FINAL PROJECT 1

A

SUMMER INTERSHIP PROJECT REPORT

ON

“THE FUTURE OF ONLINE TRADING”

AT

MOTILAL OSWAL SECURITIES LTD.

SUBMITTED IN PARTIAL FULFILMENT FOR THE REQUIREMENT

OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

TO

MAHARSHI DAYANAND UNIVERSITY

ROHTAK

SUBMITTED BY:

Sachin Yadav

Roll No-2843

MBA (3rd sem.)

AMITY BUSINESS SCHOOL

MANESAR, GURGAON

DECLARATION

I, Sachin Yadav, Roll No.2843, Class-MBA (3rd Semester) of Amity

Business School, Manesar, hereby declare that the Project titled, “THE

FUTURE OF ONLINE TRADING” is original to the best of my

knowledge and has not been published elsewhere. A seminar presentation of

the Training Report was made on …….. And the suggestions by the faculty

were duly incorporated.

Presentation In charge Signature of the Candidate(Faculty)

CountersignedDirector of the Institute

ACKNOWLEDGEMENT

As I sum up my study, I appreciatively bring to mind the contribution of all those

people without whose support and help, this study would have ever taken its present

form. I thank Mr. Vikram Singh(Faculty Guide), Mr. Pravin Sharma for supported

me & Col. Anil Gulati(CRC) of Amity Business School, Manesar - for giving me the

opportunity to do my internship at Motilal Oswal Securities Ltd. First of all I would

like to thank the Management of Motilal Oswal Securities Ltd. for giving us the

opportunity to do two-month project training in their esteemed organization. I am highly

obliged to Mr. Bhupender Yadav(Unit Manager) for granting me to undertake my

training at Ahmedabad Branch. My express thanks to all Sales Managers under whose

able guidance and direction, I am able to give shape to my training. Their constant

review and excellent suggestions throughout the project are highly commendable. My

heartfelt thanks go to all executives who helped us to gain knowledge about the actual

working and the processes involved in various departments

TABLE OF CONTENTS

Declaration Acknowledgement CertificateChapter I

IntroductionSignificance of the studyConceptualizationFocus of the studyObjectives of the studyLimitations of the study

Chapter IIIndustry ProfileCompany Profile

Chapter III Review of Existing Literature

Research Methodology

Chapter IVAnalysis and Interpretation

Chapter VFindingsRecommendationsConclusions

BibliographyAnnexure

CHAPTER I

INTRODUCTION

As per the title suggest the project report has been prepared regarding the future of online trading in India. Online trading was initiated by NSE in India and soon after the other exchanges also followed it. There was a major in yr. 2000 when lots of online trading companies came with a bang but only few were survived because of lack of computer knowledge and low internet penetration.

There are two types of online trading companies one is the banking online trading companies and the other is non-banking trading. A few examples of banking online trading companies are HDFC securities, ICICI direct.com, UTI securities etc.

On the other hand non banking trading companies are Motilal Oswal Sec Ltd, Sharekhan.com, Angel Broking, Reliance Money etc. Today online trading contributes are about 14-16%. It is continuously growing and ha a huge market potential. A study was undertaken to determine the growth of various online trading companies in India in terms of trade done by them through online and services provided by them. Major findings indicates that out of a survey of 100 respondents it was seen that 40 investors prefer online trading because of few major factors such as time saving convenience, protection through Freudian brokers etc. although during my research project I’ve seen that most of the respondents feel online trading, a secure way of investing in stock marker still a few of them feel it unsafe and a bit complicated but they posses information about online trading.

Today the online trading companies having cut-throat competition in our offering whose brokerage discounts lower margin money and zero balance accounts.

Due to the rising education awareness and use of interest there is a huge potential for online trading in future and companies must come up with innovative offerings to capture the untapped market.

SIGNIFICANCE OF THE STUDY:

Since the year 2000 a big boom has been witnessed in the Indian Stock Market when the marker showed the coming up of Online Trading System. Many online stock trading companies came but initially due to lack of online trading some companies vanished and some survived. The companies which survived are getting the handsome returns also attracting the foreign Investment Companies. Nowadays this sector is facing cut-throat competition and also provides huge growth prospects. The study then goes to evaluate and analyze the findings so as to present a clear picture of the trends in the online trading sector

CONCEPTUALIZATION:

Market

In economics, typically, the term market means the aggregate of possible buyers and sellers of a thing and the transactions between them.

The term “market” is sometimes used for financial securities, e.g., a stock exchange or commodity exchange. A stock market, or (equity market), is a private or public market for the trading of company stock and derivatives of company stock at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market is estimated at about $51 trillion.

Stock market

It is a place where companies come to raise their share capital and investors go to invest their surplus funds. Stock Market is a place where financial instruments like shares, debentures, commercial papers, bonds etc are bought and sold.  Stock markets are popularly known as stock exchanges.  There are many popular stock markets in the world. NASDQ, Tokyo Stock Exchange, London Stock Exchange is the most popular of the lot.

Online Trading

MEANING

On line trading involves investment activity which takes place over the internet and it does not require physical inclusion of broker.

ONLINE SHARE TRADING OR INTERNET TRADING: On line trading is a service offered on the internet for purchase and sale of share. In the real world, you place order on your stock broker either verbally (personally or telephonically) or in a return form (Fax)but In on Line Trading, you will access a stock broker’ sample size 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 either out manual intervention and executed there on in a matter of a few second .

In nutshellAnd here I want to discuss the main benefits what the customers should get by online trading as in earlier days if a customer wants to purchase share of any company there is much more paper work in purchasing and customer can’t purchase share in short period of time by these online services customer can purchase shares in a fast manner like earlier he has to purchase at least 100shares of each company but when these online services came into account there is no obligation on the customer that he has to purchase 100 shares here he can purchase 1 share also and sell also within seconds in market through online trading, but here he has to open demat account with any broking company .

Focus of the study

As we all accept that 21st centaury is going to be India centaury, people are looking for the options which give them high monetary rewards. Accordingly they look for various options but what is the right way and from where they can get more and more benefit is very necessary to know.

So my study entitled a “THE FUTURE OFONLINE TRADING” has been designed with the definite focus that why the on line trading is going more and more accepted by customers and what are the features and advantages which makes on line trading useful for customers. It also focuses the services of different companies and comparison b/w them which help the customer to choose the best company for their trading.

This study gives knowledge about on line trading and also about the many different brokerage company which helps the customer to choose instrument and source.

So, the study focused on the customer perception towards on line trading whether they are satisfied or not.

OBJECTIVES OF THE STUDY

To determine the growth and development of online trading in India.To study the awareness of clients towards online trading. To understand the customer perception of online trading.. . To understand the presence of major online traders in the Indian market and looking about the features provided by them. To know – Appropriate Education level & Time for online trading

LIMITATIONS OF THE STUDY

Lack of awareness of Stock market

Some respondents are unwilling to talk

Misleading concepts

Due to non response

CHAPTER II

INDUSTRY PROFILE

HISTORICAL EVOLUTIONEarly YearsThe equity brokerage industry in India is one of the oldest in the Asia region. India had an active stock market for about 150 years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry. The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. This trend was akin to the rapid growth of securities markets in Europe and the North America in the background of expansion of railroads and exploration of natural resources and land development.Historical records show that as early as 1864, there were about 1,000 brokers with the stock markets functioning from three places in Mumbai; between 9 am to 7 pm at the junction of Meadows Street and Rampart Row, from day break till 9 am and from 7 pm to early hours of next morning at Bazargate.Share prices rose sharply even at that time. A share of Colaba Land Company during the boom period of the 1860s rose from Rs 10,000 at par to Rs 120,000 and that of Backbay Shares went up from Rs 2,000 to Rs 54,000. Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companies and 62 joint stock companies. Reports on stock markets around that time indicate that an ordinary broker in 1864 earned about Rs 200 per day, a huge sum in those days. The boom period came to an abrupt end in 1865. In Jul 1865, what was then used to be called the share mania ended with burst of the stock market bubble. “Never had I witnessed in any place a run so widely distributed nor such distress followed so quickly on the heels of such prosperity” thus wrote Richard Temple, who served as the Governor of Bombay at that time. An interesting aspect is that despite the collapse of the stock market, most of the brokers met their payment commitments.In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their own, which later turned into the Dalal Street. A unique feature of the stock market development in India was that that it was entirely driven by local enterprise, unlike the banks which during the pre-independence period were owned and run by the British. Following the establishment of the first stock exchange in Mumbai, other stock exchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908), Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gained from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904 and 1908) etc, at different points of time.Success Factors for e-broking:

There are three key success factors for e-broking, (I) Scalability and robustness of the trading system: The fundamental difference between the Internet as a transaction medium and the conventional closed user group network is that the Net is a universal platform providing concurrent access to infinite users at any given point in time. Consequently, it becomes imperative for any Net-based application to have a proven capability for scalability and robustness which ensures the ability to handle and process requests from multiple users at any given point in time.

