This document appears to be a student's summer training project report submitted for a Master's in Business Administration degree. It includes typical project report sections like the student declaration, guide's certificate, acknowledgements, executive summary, table of contents, and chapters on the introduction, literature review, research methodology, analysis and interpretation of findings, findings, recommendations and conclusion. The project report focuses on analyzing customers' perceptions of online trading procedures in India.

1. A SUMMER TRAINING PROJECT REPORT
ON
“Customer’s Perception towards ONLINE
TRADING PROCEDURES”
SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD OF
DEGREE OF MASTER IN BUSINESS ADMINISTRATION 2011-13
UNDER THE GUIDANCE OF:
Ms. Gazal Gandhi
Assistant Professor, RDIAS
SUBMITTED BY:
Dhananjay V. Okhade
Enrollment No. 026-1590-3911
MBA, Semester 3rd
Batch 2011 - 2013
RUKMINI DEVI INSTITUTE OF ADVANCED STUDIES
An ISO 9001:2008 Certified Institute
(Approved by AICTE, HRD Ministry, Govt. of India)
Affiliated to Guru Gobind Singh Indraprastha University, Delhi
2A & 2B, Madhuban Chowk, Outer Ring Road, Phase-1, Delhi-110085
Table of Contents

2. Student declaration……………………………………………………………………………i
Certificate from Guide……………………………………………………………………… ii
Acknowledgement…………………………………………………………………………….iii
Executive Summary…………………………………………………………………………….iv
CHAPTER- 1: INTRODUCTION
CHAPTER – 2: LITERATURE REVIEW
2.1 Literature Review ………………………
CHAPTER – 3: RESEARCH METHODOLOGY
3.1 Purpose of the study…………………………………………………..………...…
3.2 Research Objectives of the study…………………………………………………..
3.3 Research Methodology of the study………………………………………….
3. 3.1 Research Design……………………………… …………………………......
3.3.2 Data Collection Techniques …………………………………
3.3.3 Sample design………………………………………………………………...
3.3.3.1 Population……………………………………………………………..
3.3.3.2 Sample size……………………………………………………………

3. 3.3.3.3 Sampling method……………………………………………………...
3.3.4 Method of data collection……………………………………………………..
3.3.4.1 Instrument for data collection …………
3.3.4.2 Drafting of a questionnaire…………………
3.3.5 Limitations………………………………
CHAPTER – 4: ANALYSIS& INTERPRETATION
CHAPTER- 5: FINDINGS
CHAPTER- 6: RECOMMENDATIONS AND CONCLUSION
BIBLIOGRAPHY
ANNEXURES

4. STUDENT DECLARATION
This is to certify that I have completed the Project titled “ Customer’s Perception
TOWARDS ONLINE TRADING PROCEDURES” under the guidance of Ms. Gazal
Gandhi in the partial fulfillment of the requirement for the award of the degree
of “Master in Business Administration” from “Rukmini Devi Institute of
Advanced Studies, New Delhi.” This is an original work and has not been
submitted anywhere else.
Name of the student: DHANANJAY V. OKHADE (Sign)
Course: MBA
Batch: 2011-13

5. CERTIFICATE (From Guide)
This is to certify that the project titled “Customer’s Perception towards ONLINE TRADING
PROCEDURES” is an academic work done by “Dhananjay V. Okhade” submitted in the
partial fulfillment of the requirement for the award of the degree of “Masters in Business
Administration” from “Rukmini Devi Institute of Advanced Studies, New Delhi.” under my
guidance and direction. To the best of my knowledge and belief the data and information
presented by him in the project has not been submitted earlier elsewhere.
Name- Gazal Gandhi
Assistance Professor
RDIAS

6. ACKNOWLEDGEMENT
I offer my sincere thanks and humble regards to Rukmini Devi Institute Of Advanced Studies,
GGSIP University, New Delhi for imparting us very valuable professional training in MBA.
I pay my gratitude and sincere regards to Ms. Gazal Gandhi, my project Guide for giving me
the cream of his knowledge. I am thankful to her as she has been a constant source of advice,
motivation and inspiration. I am also thankful to her for giving her suggestions and
encouragement throughout the project work.
I take the opportunity to express my gratitude and thanks to our computer Lab staff and library
staff for providing me opportunity to utilize their resources for the completion of the project.
I am also thankful to my family and friends for constantly motivating me to complete the
project and providing me an environment which enhanced my knowledge.

7. EXECUTIVE SUMMARY
Conceptually the mechanism of stock market is very simple. People who are exposed to the
same risk come together and agree that if anyone of the person suffers a loss the other will
share the loss and make good to the person who lost.
We also here observe the Customer’s Perception towards Online Trading and its related
procedures.
The Initial part of the project focuses on the sales of types of the products of the company, and
also focuses on the acquisition of the customer. The job profile is to create customer, making
good relationship with them to have references and motivating to trade for the company benefit
and their profit.
It also enlightens the strategies to acquire the customer base. Further the project tells us about
the profile of the company (SHAREKHAN). It provides knowledge about the company’s
history, mission, vision and customer base and about the company in detail and management of
the company. Also it gives special emphasis on the selling of products and management of the
company.
This is devoted to study the comparative analysis of the competitors and the SWOT analysis,
which tells about the Sharekhan edge over its competitors. This project leads us towards the
job descriptions and difficulties faced by me. The project throws light upon my finding
and analysis about the company and the suggestions for the company for better performance.
This project will help the people in getting lot of their answers related to investment options
and the ways to analysis the market. The data in the project can also help the company in
making the strategy for potential investor’s.

8. INTRODUCTION:-
ABOUT SSKI (Sharekhan) GROUP:-
SSKI group also comprises Institutional broking and Corporate Finance. While
the Institutional broking division caters to the largest domestic and foreign institutional
investors, the corporate finance division focuses on niche areas such as infrastructure, telecom
and media. SSKI holds a sizeable portion of the market in each of these segments.
As the forerunner of investment research in the Indian market, we provide the best
research coverage amongst broking houses in India. Our research team is rated as one of the
best in the country. Voted four times as the Top Domestic Brokerage House by Asia money
Survey, SSKI is consistently ranked amongst the top domestic brokerage houses in India.
To cut a long story short, Sharekhan is an equities focused organization tracing its
lineage to SSKI (S.S.KANTILAL&ISHWARLAL INVESTMENTS &SECURITIES
PVT.LTD.), a veteran equities solutions company with over 8 decades of experience in the
Indian stock markets.
If you experience our language, presentation style, content or for that matter the online trading
facility, you'll find a common thread; one that helps you make informed decisions and
simplifies investing in stocks. The common thread of empowerment is what Sharekhan's all
about!
Share khan is also about focus. Sharekhan does not claim expertise in too many
things. Sharekhan's expertise lies in stocks and that's what he talks about with authority. So
when he says that investing in stocks should not be confused with trading in stocks or a
portfolio-based strategy is better than betting on a single horse, it is something that is spoken
with years of focused learning and experience in the stock markets. And these beliefs are
reflected in everything Sharekhan does for you!

9. To sum up, Sharekhan brings to you a user- friendly online trading facility, coupled
with a wealth of content that will help you stalk the right shares.
Those of you who feel comfortable dealing with a human being and would rather visit
a brick-and-mortar outlet than talk to a PC, you'd be glad to know that Sharekhan offers you
the facility to visit (or talk to) any of our share shops across the country. In fact Sharekhan runs
India's largest chain of share shops with around 180 outlets in 90 cities!
Some of the outlets are
BRANCH MANAGER
MUMBAI(LOWER PAREL) Mr. SANDEEP JAIN
BANGALORE-JAYANAGAR Mr. CHANNARAJ K.J.
BANGALORE-GANDHI NAGAR Mr. BASAPPA D.M.
CALICUT Mr. GOPAKUMAR
CHENNAI-CHETPET Mr. RAJIV PUROHIT
CHENNAI Mr. V.KRISHNAMURTHY
COIMBATORE Mr. V.MOHANKRISHNAN
ERODE Mr. T.V.N.GIRISHKUMAR
GOA-MAPUSA Mr. KAMATH TRIVIKRAM
GOA-PANAJI Mr. PRAVEEN SHAMAIN
HYDERABAD Mr. D.HEM KUMAR
JODHPUR Mr. VINOD BHANDARI
KOLKATA Mr. SANJAY VORA
KOCHI Mr. DINSENA KALLIDIL
NAVSARI Mr. NUTAN PATEL
NEW DELHI Mr. HEMENDRA AGARWAL
PALAKKAD Mr. V.RAGUNATHAN
PUNE Ms. SUJATHA RAMAN
RAJKOT Mr. NARENDRA TANNA
SALEM Mr. R M PANDIYAN
SURAT Mr. DARSHAN VANIAWALA
THRISSUR Mr. RAMAKRISHNAN T.B.
VADODARA Mrs. ANAHITA VORA
MUMBAI-ANDHERI Mr. SAMEER ASHER
MUMBAI-FORT Mr. BHUSHAN SHAH
MUMBAI-GHATKOPAR Mr. MUSTAFA PARDIWALA
MUMBAI-OPERA HOUSE Mr. JAYESH SHAH

10. GOVERNING BOARD
SHAREHOLDERS
SSKI - 55.5% HSBC – 18.5%
(Morakhia family) INTEL – 10.5%
CARLYES – 15.5%

11. BOARD OF DIRECTORS
DESIGNATION NAME
CEO MR. TARUN SHAH
CFO MR. SHANKAR VALIVA
CTO MR. KETAN PARIAH
EXECUTIVE DIRECTOR
MR. JAIDEEP ARORA
CUSTOMERSERVICE MR. GEETA RAMESH
REPRESENTATIVE (CSR)
SALES AND MARKETING MR. AJAI BATHIJA
YOUR FRIENDLY NEIGHBOURHOOD STOCK BROKER:-
Sharekhan, India’s leading stockbroker is the retail arm of SSKI, an organization
with over eighty eight years of stock market experience with more than 180 share shops in over
90 cities, and a presence on internet through www.sharekhan.com , India’s premier online
trading destination, it reach out to customers like no one else.

