A Project Study Report On

Training Undertaken at

Titled

RESEARCH ON CAPITAL MARKET WITH INDIAINFOLINE LTD

REPORT SUBMITTED ON PARTIAL UL ILMENT O MASTER IN BUSINESS ADMINISTRATION

Su!"itted To# $ Dr%Pankaj &upta

aculty o) AIMS

Su!"itted By#$ &aura' Ban(al

M!a Part ii

APE* INSTITUTE O MANA&EMENT + S,IEN,E- .AIPUR

/Appro'ed !y AI,TE- Ne0 Del1i + A))iliated to Uni'er(ity o) Raja(t1an- .aipur2

34566 7 45689

TABLE O ,ONTENTS

PARTI,ULARS
A,:NO;LED&MENT PRE A,E E*E,UTI=E SUMMAR> RESEAR,@ ,APITAL INDIAIN OLINE ,USTOMER BE@A=IOR ANAL>SIS RESEAR,@ MET@ODOLO&> DATA ANAL>SIS INDIN&S ,ON,LUSION APPENDI,S BIBLIO&RAP@>

PA&E NO%
8 < ? A 88 ?A B8 BC C4 D8 DD A5 A8

ACKNOWLEDGMENT
Achieving a milestone for any person is extremely difficult without any kind of support. Therefore, the persons who make my task easier, it becomes my humble and foremost duty to acknowledge all of them.

I am heartiest thankful to MR% @ar'inder Sand1u (Company uide!, for giving me valuable information, support and guidance during my pro"ect work. #ithout them it would have not possible for me to work on this pro"ect.

I would like to express my gratitude to various Customers to whom I met during the pro"ect and other faculty members for giving help and support.

I am also thanking to all of persons who helped me directly or indirectly for completing this report successfully.

&AURA= BANSAL

PREFACE
$ro"ects are very important for the beginners to gain a practical knowledge about organi%ations and the market. Theory till not used in practical field is of no use. &o our institute has fixed a period for summer training when we can enter into the market through some organi%ation in order to gain some real knowledge. This in mind I carried out my pro"ect in ' INDIA IN OLINE( which is one of the largest and reputed company in India. The pro"ect was a study of ERe(earc1 on capital "arket 0it1 INDIA IN OLINEF IN SRI &AN&ANA&AR ,IT>% This report has been prepared after the intensive study of both primary and secondary market as well as their instruments with respect to broking firm. The information is also collected from the Customers to understand their investment behavior in both primary and secondary market respectively as well as their attitude towards the broking firm and its features.

EXECUTIVE SUMMARY
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Training is the first step to enter into the permanent "ob. )arket research, market surveys are some of the pillars which helps us in future to stand with potentiality, knowledge and smart work. *eeping this in mind I had carried out my summer training in I+,IA I+-./I+0 which is India1s favorite share trading company with the largest number of customers. India infoline offers investors a seamless, hassle2free and paperless way to trade shares, as it integrates the banking, trading and settlement part of the business. India infoline is trusted by over a lakh share investors, due to its negotiable brokerage rates, consultation services, margin facilities, good software as well as many other services like insurance mutual funds etc.It provided me a platform to deeply analy%e the capital market as well as customer investment perception towards it. As &ystematic, planned and disciplined work always leads to success. *eeping this in mind the pro"ect has been divided into parts. -irstly with the "oining of company as a trainee my induction process was started where I got familiar with the employees working there. &econdly, I talked to all the knowledgeable people of the organi%ation who helped me to get an initial idea about the company and its product and services. I was than lead by the officer who dealt with the customer to know the kind of services that the company offers to their customers. Thirdly, I learned about the various instruments of capital market, working of broking industry as well as got the practical experience about it also. Then the consumers of &ri anganagar city were selected and interviewed about the company that they used, their views on India infoline and stock market of India, their expectation from the company, their satisfaction regarding the special services provided by the company and their investment preferences regarding the capital market. I got the real time experience about the process of listing of I$.1s as two I$.1s i.e. Technofeb engineering /td., 3industhan media venture /td. were released and widely promoted by II-/ during my training period. I also learned the practical knowhow of the trading mechanism of e4uities, commodities, mutual funds, currencies etc. /astly, all the data were compiled together to make a complete report by analy%ing the data collected. &ome findings and recommendation were also added to keep the brand ssssssname growing with its value.

ABOUT INDIAIN OLINE LTD%

India Infoline originally incorporated on .ctober 56, 5778 as $9.-IT: 90&0A9C3 AND SERVICES PVT LTD. at )umbai under the Companies Act,578; with 9egistration +o.557<=7=.and became a public limited company on April >6, >???.The

name of the Company was changed to India Infoline.com/imited on )ay ><, >??? and later to India Infoline /imited on )arch ><,>??5. It is the first Company in India to foray into the online distribution of )utual -unds It is a one2stop financial services shop, most respected for 4uality of its advice, personali%ed service and cutting2edge technology. The+o.5Corporate agent for II-/$rudential/ife Insurance Company. 9esearch acknowledged by -orbes as ')ust 9ead for investor in &outh Asia '/isted on @ombay and +ational &tock 0xchange with a net worth of I+9 >?? crore and a market cap of over I+9 57=? crore.The company has a network of 7=; business locations (branches and sub2brokers! spread across <;8 cities and towns. It has more than6??, ??? customers. It is registered with +&,/ as well as C,&/ as a depository participant.

India Infoline Commodities $vt /imited is engaged in the business of commodities broking. .ur experience in securities broking empowered us with the re4uisite skills and technologies to allow us offer commodities broking as a contra2cyclical alternative to e4uities braking. #e en"oy memberships with the )CA and +C,0A, two leading Indian commodities exchanges, and recently ac4uired membership of , Cx. #e have a multi2channel delivery model, asking it among the select few to offer online as well as offline trading facilities.

Introduction
O!jecti'e o) t1e (tudy
The main ob"ective of the study is to analy%e the capital market mainly the primary and secondary market and their instruments, understanding the working of

broking industry as well as competitive analysis of India infoline with reference to other broking firms operating in the same area. The following study was mainly done with an ob"ective to know the state of mind of the investors who wanted to invest in the stock market B also to know the attitude and preference of the prospective investors regarding capital market with special reference to India infoline which is a online brokage house in India.

Re(earc1 on capital "arket

,apital Market#
A capital "arket is a market for securities (debt or e4uity!, where business enterprises (companies! and governments can raise long2term funds. It is defined as a market in which money is provided for periods longer than a year C5D, as the raising of short2term funds takes place on other markets (e.g., the money market!. The capital market includes the stock market (e4uity securities! and the bond market (debt!. -inancial regulators, such as the E*Fs -inancial &ervices Authority (-&A! or the E.&.

&ecurities and 0xchange Commission (&0C!, oversee the capital markets in their designated "urisdictions to ensure that investors are protected against fraud, among other duties. Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over2the2 counter, or elsewhere.

Pri"ary Market:
A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or e4uity based securities. $rimary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors. Also known as Gnew issue marketG (+I)!. The primary markets are where investors can get first crack at a new security issuance. The issuing company or group receives cash proceeds from the sale, which is then used to fund operations or expand the business. 0xchanges have varying levels of re4uirements which must be met before a security can be sold. .nce the initial sale is complete, further trading is said to conduct on the secondary market, which is where the bulk of exchange trading occurs each day. $rimary markets can see increased volatility over secondary markets because it is difficult to accurately gauge investor demand for a new security until several days of trading have occurred.

Secondary "arket#
A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges 2 such as the +ew :ork &tock 0xchange and the +A&,AH are secondary markets. &econdary markets exist for e4uities, commodities or when funds, investment banks, or entities such as -annie )ae purchase mortgages from issuing lenders. In any secondary market trade, the cash proceeds go to an investor rather than to the underlying companyIentity directly.

,apital Market In(tru"ent(#

Capital market instruments are responsible for generating funds for companies, corporations, and sometimes national governments these are used by the investors to make a profit out of their respective markets. There are a number of capital market instruments used for market trade, including &tocks 04uitie commodities @onds ,ebentures Treasury2bills -oreign 0xchange -ixed deposits

Capital market is also known as securities market because long term funds are raised through trade on debt and e4uity securities. These activities may be conducted by both companies and governments. This market is divided into primary capital market and secondary capital market. The primary market is designed for the new issues and the secondary market is meant for the trade of existing issues. &tocks and bonds are the two basic capital market instruments used in both the primary and secondary markets. There are three different markets in which stocks are used as the capital market instrumentJ the physical, virtual, and auction markets.

$hysical market Kirtual )arket Auction )arket

@onds, however, are traded in a separate bond market. This market is also known as a debt, credit, or fixed income market. Trade in debt securities are done in this market. There are also the T2bills and ,ebentures which are used as capital market instruments by the investors. These instruments are more secured than the others, but they also provide less return

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than the other capital market instruments. #hile all capital market instruments are designed to provide a return on investment, the risk factors are different for each and the selection of the instrument depends on the choice of the investor. The risk tolerance factor and the expected returns from the investment play a decisive role in the selection by an investor of a capital market instrument. Capital market instruments should be selected only after doing proper research in order to increase one.

Brie) a!out (tock "arket

The &ecurities Contracts (9egulation! Act, 578;, has defined &tock 0xchange as an Gassociation, organi%ation or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business of buying, selling and dealing in &ecuritiesG. &tock exchange as an organi%ed security market provides marketability and price continuity for shares and helps in a fair evaluation of securities in terms of their intrinsic worth. Thus it helps orderly flow and distribution of savings between different types of investments. This institution performs an important part in the economic life of a country, acting as a free market for securities where prices are determined by the forces of supply and demand. Apart from the above basic function it also assists in mobili%ing funds for the overnment and the Industry and to supply a channel for the investment of savings in the performance of its functions. The &tock 0xchanges in India as elsewhere have a vital role to play in the development of the country in general and industrial growth of companies in the private sector in particular and helps the overnment to raise internal resources for

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the implementation of various development programmes in the public sector. As a segment of the capital market it performs an important function in mobili%ing and channeli%ing resources which remain otherwise scattered. Thus the &tock 0xchanges tap the new resources and stimulate a broad based investment in the capital structure of industries. A well developed and healthy stock exchange can be and should be an important institution in building up a property base along with a socialist in India with broader distribution of wealth and income. Thus &tock 0xchange is a vital organ in a modern society. #ithout a stock exchange a modern democratic economy cannot exist. The system of "oint stock companies financed through the public investment as emerged has put the vast means of finances almost to entrepreneursF needs. -inance from external sources mainly from the investing public can become possible only when an institute like &tock 0xchange provides opportunities for the conversion of scattered savings into profitable investments with the promises of a reasonable yield and minimum element of risk. &uch a mechanism as provided by &tock 0xchanges is not merely a source of capital but also a conduit which channeli%es the savings into investment along with a free movement of capital. #ith the probable exception of a totalitarian state no overnment will be able to mobili%e resources from the public if the money market in the form of stock exchange does not exist. The &tock 0xchange benefits the entire community in a variety of way. It enables the producers to raise capital which directly and indirectly gives gainful employment to millions of people on the one hand and helps consumers to getL the variety of goods needed by them on the other. It provides opportunities to savers to store the value either as temporary abode of purchasing power or as a permanent abode of purchasing power in the form of financial assets. It also helps the segments of the savers who put their savings in commercial firms and non2banking financial intermediaries because these institutions avail themselves of the services of &tock 0xchange to invest the money thus collected. The &tock 0xchange comes close enough to a perfectly competitive market allowing the forces of demand and supply a reasonable degree of freedom to operate as compared to other markets specially the commodity markets. This segment of the factor market can be considered as a perfect or a nearly perfect market. Apart from providing a mechanism for transacting business in stock and shares it generates genuine potential for a new entrepreneur to take up initiative in the private sector

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enterprises and allows the expansion of investing community by offering gainful development of their otherwise sluggish or shy capital. The &tock 0xchange must assume the responsibility of protecting the rights of investors specially the small investors in the Moint &tock Companies.

E'olution
Indian &tock )arkets are one of the oldest in Asia. Its history dates back to nearly >?? years ago. The earliest records of security dealings in India are meagre and obscure. The 0ast India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. @y 56<?Fs business on corporate stocks and shares in @ank and Cotton presses took place in @ombay. Though the trading list was broader in 56<7, there were only half a do%en brokers recogni%ed by banks and merchants during 56N? and 568?.

