Project report for summer internship | Risk Management and investment behaviour at sharekhan ltd. by MM

UNIVERSITY OF
SUBMITTED BY:
Mysterman
ROLL NO.
BBA TH
SEMESTER
SUBMITTED TO:
A PROJECT REPORT ON
Risk Management and Investment pattern on the basis of risk profile of
Investors
SUBMITTED TO THE FULLFILMENT FOR THE AWARD OF DEGREE
OF BACHELOR OF BUSINESS ADMINISTRATION TO THE
UNIVERSITY OF
BBA [2018-2019]
UNDER THE GUIDANCE OF
DEPARTMENT OF BUSINESS MANAGEMENT
GOVT. DEGREE COLLEGE

CERTIFICATE
This is to certify the Project report entitled “Risk Management and Investment Pattern based on
Risk Profile of Investors” Submitted by Mystery Man in fulfillment of the requirement for the
degree of Bachelor of Business Administration [B.B.A] is a bonafide research work completed
under my guidance and supervision. The assistance rendered during the course of the study has
been duly acknowledged.
GDC
DECLARATION

Certified that I, Mystery Man, Student of Bachelor of Business Administration [B.B.A] has
completed the project entitled “Risk Management and Investment Pattern based on Risk Profile
of Investors” Under the guidance of Prof. _________of Management department GDC in the
fulfillment of the requirement for the degree of B.B.A .There by certify that No part of this report
has been submitted for any other degree.
Mystery Man
BBA th Semester
Roll NO. 1

ACKNOWLEDGEMENT
This project has been as a part of internship required during the completion of Degree of
Bachelor of Business Administration to the University of . I was involved with SHAREKHAN
LIMITED, , for the period of 40 days and I come across a lot of people who put in their time and
effort toward acclimatizing me to the workings of their organizations.
I express my thanks to my company guide Mr. (Manager) who motivated me in all my efforts.
I would also like to thank Mr (Professor) Mentor for supporting, guiding and encouraging me
during this project. I record my sincere thanks to her with deep gratitude.
I would also like to thanks Mr. (HOD of Management department) provide me an opportunity to
learn outside the class room. It was truly wonderful learning experience. Last but not least, I
express my gratitude to the entire staff of SHAREKHAN LIMITED.
These past 40 days were of utmost importance as they added value towards my path of
knowledge. I would like to end this acknowledgement by thanking the customers and the people
at large with whom I have interacted during the course of my training.
EXECUTIVE SUMMARY
This Project named as Risk Management and Investment pattern on the basis of risk profile of

investors in Broking Firm, is carried out at Sharekhan ltd from 1st July to 10th August to analyze
and understand the risk management of Stock Broking Firm SHAREKHAN LIMITED and how
investors invest based on their risk profile.
Capital Market in India is an emerging market with a great potential Indian capital market has
got a strong foundation and therefore has gained a confidence of Indian investors as well as
Foreign Institutional Investors. In India there are two Stock Exchanges (National Stock
Exchange and Bombay Stock Exchange) through which securities are traded. Stock exchange is
a body formed for the purpose of assisting, regulating or controlling the business of buying,
selling or dealing in securities. An investor has to trade in stock market through a registered
stockbroker. A stock broker is a member of a recognized stock exchange who is permitted to do
trades on the floor of the exchange.
The risk profile of investors depends upon their demographic structures or characteristics.
The project also deals with the analyzing the investment pattern on the basis of risk profile of
investors at Sharekhan Limited and what are the risk factors that influence the type of investment
made by individuals. As we all know that every person who wants to gain better returns in
future, they must have to invest their money in stock market or anywhere else. This study other
than risk management at sharekhan ltd also describes the investment pattern use by different
persons while doing investment in stock market keeping different risk in mind.
The main reason to choose this research is to find out the investment pattern behavior in respect
of their risk bearing capacity and this research helps the company to target the investors
according to their risk ability. The research process chosen by me is qualitative and quantitative
research. Questionnaires in part help me a lot in finding the actual position of the market under
the survey method.
. A sample size of about 150 respondents which includes individual investors as well as
corporate investors was taken for purpose from various parts of . After the survey was

completed, the data was first stored and then analyzed on the chosen parameters. This analyzed
data was later on converted into graphs. Such as pie chart, bar graphs, etc. this was to make result
easily comprehensible by any one going through the report. Later on, all this information was
compiled in the form of a presentable and highly comprehensible report.
After analyzing the data, the problem which has been identified that most of the investors are
ready to bear risk in expectation of higher returns and major of investors were familiar with the
risk management at sharekhan at various measures available. There is a strong relationship in
investment pattern and risk bearing capacity of investors while doing investment.
Risk and uncertainty go together. However, risk and return have a direct relationship, higher the
risk, higher the chances of good return and vice versa. There is a growing competition between
brokerage in a post reform India. For investors is always to decide which brokerage to choose.
Research was carried out to find out how Sharekhan manage their risk.
Risk can be defined as “Possibility of suffering losses”
“The chance of something happening that will have an impact upon objectives. It is measured in
terms of consequences and likelihood”.
Risk management in a Broking Industry is a new concept in India, since it poses maximum risk
in the financial market, managing it was felt most essential by the regulatory bodies and
exchanges.
In stock broking industry risks are high due to the volatility of the market. The risk may cause
due to its sub brokers, investor clients, branches etc. there are uncertainties about payments from
clients or from clients to sub brokers and then sub brokers to the broker. The high volatility of
the market may cause the clients or sub brokers not to make payments in specified time. Thus,
brokers are always exposed to market risks, financial risks, credit risks, liquidity risk and
operational risks. To cope up with such events brokers have to collect certain amount of margins
and maintain the same with the exchange. To manage such risks Margin, Mark to Market
margin, Inspection, Insurance, is maintained.

Also, the brokers are allowed intraday turnover and gross exposure limits. Brokers
have to maintain minimum base capital and additional base capital with the exchange.
Exchanges, SEBI and NSE CLEARING (formerly) NSCCL have taken steps like KYC,
continuous surveillance, mandatory audit etc. Thus, every broking firm has Risk Management
department. In Sharekhan Limited there is a surveillance department to deal with the risk
management activities.
This study suggests my own experience in Sharekhan Limited which is one of the leading
brokerage firms. Every company has to bear risk at some point of time in the organization so
Sharekhan Limited manages its risk very well. It has its own separate department for risk
management.
Through this report we were also able to understand, what our company’s (Sharekhan Limited)
positive and negative points the company’s hierarchy, its vision and mission, the product offer
my Sharekhan Limited. It provides live terminal known as trade tiger for online trading. We also
gave suggestion to the company what improvement can be done for the benefits of the
customers.

TABLE OF CONTENT
SR.
NO.
PARTICULARS PAGE NO.
1. Chapter 1 Area of Internship and Insight Gained 9-20
2. Chapter 2 Profile of the Organization 21-35
3. Chapter 3 Job Description and Functional Profile 36-38
4. Chapter 4 Research Methodology 39-41
5. Chapter 5 Learning Experience and insight gain 42-46
6. Chapter 6 Risk Management at Sharekhan 47-53
7. Chapter 7 Data Analysis and Interpretation 54-61
8.. Chapter 8 Recommendation and Conclusion 62-65
9. Bibliography 66
10. Appendix 67-69

CHAPTER 1
THE AREA OF INTERNSHIP AND LEARNING OBJECTIVE
The internship was conducted in Sharekhan from 1st July 2018 to 10th August 2018. It was a very
good experience. The internship comprises of finance training as well as marketing in which
there was the theoretical knowledge of Online Trading, and practical training for performing
online training and opening of demat account for prospective customers. The training was
provided on all products that sharekhan limited offers to the customers. It provides an exposure
of live capital market and other financial products. The training program is designed in such a
way it was easy to learn about the share market. Benefits after doing internship in sharekhan it
provided experience which can ultimately help in providing a good job opportunity. It is
important to know about the following terms:
Capital market
A capital market is a market for share, securities; where business enterprises or companies
and governments can raise long-term funds. Through capital market or security market people
who have idle resources can most efficiently transfer those recourses that have productive need
for them. Securities market provides channels for allocation of savings to investment and thereby
decouples these two activities. A Financial/capital market consists of investors (buyers of
securities), and borrowers (sellers of securities), intermediaries and regulatory bodies.
INDIAN STOCKMARKET OVERVIEW

