SUMMER INTERNSHIP PROGRAM A REPORT ON FACTORS AFFECTING INDIAN
EQUITY MARKET (BANKING SECTOR) INDIA INFOLINE LIMITED
AResearch Report On
COMPARATIVE analysis of stock market
report submitted in partial fulfillment of the requirement for
the award of degree of MASTER OF BUSINESS ADMINISTRATIONSession
2013-14
Submitted By:KM. KHUSHBU MBA IV SEM Roll No- 1208470024
BHAGWANT INSTITUTE OF TECHNOLOGY ,BHAGWANTPURAM,
MUZAFFARNAGAR
TABLE OF CONTENT
1. Abstract
2. Company profile
3. Introduction to the Study & Review of Literature
4. Objective of study
5. Research methodology
Research problem & hypothesisResearch variables Research
design Research venue
6. Data analysis and interpretations
7. Findings & result
8. Limitations of study
9. Conclusion
10. Suggestions/recommdation
11. References & bibliography12. Annexure
DECLARATION
I Km. Khushbu a student of MBA IVth Sem, Bhagwant Institute of
technology, Muzaffarnagar hereby solemnly declare that the research
Report titled Comparative ANALYSIS OF STOCK Market. is the outcome
of my own research report prepared by me and the same has not been
submitted to any university or institute for the award of any
degree or diploma.
\
Date: Km. KhushbuPlace: Roll No.1208470024
ABSTRACTOff to work so as to bring this organization among the
top. to be dynamic in this industry. The Present business scenario
is totally consumer oriented. Every company faces stiff competition
from its competitors, each provides the best product at competitive
rates. As a result customers have lot of choices to get the best
with the least cost. To face this competition, it is very important
to know customers behavior, their needs, preference and also the
motivation factors.India Infoline Securities Limited Provide its
Expert service in share market Operations to institutional
Investors. Company is a Member of National Stock Exchange as well
as Bombay Stock Exchange. India Infoline is slowly but steadily
gaining market share and goodwill in the Market. Its strategies for
marketing its services as well as developing a good Relationship
with its client has given an edge over the other service providers.
India Infoline is on expansion path and is looking forward to be in
the top. India Infoline is a very flexible organization and it
gives equal opportunity to its young and energetic ste comparative
analysis done in this project show how India Infoline has built
competitive edge on some groundThe research help you understand the
strategies of this industry right from De-Mat to Trading, Margin to
analysis and risk to return. I hope this project prove to be
beneficial for the Company and also give the idea about the
industry.I learnt a lot through out the process of undertaking this
project report.To fulfill my task I had to visit the client
personally who are dealing in share trading with this company or
some other broking house.For this I was assign the target of 10
accounts, for which I first generated the database and made
appointment with them and convert them in as traders of India
Infoline Securities Limited, for this I have to convince them and
explain the concept and collect the Trading Form and a cheque of
Rs. 10000 only.After going through the exercise I found that IFL is
one of the upcoming companies in the Share Market, as the
credibility of other companies are going down in the market and it
is the right time for the IFL to built its reputation in the
market. The Main reason for IFL low market share is because of
local brokers in the market which a charging very less Margin as
initial investment for Trading in Stock Market.But No doubt it is
having lots of scope to grow in the financial Market, and I wish it
is having a shining future in the coming years.
INDUSTRY PROFILE
ORIGIN AND DEVELOPMENT OF THE INDUSTRYThe Bombay Stock Exchange
(BSE) is known as the oldest exchange in Asia. It traces its
history to the 1850s, when stockbrokers would gather under banyan
trees in front of Mumbais Town Hall. The location of these meetings
changed many times, as the number of brokers constantly increased.
The group eventually moved to Dalal Street in 1874 and in 1875
became an official organization known as The Native Share &
Stock Brokers Association. In 1956, the BSE became the first stock
exchange to be recognized by the Indian Government under the
Securities Contracts Regulation Act. The Bombay Stock Exchange
developed the BSE Sensex in 1986, giving the BSE a means to measure
overall performance of the exchange. In 2000 the BSE used this
index to open its derivatives market, trading Sensex futures
contracts. The development of Sensex options along with equity
derivatives followed in 2001 and 2002, expanding the BSEs trading
platform. Historically an open-cry floor trading exchange, the
Bombay Stock Exchange switched to an electronic trading system in
1995. It took the exchange only fifty days to make this transition.
Capital market reforms in India and the launch of the Securities
and Exchange Board of India (SEBI) accelerated the integration of
the second Indian stock exchange called the National Stock Exchange
(NSE) in 1992. After a few years of operations, the NSE has become
the largest stock exchange in India.Three segments of the NSE
trading platform were established one after another. The Wholesale
Debt Market (WDM) commenced operations in June 1994 and the Capital
Market (CM) segment was opened at the end of 1994. Finally, the
Futures and Options segment began operating in 2000. Today the NSE
takes the 14th position in the top 40 futures exchanges in the
world. In 1996, the National Stock Exchange of India launched
S&P CNX Nifty and CNX Junior Indices that make up 100 most
liquid stocks in India. CNX Nifty is a diversified index of 50
stocks from 25 different economy sectors. The Indices are owned and
managed by India Index Services and Products Ltd (IISL) that has a
consulting and licensing agreement with Standard & Poors. In
1998, the National Stock Exchange of India launched its web-site
and was the first exchange in India that started trading stock on
the Internet in 2000. The NSE has also proved its leadership in the
Indian financial market by gaining many awards such as Best IT
Usage Award by Computer Society in India (in 1996 and 1997) and
CHIP Web Award by CHIP magazine (1999).The National Stock Exchange
of India was promoted by leading Financial institutions at the
behest of the Government of India, and was incorporated in November
1992 as a tax-paying company. In April 1993, it was recognized as a
stock exchange under the Securities Contracts (Regulation) Act,
1956. NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment of the
NSE commenced operations in November 1994, while operations in the
Derivatives segment commenced in June 2000.Since the early 1950s
till the early 1990s, Indian policy makers had been nourishing the
goal of Socialist pattern of society. They had been following the
development planning strategy of the former Soviet Russia in a
mixed economic framework. From July 1991, in the face of an
unprecedented foreign exchange crisis, Indian economy started
experiencing an IMF-World Bank dictated regime of
liberalisation.One aspect of this is financial liberalisation.
There is a move towards privatisation of nationalised banks these
banks are selling their shares in the stock market. Transnational
banks are encouraged to operate in the Indian banking sector.
Attempts are made to attract foreign direct investment in different
sectors. There is an increasing entry of foreign portfolio capital
due to stock market liberalisation. People are encouraged to invest
in stocks through income tax benefits and abolition of capital
gains tax. There is a move to develop a national pension fund which
will be invested in different stocks to get returns out of which
pension will be provided to retired people. It is expected that
boosting up of stock market will accelerate the process of capital
accumulation and growth. Stock market development has been an
important part of financial liberalisation in the less developed
countries (LDCs). In the pro-liberalisation circle, stock market is
assigned to play an important role in the capitalist development of
LDCs.There are many studies supporting the positive link between
stock market development and growth. Let us mention some of the
recent studies. One important study was undertaken by Levine and
Zervos (1998). Their cross-country study found that the Development
of banks and stock markets has a positive effect on growth. In
another study Levine (2003) argued that although theory provides
ambiguous relationship between stock market liquidity and economic
growth, the cross-country data for 49 countries over the period
1976-93 suggest a strong and positive relationship (see also
Levine, 2001). Henry (2000) studied a sample of 11 LDCs and
observed that stock market liberalisations lead to private
investment boom. Recently, Bekaert et al (2005) analyzed data of a
large number of countries and observed that the stock market
liberalization leads to an approximate 1 % increase in annual real
per capita GDP growth.There are some economists who are sceptical.
Long time back Keynes (1936) compared the stock market with casino
and commented: when the capital development of a country becomes
the by-product of the activities of a casino, the job is likely to
be ill-done.Referring to the study of World Bank (1993) Singh
(1997) pointed out that stock markets have played little role in
the post-war industrialization of Japan, Korea and Taiwan. He
argued that the recent move towards stock market liberalization is
unlikely to help in achieving quicker industrialization and faster
long-term economic growth in most of the LDCs.In this perspective
this study examines the nature of relationship between stock market
and growth through capital accumulation in India.
