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A Project Report
On
SUBMITTED TO
GUJARAT UNIVERSITY
AES Post Graduation Institute of Business
Management
Ahmedabad
PREPARED BY
PRIYANKA BHATTI
PREFACE
Today we are at the door step of 21st century. The world is widening without
having a New and new developments are coming these days in all fields all
over India to make the people life more comfortable and luxurious. The
industries are growing so fast in India in order to satisfy all the needs of
people. Similarly government has supported to these companies for their
development and progress of private companies.
Thus in order to survive in the market one should have theoretical as well as
Practical knowledge about all different fields prevailing in market. With this
view point. I had decided to go an and see how a thing goes over there.
Although I am having summer training apart from this I want to learn
something Extra, this is own wish and therefore I have planned it out.
For this I have chosen MARWADI SHARES & FINANCE PVT.LTD.
One of the leading financial companies. This company deals in financial
services. I have visited the company and collected all information about the
company. In this way I have completed my summer training successfully.
ACKNOWLEDGEMENT
It was a great opportunity for me to get Summer Training with a financial
organization like “MARWADI SHARES AND FINANCIAL PVT.LTD.”
I am very glad to present this report before you all whose works and ideas
have been so helpful in working out on this project report. As I carried our
way towards the completion of this project, I had many people involved
directly or indirectly and all guiding me, directing and motivating me towards
attaining my goal.
I would like to acknowledge the following individuals who contributed
materially toward the prject. First I would like to thank Mr. Sanjay Vadhar
[Director], Mr. Alpesh shah and all administrative staff of AES Management
College for their guidance and support.
I am greatly thankful to Directors Mr. Ketan Marwadi, Mr. Sandeep Marwadi
& Deven Marwadi. Also thankful to General Manager Mr.Hareshbhai
Maniyar, Company Secretary Mr. Tushit Mangukiya, Mr. Akshay Goswami
[H R Manager]. My Special thanks to my incharger Mr. Pratik Tanna for his
the ongoing intellectual contribution. I m also thankful to Mr. Jaman dabhi for
helping me. And all the staff Members of Marwadi for their co-operation.
Last but not the least, I am grateful to my parents For supporting me.
Priyanka k Bhatti
Declaration
I undersigned priyanka bhatti, a student of M.B.A. Here by declare
that project presented in this is in my own words and has been carried out under the
supervision and guidedence of Mr. Pratik Tanna sir of Marwadi Shares and Finance
Ltd.
This work has not been previously submitted to any other university
for any examination.
Date:
Place: Rajkot
Priyanka k Bhatti
CONTENTS Preface
Acknowledgement
Declaration
1. History of stock market 1
2. Indian Financial & Capital Market 5
2.1 Capital Market & Money Market 6
2.2 Indian Economy 8
2.3 Different Instrument 9
2.4 BSE 10
2.5 NSE 16
2.6 Financial Intermediaries 21
3. Introducing a demat service
3.1 Introduction 24
3.2 NSDL & Demat Services 24
3.3 Functions of NSDL 25
3.4 Services of NSDL 26
3.5 Rules for registration 26
3.6 Eligibility 27
3.7 Procedure for becoming a DP 28
3.8 Benefit and safety of DP 30
4. Marwadi’s vision & history
Marwadi Logo
Marwadi House
4.1 Company Information 35
4.2 Company profile 37
4.3 Hierarchy structure 38
4.4 Organisation chart 39
4.5 Synopsis 40
4.6 Company Milestone 40
4.7 Services of Marwadi 41
4.8 Future Services 41
4.9 Branches 42
4.10 Membership 43
4.11 Competitors 43
5 Overview of different Department
5.1 DP Department 45
5.2 Trading Department 58
5.3 H R Department 66
5.4 Account Department 80
5.5 Commodity Department 81
6. Distribution Services
6.1 Mutual fund 95
6.2 Portfolio Management 98
6.3 IPO’s subcription 102
7. Present Market scenario
7.1 Causes of market scenario 110
7.2 Future Ahead of the Market 111
7.3 Guidelines provided by SEBI 112
8. Limitation & Suggestion 114
Conclusion 117
Bibliography 118
INDEX
SR NO DETAILS PG NO
1
2
EVOLUTION
INDIAN STOCK EXCHANGES
2
4
1. HISTORY OF STOCK MARKET
Evolution
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. 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 of
Europe 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.
Other leading cities in stock market operations, Ahmedabad gained importance next
to Bombay with respect to cotton textile industry. After 1880, many mills originated
from Ahmedabad and rapidly forged ahead. As new mills were floated, the need for
a Stock Exchange at Ahmedabad was realised and in 1894 the brokers formed "The
Ahmedabad Share and Stock Brokers' Association".
What the cotton textile industry was to Bombay and Ahmedabad, the jute industry
was to Calcutta. Also tea and coal industries were the other major industrial groups
in Calcutta. After the Share Mania in 1861-65, in the 1870's there was a sharp boom
in jute shares, which was followed by a boom in tea shares in the 1880's and 1890's;
and a coal boom between 1904 and 1908. On June 1908, some leading brokers
formed "The Calcutta Stock Exchange Association".
In the beginning of the twentieth century, the industrial revolution was on the way in
India with the Swadeshi Movement; and with the inauguration of the Tata Iron and
Steel Company Limited in 1907, an important stage in industrial advancement under
Indian enterprise was reached. Indian cotton and jute textiles, steel, sugar, paper
and flour mills and all companies generally enjoyed phenomenal prosperity, due to
the First World War. In 1920, the then demure city of Madras had the maiden thrill
of a stock exchange functioning in its midst, under the name and style of "The
Madras Stock Exchange" with 100 members. However, when boom faded, the
number of members stood reduced from 100 to 3, by 1923, and so it went out of
existence.
In 1935, the stock market activity improved, especially in South India where there
was a rapid increase in the number of textile mills and many plantation companies
were floated. In 1937, a stock exchange was once again organized in Madras -
Madras Stock Exchange Association (Pvt) Limited. (In 1957 the name was changed to
Madras Stock Exchange Limited).
Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with
the Punjab Stock Exchange Limited, which was incorporated in 1936.
Indian Stock Exchanges - An Umbrella Growth
The Second World War broke out in 1939. It gave a sharp boom which was followed
by a slump. But, in 1943, the situation changed radically, when India was fully
mobilized as a supply base.
On account of the restrictive controls on cotton, bullion, seeds and other
commodities, those dealing in them found in the stock market as the only outlet for
their activities. They were anxious to join the trade and their number was swelled by
numerous others. Many new associations were constituted for the purpose and
Stock Exchanges in all parts of the country were floated. The Uttar Pradesh Stock
Exchange Limited (1940), Nagpur Stock Exchange Limited (1940) and Hyderabad
Stock Exchange Limited (1944) were incorporated.
In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited
and the Delhi Stocks and Shares Exchange Limited - were floated and later in June
1947, amalgamated into the Delhi Stock Exchnage Association Limited.
INDEX
SR NO DETAILS PG NO
1
2
3
4
5
6
CAPITAL AND MONEY MARKET
INDIAN ECONOMY
DIFFERENT INSTRUMENTS
BSE
NSE
FINANCIAL INTERMIDIARIES
6
8
9
10
16
21
2. INDIAN FINANCIAL MARKET
2.1 CAPITAL MARKET AND MONEY MARKET
In today’s era investor invest their funds after basic analysis. The basic
function of financial market is to facilitate the transfer of funds from surplus
sectors that is from (lenders) to deficit sectors (borrowers). If we look at the
financial cycle then we can say that households make their savings, which is
provided to industrial sectors, which earn profit and finally this profit will go to
the households in the form of interest and dividend. Indian Financial System
is made-up of 2 types of markets i.e. Capital Market & Money market.
CAPITAL MARKET
Securities market may be classified is by the types of securities bought and sold
there. The broadest classification is based upon whether the securities are new
issues or are already outstanding and owned by investors. Now we see following
chart for understanding market types.
Primary market:
Securities available for the first time are offered through the primary securities
markets. The issuer may be a brand-new company or one that has been in
business for many years. The securities offered may be a new type for the
issuer of additional amounts of a securities used frequently in the past. In
primary market funds are mobilized in the primary market through prospectus,
rights issues ,and private placement.
Secondary market:
Once new issues have been purchased by investors, they change hands in
the secondary markets. This market also known as stock market. In India the
secondary market consist of recognized stock exchanges operating under
rules, by-laws and regulations duly approved by the government. There are
actually two broad segments of the secondary markets:
Capital Market
Primary Market Secondary Market
Organized
Exchanges
Over The
Counter
a. Organized market :
Organized exchange are physical marketplaces where the agents of buyers
and sellers operate thorough the auction process. There are number of
organized exchanges in India. NSE(National Stock Exchange) and BSE
(Stock Exchange Mumbai) are main stock exchange. Other than this there are
more then 23 stock exchanges.
b. Over The Counter (OTC) :
The OTC market is not a central physical marketplace but a collection of
broker-dealer scattered across the country. This market is more a way of
doing business than a place. Buying and selling inters in unlisted stocks are
matched not through the auction process on the floor of an exchange but
through negotiated bidding, over a massive network of telephone and teletype
wires that link thousand of securities firms here and abroad.
MONEY MARKET
The money market has 2 components-The organized & unorganized. The
organized market is dominated by commercial banks. The other major
participants are RBI, LIC, GIC, UTI, and STCI. The main function of it is that
of borrowing & lending of short term funds. On the other hand unorganized
money market consists of indigenous bankers & money lenders. This sector is
continuously providing finance for trade as well as personal consumption.
2.2 INDIAN ECONOMY
The seventh largest and second most populous country in the world, India has
long been considered a country of unrealised potential. A new spirit of
economic freedom is now stirring in the country, bringing sweeping changes
in its wake. A series of ambitious economic reforms aimed at deregulating the
country and stimulating foreign investment has moved India firmly into the
front ranks of the rapidly growing Asia Pacific region and unleashed the latent
strengths of a complex and rapidly changing nation.
India's process of economic reform is firmly rooted in a political consensus
that spans her diverse political parties. India's democracy is a known and
stable factor, which has taken deep roots over nearly half a century.
Importantly, India has no fundamental conflict between its political and
economic systems. Its political institutions have fostered an open society with
strong collective and individual rights and an environment supportive of free
economic enterprise.
India's time tested institutions offer foreign investors a transparent
environment that guarantees the security of their long term investments.
These include a free and vibrant press, a judiciary which can and does
overrule the government, a sophisticated legal and accounting system and a
user friendly intellectual infrastructure. India's dynamic and highly competitive
private sector has long been the backbone of its economic activity. It accounts
for over 75% of its Gross Domestic Product and offers considerable scope for
joint ventures and collaborations. Today, India is one of the most exciting
emerging markets in the world. Skilled managerial and technical manpower
that match the best available in the world and a middle class whose size
exceeds the population of the USA or the European Union, provide India with
a distinct cutting edge in global competition.
2.3 DIFFERENT INSTRUMENT
The changes in the regulatory framework of the capital market & fiscal policies
have also resulted in newer kinds of financial instruments being introduced in
the market. These instruments are depended on period, interest rate, trading
etc. Equity Shares represent the Proportionate ownership of the company.
The equity share holders have last right in receiving profit. Preference Share
holders get preference in receipt of profit. Preference share holder enjoys a
preferential right of repayment in cash of winding up of a company.
Debentures are issued by companies & regulated under the SEBI guidelines of
June 11, 1992. The debenture holders are governed by the companies act.
Basically Bonds are issue for debt capital for predetermined period. It is one
of the cheaper instruments. Generally DFI like IDBI, ICICI and IFCI
have been raising capital for their operations. There are mainly two
types of government securities i.e. dated securities and treasury bills. There
are mainly two authorizes governing the Government Security viz. Central
government and state government. The public debt office of the RBI performs
all functions with regard to the issue management, settlement of trade,
distribution of interest and redemption.
There are some instrument which depend other than interest and treading are
Mutual fund schemes, Life insurance policy, Precious objective, Real estate etc.
2.4 BSE
Introduction
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a
rich heritage. Popularly known as "BSE", 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. Earlier an
Association of Persons (AOP), the Exchange is now a demutualised and
corporatised entity incorporated under the provisions of the Companies Act,
1956, pursuant to the BSE(Corporatisation and Demutualisation) Scheme,
2005 notified by the Securities and Exchange Board of India (SEBI).
With demutualisation, the trading rights and ownership rights have been de-
linked effectively addressing concerns regarding perceived and real conflicts
of interest. The Exchange is professionally managed under the overall
direction of the Board of Directors. The Board comprises eminent
professionals, representatives of Trading Members and the Managing
Director of the Exchange. The Board is inclusive and is designed to benefit
from the articipation of market intermediaries.
In terms of organisation structure, the Board formulates larger policy issues
and exercises over-all control. The committees constituted by the Board are
broad-based.The day-to-day operations of the Exchange are managed by
the Managing Director and a management team of professionals.
The Exchange has a nation-wide reach with a presence in 417 cities and
towns of India. The systems and processes of the Exchange are designed to
safeguard market integrity and enhance transparency in operations. During
the year 2004-2005, the trading volumes on the Exchange showed robust
growth.
