Rs 1000.

If the price is unchanged Ram will receive nothing.

If the stock price of Infosys falls by Rs 800 he will lose Rs 800.

As we can see, the above contract depends upon the price of the Infosys scrip, which
is the underlying security. Similarly, futures trading has already started in Sensex
futures and Nifty futures. The underlying security in this case is the BSE Sensex and
NSE Nifty.

DERIVATIVES AND FUTURES ARE BASICALLY OF 3 TYPES:

Forwards and Futures

Options

Swaps

52
FORWARD CONTRACT

A forward contract is the simplest mode of a derivative transaction. It is an agreement


to buy or sell an asset (of a specified quantity) at a certain future time for a certain
price. No cash is exchanged when the contract is entered into.

ILLUSTRATION 1:

Shyam wants to buy a TV, which costs Rs 10,000 but he has no cash to buy it outright.
He can only buy it 3 months hence. He, however, fears that prices of televisions will
rise 3 months from now. So in order to protect himself from the rise in prices Shyam
enters into a contract with the TV dealer that 3 months from now he will buy the TV
for Rs 10,000. What Shyam is doing is that he is locking the current price of a TV for
a forward contract. The forward contract is settled at maturity. The dealer will deliver
the asset to Shyam at the end of three months and Shyam in turn will pay cash
equivalent to the TV price on delivery.

ILLUSTRATION 2:

Ram is an importer who has to make a payment for his consignment in six months
time. In order to meet his payment obligation he has to buy dollars six months from
today. However, he is not sure what the Re/$ rate will be then. In order to be sure of
his expenditure he will enter into a contract with a bank to buy dollars six months
from now at a decided rate. As he is entering into a contract on a future date it is a
forward contract and the underlying security is the foreign currency.

The difference between a share and derivative is that shares/securities is an asset


while derivative instrument is a contract

What is an Index?

53
To understand the use and functioning of the index derivatives markets, it is necessary
to understand the underlying index. A stock index represents the change in value of a
set of stocks, which constitute the index. A market index is very important for the
market players as it acts as a barometer for market behavior and as an underlying in
derivative instruments such as index futures.

54
THE SENSEX AND NIFTY

In India the most popular indices have been the BSE Sensex and S&P CNX Nifty. The
BSE Sensex has 30 stocks comprising the index which are selected based on market
capitalization, industry representation, trading frequency etc. It represents 30 large
well-established and financially sound companies. The Sensex represents a broad
spectrum of companies in a variety of industries. It represents 14 major industry
groups. Then there is a BSE national index and BSE 200. However, trading in index
futures has only commenced on the BSE Sensex.

While the BSE Sensex was the first stock market index in the country, Nifty was
launched by the National Stock Exchange in April 1996 taking the base of November
3, 1995. The Nifty index consists of shares of 50 companies with each having a
market capitalization of more than Rs 500 crore.

FUTURES AND STOCK INDICES

For understanding of stock index futures a thorough knowledge of the composition of


indexes is essential. Choosing the right index is important in choosing the right
contract for speculation or hedging. Since for speculation, the volatility of the index is
important whereas for hedging the choice of index depends upon the relationship
between the stocks being hedged and the characteristics of the index.

Choosing and understanding the right index is important as the movement of stock
index futures is quite similar to that of the underlying stock index. Volatility of the
futures indexes is generally greater than spot stock indexes.

Everytime an investor takes a long or short position on a stock, he also has an hidden
exposure to the Nifty or Sensex. As most often stock values fall in tune with the entire
market sentiment and rise when the market as a whole is rising.

Retail investors will find the index derivatives useful due to the high correlation of the
index with their portfolio/stock and low cost associated with using index futures for
hedging

55
UNDERSTANDING INDEX FUTURES
A futures contract is an agreement between two parties to buy or sell an asset at a
certain time in the future at a certain price. Index futures are all futures contracts
where the underlying is the stock index (Nifty or Sensex) and helps a trader to take a
view on the market as a whole.

Index futures permits speculation and if a trader anticipates a major rally in the market
he can simply buy a futures contract and hope for a price rise on the futures contract
when the rally occurs. We shall learn in subsequent lessons how one can leverage
ones position by taking position in the futures market.

In India we have index futures contracts based on S&P CNX Nifty and the BSE
Sensex and near 3 months duration contracts are available at all times. Each contract
expires on the last Thursday of the expiry month and simultaneously a new contract is
introduced for trading after expiry of a contract.

