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PROJECT REPORT

ON

INDIA BULLS SECURITIES LIMITED.

SUBMITTED BY:

Mukesh Jha

SE-2,Spring summer: 09-11

ID NO:-D0911SSISBE10029(DEL-4/DC-1157)

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ACKNOWLEDGEMENT

I would like to take this opportunity to acknowledge the support and

cooperation of all those who enabled the successful completion of this

project.

I would like to extend our sincere gratitude towards Mr. Amit

Gupta (Branch Manager) under whose guidance I undertook this project,

for extending the advice and direction that is required to carry on a study

of this nature, and for helping me with the intricate details of the project

every step of the way.

Finally I would like to thank all the employees and clients who

helped me and took out time to answer my questions and helped to

complete this project. It was a wonderful learning experience for me.

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OBJECTIVE

1. EXECUTIVE SUMMARY

2. RESEARCH METHODOLOGY

3. COMPANY PROFILE

5 SWOT ANALYSIS

6 INTRODUCTION TOPUBLICEQUITY
MARKET

7 COMPARATIVE ANALYSIS

8 REFRENCES

9 ANNEXURE

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CHAPTER 1 - OBJECTIVE

1.1 OBJECTIVES:

• To get an insight to the working / operations of an online brokerage


firm

• To understand the online stock operations.

• To analyze online sales of the company.

• To do a SWOT Analysis of the company.

• To give measures in order to improve retail Investors confidence in


Indian primary Market

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PRIMARY OBJECTIVE:

The primary objective of my report at Indiabulls Securities Ltd.


was to carry out the online A/C sales and operations. In this objective I
was suppose to perform activities like collecting data of potential
customers from various sources, going out to meet the potential clients,
demonstration of Indiabulls’s products and lastly handling transaction of
the clients on their instructions. All these operations constituted my
primary objective.

SECONDARY OBJECTIVE:

 To know the brokerage system of the share market


 To know the difference between share market and mutual funds.
 To know the various competitor of mutual funds.
 To know the various exchanges of share market in all over the world.
 To know the timing of the share market
 To know the benefits of investing in share market and mutual funds.
 To know about the services of the share market and mutual funds.

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CHAPTER 2 - EXECUTIVE SUMMARY

2.1 EXECUTIVE SUMMARY:

Indiabulls Securities Ltd. is a Brokerage house, which deals in


purchase and sales of financial securities on behalf of these clients. The
project elaborates on SWOT analysis of operations of the Indiabull’s
branch as well as the measures to improve retail investor’s confidence in
the Indian primary markets.

The project was undertaken through regular visits to the branch.


The Branch Head who was also my industry mentor assigned the work to
me. Meeting clients, solving their quarries, executing their transaction
etc. were some of the main feature of the project.

In the first part of the project SWOT analysis of operations is


conducted by regular visit to the branch and deep analysis of its
operations.

Suggestions are given to the branch in order to increase their


efficiency and to take the advantage of opportunities and to overcome
from their weaknesses.

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CHAPTER 3 -RESEARCH METHODOLOGY

3.1 RESEARCH METHODOLOGY:

Market surveys have been conducted to know the scenario of


market regarding measures to increase retail investor’s confidence in
indian primary market.

Project study is done with a systematic approach. So while doing


a research I have followed certain steps, which are as follows: -

COLLECTION OF BACKGROUND INFORMATION

OBJECTIVES

DEVELOPING AND VALIDATING RESEARCH

COLLECTING THE INFORMATION

ANALYSING THE INFORMATION

PRESENTING THE FINDINGS

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3.1.1 DESIGNING A RESEARCH PLAN:

For the purpose of getting proper information and then further analysis
the research plan was efficiently and effectively designed. Various
decisions were taken related to

 Data sources

 Research approaches

 Research instruments

3.1.1.1 DATA SOURCES:

There are two types of sources for the collection of data

 Primary data

 Secondary data

Primary data

I have collected primary data by conducting a survey through


questionnaire. I got the relevant information after analyzing the data.

Secondary data

I have collected secondary data through Internet, books, journals


and newspapers.

3.1.1.2 RESEARCH APPROACHES:

Conducting a research a variety of approaches are used; -

Observation

This involves watching how people react to primary market and


how satisfied are they with the returns on the various investments they
have made.

Survey

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I met various individuals and I gained their responses through a
structured, non-disguised questionnaire, a copy of questionnaire is
attached.

3.1.1.3 RESEARCH INSTRUMENTS:

Questionnaire

Verbal Interaction

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CHAPTER 4 -COMPANY PROFILE

4.1 VISION AND MISSION OF INDIABULLS.

VISION

To be the largest financial services organization in Indian retail


market and become a one stop shop for all non-banking financial
products and services for the retail customer.

MISSION

• Rapidly increase the number of our client relationships to clear market


leader

• Provide our clients with a very broad array of product offering

4.2 INTRODUCTION:

It took Uday Kotak 25 years to do what Indiabulls has achieved in


4 years…here’s the business history of an empire business built from
scratch and moving on to become a force to reckon with.

The Company was promoted by three engineers from IIT Delhi, and has
attracted more than Rs.700 million as investments from venture capital,
private equity and institutional investors such as LNM India Internet
Ventures Ltd., Transatlantic Corporation Ltd., Farallon Capital Partners,
L.P, R R Capital Partners L.P, and Infinity Technology Trustee Pvt. Ltd.
and has developed significant relationships with large commercial banks

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such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN Ambro
Bank, Standard Chartered Bank, Lord Krishna Bank and IL&FS.

The Company and its subsidiaries have facilities from the above-
mentioned banks and financial institutions aggregating to Rs. 1765
million. The company headquarters are co-located in Mumbai and Delhi,
allowing it to access the two most important regions for Indian financial
markets, the Western region including Mumbai, rest of Maharashtra and
Gujarat; and the Northern region, including the National Capital Territory
of Delhi, nearby cities, parts of Haryana, Uttar Pradesh and Punjab; and
access the highly skilled and educated workforce in these cities. The
Marketing and Sales efforts are headquartered out of Mumbai, with a
regional headquarter in Delhi; and its back office, risk management,
internal finances etc. are headquartered out of Delhi, allowing the
Company to scale these processes efficiently for the nationwide network.

there was no company catering to the needs of retail segment


through Internet.

4.3 COMPANY BACKGROUND

Indiabulls Financial Services Limited was established in the year


2000. The company started its operation with a team of 15 in a single
office. Today, the company has become the distributor of various
financial products and operates from 82 offices in 55 cities to serve a
client base of around 1,80,000. The base of online clients has expanded
from just 21680 in March 2004 to 100000 clients as of March 2005. This
provides an excellent base for cross-selling third party products like
mutual funds and insurance. IFSL also sees vast potential in the
distribution of consumer durable and home loans, which it has introduced
recently.

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4.4 WHY INDIABULLS? MAKING YOUR INVESTMENT EASY!

Indiabulls to you as a Technology Oriented Financial Services


Company offering Integrated Equity analysis, Stock Trading, Depositary
& Insurance services, Margin Trading facilities backed by real time risk
management systems and fast trade execution. Indiabulls also provides its
clients with valuable real-time information, access to breaking news and
market happenings, along with in-depth and insightful analysis.

The organization has an established presence in 62 cities through


its 70 branch offices and has a base of over 35000 clients. Ranked
amongst the top 5 retail brokers in the country with average daily trading
volumes of over Rs. 600 crores in the current markets and holds over Rs.
150 crores of assets in its own depository services.

SOME OF THE UNIQUE FEATURES ARE:

• Trading via branch network, telephones and Internet account. That is


Both online and offline (by telephone).

