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A Summer Internship Project Report On

INVESTORS PREFERENCE FOR OFFLINE AND ONLINE TRADING


at
Anagram

In Partial Fulfillment of the requirements for the fulltime two years MBA program under Gujarat Technological University Prepared By: To: Rinav Shah (09089) Shukla Harshit Shah (09083) Batch: On: Year 2009-2011 2010 Submitted Dr.Sneha Submitted July 22,

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N.R.INSTITUTE OF BUSINESS MANAGEMENT(GLS-MBA), AHMEDABAD.


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DECLARATION
We, Mr.Rinav Shah & Mr. Harshit Shah, students of N.R. INSTITUTE OF BUISENESS MANAGEMENT, AHMEDABAD, hereby declare that this project report is a result of culmination of our sincere efforts. We declare that this submitted work is done by us and to the best of our knowledge; no such work has been submitted by any other person for the award of degree or diploma. We also declare that all the information collected from various secondary and primary sources have been duly acknowledged in this project report.

(Rinav Shah) (Harshit Shah)

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PREFACE
Todays modern world is progressing by leaps and bounds. In this fast changing world, management of business is very important phase. The course of MBA gives great knowledge to the students. Summer Internship Project is also a part of the MBA course. That enables the student to understand how they can apply their theoretical knowledge in practical world. It helps us to develop our leadership skills, communication skills, and analytical skills and so on. it presents a unified picture of what management is and how it is applied to various forms of human endeavor. We got the opportunity to make Summer Internship Project on online share trading in secondary market. This project report gives details about online share trading in India and its scope particularly in Ahmadabad It also describe the primary analysis about customer satisfaction towards online share trading. An overall view of online share trading presented in the report gives better idea about different options available to customers.

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ACKNOWLEDGEMENT
Every successful Endeavour has its share of problems and hurdles, but at the same time there are people who help to overcome these difficulties and thus we want to express our heartfelt gratitude towards the people who have been of great help to us in achieving the purpose. Hence, our project bears the imprints of many people. We wish to express our deep sense of gratitude towards Ms.Namrata Agarwal and Mr. Hardeep Duggal at Anagram Capital Ltd. for their immense help and valuable guidance in conducting this summer industrial project from its conception to its completion. We are obliged to N.R.Institute of Business Management. The institute has given us an opportunity to get practical knowledge in the field of management and also for helping us to undergo this inspiring project. The learning during this project has been a great experience. Most importantly we would like to thank Dr. Sneha Shukla for supporting in the preparation of project and providing the guidance during the summer training. Finally, I would like to thank all those who directly and indirectly contributed to this project. This project was an excellent opportunity for us to relate our classroom course to the real business. Last, but not the least we would like to thank all the employees of Anagram Capital Ltd, Who had directly or indirectly helped us in preparing this project report and gave their valuable time to help us.

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EXECUTIVE SUMMARY
Being Management students, we need to understand how industry analysis is done. Therefore, we are required to identify the industry of our interest to conduct a thorough analysis of the selected Industry. This helps us as the students to develop a sense of awareness around us to keep the details of the industry. Such an analysis helps to understand the industry and is highly useful for career development This project report is the testimonial of the comparative analysis between online and offline trading in equity markets. It gives brief about stock, stock market, history of stock market and current scenario of Indian stock market. The project report defines primary and secondary markets, the processes of materialization and dematerialization. The report explains depositary system and explains the roles of depository exchange and their participants. There is a questionnaire that justifies that even in the contemporary IT favorite times offline trading in Indian stock markets is more popular than online trading along with its reasons.

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TABLE OF CONTENT
CH . NO RESEARCH METHODOLOGY 1 INTRODUCTION TO THE CAPITAL MARKET
1.1 Capital Market 1.2 Capital market Segment Primary And Secondary 1.3 The Stock Exchanges and its Functions 1.3.1 The BSE and Sensex 1.3.2 The NSE 1.4 Depository 1.4.1 CDSL 1.4.2 NSDL 1.5 Dematerialization and Rematerialization

TOPIC

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CONCEPT OF SHARE TRADING


2.1 Introduction 2.2 Trading and settlement 2.3 Trading System 2.3.1 Off line Trading System 2.3.2 On line trading System 2.3.3 Off Line Trading V/S On Line Trading

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ONLINE TRADING
3.1 History 3.1.1 History of online share trading In Global Scenario

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3.1.2 History of e trading in Indian context 3.2 Process Of Online Trading 3.3 Clearing Process 3.4 Settlement Cycle 3.5 Auction Process

INDUSTRY ANALYSIS
4.1 PESTEL Analysis of Indian Capital Market 4.2 SWOT Analysis of Stock Market

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INTRODUCTION TO THE COMPANY


5.1 About ANAGRAM 5.2 Products And Services

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6 7 8

ANALYSIS OF SURVEY FINDINGS AND RECOMMANDATIONS CONCLUSIONS GLOSSARY BIBLIOGRAPHY Annexure : Questionnaire

75 90 94 97 99 100

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List of tables
SERIAL NO. 1. 2. 3. 4. 5. TABLE NO. 1 2 3 4 5 DETAILS Sampling Design Facts and Figures Of NSDL Settlement Cycle Schedule Anagram Group of Companies Regional Offices PAGE NO. 2 19 24 57 57

LIST OF FIGURES :
SERIAL NO. 1. 2. 3. 4. 5. 6. FIGURE NO. 1 2 3. 4. 5. 6. DETAILS Primary Market Trading & Settlement Cycle Online Fund Transfer Anagram Diet Moneyporee Express Moneyporee Express in 4 screen PAGE NO. 6 42 62 63 65 68

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RESEARCH METHODOLOGY AND DESIGN


8.1 RESEARCH METHODOLOGY
RESEARCH OBJECTIVE: The purpose of research is to discover answers to questions through the application of scientific procedures. To identify the broking services used by the respondents and their preferences towards it. To study overall scenario of e-Broking.. To identify the factors influencing preference for online trading. To identify the factors influencing offline trading. To measure the satisfaction level in online and offline trading.

RESEARCH DESIGN: Out of various research methods, the research method which was most suitable to my research, was Descriptive Research.
DATA COLLECTION:

The task of data collection begins after a research problem has been defined and research design/plan chalked out. While designing about the method of data collection to be used for the study, the researcher should keep in mind two types of data. There are 2 sources of data i.e. Primary Data: The normal procedure is to interview some people individually or in a group to get a sense of how people feel about the topic. So far as this research is concerned, primary data is the main source of information. The data collected is through questionnaire & information provided by the respondent.

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Secondary Data:

So far as this research is concerned Internet, Company brochures and pamphlets have been referred to. Data that could be availed from company regarding the online and offline customer base does form part of secondary data. SAMPLING PROCESS: It is true that its very difficult to do the research with the whole universe. As we know that it is not feasible to go for population survey because of the numerous customers and their scattered location. So for this purpose sample size has to be determined well in advance and selection of sample also must be scientific so that it represents the whole universe. So far as this research is concerned, due to time constraint the sample size taken is of 200 respondents of Ahmedabad city. SAMPLING DESIGN:
Mode of data collection:

Personal visit & filling up of the questionnaire, with little bit of observation. Table 1 Sample Universe Type of Sampling Sample size Research Instrument Ahmedabad city Non Probability Convenience based Sampling 200 respondents A structured questionnaire Taking in to consideration that the research instrument selected by me was the questionnaire because it gives more flexibility in terms of collection of the data and one has a chance to meet the responder personally and have an idea of getting an important unknown data that can be collected through their behavior.

formatted

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LITERATURE REVIEW: A study conducted on Analysing the Potential of E-Broking and Preferences of the Investors in Choosing a Bro for choosing the Brokerage Firm by Dr.Prageetha Raju (faculty member of ICFAI Hyderabad) and published in Indian Journal of Finance June 2009.

LIMITATIONS Despite of the level best training, there was still some limitation which, according to the researcher remains there to draw fruitful conclusion. There were some practical problems which the researcher came across during the research and could not be properly dealt with.

This Research is limited to Ahmedabad city only. The results obtained from this project are based on survey. It may not possible to arrive at the exact value of the findings. The entire online share trading Investors may not be covered.

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CHAPTER 1
INTRODUCTION TO THE CAPITALMARKET

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[1] INTRODUCTION TO THE CAPITALMARKET


1.1CAPITAL MARKET :The capital market is the market for securities, where companies and the government can raise long term funds. The capital market includes the stock market and the bond market. Financial regulators ensure that investors are protected against fraud. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded. Since projects require long term finance, but on the other hand, the investor may not like to relinquish control over their savings for a long time. A liquid stock market ensures a quick exit without incurring heavy losses or costs. Thus development of efficient market system is necessary for creating conductive climate for investment and economic growth. The primary function of the system is to provide a link between savings and investment for the creation of new wealth and to permit portfolio adjustment in the composition of the existing wealth. The progress of savings, finance and investment involves financial institutions, markets instruments, and services. Above all, supervision control and regulation are equally significant. Thus financial management is in integer part of the financial system. Capital market thus plays a vital role in channelizing the savings of individuals for Investment in the economic development of the country. As a result the investors are not constrained by their individual abilities, but by the abilities of the companies, which in turn enhance the savings and investments in the country, liquidity of capital market is an important factor affecting growth.

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1.2 CAPITAL MARKET SEGMENT PRIMARY AND SECONDARY


Broadly, the Capital Market comprises of two segments the new issue market which is commonly known as PRIMARY MARKET and the stock market where the issues shares are traded is known as SECONDARY MARKET.

