Jitendra Virahya s

JVIRAHYAS@GMAIL.COM

Jitendra

Virahya s
JVIRAHYAS@GMAIL.COM
A Project Study Report On
Training Undertaken at

Bonanza Portfolio Limited

Titled
2

Study of stock market & Investment management

Submitted in partial fulfillment for the Award of degree of Master of Business Administration

Submitted By: JV MBA Part II nd (Sem 4th )

Submitted To:H.O.D.

Jasoda Devi College and Institution Sitapura, Jaipur

2009-2011

CERTIFICATE FROM COLLEGE

To Whom So Ever it May Concern

This is to certify that J V has prepared this project report titled on Study of stock market & Investment management based on this project study. This project report is his original work and it is submitted for the fulfilment of the MBA degree.
3

Wish his good success for her future career.

Project Guide

DECLARATION

J V S/O Mr. declares that the project report titled Study of stock market & Investment management is based on my project study. This project report is my original work and this has not been used for any purpose anywhere.

JV
MBA 4th Sem (II Year)

Preface
Masters of Business Administration is conducted with providing knowledge to the students regarding various type of management like financial management, marketing management and production management etc. MBA being a specific management course there is necessary of practical knowledge to support other theoretical subject name practical training. The practical training is very important of MBA course. I have done my training in Bonanza Portfolio Limited at Jaipur for 15 days. Mr. Jitendra Virahyas help for study. During this training period I have learned about Back office work, depository work, and security market and sector analysis.

I have come to know that how does security market function and how one can deal in stock market and how to manage risk and portfolio. Thus it was really beneficial for me in terms of knowledge and experience.

Acknowledgement

I express my sincere thanks to my project guide, Miss.

Sharma H.R. Manager

(Regional office, Jaipur) of Bonanza Securities Limited., for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge him/her/them for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he/she/they had provided to me with all stages of this project. I would also like to thank the supporting staff of all the company Department, especially for the Mr. Jitendra Virahyas for their help and cooperation throughout our project.

(J V )

Executive Summery
The Indian stock market have seen various stages of economic cycles if we look at market condition then we find that at the beginning of the year 2008 the market was on cloud nine (all time high on 10 January 2008) Sensex was 21207.83. But after reaching its all time high it has started to show strong resistance to carry on and the result of the resistance and sharp slump in the world economy, the bull suddenly turned into bear and all expectations of investors that market will reach 25000 just turned into dream and according to current situation that is for away from reality. Investors just shocked due to slump in the market condition, they have rethink about investment alternatives risk and returns. Capital appreciation and time value of money. Since investment become a basic need of everyone so each and every person wants to secure his investment and willing to get good returns and capital appreciation upon the investment fund. This study really gives an overview about how and when we invest in various sectors. That how can invest money for future safety in various markets such as primary market, secondary market, Govt. security market etc. Thus the study is providing knowledge about investment scenario and guiding the investors for safe investment with the help of economic analysis, fundamental analysis, and financial analysis. One can analysis the market and understand the nature and movement of market for safe investment and can become wiser investor that is most challenging thing in current scenario.

Contents
1. 2.

Introduction to the industry Introduction of organization 3.1. Title of the Study 3.2. Duration of the Project 3.3. Objective of Study 3.4. Type of Research 3.5. Sample Size and method of selecting sample 3.6. Scope of Study 3.7. Limitation of Study

3. Research Methodology

4. Facts and Findings 5. Analysis and Interpretation 6. SWOT 7. Conclusion 8. Recommendation and Suggestions 9. Appendix 10. Bibliography

1. INTRODUCTION TO THE INDUSTRY

Broking industry is growing for last ten year with leaps & bounces to Indian economy and stock market. Brokerage houses are known as intermediaries between market and investor and play a key role in execute the functions to carry on the stock market. All the brokerage houses having different sort of charges and fee according to their facilities and efficiency provided to investors. They manage the portfolio, risk management and providing guidance to investor for dealing in security market the major players of Indian broking industry are as follows:-

1.

Bonanza Portfolio Limited

2. Share khan Limited 3. Religare Limited 4. Hem Securities Limited 5. Angle Broking Limited 6. India bulls Securities Limited 7. Anand Rathi Securities Limited

10

Analysis of players in the industry

Unicon Unicon has been founded with the aim of providing world class investing experience to hitherto underserved investor community. The technology today has made it possible to reach out to the last person in the financial market and give him the same level of service which was available to only the selected few. unicon give personalized premium service with reasonable commissions on the NSE, BSE & Derivative market through our Equity broking arm Unicon Securities Pvt. Ltd. With our sophisticated technology you can trade through your computer and if you want human touch you can also deal through our Relationship Managers out of our more than 100 branches spread across the nation.

Religare securities Trading in Equities with Religare truly empowers you for your investment needs. We ensure you have a superlative trading experience through A

highly process driven, diligent approach Research & Analytics and of the best-in-class dealing rooms

Powerful One

Further, Religare also has one of the largest retail networks, with its presence in more than 1800* locations across more than 490* cities and towns. This means, you can walk into any of these branches and connect to our highly skilled and dedicated relationship managers to get the best services.
11

The Religare Edge:

Pan India footprint Powerful research and analytics supported by a pool of highly skilled research analysts Ethical business practices Offline/Online delivery models Single window for all investment needs through your unique CRN

Anand Rathi Anand Rathi (AR) is a leading full service securities firm providing the entire gamut of financial services. The firm, founded in 1994 by Mr. Anand Rathi, today has a pan India presence as well as an international presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance, structured products all of which are supported by powerful research teams. How Bonanza differ from other in the industry Bonanza Portfolio Ltd is an emerging leader in the high growth retail financial services sector in India. India set to emerge as one of the worlds largest retail financial services markets. Indias GDP growth has averaged 6.5% since 1994 and expected to continue to grow at 8+%.

Increasing sophistication of financial markets Indian consumers affinity for equity Emergence of large domestic retail brokerage houses

12

India has nearly 10,000 brokers; most of them are small family businesses The last 5-7 years has witnessed the emergence of large institutional players driving consolidation of the retail financial services market Global players are starting to make strategic inroads into the retail financial services market Foreign broking houses dominate FII based institutional broking Some global majors like Citigroup are making inroads into retail by leveraging their network E-trade has announced majority ownership of IL&FS Investment

Bonanza Portfolio Limited Bonanza, a leading financial services &brokerage house working diligently since 1994 can be describe in a single word as a financial powerhouse. With acknowledged industry leadership in execution and clearing services on exchange traded derivatives and cash market products, bonanza has spread its trustworthy tentacles all over the country with more than 1050 outlets spread across 350 cities. It provides an extensive range of services in equity, commodities, currency derivatives, wealth management, distribution of third party product, etc.

Competition within the industry:

13

Competition within this industry is very high , there are lots of new companys coming in this business , although Bonanza Portfolio Limited has good reputation but competition is so high and due to recession all the brokerage firm are badly affected and Bonanza Portfolio Limited is also affected . This market is centre of attraction to new entrepreneur because it is already fast growing market and it is for sure that it will go further, and there are many opportunities lying ahead in the way .but although it is successful industry competition affect the major players. And bonanza is one of the successful players in this industry. it is working very efficiently to fight back with competition and challenging its competitor by satisfying its customer at most level of their satisfaction. It has many competitors which are providing different type of services .the brief introduction of its competitor is given below: 5paisa.com: 5paisa is the trade name of India info line securities private limited (5paisa), member of NSE and BSE. 5paisa is the wholly owned subsidiary of India info line limited, Indias leading and most popular finance and investment portal. 5paisa has emerged as one of leading player in e-broking space in India .their key products are investors terminal and trade terminal .its special feature is that it is not charging any kind of AMC which provides comfortable tariff card to its client. It provides the facility of margin for intraday and delivery as well as.

Icici Direct.com: Icici Direct.com is the most comprehensive website, which allows its client the opportunity to invest in share, mutual fund, derivative (future and option) and other financial products .they offer their clients a product for every investment need.

14

This provide the facility of cash trading, margin trading, margin plus trading, spot trading and BTST facility to its client. It also provides the facility of margin and funding for facilitating its client to trade with more money.

Share khan: Share khan is also one of the close competitors of bonanza. It facilitate its client in many ways .although it is not as big as India info line and icici direct.com, etc, but it is still going forward speedily by winning the trust of its customers. Its product range includes classic trade, speed trade, and speed trade plus. Which facilitate its client during trading? It has also the producer for providing the market and funding the trade.

Anand Rathi: Anand rathi (AR) is a leading full service securities firm providing the entire range of financial services. AR provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage and distribution of equities, commodities, mutual funds and insurance all of which are supported by powerful research team. Its product includes demate and trading account. it only provides margin for intraday to its clients , it does not provide funding for delivery.

Religare: Religare is driven ethical and dynamic process for wealth creation. based on this , the company stared its Endeavour in the financial market .a company promoted , controlled and managed by the promoters of ranbaxy , religare , was founded with the vision of providing integrated financial care driven by the relationship of trust . Kotak security:
15

Kotak mahindra is one of Indias leading financial institutions, offering complete financial solution that encompasses every sphere of life. From commercial banking, to stock broking, to mutual fund, to life insurance, to investment banking, the group caters to the financial needs of individual and corporate. Kotak institutional equities has full financial service capability , which includes derivative , facilitating market access through affiliated and the distinctive offering of corporate access to investors. The division services over 250 client including files, pension and mutual fund. The division has sales desk in Mumbai, London and New York, with India desk also servicing clients in Hong Kong, Singapore, Japan and Australia.

16

2. INTRODUCTION TO THE ORGANIZATION

Head office(Delhi)

Corporate office(Mumbai)

22/2-A, 1ST Floor, Laxmi insurance Bonanza House, plot no.M-2,Cama Building, Asaf Ali Road, New Delhi Industrial Estate Walbhat road, Behind the -110002 hub,Goregaon(east) Mumbai-400063

Registered office (Delhi) 4353/4C,Madan Mohan Street,Ansari Road, Daryaganj,New Delhi-110002

Regional office Raj(Jaipur) 410-413,4th floor, Silver Square, Near Raj Mandir Cinema, Bhagwandas Road, Jaipur-01

COMPANY PROFILE

17

Bonanza is a leading Financial Services & Brokerage House with acknowledged industry Leadership in execution and clearing services on Exchange Traded Derivatives and cash market products. Key elements that place Bonanza amongst the leading Brokerage Houses and makes it the preferred service provider for value based financial services are:

A Client-driven foundation and strategy committed to client-specific investment needs

and objectives. Integrated and innovative use of Technology enabling clients to trade offline, online and Strategic tie-ups with latest technology partners to facilitate trading access and direct processing across more than 900 Branches spread over 310 cities.

Client-focused philosophy backed by memberships of all principal Indian Stock and

Commodity Exchanges makes Bonanza a preferred service provider in the Industry for value based services. Bonanza confidently steers you through a challenging Financial and Trade Market every moment, whether you are present or not.

The Management

18

Mr. Shiv Kumar Goel is a Promoter / Director, CA by profession and a qualified

Company Secretary. He has more than 25 yrs of experience in financial service and brokerage. Prior to venturing into business he was Chief Executive Officer (CEO) of SRF Finance Ltd., New Delhi. He has been a pioneer in innovating technological advancements and its implementation methodologies.

