CHAPTER I

INTRODUCTION:
India is well-established securities market with long history of
organized trading. The growth in the stock exchanges of the country is
spectacular and can be attributed to increase in the number of instruments
offered, listed companies and tight credit policy of banks. As a result of
which Indian corporate sector has been relying upon capital markets for
raising funds for their needs. Consequently, a large population of the
investors small and big has been created in India.
The project I undertaken in this context is to study ONLINE
TRADING and growth of STOCK EXCHANGE.

NEED FOR THE STUDY:

The present study to review the online trading procedure a case study
of ONLINE TRADING at KARVY., as the exchange has changed its trading
from the outcry mode to online trading from 1994, there is need to assess
the performance of the capital market.

The major need for this study is to know the effectiveness of the online system in comparison with the outcry or mock trading to study its
2

advantages & recommend for beneficial & effective use of the system. The
study also include the emergence of the Depository system in the country
to rule out the drawbacks of the system of physical transfer of the shares.

OBJECTIVES OF THE STUDY:

To analyze the changes in trading after the exchange shifted from
outcry to online trading system.
It is to study the functions of KARVY through various departments.
To know the online screen based trading system adopted by KARVY
and about its communication facilities. The appropriate configuration
to set the network, which would link the KARVY to individual /
members.
To know about the latest and future development in the stock
exchange trading system.
To analyze the equity behavior of particular companies (RCL and DLF
ltd)

SCOPE OF THE STUDY

This study also includes knowing the performances of Stock
Exchange.
3

 This study is about the process and how the online trading will
function.
The scope of the study analyses us to know the online trading
activities are carried out in stock Exchange.
The scope of the study is limited to studying and analyzing the
general functioning of stock Exchange.

METHODOLOGY OF THE STUDY:

The uncertainty and the rapid fluctuation in the Indian capital market
made many investor at home and foreign worry about the future of their
investments. So in order to lessen this uncertainty in the market, SEBI
introduced many new trends by making changes in the way the capital
market functions by introducing online trading, rolling settlement,
dematerialization of shares, etc. This project is only an attempt to find
the effect if these trends on the Indian markets. This study is done with
reference of NETWORTH STOCK BROKING LTD.
The data collection methods include both primary and secondary
collection methods.

PRIMARY METHOD:
This method includes the data collected from the personal interaction
with authorized members of KARVY.

SECONDARY METHOD:
The secondary data collection method includes:

The lecturers delivered by the superintendents of respective

departments.

The brochures and material provided by KARVY.

The data collected from the magazines of the NSE, economic

times, etc.

Various books relating to the investments, capital market and

other related topics

LIMITATIONS OF THE STUDY

Online Trading has the following limitations:
1. The study is confined to online trading procedure only.
2. KARVY is a private player
3. The study is conducted for a short period of 2 months
4. Problems of listing are not covered due to limited time and to keep the
study in manageable limits.

5. A detailed knowledge of the competitor product is very much required

in this field.
6. Because of the fluctuations in the market it is a tough task.
7. There is no much awareness about the Online trading in India.

CHAPTER II

EVOLUTION OF BROKING IN INDIA:

The evolution of a broking in India can be categorized in three phases

Stockbrokers will offer on their sites features such as live portfolio

manager, live quotes, market research and news, etc. to attract
more investors.

Brokers will offer online broking and relationship management by

providing and offering analysis and information to investors
during broking and non-broking hours based on their profile and
needs, i.e. customized services.

Brokers (now e-brokers) will offer value management or services

like initial public offering online, on-line asset allocation, portfolio
management, financial planning, tax planning, insurance services,
etc. and enables the investors to take better and well considered
decisions.

The actual definition of Online Trading is as explained below:

Online trading is a service offered on the internet for purchase and sale of
shares. (In other words the increasingly popular activity of buying and
selling securities over the internet, or to a lesser extent, through a brokers
proprietary software.) In the real world you place orders on your
stockbroker either verbally (personally or the stockbrokers website through
8

your internet enabled PC and place orders through the brokers internet
based trading engine. These orders are routed to the stock exchange
without manual intervention and executed thereon in a matter of a few
seconds.
The net is used as a mode of trading in internet trading. Orders are
communicated to the stock exchange through website.

IN INDIA:
Internet trading started in India on 1 st April 2000 with 79 members seeking
permission for online trading. The SEBI committees on internet based
securities trading services has allowed the net to be used as an Order
Routing System (ORS) through registered stock brokers on behalf of their
clients for execution of transaction. Under the ORS the client enters his
requirements (security, quantity, price buy/sell) on brokers site.

OBJECTIVES:
Internet trading is expected to

Increase transparency in the markets,

Enhance market quality through improved liquidity, by increasing

quote continuity and market depth,

Reduce settlement risks due to open trades, by elimination of

mismatches,

Provide management information system,

Introduce flexibility in system, so as to handle growing volumes

easily and to support nationwide expansion of market activity.

Besides, through internet trading three fundamental objectives of

9

securities

regulation can be easily achieved, these are:

Investor protection euphonically or in a written form (fax). In

online trading, you will access a

Creation of a fair and efficient market, and

Reduction of the systematic risks.

Some of the brokers offering net trading include ICICI direct, kotak street,
etc.

REQUIREMENTS FOR NET TRADING:

For investors:
1. Installation of a computer with required specification
2. Installation of a modem
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading

The following should be produced to get a demat account

and online trading account:
As identity proof:
10

PAN card(mandatory)
For address proof any one of the following:

Voter ID card

Driving license

Ration card

Bank pass book

Telephone bill

Other requirements, which are necessary

First page of the bank pass book and last 6 months statement.

Bank

managers

signature

along

with

banks

seal,

manager

registration code on photograph.

FOR STOCK BROKERS:

1. Permission from stock exchange for net trading
2. Net worth of Rs. 50 lack
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
11

9. Setting up a website.

The net is used as a medium of trading in internet trading. Orders are

communicated to the stock exchange through website. Internet trading
started in India on 1st April 2000 with 79 members seeking permission for
online trading. The SEBI committees on internet based securities trading
services has allowed the net to be used as an Order Routing System (ORS)
through registered stock brokers on behalf of their clients for execution of
transaction.
Under the Order Routing System the client enters his requirements
(security, quantity, price, and buy/sell) in broker's site. They are checked
electronically against the clients account and routed electronically to the
appropriate exchange for execution by the broker. The client receives a
confirmation on execution of the order. The customer's portfolio and ledger
accounts get updated to reflect the transaction. The user should have the
user id and password to enter into the electronic ring. He should also have
de-mat account and bank account. The system permits only a registered
client to log in using user id and password. Order can be placed using place
order window of the website.

PROCEDURE FOR NET TRADING

Step 1: Those investors, who are interested in doing the trading over
internet system i.e. NEAT-IXS, should approach the brokers and get
them self registered with the Stock Broker.
Step 2: A and personal identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by
12

using the place order window as under:

(a) First by entering the symbol and series of stock and other
parameters like

quantity and price of the scrip on the place order

window.
(b) Second, fill in the symbol, series and the default quantity.
Step 4: It is the process of review. Thus, the investor has to review the
order placed by clicking the review option. He may also re-set to clear
the values.
Step 5: After the review has been satisfactory, the order has to be sent
by clicking on the send option.
Step 6: The investor will receive an "Order Confirmation" message along
with the order number and the value of the order.
Step 7: In case the order is rejected by the Broker or the Stock
Exchange for certain reasons such as invalid price limit, an appropriate
message will appear at the bottom of the screen. At present, a time lag of
about 10 seconds is there in executing the trade.
Step 8: It is regarding charging payment, for which there are different
mode. Some brokers will take some advance payment from the investor
and will fix their trading limits. When the trade is executed, the broker
will ask the investor for transfer of funds to his account.
Internet trading provides total transparency between a broker and an
investor in the secondary market. In the open outcry system, only the
broker knew the actually transacted price. Screen based trading
provides more transparency. With online trading investors can see
themselves the price at which the deal takes place.
The time gap has narrowed in every stage of operation. Confirmation
13

and execution of trade reaches the investor within the least possible
time, mostly after registration, the broker will provide to them a Log and
personal identification number (PIN).
The time gap has narrowed in every stage of operation. Confirmation
and execution of trade reaches the investor within the least possible
time, mostly in name, Password within 30 seconds. Instant feedback is
available about the execution. Some of the websites also offer;

News and research report

BSE and NSE movements

Stock analysis

IPO and mutual fund centers.