Figure 1: Indias Real Share Prices (log-values), 1950-2004
Figure 2: Indias Annual Growth Rate of Real Industrial Output,
1961-2003
Figure3 : Indias Annual Growth Rate of Real GDP, 1951-2003
INTRODUCTION TOWARDS THE TOPIC
STOCK MARKET IN INDIA
The Indian security market has become one of the most dynamic
and efficient security markets in Asia today. The Indian market now
conforms to International Standards in terms of operating
efficiency. During the latter half of 19th century, shares of
companies used to be floated in India Occasionally. There were
share brokers in Bombay who assisted in the floatation of shares of
companies. A small group of stock brokers in Bombay joined together
in 1875 to form an association called Native Share &
Stockbrokers Association. The association drew up codes of conduct
for brokerage business and mobilizes private funds for investment
in the corporate sector. It was this association which later became
the Bombay Stock Exchange, Mumbai or BSE.Later on in 1894 the
brokers of Ahmedabad formed the Ahmedabad Stock Exchange, the
second stock exchange of the country. During the 1900s Kolkata
became another major center of share trading and as a result
Kolkata Stock Exchange was form in 1908. Later on Chennai Stock
Exchange was started in 1920. However, by 1923, it ceased to
exist.Then the Madras Stock Exchange was started in 1937. Three
more stock exchanges were established before independence, at
Indore in 1930, at Hyderabad in 1943.Thus along with the increase
in number of stock exchanges, the number of listed companies and
the capital of listed companies grown tremendously after 1985 which
results into growth and development of stock market in India.
Indian Stock MarketShare or stock is a document issued by a
company, which entitles its holder to be one of the owners of the
company. A share is issued by a company or can be purchased from
the stock market.Share market where dealing of securities is done
is known as share market. There are two ways in which investors
gets share from market:Primary market: markets in which new
securities are issued are known as primary market. This is part of
the financial market where enterprises issue their new shares and
bonds. It is characterized by being the only moment when the
enterprise received money in exchange for selling its financial
assets.Secondary Market: Market in which existing securities are
dealt is known as secondary market. The market where securities are
traded after, they are initially offered in the primary market.
Most trading is done in the secondary market. The Stock Market is
an invisible market that trades in stocks of various companies
belonging to both the public and private sectors. The Indian Stock
Market is often referred to as the Share Market since it deals
primarily with shares of various companies. A Stock Exchange is a
place where the stocks are listed and traded. Such exchanges may be
a corporation or mutual organization which specializes in the
business of introducing the sellers with the buyers of stocks and
securities. The Indian Stock Market in India comprises of two stock
exchanges: Bombay Stock Exchange (BSE) National Stock Exchange
(NSE)BSEThe Bombay Stock Exchange (BSE) was established in 1875.The
BSE India Stock Exchange serves as the most important for companies
to raise money. The chief function of the Stock Market of India is
to help raise money as capital for the growth and expansion of
various private and public sector enterprises. Besides, the Stock
Market of India provides able assistance to the individual
investors through daily updates on current position of the stocks
of the respective companies that are enlisted in the Stock Index in
which the movement of prices in a section of the market are
captured in price indices. The popular acronym for Stock Index is
Sensitive index or sensex. Moreover, the liquidity provided by the
exchange enables the investors to sell securities owned by them
easily and quickly. Hence a person, who is subjected to sudden
dearth of funds, can immediately sell his shares for cash in India
Stock Market. The BSE Sensex, also known as BSE 30 is a widely used
market index not only in India but across Asia. In terms of volume
of transactions, it is ranked among the top five stock exchanges in
the world.
ABOUT BSE SENSEX
BSE SENSEX or Bombay Stock Exchange Sensitive Index is a
value-weighted index composed of 30 stocks started in 01 of
January, 1986. It consists of the 30 largest and most actively
traded stocks, representative of various sectors, on the Bombay
Stock Exchange. These companies account for around one-fifth of the
market capitalization of the BSE. The base value of the SENSEX is
100 on April 1, 1979, and the base year of BSE-SENSEX is 1978-79.
At irregular intervals, the Bombay Stock Exchange (BSE) authorities
review and modify its composition to make sure it reflects current
market conditions. The index is calculated based on a free-float
capitalization method; a variation of the market cap method.
Instead of using a company's outstanding shares it uses its float,
or shares that are readily available for trading. The free-float
method, therefore, does not include restricted stocks, such as
those held by company insiders.The index has increased by over ten
times from June 1990 to the present. Using information from April
1979 onwards, the long-run rate of return on the BSE SENSEX works
out to be 18.6% per annum, which translates to roughly 9% per annum
after compensating for inflation. There are five major indices in
BSE, thirteen sector specific indices and a BSE Dollex Index for
dollar prices and movements.
NSEThe National Stock Exchange of India Ltd. (NSE), set up in
the year 1993, is today the largest stock exchange in India and a
preferred exchange for trading in equity, debt and derivatives
instruments by investors. NSE has set up a sophisticated electronic
trading, clearing and settlement platform and its infrastructure
serves as a role model for the securities industry. The standards
set by NSE in terms of market practices; products and technology
have become industry benchmarks and are being replicated by many
other market participants. NSE provides a screen-based automated
trading system with a high degree of transparency and equal access
to investors irrespective of geographical location. The high level
of information dissemination through the on-line system has helped
in integrating retail investors across the nation. The exchange has
a network in more than 350 cities and its trading members are
connected to the central servers of the exchange in Mumbai through
a sophisticated telecommunication network comprising of over 2500
VSATs. NSE has around 850 trading members and provides trading in
equity shares and debt securities. Besides this, NSE provides
trading in various derivative products such as index futures, index
options, stock futures, stock options and interest rate futures.In
addition to these organizations there are other organizations
highlighting on the share trading in the Indian Stock Market are:
Securities and Exchange Board of India (SEBI) NSDL CDSL The Nifty
and the Senses are the indicators which are the parameters denoting
the prices of the stocks of the major companies of the NSE and the
BSE respectively.
ABOUT NSE AND NIFTY 50
The National Stock Exchange of India Limited (NSE) is a
Mumbai-based stock exchange. It is the largest stock exchange in
India in terms of daily turnover and number of trades, for both
equities and derivative trading. Though a number of other exchanges
exist, NSE and the Bombay Stock Exchange are the two most
significant stock exchanges in India and between them are
responsible for the vast majority of share transactions. The NSE's
key index is the S&P CNX Nifty, known as the Nifty, an index of
fifty major stocks weighted by market capitalization. NSE is
mutually-owned by a set of leading financial institutions, banks,
insurance companies and other financial intermediaries in India but
its ownership and management operate as separate entities. There
are at least 2 foreign investors NYSE Euro next and Goldman Sachs
who have taken a stake in the NSE. As of 2006, the NSE VSAT
terminals, 2799 in total, cover more than 1500 cities across India.
In October 2007, the equity market capitalization of the companies
listed on the NSE was US$ 1.46 trillion, making it the second
largest stock exchange in South Asia. NSE is the third largest
Stock Exchange in the world in terms of the number of trades in
equities. It is the second fastest growing stock exchange in the
world with a recorded growth of 16.6%. The Standard & Poor's
CRISIL NSE Index 50 or S&P CNX Nifty nicknamed Nifty 50 or
simply Nifty is the leading index for large companies on the
National Stock Exchange of India. The Nifty is a well diversified
50 stock index accounting for 22 sectors of the economy. It is used
for a variety of purposes such as benchmarking fund portfolios,
index based derivatives and index funds. There are seven major
Indices in NSE and fifteen sector specific Indices. CNX BANK INDEX
or BANK NIFTY is the index which has 17 banks listed on it and is a
separate index to look upon price movements of banks share P.
Listed companies As indicated in the above chart, the BSE has
the largest number of listed companies (4,921), followed by the TSX
Group (3,841). The number of companies listed on the NSE increased
by 21.6% to 1,406 in 2008 as compared with the 2006 figure.
The London Stock Exchange had the highest number of foreign
companies liste on its exchange (681), which constituted 22% of the
total number of companies listed on it; followed by the NYSE Group
with 415 foreign companies, which represented close to 14% of the
total listed companies on it. In terms of percentage share,
Luxemburg Stock Exchange had the highest percentage of foreign
companies at 87%, followed by Singapore Exchange at 41%. The two
main exchanges in the US, Nasdaq, and NYSE Group, had a combined
total of 5,963 companies, out of which, 751 were foreign
companies.