Mr. S. P. Goel is a Promoter/Director, qualified CA operating from the country's

financial capital Mumbai, is credited of having represented on the Board of directors of OTCEIL. Mr. Goel has represented various prestigious committees oF SEBI including that of JR Verma Committee, NSEIL (Executive Committee, Committee on Settlement of issues), NSCCL. He has also represented as a member of the Disinvestment and Privatisation Committee of the Indian Merchants Chamber (IMC).

Mr. S. K. Goel is a Promoter/Director, a qualified Chartered Accountant by

profession and experience of more than 25 years, has in past worked with leading Indian industrial groups like Modi's & Oswals's.

Mr. Vishnu Kumar Agarwal is a Promoter/Director, is a Bullion Dealer, real

estate developers & consultant. He has been credited with setting up various trading & investment channels in the field of commodity futures trading for Indian residents & investors.

Mr. Anand Prakash Goel is a Promoter/Director and a practicing Chartered

Accountant with over 23 years of experience. The management team of Bonanza comprises of Chartered Accountants, MBAs, IT Professionals and Engineers, in addition to senior professionals in the financial field.

Bonanza Affiliation and Distribution Network :19

Proven and accredited leaders in the Financial Services business, Bonanza provides you the unique opportunity to trade offline and online while cutting across all geographic barriers.

Strategic Tie-ups that provide latest technology for access and processing. Trading over 900 locations across 310 cities in India 24 hour access to Account Information via the Net or Electronic File Transfer (FTP) facilities. Membership of all Principal Indian Stock and Commodity Exchanges National Stock Exchange of India Ltd (NSEIL) Bombay Stock Exchange (BSE) Futures & Option Segment of NSEIL & BSE Dubai Gold Commodities Exchange (DGCX) National Commodity & Derivatives Exchange Ltd. (NCDEX) Multi Commodity Exchange (MCX) National Multi Commodity Exchange (NMCE) OTC Exchange of India Ltd (OTCEIL) Depository Participant with NSDL & CDSL

Corporate Agents for Life & Non-Life Insurance (both foreign / private and state owned insurance companies)

One of the largest distributors of leading Mutual Funds in India Depository Participant with NSDL & CDSL

Group Representation

20

Bonanza Portfolio Ltd. Bonanza Global DMCC, Dubai Bonanza Commodity Brokers Pvt. Ltd. Bonanza Insurance Brokers Pvt. Ltd. Bonanza Online.com Ltd.

Bonanza Research Desk

Our Research Desk Philosophy :Investing means laying out money today to receive money in real terms after taking inflation into account, tommorrow Thats because were realistic, experienced, backed by research and study and most importantly, client-driven.

Empowering the Investor: The Bonanza Research Desk has one key objective to empower you completely with Market Knowledge, Analysis and Advisory Services to help you prosper. Our team provides expert and timely analysis on equity and commodity to help you maximize your trading decisions. We offer value perspectives, suggest strategy, focus on opportunities for investment and growth, and endeavors to reduce risk potential. Trading Ideas

Daily Market Strategies Monthly Updates Investment Ideas Trading Calls

21

Commodity Views

Bonanza Future Innovations: In an ever-evolving Market, we constantly seek value for our clients. Some of our plans include: Value-based proactive Portfolio Management Services (PMS) to Resident & Non-Resident Indians (NRI).
Significant Value

market-share in Commodities Futures Trading Segment in India. execution & custodian services for Non-Resident Indians, Foreign

based Global Portfolio & Asset Allocation access to Resident Indians.

Clearing,

Institutional Investors & Overseas Corporate Bodies.

BONANZA PORTFOLIO MANAGEMENT SERVICES (PMS)

This is probably the most professional and customized Portfolio Management Service you will discover. Our key objective is your key objective Significant Wealth Creation for you. A PMS offers all the benefits of a Mutual Fund Plus other advantages that include the Flexibility to buy stocks in a phased manner and in a conducive market. Our PMS Managers are highly experienced professionals who respond swiftly to changes, rallies, patterns and move your stocks around to capitalize on Market situations. Value Plus! PMS levies charges only on actual performance. No profit No fee.

Highlights of the Bonanza PMS

22

Bonanza provides a highly professional fund management services that is yet flexible to deliver maximum returns to our clients. Here are some highlights of our process:

Professional research brings out the brightest stock and sector ideas for your portfolio. Proactive management means monitoring the operational and stock market performance of all companies in your portfolio regularly. Prudent risk management practices mean the better downside protection for your portfolio and also help convert paper gains into real profits. Greater flexibility to hold cash and allocate investments across sectors and adjust for market trends.

Professional Fund Management

It is important to realize that an investment in bonanza PMS does not automatically become an equity investment. The flexibility of the PMS allows us to convert cash to equity over period of time- this process can be speeded up or slowed down to adjust for market trends.

Recent Past Performance

23

Returns % (From Aug 13, 2004 to Nov 30, 2007)

Absolute

Annualised

Bonanza PMS Sensex Nifty

327.28 % 277.68 % 260.58 %

99.22 % 84.18 % 79.00 %

Other benefits

24

Dedicated portfolio manager contact Expert initial and ongoing advice Continual fund monitoring In-depth reporting on portfolio performance, including graphs & charts.

Features & fee structure: Minimum portfolio size: Rs.10 lakhs. You can also open a PMS account by transferring your existing portfolio of stocks or mutual funds. PMS Fees: 15% of profits plus government taxes. Charged quarterly -due only if the portfolio has made profits in that quarter.

Brokerage: 0.50% plus all applicable regulatory charges and government taxes. onanza portfolio Ltd. And Bonanza Stock Broker Ltd. will be appointed as brokers Ltd. Will be appointed as brokers to the scheme.

Other charges: Depository and other charges, expenses and taxes will be on actuals. Exit: No lock-in period. No exit charges. Exit any time with a notice of minimum 3 working days.

BROKERAGE SERVICES
25

Equity

Being a member of the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and dealer with Over The Counter Exchange of India (OTCEI) we handle your trading needs, through a network of experienced dealers across the country, and through our comprehensive website.

Commodities Investors looking for a fast paced dynamic market with excellent liquidity can now trade in the Commodity Futures Market. Bonanza is a registered trading and clearing member of NCDEX , MCX and DGCX(DUBAI). You can participate by easily opening an account with us and we shall suggest and advise you on the strategy you could employ in your investments. We will also provide you with research on your investments, and you will receive regular portfolio valuation reports to enable you to monitor performance and view the progress towards the investment objective.

Derivatives We are clearing-cum-trading members in Future & Options segment in NSE as well as BSE and we provide this facility to our clients.

SERVICES AS DEPOSITORY PARTICIPANT We are please to introduce you Bonanza as a Depository Participant for NSDL and CDSL and offer the whole range of depository services to its investor like:26

 Account Opening :- Individual/Corporate/CM/in Equity/Commodity. Dematerialization/Rematerilisation :- Conversion of physical shares into

Electronic from and vice versa.

Facilitation Repurchase/Redemption of Units of Mutual Funds. Electronic settlement of tracks in stock Exchanges. Pledging of dematerialized securities against loan Nomination facility Electronic credit of securities allotted in Public Issues, right issue. 24x7 Web access form viewing of transaction for our clients through Speed-e

(nsdl.co.in) and Easiest (cdslindia.com)

Internet based services like Speed-e and Easiest Providing better services at competitive rates.

Charge Structure

27

Sr. Particulars 1 Demat Account Opening Documentation Charges, Including stamp agreement Power of Attorney (POA) FAX indemnity Annual Maintenance : Individual CM/Corporates/Others Account Closing Charges Rematerialization Per certificate Debit Transaction : Market Off market/Inter Depository Pledge : Creation Demeb

New Charge Structure w.e.f. 1st Aug. 2007 Nil

Rs. 100/Rs. 100/Rs. 200/Rs. 250/Rs. 800/Nil Rs. 15/-

3 4 5

6 7

Rs. 15/Rs. 35/Rs. 31/- per certificate

28

E-BROKING You can easily in Equities, commodities and derivatives by signing up into www.bonanzaonline.com at Bonanza online, you can choose between two products.

Bonanza Value All beginners start somewhere and its easier with a guide. Your investments may be small, but our experience, research base and guidance are vast. Register on to the Bonanza Value module and you will find all information and processes customized to beginners.

Bonanza Max Bonanza Max is the ultimate module for dynamic traders and jobbers working through the daily trading session. In order to clearly distinguish the two products and to encourage the use of right product by the person with right mindset, the characteristics and system requirements for the two products is explained in detail in the chart below.

Bonanza Opportunity Bonanza Opportunity is targeted towards aggressive investors who prefer more active management of their equity portfolio. The scheme will aim to capitalize on value opportunities
29

thrown up by sudden price changes. It will also target event-based opportunities. Though the scheme will position its portfolio with an aggressive stance, this remains an investment product.

30

a) Portfolio Management Fee Nil b) Brokerage @ 1% of the value of the transaction+ Regulatory Charges.

31

c) Other Costs on actuals (DP Charges/Bank Charges.)

Component. Account Opening Charges Minimum initial Margin Amount Brokerage (%) Delivery Intraday F&O segment DP Charges AMC

Bonanza-Value 500/2000/- (Adjustable against market exposure)

Bonanza-Max 500/1000/- (Adjustable against market exposure)

0.40 0.05 0.05 First year Nil Rs. 300/- 2nd yr. Onwards Sale Transaction 12/7X of Total Credit (Including shares) HDFC/UTI/ICICI Nil

0.30 0.04 0.04 First year Nil Rs. 250/- 2nd yr. Onwards Sale Transaction 10/10X of Total Credit (Including shares) HDFC/UTI/ICICI 1000/- (compound on quarterly basis)

Transaction Exposure

Bank Tie-up for payments Minimum Monthly Membership commitment SMS charges for research on Mobile Software Charges Minimum Charge per contract Note

Free Nil Rs. 15/-

Free Nil Rs. 15/-

32

33

There are two types of trading environment available for online trading
1. Installable software based stock trading terminals: This trading environment

requires software to be installed on investors computer. This software is provided by the stock broking firm. This kind of trading terminal is used by high volume intraday equity traders. Advantages Orders are directly sent to stock exchange rather than stock broker which make order execution very fast. It provides much more information as compared to web based version including stock market charts, price alerts, stock market news etc.

Disadvantages
34

 You cannot trade if you are not on the same computer where you have installed the software.
2. Web (Internet) based trading application: This does not require any special

software installation. This is just like any other website which can be opened from anywhere around the world for trading purpose. Advantages Real time stock trading is possible without calling or visiting brokers office. It displays real time market watch, graphs, historical data etc. Trading history, Demat a/c balance and saving a/c balance can be checked at any time Also provides valuable analysis to investors on various stocks. Secured transactions through unique IDs Customer service through Email and chat Disadvantages Some people dont have much proficiency of internet and computers. Websites are not that user friendly as compared to personalized service of brokers Nevertheless, with all the convenience of online trading there are still investors who prefer the old fashion way of offline trading. Offline trading has lost some popularity but it is still the main form of investing. Offline trading offers many benefits as well.