PRIMARY MARKET Primary market is the market for new securities issues. In the primary market the security is purchased directly from the issuer. Government and Corporate can create and issue fresh Securities in exchange for funds. In Primary market the investors have the first opportunity to buy a newly issued security. After the first purchases, subsequent trading is said to occur in the secondary market. Chart showing the transaction in the primary market :

Figure 1

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The securities Act 1933 governs the issuance of securities. This act requires that a registration statement must be filled with the SEC (security exchange commission) by the issuer of a security. The registration statement includes the information regarding the nature of business, key features of security, the nature of risk associated with the security, and background of management. Financial statement must be included in the registration statement and they must be certified by an independent public accountant. INITIAL PUBLIC OFFERING - IPO Corporation's first offering of stock to the public. An initial public offering (IPO) is the process through which a privately held company issues shares of stock to the public for the first time. Also known as "going public," an IPO transforms a small business from a privately owned and operated entity into one that is owned by public stockholders. An IPO is a significant stage in the growth of many small businesses, as it provides them with access to the public capital market and also increases their credibility and exposure. The primary advantage a small business stands to gain through an initial public stock offering is access to capital. Becoming a public entity involves significant changes for a small business, though, including a loss of flexibility and control for management. In many cases, however, an IPO may be the only means left of financing growth and expansion. The decision to go public is sometimes influenced by venture capitalists or founders who wish to cash in on their early investment. Staging an IPO is also a very time-consuming and expensive process. A small business interested in going public must apply to the Securities and Exchange Commission (SEC) for permission to sell stock to the public. The SEC registration process is quite complex and requires the company to disclose a variety of information to potential investors. The IPO process can take as little as six months or as long as two years, during which time management's attention is distracted away from day-to-day operations. Overall, going public is a complex decision that requires careful consideration and planning. Experts recommend that small business owners consider all the alternatives first

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(such as securing venture capital, forming a limited partnership or joint venture, or selling shares through private placement, self-underwriting, or a direct public offering), examine their current and future capital needs, and be aware of how an IPO will affect the availability of future financing. SECONDARY MARKET It is the market where investors can buy and sell those shares at current prices as determined by other investors in the market. The key distinction between a primary market and secondary market is that in secondary market the issuer of the asset does not receive funds from the buyer rather the existing issues changes hands in the secondary market and funds flow from buyer of the asset to the seller. Function of secondary market 1. Secondary market provides to an issuer of securities, whether the issuer is a corporation or a governmental unit, regular information about the value of the security. The periodic trading of the asset reveals to the issuer the consensus price that, the asset commands in an open market. Thus, firm can discover what value investors attach to their stocks, and firm & non corporate issuers can observe the prices of their bonds and the implied interest rates investors expect & demand for them. Such information helps issuers assess how well they are using the funds acquired from earlier primary market activities, and it also indicates how receptive investors would be to new offering. 2. Investors in financial assets receive several benefits from a secondary market like dividends, bonus shares etc. Such a market obviously offers them liquidity for their assets as well as information about the assets fair or consensus values. 3. Secondary market brings together many interested parties and so can reduce the cost of searching for likely buyers and sellers of assets. 4. Moreover, by accommodating many traders. Secondary markets keep the cost of transactions low. By keeping the costs of both searching and transacting low, secondary market encourage investors to purchase financial assets.
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Many Secondary markets are continuous markets, which mean that prices are determined continuously throughout the trading day as buyers and sellers submit orders. For examples, Given the order flow at 10 A.M., the market clearing price of a stock on some organized stock exchange may be Rs.70; and at 11 a.m. of the same trading day, the market clearing price of the same stock, but with different order flows, may be Rs.70.75.Thus, in a continuous market, prices may vary with the patterns of orders reaching the market and not because of any change in the basic situation of supply and demand. A contrasting market structure is the call market, in which orders are batched or grouped together for simultaneous execution at the same price. That is, at certain times in the trading day (or possibly more then once in a day), a market maker holds an auction for a stock. The auction may be oral or written. 1.3 BRIEF ABOUT THE STOCK EXCHANGES Stock Exchange is a market like any other centralized market where both buyers and sellers come and conduct their business of purchase and sale of shares & securities. In other words, it is a market place for shares and securities where trading takes place in a controlled and protected environment. MEANING OF STOCK EXCHANGE A stock exchange, share market or bourse is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which
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gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets are driven by various factors which, as in all free markets, affect the price of stocks. There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a global market for securities.

FUNCTIONS OF STOCK EXCHANGE


Stock exchange is established into the main purpose of providing a market place for the members to deal in securities under well laid down regulations and to protect the interest of the investors. The main functions of stock exchange are; 1. It brings the companies and investors together so that the investors can put risk capital into companies and thus, companies can use the capital. 2. It provides an orderly regulated market for securities. 3. It provides continuous, ready and open market for selling and buying securities. 4. It promotes savings and investment in the economy by attracting funds from

the investors. 5. It facilitates takeover by means of acquiring majority of shares traded on the stock market. 6. It acts as a clearing house of business information. 7. It motivates the managers of well reputed companies, to retain their shares in A group, to improve performance.

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8. It

induces the managers to improve performance for converting non-specified

shares into specified shares in the exchange. 9. It enables the investors to evaluate the net worth of their holdings. 10.It also allows the companies to float their shares in the market.

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1.3.1THE BOMBAY STOCK EXCHANGE (BSE) The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. It is located at Dalal Street, Mumbai, India. Bombay Stock Exchange was established in 1875. There are around 3,500 Indian companies listed with the stock exchange, and has a significant trading volume. As of April 2010, the market capitalization of the BSE was about Rs. 62.4L Cr. The BSE SENSEX (SENSitive indEX), also called the BSE 30, is a widely used market index in India and Asia. As of 2005, it is among the 5 biggest stock exchanges in the world in terms of transactions volume. An informal group of 22 stockbrokers began trading under a banyan tree opposite the Town Hall of Bombay from the mid-1850s, each investing a (then) princely amount of Rupee 1. This banyan tree still stands in the Horniman Circle Park, Mumbai. In 1875, Brokers organized an association known as the Native share Brokers Association, and the countrys first stock exchange the Bombay Stock Exchange (BSE), set up in Mumbai with 318 members. The membership fee gradually increased from Re. 1 in 1887 to Rs. 1000 in 1896 and Rs. 48,000 in 1920. In 1986, The BSE came out with 30-share Sensitivity Index (a.k.a. the Sensex) that subsequently became the barometer of the Indian stock market which is updated every two minutes. In 1995, BSE has launched an electronic (e-Trading) system named BOLT, the BSE Online Trading system. In 2005, the status of the exchange changed from an Association of Persons (AOP) to a full-fledged corporation under the BSE (Corporatization and Demutualization) Scheme, 2005 (and its name was changed to The Bombay Stock Exchange Limited). HOW BSE WORKS?

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The scripts traded on BSE have been classified into the following; A - Large capitalization, profitable, reliable, high-liquid companies B1 - Mid-capitalization, reliable, high-liquid companies B2 - Mid- capitalization, moderate liquid companies T - Trade to trade companies (compulsory delivery of trade within a day), low liquid companies S - Not reliable, low liquid companies Z - Blacklist companies Jobbers play an important role on the BSE. A jobber or a broker who trades on his own account and hence offers a two-way quote or a bid-ask quote. The bid price reflects the price at which the jobber is willing to buy and the ask price represents the price at which the jobber is willing to sell. Investors have to transact via jobber/ broker. The jobber / broker feed his buy/sell quotes in his terminal, which is linked to the main server at the BSE. Since both jobbers and brokers feed their orders, the NSE has adopted a quote-driven system and an order driven system.

BSE SENSEX The BSE SENSEX (also known as the BSE 30) is a value-weighted index composed of 30 scripts. The base year of SENSEX is 1978-79 and the base value is 100. SENSEX is not only scientifically designed but also globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The set of companies which make up the index has been changed only a few times in the last 20 years. These companies account for around one-fifth of the market capitalization of the BSE. The index is

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widely reported in both domestic and international market through print as well as electronic media.

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The Index was initially calculated based on the Full Market Capitalization methodology but was shifted to the Free float methodology with effect from September 1, 2003. The Free Float Market Capitalization methodology of index construction is regarded as an industry best practice globally. Due to its wide acceptance amongst the Indian investors, SENSEX is regarded to be the pulse of the Indian stock market. 1.3.2NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE) National Stock Exchange (NSE), established in the mid 1990s as a demutualised electronic exchange by leading Indian financial institutions, offers trading, clearing and settlement services in a range of products covering equity, debt and equity derivatives. It is India's largest exchange and ranks third globally by number of trades in the equities market. NSE provides a modern, fully automated screen-based trading system, named NEAT (National Exchange Automated Trading system) with nearly 40,000 trading terminals giving it extensive reach. Its flagship index, the NIFTY 50, is used extensively by investors in India and around the world to take exposure to the Indian equities market. In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The National Stock Exchange of India (NSE) is the largest and most advanced exchange with 1016 companies listed and 726 trading members. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities. The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the satellite communication system that connects traders from 345 Indian cities. The advanced technologies enable up to 6 million trades to be operated daily on the NSE trading platform. In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian financial market by gaining many awards such as 'Best IT Usage

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Award' by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).

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HOW NSE WORKS? The NSE has opted for an order-driven system. When an order is placed by a trading member, an order confirmation slip is generated. When a trade takes place, a trading confirmation slip is printed at the trading members workstation. It gives details like quantity, price, code number of counterparty, and so on. The identity of the trading member is not revealed to other when he places an order or when his pending orders are displayed. Hence, large orders can be placed on the NSE. On the eighth day of trading, each member gets a statement showing his net position, the amount which he has to transfer to the clearing bank, and the security he has to deliver to the clearing house. Members are required to deliver securities and cash by the thirteenth and fourteenth day respectively. The fifteenth day is the payout day. All trades on NSE are guaranteed by the National Securities Clearing Corporation (NSCC). This means that when A buys from B, NSCC becomes the counterparty to both the legs of the transaction. In effect, NSCC becomes the seller to a and the buyer from B. This eliminates counterparty risk.

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1.4 DEPOSITORY :A Depository is a Company where the shares of an individual are held in the electric form, at the request of the shareholder. This eliminates the physical form of holding. The National Securities Depository Limited (NSDL) was promoted by IDBI, UTI, SBI and NSE. The Central Securities Depository Limited (CDSL) is promoted by BSE . Explanation of Depository System:An individuals money may be held in the form of liquid cash at their home or may be deposited in a bank. The bank holds their funds in the electronic form and subsequently debits or credits the account. Depending on the individuals issuance of cheques or deposit of cheques. The advantages of safety and convenience of dealing with a Bank overweigh the reasons for holding liquid cash in their home. An individuals financial assets such as Equity Shares may be compared to the above example. They may hold physical share certificates in their home and be exposed to the various risks of lack of safety, mutilation, loss etc. Alternatively, person may deposit their shares in an organization called a Depository, which holds individuals shares in the electronic form. ADVANTAGES:The risk of loss, mutilation is common for physical certificates and completely removed in electronic shares. Handling of a large number of physical certificates is ended in the Depository mode. In the electronic segment, there are no bad delivers as in physical segment. There is no stamp duty payable in electronic shares compared to the duty of 0.50% in the physical segment while transferring ownership. In loans against shares, banks usually charge a lower interest rate and margin money than in the physical share certificates.

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Settlements in the Stock Exchanges have commenced in the electronic segment and have proven to be far more efficient and convenient compared to physical shares.

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The obligations of a Depository:The Depository is obligated to maintain the Client Holdings, enable demat and remat of eligible securities, disbursement of corporate benefits, effect settlement of securities traded on the exchanges as well as Off-market trades through book entry transfers, provide for Pledging/Hypothecation of eligible securities.

DEPOSITORY PARTICIPANT : Depository Participant (DP) is an organization that acts as an Agent of the Depository and interacts with the investor. A DP is responsible for maintaining investors securities account and operating it only under investors written instructions. The Depositories Acts mandates that investors can use Depository facilities only through DPs. The distribution channel and geographical spread of the DPs offices allows person to access the Depository at a low cost. DP ID No:It is an identification number given to a DP similar to a client ID.