GROWTH AND PRESENT STATUS OF THE INDUSTRYThe ever-growing and
fast-maturing 'India Market' is a lucrative business destination
for developed countries. With 7-8% of GDP growth, huge analytical,
young and English speaking work forces the pull for opportunities
are luring. The bandwidth of 'India Market' is enviably wide and
very deep. 'Markets in India' are well protected by legal
guidelines and efficient administrators. With a liberal and
proactive government at the center the road ahead for 'Markets of
India' is very rosy. 'Market India' has witnessed exponential
growth over past one and half decade. Liberal and transparent
financial policies have effected free-in-flow of FII and as a
result of which 'India Market' has grown to a colossal monster in
the international market. Foreseeing sure and substantial returns
on investments (ROI) companies are pro- actively listing on the
stock market indexes. Government agencies once much hated for red
tape and bribes has shed its image. Professionalism is their new
mantra. Public Enterprises like IOC, ONGC, BHEL, NTPC, SAIL, MTNL,
BPCL, HPCL and GAIL, SBI, LIC, Hindustan Antibiotics Limited, Air
India etc. to name a few, are giving Private Indian companies a
good run for their money. Private giants like Reliance Industries
Limited, Infosys, Tata, Birla Corporation, Jet Airways, Ranbaxy,
Biocon, Bajaj Auto, ICICI are breaking their own records every
financial years. 'Markets in India' has witnessed meteorite rise of
the Indian Software, Telecommunication and Banking Industry. This
has propelled growth of Urban Indian class which, in turn has
increased consumerism. Today, each and every type of industry of
'Market India' like Infrastructure, Pharmaceutical &
Biotechnology, Banking & Insurance, Electronics, FMCG etc. has
tremendous growth potential. Retail Industry along with Agriculture
& Food industry are yet to contribute their share to the growth
story of 'Market India'.Indian Equity Market at present is a
lucrative field for the investors and investing in Indian stocks
are profitable for not only the long and medium-term investors, but
also the position traders, short-term swing traders and also very
short term intra-day traders. In terms of market capitalization,
there are over 2500 companies in the BSE chart list with the
Reliance Industries Limited at the top. The SENSEX today has rose
from 1000 levels to 8000 levels providing a profitable business to
all those who had been investing in the Indian Equity Market. There
are about 22 stock exchanges in India which regulates the market
trends of different stocks. Generally the bigger companies are
listed with the NSE and the BSE, but there is the OTCEI or the Over
the Counter Exchange of India, which lists the medium and small
sized companies. There is the SEBI or the Securities and Exchange
Board of India which supervises the functioning of the stock
markets in India.Thus, the growing financial capital markets of
India being encouraged by domestic and foreign investments is
becoming a profitable business more with each day. If all the
economic parameters are unchanged Indian Equity Market will be
conducive for the growth of private equities and this will lead to
an overall improvement in the Indian economy.Indian Stock Market
including both NSE-National Stock Exchange and the BSE-Bombay Stock
Exchange have certainly taken a tremendous beating in the past few
weeks. We are sure most of us here knew that the correction in the
trading curve was round the corner which would be healthy, and the
markets would bounce back from 18k levels with the help of mutual
fund investments & buying of Indian stocks again. However the
anticipation went wrong, and the US recession story along with
global and Indian commodity prices have added fuel to the global
equity market turmoil on a whole.
Future of the industryThe stock market is booming in spite of
the low agriculture output. The monsoon is good in an overall sense
but still the question remains who takes the credit? The answer is
the karma of the people. I appreciate the Indian politicians and
the industrialists who being pawns of destiny are doing things
positive and productive. India, as a country is running a very good
period and the position of planets in the transit are giving
wonderful results.Less than one percent of population own stocks
and less than 1000 individuals control the market, the majority
being the FIIS, the promoters of the company. The credit should go
to media for making stock market headlines.The question many people
in the market ask:Will the Bull Run continue? What heights we can
reach?First of all, mark my words Indian bourses in the future will
be one of the best investments in the world. There will be a time
when it can even reach 3000 points in the nifty. India will begin
one of the best dasas of the Sun, which will work in its favor. So
before 2009 Indian bourses should see an all time high.Now this
Bull Run will continue.There can be some correction in the BSE
sensex in the 7500 points level.The market will hover between the
6000- 7000 till mid august.There will be huge fluctuations.
Investors and new entrants to the market to cool down a bit and
come well below 7000. In any case if you are long terms players
then step-in and buy now and forget for another 10 years. You will
make a killing in the Indian markets.Most of the tech companies and
the main index will do well but slightly in the lower side of
expectations.
FINANCIAL SECTOR
The financial sector is in a process of rapid transformation.
Reforms are continuing as part of the overall structural reforms
aimed at improving the productivity and efficiency of the economy.
The role of an integrated financial infrastructure is to stimulate
and sustain economic growth.The US$ 28 billion Indian financial
sector has grown at around 15 per cent and has displayed stability
for the last several years, even when other markets in the Asian
region were facing a crisis. This stability was ensured through the
resilience that has been built into the system over time. The
financial sector has kept pace with the growing needs of corporate
and other borrowers. Banks, capital market participants and
insurers have developed a wide range of products and services to
suit varied customer requirements. The Reserve Bank of India (RBI)
has successfully introduced a regime where interest rates are more
in line with market forces.Financial institutions have combated the
reduction in interest rates and pressure on their margins by
constantly innovating and targeting attractive consumer segments.
Banks and trade financiers have also played an important role in
promoting foreign trade of the country.
BanksThe Indian banking system has a large geographic and
functional coverage. Presently the total asset size of the Indian
banking sector is US$ 270 billion while the total deposits amount
to US$ 220 billion with a branch network exceeding 66,000 branches
across the country. Revenues of the banking sector have grown at 6
per cent CAGR over the past few years to reach a size of US$ 15
billion. While commercial banks cater to short and medium term
financing requirements, national level and state level financial
institutions meet longer-term requirements. This distinction is
getting blurred with commercial banks extending project finance.
The total disbursements of the financial institutions in 2001 were
US$ 14 billion.Banking today has transformed into a technology
intensive and customer friendly model with a focus on convenience.
The sector is set to witness the emergence of financial
supermarkets in the form of universal banks providing a suite of
services from retail to corporate banking and industrial lending to
investment banking. While corporate banking is clearly the largest
segment, personal financial services is the highest growth
segment.The recent favorable government policies for enhancing
limits of foreign investments to 49 per cent among other key
initiatives have encouraged such activity. Larger banks will be
able to mobilize sufficient capital to finance asset expansion and
fund investments in technology.
Capital MarketThe Indian capital markets have witnessed a
transformation over the last decade. India is now placed among the
mature markets of the world. Key progressive initiatives in recent
years include: The depository and share dematerialization systems
that have enhanced the efficiency of the transaction cycle
Replacing the flexible, but often exploited, forward trading
mechanism with rolling settlement, to bring about transparency The
infotech-driven National Stock Exchange (NSE) with a national
presence (for the benefit of investors across locations) and other
initiatives to enhance the quality of financial disclosures.
Corporatization of stock exchanges. The Securities and Exchange
Board of India (SEBI) has effectively been functioning as an
independent regulator with statutory powers. Indian capital markets
have rewarded Foreign Institutional Investors (FIIs) with
attractive valuations and increasing returns. The Mumbai Stock
Exchange continues to be the premier exchange in the country with
an increase in market capitalization from US$ 40 billion in
1990-1991 to US$ 203 billion in 1999-2000. The stock exchange has
about 6,000 listed companies and an average daily volume of about a
billion dollars Many new instruments have been introduced in the
markets, including index futures, index options, derivatives and
options and futures in select stocks.
InsuranceWith the opening of the market, foreign and private
Indian players are keen to convert untapped market potential into
opportunities by providing tailor-made products: The presence of a
host of new players in the sector has resulted in a shift in
approach and the launch of innovative products, services and
value-added benefits. Foreign majors have entered the country and
announced joint ventures in both life and non-life areas. Major
foreign players include New York Life, Aviva, Tokio Marine,
Allianz, Standard Life, Lombard General, AIG, AMP and Sun Life
among others. With competition, the erstwhile state sector
companies have become aggressive in terms of product offerings,
marketing and distribution. The Insurance Regulatory and
Development Authority (IRDA) has played a proactive role as a
regulator and a facilitator in the sectors development. The size of
the market presents immense opportunities to new players with only
20 per cent of the countrys insurable population currently insured.
