Summer Training Project Report-rishika

8/2/2019 Summer Training Project Report-rishika

1/65

CHAPTER- 1

INTRODUCTION

1.1 OVERVIEW OF INDUSTRY AS A WHOLE

1


2/65

NSE launched internet trading in early February 2000. It is the first

stock exchange in the country to provide a web-based access to

investors to trade directly on the exchange. The process : Log on to the

brokers site of your choice where you get real time quotes, place a buy

or sell order on the spot, and direct the site to debit the requisite

amount. In some time you get confirmation and after the trade

settlement your bank and depository account will reflect the changes

which you can view anywhere, anytime. Online trading has become

seamless. All that you need is a PC, a modem, subscription to an

Internet Service Provider (ISP), a saving and a depository account

with any bank providing online trading facility. Along with stocks one can

trade in mutual funds and investment instruments. The advantage with

online trading that you can operate in both BSE and NSE depending on

the broking firm.

NSE introduced for the first time in India a fully automated screen based

trading. It uses a modern fully computerized trading system designed to

offer investor across the length and breadth of 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.

With over 20 million shareholders, India has the third largest investor

base in the world after the USA and Japan. Over 9000 companies are

listed on stock exchanges, which are serviced by approximately 7500

stockbrokers. The Indian capital market is significant in terms of the

degree of development, volume of trading and its tremendous growth

potential.

STOCK EXCHANGE

2


3/65

A stock exchange, share market or bourse is a corporation or mutual

organization which provides facilities for stock brokers and traders, to

trade company stocks and other securities. Stock exchanges also

provide facilities for the issue and redemption of securities, as well a,

other financial instrument and capital events including the payment of

income and dividends. The securities traded on a stock exchange

include: shares issued by companies, unit trusts and other pooled

investment products an bonds. To be able to trade a security on a

certain stock exchange, it has to be listed there.

National Stock Exchange

The national stock exchange of India limited (NSE) is a Mumbai-based

stock exchange. It is the largest stock exchange in India and the third

largest in the world in terms of volume of transaction. NSE is mutually-

owned by a set of leading financial institutions, banks, insurance

companies and other financial intermediaries in India but its ownership

and management operate as separate entities. In March 2006, the NSE

had a total market capitalization of 4,380,774 crores INR making it the

3


4/65

second-largest stock market in south Asia in terms of market-

capitalization.

Bombay Stock Exchange

The Bombay stock exchange (or BSE) is there oldest stock exchange in

Asia. It is located at Dalal street, Mumbai, India.

The Bombay stock exchange was established in 1875. there are around

4800 Indian companies listed with the stock exchange, and has a

significant trading volume. As of may 2007, the equity market

capitalization of the companies listed on the BSE was about Rs.40.7

trillion (US$999billion).

This topic includes the practical experience company products that are

followed by studying the consumer preference or interest towards share

market. This is a market; which is uncertain sometimes it gives huge

4


5/65

profit and also vice-versa; it depends upon the investment customer

made. This is a better option to have better returns on the investments

then investing in banks, mutual fund or bond et. But risk is high in this

case.

This products offers customer two type of investment option INTRADAY

and DELIVERYboth has The topic is to study the consumer preferences

towards investment in stock market.

Demat account is a pool of various scripts and securities, whereas online

trading is a tool of purchasing/selling of scripts online. These scripts are

then transferred to depository account after three days.

There own benefits and limitations but a better way to have more

returns on investment. Intraday means investing in a share market for a

day i.e. purchasing and selling of sharekhan in one day. Delivery is

purchasing share and selling those share next day. The charges that

company charge in terms of brokerage is different in both the cases.

Gone are the days when you left orders with your broker, received

conformations on the price and quality of the shares at the end of the

day and the payment made upfront or received after delays. Your

securities settlement took days to reflect in your account. Internet has

changed the way you do trading. The entire process is speedy with

limited to zeropaper work. NSE launched internet trading in early

February 2000. it is the first stock exchange in the country to provide a

web-based access to investors to trade directly on the exchange. The

process : Log on to the brokers site of your choice where you get real

time quotes, place a buy or sell order on the spot, and direct the site to

debit the requisite amount. In some time you get confirmation and after

the trade settlement your bank and depository account will reflect the

changes which you can view anywhere, anytime. Online trading has

become seamless. All that you need is a PC, a modem, subscription to

an Internet Service Provider (ISP), a saving and a depository

5


6/65

account with any bank providing online trading facility. Along with stocks

one can trade in mutual funds and investment instruments. The

advantage with online trading that you can operate in both BSE and NSE

depending on the broking firm.

1.2 Company profile

Share khan is the retail broking arm of Mumbai-based SSKI

Group, which has over eight decades of experience in the stock brokingbusiness. SSKI owns 65% in Share Khan Balance ownership is HSBC, first

Carlyle and Intel Pacific.

It has been into broking since 80 years. And has focused on

providing equity solutions to every segment. It boasts of largest ground

network of 588 share shops across 213 cities in India.

Sharekhan offers its customers a wide range of equity related services

including trade execution on BSE, NSE, Derivatives, depository services,

online trading, investment advice etc.

Through its online trading portal www.sharekhan.com, it provides

multi-channel access to the stock markets to its customers. The website

6


7/65

was launched on Feb 8, 2000. The site gives access to superior content

and transaction facility to retail customers across the country. Known for

its jargon-free, investor friendly language and high quality research, the

site has a registered base of over one lakh customers. The number of

trading members currently stands at over 3 Lacs. While online trading

currently accounts for just over 2 per cent of the daily trading in stocks

in India, Sharekhan alone accounts for 32 per cent of the volumes

traded online.

Share khans ground network includes over 588 centers in 148

cities in India, of which 32 are fully-owned branches.

The company has used some of the best-known names in the IT

industry, like Sun Microsystems, Oracle, Microsoft, Cambridge

Technologies, Nexgenix, Vignette, Verisign Financial Technologies India

Ltd, Spider Software Pvt Ltd. to build its trading engine and content. The

Morakhiya family holds a majority stake in the company. HSBC, Intel &

Carlyle are the other investors.