• Customized products for lending against shares

• Automated Extended Margin Trading Facility

• Integrated Trading and Depositary Account

• Technology transforming desktop into NEAT like terminal for


Internet trading

• One Screen for both Cash and Derivatives Trading.

• Facility to Buy Today & Sell Tomorrow itself

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• Equity Research Department, which studies the market and provides
information.

• Up-to-date news, data and analysis via Indiabulls.com

• Customized Insurance services.

• Equity Analysis Report to support your investment decisions.

4.5 SUBSIDIARIES:

1. Indiabulls Securities Ltd.

2. Indiabulls Insurance Advisors Pvt. Ltd

3. Indiabulls Commodities Pvt. Ltd.

INDIABULLS SECURITIES LTD.

Indiabulls Securities limited was incorporated as GPF Securities


Private Limited on June 9, 1995. The name of the company was changed
to Orbis Securities Private Limited on December 15, 1995 to change the
profile of the company and subsequently due to the conversion of the
company into a public limited company; the name was further changed to
Orbis Securities Limited on January 5’ 2004. The name of the company
was again changed to Indiabulls Securities Limited on February 16, 2004
so as to capitalise on the brand image of the term “Indiabulls” in the
company name. ISL is a corporate member of capital market &derivative
segment of The National Stock Exchange of India Ltd. At present, ISL
accounts for approximately 3% of the total daily turnover of the
Exchange with 32,359-client relationship and 70 branches spread across
the country as of April 30, 2004.

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INDIABULLS INSURANCE ADVISORS PVT. LTD

Indiabulls Insurance Advisors Pvt. Ltd. was incorporated as Orbis


Technologies Private Limited on February 18, 2002 and the name of the
company was changed to Indiabulls Insurance Advisors Pvt. Ltd. on
February 9, 2004 due to change in the main objects of the company.
Indiabulls Insurance Advisors Pvt. Ltd. is a corporate agent for life
insurance with Birla Sunlife Insurance Company Ltd.

INDIABULLS COMMODITIES PVT. LTD.

Indiabulls Commodities Pvt. Ltd. was incorporated on October 30,


2003 and is a member of National Commodities Derivatives Exchange
(NCDEX). The NSE for derivatives trading on commodities in India has
promoted NCDEX. Being a member of NCDEX, ICPL will function as
an intermediary for commodity’s derivatives. The Company commenced
its activities from March 30,2004.

4.6 SOME IMPORTANT PRODUCTS AND SERVICES OFFERED


BY INDIABULLS ARE:

1. Equities & Derivatives

2. Indiabulls Equity Analysis

3. Depository Services

4. Insurance

5. Personal Loans

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EQUITIES & DERIVATIVES

Equity Business caters

• Needs of independent investors.

• Active traders

• Non-Resident Indian (NRI) investors.

INDIABULLS OFFERS

• Broker assisted trade execution,

• Automated online investing

• Access to all IPO's.

Indiabulls offers the purchase and sale of securities, which includes


Equity, Derivatives and Commodities Instruments listed on National
Stock Exchange of India Ltd (NSEIL), The Stock Exchange, Mumbai
(BSE) and NCDEX.

TYPES OF ACCOUNTS

• Indiabulls Signature Account - Comprehensive services


including research and investing guidance for independent
investors.

• Power Indiabulls - Indiabulls is dedicated to empower Active


Traders through personal service and advanced trading technology.

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• Non-Resident Indian (NRI) Investor Services - With an
extensive range of investment products, you will discover an
unwavering commitment to helping you invest in India.

INDIABULLS EQUITY ANALYSIS

Indiabulls Equity Analysis, which helps the investor in building and


maintaining the ideal portfolio.

WHAT IS INDIABULLS EQUITY ANALYSIS?

• An Equity Rating approach is objective and easy to understand

• Indiabulls Equity Analysis provides clients with an objective stock


rating system for more than 400+ stocks

• An unbiased approach to help in deciding which shares to buy and


sell.

• Includes third party opinions to facilitate more informed investing


decisions.

SELLING INDIABULLS EQUITY ANALYSIS

Unique Product features

• Indiabulls: Provides simple tools for company analysis like

 Peer analysis

 Growth expectations and valuation measures

 Fundamental analysis

 Ratio analysis

 Industry outlook

Others: Complex reports, which are just industry specific

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Ease of use and understandable ratings

• Indiabulls uses a simple rating scale from A to E.

Others: Their ratings are only time and return based.

Historical and projected /estimated financials.

• Indiabulls: Gives a value based standing of the company.

IN-DEPTH ANALYSIS IN A CONCISE FORM.

• Indiabulls: Short and crisp analysis of each scrip. No smelling under


carpet , performed with the risk orientation of retail clients and not
institutional clients.

Others: Unnecessarily long analysis.

No conflict of interest

• Indiabulls: Objective analysis leading to effective investment


decisions

Others: Biased opinion due to prop book/institutional clients


/corporate finance exposures leading to prejudiced decisions

Regular Updates

• Indiabulls: Keeping the investor constantly and consistently updated

Others: Do not provide timely updates

How does Indiabulls Equity Analysis help make an investment


decision?

Indiabulls Equity Analysis helps satisfy the client’s investment


need by rating stocks based on carefully selected fact-based measures. A

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Client could consider the ratings, financials, analyzing the peer group and
the different analyst’s opinions to make a smart investment decision.

INDIABULLS SALES MOTTO

Everybody should consider reading Indiabulls Equity Analysis before


making a medium term equity investment decision

DEPOSITORY SERVICES

Two depositories in India are

• NSDL

• CDSL

Indiabulls is a depository participant with the National Securities


Depository Limited and Central Depository Services (India) Limited for
trading and settlement of dematerialized shares. Indiabulls performs
clearing services for all securities transactions through its accounts.

INSURANCE

Indiabulls gives you the opportunity to avail Birla Sunlife Life


Insurance and TATA AIG Life Insurance through the Indiabulls network
of 750 Relationship Managers over 135 locations nationwide. Which
means you can take care of life, while taking care of business.

PERSONAL LOANS

Offers the shortest route to a loan with minimum paperwork and


procedures. With Easymoney, you can avail of easy loans for a minimum
of Rs.10, 000 to a maximum amount of Rs.1, 00,000.

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Features of Easymoney are:

• Flexible loan tenor of up to 4 years (i.e. 1 month to 48 months).

• Loans available from a minimum of Rs.10,000 up to a maximum of


Rs.100,000.

• Easy monthly repayment through equated monthly installments


(EMI).

• Mediclaim Insurance bundled with every loan you avail.

• Easy documentation and quick disbursal.

You take today and you can pay it tomorrow with no penalties

DOCUMENTS REQUIRED:

• Residence Proof

• Identity Proof

• Income Proof

All of this comes to you backed by your Relationship Manager


available to you 24x7.

• Indiabulls is India's leading retail financial services company with 41


locations spread across 37 cities.

• Over 450 Client Relationship Managers are dedicated to serving your


unique needs.

• Is complemented by our knowledgeable and customer focussed


Relationship Managers.

• Provides our clients with real-time service & 24/7 accesses to all
information and products.

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• Indiabulls offers a full range of financial services and products
ranging from Equities to Insurance to enhance your wealth and hence,
achieve your financial goals.

POST REGISTRATION SERVICES:

• Deliver and receive cheques and securities

• Obtain market information

• Place orders

• Get access to IPO’s via the Book Building route as well as to all the
fixed price issues.

