Final Report EDITED by US

8/9/2019 Final Report EDITED by US

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1. INDIAN SECURITIES MARKET

Introduction

Securities market has essentially three categories of participants, namely theissuer of securities, investors in securities and the intermediaries and two categories ofproducts, namely the services of the intermediaries, the securities includingderivatives.

The securities market has two interdependent and inseparable segments, thenew issues (primary market) and the stock (secondary) market. The primary marketprovides the channel for sale of new securities while the secondary market deals insecurities previously issued.

History

1850 Shares of banks and securities of East India Company traded in Mumbaiunder a sprawling banyan tree in front of Town Hall, which is now in the HornimanCircle Park.

1875 Brokers organized an association known as the Native Share Brokers

Association, and the countrys first stock exchange the Bombay Stock Exchange(BSE), set up in Mumbai with 318 members. The membership fee graduallyincreased from Re 1 in 1887 to Rs 1,000 in 1896, and Rs 48,000 in 1920.

1956 Securities Contract Regulation Act passed

1957 The BSE and eight other stock exchanges registered under the SecuritiesTrading Contract Act.

1982 The BSE classifies scripts into Group A for carry forward, and Group B forcash transactions.

1986 The BSE 30-share Sensitivity Index (a.k.a. the Sensex) compiled; updatedevery two minutes.

1987 Stock Holding Corporation of India set up.

B. K. School of Business Management1


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1992 Ordinance promulgated for granting statutory powers to the SEBI. TheOver-The-Counter Exchange of India begins operations. The National StockExchange incorporated.

1994 The NSEs debt segment begins operations on June 30; and the capitalmarket segment begins on-line script less trading on November 3.

1995 The BSE computerizes its trading operations, signaling the end of 120years of floor-trading with open out-cry system of share-trading and the beginningof screen-based trading on the BSE.

1996 NSE 50 index launched April 22. NSDL set up as the first depository inIndia, and the NSE commences trading in dematerialized securities on December26.

2000 The SEBI approves the report on net trading brought out by the SEBIcommittee on Net based trading and services. Pursuant to the circular, stockexchanges are required to give permission to members to start Net-based tradingafter ensuring fulfillment of the minimum conditions. The NSE is the first exchangeto grant provisional permission to Cochin-based Geojit Securities to commenceNet-based trading.



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2. - AT A GLANCE

SSKI History

Founded in 1922, SSKI is One of Indias Oldest Brokerage Houses havingEight Decades of Experience into

o Institutional Broking

o Investment Banking

o Retail Broking

One of the Founding members of The Stock Exchange, Mumbai and Pioneer

Institutional Broker

SSKI Institutional Broking:

Since 1984 SSKI foray into Institutional Broking and Corporate Finance.

SSKI group also comprises Institutional broking and CorporateFinance 18 years ago. While the Institutional broking division caters to thelargest domestic and foreign institutional investors, the corporate finance

division focuses on niche areas such as infrastructure, telecom andmedia. SSKI holds a sizeable portion of the market in each of these segments.

o Forerunner of investment research in the Indian market,

o SSKI provide the best research coverage amongst broking houses inIndia. The companys research team was set up in dec.1992 and is ratedas one of the best in the country. Voted four times as the Top DomesticBrokerage House by Asia money Survey, SSKI is consistently rankedamongst the top domestic brokerage houses in India.

o Research group was set up in December 1992.

o It acts as a pioneer of investment research in the Indian market aimed atgenerating quick investment ideas

o Its Research team is rated as one of the best in the industry. Acrossretail & institutional

o Group interest in Investment Banking, Institutional Broking and RetailBroking

o It is an Integrated equity solutions provider

o It has its Institutional Clients Spread across India, Far East, UK and US.



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o It commands Major Share of the Institutional as well as ForeignInstitutional Investors (FII) Business in India.

o 0SSKI Institutional Research is rated as one of the Best in the Industry0SSKI Institutional Research is rated as one of the Best in the Industry as well as among Fund Managers Surveys -as well as among Fund Managers Surveys -

Best Domestic Securities HouseBest Domestic Securities House

Euromoney Survey July-95, 96Euromoney Survey July-95, 96 Top Ranked Domestic Brokerage HouseTop Ranked Domestic Brokerage House

Asiamoney Survey Sept-94, 95, 96, 98 & 04Asiamoney Survey Sept-94, 95, 96, 98 & 04

SSKI Investment Banking:

The Investment Banking Arm of the SSKI Group is having its presence into

o Venture Capital & Private Equity

o Infrastructure Advisory & Financing

o Focus on Infrastructure, Technology & Media

o Many 1sts goes to our credit, in Deal Sizes, in Sectors, in DealStructures E.g.

1st Telecom Offering BPL Cellular Holdings

Indias First Private Port Gujarat Pipavav Port

1st M&A-Cellular Essar & Hutchison

1st Web Service Provides Plantesia

1st Retail Chain Offering - Shoppers Shop

SSKI Retail Broking

SSKI Entered into Retail Broking in 1985.

Sharekhan is the Retail Broking Arm of the BIG 80 Years old organization,SSKI.

Sharekhan is the Brand Name given to its Retail Business.



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Sharekhan Retail Broking In Detail

SSKI carries out its Retail Broking Activities underSharekhan Brand Name.

Sharekhan is One of Indias Leading Broking Houses

Providing a Complete Life-Cycle of Investment Solutions

in EQUITIES, DERIVATIVES, COMMODITIES & DEPOSITORY

SERVICES.

Sharekhan is having its retail presence across India through --

o Sharekhan Branches & Franchisees

o www.sharekhan.com

http://www.sharekhan.com/http://www.sharekhan.com/


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Grow ing network of Share Shops

280 Share Sho

in 123 Cities

across India

Uniform ServicStandard

Sharekhan offers you

Sharekhan Outlets act as Full Service Investment Solutions Provider, providing youwide range of services like --

Equity & Derivatives Trading on NSE and BSE Online Trading Commodities Trading on MCX & NCDEX

Portfolio Management Services

Depository Services

IPO Services

Wide Range of Customized Research Products

Uniform Service Standards



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The Strength of Sharekhan is in its Specialized & Customized research Productsaddressing the investment philosophy of verities of Investors and Traders in thesecondary stock market.

- In Detail

The Business of the company overhauled 5 years ago in 2000.

The site was also launched on February 8, 2000 and named it aswww.Sharekhan.com.

It is One of the Leading Online Players controlling considerable portion ofthe Overall E-Broking Business in Indian Securities Market.

The SpeedTrade account of Sharekhan is the next generation technologyproduct launched on April 17, 2002.

SpeedTradePlus was launched on October 28, 2002 for one more featureof Trading in Derivatives together with Equity in the Same Single Screen



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SpeedTrade BSEOnline Trading Launched recently in May-2005.

Sharekhan adds More than 6000 customers Every Month.

It offers its customers with the trade execution facilities on the NSE, for cashas well as derivatives along with in-built depository services.

Ensures convenience in trading experience:

Sharekhans trading services are designed to offer an easy, hassle free tradingexperience, whether trading is done daily or occasionally. The customer will beentitled to a host of value added services, in the investment process depending onhis investing style and frequency. and offers a suite of products and services,providing the customer with a multi-channel access to the stock markets.

It gives advice based on extensive research to its customers and provides themwith relevant and updated information to help him make informed about his

investment decisions.

Sharekhan offers its customers the convenience of a Broker-Cum-DP.

It helps the customer meet his pay-in obligations on time thereby reducing thepossibility of auctions. The company believes in flexibility and therefore allowsaccepting late instructions without any extra charge. And execute the instructionimmediately on receiving it and thereafter the customer can view his updatedaccount statement on Internet.

Sharekhan Depository Services offers demat services to individual and corporateinvestors. It has a team of professionals and the latest technological expertise

dedicated exclusively to their demat department. A customer can avail of Demat \Remat, Repurchase, Pledge, Transmission facilities at any of the Sharekhanbranches and business partners outlets.

