Capital Market
Capital Market
Capital Market
ON
“A Study on Capital Market with Special
Reference to Sharekhan Ltd.”
Submitted in partial fulfillment of
MASTER OF BUSINESS ADMINISTRATION (MBA)
Conducted by
DR APJ AK TECHNICAL UNIVERSITY, LUCKNOW
Under the guidance of Under the guidance of
(Prathana Sahi) (Faculty supervisor’s name)
Faculty supervisor’s designation
Submitted By
Renu Bisht
MBA III Semester
Enrolment No.1674870020
SESSION- 2017-18
Any fruitful work is in complete without a word of thanks to those involved directly
like to thanks my HOD for their support of Ansal Technical Campus, Lucknow for
their blessings which always gave me courage to face all challenges and made my
path easier.
Their insight as well as guidance helped me understand the essentials of the report I
would like to thanks for their support college Guide of Ansal for their immense help
and guidance that they have provided during the research report .The present work has
taken its sharp largely to their wise counsels, concrete and constructive suggestions.
Renu Bisht
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TABLE OF CONTENT
Title Page
Faculty Certificate
Acknowledgement
Executive Summary
1. Introduction 1
2. Company Profile 25
3. Conceptual Discussion 59
4. Research Methodology 66
Research Objectives 67
Research Design 68
Data Sources 68
Questionnaire 68
Sample Design 68
11. Recommendations 91
13. Bibliography/Reference 95
14. Annexure 97
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CHAPTER 1
INTRODUCTION
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INTRODUCTION
Capital markets are markets where people, companies, and governments with more
funds than they need (because they save some of their income) transfer those funds to
people, companies, or governments who have a shortage of funds (because they spend
more than their income). Stock and bond markets are two major capital markets. Capital
markets promote economic efficiency by channelling money from those who do not
Capital markets carry out the desirable economic function of directing capital to
productive uses. The savers (governments, businesses, and people who save some
portion of their income) invest their money in capital markets like stocks and bonds. The
borrowers (governments, businesses, and people who spend more than their income)
borrow the savers' investments that have been entrusted to the capital markets.
For example, suppose A and B make Rs. 50,000 in one year, but they only spend
Rs.40,000 that year. They can invest the 10,000 - their savings - in a mutual fund
investing in stocks and bonds all over the world. They know that making such an
investment is riskier than keeping the 10,000 at home or in a savings account. But they
hope that over the long-term the investment will yield greater returns than cash holdings
or interest on a savings account. The borrowers in this example are the companies that
issued the stocks or bonds that are part of the mutual fund portfolio. Because the
companies have spending needs that exceeds their income, they finance their spending
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The Structure of Capital Markets
Primary markets:
The primary market is where new securities (stocks and bonds are the most common)
are issued. The corporation or government agency that needs funds (the borrower) issues
securities to purchasers in the primary market. Big investment banks assist in this
issuing process. The banks underwrite the securities. That is, they guarantee a minimum
price for a business's securities and sell them to the public. Since the primary market is
limited to issuing new securities only, it is of lesser importance than the secondary
market.
Secondary market:
The vast majority of capital transactions, take place in the secondary market. The
secondary market includes stock exchanges (like the New York Stock Exchange and the
Tokyo Nikkei), bond markets, and futures and options markets, among others. All of
Securities:
government entity).
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Equity securities:
Stock is the type of equity security with which most people are familiar. When investors
(savers) buy stock, they become owners of a "share" of a company's assets and earnings.
If a company is successful, the price that investors are willing to pay for its stock will
often rise and shareholders who bought stock at a lower price then stand to make a
profit. If a company does not do well, however, its stock may decrease in value and
shareholders can lose money. Stock prices are also subject to both general economic and
industry-specific market factors. In our example, if Carlos and Anna put their money in
stocks, they are buying equity in the company that issued the stock. Conversely, the
company can issue stock to obtain extra funds. It must then share its cash flows with the
Debt securities:
Savers who purchase debt instruments are creditors. Creditors, or debt holders, receive
future income or assets in return for their investment. The most common example of a
debt instrument is a bond. When investors buy bonds, they are lending the issuers of the
bonds their money. In return, they will receive interest payments (usually at a fixed rate)
for the life of the bond and receive the principal when the bond expires. National
governments, local governments, water districts, global, national, and local companies,
promote economic growth. Thus, foreign savings, which many people simply call
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In Indian context:
The international capital market as it has been evolving provides an opportunity for
developing countries like India to attract the required capital inflow for accelerating their
pace of development, manage their foreign exchange assets and liabilities to their
advantage and develop export capabilities in the field of financial services. Active
participation in this market would not only improve their access to the market but also
indicate the institutional and policy framework essential for developing effective and
enhanced if the developing countries like India take a constructive stand with regard to
the multilateral negotiations in respect of trade in services under the Uruguay Round.
Recent situation
Recent financial problems in emerging economies have led to calls for a new
1. Inflation concerns are increasingly taking hold of the international capital markets;
there are fears of a repetition of the 1970s, when industrialized countries endured
2. Higher energy and food prices, rising wages in emerging markets and the weak US
3. In emerging markets like India inflation is being driven above all by rising food
prices.
4. In recent months oil has breached the 130 US dollar per barrel mark, and thus been a
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countries, and low levels of investment and political problems could tighten the supply
situation still further, countering any efforts to improve energy efficiency and further
develop alternative energy sources. Production will not be able to keep pace with
growing demand, especially from Asia. So the oil price is likely to remain high and
5. Still it is believed that there may not be a recession in the USA, but a there may not be
a quick recovery either. In the Euro zone we are likely to see a cooling-off of the
economy in 2008 and 2009. Emerging markets should be able to decouple further from
In the above conditions, International capital flows should not be restricted; they benefit
entrepreneurs and savers alike, with lower borrowing costs and greater returns. The
international investment denies a country those benefits; the result is slower growth and
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Importance of capital market:
1. The capital market serves as an important source for the productive use of
economy’s savings. It mobilizes the saving of the people for further investment and
enhances the economic welfare of the society. Thus it facilitates “the movement of
stream of command over capital to the point of highest yield” towards those who can
apply them productively and profitably to enhance the national income in the
aggregate.
