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  • 1. Chapter-1: Introduction  INTRODUCTION  NEED FOR THE STUDY  OBJECTIVE OF THE STUDY  METHODLOGY  LIMITATIONSChapter-2: Overview of company Industrial profile:  INTRODUCTION  INDUSTRY SCENARIO  FUTURE FOCUES  GOVERNMENT POLICY  MAJOR PLAYER  ARTICLES RELATING TO NSE Company profile:  GENERAL PROFILE  FUCTIONAL PROFILChapter-3: Theoretical frameworkChapter-4: Data analysis & InterpretationsChapter-5: Summary suggestions  FINDINGS  BIBLIOGRAPHY  GLOSSARY 1
  • 2. Chapter-1: Introduction  Introduction  Need for the study  Objectives of the study  Methodology  Limitation 2
  • 3. INTRODUCTION OF THE STUDY India is a developing economy. Its prospering in all spheres. ShareMarket is a compelling determinant of the economy and the financial situation of acountry. Ever since the liberalization, privatization and globalization, the foreigninvestment in our country is booming. Share Market is a clear indicator of the developingtrend prevailing in our country. Statistics reveal that the trade volume has been increasingcontinuously, coupled with the ups & downs which is a nature of share trading. We areliving in an interlinked world. With growing volume of trade, it has become a necessitythat people are aware of the intricacies of the web world. Technology has changed the landscape of the stock markets. They now don‘t require atrading floor & can render services to the investors across the country from a singlelocation. Before screen based trading was introduced Regional Stock Exchanges wereplaying a very important role in the Capital Market as they were local investors. Nowthey all developed screen based trading, which is connecting floors with other stockExchanges. When you place an order to buy or sell stock, you might not think about where or howyour broker will execute the trade. But where and how your order is executed can havean impact on the overall costs of the transaction, including the price you pay for thestock. Here‘s what you should know about trade execution.SENSEX the benchmark indicator of share trading has more than tripled ever since on-line share trading commenced. It has become imperative to be a participant of this modeof trading.Meaning of Online Trading―Change is the law of nature‖. There were times when man was a wanderer or anormal. He himself had to go place to place in search of food, water and now everythingis available at your doorstep just at the click of the mouse. The growth of informationtechnology has affected almost all sectors of life. Internet has enabled us to get everyinformation at our doorstep. When Internet has affected all sectors he could ―stock 3
  • 4. markets‖ the most important player of the economy, has remained far behind. Like allother sectors Internet has set its feet in the stock markets also.Share trading is a way for faster earning and losing money. In the recent years, a volatilemarket could be witnessed. In the desire to earn money in a quick manner, more andmore people have ventured out into share trading. Lack of awareness of many investorshas made them loose lakhs of money in the Stock Market. Wise play by many others hasmade them earn in crores.At such a time, it would be interesting to know the attitude of the players and theconditions in the market. A survey about investors and the share market in such a timewould be educative to tomorrow‘s investors. It could also lead to improvements in theconditions prevailing in Reliance Money that would facilitate increase in the sharetrading.In developing countries like India, there is a great set back in mobilization process due tovarious reasons. The attitude of the public, their affiliation to traditional investments inland and property, bullion and hoarding and above all the risk of uncertainty are some ofthe reasons. The fiscal commission (1949-50) recognized the fact that in India there is anacute shortage of long term capital for industrial ventures. But it was not until 1954- 55that the central board of directors of the reserve bank permitted established businesshouses to raise their new capital by issue of debentures at comparatively high rate ofinterest. Since the capital market is a place where the private savings are kept for a verylong period, it is highly necessary to protect the interests of these investors, if the capitalmarket has to grow. To safe guard the investor‘s interest, government has enacted lawssuch as: A) The Securities Act, 1938 (together with The Life Insurance Corporation Act, 1956). B) The capital issues (Control and Regulation Act, 1943). C) The Banking Companies Act, 1949. D) The Provident Fund Act and the rules 1957. 4
  • 5. E) The Indian Companies Act, 1956. F) The Deposit Insurance Scheme, 1960. G) The Monopolies and Restrictive Trade Practices Act, 1969.A new era in capital markets in India has ushered in July 1991 with the starting of aprocess of financial and economic deregulation beginning with the devaluation of rupeeby about 20%. In July 1991 the industrial policy was totally reshaped to dispense withlicensing of all industries except the 18 scheduled industrial groups. Further removal ofMRTP limit on assets of companies, dilution of FERA (Foreign Exchange RegulationAct), and foreign trade liberalization etc., were some of the other reforms. Fiscal policywas rationalized to reduce the central budget deficit and public sector under takings werefreed from government controls by professionalizing their management, giving greaterautonomy to them and by disinvestments of their shares in favor of the public. Greaterrole is visualized for the private sector in the future investment growth. 5
  • 6. NEED FOR THE STUDY Stock Exchange is integral part of the capital market. It is the most perfect type ofmarket for Security whether of Government or Semi- Government bodies or other publicbodies which are also for shares and debentures issued by joint stockenterprises, knowing about the latest and future development in the stock exchangetrading system. To know how the online trading process helps investors and brokers,latest and future development in the Stock Exchange Online Trading System, is useful forimmediate settlement. The capital markets perform an important function in mobilization of resources;liquidity of the stock markets is an important factor effecting growth. Many profitableprojects require long term finance; however investors do not relinquish their savings for along time. Capital market is a group of interrelated markets in which capital is raised infinancial form, is lent and borrowed (or) raised in a varying time periods (such as shortterm and long term).in a developing economy, the business of capital market is themovement of capital to the point of highest yield, a liquid stock market ensures a quickexit without incurring heavy losses (or) costs. Stock market is a vehicle through whichlong term finance is characterized for the various needs of industry, commerce,government and local authorities. Thus development of efficient financial markets isnecessary for creating conducive climate for investment and economic growth. The company offers the products and financial services space with offeringsranging from Equity research, Equities and derivatives trading, Commodities trading,Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, Go bondsand other small savings instruments to loan products and Investment banking. Steel City Securities Limited was incorporated on 22nd February 1995and raised equity of Rs.105 lakh on 24th June 1995 and obtained the membership of thelargest and prestigious National Stock Exchange of H-Limited (NSE) and Bombay StockExchange (BSE) in 2000, in its capital market segment. The first VSAT for its tradingworkstation (TWS) at Hyderabad was installed in 1995 and the second at Visakhapatnamin April 1996. 6
  • 7. OBJECTIVES OF THE STUDY  To study overview of steel city security.  To know the online & offline screen based trading system adopted by steel city securities and about its communication facilities.  To know about the latest and future development in the stock exchange trading system.  To analyze the collected data.  To suggest the suitable measures for improving performance of the organization. 7
  • 8. METHODOLOGY OF THE STUDYThe methodology implemented for the on-line trading process is logging and to theNEAT screen by filling the user id ,trading member id , pass word and new pass wordafter logging on the title bar ,ticker widow, toolbar market watch , inquiry window ,order/trade window and message window is displayed by placing the orders .quoting theprice and the quantity of the share.Primary data:Primary data was taken from studied the factor that is affecting the scrip movement bywatching daily trade and collected the primary data.Secondary data:Secondary data are already published data collected for some purpose other than the oneconfronting. The researcher at a given point of time. The secondary data can be gatheredfrom various sources like books, journals, research agencies .etc For this project secondary information is collected from the various sources like―business line‖ and ―economic time‖ and the NSE and BSE websites in the internet. The information regarding the online trading is collected from Watching the online trading live Collecting information from the head of each department and from the staff working in these department Referring the capital market module work book published by national stock exchange of India LTD. Interacting with the operators as the computer terminals and the clients trading in steel city securities pvt ltd. Participating in mark trading conducted by national stock exchange of India ltd 8
  • 9. LIMITATIONS OF THE STUDY1. Some information is not available due to confidentiality. Due to that, the analysis may not be comprehensive.2. There are many constraints in studying the complex and complicated National stock exchange. Although the personal of steel city securities arev very cooperative and helpful, they are bound by their own rules and regulations.3. It is very difficult to take complete grip of the stock markets information and functioning during the one month of the study.4. It is complex process to evaluate the overall market.5. Difficult to calculate valuation concepts and understand the accounting policies. 9
  • 10. CHAPTER – II :INDUSTRY PROFILE INTRODUCTION INDUSTRY SCENARIO FUTURE FOCUES GOVERNMENT POLICY MAJOR PLAYER ARTICLES RELATING TO NSE COMPANY PROFILE  GENERAL PROFILE  FUCTIONAL PROFIL 10
  • 11. INTRODUCTIONStock Exchanges in India Stock profile represents the secondary market where existing securities shares anddebentures are traded. Stock exchange provides an organized mechanism for purchaseand sales of securities. By the end of 2005, there were 23 stock exchanges in our country.The investors want liquidity for their investments. Stock exchange provides a placewhere securities of different companies can be purchased and sold.History of Stock Exchanges Houses of exchanges arose in Europe during the 15th century. Trading wascarried on exchanges in terms of securities which represented goods. Antwerp, Layton,Amsterdam and London become celebrated all over Europe for their dealings in stockexchanges. Particularly the London stock exchange can be considered as the modern typeof stock market. It had more than 500 members in 1802. During, that time, the list ofsecurities traded had considerably expanded and a vast majority of them wereinternational in contact with the home issues. In 1987 the brokers organized themselvesinto the New York exchange board with a definite constitution. There were many changesand reorganizations and amalgamations till 1969, during the ―The New York stockexchange was formed with a maximum membership limited to 1100. The origin of stockexchanges in India is traceable in the latter half of the 19th century. At that time, capitalmarket dealings were limited to loan stock transactions of the East India Company. By1930, stock market took a turn with the emergency of sonic corporate stock anddevelopment of textile mills that resulted due to the American civil war which gaveIndian businessmen a global chance of quick profiteering by increasing exports of cottonto America and Europe at exorbitant prices. The trade boom lead to the establishment ifstock exchanges at Bombay, Ahmadabad and Calcutta. Despite the fact that unorganized stock market existed in Calcutta since 1830, thefirst organized stock exchange was set up at Bombay in 1877 under the name of ―NativeStock and Share Brokers Associations‖. The next stock exchange which emerged in thecountry was Ahmadabad share and Stock brokers Association which was founded in1894. The thirds stock exchange was set up at Calcutta in the year 1908. Though some 11
  • 12. stock exchanges were setup before independence but there was no all India Legislation toregulate their working. To rectify this situation and to regulate the working of stockexchanges in the country, the securities contract (Regulation) Act was passed in 1956. At present, there are 23 recognize stock exchanges in the country. Further overthe counter exchanges and National Stock Exchange have also started functioning in ourcountry.NATIONAL STOCK EXCHANGE OF INDIA: of IndiaSince its inception in 1992, National Stock Exchange of India has been at the vanguard ofchange in the Indian securities market. This period has seen remarkable changes inmarkets, from how capital is raised and traded, to how transactions are cleared andsettled. The market has grown in scope and scale in a way that could not have beenimagined at the time. Average daily trading volumes have jumped from ` 17 crore in1994-95 when NSE started its Cash Market segment to ` 16,959 crore in 2009-10.Similarly, market capitalization of listed companies went up from ` 363,350 crore at theend of March 1995 to ` 6,009,173 crore at end March 2010.Indian equity markets are today among the most deep and vibrant markets in the world.NSE offers a wide range of products for multiple markets, including equity shares,Exchange Traded Funds (ETF) , Mutual Funds, Debt instruments, Index futures andoptions, Stock futures and options, Currency futures and Interest rate futures. OurExchange has more than 1,400 companies listed in the Capital Market and more than92% of these companies are actively traded. The debt market has 4,140 securitiesavailable for trading. Index futures and options trade on four different indices and on 190stocks in stock futures and options as on 31st March , 2010. Currency futures contractsare traded in four currency pairs. Interest Rate Futures (IRF) contracts based on 10year7% Notional GOI Bond are also available for trading.Incorporation and managementNSE was incorporated in November 1992, and received recognition as a stock exchangeunder the Securities Contracts (Regulation) Act, 1956 in April 1993. It is managed byprofessionals who do not directly or indirectly trade on the Exchange. The trading rights 12
  • 13. are with trading members who offer their services to the investors. The Board of NSEcomprises of senior executives from promoter institutions and eminent professionals,without having any representation from trading members. While the Board deals with thebroad policy issues, the Executive Committees (ECs),which include trading members,formed under the Articles of Association and the Rules of NSE for different marketsegments, set out rules and parameters to manage the day-to-day affairs of the Exchange.The day-to-day management of the Exchange is delegated to the Managing Director whois supported by a team of professional staff. Therefore, though the role of tradingmembers at NSE is to the extent of providing only trading services to the investors, theExchange involves trading members in the process of consultation and participation invital inputs towards decision making.The Capital Market (CM) segment offers a fully automated screen based trading system,known as the National Exchange for Automated Trading (NEAT) system. This operateson a price/timepriority basis and enables members from across the country to trade withenormous ease and efficiency. Various types of securities e.g. equity shares, warrants,debentures etc. are traded on this system. The average daily turnover in the CM Segmentof the Exchange during 2009-10 was 16,959 crore. (US $3,757 million).Futures & Options (F&O)segment of NSE provides trading in derivatives instruments like Index Futures, IndexOptions, Stock Options, Stock Futures. The futures and options segment of NSE hasmade a mark for itself globally. In the Futures and Options segment, trading in S&P CNXNifty Index, CNX IT index, Bank Nifty Index, Nifty Midcap 50 index and single stocksare available. Trading in Mini Nifty Futures & Options and Long term Options on S&PCNX Nifty are also available. The average daily turnover in the F&O Segment of theExchange during 2009-10 was ` 72,392 crore (US $ 16,097 million).Contract NoteThe buying and selling brokers prepare notes after their mutual consent next day.Settlement The spot dealing are settled there in full. The settlement for ready delivery andforward contacts is one with a different procedure. 13
  • 14. STOCK MARKET INTERMEDIATESClient Brokers They do simple brokering between buyers and sellers and earn only brokerage fortheir services for their services from the clients.Floor Brokers They are authorized clerks and sub brokers who enter the trading floor andexecute orders for the clients or for members.Jobbers and Market Makers They are members who are ready to buy and sell simultaneously in selectedscrip‘s, offering bid and offer rates for the brokers and sub brokers on the trading floorand earning profit through the margin between buying and selling rates. Markets makersundertake this work compulsorily for some companies and bank finance is available tothem.Arbitrageurs They are members who do inter market deals for a profit through differences inprices as between markets.TYPES OF SPECULATORS There are different types of speculators who are active on stock exchanges in India.They are known as Bull Bear Stag Lame DuckBull A bull of Tejiwala is an operator who expects prices to rise in future and sellssecurities in the future. A bull tends to throw his victims up in the airBear A bear of Mandiwala speculator expects prices to fall in future and sells securitiesat present with a view to purchase them at lower prices in future. Just as bear presses theirvictim down to the ground. 14
