summer internship project on stock broking

7/30/2019 summer internship project on stock broking

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SUMMER TRAINING PROJECT REPORT

ON

Stock Exchange Online Share Trading At Nirmal Bang

Prepared and presented to

UNDER THE GUIDANCE OF

COMPANYS GUIDE NAME: FACULTY NAME:

Mr. GUNJAN SONKER

RELATIONSHIP MANAGER

BY

SAURABH KUMAR

Roll no: 1071470022

Kanpur Institute of Management Studies

Unnao


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ACKNOWLEDGEMENT:

I am neither a research expert nor a trend spotter; I am a management student with foundation of

management principles and theories, who is curious about various sectors and its latest

happenings.

Definitely, I cant ignore the technology, with internet as the backbone and those search engines

which helped me in building up this research project.

To being with, I am obliged to Mr. KISHORE BANG and Mr. DILIP BANG (Managing

Directors Nirmal Bang Securities (PVT) Ltd).who allotted me this interesting topic and with out

whose guidance and constructive criticism this repot might have not been completed .I would

like to thank Broker, Agents franchise owners and individuals. I appreciate for their cooperationand contributions for helping me in making project factual and information.

I would like to express my heart full gratitude to Mr. GUNJAN SONKER (Relationship

Manager), NIRMAL BANG SECURITIES (PVT) LTD. Who helped me in sharpening my

thinking by cheerfully providing challenging comments and questions. Without the individuals

have provided, this project would have lost much of its refreshing realism. Im also thankful to

the management & all employees ofNIRMAL BANG SECURITIES LTD.

I also express my gratitude to Mr. (Director), Mr.(H.O.D) and ALL FACULTY MEMBERS

OF MBA DEPARTMENT OF KANPUR INSTITUTE OF MANAGEMENT STUDIES,

UNNAO who have been instrumental in making this report useful one.

Lastly, I would like to thanks to the ALMIGHTY and my parents for their moral and financial

support and my colleagues with whom I shared my dad-to-day experiences and received lots off

suggestions that improved my work quality.

SAURABH KUMAR

MBA


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PREFACES:

In the economy for tightening Business nuts and bolt of any company industries or enterprises it

is necessary to measure it market position in a certain time interval with ever changing theories

and the concept of market.

For this assessment we need the robust methodology of survey. Although surveys does not

reveal the absolute solution of any objectives, but it provides the inclination towards a good

output.

Nirmal Bang a good share trading company in Indian market. In this project we compare the

future of this company. Find the awareness level, market potential of this company etc.

The preparation of this report provides you great pleasure in releasing our work and market

experiences in few pages which shows overall and experienced knowledge and the practical

approach about the style of a professional and thing which we found various affecting to our

marketing and product image.

The project termed as stock Exchange & Online share Trading at Nirmal Bang has made

an effort to find out the issues concerning with the NIRMAL BANG SECURITIES PVT LTD.


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TABLE OF CONTENT:

Title page 1-1

Certification from organization

Certification from project guide

Acknowledgement 2-2

Prefaces 3-3

Executive summary

Topic 6-6

Brief introduction 7-8

Research methodology 9-9

Finding & suggestion 10-10

Industry profile & company profile 11-13

Names of stock exchanges 14-15

On line share trading in India 16-18

Stock market 19-20

Market participants 21-21

History 22-23

Importance of stock market 24-36

Company profile 37-43


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Products and services 44-51

Taxation for Indian resident 52-54

Demat services 55-58

Mandatory document for account opening 59-65

Investors rights and obligation 66-71

Terms and condition 72-83

Internet trading agreement 84-98

Services management of Nirmal Bang 99-101

Research methodology 102-105

Analysis 106-111

Finding and recommendation 112-111

Limitation 115-115

Bibliography 116-116


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EXECUTIVE SUMMARY:

TOPIC: STOCK EXCHANGE & ONLINE SHARE TRADING AT NIRNAM BANG

The present repot is prepared for the partial of M.B.A and as a part of curriculum. The survey isan attempt to determine and STOCK EXCHANGE & ONLINE SHARE TRADING AT NIRMAL BANG

SECURITIES PVT. Ltd. To pursue research area are Lucknow was chosen where the survey

conducted through personnel interview.

The data collection is an analyzed and some practical tools were applied to get inferences from

the survey. The results are printed in the graphs and diagrams.

The conclusion is that Nirmal Bang securities Pvt Ltd. In India in good condition.

The research report has two sections in its first section company and industry profile is given,

where as second Research Methodology is given which includes samples design, analysis on

sample and presentation is in the form of diagram and charts.

Finally some suggestions with respect to the survey for the future improvement is given to

improve the survey because their competitors have also taken up the surveys.

At the end of the report limitations, SWOT analysis, conclusion of the research and Appendix

which includes questionnaire and the list of the city where the Sriram insight share brokers Ltd

are running. Last there is Bibliography, FAQ, and Glossary that has the technical terms of the

report.


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Objectives of study:

To understand & analyze the marketing strategies and analyze onlineTrading ofNIRMAL BANG.

To improve the format of daily sales report (DSR)

To get the Demat account opened of potential customers in favor of nirmal Bang.Analysis of need and satisfaction of distribution of financial services.

To give a brief idea about the benefits available from Mutual Funds investment and ideaof types of schemes available.

To discuss about the market trends of Mutual Funds investment.

To study some of the mutual funds schemes and analyze them observe the fundsmanagement process of mutual funds.

Explore the recent developments in the Mutual Funds in India. To give an idea about theregulations of Mutual Funds.


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RESEARCH METHODOLOGY:

To achieve the objectives of studying the stock market data has been collected Research Methodology

carried fir this study can be two types.

RESEARCH DESIGNE:This research is description of the state of affairs, as it exists at present. Soin this research I used the description research.

DATA SOURCES: In this research, I used primary data from the different brokers, agents,

retailers and investors, and secondary data from Shriram insight Share Brokers Ltd.

RESEARCH APPROACH: Depth study oft he investors perception with respects to equityinvestments.

RESEARCH INSTRUMENT: structured personal interview.

TYPES OF QUESTIONS: open and close-ended question.

SAMPLING: public interested in investing their savings.

SAMPLE SIZE: 100

SAMPLE PROCEDURE: Judgment samplings.

CONTRACT METHOD: Personal Structured Interview.


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FINDING AND RECOMMENDATION:

During my project analysis I was very keen to find some key areas which need to be taken care

seriously in the future because these are causing dissatisfaction among distributors.

Most of distribution felt dissatisfaction with there brokers but some of te disappointing areas are-

1. More exposure: Most of distributors want some more exposure for them clients fromtheir share broking companies. Nirmal Bang is now providing super exposure p to 15 of

the margin (cash segment) the step like this really creates satisfaction for the distributors.

2. Brokerage problem: Some companies have very high brokerage chares which createdifferences of market share of different companies and also dissatisfaction amongdistributors.

3. Fewer offers: Most of companies lag behind in giving time to time offers in order toattract new customers.


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BOMBAY STOCK EXCHANGES:

This stock exchanges, Mumbai, popularity known as BSE was established in 1875 as The

native share and stock brokers associations, as a voluntary non-profit making association.

It has an evolved over the years into its status as the premiere stock exchanges in the country. Itmay be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo Stock

Exchanges, which was founded in 1878.

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

upholds the interests of the investors and ensures redressed of their grievances, whether against

the companies or its own members brokers.

It also strives to educate and enlighten the investors by making available necessary informative

inputs and conducting investors education programmers.

A governing board comprises of elected directors, 2SEBI nominees, 7 public representatives andan executive director is the apex body, which decides the policies and regulates the affairs of the

exchanges.

The executive director as the chief executive officer is responsible for the day today

administration of the exchanges. The average daily turnover of the exchange during the year

2000-01 (April-March) was Rs 3984.19 crores and average numbers of daily trades 5.69 Lakhs

However the averages daily turnover of the exchanges during the year 2001-2002 has declined to

Rs. 1224.10 crores and number of average daily trades 5.69 Lakhs.