With a legacy of more than 80 years in the stock markets, the SSKI

group ventured into institutional broking and corporate finance 18 years

ago. Presently SSKI is one of the leading players in institutional broking

and corporate finance activities. SSKI holds a sizeable portion of the

market in each of these segments. SSKIs institutional broking arm

accounts for 7% of the market for Foreign Institutional portfolio

investment and 5% of all Domestic Institutional portfolio investment in

the country. The Corporate Finance section has a list of very prestigious

clients and has many firsts to its credit, in terms of the size of deal,

sector tapped etc.

SSKI

7


8/65

With a legacy of more than 80 years in the stock market, the SSKI

group ventured into institutional broking and corporate finance 18 years

ago. Presently SSKI is one of the leading players in institutional broking

and corporate finance activities. SSKI holds a sizeable portion of the

market in each of these segments. SSKIs institutional broking arm

accounts for 7% of the market for foreign institutional portfolio

investment and 5% of all domestic institutional portfolio investment in

the country. It has 60 institutional clients spread over India, fa east, UK

and us. Sharekhan is the retail broking arm of SSKI, an organization

with more than eight decades of trust and credibility in the stock

market.

SSKI GROUP COMPANIES

SSKI investor services Ltd (sharekhan)

S.S. kantilal ishwarlal securities

SSKI corporate finance

Idream productions

8


9/65

TECHNOLOGY USED BY COMPANY

Sharekhan has always believed in investing in technology to build its

business. The company has used some of the best-known names inthe IT industry, like sun Microsystems, oracle, Microsoft, nexgenix,

spider software pvt. Ltd. to build its trading engine and content.

SHAREKHAN BUSINESS

1. Brokering house2. white feathering house production

VISION

To be the best retail brokering brand in the retail business of stock

market.

MISSION

To educate and empower the individual investor to make better

investment decisions through quality advice and superior service

9


10/65

Key Statistics about Sharekhan

Top Locations

Bombay Area, India (123) Delhi Area, India (21)

Sharekhan Headquarters Address

A-206 Phoenix House 2nd Floor Senapati Bapat Marg Lower Parel

Mumbai, Maharashtra 400 013

IndiaPhone: 91 22 2498 2000

Fax: 91 22 2498 2626

Headquarters Bombay Area, IndiaIndustry Financial Services

Type Privately HeldStatus OperatingCompany Size 1001-5000 employeesWebsite http://www.sharekhan.com

Table: 1.1

Common Job Titles Manager

Relations Manager

Vice President

15%

10%

9%

10
http://www.linkedin.com/search?search=&company=Sharekhan&currentCompany=currentCompany&searchLocationType=I&distance=50&countryCode=in&postalCode=400604http://www.linkedin.com/search?search=&company=Sharekhan&currentCompany=currentCompany&searchLocationType=I&distance=50&countryCode=in&postalCode=110041http://www.linkedin.com/companies/sharekhan#hq-address%23hq-addresshttp://www.linkedin.com/companyDir?searchByInd=&ind=43&degDist=net&trk=copro_industryhttp://www.linkedin.com/search?search=&company=Sharekhan&currentCompany=currentCompany&searchLocationType=I&distance=50&countryCode=in&postalCode=110041http://www.linkedin.com/companies/sharekhan#hq-address%23hq-addresshttp://www.linkedin.com/companyDir?searchByInd=&ind=43&degDist=net&trk=copro_industryhttp://www.linkedin.com/search?search=&company=Sharekhan&currentCompany=currentCompany&searchLocationType=I&distance=50&countryCode=in&postalCode=400604


11/65

Analyst

Branch Manager

5%

4%

Top Schools Univ. of Mumbai

Univ. of Pune

Delhi Univ.Inst. of Tech. and

Management

South Gujarat Univ.

15%

6%

6%5%

4%

Median Age 28 yearsGender Male

Female

80%

20%

Table: 1.2

Companies related to Share khan

Parent Company

SSKI

Career path for Sharekhan employees

Before:

A. Anand Rathi...

After:

Religare Motilal Oswal...

ShareKhan.com is an online trading facility founded in 1999-2000 with a

focus on equities, derivatives and commodities brokerage execution on

the National Stock Exchange of India Ltd. (NSE), Bombay Stock

Exchange Ltd. (BSE), National Commodity and Derivatives Exchange

India (NCDEX) and Multi Commodity Exchange of India Ltd. (MCX).

11


12/65

Sharekhan Limited offers online security broking and portfolio services

to institutions and large corporate houses as well as individual investors.

Sharekhan Limited was formerly known as SSKI Investor Services Private

Limited. The company is based in Mumbai, India.

1.3 Problems of Share Khan

Share khan has been strongly committed not only to environmental

conservation programs but also expresses the increasingly inseparable

balance between the economic concerns and the environmental andsocial issues faced by a business. A business must not grow at the

expense of mankind and mans future but rather must serve mankind.

Share Khan has failed to evolve into a widespread internet broking

firm because of its un-focused promotional strategies

(advertisements in electronic media, newspapers, etc) across the

length and breadth of India. Although it is a well known broking

house in some states like Maharashtra, Gujarat, etc. it still lacks

considerable awareness in the northern parts of India where its

competitors have been building their reputation very rapidly.

The other of Share Khan is that they give more attention to HNIs

(high net worth individuals) as compared to retail investors.

Most of the processing and clarifications (account opening,

payments, etc) are routed to the head office in Mumbai due to

lack of decision making powers of local branches which delays

the speedy execution of decision

1.4 Competitors Information

12


13/65

5paisa.com

Company Background

Indiainfoline was founded in 1995 and was positioned as a research firm.

In 2000 e-broking was started under the brand name of 5 paisa.com.

Apart from offering online trading in stock market the company offers

mutual funds online. It also acts as a distributor of various financial

services i.e. GOI securities, Company Fixed Deposits, Insurance. Limited

ground network, present in 20 Cities.

