final report 2nd

A SUMMER TRAINING REPORT ON

“STUDY OF STOCK BROKING INDUSTRY

AT

SHAREKHAN PVT.LTD

Submitted to

IBSAR

INSTITUTE OB BUSINESS STUDIES AND RESEARCH, CBD BELAPUR

UNDER THE GUIDANCE OF:

(Asst. Manager Sharekhan Ltd.)

Submitted by:

Spl: Marketing

DECLARATION

CERTIFICATE

CONTENTS

1. ACKNOWLEDGEMENT

2 EXECUTIVE SUMMARY

3. OBJECTIVE

5. Background of Stock Exchange in India

6. Introduction of Sharekhan broking firm

7. Management Structure of Sharekhan

8. Work Structure of Sharekhan

10. Charge Structure

11. Buying and selling in stock market

12. Sharekhan products

13. Marketing approach to sales

14. Research design

15. Comparative analysis

16. Working at sharekhan

20. Bibliography

ACKNOWLED

EXECUTIVE SUMMARY

In most industrialized countries, a substantial part of

financial wealth is not managed directly by savers, but through a

financial intermediary which implies the existence of an agency

contract between the investor (the principal) and a broker or portfolio

manager (the agent). Therefore, delegated brokerage management is

arguably one of the most important agency relationships intervening

in the economy, with a possible impact on financial market and

economic developments at a macro level.

In most of the metros, people like to put their money in stock options

instead of dumping it in the bank-lockers. Now, this trend pick pace

in fast developing cities like Mumbai etc. My research is based on the

residents of Mumbai and its nearby areas.

As the per-capita-income of the city is on the higher side, so it

is quite obvious that they want to invest their money in profitable

ventures. On the other hand, a number of brokerage houses make sure

the hassle free investment in stocks. Asset management firms allow

investors to estimate both the expected risks and returns, as measured

statistically.

OBJECTIVE

To understand the planning, organising and implementation of financial products.

How to deal with various client including HNI and convince them.

And to get in depth knowledge about share market

To understand marketing and distribution strategy of financial product.

And study of stock broking firms along with sharekhan.

BACKGROUND OF STOCK EXCHANGE IN INDIA

The emergence of stock market can be traced back to 1830. In

Bombay, business passed in the shares of banks like the commercial

bank, the chartered mercantile bank, the chartered bank, the oriental

bank and the old bank of Bombay and shares of cotton presses. In

Calcutta, Englishman reported the quotations of 4%, 5%, and 6%

loans of East India Company as well as the shares of the bank of

Bengal in 1836. This list was a further broadened in 1839 when the

Calcutta newspaper printed the quotations of banks like union bank

and Agra bank. It also quoted the prices of business ventures like the

Bengal bonded warehouse, the Docking Company and the storm tug

company.

Between 1840 and 1850, only half a dozen brokers

existed for the limited business. But during the share mania of 1860-

65, the number of brokers increased considerably. By 1860, the

number of brokers was about 60 and during the exciting period of the

American Civil war, their number increased to about 200 to 250. The

end of American Civil war brought disillusionment and many failures

and the brokers decreased in number and prosperity. It was in those

troublesome times between 1868 and 1875 that brokers organized an

informal association and finally as recited in the Indenture

constituting the “Articles of Association of the Exchange”. On or

about 9th day of July,1875, a few native brokers doing brokerage

business in shares and stocks resolved upon forming in Bombay an

association for protecting the character, status and interest of native

share and stock brokers and providing a hall or building for the use of

the members of such association.

As a meeting held in the broker’ Hall on the 5th day of February,

1887, it was resolved to execute a formal deal of association and to

constitute the first managing committee and to appoint the first

trustees. Accordingly, the Articles of Association of the Exchange and

the Stock Exchange was formally established in Bombay on 3rd day

of December, 1887. The Association is now known as “The Stock

Exchange”.

The entrance fee for new member was Re.1 and there were 318

members on the list, when the exchange was constituted. The

numbers of members increased to 333 in 1896, 362 in 1916and 478 in

1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in

1896, Rs.2500 in 1916 and Rs. 48,000 in 1920. At present there are

23 recognized stock exchanges with about 6000 stock brokers.

Organization structure of stock exchange varies

14 stock exchanges are organized as public limited companies, 6

as companies limited by guarantee and 3 are non-profit voluntary

organization. Of the total of 23, only 9 stock exchanges have been

permanent recognition. Others have to seek recognition on annual

basis.

