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A Project Report



Submitted to

Juhi Sethi
Roll No. - 0922270018
E mail-

A report submitted in the partial fulfillment of

The requirements of
MBA (2009-2010)

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To maintain and cope up with the growing competition from the various online
trading providers, India Infoline needs to find potential clients and also new
investors and satisfy there needs.

The Broad objective of the project is to equipped the trainees with all the quality
Which is essential to face any circumstances which can arise while providing
service to the clients?

This project will accomplish to understand how the people interact with
technology savvy products and if they are ready for doing all the trading through
net. The project also helps in understanding the trend of the particular sector
(banking sector) in different market condition.

All these steps help me to understand how to cope up with different types of
people and there diversified need satisfaction level.

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It has been a great pleasure having gone through as a trainee in INDIA

INFOLINE LTD. which is India’s well known and starkly established retail
brokerage firm. I as a trainee got to learn a lot as I had an opportunity to work
with people who are extremely profound.

I would like to express my gratitude to Mr. VARUN KASHYAP, SALES

MANAGER IN INDIA INFOLINE LTD., NOIDA for giving an opportunity to
elongate my knowledge and providing me a pragmatic experience.

It would not be fair enough at all if I would not thank Mr. SANDEEP
Relationship Manager (RM) INDIA INFOLINE Ltd. NOIDA for providing
enough knowledge and making us acquainted with the job of client servicing. It’s
been an amazing experience working under him.

Last but not the least I would like to thanks each and every member of the INDIA
INFOLINE LTD. for being so cooperative and helpful.


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S. No. Topic Page No.

1. Executive Summary 5
2. Objectives 6
3. Company Profile 7
a) Introduction 8
b) Infrastructure 12
c) Management 13
d) Competitive Advantage 15
e) Products 18
4. Stock exchange 24
a) Securities 27
b) Regulator 28
C) Participants 30
d) Segments of Securities market 33
e) NSE and BSE 41
f) Stock Trading 45
5. Research Methodology 50
6. SWOT Analysis 83
7. Conclusion 89
8. Limitations 91
9. Questionnaire 93
23. Bibliography 95

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Executive Summary

This project was undertaken to understand the working of INDIA INFOLINE

Securities Ltd. During the summer training to acquire new clients for INDIA
INFOLINE to learn marketing techniques and competitor analysis of INDIA
INFOLINE in compression of major players in the Share trading.

The project reflects information about products and services provided by the India
Infoline to their customers. This also includes requirement and ways to acquire
client acquisition has been explained and the problems faced to handle the clients.

The information about their account opening charges, products, brokerage,

research report, minimum margin requirement, exposure, etc. are shown in
competitor analysis.

Also I have compared the mutual funds on different parameters such as risk and
returns, facilities, volume of investing money, good promotional schemes,
redemption, and investing time

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• To take an overview of the Indian Stock Market and encapsulate

the various investment avenues available.

• To analyze the Indian Stock Market. How it works. What are the
options available in the Capital Market to invest?

• What is on line trading & how it is different from other trading of

stock market? Benefits & Disadvantages of online trading.

• Also we have compared the equity and online trading on different

parameters such as risk and returns, facilities, volume of investing
money, good promotional schemes, redemption, and investing

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A-154-D, SECTOR-63,
Opp. Fortis hospital,
Noida (U.P)-201306
Phone No.- 0120-6498124


Background of INDIA INFOLINE Ltd

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India infoline commenced operations in October 1995 as Probity Research and
Services Private Limited, as an
Independent provider of information, analysis and research covering Indian
businesses, financial markets and
economy, for institutional customers.

In 1999, IIFL identified the potential of the Internet to cater to a mass retail
segment and transformed its business
model from providing information services to institutional to retail customers.
Hence, IIFL launched our Internet
Portal, and started providing news and market
information, independent research, interviews
With business leaders and other specialized features.

In May 2000, the name of the Company was changed to India Infoline Limited to
reflect the transformation. Over a
period of time, IIFL have emerged as one of the leading business and financial
information services provider in India.

Its broking service was launched under the brand name of 5paisa through our
subsidiary, India Infoline Securities
Private Limited and, the e-broking portal, was launched for
online trading in June 2000. It combined
competitive brokerage rates and research, supported by Internet technology.
Besides investment advice from an
experienced team of research research analysts, we also offer real time stock
quotes, market news and price charts with multiple tools for technical analysis.


The India Infoline group, comprising the holding company, india
infoline limited and its wholly-owned subsidiaries, straddle the entire
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financial services space with offerings ranging from equity research,
equities and derivatives trading, commodities trading, portfolio
management services, mutual funds, life insurance, fixed deposits, goi
bonds and other small savings instruments to loan products and
investment banking.
India Infoline also owns and manages the websites and the company has a
network of over 2100 business locations (branches and sub-brokers)
spread across more than 450 cities and towns. the group caters to
approximately a million customers.

India Infoline has been awarded the ‘Best Broker, India’ by Finance
Asia and the ‘Most improved brokerage, India’ in the Asia Money
polls. India Infoline was also adjudged as ‘‘Fastest Growing Equity
Broking House - Large firms’ by Dun & Bradstreet. A forerunner in the
field of equity research, India Infoline’s research is acknowledged by
none other than Forbes as ‘Best of the Web’ and ‘…a must read for
investors in Asia’.

• INDIA INFOLINE in recent past has been constantly innovating

in terms of the product and services, which it offers, and in this
respect it has started a premium NRI, FIs, HNIs and Corporate
Servicing group. This group specifically caters to the growing
investment needs of these premium client categories by taking all
their portfolio investment decisions depending upon their risk /
return parameter.

• INDIA INFOLINE has a very credible team in its Research &

Analysis division, which not only caters to the need of our
Institutional clientele but also gives their valuable input to
Investment Dealers.
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• INDIA INFOLINE is also giving in house depository services to
its clientele and it is among one the leading depository services
provide among country. Presently it manages more than Rs. 3000
Cr worth of shares under its electronic custody.

• INDIA INFOLINE among capital market investment fraternity is

the most vibrant place in terms of information and performance
and every day it is consolidating its efforts to provide more
customized services to its clients.

We are in the process of developing relationship with like minded

corporate and individual who can value INDIA INFOLINE philosophy
of financial care and in this respect I request for a personal meeting
with you on convenient date.

Now a days INDIA INFOLINE is driven by ethical and dynamic

process for wealth creation. Based on this, the company started its
endeavor in the financial market.

- An ISO 9001 : 2000 company

- Member of National Stock Exchange (NSE) since November
1994, first deposit based

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- Member of BSE.

- Depository Participant with

- National Securities Depository Limited (NSDL) since July 2000

- Central Depository Services (India) Limited (CDSL) since

February 2003

- SEBI Approved Portfolio Manager

- Working on the Philosophy of being “Financial Care Partner”

• In a span of less than five years of its retail operations, FSL recorded a
healthy growth rate both in business volumes and profitability.

• INDIA INFOLINE is among the very few stock market intermediaries to

having very sound based capital and healthy net worth..

• INDIA INFOLINE aims to have its footprint all across the country by the

end of year so that it may add value to the investing community in the


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A network of 1,616 business locations spread over 445 cities and towns
across India facilitates the smooth acquisition and servicing of a large
customer base. All our offices are connected with the corporate office
in Mumbai with cutting edge networking technology


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INDIA INFOLINE is led by individuals who are professionals and
leaders in every sense of the word.
• Mr. Nirmal Jain Chairman & Managing Director India Infoline

Nirmal Jain, MBA (IIM, Ahmadabad) and a Chartered and Cost

Accountant, founded India’s leading financial services company India Infoline
Ltd. in 1995, providing globally acclaimed financial services in equities and
commodities broking, life insurance and mutual funds distribution, among
others. Mr. Jain began his career in 1989 with Hindustan Lever’s commodity
export business, contributing tremendously to its growth. He was also
associated with Inquire-Indian Equity Research, which he co-founded in 1994
to set new standards in equity research in India.

Board of Directors

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• Mr. Nirmal Jain Chairman & Managing Director India Infoline Ltd.

• Mr. R Venkataraman Executive Director India Infoline Ltd

• Mr. Sat Pal Khattar Non Executive Director India Infoline Ltd.

• Mr. Nilesh Vikamsey Independent Director India Infoline Ltd.

• Mr Kranti Sinha Independent Director India Infoline Ltd.

• Mr Arun K. Purvar Independent Director India Infoline Ltd.

