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Final report edited_by_us Document Transcript

  • 1. 1. INDIAN SECURITIES MARKET Introduction Securities market has essentially three categories of participants, namely the issuer of securities, investors in securities and the intermediaries and two categories of products, namely the services of the intermediaries, the securities including derivatives. The securities market has two interdependent and inseparable segments, the new issues (primary market) and the stock (secondary) market. The primary market provides the channel for sale of new securities while the secondary market deals in securities previously issued. History • 1850 – Shares of banks and securities of East India Company traded in Mumbai under a sprawling banyan tree in front of Town Hall, which is now in the Horniman Circle Park. • 1875 – Brokers organized an association known as the Native Share Brokers Association, and the country’s first stock exchange the Bombay Stock Exchange (BSE), set up in Mumbai with 318 members. The membership fee gradually increased from Re 1 in 1887 to Rs 1,000 in 1896, and Rs 48,000 in 1920. • 1956 – Securities Contract Regulation Act passed • 1957 – The BSE and eight other stock exchanges registered under the Securities Trading Contract Act. • 1982 – The BSE classifies scripts into Group A for carry forward, and Group B for cash transactions. • 1986 – The BSE 30-share Sensitivity Index (a.k.a. the Sensex) compiled; updated every two minutes. • 1987 – Stock Holding Corporation of India set up. B. K. School of Business Management 1
  • 2. • 1992 – Ordinance promulgated for granting statutory powers to the SEBI. The Over-The-Counter Exchange of India begins operations. The National Stock Exchange incorporated. • 1994 – The NSE’s debt segment begins operations on June 30; and the capital market segment begins on-line script less trading on November 3. • 1995 – The BSE computerizes its trading operations, signaling the end of 120 years of floor-trading with open out-cry system of share-trading and the beginning of screen-based trading on the BSE. • 1996 – NSE 50 index launched April 22. NSDL set up as the first depository in India, and the NSE commences trading in dematerialized securities on December 26. • 2000 – The SEBI approves the report on net trading brought out by the SEBI committee on Net based trading and services. Pursuant to the circular, stock exchanges are required to give permission to members to start Net-based trading after ensuring fulfillment of the minimum conditions. The NSE is the first exchange to grant provisional permission to Cochin-based Geojit Securities to commence Net-based trading. B. K. School of Business Management 2
  • 3. 2. - AT A GLANCE SSKI History • Founded in 1922, SSKI is One of India’s Oldest Brokerage Houses having Eight Decades of Experience into – o Institutional Broking o Investment Banking o Retail Broking • One of the Founding members of The Stock Exchange, Mumbai and Pioneer Institutional Broker SSKI Institutional Broking: Since 1984 SSKI foray into Institutional Broking and Corporate Finance. SSKI group also comprises Institutional broking and Corporate Finance 18 years ago. While the Institutional broking division caters to the largest domestic and foreign institutional investors, the corporate finance division focuses on niche areas such as infrastructure, telecom and media. SSKI holds a sizeable portion of the market in each of these segments. o Forerunner of investment research in the Indian market, o SSKI provide the best research coverage amongst broking houses in India. The company’s research team was set up in dec.1992 and is rated as one of the best in the country. Voted four times as the Top Domestic Brokerage House by Asia money Survey, SSKI is consistently ranked amongst the top domestic brokerage houses in India. o Research group was set up in December 1992. o It acts as a pioneer of investment research in the Indian market aimed at generating quick investment ideas o Its Research team is rated as one of the best in the industry…. Across retail & institutional o Group interest in Investment Banking, Institutional Broking and Retail Broking o It is an Integrated equity solutions provider o It has its Institutional Clients Spread across India, Far East, UK and US. o It commands Major Share of the Institutional as well as Foreign Institutional Investors (FII) Business in India. B. K. School of Business Management 3
  • 4. oo 0SSKI Institutional Research is rated as one of the Best in the Industry0SSKI Institutional Research is rated as one of the Best in the Industry as well as among Fund Managers Surveys -as well as among Fund Managers Surveys - Best Domestic Securities HouseBest Domestic Securities House Euromoney Survey July-95, ‘96Euromoney Survey July-95, ‘96  Top Ranked Domestic Brokerage HouseTop Ranked Domestic Brokerage House Asiamoney Survey Sept-94, ’95, ’96, 98 & ‘04Asiamoney Survey Sept-94, ’95, ’96, 98 & ‘04 SSKI Investment Banking: The Investment Banking Arm of the SSKI Group is having its presence into – o Venture Capital & Private Equity o Infrastructure Advisory & Financing o Focus on Infrastructure, Technology & Media o Many 1sts goes to our credit, in Deal Sizes, in Sectors, in Deal Structures E.g.  1st Telecom Offering – BPL Cellular Holdings  India’s First Private Port – Gujarat Pipavav Port  1st M&A-Cellular – Essar & Hutchison  1st Web Service Provides – Plantesia  1st Retail Chain Offering - Shoppers Shop SSKI Retail Broking • SSKI Entered into Retail Broking in 1985. • Sharekhan is the Retail Broking Arm of the BIG 80 Years old organization, SSKI. • Sharekhan is the Brand Name given to its Retail Business. B. K. School of Business Management 4
  • 5. Sharekhan Retail Broking – In Detail SSKI carries out its Retail Broking Activities under Sharekhan Brand Name. Sharekhan is One of India’s Leading Broking Houses Providing a Complete Life-Cycle of Investment Solutions in EQUITIES, DERIVATIVES, COMMODITIES & DEPOSITORY SERVICES. Sharekhan is having its retail presence across India through -- o Sharekhan Branches & Franchisees o www.sharekhan.com B. K. School of Business Management 5
  • 6. Growing network of Share Shops • 280 Share Shops in 123 Cities across India • Uniform Service Standard Sharekhan offers you – Sharekhan Outlets act as Full Service Investment Solutions Provider, providing you wide range of services like -- • Equity & Derivatives Trading on NSE and BSE • Online Trading • Commodities Trading on MCX & NCDEX • Portfolio Management Services • Depository Services • IPO Services • Wide Range of Customized Research Products • Uniform Service Standards B. K. School of Business Management 6
  • 7. The Strength of Sharekhan is in its Specialized & Customized research Products addressing the investment philosophy of verities of Investors and Traders in the secondary stock market. - In Detail • The Business of the company overhauled 5 years ago in 2000. • The site was also launched on February 8, 2000 and named it as www.Sharekhan.com. B. K. School of Business Management 7
  • 8. • It is One of the Leading Online Players controlling considerable portion of the Overall E-Broking Business in Indian Securities Market. • The SpeedTrade account of Sharekhan is the next generation technology product launched on April 17, 2002. • SpeedTradePlus was launched on October 28, 2002 for one more feature of Trading in Derivatives together with Equity in the Same Single Screen • SpeedTrade BSE Online Trading Launched recently in May-2005. • Sharekhan adds More than 6000 customers Every Month. • It offers its customers with the trade execution facilities on the NSE, for cash as well as derivatives along with in-built depository services. • Ensures convenience in trading experience: Sharekhan’s trading services are designed to offer an easy, hassle free trading experience, whether trading is done daily or occasionally. The customer will be entitled to a host of value added services, in the investment process depending on his investing style and frequency. and offers a suite of products and services, providing the customer with a multi-channel access to the stock markets. • It gives advice based on extensive research to its customers and provides them with relevant and updated information to help him make informed about his investment decisions. • Sharekhan offers its customers the convenience of a Broker-Cum-DP. • It helps the customer meet his pay-in obligations on time thereby reducing the possibility of auctions. The company believes in flexibility and therefore allows accepting late instructions without any extra charge. And execute the instruction immediately on receiving it and thereafter the customer can view his updated account statement on Internet. • Sharekhan Depository Services offers demat services to individual and corporate investors. It has a team of professionals and the latest technological expertise dedicated exclusively to their demat department. A customer can avail of Demat Remat, Repurchase, Pledge, Transmission facilities at any of the Sharekhan branches and business partners outlets. Award-History Year 2001: Sharekhan was given the ‘Best Financial Website Award’ by Chip magazine B. K. School of Business Management 8
  • 9. Year 2005: Recently Sharekhan has been awarded as India’s most preferred stock broker under “consumer award 2005” research conducted by AC Nielsen- ORG MARG for Awaaz in the “stock broking “category. There were four stock broking houses in the competition: Sharekhan, ICICIDirect.com, Kotakstreet & Motilal Oswal. B. K. School of Business Management 9 Winner of Chip magazine’s ‘Best Financial Website Award’
  • 10. B. K. School of Business Management 10