DOCUMENTS REQUIRED FOR TRADING ACCOUNT AND DP

• 2-passport size photograph.

• Photocopy of Income Tax Permanent Account Number (PAN) Card -


If you do not have a PAN, then you would be required to give a
declaration to that effect and fill form 60.

IDENTITY PROOF - PHOTOCOPY OF ANY OF THE


FOLLOWING:

• Passport

• PAN Card

• Voter ID

• Driving License

• Ration Card

• Address Proof - Photocopy of any one of Driving License /


Passport/Ration Card/Voter Card/ Bank Statement.

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Features of Power Indiabulls (It is a unique offering by the company
which helps an investor to trade online).

An investor can avail this feature by paying a fee of Rs. 750, with this he
can track all the listed scripts at NSE.

The features include:

• Live Streaming Quotes

• Fast Order Entry

• Tic by Tic Live Charts

• Technical Analysis

• Live News and Alerts

• Extensive Reports for Real-time Accounting

BENEFITS OF TRADING WITH INDIABULLS:

• Personal relationship Manager - 24/7.

• Most competitive brokerage and DP charges.

• Only one time account opening charges and no annual maintenance


charges.

• Margin trading of 4 times the cash deposited for delivery based trade.

• Margin trading of 8 times the cash deposited for intra-day based trade.

• Margin trading of 2 times the approved category based shares


deposited for delivery-based trade.

• Margin trading of 4 times the approved category based shares


deposited for delivery-based trade.

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• Buy today Sell tomorrow for all securities facility.

CORE VALUES – WHAT DRIVES THE ORGANIZATION?

Indiabulls has a performance driven culture where the core value,


which drives the organization, is its profitability-oriented culture. Every
employee is an entrepreneur and is motivated in his own right, trying to
make profits for himself.

The major core philosophy of the company has been to provide the best
service to the customer.

TECHNOLOGY

IFSL’s ongoing investment in technology is a key element in


expanding their product and service offerings, enhancing their delivery
systems, providing fast and consistent client service, reducing processing
costs, and facilitating their ability to handle significant increases in client
activity without a corresponding rise in risk and staffing levels.
Deployment of cutting edge technology and innovation in product
development has had a key role to play in the success of the organization.

The highlights of the company’s technology include:

• In-house technology team consisting largely of engineering


graduates with detailed understanding of the trading and internal
systems

• Low response time and high flexibility to introduce new features/


products at minimal costs

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• Risk Management System is built around real time technology
requiring minimal human intervention

• National Stock Exchange approved CTCL product developed by


their technology team enabling them to provide the product to large
user base.

IFSL has computer network connecting all of the offices and


centralized service center to support its multi-channel delivery systems,
as well as other applications such as risk management.

IFSL maintain backup and recovery functions to enhance the


reliability of the system and Integrity of data. This includes logging of all
critical files intra day, duplication and storage of all critical data every
twenty-four hours and maintenance of facilities for backup and
communications. It also includes the maintenance and periodic testing of
a disaster recovery plan.

INTERNET BASED SHARE TRADING SYSTEM

ISL’s Internet Based Share trading system handles over 22,871 clients
spread all across the country. At the core of the Internet based share
trading system is an in-house developed application that interfaces with
the NSE and allows users to carry out stock transactions online. This
application has following features:

• Supports for both Cash Market and Derivatives

• Common Integrated Risk Management for both segments

• A feature rich browser based terminal

• Desktop based installable terminal for the highly active trader

• Electronic Payment Interface to participating Retail Bank

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• India bulls Equity Research & Analysis

• Support for Non-Resident Indian Customers

• Multiple Tick-by-Tick Charts and Technical Analysis

• Streaming Quotes

• Multiple and fully customizable market watches and multiple order


books.

The application is an N-tier application with robust design and


architecture made for scalability, reliability and high performance.

The main components of the Internet Based Share Trading cum CTCL
application are explained below:

1. Exchange Connector – The Exchange connector is a software


component that interfaces with the exchange for the purpose of sending
Order requests and receiving back order and trade confirmations. The
exchange connector component of the application is written in C with
X.25 connectivity support for connecting to the National Stock Exchange
through a VSAT as well as leased line. The connector has been built for
and runs on the Tru-64 Unix platform as well as for the Solaris platform
with easy portability for Linux as well.

2. Internet Trading Front-end - The Internet Trading front end has


been developed on the Java platform with the presentation layer in Java
Server Pages and the logic residing in Java classes. Currently it is being
run on the Iplanet Web Server from Netscape. The Internet trading front
end uses a proprietary methodology of database connection pooling to
achieve better performance.

3. Risk Management Module – The core of the application is the


application server and risk management module, which validates all

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orders placed by customers against the limits available to them as per our
risk management logic. This module accepts and forwards to the
exchange all orders that pass the risk management criteria while rejecting
any that do not meet them. This component of the application is written
in C and runs on the Tru-64 Unix platform with interfaces to the
Database.

4. Internet Interface – The Internet interface is an interface to web


server using advanced Inter Process Communication using DBMS Pipes
and Message Queues. This interface is also runs on Tru-64 Unix.

5. CTCL Interface – The CTCL interface is the component interface


to the Power Indiabulls Group Server, which is also their CTCL software
(approved by NSE).

6. Power India bulls Group Server – This is a server side


component of the Power Indiabulls Group Dealer Terminals. This
multi-threaded component is responsible for all communication
with the Power Indiabulls Group terminals given out to active
trading clients. It is completely written in JAVA and is portable to
any Java supporting operating system. This component has the
following advanced features:

• Connection management with reconnects functionality

• Compression of market data for optimized bandwidth


utilization

• Streaming of data to the terminals

• Advanced Database Connection Pooling through proprietary


logic for performance

• In built security features against D-Dos attacks

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• Bandwidth throttling for better performance on slow Internet
connections at client end.

7. Power Indiabulls Terminal – The Power Indiabulls Terminal is a


terminal ideally suited for the active trader. This software gets
installed on the client machine and is similar to a Dealer Terminal
over the Internet. The terminal has a lot of features that makes it
extremely usable from the point of view of a trader who is active in
the market.

Some of the product features are –

• Integrated market watches for cash and derivatives

• Multiple tick by tick charting

• Advanced Technical Analysis

• Single key stroke order entry

• Multiple customizable market watches

• Easy to use risk management reports

• Secured Socket Layer connectivity with server

• Two second order confirmation turnaround time even during


peak hours.

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4.7 COMPETITIVE STRENGTHS TO BE THE MARKET
LEADER

What keeps Indiabulls ahead of the competition is the competitive


edge that it has over other players in the market.

 Diverse Branch Network

 Bouquet of financial products and services

 Advanced technology team that delivers market leading


product innovation

 Strong sales and marketing teams with continuous


reinvestment and training

 Strong cross selling opportunities

 Strong and experienced promoters

 Leading product innovation and marketing strategies

 Well capitalized player, with strong banking relationships


and credit ratings

 Ability to combine people and technology in unique ways

 Strong market presence and increased market share leading


to a virtuous cycle of growth and profitability.

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ETHICAL VALUES

Indiabulls has a performance driven culture where the core value,


which drives the organization, is its profitability-oriented culture. Every
employee is an entrepreneur in his own right, trying to make profits for
himself as well as the Company

CORE COMPETENCY

The company’s core competency is its unique business model – the


model of relationship managers by which those who trade through the
internet also gets the human touch. The aggressive profit sharing model
(with the employees) that it pursues is another major high of the core
competency.

