IIFL - India Info Line - FUNCTION’S OF STOCK MARKET IN INDIA (WITH RESPECT TO LEVEL OF CUSTOMER A (2)

7/31/2019 IIFL - India Info Line - FUNCTIONS OF STOCK MARKET IN INDIA (WITH RESPECT TO LEVEL OF CUSTOMER A (2)

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FUNCTIONS OF STOCK MARKET IN INDIA(WITH RESPECT TO LEVEL OF CUSTOMER AWARENESS)


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CERTIFICATE OF ORIGIN

This is to certify that has worked in the Finance Sector, under the able guidance

and supervision of India Infoline Ltd.

This Summer Internship report has the requisite standard for the partial fulfillment

the Post Graduate Degree in "Finance". To the best of our knowledge no part of

this report has been reproduced from any other report and the contents are based

on original research.

)


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ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide for his able

guidance, continuous support and cooperation throughout my project,

without which the present work would not have been possible.

I would also like to thank the entire team of India Infoline for the

constant support and help in the successful completion of my project.

Also, I am thankful to my faculty guide of my institute, for his/her

continued guidance and invaluable encouragement.


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TABLE OF CONTENT

S.No Subject Page No.1 Executive Summary 012 Objective of the Project 023 Introduction 03-183.1 National Stock Exchange (NSE)3.2 Bombay Stock Exchange (BSE)3.3 National Spot Exchange Ltd. (NSEL)3.4 Function and Purpose of the Stock Market3.5 Types Of Market3.6 Market Capitalization

4 Company Profile 19-444.1 History4.2 Milestones4.3 Management team of IIFL4.4 Company Structure4.5 Product and Services5 SWOT Analysis 456 Competitor's Study 467 Research Report 52-567.1 Research Methodology

7.2 Data Collection7.3 Data Analysis8 Findings and Conclusion 589 Recommendations 5910 Annexure 60-8010.1 Annexure I10.2 Annexure II11 Bibliography 8112 Case Study 82

13 Synopsis


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Executive Summary

Indian securities markets have undergone many changes during the last decade. Exponential

growth in trading volumes is pushing existing trading systems and processes to capacity and

increasing settlement risk. With Indian market moving to a T+3 rolling settlement cycles in

line with global markets, SEBI is continuing its efforts to increase the efficiency and

transparency in Indian markets. Indeed it has been SEBI endeavor to make the Indian

markets, one of the most competitive and efficient markets of the world.

Income, Savings mobilization and promotion of investment are functions of the stock and

capital markets which are a part of the organized financial system in India.

This Project titled FUNCTION OF STOCK MARKET IN INDIA and LEVEL OF

CUSTOMER AWARENESS wrt TO STOCK MARKET IN INDIA is an attempt to

understand the stock market and role played by Indian retail Brokerage Firms in stock

market. The objective of brokerage firms is to help the investor to minimize the risk involved

in investment and maximize the return. Some of the main characteristics of the brokerageindustry include growth in e-broking; growing derivatives market, decline in brokerage fees

etc.

The role played by Indian retail brokerage industry is of immense significance, taking into

account the health of the capital markets .


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Objective of project

To gain the maximum industry exposure in the span of 7 to 8 weeks.

To get the brief knowledge of NSE,BSE,SEBI and all about the Indian stock market howits functions,what all reasons it fluctuates .

Analyzing the India infoline Ltd as a firm, its functions, products, services etc.

To analyze the level of customer awareness .

To analyze the competitors of India Infoline as a Brokerage firm.

To analyze about different products and services catered by companies to their customers.


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CHAPTER 3INTRODUCTION TO STOCK MARKET

INDIA


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Introduction to Indian stock marketIntroduction

Indian Stock Markets is one of the oldest in Asia. Its history dates back to nearly 200 years ago.

The earliest records of security dealings in India are meager and obscure. The East India

Company was the dominant institution in those days and business in its loan securities used to be

transacted towards the close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in

Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers

recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid

development of commercial enterprise and brokerage business attracted many men into the field

and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke

out and cotton supply from United States to Europe was stopped; thus, the 'Share Mania' in India

began. The number of brokers increased to about 200 to 250.

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a

place in a street (now appropriately called as Dalal Street) where they would conveniently

assemble and transact business. In 1887, they formally established in Bombay, the "Native Share

and Stock Brokers' Association,which is alternatively known as

The Stock Exchange". In

1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899.

Thus, the Stock Exchange at Bombay was consolidated.

The Indian stock market has been assigned an important place in financing the Indian corporate

sector. The principal functions of the stock markets are


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enabling mobilizing resources for investment directly from the investors

providing liquidity for the investors and monitoring

Disciplining company management.

The two major stock exchanges in India are National Stock Exchange (NSE) and Bombay Stock

Exchange (BSE).

3.1 National Stock Exchange

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock

market trading system on par with the international standards. On the basis of the

recommendations of high powered Pherwani Committee, the National Stock Exchange was

incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment

Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected

commercial banks and others.

The National Stock Exchange (NSE) is India's leading stock exchange covering various cities

and towns across the country. NSE was set up by leading institutions to provide a modern, fully

automated screen-based trading system with national reach. The Exchange has brought about

unparalleled transparency, speed & efficiency, safety and market integrity. It has set up facilities

that serve as a model for the securities industry in terms of systems , practices and procedures.

NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure, market practices and trading volumes. The market today uses state-of-art

information technology to provide an efficient and transparent trading, clearing and settlement

mechanism, and has witnessed several innovations in products & services viz. demutualization of

stock exchange governance, screen based trading, compression of settlement cycles,


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dematerialization and electronic transfer of securities, market of debt and derivative instruments

and intensive use of information technology.

Trading at NSE can be classified under two broad categories:

Wholesale debt market

Capital market

Wholesale debt market operations are similar to money market operations - institutions and

corporate bodies enter into high value transactions in financial instruments such as government

securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc.

Capital market : A market where debt or equity securities are traded .

There are two kinds of players in NSE:

Trading members

Participants

Recognized members of NSE are called trading members who trade on behalf of themselves and

their clients. Participants include trading members and large players like banks who take direct

settlement responsibility. Trading at NSE takes place through a fully automated screen-based

trading mechanism which adopts the principle of an order-driven market. Trading members can

stay at their offices and execute the trading, since they are linked through a communication

network. The prices at which the buyer and seller are willing to transact will appear on the screen.

When the prices match the transaction will be completed and a confirmation slip will be printed at

the office of the trading member.
http://www.investorwords.com/1313/debt.htmlhttp://www.investorwords.com/1726/equity.htmlhttp://www.investorwords.com/4446/securities.htmlhttp://www.investorwords.com/5014/traded.htmlhttp://www.investorwords.com/1313/debt.htmlhttp://www.investorwords.com/1726/equity.htmlhttp://www.investorwords.com/4446/securities.htmlhttp://www.investorwords.com/5014/traded.html


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NSE has several advantages over the traditional trading exchanges. They are as follows:

NSE brings an integrated stock market trading network across the nation.

Investors can trade at the same price from anywhere in the country since inter-marketoperations are streamlined coupled with the countrywide access to the securities.

Delays in communication, late payments and the malpractices prevailing in the traditional

trading mechanism can be done away with greater operational efficiency and informational

transparency in the stock market operations, with the support of total computerized

network.

NSE Nifty

S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy . It

is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives

and index funds .

