SUMMER TRAINING PROJECT REPORT

INDIABULLS SECURITIES LTD.

“Study of Indiabulls securities ltd. and Equity market

Integrated academy of management and technology

Ghaziabad, (U.P)

PGDM (Session: 2007-2009)

Submitted To: Mr. U.C. Mathur

Submitted By: Mukesh Kumar Singh

Batch: 2007-09
Roll No.: PG07106

ACKNOWLEDGEMENT
 This work bears the inputs of many persons whose valuable assistance and
insightful suggestion have made this summer project worthy.
With sincere thoughts and a deep sense of gratitude firstly I would like to take the
opportunity to express my sincere thanks to Mr. SOURABH AGRAWAL,
Relationship Manager, Indiabulls securities ltd, okhla, New delhi whose able
guidance helped me to give present shape of the project.
I would also like to thank Mr. U.C. Mathur my faculty guide for guiding me
through the project & all the people in Indiabulls securities Ltd, Okhala who
helped me during the project.
Last but not least, I would also like to thank my institute, Integrated
Academy Of Management & Technology, Ghaziabad for the knowledge gained,
that helped me to sharpen my skills.

Mukesh kumar singh

Project Report Details

Particulars:
1. Indian Stock market
2. Overview of the Regulatory Framework of the Capital Market in India
3. Overview of Indiabulls
 4. Overview of Indiabulls Securities
5. Financial Analysis of Indiabulls
6. Trading with Indiabulls
7. Understanding Capital market
8. Derivatives
9. Portfolio
10. Competitors
11. Competitive Analysis
12. SWOT Analysis
13. Findings & Suggestions
14. Bibliography & Webliography
Appendix
Questionnaire for walk-in Customers for referential Marketing
Questionnaire for market survey for awareness among general public

EXECUTIVE SUMMARY

Indian securities markets have undergone many changes during the last decade.
Exponential growth in trading volumes is pushing existing trading systems and processes
to capacity and increasing settlement risk. With Indian market moving to a T+2 rolling
settlement cycles in line with global markets, SEBI is continuing its efforts to increase
the efficiency and transparency in Indian markets. Indeed it has been SEBI endeavor to
make the Indian markets, one of the most competitive and efficient markets of the
world.
This Project titled “Study of Indiabulls securities ltd. and Equity market”
is an attempt to enable the reader to understand the position of the Indiabulls as a stock
broking firm & also different approaches used to create awareness about the offerings of
India bulls & its future prospect, this report also gives you the glance of the security
market & comparative analysis in the broad term of Indiabulls & other firms.
Apart from that, SWOT analysis of the services & product offering of Indiabulls was
also done to know the strengths and opportunity to the product on which it can leverage
and the weakness and threats, which has to be taken care of for the success of
Indiabulls and the continuous growth of it in the market. Along with that using the
questionnaire approach, the required different approaches to target the different
respondent

1. INDIAN STOCK MARKET

1.1 Introduction
Indian Stock Markets is one of the oldest in Asia. Its history dates back to nearly 200
years ago. The earliest records of security dealings in India are meager and obscure. The
East India Company was the dominant institution in those days and business in its loan
securities used to be transacted towards the close of the eighteenth century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses took place
in Bombay. Though the trading list was broader in 1839, there were only half a dozen
brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed
a rapid development of commercial enterprise and brokerage business attracted many
men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the
American Civil War broke out and cotton supply from United States to Europe was
stopped; thus, the 'Share Mania' in India began. The number of brokers increased to
about 200 to 250.
At the end of the American Civil War, the brokers who thrived out of Civil War in 1874,
found a place in a street (now appropriately called as Dalal Street) where they would
conveniently assemble and transact business. In 1887, they formally established in
Bombay, the "Native Share and Stock Brokers' Association”, which is alternatively
known as “The Stock Exchange". In 1895, the Stock Exchange acquired a premise in
the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay
was consolidated.
The Indian stock market has been assigned an important place in financing the Indian
corporate sector. The principal functions of the stock markets are
• enabling mobilizing resources for investment directly from the investors
• providing liquidity for the investors and monitoring
• Disciplining company management.

The two major stock exchanges in India are National Stock Exchange (NSE) and
Bombay Stock Exchange (BSE).
1.2 National Stock Exchange
With the liberalization of the Indian economy, it was found inevitable to lift the Indian
stock market trading system on par with the international standards. On the basis of the
recommendations of high powered Pherwani Committee, the National Stock Exchange
was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation of India, all Insurance
Corporations, selected commercial banks and others.
The National Stock Exchange (NSE) is India's leading stock exchange covering
various cities and towns across the country. NSE was set up by leading institutions to
provide a modern, fully automated screen-based trading system with national reach. The
Exchange has brought about unparalleled transparency, speed & efficiency, safety and
market integrity. It has set up facilities that serve as a model for the securities industry in
terms of systems, practices and procedures.
NSE has played a catalytic role in reforming the Indian securities market in terms of
microstructure, market practices and trading volumes. The market today uses state-of-art
information technology to provide an efficient and transparent trading, clearing and
settlement mechanism, and has witnessed several innovations in products & services viz.
demutualization of stock exchange governance, screen based trading, compression of
settlement cycles, dematerialization and electronic transfer of securities, market of debt
and derivative instruments and intensive use of information technology.
Trading at NSE can be classified under two broad categories:
• Wholesale debt market
• Capital market
Wholesale debt market operations are similar to money market operations - institutions
and corporate bodies enter into high value transactions in financial instruments such as
government securities, treasury bills, public sector unit bonds, commercial paper,
certificate of deposit, etc.
Capital market: A market where debt or equity securities are traded.
There are two kinds of players in NSE:
• Trading members
• Participants
Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large players like
banks who take direct settlement responsibility.
Trading at NSE takes place through a fully automated screen-based trading mechanism
which adopts the principle of an order-driven market. Trading members can stay at their
offices and execute the trading, since they are linked through a communication network.
The prices at which the buyer and seller are willing to transact will appear on the screen.
When the prices match the transaction will be completed and a confirmation slip will be
printed at the office of the trading member.

NSE has several advantages over the traditional trading exchanges. They are as follows:
• NSE brings an integrated stock market trading network across the nation.
• Investors can trade at the same price from anywhere in the country since inter-
market operations are streamlined coupled with the countrywide access to the
securities.
• Delays in communication, late payments and the malpractice’s prevailing in the
traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations, with the
support of total computerized network.
NSE Nifty
S&P CNX Nifty is a well-diversified 50 stock index accounting for 22 sectors of the
economy. It is used for a variety of purposes such as benchmarking fund portfolios,
index based derivatives and index funds.
NSE came to be owned and managed by India Index Services and Products Ltd. (IISL),
which is a joint venture between NSE and CRISIL. IISL is India's first specialized
company focused upon the index as a core product. IISL have a consulting and licensing
agreement with Standard & Poor's (S&P), who are world leaders in index services. CNX
stands for CRISIL NSE Indices. CNX ensures common branding of indices, to reflect the
identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' stands for CRISIL, 'N'
stands for NSE and X stands for Exchange or Index. The S&P prefix belongs to the US-
based Standard & Poor's Financial Information Services.
1.3 Bombay Stock Exchange
The Bombay Stock Exchange is one of the oldest stock exchanges in Asia. 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.
SENSEX
The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that
subsequently became the barometer of the Indian stock market.
SENSEX is not only scientifically designed but also based on 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 base year of SENSEX is 1978-79 and the base value is 100. The index is
widely reported in both domestic and international markets through print as well as
electronic media
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. All major index providers like MSCI,
FTSE, STOXX, S&P and Dow Jones use the Free-float methodology.
Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the
pulse of the Indian stock market. As the oldest index in the country, it provides the time
series data over a fairly long period of time. Small wonder, the SENSEX has over the
years become one of the most prominent brands in the country.
The SENSEX captured all these events in the most judicial manner. One can identify the
booms and busts of the Indian stock market through SENSEX.
The launch of SENSEX in 1986 was later followed up in January 1989 by introduction
of BSE National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five
major stock exchanges. The Exchange launched dollar-linked version of BSE-100 index
i.e. Dollex-100 on May 22, 2006.
In order to fulfill the need of the market participants for still broader, segment-specific
and sector-specific indices, the Exchange has continuously been increasing the range of
its indices. The launch of BSE-200 Index in 1994 was followed by the launch of BSE-
500 Index and 5 sectoral indices in 1999. In 2001, BSE launched the BSE-PSU Index,
DOLLEX-30 and the country's first free-float based index - the BSE TECK Index. The
Exchange shifted all its indices to a free-float methodology (except BSE PSU index) in a
phased manner.
The values of all BSE indices are updated every 15 seconds during the market hours and
displayed through the BOLT system, BSE website and news wire agencies.
2. OVERVIEW OF THE REGULATORY FRAMEWORK OF THE CAPITAL
MARKET IN INDIA
 India has a financial system that is regulated by independent regulators in the sectors of
banking, insurance, capital markets and various service sectors. The Indian Financial
system is regulated by two governing agencies under the Ministry of Finance. They are:
1. Reserve Bank of India
The RBI was set up in 1935 and is the central bank of India. It regulates the
financial and banking system. It formulates monetary policies and prescribes
exchange control norms.

2. The Securities Exchange Board of India

The Government of India constituted SEBI on April 12, 1988, as a non-statutory
body to promote orderly and healthy development of the securities market and to
provide investor protection.
The jurisdiction of the RBI and SEBI overlap in many fields
Department Economic Affairs
The capital markets division of the Department of Economic Affairs regulates capital
markets and securities transactions.
The capital markets division has been entrusted with the responsibility of assisting the
Government in framing suitable policies for the orderly growth and development of the
securities markets with the SEBI, RBI and other agencies. It is also responsible for the
functioning of the Unit Trust of India (UTI) and Securities and Exchange Board of India
(SEBI).
The principal aspects that are dealt with the capital market division are:
• Policy matters relating to the securities market
• Policy matters relating to the regulation and development and investor protection
of the securities market and the debt market.
• Organizational and operational matters relating to SEBI

The Capital Market is governed by:

• Securities Contract (Regulation) Act, 1956
• Securities Contract (Regulation) Rules, 1957
• SEBI Act, 1992
• Companies Act 1956
 • SEBI (Stock Brokers and Sub Brokers) Rules, 1992
• Exchange Bye-Laws Rules & Regulations
Self-regulating Role of the Exchange
The exchange functions as a Self Regulatory Organization with the parameters laid down
by the SCRA, SEBI Act, SEBI Guidelines and Rules, Bye-laws and Regulations of the
Exchange. The Governing Board discharges these functions. The Executive Director has
all the powers of the governing board except discharging a member indefinitely or
declaring him a defaulter or expelling him. The Executive Director takes decisions in the
areas like surveillance, inspection, investigation, etc. in an objective manner as per the
parameters laid down by the governing board or the statutory committees like the
Disciplinary Action Committee.
High Level Co-ordination Committee on Finance and Capital Markets
HLCCFM is the forum to deal with inter-regulatory issues arising in the financial and
capital markets as India follows a multi-regulatory regime for the financial sector. The
Capital Market Division functions as the Secretariat of this committee.

