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INTRODUCTION

INTRODUCTION
Online trading refers to buying and selling securities via the Internet or other electronic means such a wireless access, touch-tone telephones, and other new technologies. Technology is revolutionizing every field of human endeavor and activity. The rapid growth in number, volume and value of securities in the Indian capital market expose the limitation of handling and dealing in securities in physical /Paper mode; the shortcomings of the market became manifest in terms of bad deliveries ,delays in transfer and irregular settlement etc. Primary market is also referred to as New Issue Market. Primary market operations include new issues of shares by new and existing companies, further and right issues to existing shareholders, public offers, and issue of debt instruments such as debentures, bonds, etc. The number of listed companies rose from 2265 in 1980 to over Rs. 6800 at the end of 1998 the daily turnover accordingly shot up Rs. 25 crores in 1979-80 to about Rs 260 crores in 1994-95. The number of shareholders increased from 10 lakhs in 198 to 1.5 crores in 1998. The number of share holder and investors in mutual funds has also risen sharply from about 2 million to over 40 million during this period , rendering this nation to the position of having the second largest investor population in the world next only to USA. It eliminates the risk of bad deliveries, which in turn eliminates all costs and wastage of time associated with follow up for rectification. This reduction in risk associated with bad delivery has lead to reduction in Brokerage to the extent of 0.5% by quite a few brokerage firms. Screen-based trading facilitates the investor to keep a track of the transaction from the source to the end .He can punch in the orders and see the results at the bottom of the screen. Thus, one can get instant trade confirmation. The investor should familiarize himself with order entry screen and the software provided to him. Any mistake made while inputting an order can cause him significant financial loss. 2

Moreover, he will be responsible for any losses caused by lack of knowledge and/or experience. When an order is placed and executed, he becomes liable for payment of the securities. Active trading is dependent upon a number of specialized software systems. Disruptions or failure of any electronic systems utilized may lead the investor with an open position at which time losses can occur. Definition of Online Trading: The increasingly popular activity of buying and selling securities over the internet, or to a lesser extent, through a broker's proprietary software.

Process of Online Trading:


Step-1: Those investors interested in doing the trading over Internet system, that is, NEAT - ISX (NSE), should approach the brokers and register with the Stock Broker. Step-2: After registration, the broker will provide to them a login name, password and a personal identification number (PIN). Step-3: Actual placement of an order, using the place order window as under can then place an order: First by entering the symbol and series of stock and other parameters such as quantity and price of the scrip on the place order window. a) Second, fill in the symbol, series and the default quantity. It is the process of review. Thus, the investor has to review the order placed by clicking the review option. He may also re-set to clear the values.

Step-5: After the review has been satisfactory; the order has to be sent by clicking on the send option. Step-6: The investor will receive an "Order Confirmation" 'message along with the order number and the value of the order. Step- 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about ten seconds is there in executing the trade. Step-8: It is regarding charging payment, for which there are different modes. Some brokers will take some advance payment from the, investors and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds by the investor to his account.

NEED FOR THE STUDY:


Stock exchange is the integral part of the capital market. It is the most perfect type of market for securities whether of govt. Semi govt. bodies or other public bodies as for shares and debentures issued by the joint stock enterprise.

Stock exchange provides liquidity to the listed companies they give quotations to the listed companies and help in trading raising funds from the market stock. Exchange provides ready Marketability and unequal facility for the transfer of ownership of stock shares and securities. Stock market in India is more than century old and has functioning effectively through the medium of recognized stock exchanges the stock market which is the integral part of the capital has a major impact on the functioning of the economy in turn the monsoon and agriculture industrial growth and performance of the corporate sector in particular reflection the fundamental in the economy would influenced the some of capital stock market and since the capital market in playing a major role in the Indian economy from the past several years there is an essential need to study the tone of the capital market in India.

OBJECTIVE OF THE STUDY:


The primary objective is to analyze the changes in trading after the Exchange Shifted from outcry to online trading system. The secondary objective is to study the functions of the INDIA INFOLINE and through Various departments. To know the on-line screen based trading system adopted by

INDIA INFOLINE .and about its communication facilities . The appropriate configuration to set the network which would link the

INDIA INFOLINE to individual/members. To know about the latest and future development in the stock exchange Trading system . Clearly defining each and every term of the stock exchange trading procedure . To study investors reasons to trade online where investors have control over their account can make their own decision for their actions, and are independent.