NSE came to be owned and managed by India Index Services and Products Ltd. (IISL), which is a

joint venture between NSE and CRISIL . IISL is India's first specialized company focused upon the

index as a core product. IISL have a consulting and licensing agreement with Standard & Poor' s

(S&P), who are world leaders in index services. CNX stands for CRISIL NSE Indices. CNX

ensures common branding of indices, to reflect the identities of both the promoters, i.e. NSE and

CRISIL. Thus, 'C' stands for CRISIL, 'N' stands for NSE and X stands for Exchange or Index. The

S&P prefix belongs to the US-based Standard & Poor's Financial Information Services.
http://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Index_fundhttp://en.wikipedia.org/wiki/India_Index_Services_and_Productshttp://en.wikipedia.org/wiki/NSEhttp://en.wikipedia.org/wiki/CRISILhttp://en.wikipedia.org/wiki/Standard_%26_Poorhttp://en.wikipedia.org/wiki/S%26Phttp://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Index_fundhttp://en.wikipedia.org/wiki/India_Index_Services_and_Productshttp://en.wikipedia.org/wiki/NSEhttp://en.wikipedia.org/wiki/CRISILhttp://en.wikipedia.org/wiki/Standard_%26_Poorhttp://en.wikipedia.org/wiki/S%26P


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NSE


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3.2 Bombay Stock Exchange

The Bombay Stock Exchange is one of the oldest stock exchanges in Asia. It was established as"The Native Share & Stock Brokers Association" in 1875. 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. The Exchange's pivotal and pre-eminent role in the

development of the Indian capital market is widely recognized and its index, SENSEX, is tracked

worldwide.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing

it with an efficient access to resources. There is perhaps no major corporate in India which has not

sourced BSE's services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the

world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood at

USD 1.79 trillion . An investor can choose from more than 4,700 listed companies, which for easy

reference, are classified into A, B, S, T and Z groups.

SENSEX

The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently

became the barometer of the Indian stock market.


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SENSEX is not only scientifically designed but also based on globally accepted construction and

review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks

representing a sample of large, liquid and representative companies. The base year of SENSEX is

1978-79 and the base value is 100. The index is widely reported in both domestic and international

markets through print as well as electronic media

The Index was initially calculated based on the "Full Market Capitalization" methodology but was

shifted to the free-float methodology with effect from September 1, 2003. The "Free-float Market

Capitalization" methodology of index construction is regarded as an industry best practice

globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-

float methodology.

Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of

the Indian stock market. As the oldest index in the country, it provides the time series data over a

fairly long period of time. Small wonder, the SENSEX has over the years become one of the most

prominent brands in the country.

The SENSEX captured all these events in the most judicial manner. One can identify the booms

and busts of the Indian stock market through SENSEX.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE

National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five major stock

exchanges. The Exchange launched dollar-linked version of BSE-100 index i.e. Dollex-100 on

May 22, 2006.

In order to fulfill the need of the market participants for still broader, segment-specific and sector-

specific indices, the Exchange has continuously been increasing the range of its indices. The

launch of BSE-200 Index in 1994 was followed by the launch of BSE-500 Index and 5 sectoralindices in 1999. In 2001, BSE launched the BSE-PSU Index, DOLLEX-30 and the country's first

free-float based index - the BSE TEC K Index. The Exchange shifted all its indices to a free-float

methodology (except BSE PSU index) in a phased manner.


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The values of all BSE indices are updated every 15 seconds during the market hours and displayed

through the BOLT system, BSE website and news wire agencies.

All BSE-Indices are reviewed periodically by the "Index Committee" of the Exchange.


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3.3 NATIONAL SPOT EXCHANGE LIMITED

National Spot Exchange Ltd (NSEL) is a state-of-the-art electronic, demutualisedcommodity spot market. The Exchange is promoted by Financial Technologies (India) Ltd(FTIL) and National Agricultural Cooperative Marketing Federation of India Limited

(NAFED). It provides an electronic, transparent, well organized and centralized trading platform with the facility to access and participate the market remotely. It facilitates risk freeand hassle free purchase and sell of quality and quantity specified commodities to commoditymarket participants including farmers, traders, processors, exporters, importers, arbitrageurs,investors and the retail market participants. Exchange also offers various other services suchas quality certification, warehousing, warehouse receipt financing, etc. It has obtained licensesfrom various state governments to facilitate online delivery based trading in various agri-commodities.

NSEL commenced its live operations on15th October 2008. It has created efficient spotdelivery platform, helping the sellers/producers to sell commodities directly to the end buyerscomprises of processors/ exporters. Currently, NSEL holds a market share of over 98% of the

Indian electronic commodity Spot market, and has more than 495 registered membersoperating through over 3000 trader work stations, across India. Government organizations likeFCI , HAFED, MMTC, PEC, NAFED, APMARKFED, RAJFED, and CCI have been activelyutilizing the Exchange platform for selling various commodities. More than 33 commoditiesare traded on NSEL Platform having delivery locations spread across 14 states.

For the first time in India, NSEL has introduced demat delivery based instrument productscalled e-Series, in commodities like gold, silver, copper, zinc and lead. This is a uniquemarket segment, which is functioning just like cash segment in equities, but offeringcommodities in demat form in smaller denominations.

Some of the major achievements and initiatives that NSEL has undertaken are as under:

For the first time in India, farmers have started participation on an electronicExchange and directly selling castor seed to the industry without any intermediary.

NSEL has assisted farmers to access credit through warehouse receipt finance at lower interest rate and enhanced their holding power.For the growth and development of bullion trade and industry, NSEL launched, IndianBullion Market Association (IBMA) which is consortium of leading bullion dealers


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and jewellery merchants, bullion importers-exporters, Bullion Banks, refineries.Launched a unique investment product (e-Series) on its platform.Food Corporation of India (FCI) conducted electronic auction for wheat under theOpen Market Sale Scheme-Domestic (OMSS-D) on NSEL.HAFED conducted electronic auction for Bajra, Basmati Paddy and Basmati rice.

Customized contract for MMTC gold coin sales.

Introduced the procurement services to provide customized solutions to the bulk buyer and bring marketing efficiency in the supply chain of commodities.

NSEL has tied-up with various banks to provide credit facilities to farmers and buyersof commodities.

Introduced Customized Silver forward auction contract for Hindustan Zinc Limited atAhmedabad and Jaipur delivery locations

3.4 Function and purpose of stock market

The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional financial capital for expansion by sellingshares of ownership of the company in a public market. The liquidity that an exchange provides

affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.

History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where thestock market is on the rise is considered to be an up-and-coming economy. In fact, the stock market is often considered the primary indicator of a country's economic strength anddevelopment.

Rising share prices, for instance, tend to be associated with increased business investment and vice

versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on thesmooth operation of financial system functions. Financial stability is the raison d'tre of central

banks.
http://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Share_(finance)http://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Financial_systemhttp://en.wiktionary.org/wiki/raison_d'%C3%AAtrehttp://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Share_(finance)http://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Financial_systemhttp://en.wiktionary.org/wiki/raison_d'%C3%AAtre


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Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to anindividual buyer or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in that lower costs andenterprise risks promote the production of goods and services as well as employment. In this waythe financial system contributes to increased prosperity.

Shareholder rights

Although owning 51% of shares does mean that you own 51% of the company and that you have

51% of the votes, the company is considered a legal person, thus it owns all its assets, (buildings,equipment, materials etc) itself. A shareholder has no right to these without the company's

permission, even if that shareholder owns almost all the shares. This is important in areas such as

insurance, which must be in the name of the company not the main shareholder.

