CHAPTER IINTRODUCTIONOverview of Industry as a wholeIndian stock market have been role during the past five years,genratin...
Market Participants 2010 2011Securities Appellate Tribunal 1 1Regulators* 4 4Depositories 2 2Stock ExchangesWith Equities ...
The secondary market enables participants who hold securities to adjust their holdingsin response to changes in their asse...
• Corporate Sector• Government• HouseholdsThe above mentioned sectors are dependent on the Capital Market for theirfinanci...
United States 93.8 16.4India 75.0 36.5Table no 2 –Growth in stock market among worldThe stock markets worldwide have grown...
system is fast and efficient. Lack of investor education and resistance fromstockbrokers though has always posed some prob...
Profile of the organizationSMC Global is one of the largest and most reputed Investment Solutions Companythat provides a w...
Their key product offerings are as follows:o Equity Tradingo Commodity Tradingo Depositary Serviceso Portfolio Trackero Li...
History of SMCSMC acquired membership of the Delhi Stock Exchange in 1990 and later in 1995became a trading member of NSE....
Competition information1. Icicidirect.comProducts and ServicesA product for every need: ICICIdirect.com is the most compre...
2. India bullsIndia bulls Group is one of the top business houses in the country with businessinterests in Real Estate, In...
Abhipra Capital Limited is also empanelled as a Depository Participant with one of thepremier Commodity bourse, National C...
The company has four main areas of business:• Institutional Equities,• Retail (equities and other financial products),• Po...
S. W. O. T analysis of the organizationStrengths• The `do-it-yourself framework of online share trading offers retail inve...
executed as well as the speed of execution. The quality of execution, in turn,hinges on efficient order routing. We owe th...
• There are 2 types of online trading service: discount brokers and full serviceonline broker. Discount online brokers all...
out here willingly (or under the force of circumstance) assume the role of`advisors, sans the neutral, non-vested stance.O...
In short, the search for knowledge through Objective and Systematic method offinding solutions to a problem is Research.18
Scope of the studySince better broadband connectivity across the country and wider awareness of equityas an asset class wi...
Depository to investors. Depository is the people who stores shares in electronicsform. In India there are two depositorie...
MethodologyMarketing ResearchIs the systematic design collection, and analysis and reporting of Data and findingsrelevant ...
1.Define the Problem andResearch Objectives2. Develop the Research Plan3. Collect the Information4. Analyze the Informatio...
Data SourcesThere are two types of data.Primary data: The data that is collected first hand by someone specifically for th...
Research InstrumentsSelected instrument for Data Collection for survey is Questionnaire.Questionnaires: - A questionnaire ...
The sample Unit taken by me; are General individual customer those who trade inshare market.Sample Size/ Population Size: ...
4. Analysis of the Information or Data CollectedAfter the data have been collected, the researcher turns to the task of an...
CHAPTER IICONCEPTUAL FRAMEWORKInvestor perceptionSEBI in association with National Council of Applied Economic Research (N...
3. The survey results also clearly reveal that number of non-investor householdshave increased from about 156 million in 1...
To start with day to day processes which are implemented on daily basis to eliminateRisk as much as one can with the stipu...
Corporate SecuritiesThe average annual capital mobilization from the primary market has grown manifoldsince the last two-t...
Secondary MarketCorporate SecuritiesThere are 23 exchanges in the country, which offer screen based trading system. Thetra...
The NSE yet again registered as the market leader with more 85% of total turnover(volumes on all segments) in 2010-11 Top ...
The net borrowings of State Governments in 2005-06 amounted to Rs. 463,760million. The trading in government securities ex...
Notional 6% coupon bearing as well as zero coupon bonds).Now, there are futures and options based on benchmark index S&P C...
Government InterventionAs result of reforms in financial and real sector new investment alternatives haveemerged. There wa...
Also constant efforts have made auto industry to lower down the rates of automotivesand private banks also lowered their i...
Company financialsFigure no. 2 –Company’sRevenue Growth.The above shown graph depicts the revenue generated by SMC in 6 mo...
Online v/s offline tradingInternet trading is expected to:• Increase transparency in the markets.• Enhance market quality ...
It will also reduce transaction costs, increase liquidity in the market and ensure totaltransparency. It allows quick and ...
world where Internet facility isavailable.8. No documents are required for trading.9. Any Demat/DP account can be attached...
SEBI Guidelines for online TradingAccording to SEBI guidelines on Internet trading, brokers providing e-trading musthave a...
Internet TradingAt the end of March 2011, 78 trading members on the CM segment provided internetbased trading facility to ...
Table no 5– Distribution of turnover43
Market capitalizationThe total market capitalization of securities available for trading on the CM segmentincreased from R...
Online trading with SMCSMC launched online trading in June, 2006 in addition to the traditional offlinemode of trading on ...
Solutions & ServicesThe product has a lot of features which provides various benefits to clients:1) The screen gives live ...
6) It also enables the clients to view the transactions (Buy or Sell) done during theday. Beside the rate, quantity, type ...
Default Limit and Exposure to the Clients1. For Liquidated Value greater than or equal to 2 LAC, default limits will be op...
Proper Reply here shall mean:• Amount is being transferred to top up the margins only through a transferCheque or Demand d...
Before: - We have to make sure that the batch file has been created according tosquare off policy of RMS. All exceptions a...
CHAPTER IIIDATA ANALYSIS AND INTERPRETATIONQ 1. Do you know about investment options available?Knowledge PercentageYes 80%...
Q 2. Most important things you take into your mind while making investments?Factor PercentageRisk 8%Returns 17%Both 75%Tot...
Q 3. Awareness related to security marketsKNOWLEDGE PERCENTAGEComplete 8%Partial 75%Nil 17%TOTAL 100Table no 7- Investment...
Q 4. What is the basic purpose of your investment?INVESTMENT PURPOSE PERCENTAGELiquidity 30%Returns 25%Capital appreciatio...
Interpretation75% people are interested in liquidity, returns and tax benefits. And remaining 25%are interested in capital...
Q 5: Since how long have you been investing in capital market?Table no 9- Investments Period39%37%24%Figure no 7- Investme...
Q 6 : Do you trade Online?Frequency PercentageYes 141 70.5No 59 29.5Total 200 100Table no 10- Trade Online14159050100150Ye...
Q. 7. COMPLICATED PROCESSComplicated Process Frequency PercentageYes 60 30No 46 23No reply 94 47Total 200 100Table no 11- ...
Q. 8 . Why not online?Factors No. of PeopleYes NoLack of market knowledge 36 21No computer 20 110Investment risk 100 75Poo...
companies should also try to find and analyze the reasons as to why these customersare not trading online in spite of so m...
Q 9.Name of the company you trade with.Frequency PercentageKotak Securities 42 21ICICI direct 35 17.5IndiaBulls 60 30Share...
India Bulls enjoy maximum market share of 30% followed by Kotak and ICICI direct.SMC has only 7.5% share at present but is...
Q 10 : Where ELSE do you invest your surplus fund?Areas FrequencyDirect Equity 75Mutual fund 65Insurance 150Real Estate 35...
InterpretationWe also found that besides stock Market, people prefer to invest in Mutual funds.Thus, it can also serve as ...
CHAPTER IVSUMMARY AND CONCLUSIONResults of the studyFacts and figure speak in itself that as from the past years analysis ...
through the entire rigmarole of opening up the bank and demat account again for easyoperation. Apart from the hassles invo...
Limitations of the projectA study on promotional tools used for marketing product offered by HDFCSL wasbased on secondary ...
Suggestions & RecommendationsAs we worked with this project, we came across some good and some notso good features of this...
This can be done away with by going to ‘Net Position’ feature and changing it inone go.• SMC Swift gives the client a faci...