(ii) Bandwidth optimization:

In the Indian context where availability of a sufficient bandwidth is limited, the application software should demonstrate intelligence in optimizing the available bandwidth by deploying advanced technologies such as streaming.

(iii) Integration with third party systems:

On the Net, with information feeds available from multiple points, it is prudent to deploy applications that are built on open architecture methodology for interfacing with third party systems in the new Net age.

Challenges In Internet Trading: For Internet trading to succeed, it is imperative to have both – A robust business model and Comprehensive technology strategy.

Some of the challenges are discussed: Transaction fulfillment--In the Net-based economy, it is both prudent and essential for a broker/intermediary to offer total solution to the clients at a single point. Total solutions would essentially mean offering interfaces with banks, depositories, information feeds, etc. for efficiency in trade completion and reducing duplication of client information. The service providers will have to go beyond the stage of mere order execution and emerge as "informediaries" rather than "intermediaries". This will not only ensure lower trading costs in terms of offering cross services but will also help in maximizing Rolls. A true Internet trading system should deliver cost effective transaction fulfillment at a single point.

Future Of Internet Trading: International marketplaces are already witnessing re-alignments and changes with the emergence of electronic communication networks (ECNs) such as INSTINET and ISLAND, which are already contributing substantial business volumes to mainline exchanges such as NASDAQ and the NYSE. Concurrently, exchanges worldwide are looking at striking strategic alliances such as the Global Equity Market (GEM). With Net trading in securities and rapid consolidation between multiple stock exchanges, the international securities marketplace is fast becoming a "global village" through the creation of a universal virtual equity market. Therefore the challenge for the technology providers is to develop and deploy advanced e-trading tools and applications using electronic straight through processing technologies.

PLAYERS OF THE INDUSTRYS. S. Kantilal Ishwarlal Securities Pvt. Ltd. (sharekhan.com):Sharekhan, India’s leading stock broker is the retail arm of SSKI, and offers you depository services and trade execution facilities for equities, derivatives and commodities backed with investment advice tempered by decades of broking experience. A research and analysis team is constantly working to track performance and trends. ICICI Web Trade Ltd. (ICICIdirect.com):ICICIdirect.com was the first entrant into e-broking. ICICdirect.com provides the 3-in-1 to the users which ties in their saving bank account and their Demat account to their brokerage account electronically.

ICICIdirect.com has the option of trading in shares in cash, margin or spot segments. An investor can also invest in 14 Mutual Funds (Prudential ICICI MF, Franklin Templeton India MF, Alliance Capital MF, JM MF, Birla Sun Life MF, Sundaram MF, IL&FS MF, Principal MF, HDFC MF, Standard Chartered MF, Reliance Capital MF, Kotak Mahindra MF, TATA MF and DSP MERRILL LYNCH MF) through their trading account..5Paisa.com:5paisa is the trade name of India Infoline Securities Private Limited (5paisa), member of National Stock Exchange and The Stock Exchange, Mumbai. 5paisa is a wholly owned subsidiary of India Infoline Ltd, India’s leading and most popular finance and investment portal. 5paisa has emerged as one of leading players in e-broking space in India. India Info line was founded by a group of professionals in 1995. Its institutional investors include Intel Capital, one of the leading technology companies in the world promoted by the UK government, ICICI, TDA and Reeshanar. The company offers a slew of products such as stock and derivatives broking, commodities broking and mutual funds.

Kotak Securities Limited (kotakstreet.com):Kotak Securities Ltd., a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% - one of the world’s leading investment banks and brokerage firms) is India’s leading stock broking house with a market share of 5 - 6 %. Kotak Securities Ltd. has been the largest in IPO distribution - It was ranked number One in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME Database. It has also won the Best Equity House Award from Finance Asia - April 2004.

India Bulls:Indiabulls is India's leading retail financial services company with 77 locations spread across 64 cities. Its size and strong balance sheet allows providing varied products and services at very attractive prices, our over 750 Client Relationship Managers are dedicated to serving your unique needs.

Indiabulls is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides real-time service & 24/7 access to all information and products.

Motilal Oswal Securities Ltd. (MOSt):One of the top-3 stock-broking houses in India, with a dominant position in both institutional and retail broking, MOSt is amongst the best-capitalized firms in the broking industry in terms of net worth. MOSt was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology have enabled it to blossom into a thousand-member team.

The institutional business unit has relationships with several leading foreign institutional investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent media report MOSt was rated as one of the top-10 brokers in terms of business transacted for FIIs.

The retail business unit provides equity investment solutions to more than 50,000 investors through 270 outlets spanning 150 cities and 22 states. MOSt provides Advice-Based Broking, Portfolio

Management Services (PMS), E-Broking Services, Depository Services, Commodities Trading, and IPO and Mutual Fund HYPERLINK "http://www.motilaloswal.com/eag.htm" µInvestment Advisory Services§. Its Value PMS Scheme gave a 160% post-tax return for the year ended March 2004.

In Asia Money Brokers Poll 2003 MOSt has been rated as the Best Domestic Research House- Mega Funds ,while in 2000 and 2002 it has been rated as the Best Domestic Equity Research House and Second best amongst Indian Brokerage firms respectively.

HDFC Securities Ltd (HDFCsec):HDFCsec is a brand brought to you by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base of the HDFC Group and other investors a capability to transact in the Stock Exchanges & other financial market transactions. The services comprise online buying and selling of equity shares on the National Stock Exchange (NSE). Buying and selling of select corporate debt and government securities on the NSE would be introduced in a subsequent phase. In a few months, they will also start offering the following online trading services on the BSE and

UTI SECURITIES LTD.: (UTISEL)UTI Securities Ltd was incorporated on June 24, 1994 by Unit Trust of India as a 100% subsidiary and on the repealing of the UTI Act, the capital is now held by the Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). UTI Securities has been working as an independent professional entity for providing financial intermediary and advisory services to its corporate and retail clientele.The Company has presence in major cities with 20 branches and 50 franchisees to service a wide range of clients. The company has also invested in the joint-venture company with Standard Chartered Bank viz. Standard Chartered UTI Securities (P) Ltd IDBI Capital Market Services Ltd.IDBI Capital is a leading Indian securities firm offering a complete suite of products and services to individual, institutional and corporate clients.IDBI Capital Market Services Ltd. (IDBI Capital), a wholly owned subsidiary of Industrial Development Bank of India (IDBI), is a leading Indian securities firm, offering a complete suite of products and services to individual, institutional and corporate clients. The services include fixed income trading, equities brokerage, debt and equity derivatives, research, private placements, depository services, portfolio management and distribution of financial products.

ANALYSIS OF STOCK BROKING INDUSTRY

Industry Analysis using Porter’s 5 forces Model

SHAPE \* MERGEFORMAT µ §

SUPPLIERS

Web maintainersNSCLCSDLNSEBSEMCX

NCDEX

SUPPLIERS

Web maintainersNSCLCSDLNSEBSEMCX

NCDEX

SUBSTITUTESMutual Funds

InsuranceBank FD

SUBSTITUTESMutual Funds

InsuranceBank FD

BUYERS

Small InvestorsFranchise/Business

PartnersHNI’s

MF CompaniesHUF

Institutional Investors

BUYERS

Small InvestorsFranchise/Business

PartnersHNI’s

MF CompaniesHUF

Institutional Investors

POTENTIAL ENTERANT

InvestmartVarious Banks

GeojitCipher

UTI Securities Ltd.Refco Group Ltd.

IDBI Capital Mkt. Services Ltd.