A summary of our competitive advantage (INDIA

We are strategically positioned to leverage our strength in the domestic
market, due to our competitive advantages that
include the following:

1. Research
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We have our roots in equity research. Our original business model was to
provide research and information services on Indian business and capital
markets to institutional customers. Our executive directors have equity
research and investment experience in leading banks and brokerage

2. Integrated technology platform

Since the launch of our website,, and our online

trading platform,, we have invested in building a
technology platform. We use a mix of in-house and outsourced
technologies to offer a user-friendly interface for online trading. Our Trader
Terminal is an application which allows customers to
trade on both the BSE and the NSE.
We believe that our technology strengths will enable us to scale up the
business without a proportionate
increase in operating costs.

3. Multiple product offerings makes us a “one stop” shop

We provide a range of products and services to our customers, either

directly or through any one of our wholly owned subsidiaries. These

multiple offerings across multiple channels – either online through Internet

or offline through any of the branches or over the telephone enables us to
emerge as a financial “one stop” shop. This also offers significant cross
selling opportunities, which helps us in strengthening customer
relationships and loyalty.

4. Pan - India distribution network

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We have 73 branches across 36 towns and cities in India. These branches
help in customer acquisition as well as customer service. This is a part of
a conscious “bricks and clicks” strategy to reach out to our customers.

5. “India” and “” have developed

into brands

India and are well known brands amongst retail
investors across India. In all the cities that we have expanded into, we
have been able to leverage upon brand awareness and have established
a customer base.

6. Experienced management team

Our management team has hands on experience in financial services,

especially targeted at retail sales and
relationship management.

7. Customer relationship management

We have developed a team of Customer Relationship Managers across

India to handle key customer accounts. These people are experienced in
financial services and have undergone in-house training. This allows them
to offer unbiased advice on not only equities but also on other investment
products like mutual funds and insurance.

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8. Robust Risk Management Systems:

We manage the risks associated with our broking operations through use
of internally developed credit Algorithms implemented through fully
automated risk management software and selective direct monitoring
Of certain operating parameters. Our automated risk management
procedures rely primarily on internally developed Risk Management System
and systems provided by our vendors.

INDIA INFOLINE deals with…



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Equity (Shares):

We can say that a Share or Stock is a document issued by a company, which

entitles its holder to be one of the owners of the company. A share is issued by a
company or can be purchased from the stock market.

Mutual Fund:

A mutual fund is a type of Investment Company that gathers assets from

investors and collectively invests those assets in stocks, bonds, or money
market instruments. Individuals and institutions invest in a mutual fund by
purchasing shares issued by the fund. It is through these sales of shares that a
mutual fund raises the cash used to invest in its portfolio of stocks, bonds, and
other securities.
Through the collective investments of the mutual fund, each investor shares in the
returns from the fund’s portfolio while benefiting from professional investment
management, diversification, liquidity, and other benefits and services.

Derivative (F&O)-

Derivatives (Futures & Options) are ideal instruments to protect your portfolio
against risk. You can trade with index movements, hedge and leverage your
portfolio by limiting risk but keeping your upside unlimited.

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One such measure was to allow trading in equities-based derivatives on stock

exchanges in 2000. This step proved to be a shot in the arm of the capital market
and volumes soared within three years. The success of the capital market reforms
motivated the government and the Forward Market Commission (the
commodities market regulator) to kick off similar reforms in the commodities
market. Thus almost all the commodities were allowed to be traded in the futures
market from April 2003. To make trading in commodity futures more transparent
and successful, multi-commodity exchanges at national level were also conceived
and these next generation exchanges were allowed to start futures trading in
commodities on-line. Commodities exchanges have seen a surge in commodity
futures volumes in the last few months.

Portfolio Management Service

Our Portfolio Management Service is a product wherein an equity investment

portfolio is created to suit the investment objectives of a client. We at India
infoline invest your resources into stocks from different sectors, depending on
your risk-return profile. This service is particularly advisable for investors who
cannot afford to give time or don't have that expertise for day-to-day management
of their equity portfolio.

Wealth Management

Imagine a financial firm with the heart and soul of a two-person

organization. A world leading wealth management’s company that sits
down with you to understand your needs and goals. We offer you a
dedicated group for giving you the most personal attention at every

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An entry into this segment helped complete the client’s product basket;
concurrently, it graduated the Company into a one-stop retail financial
solutions provider. To ensure maximum reach to customers across
India, we have employed a multi pronged approach and reach out to
customers via our Network, Direct and Affiliate channels. Following
the opening of the sector in 1999-2000, a number of private sector
insurance service providers commenced operations aggressively and
helped grow the market.


India infoline is the most comprehensive website, which allows you to invest
in shares, mutual funds, derivatives (Future and Option) and other financial


INDIA INFOLINE offers you various options while trading in shares


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This is a delivery based trading system, which is generally done with the intention
of taking delivery of shares


You can also do delivery settlement trading up to 4 times the fund available
wherein you take long buy / short sell position in stocks with the intention of
squaring off the position within the same day settlement cycle.


Trough margin you can do an intra settlement trading up to 10 times your
available funds, wherein you take long buy/ short sell position in stock with the
intention of squaring off the position within the same day settlement cycle Margin
PLUS will give much higher leverage in your account against your limits.

Buy Today Sell Tomorrow (BTST) is a facility that allows you to sell shares even
on 1st and 2nd day after the buy date, without waiting you have the receipt of
shares into your Demat account.

CALL Trade allows you to call on a local number &trade on the telephone
through our Customer Service Executive.
Through INDIA INFOLINE the share can be traded on NSE as well as BSE.


Through INDIA INFOLINE you can now trade in index and stock futures on the
NSE. In future trading, you take buy/sell index contracts having a longer contract
period of up to 3 months.
Trading in Future is simple during course of contract life; the price moves in
favor, you make profit.

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Presently only selected stocks, which meet the criteria on liquidity and volume,
have been enabled for future trading.

An option is a contract, which gives the buyer the right to buy or sell shares at a
specific price, on or before a specific date. For this, the buyer has to pay to the
seller some money, which is called premium. There is no obligation on the buyer
to complete the transaction if the price is not favorable to him. To take the buy/
sell position on index options you have to place certain %age of order value as
margin. With options trading, you can leverage on your trading limit by taking
buy/sell positions much more than what you could have taken in cash segment.

The Buyer of a call option has the right but not obligation to purchase the
underlying Asset at the specific strike price by paying a premium where as the
seller of the Call has the obligation of selling the Underlying Asset at the specific
strike price.

By paying lesser amount of premium, you can create position under OPTIONS
and take advantage of more trading opportunities.


INDIA INFOLINE brings you the same convenience while investing in Mutual
Funds as hassle free and less paperwork investing.
You can now invest in any mutual fund like standard charter MF, Prudential
ICICI MF, Alliance MF, Franklin Templeton MF, Sunderam MF, Birla sun life;
HDFC MF, Principal MF, etc are the mutual funds available for investment. You

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can invest in mutual funds without the hassles of identity proof. You need on
signature on the mutual fund .You also get on information of performance of your
investment through online current NAV.
You may invest / purchase prudential ICICI MF, JM MF, ALLIANCE MF,
HDFC MF and STANDARD CHARTERED MF without hassles of identity

When ever you required your money, you get it easily. For that purpose you put
on signature on the redemption form. You get you’re your money by on –line or
by physical process (cheque).

Systematic investment plan (SIP)

SIP allows you to invest a certain sum of money over a period of time
periodically. Just fill in the investment amount, the period of investment and the
frequency of investing and submit INDIA INFOLINE do the rest of your
investment automatically for you.

Systematic withdrawal program

This allows you to withdraw certain Sum of money over a period of time


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(Security Exchange Board Of India)

(National securities (Central depository
depository limited) services limited)

(National stock exchange) (Bombay stock exchange)



The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock

Exchange’ as any body of individuals, whether incorporated or not,
constituted for the purpose of assisting, regulating or controlling the
business of buying, selling or dealing in securities. Stock exchange

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could be a regional stock exchange whose area of operation/jurisdiction
is specified at the time of its recognition or national exchanges, which
are permitted to have nationwide trading since inception. NSE was
incorporated as a national stock exchange.

Total equity capital of a company is divided into equal units of small
denominations, each called a share. For example, in a company the total equity
capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such
unit of Rs 10 is called a Share. Thus, the company then is said to have 20,00,000
equity shares of Rs 10 each. The holders of such shares are members of the
company and have voting rights.

Equity Market
In finance a share is a unit of account for various financial instruments
including stocks, mutual funds, limited partnerships, and REIT's. In British
English, the usage of the word share alone to refer solely to stocks is so common
that it almost replaces the word stock itself.

In simple Words, a share or stock is a document issued by a company, which

entitles its holder to be one of the owners of the company. A share is issued by a
company or can be purchased from the stock market.