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1.4.1OVERVIEW ABOUT CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED (CDSL)


CDSL is the second depository set up by the Bombay Stock Exchange (BSE) in India. It commenced its operations on March 22, 1999. It was set up BSE and other co sponsored with the net worth of Rs. 104 crores. In it, BSE has a 45 % stake while others have 55 % stake. In the same year it has Five Stock Exchanges established connectivity with it for offering trade in Demat securities and 765 companies signed up with it to get their securities admitted for dematerialization. It has 13 DPs in 91 cities across 168 locations covering 320 cities. Other co sponsored are as under. State Bank of India Bank of India Bank of Baroda HDFC Bank CDSL has also attained membership of the Asia Pacific Central Securities Depository Group (ACG). ACG has 22 members including depositories from Japan, Hong Kong, Singapore, Malaysia, Australia, and New Zealand. Membership of the organization is expected to help CDSL enhancing its knowledge base and contributing to the development of other member organizations in the best international practices, settlement risk management, cross-border linkage and technological development. This, in turn, would help CDSL to secure foreign institutional investors business through their custodian. Operations Performed by CDSL Carrying out actually share transactions To do PSU disinvestments To provide Centralized system at one e-space To secure Foreign Institutional Investors business Dematerialization of the Securities Pledge creation in against the securities Trading and settlement on day-to-day basis
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Work as a custodian of its clients

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1.4.2 NSDL
Although India had a vibrant capital market which is more than a century old, the paperbased settlement of trades caused substantial problems like bad delivery and delayed transfer of title till recently. The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first depository in India. This depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialised form in the Indian capital market. Using innovative and flexible technology systems, NSDL works to support the investors and brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settlement solutions that increase efficiency, minimise risk and reduce costs. At NSDL, we play a quiet but central role in developing products and services that will continue to nurture the growing needs of the financial services industry. In the depository system, securities are held in depository accounts, which is more or less similar to holding funds in bank accounts. Transfer of ownership of securities is done through simple account transfers. This method does away with all the risks and hassles normally associated with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower as compared to transacting in certificates. NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest development bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and National Stock Exchange of India Limited (NSE) - the largest stock exchange in India. Some of the prominent banks in the country have taken a stake in NSDL. Promoters Industrial Development Bank of India Limited (Now, IDBI Bank Limited) Unit Trust of India (Now, Adminstrator of the Specified Undertaking of the Unit Trust of India)

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National Stock Exchange of India Limited

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Table 2
NSDL Facts & Figures As on May 31, 2010 Number of certificates eliminated (Approx.) Number of companies in which more than 75% shares are dematted Average number of accounts opened per day since November 1996 Presence of demat account holders in the country 702 crore 2733 3646 80% of all pincodes in the country

1.5 DEMATERIALIZATION AND REMATERIALISATION :


Definition Of Dematerialisation:Dematerialization is a process in which person can convert physical share certificates into electronic shares. Shares should have been transferred in persons name / joint names before sending it for Dematerialization. Reason for dematerialization:The single biggest reason over buying shares in the physical form is that demat shares credited to investor account within 2 to 3 days after the end of the settlement. This is unlike the average 30 to 40 days taken in receiving back physical shares from the Agent and sometimes with objections. Possibility of loss or theft of the certificates is eliminated. This is in addition to the 0.50% stamp duty savings, which works out to Rs.50 for transfer of shares worth of Rs.10, 000 Brokers have no fear of bad delivery while selling demat shares. Due to this, they offer lower brokerage to investor. As bad deliveries are eliminated shares are not returned due to objections, resulting in saving of costs and follow up.

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Process of Dematerialization :In order to demat persons shares/certificates, person has to fill in a Dematerialization Request Form (DRF) in triplicate along with the relevant details and submit the same to their DP along with the certificates to be dematerialized. The combination of names in the shares must be same as that in the account. The persons account will be credited within 15 days when he/she submit shares for dematerialization. Defacing of Shares:When the certificates are surrendered for demat they are to be canceled at the face of the certificate by putting a stamp "Surrendered for Demat" so that the certificate cannot be traded. This process of affixing the "Surrendered for Demat" stamp on the shares is known as defacing of shares. Reasons for Rejections in Demat:Fake Certificate, Signature difference, Third Party Claim, Court cases

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REMATERIALIZATION: Rematerialization is a process in which person can convert personal electronic holding into physical share certificates. Characteristic of Rematerialization :In the Rematerialization process, for dispatching the new share certificates a request goes from the DP to the R&T Agent through the NSDL for the remat. The R&T Agent will process the request, print and then dispatch the new share certificates directly to person. The Depository is the registered holder in the Companys records. In a remat, transfer from the Depository to person will NOT be liable to a levy of Stamp Duty. This is as per the Depositories Act. However, the Depository will charge nominal charges for this process. Process of Rematerialization :For Remat of Securities, person have to submit a Remat Request Form (RRF) to the DP mentioning the relevant details for the rematerialization process to take place.

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CHAPTER 2
CONCEPT OF SHARE TRADING

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[2]CONCEPT OF SHARE TRADING


2.1 INTRODUCTION
The concept of share broking emerged after the establishment of the joint stock companies. The ownership of the companies was divided into small parts and that every part was called share. So, the term Share denominates some part in the ownership of the company. The shares are freely transferable subject to the some certain restrictions. When the need was felt to sell the shares by the owner of the shares, it was difficult to find out the buyers of the shares who want to buy the shares at the price the seller want to sell. At that time a need was felt to bring the buyers and sellers on a common platform. To solve this problem, a group of persons came into picture, which used to bring the buyers and sellers together for the trade of the shares. These persons are called the share Brokers who find the persons who wish to buy or sell their securities. The whole process of finding the buyers and sellers of the securities by the brokers is called the Share Broking. The origination of the Indian securities market may be traced back to 1975, when 22 enterprise brokers under a Banyan tree established the Bombay Stock Exchange (BSE). Over the last 130 years, the Indian securities market has evolved continuously to become one of the most dynamic, modern international standards both in terms of structure and in terms of operating efficiency.

2.2 TRADING AND SETTLEMENT


Indias stock exchanges are fully computerised order driven or order-cum-quote driven systems. The country has made rapid strides towards a dematerialised trading environment on the basis of a competing depositories model. Investors have the choice of holding their stocks in physical or dematerialised form, but trading in the exchanges is in mandatory dematerialised mode in most important stocks. As of October 2000, about 98per cent of the trading in the stock exchanges is in dematerialised mode.

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India has put in place a regulatory regime for internet trading of stocks. A large number of online brokers have started operations. More brokers are expected to follow when the exchanges put in place an ASP (Application Service Provider) model for online trading software. However, currently, the level of penetration of online trading is extremely small. The stock exchanges currently run two parallel settlement systems. Practically all the trading takes place in the account period settlement system in which all trades during a weekly account period are netted off and the net obligations are settled five business days after the end of the period. The other unpopular system is that of rolling settlements where trades of each day are settled on a T+5 basis. SEBI is currently working on mandatorily shifting all stocks in a phased manner to the rolling settlement system. Further improvements in the settlement system to T+3 or beyond would have to wait for improvements in the payment system. However, account period settlement does not give rise to significant systemic risks in India because of stringent end of day and intra-day margining systems. Put simply, the weekly settlement is regarded as akin to a one-week futures contract, and the systemic risk is taken care of by using futures style margining. The exchange imposes daily mark to market and initial margins on the brokers to eliminate settlement risk. Exchanges also have clearing houses to guarantee settlements on the exchange. As a result, there have been no settlement failures in the principal stock exchanges during the last five years.

TABLE 3
SETTLEMENT CYCLE SCHEDULE SR. NO. DAY TRADE T T+2 DESCRIPTION OF ACTIVITY

1 2

Trading Day PAY IN BY 10.30 am.

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3 4 5

T+2 T+3 T+5

PAY OUT BY 2 pm. Auction of shortage in deliveries Auction pay-in by 10.30 (1 am/ pay Out by 2 pm.)

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2.3 TRADING SYSTEM

Off line trading System On line trading System

2.3.1 OFF LINE TRADING SYSTEM As the internet has taken over the physical trade, the same is the situation in trading in shares. Even the internet has not spared trading in shares and still the conventional system of offline trading continues in todays world. Explanation of off-line trading system:In offline trading system, two parties i.e. an individual and a broker come into contact with each other and the transaction takes place. The investor goes to the broker for the purpose of buying or selling of securities and for that he has to make a payment to settle the transaction. Here both the parties would be facing some risk. Brokers would be facing the risk of default. In a typical situation, a customer would be allowed to trade on margin, either by way of transferring it to trade account with the broker or giving the broker authority to keep a hold on his bank or depository account till the time of settlement. If the margin goes below the specified limit, the website of the broker would give warning to the investor to replenish the same. Brokers can either ask for blanket permission/power of attorney from the customer to replenish the same or take risk on that, in which case they may also square off the contract. 3 WAYS OF SETTLEMENT ; 1. They would require full funding before the pay in day. 2. They may debit the customer's account with the margin money and keep hold on

balance amount. On pay-in day, the balance amount will be transferred to broker's trade.

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3. The broker would debit only the margin amount and would wail to the customer to pay on the pay-in day. As a matter of prudence, the broker would have checked the balance in the customer's account, but the balance may go down between trade day and the pay-in day. Here, brokers would have to decide the extent of risk if at all they are ready to take. In periods of volatility, especially when markets are failing, decision-making of the broker as to the extent of risk he is willing to take would be very important. Customers would face the risk of leakage of personal information. ADVANTAGES OF OFFLINE TRADING SYSTEM : Low Brokerage In case of offline trading, brokerage charged by the broker is quite low because of some personal relations, low cost of installation as compared to online trading. Less Margin Generally, company charges 25% margin while the brokers charge nearly 10%margin from the investors in case of trading in equity. Sometimes broker charges negligible amount and he allows trading up to his limit. This shifts the investors from trading online to the trading with the brokers. Foe example: Local Brokers like Motilal Oswal, Ratnakar, Pravin Ratilal etc. allow trading in shares with less margin and low brokerage. Flexibility in credit period Local Brokers allow their customers to trade in shares with longer credit periods which facilitate the payments for the investors. Whereas in Online trading a customer is required to make the payment in less than 2 days which is not the case in offline trading. The conventional system also allows making delay in settlement of payment if the relation with the broker is good. Customized Advice

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Normally, investors would like to take to the broker before taking an investment decision. Internet trading would lack this personal touch. As far as customization of data using data mining is concerned, that would not attract customers looking for something different. Some of the brokers are of the view that they would have to provide advisory services to the customers. But, with increased volumes they will have to balance their preferences and needs of the customers. DEMERITS OF OFFLINE TRADING SYSTEM: Problems in getting in touch with the Broker Problem of Attention from the Broker due to load Reliance on the Broker's information Customer has to believe what the broker says Broker might not give the best price Reconciliation of accounts and cash settlements Paperwork Geographical Restriction

1.3.2ONLINE TRADING :- A NEW DIMENSION OF TRADING


Online-trading is the mechanism of buying/selling securities via the Internet. Onlinetrading is considered as a logical extension of e-commerce.