POTENTIAL ENTERANT

InvestmartVarious Banks

GeojitCipher

UTI Securities Ltd.Refco Group Ltd.

IDBI Capital Mkt. Services Ltd.

COMPETITORS

ICICI Web Trade Ltd5paisa.com

Kotak Securities LtdIndia Bulls

Motilal Oswal Securities LtdHDFC Securities LtdMarwadi Finance Ltd

COMPETITORS

ICICI Web Trade Ltd5paisa.com

Kotak Securities LtdIndia Bulls

Motilal Oswal Securities LtdHDFC Securities LtdMarwadi Finance Ltd

SUPPLIERS

Web maintainersNSCLCSDLNSEBSEMCX

NCDEX

SUPPLIERS

Web maintainersNSCLCSDLNSEBSEMCX

NCDEX

SUBSTITUTESMutual Funds

InsuranceBank FD

SUBSTITUTESMutual Funds

InsuranceBank FD

BUYERS

Small InvestorsFranchise/Business

PartnersHNI’s

MF CompaniesHUF

Institutional Investors

BUYERS

Small InvestorsFranchise/Business

PartnersHNI’s

MF CompaniesHUF

Institutional Investors

POTENTIAL ENTERANT

InvestmartVarious Banks

GeojitCipher

UTI Securities Ltd.Refco Group Ltd.

IDBI Capital Mkt. Services Ltd.

POTENTIAL ENTERANT

InvestmartVarious Banks

GeojitCipher

UTI Securities Ltd.Refco Group Ltd.

IDBI Capital Mkt. Services Ltd.

COMPETITORS

ICICI Web Trade Ltd5paisa.com

Kotak Securities LtdIndia Bulls

Motilal Oswal Securities LtdHDFC Securities LtdMarwadi Finance Ltd

COMPETITORS

ICICI Web Trade Ltd5paisa.com

Kotak Securities LtdIndia Bulls

Motilal Oswal Securities LtdHDFC Securities LtdMarwadi Finance Ltd

Charges provided by the different companies for Online Accounts: (N.A. = Not Available)

ParametersA/c Opening FeeBrokerageInterface

Trading A/cDematDeliverySquare OffBanks Associated with

Sharekhan750NIL0.500.10HDFC, UTI, OBC, IDBI & Citibank

ICICI Direct750

NIL 0.75 0.18ICICI

Bank

Indiabulls 750 250 0.40 0.10 N.A.

5 paisa 800 NIL 0.20 0.05

Citibank, HDFC,

OBC, UTI & ICICI

Bank

Motilal Oswal

Securities Ltd 500 NIL 0.50 0.05 SBI, Axis Bank,

Kotak Street 500 N.A. 0.59 0.06Kotak Bank &

Citibank

HDFC Securities 700 NIL 0.50 0.15HDFC & Other 4

Banks

If we check the above table, we can come to know that the rates of Sharekhan is quite competitive than

other brokerage houses.

One other best point of Sharekhan is –if a person is having a online/offline trading account as well as

Demat account with Sharekhan, they won’t be charged any kind of Demat transfer charges, which are

charged when the shares are sold from the Demat account.

SUPPLIERS

NSDL & CSDL are the regulatory bodies for Depository Participants like SSKI, SHCIL,

ICICIdirect.com, etc. Also these regulatory bodies have got an upper hand as the bargaining

power stock broking houses like SSKI, etc. would be less.

NSE & BSE are under the purview of SEBI, that’s why stock broking houses like SSKI, have

low bargaining power. But here there is one advantage that NSE/BSE have i.e. they cannot go

for forward integration.

MCX & NCDEX are stock exchanges which trade in commodities and derivatives. Here again

stock broking houses have to follow rules and regulation of the same.

2. BUYERS

There are various types of investors who trade through stock broking houses like SSKI, which

includes investors like small investors, medium net worth investors, business partners,

institutional investors and mutual fund companies.

Here the bargaining power of stock broking houses depends on how big the investor is.

So here we can say that bargaining power of stock broking houses is high in case of small

investors & HUF.

While the bargaining power is moderate in case of HNI (High New Worth Investors)/ MNI’s

(Medium Net Worth Investors) and business partners.

3. ENTRY BARRIERS

Huge capital : - Capital is necessary not only for fixed facilities but also for customer’s

credit and absorbing start up losses. To start a stock broking house, one needs huge capital

for technology up gradation and skilled manpower.

Technology : - Technology for stock broking houses is life saving device. Stock broking

requires huge capital to make their products user friendly, which in turn requires capital to

employ skilled manpower. Thus, technology could be one of the entry barriers.

Regulatory Constraints : - Obtaining a license is a tedious job for a stock broking house. It

should comply with the regulation of the governing bodies like SEBI, NSDL, etc. For a

stock broking houses to plunge into the stock broking industry, it needs to have some kind

of financial background and expertise. Thus, regulators constraints could be an entry

barrier.

Experience curve : - The core competency in this industry is the services which are provided

to the end-users and the research based activities which includes “TIPS”, fundamental as

well as technical script analysis. Also the most important thing which helps already

established firms is-“TRUST” which people would be having on firms like SSKI , Motilal

Oswal, etc. this is very difficult for new companies to imitate.

Network : - The “Reach” to the customer is the key factor in the industry. The network of

the companies like Motilal Oswal, Sharekhan, and ICICI is very efficient and spreaded all

over India. It will take time for a new entrant to establish such a huge network (e.g.

Marwadi), which say that,”Network can come up as most difficult entry barrier to

overcome.”

4. COMPETITORS

The company is facing the competition from local as well as national level players. The

local players provide facility for off-line trading while the national players like

ICICIdirect.com and Kotakstreet.com, HDFC Security provide online trading services.

There are also other big names like Indiabulls, Motilal Oswal, 5paisa and Marwadi

encircles the company form both the sides by providing online and off-line trading with

competitive services.

5. POTENTIAL ENTRANTS

The potential entrants in like Investmart, Jeojit and Cipher which are coming in near future

to Rajkot City.

Nationalized banks are also thinking to enter in this field by tying up with broking houses.

E.g. Bank Of Baroda.

6. SUBSTITUTES

Here substitutes are such instruments which can be used instead of investing in shares.

The instruments like Bank FD, insurance, mutual funds are the substitutes.

If the use of this instruments increase this may be disadvantage for the stock broking houses.

The companies and banks which are having these instruments can plunge into this industry.

INDIAN SCENARIO

Stock market capitalization VS. GDP for India

The journey towards the $1-trillion mark is nothing less than spectacular, considering that the market cap was just about $150 billion in 2004. To put in context, the total bank deposits in 2004 was $500 billion and has crawled to about $650-700 billion in the same period.

By including the capitalisation of Indian entities listed on London’s Alternative Investment Market, the global firms acquired by the listed Indian companies in the last two months and others that are often considered a part of the Indian universe, we reach a total of $992 billion.

Thus, the market cap to GDP ratio for India is near 1 (i.e. 100%). But notice how it compares to the historical average, and note that it was only ~55% in 2004:

Source: Worldbank

Raw data can be found at the Reserve Bank of India site: GDP, BSE Market cap, NSE Market cap

Investopedia explains Stock Market Capitalization To GDP RatioThe result of this calculation is the percentage of GDP that represents stock market value. Typically,

a result of greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. In recent years, however, determining what percentage level is accurate in showing undervaluation and overvaluation has been hotly debated.

In 2000, according to statistics at the World Bank the market cap to GDP ratio for the U.S. was 153%, a sign of an overvalued market. With the U.S. market falling sharply after the dotcom bubble burst, this ratio may have some predictive value in signaling peaks in the market. However, in 2003, the ratio was around 130%, which was still overvalued but the market went on to produce all-time highs over the next few years

Market Capitalization

What Does Market Capitalization Mean?

The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.

Frequently referred to as "market cap".

Stock Market Capitalization To GDP Ratio

Stock Market Capitalization To GDP Ratio Calculated as:

http://www.dnb.co.in/EquityBroking/Indian%20Scenario.asp

India Broking…….