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  1. 1. CHAPTER IINTRODUCTIONOverview of Industry as a wholeIndian stock market have been role during the past five years,genrating an annualreturn of 28%(on the nifty index).Still general public prefers putting it money inbank,rather than putting it in stock. Within Indian economy doing so well, return fromstock market have been far higher than return from any other investment.Avenuerupees 1, 00,000 invested in the nifty in April would have been worth a little overrupees 3, 00,000 by April, 2008.But the top value creatures have been delivered farsuperior returns the same lakh invested in unitech would have been worth rupees1.52cr if it had been invested in aban aban offshare.Most of people are reluctant to put their money in shares,because of uncertainty of thereturn.At times stock market is so volatile that it becomes very difficult for investorsto decide whether to purchase some more stocks or sell them,whether to enter themarket or book profit. with so much uncertainty prevailing, the case of investing instock market is totally different from the case of investing in some other places.1
  2. 2. Market Participants 2010 2011Securities Appellate Tribunal 1 1Regulators* 4 4Depositories 2 2Stock ExchangesWith Equities Trading 21 19With Debt Market Segment 1 1With Derivative Trading 2 2Brokers 9,443 9,487Corporate Brokers 4,110 4,190Sub-brokers 27,541 44,074FIIs 996 1319Portfolio Managers 158 205Custodians 15 15Share Transfer Agents 82 76Merchant Bankers 152 155Bankers to an Issue 47 50Debenture Trustees 30 28Underwriters 45 35Venture Capital Funds 90 106Foreign Venture Capital Investors 78 97Mutual Funds 40 40Collective Investment Schemes 0 0Table no 1- Market Participants in Securities MarketMarket segmentThe securities market has two interdependent segments: the primary and thesecondary market. The primary market is the channel for creation of new securities.These securities are issued by public limited companies or by government agencies.In the primary market the resources are mobilized either through the public issue orthrough private placement route. It is a public issue if anybody and everybody cansubscribe for it, whereas if the issue is made available to a selected group of persons itis termed as private placement. There are two major types of issuers of securities, the corporateentities who issue mainly debt and equity instruments and the government (central as well as state)who issue debt securities.These new securities issued in the primary market are traded in the secondary market.2
  3. 3. The secondary market enables participants who hold securities to adjust their holdingsin response to changes in their assessment of risks and returns. The secondary marketoperates through two mediums, namely, the over-the-counter (OTC) marketand the exchange-traded market. OTC markets are informal marketswhere trades are negotiated. Most of the trades in the government securities are inthe OTC market. All the spot trades where securities are traded for immediate delivery and payment take place in the OTC market. The other option is to trade using theinfrastructure provided by the stock exchanges.There are 23 exchanges in India and all of them follow a systematic settlement period.All the trades taking place over a trading cycle (day=T) are settled together after acertain time (T+2 day).The trades executed on the National Stock Exchange (NSE) are cleared and settled bya clearing corporation. The clearing corporation acts as a counterparty and guaranteessettlement.Nearly 100% of the trades in capital market segment are settled through dematdelivery. NSE also provides a formal trading platform for trading of a wide range ofdebt securities, including government securities. A variant of the secondary market isthe forward market, where securities are traded for future delivery and payment. Avariant of the forward market is Futures and options market. Presently only twoexchanges viz., NSE and Stock Exchange, Mumbai (BSE) provides trading in thederivatives of securities.Dependence on Securities Market3
  4. 4. • Corporate Sector• Government• HouseholdsThe above mentioned sectors are dependent on the Capital Market for theirfinancial needs. The following table shows their percentage share respectively.International scenarioFollowing the implementation of reforms in the securities industry during the lastdecade, Indian stock markets have graduated to a better position vis-à-vis thesecurities market in developed and emerging markets. As may be seen from Table 1-2, India has a turnover ratio, which is comparable to the other developed market, andalso one of the highest in the emerging markets. At the end of 2005, Standard andPoor’s (S&P) ranked India 17th in terms of market capitalization (19th in 2004), 16thin terms of total value traded in stock exchanges (17th in 2004) and 6th in terms ofturnover ratio (7th in 2005). India has the number one ranking in terms of listedsecurities on the Exchanges followed by the USA. These data, though quiteimpressive, do not reflect the full Indian market, as S&P (even other internationalpublications) does not cover the whole market. For example, India has more than9000 listed companies at the end of March 2009, while S&P considers only 5,644companies.If whole market were taken into consideration, India’s position vis-à-vis other countries would bemuch better.Singapore 91.2 57.9France 89.5 42.2Germany 83.6 44.6Italy 95.5 55.9United Kingdom 94.3 43.64
  5. 5. United States 93.8 16.4India 75.0 36.5Table no 2 –Growth in stock market among worldThe stock markets worldwide have grown in size as well as depth over last onedecade. The turnover on all markets taken together has grown from US $ 5.5 trillion in1990 to $ 38 trillion in 2005 when it reached a peak. Thereafter, it has witnessed a decline andstood at US $ 34.6 trillion in 20011. It is significant to note that US alone accounted for about47.4% of worldwide turnover in 20011. Despite having a large number of companies listed on itsstock exchanges, India accounted for a meager 2.96% in total world turnover in 20011. Themarket capitalization of all listed companies taken together on all markets stood at US $ 34.6trillion in 2011 ($ 23 trillion in 2009). The share of US in worldwide market capitalizationdecreased from 47.24% as at end-2010 to 44.66% in end-2009, while Indian listed companiesaccounted for 1.87% of total market capitalization in 2009.International and Indian scenario in online brokingIn US markets, online brokerage has significantly changed the dynamics of the marketplace, resulting in one of the biggest shifts in the individual investors relationshipwith their brokers. Investors access a wealth of financial information on the same timeas do market and financial professionals including breaking news, developments andmarket data. Online brokerage provides investors the tools to analyze the informationsuch as research reports. In the US, 82 per cent of the deals are done on line. TheEuropean on line broking market is expected to be of $8 billions and has risen toabout $50 billion today.Net trading shall initially faced some problems relating to infrastructure andunderstanding of the concept. Presently, the legal framework is right in place andthere are organizations like SEBI, RBI etc. which provide investor guidelines to theinvestors for protection of their right. Also, investor grievance handling and redressal5
  6. 6. system is fast and efficient. Lack of investor education and resistance fromstockbrokers though has always posed some problems.With Internet trading, investment in the stock market is just a click away, in thecomfort of office or a home. It makes it easy for anyone to access net brokers andtrade in stock. Even the smallest retail investor can access information that was tillnow restricted to big traders. Net trading provides investors with seamless, real timeonline access to stock markets.6
  7. 7. Profile of the organizationSMC Global is one of the largest and most reputed Investment Solutions Companythat provides a wide range of services to its substantial and diversified client base.Founded in 1990, by Mr. Subhash Chand Aggarwal and Mr. Mahesh Chand Gupta,SMC, is a full financial services firm catering to all classes of investors. The companyis having its corporate office in New Delhi with regional offices in Mumbai, Kolkata,Chennai, Ahemdabad, Cochin, Hyderabad, Jaipur plus a growing network of morethan 1250 offices across over 350 cities/towns in India and overseas office in Dubai.• Enabling shorter settlement cycles and book entry settlements systems, andmeeting the current international standards of securities market.Products & ServicesSMC customers have the advantage of trading in all the market segments together inthe same window, as they understand the need of transactions to be executed withhigh speed and reduced time. At the same time they have the advantage of having allkind of Insurance & Investment Advisory Services for Life Insurance, GeneralInsurance, Mutual Funds, and IPO’s also.SMC is a customer focused financial services organization providing a range ofinvestment solutions to their customers. They work with clients to meet their overallinvestment objectives and achieve their financial goals. Their clients have theopportunity to get personalized services depending on their investment profiles. Theirpersonalized approach enables clients to achieve their Total Investment Objectives.7