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The 568?Fs witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 56;? the number of brokers increased into ;?. In 56;?2;5 the American Civil #ar broke out and cotton supply from Enited &tates of 0urope was stoppedL thus, the F&hare )aniaF in India begun. The number of brokers increased to about >?? to >8?. 3owever, at the end of the American Civil #ar, in 56;8, a disastrous slump began (for example, @ank of @ombay &hare which had touched 9s >68? could only be sold at 9s. 6=!. At the end of the American Civil #ar, the brokers who thrived out of Civil #ar in 56=N, found a place in a street (now appropriately called as ,alal &treet! where they would conveniently assemble and transact business. In 566=, they formally established in @ombay, the G+ative &hare and &tock @rokersF AssociationG (which is alternatively known as 'The &tock 0xchange G!. In 5678, the &tock 0xchange ac4uired a premise in the same street and it was inaugurated in 5677. Thus, the &tock 0xchange at @ombay was consolidated.

Indian Stock EGc1ange( $ An U"!rella &ro0t1

The &econd #orld #ar broke out in 57<7. It gave a sharp boom which was followed by a slump. @ut, in 57N<, the situation changed radically, when India was fully mobili%ed as a supply base. .n account of the restrictive controls on cotton, bullion, seeds and other commodities, those dealing in them found in the stock market as the only outlet for their activities. They were anxious to "oin the trade and their number was swelled by numerous others. )any new associations were constituted for the purpose and &tock 0xchanges in all parts of the country were floated.

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The Ettar $radesh &tock 0xchange /imited (57N?!, +agpur &tock 0xchange /imited (57N?! and 3yderabad &tock 0xchange /imited (57NN! were incorporated. In ,elhi two stock exchanges 2 ,elhi &tock and &hare @rokersF Association /imited and the ,elhi &tocks and &hares 0xchange /imited 2 were floated and later in Mune 57N=, amalgamated into the ,elhi &tock 0xchange Association /imited.

INTRODU,TION AND ,ON,EPT O S@ARE TRADIN&

Trading in shares is old phenomena its regulation had been started when securities contract act had been formed in 578;. Transfer of resources from those with idle resources to others who have a productive need for them is most efficiently achieved through the securities market. It provides a channel for reallocation of savings to investments. The share market can be segmented in two parts one is $rimary )arket another is &econdary )arket.

Pri"ary Market
It provides opportunity to issuers of securities government as well as corporate to raise resources to meet their re4uirements of investments. In this market companies issue fresh security sin exchange of funds through public issues or private placements. The market design for primary market is provided in the provision of Companies Act, 578; which deals with issues, listing and allotment of securities. The investors have to apply the shares by filling the application form issue by the company along with the application money. According to ,isclosure and Investor $rotection guidelines of &0@I, 577> company has to disclose all the necessary information regarding pricing of issues, listing re4uirements, disclosure norms lock2in2period for promoters contribution, contents of offer documents pre and post issue obligations etc. Company can issue shares at face value, at premium or at discount. Another method of pricing which is now days common is issuing the securities through online system of the stock exchange has to comply with the section 88 to ;6a of the companies Act, 578; and &0@I guidelines >???. The company is re4uired to enter in to an agreement with the stock exchanges which have the re4uisite system for online offer of securities. The advantages for this new system areJ2 The investors part with money only after allotment.

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 It eliminates refunds except in case of direct applications. It reduces the time taken for issue process

Secondary Market
&econdary market is the place for sale and purchase of existing securities. It enables an investor to ad"ust his holdings of securities in response to changes in his assessment about risk and return. It enables him to sell securities for cash to meet his li4uidity needs. It essentially comprises of the stock exchanges which provide platform for trading of securities and a host of intermediaries who assist in trading of securities and clearing and settlement of trades. The securities are traded, cleared and settled as per prescribed regulatory framework under the supervision of the exchanges and oversight of &0@I.

Trading Mec1ani("
0arlier trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, li4uidity and transparency +ational &tock 0xchange introduced a nation wide on line fully automated screen based trading system where a member can punch in to the computer 4uantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching sale or buy order from a counter party. &creen based trading electronically matches orders on a priceItime priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It enables market participants, irrespective of their geographical locations to trade with one another and it provides e4ual access to everybody. +&0 has main computer which is connected through Kery &mall Aperture Terminal (K&AT! installed at its office. The main computer runs on a default tolerant &T9ATE& mainframe computer at the exchange. @rokers have terminals installed at their premises which are connected through K&ATs. An investor informs a broker to place an order on his behalf.

Trading Pattern o) t1e Indian Stock Market

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Trading in Indian stock exchanges are limited to listed securities of public limited companies. They are broadly divided into two categories, namely, specified securities (forward list! and non2specified securities (cash list!. 04uity shares of dividend paying, growth2oriented companies with a paid2up capital of at least 9s.8? million and a market capitali%ation of atleast 9s.5?? million and having more than >?,??? shareholders are, normally, put in the specified group and the balance in non2 specified group. Two types of transactions can be carried out on the Indian stock exchangesJ /a2 Spot deli'ery tran(action( Gfor delivery and payment within the time or on the date stipulated when entering into the contract which shall not be more than 5N days following the date of the contractG J /!2 or0ard tran(action( Gdelivery and payment can be extended by further period of 5N days each so that the overall period does not exceed 7? days from the date of the contractG. The latter is permitted only in the case of specified shares. The brokers who carry over the out standings pay carry over charges (can tango or backwardation! which are usually determined by the rates of interest prevailing. A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell securities on his own account and risk, in contrast with the practice prevailing on +ew :ork and /ondon &tock 0xchanges, where a member can act as a "obber or a broker only. The nature of trading on Indian &tock 0xchanges are that of age old conventional style of face2to2face trading with bids and offers being made by open outcry. 3owever, there is a great amount of effort to moderni%e the Indian stock exchanges in the very recent times.

MAR:ET DESI&N Pri"ary Market

6% ,orporate Securitie(# The ,isclosure and Investor $rotection (,I$! guidelines prescribe a substantial body of re4uirements for issuersIintermediaries, the broad intention being to ensure

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that all concerned observe high standards of integrity and fair dealing, comply with all the re4uirements with due skill, diligence and care, and disclose the truth, whole truth and nothing but truth. The guidelines aim to secure fuller disclosure of relevant information about the issuer and the nature of the securities to be issued so that investors can take informed decisions. -or example, issuers are re4uired to disclose any material Orisk factors1 and give "ustification for pricing in their prospectus. An unlisted company can access the market up to 8 times its pre2issue net worth only if it has track record of distributable profits and net worth of 9s. 5 crore in < out of last five years. A listed company can access up to 8 times of its pre2issue net worth. In case a company does not have track record or wishes to rise beyond 8 times of its pre2issue net worth, it can access the market only through book building with minimum offer of ;?P to 4ualified institutional buyers. Infrastructure companies are exempt from the re4uirement of eligibility norms if their pro"ect has been appraised by a public financial institution and not less than 8P of the pro"ect cost is financed by any of the institutions, "ointly or severally, by way of loan andIor subscription to e4uity. The debt instruments of maturities more than 56 months re4uire credit rating. If the issue si%e exceeds 9s. 5?? crore, two ratings from different agencies are re4uired. Thus the 4uality of the issue is demonstrated by track recordIappraisal by approved financial institutionsIcredit ratingIsubscription by HI@s. The lead merchant banker discharges most of the pre2 issue and post2issue obligations. 3e satisfies himself about all aspects of offering and ade4uacy of disclosures in the offer document. 3e issues a due diligence certificate stating that he has examined the prospectus, he finds it in order and that it brings out all the facts and does not contain anything wrong or misleading. 3e also takes care of allotment, refund and dispatch of certificates. The admission to a depository for demateriali%ation of securities is a prere4uisite for making a public or rights issue or an offer for sale. The investors, however, have the option of subscribing to securities in either physical form or demateriali%ed form. All new I$.s are compulsorily traded in demateriali%ed form. 0very public listed company making I$. of any security for 9s. 5? crore or more is re4uired to do so only in demateriali%ed form. 4 % &o'ern"ent Securitie(# The government securities market has witnessed significant transformation in the 577?s. #ith giving up of the responsibility of allocating resources from securities market, government stopped expropriating seigniorage and started borrowing at near

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2 market rates. overnment securities are now sold at market related coupon rates through a system of auctions instead of earlier practice of issue of securities at very low rates "ust to reduce the cost of borrowing of the government. )a"or reforms initiated in the primary market for government securities include auction system (uniform price and multiple price method! for primary issuance of T2bills and central government dated securities, a system of primary dealers and non2competitive bids to widen investor base and promote retail participation, issuance of securities across maturities to develop a yield curve from short to long end and provide benchmarks for rest of the debt market, innovative instruments like, %ero coupon bonds, floating rate bonds, bonds with embedded derivatives, availability of full range ( 752day and <6>2day! of T2bills, etc.

Secondary Market
,orporate Securitie(#

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The stock exchanges are the exclusive centres for trading of securities. Though the area of operationI"urisdiction of an exchange is specified at the time of its recognition, they have been allowed recently to set up trading terminals anywhere in the country. The three newly set up exchanges (.TC0I, +&0 and IC&0! were permitted since their inception to have nation wide trading. The trading platforms of a few exchanges are now accessible from many locations. -urther, with extensive use of information technology, the trading platforms of a few exchanges are also accessible from anywhere through the Internet and mobile devices. This made a huge difference in a geographically vast country like India. EGc1ange Manage"ent#

)ost of the stock exchanges in the country are organi%ed as 'mutuals( which was considered beneficial in terms of tax benefits and matters of compliance. The trading members, who provide brokering services, also own, control and manage the exchanges. This is not an effective model for self2regulatory organi%ations as the regulatory and public interest of the exchange conflicts with private interests. 0fforts are on to demutualise the exchanges whereby ownership, management and trading membership would be segregated from one another. Two exchanges vi%. .TC0I and +&0 are demutualised from inception, where ownership, management and trading are in the hands of three different sets of people. This model eliminates conflict of interest and helps the exchange to pursue market efficiency and investor interest aggressively. Me"!er(1ip: The trading platform of an exchange is accessible only to brokers. The broker enters into trades in exchanges either on his own account or on behalf of clients. +o stock broker or sub2broker is allowed to buy, sell or deal in securities, unless he or she holds a certificate of registration granted by &0@I. A brokerIsub2broker complies with the code of conduct prescribed by &0@I. .ver time, a number of brokers 2 proprietor firms and partnership firms Q have converted themselves into corporate. The standards for admission of members stress on factors, such as corporate structure, capital ade4uacy, track record, education, experience, etc. and reflect a conscious endeavor to ensure 4uality broking services. Li(ting#

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A company seeking listing satisfies the exchange that at least 5?P of the securities, sub"ect to a minimum of >? lakh securities, were offered to public for subscription, and the si%e of the net offer to the public (i.e. the offer price multiplied by the number of securities offered to the public, excluding reservations, firm allotment and promoters1 contribution! was not less than 9s. 5?? crore, and the issue is made only through book building method with allocation of ;?P of the issue si%e to the 4ualified institutional buyers. In the alternative, it is re4uired to offer at least >8P of the securities to public. The company is also re4uired to maintain the minimum level of non2promoter holding on a continuous basis. In order to provide an opportunity to investors to investItrade in the securities of local companies, it is mandatory for the companies, wishing to list their securities, to list on the regional stock exchange nearest to their registered office. If they so wish, they can seek listing on other exchanges as well. )onopoly of the exchanges within their allocated area, regional aspirations of the people and mandatory listing on the regional stock exchange resulted in multiplicity of exchanges. The basic norms for listing of securities on the stock exchanges are uniform for all the exchanges. These norms are specified in the listing agreement entered into between the company and the concerned exchange. The listing agreement prescribes a number of re4uirements to be continuously complied with by the issuers for continued listing and such compliance is monitored by the exchanges. It also stipulates the disclosures to be made by the companies and the corporate governance practices to be followed by them. &0@I has been issuing guidelinesIcirculars prescribing certain norms to be included in the listing agreement and to be complied with by the companies. A listed security is available for trading on the exchange. The stock exchanges levy listing fees 2 initial fees and annual fees 2 from the listed companies. It is a ma"or source of income for many exchanges. A security listed on other exchanges is also permitted for trading. A listedcompany can voluntary delist its securities from non2regional stock exchanges after providing an exit opportunity to holders of securities in the region where the concerned exchange is located. An exchange can, however, delist the securities compulsorily following a very stringent procedure. Trading Mec1ani("# The exchanges provide an on2line fully2automated screen based trading system (&@T&! where a member can punch into the computer 4uantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching order from a counter party. &@T& electronically matches orders on a strict priceItime priority and hence cuts down on time, cost and risk of error, as well