The average daily turnover of the exchanges during the year 2001-2003 has declined and number

of average daily trades during the period is also decreased.

The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by SEBI

with effect from July 2, 2001, abolition of account period settlements, introduction of

compulsory rolling settlements in all scripts trades on the exchanges.

With effect from dec31, 2001 etc. have adversely impacted the liquidity and consequently there

is a considerable decline in the daily turnover at theexchanges. The average daily turnover of the

exchanges present scenario is 110363 (Laces) and number of average daily trades 1057(laces).


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NATIONAL STOCK EXCHANGES:

The NSE was incorporated is now 1992 with an equity capital of Rs 25 crores. The international

securities consultancy (ISC) of Hong Kong has helped in setting up NSE.

ISE has prepared the details business plans and installation of hardware and software system.

The promotion for NSE were financial institutions, insurances companies, banks and SEBI

capital markets Ltd, infrastructure leasing and financial services Ltd and stock holding

corporation Ltd.

It has been set up to strengthen the move towards professionalization of the capital market as

well as provide nation wide securities trading facilities to investors. NSE is not an exchange in

the traditional sense where broker own and manage the exchanges.

A two tier administrative set up involving a company board and a governing aboard of the

exchanges is envisaged. NSE is a national market for shares PSU bonds, debentures and

government securities since infrastructure and trading facilities are provided.


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NAME OF THE STOCK EXCHANGE:

Bombay stock exchange. Calcutta stock exchange.

Ahmadabad share and stock brokers association. Delhi stock exchange association Ltd. Madras stock exchanges association Ltd. Indore stock brokers association Ltd. Bangalore stock exchanges. Hyderabad stock exchanges. Cochin stock exchanges. Pune stock exchanges. U.P stock exchanges. Ludhiana stock exchanges. Jaipur stock exchanges. Gawhati stock exchanges Ltd. Maghad stock exchanges Ltd. Vsdodard stock exchanges Ltd. Coimbatore stock exchanges Ltd. The Meerut stock exchanges. National stock exchanges. Mangalore stock exchanges Ltd, Patana. Bhuveneshwar stock exchange association. Over the counter exchange of India. Bombay saurastra kuth stock exchange Ltd. Integrated stock exchange.


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ONLINE SHARE TRADING IN INDIA:

Now with HDFC, ICICI direct, share khan, Shriram insight and other brokers,

Share trading in India has gone online. Starting at about 2 pct, online trading forms about pct in

terms of volume (I think the figure is higher than 10 pct in the retail segment)

Some of these have gone on to become the biggest brokers in India. It has opened the market

to a whole segment of people. Earlier, investing in share was done by a limited few most of

who applied in an IPO and stuck with till they wanted money.

Now, not only online trading made life easier for these peoples, it has opened up investing and

trading to segment that never before participated in it. By my rough estimates during my

experiences in India tech trading in India.

Until the arrival brokerage in about 2000 or so, was like driving on Indian road. It was a

familiar story of might is right, big truck (brokers) ruled the market & there were potholes and

pitfalls in the shape of bad deliveries, dishonored contacts, fakes & what not.

Unlike the highways which have remained out of the reach of the Aam admi, the share market

has changed. Somewhere in the nineties there was a whole move to make share electronics &

fungible (like money notes, a share is a share. And move them to the dematerialized (demat)form.

Slowly, from the physical world shares move to digital world at the NSDL. Then trading

became electronic. First it was a few of the blue chips, then it was most of the blue chips and

slowly it has taken over most of the market.

New issues are today, exclusively electronics. If digitization took care of the back end, it has

also made life at the easy at the front end. In the physical delivery work, one had to talk to abroker who told you the quotes.

There was no way of knowing if the quote was right. There was no way of knowing if your

trade was made, especially if you made a good call (Bad call, almost inevitably got made). The

broker could say that this was the best price I got and nobody would be wiser.


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You would not know if the share came from his account or form the market. You would not

know if the shares were true for the small investors. Odd lots (which we inevitably awarded

during splits, mergers were as good as stock which would never got sold or the broker would

purchase them at a price way below the market price.

Industry about 70% of employees are have online active accounts, many of which were opened

in the ESOP era seems like a long while back), more than 80% of these investors are actives

traders, the number of day traders are less.

But a small chuck of these also dabbles in the future and options market. Besides this obvious

segment which is connected to the online would all days long from the cubicles, there are other

segments which have shown interest in trading due to its case.

Housewives retired professional and even small businessman. What was hitherto a male

dominate sphere also has quite a fem women into trading. The regional stock exchange which

were the way to route trades in the olden days, are now almost defunct with BSE and NSE (NSE

more than BSE) holdings way.

Earlier investors were mostly from the bigger cities. With online trading, it has opened avenues

for investors from the parts of the country with an internet connection.

A few months ago, Business world (Registration/subscription regd.) India reported that: 46 pct of

the trades were done by the top 100 brokers in 1996-97. Todays it is about 66 pct. Going online

via these professional driven by technology is a great way to cut the uncertaintiescaused by the

middleman out of the business of share trading and make lives easier for the investors.

There will be more competition in this space as brokers try to take over accounts of other

brokers. More specialized and personalized services will be in the offing as the market expands

and as smaller brokers try to survive and evolve into niche players.


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A stock market is a public market for the trading of company stock and derivatives at an agreed

price these are securities listed on a stock as well as those only traded privately.

The since of world stock market was estimated at about $36.6 trillions US at the beginning of

October 2008. The total world derivatives market has been estimated at about $791 trillion

faceoff nominal value.

11 times the size of the entire world economy. The value of the derivatives market, because it isstated in terms of national values, cannot be directly compared to a stock or a fixed income

security, which traditionally refers to an actual value.

Moreover, the vast majority PF derivatives cancels each other out (i.e., a derivatives bet on an

event occurring is offset by a comparable derivatives bet on event not occurring).

Many such relatively illiquid securities are valued as market to model, rather than an actual

market price. The stock are listed and traded on stock exchanges which are entities of an

corporation of mutual organization specialized in the business of bringing buyers and sellers of

the organization to a listing of stock and securities together.

The stock market in the united states in the united states includes the trading of all securitieslisted on the NYSE Euro next, the NASDAQ, the Amex, as well as on the many regional

exchanges, e.g. OTCBB and Pink sheets. European examples of stock exchanges included the

London Stock Exchange, the Deutsche Borse.


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MARKET PARTICIPANTS:

Afew decades ago, worldwide, buyers and sellers were individuals investors, such as wealthy

businessman, both long family histories (and emotional ties) to particular corporations.

Overtime, market have become more institutionalized buyers and sellers are larger institutions

(e.g. Pension funds, insurance companies , mutual funds, index funds, exchange traded funds,

hedge funds investors groups, banks and various other financial institutions).

The rise of the institutional investors has brought with t some improvement in market operations.This, the government was responsible for fixed(and exorbitant) fees being markedly reduced

for the small investors, but only after the large institutions had managed to break the brokers

solid fronts on fees. (They then went to negotiated fees, but only for large institutions.

However, corporate governance (at least in the west) has been very much adversely affected by

rise of (largely absentee) institutional owners

.


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HISTORY:

Historian Fernando Braudel suggested that in Cairo in the 11th century, Muslim and Jewish

merchant and already set up every form of trade association and had knowledge of manymethods of financial dealings, disproving the belief that these were originally invented later by

Italians.

In 12th century France the courratiers de changes were concerned with managing and regulation

the debts of agricultural communities and behalf of the bank. Because these men also trade with

debts, they could be called the first brokers.

A common misbelieve is that in late 13th century Bruges commodity traders gathered inside thehouse of a man called Van der Beurze, and in 1309 they became the Bruges Beurse

institutionalizing what had been.

