1. CHAPTER I
INTRODUCTION
Overview of Industry as a whole
Indian stock market have been role during the past five years,genrating an annual
return of 28%(on the nifty index).Still general public prefers putting it money in
bank,rather than putting it in stock. Within Indian economy doing so well, return from
stock market have been far higher than return from any other investment.Avenue
rupees 1, 00,000 invested in the nifty in April would have been worth a little over
rupees 3, 00,000 by April, 2008.But the top value creatures have been delivered far
superior returns the same lakh invested in unitech would have been worth rupees
1.52cr if it had been invested in aban aban offshare.
Most of people are reluctant to put their money in shares,because of uncertainty of the
return.At times stock market is so volatile that it becomes very difficult for investors
to decide whether to purchase some more stocks or sell them,whether to enter the
market or book profit. with so much uncertainty prevailing, the case of investing in
stock market is totally different from the case of investing in some other places.
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2. Market Participants 2010 2011
Securities Appellate Tribunal 1 1
Regulators* 4 4
Depositories 2 2
Stock Exchanges
With Equities Trading 21 19
With Debt Market Segment 1 1
With Derivative Trading 2 2
Brokers 9,443 9,487
Corporate Brokers 4,110 4,190
Sub-brokers 27,541 44,074
FIIs 996 1319
Portfolio Managers 158 205
Custodians 15 15
Share Transfer Agents 82 76
Merchant Bankers 152 155
Bankers to an Issue 47 50
Debenture Trustees 30 28
Underwriters 45 35
Venture Capital Funds 90 106
Foreign Venture Capital Investors 78 97
Mutual Funds 40 40
Collective Investment Schemes 0 0
Table no 1- Market Participants in Securities Market
Market segment
The securities market has two interdependent segments: the primary and the
secondary market. The primary market is the channel for creation of new securities.
These securities are issued by public limited companies or by government agencies.
In the primary market the resources are mobilized either through the public issue or
through private placement route. It is a public issue if anybody and everybody can
subscribe for it, whereas if the issue is made available to a selected group of persons it
is termed as private placement. There are two major types of issuers of securities, the corporate
entities who issue mainly debt and equity instruments and the government (central as well as state)
who issue debt securities.
These new securities issued in the primary market are traded in the secondary market.
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3. The secondary market enables participants who hold securities to adjust their holdings
in response to changes in their assessment of risks and returns. The secondary market
operates through two mediums, namely, the over-the-counter (OTC) market
and the exchange-traded market. OTC markets are informal markets
where trades are negotiated. Most of the trades in the government securities are in
the OTC market. All the spot trades where securities are traded for immediate deliver
y and payment take place in the OTC market. The other option is to trade using the
infrastructure provided by the stock exchanges.
There are 23 exchanges in India and all of them follow a systematic settlement period.
All the trades taking place over a trading cycle (day=T) are settled together after a
certain time (T+2 day).
The trades executed on the National Stock Exchange (NSE) are cleared and settled by
a clearing corporation. The clearing corporation acts as a counterparty and guarantees
settlement.
Nearly 100% of the trades in capital market segment are settled through demat
delivery. NSE also provides a formal trading platform for trading of a wide range of
debt securities, including government securities. A variant of the secondary market is
the forward market, where securities are traded for future delivery and payment. A
variant of the forward market is Futures and options market. Presently only two
exchanges viz., NSE and Stock Exchange, Mumbai (BSE) provides trading in the
derivatives of securities.
Dependence on Securities Market
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4. • Corporate Sector
• Government
• Households
The above mentioned sectors are dependent on the Capital Market for their
financial needs. The following table shows their percentage share respectively.
International scenario
Following the implementation of reforms in the securities industry during the last
decade, Indian stock markets have graduated to a better position vis-à-vis the
securities market in developed and emerging markets. As may be seen from Table 1-
2, India has a turnover ratio, which is comparable to the other developed market, and
also one of the highest in the emerging markets. At the end of 2005, Standard and
Poor’s (S&P) ranked India 17th in terms of market capitalization (19th in 2004), 16th
in terms of total value traded in stock exchanges (17th in 2004) and 6th in terms of
turnover ratio (7th in 2005). India has the number one ranking in terms of listed
securities on the Exchanges followed by the USA. These data, though quite
impressive, do not reflect the full Indian market, as S&P (even other international
publications) does not cover the whole market. For example, India has more than
9000 listed companies at the end of March 2009, while S&P considers only 5,644
companies.
