CHAPTER – 1

INTRODUCTION

1
 Introduction
India is a developing country. Now a days many people interesting to invest
in financial market on Equities to get high returns, and to save tax in honest
way. Equities are playing a major role in contribution capital to the business
since from the beginning. Since from the introduction of shares/stock
concept more and more investors are showing interest to invest in stock
market.

Though there is high risk in shares, there are also high profits. Equities in
current situation is very good to invest as SENSEX crossed 13000 points
In October, 2006 and market is following bullish trend. So to enter into the
Stock market at this time is very good as the investor who wants to seek
profits with minimum investment.

Equity is a ownership in a company. The more shares the investors own the
more dividends they gain. In financial world ownership is called Equity.

At this time a dynamic entrepreneur Sri. Nirmal Jain C.A (All India rank 2)
Established India Infoline Ltd in 1995, at Mumbai.

India Infoline Ltd is one of the Country’s leading payers in the business of
investment advisory and Intermediation. Its primary business is Broking in
Equities and Commodities (where it is popular known by its brand name
www.5paisa.com), Distribution of Mutual funds, and other personal
investment products. Hence the company has decided to study on
Commodities trading.

OBJECTIVES
• TO STUDY OF THE VARIOUS TRENDS IN EQUITY TRADING.
• TO STUDY THE ROLE OF EQUITIES IN INDIAN FINANCIAL MARKETS
• TO STUDY THE ROLE OF EQUITY TRADING WITH EMPHASIS ON INDIA
INFOLINE LTD

Need for study

To start any business capital plays a major role. Capital can be acquired in
two ways by issuing shares or by taking debt from financial institutions.
Taking debt or borrowing money from financial institutions
The owner of the company have to pay regular interest and principal amount
at the end.

Stock is ownership in a company, with each share of stock representing a

tiny piece of ownership. The more shares you own, the more of the company
you own. The more shares you own, the more dividends you earn when the
company makes a profit. In the financial world, ownership is called
“Equity”.

2
Advantages of selling stock:
• A company can raise more capital than it could borrow.
• A company does not have to make periodic interest payments to
creditors.
• A company does not have to make principal payments.

Stock/shares play a major role in acquiring capital to the business in return

investors are paid dividends to the shares they own. The more shares you
own the more dividends you receive.

At present Equity market provides various opportunities to the investors. As

the Sensitivity Index crossed 13000 point mark in the month of October,
2006. More and more investors are showing interest towards stock markets.
And also NSDL & SEBI they are imposing strict rules on the stock exchanges
to regulate the business and to protect the investors interest. SEBI imposed
the registration and regulation of the working of stock-brokers, sub-brokers,
share transfer agents , banker to the issue, merchant bankers, underwriters,
portfolio managers and other intermediaries associated with the securities
markets. SEBI also prohibited insiders trading in securities etc.

As the market is good for investing more and more companies are able to
generate money by issuing shares and there are more investors who are
ready to invest in the business are increased more in number than in the
beginning stage.

Till date Equity markets are continuing its bullish trend and it will also
continue in future also.

3
CHAPTER – 2
RESEARCH
METHODOLOGY

4
 RESEARCH METHODOLOGY

RESEARCH DESIGN:
Meaning of research design:
The formidable problem that follows the task of defining the research
problem is the preparation of the design of the research project, popularly
know as the “research design”, decision regarding what where, where ,how
much, by what means concerning inquiry are a research study constitute a
research design.” A research design is the arrangement of condition for
collection and analysis of data in manner that aims to combine relevance to
research purpose with economy in procedure”. Infact, the research design is
the conceptual structure with in which research is conducted; it constitutes
the blue print for the collection, measurement and analysis of data. As such
the design includes an out line of what the researcher will do from writing the
hypothesis and its operation and implication to the final analysis of data.

The research methodology is a way to systematically solve the research

problem. It may be understood as the science of studying how research is
done scientifically.

The study various steps that are generally adopted by a researcher in

studying his research problem along with he logic behind them. It is
necessary for the researcher to know not only research methods but also the
methodology.

Sources of data:
The research can call for gathering secondary data, primary data or both.
Secondary data consists of information that already exists somewhere,
having being collected for another purposes and primary data consists of
original information gathered for the specific purpose.

Data collection is very essential to study the information fact and figure that
are directly related to the problem that have being formulated. The kinds of
data that has collected for this study are:
1.primary data.
2. Secondary data.

PRIMARY DATA:

Data collected.
Newspapers…
1. Economic times
2. Business standard
Internet
1. www.bseindia.com
2. www.nseindia.com
3. www.5paisa.com

5
 4. www.indiainfoline.com
5. www.investopedia.com

Brokers
Members of 5paisa
2. Secondary data:
Handbook of investors.
Data provided by the 5paisa as a part of the class undertaken.
Compendium of Top 500 companies in India published by Capital
Market

6
 LIMITATIONS OF THE STUDY
1. The Time allotted for the project work was short
2. The Study is Limited to National level only.
3. The Study is limited to Company's that have Equities
4. The Study is limited to India Infoline Ltd.

7
 CHAPTER - 3
INDUSTRY PROFILE
&
COMPANY PROFILE

8
INTRODUCTION TO TRADING PROCEDURE

The trading on stock exchanges in India used to take place through open outcry without
use of information technology for immediate matching or recording of trades. This was
time consuming and inefficient. This, imposed limits on trading volumes and efficiency.
In order to provide efficiency, liquidity and transparency, NSE introduced a nation-wide
on-line fully-automated screen based trading system(SBTS) where a member can punch
into the computer quantities of securities and’ the prices at which he likes to transact and
the transaction is executed as soon as it finds a matching sale or buy order from a counter
party. SBTS electronically matches orders on a strict price/time priority and hence cuts
down on time, cost and risk of error, as well as on fraud resulting in improved operational
efficiency. It allows faster incorporation of price sensitive information into prevailing
prices, thus increasing the informational efficiency of markets. It enables market
participants, irrespective of their geographical locations, to trade with one another
simultaneously, improving the depth and liquidity of the market. It provides full
anonymity by accepting orders, big or small, from members without revealing their
identity, thus providing equal access to everybody. It also provides a perfect audit trail,
which helps to resolve disputes by logging in the trade execution process in entirety. This
sucked liquidity from other exchanges and in the very first year of its operation, NSE
became the leading stock exchange in the country, impacting the fortunes of other
exchanges and forcing them to adopt SBTS also. Today India can boast that almost 100%
trading take place through electronic order matching.

Technology was used to carry the trading platform from the trading hall of stock
exchanges to the premises of brokers. NSE carried the trading platform further to the PCs
at the residence of investors through the Internet and to handheld devices through WAP
for convenience of mobile investors. This made a huge difference in terms of equal
access to investors in a geographically vast country like India.

9
NSE has main computer which is connected through Very Small Aperture Terminal
(VSAT) installed at its office. The main computer runs on a fault tolerant STRATUS
mainframe computer at the Exchange. Brokers have terminals installed at their premises
which are connected through VSATs/leased lines/modems. An investor informs a broker
to place an order on his behalf. The broker enters the order through his PC, which runs
under Windows NT and sends signal to the Satellite via VSAT/leased line/modem. The
signal is directed to mainframe computer at NSE via VSAT at NSEs office. A message
relating to the order activity is broadcast to the respective member. The order
confirmation message is immediately displayed on the PC of the broker. This order
matches with the existing passive order(s), otherwise it waits for the active orders to enter
the system. On order matching, a message is broadcast to the respective member.

SOURCE : NCFM CAPITAL MARKET MODULE

10
The trading system operates on a strict price time priority. All orders received on the
system are sorted with the best priced order getting the first priority for matching i.e., the
best buy orders match with the best sell order. Similar priced orders are sorted on time
priority basis, i.e. the one that came in early gets priority over the later one. Orders are
matched automatically by the computer keeping the system transparent, objective and
fair. Where an order does not find a match, it remains in the system and is displayed to
the whole market, till a fresh order comes in or the earlier order is cancelled or modified.
The trading system provides tremendous flexibility to the users in terms of kinds of
orders that can be placed on the system. Several time-related (good till cancelled, good
till day, immediate or cancel), price-related (buy/sell limit and stop loss orders) or
volume related (all or none, minimum fill, etc) conditions can be easily built into an
order.

The trading system also provides complete market information on-line. The market
screens at any point of time provide complete information on total order depth in a
security; the five best buys and sells available in the market; the quantity traded during
the day in that security; the high and the low; the last traded price. Investors can also
know the fate of the orders almost as soon as they are placed with the trading members.
Thus the neat system provides an open Electronic Consolidated Limit Order Book. Limit
orders are orders to buy or sell shares at a stated quantity and stated price. If the price
quantity conditions do not match, the limit order will not be executed. The term “limit
order book” refers to the fact that only limit orders are stored in the book and all market
orders are crossed against the limit orders sitting in the book. Since the order book is
visible to all market participants, it is termed as an ‘Open Book’.

11
 COMPANY PROFILE

It was originally incorporated on October 18, 1995 as Probity Research and

Services Private Limited at Mumbai under the Companies Act, 1956 with
Registration No:11 93797. we commenced our operations as an independent
provider of information analysis and research covering Indian businesses,
financial markets and economy, to institutional customers. We became a
public limited company on April 28, 2000 and the name of the Company was
changed to Probity Research and Services Limited . The name of the
company was changed to India Infoline.com on May 23, 2000 and later to
India Infoline Limited on March 23, 2001.

In 1999, the company identified the potential of the Internet to cater to a

mass retail segment and transformed our business model form providing
information services to institutional customers to retail customers. Hence the
company launched Internet portal, www.Indiainfoline.com and started
providing news and market information, independent research, interviews
with business leaders and other specialized features.

In May 2000, the name of our company changed to India Infoline.com

Limited.

In the year 2000, we leveraged our position as a provider of financial

information and analysis by diversifying into transactional services, primarily
for online trading in shares and securities and online as well as offline
distribution of personal financial products, like Mutual funds and RBI Bonds.

Our broking service as launched under the brand name of 5Paisa through our
subsidiary, India Infoline Securities Private Limited and www.5Paisa.com, the
e-broking portal, was launched for online trading in July 2000. Besides we
also offer
Real time stock quotes, market news and price charts with multiple tools for
technical analysis

In December 2000, our subsidiary, India Infoline Insurance Services Limited

became a corporate agent for ICICI Prudential Life Insurance company
Limited. And emerged as one of the leading corporate agents for ICICI
Prudential Life Insurance company Limited.

In the year 2004 , company launched commodities broking through our

subsidiary India Infoline commodities Private LTD.

At present company has a network of 73 branches across 36 cities in India .

we plan to set up 77 additional branches in 50 cities across India for our
different business including broking, insurance, commodities and distribution
of mutual funds and other investment products.

12
 Board of directors

As per Articles of Association, Board shall consist of not less than three and
not more than twelve directors. They are as follows.