Capital market reforms are a major constituent of the overall economic reforms in India. A series of measures announced in Union Budgets beginning FY92 laid the road map for the growth and resurgence of securities markets in India. These included -

improving the investment climate by allowing foreign institutional investors to invest in equity and debt markets

expanding the product range offered by the stock exchanges strengthening the role and scope of capital markets regulation revival of commodities futures markets allowing Indian companies to issues ADRs and GDRs in international exchanges and enable

them to raise resources through Euro Commercial Borrowings divestment of government ownership in state owned companies and financial institutions tax reforms in the form of introduction of transaction tax that streamlined the tax mobilisation

from securities markets operations and also facilitated investors, a choice of tax options in the form of choosing either long term gains tax or short term tax which ever they prefer and

Regulation

A new phase of securities market regulation in India began with the setting up of Securities and Exchange Board of India in 1992. Over the period, the Board has brought in several changes in the way securities markets are organized and conducted in India. Major reforms that were brought in the Indian securities markets since 1992 are summarized below:

Nation wide network of trading terminals Electronic Trading and abolition of Open Outcry systems Dematerialisation of Shares Foreign Participation in Domestic Brokerage Business Foreign Institutional Investment in Indian stocks Venture capital Book Building Process for IPOs Investor protection guidelines Dual Fungibility of ADRs/GDRs Delisting Guidelines Corporate Governance and Disclosure Standards Introduction of Equity Derivatives Exchange Traded Market for Corporate Bonds Central Listing Authority Mutual Funds in the private sector Mutual Fund Investments Abroad> Demutualization and Corporatisation of Stock Exchanges Margin Trading Exchange Traded Funds Anti-Money Laundering Guidelines Electronic Data Information Filing and Retrieval (EDIFAR) Integrated market surveillance Rating of IPOs

Securities Appellate Tribunal Unique Client Identification

Markets

In tune with the global stock markets that began to recover from the second half of 2003; Indian stock markets too witnessed rapid growth. India’s two leading indices, the most popular BSE Sensex, and the one most used by the markets the National Stock Exchanges’ S&P CNX Nifty rose to record levels. Both primary and secondary market activity experienced sharp surge. Much progress was made in further strengthening and streamlining risk management, market regulation and supervision. A few aspects of the major developments in the India’s stock markets are described below.

1. Market Structure

Indian securities market is fairly large as compared to several other emerging markets. There are 22 stock exchanges in the country, though the entire liquidity is shared between the country’s two national level exchanges namely, the National Stock Exchange of India and the Bombay Stock Exchange Ltd. The regional stock exchanges are in pursuit of business models that make them viable.

The number of brokers in various stock exchanges rose from 6,711 in 1994-95 to 9,335 in FY06. The number of brokers in all the exchanges together peaked to 10,213 in the year FY01 but gradually declined thereafter when the regional stock exchanges began to lose business in the light of wide ranging market structure reforms introduced since then. In FY01, when the markets were in upswing, several regional stock exchanges were generating business owing to the availability of deferral products, such Badla and different settlement calendars prevailing at that time in these exchanges. For instance in FY01, the Delhi Stock Exchange registered cash market turnover of Rs 838.71 bn; Uttar Pradesh Stock Exchange, Rs 247.47 bn, Ludhiana Stock Exchange Rs 97.32 bn, Pune Stock Exchange Rs 61.71 bn as against Rs 13,395.11 bn of the turnover at the National Stock Exchange and Rs 10,000.32 bn turnover at the Bombay Stock Exchange. With the abolition of the deferral products and introduction of uniform T+2 settlement cycle, the liquidity in these exchanges flowed to the national level system consisting of NSE and BSE.

Indian Stock Markets: Growth of Market Structure (In Number)

Source: Securities and Exchange Board of India

Sub-brokers are an important constituent of Indian stock markets. Sub-brokers work under brokers with specified limits for trading and risk management. Sub -brokers are term as useful part in the value chain since they provide active interface with a large number of investors across the country and also extend the reach and access of the services of the brokerage firms. With the rapid growth of securities trading and deepening of the stock markets, the number of sub-brokers nearly doubled in the last ten years from 9,957 in FY01 to 23,479 in FY06.

Exchange-wise Brokers and Sub-Brokers in Indian Stock Exchanges 2005-06

Source: Securities and Exchange Board of India

In the national level stock exchanges, a large portion of the brokers are corporatised though enough incentive does not appear to exist for similar trends to appear in the regional stock exchanges.

2. Major aspects of business

A brief description of the major aspects of market developments in India with particular reference to NSE and BSE are summarized below. In view of the need for consistent and comparative data on a wide range of aspects, information published in official publications that is available latest for the FY06 are used in the following write up.

i) Market Capitalisation

Market capitalisation of stocks in India rose from Rs 67.50 bn in 1980 to Rs 705.21 bn in 1990 to Rs 11,926.30 bn in 2000. BSE market capitalisation as of mid-2007 is about Rs 40,000 bn, which in the background of the appreciating rupee, takes it to among the small group of exchanges with a trillion dollar market cap. Market capitalisation as percent of gross domestic product which was about 25% in the early 2000s, now equals it. Several leading emerging economies have market capitalization as a multiple of GDP, and in the manner in which stock prices are appreciating in India, the prospects for Indian market capitalisation rising further look good. Information for the tables in this chapter is sourced from the handbook published by the Securities and Exchange Board of India and the websites of the Bombay Stock Exchange Ltd, and the National Stock Exchange of India Ltd.

Market capitalisation in India

Source: Handbook of Statistics SEBI

ii) Trading Volumes

Secondary market operations gained greater momentum in the last decade. In the last ten years, the value of trading in both NSE and BSE rose six times making the Indian stock markets the leading market in the Asian region, and is also remarkable as compared to the growth in the world equity markets. During the period FY96 and FY06, value of share trading at the National Stock Exchange rose from Rs 657.42 bn to Rs 15,168.39 bn and at BSE from Rs 500.64 bn to Rs 8,160.74 bn. An important end in the volumes is the trading of a large number of small and midcap stocks as could be evidenced from the sharp rise in the number of scrips traded at BSE, in which a major chunk of these companies are listed. Share of Mumbai in NSE’s trading volumes rose from 40% in FY02 to 52% in FY06. Cities, from which NSE generates sizeable business in addition to Mumbai, include Delhi from where it gets 13% of business, Ahmedabad, 3%; Chennai, 2.77%; Kolkata 11% and others 8.1%. After Mumbai, from which BSE gets 75% of business, other important centres contributing to its business include Ahmedabad 2.9%; Kolkata 1.4%. Equity investing is spreading to a number

of cities and towns in India. Exchanges with national presence and infrastructure are gaining from this development which is expected to continue further in the future.

A major development in Indian equity markets is the dematerialization of shares which led to speedy securities settlement. Delays and bad deliveries also reduced after dematerialization. Progress made in Indian markets in dematerialization was noticed in the international markets as an important achievement and landmark. By FY06, more than 6,000 companies signed agreements for dematerialization with NSDL and 5,500 companies with CDSL. The number of shares that were dematerialized moved from 37.21 bn. in FY01 to 174.72 bn. in FY06 in NSDL and from 1.92 bn. to 27.22 bn. shares in CDSL during this period. Shares dematerialized forms a major chunk of the market capitalization.

