Smc Global Securities Limited Online Trading Finding Future Prospects for Unicon Investment Solutions 96p

SUMMER TRAINING PROJECT REPORT SMC GLOBAL SECURITIES LIMITED

SSSSSSSS

ONLINE TRADING

SESSION 2007-2010

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PREFACEIndian stock market have been role during the past five years,genrating an annual return of 28%(on the nifty index).Still general public prefers putting it money in bank,rather than putting it in stock. Within Indian economy doing so well, return from stock market have been far higher than return from any other investment.Avenue rupees 1, 00,000 invested in the nifty in April would have been worth a little over rupees 3, 00,000 by April, 2008.But the top value creatures have been delivered far superior returns the same lakh invested in unitech would have been worth rupees 1.52cr if it had been invested in aban aban offshare. Most of people are reluctant to put their money in shares,because of uncertainty of the return.At times stock market is so volatile that it becomes very difficult for investors to decide whether to purchase some more stocks or sell them,whether to enter the market or book profit. with so much uncertainty prevailing, the case of investing in stock market is totally different from the case of investing in some other places. Lack of awareness is also holding people back to a great extent,until and unless one understands the degree of risk involved in investing in shares,the kind of return one can get from there and history of such returns and how to go about it,one will not go ahead.so making aware the public about things happing in stock market is something that should be done at war level.

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TABLE OF CONTENTS

CONTENTS CHAPTER 1 : INTRODUCTION1.1 1.2 1.3 1.4 1.5 Overview of Industry as a whole Profile of the organization Problems of the organization Competition Information S.W.O.T. Analysis of the Organization

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CHAPTER 2 : OBJECTIVES AND METHODOLOGY2.1 Significance of the study 2.2 Managerial usefulness of the study 2.3 Objectives of the study 2.4 Scope of the study 2.5 Methodology 20 20 21 21 23

CHAPTER 3 : CONCEPTUAL DISCUSSION CHAPTER 4 : DATA ANALYSIS CHAPTER 5 : FINDINGS AND RECOMMENDATIONS ANNEXURE * Questionnaire BIBLIOGRAPHY

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1.1 OVERVIEW OF INDUSTRY PROFILE3

Mobilization of savings from surplus savers to deficit savers is most efficiently carried out by the securities market through a range of complex products called "securities". The definition of securities as per the SCRA, 1956 includes shares, bonds, scrips, stocks or other marketable securities of like 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. This process of mobilization of resources is carried out under the supervision and overview of the regulators. Market Participants in Securities Market Market Participants Securities Appellate Tribunal Regulators* Depositories Stock Exchanges With Equities Trading With Debt Market Segment With Derivative Trading Brokers Corporate Brokers Sub-brokers FIIs Portfolio Managers Custodians Share Transfer Agents Merchant Bankers Bankers to an Issue Debenture Trustees Underwriters Venture Capital Funds Foreign Venture Capital Investors Mutual Funds Collective Investment Schemes (Source: SEBI Bulletin.) 2007 1 4 2 21 1 2 9,443 4,110 27,541 996 158 15 82 152 47 30 45 90 78 40 0 2008 1 4 2 19 1 2 9,487 4,190 44,074 1319 205 15 76 155 50 28 35 106 97 40 0

MARKET SEGMENTThe securities market has two interdependent segments: the primary and the 4

secondary market. The primary market is the channel for creation of new securities. These securities are issued by public limited companies or by government agencies. In the primary market the resources are mobilized either through the public issue or through private placement route. It is a public issue if anybody and everybody can subscribe for it, whereas if the issue is made available to a selected group of persons it is termed as private placement. There are two major types of issuers of securities, the corporate entities who issue mainly debt and equity instruments and the government (central as well as state) who issue debt securities.

These new securities issued in the primary market are traded in the secondary market. The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risks and returns. The secondary market operates through two mediums, namely, the over-the-counter (OTC) market

and the exchange-traded market. OTC markets are informal markets where trades are negotiated. Most of the trades in the government securities are inthe OTC market. All the spot trades where securities are traded for immediate deliver y and payment take place in the OTC market. The other option is to trade using the infrastructure provided by the stock exchanges. There are 23 exchanges in India and all of them follow a systematic settlement period. All the trades taking place over a trading cycle (day=T) are settled together after a certain time (T+2 day). The trades executed on the National Stock Exchange (NSE) are cleared and settled by a clearing corporation. The clearing corporation acts as a counterparty and guarantees settlement. Nearly 100% of the trades in capital market segment are settled through demat delivery. NSE also provides a formal trading platform for trading of a wide range of debt securities, including government securities. A variant of the secondary market is the forward market, where securities are traded for future delivery and payment. A variant of the forward market is Futures and options market. Presently only two 5

exchanges viz., NSE and Stock Exchange, Mumbai (BSE) provides trading in the derivatives of securities. Dependence on Securities Market Corporate Sector Government Households

The above mentioned sectors are dependent on the Capital Market for their financial needs. The following table shows their percentage share respectively.

Dependence on Securities Market Share (%) of Securities Market inExternal Finance of Fiscal Deficit of Corporate Central Govt. 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004 -05 2005-06 2006-07 Source: CMIE & RBI. 19.35 19.17 33.38 53.23 44.99 21.67 22.12 28.16 27.05 33.58 31.39 20.60 (17.98) N . A. 24.86 22.65 38.78 17.9 20.7 9.2 48.0 35.2 54.9 30.0 36.5 60.9 67.1 61.4 69.4 77.6 64.9 26.73 34.75 52.75 Fiscal Deficit of State Govt 13.6 17.5 16.8 17.6 14.7 18.7 17.5 16.5 14.1 13.9 13.8 15.2 19.9 32.1 18.69 8.63 23.98 Financial Savings Number of Households 14.4 22.9 17.2 14.0 12.1 7.7 6.9 4.5 4.2 7.3 4.3 8.0 5.9 N . A. 6.6 7.5 7.8

INTERNATIONAL SCENARIO

Following the implementation of reforms in the securities industry during the last decade, Indian stock markets have graduated to a better position vis--vis the securities market in developed and emerging markets. As may be seen from Table 16

2, India has a turnover ratio, which is comparable to the other developed market, and also one of the highest in the emerging markets. At the end of 2003, Standard and Poors (S&P) ranked India 17th in terms of market capitalization (19th in 2002), 16th in terms of total value traded in stock exchanges (17th in 2002) and 6th in terms of turnover ratio (7th in 2002). India has the number one ranking in terms of listed securities on the Exchanges followed by the USA. These data, though quite impressive, do not reflect the full Indian market, as S&P (even other international publications) does not cover the whole market. For example, India has more than 9000 listed companies at the end of March 2004, while S&P considers only 5,644 companies.

If whole market were taken into consideration, Indias position vis--vis other countries would be much better.

International Comparison: end December 2007Particulars Japan No. of listed Companies 5,295 2,311 China 3,116 Market Capitalisation ($ Bn.) 14,266 2,412 3,041 Market Capitalisation Ratio139.8 159.7 70.3 (%) Turnover ($ Mn.) 15,547 2,151 2,273 Turnover Ratio (%) 122.8 100.6 88.0 USA UK Germany 684 1,079 57.5 1,147 130.0 Singapore 475 145 168.4 88 71.1 HongkongIndia 1,029 1,296 6268 715 681 999 426.4 55.2 109.5 332 477 508 56.3 83.3 162.5

Source: S& P Emerging Stock Market Factbook,2007A comparative study of concentration of market indices and indices stocks in different world markets is presented in the table below. It is seen that the index stocks share of total market capitalization in India is 75.0% whereas US index accounted for 93.8%. The ten largest index stocks share of total market capitalization is 36.5% in India and 16.4% in case of US.

Market Concentration in the World Index as on End 2007 Index Stocks Share of 10 largest Index (In Percent)Share Market Japan Singapore France Total Mkt Cap 99.2 91.2 89.5 Share of Total Mk tCap 20.4 57.9 42.2

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Germany Italy United Kingdom United States India

83.6 95.5 94.3 93.8 75.0

44.6 55.9 43.6 16.4 36.5

The stock markets worldwide have grown in size as well as depth over last one decade. The turnover on all markets taken together has grown from US $ 5.5 trillion in 1990 to $ 38 trillion in 2002 when it reached a peak. Thereafter, it has witnessed a decline and stood at US $ 34.6 trillion in 2006. It is significant to note that US alone accounted for about 47.4% of worldwide turnover in 2006. Despite having a large number of companies listed on its stock exchanges, India accounted for a meager 2.96% in total world turnover in 2006. The market capitalization of all listed companies taken together on all markets stood at US $ 34.6 trillion in 2006 ($ 23 trillion in 2005). The share of US in worldwide market capitalization decreased from 47.24% as at end-2005 to 44.66% in end-2006, while Indian listed companies accounted for 1.87% of total market capitalization in 2006.