Financial Intelligence Unit

FIU-IND was setup by the government of India on the 18th of November 2004 as the
central national agency responsible for receiving, processing, analyzing and
disseminating information relating to suspect financial transactions. It is also responsible
for coordinating and strengthening efforts of the national and international intelligence,
investigation and enforcement agencies in pursuing efforts against money laundering
crimes. FIU-IND is an independent body reporting directly to the Economic Intelligence
Council (EIC) headed by the Finance Minister.
 3. OVERVIEW OF INDIABULLS
3.1 Introduction
Indiabulls is India’s leading Financial and Real Estate Company with a wide presence
throughout India. Indiabulls Financial Services Limited was established in the year 2000
by three promoters all of whom are engineers from Indian Institute of Technology, New
Delhi, and has attracted over Rs 700 million of investments from venture capital firms,
private equity funds and institutional investors.
History
• Indiabulls Financial Services Limited was incorporated on January 10, 2000 as
Orbis Infotech Private Limited at New Delhi.
• The name of the Company was changed to Indiabulls Financial Services Private
Limited on March 16, 2001 due to change in the main objects of our Company
from Infotech business to Investment & Financial Services business.
• It became a Public Limited Company on February 27, 2004 and the name of the
Company was changed to Indiabulls Financial Services Limited.
Indiabulls has over 640 branches all over India. The customers of Indiabulls are
more than 4,50,000 which covers from a wide range of financial services and
products from securities, derivatives trading, depositary services, research &
advisory services, consumer secured & unsecured credit, loan against shares and
mortgage & housing finance. The company employs around 4000 Relationship
managers who help the clients to satisfy their customized financial goals.
Indiabulls entered the Real Estate business in the year 2005 with its group of
companies.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange,
Bombay Stock Exchange and Luxembourg Stock Exchange. The market
capitalization of Indiabulls is around USD 2500 million (29th December 2006).

Indiabulls and its group companies have attracted USD 500 million of equity
capital in Foreign Direct Investment (FDI) since March 2000. Some of the large
shareholders of Indiabulls are the largest financial institutions of the world such
as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon
 Capital.

3.2 Growth of Indiabulls

Year 2000-01:
One of India’s first trading platforms was set up by Indiabulls Financial Services Ltd.
with the development of an in-house team.
Year 2001-03: The service offered by Indiabulls was increased to include Equity, F&O,
Wholesale Debt, Mutual fund, IPO Financing/Distribution and Equity Research.
Year 2003-04: In this particular year Indiabulls ventured into Distribution and
Commodities Trading business.
Year 2004-05: This was one of the most important years in the history of Indiabulls. In
this year:
• Indiabulls came out with its initial public offer (IPO) in September 2004.
• Indiabulls started its Consumer Finance business.
• Indiabulls entered the Indian Real Estate market and became the first company to
bring FDI in Indian Real Estate.
• Indiabulls won bids for landmark properties in Mumbai.
Year 2005-06: : Indiabulls acquired over 115 acres of land in Sonepat for residential
home site development. Merrill Lynch and Goldman Sachs, renowned investment banks
in the world increased their shareholding in Indiabulls. Indiabulls becomes a market
leader in securities brokerage industry, with around 31% share in Online Trading.
Farallon Capital and its affiliates, the world’s largest hedge fund committed Rs. 2000
million for Indiabulls subsidiaries Viz. Indiabulls Credit Services Ltd. and Indiabulls
Housing Finance Ltd. Steel Tycoon Mr. LN Mittal promoted LNM India Internet venture
Ltd. acquired 8.2% stake in Indiabulls Credit Services Ltd.
2007.Year 2006-07: Indiabulls entered in a 50/50 joint venture with DLF,
Kenneth Builders & Developers (KBD). KBD acquired 35.8 acres of
land from Delhi Development Authority through a competitive bidding
process for Rs.450 core to develop residential apartments. Indiabulls
Financial Services Ltd. is included in the prestigious Morgan Stanley
Capital International Index (MSCI). Farallon Capital has agreed to invest
Rs. 6,440 million in Indiabulls Financial Services Ltd. Indiabulls
 received an “in principle approval” from Government of India for
development of multi product SEZ in the state of Maharashtra.
Indiabulls Infrastructure Ltd and DLF won 35.8 acres of residential land in South Delhi
in public - private partnership project for a consideration of Rs.450 cores.
FIM Ltd. managed by Farallon Capital Management bought 36% equity in Indiabulls
Buildcon Ltd. for a consideration of Rs. 150 million.
Indiabulls Financial Services Ltd acquired 100% of the equity share capital of Noble
Realtors Pvt Ltd. Noble Realtors is a Company engaged in the business of construction
and Consume finance
Diversified Business Group of Indiabulls
Fig 3.1: Diversified Business Groups of Indiabulls
3.3 India Bulls Subsidiaries
Indiabulls securities limited: business comprises of Securities & Derivatives broking.
Indiabulls Credit services limited: business comprises of personal loans, secured and
unsecured loans, and housing and auto loans.
Financial products distribution: distribution of mutual funds and insurance products.
Indiabulls commodities Pvt ltd: deals with commodity brokerage business
Indiabulls Realities limited: is into development of Real estate and mining.
Indiabulls housing loans: is into mortgage of properties and housing loan business.
3.4 Organizational Structure of Indiabulls
The organizational structure of Indiabulls is Functional, which consist of several
departments.
Functioning Online: serving clients primarily through an Internet based relationship
targeted towards clients who value anytime, anywhere access and can be serviced at low
incremental costs.
Functioning Offline: serving clients primarily through an office based relationship
targeted towards clients who value physical interaction.
Online & offline business consist of following departments
• Administration
• Operations & Service quality
• Technology
• Finance
 • Corporate affairs
• Human resources
• Marketing
• Corporate communications
• Legal

3.5 Products and Services of Indiabulls

Indiabulls offer the following products and services in the financial markets:
• Stocks
• Options and Futures
• Depository Services
• Commodities
• Insurance Products
• Mutual Funds
• Bonds and Debt Products

ConsumerFinance

Indiabulls being a retail focused organization fulfills the credit need of a large
percentage of population in India. The key aspect of Indiabulls business model is to
provide an extremely unique customer experience. The blend of power of the Internet
with personalized services allows Indiabulls to expand its geographical coverage and
capture a greater share in the highly competitive retail market. We offer consumer loans,
home loans, personal loans, securities brokerage, and other financial products and
services to retail customers from across 640 Indiabulls offices in 127 leading cities of the
country.
• Indiabulls Home Loans
One can avail of the Home Loans purchasing a ready built house/flat, residential plot and
even for re-financing existing loans you may have availed from other banks or housing
finance companies.
The benefits of taking a Home Loan.
The income tax authorities look with favour upon those servicing a housing loan from
specified financial institutions. And, it is up to you to be wise enough to take advantage
of this.
Let's start with Section 24 of the Income Tax Act.
Interest paid on capital borrowed for the acquisition, construction, repair, renewal or
reconstruction of property is entitled to a deduction. Rs 1,50,000 is the maximum
amount eligible for deduction in the case of self-occupied property and for Rented out
property there is no limit of amount of deduction.
That brings us to Section 80C of the Income Tax Act.
Get a maximum Rs.1,00,000 deductions from the Income, on repayment of principal
during a financial year. Stamp duty, registration fee or other such expenses paid for the
purpose of transfer of such house property to the assessee is also considered under this
amount.
• Purpose: For purchase of house/plot from builder / resale.
• Loan Amount: Rs.5 lac onwards.
• Maximum Tenor: 20 years for salaried individuals and 16 years for self
employed.
• Loan Against Property
One can use your self occupied residential and commercial property & use the true value
of your property.

Wondering where the money would come from for

• Higher education of your child
• Financing your business
• Medical expenses
• Daughter's wedding
• Consolidating obligations
INDIABULLS HOUSING FINANCE LIMITED is there to fulfill your dreams.
• Get a loan upto Rs.50 lakhs.
• Payable in easy monthly installments over a period of 16 years or less.
• Available against Residential as well as Commercial Properties.
• Indiabulls Fast Loans
Personal Loan Features
Flexible loan tenure of up to 4 years (i.e. 1 month to 48 months).
Loans available from a minimum of Rs.10,000 up to a maximum of Rs.100,000.
Easy monthly repayment through equated monthly installments (EMI).
Easy documentation and quick disbursal.

Documentary Requirements:
1. Residence Proof Residence Proof
If Self - Owned house: Ownership Proof - Utility Bill / Sale agreement / Ration card /
Passport.
If Parental: Utility Bill + Relationship Proof.
If Rented Accommodation: Registered Rent Agreement.
If Company Allotted: Company Allotment Letter.
2. Identity Proof
Passport
Voter Identity Card
Driving License
Photo credit Card
Pan Card
Employee ID card issued by Government / Reputed Public Ltd and Pvt Ltd Company
Banker's Verification

3. Income Proof
Salary Slip (2 months)
Salary Certificate from Government or Reputed Company.
Form 16
Salary Credit to Bank account
 4. Bank Statement
3 months bank statement from the date of application

Commercial Vehicle Loans

Indiabulls started Commercial Vehicle Finance under the flagship of Indiabulls Credit
Services Ltd. in April 2006 to provide refinance to its commercial vehicle clients. We
have sound fundamentals, competent management and expertise in financing the
transporters. The company's reach gives it a unique market position enabling it to excel in
customer satisfaction, quick service and growth-led profitability.
The Commercial Vehicle Finance provided by us helps the small and medium operators
to acquire vehicles with minimum hassle and documentation. We provide customized
financing options to suit your needs.
Our strength lies in the quick completion of transactions, long association with
transporters and the intimate knowledge of the market and its nuances.
Our finance schemes are easy to understand with no hidden costs. You will deal only
with our employees, who are of high integrity and extremely customer friendly.
You are assured of a quick, transparent and gimmick-free deal from us.
1. Product Offering
2. Proposed Finance
3. Features of Loan Offering
4. Unique Selling Proposition.
4. OVERVIEW OF INDIABULLS SECURITIES LTD
4.1 Introduction
Indiabulls Securities Ltd is engaged in the business of Internet based trading and is
registered with SEBI as a stockbroker, trading and clearing member of NSE, member of
BSE and as a depositary participant with National Securities Depository Limited
(“NSDL”) and Central Depository Services (India) Limited (“CDSL”). ISL is also a
member of the National Securities Clearing Corporation Limited.
History
Indiabulls Securities Limited (ISL) was incorporated as GPF Securities Private Limited
on June 9, 1995.
The name of the company was changed to Orbis Securities Private Limited on December
15, 1995 to change the profile of the company and subsequently due to the conversion of
the company into a public limited company; the name was further changed to Orbis
Securities Limited on January 5, 2004.
The name of the company was again changed to Indiabulls Securities Limited on
February 16, 2004 so as to capitalize on the brand image of the term “Indiabulls” in the
company name. ISL is a corporate member of capital market & derivative segment of
The National Stock Exchange of India Ltd.
4.2 Business Model & Operations of Indiabulls Securities Ltd
The three distinct internal business segments are:
• Online business
• Offline business
• Other Sales

Online business: serving clients primarily through an Internet based relationship

targeted towards clients who value anytime, anywhere access and can be serviced at low
incremental costs. The Online sales force sells all products and services and follows the
relationship manager model.