The state sector Life Insurance Corporation (LIC), the largest life
insurer in 2000, sold close to 20 million new policies with a
turnover of US$ 5 billion. The gross premia for the insurance
sector was US$ 13 billion for 2001-02. There are four public sector
and nine private sector insurance companies operating in
general/non-life insurance business with a premium income of over
US$ 2.58 billion. The markets potential has been estimated to have
a premium income of US$ 80 billion with a potential size of over
300 million people. The General Insurance Corporation (GIC) (which
covers the non-life sector) had a total premium income of US$ 2
billion in 2001-02. This has the potential to reach US$ 9 billion
in the next five years.Venture CapitalTechnology and knowledge have
been and continue to drive the global economy. Given the inherent
strength by way of its human capital, technical skills, cost
competitive workforce, research and entrepreneurship, India is
positioned for rapid economic growth in a sustainable manner. To
realise the potential, there is a need for risk finance and venture
capital (VC) funding to leverage innovation, promote technology and
harness knowledge based ideas. The Indian venture capital sector
has been active despite facing a challenging external environment
in 2001 and a competitive market scenario. There were 34 VCFs and 2
Foreign VCFs registered with SEBI in March 2002. According to a
survey conducted by Thomson Financial and Prime Database, India
ranked as the third most active venture capital market in Asia
Pacific (excluding Japan). It recorded 115 deals in 2001 with
average investment per deal amounting to US$ 7.9 million. 57 VCFs
invested US$ 908 million in 101 Indian companies during 2001.
Disbursements for 2002 are expected to be US$ 2 billion and are
estimated to reach US$ 10 billion by 2007. There is an increased
interest in India: 70 VC funds operate in India with the total
assets under management worth about US$ 6 billion. The amount has
grown nearly twenty fold in the past five years. Most VCs believe
that 2002-03 will be driven by a relatively stable economy and new
initiatives that will boost the e-commerce sector, particularly
on-line trading and e-banking sectors.
STOCK BROKING SECTOR IN INDIAThe Indian broking industry is one
of the oldest trading industries that has been around even before
the establishment of the BSE in 1875. Despite passing through a
number of changes in the post liberalization period, the industry
has found its way towards sustainable growth. In this section our
purpose will be of gaining a deeper understanding about the role of
the Indian stock broking industry in the countrys economy.
What is meant by a Stock Exchange?The Securities Contract
(Regulation) Act, 1956 [SCRA] defines Stock Exchange as anybody of
individuals, whether incorporated or not, constituted for the
purpose of assisting, regulating or controlling the business of
buying, selling or dealing in securities. Stock exchange could be a
regional stock exchange whose area of operation/jurisdiction is
specified at the time of its recognition or national exchanges,
which are permitted to have nationwide trading since inception. NSE
was incorporated as a national stock exchange.
What is an Equity/Share?Total equity capital of a company is
divided into equal units of small denominations, each called a
share. The holders of such shares are members of the company and
have voting rights.What is a Debt Instrument?Debt instrument
represents a contract whereby one party lends money to another on
pre-determined terms with regards to rate and periodicity of
interest, repayment of principal amount by the borrower to the
lender. In the Indian securities markets, the term bond is used for
debt instruments issued by the Central and State governments and
public sector organizations and the term debenture is used for
instruments issued by private corporate sector.
What is a Derivative?Derivative is a product whose value is
derived from the value of one or more basic variables, called
underlying. The underlying asset can be equity, index, foreign
exchange (forex), commodity or any other asset. Derivative products
initially emerged as hedging devices against fluctuations in
commodity prices and commodity-linked derivatives remained the sole
form of such products for almost three hundred years. The financial
derivatives came into spotlight in post-1970 period due to growing
instability in the financial markets.
What is a Mutual Fund?A Mutual Fund is a body corporate
registered with SEBI (Securities Exchange Board of India) that
pools money from individuals/corporate investors and invests the
same in a variety of different financial instruments or securities
such as equity shares, Government securities, Bonds, debentures
etc. Mutual funds can thus be considered as financial
intermediaries in the investment business that collect funds from
the public and invest on behalf of the investors. Mutual funds
issue units to the investors. The appreciation of the portfolio or
securities in which the mutual fund has invested the money leads to
an appreciation in the value of the units held by investors. The
investment objectives outlined by a Mutual Fund in its prospectus
are binding on the Mutual Fund scheme. The investment objectives
specify the class of securities a Mutual Fund can invest in. Mutual
Funds invest in various asset classes like equity, bonds,
debentures, commercial paper and government securities. The schemes
offered by mutual funds vary from fund to fund. Some are pure
equity schemes; others are a mix of equity and bonds. Investors are
also given the option of getting dividends, which are declared
periodically by the mutual fund, or to participate only in the
capital appreciation of the scheme.What is an Index? An Index shows
how a specified portfolio of share prices is moving in order to
give an indication of market trends. It is a basket of securities
and the average price movement of the basket of securities
indicates the index movement, whether upwards or downwards.
What is a Depository?A depository is like a bank wherein the
deposits are securities (viz. shares, debentures, bonds, government
securities, units etc.) in electronic form.What is
Dematerialization?Dematerialization is the process by which
physical certificates of an investor are converted to an equivalent
number of securities in electronic form and credited to the
investors account with his Depository Participant (DP)What is meant
by Securities?The definition of Securities as per the Securities
Contracts Regulation Act (SCRA), 1956, includes instruments such as
shares, bonds, scrips, stocks or other marketable securities of
similar nature in or of any incorporate company or body corporate,
government securities, derivatives of securities, units of
collective investment scheme, interest and rights in securities,
security receipt or any other instruments so declared by the
Central Government.What is the function of Securities
Market?Securities Markets is a place where buyers and sellers of
securities can enter into transactions to purchase and sell shares,
bonds, debentures etc. Further, it performs an important role of
enabling corporate, entrepreneurs to raise resources for their
companies and business ventures through public issues. Transfer of
resources from those having idle resources (investors) to others
who have a need for them (corporate) is most efficiently achieved
through the securities market. Stated formally, securities markets
provide channels for reallocation of savings to investments and
entrepreneurship. Savings are linked to investments by a variety of
intermediaries, through a range of financial products, called
Securities.
Which are the securities one can invest in? Shares Government
Securities Derivative products Units of Mutual Funds etc.Why does
Securities Market need Regulators?The absence of conditions of
perfect competition in the securities market makes the role of the
Regulator extremely important. The regulator ensures that the
market participants behave in a desired manner so that securities
market continues to be a major source of finance for corporate and
government and the interest of investors are protected.Who
regulates the Securities Market?The responsibility for regulating
the securities market is shared by Department of Economic Affairs
(DEA), Department of Company Affairs (DCA), Reserve Bank of India
(RBI) and Securities and Exchange Board of India (SEBI).
What is SEBI and what is its role?The Securities and Exchange
Board of India (SEBI) is the regulatory authority in India
established under Section 3 of SEBI Act, 1992. SEBI Act, 1992
provides for establishment of Securities and Exchange Board of
India (SEBI) with statutory powers for (a) protecting the interests
of investors in securities (b) promoting the development of the
securities market and (c ) regulating the securities market. Its
regulatory jurisdiction extends over corporates in the issuance of
capital and transfer of securities, in addition to all
intermediaries and persons associated with securities market. SEBI
has been obligated to perform the aforesaid functions by such
measures as it thinks fit. In particular, it has powers for:
Regulating the business in stock exchanges and any other securities
markets Registering and regulating the working of stock brokers,
subbrokers etc. Promoting and regulating self-regulatory
organizations Prohibiting fraudulent and unfair trade practice.
Calling for information from, undertaking inspection, conducting
inquiries and audits of the stock exchanges, intermediaries, self-
regulatory organizations, mutual funds and other persons associated
with the securities market.
Broking houses in IndiaIndia is a country having a big list of
Broking Houses. The Equity Broking Industry in India has several
unique features like it is more than a century old, dynamic,
forward looking, and good service providers, well conversant,
highly innovative and even adaptable. The regulations and reforms
been laid down in the Equity Market has resulted in rapid growth
and development. Basically, the growth in the equity market is
largely due to the effective intermediaries. The Broking Houses not
only act as an intermediate link for the Equity Market but also for
the Commodity Market, Foreign Currency Exchange Market, and many
more. The Broking Houses has also made an impact on the Foreign
Investors to invest in India to certain extent.In the last decade,
the Indian brokerage industry has undergone a dramatic
transformation. From being made of close groups, the broking
industry today is one of the most transparent and compliance
oriented businesses. Long settlement cycles and large scale bad
deliveries are a thing of the past with the advent of T+2
settlement cycle and dematerialization. Large and fixed commissions
have been replaced by wafer thin margins, with competition driving
down the brokerage fee, in some cases, to a few basis points.There
have also been major changes in the way business is conducted.
Technology has emerged as the key driver of business and investment
advice has become research based. At the same time, adherence to
regulation and compliance has vastly increased. The scope of
services have enhanced from being equity products to a wide range
of financial services. Investor protection has assumed
significance,.
SOME BASICS OF STOCK AND CAPITAL MARKETThe money you earn is
partly spent and the rest saved for meeting future expenses.