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Market Capitalization and Turnover for Major Markets (US $ million) Country/Region Market Capitalization Turnover (End of period)Developed Markets Australia Japan UK USA All Emerging Markets China India Indonesia Korea Malaysia Philippines Taiwan World Total US as % of World India as % of World 2003 2004 25,242,989 20,957,836 374,269 380,969 2,251,814 2,126,075 2,217,324 1,864,134 13,810,42 11,052,403 9 2,556,979 2,439,080 523,952 110,396 23,006 220,046 120,007 41,523 292,621 27,79 9,968 49.68 0.40 463,080 131,011 29,991 249,639 123,872 39,021 261,474 2005 2006 2007 2008 28,290,981 39,676,01 36,098,73 26,743,153 8 1 585,475 240,667 294,658 369,845 3,040,66 1,826,230 1,573,279 2,272,989 5 2,412,43 1,871,894 2,721,342 2,150,753 4 14,266,2 29,040,739 25,371,27 15,547,431 66 0 3,656,722 2,404,321 2,499,768 2,896,144 681,204 279,093 54,659 329,616 168,376 23,565 379,023 448,928 249,298 9,667 711,192 20,772 3,148 544,808 333,369 197,118 13,042 826,620 27,623 3,103 631,931 476,813 284,802 14,774 682,706 50,135 2,635 592,012 29,639,297 52.46 0.96

23,396,91 31,947,70 42,080,33 38,598,49 6 3 9 8 47.24 44.66 69.01 65.73 0.56 0.87 0.59 0.51

Source: S& P Emerging Stock Market Factbook,2007

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INTERNATIONAL AND INDIAN SCENARIO IN ONLINE BROKINGIn US markets, online brokerage has significantly changed the dynamics of the market place, resulting in one of the biggest shifts in the individual investor's relationship with their brokers. Investors access a wealth of financial information on the same time as do market and financial professionals including breaking news, developments and market data. Online brokerage provides investors the tools to analyse the information such as research reports. In the US, 82 per cent of the deals are done on line. The European on line broking market is expected to be of $8 billions and has risen to about $50 billion today. Net trading shall initially faced some problems relating to infrastructure and understanding of the concept. Presently, the legal frame work is right in place and there are organizations like SEBI, RBI etc. which provide investor guidelines to the investors for protection of their right. Also, investor grievance handling and redressal system is fast and efficient. Lack of investor education and resistance from stock brokers though has always posed some problems. With Internet trading, investment in the stock market is just a click away, in the comfort of office or a home. It makes it easy for anyone to access net brokers and trade in stock. Even the smallest retail investor can access information that was till now restricted to big traders. Net trading provides investors with seamless, real time online access to stock markets.

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1.2

PROFILE OF THE ORGANIZATION

SMC Global is one of the largest and most reputed Investment Solutions Company that provides a wide range of services to its substantial and diversified client base. Founded in 1990, by Mr. Subhash Chand Aggarwal and Mr. Mahesh Chand Gupta, SMC, is a full financial services firm catering to all classes of investors. The company is having its corporate office in New Delhi with regional offices in Mumbai, Kolkata, Chennai, Ahemdabad, Cochin, Hyderabad, Jaipur plus a growing network of more than 1250 offices across over 350 cities/towns in India and overseas office in Dubai.

Enabling shorter settlement cycles and book entry settlements systems, and meeting the current international standards of securities market.

HISTORY OF SMCSMC acquired membership of the Delhi Stock Exchange in 1990 and later in 1995 became a trading member of NSE. In 2000 the company became a member of BSE and a depository participant of CDSL India Ltd. In the same year, the company acquired the Trading & Clearing Membership of NSE Derivatives and the memberships of leading commodity exchanges i.e. NCDEX and MCX in subsequent years. In 2006, SMC expanded globally and acquired the Trading & Clearing Membership of Dubai Gold and Commodity Exchange (DGCX). In the same year, the company also started its Insurance Broking division, IPO & Mutual Fund Distribution Division and its Merchant Banking division.

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Mission

Establishing a nation-wide trading facility for equities, debt instruments and hybrids, Ensuring equal access to investors all over the country through an appropriate communication network, Providing a fair, efficient and transparent securities market to investors using electronic trading systems, Enabling shorter settlement cycles and book entry settlements systems, and meeting the current international standards of securities market.

Vision Their vision is to be the most respected company in the financial services space.

PRODUCT AND SERVICES OF SMC Equity & Derivative TradingSMC Trading Platform offers online equity & derivative trading facilities for investors who are looking for the ease and convenience and hassle free trading experience. We provide ODIN Application, which is a high -end, integrated trading application for fast, efficient and reliable execution of trades. You can now trade in the NSE and BSE simultaneously from any destination at your convenience. You can access a multitude of resources like live quotes, charts, research, advice, and online assistance helps you to take informed decisions. You can also trade through our branch network by registering with us as our client. You can also trade through us on phone by calling our designated representatives in the branches where you are registered as a client.

Clearing ServicesBeing a clearing member in NSE (derivative) segment we are clearing massive volumes of trades of our trading members in this segment.

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Commodity TradingSMC is a member of two major national level commodity exchanges, i.e National Commodity and Derivative Exchange and Multi Commodity Exchange and offers you trading platform of NCDEX and MCX. You can get Real-Time streaming quotes, place orders and watch the confirmation, all on a single screen. We use technology using ODIN application to provide you with live Trading Terminals. In this segment, we have spread our wings globally by acquiring Membership of Dubai Gold and Commodities Exchange. We provide trading platform to trade in DGCX and also clear trades of trading members being a clearing member.

Distribution of Mutual Funds & IPOsSMC offers distribution and collection services of various schemes of all Major Fund houses and IPOs through its mammoth network of branches across India . We are registered with AMFI as an approved distributor of Mutual Funds. We assure you a hassle free and pleasant transaction experience when you invest in mutual funds and IPOs through us. We are registered with all major Fund Houses including Fidelity, Franklyn Templeton etc. We have a distinction of being leading distributors of IPOs.Shortly we will be providing the facility of online investment in Mutual Funds and IPOs

Online back office supportTo provide robust back office support backed by excellent accounting standards to our branches we have ensured connectivity through FTP and Dotnet based Application. To ensure easy accessibility to back office accounting reports to our clients

MC DepositoryThey are ISO 9001:2000 certified DP for shares and commodities. We are one of the leading DP and enjoy the trust of more than 40,000 investors. We offer a quick, secure and hassle free alternative to holding the securities and commodities in

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physical form. They are one of the few Depository Participants offering depository facilities for commodities. We are empanelled with both NCDEX & MCX.

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SMC Research Based Advisory ServicesTheir massive R&D facility caters to the need of Investors, who are continuously in need of opportunities for striking rich rewards on their investment. We have one of the most advanced, hitech inhouse R&D wing with some of the best people, process and technology resources providing complete research solutions on Equity, Commodities, IPOs and Mutual Funds. We offer proactive and timely world class research based advice and guidance to our clients so that they can take informed decisions. Click on Research to unveil the treasure.

SMC Investor Awareness ForumTheir dedicated team of professionals is conducting investor meet/seminars across India. We believe that a well-informed investor is an empowered investor. We also seek your feedback on our services in these Investor meets.

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1.3 PROBLEMS OF THE ORGANIZATION

Lack of Techno Savvy people and poor Internet penetration: Since most of the people are quite experienced and also they are not techno savy. Also Internet penetration is poor in India.

Some respondents are unwilling to talk: -- Some respondents eitherdo not have time or willing does not respond, as they are quite annoyed with the phone call.