Until then, an informal meeting, but actually, the family Van der Beurze had a building in

Antwerp where those gathering occurred; the Van der Beurze had Antwerp, as most of the

merchants of that period.

As their primary place for trading. The idea quickly spread around Flanders and neighboring

countries and Beurzen soon opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian market began to trade in government securities. In

1351 the Venetian government outlawed spreading rumors intended to lower the price of

government securities during the 14th century.

This was only possible because these were independent city states not ruled by a duke but acouncil of influential citizens. The Dutch later started joint stock companies, which let

shareholders invest in business venures and get a share of their profits or losses.


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In 1602, the Dutch East India Company issued the first share on the Amsterdam stock exchange.

It was the first company to issue stock and bonds.

The Amsterdam stock Exchange (ro Amsterdam Beurs) is also said to have been the first stock

exchange to introduction continuous trade in the early 17th

century.

The Dutch pioneered short selling, option trading, debt-equity swaps, and merchant banking.

Units trust and other speculative instrument, much as we know them (Murray Sayle,Japan

Goes Dutch, London Review of books XXIII.7, April 5, 2001).

There are now stock markets in virtually every developed and most developing economy, with

the worlds biggest market being in the United stated, UK, Japan, China, Canada, Germany and

France.


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Importance Of Stock Market:

Function and purpose

The stock market is one of the most important sources for companies to raise money. This

allows businesses to be publically traded or raised additionally capital for expansion by selling

share of ownership of the company in a public market.

The liquidity that an exchange provides affords investors the ability to quickly and easily sellsecurities. This is an attractive feature of investing in stocks, compared to other less liquid

investment such as real estates.

History has shown that the price of shares and other assets is an important part of the dynamic of

economies activity, and can influence or be an indicator of social mood.

An economy where the stock market is on the rise is considered to be an up and coming

economy.

In fact, the stock market is often considered the primary indicators of a countrys economics

strength and development. Rising share prices, for instance, tend to be associated with increased

business investment and vice versa.

Share prices also affect the wealth of household and their consumption.

Therefore, central banks tend to keep an eye on the control and behavior of the stock market and,

in general, on the smooth operation of financial system functions. Financial stability is the raison

dtre of central banks.


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Exchanges also act as the clearinghouses for each transaction, meeting that they collect and

deliver the shares, and guarantee payment to the seller of a securities. This eliminates the risk to

an individual buyers or seller that the counterparty could default on the transaction.

The smooth functioning of all these activities facilities economies growth in that lower costs

enterprise risks promote the production of goods and services as well as employment.

In this way the financial system contribution to increased prosperity. An important aspect of

modern markets, however, including the stock markets, is absolute discretion.

For example, in the USA stock we see more unrestrained acceptance of any firm than in similar

markets. Such as, Chinese firms with no significant value to American society to just name one

segment.

This profit USA banker on Wall Street, as they reap large commissions from the placement, and

the Chinese company which yields funds to invest in china.

Yet accrues no intrinsic value to the long-term stability of the American economy, rather just

short-term profits to American business man and the Chinese; although, when foreign company

has a presence in the new market, there can be benefits to the markets citizens.

Conversely, there are very few large foreign corporation listed on the Toronto Stock exchangeTSX, Canadas largest stock exchange. This discretion has insulated Canada to some degree to

worldwide financial condition.

In order for the stock markets to truly facilitate economys growth via lower costs and better

employment, great attention must be given to the foreign participants being allowed in. Relation

of the stock market to the modern financial system.

The financial system in most western countries has undergone a remarkable transformation. One

features of this development is disintermediation. A portion of the funds involved in saving and

financing bank lending and deposit operation.

The general publics heightened interest in investing in the stock market, either directly or

through mutual funds, has been an important component of this process. Statistics show that in


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recent decades share have made up an increasingly large proportion of households financial

assets in many countries.

In the 1970s, in Sweden,deposit account and other very liquid assets with little risk made up

almost 60 percent of households financial wealth, compared to less than 20 percent in the 2000s.

The major part of this adjustment in financial portfolio has directly to shares but a good deal now

take the form of various kinds of institutional investment for groups of individuals, e.g., pension

funds, mutual funds, hedge funds, insurance investment of premiums, etc.

The trend towards form of saving with a higher risk has been accentuated by new rules for most

funds and insurance, permitting a higher proportion of shares to bonds.

Similar tendencies are to be found in other industrialized countries. In all developed economiessystem, such as the European Union, the United State, Japan and other developed nations, the

trend has been the same: saving has moved away from traditional (government insured) bank

deposits to more risky securities of one sort or another.


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The Stock Market, Individual Investors, and Financial Risk:

Riskier long-term saving required that an individual possess the ability to manage the associated

increased risks. Stock prices fluctuated widely, in marked contrast to the stability of (government

insured) bank deposits or bonds.

This something that could affect not only the individual investors or households, but also the

economy on a large scale. The following deals with some of the risks of the financial sectors in

general and the stock market in particular.

This is certainly more important now that so many newcomers have entered the stock market, or

have acquired other risky investment (such as investment property, i.e., real estate and

collectables.)

With each passing year, the noise level in the stock market rises. Television commentators,

financial writers, analysis, and market strategies are all over taking each other to get investors

attention.

At the same time, individual investors, immersed in chat rooms and message boards, are

exchanging questionable and often misleading tips.

Yet, despite all this available information, investors find it increasingly difficult to profit. Stock

prices skyrocket with little reasons, then plummet just as quickly.

And people who have turned to investing for their childrens education and their own retirement

become frightened. Sometimes there appears to be no rhyme or reason to the market, only folly.

This is a quote from the prefaces to a published biography about the long-terms value oriented

stock investors warren Buffett.


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The behavior of the stock market:

From experiences we know that investors may temporarily move financial prices away from

their long terms aggregate price trend (positive or up trends are referred to as bull markets:

negative or down trends are referred to as bear markets.)

Over-reaction may occur so that excessive optimism (euphoria) may drive prices unduly high or

excessive pessimism may drive unduly low. New theoretical an empirical arguments have since

been put forward against the notion that financial markets are generally efficient (i.e., in the

sense that prices in the aggregate tends to follow a Gaussian distribution.)

(But this largely theoretic academic viewpoint- knows as hard EMH- also predicts that little or

no trading should take place, contrary to fact, since prices are already at or near equilibrium,

having priced in all public knowledge.) The hard efficient-market hypothesis is sorely tested by

such events as the stock market crash in 1987, when the Dow Jones index plummeted 22.6

percentthe largest-ever one-day fall in the United States.

This events demonstrated that share prices can fall dramatically even though, to this day, it is

impossible to fix a generally agreed upon definite cause: a thorough search failed to detect any

reasonable development that might have accounted for the crash. (But note that such events are

predicted to occur strictly by chance, although very rarely.)

It seems also to be the case more generally that many price movements (beyond that which are

predicted to occur randomly) are not occasioned by new information: a study of the fifty largest

one-day share prices movements in the United States in the post-war period seems to confirm

this.

However, a soft EMH has emerged which does not required that prices remain at or near

equilibrium, but only that market participants not be able to systematically profits from any

momentary market inefficiencies.


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Various explanation for such large and apparently non-random prices movement have been

promulgated. For instance, some research has shown that change in estimated risks, and the use

of certain strategies, such as stop-loss limit and value at Risk limits, theoretically could cause

financial markets to overcorrect.

But the best explanation seems to be that the distribution of stock market prices is non-Gaussian(in which case EMH, in any of its current forms, would not be strictly applicable.)

Other research has shown that psychological factors may result in exaggerated (statically

anomalous) stock prices movement (contrary to EMH which assumes such behaviors cancel

out).

Psychological research has demonstrated that peoples are predisposed to seeing patterns, and

often will perceive a pattern in what is, in fact, just noise, (something like seeing familiar shapesin clouds or ink blots.)