Offline business: serving clients primarily through an office based relationship targeted
towards clients who value physical interaction and are typically larger accounts. The
Offline Sales force sells all products and services and follows the relationship manager
model. The Institutional business serving clients such as mutual funds and pension funds
is considered part of the offline business due to largely similar client servicing and
channel needs as required for high net worth clients. Indiabulls Securities Limited has
established relationships with some large institutional players in India and is qualified
broker for Equities, F&O and Debt markets for 145 such institutional clients.

Other Sales: includes insurance, research services and other offerings.

4.3 Basic Requirement for doing Trading

Trading requires Opening a Demat account. Demat refers to a dematerialized account.
You need to open a Demat account if you want to buy or sell stocks. So it is just like a
bank account where actual money is replaced by shares. We need to approach the
Depository Participants (DP, they are like bank branches), to open Demat account.
A depository is a place where the stocks of investors are held in electronic form. The
depository has agents who are called depository participants (DPs).
Think of it like a bank. The head office where all the technology rests and details of all
accounts held is like the depository. And the DPs are the branches that cater to
individuals.
There are only two depositories in India –
• The National Securities Depository Ltd (NSDL) and the
• Central Depository Services Ltd (CDSL).

4.4 Trading Products of Indiabulls Securities

Fig showing 3.1 Trading Products of Indiabulls securities
Indiabulls Securities provide three products for trading. They are
• Cash account
• Intraday account
• Margin trading (Mantra)

Cash account provides the client to buy 4 times of cash balance in his trading account.
Intraday product provides the client to buy 8 times of his cash balance in the trading
account.
Mantra account – called as margin trading, is a special account to buy on leverage for a
longer duration.

5. FINANCIAL ANALYSIS OF INDIABULLS SECURITIES

5.1 Income: Indiabulls Securities Ltd income unit has the following components
Income from Online business : The contribution of revenue from Online business have
grown from Rs. 31.85 million in FY 2002 to Rs. 242.26 million in FY 2004 and from
 24.05% of total business in FY 2002 to 34.85% of business in FY 2004. The rapid
growth of the online business is driven by growth in total clients, increasing product
flexibility and quality, enhanced online-only features such as portfolio analysis and
updates, streaming tickers, enhanced product offering of Power Indiabulls.
• Brokerage
• Equities
• F&O
Income from Offline Business: The offline business unit has one of the widest branch
networks in India with a pan India presence with large market share. The revenues have
grown from Rs. 96.02 million in FY 2002 to Rs. 447.25 million in FY 2004 and have
changed from 72.52% of total business in FY 2001 to 64.34% of business in FY 2004.
The rapid growth of the Offline business is driven by growth in total clients, increased
geographical presence.
o Brokerage

o Equities

o F&O

o Wholesale Debt Markets

Brokerage Income
Brokerage Income comprises revenues earned from Equities, F&O and Wholesale debt
markets on all stock exchanges.
• The income from brokerage services is driven primarily by the number of active
clients.
• The rapid growth in total clients is driven primarily by increased geographical
presence.
• Equities constitute the largest portion of brokerage business.
• F&O brokerage is becoming an increasingly important component of its
revenues as Futures & Options trading gains more acceptance.
• Wholesale Debt market is focused on institutional clients.

Income from transaction and service charges and interest income

Related income comprises revenues earned from market related activities such as
transaction charges, service charges and interest levied on customer transactions. These
charges are dependent on trading volume, number of transactions completed and any
ledger debit amount in the client account.
Income from other Sales including Insurance, Mutual Fund Sales and Other
Products
Other income comprises revenues earned from sale of third party products such as
Insurance, Mutual Funds and new services such as Research Services. Revenues are a
function of volume of mutual funds sold, the type of fund sold (active managed equity,
passive fixed income etc.) and the commissions paid on the funds sold.
 Segment wise Sales of Indiabulls securities for March 2008(in Crore)
5.2 Financial Ratio Analysis of Indiabulls Securities Ltd
Profitability ratios:

Indiabulls Securities Ltd.

Mar 2006
Mar 2007
Mar 2008

Per cent (Non-Annualized)

12 months
12 months
12 months

Margins ratios (%)

As % of operating income

PBDT
43.05
44.75
58.76

PBT
41.45
42.87
56.7

PAT
25.92
27.25
37.49

PBDT (NNRT)
43.01
44.52
58.72

PBT (NNRT)
41.41
42.63
56.66

PAT (NNRT)
25.88
27.02
37.45

Corporate tax as per cent of PBT

35.83
33.69
32.47

Returns ratios (%)

As % of total assets
PBDT

18.95
31.35

PBT

18.15
30.25

PAT

11.54
20

PAT (NNRT)

11.44
19.98

Operating cash flow

77.78
65.19

As % of net worth

PBDT

53.48
128.77

PBT

51.23
124.25

PAT
32.57
82.16

PAT (NNRT)

32.29
82.07

Operating cash flow

219.53
267.75

As % of capital employed

PBDT

47.39
58.11

PBT

45.39
56.06

PAT

28.86
37.07

PAT (NNRT)

28.61
37.03

Operating cash flow

194.53
120.82

Appropriation of profits (as % of PAT)

Dividends
3.89
19.66
0.52

Equity dividends
0.44
2.27
0.07

Preference dividends
3.44
17.39
0.45

Retained profits
96.11
80.34
99.48

Dividends / net worth

6.4
0.43

Equity dividends / equity capital

3.98
0.45
Equity dividends / equity cap. & sh. prem.

3.98
0.45

Liquidity ratios:

Indiabulls Securities Ltd.

Mar 2005
Mar 2006
Mar 2007

Times (Non-Annualized)
12 months
12 months
12 months

Short term liquidity

Cash / current liabilities & provisions

0.67
0.86
1.7

Quick ratio
1.6
0.86
1.89

Medium to long term liquidity

Current ratio
1.776
1.141
2.137

Solvency ratio
1.567
1.561
1.269

Debt equity ratio

1.237
0.848
2.056

Interest incidence (%)

11.42
19.13
11.67

-
Interest cover

PBIT / interest
3.63
4.01
5.2

PBIT (NNRT) / interest

3.63
4
5.2

Operating cash flow / interest

-2.99
11.97
8.91

(Rs. Crore)

Current assets
231.47
261.19
914.49

Current liabilities
130.34
228.86
427.87

Working capital
101.13
32.33
486.62

Net worth
83.34
108.43
181.77

Reserves & surplus

20.24
45.33
163.94

Asset utilization ratios

Indiabulls Securities Ltd.

Mar 2006
Mar 2007
Mar 2008

Times (Non-Annualized)
12 months
12 months
12 months

Efficiency ratios

Operating cash flow / total assets

0
0.78
0.65
Operating cash flow / gross fixed assets
0
17.46
14.15

Operating cash flow / capital employed

0
1.95
1.21

Operating income / total assets

0.42
0.53

Operating income / GFA / leased assets

9.51
11.58

Operating income / capital employed

1.06
0.99

PBDT (NNRT) / total assets

0.19
0.31

PBDT (NNRT) / gross fixed assets

4.23
6.8

PBDT (NNRT) / capital employed

0.47
0.58

PBT / total assets

0.18
0.3

PBT / gross fixed assets

4.05
6.56

PBT / capital employed

0.45
0.56

PAT / total assets

0.11
0.2

PAT / gross fixed assets

2.57
4.34

PAT / capital employed

0.29
0.37

5.3 Interpretation:
Profitability Ratios: Profitability is the net result of a number of policies and decisions.
The ratios examined thus far provide useful clues to the effectiveness of firms
operations.
Liquidity Ratios: liquidity ratios deal with firm’s ability to pay off its debts. It
includes
• Current ratio: The current ratio is calculated by dividing current assets by current
liabilities. The current ratio of Indiabulls securities is 1.776, 1.441, & 2.137 for
year 2005, 2006 & 2007 respectively.
Current ratio = Current assets / Current Liabilities
• Quick ratio (acid test ratio): The quick ratio is calculated by deducting
inventories from current assets and then dividing the remainder by current
liabilities. The quick ratio is a measure of the firm’s ability to pay-off the short-
term liabilities. A large part of the firms current assets are tied up in slow paying
debts. The industry average for Acid test ratio is 2.1, but for Indiabulls securities
quick ratio is 1.6, 0.86 & 1.89 for year 2005, 2006 & 2007 respectively, which is
less than Industry average. The quick ratio should be high which indicates the
company’s ability to pay-off short term obligations.
• Debt equity Ratio: Debt equity ratio is the related contribution of creditors and
owners of the businessin its financing.

Functional Area Information :- Marketing Associates

6. TRADING WITH INDIABULLS

This section will introduce us about the process and instruments used to help a customer
or a client to trade with Indiabulls securities. This process is almost similar to any other
trading firm but there will be some difference in the cost of brokerage commission.

Trading: It is a process by which a customer is given facility to buy and sell share this
buying and selling can only be done through some broker and this is where Indiabulls
help its customer.
A customer willing to trade with any brokerage house need to have a demat account,
trading account and saving account with a brokerage firm. Any one having following
document can open all the above mentioned account and can start trading.
Document Required
• 3 photographs ( signed across)
• Photo Identification Proof - any of the following - Voter ID/Driving
 License/Passport.
• Address Proof any of the following - Voter ID/Driving License/ Passport/ Bank
statement or pass book sealed and attestation by bank official/ BSNL landline bill.
• A crossed Cheque favoring “India bulls Securities Ltd”. of the required
amount. The amount for Demat as well as trading will be Rs. 900/-(free Demat
+900 Trading Account) the minimum amount being Rs. 900 a cheque can be given
for a larger amount.
• Copy of PAN Card is mandatory.
• Registration Kit
• CDSL Demat Kit
• Bank and address proof declaration. (Master undertaking)
• PAN name discrepancy form
These documents may not be consumer friendly but it is to avoid illegal transaction and
to prevent black money this ensures that money invested is accounted.
Techniques and Instruments for Trading
The various techniques that are available in the hands of a client are:-
1. Delivery
2. Intraday
3. Future
4. Forwards
5. Options
6. swaps
From 3 to 6 are called derivatives the detailed explanation for the same is given in
the separate section of “Derivatives and mutual fund as a hedging tools”
These are three ways by which a consumer can invest more money than what he is
available to his account.
1. Cash account
2. Intraday account
3. Margin trading
Cash Account: provides the client to buy 4 times of cash balance in his trading account.
Intraday product: provides the client to buy 8 times of his cash balance in the trading
account.
Mantra account: called as margin trading, is a special account to buy on leverage for a
longer duration.