STEP BY STEP PROCEDURE IN ONLINE TRADING:

Following steps explain the step by step approach to on-line trading:

Log on to the stock broker's website

Register as client/investor

Fill the application form and client broker agreement form on the
requisite value stamp paper

Obtain user ID and pass word

Log on to the broker's site using secure user ID and password

Market watch page will show real time on-line market data

Trade shares directly by entering the symbol or number of the

security

Brokers server will check your limit in the on-line account and demat account for the number of shares and execute the trade

Order is executed instantly (10-30 seconds) and confirmation can be

14

obtained

Confirmation is e-mailed to investor by broker

Contract note is printed and mailed in 24 hours

Settlement will take place automatically on the settlement day

De-mat account and the bank account will get debited and credited
by electronic means.

ONLINE TRADING HAS LED TO ADDITIONAL FEATURES

SUCH AS:

Limit / stop orders: orders that can be go unfilled, but there is an

extra Charge for this leeway facility since one need to hold a price.

Market orders:

orders can be filled at unexpected prices, but this

type is much more risky, since you have to buy stock at the given
price.

Cash account: where funds have to be available prior to placing the

order.

Margin account: where orders can be placed against stocks, to

increase Purchasing power.

ADVANTAGES OF ONLINE TRADING:

Online trading has made it possible for anyone to have easy and
efficient access to more reports and charts than it was previously
possible if one went to any brokers' office. Thus we have access to a
lot more information online.

Online trading has let room for smaller organizations to compete with
multinational organizations since it is no longer a leg it issue. Being

15

online does not identify the size of any particular organization,

therefore, this additional power to the underdogs.

Online trading has allowed companies to locate themselves where

they want as physical location is not an issue anymore.

Companies can establish themselves according to their gains and

losses, for instance where tax (sales and value added taxes) is best
suited to them.

Online trading gives control to individuals and they can exercise it

over accounts thus comprehend what is going on when they trade. It
is like going back to school and re-educating oneself on how to trade
online.

Individuals benefit by saving comparatively a lot more when trading

online as the cost per trade is less.

Individuals can invest in a variety of products, unlike earlier when

people bought bonds, mutual funds, and stock for long-term basis
and sat on them. Now they can invest in stocks, stock and index
options mutual funds, government, and even insurance.

INVESTORS REASONS TO TRADE ONLINE:

They have control over their accounts, can make their own decisions
and dont have to give reasons for their actions. They are
independent.

They have a reason to participate in the market and learn about it.

It is interesting, cheap, easy, fast, and convenient.

A lot of information is online so they can keep up-to-date with what is

happening in the trading world.

It will give investors a greater choice and better realization.

16

The immediate impact will be competition and benefits will accrue to

the investors.

It will lead to brokerage commissions going down and brokers striving

to increase business afloat.

Investors will now go to place, which have better trading conditions

and also members to offer them better facilities.

HERE ARE THE POSSIBLE DISADVANTAGES:

When network crashes, there will be problems and delays due to a

large influx of rapid online trading criteria.

Individuals are restricted to first-hand financial guidance. This

simply means that the individual is himself / herself alone to.

A tax (sales tax and value added tax) evaluation becomes an issue,
especially when you are trading internationally. One has no idea with
whom he is dealing with on the other end.

According to a study conducted by Mary Rowland, careful investor: is

online trading bad for your portfolio, the more one trades the less
returns one gets, meaning that an addicted trader gets, carried away
online and begins to trade for too much which causes losses for him /
her.

Individuals think that they are trading with the market directly and
know what they are doing, but the truth is that even though
17

technology has taken over, the basic rules of trading are the same. It
seems that the middleman has been removed, but that is not so.
When the individuals click on the mouse, his trade goes through a
broker. The commissions online pertain to the intermediary.

There is a need for more effective communication links over the

Internet and the ability of the server to deal with a large volume of
visitors.

BROKER ADVANTAGES:
Despite the popularity of online trading, not everybody uses the
Internet to trade stock. A live broker offers services that you just cant
get online the benefits of using a broker, and also tells you if you
might be better of trading online. A broker can do everything from
making all your stock trading decisions for you, to giving you a little
advice on what to buy or sell. It depends on your relationship and the
brokers services.
If you want some investing help, or if you just want somebody else to
deal with everything, using a broker might be right for you. Brokers
18

are stock market professionals. They watch the market and deal with
customers like you every day. Therefore, by hiring a broker you may
get access to expertise you dont have because brokers monitor the
markers constantly, they may be more active in researching good
stocks than you have time for. Brokers keep in touch with a network
of other professionals, so news and knowledge constantly come their
way. Is a useful resources.
Finally, your broker may offer services other than just trading stocks.
If the want, you can find a broker that will manage your taxes,
insurance, estate, and business. The personal attention available
from a broker who knows your full financial situation is very
valuable.

Now that you know how a broker can benefit you, its also important
to consider the drawbacks of using a broker.

BROKER DISADVANTEGES:
While stock brokers offer valuable services to their clients, there are some
drawbacks to using a broker. Always remember that your stock broker is a
salesperson. The broker gets paid though one or more of the following
methods.
Taking a percentage of your assets under management, making
stock trade ( commission), taking a flat fee.
19

 Of course brokers offer valuable services that nobody would

provide for fee, but make sure you get what youre paying for.
Because stock brokers get paid through the methods above, it is
important to watch out for some common ways they may take
advantage of you.
However, I must stress that the brokerage industry is highly
regulated, and most brokers act with integrity. Nonetheless, it is
best to be aware of the risks.
First, make sure you get the attention you deserve: if your broker
is constantly looking for new clients, he or she cant spend much
time following the markets and monitoring your account.
Get a feel for how much time your spends marketing and how
much attention your assets will receive.
If your broker get paid a commission for trading, keep in mind that
there may be a conflict of interest.
Your broker may trade excessively to generate high commissions
(this is called churning).
Make sure your broker can consistently justify any and all stock
traders.
Another pitfall of using a broker is that it may be hard to get a
hold of your broker in a timely fashion.
If you decide to make a trade in your account, you have to get your
broker on the phone, and have the broker enter your order.
Think of the delay involved from your decision to trade to the
orders actual entry.

20

 If you are a fear of missing the boat you may opt for online trading.
Also, because brokers have a variety of clients and may offer a
variety
of services, your broker may be a generalist. That is fine for
general
investing, but you may want to focus your investments ( for
example, perhaps youre interested in technology stocks or
international stocks).
Find out about your brokers background and interest to see if he
or she is a good match.
Finally, live brokers are more expensive than online brokers. Their
presence and personal attention command a price. You need to
make sure that the price is worth it to you.

Meaning of demat:
A demat account allows you to buy, sell and transact shares without the
endless paperwork and delays. It is also safe, secure and convenient.

What is demat account?

Demat refers to a dematerialized account.
Just as you have to open an account 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 it is just like a bank account where
actual money is replaced by shares

Why demat?
21

1. The demat account reduces brokerage charges.

2. It enables quick ownership of securities on settlement resulting in
increased liquidity,
3. It avoids confusion in the ownership title of securities, and provides easy
receipt of public issue allotments.
4. It also helps you avoid bad deliveries caused by signature mismatch,
postal delays and loss of certificates in transit.
5. It eliminates risks associated with forgery, counterfeiting and loss due to
fire, theft or mutilation.
6. Demat account holders can also avoid stamp duty (as against 0.5 per
cent payable on physical shares), avoid filling up of transfer deeds.

Steps involved in opening a demat account:

Opening an individual demat account is a two-step process:
1. Approaching a DP and fill up the demat account-opening booklet. The
Web sites of the NSDL and the CDSL list the approved DPs.
2. We receive an account number and a DP ID number for the account.

22

The cost of opening and holding a demat account.

There are four major charges usually levied on a demat account:
1. Account opening fee
2. Annual maintenance fee
3. Custodian fee
4. Transaction fee.

Account-opening fee
Depending on the DP, there may or may not be an opening account fee.
Private Banks, such as ICICI Bank, HDFC Bank and UTI Bank, do not have
one.
Players such as Karvy Consultants and the State Bank of India do so. This
fee is refundable

Annual maintenance fee

This is also known as folio maintenance charges, and is generally levied in
advance.