Pros of offline trading

35

 The most important point which investors appreciates is that they are not alone while taking any decisions so they can take the advice of their Relationship Manager when investing in a particular script. They are not faced with the challenge of making these vital investment decisions; especially, if they do not have the experience necessary to make the appropriate investments. The advantage of trading offline is higher exposure limit. Investors get higher Exposure while trading Offline as compared to Online.

With the ever booming share prices and the market scaling new heights more and more people are getting attracted towards this sector but as per the SEBI norms one must have a Demat a/c. To sell Demat a/c to a client it is required to collect all the information regarding Demat a/c in general and demat a/c offered by Bonanza. I also studied and compared the features of Demat a/c offered by various other companies in the industry to get fully prepared in order to sort the queries a client could ask about the product. I visited some of the main companies as a client and enquired about their offerings and compared these offerings with those of Bonanza. Some of the main companies I visited were India Infoline Reliance Money ICICI Direct India Bulls

Bonanza Product and Service

36

Bonanzas service encompasses the spectrum of wealth creation, management and preservation. Bonanza offers a wide range of product and services to help client reach their financial goal.

Bonanza Products Services

Brokerag e

Services

Wealth Manageme nt

Demat

Distributio n

Equit y

PMS

NSDL

Insuranc e

Commodit y

Advisor y

CDSL

Mutual Funds

Curren cy IPOs Derivative s

Fig: Bonanza Product & service

Prime Brokerage Services:

37

Equity and equity derivatives

Trading Platform offers online Equity & Equity Derivatives trading facilities

for investors. This high-end, efficiently integrated application makes trading convenient, quick and hassle free.

Added advantages - Having access to resources like research charts,

advice, live quotes online assistance - to take well-versed decisions. Trading through our branch network or phone available, by simply registering with us. Commodity Derivatives We are clearing-cum-trading members in Future & Options segment in NSE as well as BSE and we provide this facility to our clients. You can trade in future and options through www.bonanzaonline.com you can trade in index Options, Index Future, Stock Option, Derivatives, CNXIT and BANKEX

We offer access to future trading via multiple exchanges in wide-ranging We also provide investment opportunities in gulf commodities futures and

commodities agricultural commodities, base metals, energy and precious metals.

currency market. Currency Derivatives

Known as being predecessors in contributing to unique financial products, This service, we provide both offline and online.

we have now added to our stable - currency Derivative.

38

Asset Management:

Portfolio Management Services (PMS)

Our team of portfolio managers design portfolios to suit every customers

needs. Constantly scrutinizing the developments in market and moving stocks, we aim for maximum capitalization.

We suggest the most appropriate product to customers, based on factors

like their investment spheres, return expectation and risk tolerance. Our experience, expertise and research helps us give our customers investments the best upshots.

Advisory

Bonanza guides and supports its clients to re-structure and streamline

their portfolios based on changing market conditions and client objectives.

Depository Services:

39

Bonanza in association with the NSDL & CDSL offers you the whole range of DEPOSITORY SERVICES to make your share transaction faster, cheaper and easier for equity as well commodity. An organization that hold your shares in electronic form the same way as a bank holds your money is termed as a depository. We are pleased to introduce you bonanza as a depository participant for NSDL and CSDL and offer the whole range of depository services to its investor like.

Account Opening: - individual/corporate/CM/in Equity/commodity. Dematerialization/Rematerilisation: - Conversion of physical shares in to Repurchase/Redemption: - Facilitation repurchase/redemption of units Electronic settlement of tracks in stock exchanges. Pledging of dematerialized securities against loan Nomination facility Electronic credit of securities allotted in public issues, right issues. Providing better services at competitive rates Bonanza is a depository participant with NSDL and CDSL. We provide an array of Depository Services to make share transactions

Electronic form and vice versa. of Mutual Funds

quicker, easier and cheaper for both Equity and Commodity.

40

Distribution:
Insurance

Bonanza offers insurance products in Life and General Insurance. Our IRDA certified advisors offer prudent advice on policy selection and Our advisory team matches the insurance products to financial profiles of

assists through the claim redressal process.

customers to offer the best solution options, maintaining transparency and professionalism.

Mutual Funds

Bonanza is one of the largest distributors of mutual fund in India. With the help of our in-depth research across categories covering 20

parameters and our expertise, we guide our clients to take appropriate investment decisions.

Keeping in mind customers' budgets, needs and securities, our AMFI

certified investment advisors offer the best deals.

Initial Public Offer (IPO)

We offer our customers online investment access for Public offerings. In-depth research advice for the forthcoming IPOs.

Bonanzas Strengths
41

Bonanza has over 1050 outlets in more than 350 cities in India. (as on Bonanza has more than 2 lakh clients comprising of Corporate Financial

March 2009)

Institution Investors, Mutual Funds, High Net-worth Individuals and Retail Investors.

Bonanza has a young dynamic team of 1900 professionals. Strong infrastructure supporting over 3000 trading terminal supporting 24x7 service and support via our federal support system.

more than 350 VSAT's to support geographic reach and servicing capabilities.

Bonanza Values Customer centric approach At Bonanza, customers comes first. And their satisfaction is not just our top priority but also the driving force for us, every single day Transparency Honesty is our forte. We believe in dealing on thoroughly ethical grounds, being fair and transparent with our customers Meritocracy We recognize and appreciate efforts put in by our employees. And we, as a matter of fact, reward and distinguish each one of them, ceaselessly. Solidarity we believe in sharing a forthright and respectful relationship with our business partners and employees. We consider them both as our team associates, who work together. Succeed together

Bonanzas Technology
42

Single VSAT Connectivity for NSE/BSE/F&O/NCDEX /MCX/MCX-SX

through Virtual Private Network (VPN) Other connectivity links to branches through Leased Lines, ISDN, Radio Frequency and Broadband.

High Speed and Streaming live quote access via Internet for

NCDEX/MCX/MCX-SX for branches and retail clients.

Internet based Depository access (Speed-e/Easiest) to offer DP services

to Retail investors.

24x7 online access to a centralized support structure for all products

offerings.

Bonanzas Achievement

Top Equity Broking House in terms of branch expansion for 2008

3rd in terms of Number of Trading Accounts for 2008 6th in terms of Trading terminals in for two consecutive years 2007- 2008 9th in terms of Sub Brokers for 2007 Awarded by BSE 'Major Volume Driver 04-05, 06-07, 07-08.Nominated among the

Top 3 for the "Best Financial Advisor Awards '08" in the category of National Distributors Retail instituted by CNBC-TV18 and Opti Mix

43

THE CAPITAL MARKET

The capital market

The capital market is the market for securities, where the companies and government can raise long term funds. It is a marketing which money is lent for periods longer than a year. The capital market includes the stock market and bond market. The capital market consists of primary and secondary markets. Primary market: The primary market deal with the issue of new instruments by the corporate sector such as equity shares, preference shares and debt instruments. Central and State Government, various public sector industrial units, statutory and other authorities such as state electricity boards and port trusts also issue bonds/debt instruments. The primary market in which public issue of securities is made through a prospectus is a retail market and there is no physical location. Offer for subscription to securities is made to investing community. Secondary Market: The secondary market or stock exchange is a market for trading and settlement of securities that have already been issued. The secondary market consists of 22 stock exchanges. The secondary market provides a trading place for the securities already issued to be bought and sold. It also provides liquidity to the initial buyers in the primary market to re-offer the securities to any interested buyers at any price, if mutually accepted.

44

Capital issues (Control) Act, 1947 The Act had its origin during the Second World War in 1943 when the objective of the Government was to per-empts resources to support the war efforts. Companies were required to take the Government approval for tapping household savings. The act was retained with some modifications as a means of controlling the raisin of capital by companies and to ensure that national resources were channelled into proper lines. Companies act, 1956 Companies act, 1956 is a comprehensive legislation covering all aspects of company form of business entity from formation to wining-up. The legislation deals with issue, allotment and transfer of securities an various aspects relating to company management. It provides for standards of disclosure in public issues of capital, particularly in the fields of company managements and projects, information about other listed companies under the same managements and management perception of risk factors. Securities contracts act, 1956 The preciously self-regulated stock exchanges were brought under statutory regulation through the passage of the SC, which provides for direct and indirect control of virtually all aspects of securities trading and the running of stock exchange, through a process of recognition and continued supervision.

45

3.1 Share Market

Securities and Exchange Board of India SEBI is the Regulator for the Securities Market in India. Originally set up by the Government of India in 1988, it acquired statutory form in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Chaired by C B Bhave, SEBI is headquartered in the popular business district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad SEBI has to be responsive to the needs of three groups, which constitute the market:

the issuers of securities the investors The market intermediaries.

SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court. SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required under law.

46

With the objective of improving market efficiency, enhancing transparency, checking unfair trade practices and bringing the Indian market up to international standards, a package of reforms consisting of measures to liberalize, regulate and develop the securities market was introduced during the 1990s. This has changed corporate securities market beyond recognition in this decade.

National Stock Exchange The National Stock Exchange commenced its operations in 1947 as a first step in reforming the securities market the exchange. Before the NSE was set up trading on the stock exchange in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. The practice of physical trading imposed limits on trading volumes as well as, the speed with which new information was incorporated in to prices. To obviate this, the NSE introduced screen-based trading system where a member can punch into the computer the quantities of shares and the prices at which he wants to transact. The transaction is executed as soon as the quote punched by a trading member finds a matching sale or buys quote from counterparty. The increases the informational efficiency of market. With SBTS, it becomes possible for market participants to see the full market, which helps to make the market mare transparent, leading to increased investor confidence. The NSE started nation-wide SBTS, which have provided a completely transparent trading mechanism. Regional exchange lost a lot of business to NSE, forcing them to introduce SBTS. Today India and boast that almost 100% trading takes place through electronic order matching.

47

Bombay Stock Exchange: BSC Sensex or Bombay Stock Exchange Sensitive index is a value-weighted index composed of 30 stocks started in 01 of Jan, 1986. it consist of the 30 largest and most actively traded stock , representative of various sectors, on the Bombay stock exchange .these companies account for around one-fifth of market capitalization of the BSE. The base value of the sensex is 100 on April 1, 1979, and the base year of BSESENSEX is 1978-79. At irregular intervals, the Bombay stock exchange (BSE) authorities review and modify its composition to make sure it reflect current market conditions. The index is calculated based on free float capitalization method; a variation of the market cap method. Instead of using a companys outstanding share it uses its float, or share that are readily available for trading. The free float method, therefore, dose not includes restricted stocks, such as those held by company insiders. The index has increased by over ten times from June 1990 to the present. Using information from April 1979 onward, the long run rate of return on the BSE Sensex works out to be 18.6% per annum, which translates to roughly 9% per annum after compensating for inflation.

