SUMMER TRAINING REPORT ON

A STUDY OF ONLINE TRADING

AT

Submitted in partial fulfilment of the requirements for the award of the degree
of

MASTER OF BUSINESS ADMINISTRATION

to

Guru Gobind Singh Indraprastha University, Delhi

Under the Guidance of Submitted by

Prof.Lovelesh Joshi Gagan Singh Pal
Assistant Professor MBA-III Semester
Enrolment No.:
01817903918

Session 2019-20

PERIYAR MANAGEMENT AND COMPUTER COLLEGE

“Periyar Centre”, FC–33, Plot No. 1&2, Institutional Area, Jasola, New Delhi – 110025
 CONTENTS

Chapter Particular(s) Page No.

Certificate-1

Certificate-2

Summer Training Appraisal Form

Acknowledgements

Executive Summary

1 Introduction
2 Literature Review
3 Research Methodology
4 Data Reduction, Presentation & Analysis
5 Data Interpretation

6 Summary & Conclusions

References/ Bibliography

Appendices

- List of Tables

- List of Figures
 CERTIFICATE-1

TO WHOM IT MAY CONCERN

I Gagan Singh Pal, Enrolment No. 01817903918 from MBA-III Semester of the Periyar
Management and Computer College hereby declare that the Summer Training Report (MS-204)
entitled A STUDY OF ONLINE TRADING at SHAREKHAN Co. Ltd. is an original work
and the same has not been submitted to any other Institute for the award of any other degree.

Date: Signature of the Student

Certified that the Summer Training Report submitted in partial fulfilment of Master of Business
Administration (MBA) to be awarded by G.G.S.I.P. University, Delhi by Gagan Singh Pal,
Enrolment No. 01817903918 has been completed under my guidance and is satisfactory.

Date: Signature of the Guide

Name of the Guide:
Designation:
CERTIFICATE-2
 SUMMER TRAINING APPRAISAL FORM

Student Name Gagan Singh Pal Programme: MBA

Name of the College: Periyar Management and Computer College(PMCC),New Delhi

You are requested to provide your Opinion on the following parameters.

OUTSTANDING GOOD SATISFACTORY UNSATISFACTORY

A B C D

1. Technical knowledge gathered about the industry and the job he/ she was
Involved
2. Communication skills: Oral/ Written/ Listening skills
3. Ability to work in a team
4. Ability to take initiative
5. Ability to develop a healthy long term relationship with client
6. Ability to relate theoretical learning to the practical training
7. Creativity and ability to innovate with respect to work methods & procedures
8. Ability to grasp new ideas and knowledge
9. Presentation skills
10. Documentation skills
11. Sense of responsibility
12. Acceptability (patience , pleasing manners, the ability to instil trust, etc)
13. His/Her ability and willingness to put in hard work
14. In what ways do you consider the student to be valuable to the organization ?
Conider the student’s value in terms of: A Qualification
B Skills and abilities
C Activities/ Roles performed
Punctuality
Any other comment
Assesor overall rating

(Signature)
Assesor’s Name Designation
Email id:
Organization name and address:
 Acknowledgement

I offer my sincere thanks and humble regards to PERIYAR MANAGEMENT AND

COMPUTER COLLEGE, GGSIP University, New Delhi for imparting us very valuable
professional training in MBA.

I pay my gratitude and sincere regards to Prof. Lovelesh Joshi, my project Guide for giving
me the cream of her knowledge. I am thankful to her as she has been a constant source of
advice, motivation and inspiration. I am also thankful to her for giving her suggestions and
encouragement throughout the project work.

I take the opportunity to express my gratitude and thanks to our computer Lab staff and
library staff for providing me opportunity to utilize their resources for the completion of the
project.

I am also thankful to my family and friends for constantly motivating me to complete the
project and providing me an environment which enhanced my knowledge.

Student’s Signature
 EXECUTIVE SUMMARY

AS per the title suggest the project report has been prepared regarding the growth and
development of online trading in India.Online trading was initiated by NSE in India and soon
after the other exchanges also followed it.There was a major boom in the year 2000 when lots of
online training companies came with a bang but only few were survived because of lack of
computer knowledge and low internet penetration.There are only two types of online trading
companiesand the other is non banking trading. A few examples of banking online trading
companies are ICICI direct.com,UTI securities,Yes Bank. On the other hand non banking trading
companies are Sharekhan.com,Angel broking, Reliance money etc. Today online trading
contributes are about 8-10%. It is continously growing and has a huge market potential.A study
was undertaken to determine the growth of various online trading companies in India in terms of
trade done by them through online and services provide by them.

Major findings indicates that out of survey 20 respondent it was seen that major investers
prefer online trading because of few major factors such as time saving, convineince, protection
through Freudian broker etc.Although during my research project I’ve seen that most of the
respondent feel online trading,a secure way of investing into stock market still a few of them
feel it is unsafe and a bit complicated but they posses information about online trading. Today
the online trading companies having cut-throat competition in our offering whose brokerage
discounts lower margin money and zero balance account. Due to the rising education awareness
and use of internet there is a huge potential for online trading in future and companies must come
up with innovative offering to capture the untapped market.
 Chapter-1
Introduction
INTRODUCTION
Stocks
The stock or capital stock of a business entity represents the original capital paid into or invested
in the business by its founders. It serves as a security for the creditors of a business since it
cannot be withdrawn to the detriment of the creditors. Stock is distinct from the property and the
assets of a business which may fluctuate in quantity and value. Buying a stock for the long term
means that you want to own part of a company and you think that in the future the company will
be profitable. If you buy stock in a company and the company performs well, the stock's price
should rise. If the company fails, then the stock should fail you, too and go down. Companies list
their stocks on the various stock exchanges located throughout the U.S. The stock exchanges
actually compete with each other for these listings, since companies that attract more trading
make more money for the stock exchange that listed it. Company stocks are assigned a "ticker",
or trading symbol by the listing exchange. You may notice some well-chosen tickers that are
easy to remember, like "DNA" for the company Genentech, a biotechnology firm. Or some
companies' ticker is the same as its name, Nike for example.
Stock market
A stock market or equity market is a public market (a loose network of economic transactions,
not a physical facility or discrete entity) for the trading of company stock and derivatives at an
agreed price; these are securities listed on a stock exchange as well as those only traded
privately. The size of the world stock market was estimated at about $36.6 trillion US at the
beginning of October 2008. The total world derivatives market has been estimated at about $791
trillion face or nominal value, 11 times the size of the entire world economy. The value of the
derivatives market, because it is stated in terms of notional values, cannot be directly compared
to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the
vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is
offset by a comparable derivative 'bet' on the event not occurring). Many such relatively illiquid
securities are valued as marked to model, rather than an actual market price. The stocks are listed
and traded on stock exchanges which are entities of a corporation or mutual organization
specialized in the business of bringing buyers and sellers of the organizations to a listing of
stocks and securities together. The largest stock market in the United States, by market cap is the
New York Stock Exchange, NYSE, while in Canada, it is the Toronto Stock Exchange.

Relation of the stock market to the modern financial

system
The financial systems in most western countries has undergone a remarkable transformation.
One feature of this development is disintermediation. A portion of the funds involved in saving
and financing, flows directly to the financial markets instead of being routed via the traditional
bank lending and deposit operations. The general public's heightened interest in investing in the
stock market, either directly or through mutual funds, has been an important component of this
process.Statistics show that in recent decades shares have made up an increasingly large
proportion of households' financial assets in many countries. In the 1970s, in Sweden, deposit
accounts and other very liquid assets with little risk made up almost 60 percent of households'
financial wealth, compared to less than 20 percent in the 2000s. The major part of this
adjustment in financial portfolios has gone directly to shares but a good deal now takes the form
of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual
funds, hedge funds, insurance investment of premiums, etc.

The trend towards forms of saving with a higher risk has been accentuated by new rules for most
funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to
be found in other industrialized countries. In all developed economic systems, such as the
European Union, the United States, Japan and other developed nations, the trend has been the
same: saving has moved away from traditional (government insured) bank deposits to more risky
securities of one sort or another.Riskier long-term saving requires that an individual possess the
ability to manage the associated increased risks. Stock prices fluctuate widely, in marked
contrast to the stability of (government insured) bank deposits or bonds. This is something that
could affect not only the individual investor or household, but also the economy on a large scale.
The following deals with some of the risks of the financial sector in general and the stock market
in particular. This is certainly more important now that so many newcomers have entered the
stock market, or have acquired other 'risky' investments (such as 'investment' property, i.e., real
estate and collectables).With each passing year, the noise level in the stock market rises.
Television commentators, financial writers, analysts, and market strategists are all overtaking
each other to get investors' attention. At the same time, individual investors, immersed in chat
rooms and message boards, are exchanging questionable and often misleading tips. Yet, despite
all this available information, investors find it increasingly difficult to profit.

