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“A STUDY ON ONLINE TRADING OF SHARES”.

“A STUDY ON ONLINE TRADING OF SHARES”


Dissertation submitted in partial fulfillment of the requirements for the
Award of the Degree of

MASTERS IN BUSINESS ADMINISTRATION

As prescribed by

BANGALORE UNIVERSITY

By

BASAVARAJ BAGEWADI

Register Number: 06KXCM6002

Under the guidance of


Dr.SUDHA B S

SURANA PG CENTRE
BANGALORE-60

2007-08

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“A STUDY ON ONLINE TRADING OF SHARES”.

DECLARATION

I hear by declare that this dissertation titled “A Study on Online

trading of Shares” submitted by me, under the supervision of

Dr. Sudha.B.S. towards partial fulfillment of the Master of Business

Administration, department of management, Bangalore University.

I also declare that this project report has not been submitted to any

other university or any institution for the award/diploma/certificate

published any time before.

Date:

Place: Basavaraj Bagewadi


(06KXCM6002)

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“A STUDY ON ONLINE TRADING OF SHARES”.

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“A STUDY ON ONLINE TRADING OF SHARES”.

ACKNOWLEDGEMENT

The successful accomplishment of any task is incomplete without

acknowledging the contributing personalities who both assisted and

inspired and lead us to way of success.

It is my pleasure to thank Department of MBA, Bangalore


University, for having provided me with such an opportunity to undergo
the Project Work.
I thank the Almighty God for his grace bestowed on us throughout

this project. My special thanks to my project Guide Dr.Sudha B S, who

guided me with the timely advice and expertise and has helped

remarkably to complete the project.

Last, but not the least, I express my deep sense of gratitude to my


beloved Parents & Sister for their constant inspiration throughout my
study and I thanks to all my Friends and I thank all who helped me
directly or indirectly during my study.

Date

Place: Bangalore Basavaraj Bagewadi.


(06KXCM6002)

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“A STUDY ON ONLINE TRADING OF SHARES”.

CONTENTS

Sl. Particulars Page


No. No
EXECUTIVE SUMMARY 1-14
1. INTRODUCTION
- Definitions of Online Trading
- Online Trading Patterns
- Sources of Marketing
- Background of Study
- Online Trading of Stock Exchange
- Types of Stock Exchange
- Function of Stock Exchange
- Online Trading of Shares
- Advantages
- Disadvantages
- Effectiveness
- Why Online Share Trading
2. RESEARCH DESIGN 15-23
- Introduction
- Title of the Project
- Statement of the Problem
- Review of The Literature
- Objectives of the Study
- Scope of the Study
- Sources of Data
- Sample Design
- Sample Procedure
- Conceptual Definitions of the Study
- Respondent Profile
- Limitations of the Study
3. PROFILE OF NSE/BSE 24-36
- History of Online Trading
- Technology and NSE/BSE
- Online Trading Potential
- Securities Exchange Board of India (SEBI)
PROCESS AND REQUIREMENTS OF ONLINE TRADING
OF SHARES
- Online Trading Process
- Benefits of Online Trading
- Basic Risks Involved in Trading the Stock Exchange
- Investors Rights and Obligation
- General Conditions of NSE/BSE
4. ANALYSIS AND INTERPRETATION OF THE DATA 37-76
5. SUMMARY OF FINDINGS, SUGGESSION AND 77-92
CONCLUSIONS
 BIBILIOGRAPHY
 ANNEXURES

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LIST OF TABLE

Sl. Particulars Page


NO No.
1 GENDER WISE DISTRUBUTION OF INVESTORS 37
2 AGE GROUP DISTRUBUTION OF INVESTORS 38
3 QUALIFICATION OF RESPONDENTS 39
4 OCCUPATION OF INVESTORS 40
5 ANALYSIS OF THE INVESTMENT 41
6 DURATION INVESTMENT OF INVESTORS 42
7 SOURCES OF INFORMATION FOR INVESTORS 44
8 OBSERVATION OF BSE / NSE SENTIVE INDEXES 46
9 FACTORS CONDUCTED BY INVESTORS 47
10 FACTORS INFLUENCING ON INVESTMENT 51
11 CONSIDERSTION OF RISK FACTORS WHILE INVESTING 55
12 IMPORTANT FACTORS WHILE SELECTING A COMPANY 57
TO INVESTMENT
13 STAGES OF LIFE CYCLE WHILE INVESTING 59
14 STAGES OF THE LIFE CYCLE OF THE INDUSTRY 61
PREFERED TO INVEST
15 INCOME FROM INVESTMENT 63
16 ANNUAL SAVINGS OF INVESTORS 65
17 ANALYSIS OF PREFERED MARKET STRUCTURE 67
18 IMPORTANCE OF THE SHARE PRICE MOVEMENT BSE / 69
NSE INDEXES ON THE INVESTMENTS
19 ANALYSIS OF THE TERMS OF PATTERN 71
20 ANALYSIS OF AVERAGE HOLDING PERIOD FOR 73
INVESTORS
21 ANALYSIS OF THE FAMILIARITY OF ONLINE TRADING 75
SERVICES AMONG INVESTORS

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GRAPH LIST

Sl.No Headings Page


. No.
1 COMPOSITION OF MALE AND FEMALE 37
2 AGE GROUP OF INVESTORS 38
3 QUALIFICATION OF INVESTORS 39
4 OCCUPATION OF INVESTORS 40
5 ANALYSIS OF INVESTMENTS 41
6 THE DURATION OF INVESTMENT 42
7 SOURCES OF INFORMATION FOR INVESTORS 44
8 FOLLOW THE CHARTPATTERN OF BSE/NSE SENSITIVE 46
INDEXES BEFORE INVESTMENT
9 FACTORS CONDUCTED BY INVESTORS
9.1 MOST IMPORTANT 48
9.2 VERY IMPORTANT 48
9.3 IMPORTANT 49
9.4 UN IMPORTANT 49
9.5 NOT AT ALL IMPORTANT 50
10 FACTORS INFLUENCING ON INVESTMENT
10.1 MOST IMPORTANT 51
10.2 VERY IMPORTANT 52
10.3 IMPORTANT 52
10.4 UNIMPORTANT 53
10.5 NOT AT ALL IMPORTANT 53
11 CONSIDERATION OF RISKS FACTORS BEFORE 55
INVESTMENT
12 IMPORTANCE OF FACTORS BEFORE INVESTING IN A 57
COMPANY
13 STAGES LIFE CYCLE INDUSTRYBEFORE INVESTMENT 59
14 STAGE LIFE CYCLE OF THE INDUSTRY PREFFERED TO 61
INVEST
15 INCOME FROM INVESTMENT 63
16 ANNUAL SAVINGS OF INVESTORS 65
17 TYPE OF MARKET STRUCTURE PREFERED 67
18 IMPORTANCE OF MOVEMENT OF SHARE PRICES IN 69
THE BSE/NSE INDEXES
19 SHORT TERM OR LONG TERM INVESTORS 71
20 AVERAGE HOLDING PERIOD OF INVESTORS 73
21 FAMILIARITY OF ONLINE TRADING SERVICE 75

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“A STUDY ON ONLINE TRADING OF SHARES”.

EXECUTIVE SUMMARY

Stock exchange is an organized market place where securities are traded.


The Government, semi- Government bodies, public sector undertakings
and companies for borrowing funds raising resources issue these
securities. Securities are defined as any monetary claims and include
stock, shares, debentures, bonds etc. Under the securities Contract
Regulation Act 1956, the Central Government regulates securities trading
and such trading can take place only in stock exchanges recognized by
Government under this Act. As referred to earlier there are at present 23
such recognized stock exchanges in India. Of these, major stock
Exchanges, like Mumbai, Delhi, Calcutta, Chennai, Hyderabad,
Bangalore etc.

A project entitled “A Study on Online Trading of Shares.” deals with


the priorities of the investors in investing their resources.

The study considers the preferences of the investors in Bangalore, taking


into consideration their age group, income earning capacity and their
educational qualification. The data for the study was collected using a
structured questionnaire.

The main limitation of the study is that, the survey was conducted on
investors only in Bangalore, due to lack of time.

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“A STUDY ON ONLINE TRADING OF SHARES”.

CHAPTER - I

INTRODUCTION

E-business describes the use of electronic means and platforms to


conduct business. By this means the company has reduced all kinds of the
paper work and all information are flowing through the computer screen
only.

E-commerce is more specific than e-business. It means that in addition to


provide information to visitors about the company, its history, policies,
and job opportunities the company or the site offer to transact or facilitate
the selling of the products and services online. E-commerce has given
rise in turn to e-purchasing and e-marketing. E-purchasing means
companies decide to purchase the goods and information or services from
various online suppliers. Smart e-purchasing has already saved
company’s million of rupees.

E marketing describes company’s effort to inform, communicate,


promote and sell its products and services over the Internet. E-business
and e-commerce take place over four Internet domains

• B 2 B – business to business:
Online business selling to other businesses. Example
eSteel.com is a steel industry exchange that creates an
electronic market for steel producers and users.
At first B2B e-commerce primarily involved inter-business
exchanges, but a number of other B2B business models have
developed, including e-distributors, B2B service provider’s
matchmakers, and infomediaries that are widening the use of
B2B e-commerce.

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“A STUDY ON ONLINE TRADING OF SHARES”.

• B 2 C – business to consumer:
Online business selling to individual consumers.
Example amazon.com is a general merchandiser that sells
consumer products to retail consumer. Grown exponentially
since 1995, and is the type of e-commerce that most
consumers are likely to encounter.

• C 2 C – consumer to consumer e-commerce:


Consumer selling to other consumers. Example
eBay.com creates a market space where consumers can
auction or sell goods directly to other consumers.
• P 2 P Peer-to-Peer e-commerce:
E-commerce provides a way for consumers to sell to each
other, with the help of an online market such as auction site
eBay.

Use of peer-to-peer technology, which enables internet


users to share files and computer resources directly without
having to go through a central web server, in e-commerce.
Examples Gnutella is a soft ware application that permits
consumers to share music with one another directly, without
intervention of a market maker as in C2C e-commerce.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Definition of Online Trading on the web:


As per the web the sale of goods or services over the
Internet. Customers must enter and submit their credit card
details online; the sale will often proceed without the retailer
and customer ever having personal contact.

