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ACKNOWLEDGEMENT
The summer Training at Religare securities Ltd. New Delhi is my professional
experience in both Financial and Marketing sector that enriched my
knowledge to a great extent.
I am thankful and would like to express my Gratitude to the Honorable Mr RAKESH
SHARMA (SENIOR RELATIONSHIP MANAGER) and the entire Institute for
giving me a Platform to have this wonderful opportunity and being able to get a
glimpse of the Corporate Word.
During the course of my project, I had the good fortune of being guided by
Mr.VISHAL SHARMA [Branch Manager] Religare Securities Ltd, Karol Bagh
New Delhi Branch Who with all his magnanimity supervised this project report
through all its stages. I have benefited a great deal from his incisive analyses and
erudite suggestions. I humbly acknowledge his congeniality. The atmosphere of a
learning organization that he has created along with his peers in Karol Bagh Branch
has not only helped me but all the other trainees.
I am also thankful to Mr. Amit Gupta (Senior Relationship Manager Equity),
Mr. Ravi Kumar Rathor (Manager Commodity) and Mr. Sumit Upadhyay (Senior
Relationship Manager Commodity) Religare Securities Ltd, Karol Bagh Branch, for
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there constant support to my project, guidance and precious time at every level of this
study.
Acknowledgements are also due to all the other staff in Religare Securities Ltd, Karol
Bagh Branch for providing information at various point of the project, especially the
discussions on the market.
My special thanks to all my friends for their unremitting help in numerous ways,
which deserve adequate expression on this page.
I would also like to thank all the respondents of questionnaire for their cooperation.
In the end, I would like to say that it was a great experience working on this project.
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DECLARATION
I here by declare that all the contents and sources used in this project are
true and real to the best of my knowledge. I collected all data and
information used in this project. This project is result of my own efforts.
MR. MANOHAR ARORA
PGDM
(2008-2010)
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TABLE OF CONTENTSPg no.
Executive Summary. 07
About Religare securities. 08
INTRODUCTION
Project Briefs and Deliverables .. 16
Investment- why when and how???????............................................... 17
Investment in Indian Capital Market. 22
Investment in equity market.. 23
Modes of investment in equities 34
Portfolio Management Service.. 40
COMPARATIVE ANALYSIS OF LEADING BROKING HOUSE IN INDIA
Objective of project. 44
Parameters of Comparison.. 45
Research Methodology 46
Importance of broking House.. 47
Background of the companies. 48
DATA ANALYSIS
Summary of results
53
Observations..
59
Appendix
Questionnaire 62
References. 64
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Executive Summary
Investing is every bodys need. Every one wants to invest their savings for uncertain
future ahead. These hard earn savings should be properly and smartly invested so thatthe principal is safe, returns are maximized and liquidity is available. With the
globalization of Indian financial market lot of avenues of investment has opened up.
With the increase in number of options now available, complexity too has increased.
Proper knowledge can help an investor to get maximum possible returns while
minimizing his risk.
The project covers the various benefits and services provided by leading broking
house in India & Comparative Analysis of the same and seek to analyze them with
respect to return they generate and risk they have. The focus of the project is to have
better insight into investment in equities market and related instrument like Equity,
Mutual funds and Portfolio Management Services (PMS) .The key focus of the
project is the comparative analysis of functioning of leading broking house and
benefit and services they provide compare to RELIGARE SECURITIES.
The project in first stage has been able to cover the in-depth study of directinvestment in equities market i.e. investment through holding the ownership of share
of different companies.
The next stage of project has covered the study of mutual fund, portfolio management
services, Equity as investment avenues. That has been followed by the analysis of all
of these options in different broking house in terms of return they generate and degree
of risk they have.
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About Religare Securities
Company Profile
Religare is present in more then 100 branches all over India and will cross more than200 branches very soon.
Religare branches are fully equipped with high bandwidth Internet lines and high-end
computers machines. There are efficient branch managers and dealers to give you tips
of highest quality and accuracy with support from our analysts.
Our branches give you the feel of doing business in Dalal Street however, in a more
sophisticated manner. You get to work with more traders and learn more and also
trade more.
We are present in more than 150 locations across length and breadth of the country
and each location is manned by experienced professionals who are highly motivated
and are genuinely interested to serve the clients in the best possible manner.
Our equity research team consists of well-qualified and experienced professionals in
the field of fundamental & technical analysis.
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BACKGROUND AND HISTORY
Late Dr. Parvinder Singh (ex CMD Ranbaxy) was a true leader -- practical and realist
and yet, talked the language of a visionary and an idealist. For it was his vision to
start integrated financial services driven by the relationship of trust and confidence.
From here Religare Securities Limited, a Ranbaxy Promoter Group Company started
its operations.
To realize its vision, the Religare group has taken one step ahead. Today, Religare
provides various financial services, which include broking (stocks & commodities),
depository participant services, portfolio management services, advisory on mutual
fund investments and many more.