In most countries, including the United States, boards of directors and company managers have a

fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as

Martin Whitman writes:

"...it can safely be stated that there does not exist any publicly traded company where management

works exclusively in the best interests of

OPMI [Outside Passive Minority Investor] stockholders. Instead, there are both "communities of

interest" and "conflicts of interest" between stockholders (principal) and management (agent). This

conflict is referred to as the principal/agent problem. It would be naive to think that any

management would forego management compensation, and management entrenchment, just

because some of these management privileges might be perceived as giving rise to a conflict of

interest with IPOS." [Whitman, 2004, 5]

Trading
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Shares of stock are usually traded on a stock exchange, where people and organizations may buy

and sell shares in a wide range of companies. A given company will usually only trade its shares in

one market, and it is said to be quoted, or listed, on that stock exchange.

However, some large, multinational corporations are listed on more than one exchange. They are

referred to as inter-listed shares.

Buying

There are various methods of buying and financing stocks. The most common means is through a

stock broker. Whether they are a full service or discount broker, they are all doing one thing

arranging the transfer of stock from a seller to a buyer. Most of the trades are actually donethrough brokers listed with a stock exchange such as the New York Stock Exchange.

There are many different stock brokers to choose from such as full service brokers or discount

brokers. The full service brokers usually charge more per trade, but give investment advice or

more personal service; the discount brokers offer little or no investment advice but charge less for

trades. Another type of broker would be a bank or credit union that may have a deal set up with

either a full service or discount broker.

There are other ways of buying stock besides through a broker. One way is directly from the

company itself. If at least one share is owned, most companies will allow the purchase of shares

directly from the company through their investor's relations departments. However, the initial

share of stock in the company will have to be obtained through a regular stock broker. Another

way to buy stock in companies is through Direct Public Offerings which are usually sold by the

company itself. A direct public offering is an initial public offering a company in which the stock

is purchased directly from the company, usually without the aid of brokers.

When it comes to financing a purchase of stocks there are two ways: purchasing stock with money

that is currently in the buyers ownership or by buying stock on margin. Buying stock on margin

means buying stock with money borrowed against the stocks in the same account. These stocks, or

collateral, guarantee that the buyer can repay the loan; otherwise, the stockbroker has the right to

sell the stocks (collateral) to repay the borrowed money. He can sell if the share price drops below


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the margin requirement, at least 50 percent of the value of the stocks in the account. Buying on

margin works the same way as borrowing money to buy a car or a house using the car or house as

collateral. Moreover, borrowing is not free; the broker usually charges you 8-10 percent interest

Selling

Selling stock in a company goes through many of the same procedures as buying stock. Generally,

the investor wants to buy low and sell high, if not in that order; however, this is not how it always

ends up. Sometimes, the investor will cut their losses and claim a loss.

As with buying a stock, there is a transaction fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee can be high or low depending on if it is a full service or

discount broker.

After the transaction has been made, the seller is then entitled to all of the money. An important

part of selling is keeping track of the earnings. It is important to remember that upon selling the

stock, in jurisdictions that have them, capital gains taxes will have to be paid on the additional

proceeds, if any, that are in excess of the cost basis.

Even though the board of directors runs the company, the shareholder has some impact on the

company's policy, as the shareholders elect the board of directors. Each shareholder has a

percentage of votes equal to the percentage of shares he owns. So as long as the shareholders agree

that the management (agent) is performing poorly they can elect a new board of directors which

can then hire a new management team.

Owning shares does not mean responsibility for liabilities. If a company goes broke and has to

default on loans, the shareholders are not liable in any way. However, all money obtained by

converting assets into cash will be used to repay loans, so that shareholders cannot receive any

money until creditors have been paid.


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3.5 Types of Market

1. Primary market (IPOs)

In financial markets, an initial public offering (IPO) is the first sale of a company's common shares

to public investors. The company will usually issue only primary shares, but may also sell

secondary shares. Typically, a company will hire an investment banker to underwrite the offering

and a corporate lawyer to assist in the drafting of the prospectus.

The sale of stock is regulated by authorities of financial supervision and where relevant by a stock

exchange. It is usually a requirement that disclosure of the financial situation and prospects of a

company be made to prospective investors.

The Federal Securities and Exchange Commission (SEC) regulates the securities markets of the

United States and, by extension, the legal procedures governing IPOs. The law governing IPOs

in the United States includes primarily the Securities Act of 1933, the regulations issued by theSEC, and the various state "Blue Sky Laws".

2. Secondary market

The secondary market (also called "aftermarket") is the financial market for trading of securities

that have already been issued in its initial private or public offering. Stock exchanges are examples

of secondary markets. Alternatively, secondary market can refer to the market for any kind of used

goods.

3.6 MARKET CAPITALIZATION

Market capitalization represents the public consensus on the value of a company's equity . Anentirely public corporation, including all of its assets , may be freely bought and sold through

purchases and sales of stock, which will determine the price of the company's shares. Its market
http://en.wikipedia.org/wiki/Shareholders'_equityhttp://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Shareholders'_equityhttp://en.wikipedia.org/wiki/Assets


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capitalization is the share price multiplied by the number of shares in issue, providing a total valuefor the company's shares and thus for the company as a whole.

Many companies have a dominant shareholder, which may be a government entity, a family, or another corporation. Many stock market indices such as the S&P500, Sensex , FTSE , DAX, Nikkei ,Ibovespa , and MSCI adjust for these by calculating on a freefloat basis, i.e. the market capitalization they use is the value of the publicly tradable part of thecompany. Thus, market capitalization is one measure of "float" i.e., share value times an equityaggregate, with free and public being others.

Note that market capitalization is a market estimate of a company's value, based on perceivedfuture prospects, economic and monetary conditions. Stock prices can also be moved

by speculation about changes in expectations about profits or about mergers and acquisitions .

It is possible for stock markets to get caught up in an economic bubble , like the steep rise invaluation of technology stocks in the late 1990s followed by the dot-com crash in 2000. Hype canaffect any asset class, such as gold or real estate . In such events, valuations rise disproportionatelyto what many people would consider the fundamental value of the assets in question. In the case of stocks, this pushes up market capitalization in what might be called an "artificial" manner. Marketcapitalization is therefore only a rough measure of the true size of a market. However it doesrepresent the best estimate of all market participants at any point in time - bubbles are easy to spotretrospectively, but if a market participant believes a stock is overvalued, then of course they can

profit from this by selling the stock (or shorting it, if they don't hold it).