Online Trading Patterns:

• Online Trading should be screen-based system only.


• T+ 2 settlement (T means trading day).
• It is a Stock wise and Financial wise.
• Shares or security should be in D-Mat only.
• Penalty clauses should be applied
• Notionally any trade will be done by buying / selling took
place by NSE.
• It is only cheque system but no cash system.
• This is no intermediaries from 1-10-2004.
• It is agreement between stockbrokers and investors.
• It not even through authorized person.
• It is transaction is franchisee (hand post) or directly should
register with SEBI (Securities Exchange Board of India)
through respective brokers.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Sources of the online marketing:

In the online marketing the most important is to know the


customer, and in order to know the customers the company must collect
information and store it in the customer’s database and do the database
marketing. A customer database is the organized collection of
comprehensive information about individual customers or prospects that
are current, accessible and actionable for such marketing purpose as lead
generation led qualification.

Database marketing is the process of building, maintain and using


customer’s databases and other databases for the purpose of contacting,
transacting, and building relationship.

Customer mailing list is totally different from customer database.


A customer mailing list is simply a set of names, address and telephone
numbers. A customer database contains much more information.
Companies accumulate this information through customer transactions,
registrations, and telephone queries. A customer database would ideally,
contain the customer past purchase, demographic, psychographics and
other useful information.

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“A STUDY ON ONLINE TRADING OF SHARES”.

BACKGROUND OF THE STUDY

Online community is defined as a gathering of individuals in a


computer mediated environment who are united by a common purpose
and governed by self-determined policies.

Online community has five characteristics they are Purpose, Boundary,


Mutuality Rules, and Self-organization.

Why do people join online trading?

Internet has changed the pace of all activities in all over the world.
The share trading has also been affected with the winds of the changes.
Now the complicated procedure of share trading in share market has
become very easy because of the usage of the Internet in this type of
trading. The customers are getting the trading accounts through which
they can trade in the market. And for paying the money also they have no
need to go any where, the money will be debited or credited to
customer’s account automatically. So in the online trading the customers
can by sitting in the home only, trade in the share market.

Online trading will probably be one of the biggest drivers of


penetration as well as successes on the net. Even in India, however far
fetched the idea might be seen, right now. The reasons for this are

 A lot more than shares will be traded on the net.

 The savings on customer’s brokerage expenses on online trading


will be one of the most satisfying wages to gate.

 The transparency, anonymity and certainty it offers are surefire


ways to enhance loyalty.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Online Trading on Stock Exchanges:

Stock exchange is an organized market place where


securities are traded. The Government, semi- Government bodies,
public sector undertakings and companies for borrowing funds raising
resources issue these securities. Securities are defined as any monetary
claims and include stock, shares, debentures, bonds etc.

Under the securities Contract Regulation Act 1956, the Central


Government regulates securities trading and such trading can take
place only in stock exchanges recognized by Government under this
Act. As referred to earlier there are at present 23 such recognized
stock exchanges in India. Of these, major stock Exchanges, like
Mumbai, Delhi, Calcutta, Chennai, Hyderabad, Bangalore etc.

Function of Stock Exchange:

The function of stock exchange can be set out as follows:

• Provides quotation for shares/stocks for facilitating trading and


market ability.

• Extends liquidity to such stock, as they are easily marketable


and traded.

• Promotes savings and investment in the economy by attracting


funds for investment in corporate shares and securities.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Leading Stock Exchanges:

a) National Stock Exchange

b) Bombay Stock Exchange

NSE:

NSE in the world 6th best stock exchange it is introduced first


online trading later on regional stock exchange

BSE:

BSE is one of the regional stock exchanges it is private oldest stock


exchange in India, 26 regional stock exchanges in India.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Online trading of shares:

A share is a unit or part of the share capital of the company


having a special value of amount

Sec 2(46) of the company Act of 1956 defines a Share as a “a


share in the share capital of the Co. and includes stock and share is
expressed or implied.

Advantages of online trading:

• Investment benefits

• Liquidity is very high

• Transparency trade is available

• To easy for transferability

• Storage stocks are not needed

• Pledge and hypothecation is easy.

• Quality control is not needed.

• Any loss or gain enjoyed by investors directly.

• We can buy / Sell the share quickly or directly anywhere in the


world.

• Which company shares we want, it can be opted at a faster


phase.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Disadvantages of online trading:

 Assessment of the company performance is not proper


means suffering from financial losses.

 The process of Online Trading of Shares is very difficult


to understand for common people.

 Facing problems in Internet like Hackings and Hangings.

EFFECTIVENESS:

• Rates are changing at every second

• We can find easily true value

• We can do technical analysis and charts

• Total number of companies volume is very high compare


to manual trading

Why online share trading?


 Safety

 Security of money and demoting the shares

 Easy

 Economic

 Independence

 Updated and latest price

 Two way access

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“A STUDY ON ONLINE TRADING OF SHARES”.

 Competitive brokerage

Internet safety:

The safety of transaction on the Internet depends on the encryption


system used. The better this transaction system, the more difficult for any
person to back the site.
Secondly, customers can too ensure the safety of the transaction
online. They normally gets a secured user ID and pass word, the secrecy
of which is to be maintained by customers only.
Thirdly, if the transaction system requires no manual intervention,
customers further improve the safety of the transactions. This enables the
elimination of the possibility of any manual intervention. This means
orders are directly send to the exchanges, ensuring that the customers get
the best right price.

Security of money:

In systems where the broking, banking and demat accounting are


completely integrated, customer’s money remain in his own bank
account, and does not get transferred to the broker’s pool.

Easy:
The experience of trading through Internet depends a great deal on
the type of product offered by the site. Say, for example one of the issues
bothering customers may be tiered of the paper work after every trading
in writing cheques or TIFDs. Customer would then seek a system that
eliminates these processes. In online trading sites, the greater the back-
end integration of the system, the greater the amount of work do the site

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“A STUDY ON ONLINE TRADING OF SHARES”.

for the customers. Therefore, the greater convenience is available for


them.
For example, in case of ICICIDirect.com broking account, bank
account, and demat account are linked electronically. So when customers
punch in a buy or sell order, the system checks the funds/shares
availability and automatically credits/debits the accounts once the order
been executed by the exchange.

Economical:

Contrary to common perception, trading through Internet does not


require either any expertise in working on computer, or any special
financial skills. Customers could try the demo (demonstration) of the
online trading sites like ICICIDirect.com to find that customers can, with
little or no knowledge about the Internet or finance, have switched on to
online trading. Or they can attend the demonstration sessions held by
such websites in their city. The convenience provided by online trading is
even then worth the cost involved. And online trading sites are not that
costly. For example, a trader can trade shares on margin at rate as low as
0.10% on ICICIDirect.com and if one wishes to trade in cash, then rates
applicable as low as 0.4%. However it is important to compare various
online trading sites on brokerage rates, inclusive of all sub changes.

Independence:

Many of those customers, who have chosen to trade shares online


today, had at one point of time been trading through offline brokers. They
took a change to go online trading and trade shares. After realizing the

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“A STUDY ON ONLINE TRADING OF SHARES”.

advantages of trading shares online, they have shifted to online trading


now. In fact there are more than one lakh customers already opened an
account with ICICIDirect.com.

Updated Prices:

The tickers available at online trading sites provide instantaneous


updates. Also, some websites con offer to transact in those shares
instantaneously and with convenience. The solution to this problem could
be provided in different ways in different online trading sites.
At ICICIDirect.com, for any trade order, customer is asked to click
“Proceed” after he has the opportunity to completely check the order
verification form.
Moreover the customers have the option to modify or canceling the
order till the moment the order is executed at the exchange.
Finally the online trade confirmation reaches customer’s within 4
minutes. While contract notes are dispatched at the end of the day and
reach within 24 to 36 hours, with ICICIDirect.com customer can decide
what they want to buy and buy the share at price they want to and
therefore they are in total control of their trade.

Two Way Access:

Brokers too gain. In physical setup, they generally refrain from


taking and retain clients, as the cost of service as percentage of the
volume of their transactions tends to be at higher side. With a Net trading
platform, however, the number of profile of clients has little bearing a
broker’s operational efficiency.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Competitive Brokerage:

Net trading has turned out to be a cost effective proposition.


Brokerage is similar to that under the physical setup – 0.25% to 0.35% up
to the transaction value for delivery-based trades and 0.05% to 0.15% for
speculative trades. The only additional cost for investors opting for the
Net trading route is that of the computer, modem and Internet connection.

Other Services:

Internet has brought to retail investors, what was till some times
ago the sole prerogative of large brokerage houses, high net worth
individuals. For example, at ICICIDirect.com one can access multitude of
resources to arrive his stock picks.
Reliable research with an enviable track record is available for
customers. An investor can now access ICICIDirect.com and do his
technical analysis to know what other leading brokers think about a
company, whether it is a buy or a sell.
An investor can access live news from international news agencies
such as Rulers, CNBC, read abut what the leading CEOs think about the
state of economy and capital market.

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“A STUDY ON ONLINE TRADING OF SHARES”.

CHAPTER - II

RESEARCH DESIGN OF THE STUDY

Introduction:

Research methods are all those methods/techniques that are used


for conducting to the researcher’s use in performing research. Here more
emphasis is made on collection of the data directly through the customers
with directly interacting with them.

Title of the study:

“A Study on Online Trading of Shares” A special reference to


investors.

Statement Of The Problem:

As online trading of securities has been introduced very recently in


India, so as to help the common people from all over the country to invest
in the share market. To make the share market truly democratic in nature,
it is considered as a vital step.

We are unaware of the market condition. This study is totally


concerned about the expectations and behavior of the online-traders. We
are totally unaware of the investor’s choice of portfolios, their mode of
selecting and investing on securities in net trading and their method of
collection of information about the securities. And it is an effort to know
the online trading of securities and the investors in online trading in a
better way.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Review Of The Literature:

Review of the literature is nothing but the subs seeing fact or


retiring or viewing back of the literature, which is available of the same
time. To the best of the knowledge and believe of the researcher, online
trading is new to the market. So review of the literature is not available
and as per as the study concerned, it is immaterial to review of the
literature.

Objectives Of The Study:

The importance objectives of the study are as follows

1. To study the investors preferences towards the portfolios.

2. To study the various methods available to the investors for


investing as per as the portfolios.

