India Financial System

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  • 1. INDIAN FINANCIAL SYSTEM The Indian financial system can also be broadly classified into the formal (organized) financial system and the informal (unorganized) financial system. The formal financial system comes under the purview of: • The ministry of finance (MOF), • Reserve Bank of India (RBI), • Securities and Exchange Board of India (SEBI), and • Other regulatory bodies. The informal system consists of: • Individual money lenders such as neighbors, relatives, landlords, traders, and so on. • Groups of persons operating as “funds” or “associations.” • Partnership firms consisting of local brokers, pawnbrokers, and non-bank • Financial intermediaries such as finance, investment, and chit-fund companies. 1
  • 2. INDIAN FINANCIAL SYSTEM Formal (organized) Informal (organized) Financial system Financial system Financial markets Capital market Money market Equity market Derivatives  Future  Option  Swap Primary market Secondary  Forwards market  Public issue  Rights  NSE issue  BSE  Private placement  Preferentia l allotment 2
  • 3. FINANACIAL INSTRUMENTS IN THE MARKET The changes in the regulatory framework of the capital market & fiscal policies have also resulted in newer kinds of financial instruments being introduced in the market. These instruments are depended on period, interest rate, trading etc.  Equity Shares It represents the Proportionate ownership of the company. The equity share holders have last right in receiving profit.  Preference Share Its holders get preference in receipt of profit. Preference share holder enjoys a preferential right of repayment in cash of winding up of a company.  Debentures Debentures are issued by companies & regulated under the SEBI guidelines of June 11, 1992. The debenture holders are governed by the companies act.  Bonds Basically Bonds are issue for debt capital for predetermined period. It is one of the cheaper instruments. Generally DFI like IDBI, ICICI and IFCI have been raising capital for their operations.  Government securities 3
  • 4. There are mainly two types of government securities i.e. dated securities and treasury bills. There are mainly two authorizes governing the Government Security viz. Central government and state government. The public debt office of the RBI performs all functions with regard to the issue management, settlement of trade, distribution of interest and redemption. 4
  • 5. BSE (THE STOCK EXCHANGE OF MUMBAI) The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non- profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into dematerialization and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956. The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs. A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer. 5
  • 6. NSE (NATIONAL STOCK EXCHANGE) NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in June 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments. NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. The standards set by the exchange in terms of market practices, Products, technology and service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service. DEVELOPMENT OF STOCK MARKET IN INDIA 6
  • 7. The origin of the stock market in India dates back to the end of the eighteenth century when long-term negotiable securities were first issued. The real beginning, however, occurred in the middle of the nineteenth century, after the enactment of the Companies Act in 1985 which introduced the feature of limited liability, and generated investor interest in corporate securities. The Native Share and stock Brokers’ association now known as Bombay Stock Exchange (BSE) was formed in Bombay (now Kolkata) (1908), and Madras (Now Chennai) (1937). In order to promote the orderly development of the stock market, the central government introduced a comprehensive legislation called the Securities Contracts (Regulation) act,1956. The Calcutta stock exchange (CSE) was the largest stock exchange in India till the 960s. In 1961, there were 1203 listed companies across the various stock exchanges of the country. Of these, 576 were listed o CSE and 297 on BSE However, during the later half of the 1960s, the relative importance of CSE declined while that of BSE increased sharply. TRANSACTION CYCLE 7
  • 8. Decision to Placing Order trade Funds or Transaction Trade Securities Cycle Execution Settlement of trades Clearing of Trades A person holding assets (Securities/Funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange. The order is converted to a trade as soon as it finds a matching sell/ buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading member’s securities/funds as per settlement cycle. Buyer/seller delivers funds/ securities and receives securities/funds and acquires ownership of the securities. MAJOR PLAYERS 8
  • 9. 1. ANGEL BROKING LIMITED 2. S S KANTILAL ISHWARLAL SECURITIES PVT LTD. (sharekhan) 3. ICICI WEB TRADE LTD. (www.icicidirect.com) 4. 5 PAISA.COM (www.5paisa.com) 5. KOTAK SECURITIES LTD. (www.kotakstreet.com) 6. INDIABULLS (www.indiabulls.com) 7. MOTILAL OSWAL SECURITIES LTD. 8. HDFC SECURITIES LTD. (www.hdfcsec.com) 9. UTI SECURITIES LTD. A/c Opening Brokerage Interface Fee Parameters Tradi Square Banks Associated ng A/ Demat Delivery Off with c Angel Broking Ltd. 460 0.30 0.06 HDFC, ICICI HDFC, UTI, Sharekhan 750 NIL 0.50 0.10 OBC, IDBI & Citibank ICICI Direct 750 NIL 0.75 0.18 ICICI Bank Indiabulls 750 250 0.40 0.10 N.A. Citibank, HDFC, 5 paisa 800 NIL 0.20 0.05 OBC, UTI & ICICI Bank Kotak Bank & Kotak Street 500 N.A. 0.59 0.06 Citibank HDFC & Other 4 HDFC Securities 700 NIL 0.50 0.15 Banks INDUSTRY ANALYSIS USING PORTER’S 5 FORCES MODEL 9
  • 10. POTENTIAL ENTERANT Investmart Various Banks Geojit Cipher UTI Securities Ltd. Refco Group Ltd. IDBI Capital Mkt. Services Ltd. SUPPLIERS BUYERS COMPETITORS Web maintainers Small Investors NSCL ICICI Web Trade Ltd Franchise/Business CSDL 5paisa.com Partners NSE Kotak Securities Ltd HNI’s BSE India Bulls MF Companies MCX Motilal Oswal Securities Ltd HUF NCDEX HDFC Securities Ltd Institutional Marwadi Finance Ltd Investors SUBSTITUTES Mutual Funds Insurance Bank FD  Angel Broking Ltd. The Angel Group has emerged as one of the top 5 retail stock broking houses in india, having memberships on BSE, NSE and the two leading commodity exchanges in the country i.e. NCDEX and MCX. 10
  • 11. Angel Broking Ltd is also registered as a depository participant with CDSL. The group is promoted by Mr. Dinesh Thakkar, who started this enterprise as a small sub-broker in 1987 with staff strength of 3 personnel. As on date, the group is managed by a team of 150 professionals & 700 support staff and a nation wide network comprising 40 branches, over 2000+ sub brokers and business associates and 6000 terminals which cater to the requirements of more than 1 lacs retail clients.  S. S. KANTILAL ISHWARLAL SECURITIES PVT. LTD. (SHAREKHAN. COM) Sharekhan, India’s leading stock broker is the retail arm of SSKI, and offers you depository services and trade execution facilities for equities, derivatives and commodities backed with investment advice tempered by decades of broking experience. A research and analysis team is constantly working to track performance and trends. That’s why Sharekhan has the trading products, which are having one of the highest success rates in the industry. Sharekhan is having 240 share shops in 110 cities; the largest chain of retail share shops in India is of Sharekhan. In future, Sharekhan is planning to enter in Mutual funds, Insurance sector and banking sector to expand beyond the market currently covered by it. And it has started MF (Mutual Funds) on priority basis but wants to grow in it.  ICICI WEB TRADE LTD. (ICICIdirect.com) ICICIdirect.com was the first entrant into e-broking. ICICdirect.com provides the 3-in-1 to the users which ties in their saving 11