  • 11. 3. TYPES OF TRADING Offline Trading System New era of internet evolution has changed the way business is done now a days and obviously Indian security market cannot remain untouched with such a big change. However traditional way of trading which an offline is trading has deep roots in Indian stock market history and still it’s prevalent in the business. In such a trading system, an investor and a broker come into direct contact with each other and the transaction takes place. The investor goes to the broker for the purpose of buying or selling of securities and for that he has to make a payment to settle the transaction. In this trading system broker charges comparatively higher brokerage. Offline trading system exposes both the parties to the risk factor. Here investor is required to put a margin amount with the broker, but if the broker defaults then customer loses his investment amount. On the other hand some times investors are not able to fulfill their requirement of bringing amount above margin and as a result broker has to complete the transaction. Following are the different ways in which brokers complete the transaction. • They would require full funding before the pay in day. • They may debit the customer's account with the margin money and keep hold on balance amount. On pay-in day, the balance amount will be transferred to broker's trade. • The broker would debit only the margin amount and would wail to the customer to pay on the pay-in day. If the margin goes below the specified limit, the website of the broker would give warning to the investor to replenish the same. Brokers can either ask for blanket permission/power of attorney from the customer to replenish the same or take risk on that, in which case they may also square off the contract. As a matter of prudence, the broker would have checked the balance in the customer's account, but the balance may go down between trade day and the pay- in day. Here, brokers would have to decide the extent of risk if at all they are ready to take. In periods of volatility, especially when markets are failing, decision-making of the broker as to the extent of risk he is willing to take would be very important. Customers would face the risk of leakage of personal information. B. K. School of Business Management 11
  • 12. Merits of Offline trading • Less Margin Generally, company charges 25% margin while the brokers charge nearly 10%margin from the investors in case of trading in derivatives. Sometimes broker charges negligible amount and he allows trading up to his limit. This shifts the investors from trading online to the trading with the brokers. For example: Local Brokers like MotilalOswal, Ratnakar, PravinRatilal, Khandwala etc. allow trading in shares with less margin and low brokerage. • Flexibility in credit period Local Brokers allow their customers to trade in shares with longer credit periods which facilitate the payments for the investors. Whereas in Online trading a customer is required to make the payment in less than 2 days(because of T+2 trading cycle) which is not the case in offline trading. The conventional system also allows making delay in settlement of payment if the relation with the broker is good. • Customized Advice Normally, investors would like to take the advice of the broker before taking an investment decision. Internet trading would lack this personal touch. As far as customization of data using data mining is concerned, that would not attract customers looking for something different. Some of the brokers are of the view that they would have to provide advisory services to the customers. But, with increased volumes they will have to balance their preferences and needs of the customers. Demerits of Offline Trading System • Problems in getting in touch with the Broker • Limited Clientele • Problem of Attention from the Broker due to load • Reliance on the Broker's information • Customer has to believe what the broker says • Broker might not give the best price • Reconciliation of accounts and cash settlements • Paperwork • Geographical Restriction B. K. School of Business Management 12
  • 13. Online Trading - A New Dimension of Trading WHAT IS E-TRADING? • E-trading is the mechanism of buying / selling securities via the Internet. • E-trading is considered as a logical extension of e-commerce. To put it simply, e-commerce is buying and selling through electronic medium. There could be not being a better place than the stock market, where tremendous volumes are traded, to exploit the opportunities of e-commerce. But, there are certain inherent characteristics of this market, which make it more vulnerable to risks associated with e-commerce. The market requires knowledge, information, ability to analyze and quick decision-making. This requires utmost care while trading on the net. A single click can make or destroy investor's wealth. E-Trading is a service offered on the Internet for purchase and sale of shares. In the real world, you place orders on your stockbroker verbally (personally or telephonically). In Online Trading, a customer can access a stockbroker's website through his internet-enabled PC and place orders through the broker's internet- based order routing and trading engine. These orders are routed to the Stock Exchange without manual intervention and executed thereon. The order routing to the exchange will happen in a matter of seconds. The order execution once it reaches the exchange system is similar to that of an offline transaction, History of E-Trading In Global Scenario The history of e-trading began in 1983, when a doctor in Michigan placed the first online trade using E*TRADE technology. What began with a single click over 16 years ago has now taken the world by storm. The concept was visualized by one Bill Porter, a physicist and inventor with more than a dozen patents to his Credit: who provided online quotes and trading services to Fidelity, Charles Schwab, and Quick & Reilly. This led Bill to wonder why, as an individual investor, he had to pay a broker hundreds of dollars for stock transactions. Today his dream has become a reality. E-trading has become a way of investing in the developed world and is soon catching on in developing countries B. K. School of Business Management 13
  • 14. too. Since that time, online trading has increased dramatically - according to an unprecedented efficiency and control. Recent estimate, there are 7.8 million individuals trading online, making 807000 trades per day. Currently, there are over 200 broker-dealers providing retail investors with the ability to trade online. Along with the growth in online trading, there has been a surge in investor complaints related to online trading. The downfall of a few international dotcom like Value America Inc, Net Inoperative Ltd, Toysmart.com, boo.com has not diminished the opportunities thrown by internet trading. There are investment banking firms which offer a suit of services such as online trading, research reports, real-time market commentary, Java-based charts, analysis and other professional services. E-Trade has presence in around 119 countries, as one of the renowned players in the international market. E-Trade Securities Inc was floated in 1992 to offer online investing services through America Online and CompuServe and launched www.etrade.com in 1996. Recently, it announced strategic alliances with Wit Sound Vies, the online banking subsidiary of Wit Capital Group Inc, to capitalize on the complementary core strengths of the two groups. TD Waterhouse, the second largest global brokerage, has over 2.9 million customer accounts worldwide and more than $150 billion in customers' assets under administration. In addition to securities trading services, it also provides banking, mutual funds and other financial products/services to its customers. History of e trading in Indian context Net trading begins in India.... On Jan 31st 2000, the Securities Exchange Board of India (SEBI) formally notified all the stock exchanges, giving them a green signal for Net/Online trading. The various players of the securities market, which includes NSE, BSE, other regional stock exchanges and the brokers, had been waiting long for the go- ahead sign. Trading via the net is expected to generate greater volumes than ever before and this has attracted a large number of players. One day after SEBI announced its regulations for net trading, Kerala based ‘Geojit Securities’ took the lead and started online trading in Mumbai. The Kerala State Industrial Development Corporation (KSIDC) decided to join Geojit Securities in 1994. It has a 24% stake in the equity, the balance belonging to Geojit Securities itself. This is the only venture in India where a state owned development institution is participating in the equity of a stock broking company. The first net transaction was a trade for 100 shares of Reliance executed by DR Mehta, Chairman, and SEBI for the Chairman of Geojit Securities. Today there are many other big brokerage firms like MotilalOswal, Kotak Securities, SSKI and ICICI Direct running successfully. B. K. School of Business Management 14