3. To study various sources of information for traders/investors.

4. To knows awareness of customers about the online trading.

5. To understand the various online trading patterns utililsing by the


investors.

6. To study the customers opinion towards online trading.

7. To give suggestions and recommendations to the investors.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Scope Of The Study:

The study mainly covers the whole Bangalore City. And


respondents are from all age group and all type of profession.

This study finds out the customer’s choice towards the share
trading and their opinion about their investment. This study gives the
information about the performance of online traders, brokers and the
online sites available as a whole.

Sources Of Data:

Two types of data is collected in this study

1. Primary Data

2. Secondary Data

1. Primary Data:
It involves collection of data from sources from which the
researcher directly collect data that have not been previously
collected. In this study, primary data are collected by the use of two
types of methods:
i. Questionnaire
ii. Interviews

In this study questionnaires are used to collect the data from the
respondents, since where the questionnaires are not adequate,
researcher has used personal interview method for collecting data to
draw the effective conclusion.

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“A STUDY ON ONLINE TRADING OF SHARES”.

2. Secondary Data
These are the data collected from various sources, used in addition
to the primary data in the research. The various sources are the
government publications, research organizations, journals, newspapers,
websites etc.
The website under are.
www.nseindia.com
www.bseindia.com
www.investmentz.com
www.sharekhan.com
www.icicidirect.com

Data Collection Instruments:

1) The research instrument in the study is questionnaire method.

2) Personal interview was conducted along with it.

3) The set of questionnaires were used for all respondents.

Research has mainly one instrument for collecting the primary data,
i.e. questionnaire. Here the questionnaire has been made much easy to
understand and answer, and hence clearly it takes lesser time to respond.

Sampling Design:
Sampling methods or technique may be classified into two generic
types.

a. Probability or random sampling and

b. Non-probability of non-random sampling

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“A STUDY ON ONLINE TRADING OF SHARES”.

a. Probability or random sampling:

It is based on theory of probability. It provides known zero change


for selection of each population element. Under this sampling design
every item of the universe has an equal chance of inclusion in the sample.
It is so to say a lottery method in which individual units are picked up
from the whole group, not deliberately but by some mechanical process.

b. Non-probability or non-random sampling

It is not based on the theory of probability. This simply does not


provide change of selection of each population element. The only
merits of this type of sampling are simplicity convenience and low
cost.

Non-probability sampling is classified into.

1) Convenience or accidental sampling

2) Judgment sampling

Sample Unit:

In this study the respondents are from whole Bangalore City.

Sample Size:

Sample size has taken 50 respondents.

Sampling Procedure:

In this study non-probability sampling and particularly the


Convenience sampling has been used.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Conceptual Definition Of The Study:

Shares:

Share is a share in the Share Capital of the Company. Shares are


the tools, which are giving the ownership rights to its holders.

Bonus shares:

Bonus shares are shares issued by a company out of its accumulated


profits to the existing equity shareholders either as fully paid shares or as
partly paid shares free of cost.

Demat:
Demat is the abbreviation for the dematerialization. In this the
shares are kept in the electronic form. In other words Demat means
dematerialization it means from physically form converted into
electronically form.
Demat shares introduced in 1998 earlier days is transaction only
physically like bonds.

Remat:
Remat is the abbreviation for rematerialization. In this electronic
shares are transferred in to the physical form.

Cash Trading:
This is delivery based trading system. This is generally done with
the intention of taking delivery of shares on monies.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Margin Trading:
Customers can also do an intra-trading up o four times their
available funds. Where in they take in long buy/short sell position in
stokes with the intension of squaring of the position within the same
settlement cycle.

Spot Trading:
When customers are looking at an immediate liquidity option,
‘cash on spot’ may work best for them. On selling shares through ‘cash
on spot’, money is credited to their bank account the same evening and
not on the exchange payout date.

T + 2 settlements:
T (Trading day) + 2 settlement means the settlement of transaction
will be taken place after 3 days from day of transaction. Government of
India under SEBI (Securities Exchange Board of India) controls it.

BTST:
Buy Today Sell Tomorrow (BTST) is a facility that allows
customers to sell shares even on day after the buy order date. Without
this, they have to wait for the receipt of shares into their demat account.

CallNTrade:
CallNTrade allows customers to call on a local number in their city
and trade on the Telephone through customer Service Executives.

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“A STUDY ON ONLINE TRADING OF SHARES”.

Call in Advance:
The amount received from the shareholders before a call is made is
known as calls paid in advance or calls in advance.

Calls in Arrears:
When a call is not paid by the members within the date specified in
the call notice, the amount of call unpaid on the shares is called calls in
arrears.

Surrender of shares:
Surrender of shares means the return (i.e. giving back) of shares by
a shareholder to the company voluntarily for cancellation. It is a shortcut
to the long and cumbersome procedure of forfeiture of shares.

Market Order:
Customers can trade by placing market orders during market hours
that allow them to trade at the best obtainable price in the market at the
time of execution of the order.

Limit Order:
This allows customer to place a buy/sell order at a price defined by
them. The execution can happen at a price more favorable than the price,
which is defined by them. They can place limit orders during holidays
and non-marketing hours too.

Surana PG Centre, Bangalore. - 29 -


“A STUDY ON ONLINE TRADING OF SHARES”.

Respondent Profile:

 The numbers of respondents are 50. The respondents belong to the

Bangalore.

 The respondents were from various age groups.

 The respondent’s behavior towards the researcher is friendly and


helping attitude.

 The respondents were eager to give suggestions.

Limitations Of The Study:

1. Questionnaire contained a few number of the questions to


facilitate the respondent.

2. Area under the study was limited.

3. I had limited time to get the detailed information about

Online trading of Shares.

Surana PG Centre, Bangalore. - 30 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHAPTER - III

PROFILE OF NSE/BSE

History Of Online Trading in India:

In the mid-nineties screen based trading changed the face of


transactions on Indian business. Net came as a helping hand, which
also enhanced the comfort factor of the investors. Now, it is Internet
based trading. Buying and selling shares via Net that is promising to
take the investing experiences to another plane.

BSE and NSE are the two leading stock exchanges in India. BSE
was established in 1875 and is the oldest in Asia. The NSE was
established as a corporate body in 1993, with the primary objectives of
ensuring nation wide electronic trading, high level of transparency and
faster settlement circle.

The NSE has been playing a catalytic role and has significantly
contributed to the reforming of the secondary market in India in terms
of micro-structure; market practices, trading volumes and use of state
of the art technology. The use of satellite communication technology
for trading, using Very Small Aperture Terminals (VSATs), enabled
NSE to rapidly expand across the length and breadth of the country.
Subsequently, after the BSE was granted the required site permissions,
it expanded its trading facilities to the remote corners of the land.

Surana PG Centre, Bangalore. - 31 -


“A STUDY ON ONLINE TRADING OF SHARES”.

Technology in NSE and BSE:

NSE:
TATA Consultancy Services, a division of Tata Sons Ltd. was
selected as the prime contractor and system integrator by the NSE to
provide a total turnkey solution for the money markets and capital
markets floor less trading system.
The aim was to enable NSE to provide nation wide electronic
trading with highest transparency in the market place. Using the client
server architecture, fault-to-learn computing and in-memory database,
Tata Consultancy Services, solution gave NSE high visibility and impact.
For the year 2006-07, the National Security Clearing and
Settlement System (NSCS) processed settlements for over 172 million
trades with a turnover of around Rs 5, 08,121 crores. In the year 2006-07
nearly 2 million contracts were traded on NSE Future and Option system,
with a national turnover of Rs. 1, 01,925 crores. Here approximately 818
companies listed in NSE.
NSE has the option for trading of securities in both Cash Trading
and Future trading. Hence, while dealing with securities an investor can
negotiate with the price listed in the NSE index.

BSE:
The stock Exchange Mumbai, popularly known as the Bombay
stock Exchange limited is the oldest stock exchange in Asia with a rich
heritage. It was established as “The Native Shares & Stock Brokers
Association” in July 1875 with 22 share brokers. It is the first stock
exchange in the country to obtain permanent recognition in 1956 from the
Government of India under the securities contracts (Regulation) Act
1956.

Surana PG Centre, Bangalore. - 32 -


“A STUDY ON ONLINE TRADING OF SHARES”.

BOLT, i.e. BSE’s online trading system is designed and developed


by CMC Ltd., now a Tata Group company. This screen based trading
system manual entry method of trading in the ring, and went line on
March 1995. This enabled BSE to provide floor-less and fully automated
screen based trading facilities in capital market instruments, with equal
access to investors all over the country.
BSE has only the option for trading of securities in Cash Trading.
Hence, while dealing with securities an investor can not negotiate with
the price listed in the BSE index.
Approximately 5639 companies listed in BSE & around 9400
brokers are trading in BSE & NSE along with 29 foreign brokers
participating in Online Trading.

One big advantage of web trading is that, market lot ceases to


matter. A registered user, just need to log in the corresponding site and
place order confirmation, which may be followed by physical slip.

With Net trading it make little different, where the investor is,; e-
broker gives him real time quotes and a chance to react immediately.

Still to catch on:


Online trading has not yet been taken off for various reasons:
I. The concept is very new.
II. Security concerns (Hacking and Connectivity)
III. Potential investors in India are yet to trust their e-brokers.

Hacking is a problem even with e-banking or e-commerce, and


potential users may well fear to live with this. Connectivity is another
major problem. Right in the middle of hectic trading one may go offline,
or the web may jam during heavy trading.

Surana PG Centre, Bangalore. - 33 -


“A STUDY ON ONLINE TRADING OF SHARES”.

SECURITIES EXCHANGE BOARD OF INDIA (SEBI)

SEBI, which was a earlier established as an administrative


body in April 1988, was given a statutory status January 1992. Controller
of Capital Issue (CCI) was abolished with a view to have SEBI as a
single agency to look after control over capital market.

SEBI Act mainly deals with formation, management,


staffing, accounts, reports, and audit of SEBI etc. It is the supervisory and
regulatory authority for the stock and capital markets.

SEBI functions:

The SEBI can take following measures to fulfill its objectives:-

 Regulate business in stock exchanges and other securities market.


 Control and Regulation of the stock Exchanges and stock brokers.
 Development of stock and capital markets in the right direction.
 Registering and regulating self-regulatory organizations (like stock

Exchanges).
 Promoting investors education and training of intermediaries.