  • 12. bank account and their Demat account to their brokerage account electronically. This integration ensures that money is transferred to/from their bank account and the shares are transferred from/to their Demat account automatically without writing any cheques or transfer instructions while carrying out their trades in shares. ICICIdirect.com has the option of trading in shares in cash, margin or spot segments. An investor can also invest in 14 Mutual Funds (Prudential ICICI MF, Franklin Templeton India MF, Alliance Capital MF, JM MF, Birla Sun Life MF, Sundaram MF, IL&FS MF, Principal MF, HDFC MF, Standard Chartered MF, Reliance Capital MF, Kotak Mahindra MF, TATA MF and DSP MERRILL LYNCH MF) through their trading account. ICICIdirect.com doesn’t provide the facility of trading in a traditional way.  5Paisa.com 5paisa is the trade name of India Infoline Securities Private Limited (5paisa), member of National Stock Exchange and The Stock Exchange, Mumbai. 5paisa is a wholly owned subsidiary of India Infoline Ltd, India’s leading and most popular finance and investment portal. 5paisa has emerged as one of leading players in e-broking space in India. The company’s brokerage is one of the lowest in the industry. It also provides the research on commodities. Investors can benefit from its analysis and advice available at the click of the mouse. India Infoline was founded by a group of professionals in 1995. Its institutional investors include Intel Capital, one of the leading technology companies in the world promoted by the UK government, ICICI, TDA 12
  • 13. and Reeshanar. The company offers a slew of products such as stock and derivatives broking, commodities broking and mutual funds.  KOTAK SECURITIES LIMITED (kotakstreet.com) Kotak Securities Ltd., a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% - one of the world’s leading investment banks and brokerage firms) is India’s leading stock broking house with a market share of 5 - 6 %. Kotak Securities Ltd. has been the largest in IPO distribution - It was ranked number One in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME Database. It has also won the Best Equity House Award from Finance Asia - April2004. Kotak Securities Ltd is also a depository participant with National Securities DepositoryLimited (NSDL) and Central Depository Services Limited (CDSL) providing dual benefit services wherein the investors can use the brokerage services of the company for executing the transactions and the depository services for settling them. The company has 42 branches servicing around 1, 00,000 customers. Kotakstreet.com the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments.  India Bulls Indiabulls is India's leading retail financial services company with 77 locations spread across 64 cities. Its size and strong balance sheet allows providing varied products and services at very attractive prices, our over 750 Client Relationship Managers are dedicated to serving your 13
  • 14. unique needs. Indiabulls is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides real-time service & 24/7 access to all information and products. The Indiabulls Professional Network offers real-time prices, detailed data and news, intelligent analytics, and electronic trading capabilities, right at your finger-tips. This powerful technology is complemented by our knowledgeable and customer focused Relationship Managers. Indiabulls offers a full range of financial services and products ranging from Equities, Derivatives, Demat services and Insurance to enhance wealth and to achieve the financial goals.  MOTILAL OSWAL SECURITIES LTD. (MOSt) One of the top-3 stock-broking houses in India, with a dominant position in both institutional and retail broking, MOSt is amongst the best-capitalized firms in the broking industry in terms of net worth. MOSt was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research- based value investing and implementation of cutting-edge technology have enabled it to blossom into a thousand-member team. The institutional business unit has relationships with several leading foreign institutional investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent media report MOSt was rated as one of the top-10 brokers in terms of business transacted for FIIs.  HDFC SECURITIES LTD (HDFCsec) HDFCsec is a brand brought to you by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective 14
  • 15. of providing the diverse customer base of the HDFC Group and other investors a capability to transact in the Stock Exchanges & other financial market transactions. The services comprise online buying and selling of equity shares on the National Stock Exchange (NSE). Buying and selling of select corporate debt and government securities on the NSE would be introduced in a subsequent phase. In a few months, they will also start offering the following online trading services on the BSE and NSE: 1. Buying and selling of shares on the BSE 2. Arbitrage between NSE & BSE 3. Trading in Derivatives on the NSE 4. Margin trading products.  UTI SECURITIES LTD.: (UTISEL) UTI Securities Ltd was incorporated on June 24, 1994 by Unit Trust of India as a 100% subsidiary and on the repealing of the UTI Act, the capital is now held by the Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). UTI Securities has been working as an independent professional entity for providing financial intermediary and advisory services to its corporate and retail clientele. The Company has presence in major cities with 20 branches and 50 franchisees to service a wide range of clients. The company has also invested in the joint-venture company with Standard Chartered UTI Securities (P) Ltd. that is engaged in primary dealership and Government securities. The company is very soon going to start Commodity Trading through its subsidiary, USEc Commodities Ltd, which provides facility of commodity trading on NCDEX and MCX.  IDBI Capital Market Services Ltd. 15
  • 16. IDBI Capital is a leading Indian securities firm offering a complete suite of products and services to individual, institutional and corporate clients.IDBI Capital Market Services Ltd. (IDBI Capital), a wholly owned subsidiary of Industrial Development Bank of India (IDBI), is a leading Indian securities firm, offering a complete suite of products and services to individual, institutional and corporate clients. The services include fixed income trading, equities brokerage, debt and equity derivatives, research, private placements, depository services, portfolio management.  March 1995 - Commenced Equity Broking on NSE CM segment  October 1996 - Commenced Debt Broking on NSE WDM segment  December 1996 - Started operations as a Depository Participant  1996 - Started to act as Arranger to Privately Placed Bond issues  April 1998 - Commenced operations as a Portfolio Manager  February 1999 - Acquired membership of BSE, Mumbai  November 1999 - Started operations as a Primary Dealer  June 2000 - Acquired Derivatives memberships of BSE and NSE  October 2002- Commenced trading in Interest Rate Swap 16
  • 17. INDUSTRY OVERVIEW INTRODUCTION Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country’s economic state of health. Stock market is a place where securities are bought and sold. It is exposed to a high degree of volatility; prices fluctuate within 17
  • 18. m i n u t e s a n d a r e d e t e r m i n e d b y t h e d e m a n d a n d s u p p l y of s t o c k s a t a g i v e n t i m e . S t o c k b r o k er s a r e t h e o n e s w h o b u y and sell securities on behalf of i n d i vi d u a l s and institutions for some commission. The Securities and Exchange Board of India (SEBI) is the authorized body, which regulates the operations of stock exchanges, banks and other financial institutions. The past performances in the capital markets especially the securities scam by Harshad Mehta has led to t i g h t e n i n g o f t h e o p e r a t i o n s b y S E BI . I n a d d i t i o n t h e international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve, discipline and bring greater transparency in this sector, constant efforts are being made and to a certain extent improvements have been made. HISTORY OF THE BROKING INDUSTRY Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by 18
