A PROJECT REPORT ON STUDY ON ONLINE STOCK TRADING IN INDIA AT SHAREKHAN Project report submitted for the partial Fulfillment

for the award of the degree of MASTER OF BUSINESS ADMINISTRATION Submitted by Ms. Adepu Swathi (Roll No: 09671E0052)

Under the esteemed guidance of Asst Prof. Mr.B.Srivarun J.B.INSTITUTE OF ENGINEERING & TECHNOLOGY Yenkapally, Moinabad (M), R.R.Dist 2009-2011

CERTIFICATION

This is to certify that the Project Report titled ONLINE STOCK TRADING IN INDIA with reference to SHAREKHAN submitted in partial fulfillment for the award of MBA Programme of Department of Business Management, JNTU. Hyderabad was carried out by Miss.Adepu Swathi (Roll No.09671E0052) under my guidance. This has not been submitted to any other University or Institution for the award of any degree/diploma/certificate.

Name and address of the Guide MR.Srivarun

ASST. PROF., Department of Business Administration, J.B. Institute of Engineering & Technology

Signature of the Guide

Mr. Rajesh Pershad,

ASSOC. PROF. & HEAD, Department of Business Administration, J.B. Institute of Engineering &Technology

Moinabad.

Moinabad.

DECLARATION

I, Adepu Swathi do here by declare that the project report titled ONLINE STOCK TRADING IN INDIA has been done by me in SHAREKHAN LIMITED is a genuine analysis work undertaken by me and it has not been published anywhere earlier. I further declare that, this is my original work as a part of my academic course in JBIET School of Management.

Date: Place:

ADEPU SWATHI

ACKNOWLEDGEMENT

I take this opportunity to express my gratitude to all the people who have guided and helped me in the course of completion of my project. The last three months with SHAREKHAN LIMITED had been full of learning and sense of contribution to the organization. A successful project can never be done by an individual to whom the project is assigned, lest the individual get the help and guardianship of a person. I feel immense pleasure to express a deep sense of gratitude to Mr.B.CHANDER, Asst.Manager who has given me an opportunity to do my project in SHAREKHAN. I had got ample amount of guidance regarding the project & procedure to get a fair idea to know how to begin. His precious advice was very fruitful to go ahead with the project. I would also like to thank Mr.B.Srivarun, Asst Professor, JBIET, for help and guidance offered to me.

ADEPU SWATHI

ONLINE STOCK TRADING IN INDIA

CONTENTS

CHAPTER 1 Introduction CHAPTER - 2

Industry profile Company profile

Page No. 8 - 12

16-29 30-37

CHAPTER - 3
Theoretical framework

37-60

CHAPTER - 4
Data analysis

61-70

CHAPTER 5
Findings Conclusions Questionnaire

71-74 75 77

BIBLIOGRAPHY

CHAPTER-1 INTRODUCTION

INTRODUCTION As per the title suggest the project report has been prepared as a study ononline stock trading in India using the current technology which has a greatinfluence in growth of primitive stock
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trading which was earlier part of fewspecialized stock brokers has been thrown open to common people in Indiaand across the globe. Online trading was initiated by NSE in India and soonafter the otherexchanges also followed it. There was a major boom in yr. 2000 when lots of online trading companiescame with a bang but only few were survived because of lack of computerknowledge and low internet penetration. There are two types of online tradingcompanies one is the banking online trading companies and the other is nonbankingtrading. A few examples of banking online trading companies areHDFC securities, ICICI direct.com, UTI securities etc.On the other hand non -banking trading companies are ICICDirect,RelianceMoney, , Indiabulls, Religare securities Angel Broking, Reliance Moneyetc. A study was undertaken to determine the growth of various online tradingcompanies in India in terms of trade done by them through online andservices provided by them. Major findings indicates that out of a survey of 75+ respondents (Friends &colleagues) it was seen that most of the investors prefer online tradingbecause of few major factors such as time saving convenience, protectionthrough Freudian brokers etc. although during my research project Ive seenthat most of the respondents feel online trading, a secure way of investinginto stock market still a few of them feel that its unsafe and a bit complicatedbut they posses information about online trading. Today the online tradingcompanies having cut-throat competition in our offering whose brokeragediscounts lower margin money and zero balance accounts. Due to the risingeducation awareness and use of internet there is a huge potential for onlinetrading in future and companies must come up with innovative offerings tocapture the untapped market.

HISTORY Online trading involves investment activity which takes place over the Internetand it does not require physical inclusion of the broker. An investor has toregister with an online trading portal like ICICIdirect.com, motilaloswal.comand sharekhan.com and many companies like that and
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investor gets into anagreement with the firm to trade in different securities according to the termsand conditions given on the agreement. As the servers of the online trading portal are connected all the time to the stock exchanges and designated banks the order processing is done in real time and investors can also have updates on the trading. They can also check the status of their orders either through e-mail or through the interface that it cannot be accessed by a third party. Some options are usually given to users such as to link their bank account, Demat accounts and brokerage accounts into a single interface. A single window is also there for all exchanges and a single screen is there for the complete order routing mechanism. The reason why online trading has developed over conventional offline brokerage firms is that this conventional method struggled with unfavorable economies. Staff cost is just one example of it. As the markets opens for 330 minutes a day one dealer can at best execute 500 trades in a day while online company like ICICI direct executes 150,000-200,000 trades a day on the National Stock Exchange alone accounting for 3-4% of NSE trades of 5 million a day. It would require a large amount of dealers to service this demand. Besides the salary costs it would also demand huge expenses in real estate and support systems. The offline model has got a downfall in the form of lower bandwidth and IT costs and the cost of bandwidth has fallen to one-eighth of what it was in 20008 giving online broking an advantage especially in the case of lower-volume retail investors. Today 30% of volumes on the NSE comes from this and it may go up to 50% in three-four years providing explosive growth for online broking in India. To be a successful trading portal it will definitely depend on bouquet of servicesprovided by it for an end-user. Most of the portals charge a small registration fee and brokerage based on various conditions but it's important for the organization to keep focussed on customer-centric

NEED FOR THE STUDY The need for the study is felt, as many people in India are unaware of trading process in stock market.
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Difficulties like lack of easy access to the market, inadequacy of the market infrastructure, and problems in locating the right intermediaries, lack of guidance and advice inhibited the investors from investing in the stock market. At least to have the basic knowledge about the various functions of the stock exchanges is very important. After liberalization in 1991, our stock markets experienced drastic changes due to the setting up of SEBI in 1992, integration of markets, new technology in trading, introduction of on-line trading, foreign participation etc. these led to the development of stock market. The actual process of on-line trading through which immediate access on the market watch available to the client in placing orders for buying or selling of shares is to be known.

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SCOPE OF THE STUDY

Since the year 2000 a big boom has been witnessed in the Indian Stock Market when the market showed the coming up of Online Trading System. Many online stock trading companies came but initially due to lack of online trading some companies vanished and some survived. The companies which survived are getting the handsome returns also attracting the foreign Investment Companies. Nowadays this sector is facing cut-throat competition and also provides huge growth prospects. The study then goes to evaluate and analyze the findings so as to present a clear picture of thetrends in the online trading sector.

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OBJECTIVES The objectives of my research project is 1. To determine the growth and future of online trading industry in India 2. To understand the customer perception of online trading. 3. To see the type of technology used by stock exchanges and by the Indian customer in Online trading 4. To determine what type of products the customers deal while doing the online trading. 5. To understand the presence of major online traders in the Indian market and looking about the features provided by them 6. To find out the important factor which do mostly affect to the customer 7. To develop a good strategy and process that improves the business of the organization 8. To be able to compare and analyze the various Financial Products. 9. Business development and revenue generation.