 Prohibiting fraudulent and unfair trade practices relating to

Securities Market.
 Prohibiting insider trading in securities.
 To ensure investor protection.

Surana PG Centre, Bangalore. - 34 -


“A STUDY ON ONLINE TRADING OF SHARES”.

SEBI Guidelines:

Highlights of the guidelines issued by SEBI are summarized below.

 At least 60% of each kind of securities issued by company must

offer to public subscription.


 Offer must be made through a prospectus in news papers for a

period not less than three days,


 Minimum capital for listing on stock exchanges – It should be

noted that minimum equity capital requirement for listing on


Bombay Stock Exchange is Rs. 10 crores.
 Fresh issue must be de-materialized – All fresh issue of capital
will have compulsorily get their securities admitted with all
depositories for de-materialization.
 Company shall promptly forward to Stock Exchange copies of

Annual reports, notice, circulars sent to Share Holders.

Surana PG Centre, Bangalore. - 35 -


“A STUDY ON ONLINE TRADING OF SHARES”.

PROCESS AND REQUIREMENTS OF ONLINE


TRADING OF SHARES:

Online Trading is one the true revolutions brought about by the


internet. Few things have changed as much as trading stocks and other
securities, especially for the average person. Where any can come to take
part in the amazing opportunities of the stock market.

But this kind of access also has dangers. While the average person
can now buy stock, participate in the forex market, buy bonds, and
purchase shares in mutual funds, the average person is certainly not
guaranteed success in those investments. The information is provided
here is designed to help familiarize the beginning investor with of the
most basic concepts of the stock market and stock market trading. Stock
market trading system or form of analysis for your investing strategy.

Online Trading is the mechanism of buying /selling securities via


the Internet.

Surana PG Centre, Bangalore. - 36 -


“A STUDY ON ONLINE TRADING OF SHARES”.

Online Trading Process:

The client places an order via net by logging


on to his broker’s site

The broker accepts and executes the order. And


places it with the exchanges

The exchange accepts the order after


checking the share limit for the day

The broker makes the payment either directly


via the client’s bank account or pays through
his own account and recovers it later from the
client

The exchange receives money and completes


the settlement

The client is intimated about the settlement


either through the De-Mat account or via e-
mail

Surana PG Centre, Bangalore. - 37 -


“A STUDY ON ONLINE TRADING OF SHARES”.

The various transaction involved in the online trading can be


shown from the point of view of the
• Client
• Broker
• Stock Exchange

Client:
Client is a person and he receiving some benefits from brokers
or institutions and is an ultimate consumer.

Broker:
An individual or firm who acts as an intermediary between a
buyer and seller, usually charging a commission. For securities and
most other products, a license is required.

Stock Exchange:
Stock Exchange is an organized market place where securities are traded.
The Government, semi- Government Bodies, public sector undertakings
and companies for borrowing funds and rising resources issue these
securities

Surana PG Centre, Bangalore. - 38 -


“A STUDY ON ONLINE TRADING OF SHARES”.

Benefits of Online Trading:

This mode of trading has shifted the trading power from stockbrokers to
individual investors. The advantages are that it:

 Ensures the best price for the investors:


This technique offers the best price for the buying and selling
transactions of the investors, by ensuring proper matching of their
orders within the communication network itself.

 Offers liquidity to the investors:


Online trading offers 24-hour trading facilities for longer
hours when compared to the traditional stock exchanges. This
provides added liquidity to the investors.

 Offers greater transparency:


Online trading gives transparency to the investors by providing
them an audit trail.

 Enables hassle free trading:


Online trading integrates the bank, the brokerage firm and the
demat accounts, which leads to easy and paperless trading for the
client.

Surana PG Centre, Bangalore. - 39 -


“A STUDY ON ONLINE TRADING OF SHARES”.

 Allows quick trading:


The investor will be able to execute the entire trading transaction,
right from logging on to the broker’s site to the execution and
settlement of his bank account, in very short period of time.

 Provides a level playing field:


Trading on the net, gives even the smallest retail investor access
to information that earlier was available only to the big traders.

 Reduces the settlement risk:


This method of trading reduces the settlement risk for the
investor, as in this case no short sale is possible I.e. the seller will not
be able to sell the securities unless he has their actual possession.

Basic Risks Involved in Trading on the Stock Exchanges:

In considering whether to trade or authorize someone to trade for


you, you should be aware of or must get acquainted with the
following:

 Risk of higher volatility:


Volatility refers to the dynamic changes is price that securities
undergo when trading activity continues on the stock exchange.
Generally, higher the volatility of a security /contract, greater is its
price swings.

Surana PG Centre, Bangalore. - 40 -


“A STUDY ON ONLINE TRADING OF SHARES”.

 Risk of lower liquidity:


Liquidity refers to the ability of market participants to buy and
/or sell securities / contracts expeditiously at a competitive price and
with minimal price difference. Generally, it is assumed that more the
numbers of orders available in a market, greater are the liquidity.

 Risk of wider spreads:


Spreads refer to the difference in best buy and best sell price. it
represents the differential between the piece of buying a security and
immediately selling it or vice versa.

 Risk reducing orders:


Most exchanges have a facility for investors to place “limit
orders”, “stop loss orders”, etc.
• A “market” order will be executed promptly, subject
to availability of orders on opposite side.
• A “limit” order will be executed only at the “limit”
price specified for the order or a better price.
• A stop loss order is generally placed “away” from
the current price of stock/contract, and such order gets
activated if and when the stock/ contract reaches, or trades
through, the stop price.

 Risk of News Announcements:


Issuers make news announcements that may impact
the price of the securities/ contract.

Surana PG Centre, Bangalore. - 41 -


“A STUDY ON ONLINE TRADING OF SHARES”.

Investors Rights and Obligations:

• You should familiarize your self with the protection accorded to


the money or other property you may deposit with your member,
particularly in the event of a default in the stock market or the
broking firm’s insolvency.
• Before you begin to trade, you should obtain a clear idea from your
member of all brokerage, commission, fees and other charges,
which will be levied on you for trading.
• In case where a member surrenders his membership, NSE/BSE
gives a public notice inviting claims, if any, from investors.
• In case where a member is expelled form trading membership,
NSE/BSE gives a public notice inviting claims, if any, from
investors.

Surana PG Centre, Bangalore. - 42 -


“A STUDY ON ONLINE TRADING OF SHARES”.

General Conditions Applicable to Deal in Cash /Derivative


Segments of NSE/BSE:
(These conditions shall be apply on and effective from the date of this
agreement)

Definition:
Meaning of the phrases used in the agreement unless otherwise
specified or unless the context otherwise requires, the meaning of the
following words and phrases used in this agreement shall be under

 “He” means she and “she” means he

 Singular means plural and plural means singular

 SEBI means Securities Exchange Board of India

 CLIENT means any person, natural or legal with


whom this agreement is entered into.

 Exchange/s means National Exchange of India


Limited and Stock Exchange Mumbai.

 Sub broker means any person appointed as sub broker


and holding valid certificate of registration issued
bySEBI

 Shares means and include all kinds of securities


permitted by Exchange/s permitted for trading or
dealing by the Exchange/s.

Surana PG Centre, Bangalore. - 43 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHAPTER - IV

ANALYSIS AND INTERPRETAION OF DATA

Based on the primary data collected the analysis has been made the
following data.
TABLE – 1

THE TABLE SHOWING SEX WISE DISTRIBUTION OF


RESPONDENTS

PARTICULARS NO OF PERCENTAGE
RESPONDENTS

Male 40 80 %
Female 10 20 %
Total 50 100 %

CHART NO-1

CHARTS SHOWING SEXWISE DISTRIBUTION OF


RESPONDENTS

40

40

30 Male
10 Female
20

10

0
NO OF RESPONDENTS

Surana PG Centre, Bangalore. - 44 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

From the above table among 50 respondents the majority of


respondents are from a male group whose count was 40 (80%) The
female group makes a share of 10 (20%) total sample respondents.

INTERPRETATION
The above data clearly specifies that male respondents are more then
female respondents

TABLE – 2
THE TABLE SHOWING AGE GROUP DISTRIBUTION
OF THE RESPONDENTS

PARTICULARS NO OF PERCENTAGE
RESPONDENTS
Less Than 25 Years 7 14 %
25 – 35 Years 10 20 %
35 – 45 Years 15 30 %
45 – 55 Years 10 20 %
55 & above 8 16 %
Total 50 100 %
CHART NO- 2

CHART SHOWING AGE GROUP DISTRIBUTION OF


RESPONDENTS

15

15
10 10
8
10 7

0
NO OF RESPONDENTS

Less Than 25 Years 25 – 35 Years 35 – 45 Years 45 – 55 Years 55 & above

Surana PG Centre, Bangalore. - 45 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

From the above table shows among the 50 respondents 7 (14%)


respondents are below 25 years of age, 10 (20%) respondents are 25 –35
years of age, 15(30%) of respondents are comes under 35 – 45 age
groups , 10 (20%) respondents are comes under 45-55 years and only 8
(16%) respondents are above 55 years.
INTERPRETATION
The majority of investors are 35- 45 age group who trades on line.
TABLE NO-3
TABLE SHOWING QUALIFICATION OF RESPONDENT

PARTICULARS NO OF PERCENTAGE
RESPONDENTS
Under Graduate 12 26 %
Graduate 18 36 %
Post Graduate 20 40 %
Others 0 0
Total 50 100 %

CHART NO- 3

CHART SHOWING THE QUALIFICATION OF


RESPONDENTS

20
18
20

15 12 Under Graduate
Graduate
10
Post Graduate
Others
5
0
0
NO OF RESPONDENTS

Surana PG Centre, Bangalore. - 46 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

The above table shows among the 50 respondents 12 (24%) respondents


are graduate, 18 (36%) respondents are graduate, 20 (40%) respondents
are comes under post graduate.