12. Share khan offers your trade execution facilities on the BSE and the NSE, for cash as
well as derivatives, depository services and most importantly, investment advice tempered by
88 years of research and broking experience. To ensure that your trading experience with share
khan is fast, secure and hassle free, we offer a suite of products and services, providing you
with multi-channel access to the stock markets.
BROKING…PERSONALIZED:-
If you prefer the assurance and reliability of trading through a broker, you can use our network
of 30 branches and 157 business partner outlets in over 80 cities to trade in equities as
well as derivatives. We will help you with the investment process, give you advice based on
extensive research and provide you with relevant and updated information to help you make
informed investment decisions.
TRADE ANYWHERE:-
Freedom@www.sharekhan.com
However, if you prefer the convenience of trading from wherever you are, you can get yourself
a Classic trading account and enjoy the freedom that comes with it. You can now place orders
even after the trading hours, and the orders are queued up to be executed as soon as the market
opens. Sharekhan.com, the winner of several prestigious awards, has been the most preferred
destination for online trading ever since its launch.
PRODUCTS AND SERVICES OFFERED BY SHAREKHAN:-

13. APPLET BASED TRADING SYSTEM:-
• Equity and Derivatives trading from a single screen.
• Customized Market watch with streaming Cash and F&O rates live on the screen.
Instant Order placement and trading confirmations on same screen.
• Dynamic order and trade book.
• Tools to test your ISP connectivity to share khan servers.
Dial’n’Trade:-
You can now use our ‘Dial’n’Trade’ back up option. Sharekhan team will help you
place a trade after a security check right over the phone! Your account statement will get
updated with this information automatically. This service is available both in Hindi and
English. You can even use this service to place After-Market Hour Orders.
FEATURES OF Dial’n’Trade:-
• Dedicated Toll-Free number for order placements.
• Automatic fund transfer with phone banking.
• Simple and secure IVR based system for authentication.
• No waiting time. Enter your TPIN to be transferred to our telebrokers.
• Trusted, professional advice from our telebrokers.
• After-hours order placement facility between 8 am & 9:30 am.
• Reliable services wherever you are.
SPEEDTRADE:-
SpeedTrade is a next-generation online trading product that brings the power of your
broker’s terminal to your PC. It provides on a single screen streaming quotes, online tic-by-tic

14. charts, instant order placement and trade confirmations for equity / cash market. It is ideal for
active traders and jobbers who transact frequently during trading session to capitalize on intra-
day price movements.
Unlike browser based trading applications that require moving from page to page to execute a
single transaction, SPEEDTRADE is a net-based executable application that provides
everything a trader needs on one screen, thereby, reducing the maximum time required to
execute a trade by a huge margin.
What you get with SpeedTrade?
• Instant order Execution and Confirmation.
• Single screen trading terminal (cash and Derivatives).
• Real-time streaming quotes, tic-by-tic charts.
• Market summary (most traded scrip, highest value).
• Hot keys similar to a broker’s terminal.
• Alerts and reminders.
• Back-up facility to place trades on Direct Phone lines.
• Trading in Derivatives.
SpeedTradePlus:-
It extends the power of online trading from cash markets to Futures and Options. On a single
screen, you can trade cash as well as future and option contracts. Other features include Intra-
Day Charting (Bar and Japanese Candlestick Charts), easy order placement and instant trade
confirmations in seconds, price alerts, research calls, and derivative tool-kit to help you trade
like the experts.

15. POWER-PACKED FEATURES OF
SPEEDTRADE & SPEED TRADE PLUS:-
• Real Time Streaming quotes, tic-by-tic chart.
• Market summary (most traded highest value etc.)
• Ability to customize the terminal screen.
• Hot keys similar to BOLT and NEAT.
• Instant Order execution and confirmation.
• Reports for personal account details.
• Pre-defined detailed sector-wise scrip list.
• Alerts and reminders.
IPO Online:-
At the click of your mouse you can select the public issue of your choice (fixed
price or book building) and subscribe to it online! All you need to do is to select the
number of shares / money that you wish to invest; share khan will take care of your
application process, making payments etc.
SHAREKHAN RESEARCH:-
Receive high performance trading recommendations from share khan. Yes, Sharekhan
boast of strike rates as high as 65-70% in booking recommendations in the money. Our first
rule is not to lose money and the second to make some. If you did not believe making
money was a scientific process and there was a method in the madness share khan have
broken the myth and with consistency there are daily reports like Share khan Eagle Eye,
Derivative Info Kit and Share khan Investor’s Eye are being sent to the customers.

16. TRADING IN COMMODITY- FUTURES:-
Share khan provides you the facility to trade in commodities (bullion: gold / silver and
agricultural commodities) through Share khan Commodities Pvt. Ltd – a wholly owned
subsidiary of its parent SSKI. Share khan is the member of two major commodity
exchanges and offers trading facilities on both these exchanges:-
• Multi Commodity Exchange of India Ltd (, Mumbai.
• National Commodity and Derivative Exchange (NCDEX), Mumbai.
INVESTMENT IDEAS:-
For investment, the application of the bottom-up approach of
investing with a dear focus on stock picking has resulted in investment ideas that have
withstood the storm to deliver returns to patient investors. Effective money management
with appropriate risk rewards, the relentless use of stop losses, and our clear-cut focus on
the importance of timing the market accurately has contributed to this success. Sharekhan
investment philosophy is “given the clients risk profile, maximize performance by adhering
to a disciplined investment approach backed by quality research”.
Key elements of our investment philosophy and approach are:
• Bottom-up stock selection.
• In-depth, independent fundamental research.
• Selecting high-quality companies with sustainable competitive advantages.
• Disciplined valuation approach applying multiple valuation measures.
• Long-term vision, resulting in low portfolio turnover.

17. PORTFOLIO MANAGEMENT:

18. SSKI follow a multi disciplined approach incorporating quantitative analysis (use of
models and statistical analysis), fundamental analysis (industry and company analysis,
market and economic trends) and technical analysis (buying and selling patterns of
stocks). The common attributes that can be found across all our equity portfolios are:
 High-quality securities
 Holdings widely diversified among industry sectors
 Stocks with adequate market capitalizations and free float
 Stock concentration as per client risk profile but generally to be kept at
manageable levels.
SSKI investment process involves three distinct steps:
1. Screening
2. Research
3. Model portfolio construction.
RESEARCH TEAM:-
All this is made possible by a team of dedicated analysts who have years of working
experience in the industries that they track, and a proven track record in using their
knowledge of the investment science to deliver results.
DEPOSITORY SERVICES:-
Share khan offers you the convenience of a broker-DP. It will help you
meet your pay-in obligations on time thereby reducing the possibility of auctions. We
understand your need for flexibility therefore; we accept late instructions without any extra

19. charge. We execute the instruction immediately on receiving it. You can view your updated
account statement on Internet.
Share khan Depository Services offers Demat services to individual
and corporate investors. We have a team of professionals and the latest technological
expertise dedicated exclusively to our Demat department. You can avail of Demat Remat;
Repurchase, pledge, Transmission facilities at our branch and business partner’s outlets.
STATE OF AFFAIRS:-
 3 – 5 years back…
• Retail stock-broking was a highly fragmented industry; there were over 2000
brokers and 10000 sub-brokers in India.
• Basic services were enough to satisfy customers.
• Online trading was perceived as new fad.
 Present Scenario:-
• Consolidation phase – Big brokers taking over the business of small to
medium sized brokers.
• Online trading is fast gaining high level of acceptance from customers
all over the country.
• Clients are demanding investment advice backed by a solid and
comprehensive research.
 Future Outlook:-
• 25 big broking houses, 3 crore investors.
• Investment in high-end technology infrastructure and people will be a key factor
in delivering world class service.
• Brand association will be very important for sustaining and expanding business.
• Multi-channel access to the stock market (Offices + Internet + IVR-based Phone
+ mobile Devices) will be a necessity.

20. About the Industry:
INTRODUCTION TO STOCK MARKET
STOCK MARKET
A stock market is a public market 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 stock market is one of the most important sources for companies to raise money.
This allows businesses to be publicly traded, or raise additional capital for expansion by selling
shares of ownership of the company in a public market.
The size of the world stock market was estimated at about $36.6 trillion US at the beginning of
October 2008. The total world derivatives market has been estimated at about $791 trillion face
or nominal value, 11 times the size of the entire world economy.
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies. In the stock market, purchases and sales of shares are affected in conditions of free
competition. Government securities are traded outside the trading ring in the form of over the
counter sales or purchase. The bargains that are struck in the trading ring by the members of
the stock exchanges re at the fairest prices determined by the basic laws of supply and demand.
DEFINITION OF STOCK EXCHANGE:-
“Stock exchange means anybody or individuals whether incorporated or not, constituted for the
purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities.”

21. HISTORY OF STOCK EXCHANGE:-
The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875
and Ahmadabad set up in 1894. These were organized as voluntary non-profit-
making associations of brokers to regulate and protect their interests. Before the
control on securities under the constitution in 1950, it was a state subject and the
Bombay securities contracts (control) act of 1925 used to regulate trading in
securities. Under this act, the Mumbai stock exchange was recognized in 1927
and Ahmadabad in 1937. During the war boom, a number of stock exchanges
were organized. Soon after it became a central subject, central legislation was
proposed and a committee headed by Mr. A.D.Gorwala went into the bill for
securities regulation. On the basis of the basis of the committee’s
recommendations and public discussion, the securities contract (regulation) act
became law in 1956.

22. LITERATURE REVIEW:
In simple words, stock is a share in the ownership of a company. Holding a company's stock
means that you are one of the many owners (shareholders) of a company and you have a claim
to everything the company owns. As an owner, you are entitled to your share of the company's
earnings as well as any voting rights attached to the stock ("Stocks basics: what,").
.
Earlier days a stock was represented by a stock certificate which was a piece of paper that was
proof of your ownership. But in today’s computer age, your stock is stored electronically by
your broker. This is done to make the shares easier to trade. In the past, when a person wanted
to sell his shares that person physically took the certificates down to the broker. But now stocks
can be purchased with a click of mouse.
Most stocks are traded on exchanges where both buyers and sellers meet and decide on a price.
The purpose of a stock exchange is to facilitate the exchange of securities between buyers and
sellers, and reducing the risks of investing. Some exchanges are physical locations where
transactions are carried out on a trading floor. The other type of exchange is virtual, composed
of a network of computers where trades are made electronically ("Stocks basics: how,”).
1.4 Online and Offline Trading
Traditionally stock trading was done through stock brokers personally or through telephones.
As number of people trading in stock market increased enormously in last few years, some
issues like location constrains, busy phone lines, miss communication etc. started growing in
stock broker offices. Then Information technology helped stock brokers to solve those
problems by Online Stock Trading method ("Online stock brokers,”).
Online stock trading is an internet based stock trading facility where Investor can trade shares
through a website without any manual intervention from the broker. It also provides investors