SCOPE OF THE STUDY:


The scope of the study analyzes us to know the how the online trading activities are carried out in INDIA INFOLINE trading on stock exchange in India used to take place to open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient with imposed limits on trading volumes and efficiency. In order to provide efficiency liquidity and transparency energy introduced a national wide online fully automated Screen Based Trading System (SBTS). Where a member can punch into the computer quantizes of securities and the price at which he likes to transact are the transact means exhausted as soon as it finds a matching sales are buy order from a counter party. A SBTS electronically matched orders on a strict price time priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It allows faster in corporation of price sensitive information. In to prevailing price that increases the information of efficiency of markets. It enables market participants respective of geographical location to trade with one another simultaneously. Improving the depth and liquidity of the market it provides to anonymity by accepting orders, big or small the members without revealing there identity that providing equal access to everybody it also provides a perfect audit price it helps to resolve disputes by logging in the trade execution process in entity. This diverted liquidity from other exchange and in the every first year of the operation. NSE become the leading stock exchange in the company, impacting the fortune of other exchange and forecasting them adopt SBTS also.

SIGNIFICANCE OF THE STUDY:


INDIA INFOLINE is one of Indias leading financial services providers with strong presence in South India. It was incorporated in 1994 and over the years it acquired a name of trust through Equity and Commodity Broking businesses. In 2007, Baring India Private Equity Fund II Ltd., a leading private equity firm of international repute acquired a majority stake in the Company. outcry system of trading INDIA INFOLINE has developed a computerized screen of replace the conventional manual system trading computers are all the eligible members. The representatives of M/S Tata Eixsi (India) have taken up the installation of computers regarding earthling ups etc. The software installed in VECTOR (Vector Engine for Centralized Trading & online Reporting) a product developed by CMC to implement a fully automated trade execution system. A lot of information is online so they can keep up-to-date with what is happening in the trading world.

METHODOLOGY
Research methodology will help us to know what the research methods are, techniques used in fulfilling the study conducted in INDIA INFOLINE It also helps in giving scientific justification of the problems, which are all methods are relevant and which are not relevant, why particular research method is appropriate for the study. Research Design: Research design stands for advance planning of the methods adopted for collecting the relevant data and techniques to be used in their analysis, keeping in view the objective of the research and the availability of staff, time and money. Sampling Design: A sampling design is a procedure the researcher would adopt in selecting the items for the sample. In fulfilling my project I have selected 100 employees randomly from INDIA INFOLINE .to find out the Online Trading in the organization and how it does brings bad or good impact for both Investors and the organization. In random sampling each and every item in the population have equal chance of inclusion in the sample and each one of the possible samples has the same probability of being selected.

Type of Data Collection:


The collection of data can be classified into 2 categories Primary Data Secondary Data

Primary Data: Primary data was collected through observing and interviewing employees of INDIA INFOLINE . And through questionnaire method. Secondary Data: The secondary data has been collected from INDIA INFOLINE website. www.indiainfoline.com Structured questionnaire: Structured questionnaire is a printed list of questions to be filled by the respondents. The structured questions should be short as possible and simple 9

to understand. The questionnaire was designed such that it helps to elicit the accurate information.

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LIMITATIONS OF THE STUDY


The study is confined to online trading procedure only. Exhaustive analysis, problem of listing , management of trade , SEBI guidelines relating to are not covered due to limited time to keep the study in manageable limits. Analysis has been done with in a limited boundary or area where the information is lacking behind from other investors when compared to entire geographical area. Getting appropriate response from the respondents. Getting appointment from the investors. The study is limited to the curriculum. The study is limited to current time period. The study is purely for academic purpose.

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CHAPTER-2
COMPANY PROFILE

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COMPANY PROFILE

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INDUSTRY PROFILE
STOCK EXCHANGE:
Stocks (Shares, equity) are traded in stock exchange. India has two big stock exchanges (Bombay Stock Exchange - BSE and National Stock Exchange - NSE) and few small exchanges like Jaipur Stock Exchange etc. Click here to see the list of Stock Exchanges in India Investor can trade stocks in any of the stock exchange in India. Stock Broker: Investor requires a Stock Broker to buy and sell shares in stock exchanges (BSE, NSE etc.). Stock Broker is registered member of stock exchange. A stockbroker can register to one or more stock exchanges. Only stockbrokers can directly buy and sell shares in Stock Market. An investor must contact a stockbroker to trade stocks. Broker charge commissions (brokerages) for their service. Brokerage is usually a percent of total amount of trade and varies from broker to broker. Stock Trading: Traditionally stock trading is done through stockbrokers, personally or through telephones. As number of people trading in stock market increase enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc start growing in stock broker offices. Information technology (Stock Market Software) helps stock brokers in solving these problems with Online Stock Trading. Online Stock Market Trading is an Internet based stock trading facility. Investor can trade shares through a website without any manual intervention from Stock Broker. In this case these Online Stock Trading companies are stockbroker for the investor. They are registered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades in BSE and NSE. There are two different type of trading environments available for online equity trading. Installable software based Stock Trading Terminals. These trading environments require software to 15