  • 19. banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the " N a t i v e S h a r e a n d S t o c k B r o k e r s ' A s s o c i a t i o n " ( w hi c h i s alternatively known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. T h u s i n t h e s a m e w a y , g r a d u a l l y w i t h t h e p a s s a g e of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges. 19
  • 20. ORGANIZATION OVERVIEW HISTORY:- In a short span of 18 years since inception, The A n g e l G r o u p h a s e m e r g e d a o n e of t h e t o p 5 r e t a i l s t o c k broking houses in India, having memberships on BSE, NSE and the two leading commodity exchanges in the country i.e. NCDEX and MCX. Angel Broking Ltd is also r e g i s t e r e d a s a d e p o s i t o r y p ar t i c i p a n t w i t h C D S L . I t i s t h e o n l y 1 0 0 % r e t a i l s t o c k b r o k i n g h o u s e o f f e r i n g a g a m u t of retail centric services like Research, Investment Advisory, 20
  • 21. and Wealth Management Services-Broking & Commodities to individual investor. The group is promoted by Mr. Dinesh Thakkar who s t a r t e d t h i s b u s i n e s s a s a s u b - b r o k e r i n 1 9 8 7 w i t h a t e a m of 3.and today professionally managed by a team of 1871+ d i r e c t e m p l o y e e s . I t h a s a n a t i o n w i d e n e t w o r k c o m pr i s i n g 12 Regional Centers, 60 branches, 2408+ registered sub brokers and business associates and 6227+ active trading t e r m i n a l s w h i c h c a t e r t o t h e r e q u i r e m e n t s o f 2 0 5 6 1 0+ r e t a i l clients. At Angel, It habitually generate value added features without the cost burden being passed onto the clients as we strongly believe that better understanding of client’s needs a n d w a n t s i s o u r t o p p r i or i t y . O u r e- b r o k i n g f a c i l i t y i s o n e s u c h e f f o r t , w h i c h g i v e s y o u a p l a t f or m t o a c c e s s s t a t e of t h e art trading facility at the click of a button. OUR VISION To Provide Best Value For Money To Investors Through Innovative Products, Trading / Investments Strategies, Stat-Of-The-Art Technology, Personalized Services. OUR BUSINESS PHILOSOPHY 21
  • 22. E t h i c a l P r a c t i c e s & T r a n s p a r e n c y I n A l l O ur D e a l i n g Customer Interest Above Our Own A l w a y s D e l i v er W h a t W e P r o m i s e Effective Cost Management OUR QUALITY ASSURANCE POLICY We Are Committed To Being The Leader I n P r o v i d i n g W o r l d C l a s s P r o d u ct & S e r v i c e s W h i c h E x c e e d T h e E x p e c t at i o n O f O u r C u s t om e r s Achieved By Team Work And A Process Of Continuous Improvement BRANCHES 22
  • 23. Andheri (west) Bandra(west) Borivali(west) Chembur Fort Ghatkoper(east) Goregaon(west) Kalbadevi Malad(west, east) Mulund(west) Santacruz(west) Vilen parle(west) Ahemdabad Ankleshwar Baroda Delhi Hyderabad Indore Pune Rajkot Surat GOALS & OBJECTIVES Five-year goals –State specific measurable objectives –State market share objectives –State revenue/profitability objectives Financial Plan 23
  • 24.  High-level financial plan that defines financial model, pricing assumptions, and reviews yearly expected sales and profits for the next three years.  Use several slides to cover this material appropriately Resource Requirements  Technology requirements  Personnel requirements  Resource requirements –Financial, distribution, promotion, etc –External requirements –Products/services/technology required to be purchased outside company MISSION STATEMENT The main mission statement of angel broking ltd is to be on top in and around Rajkot and Saurashtra peninsula with the help of retail, bulk and past business within three years. For FY 06-07 focus will be on Bulk business from existing sub-brokers of competitors by giving those competitive pricing, better connectivity and Post trading Back-up software in post centralized and direct billing era. 24
  • 25. VISION STATEMENT To provide best value for money to investors through innovative products trading investments strategies state of the art technology and personalized service. BUSINESS PHYLOSPHY This firm is working with philosophy that ethical values and transparency should be followed and customers interest should be given preference and deliver it what angel had promise to provide with effective cost management. CORE COMPETENCE  Top quality research & portfolio advisory services for equities  Retail focused research products  Robust internet trading facility  Commodities research & broking services  Depository services through CDSL  Web based 24 x 7 back office software 25
  • 26.  Good understanding of the sub-broker and retail customer needs  Professional work culture with a personal touch  State-of-the-art technology  Streaming quotes & real time charts for bse /nse [cash / derivatives]  Single connectivity and speedy execution of trades.  Private v-sat network for remote areas.  Online technical support & help desk. UNIQUENESS OF ANGEL  100% retail focus  BSE / NSE cash, F&O & commodities on a single screen  flexible margins/ exposure limits  Personalized services through centralized help desk and 25 branches.  cost effective technology MARKET SUMMARY  Major players are Angel, SSKI, MOST, Karvi, Anagram, India Bull, Kotak in retail segment.  Marwadi and Ajay Natwarlal in sub-broker networking segment.  Market: Retail _SSKI and MOST are considered successful among rest mainly because of good research, aggressive pricing, Margin Funding and spacious and well ambient office. 26
  • 27. VIEW OF DIFFERENT DEPARTMENTS PAGE NO. TRADING DEPARTMENT 29 PRE-TRADING 30 ACCOUNT OPENING FORM 30 DEPOSITS 31 COMPLIENTS 32 TRADING 33 DEALING ROOM 27
  • 28. SAUDA PUNCHING CONFORMATION POST –TRADING 33 BILLS 35 PAYIN AND PAYOUT PROCESS 35 CONTRACTS 35 DP DEPARTMENT 36 DEPOSITORY-AN ORGANISATION 36 BRIEF HISTORY OF DEPOSITORY 38 PARTICIPANT IN INDIA ROLE OF DP 40 ACCOUNT OPENING 42 DEMATERIALIZATION SECURITY 45 PLEDGE /HYPOTHECATION 46 VIEW OF DIFFERENT DEPARTMENTS INTRODUCTION :- Same as all the firms’ angel broking ltd has different department. It had mainly three departments which are as follows:  Trading department  Back office department  DP department (a) TRADING DEPARTMENT INTRODUCTION :- Angel is one of the broker who is acting as wholesalers and as a broker it is the duty of it to provide service of collecting funds and securities from 28
  • 29. the investors and send it to clearing house respectively for this an account is to be opened ie trading account. According to SEBI investor has to open trading account, he can open an account in any depository but investor should not be partnership firm or proprietorship firm. Trading department is again divided into three parts • Pre-trading • Trading • Post-trading (1) PRE-TRADING :- Any person who wants to open an trading accounts first of all pre-trading activity is done which include:  Account opening  Deposits  Complients Account opening Form 29
  • 30. Account opening procedure I. First client will ask for opening trading account II. The Angel will give proof details and client will have to fill up form and submit to Angel with documents required III. Collection of form from the client IV. Checking of the form V. Scanning of the form 30
  • 31. VI. Then this form will be dispatch to H.O VII. Angel branch will have Collection of code by email or manually VIII. Now inform client or sub broker through phone or email about internet Id IX. Now client will be able to trade Closing procedure I. First client will give written request for closing an account II. Then this request is forwarded to H.O III. At last H.O will inform branch that account has been closed whole procedure about closing will be done at H.O IV. Angel will inform client about closing of account Deposits Retail client: Cash market Minimum Rs 5000 Intra-day Rs 10000 Delivery Rs 5000 (rare case) Sub broker: For one segment 50,000 cash or share and for commodity 1,00,000 and for all segment 50,000(flexible) For all five segments 2,00,000 if client wants Vast which include installation ,transportation charges etc 31