23. with rich, interactive information in real time including market updates, investment research
and robust analysis. Advantages and disadvantages of online trading are shown in (Table 3).
Still some people like offline stock trading where the customer calls the broker to enquire
about the stock prices. Then the broker asks some personal details to verify his identity. After
that customer can order the amount and the price at which he wants to buy a particular stock.
The broker places the order on behalf of the customer. Similarly, the customer can also sell the
shares in offline mode. And the customer can monitor all these transactions by logging into his
account. The main advantage in offline trading is time-saving.
1.5 Demat Account and Trading Account
Physical share certificates are converted into electronic format is known as “Dematerialization
or Demat”. Currently almost 99 percent of shares traded in Indian stock exchanges are in
Demat mode. You have to open a Demat account if you want to buy or sell stocks, just like a
bank account where actual money is replaced by shares. Demat account allows you to buy, sell
and transact shares without the endless paperwork and delays.
Similarly, a trading account works as an intermediary between the savings account and Demat
account. When you want to buy shares, first the money is transferred from your savings
account to trading account. After that required amount of shares are purchased and finally
shares are stored in electronic form in the Demat account. It works just in opposite way during
the time of selling shares.
1.6 Depository and Depository Participants
A depository is an entity which holds securities of investors in electronic form at the request of
the investors through a registered Depository participant. Currently there are two depositories
in India they are:
 National Securities Depository Limited (NSDL)
 Central Depository Services Limited (CDSL)
Depository provides a safe and convenient way to hold securities and enables instant transfer
of securities. It eliminates the risk associated with physical certificates such as bad delivery,

24. fake securities, Delays, thefts etc. It also provides services such as: Dematerialization,
Rematerialisation, transfer of securities and change of beneficial ownership.
Depository Participant (DP) acts as intermediaries between the depository and the investors.
The relationship between the DPs and the depository is governed by an agreement made
between the two under the Depositories Act. Hence a depository participant acts as a custodian
of your securities held in dematerialized form and carries out your instruction to transfer the
same. Currently, CDSL has 553 DPs whereas NSDL has only 293 DPs ("Depository
participant,”).
METHODOLOGY OF THE STYDY
The uncertainty and the rapid fluctuations in the Indian capital market made many investors
at home and foreign wary about the future of their investments. So in order to lessen this
uncertainty in the market, SEBI introduced many new trends by making changes in the way the
capital market functions by introducing online trading, rolling settlement, dematerialization of
shares, etc. This project is only an attempt to find the effect of these trends on the Indian
market. This study is done with reference of S.S.KANTILAL ISHWARLAL
SECURITIES&INVESTORS Pvt. Ltd. (SSKI), so its scope is limited to SSKI.
SIGNIFICANCE OF THE SUDY
The present study “customers’ perception towards on-line trading procedure” a case study
of SSKI Ltd. As the exchange has changed its trading style from outcry to on-line (screen
based) on 20 February 1997.
OBJECTIVES OF THE STUDY
1) It is to analyze the changes in trading after the exchange shifted from outcry to
online trading system.
2) To analyze and conclude what is customers’ perception towards online trading, its
usefulness and its ease in availability.
3) It is to study the functions of SHAREKHAN and through various departments.

25. 4) To know the online screen based trading system adopted by SHAREKHAN and
about its communication facilities. The appropriate configuration to set the
network, which would link the SHAREKHAN to individual / members.
5) To know about the latest and future development in the stock exchange trading
system, clearly defining each term of the stock exchange procedure.
6) To study the effect of the changing trends in the capital market on the investor, the
broker and on the country largely, particularly in Hyderabad.
7) To study the functions of SSKI through various departments and committees.
8) To study the effect of the changing technology on the Capital Market.
9) To study the procedure of trading in online trading and finding its advantages over
the manual trading.
NEED FOR THE STUDY
Stock exchanges are an integral part of the capital market. It is the
perfect type of market for securities whether of govt. or semi govt. bodies or other bodies
as for share and debentures issued by the joint stock enterprises.
Stock exchanges provide liquidity to the listed companies; they give quotations to the
listed companies and help in trading and raising funds from the market.
An exchange provides ready market for the sale and purchase of securities.
Stock market in India is more than century old and has been functioning effectively
through the medium of recognized stock exchanges. The stock market, which is integral
part of the capital, has a major impact on the functioning of the corporate sector in
particular. Since the capital market is playing, major role in the Indian economy from the

26. past several years there is an essential need to study the overall functioning of stock
exchange.
This method includes the data collected from the personal interaction with authorized members
of Share Khan Securities limited.
SCOPE OF THE STUDY:
The scope of the study analyses us to know how the Customers’ perceive the On-line Trading
activities are carried out in SHAREKHAN.
DATA COLLECTION METHODS: The data collection methods include both the primary
and secondary collection methods.
Primary method: This method includes the data collected from the personal interaction with
customers’ from different classes, government employees, corporate, executives at MNCs etc.
A total of 300 people were contacted through various mediums like phone, e-mail, personal
interviews, chats etc. 100 customers’ agreed to share their perception towards this industry.
Secondary method: The secondary data collection method includes:
• The lecturers delivered by the superintendents of respective
departments.
• The brochures and material provided by Share Khan Securities
limited.

27. • The data collected from the magazines of the NSE, economic times,
etc.
• Various books relating to the investments, capital markets and other
related topics.
LIMITATIONS OF THE STUDY:
The study is confined to the past 2-3 years and present system of the trading procedure in the
SSKI and the study is confined to cover all the related issues in brief. Online-trading procedure
only exhaustive analysis, problems of listing, management of trade, SEBI guidelines relating
there to be not covered due to limited time and to keep the study in manageable limits.
Following diagram gives the structure of Indian financial system:

28. FINANCIAL MARKETS:
Financial markets are helpful to provide liquidity in the system and for smooth
functioning of the system. These markets are the centers that provide facilities for buying and

29. selling of financial claims and services. The financial markets match the demands of
investment with the supply of capital from various sources.
According to functional basis financial markets are classified into two types.
They are:
 Money markets (short-term)
 Capital markets (long-term)
According to institutional basis again classified in to two types.
They are:
 Organized financial market
 Non-organized financial market.
The organized market comprises of official market represented by recognized
institutions, bank and government (SEBI) registered/controlled activities and intermediaries.
The unorganized market is composed of indigenous bankers, moneylenders, individual
professional and non-professionals.
MONEY MARKET:
Money market is a place where we can raise short-term capital.
Again the money market is classified in to
 Inter bank call money market
 Bill market and
 Bank loan market Etc.
E.g.; treasury bills, commercial papers, CD's etc.
CAPITAL MARKET:
Capital market is a place where we can raise long-term capital.
Again the capital market is classified in to 2 types and they are

30.  Primary market and
 Secondary market.
E.g.: Shares, Debentures, and Loans etc.
My emphasis is more on capital market.
PRIMARY MARKET
Primary market is generally referred to the market of new issues or market for mobilization of
resources by the companies and government undertakings, for new projects as also for
expansion, modernization, addition, and diversification and up gradation. Primary market is
also referred to as New Issue Market. Primary market operations include new issues of shares
by new and existing companies, further and right issues to existing shareholders, public offers,
and issue of debt instruments such as debentures, bonds, etc.
The primary market is regulated by the Securities and Exchange Board of India (SEBI a
government regulated authority).
FUNCTIONS:-
The main services of the primary market are origination, underwriting, and distribution.
Origination deals with the origin of the new issue. Underwriting contract make the shares
predictable and remove the element of uncertainty in the subscription. Distribution refers to the
sale of securities to the investors.
The following are the market intermediaries associated with the market:
1. Merchant banker/book building lead manager
2. Registrar and transfer agent
3. Underwriter/broker to the issue

31. 4. Adviser to the issue
5. Banker to the issue
6. Depository
7. Depository participant
INVESTORS PROTECTION IN PRIMARY MARKETS:-
To ensure healthy growth of primary market, the investing public should be protected. The
term investor protection as a wider meaning in the primary market. The principal ingredients of
investor’s protection are
 Provision of all the relevant information
 Provision of accurate information and
 Transparent allotment procedures without any bias.
SECONDARY MARKET:-
The primary market deals with the new issues of securities. Outstanding securities are traded in
the secondary market, which is commonly known as stock market or stock exchange. “The
secondary market is a market where scrips are traded”. It is a market place which provides
liquidity to the scrip issued in the primary market. Thus, the growth of secondary market
depend on the primary market. More the number of companies entering the primary market,
the greater is the volume of trade at the secondary market. Trading activities in the secondary
market are done through the recognized stock exchanges which are 23 in number including
Over The Counter Exchange of India, National Stock Exchange of India and Interconnected
Stock Exchange of India.
Secondary market operations involve buying and selling of securities on the stock
exchange through its members. The companies hitting the primary market are mandatorily
required to list their shares on one or more stock exchanges in India including stock exchanges.

32. Listing of scrips provides liquidity and offers an opportunity to the investors to buy or sell the
scrips.
The following intermediaries in the secondary market:
1. Broker/member of stock exchange – buyers broker and sellers broker
2. Portfolio Manager
3. Investment advisor
4. Share transfer agent
5. Depository
6. Depository participants.
STOCK MARKETS IN INDIA
Stock exchanges are the perfect type of market for securities whether of government and semi-
govt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies. In the stock market, purchases and sales of shares are affected in conditions of free
competition. Government securities are traded outside the trading ring in the form of over the
counter sales or purchase. The bargains that are struck in the trading ring by the members of
the stock exchanges re at the fairest prices determined by the basic laws of supply and demand.
DEFINITION OF STOCK EXCHANGE:-
“Stock exchange means any body or individuals whether incorporated or not,
constituted for the purpose of assisting, regulating or controlling the business of buying, selling
or dealing in securities.”
The securities include:
1. Shares, scrip, stocks, bonds. Debentures stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate;
2. Government securities; and
3. Rights or interest in securities.

33. HISTORY OF STOCK EXCHANGE:-
The only stock exchanges operating in the 19 th century were those of Mumbai
setup in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profit-
marking associations of brokers to regulate and protect their interests. Before the control on
securities under the constitution in 1950, it was a state subject and the Bombay securities
contracts (control) act of 1925 used to regulate trading in securities. Under this act, the
Mumbai stock exchange was recognized in 1927 and ahemedabad in 1937. During the war
boom, a number of stock exchanges were organized. Soon after it became a central subject,
central legislation was proposed and a committee headed by a.d.gorwala went into the bill for
securities regulation. On the basis of the basis of the committee’s recommendations and public
discussion, the securities contract (regulation) act became law in 1956.
FUNCTIONS OF STOCK EXCHANGE:-
Stock exchanges provide liquidity to the listed companies. By giving quotations to
the listed companies, they help trading and raise funds from the market, savings of investors
flow into public loans and to joint-stock enterprises because of this ready marketability and
unequalled facility for transfer of ownership of stocks, shares and securities provided by the
recognized stock exchanges as a result, over the hundred and twenty years during which the
stock exchanges have existed in this country and through their medium, the central and state
government have raised crores of rupees by floating public loans; municipal corporations,
improvement trust, local bodies and state finance corporations have obtained from the public
their financial requirements, and industry, trade an commerce- the backbone of the country’s
economy-have secured capital of
crores or rupees through the issue of stocks, shares and debentures for financing their day-to-
day activities, organizing new ventures and completing projects of expansion, diversification
and modernization. By obtaining the listing and trading facilities, public investment is
increased and companies were able to raise more funds. The quoted companies with wide
public interest have enjoyed some benefits and assets valuation has become easier for tax and
other purposes.