Instead of keeping the savings idle you may like to use savings in
order to get return on it in the future. This is called
Investment.Why should one invest? Earn return on your idle
resources Generate a specified sum of money for a specific goal in
life Make a provision for an uncertain futureOne of the important
reasons why one needs to invest wisely is to meet the cost of
Inflation. Inflation is the rate at which the cost of living
increases. The cost of living is simply what it costs to buy the
goods and services you need to live. Inflation causes money to lose
value because it will not buy the same amount of a good or a
service in the future as it does now or did in the past.
What care should one take while investing? explaining the Obtain
written documents investment Read and understand such documents
Verify the legitimacy of the investment Find out the costs and
benefits associated with the investment Assess the risk-return
profile of the investment Know the liquidity and safety aspects of
the investment Ascertain if it is appropriate for your specific
goals Compare these details with other investment opportunities
available Examine if it fits in with other investments you are
considering Deal only through an authorized intermediary Seek all
clarifications about the intermediary and the investment Explore
the options available What is meant by Interest? When we borrow
money, we are expected to pay for using it this is known as
Interest. Interest is an amount charged to the borrower for the
privilege of using the lenders money. Interest is usually
calculated as a percentage of the principal balance (the amount of
money borrowed). The percentage rate may be fixed for the life of
the loan, or it may be variable, depending on the terms of the
loan.What factors determine interest rates?When we talk of interest
rates, there are different types of interest rates - rates that
banks offer to their depositors, rates that they lend to their
borrowers, the rate at which the Government borrows in the
Bond/Government Securities market, rates offered to investors in
small savings schemes like NSC, PPF, rates at which companies issue
fixed deposits etc. The factors which govern these interest rates
are mostly economy related and are commonly referred to as
macroeconomic factors. Some of these factors are: Demand for money
Level of Government borrowings Supply of money Inflation rate The
Reserve Bank of India and the Government policiesWhat are various
options available for investment?One may invest in:Physical assets
like real estate, gold/jewellery, commodities etc. Financial assets
such as fixed deposits with banks, small saving instruments with
post offices, insurance/provident/pension fund etc. or securities
market related instruments like shares, bonds, debentures etc.
What are various Short-term financial options available for
investment?Broadly speaking, savings bank account, money
market/liquid funds and fixed deposits with banks may be considered
as short-term financial investment options:Savings Bank Account is
often the first banking product people use, which offers low
interest (4%-5% p.a.), making them only marginally better than
fixed deposits.Money Market or Liquid Funds are a specialized form
of mutual funds that invest in extremely short-term fixed income
instruments and thereby provide easy liquidity. Unlike most mutual
funds, money market funds are primarily oriented towards protecting
your capital and then, aim to maximize returnsFixed Deposits with
Banks are also referred to as term deposits and minimum investment
period for bank FDs is 30 days. Fixed Deposits with banks are for
investors with low risk appetite, and may be considered for 6-12
months investment period as normallyWhat are various Long-term
financial options available for investment?Post Office Savings
Schemes, Public Provident Fund, Company Fixed Deposits, Bonds and
Debentures, Mutual Funds etc.Post Office Savings: Post Office
Monthly Income Scheme is a low risk saving instrument, which can be
availed through any post office. Public Provident Fund: A long term
savings instrument with a maturity of 15 years and interest payable
at 8% per annum compounded annually. A PPF account can be opened
through a nationalized bank at anytime during the year and is open
all through the year for depositing money. Tax benefits can be
availed for the amount invested and interest accrued is tax-free. A
withdrawal is permissible every year from the seventh financial
year of the date of opening of the account and the amount of
withdrawal will be limited to 50% of the balance at credit at the
end of the 4th year immediately preceding the year in which the
amount is withdrawn or at the end of the preceding year whichever
is lower the amount of loan if any.Company Fixed Deposits: These
are short-term (six months) to medium-term (three to five years)
borrowings by companies at a fixed rate of interest which is
payable monthly, quarterly, semi10 annually or annually. They can
also be cumulative fixed deposits where the entire principal along
with the interest is paid at the end of the loan period. Bonds: It
is a fixed income (debt) instrument issued for a period of more
than one year with the purpose of raising capital. The central or
state government, corporations and similar institutions sell bonds.
A bond is generally a promise to repay the principal along with a
fixed rate of interest on a specified date, called the Maturity
Date.Mutual Funds: These are funds operated by an investment
company which raises money from the public and invests in a group
of assets (shares, debentures etc.), in accordance with a stated
set of objectives. It is a substitute for those who are unable to
invest directly in equities or debt because of resource, time or
knowledge constraints
INTERNATIONAL STOCK EXCHANGE AND TRADINGInternational Online
Trading Scenario. In this chapter we will have a comprehensive look
taking the international share-trading scenario as a whole. We have
considered those particular continents, nations; those usually have
major influence in the various economic aspects of India. So, the
United States of America, United Kingdom and the entire European
Union, Australia, New Zealand and African countries as a whole.
UNITED STATES OF AMERICALet us start with the United States. A
brief set of information consisting of Stock Exchanges functioning,
online share broking firms, and the latest technology they are
offering for hassle free service for their customers etc. The
prominent online share broking firms are The Wall Street Journal,
DxDollars, Power Pointers Page, Xdrive, Saxo Bank etc. These firms
are providing online as well as offline facilities to their
customers. The salient features the organizations are offering are
as:1. Online Broker List - This section contains a comprehensive
list of brokers that will allow you to trade online. Make sure to
investigate them thoroughly before choosing an online share-trading
firm. 2. Broker Ranking Resources - These sites have their own
broker performance data and rankings, if you're looking for info on
a single specific broker, or just want another opinion.3. After
Hours Resources - Use the sites in this section to get information
about how and where to trade stocks after the markets have closed
for the day.4. After hours online trading - This listing contain
sites that will allow you to trade stocks after hours.5. Exchanges
- This section contains a listing of stock exchanges throughout the
US and around the world. The sites can often be used to investigate
stocks that are traded on a given exchange. This can be especially
useful for international stocks that may be difficult to research
due to a lack of readily available information.6. International
Online Trading - Thanks to the Internet, it has become much simpler
to analyze and participate in international investment
opportunities. Once you have thoroughly researched global
opportunities, use the sites in this section to trade stocks around
the world.7. ECNs - Electronic Communications Networks (ECNs)
represent orders in Nasdaq stocks, internally matching buy and sell
orders or representing the highest bid prices and lowest ask prices
on the open market. The benefits of trading with an ECN include
after hours trading, avoiding market makers (which charge a
spread), and anonymity (which is often important for large trades).
This section contains a listing of ECNs that are available for your
trading needs.8. Scripophily - This section contain links to sites
that specialize in old stock certificates and Broking houses in
IndiaIndia is a country having a big list of Broking Houses. The
Equity Broking Industry in India has several unique features like
it is more than a century old, dynamic, forward looking, and good
service providers, well conversant, highly innovative and even
adaptable. The regulations and reforms been laid down in the Equity
Market has resulted in rapid growth and development. Basically, the
growth in the equity market is largely due to the effective
intermediaries. The Broking Houses not only act as an intermediate
link for the Equity Market but also for the Commodity Market,
Foreign Currency Exchange Market, and many more. The Broking Houses
has also made an impact on the Foreign Investors to invest in India
to certain extent.In the last decade, the Indian brokerage industry
has undergone a dramatic transformation. From being made of close
groups, the broking industry today is one of the most transparent
and compliance oriented businesses. Long settlement cycles and
large scale bad deliveries are a thing of the past with the advent
of T+2 settlement cycle and dematerialization. Large and fixed
commissions have been replaced by wafer thin margins, with
competition driving down the brokerage fee, in some cases, to a few
basis points.There have also been major changes in the way business
is conducted. Technology has emergedas the key driver of business
and investment advice has become research based. At the same time,
adherence to regulation and compliance has vastly increased. The
scope of services have enhanced from being equity products to a
wide range of financial services. Investor protection has assumed
significance,. 9. Traders World - Offers articles, software, and
newsletters on the financial markets for subscribers.10. Domestic
Securities ATTAIN System - An order display alternative to the
traditional market making price quote system on the Nasdaq. The
ATTAIN ECN allows its subscribers immediate and direct posting of
orders to the ATTN book.11. Day Trader - Brings insight, ideas,
trading techniques, and innovative thinking to investors looking to
trade the financial markets. This is all shown to you via the
actual trading journals, diaries, or so-called "trade blotters" of
an experienced Day Trader.12. Day Traders Online - Fee-based site
offering a morning stock market report, access to their real-time
trading room, and access to their news desk. free trial is
available.13. Daytradingstocks.com - A virtual community for day
traders that offer message boards, book reviews, and brokerage
reviews. Free registration is required for some of the site's
features.Over the last two decades the constant upward
translocation in the trends of online share trading in The USA has
been perfectly described below.