INTREPRETATION

With reference to qualification of members trading on line post graduates


contribute 40%.
TABLE NO – 4
THE TABLE SHOWS THE OCCUPATION OF THE
INVESTORS

PARTICUALARS NO OF PERCENTAGE
RESPONDENTS
Business men 20 40 %
Salaried Employee 10 20 %
Retired Employee 6 12 %
Professional 10 20 %
Student 4 8%
Others 0 0
Total 50 100 %
CHART NO-4

CHART SHOWING THE OCCUPATION OF


INVESTORS

25
20
20 Business men
Salaried Employee
15 Retired Employee
10 10
10 Professional
6 Student
4
5 Others
0
0
NO OF RESPONDENTS

Surana PG Centre, Bangalore. - 47 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
From the above table out of 50 respondents, 20 (40%) are business men,
10 (20%) respondents are salaried employees, 6 (12%) are Retired
employees and Professional are 10 (20%) and only 4 (8%) respondents
are Students.
INTERPRETATION
With reference to occupation businesses men majorly use on line trading
contributing 40%.
TABLE NO – 5
ANALYSIS OF THE INVESTMENTS

SECTORS FREQUENCY PERCENTAGE


Banking 8 16 %
Insurance 13 26 %
Manufacturing 3 6%
Infrastructure 10 20 %
IT 11 22 %
Others 5 10 %

TOTAL 50 100 %

CHART NO-5

CHART SHOWING THE INVESTMNETS ACCORDING


TO DIFFERENT SECTORS

14 13

12 11 Banking
10
10 Insurance
8
Manufacturing
8
5 Infrastructure
6
3 IT
4
Others
2
0
FREQUENCY

Surana PG Centre, Bangalore. - 48 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
Among the 50 respondents, 16 % of them have invested in
“Banking”, 26 % in “Insurance”, and 6 % in “Manufacturing”, 20 % in
“Infrastructure”, 22 % in “I T” and 10% in “others”.

By the above table we can consider that 26% insurance, and 20% in
infrastructure, 22%in I T it has are the major investments sectors in
online trading of shares.
INTERPRETATION
Major investment is done by investors through insurance sectors i.e 13%.
TABLE NO – 6
ANALYSIS OF DURATION OF INVESTMENT OF
INVESTORS
PARTICULARS NO OF PERCENTAGE
RESPONDENTS
Less then 1 year 21 42 %
1 to 2 year 7 14 %
2 to 4 year 12 24 %
4 to 6 year 5 10 %
More than 6 Year 5 10 %
TOTAL 50 100 %

CHART NO - 6
CHART SHOWING THE DURATION OF INVESTOR'S
INVESTMENT

25 21
20 Less then 1 year
15 12 1 to 2 year
2 to 4 year
10 7
5 5 4 to 6 year
5 More than 6 Year

0
NO OF RESPONDENTS

Surana PG Centre, Bangalore. - 49 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS:
Among 50 respondents, only 21 people are investing in Online
Trading of Shares for less then 1 year, 7 for1-2 years, 12 for2- 4 years, 5
for 4-6 years and 5 for more than 6 years. It means that 42 % people are
investing for less then 1 year, 14% for 1-2 years, 24 % for 2-4 years, and
10 % each for 4-6 years and more than 6 years.

INTERPRETATION

The numbers of investors in Online Trading of Shares are


increasing due to increased awareness and prospects of this form of
investment. A gradual increase in the participation in “Online Trading of
shares” can be easily seen in the above table and following graph.

The proper mix of moderate risks and high returns are attracting the
investors to Online Trading of Shares.

Surana PG Centre, Bangalore. - 50 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO –7
ANALYSIS OF SOURCES OF INFORMATION FOR
INVESTORS
PARTICULARS NO OF PERCENTAGE
RESPONDENTS
News Papers 14 28 %
Journals 4 8%
T.V News 9 18 %
Internet 10 20 %
Family & Friend 2 4%
Brokers 11 22 %
TOTAL 50 100 %

CHART NO-7

CHART SHOWING THE SOURCES OF INFORMATON


TO INVESTORS

14
14
12 11
10 News Papers
10 9
Journals
8 T.V News
6 4 Internet
4 2 Family & Friend
2 Brokers
0
NO OF RESPONDENTS

ANALYSIS
In Bangalore are among 50 respondents, 28 % get the required
information from “News Paper”, followed by 22 % from “Broker”, 20
% from “Internet”, 18 % from “T.V. News’, 4 % from “Family &
Friends”, and remaining 8 % from “Journals” respectively for their
requirement.

Surana PG Centre, Bangalore. - 51 -


“A STUDY ON ONLINE TRADING OF SHARES”.

INTERPRETATION

Online traders in Bangalore still depend upon the “News Papers”


for their required information in the Online Trading. Being the cheapest
and readily available means of information, the news papers are more
favorite among them. The second favorite source of information is the
brokers themselves. The brokers give all the necessary information to the
online traders with the periodic updated information of those, followed by
T.V News, Family and Friends and Journal

In the century of Electronic Media, the Printed Media is still a


reliable and favorite source of information for online traders.

Surana PG Centre, Bangalore. - 52 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO –8

OBSERVATION OF THE BSE/NSE SENSITIVE


INDEXES ON THE INVESTMENT

PARTICULARS Yes No TOTAL

NO OF 41 9 50
RESPONDENTS

PERCENTAGE 82 % 18 % 100 %

CHART NO-8

CHART SHOWING THE SESITIVITY INDEX OF


NSE/BSE

41
50

40
YES
30
NO
9
20
10

0
NO OF RESPONDENTS

ANALYSIS
Among 50 respondents, 41 people analyze the chart pattern of
BSE/NSE sensitive indexes before they go for investing in any security,
while 9 do not. That is 82 % of the investors go for the analysis of chart
pattern and remaining 18 % does not.

Surana PG Centre, Bangalore. - 53 -


“A STUDY ON ONLINE TRADING OF SHARES”.

INTERPRETATION

Analysis of chart pattern of sensitive indexes is concerned with


“Technical Analysis”. Since the technical analysis deals with the supply
and demand of securities as reflected in the behavior of the market, the
investors go for it. They are more concerned about the demand and
supply position of securities, as they influence the price of the securities.
Online traders thus do not distinguish between current income and capital
gains.

TABLE NO – 9

FACTORS CONDUCTED BY INVESTORS FOR


MAKING INVEVESTMENT
FACTORS Most Very Important Un Not at all TOTAL
Important Important Important Important

Time 14 14 19 0 50

Liquidity 13 19 13 4 1 50
Returns 19 10 13 8 0 50
Safety 16 19 8 5 2 50
Risk 19 10 21 0 0 50
Past 50
Performance 7 16 19 4 4

Marketability 9 7 18 16 6 50
Capital 11 16 14 4 5 50
Appreciation

Surana PG Centre, Bangalore. - 54 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHART N0-9.1

CHART SHOWING THR DIFFERENT FACTORS


MOST IMPORTANT FOR ON LINE TRADING
Time
20 19 19
16 Liquidity
15 14 13 Returns
11 Safety
10 9 Risk
7 Past Performance
5
Marketability
0 Capital Appreciation
Most Important

CHART N0-9.2

C H AR T S H OW IN G T H E FAC TOR W H IC H IS V E R Y
IMP OR TAN T FOR ON LIN E TR AD IN G
Tim e
20 19 19 Tim e
16 16 Liquidity
15 14 Returns
S afety
10
10 10
Risk
7 P ast P erform anc e
5 P ast P erform anc e
M ark etability
0 Capital A pprec iation
V ery Im portant
Capital A pprec iation

Surana PG Centre, Bangalore. - 55 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHART N0 - 9.3

CHART SHOWING THE FACTOR WHICH IS IMPORTANT FOR


ON LINE TRADING
Time
25 Time
21 Liquidity
20 19 19 18
Returns
15 13 13 14 Safety
Risk
10 8
Past Performance
5 Past Performance
Marketability
0 Capital Appreciation
Important
Capital Appreciation

CHART N0 - 9.4

C H AR T S H OW IN G T H E FAC TOR S W H IC H IS U N IMP OR T AN T


F OR ON LIN E T R AD IN G
Tim e
16
16 Tim e
14 Liquidity
12 Returns
10 S afety
8
8 Ris k
6 5 P ast P erform ance
4 4 4
4 P ast P erform ance
2 M ark etability
0
0 Capital A ppreciation
Un Im portant
Capital A ppreciation

Surana PG Centre, Bangalore. - 56 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHART N0 - 9.5

CHART SHOWING THE FACTOR WHICH IS NOT AT ALL


IMPORTANT FOR ON LINE TRADING
Time
6
6 Time
5 Liquidity
5
4 Returns
4
Safety
3 Risk
2
2 Past Performance
1 Past Performance
1
0 0 0 Marketability
0 Capital Appreciation
Not at all Important
Capital Appreciation

ANALYSIS

The 18 % investors has preferred to analyze “Return” at first as the


“Most Important” factor followed by, 17 % called “Safety” as the “Very
Important” factor, 18 % called “Risk” as “Important” factor, 36 % called
“Marketability” as the “Un Important” factor, and 42 % called “Capital
Appreciation” as the “Not at all Important” factor, before investing in
Online Trading of any Security. This can be clearly understood by the
following graphs.

INTERPRETATION

The investors of “Online Trading of Security, are very sensitive


towards the return they expect from their investments. Along with this
fact, they are seeking safety in their investments with avoiding risk as
much as possible. These investors do not consider difference between the
capital appreciation of their fund and the growth of their capital invested.