KEY BUSINESS STRATEGIES

Their focus on the client has allowed the company to offer a range
of services that have changed the investing landscape and created a new
model of financial services that melds people and technology to provide
an integrated human assisted technology interface service for investors
who range from self-directed full-time active investor to those who prefer
to deal with through a marketing associate in smaller towns and cities.

THEIR KEY STRATEGIES INCLUDE:

 Defend and maintain our differentiation as the firm that delivers


ethical and useful services

 Build and expand our “investing insight” through our product


offerings such as Equity Analysis which is objective, uncomplicated
and not driven by commission

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 Give clients new levels of choice tailored to their desire for help, tools
for investing their assets, their willingness to pay for additional
services and the level of business they can do with us

 Provide clients with tools, relationship managers and choices that


support their desired investment outcomes

They have developed a client specific approach as a core element of


their business strategy and are constantly focusing on acquiring new
clients and expanding their customer base. They believe that the strong
secular growth of the Indian financial markets, due to increased
household penetration of financial assets; increasing liquidity and market
capitalization of Indian markets, led by the listing of many public sector
entities; and the increasing affluence of Indian households and savers
provides an impetus to our growth perspective.

SOCIAL INITIATIVES

Does the business house think of the society and the nation or are
they basically concerned about profit generation only.

The company as such has not undertaken any major social


initiative - they did contribute to the Tsunami Relief Fund (2 days salary
of every employee). The company as such does not believe in doing
something different from their business; they believe that they could
contribute to the society by doing what they are best at – making profits
for the stakeholders and also employing more people.

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CHAPTER 5 - SWOT ANALYSIS

5.1 SWOT ANALYSIS OF INDIABULLS

5.1.1 WHAT IS SWOT ANALYSIS?

A scan of the internal and external environment is an important


part of the strategic planning process. Environmental factors can be
classified as Strengths (S) or Weakness (W), and those external to the
firm can be classified as OPPURTUNITY (O) or THREATS (T). Such
an analysis of the strategic environment is referred to as a SWOT
ANALYSIS.

The SWOT analysis provides information that is helpful in


matching the firm’s resources and capabilities to the competitive
environment in which it operates. As such, it is instrumental in strategy
formulation and selection. The following diagram shows how SWOT
ANALYSIS fits into an environmental scan:

5.1.2 SWOT ANALSIS FRAMEWORK

ENVIRONMENTAL SCAN

INTERNAL ANALYSIS EXTERNAL


ANALYSIS

STRENGTHS WEAKNESS OPPURTUNITIES THREAT


S

SWOT MATRIX

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STRENGTHS:

A firm’s strengths are its resources and capabilities that can be used as
a basis for developing a competitive advantage. Examples of such
strengths include:

• Patents.

• Strong brand names.

• Good reputation among customers.

• Cost advantages from proprietary know how.

• Exclusive access to high-grade natural resources.

• Favorable access to distribution networks.

WEAKNESS:

The absence of certain strengths may be viewed as a weakness. For


example, each of the following maybe considered as a weakness:

• Lack of patent protection.

• A weak brand name.

• Poor reputation among customers.

• High cost structure.

• Lack of access to the best natural resources.

• Lack of access to key distribution channels.

In some cases, a weakness maybe the flip side of a strength. Take the
case in which a firm has a large amount of manufacturing capacity. While
this capacity may be considered as strength that competitors do not share,
it also maybe considered a weakness if the large investment in

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manufacturing capacity prevents the firm from reacting quickly to
changes in the strategic environment.

OPPURTUNITIES:

The external environmental analysis may reveal certain new


opportunities for profit and growth some examples of such opportunities
include:

• An unfulfilled customer need.

• Arrival of new technologies.

• Loosening of regulations.

• Removal of international trade barriers.

THREATS:

Changes in the external environmental also may present threats to


the firm.

Some of the examples include:

• Shifts in consumer tastes away from firm’s products.

• Emergence of substitute product.

• New regulation.

• Increased trade barriers.

5.2 THE SWOT MATRIX

A firm should not necessarily pursue the most lucrative


opportunities. Rather, it may have a better chance at developing a
competitive advantage by identifying a fit between the firm’s strengths

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and upcoming opportunities. In some cases, the firms can overcome a
weakness in order to prepare it to pursue a compelling opportunity.

To develop strategies that take into account the SWOT profile, a


matrix of these factors can be constructed. The SWOT matrix (also
known as a TOWS MATRIX) is shown below:

Strengths of Indiabulls – What makes Indiabulls better than it’s


competitors?

• Online trading platform

• Diverse Branch Network provides ample opportunities to penetrate


deep into the existing & untapped market. Since its inception in FY
2000 the company and its subsidiaries have grown from a single
location to a nationwide network spread over 135 offices in 95
cities.

• Personal relationship manager who will help assist the clients in


share trading

• Indiabulls offers its clients a pool of financial services and


products:

 Equities & Derivatives

 Depository Services

 Commodities

 Insurance

 Mutual Funds

 Indiabulls Equity Analysis

 IPO’s

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 Loans

• No annual maintenance charges

• No custodial charge

• It does not keep any condition as to collect minimum amount of


brokerage from its clients

• Most competitive BROKERAGE and DP charges (on delivery


0.5% and on intraday 0.1%)

• Equity analysis report to support the investment decision of its


clients

• Trading via branch network, telephones and internet account i.e.


both online and offline

• Strong market presence and increased market share leading to a


virtuous cycle of growth and profitability.

• The incentive model is created such that it leads to generation of


higher revenue for the organization. This acts as a motivating
factor for the employees to perform well.

• Induction of new employees through an extensive computer based


training module that equips them to service their clients efficiently.

• An added advantage of Indiabulls is its strong brand name, which


helps its sales force to sell the products.

• Technology transforming desktop into NEAT like terminal for


internet trading

• Real time online transfer fund and exposure updating facility with
HDFC, CITIBANK, ICICI, IDBI, Standard Charted, Federal Bank,
AbnAmro.

34
WEAKNESS OF INDIABULLS:

• It should have its own mutual funds i.e. Indiabulls as of now does
not have its own mutual funds, instead of providing advises in
mutual funds it should have its own mutual funds.

• There should be a separate set of staff working in fields and trading


on behalf of their clients: India bulls has same set of staff who are
making clients and also trading on behalf of clients this hinders the
relationship manager to provide adequate and necessary tips to the
clients and at times the managers are not in the position to answer
the questions of their clients relating to the current market position
as they are on fields.

• It does not display the scripts in BSE on its terminal i.e. POWER
INDIABULLS. To trade in scripts in BSE the customer has to open
the website www.bseindia.com.

• Commodities are not traded online (MCX-multi commodity


exchange, NCDEX-national commodity derivative exchange of
India ltd.)

• It does not provide with the indices of major world markets, ADR
prices of Indian scripts.

• Unlike some of its competitors like ICICI and Kodak, Indiabulls


does not provide a complete catalogue of financial services (e.g.
Banking facility).

• There is no limit to the maximum number of clients that a


Relationship manager can handle. This affects the level of service
provided to the clients who are not volume traders.

35
OPPURTUNITIES TO INDIABULLS:

• Financial services like banking

• Market expansion i.e. opening branches at untapped areas

• ADR & GDR have issued to trade in foreign markets.

• Indiabulls is registered with Luxembourg stock exchange and so


can target other stock exchanges.

• The Capital market in the last few years has turned out to be one of
the favorable avenues for the retail investors. This is due to the
performance of the Indian Industry in various sectors and the
Economy in general. Even the future outlook looks promising.

• Scope of online trading on BSE.

• Indiabulls has tied up with other third party companies to sell their
products. Due to the high client base of Indiabulls, there exists an
opportunity to cross sell these products in the market.