3.5.1 Categorization of companies by capitalization

Traditionally, companies were divided into large-cap, mid-cap, and small-cap. The terms mega-cap and micro-cap have also since come into common use, and nano-cap is sometimes heard.Different numbers are used by different indexes; [3][4] there is no official definition of, or fullconsensus agreement about, the exact cutoff values. The cutoffs may be defined as percentilesrather than in nominal dollars . The definitions expressed in nominal dollars need to be adjusted

over the decades due to inflation, population change, and overall market valuation (for example,$1 billion was a large market cap in 1950, but it is not very large now), and they may be differentfor different countries. A rule of thumb may look like:

Mega-cap: Over $100 billion

Large-cap: $10 billion$100 billion

Mid-cap: $1 billion$10 billion
http://en.wikipedia.org/wiki/Stock_market_indexhttp://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/BSE_Sensexhttp://en.wikipedia.org/wiki/FTSE_100_Indexhttp://en.wikipedia.org/wiki/FTSE_100_Indexhttp://en.wikipedia.org/wiki/DAXhttp://en.wikipedia.org/wiki/DAXhttp://en.wikipedia.org/wiki/Nikkei_225http://en.wikipedia.org/wiki/BM%26F_Bovespahttp://en.wikipedia.org/wiki/MSCI_Inc.http://en.wikipedia.org/wiki/MSCI_Inc.http://en.wikipedia.org/wiki/Free_floathttp://en.wikipedia.org/wiki/Free_floathttp://en.wikipedia.org/wiki/Speculationhttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Dot-com_bubblehttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Short_(finance)http://en.wikipedia.org/wiki/Short_(finance)http://en.wikipedia.org/wiki/Market_capitalization#cite_note-Investopedia_dot_com_slash_terms-2http://en.wikipedia.org/wiki/Market_capitalization#cite_note-3http://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics)http://en.wikipedia.org/wiki/Stock_market_indexhttp://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/S%26P_500http://en.wikipedia.org/wiki/BSE_Sensexhttp://en.wikipedia.org/wiki/FTSE_100_Indexhttp://en.wikipedia.org/wiki/DAXhttp://en.wikipedia.org/wiki/Nikkei_225http://en.wikipedia.org/wiki/BM%26F_Bovespahttp://en.wikipedia.org/wiki/MSCI_Inc.http://en.wikipedia.org/wiki/Free_floathttp://en.wikipedia.org/wiki/Free_floathttp://en.wikipedia.org/wiki/Speculationhttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Economic_bubblehttp://en.wikipedia.org/wiki/Dot-com_bubblehttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Short_(finance)http://en.wikipedia.org/wiki/Market_capitalization#cite_note-Investopedia_dot_com_slash_terms-2http://en.wikipedia.org/wiki/Market_capitalization#cite_note-3http://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics)


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Small-cap: $100 million$1 billion

Micro-cap: $10 million-$100 million

Nano-cap: Below $10 million

CHAPTER 4COMPANY PROFILE

INDIA INFOLINE


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COMPANY PROFILE

India Infoline is one-stop nancial services shop, most respected for quality of its advice,

personalized service and cutting-edge technology. Listed on Bombay and National Stock

Exchange with a net worth of INR 200 crore and a market cap of over INR 1970 crore. The

company has a network of 976 business locations(branches and sub-brokers) spread across 365cities and towns. It has more than 800,000 customers. It is registered with NSDL as well as CDSL

as a depository participant, providing a one-stop solution for clients trading in the equities mar-ket

First Company in India to foray into the online distribution of Mutual Funds.

Every modern economy is based on a sound nancial system.A nancial system is a set of

institutional arrangements through which nancial surpluses are mobilized from the units

generating surplus income and transferring them to the others inneed of them.The activities which

include production, distribution, exchange and holding of nancial assets/instruments of di fferentkinds by nancial institutions,banks and other intermediaries of the market.Among these

organizations are banks, credit card companies, insurance companies, consumer nance

companies,stock brokerages, investment funds and some government sponsored enterprises. The

nancial markets have two major components; they are money market and capital market.

Money market

The Money Market refers to the market where borrowers and lenders exchange short-term funds to

solve their liquidity needs.Capital Market

The Capital Market is a market for nancial investments that are direct or indirect claims to capital

Securities Market


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It refers to the markets for those nancial instruments/claims/obligations that are commonly and

readily transferable by sale.It has two inter-dependent andinseparable segments, the new issues

(primary) market and the stock (secondary)market.

The secondary market enables those who hold securities to adjust their holdings in response to

changes in their assessment of risk and return.The Primary Markets provides the channel of sale of

new securities.

Stock Market

A stock market, or equity market, is a private or public market for the trading of company stock

and derivatives at an agreed price; these are securities listed on a stock exchange as well as those

only traded privately.The size of the world stock market is estimated at about $36.6 trillion US at

the beginning of October 2008.The total world derivatives market has been estimated at about

$791 trillion face or nominal value .

Forex Market

The foreign exchange market (currency, forex, or FX) market is where currency trading takes

place.It is where banks and other o fficial institutions facilitate the buying and selling of foreign

currencies.The FX market is one of the largest and most liquid nancial markets in the world, and

includes trading between large banks, central banks, currency speculators, corporations,

governments, and other institutions.

Derivative Market

Derivatives are nancial contracts, or nancial instruments, whose values are de-rived from the

value of something else (known as the underlying).The under lying on which a derivative is based

can be an asset (e.g., commodities, equities (stocks),residential mortgages, commercial real estate,

loans, bonds), an index (e.g., inter-est rates, exchange rates, stock market indices, consumer price

index (CPI)see ination derivatives), or other items (e.g., weather conditions, or other

derivatives).Credit derivatives are based on loans, bonds or other forms of credit Derivatives a

product whose value is derived from the value of one or more basic variables. Underlying Assetcan be Equity, Forex, commodity or any other asset.

ForwardsA forward contract is a customized contract between two entities, where settlement takes place ona specic date in the future at todays pre-agreed price.


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Futures

A future is contract to buy or sell an underlying asset at a specied future date,at a specied

price.These contracts are traded and settled on exchanges.Futurecontracts can be on individual

scrips or indices.

Corporation Information:

IndiaInfoline originally incorporated on 18 Oct 1995 as Probity Research & Service Pvt.

Ltd. at Mumbai under companys Act.

The name of the company was changed to IndiaInfoline.com Ltd. on 23 marches 2000.

Later on the name changed to IndiaInfoline Ltd on 23 marches 2001.

Vision Statement:

Our vision is to be the most respected company in the financial

services space.

India Infoline Group:

The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-

owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity

research, Equities and derivatives trading, Commodities trading, Portfolio Management Services,

Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to

loan products and Investment banking. India Infoline also owns and manages the websites

www.indiainfoline.com and www.5paisa.com The Company has a network of 976 business

locations (branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000

customers.

India Infoline Group subsidiaries:

India Infoline Media and Research Services Limited India Infoline Commodities Limited India Infoline Marketing & Services


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India Infoline Investment Services Limited IIFL (Asia) Pte Limited

Our Global Presence:

China, Brazil, Dubai, Russia, Singapore, UK, USA

4.1. HISTORY

We were founded in 1995 by Mr. Nirmal Jain (Chairman and Managing Director) as an

independent business research and information provider. We gradually evolved into a one-stopfinancial services solutions provider. Our strong management team comprises competent and

dedicated professionals

We are a pan-India financial services organization across 1,361 business locations and a presence

in 428 cities. Our global footprint extends across geographies with offices in New York, Singapore

and Dubai. We are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange

(NSE).

We offer a wide range of services and products comprising broking (retail and institutional

equities and commodities), wealth management, credit and finance, insurance, asset management

and investment banking.

We are registered with the BSE and the NSE for securities trading, MCX, NCDEX and DGCX for

commodities trading, CDSL and NSDL as depository participants. We are registered as a Category

I merchant banker and are a SEBI registered portfolio manager. We also received the FII license inIIFL Inc. IIFL Securities Pte Ltd received approval from the Monetary Authority of Singapore to

carry out corporate advisory and dealing in securities operations. Two subsidiaries India Infoline

Investment Services and Money line Credit Limited are registered with RBI as non-deposit


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taking non-banking financial services companies. India infoline Housing Finance Ltd, the housing

finance arm, is registered with the National Housing Bank.

4.2 MILESTONES

1995

Incorporated as an equity research and consulting firm with a client base that included leading

FIIs, banks, consulting firms and corporate.