COMPANY PROFILE
COMPANY PROFILE
India Info line Securities Pvt. Ltd.
Knowledge is power and power brings security. Risk is a very
relative term and changes with every individual and situation.
Financial management is not just about managing risk but also
managing knowledge and finally deriving answers that generate
wealth, security and trust.
VISION
Vision is to be the most respected company in the financial
services space.To be the premier provider of investment advisory
and financial planning services in India.
PUNCH LINE: ITS ALL ABOUT MONEY, HONEY!
HISTORY IN BRIEF
India Info line originally incorporated on October 18, 1995 as
PROBITY RESEARCH AND SERVICES PVT LTD. at Mumbai under the
Companies Act, 1956 with Registration No.1193797, became a public
limited company on April 28, 2000. The name of the Company was
changed to India Infoline.com Limited on May 23, 2000 and later to
India Info line Limited on March 23, 2001. The objective was to
provide unbiased and independent information to market
intermediaries and investors. The quality of research was so good
that soon it caught the imagination of all major participants in
the financial marketing. In a very short period they started
providing research report to consulting firms like Mckinsey,
companies like HUL, banks like Citibank etc.In 1999, the company
made all the research report free on the web and as a result the
number of user increases from mere a thousand to lacks in a very
short period of time. The company got the financial support from
venture capitalists and private equity investors. They raised US $
1 million in first round and in March 2000 again US $5 Million.In
2001, the company faced the worst situation. The dot com suffix,
which was sexiest to them suddenly, became the worst stigma. The
company was planning to set up a TV channel but circumstances
forced them to jettison the plan. IIL decided to narrow its focus
on businesses where it could leverage its core competencies to the
maximum. The key business lines that emerged were mutual funds,
life insurance and E-broking. The company became heavily dependent
on its e-broking businesses for survival. The odds were against
them. There was no money available from the private equity investor
at any valuation. All competitors were backed by institution or had
abundant capital. The core promoters of the company had little
experience of broking. To add to it, the market was hit by a scam.
They also had their share of price to pay and lessons to learn. It
was difficult to retain people. Although devastating for morale but
not surprising, the most market observers had written them
off.There was a core group who never lost hope. They cut all
possible costs and worked on a bare bones structure. They survived
against all odds started capturing market share. Not broking alone
but mutual fund life insurance business also grew strongly. The
company rose from strength to become the leading corporate agent in
life insurance and among top retail players in mutual fund and
broking space. It is the first Company in India to foray into the
online distribution of Mutual Funds.It is a one-stop financial
services shop, most respected for qualityof its advice,
personalized service and cutting-edge technology. The No.1Corporate
agent for ICICI Prudential Life Insurance Company, Research
acknowledged by Forbes as Must Read for investor in South Asia.
Listed on Bombay and National Stock Exchange with a net worthof
INR 200 Crore and a market cap of over INR 1970 Crore.
In 2005, IIL came with an IPO and raised Rs. 75 Crores from the
market. The issue price was Rs. 76.The IPO was 7.22 times
oversubscribed. The company after that never looked back and
started entire gamut of investments products from risk free RBI
bonds to high-risk, high rewards equities and also mutual funds and
life insurance. They also forayed into portfolio management
services and commodities broking, again leveraging upon their core
competencies in research and technology. In the last ten years,
India Info line has faced numerous ups and downs, but has never
compromised on integrity. They continue to ensure highest standards
of corporate governance.
BUSINESS DESCRIPTION
The India Info line group, comprising the holding company, India
Info line Limited and its wholly-owned subsidiaries, straddle the
entire financial services space with offerings ranging from Equity
research, Equities and derivatives trading, Commodities trading,
Portfolio Management Services, Mutual Funds, Life Insurance, Fixed
deposits, Gold, Bonds and other small savings instruments to loan
products and Investment banking. India Info line also owns and
manages the websites www.indiainfoline.com and www.5paisa.com. The
company has a network of 976 business locations .BRANCHES AND
SUB-BROKERS
Spread across 365 cities and towns. It has more than 800,000
customers. It is registered with NSDL as well as CDSL as a
depository participant.
PILLARS OF THE ORGANIZATION
unlike others, India Info line has the concept of an Investment
Team.
The brains behind all the investment strategies and decisions
regarding Wealth Management Services are:
Advisor Executive director
Mr. Nirmal Jain Mr.R Venkataraman
PRODUCT OFFERINGS
Providing in house research based advice on selected stocks
Advise on portfolio management services
Products that offer our clients unique risk -reward equation
that are customized their investment objectives
Research based recommendation on top picks in mutual fund
Life & General insurance advisory
Advise on investment in art through fund structure
Bullion buying and selling
Advising and facilitating financing select IPO based on our in-
hours research
Provide overdraft facility against collateral of shares/ MF
units
Provide term loan facility against collateral of shares/ MF
units
Background of India Infoline Ltd
India Infoline Securities Limited, axy Promoter Group Company,
was founded by late Dr. Parvinder Singh (CMD Ranbaxy Laboratories
Limited), with the vision of providing integrated financial care
driven by the relationship of trust & confidence. To realize
its vision the India Infoline group provides various financial
services which include broking (stocks & commodities),
depository participant services, portfolio management services,
advisory on mutual fund investments and many more. Working on the
philosophy of being Financial Care Partner, India Infoline unlike
other traditional broking firms not only executes the trades for
the clients but also provides them critical and timely investment
advice. The growing list of financial institutions with which India
Infoline is empanelled as an approved broker is a reflection of the
high levels of service standard maintained by the company. India
Infoline is a truly professional financial service provider managed
by a team of highly skilled professionals who have proven track
record in their respective domains. India Infoline has the widest
reach through its Regional, Zonal and Branch Offices spread across
the length & breadth of the country. Now days India Infoline is
driven by ethical and dynamic process for wealth creation. Based on
this, the company started its endeavor in the financial market. An
ISO 9001 : 2000 company Member of National Stock Exchange (NSE)
since November 1994, first deposit based Member of BSE.
Depository Participant with - National Securities Depository
Limited (NSDL) since July 2000- - Central Depository Services
(India) Limited (CDS) since February 2003 SEBI Approved Portfolio
Manager Working on the Philosophy of being Financial Care Partner
In a span of less than five years of its retail operations, FSL
recorded a healthy growth rate both in business volumes and
profitability. India Infoline is among the very few stock market
intermediaries to having very sound based capital and healthy net
worth.. India Infoline aims to have its footprint all across the
country by the end of year so that it may add value to the
investing community in the country. India Infoline Limited (A
Ranbaxy Promoter Group Company) through India Infoline Limited,
Religare Finevest Limited, India Infoline Commodities Limited and
India Infoline Services Limited provides integrated financial
solutions to its corporate, retail and wealth management clients.
Today, we provide various financial services which include
Investment Banking, Corporate Finance, Portfolio Management
Services, Equity & Commodity Broking, Insurance and Mutual
Funds. Plus, theres a lot more to come your way.
PRESENCE
India Infoline is present in more than 150 branches all over
India and the target is to cross 350 branches very soon. Our
branches are fully equipped with high bandwidth internet lines and
high end computers i.e. the latest IT tools. There are efficient
branch managers and dealers to give you tips of highest quality and
accuracy with support from our analysts. Our branches would make
you feel like doing business in Dalal Street however, in a more
sophisticated manner. You get to work with more traders and learn
more and also trade more.
INFRASTRUCTUREOfficesThe company has offices located at prime
locations in Mumbai, New Delhi, Kolkatta and Chennai. The offices
are centrally located to cater to the requirements of institutional
and corporate clients and retails clients, and for ease of
operations due to proximity to stock exchanges and banks. Today, we
have a growing network of 150 branches and more than 300 business
partners spread across 180 cities in India and a fully operational
international office at London. However, our target is to have 350
branches and 1000 business partners in 300 cities of India and more
than 7 International offices by the end of 2011.
OBJECTIVE OF THE STUDY
The objective of the project is to identify, understand and
analyze the comparison of stock market. The main focus will be on
understanding, analyzing and providing a valid explanation both
theoretically and technically, that how various comparisons in
between the Indian stock market and foreign stock market. By
undertaking this study I would like to keep my step in the field of
research. This project will help me in enhancing my analytical
skills and will give me a better understanding of how things move
on and are to be studied. At the same time with this study I will
be providing the organization a list of factors that affect the
market, so that they can keep a watch on the same and use the same
for the benefit of clients and company and also increase their
accuracy and profits. This will be my contribution to this huge
company.