Award-History

Year 2001: Sharekhan was given the Best Financial Website Award by Chipmagazine



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Year 2005: Recently Sharekhan has been awarded as Indias most preferredstock broker under consumer award 2005 research conducted by AC Nielsen-

ORG MARG for Awaaz in the stock broking category. There were four stockbroking houses in the competition: Sharekhan, ICICIDirect.com, Kotakstreet &Motilal Oswal.


Winner of

Chipmagazines

Best

FinancialWebsiteAward


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3. TYPES OF TRADING

Offline Trading System

New era of internet evolution has changed the waybusiness is done now a days and obviously Indian security market cannot remainuntouched with such a big change. However traditional way of trading which anoffline is trading has deep roots in Indian stock market history and still its prevalentin the business.

In such a trading system, an investor and a broker come into directcontact with each other and the transaction takes place. The investor goes to the

broker for the purpose of buying or selling of securities and for that he has to makea payment to settle the transaction. In this trading system broker chargescomparatively higher brokerage. Offline trading system exposes both the parties tothe risk factor. Here investor is required to put a margin amount with the broker, butif the broker defaults then customer loses his investment amount. On the otherhand some times investors are not able to fulfill their requirement of bringingamount above margin and as a result broker has to complete the transaction.

Following are the different ways in which brokers complete the transaction.

They would require full funding before the pay in day. They may debit the customer's account with the margin money and keep hold on

balance amount. On pay-in day, the balance amount will be transferred tobroker's trade.

The broker would debit only the margin amount and would wail to the customerto pay on the pay-in day.

If the margin goes below the specified limit, the website of the brokerwould give warning to the investor to replenish the same. Brokers can either ask for

blanket permission/power of attorney from the customer to replenish the same ortake risk on that, in which case they may also square off the contract.

As a matter of prudence, the broker would have checked the balance in thecustomer's account, but the balance may go down between trade day and the pay-in day. Here, brokers would have to decide the extent of risk if at all they are readyto take. In periods of volatility, especially when markets are failing, decision-makingof the broker as to the extent of risk he is willing to take would be very important.

Customers would face the risk of leakage of personal information.



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Merits of Offline trading

Less Margin

Generally, company charges 25% margin while the brokers chargenearly 10%margin from the investors in case of trading in derivatives.Sometimes broker charges negligible amount and he allows trading up to hislimit. This shifts the investors from trading online to the trading with the brokers.For example: Local Brokers like MotilalOswal, Ratnakar, PravinRatilal,Khandwala etc. allow trading in shares with less margin and low brokerage.

Flexibility in credit period

Local Brokers allow their customers to trade in shares with longer creditperiods which facilitate the payments for the investors. Whereas in Onlinetrading a customer is required to make the payment in less than 2days(because of T+2 trading cycle) which is not the case in offline trading. Theconventional system also allows making delay in settlement of payment if therelation with the broker is good.

Customized Advice

Normally, investors would like to take the advice of the broker before

taking an investment decision. Internet trading would lack this personal touch.As far as customization of data using data mining is concerned, that would notattract customers looking for something different. Some of the brokers are ofthe view that they would have to provide advisory services to the customers.But, with increased volumes they will have to balance their preferences andneeds of the customers.

Demerits of Offline Trading System

Problems in getting in touch with the Broker

Limited Clientele

Problem of Attention from the Broker due to load

Reliance on the Broker's information

Customer has to believe what the broker says

Broker might not give the best price

Reconciliation of accounts and cash settlements

Paperwork



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Geographical Restriction

Online Trading - A New Dimension of Trading

WHAT IS E-TRADING?

E-trading is the mechanism of buying / selling securities via the Internet.

E-trading is considered as a logical extension of e-commerce.

To put it simply, e-commerce is buying and selling through electronicmedium. There could be not being a better place than the stock market, wheretremendous volumes are traded, to exploit the opportunities of e-commerce. But,there are certain inherent characteristics of this market, which make it morevulnerable to risks associated with e-commerce. The market requires knowledge,information, ability to analyze and quick decision-making. This requires utmost carewhile trading on the net. A single click can make or destroy investor's wealth.

E-Trading is a service offered on the Internet for purchase and sale ofshares. In the real world, you place orders on your stockbroker verbally (personally

or telephonically).

In Online Trading, a customer can access a stockbroker's websitethrough his internet-enabled PC and place orders through the broker's internet-based order routing and trading engine. These orders are routed to the StockExchange without manual intervention and executed thereon. The order routing tothe exchange will happen in a matter of seconds. The order execution once itreaches the exchange system is similar to that of an offline transaction,

History of E-Trading In Global Scenario

The history of e-trading began in 1983, when a doctor in Michigan placedthe first online trade using E*TRADE technology. What began with a single clickover 16 years ago has now taken the world by storm. The concept was visualizedby one Bill Porter, a physicist and inventor with more than a dozen patents to hisCredit: who provided online quotes and trading services to Fidelity, CharlesSchwab, and Quick & Reilly. This led Bill to wonder why, as an individual investor,he had to pay a broker hundreds of dollars for stock transactions.



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Today his dream has become a reality. E-trading has become a way ofinvesting in the developed world and is soon catching on in developing countriestoo. Since that time, online trading has increased dramatically - according to anunprecedented efficiency and control.

Recent estimate, there are 7.8 million individuals trading online, making807000 trades per day. Currently, there are over 200 broker-dealers providing retailinvestors with the ability to trade online. Along with the growth in online trading,there has been a surge in investor complaints related to online trading. Thedownfall of a few international dotcom like Value America Inc, Net Inoperative Ltd,Toysmart.com, boo.com has not diminished the opportunities thrown by internettrading. There are investment banking firms which offer a suit of services such asonline trading, research reports, real-time market commentary, Java-based charts,analysis and other professional services. E-Trade has presence in around 119countries, as one of the renowned players in the international market.

E-Trade Securities Inc was floated in 1992 to offer online investingservices through America Online and CompuServe and launched www.etrade.comin 1996. Recently, it announced strategic alliances with Wit Sound Vies, the onlinebanking subsidiary of Wit Capital Group Inc, to capitalize on the complementarycore strengths of the two groups. TD Waterhouse, the second largest globalbrokerage, has over 2.9 million customer accounts worldwide and more than $150billion in customers' assets under administration. In addition to securities tradingservices, it also provides banking, mutual funds and other financialproducts/services to its customers.

History of e trading in Indian context

Net trading begins in India....

On Jan 31st 2000, the Securities Exchange Board of India (SEBI)formally notified all the stock exchanges, giving them a green signal for Net/Onlinetrading. The various players of the securities market, which includes NSE, BSE,otherregional stock exchanges and the brokers, had been waiting long for the go-ahead sign. Trading via the net is expected to generate greater volumes than everbefore and this has attracted a large number of players. One day after SEBIannounced its regulations for net trading, Kerala based Geojit Securitiestook thelead and started online trading in Mumbai. The Kerala State Industrial DevelopmentCorporation (KSIDC) decided to join Geojit Securities in 1994. It has a 24% stake inthe equity, the balance belonging to Geojit Securities itself. This is the only venturein India where a state owned development institution is participating in the equity ofa stock broking company. The first net transaction was a trade for 100 shares ofReliance executed by DR Mehta, Chairman, and SEBI for the Chairman of Geojit

Securities. Today there are many other big brokerage firms like MotilalOswal,Kotak Securities, SSKI and ICICI Direct running successfully.



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WORKING OF E-TRADING

How it works?

Trading has two aspects of working one is technical and second One isprocedural. We will see both aspect and how it is working?

Procedure:

Sitting in ones own home or office or even from your car, as long as youcan access the net, you can trade on the market. There are three basic thingsneeded for e-trading:

A saving account,

A D-Mat account and

A tradingaccount.

