project on religare

7/29/2019 project on religare

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INTRODUCTION TO THE TOPIC

ONLINE TRADING

Online trading can be described in simple words as the internet based investment activity

that involves no direct involvement of the broker. There are many leading online trading

portals in India along with the online trading platforms of the biggest stock houses like the

National stock exchange and the Bombay stock exchange. The total portion of online share

trading India has been found to have grown from just 3 per cent of the total turnover in 2003-

04 to 16 per cent in 2006-07.

Traditionally stock trading is done through stock brokers, personally or through telephones.

As number of people trading in stock market increase enormously in last few years, some

issues like location constrains, busy phone lines, miss communication etc start growing in

stock broker offices. Information technology (Stock Market Software) helps stock brokers in

solving these problems with Online Stock Trading. Online trading, or direct access trading

(DAT), of financial instruments has become very popular in the last five years or so. Now

almost all financial instruments are available to trade online including stocks, bonds, futures,options, ETFs, forex currencies and mutual funds.

Online trading differs in many things from traditional trading practices and different

strategies are needed for profiting from the market. In traditional trading, trades are executed

through a broker via phone or via any other communicating method. The broker assist the

trader in the whole trading process; and collect and use information for making better trading

decisions. The whole process is usually very slow, taking hours to execute a single trade.

Long-term investors who do lesser number of trades are the main beneficiaries. In online

trading, trades are executed through an online trading platform (trading software) provided by

the online broker. The broker, through their platform offers the trader access to market data,

news, charts and alerts. Day traders who want real-time market data are provided level 1.5,

level 2 or level 3 market accesses. All trading decisions are made by the trader himself with

regard to the market information he has. Often traders can trade more than one product, one


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market and/or one ECN with his single account and software. All trades are executed in

(near) real-time. In return of their services online brokers charge trading commissions (which

is often very low - discount commission schedules) and software usage fees. The investor has

to register with an online trading portal and get into an agreement with the firm to trade in

different securities following the terms and conditions listed down on the agreement. The

order processing is done in correct timings as the servers of the online trading portal are

connected to the stock exchanges and designated banks all round the clock. They can also get

updates on the trading and check the current status of their orders either through e-mail or

through the interface. Brokerages also provides research content on their websites, such that

the clients can take their own decisions on stocks before investing.

The onset of online trading changed the traditional value proposition of trading, allowing

online brokers to supply investors with rich, interactive information in real time including

market updates, investment research and robust analytics. The result is an integrated trading

experience that combines execution with interactive analysis shown by the growth of the

online customer community from a mere 23000 average trades on NSE per day in a year

2000 to over 52000 average trades in 2002.

In spite of many private stock houses at present involved in online trading in India, the NSE

and BSE are among the largest exchanges. They handle huge daily trading volumes,

supporting large amounts of data traffic, and possessing a countrywide network. The

automated online systems used for trading by the national stock exchange and the Bombay

stock exchange are the NIBIS or NSE's Internet Based Information System and NEAT for the

national stock exchange and the BSE Online Trading system or BOLT for the Bombay stock

exchange. Although the information technology revolution has reduced distances and created

a global village, only a few, isolated pockets in India are privy to these facilities and the

inherent advantages that stem from the Net. And yet, for the business savvy stockbroker,

these isolated IT villages have thrown up tremendous opportunities. With just two

technologies to choose from, Internet-based stock trading is still in its infancy in the country.

Thus, there is limited choice for early entrants NSE.IT and Financial Technologies. These

technologies offer front-end trading software, by providing the investor with a trading


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platform. For the broker, they act as an interface between the stock exchange, the bank and

the depository participant (DP) for executing banking and securities transactions.

The essential component of Internet based trading is the interface between broker, bank and

DP. A broker-bank-DP is the best combination to begin Internet trading, but experience has

shown that it is not mandatory that all three are in position before Internet-based trading

commences. As Internet trading becomes a reality, the interface will develop with enquiries

from interested parties. Here, ICICI, with its bank, stock-broking unit and DP, has a distinct

advantage. However, early players are not likely to face a shortage of suitors in the form of

banks and DPs. Later, as competition heats up and the market gets crowded, only the majorplayers are likely to survive. The entry of ICICI has also tested available financial

technologies and found the broker-banker-DP interface to be efficient. With this interface, the

broker can control the exposure of the client on a real-time basis and also fix advance

exposure limits on the basis of the deposit with the broker or on the basis of the brokers own

credit assessment of the client. In the perspective of overall risk management of the Net

broker, the system provides a flawless control mechanism which, in any case, is essential

when dealing with faceless customers. In fact, trading is only a logical extension of the

computer-to-computer link allowed by the NSE, and hence the broker will be in a position to

provide value additions, either on his own or through the software vendor. Advantages to

clients traditionally, investors have been doing stock transactions with their broker either by

placing orders on the phone or by visiting the brokers offices. During times of heightened

market activity, investors find it difficult to get the broker on telephone or fax. Even if the

client goes to the brokers office, the attention he gets on a busy day is based on the size of

his order, often resulting in frustration, arguments and disputes. For Geojit, the biggest

motivation to enter Net-based trading bandwagon was this situation. Even after installing 25

telephone lines in the companys Cochin office, clients still complained that they did not get

through. The retail broking business is a mass business activity and a broking company

cannot afford to have dissatisfied clients. Internet trading is the only solution to this problem

and investors will have the facility to trade as and when they want, provided they have a Net

connection. Soon there will be a differential brokerage system, and clients who trade through

the Net will be able to do it with a lower transaction cost compared to traditional brokers.

This trading system helps the broker to expand his business. Traditionally, brokers were


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hesitant to expand in a big way as there were problems in dealing with unknown clients. In

this system, security features can be built in, with the broker himself providing the degree of

safety he requires. Without much capital investment, the broker will be able to enlarge his

client base. With just one office in the metro, the broker will be able to do business with

many times the number of existing clients. Major issues Internet-based trading, to become

really popular, should have both seamless trading and seamless settlement, whereas now only

the former is possible. This prevents the Internet broking community from announcing large-

scale reductions in brokerage. Ease of trading and settlement along with reduction in

transaction costs is what investors look for in the new system. Hence, bankers and DPs will

have to change their systems to enable seamless settlements. At present, when the client pays

an advance deposit, the broker fixes the exposure limit, and if there is a sudden fluctuation inthe share price, the client is not able to trade unless funds move to the broker physically. This

process takes a minimum of two days, by which time the price would have changed. The

ideal situation is where the client is able to trade on the basis of his deposit in the bank, which

will be accessible to the broker through networking. Another serious issue is the efficiency of

the Internet infrastructure in the country, which affects the speed of execution. During the

day, traffic is so great that either the line is not available or it is frustratingly slow, defeating

the very purpose of Net-based trading. In short, seamless settlement of Net transactions and

improvement of the Internet infrastructure are of vital importance for exponential growth of

Internet-based trading.

The advent of Internet-based trading in the country will change the face of the Indian capital

market very soon in terms of the volume of transactions, the nature and settlement of trade,

and the profile of market participants. Soon, Internet brokers will announce a flat rate per

transaction instead of the present system of calculating brokerage as a percentage of the

value. If the system enables the Internet broker to have seamless trading and settlement

through the network, there is no cost differential between a trade of Rs 50 lakh and a trade of

Rs 5. The broker will straightaway announce his per-trade brokerage in absolute numbers.

When this happens, it will be a rude shock to the broking community unless it changes very

fast. Today, as per NSDL statistics, we have only 2.4 million investors with demat accounts

in the country. Considering various investor combinations that are holding accounts, we can

presume the country has roughly 5-7.5 lakh active investors now. This figure is unbelievably


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small compared to the potential number of investors, which is anything between 200 million

and 250 million. When we take into consideration the way transaction risk and cost in the

Indian capital market is coming down, there will be a massive surge in the number of

investors and also in volumes. The only way to manage this kind of potential growth is toadopt state-of-the-art trading techniques. The growth of Internet-based trading as a mass

trading technique in the country is unstoppable, going by the indicators available and the

signals for the future. When it ultimately gathers momentum, the biggest beneficiary will be

the investor, who will be able to trade with greater speed and transparency, and at lower

costs.