The Exchange provides an efficient and transparent market for trading in equity,
debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a
proprietory system of the Exchange and is BS 7799-2-2002 certified. The
surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000
certified.
Technology
BSE Ltd places great deal of emphasis on Information Technology to
strengthen its functioning and performance. Information Systems
Department continuously upgrades the hardware, software and networking
systems, thus enabling the Exchange to enhance the quality and standard of
service provided to its members and other market intermediaries.
To facilitate smooth transaction, BSE had replaced its open outcry system
with BSE On-line Trading (BOLT) facility in 1995. This totally automated
screen based trading in securities was put into practice nation-wide within a
record time of just 50 days.
The BOLT platform capacity has been enhanced to 40 lakh trades per day
by upgrading the hardware. In 2000 BSE set up its Own Master Earth
Station (HUB), which uses full transponder on INSAT 3B satellite to cater to
Trader Work Stations (TWS), located over 400 cities across the country.
Currently, BOLT operates in 8000 TWS located across over 409 cities in
India. BOLT has been certified by DNV for conforming to BS7799 security
standards. With this, BSE is the second stock exchange in the world to have
this certification
Exchange has also introduced the world’s first centralized exchange based
Internet trading system, BSE WEBx.com. The initiative enables investors
anywhere in the world to trade on the BSE platform.
BSE, through its superior technology, provides unique capabilities of
dedicated access mechanism on the inbound traffic, which can maintain a
consistent response time. Several other technological initiatives have been
undertaken to provide faster, efficient and more reliable services.
BSE’s website www.bseindia.com provides comprehensive information on
the stock market. It is one of the most popular financial websites in India and
is regularly visited by financial organizations and other stakeholders for
updates.
BSE also operates one of the largest private networks in India, comprising
campus LAN, WAN set up within Mumbai and across some major metros in
India, VSAT set up across the country, BSE Admin network covering BSE
offices and Internet set up supporting BSE Internet trading portal,
BSEWebx.com; corporate website, and mail services and Regional Hubs for
local fan out of leased lines within Metros backed by high availability trunk
back bone to BSE. The regional technology hubs commissioned in Chennai,
Rajkot, Jaipur and Bangalore provide cost-effective reliable services to
members.
The trading and settlement activities of the member-brokers are closely
monitored through On-line Real Time System known as BSE Online
Surveillance System (BOSS). The system enables the Exchange to detect
market abuses at a nascent stage, improve the risk management system
and strengthen the self-regulatory mechanisms. Currently, BSE is in the
process of evolving an integrated system for online surveillance of Cash and
Derivatives Segment through BSE Online Surveillance System – integrated.
BSE uses higher end fault tolerant systems for its trading and related
functionalities. It uses Integrity Non-stop S88000 systems for its online
trading systems (BOLT). The systems have been designed to deliver the
best performance without compromising on key factors of availability,
scalability,ROI and TCO.
We use one of the most powerful RISC based Alpha GS140 and ES40
servers for our Internet based trading system (ITS) enabling the end user to
carry out the trading activities from any location facilitated by the internet.
BSE also use Intel 8 way and 4 way servers for bseindia.com web site, one
of the best portal on information related to capital markets.
BSE strictly adheres to IS policies and IS Security policies and procedures
for its day to day operational activities on 24 x 7 basis which has enabled
us to achieve the BS7799 certification. In addition, BSE has also been
successful in maintaining systems and processes uptime of 99.99%
BSE Sensex chart from Feb. 2006 to July 2006 is as follows.
BSE Sensex is depend on the 30 companies which are as follows.
1. ACC 16. Maruti
2. Bajaj auto 17. NTPC
3. Bharti 18. ONGC
4. BHEL 19. Ranabaxy
5. Cipla 20. RCVL
6. Dr. Reddy 21. Reliance
7. GACL 22. REL
8. Grasim 23. Satyam
9. HDFC 24. SBI
10. HDFC bank 25. Tata motors
11. Herohonda 26. Tata Steel
12. ICICI bank 27. TCS
13. Infosys 28. Wipro
14. ITC 29. Hindalco
15. L & T 30. HLL
2.5 NSE
2.6
Introduction
The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which
recommended promotion of a National Stock Exchange by financial institutions
(FIs) to provide access to investors from all across the country on an equal footing.
On its recognition as a stock exchange under the Securities Contracts (Regulation)
Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market
(WDM) segment in June 1994. The Capital Market (Equities) segment commenced
operations in November 1994 and operations in Derivatives segment commenced
in June 2000. Based on the recommendations, NSE was promoted by leading
Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock
exchanges in the country.
Technology
Across the globe, developments in information, communication and network
technologies have created paradigm shifts in the securities market operations.
Technology has enabled organisations to build new sources of competitive
advantage, bring about innovations in products and services, and to provide for
new business opportunities. Stock exchanges all over the world have realised the
potential of IT and have moved over to electronic trading systems, which are
cheaper, have wider reach and provide a better mechanism for trade and post
trade execution
NSE believes that technology will continue to provide the necessary impetus for the
organisation to retain its competitive edge and ensure timeliness and satisfaction in
customer service. In recognition of the fact that technology will continue to
redefine the shape of the securities industry, NSE stresses on innovation and
sustained investment in technology to remain ahead of competition. NSE's IT set-
up is the largest by any company in India. It uses satellite communication
technology to energise participation from around 320 cities spread all over the
country. In the recent past, capacity enhancement measures were taken up in
regard to the trading systems so as to effectively meet the requirements of
increased users and associated trading loads. With upgradation of trading
hardware, NSE can handle up to 6 million trades per day in Capital Market
segment. In order to capitalise on in-house expertise in technology, NSE set up a
separate company, NSE.IT, in October 1999. This is expected to provide a platform
for taking up new IT assignments both within and outside India and attaining global
exposure.
NEAT is a state-of-the-art client server based application. At the server end, all
trading information is stored in an in-memory database to achieve minimum
response time and maximum system availability for users. The trading server
software runs on a fault tolerant STRATUS main frame computer while the client
software runs under Windows on PCs.
NSE is one of the largest interactive VSAT based stock exchanges in the world.
Today it supports more than 3000 VSATs. The NSE- network is the largest private
wide area network in the country and the first extended C- Band VSAT network in
the world. Currently more than 9000 users are trading on the real time-online NSE
application. There are over 15 large computer systems which include non-stop
fault-tolerant computers and high end UNIX servers, operational under one roof to
support the NSE applications. This coupled with the nation wide VSAT network
makes NSE the country's largest Information Technology user
In an ongoing effort to improve NSE's infrastructure, a corporate network has been
implemented, connecting all the offices at Mumbai, Delhi, Calcutta and Chennai.
This corporate network enables speedy inter-office communications and data and
voice connectivity between offices.
Trading
NSE introduced for the first time in India, fully automated screen based
trading. It uses a modern, fully computerised trading system designed to
offer investors across the length and breadth of the country a safe and easy
way to invest.
The NSE trading system called 'National Exchange for Automated Trading'
(NEAT) is a fully automated screen based trading system, which adopts the
principle of an order driven market.
Securities
NSE trading facilitates available for following securities
A. Shares
Equity Shares
Preference Shares
B. Debentures Partly Convertible Debentures
Fully Convertible Debentures
Non Convertible Debentures
Warrants / Coupons / Secured Premium Notes/ other Hybrids
Bonds
C. Units of Mutual Funds Circuit Breakers
The Exchange has implemented index-based market-wide circuit breakers in
compulsory rolling settlement with effect from July 02, 2001. In addition to
the circuit breakers, price bands are also applicable on individual securities.
Trading System
NSE operates on the 'National Exchange for Automated Trading' (NEAT) system, a
fully automated screen based trading system, which adopts the principle of an
order driven market. NSE consciously opted in favour of an order driven system as
opposed to a quote driven system. This has helped reduce jobbing spreads not only
on NSE but in other exchanges as well, thus
reducing transaction costs.
Market Types
Order Books
Order Matching Rules
Order Conditions
Internet Based Trading
The Securities & Exchange Board of India (SEBI) approved the report on Internet
Trading brought out by the SEBI Committee on Internet Based Trading and
Services In January 2000. Internet trading can take place through order routing
systems, which will route client orders to exchange trading systems for
execution. Thus a client sitting in any part of the country would be able to trade
using the Internet as a medium through brokers’ internet trading systems
NSE NIFTY chart from Feb. to July is as follows.
2.6 FINANCIAL INTERMEDIARIES
Financial intermediaries are institutions (such as banks,insurance companies,
mutual funds, pension funds, and finance companies.) borrow funds from people
who have saved and then make loans to others.
Most people do not enter financial markets directly but use intermediaries
or middlemen. Commercial banks are the financial intermediary we meet
most often in macroeconomics, but mutual funds, pension funds, credit
unions, savings and loan associations, and to some extent insurance
companies are also important financial intermediaries. When people
deposit money in a bank, the bank uses the funds to make loans to home
buyers for mortgages, to students so they can pay for their education, to
business to finance inventories, and to anyone else who needs to
borrow. A person who has extra money could, of course, seek out
borrowers himself and bypass the intermediary. By eliminating the
middleman, the saver could get a higher return.
Financial intermediaries provide two important advantages to savers.
First, lending through an intermediary is usually less risky than
lending directly. The major reason for reduced risk is that a financial
intermediary can diversify. It makes a great many loans, and even
though some of those loans will be mistakes, the losses will be
largely offset by loans that are sound.
A second advantage is liquidity. Liquidity is the ability to convert
assets into a spendable form--money--quickly. A house is an illiquid
asset; selling one can take a great deal of time.
General information of Indian financial market:
No of stock exchanges 24
Major stock exchanges
(NSE/BSE)
2
No of foreign institutional investor 502
No of merchant banker 124
No of venture capital fund 43
No of depositories 2
No of listed
company(NSDL/CDSL)
4172/4284
Settlement cycle T+2
No of scheduled commercial
banks
293
No of scheduled co-operative
banks
68
No of mutual funds 32
No of mutual fund schemes 432
INDEX
SR NO DETAILS PG NO
1
2
3
4
5
6
INTRODUCTION
NSDL AND DEMET SERVICES
FUNCTIONS OF NSDL
SERVICES OFFERED BY NSDL
RULES FOR REGISTRATION
ELIGIBILITY
24
24
25
26
26
27
7
8
PROCEDURE FOR BECOMING DP
BENEFIT AND SAFETY OF DP
28
30
3. INTRODUCING A DEMAT SERVICE
3.1 INTRODUCTION To obviate the problems related to the physical form one of the methods which has
been adopted is conversion of physical form into electronic form. The share
Certificates are shredded i.e. paper form is destroyed and book entry is made in
Computer. Under the guidelines given by SEBI two depositories are currently
Working i.e. NSDL and CDSL. NSE is directly connected with NSDL and BSE is
connected with CDSL. The volume of NSE is comparatively more scripts are listed.
There are mainly two markets in NSE i.e. Normal and trade to trade. And in BSE
there is only Rolling Market. Investors can do transactions without the help of any
intermediaries which are called off market trade. To facilitate the transaction there
are many depository participants working as a link between depositories and clients.
Some of them are Marwadi, RNSB, HDFC, and ICICI.
3.2 NSDL AND DEMAT SERVICES
About NSDL
Although India had a vibrant capital market which is more than a century old, the
paper-based settlement of trades caused substantial problems like bad delivery and
delayed transfer of title till recently. The enactment of Depositories Act in August
1996 paved the way for establishment of NSDL, the first depository in India. This
depository promoted by institutions of national stature responsible for economic
development of the country has since established a national infrastructure of
international standard that handles most of the settlement of securities in
dematerialized form in Indian capital market.
Using innovative and flexible technology systems, NSDL works to support the
investors and brokers in the capital market of the country. NSDL aims at ensuring the
safety and soundness of Indian marketplaces by developing settlement solutions
that increase efficiency, minimise risk and reduce costs. At NSDL, we play a quiet but
central role in developing products and services that will continue to nurture the
growing needs of the financial services industry.
In the depository system, securities are held in depository accounts, which is more or
less similar to holding funds in bank accounts. Transfer of ownership of securities is
done through simple account transfers. This method does away with all the risks and
hassles normally associated with paperwork. Consequently, the cost of transacting in
a depository environment is considerably lower as compared to transacting in
certificates.
3.3 FUNCTIONS OF NSDL
Enables the surrender and withdrawal of securities to and from the
depository.
( dematerialization and re- materialization)
Maintains investor holdings in the electronic form.
Effects settlement of securities traded to the exchanges.
Carries out settlement of trades not done on the stock exchange. ( off market
traders )
Transfer of securities
Pledging / hypothecation of dematerialized securities.
Electronic credit in public offerings of companies or corporate actions
Receipt of non - cash corporate benefits like bonus rights, etc. in electronic
form
3.4 SERVICES OFFERED BY NSDL
NSDL offers a host of services to the investors through it
Network of Dips
Maintenance of beneficiary holdings through DPS
Dematerialization
Off – market trades
Settlement in dematerialized securities
Receipt of allotment in the dematerialized form
Distribution of corporate benefits
Re – materialization
Pledging and Hypothecation Facilities
Freezing / Locking of investor’s account
Stock lending and borrowing facilities
Speed – e
Idea
3.5 RULES FOR REGISTRATION
ON being satisfied that the applicant is eligible and has complied with the
conditions stipulated in the SEBI regulations, SEBI may grant certificate to the
applicant. Before granting certificate of registration to a DP SEBI
Takes into account certain points which are as follows:
Adequacy of infrastructure and system
Trained and qualified staff to carry on activity as a DP.
