INTRODUCTIO N

INTRODUCTION
EXECUTIVE SUMMARY
Indian Capital Market has been linked to the International Financial Market and the Standard has been increased in terms of efficiency and transparency through Dematerialization of the Indian Capital Market in terms of handling and dealing in securities in paper mode , the main objective of this study is to analyze trends in growth of dematerialization process was not keeping pace with the Indian Capital Market due to un popularity of Demat, lack of information , and short direction after the inception of the scheme or the earliest time taken to evaluate its popularity. My project is base on study about dematerialization in the Indian Capital Market .The project covers issues related to depository and Sharekhan as depository .Project start with objective , Methodology ,and limitation of project than it highlight company profile with product details, than it explains capital market and depository part of this capital market . This project cover trading in equity of capital market, settlement of trade in depository, comparative analysis of structure and services offers in the same industry , analysis of structure and services offers in the same industry, analysis of dematerialization , issues related to demat e.g. opening account , nomination dematerialization ,transmission ,freezing defreezing.

SHAREKHAN (DEPOSITORY PARTICIPANT) DEPOSITORY

SHARE MARKET

CAPITAL MARKET

What is a Mutual Fund?

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

MUTUAL FUND FLOW CHART

TYPES OF MUTUAL FUND SCHEME

Mutual fund schemes may be classified on the basis of its structure and its investment objective.

BY STRUCTURE
1. Open-end Funds

An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.

2.

Closed-end Funds

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.

3.

Interval Funds

Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

BY INVESTMENT OBJECTIVE
1.

Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. It has been proved that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.

2.

Income Funds

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.

3.

Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities
6

and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

4.

Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer shortterm instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. .

Three Common Investment Goals

Goal No. 1: Retirement

Most individuals buy mutual funds for long-term goals, especially retirement. It is estimated that retirees will need 70 to 80 percent of their final, pre-tax income to maintain a comfortable lifestyle in retirement. If you plan to retire at age 65, retirement savings should last for at least 18.5 years, since the average life expectancy for a 65-year-old is 83.5,and continues to rise. Ideally, individuals use a
7

combination of sources to fund retirement, such as Social Security benefits, employer-sponsored retirement plans-like 401(k) plansand personal savings, including Individual Retirement Accounts (IRAs).

Goal No. 2: Education

Many parents and grandparents use mutual funds to invest for childrens college educations. Your time horizon is an essential consideration when investing for education: if you start when the child is born, you have 18 years to invest. However, if a child or grandchild is in your future, the time horizon can be lengthened by investing now.

Goal No. 3: Emergency Reserves and Other ShortTerm Goals

Emergency reserves are assets you may need unexpectedly on short notice. Many investors use money market funds for their reserves. Money market funds alone, or in combination with short-term bond funds, can also be appropriate investments for other short-term goals.

OTHER SCHEMES
1. Tax Saving Schemes
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These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds.

2.

Special Schemes
Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50

Sectoral Schemes
Sectoral Funds are those that invest exclusively in a specified sector. This could be an industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.

HOW TO INVEST IN MUTUAL FUND

Step one - Identify your Investment needs
Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, and level of income and expenses among many other factors. Therefore, the first step is to assess your needs. You can begin by defining your investment objectives and needs, which could be regular income, buying a home or finance a wedding or educate your children or a combination of all these needs, the quantum of risk you are willing to take and your cash flow requirements.

Step Two - Choose the right Mutual Fund

The important thing is to choose the right mutual fund scheme, which suits your requirements. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are the track record of the performance of the fund over the last few years in relation to the appropriate yardstick and similar funds in the same category. Other factors could be the portfolio allocation, the dividend yield and the degree of transparency as reflected in the frequency and quality of their communications.

Step Three - Select the ideal mix of Schemes

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Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals.

Step four - Invest regularly

The best approach is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum each month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and do investors all over the world follow a disciplined investment strategy. You can also avail the systematic investment plan facility offered by many openend funds.

Step Five- Start early

It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at a compounded rate of return.

11

ADVANTAGES OF MUTUAL FUNDS

Mutual funds make saving and investing simple, accessible, and affordable. The advantages of mutual funds include professional management, diversification, variety, liquidity, affordability, convenience, and ease of recordkeepingas well as strict government regulation and full disclosure.

Diversification:
The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value.

Professional Management:
Most mutual funds pay topflight professionals to manage their investments. These managers decide what securities the fund will buy and sell.

Regulatory oversight:

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Mutual funds are subject to many government regulations that protect investors from fraud.

Liquidity:
It's easy to get your money out of a mutual fund. Write a check, make a call, and you've got the cash.

Convenience:
You can usually buy mutual fund shares by mail, phone, or over the Internet.