EXPLANATION OF ON-LINE TRADING SYSTEM:To put it simply, e-commerce is buying and selling through electronic medium. There could be not be a better place than the stock market, where tremendous volumes are traded, to exploit the opportunities of e-commerce. But, there are certain inherent characteristics of this market, which make it more vulnerable to risks associated with e-commerce. The market
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requires knowledge, information, ability to analyze and quick decision-making. This requires utmost care while trading on the net. A single click can make or destroy investor's wealth. Online-trading is a service offered on the Internet for purchase and sale of shares. In the real world, person place orders on personal stockbroker verbally (personally or telephonically). In Online Trading, a customer can access a stockbroker's website through his internetenabled PC and place orders through the broker's internet-based order routing and trading engine. These orders are routed to the Stock Exchange without manual intervention and executed thereon. The order routing to the exchange will happen in a matter of seconds. The order execution once it reaches the exchange system is similar to that of an offline transaction.

BENEFITS OF ONLINE SHARE TRADING: Seamless Trading E-broking integrates Bank, Demat account and Brokerage account. Transfer of money and shares from and to Bank account and Demat account is done automatically. No Geographical Restriction Customers have access to site from anywhere in world. So even if customer is out of station, customer can take the advantage of market condition. No Time Restriction Customer can trade not only during market hours but also when market is closed. He is required to give limit as to at what price he wants to buy or sell the shares. When market will open, the shares will be purchased or sold automatically at that particular price or best favorable price. Online Brokers Make Investing Cheaper

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By charging drastically lowered commissions; online brokers offer cheaper access to financial markets, consequently encouraging more investing, as is evident by the increasing number of day-traders. The latter are individuals who have tried to make a career out of buying and selling stocks very quickly, often making and closing dozens of trades in a single day. The Online Investor Is Self-Reliant Because online trading greatly diminishes the role of brokers. Investors have more freedom when making investment decisions and come to rely on themselves when developing strategies. The online investor is responsible for researching, making decisions, entering an order and using a computer. All this makes online investors the masters of their domain and leaves them with no one to blame. Thus, online trading promotes selfempowerment.

Offers Greater Transparency Online trading gives greater transparency to the investors by providing them an audit

trail. This involves a complete integrated electronic chain starting from order placement, to clearing and settlement and finally ending with a credit to the depository account of the investor. Each of the above mentioned stages are subject to inspection, thus bringing in transparency into the system. Greater transparency helps in reducing the systematic risk for the investor. This is possible as the market related information affecting the stocks gets communicated to the investor on a regular basis. Due to this increased exposure, the investor can take necessary steps, which would reduce his overall market risk. Enables Hassle Free Trading Online trading integrates the bank, the brokerage firm and the demat accounts which leads to easy and paperless trading for the client. Quick Trading

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The investor will be able to execute the entire trading transaction, right from logging on to the broker's site, to the execution and settlement of his bank account, in a very short period of time. Provides A Level Playing Field Trading on the net, gives even the smallest retail investor access to information that earlier was available only to the big traders. This provides a level playing field for all investors in the securities market. Reduces The Settlement Risk This method of trading reduces the settlement risk for the investor, as in this case no short sale is possible i.e. the seller will not be able to sell the securities unless he has actual possession of them. In the case of a demat account (which is required for an online transaction), when a seller wants to sell the securities, his demat account is checked by the Depository Participant before executing the sale transaction. This reduces the settlement risk for the buyer, who is assured of the delivery of the securities.

DEMERITS IN ONLINE SHARE TRADING: Lack Of Speed

If customers in large number access the site at the same time, server gets overloaded, so it results into delay in process. Security Aspect

There may be chances of hacking of password if customer is not alert. This may cause a major loss to the investor. Lack Of Flexibility

If the customer is not alert about his position on last trading day and if he is not able to square off his position, he has to take delivery compulsory or if he doesn't have enough

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liquidity, the site will automatically square off his position. This action may or may not be in benefit of customer. Whereas in conventional broking, broker will inform the customer time to time or will take the decision himself in favor of the customer. Network Crash

There will be problems and delays due to a large influx of traffic and rapid online trading criteria as it happened on 17th May, 2004 which is referred to as Black Monday. Computer illiteracy

Literacy of Computers is mandatory for traders using this online trading service. So for those who are computer illiterate, using websites serves as a handicap for them.

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2.3.3 OFF- LINE TRADING VS ON LINE TRADING: The advent of technology has added a new dimension to broking system. Through Ebroking system, broking has become more transparent and faster. It has reduced the back office paper work. It settles the account within a couple of days rather than long period of time. It has also eliminated physical transfer of shares and money by invent of Demat account and on line banking. When anyone wants to enter into the market for trading purpose, there is common process through which individual has to pass either in conventional broking or E-broking which is basically divided in three parts. Decision -> Execution -> House keeping Now let us understand how E-broking makes itself different from conventional broking in this process Decision Decision about choosing particular scrip is made by investor himself based on his knowledge and his experience about market condition. Sometimes investors seek advice from broker and they both decide about investment. Thus in conventional broking and E-broking decision parts remain same. Execution In execution part of broking, E-broking is completely different from conventional system. This can be explained from graph below. CONVENTIONAL TRADING E-TRADING Call Log on

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Get Rates See the rates online Give order Punch in order Confirmation Confirmation Through phone through e-mail House Keeping After matching of order at a predetermined price, the question of payments and deliveries of securities /transfer of shares take place where also wide difference in terms of operation can be seen. CONVENTIONAL BROKING E-BROKING Payment through Payment through Physical Cheque Online Banking Transfer of shares Transfer of shares in paper form in paper less form House keeping of Demat Keeping of materialized shares dematerialized shares

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CHAPTER 3
ONLINE TRADING

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[3] ONLINE TRADING


3.1HISTORY
3.1.1 HISTORY OF ONLINE SHARE TRADING IN GLOBAL SCENARIO The history of e-trading began in 1983, when a doctor in Michigan placed the first online trade using E*TRADE technology. What began with a single click over 16 years ago has now taken the world by storm.. This led him to wonder why, as an individual investor, he had to pay a broker hundreds of dollars for stock transactions. Today his dream has become a reality. E-trading has become a way of investing in the developed world and is soon catching on in developing countries too. Since that time, online trading has increased dramatically - according to an unprecedented efficiency and control. 1.1.2 HISTORY OF E TRADING IN INDIAN CONTEXT On Jan 31st 2000, the Securities Exchange Board of India (SEBI) formally notified all the stock exchanges, giving them a green signal for Net/Online trading. The various players of the securities market, which includes NSE, BSE, other regional stock exchanges and the brokers, had been waiting long for the go-ahead sign. Trading via the net is expected to generate greater volumes than ever before and this has attracted a large number of players. One day after SEBI announced its regulations for net trading, Kerala based Geojit Securities took the lead and started online trading in Mumbai. The Kerala State Industrial Development Corporation (KSIDC) decided to join Geojit Securities in 1994. It has a 24% stake in the equity, the balance belonging to Geojit Securities itself. This is the only venture in India where a state owned development institution is participating in the equity of a stock broking company. The first net transaction was a trade for 100 shares of Reliance executed by DR Metha, Chairman, and SEBI for the Chairman of Geojit Securities. Today there are

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many other big brokerage firms like Motilal Oswal, Kotak Securities, SSKI and ICICI Direct running successfully.

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WHY ONLINE TRADING ENTERED LATE IN INDIA?


The Indian exchanges and brokering houses have been very slow in moving their transactions online and the major reason has been the lot government regulations. The initial delay was due to laying down the specifications for creating Closed User Groups (CUGs). This issue was resolved between the Department of Telecommunications (DoT) and the Finance Ministry around 1998 and after that soon came the online trading portals like Anagram, investsmart, ICICIDirect.com, motilaloswal.com, sharekhan.com etc. Connectivity related issue was perhaps the most important technological factor.RBI made regulation that it is mandatory for company to store at least 7 year financial and transactional data.

3.2 PROCESS OF ONLINE-TRADING:


Sitting in ones own home or office or even from personal car, as long as person can access the net he can trade on the market. There are three basic things needed for online-trading:

A bank account, A D-Mat account and A brokerage account.

The steps in online-trading replicate the real life situation and are fairly simple to follow. Once these three accounts are opened, the money and shares are transferred to investors bank and Demat account automatically, electronically and without any paper work. The first step is of course to open an account. One can open multiple accounts with himself or herself as the first name in the account. Then it is necessary to determine the type
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of account that person want and how person want to pay for the trades person make. Joint accounts are allowed but for that person will need to have certain information about those people. Accounts can be Individual, Joint, Sole Proprietorship, Corporate, or Partnership etc. The form filling requires simple personal details like full legal name, Citizenship status, Residency status, employer's name and address, personal passport\PAN number, Date of birth etc.' One can download the forms or request for them by post or even request for a representative of the firm to come over to help person with the form. Post-submitting, person are allotted a USERID and PASSWORD while giving details for registration. Then an Account reference Number is generated and displayed to person. These three things are unique to an individual and ensure security of transactions. The acceptance of the application is communicated by email. Once person has got personal USER ID and PASSWORD and persons account has been set up, he can access the website and login using the same. The second step is then to Fund Personal Account. In order to start trading online it is important that person deposit money in personal bank account before placing a buy order. In order to place a sell order person must have shares in personal DEMAT Account. Person can sell his shares anytime as long as shares are there in his DEMAT Account. In order to place a buy order person need to fund person account. Person can do this by depositing money in his bank account or else person can sell some shares existing in his Demat account and use the proceeds of sale to fund his purchase transaction. The amount of money required before placing a buy order would depend on the value of order and the type of e-invest account person have enrolled for - whether cash or margin. In a Margin account one can use a line of credit to buy marginable securities or for overdraft protection. Such an account is opened after taking into consideration Annual income, Net worth, description of persons investment objectives, as it involves lending a line of credit. In a cash account, the amount of securities bought has to be backed by the cash in the account.

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NSE has main computer which is connected through Very Small Aperture Terminal (VSAT) installed at its office.

Brokers have terminals installed at their premises which are connected through VSATs/leased lines/modems.

An investor informs a broker to place an order on his behalf. The broker enters the order through his PC, which runs under Windows NT and sends signal to the Satellite via VSAT/leased line/modem. The signal is directed to mainframe

The order confirmation message is immediately displayed on the PC of the broker. This order matches with the existing passive order(s), otherwise it waits for the active orders to enter the system.

On order matching, a message is broadcast to the respective member. All orders received on the system are sorted with the best priced order getting the first priority for matching i.e., the best buy orders match with the best sell order. Similar priced

Orders are sorted on time priority basis, i.e. the one that came in early gets priority over the later one.

Orders are matched automatically by the computer keeping the system transparent, objective and fair.

Where an order does not find a match, it remains in the system and is displayed to the whole market, till a fresh order comes in or the earlier order is cancelled or modified.