The steps in e-trading replicate the real life situation and are fairly simple tofollow. Once these three accounts are opened, the money and shares aretransferred to your bank and Demat account automatically, electronically andwithout any paper work.

The first step is of course to open an account. One can open multiple

accounts with himself or herself as the first name in the account. Then it is necessaryto determine the type of account that you want and how you want to pay for the tradesyou make. Joint accounts are allowed but for that you will need to have certaininformation about those people. Accounts can be Individual, Joint, Sole Proprietorship,Corporate, or Partnership etc.

The form filling requires simple personal details like full legal name,Citizenship status, Residency status, employer's name and address, yourpassport\PAN number, Date of birth etc.' One can download the forms or requestfor them by post or even request for a representative of the firm to come over to

help you with the form. Post-submitting, you are allotted a USERID andPASSWORD while giving details for registration. Then an Account referenceNumber is generated and displayed to you. These three things are unique to anindividual and ensure security of transactions. The acceptance of the application iscommunicated by email.

Once you have got your USER ID and PASSWORD and your accounthas been set up, you can access the website and login using the same. Thesecond step is then to Fund Your Account. In order to start trading online it isimportant that you deposit money in your bank account before placing a buy order.

In order to place a sell order you must have shares in your DEMAT Account. Youcan sell your shares anytime as long as shares are there in your DEMAT Account.



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In order to place a buy order you need to fund your account. You can do this bydepositing money in your bank account or else you can sell some shares existingin your Demat account and use the proceeds of sale to fund your purchasetransaction. The amount of money required before placing a buy order woulddepend on the value of order and the type of e-invest account you have enrolled

for - whether cash or margin.

In a Margin account one can use a line of credit to buy marginablesecurities or for overdraft protection. Such an account is opened after takinginto consideration Annual income, Net worth, description of your investmentobjectives, as it involves lending a line of credit. In a cash account, the amountof securities bought has to be backed by the cash in the account.

Then comes placing the order:

For this you enter your Trading password and go to trade.

From the Trading tab, select Enter Order under the Stocks heading.

Select a transaction type: Buy, Sell and ShortSell.

At Number of Shares', type the number of shares that you want to buy.

At 'Stock Symbol or Name(s)', type the stock symbol. If you don't know thesymbol click 'Find Symbol', type the company name, click 'Search' and clickthe symbol that you want from the list.

For a market order, select 'Market'. Otherwise, select 'Limit'. 'Stop Loss' or'Stop Limit and enter the price.

'Market Order': you just ask the broker to buy or sell your stocks at thebest price available.

'Limit Order': you tell the broker to trade only when the stock hits acertain price or better.

'Stop Loss': you tell the broker to sell your shares if the stock dropsbelow a certain price.

Select either 'Good for Day' or 'Good Until Canceled'. If you want to place an'All-or-None' order, click 'All or None'. Type your trading password and click

'Preview Order'.



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If you want to change your order, click 'Modify' and make your changes.

To see if your order has been executed and filled as you expect, check youraccount balance. The 'Account Balances' page shows your account equity

(the value of your account) and your buying power. To check your accountbalance, click the 'Accounts Services' tab, make sure the correct accountnumber displays at 'Select Account' and click 'Go'. At Total Account Value',see your account balance.

For a new price, select the appropriate option button and then enter theprice (unless you're changing it to a market order). You cannot change thestock symbol or the transaction type (Buy. Sell, Sell Short, or Buy to cover).Enter your trading password and click 'Preview Change Order'. Or, if youwant to cancel your changes, click 'Do Not Change'.

In order to cancel a stock order, from the Trading' tab, select 'View OpenOrders' under the 'Stocks' heading. Make sure you're currently in the correctaccount. Click 'Cancel' beside the order you want to cancel. Review theinformation presented to make sure this is the order you want to cancel.Click 'Cancel Order'. Enter the symbol or the name of the scrip; press "GO"or the relevant button.

The Account Opening Charge, commission rates and the minimum limit oftransaction vary from site to site. Other charges can include Annual ServicesCharges, Custody charges, D-Mat account charges etc. Also most online tradersoffer a host of other tools to aid the investment decision. A full research back up interms of reports, articles, opinions, etc., live time quotes, latest news on the scrip,technical charts to see how the stock's price has changed over time.

So sitting at home one can take an investment decision at ease after havingresearched and read up fully about the stock. With the advent of online trading, itwould seem that the markets are just a click away. Please however, do rememberthat currently in India the handful of online trading offers are mere order routingsystems. But it will not be long enough before the entire system goes online.

Benefits of E-broking

Seamless Trading

E-broking integrates Bank, Demat account and Brokerage account. Transferof money and shares from and to Bank account and Demat account is doneautomatically.

No Geographical Restriction



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Customers have access to site from anywhere in world. So even if customeris out of station, customer can take the advantage of market condition.

No Time Restriction

Customer can trade not only during market hours but also when market isclosed. He is required to give limit as to at what price he wants to buy or sell theshares. When market will open, the shares will be purchased or sold automaticallyat that particular price or best favorable price.

Online Brokers Make Investing Cheaper

By charging drastically lowered commissions; online brokers offer cheaperaccess to financial markets, consequently encouraging more investing, as isevident by the increasing number of day-traders. The latter are individuals who

have tried to make a career out of buying and selling stocks very quickly, oftenmaking and closing dozens of trades in a single day.

TheOnlineInvestorIsSelf-Reliant

Because online trading greatly diminishes the role of brokers. Investors havemore freedom when making investment decisions and come to rely on themselveswhen developing strategies. The online investor is responsible for researching,making decisions, entering an order and using a computer. All this makes onlineinvestors the masters of their domain and leaves them with no one to blame. Thus,

online trading promotes self-empowerment.

Offers Greater Transparency

Online trading gives greater transparency to the investors by providing theman audit trail. This involves a complete integrated electronic chain starting fromorder placement, to clearing and settlement and finally ending with a credit to thedepository account of the investor. Each of the above mentioned stages are subjectto inspection, thus bringing in transparency into the system. Greater transparencyhelps in reducing the systematic risk for the investor. This is possible as the marketrelated information affecting the stocks gets communicated to the investor on aregular basis. Due to this increased exposure, the investor can take necessarysteps, which would reduce his overall market risk.

Enables Hassle Free Trading

Online trading integrates the bank, the brokerage firm and the demataccounts which leads to easy and paperless trading for the client.

Quick Trading



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The investor will be able to execute the entire trading transaction, right fromlogging on to the broker's site, to the execution and settlement of his bank account,in a very short period of time.

Provides A Level Playing FieldTrading on the net, gives even the smallest retail investor access to

information that earlier was available only to the big traders. This provides a levelplaying field for all investors in the securities market.

Reduces The Settlement Risk

This method of trading reduces the settlement risk for the investor, as in thiscase no short sale is possible i.e. the seller will not be able to sell the securitiesunless he has actual possession of them. In the case of a demat account (which is

required for an online transaction), when a seller wants to sell the securities, hisdemat account is checked by the Depository Participant before executing the saletransaction. This reduces the settlement risk for the buyer, who is assured of thedelivery of the securities.

Loopholes in E-Broking

Lack Of Speed

If customers in large number access the site at the same time, server getsoverloaded, so it results into delay in process.

Security Aspect

There may be chances of hacking of password if customer is not alert. Thismay cause a major loss to the investor.

Lack Of Flexibility

If the customer is not alert about his position on last trading day and if he isnot able to square off his position, he has to take delivery compulsory or if hedoesn't have enough liquidity, the site will automatically square off his position. Thisaction may or may not be in benefit of customer. Whereas in conventional broking,broker will inform the customer time to time or will take the decision himself in favorof the customer.

Computer Illiteracy:

Literacy of Computers is mandatory for traders using this online tradingservice. So for those who are computer illiterate, using websites serves as ahandicap for them.