The behavior of the stock trading

From experience everyone know that investors may 'temporarily' move financial prices away
from their long term aggregate price 'trends'. (Positive or up trends are referred to as bull
markets; negative or down trends are referred to as bear markets.) Over-reactions may occur—so
that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may
drive prices unduly low. Economists continue to debate whether financial markets are 'generally'
efficient. According to one interpretation of the efficient-market hypothesis (EMH), only
changes in fundamental factors, such as the outlook for margins, profits or dividends, ought to
affect share prices beyond the short term, where random 'noise' in the system may prevail. (But
this largely theoretic academic viewpoint—known as 'hard' EMH—also predicts that little or no
trading should take place, contrary to fact, since prices are already at or near equilibrium, having
priced in all public knowledge.) The 'hard' efficient-market hypothesis is sorely tested by such
events as the stock market crash in 1987, when the Dow Jones index plummeted 22.6 percent—
the largest-ever one-day fall in the United States. This event demonstrated that share prices can
fall dramatically even though, to this day, it is impossible to fix a generally agreed upon definite
cause: a thorough search failed to detect any 'reasonable' development that might have accounted
for the crash. (But note that such events are predicted to occur strictly by chance , although very
rarely.) It seems also to be the case more generally that many price movements (beyond that
which are predicted to occur 'randomly') are not occasioned by new information; a study of the
fifty largest one-day share price movements in the United States in the post-war period seems to
confirm this. However, a 'soft' EMH has emerged which does not require that prices remain at or
near equilibrium, but only that market participants not be able to systematically profit from any
momentary market 'inefficiencies'. Moreover, while EMH predicts that all price movement (in
the absence of change in fundamental information) is random (i.e., non-trending), many studies
have shown a marked tendency for the stock market to trend over time periods of weeks or
longer. Various explanations for such large and apparently non-random price movements have
been promulgated. For instance, some research has shown that changes in estimated risk, and the
use of certain strategies, such as stop-loss limits and Value at Risk limits, theoretically could
cause financial markets to overreact. But the best explanation seems to be that the distribution of
stock market prices is non-Gaussian (in which case EMH, in any of its current forms, would not
be strictly applicable). Other research has shown that psychological factors may result in
exaggerated stock price movements (contrary to EMH which assumes such behaviors 'cancel
out'). Psychological research has demonstrated that people are predisposed to 'seeing' patterns,
and often will perceive a pattern in what is, in fact, just noise. (Something like seeing familiar
shapes in clouds or ink blots.) In the present context this means that a succession of good news
items about a company may lead investors to overreact positively (unjustifiably driving the price
up). A period of good returns also boosts the investor's self-confidence, reducing his
(psychological) risk threshold.

Another phenomenon—also from psychology—that works against an objective assessment is

group thinking. As social animals, it is not easy to stick to an opinion that differs markedly from
that of a majority of the group. An example with which one may be familiar is the reluctance to
enter a restaurant that is empty; people generally prefer to have their opinion validated by those
of others in the group.In one paper the authors draw an analogy with gambling. In normal times
the market behaves like a game of roulette; the probabilities are known and largely independent
of the investment decisions of the different players. In times of market stress, however, the game
becomes more like poker (herding behavior takes over). The players now must give heavy
weight to the psychology of other investors and how they are likely to react psychologically.The
stock market, as with any other business, is quite unforgiving of amateurs. Inexperienced
investors rarely get the assistance and support they need. In the period running up to the 1987
crash, less than 1 percent of the analyst's recommendations had been to sell (and even during the
2000 - 2002 bear market, the average did not rise above 5%). In the run up to 2000, the media
amplified the general euphoria, with reports of rapidly rising share prices and the notion that
large sums of money could be quickly earned in the so-called new economy stock market. (And
later amplified the gloom which descended during the 2000 - 2002 bear market, so that by
summer of 2002, predictions of a DOW average below 5000 were quite common.

Investment strategies
One of the many things people always want to know about the stock market is, "How do I make
money investing?" There are many different approaches; two basic methods are classified as
either fundamental analysis or technical analysis. Fundamental analysis refers to analyzing
companies by their financial statements found in SEC Filings, business trends, general economic
conditions, etc. Technical analysis studies price actions in markets through the use of charts and
quantitative techniques to attempt to forecast price trends regardless of the company's financial
prospects. One example of a technical strategy is the Trend following method, used by John W.
Henry and Ed Seykota, which uses price patterns, utilizes strict money management and is also
rooted in risk control and diversification.Additionally, many choose to invest via the index
method. In this method, one holds a weighted or unweighted portfolio consisting of the entire
stock market or some segment of the stock market (such as the S&P 500 or Wilshire 5000). The
principal aim of this strategy is to maximize diversification, minimize taxes from too frequent
trading, and ride the general trend of the stock market (which, in the U.S., has averaged nearly
10%/year, compounded annually, since World War II).

Online trading
Online stock trading is becoming a very popular way in which to invest in the stock market.
Ordinary everyday citizens such as you and me can now trade stocks like the pros without paying
the ridiculous broker fees that are often associated with trading on the stock market. This doesn't
mean there are no fees involved or that you won't be discouraged from capriciously trading
stocks. What it does mean is that you will be able to trade stocks, as you may have never been
able to do before because the costs involved in trading were so high that only the wealthiest
among us could really afford to work the market to any real advantage. Online trading has
changed the average investors' involvement in trading their own stocks. The availability of
company information has become so widespread and easily attainable that researching and
finding stock to buy and sell is as easy as logging onto your computer.You will find quite a few
companies that are going to compete for your business when it comes to empowering you to
trade stocks online. It is best to go with a business that offers education and advice in addition to
the ability to trade. There are many big names in the brokerage business that are getting in touch
with the technology of today and offering full service brokers and financial advisors in addition
to offering new online services that include Internet trading.

There are, broadly, two types of trading in the financial markets:

 Business-to-business (B2B) trading, often conducted on exchanges, where large

investment banks and brokers trade directly with one another, transacting large amounts
of securities, and
 Business-to-client (B2C) trading, where retail (e.g. individuals buying and selling
relatively small amounts of stocks and shares) and institutional clients (e.g. hedge funds,
 fund managers or insurance companies, trading far larger amounts of securities) buy and
sell from brokers or "dealers", who act as middle-men between the clients and the B2B
markets

If one decides to go with some of the bigger names in the business one should understand
that he will pay a little more than he would pay going with many of the lesser name firms
and trading companies. The good news is that the bigger names have more to loose after
working for decades to establish themselves and develop a good reputation among
traders. This means that they are not going to be "fly by night" and are going to work to
make sure you have the best possible service from them for your future in the stock
market trade.

Many of these firms in addition to offering the ability to buy, sell, and trade online will also offer
financial planning for retirement, future expenses, and advice on how to create a fixed income
from your investments. They will offer many tips, hints, and advice free of charge on their
website while also promoting the services they offer through discounts in hopes of gaining your
business for some of the higher ticket transactions that really pay their bills. Online investment
services offer consumers the opportunity to invest with lower commissions and fees which
means you bring more of the money home when all is said and done and spend far less on fees
and expenses associated with investing. By saving these fees you may be doing yourself a huge
service but keep in mind that the invaluable advice of a broker can often mean the difference
between mild successes and wild successes. If you can manage the fees it is a good plan to at
least consult with a broker or financial advisor or planner once or twice a year in order to get the
most out of your investment money.
According to Chiang-Nan Chao , Robert J. Mockler , Dorothy Dologite :-The market downturn
since March 2000 has posed a serious threat to brokerage firms, particularly those that offer
online trading Findings of this study suggest that broke rage firms should focus on improving
customer services, while at the same time providing services in addition to online trading. Online
brokerage firms should move into the areas that have been traditionally dominated by full service
brokerage firms and banks.
Introduction Online trading has become a formidable force in today's investment market, thanks
to recent developments in information technology. Although setbacks in the technology industry
discouraged individual investors from actively trading, the total number of online trading
accounts continues to grow. As the NASDAQ has dropped from its all time high of 5,000 in
March 2000, and the economic situation is continuing to deteriorate, many investors have
withdrawn their funds from the stock market Nevertheless, the interest in online trading is
expected to increase (12,17).
In April 2002, America's third-largest discount brokerage house, Ameritrade, agreed to purchase
Datek Online Holdings Corporation, a privately held online trading company, in an all-stock
transaction valued at almost $1.29 billion. The move would transform Ameritrade of Omaha,
Nebraska, into the largest online brokerage firm in the U.S. in terms of equity trades per day,
surpassing industry leaders E*Trade Group, Inc. and Charles Schwab Corporation. The proposed
combination comes as the online trading industry appears to be recovering gradually from a
severe recession that has prompted consolidation.On the academic side, many recent studies have
shown that online brokerages have moved away from offering only online trading, and are now
adding many other services (i.e., banking services) in order to survive in this volatile market This
study focuses on how online brokerage firms can better serve the market from the online users'
standpoint.Online trading became huge business in the late 1990s. The lure of relatively low
brokerage costs for electronic share trading, together with the capacity to monitor real-time
market developments from a computer screen, have contributed to the fact that internet-based
trading now comprises about 20% of all retail share trading.
The online trading market has become flooded with discount brokers offering low prices and
better transaction costs. Some of the most notable online discount brokers are Ameritrade,
E*Trade, Charles Schwab and TD Waterhouse. Full-service firms, including banks, reacted to
the emergence of online discount brokers by entering the online market with their own web sites.