Fulfills the requirements to procure the investors interest in the
security market
The applicant should have a minimum Networth of Rs.1 crore.
The applicant should not have been convicted in any of the five years
immediately preceding the filing of the application in any manner involving
misappropriation of funds & securities, theft, embezzlement of funds,
fraudulent conversion or forgery.
The applicant should not have been expelled, barred or suspended by SEBI,
self regulatory organisation or any stock exchange.
3.6 ELIGIBILITY
As per Regulation 19(a) of SEBI (Depositories & Participants) Regulations,
following are the categories that are eligible to become DPs:
(i) A public financial institution as defined in section 4A of the Companies Act,
1956 (1 of 1956)
(ii) A bank included for the time being in the Second Schedule to the Reserve Bank
of India Act, 1934 (2 of 1934)
(iii) A foreign bank operating in India with the approval of Reserve Bank of India
(iv) A state financial corporation established under the provisions of section 3 of
the State Financial Corporations Act, 1951 (63 of 1951)
(v) An institution engaged in providing financial services, promoted by any of the
institutions mentioned in sub clause (i), (ii), (iii), (iv), jointly or severally
(vi) A custodian of securities who has been granted a certificate of registration by
the Board under sub-section (1A) of section 12 of the Act
(vii) A clearing corporation or a clearing house of a stock exchange
(viii)
A stock broker who has been granted certificate of registration by the Board
under sub section (1) of section 12 of the Act.
Provided that the stock broker shall have a minimum net worth of rupees 50
lakhs and the aggregate value of the portfolio of securities of the beneficial
owners held in dematerialised form in a depository through him shall not
exceed 100 times of the net worth of the stock broker.
Provided further that if the stock broker seeks to act as a participant in more
than one depository , he shall comply with the criteria specified in the first
proviso separately for each such depository.
(ix) A non-banking finance company, having a net worth of not less than rupees
fifty lakhs.
Provided that such company shall act as a participant only on behalf of itself
and not on behalf of any other person Provided further that a non-banking
finance company may act as a participant on behalf of any other person, if it
has a networth of Rs. 50 crore in addition to the networth specified by any
other authority.
(x) A registrar to an issue or share transfer agent who has a minimum net worth of
Rs. 50 lakhs and who has been granted a certificate of registration by the board
under sub-section (1) of section 12 of the Act.
3.7 PROCEDURE FOR BECOMING A DP
Eligible entities may apply to NSDL in Form E as prescribed by SEBI (Depositories and
Participants) Regulations, 1996. An applicant has to submit the duly filled application
form (two sets in original) to NSDL.
Along with the Application Form, the applicant has to enclose the following details:
Business history of the applicant for the last three years;
Networth as certified by a Chartered Accountant as per the latest audited
accounts;
Copies of annual report for the past three years;
The Board of Directors in case of Corporate Entity or of a similar authority in
any other case;
Office space earmarked in square feet for depository operations;
Specimen Signatures of the officials responsible for acting on behalf of the
applicant.
Name, Designation & Qualification of Compliance officer.
Shareholding pattern.
NSDL forwards Forms A, A1, B & C1 to the applicant.
Applicant submits Form A & A1 duly filled to NSDL.
The applicant forwards "Application Fee" of Rs. 5,000/- payable to SEBI to NSDL.
Demand Draft should be drawn in favour of 'Securities and Exchange Board of
India' payable at Mumbai.
On receiving the in-principle approval from SEBI, the applicant pays the following
fees to SEBI through NSDL within 15 days:
Sr.No. Fees Rs.
1. Registration Fee 1,00,000
2. Annual Fee: 1,000
SEBI grants a Certificate of Registration to the applicant.
NSDL and the applicant sign Depository-Participant agreement.
The DP pays the following amounts to NSDL
Sr. No. Fees Rs.
1. Entry Fee 25,000
2. Interest - free Security Deposit
[refundable]
10,00,000
3. DPM Application Software Charges 2,50,000
4. Dongle Charges 1,550
5. Insurance Premium 32,000
Total 13,08,550
3.8 BENEFIT AND SAFETY OF DP
Benefit
In the depository system, the ownership and transfer of securities takes place by
means of electronic book entries. At the outset, this system rids the capital market of
the dangers related to handling of paper. NSDL provides numerous direct and
indirect benefits like:
Elimination of bad deliveries In the depository environment, once holdings of an
investor are dematerialised, the question of bad delivery does not arise.
Elimination of all risks associated with physical certificates- Dealing in physical
securities have associated security risks of theft of stocks, mutilation of
certificates, loss of certificates during movements through and from the
registrars, thus exposing the investor to the cost of obtaining duplicate
certificates etc. This problem does not arise in the depository environment.
No stamp duty for transfer of any kind of securities in the depository.
Immediate transfer and registration of securities.
Faster settlement cycle - The settlement cycle follow rolling settlement on T+2
basis
Faster disbursement of non cash corporate benefits like rights, bonus, etc..
Reduction in handling of huge volumes of paper
periodic status reports to investors on their holdings and transactions, leading to
better controls.
Elimination of problems related to change of address of investor - In case of
change of address, investors are saved from undergoing the entire change
procedure with each company or registrar.
Elimination of problems related to transmission of demat shares - In case of
dematerialised holdings, the process of transmission is more convenient as the
transmission formalities for all securities held in a demat account can be
completed by submitting documents to the DP whereas, in case of physical
securities the surviving joint holder(s)/legal heirs/nominee has to correspond
independently with each company in which shares are held.
Elimination of problems related to selling securities on behalf of a minor - A
natural guardian is not required to take court approval for selling demat
securities on behalf of a minor.
Safety
There are various checks and measures in the depository system to ensure safety of
the investor holdings. These include:
A DP can be operational only after registration by SEBI, which is based on the
recommendation from NSDL and their own independent evaluation. SEBI has
prescribed criteria for becoming a DP in the regulations.
DPs are allowed to effect any debit and credit to an account only on the basis of
valid instruction from the client.
All transactions are recorded at NSDL Central System and in the databases
maintained by business partners.
There are periodic inspections into the activities of both DP and R&T agent by
NSDL. This also includes records based on which the debit/credit are effected.
All investors have a right to receive their statement of accounts periodically from
the DP.
Investor grievance: All grievances of the investors are to be resolved by the
concerned business partner.
Insurance Cover: NSDL has taken a comprehensive insurance policy to help DP to
indemnifying investors for the loss accrued to them due to errors, omissions,
commission or negligence of DP..
All network components like router, communication controllers etc., have on-line
redundancy and thus a failure does not result in loss of transaction. Back-up
diesel generator sets
INDEX
SR NO DETAILS PG NO
1
2
3
COMPANY INFORMATION
COMPANY PROFILE
HIRARCHY STRUCTURE
35
37
38
4
5
6
7
8
9
10
11
ORGANISATION CHART
SYPNOSIS
COMPANY MILESTONE
SERVICES OF MARVADI
FUTURE SERVICES
BRANCHES
MEMBERSHIP
COMPETITIORS
39
40
40
41
41
42
43
43
4. MARWADI’S VISION & HISTORY
Corporate Vision
“To be a world class financial services provider by arranging
all conceivable financial services under one roof at affordable
price through cost-effective delivery systems and achieve
organic growth in business by adding newer lines of business.”
4.1 COMPANY INFORMATION
Name : Marwadi Shares & Finance Pvt. Ltd.
Head Office : Marwadi Financial Center
Nr. Kathiawad Gymkhana
Dr. Radhakrishnana Road
Rajkot – 360 001
Ph No : 248 13 13
E-Mail : [email protected]
Web Site : www.marwadionline.com
Directors : Mr. Ketan Marwadi
Mr. Deven Marwadi
Mr. Sandeep Marwadi
C.E.O. :Mr. Jeyakumar A. S.
General Manager : Mr. Hareshbhai Maniar
Company Secretery : Mr. Tushit Mangukiya
DP Manager : Mr. Arvind Gamot
H R Manager : Mr. Akshay Goswami
Account Manager : Mr. Suresh Vichi
Mr. Jayant Vithlani
Mr. Bhargav Pathak
4.2 COMPANY PROFILE
Marwadi Sales and Finance P. Ltd. started in the year 1994 when acquired
membership of National Stock Exchange of India Ltd. That was the time when Govt.
had just started liberalization. Capital market being at the base of every thing else
was among the first few sectors taken up for liberalization and alignment with global
benchmarks. NSE was therefore a result of Govt's policy to modernize stock market
and give our investors a cost - effective trading and settlement system.
They enter into the stock market coincided with Govt's initiative to give a modern
Stock exchange. Marwadi had then very presciently felt that this development would
change the very structure and content of the market. Then, when Depository system
was introduced to automate the settlement system, we became the first Corporate
DP in 1998 to bring this concept to investor's doorstep in Saurashtra. Marwadi had
very early on seen that the future lay in the ability to network and use technology to
its fullest possible extent. Relying on your judgment, we used technology extensively
which resulted in efficient client servicing.
It also saw the synergy that lay in providing a bouquet of services under one roof. It
is this realization that led us in the year 2003 to go for membership of National Level
Commodity Exchanges, which were set up as part of Govt's policy to bring
commodity market on par with the capital market in terms of integrity and practices.
They bold initiatives starting with our journey from capital market up to
commodities market has given us synergies in operations, enabling us to pass on the
advantage to customers.
As an organization, have achieved a leader's position by ensuring total satisfaction of
customers through world class services.
Utilize ultra modern technology for timely, seamless and accurate data
processing.
Proactively seek customer’s feedback in improving upon our service delivery
modes.
Promptly respond to customer issues in order to maximize client’s
satisfaction.
4.3 HIRARCHY STRUCTURE
4.4 ORGANISATION CHART
Board of Director
General Manager
DP Front
DP Back Audit
(Compliance)
Trading Account
Software
Technology
4.5 SYNOPSIS
Number of client : 100000
Number of Offices : 46
Number of Channel Partners : 400
Average Turnover : Rs. 70000Crore per annum
Networth of Group : 35 Crore
Infrastructure : 10,000 Sq. feet of built up area in Rajkot
city with State-of-the facilities and 300
plus computers connected on fibre optic
network, with leased lines and ISDN
lines and V-sats to support network in
remote locations
4.6 COMPANIES MILESTONE
1992: Marwadi Shares And Finance Pvt. Ltd. Was incorporated
1996: Became a corporate member of national Stock Exchange of
India.
1998: Became a member of Saurashtra Kutch Stock Exchange.
1999: Launched Depository services of Depository Participant under
National Securities Depository Ltd.
2000: Commenced Derivative Trading after obtaining registration as a
Clearing and Trading Member in NSE
2003: (MCBPL) became a corporate member of The National
Commodity and Derivatives Exchange of India Ltd.
2004: Became a corporate member of The Stock Exchange, Mumbai.
2004: Launched Depository Services of Depository Participant under
Central Depository Services (India) Ltd.
2006: converted into public company.
4.7 SERVICES OF MARWADI
1. stock broking
Cash Market
Derivatives Trading
Margin Trading
Internet Trading
2. Commodities Broking
Commodities Futures
Financing Against Commodities
3. Depository Service
NSDL
CDSL
SPEED-e
Easi
Ideas
4. IPO Subscription Services
5. Mutual Fund Products
6. Portfolio management
7. Insurance Services
8. Qualitative Research in Stock & Commodities
4.8 FUTURE SERVICES
Private Banking Sector Forex Market Commodities Demat Service Product Enhancement in commodity market
4.9 BRANCHES
Presence and Spread………..
Marwadi has spread throughout Gujarat state with our 28 branches and now taking
on Pan - India mantle with branches, now having come up in Hyderabad, Chennai
Banglore, Pune, Nasik, Kolhapur and Delhi. More out-of-Gujarat branches are on the
anvil in order to be a conspicuous player at national level. As on today they are
serving about 75,000 clients spread out over 554 pin code locations through a
network of about 300 intermediaries such as sub-brokers, franchisees and
authorized persons.
Also other branches of Marwadi in different cities like…..
Ahemedabad Jamnagar
Amreli Junagadh
Anand Keshod
Baroda Manavadar
Bhavnagar Mithapur
Bhuj Mumbai
Delhi Okha
Dhoraji Porbandar
Dhangadhra Surat
Gondal Surendranagar
Gandhidham Veraval
4.10 MEMBERSHIP
Capital Market:
National Stock Exchange of India Ltd.
Bombay Stock Exchange Ltd.
Saurashtra-Kutch Stock Exchange Ltd.
Over-the-Counter Exchange of India Ltd.
Commodities Derivatives :
National Commodity & Derivatives Exchange Ltd.
Multi Commodity Exchange of India Ltd.
Depository Operations.
National Securities Depositories Ltd. (NSDL)
Central Depository Services (India) Ltd.