Key features of business

Source: SEBI for turnover and CMIE for other indicators. $ BSE Sensex: SENSEX is a basket of 30 constituent stocks representing a sample of

large, liquid and representative companies. Base Value: 1978-79=100. NSE Nifty: S&P CNX Nifty is a well diversified 50 stock index accounting

for 22 sectors of the economy; Base Value: November 1995=1000

Domestic and Foreign Flows

Source: Handbook of Statistics SEBI

3. Major developments in equity brokerage industry in India

i) Corporate memberships

There is a growing surge of corporate memberships (92% in NSE and 75% in BSE), and the scope of functioning of the brokerage firms has transformed from that of being a family run business to that of professional organised function that lays greater emphasis on observance of market principles and best practices. With proliferation of new markets and products, corporate nature of the memberships is enabling broking firms to expand the realm of their operations into other exchanges as also other product offerings

ii) Wider product offerings

The product offerings of brokerage firms today go much beyond the traditional trading of equities. A typical brokerage firm today offers trading in equities and derivatives, most probably commodities futures, exchange traded funds, distributes mutual funds and insurance and also offers personal loans for housing, consumptions and other related loans, offers portfolio management services, and some even go to the extent of creating niche services such as a brokerage firm offering art advisory services

iii) Greater reliance on research

Client advising in India has graduated from personal insights, market tips to becoming extensively research oriented and governed by fundamentals and technical factors. Vast progress has been made in developing company research and refining methods in technical and fundamental analysis. The research and advice are made online giving ready and real time access to market research for investors and clients, thus making research important brand equity for the brokerage firms.

vi) Foreign collaborations and joint ventures

The way the brokerage industry is run and the manner in which several of them pursued growth and development attracted foreign financial institutions and investment banks to buy stakes in domestic brokerage firms, paving the way for stronger brokerage entities and possible scope for consolidation in the future. Foreign firms picked up stake in some of the leading brokerage firms, which might lead to creating of greater interest in investing in brokerage firms by entities in India and abroad.

v) Online broking

Several brokers are extending benefits of online trading through creation of separate windows. Some others have dedicated online broking portals. Emergence of online broking enabled reduction in transaction costs and costs of trading. Keen competition has emerged in online broking services, with some of these offering trading services at the cost of a few basis points or costs which are fixed in nature irrespective of the volume of trading conducted. A wide range of incentives are being created and offered by online brokerage firms to attract larger number of clients.

vi) Compliance oriented

With stringent regulatory norms in operation, broking industry is giving greater emphasis on regulatory compliance and observance of market principles and codes of conduct. Many brokerage firms are investing time, money and resources to create efficient and effective compliance and reporting systems that will help them in avoiding costly mistakes and possible market abuses. Brokerage firms now have a compliance officer who is responsible for all compliance related aspects and for interacting with clients and other stake holders on aspects of regulation and compliance.

vii) Focus on training and skill sets

Brokerage firms are giving importance and significance to aspects such as training on skill sets that could prove to be beneficial in the long run. With the nature of markets and products becoming more complex, it becomes imperative for the broking firms to keep their staff continuously updated with latest development in practices and procedures. Moreover, it is mandated for certain types of dealers/brokers to seek specific certification and examinations that will make them eligible to carry business or trade.

4. Emerging challenges and outlook for the brokerage industry

Brokerage firms in India made much progress in pursuing growth and building professionalism in operations. Given the nature of the brokerage industry being very dynamic, changes could be rapid and so as the challenges that emerge from time to time. A brief description on some of the prospects and challenges of the brokerage firms are discussed below.

i) Fragmentation

Indian brokerage industry is highly fragmented. Numerous small firms operate in this space. Given the growing importance of technology in operations and increasing emphasis on regulatory compliance, smaller firms might find it constrained to make right type of investments that will help in business growth and promotion of investor interests.

ii) Capital Adequacy

Capital adequacy has emerged as an important determinant that governs the scope of business in the financial sector. Current requirements stipulation capital adequacy in regard to trading exposure, but in future more tighter norms of capital adequacy might come into force as a part of the prudential norms in the financial sector

iii) Global Opportunities

Broking in the future will increasingly become international in character with the stock markets being open for domestic and international investors including institutions and individuals, as also opportunities for investing abroad. Keeping abreast with developments in international markets as also familiarization with global standards in broking operations and assimilating major practices and procedures will become relevant for the domestic brokerage firms.

iv) Opportunities from regional finance

Regional economic integration such as that under the European Union and the ASEAN have greatly benefited businesses in the individual countries with cross border opportunities that helped to expand the scope and significance of the business. Initial measures to promote South Asian economic integration is being made by governments in the region first at the political level to be followed up in regard to financial markets.

v) Product Dynamics

As domestic finance matures and greater flow of cross border flows continue, new market segments will come into force, which could benefit the domestic brokerage firms, if they are well prepared. For instance, in the last three to four years, brokerage firms had newer opportunities in the form of commodities futures, distribution of insurance products, wealth

management, mutual funds etc, and as the market momentum continues, broking firms will have an opportunity to introduce a wider number of products.

vi) Competition from foreign firms

Surging markets and growing opportunities will attract a number of international firms that will increase the pace of competition. Global firms with higher levels of capital, expertise and market experience will bring dramatic changes in the brokerage industry space which the local firms should be able to absorb and compete. Domestic broking firms should always give due focus to emerging trends in competition and prepare accordingly.

vii) Investor Protection

Issues of investor interest and protection will assume centre stage. Firms found not having suitable infrastructure and processes to ensure investor safety and protection will encounter constraints from regulation as also class action suits that investors might bring against erring firms. The nature of penalties and punitive damages would become more severe.

COMPANY PROFILE

Overview

Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology has enabled us to blossom into an almost 2000 member team.

Today we are a well diversified financial services firm offering a range of financial products and services such as:     

Wealth Management    

Broking & Distribution     

Commodity Broking    

Portfolio Management Services    

Institutional Equities    

Private Equity    

Investment Banking Services and     

Principal Strategies

We have a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. We are headquartered in Mumbai and as of June 30th, 2009, had a network spread over 555 cities and towns comprising 1,308 Business Locations operated by our Business Partners and us. As at June 30th, 2009, we had 5,57,373 registered customers.

In 2006, the Company placed 9.48% of its equity with two leading private equity investors based out of the US – New Vernon Private Equity Limited and Bessemer Venture Partners.

The company got listed on BSE and NSE on September 9, 2007. The issue which was priced at Rs.825 per share (face value Rs.5 per share) got a overwhelming response and was subscribed 27.18 times in turbulent market conditions. The issue gave a return of 21% on the date of listing.

As of end of financial year 2008, the group networth was Rs.7 bn and market capitalization as of March 31, 2008 was Rs.19 bn.

For year ended March 2008, the company showed a strong top line growth of 91% to Rs.7 bn as compared to Rs.3.68 bn, last year. New businesses like investment banking, asset management and fund based activities have contributed to this growth.

http://www.motilaloswal.com/Content.aspx?ReportID=0C2B2131-A6CA-444E-A7A3-C641AFEFB554

Rs. Crores FY 2007- 08 Growth (YoY)

Total Revenues 701 91%

EBIDTA 270 97%

PAT 156 100%

Credit rating agency Crisil has assigned the highest rating of P1+ to the Company’s short-term debt program.

MOSt Principles

Customer interest is paramount Ethical and transparent business practices Respect for professionals, associates and business partners Research based value investing Cutting edge technology to ensure world-class customer service

Wealth Management

Financial planning for individual, family and business wealth creation and management needs. These are provided to customers through our Wealth Management service called ‘Purple’

Broking & Distribution services Equity (cash and derivatives) Commodity Broking Portfolio Management Services Distribution of financial products Financing Depository Services IPO distribution

We offer these services through our branches, Business Partner locations, the internet and mobile channels. We also have strategic tie-ups with State Bank of India and IDBI Bank to offer our online trading platform to its customers.

Commodity Broking

Through Motilal Oswal Commodities Broker (P) Ltd our fully owned subsidiary; we provide commodity trading facilities and related products and services on MCX and NCDEX. Besides access to the best of research in the form of Daily Fundamentals & Technical Reports on highly traded commodities, our clients also get access to our exclusive Customized Trading Advice on both the trading platforms. We offer these services through our branches, Business Partner locations, the internet and mobile channels

Portfolio Management Services

Motilal Oswal Portfolio Management Services offer a range of investments solutions through discretionary services. We at Motilal Oswal have helped create wealth for our customers through our Portfolio Management Services. Our knowledge of the markets together with our understanding of our customers and their risk profiles has helped us design a range of portfolio offerings for our clients. These include the Value Strategy, Bulls Eye Strategy, Trillion Dollar Opportunity Strategy and Focused   Strategy Series I . As of June 30th, 2009, the Assets Under Management of our various portfolio schemes stood at Rs.6.8 bn.

Motilal Oswal group has applied to the regulatory bodies for a license to operate as a Domestic Asset Management Company (Mutual Fund) and we expect to begin operations soon.

Institutional Equities

We offer equity broking services in the cash and derivative segments to institutional clients in India and overseas. These clients include companies, mutual funds, banks, financial institutions, insurance companies, and FIIs. As at June 30th, 2009, we were empanelled with over 300 institutional clients including 200 FIIs. We service these clients through dedicated sales teams across different time zones.