The full-service Finns want to protect their client base and gain market share in the new online
market Discount firms felt a minimal impact from full-service firms entering the online trading
marketplace. Many small discount brokerage companies are niche Finns, against which full-
service firms do not compete directly. How ever, since the bear market started in early 2000,
discount brokerage finns have been more affected by competition. Several firms attribute
accelerated changes in competitive approaches to the marketplace to the entry of full-service
Finns.

These firms explain that competition in online trading has become more similar in product
offerings and pricing. The only area left for online trading firms to gain a competitive advantage
is through the service provided to their clients. Firms now also compete on the basis of quality
service and response to clients. In a way, the entry of full-service firms has benefited client
consumers by establishing a range of product and service options from which they can choose.
As a collateral benefit for investors, the convergence of full-service and discount firms' offerings
has highlighted niche firms that can serve a limited client base more effectively than larger
competitors (5,6,8,11,16).
Some firms in the industry state that with the entry of traditional full-service brokers, investors
have become more aware of their online trading options, and online trading now appears more
legitimate to investors. When customers realized that Merrill Lynch, Fidelity Investments, Paine
Webber and other major full-service firms had online trading web sites, it strengthened the
credibility and safety of online trading, at least in investors' minds (18,9).With the current market
conditions, firms will not win by competing on price or product because most online trading sites
offer virtually the same things. Firms have to stand out on service, and the way firms serve
people has to stand out on multiple channels. All the companies are offering multiple modalities:
Schwab is now like a Smith Barney, and Fidelity Investments competes directly with E*Trade.
Thomas Sutton, RightLine Editor-in-Chief, said that:-
Few people who set out to get rich quick trading stocks online actually become rich. The small
group of get-rich-quickers who do make lots of money fast do it purely as a result of chance.
They rarely keep their trading gains for very long. This is because trying to get rich quick causes
stock traders to take on way too much risk. This is normally done by trading with excessive
margin or by investing too much money in one position. Unfortunately, people who are in a
hurry to make a lot of money trading online tend not to do a good job of managing risk.
Managing trading risk involves focusing more on the potential downside of a trade or investment
than the potential upside. In practical terms this means using an objective stock market trading
method designed to limit drawdowns in the value of your stock portfolio. If you do a good job of
managing risk you will almost certainly make money trading the stock market over the long-
term. Those who consistently ignore risk and overload the wagons in an attempt to get rich quick
are guaranteed failure. For example, most traders with a get-rich-quick mindset don't realize that
if they repeatedly bet everything on trades in which the probability of success is 90% they will
eventually lose everything. Sure, they look like a genius for a while, but the one out of every ten
trades that happens to be a 'loser' will wipe them out.

Stock market trading online is a type of speculation where education and skill can dramatically
improve your odds of winning. Risk management is a skill. Reducing your stock market trading
risk dramatically increases the odds that you will win. Stay focused on what you need to know
and what you need to do to be successful trading the stock market online. Remember that money
is just a by-product of wise trading methods and actions. According to Mark Crisp:-It is
common now for people to undertake stock trading online. Historically there have been
American stock markets from the 1700s. In Philadelphia an exchange for trading currency was
established to enable business owners to support their business and to grow the economy. In the
early 1800s, the New York Stock Exchange replaced the Philadelphia exchange. Initially New
York Stock Exchange was a group of business people who met on a daily basis on Wall St to
trade their stocks or bonds. This initial trading was all done outside until the Exchange moved
indoors in the early 1900s. Whilst this traditional formula served its purpose admirably, trading
is no longer the bricks and mortar industry it once was. Trading no longer requires you to be in
Wall St. The way the New York Stock Exchange works could be compared to an auction. If a
company is listed on the stock exchange, they have a post in Wall St whereby trades are listed
and a specialist is employed as an "auctioneer" to oversee the bidding on each trade. This form of
trading keeps an accurate balance between supply and demand in the stock market so the price of
the shares is kept in check. These days, it is far easier to get involved in investing in stocks. In
traditional stock trading, you engage a stock broker to take and place your order for you. You
phone your broker to take the order and then there can be a delay in the order being executed.
Now you no longer need to worry about using a stock broker to act on your behalf. If buying or
selling stocks online you can place your order with the click of a mouse. Conveniently, trading
this way is also a time saver. Setting up an account with a reputable,online brokerage company is
easy. These online companies provide access to a wide range of services that were previously
only available via a traditional bricks and mortar stock broking service. Setting up an online
account gives you access to a variety of services including: up to the minute stock quotes,
detailed historic performances of individual stocks, as well as detailed information about
company fundamentals. One of the most common reasons investors like buying and selling
stocks online compared with traditional brokerage is price. There are much lower brokerage fees
for buying and selling stocks online than there are through buying and selling stocks at a
traditional brokerage house.An important advantage of using an online brokerage service to trade
stocks online is the significant price saving in brokerage fees. This is combined with the
immediacy at which you can gather information required in making your stock purchasing
decisions when trading online. Many investors also like the independence associated with trading
shares online. Many traditional brokerage houses would try to influence your decisions when
trading shares, but an online account means all the decisions you make are fully your own.
Online brokerage sites are not just about trading shares online.

(Figure 1)
Sharekhan is one of the top retail brokerage houses in India with a strong online trading
platform. The company provides equity based products (research, equities, derivatives,
depository, margin funding, etc.). It has one of the largest networks in the country with 704 share
shops in 280 cities and India’s premier online trading portal www.sharekhan.com. With their
research expertise, customer commitment and superior technology, they provide investors with
end-to-end solutions in investments. They provide trade execution services through multiple
channels - an Internet platform, telephone and retail outlets.
Sharekhan was established by Morakhia family in 1999-2000 and Morakhia family, continues to
remain the largest shareholder. It is the retail broking arm of the Mumbai-based SSKI
[SHANTILAL SHEWANTILAL KANTILAL ISWARNATH LIMITED] Group.
SSKI which is established in 1930 is the parent company of Sharekhan ltd. With a legacy of
more than 80 years in the stock markets, the SSKI group ventured into institutional broking and
corporate finance over a decade ago. Presently SSKI is one of the leading players in institutional
broking and corporate finance activities.
Sharekhan offers its customers a wide range of equity related services including trade execution
on BSE, NSE, and Derivatives. Depository services, online trading, Investment advice,
Commodities, etc.
Sharekhan Ltd. is a brokerage firm which is established on 8th February 2000 and now it is
having all the rights of SSKI. The company was awarded the 2005 Most Preferred Stock Broking
Brand by Awwaz Consumer Vote. It is first brokerage Company to go online. The Company's
online trading and investment site - www.Sharekhan.com - was also launched on Feb 8, 2000.
This site gives access to superior content and transaction facility to retail customers across the
country. Known for its jargon-free, investor friendly language and high quality research, the
content-rich and research oriented portal has stood out among its contemporaries because of its
steadfast dedication to offering customers best-of-breed technology and superior market
information.
Share khan has one of the best states of art web portal providing fundamental and statistical
information across equity, mutual funds and IPOs. One can surf across 5,500 companies for in-
depth information, details about more than 1,500 mutual fund schemes and IPO data.
One can also access other market related details such as board meetings, result announcements,
FII transactions, buying/selling by mutual funds and much more.

OBJECTIVES OF STUDY

The Objective is to review the study of ONLINE TRADING at SHAREKHAN as

the exchange has changed it’s trading from the outcry mode to online trading on
20th February 1997.

 It is to analyze the changes in trading after the exchange shifted from

outcry to online trading system.

 To know the online screen based trading system adopted by

SHAREKHAN and about its communication facilities. The appropriate
configuration to set the network, which would link the SHAREKHAN to
individual / members.

SCOPE FOR THE STUDY

The present study to review the online trading procedure a case study of
Online trading at sharekhan,as the exchange has changed it’s trading
from the outcry mode to online trading on 20th February 1997, there is
need to assess the performance of the capital market.

COMPANY PROFILE

Name of the company: Sharekhan ltd.

Year of Establishment: 1925

Headquarter: Sharekhan SSK A-206 Phoenix House Phoenix Mills Compound

Lower Parel Mumbai - Maharashtra, INDIA- 400013
Telephone No: 022-25753200/ 500022-33054600 / 022-61151111
Whatsapp No: 7506651115
Mail id: myaccount@sharekhan.com

Nature of Business: Service Provider

Services: Depository Services, Online Services and Technical Research.