• Market seems favorable for commodities trading. Should


Indiabulls choose to enter this segment it may prove to be a
profitable venture.

THREATS TO INDIABULLS:

• Companies like Sharekhan, ICICI Direct, Kotak, and Private


Brokers are major threats to Indiabulls.

• Banks with demat facility jockeying for position

• Industry competitors vying for the same target segment.

• Changes in SEBI guidelines & other tax implications.

36
• Government Regulations.

5.3 STRUCTURE OF THE ORGANIZATION

The company owes its success to its strong management team,


which has been there since its inception.

The Management Structure

37
ORGANIZATION STRUCTURE:

National Sales and Marketing Head

Vice President-Sales

Regional Sales Head

Chief Branch Manager

Branch Manager

Team Leader

Sr. Relational Manager

Relationship Manager

Associate Relationship Manager

Sales Executive

Back Office Executive

38
5.5 BACK - OFFICE OPERATIONS OF INDIABULLS

Back Office Strength:

The total strength of the back office is six

• The back office operates under the aegis of 3 experienced personnels,


who basically look after the a/c opening and other related activities
such as bank formalities and Franking etc.

• There are other two people who carry on the activities related to
Dematerialization of Shares and basic query handling of clients.

• There is one personnel dedicated to back office operations related to


Insurance and Mutual Funds.

THE OPERATIONS:

After the Registration Kit is duly received by the RM, it is


forwarded to the back office, whereby the documents such as the DP
form, Financial Agreement and the registration form along with
identification proofs and the bank cheque undergo the initial screening.
Then punching of the same is done on the ‘Webex’ software. It is then
sent to Mumbai for ‘Franking’. Franking implies that the documents are
legalized, wherein the stamp duty of Maharashtra government approves
of the same. The stamped kit is received back at the backend operations
H.O in E-block. If accepted then the Client Id is generated automatically
and shown in the software. The cheque received from the client is banked
only after the Client Id has been generated and it has undergone the initial
scanning and punching.

Banks with which Indiabulls has collaborations-

• HDFC

39
• ICICI

• CITI bank

• IDBI

• ABN AMRO

• STANDARD CHARTERED

• UTI

After scanning and punching, the cheques are segregated for the
aforesaid banks and deposited. The amount is credited to the client’s
trading a/c the same evening for the above-mentioned banks. In case of
other banks, the entire procedure takes a span of 3 days.

Courier Services: The courier services aiding the process of Franking etc
are as follows:

• Skylark

• Over Nite

• Blue Dart

INTER-DEPENDENCE OF VARIOUS BRANCHES

There is no inter-dependence in the back office of the various


branches. Every individual branch has a different code for access to the
Webex software. The working at the various branches is wholly restricted
to their office only.

PROCEDURE FOR WITHDRAWAL

The outgoing of funds is performed when a client puts forward a


request to withdraw cash lying in the trading a/c. For the same, the RM

40
sends a mail, containing the details of the client such as his Id, amount to
be withdrawn etc to the back office, where the request is taken up. This
request is then put by the back office personnel on the Webex software.
Then withdrawal cheque is drawn in the name of the client. Finally,
amount is transferred to client’s a/c. The entire procedure takes 2 days
time.

DEMATERIALIZATION OF SHARES

For dematerialization of physical shares belonging to clients, the


back office personnel takes up the shares. After getting the share
certificate duly filled by the client, the same is crosschecked. The share
certificate, the physical shares along with the filled up Dematerialization
Request Form (DRF) are forwarded to the Head Back Office in A block,
where other formalities are performed. The same is then forwarded to the
Registrar of the Company. This process of dematerialization takes around
a month’s time.

REJECTION OF THE REGISTRATION KITS

The Registration Kits who are not in conformity with the


requirements of approval under Franking are sent back to the respective
branches. In such cases, the rejected kits are handed over by the back
office to the Team leaders. The onus is on the Team Leaders to forward
the same to the Relation Manager, taking care of the a/c. He gets the
necessary alterations done by the client to make sure that the pre-
requisites for a/c opening are met.

41
FAILURE REPORTING SYSTEM

Each Query put forward is allotted a unique Id no. All kind of


queries related to stock withdrawal, stock updation, client queries etc that
are via mails are tracked using the CRM. As soon as the query of the
client is received, acknowledgement of the same is mailed to the client
along with an interaction Id generated for the query.

While processing queries or daily routine activities, if one comes across


any kind of failure, the same is reported immediately to
failures@Indiabulls.com.

Suggestions:

• There should be a person solely responsible for checking the


Registration Kit to ensure that it is complete in all respects and there
are no rejections.

• The policies related to Trading and DP should be consistent and in


congruence with each other.

• The time lag between giving in the kits for registration and opening
the account should be reduced to ensure speedy and efficient service.

5.6 HOW TO MARKET ANYTHING

Marketing is the whole business seen from the point of view of


its final result, that is, from the customer's point of view. Concern
and responsibility for marketing must therefore permeate all areas of
the enterprise." —Peter Drucker

The major reason for business success is invariably the ability of an


entrepreneur to move his or her product to the customer in an efficient,

42
cost-effective manner. The major reasons for business failure are poor
marketing, lack of sales ability and lack of momentum in the sales
department. In almost every troubled company I have consulted for,
ineffective marketing—leading to poor sales—has been the major
problem or cause of slipping revenues and financial problems.

How successful is your marketing plan? To find out, take a look at


your marketing mix—especially the four major areas discussed in greater
detail below. Whether you are thinking of setting up, starting or
expanding your business, or selling any product or service, these four
elements should be on the top-of-mind all the time:

1. The product: Exactly what product or service you are going to sell to

this market? Define it in terms of what it does for your customer. How
does it help your customer to achieve, avoid or preserve something?
You must be clear about the benefit you offer and how the customer's
life or work will be improved if he or she buys what you sell.

The product range offered by Indiabulls includes:

 Equities & Derivatives

 Depository Services

 Commodities

 Insurance

 Mutual Funds

 Indiabulls Equity Analysis

 IPO’s

 Loans

43
2. The price: Exactly how much are you going to charge for your
product or service, and on what basis? How are you going to price it to
sell at retail? How are you going to sell it at wholesale? How are you
going to charge for volume discounts? Is your price correct based on your
costs and the prices of your competitors?

Indiabulls in terms of price offers the best service, which includes

• No annual maintenance charges

• No custodial charge

• One time fee of Rs750

• Most competitive BROKERAGE and DP charges (on delivery


0.5% and on intraday 0.1%) Following is a comparison chart of
Indiabulls vis-à-vis its competitors which is why Indiabulls scores
better over its competitors.

44
COMPARISON CHART

ICICI Kotak Indiabulls

Account
Rs. 750 Rs. 500 Rs. 700
Opening Charges

Deliver
Intraday Delivery Intraday Delivery Intraday
Brokerage (%) y

0.85 0.15 0.50 0.15 0.5 0.1

Exposure on
NIL 4 times 4 times 4 times 4 times 8 times
Cash

Exposure on 2 times of the


NIL NIL
Securities Market Value

Annual NIL
Maintenance Rs 300 Rs. 260
Charges (For POA)

Trading with
other Demat N.A. N.A. Possible
Account

Banking facility ICICI Bank Kotak/HDFC/CITI All leading Banks

Net Banking
ICICI Bank Kotak/HDFC/CITI
facility

45
Off-line
Tradi N.A. N.A. Through Phone
ng

Relationship Assigned to every


N.A. N.A.
Manager client

3. The place: Where are you going to sell this product at this price? Are

you going to sell directly from your own company or through


wholesalers, retailers, direct mail, catalogs or the Internet?