  8. 8. Their key product offerings are as follows:o Equity Tradingo Commodity Tradingo Depositary Serviceso Portfolio Trackero Life Insuranceo General Insuranceo Mutual Fund8
  9. 9. History of SMCSMC acquired membership of the Delhi Stock Exchange in 1990 and later in 1995became a trading member of NSE. In 2000 the company became a member of BSEand a depository participant of CDSL India Ltd. In the same year, the companyacquired the Trading & Clearing Membership of NSE Derivatives and thememberships of leading commodity exchanges i.e. NCDEX and MCX in subsequentyears. In 2006, SMC expanded globally and acquired the Trading & ClearingMembership of Dubai Gold and Commodity Exchange (DGCX). In the same year, thecompany also started its Insurance Broking division, IPO & Mutual Fund DistributionDivision and its Merchant Banking division.Mission• Establishing a nation-wide trading facility for equities, debt instruments andhybrids,• Ensuring equal access to investors all over the country through an appropriatecommunication network,• Providing a fair, efficient and transparent securities market to investors usingelectronic trading systems,• Enabling shorter settlement cycles and book entry settlements systems, andmeeting the current international standards of securities market.Vision• Their vision is to be the most respected company in the financial servicesspace.9
  10. 10. Competition information1. Icicidirect.comProducts and ServicesA product for every need: ICICIdirect.com is the most comprehensive website,which allows you to invest in Shares, Mutual funds, Derivatives (Futures andOptions) and other financial products. Simply put we offer you a product forevery investment need of yours.ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an Affiliateof ICICI Bank Limited and the Website is owned by ICICI BankLimitedProduct & Services:Trading in shares: ICICIdirect.com offers you various options while trading inshares.Cash Trading: This is a delivery based trading system, which is generally done withthe intention of taking delivery of shares or monies.Margin Trading: You can also do an intra-settlement trading up to 3 to 4 times youravailable funds, wherein you take long buy/ short sell positions in stocks with theintention of squaring off the position within the same day settlement cycle. (ONLYfor intraday)10
  11. 11. 2. India bullsIndia bulls Group is one of the top business houses in the country with businessinterests in Real Estate, Infrastructure, Financial Services, Retail, Multiplex andPower sectors. India bulls Group companies are listed in Indian and overseas marketsand have a market capitalization of over USD 7 billion. The Net worth of the Groupexceeds USD 2.5 billion. India bulls Group companies enjoy highest ratings fromCRISIL, a subsidiary of Standard and Poor’s. India bulls has been conferred the statusof a “Business Super brand” by The Brand Council, Super brands India.India bulls Financial Services is an integrated financial services powerhouseproviding Consumer Finance, Housing Finance, Commercial Loans, Life Insurance,Asset Management and Advisory services. India bulls Financial Services Ltd isamongst 68 companies constituting MSCI - Morgan Stanley India Index. India bullsFinancial is also part of CLSA’s model portfolio of 30 Best Companies in Asia. Indiabulls Financial Services signed a joint venture agreement with Sogecap, the insurancearm of Societé Generale (SocGen) for its upcoming life insurance venture. India bullsFinancial Services in partnership with MMTC Limited, the largest commodity tradingcompany in India, is setting up India’s 4th Multi-Commodities Exchange.3. AbhipraBeginning as a Broking House, we grew into Business House. We broadened ourhorizons and stepped into the field of Depository, Stock Broking, Full-FledgedMoney Changing Services, Category I Registrar & Transfer Agent, CommodityTrading, Online Trading (Equity, F&O & Commodity), e-Return Intermediary.Abhipra today commands the status of being one of the leading DepositoryParticipants of Northern India in Private Sector. Moreover, Abhipra has TradingTerminal Outlets for NSE & BSE spread to almost every nook & corner of Northern India.11
  12. 12. Abhipra Capital Limited is also empanelled as a Depository Participant with one of thepremier Commodity bourse, National Commodities and Derivatives Exchange Limited(NCDEX). So a client now can open Commodity Demat Account with us. At Abhipra, weoffer our clients far more than merely a comprehensive range of financial services. Weoffer them ideas, innovations, and solutions with extra-ordinary results. We feel thatquality is an essential ingredient in building successful businesses. Not only do productsand services need to be of high quality, but potential customers also need to haveassurance that the products will be of high quality. This is evidenced from the fact thatAbhipra is a ISO 9001 (Quality Assurance Systems) Registered Company.4. Kotak securitiesKotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock brokingand distribution arm of the Kotak Mahindra Group. Kotak Mahindra is one of Indiasleading financial institutions, offering complete financial solutions that encompassevery sphere of life. From commercial banking, to stock broking, to mutual funds, tolife insurance, to investment banking, the group caters to the financial needs ofindividuals and corporate.Kotak Securities was set up in 1994. Kotak Securities is a corporate member of bothThe Bombay Stock Exchange and the National Stock Exchange of India Limited.12
  13. 13. The company has four main areas of business:• Institutional Equities,• Retail (equities and other financial products),• Portfolio Management and• Depository Services.5. Motilal oswalMotilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, withjust two people running the show. It has established itself as the Best Local BrokerageHouse in India (Asia Money Brokers’ Poll 2005). Their Institutional Equity Divisioncombines the efforts of the Research and Sales & Trading departments to best serveclients needs. Consistent delivery of high quality advice on individual stocks, sectortrends and investment strategy has established them as a reliable research unitamongst leading Indian as well as international investors.13
  14. 14. S. W. O. T analysis of the organizationStrengths• The `do-it-yourself framework of online share trading offers retail investors thethree benefits of transparency, access and efficiency. Paperwork diminishessignificantly, and no more painful trips to your broker to check if everythings inorder. Online trading has made it possible to universalize access to retail investors.This was earlier very difficult, as the cost of servicing often-outweighedtransaction volumes. Online brokerage ranges between 0.05-0.20 per cent of thevalue of transactions for non-delivery-based trades, and between 0.25-0.95 percent for delivery-based trades. Once major investments in online infrastructure areover and done with - and with the economies of scale coming into play - it isexpected that brokerage rates would head further downwards.• Access to online trading and latest financial happenings, apart from quotes andunbiased investment analyses, all consolidate into a value-added product mix intandem with evolving markets that are freer and fairer. The Net result: Aninquisitive, informed and demanding investor. Todays investor is more involvedin managing his or her assets and analyzing a vast array of investment options.Technology and todays enabled investor have, in turn, driven competition,resulting in reduced costs of trading, transparency in dealings, and pricing infothat is accurate and real-time. More and more investors now want to know howtheir trades are executed, and whether they have received the best possible price.Critical components of execution quality include the prices at which orders were14
  15. 15. executed as well as the speed of execution. The quality of execution, in turn,hinges on efficient order routing. We owe this to our investor fraternity.Weakness• Every thing in the world has a flip side to it - Transaction velocity is crucial.And more often than not, connections are lousy. Theres also a degree ofinvestor skepticism about online payment and settlement mechanisms in spiteof all the encryption and fire walling brought into play. Time and technologywill soon assuage these concerns, which hark back to the `physical days.• “The three main technology obstacles which have prevented Internet brokingfrom taking off are:1. Lack of Internet penetration2. Bandwidth infrastructure3. Poor quality of ISP infrastructure.”Opportunities• You have some money to dabble with. Trading shares on BSE/NSE hasalways been your dream. When will you ever find the time? And besides, thehassle of finding a broker is not easy. This is your main opportunity.• Realizing there is untapped market of investors who want to be able to executetheir own trades when it suits them, brokers have taken their trading rooms tothe Internet. Known as online brokers, they allow you to buy and sell sharesvia Internet.15