Online Account Types

Investor Terminal: Investors / Students

Trader Terminal: Day Traders / HNIs

PRICING FOR RETAIL CLIENTS

Investor Terminal

Account Opening: Rs 500

Demat 1st Yr: Rs 250

13


14/65

Initial Margin: Rs 2500(Compulsory)

Min Margin Retainable: Rs 1000

Brokerage:

Trading 0.10% each side + ST

Delivery 0.50% each side + ST

PRICING FOR HNI CLIENTS

Trader Terminal


Demat 1st Yr: Rs 250

Initial Margin: Rs 5000(Compulsory)

Min Margin Retainable: Rs 100

Brokerage:

Trading 0.10% each side + ST

Delivery 0.50% each side + ST

(Negotiable to 0.05% each side & 0.25%)

Account Access Charges

Monthly Rs 800, adjustable against Brokerage

Yearly Rs 8000, adjustable against brokerage

Deal Clinchers v/s 5 Paisa

Downtime

14


15/65

Recent past 5 paisa Trader Terminal (T.T) is experiencing high frequency

downtime between 3 3:30 p.m due to server load (as their T.T is

feature heavy compared to Speed trade charting)

Manual Accounting

The 5 paisa accounting system is manual, Online fund transfer through

bank is not credited instantly. Limit is provided EOD for shares sold

from DP, or call similarly limit released for shares sold under BTST is

manual Delay in receiving pay-out of clear funds from trading to Bank

Account

Min Account Balance

Concept of Min Rs 1,000 to be maintained in form of cash / securities to

keep account active. This can be withdrawn only on closure of account.

Kotakstreet

Company Background

15


16/65


17/65

No Flexibility in Leverage Dependent on Type of Account ( 4 to 6 times

only) No flexibility in Brokerage, driven by slab structure

Many Other ChargesRs 22.5 p.m towards DP AMC charges

DP incoming charges extra, 0.02%

Rs 1,000 as retainable Margin to keep account active

Rs 25 per call after 20 calls for the month

INDIABULLS

Company Background

India Bulls is a retail financial services company present in 70 locations

covering 62 cities. It offers a full range of financial services and products

ranging from Equities to Insurance. 450 + Relationship Managers who

act as personal financial advisors

Online Account Type

17


18/65

Signature Account: Plain Vanilla Account with focus on Equity

Analysis. The equity analysis is a paid service even for A/c holders

Power India bulls:Account with sophisticated trading tools, low

commissions and priority access to R.M

Pricing of IB Accounts

Signature Account


Demat: Rs 200 if POA is signed, No AMC for this DP

Initial Margin: NILBrokerage: Negotiable

Power India Bulls


Demat: Rs 200 if POA is signed, No AMC for this DP

Initial Margin: NIL

Brokerage: Negotiable

Deal Clinchers v/s India Bulls

POA for Clients DMAT

All shares held by client trading with IB are moved to IB Pool Account

and the same is shown as a reflection in client DP account. Charges are

levied to move shares from IB pool Account to client DP account

Paid Research Services

18


19/65

Access to a research even for an IB trading account holder is charged a

min of Rs 500 a month

Margin funding hoax

The interest on funding starts on leveraged delivery trades from T+1

day itself @21% p.a, on a daily basis

The role of Relationship Manager

Each RM is looked upon as a revenue generator and he gets a % onbusiness generated from client. This can lead to over leveraged

(Interest) & high frequency (Brokerage) trading, which may not be in the

best interest of the client.

ICICIDirect

Company Background

ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an

affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank

Limited

Account Types

19


20/65

ICICI Direct e-invest Account: Plain Vanilla Account with focus

on 3 in 1 advantage. Differentiated in services within the account

1. Cash on spot2. Margin Plus

Premium trading interface of ICICIDirect Link is given to DBC partners

and HNIs


Schemes: For short periods Rs 750 is refundable against brokerage

generated in a qtr. These schemes are introduced 3-4 times a year.

Demat: NIL, 1st year charges included in Account Opening Plus a

facility to open additional 4 DPs without 1st yr AMC

Initial Margin: Nil

Brokerage: All brokerage is inclusive of stamp duty and exclusive of

other taxes. Slab wise brokerage ranges from 0.75% to 0.25%

depending on volume.

Deal Clinchers v/s ICICIDirect

Poor online Interface

Slow website interface with no real-time quotes creates dissatisfaction

among high frequency traders

Margin trading restriction

20


21/65

The margin trading system is available up to 2:45 p.m, with outstanding

net positions under margin segment automatically squared off at any

time between 2:45 3:30 p.m. Thus no control of square off price.

Morning Trades Issue

Being one of the websites with largest no of after hour orders which are

pushed 1st thing in the morning, creates a choking of orders to the

exchange, causes delay of confirmations for new order placed during the

early morning trades.

Restriction of BTST

The sale of shares purchased is restricted to T+1 day and is not

permitted on T+2 Day.

No leverage for Delivery trades

Delivery is restricted to the total money allocated into the trading

account.

No flexibility on leverage on Intra-day trades

The leverage of 4 times is available for intraday trades.

Restriction of Bank Account

The choice of bank is restricted to ICICI Bank.

Higher Brokerage rates with slabs

21


22/65

The delivery brokerage is pegged at 0.75% and trading at 0.10% each

side, this makes is very unviable for customers dealing in large volumes.

Although progressively the delivery and trading brokerage reduce as

volumes go up.

1.5 S.W.O.T. Analysis of Share Khan

A swot analysis focuses on there internal and external environments.

Examining strengths and weaknesses in the internal environment andopportunities and threats in the external environment

STRENGTHS

Services

As a product share khan is a extremely innovative product with very less

cost services like online trading facility institutional and domesticbroking. Customized research with almost 80% efficiency etc. share

khan an edge over its research provides other support services that

make retail investors more confident and assured with their trading.

SMS alerts (allowing traders and investors to make the most of the

available opportunities). Softer intangible features like amagers, equity

driving preference. Through efficient trading processes investors can

place their orders directly on the internet do all the information seeking

and basically own the investing process.

Distribution network

22


23/65

Sharekhan with almost 250 branches spread across 123 cities beefed up

by comprehensive online research advice and transaction services. In

near future expect to make 200000-retail customers being serviced

through centralized call centre/ web solution. 60 branches semi

branches servicing affluent aggressive through highly skilled financial

advisors. 250 independent advisory roles through fundamental &

technical research and new initiatives are being made in portfolio

management services & commodities trading.

Marketing

Sharekhan is a product of SSKI a veteran equities solutions company

with over decades of experience in the Indian stock markets.

Sharekhan does not claim expertise in too many things. Shraekhans

expertise lies in stocks and that what it talks about with authority. So

when he saves that investing in stocks should not be confused with

trading in stocks or a portfolio-based strategy is better than betting on a

single horse. It is something that is spoken with years of focused and

experience in the stock markets.