Surana PG Centre, Bangalore. - 57 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO-10

ANALYSIS OF FACTORS INFLUENCING ON


INVESTMENTS

PARTICULARS Most Very Un Not At All TOTAL


Important Important Important Important Important
Economic 50
Growth 18 10 16 6 0
Monsoon and 9 13 16 11 1 50
Agriculture
Inflation 7 18 20 4 1 50
Interest Rates 11 14 20 4 1 50
Foreign 50
Exchange 9 15 14 8 4
Reserve
Tax Rates 11 14 14 11 0 50
Political 50
Situation 11 11 15 10 3
International 50
Changes in 10 11 11 14 4
Capital Market

CHART NO –10.1

CHART SHOWING THE MOST IMPORTANT FACTORWHICH


INFLUENCE THE INVESTMENT

18
20
15 11 11 11 10
9 9
10 7
5
0
Most Important

Economic Growth Monsoon and Agriculture


Inflation Interest Rates
Foreign Exchange Reserve Tax Rates
Political Situation International Changes in Capital Market

Surana PG Centre, Bangalore. - 58 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHART NO – 10.2

C H A R T S H O W IN G T H E V E R Y IM P O R T A N T F A C T O R W H IC H
IN F L U E N C E T H E IN V E S T M E N T
20 18
13 1 4 15 14
10 11 11
10

0
V ery Im po rta n t

E c on om ic G row th M o ns oo n an d A g ric u ltu re


M o ns o on a nd A gric u lture In fla tio n
Inte re s t R a te s F oreign E x c ha n g e R es erve
F o re ign E x c h an ge R e s e rve Tax R ates
P o litic a l S itu a tio n In te rn ation al C ha ng e s in C a pital M a rk e t
Inte rn a tio na l C h an ge s in C ap ita l M a rk et

CHART NO – 10.3

CHART SHOWING THE IMPORTANT FACTOR WHICH


INFLUENCE THE INVESTMENT
20 20
20
16 16 15
14 14
15
11
10

0
Important

Economic Growth Monsoon and Agriculture


Monsoon and Agriculture Inflation
Interest Rates Foreign Exchange Reserve
Foreign Exchange Reserve Tax Rates
Political Situation International Changes in Capital Market
International Changes in Capital Market

Surana PG Centre, Bangalore. - 59 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHART NO – 10.4

CHART SHOWING THE UNIMPORTANT FACTORS INFLUENCING THE


INVESTMENT
14
14
12 11 11
10
10
8
8
6
6 4 4
4
2
0
Un Important

Economic Growth Monsoon and Agriculture


Monsoon and Agriculture Inflation
Interest Rates Foreign Exchange Reserve
Foreign Exchange Reserve Tax Rates
Political Situation International Changes in Capital Market
International Changes in Capital Market

CHART NO – 10.5

CHART SHOWING THE FACTORS WHICH IS NOT AT ALL IMPORTANT


FOR INVESTMENT

0
Not At All Important

Economic Growth
Monsoon and Agriculture Monsoon and Agriculture
Inflation Interest Rates
Foreign Exchange Reserve Foreign Exchange Reserve
Tax Rates Political Situation
International Changes in Capital Market International Changes in Capital Market

Surana PG Centre, Bangalore. - 60 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
The 21 % investors has preferred to analyze “Economic Growth” at
first as the “Most Important” factor followed by, 18 % called “Inflation”
as the “Very Important” factor, 16 % called “Interest Rates” as
“Important” factor, 20 % called “International in Capital Market” and
”Tax Rates” as the “Un Important” factor, and 29 % called “Foreign
Exchange Reserve” as the “Not at all Important” factor, before
investing in Online Trading of any Security. This can be clearly
understood by the following graphs.

INTERPRETATION

The Stock market does not operate in vacuum. It is an integrated


part of the whole economy of the country. The growth rate of the

Economy increases the participation in the “Online Trading of


Securities”. As inflation erodes the purchasing power of the investors,
they prefer to have a close watch on inflation rates before investing. A
low rate of interest is preferred by investors, since when cost of money is
high one cannot compete effectively.

The effect of monsoon is seemed to be less on the online traders. And the
foreign exchange reserve gets the lowest concern from investors, since
our country has enough of it, i.e., second highest in the world.

Surana PG Centre, Bangalore. - 61 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO–11

CONSIDERATION OF RISK FACTORS WHILE


INVESTING

Rank Rank Rank Rank Rank Rank


TYPE OF RISKS 1 2 3 4 5 6 TOTAL
50
Market Risk 8 11 10 5 7 9
50
Interest-rate Risk 4 14 9 16 4 3
Purchasing Power 50
Risk 11 4 14 7 6 8

50
Business Risk 9 15 5 10 5 6
50
Financial Risk 14 2 4 4 12 14
Default/Insolvency 50
Risk 5 3 9 8 15 10

CHART NO-11

CHART SHOWING THE VARIOUS RISK FACTORS

18
16
16 15 15
14 14 14
14
12
12 11
10 10 10
10 9 9 9
8 8
8 7 7
6 6
6 5 5 5
4 4 44
4 3 3
2
2
0
Rank 1 8 4 11 9 14 5
Market Interest- Purchasing Power Business Financial Default/Insolvency
Risk rate Risk Risk Risk Risk Risk

Rank 2 Rank 3 Rank 4 Rank 5 Rank 6

Surana PG Centre, Bangalore. - 62 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
Among the risks, 27.5 % investors ranked “Financial Risk” the
first, followed by 30 % ranked “Business Risk” as the second, 28. %
ranked “Purchasing Power Risk” as third, 32. % Ranked “Interest-rate
Risk” as fourth, 30 % ranked “Default/Insolvency Risk” as fifth, and
remaining 17.5 % ranked “Market Risk” as they prefer to cover for their
investments.

INTERPRETATION

The investors want to withdraw their funds as and when required


by them, to make specific payments at specific time periods. They thus
like to have a close watch on the debt financing of the firm they want to
invest. They don not want to invest on those firms which have uncertain
income sources. The purchasing power of the income from a given
investment is also having a great importance on their decision of
investment on a given firm. Uncertainty of future income due to
fluctuation in general level of interest-rate also concerns the investors.

Surana PG Centre, Bangalore. - 63 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 12

IMPORTANT FACTORS WHILE SELECTING A


COMPANY TO INVEST

PARTICULAR Most Very Important Un Not At All TOTAL


Important Important Important Important
50
Promoters 23 11 9 6 0
50
Management 9 23 7 11 0
50
Technology 11 16 18 5 0
Product 50
Range 10 9 21 10 0

Marketing 15 16 9 10 0 50

CHART NO -12

CHART SHOWING THE FACTORS TO CONSIDER BEFORE


INVESTING

25 23 23
21
20 18
16 16 Most Important
15
15 Very Important
11 11 11 Important
10 10 10
10 9 9 9 9
Un Important
7
6 Not At All Important
5
5
0 0 0 0 0
0
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an
em
ot

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om

ag

ar
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M
Pr

an

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M

Pr

Surana PG Centre, Bangalore. - 64 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

Before investing in a given company, 23 online traders out of 50,


rank “Promoters” as the “Most Important” factor, followed by 23 online
traders who think “Management” of the company is “Very Important”
factor to analyze. Out of 50 investors 21 take “Product Range” of the
company as “Important” factor to analyze, and 10 think, as “Marketing”
is a “Un- Important” factor. None of the traders selected any of the above
factors as “Not At All Important” factor.

INTERPRETATION

The investors are well aware of any company before investing in it.
They know who are the promoters, the efficiency of the management of
the company, the types of technology it is adopting, its product range, its
marketing policies and practices, etc. Online traders give much
importance to the promoters of the company before investing into it. As it
can be seen in above table. Management of the company is also
considered as a very vital factor; as people like to invest in a company
with an efficient management. A company with a number of products in
its hand is also considered as a good one to invest in.

People less often go for evaluating the marketing strategies of the


company before investing into it, as well satisfied with other factors like
“Management”, “Promoters”, “Product Range” etc., they find it
unnecessary.

Surana PG Centre, Bangalore. - 65 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 13

CONSIDERATING OF STAGES OF LIFE CYCLE


WHILE INVESTING

PARTICULARS NO OF PERCENTAGE
RESPONDENTS
Yes 36 72 %

No 14 28 %

TOTAL 50 100 %

CHART NO – 13

C H AR T SH OW IN G D IFFER EN T LIFE C YC LE OF IN VE STIN G

Y E S, 36

40

30
NO, 14 YE S

20 NO

10

0
NO OF RE SP ONDE NTS

Surana PG Centre, Bangalore. - 66 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

Among 50 respondents, 36 people use to analyze the life-cycle of


the particular industry before investing into it, and 14 people do not. Thus
72 % of them go for the study of industry life cycle before investing into
it, and 28 % not.

INTERPRETATION

The purpose of industry analysis is to identify those industries with


potential to earn profit for itself and for the investors. Every industry
undergoes a life-cycle. An industry doing well today may be faced with
stagnation and decline in future.

Investors like to study the phases of life-cycle of industries before


investing into a particular industry. Since Industrial Analysis is one of the
major parts of Fundamental Analysis, knowingly or unknowingly they
are conducting Fundamental Analysis within their limits.

Surana PG Centre, Bangalore. - 67 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 14

STAGE OF LIFE CYCLE OF THE INDUSTRY


PREFERRED TO INVEST
PARTICULARS Pioneering Expansion Stagnation Declining TOTAL
Stage Stage Stage Stage

NO OF
RESPONDENTS 11 14 9 2 36

PERCENTAGE 31 % 38 % 24 % 7% 100 %

CHART NO – 14

CHART SHOWING THE LIFECYCLE OF INDUSTRY TO INVEST

Declining Stage 2

Stagnation Stage 9
NO OF RESPONDENTS
Expansion Stage 14

Pioneering Stage 11

0 5 10 15

Surana PG Centre, Bangalore. - 68 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
Among 36 respondents who study the life-cycle of the industries
before investing in a particular industry, 11 like to invest in” Pioneering
Stage”, 14 like to invest in “Expansion Stage” , 9 like to invest in
“Stagnation Stage”, and remaining 2 in “Declining Stage”.

INTERPRETATION

The online traders prefer to stay as secured as possible by investing


in an industry which is growing or which has grown to its maturity. Thus
they seek benefit by investing in these two stages of life-cycle. A large
percentage of investors also like to invest in industries at “Pioneering
Stage”, showing their ability to take more risk in anticipation of more
return. A very small percentage of investors, 7 % goes for investing in
“Declining Stage”, in expect of unknown benefit they can extract with
sudden boom in the industry.

Surana PG Centre, Bangalore. - 69 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 15
INCOME FROM INVESTMENTS OF ON LINE
TRADING SHARES

Particulars NO OF Percentage
RESPONDETS
No Income 10 20 %
Below Rs.1, 00,000 30 60 %
Rs.1, 00,000 to Rs.2, 00,000 6 12 %
Rs.2, 00,000 to Rs.3, 00,000 4 8%
Rs.3, 00,000 to Rs.4, 00,000 0 0
Rs.4, 00,000 & Above 0 0
Total 50 100 %

CHART NO-15

Surana PG Centre, Bangalore. - 70 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

Among the 50 respondents, 10 have no income, 30 are getting below


1,00,000., 6 are getting 100,000 – 2,00,000., 4 are getting 200,000. -
3,00,000., and no one is getting 3,00,000 – 4,00,000, and above.

INTERPRETAION

Majority of respondents are getting income in online trading of shares in


the range of below 1, 00,000 (60%). 20% of respondents are getting
negatives income because of their neglected or improper information
about shares. Who are not satisfied in getting the online shares, so
increasing the awareness about Online Trading of Shares?