Brokerage and Tax Breakup

Remarks Delivery Intraday Futures

Buy Sell Buy Sell Buy sell

Brokerage 0.5 0.5 0.1 0.1 0.1 0.1

Service 0.0612 0.0612 0.01224 0.01224 0.01224 0.01224

tax(@12.24% on
brokerage)
Security 0.125 0.125 0 0.025 0 0.017
transaction tax
(STT)
Turnover Tax (T 0.018 0.018 0.018 0.018 0.018 0.018
oT)
Stamp duty 0.011224 0.011224 0.002245 0.002245 0.002245 0.002245

Total 0.715424 0.715424 0.132485 0.157485 0.132485 0.149485

 7. UNDERSTANDING CAPITAL MARKET

7.1 Framework
The Indian capital markets have witnessed a transformation over the last decade. India
now finds its place amongst some of the most sophisticated and largest markets of the
world. With over 20 million shareholders, India has the third largest investor base in the
world after the USA and Japan. The Indian capital market is significant in terms of the
degree of development, volume of trading and its tremendous growth potential.
Over the past few years, the capital markets have also witnessed substantial reforms in
regulation and supervision. Reforms, particularly the establishment and empowerment of
SEBI, market-determined prices and allocation of resources, screen-based nation-wide
trading, dematerialization and electronic transfer of securities, rolling settlement and
derivatives trading have greatly improved both the regulatory framework and efficiency
of trading and settlement.

7.2 Indian Capital markets - Chronology

• 1994- Equity Trading commences on NSE
• 1995- All Trading goes Electronic
• 1996- Depository comes in to existence
• 1999- FIIs Participation- Globalization
• 2000- over 80% trades in Demat form
• 2001- Major Stocks move to Rolling Set
• 2003- T+2 settlements in all stocks
• 2003 - Demutualization of Exchanges

7.3 Capital Market Participants

• Banks
• Exchanges
• Clearing Corporations
• Brokers
• Custodians
• Depositories
 • Investors
• Merchant Bankers

7.4 Types of Investors

• Institutional Investors- MFs / FI / FIIs / Banks
• Retail Investors
• Arbitrageurs / Speculators
• Hedgers
• Day traders/Jobbers

7.5 Cash Market

The Spot Market or Cash Market is a commodities or securities market in which goods
are sold for cash and delivered immediately. Contracts bought and sold on these markets
are immediately effective. Spot markets can operate wherever the infrastructure exists to
conduct the transaction. The Spot market for most securities exists primarily on the
internet. The trading in this cash market can be further divided into Intraday and
Delivery.

7.6 Key Terms

• Intraday refers to buying or selling stocks today with an obligation to sell or buy
the stock on the same day. It means completing the trading cycle in the same day.
Here the stocks do not come to the Demat account.
• Delivery refers to buying stocks today with a plan of selling it in future. In India
there is a concept of T+2 settlements. Which means a stock bought on trade day
is credited to your Demat account (or delivered) into your Demat account after 2
days.
• Square off- making the position nil. Say selling off the stocks. (Or buying back
in case of short selling).
• Short selling- selling without having the possession of the stocks (possible in
intraday trade). Selling the stocks initially and buying them back later. It is a
concept used in the falling markets.
• Demat Account- the account where in the shares are delivered. Every Demat
account is linked to a trading account and a savings bank account. Demat account
are provided by CDSL (central depository services limited) and NSDL(national
 securities depository limited). Indiabulls is a depository participant which links
the depository to the beneficial owner of the account (client).
• Trading pool/margin account- the place where the stock is received after the
trade, it is the broker’s account called the broker pool account.
• T+2= Transaction + 2 days.

8. DERIVATIVES

By far the most significant event in finance during the past decade has been the
extraordinary development and expansion of financial derivatives. These instruments
enhance the ability to differentiate risk and allocate it to those investors most able and
willing to take it
8.1 Definition:
Derivatives are instruments whose value is ‘derived’, in whole or in part, from the value
of one or more underlying assets.
History of Derivatives
The history of derivatives is surprisingly longer than what most people think. Some texts
even find the existence of the characteristics of derivative contracts in incidents of
Mahabharata. Traces of derivative contracts can even be found in incidents that date
back to the ages before Jesus Christ. However, the advent of modern day derivative
contracts is attributed to the need for farmers to protect themselves from any decline in
the price of their crops due to delayed monsoon, or overproduction.
The first 'futures' contracts can be traced to the Yodoya rice market in Osaka, Japan
around 1650. These were evidently standardized contracts, which made them much like
today's futures.
The Chicago Board of Trade (CBOT), the largest derivative exchange in the world, was
established in 1848 where forward contracts on various commodities were standardized
around 1865. From then on, futures contracts have remained more or less in the same
form, as we know them today.
Derivatives have had a long presence in India. The commodity derivative market has
been functioning in India since the nineteenth century with organized trading in cotton
through the establishment of Cotton Trade Association in 1875. Since then contracts on
various other commodities have been introduced as well.
Exchange traded financial derivatives were introduced in India in June 2000 at the two
major stock exchanges, NSE and BSE. There are various contracts currently traded on
these exchanges. National Commodity & Derivatives Exchange Limited (NCDEX)
started its operations in December 2003, to provide a platform for commodities trading.
The derivatives market in India has grown exponentially, especially at NSE. Stock
Futures are the most highly traded contracts on NSE accounting for around 55% of the
total turnover of derivatives at NSE, as on April 13, 2005.

8.2 Understanding Derivatives

The primary objectives of any investor are to maximize returns and minimize risks.
Derivatives are contracts that originated from the need to minimize risk.
The word 'derivative' originates from mathematics and refers to a variable, which has
been derived from another variable. Derivatives are so called because they have no value
of their own. They derive their value from the value of some other asset, which is known
as the underlying.
Derivatives are specialized contracts which signify an agreement or an option to buy or
sell the underlying asset of the derivate up to a certain time in the future at a prearranged
price, the exercise price. The contract also has a fixed expiry period mostly in the range
of 3 to 12 months from the date of commencement of the contract. The value of the
contract depends on the expiry period and also on the price of the underlying asset.
For example, a farmer fears that the price of soybean (underlying), when his crop is
ready for delivery will be lower than his cost of production.
Let's say the cost of production is Rs 8,000 per ton. In order to overcome this uncertainty
in the selling price of his crop, he enters into a contract (derivative) with a merchant,
who agrees to buy the crop at a certain price (exercise price), when the crop is ready in
three months time (expiry period).
In this case, say the merchant agrees to buy the crop at Rs 9,000 per ton. Now, the value
of this derivative contract will increase as the price of soybean decreases and vice-a-
versa.
If the selling price of soybean goes down to Rs 7,000 per ton, the derivative contract will
be more valuable for the farmer, and if the price of soybean goes down to Rs 6,000, the
contract becomes even more valuable.
This is because the farmer can sell the soybean he has produced at Rs 9000 per ton even
though the market price is much less. Thus, the value of the derivative is dependent on
the value of the underlying.
8.3 Difference between Commodity Derivative & Financial Derivative
If the underlying asset of the derivative contract is coffee, wheat, pepper, cotton, gold,
silver, precious stone or for that matter even weather, then the derivative is known as a
commodity derivative.
If the underlying is a financial asset like debt instruments, currency, share price index,
equity shares, etc, the derivative is known as a financial derivative.
 Derivative contracts can be standardized and traded on the stock exchange. Such
derivatives are called exchange-traded derivatives. Or they can be customized as per the
needs of the user by negotiating with the other party involved.
Such derivatives are called over-the-counter (OTC) derivatives. Continuing with the
example of the farmer above, if he thinks that the total production from his land will be
around 150 quintals, he can either go to a food merchant and enter into a derivatives
contract to sell 150 quintals of soybean in three months time at Rs 9,000 per ton. Or the
farmer can go to a commodities exchange, like the National Commodity and Derivatives
Exchange Limited, and buy a standard contract on soybean.
The standard contract on soybean has a size of 100 quintals. So the farmer will be left
with 50 quintals of soybean uncovered for price fluctuations.
However, exchange traded derivatives have some advantages like low transaction costs
and no risk of default by the other party, which may exceed the cost associated with
leaving a part of the production uncovered.
In India we have several derivatives, two of the most famous derivatives traded on
National stock exchange are
• Futures
• Option
Futures and options are traded on the NSE platform, with a normal IndiaBulls
trading account the client get the access to trade in the F&O contracts.
8.4 Futures and Forwards
As the name suggests, futures are derivative contracts that give the holder the
opportunity to buy or sell the underlying at a pre-specified price some time in the future.
They come in standardized form with fixed expiry time, contract size and price.
Forwards are similar contracts but customizable in terms of contract size, expiry date and
price, as per the needs of the user.
8.5 Options
Option contracts give the holder the option to buy or sell the underlying at a pre-
specified price some time in the future.
• An option to buy the underlying is known as a Call Option.
• An option to sell the underlying at a specified price in the future is known as Put
Option.
In the case of an option contract, the buyer of the contract is not obligated to exercise the
option contract. Options can be traded on the stock exchange or on the OTC market.
8.6 Futures Terminology
o Spot Price: the price at which an asset trades in the spot market.