Number of Employees: Over 3500

Website: www.sharekhan.com

Slogan: Your Guide to The Financial Jungle.

Sharekhan is infact-
• Among the top 3 branded retail service providers
• No. 1 player in online business
• Largest network of branded broking outlets in the country serving more than
7, 00,000 clients.

Sharekhan's management team is one of the strongest in the sector and has positioned Sharekhan
to take advantage of the growing consumer demand for financial services products in India
through investments in research, pan-Indian branch network and an outstanding technology
platform. Further, Sharekhan's lineage and relationship with SSKI Group provide it a unique
position to understand and leverage the growth of the financial services sector.
SSKI Corporate Finance Private Limited (SSKI) is a leading India-based investment bank with
strong research-driven focus. Their team members are widely respected for their commitment to
transactions and their specialized knowledge in their areas of strength.

AWARDS AND ACHIEVEMENTS

- SSKI has been voted as the Top Domestic Brokerage House in the research
category, twice by Euromoney Survey and four times by Asiamoney Survey.

- Sharekhan Limited won the CNBC AWARD for the year 2004.

The team has completed over US$5 billion worth of deals in the last 5 years - making it among
the most significant players raising equity in the Indian market. SSKI, a veteran equities
solutions company has over 8 decades of experience in the Indian stock markets.
If we experience their language, presentation style, content or for that matter the online trading
facility, we'll find a common thread; one that helps us make informed decisions and simplifies
investing in stocks. The common thread of empowerment is what Sharekhan's all about!
"Sharekhan has always believed in collaborating with like-minded Corporate into forming
strategic associations for mutual benefit relationships" says Jaideep Arora, Director - Sharekhan
Limited.
Sharekhan is also about focus. Sharekhan does not claim expertise in too many things.
Sharekhan's expertise lies in stocks and that's what he talks about with authority. So when he
says that investing in stocks should not be confused with trading in stocks or a portfolio-based
strategy is better than betting on a single horse, it is something that is spoken with years of
focused learning and experience in the’ stock markets. And these beliefs are reflected in
everything Sharekhan does for us! Sharekhan is a part of the SSKI group, an Indian financial
services power house, with strong presence in Retail equities Institutional equities Investment
banking.
In delhi it is having the branches at netaji subash place and Nehru place. We have been given the
centre at netaji subash place.

Sharekhan provides 4 in 1 account.

- Demat a/c
- Trading a/c: for cash calculation
- Bank a/c: for fund transfer
- Dial and Trade: for query relating trading

PRODUCTS AND SERVICES OF SHAREKHAN LIMITED

 (Figure-2)
Sharekhan Company Background
 Sharekhan is the retail broking arm of SSKI Securities Pvt.Ltd. SSKI owns 56% in
Sharekhan, balance ownership is HSBC, First caryle, and Intel pacific.
 It is into broking since 80 years
 Focused on providing equity solutions to every segment.
 Largest ground network of 210 Branded shares shops in 90 cities.

Market Share of Sharekhan

The third – largest retail broking firm in the country,Sharekhan, on Friday announced a slew of
measures and aggressive growth strategies to climb to the second spot in the online broking
space over the next five years.It also launched a new logo, in line with its Vision 2020 and post-
acquistion by BNP Paribas in November 2016.

BNP Paribas SA said it will continue holding its stake in Geojit BNP paribas Financial Services,
even after its acquisition of retail- focused brokerage Sharekhan. The company said there was no
conflict between the two investments.
Sharekhan, the largest standalone broking firm in India,plans to double its customer base from
the current 1.4 million in the next five years.The company commands 6 percent market share in
the 25 million strong online customer segment.

Sharekhan, incorporated in 2000, pioneered the online retail broking industry and leveraged on
the first wave of digitisation when dematerialisation of share took off in 2002. In terms of cash
market volumes, It has a market share of 4.2 per cent

In the second wave of digitisation, majority of sharekhan’s business and growth will come from
mobiles. Currently, mobile- based transactions form 12 percent of its business. “We believe in
mobile commerce.Our goal is to become the most preferred platform for digital savers and
Investors, “ said Jaideep Arora, CEO,Sharekhan.The company plans to invest around 70 million
Euro. Sharekhan also aims to launch a new website,mobile apps,hire more people,and upgrade
its trading platform.It also aims to see itself among the top 15 MFs by 2020.

INDUSTRY PROFILE.
Introduction

India has a diversified financial sector undergoing rapid expansion, both in terms of strong
growth of existing financial services firms and new entities entering the market. The sector
comprises commercial banks, insurance companies, non-banking financial companies, co-
operatives, pension funds, mutual funds and other smaller financial entities. The banking
regulator has allowed new entities such as payments banks to be created recently thereby adding
to the types of entities operating in the sector. However, the financial sector in India is
predominantly a banking sector with commercial banks accounting for more than 64 per cent of
the total assets held by the financial system.

The Government of India has introduced several reforms to liberalise, regulate and enhance this
industry. The Government and Reserve Bank of India (RBI) have taken various measures to
facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These
measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises,
issuing guideline to banks regarding collateral requirements and setting up a Micro Units
Development and Refinance Agency (MUDRA). With a combined push by both government and
private sector, India is undoubtedly one of the world's most vibrant capital markets. In 2017,a
new portal named 'Udyami Mitra' has been launched by the Small Industries Development Bank
of India (SIDBI) with the aim of improving credit availability to Micro, Small and Medium
Enterprises' (MSMEs) in the country. India has scored a perfect 10 in protecting shareholders'
rights on the back of reforms implemented by Securities and Exchange Board of India (SEBI).

Market Size

The Mutual Fund (MF) industry in India has seen rapid growth in Assets Under Management
(AUM). Total AUM of the industry stood at Rs 23.80 trillion (US$ 340.48 billion) between April
2018-February 2019. At the same time the number of Mutual fund (MF) equity portfolios
reached a high of 74.6 million as of June 2018.Another crucial component of India’s financial
industry is the insurance industry. The insurance industry has been expanding at a fast pace. The
total first year premium of life insurance companies reached Rs 214,673 crore (US$ 30.72
billion) during FY19.

Along with the secondary market, the market for Initial Public Offers (IPOs) has also witnessed
rapid expansion. The total amount of Initial Public Offerings (IPO) increased to US$ 1.2 billion
raised from 37 between April – June 2018.Over the past few years India has witnessed a huge
increase in Mergers and Acquisition (M&A) activity. In H12018, 74 deals of acquisition took
place in financial sector. The total value of such transactions was US$ 4.166 billion. *

Furthermore, India’s leading bourse Bombay Stock Exchange (BSE) will set up a joint venture
with Ebix Inc to build a robust insurance distribution network in the country through a new
distribution exchange platform.

Investments/Developments

Investments by Foreign Portfolio Investors (FPIs) in Indian capital markets have reached Rs
6,310 crore (US$ 899.12 million) up to November 22, 2018.
As of October 2018, the Financial Inclusion Lab has selected 11 fintech innovators with an
investment of US$ 9.5 million promoted by the IIM-Ahmedabad's Bharat Inclusion Initiative
(BII) along with JP Morgan, Michael and Susan Dell Foundation, and the Bill and Melinda Gates
Foundation.The private equity and venture capital (PE/VC) investments reached US$ 25.20
billion between January to October 2018.*

Government Initiatives

In December, 2018, Securities and Exchange Board of India (SEBI) proposed direct overseas
listing of Indian companies and other regulatory changes.
Bombay Stock Exchange (BSE) introduced weekly futures and options contracts on Sensex 50
index from October 26, 2018.
In September 2018, SEBI asked for recommendations to strengthen rules which will enhance the
overall governance standards for issuers, intermediaries or infrastructure providers in the
financial market.
The Government of India launched India Post Payments Bank (IPPB), to provide every district
with one branch which will help increase rural penetration. As of August 2018, two branches out
of 650 branches are already operational.
Road Ahead
India is today one of the most vibrant global economies, on the back of robust banking and
insurance sectors. The relaxation of foreign investment rules has received a positive response
from the insurance sector, with many companies announcing plans to increase their stakes in
joint ventures with Indian companies. Over the coming quarters there could be a series of joint
venture deals between global insurance giants and local players.
The Association of Mutual Funds in India (AMFI) is targeting nearly five fold growth in assets
under management (AUM) to Rs 95 lakh crore (US$ 1.47 trillion) and a more than three times
growth in investor accounts to 130 million by 2025.
India's mobile wallet industry is estimated to grow at a Compound Annual Growth Rate (CAGR)
of 150 per cent to reach US$ 4.4 billion by 2022 while mobile wallet transactions to touch Rs 32
trillion (USD $ 492.6 billion) by 2022.
Exchange Rate Used: INR 1 = US$ 0.0159 as on March 31, 2019.

FINANCIAL MARKET:

Financial market are helpful to provide liquidity in the sysytem and for smooth functioning of
the system.These markets are the centres that provide facilities for buying and selling of financial
claims and services.The financial markets match the demands of the investment with the supply
of capitals from various sources.