By owning a share you can earn a portion and selling shares you get capital gain.
So, your return is the dividend plus the capital gain. However, you also run a risk

of making a capital loss if you have sold the share at a price below your buying

Trade in shares
Every transaction in the stock exchange is carried out through licensed members
called brokers. To trade in shares, you have to approach a broker However, since
most stock exchange brokers deal in very high volumes, they generally do not

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entertain small investors. These brokers have a network of sub-brokers who
provide them with orders.

The general investors should identify a sub-broker for regular trading in shares
and place his order for purchase and sale through the sub-broker.

The sub/broker will transmit the order to his broker who will then execute it.

In equity market SEBI is actively participating without them equity market can’t
control so it necessary to know about SEBI.

An Index shows how a specified portfolio of share prices is moving in order to
give an indication of market trends. It is a basket of securities and the average
price movement of the basket of securities indicates the index movement, whether
upwards or downwards.

A depository is like a bank wherein the deposits are securities (viz. shares,
debentures, bonds, government securities, units etc.) in electronic form.


Dematerialization is the process by which physical certificates of an investor are

converted to an equivalent number of securities in electronic form and credited to
the investor’s account with his Depository Participant (DP).

The definition of ‘Securities’ as per the Securities Contracts Regulation Act

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(SCRA), 1956, includes instruments such as shares, bonds, scrips, stocks or other
marketable securities of similar nature in or of any incorporate company or body
corporate, government securities, derivatives of securities, units of collective
investment scheme, interest and rights in securities, security receipt or any other
instruments so declared by the Central Government.

Function of Securities Market:

Securities Markets is a place where buyers and sellers of securities can enter into
transactions to purchase and sell shares, bonds, debentures etc. Further, it
performs an important role of enabling corporate, entrepreneurs to raise resources
for their companies and business ventures through public issues. Transfer of
resources from those having idle resources (investors) to others who have a need
for them (corporate) is most efficiently achieved through the securities market.
Stated formally, securities markets provide channels for reallocation of savings to
investments and entrepreneurship. Savings are linked to investments by a variety
of intermediaries, through a range of financial products, called ‘Securities’.


Why does Securities Market need Regulators?

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The absence of conditions of perfect competition in the securities market makes
the role of the Regulator extremely important. The regulator ensures that the
market participants behave in a desired manner so that securities market continues
to be a major source of finance for corporate and government and the interest of
investors are protected.

Who regulates the Securities Market?

The responsibility for regulating the securities market is shared by Department of

Economic Affairs (DEA), Department of Company Affairs (DCA), Reserve Bank
of India (RBI) and Securities and Exchange Board of India (SEBI)


The Securities Exchange Board of India (SEBI) is the regulatory authority in
India established under Section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for
establishment of SEBI with statutory powers for

 Protecting the interests of investors in securities

 Promoting the development of the securities market and
 Registering and regulating the working of stock brokers, sub–brokers
 Promoting and regulating self-regulatory organizations
 Prohibiting fraudulent and unfair trade practices
SEBI has power for:

• Regulating the business in stock exchange and other securities market;

• Registering and regulating the working of stock brokers sub- brokers, share
transfer agents, bankers to an issue, trustees of trust deeds, registers to an
issue, merchant bankers, underwriters, portfolio manager, investment

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advisers and such other intermediaries who may be associated with
securities markets in any manners;

• Registering and regulating the working of depositaries, participants,

custodians of securities, foreign institutional investors, credit rating
agencies and such other intermediaries as SEBI may by notification,
specify in this behalf;

• Registering and regulating the working of venture capital funds and

collective investment schemes including mutual funds;

• Promoting and regulating self-regulatory organizations;

• Prohibiting fraudulent and unfair trade practices related to securities


• Promoting investor’s education and training of intermediaries securities

• Prohibiting insider trading in securities;

• Regulating substantial acquisition of shares and take-over of companies;

• Calling for information from, undertaking inspection, conducting inquiries

and audits of the stock exchanges, mutual and other persons associated with
the securities market;

• Conducting research for the above purpose.

• Calling from or furnishing to any such agencies, as may be specified by

SEBI, such information as may be considered necessary by it for the
efficient discharge of its functions.


Participants in the Securities Market:

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The securities market essentially has three categories of participants, namely, the
issuers of securities, investors in securities and the intermediaries, such as
merchant bankers, brokers etc. While the corporate and government raise
resources from the securities market to meet their obligations, it is households
that invest their savings in the securities market.

Is it necessary to transact through an intermediary?

It is advisable to conduct transactions through an intermediary. For example you

need to transact through a trading member of a stock exchange if you intend to
buy or sell any security on stock exchanges. You need to maintain an account
with a depository if you intend to hold securities in demat form.
You need to deposit money with a banker to an issue if you are subscribing to
public issues. You get guidance if you are transacting through an intermediary.
Chose a SEBI registered intermediary, as he is accountable for its activities. The
list of registered intermediaries is available with exchanges, industry associations

• A depository is an organization form to provide electronic depository
facilities for securities trade. Securities are then held in the electronic form
through the medium of participants (DPs). The national Securities
Depository Limited (NSDL) is the first Depository in India. The function of
NSDL is regulated by the SEBI.

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• The depository is not just another custodian. The depository can legally
transfer beneficial ownership. The main objective of depository is to reduce
settlement risk by minimizing paperwork involved in trading, settling and
transferring securities.

• To utilize the services offered by a depository, you must open an account

with the depository through a DP. The DP’s are the link between the
shareholders, the company and NSDL.

• Depending upon the DP. There may or may not be an opening account fees
towards transaction and custody.

• Banks, financial institutions, custodians and stockbrokers can becomeDPs

subject to their meeting certain requirements prescribed by NSDL and
SEBI. NSDL publishes the list of DPs registered with them, from time to

• The DP will provide you with a passbook or statement of account

periodically inform you on your holdings.

• You can even have a zero balance in your account.

• If you loose your statement of account inform the DP and obtain a


• If holdings in the statement are incorrect, approach the DP for clarification.

• If you receive an incorrect dividend amount, contact the company or


Main depository participants



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In order to solve the problems associated with trading securities, NSE joined
hand with the Industrial Development Bank of India (IDBI) and the Unit Trust
of India (UTI) to promote dematerizalition of securities.
NSDL, commenced operations in November 1996 and has since established a
national infrastructure of international standard to handle trading and
settlement in dematerialized form and thus completely eliminated the risk to
investors associated with fake paper.


The Kolkata Stock Exchange Association Limited, Bank Of India HDFC Bank
Limited CDSL is another Depository after NSDL. Its promoter are Bombay Stock
Exchange,, Standard chartered Bank, State Bank of India Bank Of Baroda Union
Bank Of India, Bank Of Maharastra Centurion Bank etc.

As on 30 June 2001 CDSL has signed agreement with 3297 companies. Of these 3528 are
available for Demat services. CDSL has 160 DPs offering Depository services in 78 cities
across 147 locations in the country.

Segments of Securities Market

The securities market has two interdependent segments: the primary (new issues)
market and the secondary market. The primary market provides the channel for

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sale of new securities while the secondary market deals in securities previously


Role of the Primary Market

The primary market provides the channel for sale of new securities. Primary
market provides opportunity to issuers of securities; Government as well as
corporate, to raise resources to meet their requirements of investment and/or
discharge some obligation.
They may issue the securities at face value, or at a discount/premium and these
securities may take a variety of forms such as equity, debt etc. They may issue the
securities in domestic market and/or international market.

Face Value of a share/debenture

The nominal or stated amount (in Rs.) assigned to a security by the issuer. For
shares, it is the original cost of the stock shown on the certificate; for bonds, it is
the amount paid to the holder at maturity. Also known as par value or simply par.
For an equity share, the face value is usually a very small amount (Rs. 5, Rs. 10)
and does not have much bearing on the price of the share, which may quote
higher in the market, at Rs. 100 or Rs. 1000 or any other price. For a debt
security, face value is the amount repaid to the investor when the bond matures
(usually, Government securities and corporate bonds have a face value of Rs.
100). The price at which the security trades depends on the fluctuations in the
interest rates in the economy.

Premium and Discount in a Security Market

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Securities are generally issued in denominations of 5, 10 or 100. This is known as
the Face Value or Par Value of the security as discussed earlier. When a security
is sold above its face value, it is said to be issued at a Premium and if it is sold at
less than its face value, then it is said to be issued at a Discount.


Why do companies need to issue shares to the public?

Most companies are usually started privately by their promoter(s). However, the
promoters’ capital and the borrowings from banks and financial institutions may
not be sufficient for setting up or running the business over a long term. So
companies invite the public to contribute towards the equity and issue shares to
individual investors. The way to invite share capital from the public is through a
‘Public Issue’. Simply stated, a public issue is an offer to the public to subscribe
to the share capital of a company. Once this is done, the company allots shares to
the applicants as per the prescribed rules and regulations laid down by SEBI.