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3.3 CLEARING PROCESS:


Meaning:Clearing is the process of determination of obligations, after whish the obligations are discharged by the settlement. Explanation:Clearing is necessary for two reasons.
1) what members are due to deliver

2) what members are due to receive on the settlement date NSCCL has two categories of clearing members: 1) Trading clearing members 2) Custodians Trading members can trade on a proprietary basis or trade for their clients. All proprietary trades become the members obligation for settlement. Where trading members trade on behalf of their clients they could trade for normal clients or for clients who would be settling through their custodians. Trades which are for settlement by Custodians are indicated with a Custodian Participant (CP) code and the same is subject to confirmation by the respective Custodian. The custodian is required to confirm settlement of these trades on T+1 day by the cut-off time 1.00 p.m. Non-confirmation by custodian devolves the trade obligation on the member who had input the trade for the respective client. Settlement is a two way process which involves transfer of funds and securities on the settlement date.

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3.4 SETTLEMENT CYCLE:


After clearing, settlement of fund or securities is done. The important settlement types are as follows: 1. Normal segment 2. Trade for trade Surveillance 3. Retail Debt Market 4. Limited Physical market 5. Non cleared TT deals 6. Auction normal In 1st, 2nd, 3rd, and 6th types settlement done in dematerialized mode. In limited physical market settlement is done in physical form. Trades under settlement type Non cleared TT deals are settled either in physical or dematerialized mode. Dematerialized settlement:

NSCCL follows T+ 2 rolling system. Trade executed on T day, and on the second day NSCCL cumulate all the obligation i.e. T +1 and finally trade are settled on 3rd day i.e. T+ 2 day. On this day, funds and securities are transferred from one account to another.

In case of short deliveries, NSCCL conduct a auction on T+3 day and deliveries are made on T+4 day for the same.

All intervening holidays, bank holidays, Sundays and Saturdays are excluded to arrive at the settlement.

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FIGURE 2 SETTLEMENT PROCESS :-

(1)Trade details from Exchange to NSCCL (real-time and end of day trade file). (2) NSCCL notifies the consummated trade details to CMs/custodians who affirm back. Based on the affirmation, NSCCL applies multilateral netting and determines obligations. (3) Download of obligation and pay-in advice of funds/securities. (4) Instructions to clearing banks to make funds available by pay-in time. (5) Instructions to depositories to make securities available by pay-in-time. (6) Pay-in of securities (NSCCL advises depository to debit pool account of Custodians/CMs and credit its account and depository does it). (7) Pay-in of funds (NSCCL advises Clearing Banks to debit account of Custodians/CMs and credit its account and clearing bank does it).

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(8) Pay-out of securities (NSCCL advises depository to credit pool account of Custodians/CMs and debit its account and depository does it). (9) Pay-out of funds (NSCCL advises Clearing Banks to credit account of Custodians/CMs and debit its account and clearing bank does it). (10) Depository informs custodians/CMs through DPs. (11) Clearing Banks inform custodians/CMs.

LIMITED PHYSICAL MARKET (SMALL WINDOW):Not exceeding 500 shares. SEBI has provided the way for small investors to trade in physical form. Features: Trading in the name of individual or HUF is only constitute as a good delivery. In the street name, it is considered as bad delivery. Any trade which bears the last date on or after the introduction of security is known as bad delivery in LP market. Maximum 500 shares are traded in LP market. Shortages are closed out at actual traded price + 20% Bad deliveries are closed out at actual traded price+ 10% Non rectification/replacement for objection cases is closed out at official closing price+20% Buyer must send the securities for transfer within the 3 months from the date of pay out. These transactions are traded in a same manner as in normal market if transfer is done within the 3 months from the date of pay out.

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3.5AUCTION PROCESS: Buying-in auction is conducted for the security shortages on the day after the pay-out day through NSE/BSE trading system i.e. on T+3 day. An Auction Tender Notice is issued to the Members informing them about the names of the securities short or not delivered, quantity slated for auction and the date and time of the auction session. On NSE the auction is carried out on T+3 rd day and auction settlement happens on T+5th day. Auction is carried out in the following two cases : Short deliveries Bad deliveries

Short Deliveries: If a member is not able to deliver securities on the day of pay-in then it is considered as Short delivery. It happens when a speculator who sells shares that he doesnt own (short selling) fails to square up his transaction within a trading cycle. Bad Delivery: Bad delivery exists only in the case of physical share transfers. It doesnt exist in de-mat form of securities. If a physical transfer deed is torn, mutilated, overwritten, defaced, or if there are spelling mistakes in the name of the company or the transfer then it is considered as bad delivery. Clearing agency identifies members who are fully/partially short of securities delivery on securities pay-in day and debits their account by an amount calculated at the valuation price. (The valuation price is the closing price of the security on the preceding trading day of securities pay-in day.)

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Auction is a separate trading mechanism which is different from the normal trading. Then the exchanges conduct auction to get the securities and delivers them to the buyers who have not received the securities. There is separate trading session wherein brokers are allowed to quote offer prices. Unlike normal trading session, where order matching is done continuously, the quotes are captured and placed in ascending order of price and matched at the end of the session. If the auction price is more than the valuation price the member who defaulted will have to pay differing amount.

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CHAPTER 4
INDUSTRY ANALYSIS

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[4] INDUSTRY ANALYSIS


PESTEL ANALYSIS OF INDIAN CAPITAL MARKET
POLITICAL: The capital market of India is very vulnerable. India has been politically instable in the past but it is a little politically stable now-a-days. The political instability of the country has a very strong impact on the capital market. The share market of India changes as the political changes took place. The BSE Index, SENSEX goes up and down with any kind of small and big political news, like, if there is news that a particular political party has withdrawn its support from the ruling party, and then the capital market will go down with a bang. Also when it was declared that Congress Party has got majority in the parliament election of 2009, there was a upper circuit in Sensex. The capital market of India is too weak and is based on speculations. The political stability of the country is very important for the stability and growth of capital market in India. The political imbalance or balance of the country is the major factor in deciding the capital market of India. The political factors include: employment laws tax policy trade restrictions and tariffs political stability

ECONOMICAL: The economical measures taken by the government of India has a very strong relationship with the capital market. Whenever the annual budget is announced the capital market goes up and down with the economical policies of the government .If the policies are supportive to the companies then the capital market takes it positively and if there is any other policy that is not supportive and it is not welcomed then the capital market goes down. Like, in the case of allocation of 3-G spectrum, those companies that got the license for 3-G, they witnessed

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sharp growth in their share values so the economic policies play a major part in the growth and decline of the capital market and again if there is relaxation on any kind of taxes on items of automobile industry then the share of automobile sector goes up and virtually strengthen the capital market. The economical factors include: inflation rate economic growth exchange rates interest rates India is a country of unity in diversity .India is socially rich but the capital market is not very attached with the social factors .Yes, there is some relation between the social factors with the capital market. If there is any big social factor then to some extent it affects the capital market but small social factors dont impact at all. Like, there was opposition of reliance fresh in many cities and many stores were closed. The share prices of the reliance fresh went down but the impact was on and individual firm there was not much impact on the capital market on a whole the social factors have not much of impact on the capital market in India. The social factors include: emphasis on safety career attitudes population growth rate age distribution health consciousness

SOCIAL:

TECHNOLOGICAL: The technological factors have not that much effect on the capital market. India is technological backward country. Same as social factors, technological factor can have an effect on an individual form but it cannot have a big impact on a whole of capital market. The

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Bajaj got a patent on its dts-i technology, and launched it in its new bike but it does not effect on capital market. The technological change in India is always on a lower basis and it doesnt effect on country as a whole. The technological factors include: R&D activity technology incentives rate of technological change automation

ENVIORNMENTAL FACTORS: Initially the environmental factors dont play a vital role in the capital market. But now, the time has changed and the people are more eco-friendly. This is really bothering them that if any firm or industry is environment friendly or not. An increasing number of people, investors, and corporate executives are paying importance to these facts, the capital markets still see the environment as a liability. They believe that it is of no use for their strategy. The environmental performance is even under-valued by the markets. LEGAL FACTORS: Legal factors play an important role in the development and sustain the capital market. Legal issues relating to any industry or firm decides the fate of the capital market. If the govt. of India or the parliament introduces a new law that can affect the running of the industry then the industry will be demotivated and this demonization will lead to the demonization of the investors and will result in the fall of capital market. Like after the Hardhat Mehta scam, new rules and regulations were introduced like PAN card was made necessary for trading, if any investor was investing too much money in a small firm, then the investors were questioned,etc. These regulations were meant to maintain transparency in the capital market, but at that time, investment was discouraged. Legal factors are necessary for the improvement and stability of the capital market.

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SWOT ANALYSIS OF BROKING INDUSTRY


STRENGTHS:

Good Image of India in terms of investment Indian Economy at a growing stage High Political Stability Liberalization in norms for Investment World Wide Presence of Indian Companies Sensex Growth at 45% in last 8 years Strong Hold of SEBI to prevent violation of laws

WEAKNESS:

Illiquidity outside the scrips in futures and options may lead to large scale price manipulation in illiquid scrips and lower price realisations in such counters. Poor Indian Accounting disclosures may lead to large scale manipulation of figures by publicly traded companies.

Heavy dependence up on the Foreign Investment. Inefficiency of SEBI to prevent cases like SATYAM, Ketan Parekh.

OPPORTUNITIES: A large domestic market that is still into traditional fixed income and other government savings is all buy bound to enter the market sooner if not later. More Foreign Investment in to Public Sector through norms Liberalization.

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By proper Management it can be a very good way to channelize nations savings.

THREATS:

Global Economic slowdown Currency mismangement, High global commoditiy prices, Over valuation in Index scrips, Non liquidity in other financial markets, Change in governement focus on controlling inflation, Dominance of FII

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CHAPTER 5
INTRODUCTION TO THE COMPANY

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[5] INTRODUCTION TO THE COMPANY


COMPANYS PROFILE
NAME OF THE COMPANY: ANAGRAM

REGISTERED OFFICE:

Anagram House, H. L. Commerce College - Stadium Road, Near Commerce Six Circle, Navrangpura, Ahmedabad 380 009 Tel: 079 - 26423045/46. Fax: 079 - 26423600

CORPORATE OFFICE: Anagram Capital Limited C-10, 1st floor, Laxmi Tower, Bandra Kurla Complex Navrangpura, Mumbai - 400 051. Phone: Fax: +91-22-42198100

HEAD OFFICE : Anagram House H.L. Commerce College Stadium Road New Commerce 6 Road Circle, Ahmedabad - 380 009. Phone: Fax: +91-79-26423600.