Low cost:
Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index

Transparency Flexibility Tax benefits

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DRAWBACKS OF MUTUAL FUNDS

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.
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15

How to Read a Mutual Fund Fee Table

There are two basic types of costs associated with mutual funds. Some funds charge shareholder fees when you purchase or redeem shares of the fund, i.e., sales commissions. In addition, all funds have operating expenses, which represent the costs of running the fund. A mutual funds fees and expenses are required by law to be clearly disclosed to investors in a fee table at the front of the funds prospectus. Mutual funds compete vigorously to keep costs low, since the performance figures reported by the fund ,and the total value of your mutual fund account, are provided after all fees and expenses have been deducted. For example, the fund returns published in newspapers, advertisements, and official fund documents already are net of any fees the fund charges you. Thus, any time you consider a funds past performance, your decision reflects the impact fees have had on the fund in the past. Particularly important to your assessment of costs is the funds expense ratio. The availability of this figure in all fund prospectuses allows you to easily compare how much more or less one fund costs versus another an important part of making an informed investment decision.

16

Ten Tips on Buying Mutual Funds

1. Determine your financial objectives and how much money you can afford to invest.
Make sure the funds objectives coincide with your own. Do not change your objectives or exceed the amount set aside for investment without careful consideration. 2.

Research and obtain all available information before

you invest.
Request a copy of the funds prospectus and read it carefully. Also look over the SAI and the latest shareholder report from each fund you are considering.

3.

Determine

the

amount

of

all

sales

charges,

management fees and Administrative expenses before you invest.

Some funds charge for reinvestment of dividends and capital gains distributions, which can add to your costs. See the funds prospectus for a description of all fees and expenses.

17

4. Never treat the risks of investing in mutual funds lightly.

All mutual funds involve some degree of risk. Unlike money market accounts and certificates of deposit, mutual funds are not federally insured.

5. Exercise caution when considering investing in funds with junk bond portfolios.
While junk bonds pay a high-rate of return, junk bond companies are more volatile and more likely to default on bond payments. These factors can seriously affect the funds performance

6. Do not invest in periodic payment plans unless you are absolutely certain that you will hold your shares for a long time.
If you sell or redeem early or do not complete the plan you may find that a large portion of your investment has gone to pay sales charges. 7. Learn the consequences of redemptions. Besides the sales charges for redeeming periodic payment plans before completion, some funds may charge a redemption fee or a proportion of your investment, known as a contingent deferred sales load.

18

8. Call Secretary of State properly registered in Indian.

office to find out whether

your broker/financial advisor and the mutual fund are

Secretary office can tell you if a company or an individual has failed to properly register or if there is a history of trouble with securities regulators. If there is a history of problems, this should serve as a red flag to prospective investors.

10. If you believe you have encountered investment fraud, call Secretary office.
If something does not seem right, or if you are not satisfied with the answers you have received, contact the Secretary of States office. We are here to help you!

Share market is the market for securities where organized issuance and trading 19

Share Market Overview

of shares takes place. It plays an important role in channelizing capital from the investors to the business houses which consequently leads to the availability of funds for business expansion. Shares are certificates which represents ownership

rights of the holder in a company.

What is share?
Share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market.

Shares in the Share Market are either traded through:(a) Stock Exchange These are organized market places where stocks, bonds are other equivalents are traded between the buyers and sellers where exchange acts as a counter - party to both the participants in case of any default.
(b) Over-the -Counter (OTC)

These are not centralized exchanges and the trade takes place through a network of dealers.

Basically, Share Market can be divided into two parts :1. Primary Market It is the market where new issues of securities are 20

offered to the investors.

2. Secondary Market An investor of a secondary market buys a security

from another participant of the same and not from any issuing corporation (as in case of Primary Market).

PRIMARY MARKET
The first time that a company shares are issued to the public, it is by a process called the initial public offering (IPO). In an IPO company offloads a certain percentage of its totals shares to the public at a certain price. Most IPOs these days do not have a fixed offer price instead they follow a method called the book building process, where the offer price is placed in a hand or a range with the highest and the lowest value (refer to the newspaper ad). The public can bid for the shares at any price in the band specified. Once the bid come in the company evaluates all the bids and decides on an offer price in that range. After the offer price is fixed the company either allots its shares to the people who had applied for its shares or returns them their money.

SECONDARY MARKET

21

Company

Stock Exchange

Broker Individual Investors

Companies get themselves listed on popular stock exchanges like BSE and NSE

SECONDARY MARKET
Once the offer price is fixed and the shares are issued to the people, stock exchanges facilitate the trading of shares for the general public. Once a stock is listed on an exchange, people can start trading in its shares. In a stock exchange the existing shareholders sell their shares to anyone who is willing to buy them at a price agreeable to both the parties. Individuals cannot buy or sell shares in a stock exchange directly they have to execute their transactions through authorized members of the stock exchange who are also called stock brokers

22

DYNAMICS OF THE SHARE MARKET

Buyer
He pays the money to his broker

Broker
His broker pays it to the exchange

Stock Exchange
The exchange pays it to the sellers broker

Broker
Sellers broker finally pays the money to the seller

Seller

Similar process happens for the transfer of shares from the sellers end.