A stock market or equity market is a public entity for the trading of company stock or shares
and derivatives at an agreed price; these are securities listed on a stock exchange as well as those
only traded privately.
Indian Stock Market consists of more than 20 Stock Exchanges. The Bombay stock exchange
(BSE) and National stock exchange (NSE) are the two primary exchanges in India. BSE and
NSE account for about 80% of the equity volume traded in India.
Bombay Stock Exchange
BOMBAY STOCK EXCHANGE - (BSE) (Bombay Share Bazaar) The Stock Exchange,
Bombay is a stock exchange located on Dalal Street , Mumbai and Is the oldest and first stock
exchange in Asia . The BSE is the world's 10th largest stock exchange with an overall market
capitalization of more than $4.9 trillion on as of April 2018. The BSE has the largest number of
listed companies in the world. As of March 2018, there are over 5,439 listed Indian companies

but only around 2000 companies can be actively traded, the Bombay Stock Exchange has a
significant trading volume. BSE major index is Sensex.
NATIONAL STOCKEXCHANGE
NATIONAL STOCK EXCHANGE - (NSE) The National Stock Exchange of India was set up
by Government of India on the recommendation of Pherwani Committee in 1991. It was
incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as
a stock exchange under the Securities Contracts (Regulation) Act, 1956. The National Stock
Exchange (NSE) is a stock exchange located at Mumbai, India. National Stock Exchange has a
total market capitalization of more than US$2.27 trillion, making it the world's 11th-largest stock
exchange as of April 2018 . Though a number of other exchanges exist, NSE and the Bombay
Stock Exchange are the two most significant stock exchanges in India and between them are
responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX
Nifty, known as the NSE NIFTY an index of fifty major stocks weighted by market
capitalization.
PURPOSE - Stock markets basic role is to provide a platform for the masses of the country to
invest their savings and also as a source of funds for various organizations and institutions. It
provides an opportunity for any person to become a part-owner of the company by buying the
company’s shares. These shares can be sold and exchanged as well as used as collateral in

certain cases. One can deal in a variety of financial instruments in a stock market such as Equity
which has already been explained, Future’s, Retail Debt, Wholesale Debt, Currency Future’s,
Derivatives, and Bonds etc. Trading can only be performed by a registered broker of the
respective stock one wants to deal in or through a broker.
Stocks
The stock or capital stock of a business entity represents the original capital paid into or invested
in the business by its founders. It serves as the security of the creditors in the business since it
cannot be withdraw to the detriment of the creditors. Stock is distinct from the property and
the assets of a business which may fluctuate in quantity and value. Buying a stock for the long
term means that you want to own part of a company and you think that in the future the company
will be profitable. If you buy stock in a company and the company perform well then, the price
of the stock will rise and vice versa.
Stock Market
A stock market or equity market is a public market (a loose network of economic transactions,
not a physical facility or discrete entity) for the trading of company stock and derivatives at an
agreed price; these are securities listed on a stock exchange as well as those only traded
privately. The U.S. stock market is currently $34 trillion, compared to the rest of the world’s $44
trillion capitalization. The largest stock market in the United States, by market cap is the New
York Stock Exchange, NYSE, and while in Canada, it is the Toronto Stock Exchange. The two
main Stock Exchange of India is National Stock Exchange (NSE) and Bombay Stock Exchange
(BSE).
WHAT IS RISK?
The word risk‟ has a definite financial meaning. It refers to possibility of incurring a loss in a
financial transaction. In a broad sense, investment is considered to involve limited risk and is
confined to those avenues where the principal is safe. Speculation‟ is considered as an
involvement of funds of high risk.
TYPES OF RISK

• SYSTEMATIC RISK
• UNSYSTEMATIC RISK
SYSTEMATIC RISK
Systematic Risk does not have a specific definition but is inherent risk existing in the stock
market. These risks are applicable to all the sectors but can be controlled. If there is an
announcement or event which impacts the entire stock market, a consistent reaction will flow in
which is a systematic risk. For e.g. if Government Bonds are offering a yield of 5% in
comparison to the stock market which offers a minimum return of 10%. Suddenly Government
announces tax burden of 1% on stock market transactions, this will be a systematic risk
impacting all the stocks and may make the Government bonds more attractive.
UNSYSTEMATIC RISK
Unsystematic risk is an industry or firm-specific threat in each kind of investment. It is also
known as ‘Specific Risk’, ‘Diversifiable risk’ or ‘Residual Risk’. These are risks which are
existing but are unplanned and can occur at any point of causing widespread disruption. For e.g.
if the staff of the airline industry goes on an indefinite strike, then this will cause risk to the
shares of the airlines industry and fall in the prices of the stock impacting this industry.
Total risk = Systematic Risk + Unsystematic Risk
WHAT IS INVESTMENT?
Investment is the purchase of an asset or item with the hope that it will generate income or
appreciate in the future and be sold at the higher price.
All investors have differing attitudes towards risk. When it comes to investing, it is important to
consider your risk profile or tolerance carefully, including how comfortable you are with the
possibility of losing money, or that returns on your investments could vary widely from year to
year.

Understanding your personal risk tolerance will help you choose an appropriate asset allocation -
the following points can help you to determine an investment mix that's appropriate for your
needs.
INVESTMENT EXPERIENCE
How would you describe your investment experience and understanding of financial markets?
• Just started investing in the last year
• You understand the basics of investing
• You have been investing on your own for several years and are reasonably
confident of your knowledge of financial markets.
• Your knowledge of financial markets is well above average and you make
investment decisions confidently
RISK TOLERANCE
To establish investment strategies that suit your profile of risk and will be comfortable with,
you need to consider the possibility that the value of your investment may decline even though
this may be temporary. Are you prepared to accept the possibility of a negative return at any
time in exchange for potentially higher long-term returns? What percentage of your money
would you be prepared to invest in higher-risk investments?
Which of the following is important to you?
• Avoiding any short-term losses
• Receiving regular income from investments
• Long-term growth in the value of investments
• Protection against inflation

INVESTMENT GOALS AND OBJECTIVES
Why are you investing? Is it for something in the near future (new car, or down payment on a
home) or something farther off (a young child's education or your own retirement)? If your
investing goals are short term you want your money to be there - with interest - when you need
it. Therefore, you will need to focus on relatively short-term investments like term deposits or a
cash management trust. If on the other hand, you are investing for the long term, you may be
able to afford to take some risk in pursuit of a higher return. Shares, property, and growth
orientated managed which historically have provided higher returns than fixed interest or cash
over time, may be more appropriate.
INVESTMENT TIMEFRAME
When do you expect to need to access all or part of your investments?
• Less than 1 year (immediate access)
• Less than 2 years (short term)
• 2 to 5 years (short to mid-term)
• 6 to 10 Years (mid to long term)
• Over 10 Years (long term)
LIQUIDITY / CASH REQUIREMENTS
How much money do you need to keep available for emergencies such as house repairs, a
dental emergency or serious car repairs? These emergencies can be a serious setback if you
are not prepared. The amount of your emergency fund will depend on your current lifestyle
and expenses.
Age and Income

Your age and your income - particularly the stability of your income - are important factors to
consider when determining your investment profile. If you are young you can afford to take a
longer-term view and any short-term losses may have minimal effect. If your income or
employment is unstable you will need to take this in to account when setting your investment
goals.
Profile
INVESTMENTSTYLE

RISK PROFILE
Conservative
Your primary investment goal is capital protection.
You require
stable growth and/or a high level of income, and
access to your
investment within 3 years.
Cautious
Your primary investment goal is
capital protection. Investors in this
risk profile require fairly stable
growth
and/or a moderate level of income.
Your investment term is 3 years or
more.
Moderate
Your primary investment goal is capital growth. You
can tolerate
some fluctuations in the value of your investment in
the
anticipation of a higher return. You don't require an
income and
you are prepared to invest for 5 years or more. Your
investment
goal is capital growth.
Moderately
Investors in this risk profile can

tolerate a fair level of fluctuations in
the value of your investment in
anticipation of possible higher
returns. You don’t require income and
you are prepared to invest for 5 to 10
years.
Aggressive
Your primary investment goal is long-term capital
growth. You
can tolerate substantial fluctuations in the value of
your
investment in the short-term in anticipation of the
highest
possible return over a period of 10 years or more.