Equities: -

48

What is Equity: - Funds brought in to a business by shareholders is called equity. It is a measure of a stake of a person or group of persons starting a business. What does investing in equity mean: - When you buy a companys equity, you are in effect financing it, and being compensated with a stake in the business. You become part-owner of the company, entitled to dividends and other benefits that the company may announce, but without any guarantee of a return on your investments. Fundamental analysis: - The analysis of factual information like financial figures, balance sheet, and other information publicly available is known as fundamental analysis. This information is used to derive a fair price of the share of the share of the company. The faithful fundamentalists believe that the market incorporates all facts relating to the financial performance of the company. But a systematic analysis will ensure a more accurate valuation of the price. Fundamental analysis use tools such as ratio analysis (P/E, M/V/BV) and discounted cash flow analysis in order to arrive at the fair value of a company and hence its share. Technical Analysis: - Technical analysis is the study of historic price movements of securities and trading volumes. Technical analysis believes that prices of the securities are determined largely by forces of demand and supply. Share prices move in patterns which are easily identifiable. Crucial insights in to these patterns can be obtained by keeping track of price charts, leading to predictions that a stock price may move up to down. The belief is that by knowing the past, future prices can predict.

Settlement cycle: - The accounting period for the securities traded on the Exchange. On the NSE, the cycle beings on Wednesday and ends on the following Tuesday, and on the BSE the cycle commences on Monday and ends on Friday.
49

At the end of this period, the obligations of each broker are calculated and the brokers settle their respective obligations of each broker are calculated and the brokers settle their respective obligations as per the rules, bye-laws and regulations of the clearing corporation. If a transaction is entered on the first day of the settlement, the same will be settled in the eighth working day excluding the day of transaction. However, if the same is done on the last day of the settlement, it will be settled on the fourth working day excluding the day of transaction. Rolling settlement: - The rolling settlement ensures that each days trade is settled by keeping a fixed gap of a specified number of working days between a trade and its settlement, at present, this gap is five working days after the trading day. The waiting period is uniform for all trades. Deliver the shares and pay the money to broker: - As a seller, in order to ensures smooth settlement you should deliver the shares to your broker immediately after getting the contract note for sale but in any case before the pay-in day. Similarly, as a buyer, one should pay immediately on the receipt of the contract note for purchase but in any case before the pay-in day. Short selling: - short selling is a legitimate trading strategy, it is a sale of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller take the risk that they will be able to buy the stock at a more favourable price than the price at which they sold short

Auction: - An auction is conducted for those securities that members fail to deliver/short deliver during pay-in. three factors primarily give rise to an auction, short deliveries, un-rectified bad delivering up-rectified company objection.

50

The buy/sell auction for a capital market security is managed through the auction market. As opposed to the normal market where trade matching is an on-going process, the trade matching process for auction starts after the auction period is over. If the shares are not bought at the auction, if the shares are not offered for sale, the exchange squares up the transaction as per SEBI guidelines, the transaction is squared up at the highest price from the relevant trading period till the auction day or at 20 percent above the last available closing price whichever is higher. The pay in and pay out of funds for auction square up is held along with the payout for the relevant auction. Hawala Rate: - Hawala rate is a making-up price at which buyers and sellers settle their speculative transaction at the end of the settlement. It is the basis for buy and sells for the investor opting for carry forward during the next settlement. This price is fixed by taking the weighted average of trades in the last half-an-hour of trading on the settlement day for securities in the carry forward list, also knows as the A group or specified group. This price is significant because for a speculative buyer or a seller, the Hawala rate is the standard rate for settling his trade and for carrying forward business to the next settlement. For example, an investor buys the stock of x company at Rs.100 on Monday. By Friday (BSE settlement day), if Rs. 90 is the weighted average price in the last half-an-hour, the buyer would have to carry forward his trade at this price of Rs. 90. He then settles at Rs. 90 and enters in to a contract at Rs. 90 plus BLESS charges for the next settlement. Normally, Stock Exchange does not interfere with the Hawala rates. However, there are instances, when rates have been changed to ensure safety of the markets. This is so because in case the market witnesses a sharp fall during a settlement, the chances of a broker default are extremely high. This is when the exchange administration steps in and raises the Hawala rate to avert any possible default.
51

Book-closure and record date: - When shares of a joint stock company invariably change hands during market trades, identifying the owner of some shares becomes difficult. So it is difficult to pass on certain benefits (like share bonus issue, splits and dividend payments) to shareholders. So, when a joint stock company declares dividends or bonus issues, there has to be a cut-off date for such benefits to be transferred to the shareholders. This date is termed as "Book Closure" date or "Record Date". It is the date after which the company will not handle any transfer of shares requests until the benefits are transferred. Only shareholders marked in the company's register at the Book Closure Date or the Record Date would be entitled to receive these benefits. If a company announces book closure as 1 January, shareholders who as on that day own the stock will be entitled to the dividend/bonus/split benefit. e.g. If Mr. Y buys this stock from Mr. X on 2 January, the benefit of bonus issue or splits or dividend will still be transferred to Mr. X by the company. A company generally announces such a date along with the announcement of the bonus issue or splits or dividend announcement, as the case may be. In an efficient market as per the efficient-market hypothesis (EMH) the effect of the price change due to bonus issue or splits or dividend as on the Book Closure date gets adjusted in the price of the stock in the market effective with the opening of the trade floor on the book closure date

3.2 Commodity Market

India has a long history of futures trading extending over 125 year , while gold and silver were widely trade commodities in the 19 century , other Agro product like chana , urad , sugar wheat etc; were only added recently in most market.

52

The bull run in commodity markets coupled with the setting up of national level commodity exchanges in India and has lead to a large scale improvement in transportation , warehousing and financing etc; placing India internationally in commodities markets. Commodity future perform an important role of price discovery and risk management, which is beneficial for all the section of society i.e. producer, trader and consumer etc. Globally volumes on commodity future market are about five times of equity market. Some of major commodities exchange is Chicago Board of Trade (CBOT), New York Mercantile Exchange (NYMEX), London Metal Exchange (LME), Tokyo Commodity Exchange (TOCOM), and Bursa Malaysia (KLSE). What are future markets? Future markets are efficient price discovery platform, comprising of farmers, trader, producers, exporters, importers and industries associated with commodities. The future market is used for hedging the price risk, trading and arbitrage. What is a future contract? A future contract is standardized contract, trade on a future exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre set price. The future date is called the delivery date or financial settlement date. The pre-set price is called the future prices. What a Margin? A margin is the cash or collateral that a holder of a position in exchange traded future contract is required to pay to cover potential adverse movements in the value of the position. Generally the margin varies from 6% to 15% of total lot value. What is open interest?
53

Open interest is the total number of contracts outstanding. MCX: Multi Commodity Exchange (MCX) is an independent commodity exchange based in India. It was established in 2003 and is based in Mumbai. The turnover of the exchange for the period Apr-Dec 2008 was INR 32 Trillion. MCX offers futures trading in Agricultural Commodities, Bullion, Ferrous & Non-ferrous metals, Pulses, Oils & Oilseeds, Energy, Plantations, Spices and other soft commodities. MCX has also setup in joint venture the National Spot Exchange a purely agricultural commodity exchange and National Bulk Handling Corporation (NBHC) which provides bulk storage and handling of agricultural products. It is now regulated by forward market commission.
MCX

is India's No. 1 commodity exchange with 84% Market share in 2008($0.84

trillion)
The

exchange's competitor is National Commodity & Derivatives Exchange Ltd MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in crude oil and gold

Globally,

in futures trading
The The

crude volume touched 23.49 Million barrels on January 3, 2009 highest traded item is gold with an average monthly turnover of Rs 1.42 Trillion has 10 strategic alliances with leading commodity exchange across the globe now reaches out to about 500 cities in India with the help of about 10,000 COMDEX is India's first and only composite commodity futures price index

($29 Billion).
MCX The

average daily turnover of MCX is about US$ 2.4 billion

MCX

trading terminals
MCX

NCDEX:

54

NCDEX is the only commodity exchange in the country promoted by national level institutions. This unique parentage enables it to offer a bouquet of benefits, which are currently in short supply in the commodity markets. The institutional promoters and shareholders of NCDEX are prominent players in their respective fields and bring with them institutional building experience, trust, nationwide reach, technology and risk management skills. NCDEX is a public limited company incorporated on April 23, 2003 under the Companies Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It commenced its operations on December 15, 2003. NCDEX is a nation-level, technology driven de-mutualised on-line commodity exchange with an independent Board of Directors and professional management - both not having any vested interest in commodity markets. It is committed to provide a world-class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency. NCDEX is regulated by Forward Markets Commission. NCDEX is subjected to various laws of the land like the Forward Contracts (Regulation) Act, Companies Act, Stamp Act, Contract Act and various other legislations. NCDEX is located in Mumbai and offers facilities to its members about 550 centers throughout India. The reach will gradually be expanded to more centers.

NCDEX currently facilitates trading of 57 commodities AgricultureBarley, Cashew, Castor Seed, Chana, Chili, Coffee - Arabica, Coffee - Robusta, Crude Palm Oil, Cotton Seed Oilcake, Expeller Mustard Oil, Groundnut (in shell), Groundnut Expeller Oil, Guar gum, Guar Seeds, Gur, Jeera, Jute sacking bags, Indian Parboiled
55

Rice, Indian Pusa Basmati Rice, Indian Traditional Basmati Rice, Indian Raw Rice, Indian 28.5 mm Cotton, Indian 31 mm Cotton, Masoor Grain Bold, Medium Staple Cotton, Mentha Oil, Mulberry Green Cocoons, Mulberry Raw Silk, Mustard Seed, Pepper, Potato, Raw Jute, Rapeseed-Mustard Seed Oilcake, RBD Palmolein, Refined Soy Oil, Rubber, Sesame Seeds, Soybeans, Sugar, Yellow Soybean Meal, Tur, Turmeric, Urad, V-797 Kapas, Wheat, Yellow Peas, Yellow Red Maize. MetalsAluminium, Ingot, Electrolytic Copper Cathode, Gold, Mild Steel Ingots, Nickel Cathode, Silver, Sponge Iron, Zinc Ingot. EnergyBrent Crude Oil, Furnace Oil. At subsequent phases trading in more commodities would be facilitated.

3.3 Currency Market

The foreign exchange market (currency, Forex, or FX) is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when world over countries gradually switched to floating
56

exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system until 1971. Presently, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements.Since then, the market has continued to grow. According to Euro moneys annual FX Poll, volumes grew a further 41% between 2007 and 2008. The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollars, Euros, Japanese yen, Pounds Sterling, etc., and the need for trading in such currencies. What are Foreign Exchange/Forex/FX? Foreign exchange is the simultaneous purchase of one currency and sale of another currencies are always traded in pairs. International currencies are traded on floating exchange rates. There is a daily average turnover of about US$1.5 trillion in the foreign exchange markets. The foreign exchange market is known as the "Forex," or "FX" market. It is the largest financial market in the world.

Is there a central location for the Forex Market? Forex trading is not managed through an exchange. Since transactions are conducted between two counterparts, the FX market is an inter-bank, or over the counter (OTC) market. Who participates in the FX market?