growth. They give quantitative and qualitative directions to the flow of funds and
Thus, a capital market serves as an important link between those who save and those
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CAPITAL MARKET IN INDIA: -
Coming to Indian context, the term capital market refers to only stock markets as per the
common man's ideology, but the capital markets have a much broader sense. Where as
4. Stock market
India has made its presence felt in the IFMs only after 1991-92. At present there are over
50 companies in India, which have accessed the GDR route for raising finance. The
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Reliance was the first Indian company to issue GDR in 1992. Since 1993, number of
Indian companies successfully tapped the global capital markets & raised capital
through GDR or foreign currency bond issues. Though there was a temporary setback
due to Asian crisis in 1997. Since 1999 even IT majors have stepped the bandwagon of
international markets & raised capital. The average size of the issue was around 75USD.
And the total amount raised was around USD 6.5billion. India has the distinction of
The responsibilities of a lead manager include undertaking due diligence & preparing
the offered document , marketing the issues , arrangement & conducting road shows.
Underwriters:
The lead manager & co managers act as underwriters to the issue , taking on the risk of
interest rates /markets moving against them before they have placed bonds/DRs. Lead
Managers may also invite additional investment banks to act as sub-underwriters , thus
These intermediaries are involved in the issue of bonds/convertibles. The issuer of bonds
convertible in association with the lead manager must appoint ‘paying agents’ in
different fifnacial centers, who will arrange for the payment of interest & principal due
to investor under the terms of the issue. These paying agents will be banks.
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Lawyers & Auditors:
The lead manager will appoint a prominenet firm of solicitors to draw up documentation
evidencing the bond/DRs issue. The various draft documents will vetted by the
solicictors acting for the issuer. Many of these documents are prepared in standard forms
with a careful review to the satisfaction of the parties. The legal advisors will advise the
Similarly, Auditors are required for preparation of the financial statements, cash flows,
and audit reports. The Auditors provide a comfort letter to the lead manager on the
financial health of the company. They also prepare the financial statement as per GAAP
The listing Agent helps facilitate the documentation & listing process for listing on stock
exchange & keep file information regarding the issuer such as Annual reports,
issuers application for listing of bonds/GDRs & provides comments on offering circular
Depository Bank:
It is involved only in the issue of GDRs. It is responsible for issuing the actual GDRs
,disseminating information from the issuer to the DR holders, paying any dividends or
other distributions & facilitating the exchange of GDRs into underlying shares when
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Custodian:
The Custodian holds the shares underlying the GDRs on behalf of the depository &is
responsible for collecting rupee dividends on the underlying shares & repatriation of the
Sources of Capital
1. Private sources
2. Public sources
Both sources are very important to the economies of the world. Capital flows result
when funds are transferred across borders; the flows are recorded in the balance of
payments account. Read on for definitions, examples, and trends in capital flows.
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a. Foreign Direct Investment (FDI):
Foreign direct investment is capital invested by corporations in countries other than their
places of domicile (their home countries). Direct investment is not nearly as liquid as
portfolio investment and is therefore less volatile. The normal requirement to qualify as
foreign direct investment is for the foreign firm to own at least ten percent of voting
stock.
venture (50-50) in Mexico with a Mexican company. The Japanese company has a long-
term investment in the assets of the joint venture and not merely a passive investment
like portfolio investors, who can remove their money from a country almost
instantaneously.
FDI or Foreign Direct Investment is any form of investment that earns interest in
enterprises which function outside of the domestic territory of the investor. FDIs require
a business relationship between a parent company and its foreign subsidiary. Foreign
be regarded as an FDI, the parent firm needs to have at least 10% of the ordinary shares
of its foreign affiliates. The investing firm may also qualify for an FDI if it owns voting
1. Outward FDIs
2. Inward FDIs.
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This classification is based on the types of restrictions imposed, and the various
risks. This form of FDI is subject to tax incentives as well as disincentives of various
forms. Risk coverage provided to the domestic industries and subsidies granted to the
local firms stand in the way of outward FDIs, which are also known as “direct
investments abroad.”
Different economic factors encourage inward FDIs. These include interest loans, tax
breaks, grants, subsidies, and the removal of restrictions and limitations. Factors
Other categorizations of FDI exist as well. Vertical Foreign Direct Investment takes
place when a multinational corporation owns some shares of a foreign enterprise, which
Foreign Direct Investment is guided by different motives. FDIs that are undertaken to
strengthen the existing market structure or explore the opportunities of new markets can
operational efficiency than those available in the home country of the investor.
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Some foreign direct investments involve the transfer of strategic assets. FDI activities
may also be carried out to ensure optimization of available opportunities and economies
Benefits of FDIs:
One of the advantages of foreign direct investment is that it helps in the economic
This is especially applicable for the economically developing countries. During the
decade of the 90s foreign direct investment was one of the major external sources of
financing for most of the countries that were growing from an economic perspective.
It was observed during the financial problems of 1997-98 that the amount of foreign
direct investment made in these countries was pretty steady. The other forms of cash
inflows in a country like debt flows and portfolio equity had suffered major setbacks.
Foreign direct investment also permits the transfer of technologies. This is done
basically in the way of provision of capital inputs. It also assists in the promotion of
The countries that get foreign direct investment from another country can also
develop the human capital resources by getting their employees to receive training
Foreign direct investment helps in the creation of new jobs in a particular country. It
also helps in increasing the salaries of the workers. This enables them to get access
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Foreign direct investment assists in increasing the income that is generated through
revenues realized through taxation. It also plays a crucial role in the context of rise in
It also opens up the export window that allows these countries the opportunity to
cash in on their superior technological resources. It has been possible for the
It becomes easier for the business entities to borrow finance at lesser rates of
interest. The biggest beneficiaries of these facilities are the small and medium-sized
business enterprises.