LITERATURE REVIEW
This project is related to the Sharekhan Limited and Risk Management and investment pattern
based on risk profile at sharekhan ltd. Sharekhan is the fully owned subsidiary of BNP Paribas
which is still running successfully. This broking firm offers a wide range of products to its
customers like equity and derivative trading, online trading, Dial and trade, portfolio
management services, IPO online, mutual funds and insurance.
The company provides the software which is known as Trade Tiger for doing online trading.
Trade Tiger is software of Sharekhan which is given to customers for trading. It enables its user
Online trading in equity and derivatives, Dial-n- Trade, Cash transfer, Order and trade,
confirmation, Live Terminal
Every company has to bear risk and to reduce the companies have risk management department.
Sharekhan also have risk management department to reduce the risk of its clients. The risk
management department performs the following;
• To maintain the margin of the customers
• Mark to Market margin is calculated at the end of the day on all open positions by
comparing transaction price with the closing price of the share for the day.
• Hedging
• Doing averaging in case of loss is more
• Taking stop loss to minimize the risk

Sharekhan provide online trading facility various products and services to the customers which
help them do trade easily. Sharekhan also knows how to minimize the risk of its customers that’s
why sharekhan have over 14 lacks customers all over the country.
A number of academic studies have provided evidence of demographic and non-
demographic characteristics related to the financial risk tolerance of individuals. The most
common variables researched by academics to determine their relationship with financial risk
tolerance are gender, age, marital status, number of dependents, income, wealth, education and
financial knowledge. We report the main findings as well as a number of less-researched
variables. Gender differences have been widely examined, with a large number of studies
reporting higher financial risk tolerance for males (Grable, 2000; Grable and Joo, 2000; Bemasek
and Shwiff, 2001; Chaulk, Johnson, and Bulcroft, 2003; Yook and Everett, 2003; Grable, Lytton,
and O'Neill, 2004; Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan
and Xiao, 2006; Van de Venter and Michayluk, 2007; Gilliam, Chatterjee, and Zhu,2010).
Studies have also argued that financial risk tolerance decreases with age (Xiao,
Alhabeeb, Hong, and Haynes, 2000; Chaulk, Johnson, and Bulcroft, 2003; Hallahan, Faff, and
McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006; Van de Venter and
Michayluk, 2007; Faff, Hallahan, and McKenzie, 2009). Furthermore, a nonlinear aspect to age
has been observed (Hallahan, Faff, and McKenzie, 2004; Grable, Lytton, O'Neill, Joo, and
Klock, 2006; Faff, Hallahan, and Mckenzie, 2009). The primary explanation for the observation
of a significantly negative coefficient for age and the nonlinear relationship has been attributed to
the time horizon to recover losses that is lower with age and the higher reliance on investment
funds as individuals‟ age.
Marital status has been widely studied, especially because of its interaction with
age and gender. Financial risk tolerance is higher for single individuals (Grable and Joo, 2004;
Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao,2006).
The main justification for this result is that single individuals do not hold the same
responsibilities as those that are married and thus the single individuals are willing to accept
more financial risk. For example, Chaulk, Johnson, and Bulcroft (2003) propose that married

individuals tend to have a lower financial risk tolerance because of a greater need for wealth
protection. When gender and marital status are incorporated together, Jianakoplos and Bemasek
(1998) and Bemasek and Shwiff (2001) find that single men tend to be more risk tolerant than
single women. A negative relationship between financial risk tolerance and the number of
dependents is identified by Chaulk, Johnson, and Bulcroft (2003) and Hallahan, Faff, and
McKenzie (2004), with Faff, Hallahan, and McKenzie (2009) proposing a statistically significant
nonlinear linkage. This negative relationship has been identified with marital status and may
exist because of the added responsibilities and more conservative outlook to risk when
dependents are considered.
Higher financial risk tolerance is reported for individuals in high income and
wealth categories (Grable, 2000; Chaulk, Johnson, and Bulcroft, 2003; Yook and Everett, 2003;
Chang, DeVaney, and Chiremba, 2004; Grable and Joo, 2004; Grable, Lytton, and O'Neill, 2004;
Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006).
In addition, Grable and Joo (1999) indicate a significantly positive relationship between financial
risk tolerance and an individual's level of financial solvency.
A positive relationship has been identified between financial risk tolerance and education
(Grable, 2000; Chang, DeVaney, and Chiremba, 2004; Grable and Joo, 2004; Hallahan, Faff, and
McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006). Hallahan, Faff, and
Mckenzie (2004) also observe high positive correlations between income, wealth, and education,
suggesting that financial risk tolerance could be a function of income and wealth rather than
education.
Financial or investment knowledge has a positive relationship with financial risk tolerance
(Grable, 2000; Grable and Joo, 2000, Grable and Joo, 2004; Van de Venter and Michayluk,

2007). However, Davey (2004) challenges the view that educating individual investors about
financial markets and instruments will necessarily increase their financial risk tolerance.
Although the financial education of an advisor's clients is considered best practice, it will most
likely not have any direct influence on the risk preference of an individual as even the most
knowledgeable and educated could potentially have a low financial risk tolerance.
Learning Objectives
• To get insight about the Indian share market in context of Sharekhan
• To study the products and services of the company.
• To study about the swot analysis and competitive analysis of the company
• To get an insight about the risk involved in share market
• To understand the risk profile of investors and risk bearing capacity on the basis of
gender, education, occupation, age, family income and number of dependents.

CHAPTER-2
PROFILE OF THE ORGANISAGTION
PROFILE OF THE COMPANY
Sharekhan is the largest standalone retail brokerage in the country and the third largest in terms
of customer base after ICICI Direct and HDFC Securities. Sharekhan is one of the pioneers of
online trading in India. The nature of business is to provide services to the customers. The
services are as follows;
Depository services

Online Services
Technical research
In India, sharekhan has over 4800+ employees.
Website is www.sharekhan.com and slogan
is “YOUR GUIDE TO FINANCIAL JUNGLE.”
About Sharekhan – Always the first
Founded in 2000 and a subsidiary of BNP Paribas since November 2016, Sharekhan was one of
the first brokers to offer online trading in India. With 16 lakh customers, 153 branches and more
than 2400 business partners spread across over 575 locations, Sharekhan is one of the largest
brokers in India. Sharekhan offers a wide range of savings & investment solutions including
equities, futures and options. currency trading, portfolio management, research and mutual funds
and investor education. On an average, Sharekhan executes more than 400,000 trades daily
Guiding India's retail stock investors for 16 years
• Registered with NSE and BSE for capital market, futures and options and currency
segments and CDSL and NSDL for depository services.
• A full-service stock broking firm providing online services right from online account
opening to trading and investments.
• Created India’s best online trading platforms: Website (www.sharekhan.com), Trade
Tiger (the ultimate desktop trading software), Sharekhan App (available for Android and

iOS devices) and Sharekhan Mini (a low bandwidth website especially for mobile
browsers)
• A strong brick-and-mortar network with over 2600 outlets in 575+ cities
• Research-based financial advice on all asset classes to suit all investing and trading
styles
• Dedicated Education and training courses for investors and traders in association with
Online Trading Academy
Background
Sharekhan was founded by Mumbai-based entrepreneur Shripal Morakhia in 2000. Sharekhan
pioneered the online retail broking industry and leveraged on the first wave of digitization, when
dematerialization (demat) of securities came into effect and electronic trading was introduced in
the stock exchanges.
In India, Sharekhan has over 4800+ employees, and is present in over 575 cities through 153
branches, more than 2,500 business partners. The company has 1.4 million customer bases and,
on an average, executes more than 4 lakh trades per day.
Acquisition of Sharekhanby BNP Paribas
Sharekhan is now a fully owned subsidiary of BNP Paribas, it was rebranded as Sharekhan by
BNP Paribas.
About BNP Paribas
BNP Paribas S.A. is a French international banking group. It is the world's 8th largest bank by
total assets, and currently operates with a presence in 77 countries. It was formed through the
merger of Banque Nationale de Paris (BNP) and Paribas in 2000, but has a corporate identity
stretching back to its first foundation in 1848 as a national bank. It is one of three major
international French banks.
The firm’s online trading and investment site - www.sharekhan.com - was launched on
Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers
across the country. Known for its jargon-free, investor friendly language and high-quality
research, the site has a registered base of over one lakh customers. The number of trading
members currently stands at over 16 Lacs.

