indian brokrage industry (1)

8/10/2019 Indian Brokrage Industry (1)

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1.1 Introduction to Brokerage Industry

Brokerage industry in India is experiencing rapid growth and diversity. At present apart of

brokerage business industry is also offering wide range of financial services. These

developments have resulted in huge spurt in business and also growing market share of the

large sized brokerage houses has led to surge in enterprise value. In the year 2 ! I"#s of large

firms $%otilal#swal& 'eligare& and (delweiss) received huge response $Indian catalog& 2 *).

At the same time global and private e+uity firms have taken stake in brokerage firms. In India

there are about ,- e+uity brokerage houses that are at present listed in the stock exchanges.

The stock markets in India are one of the oldest in the world and have a strong presence and

network of domestic and local intermediaries. #wing to the high incidence of indigenous

e+uity broking& India got a ative /hare Brokers0 Association as early as *1!- this association

later came to be known as the Bombay /tock (xchange $B/(). In *13,& there were more than

*& brokers in %umbai who traded in stocks high premium was also a familiar concept

during that time. #ne of the earliest stock market booms that occurred in *13 s after the

American 4ivil 5ar led to the creation of many 6oint stock cotton7ginning mills and this

phenomena stirred an e+uity culture that saw share prices touch stratospheric levels.

Industry Insight:-

%a6ority of the broking firms entered the business post *88 . A ma6ority of members

have memberships in more than one stock exchange and across e+uities& e+uity

derivatives and commodities futures in domestic and International stock exchange.

#n the back of growing e+uity culture broking activity is spreading in Tier II and Tier III cities in India.

9eepening financial system and economic growth has provided growth and expansion

opportunities to broking firms. Access to public e+uity markets and growing

international investor0s interest has enabled them to raise resources. Although there are more than 8 brokers registered with /(BI 1 : of the turnover in

/( and B/( is accounted by about * brokers.

S.V INSTITUTE OF MANAGEMENT,KADI 1


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1.2 Growth of Brokerage Industry

In terms of volume composition& cash market trades accounted for 1: of overall volumes in

8%; as compared to * : in ;< **=*2 and *>: in ; $'s *.3- trillion) increased by *-: when

compared to ;< **=*2 $?'s *.,> trillion). A9@ grew at a faster clip in >; $'s. *.!

trillion) as compared to *; $'s *.-8 trillion).

The domestic e+uity brokerage turnover $B/( and /( combined) registered an increase of

*3: $annualized) in 8%; to 's > 8 trillion $'s >-3 trillion in ;


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S.V INSTITUTE OF MANAGEMENT,KADI "

Source: ICRA Analysis !S" and BS" we#site


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$otal !u%#er of $rades and trade si&e of Cash and 'eri(ati(e seg%ent

The trading activity in the market& the number of trades in the cash segment declined by ?*!:

$annualized) while average trade size remained flat when compared to ;


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8 SBI Ca* Sec: This is the broking arm of /tate Bank of India but there broking service is not

very great. There brokerage structure is also not very competitive and being a public sector

bank& there is a lot to be desired as far as the customer service is concerned.

1+ 9erodha : They are one of the new stock broker in India which have started discount

trading in India. They have a very competitive brokerage structure and decent customer

service. These type of discount brokers are new in India and providing tough competition to

full service brokers.

!u%#er of $er%inals in Stock Brokerage Industry )

Co%*any !a%e $er%inals Su# #rokersAngel Broking Fimited *,,>3 ! >*

'eligare /ecurities Fimited * >!* *> *

%otilal#swal /ecurities Fimited 1> *-*!

/%4 Clobal /ecurities Fimited !31 *8-

Arcadia /hare D /tock Brokers "rivate Fimited 3 >3 2*!-

Anand'athi /hare And /tock Brokers Fimited ->>2 331

Bonanza "ortfolio Fimited -28> *2!1

%arwadi /hares D ;inance Fimited ,8!* 3*

Anagram 4apital Fimited ,1>3 22!-

/ushil ;inancial /ervices "rivate Fimited >* ! !>8

Earvy /tock Broking Fimited 2882 ,8

EI;/ /ecurities "rivate Fimited 28 2 11

'eliance /ecurities Fimited 2122 28,>

Gnicon /ecurities "rivate Fimited 23*3 !2

Ashika /tock Broking Fimited 2--2 **8

Tracom /tock Brokers "rivate Fimited 2* *!

Eha6anchiD Candhi /tock Broking "rivate Fimited 2 !-

% " @ora /hares D /ecurities "rivate Fimited *8 1

" www.bus%$essm&p%$'%&.com

S.V INSTITUTE OF MANAGEMENT,KADI )
http://www.businessmapindia.com/http://www.businessmapindia.com/


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/ I Investment D Broking "rivate Fimited *3 >

/"T /ecurities Fimited *- ,

2.1 Research ,# ecti(es:

;ri%ary o# ecti(e:

The main ob6ective of this report


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After study of Clobal and Indian scenario following analysis have be done

"(/T(F Analysis

%ichel "orter s ;ive ;orce %odel Analysis

C( ine 4ell %atrix/trategic Croup %apping

Eey success factor of the industry

#pportunities D Threats Analysis

;inancial Analysis

2.3 ?i%itations

In "ro6ect 'eport the secondary sources are used for the data collection. %ost of the data taken

from the different websites so there are constrain of Time and Authencity

S.V INSTITUTE OF MANAGEMENT,KADI +


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).1 G?,BA? SC "!ARI, , I!'@S$R

5arket Ca*itali&ation

In 2 *,& the global market capitalization recovered with a * .>8: growth rate to G/9

* 1 - * . > % i l l i o n . This growth rate was nevertheless not sufficient to reach again the

levels observed during the first months of 2 **.

The best performance in 2 *, was observed in the Americas $3.8*:) followed by Asia=

"acific $J>. 1:) and (A%( $J ., :).

In the Americas& the growth was mainly driven by the G/ exchanges that increased **:

while 4anada increased slightly less $1:) and contrasted trends were observed in Fatin

American countries.

In Asia="acific& the highest growth rates were observed in Thailand $J,.-:)& "hilippine

$J>.8:)& /ingapore $J2.1:)& Kong Eong $J2.-:) and India $J2.-:) and relatively lower

growth rates occurred in mainland 4hina and Lapan $respectively J .1: and J .-:).

In (A%(& Africa %iddle (ast region experienced a 2 : growth rate& (urozone increased

*,: while the F/(C in the GE rose ,:.

!u%#er of listings

In 2 *2 the total number of listed companies on 5;( exchanges was steady $ .1:) .! :

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in Americas& J*.3: in Asia="acific and =*. : in (A%(.

0alue of share trading

9e spite the good performance of market capitalization in 2 *2& (lectronic #rder Book $(#B)

turnover value declined by ,!.8 :. All the regions were affected by this trading volumes

drop (A%( $8.3 :)& Americas $= -,.3 :) and Asia "acific $=2.8:)

$a#le 1: Regional and total " do%estic e uity %arket ca*itali&ation

;erfor%ances at year- end 2+1) co%*ared to year-end 2+1

;articulars @S' 'ec 2+1) @S' Dan2+1

E change FDan 1) in @S'

E change FDan 1) in local cur

/orea "Hchange *> 2 11 1 8. *233 -1>,,1.