According to functional basis financial markets are classified into two types.
They are:
 Money markets (Short term)
 Capital markets (Long term)
According to institutional basis again classified in to two types.They are
 Organized Financial markets
 Non – organized Financial markets
The organized market comprises of official market represented by recognized institutions, bank
and government ( SEBI) registered/ controlled activities and intermediaries. The unorganized
market is composed of indigenous bankers, moneylenders, individual professional and non-
professionals.

MONEY MARKET:

Money market ia a place where we can raise short- term capital.Again the money market is
classified in to:
 Inter bank call money market
 Bill market
 Bank loan market Etc.
 E.g: Treasury bills,Commercial papers,CD’s etc.

CAPITAL MARKET:

The capital market is the market for securities, where companies and the government can raise
long term funds.The capital market includes the stock market and the bond market. Financial
regulators ensure that investors are protected against fraud. The capital markets consist of the
primary market, where new issues are distributed to investors, and the secondary market, where
existing securities are traded.

Capital market thus plays a vital role in channelizing the savings of individual for Investment in
the economic development of the country.as a result the investors are not constrained by the
individual abilities, but by the abilities of the companies,which in turn enhance the savings and
investment in the country, liquidity of capital market is an important factor affecting growth.

Since project requires long term finance, but on the other hand, the investor may not like to
relinquish control over the savings for a long time. A liquid stock market ensures a quick exit
without incurring heavy losses or costs.Thus development of efficient market system is
necessary for creating conductive climate for investment and economic growth.

Capital market is place where we can raise long- term capital.

Again the capital market is classified in to two types and they are
 Primary market
 Secondary market
E.g. Shares,debentures, and Loans etc.
PRIMARY MARKET
Primary market is generally referred to the market of new issues or market for
mobilization of resources by the companies and government undertakings, for new projects as
also for expansion,modernization,addition,and diversification and up gradation.Primary market is
also reffered to as New Issue Market.Primary market operation includes new issue of shares by
new and existing companies,further and right issue to existing shareholders,public offers, and
issue of debt instruments such as debentures,bonds, etc.
The primary market is regulated by the Securities and Exchange Board of India(SEBI a
government regulated authority)

Function:

The main services of the primary market are origination, underwriting, and
distribution. Origination deals with the origin of the new issue.Underwriting contract makes the
shares predictable and remove the element of uncertainity in the subscription.Distribution refers
to the sale of securities to the investors.
The following are the market intermediaries associated with the market:
1. Merchant banker/ book building lead manager
2. Registrar and transfer agent
3. Underwriter/ broker to the issue
4. Advisor to the issue
5. Banker to the issue
6. Depository
7. Depository participants

Investors Protection in the primary market

To ensure healthy growth of primary market, the investing public should be

protected.The term Investor protection has a wider meaning in the primary market.The prinicipal
Ingredients of Investors protection are:
 Provision of all the relevant information.
 Provision of accurate information
 Transparent allotment procedures without any bias.
 Secondary Market

The primary market deals with the new isssue of the securities.
Outstanding securities are traded in the secondary market, which is known as stock market or
stock exchange.”The secondary market is a market where scrip’s are traded”. It is a market
place which provide liquidity to the scrip’s issued in the primary market.Thus, the growth of
secondary market dependson the primary market.Thus, the growth of secondary market depends
on the primary market.More the number of companies entering the primary market, the greater
are the volumes of trade at the secondary market. Trading activities in the secondary market are
done through the recognized stock exchanges which are 23 in number including Over the
counter Exchange of India (OTCE),National Stock exchange of India and interconnected Stock
exchange of India.
Secondary market operations invilves buying and selling of securities
on the stock exchange through its members.The companies hitting the primary market are
mandatory to list their shares on one or more stock exchanges in India.Listing of scirip’s
provides the liquidity and offers an oppurtunities to buy or sell the scirip’s.

The following are the intermediaries in the secondary market:

 Broker/ Member of stock exchanges- buyers broker and sellers broker
 Portfolio Manager
 Investment advisor
 Shares transfer agent
 Depository
 Depository participants.

Trading
Historically, stock markets were physical locations where buyers and sellers met and negotiated.
With the improvement in communications technology in the late 20th century, the need for a
physical location became less important, as traders could transact from remote locations.
Participants in the stock market range from small individual stock investors to large hedge fund
traders, who can be based anywhere. Their orders usually end up with a professional at a stock
exchange, who executes the order. Some exchanges are physical locations where transactions are
carried out on a trading floor, by a method known as open outcry. This type of auction is used in
stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers
simultaneously. The other type of stock exchange is a virtual kind, composed of a network of
computers where trades are made electronically via traders. The shares of a company may in
general be transferred from shareholders to other parties by sale or other mechanisms, unless
prohibited. Most jurisdictions have established laws and regulations governing such transfers,
particularly if the issuer is a publicly-traded entity.

The desire of stockholders to trade their shares has led to the establishment of stock exchanges.
A stock exchange is an organization that provides a marketplace for trading shares and other
derivatives and financial products. Today, investors are usually represented by stock brokers who
buy and sell shares of a wide range of companies on the exchanges. A company may list its
shares on an exchange by meeting and maintaining the listing requirements of a particular stock
exchange. Actual trades are based on an auction market model where a potential buyer bids a
specific price for a stock and a potential seller asks a specific price for the stock. (Buying or
selling at market means you will accept any ask price or bid price for the stock, respectively.)
When the bid and ask prices match, a sale takes place, on a first-come-first-served basis if there
are multiple bidders or askers at a given price.The purpose of a stock exchange is to facilitate the
exchange of securities between buyers and sellers, thus providing a marketplace (virtual or real).
The exchanges provide real-time trading information on the listed securities, facilitating price
discovery.

History
The two main stock markets of India are:-

National Stock Exchange(NSE)

Bombay stock exchange(BSE)

BSE:- At the end of the American civil war, the brokers who thrived out of this war in 1874,
found a place in a street, where they would easily assemble and transact business. This street is
nowadays, popularly known as DALAL STREET. In 1887, they formally established in
Bombay, and were known as “Native Shares and Stock Brokers Association”. In 1895, it
acquired a premise in the same street and finally was inaugurated in 1899 with the name Bombay
Stock Exchange (BSE).
India's premier stock exchange Bombay Stock Exchange (BSE) can also trace back its origin to
as far as 125 years when it started as a voluntary
non-profit making association. You hear about it
any time it reaches a new high or a new low, and
you also hear about it daily in statements like 'The
BSE Sensitive Index rose 5% today'. Obviously,
stocks and stock markets are important. Stocks of
public limited companies are bought and sold at a
stock exchange. But what really are stock
exchanges? Known also as News on the stock
market appears in different media every day. he
stock market or bourse, a stock exchange is an
organized marketplace for securities (like stocks,
bonds, options) featured by the centralization of
supply and demand for the transaction of orders by
member brokers, for institutional and individual
investors. The exchange makes buying and selling
easy. The need for stock exchanges developed out
of early trading activities in agricultural and other
commodities. During the middle Ages, traders found it easier to use credit that required
supporting documentation of drafts, notes and bills of exchange. (Figure-1)
India's other major stock exchange National Stock Exchange (NSE), promoted by leading
financial institutions, was established in April 1993. Over the years, several stock exchanges
have been established in the major cities of India. There are now 23 recognised stock exchanges
— Mumbai (BSE, NSE and OTC), Calcutta, Delhi, Chennai, Ahmedabad, Bangalore,
Bhubhaneswar, Coimbatore, Guwahati, Hyderabad, Jaipur, Kochi, Kanpur, Ludhiana,
Mangalore, Patna, Pune, Rajkot, Vadodara, Indore and Meerut.

NSE:-
With the liberalization of Indian economy it was found necessary to lift the Indian
stock markets on par with the international standards. The NSE was incorporated in 1992 by
industrial development bank of India, industrial credit and Investment Corporation of India,
industrial finance corporation of India, all insurance corporations, selected commercial banks
and others.
NSE is India’s leading stock exchange covering more than 160 cities and towns across the
country. It provides the modern fully
computerized trading system designed to offer
investors across the country a safe and easy way
to invest to liquidate investment and
securities.Investors in many areas of country did
not have the same access and opportunity to
trade so there arise the need for setting up the
national stock exchange. The NSE network has
been designed to provide equal access to
investors from anywhere in India and to be
responsive to their needs.
(Figure-2)
On its recognition as a stock exchange under the Securities Contract Act, 1956 in April 1993,
NSE started operations in the Wholesale Debt Market (WDM) segment in June 1994. Capital
market (equities) segment commenced operations in November 1994, and operations in
derivative segment started in June 2000.NSE started trading in the capital market segment on
November3, 1994 and within one year became the largest exchange in India, in terms of volumes
transacted. During the year 2005-06 NSE reported, a turnover of Rs 1,569,556 crores in the
equity segment. In 12th century France the courratiers de change were concerned with managing
and regulating the debts of agricultural communities on behalf of the banks. Because these men
also traded with debts, they could be called the first brokers. A common misbelief is that in late
13th century Bruges commodity traders gathered inside the house of a man called Van der
Beurze, and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until
then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp
where those gatherings occurred; the Van der Beurze had Antwerp, as most of the merchants of
that period, as their primary place for trading. The idea quickly spread around Flanders and
neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam. In the middle of the
13th century, Venetian bankers began to trade in government securities. In 1351 the Venetian
government outlawed spreading rumors intended to lower the price of government funds.
Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during
the 14th century. This was only possible because these were independent city states not ruled by
a duke but a council of influential citizens. The Dutch later started joint stock companies, which
let shareholders invest in business ventures and get a share of their profits - or losses. In 1602,
the Dutch East India Company issued the first share on the Amsterdam Stock Exchange. It was
the first company to issue stocks and bonds.