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MULTI CHANNEL ACCESS TO THE STOCK MARKET

Relationship Manager Call centre

Live chat

SMS

Website

CUSTOMER SUPPORT

Email

Multi Channel Investment Option

Share Shops Online Trading

Dial n Trade

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TRANSACTION CYCLE IN SHARE MARKET

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HOW TO A READ SHARE MARKET TABLE

Columns 1 & 2: column 1&2 shows 52- Week High and Low price rate of shares. Column 3:column shows Company Name & Type of Stock. Column 4: column 4 shown Ticker Symbol of company name which companies share has shown. Column 5: column 5 shown Dividend Per Share. Column 6: Column 6 shown Dividend Yield per share. Column 7: column 7 shown Price/Earnings Ratio of per share. Column 8: column 8 shown Trading Volume in hunred volume. Column 9 & 10: column 8 shown Day High and Low rate of share. Column 12: column 8 shown Net Change of shares which share goes up or down that thing is shown with the help of this table.

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Why shares
Historically shares have outperformed all the other investment instruments and given the maximum returns in the long run. In the twenty-five year period of 1980-2005 while the other instruments have barely manage to generate returns at a rate higher than the inflation rate(7.10%), on an average shares have given returns of about 17% in a year and that does not even take in account the dividend income from them. Were we to factor in the dividend income as well, the shares would have given even higher returns during the same period.

WHY INVESTING IN SHARE MARKET

Dividend income:
investments in shares are attractive as much for the appreciation in the share prices as for the dividends their companies pay out.

Tax advantages:
shares appear as the best investment option if you also consider the unbeatable tax benefits that they offer. First, the dividend income is taxfree in the hands of investors. Second, you are required to pay only a 10% short term capital gains tax on the profits made from investments in shares, if you book your profits within a year of making the purchase. Third, you don't need to pay any long-term capital gains tax on the profits if you sell the shares after holding them for a period of one year. The capital gains tax rate is much higher for other investment instruments: a 30% short-term capital gains tax (assuming that you fall in the 30% tax bracket) and a 10% long-term capital gains tax

27

Easy liquidity: shares can also be made liquid anytime from anywhere (on sharekhan.com you can sell as here at the click of a mouse from anywhere in the world) and the investments can be realized in just two working days .Considering the high returns, the tax advantages and the highly liquid nature, shares are the best investment option to create wealth.

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DIFFERENCE BETWEEN PRIMARY AND SECONDARY MARKETS

In the primary market securities are issued to the public and the proceeds go to the issuing company. Secondary market is a term used for stock exchanges, where stocks are bought and sold after they are issued to the public. PRIMARY MARKET Individuals apply to get shares of the company Company IPO

Companies share ownership by issuing shares

Company

Owners

Companies allocate shares to individuals and those who get the shares become part owners of the company.

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TERMINOLOGY USED IN SHARE MARKET

1.

Stock Broker / Sub Broker: - People like you and me cannot just go to a stock exchange and buy and sell shares. Only the members of the stock exchange can. These members are called stockbrokers and they buy and sell shares on our behalf. So, if you want to start investing in shares, you can do it only through a broker. Every stockbroker has to be registered with the Securities and Exchange Board of India, which is the stock market regulator. You can either choose a broker (who is directly registered with SEBI) or a sub-broker (people licensed by brokers to work under them).

2.

Demat account: - Gone are the days when shares were held as physical certificates. Today, they are held in an electronic form in demat accounts. Demat refers to a dematerialized account. Let's say your portfolio of shares looks like this: 40 shares of Infosys, 25 of Wipro, 45 of HLL and 100 of ACC. They will show in your demat account. You don't have to possess any physical certificates showing you own these shares. They are all held electronically in your account. Periodically, you will get a demat statement telling you what shares you have in your demat account.

30

How to get a demat account

To get a demat account, you will have to approach a Depository Participant. A depository is a place where an investor's stocks are held in electronic form. There are only two depositories in India -- the National Securities Depository Ltd and the Central Depository Services Ltd. The depository has agents who are called Depository Participants. In India, there are over a hundred DPs. Think of it like a bank. The head office, where all the technology rests and the details of all the accounts are held, is like the depository. The DPs are like the branches of banks that cater to individuals. A broker, however, is not similar to a DP. A broker is a member of the stock exchange and he buys and sells shares for his clients and for himself. A DP, on the other hand, gives you an account where you can hold those shares. To get a list of the registered DPs, visit the NSDL and CDSL Web sites.
3. Get a PAN: - The taxman demands that you get yourself a

Permanent Account Number. This is a unique 10-digit alphanumeric number (AABPS1205E, for example) that identifies and tracks an individual in the taxman's database. Almost every money transaction demands the use of a PAN.

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4.

Trading / Square off Transaction:Whenever a trader / investor buys or sells a security and on the same day before the market closes, he sells or buys that particular security (in the same quantity), the transaction is called as square off transaction or a trading transaction. Shares lying in the T, TS and T are not square off the same day.

5.

Delivery Transaction:Delivery transactions are those transactions which are not squared off at the day end, and the investor/trader is ready to take / give the delivery of the security. Charges such as brokerage, service tax on brokerage, STT, stamping charges etc. are very high on the delivery transactions.

6.