).3E 1.6E

oChi5inh S" 1,- 82 -3*.3 8!8 3!2 -23.8 26.+E 27.)E

Da*an "Hchange Grou* -

$okyo

,!! - 8 !82.! ,- 13* 1*1.3 22. E )4.6E

! S" *! 8,8 11>.1 *! 3 ->-., 13.2E 13.2E

Shen&hen S" 1 !8* *82., 8 *-* >-3.* 22.8E 18.7E

!AS'A ,5J 3 1, 838.! - 88! -*2.1 23.6E 23.6E

"uroneHt 2 3 1>3. 2 --2 333. 1 .2E 1 .8E

S.V INSTITUTE OF MANAGEMENT,KADI 1-

$i%es 9one @S' #n @S' #n E change

"Hchange "nd-2+1) 'ec "nd-2+1

Dan

In @S'

A%ericas -3!. 1 -> ., 3.8*:

Asia-;acific ! 1.-* !>*.*, >. 1:

"uro*e Africa 5iddle "ast -!-.!* -!>.>8 ., :

$otal " *1-*.> *1>,.8> * .>8:


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Colo%#o S" 2 ,-8 183.! 2 3 1 231.! 12.7E 14.6E

Saudi Stock "Hchange K$adawul

* !-2 1--., * 1 * !**.8 23.1E 23.1E

!ew 9ealand "Hchange 1 *,>.> 12 ->3.1 17.6E 2).)E

$AB?" 2: ?argest do%estic e uity %arket ca*itali&ations at year-end 2+1 and 2+1)

"Hchange "nd of 'ec.2+1) "nd of Dan 2+1 E Change

A%erica * *-1 * 2*8 .! :

Asia ;acific 2> 312 2> !-8 *.3:

"uro*e Africa And 5iddle east 8 -3! 8 3,8 =*. :

$otal ) +6 ) 426 +.7E

$a#le ): $otal !o of ?isted Co%*anies on " as on 2+1

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$a#le 0alue of share trading in %illions of local currencies

).2 Glo#al Challenges in Broking fir%

In general& broker=dealers appear to be making slow but steady progress in meeting their

biggest oversight challenges. /uitability review is the only one of the original top five

challenges to register an increase in response percentage. The increased focus on suitability

review is being driven& in part& by increased emphasis on this area by the ;inancial Industry

'egulatory Authority $;I 'A). ;I 'A reported * 3 cases that involved suitability allegations

in 2 **& twice the -> cases reported in both 2 8 and 2 * . /uitability=related ;I 'A fines

more than doubled from 2 * to 2 **& from M>.!- million to M!.! million. It is not surprising

that social media now appears on the top=five list& and it could go higher in future updates.

#ther Beacon research indicates a strong trend toward broker=dealer adoption and approval of

social media during 2 **& due mainly to increased regulatory clarity from ;I 'A on

# Source: or/' Fe'er& %o$ o0 E c2&$3es members 2 p:44www.wor/'5e c2&$3es.or346/es4s & %s %cs4!-1!7!- FE7!-M&r8e 7!-9%32/%32 s.p'0

S.V INSTITUTE OF MANAGEMENT,KADI 1!

"Hchange "nd of 'ec 2+1) "nd of Dan 2+1 E Change

A%erica !3>,3-8.!1 132>3,2.>, =-,.3 :

Asia ;acific 2>!83 131.3 21*82-2!,.2 =2.8:

"uro*e-Africa -5iddle "ast *3!>>8>.1! 2 **-8!.*, 8.3 :

$otal 2,!231822.2 282-3 -*>.3 =,!.8 :
http://www.world-exchanges.org/files/statistics/2012%20WFE%20Market%20Highlights.pdfhttp://www.world-exchanges.org/files/statistics/2012%20WFE%20Market%20Highlights.pdfhttp://www.world-exchanges.org/files/statistics/2012%20WFE%20Market%20Highlights.pdfhttp://www.world-exchanges.org/files/statistics/2012%20WFE%20Market%20Highlights.pdf


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supervisory review and records retention and the success of leading software suppliers who are

partnering with broker=dealers to address review and retention issues.

The

original study concluded that bank and warehouse broker=dealers had made more progress in

adopting modern& efficient sales practice oversight standards compared to their independent

and insurance company counterparts

#-7

1+7

#!7

COMPLIANCE SURVEILLANCE METHOD2010

Manual Combination Automated

S.V INSTITUTE OF MANAGEMENT,KADI 1"

$o* i(e Challenges 2+1+ $o* i(e Challenges 2+12

*./ales practice

monitoring!8: *./uitability review !-:

2.'egulatory change !>:2. /ales practice

monitoring31:

>. /uitability review !*: >.'egulatory change -8:

,. "roduct education 3,: ,."roduct education -1:

-.#perational processes -,: -./ocial media -*:


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#-7

1+7

#!7

COMPLIANCE SURVEILLANCE METHOD 2012

Manual Combination Automated

5anual N All transactions reviewed using Oeyes=onP manual review

Co%#ination N Blend of system and Oeyes=onP

Auto%ated N /ystem that flag items for exception review

The update reveals a widening disparity between manual and automated firms in the

intervening period. The percentage of broker=dealers using manual processes remained about

the sameQ>!: in the original study versus , : now $the difference is within sampling error).

Kowever& results also showed a meaningful shift toward fully automated systems and away

from combination systems that blend automation with eyes=on compliance reviews. In the

charts below& note that the combination percentage decreased by *-:& roughly comparable to

the *2: increase in the automated percentage

.1 istory of Stock Broking in India

9uring the ** th century& the ;rench began regulating and trading agricultural debts on

behalf of the banking community& creating the first brokerage system. In the *> s& houses

began to be set up in ma6or cities like ;landers and Amsterdam in which commodity traders

would hold meetings. /oon& @enetian brokers began to trade in government securities&

expanding the importance of the firms. In *3 2& the 9utch (ast India 4ompany became the

first publicly traded company in which shareholders could own a portion of the business.

The stocks improved the size of companies and became the standard bearer for the modern

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financial system - . The Indian securities market is fairly large as compared to several other

emerging markets. There are 22 stock exchanges in the country& though the entire li+uidity

is shared between the countries0s two national level exchanges namely& the ational /tock

(xchange of India and the Bombay /tock (xchange Ftd. The regional stock exchanges are

in pursuit of business models that make them viable and vibrant. %eanwhile& these

exchanges have become members of the national level exchanges through formation of

subsidiaries whose business is showing continuous growth and progress. These stock

exchanges carried out trade through registered intermediaries& viz. brokers. The number of

registered brokers in various stock exchanges rose from 8&,,> in ;< ! to 8&,1! in ;< 1&

while the number of registered sub=brokers increased from 2!&-,* in ;< ! to ,,& !,

;< 1. Besides brokers and sub brokers& some other intermediaries that existed in the

market are shown in the table below

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S.V INSTITUTE OF MANAGEMENT,KADI 1(

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.2 istory of Indian Stock "Hchange

BS" B,5BA S$,C/ "JC A!G"

As we read in the history of Indian stock exchange the stock exchange& %umbai& popularly

known as LBS"L. B/( was established in *1!- as RThe ative /hare and /tock Brokers

AssociationR. It is the oldest one in Asia& even older than the Tokyo /tock (xchange& which

was established in *1!1. It is a voluntary non=profit making Association of "ersons $A#") and

has converted itself into demutualised and corporate entity. It has evolved over the years into

its present status as the "remier /tock (xchange in the country. It is the first /tock (xchange in

the 4ountry to have obtained permanent recognition in *8-3 from the Covt. of India under the

/ecurities 4ontracts $'egulation) Act& *8-3. The (xchange& while providing an efficient and

transparent market for trading in securities& debt and derivatives upholds the interests of the

investors and ensures redressal of their grievances whether against the companies or its own

member=brokers. It also strives to educate and enlighten the investors by conducting investor

education programmes and making available to them necessary informative inputs. A

Coverning Board having 2 directors is the apex body& which decides the policies and regulates

the affairs of the (xchange. The Coverning Board consists of 8 elected directors& who are from

the broking community $one third of them retire every year by rotation)& three /(BI nominees&

six public representatives and an (xecutive 9irector D 4hief (xecutive #fficer and a 4hief

#perating #fficer.

The (xecutive 9irector as the 4hief (xecutive #fficer is responsible for the *1

day=to=day administration of the (xchange and he is assisted by the 4hief #perating #fficer

and other Keads of 9epartment The (xchange has inserted new 'ule in its 'ules& Bye=laws D

'egulations pertaining to constitution of the (xecutive 4ommittee of the (xchange.