o Futures Price: the price at which the futures contract trades in the
futures market
o Contract Cycle: The period over which the contract trades. The index
futures contracts on the NSE have a one-month, two-month and three-
month expiry cycles which expire on the last Thursday of the month. On
the Friday following the last Thursday, a new contract having a three-
month expiry is introduced for trading.
o Expiry Date-the date specified in the futures contract. It is the last
Thursday of the month
o Contract Size: the amount of asset that has to be delivered less than one
contract. For instance, the contract size on NSE futures market is 100
Niftiest. It is prescribed by NSE for stocks. Each stock had a different lot
size.
o Basis – the futures price minus the spot price. There will be a different
basis for each delivery month for each contract. In a normal market, basis
will be positive. This reflects that futures prices normally exceed spot
prices.
o Cost of Carry – the storage cost plus the interest that is paid to finance
the asset less the income earned on the asset.
o Initial Margin – the amount that must be deposited in the margin account
at the time the futures contract is first entered into. These margins are
prescribed by the exchange. It varies from stock to stock.
o Marking to Market – the adjustment made at the end of each trading day
to the investor’s margin account to reflect the investor’s gain or loss
depending upon the futures closing price. It is the difference between
today’s closing price and yesterdays closing. The MTM profit /loss are
credited to the client account on day to day basis. Thus we call this a T+0
settlement.
o Maintenance Margin – somewhat lower than the initial margin; the
balance in the margin account must never become negative and in case it
does, the investor receives a margin call that must top-up the account to
the initial margin level before trade commences the following day.
Difference between Long Position & Short Position
A long position is an agreement to buy. You take a long position on a stock when
you are bullish or have a feeling that the stock will move up.
LONG => BUY
A short position is an agreement to sell. You take a short position on a stock
when you are bearish or have a feeling that the stock will move down.
SHORT => SELL
There are around 152 companies which are underlying for future and options in
NSE. There are
• index Futures (Nifty futures, Bank Nifty, CNX IT futures)
• Stock Futures (Infosys futures. ITC futures, etc linked to specific stocks)
• Index options (linked to indices)
• Stock option (linked to specific stocks).
8.7 Option Contracts:
The owner of an option has the OPTION to buy or sell something at a predetermined
price. Option provides the buyer of the contract the right but not the obligation to
exercise.
Right to BUY / OWN – CALL OPTION
Or Right to SELL / WRITE – PUT OPTION
You buy a call option when you are bullish or have an upward target.
You buy a put option when you are bearish or have a downward target.
8.8 Options Terminology
• Stock options – options on individual stocks. A contract gives the buyer the right
to buy or sell shares at the specified price
• Buyer of an option – the one who by paying price (premium) buys the right but
not the obligation to exercise his/her option on the seller/writer
• Writer of an option – the one who by receiving premium, is obliged to sell/buy
the asset if the buyer exercises on him
• Call Option – gives the buyer the right but not the obligation to buy an asset by a
 certain date for a certain price
• Put Option – gives the buyer the right but not the obligation to sell an asset by a
certain date for a certain price
• Spot Price – the price at which an asset trades in the spot market.
• Strike Price – the target price or the expected price.
• Contract Cycle – the period over which the contract trades. There are three
month contracts just like the futures.
• Expiry Date – the date specified in the option contract. It is the last Thursday of
the month, just as in futures.
• Contract Size – the amount of asset that has to be delivered under one contract.
• In-The-Money Option (ITM) – an option that would lead to a positive cash-
flow to the holder if it were exercised immediately.
• A call option on the index is said to be ITM if the current index stands higher
than the strike price (Spot Price > Strike Price).
• A put option is ITM if the index is below the Strike price (Spot Price < Strike
Price).
• At-The-Money (ATM) – an option that would lead to zero cash flows to the
holder if it were exercised immediately.
• Out-Of-The-Money Option (OTM) – an option that would lead to a negative
cash-flow to the holder if it were exercised immediately.
• A call option on the index is said to be OTM if the current index stands at a level
which is less than the strike price (Spot Price < Strike Price).
8.9 Participants in Derivative Market
Three broad categories of participants:
• Hedgers
• Speculators
• Arbitrageurs

Hedgers: They face risk associated with the price of an asset. They use derivative
markets to reduce or eliminate their risk.
Speculators: They wish to bet on future movements in the price of an asset. Futures and
options contracts can give them an extra leverage; that is, they can increase both the
potential gains and potential losses in a speculative venture.
Arbitrageurs: Arbitrageurs are in business to take advantage of a discrepancy between
prices in two different markets. If, for example, they see the futures price of an asset
getting out of line with the cash price, they will take offsetting positions in the two
markets to lock in profit.
In our research we consider only two players in the derivative market. They are hedgers
and speculators.
The industry, which we have to consider our research, is derivative market or derivatives
industry.
Derivative is a product whose value is derived from the value of one or more underlying,
called bases (underlying asset, index, or reference rate), in a contractual manner. The
underlying can be commodities, precious metals, currency, bonds, stock, stock indices
etc.
The derivative market performs a number of economic functions:
• Prices in an organized derivatives market reflect the perception of market
participants about the future and lead the prices of underlying to the perceived
future level.
• The derivatives market helps to transfer risks from those who have them but may
not like them to those who have appetite for them.
• Derivatives, due to their inherent nature, are linked to the underlying cash
markets. With the introduction of derivatives, the underlying market witness
higher trading volumes because of participation by more players who would not
otherwise participate for lack of an arrangement to transfer risk.
• Speculative trades shift to a more controlled environment of derivatives market.
• An important incidental benefit that flows from derivatives trading is that it acts
as a catalyst for new entrepreneurial activity. The derivatives have a history of
attracting many bright, creative, well-educated people with an entrepreneurial
attitude.
• Derivatives market helps increase saving and investment in the long run.
 PORTFOLIO
A collection of investments held by an institution or a private individual. Holding a
portfolio is often part of an investment and risk-limiting strategy called diversification.
By owning several assets, certain types of risk (in particular specific risk) can be
reduced.
The following tables( Table 2.1,2.2,2.3) helps to understands how a portfolio can be a
hedging tool, but before we study these tables and derive some interpretation is
important to understand the assumption and jargons used.
Understanding the portfolio formation
Three portfolio have been taken for our understanding which are made from stocks only,
in realty a portfolio can be made from any assets (example: gold, insurance, FD etc). All
three portfolio are industry specific in practicality this limitation can also be broken.
Standard deviation has been used to calculate the risk, we will find that overall risk of
the stocks have been reduced till certain extent when their individual risk is pooled
together in a portfolio.

Jargons explained
1. Beta: This also measure the risk of individual stock but in relation to the market,
if the beta of stock X is 1 it means its returns are equal to market return, if market
falls by 10% stock X will also fall by 10%.
2. Weight: while calculating the standard deviation of portfolio we decide what
weight should be given to individual assets taken in the portfolio, this weight is
important because this will decided the standard deviation of portfolio. ( example
is given for the better understanding of weight at the end of cement portfolio)
3. Standard deviation: This statistical tool explains that what percentage of returns
is deviating from its mean. Higher the standard deviation higher the risk.
4. Correlation Co-variance: This shows the relation between returns of any two
given stocks whose value varies between -1 and +1, negative value means when
one stock is moving upward another is going downward. Having a negative
Correlation Co-variance is considered as a hedging technique because one stock
is giving negative return we can expect profit from other. While selecting the
 assets to make a portfolio Correlation Co-variance of assets is very important.

DESIGNED PORTFOLIO
The following portfolio have made by using the Standard Deviation as a tool the source
of all the data have been mentioned in the index, this is just an prototype of a real
portfolio. It is understood that lot of other analysis goes while making a real portfolio.
(Source: For beta http://www.bseindia.com/)
Information Technology Portfolio

Company Beta Weight Standard Correlation

deviation Co-variance

Infosys 0.92 70.34% 42.01% .87

TCS 0.97 17.76% 25.80% .95
Wipro 1.16 11.88% 10.67% .94

Table 2.1
• Standard deviation of the IT portfolio comes out to be 34.88%
• Risk involved with Infosys is reduced

Bank Portfolio

Company Beta Weight Standard Correlation

deviation Co-variance
HDFC 0.86 19.39% 6.45% -0.88
ICICI 0.95 61.61% 6.64% -0.99
State Bank of 0.91 18.99% 15.04% 0.83
India
 • Standard deviation of the Banking portfolio comes out to be 4.31%
• The overall risk of individual assets is reduced

CEMENT PORTFOLIO
Company Beta Weight Standard Correlation
deviation Co-variance
ACC 1.16 41.48% 23.53% -0.66
Gujrat Ambuja 1.03 25.89% 5.76% -0.45
Grasim Ind 0.99 32.61% 29.76% 0.80

• Standard deviation of cement sector comes out to be 30.48%

As it can be seen that risk of this portfolio is greater than individual assets, this risk can
be changed or reduced by varying the weights of different assets. The example for the
same has been shown below.
By changing the weight of Gujrat Ambuja from 25.89% to 35.89% and weight Grasim
Ind from 32.61% to 22.61% the new standard deviation comes out to be 29.80%
 10. THE COMPETITORS

10.1 Major Competitors of Indiabulls Securities Ltd.

Indiabulls Securities faces significant competition from companies seeking to attract
client financial assets, including traditional and online brokerage firms, mutual fund
companies and institutional players having wide presence and a strong brand name. They
are;
• ICICI Securities Ltd.
• Kotak Securities Ltd.
• India Infoline SSKI Ltd.
• Motilal Oswal Securities
• Karvy
• Geojit Securities
• HDFC Securities
10.2 India Infoline Ltd.
India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India
Infoline group, comprising the holding company, India Infoline Ltd and its subsidiaries,
straddles the entire financial services space with offerings ranging from Equity research,
Equities and derivatives trading, Commodities trading, Portfolio Management Services,
Mutual Funds, Life Insurance, Fixed deposits and other small savings instruments to
loan products and Investment banking. India Infoline also owns and manages the
websites, www.indiainfoline.com and www.5paisa.com

India Infoline Securities Pvt. Ltd.

India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is
engaged in the businesses of Equities broking and Portfolio Management Services. It
offers broking services in the Cash and Derivatives segments of the NSE as well as the
Cash segment of the BSE.
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world class security system that enables them to protect from any fraud or hacking.
Pedigree - 5paisa.com is a brand renowned for quality of information and services, they
are professionally managed, with a skill set which is of high standard. Their top
management has years of experience in financial services with leading banks and
institutions.

10.3 Sharekhan Securities

Sharekhan was created when SSKI Investor Services Pvt. Ltd., a company in the
securities and equities segment decided to harness the power of the Internet and offer
services to its customers through an online stock trading portal. Sharekhan brings and
provides a user-friendly online trading facility. They also have an extensive all-India
ground network of franchisees across the country.
The company offers its services through a combination of online and offline channels.
The online model comprises a portal, chat facilities, and 'speed trade' terminals. And the
offline model uses a combination of an IVR infrastructure and a team of customer agents
to receive orders over the telephone.
10.4 Motilal Oswal
Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just
two people running the show. Motilal Oswal Securities Limited has established itself as
the Best Local Brokerage House in India (Asia Money Brokers’ Poll 2005). Their
Institutional Equities Division combines the efforts of the Research and Sales & Trading
departments to best serve clients' needs. Consistent delivery of high quality advice on
individual stocks, sector trends and investment strategy has established them as a reliable
research unit amongst leading Indian as well as international investors.
Their sales & trading team, comprising top equity professionals, translates the research
findings into actionable advice for clients, based on their specific needs. Sophisticated
computerized tools are used to understand client investment profile and objectives,
which ensures proactive and timely service.