Different kinds of issues

Primarily, issues can be classified as a Public, Rights or Preferential issues (also

known as private placements). While public and rights issues involve a detailed
procedure, private placements or preferential issues are relatively simpler. The
classification of issues is illustrated below:

• Initial Public Offering (IPO) is when an unlisted company makes

either a fresh issue of securities or an offer for sale of its existing securities
or both for the first time to the public. This paves way for listing and
trading of the issuer’s securities.

• A follow on public offering (Further Issue) is when an already

listed company makes either a fresh issue of securities to the public or an
offer for sale to the public, through an offer document.

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• Rights Issue is when a listed company which proposes to issue fresh
securities to its existing shareholders as on a record date. The rights are
normally offered in a particular ratio to the number of securities held prior
to the issue. This route is best suited for companies who would like to raise
capital without diluting stake of its existing shareholders.

• A Preferential issue is an issue of shares or of convertible securities by

listed companies to a select group of persons under Section 81 of the
Companies Act, 1956 which is neither a rights issue nor a public issue. This
is a faster way for a company to raise equity capital. The issuer company
has to comply with the Companies Act and the requirements contained in
the Chapter pertaining to preferential allotment in SEBI guidelines which
inter-alia include pricing, disclosures in notice etc.

Categories of shares

Group A: Shares in this category have a high Liquidity, Market

Capitalization and Capital Appreciation.

Group B1 and B2: Similar to A, but with a slightly lower Market

Capitalization and Appreciation but good liquidity. There are
financially healthy stocks.
Group C: It includes the odd lots of Categories of A, B1 and B2. As u
may be aware, Shares/Stocks are sold in Lots, any ODD lot remaining
among the A, B1, B2 Groups, are put under C Category.
Group F: It is a Debt Market Segment (Note A. B1.B2 are all only
Group T: Their settlement needs to be done by DELIVERY only.
Trading under "T", means, actual delivery of Scrip’s is warranted.
Group Z: Suspended Lots of Shares. They are suspended due to non-
compliance of SEBI Norms.

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Issue price

The price at which a company's shares are offered initially in the primary market
is called as the Issue price. When they begin to be traded, the market price may be
above or below the issue price.

Market Capitalization

The market value of a quoted company, which is calculated by multiplying its

current share price (market price) by the number of shares in issue, is called as
market capitalization. E.g. Company A has 120 million shares in issue. The
current market price is Rs. 100. The market capitalization of company A is Rs.
12000 million.
Initial Public Offer (IPO)

An Initial Public Offer (IPO) is the selling of securities to the public in the
primary market. It is when an unlisted company makes either a fresh issue of

Page | 36
securities or an offer for sale of its existing securities or both for the first time to
the public. This paves way for listing and trading of the issuer’s securities. The
sale of securities can be either through book building or through normal public

Who decides the price of an issue?

Indian primary market ushered in an era of free pricing in 1992. Following this,
the guidelines have provided that the issuer in consultation with Merchant Banker
shall decide the price. There is no price formula stipulated by SEBI. SEBI does
not play any role in price fixation. The company and merchant banker are
however required to give full disclosures of the parameters which they had
considered while deciding the issue price. There are two types of issues, one
where company and Lead Merchant Banker fix a price (called fixed price) and
other, where the company and the Lead Manager (LM) stipulate a floor price or a
price band and leave it to market forces to determine the final price (price
discovery through book building process).

How does one know if shares are allotted in an IPO/offer

for sale? What is the timeframe for getting refund if shares
not allotted?
As per SEBI guidelines, the Basis of Allotment should be completed with 15 days
from the issue close date. As soon as the basis of allotment is completed, within 2
working days the details of credit to demat account / allotment advice and
dispatch of refund order needs to be completed. So an investor should know in
about 15 days time from the closure of issue, whether shares are allotted to him or

Does NSE provide any facility for IPO?

Yes. NSE’s electronic trading network spans across the country providing access
to investors in remote areas. NSE decided to offer this infrastructure for

Page | 37
conducting online IPOs through the Book Building process. NSE operates a fully
automated screen based bidding system called NEAT IPO that enables trading
members to enter bids directly from their offices through a sophisticated
telecommunication network. Book Building through the NSE system offers
several advantages:
• The NSE system offers a nation wide bidding facility in securities
• It provide a fair, efficient & transparent method for collecting bids using
the latest electronic trading systems
• Costs involved in the issue are far less than those in a normal IPO
• The system reduces the time taken for completion of the issue process
The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the
IPO, the session timings can be further extended on specific request by the Book
Running Lead Manager.

What is ‘Lock-in’?

‘Lock-in’ indicates a freeze on the sale of shares for a certain period of time.
SEBI guidelines have stipulated lock-in requirements on shares of promoters
mainly to ensure that the promoters or main persons, who are controlling the
company, shall continue to hold some minimum percentage in the company after
the public issue.

SEBI’s Role in an Issue

Any company making a public issue or a listed company making a rights issue of
value of more than Rs 50 lakes is required to file a draft offer document with
SEBI for its observations. The company can proceed further on the issue only
after getting observations from SEBI. The validity period of SEBI’s observation
letter is three months only i.e. the company has to open its issue within three
months period.

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Secondary market refers to a market where securities are traded after
being initially offered to the public in the primary market and/or listed
on the Stock Exchange. Majority of the trading is done in the secondary
Secondary market comprises of equity markets and the debt markets.

Role of the Secondary Market

For the general investor, the secondary market provides an efficient platform for
trading of his securities. For the management of the company,
Secondary equity markets serve as a monitoring and control conduit—by
facilitating value-enhancing control activities, enabling implementation of
incentive-based management contracts, and aggregating information (via price
discovery) that guides management decisions.

Difference between the Primary Market and the Secondary


In the primary market, securities are offered to public for subscription for the
purpose of raising capital or fund. Secondary market is an equity trading venue in
which already existing/pre-issued securities are traded among investors.
Secondary market could be either auction or dealer market. While stock exchange
is the part of an auction market, Over-the-Counter (OTC) is
a part of the dealer market.


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Role of a Stock Exchange in buying and selling shares

The stock exchanges in India, under the overall supervision of the regulatory
authority, the Securities and Exchange Board of India (SEBI), provide a trading
platform, where buyers and sellers can meet to transact in securities. The trading
platform provided by NSE is an electronic one and there is no need for buyers and
sellers to meet at a physical location to trade. They can trade through the
computerized trading screens available with the NSE trading members or the
internet based trading facility provided by the trading members of NSE.

Leading Stock exchanges in India

Currently, two stock exchanges in India,

• National Stock Exchange (NSE) and

• Bombay Stock Exchange (BSE)


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The National Stock Exchange of India Ltd. (NSE), set up in the year
1993, is today the largest stock exchange in India and a preferred exchange for
trading in equity, debt and derivatives instruments by investors. NSE has set up a
sophisticated electronic trading, clearing and settlement platform and its
infrastructure serves as a role model for the securities industry. The standards set
by NSE in terms of market practices; products and technology have become
industry benchmarks and are being replicated by many other market participants.
It provides a screen-based automated trading system with a high degree of
transparency and equal access to investors irrespective of geographical location.

The high level of information dissemination through the on-line system has
helped in integrating retail investors across the nation. The exchange has a
network in more than 350 cities and its trading members are connected to the
central servers of the exchange in Mumbai through a sophisticated
telecommunication network comprising of over 2500 VSATs. NSE has around
850 trading members and provides trading in over 1000 equity shares and 2500

Page | 41
debt securities. Besides this, NSE provides trading in various derivatives products
such as index futures, index options, stock futures, stock options and interest rate

At NSE, it has always been our endeavor to continuously upgrade the skills and
proficiency of the Indian investor. Since, financially literate investors are the
backbone of the securities market, knowledge and awareness about the securities
market is of the foremost concern to us, starting with the most basic of
information being made available as the first step.

This booklet has therefore been prepared for those of you who are keen to acquire
some basic but key information about the stock markets as an initial step towards
becoming a more informed investor. We hope this booklet will act as a means of
satisfying some of your initial queries on the stock markets.


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Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a
rich heritage. Popularly known as "BSE", it was established as "The Native Share
& Stock Brokers Association" in 1875. It is the first stock exchange in the country
to obtain permanent recognition in 1956 from the Government of India under the
Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-
eminent role in the development of the Indian capital market is widely recognized
and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons
(AOP), the Exchange is now a demutualised and corporatised entity incorporated
under the provisions of the Companies Act, 1956, pursuant to the BSE
(Corporatization and Demutualization) Scheme, 2005 notified by the Securities
and Exchange Board of India (SEBI).

