khyati sharekhan

8/6/2019 khyati sharekhan

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CHAPTER --- I

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 1 -


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OBJECTIVE OF THE PROJECT

The basic objective behind undergoing this project is to gain knowledge of

the capital market and to learn how the research are conducted. As the

sensex and nifty are on boom we thought that we should do our summer

project in any BROKING COMPANY. SHAREKHAN gave us opportunity

for undergoing our summer training in their company. Our learnings have

enhance our knowledge and we are thankful to all those who behind the

success of this project.

Our project title is MARKETING RESEARCH ON CUSTOMER

SERVICE AND SATISFACTORILY HANDLING OF TRADINGACCOUNT.

We selected this title to gain more knowledge related to handling of trading

accounts in broking firms. Our main focus of research is on services that the

firms provides to clients for TRADING. As the market is on boom more

people are opening their trading account with the broking firms. Our aim

was to learn handling of trading account in the firms.



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AWARDS and ACHIEVEMENTS

Share khan is amongst the top 2 online trading websites from India.

Share khan is the most preferred financial destination amongst the

online banking customers. Share khan is the winner of Best Financial Website Award.

Share khan is awarded at the Awaaz Consumer Awards 2005 in the

Indias stock broking firm.

Chairman of the company is Mr. Shripal Morakhia and the CEO of the

company is Mr. Tarun Shah. Head office is located at Mumbai. It has

reached 100 in number of branches all over India.

Share khan is one of Indias leading broking houses providing a complete

life-cycle of investment solutions in EQUITIES, DERIVATIVES and

COMMODITIES.

ABOUT BARODA BRANCH

This branch was opened as franchise in partnership between Mrs.

AnahitaVora and Mr. Girish Parikh four years back. And then it was

converted to branch and Mrs. Anahita Vora was appointed as a Branch

Head. Now Mrs. .Anahita Vora has become vice-president of Gujarat regionand Nirav Patel is branch manager.



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CUSTOMERS OF THE COMPANY

Baroda branch of Sharekhan have around 3000 customers.

Types of customers in Share khan:

INTRADAY : 25% of the customers are trading on intraday

basis.

DELIVERY : 50% of the customers are trading on delivery

basis.

F&O : 12% of the customers are investing in futures

and options.

COMMODITY : 5% Customers are investing in commodities.

HNI (initial investment > 2,00,000) : 8% of the customers are

Investing.

CORE ACTIVITIES

Sharekhan is Indias leading broking houses providing a complete life cycle

of investment solution in:

Equities and Derivatives Trading

Commodity Trading

Depository Service

Portfolio Management Services

Mutual Fund

IPO Services

Fundamental and Technical Research

Online Trading



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BUSINESS OF THE COMPANY

Business is categorized into SIX areas :

1. Equity

2. Derivatives

3. PMS

4. Commodities

5. Mutual Funds

6. IPOs

TRADERS are having two options for trading:

Online

Offline



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Branch

Head

Regional

SalesManager

EquityAdvisors

Back OfficeDept.

Territory salesmanager

AssistantManager

Direct SalesExecutive

Trainees

RelationshipManagers

Customer care

cacccre

AccountingDepartment

ORGANISATION

CHART


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CHAPTER --- II



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METHODOLOGY TO WORK

THE JOB WE DID IN SHAREKHAN DURING OUR SUMMER

TRAINING

PROBLEM

There are few customers who are having their account with company

but for any reason they have not started trading.

They are the inactive customers of SHAREKHAN. Our job was to

call them and take their feedback on weather they have received their

account opening kit? Have they got demo of online trading? Are they

aware about the other different products of SHAREKHAN? Have

they started trading through SHAREKHAN?

We got a list of 1117 retail clients of SHAREKHAN. These are those

clients who have freshly opened their account with company but due

to any reason they have not started trading through SHAREKHAN.

We made call to all they clients and taken their feedback and made a

report of the same and submitted the same to concern authority. It is

because our project title suited the same job it was given to us. By this

we get to know about reasons and the service satisfaction related to

their trading account with SHAREKHAN.

Our job was to take the feedback from the clients and make a report of

the same. During this job we were given full freedom and authority to

take feedback from the clients of the SHAREKHAN.

We were provided a list of 1117 retail clients to whom we spoke. The

list provided all the details of the clients such as Name of the client,

Form number, Phone number, ASSISTANT MANAGER or SALES

EXECUTIVE name who opened their account, product sold and

account opening date. Our job was to check their status on kit

received, demo provided, product knowledge and trade initiated.

Customer

name

Kit status Product

knowledge

Demo Trade

initiation



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Some of the REASONS:

When we called the customers we found the following reasons for nottrading:

Some of the customers didnt get demonstration on time.

Some of customers are not aware of the SHAREKHAN

products such as commodities, IPO, PMS, mutual funds.

Some of the clients didnt receive the account opening kit on

time.

Even some customers found the brokerage charges of

SHAREKHAN very high.

Some customers are not getting tips regularly through SMS or

on their e-mail ID.

.

SOURCES OF DATA :

PRIMARY DATA : Our learnings in SHAREKHAN

SECONDARY DATA : INTERNET SURFING



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CHAPTER --- III



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EQUITIES PRODUCTS OF SHAREKHAN

ONLINE ACCOUNT TYPES

Classic Account / Applet : Investor in

equities SpeedTrade : Trader in equities and

Derivatives



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]

FEATURES OF CLASSIC ACCOUNT

1) Nil paper work

2) Trade anywhere

3) Research mails

4) Web based product

5) Online fund transfer facilities

6) Phone trading facility

7) After hour orders

BENEFITS OF CLASSIC ACCOUNT

Live terminal (NSE, BSE, NSE F&O)

No deposits

1. Four time exposure limit

2. Buy today sell tomorrow facility

3. Phone trading on toll free number

4. Reasonable brokerage charges

5. Relationship manager facility

6. Quarterly statement7. Digital contract

ACCOUNT OPENING CHARGES

750 Rs. Lifetime membership fees + 5000 Rs. Margin OR 375 Rs. Lifetime membership fees + 10000 Rs. Margin OR

375 Rs. Lifetime membership fees + Contract note

+ 5000 Rs. Margin



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BROKERAGE CHARGES

FOR CASH SEGMENT:

Intraday Transactions: 10 paisa per 100Rs. on

purchase as well as sell transaction.

Delivery Transactions: 50 paisa per 100Rs. on

purchase as well as sell transaction.

FOR F&O SEGMENT:

Same day square off: 10 paisa single side

For long positions: 10 paisa



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SPEED TRADE

Speedtrade is a next generation online trading product that brings the power

of your brokers to your PC. It provides on a single screen streaming quotes,

trade confirmations for equity

cash market. It is ideal for active traders who transact frequently during days

trading session to capitalize on intra-day price movements.

Speed trade is a net based application that provides everything a trader needs

on one screen, thereby reducing the maximum time required to execute a

trade by a huge margin.



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FEATURES OF SPEEDTRADE

Software based product Live terminal with 140 scrips like a brokers terminal

Nil paperwork

Instant access

Online banking facility

Toll free trading facility

After market hour orders

BENEFITS OF SPEEDTRADE

Live terminal of NSE, BSE, NSE F&O

5 times credit limit

Buy today sell tomorrow facility

Suitable for high volume and intraday traders

One sided brokerage on intraday trading

Phone trading from toll free numbers

Advice by highly qualified portfolio managers

Digital contract

Quarterly transaction statement

ACCOUNT OPENING CHARGES

Rs1000 Account opening fees & 10000 Margin for trading purpose.

Rs500 Account opening fees & 20000 Margin for trading purpose.