S.No Name Designation Directorships in other

companies

1. Mr.Nirmal Jain Chairman and 1. India Infoline securities

Managing Director Pvt. Ltd.
2. India Infoline
Insurance Services
Ltd.
3. India Infoline
commodities Pvt. Ltd.
2. Mr.R.Venkataraman Executive Director 1. India Infoline
Insurance Services
Ltd.
2. India Infoline.com
Distribution company
Ltd.
3. Mr. Sat Pal Khattar Non-Executive 1. AB Hotels Ltd.
Director 2. GTL LTD.
3. Prime vetcare Pvt. Ltd.
4. Mr. Sanjiv Ahuja Non-Executive 1. Pagro Foods Ltd.
Independent 2. India Infoline
Director Insurance Services
Ltd.
5. Mr. Kranti Sinha Non-Executive 1. Hindustan Motors
Independent Ltd.
Director 2. Larsen and Toubro
Ltd.
6. Mr. Nilesh Shivji Non-Executive 1. Alpha Garments Pvt
Vikamsey Independent Ltd.
Director 2. Miloni Consultants
Pvt. Ltd.

13
Key promoters of the company
Key promoters of our company are Mr. Nirmal Jain and
Mr. Venkataraman, professionals with a good academic and work experience.

Mr. Nirmal Jain has been the chairman and Managing Director of the
Company since its incorporation i.e., October 18, 1995.
Mr. Jain holds a MBA degree form IIM Ahmedabad and is a member Institute
of Chartered Accountants of India and the Institute of Cost Accountants of
India. He started his career in 1989 with Hindustan Lever Limited, a
subsidiary of Unilever Plc, in their commodities trading and exports division
Mr.Jain has a total experience of more than 15 years.

Mr. R. Venkataraman joined the Board with effect from

July 5th,1999. He holds a B.Tech degree in Electronics and Electrical
Communications Engineering form IIT Kharagpur and an MBA degree form
IIM Bangalore. He has held senior managerial positions in various divisions
of ICICI limited, including ICICI securities limited, their investment banking
joint venture with J P Morgan of USA. He also worked as an equity analyst
with BZW and Taib Capital Corporation Limited. HE has also held the position
of Assistant Vice President with
G E Capital Services India Limited in their private equity division. He has
varied experience of more than 14 years in the financial services sector

Year wise Milestones of our evolution

• October 1995 Incorporated as Probity Research And Services Pvt. Ltd.
• March 1996 Launched Probity 200, research Reports on 200 leading
listed Indian Companies.
• June 1998 Launched Probity Sector reports.
• May 1999 launched our internet portal www.Indiainfoline.com and
changed our name to India Infoline Limited.
• April 2000 Our Company forayed into distribution of Mutual funds, fixed
deposits, RBI bonds and other small savings Products.
• July 2000 Our Company launched www.5paisa.com the e-broking portal
and started online Trading with membership of BSE & NSE.
• December 2000 Our Company obtained corporate agency For ICICI Prudential Life
Insurance Company Ltd.
• September 2001 Our Company became the Depositary Participant of NSDL.
• March 2004 Our Company launched commodities trading by taking
membership of MCX.
• April 2004 Our Company received license from SEBI to offer Portfolio
Management Services.

14
 Business

Indi Infoline Limited

Content related services- Equity research & Online
Media Property

India Infoline Securities PVt. Ltd.

• Equities & Derivative Broking.
• Depository Services.
• Portfolio Management Services.

India Infoline.com Distibution Company Ltd.

• Mutual funds
• RBI Bonds
• Fixed Deposits etc.

India Infoline Insurance Services Ltd.

• Corporate agents for ICICI Prudential
Life Insurance Company Ltd.

India Infoline Commodities Pvt. Ltd.

• Commodities Broking.

India Infoline Investment Services Pvt. Ltd.

• Margin funding & financing

15
 Brokerage Services

Online Brokerage : we offer subscribers real-time trading on

The NSE and BSE. Apart from this we also offer commodities
Trading on the MCX and NCDEX. Customers can directly
Place Orders to buy and sell securities through our automated order
Processing system.
Offline Brokerage: we began offering offline brokerage services as a back
upto our online brokerage offering through our branches. This was mainly to
address the internet access problems faced by some of our retail customers.
Competition
Broking : we face competition from small local brokers (traditional) and pan
India Brokers like Kotak Securities Ltd. S.S Kantilal Ishwarlal securities Ltd,
Indiabulls Securities Ltd, ICICI Web Trade Limited , Geojit Financial Services
Ltd etc.
Distribution : We face competition from small retail distributors (typically
single outlet unorganized units), brokers who have a distribution setu, old
and established distribution companies like Blue chip Corporate Investment
Centre Limited,Bajaj Capital Ltd, Karvy Securities Ltd, and banks including
their PMS and Wealth Management desks.
Our Strength : Our strengths are our content and research online
technology platform and customer services.
Financial Performance:
Consolidated Financial Performance of India Infoline Ltd, (Excluding
intergroup revenue)

Revenue (in Rs. Million) Year Year Nine months

ended 31st ended 31st ended 31st
March March December
2005 2006 2006
Income

Revenue from operations

Equities Brokerage & Related 30.79 191.47 323.69

income
Agency Commission & Fees 40.07 81.17 73.56

Commodities Brokerage - - 2.42

Policy Commission 7.03 17.92 29.41

Media & Content Income 7.63 16.82 34.72

Other income 21.03 52.56 11.23

Total Income 106.54 359.94 475.03

16
Our consolidated total income has grown from Rs. 106.54 million in FY 2005
to Rs. 359.94 million in FY 2006. That same year, we made a turnaround
and reported a consolidated cash profit of 103.84 million and a net profit of
Rs. 74.8 million on the first nine months of FY 2006; we have reported a
consolidated total income of Rs. 475.03 million.

As on December 31 2006, we had 28,215 customers for our broking services

and we have sold mutual fund unit, company deposits government bonds or
small savings schemes to over 0.15 million customers. India Infoline Ltd has
85 branches across 36 locations in India, controlled by 10 Regional Offices in
India. It has a branch in Dubai also.

Expenditure:

The following table sets out expenses as a percentage of its total income for
the fiscal years ended March 31, 2005, 2006, and the nine months ended
December 31, 2006.
Rs. Million
Particulars Year Year Nine
ended ended months
31st 31st ended 31st
March, March, Dec, 2006
2005 2006
Expenditure

Direct Costs 32.58% 30.12% 27.94%

Employee Cost 29.41% 16.64% 14.65%

Administration & Other Expense 48.43% 21.51% 17.78%

Interest 1.46% 2.95% 1.46%

Depreciation & Amortization 32.31% 8.07% 3.48%

Total Expenditure 144.18% 79.30% 65.32%

Our Expenses as a percentage of its total Expenditure is come down from

1.44.18% o f 2005 to 79.30% in FY 2006. That same year we reduced the
total expenditure percentage of its Total income INS 13.98% in the first
three Months of FY 2007, we have reported total expenditure % of its total
income is 65.32%.

17
 INDIA INFOLINE LIMITED

ORIGEN:

India Info line was founded in 1995 by a group of professionals with

impeccable educational qualifications and professional credentials. Its
institutional investors include Intel Capital (world’s leading technology
company), CDC (promoted by UK government), ICICI, TDA and Reeshanar.

India Info line group offers the in tire gamut of investment products including
Stock broking, Commodities broking, Mutual Funds, Fixed Deposits, GOI
Relief bonds, Post office savings and life Insurance. India Info line is the
leading corporate agent of ICICI Prudential Life Insurance Company, which is
India’s No .1 private sector life insurance company.

www.indiainfoline.com has been the only Indian Website to have been listed
by none other than Forbes in it’s ‘Best of the Web’ survey of global website,
not just once but three times in a row and counting. …a must read for
investors in south Asia is how they choose to describe India Info line. It has
been rated as No.1 in the category of Business News in Asia by Alexia rating.

Stock and Commodities broking is offered under the trade name 5paisa.
India Infoline Commodities Pvt. Ltd., a wholly owned subsidiary of India
Infoline Ltd., holds membership of MCX.

Products: The India infoline pvt Ltd., offers the following products.

a. E-broking.
b. Distribution
c. Insurance
a. E-broking:
1.Equities
2 .Derivatives
3. Commodities
The above three are traded as 5paisa.
b. Distribution:
1.Mutual funds.
2.Govt of India bonds.
3.Fixed deposits.

C. Insurance:
1.Life insurance policies.
2.corporate sector of ICICI
3.prudential life insurance.

18
 CHAPTER - 4
THEORETICAL FRAME
WORK OF EQUITIES

19
 Introduction

Equity :
Stock or any other security representing an ownership interest.
On the balance sheet, the amount of the funds contributed by the owners
(the stockholders) plus the retained earnings (or losses). Also referred to as
"shareholder's equity".
Equity is a term whose meaning depends very much on the context. In
general, you can think of equity as ownership in any asset after all debts
associated with that asset are paid off.
Stocks are equity because they represent ownership of a company, whereas
bonds are classified as debt because they represent an obligation to pay and
not ownership of assets.

Equity Income:
Income that is earned through an investment in equity.
A shareholder receives equity income usually through dividends or capital
gains. 2. This type of investment strategy attempts to provide a
stable income for investors by choosing securities that will provide
both capital appreciation and consistent dividends.

Dividend:
Distribution of a portion of a company's earnings, decided by the board of
directors, to a class of its shareholders. The dividend is most often quoted in
terms of the dollar amount each share receives (i.e. dividends per share or
DPS). It can also be quoted in terms of a percent of the current market price,
referred to as dividend yield.

Dividends may be in the form of cash, stock or property. Most secure and
stable companies offer dividends to their stockholders. Their share prices
might not move much, but the dividend attempts to
make up for this.

20
 Dividend Payout Ratio:
The percentage of earnings paid to shareholders in dividends.

Calculated as:

The payout ratio provides an idea of how well earnings support the dividend
payments. More mature companies tend to have a higher payout ratio.

In the U.K. there is a similar ratio, which is known as dividend cover. It

is calculated as earnings per share divided by dividend per share.

Earnings Per Share – EPS:

The portion of a company's profit allocated to each outstanding share of
common stock. EPS serves as an indicator of a company's profitability.

Calculated as:

In the EPS calculation, it is more accurate to use a weighted-average number

of shares outstanding over the reporting term, because the number of shares
outstanding can change over time. However, data sources sometimes
simplify the calculation by using the number of shares outstanding at the end
of the period.
Earnings per share is generally considered to be the single most important
variable in determining a share's price. It is also a major component of the
price-to-earnings valuation ratio.
Equity Market Capitalization

A measure of the total market value of an equity market. The measure is

calculated by taking the market capitalization of all companies in the equity
market and adding them together to arrive at the capitalization for the
market as a whole.