57

Central, commercial and investment banks have traditionally dominated the Forex market. Other market participation is rapidly increasing, and now includes international money managers and brokers, multinational corporations, registered dealers, options and futures traders, and private investors. When is the FX market open for trading? Forex is a true global 24-hour marketplace. The trading day begins in Sydney, and moves around the globe as each financial center comes to life. Tokyo follows, then London, and finally New York. Investors can respond in real time to any fluctuations caused by current economic, social and political events. What are the most common currencies in the Forex markets? The most liquid currencies in the Forex market are those of countries with low inflation, stable governments, and respected central banks. Nearly 85% of daily transactions involve the major currencies, including the U.S. Dollar, Japanese Yen, the European Union Euro, British Pound, Swiss Franc, and the Canadian and Australian Dollars. Is capital intensive to trade Forex? Forex Capital Management requires a minimum deposit of $300 to open a Mini Account and $2000 for a regular account. Your relationship with Forex Capital Management enables you to conduct highly leveraged trades (as much as a 200 to 1 leverage ration in the Mini Account.) You set the degree of leverage that you wish to deploy. Unless otherwise specified, your leverage level is set at the most lenient level required by your account size. Please remember that while this degree of leverage enables you to maximize your profit potential, there is an equally great potential for loss.

3.4 Derivatives
The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk adverse economic agent to guard
58

themselves against uncertainties arising of fluctuations in assets prices. By there very nature, the financial markets are marked by a very high degree of volatility. Through the use of derivative product, it is possible to partially or fully transfer price risks by locking in assets price .as instruments of risk management; these generally do not influence the fluctuation in the underlying asset prices. However, by locking in asset prices, derivative products minimize the impact of fluctuation in asset prices on the profitability and cash flow situation of risk adverse investors. Derivative Products: Derivative contracts have several variants. The most common variants are forwards, futures, options, and swaps. Take a brief look at various derivative contracts that have come to be used. Forward: A forward contact is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Future: A future contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Future contracts are special type of forward contracting the sense that the former are standardized exchange traded contracts.

Option: Option is two types calls and puts. Calls given the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date .puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Option generally have lives of up to one year. Majority of the option traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over the counter.

59

Leaps: The acronym leaps means long-term equity anticipation securities .these are options having a maturity of up to three years. Baskets: Baskets option is option on portfolio of underlying assets. The underlying asset is usually a moving average of a basket of asset .equity index options are a form of basket option. Swaps: Swaps are private agreement between two parties to exchange cash flows in the future according to pre arranged formula. They can be regarded as portfolios of forward contracts. The two commodity use swaps are: Swaptions: Swaptions are option to buy or sell a swap that will become operative at the expiry of the option .thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaption market has receiver swaptions and payer swaption. A receiver swaption is an option to receive fixed and pay floating. a payer swaption is an option to pay fixed and receive floating.

3.5 The Depository system

The principal function of a depository is to dematerialize securities and enable their transaction in book-entry form. The securities are transferred by debiting the transferors depository account and crediting the transferees depository account. Functions of Depository Dematerialization: one of the primary functions of depository is to eliminate or minimize the movement of physical securities in the market. This is achieved through
60

dematerialization of securities. Dematerialization is the process of converting securities held in physical form into holdings in book entry form. Account transfer: the depository gives effects to all transfers resulting from the settlement of trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial owners. Transfer and Registration: A transfer is the legal change of ownership of a security in the records of the issuer. For affecting a transfer, certain legal steps have to be taken like endorsement, execution of a transfer instrument and payment of stamp duty. The depository accelerates the transfer process by registering the ownership of shares in the name of the depository. Under a depository system, transfer of security occurs merely by passing book entries in the records of the depositories, on the persons entitled to receive corporate benefits. In the other case, depository it self takes the responsibility of distribution of corporate benefits. Core Services of Demat Account 3-IN-1 ACCOUNT

Accounting Opening: Any investor who wishes to avail depository services must first open an account with a depository participant of NSDL. The process of opening a demat account is very similar to a bank account. The investor can open an account with any depository participant of NSDL. An investor may open an account with several DPs or he may open several accounts with a single DP is free to fix its own fee structure. Investors have the freedom to choose a DP based on criteria like convenience, comfort, service levels, safety, reputation and charges. After exercising this choice, the investor has to enter into an agreement with the DP the form and contents of this agreement are

61

specified by the Business Rules of NSDL. In this chapter we deal with the procedure for account opening under the NSDL system. Types of Accounts: Type of depository account depends on the operations to be performed. There are three types of demat accounts which can be opened with a depository participant viz. (a) Beneficiary Account (b) Clearing Member Account and (c) Intermediary Account. Beneficiary Accounts This is an account opened by investors to hold their securities in dematerialized form with a depository and to carry out the transaction of sale and purchase of such securities in book-entry form through the depository system. A beneficiary account holder is legally entitled for all rights and liabilities attached to the securities (i.e. equity shares, debentures, government securities, etc.) held in that accounts. Therefore, the account is called beneficial owner account. A beneficiary account can be in the name of an individual, corporate, Hindu Undivided Family (HUF), minor, bank, financial institution, trust etc. or the broker himself for the purpose of his personal investments in demat form. The accounts are opened with DP.

Documents for Verification

1. Non-body Corporate Investors: For the purpose of verification, all mom-body

corporate investors have to submit the following documents, as prescribed by SEBI, along with the stipulated account opening form. A beneficiary account must be opened only after obtaining a proof of identity and address of the applicant. An authorized official of the participant should verify the photocopies of any of following documents submitted with their corresponding
62

originals and put his/her signature on them with remarks verified with original proceeding to open the account.
a. Proof of Identity (POI) I. Passport II. Voter ID Card III. PAN card with photograph IV. MAPIN card V. Identity card/document with applicants Photo, issued by

(1). Central/State Government and its Departments (2). Statutory/Regulatory Authorities (3). Public Sector Undertakings, (4). Scheduled Commercial Banks, (5). Public Financial Institutions, (6). College affiliated to Universities (this can be treated as valid only till the time applicant is a students), (7). Professional Bodies such as ICAI, ICWAI, Bar Council etc. to their Members (8). Credit cards/Debit cards issued by Banks. b. Proof of address (POA) I. Ration card II. Passport
63

III. Voter ID card IV. Driving License V Bank Passbook VI Verified Copies of 1) Electricity Bills (not more then two month old) 2) Telephone Bills (not more then two month old) 3) Leave and License Agreement / Agreement for sale. VII. Self declaration by High court & Supreme Court Judges, giving the new address in respect of their own accounts.
2. For Corporate Investor: For the purpose of verification, all corporate investors have

to submit the following documents as prescribes by SEBI along with the stipulated account opening form.
1. Memorandum & Articles of Association (MOA & AOA) Board resolution for

opening demat account and the list of authorized signatories along with their specimen signatures and photographs
2. Introduction by an existing account holder of by the applicants bank. 3. Proof of address of the corporate, evidenced by the document registered with

Registrar of companies or acknowledged copy of income tax return or Bank Statement or Leave and License Agreement/Agreement for sale. An authorized official of the participant shall verify the proof of address with the original documents and affix his/her signature on the documents submitted by the Client, while exercising such due diligence. Common Information
64

The processes of opening an account with a depository, nature of such an account, and various factors to be considered for opening a depository account are explained below. Some details are common to all types of account. These are:
1. Name of the holder 2. Date of Birth (for individual account) 3. Occupation 4. Address & phone number 5. Bank details like name of bank, type of account (current/savings) account

number, branch address, MICR etc.

6. PAN number 7. Details of nomination (for individual account ) 8. Specimen signatures 9. MAPIN UIN (s) 10. E-mail address 11. Mobile number 12. Address for communication

Beneficiary Account- Procedure for Opening Account Investors have the choice of selecting a DP based on their convenience, comfort, service levels, safety, reputation, charges etc. they have the flexibility to have more than one account with the same DP or any other DPs. No minimum balance required for opening a depository account. Investors also have the freedom to close an account with one DP and open another one with any other DP. The type of the account opening form to be filled by an investor and the list of documents required depend on the type of beneficiary account to be opened whether it is for NRIs or corporate or individual. Further, the individual account can be in a single
65

name or joint names. Clearing members a broker have to open a beneficiary account if they have to deal with their own holdings. There are several client types in the depository system and different codes are allotted to them. These are below:
1. Resident
Ordinary Hindu

Undivided Family (HUF)

2. Financial Institutions (FI)

Government-sponsored State

Financial Corporation

Others

3. Foreign Institutional Investors

Mauritius-based Others

4. Non-resident Indian (NRI)

Repatriable Non-Repatriable Depository

Receipt

5. Body Corporate
Domestic Overseas

Company Corporate Body Company

66

Government Central

Government

 State

Government Bodies

Broker Foreign Group

Companies

Depository

7. Clearing Member 8. Foreign National Foreign National / Depository Receipt 9. Mutual Fund 10. Trust 11. Bank
Foreign

Bank Bank Bank

Co-operative National

Check List for Account Opening

Proof of Identity: An authorized official of the Participant should verify the photocopies of the any of the prescribed documents submitted with their corresponding originals.

Proof of address (POS): An authorized official of the Participant should verify the photocopies of the any of the prescribed documents submitted with their corresponding originals

Ensure that all compulsory fields in the account opening form are filled (except nomination which is optional.) In case of corporate, ensure a copy of Board resolution of authorized signatories. Ensure proper authorization in case of power of attorney holder.
67

DP should give a copy of agreement to the client, including the charge. Inform clients regarding standing instruction facility. Branches of DP to co-ordinate & follow up with Head Office for account opening. Ensure account is activated before forwarding Client ID to client. Inform settlement deadlines to clients

Intermediary Account: As per SEBI Regulations on Stock Lending and Borrowing only an approved intermediary can lend borrow stocks from clients. This intermediary borrows from lenders and lends to borrowers. Intermediaries registered with SEBI as approved intermediary account with a DP of its choice for executing stock lending and borrowing transaction made through them. An intermediary account may be opened only after obtaining registration from SEBI under an approved Stock Lending Scheme and getting the approval of the depository for opening the account.

Operation of demat accounts based of power of attorney A demat account can be operated by a power of attorney holder. In this regard, it may be noted that:i. A power of Attorney executed to the promulgation of the Depositories Act is valid

and enforceable.
ii. It is the responsibility of the Depository Participant to verify whether the Power of

Attorney is adequate and sufficiently authorizing the holder of the Power of Attorney the done to operate the account of the beneficial owner.
iii. A sample clause is given hereunder which if it forms a part of the Power of

Attorney could suffice.

68

However it may be mentioned that a DP shall not obtain Power of Attorney (POA) from its clients as a requirement for opening a demat account. Further the POA shall not contain the following clauses:
I. POA Holder Done has the sole authority to operate the account and the account

folder is/are restrained from operating the account.

II. Delivery Instruction Slip (DIS) books are denied to the account holders who have

executed a POA
III. DPs are authorized to mere the securities kept under various accounts of the

clients.
IV. DPs will have a lien on the securities of the clients.

DPs are therefore required to review the POA document and if the POA contains any clause similar to what has been stated above the POA should be modified suitably. DPs must inform all those clients who have executed POA about such changes and obtain a written confirmation from the clients that they have taken note of the changes in the POA.