Various Stock exchanges in India:

At present there are 23stock exchanges recognized under the securities contract ( regulation),act
,1956. Those are :

 Ahmadabad Stock Exchange Association Ltd.

 Bangalore Stock Exchange.
 Bhubaneswar Stock Exchange Association
 Calcutta stock Exchange
 Cochin stock exchange
 Coimbatore Stock exchange
 Delhi Stock Exchange Association
 Guwahati Stock Exchange Ltd
 Hyderabad Stock Exchange Ltd.
 Jaipur Stock Exchange Ltd.
 Kanara Stock Exchange Ltd.
 Ludhiana Stock Exchange Ltd.
 Madras Stock Exchange Ltd.
 Madhya Pradesh Exchange
 Magadh Stock Exchange ltd.
 Meerut stock Exchange Ltd.
 Mumbai stock Exchange
 National stock exchange of India
 OTC exchange of India
 Pune stock exchange Ltd.
 Saurashtra kutch Stock Exchange Ltd.
 Uttar Pradesh Stock Exchange Association
 Vadodra Stock exchange ltd.
 Chapter-2
Literature Review
LITERATURE REVIEW

On the basis of literature study, it can be concluded that electronic or automated trading system
has impact in positive way but also we should keep in mind that technology comes in both form
and especially in financial markets a big question raise for the safety and security of market
health.

GluseppeNuti,MahnooshMirghaemi,PhilipRreleaven,ChaiyakornYingsaeree (Nov 2011)

paper concerned on algorithm trading as automatize the trading procedure which includes
technical and fundamental analysis, buy and sell advises, market trade activities and every phase
directed by humans and algorithm.

With the reference of working paper on computer trading in UK (Sep 2011), the actual centre
point is to fiscal stableness and electronic trading, effect of electronic trading in price efficiency
and each transaction cost and effect of developed technology.

MICHAEL J. MCGOWAN (2010): It is discussed about the pros and cons of high frequency
trading. The paper focused whether high frequency trading is more harmful or beneficial for the
society. Various automated trading, HFT strategies, whereas the other side contains the problems
as lack of knowledge or understanding which would be responsible for price manipulation,
illegal activities. And heft would be harmful for the investors.

On future of computer trading in financial markets (Oct 2012): The final project report
emphasized on the high frequency trading benefits for the markets over the negative perspective.
The project also reflected strong measures with cautiously and further task to inform policies in
the field of deficiency of knowledge and uncertainties.

Joel Hasbrouck, George Sofianos, and Deborah Sosebee April 27, 1993: They drafted a
working paper concerned on the New York trading rules and regulations and the examined area
such as the auto trial, superdot, tradequotes, order positions.

ANTHONY G. KIUNA (Nov 2010): This study focused on the impact of automated trading
system on the Nairobi stock exchange. For the purpose, longitudinal survey designed from the
2003 to 2010, paired t-test, correlation technique which found that electronic trading beneficial
for the market and suggest other markets should also adapt the technology for further better
growth.

Michael A. Goldsteina, PavitraKumarb and Frank C. Gravesb (May 2014): examined in his
study about the automated trading scenario with a view of profitability, strategies , practices and
also its impact on functioning of financial markets and how to establish the technology with the
degree of fairness and risk associated with high speed technology.
Helen Allen, John Hawkins and Setsuya Sato: This study centered on the theme of electronic
trading and its implication over the financials market. This paper consists the discussion about
the a policy concern over transparency is an final stage and problems over market atomization.

Nidhi Walia and Ravinder Kumar (2007): This study examined the investors' preference for
traditional trading and online trading, investor's perception on Online trading & comparing
current usage of online trading and offline trading. This study reveals that out of every 100
investors only 28 trade online, which points out a question as why investors were not able to
realize the importance of technology in stock trading. The major findings of the study are the
Indian investors are more conservative, they do not change brokers for trading, whereas net
traders are more comfortable with online trading for its transparency and complete control of the
terminal.

Sachithanantham et al. (2007): This studied the relationship between the capital market
reforms and amount of money invested by the investors. It was found that the educative reforms
and attractive reforms were statistically significant but they had negative influence over money
invested by the investors at the Indian Capital Market. Konnariuchida (2008) explores the
characteristics of Japan online investors. Japanese online investors prefer capital gain, do not
prefer low chart data when making investing decision more frequently, and tend to choose stock
to buy and sell on their own.

Shanmugam (1990): Studies a group of 90 investors to examine the factors affecting investment
decision. This study found that the Indian Investors were high risk takers. The investors
possessed adequate knowledge of government regulations, monetary and fiscal policy. Warren
at al. Investment holding. Krishnan and Booker (2002) analyzed the factor influencing the
decisions of investors who basically used analysts’ recommendation to arrive at a short term
decisions to hold or sell a stock. P.K. Bandgar (2000) studied middle class investors’
preferences for financial instrument in greater Bombay and stated that most of the female
investor also prefer to invest in risky securities for future investments as compared to male
investors. More of female investors are highly educated as compared to male investors. Robert
Hudson, Kevin Keasey and Kevin Lttler (2000) had given rapid increase, over the couple of
years, of share dealing services available on the web- based share trading sites. Barber and
Odean (2002) had done studies regarding the characteristics of online traders in USA by found
that young men are more likely to use the Internet for investing, and that online investors tend to
increase turnover and decrease their performance after switching to online trading. Merikas et
al.(2003) analyzed the factors influencing Greek investors behavior on the Athens Stock
Exchange. The results indicated that individuals base their stock purchase decision on economic
criteria. Glaser et al. (2009) tested whether individual investor sentiment was related to daily
stock returns by using Vector Auto Regressive Models and Granger Causality tests. According to
this study, there exists a mutual influence between sentiment and stock market returns, but only
in the very short-run (one and two trading days).
 Chapter-3
Research Methodology
Introduction
The process used to collect information and data for the purpose of making business decisions.
The methodology may include publication research, interviews, surveys and other research
techniques, and could include both present and historical information.
The research based will be Descriptive Research.

Type of data
The data collection methods include both primary and secondary collection methods.
 Primary method: This method includes the data collected from the questionnaires
and personal interaction with authorized members of Sharekhan Securities limited.

 Secondary method: The secondary data collection method includes:

 -The lecturers delivered by the superintendent.
 -The brochures and material provided by Sharekhan Securities limited.
 -The data collected from the magazines of the NSE, economic times and from internet.

Sampling Design

 The research was mainly opted on customer’s survey.

 The sample selected for survey was stratified sample. Sample size is 20 Members

Sampling Plan

For Members
 Sampling unit : Individuals.
 Sampling Method : Non Probability, Convenience Sampling.
 Sampling Size : 40 Customers.
 CHAPTER-4

DATA REDUCTION,
PRESENTATION &
ANALYSIS
 QUESTIONNAIRE
A STUDY ON ONLINE TRADING ON SHAREKHAN LTD
The purpose of this questionnaire is to know the behavior of investors about online trading and this is
only for academic purpose.