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Disadvantages of Foreign Direct Investment
related to operation, distribution of the profits made on the investment and the
personnel. The situations in countries like Ireland, Singapore, Chile and China
It is normally the responsibility of the host country to limit the extent of impact
that may be made by the foreign direct investment. They should be making sure
that the entities that are making the foreign direct investment in their country
adhere to the environmental, governance and social regulations that have been laid
The various disadvantages of foreign direct investment are understood where the
host country has some sort of national secret – something that is not meant to be
At times it has been observed that certain foreign policies are adopted that are not
Foreign direct investment may entail high travel and communications expenses.
The differences of language and culture could also pose problems in case of
chance that a company may lose out on its ownership to an overseas company.
At times it has been observed that the governments of the host country are facing
problems with foreign direct investment. It has less control over the functioning of
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the company that is functioning as the wholly owned subsidiary of an overseas
company.
This leads to serious issues. The investor does not have to be completely obedient
to the economic policies of the country where they have invested the money. At
times there have been adverse effects of foreign direct investment on the balance
of payments of a country.
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Foreign Institutional Investors (FII) :
FII means an entity established or incorporated outside India which proposes to make
investment in India.
In countries like India, statutory agencies like SEBI have prescribed norms to register
FIIs and also to regulate such investments flowing in through FIIs. FEMA norms
1. Pension Funds
2. Mutual Funds
3. Insurance Companies
4. Investment Trusts
5. Banks
6. University Funds
7. Endowments
8. Foundations
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CHAPTER 2
COMPANY PROFILE
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COMPANY PROFILE
Sharekhan is stock broking company. Share Khan comes under retail arm of SSKI
(Shripal Sevantilal Kantilal Ishwarlal ) investors Services Pvt. Ltd. offers World-class
facilities for buying and selling Shares on BSE and NSE, Demate
Corporate Finance. Sharekhan does not claim expertise in too many things.
Sharekhan's expertise lies in stocks and that's what he talks about with authority. So
when he says that investing in stocks should not be confused with trading in stocks or a
spoken with years of focused learning and experience in the stock markets. And these
Those of you who feel comfortable dealing with a human being and would rather visit a
brick-and-mortar outlet than talk to a PC, you'd be glad to know that Sharekhan offers
you the facility to visit (or talk to) any of our share shops across the country. In fact
Sharekhan runs India's largest chain of share shops with over hundred outlets in more
than 80 cities! What's a share shop? How do you locate a share shop in your city?
Sharekhan is 80 years old company which is started online in the year 2000 & it is the
first company who started online in 1984 they ventured into institutional broking&
corporate finance. They having 14 branches, 400 franchises also having 466 shops in
210 cities. In Rajkot branch daily dealing Rs.16 crore & 400 crore daily dealing all over
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VISION
To empower the investor with quality advice and superior service to help him take better
MISSION
To provide the best customer service and product innovation tuned to diverse
needs of clientele
values.
CORE VALUE
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About Sharekhan
SSKI named its online division as SHARE KHAN and it is into retail Broking
provider
It has specialized research product for the small investors and day traders
Largest chain of share shops, 103 Franchisees & 17 Branches across India.
www.sharekhan.com
It offers its customers with the trade execution facilities on the NSE, for cash as
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Ensures convenience in trading experience:
Share Khan’s trading services are designed to offer an easy, hassle free trading
on his investing style and frequency. and offers a suite of products and services,
It gives advice based on extensive research to its customers and provides them
with relevant and updated information to help him make informed about his
investment decisions.
It helps the customer meet his pay-in obligations on time thereby reducing the
accepting late instructions without any extra charge. And execute the instruction
immediately on receiving it and thereafter the customer can view his updated
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SEVEN P’S OF SHAREKHAN
PRODUCT
Product Variety
Share khan offers 3 types of online trading accounts for its customers specially designed
Speed Trade: for high net worth investors with large and active equity
Speed trade Plus- for high net worth investors dealing in derivative market.
Quality
Design
The website of Share khan namely www.sharekhan.com has been specially designed to
facilitate its users to buy and sell shares in an instant at anytime and from anywhere they
like. The site is user friendly allowing even a layman to easily operate without any
hassles.
Features:
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Hot keys similar to Brokers Terminal.
Competitive Brokerage.
Market depth, i.e. Best 5 bids and offers, updated live for all scripts
Last but not the least, ideas that help you to make money!!!
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Brand Name
The company as a whole in its offline business has named itself as SSKI Securities Pvt.
Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. Ltd. The company has
But in its online division started since 1997, the company preferred to name itself as
“SHARE KHAN”. The Brand Name “SHARE KHAN” itself suggests the business in
which
the company is dealing so that the consumer could easily identify the product or service
category.
Services
Share khan offers its customers, depository services and trade execution facilities for
decades of broking experience. The teams of its dedicated analysts are constantly at
Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading
in shares via the telephone. On dialing the toll free number 1600-22-7050 and on
entering the customers TPIN number, the customer will be directed to a telebroker who
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PRICE
List Price
PLUS
One time 750 1000 1500
registration fee
Minimum brokerage Nil 1000 1500
Charges –Quarterly
Brokerage
- In equity Market:
- In Derivative Market
Service Tax
-8% on Brokerage.
Custody Charge
Discounts
For investors with High Net worth, there are slabs in brokerage rates.
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Payment Period
The transaction settlement date in the securities market is T+ 2 days i.e. the
payment of the transaction taken place has to be made within two days of its
occurrence.
Credit terms
Share khan allows its customers to trade up to 4 times i.e. by keeping 1/4th
PROMOTION
Online share trading is totally a new concept in Indian Market. Generally investor
doesn’t like to come out from conventional way of share trading. Share khan has
introduced this product in. The concept and Product are still new in the market.
awareness about the product. Share khan adopts the following tools for promoting the
product
Advertising
Company advertises its product through TV media on channels like CNBC, Print
brochures as well as posters are used giving full details about the product.
rediff.com.
Also, stalls are opened up now and then at places where prospective customers
can be approached.
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Sales Promotion
The Company offers Rs.500 instead of Rs.750 for corporate accounts (more than
20 accounts).
Also, it provides online trading accounts for just Rs.300 for IIM students.