These exchange do not work of its own, rather, these are run

by some persons and with the help of some persons and institution.

All these are down as functionaries on stock exchange. These are

follows:

1. Stockbrokers

2. Sub-broker

3. Market makers

4. Portfolio consultants etc.

1.) Stockbrokers:-

Stock brokers are the members of stock

exchanges. These are the persons who buy, sell or deal in securities. A

certificate of registration from SEBI is mandatory to act as a broker.

SEBI can impose certain conditions while granting the certificate of

registrations. It is obligatory for the person to abide by the rules,

regulations and the buy-law. Stock brokers are commission broker,

floor broker, arbitrageur etc.

Detail of registered brokers

Total no. of registered brokers

as on 31.03.2009

Total no. of sub-brokers as on

31.03.2009

9000 24,000

2.) Sub-broker:-

A sub-broker acts as agent of stock broker. He is not a

member of a stock exchange. He assists the investors in buying,

selling or dealing in securities through stockbroker. The broker and

sub-broker should enter into an agreement in which obligations of

both should be specified. Sub-broker must be registered SEBI for a

dealing in securities. For getting registered with SEBI, he must fulfill

certain rules and regulation.

3.) Market Makers: -

Market maker is a designated specialist in the specified

securities. They make both bid and offer at the same time. A market

maker has to abide by bye-laws, rules regulations of the concerned

stock exchange. He is exempt from the margin requirements. As per

the listing requirements, a company where the paid-up capital is Rs. 3

crore but not more than Rs. 5 crore and having a commercial

operation for less than 2 years should appoint a market maker at the

time of issue of securities.

4.) Portfolio consultants:-

A combination of securities such as stocks, bonds and

money market instruments is collectively called as portfolio. Whereas

the portfolio consultants are the persons, firms or companies who

advise, direct or undertake the management or administration of

securities or funds on behalf of their clients.

Partial fulfilment for degree of M.B.A. programmed, we

received the opportunity from Sharekhan Ltd. for our summer training

project report. It is basically a stock brokering company which deals

in security and derivative market, Commodity market, mutual funds

and Insurance etc.

INVESTMENT is an act to something which generates a profit (an

additional income on top of committed amount)

People generally invest to increase the purchasing power of money

and protect decreasing or eroding of value due to inflation.

EQUITY is a share of ownership in a company.

GAINS ASSOCIATED WITH INVESTMENT IN SHARES

1) Dividend

2) Price Appreciation.

Gain from price appreciation are usually higher than dividend.

STOCK INDEX & SENSEX

An index composite of stock that indicate how overall market is

moving.

The BSE sensex is weighted average of price of 10 selected stock

listed on the BSE. The weights are the market caps of individual

stock.

INDEX NO OF

COMPANIES

CALCULATION

OF INDEX

BSE (Name of

index –Sensex)

5000

30stocks

NSE(Name of index

–Nifty)

1800 50stocks

THERE ARE BASICALLY TWO MARKETS

1) PRIMARY MARKET 2)SECONDARY

MARKET

Primary Market - Since buying IPO means buying directly

from company issuing shares IPO consist the Primary Market

Secondary market - Buying shares from stock exchange is

buying from secondary market.

BUYING AND SELLING IN STOCK MARKET

BOLT NEAT

(BSE Online Trading) (NSE Automated

Trading)

BOLT : It is the trading terminal through which we can place the

orders of buy or sell or short-sell of the Bombay Stock Exchange

(BSE) of our country.

NEAT:

It is the trading terminal through which we can place the orders of

buy or sell or short-sell of the National Stock Exchange (NSE) of our

country.

Both the BOLT & NEAT terminals are linked with the NSDL

(National Security Depositary Ltd.) and CDSL (Central Depositary

Security Ltd.)

These are the depositary participants which are regulated by SEBI

(Security Exchange Board of India) along with our NSE, BSE and

other Regional Stock Exchanges.

SHARE

Share is actually the Ownership of the company divided into small

parts and each part is called as Share or stock .A person carrying a

share of a company holds that part of ownership in that company.

SHARE MARKET

A share market is the place where buying and selling of shares takes

place Now- a - days due to internet and advanced technology buying

and selling of shares takes place anywhere in India and also from

foreign country, there is no need to be physical present in exchange

like NSE and BSE.

A person wants to buy/sell shares in share market has to first place

his/her order with a broker or can do themselves using online trading

system

When the ‘buy’ order of the shares is communicated to the exchange

(either NSE or BSE); The order stays in the queue of exchanges other

orders and gets executed if the price of that share comes to that value.