Lack of Career Opportunities Limitations of online trading Competition Technical Problem

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1.4. COMPETITION INFORMATIONICICIDIRECT.COM

Products and Services A product for every need: ICICIdirect.com is the most comprehensive website, which allows you to invest in Shares, Mutual funds, Derivatives (Futures and Options) and other financial products. Simply put we offer you a product for every investment need of yours. ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an Affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank Limited Product & Services: Trading in shares: ICICIdirect.com offers you various options while trading in shares. Cash Trading: This is a delivery based trading system, which is generally done with the intention of taking delivery of shares or monies. Margin Trading: You can also do an intra-settlement trading up to 3 to 4 times your available funds, wherein you take long buy/ short sell positions in stocks with the intention of squaring off the position within the same day settlement cycle. (ONLY for intraday)

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INDIA BULLS

India bulls Group is one of the top business houses in the country with business interests in Real Estate, Infrastructure, Financial Services, Retail, Multiplex and Power sectors. India bulls Group companies are listed in Indian and overseas markets and have a market capitalization of over USD 7 billion. The Net worth of the Group exceeds USD 2.5 billion. India bulls Group companies enjoy highest ratings from CRISIL, a subsidiary of Standard and Poors. India bulls has been conferred the status of a Business Super brand by The Brand Council, Super brands India. India bulls Financial Services is an integrated financial services powerhouse providing Consumer Finance, Housing Finance, Commercial Loans, Life Insurance, Asset Management and Advisory services. India bulls Financial Services Ltd is amongst 68 companies constituting MSCI - Morgan Stanley India Index. India bulls Financial is also part of CLSAs model portfolio of 30 Best Companies in Asia. India bulls Financial Services signed a joint venture agreement with Sogecap, the insurance arm of Societ Generale (SocGen) for its upcoming life insurance venture. India bulls Financial Services in partnership with MMTC Limited, the largest commodity trading company in India, is setting up Indias 4th Multi-Commodities Exchange.

ABHIPRA

Beginning as a Broking House, we grew into Business House. We broadened our horizons and stepped into the field of Depository, Stock Broking, Full-Fledged Money Changing Services, Category I Registrar & Transfer Agent, Commodity Trading, Online Trading (Equity, F&O & Commodity), e-Return Intermediary. Abhipra today commands the status of being one of the leading Depository Participants of Northern India in Private Sector. Moreover, Abhipra has Trading

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Terminal Outlets for NSE & BSE spread to almost every nook & corner of Northern India. Abhipra Capital Limited is also empanelled as a Depository Participant with one of the premier Commodity bourse, National Commodities and Derivatives Exchange Limited (NCDEX). So a client now can open Commodity Demat Account with us At Abhipra, we offer our clients far more than merely a comprehensive range of financial services. We offer them ideas, innovations, and solutions with extra-ordinary results. We feel that quality is an essential ingredient in building successful businesses. Not only do products and services need to be of high quality, but potential customers also need to have assurance that the products will be of high quality. This is evidenced from the fact that Abhipra is a ISO 9001 (Quality Assurance Systems) Registered Company.

KOTAK SECURITIES:-

Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of the Kotak Mahindra Group. Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. Kotak Securities was set up in 1994. Kotak Securities is a corporate member of both The Bombay Stock Exchange and the National Stock Exchange of India Limited. The company has four main areas of business: Institutional Equities, Retail (equities and other financial products), Portfolio Management and Depository Services.

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MOTILAL OSWAL:-

Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just two people running the show. It has established itself as the Best Local Brokerage House in India (Asia Money Brokers Poll 2005). Their Institutional Equity Division combines the efforts of the Research and Sales & Trading departments to best serve clients' needs. Consistent delivery of high quality advice on individual stocks, sector trends and investment strategy has established them as a reliable research unit amongst leading Indian as well as international investors.

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1.5 S. W. O. T ANALYSIS OF THE ORGANIZATION Strengths The `do-it-yourself' framework of online share trading offers retail investors the three benefits of transparency, access and efficiency. Paperwork diminishes significantly, and no more painful trips to your broker to check if everything's in order. Online trading has made it possible to universalize access to retail investors. This was earlier very difficult, as the cost of servicing often-outweighed transaction volumes. Online brokerage ranges between 0.05-0.20 per cent of the value of transactions for non-delivery-based trades, and between 0.25-0.95 per cent for delivery-based trades. Once major investments in online infrastructure are over and done with - and with the economies of scale coming into play - it is expected that brokerage rates would head further downwards. Access to online trading and latest financial happenings, apart from quotes and unbiased investment analyses, all consolidate into a value-added product mix in tandem with evolving markets that are freer and fairer. The Net result: An inquisitive, informed and demanding investor. Today's investor is more involved in managing his or her assets and analyzing a vast array of investment options. Technology and today's enabled investor have, in turn, driven competition, resulting in reduced costs of trading, transparency in dealings, and pricing info that is accurate and real-time. More and more investors now want to know how their trades are executed, and whether they have received the best possible price. Critical components of execution quality include the prices at which orders were executed as well as the speed of execution. The quality of execution, in turn, hinges on efficient order routing. We owe this to our investor fraternity.

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Weakness Every thing in the world has a flip side to it - Transaction velocity is crucial. And more often than not, connections are lousy. There's also a degree of investor skepticism about online payment and settlement mechanisms in spite of all the encryption and fire walling brought into play. Time and technology will soon assuage these concerns, which hark back to the `physical' days. The three main technology obstacles which have prevented Internet broking from taking off are: Lack of Internet penetration Bandwidth infrastructure Poor quality of ISP infrastructure.

Opportunities You have some money to dabble with. Trading shares on BSE/NSE has always been your dream. When will you ever find the time? And besides, the hassle of finding a broker is not easy. This is your main opportunity. Realizing there is untapped market of investors who want to be able to execute their own trades when it suits them, brokers have taken their trading rooms to the Internet. Known as online brokers, they allow you to buy and sell shares via Internet. There are 2 types of online trading service: discount brokers and full service online broker. Discount online brokers allow you to trade via Internet at reduced rates. Some provide quality research, other dont. Full service online brokerage is linked to existing brokerages. These brokers allow their clients to place online orders with the option of talking/ chatting to brokers if advice is needed. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Geojit securities.com, HDFCsec.com, Tatatdw.com, Kotakstreet.com are some of the online broking sites in India. And daily trading turnover is estimated in the vicinity of 0.75 per cent of the combined BSE and NSE daily turnover of about RS 11,000 crore!!! The point 22

is, there's tremendous scope for growth. Especially when you consider the US, where trading over the Net accounts for about 55 per cent of the total volumes. And, I believe, in some Asian markets the figures as high as 70 per cent.

Threats On to some threat perception - Domestic funds, foreign institutional investors and operators comprise the three main market constituents. And all three include term investors as well as opportunists in their pecking order. Some, for instance, hitch their fate with what the FIIs are up to. All this spells spurting volumes. But nobody gives a damn about the resultant volatility. And some, not all, offer free investment advice over the Net to lure rookie investors with misleading information. Prices of scripts can also be influenced to the advantage of vested interests, courtesy the Net. Unlike in the US, stockbrokers out here willingly (or under the force of circumstance) assume the role of `advisors', sans the neutral, non-vested stance.

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OBJECTIVES AND METHODOLOGY2.1 SIGNIFICANCEThis project will accomplish to understand the problem faced by the new client with respect to online share trading and find ways to solve their queries at microscopic level. The study also aims to highlight the possible hurdles that a prospective client faces who are interested to investing insecurities but is unaware of the system of online share trading. It also aims at finding out the brand image of the organization amongst the general investors and give information to the management about the new developments in the market adopted by the competitors and the areas where the company needs to improve. The project is to study the effectiveness of the stock exchange as this is one of the best way of investment.

2.2.

MANAGERIAL USEFULNESS OF THE STUDYA thorough research and a detailed study of market are very important for the

management to take the right strategy suiting the market condition. The study gives information regarding the market competition, innovative products offered by competitors, present demand of the product in the marketed. 1. 2. 3. 4. 5. The study will help the management to understand the customer mind set and also estimating the present future market demand of the product. It will help to estimate the level of awareness established in the market and in deciding the extent of promotion required. Help in finding the areas in which SMC will concentrate to increase its market share. It will help in finding out the customer expectation about the product and also help to know the customer physiology. Helps in knowing the class in which max new SMC must concentrate. This study helps in finding the area in which SMC is strong and the area in which it lags behind others. Which class of customer mostly approaches SMC policies?

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2, 3. OBJECTIVESBefore starting any project, we should keep in mind the clear objectives of the project because in the absence of the objectives one cannot reach the conclusion or end result of the project. So, the objective of my project is to:

To analyze the market share & services of existing players to judge the future prospects of online trading for SMC INVESTMENT SOLUTIONS.