FEATURES
Integrity: A company honoring commitment with highest ethical and business
practices.
Team Work: Attaining goals collectively and collaboratively.
Meritocracy: Performance gets differentiated, recognized and rewarded in an apolitical
environment.
Passion & Attitude: High energy and self motivated with a “Do It” attitude.
Excellence in Execution: Time bound results within the framework of the company’s
value system.
10.5 Karvy
The birth of Karvy was on a modest scale in the year 1982. It began with the vision and
enterprise of a small group of practicing Chartered Accountants based in Hyderabad,
who founded Karvy. They started with consulting and financial accounting automation,
and then carved inroads into the field of Registry and Share Transfers. Karvy has built a
reputation as an integrated financial services provider, offering a wide spectrum of
services for over 20 years.
In 1982, a group of Hyderabad-based practicing Chartered Accountants started Karvy
Consultants Limited with a capital of Rs.150, 000 offering auditing and taxation services
initially. Later, it forayed into the Registrar and Share Transfer activities and
subsequently into financial services.
Karvy made inroads into a host of capital-market services, - corporate and retail - which
proved to be a sound business synergy. In January 1998, Karvy became the first
Depository Participant in Andhra Pradesh.
Karvy Securities Limited
Deals in distribution of various investment products, viz., equities, mutual funds, bonds
and debentures, fixed deposits, insurance policies for the investor.
10.6 Kotak Securities
Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking and
distribution arm of the Kotak Mahindra Group. Kotak Mahindra is one of India's leading
financial institutions, offering complete financial solutions that encompass every sphere
of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to
investment banking, the group caters to the financial needs of individuals and corporate.
Kotak Securities was set up in 1994. Kotak Securities is a corporate member of both The
Bombay Stock Exchange and the National Stock Exchange of India Limited.
Its operations include stock broking and distribution of various financial products -
including private and secondary placement of debt and equity and mutual funds.
Currently, Kotak Securities is one of the largest broking houses in India with wide
geographical reach. The company has four main areas of business:
• Institutional Equities,
• Retail (equities and other financial products),
• Portfolio Management and
• Depository Services.
Kotak Securities Ltd is also a depository participant with National Securities Depository
Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual
benefit services wherein the investors can use the brokerage services of the company for
executing the transactions and the depository services for settling them.
Kotak Securities has 195 branches servicing more than 2, 20,000 customers and
coverage of 231 Cities. Kotaksecurities.com, the online division of Kotak Securities
Limited offers Internet Broking services and also online IPO and Mutual Fund
Investments.
Features of Kotak Securities
• AKSESS Kotak securities Electronic Search Service: AKSESS offers you an
easy way to get to Kotak Securities' institutional research. On this online archive
you will be able to access estimates, company reports, sector reports, strategy
reports and a bunch of other products including the daily India Market Flash
produced by Kotak Securities.
• High Quality of software (KEAT): K.E.A.T is special software that
Koataksecurities.com provides its customers using which they can view live
market rates of scrip’s on both the NSE and BSE.
• Research Reports: Kotak Securities provide Different reports to investors which
include
• Intraday calls
• Daily Technical View
• Daily Morning Brief
• Weekly Technical Report
• Sectoral Reports
• Stock Ideas
• Derivative Reports
• SMS Alerts: Kotak Securities also provides SMS alerts to customers providing
useful tips about stocks & shares.
10.7 ICICI SECURITIES
ICICI Securities, A subsidiary of ICICI Bank, was set up in February 1993 to provide
investment-banking services to investors in India. As on date ICICI Bank holds 99.9% of
the share capital of ICICI Securities.
ICICI Securities Limited is India’s leading full service investment bank with a dominant
position in all segments of its operations –
• Corporate Finance
• Fixed Income and
• Equities.

Features of ICICI securities ICICI provides multiple channels in banking like, which is
unique feature.
• Internet Banking
 • Mobile Banking
• ATM banking
• Phone Banking
• ICICI Securities is amongst the largest arranger of funds in Debt and Equity
segments and also amongst the leading advisors in Mergers and Acquisitions.
11. COMPETITIVE ANALYSIS FOR INDIABULLS SECURITIES

11.1 Indian Retail Brokerage Market

The Indian retail brokerage industry consists of companies that primarily act as agents
for the buying and selling of securities (e.g. stocks, shares, and similar financial
instruments) on a commission or transaction fee basis.

It has two main interdependent segments: Primary market and the Secondary market.
Objective: The main objective is to
• Analyze retail brokerage industry taking into account the health of the capital
markets, Derivative Market and the intensity of competition among the brokerage
companies.
• Doing Competitive Analysis for Indiabulls
11.2 Major growth drivers for brokerage revenue and trading volume are:

• Continuous fall in brokerage fees

• Adoption of technology — screen-based trading, electronic matching, and paperless
securities.
• Centralized operations, effective risk management, and control on large interconnected
operations spanning multiple locations, which is enabled by telecom connectivity and
low costs
• Increasing access to capital and the ability to provide margin finance.
11.3 Parameter Assessment for Doing Competitive analysis
A differentiating aspect is a comparative assessment of the top retail brokerages on
various value indicators, comprising of
• Product
• Pricing
• Service
• Unique Value proposition.
11.4 Customers need to analyze the Brokerage Firms Based on these 5 Parameters.
 • Brokerage & Miscellaneous charges
• Quote Software
• Execution Platform
• Demat Account, and finally
• Back office Support.

Brokerage & Miscellaneous charges: This accounts for all the charges that you incur
for your trading/investing. A few examples would be: Demat Account maintenance,
Brokerage, Annual account Fee, Telephone based trading charges, trading software
usage charges, etc.
Quote Software: This is used mainly for technical study and for live quotes. Many
people don’t evaluate quote software. Some Investors don’t pay attention to the quality
of data (how accurate it is). Or how fast and often it refreshes. Does it allow us to back
test our strategy? Does it allow customizing technical signals/parameters?? Does it allow
us to see historic data? For, what period is intra day data available? They might need all
this information. They should be clear on what they need and ensure quote software
provides it all.

Execution Platform: It’s nothing but a platform that allows us to execute our trade fast.
It should automate trade management and execution, and should automatically give
protection against human errors.
Demat Account: Demat account should only be opened with a well known and
established brokerage firm in the market.
Back office Support: People while trading face lots of problem because of lack of good
back office support. Relationship Managers trading without their client’s knowledge,
funds not being transferred, trades not being executed, slow execution etc.

11.7 Competitive Strength of Indiabulls Securities

Indiabulls securities Ltd have a distinct set of competitive advantages that make it
uniquely capable of winning in the marketplace against its competitors
• Diverse Branch Network
• Bouquet of financial products and services
• Advanced technology team that delivers market leading product innovation
• Strong sales and marketing teams with continuous reinvestment and training
• Strong cross-selling opportunities.
 • Strong and experienced promoters
• Leading product innovation and marketing strategies
• Well capitalized player, with strong banking relationships and credit ratings
• Ability to combine people and technology in unique ways
• Strong market presence and increased market share leading to a virtuous cycle of
growth and Profitability.
Core pillars of Business strategy
• Increase the number of Client Relationships.
• Offer Diversified Financial Products & Services.
• Multiple Channels – Enhance Customer Experience and Opportunities.
• Low cost and highly scalable business.
Merits of Indiabulls Securities
• Low brokerage charges (Competitive) with 0.10 for Intra-day and 0.50 % for
delivery.
• Indiabulls securities provide 8 times margin for Intra-day and 4 times margin for
delivery.
• Indiabulls is suitable for both Day trading & Long term investment
• IndiaBulls has software called Power IndiaBulls. It is a Java based application,
with real-time streaming quotes. It is fast in terms of speed and execution
• Research reports are free of cost to trading members.
• They Provide 3 in 1 interface, i.e. Demat Account, Trading account & bank
account all are linked in one interface.
De-Merits of Indiabulls Securities
• You have to open a bank account with the banks mentioned in Indiabulls site for
Credit/ Debit Facility as they don’t have their own bank. And In ICICI direct ,
you have a direct debit/credit facility with the bank
• Most customers feel that it is difficult to understand the ledger reports of
Indiabulls securities, so proper customer guidance should be given.
• Lack of Banking arm
• Rural market is yet to be tapped.
• More importance should be given to promotions & advertisements.
 Value Proposition of Indiabulls Securities
• ISL provide a very good Trading tools like Power Indiabulls & Indiabulls
market trader.
• Power Indiabulls: A desktop Trading application offering clients sophisticated
trading tools accessible at lightning fast speed.
• Indiabulls Market Trader: Browser based trading application built for retail
investor.
• Indiabulls Equity Analysis: Premium research on 400 plus companies.
• Indiabulls Professional Network: Offers real-time prices, detailed data and
news, intelligent analytics and electronic trading capabilities.
• Relationship manager: Indiabulls securities robust technology is integrated with
knowledgeable and customer-focused relationship managers who are available
24X7 to assist the clients.
• In Depth Market Analysis and Research
Their special research cell bring you intensive research reports on how the stock
market is faring, when is the right time to invest, when to execute your order and
more. Depending on what kind of investor you are, they bring you fundamental
or basic research and technical research.

11.8 Number of Branches of Competitors compared with Indiabulls securities:

Approx. 5 Branches of Competitors has been taken for comparing.
Number of Customers of competitors compared with Indiabulls.
Approximately 100 Customers of competitors.

11.9 Merits & De-merits of Competitors

ICICI securities: It provides products & services in fixed income, equity & corporate
finance.
Merits of ICICI Securities
• ICICI Direct is considered best for long term investment.( Indiabulls is suitable
for both Day trading & Long term investment)
• A direct debit/credit facility with the bank.
• All facilities available under one umbrella.
• BTST (Buy today & sell tomorrow) is available; this facility is available only in
 ICICI Direct.
• Can apply for IPO online (we can’t do this in Indiabulls).
• Can apply for mutual funds online and can also sell them online.
• Internet banking demo which gives customers an opportunity to learn.

De-Merits of ICICI Securities

• Brokerage charges are high - intraday 0.3% and 0.75% delivery compared to
other brokerage firms (is considered as highest in the market).
• Day trading is a night mare in ICICI because of Web based terminal, which is
very slow. Orders placed at or around 10.00 hrs may be queued for a while. So
intra-day Margin trading could be annoying now & then. It's not much of a hassle
for Cash trading though.
(Indiabulls offers you a trading terminal 'powerIndiabulls', which is java based
software. It is fast in terms of speed and execution).
• ICICI Direct brokerages are not negotiable ( Where as Indiabulls Brokerage
Charges are negotiable)
• While opening Demat account, three accounts are opened ,the saving bank
account, trading account and Demat account and you have to maintain minimum
of rs5000 in case if it is not a salaried account. (That Rs5000 sleeps without
earning any money)
• Other banks account cannot be linked with the ICICI trading account.
• They charge an annual maintenance charges are Rs540.

Value Proposition of ICICI Securities

• E-Instructions: You can transfer securities 24 hours a day, 7 days a week
through Internet & Interactive Voice Response (IVR) at a lower cost. Now with
"Speak to transfer", you can also transfer or pledge instructions through our
customer care officer.
• Mobile Request: Access your Demat account by sending SMS to enquire about
Holdings, Transactions, Bill & ISIN details.

• The equities research team tracks over 15 key sectors of the Indian economy and
publishes in-depth research reports every year.