In the present context this means that a succession of good new items about a company may lead

investors to overreact positively (unjustifiably driving the prices up). A period of good returns

also boosts the investors self-confidence, reducing his (psychological) risk threshold.

Another phenomenonalso from psychologythat works against an objective assessment is

group thinking. As social animal, it is now easy to stick to an opinion that differs markedly from

that of a majority of the group.

An example with which one may be familiar is the reluctance to enter a restaurant that is empty;

people generally prefer to have their opinion validated by those of other in the group.

In one paper the authors draw an analogy with gambling. In normal times the market behaves

like a game of roulette; the probabilities are known and largely independent of the investmentdecision of the different players.

In times of market stress, however, the game becomes more like poker (herding behavior takes

over). The players now must give heavy weight to the psychology of other investors and how

they are likely to react psychology.


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The stock market, as any other business, is quite unforgiving of amateurs. Inexperienced

investors rarely get the assistance and support they need.

In the period running up to 1987 crash, less than 1 percent of the analysis recommendation had

been to sell (and even during the 2000-2002 bear market, the average did not above 5%).

In the run up to 2000, the media amplified the general euphoria, with reports of rapidly rising

share prices and the notion that large sums of money could be quickly earned in the so called In

the run up to 2000, the media amplified the general euphoria, with reports of rapidly rising share

prices and the notion that large sums of money could be quickly earned in the so called new

economy stock market.

(And later amplified the glom which descended during the 2000-2002 bear market, so that by

summer of 2002, prediction of a DOW average below 5000 were quite common).


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Irrational behavior:

Sometimes the market seems to react irrationally to economic or financial news, even if that

news is likely to have no real effect on the technical value of securities itself.

But this may be more apparent than real, since often such has been anticipated, and a counter

reaction may occurs if the news is better (or worse) than expected.

Therefore, the stock market may be swayed in either by press releases, rumors euphoria and

mass panic; but generally only briefly, as more experienced investors (especially the hedge fundsquickly rally to take advantage of even the slightest, momentary hysteria.

Over the short-term, stock and other securities can be battered or buoyed by any number of fast

market-changing events, making the stock market behavior difficult to predict . Emotion candrive prices up and down, people are generally not as rational as they think, and the reasons for

buying and selling are generally obscure.

Behaviorists argue that investors often behave irrationally when making investment decision

thereby incorrectly pricing securities. This causes market inefficiencies, which, in turn, are

opportunities, to make money.

However, the whole notion of EMH is that these non-rational reactions to information cancel out,

leaving the prices of stock determined. The Dow Jones industrial Average biggest gain in one

day was 936.42 points or 11 percent, this occurred on October 12, 2008.


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Crashes:

Robert shillers plot of the S&P composite Real prices, Earning, Dividends, and interest Rates,

from irrational exuberance, 2nd. In the prefaces to this edition, Shiller warns, The stock market

has not come down to historical levels: the prices-earnings ratio as I defined it in his book is still,

at this writing [2005], in this mid-20s, far higher than the historical average..people still place

too much confidence in the market and have too strong a belief that paying attention to the

gyration in their investment will someday make them rich, and so they do not make conservative

preparation for possible bad outcomes.

Price-Earnings ratios as predictors of twenty-year returns based upto the plot by Robert shiller.

The horizontal axis shows the real price-earnings ratio of the S&P composite stock price index as

computed in Irrational Exuberance (inflation adjusted price divided by the prior ten-year mean ofinflation-adjusted earning).

The vertical axis shows the geometric average real annual return on investing in the S&P

composite stock prices index, reinvesting dividends, and selling twenty years-did do well when

prices were low relative to earnings at the beginning of the ten years.

Long-term investors would be well advised, individually, to lower their exposer to the stock

market when it is high, as it has been recently, and get into the market when it is low.

Stock market crash:

A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock

exchanges. In parallel with various economics factors, a reason for stock market crashes is also

due to panic and investing publics loss of confidence. Often, stock market crashes end

speculative economics bubbles.

There have been famous stock market crashes that have ended in the loss of billions of dollars

and wealth destruction on a massive scale. An increasing number of people are involved in the

stock market, especially since the social security and retirement plans are being increasingly

privatized and linked to stocks and bonds and other elements of the market.

There have been a number of famous stock market crashes like the Wall Street crashes of 1929,

the stock market crash of 1973-4, the Black Monday of 1987, the Dot-com bubble of 2000, and

the stock market crashes 2008.

One of the most famous stock market crashes started October 24,1929 on Black Thursday. The

Dow Jones industrial lost 50% during this stock market crash. It was the beginning of the Great

depression.


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Another famous crash took place on October 19, 1987 --- Black Monday. On Black Monday

itself, the Dow Jones fell by 22.6% after completing a 5 yearcontinuous roses in share prices.

This event not only shook the USA, but quickly spread across the world.

Thus, by the end of October, stock exchanges in Australia lost 41.8%, in Canada lost 22.5%,, in

Hong Kong lost 45.8%, and in Great Britain lost 26.4%. The names, Black Monday and

Black Tuesday are also used for October 28-29, 1929.

This followed terrible Thursdaythe starting day of the stock market crash in 1929. The crash in

1987 raised some puzzlesmain news and events did not predict the catastrophe and visible

reasons for the collapse were not identified.

This event raised question about many important assumptions of modern economics, namely, the

theory of rational human conduct, the theory of market equilibrium and the hypothesis of market

efficiency.

For some time after the crash, trading in stock exchanges worldwide was halted, since the

exchanges computers did not perform well owing to enormous quantity of trades being received

at one time.

This halt in trading allowed the Federal Reserve System and central banks of other countries to

take measures to control the spreading of worldwide financial crisis.

In the United State the SEC introduction several new measures of control into the stock market

in an attempt to prevent a re-occurrence of the events of Black Monday.

Computer systems were upgrades in the stock exchanges to handle larger trading volumes in a

more accurate and controlled manner. The SEC modified the margin requirement in an attempt

to lower the volatility of common stocks, stock option and the futures markets.

The New York Stock Exchanges and the Chicago Mercantile Exchange introduction the conceptof a circuit breaker. The circuit breaker halts trading if the Dow declines a prescribed number of

points for a prescribed amount of time.

New York Stock Exchange (NYSE) circuit breakers.


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Stock market index

The movement of the prices in a market or sections of a market are captured in priceindices called stock market indices, of which there are many, e.g., S&P, the FTSE and the

Euro next indices.

Such indices are usually market capitalization weighted, with the weight reflecting thecontribution of the stock of the index are reviewed frequently to include/exclude stocks in

order to reflects to reflects the changing business environment.

Leveraged strategies

Stock that a traders does not actually own may be traded suing short selling; marginbuying may be used to purchase stock with borrowed funds; or, derivatives may be usedto control large blocks of stock for a much smaller of amount of money than would be

required by outright purchases or sale.

Short selling

In short selling, the traders borrow stock (usually from his brokerage which holds itsclients shares or its own share on account to lend to short sellers) then sells it on themarket, hoping for the price to all.

The trader eventually buys back the stock, making money if the price fell in the meantimeor losing money if it rose; exiting a short position by buying back the stock is called

covering a short position.

This strategy may also be used by unscrupulous traders to artificially lower the price of astock. Hence most markets either prevent short selling or place restriction on when and

how a short sale can occur.

The practice of naked shorting is illegal in most (but not all) stock markets.\


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Margin buying:

In margin buying, trader borrows money (at interest)to buy a stock and hopes for it torise. Most industrialized countries have regulation that requires that if the borrowing is

based on collateral from other stock the trader owns outright, it can be a maximum of acertainpercentage of those other stocks value.

In the United State, the margin requirements have been 50% for many years (that is, ifyou want to make a $100 investment, you need to put up$500, and there is often a

maintenance margin below the $500).

A margin call is made if the total value of the investors account cannot support the lossof the trade.