34. VARIOUS STOCK EXCHANGES IN INDIA:-
At present there are 23 stock exchanges recognized under the securities contracts (regulation),
Act, 1956. Those are
Region Exchange City
Northern Ludhiana Stock Exchange Ludhiana
Region Delhi Stock Exchange Delhi
Jaipur Stock Exchange Jaipur
U.P. Stock Exchange Kanpur
Southern Hyderabad Stock Exchange Hyderabad
Region Bangalore Stock Exchange Bangalore
Mangalore Stock Exchange Mangalore
Madras Stock Exchange Chennai
Coimbatore Stock Exchange Coimbatore
Cochin Stock Exchange Cochin
Eastern Calcutta Stock Exchange Calcutta
Region Gauhati Stock Exchange Gauhati
Magadh Stock Exchange Patna
Bhubaneswar Stock Exchange Bhubaneswar
Western Bombay Stock Exchange Mumbai
Region National Stock Exchange Mumbai
OTCEI Stock Exchange Mumbai
M.P. Stock Exchange Indore
Pune Stock Exchange Pune
Vadodara Stock Exchange Vadodara
Saurashtra Stock Exchange Rajkot

35. OUT OF THESE MAJOR STOCK EXCHANGES ARE:-
NSE
The Organization
The National Stock Exchange (NSE) of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations, NSE
was promoted by leading Financial Institutions at the behest of the Government of India and
was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in
the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in
April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in
June 1994. The Capital Market (Equities) segment commenced operations in November 1994
and operations in Derivatives segment commenced in June 2000.
NSE's mission is setting the agenda for change in the securities markets in India. The NSE was
set-up with the main objectives of:
• Establishing a nation-wide trading facility for equities, debt instruments and hybrids,
• Ensuring equal access to investors all over the country through an appropriate
communication network,

36. • Providing a fair, efficient and transparent securities market to investors using electronic
trading systems,
• Enabling shorter settlement cycles and book entry settlements systems, and
• Meeting the current international standards of securities markets.
The standards set by NSE in terms of market practices and technology has become industry
benchmarks and is being emulated by other market participants. NSE is more than a mere
market facilitator. It's that force which is guiding the industry towards new horizons and
greater opportunities.
BSE
INTRODUCTION:
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 demutualised 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 redresses 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 programmers 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 nine elected
directors, who are from the broking community (one third of them retire ever year by rotation),

37. three SEBI nominees, six public representatives and an Executive Director & Chief Executive
Officer (CEO) & a Chief Operating Officer (COO).
The Executive Director as the Chief Executive Officer is responsible for the day-to-day
administration of the Exchange and the Chief Operating Officer and other Heads of
Departments assist him.
The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to constitution
of the Executive Committee of the Exchange. Accordingly, an Executive Committee,
consisting of three elected directors, three SEBI nominees or public representatives, Executive
Director & CEO and Chief Operating Officer has been constituted. The Committee considers
judicial & quasi matters in which the Governing Board has powers as an Appellate Authority,
matters regarding annulment of transactions, admission, continuance and suspension of
member-brokers, declaration of a member-broker as defaulter, norms, procedures and other
matters relating to arbitration, fees, deposits, margins and other monies payable by the
member-brokers to the Exchange, etc.
REGULATORY FRAME WORK OF STOCK EXCHANGE:
The “Securities Contract Regulation Act, 1956” and “Securities Exchange Board of India
1952” provided a comprehensive legal framework. Three tier regulatory structure comprising
 Ministry of finance
 The Securities And Exchange Board of India
 Governing body
MEMBERS OF STOCK EXCHANGE:-

38. The securities contract regulation act 1956 has provided uniform regulation for the admission
of members in the stock exchanges. The qualifications for becoming a member of a recognized
stock exchange are given below:
The minimum age prescribed for the members is 21 years.
He should be an Indian citizen.
He should be neither a bankrupt nor compound with the creditors.
He should not be convicted for fraud or dishonesty.
He should not be engaged in any other business connected with a company.
He should not be a defaulter of any other stock exchange.
The minimum required educational is a pass in 12th standard examination.
SECURITIES AND EXCHANGE BOARD OF INDIA {SEBI}
The securities and exchange board of India was constituted in 1998 under a resolution
of government of India. It was later made statutory body by the SEBI act 1992.according to
this act, the SEBI shall constitute of a chairman and five other members appointed by the
central government.
With thee coming into effect of the securities and exchange board of India act, 1992 some of
the powers and functions exercised by the central government, in respect of the regulation of
stock exchange were transferred to the SEBI.
OBJECTIVES AND FUNCTIONS OF SEBI
I. To protect the interest of investors in securities.
II. Regulating the business in stock exchanges and any other securities market.
III. Registering and regulating the working of intermediaries associated with
securities market as well as working of mutual funds.
IV. Promoting and regulating self-regulatory organizations.
V. Prohibiting insider trading in securities.
VI. Regulating substantial acquisition of shares and take over of companies.

39. VII. Performing such functions and exercising such powers under the provisions of
capital issues (control) act, 1947and the securities to it by the central
government.
SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES):
1. Board of Directors of Stock Exchange has to be reconstituted so as include non-
members, public representatives and government representatives to the extent of
50% of total number of members.
2. Capital adequacy norms have been laid down for the members of various stock
exchanges depending upon their turnover of trade and other factors.
3. All recognized stock exchanges will have to inform about transactions within 24
hrs.
Types of order:
Buy and sell orders placed with members of the stock exchange by the investors. The orders
are of different types.
Limit orders: Orders are limited by a fixed price’ buy Reliance Petroleum at Rs.50.Here, the
orders has clearly indicated the price at which it has to be bought and the investor is not willing
to give more than Rs.50.
Best rate order: Here, the buyer or seller gives the freedom to the broker to execute the order
at the best possible rate quoted on the particular date for buying. It may be lowest rate for
buying and highest rate for selling.

40. Discretionary order: The investor gives the range of price for purchase and sale. The broker
can use his discretion to buy within the specified limit. Generally the approximation price is
fixed. The order stands as this “buy BRC 100 shares around Rs.40”.
Stop loss order: The orders are given to limit the loss due to unfavorable price movement in
the market. A particular limit is given for waiting. If the price falls below the limit, the broker
is authorized to sell the shares to prevent further loss. E.g., Sell ANDHRABANK at Rs.105
stops loss at Rs.100.
Buying and selling shares: The to buy and sell the share the investor has to locate register
broker or sub broker who render prompt and efficient to service to him. The order to buy or sell
specified number of shares of the company of investor’s choice are placed with the broker. The
order may be of any of the above any mentioned type. After receiving the order the broker tries
to execute the order in his computer terminal. Once matching order is found, the order is
executed. The broker the delivers the contract note
To the investor. It gives the details regarding the name of the company, number of shares
bought, price, brokerage, and the date of delivery of share. In this physical trading form, once
the broker gets the share certificate through the clearing houses he delivers the share certificate
along with transfer deed to the investor. The investor has to fill the transfer deed and stamp it.
The stamp duty is one of the percentage considerations, the investor should lodge the share
certificate and transfer deed to the register or transfer agent of the company. If it is bought in
the DEMAT form, the broker has to give a matching instruction to his depository participant to
transfer shares bought to the investors account. The investor should be account holder in any of
the depository participant. In the case of sale of shares on receiving payment from the
purchasing broker, the broker effects the payment to the investor.
Share groups: The listed shares are divided into 3 categories:
Group A shares, B1 shares, B shares. The last 2 groups are referred to cleared securities or non
specified shares. The shares that come under the specified group can avail the carry forward
transaction. In ‘A’ group, shares are selected on the basis of equity, market capitalization and

41. public holding. Further it should have good track record and dividend paying company. It
should have good growth potential too. The trading volumes and the investor’s base are high in
‘A’ group shares. Any company when it satisfies these criteria would be shifted from ‘B’ group
to ‘A’ group.
In the B1 group actively traded share are included. Carry forward transactions are not allowed
in this group. Settlement takes place through the clearinghouse along with the ‘A’ group
shares. The settlement cycle and the procedure are identical to ‘A’ group security. The rest of
the company shares listed from the ‘B’ group.
Rolling settlement system:
Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or 5days)
after the trading day. The shares bought and sold are paid in for n days after the trading day of
the particular transaction. Share settlement is likely to be completed much sooner after the
transaction than under the fixed settlement system.
The rolling settlement system is noted by T+N i.e. the settlement period is n days after the
trading day. A rolling period which offers a large number of days negates the advantages of the
system. Generally longer settlement periods are shortened gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis of the
criteria that they were in compulsory demat list and had daily turnover of about Re.1 crore or
more. Then it was extended to “A” stocks in Modified Carry Forward Scheme, Automated
Lending and Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme
(BELSS) with effect from dec 31, 2001.
SEBI has introduced T+5 rolling settlement in equity market from July 2001 and subsequently
shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement experience it was
further reduced to T+2 to reduce the risk in the market and to protect the interest of the
investors from 1st April 2003.
Activities on T+1: conformation of the institutional trades by the custodian is sent to the stock
exchange by 11.00 am. A provision of an exception window would be available for late
confirmation. The time limit and the additional changes for the exception window are
dedicated by the exchange.

42. The exchanges/clearing house/ clearing corporation would process and download the
obligation files to the broker’s terminals late by 1.30 p.m on T+1. Depository participants
accept the instructions for pay in securities by investors in physical form up to 4 p.m and in
electronic form up to 6 p.m. the depositories accept from other DPs till 8p.m for same day
processing.
T+2 activities: The depository permits the download of the paying in files of securities and
funds until 10.30 am on T+2 from the brokers’ pool accounts. The depository processes the pay
in requests and transfers the consolidated pay in files to clearing House/clearing Corporation
by 11.00am/on T+2. The exchange/clearing house/clearing corporation executes the pay-out of
securities and funds latest by 1.30 p.m on T+2 to the depositories and clearing banks. In the
demat mode net basis settlement is allowed. The buy and sale positions in the same scrip can
be settled and net quantity has to be settled.
KEY FEATURES OF ONLINE TRADING WITH SHAREKHAN:-
• Freedom from paperwork.
• Instant credit and money transfer.
• Trade from any net enabled PC.
• Online orders on the phone.
• Timely advice and research reports.
• Real-time Portfolio tracking.
• After-hour orders.