  • 15. WORKING OF E-TRADING How it works? Trading has two aspects of working one is technical and second One is procedural. We will see both aspect and how it is working? Procedure: Sitting in ones own home or office or even from your car, as long as you can access the net, you can trade on the market. There are three basic things needed for e-trading: • A saving account, • A D-Mat account and • A trading account. The steps in e-trading replicate the real life situation and are fairly simple to follow. Once these three accounts are opened, the money and shares are transferred to your bank and Demat account automatically, electronically and without any paper work. • The first step is of course to open an account. One can open multiple accounts with himself or herself as the first name in the account. Then it is necessary to determine the type of account that you want and how you want to pay for the trades you make. Joint accounts are allowed but for that you will need to have certain information about those people. Accounts can be Individual, Joint, Sole Proprietorship, Corporate, or Partnership etc. The form filling requires simple personal details like full legal name, Citizenship status, Residency status, employer's name and address, your passportPAN number, Date of birth etc.' One can download the forms or request for them by post or even request for a representative of the firm to come over to help you with the form. Post-submitting, you are allotted a USERID and PASSWORD while giving details for registration. Then an Account reference Number is generated and displayed to you. These three things are unique to an individual and ensure security of transactions. The acceptance of the application is communicated by email. • Once you have got your USER ID and PASSWORD and your account has been set up, you can access the website and login using the same. The second step is then to Fund Your Account. In order to start trading online it is important that you deposit money in your bank account before placing a buy order. In order to place a sell order you must have shares in your DEMAT Account. You can sell your shares anytime as long as shares are there in your DEMAT Account. B. K. School of Business Management 15
  • 16. In order to place a buy order you need to fund your account. You can do this by depositing money in your bank account or else you can sell some shares existing in your Demat account and use the proceeds of sale to fund your purchase transaction. The amount of money required before placing a buy order would depend on the value of order and the type of e-invest account you have enrolled for - whether cash or margin. In a Margin account one can use a line of credit to buy marginable securities or for overdraft protection. Such an account is opened after taking into consideration Annual income, Net worth, description of your investment objectives, as it involves lending a line of credit. In a cash account, the amount of securities bought has to be backed by the cash in the account. • Then comes placing the order:  For this you enter your Trading password and go to trade.  From the Trading tab, select Enter Order under the Stocks heading.  Select a transaction type: Buy, Sell and ShortSell.  At Number of Shares', type the number of shares that you want to buy.  At 'Stock Symbol or Name(s)', type the stock symbol. If you don't know the symbol click 'Find Symbol', type the company name, click 'Search' and click the symbol that you want from the list.  For a market order, select 'Market'. Otherwise, select 'Limit'. 'Stop Loss' or 'Stop Limit’ and enter the price.  'Market Order': you just ask the broker to buy or sell your stocks at the best price available.  'Limit Order': you tell the broker to trade only when the stock hits a certain price or better.  'Stop Loss': you tell the broker to sell your shares if the stock drops below a certain price.  Select either 'Good for Day' or 'Good Until Canceled'. If you want to place an 'All-or-None' order, click 'All or None'. Type your trading password and click 'Preview Order'. B. K. School of Business Management 16
  • 17.  If you want to change your order, click 'Modify' and make your changes.  To see if your order has been executed and filled as you expect, check your account balance. The 'Account Balances' page shows your account equity (the value of your account) and your buying power. To check your account balance, click the 'Accounts Services' tab, make sure the correct account number displays at 'Select Account' and click 'Go'. At Total Account Value', see your account balance.  For a new price, select the appropriate option button and then enter the price (unless you're changing it to a market order). You cannot change the stock symbol or the transaction type (Buy. Sell, Sell Short, or Buy to cover). Enter your trading password and click 'Preview Change Order'. Or, if you want to cancel your changes, click 'Do Not Change'.  In order to cancel a stock order, from the Trading' tab, select 'View Open Orders' under the 'Stocks' heading. Make sure you're currently in the correct account. Click 'Cancel' beside the order you want to cancel. Review the information presented to make sure this is the order you want to cancel. Click 'Cancel Order'. Enter the symbol or the name of the scrip; press "GO" or the relevant button. • The Account Opening Charge, commission rates and the minimum limit of transaction vary from site to site. Other charges can include Annual Services Charges, Custody charges, D-Mat account charges etc. Also most online traders offer a host of other tools to aid the investment decision. A full research back up in terms of reports, articles, opinions, etc., live time quotes, latest news on the scrip, technical charts to see how the stock's price has changed over time. So sitting at home one can take an investment decision at ease after having researched and read up fully about the stock. With the advent of online trading, it would seem that the markets are just a click away. Please however, do remember that currently in India the handful of online trading offers are mere order routing systems. But it will not be long enough before the entire system goes online. Benefits of E-broking • Seamless Trading E-broking integrates Bank, Demat account and Brokerage account. Transfer of money and shares from and to Bank account and Demat account is done automatically. • No Geographical Restriction B. K. School of Business Management 17
  • 18. Customers have access to site from anywhere in world. So even if customer is out of station, customer can take the advantage of market condition. • No Time Restriction Customer can trade not only during market hours but also when market is closed. He is required to give limit as to at what price he wants to buy or sell the shares. When market will open, the shares will be purchased or sold automatically at that particular price or best favorable price. • Online Brokers Make Investing Cheaper By charging drastically lowered commissions; online brokers offer cheaper access to financial markets, consequently encouraging more investing, as is evident by the increasing number of day-traders. The latter are individuals who have tried to make a career out of buying and selling stocks very quickly, often making and closing dozens of trades in a single day. • The Online Investor Is Self-Reliant Because online trading greatly diminishes the role of brokers. Investors have more freedom when making investment decisions and come to rely on themselves when developing strategies. The online investor is responsible for researching, making decisions, entering an order and using a computer. All this makes online investors the masters of their domain and leaves them with no one to blame. Thus, online trading promotes self-empowerment. • Offers Greater Transparency Online trading gives greater transparency to the investors by providing them an audit trail. This involves a complete integrated electronic chain starting from order placement, to clearing and settlement and finally ending with a credit to the depository account of the investor. Each of the above mentioned stages are subject to inspection, thus bringing in transparency into the system. Greater transparency helps in reducing the systematic risk for the investor. This is possible as the market related information affecting the stocks gets communicated to the investor on a regular basis. Due to this increased exposure, the investor can take necessary steps, which would reduce his overall market risk. • Enables Hassle Free Trading Online trading integrates the bank, the brokerage firm and the demat accounts which leads to easy and paperless trading for the client. • Quick Trading B. K. School of Business Management 18
  • 19. The investor will be able to execute the entire trading transaction, right from logging on to the broker's site, to the execution and settlement of his bank account, in a very short period of time. • Provides A Level Playing Field Trading on the net, gives even the smallest retail investor access to information that earlier was available only to the big traders. This provides a level playing field for all investors in the securities market. • Reduces The Settlement Risk This method of trading reduces the settlement risk for the investor, as in this case no short sale is possible i.e. the seller will not be able to sell the securities unless he has actual possession of them. In the case of a demat account (which is required for an online transaction), when a seller wants to sell the securities, his demat account is checked by the Depository Participant before executing the sale transaction. This reduces the settlement risk for the buyer, who is assured of the delivery of the securities. Loopholes in E-Broking • Lack Of Speed If customers in large number access the site at the same time, server gets overloaded, so it results into delay in process. • Security Aspect There may be chances of hacking of password if customer is not alert. This may cause a major loss to the investor. • Lack Of Flexibility If the customer is not alert about his position on last trading day and if he is not able to square off his position, he has to take delivery compulsory or if he doesn't have enough liquidity, the site will automatically square off his position. This action may or may not be in benefit of customer. Whereas in conventional broking, broker will inform the customer time to time or will take the decision himself in favor of the customer. • Computer Illiteracy: Literacy of Computers is mandatory for traders using this online trading service. So for those who are computer illiterate, using websites serves as a handicap for them. B. K. School of Business Management 19