The shares purchased will be send to the customer either in physical

or demat format.

INTRODUCTION TO SHAREKHAN

MANAGEMENT STRUCTURE OF SHAREKHAN

Director Shankar Valia

Director Jaideep Arora

CEO

Tarunbhai Shah

Administrative Head Mr. Sakhi

Sr. Vice Precedent (Sales) Kalyan Raman

Mumbai branch head Mr. Sanjay Batale

Cluster Manager Muddassar Khan

WORK STRUCTURE OF SHAREKHAN

Sharekhan has always believed in investing in technology to build its

business. The company has used some of the best-known names in the

IT industry, like Sun Microsystems, Oracle, Microsoft, Cambridge

Technologies, Nexgenix, Vignette, Verisign Financial Technologies

India Ltd, Spider Software Pvt Ltd. to build its trading engine and

content. The City Venture holds a majority stake in the company.

HSBC, Intel & Carlyle are the other investors.

On April 17, 2002 Sharekhan launched Speed Trade and Trade Tiger,

are net-based executable application that emulates the broker

terminals along with host of other information relevant to the Day

Traders. This was for the first time that a net-based trading station of

this caliber was offered to the traders. In the last six months Speed

Trade has become a de facto standard for the Day Trading community

over the net.

Sharekhan’s ground network includes over 700+ Shareshops in 130+

cities in India.

The firm’s online trading and investment site - www.sharekhan.com -

was launched on Feb 8, 2000. The site gives access to superior

content and transaction facility to retail customers across the country.

Known for its jargon-free, investor friendly language and high quality

research, the site has a registered base of over 3 Lacks customers. The

number of trading members currently stands at over 7 Lacks. While

online trading currently accounts for just over 5 per cent of the daily

trading in stocks in India, Sharekhan alone accounts for 27 per cent of

the volumes traded online.

SHAREKHAN – ONE OF THE FASTEST GROWING

FINANCIAL COMPANY IN INDIA.

WELL ESTABLISHED TO DELIVER QUALITY SERVICE

REACH

1120 FRANCHISES

168 BRANCHES

325 CITIES

TECHNOLOGY

SUPERIOR TRADING PLATFORM,

MULTI CHNNEL ACCESS FOR

CUSTOMERS.

REAL TIME DELIVERY OF

QUALITY SERVICE AND

RESEARCH.

HUMAN CAPITAL

3000 EMPLOYEES AND GROWING.

PERFORMANCE DRIVEN WORK

ETHICS.

BRAND

ONE OF THE MOST CUSTOMER

FRIENDLY BRAND SINCE

INCEPTION.

ALMOST THE TOP5 RETAIL

BROKERS IN INDIA.

CHARGE STRUCTURE

Fee Structure for General Individuals: -

Classic Account Fast Trade Account

Account Opening Rs. NIL Rs. NIL

Monthly

Commitment

Rs. NIL Rs. NIL

Brokerage

Delivery 0.50 % 0.50%

Intra-day 0.05% 0.05 %

* Taxes as per govt.

Depository Charges

Account Opening Charges Rs. NIL

Annual Maintenance Charges Rs. NIL first year.

Rs. 300/= p.a. from

second year

EXPOSURE: 4 to 6 or even 8 TIMES (ON MARGIN MONEY)

BUYING AND SELLING IN STOCK MARKET

Buying and selling in stock market is done through:

BOLT (BSE Online trading)

NEAT (NSE automated trading)

DEMAT A/C :

Overview of Demat Account:

Demat account allows you to buy, sell and transact shares without the

endless paperwork and delays. It is also safe, secure and convenient.

In India, a demat account, the abbreviation for dematerialized

account, is a type of banking account which dematerializes paper-

based physical stock shares. The dematerialized account is used to

avoid holding physical shares: the shares are bought and sold through

a stock broker. This account is popular in India. The Securities and

Exchange Board of India (SEBI) mandates a demat account for share

trading above 500 shares. As of April 2006, it became mandatory that

any person holding a demat account should possess a Permanent

Account Number (PAN),

Why demat?

The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses.

The benefits:Benefits of Demat Account

• A safe and convenient way to hold securities;

• Immediate transfer of securities;

• No stamp duty on transfer of securities;

• Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.;

• Reduction in paperwork involved in transfer of securities;

• Reduction in transaction cost;

• No odd lot problem, even one share can be sold;

• Nomination facility

• Transmission of securities is done by DP eliminating Correspondence with companies;

• Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.