(Upon a decline in the value of the margined securities additional funds may be requiresto maintain the accounts equity, and with or wit out the margined securities or any others

within the account may be sold by the brokers to protect its loan position. This investors

is responsible for any shortfall following such forced sale).

Regulation of margin requirement (by the Federal Reserve) was implemented after thecrash of 1929. Before that, speculators typically only needed to put up a little as 10% (or

even less) of the total investment represented by the stocks purchased.

Other rules may include the prohibition of free-riding: putting in an order to buy stockswithout paying initially (there is normally a three-day grace period for delivery of the

stock.)

But then selling them (before the three-days are up) and using part of the proceeds tomake the original payment (assuming that the value of the stocks has not declined in the

interim).

New issuance:

Global issuance of equity and equity-related instrument totaled $505 billion in 2004, a29.8% increase over the $389 billion raised in 2003. Initial public offer (IPOs) by US

issuers increased 221% with 233offering that raised $45 billion, and IPOs in Europe,

Middle East and Africa (EMEA) increased by 333% from $9 billion to $39 billion.


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Investment strategies:

One of the many thing people always want to know about the stock market is, How do Iknow money investing? There are many different approaches; two basic methods are

classified as either fundamental analysis or technical analysis.

Fundamental analysis refers to analyzing companies by their financial statements foundsin SEC Filing, business trends, general economic conditions, etc.

Technical analysis studies prices action in market through the use of charts andquantitative techniques to attempt to forecast prices trends regardless of the companys

financial prospects.

One examples of a technical strategy is the Trend following method, used by John WHenry and risk control and diversification.

Additional, many choose to invent via the index method. One holds a weight or unweightportfolio consisting of the entire stock market or some segment of the stock market (such

as the S&P 500 or Wilshire 5000).

The principle aim of this strategy is to maximize diversification, minimize taxes from toofrequent trading and ride the general trend of the stock market (which, in the U.S, hasaveraged nearly 10% year, compounded annually, since World War II).

Taxation:

According to much national or state legislation, large arrays of fiscal obligation are taxedfor capital gains. Taxes are charged by the state over the transactions, dividends and

capital gains on the stock market, in particular in the stock market.

However, these fiscal obligations may vary from jurisdiction to jurisdiction because,among other reasons, it could be assumed that taxation is already incorporated into the

stock prices through the different taxes companies pay to the state, or that tax free stock

market operations are useful to boost economic growth.


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ABOUT NIRMAL BANG GROUP:

Founded in 1986 by Sri Nirmal Bang Group is recognized as one of the largest retailbroking houses in India, providing an array of financial products and services.

Our retail and institutional clients have access to product such as equities, derivatives,commodities, currency derivatives, mutual fund, IPOs, insurance, depository services and

PMS.

Throughout our history, we have fostered one overriding purpose each client withpersonal services and quality work by adhering to the principal, we have grown to

become a successful as well-respect firm of highly qualified professional.

The group is headed by Mr. Dilip Bang and Mr. Kishore Bang who bring forwardindustry expertise, insight and most important, create an environment of unmatched to

client.

We are registered members of the Bombay Stock Exchanges limited (BSE), NationalStock Exchanges of India limited (NSE), Multi Commodity Exchanges of India limited

(MCX), national commodity & Derivatives Exchanges limited (NCDEX), National Multi

Commodity Exchanges of India limited (NMCE) and MCX stock Exchange limited and

also depository participants of NSDL and CDSL.

MISSION:

To work together with integrity and make customer feel valued.Vision:

TO CREATE VALUABLE RELATIONSHIPS AND PROVIDE THE BEST FINANCIALSERVICES MOST PROFESSIONAL.

Core value: RESPECT OUR COLLEAGAUES AND THE BUSINESS ITSELF.


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WHY CHOOSE US?

CLIENT FOCUS

Client relationship from the core of our business. We value each client, no matter whatsize, as a long-term relationship. And we seek to provide unmatched services to each

client and place him as a partner at the center of everything we do.

From the very beginning of the relationship, we work closely with every client to identifyhis financial goals and risk tolerance levels and leverage our strength of the product

offering, research and financial strength to help achieve his goals. In the process, we

become an professional partners, creating opportunity, adding value and transform vision

into reality.

Diverse services offering

In addition to traditional broking services, we are also equipped to handle commoditytrading facility as well as currency derivatives and have access to a wide range of

financial services like IPOs, mutual funds and insurance.

Timely services

In an increasingly competitive environment, clients today require personalized solutionand greater flexibility and responsiveness than ever before. Our professionals are always

on call. We provide them services throughout the year and not just at the end of the

year. We believe such service is essentials for delivering solution and constructive

relationship.

Able team

We have developed a strong and enduring team by recruiting from leading graduate andpostgraduate universities and promoting from within. Our team work together to provide

superior results to our client. At the same time, each of our clients is assigned a specific

team member who owner the relationship, providing continuity, responsiveness and a

point of easy access to the firm.


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Culture

We strive to maintain standards at all times and lay emphasis on honesty,integrity and confidentiality. We speak and act to ensure transparency at all

levels and in everything we do.

Financial strength

The strength of our balance sheet is such that it gives greater confidence toall our retail and institutional clients in detail with us. The financial strength

of the group helps in future building the network and infrastructure to cater

to the larger market.

INFRASTURUCTURE:

We believe or best infrastructure gives a significant advantage allowing us to provide efficient,

transparent and qualitative services. Our technology supports everything from executive trades

and managing our investors of stocks to communicating up-to-the-second information to our

clients and monitoring for compliance.

Client interface:

We have trading terminal (both direct and indirect), online monitoring, control terminal

(administration terminals) and back office support terminal (settlement terminal) across all

location and centers.

We have Indias best single screen Multi Exchanges Trading Software platform. Our entire

centers across the country are connected through our own network, leased ISDN lines and LAN

network, MPLS and internet.

The high-end IBM serves with sophisticated security features that we use caters to trading points

across the country. This also gives u rte advantage of scalability in terms of location and size of

our planned operations. We provide telephonic and chat support for technical and functional

issues of branches, franchises and all our clients.

Our websites www.nirmalbang.com is comprehensive and provides online feeds, net trading and

provides online feed, net trading portfolio tracking tool. Investors also have access to a wide

range of financial news, information and various research reports facilitating quick decision-

making.

Our online trading portal at www.nirmalbang.com is equipped with facilities like all segment

broadcasts, multi-features graphs, online payment gateways and automatic password mailer


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utility for better security. It user-friendly navigation allows easy viewing of trading accounts,

depository accounts and research reports, which are linked to the trading platform.

The website also has a provision for creating portfolios and monitoring them on a regular basis.

Our wealth trackers module helps investors in getting ready updates n their investment so that

they can know the changing trends of the markets and the impact of the same on their portfolio.

Back office:

For back office operations, we use the lidha Didha system of Apex Soft cell Pvt. Ltd. This is one

of the top most back office software in the industry. It has the capacity to process over one lakh

traders in a five minute frame.

Our operation teams has an easy-to-navigate client login system, which is used to generate

activity reports, short-terms and long-term tax reports, holding and portfolio valuation reports as

well as trading to delivery activity reports.

We also have the requisite infrastructure needed to handles STP, upload and download and

download information to or from exchanges, bank and depositories, support units to ensure

delivery notes, bills and ledgers of trading accounts and cash management services for efficient

and effective fund management within the group.

Internal control:

Compliance and internal control play a major role in determining business strategies as well asday-to-day operation of the group. A well-equipped risk management department ensures that

the delinquency rates are minimal, while efficient risk management software provides online

MTM margin data to branches and franchisees. Our efficient back-up system and software have

been developed specially for branches and channel partners with a capacity to handle numerous

transactions. Our online position monitoring system ensures better risk management and

surveillance from our head office as well as branches and franchises. Our people from them

cornerstone of the business and their expertise and motivation delivery of exceptional solution

and services to all our clients.