The measure is used to compare the increase or decrease in the size of the
market as a whole. The measure is also used to compare the value of the
equity market to other segments of the economy, such as the value of the
real estate market.

21
Share Capital:
The portion of a corporation’s equity obtained from issuing shares in return
for cash or other considerations.

This is also called equity financing.

Equity Financing:
The act of raising money for company activities by selling common or
preferred stock to individual or institutional investors. In return for the
money paid, shareholders receive ownership interests in the corporation.
This is when a company raises money by issuing stock. The other way to
raise money is through debt financing, which is when the company borrows
money

Equity Fund
A mutual fund that invests in a broad, well-diversified group of stocks.
An equity fund typically won't invest in any bonds or notes. The invested
funds will either be in cash or stock.

Return On Equity – ROE:

A measure of a corporation's profitability, calculated as:

Essentially, ROE reveals how much profit a company generates with the
money shareholders have invested in it.

Shareholders' Equity:
A firm's total assets minus its total liabilities. Equivalently, it is share capital
plus retained earnings minus treasury shares. Shareholders' equity is the
amount by which a company is financed through common and preferred
shares.

Also known as "share capital", "net worth", or "stockholders' equity".

Shareholders' equity comes from two main sources. The first and original
source is the money that was originally invested in the company along with
any additional investments made thereafter. The second comes from retained
earnings that the company is able to achieve over time through its
operations. In most cases, the retained earnings

Stockholders' Equity:
The portion of the balance sheet that includes capital received from investors
in exchange for stock (paid-in capital), donated capital, and retained
earnings. This is equal to total assets minus liabilities, preferred stock and
intangible assets.

22
Stockholder's equity is often referred to as the book value of the company.

Types of shares :
Stock is ownership in a company. In the financial world ownership is called
Equity.
There are two primary classes of stock. Namely 1.preferred stock 2.common
stock
Preferred Stock: preferred stock promises guaranteed dividends and a
claim on a company’s assets that us above that of common shareholders.
The tradeoff may be that preferred shareholders cannot vote or share other
specified rights. Preferred stock pays a fixed dividend that is specified and
set down in advance . unless the stock is retired or called back, it will
continue paying dividends forever.

Limited voting Rights

 When the company wants to merge with another
 When the company wants to liquidate a large portion of its assets
 When the company wants to issue new bonds or preferred stock

Common stock: common stock represents ownership in a corporation.

Common stock dividends may be paid in cash, stock or property. The most
common payment method is a cash dividend. The board of directors
determines whether or not to pay dividends to common stock holders.
Common stock holders will receive the assets but only after all other
creditors, bond holders and preferred stockholders receive them first.

Investors may purchase stock on the primary or secondary market. A

company sells its stock to the public on the primary market through its Initial
Public Offering. Investors may sell their shares through brokers to other
investors on the secondary market.

23
STOCK MARKET

24
Stock Market

The market in which shares are issued and traded either through exchanges
or over-the-counter markets. Also known as the equity market, it is one of
the most vital areas of a market economy as it provides companies with
access to capital and investors with a slice of ownership in the company
and the potential of gains based on the company's future performance.

This market can be split into two main sections: the primary and secondary
market. The primary market is where new issues are first offered, with any
subsequent trading going on in the secondary market.

Capital/ Securities market

Primary market secondary market

Primary Market : The main function of New issue market is to facilitate the
transfer of resources from savers to entrepreneurs. The Securities issued by
companies for the first time are designated as initial issue or Initial Public
offer(IPO).
The new issue market
activities was regulated by Controller of Capital Issue(CCI) under the
provisions of the Capital Issues(Control) Act 1947. After the abolition of the
office of the CCI in 1992 the protection of the interest of the investors in
Securities market and promotion of the development and regulation of the
market/activity became the responsibility of SEBI.

25
Players in the Primary market :

 Merchant Banker/Book Building Lead Manager.

 Register and transfer Agent.

 Collecting and coordinating bankers.

 Advisor to the issue.

 Underwriters/Broker to the issue.

 Depository participant.

 Printers, Advertising Agencies, Mailing Agencies etc.

Initial Public Offerings(IPO’s)

Corporates may raise capital in the primary market by way of an initial public
offer, rights issue or private placement. An Initial Public Offer (IPO) is the
selling of securities to the public in the primary market. This Initial Public
Offering can be made through the fixed price method, book-
Building method Or a combination of both.

In case the issuer chooses to issue securities through the book building route
then as per SEBI guidelines, an issuer company can issue securities in the
following manner:

a. 100% of the net offer to the public through the book building route.
b. 75% of the net offer to the public through the book building process
and 25% through the fixed price portion.
c. Under the 90% scheme, this percentage would be 90 and 10
respectively.

26
Issue Mechanism: The following are the methods by which new
issue/Initial Public Offering (IPO) are made.

 Public issue through prospectus.

 Book Building.

 Offer for Sale.

 Placement and

 Rights Issue Methods.

Public Issue through prospectus :

Under this method, the issuing companies themselves offer directly to the
general public a fixed number of shares at a Stated Price, which in the case
of new companies is invariably the face value of the securities, and in case of
existing companies, it may include a premium amount if any.

The contents of Prospectus are as follows:

 Name and registered office of the issuing company

 Board of Directors

 Authorized, subscribed and proposed issue of capital to public

 Dates of opening and closing of subscription list

 Name of Broker, Underwriters, and others form whom

application forms along with copies of prospectus can be obtained etc.

27
OFFER FOR SALE :

Another method by which securities can be issued is by means of an offer for

Sale . under this method, instead of the issuing company itself offering its
shares directly to the public, it offers through the intermediary of Issue
houses/Merchant Banks/ Investment Banks (or) firms of Stock Brokers.

The advantage of this method is that the issuing company is saved from the
cost and trouble of selling the share to the public.

Placement Method :

Sale by an issue house or broker to their own clients of securities which have
been previously purchased or subscribed. Under this method securities are
acquired by the issue houses, as in offer for sale method, but instead of
being subsequently offered to the public, they are placed with the clients of
the issue houses, each issue house has a list of large private and institutional
investors who are always prepared to subscribe to any securities which are
issued in this manner.

Rights Issue :

In this case if companies whose shares are already listed and widely held,
shares can be offered by the existing shareholders. This is called Rights
Issue. Under this method, the existing shareholders are offered the right to
subscribe to shares in proportion to the number of shares they already hold.

28
BOOKING BUILDING PROCESS

Book Building is basically a capital issuance process used in Initial Public

Offer (IPO) which aids price and demand discovery. It is a process used for
marketing a public offer of equity shares of a company. It is a mechanism
where, during the period for which the book for the IPO is open, bids are
collected from investors at various prices, which are above or equal to the
floor price. The process aims at tapping both wholesale and retail investors.
The offer/issue price is then determined after the bid closing date based on
certainevaluationcriteria.

The Process:

• The Issuer who is planning an IPO nominates a lead merchant banker

as a 'book runner'.
• The Issuer specifies the number of securities to be issued and the price
band for orders.
• The Issuer also appoints syndicate members with whom orders can be
placed by the investors.
• Investors place their order with a syndicate member who inputs the
orders into the 'electronic book'. This process is called 'bidding' and is
similar to open auction.
• A Book should remain open for a minimum of 5 days.
• Bids cannot be entered less than the floor price.
• Bids can be revised by the bidder before the issue closes.
• On the close of the book building period the 'book runner evaluates the
bids on the basis of the evaluation criteria which may include -
o Price Aggression
o Investor quality
o Earliness of bids, etc.
• The book runner and the company conclude the final price at which it
is willing to issue the stock and allocation of securities.
• Generally, the number of shares are fixed, the issue size gets frozen
based on the price per share discovered through the book building
process.
• Allocation of securities is made to the successful bidders.
• Book Building is a good concept and represents a capital market which
is in the process of maturing.

29
Difference between shares offered through book building and offer of
shares through normal public issue:

Features Fixed Price process Book Building process

Pricing Price at which the Price at which securities will be
securities are offered/allotted is not known in
offered/allotted is known advance to the investor. Only an
in advance to the investor. indicative price range is known.
Demand Demand for the securities Demand for the securities offered
offered is known only can be known everyday as the
after the closure of the book is built.
issue
Payment Payment if made at the Payment only after allocation.
time of subscription
wherein refund is given
after allocation.

Underwriting :

Underwriting means guaranteeing purchase of a stipulated amount of a new

issue. Underwriting is a financial service which ensures the success of new
issue. But mostly it is undertaken on a commission basis known as
underwriter’s commission.

Merchant Banking :

Merchant Banker is any person who is engaged in the business of issue

management either by making arrangements regarding selling, buying, or
subscribing to the securities as a manager, consultant advisor, or rendering
corporate advisory service in relation to such issue management.

30
Functions of Merchant Banks :

 The basic function of these banks is marketing Corporate and other

securities i.e. guaranteeing sales and distribution of securities.

 They guarantee the success of issues by underwriting them.

 They also provide all types of services related to receiving applications,

allotment, collecting money, sending share and debenture certificates
and so on.

31
 SEBI Guidelines

Securities and Exchange Board of India (SEBI) was initially established as a

non-statutory body in April, 1988. For

a) Dealing with all matters relating to the development and regulation.

b) Providing investors Protection.

SEBI was authorized to

1. To regulate all merchant banks on issue activity

2. To lay guidelines, and supervise and regulate the working of Mutual
funds and
3. To oversee the working of stock exchanges in India.

Responsibilities of SEBI :

 Regulating the business in stock exchanges and other securities

markets.

 Registering and regulating the working of stock-brokers, sub-brokers,

share transfer agents, bankers to an issue, trustee of trust deals,
underwriters, Merchant bankers, Portfolio managers, and other
intermediaries associated with the securities markets.

 Registering and regulating of collective investment schemes including

mutual funds.

 Promoting ad regulating the working of self-regulatory organizations.

 Prohibiting fraudulent and unfair trade practices relating to securities

markets.

 Promoting investor’s education and training of intermediaries of

securities market.

 Prohibiting insiders trading in Securities, and

 Regulating substantial acquisition of shares and takeover of

companies.

32
SECONDARY MARKET

33
 SECONDARY MARKET

Secondary Market deals in securities already issued or existing. It is a

market in which previously issued credit instruments are bought and sold.

STOCK EXCHANGE

Stock Exchange is a market where stocks, shares and other securities are
bought and sold. It is a market where the owners of securities can dispose
them of as and when they desire. Stock Exchange has both Primary and
Secondary functions

There are at present 23 Stock Exchanges in the country which are recognized
by the government under the Securities Contract (Regulation) Act, 1956. 21
of them are regional ones. Two other exchanges are set up in the reforms
era they are

1. National Stock Exchange (NSE)

2. Over the counter Exchange of India (OTCEI).

Bombay Stock Exchange (BSE) is the country’s leading exchange. All stock
exchanges are managed by governing body which consists of elected broker-
directors, public representatives, and Government/SEBI.