Rs500 Account opening fees & contract note of any other broking

house if available & 10000 Marin for trading purpose. 1 year Demat account free

Rs300 annual maintenance charges for demat account (After 1 year)



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BROKERAGE CHARGES

FOR CASH SEGMENT

Intraday transactions: 10paisa per 100Rs single side

Delivery transactions: 50paisa per 100Rs on

purchase as well as sell transactions.



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OTHER PRODUCTS

COMMODITIES

Commodity derivative comprise of raw material and products that can be

traded on special commodity exchanges across the country. It includes crude

oil, gold, silver, grains etc.

Commodities expand your investing horizon from investing in a metal

company to trading in the metal itself. Trading in commodities provides

unique market opportunities for a wider section of participants.

There are two exchanges for trading in commodities: Multinational Commodity Exchange Of India Ltd., Mumbai

(MCX) www.mcxindia.com

National commodity and derivative exchange, Mumbai

(NCDX) www.ncdx.com

HOW TO START TRADING IN COMMODITIES WITH

SHAREKHAN.

To trade in commodities you need to first open an account with Share

khan. Existing clients need to just sign an agreement to the effect that

they wish to trade in commodity futures. If you are not a Share khan

client yet, all you have to do is to open an account with us by filling up

the account opening form and deposit the required margin to start trading

in commodities futures.

PORTFOLIO MANAGEMENT SERVICES

http://www.mcxindia.com/http://www.ncdx.com/http://www.mcxindia.com/http://www.ncdx.com/


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What is a Portfolio?

A Portfolio is a combination of different investment assets mixed and

matched for the purpose of achieving an investor's goal(s). Items that are

considered a part of your portfolio can include any asset you own-fromshares, debentures, bonds, mutual fund units to items such as gold, art and

even real estate etc. However, for most investors a portfolio has come to

signify an investment in financial instruments like shares, debentures, fixed

deposits, mutual fund units.

What is Diversification?

It is a risk management technique that mixes a wide variety of investments

within a portfolio. It is designed to minimize the impact of any one security

on overall portfolio performance. Diversification is possibly the best way to

reduce the risk in a portfolio.

What are the advantages of having a diversified portfolio?

A good investment portfolio is a mix of a wide range of asset class. Different

securities perform differently at any point in time, so with a mix of asset

types, your entire portfolio does not suffer the impact of a decline of any one

security. When your stocks go down, you may still have the stability of the

bonds in your portfolio. If you spread your investments across various types

of assets and markets, you'll reduce the risk of your entire portfolio getting

affected by the adverse returns of any single asset class.

Portfolio Management Services, popularly known as PMS is one of the ideal

ways of investment in equities.

It is a process of:

1. Investment profiling

2. Returns expectation

3. Choice recommendation

4. Exclusive meets

5. Tracking targets6. Portfolio tracking

There are three types of PMS of SHAREKHAN:



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Pro prime

Pro tech

Pro arbitrage

Pro Prime

Pro Prime is targeted at long term investor. The minimum amount that can

be invested in pro prime is Rs.5lakhs (as per SEBI guidelines). An investor

can expect a return of 20 to 25 percent per annum when investing in pro

prime. Pro prime is a moderate risk and moderate return product

It is recommended that client who invest in Pro Prime look at a long term

tenure that is a period of minimum one year, in order to achieve the return

objective.

Pro Tech

Pro Tech ensures high risk, high return. Invest in Pro Tech are based on the

technical analysis of price movement. The minimum amount that can be

invested in Pro Tech is Rs.5lakhs (as per SEBI guidelines). In Pro Tech there

are two products:

Nifty Thrifty

Beta Portfolio

Pro Arbitrage

Pro Arbitrage is low risk and low return product. The expected returns are

not sure or guaranteed. There are no annual maintenance charges and there is

no profit sharing.

MUTUAL FUNDS



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A mutual fund is a pool of money that is invested according to a common

investment objective by an asset management company (AMC). The AMC

offers to invest the money of hundreds of investors according to a certain

objective to keep money liquid or give a regular income or grow themoney long term. Investors buy a scheme if it fits in with their investment

goals, like getting a regular income now or letting the money accumulate

over the long term. Investors pay a small fraction of their total funds to the

AMC each year as investment management fees.

Sharekhan acts as a distributor to the various Asset Management

Companies. It does not have its own mutual fund.

CATEGORIES OF MUTUAL FUNDS

There are three broad categories of funds in the stock market: Money market

Debt

Equity

The objectives of mutual fund are:

FUND OBJECTIVE WHAT THE FUND WILL

INVEST IN

Equity (Growth) Only in stocks

Debt (Income) Only in fixed income

Securities

Money market In short term market

instrument



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What are the benefits of investing in Mutual Funds?

There are several benefits from investing in a Mutual Fund:

Small investments: Mutual funds help you to reap the benefit ofreturns by a portfolio spread across a wide spectrum of companies

with small investments.

Professional Fund Management: Professionals having

considerable expertise, experience and resources manage the pool of money

collected by a mutual fund. They thoroughly analyze the

markets and economy to pick good investment opportunities.

Spreading Risk: An investor with limited funds might be able to

invest in only one or two stocks/bonds, thus increasing his or herrisk. However, a mutual fund will spread its risk by investing a

number of sound stocks or bonds. A fund normally invests in

companies across a wide range of industries, so the risk is

diversified.

Transparency: Mutual Funds regularly provide investors with

information on the value of their investments. Mutual Funds also

provide complete portfolio disclosure of the investments made by

various schemes and also the proportion invested in each asset type.

Choice: The large amount of Mutual Funds offer the investor a wide variety

to choose from. An investor can pick up a scheme depending upon his risk/

return profile.

Regulations: All the mutual funds are registered with SEBI and they

function within the provisions of strict regulation designed to protect the

interests of the investor.



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Are there any risks involved in investing in Mutual Funds?

Mutual Funds do not provide assured returns. Their returns are linked to

their performance. They invest in shares, debentures, bonds etc. All these

investments involve an element of risk. The unit value may vary depending

upon the performance of the company and if a company defaults in paymentof interest/principal on their debentures/bonds the performance of the fund

may get affected. Besides incase there is a sudden downturn in an industry

or the government comes up with new a regulation which affects a particular

industry or company the fund can again be adversely affected. All these

factors influence the performance of Mutual Funds. Some of the Risk to

which Mutual Funds are exposed to is given below:

Market risk

If the overall stock or bond markets fall on account of overall

economic factors, the value of stock or bond holdings in the fund'sportfolio can drop, thereby impacting the fund performance.

Non-market risk

Bad news about an individual company can pull down its stock price, which

can negatively affect fund holdings. This risk can be reduced by having a

diversified portfolio that consists of a wide variety of stocks drawn from

different industries.

Interest rate riskBond prices and interest rates move in opposite directions. When

interest rates rise, bond prices fall and this decline in underlying

securities affects the fund negatively.

Credit risk

Bonds are debt obligations. So when the funds invest in corporate

bonds, they run the risk of the corporate defaulting on their interest

and principal payment obligations and when that risk crystallizes, it leads to

a fall in the value of the bond causing the NAV of the fund to take a beating.



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What are the different types of Mutual funds?

Mutual funds are classified in the following manner:

(a) On the basis of Objective

]Equity Funds/ Growth Funds

Funds that invest in equity shares are called equity funds. They carry the

principal objective of capital appreciation of the investment over the

medium to long-term.

Diversified funds

These funds invest in companies spread across sectors. These

funds are generally meant for risk-averse investors who want

a diversified portfolio across sectors.

Sector funds

These funds invest primarily in equity shares of companies in

a particular business sector or industry. These funds are

targeted at investors who are bullish.

Index funds

These funds invest in the same pattern as popular market

indices like S&P CNX Nifty or CNX Midcap 200. The moneycollected from the investors is invested only in the stocks,

which represent the index. For e.g. a Nifty index fund will

invest only in the Nifty 50 stocks. The objective of such funds

is not to beat the market but to give a return equivalent to

the market returns.