There are two different types of trading environments available for online equity

trading:

a) Installable software based Stock Trading Terminals

This trading environment requires software to be installed on investors computer. This

software is provided by the stock broker. This software requires high speed internet

connection. These kind of trading terminals are used by high volume intraday equity traders.

Advantages:

i) Orders directly send to stock exchanges rather than stock broker. This makes order

execution very fast.

ii) It provides all the information which is required to a trader on a single screen including

stock market charts, live data, alerts, stock market news etc.

Disadvantages:

i) Location constraint is there as one cannot trade if one is not on the computer where he has

installed trading terminal software.


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ii) It requires high speed internet connection.

iii) These trading terminals are not easily available for low volume share traders.

b) Web (Internet) based trading application

This kind of trading environment doesn't require any additional software installation. They

are like other internet websites which investor can access from around the world through

normal internet connection.

Advantages of Online Stock Trading (Website based):

i) Real time stock trading without calling or visiting broker's office.

ii) Display real time market watch, historical data, graphs etc.

iii) Investment in IPOs, Mutual Funds and Bonds.

iv) Check the trading history; demat account balance and bank account balance at any time.

v) Provide online tools like market watch, graphs and recommendations to do analysis of

stocks.

vi) Place offline orders for buying or selling stocks.

vii) Customers can modify the placing orders according to the market movements.

viii) Set alert to inform you certain activity on the stock through email or SMS.

ix) Customer service through Email or Chat.

x) Secure transactions.


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Disadvantages of Online Stock Trading (Website based):

i) Website performance - sometime the website is too slow or not enough user friendly.

ii) In online terminal, investor cant get customized expert advice, whereas in offline the

broker gives suggestions according to investors strategy (i.e. short term or long-term)

iii) Transactional errors due to technical problems.

Major Players in Online Trading Brokerage Houses in India

1) Kotak Securities Ltd.

2) ICICI Securities Ltd.

3) Motilal Oswal Securities

4) Religare Securities Ltd.

5) IL&FS investmart Limited

6) SSKI Ltd.

7) India bulls Financial Services Limited

8) India Infoline

9) HDFC Securities

10) Geojit securities

VALUE ADDED SERVICES:

(A)Trading in shares


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i)Spot Trading

When an investor is looking at an immediate liquidity option. Cash on spot, money is

credited to his bank a/c the same evening and not on the exchange pay-out date. This money

can then be withdrawn from any of bank ATMs.

ii) BTST Buy today and sell tomorrow is a facility that allows investor to sell shares even

one day after the buy order date ,without investor having to wait for the receipt of shares into

his demat a/c.

iii) Trading on NSE/BSE:

Through some of the service providers, we can trade on both NSE and BSE

iv) Margin Trading Investor can trade an intra-settlement trading up to 4 times of the

investors available funds, wherein investor take long buy/short sell positions in stocks with

the intention of squaring off the position within the same settlement cycle.

(B) Investing in Mutual funds:

Some of the major service providers bring the same convenience while investing in Mutual

Funds as well as Hassle free and paperless investing. Once the investor place a request for

investing in a particular fund, there are no manual process involved .Investors funds areautomatically debited or credited while simultaneously crediting or debiting investors unit

holdings.


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(C) Derivatives

a) Futures: Through online trading service providers, one can trade in index and stockfutures on the NSE. In futures trading, investor takes buy/sell positions in index or stocks

contracts having a long contract period of up to 3 months.

b) Options: Through online trading service providers, one can trade in index and stock

options.

(D) IPOs Online

Investors could also invest in Initial Public Offers (IPOs) online without going through the

hassles of filling any application form/paperwork. They can get in-depth analysis of new

IPOs issues (Initial Public Offerings) that are likely to hit the market and analysis on these.

IPO calendar, recent IPO listings, prospectus/offer documents, and IPO analysis are also

provided.

(E) Other services

Displaying indices of major world markets, nifty futures, daily share prices of all scrips,

monthly and yearly highs/lows of share prices are listed, technical charts of intraday and

EOD (End of Day) are also provided. Company profiles, breaking news and snapshots of

latest developments in the market are displayed in the website. The major internet service

trading providers in the Indian markets are Religare, HDFC, ICICIdirect,

Share khan and India bulls. The major comparative analysis parameters taken by customers

are a/c opening charges, brokerage and annual charges.


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ONLINE TRADINGINDIAN SCENARIO

In the Indian context, online trading can be rightly called as a recent phenomenon, which

took root with the change of century i.e. April 2000, and even till day online trading is not

much popular among investors for which a list of factors can be blamed. This fact is more

clear from the information available that where number of stocks exchanges in India has

grown from 7 exchanges in 1946 to total 23 exchanges till 2005, only 2 stock exchanges are

providing online share trading. Indian stock exchanges have started adopting technology

because it provides the necessary impetus for the organization to retain its competitive edge

and ensure timeliness and satisfaction in customer service.

Chart 1: Market shares of major players in Online trading business in India

www.investopedia.com

Market share in Online Trading

ICICIdirect

50%

India Bulls

26%

Others

24%

ICICIdirect

India Bulls

Others


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Though the Indian brokerage industry has been consolidating steadily over the last 10 years,

the share of the top 10 brokers has risen to only around one-fourth of the total industry

revenues. In this fragmented market, leading players like ICICI Direct, Kotak Securities,

Indiabulls, Sharekhan, and 5 Paisa, apart from many small players, compete on the basis of

low brokerage fees and customer service.

Buoyed by the bullish Indian stock market, foreign banks such as Socit Gnrale (SocGen),

BNP Paribas, Standard Chartered, and Macquarie Bank (Australia) are eyeing stakes in

Indian retail brokerages. The major growth drivers of the Indian retail brokerage industry are

the increasing appetite for equities among investors as an asset class, the convenience of

online trading, and declining brokerage fees.

Online trading has gained momentum from just 0.5% of total traded volumes 5 Yrs back,

which now account for 5% of total trading volume of approximately Rs 14000 Cr. On Once-

Over the years, the value of all trades executed through internet on NSE has grown from less

than Rs 100 Cr in June 2003 to over Rs 700 Cr in June 2005. Online trading is growing by

150 % per annum. Now NSE has 108 registered brokers and 1.053 million internet trading

subscribers. However mainly 5 companies control 90 % of the market in Internet trading.

ICICIdirect.com has around 50 % market share ,whereas India Bulls hold 26% share ,other

dominant players are Kotak securities and Share Khan. ICICI has been able to gain its

dominant presence in Internet trading because they have strong connectivity of stock trading,

demat account, bank account, etc. ICICI Direct has recorded 6, 75,000 registered customersand has become 10th largest online broker in US whereas share khan and 5paisa are losing

their way.


