Choice of an investor between NSE and BSE

A SYNOPSIS OF THE SUMMER PROJECT

ON
“CHOICE OF AN INVESTOR BETWEEN NSE AND BSE”

By

SHYMA K.R.

Reg. No. A9GMBA1503

Under the guidance of

Mr. G.S. Subrahmonya

(Internal guide)

MALIK DEENAR INSTITUTE OF MANAGEMENT STUDIES

SEETHANGOLI, BELA POST,
KASARAGOD-671321

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Choice of an investor between NSE and BSE

“CHOICE OF AN INVESTOR BETWEEN NSE AND BSE”

1.1 INTRODUCTION

Financial market consists of two major segments:

(1) Capital Market: market for long term and medium term funds.
(2) Money Market: the market for short term funds

FINANCIAL MARKET

CAPITAL MONEY
MARKET MARKET

1.2 CAPITAL MARKET

The Capital market is the market for medium and long term funds. It refers to all organizations, institutions
and instruments that provide long term funds and excludes only the short term market having a maturity of
up to one year.
The major components of the capital market are:
(1) Primary market
(2) Secondary market

(1) Primary market

This is the market for new long term capital. The primary market is the market in which a
security is sold for the first time. It deals with the issue of new or fresh capital and is therefore also referred
to as the new issue market.

(2) Secondary market

The stock exchange represents the secondary market for securities. The secondary market is
the market for the sale and purchase of previously issued securities. In this market, existing securities are
traded. The secondary market derives its name from the fact that it is not the place of origin of the security,
but the place where subsequent transaction of sale and purchase occur. The secondary market is the place
where an investor holding the security of the company can convert it into cash at will. Likewise an investor
desirous of placing his funds with a certain company can buy the previously issued securities of that
company.

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Choice of an investor between NSE and BSE

1.3 MONEY MARKET

Money market is the market for short term funds meant for use for a period of up to 1 year. Money market
provides means for raising funds for meeting short term requirements of cash on one hand, and the
deployment of surplus funds for short periods (of one year or less), on the other.

1.4 STATEMNET OF THE PROBLEM

The stock exchange is a market in which existing securities are bought and sold. The securities Contract
(Regulation) Act, 1956 defines a stock exchange as an association, organisation or body of individuals,
whether incorporated or not, established for purpose of assisting, regulating and controlling of business in
buying, selling and dealing in securities.
Every stock exchange has a specific location. The place where buying and selling of securities
takes place is referred to as the trading floor or trading ring. Not everyone is permitted to trade on the stock
exchange. Only members who have applied and obtained membership are authorized to trade here.
Brokers serve as intermediaries between buyers and sellers. In the traditional mode of operating on
the ring, the trading resembles an auction. Securities that are traded on the stock exchange are known as
listed securities. A stock exchange does not permit transactions of securities of all companies, but only listed
ones.
Stock exchanges are given trading rights in certain specified areas only. In India there are 24 such
regional exchanges, in which the oldest is the BSE (Bombay Stock Exchange). Alternatively, there may be
stock exchange with a national presence, which is not limited to the jurisdiction of a particular area. India
has 2 such All India stock exchanges: NSE (National Stock Exchange) and OTCEI (Over the Counter
Exchange of India)
This study mainly concerns with the choice of an investor between NSE and BSE. The study also
shows which is advantageous for an investor NSE or BSE. The study also draws the limitations for the
investor. Even the scope of both BSE and NSE, its comparison, similarities, objectives are also put down.

1.5 ABOUT GEOJIT

Geojit BNP Paribas today is a leading retail financial services company in India with a growing
presence in the Middle East. The company rides on its rich experience in the capital market to offer its
clients a wide portfolio of savings and investment solutions. The gamut of value-added products and
services offered ranges from equities and derivatives to Mutual Funds, Life & General Insurance and third
party Fixed Deposits. The needs of over 576,000 clients are met via multichannel services - a countrywide
network of over 540 offices, phone service, dedicated Customer Care centre and the Internet.

Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the
Bombay Stock Exchange (BSE). In 2007, global banking major BNP Paribas joined the company’s other
major shareholders - Mr. C.J.George, KSIDC (Kerala State Industrial Development Corporation) and
Mr.Rakesh Jhunjhunwala – when it took a stake to become the single largest shareholder.

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Choice of an investor between NSE and BSE

Strategic joint ventures and business partnerships in the Middle East have provided the company access to
the large Non-Resident Indian (NRI) population in the region. Now, as a part of the BNP Paribas global

network, Geojit BNP Paribas is well positioned to further expand its reach to NRIs in 85 countries. Barjeel
Geojit Securities is the joint venture with the Al Saud group in the United Arab Emirates that is
headquartered in Dubai with branches in Abu Dhabi, Ras Al Khaimah, Sharjah and Muscat. Aloula Geojit
Brokerage Company headquartered in Riyadh is the other joint venture with the Al Johar group in Saudi
Arabia. The company also has a business partnership with the Bank of Bahrain and Kuwait, one of the
largest retail banks in Bahrain and Kuwait.