Stock market of India is now been one of the fascinating market worldwide. Indian is among the top ten destination of the world to which global player want to invest. Research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis. In short, the search for knowledge through Objective and Systematic method of finding solutions to a problem is Research.

2.4 SCOPE OF THE STUDY

Since better broadband connectivity across the country and wider awareness of equity as an asset class will push the online trade volumes to over 50% of total Trade therefore it is relevant to the future prospects emerging in the stock market. In order to compete with the online trading market leader like ICICI the company has to work a lot on Online Trading in order to get the competency with other players.

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Since the online trading is accepted by major players in the Indian Stock Market, the importance of Online Trading has increased over the past decade therefore it is very important to consider the Online Trading as a future of the Indian Stock Market. This project would also tell us about the working of the Indian Stock Market and the forces acting in the Online Trading. SMC a software used by SMC Investment Solutions & SERVICES is an edge for gaining competitive advantage; therefore it is relevant to know the working of this software which would be enlightened in our company.

Online Trading Account and Demat AccountAfter the introduction of the online trading systems it is very easy to do online trading with just a PC and an internet connection. All you need to do is just open a Demat account and a trading account with a depository participant or DP. DP is connecting Depository to investors. Depository is the people who stores shares in electronics form. In India there are two depositories, NSDL and CDSL. Most of the banks and brokerage houses provide trading account and Demat account. To open a Demat account you need many things like PAN card, address proof, bank account etc. To know more about Demat account Opening a Demat Account

PROBLEM FORMULATIONThe research focuses on the future prospects of online trading along with SMC investment solutions. The research will basically present the current scenario of online trading in India, the market players involved and the trading strategies followed in the market. The research will cover the Indian trading market and try to understand its various dimensions, so as to know how is the environment in Indian trading market? We will also analyze the competitive strategies of SMC investment solutions

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Therefore this research will help in understanding Indian trading market and also try to find future prospects of online trading with SMC Investment Solutions.

2.5 METHODOLOGY

Marketing Research Is the systematic design collection, and analysis and reporting of Data and findings relevant to specific marketing situation facing the company. Research Design Types of Research: - Descriptive research

Descriptive research includes Surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs, as it exists as the present. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening.

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Marketing Research Process

1.Define the Problem and Research Objectives

2. Develop the Research Plan

3. Collect the Information

4. Analyze the Information

5. Present the Findings

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1. Define the Research Problem and Objective Objective TO ANALYSE THE MARKET SHARE & SERVICES OF EXISTING PLAYERS TO JUDGE THE FUTURE PROSPECTS OF ONLINE TRADING

FOR SMC INVESTMENT SOLUTIONS. The respondents are stratified into offline share trading respondents and online share trading respondents. Hence the sub objective are: To understand satisfaction, perception & awareness of offline trading customers. To understand satisfaction, perception & awareness of online trading customers. 2. Develop the Research Plan The second stage of Research calls for developing the most efficient plan for gathering information. Designing a research plan calls for decision on the data sources, research approaches, research instruments, sampling plan & contact methods. Data Sources There are two types of data.29

Primary data:

The data that is collected first hand by someone

specifically for the purpose of facilitating the study is known as primary data. So in this research the data is collected from respondents through questionnaire. Secondary data: For the company information I had used secondary data like brochures, websites of the company etc. Survey Approach Survey Research: - survey research is used to learn about need, perception and awareness level of the customers for online share trading. The method used by me is Survey Method as the research done is Descriptive Research. Research Instruments Selected instrument for Data Collection for survey is Questionnaire. Questionnaires: - A questionnaire consists of set of questions presented to respondent for their answers. It can be Closed Ended or Open Ended.

Open Ended: - Allows respondents to answer in their own words & are difficult to Interpret and Tabulate. Close Ended: - Pre-specify all the possible answers & are easy to Interpret and Tabulate.30

Types Of Question Included: Dichotomous Questions Which has only two answers Yes or No? Multiple Choice Questions Where the respondent is offered more than two choices. Rating Scale A scale that rates some attributes from excellent to very poor and very inefficient to Very efficient. Sampling Plan After deciding on the research approach and instrument, the marketing researcher must Design a Sampling Plan. This includes: Sampling Unit: - Who is to be surveyed? The marketing researcher must define the target population that will be sampled. The sample Unit taken by me; General individual customer those who trade in share market. Sample Size/ Population Size: - How many people should be surveyed? I have cover entire Delhi city for the survey. My sample size is 200. Sampling Procedure: - How should the respondent be chosen?31

In the Project, sampling done is on basis of area sampling for the Delhi city. In which convenient sampling was done. Contact Methods Once the sampling plan had been determine, the marketing researcher must device how the subject should be contacted: Mail, Telephone, Personal or On-line Interviews. In my project I went for personal Interviewing, as its necessary to go meet the individual respondents at their place so I can collect the right information. 3. Collect The Information The Data collection phase of marketing research is generally the most expensive and the most prone to error. I had visited all the respondents individually in the Delhi city and collected information via questionnaire. I used to talk with them and in that talk I asked them the relevant question of the questionnaire so I could get correct information from them for the objective purpose. For some questions I have to explain them about company, like different plans of the company etc. Generally most of the respondents had filled questionnaire themselves but some avoid filling up so at that time myself filled according to their answer.

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The sample of questionnaires 1 used is in Annexure.

4.

Analysis of the Information or Data Collected After the data have been collected, the researcher turns to the task of analysis then. The analysis of data requires a number of closely related operations such as establishment of categories, then application of these categories to raw data though coding, tabulation and statistical inferences. The unwieldy data should necessarily be condensed into a manageable groups and tables for further analysis. The researcher can analyze the collected data with the help of various statistical measures. After collecting the data I used hand tabulation method for analysis.

Interpretation of survey: Based on collected information the analysis is done.

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CONCEPTUAL DISCUSSIONINVESTOR PERCEPTIONSEBI in association with National Council of Applied Economic Research (NCAER) conducted a Survey of Indian Investors in 1998-99 and then followed it up in 200001. The survey of 2000-01 was based on a sample of 288,081 geographically dispersed rural and urban areas. The findings of this survey were released in September 2003. The survey estimated that a total of 13.1 million or 7.4 per cent of all Indian households totaling 21 million individuals directly invested in equity shares or debentures or both during 2000-01. The other findings are as listed below: 1. The number of debenture owning households and individual debenture holders far exceeds household and individual equity investors. Of the total 13.1 million investor households, 9.6 million households owned bonds or debentures, whereas only 6.5 million investor households owned equity shares. 2. The percentage of households investing in equity or debentures is more in urban areas than in rural areas. This divergence is more in case of equities compared to debentures. Of the 51 million urban households, 7.8 million households representing more than 12 million urban individual investors owned equity shares or debentures or both. Whereas, of the 125 million rural households, only 5.3 million households representing more than 8 million individual investors shows a definite migration of investors from equity market to bond market during the period between the two surveys. 3. The survey results also clearly reveal that number of non-investor households have increased from about 156 million in 1998-99 to nearly 164 million in 2001-02 constituting nearly 92.6 per cent of all households. 4. It was also observed that the investor population and town size are directly proportional. The largest city with more than 50 lakh population accounted for about 17 per cent of investor households and the next higher segment, more than 31 per cent investor households were in towns with population between 10 and 50 lakh.

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Primary MarketAn aggregate of Rs. 2,676,600 million were raised by the government and corporate sector during 2005-06 as against Rs. 2,572,201 million during the preceding year. Government raised about two third of the total resources, with central government alone raising nearly Rs. 1,476,360 million.