43. TRADING PROCEDURE
OUTCRY SYSTEM
TRADING IN THE STOCK EXCHANGE:
-THE CONVENTION DAY
The broker has to buy or sell securities for which he has received the orders.
For this, the broker or his authorized representatives goes to the stock exchange. This method
is called the open outcry system. Basically the brokers shout while buying or selling the
securities. The floor of the stock exchange is divided into a number of markets also known as
‘post pit’ or wing based on particular securities dealt there.
In the post pit or wing, the broker using ‘open outcry’ method makes an offer or bid price. For
making the necessary bargain, he quotes his purchase or sale price, also known as offer or bid
price. The dealer, to whom the price is quoted, quotes his own price when the quotation of the
dealer suits the broker, he may loose the bargain. If he is not satisfied with the quote price, he
may turn to some other dealer. On the close of the bargain, the dealer as well as the broker
makes a brief not of the particulars of the deal. Such notes are made on some pad and on it the
number of shares, the price agreed upon, the name of the party, what membership number etc.,
are noted.
DISADVANTAGES OF OUTCRY SYSTEM:

44. • It lacks transparency.
• The scope of manipulation, speculation and mal practice more.
• The time gap between many of the trading operations used to be met quickly and easily.
• Signal were more important in the outcry system any member who could not interpret
the buy/sell signal correctly often landed himself in disastrous situation.
• In audibility was another disadvantage of the outcry system.
Due to the above disadvantages of the outcry system, the SHAREKHAN has shifter from
outcry system to online trading from February 29 1997.
MANUAL TRADING
TRADING PROCEDURE BEFORE INTRODUCTION OF ONLINE TRADING:-
Trading on stock exchanges is officially done in the trading ring. In the trading ring the space
is provided for specified and non-specified sections, the members and their authorized
assistants have to wear a badge or carry with them on identity card given by the exchange to
enter the trading ring. They carry a sauda book or confirmation memos, duly authorized by the
exchange and carry a pen with them. The stock exchanges operations are floor level are
technical in nature .Non-members are not permitted to enter in to stock market. Hence various
stages have to be completed in executing a transaction at a stock exchange .The steps involved
in this method of trading have given below:
CHOICE OF BROKER:-

45. The prospective investor who wants to buy shares or the investors, who wants to sell shares
and transact business, have to act through member brokers only. They can also appoint their
bankers for this purpose as per the present regulations.
PLACEMENT OF ORDER:-
The next step is the placing order for the purchase or sale of securities with a broker. The order
is usually placed by telegram, telephone, letter, fax etc or in person. To avoid delay, it is placed
generally over the phone. The orders may take any one of the forms such as At Best Orders,
Limit Order, Immediate or Cancel Order, Limited Discretionary Order, and Open Order, Stop
Loss Order.
EXECUTION OF ORDER OR CONTRACT:-
Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30 P.M on all
working days Monday to Friday, and a special one-hour session on Saturday. The members or
the authorized assistants have to wear a badge given by the exchange to enter into the trading
ring. They carry a suada Block Book or conformation memos, which are duly authorized by the
exchange when the deal is struck; both broker and jobber make a note in their suada block
books. From the suada book, the contract notes are drawn up and posted to the client. A
contract note is written agreement between the broker and his clients for the transaction
executed.
DRAWING UP AND BILLS:-
Both sale and purchase bills are prepared along with the contract note and it is posted on the
same day or the next day. This in a purchase transaction, once the shares are delivered to the
client effects payment for the purchases and pays the stamp fees for transfer, a bill is made out
giving the total cost of purchase, including other expenses incurred by the broker in the price
itself. With this, the process ends.

46. DEMATERLIZATION:
Dematerialization is the process by which physical certificates of an investor are converted to
an equipment number of securities in electronic from and credited in the investor account with
his DP. In order to dematerialization his certifies an investor has to first open an account with a
DP and then request for the Dematerialization Request Form, which is DP and submit the same
along with the share certificates. The investor has to ensure that he marks “Submitted for
Dematerialization” on the certificates before the shares are handed over to the DP for demat.
Dematerialization can only be done to those certificates, which are already registered in your
name and belong to the list of securities admitted for Dematerialization at NSDL.
Most of the active scrip’s in the market including all the scrip’s of S&P CNXNIFTY and BSE
SENSEX have already joined NSDL. This list is steadily increasing.
Briefly, the process is as follows: after completion of transfer, the investor gets the option to
dematerialize such shares. Investor’s willing to exercise this option sends a Demat request
along with the option letter sent by the company to his DP. The company or its R&T agent
would confirm the Demat request on its receipt from the DP to reduce risk of loss in transit.
Dematerialized shares do not have any distinctive or certificate numbers. These shares are
fungible-which means that 100 shares of a security are the same as any other 100 shares of the
security. Odd lot shares certificates can also be dematerialized.
Dematerialization normally takes about fifteen to thirty days. To get back dematerialized
securities in the physical form, request DP for Rematerialization of the same is made.
Rematerialization is the process of converting electronic shares in to physical shares.
BENEFITS OF DEMAT:-

47. Transacting the depository has several advantages like
• It reduces the risk of bad deliveries, in turn saving the cost and wastage of time associated
with follow up for rectification. This has lead to reduction in brokerage to the extent of 0.5%
by quite a few brokerage firms.
• In case of transfer of electronic shares, you save 0.5% in stamp duty. You avoid the cost of
courier / notarization. The need for further follow-up with your broker for the
Shares returned for company objection.
• You can receive your bonuses and rights issues into your DA as a direct credit, this
eliminating risk of loss in transit.
• You can also expect a lower interest charge for loans taken against Demat shares as
compared t internet for loans against physical shares.
• There is no lost in transit, thus the overheads of getting a duplicate copy in such
circumstances is reduced.
• RBI has increased the limit of loans against dematerialized securities as collateral to Rs.1 per
borrower in case of loans against physical securities.
• RBI has also reduced the minimum margin to 25% for loans against dematerialized securities
as against 50% for loans against physical securities.
ONLINE TRADING

48. Before getting in to the online trading we should know some things about the internet, e-
commerce and etc.
1. What is Internet?
Internet is a worldwide, self-governed network connecting several other smaller
networks and millions of computers and persons, to mega sources of information. This
technology shrinks vast distances, accelerating the pace of business reforms and
revolutionizing the way companies are managed. It allows direct, ubiquitous links to
anyone anywhere and anytime to build up interactive relationships.
A combination of time and space, called the Internet promises to bring unprecedented
changes in our lives and business. Internet or net is an inter-connection of computer
communication networks spanning the entire globe, crossing all geographical boundaries. It
has re-defined the methods of communication, work study, education, business, leisure,
health, trade, banking, commerce and what not it is virtually changing every thing and we
are living in dot.com age. Net being an interactive two way medium, through various
websites, enables participation by individuals in business to business and business to
consumer commerce, visit to shopping arcades, games, etc. in cyber space even the
information can be copied, downloaded and retransmitted.
The use of Internet has grown 2000 percent in last decade and is currently growing at
10 percent per month. In India, growth of Internet is of recent times. It is expected to bring
changes in every functional area of business activity including management and financial
services. In offers stock trading at a lower cost. Internet can change the nature and capacity
of stock broking business in India.
2. E-commerce
Electronic commerce is associated with buying and selling over computer communication
networks. It helps conduct traditional commerce through new way of transferring and
processing of information. Information is electronically transferred from computer to

49. computer in an automated way. E-commerce refers to the paperless exchange of business
information using electronic data inter change, electronic technologies. It not only
automates manual processes and paper transactions but also helps organization move to a
fully electronic environment and change the way they operated.
E-TRADING INTERFACE

50. INVESTOR STOCK INVESTORS
BROKERS
SATELLIT
E LINK
DEPOSITORY REGISTAR/COM
PANY
DEPOSITORY STOCK
PARTICIPANT EXCHANGE BANK

51. PC’s and networking attempts to introduce banks of the tools and technologies
required for electronic commerce. The computers are either workstations of individual
office works or serves where large databases and information reside. Network connects
both categories of computers; the various operating systems are the most basis program
within a computer. It manages the resources of the computer system in a fair and efficient
manner.
Now we can enter in to the concept known as online trading.
In the past, investors had no option but to contact their broker to get real time access to
market data. The net brings data to the investor on line and net broking enables him to trade
on a click of mouse. Now information has become easily accessible to both retail as well as
big investor. Once investors learn to research on line, they will demand more market
information.
EVOLUTION OF BROKING IN INDIA:-
The evolution of a broking in India can be categorized in three phases –
1. Stockbrokers will offer on their sites features such as live portfolio manager, live
quotes, market research and news, etc. to attract more investors.
2. Brokers will offer on line broking and relationship management by providing and
offering analysis and information to investors during broking and non-broking hours
based on their profile and needs, i.e. customized services.
3. Brokers (now e-brokers) will offer value management or services like initial public
offering online, on-line asset allocation, portfolio management, financial planning, tax
planning, insurance services, etc. and enables the investors to take better and well
considered decisions.

52. The actual definition of “Online Trading” is as explained below:
“Online trading is a service offered on the internet for purchase and sale of shares. In the
real world you place orders on your stockbroker either verbally (personally or telephonically)
or in a written form (fax).” In online trading, you will access a stockbroker’s website through
your internet enabled PC and place orders through the broker’s internet based trading engine.
These orders are routed to the stock exchange without manual intervention an executed thereon
in a matter of a few seconds.
The net is used as a modem of trading in internet trading. Orders are communicated to the
stock exchange through website.
In India:
Internet trading started in India on 1 st April 2000 with 79 members seeking permission
for online trading. The SEBI committees on internet based securities trading services has
allowed the net to be used as an Order Routing System (ORS) through registered stock brokers
on behalf of their clients for execution of transaction. Under the ORS the client enters his
requirements (security, quantity, price buy/sell) on broker’s site.
OBJECTIVES:-
Internet trading is expected to –
• Increase transparency in the markets,
• Enhance market quality through improved liquidity, by increasing quote continuity and
market depth,
• Reduce settlement risks due to open trades, by elimination of mismatches,
• Provide management information system,
• Introduce flexibility in system, so as to handle growing volumes easily and to support

53. nationwide expansion of market activity.
Besides, through internet trading three fundamental objectives of securities regulation can be
easily achieved, these are:
• Investor protection
• Creation of a fair and efficient market, and
• Reduction of the systematic risks.
Some of the brokers offering net trading include ICICI web trade, investment India, Geojit
securities, etc.
REQUIREMENTS FOR NET TRADING:-
• For investors:
1. Installation of a computer with required specification
2. Installation of a mode
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
The following should be produce to get a demat account and online trading account:
As identity, proof &address proof produce the following things:
• Voter ID card
• Driving license
• PAN card( in case of to trade more than 50000)
• Ration card