At the forefront of the many fruitful associations between Geojit BNP Paribas and BNP Paribas is their joint
venture, namely, BNP Paribas Securities India Private Limited. This JV was created exclusively for
domestic and foreign institutional clients. An industry first was achieved when Geojit BNP Paribas became
the first broker in India to offer full Direct Market Access (DMA) on NSE to the JV’s institutional clients.

A strong brand identity and extensive industry knowledge coupled with BNP Paribas’ international
expertise gives Geojit BNP Paribas a competitive advantage.

1.6 EVOLUTION OF THE COMPANY

It all started in the year 1987 when Mr. C.J. George and Mr. Ranajit Kanjilal founded Geojit as a
partnership firm. In 1993, Mr.Ranajit Kanjilal retired from the firm and Geojit became the proprietary
concern of Mr. C .J. George. In 1994, it became a Public Limited Company named Geojit Securities
Ltd. The Kerala State Industrial Development Corporation Ltd. (KSIDC), in 1995, became a co-
promoter of Geojit by acquiring a 24 percent stake in the company, the only instance in India of a
government entity participating in the equity of a stock broking company. The year 1995 also saw
Geojit being listed on the leading regional stock exchanges. Geojit listed at The Stock Exchange,
Mumbai (BSE) in the year 2000. Company’s wholly owned subsidiary, Geojit Commodities Limited,
launched Online Futures Trading in agro-commodities, precious metals and energy futures on multiple
commodity exchanges in 2003. This was also the year when the company was renamed as Geojit
Financial Services Ltd. (GFSL). The Board consists of professional directors; including a Kerala
Government nominee. With effect from July 2005, the company is also listed at The National Stock
Exchange (NSE). Company is a charter member of the Financial Planning Standards Board of India
and is one of the largest Depository Participant (DP) brokers in the country.

On 31st December 2007, the company closed its commodities business and surrendered its
membership in the various commodity exchanges held by Geojit Commodities Ltd. Global banking
major BNP Paribas took a stake in the year 2007 to become the single largest shareholder.
Consequently, Geojit BNP Paribas has been renamed as Geojit BNP Paribas Financial Services Ltd.

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1.7 WHY GEOJIT…??

1. 24 years of history in Indian Capital Market

Geojit BNP Paribas has 24 years of in-depth broking experience in the Indian Capital Market. More
than 5, 76, 000 clients and over Rs 13,800 crores (as of 31st Dec ’2010) in Assets under Management
reflect the trust reposed in our expertise.
2. Pioneer in Online Trading in Feb. 2000
In the year 2000, Geojit BNP Paribas pioneered the simple concept of providing individuals with the
facility to trade online. This revolution has given the company the first mover advantage in online
trading. As a creative innovator, Geojit BNP Paribas uses advanced technology in online trading to
meet client requirements such as customized online trading platforms and many other services.
3. Strong Shareholders
Geojit BNP Paribas is backed by strong shareholders.
In 2007, global banking major BNP Paribas joined the company’s other major shareholders - Mr.
C.J.George, KSIDC (Kerala State Industrial Development Corporation) and Mr.Rakesh Jhunjhunwala
– when it took a stake to become the single largest shareholder.
4. Wide range of products
Geojit BNP Paribas offers a wide range of trading and investment products and solutions. Certified
financial advisors help clients to arrive at the right financial solution to meet their individual needs.
The wide range on offer includes - Equities | Derivatives | Currency Futures | Custody Accounts |
Mutual Funds | Life Insurance & General Insurance | IPO’s | Portfolio Management Services | Property
Services | Margin Funding | Loans against Shares
5. Attractive brokerage slabs
They provide value for money! To start with, they offer low online brokerage charges which further
decrease automatically, as and when, volumes increase.
6. Learn the craft
One can develop his/her trading skills by availing of the effective guidance by our research
department. We offer-
• Daily mails delivered to our client’s mailbox on market conditions and recommendations
• Technical analysis of BSE 200 Index scripts
• Free monthly investment magazine
• Services of professionally qualified executives at 540 offices across India.
• Their strong research ideas have been instrumental in converting their clients into successful
traders.
7. Multichannel service- Internet, Phone, Branch trading
Trade the way that one want to by selecting from multiple channel options- Internet, Phone or Branch.
8. First mover advantage
Geojit BNP Paribas through its first mover advantage in different areas has been the first to serve
investors with its innovative offerings.
• 1st to launch internet trading in the year 2000.

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Choice of an investor between NSE and BSE

• 1st to launch integrated internet trading system for cash and derivative segments in the year
2002.
• 1st Indian stock broking company to commence domestic retail broking operations in any
foreign country.
• 1st in the industry to have a global player offering its name thereby creating Geojit BNP
Paribas.
• 1st to launch exclusive branches for women in 2005.
9. Deep reach
They have a pan-India network of over 540 offices with industry certified executives and a dedicated
Call Centre to provide quality services.
10. Wide range of fund options
Geojit BNP Paribas gives you the option to choose from the 700 plus Mutual Fund schemes offered by
over 35 Asset Management companies such as SBI Mutual Fund, Reliance Mutual Fund, Franklin
Templeton India Mutual Fund, Tata Mutual Fund, Sundaram BNP Paribas Mutual Fund, Fidelity
Mutual Fund, and HDFC Mutual Fund.