Tax Saving Funds

These funds offer tax benefits to investors under the Income Tax Act.Opportunities provided under this scheme are in the form of tax rebates

under the Income Tax act.



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Debt/Income Funds

These funds invest predominantly in high-rated fixed-income-bearing

instruments like bonds, debentures, government securities,

commercial paper and other money market instruments. They are

best suited for the medium to long-term investors who are averse to risk andseek capital preservation. They provide a regular income to the investor.

Liquid Funds/Money Market Funds

These funds invest in highly liquid money market instruments. The

period of investment could be as short as a day. They provide easy

liquidity. They have emerged as an alternative for savings and short term

fixed deposit accounts with comparatively higher returns. These funds are

ideal for corporates, institutional investors and business houses that invest

their funds for very short periods.

Gilt Funds

These funds invest in Central and State Government securities. Since they

are Government backed bonds they give a secured return and also ensure

safety of the principal amount. They are best

suited for the medium to long-term investors who are averse to risk.

Balanced Funds

These funds invest both in equity shares and fixed-income-bearing

instruments (debt) in some proportion. They provide a steady return andreduce the volatility of the fund while providing some upside for capital

appreciation. They are ideal for medium to long-term investors who are

willing to take moderate risks.

b) On the basis of Flexibility

Open-ended Funds

These funds do not have a fixed date of redemption. Generally they

are open for subscription and redemption throughout the year. Their pricesare linked to the daily net asset value (NAV). From the investors'

perspective, they are much more liquid than closed-ended funds.

Close-ended Funds



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These funds are open initially for entry during the Initial Public

Offering (IPO) and thereafter closed for entry as well as exit. These funds

have a fixed date of redemption. One of the characteristics of the close-

ended schemes is that they are generally traded at a discount to NAV; but

the discount narrows as maturity nears. These funds are open forsubscription only once and can be redeemed only on the fixed date of

redemption. The units of these funds are listed on stock exchanges (with

certain exceptions), are tradable and the subscribers to the fund would be

able to exit from the fund at any time through the secondary market.

What are the different investment plans that Mutual Funds

offer?

The term investment plans generally refers to the services that the funds

provide to investors offering different ways to invest or reinvest:

Growth Plan and Dividend Plan

A growth plan is a plan under a scheme wherein the returns from

investments are reinvested and very few income distributions, if any, are

made. The investor thus only realizes capital appreciation on the investment.

Under the dividend plan, income is distributed from time to time. This plan

is ideal to those investors requiring regular income.

Dividend Reinvestment Plan

Dividend plans of schemes carry an additional option for

reinvestment of income distribution. This is referred to as the

dividend reinvestment plan. Under this plan, dividends declared by a fundare reinvested in the scheme on behalf of the investor, thus

increasing the number of units held by the investors.

Active Fund Management



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When investment decisions of the fund are at the discretion of a fund

manager(s) and he or she decides which company, instrument or class of

assets the fund should invest, is based on research, analysis, market news

etc. such a fund is called as an actively managed fund. The fund buys andsells securities actively based on changed perceptions of investment from

time to time. Based on the classifications of shares with different

characteristics, active investment managers construct different portfolio.

Two basic investment styles prevalent among the mutual funds are

Growth

Investing and Value Investing:

Growth Investing Style

The primary objective of equity investment is to obtain capital appreciation.

A growth manager looks for companies that are expected to give above

average earnings growth, where the manager feels that the earning prospects

and therefore the stock prices in future will be even higher. Identifying such

growth sectors is the challenge before the growth investment manager.

Value investment Style

A Value Manager looks to buy companies that they believe are currentlyundervalued in the market, but whose worth they estimate will be recognized

in the market valuations eventually.

Passive Fund Management

When an investor invests in an actively managed mutual fund, he or she

leaves the decision of investing to the fund manager. The fund manager is

the decision- maker as to which company or instrument to invest in.

Sometimes such decisions may be right, rewarding the investor handsomely.

However, chances are that the decisions might go wrong or may not be right

all the time which can lead to substantial losses for the investor. There are

mutual funds that offer Index funds whose objective is to equal the return



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given by a select market index. Such funds follow a passive investment

style. They do not analyze companies, markets, economic factors and then

narrow down on stocks to invest in. Instead they prefer to invest in a

portfolio of stocks that reflect a market index, such as the Nifty index. The

returns generated by the index are the returns given by the fund.

WHAT IS AN IPO?



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It is an acronym for Initial Public Offering. This is the first sale

of stock by a company to the

public. The main purpose of an IPO is to raise

capital for the corporation. An initial public offering occurs

when a company first sells common shares to investors in thepublic.

WHY DO COMPANIES OFFER IPOs?

In general, companies offer IPOs in order to raise money that they need for

business expansion and new business opportunities. By offering shares to

investors, a company stands to bring in a lot of money. They can then use

this money to grow their business. The more their business grows, in turn,

the higher the share prices grow and the more money is generated by

investors purchasing shares. Unlike business loans, which need to be repaidwith interest, IPOs do not have this disadvantage. It is investors who take the

risk.

If the company loses money and they will not have to repay their

investors, although investors in general demand high accountability from a

company they are buying stocks from.

WHO CAN JOIN THE IPO PROGRAM?

Public investors can purchase IPOs through their regular investmentchannels, although they will need to act fast to take advantage of the initial

low IPO costs. Business can take advantage of IPOs simply by offering

public shares in the market.

BENEFITS OF IPOs

For businesses, stocks and shares are a fast way to raise revenue for business

expansion and growth. By becoming a publicly traded company a business

can take advantage of new, larger opportunities and can start working

towards incorporation and even world wide expansion. IPO gives a companyfast access to public capital. IPOs are also a relatively low risk for business

and have the potential for huge gains and for huge opportunities.



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DIFFERENT KINDS OF ISSUES

Primarily issues can be classified as a public, right or preferential issues

(also known as private placements). While public and right issues involves sdetailed procedure, private placements or preferential issues are relatively

simpler. The classification of issues is illustrated below:

PUBLIC ISSUE: When an unlisted company makes either fresh issue

of securities or an offer for sale of its existing securities or both for the

first time to the public.

RIGHT ISSUE: When a listed company which proposes to issue

fresh securities to its existing shareholders as on a record date. The

rights are normally offered in a particular ratio to the number of

securities held prior to the issue. This route is best suited for thecompanies who would like to raise capital without diluting stake of its

existing shareholders.

PREFRENTIAL ISSUE: An issue of shares or of convertible

securities by listed companies to a selected group of persons under

section81 of Companies Act, 1956 which is neither a right issue nor a

public issue. This is a faster way for a company to raise equity capital.

DIFFERNCE BETWEEN PUBLIC ISSUE AND PRIVATE

When an issue is not only made to select set of people but also open to the

general public and any other investor at large, it is a public issue.

But if the issue is made to a select set of people, it is called private

placement. As per Companies Act 1956, an issue becomes public if it results

in allotment to 50 persons or more. This means an issue can be privately

placed where an allotment is made to less than 50 persons.

TYPES OF MARKET



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There are mainly two types of market:

Primary Market

Secondary Market

Primary Vs Secondary Market

Since buying an IPO means buying directly from the company

issuing the shares, IPO constitute the primary market.

Buying shares from stock exchange is buying from secondary

market.

All shares which are traded in the secondary market have come

through primary market as IPO.

WHY DO COMPANIES GO PUBLIC?

The reasons are:

To raise funds for expansion/start up.

Gain credibility through more security.

Easier mergers and acquisitions through availability of more

number of stocks.