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The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-
weighted index composed of 30 stocks with the base April 1979 = 100. It consists
of the 30 largest and most actively traded stocks, representative of various sectors,
on the Bombay Stock Exchange. These companies account for around one-fifth of
the market capitalization of the BSE.

The base value of the Sensex is 100 on April 1, 1979 and the base year of BSE-
SENSEX is 1978-79.

At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and
modify its composition to make sure it reflects current market conditions.

The abbreviated form "Sensex" was coined by Deepak Mohoni around 1990
while writing market analysis columns for some of the business newspapers and
magazines. It gained popularity over the next year or two.

The stock market has grown by over ten times from June 1990 to today. Using
information from April 1979 onwards, the long-run rate of return on the BSE
Sensex can be estimated to be 0.52% per week (continuously compounded) with a
standard deviation of 3.67%. This translates to 27% per annum, which translates
to roughly 18% per annum after compensating for inflation.

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Screen Based Trading

The trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of
trades. This was time consuming and inefficient. This imposed limits on trading
volumes and efficiency. In order to provide efficiency, liquidity and transparency,
NSE introduced a nationwide, on-line, fully automated screen based trading
system (SBTS) where a member can punch into the computer the quantities of a
security and the price at which he would like to transact, and the transaction is
executed as soon as a matching sale or buy order from a counter party is found.


NSE is the first exchange in the world to use satellite communication technology
for trading. Its trading system, called National Exchange for Automated Trading
(NEAT), is a state of-the-art client server based application. At the server end all
trading information is stored in an in memory database to achieve minimum
response time and maximum system availability for users. It has uptime record of
99.7%. For all trades entered into NEAT system, there is uniform response time
of less than one second.

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Hedgers :
Hedgers are those who protect themselves from the risk associated with the price
of an asset by using derivatives. A person keeps a close watch upon the prices
discovered in trading and when the comfortable price is reflected according to his
wants, he sells futures contracts. In this way he gets an assured fixed price of his
In general, hedgers use futures for protection against adverse future price
movements in the underlying cash commodity. Hedgers are often businesses, or
individuals, who at one point or another deal in the underlying cash commodity.

Speculators :
Speculators are some what like a middle man. They are never interested in actual
owing the commodity. They will just buy from one end and sell it to the other in
anticipation of future price movements. They actually bet on the future movement
in the price of an asset.

They are the second major group of futures players. These participants include
independent floor traders and investors. They handle trades for their personal
clients or brokerage firms.

Arbitrators :
According to dictionary definition, a person who has been officially chosen to
make a decision between two people or groups who do not agree is known as
Arbitrator. In commodity market Arbitrators are the person who takes the
advantage of a discrepancy between prices in two different markets. If he finds
future prices of a commodity edging out with the cash price, he will take
offsetting positions in both the markets to lock in a profit. Move over the
commodity futures investor is not charged interest on the difference between
margin and the full contract value.

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How does an investor get access to internet based trading
There are many brokers of the NSE who provide internet based trading facility to
their clients. Internet based trading enables an investor to buy/sell securities
through internet which can be accessed from a computer at the investor’s
residence or anywhere else where the client can access the internet. Investors need
to get in touch with an NSE broker providing this service to avail of internet
based trading facility.

Contract Note

Contract Note is a confirmation of trades done on a particular day on behalf of the

client by a trading member. It imposes a legally enforceable relationship between
the client and the trading member with respect to purchase/sale and settlement of
trades. It also helps to settle disputes/claims between the investor and the trading
member. It is a prerequisite for filing a complaint or arbitration proceeding
against the trading member in case of a dispute. A valid contract note should be in
the prescribed form, contain the details of trades, stamped with requisite value
and duly signed by the authorized signatory. Contract notes are kept in duplicate,
the trading member and the client should keep one copy each.
After verifying the details contained therein, the client keeps one copy and returns
the second copy to the trading member duly acknowledged by him.

Contract note issued by the stock broker

A broker has to issue a contract note to clients for all transactions in the form
specified by the stock exchange. The contract note inter-alia should have

• Name, address and SEBI Registration number of the Member broker.

• Name of partner/proprietor/Authorized Signatory.
• Dealing Office Address/Tel. No./Fax no., Code number of the member
given by the Exchange.

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• Contract number, date of issue of contract note, settlement number and
time period for settlement.

• Constituent (Client) name/Code Number.

• Order number and order time corresponding to the trades.
• Trade number and Trade time.
• Quantity and kind of Security bought/sold by the client.
• Brokerage and Purchase/Sale rate.
• Service tax rates, Securities Transaction Tax and any other charges levied
by the broker.
• Appropriate stamps have to be affixed on the contract note or it is
mentioned that the consolidated stamp duty is paid.
• Signature of the Stock broker/Authorized Signatory.

Why should one trade on a recognized stock exchange only

for buying/selling shares?

An investor does not get any protection if he trades outside a stock exchange.
Trading at the exchange offers investors the best prices prevailing at the time in
the market, lack of any counter-party risk which is assumed by the clearing
corporation, access to investor grievance and redressed mechanism of stock
exchanges, protection up to a prescribed limit, from the Investor Protection Fund

How to know if the broker or sub broker is registered?

One can confirm it by verifying the registration certificate issued by SEBI. A

broker's registration number begins with the letters ‘INB’ and that of a sub broker
with the letters ‘INS’.

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Precautions must one take before investing in the stock

Here are some useful pointers to bear in mind before you invest in the markets:
• Make sure your broker is registered with SEBI and the exchanges and do
not deal with unregistered intermediaries.
• Ensure that you receive contract notes for all your transactions from your
broker within one working day of execution of the trades.
• All investments carry risk of some kind. Investors should always know the
risk that they are taking and invest in a manner that matches their risk
• Do not be misled by market rumors, luring advertisement or ‘hot tips’ of
the day.
• Take informed decisions by studying the fundamentals of the company.
Find out the business the company is into, its future prospects, quality of
management, past track record etc Sources of knowing about a company
are through annual reports, economic magazines, and databases available
with vendors or your financial advisor.
• If you’re financial advisor or broker advises you to invest in a company
you have never heard of, be cautious. Spend some time checking out about
the company before investing.
• Do not be attracted by announcements of fantastic results/news reports,
about a company. Do your own research before investing in any stock.
• Do not be attracted to stocks based on what an internet website promotes,
unless you have done adequate study of the company.
• Investing in very low priced stocks or what are known as penny stocks does
not guarantee high returns.
• Be cautious about stocks which show a sudden spurt in price or trading
• Any advice or tip that claims that there are huge returns expected,
especially for acting quickly, may be risky and may to lead to losing some,
most, or all of your money.

Page | 49

Page | 50
Market Research Analysis

Preference of investment

7% 2%
Only shares --75%
Mutual Funds --16%
Bonds --7%
Derivatives --2%


Interpretation: This shows that although the mutual fund market is on rise
yet, the most favored investment continues to be in the Share Market. So, with a
more transparent system, investment in the Stock Market can definitely be

Awareness of online share trading


Ye s -- 91%

No -- 9%


Interpretation: With the increase in cyber education, the awareness towards

online share trading has increased by leaps and bounds. This awareness is
expected to increase further with the increase in internet education.

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Awareness of India Infoline as a Brand

Yes -- 63%
No -- 37%


Interpretation: This pie-chart shows that INDIA INFOLINE has reasonable

amount of Brand awareness in terms of a premier Retail Stock Broking Company.
This brand image should be further levered by the company to increase its market
share over its competitors.

Awareness of INDIA INFOLINE Facilities


Yes -- 20%
No -- 80%


Interpretation: although there is sufficiently high brand equity among the

target audience yet, it is to be noted that the customers are not aware of the
facilities provided by the company meaning thereby, that the company should
concentrate more towards promotional tools and increase its focus on product
awareness rather than brand awareness.

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DEMAT Account Market

18% 20%

ICICI Direct-25%
15% India Bulls-22%


Interpretation: This shows that even with sufficiently high Brand Equity,
INDIA INFOLINE ranks only 3rd amongst the Demat Account providers. This is
probably because of two main reasons.
1. Lack of promotion and unfocussed approach towards Product awareness.
2. Non – transparent marketing policies of the company.
Hence, the company should crystallize its products and should indulge in
aggressive marketing and promotion.

Satisfaction Level among Customers with Current Broker


Yes -- 92%

No -- 8%


Interpretation: This pie-chart accentuates the fact that Strategic Marketing,

today, has gone beyond only meeting sales targets and generating profit volumes.
It shows that all the competitors are striving hard not only to woo the customer
but also to make them Brand loyal by generating customer satisfaction.