RESEARCH METHODOLOGY The research methodology for the project completed in two phases: First Phase is the collection of Secondary Data: This involves the collection of Secondary data using internet and internal sources for comparison of Online trading account of other Broking houses in the market like
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ICICI Direct, MOTILAL Oswal, Religare and Reliance Money etc. Second Phase is Collection of Primary Data and Analysis: After collecting the Secondary data the next phase will be collection of primary data using Questionnaires. The questionnaire will be filled by around 75 people whowill be mainly from Bangalore/Hyderabad/Mumbai region. The sample will consist of who people are employed or work as free lancers dealing in investment options to know their financial requirements. Based on these requirements different investments will be informed to them for further perusal. TOOLS USED FOR ANALYSIS The tool employed here is percentage analysis. The total of the data collectedunder one factor are summed up and their percentage is calculated. Suppose weconsider 10 factors with 5 attributes for each factor.Each attribute is given ranks. The values are added and the percentage for eachattribute is calculated. These values are used for analysis. This is percentage analysis.

SOURCES OF DATA Primary data: Questionnaire Secondary data: Published materials of Sharekhan Limited. Such asperiodicals, journals, news papers, and website SAMPLING PLAN Sampling:

13

Since Sharekhan Limited has many segments .100%coverage was difficult within the limited period of time. Hence samplingsurvey method was adopted for the purpose of the study.

population: Sampling size:

(Universe) customers & non consumers of Sharekhan limited A sample of hundred was chosen for the purpose of the study.Sample consisted of Investor as based on their Income and Profession aswell as Educational Background Sampling Methods: Probability sampling requires complete knowledge about allsampling units in the universe. Due to time constraint non- probabilitysampling was chosen for the study

LIMITATION OF THE STUDY

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The various limitations of the study are:

1. People were not willing to answer the entire questionnaire due to the less time

available to them.
2. Some respondents might be hesitant to divulge personal and financial information

which can affect the validity of all responses.

3. There is lack of awareness among people about investing in stock market. So the

people who are aware of such things were found in specific areas for survey purposes.
4. Most people are comfortable with traditional system in small towns and

like to trade from their respective brokers, hence not providing a trueopinion of theirs.
5. Some of the respondents who did not do online trading were able to respond to only

few questions. 6. The survey was done in the some major metro cities and may not trulyexpress the opinion of whole country.

15

CHAPTER 2 INDUSTRY PROFILE

INDUSTRY PROFILE
In 12th century the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers. A common misbelieve is that in late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurze, and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until then, an informal meeting, but actually, the family Van der Beurze had a building in Antwerp where those gatherings occurred the Van der Beurze had Antwerp, as most of the merchants of

16

that period, as their primary place for trading. The idea quickly spread around Flanders and neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam. In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351 the Venetian government outlawed spreading rumors intended to lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. This was only possible because these were independent city states not ruled by a duke but a council of influential citizens. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits - or losses. In 1602, the Dutch East India Company issued the first share on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we know them. There are now stock markets in virtually every developed and most developing economies, with the world's biggest markets being in the United States, United Kingdom, Japan, India, China, Canada, Germany, France, South Korea and the Netherlands.

WHAT IS A STOCK MARKET

A stock market or equity market is a public market for the trading of companystock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. Participants in the stock market range from small individual stock investors to large hedge fundtraders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order.
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Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders. Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.) When the bid and ask prices match, a sale takes place, on a first-come-first-served basis if there are multiple bidders or askers at a given price.

IMPORTENCE OF STOCK MARKET

The stock market is one of the most important sources for companies to raise money. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where the stock market is on the rise is considered to be an up-and-coming economy. In fact, the stock market is often considered the primary indicator of a country's economic strength and development. Rising share prices, for instance, tend to be associated
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with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Financial stability is the raison d'tre of central banks. Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity. An important aspect of modern financial markets, however, including the stock markets, is absolute discretion. For example, American stock markets see more unrestrained acceptance of any firm than in smaller markets.

MARKET PARTICIPANTS
A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, with long family histories to particular corporations. Over time, markets have become more "institutionalized"; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds, investor groups, banks and various other financial institutions). The rise of the institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for "fixed" (and exorbitant) fees being markedly reduced for the 'small' investor, but only after the large institutions had managed to break the brokers' solid front on fees.

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Bombay stock exchange

The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the 1850s, when 4 Gujarati and 1 Paris stockbroker would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition.

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The Bombay Stock Exchange Limitedis the oldest stock exchange in Asia and has the
third largest number of listed companies in the world, with 4700 listed as of August 2007.[1] It is located at Dalal Street, Mumbai, India. On 31 December 2007, the equity market capitalization of the companies listed on the BSE was US$ 1.79 trillion, making it the largest stock exchange in South Asia and the 12th largest in the world. With more over 4700 Indian companies listed & over 7700 scripts on the stock exchange, it has a significant trading volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used market index in India and Asia. Though many other exchanges exist, BSE and the National Stock Exchange of India account for most of the trading in shareursofoperation

Session Beginning of the Day Session Trading Session Position Transfer Session Closing Session Option Exercise Session Margin Session Query Session End of Day Session

Timing 8:00 - 9:00 9:00 - 15:30 15:30 - 15:50 15:50 - 16:05 16:05 - 16:35 16:35 - 16:50 16:50 - 17:35 17:30

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The hours of operation for the BSE quoted above are stated in terms of the local time (i.e. GMT +5:30) in Mumbai (Bombay), India. BSE's normal trading sessions are on all days of the week except Saturdays, Sundays and holidays

NATIONAL STOCK EXCHANGE

The National Stock Exchange of India Limitedis a Mumbai-based stock exchange. It
is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around Rs 47,01,923 crore (7 August 2009) and is expected to become the biggest stock exchange in India in terms of market capitalization by 2009 end.[2]Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India, and between them are responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the Nifty, an index of fifty major stocks weighted by market capitalization. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have taken a stake in the NSE.[4] As of 2006[update], the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India
[5]

. In October 2007, the equity market capitalization of the

companies listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities. It is the second fastest growing stock exchange in the world with a recorded growth of 16.6%. The National Stock Exchange of India was promoted by leading financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)
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segment in June 1994. The Capital market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000.

Markets Currently, NSE has the following major segments of the capital market:
Equity Futures and Options Retail Debt Market Wholesale Debt Market Currency futures August 2008 Currency derivatives were introduced in India with the launch of Currency Futures in USD INR by NSE. Interest Rate Futures was introduced for the first time in India by NSE on 31st August 2009, exactly after one year of the launch of Currency Futures. NSE became the first stock exchange to get approval for Interest rate futures as recommended by SEBI-RBI committee, on 31 August,2009, a futures contract based on 7% 10 Year GOI bond (NOTIONAL) was launched with quarterly maturities. Market Hours NSE's normal trading sessions are conducted from 9:00 am India Time to 3:30 pm India Time on all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange (or by the Government of India) in advance. The exchange, in association with BSE (Bombay Stock Exchange Ltd.), is thinking of revising its timings from 9.00 am India Time to 5.00 pm India Time. There were System Testing going on and opinions, suggestions or feedback on the New Proposed Timings are being invited from the brokers across India. And finally on Nov 18, 2009 regulator decided to drop their ambitious goal of longest Asia Trading Hours due to strong opposition from its members. On Dec 16, 2009, NSE announced that it would pre-pone the market opening at 9am from Dec 18, 2009. So NSE trading hours will be from 9:00 am till 3:30 pm India Time.

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However, on Dec 17, 2009, after strong protests from brokers, the Exchange decided to postpone the change in trading hours till Jan 04, 2010. NSE new market timing from Jan 04, 2010 is 9:00 am till 3:30 pm India Time.

STOCK MATKET (OR) SECONDARY MARKET:The secondary market is a market where existing securities are purchased and sold. Stock market represents the secondary market where existing securities (share and debentures) are traded; stock Exchange provides an organized mechanism for purchase and sale of existing securities. By now, we Have 23 stock exchanges in our country.

STOCK EXCHANGES IN INDIA:1) Bombay stock exchange 2) National stock exchange 3) Ahmadabad stock exchange 4) Bhubaneswar stock exchange 5) Bangalore stock exchange 6) Calcutta stock exchange 7) Cochin stock exchange 8) Coimbatore stock exchange 9) Delhi stock exchange 10) Hyderabad stock exchange 11) Jaipur stock exchange 12) Ludhiana stock exchange 13) Madhya Pradesh stock exchange 14) Madras stock exchange 15) Gowhati stock exchange 16) Mangalore stock exchange 17) Meerut stock exchange 18) OTC stock exchange 19) Pune stock exchange 20) Saurashtra stock exchange 21) Uttar stock exchange
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22) Vadodara stock exchange 23) Delhi stock exchange Note: Recently Hyderabad stock exchange is delisted from the exchanges.