To get listed in a major stock exchange

THE PRIMARY MARKET



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ROHAN BUYS FROM THE PRIMARY MARKET

THE SECONDARY MARKET


COMPANY ANNOUNCES IPO AND DISTRIBUTES FORMS

ROHAN FILLS

UP THE FORM

AND SUBMIT TO

THE COMPANY

ROHIT FILLS

UP THE FORM

AND SUBMIT

TO THE

COMPANY ALLOT SHARES

ROHAN

ALLOTED SOME

SHARES AT Rs95

PER SHARE

ROHIT IS NOT

ALLOTED AN

SHARES


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ROHIT BUYS FROM THE SECONDARY MARKET

NOTE

Rohit buys from the stock market whereas Rohan buys from the

company (Primary Market) and sells in the secondary market.

BID AND ASK PRICE

The Bid is the buyers price. It is this price that you need to know

when you have to sell a stock. Bid is the rate/price at which there is a

ready buyer for the stock, which you intended to sell.

The Ask (or offer) is what you need to know when you are buying

i.e. this is the rate/price at which there is a seller ready to sell his

stock. The seller will sell his stock if he gets the quoted Ask price.

If an investor looks at a computer screen for a quote on the stock of

say XYZ Ltd., it might look something like this.

BID PRICE ASK PRICE

QTY PRICE (Rs.) QTY PRICE(Rs.)


ROHIT IS NOT ALLOTED SHARES BY THE COMPANY.THERE

WERE NOT ENOUGH SHARES ON OFFER

ROHAN SELLS SOME OF HIS SHARES IN THE MARKET AT A

HIGHER PRICE, SAY Rs105

ROHIT BUYS SOME SHARES FROM THA STOCK MARKET

THROUGH A BROKER AT THIS PRICE


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1000 50.25 2000 50.35

500 50.10 1000 50.40

550 50.05 1500 50.50

2500 50.00 3000 50.55

1300 49.85 1450 50.65TOTAL TOTAL TOTAL TOTAL

5850 250.25 8950 252.45

Here on the left hand side is Bid quantity and price whereas on the

right hand side is Ask quantity and price.

The best buy (Bid) order is the order with the highest price and

therefore sits on the first line of the Bid side (1000 shares @ Rs.

50.25). The best sell (Ask) order is the order with the lowest selling

price (2000 shares @ Rs. 50.35). the difference in the price of the best

bid and ask is called as the Bid-ask spread and often is an indicator of

liquidity in a stock. The narrower is the difference, the more liquid or

highly traded is the stock.

DERIVATIVES



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A derivative is a financial instrument whose value depends on the values of

other more basic underlying asset. From the view point of investors and

portfolio managers, futures and options are the two most important financial

derivatives

What are Types of Derivatives?

Forwards: A forward contract is a customized contract between two

entities, where settlement takes place on a specific date in the future at

todays pre-agreed price.

Futures: A futures contract is an agreement between two parties to buy or

sell an asset at a certain time in the future at a certain price. Futures contracts

are special types of forward contracts in the sense that the former are

standardized exchange-traded contracts, such as futures of the Nifty index.

Options: An Option is a contract which gives the right, but not an

obligation, to buy or sell the underlying at a stated date and at a stated price.While a buyer of an option pays the premium and buys the right to exercise

his option, the writer of an option is the one who receives the option

premium and therefore obliged to sell/buy the asset if the buyer exercises it

on him. Options are of two types

Calls and Puts options:

Callsgive the buyer the right but not the obligation to buy a given quantity

of the underlying asset, at a given price on or before a given future date.

Puts give the buyer the right, but not the obligation to sell a given

quantity of underlying asset at a given price on or before a givenfuture date. Presently, at NSE futures and options are traded on the Nifty,

CNX IT, BANK Nifty and 116 single stocks.

What is an Option Premium?

At the time of buying an option contract, the buyer has to pay premium. The

premium is the price for acquiring the right to buy or sell. It is price paid by

the option buyer to the option seller for acquiring the right to buy or sell.

Option premiums are always paid upfront.

FACTS ABOUT FUTURES

Future expires on last thursday of every month.



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If an individual has not squared off his position by the last

Thursday, his futures will be compulsory sold off at closing

cash market price of that scrip and the profits will be transferred

to him.

If markets are bullish, one can make money by buying futures.In times of bearish market conditions, money making

possibilities exist through selling futures.

An individual who has bought a stock for Rs.100 can sell its

future at Rs.105 and pocket Rs.5

FACTS ABOUT OPTIONS

Options expire on last Thursday of every month.

All options are settled and expiry and the holder is paid thedifference between strike price and going market rate. This is

called Automatic Exercise of Option.

A DERIVATIVE is a financial instrument whose value depends on

values of other more basic underlying variables. It does not constitute

ownership but a promise to convey ownership.

LET US TAKE AN EXAMPLE TO EXPLAIN HOW FUTURES

WORK

Suppose you are bullish on a stock say HLL which is currently selling

@ Rs 280/ share. You believe that it could touch Rs 330/ share in one

month. What would you do?

You can take a position in HLL cash market, buy HLL shares today & sell

them off if & when they touch Rs 330/share thereby making a profit of Rs50 on an investment of Rs 280 i.e. a return of 18% in one month. This is one

option.

Second option will be instead to buy HLL one month futures, this way you

dont have to pay the entire amount i.e. Rs 280 but only a certain margin say

20% . so you pay Rs 56 & take the same position as you would in cash



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market. The price rises to Rs 330, you will still earn Rs 50 as profit. The

investment is now 9% instead of 18% on same stock.

This is the advantage that stock future provides, by investing a small margin

of 10 to 20% an individual can get into the same position as in cash market.The returns therefore get multiplied accordingly.

Talking of risk, suppose HLL prices instead of rising to Rs 330 fall of Rs

250, the loss would be Rs 30. in the cash market, this would translate a loss

of 11% only but in future market this would mean a loss of 54%.

How to reduce these losses. It is possible to square off ones position

anytime to buying the futures. Suppose we are bullish on HLL & hence have

bought the shares but the price starts falling, after that you can sell off the

shares immediately.

OPTIONS

Options are derivative product which when bought entitles the buyer to

certain right.

CALL OPTION --- Right to buy a share.

PUT OPTION --- Right to sell a share.

Let us take an EXAMPLE to understand how option works:

Suppose you are bullish on the market. HLL shares are trading in the market

for Rs 242. you buy HLL Rs 240 call option, this entitles you to buy HLL

shares @ price of Rs 240/share. This is called the strike price or the exercise

price. The cost you pay for the buying the option also called the premium or

option price say Rs 20.

Suppose your view turns right & HLL prices are actually rises to Rs 270 in10 days time. The price of call will simultaneously rise to say Rs 35 from Rs

20, you could sell off the call & make Rs 15. this is @75 % returns. If you

had simply bought the shares @ Rs 242 & sold them @ Rs 270 i.e. buy &

sell the shares proper & not the option, you would have earn a return of 12%

only.



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Let us see what happen if your view does not go right;

Suppose HLL prices fall to Rs 225. in this case the price of option will fall

to Rs 10. you can sell it off & bear a loss of Rs 10/share. In the case that

HLL prices fall the way to Rs 200, the option will loose all value you will beleft amount you had paid for buying each option.

The biggest advantage of option is that they ensure limited loss & unlimited

profit for the buyer. Who bears the loss: the option seller or the option

righter. He is a skilled market player with in-depth market knowledge who

by selling options is taking a risk because selling options means limited

income & unlimited loss.

Let us now see how put option works;

Suppose you are bearish with HLL. It is trading @ Rs 262 & you think it

will go down further; you buy a put option @ strike price of say Rs 260 @ a

premium of say Rs 11. this gives you a right to sell HLL for Rs 260 even of

share price went down to say Rs 235.