The content-rich and research-oriented portal has stood out among its contemporaries
because of its steadfast dedication to offering customers best-of-breed technology and superior
market information. The objective has been to let customers make informed decisions and to
simplify the process of investing in stocks.
On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application
that emulates the broker terminals along with host of other information relevant to the Day
Traders. This was for the first time that a net-based trading station of this caliber was offered to
the traders. In the last six months Speed Trade has become a de facto standard for the Day
Trading community over the net.
Share khan’s ground network includes over 4800+ employees, and is present in over 575 cities
through 153 branches, more than 2500 business partners. The company has 1.4 million customer
bases and, on an average, executes more than 4 lakh trades per day.
Sharekhan has always believed in investing in technology to build its business. The
company has used some of the best-known names in the IT industry, like Sun Microsystems,
Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial
Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and content.
VISION AND MISSION

VISION
To be the best retail broking brand in the retail business of stock marketing
We have many dreams. We dream of becoming India's leading digital savings and investment
partner.
MISSION
To educate and empower the individual investor to make better investment better decision
through the quality advice and superior services
SHAREKHAN SERVICES
EQUITIES & DERIVATIVES
PORTFOLIO MANAGEMENT
DEPOSITORY SERVICES

COMMODITIES RESEARCH
IPO, MUTUAL FUNDS
Source- Sharekhan’s website
MANAGEMENT TEAM
Key Executives for Sharekhan ltd.

Mr. Jaideep Arora Shankar Vailaya
Chief ExecutiveOfficer
and Whole-TimeDirector Whole-TimeDirector
ORGANIZATIONAL STRUCTURE
CEO Director
(Jaideep Arora) (Shankar Valiya)
Online business head
AVP-Mumbai Online
Territory Manager
Assistant Manager

Sales Executive
Trainees
PRODUCTS & SERVICES OFFERED BYSHAREKHAN
Sharekhan’s equity related services include trade execution on BSE, NSE, Derivatives, commodities,
depository services,online trading and investment advice. Trading is available in BSE and NSE. Along
with Sharekhan.com website, Sharekhan has around 1800 offices (share shops) in 550 cities around the
country.
• Equity & Derivatives trading
• Fundamental research
• Online services
• Share shops
• Commodities trading
• Portfolio management services (PMS)
• Dial- in trade
• Mutual fund advisory
• Insurance

Documents Required
• As per KYC guidelines there needs to be photo identity and address proof of the
customer. The required documents are mentioned below: -
Identity proof Residence/ Address Proof
• Passport Passport
• Pan card Voter’s ID
• Driving License Driving License(valid)
• Voter’s ID Bank statement(latest)
• MAPIN UIN Card Telephone Bill(latest)
Electricity Bill (latest)
Ration Card
Flat Maintenance Bill (latest)
Insurance Policy (latest)
Leave-License/Purchase
Agreement (latest)
• 2 Photographs
• A copy of Pan Card
• Two cheques drawn in favor of Sharekhan Limited, one for the account opening fees and
the other for the margin money (the minimum margin money is RS 5000/-)
• A cancelled cheque should be given by the client if he provides Saving Bank Statement
as a proof for correspondence address.
Charge structure
Fee structure for general individual: -
CHARGE CLASSIC ACCOUNT SPEED TRADE
ACCOUNT
Account opening Rs 750/- Rs 1000/-
Brokerage Intraday- 0.10%
Delivery- 0.50%
Intraday- 0.10%
Delivery-0.50%
REASONS TO CHOOSE SHAREKHAN LIMITED

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.
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.
Accessibility
Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for
investors. These services are accessible through our centers across the country (Over 588
locations in 148 cities) over the internet (through the website www.Sharekhan.com) as well as
over the Voice Tool.
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. You will also get a
useful set of knowledge-based tools that will empower you to take informed decisions.
Convenience
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 1800-22-7500 &
1800-22-7050 from anywhere in India.

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 contracted via a toll-free number,
email or live chat on www.Sharekhan.com.
Investment Advice
Sharekhan has dedicated research teams of more than 30 people for fundamental and technical
research’s. 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
mobile phone.
Benefits
• Free Depository A/c
• Secure Order by Voice Tool Dial-n-Trade.
• Automated Portfolio to keep track of the value of your actual purchases.
• 24x7 Voice Tool access to your trading account.
• Personalized Price and Account Alerts delivered instantly to your Cell Phone & E-mail
address.
• Special Personal Inbox for order and trade confirmations.
• On-line Customer Service via Web Chat.
• Anytime Ordering.
COMPETITIVE ANALYSIS
Follower:
• The followers are those who just blindly follows other players who are leaders and challengers.
• The players like 5 Paisa, Motilal Oswal, HDFC securities, Kotak street are the followers.
Leaders:
• ICICI Direct is a leader in the online account which is having 1,24,000 accounts in the country.
• While in offline account sharekhan is leading with 64000 offline accounts.

Nicher:
• ICICI Direct.com and Kotakstreet.com are the two stock broking houses which are focusing only
on online investors.
Challenger:
• Sharekhan, Kotakstreet and India bulls come under this head.
• Sharekhan challenges competitors by providing quality services and research-based advice.
• India bulls is also challenging with low brokerage rates and class one services.
SWOT ANALYSIS
STRENGTH
• It is a pioneer in online trading with an over 4800+ people working in the organization.

• SSKI the parent company of sharekhan has more than eight decades of trust and
credibility in the Indian market.
• Sharekhan provides multi-channel access to all its customers through a strong online
presence with www.sharekhan.com localized branch in all states and a call center-based
Dial-n-Trade facility.
• Easier access to the customer due to branded share shops in 575 cities.
WEAKNESS
• Localized presence due to insufficient investments for country wide expansion
• Less emphasis on customer retention
• Promotional activities conducted by the company are not at par with other firms.
OPPORTUNITIES
• With the booming capital market, it can successfully launch new services and raise its
client’s base.
• It can easily tap the retail investors with small saving through promotional channels like
print media, disclosure mails etc.
• As interest on fixed deposits with post office and banks are all time low, more small
investors are entering into stock market.
THREATS
• Lack of sufficient branch- offices for speedy delivery of services

• Other players are providing margin funds to investors on easy terms where as there is not
such facility in sharekhan.
• More and more players are venturing into this domain which can further reduce the
earnings of sharekhan.
RESEARCH SECTION IN SHAREKHAN LIMITED
Sharekhan limited has its own in-house Research Organization which is known as value line. It
comprises a team of experts who constantly keep an eye on the share market and do research on
the various aspects of the share market. Generally, the research is based on the Fundamentals and
Technical analysis of different companies and also taking into account various factors relating to
the economy.
As a customer of sharekhan limited one receives daily 5-6 Research Reports on their emails
which they can use as tips for investing in the market. These reports are named as Punter Report,
Eagle Report, Investor Eye Report and High noon Report.
SOURCE – Sharekhan’s Website
CURRENT CHALLENGES OF SHAREKHAN
Sharekhan faced lots of challenges. Some of the challenge that it faces are
• Retaining its customers is a big challenge of Sharekhan.
• Updating its Online Trade Software TRADE TIGER and make sure that it always works
is another challenge.
• As the broking firms are increasing number of competitors of Sharekhan are also rising.
Facing competitions from all these firms and maintaining its position is another challenge
of Sharekhan. Some of the main competitors of Sharekhan are Angel Broking, Religare,
Kotak Securities, India Bulls, Reliance Money, HDFC Securities, ICICIdirect.com, Bajaj
Capital, Motilal Oswal, India Infoline.