EXAMPLE:

Futures contracts in Nifty in July 2007

Contract month Expiry/settlement


July 2007 July 27
August 2007 August 24
September 2007 September 28
On July 27

Contract month Expiry/settlement


August 2007 August 25
September 2007 September 28
October 2007 October 26
The permitted lot size is 100 or multiples thereof for the Nifty. That is you buy one
Nifty contract the total deal value will be 100*3000 (Nifty value)= Rs 3,00,000.

In the case of BSE Sensex the market lot is 50. That is you buy one Sensex futures the
total value will be 50*4000 (Sensex value)= Rs 2,00,000.

The index futures symbols are represented as follows:

56
BSE NSE
BSXJUN2007 (June contract) FUTDXNIFTY28-JUN2007
BSXJUL2006 (July contract) FUTDXNIFTY28-JUL2007
BSXAUG2006 (Aug contract) FUTDXNIFTY28-AUG2007

OPTIONS

Stock markets by their very nature are fickle. While fortunes can be made in a jiffy
more often than not the scenario is the reverse. Investing in stocks has two sides to it
a) Unlimited profit potential from any upside (remember Infosys, HFCL etc) or b) a
downside which could make you a pauper.

Derivative products are structured precisely for this reason -- to curtail the risk
exposure of an investor. Index futures and stock options are instruments that enable
you to hedge your portfolio or open positions in the market. Option contracts allow
you to run your profits while restricting your downside risk.

Apart from risk containment, options can be used for speculation and investors can
create a wide range of potential profit scenarios.

We have seen in the Derivatives School how index futures can be used to protect
oneself from volatility or market risk. Here we will try and understand some basic
concepts of options.

What are options?

An option is a contract, which gives the buyer the right, but not the obligation to buy
or sell shares of the underlying security at a specific price on or before a specific date.

Option, as the word suggests, is a choice given to the investor to either honour the
contract; or if he chooses not to walk away from the contract.

To begin, there are two kinds of options: Call Options and Put Options.

A Call Option is an option to buy a stock at a specific price on or before a certain date.
In this way, Call options are like security deposits. If, for example, you wanted to rent
a certain property, and left a security deposit for it, the money would be used to insure

57
that you could, in fact, rent that property at the price agreed upon when you returned.
If you never returned, you would give up your security deposit, but you would have
no other liability. Call options usually increase in value as the value of the underlying
instrument rises.

When you buy a Call option, the price you pay for it, called the option premium,
secures your right to buy that certain stock at a specified price called the strike price.
If you decide not to use the option to buy the stock, and you are not obligated to, your
only cost is the option premium.

Put Options are options to sell a stock at a specific price on or before a certain date. In
this way, Put options are like insurance policies

If you buy a new car, and then buy auto insurance on the car, you pay a premium and
are, hence, protected if the asset is damaged in an accident. If this happens, you can
use your policy to regain the insured value of the car. In this way, the put option gains
in value as the value of the underlying instrument decreases. If all goes well and the
insurance is not needed, the insurance company keeps your premium in return for
taking on the risk.

With a Put Option, you can "insure" a stock by fixing a selling price. If something
happens which causes the stock price to fall, and thus, "damages" your asset, you can
exercise your option and sell it at its "insured" price level. If the price of your stock
goes up, and there is no "damage," then you do not need to use the insurance, and,
once again, your only cost is the premium. This is the primary function of listed
options, to allow investors ways to manage risk.

Technically, an option is a contract between two parties. The buyer receives a


privilege for which he pays a premium. The seller accepts an obligation for which he
receives a fee.

58
CALL OPTION
An option is a contract between two parties giving the taker (buyer) the right, but not
the obligation, to buy or sell a parcel of shares at a predetermined price possibly on, or
before a predetermined date. To acquire this right the taker pays a premium to the
writer (seller) of the contract.

There are two types of options:

Call Options

Put Options

CALL OPTIONS

Call options give the taker the right, but not the obligation, to buy the underlying
shares at a predetermined price, on or before a predetermined date.

ILLUSTRATION 1:

Raj purchases 1 Satyam Computer (SATCOM) AUG 150 Call --Premium 8 This
contract allows Raj to buy 100 shares of SATCOM at Rs 150 per share at any time
between the current date and the end of next August. For this privilege, Raj pays a fee
of Rs 800 (Rs eight a share for 100 shares).