Role and functions of Stock Exchanges :

A well-organised Stock Exchange performs a number of useful functions they

are as follows:

 An organised stock exchange operating under the well-defined rules

and regulations minimizes the dangers of speculative dealings and
price manipulations.

 Stock exchange provides a ready; market for trading securities and

this helps in mobilization of capital.

 Stock exchange helps in determining the prices of securities.

 Stock exchange facilitates the mobilization of savings of the surplus

units.

 Stock exchange increases the creditworthiness of the business

enterprises.

34
BSE PROFILE

35
 PREFACE

For the premier Stock Exchange that pioneered the stock broking activity in
India, 125 years of experience seem to be a proud milestone. A lot has
changed since 1875 when 318 persons became members of what today is
called "Bombay Stock Exchange Limited" by paying a princely amount of
Re1.

Since then, the stock market in the country has passed through both good
and bad periods. The journey in the 20th century has not been an easy
one. Till the decade of eighties, there was no measure or scale that could
precisely measure the various ups and downs in the Indian stock market.
Bombay Stock Exchange Limited (BSE) in 1986 came out with a Stock
Index that subsequently became the barometer of the Indian Stock Market.

BSE-SENSEX, first compiled in 1986 is a "Market Capitalization-Weighted"

index of 30 component stocks representing a sample of large, well-
established and financially sound companies. The base year of BSE-SENSEX
is 1978-79. The index is widely reported in both domestic and international
markets through print as well as electronic media. BSE-SENSEX is not only
scientifically designed but also based on globally accepted construction and
review methodology. The "Market Capitalization-Weighted" methodology is
a widely followed index construction methodology on which majority of
global equity benchmarks are based.

The growth of equity markets in India has been phenomenal in the decade
gone by. Right from early nineties the stock market witnessed heightened
activity in terms of various bull and bear runs. More recently, the bourses in
India witnessed a similar frenzy in the 'TMT' sectors. The BSE-SENSEX
captured all these happenings in the most judicial manner. One can identify
the booms and bust of the Indian equity market through BSE-SENSEX.

36
 INTRODUCTION

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a
rich heritage. Popularly known as “BSE”, it was established as “The Native
Share & Stock Brokers Association” in 1875. It is the first stock exchange in
the country to obtain permanent recognition in 1956 from the Government of
India under the Securities Contracts (Regulation) Act, 1956.The Exchange’s
pivotal and pre-eminent role in the development of the Indian capital market
is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an
Association of Persons (AOP), the Exchange is now a demutualised and
corporatised entity incorporated under the provisions of the Companies Act,
1956, pursuant to the BSE(Corporatisation and Demutualisation) Scheme,
2005 notified by the Securities and Exchange Board of India (SEBI).

With demutualisation, the trading rights and ownership rights have been de-
linked effectively addressing concerns regarding perceived and real conflicts
of interest. The Exchange is professionally managed under the overall
direction of the Board of Directors.The Board comprises eminent
professionals, representatives of Trading Members and the Managing Director
of the Exchange. The Board is inclusive and is designed to benefit from
theparticipation of market intermediaries.

In terms of organisation structure, the Board formulates larger policy issues

and exercises over-all control. The committees constituted by the Board are
broad-based.The day-to-dayoperations of the Exchange are managed by the
Managing Director and a management team of professionals.

The Exchange has a nation-wide reach with a presence in 417 cities and
towns of India. The systems and processes of the Exchange are designed to
safeguard market integrity and enhance transparency in operations. During
the year 2004-2005, the trading volumes on the Exchange showed robust
growth.

The Exchange provides an efficient and transparent market for trading

in equity, debt instruments and derivatives. The BSE’s On Line Trading
System (BOLT) is a proprietory system of the Exchange and is BS 7799-
2- 2002 certified. The surveillance and clearing & settlement functions
of the Exchange are ISO 9001:2000 certified

37
 LOGO

The Stock Exchange, Mumbai, is now Bombay Stock Exchange Limited. The
Exchange has a new name, and an entirely new perspective. A perspective
born out of corporatisation and demutualisation.

Bombay Stock Exchange Limited is Asia’s oldest stock exchange. It carries

within itself the depth of knowledge of capital markets acquired since its
inception in 1875. Located in Mumbai, the financial capital of India, it has
been the backbone of the country’s capital markets.

As a corporate entity, our new identity reflects our new perspective.

Smoother, seamless, and efficient. Whichever way you look at it.

VISION

“Emerge as the premier Indian stock exchange by establishing global

benchmarks"

38
TECHNOLOGY USED IN BSE

BSE Ltd places great deal of emphasis on Information Technology to

strengthen its functioning and performance. Information Systems
Department continuously upgrades the hardware, software and networking
systems, thus enabling the Exchange to enhance the quality and standard of
service provided to its members and other market intermediaries.

To facilitate smooth transaction, BSE had replaced its open outcry system
with BSE On-line Trading (BOLT) facility in 1995. This totally automated
screen based trading in securities was put into practice nation-wide within
arecordtimeofjust50days.

The BOLT platform capacity has been enhanced to 40 lakh trades per day by
upgrading the hardware. In 2000 BSE set up its Own Master Earth Station
(HUB), which uses full transponder on INSAT 3B satellite to cater to Trader
Work Stations (TWS), located over 400 cities across the country. Currently,
BOLT operates in 8000 TWS located across over 409 cities in India. BOLT has
been certified by DNV for conforming to BS7799 security standards. With
this, BSE is the second stock exchange in the world to have this certification.

Exchange has also introduced the world’s first centralized exchange based
Internet trading system, BSE WEBx.com. The initiative enables investors
anywhere in the world to trade on the BSE platform.

BSE, through its superior technology, provides unique capabilities of

dedicated access mechanism on the inbound traffic, which can maintain a
consistent response time. Several other technological initiatives have been
undertaken to provide faster, efficient and more reliable services.

BSE’s team of experts and professionals, along with its strategic partners
have put into place several critical systems such as Derivatives Trading &
Settlement System (DTSS), Electronic Contract Notes (ECN), Straight
Through Process (STP), Unique Client Code registration (UCC), Real time
data dissemination - system - Datafeed, Integrated Back office System - CDB
/ IDB, Book Building System (BBS) & Reverse Book Building System (RBBS)
etc.

BSE’s website www.bseindia.com provides comprehensive information on

the stock market. It is one of the most popular financial websites in India and
is regularly visited by financial organizations and other stakeholders for
updates.

39
BSE also operates one of the largest private networks in India, comprising
campus LAN, WAN set up within Mumbai and across some major metros in
India, VSAT set up across the country, BSE Admin network covering BSE
offices and Internet set up supporting BSE Internet trading portal,
BSEWebx.com; corporate website, and mail services and Regional Hubs for
local fan out of leased lines within Metros backed by high availability trunk
back bone to BSE. The regional technology hubs commissioned in Chennai,
Rajkot, Jaipur and Bangalore provide cost-effective reliable services to
members.

The trading and settlement activities of the member-brokers are closely

monitored through On-line Real Time System known as BSE Online
Surveillance System (BOSS). The system enables the Exchange to detect
market abuses at a nascent stage, improve the risk management system and
strengthen the self-regulatory mechanisms. Currently, BSE is in the process
of evolving an integrated system for online surveillance of Cash and
Derivatives Segment through BSE Online Surveillance System-
Integrated(BOSS-i).

BSE uses higher end fault tolerant systems for its trading and related
functionalities. It uses Integrity Non-stop S88000 systems for its online
trading systems (BOLT). The systems have been designed to deliver the best
performance without compromising on key factors of availability, scalability,
ROI and TCO. There are powerful RISC based Unix severs rp8400 from hp for
our Derivatives, Settlement, Backoffice, Datafeed, BBS, RBBS and other
systems related to trading / non-trading and related functionalities. The
systems are facilitated by the use of the robust and high available storage
subsystems from hp.

We use one of the most powerful RISC based Alpha GS140 and ES40 servers
for our Internet based trading system (ITS) enabling the end user to carry
out the trading activities from any location facilitated by the internet.

we also use Intel 8 way and 4 way servers for bseindia.com web site, one of
the best portal on information related to capital markets.

BSE strictly adheres to IS policies and IS Security policies and procedures for
its day to day operational activities on 24 x 7 basis which has enabled us to
achieve the BS7799 certification. In addition, BSE has also been successful in
maintaining systems and processes uptime of 99.99%.

40
 SAFETY OF THE BSE MARKET

One of the objectives of the Exchange is to promote and inculcate honourable

and just practices of trade in securities transactions and to discourage
malpractices.

The surveillance function at the Exchange has assumed greater importance in

the last few years. The Securities and Exchange Board of India (SEBI) had
directed the Stock Exchanges in August 1995 to set up a separate
Surveillance Department with staff exclusively assigned to surveillance
functions. The Exchange has accordingly set up a separate Surveillance
Department to keep a close watch on price movement of scrips, detect
market manipulations like price rigging, etc., monitor abnormal prices and
volumes which are not consistent with normal trading pattern and monitor
the member-brokers' position to ensure that defaults do not occur. This
Department, which is headed by a General Manager, reports directly to the
Executive Director.

The Surveillance Department monitors exposure of the members on a daily

basis. It also scrutinises the prices and volumes of the scrips on a daily basis.

As per the guidelines issued by SEBI, the Exchanges are required to apply a
daily Circuit Filter of 20% on all the scrips except on the scrips on which
derivative products are available or are included in the indices on which
derivative products are available. On these scrips Exchange has imposed
dummy circuit filters to avoid punching error by members, if any. The
imposition of circuit filters on scrips ensures that the price of the scrip cannot
move upward or downward beyond the limit set for a day.

The large variation in the prices as well as the volumes of the scrips are
scrutinised and appropriate actions are taken. The scrips which reach new
high or new low and companies which have high turnover, are watched. Also
the prices and volumes in the newly listed scrips are monitored. In case
certain abnormalities are noticed, then circuit filters are reduced to make it
difficult for the price manipulators to increase or push down the prices of a
scrip within a short period of time. The Exchange imposes special margin in
the scrips where it is suspected that there is an attempt to ramp up the
prices by creating artificial volumes. The Exchange also transfers the scrips
for trading and settlement on a trade-to-trade basis which would result into
giving/taking delivery of shares on a gross level and no intra-day/settlement
netting off/squaring off facility would be permitted. In cases where the
abnormal movements continue despite the aforesaid measures, trading in the
scrip is suspended.

Detailed investigations are conducted in cases where price manipulation is

suspected and disciplinary action is taken against the members concerned.

41
The Exchange has developed an On-line Real Time (OLRT) Surveillance
System, which has been commissioned from July 15, 1999. Under this
system, alerts are generated by the system on-line, in real time, based on
certain preset parameters like the price and volume variation in scrips,
members taking unduly large positions not commensurate with their financial
position or having concentrated position(s) in one or a few scrips, etc.