AWARDS AND ACHIEVEMENTS
• A rated among the top 20 wired companies along with Reliance, HUJI, Infosys etc. by
‘Business Today” January 2004 edition.
• Awarded “Top Domestic Brokerage House” four times by Euro Money and Asia Money.
• Pioneers of online trading in India amongst the top 3 online trading websites from India.
Most preferred financial destination amongst online broking customers.
• India’s mot preferred brokers within 5 yrs. “Awaaz Customers Award 2005”
• The team has completed over US$5 billion worth of deals in the last 5 years -
making it among the most significant players raising equity in the Indian
market.
• SSKI, a veteran equities solutions company has over 8 decades of experience in
the Indian stock markets. If we experience their language, presentation style,
content or for that matter the online trading facility, we'll find a common
thread; one that helps us make informed decisions and simplifies investing in
stocks.
FUTURE PLAN
• 200000 plus retail customers being serviced through centralized call centers / web
solutions.
• Branches / Semi branches servicing affluent / aggressive traders through high skills
financial advisor.
• 250 independent investment managers / franchisee servicing 50000 highly valued clients.
• New initiatives Portfolio Management Services and commodities trading.
SPREADING ITS WINGS OVERSEAS

NRI SERVICES- ONE STOP SHOP FOR ALL INVESTMENT NEEDS
• Online trading platform for NRIs for Equities and Mutual Funds
• Our first representative office in Dubai
• Dedicated Relationship Manager for advisory services and Operational issues
• Simplified transactions statement
• Customized research reports
• Daily Market updates
• Access to research newsletters/ reports

CHAPTER -3
JOB DESCRIPTION AND FUNTIONAL PROFILE
A job description sets out the purpose of a job, where the job fits into the organization structure,
the main accountabilities and responsibilities of the job and the key tasks to be performed A job
description is usually developed by conducting a job analysis, which includes examining the
tasks and sequences of tasks necessary to perform the job. The analysis considers the areas of
knowledge and skills needed for the job. A job usually includes several roles. The job description
might be broadened to form a person specification or may be known as Terms of Reference
There was a 40 days training in sharekhan limited. In this training there were lot of things to
learn about Sharekhan, organizational structure, history of Sharekhan, products, Sharekhan
research reports, trading techniques, clients, demat account, online trading accounts, learned how
to buy and sell shares through these online terminals, sales technique, Sharekhan’s brokerage.
Trading is done through live terminal known as Trade Tiger. Trade Tiger is software of
Sharekhan which is given to customers for trading. It enables its user
Online trading in equity and derivatives
Dial-n- Trade
Cash transfer
Order and trade confirmation
Live Terminal

In order to gain more of the practical knowledge, it is important to interact with customers for
opening a demat account in sharekhan. In order to sell demat account some market work was
done. Selling requires identifying the prospective client and then trying to convince them.
Placement of order
The next step is to place the order of buying and selling of the shares. The orders are placed by
me after analyzing the share market. The orders may take any form such as at best order, limit
order, cancel order and stop loss order.
WORK ENVIRONMENT
• It was a 40 days experience as a summer trainee. It was a learning experience in
corporate world.
• The managerial staff was highly supportive in allotted work.
• They guide us with the knowledge of hedging tools to manage the risk in share market
and minimize our loss and how we can maximize our profit.
DAY TO DAY ACTIVITIES
• Reach Sharekhan Limited Office at 9 a.m.
• Do online trading on Trade Tiger Software.
• On some days we also used to go outside to find the prospective customers and do the
marketing of Sharekhan.
• In between the trading we used to do the calling to various prospective customers and
persuade them to open the Demat Account in Sharekhan.
• Visit the client place to take the cheque and complete all the formalities which are
required to open the Demat Account.
AREA ASSIGNED
• I covered areas in ---------- region.

REPORTING RELATIONSHIP
• Reporting Time : 9 a.m.
• Reporting to : Mr. Nirmal Kishore
(Manager)
NICE EXPERIENCE
Good place for freshers
Supportive members
Good atmosphere to work at.
Friendly & adaptable
JOB CHALLENGES
• In every field there are job challenges. Likewise, some challenges in this organization
were also there but the good thing was with hard work and sincerity it was easy to face all
this challenge. The challenges which were faced are as follows:
• Knowing about the organization and completing assignments on time, making the best
presentations among all my colleagues as allotted by our mentor was a challenge.
• Understanding the Share market and learning how to do the trading was also one of the
challenges which were faced in Sharekhan. This field is totally new and no one knows
about in detail. Learning things like how to place order? How to sell the order? How to
place the bid? When to place the bid? On what amount I had to sell and buy the currency,
equities?

• Making profit in trading was another challenge and learning how to minimize the loss by
knowing the concept of hedging, stop loss.
• Fulfilling the target to open 3 accounts was really very challenging. As most of the
people had a fear of share market as they think that in share market people always had to
bear loss. Finding the prospective client and persuading them is really very challenging.
• Reaching out to the potential customer in the remote are of region was challenging.
CHAPTER -4
RESEARCH METHODOLOGY
Research methodology is way to systematically solve the research problem. Research, in
common terms refers to a search for knowledge. Research methodology consists of different
steps that are generally adopted by a researcher to study the research problem along with the
logic behind them.
RESEARCHDESIGN:

Research design is the plan, structure and strategy of investigation conceived so as to
obtain answers to research question.



There are two types of research design. One is exploratory research and other is
descriptive research


EXPLORATORY RESEARCH:

We studied the company report, talked to the customers and employee of the
company. We identified that in spite of providing various opportunities customers
may not be aware of derivative and commodity products.

DESCRIPTIVE RESEARCH
Survey method was adopted for this research
DATA SOURCES:
The study is mainly based on the data collection from primary as well as secondary
sources.
Primary data: Data collected for specific purposes in the form of questionnaire.
Secondary data: Data existing in the form of Books, Internet, Catalogues, related reports etc.
SAMPLING DESIGN:
Definition of population: All the customers of share khan.
Sampling procedure: A non-probability sampling technique i.e. convenient sampling procedure
was adopted.
Sampling size: A sample of 150 customers was selected from the target population for the study.
RESEARCHMETHODOLOGY:
Research design

: descriptive in nature.
Data source
: data collected from primary and secondary sources.
Primary data
: primary data is collected from the respondent through
these structured questionnaires.
SAMPLING DESIGN:
Sample size
: 150

Sampling procedure
: Convenience sampling
Statistical tool
: Percentage method, mean.
STATISTICALTOOLS
For the purpose of analysis, Mean and percentage methods are used for the calculation and the
result was interpreted. This test was used to minimize the error of the data collected.
STATISTICALTOOLS USED:
Sample tools are used for analyze purpose; they are follows:
• Cross tab method
Null hypothesis (HO) states: the two attributes are independent of each other.
Alternative hypothesis (HI) states:the two attributes are dependent of each other.

CHAPTER-5
LEARNING EXPERIENCE AND INSIGHT GAIN
• The type of training in internship was On the Job Training. On the Job Training means
learning practical and implementing it in the day to day work of the organization.
• During the SIP in the company learned many things and implemented.
• The training was of 2 weeks in the Share Market. The training includes learning about the
Share Khan practices and services. The PowerPoint presentation was used by sharekhan
for teaching the trainees.
• Learned about various products of sharekhan which it offers to its customers
the products are as follows:
• Online trading account
Sharekhan provide two types of trading account:
• Classic account (For beginners and medium investor)
• Speed trade (For heavy investor)
Are you an investor Are you an active trader?
The classic account enables you to trade speed trade is a next generation online
online through our website and gives you our trading product that brings the power of
research content. your broker’s terminal to your PC.
• Sharekhan classic account
The classic account is a sharekhan online trading account, through which you can buy and sell
shares through our website www.sharekhan.com in an instant.