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Frequency of Trading
11% 9%

25% Daily-9%


Interpretation: In spite of the huge returns that the share market promises, we
see that there is still a dearth of active trade and investors. This is because of non
transparent structure of the Indian share market and the skepticism of the target
audience that is generated by the volatility of the stock market. It requires
efficient bureaucratic intervention on the part of the Government.

Percentage of Earning Invested In Share Trading

7% 2%

Upto 10%--71%
Upto 25%--19%
Upto 50%--7%
Above 50%--3%


Interpretation: This shows that people invest only up to 10% of their earnings
in the stock market, again reiterating the volatile and non-transparent structure of
the Indian stock market. Hence, effective and efficient steps should be undertaken
to woo the customers to investment more in the lucrative stock market.

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Rating of Share Trading Companies

13% 20%

ICICI Direct-30%
40% 27%

Interpretation: The survey indicated that people ranked INDIA INFOLINE at

the 3rd position as an online stock broking company. Even after relatively low
brokerages and better services being provided in competitors, INDIA INFOLINE
is not at top spot because of ineffective marketing and promotion strategies.
Hence, the company should indulge in to aggressive marketing and promotional
methods and should approach this problem in a more structured format.

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The study is aimed at analysis of securities from a selected sector viz, cement
industry. The tools used, fundamental analysis, is objective and empirically
proven to value securities.
The five companies that contribute to the portfolio construction are selected on
the basis of earning per share and the relative market capitalization they have. The
past performance and the volume of trading in the market are also taken in to
consideration. These five companies are in turn selected from a bigger list of ten
companies, which are taken on random basis from the NSE (National stock
exchange) NIFTY cement industry. It gives investor an idea as to the avenues in
cement and marketing industry where in he could make his investment.

Data was collected from primary as well as secondary sources.

 Discussion with members, staff and brokers of IIFL

 Observation of trading sessions.

 Various web sites of stock markets
 Software packages of CSE
 Published financial documents of companies.
 Financial research reports of government and non-government
 Various books and journals of portfolio management.

Page | 56

The research was conducted for a period of 6 weeks


The main purpose of fundamental analysis is to find out the intrinsic value of a
security. The intrinsic value is the true economic worth of a financial asset. Other
than intrinsic value various ratios are also used to compare the company with
other companies and with the industry.

Profit after Tax (PAT)

Earning Per Share (EPS) =
No. of equity shares

Amount declared as dividend

Dividend Per share (DPS) =
No of equity shares

Dividend per share

Pay Out Ratio =
Earning Per Share

Return On Equity =
Net worth

Net worth = Share capital + Reserve and Surplus

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Market price of share
Price Earning Ratio =

Current asset
Current Ratio =
Current liability

Price Earning Average = Average of the price earning range.

Total debt
Debt Equity Ratio =
Owner’s capital

Net Profit Margin =
Net sales


Dividend Per Share

Dividend Pay Out Ratio (DPOR) =

Earning Per Share

Sum of DPOR for 5 years
Average DPRO for five years =
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Average retention ratio = 1 – Average DPOR

Sum of ROE for 5 years

Average Return On Equity =

Long term growth rate in dividend and earnings = Average retention ratio *
Average ROE

Sum of PE ratio for 5 years

Normalized average price earning =

INTRENSIC VALUE = Projected EPS * Normalized average price earning


Projected DPS = Dividend for the year * ( 1 + Growth rate )


Page | 59
1. To analyze the growth rate of the organization
2. The main objective of the study is to compare the intrinsic value of scrip’s
with market values and recommends, buy or sell options.
3. Analysis of company performance through various ratios
4. To find the earning performance of the organization.
5. To get an idea for the investor for making investment.


Performance evaluation of three major players in cement industry in India is
done by calculating Pay out ratio; R.O.E, PE ratio etc and calculations are based
on the data for the final year ending 31 March over the years.



YEAR 2009 2008 2007 2006 2005

E.P.S 73.2 63.60 37.79 20.19 10.78
D.P.S 20.0 15.00 10.06 7.03 4.00
Pay Out 0.27 0.24 0.27 0.35 0.37

Source: Compiled from the audited financial statements of ACC LTD for
the respective years

Page | 60
The table reveals the E.P.S of Acc Ltd shows a Steady increase from 10.78
in 2005 to 73.2 in 2009. This is a good boost to build the investors’
confidence in the company.

The D.P.S & Pay out ratio shows a decrease from the year 2003 to 2008.
This indicates that company had adopted measure for retaining the profits
rather than paying out as dividend. This in turn will help the company to
have funds accumulated for future growth.


2009 2008 2007 2006 2005


Page | 61
YEAR 2009 2008 2007 2006 2005
Share Capital 187.83 187.48 184.72 178.74 177.40
Reserve & 3964.78 2955.16 1951.21 1418.45 1175.79
Net Worth 4152.61 31426.40 21359.30 15971.90 13531.90
Profit After 1438.59 1231.84 5441.80 3783.90 2002.40
R.O.E 34.64 39.20 25.48 23.69 14.80

Table reveals the R.O.E of ACC ltd shows a steady increase from 14.80 in
2005 to 34.64 in 2009. This shows the increase in Net Profit. This is a good
boost to build the investors confidence in the company



YEAR Market price E.P.S P.E Ratio%

2009 504.85 73.2 .689

Source: Compiled from the audited financial statements of ACC Ltd for the
respective years



YEAR 2009 2008 2007 2006 2005

Sales 6878.0 56603.4 31601.8 38874.0 32746.10
0 0 0 0
P.A.T 1438.5 1231.84 5441.80 3783.90 2002.40
E.P.S 73.2 63.60 37.79 20.19 10.78
D.P.S 20.00 15.00 10.06 7.03 4.00

Page | 62
The Net profit Ratio indicates that the profitability of the company is
improving over the years and indicates the efficiency in the management



YEAR 2009 2008 2007 2006 2005 2004

Current 1.00 1.00 0.91 0.92 0.95 0.93
Debt Equity .18 0.40 0.72 0.95 1.07 1.46
Net Profit 23.5 21.76 17.22 9.73 6.11 3.64
Margin % 6
Source: Compiled from the audited financial statements of ACC LTD for
the respective years.
The current Ratio of ACC Ltd
YEAR SALES throughout the period under
2009 68780.0 study is below the benchmark of
2:1 Table indicates that the
2008 56603.40 liquidity and short term
2007 31601.80 solvency of the company is not
The Debt Equity Ratio of ACC Ltd throughout the period under study is
below the maximum limit of 1:1 indicates long term solvency of the firm is

Page | 63


Source: Compiled from the audited financial statements of ACC LTD for
the respective years.
CHART 1.2 1.7


30000 SALES
2009 2008 2007 2006 2005



2009 1438.59
2008 1231.84
2007 5441.80
2006 3783.90
2005 2002.40
Source: Compiled from the audited financial statements of ACC LTD for
the respective years

Page | 64


PAT 3000
2009 2008 2007 2006 2005



2009 34.64
2008 39.20
2007 25.48
2006 23.69
2005 14.80

Source: Compiled from the audited financial statements of ACC LTD for the
respective years

Page | 65


2009 2008 2007 2006 2005


 Average Payout Ratio

= 0.27+0.24+.27+0.35+0.43

= 0.31

 Average Retention Ratio

= 0.69

 Average Return On Equity



Page | 66
 Normalized P.E Ratio

= 0.689

 Long Term Growth Rate in Dividend & Earnings

=P.E Ratio * Average Retention Ratio
= 0.689* 0.69
= 0.475%

 Projected Earnings Per Share

=Earning Per Share * Growth In Equity

Growth in Equity
= Average Retention Ratio * Average Return On Equity
= 0.69 * 27.56
= 19.02

Projected Earning Per Share

= 73.2 * 19.02
= 1392.26

 Intrinsic Value

= Projected E.P.S * P.E ratio

= 959.27

The market price as on 31 January 2009 is 504.85. Since the market

price is lower than intrinsic value (959.27), such share is considered to
be under priced and this share is suitable for investment.

Page | 67


YEAR 2009 2008 2007 2006 2005

E.P.S 239.03 167.5 94.10 96.62 85.01
D.P.S 30 27.5 20.0 16 14
Pay Out Ratio 0.13 0.16 0.21 0.16 0.16

Source: Compiled from the audited financial statements of GRASIM

INDUSTRIES for the respective years

The Table reveals the E.P.S of Grasim Industries shows a steady increase from
85.01 in 2005 to 239.03 in 2009. This is a good boost to build the investors
confidence in the company.
The DPS shows a steady increase and Pay out ratios shows fluctuation in all 5
year. This indicates the company has adopted measure for retaining the profits
rather than paying out as dividend. This in turn will help the company to have
funds accumulated for future growth.








