Strategic Analyisis on Capital Market(NIMS11)

8/8/2019 Strategic Analyisis on Capital Market(NIMS11)

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WHY INVEST ?

If you were to open a book on economics and look up the word investing, chances are

that you would find the following definition: Investing is building up to meet future

consumption demands with the intention of making surpluses or profits, as they are

popularly known.

And after reading it, the last trace of your eagerness to invest is likely to evaporate.

But investing is essential. Here is why

While the life expectancy of the average human being has increased, we are productive

only between the ages of 30 and 60 years. Hence the short time span that we are able to

earn money needs to provide for our future when we may not be capable of earning.

Everything being the same, we could keep away a part of our earnings every year (save)

that will come in handy when we will not be able to earn. However inflation destroys the

value of what we save. A sum of Rs10,000 saved this year will not have the same

purchasing power ten years down the line. Hence we need to preserve the purchasing

power of what we save.

The only way to hedge inflation is to invest in shares, debentures, bonds, gold or real

estate, to earn returns from these assets that compensate for the decline in our purchasing

power.

SHREE H. N. SHUKLA COLLEGE OF MANAGEMENT STUDIES, RAJKOT 1


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WHAT IS A SHARE ?

Share or Equity represents part of an ownership of a business. So as a shareholder

you own a piece of the action that happens in that business. Why would you want a piece

of the action? For the rewards of course. As a shareholder you have a right over the

profits generated by your business. Your company might pay out the profits generated

every year as dividends or it may retain the profits to further grow them.

Theres another way you as a shareholder can make money. If your company does well,

then its shares listed on the stock market become more valuable and the stock price

appreciates. On the other hand, the company might perform badly. Then not only do you

not get dividends but the stock price also declines. Hence investing in shares is a risky

proposition.

When you invest in shares, you can expect certain returns based on the fundamentals of a

business. However you have no control over it. What you have control over is managing

risks associated with it.



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HISTORY OF THE STOCK BROKING INDUSTRY

Indian Stock Markets are 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.

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 ofEurope was stopped; thus, the 'Share Mania' in India begun. The number of brokers

increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a

disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850

could only be sold at Rs. 87). 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.

Thus in the same way, gradually with the passage of time number of exchanges were

increased and at currently it reached to the figure of 24 stock exchanges.



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DEVELOPMENT

An important early event in the development of the stock market in India was the

formation of the Native Share and Stock Brokers Association at Bombay in 1875, the

precursor of the present-day Bombay Stock Exchange. This was followed by the

formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras

(1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant

periods to recede into oblivion during depressing times subsequently.

In order to check such aberrations and promote a more orderly development of the stock

market, the central government introduced a legislation called the Securities Contracts

(Regulation) Act, 1956. Under this legislation, it is mandatory on the part of a stock

exchanges to seek government recognition. As of January 2002 there were 23 stock

exchanges recognized by the central Government. They are located at Ahemdabad,

Bangalore, Baroda, Bhubaneshwar, Calcutta, Chenni,(the Madras stock Exchanges ),

Cochin, Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur, Ludhiana,

Mangalore, Mumbai(the National Stock Exchange or NSE), Mumbai (The Stock

Exchange), papularly called the Bombay Stock Exchange, Mumbai (OTC Exchange of

India), Mumbai (The Inter-connected Stock Exchange of India), Patna, Pune, and Rajkot.Of course, the principle bourses are the National Stock Exchange and The Bombay Stock

Exchange , accounting for the bulk of the business done on the Indian stock market.

While the recognized stock exchanges have been accorded a privileged position, they are

subject to governmental supervision and control. The rules of a recognized stock

exchanges relating to the managerial powers of the governing body, admission,

suspension, expulsion, and re-admission of its members, appointment of authorized

representatives and clerks, so on and so forth have to be approved by the government.

These rules can be amended, varied or rescinded only with the prior approval of the

government. The Securities Contracts (Regulation) Act vests the government with the

power to make enquiries into the affairs of a recognized stock exchange and its business,

withdraw the recognition the task of regulating the stock exchange to the Securities

Exchanges Board of India.



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BSE (THE STOCK EXCHANGE OF MUMBAI)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as

"The Native Share and Stock Brokers Association". It is the oldest one in Asia, even

older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary

non-profit making Association of Persons (AOP) and is currently engaged in the process

of converting itself into demutualised and corporate entity. It has evolved over the years

into its present status as the premier Stock Exchange in the country. It is the first Stock

Exchange in the Country to have obtained permanent recognition in 1956 from the Govt.of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in

securities, debt and derivatives upholds the interests of the investors and ensures redressal

of their grievances whether against the companies or its own member-brokers. It also

strives to educate and enlighten the investors by conducting investor education program

and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies and

regulates the affairs of the Exchange. The Governing Board consists of 9 elected

directors, who are from the broking community (one third of them retire ever year by

rotation), three SEBI nominees, six public representatives and an Executive Director &

Chief Executive Officer and a Chief Operating Officer.



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NSE (NATIONAL STOCK EXCHANGE)

NSE was incorporated in 1992 and was given recognition as a stock exchange in April

1993. It started operations in June 1994, with trading on the Wholesale Debt Market

Segment. Subsequently it launched the Capital Market Segment in November 1994 as a

trading platform for equities and the Futures and Options Segment in June 2000 for

various derivative instruments.

NSE has been able to take the stock market to the doorsteps of the investors. The

technology has been harnessed to deliver the services to the investors across the countryat the cheapest possible cost. It provides a nation-wide, screen-based, automated trading

system, with a high degree of transparency and equal access to investors irrespective of

geographical location. The high level of information dissemination through on-line

system has helped in integrating retail investors on a nation-wide basis. The standards set

by the exchange in terms of market practices, Products , technology and service standards

have become industry benchmarks and are being replicated by other market participants.

Within a very short span of time, NSE has been able to achieve all the objectives for

which it was set up. It has been playing a leading role as a change agent in transforming

the Indian Capital Markets to its present form. The Indian Capital Markets are a far cry

from what they used to be a decade ago in terms of market practices, infrastructure,

technology, risk management, clearing and settlement and investor service.



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HISTORICAL INDEX CHART

The chart shows the data related to NIFTY Ups and Downs from January 1994 to March

2006.



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NCDEX (NATIONAL COMMODITIES AND DERIVATIVES

EXCHANGE)

NCDEX started working on 15th

December, 2003. This exchange provides facilities to

their trading and clearing member at different 130 centers for contract.

In commodity market the main participants are speculators, hedgers and arbitrageurs.

Promoters of NCDEX are

National Stock Exchange(NSE)

ICICI bank

Life Insurance Corporation(LIC)

National Bank for Agricultural and Rural Development (NABARD)

IFFICO

Punjab National Bank (PNB)

CRISIL

WHY NCDEX?

NCDEX is nationalized screen based system which is providing transparent,private and easy services.

NCDEX is one of the traditional media which gives online information

NCDEX is one of the Indian commodity exchange, constructed on the basis of the

current national institutes the exchange has been established with the coloration of

leading institutes like NABARD, LIC, NSI etc.

In India NCDEX has maximum settlement guarantee fund.

NCDEX has appointed two exports for checking quality at the time of delivery



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FACILITIES PROVIDED BY NCDEX

NCDEX has developed facility for checking of commodity and also provides a

wear house facility

By collaborating with industrial partners, industrial companies, news agencies,

banks and developers of kiosk network NCDEX is able to provide current rates

and contracts rate.

To prepare guidelines related to special products of securitization NCDEX works

with bank.

To avail farmers from risk of fluctuation in prices NCDEX provides special

services for agricultural.

NCDEX is working with tax officer to make clear different types of sales and

service taxes.