Settlement Period :Currently the settlement period is T+2. Settlement period i.e. T+2 means one has to give the delivery of the shares sold within 2 days of the date of the transaction. In case of purchase transaction, one will get the delivery within 2 days of the date of transaction.

7.

Shares Category:-

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The stock exchange has divided the shares into the categories according to the performance of the company. The different categories are A, B1, B2, S (BSE Indonext), T, TS, Z
8.

Auction:In case of failure of delivery of shares for sale transaction within the stipulated time period, the BSE auction those shares as per the rules and regulations.

9. Close Out:-

In case of failure of delivery of shares for purchase transaction within the stipulated time period, the person buying the shares gets the benefit in the form of Close Out as per the BSEs rules and regulations.

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ROLE OF STOCK EXCHANGE

1. 2. 3. 4. 5. 6. 7. Raising capital for business. Mobilizing saving for investment. Facilitate Company growth. Redistribution of wealth. Corporate governance. Create investment opportunities for small investors. Government raises capital for development projects.

LISTING OF SECURITIES
Listing means admission of the securities to dealings on a recognised stock exchange. The securities may be of any public limited company, Central or State Government, quasi-governmental and other financial institutions/corporations, municipalities, etc. The objectives of listing are mainly to:

Provide liquidity to securities; Mobilize savings for economic development; Protect interest of investors by ensuring full disclosures.

The Exchange has a separate Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts
34

(Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of the Exchange. A company intending to have its securities listed on the Exchange has to comply with the listing requirements prescribed by the Exchange.

35

MINIMUM LISTING REQUIREMENTS FOR NEW COMPANIES (A) Minimum Capital: 1. New companies can be listed on the Exchange, if their issued & subscribed equity capital after the public issue is Rs.10 Crores. In addition to this the issuer company should have a post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 Crores. 2. For new companies in high technology (i.e. information technology, internet, e-commerce, telecommunication, media including advertisement, entertainment etc.) the following criteria will be applicable regarding threshold limit: i. The total income/sales from the main activity, which should be in the field of information technology, internet, ecommerce, telecommunication, media including advertisement, entertainment etc. should not be less than 75% of the total income during the two immediately preceding years as certified by the Auditors of the company. ii. The minimum post-issue paid-up equity capital should be Rs.5 Crores. iii. The minimum market capitalization should be Rs.50 Crores. (The capitalization will be calculated by multiplying the post issue subscribed number of equity shares with the Issue price).
36

iv.

Post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 Crores.

(B) Minimum Public offer: As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957, securities of a company can be listed on a Stock Exchange only when at least 25% of each class or kind of securities is offered to the public for subscription. In case of IPOs by unlisted companies in the IT& entertainment sector, at least 10% of the securities issued by the company may be offered to the public subject to the following:

Minimum 20 lac securities are offered to the public (excluding reservation, firm allotment and promoters contribution) The size of the offer to the public is minimum 50 cores.

For this purpose, the term "offered to the public" means only the portion offered to the public and does not include reservations of securities on firm or competitive basis. SEBI may, however, relax this condition on the basis of recommendations of stock exchange(s), only in respect of a Government company defined under Section 617 of the Companies Act, 1956. [II] MINIMUM LISTING REQUIREMENTS
EXCHANGES

FOR

COMPANIES

LISTED

ON

OTHER

STOCK

37

The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect. 1. The company should have minimum issued and paid up equity capital of Rs. 3 cores. 2. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of non-recurring nature should be excluded while calculating distributable profits. 3. Minimum net worth of Rs. 20 cores (net worth includes Equity capital and free reserves excluding revaluation reserves). 4. Minimum market capitalization of the listed capital should be at least two times of the paid up capital. 5. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%. 6. Minimum 25% of the company's issued capital should be with NonPromoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians.

38

7. The company should have at least two years listing record with any of the Regional Stock Exchange. 8. The company should sign an agreement with CDSL & NSDL for Demat trading. [III] MINIMUM REQUIREMENTS FOR COMPANIES DELISTED BY THIS EXCHANGE SEEKING RELISTING OF THIS EXCHANGE The companies delisted by this Exchange and seeking relisting are required to make a fresh public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial public offerings. [IV] PERMISSION
PROSPECTUS TO USE THE NAME OF THE

EXCHANGE

IN AN

ISSUER COMPANY'S

The Exchange follows a procedure in terms of which companies desiring to list their securities offered through public issues are required to obtain its prior permission to use the name of the Exchange in their prospectus or offer for sale documents before filing the same with the concerned office of the Registrar of Companies. The Exchange has since last three years formed a "Listing Committee" to analyze draft prospectus/offer documents of the companies in respect of their forthcoming public issues of securities and decide upon the matter of granting them permission to use the name of "Bombay Stock Exchange Limited" in their prospectus/offer documents. The committee evaluates the promoters, company, project and several other factors before taking decision in this regard. [V] SUBMISSION OF LETTER OF APPLICATION