Custodian fee
This fee is charged monthly and depends on the number of securities
(international securities identification numbers ISIN) held in the
account. It generally ranges between Rs 0.5 to Rs 1 per ISIN per month.
23

DPs will not charge custody fee for ISIN on which the companies have paid
one-time custody charges to the depository.

Transaction fee
The transaction fee is charged for crediting/debiting securities to and from
the account on a monthly basis.
While some DPs, such as SBI, charge a flat fee per transaction, HDFC
Bank and ICICI Bank peg the fee to the transaction value, subject to a
minimum amount.
The fee also differs based on the kind of transaction (buying or selling).
Both Service tax is also charged.

DEMAT BENEFITS:
The benefits are enumerated below:-

A safe and convenient way to hold securities;

Immediate transfer of securities;

No stamp duty on transfer of securities;

Elimination of risks associated with physical certificates such as bad

delivery, fake securities, delays, thefts etc.;

Reduction in paperwork involved in transfer of securities;

Reduction in transaction cost.

No odd lot problem, even one share can be sold;

24

Nomination facility;

Change in address recorded with DP gets registered with all

companies in which investor holds securities electronically
eliminating the need to correspond with each of them separately;

Transmission of securities is done by DP eliminating correspondence

with companies;

Automatic credit into demat account of shares, arising out of

bonus/split/consolidation/merger etc.

Holding investments in equity and debt instruments in a single

account

CONCLUSION:
Developing an effective trading system is by no means an easy task. It
requires a solid understanding of the many parameters available, the ability
to make realistic assumptions, and the time and dedication to develop the
system. However, if developed and deployed properly, a trading system can
yield many advantages. It can increase efficiency, free up time and, most
importantly, increase your profile.

25

CHAPTER-III

26

Following diagram gives the structure of Indian financial

system:

27

FINANCIAL MARKET:

28

Financial markets are helpful to provide liquidity in the system and for
smooth functioning of the system. These markets are the centers that
provide facilities for buying and selling of financial claims and services. The
financial markets match the demands of investment with the supply of
capital from various sources.

According to functional basis financial markets are classified into two types.
They are:
Money markets (short-term)
Capital markets (long-ter)

According to institutional basis again classified in to two types. They are

Organized financial market
Non-organized financial market.
The organized market

comprises of official market

represented by

recognized institutions, bank and government (SEBI) registered/controlled

activities and intermediaries. The unorganized market is composed of
indigenous bankers, moneylenders, individual professional and nonprofessionals.

29

MONEY MARKET:
Money market is a place where we can raise short-term capital.
Again the money market is classified in to types:
They are:
Inter bank call money market
Bill market and
Bank loan market Etc.
E.g.; treasury bills, commercial papers, CD's etc.

CAPITAL MARKET:
Capital market is a place where we can raise long-term capital.
Again the capital market is classified in to two types and they are
Primary market and
Secondary market.
E.g.: Shares, Debentures, and Loans etc.

PRIMARY MARKET:
Primary market is generally referred to the market of new issues or market
for

mobilization

of

resources

by

the

companies

and

government

undertakings, for new projects as also for expansion, modernization,

addition, diversification and up gradation. Primary market is also referred
to as New Issue Market. Primary market operations include new issues of
shares by new and existing companies, further and right issues to existing
shareholders,
30

public offers, and issue of debt instruments such as debentures, bonds,

etc.
The primary market is regulated by the Securities and Exchange Board of
India (SEBI a government regulated authority).

FUNCTIONS:
The main services of the primary market are origination, underwriting, and
distribution. Organization deals with the origin of the new issue.
Underwriting contract make the shares predictable and remove the element
of uncertainty in the subscription. Distribution refers to the sale of
securities to the investors.

The following are the market intermediaries associated with the market:
1.

Merchant banker/book building lead manager

2.

Registrar and transfer agent

3.

Underwriter/broker to the issue

4.

Adviser to the issue

5.

Banker to the issue

6.

Depository

7.

Depository participant

Investors protection in the primary market:

31

To ensure healthy growth of primary market, the investing public should be

protected. The term investor protection has a wider meaning in the primary
market.
The principal ingredients of investors protection are:
Provision of all the relevant information
Provision of accurate information and
Transparent allotment procedures without any bias.

SECONDARY MARKET:
The primary market deals with the new issues of securities. Outstanding
securities are traded in the secondary market, which is commonly known
as stock market or stock exchange. The secondary market is a market
where scrips are traded. It is a market place which provides liquidity to
the scrips issued in the primary market. Thus, the growth of secondary
market depends on the primary market. More the number of companies
entering the primary market, the greater are the volume of trade at the
secondary market. Trading activities in the secondary market are done
through the recognized stock exchanges which are 23 in number including
Over The Counter Exchange of India (OTCE), National Stock Exchange of
India and Interconnected Stock Exchange of India.

Secondary market operations involve buying and selling of securities on the

stock exchange through its members. The companies hitting the primary
32

market are mandatory to list their shares on one or more stock exchanges
in India. Listing of scrips provides liquidity and offers an opportunity to the
investors to buy or sell the scrips.
The following are the intermediaries in the secondary market:
1. Broker/member of stock exchange buyers broker and
sellers broker.
2. Portfolio Manager.
3. Investment advisor.
4. Share transfer agent.
5. Depository.
6. Depository participants.

STOCK MARKETS IN INDIA:

Stock exchanges are the perfect type of market for securities whether of
government and semi-government bodies or other public bodies as also for
shares and debentures issued by the joint-stock companies. In the stock
market, purchases and sales of shares are affected in conditions of free
competition. Government securities are traded outside the trading ring in
the form of over the counter sales or purchase. The bargains that are
struck in the trading ring by the members of the stock exchanges are at the
fairest prices determined by the basic laws of supply and demand.

DEFINITION OF A STOCK EXCHANGE:

Stock exchange means any body or individuals whether incorporated or
not, constituted for the purpose of assisting, regulating or controlling the
business of buying, selling or dealing in securities.
The securities include:
33

 Shares of public company.

Government securities.
Bonds

HISTORY OF STOCK EXCHANGES:

The only stock exchanges operating in the 19 th century were those of
Mumbai setup in 1875 and Ahmedabad set up in 1894. These were
organized as voluntary non-profit-marking associations of brokers to
regulate and protect their interests. Before the control on securities under
the constitution in 1950, it was a state subject and the Bombay securities
contracts (control) act of 1925 used to regulate trading in securities. Under
this act, the Mumbai stock exchange was recognized in 1927 and
Ahmedabad in 1937.

During the war boom, a number of stock exchanges were organized. Soon
after it became a central subject, central legislation was proposed and a
committee headed by A.D.Gorwala went into the bill for securities
regulation. On the basis of the committees recommendations and public
discussion, the securities contract (regulation) act became law in 1956.

FUNCTIONS OF STOCK EXCHANGES:

Stock exchanges provide liquidity to the listed companies.
Stock exchanges help trading and raise funds from the market by
giving quotations to the listed companies.
The central and state governments have raised crores of rupees by
floating public loans over the hundred and twenty years during
which the stock exchanges have existed in this country.
34

 By obtaining the listing and trading facilities, public investment is

increased and companies were able to raise more funds.
The quoted companies with wide public interest have enjoyed
many benefits and assets valuation has become easier for tax and
other purposes.
Municipal corporations, trust and local bodies have obtained from
the public their financial requirements, and industry, trade and
commerce have secured capital of crores of rupees through the
issue of stocks, shares and debentures for financing activities like
organizing new ventures and completing projects of expansion,
diversification and modernizations.