4.11 COMPETITORS
For Broking: Sharekhan, Karvy, Motilal & sons, Anagram, Kotak
For Demat: SKSE, Nagrik bank, Stock Holding
INDEX
SR NO DETAILS PG NO
1
2
3
4
5
DP DEPARTMENT
TRADING DEPARTMENT—1
TRADING DEPARTMENT—2
HR DEPARTMENT
ACCOUNT OPENING DEPARTMENT
COMMODITY DEPARTMENT
45
58
66
77
80
81
5. OVERVIEW OF DIFFERENT DEPARTMENT
5.1 DP DEPARTMENT
Introduction Demat Service
The concept of Depository Participant came in India in 1996 and on national level
stock exchanges started settlement in demats form in the year 1999. So it became
compulsory for each and every broking client to have a demat account for this
obligation in trading. As present approximately 390 DPs are registered with SEBI.
Depository Participant addresses the needs of retail investor clients of Gujarat.
Marwadi were the first corporate DP in Saurashtra. As on date service 50,000 plus
clients through a well-equipped branch network. They offer online services offered
by NSDL/CDSL. Affiliated to both NSDL and CDSL in order to give optimum cost
solution to clients keeping in view the investors needs. Company place a high
premium customer service and prompt reporting in order to ensure integrity of
transactions. Customer centric schemes have been designed to address the investor
needs relative to element (such as trade execution dematerialization and re
materialization) economical prices.
Marwadi is one of the big players in depository participant market. Marwadi has
more than 25000 clients. The head of the department is Mr. Arvind A. Gamot. In
this department mainly 23 employees are working under him. Balance inquiry,
DRF, receipt of trade and forms for opening or closing of demat account are
being provided.
Marwadi shares & finance pvt ltd, a leading broking house, started to provide
depository participant services in May 1999. At present Marwadi is having about
35,000 clients situated at 550 pin codes. MSFPL is having more than 28 branches for
their depository participants operations.
Marwadi also gives following services without any charges :
Demat Confirmation
Remat Confirmation
Rejection of Instruction
Special Transaction Statement as our desire
Allotment of Shares under IPO
Every quater we send the Ledger to each Client
Inimates the renewal of account
Speed - e services client without any additional charges
Account Opening Procedure
Proof of Identity: A beneficiary account must be opened only after obtained a
proof of identity of the applicant. The applicant's signature and photograph
must be authenticated by an existing account holder or by applicant's bank or
after due verification made with the original of the applicant's valid passport,
voter ID, driving license or PAN card with photograph and further.
Proof of Address: Certified copies of ration card/passport/voter ID/PAN
card/driving license/bank passbook.
Ensure that all compulsory fields in the account opening form are filled.
In case of corporate, ensure a copy of board resolution of authorized
signatories. Ensure proper authorization in case of power of attorney holder.
DP should give a copy of agreement to the client, including the charges.
An investor intending to hold securities in the electronic form in a depository
system should open an account with a participant. So also should all the
clearing members who intend to provide settlement function in the depository
system.
The participant will make available the relevant account opening form
(depending on whether the client is a retailer investor or corporate client or
clearing member) and specify the relevant list of documents regarding
references that should be submitted along with the form. It will also give a
copy of the relevant agreement, to be entered with the client, in duplicate.
The client will submit the duly filled in account opening form. It should also
furnish such documents regarding references, as specified electronic form
in by the participant, along with the account opening form. After executing
the agreement the client has to forward it to the Marwadi.
The Marwadi will verify that the account opening form is duly filled in. it
13THHKLM will also verify the enclosed documents, if any. Incomplete
forms will be forwarded to the client for rectification.
The authorized signatories are enclosed.
After completion of all documentation, the Marwadi will enter the client
details as mentioned in the account opening form in the DPM screen
provided for the purpose. After entering client details in the system, a client
account number will be generated by the DPM. The Marwadi will enter this
in the account opening form.
The Marwadi will record the client’s signature (on the form) as specimen
for authorization in the future.
The Marwadi will give a copy of the report listing the client details captured
in the DPM database to the client.
Finally Marwadi dispatch, demat account kit to the client by courier.
In this kit Marwadi provide following things.
Trade book of NSDL. With requisition slip.
Trade book of SDSL.
DRF book
Identify card
Agreement copy, duly authenticated
Account closing form
Guild lines for operation demat account
Account master letter Covering letter
OPENING ACCOUNT FORM:
Procedure for opening of Demat Account of Corporate:-
Memorandum & Articles of Association (MOA & AOA ), board resolution for
opening demat account and list of authorized signatories and photographs, etc.
Introduction by an existing account holder or by the applicant's bank.
Proof of address of the corporate evidenced by the document registered with
Registrar of Companies or acknowledged copy of Income Tax Return or Bank
Statement or Leave and License agreement/Agreement for sale.
An authorized official of the Participant shall verify the proof if address with
the original documents and affix his/her signature on the documents
submitted by the Client.
Change of Address
A written application for change of address of the corporate entity, signed by all
the authorized signatories should be submitted to the Participant.
Following documents should be submitted along with the application:
Latest transaction statement of the corporate's account received from
the participant.
Proof of new address along with the original document of new address,
for verification by the Participant.
At least one of the authorized signatories should visit the office of the Participant
in person to submit its application for change of address along with necessary
documents and sign the application once again in the presence of the officials of
the participant.
An authorized official of the Participant shall verify the application and the
abovementioned documents with the original and put his/her signature on the
application with remarks "verified" and thereafter record the change of address
in the DPM system.
Change of Signature
The client should make a request in writing specifying reasons for change in
signature.
New signature should be duty attested by client's banker.
Client should visit participant's office personally and procedure valid proof of
identify as well as the latest transaction statement of its account.
In the presence of officials of participant client should affix his/her new
signature.
An authorised official of the participant shall under his signature varify the
identity proof with the proof and photograph that were furnished at the time of
opening of account and thereafter, if found satisfactory, make necessary changes
in its records.
Process Of Security Transfer
Procedure for buying and selling dematerialized share is similar to the procedure for
buying and selling dematerialized shares is similar to the procedure for buying and
selling physical shares. The difference lies in the process of delivery (in case of sell)
and receipt (in case of Purchase of securities.
In case of purchase
The broker will receive the securities in his account on the payout day
The broker will give instruction to its DP to debit his account and credit investor's
account
Investor will give ‘Receipt Instruction to DP for receiving credit by filling
appropriates form. However one can give standing instruction for credit in to
ones account that will obviate the need of giving Receipt Instruction every time.
In case of Sell
You will give delivery instruction to DP to debit ones account and credit your broker’s
account. Such instruction should reach to your DP’s office at least 24 hours before
the pay-in other wise DP will accept the instruction only at your risk.
Transfer of Security by Depository
The first step is that two receipts are prepared one is for trade received by fax,
which is done through broker the other is for investors & small investors.
The next step is that the batch is generated after every hour. After that signature
is verified.
Two types of verifications are done i.e. V1 & V2. In V1 Marwadi verify the
company name, quantity & price of scripts. In V2 Marwadi verify ISIN, date, time,
market type etc…
Now pre-audit has been done in which two conformations are checked, i.e. if the
value exceeds rs.1 lacks & whether the duration between two trades exceeds
specified time limit.
To be more specific post-audit has been done in which all the data’s are checked
further.
The last step is that execution is done in NSE.
Pledge/Hypothecation
A cline having a beneficiary account with a participant can pledge / hypothecate
securities in electronic form against loan/ credit facilities extended by a pledge. Who
too has a beneficiary account with a participant. The creation of pledge /
hypothecation will be initiated by the pledge through the participant and the pledge
will instruct its participant to confirm the creation of the pledge.
Procedure for Creation of Pledge/Hypothecation
The first step is that the pledgor will submit an instruction to its participant to
initiate a pledge / hypothecation request in the DPM by indicating the option
create a pledge / hypothecation in the pledge / hypothecation form vide exhibit
is the pledgor will indicate therein the agreement number, closure date of the
pledge / hypothecation.
The next step is that the participant will check for the completeness of the form.
If the form is complete in all respects, the participant will accept the form for
processing and issue an acknowledgment for the same to the pledgor.
The participant will then enter the details of the request in the DPM and the
DPM will generate a pledge / hypothecation instruction number of request.
If there is sufficient balance in the client’s account, the participant will enter the
request form.
The acceptance / rejection of pledge / hypothecation confirmation is
electronically communicated to the DPM of the pledgor’s participant through dm
In case of rejection by the pledge creation of the pledge / hypothecation
instructions will be reversed and the reasons for the rejections are displayed in
the DPM of the pledgors participant
After once confirmation of creation of the pledge / hypothecation it can’t be
cancelled.
The pledge’s participant can not confirm the creation of pledge hypothecation
after the closure date.
What should one do to pledge electronic securities?
The procedure is as follows:
Both investor (pledgor) as well as the lender (pledgee) must have depository
accounts;
Investor has to initiate the pledge by submitting to DP the details of the
securities to be pledged in a standard format ;
The pledgee has to confirm the request through his/her DP;
Once this is done, securities are pledged
Corporate benefits on the pledged securities:
It is very important to know that who receive corporate benefits such as dividend,
bonus etc... So, in this case the securities pledged are only blocked in the account of
pledgor in favor of the pledgee. The pledgor would continue to receive all the
corporate benefits.
Closure Procedure
After repayment of loan to the pledgee, the pledgee will send instructions. After that
participant will check for completeness of the form submitted by pledgor. If the form
is complete in all respect, the participant will accept the form for further processing
& will issue an acknowledgement.
Now the next step is that the participant will compare details of form with those
recorded in the DP as specified in the form. Now the participant will enter the
closure request details in the dam against the pledge / hypothecation number. Now
the participant will enter the closure details in the DPM against the from of the
pledge / hypothecation. Closure request is electronically communicated to the DPM
of ledger’s participant through the dm for confirmation.
Demet Requisition Form (DRF)
In today’s era, all the transactions are done through electronic form in
NSE/BSE. So here, investors need to convert their physical certificate into
electronic form. The applicant must have gone through a systematic process
to open demat account. The first step is that the applicant will make request
for opening his account with DP. Marwadi has to first fill up DRF form.
Procedure for Dematerialization
Investor
Steps :
DPS provides DRF(De-mat Requisition Form) to the clients
Client/ investors submit the DRF and physical certificates of securities
to DP. DP checks whether the securities are available for de-mat.
Client defaces the certificate by stamping “Surrendered for
Dematerialization.”
The DP should enter the dematerialization request in DPM. dpm
generate request number (drm) which should be mentioned in
drf.
DP punches two holes on the name of the company and draws two
parallel lines across the face of the certificate.
DP enters the de-mat request in his system to be sent to nsdl. Dp
dispatches the physical certificates along with the drf to the r&t agent
NSDL records the details of the electronic request in the system and
forwards the request to the r&t agent
R & T agent, on receiving the physical documents and the electronic
request, verifies and checks them.
The DP issues a statement of transaction to the client.
DP
NSDL R & T Agent
Rematerialization Requisition Form (RRF)
Re-materialization is the process by which a client can get its electronic
holdings converted into physical certificates. The client has to submit the re-
materialization request to the participant with whom it has an account. The
participant enters the request in its system which debits the client’s holdings
to that extent automatically. The participant releases the request to NSDL and
sends the request form to the Issuer/R & T agent. The Issuer/R & T agent
then prints the certificates, dispatches the same to the client and
simultaneously electronically confirms the acceptance of the request to NSDL
Form,
Procedure,
The client will submit a request to the participant in the form vide -for re-
materialization of holdings in its account.
On receipt of the request form, the participant will verify that the form is
duly filled in and issue to the client, an acknowledgement slip, signed and
stamped.
The participant will verify the signature of the client as on the form with the
specimen available in its records.
If the signatures differs the participant will ensure the identity of the client.
If the form is in order the participant will enter the request details in its
DPM. While entering the details, if it is found that the client’s account does
not have enough balance, the participant will not entertain the request.
The participant will intimate the client that the request cannot be
entertained since the client does not have sufficient balance.
If there is sufficient balance in the client’s account, the participant will enter
the request in the DPM and the DPM will generate a Re-materialization
Request Number (RRN).
The RRN so generated is entered in the space provided for the purpose in
the re-materialization request form.
Details recorded for the RRN should be verified by a person other than the
person who entered the data. The request is then released to the DM by
the participant.
The DM forwards the request to the Issuer/R&T agent electronically.
The participant will fill the authorization portion of the request form.
The participant will dispatch the request form to the Issuer/R&T agent.
The Issuer/R&T agent accepts the request for re-materialization prints &
dispatches the certificates to the client & sends electronic confirmation to
DM.
The DM downloads this information to the DPM and the status of the re-
materialization request is updated in the DPM.
The participant must inform the client about the changes in the client
account following the acceptance of the request.
Security Broking
We facilitate buying and selling of securities on National Stock
Exchenge,Mumbai. We try and make it seemless for our customers by
offering the services to transfer securities through our demat services.
Customers are also offered the facility of trading through --,thereby making it a
door step taking our service to customer's door step.