Investment Banking

We offer financial advisory services relating to mergers and acquisitions (domestic and cross-border), divestitures, restructurings and spin-offs through Motilal Oswal Investment Advisors Private Ltd. (MOIAPL)

We also offer capital raising and other investment banking services such as the management of public offerings, private placements (including qualified institutional placements), rights issues, share buybacks, open offers/delistings and syndication of debt and equity.

MOIAPL has closed 23 transactions in 2007-08 worth US$ 1.8 billion and had 18 mandates in hand as at March 31,2008.

Private Equity

In 2006, our private equity subsidiary, Motilal Oswal Private Equity Advisors Private Ltd (MOPEAPL) was appointed as the investment manager and advisor to a private equity fund, India Business Excellence Fund, which was launched with a target of raising US$100 mn. The fund is aimed at providing growth capital to small and medium enterprises in India, with investments typically in the range of US$3 mn to US$7 mn MOPEAPL has recently launched an INR 750 crores domestic Real Estate Private Equity Fund called “India Realty Excellence Fund” sponsored by Motilal Oswal Financial Services Ltd.

Principal Strategies Group

For effective management of treasury operations and to capitalize on market opportunities, the Group has set up a 30 member team which would be responsible for effective deployment of funds into different trading and arbitrage strategies.

Focus on Research

Research is the solid foundation on which Motilal Oswal Securities advice is based. Almost 10% of revenue is invested on equity research and we hire and train the best resources to become advisors. At present we have 24 Research Analysts researching over 27 sectors and 16 commodities. From a fundamental, technical and derivatives research perspective; Motilal Oswal's research reports have received wide coverage in the media (over a 1000 mentions last year). Our consistent efforts towards quality equity research has reflected in an increase in the ratings and rankings across various categories in the AsiaMoney Brokers Poll over the years

Our unique Wealth Creation Study, authored by Mr. Raamdeo Agrawal, Managing Director, is now in its 13th year. Investors keenly await this annual study for the wealth of information it has on the companies that created wealth during the preceding five years.

History & Milestones

The story of Motilal Oswal Securities Ltd (MOSt) goes back many years, when Mr. Motilal Oswal and Mr. Raamdeo Agrawal met each other as students in a Mumbai suburban hostel in the early eighties. Both the young chartered accountants hailing from a rural & an unpretentious background had a common dream viz 'to build a professional organization with strong value systems, to provide reliable & honest investment advice to investors'. Thus was born their first enterprise called "Prudential Portfolio Services" in 1987.

2009 Motilal Oswal Securities Ltd. enters 'Limca Book of Records' for creating India's largest dealing room in Mumbai

MOSL was 'Rated No.1 – Best recommendations Mid & Small Caps' and won awards in 3 out of 4 categories at the Starmine India Broker Rankings 2009 from Thomson Reuters

2008 MOSL awarded the prestigous Nasscom - CNBC TV 18 IT User Award - 2008

MOSL awarded 'The Best Franchisor in Financial Services' by Franchisee World Magazine 2008 for the second consecutive year

MOSL creates one of India's largest Equity Dealing & Advisory rooms, spread over 26,000 sq ft in Malad, Mumbai

Motilal Oswal's India Business Excellence Fund raised USD 125 million, 25% higher  than the initial target of USD 100 million

2007 The Strategic partnership between MOSL and SBI - EZtrade - reaches an important   milestone i.e. In less than a year it has managed to sign up more than  10,000   customers

Starts Knowledge First campaign Introduces a separate brand for Private Client Group - Purple Motilal Oswal Financial Services ltd. gets listed on the BSE & NSE Mr. Motilal Oswal - Chairman and Managing Director has been appointed as a

member of the Managing Committee of Indian Merchant Chambers.

2006 Motilal Oswal Financial Services Ltd ties-up with State Bank of India to offer online trading.

Motilal Oswal Financial Services Ltd was declared as the Best Research House for Indian Stocks in 2006 as per AQ Research.

Avaya Global ranked MOSL as the second best company in the Financial Sector for customer responsiveness.

Asia money Brokers poll 2006 rates Motilal Oswal Securities – Most Independent Research- Local Brokerage

Investment Banking business advises Aban in their majority controlling stake of invest ASA – one of the largest investment banking deals of 2006.

Issues about 13% of companies’ equity to employees as ESOPs.

2005 Asiamoney Brokers Poll 2005 rates Motilal Oswal Securities - Best Local Brokerage,MOSt Independent Research Brokerage, Best in Sales and Service.

Launches two new Portfolio Management Schemes - Value Hedging for derivatives and Discover Value for the Rs. 5 lakh to Rs. 50 lakh category.

Acquires Capital Deal Stock and Share Brokers, (a proprietary concern based in Karnataka)..

Deepest distribution in the stock broking segment with about 700 Business locations in 296 cities and about 1,50,000 customers.

2004 Presence expanded to 375 Business locations in 190 cities. Value PMS delivers a whopping 160% post tax returns for the period ended

April 2004. Bulls Eye PMS - A momentum based PMS launched. Start of the Solid Research Solid Advice campaign.

2003 Enters the mutual fund and IPO distribution business. MOSt Portfolio Management Services launched with Mr. Raamdeo Agrawal

as the Portfolio Manager. Uniquely structured performance related fees. Crossed 15,000 Depository accounts. About 200 Business locations in 124 cities servicing over 15,000 Retail and

Institutional Investors.

2002 Mr. Navin Agarwal, Head of Equity Research & Institutional sales, inducted in the Board of Directors.

Received the Asia Money Award - 2nd Best among Indian Brokerage firms. Retail network completes coverage of 75 cities in India.

2001 Legendary marketing guru Shunu Sen’s services taken to revitalize retail marketing strategy and branding efforts.

Starts offering Derivatives products and advisory services on both BSE as well as NSE.

2000 Received the Asia Money award for the Best Domestic Equity house. Both Mr. Motilal Oswal and Mr. Raamdeo Agrawal receive Rashtriya

Samman Patra from Central Board of Direct Taxes for being amongst the top 50 tax payers in India fromFY94-FY98.

1999 Mr. Raamdeo Agrawal starts attending legendary billionaire investor Warren Buffett’sAnnual General Meetings of Berkshire Hathway Inc. He still continues to attend it every year.

The Wealth Creation Study started in 1996 culminates into Wealth Creation Seminarand Awards function in 1998.

First Stock Broking house to brand its services as a research and advice based broker.

“Wealth Creation” Campaign started. www.MotilalOswal.com launched. First broking house in India to go on the

web.

1998 Mr. Motilal Oswal joins the Governing Board of The Stock Exchange, Mumbai.

1996 Wealth Creation Study started. First of its kind study initiated to identify biggest and fastest wealth creating companies in Indian Stock markets.

1995 ”Motilal Oswal” gets incorporated as Motilal Oswal Securities Ltd.

1994 MOSt acquires NSE Membership and plans for major expansion of its retail network.

Inquire (Indian Equity Research) is formally created at a 2500 sq. ft office in South Mumbai with bigger and better quality infrastructure than the corporate office. Since then nearly 20% of revenue is allocated to research. First Domestic Stock broking house to have such a strong Research focus.

1990 After just three years in the business, ”Motilal Oswal” is formed through acquisition of membership on The Bombay Stock Exchange (BSE). Three

1987 Mr. Motilal Oswal and Mr. Raamdeo Agrawal lay the foundation of a great partnership by starting a sub-broking firm. The venture stands out from the rest due to their approach of Research-based broking even when sub-brokers.

Motilal Oswal Financial Services Limited is the holding company of the following five subsidiaries:

Major Services

Equities

Derivatives

E-Broking

IPO

Portfolio Management

Mutual funds

Commodities

Depository Services

Equities  Most Equity Advisory Group

In keeping with its tradition of personalized service, Motilal Oswal Securities Limited set up MOSt EAG to provide customized and integrated equity solutions to High Net worth Investors like you.

Equity Research is an inherent strength of MOSt. We believe in picking investment opportunities where the underlying value is higher than the market price. Our trading ideas are based on technical, news flow and events where risk reward ratio is favorable.

Most EAG team has highly trained equity professionals, who act as your Equity Advisor. Most Equity Advisor proactively helps you take informed equity investment decisions and build a healthy portfolio.