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INTRODUCTION TO THE INDUSTRY

Indias capital market has undergone sea changes in the pre liberalization era. We have

witnessed the sensex reach astonishing highs such as the 21000 mark. Also in the wake of the

global economic crisis the sensex was hammered to the 8000 9000 levels. Many experts

around the globe believe that the stock market is one of the most efficient ways to judge the

strength or weakness of an economy. The stock markets also provide investors some of the

highest return on investments when compared to other forms of investments. In recent years

the Indian economy has surged ahead in breakneck pace clocking 7 8% GDP growth

numbers. With this astonishing growth in the economy the number of investors in various

financial instruments has also increased and so has the demand for timely and accurate

information. The Indian markets have become more complex and more intertwined with the

global economy. This creates a further need for timely information to which the investors in

India can react appropriately. For this purpose investors seek out professional opinion from

various sources such as brokerages. But, India being a country in which small retail investors

form the major chunk of the investment community often it is not possible for them to hire

top class professional services and end up investing blindly on the advice of their agents.A new breed of companies are now emerging who are seeking to turn around this situation by

taking part in a new revolution which is not only engulfing India but also all countries around

the world. It is the broadband revolution. Although the developed countries already boasts

extensive broadband connectivity, the emerging countries and the under developed

countries still have a lot of improvements to undergo in terms of broadband infrastructure. As

the broadband network grows the number of people having access to information is also

gaining. In a recent survey by Google India it was revealed that 84% of the people with

access to the internet purchase various financial products partly based on the online

information that is available. This further highlight the need for more accurate and timely

information is made available to potential investors. New web based companies such as

moneycontrol.com, rediff.com, guruji.com and others are emerging as key players in this fast

growing industry


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Coming to the history of the capital market in India dates back to the eighteenth century when

East India Company securities were traded in the country. Until the end of the nineteenth

century securities trading was unorganized and the main trading centres were Bombay (now

Mumbai) and Calcutta (now Kolkata). Of the two, Bombay was the chief trading centrewherein bank shares were the major trading stock During the American Civil War (1860-61).

Bombay was an important source of supply for cotton. Hence, trading activities flourished

during the period, resulting in a boom in share prices. This boom, the first in the history of

the Indian capital market lasted for a half a decade. The bubble burst on July 1, 1865 when

there was tremendous slump in share prices. Trading was at that time limited to a dozen

brokers; their trading place was under a banyan tree in front of the Town hall in Bombay.

These stock brokers organized informal association in 1897 Native Shares and StockBrokers Association, Bombay. The Stock exchanges in Calcutta ad Ahmedabad also

industrial and trading centres came up later. The Bombay Stock Exchange was recognized in

May 1927 under the Bombay Securities Contracts Control Act, 1925. The capital market was

not well organized and developed during the British rule because the British government was

not interested in the economic growth of the country. As a result many foreign companies

depended on the London capital market for funds rather than in the Indian capital market.

In the post independence period also, the size the capital market remained small. During the

first and second five year plans, the governments emphasis was on the development of the

agricultural sector and public sector undertakings. The public sector undertakings were

healthier than the private undertakings in terms of paid up capital but shares were not listed

on the stock exchanges. Moreover, the Controller of Capital Issues (CI) closely supervised

and controlled the timing, composition; interest rates pricing allotment and floatation consist

of new issues. These strict regulations de-motivated many companies from going public for

almost four and a half decades.

In the 1950s, Century textiles, Tata Steel, Bombay Dyeing, National Rayon, Kohinoor mills

were the favourite scripts of speculators. As speculation became rampant, the stock market

came to be known as Satta Bazaar. Despite speculation non-payment or defaults were very

frequent. The government enacted the Securities Contracts (regulation) Act in 1956 to


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regulate stock markets. The Companies Act, 1956 was also enacted. The decade of the 1950s

was also characterized by the establishment of a network for the development of financial

institutions and state financial corporations.

The 1960s was characterized by the wars and droughts in the country which led bearish

trends. These trends were aggravated by the ban in 1969 on forward trading and Badla

technically called contracts for clearing Badla provided a mechanism for carrying forward

positions as well as for borrowing funds. Financial institutions such as LIC and GIC helped to

revive the sentiment by emerging as the most important group of investors. The first mutual

fund of India, the Unit Trust of India (UTI) came into existence in 1964.

In the 1970s Badla trading was resumed under the disguised forms of hand delivery contracts

A group. This revived the market. However, the capital market received another severe

setback on July 6, 1974, when the government promulgated the Dividend Restriction

ordinance, restricting the payment of dividend by companies to 12 per cent of the face value

or one-third of the profit of the companies that can be distributed as computed under section

369 of the Companies Act, whichever was lower. This lead to a slump in market capitalism at

the BSE by about 20 per cent overnight and the stock market did not open for nearly a

fortnight. Later came buoyancy in the stock markets when the multinational companies

(MNCs) were forced to dilute their majority stocks in their Indian ventures in favor of the

Indian public under FERA 1973. Several MNCs opted out of India. One hundred and twenty

three MNCs offered shares worth Rs 150 crore, creating 1.8 million shareholders within four

years. The offer prices of FERA shares were lower than their intrinsic worth. Hence, for the

first the FERA dilution created an equity cult in India. It was the spate of FERA issues that

gave a real fillip to the Indian stock markets. For the first time, many investors got an

opportunity to invest in the stocks of such MNCs as Colagte and Hindustan Liver Limited.

Then in 1977, a little known entrepreneur, Dhirubhai Ambani tapped the capital market. The

scrip Reliance Textiles is still a hot favorite and dominates trading at all stock exchanges.

Indias capital markets have experienced sweeping changes since the beginning of the last

decade. Its market infrastructure has advanced while corporate governance has progressed

faster than in many other emerging market economies. But in contrast to several developed


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countries and Asian economies, Indias capital markets are still shallow, implying that further

reforms are needed to make India a world-class financial centre. At nearly 40% of GDP, the

size of Indias government bond segment is comparable to many other emerging market

economies. Its corporate bond market, however, remains small and is dwarfed by those of theUnited States, South Korea and Malaysia. India boasts a dynamic equity market. The sharp

rise in Indias stockmarkets since 2003 reflects its improving macroeconomic fundamentals.

However, the large size of insider holdings and the small presence of institutional investors

believe these impressive figures. Innovative products such as securitized debt and fund

products based on alternative assets are starting to break ground. But an enabling

environment is not yet in place and there remains an overriding need to increase domestic

investors knowledge regarding the merits and risks of capital market investing. Introductionimproving macroeconomic fundamentals, a sizeable skilled labor force and greater

integration with the world economy have increased Indias global competitiveness, placing

the country on the radar screens of investors the world over. The global ratings agencies

Moodys and Fitch have awarded India investment grade ratings, indicating comparatively

low sovereign risks. These positive dynamics have led to a sustained surge in Indias equity

markets since 2003 (attracting sizeable capital from foreign investors. Net cumulative

portfolio flows from 2003-2006 (bonds and equities) amounted to USD 35 bn. Moreover,

Indias stock market has outperformed world indices in recent years. And, despite its

increasing correlation with world markets in recent years, India still offers diversification in

global portfolios.

The bond market is dominated by government bonds. Government bond issuances, resulting

from persistently high fiscal deficits, as well as specific regulatory requirements, have

underpinned the supply and demand conditions in Indias debt capital markets. Nearly 90%

of total domestic bonds outstanding are government issuances (i.e. Treasury bills, notes and

bonds), squeezing out corporate and other marketable debt securities. Initiatives to lift the

corporate bond market from its nascent stages have been slow to progress, leaving companies

unable to realize their optimum capital structure as a result.

And unlike the derivative instruments that are available for equities, those for fixed income

instruments (e.g. options in interest rates) in the organized exchanges have failed to take off,


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limiting the price discovery in the secondary markets. Against this backdrop, greater

efficiency in financial intermediation is required to support investment and growth, but this

will require structural changes in Indias public finances and the dismantling of unwieldy

regulations.

Capital markets development supported by steady infrastructure reforms Indias financial

market began its transformation path in the early 1990s. The banking sector witnessed

sweeping changes, including the elimination of interest rate controls, reductions in reserve

and liquidity requirements and an overhaul in priority sector lending. Persistent efforts by the

Reserve Bank of India (RBI) to put in place effective supervision and prudential norms since

then have lifted the country closer to global standards. Around the same time, Indias capitalmarkets also began to stage extensive changes. The Securities and Exchange Board of India

(SEBI) was established in 1992 with a mandate to protect investors and usher improvements

into the microstructure of capital markets, while the repeal of the Controller of Capital Issues

(CCI) in the same year removed the administrative controls over the pricing of new equity

issues.