• The equities team at ICICI Securities comprises of research desk, sales desk and
the trading desks.
ShareKhan
Merits of ShareKhan Securities
• Low brokerage charges, intraday 0.1% and 0.5% for delivery.
• Live streaming quotes
• Customer support is good
• No monthly charges
• Can trade in both BSE and NSE
De-Merits of ShareKhan Securities
No BTST (buy today sell tomorrow), in ShareKhan you can’t sell a share today which
you bought yesterday.
• You have to open a bank account with the banks mentioned in ShareKhan site.
• Streaming quotes requires JVM (Java Virtual Machine); this may be big
headache for customers.
• Annual charges are Rs330.
• Their trading terminals are certainly not for "investors", only for active traders.
That is because, you have to trade a certain volume every month, otherwise you
end up paying a fine

Comparing ShareKhan & ICICI Direct

Sharekhan
ICICI Securities

Live Streaming quotes

No live streaming quotes

But streaming quotes require JVM

No BTST facility
BTST facility is available

(Buy today sell tomorrow)

Annual Maintenance charge Rs 330

Annual Maintenance charge Rs 540
 You have to open a bank account
other banks account cannot be

With the banks mentioned in ShareKhan site

linked with ICICI trading account

Can apply IPO online

Can apply IPO online

Not necessary
while opening a Demat account you

Need to maintain a minimum of Rs 5000

Can trade in BSE & NSE

Can Trade in BSE & NSE

No Monthly Charges
No Monthly Charges

Cannot apply
can apply mutual funds online

India Infoline
Merits of India Infoline (5 Paisa.com) Securities
• Low brokerage charges, intraday 0.10% and 0.50% for delivery and it is
negotiable.
• Minimum brokerage per share will be 1 paisa for trading transactions and 5 paisa
for delivery based transactions.
• 5 paisa provides 6 times margin for Intraday & 8 time’s margin for Delivery.
• All customers will get Digital Contract Notes. Physical contract notes could be
provided on request which would entail a nominal charge.

De- Merits of India Infoline (5 Paisa.com) Securities

 • Registration Fees (one time) Rs.500/ and is non-refundable.
• Software License Fee Rs.799/- per month or 7999/- per annum and is non-
refundable.
• There is lot of Hidden costs.
• Annual Service Charges Rs.250.
• Customers who just want to have a depository relationship will be required to pay
Rs.1000/-, for each Demat account, which will be adjusted against service
charges.
• The information in their web based terminal is too much compressed in one
screen.
• Trader terminal is good, but the interface is too complicated
Kotak Securities
Merits
• They provide streaming quote software free.
• Low Brokerage charges with 0.05% for Intra-day & 0.45% for delivery.
• Kotak Securities will offer small-time retail investors with invest able surpluses
as low as Rs.5, 000 a chance to invest in capital markets.
• Transactions are transparent with effective back office support.
• They provide Simple Ledger reports, which customers feel easy to understand
than any other brokerage firms.
• Mutual fund & IPO facility is available online.
• Flexibility of products - Once you invest with Kotak Securities, you can enjoy
access to a wide range of products and services to help you make the most of
your investments.
De-Merits
• Unethical act: Geojit Securities Ltd has accused kotak securities stock broking
firm of hacking into its account to steal critical business information and
blocking information access. (Report: dated 2002, Ref: www.domain-b.com).
• Some investors have bad experience with accounts opening & they complain that
it takes a long time for opening accounts.
• Some customers are not happy with customer care of Kotak securities.
Value Proposition of Kotak Securities
• Kotak Securities have a definite policy on brokerage, and they have different
slabs for different clients based on their turnover. You can always choose your
brokerage based on your style and quantum of trading.
• High Quality of software (KEAT)
K.E.A.T is a special software that Koataksecurities.com provides its customers
using which they can view live market rates of scrip’s on both the NSE and BSE,
create a watch list and simultaneously place orders, view order reports, research
companies etc. It is a complete online trading terminal.
• Mobile trading
The facility is exclusively designed to give you instant access to the stock market
through mobile phone.
• Phone Trading – Call and Trade
Call & Trade is a service offered by Kotak Securities for its customers, which
provides customers with a facility to trade over the phone. Kotak Securities
provides you a toll free number that you can call from anywhere in India.
 12. SWOT ANALYSIS OF INDIABULLS SECURITIES
Visioning is best aided by SWOT analysis.
"SWOT" is a simple acronym for Strengths, Weaknesses, Opportunities and Threats.
SWOT analysis consists of the following two activities:
• An assessment of the organization’s internal Strengths and Weaknesses and
• An assessment of the Opportunities and Threats posed by its external
environment
SWOT analysis provides a framework for visioning by helping the planners to identify
and priorities the organization’s GOALS and to further identifies the strategies of
achieving them.
Assessing the Internal Environment
Internal scan or assessment of the internal environment of the organization involves
identification of its strengths and weaknesses i.e., those aspects that help or hinder
accomplishment of the organization’s mission and fulfillment of its mandate with respect
to the following Four Ps:
1. People (Human Resources)
2. Properties (Buildings, Equipments and other facilities)
3. Processes (Such as student placement services, M.I.S etc.)
4. Products (Students, Publications etc.)
Assessing the External Environment
External scan refers to exploring the environment outside the organisation in order to
identify the opportunities and threats it faces. This involves considering the following:
• Events, trends and forces in the Social, Technological, Economical,
Environmental and Political areas (STEEP).
• Identifying the shifts in the needs of customers and potential clients and
• Identification of competitors and collaborators.

SOME MORE INPUTS ON SWOT ANALYSIS

. PURPOSES OF SWOT ANALYSIS
SWOT analysis is conducted in order to identify an organization’s internal Strengths and
Weaknesses and also the Opportunities and Threats posed by its external environment. It
enables the planners to identify the following:
(1) Strengths : Internal things we have that are good OR do well
(2) Weaknesses : Internal things we do not have OR do not do well
(3) Opportunities : External factors that may help in the achievement of our
Mission.
(4) Threats : External factors that may be barriers to achievement of
our Mission

QUESTIONS TO BE ANSWERED
STRENGTHS  What makes us special?
 What resources (inputs) strategies (processes) and
performances (outputs) do we handle well? (Focus on the “Four
Ps”)
 What are our major internal strengths?

WEAKNESSES  What are our soft spots?

 What resources (inputs), strategies (processes) and
performances (outputs) do we not handle well or at all? (Focus on
the “Four Ps”)
 What are our major internal weaknesses?
OPPORTUNITIES  What trends and events can help us?
 What are the positive social, technological, economic,
environmental and political forces influencing us? (Focus on the
“STEEP”)
 What are our major external opportunities?
THREATS  What trends and events can hinder us?
 What are the negative social, technological, economic,
environmental and political forces influencing us? (Focus on the
“STEEP”)
 What are our major external threats?

12.1 STRENGTHS
• Integrated technology platform: - Since the launch of their website,
www.indiabulls.com their online trading platform, they have invested in building
a technology platform. They have also developed software called “power
Indiabulls”. Their trader terminal is an application which allows customers to
trade on both the BSE and the NSE, has features like live intra-day tick by tick
charts, historical charts, price alerts and other features. The features allow them
to seamlessly integrate across delivery channels, online or offline through
branches or telephone.
• Pan India distribution network: - They have 640 branches across India. These
branches help in customer acquisition as well as customer service. Their
distribution network is well spread to capture the target audience and cater to the
needs of their potential customers.

• Relationship manager facility: - This is one of the unique services that

Indiabulls offer’s its customers. Every customer is provided with a relationship
manager, where in the customers can contact these managers at anytime of the
day to get information on the market or get their queries clarified.
• Growth rate: - The Company is growing at a very rapid rate, from 25 branches
in the year 2003 it has grown to 640 branches in the beginning of 2007. Not only
has it seen a fast growth rate in the number of branches but also it has grown in
the number of clients and the employee strength. They have a customer base of
more than 450,000 and over 4500 relationship managers. Indiabulls has been
rated as the “Fastest Growing Large Cap Company” in India in a report by
Business Today magazine in April, 2006.
• Power Indiabulls has developed into brands: - Indiabulls.com and power
Indiabulls which is their software are well known brands amongst retail investors
across India. In all the cities that they have expanded into, they have been able to
leverage upon brand awareness and have established a customer base.
• Strong sales and marketing teams that deliver market leading product
innovation: - their relationship manager channel offers a single point contact to
all their retail customers. These managers offer personalized services to their
customers and help to build strong and continuing relationships with them.
The marketing associates help the company in client acquisition at minimal cost
and they also help the company and its subsidiaries in increasing their penetration
into smaller towns and cities.
• Strong banking relations and credit ratings: - Indiabulls has banking relation
with some of the major banking institutions in the country such as HDFC Bank,
ICICI Bank, Standard Chartered Bank, etc, for easy mobilization of funds of the
customers.
 • Strong market presence and increased market share: - Their growing client
base and market share have increased their market presence and brand
recognition has enhanced their profitability. Their brand and profitability allows
them to recruit good and efficient employees, compensate them attractively and
provides the flexibility for them to invest in the business and technology systems
these attributes in turn has a positive effect on the growth of the company.

12.2 WEAKNESSES
• Lack of a banking arm: - Indiabulls does not have a banking arm of its own
which otherwise would have helped the company to a large extent. Whereas a
few of its competitors like HDFC securities, ICICI securities, Kotak securities,
etc have their own banking arms which make the transactions easier and simpler.
• Loss of relationship managers leads to loss of clients: - Their business is
dependent on the team of relationship managers who directly manage client
relationships. Any events that harm these relationships including the loss of their
relationship managers may lead to the loss of client.

12.3 OPPORTUNITIES
• Changing demographics with higher disposable income: - India is one of the
fastest growing economies in the world. It has a large and rapidly growing
middle class of 300 million people with increasing levels of discretionary income
available for consumption and investment purposes. The options they have for
investments are fixed deposits, post office deposits etc,. This gives them a limited
interest rate on their investment; where as the stock market provides a good scope
for making good returns. The evolution in India’s demographic setup with a
median age of 24 years and higher consumption expenditure is expected to have a
virtuous cycle effect by improving the economic growth and per capita income
which would result in higher savings and investments.
• Rapid penetration of internet and computers: -Technology is vastly used in
stock market trading. Now, with the use of the computers and internet the stock
market trading has become fast. The traders can place orders through the internet
and execute them. This saves the time of the investors, who earlier had to make
calls to their brokers in order to trade. These people are willing to use advanced
communication tools, such as computers and telephones, and want to take charge
of their personal investment decisions. The use of technology is influencing more
people to invest in the stock market.
• Market size and Characteristics: -India is a large and growing economy with
rapidly expanding financial services sector. The sector has witnessed a
transformation over the last decade as a result of the economic liberalization
which started in 1991. India is the world’s 12th largest economy in dollar terms
and the 4th largest in PPP terms. The projected growth rate of real GDP is greater
than 9% per annum with higher growth in many sectors such as financial
 services. Indian financial sector presents a huge retail finance opportunity. As a
result of falling interest rates, bank deposits, other traditional investment
opportunities are losing their attraction. Thus, Indian investors are getting
attracted towards alternate investments such as the equity markets and are
looking for newer financial products.
• Diversified business model: -Our Company and our subsidiaries offer various
financial services and products ranging from equity, F & O and wholesale debt,
insurance and IPO distribution, depository services to cater to the specific needs
of the retail and institutional investors thus providing all these services in a single
platform. Thus Indiabulls is not dependent on any single of its subsidiary for
survival and failure of any one subsidiary will not have an adverse effect on the
company as a whole.

12.4 THREATS
• Economic slowdown: - Terrorist attacks and other acts of violence or war,
including those involving India or other countries could adversely affect national
economy or world economy as a whole. Such act may also result in a loss of
business confidence. Travel restrictions as a result of such incidents may have
adverse affect on the ability to operate effectively. This will result in an
economic slowdown (example: the 9/11 attack on the World Trade Centre, New
York).