  • 15. Stag A Stag is a cautious speculator in the stock exchange. He applies for shares innew companies and expects to sell them at premium if he gets an allotment. He sells theshares before being called to pay the allotment money.Lame Duck When a bear finds it difficult to fulfill his commitment, he is called struggling likea lame duck.THE IMPORTANT STOCK EXCHANGES IN INDIA ARE Bombay Stock Exchange (BSE) National Stock Exchange (NSE)BOMBAY STOCK EXCHANGE (BSE) Bombay Stock Exchange (BSE) is the first organized stock exchange set up atBombay in 1857. In the premier of apex stock exchange in India as it is distinguished notonly by its size but also it has been recognized permanently where recognition of otherstock exchanges is renewed in every 5 years. It is the oldest stock market. Earlier BSE was organized as voluntarily non-profit making association ofbrokers to regulate and protect their interest. After the Security Contracts (Regulation)Act was passed in 1956, BSE was the first Recognized Stock Exchange on a permanentbasis in 1957. Its business is no longer confined to Mumbai alone. At the end of 1995,there were 100 other cities in which it had set up business. The number of companies listed in the stock exchanges is more than 8,000 out ofwhich those listed in BSE are 6851. The capital listed in Bombay Stock Exchangeaccounts for about 40% of the overall capital listed in all the stock exchanges whereas, itsshare of the market capitalization amounts to around 9%. In BSE the total number ofcompanies‘ listed and total number of stocks issued is higher than any other stockexchanges. BSE switched over to electronic trading system in January 1995 called―Bombay Online Trading‖ (BOLT) system and this become fully operational in May1995. The BSE has allowed the expansion of online trading system to its members inother cities having terminals since August 1995. The daily turnover in BSE varies fromRs.400-800 crores. Brokers trading in NSE follow BSE to know the market. 15
  • 16. SENSEX The index in BSE is Sensex. It stands for Sensitivity index. Senses consist of 30selected top companies of BSE based on the capitalization or on the performance weightage of the scrip‘s. SENSEX is not only scientifically designed but also based on globallyaccepted construction and overview methodology. First complied in 1986, SENSEX is abasket of 30 constituent stocks responding a sample of large, liquid and representativecompanies. The base year of SENSEX is 1978-79 and the base value is 100. The index iswidely reported in both domestic and international markets through print as well aselectronic media.NATIONAL STOCK EXCHANGE (NSE) IDBI and other National Level Financial Institutions inMumbai were responsible for setting the National Stock Exchange inNovember 1992, with a paid up equity capital of Rs.25 crores. TheGovernment in the same year recognized it and the exchange started operations inwholesale debt market in June 1994. The volume of daily trade in NSE is around Rs. 1,500/- to Rs.2, 000/- crores. Themarket capitalization of listed companies in NSE is Rs.2.52 lakh crores. There are morethan 1,000 permitted securities for trading in NSE.SEBI’S ROLE IN A STOCK EXCHANGE It was set up under the SEBI Act 1992 to protect the interests of investors insecurities and to promote the development of and regulate the securities market.SEBI‘S Power in relation to stock exchange:  It may call periodical return from stock exchange.  It has the power to prescribe the maintenance of certain documents by the stock exchange.  It can compel a public company to list its shares.  In certain areas it can license dealers in securities.  It can amend bye-laws of stock exchange.  It has a power to approve bye-laws of stock exchange. 16
  • 17. STEPS TO BE FOLLWOED BY AN INVESTOR TO TRADE ON NSE SCRIPS 1. The client should open a DEMAT Account 2. Open a trading account 3. The client will be provided with a Trading ID 4. He becomes a client  Professional  Retail  Institutional 5. Then client can trade on NSE scrip’s on automated screen 17
  • 18. Steps are:1. He should open a de-mat account.2. He has to open a trading account to trade in the particular brokerage company.3. Then he will be given a trading number to trade on NSE scripts in the particular.4. Brokerage Company.5. Then he becomes a client to the particular brokerage companyClients in the brokerage companiesClients are of three types, those are1. Professional Clients2. Retail Clients3. Institutional ClientsProfessional ClientsThe Client involves in the speculation activities. He buys and sells shares on daily basis.His brokerage charges will be low.Institutional ClientsHere the broker trades on NSE on behalf of the institution. Then the client can trade onthe NSE Scripts on ―Automated Screen‖.How to TradeHe can buy and sells shares through ―NEAT‖ National Exchange Automated Trading)It adopts the order driven market against the quote driven market.NSE TRADING SYSTEMTrading NSE introduced for the first time in India, fully automated screen based trading. Ituses a modern, fully computerized trading system designed to offer investors across thelength and breadth of the country a safe and easy way to invest.The NSE trading system called ―National Exchange for Automated Trading‖ (NEAT) is afully automated screen based trading system, which adopts the principle of an orderdriven market. 18
  • 19. Market Timings Trading on the equities takes place on all days of the week (except Saturdays andSundays and holidays declared by the Exchange in advance). The market timings of theequities segment are:Normal Market Open : 09:00AMNormal Market Close : 15:30 PMThe closing session is held between l5:50 am and 16:00 pm.Limited Physical Market Open : 09:00 amTrading market start : 09:15AMLimited Physical Market Close : 15:30 pmMarket Segments The Exchange operates the following sub segments in the equities segment1. Rolling Settlement.2. Limited Physical Market.3. Institutional Segment.4. Trade for Trade Segment1. Rolling Settlement In a rolling settlement, each trading day is considered as a trading period and tradesexecuted during the day are settled based on the net obligations fore the day.At NSE trades in rolling settlement are settled on a T+2 basis i.e., on the 2nd working day.For arriving at the settlement day all intervening holidays, which include bank holidays,NSE holidays, Saturdays and Sundays are excluded. Typically trades taking place onMonday are settled on Wednesday, Tuesday‘s trades settled on Thursday and so on.2. Limited Physical Market Pursuant to the directive of SEBI to provide an exit route for small investorsholding physical shares in securities mandated for compulsory dematerialized settlement,the exchange has provided a facility for such trading in physical shares not exceeding 500shares. This market segment is referred to as ―Limited Physical Market‖ (small window).The limited Physical Market was introduced on June 7, 1999. 19
  • 20. 3. Institutional Segment The Reserve Bank of India had vide a press release on October 21, 1999, clarifiedthat Inter Foreign institutional Investor (Inter-FIT) transactions do not require priorapproval or post-facto confirmation of the Reserve Bank of India, since such transactionsdo not effect the percentage of overall holding in Indian Companies (Inter FITtransactions are how ever nor permitted in securities where the FII holdings have alreadycrossed the overall limit due to any reason). To facilitate execution of such interInstitutional deals in companies where the cut-off limit of FIT investment has beenreached, the exchange introduced a JICW market segment on December 27, 1999.The Securities where FIT investors and FIT holdings has reached the cut off limit asspecified by RBI (2% lower than the ceiling specified by RBI) from time to time wouldbe available for trading in this market type for exclusive selling by FIT clients. The cutoff limits for companies with 24% ceiling is 22%, for companies with 30% ceiling, is28% and for companies with 40% ceiling is 38%. Similarly, the cut off limit for publicsector banks (including State Bank of India) is 18% whose ceiling is 20%. The list ofsecurities eligible / become ineligible for trading in this market type would be notified tomembers from time to time.4. Trade for Trade Segment Trading in this segment is available only for the securities which have not establishedconnectivity with both the depositors as per SEBI directive. The list of these securities isnotified by SEBI from Lime to time. On account of surveillance action.The Organization The National Stock Exchange of India Limited has genesis in the report of theHigh Powered Study Group on Establishment of New Stock Exchanges, whichrecommended promotion of a National Stock Exchange by financial institutions (FIs) toprovide access to investors from all across the country on an equal footing. Based on therecommendations, NSE was promoted by leading Financial Institutions at the behest ofthe Government of India and was incorporated in November 1992 as a tax-payingcompany unlike other stock exchanges in the country. 20
  • 21. 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 commencedoperations in November 1994 and operations in Derivatives segment commenced in June2000. Corporate Structure NSE is one of the first de-metalized stock exchanges in the country, where theownership and management of the Exchange is completely divorced from the right totrade on it. Though the impetus for its establishment came from policy makers in thecountry, it has been set up as a public limited company, owned by the leadinginstitutional investors in the country. From day one, NSE has adopted the form of a demutualised exchange - theownership, management and trading is in the hands of three different sets of people. NSEis owned by a set of leading financial institutions, banks, insurance companies and otherfinancial intermediaries and is managed by professionals, who do not directly orindirectly trade on the Exchange. This has completely eliminated any conflict of interestand helped NSE in aggressively pursuing policies and practices within a public interestframework. The NSE model however, does not preclude, but in fact accommodatesinvolvement, support and contribution of trading members in a variety of ways. Its Boardcomprises of senior executives from promoter institutions, eminent professionals in thefields of law, economics, accountancy, finance, taxation, and etc, public representatives,nominees of SEBI and one full time executive of the Exchange.Number of listed companies On the capital market segment, equity shares of 685 companies are listed and 572companies are permitted to trade as of October 31, 1999. On the wholesale debt marketsegment, 797 securities are listed and 517 securities are permitted to trade as of October31, 1999. Of the 797 securities listed, 369 are Government Securities/T-Bills and thebalance account for other securities. 21
  • 22. NSE IndicesThe indices used by NSE are known under the following names: S. No. Old Name New Name 1. NIFTY S&P CNX NIFTY 2. DEFTY S&P CNX DEFTY 3. CRISIL 500 EQUITY INDEXs S&P CNX 500 EQUITY INDEX 4. NIFTY JUNIOR CNX NIFTY JUNIOR 5. CRISIL MIDCAP 200 CNX MIDCAP 200 INDEX 6. CRISIL PSE CNX PSE INDEX 7. CRISIL IBG CNX IBG INDEX 8. CRISIL MNC CNX MNC INDEXPromoters NSE has been promoted by leading financial institutions, banks, insurance companiesand other financial intermediaries:  Industrial Development Bank of India Limited  Industrial Finance Corporation of India Limited  Life Insurance Corporation of India  State Bank of India  ICICI Bank Limited  IL & FS Trust Company Limited  Stock Holding Corporation of India Limited  SBI Capital Markets Limited  Bank of Baroda  Canara Bank  General Insurance Corporation of India  National Insurance Company Limited  The New India Assurance Company Limited  The Oriental Insurance Company Limited 22
  • 23.  United India Insurance Company Limited  Punjab National Bank  Oriental Bank of Commerce  Indian Bank  Union Bank of India  Infrastructure Development Finance Company Ltd. NSE Family: NSCCL NCCL NSETECH IISL DotEx Intl. Ltd. NSE.ITNSCCL National Securities Clearing Corporation Ltd. (NSCCL), a wholly-ownedsubsidiary of NSE, was set up in August 1995. It was the first clearing corporation in thecountry to provide notations/settlement guarantee that revolutionized the entire conceptof settlement system in India. It commenced clearing operations in April 1996. It hasbeen set up to bring and sustain confidence in clearing and settlement of securities; topromote and maintain short and consistent settlement cycles.NSDL Prior to trading in a dematerialized environment, settlement of trades requiredmoving the securities physically from the seller to the ultimate buyer, through the seller‘sbroker and buyer‘s broker, which involved lot of time and the risk of delay somewhere 23
  • 24. along the chain. To obviate these problems, NSE to promote dematerialization ofsecurities joined hands with LTI and IDBI to set up the first depository in India called the―National Securities Depository Limited‖ (NSDL). The depository system gained quickacceptance and in a very short span of time it was able to achieve the objective oferadicating the paper from the trading and settlement of securities.NSE InfoTech Services Ltd Information Technology has been the backbone of conceptualization, formation,running and the success of National Stock Exchange of India Limited (NSE). NSE hasbeen at the forefront in spearheading technological changes in the securities market. Itwas important to give a special thrust and focus on Information Technology to retain theprimacy in the market. Towards this a wholly owned subsidiary NSE InfoTech ServicesLimited (NSETECH) was incorporated to cater to the needs of NSE and all its groupcompanies exclusively.NSE.IT NSE.IT Limited, a 100% technology subsidiary of NSE, was incorporated inOctober 1999. It provides the securities industry with technology that ensurestransparency and efficiency in the trading, clearing and risk management systems.Additionally, NSE.IT provides consultancy services in the areas of data warehousing,internet and business continuity plans. Amongst various products launched by NSE.ITare NEAT XS, a Computer-To-Computer Link (CTCL) order routing system, NEAT XS,an internet trading system and Probes, professional broker‘s back office system.SCSL India Index Services and Products Limited (SCSL), a joint venture of CRISIL andNSE, was set up in May 1998 to provide indices and index services. It has a licensing andmarketing agreement with Standard and Poor‘s (S&P), the world‘s leading provider ofinvestible equity indices, for co-branding equity indices. SCSL is India‘s first specializedcompany focusing upon the index as a core product. It provides a broad range of services,products and professional index services. It maintains over 90 equity indices comprisingbroad—based benchmark indices, sect oral indices and customized indices. 24
  • 25. NCDEX NSE joined hand with other financial institutions in India viz., ICICI Bank,NABARD, LIC, PNB, CRISIL, Canara Bank and IIFCO to promote the NationalCommodity & Derivatives Exchange (NCDEX which provides for a world classcommodity exchange platform for Market Participants to trade in wide spectrum ofcommodity derivatives. Currently NCDEX facilitates trading of 41 agro based commodities, 2 precious metals, 6 base metal, 2 energy products and 3 polymers.CAPITAL MARKET (EQUITIES) SEGMENT Settlement Guarantee Fund Mar 31, 2006 Rs. 4,055.18 crores Investor Protection Fund May 31, 2007 Rs. 196.74 crores Number of securities available for trading May 31, 2007 1,526 Record number of trades Feb 28, 2007 47,78,407 Record daily turnover (qt) Jan 05, 2005 6,765 lakhs Record daily turnover (value) Mar 31, 2006 Rs.17,315.06 crores Record market capitalization May 29, 2007 Rs.39,14,386 crores Record value of S&P CNX Nifty Index Jun 04, 2007 4362.95 Record value of CNX Nifty Junior Index Jun 20, 2007 8397.05 Record Pay-in/Pay-out (Rolling Settlement): Funds Pay-in/Pay-out (N2006077) May 02, 2006* Rs. 4,110.52 croresSecurities Pay-in/Pay-out (Value)(N2006077) May 02, 2006* Rs. 7,293.25 crores Securities Pay-in/Pay-out(Quantity) May 15, 2006* 2,443.71 lakhs (N2006086) *Settlement Date Settlement Guarantee Fund Mar 31, 2006 Rs. 13,032.36 crores Investor Protection Fund May 31, 2007 Rs. 44.56 crores Record daily turnover (value) Apr 27, 2006 Rs. 60,433.75 crores Record number of trades May 31, 2007 916,645 WHOLESALE DEBT SEGMENT Number of securities available for trading May 31, 2007 3,277 Record daily turnover (value) Aug 25, 2003 Rs.13,911.57 crores 25
  • 26. Different types of NSE logos:Technology in NSE: Across the globe, developments in information, communication and networktechnologies have created paradigm shifts in the securities market operations.Technology has enabled organizations to build new sources of competitive advantage,bring about innovations in products and services, and to provide for new businessopportunities. Stock exchanges all over the world have realized the potential of IT andhave moved over to electronic trading systems, which are cheaper, have wider reach andprovide a better mechanism for trade and post trade execution. NSE believes that technology will continue to provide the necessary impetus forthe organization to retain its competitive edge and ensure timeliness and satisfaction incustomer service. In recognition of the fact that technology will continue to redefine theshape of the securities industry, NSE stresses on innovation and sustained investment intechnology to remain ahead of competition. NSEs IT set-up is the largest by anycompany in India. It uses satellite communication technology to energize participationfrom around 320 cities spread all over the country. In the recent past, capacityenhancement measures were taken up in regard to the trading systems so as to effectivelymeet the requirements of increased users and associated trading loads. With up gradationof trading hardware, NSE can handle up to 6 million trades per day in Capital Marketsegment. In order to capitalize on in-house expertise in technology, NSE set up a separate 26