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Trading Vs E-Trading

The advent of technology has added a new dimension to broking system.Through E-broking system, broking has become more transparent and faster. It hasreduced the back office paper work. It settles the account within a couple of daysrather than long period of time. It has also eliminated physical transfer of sharesand money by invent of Demat account and on line banking.

When anyone wants to enter into the market for trading purpose, there iscommon process through which individual has to pass either in conventionalbroking or E-broking which is basically divided in three parts.

Decision -> Execution -> House keeping

Now let us understand how E-broking makes itself different fromconventional broking in this process.

Decision

Decision about choosing particular scrip is made by investor himself basedon his knowledge and his experience about market condition. Sometimes investorsseek advice from broker and they both decide about investment. Thus inconventional broking and E-broking decision parts remain same.

Execution

In execution part of broking, E-broking is completely different fromconventional system. This can be explained from graph below.

Conventional Broking E-broking

Call Logon

Get Rates See the rates online

Give order Punch in order

Confirmation Confirmation



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through phone through e-mail

House Keeping

After matching of order at a predetermined price, the question ofpayments and deliveries of securities /transfer of shares take place where alsowide difference in terms of operation can be seen.

Conventional Broking E-broking

Payment through Payment through

Physical Cheque Online Banking

Transfer of shares Transfer of shares

in paper form in paper less form

House keeping of Demat Keeping of

Materialized shares Dematerialized shares

Advantage of Online Trading Over Conventional Trading

The speed of transaction

Ease of settlement in the paperless mode

Confidentiality of transaction

More transparent More convenient

Broker's reach to large number of customers with less cost

Limitation Of On Line Trading Over Conventional Trading

Lack of internet penetration

Lack of expertise in share market

High brokerage



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High operating cost

Grey Market

In this type of market, there are only two parties i.e. the broker and theinvestor. The Exchange does not come into picture at all. So the transactionstaking place are out of the purview of the exchange, which in other words can alsobe termed as illegal. In this type of market the brokerage is quite low as there isntactual transaction or delivery of security as such. The transaction is written in abook as to keep record of buying and selling price and quantity. If buy price ishigher than sell price then difference is paid by investor and that amount is profit forbroker and loss of investor and vice versa.

Major Driving Forces of Grey Market:

Nowadays even grey market is also quiet popular becauseof many advantages: -

No Margin

The trader is not required to keep any deposit as margin to buy or sellthe shares. There is credit flexibility allowed to a large extent.

Trading of Index

Prediction of Index is Easier than of Security. In a SEBI regulatedmarket, a trader is not allowed to trade in Nifty or Sensex in equity market, while ingrey market, trading in Nifty or Sensex in equity market is permitted.

Longer Trading Period (One Week)

The trading duration in this market is of one Week and the settlementsare made on the end of each week (Friday). So investor can take 5 days position inthe trading. This can be considered as a major driving force for this market.

Advantage Of Future And Equity Price Difference

There is one simple rule known by everyone that on the Last Thursdayof every month security and its futures value matches. How to take advantage ofit??? Its possible on grey market with a fix profit not affected with the marketmovement.

i.e.: -

Reliance security price is: - 440

Reliance Future is traded at: - 400



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Now, Investor will Sell Reliance Shares at 440 and Buy reliancefuture at 400so on the last Thursday of the month when both the prices match,investor will reverse the transaction.

Last Thursdays

Price

Profit in Equity Profit in Futures Net Profit **

420 20 20 40

480 (-40) 80 40

360 80 (-40) 40

** Brokerage is not deducted in Net Profit

This can be possible legally in some cases but with very largeinvestment because futures are traded only in lot sizes.

Negative Factors

Risk of Defaulting Broker

Illegal



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Changing Trend

Remember the time when you left orders with your broker in the morningand received a confirmation fax late in the evening?

You wondered whether you had acquired the shares at the best possibleprice for the day. Today, the picture is different. Imagine a scenario where you log onto your account, get the live quotes of scripts you are interested in, get advisefrom experts and research reports on your investment choice and then just click themouse to place your order, pay the amount due (which automatically gets debitedinto your account with the on line brokerage firm), get your account statement, andthe delivery of your shares into your Demat account. All this is through just one click

of a mouse. Seems like a dream? But with online trading this has become a reality. Afew seconds later, you get the confirmation on your screen. And after the tradesettlement, your bank and DP accounts will reflect the changes accordingly.

The speed of transaction, confidentiality about the prices and ease ofsettlement in the paperless mode should be good reasons for retail investors tojump on to the Net. All they need is a PC, a modem, a subscription to an ISP, anaccount with a bank (which has a web presence) and a depository account. Andthey can choose from a plethora of e-trading web sites.

So, finally the changing trend is known as E-trading which really means

Buying and selling securities via the Internet or other electronic means such aswireless access, touch-tone telephones, and other new technologies with online trading.In most cases customers access a brokerage firm's Web Site through their regularInternet Service Provider. Once there, customers may consult information provided onthe Web Site and log into their accounts to place orders and monitor account activity"



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What does Share khan offer?

Share khan offers online trading account through which a customer can buy andsell shares in an instant from any part of the globe trough website. It does not take

into account any type of physical restriction of going to the broker for carrying out atransaction or any type of settlement of payment. It facilitates the customer aspeedy and hassle free transaction. Share khans product consists of a 3-in-1concept, which integrates:

1. Trading Account

2. Demat Account

3. Linking with the Savings account.

Through its trading account, a share khan customer can directly transfer his fundsfrom his savings bank account affiliated to share khan to his trading accountwithout any paper work. He can buy and sell shares from the website and also viewthe market prices of the shares he trades on the terminal.

Share khan .com allows trading at present only on NSE. BSE trading will be shortlyavailable. To open an account a customer requires filling up a form consisting of 12agreements, a passport size photograph, a residential proof, a photo id proof and acheque drawn of respective amount in favour of S. S. Kantilal Ishwarlal securitiesPvt. Ltd.

After opening an account with Share khan, a customer will be given User id,Membership password and trading password, which will enable him to access hisaccount and trade.

Share khan offers 3 types of products according to the volume-based requirementsof the investors that are as follows:

4 CLASSIC ACCOUNT

This account allows the client to trade through the website and is suitable for theretail investors.

Here maximum scripts that can be shown on the terminal are only 25. Also thetechnical charts are not available.

Its a JAVA BASED APPLET, which allows trading only through website and seelatest prices of the scripts of your choice which is attached below.

This account also allows trading in Derivatives.

The lifetime registration charge for this account is Rs.750 and there is noconstraint of minimum turnover.



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5 SPEED TRADE ACCOUNT

This is ideal for active traders who transact frequently during days tradingsession to capitalize on intra-day price movements.

Speed trade is an Internet-based application available on a CD, which provideseverything a trader needs on one screen, thereby, reducing the time required toexecute a trade.

SPEEDTRADE offers a tick-by-tick update on stock price movements with marketdepth and intra-day chart and lets the client do his own stock/technical analysis.

While the Lifetime charge for this account is Rs.1000 with a minimum brokerageof Rs.1000 to be paid monthly.

6 SPEED TRADE PLUS ACCOUNT

Speed trade plus has all the above-mentioned features with an additional powerto also trade in Derivatives.

Speed Trade Plus extends the power of online trading from cashmarkets to Futures & Options. On a single screen, a customer can trade cash aswell as future & option contracts.

Other features include advanced Intra-Day Charting (Bar & Japanese Candlestick

Charts), easy order placement and instant trade confirmations in seconds, pricealerts, research calls, and derivative tool-kit to help the customer trade like theexperts.

While the Lifetime charge for this account is Rs.1500 with a minimum brokerageof Rs.1500 to be paid monthly.

BANK AFFILIATION

Share khan has affiliation with 5 banks, which allows its customers to enjoy thefacility of instant credit and transfer of funds from his savings bank account to his

share khan trading account. The affiliated banks are as follows:

HDFC BANK

UTI BANK

CITY BANK

ORIENTAL BANK OF COMMERCE

IDBI



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AFTER HOUR ORDERS

Share khan customers also enjoy the facility of placing orders even after the tradinghours, and the orders are executed as soon as the market opens.