Sales Force
The Company has an aggressive sales force, which is given incentives, based on
Seminar
The Company also arranges seminar in corporate world for creating awareness
about the product. Recently, it had organized for a seminar in ONGC, IIM.
Direct Marketing
Company emphasizes more on direct marketing, as many people are still not
aware of this new way of smart trading. For this, the company recruits and trains
related to the product. This is the most effective way to communicate the three-
Telemarketing
This is another promotional tool company is using to boost up its sales. For this,
professional segments.
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PLACE
Channels
Share khan uses various channel alternatives to reach to its customers through
Internet
Tele Marketing
Franchisee Owners
Power Brokers
Sales Force
Coverage
Locations
Share khan has the largest chain of retail share shops in India. It has 180 share
shops located in 90 cities all over India like Pune, Thane, Chennai, Kolkata,
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PEOPLE
Employees
are provided.
Research Team
Share khan has a team of dedicated analysts who have years of working
experience in the industries that they track, and a proven track record in using
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Customers,
The heart of sharekhan are really treated loyally like the kings. The customer
care, which comprises of highly trained executives operating from 9:30 to 8:00
p.m.
PHYSICAL EVIDENCE
In Ahmedabad, two franchise outlets are located in posh areas like Navrangpura
Office Environment:
The ambience within the office is what can make the customer feel comfortable
in trading. The cordial and friendly atmosphere at office is like a full time
The office is well furnished and has 24 computer terminals on which tick-by-tick
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PROCESS
In this service organization, the ways in which the customers receive delivery of
the service constitutes the process. Here, the process involves adding ‘value’ or
‘utility’ so that the customers get full satisfaction for the money spent by them.
Here the process begins from the step when customer wants to open e-invest
All Indian residents and NRI are eligible to avail this service.
form.
3. Agreement between the Depository Participant and the client for providing the
5. Agreement between the DP and the person seeking to open an account with the
DP.
7. Agreement giving the right of lien on the credit balance of client in NSE trading.
8. Agreement giving the right of lien on the credit balance of client in BSE trading.
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SEVEN ‘S’ MODEL
Structure
Strategy Systems
Super ordinate
Goals goals
Skills Style
Staff
STRUCTURE:
cope up with specific strategic tasks without any hassles. If need arises, the
top management can assign the role to any of its employees which it
STRATEGY:
Share khan believes not only in developing the strategies but also in its
successful execution.
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SYSTEMS:
STYLE:
Style refers to all the symbolic actions undertaken by top managers of Share
STAFF:
Share khan values its employees as its assets and therefore carefully trains
employees are assigned as mentors and given real responsibility and moved
SKILLS:
The term skills refer to those activities organizations do best and for which
they are known. Share khan is known for its timely advice (suggestions/tips),
booking recommendations.
SUPERORDINATE GOALS:
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SHAREKHAN’S STOCK CLUSTER
We categorize all the scrip’s that are under coverage into six clusters. Each cluster
returns you can expect over a certain time horizons and return objectives best.
Evergreen
Applegreen
Potentially steady compounders, but five to ten years graph bit unclear.
Could gallop at 25-30 per year over the next two to three years.
Emerging Star
Young companies likely to rule chosen niches. Even better, the niches
patient.
Ugly Duckling
Vulture’s Pick
Cannonball
30-50% within six months. Get in, cash in, get out.
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Publications of sharekhan
Sharekhan’s Valueline
Derivatives Digest
Eagle Eye
High Noon
Investor’s Eye
Commodities Buzz
Commodities Beat
Sharekhan Xclusive
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PRODUCTS OF THE SHAREKHAN COMPANY
ShareKhan’s product
Other Services:
1. Dial-n-Trade
2. Depository Services
3. Commodity Trading
4. Derivative Trading
5. Mutual fund
7. Online IPO
Offline A/c is the A/c for the investors who are not familiar with the use of
computer.
For 1st Year Demat A/C is Free,On 2nd Year AMC charge is applicable.
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ONLINE
For 1st Year Demat A/C is Free,On 2nd Year AMC charge is applicable.
Type with 7 banks through which one can transfer or withdraw his fund
1. HDFC Bank
2. IDBI Bank
3. UTI Bank
4. OBC Bank
5. CITY Bank
6. Indusind Bank
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Anyone who have A/C either of above banks they can use this facility.Otherwise one
This account enables you to buy and sell shares through our website. You get features
like
b) Mutltiple watchlists
e) Real-time portfolio tracking with price alert and, of course, the assurance of
secure transactions.
Online trading account for investing in Equities and Derivatives via sharekhan.com
Streaming Quotes
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System Requirements
you’ll need access to a computer which has at least the following configuration:
Windows 2000/XP
Internet Connection
Java enabled in IE
SPEEDTRADE
For 1st Year Demat A/C is Free, On 2nd Year AMC charge is applicable.
Type with 7 banks through which one can transfer or withdraw his fund online.Which
are as follows
HDFC Bank
IDBI Bank
UTI Bank
OBC Bank
CITY Bank
Indusind Bank
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Anyone who have A/C either of above banks they can use this facility. Otherwise one
Features of SpeedTrade
Market summary (most traded scrip, highest value and lots of other relevant statistics)
System Requirements
You'll need access to a computer which has at least the following configuration:
Pentium 3 PC
Windows 2000/XP
Java enabled in IE
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Charges of Different companies for online A/C
Dial-n-Trade
place orders for buying and selling shares through your telephone.
All you have to do is dial any one of our two dedicated numbers (1-800-22-7050 or
30307600), enter your TPIN number (which is provided at the time of opening your
account) and on authentication you'll be directed to a telebroker who will buy and sell
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Features of Dial-n-Trade
TWO dedicated numbers for placing your orders with your cellphone or landline. Toll
free number: 1-800-22-7050. For people with difficulty in accessing the toll-free
number, we also have a Reliance number 30307600 which is charged at Rs. 1.50 per
Automtic funds tranfer with phone banking (for Citibank and HDFC bank customers)
Simple and Secure Interactive Voice Response based system for authentication
After hours order placement facility between 8.00 am and 9.30 am (timings to be
extended soon)
Requirements
All you need is access to a phone - either a landline or a cellphone: (the type of phone
doesn't matter)
Currently for Citibank and HDFC customers. More banks to be added soon
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PORTFOLIO MANAGEMENT SYSTEM
With the Sharekhan Team Managing Your Portfolio, you can be assured that your
analysis and technical analysis. This multi-pronged approach enables us to provide risk-
Right from choosing the combination of stocks most suitable for you based on your risk
appetite to monitoring their movements and discussing them with you at special events.