The buyer of a call has purchased the right to buy and for that he pays a premium.

Now let us see how one can profit from buying an option. Sam purchases a December
call option at Rs 40 for a premium of Rs 15. That is he has purchased the right to buy
that share for Rs 40 in December. If the stock rises above Rs 55 (40+15) he will break
even and he will start making a profit. Suppose the stock does not rise and instead
falls he will choose not to exercise the option and forego the premium of Rs 15 and
thus limiting his loss to Rs 15.

59
Let us take another example of a call option on the Nifty to understand the concept
better.

Nifty is at 3000. The following are Nifty options traded at following quotes.

Option contract Strike price Call premium


JUNE Nifty 3000 Rs 90
3100 Rs 65

JULY Nifty 3000 Rs 160


3100 Rs 130
A trader is of the view that the index will go up to 3100 in July 2007 but does not
want to take the risk of prices going down. Therefore, he buys 10 call of July
contracts at 3100. He pays a premium for buying calls (the right to buy the contract)
for 130*10*100= Rs 130000/-.

In July 2006 suppose the Nifty index goes up to 3100. He sells the call or exercises
the option and takes the difference in spot index price which is (3100-3000) * 100
(market lot) = 10,000 per contract. Total profit = 100,000/- (10,000*10).

He had paid Rs 130,000/- premium for buying the call option. So he earns by buying
call option is Rs 40,000/- (130,000-60,000).

If the index falls below 3100 the trader will not exercise his right and will opt to
forego his premium of Rs 60,000. So, in the event the index falls further his loss is
limited to the premium he paid upfront, but the profit potential is unlimited.

60
CALL OPTIONS-LONG & SHORT POSITIONS
When you expect prices to rise, then you take a long position by buying calls. You are
bullish.

When you expect prices to fall, then you take a short position by selling calls. You are
bearish.

HEDGING
We have seen how one can take a view on the market with the help of index futures.
The other benefit of trading in index futures is to hedge your portfolio against the risk
of trading. In order to understand how one can protect his portfolio from value erosion
let us take an example.

ILLUSTRATION:

Ram enters into a contract with Shyam that six months from now he will sell to Shyam 10 dresses for Rs 4000.
The cost of manufacturing for Ram is only Rs 1000 and he will make a profit of Rs 3000 if the sale is
completed.

Cost (Rs) Selling price Profit

1000 4000 3000


However, Ram fears that Shyam may not honour his contract six months from now. So he inserts a new
clause in the contract that if Shyam fails to honour the contract he will have to pay a penalty of Rs 1000. And if
Shyam honours the contract Ram will offer a discount of Rs 1000 as incentive.

Shyam defaults Shyam honours

1000 (Initial Investment) 3000 (Initial profit)

1000 (penalty from Shyam) (-1000) discount given to Shyam

- (No gain/loss) 2000 (Net gain)

As we see above if Shyam defaults Ram will get a penalty of Rs 1000 but he will
recover his initial investment. If Shyam honours the contract, Ram will still make a
profit of Rs 2000. Thus, Ram has hedged his risk against default and protected his
initial investment.

61
The above example explains the concept of hedging. Let us try understanding how
one can use hedging in a real life scenario.

Stocks carry two types of risk company specific and market risk. While company
risk can be minimized by diversifying your portfolio market risk cannot be diversified
but has to be hedged. So how does one measure the market risk? Market risk can be
known from Beta.

Beta measures the relationship between movement of the index to the movement of
the stock. The beta measures the percentage impact on the stock prices for 1% change
in the index. Therefore, for a portfolio whose value goes down by 11% when the
index goes down by 10%, the beta would be 1.1. When the index increases by 10%,
the value of the portfolio increases 11%. The idea is to make beta of your portfolio
zero to nullify your losses.

Hedging involves protecting an existing asset position from future adverse price
movements. In order to hedge a position, a market player needs to take an equal
and opposite position in the futures market to the one held in the cash market.

Every portfolio has a hidden exposure to the index, which is denoted by the beta.
Assuming you have a portfolio of Rs 1 million, which has a beta of 1.2, you can factor
a complete hedge by selling Rs 1.2 mn of S&P CNX Nifty futures.