NCDEX is providing attractive products like weather derivatives



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MCX (MULTI COMMODITY EXCHANGE)

MULTI COMMODITY EXCHANGE of India limited is a new order exchange with a

mandate for setting up a nationwide, online multi-commodity marketplace, offering

unlimited growth opportunities to commodities market participants. As a true neutral

market, MCX has taken several initiatives for users

In a new generation commodities futures market in the process, become the countrys

premier exchange.

MCX, an independent and a de-mutualized exchange since inception, is all set up to

introduce a state of the art, online digital exchange for commodities futures trading in the

country and has accordingly initiated several steps to translate this vision into reality.

MARKET WATCH:

The market watch window is used to view the market details for a particular or group of

contracts and for a particular instrument type. This window displays the following

details: Symbol,Expiry,price quotation unit, buy qty, buy price, sell price, sell qty, last

traded price,D.P.R,volume (in 000s), value (in lac),% change,

average trade price, high, low, open, close & open interest.



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TRANSACTION CYCLE

A person holding assets (Securities/Funds), either to meet his liquidity needs or to

reshuffle his holdings in response to changes in his perception about risk and return of the

assets, decides to buy or sell the securities. He selects a broker and instructs him to place

buy/sell order on an exchange. The order is converted to a trade as soon as it finds a

matching sell/buy order. At the end of the trade cycle, the trades are netted to determine

the obligations of the trading members securities/funds as per settlement cycle.

Buyer/seller delivers funds/ securities and receives securities/funds and acquires

ownership of the securities.

A securities transaction cycle is presented above. Just because of this Transaction cycle,

the whole business of Securities and Stock Broking has emerged. And as an extension of

stock broking, the business of Online Stock broking/ Online Trading/ E-Broking has

emerged.

SHREE H. N. SHUKLA COLLEGE OF MANAGEMENT STUDIES, RAJKOT

PlacingOrder

PlacingOrder

Settlementof trades

Settlementof trades

Decision totrade

Decision totrade

TradeExecutionTrade

Execution

Clearingof TradesClearingof Trades

Funds orSecurities

Funds orSecurities

TransactionCycle

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MAJOR PLAYERS

1. S S KANTILAL ISHWARLAL SECURITIES PVT LTD. (www.sharekhan.com)

2. ICICI WEB TRADE LTD. (www.icicidirect.com)

3. 5 PAISA.COM (www.5paisa.com)

4. KOTAK SECURITIES LTD. (www.kotakstreet.com)

5. INDIABULLS (www.indiabulls.com)

6. MOTILAL OSWAL SECURITIES LTD.

7. HDFC SECURITIES LTD. (www.hdfcsec.com)

8. UTI SECURITIES LTD.

9. IDBI CAPITAL MARKET SERIVICES LTD.

10. REFCO SIFY SECURITIES PVT LTD.

Parameters

A/c Opening Fee Brokerage Interface

Trading

A/cDemat Delivery

Square

Off

Banks Associated

with

Sharekhan 750 NIL 0.50 0.10HDFC, UTI, OBC,

IDBI & Citibank

ICICI Direct 750 NIL 0.75 0.18 ICICI Bank

Indiabulls 750 250 0.40 0.10 N.A.

5 paisa 800 NIL 0.20 0.05

Citibank, HDFC,

OBC, UTI & ICICI

Bank

Kotak Street 500 N.A. 0.59 0.06Kotak Bank &

Citibank

HDFC Securities 700 NIL 0.50 0.15HDFC & Other 4

Banks



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S. S. KANTILAL ISHWARLAL SECURITIES PVT. LTD. (SHAREKHAN.COM):

Sharekhan, Indias leading stock broker is the retail arm of SSKI, and offers you

depository services and trade execution facilities for equities, derivatives and

commodities backed with investment advice tempered by decades of broking experience.

A research and analysis team is constantly working to track performance and trends.

Thats why Sharekhan has the trading products, which are having one of the highest

success rates in the industry. Sharekhan is having 240 share shops in 110 cities; the

largest chain of retail share shops in India is of Sharekhan.

In future, Sharekhan is planning to enter in Mutual funds, Insurance sector and banking

sector to expand beyond the market currently covered by it. And it has started MF

(Mutual Funds) on priority basis but wants to grow in it.

ICICI WEB TRADE LTD. (ICICIdirect.com):

ICICIdirect.com was the first entrant into e-broking. ICICdirect.com provides the 3-

in-1 to the users which ties in their saving bank account and their Demat account to their

brokerage account electronically. This integration ensures that money is transferred

to/from their bank account and the shares are transferred from/to their Demat account

automatically without writing any cheques or transfer instructions while carrying out

their trades in shares.

ICICIdirect.com has the option of trading in shares in cash, margin or spot segments. An

investor can also invest in 14 Mutual Funds (Prudential ICICI MF, Franklin Templeton

India MF, Alliance Capital MF, JM MF, Birla Sun Life MF, Sundaram MF, IL&FS MF,

Principal MF, HDFC MF, Standard Chartered MF, Reliance Capital MF, Kotak

Mahindra MF, TATA MF and DSP MERRILL LYNCH MF) through their trading

account.

ICICIdirect.com doesnt provide the facility of trading in a traditional way.



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5Paisa.com:

5paisa is the trade name of India Infoline Securities Private Limited (5paisa), member of

National Stock Exchange and The Stock Exchange, Mumbai. 5paisa is a wholly owned

subsidiary of India Infoline Ltd, Indias leading and most popular finance and investment

portal. 5paisa has emerged as one of leading players in e-broking space in India.

The companys brokerage is one of the lowest in the industry. It also provides the

research on commodities. Investors can benefit from its analysis and advice available at

the click of the mouse. For those who prefer to trade the traditional way, India Infoline

investor points are available across the country.

India Infoline was founded by a group of professionals in 1995. Its institutional investors

include Intel Capital, one of the leading technology companies in the world promoted by

the UK government, ICICI, TDA and Reeshanar. The company offers a slew of products

such as stock and derivatives broking, commodities broking and mutual funds.

KOTAK SECURITIES LIMITED (kotakstreet.com):

Kotak Securities Ltd., a strategic joint venture between Kotak Mahindra Bank and

Goldman Sachs (holding 25% - one of the worlds leading investment banks and

brokerage firms) is Indias leading stock broking house with a market share of 5 - 6 %.

Kotak Securities Ltd. has been the largest in IPO distribution - It was ranked number One

in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME

Database. It has also won the Best Equity House Award from Finance Asia - April 2004.

Kotak Securities Ltd is also a depository participant with National Securities Depository

Limited (NSDL) and Central Depository Services Limited (CDSL) providing dual benefit

services wherein the investors can use the brokerage services of the company for

executing the transactions and the depository services for settling them. The company has

42 branches servicing around 1, 00,000 customers. Kotakstreet.com the online division of

Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual

Fund Investments.



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Kotak Securities Limited manages assets over 1700 crores under Portfolio Management

Services (PMS) which is mainly to the high end of the market. Kotak Securities Limited

has newly launched Kotak Infinity as a distinct discretionary Portfolio Management

Service which looks into the middle end of the market.

India Bulls:

Indiabulls is India's leading retail financial services company with 77 locations spread

across 64 cities. Its size and strong balance sheet allows providing varied products and

services at very attractive prices, our over 750 Client Relationship Managers are

dedicated to serving your unique needs.

Indiabulls is lead by a highly regarded management team that has invested crores of

rupees into a world class Infrastructure that provides real-time service & 24/7 access to

all information and products. The Indiabulls Professional Network offers real-time

prices, detailed data and news, intelligent analytics, and electronic trading capabilities,

right at your finger-tips. This powerful technology is complemented by our

knowledgeable and customer focused Relationship Managers.