Corporate SecuritiesThe average annual capital mobilization from the primary market has grown manifold since the last two-three decades. It received a further boost during the first half of 1990s with the capital raised by non-government public companies rising sharply from Rs. 43,120 million in 1990-91 to Rs. 264,170 million in 1994-95. Thereafter, there has been a decline due to conditions prevailing in the secondary market. However, the year 2005-06 took a turnaround in its performance as compared to the previous year by mobilizing Rs. 32,100 million. The capital raised, which used to be less than 1% of gross domestic saving (GDS) in the 1970s increased to about 13% in 1992-93 but thereafter witnessed declines. Though there has been a considerable increase in the amount mobilized in 2005-06, when seen as a percentage of GDS, it is 1.20% (Table 1-8). Data in Table 1-9 shows that there is a high preference for raising resources in the primary market through private placement route. Private placements accounted for 89% of total resources mobilized through domestic issues by corporate sector during 2005-06. Indian market is getting integrated with the global market, though in a limited way through Euro Issues. Since they were permitted access in 1992, Indian companies have raised about Rs. 30,980 million through American Depository Receipts (ADRs)/Global Depository Receipts (GDRs). FIIs have invested heavily in Indian market in 2005-06. They had net cumulative investments of US$ 38.75 billion as at end of March 2006. There were 745 FIIs registered with SEBI as of end March 2006. It appears that more and more people prefer mutual funds (MFs) as their investment vehicle. This change in investor behavior is induced by the evolution of a regulatory framework for MFs, tax concessions offered by Government and preference of 35

investors for passive investing. Starting with an asset base of Rs. 250 million in 1964, the total assets under management at the end of March 2006 have risen to Rs. 1,396,160 million. During the last one decade, the resources mobilized by the MFs are increased from Rs. 112,440 million in 1993-94 to Rs. 476,840 million in 2005-06.

Secondary MarketCorporate Securities There are 23 exchanges in the country, which offer screen based trading system. The trading system is connected using the VSAT technology from over 357 cities. There were 9,368 trading members registered with SEBI as at end March 2006 (Table 1-10). The market capitalization has grown over the period indicating more companies using the trading platform of the stock exchange. The all India market capitalization is estimated at Rs. 13,187,953 million at the end of March 2006. The market capitalization ratio defined as the value of listed stocks divided by GDP is used as a measure of stock market size. It is of economic significance since market is positively correlated with the ability to mobilize capital and diversify risk. It increased sharply to 52.3% in 2005-06 against 28.5% in the previous year. The trading volumes on exchanges have been witnessing phenomenal growth over the past decade. The trading volume which peaked at Rs. 28,809,900 million in 2000-01, fell substantially to Rs. 9,689,093 million in 2004-05. However, the year 2005-06 saw a turnaround in the total trading volumes on the exchanges. It registered a volume of Rs. 16,204,977 million. The turnover ratio, which reflects the volume of trading in relation to the size of the market, has been increasing by leaps and bounds after the advent of screen based trading system by the NSE. The turnover ratio for the year 2005-06 accounted at 122.9%. The relative importance of various stock exchanges in the market has undergone dramatic change during this decade. The increase in turnover took place mostly at the big exchanges. The NSE yet again registered as the market leader with more 85% of total turnover (volumes on all segments) in 2005-06. Top 5 stock exchanges accounted for 99.88% of turnover, while the rest 18 exchange for less than 0.12% during 2005-06 (Table 1-11). About ten exchanges reported nil trading volume during 36

the year. S&P CNX Nifty is the most widely used indicator of the market, .The index movement have been responding to changes in the governments economic policies , the increase in FIIs inflows , etc. However, the year 2005-06 witnessed a favorable movement in the Nifty, wherein it registered its all time high in January. The movement of the S&P CNX Nifty, the most widely used indicator of the market, is presented in Chart 1-1. The index movement have been responding to changes in the governments economic policies , the increase in FIIs inflows , etc. However, the year 2005-06 witnessed a favorable movement in the Nifty, wherein it registered a high in January 2006 of 2014.65. The point-to-point return of Nifty was 80.14% for 2005-06.

Resources mobilized through public Issues(Amount in Rs. Million) Year Resources raised by non-government companies 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-04 2003-05 2004-06 43,120 61,930 198,030 193,300 264,170 160,750 104,100 31,380 50,130 51,530 49,490 56,924 18,777 32,100 3.32 4.38 12.76 9.98 10.48 5.34 3.28 0.84 1.27 1.11 1.01 1.17 0.74 1.20 % of GDS % of disbursement by Fis 33.66 38.08 85.54 74.85 78.69 41.59 24.40 5.85 8.59 7.51 6.89 10.18 18.37 15.08 750,800 112,530 130,210 112,430 112,750 583,30 203,70 40,640 36,110 199,532 111,350 71,370 45,830 476,840 Mobilisation By MF

Government SecuritiesThe primary issues of the Central Government have increased manifold during the decade of 1990s from Rs. 89,890 million in 1990-91 to Rs. 1,476,360 million in 200506 (Table 1-9). The issues by state governments have also increased over this period from Rs. 25,690 million to Rs. 505,210 million. The Central Government 37

mobilized Rs. 1,215,000 million through issue of dated securities and Rs. 261,360 million through issue of T-bills. After meeting repayment liabilities of Rs. 326,930 million for dated securities, and redemption of T-bills of Rs. 261,260 million, net market borrowing of Central Government amounted to Rs. 888,160 million for the year 2005-06. The State Governments collectively raised Rs. 505,210 million during 2005-06 as against Rs. 308,530 million in the preceding year. The net borrowings of State Governments in 2005-06 amounted to Rs. 463,760 million. The trading in government securities exceeded the combined trading in equity segments of all the exchanges in the country during 2005-06. The aggregate trading in central and state government dated securities, including treasury bills, increased by manifold over a period of time. During 2005-06 it reached a level of Rs. 26,792,090 million. The share of WDM segment of NSE in total turnover for government securities decreased marginally from 52% in 2004-05 to 47.6% in 2005-06. However, the share of WDM segment of NSE in the total of Non-repo government marginally from 74.01% in 2004-05 to 74.89% in 2005-06. Along with growth of the market, the investor base has also widened. In addition to banks and insurance companies, corporate and individual investors are also investing in government securities. Due to the soft interest rate policy pursued by the RBI, the coupon rates offered on government borrowings have fallen sharply. The weighted average costs of its borrowing have declined to 5.71% in 2005-06. The maturity structure of government debt is also changing. About 77% of primary issues were raised through securities with maturities above 5 years and up to 10 years. As a result the weighted average maturity of dated securities increased to 14.94 years in 2005-06. securities increased

Derivative MarketThe number of instruments available in derivatives has been expanded. To begin with, SEBI only approved trading in index futures contracts based on S&P CNX Nifty Index and BSE-30 (Sensex) Index. This was followed by approval for trading in options based on these two indices and options on individual securities and also futures on interest rates derivative instruments (91-day Notional T-Bills and 10year Notional 6% coupon bearing as well as zero coupon bonds). Now, there are 38

futures and options based on benchmark index S&P CNX Nifty and CNX IT Index as well as options and futures on single stocks. The total exchange traded derivatives witnessed a value of Rs. 21,422,690 million during 2005-06 as against Rs. 4,423,333 million during the preceding year. While NSE accounted for about 99.5% of total turnover, BSE accounted for less than 1% in 2005-06. NSE has created a niche for itself in terms of derivatives trading in the global market.

Risk Management SystemThe risk management system ensures the minimization of inherent known risks with appropriate tools and timely speedy flow of information. An effective risk management system further ensures certain alerts by which unknown risks can be predicted & informed in due course of time. In stock market operation, the risk is too high to imagine and one can find instant impact of every bit of information in terms of monetary gain or loss. So one has to be very careful & particular to the alerts provided time to time by RMS for containing the risks. Further, RMS cant ensure a complete elimination of risks. It can reduce the risk & level of reduction of risk depends upon our own efforts. So it is advised that one should follow set norms & put proper attentions on various alerts send by the RMS during the day /at the end of day for controlling the risks. To start with day to day processes which are implemented on daily basis to eliminate Risk as much as one can with the stipulated tools and techniques. One should apply these tools and techniques according to the requirement of their Management and the Market conditions.

Rationale behind StudyAs result of reforms in financial and real sector new investment alternatives have emerged. There was a time when few individuals possessed majority of the wealth in 39

the society.