This system includes databases such as company profile, members' profile

and historical database of turnover and price movement in scrips, members'
turnover, their pay-in obligations, etc. The system generates alerts on the
basis of pre-set parameters during the trading hours and corrective action
based on further investigations is taken in such cases.

42
 LISTING OF SECURITIES

Listing means admission of the securities to dealings on a recognised stock

exchange. The securities may be of any public limited company, Central or
State Government, quasi governmental and other financial
institutions/corporations, municipalities, etc.

The objectives of listing are mainly to :

• provide liquidity to securities;

• mobilize savings for economic development;
• protect interest of investors by ensuring full disclosures.

The Exchange has a separate Listing Department to grant approval for listing
of securities of companies in accordance with the provisions of the Securities
Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules,
1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-laws
and Regulations of the Exchange.
A company intending to have its securities listed on the Exchange has to
comply with the listing requirements prescribed by the Exchange. Some of
the requirements are as under :-

I Minimum Listing Requirements for new companies

II Minimum Listing Requirements for companies listed on other stock exchanges
Minimum Requirements for companies delisted by this Exchange seeking
III
relisting of this Exchange
Permission to use the name of the Exchange in an Issuer Company's
IV
prospectus
V Submission of Letter of Application
VI Allotment of Securities
VII Trading Permission
VIII Requirement of 1% Security
IX Payment of Listing Fees
X Compliance with Listing Agreement
XI "Z" Group
XII Cash Management Services (CMS) - Collection of Listing Fees

43
[I] Minimum Listing Requirements for new companies

(A) Minimum Capital :

1. New companies can be listed on the Exchange, if their issued &

subscribed equity capital after the public issue is Rs.10 crores . In
addition to this the issuer company should have a post issue
networth ( equity capital + free reserves excluding revaluation
reserve) of Rs.20 crores.

2. For new companies in high technology ( i.e. information technology,

internet, e-commerce, telecommunication, media including
advertisement, entertainment etc.) the following criteria will be
applicable regarding threshold limit:

i. The total income/sales from the main activity, which should be

in the field of information technology, internet, e-commerce,
telecommunication, media including advertisement,
entertainment etc. should not be less than 75% of the total
income during the two immediately preceding years as
certified by the Auditors of the company.

ii. The minimum post-issue paid-up equity capital should be Rs.5

Crores.

iii. The minimum market capitalisation should be Rs.50 Crores.

(The capitalisation will be calculated by multiplying the post
issue subscribed number of equity shares with the Issue
price).

iv. Post issue networth ( equity capital + free reserves excluding

revaluation reserve) of Rs.20 Crores.

(B) Minimum Public offer :

As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957,
securities of a company can be listed on a Stock Exchange only when at least
25% of each class or kind of securities is offered to the public for
subscription.
In case of IPOs by unlisted companies in the IT& entertainment sector, at
least 10% of the securities issued by the company may be offered to the
public subject to the following:

• Minimum 20 lac securities are offered to the public (excluding

reservation, firm allotment and promoters contribution)
• The size of the offer to the public is minimum 50 crores.

44
For this purpose, the term "offered to the public" means only the portion
offered to the public and does not include reservations of securities on firm
or competitive basis.
SEBI may, however, relax this condition on the basis of recommendations of
stock exchange(s), only in respect of a Government company defined under
Section 617 of the Companies Act, 1956.
[II] Minimum Listing Requirements for companies listed on other stock
exchanges
The Governing Board of the Exchange at its meeting held on 6th August,
2002 amended the direct listing norms for companies listed on other Stock
Exchange(s) and seeking listing at BSE. These norms are applicable with
immediate effect.

1. The company should have minimum issued and paid up equity capital
of Rs. 3 crores.
2. The Company should have profit making track record for last three
years. The revenues/profits arising out of extra ordinary items or
income from any source of non-recurring nature should be excluded
while calculating distributable profits.
3. Minimum networth of Rs. 20 crores (networth includes Equity capital
and free reserves excluding revaluation reserves).
4. Minimum market capitalisation of the listed capital should be at least
two times of the paid up capital.
5. The company should have a dividend paying track record for the last 3
consecutive years and the minimum dividend should be at least 10%.
6. Minimum 25% of the company's issued capital should be with Non-
Promoters shareholders as per Clause 35 of the Listing Agreement.
Out of above Non Promoter holding no single shareholder should hold
more than 0.5% of the paid-up capital of the company individually or
jointly with others except in case of Banks/Financial
Institutions/Foreign Institutional Investors/Overseas Corporate Bodies
and Non-Resident Indians.
7. The company should have at least two years listing record with any of
the Regional Stock Exchange.
8. The company should sign an agreement with CDSL & NSDL for demat
trading.

45
 TRADING AND SETTLEMENT

TRADING

 Listed Securities

 Permitted Securities

 Tick Size

 Computation of closing price of scrips in the Cash Segment

 Compulsory Rolling Segment (CRS)

SETTLEMENT

 Pay-in and Pay-out for 'A', 'B1', 'B2', ‘T’, ‘S’, ‘TS’, 'C', "F", "G" & 'Z' group
of securities
 Demat pay-in
 Auto delivery facility
 Pay-in of securities in physical form
 Funds Pay-in
 Securities Pay-out
 Funds Payout
 Penalty Norms
 Brokers Contingency Fund

46
 TRADING

Trading on the BOLT System is conducted from Monday to Friday between

9:55 a.m. and 3:30 p.m. The scrips traded on the Exchange have been
classified into 'A', 'B1', 'B2','T', ‘S', ‘TS' 'F' ,'G' and 'Z' groups.

T he Exchange has for the guidance and benefit of the investors have
classified the scrips in the Equity Segment into 'A', 'B1', 'B2','T', ‘S', ‘TS' and
'Z' groups on certain qualitative and quantitative parameters which include
number of trades, value traded, etc.

The “F” Group represents the Fixed Income Securities.

The “T” Group represents scrips which are settled on a trade to trade basis as
a surveillance measure.

The “S” Group represent scrips forming part of the “ BSE-Indonext”

segment . The “TS” Group consist of scrips in the “ BSE-Indonext” segment
which are settled on a trade to trade basis as a surveillance measure.

Trading in Govt. Securities for retail investors is done under "G" group.

The 'Z' group was introduced by the Exchange in July 1999 and includes the
companies which have failed to comply with the listing requirements of the
Exchange and/or have failed to resolve investor complaints or have not made
the required arrangements with both the Depositories, viz., Central
Depository Services (I) Ltd. (CDSL) and National Securities Depository Ltd.
(NSDL) for dematerialization of their securities.

The Exchange also provides a facility to the market participants for on-line
trading of odd-lot securities in physical form in 'A', 'B1', 'B2' ‘T','S', ‘TS' and
'Z' groups and Rights renunciations in all the groups of scrips in the Equity
Segment.

With effect from December 31, 2001, trading in all securities listed in equity
segment of the Exchange takes place in one market segment, viz.,
Compulsory Rolling Settlement Segment (CRS).

The scrips of the companies which are in demat can be traded in market lot
of one but the securities of companies which are still in the physical form are
traded on the Exchange in the market lot of generally either 50 or 100.
However, the investors having quantities of securities less than the market
lot are required to sell them as "Odd Lots". The facility of trading in odd lots
of securities not only offers an exit route to investors to dispose of their odd
lots of securities but also provides them an opportunity to consolidate their
securities into market lots.

47
This facility of selling physical shares in compulsory demat scrips is called an
Exit Route Scheme. This facility can also be used by small investors for
selling upto 500 shares in physical form in respect of scrips of companies
where trades are required to be compulsorily settled by all investors in demat
mode.

Listed Securities:

The securities of companies which have signed Listing Agreement with the
Exchange are traded at the Exchange as "Listed Securities". Baring a few
scrips, all scrips traded in the Equity Segment at the Exchange fall in this
category.

Permitted Securities:

To facilitate the market participants to trade in securities of the companies

which are actively traded at other Regional Stock Exchanges but are not
listed on the Exchange, the Exchange has in April 2002 decided to permit
trading in such securities as " Permitted Securities" provided they meet the
relevant norms specified by the Exchange.

Tick Size:

Tick size is the minimum difference in rates between two orders on the same
side i.e., buy or sell, entered on the system for a particular scrip. Trading in
scrips listed on the Exchange is done with the tick size of 5 paise.

However, in order to increase the liquidity and enable the market participants
to put orders at finer rates, the Exchange has reduced the tick size from 5
paise to 1 paise in case of units of mutual funds, securities traded in "F"
group and equity shares having closing price upto Rs. 15/- on the last trading
day of the calendar month. Accordingly, the tick size in various scrips quoting
upto Rs.15/- is revised to 1 paise on the first trading day of month. The tick
size so revised on the first trading day of month remain unchanged during
the month even if the prices of scrips undergo change.

48
Settlement

Pay-in and Pay-out for 'A', 'B1', 'B2', ‘T’, ‘S’, ‘TS’, 'C', "F", "G" & 'Z' group of
securities

The trades done on BOLT/Exchange by the members in all the securities in

CRS are now settled on the Exchange by payment of monies and delivery of
securities on T+2 basis. All deliveries of securities are required to be routed
through the Clearing House,

The Pay-in /Pay-out of funds based on the money statement and that of
securities based on Delivery Order/ Receive Order issued by the Exchange
are settled on T+2 day.

49
 PENALTY NORMS

For settlement (Pay-in) defaults :

Violation/s Obligation>= 20% Obligation more than

Of BMC & <= BMC BMC(For Financial Yr)
**Deposit as funds
(On 3 months shortage collateral.
rolling basis)
st
Delay in clearance of 1 instance : Rs.5,000/- or 1stinstance : 0.5% of
funds obligations (viz. 1% of funds obligation, funds obligation. In
shortages, auction whichever is higher. addition BOLT Terminal to
and normal pay-in be de-activated
obligation) and non- immediately and to remain
deposit of additional de-activated till pay-in
capital as per SEBI obligation is cleared.
stipulated capital 2ndinstance : Rs.10,000/- or
2ndinstance : 1% of funds
cushion requirements 2% of funds obligation, obligation.In addition to
whichever is higher. the above penalty, BOLT
Terminal to be de-
activated immediately and
to remain de-activated for
additional ONE trading
day, after clearance of the
obligation.
As above 3 instance : Rs.15,000/- or 3rdinstance : 1.5 % of
rd

2.5% of funds obligation, funds obligation.In addition

whichever is higher. to the above penalty, BOLT
Terminal to be deactivated
immediately and to remain
de-activated for additional
three trading days after
clearance of the obligation
irrespective of the amount
of obligation

50
4thinstance :Rs. 20,000/- or 4thinstance : : 2% of the
3 % of the funds obligation funds obligation. In
whichever is higher will be addition to the above
levied penalty, BOLT Terminal to
be de-activated
immediately and to remain
de-activated for additional
five trading days after
clearance of the obligation,
irrespective of the amount
of obligation.
5 instance : Rs. 40,000/- 5thinstance : 3% of the
th

or 6% of the funds obligation funds obligation. In

whichever is higher. addition to the above
penalty, BOLT Terminal to
be de-activated
immediately and to remain
de-activated for additional
seven trading days after
clearance of the obligation,
irrespective of the amount
of obligation. Plus the
matter would be referred
to DAC.
th
6 instance & above : : Rs.
75,000/- or 10% of funds
obligation whichever is
higher. In addition the
matter would be referred to
DAC. In case this is the sixth
instance within a period of 3
months, on rolling basis,
BOLT terminals of the
member shall be de-
activated immediately. Also
deposit as “funds shortage
collateral” ** will be
collected as per SEBI
guidelines.