Along with enabling access for you to trade online, the CLASSIC ACCOUNT also gives you our
Dial-n-Trade service. With this service, all you have to do is dial 1-600-22-7050 to buy and sell
shares using you phone.
• Free trading through phone (Dial-n-trade)
• Two dedicated numbers for placing your orders with your cell phone or
landline.
• Automatic funds transfer with phone banking (for Citibank and HDFC
bank customers)
• Simple and secure interactive voice response-based system for
authentication
• Get the trusted, professional advice of our tele brokers
• After hours order placement facility between 8.00 am and 9:30 am
• Integration of: Online trading + saving bank + Demat Account.
• Instant cash transfer facility against purchase and sale of shares
• IPO investments
• Instant order and trade confirmations by email
• Single screen interface for cash and derivatives
• Sharekhan Speed Trade Account
This account is for active traders who trade frequently during the day’s trading session.
Following are few popular features of speed trade account.
• Single screen interface for cash and derivatives
• Real time streaming quotes with instant order execution & confirmations
• Hot keys similar to a traditional broker terminal
• Alerts and reminders
• Back up facility to place trades on Direct Phone lines

• DIAL-N-TRADE
Along with enabling access for your trade online, the CLASSIC and TRADE-TIGER
ACCOUNT also gives you our Dial-n-trade services. With this service, all you have to do is dial
our dedicated phone lines 1-800-22-7500, 3970-7500.
• PORTFOLIO MANAGEMENT SERVICES
1. ProPrime: - Research & Fundamental Analysis.
2. ProTech: - Technical Analysis.
-Thrifty Nifty
-Beta Portfolio
3. ProArbitrage: - Exploit price analysis
• IPO ON-LINE
You can apply all the forthcoming ipo online hassle-free, paperless and time saving work.
CHARGE STRUCTURE
Fee structure for generalindividual: -
CHARGE CLASSIC ACCOUNT SPEED TRADE
ACCOUNT
Account opening Rs 750/- Rs 1000/-
Brokerage Intraday- 0.10%
Delivery- 0.50%
Intraday- 0.10%
Delivery-0.50%
PRODUCT DETAILS
Online Trading:
CLASSIC ACCOUNT: A/C Opening charges:Rs. 750/-

DEMAT A/C free for first year and Rs.400 from 2nd year onwards (Annual Maintenance charges).
Trading through website Live terminal. No brokerage commitment required. NSE and BSE online. Both
Cash & F&O.
EXPOSURE: 10 TIMES for Intraday (ON MARGINE MONEY)
: 4 TO 6.7 TIMES for 5 days (ON MARGINEMONEY)
Online IPO's available
We have tie up with Nine banks for online fund transferring i.e. HDFC, ICICI, IDBI,CITI, Union
Bank ofIndia, Oriental Bank ofCommerce, INDUSIND,UTI bank, Bank ofIndia, Deutsche Bank
& Yes Bank for online money transfer.
• Meanwhile we were supposed to bring documents to open our Demat Account the
documents are mentioned above. After the training of about the company and the
industry, they provided theoretical knowledge of how to trade in currency(futures),
equity, derivatives (futures and options)
• Learned to calculate the brokerage of different transactions.
• After the theoretical knowledge was over, the demat account was opened for practical
knowledge of the trading online in the Share Market.
• The target was given to open Demat accounts. So, the survey of about 100 people was
done to fill the questionnaire. And after the analysis of the findings there were 20 people
who were interested to open accounts. But they were not ready to open their accounts
now.
• The rest of the tenure of my SIP, did trading in all the possible markets and gained
knowledge of how the market fluctuate and its ups and down.
In short, the following things are:
• Importance of information technology in the field of stock broking is immense.
• The terminal through which the brokers buy and sell shares is software that completely
depends on the internet. For sharekhan this terminal has been designed by the software

company. Buying and selling through internet is fast. As soon as the prices of the shares
goes up or comes down then they can be sold or purchased instantly within seconds.
• In sharekhan limited. I have learned a lot relating to the finance, learned the meaning of
words that are mostly used in the share market.
• Learned about various product of sharekhan limited, learned various aspects regarding
share market.
• Learned how to use online trading terminal
• Learned about various product used in the share market especially demat account.
• Got the practical knowledge of the market
• Learned some marketing techniques also by convincing people to open a demat account.
INSIGHT GAINED
• Information plays a vital role in share market
• It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just to ensure that they do not lose them.
• The no of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer not trading to their customers and prominent
among them as sharekhan.
• Many people are also getting aware about the share market so they are started investing
in share market which include equity, commodity and currency market.

CHAPTER-6
RISK MANAGEMENT IN SHAREKHAN LIMITED
What is risk management?
Risk management is the structured approach towards managing the uncertainties. Risk
management involves risk identification and risk assessment. Further to avoid the unpredictable
outcomes arising out of risk, the risk can be avoided, reduced or transferred. However, best
possible solution has to be chosen to tackle the risk.
The objective of the Risk management function is to ensure that all risks, which threaten the
business of Stock and Share Markets, are recognized, controlled and reduced to an acceptable
level while all applicable regulatory requirements of the various regulatory authorities are
complied with.
To manage risks like value at risk margin, mark to market margin and extreme loss margin is
maintained. Also, the brokers are allowed intraday turnover and gross exposure limits. Brokers
have to maintain minimum base capital and additional base capital with the exchange. Exchanges
like SEBI and NSE Clearing Limited have taken steps like know your client, continuous
surveillance, mandatory audit etc. Thus, every risk broking firm has risk management
department.
Risk vs. Return
The risk and return go hand in hand. They have a direct relationship. Higher the risk, higher is
the possibility of better returns and lower the risk, lower is the possibility of better returns.
Investors’ personality, lifestyle, and their financial position play a big role on how much risk
they can comfortably bear. The risk/return tradeoff is the balance, an investor must decide on
between the desires for the lowest possible risk for the highest possible returns. It is important to
keep in mind that low levels of uncertainty (low risks) are associated with low potential return
and high levels of uncertainty (high risks) are associated with high potential returns.

The diagram given below explains the relationship between risks and return. As the risk
increases the probability of getting higher returns also increases and vice versa.
Low risk = Low return
Higher risk = High return
Return Risk
Ways todeal with Risk
Ways to deal with Risk Avoid Retain Reduce Transfer
(a) Avoid the Risk
Avoidance of risk includes not performing an activity that could carry risk. Avoidance may seem
the answer to all risks, but avoiding risks also means losing out on the potential gain that
accepting the risk may have allowed. Not entering a business to avoid the risk of loss also
avoids the possibility of earning profit.
(b) Retain the Risk
Retention of risk involves accepting the loss when it occurs. Risk retention is a viable strategy
for small risks where the cost of insuring against the risk would be greater over time than the
total losses sustained. All risks that are not avoided or transferred are retained by default. This
includes risks that are so large that they either cannot be insured against or the premiums would
be infeasible.
(c) Reduce the Risk
Reduction in risk involves methods that reduce the severity of the loss or the likelihood of the
loss from occurring. Outsourcing could be an example of risk reduction. For example, a
company may outsource its manufacturing of hard goods to another company, while handling
the business management itself. This way, the company can concentrate more on business
development without worrying much about the manufacturing process.
(d) Transfer the Risk

Risk transference causes another party to accept the risk, typically by contract or hedging.
Insurance is one type of risk transfer which uses contracts. Liability among construction or other
contractors is very often transferred this way. Such transference of risk may include certain cost
like insurance premium.
Process of Risk Management
Identify the areas ofrisk
Search for and locate the areas where there can be risk before they become the actual problems
for the organization.
Analyze the risk
Transform the risks data into decision-making information. Evaluate impact, probability and
time frame of it and classify the risks, and prioritize them.
Plan
On the basis of the data evaluated, plan for the management of risk Planning is done according to
whether the risk is to be avoided, retained, reduced or transferred.
Control
Find out any deviations or variance and correct for the same during the execution of risk
mitigation plan.
Communicate
Communicate the internal and external information and feedback to the project on the risk
activities, current risks, and emerging risks.
MEASURES TAKEN BY BSE FOR RISK MANAGEMENT
Certain steps or measures are taken by BSE towards the reduction of risks of stock brokers.
• Know your client (KYC)