1999

Restructured the business model to embrace the internet; launched archives.indiainfoline.com

mobilized capital from reputed private equity investors.

2000

Commenced the distribution of personal financial products; launched online equity trading;

entered life insurance distribution as a corporate agent. Acknowledged by Forbes as Best of the

Web and ...must read for investors.

2004

Acquired commodities broking license; launched Portfolio Management Service.

2005

Listed on the Indian stock markets.2006

Acquired membership of DGCX; launched investment banking services.

2007

Launched a proprietary trading platform; inducted an institutional equities team; formed a

Singapore subsidiary; raised over USD 300 man in the group; launched consumer finance business

under the Money line brand.

2008

Launched wealth management services under the IIFL Wealth brand; set up India Infoline

Private Equity fund; received the Insurance broking license from IRDA; received the venture

capital license; received in principle approval to sponsor a mutual fund; received Best broker-

India award from Finance Asia; Most Improved Brokerage- India award from Asia money.


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2009

Received registration for a housing finance company from the National Housing Bank; received

Fastest growing Equity Broking House - Large firms in India by Dun & Bradstreet

2010

Received in-principle approval for membership of the Singapore Stock ExchangeReceived membership of the Colombo Stock Exchange

4.3. Management Team Of India Infoline

Mr. Nirmal Jain

Chairman & Managing Director , India Infoline Ltd

Mr. Nirmal Jain is the founder and Chairman of India Infoline Ltd. He is a PGDM (Post Graduate

Diploma in Management) from IIM (Indian Institute of Management) Ahmedabad, a Chartered

Accountant and a rank-holder Cost Accountant. His professional track record is equally

outstanding. He started his career in 1989 with Hindustan Lever Limited, the Indian arm of

Unilever. During his stint with Hindustan Lever, he handled a variety of responsibilities, including

export and trading in agro-commodities. He contributed immensely towards the rapid and

profitable growth of Hindustan Levers commodity export business, which was then the nations as

well as the Companys top priority.

He founded Probity Research and Services Pvt. Ltd. (later re-christened India Infoline) in 1995;


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perhaps the first independent equity research Company in India. His work set new standards for

equity research in India. Mr. Jain was one of the first entrepreneurs in India to seize the internet

opportunity, with the launch of www.indiainfoline.com in 1999. Under his leadership, India

Infoline not only steered through the dotcom bust and one of the worst stock market downtrends

but also grew from strength to strength.

Mr. R. Venkataraman

Executive Director , India Infoline Ltd.

Mr. R Venkataraman, Co-Promoter and Executive Director of India Infoline Ltd, is a B.Tech

(electronics and electrical communications engineering, IIT Kharagpur) and an MBA (IIM

Bangalore). He joined the India Infoline Board in July 1999. He previously held senior managerial

positions in ICICI Limited, including ICICI Securities Limited, their investment banking joint

venture with J P Morgan of US, BZW and Taib Capital Corporation Limited. He was also the

Assistant Vice President with G E Capital Services India Limited in their private equity division,

possessing a varied experience of more than 19 years in the financial services sector.

Mr. Nilesh Vikamsey

Independent Director , India Infoline Ltd.

Mr. Nilesh Vikamsey Board Member since February 2005 - is a practicing Chartered

Accountant for 25 years and Senior Partner at M/s Khimji Kunverji & Co., Chartered


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Accountants, a member firm of HLB International, a world-wide organisation of professional

accounting firms and business advisers, ranked amongst the top 12 accounting groups in the

world. Mr. Vikamsey headed the audit department till 1990 and thereafter also handled

financial services, consultancy, investigations, mergers and acquisitions, valuations and due

diligence, among others. He is elected member of the Central Council of Institute of Chartered

Accountant of India (ICAI), the Apex decision making body of the second largest accounting

body in the world, 20102013.

He is on the ICAI study group member for the introduction of the Accounting Standard 30

on financial instruments recognition and management. Convener of the Study group Formed

by ASB of ICAI to formulate comments on various Exposure Drafts, Discussion Papers and

other matters pertaining to IFRS originating from IASB, Representative of the Institute of

Chartered Accountants of India on the Committee for Improvement in

Transparency, Accountability and Governance(ITAG) of South Asian Federation of

Accountants (SAFA), Member of Executive Committee & IFRS Implementation Committee of

WIRC of Institute of Chartered Accountant of India (ICAI), Accounting and Auditing

Committee of Bombay Chartered Accountant Society (BCAS) and also on its Core Group,

member of Review, Reforms & Rationalisation Committee, IPR Committee of Bombay

Chamber of Commerce and Industry (BCCI), Member of Legal Affairs Committee of BombayChamber of Commerce and Industry(BCCI), Corporate Members Committee of The Chamber

of Tax Consultants (CTC), Regular Contributor to WIRC Annual Referencer on Bank Branch

Audit, Study/ Sub Group formed by ICAI for Considering Developments on Fair Value

Accounting (AS 30) post Sub Prime crisis, Sub Group formed by ICAI for approaching the

Government and Regulatory Authorities for Convergence with IFRS.

He is also a Vice Chairman of Financial Reporting Review Board Accounting Standard Boardand Member of Accounting Standard Board and various other Standing and Non Standing

Committees. Mr. Vikamsey is also a Director of Miloni Consultants Private Limited, HLB

Offices and Services Private Limited, Trunil Properties Private Limited, BarKat Properties

Private Limited and India Infoline Investment Services Limited.


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Mr. Kranti Sinha


Mr. Kranti Sinha Board member since January 2005 completed his masters from the

Agra University and started his career as a Class I Officer with Life Insurance Corporation

of India. He served as the Director and Chief Executive of LIC Housing Finance Limited

from August 1998 to December 2002 and concurrently as the Managing Director of LICHFL

Care Homes (a wholly-owned subsidiary of LIC Housing Finance Limited). He retired from

the permanent cadre of the Executive Director of LIC; served as the Deputy President of the

Governing Council of Insurance Institute of India and as a member of the Governing

Council of National Insurance Academy, Pune apart from various other such bodies. Mr.

Sinha is also on the Board of Directors of Hindustan Motors Limited and Cinemax (India)

Limited.

Mr. A. K. Purwar


Mr. Purwar is currently the Chairman of IndiaVenture Advisors Pvt. Ltd., investment manager to

IndiaVenture Trust Fund I, the healthcare and life sciences focussed private equity fund

sponsored by the Piramal Group. He has also taken over as the Chairman of IL & FS Renewable

Energy Limited in March 2008 and India Infoline Investment Services Ltd in November 2009. He

is working as Independent Director in leading companies in Telecom, Steel, Textiles, Power, Auto


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components, Renewable Energy, Engineering Consultancy, Financial Services and Healthcare

Services. He is an Advisor to Mizuho Securities in Japan and is also a member of Advisory Board

for Institute of Indian Economic Studies (IIES), Waseda University, Tokyo, Japan.

Mr. Purwar was the Chairman of State Bank of India, the largest bank in the country from

November 02 to May 06 and held several important and critical positions like Managing Director

of State Bank of Patiala, Chief Executive Officer of the Tokyo branch covering almost the entire

range of commercial banking operations in his illustrious career at the bank from 1968 to 2006.

Mr. Purwar also worked as Chairman of Indian Bank Association during 2005 2006. Mr. Purwar

has received the CEO of the year Award from the Institute for Technology & Management

(2004); Outstanding Achiever of the year Award from Indian Banks Association (2004);

Finance Man of the Year Award by the Bombay Management Association in 2006.