1. Name………………………

2. Age
□ 15 to 30 □ 31 to 45
□ 46 to 60 □ above 60

3. Income per month

□ Below 15000 □ 15001 to 30000
□ 30001 to 45000 □ above 45000

4. Education qualification
□ Graduation □ post graduation
□ Others

5. Do you know about online trading?

□ Yes □ No

6. How was account opened?

□ Personal acquaintance □ Referral-Clients
□ Referral-Non Clients □ Call/Walk in
□ Personal Prospect Visit

7. Net worth involved in online trading ………………...

8. Do you feel safe while trading online?
□ Yes □ No

9. In which stock you most trade online

□ Equity □ Mutual Funds
□ Commodities □ F&O Equitie
□ Other

10. No. of years of online trading experience in stocks at this firm

□ below 5 yrs □ 5 to 10

11. Do you receive updated online information regarding the stock market from your
dealer/broker?
□Yes □No

12. Do you believe that your trader/broker is very successful in online trading?
□ Strongly Agree □Agree □Moderate
□Disagree □Strongly Disagree
 AGE STRUCTURE OF RESPONDENTS

Age Chart

10%

20%
15 to 30
31 to 45
46 to 60
AGE RESPONDENT
15-30 14
31-45 4
70%
45-60 2

(Figure-)

INTERPRETATION-
It can be seen that most of the people who are between 15 to 30 old are most involved in online
trading while there are four people who are between 31 to 45 and only two are above 45.
 INCOME

Income Chart

10%
5% Number of
Income/Month Member
Below 15000 12
Below 15000 15001 to
15001 to 30000 30000 5
30001 to 45000 30001 to
Above 45000 45000 1
25%
60%
Above 45000 2

(Figure-4)

INTERPRETATION-
This is clear from the chart that people having income less than 15000 are more involved in
online trading and 5 people are having income more than 15000 but less than 30000 and 3 people
are having income more than 30000.
EDUCATION QUALIFICATION

Education Chart

2
Other

5
Post Graduation Number of Member

13
Graduation

0 2 4 6 8 10 12 14

(Figure-5)

INTERPRETATION-
It can be seen that most of the people who are involved in online trading are graduates and 5
respondents are post graduates and 2 people have different education qualification.
 ACCOUNT OPENING
Account Number of
Ref Member
Personal
acquintan
Account Ref Chart ce 6
Referral-
Clients 8
Referral-
Non
Clients 1
15%
Call /
30% Wall in 2
10% Personal
Personal acquintance
Referral-Clients
Prospect
Referral-Non Clients visit 3
Call / Wall in
Personal Prospect visit
5%

40%

(Figure- 6)

INTERPRETATION-
Many of the respondents opened their accounts through agent(client) of the company & 6 people
opened by personal acquaintance while 6 respondents used other mode of account opening.
There are 8 respondent whose account are open on the basis of referral client.
FEEL SAFE..?

Number of
14 Answer Member
Yes 14
14
No 6

12

10

8
Number of Member
6

0
Yes No

(Figure-7)

INTERPRETATION-
It is shown in the figure that 70% of respondents feel safe while trading online and 30% are
having fear of fraud.
MOST TRADED STOCK

Most Traded Stock

stock Member
8 Equity 7
M.Funds 8
Commodities 3
7 F&O 1
Other 1
6

8
4 Number of Member
7

2
3

1
1 1

0
Equity Mutual Funds Commodities F&O Equities Other

(Figure-8)

INTERPRETATION-
It can be seen that 40% respondents most trade in mutual fund and 7 people trade in equity & 3
invest in commodities while 1 person trades in future and option and 1 in other stocks.
EXPERIENCE

Online Trading Experience

Number of
experience Member
Below 5 Year 17
15%
5 to 10 3

Below 5 Year
5 to 10

85%

( Figure 9 )

INTERPRETATION

There are 17 respondent who have the experience of below 5 years of trading while
there are only 3 respondent who have the experience of 3 to 10 years.
RECEIVE UPDATED INFORMATION

Updated Information

Number
of
Answer Member
Yes 9
No 11

Yes
No
11

(Figure – 10 )

INTERPRETATION

There are 11 respondent 55 % who say that they will given updates information
about the share market. There are 45 % respondent 09 who say that they will not
given updated information about the share market.
 SUCCESSFUL BROKER

Successful broker

5% 5% 5%
Successful Number of
broker Member
35% Strongly
Strongly agree agree 1
Agree
Agree 7
Moderate
Disagree
Moderate 10
Strongly disagree Disagree 1
Strongly
disagree 1
50%

(Figure-11)

INTERPRETATION

There are 10 member who say that they are moderate broker. There is only 1 respondent who say
that he is strongly agree that he is a succesful broker. There is only 1 respondent who say that he
is not agree that he is a broker. There is 1 broker who is strongly disagree in succesful
broker.There are 7 respondent who are agree that they make succesful broker.
 CHAPTER-5
DATA
INTERPRETATION
FINANCIAL STATEMENT ANALYSIS

Financial statement analysis is a judgmental process. One of the primary objectives is

identification of major changes in trends, and relationships and the investigation of the reasons
underlying those changes. The judgment process can be improved by experience and the use of
analytical tools. Probably the most widely used financial analysis technique is ratio analysis, the
analysis of relationships between two or more line items on the financial statement. Financial
ratios are usually expressed in percentage or times. Generally, financial ratios are calculated for
the purpose of evaluating aspects of a company's operations and fall into the following
categories:

 Liquidity ratios measure a firm's ability to meet its current obligations.

 Profitability ratios measure management's ability to control expenses and to earn a return
on the resources committed to the business.
 Leverage ratios measure the degree of protection of suppliers of long-term funds and can
also aid in judging a firm's ability to raise additional debt and its capacity to pay its
liabilities on time.
 Efficiency, activity or turnover ratios provide information about management's ability to
control expenses and to earn a return on the resources committed to the business.

A ratio can be computed from any pair of numbers. Given the large quantity of variables
included in financial statements, a very long list of meaningful ratios can be derived. A standard
list of ratios or standard computation of them does not exist. The following ratio presentation
includes ratios that are most often used when evaluating the credit worthiness of a customer.
Ratio analysis becomes a very personal or company driven procedure. Analysts are drawn to and
use the ones they are comfortable with and understand.

Liquidity Ratios
Working Capital
Working capital compares current assets to current liabilities, and serves as the liquid reserve
available to satisfy contingencies and uncertainties. A high working capital balance is mandated
if the entity is unable to borrow on short notice. The ratio indicates the short-term solvency of a
business and in determining if a firm can pay its current liabilities when due.

 Formula
Current Assets - Current Liabilities

Acid Test or Quick Ratio

A measurement of the liquidity position of the business. The quick ratio compares the cash plus
cash equivalents and accounts receivable to the current liabilities. The primary difference
between the current ratio and the quick ratio is the quick ratio does not include inventory and
prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than its
current ratio. It is a stringent test of liquidity.

 Formula
 Cash + Marketable Securities + Accounts Receivable
Current Liabilities

Current Ratio
Provides an indication of the liquidity of the business by comparing the amount of current assets
to current liabilities. A business's current assets generally consist of cash, marketable securities,
accounts receivable, and inventories. Current liabilities include accounts payable, current
maturities of long-term debt, accrued income taxes, and other accrued expenses that are due
within one year. In general, businesses prefer to have at least one dollar of current assets for
every dollar of current liabilities. However, the normal current ratio fluctuates from industry to
industry. A current ratio significantly higher than the industry average could indicate the
existence of redundant assets. Conversely, a current ratio significantly lower than the industry
average could indicate a lack of liquidity.

 Formula
Current Assets
Current Liabilities

Cash Ratio
Indicates a conservative view of liquidity such as when a company has pledged its receivables
and its inventory, or the analyst suspects severe liquidity problems with inventory and
receivables.

 Formula
Cash Equivalents + Marketable Securities
Current Liabilities

Profitability Ratios
Net Profit Margin (Return on Sales)
A measure of net income dollars generated by each dollar of sales.

 Formula
Net Income *
Net Sales

* Refinements to the net income figure can make it more accurate than this ratio computation.
They could include removal of equity earnings from investments, "other income" and "other
expense" items as well as minority share of earnings and nonrecuring items.

Return on Assets
Measures the company's ability to utilize its assets to create profits.

 Formula
Net Income *
(Beginning + Ending Total Assets) / 2

Operating Income Margin

A measure of the operating income generated by each dollar of sales.
  Formula
Operating Income
Net Sales

Return on Investment
Measures the income earned on the invested capital.

 Formula
Net Income *
Long-term Liabilities + Equity

Return on Equity
Measures the income earned on the shareholder's investment in the business.

 Formula
Net Income *
Equity

Gross Profit Margin

Indicates the relationship between net sales revenue and the cost of goods sold. This ratio should
be compared with industry data as it may indicate insufficient volume and excessive purchasing
or labor costs.

 Formula
Gross Profit
Net Sales

Financial Leverage Ratios

Total Debts to Assets
Provides information about the company's ability to absorb asset reductions arising from losses
without jeopardizing the interest of creditors.

 Formula
Total Liabilities
Total Assets

Capitalization Ratio
Indicates long-term debt usage.

 Formula
Long-Term Debt
Long-Term Debt + Owners' Equity

Debt to Equity
Indicates how well creditors are protected in case of the company's insolvency.
  Formula
Total Debt
Total Equity

Long-term Debt to Net Working Capital

Provides insight into the ability to pay long term debt from current assets after paying current
liabilities.

 Formula
Long-term Debt
Current Assets - Current Liabilities

Efficiency Ratios
Cash Turnover
Measures how effective a company is utilizing its cash.

 Formula
Net Sales
Cash

Sales to Working Capital (Net Working Capital Turnover)

Indicates the turnover in working capital per year. A low ratio indicates inefficiency, while a
high level implies that the company's working capital is working too hard.