 Benefits

MOSt EAG team has highly trained equity professionals, who act as your Equity Advisor. MOSt Equity Advisor proactively helps you take informed equity investment decisions and build a healthy portfolio. The Equity Advisor keep a close watch on the performance of each stock in your portfolio and suggest changes as and when there is a significant trend reversal or deterioration in a company's performance..

EAG Process

Client Profiling : MOSt Equity Advisor determines each EAG client's profile before deciding the ideal asset allocation. Profiling takes into consideration issues like your attitude towards risk, investment horizon, life stage, and return expectation and investment objectives.

Investments & Trading : MOSt Equity Advisor are experts in providing value based investment solutions as well as advising you in positional trading, as per your profile.

Portfolio Tracking Software : Your equity portfolio is continuously monitored using Portfolio Tracking Software.

Integrated Approach : We use integrated approach in our investment strategy using a combination of cash, derivatives and other leverage products to help you reach your investment goal.

Minimum requirements and fees structure : Portfolio size should be 25 lakhs plus and fees structure varies from case to case.

Normal Fees : Delivery base 0.50%, Trading 0.10 %, Derivatives 0.10%.

Derivatives

MOSL F&O :

Futures & options are derivatives, which derive their values from equity as their underlying. Hence our Equity Advisory Group (EAG), equipped with all the required skills and understanding of Equity Derivatives, will act as your advisors in futures & options segment as well to help you take informed trading decisions.  

 Why F&O :

Derivatives instruments are primarily hedging tools. Clients can be assisted in protecting the downside risk to their portfolio using appropriate combination of options. Our advisory is skilled to help you in maximizing your gains from your existing corpus using numerous strategies based on the direction and intensity of the views. Derivatives give an ability to leverage; given the risk appetite clients can extrapolate their gains with the timely assistance of our advisory.

EAG Process (Derivatives):

Client Profiling : MOSt Equity Advisor determines each EAG client's profile before deciding the set of derivative strategies that will ideally suit you. If you have a good risk appetite & are willing to take riskier bets for reciprocating returns, we will suggest aggressive strategies like buying naked futures. On the other hand, if you are risk averse and would like to protect your self moderating some of your incremental gains but finding it difficult to digest the bouts of volatility in the markets, we can suggest certain portfolio hedging strategies to ease your worries.

Trading : The MOSt Equity Advisor is an expert in swift & timely execution of trading ideas at the same time monitoring those ideas as per your profile.

Integrated Approach : We use integrated approach in our trading strategy using a combination of futures and/or calls and/ or puts to help you optimally capitalize your view reach your trading goal.

Portfolio Tracking Software : Your F&O position will be continuously monitored using Portfolio Tracking Software. 

Minimum requirements and fees structure : Margins as per NSE requirement and fees structure varies from case to case.

Normal Fees : Derivatives 0.10%. 

Our Company is a member of the National Stock Exchange, which provides equity and derivative trades execution through off line and on line channels for the customers. 

E-Broking

 Key benefits of trading online with mybroker

Single screen order/trade entry, without going through the hassles of giving transfer instruction,

writing cheques.

Instant order/trade confirmation gives you similar trading experience as exchange based software

without the burden of overhead and maintenance cost

A refreshing experience of getting outstanding research based advise equity and derivatives on the

same screen.

Live quotes of NSE–Cash/Derivative, BSE Cash, Commodity. Create multiple market watches,

default market watch – NIFTY, SENSEX, Industrial. You can add NSE-Cash, Derivative & BSE

script on the same market watch.

Get access to various online reports like margin report, Demat A/c details, trades executed,

turnover report, net position report with mark to market profit/loss and realized profit.

Online transfer of funds through multiple banks.

Access to latest research reports, daily market dairy, pivot points, derivative dairy.

View top 20 shares by value or volume traded, along with top gainers / losers.

IPOBackground

Book Building and Fixed Price Issue are the two types of Initial Public Offerings (IPOs) through which a corporate can raise money in the capital market.

In a book building public issue the bids are received at different price levels and the demand for the issue is built up over a period of time. Depending upon the bids received at different price levels the issue price is ascertained. In a fixed price issue the issue price is pre ascertained by the issuer.

Portfolio Management

In today's complex financial environment, investors have unique needs which are derived from their risk appetite and financial goals. But regardless of this, every investor seeks to maximize his returns on investments without capital erosion.

While there are many investment avenues such as fixed deposits, income funds, bonds, equities etc… It is a proven fact that Equities as an asset class typically tend to outperform all other asset classes over the long run.

Investing in equities, require knowledge, time and a right mind-set. Equity as an asset class also requires constant monitoring may not be possible for you to give the necessary time, given your other commitments.

Motilal Oswal Securities Ltd brings with more than 2 decades of experience & expertise in equity research and stock broking. We are one of the leading portfolio service providers, with asset under management worth Rs. 590 Crores.

  Portfolio Characteristics

Value based stock selection     Investment Approach : “Buy & Hold”     Investments with Long term perspective     Aim to Maximize post tax return due to Low Churn     Focused portfolio construction     Capital preservation consciousness*

  Investment Philosophy Identify and purchase a piece of great business at a fraction of its true value. Investments with a Long-term investment View. The fund manager strongly believes that “Money

is made by Sitting”          Investments are identified by a Bottom up Approach. The aim is to identify potential long-term

wealth creators by focusing on individual companies and their management bandwidth. Margin of Safety  

Benefits of Portfolio Management Service:

Professional Management

The service offers professional management of your equity investments with an aim to deliver consistent return with an eye on risk.

Risk Control

Well defined investment philosophy & strategy acts as a guiding principle in defining the investment universe. We have a very robust portfolio management software that enables the entire construction, monitoring and the risk management processes. 

 Convenience

Our Portfolio Management Service relieves you from all the administrative hassles of your investments. We provide periodic reports on the performance and other aspects of your investments.

Constant Portfolio Tracking

We understand the dynamics of equity as an asset class, so we track your investments continuously to maximize the returns.

Transparency

You will get account statements and performance reports on a monthly basis. That’s not all; web access will enable you to track all information relating to your investment on daily basis. The following portfolio reports are accessible online :

Performance Statements Portfolio Holding Reports Transactions Statements Capital Gain / Loss Statements

Dedicated Relationship Manager

Your Relationship manager will help you carefully understand your financial goals and advise you the right product mix. The relationship managers, the one point contact will bestow personalized service and ensure that you receive periodic updates, and account performance reports.

Mutual Funds

Mutual funds… realize your financial goal through MOSt MUTUAL.

Investments can seem complicated and mystical. Since all the traditional investment avenues like bank deposits, RBI Bonds, NSC, KVP etc are becoming unattractive with the interest rate falling continuously, one needs to look for other investments alternatives. At Motilal Oswal Securities Ltd, we understand the importance of financial goals of our privileged clients and provide you comprehensive solutions to all your financial needs. Through our tailor made portfolios, we serve your needs better and help you make informed investment decisions.

 Services Offered

At Motilal Oswal, we offer two distinct modes of investment to suit your specific needs. The client may choose to apply online for Mutual Funds or call up one of our relationship managers to help you place orders in Mutual Fund schemes.

Mentioned below is a brief description of the services that we offer to our clients :

Need based advisory, fully backed with solid research.

Dedicated Mutual fund advisors to understand your needs and help you build a tailor made

portfolio.

Monthly review of portfolios.

Monthly Fact-sheet covering our analysis of various funds.

Knowledge sharing through educational seminars and workshops.

Commodities

Ever since the dawn of civilization commodities trading have become an integral part in the lives of mankind. The very reason for this lies in the fact that commodities represent the fundamental elements of utility for human beings. Over the years commodities markets have been experiencing tremendous progress, which is evident from the fact that the trade in this segment is standing as the boon for the global economy today. The promising nature of these markets has made them an attractive investment avenue for investors. Earlier investors invested in those companies, which specialized in the production of commodities. This accounted for the indirect investments in commodity assets.

Commodity markets have a huge potential in the Indian context particularly because of the agri-based economy. With the government's initiative for agricultural liberalization, commodities' trading in India has gained increased momentum in activities.

Depository Services

In the times of T+2 having a demat account linked to your trading account becomes really convenient. The non-trading clients can also avail of MODES.