4.4. COMPANY STRUCTURE

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock

Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both

the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and

Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a

depository participant, providing a one-stop solution for clients trading in the equities market. It

has recently launched its Investment banking and Institutional Broking business.


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A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients. These

services are offered to clients as different schemes, which are based on differing investment

strategies made to reflect the varied risk-return preferences of clients.

India Infoline Media and Research Services Limited .

The content services represent a strong support that drives the broking, commodities, mutual fund

and portfolio management services businesses. Revenue generation is through the sale of content

to financial and media houses, Indian as well as global.

It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the

Web' and 'a must read for investors in Asia'. India Infoline's research is available not just over

the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First

Call and Internet Securities where India Infoline is amongst the most read Indian brokers.

India Infoline Commodities Limited.

India Infoline Commodities Pvt Limited is engaged in the business of commodities broking. Our

experience in securities broking empowered us with the requisite skills and technologies to allow

us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoy

memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and


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recently acquired membership of DGCX. We have a multi-channel delivery model, making it

among the select few to offer online as well as offline trading facilities.

India Infoline Marketing & Services

India Infoline Marketing and Services Limited is the holding company of India Infoline Insurance

Services Limited and India Infoline Insurance Brokers Limited.

(a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance

Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI

Prudential Life Insurance Co Limited, which is India's largest private Life Insurance Company.

India Infoline was the first corporate agent to get licensed by IRDA in early 2001.

(b) India Infoline Insurance Brokers Limited is a newly formed subsidiary which will carry out the

business of Insurance broking. We have applied to IRDA for the insurance broking license and theclearance for the same is awaited. Post the grant of license, we propose to also commence the

general insurance distribution business.

India Infoline Investment Services Limited

Consolidated shareholdings of all the subsidiary companies engaged in loans and financing

activities under one subsidiary. Recently, Orient Global, a Singapore-based investment institutioninvested USD 76.7 million for a 22.5% stake in India Infoline Investment Services. This will help

focused expansion and capital raising in the said subsidiaries for various lending businesses like

loans against securities, SME financing, distribution of retail loan products, consumer finance

business and housing finance business. India Infoline Investment Services Private Limited consists

of the following step-down subsidiaries.

(a) India Infoline Distribution Company Limited (distribution of retail loan products)

(b) Money line Credit Limited (consumer finance)

(c) India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Pte Limited


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IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in Singapore to

pursue financial sector activities in other Asian markets. Further to obtaining the necessary

regulatory approvals, the company has been initially capitalized at 1 million Singapore dollars.

4.5 OUR PRODUCTS & SERVICES

Equities

Online Trading

Commodities

Insurance s

Wealth Management

Asset Management

Mutual Funds

Loans

Stock SMS Service

Newsletters
http://www.indiainfoline.com/ProductsAndServices/Equitieshttps://trading.indiainfoline.com/ttlw/login.aspxhttp://www.indiainfoline.com/ProductsAndServices/Commoditieshttp://www.indiainfoline.com/ProductsAndServices/Insurance/http://www.indiainfoline.com/ProductsAndServices/Wealthhttp://www.indiainfoline.com/ProductsAndServices/Assethttp://var/www/apps/conversion/current/tmp/scratch11011/%20https://appserver.5paisa.com/muon/mufulogin.asphttp://www.indiainfoline.com/PersonalFinance/Loans/http://www.indiainfoline.com/ProductsAndServices/SMS/http://www.indiainfoline.com/ProductsAndServices/Newsletters/http://www.indiainfoline.com/ProductsAndServices/Equitieshttps://trading.indiainfoline.com/ttlw/login.aspxhttp://www.indiainfoline.com/ProductsAndServices/Commoditieshttp://www.indiainfoline.com/ProductsAndServices/Insurance/http://www.indiainfoline.com/ProductsAndServices/Wealthhttp://www.indiainfoline.com/ProductsAndServices/Assethttp://var/www/apps/conversion/current/tmp/scratch11011/%20https://appserver.5paisa.com/muon/mufulogin.asphttp://www.indiainfoline.com/PersonalFinance/Loans/http://www.indiainfoline.com/ProductsAndServices/SMS/http://www.indiainfoline.com/ProductsAndServices/Newsletters/


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Equities

India Infoline provided the prospect of researched investing to its clients, which was hitherto

restricted only to the institutions. Research for the retail investor did not exist prior to India

Infoline. India Infoline leveraged technology to bring the convenience of trading to the investors

location of preference (residence or office) through computerized access. India Infoline made it

possible for clients to view transaction costs and ledger updates in real time.

In accounting and finance , equity is the residual claim or interest of the most junior class of investors in assets , after all liabilities are paid. If liability exceeds assets, negative equity exists. Inan accounting context, Shareholders' equity (or stockholders' equity, shareholders' funds,

shareholders' capital or similar terms) represents the remaining interest in assets of a company,spread among individual shareholders of common or preferred stock .

At the start of a business , owners put some funding into the business to finance operations. Thiscreates a liability on the business in the shape of capital as the business is a separate entity from itsowners. Businesses can be considered to be, for accounting purposes, sums of liabilities and assets ;this is the accounting equation. After liabilities have been accounted for, the positive remainder isdeemed the owner's interest in the business.

This definition is helpful in understanding the liquidation process in case of bankruptcy . At first,all the secured creditors are paid against proceeds from assets. Afterward, a series of creditors,ranked in priority sequence, have the next claim/right on the residual proceeds. Ownership equityis the last or residual claim against assets, paid only after all other creditors are paid. In such caseswhere even creditors could not get enough money to pay their bills, nothing is left over toreimburse owners' equity. Thus owners' equity is reduced to zero. Ownership equity is also knownas risk capital or liable capital.

EQUITY INVESTMENT

An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains , as thevalue of the stock rises. It may also refer to the acquisition of equity (ownership) participation in a

private (unlisted) company or a startup company . When the investment is in infant companies, it is
http://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Negative_equityhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Common_stockhttp://en.wikipedia.org/wiki/Preferred_stockhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Ownerhttp://en.wikipedia.org/wiki/Business_operationshttp://en.wikipedia.org/wiki/Share_capitalhttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Accounting_equationhttp://en.wikipedia.org/wiki/Liquidationhttp://en.wikipedia.org/wiki/Bankruptcyhttp://en.wikipedia.org/wiki/Creditorhttp://en.wikipedia.org/wiki/Residual_claimanthttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Capital_gainhttp://en.wikipedia.org/wiki/Startup_companyhttp://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Negative_equityhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Common_stockhttp://en.wikipedia.org/wiki/Preferred_stockhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Ownerhttp://en.wikipedia.org/wiki/Business_operationshttp://en.wikipedia.org/wiki/Share_capitalhttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Accounting_equationhttp://en.wikipedia.org/wiki/Liquidationhttp://en.wikipedia.org/wiki/Bankruptcyhttp://en.wikipedia.org/wiki/Creditorhttp://en.wikipedia.org/wiki/Residual_claimanthttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Capital_gainhttp://en.wikipedia.org/wiki/Startup_company


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referred to as venture capital investing and is generally understood t o be higher risk thaninvestment in listed going-concern situations.

The equities held by private individuals are often held via mutual funds or other formsof collective investment scheme , many of which have quoted prices that are listed in financialnewspapers or magazines; the mutual funds are typically managed by prominent fund managementfirms, such as Schroders , Fidelity Investments or The Vanguard Group . Such holdings allowindividual investors to obtain the diversification of the fund(s) and to obtain the skill of the

professional fund managers in charge of the fund(s). An alternative, which is usually employed bylarge private investors and pension funds, is to hold shares directly; in the institutionalenvironment many clients who own portfolios have what are called segregated funds , as opposedto or in addition to the pooled mutual fund alternatives.