be installed on investors computer. This software is provided by the stockbroker. This softwares require high speed internet connection. These kind of trading terminals are used by high volume intraday equity traders. Below is the detail comparison of major Online Stock Market Trading websites in India. This comparison is to help investor to take calculated decision while searching for new trading portal. 1. ICICI Direct 2. Share khan 3. India bulls 4. 5Paisa 5. Motilal Oswal Securities 6. HDFC Securities 7. Reliance Money 8. IDBI Paisa Builder 9. Religare 10. Geojit 11. Networth Stock Broking 12. Kotak Securities 13. Standard Chartered-STCI Capital Markets Ltd 14. Angel Trade 15. HSBC Invest Direct DEFINITION OF STOCK EXCHANGE: Stock exchange means anybody or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. It is an association of member brokers for the purpose of self-regulation and protecting the interests of its members. It can operate only if it is recognized by the Government under the securities contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act by the central government, Ministry of Finance.

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HISTORY OF STOCK EXCHANGE: The only stock exchanges operating in the 19th century were those of Bombay set up in 1875 and Ahmadabad set up in 1894. These were organized as voluntary non profitmaking association of brokers to regulate and protect their interests. Before the control on securities trading became central subject under the constitution in 1950, it was a state subject and the Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under this act, the Bombay stock exchange was recognized in 1927 and Ahmadabad in 1937. During the war boom, a number of stock exchanges were organized in Bombay, Ahmadabad and other centers, but they were not recognized. Soon after it became a central subject, central legislation was proposed and a committee headed by A.D. Gorwala went into the bill for securities regulation. On the basis of the committees recommendations and public discussion, the securities contracts (regulation) Act became law in 1956. FUNCTIONS OF STOCK EXCHANGE: Maintains activity training Fixation of prices Ensures safe and fare dealings Aids in financing the industry Dissemination of information Performance end users Self regulating organization BYLAWS Besides the above act, the securities contracts (regulation) rules were also made in 1975 to regulative certain matters of trading on the stock exchanges. There are also bylaws of the exchanges, which are concerned with the following subjects.

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Opening / closing of the stock exchanges, timing of trading, regulation of blank transfers, regulation of Badla or carryover business, control of the settlement and other activities of the stock exchange, fixating of margin, fixation of market prices or making up prices, regulation of taravani business (jobbing), etc., regulation of brokers trading, brokerage chargers, trading rules on the exchange, arbitrage and settlement of disputes, settlement and clearing of the trading etc. REGULATION OF STOCK EXCHANGES The securities contracts (regulation) act is the basis for operations of the stock exchanges in India. No exchange can operate legally without the government permission or recognition. Stock exchanges are given monopoly in certain areas under section 19 of the above Act to ensure that the control and regulation are facilitated. Recognition can be granted to a stock exchange provided certain conditions are satisfied and the necessary information is supplied to the government. Recognition can also be withdrawn, if necessary. Where there are no stock exchanges, the government licenses some of the brokers to perform the functions of a stock exchange in its absence. SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). SEBI was set up as an autonomous regulatory authority by the government of India in 1988 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matter connected therewith or incidental thereto. It is empowered by two acts namely the SEBI Act, 1992 and the securities contract (regulation) Act, 1956 to perform the function of protecting investors rights and regulating the capital markets.

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INDIAN STOCK MARKET:


HISTORICAL BACKGROUND: The stock market provides a market place for the purchase and sale of securities evidencing the ownership of business property or of a public or business debt . The origin of the stock market therefore goes back to the time when securities representing this property or promises to pay were the first issued and made transferable from one person to another . The earliest record of securities dealing in India were loan transactions of East India company , way back in the eighteenth century . By 1830s there was a perceptible increase in the volume of business , not only in loan but also in corporate stock and shares . In 1850, the companies Act introducing interest limited liability was enacted and with it commenced the era of modern joint stock enterprise in India . The Act also served to generate securities . From 1850 to 1865, the history of brokers and their rise to power in Bombay is the history of Premchand Roychand . Brokerage business attracted many people into the field and by 1860, the number of brokers had increased to 60. An important early in the development of the stock market in India was the formation of Native share and s tock Brokers Association in Bombay, in 1857, the precursor of the present day Bombay stock Exchange. Infact, the oldest stock exchange in Asia is the BSE having been established in 1875,while the Tokyo stock Exchange was founded in 1878. The setting up of BSE was followed by the formation of associations in Ahmadabad (1894) , Calcutta (1908)and Madras (1937). investor in corporate