Various Stock Exchanges in India:

At present there are 23 stock exchanges recognized under the securities
contracts (regulation), Act, 1956. Those are:
35

Exchange
Ludhiana Stock exchange
Delhi Stock exchange
Jaipur Stock exchange
Northern Region U.P. Stock exchange
Hyderabad Stock exchange
Bangalore Stock exchange
Mangalore Stock exchange
Madras Stock exchange
Coimbatore Stock exchange
Southern
Region

City
Ludhiana
Delhi
Jaipur
Kanpur
Hyderabad
Bangalore
Mangalore
Chennai
Coimbatore

Region

Eastern Region

Calcutta Stock exchange

Magadha Stock exchange
Bhubaneswar Stock exchange

Calcutta
Patna
Bhubaneswar

Western Region

Bombay Stock exchange

National Stock exchange
OTCEL Stock exchange
M.P. Stock exchange
Pune Stock exchange

Mumbai
Mumbai
Mumbai
Indore
Pune

36

Out of these major stock exchanges are:

NSE:
The National Stock Exchange of India Limited has genesis in the report of
the High Powered Study Group on Establishment of New Stock Exchanges,
which recommended promotion of a National Stock Exchange by financial
institutions (FIs) to provide access to investors from all across the country
on an equal footing. Based on the recommendations, NSE was promoted by
leading Financial Institutions at the behest of the Government of India and
was incorporated in November 1992 as a tax-paying company unlike other
stock exchanges in the country. On its recognition as a stock exchange
under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE
commenced operations in the Wholesale Debt Market (WDM) segment in
June 1994. The Capital Market (Equities) segment commenced operations
in November 1994 and operations in Derivatives segment commenced in
June 2000
NSE's mission is setting the agenda for change in the securities markets in
India. The NSE was set-up with the main objectives of:

Establishing a nation-wide trading facility for equities and debt

instruments.

Ensuring equal access to investors all over the country through an

appropriate communication network.
37

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 markets.

The standards set by NSE in terms of market practices and technology, have
become industry benchmarks and are being emulated by other market
participants. NSE is more than a mere market facilitator. It's that force
which is guiding the industry towards new horizons and greater
opportunities.
BSE:
The Stock Exchange, Mumbai, popularly known as "BSE" was established
in 1875 as "The Native Share and Stock Brokers Association". It is the
oldest one in Asia, even older than the Tokyo Stock Exchange, which was
established in 1878. It is a voluntary non-profit making Association of
Persons (AOP) and is currently engaged in the process of converting itself
into demutualised and corporate entity. It has evolved over the years into its
present status as the premier Stock Exchange in the country. It is the first
Stock Exchange in the Country to have obtained permanent recognition in
1956 from the Govt. of India under the Securities Contracts (Regulation)
Act 1956.The Exchange, while providing an efficient and transparent
market for trading in securities, debt and derivatives upholds the interests
of the investors and ensures redresses of their grievances whether against
the companies or its own member-brokers.

38

A Governing Board having 20 directors is the apex body, which decides the
policies and regulates the affairs of the Exchange. The Governing Board
consists of 9 elected directors, who are from the broking community (one
third of them retire ever year by rotation), three SEBI nominees, six public
representatives and an Executive Director & Chief Executive Officer and a
Chief Operating Officer. The Executive Director as the Chief Executive
Officer is responsible for the day-to-day administration of the
Exchange and the Chief Operating Officer and other Heads of Department
assist him.
The Exchange has inserted new Rule No.126 A in its Rules, Byelaws
pertaining to constitution of the Executive Committee of the Exchange.
Accordingly, an Executive Committee, consisting of three elected directors,
three SEBI nominees or public representatives, Executive Director & CEO
and Chief Operating Officer has been constituted. The Committee considers
judicial & quasi matters in which the Governing Board has powers as an
Appellate

Authority,

matters

regarding

annulment

of

transactions,

admission, continuance and suspension of member-brokers, declaration of

a member-broker as defaulter, norms, procedures and other matters
relating to arbitration, fees, deposits, margins and other monies payable by
the member-brokers to the Exchange, etc.

REGULATORY FRAME WORK OF STOCK EXCHANGE :

A comprehensive legal framework was provided by the Securities Contract
Regulation Act, 1956 and Securities Exchange Board of India 1952.
Three tier regulatory structure comprising
39

 Ministry of finance
The Securities And Exchange Board of India
Governing body

MEMBERS OF THE STOCK EXCHANGE:

The securities contract regulation act 1956 has provided uniform regulation
for the admission of members in the stock exchanges. The qualifications for
becoming a member of a recognized stock exchange are given below:

The minimum age prescribed for the members is 21 years.

He should be an Indian citizen.

He should be neither a bankrupt nor compound with the

creditors.

He should not be convicted for fraud or dishonesty.

He should not be engaged in any other business connected with a

company.
40

He should not be a defaulter of any other stock exchange.

The minimum required education is a pass in 12th standard

examination.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI):

The Securities And Exchange Board Of India (SEBI) was constituted in
1988 under a resolution of government of India.

It was later made

statutory body by the SEBI act 1992.according to this act, the SEBI shall
constitute of a chairman and four other members appointed by the central
government. With the coming into effect of the securities and exchange
board of India act, 1992 some of the powers and functions exercised by the
central government, in respect of the regulation of stock exchange were
transferred to the SEBI.

OBJECTIVES AND FUNCTIONS OF SEBI

To protect the interest of investors in securities.

Regulating the business in stock exchanges and any other

securities market.

Registering

and

regulating

the

working

of

intermediaries

associated with securities market as well as working of mutual

funds.
41

Promoting and regulating self-regulatory organizations.

Prohibiting insider trading in securities.

Regulating substantial acquisition of shares and take over of

companies.

Performing such functions and exercising such powers under the

provisions of capital issues (control) act, 1947and the securities to
it by the central government

SEBI GUIDELINES TO

SECONDARY

MARKETS:

(STOCK

EXCHANGES):

Board of Directors of Stock Exchange has to be reconstituted so as

to include non-members, public representatives and government
representatives to the extent of 50% of total number of members.

Capital adequacy norms have been laid down for the members of
various stock exchanges depending upon their turnover of trade
and other factors.

All recognized stock exchanges will have to inform about

transactions within 24 hrs.

TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the
investors. The orders are of different types

Limit orders:
42

Orders are limited by a fixed price. E.g. buy Reliance Communications ltd
at Rs.160.Here, the order has clearly indicated the price at which it has to
be bought and the investor is not willing to give more than Rs.160.

Best rate order:

Here, the buyer or seller gives the freedom to the broker to execute the
order at the best possible rate quoted on the particular date for buying. It
may be lowest rate for buying and highest rate for selling.

Discretionary order:
The investor gives the range of price for purchase and sale. The broker can
use his discretion to buy within the specified limit. Generally the
approximation price is fixed. The order stands as this buy BRC 100 shares
around Rs.40

Stop loss order:

The orders are given to limit the loss due to unfavorable price movement in
the market. A particular limit is given for waiting. If the price falls below the
limit, the broker is authorized to sell the shares to prevent further loss. E.g.
Sell BRC limited at Rs.24, stop loss at Rs.22.

Buying and selling shares:

To buy and sell the shares the investor has to locate register broker or sub
broker who render prompt and efficient service to him. The order to buy or
sell specifying the number of shares of the company of investors choice is
placed with the broker. The order may be of any type. After receiving the
order the broker tries to execute the order in his computer terminal. Once
matching order is found, the order is executed. The broker then delivers the
contract note to the investor. It gives the details of the company, no. of
shares bought, price, brokerage, and the date of delivery of share. In this
43

physical trading form, once the broker gets the share certificate through the
clearing houses he delivers the share certificate along with transfer deed to
the investor. The investor has to fill the transfer deed and stamp it. The
stamp duty is 1% considerations, the investor should lodge the share
certificate and transfer deed to the register or transfer agent of the
company. If it is bought in the DEMAT form, the broker has to give a
matching instruction to his depository participant to transfer shares
bought to the investors account. The investor should be account holder in
any of the depository participant. In the case of sale of shares on receiving
payment from the purchasing broker, the broker effects the payment to the
investor.

Share groups:
The scrips traded on the BSE have been classified into A,B1,B2,C,F and
Z groups. The A group represents those, which are in the carry forward
system. The F group represents the debt market segment (fixed income
securities). The Z group scrips are of the blacklisted companies. The C
group covers the odd lot securities in A, B1&B2 groups.

ROLLING SETTLEMENT SYSTEM:

Under rolling settlement system, the settlement takes place n days (usually
1, 2, 3 or 5days) after the trading day. The shares bought and sold are paid
in for n days after the trading day of the particular transaction. Share
settlement is likely to be completed much sooner after the transaction than
under the fixed settlement system.