Surana PG Centre, Bangalore. - 71 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 16

ANALYSIS OF ANNUAL SAVINGS OF INVESTORS


Particulars NO OF Percentage
RESPONDENTS
Below Rs.10,000 30 75 %
Rs.10,000 to Rs.20,000 6 15 %
Rs.20,000 to Rs.30,000 4 10 %
Rs.30,000 to Rs.40,000 0 0
Rs.40,000 & Above 0 0
Total 40 100 %

CHART NO – 16

C H A R T S H O W IN G T H E A N N U A L S A V IN G S O F N V E S T O R S

35
30
30

25 B elow R s .10,000
R s .10,000 to R s .20,00 0
20
R s .20,000 to R s .30,00 0
15
R s .30,000 to R s .40,00 0
10 R s .40,000 & A b ove
6
4
5
0 0
0
N O O F R E S P O N D E N TS

Surana PG Centre, Bangalore. - 72 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANANLYSIS
Among the 40 respondents 75% were saving below 10,000., 15% are
Rs.10,000 to 20,000., 10% are Rs. 20,000 to 30,000., and No one is
saving are saving are Rs.30,000 to 40,000 and Rs.40,000 & above.

INTERPRETATION
Maximum respondents are savings (30) in this scale of below 10,000
which majorly contributes 75%.

Surana PG Centre, Bangalore. - 73 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 17

ANALYSIS OF PREFERRED MARKET STRUCTURE

PARTICULARS Absolute Perfect Imperfect TOTAL


Monopoly Competition Competition

FREQUENCY 24 17 9 50
PERCENTAGE 48 34 18 100

CHART NO-17

C H A R T S H O W IN G T H E M A R K E T S T R U C T U R E

30

25

20
A b s o lute M on o po ly
15 P e rfe c t C o m p etition
Im p erfe c t C om pe titio n
10

0
FRE QUE NCY

Surana PG Centre, Bangalore. - 74 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
Among 50 respondents, 48 %age of online trader prefer “Absolute
Monopoly”, followed by 34 % of them preferring “Perfect
Competition” and remaining 18 %age go for “Imperfect Competition”.

INTERPRETATION

Online traders prefer to invest in a company which is market


dominant by nature. As these companies dominate the market because of
their core competence like technology or patent rights etc. thus allowing
the investors to milk their investment. 35 % investors, who prefer to
invest in an industry where no single company is dominating, follow
them, thus they go for moderate risk involved investments with limited
growth of their money.

Still a percentage of investors, that is, 18 % of them, like to invest in


an industry with “Imperfect Competition”, since it lies between
“Absolute Monopoly” and “Perfect Competition”, thus enjoying benefits
of both the form of markets.

Surana PG Centre, Bangalore. - 75 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 18

IMPORTANCE OF THE SHARE PRICE MOVEMENT


BSE/NSE INDEXES ON THE INVESTMENTS

PARTICULARS Most Very Important Un Not At All Total


important Important Important Important

FREQUENCY
14 18 11 7 0 50

PERCENTAGE
28 36 22 14 0 100

CHART NO-18

CHART SHOWING THE BSE/NSE SENSEX SHARE PRICE


MOVEMENTS

Not At All Important 0

Un Important 7

Important 11
FREQUENCY
Very Important 18

Most important 14

0 5 10 15 20
FREQUENCY

Surana PG Centre, Bangalore. - 76 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
Among 50 respondents when asked about the importance of the
share price movements in BSE/NSE indexes on their decision of
investing in a particular security, 28 % says its “Most Important”, 36 %
says its “Very Important”, 22 % says its “Important”, 14 % says its “Un
Important”, and none says its “Not At All Important”.

INTERPRETATION

Online traders prefer technical analysis of the chart pattern. Most


of them take care of the movements of the share prices in the BSE/NSE
indexes. Only a few of them, that is, 15 % of them take it as un-important
factor, it shows their inability to analyze the chart patterns. Though this
group has not rejected the importance of the movement of share prices in
these indexes on their investments

Surana PG Centre, Bangalore. - 77 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 19

ANALYSIS OF THE TERMS OF PATTERN

PARTICULARS NO OF RESPONDENTS PERCENTAGE


Short term 30 60
Long term 20 40
Total 50 100

CHART NO-19

C H AR T S H O W IN G T H E AN AL YS IS O F T E R M S

35
30
30

25
20
20 S hort term
15 Long term

10

0
NO O F RE S P O NDE NTS

Surana PG Centre, Bangalore. - 78 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS
Among the 50 respondents 30 respondents are investing in Short term and
20 respondents in Long term investments.

INTERPRETATION
There fore Short term investors is popular because it has 60% of the
investment in Online Trading of Shares. Short term investments yields
probably the higher returns.

Surana PG Centre, Bangalore. - 79 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 20

ANALYSIS OF AVERAGE HOLDING PERIOD FOR


INVESTORS

1 Month More
PARTICULARS 1 Week to 3 Within 6 Within than 1 TOTAL
Months Months 1 Year Year

NO OF
RESPONDENTS 9 14 17 8 2
50
PERCENTAGE
18 % 28 % 34 % 16 % 4% 100 %

CHART NO-20

CHART SHOWING THE AVERAGE HOLDING PERIOD OF


INVESTORS

18 17

16
14
14
1 Week
12
1 Month to 3 Months
10 9
8 Within 6 Months
8
Within 1 Year
6
More than 1 Year
4
2
2
0
NO OF RESPONDENTS

Surana PG Centre, Bangalore. - 80 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

Among 50 respondents, the average holding period for 9 is “1


Week”, 14 is “1 Month to 3 Month”, 17 is “Within 6 Month”, 8 is
“Within 1 Year”, and 2 is “More than I Year”. Their respective
percentages are 18 %, 28 %, 34 %, 16 %, and 4 % respectively.

INTERPRETATION

Investors of online trading of securities like to hold their securities


for a minimum period. It can be seen by the fact that 80 (18+28+34) % of
the investors hold their securities for 6 or less than 6 months. But they
like to watch the movements of the market for a while before going for
selling their assets, as only 18 % of them hold their securities for 1 week
or less than 1 week.

But still investors are there who would like to hold the securities for
almost one year, and a negligible of them for more than one year. The fast
moving prices of securities and the updated information helps the online
traders to take quick and effective decision at right time.

Surana PG Centre, Bangalore. - 81 -


“A STUDY ON ONLINE TRADING OF SHARES”.

TABLE NO – 21

FAMILIARITY OF ONLINE TRADING SERVICES

PARTICULARS NO OF PERCENTAGE
RESPONDENTS
36 %
ICICI 18
24 %
HDFC 12
20 %
Peninsular capital market Ltd 10
8%
Motilal Oswal 4
12 %
Kotak 6
0
Tata td Waterhouse 0
TOTAL 50 100 %

CHART NO-21

CHART SHOWING T HE FAM ILIARIT Y OF ON LINE SERVICES

18
20

15 12
10
10 6
4
5
0
0
NO OF RESPONDENTS

ICICI HDFC Peninsular capital market Ltd Motilal Oswal Kotak Tata td W aterhouse

Surana PG Centre, Bangalore. - 82 -


“A STUDY ON ONLINE TRADING OF SHARES”.

ANALYSIS

Among the 50 respondents, 36 % are familiar with “ICICI”, 26 %


with “HDFC”, 20 % with “Peninsular capital market Ltd”, 8 % with
“Karvy”, 12 % with “Kotak”, and none with “Tata td Waterhouse”.

INTERPRETATION

In Bangalore, the online traders are aware of ICICI, HDFC and


Peninsular capital market Ltd. As they count for 84 (36+24+20) %. An
excellent service and awareness helps them to win the confidence of
investors.

Surana PG Centre, Bangalore. - 83 -


“A STUDY ON ONLINE TRADING OF SHARES”.

CHAPTER - V

SUMMARY OF FINDINGS, SUGGESTIONS AND


CONCLUSION

A) FINDINGS:

1. The Male investors 80 % are highly interested in online trading of


shares and Female investors are not so much interested.

2. In the age group of 35 – 45 years (30%) are more interested


investment in Online Trading of Shares and at the age of 25 – 35
years (20%) and 45 – 55 years (20%) are equally interested, only
16% are interested above 55 years.

3. The majority of investors are post graduates (40%) because they


are highly interested in share market. The next majority is Graduate
(36%), and under graduates are only 24%.

4. The Business men 40% are more interested in investments of

shares because of them are having very good knowledge about


share market and its dealings Salaried employee (20%) and
Professional 20% are not having much knowledge about share
market and retired employees and Students 24% are least interested
in investment in online trading of shares.

5. In the insurance sectors 26% are majority invested because it is

more beneficial to the investors and following the next majority IT


22% and Infrastructure 20% are also benefit to the investors and
32% are much selected from other sectors.

Surana PG Centre, Bangalore. - 84 -


“A STUDY ON ONLINE TRADING OF SHARES”.

6. The majority of investors 42% are investing lessthan one year

because in recent times share market is very popular to invest and


have high returns and 4 – 6 years and above 6 years investors are
only 20%.

7. The majority collected information through the newspapers (28%)


because it is cheaper than any other sources of information and
have a detailed data and following the next brokers 22% and
internet 20%.

8. From the analysis of data collected we can know that 82% of

investors follow the BSE/NSE sensex chart pattern. 18% investors


are not following chart pattern.

9. Risk (18%) and Return (18%) are both considered most important
factors while investing in shares because they are more effective
factors and capital appreciation are not at all important.

10.The growth rate of the economy 21% increases the participation in


the “Online Trading of Shares”. As inflation 18% erodes the
purchasing power of the investors, they prefer to have a close
watch on inflation rates before investing. A low rate of interest is
preferred by investors, since when cost of money is high one can
not compete effectively.

11.The effect of monsoon is seemed to be less on the online traders.


And the foreign exchange reserve gets the lowest concern from
investors, since our country has enough of it, i.e., second highest in
the world.

Surana PG Centre, Bangalore. - 85 -


“A STUDY ON ONLINE TRADING OF SHARES”.

12. Financial risks 27.5% is most important while investing and it is

considered by the investors followed by business risks and


investment risks.