FUNDAMENTAL RESEARCH PRODUCTS



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Features of Share khans Fundamental Research:

Research plays a vital role in the success of Share khan. Share khans

fundamental research team carries out in-depth research while analyzing

companies. The following criteria are looked into while investigating acompany:

Background

Management

Business

Product and services

Facilities

There are five key fundamental products of Share khan:

Stock idea

Investors eye

Share khan valueline

Share khan top picks

Market strategy

STOCK IDEA

It includes:

The company background

The investment arguments

The key financials of the company

The shareholding pattern of the company

The price chart for the stock

The performance of the stock in absolute terms and relative to the

sensex.

If the investors do not have the time to read the entire report then the first

page would give them important information that they need to know about

the stock, thereby helping them to make an informed decision.



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INVESTORS EYE

Investors eye is a daily newsletter from the fundamental research team

which is aimed at helping investors to take informed decisions.

The following are the contents of the Investors Eye: View on the most important news report of the day.

Stock idea reports

Stock update reports

Special reports

SHARE KHAN VALUELINE

It is a fundamental monthly investment magazine targeted at investors.

Share khans valueline gives a wrap-up of the previous month. It is

published in Hindi, English and Gujarati. It gives the following information:

Name of the scrip

Recommended price

Date of recommendation

Price as on beginning of current month

Percent gain or loss

SHARE KHAN TOP PICKS

It presents the best twelve of share khan stock ideas. This report is aimed at

investors.

Each stock in the list is accompanied by its current market price, price target

and the price expected. The list is revised on the monthly basis.

MARKET STRATEGY

Market strategy outlines share khans expectations of the broad market and

defines the investment strategy.The broad view on the market expressed through a market strategy report

holds till the same is changed and notified through a new market strategy

report.

DIAL n TRADE



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It is a tele broking facility which sharekhan give to its customers.

Dial n Trade is offered as a back up service for customers who prefer

to go for online trading account.

FEATURES OF DIAL n TRADE

It is a call center totally dedicated to market activities.

Two numbers one toll free and other local

1800-22-7050: This number can be accessed from any BSNL or

MTNL landline anywhere in India and is toll free that is for the

customer it is free of cost.

30307600: This is single response number i.e. to access this number a

customer has to dial the local STD code before dialing the number.

For eg. : To make a call from Delhi a customer has to dial (011)

30307600. This will be treated as local call. Thus customer has to pay

only local charges for his or her calls.

Dial n Trade does not charge any access charges for its

services, i.e. dial n trade as a service is absolutely free. Dial n

Trade has not set any limit for the number of calls that can be

made.

In case if the customer faces any problem with the toll free

number or with the local one, he or she can always contact Dial

n Trade through the number 24989191, which is a backup

number. The backup number is not a toll free number.

The Dial n Trade recording system helps to deal with conflicts.It facilitates smooth functioning of Dial n Trade service. The

conversation between a client and Dial n Trade executive is

automatically recorded on Dial n Trade recording server.

Dial n Trade provides clients with a customer service cell to

take care of queries and complaints.



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The Dial n Trade IVR (interactive voice response) system

provides live data about the number of calls that are in queue.

This feature help Dial n Trade executive to adjust his or her call

handling speed. The waiting time at peak hours does not exceed

more than 55 seconds. Dial n Trade regularly extends outbound campaigns to educate

the clients on futures and options.

All Dial n Trade executives are given regular training on

various aspects of the stock market and share khan research

products.

Any client who wants to complain about Dial n Trade can

easily do so by sending a mail to my account at sharekhan.com

Dial n Trade also advice clients on IPOs that are covered by

share khans fundamental research team. Clients can make online IPO application by calling up Dial n

Trade.

Share khans well trained customer service executives will

solve any query that the client has about his or her trading

account.



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ACCESSING DIAL N TRADE

Client call up 1800-22-7050/30307600 which is either toll free number or

local number.

After welcome message, system prompts client to dial phone ID.

System prompts client to dial T-pin


If dataentered is

correct

If dataentered is

incorrect

Call is

forwarded to

phone

-trading

executive

System

prompts

client to

redial phone

ID and T -

pin

If data iscorrect

If data incorre

Call

disconn

-ed


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CHAPTER --- IV



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STOCK MARKET

What is STOCK MARKET?

A market where people buy and sell shares of different companies. The

main purpose of share market is to facilitate the exchange of stock

between buyers and sellers. It is the place where buyers and sellers meet

and discuss on the price of shares.

There are two main exchanges in India:

BOMBAY STOCK EXCHANGE ( BSE )

NATIONAL STOCK EXCHANGE ( NSE )

The Bombay Stock Exchange and the National Stock Exchange of India are

the two primary exchanges in India. In addition, there are 22 Regional Stock

Exchanges. However, the BSE and NSE have established themselves as the

two leading exchanges and account for about 90% of the equity volume

traded in India.

Most key stocks are traded on both the exchanges and hence the investorcould buy them on either exchange. The primary index of BSE is BSE

Sensex

comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which

consists of 50 stocks.

The BSE Sensex is the older and more widely followed index. Both these

indices are calculated on the basis of market capitalization and contain the

heavily traded shares from key sectors. The markets are closed on Saturdays

and Sundays. Both the exchanges have switched over from the open outcry

trading system to a fully automated computerized mode of trading known as

BOLT (BSE online trading) and NEAT (National Exchange AutomatedTrading) System. It facilitates more efficient processing, automatic order

matching, faster execution of trades and transparency. The scrips traded on

the BSE have been classified into A, B1, B2, C, F, and Z groups.

The A group shares represent those, which are in the carry forward system

(Badla). The F group represents the debt market (fixed income securities)

segment. The Z group scrips are the blacklisted companies. The C group



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covers the odd lot securities in A, B1, & B2 groups. The key regulator

governing Stock ,Exchanges, Brokers, Depositories, Depository participants,

Mutual Funds, FIIs and other participants in Indian secondary and primary

market is the Securities and Exchange Board of India (SEBI) Ltd.

Points taken into consideration before investing in stock market:

1. From where shares are to be bought?

2. How to identify which company to invest in?

3. Deciding when to invest in the market?

What are the various ways to invest money?

The first way is to buy shares when prices are low and sell them

when prices are high.

The second way is to buy a stock from NSE and sell at a higher

price at BSE.

The third way is to investing in mutual fundsand takes care of risk

and return. Doing speculation by keeping a strong watch on the market.

Shares are risky so investing in good companies means high

returns and investing in bad companies means low returns.

FACTORS AFFECTING THE PRICE OF A STOCK

Broadly there are two factors that affect the rise of a stock. They are:

STOCK SPECIFIC

MARKET SPECIFIC



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The stock specific factor is related to the peoples expectations about the

company, its future earnings capacity, financial health and management,

level of technology and marketing skills.

The market specific factor is influenced by the investors sentimenttowards the stock market as a whole. This factor depends on the

environment rather than the performance of any particular company.

Events favorable to an economy, political or regulatory environment like

high economic growth, budget, stable government etc. can result in a

boom in the market. On the other hand, unfavorable events like war,

economic crisis, communal riots etc depress the market irrespective of

certain companies performing well. However, the effect of market

specific factor is generally short term. Despite ups and downs, price of a

stock in the long run gets stabilized based on the stock specific factors.

Therefore, a prudent advice to all the investors is to analyze and investand not speculate in shares.

STOCK INVESTMENT ADVICE

So many people trade in the stock market with the same chance, but fewpercent of them earn enough return.

The reasons why people dont earn enough return in the stock market are the

emotions and strategies. Successful traders act without emotions and they

have a strategy and follow the principles of their strategy.

To success in the stock market, you should avoid some mistakes and learn

some investment tips.

One should avoid the following mistakes:

LACK OF STRATEGY

Having a strategy in the stock market is very important. You should

when buy a stock, what is selling price and how long you will hold the

shares. When choose a strategy follow its principles and dont change

your strategy everyday.



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WAITING FOR MARKET

Many traders when lose in a stock dont sell the stock and stay till the

stock price return to the price they have bought. This is one of the

greatest mistakes that the new traders do it because they may be lose

much more money and time with holding a fail position.