Indiabulls offers a full range of financial services and products ranging from Equities,

Derivatives, Demat services and Insurance to enhance wealth and to achieve the financial

goals.

MOTILAL OSWAL SECURITIES LTD. (MOSt):

One of the top-3 stock-broking houses in India, with a dominant position in both

institutional and retail broking, MOSt is amongst the best-capitalized firms in the broking

industry in terms of net worth. MOSt was founded in 1987 as a small sub-broking unit,

with just two people running the show. Focus on customer-first-attitude, ethical and

transparent business practices, respect for professionalism, research-based value investing

and implementation of cutting-edge technology have enabled it to blossom into a

thousand-member team.



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The institutional business unit has relationships with several leading foreign institutional

investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent media report

MOSt was rated as one of the top-10 brokers in terms of business transacted for

FIIs.

The retail business unit provides equity investment solutions to more than 50,000

investors through 270 outlets spanning 150 cities and 22 states. MOSt provides Advice-

Based Broking, Portfolio Management Services (PMS), E-Broking Services,

Depository Services, Commodities Trading, and IPO and Mutual Fund Investment

Advisory Services. Its Value PMS Scheme gave a 160% post-tax return for the year

ended March 2004.

In AsiaMoney Brokers Poll 2003 MOSt has been rated as the Best Domestic Research

House- Mega Funds ,while in 2000 and 2002 it has been rated as the Best Domestic

Equity Research House and Second best amongst Indian Brokerage firms

respectively.

HDFC SECURITIES LTD (HDFCsec):

HDFCsec is a brand brought to you by HDFC Securities Ltd, which has been promoted

by the HDFC Bank & HDFC with the objective of providing the diverse customer base of

the HDFC Group and other investors a capability to transact in the Stock Exchanges &

other financial market transactions. The services comprise online buying and selling of

equity shares on the National Stock Exchange (NSE). Buying and selling of select

corporate debt and government securities on the NSE would be introduced in a

subsequent phase. In a few months, they will also start offering the following online

trading services on the BSE and NSE:

1. Buying and selling of shares on the BSE

2. Arbitrage between NSE & BSE

3. Trading in Derivatives on the NSE

4. Margin trading products.

They are also planning to include buying and selling of Mutual Funds, IPO subscriptions,

Right issues, purchase of Insurance policies and asset financing.

http://www.motilaloswal.com/eag.htmhttp://www.motilaloswal.com/eag.htmhttp://www.motilaloswal.com/eag.htmhttp://www.motilaloswal.com/eag.htm


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UTI SECURITIES LTD.: (UTISEL)

UTI Securities Ltd was incorporated on June 24, 1994 by Unit Trust of India as a 100%

subsidiary and on the repealing of the UTI Act, the capital is now held by the

Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). UTI

Securities has been working as an independent professional entity for providing financial

intermediary and advisory services to its corporate and retail clientele.

The Company has presence in major cities with 20 branches and 50 franchisees to service

a wide range of clients. The company has also invested in the joint-venture company with

Standard Chartered Bank viz. Standard Chartered UTI Securities (P) Ltd. that is

engaged in primary dealership and Government securities. The company is very soon

going to start Commodity Trading through its subsidiary, USEc Commodities Ltd, which

provides facility of commodity trading on NCDEX and MCX.

IDBI Capital Market Services Ltd.

IDBI Capital is a leading Indian securities firm offering a complete suite of products and

services to individual, institutional and corporate clients.

IDBI Capital Market Services Ltd. (IDBI Capital), a wholly owned subsidiary of

Industrial Development Bank of India (IDBI), is a leading Indian securities firm, offering

a complete suite of products and services to individual, institutional and corporate clients.

The services include fixed income trading, equities brokerage, debt and equity

derivatives, research, private placements, depository services, portfolio management and

distribution of financial products. Over the last five years, we have emerged as a leading

player in each of these businesses.

March 1995 - Commenced Equity Broking on NSE CM segment

July 1995 - Built agent Distribution Network across the country

October 1996 - Commenced Debt Broking on NSE WDM segment

December 1996 - Started operations as a Depository Participant



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1996 - Started to act as Arranger to Privately Placed Bond issues

April 1998 - Commenced operations as a Portfolio Manager

February 1999 - Acquired membership of BSE, Mumbai

November 1999 - Started operations as a Primary Dealer

June 2000 - Acquired Derivatives memberships of BSE and NSE

March 2002 - Achieved an outright secondary market turnover exceeding

Rs100,000 cr in G-Secs

October 2002- Commenced trading in Interest Rate Swaps

Refco - Sify Securities India Pvt. Ltd

Refco-Sify Securities India Pvt. Ltd., headquartered in Mumbai, is a joint venture

between the Refco Group Holding Ltd., USA; and Satyam Infoway Limited (NASDAQ:

SIFY) to offeronline and offline equity and derivatives trading for retail customers as

well as execution and clearing services for financial institutions.

Refco also provides clients with prime brokerage services, fixed income, equities, foreign

exchange, OTC derivatives and asset management.

Refco is a leader in providing clients with the latest technological advances in products

and services. Its proprietary systems and global infrastructure provide the flexibility to

meet all client requirements.



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INDUSTRY ANALYSIS USING PORTERS 5 FORCES MODEL


SUPPLIERS

Web maintainers

NSCLCSDLNSEBSEMCX

NCDEX

SUPPLIERS

Web maintainersNSCLCSDLNSEBSEMCX

NCDEX

SUBSTITUTESMutual Funds

InsuranceBank FD

SUBSTITUTES

Mutual FundsInsuranceBank FD

BUYERS

Small InvestorsFranchise/Business

PartnersHNIs

MF CompaniesHUF

InstitutionalInvestors

BUYERS

Small InvestorsFranchise/Business

PartnersHNIs

MF CompaniesHUF

InstitutionalInvestors

POTENTIAL ENTERANT

InvestmartVarious Banks

GeojitCipher

UTI Securities Ltd.Refco Group Ltd.

IDBI Capital Mkt. ServicesLtd.

POTENTIAL ENTERANT

InvestmartVarious Banks

GeojitCipher

UTI Securities Ltd.Refco Group Ltd.

IDBI Capital Mkt. ServicesLtd.

COMPETITORS

ICICI Web Trade Ltd5paisa.com

Kotak Securities LtdIndia Bulls

Motilal Oswal Securities LtdHDFC Securities LtdMarwadi Finance Ltd

COMPETITORS

ICICI Web Trade Ltd5paisa.com

Kotak Securities LtdIndia Bulls

Motilal Oswal Securities LtdHDFC Securities LtdMarwadi Finance Ltd

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1. SUPPLIERS

NSDL & CSDL are the regulatory bodies for Depository Participants like SSKI,

SHCIL, ICICIdirect.com, etc. Also these regulatory bodies have got an upper

hand as the bargaining power stock broking houses like SSKI, etc. would be less.

NSE & BSE are playgrounds where common an investor trade through stock

broking houses, for which they have to take permission from NSE/BSE.

NSE & BSE are under the purview of SEBI, thats why stock broking houses like

SSKI, have low bargaining power. But here there is one advantage that NSE/BSE

have i.e. they cannot go for forward integration.

MCX & NCDEX are stock exchanges which trade in commodities and

derivatives. Here again stock broking houses have to follow rules and regulation

of the same.

Web maintainers are companies which maintain web sites & technical aspects of

the same. Here stock broking houses like SSKI can have more bargaining power

due to stiff competition among web maintaining companies.

Web maintainers are companies who make and maintain softwares for stock

broking houses. If say for example stock broking houses switches over to other

web maintainers then that company cannot understand the mechanisms of

softwares. So it is quite high switching cost.