Indias financial markets also began to embrace technology. Competition in the markets

increased with the establishment of the National Stock Exchange (NSE) in 1994, leading to a

significant rise in the volume of transactions and to the emergence of new important

instruments in financial intermediation.

Market infrastructure strengthened through innovations

Market infrastructure has strengthened markedly heralded by steady reforms. The seamless

move toward shorter settlement periods has been enabled by a number of innovations. The

introduction of electronic transfer of securities brought down settlement costs markedly and

ushered in greater transparency, while dematerialization instituted a paper-free securities

market. Together, these mechanisms eliminated forgery of share certificates. Straight-through

processing automated the complete workflow (i.e. front, middle and back office and general

ledger) involved in the financial transaction, thus doing away with multiple data re-entry and

avoiding delays and errors. On the initiative of the Reserve Bank of India and the cooperation


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of public and private institutions, the Clearing Corporation of India Limited (CCIL) was

established in 2001 to facilitate the clearing of trades and transactions in the foreign exchange

and fixed income markets, catalyzed by the extensive use of information technology.

Good corporate governance, but overall legal framework needs improving

Continuing efforts by the SEBI to upgrade the corporate governance framework have

positioned India at an above-average level against other emerging market economies,

according to the Institute of International Finance (IIF), the global association of financial

institutions3. Since March 2006, listed companies have been required to submit quarterly

compliance reports to the SEBI, facilitating the valuation of companies and bringing it in linewith the Sarbanes-Oxley Act. Enforcement remains a challenge due to a still limited number

of adequately trained staff to implement the rules. Nor are companies subject to substantial

fines or legal sanctions, which reduce their incentives to comply. In turn, this reflects the

ongoing gaps in Indias legal system, and somewhat undermines the steps to promote Indias

capital markets further. Although India does have a functional legal system, the countrys law

enforcement still lags behind the more advanced economies of Hong Kong and Singapore

according to the World Bank. This implies that efforts to raise corporate governance need to

be accompanied by a stronger legal framework to bring greater stability in its capital markets

and foster investor confidence.

A sizeable but largely skewed capital market for over a century, Indias capital markets,

which consist primarily of debt and equity markets, have increasingly played a significant

role in mobilizing funds to meet public and private entities financing requirements. The

advent of exchange-traded derivative instruments in 2000, such as options and futures, has

enabled investors to better hedge their positions and reduce risks. In total, Indias debt and

equity markets were equivalent to 130% of GDP at the end of 2005. This is an impressive

stride, coming from just 75% in 1995, suggesting issuers growing confidence in market

based financing. However, the size of the countrys capital markets relative to the United

States, Malaysias and South Koreas remain low, implying a strong catch-up process for

India.


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Types of capital market:

A) The primary market is that part of the capital markets that deals with the issuance of

new securities. Companies, governments or public sector institutions can obtain funding

through the sale of a new stock or bond issue. This is typically done through a syndicate of

securities dealers. The process of selling new issues to investors is called underwriting. In the

case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn a

commission that is built into the price of the security offering, though it can be found in the

prospectus.

Features of primary markets are:

a) This is the market for new long term capital. The primary market is the market where the

securities are sold for the first time. Therefore it is also called New Issue Market (NIM).

b) In a primary issue, the securities are issued by the company directly to investors.

c) The company receives the money and issues new security certificates to the investors.

d) Primary issues are used by companies for the purpose of setting up new business or for

expanding or modernizing the existing business.

e) The primary market performs the crucial function of facilitating capital formation in the

economy.

f) The new issue market does not include certain other sources of new long term external

finance, such as loans from financial institutions. Borrowers in the new issue market may be

raising capital for converting private capital into public capital; this is known as going

public.

g) The financial assets sold can only be redeemed by the original holder.

B) The secondary market, also known as the aftermarket, is the financial market where

previously issued securities and financial instruments such as stocks, bonds, options, and

futures are bought and sold. The term "secondary market" is also used refer to the market for

any used goods or assets, or an alternative use for an existing product or asset where the

customer base is the second market (for example, corn has been traditionally used primarily

for food production and feedstock, but a second- or third- market has developed for use in


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ethanol production).With primary issuances of securities or financial instruments, or the

primary market, investors purchase these securities directly from issuers such as corporations

issuing shares in an IPO or private placement, or directly from the federal government in the

case of treasuries. The national exchanges - such as the National Stock Exchange and theBombay stock exchange are secondary markets. After the initial issuance, investors can

purchase from other investors in the secondary market.

The secondary market for a variety of assets can vary from fragmented to centralized, and

from illiquid to very liquid. In any secondary market trade, the cash proceeds go to an

investor rather than to the underlying company/entity directly. The major stock exchanges are

the most visible example of liquid secondary markets - in this case, for stocks of publiclytraded companies. Exchanges such as the New York Stock Exchange, Nasdaq and the

American Stock Exchange provide a centralized, liquid secondary market for the investors

who own stocks that trade on those exchanges. Most bonds and structured products trade

over the counter, or by phoning the bond desk of ones broker-dealer.

INDIAS PULSATING EQUITY MARKETS

The development of Indias equity capital markets has taken a more progressive trajectory

than the bond market, largely reflecting the governments laissez faire approach in the

segment. At 90% of GDP19, its size is comparable to that of other emerging countries,

although is still small relative to many developed markets of Indias 23 stock exchanges,

equity trading is most active in the National Stock Exchange (NSE) and the Bombay Stock

Exchange (BSE). Since theNSEs inception in 1994, it has caught up with the BSE in terms

of capitalization but exceeded it in turnover. The BSE boasts of over 4,000 listed companies,

surpassing stock exchanges in the US. This explains its slightly higher market capitalization

over the NSE, although its lower turnover implies that inefficiencies remain due to the high

proportion of untraded companies. Its share of total equity turnover is just 33% compared to

66% of its rival, the NSE. The increase in the limit for foreign direct investment in the stock

exchanges to 49% announced early this year is expected to lend more dynamism to the equity

capital markets. The investment limit for a single investor was set at 5%. It did not take long

after the new limit was announced that the New York Stock Exchange (NYSE), Goldman


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Sachs, General Atlantic and Softbank Asian Infrastructure Fund all acquired a 5% stake in

the National Stock Exchange (NSE). Increased foreign presence is expected to help the NSE

to inch forward to the global markets, generate a wider customer and investor base and offer

more innovative products. The Bombay Stock Exchange is also courting strategic investors.

If it succeeds, this should help speed up the process of consolidating the thousands of inactive

listed companies on the board. Moreover, the move will enhance its competitive strength

against the NSE, which has diminished over the past decade.

Higher volatility

Benchmarking the risk/return characteristics of Indias equity markets against the world

average shows that Indias stock market has historically been more volatile while its returns

have, until recently, underperformed. This should not come as a surprise as the past decade

witnessed several political and economic uncertainties, undermining business and investor

confidence. Only from 2006 has Indias stock market begun to outperform the worlds index

as momentum to liberalize the economy gathered pace and investors began to take notice.

Reflecting the recent sharp run-up in equity prices, Indias stock markets today rank

among the most expensive in the world, raising concerns over a correction, especially if

earnings disappoint. However, sustained economic growth combined with continued market-

friendly capital market reforms should prove to be supportive factors for superior returns in

the medium run. In terms of sector wise composition in benchmark indices, Indias stock

market is broad-based, putting it roughly in line with the world index. The higher weight of

the IT sector today reflects the countrys increasing turn towards a knowledge-based

economy. But this may change, with consumer discretionary and consumer staples projected

to get a larger share of the pie in tandem with rising incomes and as household preferences

become more discerning. The shares of financials and healthcare sectors are also expected to

increase markedly as industry consolidation picks up and the door to foreign direct

investment is widened.