1.8 ABOUT NSE

In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The
National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced
exchange with 1016 companies listed and 726 trading members.

The NSE is owned by the group of leading financial institutions such as Indian Bank or Life Insurance
Corporation of India. However, in the totally de-mutualised Exchange, the ownership as well as the
management does not have a right to trade on the Exchange. Only qualified traders can be involved in
the securities trading.

The NSE is one of the few exchanges in the world trading all types of securities on a single platform,
which is divided into three segments: Wholesale Debt Market (WDM), Capital Market (CM), and
Futures & Options (F&O) Market. Each segment has experienced a significant growth throughout a
few years of their launch. While the WDM segment has accumulated the annual growth of over 36%
since its opening in 1994, the CM segment has increased by even 61% during the same period.

The National Stock Exchange of India has stringent requirements and criteria for the companies listed
on the Exchange. Minimum capital requirements, project appraisal, and company's track record are
just a few of the criteria. In addition, listed companies pay variable listing fees based on their corporate
capital size.

The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading
platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the
satellite communication system that connects traders from 345 Indian cities. The advanced
technologies enable up to 6 million trades to be operated daily on the NSE trading platform.

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1.9 HISTORY OF NSE

Capital market reforms in India and the launch of the Securities and Exchange Board of India (SEBI)
accelerated the incorporation of the second Indian stock exchange called the National Stock Exchange
(NSE) in 1992. After a few years of operations, the NSE has become the largest stock exchange in
India.

Three segments of the NSE trading platform were established one after another. The Wholesale Debt
Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was

opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today
the NSE takes the 14th position in the top 40 futures exchanges in the world.

In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that
make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50 stocks from 25
different economy sectors. The Indices are owned and managed by India Index Services and Products
Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor's.

In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in
India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the
Indian financial market by gaining many awards such as 'Best IT Usage Award' by Computer Society
in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).

1.10 ABOUT BSE

As the first stock exchange in India, the Bombay Stock Exchange is considered to have played a very
important role in the development of the country's capital markets. The Bombay Stock Exchange is the
largest of 22 exchanges in India, with over 6,000 listed companies. It is also the fifth largest exchange
in the world, with market capitalization of $466 billion.

The Bombay Stock Exchange uses the BSE Sensex, an index of 30 large, developed BSE stocks. This
index gives a measure of the overall performance of the Bombay Stock Exchange, and is closely
followed around the world. Based on the Sensex, the BSE equity market has grown significantly since
1990.

In addition to individual stocks, the BSE also has a market in derivatives, which was the first to be
established in India. Listed derivatives on the exchange include stock futures and options, index
futures and options, and weekly options.

The Bombay Stock Exchange is also actively involved with the development of the retail debt market.
The debt market in India is considered extremely important, as the country continues to develop and
depends on this type of investment for growth. Until recently, the debt market in India was limited to a

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Choice of an investor between NSE and BSE

wholesale market, with banks and financial institutions as the only participants. The Bombay Stock
Exchange believes that a retail market will bring great opportunities to individual investors through
better diversification.

1.11 HISTORY OF BSE

The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the
1850s, when stockbrokers would gather under banyan trees in front of Mumbai's Town Hall. The
location of these meetings changed many times, as the number of brokers constantly increased. The
group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as
'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to
be recognized by the Indian Government under the Securities Contracts Regulation Act.

The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure
overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market,
trading Sensex futures contracts. The development of Sensex options along with equity derivatives
followed in 2001 and 2002, expanding the BSE's trading platform.

Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an
electronic trading system in 1995. It took the exchange only fifty days to make this transition.

2.1 OBJECTIVES OF THE STUDY

• To find out through which (BSE or NSE) the investors most prefer to trade in.

• To analyze trading through which (BSE or NSE) is more advantageous.

• To examine the limitations

• To find out under what factors the investors choose between BSE and NSE.

2.2 LIMITATION OF THE STUDY

• Since the investors are less in Kasaragod, it is quite difficult to draw up a accurate conclusion/

• Even taking samples is hardly possible as the investors are less in Kasaragod

• Even time will be a constraint to study about exchange like NSE and BSE which very large
enough

• Even taking just one reference ie; Geojit wont support in drawing up a accurate justification

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Choice of an investor between NSE and BSE

2.3 RESEARCH METHODOLOGY

For the preparation of this study Exploratory research design is adopted. Exploratory research design
seeks to discover new relationships between several facts. It discovers ideas and insights. The major
purpose of exploratory research design is the clear identification of problems segregating from
irrelevant variables and alternatives.

Exploratory research design can be carried out by the following methods;

a) Search of secondary data or literature search

b) Survey of knowledgeable person or experience survey

c) Focus group

d) Case study

For my project work I mainly concentrated on the following methods:

• Search of secondary data or literature search

• Survey of knowledgeable person or experience survey

• Case study

2.4 PLAN OF ACTION

This study will be carried out with the help of Geojit BNP Paribas, Kasaragod. Further more data will
be acquired from text books, journals, websites etc.

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