With the efforts of government our economy witnessed significant

growth, which led to uniform distribution of income in society. As a result income of masses started rising and they started looking for suitable investment avenues, to achieve their financial goals. From savings accounts, fixed deposits, post office savings schemes, several other investment alternatives have emerged such as capital markets, mutual funds, commodities market, insurance derivatives etc. There has been a major shift towards risky investments in order to earn higher returns. There were also scams like US-64, Harshad Mehtas scam, which forced investors to make changes in their portfolio. But after government efforts investors confidence is restored in equity markets, which led to growth in financial services sector. After this period in today's market scenario we find Indian economy still struggling while the world is facing massive recession. Indian economy is in such position because it is still in its developing stage and so there is so much more to explore and develop. Recently market has faced downtrend but still holding on and offering new investment avenues to investors and still offers lucrative benefits to investors. SMC GLOBAL AND SECURITY plays a very important role along with other players in the market in current scenario by offering its financial services. Investors today are going in for saving their money instead of investing it in the market due to current market situation. Government of India is making constant efforts to support the economy by decreasing interest rate on loans of all types. This showed a positive growth in the market by investors turning back to the market. Also constant efforts have made auto industry to lower down the rates of automotives and private banks also lowered their interest rates on loans to help Indian investors to come forward and step in the market. Thus, this study helps in understanding current market volatility and solutions to deal with it, so as to find future prospects for \SMC GLOBAL AND SECURITY and answer questions like, how to deal with recession evils? How to protect investors interest? How to sustain market position and market share? To understand it and deal with it one always has to go to the basics that is the investors and the reason investor invests is his motive.

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Motives for investment may vary from person to person, but there are some common desires. Everybody expects some return out of investment. Investors are also concerned about the safety of investment. And, in case of an emergency, people want their money back, quickly. Hence, there are three criterias to evaluate every investment avenue: 1. 2. 3. Safety Liquidity Returns

Products & Services SMC customers have the advantage of trading in all the market segments together inthe same window, as they understand the need of transactions to be executed with high speed and reduced time. At the same time they have the advantage of having all kind of Insurance & Investment Advisory Services for Life Insurance, General Insurance, Mutual Funds, and IPOs also. SMC is a customer focused financial services organization providing a range of investment solutions to their customers. They work with clients to meet their overall investment objectives and achieve their financial goals. Their clients have the opportunity to get personalized services depending on their investment profiles. Their personalized approach enables clients to achieve their Total Investment Objectives. Their key product offerings are as follows: o Equity Trading o Commodity Trading o Depositary Services o Portfolio Tracker o Life Insurance o General Insurance o Mutual Fund

COMPANY FINANCIALSRevenue Month Sep 07 Oct 07 Nov 07 Dec 07 Jan08 Feb08 Mar08 (in Lakhs) 29.05 60.27 79.61 107.94 104.37 140.43 128.89

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The above shown graph depicts the revenue generated by SMC in 6 months starting from September, 2007 to March2008. This graph shows an upward sloping trend line. If we look at the numbers, we see a 343% growth in the revenues from 29.05 lakhs in Sept07 to 128.89 lakhs in March08. Though, there have been a few slips in January and March but over all its presents financials of a growth company.

ONLINE Vs OFFLINE TRADINGInternet trading is expected to: Increase transparency in the markets. Enhance market quality through improved liquidity, by increasing quote continuity and market depth. Reduce settlement risks due to open trades, by elimination of mismatches. Provide management information system (MIS). Introduce flexibility in system, to handle growing volumes easily and to support nationwide expansion of market activity. Besides, through Internet trading three fundamental objectives of securities regulation can be easily achieved, these are: Investor protection, creation of a fair and efficient market and, reduction of the systematic risks.

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The investors would be able to track the fluctuations in a particular stock and the market as a whole, while deciding to execute the order and also while the order is being executed. The confirmation of the order would also be real time. The order routing system on which net trading will be done is compatible with screen-based trading terminals used today. Internet trading brings in total transparency between a broker and an investor in case of secondary market operations. When the open outcry system was prevalent, only the broker knew the actually transacted price. This practice diminished significantly when it was taken over by screen-based trading. With on-line trading, investors can now see for themselves the price at which the deal takes place. It will also reduce transaction costs, increase liquidity in the market and ensure total transparency. It allows quick and easy access to valuable research and information to an investor and enables him execute transactions faster and more efficiently on a real time basis. The volume of trade has also increased and has provided depth to the market. Thus, in a nut shell, we can summarize the difference between online and offline trading as follows: ONLINE 1. In online trading mechanism the OFFLINE In offline the investor has no control.

customer has full control on his Demat and trading a/c. 2. Investor in online trading can easily transfer it funds. 3. Broking houses providing online trading also provides live terminals to their clients. 4. The broker provides investor at online trading with advisory facility. 5. Online investor can directly invest into IPOs and Mutual funds also. 6. Investor can place order even after the 43 Offline trader needs to open separate account. Investor cannot place After Market Order Offline investors are deprived of advices. The investor needs to deposit and withdraw fund each time of trading. No live terminal is provided.

market closes. 7. The client can globally access the account and can trade anywhere in the world where Internet facility is available. 8. No documents are required for trading. 9. Any Demat/DP account can be attached with any companys trading account. 10. Online trading is time effective 11. No pool account is maintained at online process

(AMO). Trader cannot trade away for the place where he/she has opened its account. DI slips are required for trading. The Demat account cannot be linked with any trading account. It is time consuming process. In offline pool account are maintained.

SEBI Guidelines for online TradingAccording to SEBI guidelines on Internet trading, brokers providing e-trading must have a minimum net worth of Rs. 50 lakhs, besides obtaining specific permission of the stock exchange concerned. Stock exchanges should ensure that the systems used by the broker provide for security, reliability and confidentiality of data through use of the encryption technology. For signatures, participants should use authentication technologies and certification agencies as and when notified later. Stock exchanges should also ensure that brokers maintain adequate back-up systems and data storage capacity. Brokers should have adequate system capacity for handling data transfer and arrange for alternate means of communication in case of Internet failure. The following security features are mandatory for all Internet-related trading systems: User ID. First level password. Automatic expiry of password at the end of reasonable duration. All transaction logs with proper audit facilities to be maintained in the system. Secured socket level security server for access through Internet. Suitable firewalls between trading set up directly connected to an exchange trading system and the internet trading set up. 44

Internet TradingAt the end of March 2007, 78 trading members on the CM segment provided internet based trading facility to investors. The members of the exchange in turn had registered 849,696 clients for web based access as on March 31, 2007. In the CM segment about 499 lakh trades for Rs. 81,034 crores, constituting 7.11% of total trading volume, were routed and executed through internet. The following table gives the growth of internet trading.

Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Enabled Members* 3 61 82 80 70 78

Registered Clients* 123578 231899 346420 463560 849696

900000 800000 700000 600000 500000 400000 300000 200000 100000 0 Clients 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Year

Trading Volume (Rs. Crore) 7287.81 8138.81 15360.76 37945.08 81033.81

% of total trading volume 0.54 1.59 2.48 3.45 7.11

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

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90000 80000 70000 60000 50000 40000 30000 20000 10000 0 Volum e 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

(Source:

- www.nseindia.com)

By the end of Dec. 2006 the number of clients doing the online trading has increased to 13lacs.

LiquidityThe liquidity in the CM segment, as measured by the turnover ratio, has witnessed a steady increase and reached nearly 10.13% during March 2007. More than 98.02% of securities available for trading are being traded every month and 95.6% of the securities were traded for at least 100 days during 2005-06, as indicated below:

Distribution of TurnoverThe concentration of trading among top N securities/brokers. It is observed that the top 5 and 100 securities account for about 25.88% and 84.26% of total turnover in the CM segment in 2005-06. The details of 50 most active securities during 200506, which accounted for 78.40% of turnover Broker-wise distribution of turnover increasing diffusion of trades among a large number of trading members over the years. During 2005-06, top 5 brokers accounted for only 13.52% of turnover, while top 100 brokers accounted for 65.09% of total turnover. The following shows the turnover of the trade done through internet.Trade Date 5-May-2007 4-May-2007 3-May-2007 2-May-2007 29-Apr-2007 28-Apr-2007 Settlement No. 2007082 2007081 2007080 2007079 2007300 2007078 No. of Trades 649071 655428 680710 669625 308508 652819 Turnover (Rs.cr) 1182.21 1234.84 1260.11 1216.86 735.79 1326.26

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27-Apr-2007 26-Apr-2007 25-Apr-2007 24-Apr-2007 21-Apr-2007 20-Apr-2007 19-Apr-2007 18-Apr-2007 17-Apr-2007 13-Apr-2007 12-Apr-2007 10-Apr-2007 7-Apr-2007 5-Apr-2007 4-Apr-2007 3-Apr-2007

2007077 2007076 2007075 2007074 N2007073 N2007072 N2007071 N2007070 N2007069 N2007068 N2007067 N2007066 N2007065 N2007064 N2007063 N2007062

677594 565581 613816 614635 681553 585334 607168 568237 501438 686576 681800 570339 758906 633591 635877 591383

1597.00 1353.48 1263.89 1356.16 1375.54 1143.46 1200.28 1052.51 922.51 1315.20 1284.18 1143.94 1655.68 1306.19 1238.40 1180.07

MARKET CAPITALIZATIONThe total market capitalization of securities available for trading on the CM segment increased from Rs. 363,350 crore as at end March 1995 to Rs. 1,585,585 crore as at end March 2007. Top 50 companies account for 69.21% of total market capitalization as at end March 2007.