DEFINTIONS OF STOCK EXCHNGE:-

Securities exchanges are market places where securities that have been listed there on may be bought and sold for either investment or speculation. By pyle A Stock Exchange is something like a vast warehouse where securities are taken away from the shelves and sold across the countries at a fixed price in a catalogue which is called the official list. By Hartely Withers Securities or stock exchanges are privately organized markets which are used to facilitate Trading in securities .As per this definition the stock exchanges are the organized places where securities are purchased and sold. By Husband and Dockeray

LEGAL FRAMEWORK FOR CAPITAL MARKETS

The SEBI (Securities and Exchange Board of India) provides legislative and regulatory provisions relevant from the view point of a dealer. Before 1992 the three principal acts governing the securities market were:a) The Capital Issues (Control) Act, 1947. b) The Companies Act, 1956. c) The Securities Contracts (Regulation) Act, 1956.

CAPITAL ISSUES (CONTROL) ACT, 1947:

To protect the investing public.
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To ensure that the capital structure of companies was sound and in the public interest. To regulate the volume, terms, and conditions for Foreign Investment.

SECURITIES CONTRACTS (REGULATION) ACT, 1956:

Stock Exchanges, through a process of recognition and continued supervision. Contracts in securities and Listing of securities on stock exchanges. To regulate the working of stock exchanges or secondary market with a view to prevent the undesirable transactions or speculations in securities. To build up the strong and healthy investment market in which the public could invest with confidence.

COMPANIES ACT 1956:

To regulate the issue of capital and matters incidental thereto, viz., content and format of prospectus. To regulate the capital structure of the companies. To regulate the procedure for the allotment of shares and issue of share certificates.

SEBI ACT, 1992:

To ensure effective regulation of the market, SEBI Act, 1992 was enacted to empower SEBI with statutory powers for

26

Protecting the interests of investors in securities. Promoting the development of securities market and Regulating the securities market. Its regulatory jurisdiction extends over corporate in the issue of capital and transfer of

securities, in addition to all intermediaries and persons associated with securities market. SEBI can specify the protection of investors in disclosure required for the protection on investors in respect of issues; can issue directions of all intermediaries associated with the securities market in the interests of investors and can conduct inquiries, audits and inspections and adjudicate offences under the Act Enactment of SEBI Act was an attempt towards integrated regulation of the securities market. SEBI was given concurrent/delegated powers for various provisions under the companies Act and SCA.

DEPOSITORIES ACT, 1996:

The Depositories Act, 1996 was passed to provide for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed, accuracy and security by De-materializing the securities in the depository mode and providing for maintenance of ownership records in a book entry from. In order to streamline both the stages of settlement process, the act envisages transfer of ownership in securities electronically by book entry without making the securities move from person to person the transferred and other procedural requirement under the companies act.

REGULATIONS:
The responsibility for regulating the securities market is shared by DEA (Department of Economic Affairs) DCA (Department of Company Affairs)
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RBI (Reserve Bank of India) SEBI (Securities and Exchange Board of India) SAT (Securities Appellate Tribunal)

SEBI also provides rules and regulations for: Prohibition of certain dealings in securities Prohibition against market manipulation Prohibition of misleading statements to induce sale or purchase securities Investigation into alleged contravention Duties of the person in respect of whom an investigation has been ordered Investigation officer

Government has issued notifications providing that the contracts for sale and purchase of government securities, gold-related securities, money market securities and securities derive from these securities and ready forward contracts in debt securities shall be regulated by RBI such contracts, if executed on stock exchanges, shall however, be regulated by SEBI in a manner that is consistent with the guidelines issued by RBI.

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CHAPTER-3 COMPANY PROFILE

COMPANY PROFILE
Sharekhan is one of the leading retail brokerage of Citi Venture which is running

29

successfully since 1922 in the country. Earlier it was the retail broking arm of the Mumbai based SSKI Group, which has over eigdes of experience in the stock broking business. Share khan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc. Earlier 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. SSKI is one of the leading players in 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 content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks. MISSION OF SHAREKHAN To educate and empower the individual investor to make better investment decisions through 1) QUALITY ADVICE 2) INNOVATIVE PRODUCTS and 3) SUPERIOR SERVICE.

PRODUCT AND SERVICES OFFERD BY SHAREKHAN 1. Equity Trading Platform (Online/Offline). 2. Commodities Trading Platform (Online/Offline).
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3. Portfolio Management Service. 4. Mutual Fund Advisory and Distribution. 5. Insurance Distribution. 6. Forex OFFERINGS OF THE SHAREKHAN Sharekhan offers both Offline and online trading account. But now a days it mostly concentrates on online trading account through which a customer can buy and sell shares in an instant from any part of the globe trough website. It does not take into account any type of physical restriction of going to the broker for carrying out a transaction or any type of settlement of payment. It facilitates the customer a speedy and hassle free transaction. Sharekhans product consists of a 4-in-1 concept, which integrates: D-matAccount TradingAccount Bank Link Dial-N-Trade

For doing a trading of shares everyone need D-mat A/C. In his D-mat A/C one can kept his shares. Then Sharekhan provides a Trading A/C Through this trading account, a Sharekhan customer can directly transfer his funds from his savings account i.e. from bank account to Sharekhan to his trading account without any paper work. He can buy and sell shares from the website and also view the market prices of the shares he trades on the terminal. Sharekhan.com allows trading at present only on NSE. BSE trading will be shortly available. To open an account a customer requires filling up a form consisting of 12 agreements, a passport size photograph, a residential proof, a photo id proof and a cheque drawn of respective amount in favor of S. S. Kantilal Ishwarlal securities Pvt. Ltd. & from 22 March , 2007 cheque is drawn in favor of Sharekhan LTD. it self. After opening an account with Sharekhan, a customer will be given User id, Membership password and trading password, which will enable him to access his account and trade.

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PRODUCTS OF SHAREKHAN Sharekhan offers 2 types of products according to the volume-based requirements of the investors that are as follows: CLASSIC ACCOUNT:

This account allows the client to trade through the website and is suitablefor the retail investors. Here maximum scripts that can be shown on the terminal are onlyAlsothe technical charts are not available. Its a JAVA BASED APPLET, which allows trading only through website and see latest prices of the scripts of your choice which isattached below. This account also allows trading in Derivatives. The lifetime registration charge for this account is Rs.750 and there is no constraint of minimum turnover.

SPEED TRADE ACCOUNT This is ideal for active traders who transact frequently during daystrading session to capitalize on intra-day price movements. Speed trade is Internet-based application based software which isavailable on a CD, which provides everything a trader needs on onescreen, thereby, reducing the time required to execute a trade. SPEEDTRADE offers a tick-by-tick update on stock price movementswith market depth and intra-day chart and lets the client do his ownstock/technical analysis. While the Lifetime charge for this account is Rs.1000 /- with aminimum brokerage of Rs.1500 /- to be generated each quarterly. KEY FEATURES Freedom from paper work Instant credit and money transfer
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Trade from any net enabled pc Online orders on phone Timely advice and research reports Real time portfolio tracking Information and price alerts

COMPETITORS Sharekhan is one of the major player in on line Trading. In Mumbai the main competitors of Sharekhan are ICICI Direct, India bulls, Kotak Securities, HDFC Securities, Anand Rathi, and Motilal Oswal. 1. Religare Enterprises 2. India Info line 3. ICICI Direct 4. India Bulls 5. Reliance Money 6. Kotak Securities 7. Motilaloswal These are some of the competitors of sharekhan.