SCOPE OF STUDY
It gave me an opportunity to study the stock market in a
detailed manner. I got knowledge of prevailing Market Scenario. It
helped me in learning the market dynamics, study the movement of
share prices and to give a proper justification for the same,
theoretically and technically. It helped me in understanding and
learning the corporate culture And above all, the concerned
organization can get some valuable recommendations, which can
definitely improve the performance of the organization
LITERATURE REVIEWIn 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. 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. There are mainly two types of Portfolio
management strategies. Passive Portfolio Strategy Active Portfolio
Strategy1. Passive Portfolio Strategy: A strategy that involves
minimal expectation input, and instead relies on diversification to
match the performance of some market index. A passive strategy
assumes that the marketplace will reflect all available information
in the price paid for securities2. Active Portfolio Strategy: A
strategy that uses available information and forecasting techniques
to seek a better performance than a portfolio that is simply
diversified broadly.
IMPORTANCE OF STUDY
The PURPOSE of the report is to analyze the comparative study of
stock market. It is of great importance to understand, learn and
analyze the same. Thus, this report is a move in path of
understanding those factors and analyzing the impact of the same.
Journals, diaries, or so-called "trade blotters" of an experienced
Day Trader.
RESEARCHMETHODOLOGYUSED.
Research methodology is a systematic way, which consists of
series of action steps, necessary to effectively carry out research
and the desired sequencing to these steps. The marketing research
is a process of involves a no. of inter-related activities, which
overlap and do rigidly follow a particular sequence. It consists of
the following steps:- Formulating the objective of the study
Designing the methods of data collection Selecting the sample plan
Collecting the data Processing and analyzing the data Reporting the
findings
Objective of Study
Research Design
Sample Design
Data Collection
Data Analysis
Report of findings
DATA COLLECTIONPrimary data collection:- primary data are those
which are collected a fresh & for the first time. Personal
unstructured interview of the employee of the bank. Distribution of
the questionnaires among the bank employee to gather
information.Secondary data collection:- secondary data which has
already been collected & analyzed by some one else. Documents
given by bank. Internet information & websites. Book &
magazines. Information given by customers Registration kit and
information broacherDATA ANALYSIS-{BASED ON INVESTORS OF SHARE
MARKET IN VARIOUS REGION OF Meerut} Representing in the form of
table & chart.There are some areas of Ghaziabad region from
where I got the investors response which are already invests their
money in share market through India Info line. From where I found
some persons either most satisfied or least satisfied. Analysis is
given below:
PALLAV PURAMIn this area 11 % investors are dissatisfied, 17 %
satisfied, 28 % good, 44 % excellent.
PALLAV PURAM
11 % DISSATISFIED 17 % SATISFIED
28 % GOOD
44 % EXCELLENT
According to this diagram 11% dissatisfied,28% good17% satisfied
and 44%excellent because some problem are related to the awareness
of stock market.
GANGANAGARIn this area 17 % investors are dissatisfied, 22 %
satisfied, 22 % good, 39 % excellent.
GANGANAGAR
17 % DISSATISFIED 22 % SATISFIED
22 % GOOD
39 % EXCELLENT
39%22%22%17%EXCELLENTGOODSATISFIED DISSATISFIED According to
this diagram 17% dissatisfied, 22% good 22% satisfied and
39%excellent because some problem are related to the awareness of
stock market.
P.L SHARMA ROADIn this area 6 % investors are dissatisfied, 22 %
satisfied, 33 % good, 3%excellent.
P.L SHARMA ROAD
6 % DISSATISFIED 22 % SATISFIED
33 % GOOD
39 % EXCELLENT
According to this diagram 22% dissatisfied, 33% good 22%
satisfied and 39%excellent because some problem are related to the
awareness of stock market.
SAKET
In this area 17 % investors are dissatisfied, 22 % satisfied, 28
% good, excellent.
SAKET
17 % DISSATISFIED 22 % SATISFIED
28 % GOOD
43% EXCELLENT
43%28%22%17%EXCELLENTGOODSATISFIED DISSATISFIED
According to this diagram 17% dissatisfied ,28% good 22%
satisfied and 43%excellent because some problem are related to the
awareness of stock market.
Market Research Analysis
Interpretation: This shows that although the mutual fund market
is on rise yet, the most favored investment continues to be in the
Share Market. So, with a more transparent system, investment in the
Stock Market can definitely be increased.
Awareness of online share trading
Interpretation: With the increase in cyber education, the
awareness towards online share trading has increased by leaps and
bounds. This awareness is expected to increase further with the
increase in internet education.
Awareness of India Info line Ltd in as a Brand Interpretation:
This pie-chart shows that India Infoline Ltd has reasonable amount
of Brand awareness in terms of a premier Retail Stock Broking
Company. This brand image should be further levered by the company
to increase its market share over its competitors.
Awareness of India Info line Ltd Facilities Interpretation:
although there is sufficiently high brand equity among the target
audience yet, it is to be noted that the customers are not aware of
the facilities provided by the company meaning thereby, that the
company should concentrate more towards promotional tools and
increase its focus on product awareness rather than brand
awareness
DEMAT Account MarketInterpretation: This shows that even with
sufficiently high Brand Equity India Info line Ltd ranks only 3rd
amongst the Demat Account providers. This is probably because of
two main reasons.
1. Lack of promotion and unfocussed approach towards Product
awareness.2. Non transparent marketing policies of the company.
Hence, the company should crystallize its products and should
indulge in aggressive marketing and promotion.
Satisfaction Level among Customers with Current Broker
Interpretation: This pie-chart accentuates the fact that
Strategic Marketing, today, has gone beyond only meeting sales
targets and generating profit volumes. It shows that all the
competitors are striving hard not only to woo the customer but also
to make them Brand loyal by generating customer satisfaction.
Frequency of Trading Interpretation: In spite of the huge
returns that the share market promises, we see that there is still
a dearth of active trade and investors. This is because of non
transparent structure of the Indian share market and the skepticism
of the target audience that is generated by the volatility of the
stock market. It requires efficient bureaucratic intervention on
the part of the Government.
Percentage of Earning Invested In Share Trading
Interpretation: This shows that people invest only up to 10% of
their earnings in the stock market, again reiterating the volatile
and non-transparent structure of the Indian stock market. Hence,
effective and efficient steps should be undertaken to woo the
customers to investment more in the lucrative stock market. Rating
of Share Trading Companies Interpretation: The survey indicated
that people ranked India Infoline Ltd at the 3rd position as an
online stock broking company. Even after relatively low brokerages
and better services being provided in competitors, India Infoline
Ltd is not at top spot because of ineffective marketing and
promotion strategies. Hence, the company should indulge in to
aggressive marketing and promotional methods and should approach
this problem in a more structured format.
SWOT ANALYSIS
A SWOT analysis focuses on the internal and external
environments, examining strengths and weaknesses in the internal
environment and opportunities and threats in the external
environment.
STRENGTHSSERVICEAs products of India Infoline Ltd is a extremely
innovative product with very less cost. Services like online
trading facility, institutional and domestic broking, customized
research reports with almost 80% efficiency etc give India Infoline
Ltd an edge over its competitors. India Infoline Ltd provides other
support services that make retail investors more confident and
assured with their trading. SMS alerts (allowing traders and
investors to make the most of the available opportunities), Softer,
intangible features like imagery, equity driving preference.
Through efficient trading processes Investors can place their
orders directly on the Internet, do all the information seeking and
basically own the investing processDistribution NetworkWe have a
growing network of 150 branches and more than 300 business partners
spread across 180 cities in India and a fully operational
international office at LondonOUR target is to have 350 branches
and 1000 business partners in 300 cities of India and more than 7
International offices by the end of 2006.Unlike a traditional
broking firm, India Infoline Ltd group works on the philosophy of
partnering for wealth creation.
ProductsCompanys product line is quite flexible in the sense
that there is a product for every kind of investors. Also all the
products cover all the loop holes of all the products offered by
the other competitors like low cost, user friendly online trading
services etc.
Weakness
Branding
Though the company has efficient products but large part of
investment interested population does not know the company. The
most basic expectation for a trader or investor when one begins
trading is that one must get timely delivery of shares and proceeds
from sale of shares. Also ones cash balances with the broker must
be safe and secure. Though this confidence in the broker comes with
time and experience, good and transparent practices also play a
major role in imbibing confidence in tradersCompetition from
BanksMost of the banks due to good branding have the faith of the
customers of their banking database. So they enjoy the liberty of
huge database and customers find it more reliable to trade there
rather than with a unknown broker. Also banks like HDFC Bank and
ICICI Bank have the advantage of linking the trading accounts of
their customers to saving accounts. This makes trading easier, and
at the same time a trader withdraws exactly as much money from his
account as is needed to complete the trade. Similarly sales
proceeds are credited directly to saving account
OPPORTUNITIESThe external environment analysis may reveal
certain new opportunities for profit and growth. Ever-Increasing
MarketAfter the NSE brought the screen based trading system stock
markets are now more secured which has attracted lot of retail
investors and the demand is increasing day by day. This has
resulted in improved liquidity and heavy volumes on transactions.