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2. BUYERS

There are various types of investors who trade through stock broking houses like

SSKI, which includes investors like small investors, medium net worth investors,

business partners, institutional investors and mutual fund companies.

Here the bargaining power of stock broking houses depends on how big the

investor is.

So here we can say that bargaining power of stock broking houses is high in case

of small investors & HUF.

While the bargaining power is moderate in case of HNI (High New Worth

Investors)/ MNIs (Medium Net Worth Investors) and business partners.

But the in case of mutual fund companies and institutional investors bargaining

power is less.

There is competitive buzz in stock broking industry; competitors are offering low

brokerage and best services with added feature. So switching cost is pretty much

less. So the buyer can easily switch over to competitors product.

3. ENTRY BARRIERS

Huge capital : - Capital is necessary not only for fixed facilities but also for

customers credit and absorbing start up losses. To start a stock broking house,

one needs huge capital for technology up gradation and skilled manpower.

Technology : - Technology for stock broking houses is life saving device.

Stock broking requires huge capital to make their products user friendly,

which in turn requires capital to employ skilled manpower. Thus, technology

could be one of the entry barriers.



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Regulatory Constraints : - Obtaining a license is a tedious job for a stock

broking house. It should comply with the regulation of the governing bodies

like SEBI, NSDL, etc. For a stock broking houses to plunge into the stock

broking industry, it needs to have some kind of financial background and

expertise. Thus, regulators constraints could be an entry barrier.

Experience curve : - The core competency in this industry is the services which

are provided to the end-users and the research based activities which includes

TIPS, fundamental as well as technical script analysis. Also the most

important thing which helps already established firms is-TRUST which

people would be having on firms like SSKI , Motilal Oswal, etc. this is very

difficult for new companies to imitate.

Network : - The Reach to the customer is the key factor in the industry. The

network of the companies like Motilal Oswal, Sharekhan, and ICICI is very

efficient and spreaded all over India. It will take time for a new entrant to

establish such a huge network (e.g. Marwadi), which say that,Network can

come up as most difficult entry barrier to overcome.

Expected Retaliation : - Whenever a new player comes in the industry, the old

companies have an option to reduce the prices of their product. This kind of

practice is called expected Retaliation which is also possible in this industry in

terms of less brokerage rates and reduced account opening charges. E.g.

before the entry of so many mew companies, Sharekhan was having two types

of accounts viz. speed trade speed trade plus, which were costing 1000 &

1500 account opening charges respectively. But due to competition, they have

come up with only one account i.e. speed trade plus with the account charges

of Rs.1000.



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4. COMPETITORS

The company is facing the competition from local as well as national level

players. The local players provide facility for off-line trading while the

national players like ICICIdirect.com and Kotakstreet.com, HDFC Security

provide online trading services.

There are also other big names like Indiabulls, Motilal Oswal, 5paisa and

Marwadi encircles the company form both the sides by providing online and

off-line trading with competitive services.

5. POTENTIAL ENTRANTS

The potential entrants in like Investmart, Jeojit and Cipher which are coming

in near future to Rajkot City.

Nationalized banks are also thinking to enter in this field by tying up with

broking houses. E.g. Bank Of Baroda.

6. SUBSTITUTES

Here substitutes are such instruments which can be used instead of

investing in shares.

The instruments like Bank FD, insurance, mutual funds are the substitutes.

If the use of this instruments increase this may be disadvantage for the

stock broking houses.

The companies and banks which are having these instruments can plunge

into this industry.



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COMPETITIVE ANALYSIS

FOLLOWER:

The followers are those who just blindly follow the other player which are

leader and challenges.

The players like 5 paisa, Motilal Oswal, HDFC Securities, Kotakstreet are the

followers.

LEADER:

ICICIdirect.com is a leader in the online account which is having 1, 24,000

accounts in the country.

While in offline account Sharekhan is leading with 64,000 offline accounts.

NICHER:

ICICIdirect.com and Kotakstreet.com are the two stock broking houses which

are focusing only on online investors.

CHALLENGER:

Sharekhan, Kotakstreet and Indiabulls come under this head.

Sharekhan challenges competitors by providing quality services and research

based advice.

Indiabulls is also challenging with low brokerage rates and class one services.



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HISTORY

Sharekhan, the retail arm of the SSKI (Shrepal Sewaklal Kantilal Ishwarlal) Group offers

world-class facilities for buying and selling shares on BSE and NSE, demat services,

derivatives (F&O) and most importantly investment advice tempered by 85 years of

research and broking experience. A research and analysis team is constantly working to

track performance and trends. Thats why Sharekhan has the trading products, which are

having one of the highest success rates in the industry. You can avail of all its services at

any of their 240 outlets in 110 cities, or through internet using their real time online

trading terminals.

A part from Sharekhan, the SSKI Group also comprises of Institutional Broking and

Corporate Finance. The Institutional Broking division caters to domestic and foreign

institutional investors, while the Corporate Finance Division focuses on niche areas such

as infrastructure, telecom and media. SSKI has been voted as the Top Domestic

Brokerage House in the research category, twice by Euromoney survey and four times by

Asiamoney survey. SSKI has been voted the best domestic brokerage in India by

Asiamoney Polls 2004.

Also SSKI is being rated as No. 1 Financial Researcher by Business Today, in the Survey

conducted on Lead Managers of all the Mutual Funds.

Basically, the company is a market leader in providing brokering services and has a high

turnover in it which makes it No.1 in the market. The main difference is the services that

they provide to the investors. The customer is managed with a friendly corporate culture

to give him a more benefited investment idea and motivate him whenever he needs. The

company is providing as many tips to the clients (pre-market, online and post-market) for

more and more trading ideas and the manager helps each client to concentrate on a few

scripts so that he can manage the profit/loss.



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In future, Sharekhan is planning to enter in Mutual funds, Insurance sector and banking

sector to expand beyond the market currently covered by it. And it has started MF

(Mutual Funds) on priority basis but wants to grow in it.

To sum up, Sharekhan brings a user- friendly trading facility, coupled with a wealth of

content that will help customers stalk the right shares.



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CURRENT POSITION

VISION

To empowr the investor with quality advice and superior serivce to help him take

better investment decisions. We believe that our growth depends on client

satisfaction.



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MISSION STATEMENT

o To provide the best customer service and product innovation tuned to diverse

needs of clientele

o Continuous up-gradation with changing technology, while maintaining human

values

o Respond to progressive globalization and achieving international standard.

o Efficiency and effectiveness built on ethical practices.



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CORE VALUE

Customer satisfaction through

Providing quality service effectively and efficiently

Smile, it enhances your face value is a service quality

stressed on

Periodic customer service Audits

Maximization of stakeholder value

Success through Teamwork ,integrity and People



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GENERAL INFORMATION

NAME : S. S. KANTILAL ISHWARLAL

SECURITEIS PVT. LTD.

HEAD OFFICE : SHAREKHAN LTD.

A 206, PHOENIH HOUSE,

PHOENIH MILL COPUND,

SENAPATI, BAPTA MARG,

LOWER PAREL,

MUMBAI - 400013

PH NO : 1800 - 22 7500 , 3970 75 00

E-MAIL : [email protected]

WEB SITE : www.sharekhan.com

CHIEF EXECUTIVE OFFICER: TARUN SHAH

BRANCH OFFICES : 100 BRANCHES

http://www.sharekhan.com/http://www.sharekhan.com/


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CHANGING TREND

Remember the time when you left orders with your broker in the morning and received a

confirmation fax late in the evening?

You wondered whether you had acquired the shares at the best possible price for the day.