We, offer integrated -- services by bundling all peripheses services together
thereby making securities broking a seemless experience
Commodity Derivatives
We, at Marwadis, are providers of broking services in Capital Market. With the
opening up of commodities sector and the consequent felt need to provide price
stabilization services, the Govt. mandated host mandated National level Commodity
Exchanges. As part of our effort to broad base services to our customers, we have
taken membership of National level commodity exchanges. A new investment option
is commodities. Until a few months ago this would not have made sense as there
was no avenue for trading in commodities.
We at Marwadi have taken the pioneering step of bringing this to your doorstep.
Good ness met historically prices in commodities are less volatile than equities and
bonds, thus providing an efficient diversification option.
5.2 TRADING DEPARTMENT - 1
INTRODUCTION
With the increasing popularity of “scrip less trading” many brokers and sub
brokers are attempting to assess possible impact of this in their business
practices. In lay man language, the broker can be considered as a
“wholesaler” of services and sub broker can be considered as a “retailer”. As
a part of service the sub brokers also collect the securities and funds from the
investor and delivers the same to the main broker for onward settlement with
the clearing corporation (CC)/clearing house (CH).
According to SEBI rules, it is advisable to open trading account. An investor can open
trading account in any depository. As per the guidelines prescribed, partnership firm
& corporate body cannot open their trading account. Marwadi has different
segments to facilitate the transactions related to trading. To open trading account
anyone must have to follow the specific procedure which is as follows.
DIFFERENT SAGMENT
FORM
EXPLANATION OF DIFFERENT SEGMENTS:
Clients can be divided mainly in three segments.
Direct Client (All Segment)
Authorized Person’s Client (Derivatives Segment)
Sub Broker Client (Cash Segment)
1. DIRECT CLIENT:
When client wants to deal in each and every segment then Marwadi make
direct client agreement. When client wants to open an account in Marwadi or
in any of the branches at that time Marwadi also makes direct client
agreement.
FORM
2. AUTHORISED PERSON’S CLIENT:
Trading members of the Exchange may appoint authorized person who can be
individuals, registered partnership firms, corporate bodies or companies as defined
under the Companies Act, 1956 in the Capital Market (CM) segment or Futures &
Options (F&O) segment or in both Capital market and Future & Options segment.
FORM
3. SUB BROKER CLIENT:
When client wants to deal in only cash segment then Marwadi makes sub
broker client agreement.
FORM
PROCEDURE FOR OPENING AND CLOSING TRADING ACCOUNT
Client ask for form
The client fills up the form and submit to Marwadi
The Marwadi checks all the details and then verify the proves.
Marwadi makes agreement according to segment and relevant agreement
form has been attached.
The next step is coding. In coding name and surname has been checked and if
anything matches then it shows that account is already been opened.
Otherwise new code is given. After coding address details have been entered.
The next step is brokerage. The brokerage charge depends upon different
segments and clients. In same day square up the brokerage is fixed that is 0.8
paisa. Client gives brokerage to broker and broker will give it to Marwadi at
the end of month. There would not be any delivery charge. Marwadi decides
the different slabs according to which clients are charged.
At last data entry has been done.
REQUIREMENT FOR OPENING AN ACCOUNT:
Photo copy (driving license, ration card, voter id card, pass port)
De-mat account copy
Pan card number
Bank Account number
Electric bill (Last Two Months bill)
Authority letter
E-mail id
Declaration
CLOSING OF AN ACCOUNT:
A beneficial owner or clearing member may close his account with the
participant. at the time of default of client participant can also be initiated for
closure of account for which the client has to submit an account closure
request form to the participant on the other hand client can also re-materialize
his holdings or can transfer it with another participant.
PROCEDURE FOR CLOSING AN ACCOUNT:
The client will submit a request to the Participant in the form vide for
account closure.
On receipt of the request form, the Participant will verify that the form is
duly filled in and issue to the client, an acknowledgement slip, signed
and stamped.
The Participant will verify signature of the client on the form with the
specimen signature available in its records.
If the signature differs, the Participant will ensure the identity of the
client.
The client is required to indicate whether it has opted for transferring
the holding to another account or for re-materialization.
If the option is for transfer of holding to another account, procedure laid
down to another transfer will be followed.
If the option is for re-materialization, procedure laid down for re-
materialization will be followed.
After all the balances in the client account become zero, the Participant
will change the status of the client account to “TO BE CLOSED.”
The Participant will issue a final statement of accounts to the client
SURVEILLANCE AND ADDMINISTRATION
After completion of coding procedure a number is generated which is called
DRN (demat requisition number). The number is activated in exchange for
trading. The mentioned procedure is called mapping. Now the limit has been
set for the clients and brokers. DIFFERENT Types of limits are as under.
Today gross limit.
Today turnover limit.
Today margin
Today M To M lose (Market to Market)
Net Purchase
Net Sell
Net Quantity
Net Position
Pending order limit
maximum quantity
maximum value
TRADING DEPARTMENT - 2
Different Option for Trading,
NSE Cash
NSE Derivatives
BSE Cash
PROCESS OF TRADING:
The trading system provides tremendous facilities to the users in terms of
orders that can be placed on the system.
It provides complete online market system.
The market screen at any point of time provide complete information on
total order depth, five best buyers & sellers available in the market, the
quantity traded during the day in that security, the high - low, the last
traded price etc…
Immediately after the trading limit has been placed in order book investor
can know the fate of the orders.
Limit orders are orders to bye & sell shares at a stated quantity & stated
price.
If price quantity condition doesn’t match; the limit order will not be
executed.
NSE CASH
The neat system supports an order driven market, where in orders match on
the basis of time & price priority. All quantity fields are in units & prices are
quoted in Indian currency (RS.)
The regular lot size & tick size for various securities traded are notified by the
exchange from time to time.
The system (NEAT) is available for trading on all days except Saturday, Sunday
& other Holidays which are declared by the exchange from time to time.
The trading member can carry out following activities after login to the NEAT
system & before the market pens for trading
Setup market watches (i.e. the securities which the user would Like to
view the entire screen)
Viewing inquiry screens.
Now the trading market is divided into different phases as follows.
1. Open phase
2. Market close
3. Surcon
1) Open phase
The open period indicates the commencement of the trading activity.
At that time a message is sent to all the trader workstations. Order entry is allowed only when all the securities have been opened.
The activities that are mainly done at this stage are order inquiry, order
modification, order pending until executed, cancellation at the time of
closing.
2) MARKET CLOSE
At the time of closing normally no further orders can be entered but in
F&O there are two types available i.e. American & European in which
European type allows users to enter the order after closing the session.
3) SURCON
Surveillance & control is that period after closure of the market during
which the users can, inquire. After every SURCON period, the system
processes the data for making the system available for the next trading
day.
MARKET TYPES:
The Capital Market System has four types of market. Marwadi are:
Normal Market
Odd Lot Market
ALBM Market
Auction Market
1.NORMAL MARKET:
Normal market consists of various book types wherein orders are
segregated as Regular Lot orders, Special Term orders, Negotiated
Trade orders and Stop Loss orders depending on their order attributes.
All orders have to be of Regular Lot size or multiples thereof.
2.ODD LOT MARKET:
An order is called an Odd Lot order if the order size is less than
Regular Lot size. Such orders are traded in the Odd-Lot market. These
orders do not have any special terms attribute attached to them. In an
Odd-Lot market, both the price and quantity of the orders (buy and
sell) should exactly match for the trade to take place.
3.ALBM MARKET:
ALBM orders are similar to the normal market orders except that
ALBM orders have different settlement periods vis-a-vis normal
market. The orders entered in this market do not have any special
terms attribute attached to them.
4.AUCTION MARKET:
In the Auction market, auctions are initiated by the Exchange on
behalf of trading members for settlement related reasons.
There are three participants in this market. A. Initiator :
The party who initiates the auction process is called an initiator.
B. Competitor:
The party who enters orders on the same side as of the initiator is
called a Competitor.
C. Solicitor:
The party who enters orders on the opposite side as of the initiator is
called a Solicitor
NEAT SCREEN
MAJOR SEGMENTS
The following windows are displayed on the Trader Workstation screen:
Title Bar
Ticker Window
Tool Bar
Market Watch Window
Inquiry Window
Snap Quote
Order/Trade Window
Message Window
NSE DERIVATIVE:
Derivatives are one of the most complex instrument. Delivery contracts,
stating what is to be delivered for a fixed priced at a specified place on a
specified date. These contracts were undertaken between farmers &
merchants to element the risk arising out of uncertainty future prices of grains.
A derivative is Na contract whose value is derived from value of another
assets, known as the underlying, which could be a share, a stock market
index, and interest rate, a commodity or a currency.
As per above structure of derivative markets, two major segment of it
financial derivative market and commodity derivative market. In
financial derivative market it sub divided in organized market and Over
The Counter (OTC) market. All the financial instruments are treaded
DERIVATIVE
MARKETS
FINANCIAL
DERIVATIVE
COMMIDITY
DERIVATIVE
ORGANISED
MARKET
OTC
MARKET
ORGANISED
MARKET
OTC
MARKET
under this market. The functions of financial derivative markets are
treading, clearing, settlement. PARTICIPANTS OF DERIVATIVE MARKET:
Participants who tread on the derivatives market can be classified
under the following three broad categories are as follows :
Hedgers: Hedgers face risk associated with the price of an asset. They
use the futures or options markets to reduce or eliminate.
Speculators : speculators are participants who wish to bet on future
movements in the price of an asset. Futures and options contracts can
give them leverage ; that is, by putting in small amounts of money upfront
they can take large positions on the market. As a result of their leveraged
speculative position they increase the potential for large gains as well as
large losses.
Arbitragers : arbitragers work at making profits by taking advantage of
discrepancy between prices of the same product across different markets.
TYPES OF CONTRACTS IN DERIVATIVE MARKET
Different contacts are of different types. The most common once are
forwards, futures, options, warrants, baskets and swaps.
Forwards:
A forward contract is an agreement between two entities to buy or sell
the underlying asset t a future date, at today’s pre-agreed price.
Futures:
A futures contract is an agreement between two parties to buy or se
the underlying asset at a future date at today’s future price.
Futures contracts differ from forward contracts in the sense the they are
standardized and exchange traded. Other differences are as under.
Future Forwards
Trade on an organized exchange OTC in nature
Standardized contract terms Customized contract terms
Hence mort liquid Hence less liquid
Requires margin payments No margin payment
Follows daily settlement Settlement happens at end of period
Derivative Futures
Stock futures
Nifty futures
Bank Nifty Futures
CNX IT Futures
Derivative Options
Stock Option
Nifty Option
Bank Nifty Option
CNX IT Option
Options : There are two type of options- calls and puts, calls give the buyer
the right but not the obligation to buy a given quantity of the underlying
asset, at a given price on or before a given future date. Puts give the buyer
the right but not the obligation to sell quantity of the underlying asset at a
given price on or before a given date.
Warrants: options generally have lives of up to one year, the majority of
options traded on options exchanges having a maximum maturity of nine
months. Longer-dated options are called warrants and are generally traded
OTC.
Baskets: basket options are options on portfolios of underlying assets. The
underlying asserts. The underlying asset is usually a weighted average of a
basket of assets. Equity index options are a form of basket options.
Swaps: swaps are private agreements between two parties to exchange cash
flow in the future according to a prearranged formula. They can be regulated
as portfolios of forward contracts. The two commonly used swaps are interest
rate swaps and currency swaps.
CURRENT SYSTEM IN INDIA:
Currently in India, all future transactions are settled in cash. There is no
system of physical delivery. It is widely expected that NSE/BSE will move to a
physical delivery soon. However index based future and options will continue
to be based on cash settlement system.
KIND OF RISKS IN DERIVATIVE MARKET:
Different types of risks do participants in the derivatives market face which are
as under :
Counter party(or default) risk:
The risk is very low or almost zero, because the exchange takes on the
responsibility.
Legal risk:
The risks that legal objections might be raised, regulatory framework
disallow some activities.
Market risk:
In this type of risk the market price of security may move up or down.
Liquidity risk:
Risk that unwinding of transactions might be difficult if the market is liquid.
SCREEN
From above screen we can find the current position of any company’s stock
current index rate, turnover etc. In F & O there are mainly 30 selected stocks
and index we can purchase or sell.
Pay Out and Pay in Process
Introduction
After completion of trading the further process is done through this department.
Mainly it handles two processes which are known as pay in and pay out process.
Further description is given below.
Payout Process
When transaction is done between the two members of same DP then it is called
internal payout process, but it can be known only after 4 o’clock when trading
gets over. It can be known that whether the transaction is done internally or not.
Otherwise all the transactions are done thorough exchange only. Now if the
situation arises in which one of the member of DP has sold a definite quantity of
shares, but against which no one has purchased the same amount of quantity of
shares belonging to same company then the whole lot will go to the exchange. On
the other hand if one of the parties has bought comparatively less quantity than
sold by another party then it is called shortfall of shares. Now let us understand
the above concept with the help of a practical example. Suppose, one of the
members of Marwadi in RAJKOT has sold 500 shares of Reliance LTD., but against
which member of Marwadi at SURENDRANAGER branch has purchased only 300
shares of the same company then it is called SHORTFALL. Now, after the closing of
trading activity (i.e. after 4 o’clock). Exchange will prepare a shortfall report & this
will be directly sent to Marwadi. Now, department will prepare a summary from
the report. After that if DP has access then dealing will be done internally
otherwise auction will be done by exchange in which exchange will purchase or
sell shortfall of shares from the market. Payout process mainly indicates access
amount to be paid by DP i.e. when purchase of share is comparatively higher then
selling.