+91-79-26423045 / 46. +91-22-26505633

FORM OF ORGANISATION: PROMOTER: ACCOUNTING YEAR:

Private Sector Lal Bhai Group

1ST April to 31st March

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REGISTRATION DETAILS:Anagram Stockbroking Limited BSE Cash SEBI Regn. No.: INB011257152, BSE F&O SEBI Regn. No.: INF010808537 MCX-SX Currency Derivative SEBI Regn no: INE261257152, PMS Regn. No.: INP000002031, NSDL DP SEBI Regn. No.: IN-DP-NSDL-180-2000, Mutual Fund: ARN 3068 Anagram Capital Limited NSE Cash SEBI Regn. No.: INB230597630, NSE F&O SEBI Regn. No.: INF230597630 MCX-SX Currency Derivative SEBI Regn no: INE260597630, BSE Currency Derivative SEBI Regn no: INE010597630NSE Currency Derivative SEBI Regn. No: INE230597630 Anagram Comtrade Limited MCX-10425; NCDEX-00205; NMCE- CL0126, National Spot Exchange Limited - 11270;

5.1ABOUT ANAGRAM
Introduction Anagram Capital Ltd.(Anagram) is amongst the leading retail broking houses in India. It is engaged in offering comprehensive personal finance solutions since 1994. The company is a part of the of the Rs 20 bn Lalbhai Group. The group companies in the capital and commodities market area include Anagram Capital Ltd and Anagram Comtrade Ltd. Anagram offers a wide range of services for the discerning equity investor, in addition to online account access and real time trading. Anagram Capital has a pan-India branch network of 137 branches and over 1,300 sub-brokers with 1,80,000 customers with an average daily equity trading volume of around Rs5,000 crore. Anagram also records an average daily business of around Rs150 crore in commodities and Rs200 crore in currency derivatives. Of Anagram's 137 branches, around 55 are in Maharashtra and Gujarat. Markets and Network Anagram has membership in all the leading stock and commodities exchanges in the country.

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The firm is a member in NSE, BSE, NCDEX and MCX. It is a depository participant with NSDL. Anagram has its roots in Western India and has established nationwide presence with 169 branches, 1,360 sub-brokers, 2,556 terminals spread across major metros and states in the country. It also provides trading in futures and options through its online portal www.anagram.co.in Areas of Expertise Anagram offers real time trading opportunities on the BSE as well as the NSE. It also offers depository and online services to clients for account accessing and information through its online portal catering to the needs of mobile trader as well as the net savvy investor. Anagram offers state-of theart online trading through its website (www.anagram.co.in). Regular updates during trading hours, and access to information, analysis and research, and a range of monitoring tools is available. The company has steadily building up a comprehensive portfolio of products and services apart from conventional broking. High speed anywhere trading through the net, online depository services, commodities trading and retail debt products are increasingly areas of special emphasis for the company. Research Anagram is a research driven organization. Daily Call is its morning newsletter that takes a trading call on the market and gives a ringside view of the overnight national and international events. Customers get real time feeds on news, comments and recommendations through instant messaging that are of utmost essence to the serious trader. The Weekly Watch delivered to all the clients every Saturday evening is the most comprehensive reports of its kind. The report summons developments over the past week, major economic talking points, summary on derivatives markets, technical outlook and trading ideas for the forthcoming week and fundamental investments with an exhaustive research report for a medium to long term horizon. On the commodities side, it releases daily and weekly reports providing outlook on international agri-commodities. Advisory Services Apart from broking business, Anagram is also engaged in offering advisory services of

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investments into mutual funds, primary market, life insurance and other small saving products. The distribution services add up to their broking business and are serviced by experts at each location. The business is supported by an efficient research and back office team. Anagrams set of diligent advisors helps its customers plan and get more out of ones money. The schemes include, fixed income, bank fixed deposits, company fixed deposits, small savings schemes, tax saving schemes and NRI deposits. Anagram also provides tax planning services where a list of tax saving schemes and a forum for Q&A where the queries are answered by the tax advisors; and an NRI advisory body, where it provides information for NRIs in helping them makes judicious investment decisions. Performance The company registered strong growth during the first 10 months of 2009. The company added 46,460 domestic customer accounts in 2009 as compared to 35,295 in 2008. Number of terminals, sub brokers and employees almost doubled during this period. Growth Areas Anagram has diversified its business to other areas such as portfolio management services and is looking forward at opening overseas branches. It plans to introduce company fixed deposits and merchant banking to its current offerings. It is also aiming at increasing their institutional client base, acquiring new business/brokerage firms and also entering into joint venture operations in the near future. The firm has its roots in Western India especially Gujarat where it is the biggest player. But it has expanded considerably. ANAGRAM TAKEOVER BY EDELWEISS CAPITAL LTD. With a view to focus on its core business of textiles, Gujarat-based Lalbhai group on Wednesday exited its domestic broking business by selling its unit, Anagram Capital Ltd, to Edelweiss Capital Ltd for Rs164 crore. Edelweiss plans to operate Anagram as its 100% subsidiary. Of Anagram's 137 branches, around 55 are in Maharashtra and Gujarat and this acquisition will provide Edelweiss a very strong footprint in the region.

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Table 4
ANAGRAM GROUP COMPANIES Anagram Stockbroking Ltd. Anagram Capital Ltd. Anagram Comtrade Ltd.
Membership on the BSE Depository Participant with NSDL

Membership on the NSE Cash and Futures & Options Segment with NSDL Member on the NCDEX, MCX & NMCE

Table 5

REGIONAL OFFICES

Ahmedabad Hyderabad Indore Jaipur Kolkata Rajkot

Bangalore Mumbai New Delhi Pune Surat Chennai

INVESTMENT PHILOSOPHY
Given the clients risk profile, maximize performance by adhering to disciplined investment approach backed by quality research.

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Anagrams investment philosophy is based on two key attributes: 1. Wealth Creation: The creation of Wealth can be categorized as : Having money work for client Having others work for client Client Working for Money 2. Wealth Preservation: As wealth grows, focus is shifted to striking a balance between asset creation and preservation. Wealth preservation applies to day-to-day financial life which includes managing cash flow and overall risk management.Top of Form

5.2 PRODUCTS AND SERVICES DETAIL


REPORTS: Market Outlook at 8:00 a.m. : A pre-market report that arms the client with sensitive information before the opening bell. Key corporate developments, policy announcements, geo-political news and views are analyzed for their impact on the market. Technical Report at 6:00 p.m. : This report analyzes trading pattern, historical background, market positions of key stocks and offers short term (1 to 5 days) as well as medium term (10 to 20 days) view. Tracking individual scrips as well as the Sensex and Nifty, its insights cut through the market maze. Derivative Analysis Report at 8:00 a.m. : The report provides information on FII activity in derivative segment, change in open interest put call ratio, cost of carry of stock and index based derivative products. The derivative analysts use the above tools to project movements during the next trading sessions.

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FUNDAMENTAL RESEARCH SERVICES : The Sunday Weekly Report : This weekly report is the ace of all reports. It offers a comprehensive market overview and likely trends in the week ahead. It also presents few top picks based on an in-depth analysis of technical and fundamental factors. It gives short term and long term outlook on these scrips, their price targets and trading strategies. Another unique feature of this report is that it provides an updated view of about 70 prominent stocks on an ongoing basis. The Industry Watch : This report provides an in-depth analysis of specific industries which are likely to outperform others in the economy. It analyzes their strengths and weaknesses and ascertains their future outlook. The final view is arrived at after thorough interaction with industry experts. Also comparative performances of various companies in the sector are evaluated and top picks are recommended. Stock Analysis : Anagrams stock research has performed very well over the past few years and the Anagram Model Portfolio has consistently outperformed the benchmark indices. along with investment rationale for each scrip. Flash News : Key developments and significant news announcements that are likely to have an impact on markets / scrips are flashed live on trading terminals. Flash news keeps the market participants updated on an online basis and helps them to reshuffle on their holdings TECHNICAL RESEARCH SERVICE : Nifty Tracker : Nifty Futures is the most traded instrument with highest volumes in F & O and excellent liquidity. The team tracks the Nifty Future and generates calls based on unique trading The fundamentals of select scrips are thoroughly analyzed and an actionable advice is provided

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system which is a result of their focused research over the past few years. The objective is to generate positive returns for traders who are looking for a high risk / high reward product. Online Chart: An online forum to help clients, specifically day traders in judging the directions of the market and stocks which are in the limelight. Intraday Calls : For day traders, Anagram provides intra-day calls with entry, exit and stop loss levels during market hours. These calls are flashed on their terminals. Their analysts continuously track the calls and provide recommendations according to the market movements. Position Calls : Anagrams Position Trading Calls are based on thorough analysis of the price movement in select scrips. These calls are for a 10-15 day time span with stop loss and target levels. These calls are flashed on their terminals during market hours. Derivative Strategies : Their analysts take view on the Nifty and select stocks based on the derivatives data and technical tools. Suitable Derivative Strategies are devised, which are flashed on their terminals and published in their reports. Futures Calls : A customized product for HNIs to help them trade with leveraged position; wherein clients are advised on the stocks with entry, exit and stop loss level for short term benefits. Over and above this, financial status of the calls is monitored at all times. INVESTMENT ADVISORY DESK : At Anagram, they have a dedicated Investment Advisory Desk: To help manage clients equity portfolio and create wealth To help client understand their risk profile and define investment goals realistically To minimize clients risk and maximize their returns.

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To help client decide what to buy / sell and when to buy / sell. To help clients understand macro-economic trends and sectoral / company developments.

To help client restructure their portfolio based on sound research.

IPO DISTRIBUTION AND ADVISORY : Wide network of branches for better customer reach. Dedicated Research Teams generating sector related reports. Ease in investing with informed decision making. Advisory Help Desk for all IPO related queries.

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THE UNIQUE FEATURES OF ANAGRAM PRODUCTS:

Figure 3

Instant Online Fund Transfer with Multiple Banks

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ANAGRAM DIET

Efficient uptime and greater stability for high speed Customized solutions as per clients requirements Personalized Advisory services for HNI clients Call and Trade at 137 branches across the country

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DP with CDSL with automated pay-in facility Instant Online technical support for clients NSE& BSE Access Flexibility of trading on both the NSE & BSE via a single screen Single order form for Cash and F & O Single order form offers you the convenience of transacting in various segments of the market without having to switch between multiple windows Point and Click order entry Makes order entry quick and simple with a click on the security the same gets inserted into the order form on your trade screen Hot Key Functions Using a single keystroke (Hot Key) function you can achieve important tasks very similar to a broker's terminal. Accessing important reports is also one keystroke away. Given only to HNI Clients

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MONEYPORE EXPRESS
Moneypore Express is an EXE based desktop software designed for active traders who transact frequently to capture favorable short-term price movements. The platform offers active traders the tools they need to make critical decisions with confidence. Moneypore Express is designed and built from the ground up to address the needs of active traders. Moneypore Express makes the most of state-of the-art technology to deliver power, speed and reliability. Through an easy-to-use interface, users are provided with the same tools and advantages that the professionals enjoy. Figure 5

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SYSTEM REQUIREMENT Browser Type:- Microsoft Internet Explorer 6.0 or higher (Java enabled) Internet Connection Broadband/Dial-Up (Modem at a minimum of 28.8/33.6 Kbps) System Requirement:- P 3 or P4 GHz or best available at market RAM 128 MB or better Operating System Windows 98/2000 or Windows XP BENEFITS: Fully Customizable display The save desktop option allows you to save your created trade screen layout, so the next time you access the application the created layout is not lost. Dynamic Charts with Indicators Provides you a wealth of charting capabilities and timing indicators, which allow you to go right into the action with real-time daily charts, and intra-day charts. Watch price movements by minutes, days, or weeks. EOD Charts Moneypore Express puts up to 5 years of in-depth market history at your command with the power to instantly back-test any trading strategy you design, before risking one rupee of your trading capital. Real-Time market data : Get real time market data from both the NSE and BSE similar to what a broker gets. Advanced Alert capabilities Alert Window allows you to be free from watching every tick. Users can be notified once a security has reached the set parameters. Multiple securities can be monitored using the set parameters. These alerts can be triggered both visually and audibly. Live order status

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Tracking all your orders is made easy through the order status screen. Further drill down into all details pertaining to an order is available in the order detail sub report.