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NATIONAL STOCK EXCHANGE:


The NSE was incorporated in November 1992 with an equity capital of Rs.25 crores, the International Securities Consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has prepared the detailed business plans and installation of hardware and software system. The Promotion for NSE were financial institutions, insurance companies, banks and SEBI capital market Ltd., infrastructure leasing and financial services and stock holding corporation ltd. It has been set up to strengthen the move towards professionalization of the capital market as well as provide nationwide securities trading facilities to investors. NSE is not an exchange in the traditional sense where brokers own and manage the exchange. A two tier administrative set up involving a company board and a governing aboard of the exchange is envisaged. NSE is a national market for shares PSU bonds, debentures and government securities since infrastructure and trading facilities are provided. NSE-NIFTY: The NSE on April 22, 1996 launched a new equity Index. The NSE -50. The new index, which replaced the existing NSE-100 index is expected to serve as an appropriate Index foe the new segment of futures and options. Nifty means National Index for Fifty Stocks. The NSE50 comprises 50 companies that represent 20 broad Industry groups with an aggregate market capitalization of around Rs 1,70,000 crores. All companies includes in the Index have a market capitalizations in excess of Rs. 400 crores each and should have traded for 85% of trading days at an impact cost of less than 1.5%

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The base period for the index is the close of prices on Nov 3, 1995, which make one year of completions of operations of NSEs capitals markets segments . The base values of the Index has been set at 1000. NSE--MIDCAP INDEX: The NSE midcap Index or the Junior Nifty comprises 50 stocks that represent 21abroad Industry groups and will provide proper representation of the madcap segments of the Indian capitals Market. All stocks in the index should market capitalizations of greater than Rs. 200 corers and should have traded 85% of the trading days at an impact cost of less 2.5%. The base period for the index is Nov 4, 1996, which signifies two years for completion of operations of the capitals market segment of the operations. The values of the Index has been set at 1000. Average daily turnover of the present scenario 258212 (lakhs) and number of averages daily trades 2160(lakhs). Ex: Satyam computers. GROWTH OF STOCK EXCHANGE IN INDIA: The stock market activities in India were relatively on a low key during the beginning of the decade of 80s securities mainly because of the allies regime till 1947. Afterwards, the Government of India concentrated more on administration and less on development and pursuit of the philosophy of public sector dominating the economy. Stock Exchange was placed under the exclusive regulation of the Government through proclamation in 1930s of the constitution of India. During the 1950s & 1960s Indian economy was dominated by the public sector, which was consider as the major vehicle for economic and industrial development. This trend has changed since mid 80s with liberalization of Government policies and greater freedom given to private sector.

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This policy of progressively deregulating the economy led to the emerge of stock market as a major instrument of finance for industry and trade. India can boast of being one of the oldest stock markets in Asia. The Bombay Stock exchange (BSE) was founded in 1875, while the London Stock Exchange was established in 1773. PRESENT SCENARIO: The decade of 80s witnessed the emergence of stock market as major source of finance for trade and industry . The process of liberalization and deregulation has led to a pace of growth almost unparalleled in the history of any nation. Average annual capital mobilization from market, which used to about Rs.70 crores in the 60s and about Rs. 90 crores in the 70s increased manifold during the 80s with the amount raised in 1989-90 being of the order of Rs.647.3 crores. The number of listed companies rose from 2265 in 1980 to over Rs. 680 the end of 1998 the daily turnover accordingly shot up Rs. 25 crores in 1979-80 to about Rs 260 crores in 1994-9 . The number of shareholders increased from 10 lakhs in 198 to 1.5 crore in 1998. The number of share holder and investors in mutual funds has also risen sharply from about 2 million to over 40 million during this period , rendering this nation to the position of having the second largest investor population in the world next only to USA. At present, there are 19 Stock Exchange recognized under securities Contracts (Regulation) Act, 1956. These recognized stock exchanges mobilize and direct the flow of saving of the general public into productive channels of investment.

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