2009 2008 2007 2006 2005

Page | 68

YEAR 2009 2008 2007 2006 2005
Share Capital 916.90 916.90 916.90 916.90 916.90
Reserve & Surplus 8044.12 61383.5 48903.90 42366.60 35191.40
Net Worth 8135.81 62300.4 49820.80 43283.50 36108.30
Profit After Tax 2232.6 15358.1 8632.10 8857.10 7792.60
R.O.E 27.44 24.65 17.33 20.46 21.58

Source: Compiled from the audited financial statements of GRASIM

INDUSTRIES for the respective years



YEAR Market Price E.P.S P.E Ratio%
2009 1197.30 239.03 0.5

Source: Compiled from the audited financial statements of GRASIM

INDUSTRIES for the respective years


YEAR 2009 2008 2007 2006 2005
Sales 10278.68 86044.50 66728.10 62060.70 52217.50
P.A.T 2232.6 15358.10 8632.10 8857.10 7792.60
E.P.S 239.03 167.5 94.10 96.62 85.01
D.P.S 0.30 27.5 20 16 14

Source: Compiled from the audited financial statements of GRASIM

INDUSTRIES for the respective years

Page | 69

YEAR 2009 2008 2007 2006 2005
Current Ratio 0.90 0.94 0.93 0.86 0.82
Debt Equity 0.43 0.44 0.43 0.51 0.63
Net Profit 20.15 17.85 12.94 14.27 14.94
Margin %

Source: Compiled from the audited financial statements of GRASIM

INDUSTRIES for the respective years

The current Ratio of GRASIM INDUSTRIES throughout the period under study is
below the benchmark of 2:1, The Table indicates that the liquidity and short term
solvency of the company is not satisfactory.
The debt Equity Ratio of Grasim Industries throughout the period under study is
below the maximum limit of 1:1, indicates long term solvency of the firm is

2009 10278.68
2008 86044.50
2007 66728.10
2006 62060.70
2005 52217.50



Page | 70
Source: Compiled from the audited financial statements of GRASIM
INDUSTRIES for the respective years



30000 SALES
2009 2008 2007 2006 2005



2009 2232.6
2008 15358.10
2007 8632.10
2006 8857.10
2005 7792.60

Source: Compiled from the audited financial statements of GRASIM

INDUSTRIES for the respective years
Page | 71




10000 P.A.T(RS.MN)


2009 2008 2007 2006 2005



2009 27.44
2008 24.65
2007 17.33
2006 20.46
2005 21.58

Source: Compiled from the audited financial statements of GRASIM

INDUSTRIES for the respective years


Page | 72


15 Series1
2009 2008 2007 2006 2005


 Average Payout Ratio

= 0.13+0.16+0.21+0.16+0.16

= 0.164

 Average Retention Ratio

= 0.84

 Average Return On Equity



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 Normalized P.E Ratio

= 0.5

 Long Term Growth Rate in Dividend & Earnings

=P.E Ratio * Average Retention Ratio

= 0.84 * 0.5
= 0.42%

 Projected Earnings Per Share

=Earning Per Share * Growth In Equity

Growth in Equity
= Average Retention Ratio * Average Return On Equity
= 0.84 * 22.29
= 18.72

Projected Earning Per Share

= Earning Per Share*Growth In Equity

= 239.03 * 18.72
= 4475.50

 Intrinsic Value
= Projected E.P.S * P.E ratio
= 2237.75

The market price as on 31 January 2009 is 1197.30. Since the market price is
lower than intrinsic value (2237.75), such share is considered to be under priced
and this share is suitable for investment.

Page | 74


YEAR 2009 2008 2007 2006 2005

E.P.S 11.03 6.32 3.27 17.75 13.40
D.P.S 175 16.5 90 80 70
Pay Out Ratio 0.16 0.26 0.28 0.45 0.52

Source: Compiled from the audited financial statements of GUJARATH

AMBUJA CEMENT for the respective years

The Table reveals the EPS of Gujarat Ambuja Cement shows a fluctuating trend
over the years. This is not favorable to build the investors confidence in the
The DPS & Payout ratio was showing an increasing trend but in the last year it is
decreased due to several market fluctuations. This indicates the company had

adopted measure for retaining the profits rather than paying out as dividend. This
in turn will help the company to have funds accumulated for future growth


Page | 75




2009 2008 2007 2006 2005


YEAR 2009 2008 2007 2006 2005
Share Capital 3044.8 3033.70 2703.80 1794 1553.00
Reserve & Surplus 4356.39 31872.1 19080.10 18422.90 14612.50
Net Worth 46608.7 34905.8 21783.90 20216.90 16165.50
Profit After Tax 1769.1 1503.25 4682.90 3367.90 2220.90
R.O.E 3.79 4.31 21.50 16.66 13.74

Source: Compiled from the audited financial statements of GUJARATH

AMBUJA CEMENT or the respective years

Page | 76

YEAR Market Price E.P.S P.E Ratio%

2009 70.45 11.03 0.64

Source: Compiled from the audited financial statements of f GUJARATH

AMBUJA CEMENT or the respective years


YEAR 2009 2008 2007 2006 2005
Sales 56713.9 62141.60 25979.50 19583.40 17347.20
P.A.T 1769.1 1503.25 4682.90 3367.90 2220.90
E.P.S 11.03 6.32 3.27 17.75 13.40
D.P.S 175 165 90 80 70

Source: Compiled from the audited financial statements of GUJARATH

AMBUJA CEMENT for the respective years


YEAR 2009 2008 2007 2006 2005
Current Ratio 1.05 0.91 0.63 0.76 1.12
Debt Equity 0.15 0.35 0.57 0.83 1.10
Net Profit 29.67 24.19 18.03 17.20 12.80
Margin %

Source: Compiled from the audited financial statements of GUJARATH

AMBUJA CEMENT for the respective years

Page | 77
The current ratio of Ambuja Cements throughout the period under study is below
the benchmark 2:1. Table indicates that the liquidity and short term solvency of
the company is not satisfactory.

The Debt Equity Ratio throughout the period under study is below the maximum
limit of 1:1, indicates long term solvency of the firm is satisfactory.



2009 56713.9 SALES TURN OVER
2008 62141.60
2007 25979.50
2006 19583.40 AMBUJA CEMENT
2005 17347.20 LIMITED

Source: Compiled from the audited financial statements of GUJARATH

AMBUJA CEMENT for the respective years


Page | 78

30000 SALES
2009 2008 2007 2006 2005




2009 1769.1
2008 1503.25
2007 4682.90
2006 3367.90
2005 2220.90

Source: Compiled from the audited financial statements of GUJARATH AMBUJA

CEMENTS for the respective years


Page | 79

PAT 2500
2000 P.A.T(RS.MN)
2009 2008 2007 2006 2005



2009 3.79
2008 4.31
2007 21.50
2006 16.66
2005 13.74

Source: Compiled from the audited financial statements of GUJARATH AMBUJA

CEMENTS for the respective years


Page | 80




2009 2008 2007 2006 2005



 Average Payout Ratio

= 0.16+0.26+0.28+0.45+0.52

= 0.334

 Average Retention Ratio

= 0.67

 Average Return On Equity


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 Normalized P.E Ratio

= 0.64

 Long Term Growth Rate in Dividend & Earnings

=P.E Ratio * Average Retention Ratio

= 0.64 * 0.67
= 0.43%

 Projected Earnings Per Share

=Earning Per Share * Growth In Equity

Growth in Equity
= Average Retention Ratio * Average Return On Equity
= 0.67 * 12.00
= 8.04

Projected Earning Per Share

= 11.03 * 8.04
= 88.68

 Intrinsic Value
= Projected E.P.S * P.E ratio
= 56.75

The market price as on 31 January 2009 is 70.45. Since the market price is
higher than intrinsic value (56.75), such share is considered to be over priced
and this share is not suitable for investment.

Page | 82

Of India Infoline ltd.

Page | 83
A SWOT analysis focuses on the internal and external
environments, examining strengths and weaknesses in
the internal environment and opportunities and threats
in the external environment.


As products of INDIA INFOLINE is a extremely innovative product with very

less cost. Services like online trading facility, institutional and domestic
broking, customized research reports with almost 80% efficiency etc give
INDIA INFOLINE an edge over its competitors. INDIA INFOLINE provides

Page | 84
other support services that make retail investors more confident and assured
with their trading. SMS alerts (allowing traders and investors to make the
most of the available opportunities), Softer, intangible features like imagery,
equity driving preference. Through efficient trading processes Investors can
place their orders directly on the Internet, do all the information seeking and
basically own the investing process.