REASON TO CHOOSE SHAREKHAN Experience SSKI has more than eight decades of trust and credibility in the Indian stockmarket. In the Asia Money broker's poll held recently, SSKI won the 'India's best broking house for 2004' award. Ever since it launched Sharekhan as itsretail broking division in February 2000, it has been providing institutionallevelresearch and broking services to individual

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investors.TechnologyWith their online trading account one can buy and sell shares in an instant fromany PC with an internet connection. Customers get access to the powerful online trading tools that will help them to take complete control over their investment in shares. Accessibility Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for investors. These services are accessible through many centers across the country (Over 650 locations in 150 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 intodirect profits, investors get access to a wide range of information on the content rich portal,www.sharekhan.com. Investors will also get a useful set of knowledge-based tools that will empower them to take informed decisions. Convenience One can call Sharekhans Dial-N-Trade number to get investment advice and execute his/her transactions. They have a dedicated call-center to provide this service via a Toll Free Number 1800 22-7500 & 39707500 from anywhere in India. Customer Service Its customer service team assist their customer for any help that they need relating to transactions, billing, demat and other queries. Their customer service can be contacted via a tollfree number, email or live chat on www.sharekhan.com Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical research. Their analysts constantly track the pulse of the market and provide timely investment advice to customer in the form of daily research emails, online chat, printed reports etc. BENEFITS Free Depository A/c
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Instant Cash Transfer Multiple Bank Option. Secure Order by Voice Tool Dial-n-Trade

How to open account with Sharekhan?

For online trading with Sharekhan, investor has to open an account. Following are the ways to open an account with Sharekhan: Call them at phone number provided below and ask that you want to open an account with them. Call on Toll free number: 1-800-22-7500 to speak to a Customer Service executive If you are in Mumbai call on 022-66621111 Visit one of their branches. Sharekhan has a huge network all over India. Click on http://sharekhan.com/Locateus.aspx this link to find out your nearest branch. Just select the place near you and you'll find a manager to assist you there. You can send them an Email on info@sharekhan.com to know about their products and services. If you wish to chat with customer service representative, you can join the chat sesssion. ADVANTAGES OF SHAREKHAN
Online trading is very user friendly and one doesn't need any software to access. 35

 They provides good quality of services like daily SMS alerts, mail alerts,stock recommendations etc. Sharekhan has ability to transfer funds from most banks. Unlike ICICIDirect, HDFC Sec, etc., so investor not really needs to open an accountwith a particular bank as it can establish link with most modern banks. DISADVANTAGES OF SHAREKHAN They charge minimum brokerage of 10 paisa per stock would not let youtrade stocks below 20 rs. (If you trade, you will loose majority of yourmoney in brokerage). Lots of hidden rules and charges. They do not provide facility to book limit order trades during after-hours. Classic account holders cannot trade commodities.
Cannot purchase mutual fund.

CHAPTER-3
36

THEORITICAL FRAMEWORK

ONLINE TRADING Countries all over the world have invested heavily to leverage the Internetand transform their conventional businesses into e-businesses. E-businessesare defined as the use of Internet based information and communicationtechnologies (ICT) by organizations to conduct transactions, shareinformation and maintain relationships. New technologies such as World WideWeb have made a profound on all business around the world. E-businessenables organizations to reduce cost, increase demand and create newbusiness models. E-commerce is a subset of e-business and defined as buying and selling ofgoods and services on the Internet, especially the World Wide Webwww.dotcom-productions.com). In fact, any
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commerce carried out usingcomputer networks are called electronic commerce and has created anopportunity to do business and handle transactions electronically and stocktrading domain makes the most of its chance all over the world. As, the time factor play critical role in this business, internet quicken and streamline the trading process. Creating more convenience, saving time and money andpaperless process are the most significant goals of the online trading. Definitions of Online Trading The Internet revolution has been changing the fundamentals of the society. Itchanges the shape of communication and also trading process. It shifts closerand closer to vital sources of information and new trading environment by thename of "online trading". It provides users with means to directlyinteract with service- oriented computer systems tailored to their specificneeds; therefore, they can serve themselves better by making their owndecisions. There are lots of definitions for online trading. Hereby, four main definitions are mentioned:

Referring to two websites which are active in trading fields(www.investorwords.com and www.advfn.com) they define online trading inthis manner: The increasingly popular activity of buying and selling securitiesover the internet, or to a lesser extent, through a broker's proprietarysoftware. Likewise Fan et al. define it in this way: The 'online trading' isdefined as a process of trading financial products especially stocks over theInternet, and online stock trading site is a web site that helps traders orcustomers to buy and sell the financial products over the Internet.Also online trading is described as service offered on the internet for purchaseand sale of shares. In the real world you place orders with your stockbroker.In online trading, you will access a stockbroker's website through yourinternet-enabled PC and place orders through the brokers internet-basedtrading engine. These orders are routed to the Stock Exchange withoutmanual intervention and executed thereon in a matter of a few seconds.(www.investsmartindia.com)Furthermore there is
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another definition for online trading which defines it inthis way: Online trading is placing an order for a trade using the internet.Online trading is not a strategy, but a means to enter a trade. Online tradingcan be used to enter a short trade or day trade, or a longer-term position in astock, bond, commodity or option. (www.trendtraders.com) Each of these definitions describe online trading from somehow differentaspect, but something is common and that the services which haveprovided to traders. They divided into three categories Full-service Discount Online Investors who do not have time to research investments on their own willlikely rely on a fullservice broker to help them construct an investmentportfolio, manage their investments, or make recommendations regardingwhich investments to buy. Full-service brokers have access to a wide range ofreports and analyses from the company's large staff of financial analysts.

These analysts research companies and recommend investments to peoplewith different financial needs. Persons who prefer to select their owninvestments generally use a discount or online broker and pay lowercommission charges. Discount firms usually do not offer advice about specificsecurities. Online brokerage firms make their trades over the Internet inorder to keep costs down and fees low. Discount brokerage firms usually havebranch offices, while online firms do not. Most brokerage firms now have callcenters staffed with both licensed sales agents and customer servicerepresentatives who take orders and answer questions at all hours of theday. (www.trendtraders.com) There are two basic ways to day trade electronically. The first is through"Conventional Online Trading", using your Internet browser and a Web based broker. The second is by way of "Direct Access Trading systems", usingspecialized software and a private network. It is important for day traders tounderstand the key features of, and the differences between, these two formsof

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electronic trading. Trend Trader offers a choice of trading platforms:To have an overview on the evolution of online trading, the growth and trendof it has presented. Online Trading trends
Security issues fading: Concerns centered on security issues(encryption) and customer

service issues (upgraded server andnetwork equipment) are fading as consumers become accustomed tousing the internet on a weekly or even daily basis for many types oftransactions.
Pricing stabilization: The online brokerage industry has seen severeprice competition

over the last two years, with every competitorlowering commission rates in an attempt to gain as many newaccounts as possible. There is a belief that, prices have startedto stabilize and further price reductions are unlikely from thepresent level.

While new entrants will have to align commission rateslower to be competitive, rates of established online brokerages will bestable over the next year. Online Trading characteristics
High amounts spent on advertising: Because of relatively low barriersto entry,

companies in this industry spend heavily on advertising inorder to create a "brand" or "portal destination". The industry is in arace to lock up as many customers as possible, with the idea that acompany can retain those customers by creating switching costs. Eachcompany could create switching costs by customizing the companyportal, making it costly for a customer who switches to competitors' site. Importance of technology: Companies in the industry compete onspeed of access, speed of order processing, and system reliability.Conventional brokerages are not accustomed to dealing with thisadditional layer of complexity. Established online brokerages have anadvantage over newly entering conventional brokerages in this area.
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 Scale is important: With the large conventional brokeragesentering the online business,

gaining economies of scale will beimportant. Heavy advertising costs will need to be spread over alarger number of accounts. How successful a brokerage is at gainingand retaining customers over the next year will determine which online brokerages survive as independent businesses.
Different service proposition: Online brokerages offer a differentbundle of features

compared to conventional brokerages. Convenient twenty-four hours access for trading and research are definingcharacteristics of the online business. Convenience and low costtrades have been two primary drivers responsible for the significant transfer of investors from conventional brokerages to onlinebrokerages.