If whole market were taken into consideration, India’s position vis-à-vis other countries would be
much better.
Singapore 91.2 57.9
France 89.5 42.2
Germany 83.6 44.6
Italy 95.5 55.9
United Kingdom 94.3 43.6
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5. United States 93.8 16.4
India 75.0 36.5
Table no 2 –Growth in stock market among world
The stock markets worldwide have grown in size as well as depth over last one
decade. The turnover on all markets taken together has grown from US $ 5.5 trillion in
1990 to $ 38 trillion in 2005 when it reached a peak. Thereafter, it has witnessed a decline and
stood at US $ 34.6 trillion in 20011. It is significant to note that US alone accounted for about
47.4% of worldwide turnover in 20011. Despite having a large number of companies listed on its
stock exchanges, India accounted for a meager 2.96% in total world turnover in 20011. The
market capitalization of all listed companies taken together on all markets stood at US $ 34.6
trillion in 2011 ($ 23 trillion in 2009). The share of US in worldwide market capitalization
decreased from 47.24% as at end-2010 to 44.66% in end-2009, while Indian listed companies
accounted for 1.87% of total market capitalization in 2009.
International and Indian scenario in online broking
In US markets, online brokerage has significantly changed the dynamics of the market
place, resulting in one of the biggest shifts in the individual investor's relationship
with their brokers. Investors access a wealth of financial information on the same time
as do market and financial professionals including breaking news, developments and
market data. Online brokerage provides investors the tools to analyze the information
such as research reports. In the US, 82 per cent of the deals are done on line. The
European on line broking market is expected to be of $8 billions and has risen to
about $50 billion today.
Net trading shall initially faced some problems relating to infrastructure and
understanding of the concept. Presently, the legal framework is right in place and
there are organizations like SEBI, RBI etc. which provide investor guidelines to the
investors for protection of their right. Also, investor grievance handling and redressal
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6. system is fast and efficient. Lack of investor education and resistance from
stockbrokers though has always posed some problems.
With Internet trading, investment in the stock market is just a click away, in the
comfort of office or a home. It makes it easy for anyone to access net brokers and
trade in stock. Even the smallest retail investor can access information that was till
now restricted to big traders. Net trading provides investors with seamless, real time
online access to stock markets.
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7. Profile of the organization
SMC Global is one of the largest and most reputed Investment Solutions Company
that provides a wide range of services to its substantial and diversified client base.
Founded in 1990, by Mr. Subhash Chand Aggarwal and Mr. Mahesh Chand Gupta,
SMC, is a full financial services firm catering to all classes of investors. The company
is having its corporate office in New Delhi with regional offices in Mumbai, Kolkata,
Chennai, Ahemdabad, Cochin, Hyderabad, Jaipur plus a growing network of more
than 1250 offices across over 350 cities/towns in India and overseas office in Dubai.
• Enabling shorter settlement cycles and book entry settlements systems, and
meeting the current international standards of securities market.
Products & Services
SMC customers have the advantage of trading in all the market segments together in
the same window, as they understand the need of transactions to be executed with
high speed and reduced time. At the same time they have the advantage of having all
kind of Insurance & Investment Advisory Services for Life Insurance, General
Insurance, Mutual Funds, and IPO’s also.
SMC is a customer focused financial services organization providing a range of
investment solutions to their customers. They work with clients to meet their overall
investment objectives and achieve their financial goals. Their clients have the
opportunity to get personalized services depending on their investment profiles. Their
personalized approach enables clients to achieve their Total Investment Objectives.
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8. Their key product offerings are as follows:
o Equity Trading
o Commodity Trading
o Depositary Services
o Portfolio Tracker
o Life Insurance
o General Insurance
o Mutual Fund
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9. History of SMC
SMC acquired membership of the Delhi Stock Exchange in 1990 and later in 1995
became a trading member of NSE. In 2000 the company became a member of BSE
and a depository participant of CDSL India Ltd. In the same year, the company
acquired the Trading & Clearing Membership of NSE Derivatives and the
memberships of leading commodity exchanges i.e. NCDEX and MCX in subsequent
years. In 2006, SMC expanded globally and acquired the Trading & Clearing
Membership of Dubai Gold and Commodity Exchange (DGCX). In the same year, the
company also started its Insurance Broking division, IPO & Mutual Fund Distribution
Division and its Merchant Banking division.