44

The rolling settlement system is noted by T+N i.e. the settlement period is n
days after the trading day. A rolling period which offers a large number of
days negates the advantages of the system. Generally longer settlement
periods are shortened gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis
of the criteria that they were in compulsory demat list and had daily
turnover of about Rs.1 crore or more. Then it was extended to A stocks in
Modified Carry Forward Scheme, Automated Lending and Borrowing
Mechanism (ALBM) and Borrowing and lending Securities Scheme (BLSS)
with effect from Dec 31, 2001.

SEBI has introduced T+5 rolling settlement in equity market from July
2001 and subsequently shortened the cycle to T+3 from April 2002. After
the T+3 rolling settlement experience it was further reduced to T+2 to
reduce the risk in the market and to protect the interest of the investors
from 1st April 2003.

Activities on T+1:
Conformation of the institutional trades by the custodian is sent to the
stock exchange by 11.00 am. A provision of an exception window would be
available for late confirmation. The time limit and the additional changes for
the exception window are dedicated by the exchange.

The exchanges/clearing house/ clearing corporation would process and

download the obligation files to the brokers terminals late by 1.30 p.m. on
T+1. Depository participants accept the instructions for pay in securities by
45

investors in physical form up to 4 p.m. and in electronic form up to 6 p.m.

the depositories accept from other DPs till 8p.m for same day processing.

Activities on T+2:
The depository permits the download of the paying in files of securities and
funds till 10.30 a.m on T+2 from the brokers pool accounts. The depository
processes the pay in requests and transfers the consolidated pay in files to
clearing

House/clearing

Corporation

by

11.00am/on

T+2.

The

exchange/clearing house/clearing corporation executes the pay-out of

securities and funds latest by 1.30 p.m on T+2 to the depositories and
clearing banks. In the demat mode net basis settlement is allowed. The
buy and sale positions in the same scrip can be settled and net quantity
has to be settled.

46

47

INTRODUCTION
Karvy Computershare Pvt
Limited

Historical Background: The birth of Karvy was on a modest scale in

1981. It began with the vision and enterprise of a small group of
practicing Chartered Accountants who founded the flagship company
Karvy Consultants Limited. We started with consulting and financial
accounting automation, and carved inroads into the field of registry and
share accounting by 1985. Since then, we have utilized our experience
and superlative expertise to go from strength to strengthto better our
services, to provide new ones, to innovate, diversify and in the process,
evolved Karvy as one of Indias premier integrated financial service
enterprise.
Thus over the last 20 years Karvy has traveled the success route,
towards building a reputation as an integrated financial services provider,
offering a wide spectrum of services. And we have made this journey by
taking the route of quality service, path breaking innovations in service,
versatility in service and finallytotality in service.

48

Our

highly

qualified

manpower,

cutting-edge

technology,

comprehensive infrastructure and total customer-focus has secured for us

the position of an emerging financial services giant enjoying the
confidence and support of an enviable clientele across diverse fields in
the financial world.
Our values and vision of attaining total competence in our servicing has
served as the building block for creating a great financial enterprise,
which stands solid on our fortresses of financial strength - our various
companies.With the experience of years of holistic financial servicing
behind us and years of complete expertise in the industry to look forward
to, we have now emerged as a premier integrated financial services
provider.
PROFILE OF KARVY FINANCIAL POLICYS:
It is an undisputed fact that the stock market is unpredictable and
yet enjoys a high success rate as a wealth management and wealth
accumulation option. The difference between unpredictability and a
safety anchor in the market is provided by in-depth knowledge of market
functioning and changing trends, planning with foresight and choosing
one & s options with care. This is what we provide in our Stock Broking
services.
We offer services that are beyond just a medium for buying and
selling stocks and shares. Instead we provide services which are multi
dimensional and multi-focused in their scope. There are several
advantages in utilizing our Stock Broking services, which are the reasons
why it is one of the best in the country.

49

We offer trading on a vast platform; National Stock Exchange,

Bombay

Stock

Exchange

and

Hyderabad

Stock

Exchange.

More

importantly, we make trading safe to the maximum possible extent, by

accounting for several risk factors and planning accordingly. We are
assisted in this task by our in-depth research, constant feedback and
sound advisory facilities. Our highly skilled research team, comprising of
technical analysts as well as fundamental specialists, secure resultoriented information on market trends, market analysis and market
predictions. This crucial information is given as a constant feedback to
our customers, through daily reports delivered thrice daily; The Presession Report, where market scenario for the day is predicted, The Midsession Report, timed to arrive during lunch break, where the market
forecast for the rest of the day is given and The Post-session Report, the
final report for the day, where the market and the report itself is
reviewed. To add to this repository of information, we publish a monthly
magazine “ Karvy ; The Finapolis & rdquo;, which analyzes the
latest stock market trends and takes a close look at the various
investment options, and products available in the market, while a weekly
report, called “ Karvy Bazaar Baatein”, keeps you more
informed on the immediate trends in the stock market. In addition, our
specific industry reports give comprehensive information on various
industries. Besides this, we also offer special portfolio analysis packages
that provide daily technical advice on scrips for successful portfolio
management and provide customized advisory services to help you make
the right financial moves that are specifically suited to your portfolio.
Our Stock Broking services are widely networked across India, with the
number of our trading terminals providing retail stock broking facilities.
Our services have increasingly offered customer oriented convenience,
which we provide to a spectrum of investors, high-networth or otherwise,
with equal dedication and competence.
50

But true to our spirit, this success is not our final destination, but
just a platform to launch further enhanced quality services to provide you
the latest in convenient, customer-friendly stock management. Over the
years we have ensured that the trust of our customers is our biggest
returns. Factors such as our success in the Electronic custody business
has helped build on our tradition of trust even more. Consequentially our
retail client base expanded very fast.

Karvy Alliances:
Karvy Computershare Pvt
Limited

Mutual Fund Services | Issue Registry | Corporate Shareholder Services

Karvy Computershare Private Limited is a 50:50 joint venture of
Karvy

Consultants

Limited

and

Computershare

Limited,

Australia.

Computer share Limited is world's largest -- and only global -- share

registry, and a leading financial market services provider to the global
securities industry.
The joint venture with Computer share, reckoned as the largest
registrar in the world, servicing over 60 million shareholder accounts for
over 7,000 corporations across eleven countries spread across five
continents. Computer share manages more than 70 million shareholder
accounts for over 13,000 corporations around the world.

51

Karvy Computer share Private Limited, today, is India's largest

Registrar and Share Transfer Agent servicing over 300 corporates and
mutual funds and 16 million investors.

Karvy Computershare Pvt

Limited

Mutual Fund Services | Issue Registry | Corporate Shareholder Services

We have traversed wide spaces to tie up with the worlds largest transfer
agent, the leading Australian company, Computershare Limited. The
company that services more than 75 million shareholders across 7000
corporate clients and makes its presence felt in over 12 countries across
5 continents has entered into a 50-50 joint venture with us.
With our management team completely transferred to this new entity, we
will aim to enrich the financial services industry than before. The future
holds new arenas of client servicing and contemporary and relevant
technologies as we are geared to deliver better value and foster bigger
investments in the business. The worldwide network of Computershare
52

will hold us in good stead as we expect to adopt international standards

in addition to leveraging the best of technologies from around the world.
Excellence has to be the order of the day when two companies with such
similar ideologies of growth, vision and competence, get together.
www.karisma.karvy.com

Mutual Fund
Services

We have attained a position of immense strength as a provider of acrossthe-board transfer agency services to AMCs, Distributors and Investors.
Nearly 40% of the top-notch AMCs including prestigious clients like
Deutsche AMC and UTI swear by the quality and range of services that
we offer. Besides providing the entire back office processing, we provide
the link between various Mutual Funds and the investor, including
services to the distributor, the prime channel in this operation.