  • 32. Complients Part-A Demat-(photo proof)  Pan card  Driving license  Election card  Passport Part-B (Residence proof)  Bank passbook  Ration card  Electric Bill  Telephone Bill  LIC policy Trading Account proof Following are the proof required for opening trading account.  Client master copy (DP proof)  Pan card for photo proof/form-60  Any one from Part-A  Any one from Part-B (2) TRADING :- 32
  • 33. After pre-trading next comes trading which include:  Dealing room  Sauda punching  Conformation Dealing room Dealing room is the rooms where dealing of different securities are done which include:  NSE Cash  BSE Cash  NSE Derivatives (3) POST TRADING :-  Contracts  bills and  pay in and pay out process Introduction 33
  • 34. After completion of trading the further process is done through this department. Mainly it handles two processes which are known as pay in and pay out process. Further description is given below. Payout Process When transaction is done between the two members of same DP then it is called internal payout process, but it can be known only after 4 o’clock when trading gets over. It can be known that whether the transaction is done internally or not. Otherwise all the transactions are done thorough exchange only. Now if the situation arises in which one of the member of DP has sold a definite quantity of shares, but against which no one has purchased the same amount of quantity of shares belonging to same company then the whole lot will go to the exchange. On the other hand if one of the parties has bought comparatively less quantity than sold by another party then it is called shortfall of shares. Now let us understand the above concept with the help of a practical example. Suppose, one of the members of Angel in RAJKOT has sold 800 shares of Reliance LTD., but against which member of Angel at Mumbai branch has purchased only 300 shares of the same company then it is called SHORTFALL. Now, after the closing of trading activity (i.e. after 4 o’clock). Exchange will prepare a shortfall report & this will be directly sent to H.O. Now, department will prepare a summary from the report. After that if DP has access then dealing will be done internally otherwise auction will be done by exchange in which exchange will purchase or sell shortfall of shares from the market. Payout process mainly indicates 34
  • 35. access amount to be paid by DP i.e. when purchase of share is comparatively higher then selling. Bills In the same way Angel H.O will prepare bill of clients name and this will be sended to respective branches to different places and now branches would be dispatching to their respective clients. Pay In Process Now if we look from the other side the same concept, then it is called PAY IN PROCESS. In this process if selling is done comparatively higher then purchase, then DP will earn i.e. DP will get relatively more amount against which it has to pay less amount. In both the transaction i.e. in paying & payout the payment will be done thorough checks only. Contract note Contract note is a confirmation of trades done on a particular day for and on behalf of a client. Angel shall issue a contract note to his client for trades (purchase/sale of securities) executed with all relevant details as required therein to be filled in (refer to SEBI circular no. SMD/SED/CIR/ 23321 dated June 8, 2005). A contract note shall be issued to a client within 24 hours of the execution of the contract duly signed by the TM or his authorized signatory or client attorney. 35
  • 36. Depository- An Organization A depository is an organization where the securities of investors are held in electronic form. Investors open an account in the depository system through a Depository Participant (DEPOSITORY PARTICIPANTS) and hold securities in that account. There are two depositories in India which are National Securities Depository Ltd (NSDL) and Central Depository Service Ltd (CDSL). Depository system is quite similar to a banking system. If an investor wants to utilize the service offered by a depository, he/she has to open an account with the depository through a DEPOSITORY PARTICIPANTS. This can be compare to the opening of an account with any of the branches of a bank in order to utilize the services of the bank. Holding securities in Depository is now a normal practice across the world. All depositories operate under country’s specific rules and regulations to assure safety, liquidity and right/ liability. 36
  • 37. A depository may be defined as facilities of holding securities in electronic form that means without holding any certificates in physical form and which subsequently enable securities transaction to be process by electronic book entry system, without movement of papers. A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as Beneficial owner (BO) has to open a Demat account through any DP for dematerialization of his holdings and transferring securities. Angel is having DP of CDSL where the balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the investor, at regular intervals, a statement of account which gives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of securities. 37
  • 38. BRIEF HISTORY OF DEPOSITORY PARTICIPANT Although India had a vibrant capital market which is more than a century old. The paper based settlement or trades caused substantial problems like bad delivery and delayed transfer of title till recently. The enactment of depositories act in august 1996 paved the way for establishment of NATIONAL SECURITIES DEPOSITORY LIMITED, The first depository in India. This depository promoted by institution of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handle most of the trading and settlement in dematerialized form in India capital market. NATIONAL SECURITIES DEPOSITORY LIMITED was promoted by UTI, IDBI and NSE. It started providing depository services in November 1996. Afterwards, CENTRAL DEPOSITORY SERVICE LIMITED flagged of its operation in July 1999. The CENTRAL DEPOSITORY SERVICE LIMITED was promoted by BSE jointly with leading banks such as SBI, BOI, BOB, HDFC, Standard Chartered, Union Bank of India & Centurion Bank. Trading in dematerialization share commenced on NSE in December 1996 on BSE in December 1997. In January 1998 compulsory Demat trading for retail investor started for selected scrips. Thus scrips in compulsory demat trading included the once with highest market capitaliasation and most traded scrips. This step led to phenomenon growth of the depository environment in Indian capital market. 38
  • 39. Until CENTRAL DEPOSITORY SERVICE LIMITED commenced its operations it was a one man show handled by DEPOSITORY PARTICIPANTS of NATIONAL SECURITIES DEPOSITORY LIMITED. NATIONAL SECURITIES DEPOSITORY LIMITED had there fore cover a large chunk of market before CENTRAL DEPOSITORY SERVICE LIMITED came into picture and it has remained the largest depository till date. Investors were opening the account in NATIONAL SECURITIES DEPOSITORY LIMITED and dematerializing there shares in the first phase. That was a booming period for the depository industry. Thus, in the initial years of the industry there was only one depository and the competition was between DEPOSITORY PARTICIPANTS only. The service was newly launch and SEBI was increasing the scope and compulsion by way of introducing more and more scrip in the least of compulsory demats trading. 39
  • 40. ROLE OF  A Depository is an organization firm to provide electronic depository facilities for securities traded. Securities are then held in the electronic form through the medium of DP. The NSDL is the first depository in India. The functions of NSDL are regulated by the Securities and Exchange Board of India (SEBI).  The Depository is not just another custodian. The Depository can legally transfer beneficial ownership, which a custodian can not. The chief objective of a depository is to reduce settlement risk by minimizing the paperwork involved in trading, settling and transferring securities.  To utilize the services offered by a depository, you must open an account with the depository through a DP. The DPs are the link between the shareholders and the company and NSDL.  Depending on the DP, there may or may not be an opening account fee. The DPs levy fees towards transaction and custody.  Banks, financial institutions, custodians and stock brokers can become DPs subject to their meeting certain requirements prescribe by NSDL and SEBI. NSDL publishes the list of DPs registered with them from time to time.  The DP will provide you with a passbook or statement of account periodically to inform you on your holdings.  You can even have a zero balance in your account. 40