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Accordingly& an (xecutive 4ommittee& consisting of three elected directors& three /(BI nominees

or public representatives& (xecutive 9irector D 4(# and 4hief #perating #fficer has been

constituted. The 4ommittee considers 6udicial D +uasi matters in which the Coverning Board has

powers as an Appellate Authority& matters regarding annulment of transactions& admission&

continuance and suspension of member=brokers& declaration of a member=broker as defaulter&

norms& procedures and other matters relating to arbitration& fees& deposits& margins and other

monies payable by the member=brokers to the (xchange& etc.

!S" !A$I,!A? S$,C/ "JC A!G"

/( was incorporated in *882 and was given recognition as a stock exchange in April *88>. It

started operations in Lune*88,& with trading on the 5holesale 9ebt %arket /egment.

/ubse+uently it launched the 4apital %arket /egment in ovember *88, as a trading platform

for e+uties and the ;utures and #ptions /egment in Lune 2 for various derivativeinstruments.

/( has been able to take the stock market to the doorsteps of the investors. The technology

has been harnessed to deliver the services to the investors across the country at the cheapest

possible cost. It provides a nation=wide& screen=based& automated trading system& with a high

deree of transparency and e+ual access to investors irrespective of geographical location. Thehigh level of information dissemination through on=line system has helped in integrating retail

investors on a nation=wide basis. The standards set by exchange in terms of market practices&

products& technology and service standards have become industry benchmarks and are being

replicated by other market participants. 5ithin a very short span of time& /( has been able to

achieve all the ob6ectives for which it was set up. It has been playing a leading role as a change

agent in transforming the Indian 4apital %arket to its present form. The Indian 4apital %arkets

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are a far cry from what they used to be a decade ago in terms of market practices&

infrastructure& technology& risk management& clearing and settlement and investor service.

.) Growth and "(olution of Broking Industry

The stock markets in India are one of the oldest in the world and have a strong presence and

network of domestic and local intermediaries. #wing to the high incidence of indigenous

e+uity broking& India got a ative /hare Brokers0 Association as early as *1!- this association

later came to be known as the Bombay /tock (xchange $B/(). In *13,& there were more than

*& brokers in %umbai who traded in stocks high premium was also a familiar concept

during that time. #ne of the earliest stock market booms that occurred in *13 s after the

American 4ivil 5ar led to the creation of many 6oint stock cotton7ginning mills and this

phenomena stirred an e+uity culture that saw share prices touch stratospheric levels.

The /ecurities and (xchange Board of India $/(BI)& which was set up in *811 as an

administrative arrangement& was given statutory powers after the enactment of the /(BI Act in

*882. The main function of /(BI was to protect investor interests in securities& to promote the

development of securities markets and to regulate the securities markets.

Introduction of a wide range of economic reforms that revolved around the central theme of

liberalization of financial markets revived the exuberance in the stock markets during the

nineties. 9ue to the greater freedom and flexibility that accompanied the reforms& stock

markets in India set out on a growth 6ourney that was to last in the next one=and=a=half

decades. 9espite ma6or setbacks in the early *88 s and 2 s& which caused the Loint

"arliamentary 4ommittees to conduct extensive investigations in the stock markets& the

markets continued their impressive growth.

The reforms brought about many fundamental changes that fuelled the pace of market growth

and at the same time brought some orderliness in the manner and conduct of operations.

'eforms also e+uipped the Indian markets with the best processes and practices. /ome of

these processes were Abolition of open outcry introduction of electronic trading $secondary

markets) consent for foreign ownership $foreign institutional investment) of shares and for

Indian companies to raise capital from overseas $A9's7C9's) expansion in product range

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$e+uities7 derivatives7debt) book building process and transparency in I"# issuance $primary

markets) TJ2 settlement cycle $payments and settlements) depositories for share custody

$dematerialization of shares) governance of stock exchanges $demutualization and

corporatization of stock exchanges) and internet trading $e=broking).

9ue to all these changes& the stock markets in India grew unprecedentedly and so did the

e+uity broking firms. The broking industry is fast emerging as a high growth segment in the

Indian financial services map& in terms of business growth& distribution and network& and

enterprise value 3.

3.1 ;roduct ;rofile

I"#(+uityInsurance%utual ;und9( %at Account

) 2 ps:44www.'$b.co.%$4=FSI!-- 4=ro8%$3O


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Trading AccountAdvisory /ervices4ommodities"ortfolio %anagement /ervices9epository /ervices9erivative

I;, = I"# is an acronym for Initial "ublic #ffering. This is the first sale of stock by acompany to the public. As we see that the no of I"# are increasing year by year. In the year

2 8=* it was ,,. And in the year 2 *, it reaches to 12. /o it is growing with an approx.13:.

2 8=* 2 * =** 2 **=*2 2 *2=*> 2 *>=*,

*2>,

-3!18

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!o of I;,s

" uity Broking: - Investing in shares or stock market is inarguably the best route to long=term

wealth accumulation. Kowever& it can also be a very risky proposition due to high risk=return

trade=off prevalent in the stock market. Kence& it is more appropriate to take help of an

experienced and trustworthy expert who will guide you as to when& where and how to invest.

Angel provides guidance in the exciting world of stock market with suitable trading solutions

and value=added tools and services to enhance your trading experience.

,nline " uity $rading

S.V INSTITUTE OF MANAGEMENT,KADI !-


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Three different online products tailored for traders D investors

4ustomized single screen %arket 5atch for multiple exchanges

'eal=time rates

;lash news D intra=day calls

Intra=day D historical charts with technical tools

#nline research

'eri(ati(es $rading

The derivative segment is a highly lucrative market that gives investors an opportunity to earn

superlative profits $or losses) by paying a nominal amount of margin. #ver past few years&

;uture D #ptions segment has emerged as a popular medium for trading in financial markets.

;uture contracts are available on (+uities& Indices& 4urrency and 4ommodities.

Co%%odity 'eri(ati(e $rading

4ommodities 9erivative market has emerged as a new avenue for investors to create wealth.

Today& 4ommodities have evolved as the next best option after stocks and bonds for

diversifying the portfolio. Based on the fundamentals of demand and supply& 4ommodities

form a separate asset class offering investors& arbitrageurs and speculators immense potential to

earn returns.

;ortfolio 5anage%ent Ser(ice

"ortfolio %anagement /ervice is a highly customized service offering a range of investment

options best suited in the current market scenario. "ortfolio %anagement /ervice $"%/) offers

to K I0s who seek customized solutions to realize their investment goals. "ortfolio %anagers

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are e+uipped to design an investment portfolio across various investment avenues like (+uities&

;ixed 9eposits& and Bonds etc. in sync with your uni+ue needs.

Currency $rading

The global increase in trade and foreign investments has led to inter=connection of many

national economies. This and the resulting fluctuations in exchange rates& has created a huge

international market for ;orex rendering investors another exciting avenue for trading. The

;orex market offers unmatched potential for profitable trading in any market condition or any

stage of the business cycle.

Indian oreH 5arket

In terms of daily turnover in 2 *2& India is the *3th largest market in the world. India0s market

share in 5orld ;S %arket increased from .* : in *881 to .8: in 2 * . As per Fatest 'BI

9ata& 9aily ;S Indian %arket volumes are M*2 Billion in 2 *>.

Indian Currency utures 5arket K ;resent Status

4urrency ;utures Trading was launched in India on 28th August& 2 1 on /(. /( D

%4S0/S are the ma6or 2 exchanges presently. OGnited /tock (xchange of IndiaP is the

upcoming exchange promoted by Bank of India& ;ederal Bank& %%T4 D Laypee 4apital along

with 8 other banks. The ;S market in India is regulated by The ;oreign (xchange %anagement

Act& *888 or ;(%A& "resently 9aily Turnover on both exchanges averages 's. >- crores.