Mission
• Establishing a nation-wide trading facility for equities, debt instruments and
hybrids,
• Ensuring equal access to investors all over the country through an appropriate
communication network,
• Providing a fair, efficient and transparent securities market to investors using
electronic trading systems,
• Enabling shorter settlement cycles and book entry settlements systems, and
meeting the current international standards of securities market.
Vision
• Their vision is to be the most respected company in the financial services
space.
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10. Competition information
1. Icicidirect.com
Products and Services
A product for every need: ICICIdirect.com is the most comprehensive website,
which allows you to invest in Shares, Mutual funds, Derivatives (Futures and
Options) and other financial products. Simply put we offer you a product for
every investment need of yours.
ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an Affiliate
of ICICI Bank Limited and the Website is owned by ICICI Bank
Limited
Product & Services:
Trading in shares: ICICIdirect.com offers you various options while trading in
shares.
Cash Trading: This is a delivery based trading system, which is generally done with
the intention of taking delivery of shares or monies.
Margin Trading: You can also do an intra-settlement trading up to 3 to 4 times your
available funds, wherein you take long buy/ short sell positions in stocks with the
intention of squaring off the position within the same day settlement cycle. (ONLY
for intraday)
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11. 2. India bulls
India bulls Group is one of the top business houses in the country with business
interests in Real Estate, Infrastructure, Financial Services, Retail, Multiplex and
Power sectors. India bulls Group companies are listed in Indian and overseas markets
and have a market capitalization of over USD 7 billion. The Net worth of the Group
exceeds USD 2.5 billion. India bulls Group companies enjoy highest ratings from
CRISIL, a subsidiary of Standard and Poor’s. India bulls has been conferred the status
of a “Business Super brand” by The Brand Council, Super brands India.
India bulls Financial Services is an integrated financial services powerhouse
providing Consumer Finance, Housing Finance, Commercial Loans, Life Insurance,
Asset Management and Advisory services. India bulls Financial Services Ltd is
amongst 68 companies constituting MSCI - Morgan Stanley India Index. India bulls
Financial is also part of CLSA’s model portfolio of 30 Best Companies in Asia. India
bulls Financial Services signed a joint venture agreement with Sogecap, the insurance
arm of Societé Generale (SocGen) for its upcoming life insurance venture. India bulls
Financial Services in partnership with MMTC Limited, the largest commodity trading
company in India, is setting up India’s 4th Multi-Commodities Exchange.
3. Abhipra
Beginning as a Broking House, we grew into Business House. We broadened our
horizons and stepped into the field of Depository, Stock Broking, Full-Fledged
Money Changing Services, Category I Registrar & Transfer Agent, Commodity
Trading, Online Trading (Equity, F&O & Commodity), e-Return Intermediary.
Abhipra today commands the status of being one of the leading Depository
Participants of Northern India in Private Sector. Moreover, Abhipra has Trading
Terminal Outlets for NSE & BSE spread to almost every nook & corner of Northern India.
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12. Abhipra Capital Limited is also empanelled as a Depository Participant with one of the
premier Commodity bourse, National Commodities and Derivatives Exchange Limited
(NCDEX). So a client now can open Commodity Demat Account with us. At Abhipra, we
offer our clients far more than merely a comprehensive range of financial services. We
offer them ideas, innovations, and solutions with extra-ordinary results. We feel that
quality is an essential ingredient in building successful businesses. Not only do products
and services need to be of high quality, but potential customers also need to have
assurance that the products will be of high quality. This is evidenced from the fact that
Abhipra is a ISO 9001 (Quality Assurance Systems) Registered Company.
4. Kotak securities
Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking
and distribution arm of the Kotak Mahindra Group. Kotak Mahindra is one of India's
leading financial institutions, offering complete financial solutions that encompass
every sphere of life. From commercial banking, to stock broking, to mutual funds, to
life insurance, to investment banking, the group caters to the financial needs of
individuals and corporate.
Kotak Securities was set up in 1994. Kotak Securities is a corporate member of both
The Bombay Stock Exchange and the National Stock Exchange of India Limited.
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13. The company has four main areas of business:
• Institutional Equities,
• Retail (equities and other financial products),
• Portfolio Management and
• Depository Services.