Pay In Process
Now if we look from the other side the same concept, then it is called PAY IN
PROCESS. In this process if selling is done comparatively higher then purchase,
then DP will earn i.e. DP will get relatively more amount against which it has to
pay less amount. In both the transaction i.e. in paying & payout the payment will
be done thorough checks only.
5.3 HR DEPARTMENT
Introduction
Today the success of any business is widely dependent upon its human resource. In
present era where all companies have enough amounts of resources at that time,
human resource plays main role to pull an organization toward success. Today in any
financial institution right person at the right place becomes necessary. So Marwadi
has decided different strategies for recruitment, training & development, promotion
or any kind of transfer or demotion. Everything is predecided and accordingly any
decision is taken. Up till now recruitment was not depended on any specific criteria,
but after recruitment training was given to employees according to their
designations. But now it has been decided that each and every employee before
recruited, should have to clear all the examination related to different areas like DP,
capital market, derivatives related exam etc. and further it has been decided that no
new employment will be done without passing all the examination so on the basis of
score placement will be done.
Organisation of H. R. Department
The internal organization or structure of the personnel department varies widely in
different companies, depending upon that size. For example in small companies
personnel functions are discharged by line executives. But in the large company,
where personal activities are generally of a complex nature, a separate department
is organized for the purpose which is called H R DEPARTMENT as in MSFPL. Here, Mr.
Akshay Goswami is working as a manager.
The organization structure of H R Department of this company is as follows,
Personnel
Administration
HR
Personnel Department:
Personnel management performs one of the major roles, which is primarily
concerned with human constituents of an organization. The principal component of
an organization is its “human resources” or “people at work”. Human resource can
be differentiated on the basis of skills, attitudes, talents, and knowledge. Here the
Marwadi understands the importance of human resource so they have separate
department called “PERSONNEL DEPARTMENT”. Here the activities like recruitment,
selection, gratuity, pf, and bonus are handled. For selection and recruitment they
use both the sources i.e. internal source and external source.
To recruit an employee within organization Marwadi give promotion to the
employee or transfer to other place. But if Marwadi has to select from outside then
they follow the traditional channel for recruitment and selection.
Give advertisement in news paper
Fill up the Application form
Written test
Personal interview
Reference checking
Physical checking
Final selection
Placement
To give training and development Marwadi follow very unique technique. First of all
they check the requirement of individual employee. For that Marwadi use special
agency which is specially functioning in this area. The agency will prepare special
report for an individual employee and as per the report h r manager will take
decision for training and development.
For bonus, gratuity, pf, salary Marwadi follows the relevant acts.
Administration Department
The main objective or function of department is to give knowledge about work to be
done by an employee. For that they have arranged different types of examination as
per requirements. These types of examination are one of the strong tools for the
motivation because it helps both, Marwadi as well as employees. From the point of
view of Marwadi, they get more qualified and educated employees and on the other
side the employee gets increment in salary.
HR DEPARTMENT
Here the activities like training, performance appraisal improvement in employees,
developing organizational culture are performed.
To tackles the problems such as high turnover ratio, less productivity, negative
attitude they prepare very unique techniques for training.
For training purpose they have adopted different techniques. Here they are
providing two types of training.
On the Job Training
Off the Job Training
To give job related training, they provide on the job training and this type of training
is provided by supervisors & subordinates. For off the job training they consult other
company named as ethos management. Ethos management has taken certain steps
for training like first of all they check the individual requirement and then they
provide training according to needs of the employee. By providing training H R
department has been able to create a good and healthy environment and through
such an environment they have been able to set up a good organization culture and
because of organization culture employees attitudes towards their work, place and
its position.
5.4 ACCOUNT DEPARTMENT
The company is providing services for trading in shares and derivative
products to its clients at Rajkot office and from it’s branches. The clients place
order for buy/sale of shares and such transaction are executed on the trading
terminals situated at the office of the company/ branches. All terminals are
connected through v-sats, leased lines etc. and at the end of day, the
complete details of all trades done is collected at Rajkot office. The software
driven system takes care of all these transactions and at the end of the day,
bills etc. for all trade are prepared. The bills are prepared at Rajkot only and
are dispatched to the clients at the same day.
Each and every expense is mentioned under specific head only. The main books of
accounts which they maintain as per the requirements u/r various Acts are; Register
of transactions (sauda book) clients ledger, General ledger, Journals, Cash book,
Bank book, Margin deposite book, register of accounts and all the accounting
records as per general accounting standards. The company is marinating serially
numbered bills for all the clients at Rajkot. As per SEBI’s directives, client are
provided with contract notes cum bills on serially numbered continuous stationary.
Presently the company is providing services through total thirty branches situated
within the country. Marwadi’ s authorized capital is increased to 25crore from 10
crore.
In account department Different margins are also decided for different types of slabs
decided for brokers and margin for square up is also decided here only.
For preparing an account they use in house software that is beats.
5.5 COMMODITY DEPARTMENT
Introduction
Organized commodity derivatives in India started as early as 1875, barely about a
decade after they started in Chicago. However, many feared that derivatives fuelled
unnecessary speculation and were detrimental to the healthy functioning of the
markets for the underlying commodities. As a result, after independence,
commodity options trading and cash settlement of commodity futures were banned
in 1952. A further blow came in 1960s when, following several years of severe
draughts that forced many farmers to default on forward contracts (and even caused
some suicides), forward trading was banned in many commodities considered
primary or essential. Consequently, the commodities derivative markets dismantled
and remained dormant for about four decades until the new millennium when the
Government, in a complete change in policy, started actively encouraging the
commodity derivatives market. Since 2002, the commodities futures market in India
has experienced an unprecedented boom in terms of the number of modern
exchanges, number of commodities allowed for derivatives trading as well as the
value of futures trading in commodities, which might cross the $ 1 Trillion mark in
2006. However, there are several impediments to be overcome and issues to be
decided for sustainable development of the market. This paper attempts to answer
questions such as: how did India pull it off in such a short time since 2002? Is this
progress sustainable and what are the obstacles that need urgent attention if the
market is to realize its full potential? Why are commodity derivatives important and
what could other emerging economies learn from the Indian mistakes and
experience?
The Indian economy is witnessing a mini revolution in commodity derivatives and
risk management. Commodity options trading and cash settlement of commodity
futures had been banned since 1952 and until 2002 commodity derivatives market
was virtually non-existent, except some negligible activity on an OTC basis. Now in
September 2005, the country has 3 national level electronic exchanges and 21
regional exchanges for trading commodity derivatives. As many as eighty (80)
commodities have been allowed for derivatives trading. The value of trading has
been booming and is likely to cross the $ 1 Trillion mark in 2006 and, if all goes well,
seems to be set to touch $5 Trillion in a few years.
Role of Marwadi in Commodity
Marwadi Commodity Broker Pvt. Ltd. (MCBPL) is experienced share broker
dedicated for progress of Commodity Derivatives. Marwadi Group owns
MCBPL. MCBPL provided all the commodity related services against
Commodity Derivatives brokerage.
MCBPL has Commodity Derivatives dedicated teams for research, dealers,
experienced industrialist and experts. Currently MCBPL is member of NCDEX
and MCX and planning to provide to deal in other world-class exchanges
shortly. MCBPL will provide best services with the help of its own researched
advices.
Why are Commodity Derivatives Required?
India is among the top-5 producers of most of the commodities, in addition to being
a major consumer of bullion and energy products. Agriculture contributes about 22%
to the GDP of the Indian economy. It employees around 57% of the labor force on a
total of 163 million hectares of land. Agriculture sector is an important factor in
achieving a GDP growth of 8-10%. All this indicates that India can be promoted as a
major center for trading of commodity derivatives. It is unfortunate that the policies
of FMC during the most of 1950s to 1980s suppressed the very markets it was
supposed to encourage and nurture to grow with times. It was a mistake other
emerging economies of the world would want to avoid. However, it is not in India
alone that derivatives were suspected of creating too much speculation that would
be to the detriment of the healthy growth of the markets and the farmers. Such
suspicions might normally arise due to a misunderstanding of the characteristics and
role of derivative product. It is important to understand why commodity derivatives
are required and the role they can play in risk management. It is common knowledge
that prices of commodities, metals, shares and currencies fluctuate over time. The
possibility of adverse price changes in future creates risk for businesses. Derivatives
are used to reduce or eliminate price risk arising from unforeseen price changes. A
derivative is a financial contract whose price depends on, or is derived from, the
price of another asset.
Two important derivatives are futures and options.
(i) Commodity Futures Contracts: A futures contract is an agreement for buying or
selling a commodity for a predetermined delivery price at a specific future time.
Futures are standardized contracts that are traded on organized futures exchanges
that ensure performance of the contracts and thus remove the default risk. The
commodity futures have existed since the Chicago Board of Trade (CBOT,
www.cbot.com) was established in 1848 to bring farmers and merchants together.
The major function of futures markets is to transfer price risk from hedgers to
speculators. For example, suppose a farmer is expecting his crop of wheat to be
ready in two months time, but is worried that the price of wheat may decline in this
period. In order to minimize his risk, he can enter into a futures contract to sell his
crop in two months’ time at a price determined now. This way he is able to hedge his
risk arising from a possible adverse change in the price of his commodity.
(ii) Commodity Options contracts: Like futures, options are also financial
instruments used for hedging and speculation. The commodity option holder has the
right, but not the obligation, to buy (or sell) a specific quantity of a commodity at a
specified price on or before a specified date. Option contracts involve two parties –
the seller of the option writes the option in favour of the buyer (holder) who pays a
certain premium to the seller as a price for the option. There are two types of
commodity options: a ‘call’ option gives the holder a right to buy a commodity at an
agreed price, while a ‘put’ option gives the holder a right to sell a commodity at an
agreed price on or before a specified date (called expiry date).
The option holder will exercise the option only if it is beneficial to him; otherwise he
will let the option lapse. For example, suppose a farmer buys a put option to sell 100
Quintals of wheat at a price of Rs.25 per quintal and pays a ‘premium’ of Rs.0.5 per
quintal (or a total of Rs.50). If the price of wheat declines to say Rs.20 before expiry,
the farmer will exercise his option and sell his wheat at the agreed price of Rs.25 per
quintal. However, if the market price of wheat increases to say Rs.30 per quintal, it
would be advantageous for the farmer to sell it directly in the open market at the
spot price, rather than exercise his option to sell at Rs.25 per quintal. Futures and
options trading therefore helps in hedging the price risk and also provide investment
opportunity to speculators who are willing to assume risk for a possible return.
Further, futures trading and the ensuing discovery of price can help farmers in
deciding which crops to grow. They can also help in building a competitive edge and
enable businesses to smoothen their earnings because nonhedging of the risk would
increase the volatility of their quarterly earnings. Thus futures and options markets
perform important functions that can not be ignored in modern business
environment. At the same time, it is true that too much speculative activity in
essential commodities would destabilize the markets and therefore, these markets
are normally regulated as per the laws of the country.
Commodities products
Gold, Gold HNI, Gold M, I-Gold, Silver, Silver
HNI, Silver M
Castor Oil, Castor Seeds, Coconut Cake, Coconut Oil,
Cottonseed,
Crude Palm Oil, Groundnut Oil,
Kapasia Khalli (Cottonseed Oilcake), Mustard
/Rapeseed Oil,
Mustard Seed (Sirsa), RBD Palmolein, Refined Soy Oil,
Refined Sunflower Oil, Rice Bran Refined Oil, Sesame
Seed, Soymeal, Soy Seeds
Cardamom, Jeera, Pepper, Red Chilli
Aluminium, Copper, Lead, Nickel, Sponge Iron, Steel
Flat, Steel Long (Bhavnagar),
Steel Long (Gobindgarh), Tin, Zinc
Cotton Long Staple ,
Cotton Medium Staple,
Cotton Short Staple, Cotton Yarn, Kapas
Chana, Masur, Tur, Urad, Yellow Peas,
Basmati Rice, Maize, Rice, Sarbati Rice, Wheat
Brent Crude Oil, Crude Oil,Furnace Oil Middle East
Sour Crude Oil
Arecanut, Cashew Kernel, Rubber
High Density Polyethylene (HDPE),
Polypropylene (PP), PVC
Guar Seed, Guargum, Gurchaku, Mentha Oil, Potato,
Sugar M-30, Sugar S-30,
Conclusion
India is one of the top producers of a large number of commodities, and also has a
long history of trading in commodities and related derivatives. The commodities
derivatives market has seen ups and downs, but seem to have finally arrived now.
The market has made enormous progress in terms of technology, transparency and
the trading activity. Interestingly, this has happened only after the Government
protection was removed from a number of commodities, and market forces were
allowed to play their role. This should act as a major lesson for the policy makers in
developing countries, that pricing and price risk management should be left to the
market forces rather than trying to achieve these through administered price
mechanisms. The management of price risk is going to assume even greater
importance in future with the promotion of free trade and removal of trade barriers
in the world. All this augurs well for the commodity derivatives markets.