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Growing Participation of Foreign Institutional Investors (FIIs) in equity

Reflecting Indias improving macroeconomic fundamentals, increasing corporate profitability

and competitiveness, and greater integration with the world economy, foreign institutional

investors (FIIs) participation grew steadily over the past 3 years. True, FII invest in local

bonds and equity, but their interest has largely been on the latter. The inflow of portfolio

capital continues to test new highs and in recent years has outpaced the inflow of foreign

direct investment (FDI). Indias accounting standards, although still not in full convergence

with international practices, combined with the quarterly reporting frequency mandated by

the SEBI on listed companies, offer guidance in corporate valuation. Greater inflows are still

to be expected, arising from international investors quest for higher returns and improved

portfolio diversification, buttressed by ongoing structural changes in Indias economy and itsfinancial markets. Sustained inflow of capital will not only bring greater liquidity in the

market, but foreign presence will encourage further market transparency.

Increasing overseas listing by way of GDR and ADR

Domestic companies, both large- and small-cap, have been allowed to list abroad by way of

American Depository Receipts and Global Depository Receipts (ADR, GDR) since 1992.

Owing to global and local market conditions (e.g. global liquidity, stock market crashes,

economic and financial crises), the amount raised through the ADR route since its inception

has been quite volatile. Only in recent years have issuances picked up steadily, with the

amount raised in fiscal year 2005/2006 exceeding USD 2.5 billion, a level not seen in over 10

years. As one of the measures to allow greater capital account convertibility, the RBI has

allowed two-way flexibility for Indian ADRs/GDRs. This allows holders of the instruments

to cancel them with the depository and sell the underlying shares in the market. The company

can then issue ADRs anew to the extent of the shares converted into local shares. This was

not the case in the last decade, which limited companies ability to access capital abroad.

Scope for improvement

Impressive though the developments may be, Indias stock markets still have some room for

improvement. For one, the shareholder pattern needs to be broadened, as ownership is

concentrated in the promoters and company insiders show an increasing presence. This


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implies that minority shareholders interest is minimal, which needs to be increased for the

sake of improved corporate governance. The presence of institutional investors in the equity

market is also low, resulting from the restrictive investment guidelines set by the government

for the insurance industry, banks and pension funds. Of note, while only 18% of the listed

companies in the NSE are owned by retail investors, they account for an estimated 85% of

the trading volume, according to a recent paper by McKinsey. This suggests that retail

investors tend to speculate in the stock market rather than follow a strategy of pursuing long-

term benefits. Resumption in privatization is also the key to further developing Indias equity

markets. Since FY 2003/2004, privatization activities have dwindled, driven in part by the

lack of political consensus to keep it on track. The sluggish process prevents publicly owned

companies from accessing more efficient sources of funding. It also interferes with theirmovement toward market-disciplined processes and better corporate governance.

The Capital Market - Future

Indias economy is expected to benefit enormously from the process of gradual capital

market liberalization. Empirical evidence has shown that emerging market economies that

have heralded changes in their financial markets experienced higher growth and investment.

Indias regulators have been active in seeking ways to develop the countrys financial

markets, and a culture of introducing greater risk management is starting to set in. The main

challenge ahead is to strengthen the political will to further ease regulations in the capital

markets and the limits prescribed to market participants. India is no exception, with per-

capita GDP and domestic investment rising post-liberalization. Economies which pursued

deeper financial market reforms, and whose per-capita incomes were roughly similar to

Indias prior to their liberalization periods, not surprisingly experienced even greater rewards.

Drawing from these countries experiences, Indias growth potential can experience a

sustained pick-up if it stays on the path of reforming its capital markets. Full capital account

convertibility no longer appears to be a pipe dream, going by the RBIs reconsideration of the

Tara pore Committees roadmap to capital account liberalisation. Early in 2006, the

conditions for full capital account convertibility have been re-examined against issues such as

exchange rate management, prudential safeguards to monetary and financial stability and

implications of dollarization in India. Although full convertibility is still not expected to

occur overnight, the momentum towards that goal seems to have accelerated.


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TITLE OF THE STUDY

A study on perception of Equity investors towards online trading in India.

STATEMENT OF PROBLEM

Online trading is becoming quite popular in recent times and being preferred over the

traditional offline mode of investment. Although there is a growing popularity of online

investment, at the same time there are questions being raised about certain aspects of online

trading such as its safety, its convenience, the quality of investment decisions etc. The

research has therefore been conducted to study these aspects of online trading among various

age groups of investors so as to find out the general perception of people towards online

trading in the light of these aspects.

SCOPE OF STUDY

The scope of the study enables the study to be delimited from the stand point of

manageability.

a) GEOGRAPHICAL SCOPE

City of Bangalore

b) THEORETICAL SCOPE

The perception of investors towards online trading and the factors that influences such

perception keeping age as the independent variable and the safety, convenience and

investment decision as dependent.


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OBJECTIVES OF THE STUDY

The objectives of the study are:

1)To study investors perception towards online trading in terms of age, safety, convenienceand investment decisions.

2) To analyze the inter relationship between Age and safety, convenience and investment

decisions.

3) To study the merits and demerits of online trading.

4) To identify innovative value added services

5) To study the online equity trading market in India.

TYPE OF RESEARCH

Since the study aims at testing hypothesis and specifying and interpreting relationships, it is

an analytical type of research. It concentrates on analyzing data in depth and examining

association between factors.

METHODOLOGY

DATA SAMPLING

Since the sample group is small and heterogeneous in nature and also statistical tools are

to be used, Stratified Random Sampling is best suited.

Stratified Random Sampling is one amongst the most elementary random sampling

techniques. A stratified random sampling is a method that allows each possible sample to

have an equal probability of being picked and each item or individual in the entire population

have an equal chance of being included in the sample. For this project work, without

replacement sampling method is used. It means that a person or item once selected is not


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returned to the frame and therefore cannot be selected again. This selection process continues

until the desired sample size n is obtained.

SAMPLING DETAILS

Sample unit

The sample unit of the research is that of the population, that is respondents who invest in

equity shares.

Sample size

Out of the total population of equity investors in Bangalore, 75 respondents have been taken

as the sample size.

DATA COLLECTION METHODS

For this study, the data are collected from two types of sources, Viz. Primary data and

Secondary data.

Primary Data

Primary data is gathered from direct observation or data personally collected. It refers to that

data which is collected for a specific purpose from the field of enquiry, and are thus original

in nature. It is the data that is accessed for the first time and full control is provided in

working with primary data. For the project, primary data were collected mainly through

Survey Method, using the tool questionnaire. While administering the questionnaires, the

objectives of the study and the method of filling the questionnaire had been explained to the

respondents personally. Necessary clarifications have been given for the terminology used in

the questionnaire.


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Secondary Data

Secondary data are those, which have been already collected by others for a specific purpose

and are subsequently used for applications in different conditions. It is the second-hand

information about an event that has not been personally witnessed by the researcher. The use

of secondary data saves time and money. Here the secondary data were obtained from:

a) Various text books, registers etc.

b) Websites of the organization as well as others like nseindia.com and moneycontrol.com.

The purpose of using the secondary data is to increase the accuracy of analysis.

TOOLS FOR DATA COLLECTION

QUESTIONNAIRE

For this project work, data is collected from respondents using the questionnaires. In a

statistical enquiry the requisite information is often collected through a printed Performa in

the form of a questionnaire. This sheet contains a series of question, which the investigators

are supposed to ask the informant and the informants are supposed to write answers against

each individual question. It is prepared in such a way that the respondents can easily answer

it. For this project, there were 18 closed ended questions and 1 open ended question, which

are related to the Perception of equity investors towards online trading in India.

TOOLS FOR DATA ANALYSIS

It was stated before that making mistakes in analytical work is unavoidable. This is the reason

why a complex system of precautions to prevent errors and traps to detect them has to be set

up. An important aspect of the quality control is the detection of both random and systematic

errors. For the detection itself as well as for the quantification of the errors, statistical

treatment of data is indispensable. A multitude of different statistical tools is available, some

of them simple, some complicated, and often very specific for certain purposes. Fortunately,


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with a few simple convenient statistical tools most of the information needed in regular

research work can be obtained: the "t-test, the "F-test", correlation and regression analysis.