  16. 16. • There are 2 types of online trading service: discount brokers and full serviceonline broker. Discount online brokers allow you to trade via Internet atreduced rates. Some provide quality research, other don’t. Full service onlinebrokerage is linked to existing brokerages. These brokers allow their clients toplace online orders with the option of talking/ chatting to brokers if advice isneeded. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com,IndiaBulls.com, Sharekhan.com, Geojit securities.com, HDFCsec.com,Tatatdw.com, Kotakstreet.com are some of the online broking sites in India.• And daily trading turnover is estimated in the vicinity of 0.75 per cent of thecombined BSE and NSE daily turnover of about RS 11,000 crore!!! The pointis, theres tremendous scope for growth. Especially when you consider the US,where trading over the Net accounts for about 55 per cent of the total volumes.And, I believe, in some Asian markets the figures as high as 70 per cent.Threats• On to some threat perception - Domestic funds, foreign institutional investors andoperators comprise the three main market constituents. And all three include terminvestors as well as opportunists in their pecking order. Some, for instance, hitchtheir fate with what the FIIs are up to. All this spells spurting volumes. Butnobody gives a damn about the resultant volatility.• And some, not all, offer free investment advice over the Net to lure rookieinvestors with misleading information. Prices of scripts can also be influenced tothe advantage of vested interests, courtesy the Net. Unlike in the US, stockbrokers16
  17. 17. out here willingly (or under the force of circumstance) assume the role of`advisors, sans the neutral, non-vested stance.Objectives of the studyBefore starting any project, we should keep in mind the clear objectives of the projectbecause in the absence of the objectives one cannot reach the conclusion or end resultof the project.So, the objective of my project is to:• To analyze the market share & services of existing players.• To analyze the facts that how much people are interested to invest in stocks.• To judge the future prospects of online trading for SMC investment solutions.Stock market of India is now been one of the fascinating market worldwide. Indian isamong the top ten destination of the world to which global player want to invest.Research comprises defining and redefining problems, formulating hypothesis orsuggested solutions; collecting, organizing and evaluating data; making deductionsand reaching conclusions; and at last carefully testing the conclusions to determinewhether they fit the formulating hypothesis.17
  18. 18. In short, the search for knowledge through Objective and Systematic method offinding solutions to a problem is Research.18
  19. 19. Scope of the studySince better broadband connectivity across the country and wider awareness of equityas an asset class will push the online trade volumes to over 50% of total Tradetherefore it is relevant to the future prospects emerging in the stock market.In order to compete with the online trading market leader like ICICI the company hasto work a lot on Online Trading in order to get the competency with other players.Since the online trading is accepted by major players in the Indian Stock Market, theimportance of Online Trading has increased over the past decade therefore it is veryimportant to consider the Online Trading as a future of the Indian Stock Market.This project would also tell us about the working of the Indian Stock Market and theforces acting in the Online Trading.“SMC” a software used by SMC Investment Solutions & SERVICES is an edge forgaining competitive advantage; therefore it is relevant to know the working of thissoftware which would be enlightened in our company.Online Trading Account and Demat AccountAfter the introduction of the online trading systems it is very easy to do online tradingwith just a PC and an Internet connection. All you need to do is just open a Demataccount and a trading account with a depository participant or DP. DP is connecting19
  20. 20. Depository to investors. Depository is the people who stores shares in electronicsform. In India there are two depositories, NSDL and CDSL.Most of the banks and brokerage houses provide trading account and Demat account.To open a Demat account you need many things like PAN card, address proof, bankaccount etc.20
  21. 21. MethodologyMarketing ResearchIs the systematic design collection, and analysis and reporting of Data and findingsrelevant to specific marketing situation facing the company.Research DesignTypes of Research: - Descriptive researchDescriptive research includes Surveys and fact-finding enquiries of different kinds.The major purpose of descriptive research is description of the state of affairs, as itexists as the present. The main characteristic of this method is that the researcher hasno control over the variables; he can only report what has happened or what ishappening.21
  22. 22. 1.Define the Problem andResearch Objectives2. Develop the Research Plan3. Collect the Information4. Analyze the Information5. Present the FindingsFigure no 1- Research process1. Define the Research Problem and ObjectiveObjective• To analyse the market share & services of existing players• To judge the future prospects of online trading for smc investment solutions.The respondents are stratified into offline share trading respondents and online sharetrading respondents.2. Develop the Research PlanThe second stage of Research calls for developing the most efficient plan forgathering information.Designing a research plan calls for decision on the data sources, research approaches,research instruments, sampling plan & contact methods.22
  23. 23. Data SourcesThere are two types of data.Primary data: The data that is collected first hand by someone specifically for thepurpose of facilitating the study is known as primary data. So in this research the datais collected from respondents through questionnaire.Secondary data: For the company information I had used secondary data likebrochures, websites of the company etc.Survey ApproachSurvey Research: - survey research is used to learn about need, perception andawareness level of the customers for online share trading.The method used by me is Survey Method as the research done is DescriptiveResearch.23
  24. 24. Research InstrumentsSelected instrument for Data Collection for survey is Questionnaire.Questionnaires: - A questionnaire consists of set of questions presented torespondent for their answers. It can be Closed Ended or Open Ended.Open Ended: - Allows respondents to answer in their own words & are difficult toInterpret and Tabulate.Close Ended: - Pre-specify all the possible answers & are easy to Interpret andTabulate.Types Of Question Included:Dichotomous QuestionsWhich has only two answers “Yes” or “No”?Multiple Choice QuestionsWhere the respondent is offered more than two choices.Rating ScaleA scale that rates some attributes from “excellent” to “very poor” and “veryinefficient” to “Very efficient”.Sampling PlanAfter deciding on the research approach and instrument, the marketing researchermustDesign a Sampling Plan. This includes:Sampling Unit: - Who is to be surveyed? The marketing researcher must define thetarget population that will be sampled.24
  25. 25. The sample Unit taken by me; are General individual customer those who trade inshare market.Sample Size/ Population Size: - How many people should be surveyed?I have cover entire Delhi city for the survey. My sample size is 200.Sampling Procedure: - How should the respondent be chosen?In the Project, sampling done is on basis of area sampling for the Delhi city.In which convenient sampling was done.Contact MethodsOnce the sampling plan had been determine, the marketing researcher must devicehow the subject should be contacted: Mail, Telephone, Personal or On-lineInterviews.In my project I went for personal Interviewing, as it’s necessary to go meet theindividual respondents at their place so I can collect the right information.3. Collect The InformationThe Data collection phase of marketing research is generally the most expensive andthe most prone to error.I had visited all the respondents individually in the Delhi city and collectedinformation via questionnaire.I used to talk with them and in that talk I asked them the relevant question of thequestionnaire so I could get correct information from them for the objective purpose.For some questions I have to explain them about company, like different plans of thecompany etc.Generally most of the respondents had filled questionnaire themselves but some avoidfilling up so at that time myself filled according to their answer.25
  26. 26. 4. Analysis of the Information or Data CollectedAfter the data have been collected, the researcher turns to the task of analysis then.The analysis of data requires a number of closely related operations such asestablishment of categories, then application of these categories to raw data thoughcoding, tabulation and statistical inferences. The unwieldy data should necessarily becondensed into a manageable groups and tables for further analysis.The researcher can analyze the collected data with the help of various statisticalmeasures.After collecting the data I used hand tabulation method for analysis.5. Interpretation of survey:Based on collected information the analysis is done. The questionnaire used by me isgiven below.26