  • 41. BENEFITS OF OPENING AN ACCOUNT WITH CDSL SYSTEM  The unique centralized database of CDSL enables DPs in Debit/Credit securities instantaneously to the Beneficial Owner’s account, thereby avoiding any transit position.  CDSL’s unique client ID number ensures debit/credit of securities only to the intended account as the system does not accept a transaction, where account number is keyed in incorrectly.  CDSL offers facilities to the Clearing House. Clearing Corporation under which securities sold/purchased by any BO on BSF can be directly delivered from/ received in the BO account, without routing them through the broker’s pool account.  CDSL does not collect any custody fees from DPs, thus, BOs can expect a lower charge in respect of securities held in CDSL accounts. The transaction cost for settlement of securities through CDSL as lower in most cases. 41
  • 42. ACCOUNT To avail the various services offered by CDSL an investor or a broker or an approved intermediary has to open a CDSL depository account. Depository accounts are of three types: • BENEFICIARY ACCOUNT: An investor or a broker who wants to hold shares on dematerialized form and undertake scrips less trading must have depository account called Beneficiary Owner account (BO) with a DP of his choice. • CLEARING MEMBER ACCOUNT: Member brokers of the stock exchange which have established electronic connectivity with CDSL need to open a clearing member account with a DP of his choice to clear and settle trades in the demat form. This account is meant only to transfer shares and receives shares for the clearing corporation/house and hence, the member broker does not have any ownership rights over the shares running held in such an account. • INTERMIDEARY ACCOUNT: Any person desiring to act as an approved intermediary account with any DP office choice. An intermediary account may be open with the DP only after the intermediary has obtained registration from the securities and Exchange board of India. And with the prior approval of the CDSL. This account is meant only to deposit the securities receive from the lender and lend them to the 42
  • 43. borrower under stock landing and borrowing scheme. The intermediary does not have any ownership rights over the shares held in such account. PROCEDURE FOR OPENING AN ACCOUNT :- An investor who wants to hold securities in the electronic form in a depository system should open an account with a participant with following procedure  The participant will make available the relevant account opening form (depending on whether the client is a retailer investor or corporate client or clearing member) and specify the relevant list of documents regarding references that should be submitted along with the form. It will also give a copy of the relevant agreement, to be entered with the client, in duplicate.  The client will submit the duly filled in account opening form. It should also furnish such documents regarding references, as specified electronic form in by the participant, along with the account opening form.  The Angel will verify that the account opening form is duly filled in. it will also verify the enclosed documents, if any. Incomplete forms will be forwarded to the client for rectification.  The authorized signatories are enclosed. 43
  • 44.  In case the documents are not proper, the form will rejected and intimate the client of the same, stating the reasons for doing so. The copy of the agreement submitted by the client is destroyed.  If the form is in order, the Angel will accept the same and give an acknowledgment slip duly signed and stamped, to the client. The Angel will execute the agreement and give a copy of it to the client.  After completion of all documentation, the Angel will send to H.O then enter the client details as mentioned in the account opening form in the DPM screen provided for the purpose. After entering client details in the system, a client account number will be generated by the DPM. H.O will send to Angel  The Angel will give a copy of the report listing the client details captured in the DPM database to the client. The report will be generated by the DPM.  Finally Angel dispatch, Demat account kit to the client by courier. DEMET REQUISITION FORM (DRF) Now we know that all the transaction are done through electronic form for this investors has to convert all the physical certificates into electronic form for this process is to be made for dematerialization of the certificates 44
  • 45. DEMATERIALIZATION OF SECURITY According to the Depositories Act 1996, an investor has the option to hold shares either in physical or electronic form. Now ever, SEBI has notified that settlement of trade in almost all listed securities should take the Demat mode. Although, trades up to 500 shares can settled in physical form, physical settlement is virtually not taking place for apprehension of bad delivery on account of mismatch of signatures, forgery of signature, fake certificate, etc. Before you start trading of your security using Demat account you dematerialize the certificate. Dematerialize means converting security in electronic form from physical form. Only those security can be Dematerialized whose owner company has registered itself for CDSL service. Shareholder can request its owner company to register itself with CDSL if it is not registered only after that security can be dematerialized Procedure for dematerialization  If client is having physical certificate and wants to convert then request is to give to angel for dematerialization  Then this request is send to H.O  H.O will stamp this request and send this request to related R&T agent  R&T Agent will on receiving the physical documents and the electronic request verifies and checks them  The DP issues a statement of transaction to the client  Then angel will inform to client 45
  • 46. PLEDGING Major benefit of the Demat account and holding security in Demat form is that you can put this certificate on pledge and you will get loan on it. If you have a demat account with RNSB bank then you will get loan either form this bank or you will get it form some other institutes. The person who applied for the loan is called ledger and one need to have Demat account with CDSL. Pledge puts once security under the pledge it can not use for other purpose. This security pledged are moved from ‘Free Balance’ to ‘Pledged Balance’ account. 46
  • 47. PRODUCTS OF THE ANGEL Trading in securities / commodities using the internet platform is a convenient option. We provide you an opportunity to trade on BSE / NSE ( Cash and F & O ), NCDEX and MCX from the comfort of your home or office. Our internet trading platform gives you state-of-the-art trading facility, order and trade confirmation, e- contracts and 24 X 7 on-line web enabled back-office system at the click of a button. ANGEL PRODUCTS ANGEL ANGEL TRADE ANGEL DIET tTRADE Offline ANYWHER E 47
  • 48.  ANGEL DIET :- o Application based ideal for traders o User friendly & sample navigation o Robust & speedier execution of trade o BSE,NSE, F & O, MCX & NCDEX  ANGEL TRADE :- o Browser based for investors o No installation required o Advantages of mobility o BSE, NSE, F & O, MCX & NCDEX  ANGEL ANYWHERE :- o Application based ideal for traders using technical tools o Intra-day / Historical charts with various indicators o BSE, NSE-Cash & Derivatives 48