39

As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies. [VI] ALLOTMENT OF SECURITIES As per Listing Agreement, a company is required to complete allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval of the basis of allotment. [VII] TRADING PERMISSION As per Securities and Exchange Board of India Guidelines, the issuer company should complete the formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working days of finalization of Basis of Allotment. A company should scrupulously adhere to the time limit for allotment of all securities and dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the listing permissions of all the Exchanges whose names are stated in its prospectus or offer documents. In the event of listing permission to a company being denied by any Stock Exchange where it had applied for listing of its securities, it cannot proceed with the allotment of shares. However, the company may file an appeal before the Securities and Exchange Board of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.
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[VIII] REQUIREMENT OF 1% SECURITY The companies making public/rights issues are required to deposit 1% of issue amount with the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited in the event of the company not resolving the complaints of investors regarding delay in sending refund orders/share certificates, non-payment of commission to underwriters, brokers, etc. [IX] PAYMENT OF LISTING FEES All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time. The schedule of listing fees for the year 2004-2005, prescribed by the Governing Board of the Exchange and approved by the Securities and Exchange Board of India is given here under:

SCHEDULE OF LISTING FEES FOR THE YEAR 2006-2007 1. Initial Listing Fees 2. Annual Listing Fees (i) Companies with paid-up capital* up to Rs. 5 cores (ii) above 5 cores and up to Rs. 10 cores (iii) Above Rs. 10 cores and up to Rs. 20 cores
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20,000

10,000

15,000 30,000

3. Companies which have a paid-up capital* of more than Rs. 20 cores will pay additional fee of Rs. 750/- for every increase of Rs. 1 cores or part thereof. 4. In case of debenture capital (not convertible into equity shares) of companies, the fees will be charged @ 25% of the fees payable as per the above mentioned scales. [X] COMPLIANCE WITH LISTING AGREEMENT The companies desirous of getting their securities listed are required to enter into an agreement with the Exchange called the Listing Agreement and they are required to make certain disclosures and perform certain acts. As such, the agreement is of great importance and is executed under the common seal of a company. Under the Listing Agreement, a company undertakes, amongst other things, to provide facilities for prompt transfer, registration, sub-division and consolidation of securities; to give proper notice of closure of transfer books and record dates, to forward copies of unabridged Annual Reports and Balance Sheets to the shareholders, to file Distribution Schedule with the Exchange annually; to furnish financial results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely to materially affect the financial performance of the Company and its stock prices, to comply with the conditions of Corporate Governance, etc. The Listing Department of the Exchange monitors the compliance of the companies with the provisions of the Listing Agreement, especially with regard to timely payment of annual listing fees, submission of quarterly
42

results, requirement of minimum number of shareholders, etc. and takes penal action against the defaulting companies. [XI] "Z" Group The Exchange has introduced a new category called "Z Group" from July 1999 for companies who have not complied with and are in breach of provisions of the Listing Agreement. The number of companies placed under this group as at the end of May, 2001 was 1,475. The number of companies listed at the Exchange as at the end of May 2001 was 5,874. This is the highest number among the Stock Exchanges in the country and in the world.

43

COMPANY PROFILE

44

COMPANY PROFILE
Share khan is one of the leading retail brokerage firms in the country. It is the retail broking arm of the Mumbai-based SSKI Group, which has over eight decades of experience in the stock broking business. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc. The firms online trading and investment site www.Sharekhan.com was launched on Feb. 8, 2000. The site gives access to superior content and transaction facility to retail customers across the country. Known for its jargonfree, investor friendly language and high quality research, the site has a registered base of over one-lakh customers. The number of trading members currently stands at over 3 lakh. While online trading currently accounts for just over 1 percent of the daily trading in stocks in India, Sharekhan alone accounts for 22 percent of the volumes traded online. The content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-ofbreed technology and superior market information. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks. On April 17, 2002 Sharekhan launched speed trade, a net-based executable application that emulated the broker terminals along with host of other information relevant to the day traders. This was for the first time that a net-based trading station of this caliber was offered to the traders. In the last six months

45

Speed Trade has become a de facto standard for the Day Trading community over the net. Sharekhans ground network includes over 250 centers in 123 cities in India, of which 20 are fully-owned branches. Sharekhan has always believed in investing in technology to build its business. The company has used some of the best-known names in the IT industry like Sun Microsystem, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies India Ltd., Spider Software Pvt. Ltd. to build its trading engine and content. The Morakhia family holds a majority stake in the company. HSBC, Intel & Carlyle are the other investors. With a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading players in the institutional broking and corporate finance activities. SSKI holds a sizeable portion of the market in each of these segments. SSKIs institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK and US. Foreign Institutional Investors generate about 65% of the organizations revenue, with a daily turnover of over US$ 2 million. The Corporate Finance section has a list of very prestigious clients and has many firsts to its credit, in terms of the size of deal, sector tapped etc. The group has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular holding, Gujarat Pipavav, Essar, Hutchison, Planet Asia and Shoppers Stop.
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REASONS TO CHOOSE SHARE KHAN LTD. EXPERIENCE SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money brokers poll held recently, SSKI won the Indias best broking house for 2004 award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institutional-level research and broking services to individual investors. TECHNOLOGY With our online trading account you can buy and sell shares in an instant from any PC with an Internet connection. You will get access to our powerful online trading tools that will help you take complete control over your investment in shares. ACCESSIBILITY Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for investors. These services are accessible through our centers across the country (over 250 locations in 123 cities), over the internet (through the website www.sharekhan.com) as well as over the voice tool. KNOWLEDGE In a business where the right information at the right time can translate into direct profits, you get access to a wide range of information on our content-rich portal, sharekhan.com. You will also get a useful set of knowledge-based tools that will empower you to take informed decisions.