Today, the picture is different. Imagine a scenario where you log on to your account, get the

live quotes of scripts you are interested in, get advise from experts and research reports

on your investment choice and then just click the mouse to place your order, pay the

amount due (which automatically gets debited into your account with the on line

brokerage firm), get your account statement, and the delivery of your shares into your

Demat account. All this through just one click of a mouse. Seems like a dream? But withonline trading this has become a reality. A few seconds later, you get the confirmation on

your screen. And after the trade settlement, your bank and DP accounts will reflect the

changes accordingly.

The speed of transaction, confidentiality about the prices and ease of settlement in the

paperless mode should be good reasons for retail investors to jump on to the Net. All they

need is a PC, a modem, a subscription to an ISP, an account with a bank (which has a web

presence) and a depository account. And they can choose from a plethora of e-trading web

sites.

So, finally the changing trend is known as E-trading which really means Buying and selling

securities via the Internet or other electronic means such as wireless access, touch-tone

telephones, and other new technologies with online trading. In most cases customers access a

brokerage firm's Web Site through their regular Internet Service Provider. Once there,

customers may consult information provided on the Web Site and log into their accounts to

place orders and monitor account activity"



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7 Ps OF SHAREKHAN

1. PRODUCT

Product Variety

Share khan offers 3 types of online trading accounts for its customers

specially designed according to their volume in share trading. Those 3

varieties are:

Classic- for retail investors

Speed Trade: for high net worth investors with large and active

equity portfolio who need to monitor and action swiftly Speed trade Plus- for high net worth investors dealing in derivative

market.

Quality

User Friendly, attractive & colorful Website.

.

Design

The website of Share khan namely www.sharekhan.com has been specially

designed to facilitate its users to buy and sell shares in an instant at anytime

and from anywhere they like. The site is user friendly allowing even a

layman to easily operate without any hassles.



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Features:

Share khans product comes with the following features:

Trade execution in a fraction of a second!

Single Screen Trading Terminal

Real time streaming quotes. Price watch on any number of scripts.

Hot keys similar to Brokers Terminal.

Customized Alerts based on Multiple Parameters.

Back up Facility to place trades on Direct Phone Lines.

Intra day charts, updated live, tick-by-tick.

Instant Order\ Trade Confirmation in the same window

Live margin, position, marked to market profit & loss report. Competitive Brokerage.

Flexibility to customize screen layout and setting.

Facility to customize any number of portfolios & watch lists.

Facility to cancel all pending orders at one click.

Facility to square off all transactions at one click.

Top Gainers, Top Losers, and Most Active, updated live.

Index information; index chart, index stock information live.

Market depth, i.e. Best 5 bids and offers, updated live for all scripts

Online access to both accounts and DP.

Live updated Order and Trade Book.

Details of pending, executed and rejected orders.

Online access to Customer Service.

128 - bit super safe encryption.

Facility to place after market orders

Online fund transfer facility from leading Banks

Online intra-day technical calls.

Exhaustive database of over 2000 companies

Historical charts and technical analysis tools.

Last but not the least, ideas that help you to make money!!!



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Brand Name

The company as a whole in its offline business has named itself as

SSKI Securities Pvt. Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal

Securities Pvt. Ltd. The company has preferred to name themselves

under a Blanket Family Name.

But in its online division started since 1997, the company preferred

to name itself as SHARE KHAN. The Brand Name SHARE

KHAN itself suggests the business in which the company is dealing so

that the consumer could easily identify the product or service category.

Services

Share khan offers its customers, depository services and trade

execution facilities for equities, derivatives and commodities backed

with investment advice tempered by decades of broking experience.

The teams of its dedicated analysts are constantly at work to track

performance and trends.

Dial-n-trade is also an exclusive service available to all Sharekhan

customers for trading in shares via the telephone. On dialing the toll

free number 1600-22-7050 and on entering the customers TPIN

number, the customer will be directed to a telebroker who will buy or

sell shares for him.



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2. PRICE

List Price

CLASSIC SPEED TRADE SPEED TRADE

PLUSOne time

registration fee

750 1000 1500

Minimum brokerage

Charges Quarterly

Nil 1000 1500

Brokerage

Share khan in its online business charges brokerage as follows:

- In equity Market:

On Trading: 0.1% On Delivery: 0.5%

- In Derivative Market

On Trading: 0.12% (Total brokerage) On Delivery: 0.2%

Service Tax

-8% on Brokerage.

Turnover tax + Stamp duty

-0.015% (Rs. 15 on every turnover of Rs. 100000)

Custody Charge

Re. 1 per script held per month.

Discounts

For investors with High Net worth, there are slabs in brokerage rates.

Payment Period

The transaction settlement date in the securities market is T+ 2 days i.e.

the payment of the transaction taken place has to be made within two

days of its occurrence.

Credit terms

Share khan allows its customers to trade up to 4 times i.e. by keeping

1/4th margin with them.

Dematerialization charges

Re. 3 per certificate or Rs.15 per requests whichever is higher.



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3. PROMOTION

Online share trading is totally a new concept in Indian Market. Generally

investor doesnt like to come out from conventional way of share trading. Share

khan has introduced this product in. The concept and Product are still new in the

market. Therefore the company has undertaken extensive promotion campaign

to create awareness about the product. Share khan adopts the following tools for

promoting the product

o Advertising

Company advertises its product through TV media on channels like

CNBC, Print Media-in leading dailies and outdoors media. It advertises

itself as an innovative Brand with a cartoon of tiger-called SHERU.

Besides attractive and colorful brochures as well as posters are used giving

full details about the product.

Mails are sent to people logging on to sites like moneycontrol.com and

rediff.com.

Also, stalls are opened up now and then at places where prospective

customers can be approached.

o Sales Promotion

The Company offers Rs.500 instead of Rs.750 for corporate accounts

(more than 20 accounts).

Also, it provides online trading accounts for just Rs.300 for IIM students.

o Sales Force

The Company has an aggressive sales force, which is given incentives,

based on their sales. The sales force is given intensive training

continuously.



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o Seminar

The Company also arranges seminar in corporate world for creating

awareness about the product. Recently, it had organized for a seminar in

ONGC, IIM.

o Direct Marketing

Company emphasizes more on direct marketing, as many people are still

not aware of this new way of smart trading. For this, the company recruits

and trains sales representatives so as to explain the product and solve

customer queries related to the product. This is the most effective way to

communicate the three-in-one concept which company offers.

o Telemarketing

This is another promotional tool company is using to boost up its sales.

For this, the company collects the database of the people belonging to

different professional segments.

4. PLACE

Channels

Share khan uses various channel alternatives to reach to its customers

through

Internet

Tele Marketing

Retail Share Shops

Franchisee Owners

Power Brokers

Sales Force



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Coverage

Access to the website from any part of the globe.

Locations

Share khan has the largest chain of retail share shops in India. It has 180

share shops located in 90 cities all over India like Pune, Thane, Chennai,

Kolkata, Banglore, Luckhnow, Darjleeng, Kanpur, Baroda, Midnapore,

Surat, Delhi, Gaziabad, Hydrabad, Allahbad, etc.

5. PEOPLE

Employees

Selection: Employees are selected on the basis of their experience

and qualification as applicable to the job.

Training: Intensive training is provided to the employees till a week

once they join and even at times required after that.

Motivation: The employees are motivated through incentives they

are provided.

Research Team

Share khan has a team of dedicated analysts who have years of working

experience in the industries that they track, and a proven track record in

using their knowledge of the investment science to deliver results.

Customers, the heart of sharekhan are really treated loyally like the kings.

The customer care, which comprises of highly trained executives operating

from 9:30 to 8:00 p.m.



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6. PHYSICAL EVIDENCE

Locality of the office: In Ahmedabad, two franchise outlets are located in

posh areas like Navrangpura and Maninagar. A new franchise is going toopen up in Vastrapur.

Office Environment: The ambience within the office is what can make the

customer feel comfortable in trading. The cordial and friendly atmosphere at

office is like a full time motivation for the employees.