  • 49. Angel E-Broking Products Angel Anywhere Angel Trade Angel Diet Application based Browser based for Application based ideal for traders Investors No ideal for traders User friendly & installation required using technical tools simple navigation Advantage of mobility intra-day / historical Robust & speedier Trading as simple as charts with various execution of trade internet surfing indicators BSE, BSE, NSE, BSE,NSE, derivatives NSE- Cash & derivatives & & commodities. Derivatives. commodities. 49
  • 50. ANGEL GOLD Introduction: In a volatile market it is very difficult for an investor to pick up value stocks which will give decent returns in the long run. We at ANGEL GOLD realize your need for a professional financial advisor and hence are here to assist you in making wise and profitable decisions. Features of Angel Gold :  A premium service for clients who need professional guidance on long term investments.  Minimum fund / portfolio of Rs. 1 lac and maximum of Rs. 4 lac eligible for Angel Gold.  Director- Research, Mr.Lalit Thakkar along with 12 analysts to design and monitor portfolios.  Appropriate risk profiling before taking investments decisions.  Periodic group meeting and seminars in branches.  Monthly Newsletter from the desk of “Angel Gold”.  Browser based back-office software. DERIVATIVES 50
  • 51. Derivatives Analysis TRADING IN NSE, BSE AND DERIVATIVES TREADING BSE NSE CASH MARKET CASH DERIVATIVE MARKET MARKET 51
  • 52.  ABOUT THE DERRIVATIVES :- Keeping in view the experience of even strong and developed economies the world over, it is no denying the fact that financial market is extremely volatile by nature. Indian financial market is not an exception to this phenomenon. The attendant risk arising out of the volatility and complexity of the financial market is an important concern for financial analysts. As a result, the logical need is for those financial instruments which allow fund managers to better manage or reduce these risks. Out of various risks, Credit Risk and Interest Rate risk are the two core risks, which are commonly acknowledged by various categories of Financial Institutions particularly banks. Effective management of these core risks is a critical factor in comprehensive risk management and is essential for the long-term financial health of business organizations, especially banks. With gradual liberalization of Indian financial system and the growing integration among markets, the risks associated with operations of banks and All India Financial Institutions have become increasingly complex, requiring strategic management. In keeping with spirit of the guidelines on Asset-Liability Management (ALM) systems and on integrated risk management systems, it is very much required to design risk management architecture, taking into consideration the size, complexity of business, risk philosophy, market perception and the level of capital. In addition, fine-tuning the risk management system to deal with credit and market risk is also the need of the hour. 52
  • 53. For enabling the banks and the financial institutions, among others, to manage their risk effectively, the concept of derivatives comes into picture. The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility. Through the use of derivative products, it is possible to partially or fully transfer price risks by locking–in asset prices. As instruments of risk management, these generally do not influence the fluctuations in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse investors.  MEANING OF DERIVATIVES:- 53
  • 54. A derivative is a financial instrument, which derives its value from some other financial price. This “other financial price” is called the underlying. The underlying asset can be equity, FOREX, commodity or any other asset. A wheat farmer may wish to contract to sell his harvest at a future date to eliminate the risk of a change in prices by that date. The price for such a contract would obviously depend upon the current spot price of wheat. Such a transaction could take place on a wheat forward market. Here, the wheat forward is the “derivative” and wheat on the spot market is “the underlying”. The terms “derivative contract”, “derivative product”, or “derivative” are used interchangeably. The most important derivatives are futures and options. Example: - A very simple example of derivatives is curd, which is derivative of milk. The price of curd depends upon the price of milk, which in turn depends upon the demand, and supply of milk. See it this way. American depository receipts/ global depository receipts of ICICI, Satyam and Infosys traded on stock exchanges in the USA and England have their own values? No. They draw their price from the underlying shares traded in India. Consider how the value of mutual fund units changes on a day-to- day basis. Don’t mutual fund units draw their value from the value of the portfolio of securities under the schemes? Aren’t these examples of derivatives? Yes, these are. And you know what; these examples prove 54
  • 55. that derivatives are not so new to us. Nifty options and futures, Reliance futures and options, Satyam futures and options etc are all examples of derivatives. Futures and options are the most common and popular form of derivatives.  HISTORY OF DERIVATIVES:- The derivatives markets has existed for centuries as a result of the need for both users and producers of natural resources to hedge against price fluctuations in the underlying commodities. India has been trading derivatives contracts in silver, gold, spices, coffee, cotton and oil etc for decades in the gray market. Trading derivatives contracts in organized market was legal before Morarji Desai’s government banned forward contracts. Derivatives on stocks were traded in the form of “Teji” and “Mandi” in unorganized markets. Recently futures contract in various commodities was allowed to trade on exchanges. In June 2000, NSE and BSE started trading in futures on Sensex and Nifty. Options trading on Sensex and Nifty commenced in June 2001. Very soon thereafter trading began on options and futures in 31 prominent stocks in the month of July and November respectively. The market lots keeps on changing from time to time. The minimum quantity you can trade in is one market lot.  DERIVATIVES: AN INDIAN CONTEXT:- 55
  • 56. In Indian context, the intensity of derivatives usage by institutional investors (viz. Banks, Financial Institution; Mutual Funds, Foreign Institutional Investors, Life and General Insurers) depend on their ability and willingness to use derivatives for one or more of the following purposes:  Risk containment: using derivatives for hedging and risk containment purposes  Risk Trading/Market Making: Running derivatives trading book for profits and arbitrage; and/or  Covered Intermediation: On-balance-sheet derivatives intermediation for client transaction, without retaining any net-risk on the balance sheet (except credit risks).  TYPES OF DERIVATIVES 56
  • 57. Derivative as a term conjures up visions of complex numeric calculations, speculative dealings and comes across as an instrument which is the prerogative of a few ‘smart finance professionals’. In reality it is not so. In fact, a derivative transaction helps cover risk, which would arise on the trading of securities on which the derivative is based and a small investor can benefit immensely. “A derivative security can be defined as a security whose value depends on the values of other underlying variables.” Very often, the variables underlying the derivative securities are the prices of traded securities. Derivatives and futures are basically of 3 types:  Forwards and Futures  Options  Swaps DERIVATIVES Options Futures Swaps Forwards Put Call Interest Rate Currency Commodity Security VALUE ADDED SERVICES 57
  • 58. INTRODUCTION Angel provides various services which increases the value of the firm and provides customer satisfaction through these services. These services helps customer in trading and makes the task easy, in this firm will be providing services for this special person are appointed for specific purpose who would be providing that services only .Thus personalized concentration is given to all the clients. Services offered Following are the services offered by Angel 58