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CONVENIENCE You can call our Dial-N-Trade number to get investment advice and execute your transactions. We have a dedicated call-centre to provide this service via a toll free number from anywhere in India. CUSTOMER SERVICE Our customer service team will assist you for any help that you need relating to transactions, billing, Demat and other queries. Our customer service can be contracted via a toll-free number, email or live chat on sharekhan.com. INVESTMENT ADVICE Sharekhan has dedicated research teams for fundamental and technical research. Our analyst constantly track the pulse of the market and provide timely investment advice to you in the form of daily research emails, online chat, printed reports and SMS on your phone. BENEFITS Secure Order by Voice Tool Dial-n-Trade. Automated Portfolio to keep track of the value of your actual purchases. 24x7 Voice Tool access to your trading account. Personalized Price and Account Alerts delivered instantly to your cell phone & email address. Special Personal Inbox for order and trade confirmations. On-line customer service via web chat. Anytime Ordering.
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PRODUCTS OF SHAREKHAN

1- Equity Trading Platform (Online/Offline). 2- Commodities Trading Platform (Online/Offline). 3- Portfolio Management Service. 4- Mutual Fund Advisory and Distribution. 5- Insurance Distribution. 6- Depository Services. 7- Research Report.

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TYPES OF ACCOUTNS 1- CLASSIC ACCOUNT 2- TRADE TIGER ACCOUNT

1. Classic Account This account allows the client to trade through our

website www.sharekhan.com and is suitable for the retail investor who is risk averse and hence prefers to invest in stocks or who does not trade too frequently. Features Online trading account for investing in equity and derivatives via www.sharekhan.com Live terminal (NSE Online, BSE Offline) Integration of on-line trading, saving bank and Demat account. Instant cash transfer facility against purchase & sale of shares. Competitive transaction charges. Instant order and trade confirmation be email. Streaming Quotes. (Cash & Derivatives) Personalized market watch. Single screen interface for cash and derivatives and more. Provision to enter price trigger and view the same online in market watch.

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Dial-n-trade Along with enabling access for your trade online, the CLASSIC also gives you our Dial-n-trade services. With this service, all you have to do is dial our dedicated phone lines 1-800-22-7500 and 1-800-22-7050.

2. Tiger Trade Account It is an internet-based software application that enables you to buy and sell in an instant. It is ideal for active trades and jobbers who transact frequently during days session to capitalize on intra-day price movement. Features A single platform for multiple exchange BSE, NSE, MCX, NCDEX, Mutual funds and IPOs. Multiple Market Watch available on a single screen. User can save his own defined screen as well as graph template, that is, can save the layout for future use. User-defined alert settings on an input Stock Price trigger tools available to gauge market such as Tick Query, Ticker, Market Summary, Action Watch, Option Premium Calculator, Span Calculator. Shortcut key for FAST access to order placements & reports.

FEES STRUCTURE
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Charge Account Opening Monthly maintain charges Brokerage

Classic Account Rs. 750 /Rs.300/Intra-day 0.10% Delivery 0.50%

Tiger trade account nil Rs. 300/Intra-day 0.05% Delivery 0.25%

Note Minimum margin cheque Rs. 5000with the classic account that is must deposit in account opening time. If margin cheque exceeds Rs. 50000, account opening free. Minimum brokerage cheque Rs. 6000 (adjusted towards brokerage within one year) that is applicable for only tiger trade account. Annual maintenance charges Rs. 300 (chargeable in second year) that is applicable for both account.
No account closing charges.

Comparison with leading companies in share brokrage

52

FIRMS NAME FACTS OPENING CHARGES AMC

HDFC RS.750/Rs. 750/-

ICICI Rs.750/Rs. 750/-

RELIGARE Rs.500/Rs .16 per transaction R. M.