Experienced professional:

Our teams of professional consist of individual with significant experience in securities trading,

market structure, trading technology and portfolio management. They have a strong experience

in trade execution and understanding of order flow dynamics. This combined with technical

analysis of market momentum, help our clients to determine the price at which they buy and /or

sell.


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We believe, we are the first choice for our clients because we among the very best at trade

executive solution and assets management services. At Nirmal bang, each and every professional

is focused on turning the initial trade or investment into a collaborative, person-to-person

relationship that keeps delivering true added value.

Research Expertise:

Our research team is headed by two senior research analysts who have more than 15 years of

experience in this field.

Our team of experienced fundamental research and technical analysts provide reports on

industries, sectors, companies and individual stocks. Our research reports are backed by in-depth

research and analysis of emerging as well as current market trends. Besides, our research

analysts also appear on leading business news channel where they share their insights on the

market.

Nirmal Bang Groups business strives the largest number of common people. Consider these:

Equity* /commodity/ currency*/mutual fund/IPO/PMS/insurance/DP products.

Management philosophy:

Nirmal Bang Groups business ventures are highly successful due to our Managementphilosophy. Features of this include total empowerment of its employee, decentralized decision-

making process and freedom of action. Most of all, the Group views every employee as a

potential partner in business. Group Companies has also been instrumental in creating

innumerable indirect jobs in the communities they serve.

About Nirmal Bang:

Nirmal Bang Securities Pvt Ltd. is the stock-Broking arm of the Rs. 7,500 crore (approx) Nirmal

Bang. With over 450 branches, 8000 employees (approx), 28 lakh investors, Nirmal Bang, with

evolved into a premier financial supermarket providing a host of services including stock-

broking, distribution of investment products, properly, property development, industrial

investment, risk management, insurance products and consumer finance.


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Human Resources:

Human resources is the key to any services sectors industry. We have a strong and vibrant

workforce in every field or our activity, be it research, system, accounts, marketing or

networking.

With the manpower strength of over 1100 employees, the Company is managed by a highly

motivated, qualified & talented team of professional qualified CAs, MBA,s, Engineers, etc with

proven track records.

Technology:

Stock-broking being a process intensive activity, issues such as speed, accuracy, round-the-clock

system availability and system securities are of paramount importance and technology forms the

backbones of the business.

This is why Nirmal Bang is technology driven. We boast of state-of-the-art technology and an in-

house team of highly competent software and networking engineers who constantly review

system and procedures to ensure operational efficiency.

All our branches are connected through Wide Area Network (WAN) and are served by a

centralized back office processing system, which enables clients to obtain up to date information

online at the click of a button.

Customer Focus:

Despite a rapidly expanding client base and a dizzying increase in transaction volumes, each

client at Nirmal Bang is special. We specialize in building long term relationship with our

customers by providing them with the four things they desire most, viz., speed,, convenience,

reliability and personalized services.

Our continuous strive to provide best services to our clients, results in receipt of not a single

Arbitration Award against the company since its inception.


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A. WIDE OPTION WHILE TRADING:

A product for every need:

Nirmal Bang is the most comprehensive website, which allows you to invest in shares,mutual funds, derivatives (Future and Option) and other financial products. Simply put,we offer you products for every investment need of yours.

Trading in shares:

Nirmal Bang offers you various options while trading in shares.

Cash trading:

This is a delivery based system, which is generally done with the information of takingdelivery of shares or monies.

Margin Trading:

You can also do an intra-settlement trading up to 3 to 4 times your available funds, where

in you take long buy/short sell position in stocks with in the intention of squaring off the

position within the same day settlement cycle.

In margin trading, you take buy/sell position in stocks(s) with the intention of acquiring

off the position within the same settlement cycle. If, during the course of the settlement

cycle, he price moves in your favor (rises in case you have a buy position or falls in case

you have a sell position), you make profit. In case you have the option to take/give

delivery of buy/sell position respectively if you have sufficient cash/securities to do so.

Normally to buy shares, you have to place (ensure availability of limit) 100% of the

order value, while to sell shares, you need to have shares in your Demat account.

However, margins are blocked only to safeguard any adverse price movement. At

present, you have to place 33.33% of the order value as margin. With margin trading, youcan leverage on your trading limit by taking buy/sell positions much more than what you

could have taken in cash segment. However, the risk profile of your transaction goes up.


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Margin PLUS Trading:

Through Margin PLUS you can do an intra-settlement trading up to 10 times youravailable funds, where in you take long buy/sell position in stock with the intention of

squaring off the position within the same days settlement cycle. Margin PLUS will give

a much higher leverage in your limits.

Margin PLUS is an order placement feature where you can take a position at market priceand also place a cover order for the position specifying the SLTP and the limit price. Thiswill minimize the loss cover at the time of taking the position itself. There by it gives a

clear view of maximum downside involved in a particular position at a particular price,

Nirmal Bang wont levy a normal margin ranging from 21% to 50%. It would block he

maximum loss which customer can suffer.

Spot Trading:

This facility can be used only for selling you is demat stocks which already exist inyoure demat account. When you are looking at an immediate liquidity option, cash on

spot may work the best for you, on selling shares through cash on spot, money is

certified to your bank a/c the same evening & not on the exchange payout date.

BTST:

Buy today sell tomorrow (BTST) is a facility that allows you sell shares even on 1 st and2nd day after the buying order date, without you having to Waite for the receipt of shares

into your demat account.

Call N Trade:

Call N Trade allow you call on a local number in your city & trade on the telephonethrough our customer services Executive.

Trading in NSE/BSE: through Nirmal Bang you can trade on NSE and BSE.


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Market order:

This is an order to buy sell securities at the best price obtainable in the market at the timeit is matched by the exchange. Therefore, change of its getting executed are better. In

case of market order for NSE, all market order placed which are not executive fully; it

becomes a limit order for the balance quantity at the last traded price.

Market Order in BSE: Explanation:

Market order can be placed only during market hours (i.e., when the Exchanges is open for

trading).

You could trade by placing market orders during market hours that allows you to trade at the best

obtainable price in the market at the time of execution of the order.

Limit Order:

Limit Order is an order to buy or sell securities in which you specify the maximum price per unit

in case of a buy order and the minimum price per unit in case of sell order. The actual transaction

can be at a price more favorable than the price specified.

Allow you to place a buy/sell order at a price defined by you. The execution can happen at a

price more favorable than the price, which is defined by you, limit orders can be placed by you

during holidays & non market hours too.

Online confirmation of Order and trade:

You get online confirmation of orders and trades- the status of any order is updated on real-time

basis in the Order Book. As soon as you place your order they are validated by the system and

sent to the exchange for execution. The entire process is fully automation and there are no

manual interventions.


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GTC, GTD and IOC Order:

A Good Till cancelled (GTC) order remains in the system until the trading members cancels it.

However, the system cancels this order if it is not trade within a number of days parameterized

by the Exchanges. A Good Till Days/Date (GTD) order allows the user to specify the number of

days/date till which the order should stay in the system if not executed. The maximum number of

days for which the GTC/GTD order can remain in the system is notified by the exchange from

time to time after which the day/date on which the order is placed and inclusive of holidays. An

immediate or cancel (IOC) order allows the user to buy or sell a security as soon as the order is

released into the system, falling which the order is cancelled from the system. Partial match is

possible for the order and the unmatched portion of the order is cancelled immediately.

Disclose Quantity (DQ) Order:

Normally, the order quantity is disclosed in full to the market. An order with a disclosed quantity

(DQ) condition/attribute allows the trading members to disclose only a part of the order quantity

to the market. For example, an order of 1000 with a disclosed quantity condition of 200 willmean that 200 is displaced to the market at a time. After this traded, another 200 is automatically

released soon till the full order is executed. DQ (Disclosed Quantity) should not be less that 10%

of the order quantity and at the same time should not be greater than or equal to the order

quantity.