ANALYTICAL TOOL

After the collection of the data each sample question is coded and tabulated and then

subjected to analysis. The data obtained are analyzed using the following tools

Percentage (%)

The percentage of respondents coming under the same category was found out and it helped

to know the response of the investors more clearly.

Diagrammatical Representation

Diagrams are used to represent the tabulated data diagrammatically as this will give a clear

picture about the information collected. The diagrams used includes Bar diagram, Pie Chartsetc.

Chi square distribution

The chi-square test is used in order to estimate how closely an observed distribution matches

an expected distribution. It also helps in estimating whether two random variables are

independent. In the report Chi square distribution has been used in order to find out whether

the variables are inter-related or not.

Spearmans rank correlation

Spearmans rank correlation is used in order to study the correlation between two inter

dependent variables. Spearman's Rank Correlation is a technique used to test the direction


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and strength of the relationship between two variables. In other words, its a device to show

whether any one set of numbers has an effect on another set of numbers. The Spearman

coefficient is denoted with the Greek letter rho ().

LIMITATIONS OF THE STUDY

Area of the study is limited to one city only so the findings may not hold true for large

cross section of population.

Getting appropriate response from the respondents due to their lack of interest and

ignorance.

Time and resource constraint were the major limitations affecting various aspects of

the study.

The sample size is small for the accurate study of the customer.

Research design is a logical and systematic plan prepared for directing a research study. It

specifies the objectives of the study and techniques to be adopted to achieve the stated

objectives. It is a specification of methods and procedures for acquiring the information

needed for solving the problem. It involves arrangement of condition for collection and

analysis of data in a manner that aims to combine relevance to the research purpose with

economy in procedure. So a research design is the conceptual structure within which research

is conducted.


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LITERATURE REVIEW

A) Online Stock trading Software Programs Simplified

- By Christian James: 2010

This article discusses how easy online trading become over the recent past has become so

easy. Ever since online investing came to people's living rooms the quantity of online stock

trading applications that came out is staggering. Stock analysis lends itself very well to PC

software and with the capability to take the place of so many manual tasks, trading online has

never been easier. The times of manually trading trend lines and looking long and hard at

empty graphs appeared to be finally over. These days we are able to see super complicated

stock data at the push of a button.

B) Trading Stocks Online For Beginners

- By Sanjeev Savant: 2010

The article compares the past and the recent. In the good old days (or bad), when we had to call

our broker to buy or sell a stock. The whole process was so time consuming. It took hours to finally

get a confirmation about our trades. Not to forget the high cost that went along with it.

But all that is history. Now we can go online and trade stocks whenever we want, of course

during the trading hours, and get immediate confirmation about our trade. Besides this we can

login any time into our account to check the real time status of your account. However it

would be unwise to think that if we are trading online we will have no access to a personal

broker to help us with y\our investment decisions. Some brokerage firms do provide that

option but it does come with a slight fee. At the same time if one thinks that he can take

control of his investment account then online accounting has made it all possible.


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C) ONLINE STOCK TRADING: SRATEGIES AND PITFALLS

BY Mark Crisp, 2004

The article discusses the tips and strategies for online stock market trading so as to minimize risk

and to earn a healthier online trading profits. It describes the wide range of information sources,

conducting ones own research to validate or discard the information and consistency in the

application of online trading strategies based on such information.

D) THE CHARACTERISTICS OF ONLINE INVESTOR

BY Konnari Uchida, JOURNAL OF BEHAVIOURAL SCIENCE

This article is explores the characteristics of Japanese online investors. Main findings of the

research are young men are more likely to engage in online trading ,employed investors trade

online more frequently ,implying that proximity to the information network of the workplace

investor decisions to trade online. Japanese online investors prefer capital gains, do not prefer

low-volatility stocks, refer to chart data when making investing decisions more frequently, and

tend to choose stocks to buy and sell on their own.

E) Short Term vs. Long-Term Investments - The Choice Is Yours

- By Ernest Achesa: 2010

This article helps us learn about two broad categories of investors. People, who get into

investments for the short term, are those that go into the stock market or over the counter

exchanges, make purchase - mostly with popular stocks, with the hope of making money

through capital gains. On the other hand, the other group of people is those who get into thestock market, they decide that they want to get in for the long-term and make careful

purchases. They definitely look at the share price of the company, but they are more

concerned about the dividends of the company and the returns that will have without

necessarily selling his company through the stock exchange.


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F) ONLINE TRADING

- By John G., BUSINESS LINE, JULY 2000

The article talks about the Geojits internet trading model which discusses the interfacebetween the broker, banker and the depository participant. The article explains the benefits of

such an interface using the internet to brokers as well as clients. It offers seamless trading and

settlement facilities. The broking industry is said to have an impact as the brokers would

calculate commission on the basis of number of transactions rather than value of transactions.

When this happens, it will be a rude shock to the broking community unless it changes very

fast. It is expected that the growth of Internet-based trading as a mass trading technique in the

country is unstoppable, going by the indicators available and the signals for the future. When

it ultimately gathers momentum, the biggest beneficiary will be the investor, who will be able

to trade with greater speed and transparency, and at lower costs.

G) Online Stock Trading in India: An empirical investigation

-By Nidhi Walia and Ravinder Kumar: 2007

The research report examined the investors preference for traditional trading and online

trading, investors perception on online trading and comparing current usage of online trading

and offline trading. This study reveals that out of every 100 investors only 28 trade online,

which points out a question as why investors were not able to realize the importance of

technology in stock trading. Online trading has gained momentum from just 0.5% of total

traded volumes 5 Years back, which now accounts for 5% of the total trading volume of

approximately Rs 14000 Cr on NSE. Over the past 2 years, the value of all trades executed

through Internet on NSE has grown from less than Rs 100 cr in June 2003 to over Rs 700 Cr

in June 2005.

The major findings of the study are that Indian investors are more conservative, they do not

change easily and Indian traditional traders still choose brokers for trading, whereas net

traders are more comfortable with online trading for its transparency and complete control of

the terminal.


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INTRODUCTION TO THE COMPANY

RELIGARE ENTERPRISES LTD:

Company profile

A diversified financial services group with a pan-India presence and presence in multiple

international locations, Religare Enterprises Limited ("REL") offers a comprehensive suite of

customer-focused financial products and services targeted at retail investors, high net worth

individuals and corporate and institutional clients.

REL, along with its joint venture partners, offers a range of products and services in India,

including asset management, life insurance, wealth management, equity and commodity

broking, investment banking, lending services, private equity and venture capital. Religare

has also ventured into the alternative investments sphere through its holistic arts initiative and

film fund. With a view to expand and diversify, REL operates in the life insurance space

under 'Aegon Religare Life Insurance Company Limited' and has launched India's first wealth

management joint venture under the brand name 'Religare Macquarie Private Wealth'.

REL, through its subsidiaries, has launched India's first holistic arts initiative - with a gallery

- as well as the first SEBI approved film fund, which is an initiative towards innovation and

spotting new opportunities for creation and maximization of wealth for investors.

REL operates from seven domestic regional offices, 43 sub-regional offices, and has a

presence in 498* cities and towns controlling 1,837* business locations all over India.

To make a mark in the global arena, REL acquired UK-based Hichens, Harrison & Co. in

2008 which was subsequently re-named as Religare Hichens Harrison PLC ("RHH").

Hichens, Harrison & Co. was incorporated in London in the year 1803 and is believed to be

one of the oldest firms of stockbrokers in the City of London. Pursuant to expansion of REL's

business, the company has grown from largely an equity trading company into a diversified

financial services company. With the addition of RHH the REL group now operates out of

multiple global locations, other than India, (the UK, the USA, Brazil, South Africa, Dubai

and Singapore).