Interiors and Infrastructure: The office is well furnished and has 24computer terminals on which tick-by-tick price movements of the securities

are displayed.

7. PROCESS

In this service organization, the ways in which the customers receive

delivery of the service constitutes the process. Here, the process involves

adding value or utility so that the customers get full satisfaction for the

money spent by them.

Here the process begins from the step when customer wants to open e-invest

account and ends when his account is actually activated.

All Indian residents and NRI are eligible to avail this service.

Customers can open a sharekhan e-invest account by filling a single

application form.



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This form includes 12 agreements like

1. Main form with customer details

2. Agreement between sharekhan and client in respect of the ONLINE-

INVESTMENT SUPPORT service offered.

3. Agreement between the Depository Participant and the client for

providing the transaction statement through Internet.

4. Irrevocable power of attorney

5. Agreement between the DP and the person seeking to open an

account with the DP.

6. Maintenance of clients account on a running account bases by

SSKI.

7. Agreement giving the right of lien on the credit balance of client in

NSE trading.

8. Agreement giving the right of lien on the credit balance of client in

BSE trading.

9. Risk disclosure document (cash segment)

10. Power of attorney

11. Member and client agreement.

12. Web-online agreement between member-broker and client.



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SEVEN (7) - S MODEL

STRUCTURE:

Share khan is flexible in terms of making temporary structural changes to cope up with

specific strategic tasks without any hassles. If need arises, the top management can assign

the role to any of its employees which it considers capable and skillful.

STRATEGY:

Share khan believes not only in developing the strategies but also in its successful

execution.


Super-ordinate

Goalsgoals Styl

e

Syste

ms

Structure

Strategy

Skills

Staff


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SYSTEMS:

This constitutes of all the training and development systems, estimating budgets and the

accounting system of Share khan.

STYLE:

Style refers to all the symbolic actions undertaken by top managers of Share khan and its

influence on the subordinates.

STAFF:

Share khan values its employees as its assets and therefore carefully trains and motivates

them by giving them incentives at regular intervals. Talented employees are assigned as

mentors and given real responsibility and moved into higher positions.

SKILLS:

The term skills refer to those activities organizations do best and for which they are

known. Share khan is known for its timely advice (suggestions/tips), which it caters to its

customers and it boasts of 70-90% strike rates in booking recommendations.

SUPERORDINATE GOALS:

This refers to guiding concepts, values and aspirations that unite an organization in some

common purpose. It provides the customers the best service as it believes in customer

satisfaction and retention.



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CORPORATE STRUCTURE

SSKI Group - Corporate Structure

Integrated Equity Solutions Provider

Among the top 3 branded retail service providers

(Rs. 200+crs average daily Vol- FY 03-04)

Multi-channel access to clients

Tailor made research and products

Depository Services

Derivatives

Innovative products for enhanced performance


Owns 50.5% of

SSKI Corporate Finance Pvt. Ltd.

Investment Banking arm of the groupShareholding pattern

50.5% SSKI Securities Pvt. Ltd.

49.5 % Morakhia family

SSKI Investor Services Pvt. Ltd.

Retail broking arm of the group

Shareholding pattern56% Morakhia family (promoters)

18.5% HSBC Private EquityManagement, Mauritius

18.5% First Carlyle Ventures, Mauritius

7% Intel Pacific Inc.

SSKI Securities Pvt. Ltd.

Morakhia Family & Associates

Owns 56%

of

46


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PRODUCTS OF THE SHAREKHAN COMPANY

OFFLINE

The Off-Line account is trading account through which one can buy and sell through

his/her telephone or by personal visit at sharekhan shop. This a/c is for those who are not

comfortable with computer and want to trade.

o Offline A/c is the A/c for the investors who are not familiar with the use of

computer.

o The A/C opening charges Rs.500(One time)

o For 1st Year Demat A/C is Free, on 2nd Year AMC charge is applicable.


ShareKhansproduct

offline online

Classic A/C Speed TradeA/C

Other Services


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ONLINE

A/C Opening Charges Rs.750(onetime Charge).

For 1st Year Demat A/C is Free,On 2nd Year AMC charge is

applicable.

Type with 7 banks through which one can transfer or withdraw his

fund online.Which are as follows

1. HDFC Bank

2. IDBI Bank3. UTI Bank

4. OBC Bank

5. CITY Bank

6. Indusind Bank

7. Union Bank of India

Any one who have A/C either of above banks they can use

this facility.Otherwise one has to make fund transfer or withdraw

by cheque.

This account enables you to buy and sell shares through our website. You

get features like

a) Streaming quotes (using the applet based system)

b) Mutltiple watchlists

c) Integrated Banking, demat and digital contracts

d) Instant credit and transfer

e) Real-time portfolio tracking with price alert and, of course, the



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assurance of secure transactions.

HOW TO USE:

By entering the Login ID and Browsing Password you can login into your

CLASSIC A/C.



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FEATURES OF CLASSIC ACCOUNT / FAST TRADE ACCOUNT

that enables you to invest effortlessly

Online trading account for investing in Equities and Derivatives via

sharekhan.com

Integration of: Online trading + Bank + Demat account

Instant cash transfer facility against purchase & sale of shares

Make IPO booking

You get Instant order and trade confirmations by e-mail

Streaming Quotes

Personalised Market Scan with your own customized stock ticker!

Single screen interface for cash and derivatives

Your very own Portfolio Tracker!



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FAST TRADE TERMINAL

SYSTEM REQUIREMENTS

youll need access to a computer which has at least the following

configuration:

Pentium 3 PC, Minimum 128 MB RAM

Windows 2000/XP

Internet Connection

Internet Explorer 6.0

Java enabled in IE



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SPEEDTRADE PLUS

A/C Opening Charges Rs.1000/-(onetime Charge).

Monthly charges Rs.500/-(But if Client give Brokerage of Rs.1500/-in

a Quarter, then Rs.1500/-that was charged of a Quarter will be

Reimbursed).

For 1st Year Demat A/C is Free, On 2nd Year AMC charge is

applicable.

Type with 7 banks through which one can transfer or withdraw his

fund online. which are as follows

1. HDFC Bank

2. IDBI Bank

3. UTI Bank

4. OBC Bank

5. CITY Bank

6. Indusind Bank

7. Union Bank of India

Any one who have A/C either of above banks they can use this

facility. Otherwise one has to make fund transfer or withdraw by

cheque.



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FEATURES OF SPEEDTRADE PLUS ACCOUNT

that enable you to trade effortlessly

Instant order Execution & Confirmation

Single screen trading terminal

Real-time streaming quotes, tic-by-tic charts

Market summary (most traded scrip, highest value and lots of

other relevant statistics)

Hot keys similar to a brokers terminal

Alerts and reminders

Back-up facility to place trades on Direct Phone lines

Single screen interface for cash and derivatives



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SPEEDTRADE PLUS TERMINAL

SYSTEM REQUIREMENTS

You'll need access to a computer which has at least the following configuration:

Pentium 3 PC

Minimum 128 MB RAM

Windows 2000/XP

Dial-up Modem / Cable modem Internet Connection Account

Internet Explorer 6.0

Java enabled in IE



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GRAPHICAL INFORMATION OF SCRIPTS ON SHAREKHAN

TERMINAL



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SERVICES

STOCK IDEAS

Stock Ideas is aimed at Sharekhan's trading clients. It presents our best stock picks in

today's market. We categorize these companies into six clusters to help you identify the

stocks that fit your time horizons and return objectives the best. Each cluster represents a

certain profile in terms of business fundamentals as well as the kind of returns you can

expect of it over a certain time horizon.