Products

Companys product line is quite flexible in the sense that there is a

product for every kind of investors. Also all the products cover all the

products offered by the other competitors like low cost user-friendly

online trading services etc.

WEAKNESS

Localized presence due to insufficient investments for country

wide expansion.

23


24/65

Lack of awareness among customers because of non-aggressive

promotional strategies (print media, newspapers, etc).

Lesser emphasis on customer retention.

Focuses more on HNIs than retail investors which results inmeager market-share as compared to close competitors.

OPPORTUNITIES

The external environment analysis may reveal certain opportunities for

profit and growth.

Ever-increasing market

After the NSE brought the screen based trading system stock markets

are now more secured which has attracted lot of retail investors and the

demand is increasing day by day. This has resulted in improved liquidity

and heavy volumes on transaction. Share khan is one of the early

entrants here. As to how much it will roar swift it can swoop on themarket, the future alone can answer such queries. Sharekhan has been

a mega player and is known for being a mover of stocks. It is also known

for putting big deals through and enjoys good networking with the FIIs. It

has been dynamic enough to move with the times and capture the

opportunities that the market throws up from time to time.

Improving technology

In county like India technology is always improving which gives the

company a chance to keep on improving their product with time

whereas for the small players like local brokers it will be difficult to keep

the same pace as the changing technology. Also with SEBI lying down

24


25/65

some strict guidelines small brokers are finding it harder to retain

customers with no research department and small capital. The

traditional business players may not have systems technology, customer

services etc capable of directly servicing so many retail customers.

Education level

The education level in the country is improving year as far as technology

goes. With that the understanding of the stock market is also increasing

and a lot of retail investors are steeping in the markets which are being

shown by increasing volumes, transactions and indices.

THREATS

Aggressive promotional strategies by close competitors may

hamper Share Khans acceptance by new clients.

Lack of sufficient branch-offices for speedy delivery of services.

Other players are providing margin funds to investors on easy

terms where as there is no such facility in share khan.

More and more players are venturing into this domain which can

further reduce the earnings of Share Khan.

25


26/65

CHAPTER 2

OBJECTIVE AND METHODOLOGY

26


27/65

2.1 SIGNIFICANCE

This project will accomplish to understand the problem faced by the new

client with respect to online share trading and find ways to solve their

queries at microscopic level. The study also aims to highlight the

possible hurdles that a prospective client faces who are interested toinvesting in securities but is unaware of the system of online share

trading. Its also aims at finding out the brand image of the organization

amongst the general investors and give information to the management

about the new developments in the market adopted by the competitors

and the areas where the company needs to improve.

This is a limited study which takes into consideration the various

operations performed by the company. This data can be exported to

take in the trends across the industry. The significance for the industry

lies in studying these trends that emerge from the study. It is a rapidly

changing and evolving sector.

At sharekhan our goal is not only to sell a bike, but also to help you

every step of the way in making our world a better place to live in.

besides its will to provide a high quality service to all of its customer.

Sharekhan takes a stand as a socially responsible enterprise respectful

of its environment and respectful of the important issues.

27


28/65

Sharekhan has been strongly committed not only to environmental

conservation programmes but also expresses the increasingly

inseparable balance between the economic concerns and the

environmental and social issues faced by a business. A business must

not grow at the expense of mankind and mans future but rather must

serve mankind.

The best is yet to come. SHAREKHAN is powering its way through a

market that is still to unleash its true potential, as barely two percent of

the population had been penetrated so far.

2.2 MANAGERIAL USEFULNESS OF THE STUDY

The stock market is one such institution whose very existence has been

challenged by the growth in information technology. It has turned very

idea of a stock market on its head.

Technology has impact the working of stock markets in every sense.

However, useful starting point for this study would be the study of

dematerialization, or demat as it is popularly known as. This is simply

because demat has change the way stocks are held and traded and

therefore has effect on every other function of the market.

Dematerialization in simple terms means the conversion of shares from

physical to electronic form.

Demat, enabled by the use of technology is probably is single most

important factor which has repercussions on every aspect of the stock

markets.

28


29/65


30/65

Demat is instrumental in:

Abolition of market lots

Introduction of rolling settlements

Enhancing liquidity

Brining stamp duty to zero

Reducing chances of bad delivery

Increased lending by banks and other FIs

SEBI extended demat to IPOs during capital reforms in capital marketsin 2002. The premise being elimination of problems due to loss of

allotment letters, share certificates etc., encouraging shareholders to

out of for demat credit allotments, trading compulsorily in demat form

within an option of holding shares in physical form for retail investors.

BSE, the first exchange to be set up in India, started as a floor-based

exchange. However, NSE, setup as an alternative to BSE, was an

electronic (computerized) exchange. With advancements in technology,both these exchanges moved to SBTS (Screen Based Trading System) in

`997.

While NSE introduced NEAT (NSEs Online Trading System) in May 1997,

BSE introduced BOLT (BSEs Online Trading System) in September 1997

in Mumbai.

The outcome has phenomenal with respect to the number of trades

taking place on these two exchanges.

Further, trading in stocks has reached retail investors home via the

Internet in 2003-2004, SEBI proposed Internet based trading under ORS

(Order Routing System)

30


31/65

Trading via Internet was an instant hit, with 18 members being granted

licenses in 2004-2005 and trades touching 767 Cr. During the first six

months itself.

Although security concerns still exist regarding the safety of datatransfer over the Internet, companies like VERISIGN and RSA, who

specialize in security algorithms and data encryption ensure high degree

of authenticity and trust in trades.

Information Flow

Any trading system disseminates data to market constituents, in other

words, information is freely available. This has two disadvantages-

It makes easier for off-exchange transactions to occur because of

availability of information.

It makes off-exchange transactions attractive due to absence of

trading costs.

On the other hand rapid flow of information has also meant increased

volatility in the markets. In financial terms, volatility is:

The degree to which the price of a security, commodity, or market rises

or falls within a short-term period. An obvious reason for market

volatility is technology. This includes more timely information

dissemination, improved technology to make trades and more kinds of

financial instruments. The faster information is disseminated, the

quicker markets can react to both negative and positive news. Improved

trading technology makes it easier to make it easier to take advantage

of arbitrage opportunities, and the resulting price alignment arbitragecauses. Finally, more kinds of financial instruments allow investors more

opportunity to move their money to more kinds of investments positions

when conditions change.