  • 27. company, NSE.IT, in October 1999. This is expected to provide a platform for taking upnew IT assignments both within and outside India and attaining global exposure. NEAT is a state-of-the-art client server based application. At the server end, alltrading information is stored in an in-memory database to achieve minimum responsetime and maximum system availability for users. The trading server software runs on afault tolerant STRATUS main frame computer while the client software runs underWindows on PCs. The telecommunications network uses X.25 protocol and is the backbone of theautomated trading system. Each trading member trades on the NSE with other membersthrough a PC located in the trading members office, anywhere in India. The tradingmembers on the various market segments such as CM / F&O , WDM are linked to thecentral computer at the NSE through dedicated 64Kbps leased lines and VSAT terminals.The Exchange uses powerful RISC -based UNIX servers, procured from Digital and HPfor the back office processing. The latest software platforms like ORACLE 7 RDBMS,GUPTA - SQL/ORACLE FORMS 4.5 Front - Ends, etc. have been used for theExchange applications. The Exchange currently manages its data centre operations,system and database administration, design and development of in-house systems anddesign and implementation of telecommunication solutions. NSE is one of the largest interactive VSAT based stock exchanges in the world.Today it supports more than 3000 VSATs. The NSE- network is the largest private widearea network in the country and the first extended C- Band VSAT network in the world.Currently more than 9000 users are trading on the real time-online NSE application.There are over 15 large computer systems which include non-stop fault-tolerantcomputers and high end UNIX servers, operational under one roof to support the NSEapplications. This coupled with the nationwide VSAT network makes NSE the countryslargest Information Technology user. In an ongoing effort to improve NSEs infrastructure, a corporate network hasbeen implemented, connecting all the offices at Mumbai, Delhi, Calcutta and Chennai.This corporate network enables speedy inter-office communications and data and voiceconnectivity between offices In keeping with the current trend, NSE has gone online on the Internet. Apart fromhaving a 2mbps link to VSNL and our own domain for internal browsing and e-mail 27
  • 28. purposes, we have also set up our own Web site. Currently, NSE is displaying its livestock quotes on the web site (www.nseindia.com) which are updated online.Industry scenario: Milestones of NSE  November 1992 Incorporation  April 1993 Recognition as a stock exchange  May 1993 Formulation of business plan  June 1994 Wholesale Debt Market segment goes live  November 1994 Capital Market (Equities) segment goes live  March 1995 Establishment of Investor Grievance Cell 28
  • 29.  April 1995 Establishment of NSCCL, the first Clearing Corporation June 1995 Introduction of centralized insurance cover for all trading members July 1995 Establishment of Investor Protection Fund October 1995 Became largest stock exchange in the country April 1996 Commencement of clearing and settlement by NSCCL April 1996 Launch of S&P CNX Nifty June 1996 Establishment of Settlement Guarantee Fund November 1996 Best IT Usage award by Computer Society of India December 1996 Commencement of trading/settlement in dematerialized securities December 1996 Dataquest award for Top IT User December 1996 Launch of CNX Nifty Junior February 1997 Regional clearing facility goes live November 1997 Best IT Usage award by Computer Society of India May 1998 Promotion of joint venture, India Index Services & Products Limited (SCSL) May 1998 Launch of NSEs Web-site: www.nse.co.in July 1998 Launch of NSEs Certification Programmed in Financial Market August 1998 CYBER CORPORATE OF THE YEAR 1998 award February 1999 Launch of Automated Lending and Borrowing Mechanism April 1999 CHIP Web Award by CHIP magazine October 1999 Setting up of NSE.IT January 2000 Launch of NSE Research Initiative February 2000 Commencement of Internet Trading June 2000 Commencement of Derivatives Trading (Index Futures) September 2000 Launch of Zero Coupon Yield Curve December 2000 Commencement of WAP trading June 2001 Commencement of trading in Index Options July 2001 Commencement of trading in Options on Individual Securities November 2001 Commencement of trading in Futures on Individual Securities December 2001 Launch of NSE VaR for Government Securities January 2002 Launch of Exchange Traded Funds (ETFs) October 2002 Launch of NSE Government Securities Index 29
  • 30.  January 2003 Commencement of trading in Retail Debt Market June 2003 Launch of Interest Rate Futures August 2003 Launch of Futures & options in CNXIT Index June 2004 Launch of STP Interoperability August 2004 Launch of NSE‘s electronic interface for listed companies March 2005 ‗India Innovation Award‘ by EMPI Business School, New Delhi June 2005 Launch of Futures & options in BANK Nifty Index December 2006 Derivative Exchange of the Year, by Asia Risk magazine January 2007 Launch of NSE – CNBC TV 18 media centre March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com June 2007 NSE launches derivatives on Nifty Junior & CNX 100 October 2007 NSE launches derivatives on Nifty Midcap 50 January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008 March 2008 Introduction of long term option contracts on S&P CNX Nifty Index April 2008 Launch of India VIX April 2008 Launch of Securities Lending & Borrowing Scheme August 2008 Launch of Currency Derivatives August 2009 Launch of Interest Rate Futures November 2009 Launch of Mutual Fund Service System December 2009 Commencement of settlement of corporate bonds February 2010 Launch of Currency Futures on additional currency pairs March 2010 NSE- CME Group & NSE - SGX product cross listing agreement April 2010 Financial Derivative Exchange of the Year Award by Asian Banker July 19, 2010 Commencement of trading of S&P CNX Nifty Futures on CME July 19, 2010 Real Time dissemination of India VIX. July 28, 2010 LOI signed with London Stock Exchange Group October 12, 2010 Introduction of Call auction in Pre-open session October 28, 2010 Introduction of European Style Stock Options October 29, 2010 Introduction of Currency Options on USD INR November 9, 2010 Launch of mobile trading for all investors December 29, 2010 NSCCL Rated ―CCR AAA‖ for third consecutive year January 05, 2011 NSE receives Financial Inclusion Award 30
  • 31. Many more stock exchanges were established during 1980s, namely: 1. Cochin Stock Exchange (1980) 2. Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982) 3. Pune Stock Exchange Limited (1982) 4. Ludhiana Stock Exchange Association Limited (1983) 5. Gauhati Stock Exchange Limited (1984) 6. Kanara Stock Exchange Limited (at Mangalore, 1985) 7. Magadha Stock Exchange Association (at Patna, 1986) 8. Jaipur Stock Exchange Limited (1989) 9. Bhubaneswar Stock Exchange Association Limited (1989) 10. Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989) 11. Vadodara Stock Exchange Limited (at Baroda, 1990) 12. Coimbatore Stock Exchanged) Government Securities: The government securities market has witnessed significanttransformation in the 1990s. With giving up of the responsibility of allocating resourcesfrom securities market, government stopped expropriating seignior age and startedborrowing at near – market rates. Government securities are now sold at market relatedcoupon rates through a system of auctions instead of earlier practice of issue of securitiesat very low rates just to reduce the cost of borrowing of the government. Major reformsinitiated in the primary market for government securities include auctions system(uniform price and multiple price method) for primary issuance of T-bills and centralgovernment dated securities, a system of primary dealers and non-competitive bids towiden investor base and promote retail participation, issuance of securities acrossmaturities to develop a yield curve from short to long end and provide benchmarks forrest of the debt market, innovative instruments like, zero coupon bonds, floating ratebonds, bonds with embedded derivatives, availability of full range (91-day and 382 day)of T-bills, etc.e) Articles: The articles of association of steel city securities limited.National stock exchange 31
  • 32. f) Major Players: 32
  • 33. COMPANY PROFILEHISTORICAL BACKGROUND OF THE COMPANY: Steel City Securities Limited was incorporated on 22nd February 1995 and raisedequity of Rs.105 lakh on 24th June 1995 and obtained the membership of the largest andprestigious National Stock Exchange of H-Limited (NSE) and Bombay Stock Exchange(BSE) in 2000, in its capital market segment. The 1st VSAT for its trading workstation(TWS) at Hyderabad was installed in 1995 and the 2nd at Visakhapatnam in April 1996. Presently, there are 64 VSATS installed at more than 50 centers in AndhraPradesh, Orissa, Tamilnadu and Karnataka. There are 219 computer trading terminalsput together connected to their VSAT at the centers (each VSAT can have 5 TWSconnected). Since its inception the service of this organization is prompt and there is nota single instance of payout of funds / deliveries delay to any client, from the beginningthe firm is committed to continue the same service in future also. Companies‘ basicprinciple is total commitment in service to all clients with all transparency and ensuresthat is it their sacred policy not to indulge in own trading, there are no self-motives ornecessity to cancel or delay anything. Every branch is fully equipped and independentlyconnected to the NSE Hub at Mumbai; every branch is having 2 to 5 trading terminalsconnected to VSAT. The company performance has not parallel on NSE.Steel City Securities Ltd. follows a functional organization system. It provides variousservices, which are provided through different departments.Various Functional Departmentsi. PlanningIt involves planning of human resources requirements, recruitment, selection, training,ii. Directing In this company the personnel manager coordinates various managers atdifferent levels as the personnel functions are concerned. The willing and effectivecooperation of employees for the attainment of organizational goals is possible throughproper directions. 33
  • 34. iii. Controlling: In SCSL, the controlling is done by the top management, in this aspect they doauditing training programmes, directing morale surveys, conducting separate interviewsare some of the functions of the top management in controlling.iv. Recruitment It is the process of searching for prospective employees and stimulating them toapply for jobs in the organization. In SCSL, if they want any person, they will givenotification in newspaper in order to stimulate the eligible persons to apply for that job.v. Employee Relation The company has recruited required personnel and trained them for operations ofthe company at all braches and to maintain cordial relations between the management andthe employees.vi. Employee Service All the employees of the company from top to bottom dedicate their sincereservices with co-operation, co-ordination, hard work and team spirit which results insuccessful performance of SCSL which helped SCSL to become of the best stock brokingfirm in India.vii. Selection It is the process of ascertaining the qualifications, experience, skill, knowledge,etc. of an applicant with a view to appraise his/her suitability to a job. The topmanagement in this organization shall do the selection. They send the letters ofappointment or rejection to the board of directors.viii. Placement It is the process of assigning the selected candidates with most suitable job. InSCSL, the directors do the selection of the candidates for placement. The placement maybe in the head office or in branches of SCSL which are different places.ix. Training The selected candidates will be shown placement in one of the branches of SCSLand are given proper training. The trainers are the most experienced persons.x. Promotions and Transfers: In SCSL, the personnel management provides promotion to the skilled and eligible 34
  • 35. persons. The transfers of persons are more in this company but they will be an increase inthe salary of the persons who are transferred to other branches.xi. Activities of the organization: SCSL provides different services. These services are provided through variousdepartments.xii. Trading Department: This area mainly deals with online trading facility which is received throughVSAT into the server and finally into Hub going to the trading system. Interacting withthe clients, admitting the clients or investors or sub-brokers and helping out in openingthe accounts and facilitating them with the direct interaction with the online tradingfacility, etc. are the other works done by the Trading Department. The main aspect isconcerned with the involvement of investors or clients or sub brokers to participate intrading. A particular day‘s trading on the different scripts can be viewed online which isprovided by the NEAT trading software by NSE and the original positions are determinedby the end of the trading day, i.e., at 3.30 p.m. where there itself a back up is saved andthat particular day‘s trading position of each client is determined by the back officeprocess made by the depository participants. So trading department has a very importantrole in a member of NSE like SCSL to provide updated information of a day‘s tradingactivities.TRADING AND SETTLEMENT: One of the basic services provided by SCSL as member of NSE and NSDL is tofacilitate transfer of securities from one demat accounts to the other on the instruction ofthe account holder. In NSDL depository system both transfer and the transferee have togive instructions to their DPs for delivering and receiving of securities. However, thetransferee can give ‗Standing Instructions (SI)‘ to its DP for receiving in securities.Transfer of securities from one demat accounts to the other may be done for any of thefollowing purposes: Transfer due to a transaction done on a person to person basis i.e., an‗off market‘ trade Transfer arising out of a transaction done on a stock Exchange.Transfer arising out of a transmission and account closure. 35
  • 36. STOCK MARKET TRADING The trading on stock exchanges in India used to take place through open outcrywithout use so information technology for immediate matching or recording of trades.This was time consuming and inefficient. This imposed limits on trading volumes andefficiency. In order to provide efficiency, liquidity and transparency, NSE introduced anation-wide on-line fully-automated screen based trading system (SBTS) where amember can punch into the computer quantities of securities and the prices at which helikes to transact and the transaction is executed as soon as it finds a matching sale or buyorder from a counter party. SBTS electronically matches orders on a strict price/timepriority and hence cuts down on time, cost and risk of error, as well as on fraud resultingin improved operational efficiency. It allows faster incorporation of price sensitiveinformation into prevailing prices, thus increasing the informational efficiency ofmarkets. It enables market participants, irrespective of their geographical locations, totrade with one another simultaneously, improving the depth and liquidity of the market. Itprovides full anonymity by accepting orders, big or small, from members withoutrevealing their identity, thus providing equal access to everybody. It also provides aperfect audit trail, which helps to resolve disputes by logging in the trade executionprocess in entirety. This sucked liquidity from other exchanges and in the very first yearof its operation, NSE became the leading stock exchange in the country, impacting thefortunes of other exchanges and forcing them to adopt SBTS also. Today India can boastthat almost 100% trading take place through electronic order matching.I. NEAT SystemThe NEAT system supports an order driven market, wherein orders match on the basisof time and price priority. All quantity fields are in units and prices are quoted in IndianRupees. The regular lot size and tick size for various securities traded is notified by theExchange from time to time.II. Market TypesThe Capital Market system has four types of market.A. Normal Market Normal market consists of various book types wherein orders are segregated asRegular Lot Orders, Special Term Orders, Negotiated Trade Orders and Stop Loss 36
  • 37. Orders depending on their order attributes.B. Odd Lot Market The odd lot market facility is used for the Limited Physical Market.C. Ret debt Market The RETDEBT market facility on the NEAT system of capital market segmentis used for transactions in Retail Debt Market session. Trading in Retail Detail Markettakes place in the same manner as in equities (capital market) segment.D. Auction Market In the Auction market, auctions are initiated by the Exchange on behalf oftrading members for settlement related reasons.E. Accounts Department The function of accounts department is to maintain a record of all pay in, payout; cash received for demat account opening, account closing, and transaction chargesfor operating the account. Records of expenses incurred and incomes earned frombusiness are also maintained basing on which every year an Annual Report is prepared.F. Deliveries DepartmentDeliveries department acts as an Intermediary between stock exchange and clients andso proper knowledge is needed without which the results may be hazardous.Proper records of all inward and outward stocks should be maintained failing whichthere may be improper deliveries leading to penalties and disagreement with clients. Inthe secondary market operations when shares and securities are bought or sold, thechange of hands of the possession of these shares or securities from seller to the buyerwill discharge the delivery obligation of the seller. In case of BSE, the clearing house isBOISL and in case of NSE, NSCCL is extended to the responsibility of settling thedelivery obligations of sellers and buyers dealt Ina given settlement period.G. Rolling Settlement for Demat Securities for both BSE and NSE:-i. Introduction to Dematerialized Rolling Segment a. Trading of dematerialized securities is available both on NSE and BSE. b. At NSE, dematerialized securities are traded in two separate segments called ‗AE Segment‘ and ‗BE Segment‘ which are in addition to the segment for trading in securities in the Normal Segment (account period settlement) where compulsory 37
  • 38. dematerialized trading is only allowed. In case of AE segment, dematerialized securities are traded only in market lots, whereas in BE segment these can be traded in multiples of one share. c. At BSE, dematerialized securities are traded in a separate segment called Demat Rolling Segment and normal segment (account period settlement) where compulsory dematerialized trading is only allowed. In Demat Rolling Segment, the trades are settled on T+5 bases.ii. Rolling Settlement CycleTrading in rolling settlement is quite similar to trading in normal settlement except thatthe normal segment follows weekly account period settlement and rolling settlementfollows T+5 Settlement. For example, all trades executed on a particular day (T), nettedintra day, will be settled on the following fifth (T+5) working day. The trades done on aday cannot be netted off against those done on the earlier day. Trades executed onMonday will normally be settled on next Monday (T+5). Both Pay-in and pay-out will beon the same day. The difference between a rolling settlement and weekly account periodsettlement can be illustrated by the following figure: T + 5 Rolling Settlement Weekly Account Period 38