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Track your orders real time Track your stock order and trades in real-time. Real time position updates

All your positions are updated automatically and instantly. No need to use the refresh button at all.

Dynamic buying power Reflects the credits and debits instantly on every trade execution. No need to refresh each statement to know your latest buying limits.

Derivative chain This feature provides you with a list of all derivative contracts available for the selected security. To view derivative prices of a security just right click on the symbol and click on derivative chain.

Lock terminal option If your system is unattended this function locks the trading platform for you and can be accessed again only on providing the proper login details.

Message window docking : This feature enables you to receive trading messages, intra-day trading calls, and messages from both the exchanges flashed real time onto your screen

Back Office access View segment wise ledger bills and contract notes, trades, positions, account contract notes, trades, positions, account balance, realized/unrealized profit & loss, and buying power all in real time

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MoneyPore Express: Figure 6

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CHAPTER 6
ANALYSIS OF SURVEY

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[6] ANALYSIS OF SURVEY


6.1 ANALYSIS
Q.1. In which stock broking house do you have your account? Table 6
sr.n o. 1 2 3 4 5 6 Tot al Company Anagram Icici Securities Anand Rathi India Infoline Shah Investors Others No. of Respondents 57 34 22 29 20 38 200

Out of 200 respondents, 57 investors(28.5%) were active traders of Anagram which suggest strong presence of the company in Ahmedabad City. Also the second highest respondents(38) we got were from other broking firms and sub-brokers. These accounted 19% of the total respondents which suggest the presence of high number of market players in the Equity market.

ICICI securities had the third highest number of respondents(34) which mainly comprise of online traders.

Q.2In which of the following do you trade in stock market ? (Multiple Ticks Allowed) Table 7
Sr.No. 1 2 3 No. of Responden ts 25 40 18

Intraday Delivery Future & Options

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4 5

Intraday & Delivery All

86 31

This Question was put up to know the investment pattern of Investors. Out of 200 respondents surveyed, 86 investors opted to trade in intraday & Delivery based trading. The main motive is to minimize risk during high volatility. 40 respondents who account for 20% of the respondents trade on delivery basis. The main reason is to get more return with less risk. Less than 10% of the respondents are trading in F & O. which shows less presence of risk takers.

Q.3.Which of the following services do you use and admire provided by your broking firm ? (Rank in the scale of 1-5 as per your priority. Rank 1 for most important and Rank 5 for not at all important) S R R R R r. a a a a N n n n Ra n o Service k k k nk k . s 1 2 3 4 5 Score
m 1 2 3 Resear ch Tips Resear ch 1 4 0 1 2 2 4 1 9 10 33 1 3 3 8 t h e 1 3 9 8 c o m p a n y 173 81.8 N o p q [{(m*5)+(n*4)+ (o*3)+(p*2)+ (q*1)}/5]

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4 5 6 7

Reports Online Money Transfer IPO Fundin g Demat erializa tion Trade Confirmati on Branch Trainin g

9 5 7 5 4 6 3 6 7

4 3 3 9 1 1 4 8 2 9

23 36 20 37 42

2 8 2 9 1 9 2 4 2 8

1 1 2 1 1 4 6 2 8 3 4

156.6 143.6 61.6 138.8 133.4

From the above chart it can be noted that Rank 1 which is most important,70% of respondents have given to Research tips which shows that Investors have a strong reliance on tips.

More than 70% of respondents doesnt give much importance to Dematerialization of processs.

Research Tips is the most preferred by the investors which shows that Investors have more reliance on Research Tips provided by the company. Investors also have preference for the services like Online Money Transfer and IPO Funding. More than 60% of employees have opted for online money transfer which also shows the usage of net banking. Q.4 .Which mode do you use for trading ? Table 9
Sr.No. 1 2 Mode Online Offline Response 33 167 Percentag e 16% 84%

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Out of 200 respondents, 167 respondents which account for 84% are currently trading through Offline Mode. The survey shows presence of only 16% Online traders.

Q.5.What are the factors that influence you to trade in Offline mode ? (Rank in the scale of 1-5 as per your priority. Rank 1 for most important and Rank 5 for not at all important) Table 10
R a n k 1 R a n k 2 R a n k 3 R a n k 4 R a n k 5

Factors Sr . N o. 1 2 3 4 5

Non availability of internet and/or P.C. Uncomfortability with online system Fear of Input error by self. Accustomed to offline system since long To avoid software charges

M 3 1 1 8 2 6 8 5 1 4

n 6 5 2 3 3 9 2 3 2 1

o 2 5 3 8 1 3 6 2 6

P 1 3 3 4 5 1 5 3 7

q 5 5 3 9 1 6 8 7 9

Score [{(m*5)+ (n*4)+ (o*3)+ (p*2)+ (q*1)}/5] 100.4 89.6 111 132.6 77

Out of 200 respondents more than 40% showed the main reason on not doing online trading is that they are accustomed to offline system since long time. Of the total respondents, around 35% considered non-availability of Internet And P.C. to be the main reason for doing offline trading. Out of 200 respondents, 75% gave least preference for avoiding software charges as the reason for trading in offline mode.

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The Survey shows that most important factor that doesnt influence online trading is Respondents are accustomed to offline trading since long time.

The survey also showed that Investors doesnt consider software charges as a factor to hinder online trading.

Q.6.What are the factors that influence you to trade in Online mode ? (Rank in the scale of 1-5 as per your priority. Rank 1 for most important and Rank 5 for not at all important) Table 11
R a n k Ra nk 1 S r . N o . 1 2 3 4 5 6 7 [{(m*5)+(n*4)+ (o*3)+(p*2)+ (q*1)}/5] 29 21.2 15.2 25 16.8 22.2 20.8 2 3 R a n k R a n k 4 R a n k 5

Score

Factors Access to stock Prices Verification & Confirmation Privacy Speed Custo mizatio n Techni cal Charts Online Transfer

m 20 6 3 13 2 11

N 1 0 7 2 9 5 1 0 6

o 0 1 2 7 5 9 1 9

P 2 4 1 1 3 1 0 2 7

q 1 4 1 0 3 7 9 4

Fund 7

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Out of the total Online Investors surveyed more than 50% considers the main factor that drives to do online trading is the access to stock prices in a real time.

Investors also consider Speed as a factor influencing online trading

Out of the total online investors maximum weight is given to the access of stock prizes at a real time data. This factors contains the highest score of 28. Speed is considered second most important factor influencing Online trading. Privacy is considered the least important factor to influence online trading with average score of 15.

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For Offline Traders:Highly Satisfied Satisfied Indifferent Dissatisfied Highly Dissatisfied

Respond ents

23 120 7 8 9

Q.7.Satisfaction level:Table 12

The survey shows that there is a high satisfaction level among Offline traders. 85% of the respondents are satisfied with offline trading system due to various reasons.

Q.8. Satisfaction Level :Table 13 For Online Traders:Highly Satisfied Satisfied Indifferent Dissatisfied Highly Dissatisfied

Respond ents

23 5 0 2 3

The survey shows that inspite of low in number but there is a high satisfaction level in online traders.

More than 80% of the total online traders surveyed are satisfied with online trading system.

Q.9.Investors willingness to change:Table 14 Willingness to change:Offline to Online Online to Offline Dont want to change
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23 4 173

c o m p a n y

a d d r e s s ]

The survey shows that respondents are reluctant to switch over from their normal mode of trading. Only 13 % of the total respondents showed readiness to sitch over to other mode.

Q.10.Would you like to have a training on following matters of online system? Table 15 Training Requirements yes No Training on Software Installation 79 121 Training on Functional Keys: 122 78 Training on Online Fund Transfer 90 110 Training for Customisation 113 87

Out of 200 respondents, investors seek to have training on Functional Keys. Also the least preference is shown on training on software installation. Respondents show almost equal preference for training on Online Money Trandfer and Customization training.

Q.11 In this stock market industry, how do you see the growth of online trading ? Table 16 Growth Slow Moderate Tremend ous Cannot Say
Respons es 37 58 80 25

In spite of having only 16% of online traders as the respondents, more than 40% of the respondents predicted tremendous growth of online trading.

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There were only 15% of the respondents who have assumed slow growth of Online trading.

Q.12.If you offered better product and services, are you interested in switching over to another broking house? Options Yes No
Responses 134 66

Out of the total respondents only 33% of them showed willingness to switch to another brokinf firm. This shows the strong affiliation of Investors with the Respective Broking Firms.

Q.13.Analysis Of Personal Details: Table 17


No. oF Responde nts 17 88 69 26

Age <25 25-40 40-60 >60

The survey shows that maximum investors in stock market are in the age of 25-40. And the second highest number of investors are in the age 40-60 which denotes involvement of working people in stock market.

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Table 18
Income (p.a.) <2L 2L-5L 5L-10L >10L No. Respondents oF 12 46 93 49

The survey shows that maximum investors are the one having annual income between 510 lacs.

More than 40% of respondents were having annual income in this range. While less than 10% of respondents had annual income below 2 lakhs.

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CHAPTER 7
FINDINGS AND RECOMMENDATIONS

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FINDINGS:
The study has revealed the nature of the share investor and investment atmosphere in Ahmedabad. As per our study, about 84% of the investors do use Offline system and only 16% do avail Online trading system. Majority of the Online traders are found to engage themselves intraday trade. Those investors who trade only in delivery terms, are not showing any interest in online system, as they dont require a continuous watch on market. About 70% of the respondants do rank the Research Tips , provided by the company , at the highest i.e. first position in terms of its importance. Offline investors have given maximum of 26% {133/50*100} credit to accustomed since long time and second highest i.e 20% {100/500*100} credit to technology amongst various five different driving forces for Offline trading Online investors have given maximum of 20% {29/150*100} credit to access to real time stock prices at ones own place amongst various seven different driving forces for Online trading 14% of offline traders are found to be highly satified with their current system , 72% highly satisfied , 4% indifferent , 5% dissatisfied and 5% highly dissatisfied. Similarly 70% of online traders are highly satisfied with online system , 15% satified , 6% dissatisfied and 9% highly dissatisfied 11% of offline traders are willing to switch over to online system. Just 2% of the online traders are willing to switch over to offline system. More than 50% of the respondants (including offline traders) are found to be looking foreward for the Training on functional keys of the online software and on software customisation

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It is found that 67% of the investors are ready to change their broking firm if there is some other firm providing even better product and services then what they are availing at current

33% of investors are loyal to their current broking firm and so would not tend to change . 44% of investors are found to be falling in age group of 25 to 40 years : and 34% of the in 40 to 60 years. About 46% of the stock market traders are found to have annual income in range og Rs.5 lacs to rs.10 lacs . Only 6% of traders do have annual income of below Rs.2 lacs.