  • 20. Trading Vs E-Trading The advent of technology has added a new dimension to broking system. Through E-broking system, broking has become more transparent and faster. It has reduced the back office paper work. It settles the account within a couple of days rather than long period of time. It has also eliminated physical transfer of shares and money by invent of Demat account and on line banking. When anyone wants to enter into the market for trading purpose, there is common process through which individual has to pass either in conventional broking or E-broking which is basically divided in three parts. Decision -> Execution -> House keeping Now let us understand how E-broking makes itself different from conventional broking in this process. • Decision Decision about choosing particular scrip is made by investor himself based on his knowledge and his experience about market condition. Sometimes investors seek advice from broker and they both decide about investment. Thus in conventional broking and E-broking decision parts remain same. • Execution In execution part of broking, E-broking is completely different from conventional system. This can be explained from graph below. Conventional Broking E-broking Call Log on Get Rates See the rates online Give order Punch in order Confirmation Confirmation through phone through e-mail B. K. School of Business Management 20
  • 21. House Keeping After matching of order at a predetermined price, the question of payments and deliveries of securities /transfer of shares take place where also wide difference in terms of operation can be seen. Conventional Broking E-broking Payment through Payment through Physical Cheque Online Banking Transfer of shares Transfer of shares in paper form in paper less form House keeping of Demat Keeping of Materialized shares Dematerialized shares Advantage of Online Trading Over Conventional Trading • The speed of transaction • Ease of settlement in the paperless mode • Confidentiality of transaction • More transparent • More convenient • Broker's reach to large number of customers with less cost Limitation Of On Line Trading Over Conventional Trading • Lack of internet penetration • Lack of expertise in share market • High brokerage B. K. School of Business Management 21
  • 22. • High operating cost Grey Market In this type of market, there are only two parties i.e. the broker and the investor. The Exchange does not come into picture at all. So the transactions taking place are out of the purview of the exchange, which in other words can also be termed as illegal. In this type of market the brokerage is quite low as there isn’t actual transaction or delivery of security as such. The transaction is written in a book as to keep record of buying and selling price and quantity. If buy price is higher than sell price then difference is paid by investor and that amount is profit for broker and loss of investor and vice versa. Major Driving Forces of Grey Market: Nowadays even grey market is also quiet popular because of many advantages: - • No Margin The trader is not required to keep any deposit as margin to buy or sell the shares. There is credit flexibility allowed to a large extent. • Trading of Index Prediction of Index is Easier than of Security. In a SEBI regulated market, a trader is not allowed to trade in Nifty or Sensex in equity market, while in grey market, trading in Nifty or Sensex in equity market is permitted. • Longer Trading Period (One Week) The trading duration in this market is of one Week and the settlements are made on the end of each week (Friday). So investor can take 5 days position in the trading. This can be considered as a major driving force for this market. • Advantage Of Future And Equity Price Difference There is one simple rule known by everyone that “on the Last Thursday of every month security and its future’s value matches”. How to take advantage of it??? It’s possible on grey market with a fix profit not affected with the market movement. i.e.: - Reliance security price is: - 440 Reliance Future is traded at: - 400 B. K. School of Business Management 22
  • 23. Now, Investor will Sell Reliance Shares at 440 and Buy reliance future at 400 so on the last Thursday of the month when both the prices match, investor will reverse the transaction. Last Thursday’s Price Profit in Equity Profit in Futures Net Profit ** 420 20 20 40 480 (-40) 80 40 360 80 (-40) 40 ** Brokerage is not deducted in Net Profit This can be possible legally in some cases but with very large investment because futures are traded only in lot sizes. Negative Factors • Risk of Defaulting Broker • Illegal B. K. School of Business Management 23
  • 24. Changing Trend Remember the time when you left orders with your broker in the morning and received a confirmation fax late in the evening? You wondered whether you had acquired the shares at the best possible price for the day. Today, the picture is different. Imagine a scenario where you log on to your account, get the live quotes of scripts you are interested in, get advise from experts and research reports on your investment choice and then just click the mouse to place your order, pay the amount due (which automatically gets debited into your account with the on line brokerage firm), get your account statement, and the delivery of your shares into your Demat account. All this is through just one click of a mouse. Seems like a dream? But with online trading this has become a reality. A few seconds later, you get the confirmation on your screen. And after the trade settlement, your bank and DP accounts will reflect the changes accordingly. The speed of transaction, confidentiality about the prices and ease of settlement in the paperless mode should be good reasons for retail investors to jump on to the Net. All they need is a PC, a modem, a subscription to an ISP, an account with a bank (which has a web presence) and a depository account. And they can choose from a plethora of e-trading web sites. So, finally the changing trend is known as E-trading which really means Buying and selling securities via the Internet or other electronic means such as wireless access, touch-tone telephones, and other new technologies with online trading. In most cases customers access a brokerage firm's Web Site through their regular Internet Service Provider. Once there, customers may consult information provided on the Web Site and log into their accounts to place orders and monitor account activity" B. K. School of Business Management 24
  • 25. What does Share khan offer? Share khan offers online trading account through which a customer can buy and sell shares in an instant from any part of the globe trough website. It does not take into account any type of physical restriction of going to the broker for carrying out a transaction or any type of settlement of payment. It facilitates the customer a speedy and hassle free transaction. Share khan’s product consists of a 3-in-1 concept, which integrates: 1. Trading Account 2. Demat Account 3. Linking with the Savings account. Through its trading account, a share khan customer can directly transfer his funds from his savings bank account affiliated to share khan to his trading account without any paper work. He can buy and sell shares from the website and also view the market prices of the shares he trades on the terminal. Share khan .com allows trading at present only on NSE. BSE trading will be shortly available. To open an account a customer requires filling up a form consisting of 12 agreements, a passport size photograph, a residential proof, a photo id proof and a cheque drawn of respective amount in favour of S. S. Kantilal Ishwarlal securities Pvt. Ltd. After opening an account with Share khan, a customer will be given User id, Membership password and trading password, which will enable him to access his account and trade. Share khan offers 3 types of products according to the volume-based requirements of the investors that are as follows: 4 CLASSIC ACCOUNT • This account allows the client to trade through the website and is suitable for the retail investors. • Here maximum scripts that can be shown on the terminal are only 25. Also the technical charts are not available. • It’s a JAVA BASED APPLET, which allows trading only through website and see latest prices of the scripts of your choice which is attached below. • This account also allows trading in Derivatives. • The lifetime registration charge for this account is Rs.750 and there is no constraint of minimum turnover. B. K. School of Business Management 25
  • 26. 5 SPEED TRADE ACCOUNT • This is ideal for active traders who transact frequently during day’s trading session to capitalize on intra-day price movements. • Speed trade is an Internet-based application available on a CD, which provides everything a trader needs on one screen, thereby, reducing the time required to execute a trade. • SPEEDTRADE offers a tick-by-tick update on stock price movements with market depth and intra-day chart and lets the client do his own stock/technical analysis. • While the Lifetime charge for this account is Rs.1000 with a minimum brokerage of Rs.1000 to be paid monthly. 6 SPEED TRADE PLUS ACCOUNT • Speed trade plus has all the above-mentioned features with an additional power to also trade in Derivatives. • Speed Trade Plus extends the power of online trading from cash markets to Futures & Options. On a single screen, a customer can trade cash as well as future & option contracts. • Other features include advanced Intra-Day Charting (Bar & Japanese Candlestick Charts), easy order placement and instant trade confirmations in seconds, price alerts, research calls, and derivative tool-kit to help the customer trade like the experts. • While the Lifetime charge for this account is Rs.1500 with a minimum brokerage of Rs.1500 to be paid monthly. BANK AFFILIATION Share khan has affiliation with 5 banks, which allows its customers to enjoy the facility of instant credit and transfer of funds from his savings bank account to his share khan trading account. The affiliated banks are as follows:  HDFC BANK  UTI BANK  CITY BANK  ORIENTAL BANK OF COMMERCE  IDBI B. K. School of Business Management 26