Carrying the limitless' ideology forward, we have explored new

dimensions in every aspect of Mutual Fund servicing right from volume
53

management, cost effective pricing, delivery in the least turnaround time,

efficient back-office and front-office operations to customized service. We
have been with the AMCs every step of the way, helping them serve their
investors better by offering them a diverse and customized range of
services. The first to market' approach that is our anthem has earned us
the reputation of an innovative service provider with a visionary bent of
mind.
Our service enhancements such as Karvy Converz', a full-fledged call
center, a top-line website (www.karvymfs.com), the m-investor' and
many more, creating a galaxy of customer advantages.
www.karvymfs.com

Issue
Registry

In our voyage towards becoming the largest transaction-processing house

in the Indian Corporate segment, we have mobilized funds for numerous
corporate, Karvy has emerged as the largest transaction-processing
house for the Indian Corporate sector. With an experience of handling
over 700 issues, Karvy today, has the ability to execute voluminous
transactions and hard-core expertise in technology applications have
gained us the No.1 slot in the business. Karvy is the first Registry
Company to receive ISO 9002 certification in India that stands testimony
to its stature
Karvy has the backing of skilled human resources complemented by
requisite technological packages to ensure a faster processing capability.
54

Karvy has the benefit of a good synergy between depositories and

registry that enables faster resolution to related customer queries. Apart
from its unique investor servicing presence in all the phases of a public
Issue, it is actively coordinating with both the main depositories to
develop special models to enable the customer to access depository
(NSDL, CDSL) services during an IPO.
Our trust-worthy reputation, competent manpower and high-end
technology and infrastructure are the solid foundations on which our
success is built. http://karisma.karvy.com

Corporate Shareholder
Services

Karvy has been a customer centric company since its inception. Karvy
offers a single platform servicing multiple financial instruments in its bid
to offer complete financial solutions to the varying needs of both
corporate and retail investors where an extensive range of services are
provided with great volume-management capability.
Today, Karvy is recognized as a company that can exceed customer
expectations which is the reason for the loyalty of customers towards
55

Karvy for all his financial needs. An opinion poll commissioned by The
Merchant Banker Update and conducted by the reputed market research
agency, MARG revealed that Karvy was considered the Most Admired in
the registrar category among financial services companies.
We have grown from being a pure transaction processing business, to one
of complete shareholder solutions. http://karisma.karvy.com

Karvy Global Services

Limited
The specialist Business Process Outsourcing unit of the Karvy Group. The
legacy of expertise and experience in financial services of the Karvy
Group serves us well as we enter the global arena with the confidence of
being able to deliver and deliver well.
Here we offer several delivery models on the understanding that business
needs are unique and therefore only a customized service could possibly
fit the bill. Our service matrix has permutations and combinations that
create several options to choose from.
Be it in re-engineering and managing processes or delivering new
efficiencies, our service meets up to the most stringent of international
standards. Our outsourcing models are designed for the global customer
and are backed by sound corporate and operations philosophies, and
domain expertise. Providing productivity improvements, operational cost
56

control, cost savings, improved accountability and a whole gamut of

other advantages.
We operate in the core market segments that have emerging
requirements for specialized services. Our wide vertical market coverage
includes Banking, Financial and Insurance Services (BFIS), Retail and
Merchandising, Leisure and Entertainment, Energy and Utility and
Healthcare.
Our horizontal offerings do justice to our stance as a comprehensive BPO
unit and include a variety of services in Finance and Accounting
Outsourcing Operations, Human Resource Outsourcing Operations,
Research and Analytics Outsourcing Operations and Insurance Back
Office Outsourcing Operations. www.karvyglobal.com
Karvy Comtrade
Limited

At Karvy Commodities, we are focused on taking commodities trading to

new dimensions of reliability and profitability. We have made
commodities trading, an essentially age-old practice, into a sophisticated
and scientific investment option.
Here we enable trade in all goods and products of agricultural and
mineral origin that include lucrative commodities like gold and silver and
popular items like oil, pulses and cotton through a well-systematized
trading platform.
Our technological and infrastructural strengths and especially our street57

smart skills make us an ideal broker. Our service matrix is holistic with a
gamut of advantages, the first and foremost being our legacy of human
resources, technology and infrastructure that comes from being part of
the Karvy Group.
Our wide national network, spanning the length and breadth of India,
further supports these advantages. Regular trading workshops and
seminars are conducted to hone trading strategies to perfection. Every
move made is a calculated one, based on reliable research that is
converted into valuable information through daily, weekly and monthly
newsletters, calls and intraday alerts. Further, personalized service is
provided here by a dedicated team committed to giving hassle-free
service while the brokerage rates offered are extremely competitive.
Our commitment to excel in this sector stems from the immense
importance that commodities broking has to a cross-section of investors
– farmers, exporters, importers, manufacturers and the
Government of India itself.
Quality
Policy
To achieve and retain leadership, Karvy shall aim for complete customer
satisfaction, by combining its human and technological resources, to
provide superior quality financial services. In the process, Karvy will strive
to exceed Customer's expectations.
QUALITY OBJECTIVES
As per the Quality Policy, Karvy will :

Build in-house processes that will ensure transparent and

harmonious relationships with its clients and investors to provide
high quality of services.
58

Establish a partner relationship with its investor service agents and

vendors that will help in keeping up its commitments to the
customers.

Provide high quality of work life for all its employees and equip
them with adequate knowledge & skills so as to respond to
customer's needs.

Continue to uphold the values of honesty & integrity and strive to

establish unparalleled standards in business ethics.

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

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

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

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

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

employees, suppliers and regulatory authorities) proud and
satisfied.

Overview:
KARVY is a premier integrated financial services provider, and ranked
among the top five in the country in all its business segments, services
over 20 million individual investors in various capacities, and provides
investor services to over 300 corporates, comprising the who's who of
Corporate India.
KARVY covers the entire spectrum of financial services such as
Stock broking, Depository Participants, Distribution of financial products
like mutual funds, bonds, fixed deposit, Merchant Banking & Corporate
Finance, Insurance Broking, Commodities Broking, Realty Services,
59

Personal Finance Advisory Services, placement of equity, IPOs, among

others. Karvy has a professional management team and ranks among the
best in technology, operations, and more importantly, in research of
various industrial segments.
At Karvy Commodities, we are focused on taking commodities
trading to new dimensions of reliability and profitability. We have made
commodities trading, an essentially age-old practice, into a sophisticated
and scientific investment option. Here we enable trade in all goods and
products of agricultural and mineral origin that include lucrative
commodities like gold and silver and popular items like oil, pulses and
cotton through a well-systematized trading platform.
Our technological and infrastructural strengths and especially our
street-smart skills make us an ideal broker. Our service matrix is holistic
with a gamut of advantages, the first and foremost being our legacy of
human resources, technology and infrastructure that comes from being
part of the Karvy Group.
Our wide national network, spanning the length and breadth of
India, further supports these advantages. Regular trading workshops and
seminars are conducted to hone trading strategies to perfection. Every
move made is a calculated one, based on reliable research that is
converted into valuable information through daily, weekly and monthly
newsletters, calls and intraday alerts. Further, personalized service is
provided here by a dedicated team committed to giving hassle-free
service while the brokerage rates offered are extremely competitive. Our
commitment to excel in this sector stems from the immense importance
that commodities broking has to a cross-section of investors –
farmers, exporters, importers, manufacturers and the Government of
India itself.

60

61

CHAPTER-IV

62

TRADING SESSION
Trading timings are from 9:00 A.M. to 3:30 P.M. on all 5 days of the trading
period. Monday to Friday is the trading period in all the stock exchanges.
SEBI has stipulated that all the stock exchanges in India must have same
trading period.

ORDERS:
Orders can be done one at a time or in a batch mode.The submitted order
will be accepted at the CTS, after validation if it finds any invalid reason the
order is return back to the BWS, with the appropriate error message. If
Accepted at the CTS it will be added to the local pending order book. The
order will then be taken up for matching, if it is a buy order the system
tries to find a sell order, which fits the requirement of the buy order, when
such match is found a trade gets executed. Each trade involves
two brokers and respective traders who sent the order. Both these traders
are informed of the trade being executed at their respective BWS.
At the BWS the trade is added to the local trade book.
Orders sent by the brokers are two types:

Good for the day (GFD)

Good till cancellation(GTC)

GOOD FOR THE DAY:

63

This is also called as market order. For an order if the member selects the
deal as good for the day, the order is treated as market order. If a best bid
founds match with best order then the transaction gets executed. If the
match is not found then after trade time the order gets cancelled that day.
Next day he has to place a new order.
For example if a member wants to purchase 1000 shares of satyam info @
400 each through Good for Day order. If the correct match is not found,
order gets cancelled automatically and new quotation has to be placed the
next day.