  • 39. STRUCTURE OF THE ORGANISATION: The total control of the organization is under the Chairman who is also theManaging Director. Under him there are three Executive Directors for surveillance &operations and also a Sleeping Director. Mr.G.Sree Ram Murthy is the Chairman cum Managing Director, Mr.G.RajaGopalReddy the Executive Director looks after the market development and opening of newfranchisees. He also looks after requirements of new and existing branches.Mr.K.Satyanarayana the Executive Director, surveillance has an inspection team underhim for the purpose of vigilance in all branches and franchisees. Mr.Satish Kumar Arya is the Director Operations. He controls the trading limits,margins etc. All office related matters are dealt by him. He is also responsible formeeting the requirements and following the rules set by the stock exchanges.Mr.G.S.R.Prasad is the fourth Director who does not play any role in the day to dayworking of the company. General Manager (Operations) is Mr.Murali is responsible for De-Mat withNSDL / CDSL. General Manager is Mr.V.Srinivas who looks after the Networking,Software, Hardware and trading related requirements and VSAT connectivity. Financeand accounts were looked after by Mr.Ramu who is a Chartered Accountant. Mr. Samba Murthy is responsible for the trading and registration of new clients.He is the Trading Manager. Mr. Krishna Naga Bhutan is the Marketing Manager. He isalso responsible for conduction various awareness seminars. The legal section deals withthe investor‘s problems and legal issues with the company. Even without relation to thecompany they render legal services 39
  • 40. ORGANISATIONAL STRUCTURE 40
  • 41. The different branches and franchisees of the company report directly to the HeadOffice in Visakhapatnam and any activity taken up by these should be brought to thenotice of the Head Office. Every branch has a Branch Manager, Accountant, TradingManager and Trading Operator. The company has various functional departments for itssmooth functioning. Steel City Securities Ltd. follows a functional organization system. It providesvarious services, which are provided through different departments.BOARD OF DIRECTORS OF STEEL CITY SECURITIES LIMITED Sri G.Sree Rama Murthy Chairman and Managing Director Sri G.RajaGopal Reddy Executive Director Sri K.Satyanarayana Executive Director (S) Sri Satish Kumar Arya Director Operations Sri G.Satya Rama Prasad DirectorsThe various service departments in SCSL are: Systems Departments Inspection Department Personal Department Accounts Deliveries Depository Participant Research and Development 41
  • 42. ACTIVITIES OF STEEL CITY STEEL CITY SECURITIES LIMITED TRADING FACILITIES SETTLEMENT OF TRADES FUNDS SECURITIES PAY IN PAY OUT PAY IN PAY OUT PAY OUT SECURITIES BOUGHT BY LOSS CLIENTS FUNDS INTERNAL FUNDS NSE PAY OUT TO CLIENTS 42
  • 43. STEPS TAKEN BEFORE THE REGISTRATION OF THE CLIENT:1. Registration of the Client: The customer has to fill in the registration form and provide details of hisQualifications, Date of Birth etc. He has to furnish his photographs and proof of Identitythrough PAN Card, Driving License or Voter Identity Card.2. Introduction of the Client: The customer has to be introduced by one of the existing clients of the companywho voucher for the honesty and integrity of the former.3. Background of the Client: A detailed background check of the client is necessary. Only after a thoroughchecks of his place of origin, his business etc. the client is registered.4. Strengths / Weaknesses of the Client: The client‘s financial position is also monitored. Only customers who have asound financial position are registered for trading.5. Previous record of business: The previous record of the business of the client is checked to see the fairness inhis dealings and promptness in settling the outstanding debts.6. Undertaking / Agreement: An undertaking is taken from the client to the effect that the deals have been doneon behalf of him by Steel City Securities Ltd on his instruction and is liable to the profits/ losses thereof.7. Storing previous transactions: All transactions of the client are stored for legality purpose. According to theguidelines of SEBI, the transactions of the past five-year have to be maintained. 43
  • 44. COMPANY POLICY: The basic policy of SCSL is not to indulge in own trading. The basic principle ofSCSL is total commitment in service to all clients. The service of SCSL is prompt andhence there are not delays in payout of funds or deliveries to any client. SCSL collectspay in T+1 and its payout in T+3 days. Through SCSL, trade in NSE per day is 200crores whereas; trade in BSE per day is 4 crores.Capital: The base capital is set up a trade center is 1 crore, SCSL raised equity of Rs.105lakhs during its incorporation. Earlier, SCSL paid Rs.75 lakhs as base capital to NSEwhen it was set up. Every trade corporation has to maintain a reserve of some amountwith NSE. At present, SCSL has 7.5 crores as margin with NSE.Working Staff: There is 100 to 150 staff employed in SCSL. The staff draws a salary basing onthe cadre they are employed. The salaries in SCSL vary from Rs.2000 to Rs.20000 permonth basing on the cadre of the employee.Employee Recruitment: In SCSL, the top managements select the candidate and the letter of appointmentor rejection is sent to the Board of Directors. The Directors do the placement in SCSL.The placement can either be in the Head Office or in any other branches of SCSL.Planning: It involves planning of Human Resource Department i.e. recruitment, selection,training etc. it also involves forecasting of personnel changing values, attitudes andbehavior of employees.Directing: In this company, the personnel manager co-ordinates various managers at differentlevels as the personnel functions are concerned. The wilting and effective co-operation 44
  • 45. of employees for the attainment of organization goals is possible through properdirection.Controlling: In SCSL, the top management does the controlling. In this aspect, they do auditingtraining programmers; directing moral surveys are some of the functions of the topmanagement.Recruitment: It is the process of searching for prospective employees and simulating them toapply for jobs in the organization. In SCSL, if they want any person, they will givenotification in newspaper in order to simulate eligible persons to apply for that job.Employee Relation: The employee relation at all levels remains cordial. Training, Promotion andTransfers are done in SCSL to motivate and increase the morale of the staff. All theemployees in SCSL from top to bottom perform their services with sincerity, hard work,dedication and with team spirit due to which SCSL is considered as one of the best stocktrading firm in India.Selection, Placement and Training: The top management shall do the selections. Placement is in the head office and inthe branches of SCSL, which are in different places. Selected candidates are placed inone of the branches of SCSL and gives proper training.Functions of the SCSL: SCSL provides mock trading to its clients and members. SCSL provides complete automated system both in trading and settlement process. SCSL enables clients to trade both in NSE and BSE. SCSL converts the paper shares into electronic shares through DMAT Process. SCSL provides market information. SCSL acts as clearing member for trades taking place through SCSL. SCSL is a depository participant of NSDL &CDSL and it is a trading and Clearing member of NSE & BSE. 45
  • 46. Facilities provided to Client in SCSL: Gross exposure facility given in SCSL is 5 times. But, up to 10 times, it is relaxedto clients. Turnover facility given in SCSL to clients is 33.33 times. But, the restrictionsare not considered. Minimum of Rs.20, 000 margins money is collected fromprofessional clients who trade for speculation purpose. For deliver purpose, no marginmoney is collected. Due to the total commitment in service to its clients, SCSL isconsidered to be one of the best Stock Broking Companies in India.NSE Branches of SCSL:Mumbai GudiwadaSecunderabad KakinadaGajuwaka CuddapahVizianagaram GunturTirupathi ProddutturBhimavaram NarsaraopetVijayawada ChilakalurpetMellor EluruNandyala OngoleNSE Franchisees:Rourkela Berhampur (2)Srikakulam VisakhapatnamChennai KukatpalliAnantapur BakaramChittor TenaliAmalapuram PidigurallaMadanapalli Hanumakonda 46
  • 47. SECURITIES TRADED IN SCSL: In SCSL all the shares, scripts, stocks, bonds, debentures, derivatives, governmentsecurities, debt instruments etc. can be traded. But generally, trading is mostly done inscripts listed in BSE & NSE. The government securities and the corporate securities can be traded throughNEAT system in NSE. Only trading mechanism available in the debt market was thetelephone market before June 1994 when NSE launched wholesale debt market (WDM)segment. This provides the only formal platform for trading of a wide range of debtsecurities. Though many trades in the gilt‘s takes place through telephone, a longer chunkof trades get rented through NSE brokers. Trading in derivatives of securities commenced in June 2002 with the enactment ofenabling legislation in early 2000.THE TRADING PROCESS: Steel City Securities Limited provides stock trading services to its clients andmembers. It enables the clients to trade in both NSE & BSE. Through the computertrading terminals in SCSL, the client places an order to buy or sell the shares. After thetrade is confirmed, the client receives the settlement net positions. SCSL collects themargin, brokerage, service tax & commission from the clients for the trades taking placein SCSL. SCSL converts the physical shares into the electronic shares through D-MATprocess. Clearing and settlement of trades, dematerialization of shares, providing marketinformation to the clients are daily chores in SCSL, apart from trading.1. DOCUMENTATION: The trading member or stockbroker shall enter into an agreement in the specifiedformat provided by NSE with the client before accepting orders on latter‘s behalf. Thesaid agreement shall be executed on non-judicial stamp paper of adequate value, dulysigned by both the parties on all the pages. This agreement is known as ‗MemberConstraint Agreement‘. Copy of this agreement is to be kept with the trading memberpermanently. 47
  • 48. B) MILE STONESYear wise milestones of our Evolution Year Activity / Milestone 1995 • The company was incorporated • Obtained the Membership in National Stock Exchange of India Limited in October andcommenced equity broking • Installed 1st VSAT and Started the Operations in Hyderabad in December 1996 • The company has become successful in starting its operations at Visakhapatnaminstalling the 2nd VSAT in April • Changed the registered office of company on April 15, 1996 1999 • Foray in distribution of financial products • Set up 10th centre during the year 2000 • SEBI‘s Approval as Depository Participant of National Securities Depository Limited • Own In-house back office software developed named ―STEEL PACK‖ 2001 • Obtained Membership of BSE by Steel City Capital services Pvt. Limited • Maintained 3,353 DP client accounts 2002 • SEBI‘s Approval as Depository Participant of Central Depository Services (I) Limited • Started the operations of Futures & Options segment in May • Incorporated Steel City Insurance Agencies Private Limited in August • Maintained 7,617 DP client accounts • Set up the 50th Centre 2003 • Commenced distribution of insurance products •Maintained 22,678 DP client accounts 2004 • Membership of Multi commodity exchange of India Limited and National Commodity &Derivatives Exchange Limited • Started the operations of Mutual Funds in February • Maintained 37,497 DP client accounts • Set up the 100th Centre 48
  • 49. 2005 • Maintaining 46,712 DP client accounts as on date. • Set up more than 200 centre‘s. • Applied for Registration of Trademark and obtained T.M.No. 1350172 and also the said Trademark is accepted for registration. • Accredited with ISO 9001:2000 certification with the scope of ―Service Provision for Stock/Securities Market Operations, Depository Participant Services, Other Allied and Customer Support Services‖ from AQA International, LLC, USA, ANAB Accredation No. 010694, Certificate No. 5825 dated November 1, 2005 valid from November 1, 2005 to November 1, 2008. • Commenced the Procedure for empanelment of the company in various Institutions • Launching internet e-broking portal as www.steelcitynettrade.comc) Objectives:The main objects of the Company as contained in our Memorandum of Association arereproduced below:1. To carry on Investment business and to purchase, acquire, hold and dispose of orotherwise invest in shares, debentures stocks, bonds, obligations and securities, issued orguaranteed by any Company constituted or carrying on business, in India or elsewhereand debenture stocks, bonds, obligations and securities issued or guaranteed by anyGovernment, State dominion, sovereign ruler, commissioner public body or authority,supreme, municipal, local or otherwise whether in India or elsewhere.2. To carry on business as consultants and advisors in marketing personnel, taxation,technology, projects setting up, loan syndication, project appraisal, research anddevelopment including rendering of services such as share brokers, sub-brokers, dealers,underwriters, merchants, bankers, registrars to issue and share transfer agents, portfoliomanager and all allied matters including sponsoring and setting up of mutual fund andventure capital fund. 49
  • 50. 3. To carry on the business of investment Company and to invest in, acquire, subscribe,hold, alter, resell and deal in investments in any shares, stocks, bonds, securities,debentures whether convertible or otherwise issued or to be issued by any public limitedcompanies or private limited companies registered under the Companies Act, 1956 or anystatutory modification or re-enactment thereof and/or any companies carrying on businessin India and subject to such approval as may be necessary according to the law for thetime being in force, to invest moneys of the Company in shares, debentures and othersecurities of any company registered abroad and/or any statutory corporations and toinvest in securities of Central Government and State Governments in India, public bodiesor authorities anywhere and to carry on all and every other business which is generallycarried on by investment companies.4. To apply for and become in India or abroad member of any Stock Exchange, Securities& Exchange Board of India, Over The Counter Trading and Exchange of India, NationalStock Exchange and any other similar authority, body or institution as may be establishedfrom time to time and also to carry on and act as stock brokers, C, F & O, mutual funds,clearing members, margin trading, primary dealers and syndicate members and to do allincidental acts and things necessary for the attainment of foregoing objects.D) UNIQUE ACHIEVEMENT:To be at the top providing the best, prompt, transparent, committed, highest quality ofservices to all retail, high net worth, institutional clients at every place in the country allthe time. 50
  • 51. E) SWOT ANALYSIS: Strengths Weaknesses• Integrated online trading in terms of brokerage services in equities, derivatives, commodities and depository services • Insignificant presence in overseas and• Presence at 97 Cities/Towns as on date institutional segment through 225centres with plans of opening 100 • Awareness about our e-broking portal is additional centres yet to be created among masses+• Strong brokerage and depository services • Yet to obtain approval of Trademafor clientelebase created over the past 10 years developing into brand of operations• In-house developed back-office software, own • Our first e-broking network, ready economiccommunication portal is to launch shortly. model ofoperations etc. Opportunities Threats• Additional centres will increase the clientle •Competition from existing and new base and in-turn will increase revenue entrants• Retail sector is expected to grow due to • Downturn or volatility of securities and com reduction in interest rate and opting for new • Slowdown of Indian and global economy opportunities inequity and relate instruments • Change in government and economic• Rapid penetration of Internet and computers policies including personal taxation may will be instrumental in increasing e-broking affect our volume and fund mobilization business 51
  • 52. F) FUTURE PLANS:The Company is one of the early broking companies, which started full services to big &small retail clients going to their doorstep in Towns, Semi-urban Towns, who utilized thefinancial market services fully welcoming the ONLINE services at their own place. TheOpportunities are infinite across the villages, towns, cities and metros and remainuntapped by the existing companies engaged in the similar field and segment. We haveassessed the vast potential in the retail segment due to technology revolution and thus,focused in rendering our brokerage services in these places by putting up more centresand also adding more financial products over a period of time since inception.Immediate Future Plans:After having already established business operations of over the past 10 years in retailbroking and other ancillary services, we have planned for further expansion in terms ofthe following: 100 additional centers to be opened in India and specially at the locations where the potential exists Thrust on distribution of financial products by leveraging on high net worth individual and other brokerage clients to support the overall growth Adding general insurance products distribution in addition to present life insurance products Tapping scope in Commodity Futures market through all the centre‘s situated across India as many of the present centre‘s are not offering commodities brokerage services Launching internet online trading to provide access and reach to all the location in India and abroad and having interfacing with company depository services In near future, we have plans to open branches in Singapore, Malaysia, Dubai, London, New York and to enroll with almost prominent Institutions to provide institutional broking services. 52