31


32/65

2.3 OBJECTIVE OF THE STUDY

Customer Acquisition through sales of Trading / Demat Accounts in

order to get a deep insight as to how the Organization actually

performs these functions.

Understanding the Commodity and Derivative market and the way

work is performed in these segments.

Investigate the difficulties faced by the existing clients of Share Khan

with respect to its internet trading services

The primary objective of this study is to gain an insight into the

basics of internet trading with respect to Indian capital market.

To ascertain the problems those are hindering the acceptance of

internet trading among the prospective investors.

To conduct Market Research in various parts of the city in order to

get statistical data for commenting on the future of online share

trading in India.

2.4 SCOPE OF THE STUDY

With growing acceptance and popularity of internet trading the

study aims at providing a deeper insight into this new field of

security trading in India.

32


33/65


34/65

collected from such people and the same methodology was

repeated. For each and every customer personal quarries have

been entertained after the sale is done.

Methodology is a way to systematically solve to research problem.it may be understood as a science of studying how research is

done scientifically. In it we study the various steps that are

generally adopted by a researcher in studying his research

problem along with logic behind him. Why research study has

been undertaken, how research problem has been defined, in

what way and why the hypothesis has been formulated, what data

collected and what particular method has been adopted, why

particular technique of analyzing data has been used and a host of

similar other questions are usually answered when we talk of

research methodology concerning a research problem or study.

Research is a process of refining human experience for being

embodied in the stock of knowledge. In course of this refining

operation a researcher has to follow various specific steps. First,

any development in the scientific knowledge is founded on thebasis of previous knowledge in that area of study. Further, a

researchers quest is to adopt a suitable methodology to pursue

his current research endeavor. This enables him to get reliable

results, which are helpful to form some concrete conclusions.

Present research aims to investigate the level of customer

satisfaction amongst different product types of Sharekhan.

Both type i.e. Primary as well as Secondary data are used in this

report.

Questionnaire and Observation as primary data while Research

reports, pamphlets, and sites of Sharekhan group are used for

secondary data.

34


35/65

Present research is descriptive in nature.

Convenient sampling technique is used in this report.

35


36/65

CHAPTER 3CONCEPTUAL DISCUSSION

(THEORITICAL BACKDROP & LITERATUREREVIEW)

3.1 GENERAL INTRODUCTION

The stock trading history in India is obscured in the mists of time.

Historical records, as and where they exist, rarely speak about business

and speculative activity except in passing. However, the origin of stock

broking in the country may go back to a time, when shares, debentures

and bonds representing titles to property were first issued on the

condition of transfer from one person to another and the earliest record

36
http://www.ulearntoday.com/magazine/physics_article1.jsp?FILE=stockglossary#4http://www.ulearntoday.com/magazine/physics_article1.jsp?FILE=stockglossary#4


37/65

of dealings in securities in India is the East India Company's loan

securities, way back in the 18th century.

The first stock exchange in India, Bombay Stock Exchange was

established in 1875 as 'The Native Share and Stockbrokers Association'

and has evolved over the years into its present status as the premier

stock exchange in the country. It may be noted that BSE is the oldest

stock exchange in Asia, even older than the Tokyo Stock Exchange,

which was founded in 1878. The country's second stock exchange was

established in Ahmedabad in 1894, followed by the Calcutta Stock

Exchange (CSE). CSE can also trace its origin back to 19th century. From

a get together under a 'neem tree' way back in the 1830s, the CSE was

formally established in May 1908.

India's other major stock exchange National Stock Exchange (NSE),

promoted by leading financial institutions, was established in April 1993.

Over the years, several stock exchanges have been established in the

major cities of India. There are now 23 recognized stock exchanges

Mumbai (BSE, NSE and OTC), Calcutta, Delhi, Chennai, Ahmedabad,

Bangalore, Bhubhaneswar, Coimbatore, Guwahati, Hyderabad, Jaipur,

Kochi, Kanpur, Ludhiana, Mangalore, Patna, Pune, Rajkot, Vadodara,

Indore and Meerut. Today, most of the global stock exchanges have

become highly efficient, computerized organizations.

Computerized networks also made it possible to connect to each other

and have fostered the growth of an open, globalsecurities market.

Though Stock Broking was practiced in Calcutta as early as 1836, the

members of the broking profession had neither any code of conduct for

their guidance, nor any permanent place for congregation. The centre of

their activity was near a neem tree, where at present, stands the offices

of the Chartered Bank (now known as Standard Chartered) on Netaji

Subhas Road, Calcutta. In 1905, Chartered Bank began to construct their

37
http://www.bseindia.com/about/abintrobse/introd.asphttp://www.tse.or.jp/english/index.shtmlhttp://www.nseindia.com/us/usindex.htmhttp://www.bseindia.com/about/abintrobse/introd.asphttp://www.tse.or.jp/english/index.shtmlhttp://www.nseindia.com/us/usindex.htm


38/65

own building, which led brokers to shift the arena of their operation, to

the neighborhood of the recent Allahabad Bank.

The brokers had no shelter and business was carried on in the open

place. The inconvenience of such trading, prompted brokers to organize

themselves and in May 1908, an association was formed under the

name and style of the Calcutta Stock Exchange Association at 2,

China Bazaar Street.

At the time of incorporation in 1908, the Stock Exchange had 150

members. Today the total membership has risen to more than 900,

which contains several corporate and institutional members. The

number of companies listed on the Exchange is more than 4800. The

Annual turnover of the Exchange in 2004-05 was to the tune of around

Rs, 12, 00,000 crores. The Calcutta Stock Exchange has been granted

permanent recognition by the Central Government with effect from April

14, 1980 under the relevant provisions of the Securities Contracts

(Regulation) Act, 1956, with a view to render useful service to investors.

In December 1993, SEBI directed the stock exchanges to discontinue thetraditional system of carry forward of transactions (badla).

Subsequently, it proposed an alternative system in March 1994, but no

agreement could be reached on implementing this system. In February

1995, SEBI set up the G. S. Patel Committee (GSPC) to review the

system of carry forward transactions. The GSPC submitted its report in

March 1995. SEBI adopted the system recommended by the GSPC with

some modifications in its decisions of July 27, 1995 and October 5, 1995.