THE EMERGENCE OF E-BROKING IN INDIA The Indian trader is being fancied by the democratized world of online trading or also known as e-broking. The regular and attractive advertisements in the print media and electronic media have added to this fancy world. But as we compare to the Western countries, in India online trading has not still grasped the market , but has done a very important amount of progress in the past years and the future of online trading is bright. That is why many new companies are coming into this form of business structure and the existing companies are changing to this new format besides offline and other traditional forms of business. With only a mere share of 10% online trading a combined gross turnover of around Rs. 9000-10,000 crores handled by the BSE and NSE together there is a much greater scope for online trading. At present some of the dominant players in the online trading market of share market are 1. Sharekhan.com 2. Icicidirect.com 3. Unicon
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4. 5paisa.com 5. Indiabulls 6. Kotak Securities 7. Motilal Oswal 8. Geojit Securities Earlier the share market was not safe enough to invest but some of the changes in the past ten years in the Indian share market have created the interest of trading in the shares by the people. Broadly we can classify three importantfactors which have contributed to the development of online trading in India-

Firstly the major step was taken by the National Stock Exchange (NSE) in the year 1994 which allowed the electronic trading and seeing to this various other stock exchanges in India followed soon. This helped in making the fast.accurate and transparent transactions saving a lot of time then the traditional method of trading. The investors were also saved by the clutches of the fraud brokers at the times when the clients were not aware of the true prices of the shares. Secondly, in the year 1996 the dematerialization of the shares came (also known as DEMAT) which avoided the online presence of shares in an electronic form avoiding them from theft, pilferage or from other losses like counterfeiting and frauds regarding share transfer.The third reason was the rapid growth of computer education and learning of internet by the people. With the evolving of internet the online trading became a hit and the investors became confident in investing just with a click of a mouse.

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Today the online trading companies having cut-throat competition in our offering whose brokerage discounts lower margin money and zero balance accounts. Due to the rising education awareness and use of internet there is a huge potential for online trading in future and companies must come up with innovative offerings to capture the untapped market. ONLINE TRADING INFRASTRUCTURE The emergence of online exchanges has facilitated faster transactions by providing online trading portals and brokerage houses ease and flexibility. The Internet has indeed opened up new opportunities for conducting the business. The worldwide stockexchanges has made a major shift from the traditional method oftrading and now conduct a bulk of its business online through its brokers and partners. In the developed countries majorly all the exchange
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transactions are conducted online. The trend took off slowly in India and the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) two of the largest exchanges in India have been conducting online trade successfully for some time. WHY ONLINE TRADING ENTERED LATE IN INDIA? The Indian exchanges and brokering houses have been very slow in moving their transactions online and the major reason has been the lot government regulations. The initial delay was due to laying down the specifications for creating Closed User Groups (CUGs). This issue was resolved between the Department of Telecommunications (DoT) and the Finance Ministry around 1998 and after that soon came the online trading portals like IL&FS investsmart, ICICIDirect.com, motilaloswal.com, sharekhan.com etc. Connectivityrelated issue was perhaps the most important technological factor. RBI made regulation that it is mandatory for company to store at least 7 year financial and transactional data. In the non-stop, 24 hours a day, seven days a week world of investing, we are able to Obtain investment news around the clock
Check quotes on exchanges all over the world day or night

Easily compare one investment to another vianumerous ratios, charts, graphs, and tables Screen for the best investments to fit our individualgoals and requirements Trade stocks as easily and quickly as professionaltraders Calculate retirement needs based on various scenarios Regularly monitor portfolios and make necessarychanges quickly and almost effortlessly
Control the routing of individual trades for the best possible price and execution.

Even many years after the launch of the first onlinebrokerage firm, there remain a large contingent of individualinvestors who still pick up the phone and call their stock broker tobuy and sell investments. However, every year a growing numberof investors are placing their trades using online brokers. ONLINE TRADING BY NSE & BSE The central computer located at the Exchange is connected to the workstations of the Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders placed at the Brokers'
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workstations reach the central computer and are matched by the computer based on price and time priority.Both the exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE On Line Trading) and NEAT (National Exchange Automated Trading) System. It facilitates more efficient processing, automatic order matching, faster execution of trades and transparency.The scrips traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' groupshares represent those, which are in the carry forward system(Badla). The 'F' group represents the debt market (fixed incomesecurities) segment. The 'Z' group scrips are the blacklisted companies. The 'C' group covers the odd lot securities in 'A', 'B1' & 'B2' groups.

PROCESS OF ONLINE TRADING An investor interesting in trading through Internet shall have to, firstly register himself with an Internet brokerage firm. Some formalities such as filling the account opening form of the ebroker,copies of identity proof, copy of residence proof are made to registerhimself with the etrader. Secondly, the investor would be required to open a bank account with a scheduled bank and sufficient balance should be kept in the account. Thirdly he would The client places order via the net by logging on to his Brokers site. be required to open account with a depository participant because only dematerialized shares can be traded on Internet. So, generally following steps are followed while doing the trading through the Internet: Step-I: Those investors interested in doing the trading over Internet system, that is,NEAT - ISX (NSE), should approach the brokers and register with the Stock Broker. The broker accepts and
45

executes the order and places it with the exchange. The exchange accepts the order after checking the share limit for the day. The broker makes the payment either directly via the client bank account or pays through its own account and recovers it later from the client. The exchange receives money and completes the settlement. The client is intimated about the settlement either through the demat or via e-mail. Step-2: After registration, the broker will provide to them a login name, password and a personal identification number (PIN). Step-3: Actual placement of an order, Using the place order window as under can then place an order:
(a) First by entering the symbol and series of stock and other parameters such as quantity

and price of the scrip on the placeorder window. (b) Second, fill in the symbol, series and the default quantity.

Step-4: It is the process of review. Thus, the investor has to review the order placed by clicking the review option. He may also re-set to clear the values. Step-5: After the review has been satisfactory; the order has to be sent by clicking on the send option. Step-6: The investor will receive an "Order Confirmation" 'message along with the order number and the value of the order. Step- 7:

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In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about ten seconds is there in executing the trade. Step-8: It is regarding charging payment, for which there are different modes. Some brokers will take some advance payment from the, investors and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds by the investor to his account.

THE MECHANICS OF ONLINE TRADING

CLIENT

BROKER

STOCK EXCHANGE

Accepts the orders, checks client Accepts the places the order with the stock limit of the der on the brokers website through the distinctiveidentity and orders after checking the scripexchange broker for the I.D. code .

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d in his Demat account. The client is intimated about the execution of the deal by e-mail. Pays the broker Pays the Exchange though his owns account and receives it from the client the Receives account money and completes the settlement

DIFFERENCE BETWEEN ON LINE AND OFF LINE TRADING Nevertheless, with all the convenience of online trading there are still investors who prefer the old fashion way of offline trading. Offline trading has lost some popularity but it is still the main form of investing. Offline trading offers many benefits as well.
1. The one benefit that an investor appreciates the most is that they are not alone when

making
2.

investment decisions.

There are experienced and professional brokerage companies that handle their investments for them. Investors are not faced with the challenge of making these vitalinvestment decisions; especially, if they do not have theexperience necessary to make the appropriate investments.

3.

4.

Also, there is someone there to answer any questions that maycause concerns. sNot to mention, with offline trading mistakes areless likely to take place. No one wants to
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throw their money awayor stand by and watch someone else throw their money away. Itmay be wise to hire a professional to assist you in making thecorrect investment decisions if you feel you lack the knowledgenecessary. Online trading is very expensive as compare to manual tradingor offline trading. Online trading consumes less time as compare to manualtrading. Online trading has very helpful to finding the records easily butoffline trading takes more time to finding the records. In the help of online trading, there is no chance of any errorswhile doing the trading. in offline trading there are some errorsexist like barriers of communication .