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MUTUAL FUND
Introduction
Everybody talks about mutual funds, but what exactly are they? Are they like shares in a
company, or are they like bonds and fixed deposits? Will I lose all my money in funds or
will I become an overnight millionaire? Big questions that get answered in just five
minutes.
Meaning
objective by an asset management company (AMC). The AMC offers to invest the
or give a regular income or grow the money long term. Investors buy a scheme if it fits
in with their investment goals, like getting a regular income now or letting the money
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accumulate over the long term. Investors pay a small fraction of their total funds to the
There are three broad categories of funds in the Indian market - money market,
debt and equity. A money market fund invests in short-term government debt paper and
is good for parking money for the short term since the principal is safe, returns better
than a bank deposit and liquidity high. Debt funds invest mainly in debt instruments like
government securities, corporate and institutional debt paper. They are also called
income funds since people buy them for their income needs. Equity funds invest in the
stock market and suit long term investors who want capital appreciation. Commodity,
We're glad to announce that you will now be able to invest in Mutual
Funds through us! We've 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
customer.
You have two choice through which you can invest in Mutual Fund.
A) On the main page of this micro-site and scheme snapshot page we have provided
with a link to PDF version of application form which you just need to download, print
and fill up relevant details. Submit the duly filled copy with payment either to Nearest
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B) Alternatively you can call up our customer service 1600-22-7500 and give your
contact detail wherey we will arrange to mail you a hard copy of application of desired
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 hold the securities in the electronic
form for the investor Sharekhan Depository services offers dematerialisation services to
individual and corporate investors.We have a team of professionals and the latest
national network of franchisee, making our services quick, convenient and efficient. At
"dematerialization" of securities)
Transfer the shares in the electronic form from one account to another.
Give electronic credit of new share allotments such as public issues, bonus, rights etc.
49 | P a g e
Convert your electronic holding into physical holding (which is called
"dematerialization of securities")
Every investor’s needs and goals are different. To meet these needs, Sharekhan provides
a comprehensive set of research reports, so that one can take the right investment
The R&D department Head Mr. Hemang Jani forwards all the details regarding all
stocks and scripts to all the branches through Internet. At the end of each trading day
there is a Teleconference, through which the R&D department Head MR. Hemang Jani
talks with each Branch heads and discusses about each day’s closing position and shows
their predictions about next day’s opening position. The quarries regarding stock
positions and other relevant matter of the branch heads of each branch is being solved
through teleconference.
Eagle eye, High Noon, Investor’s Eye, Commodities Buzz, Commodities Beat,
Commodity Trader’s corner, Sharekhan Xclusive, etc. are being prepared by the
research team of Sharekhan made up of highly experienced people from diverse field.
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Analysis Before, During (live market updates) and After market
timings
ONLINE IPO
Online IPO (Initial Public Offering) is a new service started by Sharekhan for
providing the application form of any company’s issues of shares just like the TCS issue
can be subscribed by filling an online form to reduce the paper work and the fund
transfer facility is also provided to the clients for transferring the funds online. It is given
on its web-site for helping the clients who are not able to collect the forms manually and
the speed of filling and reducing the risk of misplacing of forms, not reaching in time,
etc.
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SWOT ANALYSIS
During this training at sharekhan, we had come to know the Strengths-Weaknesses-
Opportunities-Threats for the company and it is very useful for a company to analyze
them. Therefore, the SWOT analysis is presented here and the suggestions for
Strengths:
Well-maintained infrastructure.
Wide product range to enable the clients to choose the best alternative.
Weaknesses:
Time consuming process for account opening, resolving the problems of the
customers, etc.
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Opportunities:
Attract the customers who are dissatisfied with other broker & DPs.
Threats:
Poor marketing activities for making the company known among the customers.
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CHAPTER - 3
CONCEPTUAL
DISCUSSION
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CONCEPTUAL DISCUSSION
There has been a wide range of studies concerning financial sector reforms in general,
and capital market reforms in particular, since mid 1980s in India. This section
highlights certain important studies that are context relevant. Several studies such as
Sahni (1985), Kothari (1986), Mookerjee (1988), Lal (1990), Chandra (1990), Franscis
(1991), Ramesh Gupta (1991,1992), Raghunathan (1991), Varma (1991), Gupta (1992),
and Sinha (1993) comment upon the Indian capital market in general and trading
systems in the stock exchanges in particular and suggest that the systems therein are
rather antiquated and inefficient, and suffer from major weakness and malpractices.
According to most of these studies, significant reforms are required if the stock
exchanges are to be geared up to the envisaged growth in the Indian capital market.