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as on fraud resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets. It enables market participants to see the full market on real2 time, making the market transparent. It allows a large number of participants, irrespective of their geographical locations, to trade with one another simultaneously, improving the depth and li4uidity of the market. It provides full anonymity by accepting orders, big or small, from members without revealing their identity, thus providing e4ual access to everybody. It also provides a perfect audit trail, which helps to resolve disputes by logging in the trade execution process in entirety. Trading Rule(# 9egulations have been framed to prevent insider trading as well as unfair trade practices. The ac4uisitions and takeovers are permitted in a well2defined and orderly manner. The companies are permitted to buy back their securities to improve li4uidity and enhance the shareholders1 wealth Price Band(: &tock market volatility is generally a cause of concern for both policy makers as well as investors. To curb excessive volatility, &0@I has prescribed a system of price bands. The price bands or circuit breakers bring about a coordinated trading halt in all e4uity and e4uity derivatives markets nation2wide. An index2based market2wide circuit breaker system at three stages of the index movement either way at 5?P, 58P and >?P has been prescribed. The movement of either &B$ C+A +ifty or &ensex, whichever is breached earlier, triggers the breakers. As an additional measure of safety, individual scrip2wise price bands of >?P either way have been imposed for all securities except those available for stock options.

De"at TradingJ The ,epositories Act, 577; was passed to proved for the establishment of depositories in securities with the ob"ective of ensuring free transferability of securities with speed, accuracy and security by /a2 making securities of public limited companies freely transferable sub"ect to certain exceptionsL /!2 dematerialising the

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securities in the depository modeL and /c2 providing for maintenance of ownership records in a book entry form. In order to streamline both the stages of settlement process, the Act envisages transfer of ownership of securities electronically by book entry without making the securities move from person to person. Two depositories, vi%. +&,/ and C,&/, have come up to provide instantaneous electronic transfer of securities. At the end of )arch >??>, N,5=> and N,>6N companies were connected to +&,/ and C,&/ respectively. The number of demateriali%ed securities increased to 8;.8 billion at the end of )arch >??>. As on the same date, the value of demateriali%ed securities was 9s. N,;;7 billion and the number of investor accounts was N,;?8,866. All actively traded scrips are held, traded and settled in demat form. ,emat settlement accounts for over 77P of turnover settled by delivery. This has almost eliminated the bad deliveries and associated problems To prevent physical certificates from sneaking into circulation, it has been mandatory for all new I$.1s to be compulsorily traded in demateriali%ed form. The admission to a depository for demateriali%ation of securities has been made a prere4uisite for making a public or rights issue or an offer for sale. It has also been made compulsory for public listed companies making I$. of any security for 9s. 5? crore or more to do the same only in demateriali%ed form. ,1arge(: A stock broker is re4uired to pay a registration fee of 9s.8, ??? every financial year, if his annual turnover does not exceed 9s. 5 crore. If the turnover exceeds 9s. 5 crore during any financial year, he has to pay 9s. 8,??? plus one2hundredth of 5P of the turnover in excess of 9s.5 crore. After the expiry of five years from the date of initial registration as a broker, he has to pay 9s. 8,??? for a block of five financial years. @esides, the exchanges collect transaction charges from its trading members. +&0 levies 9s. N per lakh of turnover. The maximum brokerage a trading member can levy in respect of securities transactions is >.8P of the contract price, exclusive of statutory levies like &0@I turnover fee, service tax and stamp duty. 3owever, brokerage charges as low as ?.58P are also observed in the market. 9olling settlement on TR< basis gave way to TR> from April >??<. The market has moved close to spotIcash market. Ri(k Manage"ent# To pre2empt market failures and protect investors, the regulatorIexchanges have developed a comprehensive risk management system, which is constantly monitored and upgraded. It encompasses capital ade4uacy of members, ade4uate margin

23

re4uirements, limits on exposure and turnover, indemnity insurance, on2line position monitoring and automatic disablement, etc. They also administer an efficient market surveillance system to curb excessive volatility, detect and prevent price manipulations. 0xchanges have set up tradeIsettlement guarantee funds for meeting shortages arising out of no fulfillmentI partial fulfillment of funds obligations by the members in a settlement. A clearing corporation assures the counterparty risk of each member and guarantees financial settlement in respect of trades executed on +&0. &o'ern"ent Securitie(# The reforms in the secondary market include ,elivery versus $ayment system for settling scrip less & / transactions to reduce settlement risks, & / Account II with 9@I to enable financial intermediaries to open custody (Constituent & /! accounts and facilitate retail transactions in scrip less mode, enforcement of a trade2for2trade regime, settlement period of TR? or TR5 for all transactions undertaken directly between & / participants and up to TR8 days for transactions routed through +&0 brokers, routing transactions through brokers of +&0, .TC0I and @&0, repos in all government securities with settlement through & /, li4uidity support to $,s to enable them to support primary market and undertake market making, special fund facility for security settlement, etc. As part of the ongoing efforts to build debt market infrastructure, two new systems, the +egotiated ,ealing &ystem (+,&! and the Clearing Corporation of India /imited (CCI/! commenced operations on -ebruary 58, >??>. +,&, interalia, facilitates screen based negotiated dealing for secondary market transactions in government securities and money market instruments, online reporting of transactions in the instruments available on the +,& and dissemination of trade information to the market. overnment &ecurities (including T2bills!, call money, noticeIterm money, repos in eligible securities, Commercial $apers and Certificate of ,eposits are available for negotiated dealing through +,& among the members. The CCI/ facilitates settlement of transactions in government securities (both outright and repo! on ,elivery versus $ayment (,v$2II! basis which provides for settlement of securities on gross basis and settlement of funds on net basis simultaneously. It acts as a central counterparty for clearing and settlement of government securities transactions done on +,&. T@E NATIONAL STO,: E*,@AN&E O INDIA LIMITED

24

The +ational &tock 0xchange of India /imited has genesis in the report of the 3igh $owered &tudy roup on 0stablishment of +ew &tock 0xchanges, which recommended promotion of a +ational &tock 0xchange by financial institutions (-Is! to provide access to investors from all across the country on an e4ual footing. @ased on the recommendations, +&0 was promoted by leading -inancial Institutions at the behest of the overnment of India and was incorporated in +ovember 577> as a tax2 paying company unlike other stock exchanges in the country. .n its recognition as a stock exchange under the &ecurities Contracts (9egulation! Act, 578; in April 577<, +&0 commenced operations in the #holesale ,ebt )arket (#,)! segment in Mune 577N. The Capital )arket (04uities! segment commenced operations in +ovember 577N and operations in ,erivatives segment commenced in Mune >???.

NSEH( Mi((ion +&0Fs mission is setting the agenda for change in the securities markets in India. The +&0 was set2up with the main ob"ectives ofJ 5. 0stablishing a nation2wide trading facility for e4uities, debt instruments and hybrids,

25

>. 0nsuring e4ual access to investors all over the country through an appropriate communication network, <. $roviding a fair, efficient and transparent securities market to investors using electronic trading systems, enabling shorter settlement cycles and book entry settlements systems N. )eeting the current international standards of securities markets. 8. The standards set by +&0 in terms of market practices and technologies have become industry benchmarks and are being emulated by other market participants. +&0 is more than a mere market facilitator. ItFs that force which is guiding the industry towards new hori%ons and greater opportunities. NSE &roup National Securitie( ,learing ,orporation Ltd% /NS,,L2 It is a wholly owned subsidiary, which was incorporated in August 5778 and commenced clearing operations in April 577;. It was formed to build confidence in clearing and settlement of securities, to promote and maintain the short and consistent settlement cycles, to provide a counter2party risk guarantee and to operate a tight risk containment system. NSE%IT Ltd% It is also a wholly owned subsidiary of +&0 and is its IT arm. This arm of the +&0 is uni4uely positioned to provide products, services and solutions for the securities industry. +&0.IT primarily focus on in the area of trading, broker front2end and back2 office, clearing and settlement, web2based, insurance, etc. Along with this, it also provides consultancy and implementation services in ,ata #arehousing, @usiness Continuity $lans, &ite )aintenance and @ackups, &tratus )ainframe -acility )anagement, 9eal Time )arket Analysis B -inancial +ews.

India IndeG Ser'ice( + Product( Ltd% /IISL2 It is a "oint venture between +&0 and C9I&I/ /td. to provide a variety of indices and index related services and products for the Indian Capital markets. It was set up in )ay 5776. II&/ has a consulting and licensing agreement with the &tandard and $oorFs (&B$!, worldFs leading provider of investible e4uity indices, for co2branding e4uity indices.

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National Securitie( Depo(itory Ltd% /NSDL2 +&0 "oined hands with I,@I and ETI to promote demateriali%ation of securities. This step was taken to solve problems related to trading in physical securities. It commenced operations in +ovember 577;.

Bo"!ay Stock EGc1ange /BSE2

A very common name for all traders in the stock market, @&0, stands for @ombay &tock 0xchange. The oldest market not only in the country, but also in Asia. The early days of @&0 was known as GThe +ative &hare B &tock @rokers Association.G It was established in the year 56=8 and became the first stock exchange in the country to be recogni%ed by the government. In 578;, @&0 obtained a permanent recognition from the overnment of India under the &ecurities Contracts (9egulation! Act, 578;. In the past and even now, it plays a pivotal role in the development of the countryFs capital market. This is recogni%ed worldwide and its index, &0+&0A, is also tracked worldwide. 0arlier it was an Association of $ersons (A.$!, but now it is a demutualised and corporati%ed entity incorporated under the provisions of the Companies Act, 578;, pursuant to the @&0 (Corporati%ation and ,emutuali%ation! &cheme, >??8 notified by the &ecurities and 0xchange @oard of India (&0@I!.

27

BSE act( -irst in India to introduce 04uity ,erivatives -irst in India to launch a -ree -loat Index
-irst -irst -irst F@&0

in India to launch E&S version of @&0 &ensex in India to launch 0xchange 0nabled Internet Trading $latform in India to obtain I&. certification for &urveillance, Clearing B &ettlement

.n2/ine Trading &ystem (@./T! has been awarded the globally recogni%ed the Information &ecurity )anagement &ystem standard @&==772>J>??>.

SEBI#$
&0@I as the Capital )arket 9egulator in India, has twin ob"ectives i.e. of regulating as well as developing the )arket.

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The &0@I is the main regulatory body in the Indian capital market scenario . &0@I is responsible for J $rotecting the interests of investors in securities $romoting the development of the securities markets 9egulating the securities markets .n April 5>, 5766, the &ecurities and 0xchange @oard of India (&0@I! was established with a dual ob"ective of protecting the rights of small investors and regulating and developing the stock markets in India. In 577>, the @ombay &tock 0xchange (@&0! , the leading stock exchange in India, witnessed the first ma"or scam masterminded by 3arshad )ehta ()ehta! . Analysts unanimously felt that if more powers had been given to &0@I, the scam would not have happened. As a result, the overnment of India ( oI! brought in a separate legislation by the name of F&0@I Act 577>F and conferred statutory powers to it. &ince then, &0@I had introduced several stock market reforms. These reforms significantly transformed the face of Indian stock markets. &0@I introduced on2line trading and demat of shares which did away with the age2old paper2based trading, thus bringing more transparency into the trading system. Analysts and experts appreciated &0@I for these reforms. .ne stock market analyst said, GIFm sure that most of us would agree that &0@I has handled the challenges exceptionally well.G In spite of &0@IFs capital market reforms and increasing regulatory powers over the years, analysts felt that it had failed miserably in stopping stock market scams. In the ten years after the )ehta scam, several scams came to light, casting doubt on the efficiency of &0@I as a regulatory body. 3owever, a few analysts felt there was a need to confer more powers to &0@I to stop these scams. .ne analyst commented, GItFs rather daunting task of putting in place a regulatory framework for the market against all odds.G In the 576?s, Indian capital markets witnessed significant changes. ,uring the sixth -ive2:ear plan (576?268!, many ma"or industrial policy changes were introduced. These included opening up the Indian economy to foreign corporations and emphasi%ing a greater role for the private sector. )any companies tapped the primary market to raise re4uired funds from the public. The total capital raised from the primary market increased from 9s 5.7; bn in the fiscal 57=726? to 9s. ;8 bn in 576727?. #ith more companies raising money by issuing shares, retail investors got another investment avenue to park their surplus funds.