 Formula
Net Sales
Average Working Capital

Total Asset Turnover

Measures the activity of the assets and the ability of the business to generate sales through the
use of the assets.

 Formula
Net Sales
Average Total Assets

Fixed Asset Turnover

Measures the capacity utilization and the quality of fixed assets.

 Formula
Net Sales
Net Fixed Assets
Capital Gearing Ratio:
Closely related to solvency ratio is the capital gearing ratio. Capital gearing ratio is mainly used
to analyze the capital structure of a company.

 Formula
Equity Share Capital
Fixed Interest Bearing Funds

Retained Earnings to Total Assets Ratio

This ratio indicates the extent to which assets have been paid for by company profits.A retained
earnings to total assets ratio near 1:1 (100%) indicates that growth has been financed through
profits, not increased debt.A low ratio indicates that growth may not be sustainable as it is
financed from increasing debt, instead of reinvesting profits.
 Formula
Retained earnings
Total assets

Cash Flow Indicator Ratios:

Operating Cash Flow/Sales Ratio
This ratio, which is expressed as a percentage, compares a company's operating cash flow to
its net sales or revenues, which gives investors an idea of the company's ability to turn sales into
cash.

 Formula:
Operating cash flow
Net sales(revenues)

Cash Turnover Ratio

The cash turnover ratio indicates the number of times that cash turns over in a year
 Formula
Sales
Cash

Cash Flow to Long Term Debt Ratio

The cash flow to long term debt ratio appraises the adequacy of available funds to pay
obligations.
 Formula
Cash flow
Long term debt
Operations Cash Flow to Current Liabilities Ratio
If the operations cash flow to current liabilities ratio keeps increasing, it may indicate that cash
inflows are increasing and need to be invested.
 Formula
Cash flow from operations
Current liabilities

Cash Flow for Investing to Cash Flows from Operating and Financing
This ratio compares the funds needed for investment to the funds obtained from financing and
operations.
 Formula
Cash flows from investing .
Cash flows from operations + cash flows from financing

SOLVING & ANALYSING RATIOS:

i> Net profit margin = 152.02 x100 = 22.82%
665.99
 A higher profit margin indicates a more profitable company that has better control over its
costs compared to its competitors. This is compared with the last year’s profit margin of
company.

ii> Quick ratio = 1656.05 = 1.31

1258.52

Ideal Quick ratio is 1:1. Company needs to improve this.

iii> Current ratio = 1709.81 = 1.36

1258.52

Ideal Quick ratio is 2:1. Company needs to increase its assets or decrease its
liabilities.

iv> Operating profit margin = 246.85x100 = 37.06

665.99

A healthy operating margin is required for a company to be able to pay for its fixed
costs, such as interest on debt.

v> Total debt/equity ratio = 497.750 = 0.45

1107.71

The normally acceptable debt-equity ratio is 2:1. Ratio less than one means equity
provides a majority of the financing.

vi> Return on investment = 152.02x100 = 9.47

1605.46

Higher ratio is better. In this case the ratio has increased as compared to the last
year’s ratio (8.23).

vii> Gross profit margin = 271.14 x 100 = 40.72%

665.99

Higher the ratio better it is.

viii> Return on equity = 152.02 = 13.73

 1107.71

ix> Capitalization ratio = 497.75 = 0.31 or 31%

1605.46
Low debt and high equity levels in the capitalization ratio
indicate investment quality.

x> Long term debt to net working capital = 497.75 = 1.11

451.29

xi> Fixed assets turnover ratio = 665.99 = 0.57

1152.42
A high ratio means a high rate of efficiency of utilization of fixed asset and low ratio means
improper use of the assets.

xii> Debtor turnover ratio = 665.99 = 1.15

577.50
Higher ratio is better. In this case company’s net sale is more than the average debtors.

xiii> Capital gearing ratio = 1107.71 = 2.23

497.75

xiv> Operating cash flow ratio = 5.120 x 100 = 0.76%

665.99
The greater the amount of operating cash flow, the better.

xv> Cash flow to long term debt = 131.59 = 0.26

497.75
The higher the percentage ratio, the better the company's ability to carry its total debt. In
this case, their debt load is higher than their operating cash flows, giving it a ratio of less
than one, however the percentage (being below 40%) is considered low.

xvi> Cash turnover ratio = 665.99 = 1.18

 561.84

xvii> Operations cash flow to current liabilities = 5.1200 x 100 = 0.49%

1026.21
Any result less than 1 indicates that the company is not able to liquidate its current
liabilities from operating cash flow; the company will probably have to sell assets, borrow
money or issue stock in order to meet its short term debt obligations.

xviii> Retained earnings to total assets = 177.54 = 0.11

1605.46
Retained earnings to total assets ratio near 1:1 (100%) indicates that growth has been
financed through profits, not increased debt. This low ratio indicates that growth is not
sustainable as it is financed from increasing debt, instead of reinvesting profits.

xix> Equity multiplier = 1605.46 = 1.44

1107.71
The equity multiplier ratio discloses the amount of investment leverage. A higher equity
multiplier indicates higher financial leverage, which means the company is relying more
on debt to finance its assets.

xx> Cash flow for investing to cash flow from operating and financing
=- 265.620
5.12+392.08

= -265.62
397.20

= -0.66
 CHAPTER-6
SUMMARY &
CONCLUSIONS
RESULT OF THE STUDY

DURING MY SUMMER TRAINING, I HAVE LEARNED:

 Importance of information technology in the field of stock broking is immense.

 Stock broking companies run with the help of IT. The terminal through which the brokers
buy and sell shares is software that completely depends on the internet. For Sharekhan,
this terminal has been designed by the software company “Spider”. Buying and selling
through internet is fast. As soon as the prices of the shares goes up or comes down then
they can be sold or purchased instantly within seconds. Customer Relationship is very
necessary for the company to retain the customers.
 In Sharekhan Ltd. I have learned a lot relating to the finance, learned the meaning of the
words that are mostly used in the share market.
 Learned about various products of the Sharekhan Limited, Learned various aspects
regarding Share Market.
 Learned how to use online trading terminal.
 Learned the various policies of the company.
 Learned about various products used in the share market especially Demat accounts and
Derivatives.
 Got the practical knowledge of the market.
FINDINGS AND OBSERVATIONS:-

 Fluctuations are more in secondary market than any other market.

 There are more speculators than investors.
 Information plays a vital role in the secondary market.
 Previously rolling settlement is T+5 days, now it changed to T+2 days and further it will
be changing to T+1 day.
 It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers.
 The number of players is increasing at a steady rate and today there are over a
dozen of brokerage houses who have opted to offer net trading to their customers
and prominent among them are SHARE KHAN, India bulls, kotakstreet, ICICI direct.

LIMITATIONS OF THE STUDY:

Despite of the training my level best, there were still some limitation which I think remains there
to draw fruitful conclusion. There were some practical problems which come across and could
not be properly death with

 The advisory services being promised by the brokers would be of little use
to investors looking for an insight into the market.

 As a client one will access the NSE through a server of the online
brokerage and this may involve queuing delays

 The company does not provide its financial report to anyone. So the balance sheet, cash-
flow-statement & profit and loss account shown in this project are not audited and are of
some other’s company.

CONCLUSION

 Things have changed for the better with the SHAREKHAN going on-line coupled with
endeavor to stream line the whole trading system, things have changed dramatically over
 the last 3 to 4 years. New and advanced technologies have breached geographical and
cultural barriers, and have brought the countrywide market to doorstep.
 The introduction of on-line trading would influence the investors resulting in an
increase in the business of the exchange. It has helped the brokers handling a vast amount
of transactions and this can be an efficient trading, delivering, settlement system with
adequate protection to investors. The trading of SHAREKHAN of the first day was Rs.
1.8 crores.
 Due to invention of online trading there has been greater benefit to the investors
as they could sell / buy shares as and when required and that to with online trading.
 The broker’s has a greater scope than compared to the earlier times because of
invention of online trading.
 The concept of business has changed today, this is a service oriented industry
hence the survival would require them to provide the best possible service to the
clients.
 I recommend the exchange authorities to take steps to educate Investors about
their rights and duties. I suggest to the exchange authorities to increase the investors’
confidences.
 I recommend the exchange authorities to be vigilant to curb wide fluctuations of prices.
 The speculative pressures are responsible for the wide changes in the price, not attracting
the genuine investors to the greater extent towards the market.
 Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits, therefore the authorities of the exchange should be more
vigilant to curb the speculation.
REFERENCES /
BIBLOGRAPHY
 BIBLIOGRAPHY

 www.sharekhan.com
 www.economictimes.com
 www.moneycontrol.com
 www.bseindia.com
 www.nseindia.com
 www.sebi.gov.in
 www.investors.com
 www.investopedia.com

Newspapers:-
 The Times of India
 The Economic Times

BOOKS:-
 Beri G.C, Marketing Research
 Gupta C.B, Marketing Management.