It may also be mentioned that where a client has executed a POA such depository accounts can be operated both by the clients as well as by the POA holder. Therefore DPs should ensure that the signatures of the accounts holders and the POA holder are captured in the DPM system and DPs are required to provide DIS books to the clients who have executed a POA and allow the clients to operate their accounts as well. Further DPs are required to maintain separate accounts of the clients in conformity with regulation 42 of Security and Exchange Board of India (Depositories and Participants) Regulations 1996. Lien on the securities can be only as per Regulation 58 of SEBI Regulation and as per the procedure laid down in the bye Laws and business Rules of NSDL.
69

Closure of Account Closure on Clients Request: - DP can close a depository account on receipt of an application in the prescribed format. The application should be made by the account holder or by the entire joint holder. An account can be closed only when there is no balance in the account. In case there is any balance in the account sought to be closed, the following steps are necessary.
a. Dematerialization of all securities to the credit of the account at the time of making

the application for closure

b. Transferring the balance to the credit of another account opened by the same

account holders either with the same participant or with a different participant. However, where demat request are pending for disposal for a long tine in a demat account and the client desires to close such an account the following procedure maybe adopted by the client

Write a letter in the prescribed format to the issuer, requesting for rejection of the pending dematerialization requests and send fresh physical security to the client directly

Enclose a copy of the dematerialization request generated from DPM system duly signed & stamped by the participant along with the aforesaid letter to the issuer. Before closing the account the DP should ensure that all pending transaction has

been settled. The request for closure should be processed only after ensuring that there is no balance lying in the account. If a client makes a request for closure of account, DPs should provide the Statement of Transaction (SOT) to the client for the period from the beginning of the quarter in which the account is closed till the date of closure. Further the SOT should
70

bear the words Account Closed and should be prominent. For this purpose, DP can affix a rubber stamp or create a suitable system that will clearly show on the SOT that the account has been closed. Consolidation of Account Some clients could have opened multiple accounts to dematerialize their shares held in multiple combinations an sequence of names. However they may not need so many accounts after they have dematerialized their shares and may want to bring all their share holdings into one of fewer accounts. This can be achieved by using normal off market transfer instruction.

Closure by DP The DP may also initiate closure of a clients if the client has defaulted in performing its obligations laid out in the client-participant agreement. The participant should give sufficient notice to the client before initiating closure of his account. The notice should clearly state the reasons of closure of account. The process of closing account in such a case is the same that of client-initiated closure. Closure/Shifting of Clearing Account: - a clearing member may transfer its clearing account from one DP to another DP. For this simultaneously applications have to be made of closure of account to the earlier DP and for opening of new clearing member account to the new DP forwards the application to the depository for approval and allotment of a new CM-BP-ID. Once the new CM-BP-ID is allotted the new DP opens a new clearing account and intimates the depository advises the old DP to close the
71

account. The old DP then closes the account and intimates the clearing member. All pay-out of securities, subsequent to closure of old clearing account takes place in the new account. Freezing Accounts Account freezing means suspending any further transaction from a depository account till the account is unfrozen
1. If a written instruction is received from the client by the DP, requesting freezing of

account.
2. If an electronic request is made by a client to his DP or to the Depository in the

form and manner as may be prescribed the depository.

3. If orders are received by the DP depository from the Central of State

Government, SEBI or any order by court, tribunal, or statutory authority.

4. If a request is received by the depository from a DP client. 5. If orders are passed by Disciplinary Action Committee (DAC) or if DP becomes

insolvent. By freezing an account for debits only (preventing transfer of securities out of the account) the client can receive securities in his account. An account can also be frozen for debits as well as credits (preventing any movement of balances out of the account). No transaction can take place in such an account until it is reactivated. A frozen account may be unfrozen or reactivated by taking the reverse steps.
1. On the valid written request of the account holder where he had requested

freezing.
2. On directions of depository made in pursuance of the order of the appropriate

authority
3. Changes in Client Details

72

A client may change any of the following particulars in the depository system. All he has to do is to submit the change in writing to the DP.

Fathers/Husbands Name (change from fathers name to husbands name may be necessary on account of marriage). Standing instruction facility (an investor can activate/deactivate it). Address (both local as well as correspondence), telephone number, mobile number, clients have to provide proof of new address while submitting application for change address.

Occupation details Nominee details (the DP has to obtain the required form from the client duly filled and effect the changes). Bank details (clients may revise the bank details given by him before record date to ensure that the dividend/interest warrants bear the correct bank details).

PAN number details In case of NRIs the Reserve Bank of India reference number and approval date. E-mail addresses.

Change of address for individual clients

1. While processing requests for change of address receive from client, DP should

obtain the following documents.

a. A written application for change of address from the client. b. Proof of identity c. Latest transaction statement of the account received from the participant. d. Proof of new address along with the original documents of the new address. 2. The client should personally visit the office of the DP where the client maintains

and operates his/her account and submit the application for change of address. However in case the client expresses inability to personally visit the participant,
73

the application for change of address along with other documents can be submitted though an authorized representative.
3. The client or its authorized representative should sign the application once again

in the presence of the officials of the DP.

4. The DP should verify the signature of the client on the application and the identity

documents with the documents maintained with the DP. Further the documents pertaining to new address should be verified with the original. After due verification an authorized official of the DP should put his/her signature on the application with remarks verified with original and thereafter record the change of address in the DPM system.
5. However in case DP could not verify the documents because the records of the

documents submitted by the client are kept at a different place, then the participant must verify the same within a period of seven working days and only then effect the change.

Change of signature
1. The client should make a request in writing specifying reasons for change in

signature.
2. New signature should be duly attested by clients banker. 3. Client should visit DPs office personally and produce valid proof of identity as

well as the latest transaction statement of its account.

4. In the presence of officials of DP client should affix his/her new signature.

A holder of eligible securities in the depository system may get his physical holdings converted into electronic form by making a request through the DP with whom he has his beneficiary account.

74

Prerequisites for Dematerialization Request

1. The registered holder of the securities should make the request 2. Securities to be dematerialized must be recognized by NDDL as eligible. In other

word only those securities whos ISIN has been activated by NSDL can be dematerialized in the NSDL system.
3. The company/issuer should have established connectivity with NSDL. Only after

such connectivity is established the securities of that company are recognized to be available for dematerialization in the NSDL system.
4. The holder of securities should have a beneficiary account in the same name as

it appears on the security certificates to be dematerialized.

5. The request should be made in the prescribed dematerialization request form.

Dematerialization Process: Steps

1. Client/investor submits the DRF (Demat Request Form) and physical certificates

to DP. DP checks whether the securities are available for demat.

2. DP enters the demat request in his system to be sent to NSDL. 3. DP dispatches the physical certificates along with the DRF to the R&T agent. 4. NSDL records the details of the electronic request the system and forwards the

request to the R&T agent.

5. R&T agent on receiving the physical document and the electronic request verifies

and checks them. Once the R&T agent is satisfied, dematerialization of the concerned securities is electronically confirmed to NSDL.
75

6. NSDL credits the dematerialized securities to the beneficiary account of the

investor and intimates the DP electronically. The DP issues a statement of transaction to the client Trading and Settlement One of the basic services provided by NSDL is to facilitate transfer of securities from one account to another at the instruction of the account holder. In NSDL depository system both transferor and transferee have to give instruction to its depository participants (DPs) for delivering (transferring out) and receiving of securities. Transfer of securities from one account to another may be done for any of the following purposes.
a. Transfer due to a transaction done on a person to person basis is called off-

market transaction
b. Transfer arising out of a transaction done on a stock exchange c. Transfer arising out of transmission and account closure.

The ID for an off-market trade or for a market trade has to be clearly indicated in the form by marking appropriately. The form should be complete in all respects. All the holders of the account have to sign the form. If the debit has to be effected on a particular date in future, account holder may mention such date in the space provided for execution date in the form. Settlement of off-market Transactions: Off-Market Trade
1. Seller gives delivery instructions to his DP to move securities from his account to

the buyers account.

2. Buyer automatically receives the credit of the securities in to his account on the

basis of standing instruction for credits.

76

3. Buyer receives credit of securities in to his account only if he gives receipt

instructions if standing instructions have not been given.

4. DP needs to be extra careful in verifying the signature of the client if large

quantities of securities are being debited to the account.

5. Funds move from buyer to seller outside the NSDL system.

Settlement of Market-Transaction Market Settlement-Demat Share A market trade is one that is settled though participation of a clearing Corporation. In the depository environment, the securities move through account transfer. Once the trade is executed by the broker on the stock exchange, the seller given a delivery instruction to his DP to transfer securities to his brokers account. The broker has to then complete the pay-in before the deadline prescribed by the stock exchange. The broker removes securities from his account to (Clearing Corporation / Clearing House) CC/CH of the stock exchange concerned, before the deadline given by exchange. The CC/CH gives pay-out and securities are transferred to the buying brokers account. The broker then gives delivery instructions to his DP to transfer securities to the buyers account.
1. Seller gives delivery instructions to his DP to move securities from his account to

his brokers account.

2. Securities are transferred from brokers account to CC on the basis of a delivery

out instruction.
3. On pay-out, securities are moved from CC to buying brokers account. 4. Buying broker gives instruction and securities move to the buyers account.

Market type

77

Stock exchanges offer different market segments in which trades can be done. The segmentation is done by the type of settlement or type of trade. Each of the segments is denoted ad Market Type in NSDL depository system. The stock exchange which offers these market types, generally, recognize these settlements with a two character code, the DI slip should contain the market type for which securities are being transferred to the clearing member. The contract note/trade confirmation slip given by the broker/sub-broker will indicate the market type. Settlement Number Trading periods of each of the market segments is identified by a settlement number. Every settlement number has a trade beginning day, trade-ending day, settlement pay-in day and settlement pay-out day. Stock exchanges divide a period of one year in to several settlement periods and allocate settlement number for each settlement-period. All these days collectively are called settlement calendar. DPM system will give complete details of settlement calendar for each stock exchange.

Delivery Deadline Stock exchange set a deadline time by which clearing member are expected to deliver securities. Clearing member can deliver securities within the deadline time only if they have received securities from their clients. In order to ensure that clients give securities in time to the clearing member, SEBI has prescribed deadline time by which clients have to give securities to clearing members. SEBI has advised DPs to instruct their clients to submit the settlement instructions on T+1 (in physical form up to 4.00p.m. and 6 p.m. in case of electronic instructions) for pay-in of securities viz.; instruction, CM Pool to CM Pool account transfers and Delivery-out instruction, etc. For example, pay-in for trades executed on Monday will be on Wednesday. Hence, Client will have to submit instructions to their Participants (up to 4 p.m. in case of physical and up to 6 p.m.

78

in case of electronic instructions) on Tuesday. The client must submit the delivery instruction slip to its Depository Participant before the DPs acceptance deadline, Automatic Delivery-out
1. Delivery-out instructions for moving securities from CM settlement account to CM

delivery account can be generated automatically by the respective clearing corporations based on the net delivery obligation of its clearing members. The clearing corporation can generate auto Dos will be generated around the time of download of the delivery obligations to the clearing members. Such clearing members will not be required to give delivery out instruction forms to the participants for pay-in to the clearing corporation in respect of the automatically generate Dos.
2. Auto DOs will not be generated in the following cases and the clearing members

will have to give delivery-out instruction forms to their participants as usual:

a. Non pari-passu shares or multiple ISINs: b. Irreversible delivery-out (IDO): c. Shifting of CM settlement account from one participant to another participant: 3. Clearing members will be required to give inter-settlement instructions to the

participants for securities lying in another settlement as usual.