DIAL-N-TRADE

It is also an exclusive service available to all Share khan customers for trading inshares via the telephone. On dialing the toll free number 1600-22-7050 and onentering the customers TPIN number, the customer will be directed to a tele-brokerwho will buy or sell shares for him.

TIMELY ADVICE

Last but not the least, the USP of share khan is its timely advice that it gives to itscustomers 4 times in a day through e-mails. Among these e-mails sent,

One is pre-market mail indicating the position of the market (i.e. either bullishor bearish trend) when it opens.

The other two e-mails are the during market hours mails which indicate as tohow the market will move and in which direction.

The fourth e-mail that is called the post market mail or the eagle eye is themost important and valuable suggestion.

In this e-mail, all the scripts that are under coverage are segregated into 5clusters. Each cluster represents a certain profile in terms of businessfundamentals as well the kind of returns the customer expects over a certain timehorizon. This he3lps the customer identify the stocks that match to his objectives.



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4. EQUITY RESEARCH

All the suggestions, tips and high performance trading recommendations arereceived from the research team of Share khan consisting of 38 dedicated analystswho have years of working experience in the industries that they track, and a proventrack record in using their knowledge of the investment science to deliver results.

Share khan boasts of strike rates as high as 70-90% in bookingrecommendations in the money. The company believes in not to lose money and tomake some.

Efficient Execution on BSE, NSE, Derivatives

Depository Services

Advice in many shapes

Wealth of content and tools to help you make sound investment decisions

Stability and Security

Good risk management

Substantial shareholding by prestigious foreign institutions.

Personalized attention

RESEARCH

The scientific approaches that determine market direction and help you decidewhat stocks to buy or sell. Whether it is for the short term or the long term, there ismethod in this madness!

Research is classified into 3 analyses:

Fundamental Analysis Technical Analysis

Market Analysis

Fundamental Analysis

This science analyses balance sheets, management quality, sectoraltrends and the economy. Value investing or cash flow analysis. In depth andclose tracking of company related performance.

Doing it the Sharekhan way using the bottom-up approach, the idea is tofocus on stock picking, i.e. identifying winning ideas for our clients.



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It is classified into two:

Sharekhan Research SSKI Research

Sharekhan Research

Our tigers dig meaty Stock Ideas out of the heart of the market andbring them to you. Their skill at identifying their prey--Stock Ideas--whilekeeping your taste for investment in mind is reflected in the depth of theirresearch and the performance of the ideas. The Market Strategy reports, on theother hand, identify the hunting-ground for Stock Ideas, i.e. sectors and stockgroups that are ripe for performance, discuss the state of the economy andits impact on the stock market as well asadvise you on dealing with the impactof socio-political issues on the market.

It is classified into two: Market Strategy

Stock Ideas

Market Strategy

The Market Strategy reports identify the hunting-ground forStock Ideas, i.e. sectors and stock groups that are ripe forperformance, and discuss the state of the economy and its impacton the stock market. Market Strategy also takes a longer-term

view on stocks, i.e. three to six months. It outlines ourexpectations of the broad market and defines a broad strategy. Itgives a five-legged rating to a list of stocks that we think willoutperform the market during the given time period.

Stock Ideas

Stock Ideas is aimed at Sharekhans trading clients. Itpresents our best stock picks in today's market. We categoriesthese companies into six clusters to help you identify the stocks

that fit your time horizons and return objectives the best. Eachcluster represents a certain profile in terms of businessfundamentals as well as the kind of returns you can expect of itover a certain time horizon.

Stock Ideas are given in form of two ways: Recommendation In recommendation we give advice to clients

which shares to buy, hold and sell.

Cluster



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Evergreen: Dominant players with strong brands, robustmanagement credentials, supernormal shareholder returns.Will steadily compound 18-20% pa for next 5 to 10 years.

Apple Green: Potentially steady compound, but 5-10-year

graph is a bit unclear. Could gallop at 25-30% pa over thenext 2-3 years.

Emerging Star: Young companies likely to rule chosenniches. Even better, the niches could balloon into full-blownmarkets. Potentially ten- baggers if youre patient.

Ugly Duckling: Trading below fair value or at hugediscount to peer group. But somethings cooking. Coulddouble in two to three years time. Swans, anybody?

Vultures Pick: Companies with valuable assets atthrowaway prices. Buy and await predators. Startlingly highreturns possible. Patience is vital, my dear.

Cannonball: Seasons favorites. Typically fast gainers inrising markets could return 30-50% within 6 months. Get in,cash in, and get out.

SSKI Research

Institutional Research - Each individual company is analyzed and its

results are placed on our site. Here Rating is given on relative basis, inthe form of underperformer, neutral and outperformed.

Outperformer: This stock will outperform the market bygiving a relatively higher return than a market-based index.

Neutral: This stock is expected to more or less give youthe index rate of return or a return not significantly higher orlower than the market index.

Underperformer: This stock is expected to lose value on arelative basis when compared to a market-based index.

Sector Watch Here each sector is analyzed thoroughly. For e.g.Pharma sector, automotive sector, and various other sectors.

Technical Analysis

Price, Volume and Open Interest. The scientific study of theseparameters using charts to simulate accumulation and distribution patterns. Useof the Dow Theory, Elliott wave analysis, moving averages and momentumindicators. Forecasting of stock and index trends plus developing trading



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strategies based on the forecasts with appropriate risk-reward ratio. It is againdivided into two

Cash

The cash market encompasses the entire gamut of listed stocks on

Indian stock exchanges. The cash market refers to the secondary marketwhere you may day trade or take delivery. Every product developed forthe cash market can be replicated in the futures & options market (if it islisted there) by following the trading levels of the cash market forexecution in the derivatives market.

Momentum Calls: The demand for catching fast movements instocks for a 1-7-day period has led to the emergence of this product.Momentum Calls help you make a quick buck with the use of stoplosses and a risk-reward ratio of 1:2 at least. The idea is to identifymomentum the moment it begins and get onto the bandwagon. But if the

move does not happen we move out as fast at minimum loss rather thanwait for stop losses to be triggered. This improves efficiency in tradingand maximizes profits.

Punters Call: A daily view on how the market and the majorindices, i.e. the Sensex and Nifty, are expected to behave during theday. Closest support and resistance levels plus moving averages areprovided to help traders take decisions.

Fortnightly View:A fortnightly recap and analysis of our marketview over the short, medium and long term.

Derivatives

Derivatives are about opportunities in derivatives market. InDaring Derivatives, stock option premiums are traded to captureprice movements; margin trading is carried out using the futuressegment; and low-priced options of stocks that are about to makea big move in the last week before expiry of the options areidentified to help you make a killing. The calls cover index futurestoo.

Market Analysis

If you dont care about balance sheets or charts and only want to knowwhat the market grapevine has to offer, this is for you. Whats moving and whois buying what? Our networking and years of experience bring all suchinformation to you.

It is analyzed in two ways:



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Dealing Room: The most experienced dealing room with years of experience instock market research, always in touch with what is happening. We provide thisinformation to clients through SpeedTrade, and to our branches and franchiseesthrough Yahoo Messenger, telephone and SMS.

Dealing Rooms Favourites:Straight from the horse's mouth, theproduct is an outcome of our ability to have our finger on the pulse of the market. It'sabout stocks that are part of the market grapevine, on top of the dealing room's watch-list and vetted by our charts. You could hold the stocks for a few days to a few weeks.That you need to use stop losses with them goes without saying.

Intra-day Market Calls & Information: Based on informationfrom informed sources we push intra-day calls and informationrelated to the market that allow clients to take advantage of daytrading opportunities.