  • 27. AFTER HOUR ORDERS Share khan customers also enjoy the facility of placing orders even after the trading hours, and the orders are executed as soon as the market opens. DIAL-N-TRADE It is also an exclusive service available to all Share khan customers for trading in shares via the telephone. On dialing the toll free number 1600-22-7050 and on entering the customers TPIN number, the customer will be directed to a tele-broker who will buy or sell shares for him. TIMELY ADVICE Last but not the least, the USP of share khan is its timely advice that it gives to its customers 4 times in a day through e-mails. Among these e-mails sent, • One is pre-market mail indicating the position of the market (i.e. either bullish or bearish trend) when it opens. • The other two e-mails are the during market hours mails which indicate as to how the market will move and in which direction. • The fourth e-mail that is called the post market mail or the eagle eye is the most important and valuable suggestion. In this e-mail, all the scripts that are under coverage are segregated into 5 clusters. Each cluster represents a certain profile in terms of business fundamentals as well the kind of returns the customer expects over a certain time horizon. This he3lps the customer identify the stocks that match to his objectives. B. K. School of Business Management 27
  • 28. 4. EQUITY RESEARCH All the suggestions, tips and high performance trading recommendations are received from the research team of Share khan consisting of 38 dedicated analysts who have years of working experience in the industries that they track, and a proven track record in using their knowledge of the investment science to deliver results. Share khan boasts of strike rates as high as 70-90% in booking recommendations in the money. “The company believes in not to lose money and to make some. “  Efficient Execution on BSE, NSE, Derivatives  Depository Services  Advice in many shapes  Wealth of content and tools to help you make sound investment decisions  Stability and Security  Good risk management  Substantial shareholding by prestigious foreign institutions.  Personalized attention RESEARCH The scientific approaches that determine market direction and help you decide what stocks to buy or sell. Whether it is for the short term or the long term, there is method in this madness! Research is classified into 3 analyses:  Fundamental Analysis  Technical Analysis  Market Analysis Fundamental Analysis This science analyses balance sheets, management quality, sectoral trends and the economy. Value investing or cash flow analysis. In depth and close tracking of company related performance. Doing it the Sharekhan way using the bottom-up approach, the idea is to focus on stock picking, i.e. identifying winning ideas for our clients. It is classified into two:  Sharekhan Research B. K. School of Business Management 28
  • 29.  SSKI Research • Sharekhan Research Our tigers dig meaty Stock Ideas out of the heart of the market and bring them to you. Their skill at identifying their prey--Stock Ideas--while keeping your taste for investment in mind is reflected in the depth of their research and the performance of the ideas. The Market Strategy reports, on the other hand, identify the hunting-ground for Stock Ideas, i.e. sectors and stock groups that are ripe for performance, discuss the state of the economy and its impact on the stock market as well as advise you on dealing with the impact of socio-political issues on the market. It is classified into two:  Market Strategy  Stock Ideas Market Strategy The Market Strategy reports identify the hunting-ground for Stock Ideas, i.e. sectors and stock groups that are ripe for performance, and discuss the state of the economy and its impact on the stock market. Market Strategy also takes a longer-term view on stocks, i.e. three to six months. It outlines our expectations of the broad market and defines a broad strategy. It gives a five-legged rating to a list of stocks that we think will outperform the market during the given time period. Stock Ideas Stock Ideas is aimed at Sharekhan’s trading clients. It presents our best stock picks in today's market. We categories these companies into six clusters to help you identify the stocks that fit your time horizons and return objectives the best. Each cluster represents a certain profile in terms of business fundamentals as well as the kind of returns you can expect of it over a certain time horizon. Stock Ideas are given in form of two ways:  Recommendation – In recommendation we give advice to clients which shares to buy, hold and sell.  Cluster  Evergreen: Dominant players with strong brands, robust management credentials, supernormal shareholder returns. Will steadily compound 18-20% pa for next 5 to 10 years. B. K. School of Business Management 29
  • 30.  Apple Green: Potentially steady compound, but 5-10-year graph is a bit unclear. Could gallop at 25-30% pa over the next 2-3 years.  Emerging Star: Young companies likely to rule chosen niches. Even better, the niches could balloon into full-blown markets. Potentially ten- baggers if you’re patient.  Ugly Duckling: Trading below fair value or at huge discount to peer group. But something’s cooking. Could double in two to three years’ time. Swans, anybody?  Vulture’s Pick: Companies with valuable assets at throwaway prices. Buy and await predators. Startlingly high returns possible. Patience is vital, my dear.  Cannonball: Season’s favorites. Typically fast gainers in rising markets could return 30-50% within 6 months. Get in, cash in, and get out.  SSKI Research Institutional Research - Each individual company is analyzed and its results are placed on our site. Here Rating is given on relative basis, in the form of underperformer, neutral and outperformed.  Outperformer: This stock will outperform the market by giving a relatively higher return than a market-based index.  Neutral: This stock is expected to more or less give you the index rate of return or a return not significantly higher or lower than the market index.  Underperformer: This stock is expected to lose value on a relative basis when compared to a market-based index. Sector Watch – Here each sector is analyzed thoroughly. For e.g. Pharma sector, automotive sector, and various other sectors. Technical Analysis Price, Volume and Open Interest. The scientific study of these parameters using charts to simulate accumulation and distribution patterns. Use of the Dow Theory, Elliott wave analysis, moving averages and momentum indicators. Forecasting of stock and index trends plus developing trading strategies based on the forecasts with appropriate risk-reward ratio. It is again divided into two • Cash B. K. School of Business Management 30
  • 31. The cash market encompasses the entire gamut of listed stocks on Indian stock exchanges. The cash market refers to the secondary market where you may day trade or take delivery. Every product developed for the cash market can be replicated in the futures & options market (if it is listed there) by following the trading levels of the cash market for execution in the derivatives market. • Momentum Calls: The demand for catching fast movements in stocks for a 1-7-day period has led to the emergence of this product. Momentum Calls help you make a quick buck with the use of stop losses and a risk-reward ratio of 1:2 at least. The idea is to identify momentum the moment it begins and get onto the bandwagon. But if the move does not happen we move out as fast at minimum loss rather than wait for stop losses to be triggered. This improves efficiency in trading and maximizes profits. • Punter’s Call: A daily view on how the market and the major indices, i.e. the Sensex and Nifty, are expected to behave during the day. Closest support and resistance levels plus moving averages are provided to help traders take decisions. • Fortnightly View: A fortnightly recap and analysis of our market view over the short, medium and long term. • Derivatives  Derivatives are about opportunities in derivatives market. In Daring Derivatives, stock option premiums are traded to capture price movements; margin trading is carried out using the futures segment; and low-priced options of stocks that are about to make a big move in the last week before expiry of the options are identified to help you make a killing. The calls cover index futures too. Market Analysis If you don’t care about balance sheets or charts and only want to know what the market grapevine has to offer, this is for you. What’s moving and who is buying what? Our networking and years of experience bring all such information to you. It is analyzed in two ways: Dealing Room: The most experienced dealing room with years of experience in stock market research, always in touch with what is happening. We provide this information to clients through SpeedTrade, and to our branches and franchisees through Yahoo Messenger, telephone and SMS. B. K. School of Business Management 31