STEPS:

1. Determine the beta of the portfolio. If the beta of any stock is not known, it is
safe to assume that it is 1.

2. Short sell the index in such a quantum that the gain on a unit decrease in the
index would offset the losses on the rest of his portfolio. This is achieved by
multiplying the relative volatility of the portfolio by the market value of his
holdings.

Therefore in the above scenario we have to shortsell 1.2 * 1 million = 1.2 million
worth of Nifty

Now let us study the impact on the overall gain/loss that accrues:

62
Index up 10% Index down 10%

Gain/(Loss) in Portfolio Rs 120,000 (Rs 120,000)

Gain/(Loss) in Futures (Rs 120,000) Rs 120,000

Net Effect Nil Nil

As we see, that portfolio is completely insulated from any losses arising out of a fall
in market sentiment. But as a cost, one has to forego any gains that arise out of
improvement in the overall sentiment. Then why does one invest in equities if all the
gains will be offset by losses in futures market. The idea is that everyone expects his
portfolio to outperform the market. Irrespective of wh The same methodology can be
applied to a single stock by deriving the beta of the scrip and taking a reverse position
in the futures market.

Thus, we have seen how one can use hedging in the futures market to offset losses in
the cash market

Either the market goes up or not, his portfolio value would increase.

SPECULATION
Speculators are those who do not have any position on which they enter in futures and
options market. They only have a particular view on the market, stock, commodity
etc. In short, speculators put their money at risk in the hope of profiting from an
anticipated price change. They consider various factors such as demand supply,
market positions, open interests, economic fundamentals and other data to take their
positions.

63
EXAMPLE:

Ram is a trader but has no time to track and analyze stocks. However, he fancies his
chances in predicting the market trend. So instead of buying different stocks he buys
Sensex Futures.

On May 1, 2006, he buys 100 Sensex futures @ 3600 on expectations that the index
will rise in future. On June 1, 2006, the Sensex rises to 4000 and at that time he sells
an equal number of contracts to close out his position.

Selling Price : 4000*100 = Rs 4,00,000

Less: Purchase Cost: 3600*100 = Rs 3,60,000

Net gain Rs 40,000 Ram has made a profit of Rs 40,000 by taking a call on the future
value of the Sensex. However, if the Sensex had fallen he would have made a loss.
Similarly, if would have been bearish he could have sold Sensex futures and made a
profit from a falling profit. In index futures players can have a long-term view of the
market up to atleast 3 month

ARBITRAGE
An arbitrageur is basically risk averse. He enters into those contracts were he can earn
riskless profits. When markets are imperfect, buying in one market and
simultaneously selling in other market gives riskless profit. Arbitrageurs are always in
the look out for such imperfections.

In the futures market one can take advantages of arbitrage opportunities by buying
from lower priced market and selling at the higher priced market. In index futures
arbitrage is possible between the spot market and the futures market (NSE has
provided a special software for buying all 50 Nifty stocks in the spot market.

Take the case of the NSE Nifty.

Assume that Nifty is at 1200 and 3 months Nifty futures is at 1300.

64
The futures price of Nifty futures can be worked out by taking the interest cost
of 3 months into account.

If there is a difference then arbitrage opportunity exists

Let us take the example of single stock to understand the concept better. If Wipro is
quoted at Rs 1000 per share and the 3 months futures of Wipro is Rs 1070 then one
can purchase ITC at Rs 1000 in spot by borrowing @ 12% annum for 3 months and
sell Wipro futures for 3 months at Rs 1070.

Sale = 1070
Cost= 1000+30 =

Arbitrage profit = 1040

These kind of imperfections continue to exist in the markets but one has to be alert to
the opportunities as they tend to get exhausted very fast.

BENEFITS OF TRADING WITH INDIABULLS


Personal Relationship Manager
Most competitive brokerage & DP charges (Delivery-0.5% and
Intraday-.005%)
No annual maintenance charges.
Technology transforming desktop into NEAT like terminal for internet trading.
Trading via branch network, telephone and internet account I.e. both Online &
Offline.
Real time Online fund Transfer & Exposure updating facility with HDFC
Bank, Citibank & ICICI Bank.
Integrated Trading and Depository Account.
Margin Trading of 4 times the cash deposited for delivery based trade.
Margin Trading of 10 times the cash deposited for intraday based trade.
Margin Trading of 2 times the approved category A based shares.
Quality equity Research department, Which studies the market and provides
personalized information.
Equity Analysis report to support your investment decisions.