market, the public sector bond market, the govt. securities market, the housing finance
and other debt markets in India. This provides a diagnostic study of the state of the
Indian debt market, recommending necessary measures for the development of the
secondary market for debt. It highlights the need to integrate the regulated debt market
with the free debt market, the necessity for market making for financing and hedging
options and interest rate derivatives, and tax reforms. Cho (1998) points out the reasons
for which reforms were made in Indian capital market stating the after reform
developments. Shah (1999) describes the financial sector reforms in India as an attempt
capital in the economy. Shah and Thomas (2003) review the changes which took place
on India’s equity and debt markets in the decade of the 1990s. This has focused on the
importance of crises as a mechanism for obtaining reforms. Mohan (2004) provides the
rationale of financial sector reforms in India, policy reforms in the financial sector, and
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the outcomes of the financial sector reform process in some detail. Shirai (2004)
examines the impact of financial and capital market reforms on corporate finance in
India. India’s financial and capital market reforms since the early 1990s have had a
positive impact on both the banking sector and capital markets. Nevertheless, the capital
from low-quality ones (and thus lowering capital costs for the former compared with the
latter). While some high-quality firms (e.g., large firms) have substituted bond finance
for bank loans, this has not occurred to any significant degree for many other types of
firms (e.g., old, export-oriented and commercial paper-issuing ones). This reflects the
fact that most bonds are privately placed, exempting issuers from the stringent
accounting and disclosure requirements necessary for public issues. As a result, banks
remain major financiers for both highand low-quality firms. The paper argues that India
should build an infrastructure that will foster sound capital markets and strengthen
Chakrabarti and Mohanty (2005) discuss how capital market in India is evolved in the
reform period. Thomas (2005) explains the financial sector reforms in India with stories
of success as well as failure. Bajpai (2006) concludes that the capital market in India has
gone through various stages of liberalization, bringing about fundamental and structural
changes in the market design and operation, resulting in broader investment choices,
drastic reduction in transaction costs, and efficiency, transparency and safety as also
increased integration with the global markets. The opening up of the economy for
investment and trade, the dismantling of administered interest and exchange rates
regimes and setting up of sound regulatory institutions have enabled time. Gurumurthy
(2006) arrives at the conclusion that the achievements in the financial sector indicate
that the financial sector could become competitive without involving unhealthy
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competition, within the constraints imposed by the macroeconomic policy stance.
Mohan (2007) reviews India’s approach to financial sector reforms that set in process
since early 1990s. Allen, Chakrabarti, and De (2007) concludes that with recent growth
rates among large countries second only to China’s, India has experienced nothing short
of an economic transformation since the liberalisation process began in the early 1990s.
Chhaochharia (2008) arrives at the conclusion that India has a more modern financial
and banking system than China that allocates capital in a more efficient manner.
However, the study is skeptical about who would emerge with the stronger capital
market, as both the country is facing challenges regarding their capital markets. Prasad
and Rajan (2008) argues that the time has come to make a more concerted push toward
the next generation of financial reforms. The study advocates that a growing and
increasingly complex market-oriented economy and its greater integration with global
trade and finance will require deeper, more efficient, and wellregulated financial
markets.
The survey and review of literature about the financial sector reforms in India reveals
that the reforms have been pursued vigorously and the results of the reforms have
brought about improved efficiency and transparency in the financial sector. The reforms
also brought into inter-linkage of financial markets across the globe leading to new
perform as an instrument to hedge the risk arising from movement in prices not only in
commodity markets but also in securities market. Bose, Suchismita conducted research
on (2006) found that Derivatives products provide certain important economic benefits
towards those more willing and able to bear risk. Derivatives also help price discovery,
i.e. the process of determining the price level for any asset based on supply and demand.
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These functions of derivatives help in efficient capital allocation in the economy. At the
same time their misuse also poses threat to the stability of the financial sector and the
overall economy. Routledge, Bryan and Zin, Stanley E of Carnegie Mellon University
conducted research on “Model Uncertainty and Liquidity” in year 2001. Extreme market
outcomes are often followed by a lack of liquidity and a lack of trade. This market
collapse seems particularly acute for markets where traders rely heavily on a specific
empirical model such as in derivative markets. Sen Shankar Som and Ghosh Santanu
Kumar (2006) studied the relationship between stock market liquidity and volatility and
risk. The paper also deals with time series data by applying “Cochrane Orchutt two step
procedures”. An effort has been made to establish a relation between liquidity and
volatility in their paper. It has been found that there is a statistically significant negative
relationship between risk and stock market liquidity. Finally it is concluded that there is
Shenbagraman (2004) reviewed the role of some non-price variables such as open
interests, trading volume and other factors, in the stock option market for determining
the price of underlying shares in cash market. The study covered stock option contracts
for four months from Nov. 2002 to Feb. 2003 consisting 77 trading days. The study
concluded that net open interest of stock option is one of the significant variables in
determining future spot price of underlying share. The results clearly indicated that open
interest based predictors are statistically more significant than volume based predictors
in Indian context. All the existing studies found that the Equity return has a significant
and positive impact on the FII (Agarwal, 1997; Chakrabarti, 2001; and Trivedi & Nair,
2003). But given the huge volume of investments, foreign investors could play a role of
market makers and book their profits i.e., they can buy financial assets when the prices
are declining thereby jacking-up the asset prices and sell when the asset prices are
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increasing (Gordon & Gupta, 2003). Hence, there is a possibility of bi-directional
relationship between FII and the equity returns. Masih AM, Masih R, (2007), had
coefficients , granger’s causality test, augmented Dicky Fuller test (ADF), Elliott,
Rothenberg and Stock point optimal test. The Authors, through this paper, have tried to
find out what kind of relationship exists between emerging and developed futures
markets of selected countries. Kumar, R. and Chandra, A. (2000), had studied that
Individuals often invest in securities based on approximate rule of thumb, not strictly in
tune with market conditions. Their emotions drive their trading behavior, which in turn
drives asset (stock) prices. Investors fall prey to their own mistakes and sometimes
proving a theoretical concept as in practice they hardly move efficiently. The purely
rational approach is being subsumed by a broader approach based upon the trading
sentiments of investors. The present paper documents the role of emotional biases
towards investment (or disinvestment) decisions of individuals, which in turn force stock
prices to move. Srivastava, S., Yadav, S. S., Jain, P. K. (2008), had conducted a survey
brokers’ assessment of market activity and their perception of benefits and costs of
derivative trading. The need for such a study was felt as previous studies relating to the
impact of derivatives securities on Indian Stock market do not cover the perception of
market participants who form an integral part of the functioning of derivatives markets.
The issues covered in the survey included: perception of brokers about the attractiveness
securities; popularity of a particular derivative security out of the total set; different
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purposes for which the clients are using these securities in order of preference; issues
concerning derivatives trading; reasons for non usage of derivatives by some investors.
The investors are using derivative securities for different purposes after its penetration
into the Indian Capital market. They use these securities not only for risk management
and profit enhancement but also for speculation and arbitrage. High net worth
individuals and proprietary traders account for a large proportion of broker turnover.