GOOD TILL CANCELLATION:

This order is forwarded to the last trading day of that settlement period.
This is also called as carry forward order like GFD; broker has to select the
option of GTC for the order. If the order finds match with in the trading
settlement period, the order is executed. If no match is found, the order is
cancelled on the last day of settlement period. This order is not carried
forward to the next settlement period.
For example, if a member a place purchase order of 500 shares of SBI @
690 per share and selects the order as GTC and place an order. If the
match is not found on that day it will be forwarded to the next day until
trading settlement period day

64

The given flow chart clearly explains the process of online

trading:

65

L o g in

S e ll t r a n s c a t io n

B u y t r a n s c a t io n

T h e s y s te m w ill c h e c k y o u r
d p a c c o u n t q u an tity

T h e s y s te m w ill c h e c k b u y in g
lim its

O rd e rs ac c e p te d

R e je c t e d o r d e r s w o u ld b e
c o m m u n ic a t e d a lo n g w it h r e a s o n s

o rd e rs a c c e p te d

y o u r o r d e r is t r a n s m it t e d t o e x c h a n g e f o r e x e c u t io n

p e n d in g b u y o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c ree n

y o u m a y e d it y o u r
p e n d in g o r d e r

o n e x e c u t io n
o f y o u r o rd e rs

y o u m a y e d it y o u r
p e n d in g o r d e r

y o u m a y d e le t e
y o u r p e n d in g o r d e r

f la s h e d o n y o u r
s c r e e n im m e d ia t e ly
o n e x e c u t io n

c o n f o r m a t io n c o u l
d b e s e n d to y o u r
e - m a il a n d m o b ile

p e n d in g s e ll o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c re e n

y o u m a y d e le t e y o u r
p e n d in g o r d e r

c o n t r a c t n o t e w o u ld
b e s e n t t o b y m a il
o r h a n d d e liv e r y

LEVEL QUOTE:
The Level I real-time streaming quote updates automatically every five
seconds and continually throughout market hours.
66

TO GET QUOTES:
1. Enter a symbol in the field located on the left-hand side. You can also
click the small arrow at the right to select a symbol you previously
entered in the same day.
2. press the Enter key on your keyboard or select Get Quotes (under the
select Action drop-down menu) to display real-time streaming quotes.

TO ADD STOCK TO WATCH LIST:

For stocks you watch frequently, select Add to Watch List (under the select
Action drop-down menu) so you can view quote without entering the symbol
again.

To View Company Information for a specific stock

1. Enter a symbol in the field located in the left-hand side. You can also
click the small arrow at the right to select a symbol you previously
entered in the same day
2. Select Get Content under the select Action drop-down menu. A
separate window will appear with news and charts fir the selected
stock. You can also click the following links at the top of the pop-up
window to see more information for the stock

a) Detailed quotes:
Detailed quote, intra-day, and the latest news

b) News:
Recent new

67

c) Charts:
Six different charts types intra-day, one month, three months,
six months one year and Interactive.

d) SEC fillings:
The companys report to the SEC

e) Profile:
A description of the company and fundamental information about its
stock.

f) Historical:
The open, high, low, and closing prices, change and volume of any given
stock in the past six years.

g) Message:
Related bulletin board message about the stock posted by the public

To view market Information

Click market snap.
The market information will show in a different window.

Streaming quote Field Definitions:

Ask:
Lowest price at which someone currently offers to sell the stock.

Ask Size:
Number of shares, in hundreds, for sale at the current ask price.

Bid:
Highest price at which someone currently offers to buy the stock
68

Bid Size:
Number of shares, in hundreds of the offer at the current Bid

Change:
The difference between the price of the Last trade and the stocks
previous close price.

% Change:
The percent difference between the price of the Last trade and the
stocks previous close price.

Close:
The last trade on the previous trading day.

High:
Highest. trade price on the stock during the current trade date

Last:
Most recent trade price on the stock during the current trade date.

Low:
Lowest trade price on the stock during the current trade date.

Open:
The opening price of the stock on the current trade date.

Current Bid is Higher:

Tick will show an arrow pointing up.

Current Bid is lower:

Tick will show an arrow pointing down.
69

Current Bid is same:

Tick will show UC (unchanged).

Volume: Total number of shares of the stock traded during the current
trade date

To export Order Record to and Excel File:

1. In the order screen, click Import to Excel at the bottom.
2. Choose the location on your computer where you want to save the file
and click.

BASKET TRADING:
You can fill your basket with orders in advance, and place them later with
just one click.
Web Trader provides you multiple baskets.
Once you add/remove orders in the Basket, the system saves the
modification automatically.

To Set Up Your Basket:

1. Click the Basket tab to open the Basket window.
2. Select a basket from the drop-down menu at left.
3. To re-name the basket, click Rename cart, type a new name
into the pop-up window, and click OK.
70

KEYS USED FOR TRADING:

F1

- BUY

F2

- SELL

F3

- PENDING ORDER( BUYING & SELLING)

F6

- MARKET DEBTS ( COMPANY ENQUIRY)

F7

- ARBITRAGE ORDERS

F8

- HOW MANY TRADING HAS BEEN DONE

SHIFT+F8

- NET POSITION OF THE COMPANYS SHARES

CTRL+F8
- SETTLEMENT
EXPOSURE PURPOSE
SHIFT+F9

OF

NET

POSITION

NEWS

F11

- ADDING A NEW COMPANY IN TO THE N/W

F12

- TEMPORARY LOCKING OF WINDOWS

71

FOR

72

KARVY is a premier integrated financial services provider, and ranked

among the top five in the country in all its business segments, services
over 20 million individual investors in various capacities, and provides
investor services to over 300 corporates, comprising the who's who of
Corporate India.
KARVY covers the entire spectrum of financial services such as
Stock broking, Depository Participants, Distribution of financial products
73

like mutual funds, bonds, fixed deposit, Merchant Banking & Corporate
Finance, Insurance Broking, Commodities Broking, Realty Services,
Personal Finance Advisory Services, placement of equity, IPOs, among
others. Karvy has a professional management team and ranks among the
best in technology, operations, and more importantly, in research of
various industrial segments.
At Karvy Commodities, we are focused on taking commodities
trading to new dimensions of reliability and profitability. We have made
commodities trading, an essentially age-old practice, into a sophisticated
and scientific investment option. Here we enable trade in all goods and
products of agricultural and mineral origin that include lucrative
commodities like gold and silver and popular items like oil, pulses and
cotton through a well-systematized trading platform.
Our technological and infrastructural strengths and especially our
street-smart skills make us an ideal broker. Our service matrix is holistic
with a gamut of advantages, the first and foremost being our legacy of
human resources, technology and infrastructure that comes from being
part of the Karvy Group.
Our wide national network, spanning the length and breadth of
India, further supports these advantages. Regular trading workshops and
seminars are conducted to hone trading strategies to perfection. Every
move made is a calculated one, based on reliable research that is
converted into valuable information through daily, weekly and monthly
newsletters, calls and intraday alerts. Further, personalized service is
provided here by a dedicated team committed to giving hassle-free
service while the brokerage rates offered are extremely competitive. Our
commitment to excel in this sector stems from the immense importance
that commodities broking has to a cross-section of investors –
farmers, exporters, importers, manufacturers and the Government of
India itself.
74

EQUITY TRADING FOR THE MONTH OF JUNE OF

KARVY:

Date
Open High
Low
Close
1-Jun-16
35.95
36.15
34.15
34.15
2-Jun-16
38
38
34.45
34.45
6-Jun-16
39
39.25
36
36.25
7-Jun-16
37
40
37
37.7
8-Jun-16
37.75
38.85
37.75
38.85
9-Jun-16
36.5
39.35
35.7
37
10-Jun16
34.2
37.5
34.2
37.5
13-Jun16
34
35.8
34
35.75
14-Jun16
31.6
34.65
31.6
34.1
15-Jun16
33.1
35
32.5
33
16-Jun16
35
36.85
33.4
34.15
17-Jun16
35
35.75
34.7
35.15
20-Jun16
37
39.5
36.5
36.5
21-Jun16
37.5
40.3
36.75
38
22-Jun16
40.05
41
38.65
38.65
23-Jun16
41
42
40.05
40.65
24-Jun16
41.3
42
40.85
41.9
27-Jun16
44
44
42.7
42.7
28-Jun16
45.4
45.5
42.75
44.9
75

29-Jun16
30-Jun16

43.3

46.5

40.07

45.17

43

45.2

41.24

43.41

INTERPRETATION:

The stock has shown a downtrend initially but has recovered and give a buy
signal. There is a fluctuation in the prices, which indicates the investor to
go for long term investments. Thus it is not advised for shirtterm investors.