Banks are active participants on the exchanges. 'Is D ;IIs are not permitted to trade as of

now. 4urrency markets offer investors a step into the world of ;orex. The global increase in

trade and foreign investments has led to inter=connection of many national economies. This and

the resulting fluctuations in exchange rates& has created a huge international market for ;orex

rendering investors another exciting avenue for trading. The ;orex market offers unmatched

potential for profitable trading in any market condition or any stage of the business cycle.

S.V INSTITUTE OF MANAGEMENT,KADI !!


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4.1 ;riceThe price of any product decide the market demand. The following are the four factors that

have a ma6or impact on stock prices. And that decide the price of stock. StockMs 'e%and and Su**ly: - supply and demand are the most important factor that impacts

stock prices. If you have an online trading account& you get to look at the volume of shares

bought or sold during the respective trading sessions. 5hen you have more people buying a

particular commodity and if there is a general scarcity& it automatically has an impact on the

price of the commodity. /ame thing happens when there are more number of people buying the

share versus the ones who are selling the stock. The reverse happens when more people are

selling the stock as against the ones who are buying it. Co%*anyMs 5arket Ca*itali&ation = "eople generally make the mistake of determining the

worth of the company by referring to its share price which is not entirely correct. The right wayto determine a company0s worth is to understand its market capitalization which will help one

determine the true worth of the company. The market capitalization of a company is a key

indicator in determining its stock price. StockMs "arnings *er Share: - (arnings per share simply means the profit a company has

made per share. The ("/ becomes a fairly good indicator to gauge the company0s performance

as well as its present financial status. A higher earnings per share is a positive signal that leads

to increased buying of the company0s shares which again has a positive rub off on the

company0s share prices. The best time to look up ("/ related data is when companies release

their +uarterly reports. 5arketFCo%*any !ews: - %ere speculation via news and media reports might cause prices to

plunge or even skyrocket. 4ompany or industry news that has the potential to either go in favor

or against the company can have a ma6or impact on stock prices. It is& however& advisable to

stay clear of speculative news the ob6ective of which is to either break the prices or inflate it for

short term gains. Access to real time news and information on market trends D access to super

+uick online trading has vastly changed the dynamics of stock market investment.

4.2 Inco%e of $argeted custo%er%any firms dictate to their broker the type of clients they want to solicit. Through not

written in stone& most of the bulge bracket firms want to reps to prospects for middle age

individual with li+uid assets of between * and - . Cenerally stock brokers are

target to middle and top rich people classes. Because they have ample power of money to

invest in the stock market. Apart from that the stock brokers are targeted to professional

people like doctor& advocate& 4A etc. ;rom there are getting the investment easily.

S.V INSTITUTE OF MANAGEMENT,KADI !"


24/85

4.) ;enetration ?e(el

A strong financial market with broad participation is essential for a developed economy. 5ith

India s growth story unfolding& there is a need to raise resources for companies to fuel thecapital needs of the economy and also ensure that the benefits of growth percolate to bottom of

the socio=economic pyramid. India s household savings& one of the highest in the world at > :&

can be channelized through e+uities& bonds and other instruments to achieve greater financial

inclusion and improve the financial markets in India.

#f about the !&1 scrip0s listed on the Indian stock markets& less than >& are actively

traded. /ince the entire structure has a speculative culture& it exposes investors to greater risks

and restricts real capital formation. Investors pay a very high cost of transaction& which can

definitely be pruned by - :.

#n another front& the market for other forms of financial instruments& such as bonds and

interest=rate futures& has not developed ade+uately. The e+uity segment currently accounts for

more than !-: of market activity in India. In developed countries& the trend is the reverse& with

bonds accounting for more than 1 : of trading in some markets.

There s clearly a lack of broad participation. #f a population of over one billion& barely *1

million invest in e+uity markets. According to /(BI data& * cities contributed over 1 : of

trading volume in 2 * .

#f a population of over a billion& only *1 million are invested in e+uities and * cities

contributed to over 1 : of trading volume in 2 * .

The erratic behavior in the e+uity markets also indicates that these are not only highly

speculative but also lacks support from a large base. The Indian market is highly dependent onforeign institutional investors $;II) movement. Thus& any change in ;II inflows and outflows

lead to extreme changes in market indicators& despite unchanged fundamentals.

4. Sales ;ro%otion

S.V INSTITUTE OF MANAGEMENT,KADI !#


25/85


26/85

/' o ame Terminal /ubBroker

o. ofemployee

o ofBranches

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2 Earvy /tock BrokingFtd

2882 ,8 >8* -1*

> %otilal #swal Ftd !82> 18 2*8> 3>

, India Info line *!> *!> 2 3 -

- India bulls 21!3 2 -1!> -22

3 IFD;/ InvestmentFimited

*3,, 1- *8 28,

! 'eliance %oney 2,21 *,8, 2 >! *,2

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8 Anand 'athi /ec. Ftd *-2! >2 ,-33 22

* Ceo6it 32! 2,! >,> >*,

7.1 'istri#ution Channel

S.V INSTITUTE OF MANAGEMENT,KADI !)4ustodian


27/85

In stock Broking industry the above distribution network channel is exits. It means that the

producer relies on a few intermediaries to carry their product.

8.1 /ey $rend in Brokerage Industry

@nfa(ora#le Budget

S.V INSTITUTE OF MANAGEMENT,KADI !*

4ommercial bank 4learing

Back office

4learing /ettlement Accounting D

;inance

Trades

TradesTrades

5iddle office

@alidation Booking confirmation

Trades

ront office

Trade capture execution

E ecu %o$Or'er
http://en.wikipedia.org/wiki/Intermediarieshttp://en.wikipedia.org/wiki/Intermediaries


28/85


29/85

%r %assey was also one of the directors of /(F. %r /inha& who in an affidavit filed before a

%umbai 4ourt had blamed the entire former senior management& including himself& for the

payment crisis& will be appearing before the investigators on 5ednesday& he said.

RKis interrogation will throw light on some unanswered +uestions. Kis revelations would be

crucial and we are ready to ask him some tough and straight +uestions.R

(#5 had summoned %r /inha after registering an ;I' on /eptember > & but he did not appear

before the %umbai "olice agency citing ill health. R/inha has now communicated to us that he

would present himself tomorrow&R the officer added.

%r /inha& in the affidavit& claimed he suspected that some of the former senior management

executives had entered into dealings with buying members of /(F for their personal benefitsand demanded a 6udicial in+uiry against them.

Ke admitted submitting Rwrong stock statementR to the /(F Board and commodity regulator

;%4 based on the report by the warehousing division of the exchange. Taking the blame for

not informing the Board about increasing exposure and risk of widespread defaults& %r /inha

stated the management allowed the exchange to function and did not stop trading due to fear of

defaults.

4iting several instances of misrepresentation of stock position and fund diversion& /inha said

buyers diverted funds availed through fictitious sale transactions to purchase real estate and

other properties. Two former executives of /(F were arrested last week in connection with

the scam.

S.V INSTITUTE OF MANAGEMENT,KADI !


30/85

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31/85

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S.V INSTITUTE OF MANAGEMENT,KADI "1


32/85

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S.V INSTITUTE OF MANAGEMENT,KADI "!

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33/85

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S.V INSTITUTE OF MANAGEMENT,KADI ""


34/85

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S.V INSTITUTE OF MANAGEMENT,KADI "#


35/85

> o / % % c & / & $ ' ? e 3 & / Eco$om%c

Tec2$o/o3%c&/ S o c % & /

>ESTE? A$&/;s%so0 I$'%&$

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1+.1 ;"S$"? Analysis of Brokerage Industry"(/T(F analysis stands for political economic social technological environment and legal

systems and describes a framework of macro environment factors used in the environment

scanning component of strategic mgt. it is a part of the external analysis when conducting a

strategic analysis or doing market research& and gives an overview of the different macro

environment factors that the company has to take into consideration.it is a useful strategic tool

for understanding market growth or decline &business position& potential and direction for

operations.