NOT TAKING THE PROFIT

When a reasonable profit has already been made, overcome to Greed

and sell the stock for taking the profit.

OVERTRADING

Many traders especially day traders feel the need to hold positions in

the market at all times on every trading day. Often they will break

their own rules in order to get all of their capital into the market.

Sometimes it is best to stand aside and avoid holding any position in

the markets at all.

FALLING IN LOVE WITH A STOCK

Some people stick to stock because they believe it is a good stock.

They even lose much money, but dont sell it.

A WAY TO GET RICH QUICKLY

People will often expect to get rich in the market overnight,



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but they fail to realize that trading is like any profession, you must

learn how to do it first.

If you are planning to go into the stock market investment, then

there are some general tips before investing in the stock market:

UNDERSTAND THE BASICS OF ECONOMICS

The stock market follows the laws of economics, particularly the law

of supply and demand. If there is a greater demand for the stocks of a

particular company, the price of its stock will go up accordingly. On

the other hand if there are more stocks available for selling than stock

buyers, the unit price of that companys stocks will go down.

CHOOSE COMPANIES THAT ARE MORE LIKELY TO STAY

With so many existing companies in the stock market, choosing

becomes a big challenge for beginners. Government owned

companies and businesses are relatively stable, unless there is a

political revolution in the horizon. Telecommunications and gasoline

companies are also stable and profitable since the demand for these

products and services is constant. Although IT companies are the

fastest growing in the market today, choose IT companies that have

proven track records of profitability and stability of at least 10 years.

ALWAYS READ AND WATCH THE NEWS

Dealing with the stock market is not a guessing game. Sound

decisions and good intuition are results of constantly learning about

the local and global political and economic happenings. Give

particular attention to the industry where your company belongs. Even

stable companies can suddenly go bankrupt or experience a big blow

that can bring them down.



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SPREAD YOUR INVESTMENTS

Avoid investing in just one company. If all your stocks are

concentrated to one company, the chance for loses is also greater.

Spread them out so that earning investments can cushion thoseinvestments that earn less.

DO NOT BE GREEDY

Although stock market investment is all about profits, becoming

greedy will make an investor lose his/her better senses.

BEAR AND BULL MARKETS

A bull market is one where prices are rising, whereas a

bearish market is one where prices are falling. These terms gives a

general impression of how the market is doing.

A stock market bull is someone who has a very optimistic view of the

market, they may be stock holders or may be investors who

aggressively buy and sell stocks quickly.

A bear investor is pessimistic about the market and may make more

conservative stock choices.



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GAINS FROM STOCK

The gains from stock are:

DIVIDENDS

PRICE APPRECIATION

PLAYERS IN STOCK MARKET

The major players in stock market are divided under two heads:


INSTITUTIONSINDIVIDUALS

LONG

TERM

INVESTORS

TRADERS

DAY

TRADERS

POSITION

TRADERS

FIIs Indian

companiesMutual


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INDIVIDUALS consist of:

1. Long term investors

2. Traders

LONG TERM INVESTORSLong term investors are those who invest over a long period of time

i.e. for 2 years or 3 years. They do not frequently buy

or sell shares.

TRADERS

Traders are those who buy and sell frequently.

There are two types of traders:

1. DAY TRADERS

2. POSITION TRADERS

DAY TRADERS

Day traders trade over intraday price fluctuations

POSITION TRADERS

Position traders buy stock and hold them and wait for price to rise.

Position traders trade over weeks.



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INSTITUTIONS consist of:

1. FIIs

2. Indian companies

3. Mutual funds

WHAT IS AN FII?

An institution established or incorporated outside India and which

makes investment in Indian stocks.

For eg:

Fidelity

Franklin Templeton

Capital International

FACTORS THAT MAKE MARKET VOLATILE

There are various factors which brings volatility in the share market.

They are:

Price fluctuations occur due to demand and supply imbalances.

Such imbalances are cause by the news related to:

Economy

Company

Sector

These imbalances make the investors reassess their

expectations of the company profitability and hence make

them either buy or sell.

This inturn creates demand and supply imbalances.

OTHER FACTORS THAT MAY AFFECT THE MARKET

MOOD:

Dollar Value

FII Inflows

Annual Budget

Oil Prices



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Updated information is needed on stock market because of its

volatility.

PARAMETERS ON WHICH COMPANYS

PERFORMANCE CAN BE MEASURED:

Market capitalization

Earning per Share

Price Earning Ratio

Dividend per Share

WHAT IS STOCK INDEX?

An index is a composite of stocks that indicates how the overall

market is moving.

It is a composite figure that tracks average change in a number of

related numerical variables over a period of time.

ROLE OF INDEX

The stock index is a barometer for market behaviour.

The role of good index is to reflect the state of overall

market at a very moment and indicate how the stock market

perceives the Indian corporate sector.

Higher the value of index the better is health of market and

vice versa.

Who is a Broker?

A company or an individual who: Is a member of stock exchange,

Is registered with SEBI,

Acts as a middleman between the buyer and seller of securities

in the market.

A broker charges fees for his services. This is known as Brokerage.



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Both NSE and BSE have switched over from open trading system

to a fully automated computerized mode of trading known as

BOLT and NEAT i.e. BSE online trading and National Exchange

Automated Trading.

It facilitates more efficient processing, automated order matching,transparency and faster execution of traders. Broker sits on BOLT

and need terminals and execute order through the same.

SETTLEMENT

It is the process which ensures that the buyer receives the shares he

has paid for and that money is paid to the person who has sold the

shares.

This is the process from buyer to seller and similar process occurs for the

transfer of shares from the sellers end.

A fixed process is followed for easy transfer of money and shares.It is termed as a settlement cycle of T+2 or Transaction + 2 days,

which means that if you buy shares on Monday then you will get delivery

of the shares after two working days i.e. on Monday. Similarly if you sell

shares on Monday then you will receive your money on Wednesday.


BUYER

PAYS

MONEYTO

BROKER

SHARE

KHAN

BROKER

PAYS

MONEY TO

STOCK

EXCHANGE

STOCK

EXCHANGE

PAYS IT TO

THE SELLERS

BROKER

BROKER

FINALLY

PAYS THE

MONEY TO

THE

SELLER

SELLER


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AUCTION

If the seller doesnt transfer shares by morning of T+2 days then:

The exchange buys the shares from open market at market price.

The shares are transferred to the buyer at promised price.The difference in the price is deducted with penalty from the seller.

TYPES OF ORDER

There are three types of order:

Market Order

Limit Order

Stop Loss Order

MARKET ORDER

An order to buy or sell at current market price. In this case, no specific

price is specified and order gets executed at current market price.

LIMIT ORDER

An order placed with a brokerage to buy or sell a predetermined

amount of shares at a specified price. This is generally better than the

current market price. In this case order gets executed only when

market price reaches specified level.

STOP LOSS ORDER

A stop loss order allows the client to place an order which gets

activated only when price of relevant shares reaches a threshold price

specified by investor in form of Stop Loss Trigger Price.



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TRADING

There are three types of trading:

Delivery trading Margin trading

Day trading

Delivery trading Margin trading Day trading

DELIVERY TRADING

In delivery base trading, you have Rs.100; you buy the shares worth

rs.100 and take delivery of those shares.

MARGIN TRADING

In margin trading, you have Rs.100; you buy the shares with 4 timesthe amount (i.e. Rs.400). On T+2 day, you either arrange for borrowed

amount or sell back the shares.

DAY TRADING

Day trading involves taking a position in the markets with a view of

squaring that position before the end of that day.

A day trader typically trades several times a day and the goal of a day

trader is to capitalize on price movement within one trading day.

Unlike investors, a day trader may hold positions for only a few

seconds or minutes and never overnight. This is really the safest way

to do day trading because you are not exposed to the potential losses

that can occur when stock market is closed due to news that can affect

the prices of your of your stocks.