A calculation can be made to assess whether an equity is over or underpriced, compared with along-term government bond. This is called the Yield Gap or Yield Ratio. It is the ratio of the dividend yield of an equity and that of the long-term bond.

PMS :

Our Portfolio Management Service is a product wherein an equity investment portfolio is created

to suit the investment objectives of a client. We at India Infoline invest your resources into stocks

from different sectors, depending on your risk-return profile. This service is particularly advisablefor investors who cannot afford to give time or don't have that expertise for day-to-day

management of their equity portfolio.

Portfolio management involves deciding what assets to include in the portfolio, given the goalsand risk tolerance of the portfolio owner. Selection involves deciding which assets toacquire/divest, how many to acquire/divest, and when to acquire/divest them. These decisionsalways involve some sort of performance measurement, most typically the expected return on the

portfolio, and the risk associated with this return (e.g., the expected standard deviation of the

expected return). However, due to the almost-complete uncertainty of future values, this performance measurement is often done on a casual qualitative basis, rather than a precisequantitative basis (which would give a false sense of precision). Typically the expected returnfrom portfolios of different asset bundles are compared.

The unique goals and circumstances of the investor must also be considered. Some investors aremore risk averse than others.
http://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Schrodershttp://en.wikipedia.org/wiki/Schrodershttp://en.wikipedia.org/wiki/Fidelity_Investmentshttp://en.wikipedia.org/wiki/Fidelity_Investmentshttp://en.wikipedia.org/wiki/The_Vanguard_Grouphttp://en.wikipedia.org/wiki/Diversification_(finance)http://en.wikipedia.org/wiki/Diversification_(finance)http://en.wikipedia.org/wiki/Fund_managerhttp://en.wikipedia.org/wiki/Portfolio_(finance)http://en.wikipedia.org/wiki/Segregated_fundhttp://en.wikipedia.org/wiki/Yield_Gaphttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Expected_returnhttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Standard_deviationhttp://en.wikipedia.org/wiki/Risk_aversionhttp://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Schrodershttp://en.wikipedia.org/wiki/Fidelity_Investmentshttp://en.wikipedia.org/wiki/The_Vanguard_Grouphttp://en.wikipedia.org/wiki/Diversification_(finance)http://en.wikipedia.org/wiki/Fund_managerhttp://en.wikipedia.org/wiki/Portfolio_(finance)http://en.wikipedia.org/wiki/Segregated_fundhttp://en.wikipedia.org/wiki/Yield_Gaphttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Expected_returnhttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Standard_deviationhttp://en.wikipedia.org/wiki/Risk_aversion


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Mutual funds have developed particular techniques to optimize their portfolio holdings. See fund management for details.

Portfolio formation

Many strategies have been developed to form a portfolio; among them:

equally-weighted portfolio

capitalization-weighted portfolio

price-weighted portfolio

optimal portfolio (for which Risk-Adjusted Return is highest)

Research

Sound investment decisions depend upon reliable fundamental data and stock selection techniques.

India Infoline Equity Research is proud of its reputation for, and we want you to find the facts that

you need. Equity investment professionals routinely use our research and models as integral tools

in their work.

They choose Ford Equity Research when they can clear your doubts.

Commodities

India Infolines extension into commodities trading reconciles its strategic intent to emerge as a

one-stop solutions financial intermediary. Its experience in securities broking has empowered itwith requisite skills and technologies. The Companys commodities business provides a contra-

cyclical alternative to equities broking. The Company was among the first to offer the facility of

commodities trading in Indias young commodities market (the MCX commenced operations only

in 2003). Average monthly turnover on the commodity exchanges increased from Rs 0.34 bn to Rs
http://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Fund_managementhttp://en.wikipedia.org/wiki/Fund_managementhttp://en.wikipedia.org/w/index.php?title=Risk-Adjusted_Return&action=edit&redlink=1http://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Fund_managementhttp://en.wikipedia.org/wiki/Fund_managementhttp://en.wikipedia.org/w/index.php?title=Risk-Adjusted_Return&action=edit&redlink=1


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20.02 bn. The commodities market has several products with different and non-correlated cycles.

On the whole, the business is fairly insulated against cyclical gyrations in the business.

Mortgages

During the year under review, India Infoline acquired a 75% stake in Money tree Consultancy

Services to mark its foray into the business of mortgages and other loan products distribution. The

business is still in the investing phase and at the time of the acquisition was present only in the

cities of Mumbai and Pune. The Company brings on board expertise in the loans business coupled

with existing relationships across a number of principals in the mortgage and personal loans

businesses. India Infoline now has plans to roll the business out across its pan-Indian network to

provide it with a truly national scale in operations.

Invest Online

India Infoline has made investing in Mutual funds and primary market so effortless. All you have

to do is register with us and thats all. No paperwork no queues and No registration charges.

Invest In Mutual FundsIndia Infoline offers you a host of mutual fund choices under one roof, backed by in-depth

research and advice from research house and tools configured as investor friendly.

Apply In IPOs

You could also invest in Initial Public Offers (IPOs) online without going through the hassles of

filling ANY application form/ paperwork.

SMS

Stay connected to the market

The traders of today; you are constantly on the move. But how do you stay connected to the

market while on the move? Simple, subscribe to India Infoline's Stock Messaging Service and get

Market on your Mobile!


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There are three products under SMS Service:

Market on the move.

Best of the lot.

VAS (Value Added Service)

Insurance

An entry into this segment helped complete the clients product basket; concurrently, it graduated

the Company into a one-stop retail financial solutions provider. To ensure maximum reach to

customers across India, we have employed a multi pronged approach and reach out to customers

via our Network, Direct and Affiliate channels. Following the opening of the sector in 1999-2000,

a number of private sector insurance service providers commenced operations aggressively andhelped grow the market.

The Companys entry into the insurance sector derisked the Company from a predominant

dependence on broking and equity-linked revenues. The annuity based income generated from

insurance intermediation result in solid core revenues across the tenure of the policy.

Wealth Management Service

Imagine a financial firm with the heart and soul of a two-person organization. A world-leading

wealth management company that sits down with you to understand your needs and goals. We

offer you a dedicated group for giving you the most personal attention at every level.

Newsletters

The Daily Market Strategy is your morning dose on the health of the markets. Five intra-day ideas,

unless the markets are really choppy coupled with a brief on the global markets and any other

cues, which could impact the market. Occasionally an investment idea from the research team and

a crisp round up of the previous day's top stories. That's not all. As a subscriber to the Daily

Market Strategy, you even get research reports of India Infoline research team on a priority basis.


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The India Infoline Weekly Newsletter is your flashback for the week gone by. A weekly outlook

coupled with the best of the web stories from India Infoline and links to important investment

ideas, Leader Speak and features is delivered in your inbox every Friday evening.

IIFL PReMIA :

'India Infoline Limited' acts only as an Introducing broker for 'Interactive Brokers LLC' for

transactions in overseas investment products. The Trading platform for transacting in overseas

investment products shall be provided to Investors by Interactive Brokers LLC. Investors should

acquaint themselves with the complexities of trading in overseas investment products and the

extent of their exposure to risk before investing in instruments traded on the overseas Exchanges.

The contents herein shall not be considered as an invitation or persuasion to trade or invest.