54. • Bank pass book
• Telephone bill
Other requirements, which are necessary
• First page of the bank pass book and last 6 months statement.
• Bank manager’s signature along with bank’s seal, manager registration code on
photograph.
For stock brokers:
1. Permission from stock exchange for net trading
2. Net worth of Rs. 50 lac
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website.
The net is used as a medium of trading in internet trading. Orders are communicated
to the stock exchange through website. Internet trading started in India on 1st April 2000 with
79 members seeking permission for online trading. The SEBI committees on internet based
securities trading services has allowed the net to be used as an Order Routing System (ORS)
through registered stock brokers on behalf of their clients for execution of transaction.
Under the Order Routing System the client enters his requirements (security, quantity, price,
and buy/sell) in broker's site. They are checked electronically against the clients account and
routed electronically to the appropriate exchange for execution by the broker. The client
receives a confirmation on execution of the order. The customer's portfolio and ledger accounts

55. get updated to reflect the transaction. The user should have the user id and password to enter
into the electronic ring. He should also have demat
account and bank account. The system permits only a registered client to log in using user id
and password. Order can be placed using place order window of the website.
PROCEDUR FOR NET TRADING:-
Step 1: Those investors, who are interested in doing the trading over internet system i.e.
NEAT-IXS, should approach the brokers and get them self registered with the Stock Broker.
Step 2: After registration, the broker will provide to them a Login name, Password and
personal identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by using the place order
window as under:
(a) First by entering the symbol and series of stock and other parameters like quantity and price
of the scrip on the place order window.
(b) Second, fill in the symbol, series and the default quantity.
Step 4: It is the process of review. Thus, the investor has to review the order placed by clicking
the review option. He may also re-set to clear the values.
Step 5: After the review has been satisfactory, the order has to be sent by clicking on the send
option.
Step 6: the investor will receive an "Order Confirmation" message along with the order
number and the value of the order.
Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons
such as invalid price limit, an appropriate message will appear at the bottom of the screen. At

56. present, a time lag of about 10 seconds is there in executing the trade.
Step 8: It is regarding charging payment, for which there are different mode. Some brokers
will take some advance payment room the investor and will fix their trading limits. When the
trade is executed, the broker will ask the investor for transfer of funds by the investor to his
account.
Internet trading provides total transparency between a broker and an investor in
the secondary market. In the open outcry system, only the broker knew the actually transacted
price. Screen based trading provides more transparency. With online trading investors can see
them sleeves the price at which the deal take place.
The time gap has narrowed in every stage of operation. Confirmation and execution of trade
reaches the investor within the least possible time, mostly within 30 seconds. Instant feedback
is available about the execution. Some of the websites also offer;
• New and research report
• BSE and NSE movements
• Stock analysis
• Freebies
• IPO and mutual fund centers and
• Movements of interaction stock exchanges.
STEP BY STEP PROCEDURE IN ONLINE TRADING:-
Following steps explain the step by step approach to on-line trading:
• Log on to the stock broker's website
• Register as client/investor
• Fill the application form and client broker agreement form on the requisite value stamp
paper
• Obtain user ID and pass word
• Log on to the broker's site using secure user ID and password

57. • Market watch page will show real time on-line market data
• Trade shares directly yourself by entering the symbol or number of the security
• Brokers server will check your limit in the on-line accountant demat account for the
number of shares and execute the trade
• Order is executed instantly (10-30 seconds) and confirmation can be obtained.
• Confirmation is e-mailed to investor by broker
• Contract note is printed and mailed in 24 hours
• Settlement will take place automatically on the settlement day
• Demat account and the bank account will get debited and credited by electronic means.
ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS:
 Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this
leeway facility since one need to hold a price.
 Market orders: orders can be filled at unexpected prices, but this type is much more
risky, since you have to buy stock at the given price.
 Cash account: where funds have to be available prior to placing the order.
 Margin account: where orders can be placed against stocks, to increase Purchasing
power.
ADVANTAGES OF ONLINE TRADING:
• Online trading has made it possible for anyone to have easy and efficient access to
more reports and charts than it was previously possible if one went to any brokers'
office. Thus, we have access to a lot more information online to self teaches
ourbroker’slves.

58. • Online trading has let room for smaller organizations to compete with multinational
organizations since is no longer a legit issue. Being online does not identify the size of
any particular organization, therefore, this additional power to the underdogs.
• Online trading has allowed companies to locate themselves where they want, as
physical location is not an issue anymore. Companies can establish themselves
according to their gains and losses, for instance where tax (sales and value added taxes)
is best suited to them.
• Online trading gives control to individuals and they can exercise it over accounts thus
comprehend what is going on when they trade. It is like going back to school and re-
educating oneself on how to trade online.
• Individuals’ benefit by saving comparatively a lot more when trading online as the cost
per trade is less.
• Individuals can invest in a variety of products, unlike earlier when people bought
bonds, mutual funds, and stock for long-term basis and sat on them. Now they can
invest in stocks, stock and index options mutual funds, individual, government, and
even insurance.
• Online trading has made it possible for one fid investment options that were not
available on a regular basis like offbeat net stocks eccentric unique things and trading
in global market.
INVESTORS REASONS TO TRADE ONLINE:
• They have control over their accounts can make their own decisions and don’t have
to give reasons for their actions. They are independent.
• They have a reason to participate in the market and learn about it.
• It interesting, cheap, easy, fast, and convenient.
• A lot of information is online so they can keep up-to-date with what is happening in
the trading world.

59. • It is the interest of the small investors because rates will be available immediately
across the country execution will be immediately across the country and execution
will be immediate.
• It will give investors a greater choice and better realization.
• The immediate impact will be competition and benefits will accrue to the investors.
• It will lead to brokerage commissions going down and brokers striving to increase
business afloat.
• Investors will now go to place, which have better trading conditions and also
members to offer them better facilities.
• They have access to numerous tools to invest, and can create their own portfolio.
HERE ARE THE POSSIBLE DISADVANTAGES:
• When network crashes, there will be problems and delays due to a large influx of rapid
online trading criteria.
• Individuals are restricted to first-hand financial guidance. This simply means that the
individual is himself / herself alone to.
• A tax (sales tax and value added tax) evaluation becomes an issue, especially when you
are trading internationally.
• Chances are that one has no idea who one is dealing with on the other end, so it is
advisable to gather all the possible information about the party one is dealing with. In
short, do the home work and be prepared.
• Online trading has left individuals open to too much information. This is harmful since
it leaves brokerages wide open to sensitive data.
• According to a study conducted by Mary Rowland, careful investor: is online trading
bad for your portfolio, the more one trades the less returns one gets, meaning that an
addicted trader gets, carried away online and begins to trade for too much which causes
losses for him / her.

60. • The study also shows that smart investment is better than fast investment. Simply put
speed should be considered to be a major factor would lead any online trader to think
they know the market.
• Individuals think that they are trading with the market directly and know what they are
doing, but the truth is that even through technology has taken over the basic rules of
trading are the same. It seems that the middleman has been removed, but that is not so.
When the individuals click on the mouse, his trade goes through a broker. The
commissions online pertain to the intermediary.
• There is a need for more effective communication links over the Internet and the ability
of the server to deal with a large volume of visitors.
TRADING AND SETTLEMENT AT SHARE KHAN
The NSE first introduced online trading in India. The Online trading system imparted a
greater level of transparency and investors preferred exchanges that offered Online trading
because of the following factors:
• The ease of operation from the view of the both members and the investors.
• Increase in the confidence of the investors because at higher level of transparency.
• Facilities better monitoring of the market by the exchange.
• The best price achieved in buying and selling.
All these resulted in ever-increasing volumes on the exchanges offering the online trading.
TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING

61. Share Khan deals in buying and selling equity shares and debentures on the National
Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-Counter
Exchange of India (OTCEI).
Share Khan is provided with a computer and required software from their registered
stock exchanges. These centers are called “Broker Work Stations”. These computers are
connected to the server at the stock exchanges through cable.
The member or broker sitting in his office can send the quotations, orders, negotiations, deals,
in-house deals, auction orders etc., through the computer.
The central trading system (CTS) will accept these orders and send it for match.
If there is any mistake in the order, CTS will reject the orders and send respective error
message to the member concern. All these operations are in built. The main objective of CTS is
to monitor the Stock Exchanges operations.
Order placed by the broker will be sent for a match and if the match is found suitable, the
transaction will be executed. Otherwise, the order will be deleted automatically after
completion of trading time the carry forward transactions (Good Till cancellation) are forward
to the next day. Even if the match is not found with in the prescribed period, the order will not
cancel.
TRADING SESSION
Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period. Monday
to Friday is the trading period in all the stock exchanges. SEBI has stipulated that all the stock
exchanges in India must have same trading period.
BROKER WORK STATION:
At the broker workstation the best BBO’s the last traded price, the day ‘s opening price,
previous day’s closing price, highest and lowest prices, the weighted average price, the total
trade value and total trade value will be available continuously, as the BBO for each scrip.

62. Other information will be available on query from the BWS. These include top gainers /losers
of the day. Trader-wise, scrip wise net position, client wise net position, top scrip by the
volume/value, market summary etc.
The BWS as a powerful profiling future which enables each trader to customize his/her screens
layouts as is convenient, profiles may be set at the BWS by the individual users, for the scrip’s
that he/she is interested in watching columns of information available, etc.
Brokers are also provided with information relating to the companies in the matter of Book
closure, Dividend declarations, resolutions in board meeting, information about liquidated
companies, company report etc.
Broker can visualize his personal details relating to trade done he can have scrip wise details,
sub-broker wise details, and client-wise details and can also take the point of daily volume
reports and adjustment reports.
ORDERS:
Orders can be done one at a time or in a batch mode.
The submitted order will be accepted at the CTS after validation if found any invalid reason the
order is return back to the BWS, with the appropriate error message. If
Accepted at the CTS it will be added to the local pending order book.
The order will then be taken up for matching if it is a buy order the system tries to find a sell
order, which fits the requirement of the buy order when such match is found a trade, gets
executed. Each trade involves two brokers and respective traders who sent the order. Both
these traders are informed of the trade being executed at their respective BWS.
At the BWS the trade is added to the local trade book, land the pending quantity decreased by
the trade quantity in the local pending order book.
Orders sent by the brokers are two types:

63. • Good For the Day (GFD)
• Good Till Cancellation(GTC)
Good for the Day:
This also called as “market order”. For an order if the member selects the deal as good for day,
the order is treated as market order. If a “best bid” founds match with “best order” then the
transaction executes. If the match is not found then after trade time the order is cancelled that
day. Next day he has to place a new order.
For example if a member wants to purchase 1000 shares of satyam info @ 400, each through
Good for Day order. If the correct match is not found, order is cancelled automatically and new
quotation has to be placed the next day.
Good till Cancellation:
This order is forwarded to the last trading day of that settlement period. This is also called as
carry forward order like GFT; broker has to select the option of GTC for the order. If the order
finds match with in the trading settlement period, the order is executed. If no match is found,
the order is cancelled on the last day of settlement period. This order is not carried forward to
the next settlement period.
For example, if a member places a purchase order of 500 shares of SBI @ 690 per share,
selects the order as GTC, and places an order. If the match is not found on that day it will be
forwarded to the next day until trading settlement period day.
SETTLEMENT OF TRANSACTIONS:

64. Clearing of transaction in the form of shares and cash is called settlement, which was held in
clearing house of stock exchange (for example, SHAREKHAN is a clearance house is member
in NSDL (National Securities Depository Limited). Buyers will take the delivery of shares
through the Depository Participants (DP’S) like SHARE KHAN and others. Finally, the
settlement is made by means of delivering the share certificates along with the transfer deeds.
The transferor (or the seller) duly signed transfer deed. It bears a stamp of the selling broker.
The buyer then fills up the certificates fills up the particulars in the transfer deed. Settlement
can be done in the following way.
• Spot settlement: under this method, the delivery of securities and payment for them are
affected on the day of the contract itself.
• Rolling settlement: Under this rolling settlement the trading is on “T+2”,basis i.e. if
Monday is trading day then Wednesday is the paying day . In case on non-delivery, the
securities will go for auction.
DETAILS OF PROCEDURES:
Delivery in : The members who is in PAY-OUT position delivers share certificates in to
clearing house with in the settlement period along with the delivery Chelan filled in with the
details of share certificates which has folio numbers or distinctive numbers etc.
Delivery out: The buyer of shares who made pay in position will take delivery of shares from
the clearinghouse.
Pay-in: The member who is in paying position shall pay for value of shares with in the trading
settlement period (T+2).

65. Payout: The cheques paid in the clearinghouse will be paid members who are in paying
position.
All disputes arising between members regarding non-deliveries, non-payments, good and bad
deliveries pertaining to the settlement will be here by Share Khan and settled by the settlement
committee of the exchange.
BROKERAGE STRUCTURE AT SHAREKHAN
Trading - 0.1 %( on each side)
Delivery - 0.5%
Exposure - 4 times of deposit
Sharekhan provides offline trading too. For this sharekhan is providing a toll-free number i.e.
1-600-22-7500.
The given flow chart clearly explains the process of online trading:

66. L o g in
B u y t r a n s c a t io n S e ll t r a n s c a t io n
T h e s y s te m w ill c h e c k y o u r
T h e s y s te m w ill c h e c k b u y in g d p a c c o u n t q u a n tity
lim its
O rd e rs ac c e p te d R e je c t e d o r d e r s w o u ld b e o rd e rs a c c e p te d
c o m m u n i c a t e d a lo n g w it h r e a s o n s
y o u r o r d e r is t r a n s m it t e d t o e x c h a n g e f o r e x e c u t io n
p e n d in g b u y o r d e r s o n e x e c u t io n p e n d in g s e ll o r d e r s
w o u ld b e d is p la y e d o f y o u r o rd ers w o u ld b e d is p la y e d
o n y o u r s c re e n o n y o u r s c re e n
y o u m a y e d it y o u r y o u m a y d e le t e y o u m a y e d it y o u r y o u m a y d e le t e y o u r
p e n d in g o r d e r y o u r p e n d in g o r d e r p e n d in g o r d e r p e n d in g o r d e r
f la s h e d o n y o u r c o n f o r m a t io n c o u l c o n t r a c t n o t e w o u ld
s c r e e n im m e d ia t e ly d b e s e n d to y o u r b e s e n t t o b y m a il
o n e x e c u t io n e - m a il a n d m o b ile o r h a n d d e liv e r y
THE WINDOW WHICH DISPLYAS IS BUYING SHARES ONLINE THROUGH
SHAREKHAN.COM

67. THE WINDOW WHICH DISPLYAS IS SELLING SHARES ONLINE THROUGH
SHAREKHAN.COM

68. SURVEILLANCE:
Surveillance can be done during the continuous trading session for monitoring the
broker scrip and the market, this is referred to as online may be used for analysis. Analysis and
monitoring reports that can generate. For the continuous trading session the surveillance

69. workstation user can set up a member of alerts any scrip broker or index the workstation
profile will be automatically reported to the user.
The market event list will be available to the BWS user. During the continuous
trading session details of the scrip broker or index that pass the alert or violate their circuit
breakers are displayed on message window. There are three messages windows i.e., one for
each scrip and index, different colors indicate the importance and BWS user is modified when
BWS user is denied access to the system a number of are available for the SWS user.
PROBLEM AREAS:
When internet trading was first launched in Feb. 2000, the stock markets were experiencing an
unprecedented boom and it held out a lot of promise. However, two years down the line we
find the system as failed to deliver up to its potential. The main reasons for declining volume
of trading are:
Bearish market:
The poor performance in the on line market segment can be attributed to lack of Bull Run in
the stock market. This is the reason for which the overall trading as come down. Almost ever
since internet trading has started the markets have remained bearish. This relationship between
the mood of the market and the internet in trading indeed gets reflected in the volumes.
Poor penetration of the internet:
Besides the bearishness in the equity market, another reason for low acceptance of net trading
could be poor penetration of the internet. In India it is a fact that internet has not been able to
spread it’s tentacles in rural areas and small towns.
The very basis of net trading is based on two factors:

70. 1. An equity market in good shape.
2. Deep penetration of the internet.
Poor internet connectivity:
In the Indian context, the quality of internet connections also comes into play for determining
the reasons for the lack in response. Here, we have connectivity problems and there are
instances of clients panicking, as they could not execute their trades. Many times at particularly
at places other than Mumbai, sudden stoppage of electricity results in disconnection.
Long supply chain:
In case of conventional or offline, trading the chain is small as the clients directly interact with
the brokers. However, in case of internet trading the chain is quite long as it involves a client,
an internet service provider, server, stock exchange, depositor and a broker and a problem can
rise up at any stage of the chain, breaking down the entire system.
A Costly Affair:
Other than the technological hassles, there is an element of cost as well. For active traders,
doing online trading he has to remain connected all the time and the cost of connecting through
dial up can work out to Rs 3500 per month which is over and above the brokerage and other
service charges. This is the reason offering online trading facility
Allows the clients to use the conventional system as well in order to retain them. A part from a
dealing room, most broking houses have a separate room for the clients. Where the stock
exchanges terminals are kept for their use.
Low Investor Confidence:

71. Investor confidence in the country has been badly hurt due to the escalating IndoPak tensions.
This sentiment has got reflected in the stock markets, which have gone down. The global
recession has also dampened the mood of the stock market. Although, the US economy is
showing signs of recovery, but any tangible outcome is yet to be felt.
DATA COLLECTION:-
PRIMARY DATA as the decision of the investor keeps on changing from time to time.
Collection of primary data is reliable as it avoids self – report bias and cannot record what
cannot be said.
Due to time and financial constraint Marketing Research is done through Sampling. Sample
offers various benefits as:
1) It saves time.
2) It helps in cutting expense.
SECONDARY SOURCES The data had been collected through Books, Journals and
Websites.
3.3.3 SAMPLE DESIGN
3.3.3.1 POPULATION:100 people
3.3.3.2 SAMPLE SIZE:The sample size is 60 persons.
3.3.3.3 Sampling Method:-
Judgment sampling and Convenience Sampling Technique
Judgment sampling is mainly done on the basis of the knowledge of the respondent about stock
market and Convenience Sampling is the technique in which the researcher just simply picks
up the respondents on the basis of their availability.
3.3.4 Methods of Data Collection:-

72. 3.3.4.1 Instrument for data collection:
The study to be conducted is about the Derivative Market in Shakarpur, NirmaanVihar and
Laxmi Nagar and members of Share Khan so the method of data collection used is “SURVEY
METHOD” with the help of Questionnaire.
3.3.4.2 Drafting of a questionnaire :
To frame questionnaire or schedule, we have at first to decide regarding various questions to be
incorporated. This decision of the selection of questions depends upon the purpose of enquiry.
In this regard, precaution should be adopted to avoid irrelevant or unnecessary questions.
3.3.5 LIMITATIONS
1) For performing these king of research large data base is required. The data collected for this
study is not sufficient to analyze the investment pattern of retail investors in India.
2) There may be many variables which influences the result but this analysis reveals only few
variables.
3) There can be some deviations in the data as the human psychology changes from time to
time.
4) The feedback we got may not be correct as the respondent might have filled in the
information with no interest or in hurry.
5) Scientific research on the part of research is also required.
6) Accuracy level may be effected when data is subjected to weighing.
7) Time was the biggest constraint as these studies cannot be completed with accuracy in two
month.

73. 8) Understanding the psychology of human is not the cup of every one tea so, might be some
interpretations go wrong.
9) Some respondents might have taken the question in different sense which can change the
data collected.
10) Cost was also the constraint as collection of Primary data required huge amount of spending.
ANALYSIS& INTERPRETATION
There are certain questions which have been asked to the people for the completion of this
project and find the result matching to the Objective.
1. PEOPLE WHO INVEST AND DON’T INVEST

74. No
17%
Yes
No
Yes
83%
Interpretation: This shows that though the slowdown has affected many people financially
and mentally but then also there is large portion of population who invest their money in one or
the other financial instrument in hope of getting some handsome return. The people who don’t
invest can be the client of the company as these people are the fresh market for the company
and the challenge for the marketers to find out the reasons behind their decision and pull them
towards the growing investment sector.
2. REASON FOR NOT INVESTING

75. Time Constraint
20% 8%
Financial
Constraint
18% Lack of knowledge
54%
Volatile Market
Interpretation: This chart answers the why part of not investing the money. The company
should concentrate on these reasons and try to solve the issues like imparting knowledge about
the various investment options and the share market. Those having financial constraint can also
be converted to the clients as the company should provide them the options which are in the
client reach of investment. The people with time constraint and financially sound can be given
an option of Portfolio Management Services.
3. TRADER OR INVESTOR

76. 30% Short TermTrader
Long Term
70% Investor
Interpretation: This chart shows that 70% of the people believe in short term trading i.e.
investing their money for less than 1 year. These short term investors believe in getting their
return quick as they don’t want to park their money for longer time. The company can attract
them towards the share market as this market give high return in short span combining with
risk factor. The company should identify the risk taker and then play the role of increasing their
client base by absorbing the clients in their company. For long term investors aspiring high
return on their investment Portfolio Management Services can be a good options and attracting
them towards the investment in blue chip companies in share market for more than a year.
4. PREFERENCE OF INVESTMENT

77. Share Market
Mutual Fund
4% 3%
31% 45%
Insurance
Govt. Sec &
17% Bonds
Fixed Deposits
Interpretation: In this chart we can see that the preference for Share Market is more but the
preference for Insurance is not less. Insurance sector is an upcoming sector. The company
should see this as an opportunity and should take a step towards diversification to Insurance
sector. Mutual Fund is also a limited risky platform to invest in with good return and the
company should step forward to tell more about this instrument.
5. WHAT MOVES THE SHARE MARKET

78. US economy
Govt.announceme
12% 18%
nt
23% 10% Market
sentiments
company
37%
performance
Speculation
Interpretation: This helps in understanding the psychology of the investor and helps the
company in making the research reports for the clients’ (this is a kind of additional service to
retain the customer towards share market). The Company can provide the technical and
fundamental analysis so that those reports help them in their analysis of share market and they
can make their own company portfolio for investment purpose according to the market
forecasting and their own analysis.