76

INDIABULLS STOCK BROKING LIMITED:

India bulls are Indias leading Financial Services and Real Estate Company
having over 640 branches all over India. India bulls serves the financial
needs of more than 4,50,000 customers with its wide range of financial
services and products from securities, derivatives trading, depositary
services, research & advisory services, consumer secured & unsecured
credit, loan against shares and mortgage & housing finance. With around
4000 Relationship Managers, India bulls help its clients to satisfy their
customized financial goals. India bulls through its group companies have
entered Indian Real Estate business in 2005. It is currently evaluating
several

large-scale

projects

worth

several

hundred

million

dollars.

India bulls Financial Services Ltd is listed on the National Stock

77

Exchange, Bombay Stock Exchange and Luxembourg Stock Exchange. The

market capitalization of India bulls is around USD 3,330 million (30th
September 2007). Consolidated net worth of the group is around USD 950
million (30th September 2007). India bulls and its group companies have
attracted more than USD 800 million of equity capital in Foreign Direct
Investment (FDI) since March 2000. Some of the large shareholders of India
bulls are the largest financial institutions of the world such as Fidelity
Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Carillon
Capital.

Business of the company has grown in leaps and bounds since its
inception. Revenue of the company grew at a CAGR of 159% from FY03 to
FY07. During the same period, profits of the company grew at a CAGR of
184%.

India bulls became the first company to bring FDI in Indian Real Estate
through a JV with Farallon Capital Management LLC, a respected US based
investment firm. India bulls have demonstrated deep understanding and
commitment to Indian Real Estate market by winning competitive bids for
landmark properties in Mumbai and Delhi.

78

EQUITY TRADING FOR THE MONTH OF JUNE OF

INDIABULLS STOCK BROKING LIMITED:
Date
Open
High
Low
Close
1-Jun-16
108
110.5 106.55
108.05
2-Jun-16
106.3
112.4
106.1
107.55
6-Jun-16
109
109
105.6
106.3
7-Jun-16
114.75
116.75
108
108.8
8-Jun-16
112.4
115
111.55
112.3
9-Jun-16
115.2
116.7
111.05
111.5
10-Jun16
104
119.8
104
114.95
13-Jun16
100
104.8
99.8
103
14-Jun16
100
108
95.2
98.55
15-Jun16
100 100.75
98.25
100.1
16-Jun16
98
99.9
97.5
99
17-Jun16
95
99.7
93.1
97.45
20-Jun16
102
102.5
95.1
95.65
79

21-Jun16
22-Jun16
23-Jun16
24-Jun16
27-Jun16
28-Jun16
29-Jun16
30-Jun16

102

102.4

99.1

99.5

108

108

102.5

103.1

107.5

107.9

106.55

107

107

107.9

105.05

106.3

108

108.8

106.05

106.8

105.1

108

104.5

106.8

106

107.5

102.3

104.65

105

108.2

103.52

105.41

CLOSE

80

INTERPRETATION:
The stock has shown a downtrend which is a good sign for genuine
investors who go for long-term investment rather than for a short-term
investments. In this situation there is no way to speculative as the prices
are continuously going down and increasing.

INDIAINFOLINE LIMITED:
81

Circa 1995 A group of professional formed a company called Probity

Research & Services Pvt Ltd. The name was later changed to India Infoline
Ltd. The Objective was to provide unbiased and independent information to
market intermediaries and investors. The quality of research soon caught
the imagination of all major participants in the financial market. In a span
of 2 of 3 years the client list read like the whos who of Indian financial
market. The list included consulting firms like Mckinsey, companies like
Hindustan Lever, Banks like Citibank, Rating agencies like CRISIL, D & B,
FIs, Foreign as well as leading Indian brokers.

One fine morning in early 1999,a colleague had a crazy idea that if the
company made all the research available free on the web, the number of
users may well jump from 250 to 2, 5 million. To make it true, the business
required a reincarnation. And the prerequisite was a death. It meant that
the company put up all the on formation free on the website and let go of all
the revenues and profits. Worse, of the new avatar failed, there would be no
comebacks.
The Company became heavily dependent on its e-broking business for
survival. The odds were against them. There was no money available from
the private equity investors at any valuation. The core promoters of the
company had little experience of broking. To add to it, the market was hit
by a scam. They also had their share of price to pay and lessons to learn. It
was difficult to retain people. Although divesting for morale, but not
surprising, most observes had written them off.
82

EQUITY TRADING FOR THE MONTH OF JUNE OF

INDIAINFOLINE LIMITED:
Date
Open
High
Low
Close
1-Jun-16
119.95 120.95
118.5
120.5
2-Jun-16
119.8
121.7
118.5
119.95
6-Jun-16 120.05
121.2
119
119.8
7-Jun-16
124
124.8
119.6
121.25
8-Jun-16
121.1
124.3 120.85
122.9
9-Jun-16
120.3
123.3
118.5
120.2
10-Jun16
116
119.5
115.1
118.4
13-Jun16
114.8
115.9
113.6
115.35
14-Jun16
109.5
116.5
107.3
114
15-Jun16
110.75
111.2
107.3
108.55
16-Jun16
110.15
112.5
109.8
110.2
17-Jun16
109
114.1
109
112.1
20-Jun16
117
117
110.75
111.4
21-Jun16
115.25
115.5
110.35
111.85
22-Jun16
118.5
119
115.3
115.85
23-Jun16
119
119.95
117
118.1
24-Jun16
115.05
118.2
113.5
116.95
27-Jun16
115.65
115.65
113.1
114.05
28-Jun16
115.7
118.4
113.35
114.95
29-Jun16
116.05
119.64
112.64
116.24
30-Jun16
117.21
118.93
114.41
113.46

83

CLOSE

INTERPRETATION:
The stock has shown a downtrend which is a good sign for genuine
investors who go for long-term investment rather than for a short-term
investments. In this situation there is no way to speculative as the prices
are continuously going down and increasing.
84

CHAPTER-V
85

FINDINGS AND SUGGESTIONS

FINDINGS AND SUGGESTIONS

FINDINGS:

Fluctuations are more in secondary market than any other market.

The people who are working in the stock exchange are not giving the
accurate information about the share market.

The investors are also lacking knowledge in the shares Lack of

awareness on online trading.

86

The investors are not allowed to trade the quotations directly to buy
or sell their securities.

SEBI is not conducting seminars to get awareness on the share

market to the investors.

There are more speculators than investors.

It was also observed that many broking houses offering internet

trading allow clients to use their conventional system as well just
ensure that they do not loose them and this instead of offering
e-broking services they becomes service provider.

SUGGESTIONS:
The SEBI has to conduct the regular seminar to create awareness
on the share market.

87

 The stock exchange has to permit the investors to trade their

quotations directly .
They have to improve the online trading perfectly.
The online system has to advise the investor, at the time of trading
which price can get him profit for a security.
In KARVY settlement of the account will be improved.

CONCLUSION:

88

In this present competitive would economy plays a vital role in developing of

the country, if a person is able to have the better life by having sufficient
wealth with him. It can be made happen only by means of earnings, any
person cannot earn more by staying stagnated at one place there are many
ways of earning one among them is by way of investing in the stock
exchanges. No person can directly enter into the markets; the only source is
through the middle man that is any company that is member in the stock
exchange.
These members companies are providing many services to the investors or
their clients like portfolio investments, derivatives and mutual funds etc.,
so any company has to provide better services to the costumer in such a
way that they can trust the company in investing their wealth through the
company. It can be done by following the certain guidelines and rules &
regulations framed by SEBI.

89

CHAPTER VI

90

BIBLIOGRAPHY:
BOOKS:

Security Analysis And Portfolio Management

-V.A.Avadhani

Marketing of Financial Services

-V.A.Avadhani

Indian Financial System

-M.Y.Khan

WEBSITES:

www.bseindia.com

www.sebi.com

www.nseindia.com

www.karvy.com

SEARCH ENGINE UDED

www.google.com
INDIAN SECURITIES MARKET A REVIEW
ECONOMIC TIMES OF INDIA
91

92