13.Online traders give much importance to the promoters (23)of the


company before investing into it. Management (23) of the
company is also considered as a very vital factor; as people like to
invest in a company with an efficient management. A company
with a number of products (21) in its hand is also considered as a
good one to invest in.

14.Investors like to study 72 % the phases of life-cycle of industries


before investing into a particular industry.

15. The online traders prefer to stay as secured as possible by investing

in an industry which is growing 38% or which has grown to its


maturity 24%.

16. The majority investors 60 % are getting income form shares below

Rs. 1, 00,000. And respondents who are earning income above Rs.
100,000 (20%) are only 10.

17.Online traders prefer technical analysis of the chart pattern. Most


of them take care of the movements of the share prices in the
BSE/NSE indexes.

18.The majority of investors 75 % the making saving below Rs.


10,000 and above 10,000 savings is only by 25 %.

19. Short term investors are more than the Long term investors because

they have fear that if they hold shares for long period then will
incur the loss.

Surana PG Centre, Bangalore. - 86 -


“A STUDY ON ONLINE TRADING OF SHARES”.

20.Investors of online trading of shares like to hold their shares for a


minimum period. The fast moving prices of the shares and the
updated information helps the online traders to take quick and
effective decision at right time.

21. In Bangalore, the online traders are aware of ICICI 36%, HDFC

24% and Peninsular Capital Market Ltd. services 20 %. An


excellent service and awareness helps them to win the confidence
of investors.

22. Online trade the awareness of “Online Trading of Shares” is less in

the traditional investors, showing the need to inform them about it,
and educate them for the investments.

Surana PG Centre, Bangalore. - 87 -


“A STUDY ON ONLINE TRADING OF SHARES”.

B) SUGGESTIONS

1. The investors should make more investments in “Online Trading of


Shares” as constructing their portfolio. This way they can get more
return from their portfolio.

2. The female investors are less interested in investments so they have


to be encouraged.

3. In the age group of above 55 years are invested very low they have
encourage to invest in online trading shares. Because the age group
includes retired employees.

4. In the shares market retired employee and professionals and

students is less knowledge about share trading they have help to


increases the knowledge about online trading of shares.

5. While constructing the portfolio, the investors should stress more

on capital appreciation, as mere growth of capital without the


growth of purchasing power nullify the growth of capital.

6. Online traders should also take into account the “Monsoon and
Agricultural” factor before investing. Still large part of the earning
of our country come from the agriculture and it ultimately depends
on monsoon. So the economic condition of our country is lot more
dependent on this factor.

7. People should analyze the marketing strategy of a company, before


investing into it. The marketing function brings the revenue and
ultimately profit to the company and its owners.

Surana PG Centre, Bangalore. - 88 -


“A STUDY ON ONLINE TRADING OF SHARES”.

8. Online traders should make use of Internet more while making


decision on their investments in online Share market. The use of
Internet can help them to get more and more accurate information,
and hence increase their efficiency.

9. The government and concerned authority like SEBI should take


more efforts to educate people about the “Online Trading of
Shares”, and increase the awareness among them.

Surana PG Centre, Bangalore. - 89 -


“A STUDY ON ONLINE TRADING OF SHARES”.

C) CONCLUSION:

The investors of “Online Trading of Shares” are very sensitive to


the return on their investment. They use to have a close watch on the debt
financing, the promoters, the product range and the management of the
company, where they want to invest. As a part of their “Economic
Analysis”, they prefer to consider inflation and interest rates of the
economy. While selecting a given industry to invest, these investors like
to invest an industry, which is growing, or at its maturing stage.

The preferred market structure of investors to invest is one, which


is dominated by a single company. Online traders analyze the BSE/NSE
sensitive indexes to know the demand and supply situation of shares in
the market. The fast moving prices of the securities and the updated
information helps the online traders to take quick and effective decision
at right time. Online traders do not like to hold their assets for a long
time. Preferably, they dispatch them within six month.

In the century of Electronic Media, the Printed Media is still a


reliable and favorite source of information for online traders. Their
favorite source of information is news papers followed by e-brokers.

The people who have not invested in share market earlier usually
not show interest in “Online Trading of Shares”. They are interested in
the traditional instruments of investments like insurance, Infrastructures,
IT etc. These investors need to make aware of “Online Trading of
Shares”, and educate them to make investments in this instrument. The
proper mix of moderate risks and high returns are attracting the investors
to Online Trading of Shares.

Surana PG Centre, Bangalore. - 90 -


“A STUDY ON ONLINE TRADING OF SHARES”.

Investor’s investments in Online Trading Shares, the investor in


equity enjoys some unique advantages of safety, liquidity and
marketability. In addition, any investment in shares is wealth of the
investor, which is free from for wealth tax. There is no limit to such
investments, which can be made for wealth tax purposes.

Totally we have concluded that for investors if increase the


awareness on online trading and investment in shares at correctly
defiantly will increase his/her future income.

Surana PG Centre, Bangalore. - 91 -


“A STUDY ON ONLINE TRADING OF SHARES”.

BIBILIOGRAPHY

1. V.A.Avadhani- Securities Analysis and Portfolio Management-


Himalayan Publication.

2. V.S.Datey- Student guide to Corporate Law-Taxmann Allied

Services Private Ltd.

3. Reddy and Appanniah- Company Law and Secretary Practice-


United Publishers.

WEBSITES

• www.nseindia.com

• www.bseindia.com

• www.google.com

• www.sharekhan.com

Surana PG Centre, Bangalore. - 92 -


“A STUDY ON ONLINE TRADING OF SHARES”.

A STUDY ON
ONLINE TRADING OF SHARES
[With special reference to investors of Bangalore]

I Mr. Basavaraj Bagewadi. pursuing MBA in Surana PG Centre, conducting


research on above topic to submit dissertation to fulfill requirements of the award of
MBA , Bangalore University .

In this connection, may I request you to help by responding to this


questionnaire? I assure you that the information collected will be kept highly
confidential and will only be used for the academic purpose.

Signature

IDENTIFICATION DETAILS

1] Name: ………………………………………………………………………..

2] Gender: Male { } Female { }

3] Address and Contact No: ……………………………………………………

……………………………………………………

……………………………………………………

…………………………………………………….

4] Age Group:

a) Less than 25 { } b) 25-35 { }


c) 35-45 { } d) 45-55 { }
e) 55 and above { }

5] Educational Qualification:

a) Under Graduate { } b) Graduate { }


c) Post Graduate { } d) Others { }

6] Occupation:

a) Business { } b) Salaried Employee { }

Surana PG Centre, Bangalore. - 93 -


“A STUDY ON ONLINE TRADING OF SHARES”.

c) Retired Employee { } d) Professionals { }


e) Student { } f) Other Specify { }

DATA FOR THE STUDY

1] Have you invested in Shares?

Yes { } No { }

2] In which Sector have you invested?

a) Banking { } b) insurance { }
c) Manufacturang { } d) infrastructure { }
e) Services { } f) other specify { }

3) How long have you been investing in shares?

a) Less than 1 { } b) 1-2 { }


c) 2-4 { } d) 4-6 { }
e) 6 and above { }

4) From which source you get your required information? Rank them on their
Importance?

a) News Papers { } b) TV News { }


c) Family & Friends { } d) Journals { }
e) Internet { }

5) Do you follow the Stock Indices before investing?

Yes { } No { }

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“A STUDY ON ONLINE TRADING OF SHARES”.

6) How do you consider these factors before Investing?

Factors Most Very Important Un Not at all


Important Important Important Important
Time
Liquidity
Returns
Safety
Risk
Past
Performance
Marketability
Capital
Appreciation
Others

7) How do you consider the influences of the following factors on your investment in
a particular share?

Factors Most Very Important Un Not at all


Important Important Important Important
Economic
growth
Monsoon &
Agricultural
activity
Inflation
Interest Rate
Foreign
Exchange
Reserves
Tax Rates
Political
Situation
International
Changes in
Capital
Market

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“A STUDY ON ONLINE TRADING OF SHARES”.

8] Rank the Risks which you want cover accordingly in your investment?

a) Market Risk { } b) Interest Rate Risk { }


c) Purchasing Power Risk { } d) Business Risk { }
e) Financial Risk { } f) Insolvency Risk { }
g) Any Other …….……………

9] How do you feel the importance of the following factors while selecting a
particular company to invest?

Factors Most Very Important Un Not at all


Important Important Important Important
Promoters
Management
Technology
Product
Range
Marketing
Any Other

10] Do you like to analyze the stage of the life-cycle of the particular industry where
you invest?

Yes { } No { }

If Yes in which stage of the life-cycle of the industry you will like to invest?

a) Pioneering Stage { } b) Expansion Stage { }


c) Stagnation Stage { } d) Declining Stage { }

11) Annual income of shares

a) Less than 100,000 { } b) 1, 00,000-2, 00,000 { }


c) 2, 00,000-3, 00,000 { } d) 3, 00,000-4, 00,000 { }
e) 4, 00,000 and Above { }

12) Annual savings

a) Less than 10,000 { } b) 10,000-20,000 { }


c) 20,000-30,000 { } d) 30,000-40,000 { }
e) 40,000 and Above { }

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“A STUDY ON ONLINE TRADING OF SHARES”.

13) The types of market structure you will prefer while selecting in industry to invest?

a) Absolute monopoly { }
b) Perfect competition { }
c) Imperfect competition { }

14) The importance of past movement of share price in BSE/NSE on your


investment?

a) Most Important { } b) Very Important { }


c) Important { } d) Un Important { }
e) Not at all important { }

15) Are you a short term or long term investor?

Short term { } Long term { }

16) The average time of holding your shares?

a) 1 Week { }
b) 1 Month to 3 Months { }
c) With in 6 Months { }
d) With in 1 year { }
e) More than 1 Year { }

17) Among Online trading Services whom you are familiar with?

a) ICICI { }
b) HDFC { }
c) KOTAK { }
d) Motilaloswal { }
e) PENENSULAR CAPITAL MARKET LTD { }

f) Any other ……………………………………………......

18) Are you satisfied with returns from your investment?

Yes { } No { }

If ‘No’
Reason ………………………………………………………………………….

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“A STUDY ON ONLINE TRADING OF SHARES”.

19) Please give your awareness of Online Trading?

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20) What are your suggestions for efficient growth of capital market, with special
reference to Online Trading of Shares, in the post budget scenario?

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Thank You

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