• Holding investments in equity and debt instruments in a single account

PRODUCT OF SHAREKHAN

SHAREKHAN PRODUCT

CLASSIC ACCOUNT FAST TRADE TRADE TIGER

Overview of Classic Account

Classic account enables you to buy and sell shares through the

sharekhan website. Classic is browser based online trading

facility. It is an idea online trading platform offering and

integrated 3 in 1 that is trading or stock broking account

integrated with demat and bank account for online transfer of

fund and share. It is an idea for investor who want the

convenience of an online account and want to do away with

paperwork. It is a browser based application that equips you with

all the facilities to make you and inform investor.

Feature of Classic Account :

Online trading account for investing in equities and

derivatives via sharekhan.com

Integration of online trading + bank + demat account

Install cash transfer facility against purchase and sale of

shares

Make IPO bookings

You get instant order and trade confirmations by e-mail

Streaming quotes

Personalized market scan with your own customized stock

ticker.

Single screen interface for cash and derivatives.

It allows you to create your own portfolio to monitor and

manage your equity and mutual funds investment.

It also allows you to view customized market statistics for

your selected scripts in both the segments by allowing you to

create separate market watch folder of your choice

Overview Of fast Trade:

Fast trade is an ideal online trading platform offering an

integrated 3 in 1 that is a trading or stock broking account for

online transfer of fund and shares. Fast trade is an applet based

trading facility. Fast trade is an ideal facility for investor or

trader who wants to convenience of an online account and wants

to do away with paperwork. It is an applet based application

which provides all the facilities an investor and traders requires

for speedy and efficient trading.

Feature of Fast Trade:

It enable access to the real time streaming quotes and offers

a single screen interface to the cash and derivatives segment.

It facilitate you with the important market statistics such as

levels, trend in the various indies and volumes in the

different scripts, market depth and other relevant statistics.

It is also allows you to view customized market statistics for

your selected scripts in the both segments by allowing you to

create separate market watch folders of your choice.

It provide with you number of online report through which

you can track your trading and investment position and get

all the required information.

It is also provide access to various research product of

sharekhan.

Overview of Trade tiger:

Trade tiger is an advance online trading platform offering an

integrated 3 in 1 account, that is a trading or stock-broking

account integrated demat account and with the bank account for

online transfer of shares and funds. Trade tiger is an ideal tool for

active trader and jobbers who transact frequently during the days

trading session. It is an internet based executable application that

provides everything a trader needs on a single screen. It enable to

customer to capitalize on intra-day price movements.

Characteristics of trade tiger:

Trade tiger facilities instant order execution and

confirmation.

It enable access to real-time streaming quotes a single screen

interface for the cash, derivatives and commodities

segments.

It provide intra-day tie by tie chat and ticker along with

other technical analyse tools.

It provides hot keys that similar to broker’s terminal.

It provides alert and reminder facilities.

It offers a back up facilities to place the trades on

sharekhan’s other browser based online trading product

namely, classic account, fast trade as well as the service

namely, dial n trade.

Features of trade tiger:

A single platform for multiple exchange NSE and BSE,

MCX, NCDEX, mutual funds ipo’s.

Multiple market watch available on single screen.

Multiple chart with tick by intraday and end of day

charting powered with various studies.

Graph studies include average, band Bollinger, know

sure thing, MACD, RSI, etc.

Apply studies such vertical, horizontal, trend,

retracement and free lines.

User can save his own defined screen as well as graph

template that is, saving the layout for future use.

User define alert setting on an input stock price trigger.

Shortcut key for fast access to order placement and

reports.

Online fund transfer activated with 12 bank

MARKETING APPROCH TO SALES

Initial consultancy with client team

Market research

Preparation of course material

Questionnaire asked to the client and identifying the needs

Fixing the appointment

Opening the account

Follow-up

The first step in the process is the consultancy with client

team. This will help in the identification of strength and

weakness in selling.

The next step is to undertake market research whereby

analysis of competitor positioning , the product they offer,

their brokerage charges etc..

The next step is prepare course material and submit to the

client for approval.

After submitting the course material question asked to the

client like does he/she a regular trader or first time trader?

Does he/she trade offline or online, what is the approximate

volume of the trade, what is their expectation from broking

firm, this will help in identifying what product the client

genuinely need and is looking for.