Today MODES is available at all business locations of Motilal Oswal. In terms of number of accounts MODES is the second biggest Depository Participant in CDSL with over 150,000 accounts. The trust they have in Motilal Oswal is reflected by their cumulative holding in MODES worth over Rs. 3400 crores.

You receive regular account reports and an efficient service at all times. Clients having holdings over Rs. 10 lakh receive special SMS service. They get recommendations on their holdings based on Motilal Oswal Research rated the "Most Independent Research - Local Brokerage" by Asia Money Brokers Poll 2006.

Awards and Accolades

Motilal Oswal Financial Services has received many accolades in the year gone by. Some of them are: 2009

Rated ‘Best Overall Country Research’ for a Local Brokerage in the 2007 AsiaMoney Brokers poll    

Rated India’s top broking house in terms of total number of trading terminals by the Dun & Bradstreet survey    

Rated ‘Outstanding Commodity Broking House-2007’ by Globoil India    

Ranked second best for Customer Responsiveness in the Financial Sector at the Avaya GlobalConnect Customer Responsiveness awards.

MOSL was 'Rated No.1 – Best recommendations Mid & Small Caps' and won awards in 3 out of 4 categories at the Starmine India Broker Rankings 2009 from Thomson Reuters

2008 MOSL awarded the prestigious Nasscom - CNBC TV 18 IT User Award - 2008 MOSL awarded 'The Best Franchisor in Financial Services' by Franchisee World Magazine

2008 for the second consecutive year MOSL creates one of India's largest Equity Dealing & Advisory rooms, spread over 26,000 sq

ft in Malad, Mumbai Motilal Oswal's India Business Excellence Fund raised USD 125 million, 25% higher  than the

initial target of USD 100 million Asia Money Brokers poll 2007 rates Motilal Oswal Securities Ltd. - Best Overall Country

Research - Local Brokerage

2007 Motilal Oswal Commodities Broker Pvt Ltd (MOCBPL) bagged Globoil India's prestigious

'Outstanding Commodity Broking House - 2007' Award Motilal Oswal Financial Services Ltd. featured as a case study in Harvard Business School Motilal Oswal Securities Ltd ranked as the 'Most Independent Research - Local Brokerage

among Hedge Funds' by Asia Money Brokers-Poll 2006”

CHAPTER III

RESEARCH METHODOLOGY . RESEARCH DESIGNNon-Probability

The non-probability respondents have been researched by selecting the persons who does the stock trading. Thos persons who do not trade in stocks will not been interviewed.

Exploratory and Descriptive Research

The Research is primarily both exploratory and descriptive in nature. The source of information will collect from primary and secondary. A well structured questionnaire was prepared for the primary research and personal interviews will be conducted to collect the responses of the target population.

Sampling Technique Initially, a rough draft was prepared a pilot study was done to check the accuracy of the Questionnaire and certain changes were done to prepare the final questionnaire to make it more judgmental.

Sample SizeThe sample size was restricted to only100 respondents.

Sampling AreaAhmedabad city.

CHAPTER IV

RESEARSH ANALYSIS & INTERPRETATION

1) Do you own a computer?

INTERPRETATION Out of 100 people surveyed found that 20 people do not have computer while 80 people

having computer.

2) Do you have an Internet connection?

Yes No

80 20

Yes No

60 20

INTERPRETATION:

80% people having Internet Connection while 20% people do not have Internet Connection.

3) Do you trade Online?

Yes No

40 20

INTERPRETATION:

In the present scenario, 40 people Trade Online out of 60 people.

4) Through which Technology do you trade Online?

Web Based Technology Software Base

28 12

INTERPRETATION:

From the survey of 40 (on line) people, found that 28 people preferred Web Based technology while remaining 12 are using Software based technology.

5) Do you think online trading is easy and fast way of trading?

Yes No38 2

INTERPRETATION:

Survey of 40 people 38 people perceived that Online Trading easy and fast way trading.

]

6) Which of the following companies do you preferred to Online Trading?

ICICI Direct

Sharekhan IndiabullsMotilal

Oswal Sec. Ltd

Kotak Securities ReligareAny

Other

11 8 5 7 5 3 1

INTERPRETATION:

Among the 40 people of online trader, 11 people preferred ICICI Direct while 8 people

preferred Sharekhan follow by Motilal Oswal Sec. Ltd and which is preferred by 7

people.

7.) How would you rate the internet and telecommunication Services?

INTERPRETATION:

Among the 40 people of online trader found that 7 people rated Excellent Internet while

20 people rated Average service of Internet.

Excellent Good Average Poor7 20 10 3

9) What factors do you consider when you trade online?

Strongly Agree

Agree Neither AgreeNor Disagree

Disagree Strongly Disagree

1 2 3 4 5

Time Saving Convenient Instant Transfer Security

Strongly Agree 12 15 19 15

Agree 20 22 16 16

Neither A Nor D 7 2 5 7

Disagree 1 1 0 2

Strongly disagree 0 0 0 0

Total 40 40 40 40

10.) Do you think that online trading has helped in growth and development of online stock market?

Yes No40 0

INTERPRETATION: 40 Respondent believe that online trading will help for growth and development of stock market.

10)Do you think introduction of online trading has helped in attracting the new investors thus increasing the trading volumes of Stock Market?

Strongly Agree Agree Neither Agree Nor Disagree 15 18 7

INTERPRETATION:

15 respondents are strongly Agree that online trading has helped in attracting the new investors to increase volume of stock market while 18 respondents are agree.

11)Do you feel that the trading volume will increase in near future because of online trading?

Yes No35 5

INTERPRETATION: Out of 40 respondents, 35 are believed that online trading accelerates to increase trading volume in

near future.

12) Now Technology is Diversified, Do you think M-Trading (Mobile Trading) will prove to be a new concept?

Yes No38 2

INTERPRETATION:

Out of 40 samples, 38 are believed that M-Trading increase trade volume and 2 respondent are not sure.

CHAPETR V

FINDINGS

1. The future of online trading is very bright, because of its rapid growth & development and huge acceptance.

2. People are moving towards online trading from offline.3. More investors are consider online trading as a better, but because of lack of knowledge about

using it they still stuck to the offline.4. Still there are many people who have not computer or internet connection or they do not trade

online. 5. Online trading option help companies for more clients’ acquisition.6. Online trading in near future become so popular that everyone should start trade online by PC’s

or may be through mobiles.

RECOMMENDATIONS

1. Company should more focus on the promotion of its online offering.2. Company should find out its existing customer, who are doing offline trades and make them

aware about the ease and benefits of online trade, and trained them if required.3. Company has to provide online trading software at the minimum or free charges.4. Online trading should provide online a/c. to every customer with trading & DMAT account.5. Company has to facilitate its online services with solid research and advices which help the

investors to do the various investments.

CONCLUSION

The online trading is growing with a rapid pace with the rising level of education among the

customers. The other factors being that the India Investor nowadays wants to deal himself in trading

rather than depending upon other middlemen. They also consider the factors like time saving in doing

the online transaction, convenience etc. Although some people feel that online trading is not secure but

the people doing the trading online is happy about the increasing security concerns among the

companies. The year 2008 has not been so good for the stock market and the Sensex and Nifty has

been dipping and affecting the business negatively for these companies. This is due to the fact that at

these times people do not prefer to open the DMAT and Trading accounts. So the companies have to

reduce their account opening fees to attract more and more customers. Also people trade very less in

the bearish market and the company’s profits against brokerage fees soars downwards. It is also a

found fact that during the bearish market the ratio of online trading becomes very less. Also there is an

intense competition among the companies and the companies come up with new and new promotion

schemes such as discounted and negotiable brokerages, Zero balance accounts, waiving a/c opening

fees and AMC etc. As the internet penetration is growing in Indian this business holds a huge potential

for growth. The mantra for success I the current situation will be educating the customers about

the benefits of online trading and the amount of ROI that can be generated through it. The total

trading volume of brokerage companies has increased from USS1239.1 billion in 2004 to USS1492.1

billion in 2005, and is expected to reach USS6535.7 billion by 2015.

Bibliography

Marketing management by Philip Kotler

Times of India

The Economic Times

The Financial Express

www.google.com

www.motilaloswal.com

www.sharekhan.com

www.icicidirect.com

www.kotakstreet.com

www.bseindia.com

www.nseindia.com

www.sebi.co.in