Interestingly, some retail participation was also witnessed despite the fact that these
securities are beyond the reach of retail investors (because of complexity and high initial
cost). Naresh, G., (2006), studied the dynamic growth of the Derivatives market,
particularly Futures & Options and the perceived risks to the financial sector continue to
stimulate debate on the proper regulation of these instruments. Even though this market
recommendations byelaws and rules there is still a debate on the existing regulations
such as why is regulation needed? When and where regulation needed? What are
reasonable and attainable goals of these regulations? Therefore this article critically
examines the views of market participants on the existing regulatory issues in trading
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CHAPTER 3
RESEARCH
METHODOLOGY
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RESEARCH OBJECTIVES
investors.
brokers.
To study the investors satisfaction level for the various services provided
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RESEARCH DESIGN:
The three main ways to collect this information are: Observational, defined as a
method of viewing and recording the participants. Case study, defined as an in-depth
Data Source
Primary Sources
These include the survey or questionnaire method as well as the personal interview
Secondary Sources
These include books, the internet, company brochures, product brochures, the company
respondents.
Sample Design:-
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JUSTIFICATION OF THE PROJECT
The company was interested to find out the investor perception and the problems faced
by the general investor while dealing with the brokers. The company was also interested
to find out the common problems as faced by general investor while in share market and
the satisfaction level for the services provided by the brokers to the investor.
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CHAPTER-4
DATA ANALYSIS
&
INTERPRETATION
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DATA ANALYSIS & INTERPRETATION
DEMOGRAPHIC FINDINGS
AGE GROUP
90
80
70
60
50
Series 3
40
30
20
10
0
Below 20 20-35 36-50 51-65 above 65
Out of total 200 respondents, below 20 years of age were none, 39% of the respondents
falls in the age group of 36-50 years where as 29% were in the age group of 51-65 years
and next 16% falls in the group of more than 65 years.
JOB PROFILE
Category % of respondents
Service 47
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Business 40
Others 13
No. of respondents
26
Service
Business
94 Others
80
Out of total respondents , most of respondents were from service class and 40 % were
during business and rest of the respondents include retired person, other people, other
professional’s students etc.
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ANNUAL INCOME (IN LACS)
Income group % of respondents
Less than 1 lac 2
7
1-5 lacs 4
1
More than 5 lacs 2
9
No. of Respondents
Most of the respondents belong to the income group of 1-5 lacs followed by the
respondents belong to income group of more than 5 lacs which is 28% of total
respondents and rest of Respondents belonging to the income group below 1 lac.
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EDUCATIONAL BACKGROUND:-
Qualification % of respondents
Under graduate (U.G) 25
Graduate 43
Post graduate(PG) 26
Others(O) 6
90
80 79
70
60
53 55
50
Column2
40
30
20
13
10
0
Under graduate Graduate Post graduate Other
Most of the respondents were graduate and 26% were post graduate and rest 6% belong
to other category.
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When the respondent were asked their preference of investment, is cash market ,
derivatives market or both, the following respondents were obtained .
No. of respondents
120 103
100 76
80
No. of respondents
60
40 21
20
Out of 200 respondents amount 52% respondents their fund in cash and derivative
market, 38% investment is only cash market and rest is derivative market.
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When the respondents were asked about the time period for which they are
investing, the following responses were obtained.
No of respondents
25
97
Out of total 200 respondents 12% respondents were new investors, 48% were investing
for 1-5 year and rest were for more than 5 year.
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When the respondents were asked about proportion of income they invest in shares
and securities, the following responses were obtained.
No. of respondents
31 47
Up to 5%
5to 10 %
10 to 25%
more than 25%
63
59
When the respondents asked about the proportions of income they invest in shares and
securities, it was found that most of the (32%) respondents invest 10-25% of their
income, 30% of respondents invest 5-10%, 24% of them invest up to 5% and rest more
than 25%.
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When the respondents were asked trading frequency, the following responses were
obtained.
No. of respondents
131
140
120
100
No. of respondents
80
60 49
40
13
20 7
0
Daily Monthly Weekly According to the market
On analyzing the trading practices it was found that majority, 65% of the investors trade
according to the market 25% trade daily followed by weekly traders 7%.
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When the respondents were asked about trading advice , the following responses
were obtained.
No. of respondents
120
98
100
80
60
37 35 No. of respondents
40
19
20 11
0
ea n ice ice r
id tio v dv he
n o p ad a Ot
ow t' s
en
d er
ur er fri ok
yo Ex
p Br
On On
Regarding the decision of amount and investment area, 98 out of 200 takes the idea on
their own and 37 on expert’s opinion, 35 on brokers advice, and 19 on friends advice.
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When the respondents asked whether any professional advice is available to them
when required, the following responses were obtained.
No. of Responding
19
73 Yes
No
Sometime
108
Out of 200, 108 respondents said that they don’t and professional advice , 73 said that
they get it sometimes, and 19 of them get advice when needed.
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When the respondents were asked about the motive for making investment in
capital market, the following responses were obtained.
Option Rank I Rank II Rank III
Regular income in 113 27 60
the form of
dividend/ interest
Tax planning 55 26 119
Capital gain 120 25 55
Rank I
Rank II
Rank III
On analyzing motives for investment in capital market it was found that capital gain
was the most important factor that influences investment decisions followed by regular
income and tax planning.
When the Respondents were asked about the factors they consider while selecting a
broker, the following responses were obtained.
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Option Rank I Rank II Rank III
Brokerage 129 59 12
Frequent payments 112 43 45
& transfer of
securities
Less advance 59 79 62
margin
Credit limits 65 46 89
Personal Relations 79 24 97
387
400 336
350
300 237
250 177158 195
200
118
150 86 92 89 97
45 62 48
100
12
50
0 Rank I
Rank II
Rank III
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When The respondents were asked about the difference they feel between ring
trading (order form of trading) and online, the following responses were obtained.