SECTORAL DISTRIBUTIONThe share of top '50' companies, classified according to different sectors, in terms of trading volume and market capitalization. A drastic change in the importance of different sectors is observed since NSE commenced trading. The share of manufacturing companies in trading volume of top '50' companies, which was more than 23% in 1998-99, had witnessed a decline in the years 2001-02 and 2002-03, but a turnaround was noticed in the year 2003-04 (it accounted for 37.66%) which was also maintained till 2006-07 with the share of manufacturing companies rising to 41.81%. As compared to this, the share of information technology (IT) companies in trading volume, which had been quite high in the year 2000-01, witnessed a considerable decline and stood at only 19.56% in 2005-06. A mixed trend has been noticed in these sectors in terms of market capitalization. Sectors like manufacturing, which used to dominate in terms of market capitalization in the year 1999-00 witnessed a dip in 47

2002-03, however this sector has witnessed a rebound and accounted for 31.13% and 23.35% in 2005-06 and 2006-07 respectively. The IT sector has also shown a turnaround this year with 22.54% in the top 50-market capitalization in 2006-07.

ONLINE TRADING WITH SMCSMC launched online trading in June, 2006 in addition to the traditional offline mode of trading on NEATXSV4. Since then SMC has managed to a fair share of client base which is very much visible from the company financials. SMC is doing a good job in the offline industry as it has established a good brand name for itself in a short span of time. But looking at the competition, the company decided to launch its online trading portal in June, 2006. Besides, being up in the line of competition, Online trading also helps the company to cut recurring costs as it happens in offline trading. Though, setting up online trading infrastructure requires one time set up cost like the cost of software, bandwidth charges, skilled manpower etc. which is quite high. But the benefits are recurring as the online trading is about volumes. Larger the client base, higher the revenues. This is screenshot of SMC, which is the online trading software of SMC.

Features of SMCA browser based trading software that enables clients to access their accounts from anywhere using internet by a unique ID and password. This facility is available to all the online clients the moment they get registered with SMC INVESTMENT

SOLUTIONS & SERVICESThe product has a lot of features which provides various benefits to clients:

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1) The screen gives live streaming quotes from respective exchanges. The client has an option of having live Multiple Windows for different exchanges and his personal window where he can add the scrips of his choice and save it. 2) It provides a Common window for display of market watch and order execution where the client can click + (plus) for Buy and (minus ) for Sell or Click on the scrip and Press F1 to Buy and F2 to sell which provides an easy trading facility to the client. It also provides an Offline order placement facility. 3) Before Buying or Selling, the client can watch the Market Depth, which tells about Best Buy/Sell rates and Quantities etc of that security & also enables the clients to use the Stop-loss Feature to minimize their losses. 4) A very useful feature of the product is FIRE THE TRIGGER, which lets the TRIGGER, client set an Alert for itself to indicate a certain price of the scrip. The user can set a different color or an audio alarm. 5) It enables clients to transfer funds online from their bank account to SMC trading account. SMC has banking integration with PNB, HDFC,AXIS Bank. 6) It also enables the clients to view the transactions (Buy or Sell) done during the day. Beside the rate, quantity, type of account etc, the client can also view the order number, time of transaction & can also get the details of entire fortnight. 7) The client can see the Bids/Offers that are not yet executed by the Exchange and has the options to Modify and Cancel the Order. 8) Greater exposure for trading on the available margin & DP MARGIN STOCK with very competitive commission. 9) It also provides Real time updating of exposure and portfolio while trading & Online Integration of trading a/c with two common depositories to help move clients shares to and fro with ease.

They also have the authority to square of the positions of the clients who dont pay their margin money. 49

IT shares the responsibility of supporting the entire system so that it runs smoothly.

How to do trading with our SMC Swift Model:Step 1 Install the Software provided by us and register urself on the software

Step 2: Check the Current Status of the account

Step 3: Check the limit assigned

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Step 4 Account Valuation

Step 5 To Buy

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To Sell

ORDER BOOK

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TRADE BOOK

Default Limit and Exposure to the Clients:1. For Liquidated Value greater than or equal to 2 LAC, default limits will be opened in Intraday ten times and Delivery Three times (Only on a Cat) on Cash market and one time on FNO market of Net Margin. 2. For Liquidated Value less than 2 LAC, default limits will be opened in Intraday five times and Delivery Three times (Only on a Cat) on Cash market and one time on FNO market of Net Margin .53

Square Up: It is a margin status when percentage of coverage is less then 25% when comparing funding stock (A cat stock) with gross margin. It is a last alert that the position of client may be squared up at any time if the Percentage of coverage goes below 25%. It is a last alert that something must be done either by reducing the position or enhancing the margin .It is a point where the position of the client is squared up. NORMAL SQUARE OFF (LESS THEN 25%) This activity has been done on daily basis with the help of software driven Batch file (provided by the IT department). Codes which have been not uploaded in the Batch file due to any exceptions are any commitment from Branch end are done manually if commitment fails. Sauda of a client BELOW 25% will be compulsory squared off next morning, in case no proper reply received from the concerned RM/Branch. Proper Reply here shall mean: - Amount is being transferred to top up the margins only through a transfer Cheque or Demand draft subject to the condition that the transfer Cheque or Demand draft is reflected in the bank as having been deposited before 2:00 P.M. - The reply should Specify what positions shall be squared off before that 10.30 a.m. , in case the same is not done to the extent of bringing the clients margin above the required 50% margin levels , the RMS shall block the client and square off the balance position so as to bring the client above the required margin levels.54

Margin Call square off process:1. 2. 3. Preparation of square off cases report. Preparation of Batch File for Automated Square off. Reconciliation of Batch File after and before it has been executed.

4. Consolidation of square off replies of margins from Branch end and make it considered. 5. Preparation of Exceptions client List.

6. Making note of commitments from Branch and Regional Heads against square off codes and make follow up accordingly. 7. Preparation clients Cheque deposit details.

Before: - We have to make sure that the batch file has been created according to square off policy of RMS. All exceptions and necessary details has been taken into consideration or not. After: - After execution of the batch file we have to check that every order of the file is properly executed or not and if there is any rejection then immediate action to be taken (Rejection to be squared manually) SQUARE OFF 5TH DAY LEDGER DEBIT CLIENTS (NON LAS):This activity is done on the Manual basis only. The process of square off 5th day ledger debit is same as Normal Square off; only difference is that it is done manually. To square off we have to prepare NON LAS LEDGER DEBIT REPORT.

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DATA ANALYSISQ 1. Do you know about investment options available?

KNOWLEDGE Yes No TOTAL

%AGE 80% 20% 100

InterpretationOnly 80% people knows the exact meaning of investment. Because of remaining 20% take his/her residential property as an investment. According to law purpose this is not an investment because of it is not create any profit for the owner.

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Q 2. Most important things you take into your mind while making investments? FACTOR Risk Returns Both TOTAL %AGE 8% 17% 75% 100

Interpretation75% people are considered the both factors risk as well as returns but, only 25% considered the risk or returns factor.

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Q 3. Awareness related to security markets KNOWLEDGE Complete Partial Nil TOTAL PERCENTAGE 8% 75% 17% 100

InterpretationOn that basis, we conclude that 17% people know nothing about the securities investments and 75% people have partial knowledge about it, so, some promotional activities are required for increasing the awareness about security market.

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Q 4. What is the basic purpose of your investment? INVESTMENT PURPOSE Liquidity Returns Capital appreciation Tax benefits Risk covering Others TOTAL PERCENTAGE 30% 25% 10% 20% 5% 10% 100

Interpretation75% people are interested in liquidity, returns and tax benefits. And remaining 25% are interested in capital appreciations, risk covering, and others.