DEMAT A\C

38


39/65

Demat a\c is just like a saving a\c. in saving a\c we save our money and

in demat we deal in share market. Demat is dematerialization and

trading in the demat mode. It is safer and faster alternative to the

physical existence of securities.

Demat as a parallel solution offers from delays, thefts, forgeries,

settlement risk and the paper work. This system works through

depository participants (Dps) who offers demat services and the

securities are held in the electronic form for there investor directly by

the depository.

WHAT IS DEPOSITORY

In India, there are two depositories

National securities depository ltd.(NSDL)

Central depository services India ltd.(CDSL)

NSDL

Although India had a vibrant capital market, which is more then a

century old, the paper based settlement of trades caused problems like

bad delivery and delayed transfer of till recently, the enactment of

depositories act in august 1996 paved the way for establishment of

39


40/65


41/65

Central depository services India ltd.(CDSL) is the other depository,

promoted by the stock exchange, Mumbai in association with bank of

India, bank of Baroda, and state bank of India and HDFC bank.

With the depositories in place, there is a need to ensure that an

effective online trading mechanism is available for the retail investors to

transact in the paperless form. Effectively all leading stock exchange

including BSE and NSE have moved towards online trading. Further the

national stock exchange established a view to provide an efficient and

transparent securities market to the investors.

The depositories are required to have adequate controls, system and

procedure to prevent conduct by DPs which is detrimental to the interest

of investors or the securities market. It charged NSDL of not taking

appropriate penal against DPs observed by them during inspections.

NSDLs action has never gone beyond imposition of monetary penalties.

DEMATERIALIZATION

The dematerialization system is an alternative to the physical existenceof securities. In this system securities are converted into electronic form

and deposited in a depository account in the investors name.

41


42/65

In order to dematerialize certificates, an investor will have to first open

an account with a DP and then request for the dematerialization request

form(DRF), which is available with the DP, and submitting the same

along with the physical certificates. The investor has to ensure that

before the certificates are handed over to the DP for demat, they are

defaced by marking surrendered for dematerialization on the face of

the certificates

3.2 TYPES OF PRODUCTS

Products offered by Sharekhan

1- Equity and Derivatives

2- Research

3- Mutual Fund Advisory

4- Portfolio Management Services.

1. EQUITY and DERIVATIVES

42


43/65

Figure3.1

With a Sharekhan online trading account, you can buy and sell

shares instantly. The investors can choose from 2 online trading

accounts that suit their trading habits and preferences the classic

account for most investors and speed trade for active day traders.

The Classic Account also comes with Dial-n-trade completely free,

which is an exclusive service for trading shares by using telephone.

This account enables people to buy and sell shares through

sherkhans website. They get features like:

a) Streaming quotes (using the applet based system)

b) Multiple watch lists

c) Integrated Banking, demat and digital contracts

d) Instant credit and transfer

e) Real-time portfolio tracking with price alerts

and, of course, the assurance of secure transactions.

The Dial-n-Trade service enables one to place orders for buying

and selling shares through telephone by dialing any one of our two

numbers (1-800-22-7050 or 30307600), enter your TPIN

number (which is provided at the time of opening your account)

43


44/65

and on authentication you'll be directed to a telebroker who

will buy and sell shares for you.

2. RESEARCH

To cater to the different needs of each investor sherkhan provides

a comprehensive set of research reports, so that you can make the

right investment decisions regardless of your investing

preferences.

A. SHAREKHAN SHOPS

It has 510 share shops across 170 cities in India. There it provides a

host of trading related services - customer service staff will also help

you with any accounts related queries you may have.

A Sharekhan outlet offers the following services:

Online BSE and NSE executions (through BOLT & NEAT terminals)

Free access to investment advice from Share khans Researchteam

Sharekhan Value Line (a monthly publication with reviews of

recommendations, stocks to watch out for etc)

Daily research reports and market review (High Noon & Eagle Eye)

Pre-market Report (Morning Cuppa)

Daily trading calls based on Technical Analysis

Cool trading products (Daring Derivatives and Market Strategy)

Personalized Advice

Live Market Information

Depository Services: Demat & Remat Transactions

Derivatives Trading (Futures and Options)

44


45/65

Commodities Trading

IPOs & Mutual Funds Distribution

Internet-based Online Trading: Speed

Trade

B.DEMAT

Dematerialization and trading in the demat

mode is the safer and faster alternative to

the physical existence of securities. Demat

as a parallel solution offers freedom from

delays, thefts, forgeries, settlement risks and paper work. This system

works through depository participants (DPs) who offer demat services

and the securities are held in the electronic form for the investor

directly by the Depository.

Sharekhan Depository Services offers dematerialization services to

individual and corporate investors.

3. MUTUAL FUNDS

Share khans clients will now also be able to invest in Mutual fundsthrough them. They have already started this service for a few mutual

funds, and in the near future will be expanding our scope to include a

whole lot more. Applying for a mutual fund through us is open to

everybody, regardless of whether you are a Sharekhan customer.

45


46/65

To invest in a fund, all you have to do is download the application form,

print it out, fill it in and send it over to them.

3. PMS

This is a product which allows the customer to be completely hands off

as all the equity decisions of the customer are taken y the professionals

appointed by the firm.

The product is classified into three categories-:

ProTech

ProPrime

ProArbiterage

ProTech

Product Offerings

Nifty Thrifty:

Nifty futures are bought and

sold and the exposure does not

exceed the value of the

portfolio. The advantage is that

Nifty allows making profits

even in falling markets

Beta Portfolio :

Here 80% of the portfolio is traded in

delivery (cash

market) and the rest 20% in the Future and Option segment (e.g. Buying

46


47/65

calls /put etc.)This results in a higher and safer return as risk is

undertaken only on the 29% of the portfolio

ProPrime

Product Offerings

The Aggressive Scheme:

Ideal for investors looking at higher returns and are ready to

take higher risks.

The portfolio consists of the following stocks:

Expected growth in profitability

Relatively low valuations

Mid to smallcap companies

The Balanced Scheme:

Ideal for investors looking at steady returns with low risk

appetite consists of a blend of consistent a blue chip stocks

ensuring a balanced growth.