51
NSE PROFILE

52
The Organisation

The National Stock Exchange of India Limited has genesis in the report of the
High Powered Study Group on Establishment of New Stock Exchanges, which
recommended promotion of a National Stock Exchange by financial
institutions (FIs) to provide access to investors from all across the country on
an equal footing. Based on the recommendations, NSE was promoted by
leading Financial Institutions at the behest of the Government of India and
was incorporated in November 1992 as a tax-paying company unlike other
stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts

(Regulation) Act, 1956 in April 1993, NSE commenced operations in the
Wholesale Debt Market (WDM) segment in June 1994. The Capital Market
(Equities) segment commenced operations in November 1994 and operations
in Derivatives segment commenced in June 2000.

Our Logo

The logo of the NSE symbolises a single nationwide securities trading facility
ensuring equal and fair access to investors, trading members and issuers all
over the country. The initials of the Exchange viz., N, S and E have been
etched on the logo and are distinctly visible. The logo symbolises use of state
of the art information technology and satellite connectivity to bring about the
change within the securities industry. The logo symbolises vibrancy and
unleashing of creative energy to constantly bring about change through
innovation.

53
Our Group

NSCCL

NSE.IT
IISL

DotEx Intl. Ltd.

NSDL

54
Our Mission

NSE's mission is setting the agenda for change in the securities markets in
India. The NSE was set-up with the main objectives of:

• establishing a nation-wide trading facility for equities, debt

instruments and hybrids,
• ensuring equal access to investors all over the country through an
appropriate communication network,
• providing a fair, efficient and transparent securities market to
investors using electronic trading systems,
• enabling shorter settlement cycles and book entry settlements
systems, and
• meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology have
become industry benchmarks and are being emulated by other market
participants. NSE is more than a mere market facilitator. It's that force which
is guiding the industry towards new horizons and greater opportunities.

Market Timings

Trading on the equities segment takes place on all days of the week (except
Saturdays and Sundays and holidays declared by the Exchange in advance).
The market timings of the equities segment are:

Normal Market Open : 09:55 hours

Normal Market Close : 15:30 hours

The Closing Session is held between 15.50 hours and 16.00 hours

Limited Physical Market Open : 09:55 hours

Limited Physical Market Close : 15:30 hours

55
Securities Available for Trading

The Capital Market (Equities) segment of NSE facilitates trading in the

following instruments:

A. Shares

• Equity Shares
• Preference Shares

B. Debentures

• Partly Convertible Debentures

• Fully Convertible Debentures
• Non Convertible Debentures
• Warrants / Coupons / Secured Premium Notes/ other Hybrids
• Bonds

C. Units of Mutual Funds

For the list of securities available for trading on the NSE .

Listing

Listing means admission of securities of an issuer to trading privileges on a

stock exchange through a formal agreement. The prime objective of
admission to dealings on the Exchange is to provide liquidity and
marketability to securities, as also to provide a mechanism for effective
management of trading.

Listing on NSE provides qualifying companies with the

broadest access to investors, the greatest market depth and liquidity, cost-
effective access to capital, the highest visibility, the fairest pricing, and
investor benefits. NSE trading terminals are now situated in various cities
and towns across the length and breath of India.

Securities listed on the Exchange are required to fulfill the eligibility criteria
for listing. Various types of securities of a company are traded under a
unique symbol and different series.

56
Listing Procedure

An Issuer has to take various steps prior to making an application for listing
its securities on the NSE. These steps are essential to ensure the compliance
of certain requirements by the Issuer before listing its securities on the NSE.
The various steps to be taken include:

• Initial Discussions
• Approval of Memorandum and Articles of Association
• Approval of draft prospectus
• Submission of Application
• Listing conditions and requirements

In case company fulfils the criteria, the following information for further
processing :

1. A brief note on the promoters and management.

2. Company profile.
3. Copies of the Annual Report for last 3 years.
4. Copies of the Draft Offer Document.
5. Memorandum & Articles of Association.

57
 Listing Fees

The listing fees depend on the paid up share capital of your Company:

Particulars Amount (Rs.)

Initial Listing Fees 7,500
Annual Listing Fees
Companies with paid up share and/or debenture capital:
Of Rs.1 crore 4,200
Above Rs.1 crore and up to Rs.5
8,400
crores
Above Rs.5 crores and up to Rs.10
14,000
crores
Above Rs.10 crores and up to Rs.20
28,000
crores
Above Rs.20 crores and up to Rs.50
42,000
crores
Above Rs.50 crores 70,000

Companies which have a paid up capital of more than Rs. 50 crores will
pay additional listing fees of Rs. 1400 for every increase of Rs. 5 crores or
part thereof in the paid up share/debenture capital.

58
Equities

NSE started trading in the equities segment (Capital Market segment) on

November 3, 1994 and within a short span of 1 year became the largest
exchange in India in terms of volumes transacted.

Trading volumes in the equity segment have grown rapidly with average
daily turnover increasing from Rs.17 crores during 1994-95 to Rs.4,328
crores during 2003-04. During the year 2003-04, NSE reported a turnover of
Rs.1,099,535 crores in the equities segment accounting for 68.60% of the
total Indian securities market.

The Equities section provides you with an insight into the equities segment of
NSE and also provides real-time quotes and statistics of the equities market.
In-depth information regarding listing of securities, trading systems &
processes, clearing and settlement, risk management, trading statistics etc
are available here.

Current Settlement Statistics (Equities)

The Exchange has successfully completed its 1540th Normal Settlement

The Exchange has successfully completed its 1540th Normal Settlements

(Rolling T+2 following SEBI directive) since inception i.e., Settlement
Number N – 2006067 on April 17, 2006. The settlement statistics are as
follows:

Particulars Values
N – 2006067
Total traded quantity (lakhs) 4618.43
Total traded value (Rs. In Crores) 10905.09
Total value of the settlement (Securities) (Rs. In Crores) 2957.25
Total value of the settlement (Funds) (Rs. In Crores) 1130.74
Shortages for the settlement 0.27%
% of Delivery ( No. of shares deliverable / No. of shares traded ) 28.02%

Retail Debt Market has completed its 814th settlements details of which are
as follows :

Settlement No. Traded Value Settlement Value

Securities Funds
D- 2006067 NIL NIL NIL

59
COMPANY ANALYSIS

60
 Satyam profile

Delivering What Business Demands

Satyam Computer Services Ltd. (NYSE: "SAY") is a leading global consulting

and IT services company, offering a wide array of solutions customized for a
range of key verticals and horizontals. From strategy consulting right through
to implementing IT solutions for customers, Satyam straddles the entire IT
space. It has excellent domain competencies in verticals such as Automotive,
Banking & Financial Service, Insurance & Healthcare, Manufacturing,
Telecom-Infrastructure-Media-Entertainment-Semiconductors (TIMES). As a
diverse end-to-end IT solutions provider, Satyam offers a range of expertise
aimed at helping customers re-engineer and re-invent their businesses to
compete successfully in an ever-changing marketplace.

Satyam's network spans 55* countries, across 6* continents. Over 28,000*

dedicated and highly skilled IT professionals, work in development centers in
India, the USA, the UK, the UAE, Canada, Hungary, Singapore, Malaysia,
China, Japan and Australia* and serve over 469* global companies, including
over 156* Fortune 500 corporations.

We have strategic technology and marketing alliances with over 50* top-
notch companies that help us provide end-to-end services to our customers.

Satyam's need-driven deployment of domain and technology expertise brings

to customers a range of solutions and products that enhance performance
and competitiveness.

Our unique RightSourcingTM delivery model allows us to leverage local

competencies to offer global competitiveness to our customers.

Our consulting and IT solutions have resulted in technology-intensive

transformations that have met the most stringent of international quality
standards. We have developed a unique quality hallmark, called eSCMSM
(eSourcing Capability Model), for IT Enabled Services (ITES), in collaboration
with Carnegie Mellon University and Accenture.

We follow a specially developed Business Continuity Model (BCM), which

allows us to continue mission critical operations of our customers, even in the
most challenging of times.

61
Core Purpose:
"To leverage information, knowledge and technology to enhance human
endeavor."

Satyam develops and deploys intelligent applications in technology for

diverse situations meeting varying requirements. Satyam helps businesses
and organizations push the limits of excellence, and helps optimize their
strengths.

Satyam's core values are expressed in the way teams are built and the
manner in which they operate and achieve results. These values have been
identified based on internal strengths of the organization. They are the
guiding parameters for all organization-wide initiatives.

BeliefinPeople:
Satyam believes its true strength lies in the potential of its Associates.
Associates work in an atmosphere of trust and confidence. Every individual
Associate is a leader. This leadership is expressed in the way tasks are
assigned and taken up, the freedom with which workstyles are negotiated
and high standards of quality set independently by each and every Associate.
A high degree of operational freedom helps Associates exercise their
creativity and expertise in approaching tasks and achieving Customer
Delight.

Vertical Industries

• Aerospace & Defense

• Automotive
• Banking and Financial Services
• Education
• Energy & Utility
• Government
• Healthcare
• Insurance
• Manufacturing
• Media & Entertainment
• Non-Profits
• Real Estate & Construction
• Retail
• Telecom
• Travel & Transportation

62
 Satyam Computer Services Ltd

Financial performance (Rs . Cr)

Year-end 2007-06 2006-05 2005-04 2004-03
Equity 64 63 63 63
Net worth 3217 2581 2135 1930
Enterprise value 10688 7474 4061 7326
Capital Employed 3227 2588 2153 1936
Gross Block 938 839 776 739
Sales 6228 4634 3464 2541
Other Income 182 380 102 113
PBIDT 1711 1571 972 774
PBDT 1703 1568 971 774
PBIT 1524 1246 868 663
PBT 1573 1445 867 662
Reported PAT(RPAT) 1423 1240 750 556
Adjusted PAT 1419 1232 751 542
CP 1326 1146 854 667
Rev.Earning in FE 3032 2294 1870 1602
Rev.Expenses in FE 1806 1355 955 589
Book Value (Rs) 100.77 81.61 67.81 61.37
EPS (Rs) 22.85 17.06 9.49 14.24
Dividend (%) 175 350 250 200
Pay out (%) 21.89 23.49 31.61 8.32

Equity: Stock or any other security representing an ownership interest.