INDIABULL Rs.1250/500 Rs.16per transaction R.M. NO

SHAREKHAN Rs.750/Rs. 300/-

RESEARCH REPORT DIAL N TRADE

NO Rs.20per call chargeable INT .15% DEL.75% NO NO

NO

DAILY BASIS FREE

Rs.20per call NO chargeable INT .15% DEL.75% NO NO INT .10% DEL.50% YES 8timeonly trading 9:55to2:45

BROKRAGE

INT .10% DEL .50% YES 8time only trading 9:55to3:00

INT .05% DEL .50% YES 5time 2days+trading 9:55to3:30

LIVE TERMINAL EXPOSURE

TRADING TIMING Note

9:55to3:0

9:55to3:30

In India bull provide two types of account cool and demat account and both charge is shown on the table. In this table Religare and India bull provide only R.M. facility insists of research report. In the case of exposure India bull and Religare provide till trading but Sharekhan provide trading plus two another working days

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OBJECTIVES OF THE STUDY

54

OBJECTIVES OF THE STUDY

To know the work culture and methodology of the share market To know the rules and regulation of SEBI. To know the rules and regulation of AMC (Assets Management Company) To know the brokerage system of the share market To know the difference between share market and mutual funds. To know the various competitors in the mutual funds market. To know the various exchanges of share markets all over the world. To know the timing of the share market. To know how the value of shares and mutual funds is calculated. To know the various factors on which prices of shares and mutual funds To know the benefits of investing in share market and mutual funds. To know about the services of the share market and mutual funds.

fluctuates.

55

RESEARCH METHODOLOG Y

56

RESEARCH METHODOLOGY objective of the present study can be accomplished by conducting a systematic market research. Market research is the systematic design, collection, analysis and reporting of data and findings that are relevant to different marketing situations facing the company. The marketing research process that will be adopted in the present study consists of the following stages a) Defining the problem and the research objective: The research

objective states what information is needed to solve the problem. The objective of the research is to find out the facilities provided in mutual funds and share market and what will be its benefits in the future. b) Developing the research plan: Once the problem is identified, the next step is to prepare a plan for getting the information needed for the research. The present study will adopt the exploratory approach wherein there is a need to gather large amount of information before making a conclusion. If required, the descriptive and casual approaches may also be used. c) Collection and Sources of data: Market research requires two kinds of data, i.e., primary data and secondary data. Preparing questionnaires that will contain both open-ended and close-ended questions may collect the primary

57

data. Secondary data will be collected from various journals, books and web sites. d) Analyze the collected information: This involves converting raw data into useful information. It involves tabulation of data and using statistical measures on them for developing frequency distributions and calculating the averages and dispersions. e) Report research findings: This phase will mark the culmination of the marketing research effort. The report with the research findings is a formal written document. The research findings and personal experience will be used to propose recommendations to develop the market in online trading.

58

Limitations:
Though the present study aims to achieve the above-mentioned objectives in full earnest and accuracy, it may be hampered due to certain limitations. Some the limitations of this study may be summarized as follows: Getting accurate responses from the respondents. Locating the target customers of mutual funds is very time consuming.

59

DATA COLLECTION

60

Types of data collection There are two types of data collection methods available. 1. Primary data collection 2. Secondary data collection
1)

Primary data collection method

The primary data is that data which is collected fresh or first hand, and for first time which is original in nature. Primary data can collect through personal interview, questionnaire etc. to support the secondary data. 2) Secondary data collection method The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, balance sheets, books etc. This project is based on primary data collected through personal interview of head of account department, head of SQC department and other concerned staff member of finance department. But primary data collection had limitations such as matter confidential information thus project is based on secondary information collected through five years annual report of the company, supported by various books and internet sides. The data collection was aimed at study of working capital management of the company

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Data analysis & Interpretation

62

Data analysis & interpretation:

Q1. Where do you invest your savings?

OPTIONS Equity Mutual fund Fixed deposits insurance

NO OF RESPONDENTS 59 25 9 7

INTERPRATATIONS:
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This figure says that most people go for at 1st EQUITY investment then for MUTUAL FUND, FIXED DEPOSITS AND INSURANCE. Because equity gives good return in short time as well as long term as compared to mutual fund

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Q2.

Which sectors give more return?

OPTIONS Share market Mutual fund

NO OF RESPONDENTS 23 77

23%

77%

Sharemarket

Mutual funds

INTERPRATATIONS: This pie chart shows that share market give return 77% as compared to mutual fund at 23% return. It signifies mostly more people go for share market as compared to mutual funds.

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Q3.

Your investment decisions are influenced by

Options Oneself Broker Eco policies Market research Friends/relatives Any other

No of respondents 24 36 20 12 8

40 35 30 e g a t 25 n e c20 r e P 15 10 5 0 24

36

Oneself Brokers

20

Eco. Policies Market Ramous

8
Friends/Relatives

Investment Decisions

INTERPRATATIONS: How do investors take their investment decisions is presented in this bar graph. In this graph it is evident that mostly investment decision are taken on the insistence of the brokers firms and companies and that percentage is 36%. In this area Sharekhan has its own research report and that strike rate has 80%. This is an advantage to the customers of Sharekhan.
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Q4.

Are you satisfied with your current investment?

NO OF RESPONENTS 42 58

OPTIONS YES NO

42% 58%

Yes N o

INTERPRATATIONS: That chat is show the satisfaction level of current investment( in share) and long term investment(mutual fund) than here shows that the satisfaction level in current investment (shares) is 58% and satisfaction in long term investment (mutual fund) is 42%.