65
INDIABULLS-IN NEWS 2006-2007

Farallon pays Rs 88cr for 33% stake in Indiabulls arm [The Times Of India ( Jan
3, 2006 )

Merrill Lynch acquires 2% in Indiabulls [Economic Times - India ( June 29, 2006)

Amaranth to pick up 42.5% stake in Indiabulls [Economic Times - India ( June 08,
2007 )

US Fund Amaranth LLC Acquires 42.5 Percent Stake In Indiabulls IPO ...
[Business Wire -San Francisco, CA, USA ( June 07, 2007 ) ]

Toddler takes giant steps [Business India ( Feb 28-Mar 13, 2007 ) ]

Indiabulls raises $60m via GDR issue [ Sify ( Feb 25, 2007 ) ]

Indiabulls GDR priced at Rs 107 per share [Moneycontrol.com (Feb 25, 2006)]

Indiabulls prices $45mn GDR issue [Business Standard (Feb 25, 2006 ) ]

Indiabulls raises $60 mln via GDR issue - BSE [Reuters India (Feb 25, 2007)]

Indiabulls Financial prices GDR issue at US $45 million [Myiris.com (Feb 25,
2007)]

Indiabulls GDR priced at Rs 107/share [Economic Times (Feb 25, 2006)]

Indiabulls' net grows 173% in Q3 [Economic Times (Jan 13, 2006)]

Indiabulls for FII stake in Credit Services [Moneycontrol.com (Jan 13, 2007)]

Indiabulls third-quarter net jumps, income rises too [Hindustan Times (Jan 13,
2006)]

Indiabulls Q3 net soars 175% to Rs 18.4cr - New Delhi,India


[Moneycontrol.com (Jan 13, 2007)]

Indiabulls Q3 profits soar 173% to Rs. 18.4 crores [Sify (Jan 13, 2007)]

66
Indiabulls plans to hike FII limit to 100%, EGM postponed: [New Kerala (Jan
13, 2007)]

Farallon buys 33% in Indiabulls arm [The Economic Times (Jan 3, 2007)]

Farallon buys 33% in Indiabulls Credit [Business Standard (Jan 3, 2007)]

DLF and INDIABULLS JV buys DDA plot in South Delhi for 450 crores.

26 APRIL 2007
DLF and Indiabulls have acquired 35.8 acres of Residential Development under
Public-Private Partnership Project by putting in the highest bid of Rs 450.01 crores in
the open auction carried out by DDA.

Sources have indicated that the Residential Development will feature high end
residential apartments in private landscaped surroundings, and the Public-Private
project will involve the construction of housing units for Economically Weaker
Section of the society with all civic amenities. The residential development is in prime
location at South Delhi between Anand Mai Marg and Delhi-Mehrauli Road.

The residential development will be a unique project in New Delhi with beautifully
landscaped gardens and world class amenities and will feature around 750 residential
apartments in high rise buildings.

DLF and Indiabulls had also bought 3 out of 5 mills in Lower Parel in the NTC
auctions. While DLF had acquired Mumbai Textile Mills for Rs 702 crores, Indiabulls
had acquired Jupiter and Elphinstone Textile Mills for Rs 718 crores. DLF is
countrys largest real estate developer and is planning a mega issue of 10,000 crores,
the largest by any Indian company. To date DLF has completed and under
development of over 207 million

67
sq ft across its residential, commercial and retail businesses with a spread of 54
million sq ft under commercial, 19 million sq ft under retail and 134 million sq ft
under residential projects.

Recently Mr L N Mittal, the famous steel magnate and one of worlds richest man
had acquired 8.2% stake in Indiabulls subsidiary for Rs 90 crores valuing the
subsidiary at Rs 1,100 crores. On the news of winning the auction Indiabulls shares
ended 12% higher than previous closing at an all time high of Rs 279 and taking the
market capitalization of the company to more than a billion dollars. Indiabulls had
earlier reported Rs 253 crores in net profit for the last financial year.
LN Mittal buys 8% in Indiabulls Credit for 90 crores

29 MARCH 2007
Mr L N Mittal, the famous steel magnate and worlds third richest man has acquired
8.2% stake in Indiabulls Credit Services, the majority owned subsidiary of Indiabulls
Financial Services for Rs 90 crores, through LNMIIV Ltd. The investment at approx
Rs 62 per share values Indiabulls Credit Services at Rs 1,100 crores.