On the balance sheet, the amount of the funds contributed by the owners
(the stockholders) plus the retained earnings (or losses). Also referred to as
"shareholder's equity".

The equity of satyam computers ltd has been increased form 63cr to 64cr
since from the year 2003To 2007.

Net worth : It the total of paid-up equity capital and free reserves and
surplus.Paid up capital is the has been increased in the year 2007 compared
to the year 2005-04.

Book value : the book value of the Equity share increased to 86.77 from
82.37.

EPS : Earning per share of the satyam company has been increasing in
consecutive years
Except in the year 2004. Due to down trend in IT sector but gradually it has
increased to
20.77 form 17.06.

63
Dividend :payment made to share holders usually once or twice a year out
of a company’s
Profits after tax. Dividend is declared on the face value of the share and not
on its market price.
Bonus share is also a kind of dividend.]
Calculated as:

The percentage of earnings paid to shareholders in dividends.

Calculated as:

Dividends paid to the share holders was Rs 175cr in the year 2007.

Pay out (%) : the pay out (%) of dividend is 21.89 from 31.61

Conclusion: satyam computers ltd is one of the multi national companys

and it has been a legend in IT , satyam computers ltd has got Equity of
64crs and net worth 3217Cr which is lower than wipro, and Infosys. But has
Eps, Dividend pay out ration is more than wipro and Infosys.

64
 Wipro’s Profile

Wipro Fluid Power Limited - Wipro Fluid Power offers world-class hydraulic
cylinders and truck hydraulic components and represents the Kayaba,
Kawasaki, Sun Hydraulics and Teijin Seiki range of hydraulic products in
India. With state-of-the-art manufacturing facilities and extensive product
development and testing facilities, Wipro Fluid Power has emerged leader in
the in the hydraulic cylinders and truck tipping systems market in India.

Wipro Infotech India - Wipro Infotech is the IT services, solutions and

products division of Wipro. It operates in the geographies of Asia-Pacific and
the Middle-East. Wipro Infotech is one of the leading manufacturers of
computer hardware and a provider of systems integration services in India.
The company manufactures a popular line of desktops, notebook PCs, data
servers and offers a range of technology services.

Wipro Lighting - Wipro Lighting manufactures and markets the Wipro

brand of luminaires, lamps and accessories. Wipro Lighting caters to both
institutional and retail consumers, offering lighting solutions across various
application areas such as commercial lighting for modern work spaces,
manufacturing and pharmaceutical companies, designer petrol pumps and
outdoor architecture.

Milestones

Our values are extremely important to us and form the bedrock of our vision
and plans. Values are an integral part of our culture and present a common
face to our Customer. The four Wipro values: Human Values, Integrity,
Innovative Solutions and Value for Money are encapsulated in our promise to
the customer and in our Identity.

These values shape our thinking, our behavior, our culture and how we come
across to our customers, partners and to the world at large.

“Innovation is Wipro - Wipro is Innovation” is our statement of purpose. The

challenge this pursuit presents to us every day is – how does one make
Innovation “Purposeful”, “ingrained” and “Deliberate” in our organization.

We recognize and nurture “innovative solutions” as one of the four Wipro

values. We prioritize focus and resources guided by this value. The Wipro
way of Innovation is really about this deliberate sustained innovation.

Our purpose of Innovation is to create higher value for our customers. This
continuous thought led us to foresee the benefit of partnering with
technology companies to bring value to our customers. Combining these

65
relationships with our strong R&B talent led to the idea of “Lab on Hire” and
subsequently to offshore development centers which made offshore
outsourcing truly mainstream. Pushing this idea a little further helped us
conceptualize the remote infrastructure service model, branded as global
command center or GCC to manage the customer’s IT infrastructure. Today,
we serve our customers with a wide spectrum of services fuelled by the
power of innovation.

Industries
Automotive Electronics
Automotive IT
Avionics
Computing Peripherals
Computing Platforms
Consumer Electronics
Distribution & Logistics
Energy & Utilities
Finance
Government
HealthScience
High Technology

66
Insurance
Manufacturing
Media & Entertainment
Mobile Devices
Retail
Semiconductors
Software Products
Storage Technologies
Telecom - Equipment Vendors
Telecom - Service Providers
Travel & Transport

67
 WIPRO LTD

Financial performance (Rs . Cr)

Year-end 2006-05 2005-04 2004-03 2003-02
Equity 141 47 47 46
Net worth 4892 3508 3330 2533
Enterprise value 46720 31449 28225 39287
Capital Employed 4955 3608 3400 2559
Gross Block 1763 1334 1162 962
Sales 10264 7276 5188 4040
Other Income 152 94 127 118
PBIDT 2635 1948 1237 1075
PBDT 2632 1942 1234 1072
PBIT 2036 1762 1085 937
PBT 2340 1756 1082 934
Reported PAT(RPAT) 2020 1495 950 813
Adjusted PAT 2006 1483 906 802
CP 1886 1681 1066 951
Rev.Earning in FE 5374 3836 2887 2349
Rev.Expenses in FE 3905 2393 1488 1195
Book VALUE (Rs) 69.54 150.70 143.20 108.95
EPS (Rs) 20.55 35.59 34.84 37.26
Dividend (%) 250 250 1450 50
Pay out (%) 24.34 81.48 2.87 2.68

Equity: Stock or any other security representing an ownership interest.

On the balance sheet, the amount of the funds contributed by the owners
(the stockholders) plus the retained earnings (or losses). Also referred to as
"shareholder's equity".

The equity of Infosys Technologies ltd has been increased to141cr from 46cr
since from the year 2003 to 2006.

Net worth : It the total of paid-up equity capital and free reserves and
surplus.
Paid up capital is the has been increased in the year 2006
compared to the year 2004-03.

Book value : the book value of the Equity share decreased to 69.54 from
150.70

EPS : Earning per share of the Infosys Technologies ltd has been decreased
in consecutive years. Eps has decreased to 20.55 form 37.26.

68
Dividend :payment made to share holders usually once or twice a year out
of a company’s
Profits after tax. Dividend is declared on the face value of the share and not
on its market price.
Bonus share is also a kind of dividend.
Calculated as:

The percentage of earnings paid to shareholders in dividends.

Calculated as:

Dividends paid to the share holders was 1450crs in the year 2004.

Pay out (%) : the pay out (%) of dividend is 24.34 from 81.48

Conclusion: Wipro is one of the multi national companys and it has been a
legend in IT , Lighting, and fluid power. Wipro has got Equity of 141crs
which is higher than Infosys, and Satyam computers. But Eps, Dividend pay
out ration has been decreased continuiously every year. And has 2 nd highest
enterprise value next to Infosys.

69
 Infosys profile

Infosys Technologies Ltd. (NASDAQ: INFY) provides consulting and IT

services to clients globally - as partners to conceptualize and realize
technology driven business transformation initiatives. With over 52,000
employees worldwide, we use a low-risk Global Delivery Model (GDM) to
accelerate schedules with a high degree of time and cost predictability.

As one of the pioneers in strategic offshore outsourcing of software services,

Infosys has leveraged the global trend of offshore outsourcing. Even as many
software outsourcing companies were blamed for diverting global jobs to
cheaper offshore outsourcing destinations like India and China, Infosys was
recently applauded by Wired magazine for its unique offshore outsourcing
strategy — it singled out Infosys for turning the outsourcing myth around
and bringing jobs back to the US.

Infosys provides end-to-end business solutions that leverage technology. We

provide solutions for a dynamic environment where business and technology
strategies converge. Our approach focuses on new ways of business
combining IT innovation and adoption while also leveraging an organization's
current IT assets. We work with large global corporations and new generation
technology companies - to build new products or services and to implement
prudent business and technology strategies in today's dynamic digital
environment.

Infosys' Vision:

"To be a globally respected corporation that provides best-of-breed business

solutions, leveraging technology, delivered by best-in-class people."

Infosys' Mission Statement :

"To achieve our objectives in an environment of fairness, honesty, and

courtesy towards our clients, employees, vendors and society at large."

70
Key milestones
Year of Incorporation : 1981

Became a public limited company 1992

in India :
ISO 9001/TickIT Certification : 1993

Attained SEI-CMM Level 4 : 1997

Listed on NASDAQ : 1999

Crossed $100 million in annual 1999

revenues :
Attained SEI-CMM Level 5 : 1999

Crossed $400 million in 2001

revenues :
Crossed $ half a billion in 2002
revenues :
Crossed $ billion in revenues : 2004

71
 INFOSYS TECHNOLOGIES Ltd.

Financial performance (Rs . Cr)

Year-end 2006-05 2005-04 2004-03 2003-02
Equity 135 33 33 33
Net worth 5242 3253 2861 2080
Enterprise value 59468 31270 25427 23942
Capital Employed 5242 3253 2861 2080
Gross Block 2183 1570 1273 961
Sales 9028 6860 4761 3623
Other Income 227 172 127 106
PBIDT 3146 2498 1702 1349
PBDT 3145 2497 1701 1348
PBIT 2936 2231 1471 1160
PBT 2736 2229 1470 1159
Reported PAT(RPAT) 2421 1904 1243 958
Adjusted PAT 2415 1898 1239 952
CP 2173 1474 1147 969
Rev.Earning in FE 6105 4533 3378 2496
Rev.Expenses in FE 2772 1937 1540 1030
Book Value (Rs) 193.72 488.21 431.86 314.34
EPS (Rs) 68.82 170.01 142.76 314.34
Dividend (%) 900 230 2590 540
Pay out (%) 16.64 76.12 18.91 16.49

Equity: Stock or any other security representing an ownership interest.

On the balance sheet, the amount of the funds contributed by the owners
(the stockholders) plus the retained earnings (or losses). Also referred to as
"shareholder's equity".

The equity of Infosys Technologies ltd has been increased form 135cr to 33cr
since from the year 2002 to 2006.

Net worth : It the total of paid-up equity capital and free reserves and
surplus.Paid up capital is the has been increased in the year 2005 compared
to the year 2004-03.

Book value : the book value of the Equity share decreased to 193.72 from
488.21

EPS : Earning per share of the Infosys Technologies ltd has been decreased
in consecutive years. Eps has decreased to 68.82 form 314.34.

72
Dividend :payment made to share holders usually once or twice a year out
of a company’s
Profits after tax. Dividend is declared on the face value of the share and not
on its market price.
Bonus share is also a kind of dividend.
Calculated as:

The percentage of earnings paid to shareholders in dividends.

Calculated as:

Dividends paid to the share holders was 2590crs in the year 2004.