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VISION, MISSION AND BRAND ESSENCE

Vision

To build Religare as a globally trusted brand in the financial services domain and present it as

the Investment Gateway of India'.

Mission

Providing one complete Fast and Easy to Deploy, Flexible, Legal, Validity, Low Cost of

Ownership, Reliable Platform to Invest in Equity, Derivative, Commodities, Mutual Fund,

IPOs with a prime objective to create the value for the investors hard earn money.

As per the Quality Policy, Religare securities will:

Build in-house processes that will ensure transparent and harmonious relationships

with its clients and investors to provide high quality of services.

Establish a partner relationship with its investor service agents and vendors that will

help in keeping up its commitments to the customers.

Use state-of-the art information technology in developing new and innovative

financial products and services to meet the changing needs of investors and clients.

Strive to be a reliable source of value-added financial products and services and

constantly guide the individuals and institutions in making a judicious choice of same.

Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers

and regulatory authorities) proud and satisfied.

Brand Essence

Core brand essence is Diligence and Religare is driven by ethical and dynamic processes for

wealth creation.


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GROUP STRUCTURE

Religare Securities Limited

Retail Equity Broking

Online Investment Portal

Portfolio Management Services

Depository Services

Religare Commodities Limited

Commodity Broking Business

Religare Capital Markets Limited

Investment Banking

PE and M&A Advisory

Investment Banking

Religare Hichens Harrison

Corporate Broking

Institutional Broking

Derivatives Sales

Religare Finvest Limited

Lending and Distribution business


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Religare Insurance Broking Limited

Life Insurance Broking Business

Non-Life Insurance Broking Business

Religare Arts Initiative Limited

Business of Art

Art Gallery

Art Advisory

Religare Venture Capital Limited

Private Equity and Investment Manager

Religare AMC Limited

Asset Management Business

Portfolio Management

Religare Venture Capital Private Limited

Private Equity and Investment Manger

Religare Macquarie Wealth Management Limited

Joint Venture with Macqurie for Wealth Management Business

Religare AEGON AMC

50:50 Joint Venture between REL and AEGON for Asset Management business in

India


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AEGON Religare Life Insurance

Life Insurance Company, Joint Venture between REL(44%), AEGON(26%) and

Bennett & Coleman(30%)

Religare Finance Ltd.

Capital Market Financing

Vistaar Religare Capital Advisors Limited

Joint Venture with Vistaar Entertainment Ventures for film fund

Indias first ever film fund

BRAND IDENTITY

Name

Religare is a Latin word that translates as 'to bind together'. This name Religare was chosen

to reflect the integrated nature of the financial services the company offers. The name is

intended to unite and bring together the phenomenon of money and wealth to co-exist and

serve the interest of individuals and institutions, alike.


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Symbol

The name is paired with the symbol of a four-leaf clover, a rare mutation of the commonthree-leaf clover. Traditionally, it is considered good fortune to find a four-leaf clover as

there is only one four-leaf clover for every 10,000 three-leaf clovers found. Each leaf of the

four-leaf clover has a special meaning in the sphere of Religare.

The first leaf of the clover represents Hope. The aspirations to succeed. The dream of

becoming. Of new possibilities. It is the beginning of every step and the foundations

on which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place ones own faith in

another. To have a relationship as partners in a team. To accomplish a given goal with

the balance that brings satisfaction to all not in the binding but in the bond that is

built.

The third leaf of the clover represents Care. The secret ingredient that is the cement in

every relationship. The truth of feeling that underlines sincerity and the triumph ofdiligence in every aspect. From it springs true warmth of service and the ability to

adapt to evolving environments with consideration to all.

The fourth and final leaf of the clover represents Good Fortune. Signifying that rare

ability to meld opportunity and planning with circumstance to generate those often

looked for remunerative moments of success.

Hope. Trust. Care. Good fortune. All elements perfectly combine in the emblematic

and rare, four-leaf clover to visually symbolize the values that bind together and form

the core of the Religare vision.


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CLIENT INTERFACE

Retail Spectrum-

To cater to a large number of retail clients by offering all products under one roof through the

Branch Network and Online mode

Equity and Commodity Trading

Personal Financial Services

Mutual Funds

Insurance

Saving Products Personal Credit

Personal Loans

Loans against Shares

Online Investment Portal

Institutional Spectrum-

To Forge & build strong relationships with Corporate Client and Institutions

Institutional Equity Broking

Investment Banking

Merchant Banking

Transaction Advisory

Corporate Finance

Wealth Spectrum

To provide customized wealth advisory services to High Net worth Individuals

Wealth Advisory Services

Portfolio Management Services

International Advisory Fund Management Services


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CENTRAL LEADERSHIP TEAM

Board of Directors Religare Enterprises Limited

Mr. Sunil Godhwani - Chairman and Managing Director Mr Shachindra Nath - Group CEO Mr. Anil Saxena - Group CFO Mr. Harpal Singh - Non Executive Director Mr. Deepak Ramchand Sabnani - Independent Director Ms. Kathryn Matthews - Independent Director Mr. Padam Bahl - Independent Director Mr. J. W. Balani - Independent Director Ms. Sunita Naidoo - Independent Director Mr. Stuart D Pearce - Independent Director Mr. R. K. Shetty - Alternate to Mr. J. W. Balani Capt. G. P. S. Bhalla - Alternate to Mr. Deepak Sabnani

CEOs

Mr. Anuj Gulati - Religare Health Insurance Co. Ltd. Mr. Basab Mitra - Religare Enterprises Limited Mr. Gagan Randev - Religare Securities Limited Mr. Kamlesh Dangi - Religare Enterprises Limited Mr. Kavi Arora - Religare Finvest Limited Mr. Martin Newson - CReligare Capital Markets Mr. Rajiv Jamkhedkar - AEGON Religare Life Insurance Company Limited Mr. Saurabh Nanavati - Religare Asset Management Company Private Limited Mr Tarun Kataria - Religare Capital Markets India


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NEW INITIATIVES

Religare Capital Markets Limited, the wholly owned subsidiary of Religare Enterprises

Limited (REL), the holding company for financial services businesses of the group has

proposed to acquire Londons oldest brokerage firm - Hichens Harrison & Co Plc. This

acquisition will provide Religare with the opportunity of creating a global distribution and

execution platform within emerging countries and surely help the Group to emerge as a

global player in the financial services market to provide small and medium Indian corporate

with much needed access to capital.

Hichens Harrison is well placed in the emerging markets of Johannesburg, Cape Town,

Jakarta, Kuala Lumpur, Buenos Aires, Rio de Janero, Dubai and Mumbai.

Femme Power, an initiative by Religare, proposes to empower non-working women toexplore an alternative career that gives them the freedom to work on their own terms and

conditions.

This program will serve as a platform that will allow women to have a brilliant new start with

zero investment and will give them an opportunity to learn various aspects of the financial

markets. By introducing and generating leads via references from the existing base of onlinecustomers, employees and personal contacts, they will earn themselves fulfilling monetary

rewards.

The initiative is being packaged in a way that will enable the homemakers to strike a perfect

balance between work and family life, give a free rein to their potential, and discover a whole

new world of independence.


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CODE OF CONDUCT

Preamble

This Code of Conduct (hereinafter referred to as the Code)has been framed and adopted by

Religare Enterprises Limited (hereinafter referred to as REL) and its

subsidiaries(hereinafter referred to as the Company) in compliance with the provisions of

Clause 49 of the Listing Agreement. The Code is in alignment with the Companys Vision

and Values to achieve the Mission and objectives and aims at enhancing ethical transparent

process in managing the affairs of the Company.

Applicability

The Code is applicable to the Board of Directors (hereinafter referred to as Board

Members)and the Senior Management Personnel, immediately one level below the Board

Members. The Company Secretary shall be the Compliance Officer for the purpose of this

Code of Conduct.