  27. 27. CHAPTER IICONCEPTUAL FRAMEWORKInvestor perceptionSEBI in association with National Council of Applied Economic Research (NCAER)conducted a Survey of Indian Investors in 2000-01 and then followed it up in 2004-05. The survey of 2005-06 was based on a sample of 288,081 geographicallydispersed rural and urban areas. The findings of this survey were released inSeptember 2006. The survey estimated that a total of 13.1 million or 7.4 per cent ofall Indian households totaling 21 million individuals directly invested in equity sharesor debentures or both during 2007-08. The other findings are as listed below:1. The number of debenture owning households and individual debenture holdersfar exceeds household and individual equity investors. Of the total 13.1 millioninvestor households, 9.6 million households owned bonds or debentures,whereas only 6.5 million investor households owned equity shares.2. The percentage of households investing in equity or debentures is more in urbanareas than in rural areas. This divergence is more in case of equities comparedto debentures. Of the 51 million urban households, 7.8 million householdsrepresenting more than 12 million urban individual investors owned equityshares or debentures or both. Whereas, of the 125 million rural households, only5.3 million households representing more than 8 million individual investorsshows a definite migration of investors from equity market to bond marketduring the period between the two surveys.27
  28. 28. 3. The survey results also clearly reveal that number of non-investor householdshave increased from about 156 million in 1998-99 to nearly 164 million in2007-08 constituting nearly 92.6 per cent of all households.4. It was also observed that the investor population and town size are directlyproportional. The largest city with more than 50 lakh population accounted forabout 17 per cent of investor households and the next higher segment, morethan 31 per cent investor households were in towns with population between 10and 50 lakh.Risk Management SystemThe risk management system ensures the minimization of inherent known risks withappropriate tools and timely speedy flow of information. An effective riskmanagement system further ensures certain alerts by which unknown risks can bepredicted & informed in due course of time.In stock market operation, the risk is too high to imagine and one can find instantimpact of every bit of information in terms of monetary gain or loss. So one has to bevery careful & particular to the alerts provided time to time by RMS for containingthe risks.Further, RMS can’t ensure a complete elimination of risks. It can reduce the risk &level of reduction of risk depends upon our own efforts. So it is advised that oneshould follow set norms & put proper attentions on various alerts send by the RMSduring the day /at the end of day for controlling the risks.28
  29. 29. To start with day to day processes which are implemented on daily basis to eliminateRisk as much as one can with the stipulated tools and techniques. One should applythese tools and techniques according to the requirement of their Management and theMarket conditions.Primary MarketThe government and corporate sector raised an aggregate of Rs. 2,676,600 millionduring 2009-10 as against Rs.2,572,201 million during the preceding year.Government raised about two third of the total resources, with central governmentalone raising nearly Rs. 1,476,360 million.(Source: SEBI)Table no 3: Resources Mobilized from the Primary Market29
  30. 30. Corporate SecuritiesThe average annual capital mobilization from the primary market has grown manifoldsince the last two-three decades. It received a further boost during the first half of1990s with the capital raised by non-government public companies rising sharplyfrom Rs. 43,120 million in 1990-91 to Rs. 264,170 million in 1994-95. Thereafter,there has been a decline due to conditions prevailing in the secondary market.However, the year 2008-09 took a turnaround in its performance as compared to theprevious year by mobilizing Rs. 32,100 million. The capital raised, which used to beless than 1% of gross domestic saving (GDS) in the 1970s increased to about 13% in1992-93 but thereafter witnessed declines.Indian market is getting integrated with the global market, though in a limited waythrough Euro Issues. Since they were permitted access in 1992, Indian companieshave raised about Rs. 30,980 million through American Depository Receipts(ADRs)/Global Depository Receipts (GDRs).FIIs have invested heavily in Indian market in 2009-10. They had net cumulativeinvestments of US$ 38.75 billion as at end of March 2010. There were 745 FIIsregistered with SEBI as of end March 2010.It appears that more and more people prefer mutual funds (MFs) as their investmentvehicle. This change in investor behavior is induced by the evolution of a regulatoryframework for MFs, tax concessions offered by Government and preference ofinvestors for passive investing. Starting with an asset base of Rs. 250 million in 1964,the total assets under management at the end of March 2010 have risen to Rs.1,396,160 million. During the last one decade, the resources mobilized by the MFs areincreased from Rs. 112,440 million in 1993-94 to Rs. 476,840 million in 2009-10.30
  31. 31. Secondary MarketCorporate SecuritiesThere are 23 exchanges in the country, which offer screen based trading system. Thetrading system is connected using the VSAT technology from over 357 cities. Therewere 9,368 trading members registered with SEBI as at end March 2011.The market capitalization has grown over the period indicating more companies usingthe trading platform of the stock exchange. The all India market capitalization isestimated at Rs. 13,187,953 million at the end of March 2011. The marketcapitalization ratio defined as the value of listed stocks divided by GDP is used as ameasure of stock market size. It is of economic significance since market is positivelycorrelated with the ability to mobilize capital and diversify risk. It increased sharply to52.3% in 2010-11 against 28.5% in the previous year. The trading volumes onexchanges have been witnessing phenomenal growth over the past decade. Thetrading volume which peaked at Rs. 28,809,900 million in 2008-09, fell substantiallyto Rs. 9,689,093 million in 2009-10. However, the year 2010-11 saw a turnaround inthe total trading volumes on the exchanges. It registered a volume of Rs. 16,204,977million. The turnover ratio, which reflects the volume of trading in relation to the sizeof the market, has been increasing by leaps and bounds after the advent of screenbased trading system by the NSE. The turnover ratio for the year 2010-11 accountedat 122.9%.The relative importance of various stock exchanges in the market has undergonedramatic change during this decade. The increase in turnover took place mostly at thebig exchanges.31
  32. 32. The NSE yet again registered as the market leader with more 85% of total turnover(volumes on all segments) in 2010-11 Top 5 stock exchanges accounted for 99.88%of turnover, while the rest 18 exchange for less than 0.12% during 2010-11. About tenexchanges reported nil trading volume during the year.S&P CNX Nifty is the most widely used indicator of the market, .The indexmovement have been responding to changes in the government’s economic policies ,the increase in FIIs inflows , etc. However, the year 2005-06 witnessed a favorablemovement in the Nifty, wherein it registered its all time high in January. Themovement of the S&P CNX Nifty, the most widely used indicator of the market. Theindex movement have been responding to changes in the government’s economicpolicies , the increase in FIIs inflows , etc. However, the year 2010-11 witnessed afavorable movement in the Nifty, wherein it registered a high in January 2011 of2014.65. The point-to-point return of Nifty was 80.14% for 2010-11.Government SecuritiesThe primary issues of the Central Government have increased manifold during thedecade of 1990s from Rs. 89,890 million in 1990-91 to Rs. 1,476,360 million in 2010-11. The issues by state governments have also increased over this period from Rs.25,690 million to Rs. 505,210 million. The Central Government mobilized Rs.1,215,000 million through issue of dated securities and Rs. 261,360 million throughissue of T-bills. After meeting repayment liabilities of Rs. 326,930 million for datedsecurities, and redemption of T-bills of Rs. 261,260 million, net market borrowing ofCentral Government amounted to Rs. 888,160 million for the year 2010-11.32
  33. 33. The net borrowings of State Governments in 2005-06 amounted to Rs. 463,760million. The trading in government securities exceeded the combined trading in equitysegments of all the exchanges in the country during 2010-11. The aggregate trading incentral and state government dated securities, including treasury bills, increased bymanifold over a period of time. During 2010-11 it reached a level of Rs. 26,792,090million. The share of WDM segment of NSE in total turnover for governmentsecurities decreased marginally from 52% in 2004-05 to 47.6% in 2010-11. However,the share of WDM segment of NSE in the total of Non-repo government securitiesincreased marginally from 74.01% in 2004-05 to 74.89% in 2010-11.Along with growth of the market, the investor base has also widened. In addition tobanks and insurance companies, corporate and individual investors are also investingin government securities. Due to the soft interest rate policy pursued by the RBI, thecoupon rates offered on government borrowings have fallen sharply. The weightedaverage costs of its borrowing have declined to 5.71% in 2010-11. The maturitystructure of government debt is also changing. About 77% of primary issues wereraised through securities with maturities above 5 years and up to 10 years. As a resultthe weighted average maturity of dated securities increased to 14.94 years in 2010-11.Derivative MarketThe number of instruments available in derivatives has been expanded. To begin with,SEBI only approved trading in index futures contracts based on S&P CNX NiftyIndex and BSE-30 (Sensex) Index. This was followed by approval for trading inoptions based on these two indices and options on individual securities and alsofutures on interest rates derivative instruments (91-day Notional T-Bills and 10-year33