29

@etween 576= and 5775, 5>P of household savings were invested in e4uity and corporate debentures as compared to only =P between 576> and 5768, signifying the increasing number of retail investors in the stock market.

TRADIN& MEMBERS@IP
Stock Broker( Introduction A broker is an intermediary who arranges to buy and sell securities on behalf of clients (the buyer and the seller!. According to 9ule > (e! of &0@I (&tock @rokers and &ub2@rokers! 9ules, 577>, a stockbroker means a member of a recogni%ed stock exchange. +o stockbroker is allowed to buy, sell or deal in securities, unless he or she holds a certificate of registration granted by &0@I. A stockbroker applies for registration to &0@I through a stock exchange or stock exchanges of which he or she is admitted as a member. &0@I may grant a certificate to a stock2broker Cas per &0@I (&tock @rokers and &ub2@rokers! 9ules,577>D sub"ect to the conditions thatJ a! 3e holds the membership of any stock exchangeL b! 3e shall abide by the rules, regulations and bye2laws of the stock exchange or stock exchanges of which he is a memberL c! In case of any change in the status and constitution, he shall obtain prior permission &0@I to continue to buy, sell or deal in securities in any stock exchangeL d! 3e shall pay the amount of fees for registration in the prescribed mannerL and e! 3e shall take ade4uate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaint and keep &0@I informed about the number, nature and other particulars of the complaints. #hile considering the application of an entity for grant of registration as a stock broker, &0@I shall take into account the following namely, whether the stock broker applicant 2

30

a! is eligible to be admitted as a member of a stock exchangeL b! 3as the necessary infrastructure like ade4uate office space, e4uipment and man power to effectively discharge his activitiesL c! 3as any past experience in the business of buying, selling or dealing in securitiesL d! Is being sub"ected to any disciplinary proceedings under the rules, regulations and bye2laws of a stock exchange with respect to his business as a stockbroker involving either himself or any of his partners, directors or employees. Su!$Broker( A &ub2broker is a person who intermediates between investors and stock brokers. 3e acts on behalf of a stock2broker as an agent or otherwise for assisting the investors for buying, selling or dealing in securities through such stock2broker. +o sub2broker is allowed to buy, sell or deal in securities, unless he or she holds a certificate of registration granted by &0@I. A sub2broker may take the form of a sole proprietorship, a partnership firm or a company. &tockbrokers of the recogni%ed stock exchanges are permitted to transact with sub2brokers. &ub2brokers are re4uired to obtain certificate of registration from &0@I in accordance with &0@I (&tock @rokers B &ub2brokers! 9ules and 9egulations, 577>, without which they are not permitted to buy, sell or deal in securities. &0@I may grant a certificate to a sub2 broker, sub"ect to the conditions thatJ (a! 3e shall pay the fees in the prescribed mannerL (b! 3e shall take ade4uate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaint and keep &0@I informed about the number, nature and other particulars of the complaints receivedL (c! In case of any change in the status and constitution, the sub2 broker shall obtain prior permission of &0@I to continue to buy, sell or deal in securities in any stock exchangeL and (d! 3e is authori%ed in writing by a stock2broker being a member of a stock exchange for affiliating himself in buying, selling or dealing in securities. In case of company, partnership firm and sole proprietorship firm, the directors, the partners and the individual, shall comply with the following re4uirementsJ

31

(a! The applicant is not less than >5 years of ageL (b! The applicant has not been convicted of any offence involving fraud or dishonestyL (c! The applicant has at least passed 5>th standard e4uivalent examination from an institution recogni%ed by the overnment. (d! They should not have been debarred by &0@I. (e! The corporate entities applying for sub2broker ship shall have a minimum paid up capital of 9s. 8 lakh and it shall identify a dominant shareholder who holds a minimum of 85P shares either singly or with the unconditional support of hisIher spouse.

ABOUT INDIAIN OLINE LTD%

4%4 ,OMPAN> O=ER=IE; India Infoline originally incorporated on .ctober 56, 5778 as PROBITY RESEARCH AND SERVICES PVT LTD. at )umbai under the Companies Act,578; with 9egistration +o.557<=7=.and became a public limited company on April >6, >???.The name of the Company was changed to India Infoline.com/imited on )ay ><, >??? and later to India Infoline /imited on )arch ><,>??5. It is the first Company in India to foray into the online distribution of )utual -unds It is a one2stop financial services shop, most respected for 4uality of its advice, personali%ed service and cutting2edge technology. The+o.5Corporate agent for II-/$rudential/ife Insurance Company. 9esearch acknowledged by -orbes as ')ust 9ead for investor in &outh Asia '/isted on @ombay and +ational &tock 0xchange with a net worth

32

of I+9 >?? crore and a market cap of over I+9 57=? crore.The company has a network of 7=; business locations (branches and sub2brokers! spread across <;8 cities and towns. It has more than6??, ??? customers. It is registered with +&,/ as well as C,&/ as a depository participant.

=i(ion
'.ur vision is to be the most respected company in the financial services space(

Per)or"ance o) t1e co"pany# 6AA?#Incorporated as an e4uity research and Consulting firm with a client base that included leading -IIs, banks, consulting firms and corporate. 6AAA# 9estructured the business model to embrace the internetL launched

www.indiainfoline.comL
investors.

mobili%ed capital from reputed private e4uity

33

4555J Commenced the distribution of personal financial productsL launched online e4uity tradingL entered life insurance distribution as a corporate agent. Acknowledged by -orbes as O@est of the #eb1 andO...)ust read for Investors1. 455<# Ac4uired commodities broking licenseL launched $ortfolio )anagement &ervice. 455?# /isted on the Indian stock )arkets. 455B# Ac4uired )embership .f , CAL launched investment banking &ervices. 455C# /aunched a proprietary trading platformL inducted an institutional e4uities teamL formed a &ingapore subsidiaryL raised over E&, <??mn in the groupL launch edconsumerfinance business under the O)oney line O@rand. 455D#/aunched wealth management services under the OII-/ #ealth ObrandL set up India Info line $rivate 04uity fundL received the Insurance broking license from I9,AL received the venture capital licenseL received in principle approval to sponsor a mutual fundL received O@est broker2 India1 award from Finance AsiaL O)ost Improved @rokerage2 India1 award from Asia one!. 455A# 9eceived registration for a housing finance company from the +ational 3ousing @ankL received O-astest growing 04uity @roking 3ouse /arge firms1 in India by ,un @radstreet.

INDIA IN OLINE Ltd%

India Infoline /imited is listed on both the leading stock exchanges in India, vi%. the &tock 0xchange, )umbai (@&0! and the +ational &tock 0xchange (+&0! and is also a member of both the exchanges. It is engaged in the businesses of 04uities broking, #ealth Advisory &ervices and $ortfolio )anagement &ervices. It offers broking services in the Cash and ,erivatives segments of the +&0 as well as the Cash segment of the @&0. It is registered with +&,/ as well as C,&/ as a depository participant, providing a one2stop solution for clients trading in the e4uities market. It has recently launched its Investment banking and Institutional @roking business.

34

35

INDIA IN OLINE MEDIA AND RESEAR,@ SER=I,ES LIMITED.

The content services represent a strong support that drives the braking, commodities, mutual fund and portfolio management services businesses. 9evenue generation is through the sale of content to financial and media houses, Indian as well as global. It undertakes e4uities research which is acknowledged by none other than -orbes as F@est of the #ebF and F...a must read for investors in AsiaF. India Info line1s research is available not "ust over the internet but also on international wire services like @loomberg (CodeJ II//!, Thomson -irst Call and Internet &ecurities where India Infoline is amongst the most read Indian brokers.

INDIA IN OLINE ,OMMODITIES LIMITED.

India Infoline Commodities $vt /imited is engaged in the business of commodities broking. .ur experience in securities broking empowered us with the re4uisite skills and technologies to allow us offer commodities broking as a contra2cyclical alternative to e4uities braking. #e en"oy memberships with the )CA and +C,0A, two leading Indian commodities exchanges, and recently ac4uired membership of , Cx. #e have a multi2 channel delivery model, asking it among the select few to offer online as well as offline trading facilities.

36

INDIA IN OLINE MAR:ETIN& + SER=I,ES

India Infoline )arketing and &ervices /imited is the holding company of India Infoline Insurance &ervices /imited and India Infoline Insurance @rokers /imited.(a! India Infoline Insurance &ervices /imited is a registered Corporate Agent with the Insurance 9egulatory and ,evelopment Authority (I9,A!. It is the largest Corporate Agent for II-/$rudential /ife Insurance Co /imited, which is IndiaFs largest private /ife Insurance Company. India Infoline was the first corporate agent to get licensed by I9,A in early >??5. (b! India Infoline Insurance @rokers /imited India Infoline Insurance @rokers /imited is a newly formed subsidiary which will carry out the business of Insurance broking. #e have applied to I9,A for the insurance broking license and the clearance for the same is awaited. post the grant of license, we propose to also commence the general insurance distribution business.

INDIA IN OLINE IN=ESTMENT SER=I,ES LIMITED

Consolidated shareholdings of all the subsidiary companies engaged in loans and financing activities under one subsidiary. 9ecently, .rient lobal, a &inga$7re2based investment institution invested E&, =;.= million for a >>.8P stake in India Infoline Investment &ervices. This will help focused expansion and capital raising in the said subsidiaries for various lending businesses like loans against securities, &)0 financing, distribution of retail loan products, consumer finance business and housing finance business. India Infoline Investment &ervices $rivate /imited consists of the following step2down subsidiaries. (a! India Infoline ,istribution Company /imited (,istribution of 9etail /oan $roducts! (b! )oney line Credit /imited (Consumer -inance! (c! India Infoline 3ousing -inance /imited (3ousing -inance! II L /A(ia2 Pte Li"ited II-/ (Asia! $te /imited is wholly owned subsidiary which ,has been incorporated in &ingapore to pursue financial sector activities in other Asian markets. -urther to obtaining the necessary regulatory approvals, the company has been initially capitali%ed at 5 million &ingapore dollars.

37

PRODU,TS AND EIUITIES SER=I,ES

India Infoline provided the prospect of researched investing to its clients, which was hitherto restricted only to the institutions. 9esearch for the retail investor did not exist prior to IndiaF Infoline. India Infoline leveraged technology to bring the convenience of trading to the investorFs location of preference (residence or office! through computeri%ed access. India Infoline made it possible for clients to view transaction costs and ledger updates in real time.

PMS

.ur $ortfolio )anagement &ervice is a product wherein an e4uity investment portfolio is created to suit the investment ob"ectives of a client. #e at India Infoline invest your resources into stocks from different sectors, depending on your risk2return profile. This service is particularly advisable for investors who cannot afford to give time or donFt have that expertise Tor day2to2day management of their e4uity portfolio.

Re(earc1
&ound investment decisions depend upon reliable fundamental data and stock selection techni4ues. India Infoline 04uity 9esearch is proud of its reputation for, and we want you to find the facts that you need. 04uity investment professionals routinely use our research and models as integral tools in their work.They choose -ord 04uity 9esearch when they can clear your doubts. 38

,o""oditie(
India Infoline1s extension into commodities trading reconciles its strategic intent to emerge as a one2stop solutions financial intermediary. its experience in securities broking has empowered it with re4uisite skills and technologies. The CompanyFs commodities business provides a contra cyclical alternative to e4uities broking. The Company was among the first to offer the facility of commodities trading in IndiaFs young commodities market (the )CA commenced operations only in >??<!. Average monthly turnover on the commodity exchanges increased from 9s. ?.<N bn to 9s >?.?> bn. The commodities market has several products with different and non2correlated cycles. .n the whole, the business is fairly insulated against cyclical gyrations in the business.