Unlike a traditional broking firm, Religare group works on the philosophy of being
Financial Care Partner. We not only execute the trades for our clients but also
provide them critical and timely investment advice. The growing list of financial
institutions with which Religare is empanelled as an approved broker is a reflection of
the high-level service standard maintained by the company.
Religare is proud of being a truly professional financial service provider managed by
a highly skilled team, who have proven track record in their respective domains.
Through its regional, zonal and branch offices, Religare has the widest reach and is
available to you across the length and breadth of the country.
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GROUP OF COMPANIES
Religare Securities Limited
1. Member of National Stock Exchange of India and Bombay Stock Exchange of
India.
2. Depository Participant with National Securities Depository Limited and
Central Depository Services (I) Limited
3. A SEBI approved Portfolio Manager
RSL serves a platform to all segments of investors to avail the opportunities offered
by investing in Indian equities either on their own or through managed funds in
Portfolio Management.
Religare Comdex Limited
Commodities as a word originated from the French word commodity meaningbenefit or profit. Rightly so! The continuously growing turnover which commodities
market has seen is incredible, benefiting both producers and buyers. These amazing
results have transformed commodities as a most sought-after asset class. And this has
caught attention of the whole world.
Commodities market is particularly significant to our country as India is essentially a
commodity-based economy. Therefore, it should not be surprising to see that Indian
Commodities Market is also taking giant strides, growing at a scorching pace and is
well all poised to occupy its rightful place in the world. This has provided Indian
investors with new emerging investment opportunities in the arena of commodities.
Commodity Derivatives trading in India is now done through the electronic trading
platform of two popular exchanges NCDEX (National Commodity & Derivative
Exchange Limited) and MCX (Multi Commodity Exchange). The various
commodities being traded on the exchanges include precious metals, crude oil, andagro-commodities amongst others.
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Religare Comdex Limited is a member of both the exchanges (MCX & NCDEX) that
allows you to trade in all the commodities traded in both the exchanges. Presently,
trading in commodities is restricted to futures contracts only.
Member of National Commodity Derivative Exchange and Multi Commodity
Exchange.
RCL provides platform to both agro and non-agro commodity traders to derive the
actual price of the commodity and also to trade and hedge actively in the growing
commodity trading market in India.
Religare Finvest Limited (RFL)
Religare Finvest Limited (RFL) is registered with the Reserve Bank of India (RBI)
as a Non-Banking Finance Company (NBFC) and is presently engaged in providing
personal credit {such as Loans Against Shares (LAS) and Personal Loans},
distribution of Mutual Funds, Wealth Management, IPO Financing and Corporate
Finance Services.
RFL is aggressively making a name in the Financial Services arena in India. In a fast
paced, constantly changing dynamic business environment, RFL has developed achange resilient vertically integrated value chain for delivering the most competitive
products and services.
Loan Against Shares
Sitting Idel on your Stock Portfolio?
Religare Finvest offers you to get more out of your existing portfolio through its
Loan Against Shares product. Loan Against Shares allow you to take
advantage of investment opportunities in the market without the involvement of fresh
funds. One can use the shares in his current portfolio to take larger positions in the
market.
If utilized prudently, this product can help unlock the value of Securities even
during depressed Stock Market conditions and provide customers with the much-
needed liquidity during pressing times.
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Corporate Financing
We provide innovative, integrated and best-fit solutions to our corporate customers. It
is our continuous endeavor to provide value enhancements through diverse financial
solutions on an on-going basis, through Corporate Debt, Private Equity, IPO, ECB,
FCCB, and GDR/ADR etc.
IPO Financing
The first sale of stock by a company to the public is termed as Initial Public Offer (IPO). IPOs areissued with the purpose of seeking capital to expand and diversify and simultaneously become traded
on the Stock Exchange Bourses.
IPO gives an opportunity to the investor (s) to be a part of an existing company and have a share in it.
To subscribe to the offer of any company the investor (s) need to have ready cash at their disposal at
the time of application. This might not be so in all circumstances.
Here IPO Financing acts as a support scheme to cash-in on the opportunities available in the primary
market. IPO Financing is a scheme wherein the investor provides the margin amount, and the financer
finances the remaining amount at an agreed rate of interest and other mutually agreed upon terms and
conditions.
Example
Own Investment Through IPO financingInvestors fund (Rs.) 10,00,000 10,00,000
Financing (Rs.) * 0 90,00,000
Application size 10,00,000 1,00,00,000
No. of shares applied for
(assuming issue price to be 100/-)10,000 1,00,000
No. of times issue is
oversubscribed50 50
Shares allotted 200 2000
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Personal Financing
Life is too short to worry about tomorrow, so drop your worries and live your dreams,
TODAY! We help your desires come alive as we take care of at least one of the
roadblocks in your way.