Pay out (%) : the pay out (%) of dividend is 16.64 from 76.12

Conclusion: Infosys Technologies ltd is one of the multi national companys

and it has been a legend in IT , Infosys Technologies ltd has got Equity of
135crs which is lower than wipro, and greater than satyam computers. But
Eps, Dividend pay out ration is decreased and it is lesser than wipro and
satyam. But has higher enterprise value that of wipro and satyam.

73
CHAPTER - 5
GRAPHICAL
REPRESENTATIO
N

74
Graphical representation

160

140

120

100

80

60

40

20

0
Equity Networth Book value Eps Div pay ratio

Wipro 64 3217crs 100.77 22.85 21.89

Satyam 141 4892crs 69.54 20.55 24.34
Infosys 135 5242crs 193..72 68.92 16.94

Interpretation: In case of networth of above three companies Infosys is top

in the graph and followed by satyam and wipro. In Bar graph the equity
capital of satyam is higher than Infosys and wipro. Where as the book value
of equity is more in Infosys followed by wipro. In Case of Earning per share
Infosys is higher. In case of dividend pay out ratio satyam is higher.

75
 200

150

100 Wipro
Satyam
50 Infosys

0
Equity Book EPS Div Pay
value out ratio

Interpertation : In Bar graph the equity capital of satyam is higher than

Infosys and wipro. Where as the book value of equity is more in Infosys
followed by wipro. In Case of Earning per share Infosys is higher. In case of
dividend pay out ratio satyam is higher.

76
 Wipro
Infosys
Satyam

Interpretation: In the pie diagaram infosys has major part in Earning per
share and divided pay out ratio. Next place is Wipro followed by satyam

77
 SENSEX - THE BAROMETER OF INDIAN CAPITAL MARKETS

Introduction For the premier Stock Exchange that pioneered the

stock broking activity in India, 128 years of experience seems to be a
proud milestone. A lot has changed since 1875 when 318 persons
became members of what today is called "The Stock Exchange,
Mumbai" by paying a princely amount of Re1.

Since then, the country's capital markets have passed through both
good and bad periods. The journey in the 20th century has not been an
easy one. Till the decade of eighties, there was no scale to measure
the ups and downs in the Indian stock market. The Stock Exchange,
Mumbai (BSE) in 1986 came out with a stock index that subsequently
became the barometer of the Indian stock market.

SENSEX is not only scientifically designed but also based on globally

accepted construction and review methodology. First compiled in
1986, SENSEX is a basket of 30 constituent stocks representing a
sample of large, liquid and representative companies. The base year of
SENSEX is 1978-79 and the base value is 100. The index is widely
reported in both domestic and international markets through print as
well as electronic media.

The growth of equity markets in India has been phenomenal in the decade
gone by. Right from early nineties the stock market witnessed heightened
activity in terms of various bull and bear runs. The SENSEX captured all
these events in the most judicial manner. One can identify the booms and
busts of the Indian stock market through SENSEX.

SENSEX Calculation Methodology

SENSEX is calculated using the "Free-float Market Capitalization"

methodology. As per this methodology, the level of index at any point of time
reflects the Free-float market value of 30 component stocks relative to a
base period. The market capitalization of a company is determined by
multiplying the price of its stock by the number of shares issued by the
company. This market capitalization is further multiplied by the free-float
factor to determine the free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index
points. This is often indicated by the notation 1978-79=100. The calculation
of SENSEX involves dividing the Free-float market capitalization of 30
companies in the Index by a number called the Index Divisor. The Divisor is
the only link to the original base period value of the SENSEX. It keeps the
Index comparable over time and is the adjustment point for all Index
adjustments arising out of corporate actions, replacement of scrips etc.

78
During market hours, prices of the index scrips, at which latest trades are
executed, are used by the trading system to calculate SENSEX every 15

EQUITY MARKET TERMINOLOGY

Bull run: continued uptrend of a bull market

Bull Market: Prolonged rise in the price of shares, sustained by buying

pressure of actual investors or Bulls news of favorable economic growth,
decontrol, political developments, lifting of price controls, budgetary
concessions, etc can trigger off a bull market.

Bear market: Prolonged period of falling share prices, dominated by selling

pressure in the market place, brought about by bears or by adverse
economic or political factors.

Buy and hold strategy: Accumulating shares of a company over the years
for long-term growth benefits and favorable capital gains tax on profits.

Dividend: payment made to shareholders, usually once or twice a year out

of a company’s profits after tax. Bonus shares are also a kind of dividend.

Equity: Equity is a ownership in a company.

BSE SENSEX: A statistical measure of the prices of 30 selected stocks traded

in the Bombay stock Exchange. The method of compilation is similar to the
one used in Standard & Poor’s Indices.

NIFTY: Top 50 shares fancied most by investors, the list keeps changing
naturally.

Small Caps: the stock of small companies that have the potential to grow
rapidly is classified as small-cap stock. Many of these companies are
relatively new. Most initial public offerings are for small-cap companies.

Mid Caps: Mid-cap stocks are typically stocks of medium-sized companies.

They still offer the growth potential with the stability of a larger company.
Stocks of many well-known companies that have been in business for
decades are mid-cap stocks.

Large-cap stocks: stock of the largest companies such as IBM or GE and

other movers and shakers of the economy are classified as large-cap stocks.

79
 5PAISA.COM

Equities TRADING IN 5PAISA

5paisa is the trade name of India Infoline securities pvt ltd. Member:
NSE, BSE, and Mix & NCDEX, Cash F & O, SEBI Reg no, INB 231097537&
INF231097537, NSE Code no. 10975, BSE Code no. INB011097533, NSDL IN
– DP-NSDL- 185-2000, MCX NO. 00378, PMS SEBI Regn no. INP 000000944.

Trade In BSE, NSE, Cash And F&O… All IN One Screen!

With the 5paisa trader terminal 2005 (TT5)you can trade in BSE, NSE
and that too in both segments of the market, cash as well as derivatives (f
&O). You will have one click access to all the features and functionalities that
you would ever require in you’re trading including online access to your
trading including online access to your DP and Your Ledger.

Technology to Power your trading:

It is truly unbelievable how the ordinary telephone and

computer can change lives. The 5paisa trader terminal, using advanced;
data compression technology executes your trades faster than you can blink.
Add to this the amazing 128-bitSSL super security, and you have
unparalleled

speed coupled with unbeatable security. The same technology also powers
the intra- day/historical charts, live streaming quotes that you can see at a
single click and much more.
How Do You Open An Account In 5 Paisa?
Register on our site www.5paisa.com or callus toll free at 1600226555 or
just e-mail us at info @5pmail.com.our executive will call on you, and in less
than 5 minutes, complete all formalities!

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5paisa Broking Account

Particulars Investor Trader Trader

Terminal Terminal (p.a
Terminal (Monthly plan)
plan)
Registration fee (one time) Rs.500 Rs.500 Rs.500
Minimum Initial Margin Rs.2500 Rs.5000 Rs.5000
Trading Brokerage (cash 0.10% 0.07% 0.07%
seg)
Delivery Brokerage (cash 0.50% 0.25% 0.25%
seg)
Trading Brokerage (F& O 0.10% 0.06% 0.06%
seg)
Minimum per share 5paisa 5paisa 1paisa
(trading)
Minimum per share 5paisa 5paisa 5paisa
(Delivery)
Software License Fee NIL 799 7999

Application Formalities:
5paisa is having the following formalities the person who wants become a
client of 5paisa should have to fulfill the followings
1. Identity proof
2. One passport size photograph
3. One cheque
4. Nominee photograph and signature
5. Two witness Signature
6. Residential Proof

Advantages of 5paisa:

The following are the Advantages of 5paisa

• Low brokerage.
• Online terminal.
• Expert unbiased advice.
• Immediate order execution.
• Individual terminal for online trader.
• One - stop shop for all your investment needs.
• Immediate confirmation, digitally & Physically

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On – Line Trading:

5 paisa is providing On-Line Trading facility for their clients to

do trade on Commodities, derivatives and equities.
What is on-line trading?
Trading of Securities (Buying and Selling of Shares and Commodities)
through internet is called On-Line Trading. The Objective of On-Line Trading
is:

• To facilitate easy transaction processing

• Easy surveillance so that less scope of Speculation
• To make the Trading fully automated and simple Trading Procedures.

5 paisa On-Line Securities Trading is operated through WAN (Wide Area

Network) which is one of special feature of 5paisa

Demat:

Demat means Transformation Physical form of shares into Electronic

form. Dematerialization of shares avoids bad physical delivery of shares. In
on-Line Trading System, the Dematerialized Shares Traded.

Charges for Demat:

To do trading through on-line they should have demat. It is very

useful for trading. India Infoline ltd is changing the following charges:
Account Opening fees NIL
Annual Charges Rs.2.50
Custody Charges Re. 1 per month per ISIN per a/c. Min. 1 per
month.
Transaction Credit NIL
Transaction Debit 0.05% of the value of transaction, subject to min Rs.15
per instruction and max Rs100 per instruction

Pledge creation Rs.30 per instruction

Dematerialization Rs.5 per certificate, Rs.25 per request towards
postal charges.
Re-materialization Rs.15per certificate, Rs.25 per request towards
postal charges
Rejection/Failure Rs.20 per entry

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BROKERAGE AND OTHER REGULATORY CHARGES

Brokerage Charges for Equities trading in 5paisa

First Leg Square Off

Trading 0.05% 0.05%

Delivery 0.25% N.A

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CHAPTER - 6

CONCLUSION
AND
SUGGESTIONS

84
CONCLUSIONS & SUGGESTIONS:

FINDINGS:

1. Most of the Clients are dealing with 5paisa for a long time i.e. between 5-
10 years and above and so it can be inferred that the dealers are loyal to the
company.
2. There is no development in rural areas; due to there are no E-broking
branches
3. Almost all the clients responded that the brokerage of 5paisa is lesser
than the competitors
4. The 5paisa providing best services to their clients.
5. As more and more clients are responding well and opening their account
with India Infoline, sometimes company is facing problems like hanging of
the systems and slow server networks.

SUGGESTIONS:

1. Increase the quick access to the network

2. Increase the server capacity
3. Increase the quick problem solving to the customers
4. Provide better service then competitors does
5. Better to extend the market facilities to rural areas also and encourage
them and educate them to invest in stock markets.

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BIBLIOGRAPHY

86
NEWS PAPERS

The following brand name of news papers are utilized to gather the
information
1. Economics Times.
2. Business Standard

INTERNET

The web sites are used for collecting the data

www.investopedia.com
www.bseindia.com
www.nseindia.com
www.5paisa.com
www.indiainfoline.Com
www.moneypore.com

Books

The following books are referred to study Equities.

Financial Management - I.M. Panday.

Indian financial system - M.Y.Khan.

Capital market book published by - India Infoline

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