Mortgage( and 1o"e loan(

,uring the year under review, India Infoline ac4uired a =8P stake in )oney tree Consultancy &ervices to mark its foray into the business of mortgages and other loan products distribution. The business is still in the investing phase and at the time of the ac4uisition was present only in the cities of )umbai and $une. The Company brings on board expertise in the loans business coupled with existing relationships across a number of principals in the mortgage and personal loans businesses. India Infoline now has plans to roll the business out. across its pan2Indian network to provide it with a truly national scale in operations.

Per(onal Loan( reedo" to c1oo(e )ro" < )leGi!le option( to repay

/oan against residential and commercial property, 0xpert recommendations, 0asy documentation, Huick processing and disbursal, +o guarantor re4uirement, 0xpert recommendations 0asy documentation, Huick processing and disbursal, +o guarantor re4uirement

39

In'e(t Online
India Infoline has made investing in )utual funds and primary market so effortless. All you have to do is register with us and thatFs all. +o paperwork no 4ueues and +o registration charges.

In'e(t In M
India Infoline offers you a host of mutual fund choices under one roof, backed by in2 depth research and advice from research house and tools configured as investor friendly.

Apply In IPOH(
:ou could also invest in Initial $ublic .ffers (I$.Fs! online without going through the hassles of filling A+: application formU $aperwork.

SMS Stay connected to t1e "arket

The trader of today, you are constantly on the move. @ut how do you stay connected to the market while on the moveV &imple, subscribe to India InfolineFs &tock )essaging &ervice and get )arket on your )obileU

T1ere are t1ree product( under SMS Ser'ice #

)arket on the move. @est of the lot. KA& (Kalue Added &ervice!

In(urance
An entry into this segment helped complete the clientFs product basketL concurrently, it graduated the Company into a one2stop retail financial solutions provider. To ensure maximum reach to customers across India, we have employed a multi pronged approach and reach out to customers via our +etwork, ,irect and Affiliate channels. -ollowing the opening of the sector in 57772>???, a number of private sector insurance service providers commenced operations aggressively and helped grow the market.. The CompanyFs entry into the insurance sector derisked the Company from a predominant dependence on broking and e4uity2linked revenues. The annuity based 40

income generated from insurance intermediation result in solid core revenues across the tenure ofthe policy.

;ealt1 Manage"ent Ser'ice

Imagine a financial firmF with the heart and soul of a two2person organi%ation. A world2 leading wealth management company that sits down with you to understand your needs and goals. #e offer you a dedicated group for giving you the most personal attention at every level.

Ne0(letter(
The ,aily )arket &trategy is your morning dose on the health of the markets. -ive intra2 day ideas, unless the markets are really choppy coupled with a brief on the global markets and any other cues, which could impact the market. .ccasionally an investment idea from the research team and a crisp round up of the previous dayFs top stories. ThatFs not all. As a subscriber to the ,aily )arket &trategy, you even get research reports of India Infoline research team on a priority basis. The India Infoline #eekly +ewsletter is your flashback for the week gone by. A weekly outlook coupled with the best of the web stories from India Infoline and links to important Investment ideas, /eader &peak and features are delivered in your inbox every -riday evening.

EJuitie(
India Infoline provided the prospect of researched investing to its clients, which was hitherto restricted only to the institutions. 9esearch for the retail investor did not exist prior to India Infoline leveraged technology to bring the convenience of trading to the investorFs location of preference (residence or office! through computeri%ed access. India Infoline made it possible for clients to view transaction costs and ledger updates in real time.

41

O'er t1e la(t )i'e year(- India In)oline (1arpened it( co"petiti'e edge t1roug1 t1e )ollo0ing initiati'e(#

Multi$c1annel deli'ery "odel#

T1e Company is among the few financial intermediaries in India to offer a complement of online and offline broking. The CompanyFs network of branches also allows customers to place orders on phone or visit our branches for trading.

Integrated "iddle and !ack o))ice#

The customer can trade on the @&0 and +&0, in the cash as well as the derivatives segment all through the available multiple options of Internet, phone or branch presence.

Multiple$trading option(#
The Company harnessed technology to offer services at among the lowest rates in the business. )embershipJ GThe Company widened client reach in trading on the domestic and international exchanges.1

Tec1nology#
The Company provides a prudent mix of proprietary and outsourced technologies, which facilitate business growth without a corresponding increase in costs.

,ontent#
The Company has leveraged its research capability to provide regular updates and investment picks across the short and long2term.

Ser'ice#
Clients can access the customer service team through various media like toll2free lines, emails and Internet2 messenger chat for instant 4uery resolution. The CompanyFs customer service executives proactively contact customers to inform them of key changes and initiatives taken by the Company. @usiness #orld rated the CompanyFs customer service as F@estF in their survey of online trading sites carried out in ,ecember >??<.

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:ey )eature(
)embership on the @ombay &tock 0xchange /imited and the +ational &tock 0xchange. 9egistered with the +&,/ as well as C,&/ as a depository participant, providing a one2stop solution for clients trading in the e4uities market. @roking services in cash and derivative segments, online as well as offline under the brand of 8paisa.com $resence across 57 states through a 5== strong branch network, with =8,??? online registered users. F $rovision of free and world2class research to all clients. PILLARS O T@E OR&ANIKATION Enlike others, India Infoline has the concept of an Investment Team. The brains behind all the investment strategies and decisions regarding #ealth )anagement &ervices areJ

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;OR:IN& O BRO:IN& INDUSTR> ;%R%T%II L

DEMAT A,,OUNT
,e2mat account is a safe and convenient means of holding securities "ust like a bank account is for funds. Today, practically 77.7P settlement (of shares! takes place on ,e2mat mode only. Thus, it is advisable to have a @eneficiary .wner (@.! account to trade at the exchanges.

Bank Account =( De$"at Account

Ba(i( O) Di))erentiatio n or" o) @olding(LDep o(it( U(ed )or

S% No%

Bank Account

De$"at Account

6%

-unds &afekeeping of money Transfer of money (without actually handling money! A bank of choice

&ecurities &afekeeping of shares Transfer of shares (without actually handling shares! A ,$ of choice (can be a bank! )andatory (effective from April ?5, >??;! +o interest accruals on securities held in demat account

4%

8%

acilitate( ;1ere to open ReJuire"ent o) PAN Nu"!er Intere(t accrual on 1olding( Mini"u" !alance reJuire"ent

<%

?%

+ot )andatory Interest income is sub"ect to the applicable rate of interest AH@W maintenance is specified for certain bank accounts

B%

C%

+o such re4uirement

44

D%

Eit1er or Sur'i'or )acility

Available

+ot available

AIB 2 Average Huarterly @alance

&. +o. 6% 4%

@A&I& .&I)I/A9IT: Security and ,on'enience Nu"!er o) account( Tran()er o) depo(it( /)und( or (ecuritie(2 P1y(ical tran()er o) "oneyL(ecuritie ( No"ination acility

$A9TICE/A9& @oth are very safe and convenient means of holding depositsIsecurities +o legal barrier on the number of bank or demat accounts that can be opened -undsIsecurities are transferred only at the instruction of the account holder

8%

<%

$hysical transfer of moneyIsecurities is not involved

?%

Available

45

Bene)it( O) De$"at Account # 5. A safe and convenient way of holding securities (e4uity and debt instruments both!. >. Transactions involving physical securities are costlier than those involving demateriali%ed securities ("ust like the transactions through a bank teller are costlier than AT) transactions!. Therefore, charges applicable to an investor are lesser for each transaction. <. &ecurities can be transferred at an instruction immediately. N. Increased li4uidity, as securities can be sold at any time during the trading hours (between 7J88 A) to <J<? $) on all working days!, and payment can be received in a very short period of time. 8. 9isks like forgery, thefts, bad delivery, delays in transfer etc, associated with physical certificates, are eliminated. ;. $ledging of securities in a short period of time. =. 9educed paper work and transaction cost. 6. .dd2lot shares can also be traded (can be even 5 share!. 7. +omination facility available. 5?. Any change in address or bank account details can be electronically intimated to all companies in which investor holds any securities, without having to inform each of them separately.

46

55. &ecurities are transferred by the ,$ itself,so no need to correspond with the companie.

Opening a De$"at Account

To start dealing in securities in electronic form, one needs to open a ,e2mat account with a ,$ of his choice. An investor already having shares in physical form should ensure that he gets the account opened in the same set of names as appearing on the share certificateL otherwise a new account can be opened in any desired pattern by the investor.

47

&etting (tarted 5. Choose a ,$ >. -ill up an account opening form provided by ,$, and sign an agreement with ,$ in a standard format prescribed by the depository. <. ,$ provides the investor with a copy of the agreement and schedule of charges for his future reference. N. ,$ opens the account and provides the investor with a uni4ue account number, also known as @eneficiary .wner Identification +umber (@. I,!.

Docu"ent( to !e attac1ed $assport si%e photographs $roof of residence ($.9! 2 Any one of $hoto 9ation Card with ,.@ I $hoto ,riving /icense with ,.@ I $assport copy I 0lectricity bill I Telephone bill $roof of identity ($.I! 2 Any one of $assport copy I $hoto ,riving /icense with ,.@ I Koters I, Card I $A+ Card I $hoto 9ation Card with ,.@ $A+ card

Note#

The agreement re4uired to be signed by the investor details the rights and duties of the investor and ,$. ,$ may revise the charges by giving a <? days prior notice. &0@I has rationali%ed the cost structure for inaction by removing account opening charges, transaction charges for credit of securities and custody charges, effective from Manuary >6, >??8.

MaGi"u" Nu"!er o) 1older( in a De$"at Account

A maximum of three persons are allowed to open a "oint ,e2mat account in names.

DEMATERIALISATION
,emateriali%ation is the process of converting physical shares (share certificates! into an electronic form. &hares once converted into demateriali%ed form are held in a ,e2mat account. 48

De"aterialiMation Proce((J
An investor having securities in physical form must get them demateriali%ed, if he intends to sell them. This re4uires the investor to fill a ,e2mat 9e4uest -orm (,9-! which is available with every ,$ and submit the same along with the physical certificates. 0very security has an I&I+ (International &ecurities Identification +umber!. If there is more than one security than the e4ual number of ,9-s has to be filled in.

The whole process goes on in the following mannerJ22

49

Re"ateriali(ation
The process of getting the securities in an electronic form, converted back into the 50

physical form is known as 9ematerialisation. An investor can remateriali%e his shares by filling in a 9emat 9e4uest -orm (99-!. The whole process goes on as followsJ 222

Depo(itory $ An organi%ation that facilitates holding of securities in the electronicform and enables ,$s to provide services to investors relating to transaction insecurities. There are two depositories in India, namely +&,/ and C,&/. As per a&0@I 51

guideline, the minimum net worth stipulated for a depository is 9s.5?? crore.

NSDLL,DSL $ The securities are held in depository accounts, like the funds are held in bank accounts. There are two depositories in India namely +&,/ and C,&/. +&,/ (+ational &ecurities ,epository limited! was established in August 577; and is the first depository in India. C,&/ (Central ,epository &ecurities /imited! is the other depository and was established in 5777. DP /Depo(itory Participant2 $ A ,epository $articipant can be a financial organi%ation like banks, brokers, financial institutions, custodians, etc., acting as an agent of the ,epository to make its services available to the investors. There are a total of 5<<N ,$s registered with &0@I, as on )arch <5, >??7 and each ,$ is assigned a uni4ue identification number known as ,$2I,. Trading accountJ It is that type of account with the help of which a ,e2)at account holder can buy or sell shares. India Infoline /td. $rovide their customer software Trade Terminal for trading by free of cost and unlimited number of scripts. In India in)o line !ot1 de"at and trading aLc are opened (i"ultaneou(ly

or"alitie( reJuired )or opening o) De$Mat and Trading aLc in India In)oline Ltd.

or Indi'idual 52

$A+ Card(compulsory for all "oint holders! Address proof of all "oint holders &pecimen copy of che4ue

or NRI
-oreign and Indian Address proof $A+ Card(compulsory! @ank aIc indicating type of aIc as +90I+9. &pecimen copy of che4ue

or @U
Address proof and identity proof of karta $A+ Card of 3E-(compulsory! &pecimen copy of che4ue ,eclaration giving details of the family members of the 3E- with their names, date of birth B relationship with the karta.

or Minor
)inor $A+ Card @irth certificate of minor Address and identity proof of guardian &pecimen copy of che4ue

Product( and Ser'ice( o))er !y India In)oline ltd

53

A product for every needJ 8paisa.com is the most comprehensive website, which allows you to invest in &hares, )utual funds, ,erivatives (-utures and .ptions! and other financial products. &imply put we offer you a product for every investment need of yours.