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In day trading, you have Rs.100; you buy shares 4-8 times the amount

and make sure that you square off at the end of day.

Day trading can be further subdivided into:

SCALPERS: This style of day trading involves the rapid and

repeated buying and selling of a large volume of stocks withinseconds or minutes. The objective is to earn a small per share profit on

each transaction while minimizing the risk.

MOMENTUM TRADERS: This type of day trading involves

identifying and trading stocks that are in a moving

pattern during the day in an attempt to buy such stocks at bottom and

sell at top.

SHORT SELLING

Shorting means something you dont own. Short sellers assume thatthey will be able to buy the stock at lower amount than the price at

which they sold short.

People short sell because of their bearish expectations from the

market.



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DEMAT ACCOUNT

Demat refers to a dematerialized account. Just as you have to open anaccount with a bank if you want to save your money, make cheque

payments etc. you need to open a demat account if you want to buy or

sell stocks. So its just like a bank account where actual money is

replaced by shares

For eg:

Lets say your portfolio of shares look like this:

40 of Infosys

25 of Wipro45 of HLL

100 of ACC

All this will show in your demat account.

So you dont have to possess any physical certificates showing that

you own these shares. They are held electronically in your account.

As you buy and sell the shares, they are adjusted in your account.

DEPOSITORY

The organization responsible to maintain investors securities in the

electronic form is called the depository. In other words, a depository

can therefore be conceived of as a Bank for securities. In India there

are two such organizations i.e. NSDL and CDSL. The depository

concept is similar to the banking system with the exception that banks

handle funds whereas a depository handles securities of the investors.

An investor wishing to utilize the services offered by a depository has

to open n account with the depository through a Depository

Participant.



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DEPOSITORY PARTICIPANT

The market intermediary through whom the depository services canbe availed by the investors is called a Depository Participant. As per

SEBI regulations, DP could be organizations involved in the business

of providing financial services like banks, brokers, and financial

institutions.

BENEFITS OF DEMAT ACCOUNT

Demat account has become a necessity for all categories of investors

for the following reasons:

A safe and convenient way to hold securities.

Immediate transfer of securities.

Elimination of risk associated with physical certificates such as

bad delivery, fake securities, delays, theft etc.

Reduction in paper work involved in transfer of securities.

STEPS INVOLVED IN OPENING A DEMAT ACCOUNT

1. First an investor has to approach a Depository Participant

(DP) and fill up an account opening form.

2. The account opening form must be supported by copies of

any of the approved documents to serve as proof of identity

(POI) and proof of address as specified by SEBI.

3. Besides, production of PAN card in original at the time of

opening of account has been made mandatory effective from

April 01,2006

4. All applicants should carry original documents for

verification by an authorized official of the depository

participant, under his signature.



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5. Then the investor has to sign an agreement with DP in a

depository prescribed standard format, which details rights

and duties of investor and DP.

6. The DP will open the account in the system and give an

account number, which is also called Beneficiary OwnerIdentification Number.

7. If you want to sell your shares, you need to place an order

with your broker and give a delivery instruction to your DP.

8. The DP will debit your account with the number of shares

sold and you will receive payment from your broker.

9. If you want to buy shares, inform your broker about your

depository account number, so that shares bought are

credited in your account.

A broker is separate from a DP. A broker is a member of thestock exchange who buys and sells shares on his behalf and on

behalf of his clients.

While a DP will just give you an account to hold those

shares.

There are two main authorities in India for handling of demat

account. They are:

NSDL i.e. National Securities Depository Limited.

CDSL i.e. Central Depository Services Limited.

DEMAT PROCESS


SUBMIT REQUEST TO DP FOR DEMATERIALISATION ALONGWITH CERTIFICATES TO

BE DEMATERIALISED

DEPOSITORY PARTICIPANT ISSUES AN ACKNOWLEDGEMENT SLIP DULY SIGNED

AND STAMPED

REGISTER OF ISSUING COMPANY ACCEPTS REQUEST

DEMAT ACCOUNT CREDITED AUTOMATICALLY


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BANK ACCOUNT Vs DEMAT ACCOUNT

BANK ACCOUNT DEMAT ACCOUNT

Store s cash Stores shares

Holders get pass book Holders get statement of account

Holders get cheque book Holders get depository slip



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FEATURES OF ONLINE TRADING

Easily operated

Time convenience

Paper less work

Live order status

You can check your DP, Bank balance, Portfolio status Save other expenditure

Live tips

BENEFITS OF ONLINE TRADING

Increase traders capacity in the stock exchange

Eliminate unmatched traders and delayed reporting

Speedy matching

Provide for online and offline monitoring, control and surveillance of

the market

Single screen order without going through the hassels of giving

transfer instruction, writing cheques

Instant order/ trade confirmation gives you similar trading experience

as exchange based software without the burden of overhead and

maintenance cost

A refreshing experience of getting outstanding research based advice

on intraday and delivery trades on the same screen

Live quotes of NSE-cash /derivative, BSE cash, commodity. Create

multiple market watches, default market watch NIFTY, SENSEX.

You can add NSE-cash, Derivative and BSE script on the same

market watch



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Get access to various online reports like margin reports, Demat

account details, trade executed, turnover report, net position report

with mark to market profit/loss and realized profit

View top 20 shares by value or volume traded, alongwith top gainers/

losers

OFFLINE TRADING

In offline trading customer not directly trade in the market but trading

is done through broker or sub-broker

Documentation work is more in offline trading because customer not

trading in the market directly so all the transaction required some

signature process

In case of offline, customer not directly trading in IPOs because it

requires form fill up process.

DIFFERENCE BETWEEN THE OFFLINE AND ONLINE TRADING

Following is the difference point between the online and offline trading:

In online trading customer can trade through the net, he can trade

online through the user ID and password provided to him. While in

case of offline trading is done through the broker and sub-broker.

In online trading there is no need to give cheques when we are

purchasing the securities and no need to sign in any document of the

securities purchased, while in offline we have to follow all the

procedures then securities is transferred in our Demat account.

In online customer can invest in shares, mutual funds, IPOs,government securities and many more investment is done without any

paper work and just click on the mouse you can purchase and sell the

securities while in offline we have to fill up the form and many more

formalities for the IPOs , mutual funds and other securities.

Online trading is done through sitting in home or by sitting in the

cyber caf. No need to visit any broker and sub-broker for the



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purchase and sell of securities while in offline, we have to maintain

good contact with the sub-broker for the trading purpose.

In online you show the price and you yourself done the sale and

purchase transaction, no chance of misinterpretation while in case of

offline, price shown by the client is different from on which it ispurchase this may be lower or higher, also it depends upon the broker

at which time he purchase and sell the securities.

Brokerage charges for both offline and online is same but looking at

the account opening charges and annual maintenance charges of

online trading account is slightly higher than the offline but its worth

against the facility provided by the online trading account.

In offline customer can trade only in VSE (Vadodara Stock Exchange)

while in online customer can trade in NSE (National Stock Exchange)

and BSE (Bombay Stock Exchange).



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CHAPTER --- V



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ANALYSIS AND FINDINGS

MARKET RESEARCH ON CUSTOMER SERVICE AND

SATISFACTORILY HANDLING OF TRADING ACCOUNTS

The main objective of our topic was to conduct research on customer

service and to find out that the retail clients of SHAREKHAN are

satisfied with the way their TRADING A/C is handled at

SHAREKHAN. To conduct research we drafted a questionnaire and

taken feedback for the same from the retail clients of SHAREKAN.

We fill up these questionnaires from the 100 RETAIL CUSTUMERSof SHAREKHAN. After the filling up of questionnaire the job of

analyzing the questionnaire was to be done. We conducted the

research on telephone by asking the clients about the services the

sharekhan provide and what they feel about SHAREKHAN. Are they

really satisfied with the services SHARKHAN provide? Are they

satisfied with the way their trading account is handled at

SHAREKHAN?