Investors who are majorly dealing in IPO are found to be looking foreward for facility or service of the Margin Funding.

7.2RECOMMENDATIONS
Following are the recommendations from our side that may play a role in giving the boost to the online trading system and Companys Business: Providing the more information and knowledge among the public through different media.. Although ratio of online traders is quite low at present, the new entrants in stock market comprise of the youth who prefer online technology (irrespectine of whether they trade in intraday or delivery pattern). Hence, while generating the leads from the youth, online system would serve the purpose. Training camps on the methods of online should be conducted as more than 50% of the respondants (including offline traders) are found to be looking foreward for the training on functional keys of the online software and on software customisation . By providing training there might be ample of offline tradfers who would atleast give a thought for switching over to online system. As a result of training activity, following benefits could be achieved: Satisfaction and updations for online traders. Shift can be achieved from offline to online. New leads could be generated Carriying out different promotional activities like free online trading game, seminars etc.
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Certain investors have got an attitude to invest mainly in IPO. Such investors do admire the service of Margin Funding which is not provided by all broking firms. Anagram is providing the Margin Funding facility and hence it may publicize it.

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Anagram is providing (to its ABS account holders) the free research calls, which is adorned with average success ratio 85%. This is very lucrative feature of anagram. There are some other service providers taking annual charges (extending from Rs 4000 to considerable big amount) for the research calls.

About 70% of the respondants do rank the Research Tips , provided by the company , at the highest i.e. first position in terms of its importance.

Hence, Anagram may Soundly position its research service on financial portals. Charge considerable amount of its research calls.

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CHAPTER 8
CONCLUSION

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[8]CONCLUSION
At ancient time for dealing with a security person left the order with the broker in the morning and received a conformation fax late in the eveningInvestor wondered whether they had acquired the shares at the best possible price for the day. Today, the picture is different. where persons log on to their account, get the live quotes of scripts they are interested in, get advise from experts and research reports on their investment choice and then just click the mouse to place their order, pay the amount due, get their account statement, and the delivery of their shares into their Demat account. All this through just one click of a mouse. A few seconds later, persons get the confirmation on their screen. And after the trade settlement, personal bank and DP accounts will reflect the changes accordingly. The speed of transaction, confidentiality about the prices and ease of settlement in the paperless mode should be good reasons for retail investors to jump on to the Net. All they need is a PC, a modem, a subscription to an ISP, an account with a bank and a depository account. And they can choose from a plethora of online-trading web sites. So, finally the changing trend is known as Online-trading which really means Buying and selling securities via the Internet or other electronic means such as wireless access, touch-tone telephones, and other new technologies with online trading. Online trading started in India in February 2000 when a couple of brokers started offering an online trading platform for their customers. Following are certain features of online trading: Freedom of information Control of Investors money Real Time Access to the market Ensures the best price for investors. Offers greater transperancy

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There are some problems while doing the trade through the internet. Major problems faced by online trader are that: Non-availability of personalized advice: The people don't have full knowledge regarding online trading. They face technical inconvenience. They find it difficult to trade themselves, as a wrong entry made by them, can bring them huge losses. Nevertheless to say that online trading has the bright future as the percentage of the trade done through online trading is increasing day by day. According to an article by Krishnamurthy B in 2005 after inception of online trading in India in the year 2000 online trading is gained momentum with trading volumes growing by 150 per cent per annum in the years 2003-2005 and it was more than approx. 200% in the year 2008 The volume of all trades executed through the Internet on the National Stock Exchange had grown from less than Rs 100 crore (Rs 1 billion) in June 2003 to over Rs 700 crore (Rs 7 billion) in July 2005 which was a handsome growth in the year 2005in the starting of 2008 the growth of online share was good but at the mid of the year when subprime crisis affected India including all over the world, market of online trading got shrunk by more than 50% Now the growth of online trading is on its right track ,Indian stock market has been announced the one of the Safe and stable market of the world, so here in India the online trading is growing like anything in comparison to the whole world.

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GLOSSARY

TERMS DEPOSITORY BENEFICIARY ACCOUNT

MEANING A Depository is a Company where the shares of an individual are held in the electronic form, at the request of the shareholder. A beneficiary account is an account held with the Participant by a client for the purpose of holding its securities.

HOUSE ACCOUNT

A house account is the Participants Own Beneficiary account held in its own system for the purpose of holding its own securities.

OWN CLEARING ACCOUNT

An own clearing account is the Participants own clearing account held in its own system in case where the participant is also a clearing member of a clearing corporation. This account is held for the purpose of carrying out clearing and settlement functions in respect of electronic trades.

REMATERIALIZ ATION DEMATERIALIZ ATION CLEARING

Re-materialization is the process by which a client can get its electronic holdings converted into physical certificates. Dematerialization is a process in which person can convert physical share certificates into electronic shares. Clearing is the process of determination of obligations, after which the obligations are discharged by the settlement.

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CUSTODIANS

Custodians are clearing members but not trading members. They settle trades on behalf of their clients that are executed through other trading members. Clearing member is a firm which is a member of an exchanges clearing corporation and involves in clearing of trades. Its a financial intermediary which interfaces with the investors to buy or sell securities on behalf of them and charges some percentage of the settlement amount for doing so. A share represents a unit of ownership in a company An account where securities are held in an electronic form An activity of buying and selling shares to earn capital gains Analyzing which is a good company to invest in An index is an average of stocks representing the market Confirmation given by the broker to his client for a trade executed Process of determination of obligations standing against parties to trade Collateral that a member has to deposit with the exchange Payouts made by the companies to shareholders as a reward for buying stock in that company

CLEARING MEMBER BROKERAGE FIRM SHARES DEMAT ACCOUNT TRADING TYPES ANALYSIS INDICES CONTRACTS SETTLEMENT LIMITS/MARGIN S DIVIDENDS

OF

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BIBLIOGRAPHY
9.1 WEBSITES 1) 2) 3) 4) 5) 6) 7) 8) 9) www.nseindia.com www.bseindia.com www.anagram.co.in www.investsmartindia.com www.sebi.gov.in www.nsdl.co.in www.cdsl.co.in www.google.com www.wikipedia.com

9.2 BOOKS Financial Markets Beginners Module: NCFM Kotler Philip, Marketing Management, Eleventh Edition, 2002, Chapter 13, Prentice-Hall of India, New Delhi

9.3 JOURNAL Finance India, June 2002 : Preference of Investers in Ahmedabad by Ranjith V.K.

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Indian Journal of Finance, June 2009, 3rd issue Analysing the Potential of E-Broking and Preferences of the Investors in Choosing a Bro for choosing the Brokerage Firm by Dr.Prageetha Raju (faculty member of ICFAI Hyderabad)

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QUESTIONNAIRE
Dear Respondent, We are students of N.R.Institute of Business Management and doing Summer Intenrship in Anagram Securities Ltd. As a part of MBA curriculum, we are conducting a survey and would be grateful if you could spare some of your precious time to fill this questionnaire for the same. We ensure you that the information provided by you will be used for the academic purpose only, and will not be revealed anywhere else. 1. In which stock broking house do you have your account? Anagram Securities Ltd. ICICI Securities Anand Rathi Stock Broking Ltd. Monarch Securities India Infoline Shah Investors Ltd. Others (Please Specify)______________________ 1. Which of the following services provided by the broking firm do you avail ? Online Trading Commodity Currency Margin Funding Portfolio Management Services 1. In which of the following do you trade in stock market ? (Multiple Ticks Allowed) Intraday Delivery Future & Options 1. Which of the following services do you use and admire provided by your broking firm ? (Rank in the scale of 1-5 as per your priority. Rank 1 for most important and Rank 5 for not at all important) Research Calls/ Tips 1__ 2__ 3__ 4__ 5__ Research Reports 1__ 2__ 3__ 4__ 5__ Online money transfer 1__ 2__ 3__ 4__ 5__ IPO Funding 1__ 2__ 3__ 4__ 5__ Dematerialize & Rematerialize 1__ 2__ 3__ 4__ 5__ Trade Confirmation 1__ 2__ 3__ 4__ 5__ Branch Training 1__ 2__ 3__ 4__ 5__

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1. Which mode do you use for trading ? Online Offline 1. If Offline, What are the factors that influence you to trade in offline mode ? (Rank in the scale of 1-5 as per your priority. Rank 1 for most important and Rank 5 for not at all important) Non availability of internet and/or P.C. 1__ 2__ 3__ 4__ 5__ Uncomfortability with online system. 1__ 2__ 3__ 4__ 5__ Fear of Input error by self. 1__ 2__ 3__ 4__ 5__ Accustomed to offline system since long time. 1__ 2__ 3__ 4__ 5__ To avoid software charges. 1__ 2__ 3__ 4__ 5__ Others :(Please Specify)______________________________________________ 1. If Online, What are the factors that influence you to trade in online mode? (Rank in the scale of 1-5 as per your priority. Rank 1 for most important and Rank 5 for not at all important) Access to stock prices and trade platform at ones own place. 1__ 2__ 3__ 4__ 5__ Verification and confirmation to real time data. 1__ 2__ 3__ 4__ 5__ Privacy. 1__ 2__ 3__ 4__ 5__ Speed. 1__ 2__ 3__ 4__ 5__ Customization available on screen. 1__ 2__ 3__ 4__ 5__ Software aids with technical analysis. 1__ 2__ 3__ 4__ 5__ Online fund pay in and pay out. 1__ 2__ 3__ 4__ 5__ Others : (Please Specify)______________________________________________ 1. Satisfaction level:For Offline Traders: O Highly Satisfied O Satisfied O Indifferent O Dissatisfied O Highly 2. Willingness to change: Offline to Online. For Online Traders: O Highly Satisfied O Satisfied O Indifferent O Dissatisfied O Highly Dissatisfied

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Online to Offline. Dont want to change. 1. Would you like to have a training on following matters? Training on Software Installation: O Yes Training on Functional Keys: O Yes Training on Online Fund Transfer: O Yes Training for Customisation: O Yes O O O O No No No No

2. In this stock market industry, how do you see the growth of online trading ? Slow Moderate Tremendous Cannot say 1. If you offered better product and services, are you interested in switching over to another broking house? O Yes O No 2. Any Suggestion / Feedback (for Online system):______________________________ ________________________________________________________________________ ________________________________________________________________________

PERSONAL DETAILS =============================================================== 1. Clients Name :-________________________________________________________ 2. Contact No.:___________________________________________________________ 3. Email Id:______________________________________________________________ 4. Occupation: Businessman:__ Professional:__ Employee:__ Student:__ Other:____ 5. Income (annual): upto 2 lacs__ 2 lacs to 5lacs__ 5 lacs to 10lacs__ above 10lacs__ 6. Age: upto 25years__ 25 to 40years__ 40 to 60years__ above 60years__.

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