Distribution Network

We have a growing network of 150 branches and more than 300 business partners
spread across 180 cities in India and a fully operational international office at
OUR target is to have 350 branches and 1000 business partners in 300 cities of
India and more than 7 International offices by the end of 2006.
Unlike a traditional broking firm, INDIA INFOLINE group works on the
philosophy of partnering for wealth creation.

Company’s product line is quite flexible in the sense that there is a product for
every kind of investors. Also all the products cover all the loop holes of all the
products offered by the other competitors like low cost, user friendly online
trading services etc.



Though the company has efficient products but large part of investment interested
population does not know the company. The most basic expectation for a trader or
investor when one begins trading is that one must get timely delivery of shares

Page | 85
and proceeds from sale of shares. Also ones cash balances with the broker must
be safe and secure. Though this confidence in the broker comes with time and
experience, good and transparent practices also play a major role in imbibing
confidence in traders

Competition from Banks

Most of the banks due to good branding have the faith of the customers of their
banking database. So they enjoy the liberty of huge database and customers find it
more reliable to trade there rather than with a unknown broker. Also banks like
HDFC Bank and ICICI Bank have the advantage of linking the trading accounts
of their customers to saving accounts. This makes trading easier, and at the same
time a trader withdraws exactly as much money from his account as is needed to
complete the trade. Similarly sales proceeds are credited directly to saving


The external environment analysis may reveal certain new opportunities for profit
and growth.

Page | 86
Ever-Increasing Market

After the NSE brought the screen based trading system stock markets are now
more secured which has attracted lot of retail investors and the demand is
increasing day by day. This has resulted in improved liquidity and heavy volumes
on transactions. INDIA INFOLINE is one of the early entrants here. As to how
much it will roar and how swift it can swoop on the market, the future alone can
answer such queries. INDIA INFOLINE has been a mega player and is known for
being a mover of stocks. It is also known for putting big deals through and enjoys
good networking with the FIIs. It has been dynamic enough to move with the
times and capture the opportunities that the market throws up from time to time.

Improving Technology

In country like India technology is always improving which gives the company a
chance to keep on improving their product with time whereas for the small
players like local brokers it will be difficult to keep the same pace as the changing
technology. Also with SEBI lying down some strict guidelines small brokers are
finding it harder to retain the customers with no research department and small
capital. The traditional business model is highly dependent on a large network of
sub-brokers, and many established players may not have systems (technology,
customer service, etc.) capable of directly servicing so many retail customers.

Unfulfilled Needs Of The Customers

With so many competitors offering their products in the market but no one is able
to completely satisfy the customers. Some have the problem of lack of
information or some were scared of volatility of the stock markets. INDIA
INFOLINE has the opportunity to tap this unsatisfied set of customers and to
make hold in the market. The Internet serves to break all barriers to information,
as it offers an extremely hassle-free investing platform. And, INDIA INFOLINE
hopes to fully utilize and capitalize on this platform. This original idea by INDIA

Page | 87
INFOLINE itself was born out of the consumer's need for a more transparent,
easy to understand and convenient option of investing in stocks.

Education Level
The education level in the country is improving year after year as far as
technology goes. With that the understanding of the stock market is also
increasing and a lot of retail investors are steeping in the markets which are being
shown by increasing volumes, transactions and indices.

New Competitors

A lot of new competitors are trying to enter the market in this bullish run to taste
the flavor of this cherry. This is creating a lot of competition for large players like
INDIA INFOLINE and it is creating little confusion in the minds of the customers
about the services provided by the broker. Also many banking firms are entering
into the market with huge investment. Competitors like ICICI, kotuku; HDFC, 5-
paisa etc. are posing a lot of threats to the company.

Page | 88
Technology Based Business
Online trading is totally based on the technology which is quite complex.
Typically, the technology solution has to start from the Internet front-end
(or the screen that you see when you begin trading). Then it needs to get into
the 'middle tier' of risk management systems that assess data from banks and
depository participants (DP), calculate client risk at that point in time, and
give the 'Go/No go' advice to the trade. So technology is a kind of threat
because unless until it is working properly it is good but internet is not that
safe. Though a lot of cyber laws are being made but not yet executed.


In Equity and online trading, INDIA INFOLINE have mainly

competition with,, HDFC, comes at no. retail broker. It has an advantage of being in
this industry for more than 8 decades. It has launched its website in
2000 and were among the first player in the online share trading. The
INDIA INFOLINE has decided to spend its advertisement budget
through four medias i.e. television, print, web and outlets. From the
above analysis we can point out some points:
Page | 89
1. INDIA INFOLINE account opening charges are lower than other
competitors. INDIA INFOLINE is less flexible to cut down its
account opening charges on the other side; some of the brokers
are offering free account opening to high net worth customers.

2. The charges of demat account are reasonable at Rs. 500/- but

India bulls is offering pool account with no annual maintenance

3. INDIA INFOLINE provides trading in NSE, BSE and derivatives.

It is also about to launch online mutual funds and arbitrage
facility is not available to customers

4. INDIA INFOLINE is the only one that does not have any demat
transaction charges either on buying or selling

5. Unlimited toll free calls service is provided to customer in


6. INDIA INFOLINE accept offline payment from other banks also

but, clients have
compulsion to open an online account

7. BTST facility is available on almost all scrip’s of NSE in India

infoline, India bulls but this facility is mot providing by, kotakstreet offers it only for 75% of share value
and gives it only on 127 scripts.

8. Sms alerts facility is mot available at,

and India bulls.

Page | 90
9. INDIA INFOLINE research reports come in client e-mail at free
of cost around 5-6 times in a day. But some brokers charged for it
and some provide it only at once in a day, while it is paid in
indiabulls, and

10. Lowest Brokerage provider.

To sum up, we can say that computerization and automation are not
to be avoided. Technology has been able to make the stock markets
accessible to every individual. It has also led to positive
developments in terms of reduced costs and fewer errors but as some
experience has indicated, it cannot be applied as a panacea for all
problems. Regulation and knowledge dissemination are still
important; the use of technology should be preceded by a detailed
study and assessment of all other alternatives.

Limitations during the project:

Lack of awareness of stock market

Since the area is not known before it takes lot of time in convincing
people to start investing in shares primarily in ipo’s

No proper assurance of right information

Page | 91
The main data sources are websites, telephonic information and offices

• The data on websites might be possible, not get updated.

• The marketing person might be possible , is not through

with all concepts to whom I contacted.

• Sometimes, they try to hide information

Services of competitors

We cannot give proper comment oj competitor’s services till we use it.

But I try to collect as accurate information as possible . as we all know
services are intangible and we cannot predict its quality, it is a thing a
feel not to see.

Mostly people comfortable with traditional brokers

As people are doing trading from there respective brokers, they are
quite comfortable to trade via phone.

Lack of techno savvy people and poor internet penetration

Page | 92
Since most of the people are quite experienced and also they are not
techno savvy. Also Internet penetration is poor in India.

Some respondents are unwilling to talk

Some respondents are unwilling does not respond, as they are quite
annoyed with the phone call and some don’t have time.

Inaccurate leads

Sometimes leads are provided which had error in it which varies from
only 5 digit phone numbers to wrong phone number.

Misleading concepts

Some people think that shares are too risky and just another name of
gamble but they don’t know it’s not at all that risky for long investors.

Format of the Questionnaire

Personal Details
Name : ……………… India infoline Ltd
Age : ……..……….. Sec-63, Noida
Sex : ………………..

Page | 93
Address and phone no : ...……………..
E-mail address : …….………...

1. Do you know about ‘Equity Market’?

a) Yes
b) No

2. How much do you know about ‘Equity Market’?


3. Do you know every function of ‘Equity Market’?

a) Yes
b) No

4. How do you rate yourself on the given scale? If you think

you are expert, average or know nothing then given yourself
3,2or1 respectively:
Expert (3) …………
Average (2) …………
Know nothing ………….

5. What is your monthly income?

a) Less then Rs. 50,000 [ ]
b) Rs. 50,000- Rs. 1,00,000 [ ]
c) Rs. 1,00,000-Rs. 10,00,000 [ ]
d) More then Rs. 10,00,000 [ ]

6. What is your saving as percentage of your monthly income?

Upto ……………………….

Page | 94
7. How much would you like to invest of your total monthly
saving in ‘Equity Market’?
Upto ……………………….

8. How much would you like to invest through India infoline

Upto ……………………….


Books and News Paper

• The economic times, Business Standard, Business line etc.

Page | 95
• Intelligent Stock Market Investing. By N. J. Yasaswy
• The Indian Securities Market By Tadashi Endo.
• The Big Picture : Reflections on Our Economics Times By T. T. Ram


Page | 96