• Political instability in the country: - The government of India has pursued the
policy of economic liberalization, including relaxing restriction on the private
sector. With the change in government, there is no assurance that these
liberalization polices will continue in the future. Any political instability could
delay the economic reforms and could have adverse effect on the market.
• Volatile movement in market indices: - The Indian stock market is very
volatile in nature and is capable of shedding or gaining several points in a single
day. Unless and until the market stabilizes the investors will be very hesitant to
invest in the market. Stock market falls will have acascading effect on the
investors and economy of the country.

• Competition: - Indiabulls faces significant competition from companies seeking

to attract client’s financial assets, including traditional and online brokerage
firms, mutual fund companies, etc, which are having a wide presence and strong
brand name. As the company enters new markets their bound to face additional
competition from those who have longer operating history have grater retail and
brand presence than Indiabulls. If the company is unable to manage its business it
might impede their competitive position and their profitability.
 • Substitutes: - Various alternative forms of investment including fixed deposits
with banks and post offices etc act as substitutes to retail broking products and
services. The stock market is very unpredictable with fluctuations; this may
prompt many people to invest in fixed deposits, posy office deposits, etc in order
to avoid risk.

• Low product differentiation: - The retail broking services provided by the

various companies are homogeneous with very low product differentiation. This
does not allow the company to freely fix their prices due to the threat of
competition, which in turn reduces their profit.

13.FINDINGS & SUGGESTIONS

Aggressive Promotions: Indiabulls Securities compared to its competitors concentrates

less on advertising and promotions, especially through electronic media. Its competitors
like Sharekhan, ICICI and Kotak are advertising aggressively through media. Hence
Indiabulls should concentrate more on advertising through print and electronic media.
. Most of the Brokerage Houses are using advertising strategy for promoting their
products. This is in form of print ads, TV commercials, holding seminars, Web
advertising etc. For example Share Khan advertises its product by placing its
advertisement on different other web sites. Some other companies like An and Rather,
Stock Holding Corporation use seminars as a means to promote their product
It would be an advantage if Indiabulls follows some kind of advertising strategy. This
can be done through,
1. Print Media.
2. Banners and Hoardings.
3. Web advertising (Placing ads into other popular web sites).
4. By conducting seminars. For example, people can be called in the office
at weekends, conducting presentations.
5. SMS promotional schemes. Etc

Tapping Rural Market: The Indian rural investors market are relatively untapped, with
only small and private firms meeting the current demand. Indiabulls Securities can gain
the “First Mover Advantage” over its competitors, especially in areas were commercial
crops are grown and the standard of living is high. These people do not have much
option to invest other than banks and post offices.

Reduce the initial account opening charges: The charge for opening a trading and
demat account in Indiabulls securities is high compared to its competitors. This
influences the potential investors to open their account with another company which
provides the same at lower prices. Thus it acts as a mental barrier for potential
customers, who tend to overlook all other benefits offered by Indiabulls. Hence
Indiabulls should consider reducing their account opening charges.
Bring in more product differentiation: Product differentiation here means that
Indiabulls securities should bring in more customized services and more value
proposition for large investors. It can reduce the brokerage charges for large investors
which will encourage them to invest more in the company.
Invest more on R&D: Indiabulls should concentrate on its research and development
since most of its competitors are investing on R&D. This will help the company to read
the market better and will also be in a better position to understand the needs of the
customers. This can be extremely beneficial for Indiabulls in the long run.
Provide Online IPO Indiabulls does not provide IPO subscription facility through its
online software. Many clients are facing this problem as they have to go through paper
work subscription method. Whereas all other competitors are providing this facility
online
Since most of the companies are coming with their IPOs/FPOs, it would be beneficial for
Indiabulls customers if they are provided with this facility online. Consider this
recommendation while updating the online software in future
A New Plan
Indiabulls is a one stop shop for all kind of financial investments therefore; it is in the
position to serve its customer in better way, for this it should adopt a policy of “know
your customer before he is your customer”
The objective of this policy will be
• Knowing the complete profile of a customer on the basis of age, income, risk
aversion, financial requirements etc
• And deciding the best investment plan out of various instruments available with
Indiabulls.
• These places will also be suitable for those who are looking for loans.

Plan of action
o There should be an office, were any one can walk-in who is willing to
invest, the office will not be dedicated to particular instrument.
o This office will have analysts who will judge the complete profile of
these customer
o Accordingly he will suggest best investment portfolio for these customer.

Requirements
• A fresh advertisement campaign, explaining the importance of planed way
investment especially if it is guided by some professional.
• Filing the position of analyst who can understand the complete need of a
customer and invest his money in planned way.
• Opening new genre of office which should be consumer friendly and it should be
equipped to handle any kind of customer query.
• Communication will be the key for success.
• A new kind of software have to be developed were a customer can see the
 complete portfolio at a time on the same screen.

Market Analysis
• There are companies like ICICI, Relaince Capital, Kotak Mahindra, and HDFC
etc who are capable in bringing same kind of concept, as they are also providing
all financial services available with Indiabulls.
• Currently more people are willing to invest especially in stocks and insurance as
people are getting educated about the benefits of investments, and same is
applicable for loans.

Appendix
Profit & loss Summary
Mar 2006 Mar 2007 Mar 2008

Rs. Crore (Non-Annualized) 12 months 12 months 12 months

-
Income 69.48 114.59 317.97
Leasing & hire services 0 0 0
Security transactions 0.18 0 0
Dividend income 0 0.29 0
Interest income 15.36 1.93 21.16
Others 53.94 112.37 296.81
Other income 0 0 0
Non-recurring income 0.03 0.27 0.13
-
 Expenditure
Loss on security transactions 0 0.28 0.04
Other operating expenses 3.58 7.92 13.84
Personnel cost 10.72 20.88 50.24
Other expenses 11.33 13.71 21.24
Finance charges 13.97 21.48 46.7
Lease rent 2.19 3.89 3.08
Less: expenses capitalized 0 0 0
Non-recurring expenses 0 0 0
-
Profits / losses
PBDT 29.91 51.28 186.85
Depreciation 1.11 2.16 6.57
PBT 28.8 49.12 180.28
Tax provision 10.79 17.89 61.06
PAT 18.01 31.23 119.22
-
Appropriation of profit
Dividends 0.7 6.14 0.62
Retained earnings 17.31 25.09 118.6

14. Bibliography

“Bombay Stock Exchange" Bseindia. 20 Mar. 2008 <http://www.bseindia.com/>.

" Indiabulls Securities” Indiabulls.Com. 15 Mar. 2008 <http://www.indiabulls.com/>.
"National Stock Exchange” nseindia. 18 May. 2008 <http://www.nseindia.com/>.
"Share khan Securities” Sharekhan.Com. 18 May. 2008 <http://www.sharekhan.com/>.
“India Infoline Securities” India-Infoline.Com.19 May.2008
<http://trade.indiainfoline.com/>.
" India Infoline Securities” 5paisa.Com. 19 May. 2008 <http://www.5paisa.com/>.
" Kotak Securities” kotak securities.Com. 19 May. 2008
<http://www.kotaksecurities.com/>.
"ICICI Securities” ICICI securities.Com..20 May. 2008
<http://www.icicisecurities.com/>.
" Karvy” Karvy.Com. 20 May. 2008 <http://www.karvy.com/>.
“Online Investors & Traders” 20 May. 2008 <http://www.traderji.com/>.
" Motilal Oswal Securities” . 20 May. 2008 <http://www.motilaloswal.com/>.

QUESTIONNAIRE FOR WALKINg CUSTOMER FOR REFRENTIAL

MARKETING
CUSTOMER FEEDBACK
INDIABULLS SECURITIES PVT. LTD.
CLIENT NAME :
PHONE NUMBER :
DATE :
• FROM HOW LONG YOU ARE TRADING WITH INDIABULLS?

• WHICH FEATURE OF INDIA BULLS DO YOU LIKE MOST?

• IN WHICH SHARE OR MARKET YOU WANT TO INVEST IN FUTURE

& WHY?

• ANY SUGGESTIONS FOR IMPROVEMENT

• DO YOU KNOW ANY PERSON WHO IS INTERSTED IN TRADING WITH

INDIABULLS (IF YES PLEASE GIVE NAME WITH TELE. NO.)
1- 2-

3- 4-
Questionnaire for market survey for awareness among general public

Name of Person:
Contact Number:
E-mail Id
Are you interested in Share Market?
Do you invest in Share market?
Are you aware of any Stock broking company ?
5PAISA
SHERKHAN
MOTILAL OSWAL
ICICI DIRECT
HDFC
INDIABULLS
KOTAK
ANY OTHER
DON’T KNOW ANY ONE
Have you any plan to invest in security in near future?

Signature

POPULATION SIZE -: 100

TARGET POPULATION -: GOVERNMENT SERVENTS, MIDEUM CLASS SHOP
KEEPER, SMALL BUSINESSMANS ETC.
RESULT

5paisa 6
S.khan 18
M.oswal 12
ICICI Direct 15
HDFC 4
Indiabulls 21
Kotak 10
Any other 9
Don't know 5
TOTAL 100
 QUESTIONNAIRE FOR PRIMARY DATA
FROM DELHI & NCR
SECURITIES COMPANIES SURVEY
COMPANY NAME :
BRANCH :
BRANCH MANAGER :

OFFERINGS
1. TRADE IN EQUITIES YES
NO

2. TRADE IN COMMODITIES YES NO

3. TRADE IN MUTUAL FUNDS YES NO

4. TRADE IN BONDS & DEBENTURES YES NO

5. TRADE IN IPO’s YES NO

6. ANY OTHER (SPECIFY IF ANY)

SERVICIES OFFERED IN EQUITIES & COMMODITIES

D.MAT ACCOUNT
TRADING ACCOUNT
INITIAL CHARGES
MONTHLY / ANNUALY CHARGES (IF ANY)
DELIVERY TRANSACTION CHARGES
BROKERAGE FOR DELIVERY/ CASH
BROKERAGE FOR INTRADAY/ JOBBING
BROKERAGE FOR FUTURE & OPTION

MARGINAL TRADING OPTION

(IF YES ANSWER THE FOLLOWING QUESTIONS
OTHERWISE JUMP TO NEXT HEADING)
• IN CASH
INTRADAY (TIMES)
DELIVERY (TIMES)
• IN STOCK
INTRADAY (TIMES)
DELIVERY (TIMES)
REPAYMENT OF DEBIT AMOUNT
IN HOW MANY DAYS
INTEREST RATE

TRADING FACILITIES
• ONLINE
• OFFLINE / WALK-IN
• TELEPHONIC

WORKING WITH
• BSE
• NSE
• BOTH
• CDSL
• NSDL
• BOTH

CUSTOMER RELATIONSHIP
CUSTOMER APPROCHABILITY
• BY TELECALLING
• BY PERSONAL VISIT
• BY REFERENCE
• BY BROUCHER OR ANY OTHER ADDV MATERIAL
• ANY OTHER METHOD

HOW YOU RETAIN YOUR CUSTOMER ?