  34. 34. Notional 6% coupon bearing as well as zero coupon bonds).Now, there are futures and options based on benchmark index S&P CNX Nifty andCNX IT Index as well as options and futures on single stocks.The total exchange traded derivatives witnessed a value of Rs. 21,422,690 millionduring 2010-11 as against Rs. 4,423,333 million during the preceding year. WhileNSE accounted for about 99.5% of total turnover, BSE accounted for less than 1% in2010-11. NSE has created a niche for itself in terms of derivatives trading in theglobal market.34
  35. 35. Government InterventionAs result of reforms in financial and real sector new investment alternatives haveemerged. There was a time when few individuals possessed majority of the wealth inthe society. With the efforts of government our economy witnessed significantgrowth, which led to uniform distribution of income in society. As a result income ofmasses started rising and they started looking for suitable investment avenues, toachieve their financial goals. From savings accounts, fixed deposits, post officesavings schemes, several other investment alternatives have emerged such as capitalmarkets, mutual funds, commodities market, insurance derivatives etc. There has beena major shift towards risky investments in order to earn higher returns. There werealso scams like US-64, Harshad Mehta’s scam, which forced investors to makechanges in their portfolio. But after government efforts investors’ confidence isrestored in equity markets, which led to growth in financial services sector. After thisperiod in todays market scenario we find Indian economy still struggling while theworld is facing massive recession. Indian economy is in such position because it isstill in its developing stage and so there is so much more to explore and develop.Recently market has faced downtrend but still holding on and offering newinvestment avenues to investors and still offers lucrative benefits to investors.SMC GLOBAL AND SECURITY plays a very important role along with otherplayers in the market in current scenario by offering its financial services. Investorstoday are going in for saving their money instead of investing it in the market due tocurrent market situation. Government of India is making constant efforts to supportthe economy by decreasing interest rate on loans of all types. This showed a positivegrowth in the market by investors turning back to the market.35
  36. 36. Also constant efforts have made auto industry to lower down the rates of automotivesand private banks also lowered their interest rates on loans to help Indian investors tocome forward and step in the market.Thus, this study helps in understanding current market volatility and solutions to dealwith it, so as to find future prospects for SMC GLOBAL AND SECURITY andanswer questions like, how to deal with recession evils? How to protect investorsinterest? How to sustain market position and market share?To understand it and deal with it one always has to go to the basics that is theinvestors and the reason investor invests is his motive.Motives for investment may vary from person to person, but there are some commondesires. Everybody expects some return out of investment. Investors are alsoconcerned about the safety of investment. And, in case of an emergency, people wanttheir money back, quickly. Hence, there are three criteria’s to evaluate everyinvestment avenue:1. Safety2. Liquidity3. Returns36
  37. 37. Company financialsFigure no. 2 –Company’sRevenue Growth.The above shown graph depicts the revenue generated by SMC in 6 months startingfrom September, 2010 to March’2011. This graph shows an upward sloping trendline. If we look at the numbers, we see a 343% growth in the revenues from 29.05lakhs in Sept’10 to 128.89 lakhs in March’11.Though, there have been a few slips in January and March but over all its presentsfinancials of a growth company.37MonthRevenue(In Lakhs)Sep ‘10 29.05Oct ‘10 60.27Nov‘10 79.61Dec‘10 107.94Jan’11 104.37Feb’11 140.43Mar’11 128.890204060801 001 201 401 60Sep‘10Nov‘11Jan’13Mar’15Rev enu e( inLak hs)02 04 06 08 01 001 201 401 60Sep‘1 0Nov‘1 0Jan’1 1 Mar’1 1
  38. 38. Online v/s offline tradingInternet trading is expected to:• Increase transparency in the markets.• Enhance market quality through improved liquidity, by increasing quotecontinuity and market depth.• Reduce settlement risks due to open trades, by elimination of mismatches.• Provide management information system (MIS).• Introduce flexibility in system, to handle growing volumes easily and tosupport nationwide expansion of market activity.• Besides, through Internet trading three fundamental objectives of securitiesregulation can be easily achieved, these are: Investor protection, creation of afair and efficient market and, reduction of the systematic risks.The investors would be able to track the fluctuations in a particular stock and themarket as a whole, while deciding to execute the order and also while the order isbeing executed. The confirmation of the order would also be real time. The orderrouting system on which net trading will be done is compatible with screen-basedtrading terminals used today.Internet trading brings in total transparency between a broker and an investor in caseof secondary market operations. When the open outcry system was prevalent, only thebroker knew the actually transacted price. This practice diminished significantly whenit was taken over by screen-based trading. With on-line trading, investors can now seefor themselves the price at which the deal takes place.38
  39. 39. It will also reduce transaction costs, increase liquidity in the market and ensure totaltransparency. It allows quick and easy access to valuable research and information toan investor and enables him execute transactions faster and more efficiently on a realtime basis. The volume of trade has also increased and has provided depth to themarket. Thus, in a nut shell, we can summarize the difference between online andoffline trading as follows:Online Offline1. In online trading mechanism thecustomer has full control on his Dematand trading a/c.2. Investor in online trading can easilytransfer it funds.3. Broking houses providing online tradingalso provides live terminals to theirclients.4. The broker provides investor at onlinetrading with advisory facility.5. Online investor can directly invest intoIPO’s and Mutual funds also.6. Investor can place order even after themarket closes.7. The client can globally access theaccount and can trade anywhere in theIn offline the investor has no control.The investor needs to deposit and withdrawfund each time of trading.No live terminal is provided.Offline investors are deprived of advices.Offline trader needs to open separate account.Investor cannot place After Market Order(AMO).Trader cannot trade away for the placewhere he/she has opened its account.DI slips are required for trading.39
  40. 40. world where Internet facility isavailable.8. No documents are required for trading.9. Any Demat/DP account can be attachedwith any company’s trading account.10. Online trading is time effective11. No pool account is maintained at onlineprocessThe Demat account cannot be linked withany trading account.It is time consuming process.In offline pool account are maintained.Table no 4-Difference between online and offline trading40
  41. 41. SEBI Guidelines for online TradingAccording to SEBI guidelines on Internet trading, brokers providing e-trading musthave a minimum net worth of Rs. 50 lakhs, besides obtaining specific permission ofthe stock exchange concerned. Stock exchanges should ensure that the systems usedby the broker provide for security, reliability and confidentiality of data through useof the encryption technology. For signatures, participants should use authenticationtechnologies and certification agencies as and when notified later.Stock exchanges should also ensure that brokers maintain adequate back-up systemsand data storage capacity. Brokers should have adequate system capacity for handlingdata transfer and arrange for alternate means of communication in case of Internetfailure. The following security features are mandatory for all Internet-related tradingsystems:• User ID.• First level password.• Automatic expiry of password at the end of reasonable duration.• All transaction logs with proper audit facilities to be maintained in the system.• Secured socket level security server for access through Internet.• Suitable firewalls between trading set up directly connected to an exchangetrading system and the Internet trading set up.41