Stop Loss Order:

A stop loss order allows the client to place an order which gets activated only when the market

price of the relevant securities reached or crosses a threshold price specified by the investors in

the form of stock loss trigger price. When a stop loss trigger price (SLTP) is specified in a limit

order, the order becomes one which is conditional on the market price of the stock crossing the

specified SLTP. The order remains passive (i.e. not eligible for execution) till the condition is

satisfied. Once the last traded price of the stock reached or surpasses the SLTP, the order

becomes activated (i.e. eligible for execution by being taken up in the matching process of the

exchange) and then on behave like a normal limit order. It is used as a tool to limit the maximum

loss on a position.

StopLoss by Order:

A short sell reliance shares at Rs. 325 in experience that the price will fall. However, in the

event the price rises above his buy price A would like to limit sell order specifying a stock loss

trigger price Rs. 305 and a limit price of Rs. 300. The stop loss trigger prices price has to be

between the limit prices an trade price at the time of placing the stop loss order. Once the last

trade price touches or crosses Rs. 305, the orders get converted into a limit sell order at RS. 300.


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2:Trade in derivatives:

Future:

Through Nirmal Bang you can now trade in index and stock futures on the NSE in future trading,

you take buy/sell position in index or stock (S) contract having a longer contract period of upto 3

month.

Trading in FUTURE is simple if, during the course of the contract life, the price moves in favor

(i.e. rises in case you have a by position or sell in case you have a sell position), you make a

perfect. Presently only selected stock, which meet the certain liquidity and volume, have been

enabled for future trading.

Calculate index and now your margin are tools to help you in calculating your margin

requirement and also the index & stock price movement.

Option:

An option is a contract, which gives buyer the right to buy or sell shares at a specific prices, on a

before a specific date. For this, the buyer has to pay to the seller some money, which is called

premium. There is now obligation on the buyer to complete the transaction if the price is not

favorable to him.

To take the buy/sell position on index/stock option, you have to place certain % of order value as

margin. With option trading, you can leverage on your trading limit buy taken buy/sell positionmuch more that what you could have taken in cash segment.

The buyer of a call option has the right but not the obligation to purchase the underlying asset at

the specified strike price buy paying a premium whereas the seller of the call has the obligation

of selling the underlying asset at the specified strike price.

The buyer of a put option as the right but not the obligation to sell the underlying asset at the

specified strike price paying a premium whereas the seller of the put has the obligation of buying

the underlying the asset at the specified price. Buy paying lesser amount of premium, you can

create position order option and take advantage of more trading opportunities.


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Switch:

To suit your changing needs you may wish to shift monies between different schemes. You can

switch your monies online form one schemes to another in the some fund family without any

hassles.

Systematic investment plans (SIP)

SIP allows you to invest a certain some of money over a period of time periodically. Just fill in

investment amount, the period of investment and the frequency of investing and submit. We will

do the rest for you automatically investing periodically for you.

Systematic withdrawal plan:

This allows you to withdraw or certain some money over up period of time periodically.

Transfer-in: we can convert to existing mutual funds into electronic more through a transfer-in

request.

3: IPOS and BONDS Online:

You can also invest in initial public offers (IPOs) and bonds online without going through the

hassles of filling any application form/paperwork.

Get in-depth analysis for new IPOs issue (initial public offering) which are about to hit the

market and analysis on these. IPO calendar, recent IPO listing, prospectus/offer document, and

IPO analysis are few of the features, which helps you keep, keep on talk of the IPO markets.


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Taxation of Indian Resident:

The below mentioned FAQs are restricted to tax implication of the resident investors only.

Q: Buy and sell securities; do I have to play tax on these transactions?

Yes, you are liable to play tax on his transaction: on the difference between the price at which

you sell and the price at which you acquired it. You can also claim deduction for expenses

incurred these securities along with cost of buying these securities. Further if these securities are

held or along term before selling them, your cost of acquisition can be increased by the

indexations, which reduce your capital gains, indexation benefits, is not available on debenture

and bonds. In case these securities are held as stock-in-trade i.e. if you are in the business of

buying and selling securities. The profit and loss from purchase and sell of securities will be

taxed under the head profit of gains of business or profession.

Q: what is the nature of income under which transaction in securities will be taxed?

Profit and loss from purchase and sales of securities will be taxed under the head of income

from capital gains, provided such securities are held as investment by you. In case these

securities a new held as stock-in-trade.i.e. If you are in the business of buying and selling

securities under the head profit or gains of business or profession.

Capital gain/loss:

Capital gain/loss means any profit or loss arising from transfer of a capital asset affected in the

previous year.

Capital Assets:

Capital asset means property of any kind heldby an assesses, whether or not connected with hisbusiness or profession, but does not include 1:stock-in-trade, 2: personal effect such as jewelers,

furniture, motor car held for personal use. 3: 61/2% Gold Bonds. 1980. 4: 7% Gold Bonds. 5:National Defiance Gold Bonds 1999. 6. Gold deposit Bond under the gold deposit scheme,

1999 notified by the central government.


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Transfer of a capital asset:

Transfer includes sale, exchanges or relinquishment of the asset of the extinguishment on any

right there in or compulsory acquisition thereof under any low. In a case where as asset is

converted by the owner or treated by him, is also treated as transfer. However, the following

specific transaction are not regarded as transfer e.g. (a) any distribution of capital assets on total

or partial partition of an HUF (a) any transfer of a capital under a gift or will or an irrevocable

trust expect share, debenture or warrants allotted to employee under approved EFOP scheme,

(b) Issue of share by resulting of amalgamated company in lieu of shares held in the demerged or

amalgamating company (providing in case of amalgamation, amalgamation company in Indian

company)

(c) any transfer by way of conversion of bonds or debentures of a company into shares or

debentures of that company in case of (a) and (b) above, if the resulting owner sells the capital

asst subsequently, the cost of acquisition shall be deemed to be the cost at which the capital asset

was acquire by the previous owner. In case of demerger, it shall be the portion of the cost whichbears to the total cost the same proportion as the net-book value of the assets transferred in the

demerged bears to the net worth of the demerged company immediately before demerged. The

cost of acquisition of the original shares would stand reduced correspondingly.

Short term Asset:

Capital is divided as long term and short term with reference to the period of holding of the asset

by you. The period of holding computed from the date acquisition to the date immediately

preceding its sale. If the shares, unit os specific mutual fund u/s 10(23D) or any other listedsecurities are held by you for less than 12 months then such shares/ units or listed securities

would be treated as short term assets. In all other cases, the asset is required to hold for 36 month

so as to quality for long term capital gain.

Long Term Asset:

If the shares, unit of specified mutual fund u/s 10(23D) or any other listed security are held by

you for more then 12 month then such share/units or listed security would be treated as long term

asset.Example:

You purchase 1000 shares of ACC on 10.6.2005 for Rs 1, 10,000/-

You were allotted 1000 shares as bonus on 11.8.2005

You sold these shares on 12.8.2006 for Rs 1, 30,000/-


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Calculation of long term capital gain would be as follows:

Amount in Rs

Sale consideration 1, 30,000

Cost of 1000 shares purchased on 10.6.2000 110000*406/389 (indexation benefits) 1, 14,807

Cost of one thousand bonus shares nil

Long term capital 15, 193


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DEMAT SERVICES

Company offering

Nirmal Bang is a registered member (Depository participant) of CDSL.

In this system, physical security holding are converted into electronic (or in other words,

dematerialized) holdings.

Why NIRAML BANG Demat Account?

Demat A/C free open. Demat access through internet and phone. Portfolio valuation on the account statements. Online execution of transactions at branches. Special rates for stock market intermediaries and sub brokers. Transaction update from back-office four times a day.

Transfer of shares and settlements

Transfer and settlements have never been easy as it under the depository system. All that is

required is an instruction slip from you. If you are selling securities then it has to be a delivery

instruction slip. If you are purchasing securities it has to be a receipt instruction slip or standing

instruction for credit.