S.V INSTITUTE OF MANAGEMENT,KADI "(


36/85


37/85

it used to& and this has an adverse effect on company earnings. All of this adds up to a drop in

the stock market. ;ollowing are the recent trend in deposit rate. 1

oreign 5arkets

(conomic trends in foreign markets can have an effect on the stock market in India & according

to the article titled R'iding the (conomic 'oller 4oasterR published in RInc.R magazine. 5hen

the economies in foreign countries are down& that adverse effect can be seen in the Indian

companies and as result they cannot able to trade the share. This causes a drop in revenue& and

that can show up as a drop in the stock market. ;oreign stock exchanges also have an effect on

the Indian stock market. If foreign exchanges start to fail or experience sharp drops& then that

kind of activity can cause investors to anticipate a ripple effect& resulting in a drop in the /tock (xchange.

"Hchange Rates

;oreign currency rates have a direct impact on the price and value of stocks in foreign

countries& and changes in exchange rates will increase or decrease the cost of doing business in

a country& which will affect the price of stocks of companies doing business abroad. 5hile

+ www.rb%.or3.%$

S.V INSTITUTE OF MANAGEMENT,KADI "*


38/85

long=term movements in exchange rates are affected by fundamental market forces of supply

and demand and purchase price parity& short=term movements are driven by news& events and

futures trading and are difficult to predict.

Su**ly > 'e%and

This age old economic model is extremely important in the world of stocks. 5hen the price of

stock is low $or supply is high)& investors will buy more& creating a demand for that certain

stock. After a while& the price rises $supply decreases) as investors have proved they are willing

to pay a higher amount for successful stocks. 5hen the price is too high& however& demand

decreases and investors move on. /ometimes there is a sweet spot when supply and demand are

balanced& but inevitably& the battle wages on and supply and demand fluctuate as they have for thousands of years.

,(erall "cono%ic ealth

The economic state of the country and consumer confidence can also spur growth and

development or harm it. In recessionary times& consumers begin limiting their purchases to the

essentials& foregoing luxury or big=ticket items. 4ompanies also scale back production& hiring

and the development of new products and services to ensure that their finances can weather thestorm. In periods of overall economic growth& these companies once again expand. The

opposite is true in industries that deal in basic consumer goods that everyone needs regardless

of the economy food& diapers& and staple goods. 9emand picks up for these necessities as

consumers stock up on them and substitute basic goods for luxury goods $example people buy

more groceries to eat in rather than go to a restaurant). In inflationary times& the demand for

staple goods declines as consumers can afford more luxury substitutes.

S.V INSTITUTE OF MANAGEMENT,KADI "+


39/85

-

(---

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1-

GD> VS SENSE@

se$se GD> R& e

Social actor

y*e

/tocks and the stock market also can be affected by hype about a company or the release of

new products or services. %any people and organizations have an interest in promoting

particular stocks and industries to increase the value of their own shares and profits& and

positive financial reports and stock market newsletters& Internet blogs& press releases and news

reports can build high expectations for the performance of companies& which will raise the

price of their stocks. This can occur even when the hype has no foundation in truth investors

are wise to consider peoples reaction to hype rather than analyse the merits of the positive

promotion. Kype $and its opposite) can be advanced by respected stock market authorities such

as 5arren Buffet& "eter Fynch and hedge fund investor and financial speculator Ceorge /oros

such is the respect given to these individuals0 skill and past success that they sometimes can

affect the movement of markets by simply suggesting that developments might occur.

5arket ;sychology

At the end of the day& swings in the stock market are caused by human beings. There are boom

periods in a rising market when everyone wants to buy. Alternatively& there are also periods of

panic when almost every investor is scrambling to sell.

"H*ectations > S*eculation

S.V INSTITUTE OF MANAGEMENT,KADI "


40/85

(xorbitant spending and mass speculation got a little out of hand in the roaring 2 s. ;ollowing

5orld 5ar I& spending habits increased and the stock market flourished& making fortunes for

many. "eople had so much faith in the market that they were borrowing& and going into debt& to

purchase more stocks. #ver time& the market couldn0t cope with the inflated values. 4ompanies

were forced to close when the stock market crashed in *828& people were laid off& and the

Creat 9epression began.

orld "(ents

4ompany stock prices and the stock market in general can be affected by world events such as

war and civil unrest& natural disasters and terrorism. These influences can be direct and

indirect& and they often occur in chain reactions. The social uncertainty and fear generated by

the terrorist attacks on /ept. **& 2 *& affected markets directly as they caused many investors

in the Gnited /tates to trade less and to focus on stocks and bonds with less risk. An example of

an indirect influence on markets is the announcement of a new military venture by a country in

response to the outbreak of civil unrest or conflict abroad. This announcement likely would

cause the price of the stocks of military e+uipment and weapons manufacturers to rise due to an

expected increase in defense contracts& which in turn can raise the value of stocks for

companies that supply military e+uipment parts and technology. It likely would raise the

demand for& and price of& natural resources used to make these parts& which would raise the

price of stocks representing particular mining and natural resource processing companies.

;olitical actor and ?egal actors:

Go(ern%ent Inter(ention

%any industries are regulated by the government in one form or another. Covernment agencies

such as the (nvironmental "rotection Agency& the ;ood Damp 9rug Administration or the

G./. 9epartment of Agriculture maintain standards that all operators in an industry must follow

for the safety of consumers& employees& or natural resources. /ome industries are more heavily

regulated than others and new laws and rules can shake up an entire industry and depress

S.V INSTITUTE OF MANAGEMENT,KADI #-


41/85

growth. ;or example& new child toy safety laws implemented under the 4onsumer "roduct

/afety Improvement Act in 2 8 threatened to wipe out many small toy producers as the

re+uirements to test and certify the toys were cost=prohibitive to all but large toy

manufacturers. "roposed changes to the Act may help alleviate the burden on small

manufacturers and resellers.

Scandals

othing gets the attention of the G/ media +uicker than a good=old=fashioned scandal. Insider

trading& fraud& cooking the books and other high=end& white collar scams have all collapsed

popular companies and negatively impacted the markets in the recent past. Kousehold names

such as (nron and Bernard %ad off caused plummeting stock prices and created a domino

effect with associated businesses and firms. %oral of the story& cheating investors is illegal and

leads to 6ail time& worthless stock prices and large=scale corporate layoffs.

Regulatory Bodies

The /ecurities and (xchange Board of India $fre+uently abbreviated /(BI) is the regulator for

the securities market in India. It was established in the year *811 and given statutory powers on

*2 April *882 through the /(BI Act& *882

The /(BI is managed by its members& which consists of following a) the chairman who is

nominated by Gnion Covernment of India. b) Two members& i.e. #fficers from Gnion ;inance

%inistry. c) #ne member from The 'eserve Bank of India. d) The remaining - members are

nominated by Gnion Covernment of India& out of them at least > shall be whole=time members

/ C !or%s

ow the government have implemented the rules for every organization to take the basis

information about the customer.

Settle%ent Cycle and Settle%ent ;eriods

S.V INSTITUTE OF MANAGEMENT,KADI #1
http://en.wikipedia.org/wiki/Regulatory_agencyhttp://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India_Act,_1992http://en.wikipedia.org/wiki/Regulatory_agencyhttp://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India_Act,_1992


42/85

In a rolling settlement& each trading day is considered as a trading period and trades executed

during the day are settled based on the net obligations for the day. At /(& trades in rolling

settlement are settled on a TJ2 basis i.e. on the 2nd working day. ;or arriving at the settlement

day all intervening holidays& which include bank holidays& /( holidays& /aturdays and

/undays are excluded. Typically trades taking place on %onday are settled on 5ednesday&

Tuesday s trades settled on Thursday and so on.