Investors should make independent judgement with regard to suitability, profitability, and fitness

of any product or service offered by Interactive Brokers LLC. India Infoline Ltd, its affiliates,

Group companies, including Directors and officials accept no liabilities for any loss or damage of

any kind to any person arising out of any actions taken in reliance thereon.

Investor by accessing this site agrees that anyone in the Interactive Brokers Group or their

representative may contact the investor via phone or email with information on products and

services and to guide the investors in the use of the trading platform.

The site, all of its pages and the material contained therein are not oriented for persons belonging

to jurisdictions in which due to the nationality of the person, their residence or other reasons access


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to the site, consultation, availability or publications are restricted or prohibited. Persons subject to

such restrictions or prohibition must not access the site.

The distribution of this Service or content in other jurisdictions may be restricted by law and the

persons who access the Service should inform themselves about, and observe, any such

restrictions. This Service is not intended to be any form of an investment advertisement,

investment advice or investment information and has not been registered under any securities law

of any foreign jurisdiction and is only for the information of any person in any jurisdiction where it

may be lawful to provide such information, otherwise the same shall not be considered an

information.

No information, opinions or other matter contained in the site shall be interpreted as an invitation,

offer or suggestion to buy or sell shares, financial instruments, consultations, financial

services or transactions of any kind. It should not be viewed as a recommendation or for the

purpose of soliciting any action. This Service on the Website does not constitute an offer to sell or

a solicitation to any person in any jurisdiction where it is unlawful to make such an offer or

solicitation.

The use and interpretation of the Services offered may require skill and judgment and the products

may involve significant risks, and that Investors shall at all time fully understand all such risks and

exercise their own judgment in the use of the Products and Services. The services are subject to

various risks including risks associated with internet based trading system. IIL shall not be

responsible in any manner for communication failures, distortions or delays when trading via the

Internet

About PReMIA

Priority Relationship Management & Investment Advisory (PReMIA)

PReMIA is a multi-product, customized financial environment which aims to generate

superior returns for IIFL's preferred clients, by investing across varied asset classes.


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With PReMIA, you have access to a team that's vastly experienced and trained in different

aspects of the stock market, assuring you a multi-faceted opinion for all your financial queries.

Adjudging your risk profile, setting investment goals, chalking out strategies to attain all long

term and short term financial objectives are just a few of the duties that we take care of. Our dedicated relationship managers & investment advisors work tirelessly studying market,

presenting new opportunities, evaluating and interpreting them so that you get the best of

every opportunity.

Platinum class research, dedicated customer service teams coupled with easy access and

complete account transparency make PReMIA a unique experience for all our Priority Clients.

The PReMIA Team

Our Team of dedicated Relationship Managers and experienced Investment Advisors make

sure that your money is invested in the best investment avenues depending on your future

financial goals. We ensure that we have none but the best people servicing you.

Our Relationship Managers and Investment Advisors are MBAs / CAs / CFAs, who come

with a rich experience in Wealth Management / Private Client Group Broking / Priority

Banking. They have sound knowledge of Financial Products and most importantly place their

clients before everything else. WITH US AROUND YOU DONT HAVE TO WORRY

ABOUT YOUR INVESTMENTS .

PReMIA Infrastructure

1. IIFL PReMIA has 23 branches across India to cater to your financial requirements

24*7


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2. We have state-of-art Dealing Rooms

3. Robust back-end systems

4. Dedicated team of Analysts

5. Fund Management expertise6. Product Desk to provide customized products which are a combination of Equity and

Debt

7. Desk for International Equity

PRODUCT OFFERINGS

Equity

We offer a bouquet of Equity offerings suitable for high traders to long term investors, beginners

to diverse class of capital market participants. We have a dedicated desk assisting clients on Asset

allocation, trading strategies, portfolio optimization. Award winning research on Fundamental,

Technical & Derivatives aimed at growing assets by outperforming market.

Derivatives

Extensive research coverage on strategies such as Hedging, Carry-overs, Spreads, etc., helps

clients to balance the risk and rewards of derivative trading. Our experienced advisors support high

traders to make most of this popular market segment.

Mutual Funds

A mixture of comprehensive coverage of all mutual fund offerings and seamless execution of

instructions. IIFL research and Mutual Fund trackers helps clients to navigate the ever growing

market of MF Offers with outmost ease.


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Structured Product

Customized Structures offering unique combination of coupons, market participation representing

wide variety of Industry segment helps High Net worth Clients manage and preserve their wealth.

Life Insurance

IIFL -one of the largest insurance brokers presents its clients with a bouquet of products across

multiple service providers in most convenient manner. Our expertise in different classes along

with Insurance completes a client's financial planning process.


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Services

Dedicated Team

The highly experienced PReMIA team makes investment related decision-making much easier.

Relationship Managers and Advisors constantly strive to add value in services by providing

customized analytics and tools to meet clients unique requirements keeping in mind their risk

taking abilities.

World-class Research made simple for our clients

IIFL PReMIA has a full-fledged research team involved in macro-economic studies, sectoral

research and industry specific equity research covering Indian, emerging and global markets. Also,

IIFL's 'Forbes-acclaimed' world-class research team offers IQ (Insights Quick), a customized,

premium research offering, tailor-made for PReMIA customers.

Easy Access and Complete Account Transparency

Access to online back office systems, charting tools, real time terminals and research mines all

integrated through an award winning trading platform. Now, keep track of your investments,

anytime.

Dedicated Customer ServiceIIFL PReMIA has a dedicated customer care service desk to ensure that all queries pertaining to

your account, transaction details and fund status are clarified. Our experts are always keen on

helping the Priority Clients take an informed decision as we understand the value of spotting an

opportunity before others do.

Top-of-the-line Dealing Desk

More than 25 state-of-the-art Central Dealing Rooms deliver an unparallel equity trading

experience. Have the PReMIA edge with our expert teams handling all your investment worries.


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Customized Investment Strategies

The IIFL PReMIA team employs advanced strategies for trading with customized products in

Equity, MF, Structured and many more. Every step is backed by a centralized, real time Risk

Management System with cutting edge technology.

WHY PReMIA :

Your Investment Cycle and PReMIA


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How do we handle your Investments ?

5. SWOT ANALYSIS


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Strengths

Integrated technology platform One Stop shop Pan - India distribution network India Infoline.com and 5paisa.com have developed into brands

Weaknesses

Lack of a banking arm to complete the bank-broker-depository chain Insignificant presence in institutional Segment

Opportunities

Changing demographics with higher disposable income and increasingly complex

financial instruments will drive demand for investment advisory services Rapid penetration of Internet and computers means that technology enabled financialservices will gain market share

Threats

Economic slowdown Volatile movement in indices events like May 17, 2004 Stock markets falls will have a cascading effect on our mutual fund mobilization Increase/decrease in interest rate can affect our debt/ income fund mobilizations Future changes in personal taxation rules can impact insurance sales Increasing competition from large and particularly foreign players


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CHAPTER : 6

COMPETITORS OF IIFL


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INDIA BULLS :

In middle of 1999, when e-commerce was just about starting in India, Sameer Gehlaut and his

close IIT Delhi friend Rajiv Rattan got together and bought a defunct securities company with a

NSE membership and started offering brokerage services . A Few months later, their friend

Saurabh Mittal also joined them. By December 1999, the company embarked on its journey to

build one of the first online platforms in India for offering internet br

Documents

IIFL - India Info Line - FUNCTION’S OF STOCK MARKET IN INDIA (WITH RESPECT TO LEVEL OF CUSTOMER A (2)