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Q6.What are the factors which you considered before investing in particular company? OPTIONS Financial potions Current market position Goodwill Future prospects Any other NO OF RESPONDENTS 24 36 20 12

40 35 30 e g a t n e c r e P 25 20 15 10 5 0 24

36

Financial Positions

Current market Positions

20

Goodwill

12 8

Future Prospects

Any other

factors

INTERPRATATIONS: What factors are necessary before the investment in company or in firm is show in this bar graph. It is evident that in the current market position accounts for 36% , most investors go for investment after seeing the current market positions and after that the financial position of company which is at 24%, then goodwill of company at 20%,future prospects at 12%,and any other factors at 8%.

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 What is the market of share khan in the earning share brokerage?

Comparison between different broker company according to earn brokerage

5paise sharekhan motilaloswal icicidirect hdfc indiabulls kotak any other

40 70 11 61 15 38 19 46
Voters: 300. 300.

13.23% 23.34% 3.53% 20.05% 5.01% 13.06% 6.33% 15.45%

INTERPRATATIONS:

Share khan earn more brokerage in share trading as compared to all the leading firms and companies and share khan get 284 vote and 23.34% regarding to other firms and companies earning that is shown that satisfied level, share khan strike rate all things are shown share khan s profit and market share.

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OBSERVATION S & FINDINGS

70

OBSERVATIONS & FINDINGS

most people go for at 1st EQUITY investment then for MUTUAL

FUND, FIXED DEPOSITS AND INSURANCE. Because equity gives good return in short time as well as long term as compared to mutual fund. 77% as compared to mutual fund at 23% return. It signifies mostly more people go for share market as compared to mutual funds. mostly investment decision are taken on the insistence of the brokers firms and companies and that percentage is 36%. In this area Sharekhan has its own research report and that strike rate has 80%. This is an advantage to the customers of Sharekhan. the satisfaction level of current investment( in share) and long term investment(mutual fund) than here shows that the satisfaction level in current investment (shares) is 58% and satisfaction in long term investment (mutual fund) is 42%. the investment in company or in firm is show in this bar graph. It is evident that in the current market position accounts for 36% , most investors go for investment after seeing the current market positions and after that the financial position of company which is at 24%, then goodwill of company at 20%,future prospects at 12%,and any other factors at 8%.

Share khan earn more brokerage in share trading as compared to all the leading firms and companies and share khan get 284 vote and 23.34% regarding to other firms and companies earning that is shown that satisfied level, share khan strike rate all things are shown share khan s profit and market share.

71

CONCLUSION & SUGGESTION

72

CONCLUSION
The strategy adopted by me in completion of this project help me a lot till now in making comparison between share market and mutual funds. From the analysis we can say that if there is more risk there is more return and we can say that share market is totally dependent on the risk taken by the investors in investing in shares. And in mutual funds there is less risk as the money of investors invested in different sectors so it can divide the risk in different portfolio adopted by mutual funds companies. At last I can say that money invested in this rise and fall market it is better to invest in mutual funds for those investors who are risk adverse and for those who are risk taker it is better for them to invest in share market. We can also say that in share market customers is decision maker while in mutual funds investors is totally dependent on assets management company, investors do not have active control on money invested by him/her. In OJT the strategy adopted by me in achieving my target helped me a lot. This strategy helped me in knowing the customer reaction towards share market, customers attitude towards share broking firms and in this I helped how to interact with the customers which is beneficial for me in future.

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SUGGESTIONS
After interpretation and analysis, I am giving certain suggestions to the company which I hope may be helpful for the company. The company should utilize its stock more efficiently. The company should pay attention towards the proper and efficient utilization of working capital. The company can reduce the time for purchase order. The buffer should be maintained incase of emergency. Insurance should be covered especially fire in case of transit journey also.

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BIBLIOGRAPHY

75

BIBLIOGRAPHY
www.sharekhan.com www.mutualfunds.com www.amfi.com www.google.com Training kit provided by Sharekhan
www.altavista.com

www.dogpil.com

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ANNEXURE

77

QUESTIONNAIRE
We are first year students of Graduate School of Business and Administration, Greater Noida, conducting a survey on investors behavior and psychology. We assure you that individual response will be kept confidential. Please circle or tick the appropriate option. Q1. Where do you invest your savings? i. ii. iii. iv. Q2. Mutual funds Equity Insurance Fixed Deposits

Which sectors give more return? i. ii. Share market Mutual Funds

Q3. i. ii. Q4. i. ii. iii. iv. v. vi. Q5.

Are you satisfied with your current investment? Yes No Your investment decisions are influenced by Oneself Broker Eco.Policies Market Research Friends/Relatives An other Are you satisfied with company services? i. Yes ii. No

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Q6.

What are the factors which you considered before investing in a particular company? i. ii. iii. iv. v. Financial Position Current Market Position Goodwill Future Prospects Any others.

PERSONAL DETAILS: Name Mr./Mrs./Miss__________________________ Address____________________________________ ___________________________________________ Phone No. __________________________________ Email ______________________________________ Occupation a) Government Employee b) Private Employee c) Self Employed d) Student E) Housewife

Your monthly household income a) Less than 15000 b) 15001-25000 c)25001 and above

79