"n(iron%ental actor:

Co%*any !ews

#n a different note& formal company announcements and news can also affect a market trend

analysis. Cood news or bad news can cause rising stock prices& or it can cause falling prices

and rising prices for competing corporations. 4ompany layoffs can reduce consumer trust in

the future of a company and result in less=valuable stock. /uccessful company ac+uisitions&

however& are an indication of growth and can lead to better stock performance.

ar > $erroris%

aturally& fear can change investment habits. After 87**& people cashed out their investments

and values plummeted. "anicked selling stopped after a few days& but it took about two years

for the market to fully recover from the terrorist attacks and the 5ar in Ira+. Kowever& war

turned out to be the solution in the case of the *8> s and the Creat 9epression. An increase in

military spending increased demand. A terrorist attack $"earl Karbor)& then spurred the nation

into financially recovering itself during 5orld 5ar II.

!atural 'isasters

9isasters like natural calamities and terror attacks effect the economy as well as the stock

market leading to volatility though experts believe that these effects are generally short term as

is mainly due the market sentiments and if the fundamentals of a company are strong they are

able to pull up soon.

"n(iron%ental I%*act

S.V INSTITUTE OF MANAGEMENT,KADI #!


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(conomic growth in an industry can be impacted not only by the environmental effect the

products or services have but also by consumers perceptions of that impact. ;or example& the

market for fur apparel declined drastically over the course of a few years in the *88 s when

consumers perceived that raising and killing small animals for their fur was both inhumane and

a poor use of land. Although the industry is once again picking up with international demand&

the number of fur farmers in the country has substantially declined. If the public views an

industry s products or services as being harmful or unsafe& most companies within the sector

can experience a marked decline in sales +uickly.

$echnological actor

Internal 'e(elo*%ent

9evelopments that can occur within companies will affect the price of its stock& including

mergers and ac+uisitions& earnings reports& the suspension of dividends& the development or

approval of a new innovative product& the hiring or firing of company executives and

allegations of fraud or negligence. /tock price movements will be most drastic when these

internal developments are unexpected.

"lectronic $rading

(lectronic Trading in this article refers to the trading of securities $e+uities and derivatives) in

the stock exchanges& without& or with minimal human intervention. (lectronic trading is in

contrast to older floor trading and phone trading and has a number of advantages& but glitches

and cancelled trades do still occur.

!S" $rading $echnology

/(0s trading system& called ational (xchange for Automated Trading $ (AT)& is a state of=

the=art client server based application. It has uptime record of over 88: with latency is in

single digit millisecond level for all orders entered into the (AT system. /( has been

S.V INSTITUTE OF MANAGEMENT,KADI #"
http://en.wikipedia.org/wiki/Floor_tradinghttp://en.wikipedia.org/wiki/Floor_trading


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continuously undertaking capacity enhancement measures so as to effectively meet the

re+uirements of increased users and associated trading loads.

Bo%#ay ,nline $rading Syste%

The Bombay #n=line Trading /ystem $B#FT) is 4%4 s on=line Trading /ystem for trading in

/tocks. The /ystem is operational at Bombay /tock (xchange = the premier /tock (xchange in

the /outh (ast Asian region since %arch *88-. It is one of the few /tock Trading systems

around the globe& which handles hybrid7mixed mode of trading i.e. #rder driven as well as

+uote driven

,nline and 5o#ile $rading

Today is an era of technology& people are using the advance software which enables the better

facility. Brokerage industry provide the platform to their customer to use the online and mobile

trading. #nline and mobile trading provide the smooth and fast trading facility to the customer.

1+.2 $aHes and ?e(is

S"BI $urno(er fees

Sr. !o. !ature of securities Rate of ee

*.All sale and purchasetransactions in securities otherthan debt securities

. * per cent of the price at which thesecurities are purchased or sold $'s.* per crore)

2 All sale and purchasetransactions in debt securities

. 2- per cent of the price at which thesecurities are purchased or sold $'s.2.-

per crore)

Sta%* 'uty

S.V INSTITUTE OF MANAGEMENT,KADI ##


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/tamp duty is levied on value of shares transferred. In India stamp duty is levied by variousstates and hence rate of stamp duty varies from state to state. In %aharashtra& the stamp dutyrate for 4ash %arket $other than Covernment /ecurities) and 9erivatives %arket Turnover$non=delivery)

$y*e of $rade Sta%* 'uty Rate

on=delivery trade . 2:

9elivery trade . *:

Ser(ice $aH

Category $aH Rate ;aya#le By

/tock brokers/ervices

*2.>3: $*2:J .2,:education cess J .*2 :secondary and highereducation cess)

Brokers and collected from their clients.Kowever if the services are partly

performed outside India and payment isreceived in convertible foreign exchangewithin 3 months& then the services will betreated as (xport of /ervices and will beexempt from levy of /ervice Tax

Securities $ransaction $aH S$$

Sr. !o. $aHa#le securitiestransaction

$aH Rate @*to 5ay )1

2+1)

$aH Ratew.e.f. Dune 1

2+1);aya#le #y

*.

"urchase of an e+uity sharein a company& where suchcontract is settled by theactual delivery or transfer of such share or unit.

.* per cent .* per cent

"urchaser= on the valueof taxable securitiestransaction based on thevolume weightedaverage price.

"urchase of a unit of ane+uity oriented fund& wheresuch contract is settled bythe actual delivery ortransfer of such share orunit.

.* per cent IF A

S.V INSTITUTE OF MANAGEMENT,KADI #(


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2.

/ale of a e+uity share in acompany& where suchcontract is settled by theactual delivery or transfer of such share or unit

.* per cent .* per cent

/eller = on the value oftaxable securitiestransaction based on thevolume weightedaverage price.

/ale of a unit of an e+uityoriented fund& where suchcontract is settled by theactual delivery or transfer of such share or unit

.* per cent . * per cent


>

/ale of an e+uity share in acompany or a unit of ane+uity oriented fund& wheresuch contract is settledotherwise than by the actualdelivery or transfer of suchshare or unit.

. 2- per cent . 2- per cent


,a /ale of an option insecurities . *! per cent . *! per cent/eller = on the option

premium..

,b/ale of an option insecurities& where option isexercised

.*2- per cent .*2- per cent "urchaser = on thesettlement price.

,c /ale of a futures in securities . *! per cent . * per cent/eller = on the price atwhich such futures istraded.

;urther as per /(BI guidelines ;II s are re+uired to settle the transactions by delivery only andtherefore sr. no.> of the above table is not applicable in case of ;IIs

11.1 C,5;A! I! ,R5A$I,!

S. S. /A!$I?A? IS AR?A? S"C@RI$I"S ;0$. ?$'. sharekhan.co%

/harekhan& India0s leading stockbroker is the retail arm of SS/I & and offers you depositoryservices and trade execution facilities for e+uities& derivatives and commodities backed with

investment advice tempered by decades of broking experience. A research and analysis team is

constantly working to track performance and trends. That0s why /harekhan has the trading

products& which are having one of the highest success rates in the industry. /harekhan is having

2, share shops in ** cities the largest chain of retail share shops in India is of /harekhan.

S.V INSTITUTE OF MANAGEMENT,KADI #)


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In future& /harekhan is planning to enter in %utual funds& Insurance sector and banking sector

to expand beyond the market currently covered by it. And it has started %; $%utual ;unds) on

priority basis but wants to grow in it.

ICICI e# $rade ?td. ICICIdirect.co%

I4I4Idirect.com was the first entrant into e=broking. I4I4direct.com provides the >=in=* to the

users which tie in their saving bank account and their 9emat account to their brokerage account

electronically. This integration ensures that money is transferred to7from their bank account and

the shares are transferred from7to their 9emat account automatically without writing any

che+ues or transfer instructions while carrying out their trades in shares.

I4I4Idirect.com has the option of trading in shares in cash& margin or spot segments. An

investor can also invest in *, %utual ;unds $"rudential I4I4I %;& ;ranklin Templeton India

%;& Alliance 4apital %;& L% %;& Birla /un Fife %;& /undaram %;& IFD;/ %;& "rincipal %;&

K9;4 %;& /tandard 4hartered %;& 'eliance 4apital %;& Eotak %ahindra %;& TATA %; and

9/" %(''IFF F< 4K %;) through their trading account.