Receipt of Corporate Benefits

Even securities establishment like bonus and right can be credit to your Demat account

electronically. All you have to do is choose the right option in the share application from. Crash

benefits like dividend and interest will, however be forward to you directly and not through the

depository.

Holding & Transaction Statements

We provide statements of holding cum transaction every month at Zero cost.


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Dematerialization of shares

At you request we arrange to convert your physical holding into electronic from. To do this

would require to open an account with CDSL through us called Beneficiary Account in thename and style in which the shares are held and lodge the share certificates with us accompanied

by a dematerialized request from, separate for each scrip.

You are required to only make sure that CDSL has admitted that scrip for dematerialization. An

upto date list will be provided to you which will be constantly updated.

Rematerialization

You have the option to convert your electronic shares back to physical shares.

Pledge-Hypothecation

You can also avail against your electronic shares. This process is also much faster than in the

case of physical shares.


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HEAD OFFICE:-

38-b/39, Khatau building, 2 floor, Alkesh dinesh moby marg fort, Mumbai.

SMS BANG TO 54646

E-MAIL:[email protected]

Contact at: 022-30272323

www.nirmalbang.com
http://www.nirmalbang.com/http://www.nirmalbang.com/http://www.nirmalbang.com/


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MANADATORY DOCUMENT:-

1. PROOF FO IDENTITY (For individual /Karta / Sole proprietor / Authorized person (s) forPartnership, corporate and Trust)

Photocopy of PAN card

1.PROOF OF ADDRESS (For individual / Karta / Sole proprietor / Authorized person (s)for Partnerships, Corporate and Trust)

Photocopy of any one of the following:

Passport, Voter ID Card, Driving license, Bank Passbook, Rent Agreement, Ration Card,

Current Telephone Bill, Current Electric Bill, Flat Maintenance Bill, and Certificate Issued

by employer registered under MAPIN, Insurance Policy.

2. BANK AND DP PROOF:I. Letter from clients banker certifying the account number and the period from which the

accounts in operation as per prescribed format.

II. Copy of a pas book / bank statement containing name of the clientIII. Copy of current transaction statement / holding statement / certification by DP containing the

name of DP and client

3. PROOF OF INCOME AND ASSETS:I. Copy of the salary of the constituent for the last monthII.Income tax statement for the last 2 financial years

III.Assets liability statementIV.Copy of the values certificate in case of immovable property

4. FOR MINORS:In additional to the abovementioned documents, the following documents would also berequired for minors.

I.Birth certificate of Minor.


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5. ADDITIONAL DOCUMENTS FOR NON-INDIVIUALS:I. Copy of the balance sheet for the last 2 financial years (copies of annual balance sheet to

be submitted every years)

II. Copy of latest share holding pattern including list of all those holding more than 5% in theshare capital of the company, duly certified by the company secretary/ whole time

Director/MD. (copy of updated shareholding patterns to be submitted every year)

III. Copies of the memorandum and articles of association in case of a company / bodycorporate or partnership deed in case of a partnership firm

IV. Copy of the Resolution of Board of Directors approving participation in equity /derivatives/ debts trading and naming authorized persons for dealing in securities.

V. Photographs of partners/whole time directors, individual promoters holding 5% or more,either directly or indirectly, in the shareholding of the company and of persons authorized

to deal in securities.VI. Net worth certified by Chartered accountant.VII. Declaration on letterhead of firm as per prescribed format for sole proprietorship and

partnership Firms.

1. BASIC RISKS INVOLVED IN TRADING ON THE STOCKEXCHANGE (EQUITY AND OTHER INSTRUMENT)

1.1 Of higher volatility:Volatility refers to the dynamic changes in price that securities undergo when trading

activity continues on the Stock Exchanges. Generally, higher the volatility of a

security/contract, greater is its price swings.

There may be normally greater volatility in thinly traded securities/contracts than in active

securities/contracts. As a result

Of volatility, your order may only be partially executed or not executed at all.

Or the price at which your order got executed may be substantially different from the last

traded price or changes substantially thereafter, resulting in notional or real losses.

1.2 Risk of lower liquidity:Liquidity refers to the ability of market participants to buy and or sell securities/ contracts

expeditiously at a competitive price and with minimal price difference.

Generally, it is assumed that more the number or order available in a market, greater is the

liquidity.


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Liquidity is important because with greater liquidity, it is easier for investors to buy and/or

sell securities/ contracts swiftly and with minimal price difference, and as a result,

investors are more likely to pay or receive a competitive price for securities/contracts

purchased or sold.

There may be a risk of lower liquidity in some securities/contracts as compared to active

securities/contracts. As a result, your order may only be partially executed, or may be

executed with relatively greater price difference or may not be executed at all.

1.2Buying/Selling without intention of giving and or taking delivery of a securities, as part of aday trading strategy, may also result into losses, because in such a situation, stock may

have to be sold/purchased at a low/high prices, compared to the executed price levels, so

as not to have any obligation to delivery/receive a security.

1.3 Risks of wider spreads:Spread refers to the difference in best buy prices and the best sell prices. It represents the

differential between the prices of buying a securities and immediately selling it or vice

versa.

Lower liquidity and higher volatility may result in wider than normal spreads for loss

liquid or illiquid securities/contracts. This is turn will hamper better price formation.

1.4 Risk-reducing orders:Most exchanges have a facility for investors to place limit orders, stop loss orders

etc. The placing of such orders (e.g., stop loss limit orders) which are intended to limit

losses to certain amount may not be effective many a time because rapid movement in

market conditions may make it impossible to execute such orders..

1.4.1 A market order will be executed promptly, subject to available of orders on oppositeside, without regard to price and that, while the customer may receive a prompt of a

market order, the execution may be at available prices of outstanding orders, which

satisfy the order quantity, on price time priority. It may be understood that these prices

may be significantly different from the last traded prices or the best prices in that security.

1.4.2 A limit order will beexecuted only at the time limit price specified for the order or abetter price. However, while the customer receives prices protection, there is a possibility

that the order may not be executed at all.

1.4.3 A stop loss order is generally placed away from the current price of a stock / contract,and such order gets activated if and when stock/contract reaches, or trades through, the

stop price.

Sell stop order are entered ordinarily below the current price, and buy stop orders are

entered ordinarily above the current price. When the stock reaches the pre-determined


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price, or trades through such price, the stop loss order convert to a market/limit order and

is executed at the limit order.

There is no assurance therefore that the limit order will be executable since a

stock/contract might penetrate the pre-determined price, in which case, the risk of such

order not getting executed arises, just as with a regular limit order.

1.5 Risk of New Announcements:

Issuers make news announcements that may impact the prices of the securities/contracts. These

announcements may occur during trading, and when combined with lower liquidity and higher

volatility, may suddenly cause an unexpected positive or negative movement in the price of the

security/contracts.

1.6 Risk of Rumors:

Rumors about companies at times float in the market through word of mouth, newspapers,

websites or news agencies, etc. the investors should be wary of and should desist from acting on

rumors.

1.7 System Risk:

High volume trading will frequently occur at the market opening and before market close. Suchhigh volume may also occur at any point in the day. These may cause delays in order execution

or confirmation.

a.7.1 During periods of volatility, on account of market participants continuously modifyingtheir order quantity or prices or placing fresh orders, there may be delays in order

execution and its confirmation.

a.7.2 Under certain market condition, it may be difficult or impossible to liquidate a position inthe market at a reasonable price or at all, when there are no outstanding order either on

the buy side or the sell side, or if trading is halted in a security due to any action onaccount of unusual trading activity or stock hitting circuit or for any other reason.


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a.8 system/network congestion:Trading on NSE/BSE is in electronic mode, based on satellite/leased line based communication,

combination of technology and computer system to placed and route orders.

Thus, there exist a possib

Documents

summer internship project on stock broking