  • 32.  Dealing Room’s Favourites: Straight from the horse's mouth, the product is an outcome of our ability to have our finger on the pulse of the market. It's about stocks that are part of the market grapevine, on top of the dealing room's watch-list and vetted by our charts. You could hold the stocks for a few days to a few weeks. That you need to use stop losses with them goes without saying.  Intra-day Market Calls & Information: Based on information from informed sources we push intra-day calls and information related to the market that allow clients to take advantage of day trading opportunities. Editorial: The editorial keeps a track of all the market information and feeds it live into the Web and brings it to you at the end of the day via the daily newsletter Eagle Eye  Live Markets: The Live Markets section begins your morning with the latest news from the corporate world and analysis of how the equities markets fared across the globe. Once the opening bell goes off, Live Markets kicks in as a real-time commentary on the market. It is updated several times a day and provides a blow-by- blow account of market action. It is spiced liberally with breaking news with a dash of the rumors floating in the market.  Market Commentary: Market Commentary brings you a bird's eye view of the day's market action. B. K. School of Business Management 32
  • 33. 5. SEVEN Ps OF SHARE KHAN PRODUCT • Product Variety Share khan offers 3 types of online trading accounts for its customers specially designed according to their volume in share trading. Those 3 varieties are:  Classic- for retail investors  Speed Trade: for high net worth investors with large and active equity portfolio who need to monitor and action swiftly  Speed trade plus: for high net worth investors dealing in derivative market. • Quality User Friendly, attractive & colorful Website designed by Infosys. . • Design www.Sharekhan.com has been specially designed to facilitate its users to buy and sell shares instantly at anytime and from anywhere they like. The site is user friendly allowing even a layman to easily operate without any hassles. • Features Share khan’s product comes with the following features:  Trade execution in a fraction of a second!  Single Screen Trading Terminal  Real time streaming quotes. Price watch on any number of scripts.  Hot keys similar to Brokers Terminal.  Customized Alerts based on Multiple Parameters.  Back up Facility to place trades on Direct Phone Lines.  Intra day charts, updated live, tick-by-tick.  Instant Order Trade Confirmation in the same window  Live margin, position, marked to market profit & loss report.  Competitive Brokerage.  Flexibility to customize screen layout and setting.  Facility to customize any number of portfolios & watch lists.  Facility to cancel all pending orders at one click.  Facility to square off all transactions at one click.  Top Gainers, Top Losers, and Most Active, updated live.  Index information; index chart, index stock information live. B. K. School of Business Management 33
  • 34.  Market depth, i.e. Best 5 bids and offers, updated live for all scripts  Online access to both accounts and DP.  Live updated Order and Trade Book.  Details of pending executed and rejected orders.  Online access to Customer Service.  128 - Bit super safe encryption.  Facility to place after market orders  Online fund transfer facility from leading Banks  Online intra-day technical calls.  Exhaustive database of over 2000 companies  Historical charts and technical analysis tools.  Last but not the least, ideas that help you to make money!!! • Brand Name  The company as a whole in its offline business has named itself as SSKI Securities Pvt. Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. Ltd. The company has preferred to name themselves under a Blanket Family Name.  But in its online division started since 1997, the company preferred to name itself as “SHARE KHAN”. The Brand Name “SHARE KHAN” itself suggests the business in which the company is dealing so that the consumer could easily identify the product or service category.  Recently Sharekhan has been awarded as India’s most preferred stock broker under “consumer award 2005” research conducted by AC Nielsen-ORG MARG for Awaaz in the “stock broking “category. This award will strengthen Sharekhan’s brand image. • Services  Share khan offers its customers, depository services and trade execution facilities for equities, derivatives and commodities backed with investment advice tempered by decades of broking experience. The teams of its dedicated analysts are constantly at work to track performance and trends.  Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading in shares via the telephone. On dialing the toll free number 1600-22-7050 and on entering the customers T- PIN number, the customer will be directed to a call centre executive who will buy or sell shares for him.  Sharekhan provides online tips four times a day which consists of information like premarket anticipation, intraday opportunities, post market analysis and next day prediction. B. K. School of Business Management 34
  • 35. PRICE • Price List CLASSIC SPEED TRADE SPEED TRADE PLUS One time registration fee 750 1000 1500 Minimum brokerage Charges –Quarterly Nil 1000 1500 • Brokerage Share khan in its online business charges brokerage as follows: - In equity Market: On Trading: 0.1% On Delivery: 0.5% - In Derivative Market: First leg: 0.1% Same day settlement: 0.02% Next day settlement: 0.1% • Service Tax 10.2% on brokerage • Turnover tax + Stamp duty 0.02% (Rs. 20 on every turnover of Rs. 100000) • Discounts For investors with High Net worth, there are slabs in brokerage rates. • Payment Period The transaction settlement date in the securities market is T+ 2 days i.e. the payment of the transaction taken place has to be made within two days of its occurrence. • Credit terms Share khan allows its customers to trade up to 4 times i.e. by keeping 14th margin with them. B. K. School of Business Management 35
  • 36. • Dematerialization charges Rs.5 per certificate or Rs.35 per scrip whichever is higher. PROMOTION Online share trading is totally a new concept in Indian Market. Generally investor doesn’t like to come out from conventional way of share trading. Share khan has introduced this product in. The concept and Product are still new in the market. Therefore the company has undertaken extensive promotion campaign to create awareness about the product. Share khan adopts the following tools for promoting the product. Direct Sales: Direct Sales is one the oldest way and the most effective way which is used worldwide to sell the product. Until now Sharekhan was used to sell the product mainly through direct sales.Infact major portion of Sharekhan’s existing customers has been acquired through this way. There are 250 share shops in 123 cities and in each of them there is around 15 to20 employees working in direct sales force. Advertising: Sharekhan has realized the importance to strengthen its brand name and create the awareness among the investor community to invest in the stock market. Sharekhan has used aggressively print as well as electronic media to market the product. They have taken the services of celebrity like Boman Irani and produced an electronic advertisement in which Sharekhan covey the message that investment in the share market gives highest return than one can get in mutual funds. Sales promotion: Sharekhan has started a unique program called First Step for those who want to invest first time in stock market. Through this first step program Sharekhan is trying to remove first time jitter of the investors by explaining the basics of the stock market and showing them the way how they should proceed in the stock market which is really the first step to invest in the stock market. What is the first step program? It answers some fundamental questions which are there in the mind of new entrants in the stock market field. In this first step program, Sharekhan has answered following queries: B. K. School of Business Management 36
  • 37.  Why should one invest in shares? Invest to create wealth Shares – the best investment option Benefits of share investing are many  How do I buy / sell shares? Invest through primary and secondary markets A beginner’s guide to the stock market Placing an order to buy/ sell shares  How do I select the right shares? Science of investing in shares Components of fundamental research Learning to judge an IPO  How can I minimize risks and maximize returns Types of risk involved in investing in shares Reducing risk Become a successful investor  How can I benefit from online trading? Using your computer to trade Trading online is convenient Benefits of trading on Sharekhan.com 7 REASONS WHY YOU SHOULD CHOOSE SHAREKHAN 1) EXPERIENCE: SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money broker’s poll held recently, SSKI won the ‘India’s best broking house for 2004’ award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institutional level research and broking services to individual investors. 2) TECHNOLOGY: with our online trading account you can buy and sell shares in an instant from any PC with an internet connection. You will get access to our powerful online trading tools that will help you take complete control over your investment in shares. 3) ACCESSIBILITY: sin addition to our online and phone trading services, we also have a ground network of 240 share shops across 110 cities in India where you can get personalized services. 4) KNOWLEDGE: in a business where the right information at the right time can translate into direct profits, you get access to a wide range of information on our content-rich portal, Sharekhan.com. You will B. K. School of Business Management 37