I4I4Idirect.com doesn0t provide the facility of trading in a traditional way.

Indian Info line

-paisa is the trade name of India Infoline /ecurities "rivate Fimited $-paisa)& member of

ational /tock (xchange and The /tock (xchange& %umbai. -paisa is a wholly owned

subsidiary of India Infoline Ftd& India0s leading and most popular finance and investment

portal. -paisa has emerged as one of leading players in e=broking space in India.

The company0s brokerage is one of the lowest in the industry. It also provides the research on

commodities. Investors can benefit from its analysis and advice available at the click of the

mouse. ;or those who prefer to trade the traditional way& India Infoline investor points are

available across the country.

India Infoline was founded by a group of professionals in *88-. Its institutional investors

include Intel 4apital& one of the leading technology companies in the world promoted by the

GE government& I4I4I& T9A and 'eeshanar. The company offers a slew of products such as

stock and derivatives broking& commodities broking and mutual funds.

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/otak Securities ?i%ited kotakstreet.co%

Eotak /ecurities Ftd.& a strategic 6oint venture between Eotak %ahindra Bank and Coldman

/achs $holding 2-: = one of the world0s leading investment banks and brokerage firms) is

India0s leading stock broking house with a market share of - = 3 :. Eotak /ecurities Ftd. has

been the largest in I"# distribution = It was ranked number #ne in 2 >= , as Book 'unning

Fead %anagers in public e+uity offerings by "'I%( 9atabase. It has also won the Best (+uity

Kouse Award from ;inance Asia = April 2 ,.

Eotak /ecurities Ftd is also a depository participant with ational /ecurities 9epository

Fimited $ /9F) and 4entral 9epository /ervices Fimited $49/F) providing dual benefit

services wherein the investors can use the brokerage services of the company for executing the

transactions and the depository services for settling them. The company has ,2 branches

servicing around *& & customers. Eotakstreet.com the online division of Eotak /ecurities

Fimited offers Internet Broking services and also online I"# and %utual ;und Investments.

Eotak /ecurities Fimited manages assets over *! crores under "ortfolio %anagement

/ervices $"%/) which is mainly to the high end of the market. Eotak /ecurities Fimited has

newly launched OEotak InfinityP as a distinct discretionary "ortfolio %anagement /ervice&

which looks into the middle end of the market.

India Bulls

Indiabulls is India s leading retail financial services company with !! locations spread across

3, cities. Its size and strong balance sheet allows providing varied products and services at

very attractive prices& our over !- 4lient 'elationship %anagers are dedicated to serving your

uni+ue needs.

Indiabulls is lead by a highly regarded management team that has invested crores of rupees into

a world class Infrastructure that provides real=time service D 2,7! access to all information and

products. The Indiabulls "rofessional etwork offers real=time prices& detailed data and news&

intelligent analytics& and electronic trading capabilities& right at your fingertips. This powerful

technology is complemented by our knowledgeable and customer focused 'elationship

%anagers.

S.V INSTITUTE OF MANAGEMENT,KADI #+


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Indiabulls offers a full range of financial services and products ranging from (+uities&

9erivatives& 9emat services and Insurance to enhance wealth and to achieve the financial

goals.

Motilal O" al Se&u itie" Ltd 3MOSt4

#ne of the top=> stock=broking houses in India& with a dominant position in both institutional

and retail broking& %#/t is amongst the best=capitalized firms in the broking industry in terms

of net worth. %#/t was founded in *81! as a small sub=broking unit& with 6ust two people

running the show. ;ocus on customer=first=attitude& ethical and transparent business practices&

respect for professionalism& research=based value investing and implementation of cutting=edge

technology have enabled it to blossom into a thousand=member team.

The institutional business unit has relationships with several leading foreign institutional

investors $;IIs) in the G/& GE& Kong Eong and /ingapore. In a recent media report %#/t was

rated as one of the top=* brokers in terms of business transacted for ;IIs.

The retail business unit provides e+uity investment solutions to more than - & investors

through 2! outlets spanning *- cities and 22 states. %#/t provides Advice=Based Broking&"ortfolio %anagement /ervices $"%/)& (=Broking /ervices& 9epository /ervices&

4ommodities Trading& and I"# and %utual ;und Investment Advisory /ervices. Its @alue "%/

/cheme gave a *3 : post=tax return for the year ended %arch 2 ,

In Asia%oney Brokers "oll 2 > %#/t has been rated as the Best 9omestic 'esearch Kouse=

%ega ;unds& while in 2 and 2 2 it has been rated as the Best 9omestic (+uity 'esearch

Kouse and /econd best amongst Indian Brokerage firms respectively .

' C Securities ?td ' Csec 4

K9;4 securities is a brand brought to you by K9;4 /ecurities Ftd& which has been promoted

by the K9;4 Bank D K9;4 with the ob6ective of providing the diverse customer base of the

K9;4 Croup and other investors a capability to transact in the /tock (xchanges D other

financial market transactions. The services comprise online buying and selling of e+uity shares

on the ational /tock (xchange $ /(). Buying and selling of select corporate debt and

S.V INSTITUTE OF MANAGEMENT,KADI #


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%utual ;und9emat AccountTrading AccountAdvisory /ervices4ommodities"ortfolio %anagement /ervices9epository /ervices9erivative

12.2 'efine Su#stitute ;roduct and Criteria of Su#stitution

The substitute "roduct of share market are is bank fixed deposits& real estate& precious %etal&

money market& mutual fund. As all the option are giving the return as near to stock market. #ut

of them the mutual fund is the nearest substitute "roduct.

5utual und

S.V INSTITUTE OF MANAGEMENT,KADI (1


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S.V INSTITUTE OF MANAGEMENT,KADI (!

und $y*e 1+- ear E

Farge 4ap Crowth !.

Farge 4ap Blend 1.*

Farge 4ap @alue 1.8%id 4ap Crowth 1.-

%id 4ap Blend **.!

%id 4ap @alue **.,

/mall 4ap Crowth 1.2

/mall 4ap Blend **.2

/mall 4ap @alue 2.1

4onservative Allocation 3.>

%oderate Allocation !.,

;oreign /tock 8.!

Kigh= uality Bond -.2

Kigh=


53/85

*+.1

+.

+.(

11.*

11.#+.!

11.!

!.+

)."

*.#

.*

(.!(.#

Mutual /und 5 o t' Rate

?&r3e C&p Grow 2

?&r3e C&p =/e$'

?&r3e C&p V&/ue

M%' C&p Grow 2

M%' C&p =/e$'

M%' C&p V&/ue

Sm &// C&p Grow 2

Sm&// C&p =/e$'

Sm&// C&p V&/ue

Co$s er


54/85

1,++ 1,,- 1,,! 1,,# 1,,) 1,,+ !--- !--! !--# !--) !--+ !-1- !-1! !-1#-

!

#

)

+1-

1!

1# 1!11

1-11

1!

11.(1-.( 1- +.(+.( *.(

#.!( #(.!( )

*.(+.!( +)

+.!(, ,

+.(

F% e' Depos% R& e

Ce&rs

R& e

As it is indicating from the graph that the rate of fixed deposit have been reduced the *2: as in*88* from 1.-: in 2 *>.

Real "state

166.1666200020012002200$200,200+200-2007200.2006201020112012201$

#1+8

#108

#+8

08

+8

108

1+8

208

2+8

$08

$+8

#128

#$8 #2828

+8 +8

228

178 1.8

$08

208228 2+8

1.8

2,8208

Retu n on Real E"tate

The return on the real estate investment are highly fluctuated and return on real estate is

average from *-: to 2 :

5oney 5arket SecuritiesThere are many instrument are available in the market to invest. #ne of them is to invest

money in treasury bills. It is risk free security and it have been issued by the reserve bank of

S.V INSTITUTE OF MANAGEMENT,KADI (#


55/85

India. /o it is also the substitute product to stock market. But having the less amount of return

as compare to stock market.