  • 53. B) FUCTIONAL PROFILEa) Production:A) Equity brokerage servicesWe are member of NSE and BSE and offer secondary market broking services to our variousretail customers. As on date, we have a registered client base of 36,311 nos. We offer equityand derivatives broking services through dedicated dealers and managers. All our centers areconnected via VSAT, VPN and CTCL. Brokerage services are provided to active trades, retailinvestors and high net worth investors with advisory assistance by our dedicated dealers andmanagers located at our centre‘s based on technical, fundamental and market research carriedout by our research team. The retail customer acquisition has seen accelerated growth owing towide spread branch and franchisee network of the Company. All our customers are connectedwith our network and the network system is depicted below:a) Exchange NetworkWe are having accessibility to trade in four different exchanges namely National StockExchange (NSE), Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange(MCX) and National Commodity & Derivative Exchange (NCDEX). Presently two majorservice providers are existing in the country, one is HCL Comment Ltd. and other is HugeEscorts Ltd (HECL). HCL has got wide range of expandability and reliabilitywith rugged Technology as per the Indian Climate Conditions. HECL has also got high spreadof Network throughout the country. The present VSAT Network throughout the country isbeing operated by Extended-C Band and KU-Band Technology. These two technologies aremost ideal for Stock Broking.Connectivity: The Exchanges have installed VSAT with the support of HCL Com net andHUGES at most of our centre‘s. All end users are being connected via Indian satellite toaccess NSE/BSE/MCX/NCDEX Trading Servers installed at Mumbai.Accessibility: In each VSAT location, we have 5 to 7 Terminals to trade in differentExchanges as per client request. All four exchanges have provided free software like NEAT(National Exchange for Automated Trading), BOLT (Bombay Online Trading), MCX (Trader 53
  • 54. Workstation) and NCDEX (National Commodity and Derivative Exchange). These FrontendTrading screens are called as Market watch, through which Client can place orders Between9.00am to 3.30pm daily in Capital Market, Futures & Options and Commodities segments.Since Commodity Market has dependency on International Bullion Markets, the Live Market-Watch is available up to 11.50pm daily. On functional side all four soft ware‘s are user-friendly to handle the client order requests. Client can also cancel or Modify their orderrequests as per their will and market conditions. All four exchanges are working from Mondayto Friday and no Trading activity is done on Saturdays and Sundays. In case of Commoditysegment, the exchange is open for trading from Monday to Friday and on Saturday till 2.00pm.Maintenance: VSAT downtime has been maintained by the HCL Com net and HUGES. Theyhave region wise support to attend the downtime immediately within 4 to 6 hours. Inventory ofspares is also maintained at the region level.b) Virtual Private Network (VPN):We have facilities for our clients to trade in all three segments (Cash, F&O and Commodity) ina single VSAT connectivity through CTCL (Computer to Computer Link) software. ThisNetwork is basically for better surveillance and more functional features comparing to theExchange provided software. Since Exchanges do not provide any CTCL software, we haveapproached CTCL Software Vendors empanelled by the Exchanges. There are many CTCLSoftware Vendors available in the Market today. This Network is maintained by the HCLComnet from NOIDA (UP). HCL Comnet has their own HUB at NOIDA to provideInteractive and Broadcast Bandwidth to connect between Central and Remote sites.Connectivity: We have our Branches and Franchisee locations in entire Andhra Pradesh,Karnataka and Orissa. In these locations we have installed VSAT with the support of HCLComnet. All end users are being connected via Indian Satellite to access CTCL Trading Serverinstalled at Visakhapatnam.Accessibility: In each VSAT location we have 3 Terminals to trade in different Exchanges asper client request. SCSL has bought licensed CTCL software ODIN (Open Dealer IntegratedNetwork) from Financial Technologies Limited, Mumbai. This Front–end can support MultipleMarket watch screens, through which client can place orders between 9.00am to 3.30pm dailyin Capital Market, Futures & Options and Commodities segments. Since Commodity Markethas dependency on International Bullion Markets, the Live Market- Watch is available up to 54
  • 55. 11.50pm daily. On functional side all four software are user-friendly to handle the client orderrequests. Client can also cancel or modify their order requests as per their will and marketconditions. All four exchanges are working from Monday to Friday and no Trading activity isdone on Saturdays and Sundays. In case of Commodity segment, the exchange is open fortrading from Monday to Friday and onSaturday till 2.00pm. Maintenance: VSAT downtime ismaintained by the HCL Comnet. They have region wise support to attend the downtimeimmediately within 4 to 6 hours. Inventory of spares is also maintained at the region level.c) Remote Access Service (RAS) This is a low-cost solution to encourage our clients to connect to Trading Servervia DIAL-UP (Through local Telephone or Broad Band Lines). This Network is wellsupported for the clients within the 20 to 40 km radius. Order confirmation speed ismarginally slow in comparison with VSAT Connectivity.Connectivity: We have RAS users at many centers. In these locations we have installedRASROUTERS. All end users are being connected via telephone or Broad Band Lines toaccess CTCL Trading Server installed at all our Branches and Franchisee locations.Accessibility: In each RAS location we have Terminal to trade in different exchange as perclient request‘sB) FINANCE: 55
  • 56. ACCOUNTS: The Accounts/ Finance department maintains the accounts in Steel city securities Ltd.The accounts are prepared in three forms. They are:  Client-wise net positions,  Scrip-wise net positions,Pay-in and Pay-out settlement of fundsC) PERSONAL:Manpower:We have experienced and well-qualified personnel, handling greater responsibilities, workflow, communication, compliance, correspondence, implementation, auditing, maintenance,documentation etc. As per Exchange guidelines we keep NCFM qualified persons in thetrading operations. We also conduct functional training programs for newly joined employeesbefore commencement of branch operations. We have developed extensive in-house trainingpackage. The Company has an excellent reward policy by offering performance basedincentives in addition to salary. At present we are having total manpower strength of 343inclusive of 292 permanent employees and 51 on probation.RECRUITMENT PROCESS:It is the process of searching for prospective employees and stimulating them to apply for jobsin the organization. In SCSL, if they want any person, they will give notification in newspaperin order to stimulate the eligible persons to apply for that job.Selection It is the process of ascertaining the qualifications, experience, skill, knowledge, etc. ofan applicant with a view to appraise his/her suitability to a job. The top management in thisorganization shall do the selection. They send the letters of appointment or rejection to theboard of directors.Placement:It is the process of assigning the selected candidates with most suitable job. In SCSL, thedirectors do the selection of the candidates for placement. The placement may be in the headoffice or in branches of SCSL which are different places.Training: 56
  • 57. The selected candidates will be shown placement in one of the branches of SCSL andare given proper training. The trainers are the most experienced personD) MARKETING PRODUCT: shares PRICE: depend on the stock transaction amount (brokerage cost, service cost) PLACE: Vishakhapatnam PROMOTION: web sites, populates 57
  • 58. CHAPTER –3: THEORETICAL FRAME WORK AND CONCEPTUAL DATA 58
  • 59. THEORETICAL FRAME WORKSTOCK EXCHANGEThe term ―STOCK EXCHANGE‖ implies is evident from the following feature of anexchange.S - Securities provider for investorT - Tax benefits, planning and examples0 - Optimum return of investmentsC - Caution approachK - Knowledge of MarketE - Eligibility for accrualsX - Exchange of securities transactedC - Cyclopedia of listed companiesH - High yieldA - Authentic informationN - New entrepreneurs encouragedG - Guidance to investors and companiesE - Equity cult 59
  • 60. INDIAN STOCK BROKING HOUSES The Indian capital market has undergone numerous changes in over the years.Traditionally stock market booms and decline have laid numerous Problems for lay investors.A close interaction of these problems revealed that these were due to paper based trading andsettlement. The short learning of the markets become manifest in the bad deliveries, delays intransfers and irregular settlement etc. the remedial measure was dematerialization under thedepository system. With the introduction of de-mat system in 1996 and in effect from January1998, investors in capital market need to have de-mat ac. and trading ac. stock broking housesplay a vital role in this field. These stock broking houses become depository participant ofNSDL&CDSL arid help lay investors to trade in capital markets without any hassles.Brokerage: The maximum brokerage that can be charged by a broker is decided by the stockexchanges as per the Exchanges regulations. The SEBI (stock brokers and sub brokers),1992stipulates that sub broker cannot charge from his clients commission which is more than 1.5%of the value mentioned in the respective purchase (or)sale note.The trading member can charge:1. Brokerage charged by member broker.2. Penalties arising on specific default on behalf of client. (Investor).3. Service tax as stipulated. In India, now many stock broking houses have come up. some of the major players aresteel city security Ltd., ICICI, India bulls, MotilalOswal, etc. some companies provide on lineservices, some of them are provide only off line services and some are provide both on Line &off-line. E.g. steel city securities Ltd Over the years stock markets matured as the platforms for making Investments. Herewe can‘t forget the role played by SEBI (Securities Exchange Board Of India). The regulationspassed by SEBI in monitoring and controlling the trading practices made it comfortable for theinvestors. Over the last few decades, the average person‘s interest in the stock market hasgrown exponentially. What was once a toy of the rich has now turned into the vehicle of choicefor growing wealth? This demand coupled with advances in trading technology has opened upthe markets so that now a day nearly anybody can own stocks. 60
  • 61. Despite their popularity, however, most people don‘t fully understand stocks. Much islearned from conversations around the water cooler with others who also don‘t know whatthey‘re talking about. Chances are you‘ve already heard people say things Like, ―Bob‘s cousinmade a killing in XYZ Company, and now he‘s got another hot tip...‖ or ―Watch out withstocks--you can lose your shirt in a matter of days!‖ So much of this misinformation is basedon a get- rich-quick mentality, which was especially prevalent during the amazing dotcommarket in the late 90s. People thought that stocks were the magic answer to instant wealth withno risk. The ensuing dotcom crash proved that this is not the case. Stocks can (and do) createmassive amounts of wealth, but they aren‘t without risks. The only solution to this is education.The key to protecting yourself in the stock market is to understand where you are putting yourmoney. Prior to SEBI there was not that awareness of the markets, investors used to face somany problems with brokers. But after the concept of dematerialization of Stocks it was madeeasy. As the next step exchanges like BSE (Bombay Stock Exchange) and NSE (NationalStock Exchange) allowed with some criteria ―Online Trading in Equity & Derivative Markets‖.CAPITAL MARKET An efficient capital market is a pre-requisite of economic development. An ideal capitalmarket is one where finance is used as handmaid to serve the needs of industry. The capitalmarket must facilitate the movement of capital to the point of highest yield.The main components apart from financial institutions of a capital market are:  Primary market  Secondary Market PRIMARY MARKETThe new issues market where new securities, i.e., shares or bonds that have never beenpreviously issued are offered represents the primary market. Both the new companies and theexisting ones can raise capital in the primary market. The primary market helps the corporateenterprises in securing their funds that are generally used for setting up new corporateenterprises or going in for expansion, diversification, growth or modernization.Growth and development of Primary market in India The primary market in India is not fully developed as compared to other countries likeUSA, UK, and Germany. But there has been tremendous growth in the sphere of new issue 61
  • 62. activity in India in l980s and 1990s. The total amount of capital raised during 1961 was onlyRs.74 crores which increased to 301.1 crores during 1981. Subsequently the liberalization ofindustrial and new capital issue policies in 1984-85 gave real shot in the arm to the securitiesmarket. Further the relaxation of norms relating to foreign investments and incentives providedby the government helped to sustain the impetus of growth in the market. The securities scamduring 1991 caused a tremendous setback to the growing new issue market in India. But thenew economic policy of the P.V. NarasimhaRao government and the setting up of SEBI topromote orderly and healthy growth of securities market providing investor protection has tobe regarded as one of the most important developments on the securities market of India inrecent years. During the year 1993, there has been a tremendous growth in the new issueactivity resulting into Rs.19825.6 crores of capital raised by non-government public limitedcompanies in India. SECONDARY MARKET/STOCK MARKET: Stock market represents the secondary markets where existing securities (shares anddebentures) are traded. Stock exchange provides an organized mechanism for purchase andsale of existing securities. By the end of 1993-94, there were 23 stock exchanges in ourcountry. The daily turnover at these stock exchanges during 1993-94 was to the tune ofRs.3877.8 million. At present, there are 21 stock exchanges in our country. Stock exchangesprovide a place where securities of different companies can be purchased and sold. Stock Exchange is a body of persons, whether incorporated or not, formed with a view tohelping, regulating and controlling the business of buying and selling of securities. Stockexchanges are organized and regulated markets for various securities issued by corporate sectorand other institutions. Stock Exchange acts as an investment market for buyer and sellers ofsecurities. The number of official stock exchanges in India has increased from 9 in 1979-80 to 21as on today. India has now the largest number them are regulated by the SEBI. They areorganized either as voluntary, nonprofit making associations (viz., Mumbai,Ahmadabad,Indore), or public limited companies (viz., Kolkata, Delhi, Bangalore), orcompany limited by guarantee (viz., Chennai, Hyderabad). All stock exchanges have two parts: The new issue market or primary market orprimary market and Secondary market. While the primary market supplies fresh or additionalcapital to the companies, the securities already issued or floated on the primary market are 62
  • 63. traded on the secondary market. The secondary market doesn‘t play any direct role in makingfunds available to the corporate; its role in this respect is only indirect, i.e., it helps toencourage investors to invest in industrial securities by making them liquid, i.e., by providingfacilities for continuous, regular, and buying and selling of those securities. Primary marketdeals in new securities while secondary markets deals in already existing or old securities,which have been listed on it. The investors acquire or buy securities directly from thecompanies on the primary market, while the trade securities so acquired among them on thisstock market.TRADING SYSTEM NSE operates on the ―National Exchange for Automated Trading‖ (NEAT) system, afully automated screen based trading system, which adopts the principle of an order drivenmarket. NSE consciously opted in favor of an order driven system as opposed to a quote drivensystem. This has helped reduce jobbing spreads not only on NSE but in other exchanges aswell thus reducing transactions costs.Trading System — Market TypesThe NEAT System has four types of Market. They areNormal Market All orders which are of regular lot size or multiples thereof are traded in the NormalMarket. For shares that are traded in the compulsory dematerialized mode the market lot ofthese shares in one. Normal market consists of various book types wherein orders aresegregated as Regular lot orders, Special Term Orders, Negotiated Trade Orders and shop Lossorders depending on their orders attributes.Odd Lot Market All orders whose orders size is less than the regular lot size are traded in the odd — lotmarket. An order is called an odd lot order. If the orders size is less than regular lot size. Theseorders do not have any special terms attributes attached to them. In an odd lot market, both theprice and quality of both the orders (buy and sell) should exactly for the trade to take place.Currently the odd lot market is used for the Limited Physical Market as per the SEBIdirectives. 63
  • 64. Action Market In the Auction Market, the Exchange on behalf o trading members for settlement relatedreasons initiates auctions. There are 3 participants in this market. Initiator - The party who initiate the auction process is called an initiator. Competitor - The party who enters orders on the same side as of the initiator. Solicitor - The party who enters orders on the opposite side of the initiator.Spot Market Settlement periods vis-à-vis normal market. These orders do not have any special termsattributes attached to them. Currently the spot Market is not in use.NEAT SYSTEM LOGS ON PROCESS: On starting NEAT application, the logon screen appears with the following detail:(i) User ID(ii) Trading Member ID(iii) PasswordIn order to sign on to the system, the user must specify a valid User ID, TradingMember ID and the corresponding password. A valid combination of User ID, TradingMember ID and the password is needed to access the system. Figure 3.3 showsScreenshot of log on screen of NEAT CM. Figure: Logon Screen of NEAT CM 64