ONLINE TRADING INTERNATIONALLY Online trading is not a phenomenon that is sweeping only the UnitedStates; it is being implemented in other countries as well. For thepurpose of this study, articles regarding online trading that took placein Switzerland, India, and Singapore were analyzed. In Switzerland,40 per cent of the shareholders search for their financial informationvia the Internet and more than 25 per cent of people between theages of eighteen and twentynine also place their orders via theInternet. The characteristics of online investors are very similar tothose in the U.S. Swiss Internet investors are generally maleprofessionals with a high level of education and income. They also arevery self-directed individuals that make decisions regarding theirfinances on their own. In India, trading via the Internet refers to giving your orders tobrokers via a website and not directly on an exchange. Goswami(2003) also explains how the Internet in India acts as an OrderRouting System since all orders must be routed through the sameexchange mechanisms this helps to ensure transparency andsecurity. India investors are professional self-directed people that arehighly educated. Goswami rates convenience,

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low cost, and speed asthe benefits of online trading that are most important to the Indianinvestors. Finally in Singapore, the self-investing trend has led to many ebrokerageswith lower fees than traditional brokerages. The majorityof investors in Singapore are young professional males with at leastone college degree. However, since stock trading on the Internet hasbecome so accepted in Singapore, it is not correct to say thatinvestors are only the young and the educated. Instead, Internettrading is appealing to investors across different age levels anddifferent educations. Nevertheless, according to Teo, Tan and Peck,the one characteristic that almost all online investors have is highlevelincomes. They found that this was because most local onlinebrokerages require a deposit of at least $1000 (Singapore dollars) inorder to start trading.

CURRENT SCENARIO OF SHARE MARKET OF INDIA

Currentmarket of India. This is because of the NSE of India and the BSE of India plunging for the third consecutive week at a stretch. The rapid flow of foreign funds and with Indian investors heavily investing, it was the force of the bull that reigned supreme. But the situation lasted for a short time. The bear market gained momentum post festive season, i.e. Diwali turning the 21000 plus BSE sensex benchmark to loss more than 1800 points. Even the nifty of the NSE of India exhibited a similar fate. No investor can do away with the forces of the bear and the bull. And this is a common affair in the NSE BSE market. There are several reasons that led to the plunge of the nifty and BSE sensex. Here is a list of the same: 2G spectrum scam creating political instability; it did have an impact on the dampening of the NSE BSE markets

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 The housing finance bribery scam involving top officials in from top financial institutions and PSUs; the scam is unearthed by CBI. It has dampened domestic trading but not international trading Credit concerns in Europe Korean fears leading to sell-off in global markets Monetary tightening in China, and more. The above factors accounted for the current downtrend. One reason that led to the fast rise of the BSE sensex resulting in an all-time high is because foreign investors who majorly contributed to the inflow of funds did not participate in the selling. As per market statistics and latest news, there weren't many sellers preceding the Diwali, but post Diwali, net selling amounting to Rs. 3500 crore happened suddenly leading to the consecutive fall. But the greatest downtrend was witnessed during the recession period that greatly affected world markets including the NSE of India and BSE of India. And the markets did recuperate and special mention needs to be made of the fast recuperation of the share market of India. For latest news related to the NSE of India, BSE of India, and the share market of India as a whole, you can bank upon an online trading platform. As a beginner, you can open a trading account here; right from day one you can avail a number of benefits right from getting stock tips related to NSE BSE markets, recommended stocks, access to news, and related regalia. Experts catering to investors from such a portal facilitate the latter to get a clear picture of share market of India. Depending on the particular market condition, you will be given the right advice. Who doesn't know about the BSE sensex? Ask any literate individual and pat would come the reply; such is its influence in corporate houses, Indian households, etc. today. Look for gains in the long term and do not get influenced by such temporary downtrends. Continue with your research and set a trend.
As the economy is getting better form the Great Depression of 2007, the analysts think

that the stocks will perform better than bonds and cash. Though there was a 50% rise in the stock market till March, 2010, in the last few weeks of April, 2010, the market has seen to be tumbling. Though there is uncertainty in the market, but, the economists expect FTSE 100 to be in the range of 5,000 to 5,500 by the end of 2010. The analysts are expecting to see a slow but steady growth in 2010.

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 In the year 2010, it is predicted by the economists that the Dow 30 will have another unstable year and will dip below 10,000 a time or two before the year end, closing at 11,650. However, instead of a second-dip recession, the GDP will grow by 3% or more. As a result of Obamas stimulus program, there will be a positive effect on short sale and low mortgage rates will stabilize the housing market. The stocks will also be relatively cheap on an earning basis. As a result of debt problems in Europe, which has not yet been resolved, the economic growth in the US has also been dragged down. On 6th May, there was nearly a 1,000 point drop in the Dow. On a positive note, stocks are now more overselling than they were at the end of the March 2009, and that oversold condition resulted in an assembly.

As a savvy investor, you should follow the economic condition closely, and invest your money, to get the maximum profit on your money. A stock market is a public soak where stocks, bonds and shares of different companies are bought and sold. The companies issue stocks to get fund, which is necessary for the development of the company, in terms launching new products or employing employees or expanding the business. You become a part of the company by owing stocks of that company. You can earn money, if that company shows profit. Stock markets are closely related to the economic equilibrium of a country. When the economic condition of the country is good, inflation and unemployment level is low, the market is said to be bullish. If the economic condition is adverse, there is rise in inflation and unemployment level, the market is said to bearish.

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Trading volume on nse:

53

TURNOVER OF NSE Date 05-08-2011 04-08-2011 03-08-2011 02-08-2011 01-08-2011 29-07-2011 28-07-2011 Shares Traded 805,120,438 639,543,139 573,038,549 502,359,286 534,607,702 681,287,484 848,236,210 Val (Rs cr) 14,258.74 11,190.59 10,574.71 9,544.22 9,591.68 12,437.64 15,010.16

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World stock markets review of 2010-2011

The UK's FTSE 100 was up 11pc by Christmas, but the star performers of 2010 were Germany and Russia.

The traditional Santa Claus rally has helped the UK stock market to become one of the bestperforming markets in the developed world in 2010, especially mid-tier and smaller companies. However, gains in German blue-chips were almost double those seen in the UK. The FTSE 100 is up 11pc over the course of the year, but the FTSE 250 rose a very impressive 23pc. This is in addition to the 45pc gains in the mid-cap index during 2009. The junior market performed even better with AIM rising 40pc so far in 2010. It was, however, a roller-coaster ride. The blue-chip index hit a peak in April of 5,825, before plunging to its year low on July 1 of 4,805. Worries over debt in Greece, Spain, Portugal and Ireland hit wider sentiment, but the miners also helped to drag the FTSE 100 lower after the Australian government introduced a supertax on miners' profits. Negotiations over the year between the world's major mining groups
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and Australian authorities eventually reached a compromise agreement and a commitment to reduce the new tax and give clarity on future royalty payments. DISCUSSION AND IMPLICATIONS FOR THE FUTURE

Has online investing benefited or impaired the financial industry? Thepurpose of any efficient market is to bring all possible buyers andsellers together so that all the preferences are reflected in the marketprice. Online investing benefits the financial industry by helping thestock market to reach this goal. It allows more buyers and sellers tocome together to carry out transactions. Some fear that online investing will increase market fragmentation,which is when too many competitive suppliers enter an active or newmarket. Although that may happen over a short period of time, in thelong run, the number of suppliers and consumers should even out asmore people start using the Internet to trade. Whether to switch to online trading is something that investors willhave to decide for themselves. At this time, average Internet tradersmight fall into the category of young highly educated men with largerincomes, but this is sure to change. Women are now beginning to usethe Internet more for online shopping and paying bills so using theInternet to invest should follow. Also a number of inexperiencedinvestors have started trading online because of the amount ofpublicity touting its ease and convenience. These immature investorswill need a lot of knowledge and advice from ebrokerages, and onlineinvesting firms must take a step up and be available for morepersonal advice. That may mean that transaction costs will go up formore nave investors who request more personalized service, but itwill be worth it for them in the long run. It is also important to educate new investors that investing onlinetends to make them look to the short term instead of investing for thelong term, and that this can cause them to trade more frequently,thereby lowering their returns. Buying individual stocks can be veryrisky and without the right advice on how to diversify investments, anave investor could end up losing a lot of money.