STOCK CLUSTER

We categorize all the scrips that are under coverage into six clusters. Each clusterrepresents a certain profile in terms of business fundamentals as well as the kind of

returns you can expect over a certain time horizons and return objectives best.

EVERGREEN

Dominant players with strong brands, robust management

credentials, supernormal shareholder returns. Will steadily

compound 18-20% per year for next five to ten years.

APPLEEGREN

Potentially steady compounders, but five to ten years graph bit

unclear. Could gallop at 25-30 per year over the next two to

three years.

EMERGING STAR

Young companies likely to rule chosen niches. Even better, the

niches could balloon into full-blow markets. Potentially ten-

baggers if youre patient.



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UGLY DUCKLING

Trading below fair value or at huge discount to peer group. But

somtehings cooking. Could double in two to three years time.

VULTURES PICK

Companies with valueable assets at throwaway prices.Buy &

await predators. Stratlingly high returns possible.

CANNONBALL

Seasons favourites. Typically fast gainers in rising

markets,could return 30-50% within six months. Get in, cash in,

get out.



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DIAL AND TRADE

Trade in Equity by using your phone!

Free with your Sharekhan Classic Account, the Dial-n-Trade service

enables you to place orders for buying and selling shares through your

telephone.

All you have to do is dial any one of our two dedicated numbers (1-

800-22-7050 or30307600), enter yourTPIN number (which is

provided at the time of opening your account) and on authentication

you'll be directed to a telebroker who will buy and sell shares for

you.

Features of Dial-n-Trade

that enable you to trade effortlessly

TWO dedicated numbers for placing your orders with your cellphone

or landline. Toll free number: 1-800-22-7050. For people with difficulty in

accessing the toll-free number, we also have a Reliance number30307600

which is charged at Rs. 1.50 per minute for STD calls.

http://www.sharekhan.com/ClassicAccount/http://www.sharekhan.com/ClassicAccount/


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Automtic funds tranfer with phone banking (for Citibank and HDFC

bank customers)

Simple and Secure Interactive Voice Response based system for

authentication

No waiting time. Enter your TPIN to be transferred to our telebrokers

You also get the trusted, professional advice of our telebrokers

After hours order placement facility between 8.00 am and 9.30 am

(timings to be extended soon)

Reliable service, wherever you are

Requirements

All you need is access to a phone - either a landline or a cellphone:

(the type of phone doesn't matter)

If calling from a cellphone, please dial 022-1-800-22-7050

Currently for Citibank and HDFC customers. More banks to be

added soon

After hour order timings: 8.00 am to 9.30 am

It takes approximately 10 minutes of your time to place an

order.



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PMS (PORTFOLIO MANAGEMENT SERVICE)

I. Better Performance & Linear Returns with Hedging

Better performance

Superior performance is possible from superior market timing; our

critical edge

Superior performance is possible from picking stocks before inflection points in their trading

cycles

Linear Returns with moderated & hedged risks

Linear returns are possible from having hedged/sell market positions in

downtrends

Linear returns are possible by using options market to change the

portfolio beta

II. Convergence of time frames

The best of both worlds can be achieved by having positions in cash and options

The best of both worlds are achieved by using swing/momentum based index trading

systems with stop and reverse trend following.

Delivery positions enable profit maximisation while options positions offer high beta

short term profile in the same portfolio

III. Two Product offering

Trading on Nifty: Nifty futures will be bought and sold on the basis of anautomated trading system generated calls to go long/short. The exposure will

never exceed the value of the portfolio i.e. no leveraging; but will allow us to be

short/hedged in Nifty in falling markets therefore allowing the client to earn

irrespective of the market direction.

Trading Portfolio:



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Stocks in long term technical up trends will be identified to trade in at various

inflection points in their trading cycles. 80% of the portfolio will trade in delivery

of such stocks. 20% will be used in creating an options book i.e. buying calls/puts

of the index/stocks to increase the beta of the portfolio and to hedge against

pitfalls. The use of timing for delivery and options for a higher beta will attempt

to offer a superior rate of return by taking a risk with only 20% of the capital.

Here too money management rules will be in place to see that the capital is not

eroded. Portfolio rebalancing may be conducted between the Cash and options

segments based on the profitability of each segment.

IV. How to Invest?

Minimum investment Rs.5 Lakh

Lock in for 3 months

Fortnightly reporting of Portfolio Net Worth

Monthly reporting of Portfolio Holdings/Transactions

20% profit sharing fees on booked profits quarterly basis.

5% discount on profit sharing fees [to 15%] for investment of 1 crore OR lock in of 1

year.

0% AMC fees

Brokerage 0.05% for derivatives and 0.30% for delivery



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ONLINE IPO

Online IPO (Initial Public Offering) is a new service started by Sharekhan for providing

the application form of any companys issues of shares just like the TCS issue can be

subscribed by filling an online form to reduce the paper work and the fund transfer

facility is also provided to the clients for transferring the funds online. It is given on its

web-site for helping the clients who are not able to collect the forms manually and the

speed of filling and reducing the risk of misplacing of forms, not reaching in time, etc.



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Sharekhan gives you the facility to fill up the IPO without giving any physical

documents and signatory.



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RESEARCH BASED SERVICES

Every investors needs and goals are different. To meet these needs, Sharekhan provides

a comprehensive set of research reports, so that one can take the right investment

decisions regardless of their investing preferences! The Research and Development at

Sharekhan is done at its Head office Mumbai.

The R&D department Head Mr. Hemang Jani forwards all the details regarding all stocks

and scripts to all the branches through Internet. At the end of each trading day there is a

Teleconference, through which the R&D department Head MR. Hemang Jani talks with

each Branch heads and discusses about each days closing position and shows their

predictions about next days opening position. The quarries regarding stock positions and

other relevant matter of the branch heads of each branch is being solved through

teleconference.

Institutional Research - Each individual company is analyzed and its results are placed

on our site. Here Rating is given on relative basis, in the form of underperformer, neutral

and outperformer.

Outperformer: This stock will outperform the market by giving a relatively

higher return than a market-based index.

Neutral: This stock is expected to more or less give you the index rate of return

or a return not significantly higher or lower than the market index.

Underperformer: This stock is expected to lose value on a relative basis when

compared to a market-based index.

Sector Watch Here each sector is analyzed thoroughly. For eg. Pharma sector,

Automotive sector, and various other sectors.



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An example of Sharekhans Research Based Service :



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SHAREKHAN DEPOSITORY SERVICES

Dematerialization and trading in the demat mode is the safer and faster alternative to the

physical existence of securities. Demat as a parallel solution offers freedom from delays,

thefts, forgeries, settlement risks and paper work. This system works through depository

participants (DPs) who offer demat services and the securities are held in the electronic

form for the investor directly by the Depository.

Sharekhan Depository Services offers dematerialization services to individual and

corporate investors. Sharekhan is a registered Depository Participant (DP) with National

Securities Depository Ltd. (NSDL). It has a team of professionals and the latest

technological expertise dedicated exclusively to our demat department, apart from a

national network of franchisee, making our services quick, convenient and efficient. At

Sharekhan, the commitment is to provide a complete demat solution which is simple,

safe and secure.



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BENEFITS OF TRADING WITH SHAREKHAN

Only Sharekhan offers the facility to trade at two major commodity exchanges of

the country:

1. Multi Commodity Exchange of India Ltd, Mumbai (MCX) and

2. National Commodity and Derivative Exchange, Mumbai (NCDEX).

Sharekhan also equips you with world-class research, based on technical and

fundamental study of all major commodities.

Whats more Sharekhan is in the process of launching several trading products

and strategies to help you trade in the commodity futures segment.