Transaction in the Organized Market
Organized markets have structured forms of transactions. The commodity
exchanges are regulated as per rules and regulations define in The Forward
Contracts (Regulation) Act, 1952 for regulating forward\future contracts. In
December 2003, the national commodity and derivative exchange Ltd
(NCDEX) launched futures trading in nine major commodities.
MCX To begin with contacts in gold, silver, cotton, soyabean, soya oil,
mustered seed, rapeseed oil, crude palm oil and RBD Palmolive are being
offered. Now more then 40 commodity items are included. Day by day number
of commodity items is incising. The various commodities which tread on the
NCDEX and look at some commodity specific issues. In this commodity
market classified as agriculture products, precious metal, other metal and
energy.
Following items are treaded in commodity exchange namely
NCDEX and MCX.
National Commodity & Derivatives Exchange Limited
(NCDEX) is a professionally managed online multi
commodity exchange promoted by ICICI Bank Limited
(ICICI Bank),
Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural
Development (NABARD) and National Stock Exchange of India Limited (NSE). Punjab
National Bank (PNB), CRISIL Limited (formerly the Credit Rating Information Services
of India Limited), Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Canara
Bank by subscribing to the equity shares have joined the initial promoters as
shareholders of the Exchange. NCDEX is the only commodity exchange in the country
promoted by national level institutions. This unique parentage enables it to offer a
bouquet of benefits, which are currently in short supply in the commodity markets.
The institutional promoters of NCDEX are prominent players in their respective fields
and bring with them institutional building experience, trust, nationwide reach,
technology and risk management skills.
NCDEX is a public limited company incorporated on April 23, 2003 under the
Companies Act, 1956. It obtained its Certificate for Commencement of Business on
May 9, 2003. It has commenced its operations on December 15, 2003.
NCDEX is a nation-level, technology driven de-mutualized on-line commodity
exchange with an independent Board of Directors and professionals not having any
vested interest in commodity markets. It is committed to provide a world-class
commodity exchange platform for market participants to trade in a wide spectrum of
commodity derivatives driven by best global practices, professionalism and
transparency.
NCDEX is regulated by Forward Market Commission in respect of futures trading in
commodities. Besides, NCDEX is subjected to various laws of the land like the
Companies Act, Stamp Act, Contracts Act, Forward Commission (Regulation) Act and
various other legislations, which impinge on its working.
NCDEX is located in Mumbai and offers facilities to its members in more than 390
centres throughout India. The reach will gradually be expanded to more centres.
NCDEX currently facilitates trading of thirty six commodities - Cashew, Castor Seed,
Chana, Chilli, Coffee, Cotton, Cotton Seed Oilcake, Crude Palm Oil, Expeller Mustard
Oil, Gold, Guar gum, Guar Seeds, Gur, Jeera, Jute sacking bags, Mild Steel Ingot,
Mulberry Green Cocoons, Pepper, Rapeseed - Mustard Seed ,Raw Jute, RBD
Palmolein, Refined Soy Oil, Rice, Rubber, Sesame Seeds, Silk, Silver, Soy Bean, Sugar,
Tur, Turmeric, Urad (Black Matpe), Wheat, Yellow Peas, Yellow Red Maize & Yellow
Soybean Meal. At subsequent phases trading in more commodities would be
facilitated.
Screen of Ncdex
Multi Commodity Exchange (MCX):
MCX is an independent and de-mutulised multi commodity exchange. It was
inaugurated on November 10, 2003 by Mr. Mukesh Ambani, Chairman and
Managing Director, Reliance Industries Ltd., and has permanent recognition
from the Government of India for facilitating online trading, clearing and
settlement operations for commodity futures markets across the country.
Headquartered in the financial capital of India, Mumbai, MCX is led by an
expert management team with deep domain knowledge of the commodity
futures markets. The integration of dedicated resources, robust technology
and scalable infrastructure, has helped MCX record many firsts since its
inception.
Being a nation-wide commodity exchange having a robust infrastructure,
offering multiple commodities for trading with wide reach and penetration,
MCX is well placed to tap the vast potential poised by the commodities
market. MCX offers a wide spectrum of opportunities to a large cross section
of participants including Producers/ Processors, Traders, Corporate, Regional
Trading Centers, Importers, Exporters, Co-operatives and Industry
Associations amongst others
Screen of MCX
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 000’s), value (in lack),%
change, average trade price, high, low, open ,close & open interest.
INDEX
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MUTUAL FUND
SCHEMES AND FUNDS
PORTFOLIO MANAGEMENT
IPO
95
98
102
106
6. DISTRIBUTION SERVICES
6.1 MUTUAL FUND
Introduction
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciation realised are shared by its
unit holders in proportion to the number of units owned by them. Thus a Mutual
Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at
a relatively low cost. The flow chart below describes broadly the working of a mutual
fund
The Indian mutual fund industry is dominated by the Unit Trust of India which has a
total of Rs700bn collected from more than 20 million investors. The UTI has many
funds/schemes in all categories like equity, balanced, income etc with some being
open-ended and some being closed-ended. The Unit Scheme 1964 commonly
referred to as US 64, which is a balanced fund, is the biggest scheme with a corpus of
about Rs200bn.The mutual fund industry in India started in 1963 with the formation
of Unit Trust of India, at the initiative of the Government of India and Reserve Bank
the. The history of mutual funds in India can be broadly divided into four distinct
phases
Mutual Funds in India
UTI commenced its operations from July 1964 .The impetus for establishing a formal
institution came from the desire to increase the propensity of the middle and lower
groups to save and to invest. UTI came into existence during a period marked by
great political and economic uncertainty in India.
Finance Minister, T.T. Krishnamachari set up the idea of a unit trust that
would be "open to any person or institution to purchase the units offered by
the trust. However, this institution as we see it, is intended to cater to the
needs of individual investors, and even among them as far as possible, to
those whose means are small."
His ideas took the form of the Unit Trust of India, an intermediary that would
help fulfill the twin objectives of mobilizing retail savings and investing those
savings in the capital market and passing on the benefits so accrued to the
small investors. One thing is certain – the fund industry is here to stay. The
industry was one-entity show till 1986 when the UTI monopoly was broken
when SBI and Canbank mutual fund entered the arena. This was followed by
the entry of others like BOI, LIC, GIC, etc. sponsored by public sector banks.
Starting with an asset base of Rs0.25bn in 1964 the industry has grown at a
compounded average growth rate of 26.34% to its current size of Rs1130bn.
Mutual Fund Operation Flow Chart
There are many entities involved and the diagram illustrates the or
ganisational set up of a mutual fund
2. SCHEMS AND FUNDS
By Structure:
Open-ended Funds
An open-end fund is one that is available for subscription all through the year.
These do not have a fixed maturity. Investors can conveniently buy and sell
units at Net Asset Value ("NAV") related prices. The key feature of open-end
schemes is liquidity.
Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging
from 3 to 15 years. The fund is open for subscription only during a specified
period. Investors can invest in the scheme at the time of the initial public issue
and thereafter they can buy or sell the units of the scheme on the stock
exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to
the Mutual Fund through periodic repurchase at NAV related prices. SEBI
Regulations stipulate that at least one of the two exit routes is provided to the
investor.
Interval Funds
Interval funds combine the features of open-ended and close-ended schemes.
They are open for sale or redemption during pre-determined intervals at NAV
related prices.
By Investment Objective:
Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to
long- term. Such schemes normally invest a majority of their corpus in
equities. It has been proven that returns from stocks, have outperformed most
other kind of investments held over the long term. Growth schemes are ideal
for investors having a long-term outlook seeking growth over a period of time.
Income Funds
The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds,
corporate debentures and Government securities. Income Funds are ideal for
capital stability and regular income.
Balanced Funds
The aim of balanced funds is to provide both growth and regular income.
Such schemes periodically distribute a part of their earning and invest both in
equities and fixed income securities in the proportion indicated in their offer
documents. In a rising stock market, the NAV of these schemes may not
normally keep pace, or fall equally when the market falls. These are ideal for
investors looking for a combination of income and moderate growth.
Money Market Funds
The aim of money market funds is to provide easy liquidity, preservation of
capital and moderate income. These schemes generally invest in safer short-
term instruments such as treasury bills, certificates of deposit, commercial
paper and inter-bank call money. Returns on these schemes may fluctuate
depending upon the interest rates prevailing in the market. These are ideal for
Corporate and individual investors as a means to park their surplus funds for
short periods.
Load Funds
A Load Fund is one that charges a commission for entry or exit. That is, each
time you buy or sell units in the fund, a commission will be payable. Typically
entry and exit loads range from 1% to 2%. It could be worth paying the load, if
the fund has a good performance history.
No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit.
That is, no commission is payable on purchase or sale of units in the fund.
The advantage of a no load fund is that the entire corpus is put to work.
Other Schemes:
Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of
the Indian Income Tax laws as the Government offers tax incentives for
investment in specified avenues. Investments made in Equity Linked Savings
Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of
the Income Tax Act, 1961. The Act also provides opportunities to investors to
save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided
the capital asset has been sold prior to April 1, 2000 and the amount is
invested before September 30, 2000.
Special Schemes
Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in the offer
document. The investment of these funds is limited to specific industries like
InfoTech, FMCG, Pharmaceuticals etc.
Index Schemes
Index Funds attempt to replicate the performance of a particular index such as
the BSE Sensex or the NSE 50
Sectoral Schemes
Sectoral Funds are those, which invest exclusively in a specified industry or a
group of industries or various segments such as 'A' Group shares or initial
public offerings
Advantage
The advantages of investing in a Mutual Fund are:
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Marwadi : Mutual Fund Industry
Marwadi Shares & Finance Pvt. Ltd., ISO 9002 Certified company, have
30000 clients and 1000 corers of holdings with strengths of 250 employees
spread all over the India and number one is Saurashtra and Kutch reason.
MSFPL is Corporate Agent of Mutual Fund company, like Franklin Templeton
Investment, Prudential ICICI, HDFC, BIRLA Sun life, Reliance Capital,
Principal Mutual fund etc., Company is technically wealthy & fully
computerized managed Management uses the Internet for daily reporting as
well as to keep in touch with its branches with fully trained employees.
MSFPL having Mutual fund is one products out of various financial products.
Company is handling 38 company’s mutual fund’s open-ended and close-
ended schemes on commission basis. Company provides customer services
like Daily market report, valuation report, new launches of schemes, portfolio
management, Day to day NAV reports, monthly base customer meet,
campaign at government or private company premises.
Mutual fund department started since November-2002, Annual turn over of
mutual fund is three crores. Company gets on an average 3 lakh Rupees on
mutual fund business commission every year. Sales executives go for direct
marketing and collect the High Net worth Individuals (HNI), Trusts and
Industrialists database. Sales Executive meet the customer and give them
day to day market reports and advise them about new schemes and valuation
report of their investments. Sales Executive is doing direct marketing.
Company is planning to start service at all the branches with all the services
of mutual fund. Presently company is providing mutual fund services only at
Head Office at Rajkot, and looking for great opportunity from rest of all the
branches.
6.3 PORTFOLIO MANAGEMENT
Introduction
Portfolio management is a tool provides some basic benefits such as giving a holistic
view of the various investments and the alignment of the investments with the long
term goals of the individual. However Portfolio is one of the most challenging jobs
and therefore isn't easy. Portfolio Management can help you gain control of your
investments and deliver some meaningful value to your earnings from the
investments. Portfolio Management takes a holistic view of the overall earning
strategy of the individual.
While managing the investment portfolio; it is important to remember that the
riskier strategic investments should always be balanced with more
conservative investments. The investment mix should be constantly monitored
to assess which investments are on track, and which are the ones that need
help and which are the ones that need to be shut down.
However, the key of successful portfolio management lies in the execution. A
strong portfolio management program can turn any sinking investment around
and do the following:
maximize value of investments while minimizing the risk.
Allow investors to schedule resources more efficiently
Reduce the number of redundant investments and make it easier to kill
loss making investments.
And of course portfolio management definitely means that you are left with
more money in your pockets. Efficient portfolio management also reduces
overall expenditures by 20% by saving the losses that are otherwise made on
loss making investments.
Marwadi having own 3 schemes under the BAGBAN product for Portfolio
management there are as follows.
1. Baramasi
2. Marigold
3. Sunflower
So far in INDIA most of the middle class earners have been risk-averse and
therefore park most of their savings in Fixed Deposits and Other Savings
Accounts, though the yield from such investment avenues is very low.
However, the recent trend has been such that more people have been
attracted towards investment in Mutual Funds and Equities. It is in this light
that Portfolio Management Companies have been gaining prominence in
India. The trend is only set to go upwards in the years to come, as the Indian
middle class becomes more risk friendly
IT portfolio management can help any organization to gain control of its IT projects
and deliver meaningful value to the business. IT Portfolio management takes a
holistic view of the organization’s overall IT strategy. Both IT and business leaders
analyze project proposals by matching them with the company's strategic objectives.