5. Motilal oswal
Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with
just two people running the show. It has established itself as the Best Local Brokerage
House in India (Asia Money Brokers’ Poll 2005). Their Institutional Equity Division
combines the efforts of the Research and Sales & Trading departments to best serve
clients' needs. Consistent delivery of high quality advice on individual stocks, sector
trends and investment strategy has established them as a reliable research unit
amongst leading Indian as well as international investors.
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14. S. W. O. T analysis of the organization
Strengths
• The `do-it-yourself' framework of online share trading offers retail investors the
three benefits of transparency, access and efficiency. Paperwork diminishes
significantly, and no more painful trips to your broker to check if everything's in
order. Online trading has made it possible to universalize access to retail investors.
This was earlier very difficult, as the cost of servicing often-outweighed
transaction volumes. Online brokerage ranges between 0.05-0.20 per cent of the
value of transactions for non-delivery-based trades, and between 0.25-0.95 per
cent for delivery-based trades. Once major investments in online infrastructure are
over and done with - and with the economies of scale coming into play - it is
expected that brokerage rates would head further downwards.
• Access to online trading and latest financial happenings, apart from quotes and
unbiased investment analyses, all consolidate into a value-added product mix in
tandem with evolving markets that are freer and fairer. The Net result: An
inquisitive, informed and demanding investor. Today's investor is more involved
in managing his or her assets and analyzing a vast array of investment options.
Technology and today's enabled investor have, in turn, driven competition,
resulting in reduced costs of trading, transparency in dealings, and pricing info
that is accurate and real-time. More and more investors now want to know how
their trades are executed, and whether they have received the best possible price.
Critical components of execution quality include the prices at which orders were
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15. executed as well as the speed of execution. The quality of execution, in turn,
hinges on efficient order routing. We owe this to our investor fraternity.
Weakness
• Every thing in the world has a flip side to it - Transaction velocity is crucial.
And more often than not, connections are lousy. There's also a degree of
investor skepticism about online payment and settlement mechanisms in spite
of all the encryption and fire walling brought into play. Time and technology
will soon assuage these concerns, which hark back to the `physical' days.
• “The three main technology obstacles which have prevented Internet broking
from taking off are:
1. Lack of Internet penetration
2. Bandwidth infrastructure
3. Poor quality of ISP infrastructure.”
Opportunities
• You have some money to dabble with. Trading shares on BSE/NSE has
always been your dream. When will you ever find the time? And besides, the
hassle of finding a broker is not easy. This is your main opportunity.
• Realizing there is untapped market of investors who want to be able to execute
their own trades when it suits them, brokers have taken their trading rooms to
the Internet. Known as online brokers, they allow you to buy and sell shares
via Internet.
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16. • There are 2 types of online trading service: discount brokers and full service
online broker. Discount online brokers allow you to trade via Internet at
reduced rates. Some provide quality research, other don’t. Full service online
brokerage is linked to existing brokerages. These brokers allow their clients to
place online orders with the option of talking/ chatting to brokers if advice is
needed. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com,
IndiaBulls.com, Sharekhan.com, Geojit securities.com, HDFCsec.com,
Tatatdw.com, Kotakstreet.com are some of the online broking sites in India.
• And daily trading turnover is estimated in the vicinity of 0.75 per cent of the
combined BSE and NSE daily turnover of about RS 11,000 crore!!! The point
is, there's tremendous scope for growth. Especially when you consider the US,
where trading over the Net accounts for about 55 per cent of the total volumes.
And, I believe, in some Asian markets the figures as high as 70 per cent.
Threats
• On to some threat perception - Domestic funds, foreign institutional investors and
operators comprise the three main market constituents. And all three include term
investors as well as opportunists in their pecking order. Some, for instance, hitch
their fate with what the FIIs are up to. All this spells spurting volumes. But
nobody gives a damn about the resultant volatility.
• And some, not all, offer free investment advice over the Net to lure rookie
investors with misleading information. Prices of scripts can also be influenced to
the advantage of vested interests, courtesy the Net. Unlike in the US, stockbrokers
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17. out here willingly (or under the force of circumstance) assume the role of
`advisors', sans the neutral, non-vested stance.
Objectives of the study
Before starting any project, we should keep in mind the clear objectives of the project
because in the absence of the objectives one cannot reach the conclusion or end result
of the project.