4. Participants can generate separate reports from the DPM both for auto DOs and

manual Dos.
5. All the existing features of DOs viz; remaining valid till the NSDL deadline tine

and partial delivery for insufficient balance will be applicable for auto DOs also.

3.6 Trading
Trading is the process of buying or selling different type of security in stock market. In these stock markets daily there are many transaction held on the basis of trading. When
79

investors buys any kind of security, his main motive is to make profit out of that by selling it on the high prices .this all process of selling and buying is called trading. In India there is two type of trading available. These two types are: Online share trading: Realizing there is untapped market of investors who want to be able to execute their own trades when its suits them, broker have taken their trading rooms to the internet known as online broker, they allow you to buy and sell shares via internet. Investors can have complete control of their stocks investing action, now that they have the convenience of buying and selling share on the NSE online and in real time. Each individual has access to the latest information and tools to analysis any stock investment decision. Plus the power to execute the sale or purchase right before them on their personal computer screen.

TRADING IN SECURITY MARKET: 1. Trading in shares: Cash Trading: This is a delivery based trading system, which is generally done with the intention of taking delivery of shares or monies. Margin Trading: Customers can also do an intra-settlement trading up to 3 to 4 times, with available funds, wherein customers take long buy/ short sell positions in stocks with the intention of squaring off the position within the same day settlement cycle. Margin PLUS Trading: Through Margin PLUS customers can do an intra-settlement trading up to 25 times with available funds, wherein customer take long buy/ short sell
80

positions in stocks with the intention of squaring off the position within the same day settlement cycle. Margin PLUS will give a much higher leverage in the customer account against their limits. Spot Trading: This facility can be used only for selling demats stocks which already exist in demat account. When customer are looking at an immediate liquidity option, 'Cash on Spot' may work the best for them, On selling shares through "cash on spot", money is credited to customer bank a/c the same evening & not on the exchange payout date. This money can then be withdrawn from any of the ICICIBank ATMs. BTST : Buy Today Sell Tomorrow (BTST) is a facility that allows customers to sell shares even on 1st and 2nd day after the buy order date, without this customer have to wait for the receipt of shares into customers demat account. Call Trade: Call Trade allows customer to call on a local number in customer city & trade on the telephone through our Customer Service Executives. This facility is currently available in over 11 major states across India. Trading on NSE/BSE: Through ICICIdirect.com, customer can trade on NSE as well as BSE. Market Order: Customer could trade by placing market orders during market hours that allows you to trade at the best obtainable price in the market at the time of execution of the order. Limit Order: It Allows Customer to place a buy/sell order at a price defined. The execution can happen at a price more favorable than the price, which is defined by the Customer, limit orders can be placed by Customer during holidays & non market hours too.

Trading in Derivatives
81

FUTURES Through ICICIdirect.com, customer can now trade in index and stock futures on the NSE. In futures trading, customer takes buy/sell positions in index or stock(s) contracts having a longer contract period of up to 3 months. Trading in FUTURES is simple! If, during the course of the contract life, the price moves in Customer favor (i.e. rises in case Customer have a buy position or falls in case Customer have a sell position), Customer make a profit. Presently only selected stocks, which meet the criteria on liquidity and volume, have been enabled for futures trading. Calculate Index and Know Customer Margin is tools to help in calculating margin requirements and also the index & stock price movements. The ICICIDIRECT UNIVERSITY on the HOME page is a comprehensive guide on futures and options trading.

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

82

The Buyer of a Call Option has the Right but not the Obligation to Purchase the Underlying Asset at the specified strike price by paying a premium whereas the Seller of the Call has the obligation of selling the Underlying Asset at the specified Strike price. The Buyer of a Put Option has the Right but not the Obligation to Sell the Underlying Asset at the specified strike price by paying a premium whereas the Seller of the Put has the obligation of buying the Underlying Asset at the specified Strike price. By paying lesser amount of premium, Customer can create positions under OPTIONS and take advantage of more trading opportunities.

Electronic trading
Electronic trading eliminates the need for physical trading floors. Brokers can trade from their offices, using fully automated serene-based processes. Their workstations are connected to a Stock Exchanges central computer via satellite using very small aperture terminus (VSATs). The orders placed by brokers reach the Exchanges central computer and are matched electronically. The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) are the countrys two leading Exchange. There is 20 other regional Exchange, connected via the Inter-Connected Stock Exchange (ICSE). The BSE and NSE allow nationwide trading via their VSAT system.
83

3. RESEARCH METHODOLOGY
Research methodology mean what's method apply to do any type of research and. how can you collect the data from the field'. Before conducting any type of research and analysis and inference based on it, the first and the foremost thing is to collected the date and after the proceeding in a systematic manner to finally reach at result.

Research:Research is a process of collecting, analyzing, interpreting and summarizing in a significant manner for the purpose of framing out necessary conclusion and finding of data perceived and formulated for deriving out the meaningful information. To carry our

84

research necessary telephonic calls needed to be done, suitable appointments were to be fixed and therefore to be market survey is to be followed.

Process:Collection of data: this is an important aspect in formulating the objective of research process where the data is collected via two processPrimary sources Secondary sources Primary sources- the data is collected primarily by interviewing and personal observation and is original in nature & accurate to the considerable extent. Primary data may be described as those data that have been observed and recorded by the researchers for the first time to their knowledge. There are several methods of collecting primary data. Important ones are: -Observation method -Interview method -Questionnaires -Schedules and -Other methods etc. Secondary sources- where the data is obtained from some published & printed sources as newspaper, magazine, website and so on. Secondary data are statistics not gathered for the immediate study at hand but for some other purposes.
85

The secondary data can be collected by internal and external secondary data like data gathered from the files and documents of the company and business periodicals published for monthly, quarterly or annually. -Publications of central state and local govt. -Publication of foreign. -Journal -Books, magazines and newspaper -Reports and publication of business house -Reports and publication of scholars and universities. -Public records

Analyzing of collected data: the data collected through market survey & published sources are then processed to obtained necessary inferences & finding for the purpose of achieving the objective as well as to derive necessary conclusion. A considerable skill & knowledge is involved in analyzing the data for the purpose of interpreting thereof. Interpreting of data: it is the significant step where the data collected and analyzed is interpreted in the forms of graphs and figures is depicted in the report called project report. Summarizing the data: thereby necessary summary is prepared which is essential in the summer training being done under an organization.

86

3.1 Title of the Study

Study of stock market & Investment management.

3.2 Duration of the Project

15 days

3.3 Objective of Study

The stock exchange of the country is the important part of the capital market. It provides the investors a platform to invest in different securities. The well regulated stock exchange is in the interest of both the companys as well as the investors. In India the stock exchange provide a good leverage to the capital market, but it is not very easy to get profit out of this market, for this knowledge is must about the market. the knowledge can be obtained by knowing the security market . Knowledge of security market is very important to a management student. As I have done my project training in Motilal Oswal Securities Limited ,the following are the objective, which I kept in my mind while doing summer training:To know practical concept about the security market To study the general operation of the Motilal Oswal Securities Limited.

87

Analyzing the market survey and thereby finding out the investment pattern of the consumer. To impart knowledge about the general working of the stock exchange Fundamental analysis of securities To gain in depth knowledge about up gradation made due to computer in stock exchange.

3.4 Type of Research

EXPLORATORY: Exploratory research is a type of research conducted because a problem has not been clearly defined. Exploratory research helps determine the best research design, data collection method and selection of subjects Exploratory research often relies on secondary research such as reviewing available literature and/or data, or qualitative approaches such as informal discussions with consumers, employees, management or competitors, and more formal approaches through in-depth interviews, focus groups, projective methods, case studies or pilot studies.

3.5 Sample Size and method of selecting sample

100, Stratified Sampling SAMPLING PLAN:

88

Sample unit :- The

sampling

units

are various

areas

of

jaipur

which have been approached to collect data from different people. Sampling method:- Sampling method used in this research is simple random sampling which is also known as probability sampling. sample. It is say to a lottery method. Sample size:- The size of the sample was restricted to 100, as to just get a quick analysis Under this sampling design every item of universe has an equal chance of inclusion in

CONTACT METHOD Personal interview is used as a method of contacting people. It is a market research technique for gathering information through face-toface Contact with individuals. Personal interviews take place in a variety of settings-in Homes, at shopping malls, in a business office. This type of research is relatively costly, because it requires a staff of interviewers, but it provides the best opportunity to obtain information through probing for clearer explanations. It is the best technique to use early on in the research process when the researcher is questions need to be asked, because new come out of the dialogue DATA COLLECTION METHOD Research Instrument used in this research was Questionnaire. not and yet sure which better questions can

89

A questionnaire is a formalized set of questions for eliciting information. It is one of the most common instruments used for primary data collection. The questionnaire can be administered in various ways. It can be administered by means of a personal interviewer as well as by the telephone, Mail. Here, the questionnaire was administered by a personal interview. TOOLS OF ANALYSIS For the proper analysis of data, Quantitative Technique such as percentage method was used. In addition, Microsoft excel was also used for preparing charts for deducing inferences.

3.6 Scope of Study

After conducting the research at bonanza Securities Limited at jaipur on equity research , many stages are undertaken as guidance towards appearing at conclusion like interaction with staff ,questionnaire survey and percentage analysis. As the questionnaire are targeted to get filled by general public who keeps interest in investment and have an idea about equity .so I got the opportunity to know certain facts about this securities market . Whatever conclusions I have drawn from this research part are mentioned below: Presently in India, securities market is not so much established and popular, there is only a small portion of people who are being an active part of this market as an investor. Most of the people invest only 20% to 40% of their saving in this market and their basic criteria to invest in this market is achieving higher returns. Most of the investors want to enjoy higher returns by investing in this market. Most of the investors, who are investing in this securities market, are choosing the securities on the basic of goodwill of the company although they prefer and believe
90

that technical analysis produces good and accurate result but still as these technical analysis is not so easy to understand they choose their securities on the basis of the reputation of the company. If we look upon those people who are using technical analysis then we will find that most of the people who choose the securities by doing technical analysis are using moving average as the most easy and suitable tool. There are also some people who are investing in securities market by using market calls and tips as the base to choose the securities, but they are not so much about the result of these market calls and tips, they didnt believe that these calls and tips are so much fruitful but as they are not very much aware regarding the technical tools, they have to use market calls and tips. It is the believe of investor that technical analysis is not very easy to understand, but as the securities market is growing day by day so investors are trying to understand these technical tools we can say now people are being interested to learn about technical analysis. It is a good indication that people are now interested and excited to know about technical analysis of securities and they want to choose the securities on the basis of technical analysis so all the companies related to securities market like Bonanza should encourage and motivate their know investors and clients to use of most easy technical tools to them.

3.7 Limitation of Study

The various limitations which are found by me in market are:Lack of awareness of stock market: - Since the area is not known before it takes lot of time in convincing people to start investing in share primarily in IPOs. Mostly people comfortable with traditional brokers: - As people are doing trading from their respective broker, they are quite comfortable to trade via phone.

91

Some respondents are unwilling to talk: - Some respondents either do not have time or willing does not respond, as they are quite annoyed with the phone call. Lake of techno savvy people and poor internet penetration:-Since most of the people are quite experienced and also they are not techno savvy. Also internet penetration is poor in India. Inaccurate leads: - Sometimes leads are provided which had error in it which varies from only 5 digit phone number to wrong phone number. Misleading concepts: - Some people think that shares are too risky and just another name of gamble but they dont know its not at all that risky for long investors.