Indiabulls has a network of 135 offices spread across 95 cities.


Indiabulls is built for the individual investor to offer a full suite of
financial services.

4. The promotion: Promotion includes every aspect of advertising,

brochures, packaging, salespeople and sales methodology. How are


you going to promote, advertise and sell this product at this price at
this location? What will be the process from the first contact with a
prospect through to the completed sale?

Indiabulls is all about aggressive selling. It is an amazing fact to believe


that on an average all over India 500 accounts are opened on daily basis.
So once can imagine the sales methodology and selling techniques being
adopted by the company.

Creative marketing comes from continually questioning the


existing situation and looking for ways to change this marketing mix—
the product, price, place and promotion. Creative marketing often
involves adding new products or services or modifying existing ones. It
may require changes in pricing, place of sale or promotional methods.
Sometimes, marketing requires that you delete existing products or

46
services, sell them at different prices, offer them in different places or
promote them differently.

You can change any one of these elements and then test to
determine whether this change improves sales or profitability. Sometimes
you may have to change several factors at once to achieve a quantum leap
upward in sales results. But in any case, your marketing mix should be a
dynamic combination of elements that is always changing.

THE SALES PROCESS

The company that started its operation with a team of 15 in a single


office has today become the distributor of various financial products and
operates from 135 offices in 95 cities to serve a client base of
around4,50,000. This provides an excellent base for cross-selling third
party products like mutual funds and insurance. IFSL also sees vast
potential in the distribution of consumer durable and home loans, which it
has introduced recently.

After being acquainted with the products and services offered by


Indiabulls, we were teamed up with a relationship manager (RM) to gain
insight into the sales process. The motive behind going on a call with a
RM was to understand how a Manager approached a prospective client
for opening an account.

The sales leads provided to a RM by the company are generated through:

• Indiabulls Internet site.

• Indiabulls toll free inbound call center

• Promotions/ Road shows

Apart from the aforesaid means there are self-generated leads by the
managers through

47
• Word of mouth

• Cold calling

• References

The sales process begins with the RM contacting the prospective


client and apprising him of the products and services offered by
Indiabulls. Then the endeavor of the RM is to fix an appointment with
him to showcase the product through demonstrating the ease and
convenience of online trading. Should the client have any apprehensions
about the product, the RM tries to resolve it there and then. During the
demonstration the client is detailed how to navigate through the trading
terminal. The interested client is then supposed to fill up the registration
kit, which comprises of:

1. The Trading Account Form

2. The DP Account Form

3. The Financing Agreement

The duly filled up kit is then forwarded to the back office for data
entry and other formalities.

Indiabulls Securities LTD is harping on the concept of its Relationship


Managers. The Relationship Manager caters to the clients, right from the
time of the opening

Of the a/c. every individual client has a RM who assists him in his
dealings with the Stock Market.

• Keeping him informed about latest market updates via mails.

• Being available to client’s 24x7.

48
• Entertaining requests of clients pertaining to ledgers, a/c balances,
receipts etc.

Indiabulls in this case has done very well; the process is simple and
easy

Open….Your account in 3 easy steps and start trading

1. Call up Indiabulls helpline or logon to www.Indiabulls.com.

2. Read and complete the Indiabulls registration kit.

3. Return all the relevant documents to your relationship manager who


will then get the process completed..

5.7 ENSURING CUSTOMER SATISFACTION

To ensure Total Customer Satisfaction, the following initiatives are


taken. Various business processes of the company are defined and
managed with the sole objective of meeting and exceeding the explicit
and implicit customer expectations.

The sta us of customer satisfaction is measured through three


principal interventions:

49
• Customer Satisfaction Survey

• Handling Customer Complaints

• Complaint Handling System

CUSTOMER SATISFACTION SURVEY:

The database is maintained by the company which results in calling


up the clients from time to time to ensure customer satisfaction and in
the end the detailed report is made for the same and which in return is
given to the zonal head.

The results of these reviews are used to update the systems and
procedures, thus institutionalizing continual improvement processes.

CUSTOMER COMPLAINT HANDLING:

A comprehensive and clearly documented system is implemented


through out the company to handle complaints more systematically. The
number of complaints pending and their age as well as the cycle time
for attending to them are continuously monitored and regularly
reviewed by the person concerned to ensure speedy redressal.

COMPLAINT HANDLING SYSTEM:

The calls and complaints from the customers are systematically


processed for timely response and solution right from the branch,
maintenance center or the site itself. Only those complaints, which are
beyond the scope of these centers, are reported to headquarters for
necessary support by way of know-how, material or experts. Invariably,
whenever complaints are handled to the satisfaction of the customers,
acknowledgements are taken to act as input for further improvement of
the product or service. The complaint status is reported at regular

50
intervals to the concerned branch /zonal in-charge for review and
necessary corrective & preventive action.

51
CHAPTER 6 -INTRODUCTION TO PUBLIC EQUITY MARKET

6.1 INTRODUCTION TO PUBLIC EQUITY MARKET

Public equity markets are those where corporates raise resources


through IPO’s by getting listed in the stock exchanges. Public equity
markets are subjected to a wide range of governance, disclosure,
transparency and compliance norms set by the securities exchanges
commissions/government agencies and also the self-regulatory
functions set by the exchanges themselves. Institutional and retail
investors mostly use this channel.

The distinct advantages of the public equity capital are:

a. Lower cost of capital for the firm

b. Provide liquidity for current stockholders

c. Shift monitoring costs for private lenders

d. Firm can learn from information contained in the stock price


movements.

However, public equity capital has some costs too. These include

a. Disclosure of proprietary information

b. Agency costs of outside equity

c. Costs of reporting/filing with regulators/exchanges

d. Costs of corporate control

e. Under-pricing

A few features generally observed in the respect of the IPO markets


include:

• Typically, IPO prices are below the level that they reach on the
market a few days or weeks later, when more public information is

52
available (under pricing). However the extent of under-pricing will
narrow with several companies coming up for listing.

• Each IPO generates beneficial information externalities for other


companies that are about to go public.

• Privatized companies tend to list in public equity markets that


offering better legal protection of shareholders.

• The decisions to go public are affected by firms’ ownership


structure. When company has only one owner or when banks holds
majority shares, companies are less likely to prefer public equity.

6.2 PUBLIC EQUITY CAPITAL:

Governments:

The scope of government in further development of public equity markets


could consist of:

• Extend the realm of regulation to other markets as well

• Extend fiscal support to corporates accessing public equity


markets

• Evolve policy framework that will streamline compliance


requirements and thereby costs of regulation

• Refine regulation so as to make it cohesive, comprehensive


and more integrated.

• Choice of public equity markets in case of privatization and


divestment process of government stake.

53
• CHAPTER 9 –COMPARITIVE ANALYSIS

What is a Mutual Fund?


A Mutual Fund is a trust that pools the savings of a number of investors
who share a common financial goal. The money thus collected is invested
by the fund manager in different types of securities depending upon the
objective of the scheme. These could range from shares to debentures to
money market instruments. The income earned through these investments
and the capital appreciations realized by the scheme are shared by its unit
holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. The small savings of all the investors
are put together to increase the buying power and hire a professional
manager to invest and monitor the money. Anybody with an investible
surplus of as little as a few thousand rupees can invest in Mutual Funds.
Each Mutual Fund scheme has a defined investment objective and
strategy.