Sharekhan is a registered Stock Broker with the Bombay Stock Exchange and

National Stock Exchange to trade on behalf of clients. The screen-based trading is

done on BOLT- BSE Online Trading and NEAT- National Exchange Automated

Trading, terminals. There are two types of transactions executed on these terminals

viz. intra-day and delivery based transactions. Intraday transactions are those, in

which the squaring up of deal is done on the same day, while in delivery based

transaction the squaring up is not done on the same day, but the stock is to be traded

on the basis of rolling settlement i.e. T+2. The Brokerage of Intraday transaction is

0.10% single side, while brokerage on delivery based transactions is 0.50% on both

side, i.e. while purchasing as well as selling.



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SMS SERVICES

Your Classic account now comes with the exclusive Sharekhan SMS Alert service. Get

quality trading calls and profitable investment ideas on your mobile phones.

In our continuous efforts to make investing easier, we have launched the SharekhanSMS Alert service. As part of this service ourChart Buster Calls and Stock Ideas shall

be disseminated to our on-line trading customers via mobile phones in the form of short

messages.

Our SMS service comes at a nominal fee of Rs100, which

shall be charged on a monthly basis. *

In order to avail of this facility all you need to do is to fill in

the form below and submit the details

Customer ID

First Name

Last Name

Mobile

number

CitySubmit

The Sharekhan SMS

Alert service can be

accessed from:

Hutch

BSNL

TouchTel

Reliance

Airtel

Spice Mobile

and several others!



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MARKET COVERAGE

Sharekhan is having the 478 BRANCHES in 178 Cities all over India.


Ground Network

Largest in India

122 Franchisees and 28 branches

Covers 82 cities in 17 states acrossIndia

Trade execution facility on BSE and

NSE for Cash as well asDerivatives

Depository/Demat account services

Personalized Sharekhan researchadvice

Uniform service standards

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During this training at Sharekhan, we had come to know the Strengths Weaknesses

Opportunities Threats for the company and it is very useful for a company to analyze

them. Therefore, the SWOT analysis is presented here and the suggestions for

maintaining strengths and removing weaknesses are explained.

STRENGTHS:

Well-maintained infrastructure.

Dedicated, Intelligent and Loyal staff.

On-line Trading products.

Lowest brokerage and other charges w.r.t. Competitors.

The best investment advice correct up to 70-90 % through dedicated

research and reports.

Wide product range to enable the clients to choose the best alternative.

One of the best DPs in India.

A positive image in the existing clients.

WEAKNESSES:

Less awareness in the market.

Time consuming process for account opening, resolving the problems of the

customers, etc.

Service quality is not maintained accordingly how they are promoted.



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OPPORTUNITIES:

Slope of stock market towards delivery based transaction.

Large potential market for delivery and intra-day transactions.

Open interest of the people to enter in stock market for investing.

Attract the customers who are dissatisfied with other broker & DPs.

An indirect opportunity generated by the market from its bullishness.

Large untapped market in the saurashtra region of Gujrat.

THREATS:

Decreasing rates of brokerage in the market.

Increasing competition against other brokers & DPs

Poor marketing activities for making the company known among the

customers.

A threat of loosing clients for any kind of weakness of the company.

Loosing the untapped market with the entry of the

competitors.



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As all we know that SENSEX either rise or may fall down due to

information available in the market related to corporate bodies and

government policy and budget play a very vital role in this.

The Budget Report Card can give rise some of the industry bullish period

and for some it give bearish period also.

For Example:

THE REPORT CARD dated on February 28th

2006.

THE GOOD NEWS

Economic growth projected at 8.1% in 2005-06.

Agriculture growth at 2.3 %.

Inflation rate projected at 5% in current fiscal.

Industrial growth at 7.8 % (April 06 December 06)

BUT LOT NEEDS TO BE DONE

Bold policy reforms in oil sector required.

Policy required for infrastructure development.

Industry needs to be unburdened from high taxes

Rs 1,72,000 cr investment required for national highways.

Rs 40,000 cr required for airports.

Rs. 50,000 cr investment needed for ports.

Power sector remains main impediment to growth.



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BUDGET HIGHLIGHTS FROM 2002 TO 2006



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FOREIGN INSTITUTIONAL INVESTMENT (FII)

The finance minister (FM) presented the union budget for the fiscal year 2006-07 today. We believe

that in the budget 2006-07, the FM has managed the expectations of most, by doing little. Corporate

India is delighted that there has been no tampering of the current tax structure and no additional

levy of taxes. There has also been no change in the personal taxes, as the moderate and stable

personal income tax regime has resulted in buoyant tax collections. The indirect taxes have taken the

much-anticipated course.

The two key themes of the Union Budget 2006-07 are:

a. fiscal consolidation: as the fiscal deficit for FY2006 has given a positive surprise andthe targets for 2006-07 stage a come back to the Fiscal Responsibility and Budget

Management Act (FRBM Act); and

b. the story for the growth in investment spending continued with the plan outlay on

infrastructure spending upped by approximately 22%.

First let us take a look at FY2006 numbers. The revised estimates suggest that the tax

revenues are likely to grow at 21% for FY2006. Although the growth in the corporation

tax and the excise duty was lower than what was envisaged in the budget for the year, it

was more than made up by higher collections on account of the personal income tax and

customs duty. The fiscal deficit as a percentage of the gross domestic product (GDP) for

the year is now estimated at 4.1% as compared with 4.3% envisaged at the time of the

budget. The revenue deficit has also shown a marked improvement and is expected to be

2.6% of the GDP as compared with 2.7% anticipated at the time of the budget.

For FY2007 the FM has been able to keep a tight check on the fiscal deficit despite

making an Rs11,500 crore allocation for the much spoken National Rural Employment

Guarantee Scheme (NREGS). The fiscal balance has been maintained on the back of a

strong growth of 19.5% in the tax revenues and a check on the revenue expenditure. The

fiscal deficit is likely to be 3.8% of the GDP, which is lower by 0.3% over the revised

estimates for FY2006 and is on coarse to meet the objectives of the FRBM Act.



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EFFECT OF BUDGET 2006 07 ON INDUSTRIES

Gainers of budget 2006-07

Sector Companies

Automobiles: Maruti Udyog, Tata Motors, M&M

Banking: State Bank of India, Punjab National Bank,Canara Bank

Capital goods: BHEL

Cement: Shree Cement, Gujarat Ambuja

FMCG: ITC, HLL

IT: NIIT, Educomp

DefenceEquipment:

Bharat Electronics, Nelco

Metals: Monnet Ispat, Raipur Alloys, Tata Sponge

Textiles: Banswara Syntex, Rajasthan Spinning, AlokIndustries

Losers of budget 2006-07Sector Companies

Financial services: IDFC

IT: Spanco Tele, Mphasis

Inorganic

chemicals:

DCM Shriram Cons, Chemplast Sanmar,

Gujarat Alkalies

Oil and gas: ONGC

IT: Spanco Tele, Mphasis

Telecom: Bharti Tele-Ventures

Textiles: Lakshmi Machine Works



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NON-MARKETABLE FINANCIAL ASSETS

A good portion of financial assets is represented by non-marketable financial

assets. These can be classified into the following broad.

Bank deposits

Post office deposits

Company deposits

Provident fund deposits

EQUITY SHARES

Equity shares represent ownership capital. As an equity shareholder, you

have an ownership stake in the company. This essentially means that you

have a residual interest in income and wealth. Perhaps, the most romantic

among various investment avenues, equity shares are classified into the

following broad categories by stock market analysts:

Blue chip shares

Growth shares

Income shares

Cyclical shares

Speculative shares



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BONDS

Bonds or debentures represent long-term debt instruments. The issuer of a

bond promises to pay a stipulated stream of cash flows. Bonds may be

classified into the following categories:

Govern

Documents

Strategic Analyisis on Capital Market(NIMS11)