;ost Sa(ing unds

"ostal 9eposits are the best and risk free source of investment. "ostal 9eposits are popular in

mostly rural areas and among retired people who lives alone without children. "eople with no

or low risk appetite love to invest in post office schemes. ;ind below the top five ;ixed 9eposit

schemes available in as on ovember& 2 *>.

;ostal 'e*osit Sche%e Interest Rate E5onthly Inco%e Sche%e 1.,Recurring 'e*osit 1.>Sa(ings Account ,.!ational Sa(ings Certificate 3 yr 1.-!ational Sa(ings Certificate 1+ yrs 1.1$i%e 'e*osit 1.2 =1.,Senior Citi&ensO Sa(ing Sche%e 8.2 payable +uarterly;u#lic ;ro(ident und 1.!"%*loyeesO ;ro(ident und 1.-

1) 'RI0I!G ,RC" , BR,/I!G I!'@S$R 8

Source:5 o c%&/ &r %c/e o0 M%c2&e/ >or er

S.V INSTITUTE OF MANAGEMENT,KADI ((


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$hreat of !ew

"ntry

"articular @ery Kigh Kigh %oderate Fow @ery Fow(xiting4ompetitors arestruggling toearn profitIndustry#utlook IndustryCrowth rate4apital'e+uirementBuyer switching 4ostBrand

preference andFoyalty'egulatory

policy

S.V INSTITUTE OF MANAGEMENT,KADI ()


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Total /core 3 > *2

/um of factor value

2*

Average >

$he $hreat of new entry in #rokerage industry is high to %oderate.

ationalized banks are also planning to enter this field by tying up with broking houses.

(.g. Bank #f Baroda.

Threat of new entry is high when4apital re+uirements to start the business are less4ustomer can easily switch $low switching cost)Technology is not hard to ac+uire or not protected well"roducts is not differentiated.

$hreat of Su#stitute

"articular @eryKigh

Kigh %oderate Fow @ery Fow

Availabilityof substituteIncome fromsubstitute

product/witchingcostTotal /core * ,/um of factor value

-

Average *.3

$he threat fro% su#stitute *roduct is (ery high to high.

Kere substitutes are such instruments& which can be used instead of investing in shares.

The instruments like Bank ;9& insurance& mutual funds are the substitutes.

If the use of this instruments increase this may be disadvantageous for the stock

broking houses.

The companies and banks& which are having these instruments& can plunge into this

industry.

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Bargaining *ower of su**lier

"articular @ery Kigh Kigh %oderate Fow @ery Fow o. of supplier /upplier

providedifferentiated

product/ubstitute of

productavailable/carcity of

product/upplier arescattered or concentratedTotal /core > 2 ,/um of factor value

8

Average *.1

$he Bargaining *ower of su**lier is (ery high to high

/9F D 4/9F are the regulatory bodies for 9epository "articipants like //EI& /K4IF&

I4I4Idirect.com& etc. Also these regulatory bodies have high bargaining power as stock

broking houses like //EI& etc. would be less.

/( D B/( are playgrounds where common investors trade through stock broking

houses& for which they have to take permission from /(7B/(.

/( D B/( are under the purview of /(BI& that0s why stock broking houses like //EI&

have low bargaining power. But here /(7B/( have one advantage& they cannot go for

forward integration.

%4S D 49(S are stock exchanges& which trade in commodities and derivatives. Kere

again stock broking houses have to follow rules and regulation of the same.

S.V INSTITUTE OF MANAGEMENT,KADI (+


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"articulars @eryKigh$*)

Kigh %oderate Fow @eryFow$-)

o. of "layers %arket /hare "roduct9ifferentiate(ntry and (xitBarriers/witching cost Total /core 2 2 > 1/um of factor value

*-

Average >'ivalry among the competitors in stock broking industry is %oderate .

Attracti(eness of industry #y the co%*etiti(e analysis

Co%*etiti(e orces Attracti(e scoreThreat from the ew (ntrants 2.2Threat from the /ubstitute "roducts >Bargaining "ower of /uppliers *.3Bargaining "ower of Buyers *.1

'ivalry among the 4ompetitors >$otal **.3!o of factors -A(erage score 2.>2

According to competitive forces analysis& we can interpret that the attractiveness of industry ishigh to moderate according to average attractive score of stock broking industry which is 2.>2.

S.V INSTITUTE OF MANAGEMENT,KADI )-


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S.V INSTITUTE OF MANAGEMENT,KADI )1


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1 .1 BCG 5A$RIJ

Pa ti&ula Ma !etS'a e

Relati9eS'a e

ICICI Se&u itie"Ltd

#. )7 1--.--7

S.V INSTITUTE OF MANAGEMENT,KADI )!


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:ota! Se&u itie"Ltd

!. 17 (+.)+7

S'a e!'an !."(7 #*.#*7HD/C Se&u itie"Ltd

1.((7 "1.""7

India bull"Se&u it;

-.*"7 1#.*17

:a 9; In9tAd9i"o ;

-.)*7 1".#+7

'elative market share position is given on the x axis of the B4C %atrix. The midpoint on the x

axis usually is set at .- & corresponding to a division that has half the market share of the

leading firm in the industry. The y axis represents the industry growth rate in sales& measured in

percentage terms. The growth rate percentages on the y axis could range from * to - percent&

with . being the midpoint. These numerical ranges on the x and y axes often are used& but

other numerical values could be established as deemed appropriate for particular organizations.

An example of a B4C %atrix above& each circle represents a separate 4ompany. The size of

the circle corresponds to the proportion of corporate revenue generated by that company& and

the pie slice indicates the proportion of corporate profits generated by that division. 9ivisions

located in uadrant I of the B4C %atrix are called uestion %arks& those located in uadrant

II are called /tars& those located in uadrant III are called 4ash 4ows& and those divisions

located in uadrant I@ are called 9ogs.

S.V INSTITUTE OF MANAGEMENT,KADI )"


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Stars

uadrant I Businesses $often called /tars) represent the organization s best long run

opportunities for growth and profitability. 9ivisions with a high relative market share and a

high industry growth rate should receive substantial investment to maintain or strengthen

their dominant positions. Kere in this matrix I4I4I 9irect security limited is fall on the star

matrix& which reveals that they have high market growth rate and high relative market share.

uestion 5arksuadrant II have a low relative market share position& yet compete in a high growth industry.

Cenerally these firms cash needs are high and their cash generation is low. These businesses

are called uestion %arks because the organization must decide whether to strengthen them

by pursuing an intensive strategy $market penetration& market development& or product

development) or to sell them.

Cash Cows uadrant III have a high relative market share position but compete in a low=growth

industry. 4alled 4ash 4ows because they generate cash in excess of their needs& they often

are milked. %any of today s 4ash 4ows were yesterday s /tars. 4ash 4ow divisions should

be managed to maintain their strong position for as long as possible. "roduct development

or concentric diversification may be attractive strategies for strong 4ash 4ows. Kowever& as

a 4ash 4ow business becomes weak& retrenchment or divestiture can become more

appropriate. Kere in this matrix the kotak security ltd is fall in the cash cow uadrant.

'ogs

uadrant I@ have a low relative market share position and compete in a slow= or

no=market=growth industry they are 9ogs in the industry portfolio. Kere in this matrix the/hare khan& K9;4 /ecurity& Indiabull&Earvy are in dog uadrant.

1 .2 G" K !I!" C"?? 5A$RIJ

S.V INSTITUTE OF MANAGEMENT,KADI )#


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C( %atrix also called %cEinsey %atrix is a strategic management tool for conducting portfolio analysis. The portfolio which is analyzed with the matrix may include products&services or entire /BGs $strategic business units) owned by the company.

This tool is very similar to the B4C %atrix and you can actually view the C( or %cEinsey%atrix is a kind of extension of the B4C %atrix $the multifactor portfolio analysis tool).

The main

difference is that the C( %atrix compares different products or businesses on RBusiness/trengthR and R%arket Attractivenes

indian brokrage industry (1)

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