After the client is satisfied with the product appointment is

fixed to open the demat account. the required document are

taken from the client thereby proceeding the future

procedure.

After opening the account follow-up is made with the client

whether he has receiving the welcome kit and started

trading.

RESEARCH DESIGN

For the proper analysis of data simple quantitative technique such as

percentage were used. It help in marketing more accurate

generalization From the data available .The data which was collected

from a sample of population.

Q.1) Are you aware of online Share trading?

Yes 72%

No 28%

Q.2) Heard about Sharekhan Broking?

Yes 60%

No 40%

Q.3) Do you know about the facilities provided by Sharekhan?

Yes 40%

No 60%

Q.4) Do you use net banking service?

Yes 80%

No 20%

Q.5) Which broking firm easily available everywhere?

Sharekhan

Kotak securities

India bulls

ICICI direct

Motilal oswal

Q.6) Which stock broking firm Demat account offered you a large

no. of services?

Sharekhan

Kotak securities

India bulls

ICICI direct

Motilal oswal

Q.7) Which broking firm provide you a better email facility?

Sharekhan

Kotak securities

India bulls

ICICI direct

Motilal oswal

Q.8) Which broking firm provide a less BROKARAGE rate ?

Sharekhan

Kotak securities

India bulls

ICICI direct

Motilal oswal

COMPARATIVE ANALYSIS

The major competitors and their broking charges in comparison are as

fallows:

KOTAK SECURITIES

Account opening charges Retail : Rs. 750/-

HNI: Rs.750/- out of which

entire Rs. 750 is reversed again

the brokerage in the first quarter.

Minimum balance in E-

brokerage account

Rs.1000/- or stock worth

Rs.1000/-

Minimum trade amount Nil

No. Of time exposure allowed Retail: up to 4 times

HNI: up to 4 to 10 times

Delivery Retail: 0.45%

HNI: 0.18%

Per trade 0.05% per share or Rs. 25

whichever is higher

INDIA BULLS

Account opening charges Stamp per charge is 50/- +F &

O 50/- + DP 100/-

Minimum balance in E-

brokerage account

Nil

Minimum trade amount Nil

Delivery 0.50%

Square off 0.10% for each leg

ICICI DIRECT

Account opening charges Rs. 750/-

Minimum balance in E-

brokerage account

Nil

Minimum trade amount Nil

No. Of time exposure allowed 4 times

Delivery 0.75%

Per trade Rs.25 for delivery or 2.5% of

trade value whichever is

higher & Rs. 15/- for margin

trade

It has huge client base

Here the per call charges is Rs. 25/-

In ICICI you can only access one company at that time.

There tie up is only one bank that is ICICI.

There is high brokerage for delivery is 0.75 paisa and

intraday is 0.25 paisa.

MOTILAL OSWAL

Account opening charges Rs. 500/-

Minimum balance in E-

brokerage account

Nil

Minimum trade amount Nil

No. Of time exposure allowed 5 times

Delivery 0.4% negotiable

Square off 0.10% for each leg

RELIANCE

No. Of time exposure allowed Nil

Minimum trade amount Nil

Delivery 0.15% to 0.20%

Here the problem is that any order you place has to be

cleared by 2.30 pm.

No exposure is given here.

There tie up with only two banks i.e. HDFC & IDBI.

In Reliance charges per call is Rs.15/-

WORKING AT SHAREKHAN

Overall it was great learning experience working at sharekhan . it

was mainly related to field work as i was suppose to meet client

and explain the various product of sharekhan. Client were from

network as well as lead provided by my AM. an initial stage i

didn’t succeed but latter on when i had the perfect knowledge

about the product i was quite confident at the client meetings.

The profile given to me was a marketing and distribution strategy

of financial product of sharekhan as well as client acquisition. I

had given certain targets which i had to complete it in a given

period of time. I was actually taught how to talk with costumer

and give them proper sales pitch. Once that was acquired a

regular update of lead management system ( it is the system

wherein the client profile is given) was to be done. In latter stage

the company provided to me with the various information which

was a great learning experience as fresher.

I also learn to trade in share market which was a very good

experience for me. People invest in share market with mindset

that it makes your money double but that is not truth. There are

frequent ups and downs in the market. Gradually the confidence

level also increase and also learn how to read various charts and

lines which then built up the confidence level to trade in market

BIBLIOGRAPHY

www.sharekhan.com

www.reliancemoney.com

www.icicidirect.com

www.indiabulls.com

www.motilaloswal.com