ProArbiterage

It spots risk free opportunities which offer higher return than other risk

free instruments available in the market. On spotting the opportunity

the stock is bought and the future is sold so as to lock in the spread. In

this way the scheme moves from one opportunity to another.

ACCOUNT OPENING

Their demat and trading a/c opening charges (combined) are Rs 950/-

and it as mandatory to open both the accounts there i.e. you cannot

47


48/65


49/65

2. Speed trade terminal- Speedtrade is a powerful trading

and research platform that has live streaming quotes,

trading calls, advanced charting, market news and a single

trading screen for BSE & NSE. It is not provide to all the

clients. Only those clients are eligible for it that can

generate a quarterly brokerage of Rs.1500. Otherwise, they

are bound to pay the penalty of the remainder.

Comparatively it has got more and advanced features, e.g.:

one can see more number of scripts at a time on the screen.

Dial-n-trade (calling the dealers on phone and getting the trade

done through them)

R.M. FACILITY

Relation managers are the people who provide their clients with the

regular tips for trading in equity market and thereby assist them in

getting the maximum returns.

In sherkhan, relationship managers are not provided to all the clients.

This facility is only made available to those clients whos portfolio is

above Rs. 2, 00,000/-.

TECHNICAL REPORTS

Their clients receive 4 mails per day informing them about the most

probable share market movements for that day.

49


50/65

Their Technical Trading calls based on the Brave heart Strategy has

consistently given a strike rate of 87% on calls with a 1-2 months of

price target and 95% for calls based on 3-6 months target.

INTERACTION WITH CLIENTS

The clients are provided with two numbers through which they can

interact with the company, one is a local number (call rates applicable)

and another is a MTNL/BSNL number (no charges). If the clients want to

avail the sms facility they have to pay Rs. 100 extra per month for it.

AWARDS AND RECOGNITION

Sharekhan has been voted as Indias most preferred broking house by

CNBC, a testimony of customers confidence in it.

Its research team by the name of cool gurus has been quoted by

Economic Times for getting the highest returns.

BANK TIE-UPS

Sharekhan has tie-ups with 10 banks. Few of them are:

ICICI

HDFC

UTI

OBC

AXIS

YES

3.3 SHAREKHAN SERVICES

50


51/65

Dial-n-trade

Along with enabling access for your trade online, the classic and

Speedtrade account also gives you our dial-n-trade services. With this

service, all you have to do is dial our dedicated phone lines 1-800-22-

7500 and 39707500.

DNT-Toll free features

Dedicated toll free number for order placements.

Automatic fund transfer with phone banking (only with

Citibank).

Simple and secure IVR based system fro authentication.

No wait time. On entry of phone id and TPIN, the call istransferred.

Trusted, professional advice of Tal-brokers, who offer r

undiluted sharekhan research inputs.

IPN ON-Line

Can apply the entire following IPO online for free.

Research tips: Company provide 4-6 e-mails to therecustomers per day.

Pre Market:pre-market report covering views, events andmore.

51


52/65

Daring derivatives:covers futures and option commentaryand trading calls.

High Noon:is aimed at traders, this technical daily newsletter

carries punters calls and smart chart. It is released at noon to be

acted upon during the course of the day.

Post-Market report: updates you day happening.

Eagle Eye: is aimed at traders, this technical daily newsletter

carries punters calls, hit list and smart chart. Its released at the

end of the day to be acted on following day.

Investor eye: is aimed at investors, this fundamental dailynewsletter carries most important news report, research update

on our stock idea and other fundamental reports.

Stock ideas: aimed at investors and it presents our best stock

picks in todays market.

52


53/65

CHAPTER 4

DATA ANALYSIS

53


54/65

Analysis

On the basis of the primary data collected through questionnaires &

personal interviews conducted with companies employees and clients

analysis was done and following are the question wise results:Types of Investors

54

Religare Securities Ltd.

0%

10%

20%

30%

40%

25L

acs

Investment

P

ercentage

ofInvestors

Investment

India Bulls Financial S ervices L

0%5%

10%15%

20%25%

30%35%

25La

cs

Investmen

P

ercentage

ofInvetsors

Investment

Reliance Mone

0%

10%

20%

30%

40%

25Lac

s

Investment

Percentage

of

Invetors

Investment

Sharekhan

0%

10%

20%

30%

40%

25Lac

s

Investment

Percentage

of

Invetsors

Investment

Icici Direct

0%

10%

20%

30%

40%

25La

cs

Investment

Perce

ntage

ofInvetors

Investment

Figure: 4.1


55/65

Small investors prefer to invest in the stock market through Religare

Securities Ltd., India Bulls Financial Services Ltd. & ICICI Direct.com.

Reliance Money is being preferred more by medium investors.

Sharekhan is suitable for big investors.

Medium of Trade

55

Religare Secur ities Ltd.

0%

20%

40%

60%

80%

online offline

Medium of Trade

Percentage

of

investors

Medium of Trade

Sharekhan

0%

20%

40%

60%

80%

online offline

Medium of trade

Percentage

of

investors

Medium of trade

Indiabulls Finacial Services Ltd.

0%

20%

40%

60%

80%

online offline

Medium of Trade

Percentage

of

Investors

Medium of trade

ICIC Direct

0%

20%

40%

60%

80%

100%

online offline

Medium of trade

Percentage

of

Investors

Medium of Trade

Medium of trade

0%

50%

100%

150%

online of fline

Me dium of trade

Percentage

of

investors

Medium of trade

Figure: 4.2


56/65

It has been observed that traders inclination towards online trading is

increasing. Investors who opt for online trading are more in Religare and

Indiabulls as their software terminal is very effective. Offline traders are

more in Sharekhan and ICICI Direct.com as their terminal is very

expensive as well as inaccurate. RelianceMoney offers only internet

based trading.

Technical Reports

56

Religare Securities Ltd.

Yes

66%

No

34%Yes

No

Indiabulls Financial Services Ltd.

Yes

55%

No

45%Yes

No

Sharekhan

Yes

95%

No

5%

Yes

No

Reliancemone

Yes

35%

No

65%

Yes

No

ICICI Direct

Yes

97%

No

3%

Yes

No

Figure: 4.3


57/65

Religare send market tips through E-mails to the clients. Moreover

Relationship Manager also keeps on giving market tips to their

respective clients. Indiabulls provide market tips through e-mails and

sometimes through sms. Both these companies are irregular in sending

technical reports to their clients. On the other hand, Sharekhan and ICICI

Direct.com are very regular in sending technical reports to their clients.