  • 65. Following are the details of the Log-on screen: (i) User ID: Each trading member can have mo re than one user ID. The number of users allowed for each trading member is notified by the Exchange from time to time. Each user of a trading member must be registered with the Exchange and is assigned a unique user ID. (ii) Trading Member ID: The Exchange assigns a trading member ID to each trading member. The trading member ID is unique and functions as a reference for all orders/trades of different users. This ID is common for all the users of a particular trading member. The trading member ID and user IDs form a unique and validcombination.It is the responsibility of the trading member to maintain adequate control over the persons having access to user IDs. The trading member should request the Exchange for changes in names of the users of user ID, especially when there are changes in the users who are dealing on behalf of the trading member. (iii) Password: When a user logs in for the first time, he has to enter the default password NEATCM provided by the exchange. On entering this password, the system requests the user to enter a new password in the `New Password field. On entering the new password, the system requests for confirmation of this new password. This new password is known to the user only. See box no. 3.2 for features of User ID and PasswordTerms System-Orders Books The NSE trading systems provides complete flexibility to members in the kinds oforders that can be placed by them. Orders are first numbered and time-stamped on receipt andthen immediately processed for potential match. Every order has a distinctive orders numberand a unique time stamp on it. if a match is not found, then the orders are stored in differentbooks‘. Orders are stored in price-time priority in various books in the following sequence.Best Price. Within Price, by time Priority. Price priority means that if two orders are enteredinto the system, the order having the best price gets the higher priority. Time priority means iftwo orders having the same price are entered, the order that is entered first gets the higherpriority. 65
  • 66. The Equities Segments has following types of books.Regular Lot Book: The Regular Lot book contains all regular lot orders that have none of thefollowing attributes attachment to them.All or none (AON)Minimum Fill (MF)Stop Loss (SL)Special Terms book: The Special terms book contains 11 orders that hove either if thefollowing terms attached.All or None (AON)Minimum Fill (MF)Negotiated Trade book:The Negotiated Trade book contains all negotiated order entries captured by the system beforethey have been matched against their counterparty trade entries. These entries are matched withidentical counterparty entries only. It is to be noted that these entries contain a counterpartycode in addition to other order details.Stop-Loss Book: Stop Loss orders are stored in this book till the trigger price specified in the order is reachedor surpassed. When the trigger price is reached or surpassed, the order is released in theRegular lot book. The stop loss condition is met under the following circumstances: Sell order a sell order inthe Stop Loss book gets triggered when the last traded price in the normal market reaches orfails below the trigger price of the order. Buy Order - A buy order in the Shop Loss book getstriggered when the last traded price in the normal market reached or exceeds the trigger priceof the order.Odd Lot Book:The Odd lot books contain all odd lot orders (orders with quantity less than marketable) in thesystem. The system attempts to match an active odd lot order against passive orders in thebook. Currently, pursuant to a SEBI directive, the Odd Lot Market is being used for orders thathave quantity less than or equal to 500 viz., the Limited Physical Market.Spot Book: 66
  • 67. The Spot Lot Book contains all spot orders (orders having only the settlement period different)in the system. The system attempts to match an active spot lot order against the passive ordersin the book. Currently the Spot Market type is not in use.Auction Book:This book contains orders that are entered for all auctions. The matching processes for auctionorders in this book are initiated only at the end of the solicitor period. .Trading System — Order Conditions A Trading Member can enter various types of orders depending upon his / herrequirements. These conditions are broadly classified into three categories: time relatedconditions 1. Time ConditionsDAY - A Day order, as the name suggests, is an order which is valid for the day on which it isentered. If the order is not matched during the day, the order gets cancelled automatically at theend of the trading day.GTD - A Good Till Days / Date (GTD) order allows the Trading Member to specify the days /date up to which the order should stay in the system. At the end of this period the order will getflushed from the system. Each day / date counted is a calendar day and inclusive of holidays.The days / date counted are inclusive of the day / date on which the order is placed. Themaximum number of days a GTD order can remain in the system is notified by the Exchangefrom time to time. 2. Price ConditionsLimit Price / Order - An order that allows the price to be specified while entering the orderinto the system.Market Price / Order - An order to buy or sell securities at the best price obtainable at thetime of entering the order.Stop Loss (SL) Price / Order - The one that allows the Trading Member to place an orderwhich gets activated only when the market price of the relevant security reached or crosses athreshold price. Until then the order does not enter the market. A sell order in the Stop Loss book gets triggered when the last traded price in thenormal market reaches or fails below the trigger price of the order. A buy order in the Stop 67
  • 68. Loss book gets triggered when the last traded price in the normal market reached or exceedsthe trigger price of the order.3. Quantity Conditions Disclosed Quantity (DQ) An order with a DQ condition allows the Trading Member todisclose only a part of the order quantity to the market. For example, an order of 1000 with adisclosed quantity of 200 will mean that 200 is displayed to the market at a time after this istraded. Another 200 is automatically released So on till the full order is executed. TheExchange may set a minimum disclosed quantity criteria from time to time.MF - Minimum fill (MF) orders allow the Trading Member to specify the minimum quantityby which an order should be filled. For example, an order of 1000 units with minimum fill 200will require that each trade be for at least 200 units.AON - All or None orders allow a Trading Member to impose the condition that only the fullorder should be matched it will stay in the books till matched of cancelled.THE TRADING PROCESS Steel city securities Ltd provides stock trading services to its clients and members. Itenables the clients to trade in both NSE & BSE. Through the computer trading terminals insteel city, the client places an order to buy or sell the shares. After the trade is confirmed, theclient receives the settlement net positions. Steel city securities Ltd collects the margin,brokerage, service tax & commission from the clients for the trades taking place in Steel citysecurities Ltd Steel city securities Ltd convert the paper shares into the electronic shares through D-MAT process. Clearing and settlement of trades, dematerialization of shares, providing marketinformation to the clients are daily chores in Steel city securities Ltd apart from trading. 68
  • 69. NEAT System The NEAT system supports an order driven market, wherein orders match on basis oftime and price priority. All quantity fields are in units and prices are quoted in Indian Rupees.The regular lot size and tick size for various securities traded is notified by the exchange fromtime to time. To bring in efficiency, transparency and depth in the market, NSE provides a fullyautomated screen based trading system known as NEAT. Its trading members use NEATsystem for trading in the capital market segment in NSE.Market Phase The system is normally made available for trading on all days except Saturdays, Sunday& other holidays.Pre-open phase: The pre-open period is relevant only in the normal market. Order matching takes placeat the end of the session, based on which an opening price is computed & assigned to all tradesof pre-open. 69
  • 70. Opening: In this period, all orders that have been entered in the pre-open phase are matched.During this phase, the trading member cannot login to the system. If the member is alreadylogged in the cannot perform trading activities till market is opened.Open Phase: The open period indicates the commencement of trading activity. To signify the start ofa trading, a message is sent to all the trade workstation. Order entry is allowed when all thesecurities have been opened. During this phase, orders are matched on a continuous basis.Trading in all the instruments is allowed unless they are specifically prohibited by theexchange. The activities that are allowed at this stage are:  Inquiry: Inquiry about the market status, the shares and their prices.  Order entry: Placing an order to buy or sell the scrip‘s by quoting the price and the quantity of the share.  Order modification: Modifying the order that has been already placed. The modification may be with respect to price or quantity.  Order cancellation: The order placed already can also be cancelled if the price or the quantity of scrip is not satisfactory. Order cancellation also includes quick order cancellation.Market close: Where the market closes, trading in all instruments for that market comes to an end.No further orders are accepted, but the user is permitted to perform activities like inquiries.Surcons: Surveillance and control (SURCON) is that period after market close during which, theusers have inquiry access only. After the end of SURCON period, the system processes thedata for making the system available for the next trading day. When the system startsprocessing data, the interactive connection with the BOLT system is lost and the message tothat effect is displayed at the trader workstation. 70
  • 71. BOLT system enables members from across the country to trade simultaneously withenormous ease and efficiency. A member punches into the computer quantities of securitiesand the price at which he wants to transact and the transaction is executed through themainframe computer of the exchange as soon as the order punched by him finds a matchingsale or buy order from a counter party.The NSE opens at 9.00 a.m. and the trading starts at 9.15 a.m. 5 minutes is given for thestockbrokers to quote their price and to get a recap of the yesterdays prices of different scrip‘s.The trading ends at 3.30 P.m. The auction market starts at 4.00 p.m. and continues till 4.30after normal on-line trading. In BSE, the trade starts at 9.55 a.m. and ends at 3.30 p.m. A gracetime of 20 minutes from 3.40p.m. to 4.00 p.m. is given in BSE as ‗End of the Session‘ fortrading.Market by Price The purpose of Market by Price (MBP) is to enable the user to view outstanding orders in themarket aggregated at each price and are displayed in order of best prices. Figure 3.6 showsscreenshot of market by price window in NEAT CM.The fields that are available on theselection screen are Symbol, Series and Book Type. The options available in the book typefield are Regular Lot and RETDEBT.The detailed MBP screen is split into First Line, DetailLine and Summary Line. The first line displays Market Type, Symbol, Series, Total TradedQuantity, Highest Trade Price, Lowest Trade Price, Last Trade Price, % Change in LTP fromPrevious Day Close and Average Traded Price. The detail line displays Number of Buy Orders, Total Buy Order Quantity at that price, BuyOrder Price, Sell Order Price, Total Sell Order Quantity at that price and Number of SellOrders. The summary line displays Total Buy Order Quantity and Total Sell Order Quantity.For special term orders, the terms are not reflected in the MBP screen. Buy orders aredisplayed on the left side of the window and sell orders on the right. The orders appear in aprice/time priority with the "best priced" order at the top. When any Regular Lot information,currently displayed on the window, is changed (for example as the result of a trade), thisinformation is automatically reflected in the MBP i.e. dynamic updating of MBP screenspresent.54All buyback orders are identified by an ‗*‘ in the MBP screen. In case a buybackorder appears in the best five orders in the MBP an ‗*‘ will precede such an order record. In 71
  • 72. addition, an ‗*‘ will appear against the ‗Total Buy‘ field in the MBP irrespective of the orderbeing in best five orders in the MBP or notSpecial Features of MBP(a) Regular lot & special term orders can be viewed in the MBP. Thepercentage change for lasttrade price with respect to previous day‘s closing price, open price (in case of pre-openindicative opening price),high price for a day, low price a day and the average trade price ofthe security in the given market are the additional fields in the screen.(b) No untriggered stop-loss order will be displayed on the MBP screen.(c) Only order details for the best 5 prices information is displayed Figure 3.6: Market by Price window in NEAT CMBack Office To calculate the net mark to market value, Bhav copy file is imported from NSE/BSE.Net mark to market value is to be known to know the profit or loss position of the client, 72
  • 73. basing on which the Trading Manager of Steel city securities Ltd will decide whether the clientcan trade or not for the next day on comparing it with the margin paid by the client. After importing the Bhav copy file, the trading module is opened. In trading module,the sauda status is known from the Sauda Manager‘. Sauda manager is the number of tradeconfirmations recorded. Confirmation of trading transaction with brokerage commission isknown as ‗Sauda‘. After Sauda Manager, Net positions process is done. In the net positions process,cumulative net positions reports, client-wise net position reports and other reports are madeand are sent to clients and to the accounts department. The bills are prepared and are sent to therespective clients.REPORTS After selecting ‗REPORTS‘ option from main menu, the member bas to specify thecriteria for which the report is needed. The types of reports that may be generated are:deliveries reports; receipts reports; obligations reports; custodial trades reports; bad deliveriesreports; funds reports; auctions reports; objections reports; margins reports; securities reportsand miscellaneous reports. The daily reports of various aspects relating to the trading activitiesare maintained.CLEARING Settlement of trades transacted on an exchange requires smooth, preferablyinstantaneous, movement of securities and funds in accordance with the prescribed schedule ofpay-in / pay-out. Movement of securities has been almost instantaneous in the dematerializedenvironment. Two depositories are in place to provide electronic transfer of securities. 10major stock exchanges accounting for about 99% of turnover have been connected todepositories. All actively traded scrips are held, traded and settled in de-mat form. NSEfollows a different model where a clearing corporation guarantees settlement obligationsemanating from trades.SETTLEMENT The trades accumulated over a trading cycle are clubbed together at the end of thetrading cycle, positions (trades) are netted and the balance obligations are settled. 73
  • 74. There are two main types of settlements:  Fixed or Account Period Settlement  Rolling SettlementAccount Period Settlement (APS) An APS is a settlement where the trades pertaining to a period stretching over morethan one day are settled together. The clearing member of NSE has 3 days market segment and5 days market segment. NSCCL offers an account period settlement, which starts on Wednesday and ends onTuesday of next week. Concluded or locked-in trades are received from NSE by NSCCL. Atthe end of each trading day, NSCCL determines the cumulative obligations of each memberand electronically transfers the data to clearing members. Settlement is deemed to be completeupon declaration and release of pay-out of funds and securities. On pay-out day the securitiesare delivered to the respective receiving members.Rolling Settlement In contrast to account period settlement, under rolling settlement all open positions atthe end of a date ‗T‘ mandatory results in delivery and payment of ‗X‘ working days later. Inother words, all the net obligations at the end of day‘s trading are to be settled by exchange offunds and delivery on the fifth day from the trading day. This method of trading andsettlement process is called ‗Rolling Settlement‘. In order to enhance liquidity, to shorten the settlement cycle and to promote market forderivatives, SEBI permitted rolling settlement in respect of selected shares and trades in thissegment are settled by de-mat delivery only. As on January 2001, rolling settlement wasavailable in respect of 156 scrip‘s. In both the types of settlement, for confirmed trades, the settling bank will arrange forpayment and clearance and depository for effecting transfers by electronic book entry system.Canara bank provides the clearinghouse facility. 74
  • 75. COST OF TRADINGThe various costs involved in the process of online trading are as follows: 1. Margins, 2. Brokerage, 3. Service tax , 4. Stamp duty.MarginsThe base capital to set up a trade centre is one crore rupees. Earlier, IIL paid Rs. 75 lakhs asbase capital when it was set-up. The trade corporation has to maintain a reserve of someamount with NSE where 30% -50% will be in the form of cash and the remaining in the formof bank guarantees (securities), FDR‘s etc. IIL has 7.5. Crores as margin with NSE at present. Gross intra-day turnover (buy and sell) of a member shall not exceed 33 1/3 time thebase capital. Gross exposure of a member at any time shall not exceed 8.5 times the free basecapital of one crore rupees and not exceed 12 times over the free base capital of one crorerupees. Minimum of Rs.20000 is collected as margin money from professional clients in Steelcity securities Ltd. For delivery purpose no margin money is collected. Client margincollection is calculated in 16 types known as ‗Span calculation‘ and the maximum margin iscollected from the clients. Steel city securities Ltd collects 25% margin money in futures fromclients. For trading in index 15% margin is charged. For retail clients, thee full amount of thevalue of shares is calculated and collected to allow them to purchase the shares.BrokerageBrokerage is of two types:Speculation brokerage or square up commission This brokerage is charged where buying and selling of shares is done in one day onlyand at the end of the days trade, the position is zero. The speculation brokerage is chargedfrom 0.02% to 0.05%. 75