We talk to 100 customers during this process.

While drafting the questionnaire we kept in mind the following

things.

Our main focus was on trading account handling of the clients of the

sharekhan and the services related to it.

While drafting the questionnaire we discuss with the concern

authority and also taken their guidance for drafting the questionnaire.

We target the retail clients of the SHAREKHAN to take feedback

related to services.

We drafted the questionnaire and taken the approval for the same

from the authority.



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TARGET MARKET --- RETAIL CLIENTS OF SHAREKHAN BARODA

INTERVIEW CONDUCTED --- TELEPHONIC INTERVIEW

SAMPLE SIZE --- 100 CLIENTS

PRETEST CONDUCTED ON --- 10 CLIENTS



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Questions and Analysis

Q1. Do you invest in stock market?

Yes No

This question was set in questionnaire as a warm up question. This

question was set for easy start up of questionnaire, so that customers can

take it as an easy question.

0

10

20

30

40

50

60

70

80

90

100

IN

PERCENTAGE

YES NO

RESPONSES

YES

NO

As this was a simple question and set as a warm up question, we got 100%

responses in YES. It was implied that the responses will be in YES because

we ask the question to those who are having their trading a/c withSHAREKHAN. It was just a formal question to start with.



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Q2. On what basis you take investment decisions?

On your own friends and relatives

Brokers tips Experience consultants

This question was set to know how do clients take their investment

decisions so that we can know that how many clients use the research tips

that SHAREKHAN provide for their investment decisions. what influences

their investment decision. What are the bases clients c sets before taking

investment decisions. By this we can know how many clients use

SHAREKHAN research tips for their investment decision.

0

10

20

30

40

50

60

70

IN PERCENTAGE

ON OWN BROK TIPS FRI N REL EXP. CON

CUSTOMER RESPONSES

ON OWN

BROK TIP

FRI N REL

EXP. CON

As the chart shows 61% of the clients take their investment decision on their

own. 56% of the clients use brokers tips for their investment decision, 15%

clients take the help of friends and relatives and remaining 3% people take

clues from the experience consultants. This above analysis gives us idea that

how people take their investment decisions. Main purpose of setting this

question is to find out that how many clients use SHAREKHAN research

tips while taking investment decision and how many of them get influence

through the sharekhans tips. As per above analysis 56% of the clients use

SHAREKHAN research tips while taking their investment decisions, which

is a considerable figure

Q3. You are having your trading account with SHAREKHAN since



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how long?

0-6 months 7-12 months

13-18 months 19-24 months

>24 months

This question was set to know about the tenure of the clients account with

the SHAREKHAN. We were having a list of the retail clients and many of

them have opened their account with SHAREKHAN newly. By this we will

get to know from how much time the client is having their account with

SHAREKHAN and since how long the client is pursuing the services of

SHAREKAN. The main objective was to know about the tenure of the

clients account with SHAREKHAN, since how long client is trading throughSHAREKHAN.

0

10

20

30

40

50

6070

80

90

100

IN

PERCENTAGE

0-6 mth 7-12

mth

13-18

mth

19-24

mth

>24 mth

MONTHS

0-6 mth

7-12 mth

13-18 mt

19-24 mt

>24 mth

From the above analysis we can make out that 74% of the clients are having

their account with SHAREKHAN from last 6 months. 21% of the clients are

having their account with SHAREKHAN from the period between 7-12

months, 2% of the clients are having their account from the period between



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13-18 months, 2% of the clients having account from 19-24 months and 1%

the clients having account from more than 24 months. From the above

analysis we can make out that 74% of the clients are having account with

SHAREKHAN from last 6 months, so they are they new clients of company

availing the services from past 6 months. The main objective to set thisquestion was to know about the tenure of the client with company so that we

can make out how the client are availing the services of SHAREKHAN with

the tenure passes.

Q4. How frequently you trade through SHAREKHAN in a month?



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0-10 times 11-20 times

21-30 times 31-40 times

>40 times

This question was set to find out the frequency of trading of a client through

SHAREKHAN, so that we get to know how frequently the client needs the

services of the company. The higher the frequency the more times clients

will avail the services of the SHAREKHAN.

0

20

40

60

80

100

RESPONSE IN %

0-10

times

11-20

times

21-30

times

31-40

times

> 40

times

NUMBER OF TIMES TRADED IN

MONTH

0-10 times

11-20 time

21-30 time

31-40 time

> 40 times

From the above analysis we get to know about the frequency of trading of a

client in a month. 56% of the client between 0-10 times in a month, 25% of

the clients trade between 11-20 times, 9% of the clients trade between 21-

30 times, 5% of clients between 31-40 times and 5% trade more than 40

times in a month. From this we can get to know how frequently a client

trades through company and from this we can also get a rough idea about the

earnings of SHAREKHAN in terms of brokerage.

Q5. What is the hit ratio of SHAREKHAN Research tips?



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0-25% 26-50%

51-75% 76-100%

As it is the part of the service of SHAREKHAN to provide research tips to

the clients, we set this question to know about the success ratio of the

SHAREKHAN tips from the clients. As per above analysis 56% of the

clients use their tips while taking investment decisions. So we did ask them

how they find the tips provided by the company and what is its success

ratio? The main objective was to know that how clients find the

SHAREKHAN research tips.

0

20

40

60

80

100

CUSTOMER

RESPONSES

IN %

0-25 % 26-50 % 51-75 % 76-100%

PERCENT

0-25

26-50

51-75

76-100

As per above analysis 50% of the clients find the SHAREKHAN tips

success ratio between 0-25%, 30% of the clients find the success ratio

between 26-50%, 16% of the clients find it between 51-75% and 4% of the

clients find it between 76%-100. many of the clients responded very low for

the success ratio, this can be because many clients complain for not getting

tips timely and regularly.

Q6. Are you satisfied with the way your trading account is handled

at SHAREKHAN?



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Yes No

The above question was set to take the feedback of the clients on the

satisfaction of the trading account handled @ SHAREKHAN. By this wewill get to know the satisfaction ratio of the clients for their trading account

handled by the company. The main objective is to find the satisfaction ratio.

0

20

40

60

80

100

IN

PERCENT

YES NO

RESPONSES

YES

NO

As per the above analysis 76% of the clients responded YES and 24% of the

clients responded NO. We can easily make out from this that the clients are

satisfied with the way their trading account is handled at sharekhan and the

related services to it. 76% of the clients are SATISFIED.

Q7. Out of these products, which of the products of SHAREKHAN you are

aware of?



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Mutual Funds Commodities

P.M.S. IPOs

No Idea

The main objective to set the above question was to know about the

awareness of the clients of the other products of the SHAREKHAN. From

this we can get that how many clients aware of the other services

SHAREKHAN provide. Is the sales team of the company is telling the

clients about the different products SHAREKHAN deal in?

0

10

20

30

40

50

60

70

80

90

100

% CLIENT

AWARENESS

MF COM PMS IPO NO

IDEA

PRODUCTS

MF

COM

PMS

IPO's

NO ID

From the above analysis we can make out that 67% of the clients are aware

about mutual funds, 58% of the clients are aware about the commodities,

50% of the clients are aware of p.m.s. 73% of clients are aware about the

IPOs services that SHAREKHAN provide and 15% of the clients were not

having any idea about any product. This shows the different product

awareness among the clients, so that they can look in to business. Highestawareness is of IPOS.

Q8. Are you looking forward to invest in any of the above products

of SHAREKHAN?



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Yes No

If YES then which

The basic objective behind this question was to generate leads if any client is

interested in any of the above products so SHAREKHAN can look forward

for business with them. The question was set t

khyati sharekhan

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