  • 38. also get a useful set of knowledge based tools that will empower you to take informed decisions. 5) ONVENIENCE: You can call our dial n trade number to get investment advice and execute your transactions. We have a dedicated call center to provide this service via a toll free number from anywhere in India. 6) CUSTOMER SERVICE: Our customer service team will assist you for any help that you need relating to transactions, billing, demat and other queries. Our customer service can be contacted via a toll free number, email or live chat on sahrekhan.com. 7) INVESTMENT ADVICE: SHAREKHAN has dedicated research teams for fundamental and technical research. Our analysts constantly track the pulse of the market and provide timely investment advice to you in the form of daily research emails, online chat, printed reports and SMS on your phone. • Seminar The Company also arranges seminar in corporate world for creating awareness about the product. Recently, it had organized for a seminar in ONGC, IIM. • Direct Marketing Company emphasizes more on direct marketing, as many people are still not aware of this new way of smart trading. For this, the company recruits and trains sales representatives so as to explain the product and solve customer queries related to the product. This is the most effective way to communicate the three-in-one concept which company offers. • Telemarketing This is another promotional tool company is using to boost up its sales. For this, the company collects the database of the people belonging to different professional segments. PLACE • Channels Share khan uses various channel alternatives to reach to its customers through  Internet  Tele Marketing  Retail Share Shops  Franchisee Owners  Power Brokers B. K. School of Business Management 38
  • 39.  Sales Force • Coverage Access the website from any part of the globe. • Locations Share khan has the largest chain of retail share shops in India. It has 250 share shops located in 123 cities all over India like Pune, Thane, Chennai, Kolkata, Bangalore, Lucknow, Darjeeling, Kanpur, Baroda, Midnapore, Surat, Delhi, Ghaziabad, Hyderabad, Allahabad, etc. PEOPLE • Employees  Selection: Employees are selected on the basis of their experience and qualification as applicable to the job.  Training: Intensive training is provided to the employees till a week once they join and even at times required after that.  Motivation: The employees are motivated through incentives they are provided. • Research Team Share khan has a team of dedicated analysts who have years of working experience in the industries that they track, and a proven track record in using their knowledge of the investment science to deliver results. • Customers, the heart of Sharekhan are really treated loyally like the kings. The customer care, which comprises of highly trained executives operating from 9:30 to 8:00 p.m. PHYSICAL EVIDENCE • Locality of the office: In Ahmedabad, two franchise outlets are located in posh areas like Navrangpura and Maninagar. • Office Environment: The ambience within the office is what can make the customer feel comfortable in trading. The cordial and friendly atmosphere at office is like a full time motivation for the employees. • Interiors and Infrastructure: The office is well furnished and has 24 computer terminals on which tick-by-tick price movements of the securities are displayed. B. K. School of Business Management 39
  • 40. PROCESS • In this service organization, the ways in which the customers receive delivery of the service constitutes the process. Here, the process involves adding ‘value’ or ‘utility’ so that the customers get full satisfaction for the money spent by them. • Here the process begins from the step when customer wants to open e- invest account and ends when his account is actually activated. • All Indian residents and NRI are eligible to avail this service. • Customers can open a Sharekhan e-invest account by filling a single application form. This form includes 12 agreements like 1. Main form with customer details 2. Agreement between Sharekhan and client in respect of the online investment support service offered. 3. Agreement between the Depository Participant and the client for providing the transaction statement through Internet. 4. Irrevocable power of attorney 5. Agreement between the DP and the person seeking to open an account with the DP. 6. Maintenance of client’s account on a running account bases by SSKI. 7. Agreement giving the right of lien on the credit balance of client in NSE trading. 8. Agreement giving the right of lien on the credit balance of client in BSE trading. 9. Risk disclosure document (cash segment) 10.Power of attorney 11.Member and client agreement. 12.Web-online agreement between member-broker and client. Analysis of the Application Form 1. Main form In main form all important details about customers are covered up. Like his correspondence address, residential address, bank details, Pan No. details, details about nominee etc. 2. Web online agreement between member broker and client This form includes:  Who can be member broker  Definition of client  Duties and responsibilities of both  Requirements for opening a online demat account B. K. School of Business Management 40
  • 41.  Rules and regulations of cash segment and derivative segment on web 3. Member and client agreement This form contains the provisions as to what are terms and conditions in capital market segment. Derivative segment operative Clauses 4. Agreement between Share khan and the client in respect of the online investment support services offered  What all facilities Sharekhan.com would be providing  Up to what client is liable and what are authority responsibility in relation to transactions  Registration and account opening  Subscription rates and regulations  Transaction processing  Clearing and settlement of transaction 5. Agreement between the DP and the person seeking to open an account with the DP It mainly contains charges charged by Share khan as DP to its clients for various services offered by him. 6. Irrevocable power of attorney The power of attorney is irrevocable until all dues payable by client to member broker are satisfactorily settled and agreed between them. 7. Agreement between the DP and client for providing the transaction statement through internet It contains the agreement of in what way client would be getting transaction through internet 8. Power of attorney Here Share khan is irrevocably nominated, appointed as true and lawful attorney for certain acts for Demat account. 9. Risk disclosure document Risk involved for cash segment to client. Investor’s rights and obligations are mentioned in it. • This form will help him open the Sharekhan trading account along with a bank account and DEMAT account. • There are three options available to the customer for applying: 1. Through toll free number: 1-1600-11-7050 2. Through visit to any of the Sharekhan centers in the city. B. K. School of Business Management 41
  • 42. 3. Through filling up the application form online. • Customer is required to give residential proof and an identity proof along with the application form. • On submitting the application form, it will be processed at Bombay and all the required accounts will be set up. If the application is not processed because of lack of details, application will be rejected and the customer will be contacted by company’s representative or by mail. • Once the application is accepted the customer will be informed by mail as well as through post. • Customer will be sent a login ID, membership and trading password, DP number, customer ID once the form is processed. • Now the customer can login to the account from any place and start trading. In case, he faces some difficulty, he can contact the company through mail or can give a call to customer care or personally visit the center. B. K. School of Business Management 42
  • 43. 6. EVALUATION OF INDIAN E-PORTALS USP: Share khan: Online Trading Terminal and customized investor advise ICICI direct: Brand Name and various investment options 5 Paisa: Low Brokerage and no account opening charge HDFC securities: Brand Name KOTAK securities: Terminal Speed and good after sales service B. K. School of Business Management 43
  • 44. India Bulls: competitive brokerage DEMERITS: Share khan: Absence of BSE Online Trading ICICI direct: High Brokerage 5 Paisa: No Brand Name & unreliable HDFC securities: High Brokerage KOTAK securities: Deposit India Bulls: no net banking facility B. K. School of Business Management 44
  • 45. 7. APPLICATION OF MANAGEMENT CONCEPTS IN SHAREKHAN PEST Changes Affecting Share Market POLITICAL IMPLICATIONS Current UPA government policy regarding oil marketing companies is very confusing for the investor community. The price of the petrol, diesel, LPG & kerosene is not decided by simple supply and demand equation, but it is manipulated under the pressure of left parties which results in very poor valuation of oil marketing companies’ share price. In 2004 parliament election when UPA alliance came in power stock market replied negatively and it cracked down to 800 points. ECONOMIC IMPLICATIONS Because of the fall in the bank saving rate, people are transferring their saving towards equity markets either directly of through mutual funds in search of higher return. Because of the good corporate performance throughout across the sectors the overall growth in terms of the market capitalization has increased which in turn results in wealth creation for investors. In budget 2004, P. Chidambaram has introduced S.T.T. (Securities Transaction Tax) which created havoc amongst stock broker community, because S.T.T. affected their businesses. SOCIAL IMPLICATIONS Online trading is being adapted by more and more people each day. Youngsters have started trading in large numbers too. The society as a whole is moving towards technology in this digital revolution age. Women in corporate world or housewives have started earning through this way of smart trading sitting at home or in their offices. Thus, in this changing technological scenario, e-trading clicks in people’s mind along with e-shopping, e-governance. Globalization has brought about a change in consumers who want ease and comfort in trading everywhere they move. When In such economic environment, people prefer to trade offline, wherein their profits remain un-booked as per their wish. Mr. Chidambaram, who had given an excellent budget in 1991, which brought a change in economy, is once again the Finance Minister. It will have different effect on the incomes of people belonging to different income groups and hence will affect the stock markets too. B. K. School of Business Management 45