Editorial: The editorial keeps a track of all the market information and feeds itlive into the Web and brings it to you at the end of the day via the dailynewsletter Eagle Eye

Live Markets:The Live Markets section begins your morning withthe latest news from the corporate world and analysis of how theequities markets fared across the globe. Once the opening bellgoes off, Live Markets kicks in as a real-time commentary on themarket. It is updated several times a day and provides a blow-by-

blow account of market action. It is spiced liberally with breakingnews with a dash of the rumors floating in the market.

Market Commentary: Market Commentary brings you a bird'seye view of the day's market action.



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5. SEVEN Ps OF SHARE KHAN

PRODUCT

Product VarietyShare khan offers 3 types of online trading accounts for its customers speciallydesigned according to their volume in share trading. Those 3 varieties are:

Classic- for retail investors Speed Trade: for high net worth investors with large and active

equity portfolio who need to monitor and action swiftly Speed trade plus: for high net worth investors dealing in derivative

market.

QualityUser Friendly, attractive & colorful Website designed by Infosys.

. Design

www.Sharekhan.com has been specially designed to facilitate its usersto buy and sell shares instantly at anytime and from anywhere they like.The site is user friendly allowing even a layman to easily operate withoutany hassles.

FeaturesShare khans product comes with the following features:

Trade execution in a fraction of a second! Single Screen Trading Terminal Real time streaming quotes. Price watch on any number of

scripts. Hot keys similar to Brokers Terminal. Customized Alerts based on Multiple Parameters. Back up Facility to place trades on Direct Phone Lines. Intra day charts, updated live, tick-by-tick. Instant Order\ Trade Confirmation in the same window Live margin, position, marked to market profit & loss report. Competitive Brokerage.

Flexibility to customize screen layout and setting. Facility to customize any number of portfolios & watch lists.



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Facility to cancel all pending orders at one click. Facility to square off all transactions at one click. Top Gainers, Top Losers, and Most Active, updated live. Index information; index chart, index stock information live. Market depth, i.e. Best 5 bids and offers, updated live for all

scripts Online access to both accounts and DP. Live updated Order and Trade Book. Details of pending executed and rejected orders. Online access to Customer Service. 128 - Bit super safe encryption. Facility to place after market orders Online fund transfer facility from leading Banks Online intra-day technical calls. Exhaustive database of over 2000 companies Historical charts and technical analysis tools. Last but not the least, ideas that help you to make money!!!

Brand Name

The company as a whole in its offline business has nameditself as SSKI Securities Pvt. Ltd -Sevaklal Sevantilal Kantilal andIshwarlal Securities Pvt. Ltd. The company has preferred to namethemselves under a Blanket Family Name.

But in its online division started since 1997, the companypreferred to name itself as SHARE KHAN. The Brand Name

SHARE KHAN itself suggests the business in which thecompany is dealing so that the consumer could easily identify theproduct or service category.

Recently Sharekhan has been awarded as Indias mostpreferred stock broker under consumer award 2005 researchconducted by AC Nielsen-ORG MARG for Awaaz in the stockbroking category. This award will strengthen Sharekhans brandimage.

Services

Share khan offers its customers, depository services and tradeexecution facilities for equities, derivatives and commoditiesbacked with investment advice tempered by decades of brokingexperience. The teams of its dedicated analysts are constantly atwork to track performance and trends.

Dial-n-trade is also an exclusive service available to all Sharekhancustomers for trading in shares via the telephone. On dialing thetoll free number 1600-22-7050 and on entering the customers T-PIN number, the customer will be directed to a call centreexecutive who will buy or sell shares for him.



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Sharekhan provides online tips four times a day which consists ofinformation like premarket anticipation, intraday opportunities,post market analysis and next day prediction.

PRICE

Price List

CLASSIC SPEEDTRADE

SPEEDTRADE PLUS

One timeregistration fee

750 1000 1500

Minimum brokerageCharges Quarterly

Nil 1000 1500

BrokerageShare khan in its online business charges brokerage as follows:

- In equity Market:On Trading: 0.1%On Delivery: 0.5%

- In Derivative Market:First leg: 0.1%Same day settlement: 0.02%Next day settlement: 0.1%

Service Tax

10.2% on brokerage

Turnover tax + Stamp duty0.02% (Rs. 20 on every turnover of Rs. 100000)

DiscountsFor investors with High Net worth, there are slabs in brokerage rates.

Payment Period

The transaction settlement date in the securities market is T+ 2 days

i.e. the payment of the transaction taken place has to be made withintwo days of its occurrence.



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Credit termsShare khan allows its customers to trade up to 4 times i.e. by keeping1\4th margin with them.

Dematerialization chargesRs.5 per certificate or Rs.35 per scrip whichever is higher.

PROMOTION

Online share trading is totally a new concept in Indian Market. Generallyinvestor doesnt like to come out from conventional way of share trading. Share khanhas introduced this product in. The concept and Product are still new in the market.

Therefore the company has undertaken extensive promotion campaign to createawareness about the product. Share khan adopts the following tools for promoting theproduct.

Direct Sales: Direct Sales is one the oldest way and the most effective way which isused worldwide to sell the product. Until now Sharekhan was used to sell the productmainly through direct sales.Infact major portion of Sharekhans existing customers hasbeen acquired through this way. There are 250 share shops in 123 cities and in eachof them there is around 15 to20 employees working in direct sales force.

Advertising: Sharekhan has realized the importance to strengthen its brand nameand create the awareness among the investor community to invest in the stock market.Sharekhan has used aggressively print as well as electronic media to market theproduct.

They have taken the services of celebrity like Boman Iraniand produced anelectronic advertisement in which Sharekhan covey the message that investment inthe share market gives highest return than one can get in mutual funds.

Sales promotion: Sharekhan has started a unique program called First Step for

those who want to invest first time in stock market. Through this first step programSharekhan is trying to remove first time jitter of the investors by explaining the basicsof the stock market and showing them the way how they should proceed in the stockmarket which is really the first step to invest in the stock market.

What is the first step program?



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It answers some fundamental questions which are there in the mind of newentrants in the stock market field. In this first step program, Sharekhan has answeredfollowing queries:

Why should one invest in shares?Invest to create wealthShares the best investment optionBenefits of share investing are many

How do I buy / sell shares?Invest through primary and secondary marketsA beginners guide to the stock marketPlacing an order to buy/ sell shares

How do I select the right shares?Science of investing in sharesComponents of fundamental researchLearning to judge an IPO

How can I minimize risks and maximize returnsTypes of risk involved in investing in sharesReducing riskBecome a successful investor

How can I benefit from online trading?Using your computer to tradeTrading online is convenientBenefits of trading on Sharekhan.com

7 REASONS WHY YOU SHOULD CHOOSE SHAREKHAN

1) EXPERIENCE: SSKI has more than eight decades of trust

and credibility in the Indian stock market. In the Asia Money brokers pollheld recently, SSKI won the Indias best broking house for 2004 award.Ever since it launched Sharekhan as its retail broking division inFebruary 2000, it has been providing institutional level research andbroking services to individual investors.

2) TECHNOLOGY: with our online trading account you can buyand sell shares in an instant from any PC with an internet connection.You will get access to our powerful online trading tools that will help youtake complete control over your investment in shares.



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3) ACCESSIBILITY: sin addition to our online and phone tradingservices, we also have a ground network of 240 share shops across 110cities in India where you can get personalized services.

4) KNOWLEDGE: in a business where the right information at

the right time can translate into direct profits, you get access to a widerange of information on our content-rich portal, Sharekhan.com. You willalso get a useful set of knowledge based tools that will empower you totake informed decisions.

5) ONVENIENCE: You can call our dial n trade number to getinvestment advice and execute your transactions. We have a dedicatedcall center to provide this service via a toll free number from anywhere inIndia.

6) CUSTOMER SERVICE: Our customer service team will assist you for

any help that you need relating to transactions, billing, demat and otherqueries. Our customer service can be contacted via a toll free number,email or live chat on sahrekhan.com.