According to know your client scheme the member brokers of the exchange are
required to obtain detailed information of clients prior to commencement of any transactions
with new clients. A similar procedure is also to be followed for existing clients. This information
is to be made available to the exchange authorities whenever called for. In case the member
broker fails to furnish the same, it may result in penalties to the member brokers.
• Surveillance / Inspection
Surveillance / Inspection department carries out inspection of themember brokers records and
keep a regular check on the activities of member brokers as well as sub brokers as regards the
compliance of the risk management procedures.
• Insurance
The exchange presently has in place insurance policies to protect
itself in the event of losses on account of fire, damage to computer systems and a comprehensive
policy that covers risks faced by the exchange, its member brokers and the clearing houses.
The risks covered under the basic cover of the policy are detailed as below.
• Verification of shares members’ office
The exchange has outlined the process i.e. in case the transaction in a script with one particular
client in a settlement exceeds Rs. 10 lacs then the member has to send the photocopies of the
transfer deeds and the share certificates to the company / registrar for verification of the material
particulars. The basic idea behind the introduction of this procedure is to prevent the fake /
forged / stolen shares from being introduced in the market
MEASURES TO REDUCE THE RISK
Stock broking firm is highly exposed to the financial risks. Since it poses maximum risk in the
financial markets, risk management in stock broking firms was felt most essential by the
exchanges and its regulatory bodies. National Stock Exchange introduced for the first time in
India, risk containment measures that were common internationally but were absent from the
Indian Securities Market. NSCCL has also put in place a comprehensive risk management
system, which is constantly upgraded to pre-empt market failures. These measures were taken to

reduce the risks at brokers’ end. SEBI has also suggested certain measures to manage the risks
borne by the brokers.
• Margins
There is a lot of uncertainty in the movement of share prices. This uncertainty leading to risk is
sought to be addressed by margining systems by stock markets. Suppose an investor, purchases
1000 shares of ‘ABC’ company atRs.100 on July 1, 2018. Investor has to give the purchase
amount of Rs.1, 00,000 (1000 x 100) to his broker on or before July 2, 2018. Broker, in turn,
has to give this money to stock exchange on July 3, 2018. There is always a small chance that the
investor may not be able to bring the required money by required date. As an advance for buying
the shares, investor is required to pay a certain portion (margin) of the total amount of
Rs.1,00,000 to the broker at the time of placing the buy order. Stock exchange in turn collects
similar amount from the broker upon execution of the order. This initial token payment is called
margin. For every buyer there is a seller and if the buyer does not bring the money, seller may
not get the money. Margin is levied on the seller also to ensure that the gives the shares sold to
the broker who in turn gives it to the stock exchange.
• Mark to Market Margin (MTM Margin)
Mark to Market margin is calculated at the end of the day on all open positions by comparing
transaction price with the closing price of the share for the day. In the above example a buyer
purchased 1000 shares @ Rs.100 at 11 am on July1, 2018. If close price of the shares on that day
happens to be Rs.75, then the buyer faces a notional loss of Rs.25, 000 on his buy position. In
technical terms this loss is called as MTM loss and is payable by July 2, 2018 (that is next day of
the trade). Incase price of the share falls further by the end of July 2, 2018 to Rs. 70, then
buy position would show a further loss of Rs.5, 000. This MTM loss is payable. In case, on a
given day, buy and sell quantity in a share are equal, that is net quantity position is zero, but
there could still be a notional loss / gain (due to difference between the buy and sell values), such
notional loss also is considered for calculating the MTM payable.
MTM Profit/Loss = [(Total Buy Qty X Close price) - Total Buy Value] - [Total Sale Value -
(Total Sale Qty X Close price)]

TECHNIQUES TO REDUCE RISK FOR INVESTOR
• Hedging
Hedging means reducing or controlling risk. It is a transfer of risk without buying insurance
policies. It consists of the purchase or sale of equal quantities of the same or very similar
commodities in two different markets at approximately the same time, with the expectation that a
future change in price in one market will be offset by an opposite change in the other market.
This technique is basically used in Derivatives Markets (Future and Options) For example if you
own a stock that you are worried will decline in price, you can "hedge" your position by either
buying put options on the stock or by selling call options on the stock. So, if the price of stock
will decrease, the value of the put options will increase, thereby offsetting part of the loss
incurred in the stock. Similarly, a call option will decline in value as the price of the stock falls.
So, if you sold call options, with the hope that they expire worthless, the money you received for
selling the options (called the option premium) would partially offset the losses from your long
position in the stock. Generally, this strategy is not recommended as to reduce their investment
risk because an individual may sometimes end up losing on both sides. Rather, if you own a
stock and it's time to sell, then sell it at the market. This is the best way to limit your investment
risk.
• Averaging
Averaging is another way to reduce the risk of an investor. Averaging is the process of buying
additional shares in a company at lower prices than you originally purchased. For example, if
you own 10 lots in JPY Currency (Yen) at price 61.75 and the price of JPY is decreasing then
you can again buy 10 lots of JPY at price 61.05 in order do its averaging.
A basic calculation for average inventory would be:
(Current Inventory + Previous Inventory) / 2
The market price which you will get is
61.75*10+61.05*10/20 = 61.4
Now 61.4 will be your new market price instead of 61.75 which is the previous price.

• Stop loss
Stop-loss is a widely used term in investment circles. As the name says, it is a price level at
which one should stop or limit his losses in a position. Investing or trading is like gambling when
one looks at from the outcome perspective. When a person gambles or speculates, he does not
know what the outcome will be. He would hope the outcome to be in his favor but it could very
well go against him. The same thing goes for investing or trading. When someone buys a stock,
he might be thinking, and to a great extent hoping, that the stock price would go up, but it could
very well go down. So, what should a person do if the prices go contrary to one's expectations?
There are two alternatives: (i) He can continue to hold it believing, and hoping, that it will
ultimately go up; or (ii) He can blame the unexpected mess on his wrong selection, bad
judgment, bad timing or on circumstances/development beyond his control or imagination,
and… get out of the position and to get exit from that position an investor use the technique
known as stop loss.
Stop losses are the same as a stop limit order, in terms of online trading, stop losses are a price
you set at which your shares will sell automatically. Stop losses greatly reduce the risk involved
in trading shares. Whenever you buy (go long) or sell (short) a share, brokerage accounts allow
you attach stop losses for free to a share.
For example, if you own 20 lots of dollar in currency market at dollar 56.75 but it goes down
then an investor can use the strategy known as stop loss in order to minimize his loss. He can set
a price say at dollar 52.5 where his shares will sell automatically and his loss will get minimize.

Chapter - 7
DATA ANALYSIS AND INTERPERTATION
1. To understand the risk profile of investors
Q9. What do you expect when you invest?
CHART-1
Interpretation: - This chart-1 shows, out of 150 respondents 72 people are ready to bear
nominal risk and 60 people don’t want to take any risk. This shows that around 40 % respondents
are conservative in terms of taking risk and only 12% respondents are ready to bear risk and out
of these 12 % only 2 % are ready for high risk situation.
Q10 . How long do you normally hold investment?
CHART -2

Interpretation: - As per Chart-2, most of the respondents invest for a longer time period i.e.
around 42.66% and rest of the respondents have very less variability regarding holding of
investment as all other respondents are equally interested in daily, weekly or monthly holding
of investment i.e. around 28% go for each kind of investment holding.
Q11. If your investments were to fall in value by 15 per cent over a one-year period, you
will
Chart -3
Interpretation: - Chart-3 is giving the overview regarding respondent’s reaction related to their
investment, if market falls in value. We can see here the respondents /investors are neither
very conservative nor aggressive in market condition i.e. only 8% investors are willing to
withdraw all money or invest more money in such situation. Most of the respondents are aware
& ready for such condition. They want to be in the market in expectation of money of market.
Q12. You are ready for limited losses in expectation of higher long-term returns?

Chart-4
Interpretation:- Chart-4 is about that whether investors are ready to bear limited loss in
expectation of high returns we find that only around 24.4% investors are not agree for this but
around 43.3% are considering the idea i.e. most of the respondents are aware about the ups &
downs of stock market & ready for risks involved in it in expectation of getting higher returns.
Q.13. I am willing to experience the ups and downs of the market for the potential of
greater returns.
Chart-5

Interpretation: - Chart-5 is about that whether investors are ready to experience ups and
downs of market we find that only around 9.03% investors are not agreeing for this but around
90.97% are considering the idea i.e. most of the respondents are aware about the ups & downs
of stock market & want to experience that.
Q14. My main concern is security; keeping money safe is more important than earning
high returns.
CHART – 6
Interpretation: - This chart -6 shows the investors are aware about the highs and lows of
security market and want to experience that also they are quite positive towards market as
they expect after a low market will recover & give them higher return still the safety is major
concern of investors. Out of total 150 respondents only less than 5.33% disagree with the fact.
Q15. I am fairly experienced in investment.