79. 6. PERCENTAGE OF THE EARNING INVESTED BY THE PEOPLE
10% of earning
14%
30% 20% of earning
19%
30% of earning
37%
more than 30% of
earning
Interpretation: This statistical data is very important for the company as this is an estimation
of how much business the company can get in their court. The company could categories the
investors according to their capacity to invest and pitch them the right product to invest in. The
investors who are ready to invest more than 30% of their earning should be treated under
special category as they can be High Net worth Individual for the company.

80. 7. APPETITE FOR RISK
17% 17%
5%
12%
10%
15%
20%
54%
Interpretation: This data shows the capacity of the investors to take risk. Those who are ready
to take high risk seek high return on their investment from the market. These data will help the
company to target the customer with right kind of product offering to them and categorize the
client under different heads. This data will also cross check certain other data in the research
whether client is true to the questionnaire or not.

81. 8. RECESSION: THE BEST TIME TO PURCHASE SHARE
Yes
37%
Yes
No No
63%
Interpretation: This chart shows that in recession phase also around 40% people do not lose
hope to earn or invest. The company should take an initiative to hold the faith of these people
in recession. The rest not having faith in the recession time should be provided with financial
consultancy to do the right investment in the critical phase of economy.

82. 9. BEST FINANCIAL INSTRUMENT TO INVEST DURING
BOOM PHASE
Fixed Deposit
Share market(blue
7% 9% 2% chip co.)
17% Mutual Fund
57%
8% Insurance
Govt. sec &
Bonds
PMS
Interpretation: This chart shows the proportion of people investing in different financial
instruments during boom phase. This helps the company in knowing the psychology of the
investors as how they switch on their investing decision from boom phase to normal or
stagnant phase to recession phase. It is expected during boom phase that there are more chance
of high return from share market and sectors which invest their major portion of money in
share market so 57% of people are tilted towards share market.

83. 10. BEST FINANCIAL INSTRUMENT TO INVEST DURING
RECESSION PHASE
Fixed Deposit
Share market(blue
5% 8% chip co.)
18%
Mutual Fund
43% 9%
Insurance
17%
Govt. sec &
Bonds
PMS
Interpretation: This chart shows the contrasting data from the earlier one. This is how the
economic situation changes the decision of the investor. As we can see that during boom
period, share market was the most liked one but in recession the people see the security and
most of their investment goes to government securities and bonds as they are safer than any
other instrument. In recession time people usually lose faith in the economic growth and their
vision to get good return is very short and change their decision or some of them either don’t
invest and keep their money with them which give them zero in return. The people should be
aware of the difference between recession and depression and this can be done by any
company consultant to their clients.

84. Findings from the Survey
After the analysis followings are the main points which come out by the survey:
• Still there are people who do not want to go for the derivatives market because they
think it is risky and hard to understand and also due to financial constraints.
• Mostly Professional and post graduates are the participant of the derivatives market.
• Derivatives need continuously involvement of the investors.
• Respondents still prefer to go for the equity market. For investment purpose people go
for the equity market.
• Majority of investors invest for short term period.
• Normally near about 20% part of the income people invest in various sectors.
• Still people think that market is more risk prone and opt for government securities
during recession period and during boom phase they go for share market..
• Main reasons for not using derivatives reveals from the survey are that people have less
knowledge and they are unable to understand the derivative market concept.
• Main purpose to invest in derivatives market is to hedge them from the future risk.
• Main factor which people consider before investing money in market is condition in the
market. Other reasons are also there like profit of the company, growth of the company,
previous return on the stock, capital return etc

85. OBSERVATIONS AND FINDINGS
• Fluctuations more in secondary market than any other market.
• There are more speculators than investors.
• Information plays a vital role in the secondary market.
• Previously rolling settlement is T+5 days, now it changed to T+2 days and further it
will be changing to T+1 day.
• According to Mr. Manish Sukhla of Motilal Oswal Securities, many clients who
registered themselves for online trading ended up using the offline system.
• It was also observed that many broking houses offering internet trading allow clients to
use their conventional system as well just ensure that they do not loose them and this
instead of offering e-broking services they becomes service providers.
• The number of players is increasing at a steady rate and today there are over a dozen of
brokerage houses who have opted to offer net trading to their customers and prominent
among them are SHARE KHAN, India bulls, kotakstreet, Motilal Oswal securities and
geojit.

86. • The Bombay stock exchange sensex zoomed past the 6900 barrier for the first time in
history to achieve new all time high of 6864.62 intra day trade and ended at a historic
close of 6849.48 points.
• SEBI reconstruct the retail investors limit i.e., Rs.50000 to Rs.100000.
Conclusion
• Things have changed for the better with the SHAREKHAN going on-line coupled with
endeavor to stream line the whole trading system, things have changed dramatically
over the last 3 to 4 years. New and advanced technologies have breached geographical
and cultural barriers, and have brought the countrywide market to doorstep.
BROKER’S have suddenly been thrown to intense competition from their counter parts
across the country.
• The Regional Stock Exchanges have their own advantages like being nearer to the retail
investors and to let the Broker’s perish would be detrimental to stock market system
there is no brokerage firms with in India with national reach.
• In the present scenario and to compete the BROKER’S would require sound
infrastructure and trading as per international standards. The concepts of business have
changed and today this has become service to client or to provide the best possible
service to client or to engage into new business from the regional center to the metro
centers and to impart liquidity introduction of on-line trading is necessary.
• The introduction of on-line trading would influence in 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. The trading of SHAREKHAN of the first
day was Fs. 1.8 crores.

87. • Due to invention 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, it will
inspire confidence in investors resulting in increase business of the exchange.
• The BROKER’S has a greater scope than compared to the earlier times because of
invention of online trading.
• The concept of business has changed today this is a service oriental industry hence the
survival would require them to provide the best possible service to the client.
• The longer trading time had helped the investors as well as the broker to take much
interest in the trading of the securities as they had extra time to take in the security
market.
• The existing system can be further improved by introduction of stop loss facility that
will help to reduce investor’s losses.
• Also there is need for an exchange to setup standing committee into breakdown of
online trading.

88. SUGGESTIONS:
• I suggest the exchange authorities to take steps to educate Investors about their rights
and duties. I suggest to the exchange authorities to increase the investors’
confidences.
• I suggest the exchange authorities to be vigilant to curb wide fluctuations of prices.
• The speculative pressures are responsible for the wide changes in the price, not
attracting the genuine investors to the greater extent towards the market.
• Genuine investors are not at all interested in the speculative gain as their investment
is based on the future profits, therefore the authorities of the exchange should be more
vigilant in imposing to curb the speculative of securities.
• Necessary steps should be taken by the exchange to deal with the situations arising
due to break down in online trading.

89. BIBILOGRAPHY
BOOKS:
• Investment management V.K.Bhalla
• Investment management Preethi singh
• Security Analysis And Portfolio Management V.A.Avadhani
• Marketing of Financial Services V.A.Avadhani
• Indian Financial System M.Y.Khan
• Secondary market & its functions I.M. Pandey
WEBSITES:
• www.Share Khan.com
• www.bseindia.com
• www.sebi.com

90. • www.moneycontrol.com
• www.economictimes.com
• www.nseindia.com
• www.reuters.com
ANNEXURES:
QUESTIONNAIRE:-
Sir/Ma’am,
This questionnaire is the part of our summer internship programme. It is only for educational
purpose. The information provided by you will be kept secure and confidential.
NAME-
CONTACT-
GENDER-
OCCUPATION-
EDUCATIONAL QUALIFICATION-
 Undergraduate
 Graduate
 Post graduate
 Professional Degree

91. Q1. In which of these Financial Instruments do you invest into?
(i) Shares (ii) Mutual Funds (iii)Bonds (iv) Others
Q2. Which type of trading you prefer?
(i) Online (ii) Offline (iii) Not Applicable
Q3. If you prefer online Trading then what are the reasons for it?
(i) Privacy (ii) User friendly & Time Saving
(iii) Convenience (IV) All The Above
Q4. What factors motivates you to invest in securities?
(i) New IPO's (ii) Entry of FII's
(iii) More returns in less time (iv) Others
Q5. Does online trading system motivate you to deal in securities?
(i) Yes (ii) No
Q6. Have you heard about Sharekhan?
(i) Yes (ii) No
Q7. Which Brokerage Firm do you prefer for Online Trading?
(i) ICICI Direct (ii) Sharekhan (iii) India bulls
(iv) Kotak Securities (v) 5paisa (vi) Any other__________
Q8. What differentiates your Share Trading Company from others?
(i)Brokerage (ii) Research Report (iii) Dial up trade facility
(iv)Magazine (v) Exposure (vi) Account opening charges
Q9. How often do you trade?

92. (i) Daily (ii) Weekly (iii) Monthly (iv) Yearly
Q10. In which category does your income fall? (Per month in Rs)
i) 0-15000 ii) 15000 – 35000 iii) 35000 – 60000 iv) Above 60000
Q11. What percentage of your earnings do you invest in share trading?
(i)Up to 10% (ii) Up to 25% (iii) Up to 50% (iv) Above 50%
Q12. According to your preference rank the attributes of a share trading company.
(1=Most Important, 5= Not Important at all)
1. Customer Service :
2. Proper Guidance :
3. Regular Updates :
4. Trustworthiness :
5. Brokerage Charges :
Q13. Rank these share trading companies according to the quality of service they
provide. (1=Excellent, 5= Very poor)
1. Sharekhan
2. ICICI Direct
3. Indiabulls
4. Kotak Securities
5. Others (Specify)
Q14. What additional features do you wish to have in Online Share Trading?
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