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 Since no online investing firms are the same, investors will valuecertain ones over others based on their needs. The new breed ofinvestor that enjoys risk and likes to trade frequently will favor sitesthat gives them low transaction costs and lots of control. However,beginning possible. As the Internet becomes available to more people all over the globe,foreign investors will increase their purchases of U.S. stock and U.S.investors will begin to diversify by including more foreign stocks intheir portfolios. These foreign investors will appreciate theopportunity to invest in U.S. stocks more conveniently and at lowercosts. Foreign investors will now be able to pay lower transaction feesand stop paying higher fees to their brokers for international trades.The same can be said about U.S. investors trading foreign stocks.Many advisors suggest holding foreign stocks in a portfolio as itactually reduces undiversifiable risk, so online investing will giveinvestors an easier way to acquire these international stocks. More traditional brokers will need to start offering services via theInternet if they have not already. However, they should not gocompletely online as a majority of the investors like the security ofknowing that there is an actual physical location where they can go ifthey need expert advice. For investors that want to experiment withonline investing but are already clients of traditional brokers, the ideaof setting up play money for them to invest with is a suitable idea.Also, brokers could set up a mixture that allows both online tradingand traditional trading. Traditional brokers should consider offeringother services such as estate planning and tax planning, which willnot be as easy to offer online.
However, there are indications that online trading has somewhatdampened since 2000.

investors will want sites that give them more advice

andhandholding tools. More value-added knowledge should be added toas many sites as

What began as an economic slowdown onlygot worst with the September 11th terrorists attacks. Investors havegenerally have become less tolerant and more risk averse. Whendramatic events such as September 11th happen, it directly affectedthe overall performance of the economy and investors have thetendency to stay with approaches that they are most comfortable withand not try anything new (like online trading) while at the same timeinvesting less (sine investments involve risk). If the market picks upspeed, investors will change their minds. But, given the uncertainty inglobal oil prices and other issues, including ballooning U.S. tradedeficits and the war on terrorism,
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investors are very unlikely to returnto online trading in the near future. However, they will do so as soonas the market picks up and they once again become comfortable withthis new approach to trading.

Advantages and Disadvantages of online trading

Trading online the same as other systems has advantages and alsodisadvantages. Below the main points are summarized: ADVANTAGES:
Quick access/Convenience: You can place your orders fromanywhere and at any time.

All you need is a personal computer. Whenyou trade online, you save yourself a lot of time. You need not callyour stockbroker to give your orders or to find out what happened toyour trade.
Control/Transparency: With online trading, power is literally atyour fingertips. With a

few keystrokes, you can place your orders andget all the information you need without any assistance or interventionof a stockbroker. You do not have to discuss or reveal yourtrades or plans with your stockbroker. You become an empowered,self-directed investor.
Efficiency: Getting information or feedback used to take minutes,sometimes even days.

With online trading, you get these fasterbecause you get online, real-time information on your accountbalance, order status, and stock quotes with the best three levels ofbids and offers.
Opportunity to take advantage of market movements: Bytrading online, you have the

ability to react quickly and takeadvantage of opportunities in the market that will hopefully enhancethe value of your investments

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DISADVANTAGES: Despite all the advantages of Online Trading there are a few disadvantages.However, these disadvantages only apply to certain investors, theinexperienced investor, the traditional investor, and the busy investor.
Expertise: Nobody involved in financial markets claims to know allthe right moves, but

everyone involved in the markets has anunderstanding of how things work. For an individual who knowsnothing about stocks and nothing to look for might have a problemwith online trading. Online trading does provide investors withsufficient research to make educated investments, but investors mustbe able to interpret the research and put it to use. Thoseindividuals who do not have an understanding of the information mightbe better off letting a broker make the decisions.
Time: There are a lot of investors out there that are very welleducated in the financial

markets but are too busy doing other things.Online trading requires an individual to do his or her own analysis. Theresearch is provided by the online company, but the investor mustgo through the information and determine what is valuable to theirinvestment strategies. This often times requires an individual to havesome free time. Many investors just do not have the time to gothrough the research; therefore, using a broker is the only otheroption.For the traditional investor Online trading also has one major disadvantage:
Informality: Using an online service to make trades is very informal.Traditional

investors grew up investing through a broker andinteracting with that broker. Often time's traditional investors havevery close relationships with their brokers and online tradingeliminates the possibility of any relationships. Online trading might notbe for everyone and often times are not. However, 82 percent of thosepeople who invest online believe that most investors will invest onlinein five years. Whether or not this is true, trading online has becomevery popular and has opened a door to whole new perspectiveof investing. Whether you are a first time investor or a professional,online trading offers convenience, lower costs, andempowerment to all users.

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CHAPTER-4 DATA ANALISIS

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Analysis and Interpretation

1. What is your education qualification?

To invest in the stock market minimum 100000 or more than this should be the annual income level of the people. In India the per capitaincome in also increasing so we can say that there is a goodopportunity for the online trading market.

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2.What your annual income?

INTERPRETATION 58%respondent are having the income level of 100000-200000 ,21% is having 200000-300000 , 12% in having300000-400000, 7% of the total respondent are having income more than 400000 perannum and only 2% are having less than 100000 per annum.To invest in the stock market minimum 100000 or more thanthis should be the annual income level of the people. In India the percapita income in also increasing so we can say that there is a goodopportunity for the online trading market.

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3.What percentage of your monthly household income could beavailable for investment?

INTERPRETATION According to the data 23% of the total respondent investless than 5% of their income,41% respondents are saying that they invest 5%-10% of their monthlyincome (which is highest)Whereas the 21% investor do the investment 10%-15% of their totalmonthly income,13 invest between 15%-20% of the total income andonly 2% does more than 20% of their income invest in the marketWe can easily understand that 75% of the total population is having agood amount of investment, so the investment is their in the market,good number of people are ready to invest a good amount in themarket91% of respondent is in the income level of 100000 300000(according to the last question analysis).So we can say that stock brokerage houses will have to do agood business with the help of Online trading system with few valueaddition services

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4.Where do you often invest your money?

INTERPRETATION Highest number of respondent is having their investment in the equity that is 65% whereas the investment available for the mutual fund, term deposit and insurance is 14% ,12% and 9% So the investor for equity is high which is again showing the n number of opportunity for online trading

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5.what is the primary objective of your investment?

INTERPRETATION 13% of the respondent invest the money for the reason capital appreciation but most of the investor is having same motive that is source of income and retirement plan, wealth preservation and education funding for children or other are only 10% From the analysis we can have idea that the main objective of the investor to earn the money through trading in stock market77% of the respondent achieve their objective with the help of investment in the equity market, because most of the investment take place in the form of equity (explanation of 4th ans) So we can say that there is a huge potential in the market for the trading in the stock market

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6.Do you owe a Computer?

INTERPRETATION 78% of the total respondent who are dealing with the stock market is having computer in their house and only 22% is not having computer in their house The people who is having computer that is 78% can also go for online trading which can be a large number of people who will go for online trading. they dont need to do a additional investment for computer to go for online trading

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8. Online trading is a secure way of trading?

INTERPRETATION 71% of the respondent is having a positive thinking that onlinetrading is a secure way of trading whereas 185 of the respondentbelieves that online trading is not a secure way of tradingSatisfaction about the process, by which they will be going to do atrading that is online trading, should be there in the mind of thecustomer. If they believe that their is no risk over the money whichthey are going to invest in the market with the help of online trading,there will be a perception to go for online trading at least one time

9. online trading is easy and fast way of trading?

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INTERPRETATION 51% of the total respondent believe that online trading is a easytask Whereas 41% of the respondent believes that to deal with onlineTrading is not a easy task and 85 was confused to anything about thatthe trading via internet is a easy task or notThere is a difference between the people who believe and whodont believe is not very big that is only 10% , the reason of thisproblem can be if a person is doing its investment on its own he or shethink of the problem of being mistaken in the transaction. So there is aneed of proper training to do trading online

10. Introduction of online trading helped to attract the newInvestors thus increasing thevolumes at Stock Market?

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CHAPTER-5

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FINDINGS For how long you have been trading with on line-trading? According to this survey we find that 44% people saysthat we are investing the money online from one year.11% people says that we are investing money onlinefrom 4 year. so we can say that now online trading isvery popular in the modern mo How will you describe your experience with on-line tradingtill date? According to this survey we find that 60% of people findvery easy to operate. and15% people find no secure.so we can say that online trading is very simple tooperate and easy to understand. What amount of money you invest normally? According to this survey we find that 35% of peopleinvest money normally 50000. 14% of people investmoney between 150000to200000. So we can say thatthe people are not invest more money in the sharemarket because there is a great risk involved whiledoing the trading. How often do you trade? According to this survey we find that 10% of people dotrade Daily. 18% people do trade more than month. Sowe can say that people are generally invest in stockmarket weekly basis. which trading you prefer? According to this survey we find that 20% people preferonline trading and 32% people prefer offline trading. Sowe can say that mostly people are awareness about theon line trading and because of this reason the mostlypeople are optimizing offline trading.