7) INVESTMENT ADVICE: SHAREKHAN has dedicated research teams forfundamental and technical research. Our analysts constantly track thepulse of the market and provide timely investment advice to you in theform of daily research emails, online chat, printed reports and SMS onyour phone.

SeminarThe Company also arranges seminar in corporate world for

creating awareness about the product. Recently, it had organized for aseminar in ONGC, IIM.

Direct MarketingCompany emphasizes more on direct marketing, as many people

are still not aware of this new way of smart trading. For this, the companyrecruits and trains sales representatives so as to explain the product andsolve customer queries related to the product. This is the most effective

way to communicate the three-in-one concept which company offers. Telemarketing

This is another promotional tool company is using to boost up itssales. For this, the company collects the database of the peoplebelonging to different professional segments.

PLACE

Channels



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Share khan uses various channel alternatives to reach to its customersthrough

Internet Tele Marketing

Retail Share Shops Franchisee Owners Power Brokers Sales Force

CoverageAccess the website from any part of the globe.

LocationsShare khan has the largest chain of retail share shops in India. It has 250

share shops located in 123 cities all over India like Pune, Thane, Chennai,Kolkata, Bangalore, Lucknow, Darjeeling, Kanpur, Baroda, Midnapore,Surat, Delhi, Ghaziabad, Hyderabad, Allahabad, etc.

PEOPLE

Employees

Selection: Employees are selected on the basis of their experience andqualification as applicable to the job.

Training: Intensive training is provided to the employees till a week once theyjoin and even at times required after that.

Motivation: The employees are motivated through incentives they are provided.

Research Team

Share khan has a team of dedicated analysts who have years of workingexperience in the industries that they track, and a proven track record inusing their knowledge of the investment science to deliver results.

Customers, the heart of Sharekhan are really treated loyally like thekings. The customer care, which comprises of highly trained executivesoperating from 9:30 to 8:00 p.m.

PHYSICAL EVIDENCE

Locality of the office: In Ahmedabad, two franchise outlets are located inposh areas like Navrangpura and Maninagar.



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Office Environment: The ambience within the office is what can make thecustomer feel comfortable in trading. The cordial and friendly atmosphereat office is like a full time motivation for the employees.

Interiors and Infrastructure: The office is well furnished and has 24

computer terminals on which tick-by-tick price movements of the securitiesare displayed.

PROCESS

In this service organization, the ways in which the customers receivedelivery of the service constitutes the process. Here, the process involvesadding value or utility so that the customers get full satisfaction for themoney spent by them.

Here the process begins from the step when customer wants to open e-invest account and ends when his account is actually activated.

All Indian residents and NRI are eligible to avail this service.

Customers can open a Sharekhan e-invest account by filling a singleapplication form.This form includes 12 agreements like

1. Main form with customer details

2. Agreement between Sharekhan and client in respect of the onlineinvestment support service offered.

3. Agreement between the Depository Participant and the client forproviding the transaction statement through Internet.

4. Irrevocable power of attorney5. Agreement between the DP and the person seeking to open anaccount with the DP.6. Maintenance of clients account on a running account bases by SSKI.7. Agreement giving the right of lien on the credit balance of client in NSE

trading.8. Agreement giving the right of lien on the credit balance of client in BSE

trading.9. Risk disclosure document (cash segment)10.Power of attorney11.Member and client agreement.12.Web-online agreement between member-broker and client.

Analysis of the Application Form

1. Main form

In main form all important details about customers are covered up.



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Like his correspondence address, residential address, bank details, Pan No.details, details about nominee etc.

2. Web online agreement between member broker and client

This form includes: Who can be member broker Definition of client Duties and responsibilities of both Requirements for opening a online demat account Rules and regulations of cash segment and derivative segment on web

3. Member and client agreement

This form contains the provisions as to what are terms and conditions in

capital market segment. Derivative segment operative Clauses

4. Agreement between Share khan and the client in respect of the onlineinvestment support services offered

What all facilities Sharekhan.com would be providing Up to what client is liable and what are authority responsibility in relation

to transactions Registration and account opening Subscription rates and regulations

Transaction processing Clearing and settlement of transaction

5. Agreement between the DP and the person seeking to open an accountwith the DP

It mainly contains charges charged by Share khan as DP to its clients forvarious services offered by him.

6. Irrevocable power of attorney

The power of attorney is irrevocable until all dues payable by client tomember broker are satisfactorily settled and agreed between them.

7. Agreement between the DP and client for providing the transactionstatement through internet

It contains the agreement of in what way client would be gettingtransaction through internet

8. Power of attorney

Here Share khan is irrevocably nominated, appointed as true and lawfulattorney for certain acts for Demat account.



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9. Risk disclosure documentRisk involved for cash segment to client. Investors rights and obligations

are mentioned in it.

This form will help him open the Sharekhan trading account along with a

bank account and DEMAT account.

There are three options available to the customer for applying:

1. Through toll free number: 1-1600-11-70502. Through visit to any of the Sharekhan centers in the city.3. Through filling up the application form online.

Customer is required to give residential proof and an identity proof alongwith the application form.

On submitting the application form, it will be processed at Bombay andall the required accounts will be set up. If the application is not processedbecause of lack of details, application will be rejected and the customerwill be contacted by companys representative or by mail.

Once the application is accepted the customer will be informed by mailas well as through post.

Customer will be sent a login ID, membership and trading password, DPnumber, customer ID once the form is processed.

Now the customer can login to the account from any place and starttrading. In case, he faces some difficulty, he can contact the companythrough mail or can give a call to customer care or personally visit thecenter.



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6. EVALUATION OF INDIAN E-PORTALS

USP:

Share khan: Online Trading Terminal and customized investor advise

ICICI direct: Brand Name and various investment options

5 Paisa: Low Brokerage and no account opening charge

HDFC securities: Brand Name



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KOTAK securities: Terminal Speed and good after sales service

India Bulls: competitive brokerage

DEMERITS:

Share khan: Absence of BSE Online Trading

ICICI direct: High Brokerage

5 Paisa: No Brand Name & unreliable

HDFC securities: High Brokerage

KOTAK securities: Deposit

India Bulls: no net banking facility



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7. APPLICATION OF MANAGEMENT CONCEPTS INSHAREKHAN

PEST Changes Affecting Share Market

POLITICAL IMPLICATIONS

Current UPA government policy regarding oil marketing companies is veryconfusing for the investor community. The price of the petrol, diesel, LPG & keroseneis not decided by simple supply and demand equation, but it is manipulated under thepressure of left parties which results in very poor valuation of oil marketing companies

share price.

In 2004 parliament election when UPA alliance came in power stock marketreplied negatively and it cracked down to 800 points.

ECONOMIC IMPLICATIONS

Because of the fall in the bank saving rate, people are transferring their savingtowards equity markets either directly of through mutual funds in search of higherreturn.

Because of the good corporate performance throughout across the sectors theoverall growth in terms of the market capitalization has increased which in turn resultsin wealth creation for investors.

In budget 2004, P. Chidambaram has introduced S.T.T. (Securities TransactionTax) which created havoc amongst stock broker community, because S.T.T. affectedtheir businesses.

SOCIAL IMPLICATIONS

Online trading is being adapted by more and more people each day.Youngsters have started trading in large numbers too. The society as a whole ismoving towards technology in this digital revolution age. Women in corporate world orhousewives have started earning through this way of smart trading sitting at home orin their offices. Thus, in this changing technological scenario, e-trading clicks inpeoples mind along with e-shopping, e-governance. Globalization has brought about achange in consumers who want ease and comfort in trading everywhere they move.

When In such economic environment, people prefer to trade offline, whereintheir profits remain un-booked as per their wish. Mr. Chidambaram, who had given anexcellent budget in 1991, which brought a change in economy, is once again theFinance Minister. It will have different effect on the incomes of people belonging to

different income groups and hence will affect the stock markets too.



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The income from the main business gets lost in the stock markets. These affectthe society in the sense that people have given their lives loosing in stock markets.This is an adverse implication of stock market as a whole.