  • 76. Delivery Brokerage This brokerage is charged where there may be buying or selling lot remaining at theend of the days trade. The delivery brokerage is charged from 0.3% to 0.01%. As per SEBI, maximum brokerage shouldn‘t exceed 2.5% both in BSE and NSE. Forretail clients, the brokerage charged is 0.7%. A sub-broker charge 2.5% from the clients to sellor buy the shares out of which, Steel city securities Ltd charges 1% from the sub-broker.Service tax:In Steel city securities Ltd, 5% service tax on brokerage is collected from the clients.Stamp duty If the stamp duty of 0.006% on turnover is Rs50 , only Rs30 is collected in NSE. InBSE, the minimum is 1Re and the maximum stamp duty is unlimited.De-mat Process When a client places his physical shares for de-mat, Steel city securities Ltd afterinputting the information in depository participants sends the physical shares to the company,which issued the shares. The client code number and the information and the clients signatureis sent to Share Holding Registrar. There they verify whether the shares really belong to the client and whether thesignature is matching or not. Once they are satisfied that the information sent through the DP‘sare right, the shares are cleared and the information is passed on to the client. The physicalshares are then torn away as they already exist in electronic form. When a client enters into DP for de-mat purpose, he is given a unique code member. Hecan know his share position easily. It is known as client ID number. As mentioned earlier, Steel city securities Ltd is depository participant. So, Steel citysecurities Ltd acts as an intermediary between clients and NSDL &CDSL. 76
  • 77. MARKET INFORMATION In Steel city securities Ltd, daily the research analyst collects the market informationand it is analyzed. The market information is used to forecast the index movement, pricemovement of the shares and enables the clients to make use of the information in trading to getbetter results. The research analyst in forecasting the market movement follows the technical analysis,fundamental analysis and efficient market hypothesis. The research analyst collects theinformation about the company, the industry and the economy through different media to knowthe company‘s position. The research analyst follows the market closely by watching the price movement of theshares in the market. The technical analysis is very helpful in making investment decisions.The research analyst follows different tools of technical analysis like Japanese candlestickmethod; Elliot wave theory; Dow theory; price trends and volume trends; volatility; floatingstock and volume of trade etc., to assess the market. Technical analysis reveals the movementof the scrip. It explains when to buy a share and when to sell. So, the research analyst givesmuch important to the technical analysis to forecast the price movement of the scrip accurately. Since, the NSE & BSE are markets with strong form efficiency, as the market discountsthe information itself very quickly and changes as per the information, the research analyst hasonly fewer jobs to do here. The research analyst not only analyses the marketing information but, every day in Steelcity securities Ltd an edition of the research analyst‘s, suggestions on scripts that have to bebought and sold is also printed which helps the clients of Steel city securities Ltd to invest inshares that are profitable. Mostly, the predictions of the research analyst about the marketmovement prove to be accurate. So market information in Steel city securities Ltd is trustworthy.LEGAL FRAMEWORK It deals with legislative and regulatory provisions relevant from the viewpoint of adealer. The legality of trading is through the various acts and regulators of stock exchange. 77
  • 78. Before 1992, the three principal acts governing the securities market were:Acts related tostock trading are  The Capital Issues (control) Act, 1947, which restricted the issuers‘ access to the securities market and controlled the pricing of issues.  The Companies Act, 1956, which sets out the code of conduct for the corporate, sector in relation to issue, allotment and transfer of securities, and disclosures to be made in public issues.  The Securities Contract (Regulation) Act, 1956 that provides for regulation of transactions in securities through control over stock exchanges.  SEBI Act, 1992: To ensure effective regulation of the market, SEBI Act, 1992 was enacted to empower SEBI with statutory powers for  Protecting the interests of investors in securities.  Protecting the development of the securities market and  Regulating the securities market.Regulators The responsibility for regulating the securities market is shared by Department ofEconomic Affairs (DEA), Department of Company Affairs (DCA), RBI; Securities ExchangeBoard of India (SEBI) and Securities Appellate Tribunal (SAT). 78
  • 79. CHAPTER – IV: ANALYSIS AND INTERPRETATIONS 79
  • 80. TATA MOTORS:Historical Security-wise Price Volume Data Data for TATAMOTORS - EQ from 19-07-2011 to 25-08-2011 Symbol Series Date Prev Open High Low Last Close Average Total Turnover Close Price Price Price Price Price Traded Price Quantity in Description: Rs.LacsTATAMOTORS EQ 19-Jul-11 1014.8 1001 1002.15 978 985 983.95 987.82 3122797 30847.73TATAMOTORS EQ 20-Jul-11 983.95 990 995.65 964.1 968.05 968.85 978.21 1896414 18550.95TATAMOTORS EQ 21-Jul-11 968.85 972.9 984.95 962.75 975.6 977 977.82 1342469 13126.98TATAMOTORS EQ 22-Jul-11 977 987 1005 980.4 995 996.95 994.87 2146720 21357.14TATAMOTORS EQ 25-Jul-11 996.95 994 1011.9 987.1 1005.15 1006.4 1004.06 1358645 13641.66TATAMOTORS EQ 26-Jul-11 1006.4 1007.9 1013.1 965.65 971 973.05 979.72 1937010 18977.21TATAMOTORS EQ 27-Jul-11 973.05 975 977.85 948.3 956.2 957.7 958.23 1736500 16639.62TATAMOTORS EQ 28-Jul-11 957.7 951.9 966 945.45 948.45 950.7 953.64 1630138 15545.71TATAMOTORS EQ 29-Jul-11 950.7 948.9 955.9 940 953 948.1 947.93 1361433 12905.47TATAMOTORS EQ 1-Aug-11 948.1 955 966.95 950.65 963.6 961.5 960.12 1147475 11017.09TATAMOTORS EQ 2-Aug-11 961.5 955.05 962.9 950 957 956.4 955.34 1587080 15162.02TATAMOTORS EQ 3-Aug-11 956.4 945 945 921.3 928.2 928.15 927.92 1786057 16573.16TATAMOTORS EQ 4-Aug-11 928.15 922.7 928.6 910.35 915 913.95 919.04 3752739 34489.09TATAMOTORS EQ 5-Aug-11 913.95 879 892 870 891.05 889.6 880.89 2439670 21490.87TATAMOTORS EQ 8-Aug-11 889.6 871.05 872 823.75 830.2 827.7 837.38 3109154 26035.55TATAMOTORS EQ 9-Aug-11 827.7 793 821 784.05 793.5 794.05 800.41 4985087 39901.14TATAMOTORS EQ 10-Aug-11 794.05 824.5 849.4 816 842.05 844.2 839.01 3085125 25884.39TATAMOTORS EQ 11-Aug-11 844.2 829 862.95 817 850 849 840.77 3925835 33007.39TATAMOTORS EQ 12-Aug-11 849 850.95 850.95 793.1 799.1 800 809.65 5268147 42653.53TATAMOTORS EQ 16-Aug-11 800 812.1 819.9 795.05 807.35 801.55 805.6 2297080 18505.37TATAMOTORS EQ 17-Aug-11 801.55 799 800.15 772.1 780 778.85 782.26 2541175 19878.67TATAMOTORS EQ 18-Aug-11 778.85 786.7 787.3 747.9 748 752.05 758.12 2518993 19096.97TATAMOTORS EQ 19-Aug-11 752.05 737.25 739.8 702.15 710.05 712.35 717.99 5589606 40132.81TATAMOTORS EQ 22-Aug-11 712.35 715.45 742.1 700 739.7 737 718.3 4437691 31876.06 80
  • 81. TATAMOTORS EQ 23-Aug-11 737 735 746.9 715 727.75 727.6 730.02 3613076 26376.13TATAMOTORS EQ 24-Aug-11 727.6 727 736.8 695.05 695.55 700.75 716.5 3593472 25747.09TATAMOTORS EQ 25-Aug-11 700.75 711.05 721.8 705.2 716 714.25 714.02 3461963 24718.98 GRAPH:Online Stock Chart Interpretation: The stock has been in a corrective phase since (19-07-2011) from rupees 718.50 and chart patterns indicate a new segment of the uptrend is under way. The stocks take a new up move from 23-07-2011 the subsequent rally in the past couple of trading sessions confirm the case for the resumption of an uptrend. The stock fluctuated 721.35 to 732.45. 81
  • 82. Wipro: Historical Security-wise Price Volume Data Data for WIPRO - EQ from 19-07-2011 to 25-08-2011 Prev Open High Low Last Close TotalSymbol Series Date Average Turnover Close Price Price Price Price Price Traded Price Quantity in Descrip tion: Rs.LacsWIPRO EQ 19-Jul-11 413.65 414.85 417 410.65 414.75 415.2 413.33 912642 3772.26WIPRO EQ 20-Jul-11 415.2 417 417 395.05 398 398.95 401.18 4690625 18817.73WIPRO EQ 21-Jul-11 398.95 398 402.8 392.95 402 401.1 399.98 829248 3316.85WIPRO EQ 22-Jul-11 401.1 404.95 407 402.05 406.35 405.85 404.87 1263304 5114.69WIPRO EQ 25-Jul-11 405.85 406 411.6 401.8 410 410.15 407.98 682805 2785.69WIPRO EQ 26-Jul-11 410.15 409.9 412.3 405.15 410 410.45 409.32 1148100 4699.39WIPRO EQ 27-Jul-11 410.45 408.05 409.9 401.45 402 402.55 405.79 1148344 4659.83WIPRO EQ 28-Jul-11 402.55 395.9 399.9 391.3 395 395 394.58 1206791 4761.74WIPRO EQ 29-Jul-11 395 391.55 400 388 390.9 389.3 393.07 1097964 4315.81WIPRO EQ 1-Aug-11 389.3 391.5 397.2 387 393.05 391.9 392.05 498158 1953.02WIPRO EQ 2-Aug-11 391.9 391.05 391.9 382.1 384.1 383.45 384.47 862653 3316.65WIPRO EQ 3-Aug-11 383.45 379 385 376 381 381.2 381.5 1265118 4826.43WIPRO EQ 4-Aug-11 381.2 379.65 383.65 375 376.5 375.7 379.87 1077137 4091.67WIPRO EQ 5-Aug-11 375.7 362.05 370.7 359.05 369.65 367.3 366.02 1343064 4915.95WIPRO EQ 8-Aug-11 367.3 355 360.4 337 359.35 357.85 352.36 2845336 10025.8WIPRO EQ 9-Aug-11 357.85 340.1 352.1 338.3 349.4 346.75 345.4 3496937 12078.48WIPRO EQ 10-Aug-11 346.75 353 358.3 349.15 355 354.9 354.29 2147642 7608.79WIPRO EQ 11-Aug-11 354.9 349 356.7 347.55 353 352.9 352.81 1240189 4375.57WIPRO EQ 12-Aug-11 352.9 356 357.7 337 342.9 342.95 343.32 1871808 6426.33WIPRO EQ 16-Aug-11 342.95 345 348.85 336.7 342 340.4 341.63 957227 3270.16WIPRO EQ 17-Aug-11 340.4 338 352.25 338 345 344.3 345.85 1644316 5686.81WIPRO EQ 18-Aug-11 344.3 345 345.5 323.95 325 328.15 330.93 2396107 7929.43WIPRO EQ 19-Aug-11 328.15 320 327.95 310.5 319.95 320.35 320.84 1561982 5011.43WIPRO EQ 22-Aug-11 320.35 317.6 337.45 315.1 331.5 332.35 326.06 1044871 3406.89WIPRO EQ 23-Aug-11 332.35 335 338 320.7 333.9 332.95 331.54 1128510 3741.48WIPRO EQ 24-Aug-11 332.95 333 335 326.2 329.05 329.85 329.66 1277305 4210.73WIPRO EQ 25-Aug-11 329.85 331.8 332.9 325.25 329.5 328.2 328.73 1861202 6118.39 82
  • 83. GRAPH:Interpretation: Above table indicates WIPRO fluctuates very less during the period. 1st week slowlyup and down Because index effected so slightly fallen the WIPRO price during the period.WIPRO prices are fluctuated 326.55 to 329.25. 83
  • 84. HDFC: Historical Security-wise Price Volume Data Data for HDFC - EQ from 19-07-2011 to 25-08-2011Symbol Series Date Prev Open High Low Last Close Average Total Turnover Close Price Price Price Price Price Traded Price Quantity in Descr iption: Rs.LacsHDFC EQ 19-Jul-11 700.7 702 709 695.05 702.55 703.7 702.75 1379200 9692.35HDFC EQ 20-Jul-11 703.7 708.9 709.05 693.65 696 697.25 701.74 1089228 7643.55HDFC EQ 21-Jul-11 697.25 693 702.35 691.05 697.2 698.55 697.76 652707 4554.32HDFC EQ 22-Jul-11 698.55 704 712 700.05 709.15 707.85 708.23 1160424 8218.52HDFC EQ 25-Jul-11 707.85 703.55 709.9 696.1 707.7 708.2 703.06 1925904 13540.18HDFC EQ 26-Jul-11 708.2 711.4 714 685.75 696 693.95 694.56 1886011 13099.47HDFC EQ 27-Jul-11 693.95 696 705.5 686.25 701.8 703.3 696.81 2428371 16921.24HDFC EQ 28-Jul-11 703.3 695.3 696.7 686 686.35 688.35 690.84 2021353 13964.36HDFC EQ 29-Jul-11 688.35 687 692.9 675.3 692 689 684.86 2421633 16584.68HDFC EQ 1-Aug-11 689 697.8 707 691.2 692.5 694.6 699.12 1970548 13776.43HDFC EQ 2-Aug-11 694.6 690.2 693.15 683 684.7 685 687.22 1280478 8799.75HDFC EQ 3-Aug-11 685 677.3 684.95 675.3 680.5 679.95 680.02 1053042 7160.85HDFC EQ 4-Aug-11 679.95 682.6 696.5 673.75 676.9 676.45 685.26 4184042 28671.69HDFC EQ 5-Aug-11 676.45 661.3 674 658.9 669.9 664.8 666.13 2760020 18385.27HDFC EQ 8-Aug-11 664.8 654 666.2 641 649.85 646.75 652.13 3237082 21109.98HDFC EQ 9-Aug-11 646.75 625.05 664.85 624.2 661.9 659 649.38 3673395 23854.2HDFC EQ 10-Aug-11 659 672 673.8 660 669 666.15 665.43 2428299 16158.7HDFC EQ 11-Aug-11 666.15 660 688.65 660 684 683.7 681.58 2884036 19656.96HDFC EQ 12-Aug-11 683.7 687.9 688.9 663 671 668.75 672.93 2698571 18159.58HDFC EQ 16-Aug-11 668.75 677.9 681.45 642 646.4 644.5 656.52 3134178 20576.5HDFC EQ 17-Aug-11 644.5 645.1 670.5 645.05 661 660.6 660.86 3374731 22302.26HDFC EQ 18-Aug-11 660.6 663 668.8 636 640 640.65 645.37 3248024 20961.76HDFC EQ 19-Aug-11 640.65 633.5 647.2 628.1 639 639.2 637.71 3775170 24074.72HDFC EQ 22-Aug-11 639.2 639.1 648.4 638.35 639.9 641.15 643.18 1506103 9686.94HDFC EQ 23-Aug-11 641.15 646.5 650.9 631.55 646.8 645.85 641.57 2529652 16229.42HDFC EQ 24-Aug-11 645.85 640.2 657.5 640.2 646.6 646.3 647.71 3192592 20678.62HDFC EQ 25-Aug-11 646.3 650.6 650.6 622.2 630.15 628.2 632.37 3750417 23716.6 84
  • 85. GRAPH:Interpretation: Above table indicates HDFC fluctuates very less during the period. 1st weekfallen very high after recovery price decreases later fluctuate again. Because index effected soslightly fallen the HDFC price during the period HDFC prices are fluctuated 708.45 to 660.15. 85
  • 86. M&M: Historical Security-wise Price Volume Data Data for M&M - EQ from 19-07-2011 to 25-08-2011Symbol Series Date Prev Open High Low Last Close Average Total Turnover Close Price Price Price Price Price Traded Price Quantity in Description: Rs.LacsM&M EQ 19-Jul- 706.8 709.95 717 702.5 716.4 716.35 711.31 768903 5469.31 11M&M EQ 20-Jul- 716.35 717.6 719.8 704 705.2 705.65 709.38 536069 3802.79 11M&M EQ 21-Jul- 705.65 702 710.55 697.1 705 702.65 703.96 589715 4151.37 11M&M EQ 22-Jul- 702.65 708.9 726 705.5 724.1 724.35 718.62 718890 5166.07 11M&M EQ 25-Jul- 724.35 721 753 721 748 748.3 741.1 2044486 15151.64 11M&M EQ 26-Jul- 748.3 747.7 753.45 713.45 715 717.75 729.8 2050961 14967.99 11M&M EQ 27-Jul- 717.75 718 720.5 708.65 720.5 718.3 714.85 1197045 8557.02 11M&M EQ 28-Jul- 718.3 709 726.45 702 716.8 716.1 714.82 1537573 10990.83 11M&M EQ 29-Jul- 716.1 715 724.45 708.4 721.15 720.75 719.64 961291 6917.84 11M&M EQ 1-Aug- 720.75 724.5 735.6 724.5 730.65 730.95 731.49 1643959 12025.4 11M&M EQ 2-Aug- 730.95 726.55 734.75 720.15 725 723.4 727.08 1414365 10283.5 11M&M EQ 3-Aug- 723.4 715.3 720 701.45 712.55 708.9 707.12 1552260 10976.29 11M&M EQ 4-Aug- 708.9 706.2 709.7 676.6 680.85 679.45 690.95 2588861 17887.75 11M&M EQ 5-Aug- 679.45 660 669 638.25 657 653.35 651.04 3024155 19688.36 11M&M EQ 8-Aug- 653.35 640.9 679.9 632.6 671 668.25 660.63 2564829 16943.94 11M&M EQ 9-Aug- 668.25 636.2 700 636.2 699.8 693.1 686.39 4747917 32589.44 11M&M EQ 10-Aug- 693.1 710 733.5 704.15 726.5 730.4 722.96 3899834 28194.34 11M&M EQ 11-Aug- 730.4 719 739.4 714.35 724.95 728.6 727.38 1796271 13065.65 11M&M EQ 12-Aug- 728.6 733.7 742.9 730 741.15 739.95 738.4 2539135 18749.03 11M&M EQ 16-Aug- 739.95 743.1 745.6 728.6 732 732 738.07 1941795 14331.87 11M&M EQ 17-Aug- 732 726.75 730 713.75 721 719.15 720.28 1614704 11630.41 11M&M EQ 18-Aug- 719.15 719.9 734.8 705.2 717.7 717.2 719.85 1621345 11671.17 11 86
  • 87. M&M EQ 19-Aug- 717.2 703.65 727.55 703.65 717.35 718.5 719.28 1573527 11318.13 11M&M EQ 22-Aug- 718.5 719 723.5 698.65 713.2 713.8 707.66 4034477 28550.31 11M&M EQ 23-Aug- 713.8 715 718.85 692.55 706.1 709.25 706.17 3250061 22950.98 11M&M EQ 24-Aug- 709.25 702.2 712.5 694.6 695.1 697.45 703.64 3175792 22346.14 11M&M EQ 25-Aug- 697.45 704.7 707.4 690.05 692.5 697.4 698.88 3147019 21993.86 11 Graph: Interpretations: Above table indicates M&M fluctuates very less during the period. 1st week fallen very high after recovery price decreases later fluctuate again increase.Because index effected so slightly fallen the M&M price during the period. M&M prices are fluctuated 740.35 to710.35. 87
  • 88. M&Mfin: Historical Security-wise Price Volume Data Data for M&MFIN - EQ from 19-07-2011 to 25-08-2011 Prev Open High Low Last Close TotalSymbol Series Date Average Turnover Close Price Price Price Price Price Traded Price Quantity in Description: Rs.Lacs 19-Jul-M&MFIN EQ 685.2 689 708 684.95 692 696.15 698.3 58696 409.88 11 20-Jul-M&MFIN EQ 696.15 701.55 706.7 695 697.65 700.45 700.94 46282 324.41 11 21-Jul-M&MFIN EQ 700.45 702.95 702.95 685.1 692 690.9 691.82 16262 112.5 11 22-Jul-M&MFIN EQ 690.9 694 716.3 691 710 714.3 701.3 100661 705.93 11 25-Jul-M&MFIN EQ 714.3 714 717.45 694.4 703 706.75 708.51 23126 163.85 11 26-Jul-M&MFIN EQ 706.75 706 706 681 689 688.25 692.13 13343 92.35 11 27-Jul-M&MFIN EQ 688.25 693 698 681.1 685 685.65 688.71 18702 128.8 11 28-Jul-M&MFIN EQ 685.65 693.95 693.95 664.55 668.25 667.1 669.93 25174 168.65 11 29-Jul-M&MFIN EQ 667.1 654 673 632.15 637 637 642.35 50640 325.28 11 1-Aug-M&MFIN EQ 637 639.8 675 632.6 674 672.35 659.79 119075 785.65 11 2-Aug-M&MFIN EQ 672.35 671.95 672 655.35 660.05 659.8 661.15 18507 122.36 11 3-Aug-M&MFIN EQ 659.8 657.8 662.7 651.05 655.05 655.75 653.25 82715 540.34 11 4-Aug-M&MFIN EQ 655.75 655 684 655 673.5 672 672.54 59982 403.4 11 5-Aug-M&MFIN EQ 672 655 661.2 643.95 644.1 646.55 652.83 21200 138.4 11 8-Aug-M&MFIN EQ 646.55 645 669.9 616.6 658 654.9 649.01 35733 231.91 11 9-Aug-M&MFIN EQ 654.9 620.1 672.3 620 661 662.55 655.5 32630 213.89 11 10-Aug-M&MFIN EQ 662.55 666.05 715 656 690 699.85 679.13 95078 645.7 11 11-Aug-M&MFIN EQ 699.85 670 694.8 670 691.25 688.1 685.63 50833 348.53 11 12-Aug-M&MFIN EQ 688.1 690.7 707.8 610 670.45 668.55 679.12 133639 907.57 11 16-Aug-M&MFIN EQ 668.55 699 699 653.5 672 663.15 666.13 89644 597.14 11 17-Aug-M&MFIN EQ 663.15 666.1 675.4 663.2 665 664.8 667.86 104676 699.09 11 18-Aug-M&MFIN EQ 664.8 670 670 635 643.25 654.3 650.92 40267 262.11 11 19-Aug-M&MFIN EQ 654.3 646.05 655 622.15 633 633.65 639.81 30922 197.84 11 88
  • 89. 22-Aug-M&MFIN EQ 633.65 635.05 644 597 607 604.7 609.29 83049 506.01 11 23-Aug-M&MFIN EQ 604.7 615 619.75 603 613.2 611.85 609.36 147571 899.24 11 24-Aug-M&MFIN EQ 611.85 614.85 623.8 614.85 619.95 618.9 619.4 16660 103.19 11 25-Aug-M&MFIN EQ 618.9 621.65 621.65 598.2 603 602.6 603.97 39156 236.49 11Graph:Interpretations: Above table indicates M&MFIN fluctuates very less during the period. 1st weekfallen very high after recovery price decreases later fluctuate again increase. Because indexeffected so slightly fallen the M&MFIN price during the period. M&MFIN prices arefluctuated 714.45 to 660.65. 89