So, the objective of my project is to:
• To analyze the market share & services of existing players.
• To analyze the facts that how much people are interested to invest in stocks.
• To judge the future prospects of online trading for SMC investment solutions.
Stock market of India is now been one of the fascinating market worldwide. Indian is
among the top ten destination of the world to which global player want to invest.
Research comprises defining and redefining problems, formulating hypothesis or
suggested solutions; collecting, organizing and evaluating data; making deductions
and reaching conclusions; and at last carefully testing the conclusions to determine
whether they fit the formulating hypothesis.
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18. In short, the search for knowledge through Objective and Systematic method of
finding solutions to a problem is Research.
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19. Scope of the study
Since better broadband connectivity across the country and wider awareness of equity
as an asset class will push the online trade volumes to over 50% of total Trade
therefore it is relevant to the future prospects emerging in the stock market.
In order to compete with the online trading market leader like ICICI the company has
to work a lot on Online Trading in order to get the competency with other players.
Since the online trading is accepted by major players in the Indian Stock Market, the
importance of Online Trading has increased over the past decade therefore it is very
important to consider the Online Trading as a future of the Indian Stock Market.
This project would also tell us about the working of the Indian Stock Market and the
forces acting in the Online Trading.
“SMC” a software used by SMC Investment Solutions & SERVICES is an edge for
gaining competitive advantage; therefore it is relevant to know the working of this
software which would be enlightened in our company.
Online Trading Account and Demat Account
After the introduction of the online trading systems it is very easy to do online trading
with just a PC and an Internet connection. All you need to do is just open a Demat
account and a trading account with a depository participant or DP. DP is connecting
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20. Depository to investors. Depository is the people who stores shares in electronics
form. In India there are two depositories, NSDL and CDSL.
Most of the banks and brokerage houses provide trading account and Demat account.
To open a Demat account you need many things like PAN card, address proof, bank
account etc.
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21. Methodology
Marketing Research
Is the systematic design collection, and analysis and reporting of Data and findings
relevant to specific marketing situation facing the company.
Research Design
Types of Research: - Descriptive research
Descriptive research includes Surveys and fact-finding enquiries of different kinds.
The major purpose of descriptive research is description of the state of affairs, as it
exists as the present. The main characteristic of this method is that the researcher has
no control over the variables; he can only report what has happened or what is
happening.
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22. 1.Define the Problem and
Research Objectives
2. Develop the Research Plan
3. Collect the Information
4. Analyze the Information
5. Present the Findings
Figure no 1- Research process
1. Define the Research Problem and Objective
Objective
• To analyse the market share & services of existing players
• To judge the future prospects of online trading for smc investment solutions.
The respondents are stratified into offline share trading respondents and online share
trading respondents.
2. Develop the Research Plan
The second stage of Research calls for developing the most efficient plan for
gathering information.
Designing a research plan calls for decision on the data sources, research approaches,
research instruments, sampling plan & contact methods.
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23. Data Sources
There are two types of data.
Primary data: The data that is collected first hand by someone specifically for the
purpose of facilitating the study is known as primary data. So in this research the data
is collected from respondents through questionnaire.
Secondary data: For the company information I had used secondary data like
brochures, websites of the company etc.
Survey Approach
Survey Research: - survey research is used to learn about need, perception and
awareness level of the customers for online share trading.
The method used by me is Survey Method as the research done is Descriptive
Research.
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24. Research Instruments
Selected instrument for Data Collection for survey is Questionnaire.
Questionnaires: - A questionnaire consists of set of questions presented to
respondent for their answers. It can be Closed Ended or Open Ended.
Open Ended: - Allows respondents to answer in their own words & are difficult to
Interpret and Tabulate.
Close Ended: - Pre-specify all the possible answers & are easy to Interpret and
Tabulate.
Types Of Question Included:
Dichotomous Questions
Which has only two answers “Yes” or “No”?
Multiple Choice Questions
Where the respondent is offered more than two choices.
Rating Scale
A scale that rates some attributes from “excellent” to “very poor” and “very
inefficient” to “Very efficient”.
Sampling Plan
After deciding on the research approach and instrument, the marketing researcher
mustDesign a Sampling Plan. This includes:
Sampling Unit: - Who is to be surveyed? The marketing researcher must define the
target population that will be sampled.
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