Whether online trading settled in Indian investor psyche?

According to this survey we find that 30% people says yesand 70% people says no. so we can find that on linetrading is not settled in theIndian psyche because some people are not experiencetowards online trading. What shortcomings do you feel in Indian derivativesmarket?
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According to this survey we find that 37% of people sayslack of awareness 49% says Shortage of expertise and14% people says any other. So we can say that mostlypeople are shortage of experience about the Indianderivatives market or share market. Which media would you prefer the most for investment? According to this survey we find that 41% people Prefer T.Vand 39% people prefer newspaper and 20% people prefermagazines. So we cansuggest that mostly people are very easily grapped theknowledge through T.V.

RECOMMENDATIONS

The companies should come up with more and more innovative features intheir web portals. We came to know about most important factor about the product withthe help of factor analysis, so we should go for change the productaccording to the customer need. We should also focus upon the value added services. Generallycompany does claim that if you will by the product you will get thesebenefits but company doesnt provide the services here. So servicesalways does matter when we talk of ONLINE TRADING Company should also look for the problem which customer generallyface when they do trading (like problem of operating properly) The customer should be educated regularly regarding the newtechnologies and techniques of trading online and also other relevantinformation. The companies should look after to develop more safe and secureways of transacting business online. The companies should make maximum efforts to detect fraud casesand minimize them

INDUSTRY RELEVANCE

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My research project is quite relevant to the today generation of online tradingcommunity. The following things can be useful for online trading community They should know their market position with other competitors.
They should probe the broking company to get know some areas ofimprovement.The

changing perception of market and the companies will also bemade clear. They should get the broking companies to do effective segmentation oftheir market based their research analysis teams for better trading. Everyone should understand the effects & advantages of todayschanging technology and should keep themselves abreast with thechanging & upcoming technology. LEARNING The last two months has been a great learning experience for me because Icame to know about many aspects of online trading which I didnt know inlast 6 years of using the online trading facilities. Some of the learning of mineis: I improved my communication skills by learning how to talk todifferent kind of people as it requires the different approach to handleeach person. I became aware about various aspects of working of stock exchange I learnt few things about back office work I learnt about the consumer perception about the stock market andonline trading. Patience was the thing I learnt the most as I have to approach variouspersons to whom I had to explain same things again and again whileapproaching or calling them at regular Intervals.

CONCLUSION The online trading is growing with a rapid pace with the rising level of education among the customers. The other factors being that the Indian Investor nowadays wants to deal
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himself in trading rather than depending upon other middlemen. They also consider the factors like time saving in doing the online transactions, convenience etc. Although some people feel that online trading is not secure but the people doing the trading online is happy about the increasing security concerns among the companies. The year 2008 has not been so good for the stock market and the Sensex and Nifty has been dipping and affecting the business negatively for these companies but the same trend reversed in 2009 - 2010. This is due to the fact that at these times people do not prefer to open the DMAT and Trading accounts. So the companies have to reduce their account opening fees to attract more and more customers. Also people trade very less in the bearish market and the companys profits against brokerage fees soars downwards. It is also a found fact that during the bearish market the ratio of online trading becomes very less. Also there is an intense competition among the companies and the companies come up with new and new promotion schemes such as discounted and negotiable brokerages, Zero balance accounts, waiving a/c opening fee and AMC etc. As the internet penetration is growing in India this business holds a huge potential for growth. Now if the existing company will have to capture the market they will have to look for the innovation in their product as well as service mix. The mantra for success in the current situation will be educating the customers about the benefits of online trading and the amount of ROI that can be generated through it.

The Internet is drastically changing how everyone does business, including the financial industry. Online investing has benefits to offer investors as well as brokers. These benefits include low transaction costs, convenience, speed, boundary spanning, improved communication, and risk management. However, these benefits do not come without costs. Some costs of online trading include information-processing costs, unobservable costs, information illusion, and smaller commissions for brokers. The characteristics of online traders are somewhat different from traditional investors. Online traders tend to be males in their early twenties to mid-thirties, with high income and education levels. Yet this will be changing as more people gain access to the Internet and start doing more everyday things online. Foreign investors will also

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increase trading in U.S. stocks, and U.S. investors will begin investing in foreign markets. Although online investing is gaining prominence, it will not be for everyone. Some will not trust the security of trading online and others will not have the time to do the research required and will prefer to have traditional brokers invest for them. Overall, online investing will only encourage new investors to trade in the stock market, bringing together buyers and sellers to make the market more efficient. After some of the kinks are worked out of online trading, it will tend to be more beneficial to the financial industry in the long run without many negative effects. Even though online trading has slowed down somewhat at the present time, it is our belief that it will pick up speed in the future. Once investors have become more comfortable with the current economic conditions and foresee brighter economic conditions they will return.

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QUESTIONARY

Questionnaire Dear respondent, I am student of MBA. I am working on theproject of On-Line trading. You are requestedto fill the questionnaire to enable, to undertakethe study on the said Project. Name.

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Occupation Address Phone no. 1. For how long you have been trading with on linetrading? (a)1 year (b) 2 year(c) 3 year (d) 4 year 2 .How will you describe your experience with on-linetrading till date? (a) very easy to operate (b) very difficult to operate (c) not secure (d) Any other 3. What amount of money you are invested normally? (a) 50000 (b) 100000 to 150000 (c) 150000 to 2000000 (d) Any other amount 4. How often do you trade? (a)Daily (b) Weekly (c) Monthly (d) More than one month 5. In which trading you will prefer? (a) Online trading (b) offline trading(c) Both 6. According to you online trading settled in Indian investorpsyche (a) Yes(b) No 7. What shortcomings do you feel in Indian On-line Trading ? (a) Lack of awareness the investors about on-linetrading
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(b) Shortage of domestic technical expertise (c) Shortage Of Infra structure (d) If any other 8. Which media would you prefer the most for investor? (a) T.V (b) Newspaper(c) Magazines (d) Journals 9. What is your annual income? (a) Below 100000 (b) 1,00,000 2,00,000 (c) 2,00,000 3,00,000 (d) 3,00,000 4,00,000 10. What percentage of your monthly household income could beavailable for m investment? (a) Less than 5% (b) 5% to10% (c) 10% to 15% (d) 15% to20% 11. Where do you often invest your money? (a) Equity (b)Mutual fund(c) Insurance (d)Term deposits(e) Others

12. What is the primary objective of your investment? (a) Capital appreciation(b) Sourceof income (c) Retirement planning (d) Wealthpreservation(e) Education funding /others 13. Do you owe a Computer? (a) Yes(b) No 14. online trading is a secure way of trading (a) Strongly agree (b) Agree
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(c) Cant say(d) Disagree 15. online trading is easy and fast way of trading? (a) Strongly agree (b) Agree (c) Cant say (d) Disagree 16. Introduction of online trading helped to attract the newInvestors thus increasing the trading volumes at Stock Market? (a) Strongly agree (b) Agree (c) Cant say (d) Disagree

BIBLIOGRAPHY money.rediff.com www.bseindia.com www.nseindia.com www.bseindia.com www.sebi.co.in www.investorwords.com www.advfn.com www.investsmartindia.com www.trendtraders.com www.sharekhan.com
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 www.motilaloswal.com/home http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India http://www.world-exchanges.org/statistics/ytd-monthly http://www.nse-india.com/content/us/us_factsfigures.htm

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