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Q 5: Since how long have you been investing in capital market? Time Period Frequency 80 73 47 200 %age 39 37 24 100

Less than 3 yrs 3-5 yrs More than 5 yrs Total

24% 39%

37%

Interpretation Looking at the figures, we can observe that 39 % of people have been investing for less than 3 years and so on. We know that the capital markets have picked up in past 4-5 years. Also, there are more stringent norms by SEBI and exchanges. That is the reason why people have started to pose more trust in capital markets now.

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Q 6 : Do you trade Online? Yes No Total Frequency 141 59 200 Percentage 70.5 29.5 100

141 150 100 50 0 Y es No 59

Interpretation Out of the people surveyed, 70 % people trade online. This shows a good prospect for online trading in future.

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Q. 7. COMPLICATED PROCESS Frequency 60 46 94 200 Percentage 30 23 47 100

Yes No No reply Total

30% 47 %

2 3%

Ye s

No

No re p ly

InterpretationThis table shows the consolidated table of number of people voting for different factors as to why dont they prefer to trade online.

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Q. 8 . Why not online?Factors LACK OF MARKET KNOWLEDGE NO COMPUTER INVESTMENT RISK POOR SERVICES COMPLICATED PROCESS No. of People Yes No 36 20 100 75 60 21 110 75 72 46

W hy N ot O nline120 100 80 60 40 20 0LA CK OF MA RKET KNOWLEDGE NO COMPUTER INVESTMENT RISK POOR SERVICES COMPLICA TED PROCESS

# Respondents

Y es No

F a c to r s

InterpretationWe asked the people as to why they dont trade online. Out of the reasons, given, we observe that maximum people avoid doing online trading as they perceive it to be more risky. Also, some of them have experienced poor services from their online brokers. Hence, they avoid doing online trading. At the same time the companies need to trap those 30% people who are still not aware of the benefits of online trading and try to shift them towards online trading. The companies should also try to find and analyze the reasons as to why these customers are not trading online in spite of so many benefits the online trading offers.

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IF YES Name of the company you trade with.Kotak Securities ICICI direct IndiaBulls Sharekhan SMC Investments Solutions Others TOTAL Frequency 42 35 60 30 15 18 200 Percentage 21 17.5 30 15 7.5 9 100

Mkt. share60 50 40 30 20 10Se cu r itie s ICI CI d ire ct In d ia B ull s Sh a re Un kh a ic o n n In ves tme nt.. .

0

InterpretationIndia Bulls enjoy maximum market share of 30% followed by Kotak and ICICI direct. SMC has only 7.5% share at present but is growing

Ko t ak

Oth e rs

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Q 9: Which factor is most important while choosing a broking house?

F re q ue nc y 80 60 40 20 0 35 34 11 Low R e g u la r F a s t F ast B ra n d tra n s a c tio fo rm a tio Q u e ry tra n s a c tio Im a g e in 35 34 45 11 75

45

F re q u e n c y 7 5

InterpretationOut the factors that attract ant investor to online trading are the low transaction cost followed by fast processing so that their margin is not lost due to time lag. Also, another factor that is of importance are the regular updates that the organization provides to its clients.

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Q 10 : Where ELSE do you invest your surplus fund? Areas Direct Equity Mutual fund Insurance Real Estate Banks Frequency 75 65 150 35 150

Other investments

16% 32% 14%

7% 31%

Direct Equity

Mutual fund

Insurance

Real Estate

Banks

Interpretation We also found that besides stock Market, people prefer to invest in Mutual funds. Thus, it can also serve as a good opportunity to earn revenue for the company.

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FINDINGS AND RECOMMENDATIONSAs we worked with this project, we came across some good and some not so good features of this product. We take this opportunity to suggest some measures in order to make improvements to the product. 1. SMC needs to be more flexible with account types and brokerage structure so that it can cater to all types of client segments and hence, increase its client base. 2. SMC need to focus on HNI and corporate accounts more as they bring in bulk business. 3. It should also try to collaborate with more banks so that the investor doesnt have to go through the turmoil of opening new accounts. 4. Their were some features in SMCPlus that needed to be changed and so were suggested by us. There was no feature of Payment Gateway for fund transfer to and from the client in case of Pay-in and Payout. The Margin report and Intra-day report though, contains all the necessary details, are a little complicated from the clients end. In case the client does some transactions for Intra-day purpose but he gets his orders in different lots. Now, if he wants to change his order type from Intra-day to Delivery, then he has to go to trade log and change the order type for each of the order lots. This can be done away with by going to Net Position feature and changing it in one go. SMCSwift gives the client a facility to put an alarm if a certain rate of a particular stock is achieved.

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We suggest that a new feature should be introduced wherein an SMS facility should be provided to the clients who are on the go most of the time. This feature will be unique as no other software does it and can become the USP of this product. This will also benefit the company n terms of revenue. 5. As a whole, if we look in general, we find a lot of frauds happening in this field. Thus, there should be proper compliance measures taken up by the company for investor protection like sending reports on the total trades done on their accounts. 6. Also, looking at the competitive scenario, it is suggested that the company should aggressively focus more on Sales and promotional activities by efficiently utilizing the manpower resource it has. 7. The company can also introduce dial and trade facility in case online system defunct.

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CONCLUSIONFacts and figure speak in itself that as from the past years analysis of capital market we could see the bullish trend of the Indian stock market. There has been a tremendous pressure on the Indian industries to perform well as the expectations of the investors are rising with bullish market sentiments. The Online trading has grown tremendously since 2000-01 to 2007 form 7287.18 cr. to 81033.1 cr. respectively. The client base has also improved form 1,23,578 to 8,49,696. This has raised to 12.70 lacs till Dec. 2007. Compared to the Western countries, online trading is still in its infancy in India. With trading turnover at around Rs. 10 crores per day from online trading compared to a combined gross turnover of around Rs. 9000-10,000 crores handled by the BSE and NSE together, online trading has a long way to go. With some ten dotcom players, such as icicidirect.com, investsmart, 5paisa.com, indiabulls, and a host of brokers, such as kotaksecurities, sharekhan, motilaloswal, Geojit Securities and duttstock, entering the online ring promises exciting times ahead. However, the existing online trading system suffers from a major lacunae. icicidirect.com currently offers online trading services only to investors who have a bank or a demat account with ICICI. Or, investors can open an online trading account with SMC only if they open a demat account with it and have a bank account either with ICICI, HDFC Bank. If investors do not have these accounts, they have to go through the entire rigmarole of opening up the bank and demat account again for easy operation. Apart from the hassles involved, there may also be certain extra charges involved in this exercise that may have to be built into the overall cost of online trading.

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ANNEXURES

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QUESTIONNAIREQ 1. Do you know about investment options available? KNOWLEDGE Yes No

Q 2. Most important things you take into your mind while making investments? FACTOR Risk Returns Both Q 3. Awareness related to security markets KNOWLEDGE Complete Partial Nil TOTAL Q 4. What is the basic purpose of your investment? INVESTMENT PURPOSE Liquidity Returns Capital appreciation Tax benefits Risk covering Others

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Q 5: Since how long have you been investing in capital market? Time Less than 3 yrs 3-5 yrs More than 5 yrs Total

Q 6 : Do you trade Online? Yes No Q. 7. COMPLICATED PROCESS Yes No No reply

Q. 8 . Why not online?Factors LACK OF MARKET KNOWLEDGE NO COMPUTER INVESTMENT RISK POOR SERVICES COMPLICATED PROCESS

IF YES Name of the company you trade with.Kotak Securities ICICI direct IndiaBulls Sharekhan SMC Investments Solutions Others

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Q 9: Which factor is most important while choosing a broking house? Low transaction Regular information Fast quarry Fast transaction Brand image Q 10 : Where ELSE do you invest your surplus fund? Areas Direct Equity Mutual fund Insurance Real Estate Banks

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BIBLIOGRAPHYBOOKS Gupta, C.B., Human resource management Kothari, C.R., Research Methodology Gupta .S.L ,Research Mythology

Sources of Secondary Data:1. Magazines and Journals: S & P Emerging Stock Market Factbook SEBI Bulletin The Economic Times The Mint The Hindustan Times The Times of India The Wallstreet Journal Indian Economy Magazine Financial Management (Prasanna Chandra 12th Edition) Marketing Research (TN Chabbra 4th Edition)

2. Websites www.cmie.com www.rbi.org.in www.SMCindia.in www.nse-india.com www.wikipedia.com www.ask.com www.google.co.in www.sebi.gov.in

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