This investment follows Farallon Capitals two prior rounds of investments in


Indiabulls Credit Services. Recently Farallon had paid Rs 55 per share and invested $
20 million in the company and last year Farallon had paid Rs 22 per share to buy 33%
stake for Rs 88 crores in Indiabulls Credit Services.

Mr. L N Mittal, through LNMIIV Ltd, has been an investor in Indiabulls Financial
Services, the listed company since the year 2000 when he had originally bought 61.3
lac shares representing approx 7.52% stake in the company at an average price of Rs 6
per share. LNMs original investment in Indiabulls Financial Services has appreciated
by more than 40 times in 6 years, he continues to be a large shareholder in the
company. The total foreign shareholding in the company has gone up to 56.6% as per

the latest stock exchange filings and some of the shareholders who own more than 5%
equity in the company are Fidelity, Capital International and Merrill Lynch.

68
FINDING AND ANALYSIS

69
ANALYSIS OF THE PREFERRED INVESTMENT AREA

The investment was broadly divided into five areas, mainly-Bank deposits. Shares,
Mutual Fund ,Real Estate and insurance plans.

45

40

35

30

25

20 No. of Respondents

15

10

0
Bank Shares Mutual Real Insurance
Deposits Funds Estates plan

Following observations can be made on the basis of above analysis:

Bank Deposits being the most preferred area, 43% respondents out of hundred
invested in bank deposits.

The second preferred area was Shares as 27% respondents were investing in the
share market.

Then preferred area was the Mutual Funds with 13% of respondents

Real estates were the least preferred area i.e. only 7%

70
ANALYSIS OF THE FACTORS AFFECTING THE
INVESTMENT

The factors are categorized in to four parameters to know the purpose of investment
made by the investor.

15
4

52
29

High returns
Moderate Return
Low Risk
Moderate Risk

52% respondents go invests for higher returns.

29% respondents prefer Moderate Return for their investments.

15% prefer moderate risk.

Only 4% for Low risk.

71
ANALYSIS FOR INTERMEDIATING COMPANY

These factors are categorized into brokerage, Information provided by them the
exposure limit or loan facility provided by them and their Brand Name.

21% respondents choose Kotak Securities Ltd.

38% respondents choose Indiabulls Securities Ltd. for trading.

7% respondents choose ICICI direct.

4% respondents choose Fortis.

30% go for others.

72
ANALYSIS OF THE FACTORS FOR BROKING HOUSE

These factors are categorized into brokerage, Information provided by them the
exposure limit or loan facility provided by them and their Brand Name.

16 12

Brokerage
Expertise Know ledge
Exposure/Loan
28 Brand nam e
44

44% respondents choose their broking house on basis of information provided by


them.

28% prefer by the exposure limit and the loan facility provided to them.

12% by the brokerage charge by the broking house.

16% by Brand Name.

73
ANALYSIS OF THE INFLUENCE OF THE PAST
PROFILE OF A COMPANY

58% respondents say yes they study profile of the company before making
investment.

42% respondents say no.

74
ANALYSIS OF THE REQUIREMENT OF EXPERTISE

93% respondents say yes, they required expertise knowledge.

7% respondents say no.

75
MOST IMPORTANT SERVICE PARAMETER

Service Parameters

3% 20%
Speed
42% Quality
Information
Others
35%

The most important service parameter that came up as a result of survey is


Information i.e. the investors feel that the information contained in the service
package is the key to more profits.

Second major parameter is Quality of service.

20% investors feel that the quickness of service is above par than any other aspect.

76
LIMITATIONS OF THE RESEARCH

To study share market is a very vast topic and the search is just limited to a small
portion.

Due to the reluctant nature of the respondents it was not an easy task to collect
relevant information from them.

Sometime it was difficult to make the respondents understand the purpose of the
survey.

Busy schedule of the respondents was also a major hindrance to establish a


contact with them.

It may be possible the information provided by them is not true.

77
CONCLUSION

The perceptions of people about share markets are very strong. But they can be
influenced, if not completely changed.

The reason people prefer staying away from the share markets is lack of confidence -
about their own understanding of the market and the very nature of the market.
The fact that stock markets themselves are volatile and wide open to changes in
external forces makes it much more difficult for people to consider them as an
investment alternative.

The right kind of campaigning directed towards increasing the awareness of people
will get new customers. But more than that, this campaign will help retain customers,
which is the key to staying ahead in the market.