4. Facts and Findings

FINDINGS
Fundamental Analysis helps us understand in which stock we should invest In equity market there is continuous growth in number of contracts but fewer understand on what basis they are investing. The findings for the above research are as follows: People are not aware of using the online trading facilities

Bonanza has

captured the market because of its brand name and the brand awareness in the minds of the consumers.But people are yet to know about its excellent service which would definitely customer. help the company to capture more and more new

92

Customer feel

that the brokage charged by Bonanza are very high as compared to other brokage house but they are not aware of the various facilities(margin trading, recommendation etc) provided by India Bonanza to its customer which make it unique .

concerned client, damaging the reputation of the firm.

Many

clients

did not know about the change of RM. This leaves a bad impression on the

clients are not given confirmation after the trade

Many

time

Some time the

database (including customer contact number and address) maintained by the company is wrong that create a problem to the company to have a regular touch with its customer.

5. Analysis and Interpretation

Knowing the awareness and perception of the customers is very important in any industry. This provides insight into the customer behavior and his expectation from the industry players. A proper understanding of the awareness and perception would definitely benefit the players. This survey attempt to know the investor better. It examines some interesting choices of the investor including the reasons behind investing in stock market and the
93

risk tolerance levels of the investors. The investor knowledge about the stock market and company. This jaipur city survey was conducted to know the investor awareness and perception about company. It is hoped that this survey in jaipur city would go a long way in benefiting for Bonanza securities Limited.

Do you know about bonanza?

(a) 32% of the respondent is Have heard about them (b) 56% of the respondent is Aware (c) 12% of the respondent is Unaware

Have heard about them , 32, 32% Aware, 56, 56% Completely Unaware, 12, 12%

Aware Completely Unaware Have heard about them

where would you like to Invest?

(a) 36% of the respondent is share market (b) 20% of the respondent is fixed deposits (c) 12% of the respondent is property (d) 14% of the respondent is jewellery (e) 18% of the respondent is insurance
94

40 35 30 25 20 15 10 5 0 20

36

F ix e d D e p o s its S h a re M a rk e t 18 12 14 P ro p e rty Je w e lle ry In s u ra n c e

which company of the share market are you aware of?

(a) 35% of the respondent is bonanza securities limited (b) 20% of the respondent is indiabulls (c) 24% of the respondent is anand rathi (d) 11% of the respondent is angel (e) 10% of the respondent is other
95

40 35 30 25 20 15 10 5 0

35 24 20 11 10

B o n a n z a In d ia b u llsA n a n d R a t h iA n g e l C o m p a n i e 's N a m e S e r ie s 1

O th er

In which brokerage house you have your Demat account?

(a) 32% of the respondent is bonanza securities limited (b) 18% of the respondent is indiabulls (c) 22% of the respondent is anand rathi (d) 16% of the respondent is angel (e) 12% of the respondent is other

96

O ther , 12, 12% A ngel , 16, 16%

B onanz a , 32, 32%

A nand Rathi , 22, 22%

Indiabulls , 18, 18%

B onanz a Indiabulls A nand Rathi A ngel O ther

How often do you trade ? (a) 25% of the respondent3 is Daily W e e k ly , 0 30 D a of , 2 5 (b) 30% ily the respondent is weekly 25

S o m e tim e , 2 6

(c) monthly 2 0 19% of the respondent is M o n th ly , 1 9 1 5 26% of the respondent is sometime (d) 10 5 0 D a ily W e e k ly M o n th ly S e rie s 1 97 S o m e tim e

 Which of these products apart from equity your company is providing? (a) 18% of the respondent is Mutual fund (b) 15% of the respondent is Investment (c) 10% of the respondent is Insurance (d) 22% of the respondent is Trading (e) 35% of the respondent is All of the

98

40 35 30 25 20 15 10 5 0 M utual Fund Inves tm ent advis ory Ins uranc e Trading 22 18 15 10

35

A ll of the above

F in a n cia l P rod u cts S eries 1

Does your company provide online trading?

(a) 11% of the respondent is No (b) 89% of the respondent is Yes

No, 6, 11%

Yes No

99

Yes , 50, 89%

6. SWOT ANALYSIS

STRENGTH
Customized Brokerage Charges The brokerage charge by Bonanza is among the

least as compared to other brokerage firms in the industry. The brokerage for Intraday varies from 0.01 to 0.03% and for Delivery it is 0.1 to 0.3%. The brokerage varies on the basis of volumes of trading expected from the client. Bonanza also charges brokerage of 0.01% and 0.1% from some HNIs.
No Annual Maintenance Charges There is no Annual Maintenance Charges (AMC)

on Demat and Trading a/c which is there in almost every other big brokerage firm.
100

 Value Added Services There are no charges for calling RMs (Relationship

Managers) in relation to their a/c or trading. A client can call any number of times to his RM to enquire about his a/c status or to place any order which is chargeable in other brokerage firm. e.g. ICICI DIRECT charges Rs 12 for enquiring about the a/c and Rs. 20 for placing any order.
User Friendly Software - The software provided by Bonanza (Power Bonanza) is very

easy to use and reflects the price changes immediately without any time lag. The client can easily place his order and see the movement of price change of his favorite scripts without any time delay while other companies like ICICI DIRECT has a time lag of almost 20-25 seconds or more.
Organized RMS (Risk Management System) Bonanza has an organized RMS and

this is the reason why clients doesnt suffer much losses and his position is squared off automatically with the help of RMS. This is the only reason why Bonanza suffered least losses as compared to other big brokerage firm when market crashed.

WEAKNESS

Trading of Z category stocks - Z (b1, b2, s, t) category stocks are not allowed to buy because there is danger of liquidity in the stocks and attracts higher speculation. These are the stocks which are mainly traded in BSE and Bonanza encourages its clients to trade only in NSE. Time consuming process Every documentation has to be send to HQ (Gurgaon) because of which the processing of documentation takes time. This centralization is costly also when it comes to sending each document from different parts of the country to HQ.

101

OPPORTUNITY

The way ahead - There is a lot of opportunity available in mutual funds and insurance sector being a pioneer in financial sector in its own way Bonanza should foray into mutual fund and insurance sector. Limited reach - Since Bonanza is not present in 2tier cities because of which there is huge untapped market of rural and small urban sector.

THREATS

FDI in stock broking As the competition in stock broking increasing and SEBIs new norms which allow FDI to enter in stock broking can post a threat to Bonanza.

7. Conclusion
This securities market is about to grow in future very much with the growth of equity research. There is very high competition in this market , there are many companies which are providing different type of services to there clients and, this market is centre of attraction to new entrepreneur because it is already successful market and it is for sure that it will grow further, and there are many opportunities lying ahead in the way. Bonanza portfolio Limited is an active and well known participant of this securities market, this is achieving great success by working very hard with dedication. There is very good staff in this organization so it may facilitate its clients in many ways, although

102

there is competition but still it is doing its own work and providing services to their clients up to the best extent. Equity analysis is very important service of Bonanza Portfolio Ltd that it is providing to its client .It provides the suggestion that which security is good for the purpose of investment. For this project purpose, i have been gone through with a research that has been conducted in Jaipur with a sample size of 160 investors and on the basis of this research; I can conclude that most of the people believe that technical analysis can provide more suitable and desirable results to them .People are interested to now about this technical analysis part, for this we just need to aware and encourage them.

There should be more awareness made about the portfolio management services by giving more advertisement. The bonanza PMS should go for tie-ups with the corporate to increase business. Bonanza portfolio limited should organize some events to build its Brand Image in the minds of the people towards PMS. As per customers point of view, they feel that bonanza portfolio limited should open more number of branches for the convenience of people.

8. Recommendation and Suggestions

For Brokerage Firms and Investors based on the study Brokerage firms should consider educational institutes offering professional and post graduate level courses as avenues of business. Actively participating in seminars, putting up stalls could help them in generating an interest towards capital markets. Domestic Brokerage firms should collaborate with foreign trading firms to allow investors to invest in foreign markets that offer returns commensurate with the risk involved.
103

 Brokerage Firms should be a source of reliable market information as most investors consider personal analysis more important than brokers advice. The investors should be provided information pertaining to studies that are undertaken by experts to forecast trends. They should provide tips on investment through messenger and smss but this should be sent directly from the corporate offices rather than individual relationship managers to increase the veracity of the tips. The investors should be educated about online trading to avoid misinterpretation information offered by the relationship managers. For Bonanza
Bonanza is not present in 2-tier cities which lead to less business generation for the

company. So they should enter in 2 tier cities so that they can capture the untapped market. Bonanza does not deal in Z category shares which again lead to less business generation. It should allow its investors to also trade in Z category shares which would in turn lead to more business for the company. Being a pioneer in Financial Sector Bonanza should foray into Mutual Funds and Insurance Sector.

9. QUESTIONNAIRE
Questionnaire based on awareness of company and consumer behaviour while taking decisions related to his investment in Equities and Derivative market

Name:-..... Age:-. Mobile no:- Landline no:-.

104

Address:-....... Occupation:-.....
Please select the appropriate option:

Investors income level? (A) 10000 (d) above 100000 (b) 10000-50000 (c) 50000-100000

age of investors :(a) 20

(b) 20-40

(c) 40-60

(d) 60 above

How much portion of yours saving do you invest/would invest in

share market? (a) 20% (d) Above 60%

(b) 20%-40%

(c) 40%-60%

you invest in stock market because :(a) high return ( b) faster return ( c ) easily liquidity

(d) depends on market

Taking the factors like security, rate of return and time in

consideration which among the Following you rate as per the best option? (a) Bank FDs (d) Equity/ derivative (b) commodity market (e) Mutual funds
105

(c) Bonds

What are the bases upon which people decide to invest in stock

market? (a) Technical analysis / fundamental analysis (b)Market call / tips (c) Popularity of security (d) Goodwill of the company

Which one you prefer most? (a) Technical analysis (b) Market tips / calls

How much you believe on technical analysis of stock or how much

right result can be acquired by doing the technical analysis of any scrip? (a)40% ( b ) 40-50% ( c ) more than 50%

(d) Does not believe at all

Is the technical analysis easy to understand even by a simple

investor? (a) Yes

(b) no

If your base to choose the scrip is market calls / market tips, and

then what are the sources you trust upon most? (a) market tips by security based company on mobile . (b) T.V channel like CNBC
106

(c) stock brokers

Up to what percent market tips are correct according to you? (a) 30% or less (d) More than 60% (b) 30%-50% (c) 50%-60%

Do you think will securities market grows?

(a) Yes

(b) no

10.
1.

Bibliography
library of company and college 2. 3. 4. 5. 6. www.Bonanzaonline.com www.Reliancemoney.com www.bseindia.com www.indiabulls.com www.investopedia.com

107

7.

How to Invest in share Market. Market Analysis For The Intelligent Investors.

Stock

-N.J.YASASWY 8. Statistical Methods

- V.K.Kapoor

Jitendra Virahyas
JVIRAHYAS@GMAIL.COM

108

109