  • 59. RESEARCH REPORTS & Daily / weekly reports Company provide daily and weekly report to the clients so that clients on the basis of this report can so for the market watch of the different securities. 59
  • 60. Company/ sector reports Here in the above screen sector report is shown. Angel provide company reports in which detail history of the company is given. Along with this it also provide facility of sector reports like banking report, pharma sector, agriculture sector, it sector etc so hose who want to invest in particular sector can refer this sector reports. 60
  • 61. Special reports – event based Special event based report are also one of the value added service of the Angel group. Investors can get detailed information about the event happened and which help in future for trading. 61
  • 62. It is very useful to those who are engaged in intra-day transaction. Angel group is providing intra-day tips and intra-day call and it is glad that most of the intra-day tips are proved to be successful. THE BACK OFFICE  Internet based back office: 24 hours, 365 days, integrated online back office through user id and password. 62
  • 63.  Current and historical data: data, both present and historical.  customized reports : digital contracts, bills, positions, ledger, accounts segment wise- exchange wise  Queries: client queries and the feedback for the same  Online help desk facility: a complete helpdesk to assist you PORTFOLIO ADVISORY SERVICE:- Angel offers discretionary PMS to investors I order to assist them in manging their funds amidst continuous changing market dynamics and increasing complexities of investing. Investing in equity markets requires 63
  • 64. in-depth knowledge and through analysis coupled with clear understanding of domestic and international economies. Investors need the services of an expert to manage their funds and deliver good returns in diverse market conditions. Continuous wealth creation with an emphasis on capital preservation is essential I today’s complex markets. In order to systematically diversify the holdings of clients across varied sectors and with an intention to give them handsome returns, Angel devised the concept of the Model Portfolio:  Angel cam out with it’s first Model Portfolio in August 2002  Since then it has come out with Model Portfolios which have consistently outperformed the Sensex YOY  In fact the latest Model Portfolio by Angel has successfully outperformed the Sensex by a whopping 80 %.  Portfolio comprises only of fundamentally strong scrips  Regular update on holdings.  Online expert advice  No fees charged for this service 1) FUNDAMENTAL RESEARCH SERVICES :-  The Sunday Weekly Report :- 64
  • 65. This weekly report is the ace of all reports. It offers a comprehensive market over view and likely trends I the week ahead. It also presents few top picks based on an in-dept analysis of technical and fundamental factors. It gives short term and long term outlook on these scrips. Their price targets and trading strategies. Another unique feature of this report is that it provides an updated view of about 70 prominent stocks on an ongoing basis.  The Industry Watch :- This report provides an in-depth analysis of specific industries which are likely to outperform others in the economy. It analyzes their strengths and weaknesses and ascertains their future outlook. The final view is arrived at after through interaction with industry experts. Also comparative performances of various companies in the sector are evaluated and to picks are recommended.  Stock Analysis :- Angel’s stock research has performed very well over the past few years and the Angel Model Portfolio has consistently outperformed the benchmark indices. The fundamentals of select script are thoroughly analyzed and an actionable advice is provided along with investment rationale for each scrip.  Flash News :- Key developments and significant news announcements that are likely to have an impact on markets / scrips are flashed live o trading terminals. Flash News keeps the market participants updated on an online basis and helps them to reshuffle their holdings. 2) TECHNICAL RESEARCH SERVICES :-  Nifty Tracker :- A nifty future is the most traded instrument with highest volumes in F & O and excellent liquidity. Our team tracks the Nifty future and 65
  • 66. generates calls based on our unique trading system which is a result of our focused research over the past few years The objective is to generate positive returns for traders who are looking for a high risk high reward product.  Online Chat :- An online forum to help clients, specifically day traders in judging the direction of the market and stocks which are I the limelight.  Intra Day Calls :- For day traders, Angel provides intra-day calls with entry, exit and stop loss levels during market hours. These calls are flashed on our terminals. Our analysts continuously track the calls and provide recommendations according to the market movements.  Position Calls :- Angel’s “Position Trading Calls” are based on through analysis of the price movement in select scrips. These calls are for a 10-15 day time span with stop loss and target levels. These calls are flashed on our terminals during market hours.  Derivative Strategies :- Our analysts take view on the Nifty and select stocks based on the derivatives data and technical tools. Suitable “Derivative Strategies” are devised. Which are flashed on our terminals and published in our reports.  Futures Calls :- A customized product for HNIs to help them trade with leveraged position; wherein clients are advised to the stocks with entry, exit and stop loss levels for short term benefits. Over and above this, financial status of the calls is monitored at all times. 66
  • 67. RESEARCH STUDY  Research Objective:- 67
  • 68. The main objective of the study is to analyse the awareness of Equity and derivatives segment, their potential market and investment patent of people in Rajkot City.  Why This Research Study Is Conducted? In the Rajkot City, Most of the investors trade in equity while Derivatives & Commodities segment remain inaccessible. There are very few people in Rajkot who are trading in Derivatives while there are immense opportunities for the development of these segments. Angel Broking Ltd is in the Equity, Derivatives & Commodities segment company needs to focus on increasing the awareness about Derivatives. Because, if trading on these instruments will increase, Angel Broking Ltd will also be benefited by earning revenue in term of Brokerage. This was the main reason behind conducting this study.  Secondary objectives are:  To know the investment habit and purpose of investing, of the people of Rajkot City.  To know the awareness of Equity and Derivatives in the people of Rajkot city.  To know the scope for the Equity and Derivatives market in Rajkot city.  To know the influencing force behind the decision making while trading in Equity and Derivatives.  To find out the best medium to educate the masses about Equity and Derivatives.  HYPOTHESIS:- 68
  • 69. H0: There is no significant difference in level of awareness of Equity and Derivatives in the people of Rajkot city. H1: There is significant difference in level of awareness of Equity and Derivatives in the people of Rajkot city.  SOURCES OF DATA :- There are mainly two sources of collection of data.  Primary Data:- The data, which is collected directly from the respondents to the base of knowledge and belief of the research, are called primary data. The normal procedure is to interview some people individually to get a sense of how people feel about the Equity and derivatives segment. So far as my research is concerned, primary data is the main source of information. I have collected data through Questionnaire and information from respondent.  Secondary Data: When data are collected and compelled from the published nature or any other’s primary data is called secondary data. So far as my research is concerned, I have not collected any information from any sources. So, I have not used secondary data for my research.  SAMPLING PROCESS :- It is very true that it’s very difficult to do the research with the whole universe. As we know that it is not feasible to go for population survey because of the numerous customers and their scattered location. So for this purpose sample size has to be determined well in advance and 69