54
55
TYPES OF MUTUAL FUND SCHEME
Mutual fund schemes may be classified on the basis of its structure and its
investment objective.
BY STRUCTURE
1 Open-end Funds
An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy and
sell units at Net Asset Value ("NAV") related prices. The key feature of
open-end schemes is liquidity.
2. Closed-end Funds
A closed-end fund has a stipulated maturity period which generally ranging
from 3 to 15 years. The fund is open for subscription only during a specified
period. Investors can invest in the scheme at the time of the initial public
issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to
the Mutual Fund through periodic repurchase at NAV related prices. SEBI
Regulations stipulate that at least one of the two exit routes is provided to
the investor.
3. Interval Funds
Interval funds combine the features of open-ended and close-ended schemes.
They are open for sale or redemption during pre-determined intervals at
NAV related prices.

BY INVESTMENT OBJECTIVE
1. Growth Funds

56
The aim of growth funds is to provide capital appreciation over the medium
to long term. Such schemes normally invest a majority of their corpus in
equities. It has been proved that returns from stocks, have outperformed
most other kind of investments held over the long term. Growth schemes are
ideal for investors having a long-term outlook seeking growth over a period
of time.
2. Income Funds
The aim of income funds is to provide regular and steady income to
investors. Such schemes generally invest in fixed income securities such as
bonds, corporate debentures and Government securities. Income Funds are
ideal for capital stability and regular income.

3. Balanced Funds
The aim of balanced funds is to provide both growth and regular income.
Such schemes periodically distribute a part of their earning and invest both
in equities and fixed income securities in the proportion indicated in their
offer documents. In a rising stock market, the NAV of these schemes may
not normally keep pace, or fall equally when the market falls. These are
ideal for investors looking for a combination of income and moderate
growth.

4. Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of


capital and moderate income. These schemes generally invest in safer short-
term instruments such as treasury bills, certificates of deposit, commercial
paper and inter-bank call money. Returns on these schemes may fluctuate
depending upon the interest rates prevailing in the market. These are ideal

57
for Corporate and individual investors as a means to park their surplus funds
for short periods.

OTHER SCHEMES

1. Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of
the Indian Income Tax laws as the Government offers tax incentives for
investment in specified avenues. Investments made in Equity Linked
Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s
88 of the Income Tax Act, 1961. The Act also provides opportunities to
investors to save capital gains u/s 54EA and 54EB by investing in Mutual
Funds.

2. Special Schemes

• Index Schemes

Index Funds attempt to replicate the performance of a particular


index such as the BSE Sensex or the NSE 50

• Sectoral Schemes

Sectoral Funds are those that invest exclusively in a specified


sector. This could be an industry or a group of industries or
various segments such as 'A' Group shares or initial public
offerings.

58
HOW TO INVEST IN MUTUAL FUND

Step one - Identify your Investment needs


Your financial goals will vary, based on your age, lifestyle, financial
independence, family commitments, and level of income and expenses
among many other factors. Therefore, the first step is to assess your needs.
You can begin by defining your investment objectives and needs, which
could be regular income, buying a home or finance a wedding or educate
your children or a combination of all these needs, the quantum of risk you
are willing to take and your cash flow requirements.

Step Two - Choose the right Mutual Fund

The important thing is to choose the right mutual fund scheme, which suits
your requirements. The offer document of the scheme tells you its objectives
and provides supplementary details like the track record of other schemes
managed by the same Fund Manager. Some factors to evaluate before
choosing a particular Mutual Fund are the track record of the performance of
the fund over the last few years in relation to the appropriate yardstick and
similar funds in the same category. Other factors could be the portfolio
allocation, the dividend yield and the degree of transparency as reflected in
the frequency and quality of their communications.

Step Three - Select the ideal mix of Schemes

Investing in just one Mutual Fund scheme may not meet all your investment
needs. You may consider investing in a combination of schemes to achieve
your specific goals.

59
Step four - Invest regularly

The best approach is to invest a fixed amount at specific intervals, say every
month. By investing a fixed sum each month, you buy fewer units when the
price is higher and more units when the price is low, thus bringing down
your average cost per unit. This is called rupee cost averaging and do
investors all over the world follow a disciplined investment strategy. You
can also avail the systematic investment plan facility offered by many open-
end funds.

Step Five- Start early

It is desirable to start investing early and stick to a regular investment plan.


If you start now, you will make more than if you wait and invest later. The
power of compounding lets you earn income on income and your money
multiplies at a compounded rate of return.

Advantages of Mutual Funds

• Diversification: The best mutual funds design their portfolios so


individual investments will react differently to the same economic
conditions. For example, economic conditions like a rise in interest
rates may cause certain securities in a diversified portfolio to decrease
in value. Other securities in the portfolio will respond to the same
economic conditions by increasing in value. When a portfolio is

60
balanced in this way, the value of the overall portfolio should
gradually increase over time, even if some securities lose value.
• Professional Management: Most mutual funds pay topflight
professionals to manage their investments. These managers decide
what securities the fund will buy and sell.

• Regulatory oversight: Mutual funds are subject to many government


regulations that protect investors from fraud.

• Liquidity: It's easy to get your money out of a mutual fund. Write a
check, make a call, and you've got the cash.

• Convenience: You can usually buy mutual fund shares by mail,


phone, or over the Internet.

• Low cost: Mutual fund expenses are often no more than 1.5 percent of
your investment. Expenses for Index Funds are less than that, because
index funds are not actively managed. Instead, they automatically buy
stock in companies that are listed on a specific index

• Transparency

• Flexibility

• Choice of schemes

• Tax benefits

61
Drawbacks of Mutual Funds

• No Guarantees: No investment is risk free. If the entire stock market


declines in value, the value of mutual fund shares will go down as
well, no matter how balanced the portfolio. Investors encounter fewer
risks when they invest in mutual funds than when they buy and sell
stocks on their own. However, anyone who invests through a mutual
fund runs the risk of losing money.

• Fees and commissions: All funds charge administrative fees to cover


their day-to-day expenses. Some funds also charge sales commissions
or "loads" to compensate brokers, financial consultants, or financial
planners. Even if you don't use a broker or other financial adviser, you
will pay a sales commission if you buy shares in a Load Fund.

• Taxes: During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios. If
your fund makes a profit on its sales, you will pay taxes on the income
you receive, even if you reinvest the money you made.

• Management risk: When you invest in a mutual fund, you depend on


the fund's manager to make the right decisions regarding the fund's
portfolio. If the manager does not perform as well as you had hoped,
you might not make as much money on your investment as you
expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers.

62
SHARE MARKET

What is share?
Share or stock is a document issued by a company, which entitles its holder
to be one of the owners of the company. A share is issued by a company or
can be purchased from the stock market.
What is share market?
A market where dealing of securities is done is known as share market.
There are basically two types of share market in India:
1. Bombay Stock Exchange (BSE)
2. National Stock Exchange (NSE)

63
DIFFERENCE BETWEEN PRIMARY AND SECONDARY MARKETS

In the primary market securities are issued to the public and the proceeds go
to the issuing company. Secondary market is a term used for stock
exchanges, where stocks are bought and sold after they are issued to the
public.

PRIMARY MARKET

Individuals
apply to get
shares of the
company
Company
IPO

Companies share ownership by issuing shares

Company Owners
Companies allocate shares to individuals and those who get
the shares become part owners of the company.

64
SECONDARY MARKET

Stock Broker
Company
Exchange Individual
Investors

Companies get themselves listed on popular stock exchanges like BSE and
NSE

65
DYNAMICS OF THE SHARE MARKET

Buyer Broker Seller


Stock Broker
He pays the His broker Exchange
money to pays it to the Seller’s broker
his broker exchange The exchange finally pays the
pays it to the money to the
seller’s broker seller

Similar process happens for the transfer of shares from the seller’s end.