Effective IT portfolio management also helps in the following manner:
Helps to maximize value of IT investments while minimizing the risk
Improves communication and alignment between Information Systems
and business leaders
Encourages business leaders towards teamwork and to take
responsibility for projects
Allows planners to schedule the IT resources more efficiently
The application and definition of pharmaceutical portfolio management has
evolved greatly over the past 20 years. It is becoming even more important in
India in the face of the patents regime coming to an end in 2005. The TRIPS
agreement brings about great implications for the pharmaceutical portfolio
management of the Indian companies, as many drugs will be coming off-
patents this year. It is imperative that the Indian pharmaceutical organizations
handle this changing scenario to their best advantage and build a competitive
advantage earlier on in this equal platform.
Product Portfolio Management is a system that is put in place in organizations in
order to select a portfolio of new product development projects.
This system is implemented in any organization with the view of achieving the
following goals:
Maximizing the profitibality or value fo the portfolio
Providing balance supporting the strategy of the enterprise
Product Portfolio Management is the responsibility of the senior management
team of an organization or business unit. The team, which is involved in the
process, is usually called the Product Committee. The product committee
meets regularly to manage the product pipeline and make decisions about the
product portfolio.
Program portfolio management in any multimedia company or a television channel
company is akin to the concept of product portfolio management followed by any
other product manufacturing company, or in fact similar to the financial portfolio
management followed by any investment professional.
The program portfolio management is a concept that has only recently
emerged in the Indian entertainment industry owing to the fact that, before the
advent of international channels in the Indian scenario, the Indian television
industry was monopolized by the national television channel and therefore
had no requirement for any channel or program management as the audience
gulped down whatever was offered to them through the only channel of
entertainment in the country.
6.4 INITIAL PUBLIC OFFER (IPO)
A corporate may raise capital in the primary market by way of an initial public
offer, rights issue or private placement. An Initial Public Offer (IPO) is the
selling of securities to the public in the primary market. It is the largest source
of funds with long or indefinite maturity for the company.
In case the issuer chooses to issue securities through the book building route
then as per SEBI guidelines, an issuer company can issue securities in the
following manner:
100% of the net offer to the public through the book building route.
75% of the net offer to the public through the book building process and 25%
through the fixed price portion.
Under the 90% scheme, this percentage would be 90 and 10 respectively.
The traditional method of doing IPOs is the fixed price offering. Here, the
issuer and the merchant banker agree on an "issue price" - e.g. Rs.100. Then
you and I have the choice of filling in an application form at this price and
subscribing to the issue.
Extensive research has revealed that the fixed price offering is a poor way of
doing IPOs. Fixed price offerings, all over the world, suffer from `IPO
underpricing'. In India, on average, the fixed-price seems to be around 50%
below the price at first listing; i.e. the issuer obtains 50% lower issue proceeds
as compared to what might have been the case. This average masks a steady
stream of dubious IPOs who get an issue price which is much higher than the
price at first listing. Hence fixed price offerings are weak in two directions:
dubious issues get overpriced and good issues get underpriced, with a
prevalence of underpricing on average.
There should be no fragmentation of the shares on offer. All shares to be sold should
go through a single auction. If a retail investor wanted to "access the IPO at prices
close to the offer price" she would just place non--competitive bids at the IPO, where
she bids to buy (say) 100 shares at the IPO price, whatever it proves to be.
Allocation of shares in the depository should take place on Tuesday itself. There
should be no physical shares. Trading on NSE should start on Wednesday (the next
day). This gives us a one--day lag between the IPO and the start of trading.
Bid,
A bid is the demand for a security that can be entered by the syndicate/sub-
syndicate members in the system. The two main components of a bid are the price
and the quantity.
Bidder,
The person who has placed a bid in the Book Building Process.
Book Running Lead Manager,
A Lead Merchant Banker who has been appointed by the Issuer Company as the
Book Runner Lead Manager. The name of the Book Runner Lead Manager is
mentioned in the offer document of the Issuer Company.
Floor Price,
The minimum offer price below which bids cannot be entered. The Issuer Company
in consultation with the Book Running Lead Manager fixes the floor price.
Merchant Banker
An entity registered under the Securities and Exchange Board of India (Merchant
Bankers) Regulation, 1999.
Syndicate Members,
Syndicate Members are the intermediaries registered with the Board and permitted
to carry on activity as underwriters. The Book Running Lead Managers to the issue
appoints the Syndicate Members.
IPO’s Prospectus field with SEBI are as follows.
Accel Frontline Ltd. Ken Software Technologies Ltd.
Action Construction Equipments Ltd. Lawreshwar Polymers Ltd.
Allcargo Global Logistics Ltd. LISTZylog Systems Ltd.
AML Steel Ltd. Maanya Biotech Ltd
Ammana Bio Pharma Ltd. Malwa Industries Ltd.
ARS Systems & Communications Ltd. Minar International Ltd.
Atlanta Ltd. MSPL Ltd
Aviva Industries Ltd. Multi Commodity Exchange of India Ltd
Bharat Hotels Ltd. Net 4 India Ltd
Binani Cement Ltd. Odyssey India Ltd
Bluplast Industries Parabolic Drugs Ltd
Brahma Interactive Ltd. Pyramid Saimira Theatre Ltd
Celestial Labs Ltd Ramsarup Industries Ltd
Chemcel Biotech Ltd. Renaissance Jewellery Ltd
Dagger- Forst Tools Ltd. Richa Knits Ltd
Deep Industries Ltd. Saamya Biotech ( India ) Ltd.
Development Credit Bank Ltd. SPS Steels Rolling Mills Ltd
DLF Universal Ltd SRS Entertainment Ltd
Gammon Infrastructure Projects Ltd. Steel City Securities Ltd
Gayatri Projects Ltd Sunstar Overseas Ltd
Glory Polyfilms Ltd Supreme Infrastructure India Ltd
GMR Infrastructure Ltd. SVP Industries Ltd
Gremach Infrastructure Equipments &
projects Ltd.
Technocraft Industries ( India ) Ltd.
Gwalior Chemical Industries Ltd. Todays Writing Products Ltd
Hanung Toys and Textiles Ltd. Usher Agro Ltd
HOV Services Ltd. Vigneshwara Exports Ltd
Indowind Energy Ltd. Voltamp Transformers Ltd
Industrial Organics Ltd. XL Telecom Ltd
INDEX
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CAUSES OF MARKET SENERIO
FUTURE AHEAD OF THE SHARE MARKET
GUIDELINES PROVIDED BY SEBI
110
111
112
7. PRESENT MARKET SCENARIO
7.1 CAUSES OF MARKET SCENARIO
The main factor that has led to this sudden correction in the markets had
been rising concerns amongst global investors with relation to the US
Federal Reserve (Fed) continuing to raise interest rates. Rising interest
rates has negative implications for global economic growth as well as
institutional fund flows. The sudden rise in concerns of rising interest
rates has been caused by recent statements by the Fed, indicating that the policy of
tightening interest rates could potentially continue going forward based on trends in
economic data. This hurt investor sentiment who
were expecting some indications of a pause in the rate tightening policy of Fed.
While concerns on interest rates has been the catalyst that has caused this
decline, the primary reason for the sharp fall has been the very sharp run
up in the markets over the last five months. We have been indicating in our
monthly write-ups that the pace of the market rally is clearly
unsustainable and should lead to a cautious view on the markets in the
shorter-term. We had mentioned in our April '06 write-up, "We believe that
this resilience of the markets is another indication towards a build up of
euphoric market sentiment, as market participants tend to focus primarily
on positives and negative factors are ignored. In such an environment it
becomes difficult to predict the timing of a long-awaited correction, and
the market rally could continue for a longer-period than expected. However
it is important to keep in mind that a sharp correction should not be ruled
out over the short-to-medium term, and that the same occurs most often at a time
least expected”.
We thus believe that the market decline is basically a correction of the
very sharp run-up in the markets over the last five months, and concerns on
rising interest rates has been the catalyst that has sparked the decline.
There has been no significant change in fundamentals and the longer-term
fundamental 'India-story' continues to remain as strong as before (infact
4Q results of corporate India have been very healthy and better than
expectations).
7.2 FUTURE AHEAD OF THE SHARE MARKET
Given that there has been no change in market fundamentals, we continue to
have a positive medium-to-long term outlook based on strong fundamentals and
strong domestic liquidity.
However, the shorter-term outlook on the markets remains uncertain. The
call on market direction is primarily a call on global investor sentiment
(linked to concerns on interest rates), and it is very difficult to predict
trends in the same. We believe that as long as global investor sentiment
remains weak, markets could potentially continue on its downward trend.
However as witnessed in the past, global investor sentiment can prove to be
fickle, and a sudden turn in investor sentiment could lead to a sharp
bounce-back in the markets. It is however very difficult to predict the timing of the
same.
While markets have now corrected approximately 10% from its highs, it is
important to keep in mind that this in on the back of a 64% market rally
since the lows in October. The correction is thus not that significant in
relation to the market rally, and further downside is possible without disturbing the
long term bull trend.
7.3 GUIDELINES PROVIDED BY SEBI
While further downside in the markets cannot be ruled out, it is important
to keep in mind that the markets can bounce back equally sharply and
suddenly. We would recommend that investors stay invested through the
current bout of volatility and focus on longer-term returns on their
portfolios. Further declines in the market could be utilised as a good
entry point for further investments in equities.
The prices of precious and base metals tumbled on Monday in
theinternational Market as speculators pulled out fearing a fall in the dem
and due to the rising interest rates. Moreover, the correction was overdue
for a long time. The fall in the international metal prices was also reflected in
our domestic market.
The falling dollar value in the world market may lead to rise of the interest
rates (Fed Rate) in U.S
If the U.S Interest Rates rise, the rest of the world will tend to resist capital
flows from being sucked by the U.S.
In turn if the Domestic Interest Rates further harden then the Corporates will
be inclined to redraw their investment plans. In addition, the Governments
Fiscal Plans will be affected if interest rate goes up.
The prospects of further interest rate rise in the U.S have serious implications
for the world economy.
Corporates in India and other developing countries may have to depend only
on domestic sources of loan funds.
INDEX
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LIMITATAION AND SUGGESTION
CONCLUSION
BIBLIOGRAPHY
114
117
118
8.LIMITATION & SUGGESTION
LIMITATION
During our tenure we found following problems:
ON LINE TRADING
There is no facility for on line trading. So need to developed.
MARKETING STRATEGIES
They are not publishing their advertisements. So, some people are not
aware of their services and not attracted.
LESS EDUCATED EMPLOYEE
We found that in some of the department, the education of employees
is not equivalent to their job.
RESEARCH DEPARTMENT
Due to less efficiency of the department, the research work of market is not
up to the mark compare to other companies.
HIGH CHARGES
We found that the charges of de-mat account is high compare to other
broking house.
OVER LOAD
Because of the lesser number of employees, work load is very high.
RECRUITMENT POLICY
We found that the policy of recruitment is not appropriate; recruitment is not
done according to job requirement
PROFESSIONALISM
Approach of Employees is less professional towards their job.
SUGGESTION
JOB STANDARD
For each & every designation there should be proper policy for job
specification and job description and also appoint right person at the
right place.
RESEARCH MATERIAL
To survive in high competition, Marwadi should provide well analyzed &
subjective material in easy language to their brokers and clients.
MORE COMPENSATION
Appropriate compensation should be paid to employees for overtime
MORE RECRUITEMENT
To reduce stress and work load, a more recruitments are needed.
LESS CHARGES
To attract more customers and compete in market, Charges of demat
account should be set according to rates prevailing in market.
TRAINING
To increase professionalism, set a organization culture and
also to increase the productivity & efficiency of employees, there is a need
for a well prepare training program at each & every level of the organization.
ADVERTISING
Marwadi have to give advertisement in media like TV,
Newspapers and Magazines etc.
OTHER SUGGESTION
Trading department is back born of company so it is necessary to make their
trading department well equipped with different instruments like TV, a
computer with big screen , proper sitting arrangement etc…
To refresh employees there is a need for a waiting lounge.
Research team is needed to reduce the dependence on other research
companies.
Marketing person should be appointed for different types of financial
services.
There is a need for separate department where a customer can get all the
information regarding different services.
To have customer suggestions and solve their grievances and having good
and health relationship a public relation office should be appointed.
CONCLUSION
During my project I have seen that all the staff members of Marwadi group
ltd. found to be good and co-operative. Working environment of MSFPL [
Marwadi Shares and Finance pvt. Ltd.] is also good. They are believe in
Team work. And every executive officer has its own identity in the firm.
MSFPL has clear vision and working system. MSFPL knows what are their
objective and how will they reach there? MSFPL firm is a goal oriented its
example is that Marwadi shares and Finance pvt. Ltd become Public Ltd. In
year 2006. MSFPL is having good research team which constantly in touch
with current market situation and consumers preferences.
MSFPL have advance technologies in the field of finance and software and
they are also using it at its optimum level..According to me MSFPL will
definitely achieve their objectives in near future due to their team spirit and
consumer oriented working environment.
Hence I conclude that whatever efforts have been putted by MSFPL is the subject to
recommendation and I wish them to achieve their targets.
BIBLIOGRAPHY
Books
Capital Market Modules
Mutual fund from AMFI s examination book.
Investment analysis and portfolio management
By – Prasanna Chandra
Web sites
www.Marwadionline.com
www.nse-india.com
www.bseindia.com
www.capitalmarket.com
www.ncdex.com
www.mcx.com
www.nsdl.com
www.google.com