Differences No. of respondents
No. of respondents
120 106
100
80 59
60
40 18
20 15
2
0
er er er er rs No. of respondents
rm rm m rm he
o o or o ot
ef ef ef e f
th
n
th or th
an ha e m an
r th tt th e th
sie en an at
a ar th ur
ee ns
p
ier ac
c
or as
m tra e or
e
r is re ter m
o as s
lat
e m
sf ri
e r is i late
Th e er
e lat lat Th
e
h he
T T
About 53% Respondents said that online trading is more transparent then the older ring
trading system where as 30% investors feel online trading is more easier understanding
the mechanism of trading, 7.67% Respondents feel the later is more faster, 8.66% feel it
is more accurate.
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When the Respondents were asked whether they are aware of different charges by
their broker , the following responses were obtained.
Charges No. of respondents
Yes No
Turnover/Transaction 197 3
Demat charges 184 16
Service Tax 179 21
No. of respondents
179
197
Turnover/Transaction
Demat charges
Service tax
184
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When the respondents were asked whether they are satisfied with the different
charges by their brokerage, the following responses were obtained.
No. of Respondents
124
140
120
100
No. of Respondents
80
51
60
25
40
20
0
Satisfied Somehow satisfied dissatisfied
When the Respondents were asked to rate the service provided by their broker, the
following responses were obtained.
Service Good Fair Poor
Phone service 33 50 117
Brokerage 122 67 11
Conformation of 53 23 124
traders
Professional advice 28 60 112
Relaxation in 26 85 89
advance margin
Payment/delivering 50 42 108
of securities
Staff behavior 31 124 45
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Service Good Fair Poor Total
weight
Phone service 99 100 117 316
Brokerage 366 1344 11 511
Conformation of 159 46 124 329
traders
Professional advice 84 120 112 316
Relaxation in 78 170 89 337
advance margin
Payment/delivering 150 84 108 342
of securities
Staff behavior 93 248 45 386
Total Weight
600
511
500
386
400 329 337 342
316 316
300
200
100 Total Weight
0
ice ge rs e in es r
rv era ade dvic a rg r iti avio
se ok tr la m cu h
e Br of na ce se be
on is o n f ff
Ph on s va go St
a
ati o fe ad r in
rm Pr in v e
nf
o
tion d eli
Co a t/
e lax m
en
R y
Pa
A remarkably high dissatisfaction was there among the investors for the brokerage
charged by their broker, most of them are dissatisfied with the staff and relation in
advance margin.
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CHAPTER 5
CONCLUSION
/FINDINGS
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CONCLUSION
Business class investors more proportion of their income in shares & securities as
their own idea and some rely on expert’s opinion and broker’s advice.
In cash segment, capital gain is the prior motive of the investors followed by regular of
the investors followed by regular income and tax income and tax planning.
The satisfaction level regarding services by brokers of phone service & professional
Most of the investors feel that online trading is more transparent than the older form of
Most of the people are aware of different charges charged by the brokers (Demat
While selecting a broker, brokerage & frequent payments were considered as main
Most of the investors are not satisfied with “phone services” provided by the brokers,
The major problem faced by the investors is of broker’s attitude towards small investors
invested.
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FINDINGS
Out of 94 services class investors, about 40% invest 10-25% of their total income in
shares and securities, 22% invest 5-10%,228% invest up to 5% where as only 10%
invest more than 25%. Out of 80 investors belonging to business class, 26% invest more
than 25% of their income in shares and securities where as 30.15% invest 10-25% and
rest invest 5-10. Out of 26 respondents having job other profession, 73% invest up to 5%
where as rest invest 5-10% of the total income/earning in shares & securities.
Out of 57 respondents having annual income than 5 lacs, 45% invest more than 25% of
their income in shares and securities, 34% invest 10-25% and rest invest 5-10% in
shares and securities. In 1-5 lacs annual income category 63% invest in 10-25%, 12%
more than 25% and rest invest 5-10% of their earnings in shares and securities.
Respondents having annual income up to 1 lac, mostly invest only up to 5-10% of total
While trading in each segment, the main motive of the respondents Is the age group of
51-65 years and above 65 years was regular income in the form of dividend/interest.
About 81% of the total respondents in these capital gain and 2 nd Tax Planning. 64%
respondent in the age group of 36-50 years have given priority to regular income,
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CHAPTER 6
RECOMMENDATION
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RECOMMENDATION
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CHAPTER 7
LIMITATIONS OF THE
STUDY
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LIMITATIONS OF THE STUDY
The number of respondents include for the study is limited due to the time
constraints.
All the findings and observations made in this study are purely based on
Since the sample is very small when compared to the universe the findings and
Some of the respondents were reluctant to share information with the researcher.
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BIBLIOGRAPHY /
REFERENCE
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Bibliography
BOOKS
RESEARCH PAPERS
WEB SITES
WWW.NSEINDIA.COM
WWW.BSEINDIA.COM
WWW.SEBIINDIA.COM
NFCM, DEALERS MODULE HAND BOOK
RESEARCH METHODOLOGY
KOTHARI C.R. –EDITION 2000
WWW.GOGGLE.COM
WIKIPEDIA
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ANNEXURE
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QUESTIONNAIRE
Name:……………………………………………………………………
Address:…………………………………………………………………
Phone No:………………………………………………………………
Annual Income (in lacs): ( ) less than 1 ( )1-5 lacs ( ) More than 5 lacs
Qualification:
(c) Both ( )
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(a) Options ( b) Future in shares
(c) Both ( )
(6) Whom do you Consult before taking decision about the investment ?
(9) What are your motives for making investment in shares and securities in Derivatives
(10) Which factors influence you while selecting a broker (Please rant up to 3 ) ?
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(a) Brokerage
(c) Others ( )
(12) What is your satisfaction level pertaining to different charges charged by your
broker ?
(c) Dissatisfied ( )
(13) What are the benefits of trading in derivative segment over the cash segment ?
Phone Service
Brokerage
Professional advice
Relaxation advance
margins
Payment
Staff Behavior
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(15) Tick the problems faced by you ?
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
………………………………………………
Suggestion, if any:
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
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……………………………………………………………………………………………
…………………………………………………………
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