6% Trading in (1are(#
8 paisa.com offers you various options while trading in shares.

Cash Trading #
This is a delivery based trading system, which is generally done of taking delivery of shares or monies. with the intention

Margin Trading #
:ou can also do an intra2settlement trading upto 8 to < ti"e( your available funds, wherein you take long buyI short sell positions in stocks with the intention of s4uaring off the position within the same day settlement cycle.

Spot Trading #
This facility can be used only for selling your demat stocks which are already existing in your demat account. #hen you are looking at an immediate li4uidity option, FCash on &potF may work the best for you, .n selling shares through Gcash on spotG, money is credited to your bank aIc the same evening B not on the exchange payout date.

BTST :
@uy Today &ell Tomorrow (@T&T! is a facility that allows you to sell shares even on 5st and >nd day after the buy order date, without you having to wait for the receipt of shares into your demat account.

,all NTradeN #
Call+TradeX allows you to call on a local number in your city B trade on the telephone through our Customer &ervice 0xecutives. This facility is currently available in over 11 major states across India. 54

Trading on NSELBSE # Through 8paisa.com, you can trade on NSE as well as BSE. Market Order # :ou 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. Li"it Order # Allows you to place a buyIsell order at a price defined by you. The execution can happen at a price more favorable than the price, which is defined by you, limit orders can be placed by you during holidays B non market hours too.

4% TRADE IN DERI=ATI=ES#
UTURES Through 8paisa.com, you can now trade in index and stock futures on the +&0. In futures trading, you take buyIsell positions in index or stock(s! contracts having a longer contract period of up to < months.Trading in -ETE90& is simpleU If, during the course of the contract life, the price moves in your favor (i.e. rises in case you have a buy position or falls in case you have a sell position!, you make a profit. $resently only selected stocks, which meet the criteria on li4uidity and volume, have been enabled for futures 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. -or 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 buyIsell position on indexIstock options, you have to place certain P of order value as margin. #ith options trading, you can leverage on your trading limit by taking buyIsell positions much more than what you could have taken in cash segment. The @uyer of a ,all Option has the 9ight but not the .bligation to $urchase the Enderlying Asset at the specified strike price by paying a premium whereas the &eller of the Call has the obligation of selling the Enderlying Asset at the specified &trike price.

55

The @uyer of a Put Option has the 9ight but not the .bligation to &ell the Enderlying Asset at the specified strike price by paying a premium whereas the &eller of the $ut has the obligation of @uying the Enderlying Asset at the specified &trike price. @y paying lesser amount of premium, you can create positions under .$TI.+& and take advantage of more trading opportunities.

8% In'e(ting in Mutual )und(#

8paisa.com brings you the same convenience while investing in )utual funds also 2 3assle free and $aperless Investing. #ith the inclusion of -idelity )-, you can now invest on2line in 57 mutual -unds through India Infoline. $rudential II-/)-, M) )-, Alliance )-, -ranklin Templeton )-, &undaram )-, @irla &un /ife )-, 3,-C )-, $rincipal )-, ETI )-,9eliance )-,*otak )-,Tata )-,,&$ )errill /ynch )-, I+ )-,C3./A )-,,eutsche )-,3&@C )- and &tandard Chartered )- are the )utual -unds available for investment. :ou can invest in mutual funds without the hassles of filling application forms or any other paperwork. :ou need no signatures or proof of identity for investing. .nce you place a re4uest for investing in a particular fund, there are no manual processes involved. :our bank funds are automatically debited or credited while simultaneously crediting or debiting your unit holdings. :ou also get control over your investments with online order confirmations and order status tracking. et to know the performance of your investments through online updation of )- portfolio with current +AK.

Rede"ption#
In addition to giving hassle2free paperless redemption, India Infoline offers faster li4uidity. :ou can redeem the mutual fund units through India Infoline. The money will be credited to your bank account automatically < days after the order placement date. S0itc1#

To suit your changing needs you may wish to shift monies between different schemes. :ou can switch your monies online from one scheme to another in the same fund family without any thassles.

56

Sy(te"atic In'e(t"ent plan( /SIP2#

&I$ allows you to invest a certain sum of money over a period of time periodically. Must fill in the investment amount, the period of investment and the fre4uency of investing and submit. India Infoline will do the rest for you automatically investing periodically for you.

Sy(te"atic 0it1dra0al plan#

This allows you to withdraw a certain sum of money over a period of time periodically.

Tran()er$in#

:ou can convert your existing )utual funds into electronic mode through a transfer2 in re4uest.

<% IPO( and Bond( Online#

:ou could also invest in Initial $ublic .ffers (I$.s! and @onds online without going through the hassles of filling A+: application formI paperwork. et in2depth analyses of new I$.s issues (Initial $ublic .fferings! which are about to hit the market and analysis on these. I$. calendar, recent I$. listings, prospectusIoffer documents, and I$. analysis are few of the features, which help you, keep on top of the I$. markets.

?% Per(onal inance#

57

Ese our $ersonal -inance section and get hold of tools that can help you plan your investments, retirement, tax etc. Analyse your risk profile through the Ri(k AnalyMer and get a suitable investment portfolio plan using A((et Allocator.

B%,u(to"er Ser'ice eature(#

#ith HIndia In)olineH you can trouble shoot all your problems online. Address your trading 4ueries on2line through OEa(y MailO. :ou can view and change your profile or password on2line through &eneral Pro)ile option. et details of II-/ Centers, our sales and service offices, across India through !ranc1 !ill( + account(. ee locator. Kiew your Account &tatement and @ill &ummary of your transactions online using Kiew your Digital ,ontract Note( instantly. Kiew various charges through the

Sc1edule option. ive your feedback or viewpoint through the =ie0point online The marketing strategy is such that people are made aware of the of advantages of on2line trading. The other important thing is customer service. If you ask me as to what II-/ is doing in customer service, I would put it succinctly as the ease of allowing trading, back2office operations and seamless connectivity to the bank and the ,$.

Per)ect Port)olio Manage"ent Ser'ice(

Intermediaries and investment consultants for retail, high net worth individuals and corporations helping them leverage the booming Indian economy by profitably participating in Indian 04uity and Commodities )arkets. #e offer customised solutions based on the risk profile of each investor by planning a personalised asset allocation program and effectively utilising various available cash and derivative products (including futures I options and related strategies like spreads, straddles, strangles etc.!

eature( o) II L
AIC opening charge29s.=8?I2 (refundable against brokerage!R 888I2 58

)argin money2 minimum 9s.5?, ???I2 +ame of the software used2 Trader Terminal advance &oftware installation charge2 +il. +o. of scripts provided by the software2 unlimited. )aintainance charge2 +il. 0xposure2 6 to 5? times (intra day! N times (delivery!. +ame of the bank with the help of which customer get the facility of net banking2 3,-C @ank, Axis @ank, ICICI @ank, @ank of @aroda &ervices provided2 04uity, I$., )-, $)&, Commodities, Insurance, #ealth )anagement &ervices, )ortgages. ,$ sells charge2 58 per instruction R service tax. @rokerage2 ?.?5P to.?8P intraday ?.5P to ?.8P deliveries. Transaction 9eport2 sms, daily mail, daily courier, $repaid &cheme2 not available. Types of trading accounts provided2 ,e2)at aIc, Trading aIc , )argin aIc. +etwork2 55N8 branches and 6????? customers.

59

,u(to"er !e1a'ior in relation to (tock "arket

;1o i( a cu(to"erP A cu(to"er refers to individuals or households that purchase goods and services generated within the economy. The word historically derives from Gcustom,G meaning GhabitGL a customer was someone who fre4uented a particular shop, who made it a habit to purchase goods there, and with whom the shopkeeper had to maintain a relationship to keep his or her Gcustom,G meaning expected purchases in the future.

#hy the stock market is called a marketP

A market is a place where goods are bought and sold. The stock market is where people buy and sell one type of product. That uni4ue product is shares of ownership in a company, which are also known as stocks. $otential investors get to choose from many companies that sell a variety of goods, from clothing to medicines to sports e4uipment to toys. #hen people buy and sell stock, itFs called trading. T1e 'ariou( categorie( o) cu(to"er in (tock "arket +ot every person use to invest in stock market nor persons of a particular class invests in stock market .the ma"or type of investors belongs to following categoriesJ @usinessmen &alaried person 9etired person

Be1a'ior o) cu(to"er 0it1 re(pect to t1e 'ariou( categorie( Bu(ine(("en#$

60

They are more likely to take risks in investing because they have previous experience of taking risks in their previous wealth creation. These individuals have a high2risk tolerance and less of a need for security. They also need to feel in control of their investments, often to the extent of becoming highly involved with the running of their investments, researching or becoming overly involved with technicalities. The need for control is related to the fact that they have a strong belief in themselves and their own abilities. .nce they feel they are losing control of an investment situation, their risk tolerance reduces. @y being actively involved and in control, these investors "ee# they are reducing risk. 3owever such involvement may actually be detrimental as it is likely to be a source of irritation to their investment advisor who cannot get on with the business of running their clients affairs due to constant 4uestioning and harassment. The classes of occupation that are likely to be active investors includeJ small business owners who have developed their own businesses rather than inherited, medical surgeons, independent professionals, such as lawyers or accountants, who work for themselves rather than a large firm, entrepreneurs, and self2employed consultants.

Active investors are more likely to get personally involved with the running of their financial affairs, and may believe they know more than their advisor does. They are less likely to delegate the maintenance of those parts of their investment portfolio in which they believe they have experience or have had personal success. 3owever, these individuals are more likely to be contrarian in their stock picking habits and have less need to be completely diversified. Age tends to soften their need to be constantly in control, so that older clients may be more malleable and open to their advisors suggestions.

&o'ern"ent e"ployee( L Salaried per(on#$

To these investors security is more important than risk In addition, certain classes of occupation are more likely to contain passive investors. -or exampleJ2 &tateICentre govt. employees, non2surgical doctors, corporate executives, lawyers and accountants who work in companies. 9easons for this are that these individuals are less likely to have high financial resources at an early stage in their careers, having had to delay earning good salaries in order to study or having to repay student loans. .nce earning a decent wage, they are then more careful with their money, having a greater need for security. Anyone, therefore, with reduced financial recourses is likely to be more risk conscious and, hence, a passive investor. -or these individuals itFs important to hang on to their money.

61

$assive investors make good clients because they tend to trust their financial advisor and are more likely to delegate the running of their financial affairs. And because they are risk averse, they tend to like diversified portfolios of investments in 4uality companies or investment products. 3owever, they can believe that an investment is more risky than it is, which may keep them out of potentially lucrative opportunities. $assive investors are also more likely to need the approval of others and are unlikely to take a first step into unknown investment territory by being a contrarian. Conse4uently, they are more likely to follow the investment herd when it comes to stock market investment and stick to following the trend.

Retired per(on#$
These investor are cautious and intent on safeguarding their wealth, shunning volatility or excitement. those who take the path of least resistance, looking primarily for security and safety in their investments and doing what has worked previously.