  42. 42. Internet TradingAt the end of March 2011, 78 trading members on the CM segment provided internetbased trading facility to investors. The members of the exchange in turn hadregistered 849,696 clients for web based access as on June 30, 2012. In the CMsegment about 499 lakh trades for Rs.81,034 cores, constituting 7.11% of total tradingvolume, were routed and executed through internet.By the end of Dec. 2011 the number of clients doing the online trading has increasedto 13lacs.LiquidityThe liquidity in the CM segment, as measured by the turnover ratio, has witnessed asteady increase and reached nearly 10.13% during March 2007. More than 98.02% ofsecurities available for trading are being traded every month and 95.6% of thesecurities were traded for at least 100 days during 2005-06, as indicated below:Distribution of TurnoverThe concentration of trading among top ‘N’ securities/brokers. It is observed that thetop ‘5’ and ‘100’ securities account for about 25.88% and 84.26% of total turnover inthe CM segment in 2009-10. The details of ‘50’ most active securities during 2009-10which accounted for 78.40% of turnover Broker-wise distribution of turnoverincreasing diffusion of trades among a large number of trading members over theyears. During 2009-10, top ‘5’ brokers accounted for only 13.52% of turnover, whiletop ‘100’ brokers accounted for 65.09% of total turnover. The following shows theturnover of the trade.42
  43. 43. Table no 5– Distribution of turnover43
  44. 44. Market capitalizationThe total market capitalization of securities available for trading on the CM segmentincreased from Rs. 363,350 crore as at end March 1995 to Rs. 1,585,585 crore as atend March 2011. Top 50 companies account for 69.21% of total market capitalizationas at end March 2011.Sectorial distributionThe share of top 50 companies, classified according to different sectors, in terms oftrading volume and market capitalization. A drastic change in the importance ofdifferent sectors is observed since NSE commenced trading. The share ofmanufacturing companies in trading volume of top 50 companies, which was morethan 23% in 2000-01, had witnessed a decline in the years 2007-08 and 2008-09, but aturnaround was noticed in the year 2009-10 (it accounted for 37.66%) which was alsomaintained till 2010-11 with the share of manufacturing companies rising to 41.81%.As compared to this, the share of information technology (IT) companies in tradingvolume, which had been quite high in the year 2007-08, witnessed a considerabledecline and stood at only 19.56% in 2009-10. A mixed trend has been noticed in thesesectors in terms of market capitalization. Sectors like manufacturing, which used todominate in terms of market capitalization in the year 2001-02 witnessed a dip in2005-06, however this sector has witnessed a rebound and accounted for 31.13% and23.35% in 2009-10 and 2010-11 respectively. The IT sector has also shown aturnaround this year with 22.54% in the top ‘50’-market capitalization in 2008-09.44
  45. 45. Online trading with SMCSMC launched online trading in June, 2006 in addition to the traditional offlinemode of trading on NEATXSV4. Since then SMC has managed to a fairshare of client base which is very much visible from the companyfinancials.SMC is doing a good job in the offline industry as it has established a goodbrand name for itself in a short span of time.But looking at the competition, the company decided to launch its onlinetrading portal in June, 2006.Besides, being up in the line of competition, Online trading also helps thecompany to cut recurring costs as it happens in offline trading.Though, setting up online trading infrastructure requires one time set up costlike the cost of software, bandwidth charges, skilled manpower etc. which isquite high. But the benefits are recurring as the online trading is about volumes.Larger the client base, higher the revenues.Features of online tradingA browser based trading software that enables clients to access their accounts fromanywhere using internet by a unique ID and password. This facility is available to allthe online clients the moment they get registered with SMC investment.45
  46. 46. Solutions & ServicesThe product has a lot of features which provides various benefits to clients:1) The screen gives live streaming quotes from respective exchanges. The client hasan option of having “live” Multiple Windows for different exchanges and his personalwindow where he can add the scrips of his choice and save it.2) It provides a Common window for display of market watch and order executionwhere the client can click + (plus) for Buy and – (minus ) for Sell or Click on thescrip and Press F1 to Buy and F2 to sell which provides an easy trading facility to theclient. It also provides an Offline order placement facility.3) Before Buying or Selling, the client can watch the Market Depth, which tells aboutBest Buy/Sell rates and Quantities etc of that security & also enables the clients to usethe Stop-loss Feature to minimize their losses.4) A very useful feature of the product is fire the trigger, which lets the client set an“Alert” for itself to indicate a certain price of the scrip. The user can set a differentcolor or an audio alarm.5) It enables clients to transfer funds online from their bank accountto SMC trading account. SMC has banking integration with PNB, HDFC,AXISBank.46
  47. 47. 6) It also enables the clients to view the transactions (Buy or Sell) done during theday. Beside the rate, quantity, type of account etc, the client can also view the ordernumber, time of transaction & can also get the details of entire fortnight.7) The client can see the Bids/Offers that are not yet executed by the Exchange andhas the options to “Modify” and “Cancel” the Order.8) Greater exposure for trading on the available margin & DP MARGIN STOCK withvery competitive commission.9) It also provides Real time updating of exposure and portfolio while trading &Online Integration of trading a/c with two common depositories to help move clientsshares to and fro with ease.They also have the authority to square of the positions of the clients who don’t paytheir margin money.IT shares the responsibility of supporting the entire system so that it runs smoothly.47
  48. 48. Default Limit and Exposure to the Clients1. For Liquidated Value greater than or equal to 2 LAC, default limits will be openedin Intraday ten times and Delivery Three times (Only on a Cat) on Cash marketand one time on FNO market of Net Margin.2. For Liquidated Value less than 2 LAC, default limits will be opened in Intradayfive times and Delivery Three times (Only on a Cat) on Cash market and one timeon FNO market of Net Margin .Square UpIt is a margin status when percentage of coverage is less then 25% when comparingfunding stock (A cat stock) with gross margin. It is a last alert that the position ofclient may be squared up at any time if the Percentage of coverage goes below 25%. Itis a last alert that something must be done either by reducing the position orenhancing the margin .It is a point where the position of the client is squared up.Normal Square Off (Less Then 25%)This activity has been done on daily basis with the help of software driven Batch file(provided by the IT department). Codes which have been not uploaded in the Batchfile due to any exceptions are any commitment from Branch end are done manually ifcommitment fails.Sauda of a client below 25% will be compulsory squared off next morning, in case noproper reply received from the concerned RM/Branch.48
  49. 49. Proper Reply here shall mean:• Amount is being transferred to top up the margins only through a transferCheque or Demand draft subject to the condition that the transfer Cheque orDemand draft is reflected in the bank as having been deposited before 2:00P.M.• The reply should Specify what positions shall be squared off before that 10.30a.m. , in case the same is not done to the extent of bringing the clients marginabove the required 50% margin levels , the RMS shall block the client andsquare off the balance position so as to bring the client above the requiredmargin levels.Margin Call square off process:1. Preparation of square off cases report.2. Preparation of Batch File for Automated Square off.3. Reconciliation of Batch File after and before it has been executed.4. Consolidation of square off replies of margins from Branch end and make itconsidered.5. Preparation of Exceptions client List.6. Making note of commitments from Branch and Regional Heads againstsquare off codes and make follow up accordingly.7. Preparation clients Cheque deposit details.49
  50. 50. Before: - We have to make sure that the batch file has been created according tosquare off policy of RMS. All exceptions and necessary details has been taken intoconsideration or not.After: - After execution of the batch file we have to check that every order of the fileis properly executed or not and if there is any rejection then immediate action to betaken (Rejection to be squared manually)Square Off 5th Day Ledger Debit Clients (Non Las)This activity is done on the Manual basis only. The process of square off 5th dayledger debit is same as Normal Square off; only difference is that it is done manually.To square off we have to prepare non las ledger debit report.50
  51. 51. CHAPTER IIIDATA ANALYSIS AND INTERPRETATIONQ 1. Do you know about investment options available?Knowledge PercentageYes 80%No 20%Total 100Table no 5 -Investment optionsFigure no 3-Investment optionsInterpretationOnly 80% people knows the exact meaning of investment. Because of remaining 20%take his/her residential property as an investment. According to law purpose this is notan investment because of it is not create any profit for the owner.51
  52. 52. Q 2. Most important things you take into your mind while making investments?Factor PercentageRisk 8%Returns 17%Both 75%Total 100Table no 6- Investments TechniqueFigure no 4- Investments TechniqueInterpretation75% people are considered the both factors risk as well as returns but, only 25%considered the risk or returns factor.52