Indiabulls Securities is currently one of the biggest broking houses in the country and
its strategies to penetrate further into the market will certainly take it way ahead of its
competitors.

78
RECOMMENDATIONS

INTRODUCTION PROGRAMS must be held for the sales teams before letting
them go into the field. In these induction classes the experienced sales staff
employees should share their valuable live experiences and knowledge, which
they have experienced while in field.

Weekly magazines must be published and distributed to the investors that can help
them for making better investments.

Sales team must be fully equipped with latest technology such as using Laptop
that can be used for making presentation to the customers especially to the
corporate clients about their product and services provided by them.

Make your site user friendly so that more and more people know about trading
and do the same also.

Advertisement through Canopy, help to generate leads.

Company should advertise with a concern that has a brand name in the market.

79
OTHER RECOMMENDATIONS
1. Strong Need Of Brand Building

2. Promotional Strategies

3. Solid Network Required To Develop The Business Further

4. Make The Branch Self Informative

5. The RM should provide an in depth demonstration of the software and


client should be assisted regularly.
6. Provision of a manual for online clients for ease of operation.
7. Time lag between the complaints put and follow up should be reduced.
8. Database should be verified properly, so that repeated entries do not
occur. This will reduce inconvenience to the clients, who complained
about multiple calls received.

80
PROMOTIONAL STRATEGIES

1)
Press publicity:
Outdoor publicity:

Press publicity:

Paper inserts

Advertisements in newspaper (local and national).

Interest cards distribution

Mailers/personal invitations to selective section of the society

Leaflets

OUTDOOR PUBLICITY:
Banners in commercial areas and prime sites.

Air balloons at shopping complex.

Bus stands shelters.

Off site ATM for developing business

81
ANNEXURE

ORGANISATIONL CHART

CHAIRMAN & CEO

Sameer Gehlant Rajeev Rattan Surabh Mital


CEO President & CEO CEO

Oivyesh Shah
Gagan Banga Head online sales
Head online sales

T.S. Muglani Pheeta Nagpal Ashok Sharma Suresh Jain


Chief Tech Head- HR Finance V.P
officer Controller

82
SURVEY QUESTIONNAIRE

Name :

Address :

Phone no :

1. Where do you prefer to invest your money?

a) Bank Deposits
b) Shares

c) Mutual Funds d) Real


estate

e) Insurance Plans

2. What are the factors, which attracts you for the investment?

a) High Return b) Moderate Return

c) Low Risk d) Moderate Risk

3. Do you prefer to invest in shares?

a) Yes b) No

4. If yes, out of following, which intermediating company would you go For?

a) Kotak Securities b) Indiabulls Securities

c) ICICI d) Fortis
Securities

d) Others, please specify

5. If Indiabulls, What are the factors, which attract you to deal with
Indiabulls?

83
6. If Others, What are the factors, which attract you, please specify?

7. What attracts you to invest in Shares?

a) Brokerage b) Expertise
Knowledge

c) Exposures/loan d) Brand

8. On what basis do you prefer to trade in shares?

a) Daily b) Monthly

c) Yearly d) other, please specify

9. Does the companies profile matter for the investment decisions?

a) Yes b) No

10. Do you require the opinion of portfolio managers to manage your


investment?

a) Yes b) No

11. What is the most important service parameter that you look for

while trading.

a) Information b) Speed

c) Quality d) Other

12. Any recommendation / Suggestion

84
BIBLIOGRAPHY

INTERNET WEBSITE

www.indiabulls.com

www.nseindia.com

www.bseindia.com

www.sebi.gov.in

www.moneycontrole.com

JOURNALS & ARTICLES

Economics Times

BOOKS

C.R. Kothari, Marketing Research

NCFM W.Breen, Low Price-Earnings Ratio & Industry Relatives, Financial


Analysts Journal, July-Feburary 1968.
W.Breen & Savage J. Portfolio Distribution & Security Selection Models,
Journal of Finance, December 1968.
S.Basu, Investment Performance of Common Stocks in Relation to Their Price-
Earning Ratios: A Test of the Efficient Market Hypothesis, Journal of Finance,
June 1977.

85
Basu, Sanjoy, "The Relationship between Earnings Yield, Market Value and
Return for NYSE Common Stocks: Further Evidence," Journal of Financial
Economics 12 (1983): 129-156.

Indiabulls Broachres and Mannuals

86