62

,USTOMER BE@A=IOR ;IT@ RESPE,T TO INDIA IN OLINE LTD

;1o are t1e cu(to"er( in INDIA IN OLINE LTDP All those person who had there demat account open with India Infoline ltd are called the customer of India Infoline ltd. =ariou( categorie( o) cu(to"er de)ined !y India In)oline ltd I+,IA I+-./I+0 /T, classify there customer on the basis of there response to stock market. &uch as if a customer is regularly trading in stock market through it1s demat account then that customer is treated as T0H (trading on e4uity! customer. In the same way other categories of customer are NT /non trader2# All those customer who had open there demat account with India Infoline ltd but not started trading in stock market through that demat account after < month of its account opening date those customer are treated as non trader by India Infoline ltd. ST /(top trader2 Those entire customers who had traded with its account once or twice and after that stop trading through its account due to some reasons are known as stop traders.

63

ANAL>SIS S;OT analy(i( o) India In)oline

;@AT IS S;OT ANAL>SISP A scan of the internal and external environment is an important part of the strategic planning process. 0nvironmental factors can be classified as Strengt1( /S2 or ;eakne(( /;2- and those external to the firm can be classified as OPPURTUNIT> /O2 or T@REATS /T2% &uch an analysis of the strategic environment is referred to as a

S;OT ANAL>SIS%
The &#.T analysis provides information that is helpful in matching the firm1s resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how S;OT ANAL>SIS fits into an environmental scanJ

64

ENVIRONMENTAL SCAN

INTERNAL ANALYSIS

EXTERNAL ANALYSIS

STRENGTHS

WEAKNESS

OPPURTUNITIES

THREATS

S;OT ANALSIS RAME;OR:

Strengt1(#
A firm1s strengths are its resources and capabilities that can be used as a basis for developing acompetitive advantage. 0xamples of such strengths includeJ

65

 >2in25 account integrates your broking and demat accounts. All accounts are from II-/ and very well integrated. This feature makes II-/ the most interesting player in online trading facility. There is absolutely no manual interfere re4uire. This is truly online trading environment. Enlike most of the online trading companies in India which re4uire transferring money to the brokerFs pool or towards deposits, at II-/ you can manage your own demat. Investment online in I$.s, )utual -unds, .I @onds, and $ostal &avings &chemes all from one website. eneral Insurance is also available from II-/ /ombard. Trading is available in both @&0 and +&0 ood reputation among customers as I+,IA I+-./I+0 ltd provides a relationship manager to every client. Cost advantages from proprietary know how. 0xclusive access to high2grade natural resources. .nline trading platform ,iverse @ranch +etwork provides ample opportunities to penetrate deep into the existing B untapped market. Its subsidiaries have grown from a single location to a nationwide network spread over various cities. $ersonal relationship manager who will help assist the clients in share trading +o custodial charge It does not keep any condition as to collect minimum amount of brokerage from its clients 04uity analysis report to support the investment decision of its clients Trading via branch network, telephones and internet account i.e. both online and offline &trong market presence and increased market share leading to a virtuous cycle of growth and profitability The incentive model is created such that it leads to generation of higher revenue for the organi%ation. This acts as a motivating factor for the employees to perform well. Induction of new employees through an extensive computer based training module that e4uips them to service their clients efficiently.

66

 An added advantage of I+,IA I+-./I+0 ltd is its strong brand name, which helps its sales force to sell the products.

;eakne((#
etting access to India Infoline website during market session can be frustrating. II-/brokerage is high. +ot all stocks are available under )argin $lus Too many people try to eat the same piece of pie i.e. people employed in I+,IA I+-./I+0 ltd hit the same area to target their customers. There should be a separate set of staff working in fields and trading on behalf of their clientsJ I+,IA I+-./I+0 ltd has same set of staff who are making clients and also trading on behalf of clients this hinders the relationship manager to provide ade4uate and necessary tips to the clients and at times the managers are not in the position to answer the 4uestions of their clients relating to the current market position as they are on fields. ,ue to the continuous need to meet the targets, some of the 9elationship managers crack under pressure and thus leave the organi%ation There is no limit to the maximum number of clients that a 9elationship manager can handle. This affects the level of service provided to the clients who are not volume traders.

Opportunitie(#
The external environmental analysis may reveal certain new opportunities for profit and growth some examples of such opportunities includeJ The market will gradually evolve into two segments, where there will be self2directed traders and those who seek advice for making their investment decisions. The latter set will prefer to speak to the broker, get his advice and then trade through certain channels. &o both have to co2exist, as is the case in almost all the mature markets &cope of online trading on @&0 An unfulfilled customer need. )arket expansion i.e. opening branches at untapped areas 67

 The Capital market in the last few years has turned out to be one of the favorable avenues for the retail investors. This is due to the performance of the Indian Industry in various sectors and the 0conomy in general. 0ven the future outlook looks promising )arket seems favorable for commodities trading. Arrival of new technologies

T1reat(#
Changes in the external environmental also may present threat to the firm some of the examples include Companies like 9elegates &hare khan, and $rivate @rokers are ma"or threats to II-/. /ocal brokers capable of charging lower brokerage Industry competitors vying for the same target segment. Changes in &0@I guidelines B other tax implications. overnment 9egulations &hifts in consumer tastes away from firm1s products 0mergence of competitor company who charging less brokerage

68

RESEAR,@ MET@DOLO&>
INTRODU,TION
9esearch in common parlance refers a search for knowledge. .nce can also define research as a scientific and systematic search for pertinent information on a specific c topic. Infect, research is an art of scientific investigation. '9esearch as a systemati%ed effort to gain new knowledge( 9esearch is an original contribution to the existing stop of knowledge for it advancement. It is the pursuit of truth with help of study observation comparison and experiment insured research for knowledge through ob"ective and systematic method of finding solution to a problem is research. 9esearch refers to the systematic method consisting of enunciating the problem, formulating the hypothesis, collection of the facts. 9esearch is a process of steps used to collect and analy%e information to increase our understanding of a topic or issueG. It consists of three stepsJ $ose a 4uestion, collect data to answer the 4uestion, and present an answer to the 4uestion.

Title O) T1e Study

'9esearch on capital

mark t !it" INDIAINFOLINE

LTD#$
O!jecti'e O) T1e Study
To study the company profile of Indiainfoline /td. To study customer satisfaction level of Indiainfoline /td. To study the various services provided by Indiainfoline /td. To know the expectation of Indiainfoline /td Customers. 69

Sa"ple#$
The sample was selected randomly from the people of different fields another survey and telephonic interview was done among the customers of II-/.

Sa"ple (iMe#$
Total sample si%e was restricted to 5?? for all segments.

Scope o) t1e (tudy#$

The study helps me to know the state of mind of the investors B their expected charges regarding @rokerage, 9eturn, Annual maintenance charges, and so on as well as their investment preferences regarding capital market. The @rokerage house is also benefited as it come to know what an individual investor expects when he or she is going to invest in capital market, to which extent the customer is satisfied with the II-/. The firm will also come to know about the investors mindset about their investment in primary market or secondary market. @y this study the firm will come to know about the lagging areas and the loopholes and can overcome them and it can also formulate various efficient competitive strategies with the help of competitive analysis to outrage their competitors.

@ypot1e(i(
A hypothesis is a hypothetical statement regarding the relation between two or more variables. They must be statements of the relationship between variables and they must carry clear implications for testing the stated relations. A broad hypothesis is given below from which more focused hypothesis may be derived 'Car manufacturers have ignored the preferences of women in car design(. @y reducing 70

the problem to a hypothetical statement, the problem has become more focused and the hypothesis can be tested through research methods.

Re(earc1 Met1odology
The pro"ect started by approaching India Info line /td to know about the capital market, working of broking industries along with the competitive analysis of India Info line with reference to the other broking companies operating in the same area. The studies also focus on consumer behavior towards stock markets, their investment preference towards capital market and their expectations from a brokerage house . This will be reflected from the 4uestions contained in the 4uestionnaire discussed later in the pro"ect report. The survey was also conducted to know the state of mind of the investors who wanted to invest in the stock market B also to know the attitude and preference of the prospective investors regarding India info line. A Huestionnaire is designed to collect the needed information regarding the survey. -or the survey I have taken =? existing and prospecting investors, I got the 4uestionnaire filled by them to know the state of mind of the investors who wanted to invest in the stock market, their expected charges regarding @rokerage, 9eturn, Annual maintenance charges B also to know the attitude and preference of the prospective investors regarding capital market. 9esults are cautiously viewed as sample is coming from a specific population. The response that is generated during this exercise is converted in the form of percentage to have a comparative outlook. As the number itself cannot explain the true picture. These percentages are then represented through the simple tools like @ar graph, $ie charts etcY

Met1od o) data collection#

All the data was collected through one to one interview and telephonic interview. All the 4uestions discussed below were explained to the respondent proper care has been 71

taken to see that respondent understand the 4uestion clearly and answer to in without any hurry. All the respondents were interviewed at their convenience so that there is no chance that the interviewer comprehends. The responses were clearly taken without suffering from any ambiguity.

Type o) Data
In )y pro"ect I have used both $rimary B &econdary data. or Pri"ary Data# 2

I made a 4uestionnaire and the 4uestionnaire filled by the prospective investors who wanted to invest in the capital market. ,ata .bserved or collected directly from first2 hand experience data is called primary data. Direct per(onal o!(er'ation#$ This is a very general method of collecting primary data. 3ere the investigator directly contact the informants, solicits their cooperation and enumerates the data. The Information is collected by direct personal interviews. Indirect oral Inter'ie0#$ Information are not collected directly from the source but by interviewing persons closely related with the problem. This method is time saving and involves relatively less cost. Iue(tionnaire Met1od#$ 0specially when the in4uiry is 4uite extensive. It involves preparation of a list of 4uestions relevant to the in4uiry and presenting them in the form of a booklet, often called a 4uestionnaire. or Secondary DataJ 2

I have taken the information from the official website of India Info line ltd. that is www.indiainfoline.com, 8paisa.com, maga%ines, "ournals, other companies1 websites 72

etc. $ublished data and the data collected in the past or other party is called secondary data.

Internet#$ ,ata from previous pro"ects was gathered from the internet such as &ecurity market surveys from maga%ines. The data may not be directly relevant to the topic under study but was of immense value for planning out the study. &ome of the data available may be outdated but can be useful for forming the basis of our study. Literature# Collect literature and reviews to get a general overview of the &ecurity market in India. &tudy the existing reports undertaken for assessing the traits of Investor. Customer -eedback -orms#$ I have collect data from customer feedback forms, which are collected on2premises. Customer satisfaction survey (i.e. service response time, delivery timing, professionalism!

Li"itation o) t1e (tudy

Customers were in hurry so they were not interested to talk and also to fill the

4uestionnaire.
&ome time customers fill half of the 4uestionnaire and walk out of the office. &ome customer feels shy in filling the 4uestionnaire and talking about their

investment behavior. 73

 )ost of the customers are not interested to give the answer of all the 4uestions, so it generally creates a huge problem at that time. The &ample si%e used for the research was small. Analysis of the data might differ depending on the statistical tools and techni4ues used.

ANAL>SIS O ,USTOMER BE@A=IOUR H5 what is your professionV a! overnmentI &alaried employees b! @usinessman c! 9etired person

74

Category 0mployees @usinessmen 9etired Total

+o. .f $eople N< >= <? 5??

$ercentage N<P >=P <?P 5??P

Interpretation#
N<P of the customer surveyed in &ri anganagar who visited the branch of India Infoline ltd belongs to ovt. employees or salaried person >=P are businessmen and rest are the <?P retired persons.

H> ,o you like invests your moneyV a! :es b! +o

75

Category :es +o Total

+o. .f $eople =8 >8 5??

$ercentage =8P >8P 5??P

Interpretation#
Among the various people &urveyed only =8 were interested in investing there money rest >8 were not interested to invest there money.

H< In which market does you invest your moneyV a! $rimary market b! &econdary market c! .ther

Category $rimary &econdary

+o1s of $eople >; N< 76

$ercentage >;P N<P

.ther Total

<5 5??

<5P 5??P

Interpretation#
)ost of the people are afraid of investing there money in secondary market and they use to invest there money in factors of primary market or in various post office schemes.;7P of people are interested in investing in stock market, others do invest in )utual funds, banks, post office etc. . HN. ,o you have your own demat accountV a! :es b! +o

Category :es +o Total

+o. .f $eople ;< <= 5??