Chart-7
INTERPRETATION: - As we can see in the chart-7, most of the respondents i.e. around
71.33% are not sure about their investment capabilities. They are not very sure that their
expectation of decision is fair enough. Here I want to mention that the market is so volatile
in India that very less investors find themselves fairly enough experienced & don’t bear
losses.
Q16. I am very secure related to my future income (such as from salary, pension or other
investments)?
Chart-8
Interpretation: - Chart-8 shows that most of people involve in security market are quite
secured related to their future income. We can also understand the statement that the people
who have fair enough income resources, comes in security investment as they consider all the
pros. & cons. Of the market they know that the market is good place to get better returns but it
also contains risk so losses bearable only in the case of secured future returns.

Q17. Which of the risk management measure you heard of?
Chart-9
Interpretation: - Chart-9 shows that Stop loss is popular risk management measures about
which investors are aware of 52% investors have heard of stop loss while averaging and
hedging are less popular among investors when compared to stop loss.
Q18 Whether Share khan is experienced with risk management
Chart-10

Interpretation: - Chart-10 shows that 69.33 % of investors believe that sharekhan is an
experienced broker firm while around 20 % of investor still not consider sharekhan as an
experienced brokerage firm. And 11.33% are neutral on this subject.
CHAPTER-8
RECOMMENDATION AND CONCLUSION
CONCLUSIONS
Working with Sharekhan Ltd. to online trading and to study the risk management was a great
experience. The activities of online trading and risk management are the heart of barking
industry and they should be taken care of.
As you know prices of shares in Indian stock market change very swiftly, they are very volatile
and unpredictable too. Therefore, broking firm is a very risky business and chance of financial
losses lies in almost each and every activity of the business. However, with the margin system
and use of advanced technology the transparency of market is growing.
Therefore, to conclude it can be noted that though the business of stock broking is always
exposed to the risk of loss of money but such risk can be managed and reduced through technical
analysis and having a good knowledge of stock market and by strictly adhering to the rules and

regulations mentioned by exchanges, SEBI and NSECL. This will not only reduce the risk but
also organization run smoothly and grow further.
Through this project I came to a conclusion that Sharekhan is one of the best broking houses
among all the other firms existing in India have changed dramatically over 3 to 4 years. New and
advanced technologies have barriers and have brought the countrywide market to doorsteps.
The introduction of on-line trading would influence the investors resulting in an increase in the
business of the exchange. It has helped the brokers handling a vast amount of transactions and
this can be an efficient trading delivering, settlement system with adequate protection to
investors.
Due to investors of online trading there has been greater benefit to the investors as they could
sell/buy shares as and when required and that to with online trading.
The brokers have a greater scope than compared to the earlier times because of invention of
online trading.
The concept of business has change today, this is a service-oriented industry hence the survival
would require them to provide the possible service to the clients.
FINDINGS

Most of the respondents are ready to take either no risk or nominal risk while doing the
investment.


Most of the respondents are generally go for longer time horizon.


There is a situation of investment fall by 15% then most of the respondents are neither
conservative nor aggressive.



Most of the respondents are agree to take limited losses in expectation of higher returns.


Most of the respondents are given their opinion in the favor of experiencing the ups and
downs of the market.


Most of the respondents are agreeing with this their main concern is safety.


Most of the respondents are said that they are not sure about fairly experienced in
investment.


Most of the respondents are in favors of they are very much concern with security related
to future income.


This study shows most of the respondents either go for conservative risk profile or
balanced risk profile.


This study helps in describing the risk profile of investors.


This study describes the strong relationship between demographic data in respect of
different parameters.

• Most of the respondent are aware of various measures that share khan takes for the
management of risk.
• This study also describes that investors looking forward to invest would prefer
share khan over competitor because of its experience in the stock market.

RECOMMENDATIONS
• The exchange should take steps to educate investors about their rights and duties.
• The exchange authorities should increase the investor’s confidence.
• The exchange authorities should be vigilant to curb wide fluctuations of price.
• Necessary steps should be taken by the exchange to deal with the situations arising due to
break down in online trading.
• Every stock broking firm must have a risk management department to keep a strict watch
on market.
• Employees with proper qualifications must be appointed as brokers or sub brokers so that
such qualified staff help in reducing mistakes and errors as they have a proper
understanding of the procedure.
• The clients should be asked to call dealers on the phones only on which the
conversation can be recorded. Thus, clients’ calls on personal phones should be avoided.
It helps to reduce the miscommunication and conflicts between client and broker.
• All the documents along with applications for client and sub broker must be verified
thoroughly and all the requirements (e.g. Letter from bank, copy of passbook, signature,
letter of landlord in case of tenant etc.) must be fulfilled.

• The senior officers of brokers must visit periodically to keep a check and understand their
problems.
• Stop loss is popular risk management measure among investors.
Some suggestions to Sharekhan Ltd.
• It needs to open more branches to be a topper in market because it has a low distribution
network.
• Link as many accounts as client wants to for online banking.
• Need to tie up with major banks like SBI, Allahabad, and bank of Baroda etc.
• The company should focus on customer satisfaction only not on just taking money from
their pockets.
• Some promotional activities are required for the awareness of the customer.
• Seminars should be held for providing information to prospective and present customers.

BIBLIOGRAPHY
Websites:
www.sharekhan.com
www.economictimes.com
www.bseindia.com
www.nseindia.com
www.investopedia.com
www.sebi.gov.in
www.wikipedia.com
Newspapers:
The Times of India
The economic times
Business Standard

The Hindu
APPENDIX
QUETIONAIRE
Investment Pattern on the basis of Risk profile of Investors
I am a final year student currently pursuing my UNDER GRADUATION at Government Degree
College . I am conducting a research study on “An analysis on investor behavior on various
investment avenues”. This research (project) is taken as
a partial requirement for the completion of my UG. I seek your kind assistance in completing the
attached questionnaire which would take few minutes from your valuable time. Your responses
will be treated as Strictly Confidential.
PersonalInformation

1. Gender
a) Male b) Female
2. Occupation
i) Business ii) Service iii) Students iv) House wife
3. Age
i) 20-30 ii) 30-40 iii) 40-50
iv) Above
50
4. Education
i) Under Graduate ii) Graduate iii) Post Graduate iv) Ph. D.
5. Income
a) < 3 Lakh b) 3-5 Lakh c) 5-10 lakh d) 10-20 Lakh e) > 20 Lakh
6. No. of dependents in Family
a) No dependent b) 1-2 c) 3-4 d) 5-7 e) >7
7. Family Income
a) <5 Lakh b) 5-15 lakh c) 15-25 Lakh d) > 25 Lakh
• How much percentage of total income he/she invests?
a) Below 20% b) 20 % - 40 % c) 40 % - 60% d) > 60 %
The risk management questionnaire
• Which of the risk management measure you heard of?
• Stop loss
• Averaging
• Hedging
• Sharekhan is experienced with risk management
• Strongly Agree
• Agree
• Neutral
• Disagree

• Strongly Disagree
The risk-profile questionnaire
• What do you expect when you invest?
• no risk
• nominal risk
• moderate risk
• higher risk
• How long do you normally hold investments?
• For a day
• For a week
• For a month
• For a year
• If your investments were to fall in value by 15 per cent over a one -year period, you will
• withdraw all money from share market
• Take out some money and move it to a safer investment.
• Wait until market recovers the loss and then consider other investments.
• Stick to the investment.
• Invest more money in the same investment as it is 15 per cent cheaper
• You are ready for limited losses in expectation of higher long-term returns?
• Strongly disagree
• Disagree
• Neither agree nor disagree
• Agree
• strongly agree
• I am willing to experience the ups and downs of the market for the potential of
greater returns.
• Strongly disagree
• Disagree
• Neither agree nor disagree
• Agree
• Strongly agree

• My main concern is security; keeping money safe is more important than earning
high returns.
• Strongly disagree.
• Disagree.
• Neither agree nor disagree.
• Agree.
• Strongly agree.
• I am fairly experienced in investment.
• Disagree.
• Agree.
• Strongly agree.
• I am very secure related to my future HYPERLINK
"http://www.dummies.com/how-to/content/what-type-of-investor-are-you.html"
income (such as from salary, pension or other investments)?
• Disagree.
• Agree.
• Strongly agree.

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