  • 46. The income from the main business gets lost in the stock markets. These affect the society in the sense that people have given their lives loosing in stock markets. This is an adverse implication of stock market as a whole. TECHNOLOGICAL IMPLICATIONS As this is online trading, one has to be constantly in touch of the latest developments in the technological field. If the competitor has a better portal due to developments in software, then there is a chance of loosing market share. Recently, applet-based software is used which is enabled by Java to get the basic portal. Even, the speed of execution and internet connection used by the company affects the customers. An internet version of 6.0 is a must for online trading. So, one has to be continuously upgraded with new technological developments in the market. SWOT Analysis STRENGTHS • 8 decades of experience in stock market • Largest chain of retail share shops in India • Volume based differentiated product. • User friendly website. • Dedicated and responsive workforce/staff. WEAKNESSES • Problems due to Network crash • Unawareness among investors. • Low customer satisfaction. OPPORTUNITIES • To tap the untapped market • To capture the Market lost to its Competitors. • To focus on developing a superior and powerful portal • To spread awareness of its Brand Name • To make people aware of stock market field by means of FIRST STEP PROGRAM THREATS • Competitor develops a superior portal • Prolonged depression and high volatility in the market • New Entrants & local brokers B. K. School of Business Management 46
  • 47. CPA (CUTOMER PROFITABILITY ANALYSIS) Share khan classifies its customers according to their volume in trade into the following: PLATINUM AND GOLD CUSTOMERS Share khan pays exclusive attention to its speed trade plus and speed trade customers and considers them as platinum (most valuable) customers as they yield high volume to the company and earn them high income in terms of brokerage. These are the only customers who are provided BSE Online Terminal. It specially cares for its speed trade customers in terms of rendering quick response to attend to their queries and complaints, because these are the customers who once if satisfied properly would word and recommend the company and its service to other investors also. IRON CUSTOMERS Share khan recognizes its classic account holders as its iron customers as these are the retail customers who are very small players and yield income to the company in terms of small brokerage. Share khan always believed in a policy to be responsive to customers’ queries and complaints. B. K. School of Business Management 47 Platinum Customers- Speed Trade Plus Gold Customers- Speed Trade Iron Customers- Classic
  • 48. 8. OUR EXPERIENCE Learning Experience When we started our summer training, we knew very little about the stock market and its nitty-gritty. And now when we are leaving the company we are confident about our knowledge. Although nobody can claim complete expertise but there is a sea change at least from our point of view. We have learnt what are the various indices and their significance in market. We have also learnt the impact of sensex and nifty on overall stock market. We have learnt about various fundamentals and technical aspects which affect the stock prices in short run and long run. Selling Experience Apart from this our specific task is to sell the online trading accounts. During this venture we came across many people who came from different walks of life. We learnt how to deal with them, how to persuade them and guide them in trading. Selling an online trading account requires special focus on targeting the customers. Each and every person do not trade / invest in the stock market. Actually what we had to do was to identify the prospect and then convince them. Wasting time on the customer who does not know anything about stock market is completely worthless. We were 3 of us working as a trainee executive for 2 months and were assigned a target of 15 accounts individually. Out of the target assigned of 30 accounts, we achieved 24 accounts in total. We came to know that our conversion ratio was around 80%. Each of us initially met roundabout 10 to 15 people everyday. Out of these we found 2 to 3 persons who took actual interest in the product. With regular follow-ups the conversion ratio turned out to be only 1 customer in 4 to 5 days. As we met more and more people, we came to know more about how to talk to them, how much time be given to each person we met. Even, by solving the customer queries, our own understanding was enhanced. While selling our product in the market, we also came to know more about our competitor’s product like, icicidirect.com, India bulls and their strategy of marketing and the consumer’s preference towards the competitor’s product. We did cold calling in these two months and created our own database through it. In the second month, we got leads from our Tele-caller at Sharekhan which are generated from Websites like moneycontrol.com, rediffmail.com, indiatimes.com. B. K. School of Business Management 48
  • 49. Share khan also gives advertisement in leading English dailies and on channels like CNBC where the customer care toll free no. is displayed. We met people in different locations at Ashram road, C.G. road, Mithakhali 6 roads, S.G. Highway, Paldi, Maninagar, Judges Bungalow road, Vatva, Gandhinagar, Shahibag, Jodhpur, Sabarmati, Naranpura, Navrangpura, Gurukul etc. It include Advertising Agencies, Chartered Accountants, Travel agencies, Exporters, Education consultants, Samsung as well as other household appliance showrooms. We met the Customer Relationship Managers, Assistant Managers, Sales Managers, Accountant officers and even the Directors of some companies. We needed to report daily in our company in the DSR (Daily Sales Report) the information about the people we met. This DSR included: Name of the customer, Ph. Number, Time, Period, Status, Follow up and Reasons. Even, we were required to fill up a Deal-Sheet for HNIs that is the High-Network Individuals (the individuals who trade in higher volumes) that we met on a particular day. We opened up stalls at places like New Cloth Market, Gurukul road, Maninagar. Once, a customer filled up the form, we had to call him/her after7 working days to check if he has received the login ID and password from us (Bombay office of Sharekhan). After that, we were required to show the customer how to make a transaction and how to get access to the terminal. Also, other queries which the customer faced had to be solved by us. So, it was all a very good learning experience for us. What we faced was the scorching heat of the city, be in a one area at one time and just the opposite area in other time as per customer’s appointment. How to speak to consumers, solving their queries, building a rapport with them was all up to us. We created our own databases which we feel is an achievement. Also, getting into the offices with the “salespeople not allowed” board was an achievement. The feeling after meeting a customer once and in the final meeting, and closing the deal gave us a sense of fulfillment. There were 59 signatures in the account opening form and entertaining our customers while filling-up the form was again a challenge. At Sharekhan, the atmosphere was perfectly cordial. There were senior trainees always to solve the difficulties we faced in approaching a customer, filling up the form, demonstrating the site, or solving their queries. We were supposed to be formally dressed and required to report twice daily. We faced some bad and resentful experiences like being sent out of offices without being listened. Even, we waited for hours for a customer and went to the customer again in case if a signature is left in the form or in occurrence of any proof problems. This was again a learning to increase our tolerance and be more careful while filling up the form. B. K. School of Business Management 49
  • 50. 9. RECOMMENDATIONS To Share khan: 1. CRM: After acquiring a customer he or she requires special attention which can be done by assigning that particular customer to relationship executive. The task of serving the customer should not left to sales executives, but a relationship executive should given the responsibility to solve the customer query. It is more difficult to retain a customer than to acquire one. 2. Effective promotional tools: Sales promotion schemes should be such to attract the prospective customers. Proper advertising may be done in order to create awareness and good schemes to attract the customers may be offered. 3. Customer convenience: Suggestions are not available in the basic portal. The terminal speed is low and the Login ID, TPIN and phone ID are not changeable. Company may provide these facilities as well. 4. Pledging: In order to attract customers, Sharekhan should provide online pledging system. This will enhance its sales, as customer will not have to move cash to the company every time he/she wants to trade. 5. Sales force: Company does recruit trainees, but it does lack a professional sales force, which remains with it on a permanent basis. For this, the company may offer salary on a fixed basis instead of variable one that it offers now. 6. Online demonstration: Sharekhan should provide online demonstration on its website so that customer gets visual idea about Sharekhan portal. B. K. School of Business Management 50
  • 51. 10. BIBLIOGRAPHY Magazines: “Share khan value line, dalalstreet, Flashnews,” Websites:  http://www.Sharekhan.com  http://www.nseindia.com  http://www.bseindia.com  http://www.hdfcsec.com  http://www.indiabulls.com  http://www.5paisa.com  http://www.icicidirect.com  http://www.kotakstreet.com  http://www.google.com B. K. School of Business Management 51
  • 52. B. K. School of Business Management 52