PURPOSE

The purpose of the Code goes beyond the Legal Minimum and has been framed to:

Promote ethical standards of business conduct;

Maintain the culture of honesty, integrity, transparency and accountability in the

Board Members and Senior Management Personnel;

Provide guidance in the identification and resolution of issues;

Uphold the spirit of social responsibility and accountability in line with the

legislations, regulations and guidelines governing the Company; and

Last of all, to comply with the provisions of Clause 49 of the Listing agreement.


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Standards of Ethical Conduct

The Board Members and the Senior Management Personnel shall act within the powers

conferred on them and shall observe the highest standards of ethical conduct and integrity and

shall work to the best of their ability and judgment.

In addition, the Board Members and the Senior Management Personnel-

Shall maintain and help the Company in maintaining highest standards of

Corporate Governance practices;

Shall act in utmost good faith and exercise due care, diligence and personal and

professional integrity in the performance of their official duties and

responsibilities and shall in no event compromise with their independence of

judgment;

Shall not exploit for their own personal gain, opportunities that are discovered

through use of corporate property information or position unless the opportunity is

disclosed fully in writing to the Board of Directors of the Company and the Board

declines to pursue such opportunity and allow him to avail such opportunity;

Shall avoid and disclose actual and apparent conflict of personal interest with the

interest of the Company and to disclose all contractual interests whether directly

or indirectly in any manner which gives them or their relative or firm or associate,

any pecuniary benefit, regardless of the value involved with the Company;

Shall not commit any offence involving moral turpitude;

Shall promote professionalism in the Company.

Conflict of Interest

A Conflict of interest occurs when personal interest of the Board Members and Senior

Management Personnel interferes or appears to interfere, in any way, with the interests of the

Company.


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The Board Members and Senior Management Personnel shall not engage in any business

relationship or activity, whether directly or indirectly, which may be in conflict of interest of

the Company. Although this duty does not prevent them from engaging in personal

transactions and investments, it does, however, demand that they should avoid situationswhere a conflict of interest might occur or appear to occur.

Some of the possible instances being mentioned below.

Employment / Outside Employment:

The Board Members and Senior Management Personnel are expected to devote their full time

and attention to the business interests of the Company and are further prohibited from

engaging in any activity prejudicial to the interests of the Company. Any simultaneous

employment or Directorship with competitors of the Company, or any engagement in any

activity thereby strengthening their position is considered to be against the business interests

of the Company.

Outside Directorships:

No Board Member and Senior Management Personnel shall serve as a Director of any

Company that competes directly or indirectly with the Company unless previously

unanimously agreed to by the Board of Directors. Further, each Board Member and Senior

Management Personnel shall inform the Board of Directors of any changes in his Board

positions and shall inform the company immediately about emergency situation that maydisqualify him from Directorship.

Business Interests:

If any Board Member and Senior Management Personnel is considering investment in the

business of any competitor of the Company, he should ensure that these investments do not


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compromise on their responsibilities towards the Company. Before making Substantial

Investment in the business of the Competitor, the Board Member and Senior Management

Personnel shall obtain approval of the Board of Directors of the Company.

Related Parties:

The Board Members and Senior Management Personnel, before conducting business of the

Company with a Related Party or a Relative and/or with a business in which a relative is

associated in any significant role, shall promptly disclose their interest to the Board of

Directors of the Company.

For the sake of clarity, the term Relative shall mean relative as defined in Section2(41)and Section 6 read with Schedule IA to the Companies Act, 1956.

No Payments or gifts from others:

Under no circumstances, the Board Members and Senior Management Personnel shall accept

or receive, directly or indirectly, any gift, payments or favour, in whatsoever form, from

Companys business associates, which can be perceived as being given to gain favour or

dealing with the Company or which may influence any business decision.

Transactions in shares of the Company and prevention of insider trading :

The Board Members and Senior Management Personnel of the Company shall not indulge in

trading in Companys securities on the basis of unpublished price sensitive information. All

Board Members and Senior Management Personnel will comply with the prevention of

insider trading guidelines as issued by SEBI.


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Conduct of Business:

The Board Members and the Senior Management team shall conduct the Companys business

in an efficient and transparent manner and in meeting its obligations to shareholders and other

stakeholders.

Reporting:

The Directors and the Senior Management team shall immediately bring to the notice of the

Board about any unethical behavior, actual or suspected fraud or violation of companys

Policies.

Protection of Companys Assets

The Board Members and Senior Management Personnel shall endeavor to protect the assets

and proprietary information of the Company and ensure that the same are being used by the

Company only for business purposes of the Company. Any suspected incident or fraud or

mismanagement of the assets of the Company should be immediately reported to the

Chairman or Managing Director or Compliance Officer of the Company.

Confidential Information

The Board Members and Senior Management Personnel shall maintain confidentiality of

Confidential Information entrusted by the Company or acquired during performance of their

duties and shall not use it for personal gain or advantage. They shall, at all times, ensure

compliance with SEBI (Prohibition of Insider Trading) Regulations, 1992 as also other

regulations, as may become applicable to them, from time to time.

This obligation shall apply to the Board Members and Senior Management Personnel not

only during their tenure or employment with the Company but even after the cessation

thereof.


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Further they shall not make any statement which has the effect of adverse criticism of any

policy or action of the Company or which is capable of embarrassing the relations between

the company and the public including all the stakeholders.

Compliance of Law

The Board members and the senior management personnel shall acquire appropriate

knowledge of law relating to their duties sufficient to enable them to recognize potential

dangers and to know when to seek advise from the Finance, Secretarial and legal departments

and shall comply with all Laws ,Rules and regulations applicable to the business of the

Company.

Waivers and Amendments of the Code

The Company is committed to continuously reviewing and updating its policies and

procedures. However, any amendment or waiver of any provision of the Code must be

approved by the Board of Directors of the Company and publicly disclosed as required by

any applicable law or regulation and also on the Companys website, if any, together with

details about the nature of the amendment or waiver.

No Rights Created

The Code sets forth certain fundamental principles, ethics, values, policies and procedures

that govern the Board Members and Senior Management Personnel in the conduct of the

business of the Company. It is not intended to and does not create any rights in any

employee, client, competitor, shareholder or any other person or entity.

Placement of the Code On Website

Pursuant to Clause 49 of the Listing Agreement, this Code and any amendment thereto shall

be posted on the website of the Company


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SERVICES RENDERED BY RELIGARE SECURITIES LTD.

EQUITY AND DERIVATIVE TRADING

The term equity derivative describes a class of financial instruments whose value is at least

partly derived from one or more underlying equity securities. Market participants trade equity

derivatives in order to transfer or transform certain risks associated the underlying. Options

are by far the most common equity derivative; however there are many other types of equity

derivatives that are actively traded.

Institutional Distribution

Depository Services

Commodities

Broking

International

Equity &

CommoditiesWealth

Management

Investment Banking

Internet

Tradin

Private Equity

Insurance Broking

Lending Services

Equity & Derivative Trading


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INSTITUTIONAL DISTRIBUTON SERVICE

The Client Service Manager will be responsible for all aspects of client reporting for

institutional investment clients and industry organizations. The candidate will also be

responsible for client servicing which includes working with clients, internal groups and UK

based portfolio management.

DEPOSITORY SERVICES

Depository is an organization which holds your securities in electronic (also known asbook

entry) form, in the same manner as a bank holds your money. Further, a depository also

transfers your securities without actually handling securities, in the same day as a bank

transfers funds without actually handling cash.

INSURANCE BROKING:

The term Insurance Broker became a regulated term under the Insurance Brokers

(Registration) Act 1977which was designed to thwart the bogus practices of firms holding

themselves as brokers but in fact acting as representative of one or more favored insurance

companies. Insurance brokerage is largely associated with general insurance (car, house

project on religare

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