66
MULTI CHANNEL ACCESS TO THE STOCK MARKET

Relationship Manager
Live chat

Call centre
SMS

Website Email
CUSTOMER SUPPORT

Multi Channel
Investment Option

Share Shops Dial n Trade

Online Trading

67
TERMINOLOGY USED IN SHARE MARKET

1. Stock Broker / Sub – Broker: - People like you and me cannot just go to a
stock exchange and buy and sell shares. Only the members of the stock
exchange can. These members are called stockbrokers and they buy and
sell shares on our behalf. So, if you want to start investing in shares, you
can do it only through a broker. Every stockbroker has to be registered
with the Securities and Exchange Board of India, which is the stock
market regulator. You can either choose a broker (who is directly
registered with SEBI) or a sub-broker (people licensed by brokers to
work under them).
2. Demat account: - Gone are the days when shares were held as physical
certificates. Today, they are held in an electronic form in demat accounts.
Demat refers to a dematerialized account. Let's say your portfolio of
shares looks like this: 40 shares of Infosys, 25 of Wipro, 45 of HLL and
100 of ACC. They will show in your demat account. You don't have to
possess any physical certificates showing you own these shares. They are
all held electronically in your account. Periodically, you will get a demat
statement telling you what shares you have in your demat account.

HOW TO GET A DEMAT ACCOUNT

To get a demat account, you will have to approach a Depository Participant. A


depository is a place where an investor's stocks are held in electronic form.
There are only two depositories in India -- the National Securities Depository
Ltd and the Central Depository Services Ltd.

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The depository has agents who are called Depository Participants. In India,
there are over a hundred DPs. Think of it like a bank. The head office, where all
the technology rests and the details of all the accounts are held, is like the
depository. The DPs are like the branches of banks that cater to individuals.
A broker, however, is not similar to a DP. A broker is a member of the stock
exchange and he buys and sells shares for his clients and for himself. A DP, on
the other hand, gives you an account where you can hold those shares.

To get a list of the registered DPs, visit the NSDL and CDSL Web sites.

3. Get a PAN: - The taxman demands that you get yourself a Permanent
Account Number. This is a unique 10-digit alphanumeric number
(AABPS1205E, for example) that identifies and tracks an individual in the
taxman's database. Almost every money transaction demands the use of a PAN.

4. Trading / Square off Transaction:-

Whenever a trader / investor buys or sells a security and on the same day before
the market closes, he sells or buys that particular security (in the same quantity),
the transaction is called as square off transaction or a trading transaction. Shares
lying in the T, TS and T are not square off the same day.

5. Delivery Transaction:-

Delivery transactions are those transactions which are not squared off at the day
end, and the investor/trader is ready to take / give the delivery of the security.

Charges such as brokerage, service tax on brokerage, STT, stamping charges


etc. are very high on the delivery transactions.

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6. Settlement Period :-

Currently the settlement period is T+2. Settlement period i.e. T+2 means one
has to give the delivery of the shares sold within 2 days of the date of the
transaction. In case of purchase transaction, one will get the delivery within 2
days of the date of transaction.

7. Shares Category:-

The stock exchange has divided the shares into the categories according to the
performance of the company.

The different categories are A, B1, B2, S (BSE Indonext), T, TS, Z

Auction:-

In case of failure of delivery of shares for sale transaction within the stipulated
time period, the BSE auction those shares as per the rules and regulations.

8. Close Out:- In case of failure of delivery of shares for purchase


transaction within the stipulated time period, the person buying the
shares gets the benefit in the form of Close Out as per the BSE’s rules
and regulation

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ROLE OF STOCK EXCHANGE

1. Raising capital for business.


2. Mobilizing saving for investment.
3. Facilitate Company growth.
4. Redistribution of wealth.
5. Corporate governance.
6. Create investment opportunities for small investors.
7. Raising capital for business.
8. Mobilizing saving for investment.
9. Facilitate Company growth.
10. Redistribution of wealth.
11. Corporate governance.
12. Create investment opportunities for small investors.
13. Government raises capital for development project.

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RESULTS AND FINDINGS

The feedback of 300 customers has been taken and the findings along with
its analysis are as follows: -

• I asked from the customers about the securities in which they invest there
savings.

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59 EQUITY
60

50
Percentage

MUTUAL FUND
40

30 25
FIXED DEPOSITS
20
9 7
10 INSURANCE
0

Sector

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Which sector is more secure.

5%

40%

55%

Sharemarket Mutual funds Both

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Which sector gives more return.

23%

77%

Sharemarket Mutual funds

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• Investment decisions of the customers are influenced on the basis of
following grounds.

40 36
Oneself
35
30
Brokers
24
Percentage

25
20
20 Eco. Policies
15
8 Market Ramous
10
5 Friends/Relatives
0

Investment Decisions

75
• Are you satisfied with your current investment?

42%

58%

Yes No

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• What are the factors which you considered before investing in
particular company?

40 36 Financial
35 Positions
30 Current market
24 Positions
Percentage

25
20 Goodwill
20
15 12 Future Prospects
10 8

5 Any other
0
factors

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CONCLUSION

The strategy adopted by me in completion of this project help me a


lot till now in making comparison between share market and mutual
funds. From the analysis we can say that if there is more risk there is
more return and we can say that share market is totally dependent on the
risk taken by the investors in investing in shares. And in mutual funds
there is less risk as the money of investors invested in different sectors so
it can divide the risk in different portfolio adopted by mutual funds
companies.
At last I can say that money invested in this rise and fall market it
is better to invest in mutual funds for those investors who are risk adverse
and for those who are risk taker it is better for them to invest in share
market.
We can also say that in share market customers is decision maker
while in mutual funds investors is totally dependent on assets
management company, investors do not have active control on money
invested by him/her.
In OJT the strategy adopted by me in achieving my target helped
me a lot. This strategy helped me in knowing the customer reaction
towards share market, customer’s attitude towards share broking firms
and in this I helped how to interact with the customers which is beneficial
for me in future.

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ANNEXURE

Q1. Where do you invest your savings?

i. Mutual funds
ii. Govt. of India Securities
iii. Share market
iv. Fixed Deposits
v. Any other.
Q2. Which sector is more secure?
i. Mutual Funds
ii. Share market
iii. Other
Q3. Which sectors give more return?
i. Share market
ii. Mutual Funds
Q4. Are you satisfied with your current investment?
i. Yes
ii. No
Q5. Your investment decisions are influenced by
i. Oneself
ii. Broker
iii. Eco.Policies
iv. Market Research
v. Friends/Relatives
vi. An other
Q6. Are you satisfied with company services?
i. Yes ii. No

Q7. What are the factors which you considered before investing in a
particular company?
i. Financial Position
ii. Current Market Position
iii. Goodwill
iv. Future Prospects
v. Any others.

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PERSONAL DETAILS:

Name Mr./Mrs./Miss__________________________

Address____________________________________

___________________________________________

Phone No. __________________________________

Email ______________________________________

Occupation

a) Government Employee b) Private Employee


c) Self Employed d) Student E) Housewife

Your monthly household income


a) Less than 15000 b) 15001-25000 c)25001 and above

Please give some references of people who you know are


trading/investing in stocks:

1. _________________________________

2. _________________________________

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REFRENCES

WEBSITE USED:

1) http:/icf.som.yale.edu/confidence.index

2) www.rbi.org.in

3) www.sebi.org.in

4) www.google.com

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