Share khan send 4 reports through mails which include premarket report

before 9:55, post market report, afternoon report and evening report.

ICICI Direct.com sends their market tips through e-mails only.

91% of the respondents says that Sharekhan is number one in themarket.

The common reasons behind this arte as follows:

Good returns

Advisory

Customized services

Only 9% of the respondents find that Sharekhan is not number one in

the market.

But the reasons of this thing was not even clear to the respondents as

they fill they need more customized services and more returns out of

their investment.

So at last here I would like to recommend that if Sharekhan gives more

emphasis on customized services then more and more customers get

satisfied.

57


58/65

CHAPTER 5- FINDINGS AND RECOMMENDATION S

58

Preference of Investment

Only Shares-- 75 %

Mutual Funds-- 16%

Bonds--7%

Derivatives--2%

Figure: 5.1


59/65

Interpretation: This shows that although the mutual funds market is on

the rise yet, the most favored investment continues to be in the Share

Market. So, with a more transparent system, investment in the Stock

Market can definitely be increased.

Interpretation: With the increase in cyber education, the awareness

towards online share trading has increased by leaps and bounds. This

awareness is expected to increase further with the increase in Internet

education.

Overall Satisfaction

Customers are satisfied with the services which are being provided to

Religare. Indiabulls, ICICI Direct.com and Reliance money have satisfied

their clients to some extent only. Customers are not satisfied with Share

khans performance.Sharekhan provide effective service only to the big

investors. Small investors are not given due importance and attention.

Activeness of Grievance cell

Religare clients find grievance cell of the company active to some

extents only. Indiabulls is highly ineffective in redressing customer

59

Awareness of online share trading

Yes -- 91%

No-- 9%

Figure: 5


60/65

grievances. Share khans grievance cell is not effective and customers

receive very indifferent responses. ICICI Direct.com and Reliance money

are particular in redressing their customers grievances.

After having an experience of two months in sales of demat account I

would like to suggest the following things:

Company has an advantage of reach tips for which sharekhan is

known for, the customer who are new they need relationship

managers who will tell them about investment so it should be

provided to all the customer on demand this will lead to customer

satisfaction and will hip to have more references from the satisfied

customer.

The company also have the advantage of brokerage charges it

need some revision so that the customer who are locking for the

less brokerage can open there account in our company taking into

consideration the different proposal. It can reduce for a HNI client.

The company has shown the growth trend and it has reached at

no.2 it can move to no.1 because it has an advantage of its

services. As sharekhan is already tie-up with 10 banks for online

fund transfer that reduces the paper work for customer and ease

in trading.

The company should revise the advertising strategy to increase its

brand awareness. I suggest making advertisement on television so

that maximum market can be targeted.

60


61/65

Company should focus on customer satisfaction at every levels of

the account procedure.

Brokerage can be reduced with the attractive proposal with

HNI.

Relationship manager should be given on the customer

demand.

Company should use the tool of advertising for marketing

the brand and the product.

Reduction in brokerage would attract the customer of

indiabulls, 5paisa and other competitors having less

brokerage then us.It would increase the market share or

client acquisition.

The account opening time should be reduced to maximum

5days because customer losses the opportunity of

investments.

The company shows the positive trend in growth but it can

be increased more if it focuses on building the brand equity

61


62/65

Conclusion

Talking about Sharekhan it is one of the most well known players in

this segment and boasts is of high clientele because of its good andregular research tips, tie-ups with almost all major banks (10 banks to

be precise) as well as competent Relationship Managers. But the only

stain on its name because of the fact that it doesnt care much for its

small customers who are not even provided an R.M. Also their terminal

charges are also quiet high as compared to that of its competitors.

While there are many factors that need to be understood, one simple

fact is worthy of note. The average age of the Indian Internet user as

cited by a recent IDC survey is 27 years. The average age of the head

(and financial decision taker) of the Indian equity-investor household, as

revealed by the SEBI-NCAER study of Indian investors in 2000 is 45

years. The older, experienced equity investor is not online today and the

fact that older, mature investors are not tech-positive and hence

unlikely to move to online trading is a major barrier to the growth of e-

broking in India.

Here, the numbers of banks with a strong online presence are very few -

again, dominated by new private banks and foreign banks. Both have

lesser reach owing to a smaller network in the country. The relative

inability of large public-sector banks to offer-facilities for Internet

banking is a barrier in this regard. Besides, Internet penetration in India

is still very low and concerns about security also tend to predominate. In

markets like the US, online brokerages are advertised very heavily.

Online trading in India has so far not seen similar levels of aggressive

advertising, with the exception of ICICI Direct and India bulls. Besides,

only scripts that have been compulsorily dematerialized can be traded

on the net here.

62


63/65

ANNEXURES

QUESTIONNAIRE

Name: ..... Occupation:

Phone: .....

(1) Do you invest in stock market?

Yes No

(2) You are a client of which is a brokerage house.

(3) What is your Experience in the market?

Less than a year 1-4 year More than 4 years

(4) What is your Trading Preference?

Speculation Investment Both

(5) What is your Average investment period? Less than 3 months. 3 to 9 months.

9 months to 2 year. More than 2 year.

(6) Factors influencing the investment decisions?

Advice from Broker Current news

Reviews in Financial Magazines Advice from Friends

Self Evaluation Others___________

(7) How much Risk are you willing to take?

High Low Moderate

63


64/65


65/65

BIBLIOGRAPHYBooks and Newspapers:

The Economic Times, Business Standard, Business line

Securities Market (Basic) Module :--NCFM

Economic Times.

Training Kit Provided by the Sharekhan.

Indian financial system by M.Y KHAN

NSDL Depository operations module :--NCFM

URLs:

www.indiainfoline.com

www.economics times.com

http://www.investopedia.com/articles/

www. nse-india.com www.bseindia.com

www.moneycontrol.com

www.sharekhan .com
http://www.economics/http://www.investopedia.com/articles/http://www.bseindia.com/http://www.moneycontrol.com/http://www.economics/http://www.investopedia.com/articles/http://www.bseindia.com/http://www.moneycontrol.com/

Documents

Summer Training Project Report-rishika