TECHNOLOGICAL IMPLICATIONS

As this is online trading, one has to be constantly in touch of the latestdevelopments in the technological field. If the competitor has a better portal due todevelopments in software, then there is a chance of loosing market share. Recently,applet-based software is used which is enabled by Java to get the basic portal. Even,the speed of execution and internet connection used by the company affects thecustomers. An internet version of 6.0 is a must for online trading. So, one has to becontinuously upgraded with new technological developments in the market.

SWOT Analysis

STRENGTHS

8 decades of experience instock market

Largest chain of retail share

shops in India Volume based differentiated

product.

User friendly website.

Dedicated and responsiveworkforce/staff.

WEAKNESSES

Problems due to Network crash

Unawareness among investors.

Low customer satisfaction.

OPPORTUNITIES

To tap the untapped market

To capture the Market lost to itsCompetitors.

To focus on developing asuperior and powerful portal

To spread awareness of itsBrand Name

To make people aware of stockmarket field by means of FIRSTSTEP PROGRAM

THREATS

Competitor develops a superiorportal

Prolonged depression and highvolatility in the market

New Entrants & local brokers



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CPA (CUTOMER PROFITABILITY ANALYSIS)

Share khan classifies its customers according to their volume in trade into thefollowing:

PLATINUM AND GOLD CUSTOMERS

Share khan pays exclusive attention to its speed trade plus and speed tradecustomers and considers them as platinum (most valuable) customers as they yieldhigh volume to the company and earn them high income in terms of brokerage. Theseare the only customers who are provided BSE Online Terminal. It specially cares for itsspeed trade customers in terms of rendering quick response to attend to their queriesand complaints, because these are the customers who once if satisfied properly wouldword and recommend the company and its service to other investors also.

IRON CUSTOMERS

Share khan recognizes its classic account holders as its iron customers asthese are the retail customers who are very small players and yield income to thecompany in terms of small brokerage. Share khan always believed in a policy to beresponsive to customers queries and complaints.


Platinum Customers-Speed Trade Plus

Gold Customers-

Speed Trade

Iron Customers-Classic


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8. OUR EXPERIENCE

Learning Experience

When we started our summer training, we knew very little about the stockmarket and its nitty-gritty. And now when we are leaving the company we are confidentabout our knowledge. Although nobody can claim complete expertise but there is asea change at least from our point of view. We have learnt what are the variousindices and their significance in market. We have also learnt the impact of sensex andnifty on overall stock market. We have learnt about various fundamentals andtechnical aspects which affect the stock prices in short run and long run.

Selling Experience

Apart from this our specific task is to sell the online trading accounts. During thisventure we came across many people who came from different walks of life. We learnthow to deal with them, how to persuade them and guide them in trading.

Selling an online trading account requires special focus on targeting thecustomers. Each and every person do not trade / invest in the stock market. Actuallywhat we had to do was to identify the prospect and then convince them. Wasting timeon the customer who does not know anything about stock market is completelyworthless.

We were 3 of us working as a trainee executive for 2 months and wereassigned a target of 15 accounts individually. Out of the target assigned of 30accounts, we achieved 24 accounts in total. We came to know that our conversionratio was around 80%.

Each of us initially met roundabout 10 to 15 people everyday. Out of these wefound 2 to 3 persons who took actual interest in the product. With regular follow-upsthe conversion ratio turned out to be only 1 customer in 4 to 5 days.

As we met more and more people, we came to know more about how to talk tothem, how much time be given to each person we met. Even, by solving the customer

queries, our own understanding was enhanced.

While selling our product in the market, we also came to know more about ourcompetitors product like, icicidirect.com, India bulls and their strategy of marketingand the consumers preference towards the competitors product.

We did cold calling in these two months and created our own database throughit. In the second month, we got leads from our Tele-caller at Sharekhan which aregenerated from Websites like moneycontrol.com, rediffmail.com, indiatimes.com.Share khan also gives advertisement in leading English dailies and on channels likeCNBC where the customer care toll free no. is displayed.



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We met people in different locations at Ashram road, C.G. road, Mithakhali 6roads, S.G. Highway, Paldi, Maninagar, Judges Bungalow road, Vatva, Gandhinagar,Shahibag, Jodhpur, Sabarmati, Naranpura, Navrangpura, Gurukul etc.

It include Advertising Agencies, Chartered Accountants, Travel agencies,Exporters, Education consultants, Samsung as well as other household applianceshowrooms. We met the Customer Relationship Managers, Assistant Managers, SalesManagers, Accountant officers and even the Directors of some companies.

We needed to report daily in our company in the DSR (Daily Sales Report) theinformation about the people we met. This DSR included: Name of the customer, Ph.Number, Time, Period, Status, Follow up and Reasons. Even, we were required to fillup a Deal-Sheet for HNIs that is the High-Network Individuals (the individuals whotrade in higher volumes) that we met on a particular day. We opened up stalls atplaces like New Cloth Market, Gurukul road, Maninagar.

Once, a customer filled up the form, we had to call him/her after7 working daysto check if he has received the login ID and password from us (Bombay office ofSharekhan). After that, we were required to show the customer how to make atransaction and how to get access to the terminal. Also, other queries which thecustomer faced had to be solved by us. So, it was all a very good learning experiencefor us.

What we faced was the scorching heat of the city, be in a one area at one timeand just the opposite area in other time as per customers appointment. How to speakto consumers, solving their queries, building a rapport with them was all up to us. Wecreated our own databases which we feel is an achievement. Also, getting into theoffices with the salespeople not allowed board was an achievement. The feeling aftermeeting a customer once and in the final meeting, and closing the deal gave us asense of fulfillment. There were 59 signatures in the account opening form andentertaining our customers while filling-up the form was again a challenge.

At Sharekhan, the atmosphere was perfectly cordial. There were senior traineesalways to solve the difficulties we faced in approaching a customer, filling up the form,demonstrating the site, or solving their queries. We were supposed to be formally

dressed and required to report twice daily.

We faced some bad and resentful experiences like being sent out of officeswithout being listened. Even, we waited for hours for a customer and went to thecustomer again in case if a signature is left in the form or in occurrence of any proofproblems. This was again a learning to increase our tolerance and be more carefulwhile filling up the form.



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9. RECOMMENDATIONS

To Share khan:

1. CRM:After acquiring a customer he or she requires special attention

which can be done by assigning that particular customer to relationshipexecutive. The task of serving the customer should not left to sales executives,but a relationship executive should given the responsibility to solve thecustomer query. It is more difficult to retain a customer than to acquire one.

2. Effective promotional tools:Sales promotion schemes should be such to attract the prospective

customers. Proper advertising may be done in order to create awareness andgood schemes to attract the customers may be offered.

3. Customer convenience:Suggestions are not available in the basic portal. The terminal speed

is low and the Login ID, TPIN and phone ID are not changeable. Company mayprovide these facilities as well.

4. Pledging:In order to attract customers, Sharekhan should provide online

pledging system. This will enhance its sales, as customer will not have to movecash to the company every time he/she wants to trade.

5. Sales force:Company does recruit trainees, but it does lack a professional sales

force, which remains with it on a permanent basis. For this, the company mayoffer salary on a fixed basis instead of variable one that it offers now.

6. Online demonstration: Sharekhan should provide online demonstration on its website so thatcustomer gets visual idea about Sharekhan portal.



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10. BIBLIOGRAPHY

Magazines:

Share khan value line, dalalstreet, Flashnews,

Websites:

http://www.Sharekhan.com http://www.nseindia.com http://www.bseindia.com http://www.hdfcsec.com http://www.indiabulls.com http://www.5paisa.com http://www.icicidirect.com http://www.kotakstreet.com http://www.google.com
http://www.kotakstreet.com/http://www.google.com/http://www.kotakstreet.com/http://www.google.com/

Final Report EDITED by US

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