$ercentage ;<P <=P 5??P

Interpretation#
77

 Among those who are interested in stock market trading only ;<P of them have demat aIc 9est of them either has shares in physical form or do trades through their broker1s demat aIc

H8 ,o you have your demat account with India Infoline ltdV a! :es b! +o

40%

yes no 60%

Category :es +o Total

+o. .f $eople ;? N? 5??

$ercentage ;?P N?P 5??P

Interpretation#
78

 ;?P are person surveyed are the existing customer of India Infoline ltd and rest N?P do not have their demat account with India Infoline ltd.

H;. ,o you know about online share tradingV (a! :es (b! +o

Category :es +o Total

+o. .f $eople ;8 <8 5??

$ercentage ;8P <8P 5??P

Interpretation#
79

;8P of the person having their demat account know about the online

trading facilities but still <8P of the people are not aware of this facility.

H=. .ther then the demat account of India Infoline ltd with which other brokage house do you have your demat accountV a! *arvy b! 9eligare c! &harekhan d! Aanand 9athi

Karvy

Religare

S hare khan

15% 40% 30% 15%

Company *arvy 9eligare &hare khan Aanand 9athi Total

+o. .f $eople 58 <? 58 N? 5?? 80

$ercentage 58P <?P 58P N?P 5??P

Interpretation#
<?P of AICs are opened in 9eligare 58P of AIC in *arvy 58P of AICs in &harekhan N?P of AICs in Aanand 9athi H6. 3ow do you invest your moneyV a! 04uity b! )utual funds c! I$.s d! .thers
50% 45% 40% 35% 30% 5% 0% 15% 10% 5% 0% 0 1 3 4 5 i!o"s, 15% mutualfunds, 5 % other, 0% equity, 40%

Category 04uity mutual funds

+o. .f $eople N? >8 81

$ercentage N?P >8P

I$.1s other Total

58 >? 5??

58P >?P 5??P

Interpretation#
The survey show that N?Pinvest money in e4uity,>8P mutuslfunds,>?Pothers and 58PIpo1&.

H7. #hat type of trading do you preferV a! ,elivery based b! Intraday c! )argin trading

Category ,elivery Intraday )argin based

@usinessmen 58P ;8P >?P

&alaried N8P >8P <?P

9etired 8?P >?P <?P

82

Interpretation#
The survey show that ;8P of the businessmen do intraday trading and >?P does margin based trading only 58P of the businessmen does delivery based trading as they like to earn more in less time . .n the other hand N8P and 8?P of the salaried and retired person respectively like delivery based trading very few of them like to do intra day or margin based trading as they mainly prefer the safety of there money which is possible in long term trading . H5?. 3ow do you choose to invest in a particular type of securities at a particular time V a! ,o analysis of the market by yourself b! Ask some of your colleagues c! Take stock tips from media d! Information given on the website of India Infoline ltd

Category &elf analy. -rom Colleagues Analyst

+o..f $eople <? <= >> 83

$ercentage <?P <=P >>P

#ebsite Total

55 5??

55P 5??P

Interpretation#
.&urvey show that <=P people invest ask to some of your colleagues,<?P self analy,>>P analyst and rest 55P from website. H55 are you satisfied with India Infoline ltd as a brokage houseV a! :es b! no

# %o es 0%

Category :es +o Total

%o .f $eople +o. $% =< >= 5?? # es $3%

$ercentage =<P >=P 5??P

Interpretation#
.nly a proportion of =<P of people are satisfied with India Infoline ltd rest >=P people are not aware of the various facilities provided by India Infoline ltd such as research tips, margin ,free software facility, services of 9)1s etc that is why they are not satisfied with I+,IA I+-./I+0 ltd.

84

INDIN&S
About stock market#$
This analysis contributes to our understanding that every investor is different, with different financial goals, different tolerances to risk, different personal situations and different desires. The .b"ectives being the type of return being sought, while constraints include factors such as time hori%on, how li4uid the investor is, any personal tax situation and how risk is handled. The analysis also show that the ma"ority of investors are more probable to sell (buy! stocks in a company after a positive (negative! earnings surprise, and are biased towards buying after the disclosure of new financial statement information. /arge investors, on the other hand, show behavior opposite to that of the ma"ority of investors. #e suggest investor overconfidence and asymmetric information as possible explanations for the documented behavior.

Eneducated mass do not have much information about the stock market but invest in stock market according to the saying of other.

@usinessmen make more investment in stock market whereas a salaried investors are busy at work during the week and consider trading decisions mainly during the weekend and conse4uently they are more likely to trade (either buy or sell! on )ondays.

There is a fear factor among general public in concerned with share market. They think it is speculation.

85

3ow to analy%e e4uity.

3ow to analy%e index value J2 Z current market capitali%ation A base value. @ase market capitali%ation 3ow to calculate net asset valueJ2 &um of market value of shares R /i4uid assets R ,ividendsIinterest accrued 2 amount due on unpaid assets 2 0xpenses accrued but not paid +o. of shares outstanding

A@.ET I+,IA I+-./I+0 /T,#$

5. According to the survey most of the customers of 'Infoline /td(says that it is pocket friendly. >. Coming to faith =?P say IndiaInfoline /td is better than othersstock brokers due to customers satisfaction. <. /ack of promotional activities undertaken by IndiaInfolinesecurities /td. N. )ain purposes of investments are returns B li4uidity. 8. Investors take risk as well as returns into their mind while making the investment. ;. @usinessmen are more interested in the stock market than the others. =. Commodity market is less preferred by the investors, might because of less awareness about commodity market. 6. $eople want to invest their money in the security market but the have not the proper knowledge. 7. $eople pay more emphasis on brokerage than service provide by brokerage houses.

86

INDIN&S
$eople are not aware of using the online trading facilities INDIA IN OLINE LTD has captured the market because of its brand name and the brand awareness in the minds of the consumers. @ut people are yet to know about its excellent service which would definitely help the company to capture more and more new customer. Customer feel that the brokage charged by I+,IA I+-./I+0 /T, 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 Infoline ltd to its customer which make it uni4ue . )any clients did not know about the change of 9). This leaves a bad impression on the concerned client, damaging the reputation of the firm )any time clients are not given confirmation after the trade &ome 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.

87

90C.))0+,ATI.+ #orking of @ack .ffice

There should be a person solely responsible for checking the 9egistration *it to ensure that it is complete in all respects and there are no re"ections. The policies related to Trading and ,$ should be consistent and in congruence with each other. The time lag between giving in the kits for registration and opening the account should be reduced to ensure speedy and efficient service. Any change in the policies of company should be given at least one month notice before implementing it. A)ter getting Lead( attention (1ould !e "ade on )ollo0ing point(# 5. The calls made should be more informative and assertive. >. The 9) should provide an in depth demonstration of the software and client should be assisted regularly. <. $rovision of a manual for online clients for ease of operation. N. Time lag between the complaints put and follow up should be reduced. 8. ,atabase should be verified properly, so that repeated entries do not occur. This will reduce inconvenience to the clients, who complained about multiple calls received.

Analy(i( o) ,lient Interaction /Already eGi(ting client(2 Client interaction and after sales services are the most crucial aspects for any business. #e carried out a study to gauge the level of satisfaction of the clients with the services of India Infoline ltd. This helped us in understanding why India Infoline ltd has become one of the most trusted brands within a short span of its commencement. 5. The 9elationship )anagers (9)! should be made responsible to ensure that the clients are well catered, thus, reducing switching over of a lot of time lag is there 88

between the follow up and the change of 9), as a result, the calls could not leave a positive impact on the clients, so contacted. Therefore, follow up should be done fast without any time lag. >. The customers, who were satisfied with the services, appreciated this kind of follow up. Therefore, such follow2ups are done from time to time, to gain customer confidence. <. )any clients are not given confirmation after the trade, so they should be given due information about it. N. Complete net knowledge should be given to clients so that they may not find any difficulty in login of their AIC on the website of India Infoline ltd . 8. 9outing, thereby reducing loss of business to the firm.

89

,ON,LUSION

Indian economy is growing faster. This is one of the best growing economies among the world. :ou can say the best emerging economy of the world. &tock market is the reflection of economy. +aturally stock market of India is roaring. &ensex (.ne of the best Index of @ombay &tock 0xchange! has climbed from <,??? to >>,??? in last five years and it is believed that it will reach N???? in coming years. +ow a dayFs every investor and trader en"oying sweet taste of stock. )ore all less every day many stock prices have been increasing. &ome of them are heating the upper circuit (8P,5?P>?P!. #hile making an investment in Indian (tock "arket there are lots of thing you should consider before it. I will guide you most important thing and tips that you can implement while making any investment in stock market of India. These stock market tips and tricks are based on many years of expertise experience and as a professional expert in Indian stock market. These are the &tock market secrets........ @uy at low and sell at high # $ This is way to make money in stock market that you should buy at lower prices and should sell at higher prices. It determines the success and failure of an investor in stock market of India Current Trend of &tock )arket : $ As per current trend of stock market it has been seen that once stock market rise at higher speed it down also with same speed and if stock market have gone down there is more possibilities of getting up. This is the current market trends but it can be change in future. :eep patience# $ $atience is also plays a vital role in your winning and losing. In stock market many people1s take immediate decisions which can result in big losses later on. This is the nature of stock market every step should be take after a deep thinking and consideration on it. -rom the above survey B comparison charts J #e can conclude that the ma"ority of prospective investors from the sample i.e.=?P does not want to invest in the capital market because either they don1t have sufficient knowledge about stock market or they don1t have time or they feel that it is risky to invest in stock market. At last from my study I would like to conclude that India Infoline ltd is growing at a good pace. It is rapidly increasing its market share by capturing new consumers.

90

3owever the beat and the uni4ue 4ualities of the company are yet to be known by the people. The investors must be informed about its facilities like >in5 account, margin based trading, research tips given on website. 0ven though there are lots of opportunities to expand B progress for the company but still it is making sufficient profit. /ast but not the least, India Infoline ltd is customer friendly and this obviously makes a value addition to any company in this competitive environment. )y experience with this company as a summer trainee was a overwhelming, which gave me a lot of knowledge and idea about stock market and the brokage house. @esides I came to know the difference between the class room study and the real work done in the market to make a product rise in the market

91

A$$0+,IC0&
,u(to"er !e1a'ior analyMer Jue(tioner Na"e# QQQQQQQQQ% ,ontact no%QQQQQQ%%
Age QQQQQQQQ%%%%%

H5 what is your professionIoccupationV a! overnmentI&alaried employees b! @usiness c! 9etired person H> ,o you like to invest your moneyV a! yes b! no H< In which markets do you invest your moneyV a! $rimary market b! secondary market c! .thers HN ,o you have your own demat accountV a! yes b! no H8 ,o you have your demat account with India Infoline ltdV a! :es 92

b! +o H; ,o you know about online share tradingV a! :es b! +o H= .ther then the demat account of India Infoline ltd with which other brokage house do you 3ave your ,emat Account V a! *arvy b! 9eligare c! &harekhan d! ,o not have other demat account. H6 3ow do you invest your moneyV a! 04uity b! )utual -unds c! I$.& d! .thers H7 #hat type of trading do you preferV a! ,elivery @ased b! Intraday c! )argin trading H5? 3ow do you choose to invest in a particular type of securities at a particular timeV a! ,o analysis of the market by yourself b! Ask some of your colleagues c! :ou and your friend both analyses the market and then invest. d! &ee the recommendation given on the website of India Infoline ltd 93

H55. Are you satisfied with India Infoline V a! :es b! +o +A)0 5. YYYYYYYYY >. YYYYYYYYY <. YYYYYYYYY N. YYYYYYYYY C.+TACT +.. YYYYYYYY YYYYYYYY .YYYYYYY... YYYYYYYY

94

BIBLIO&RAP@>#

*otler

$hilip

)arketing

)anagement,

millennium

edition,

prentice

3all

inc.$ublication,>?55. *othari C.9.9esearch )ethology, <rd 0dition,+ew age $ublication,>??7. &harma ,.,.)arketing 9esearch,<rd 0dition,$ublication &ultan Chand B son $ublication,>?5?.

Ne0( Paper(

The 0conomic Times @usiness &tandard

;EBLIO&RAP@>
httpJIwww.wikipedia.com www.infibeam.com 8paisa.com. www.indiainfoline.com

95