India Infoline Ltd is one of the early entrants here. As to how
much it will roar and how swift it can swoop on the market, the
future alone can answer such queries. India Infoline Ltd has been a
mega player and is known for being a mover of stocks. It is also
known for putting big deals through and enjoys good networking with
the FIIs. It has been dynamic enough to move with the times and
capture the opportunities that the market throws up from time to
time.Improving TechnologyIn country like India technology is always
improving which gives the company a chance to keep on improving
their product with time whereas for the small players like local
brokers it will be difficult to keep the same pace as the changing
technology. Also with SEBI lying down some strict guidelines small
brokers are finding it harder to retain the customers with no
research department and small capital. The traditional business
model is highly dependent on a large network of sub-brokers, and
many established players may not have systems (technology, customer
service, etc.) capable of directly servicing so many retail
customers.
Unfulfilled Needs of the CustomersWith so many competitors
offering their products in the market but no one is able to
completely satisfy the customers. Some have the problem of lack of
information or some were scared of volatility of the stock markets.
India Infoline Ltd has the opportunity to tap this unsatisfied set
of customers and to make hold in the market. The Internet serves to
break all barriers to information, as it offers an extremely
hassle-free investing platform. And, India Infoline Ltd hopes to
fully utilize and capitalize on this platform. This original idea
by India Infoline Ltd itself was born out of the consumer's need
for a more transparent, easy to understand and convenient option of
investing in stocks.Education LevelThe education level in the
country is improving year after year as far as technology goes.
With that the understanding of the stock market is also increasing
and a lot of retail investors are steeping in the markets which are
being shown by increasing volumes, transactions and indices.
THREATSNew CompetitorsA lot of new competitors are trying to
enter the market in this bullish run to taste the flavor of this
cherry. This is creating a lot of competition for large players
like India Infoline Ltd and it is creating little confusion in the
minds of the customers about the services provided by the broker.
Also many banking firms are entering into the market with huge
investment. Competitors like ICICI, kotuku; HDFC, 5-paisa etc. are
posing a lot of threats to the company.Technology Based
BusinessOnline trading is totally based on the technology which is
quite complex. Typically, the technology solution has to start from
the Internet front-end (or the screen that you see when you begin
trading). Then it needs to get into the 'middle tier' of risk
management systems that assess data from banks and depository
participants (DP), calculate client risk at that point in time, and
give the 'Go/No go' advice to the trade. So technology is a kind of
threat because unless until it is working properly it is good
.s
FINDINGS AND RESULT
FINDINGS
During the Customer Awareness about Share Trading main points
that came into focus are:
Dematerialization is basic tool of share trading. Equity fund is
not complicated. It is clear and specific fund. By the increase in
demand of equity, company can get more profit. The current
knowledge is very compulsory and all the event occurring in the
world are also mention for better profit. Market is uncertain and
fluctuates by a tiny event.
The analysis of all the stock market leads us to: Some findings
and Result- While I was doing the project I came across so many
investors, I studied their behavior, Their reactions, I studied
various research reports, news articles, and from all that I could
Find out that each and every thing, whether a minute one or a big
one, affects the Investors decision and thus affect the share
prices. I have listed some factors in the report which affect the
share prices, also I have done a Technical analysis for the same,
but what comes out at the end is that there are still so many
unnoticed factors which affect the share prices. This list is not
exhaustive; still there is so much which needs to be studied and I
tried to cover as much as I could. From the analysis, I could find
out and conclude that, the Share Prices are affected by Each and
every factor in varying degree. The analysis shows that there is a
very small impact of Interest Income, Advances, Deposits,
Borrowings and a slightly more impact of Bank Nifty Index on Share
Prices. It is so because there are N numbers of factors and it was
not possible to quantify each one of them and conduct the analysis,
there were some technical difficulties also which turn out to be
the limitation of the project. But at the end of the analysis we
can ACCEPT THE HYPOTHESIS, as most of the factors, do affect the
Share Prices in some or other manner. From the one and half month
training at India Info line, I could get that INVESTORS SENTIMENTS
work out most for the market dynamics, this is the most significant
factor which affect Share Prices drastically in either of the
direction. A latest example I can quote is the post election result
session on Monday, 18 May, 2009, when Investors were happy that UPA
government was back into power and the market jumped thousand
points up. Talking about the investors, what I can suggest them
from my study is that they should be very careful while investing
in the Stock Market. The market is simply UNPREDICTABLE. One should
do a proper and detailed analysis before investing in stocks. Banks
shares are pretty safe, as I could find from the analysis. The
Banking Sector is ever growing and thus money invested in it would
always give you good returns. But still one should beware of the
Markets unpredictable ups and downs. This report is of great help
to the company and investors. They can use the analysis and draw
conclusions. Also they can do their own analysis if they want
keeping this Analysis as a base. They can use the tools and
techniques to take decision and play safe in the market.
LIMITATIONS OF THE STUDY
Though the resources seem sufficient enough to achieve high
standard for this research, still we foresee the following
limitations of study. The Sector is very vast and it was not
possible to cover every nook and corner of this sector. The
objective which we want to fulfill in this project is really good,
but the major demerit to our study is the availability of time for
our search and analysis, but then also, I have tried my level best
to show a glimpse of my Research in tune with the objectives.
CONCLUSION
On the basis of the study it is found that India infoline is
better services provider than the other stockbrokers because of
their timely research and personalized advice on what stocks to buy
and sell. India infoline provides the relationship manager facility
for encouragement and protects the interest of the investors. It
also provides the information through the internet and mobile
alerts that what IPOs are coming in the market and it also provides
its research on the future prospect of the IPO.Study also concludes
that people are not much aware of commodity market and while its
going to be biggest market in India. From the above survey and
observation it is found that most of the people who are trading in
share market belongs to the employee group, next comes the business
men and other class of income people. As the share market value
goes on increasing day by day the investor who wants to invest in
shares also increasing. But investing in shares is as risky as
earning yield.Trading in online trading firm is easy as it all
delivered with internet and within a few minutes the customer can
buy and sell shares which save time as well as reduction of paper
work. Hence trading in share market is increasing day by day and
investors are ready to invest their investment in share market
only.I got the knowledge about the customers needs and their
references for having a particular product. The need of customers
differs from person to person, area, locality and occupation.
Customer always wants more service by paying less.They expect all
the information such less rates, less brokerages, highly returns
and better service level without delay.
SUGGESTIONS / RECOMMENDATIONS
Provide the facility of free demonstrations for all Improvement
in the opening of De-mat & contract notice procedure is
required There should be a limited number of clients under the
relationship manger. So that he can handle new as well as old
customer properly Some promotional activities are required for the
awareness of the customer People at young age should be encouraged
to invest in stock market Seminars should be more held for
providing information to prospective and present customers In the
organization, There must me be co-operation with other department
and other branches Company should make more promotional activities
by giving advertisements and publicity. Give more demonstration to
customers so that they can get complete knowledge about online
trading Give the complete information about products and services
offered by the company to the customers. The number of branches it
has at present should be increased all over the country, which will
attract a large number of customers. Company should educate about
the rules and regulations of SEBI to its customers.
REFERENCES AND BIBLIOGRAPHY
Books(1)Chandra P - Investment Analysis and Portfolio Management
(Tata Mc Graw Hill, 2008)2) Fischer and Jordan - Security Analysis
and Portfolio Management (Prentice-Hall, 1996, 6th edition)3)
Ranganatham - Investment Analysis and Portfolio Management (Pearson
Education, 1st Ed.)4) Pandian P - Security Analysis and Portfolio
Management (Vikas, 1st Ed.)5) Bodie, Kane, Marcus & Mohanti -
Investment and Indian Perspective (TMH, 6th Ed.).
Websites www.usectrade.com www.angeltrade.com
www.indianshareshistory.com www.bseindia.com
www.statebankofindia.com www.moneycontrol.com News Papers Times of
India Business Standard Economic times
ANNEXURE
QUESTIONNAIRE1. Would you like to invest in the stock market?(a)
Yes (b) No2. If not why?(a) Lack of Knowledge(b) Feel its Risky(c)
No time(d) Dont have money3. Do you know about online share
trading?(a) Yes(b) No4. Does u have Demat & Trading A/C?(a)
Yes(b) No5. In which Brokerage house y