  53. 53. Q 3. Awareness related to security marketsKNOWLEDGE PERCENTAGEComplete 8%Partial 75%Nil 17%TOTAL 100Table no 7- Investments AwarenessFigure no 5- Investments AwarenessInterpretationOn that basis, we conclude that 17% people know nothing about the securitiesinvestments and 75% people have partial knowledge about it, so, some promotionalactivities are required for increasing the awareness about security market.53
  54. 54. Q 4. What is the basic purpose of your investment?INVESTMENT PURPOSE PERCENTAGELiquidity 30%Returns 25%Capital appreciation 10%Tax benefits 20%Risk covering 5%Others 10%TOTAL 100Table no 8- Investments PurposeFigure no 6- Investments Purpose54
  55. 55. Interpretation75% people are interested in liquidity, returns and tax benefits. And remaining 25%are interested in capital appreciations, risk covering, and others.55
  56. 56. Q 5: Since how long have you been investing in capital market?Table no 9- Investments Period39%37%24%Figure no 7- Investments PeriodInterpretationLooking at the figures, we can observe that 39 % of people have been investing forless than 3 years and so on. We know that the capital markets have picked up in past4-5 years. Also, there are more stringent norms by SEBI and exchanges. That is thereason why people have started to pose more trust in capital markets now.56Time Period Frequency PercentageLess than 3 yrs80 393-5 yrs73 37More than 5 yrs47 24Total200 100
  57. 57. Q 6 : Do you trade Online?Frequency PercentageYes 141 70.5No 59 29.5Total 200 100Table no 10- Trade Online14159050100150Yes NoFigure no 8- Trade OnlineInterpretationOut of the people surveyed, 70 % people trade online. This shows a good prospect foronline trading in future.57
  58. 58. Q. 7. COMPLICATED PROCESSComplicated Process Frequency PercentageYes 60 30No 46 23No reply 94 47Total 200 100Table no 11- Investments Complications30%23%47%Yes No No replyFigure no 9- Investments ComplicationsInterpretationThis table shows the consolidated table of number of people voting for differentfactors as to why don’t they prefer to trade online.58
  59. 59. Q. 8 . Why not online?Factors No. of PeopleYes NoLack of market knowledge 36 21No computer 20 110Investment risk 100 75Poor services 75 72Complicated process 60 46Table no 12- Online Trading FactorsFigure no 10- Online Trading FactorsInterpretationWe asked the people as to why they don’t trade online. Out of the reasons, given, weobserve that maximum people avoid doing online trading as they perceive it to bemore risky. Also, some of them have experienced poor services from their onlinebrokers. Hence, they avoid doing online trading.At the same time the companies need to trap those 30% people who are still not awareof the benefits of online trading and try to shift them towards online trading. The59
  60. 60. companies should also try to find and analyze the reasons as to why these customersare not trading online in spite of so many benefits the online trading offers.60
  61. 61. Q 9.Name of the company you trade with.Frequency PercentageKotak Securities 42 21ICICI direct 35 17.5IndiaBulls 60 30Sharekhan 30 15SMC Investments Solutions 15 7.5Others 18 9TOTAL 200 100Table no 13- Company mostly choose0102030405060KotakSecuritiesICICIdirectIndiaBullsSharekhanUniconInvestment...OthersMkt. shareFigure no 11- Company mostly chooseInterpretation61
  62. 62. India Bulls enjoy maximum market share of 30% followed by Kotak and ICICI direct.SMC has only 7.5% share at present but is growing62
  63. 63. Q 10 : Where ELSE do you invest your surplus fund?Areas FrequencyDirect Equity 75Mutual fund 65Insurance 150Real Estate 35Banks 150Table no 14- Other Investments optionOther investments16%14%31%7%32%Direct Equity Mutual fund Insurance Real Estate BanksFigure no 12- Other Investments option63
  64. 64. InterpretationWe also found that besides stock Market, people prefer to invest in Mutual funds.Thus, it can also serve as a good opportunity to earn revenue for the company.64
  65. 65. CHAPTER IVSUMMARY AND CONCLUSIONResults of the studyFacts and figure speak in itself that as from the past years analysis of capital marketwe could see the bullish trend of the Indian stock market. There has been atremendous pressure on the Indian industries to perform well as the expectations ofthe investors are rising with bullish market sentiments. The Online trading has growntremendously since 2000-01 to 2007 form 7287.18 cr. to 81033.1 cr. respectively. Theclient base has also improved form 1,23,578 to 8,49,696. This has raised to 12.70 lacstill Dec. 2010.Compared to the Western countries, online trading is still in its infancy in India. Withtrading turnover at around Rs. 10 crores per day from online trading compared to acombined gross turnover of around Rs. 9000-10,000 crores handled by the BSE andNSE together, online trading has a long way to go. With some ten dotcom players,such as icicidirect.com, investsmart, 5paisa.com, indiabulls, and a host of brokers,such as kotaksecurities, sharekhan, motilaloswal, Geojit Securities and duttstock,entering the online ring promises exciting times ahead.However, the existing online trading system suffers from a major lacunae.icicidirect.com currently offers online trading services only to investors who have abank or a demat account with ICICI. Or, investors can open an online trading accountwith SMC only if they open a demat account with it and have a bank account eitherwith ICICI, HDFC Bank. If investors do not have these accounts, they have to go65
  66. 66. through the entire rigmarole of opening up the bank and demat account again for easyoperation. Apart from the hassles involved, there may also be certain extra chargesinvolved in this exercise that may have to be built into the overall cost of onlinetrading.66
  67. 67. Limitations of the projectA study on promotional tools used for marketing product offered by HDFCSL wasbased on secondary data obtained. Therefore it had the following limitations:• Quality of Research: There are some data which is collected from secondaryresearch. Therefore, the secondary research used must be scrutinized closelysince the origins of the information may be questionable. Moreover, theresearcher needs to take sufficient steps to critically evaluate the validity andreliability of the information provided.• Specific to Researcher’s Needs: In many cases, the Organization do notprovide its full information. Some informations are critical for the informationwhich is not revealed. Thus may include variation due to self interpretation.• Incomplete Information: In many cases, researchers find information thatappears valuable and promising. The researcher may not get the full version ofthe research to gain the full value of the study. This is because many researchsuppliers offer free portions of their research and then charge expensive feesfor their full reports.• Not Timely: When using secondary research, one must exercise caution whenusing dated information from the past. With companies competing in fastchanging industries, an out-of-date research reports many have little or norelevance to the current market situation.67
  68. 68. Suggestions & RecommendationsAs we worked with this project, we came across some good and some notso good features of this product.We take this opportunity to suggest some measures in order to make improvements tothe product.1. SMC needs to be more flexible with account types and brokerage structure sothat it can cater to all types of client segments and hence, increase its clientbase.2. SMC need to focus on HNI and corporate accounts more as they bring in bulkbusiness.3. It should also try to collaborate with more banks so that the investor doesn’thave to go through the turmoil of opening new accounts.4. Their were some features in SMC Plus that needed to be changed and so weresuggested by us.• There was no feature of ‘Payment Gateway’ for fund transfer to and from theclient in case of Pay-in and Payout.• The Margin report and Intra-day report though, contains all the necessarydetails, are a little complicated from the client’s end.• In case the client does some transactions for ‘Intra-day’ purpose but he getshis orders in different lots. Now, if he wants to change his order type from‘Intra-day’ to ‘Delivery’, then he has to go to trade log and change the ‘ordertype’ for each of the order lots.68
  69. 69. This can be done away with by going to ‘Net Position’ feature and changing it inone go.• SMC Swift gives the client a facility to put an alarm if a certain rate of aparticular stock is achieved.We suggest that a new feature should be introduced wherein an SMS facilityshould be provided to the clients who are on the go most of the time. This featurewill be unique as no other software does it and can become the USP of thisproduct. This will also benefit the company n terms of revenue.5. As a whole, if we look in general, we find a lot of frauds happening in thisfield. Thus, there should be proper compliance measures taken up by thecompany for investor protection like sending reports on the total trades doneon their accounts.6. Also, looking at the competitive scenario, it is suggested that the companyshould aggressively focus more on Sales and promotional activities byefficiently utilizing the manpower resource it has.7. The company can also introduce dial and trade facility in case online systemdefunct.69

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