  • 90. Maruti: Historical Security-wise Price Volume Data Data for MARUTI - EQ from 19-07-2011 to 25-08-2011Symbol Series Date Prev Open High Low Close Average Total Turnover Close Price Price Price Price Traded Price Quantity in Description: Rs.LacsMARUTI EQ 19-Jul- 1174.75 1169.5 1174.9 1158.45 1163 1164.11 245365 2856.33 11MARUTI EQ 20-Jul- 1163 1168.7 1176.9 1159.1 1162.7 1170.82 255318 2989.3 11MARUTI EQ 21-Jul- 1162.7 1155.05 1170 1147.6 1156.15 1155.23 172146 1988.69 11MARUTI EQ 22-Jul- 1156.15 1159 1168 1155 1161.6 1161.42 376871 4377.07 11MARUTI EQ 25-Jul- 1161.6 1156.7 1185 1153.6 1181.25 1170.98 203872 2387.3 11MARUTI EQ 26-Jul- 1181.25 1176 1201.7 1154.75 1176.95 1184.74 1430916 16952.65 11MARUTI EQ 27-Jul- 1176.95 1182.9 1216.4 1172.2 1209.25 1195.16 503547 6018.19 11MARUTI EQ 28-Jul- 1209.25 1197 1225 1178.55 1185.9 1204.09 653432 7867.93 11MARUTI EQ 29-Jul- 1185.9 1189 1219.8 1189 1206.65 1211.08 333021 4033.13 11MARUTI EQ 1-Aug- 1206.65 1210.1 1228.9 1191.45 1209.6 1208.35 381542 4610.37 11MARUTI EQ 2-Aug- 1209.6 1193.05 1215.8 1193.05 1212.2 1203 271852 3270.38 11MARUTI EQ 3-Aug- 1212.2 1195.5 1221.65 1195.5 1212.3 1212.46 428422 5194.46 11MARUTI EQ 4-Aug- 1212.3 1198.05 1216 1193.35 1200.3 1204.18 476072 5732.77 11MARUTI EQ 5-Aug- 1200.3 1170 1200 1168.8 1192 1187.38 363463 4315.69 11MARUTI EQ 8-Aug- 1192 1178.45 1207.55 1163.1 1191.75 1189.02 356035 4233.32 11MARUTI EQ 9-Aug- 1191.75 1170.05 1216.9 1170 1211.95 1201.13 386251 4639.37 11MARUTI EQ 10-Aug- 1211.95 1225 1283.4 1215.6 1277.6 1256.5 819358 10295.19 11MARUTI EQ 11-Aug- 1277.6 1270.55 1282 1239.25 1247.65 1257.36 399042 5017.4 11MARUTI EQ 12-Aug- 1247.65 1249.4 1269 1238 1246.35 1250.32 442137 5528.12 11MARUTI EQ 16-Aug- 1246.35 1246.2 1255.6 1220.1 1225.1 1231.47 340364 4191.5 11 90
  • 91. MARUTI EQ 17-Aug- 1225.1 1220 1230.8 1179 1186 1195.29 385046 4602.4 11MARUTI EQ 18-Aug- 1186 1197 1203 1152.65 1159.4 1170.37 286994 3358.9 11MARUTI EQ 19-Aug- 1159.4 1137 1166.45 1134.1 1159.05 1147.74 271953 3121.31 11MARUTI EQ 22-Aug- 1159.05 1165.5 1174.6 1149.1 1169.4 1163.37 209465 2436.85 11MARUTI EQ 23-Aug- 1169.4 1171.1 1174.5 1152.4 1158.2 1160.23 201777 2341.08 11MARUTI EQ 24-Aug- 1158.2 1145 1156.8 1097.35 1114.5 1125.16 650647 7320.83 11MARUTI EQ 25-Aug- 1114.5 1124 1130.2 1103.4 1110.8 1115.4 517715 5774.59 11 Graph: Interpretation: Above table indicates MARUTI fluctuates very less during the period. 1st week fallen slowly increased and during the middle of the it will sudden high and decreased . Because index effected so slightly fallen the MARUTI price during the period MARUTI prices are fluctuated 1160.80 to 1277.70 and 1277.70 to 1110.70. 91
  • 92. SUMMARY The capital markets perform an important function in mobilization of resourcesliquidity of the stock markets is an important factor effecting growth. Many profitableprojects require long term finance; however investors do not relinquish their savings for along time. capital market is a group of interrelated markets in which capital is raised infinancial form, is lent and borrowed (or) raised in a varying time periods (such as shortterm and long term).in a developing economy, the business of capital market is themovement of capital to the point of highest yield, a liquid stock market ensures a quick exitwithout incurring heavy losses (or) costs. Stock market is a vehicle through which longterm finance is characterized for the various needs of industry, commerce, government andlocal authorities. Thus development of efficient financial markets is necessary for creatingconducive climate for investment and economic growth The steel city securities Ltd. group has a significant presence across the countrywith over 500 branches in over 300 cities across India. All these Offices are networked andare connected with the corporate office in Mumbai. The Group has invested significantly intechnology and research, the results of which are there for everyone to see. The 5paisatrading is one of the most advanced Platforms available to retail investor in India. Thegroup has memberships on BSE and NSE for equities trading, depository participant withNSDL and CDSL and on MCX and NCDEX for commodities trading. It has a SEBI licensefor portfolio Management under which, various schemes are offered. The company offers the products and financial services space with offeringsranging from Equity research, Equities and derivatives trading, Commodities trading,Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, Go bondsand other small savings instruments to loan products and Investment banking.Steel city securities Limited has fixed its issue price at Rs 76 per Equity share. The 100%book-built issue offering 1.19 crore shares in the price band of Rs 70-80 closed on April 27,2005 and were oversubscribed 7.22 times. While the QIB portion was oversubscribed10.49 times, the non-institutional investors segment was oversubscribed 5.64 times.Steel city securities Ltd. is engaged in the businesses of Equities broking and PortfolioManagement Services. It holds memberships of both the leading stock exchanges of Indiaviz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offersbroking services in the Cash and Derivatives segments of the NSE as well as the Cash 92
  • 93. segment Of the BSE.Steel city securities Commodities Pvt. Ltd. is a 100% subsidiary of Steel city securitiesLtd., which is engaged in the business of commodities broking. Our experience in securitiesbroking empowered us with the requisite skills and technologies to allow us offercommodities broking as a contra-cyclical alternative to equities broking. We enjoymemberships with the MCX and NCDEX, two leading Indian commodities exchanges, andrecently acquired membership of DGCX. We have a multi-channel delivery model, makingit among the select few to online as well as offline trading facilitiesSteel city. Insurance Services Ltd is also a 100% subsidiary of Steel city securities Ltd. andis a registered Corporate Agent with the Insurance Regulatory and Development Authority(IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Ltd,which is Indias largest private Life Insurance Company.Steel city Investment Service Ltd is also a 100% subsidiary of Steel city securities Ltd. Ithas an NBFC license from the Reserve Bank of India (RBI) and offers margin-fundingfacility to the broking customers. Steel city securities Ltd. Insurance Brokers Ltd is a 100%subsidiary of Steel city securities Ltd. and is a newly formed subsidiary which will carryout the business of Insurance broking. We have applied to IRDA for the insurance brokinglicense and the clearance for the same is awaited. The Indian capital market has undergone numerous changes in over the years.Traditionally stock market booms and decline have laid numerous Problems for layinvestors. A close interaction of these problems revealed that these were due to paper basedtrading and settlement. The short learning of the markets become manifest in the baddeliveries, delays in transfers and irregular settlement etc. the remedial measure wasdematerialization under the depository system. With the introduction of de-mat system in1996 and in effect from January 1998, investors in capital market need to have de-mat ac.and trading ac. stock broking houses play a vital role in this field. These stock brokinghouses become depository participant of NSDL&CDSL arid help lay investors to trade incapitals markets without any hassles.The maximum brokerage that can be charged by a broker is decided by the stock exchangesas per the Exchanges regulations. The SEBI (stock brokers and sub brokers),1992 stipulatesthat sub broker cannot charge from his clients commission which is more than 1.5% of the 93
  • 94. value mentioned in the respective purchase (or)sale note.The trading member can charge:1. Brokerage charged by member broker.2. Penalties arising on specific default on behalf of client. (Investor).3. Service tax as stipulated. In Steel city securities Ltd. all the shares, scripts, stocks, bonds, debentures,derivatives, government securities, debt instruments etc. can be traded. But generally,trading is mostly done in scripts listed in BSE & NSE.The government securities and the corporate securities can be traded through NEAT systemin NSE. Only trading mechanism available in the debt market was the telephone marketbefore June 1994 when NSE launched wholesale debt market (WDM) segment. Thisprovides the only formal platform for trading of a wide range of debt securities. Thoughmany trades in the gilts takes place through telephone, a longer chunk of trades get rentedthrough NSE brokers. Steel city securities Ltd. provides stock trading services to its clients and members.It enables the clients to trade in both NSE & BSE. Through the computer trading terminalsin Steel city securities Ltd. the client places an order to buy or sell the shares. After thetrade is confirmed, the client receives the settlement net positions. Steel city securities Ltd.collects the margin, brokerage, service tax & commission from the clients for the tradestaking place in Steel city securities Ltd. The NEAT system supports an order driven market, wherein orders match on basisof time and price priority. All quantity fields are in units and prices are quoted in IndianRupees. The regular lot size and tick size for various securities traded is notified by theexchange from time to time.To bring in efficiency, transparency and depth in the market, NSE provides a fullyautomated screen based trading system known as NEAT. Its trading members use NEATsystem for trading in the capital market segment in NSE.The open period indicates the commencement of trading activity. To signify the start of atrading, a message is sent to all the trade workstation. Order entry is allowed when all thesecurities have been opened. During this phase, orders are matched on a continuous basis. 94
  • 95. Trading in all the instruments is allowed unless they are specifically prohibited by theexchange. The activities that are allowed at this stage are: The NSE opens at 9.00 a.m. and the trading starts at 09.15 a.m. 5 minutes is givenfor the stockbrokers to quote their price and to get a recap of the yesterdays prices ofdifferent scripts. The trading ends at 3.30 P.m. The auction market starts at 4.00 p.m. andcontinues till 4.30 after normal on-line trading. In BSE, the trade starts at 9.00 a.m. andends at 3.30 p.m. A grace time of 20 minutes from 3.40p.m. to 4.00 p.m. is given in BSEas ‗End of the Session‘ for trading. To know the trade position, back-office is done in Steelcity securities Ltd. everyday immediately after the trade ends. The main modules of back office system are: Trading Finance Clearing Business & Administration Import Export Housekeeping Margins In the back office, first the Import Export module is opened where the trade file ofthe day‘s trade is collected and the text file if imported to the system. There, the oldclosing prices are inserted by new prices from the Bhav copy file. Bhav copy is theaverage of last half-an-hour prices of the scrip‘s custodial trades reports; bad deliveries reports; funds reports; auctions reports;objections reports; margins reports; securities reports and miscellaneous reports. The dailyreports of various aspects relating to the trading activities are maintained. Settlement of trades transacted on an exchange requires smooth, preferablyinstantaneous, movement of securities and funds in accordance with the prescribedschedule of pay-in / pay-out. Movement of securities has been almost instantaneous in thedematerialized environment. Two depositories are in place to provide electronic transfer ofsecurities. 10 major stock exchanges accounting for about 99% of turnover have beenconnected to depositories. All actively traded scripts are held, traded and settled in de-matform. NSE follows a different model where a clearing corporation guarantees settlementobligations emanating from trades. 95
  • 96. The trades accumulated over a trading cycle are clubbed together at the end of the tradingcycle, positions (trades) are netted and the balance obligations are settled. The base capital to set up a trade centre is one crore rupees. Earlier, Steel citysecurities Ltd. paid Rs. 75 lakhs as base capital when it was set-up. The trade corporationhas to maintain a reserve of some amount with NSE where 30% -50% will be in the form ofcash and the remaining in the form of bank guarantees (securities), FDR‘s etc. IIL has 7.5.Crores as margin with NSE at present. Gross intra-day turnover (buy and sell) of a member shall not exceed 33 1/3 timethe base capital. Gross exposure of a member at any time shall not exceed 8.5 times thefree base capital of one crore rupees and not exceed 12 times over the free base capital ofone crore rupees. This brokerage is charged where buying and selling of shares is done in one day onlyand at the end of the days trade, the position is zero. The speculation brokerage is chargedfrom 0.02% to 0.05%.This brokerage is charged where there may be buying or selling lotremaining at the end of the day‘s trade. The delivery brokerage is charged from 0.3% to0.5%. As per SEBI, maximum brokerage shouldn‘t exceed 2.5% both in BSE and NSE.For retail clients, the brokerage charged is 0.7%. A sub-broker charge 2.5% from theclients to sell or buy the shares out of which, Steel city securities Ltd. charges 1% from thesub-broker. In Steel city securities Ltd. 5% service tax on brokerage is collected from theclients. If the stamp duty of 0.006% on turnover is Rs30 or more, only Rs30 is collected inNSE. In BSE, the minimum is 1Re and the maximum stamp duty is unlimited. The Accounts/ Finance department maintains the accounts in Steel city securitiesLtd. The accounts are prepared in three forms. They are: Client-wise net positions, Scrip-wise net positions, Pay-in and Pay-out settlement of funds.The net positions of each client at the end of the day are prepared and a copy is sent to theclient. This is the settlement wise pay-in/pay-out funds statement. It is similar to trialbalance. Delivery out is termed as pay-in and receipt in is termed as pay-out. The pay-outfor Steel city securities Ltd. are debited and the pay-in for Steel city securities Ltd. is 96
  • 97. credited. This statement includes other expenses in trading like brokerage, deliverycommission, stamp duty etcThough de-mat was introduced in 1994, it came into existence in 1996. The depositoriesAct, 1996 was passed to provide for the establishment of depositories in securities with theobjective of ensuring free transferability of securities with speed, accuracy and security bydematerializing the securities in the depository model. A depository holds securities indematerialized form. It maintains ownership records of securities and effects transfer ofownership through book entry.The two depositories, National Securities Depository Limited (NSDL) and CentralDepository Services Limited (CDSL) provide services to investors and clearing membersthrough Depository Participants (DPs). They do not change the investors and clearingmembers directly but charge their DPs, who are free to have their own charge structure fortheir clients.The research analyst in forecasting the market movement follows the technical analysis,fundamental analysis and efficient market hypothesis. The research analyst collects theinformation about the company, the industry and the economy through different media toknow the company‘s position.BSE conducts mock trading for all its trading members. Themock trading usually takes place once in a month or in two months.Mock – trading is a process where the regular online trading is done at all the tradeworkstations, which are registered with BSE. Though the on-line trading is done, paymentof funds or deliveries doesn‘t take place. Though the trade results in turnover in croresthere is no transfer of funds or share certificates. The mock-trading process is similar to theregular trading process. 97
  • 98. FINDINGS It is observed that market fluctuates day by day as there is a raise or fall in the market Nifty points and specific reasons for such fluctuations during the project period raise or fall are also analyzed. During the month of July, where Inflation spiked to 3 1/2 year high. From there on, the Government intensified its fight against inflation. During the month of July, there is fall in the market due to drop in Chinese stocks & losses outsourcing firms on concern about the strength of the rupee value. The Tata motors stock spiked to very high in the month of December the profit booking was started from30847.73 to 24718.98 The Tata steel stock took a new up move from the month of December. The HDFC stock was in a corrective phase during the project period. A drastic fall in the M&M was observed. It was the chance for the investor to invest in that stock. 98
  • 99. SUGGESTIONS They can increase the total number of customers trading per day there is still lot of potential is there with existing client base. This can be achieved by increasing activation staff. Since the internet trading is newly introduced in India the customer support should guide the customers while trading. The company has to conduct awareness campaigns to attract more customers. It may be suggested that the company has to take necessary initiation towards more advertisements. 99
  • 100. BIBLIOGRAPHYSECURITY ANALYSIS AND PORTFOLIO MANAGEMENT - FISCHER JORDANINVESTMENT MANAGEMENT - V.K.BHALLAFINANCIAL MANAGEMENT -R.K.SHARMA &SHASHI.K.GUPTAFINANCIAL INSTITUTIONS AND MARKETS - L.M.BHOLEJOURNALS:FINANCIAL ANALYSTWEBSITES:www.nseindia.comwww.bseindia.comwww.googlesearch.comwww.vantagetrade.comWww.Steelcitysecurities.com 100
  • 101. GlossaryList of abbreviations:ADs Authorized DealersAT Algorithmic TradingAI Auction InquiryAL Activity LogASBA Application Supported by Blocked AmountADRs American Depository ReceiptsAL Activity LogAON All or NoneBOVL Branch Order Value LimitBSE Bombay Stock ExchangeBM Branch ManagerCADT Client Allocation DetailsCDS Currency Derivatives SegmentCD Cum- DividendCB Cum- BonusCLI ClientCI Cum-InterestCM Clearing MemberCR Cum- RightsCSD Collateral Security DepositCDSL Central Depositories Services Ltd.CM Capital MarketCo. CompanyCTCL Computer to Computer Link 101
  • 102. DEA Department of Economic AffairsDFDS Demat Final Delivery StatementDFRS Demat Final Receipt StatementDMA Direct Market AccessDP Depository ParticipantDPG Dominant Promoter GroupDQ Disclosed QuantityDvP Delivery versus PaymentECBs External Commercial BorrowingsEPI Early Pay-InFCCBs Foreign Currency Convertible BondsFI Financial InstitutionFII Foreign Institutional InvestorsFIPB Foreign Investment Promotion BoardF&O Futures and OptionsFTP File Transfer ProtocolFPO Follow-on Public OfferGDRs Global Depository ReceiptsHUF Hindu Undivided FamilyICDR Issue of Capital and Disclosure RequirementsIEPF Investor Education and Protection FundIFSD Initial Free Security DepositINST InstitutionalIOC Immediate or Cance 102