  • 70. selection of sample also must be scientific so that it represents the whole universe. So far as my research is concerned, I have taken sample size of 100 respondents. I have selected many peoples who invested their savings in to different investment tools. All the respondents are stratified on the basis of their profession. I have selected the samples as per my convenience. Sample universe Rajkot city Sampling Technique Stratified and Random Sample size 100 respondents Sampling Unit: Professional = Random Business Man = Random Government Employ = Random Private Employees = Random SCOPE OF STUDY  The research that is being conducted by me will be useful in the following respect.  This will helpful to know the investment patent of people. 70
  • 71.  This will helpful to know the mindset of peoples towards the Equity and Derivatives.  This will help to the company, how to make people aware about Equity and derivatives by imparting best education.  This will help the company to frame effective Marketing Strategy.  This will also help to select the right media for advertising to create brand awareness as well as to give knowledge of the products.  This will also help to select right medium for trading in Equity and derivatives segment.  This will help the company to reduce the obstacles which come in the way for the development of Equity and derivatives segment.  LIMITATIONS OF THE STUDY :-  Personal Bias 71
  • 72. People may have personal bias towards particular investment option so they may not give correct information and due to which conclusion may be derived.  Time Limit The time duration of the research is short that’s why the information is not covered fully.  Area The area was limited to Rajkot city only, so we can not know the degree of the literacy outside the city.  Sample Size The last limitation is Sample size, taken by us is of 100 only; due to which we may not get the proper results.  Legal threat Some of the person fills the wrong information about them because of the some legal limitations. Q.1 Gender : 7 2 72
  • 73. Male Female Gender Female, 29 Male, 71 Q.2 Age 21-35 2 36-50 5 Above 50 2 73
  • 74. 60 50 40 30 20 10 0 21-35 36-50 Above 50 Q.3 EDUCATION:- Under Graduate 1 Graduate 4 Post Graduate 2 74
  • 75. Others 1 12 Other Post Graduate 27 Graduate 42 19 Under Graduate 0 10 20 30 40 50 Q.4 OCCUPATION :- Professional 1 Businessman 1 75
  • 76. Govt. Employee 4 Private Employee 2 Occupation Privet Emp. 21 Govt.emp. 48 Businessman 17 Professional 14 Q.5 Of these investment options, with which are you familiar and already invest in? 76
  • 77. Bank FD 2 Postal Scheme 1 Mutual Funds Insurance Derivatives 1 2 0 Shares/Equity Commodity 1 0 Derivatives 7 Commodity 5 Equity 15 Insurance 20 Mutual Fund 14 Post 18 Bank 21 0 5 10 15 20 25 Q.6 Are You invested in Equity or Commodity market? 77
  • 78. Yes 3 No 6 38 Yes No 62 Q.7 If Yes, than in which you are invested from below? Equity 1 Derivatives (F&O) 1 Commodity 7 78
  • 79. 20 19 18 16 14 12 12 10 8 7 6 4 2 0 Equity F&O Commodity Q. 8 If you are trading in derivatives & commodities or you want to be in, which factors will you give importance ? 79
  • 80. Risk Reduction Leverage benefit 2 3 Rate of Return 4 50 45 45 40 34 35 30 25 21 20 15 10 5 0 Risk Reduction Leverage benefit Rate of Return Q.9 Do you consider investment in derivatives & Commodity are safer then other investment avenues? 80
  • 81. Yes No 2 7 80 70 60 50 40 30 20 10 0 S1 Yes No Q.10 If No, than What are constraints that are holding you back ? 81
  • 82. Risk 3 Uncertainty 1 Lack Information regarding market 1 Lack of Uncertainity, Information, 18 17 Risk, 32 Q.11 How do you take decisions if you want to trade in Derivatives & Commodities ? 2 1 3 82
  • 83. Independently Advice of Friends Broker News Channels 0 Newspapers 0 Internet 0 35 33 30 28 25 19 20 15 10 8 6 6 5 0 et ds r ern y pe nt el en tl ge en nn pa Fri Int ha ed A ws er/ C ep Ne ok ws Ind Br Ne Q.12 How much time will you be able to devote for learning Equity OR Commodity ? 1 3 83
  • 84. ½ Hour 1 Hour Not Fixed 6 70 64 60 50 40 30 31 20 16 10 0 1/2 Hour 1 Hour Not Fixed Q.13 According to you, Which medium is the most Reliable for trading in Equity & Derivative ? 5 84
  • 85. Stock Broking Company Franchises/Sub Broker 2 Online 1 Online, 14 Franchises/ Stock Broking Sub Broker, 29 Co., 57 Chi - Square Test 85
  • 86. H0: There is no significant difference in level of awareness of Equity and Derivatives in the people of Rajkot city. H1: There is significant difference in level of awareness of Equity and Derivatives in the people of Rajkot city. OBSERVED FREQUENCY TABLE Occupation Investment in Investment Total Equity or i n O t h er s Derivatives Professional 6 8 14 Govt. Employee 20 28 48 Businessman 5 12 17 Private 7 14 21 Employee Total 38 62 100 E X P E C T E D F R E Q U E N C Y TA B L E Occupation Investment in Investment Total Equity or i n O t h er s Derivatives 86
  • 87. Professional 5.32 8.68 14 Govt. Employee 18.24 29.76 48 Businessman 6.46 10.54 17 Private 7.98 13.02 21 Employee Total 38 62 100 CALCULATION OF CHI-SQUARE 2 Obs. Expe. (Oij-Eij) 2 (Oij - Eij) (Eij – Eij) Freq. Freq. Eij Oij Eij 6 5.32 0.68 0.46 0.086 8 8.68 -0.68 0.46 0.053 20 18.24 1.76 3.10 0.170 87
  • 88. 28 29.76 -1.76 3.10 0.104 5 6.46 -1.46 2.13 0.330 12 10.54 1.46 2.13 0.202 7 7.98 -0.98 0.96 0.120 14 13.02 0.98 0.96 0.074 100 100 1.139 2 X= 1.139 .˙. Degree of freedom in this case = (r - 1) (c - 1) = (4-1) (2-1) = 3x1 =3 . ˙ . Chi square test value at 5% level of significance = 7.815  Decision: Here, the table value at 5% level of significance with the degree of freedom ( r-1) (c-1) = 3 is 7.815. Here, calculate value is 1.139 2 2 So, Xcal. < X tab. 88
  • 89. So, the Null Hypothesis is Accepted. We can say that, there is no significant difference in level of awareness of Equity and Derivatives in the people of Rajkot city. QUESTIONNAIRE Name :____________________________________________________ Address :__________________________________________________ Contact No.________________________________________________ 1. Gender : Male Female 2.Age :- 21-35 36-50 Above 50 3. Education : ___________________________ 4. Occupation: Professional Businessmen Govt. Employee Private Employee 5. Where do you invest your saving? 89
  • 90. Bank FD Postal Scheme Mutual Funds Insurance Derivatives Shares/Equity Commodities 6. Are You invested in Equity or Commodity market? Yes No 7. If Yes, than in which you are invested from below? Equity Derivatives (F&O) Commodity 8. If you are trading in derivatives & commodities or you want to be in, which factors will you give importance ? Risk Reduction Leverage Benefit Rate of Return 9. Do you consider investment in Equity & Derivative are safer then other investment avenues ? Yes No 10. If NO, than what are consider that are holding you back ? Risk Uncertainty Lack Information regarding market 11. How do you take decision If you want to trade in Equity & Derivative ? Independently Broker/Agent News Channels News Papers Internet Friends 12. How much time will you able to devoted for learning Equity & OR Derivative ? 90
  • 91. ½ Hour 1 Hour Not fixed 13. According to you, Which medium is the most Reliable for trading in Equity & Derivative ? Stock Broking Company Franchises/Sub Broker Online BIBLIOGRAPHY • Kothari C.R., Research Methodology, New Delhi, Vikas Publishing House pvt. Ltd. 1978 • Pathak Bharti v., Indian Financial System, Delhi, Person Education(Singapore) pvt. Ltd. WEBSITES: 1. www.Google.com 2. www.bseindia.com 3. www.nseindia.com 4. www.sharekhan.com 5. www.ncdex.com. 6. www.mcx.com 91
  • 92. NEWSPAPERS: • ECONOMIC TIMES • TIMES OF INDIA • FINANCIAL EXPRESS • SHAREKHAN’S VALUE LINE MAGAZINE 92