Religare Personal Loans allow you to sit back and relax, for you now have the
pleasure of surplus wealth. Just give us a call or fill up an application form online or
better still, drop in to any of our branches and let us help you in making the most of
what life has to offer.
Religare is a corporate financial service provider with very sound financial base and
backing. It is managed by the best skilled professionals in the market and boasts to
have the widest reach in India through its regional, zonal and branch offices spread
across the country.
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Religare Enterprises Limited
Religare Securities Limited
Equity Broking
Online Investment Portal
Portfolio Management Services
Depository Services
Religare Commodities Limited
Commodity Broking
Religare Capital Markets Limited
Investment Banking
Proposed Institutional Broking
Religare Realty Limited
In house Real Estate Management
Company
Religare Hichens Harrison**
Corporate Broking
Institutional Broking
Religare Finvest Limited
Lending and Distribution business
Proposed Custodial business
Religare Insurance Broking Limited
Life Insurance
General Insurance
Reinsurance
Religare Arts Initiative Limited
Business of Art
Gallery launched - arts-i
Religare Venture Capital Limited
Private Equity and Investment
Manager
Religare Asset Management*
Derivatives Sales
Corporate finance
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MANAGEMENT PROFILE
Individuals who are professional leaders and are committed to reface the financial
services industry in India lead Religare.
Each of the individual works constantly towards Religares objective of Indias
first truly MNC in financial services.
Religare team is led by a very eminent Board of Directors who provide policy
guidance and work under the active leadership of its CEO & Managing Director andsupport of its
Board of Directors
Following is the list of Directors of Religare Securities Limited:
Chairman Mr. Harpal Singh
Managing Director Mr. Sunil GodhwaniDirector Mr. Vinay Kumar Kaul
Director Mr. Malvinder Mohan Singh
Director Mr. Shivinder Mohan Singh
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Project briefs and deliverables
The primary goal is to build a lifetime relationship with the customer and act as
an advocate in the pursuit of finding a mutually agreeable solution to differences
between the customer and services offered by Religare securities.
This project, Comparative Analysis of Religare Securities With Top Five Broking
Houses at its very outset, helped me to understand the fact that How different retail
broking houses provide different services of all the financial product to their existing
clients & also help the Religare Securities to know its existing market share. No
company can hope to survive in this competitive business world without knowing the
different benefits provide by their rivals in the market so with the help of this project
Religare Securities also come to know the benefits provide by other retail broking
houses to different clients to some extent. It not only helps the company to attract
customers by providing different services which make customer happy but also retain
their existing clients. This project also help me in gathering knowledge about the
different financial product as well as how to deal with the customer. Therefore, the
primary objective of undertaking this project is to gain knowledge about the financial
product as well as how to judge the customer & to provide what type of service to that
customer. It helped me to familiarize myself with the sort of problems faced by thecompany in providing different benefits to different clients as well as the steps taken
by the company to achieve its end. And also how the increasing list of customer
affects the profitability of the company. So the bottom line is that undertaking this
project helped me to get a fair idea of the company profile in general and handling the
marketing of the financial products in particulars.
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INVESTMENT Why When & How ??????????
Investment planning is an alien concept for the Indian populace. For a country, which
till now was worried about making ends, meet this emerging trend is definitely a new
experience. But, the truth is that if only they would have been introduced to the Art of
Managing Money, life could have been so much easier. Most of us spend more than
half of our lives working and saving because money is important, in fact crucial.
However, most of us spend almost no time planning to make that hard-earned money
work more effectively for us. So, how do one plan for his financial life?
Financial planning is nothing but an assessment of ones goals and the steps one must
take to help make them a reality. Is he willing to retire with a sound lump sum amount
or does one want a steady monthly income. Is sons education or daughters' marriage
worrying? The key is to figure out goals. Where is your money going? The most
important thing is that one should where your money is going. Zero on your monthly
and annual expenses.
Knowledge is power. It is common knowledge that money has to be invested wisely.
It takes years to understand the art of investing. To start with, one should take
investment decisions with as many facts as he can assimilate. But, understand that no
one can ever know everything. Learning to live with the anxiety of the unknown is
part of investing. Investing isn't gambling or speculation; it's about taking reasonable
risks to reap steady rewards. Our main aim in the project is to study, analyze and
compare the services provided by leading broking house in comparison to servises
provided byRELIGARE SECURITIES.
Why should one Invest?
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Simply put, one should invest so that his money grows and shields him against rising
inflation. The rate of return on investments should be greater than the rate of inflation,
leaving him with a nice surplus over a period of time.
Whether money is invested in stocks, bonds, mutual funds or certificates of deposit
(CD) or any other assets, the end result is to create wealth for retirement, marriage,
college fees, vacations, better standard of living or to just pass on the money to the
next generation. Also, it's exciting to review investment returns and to see how they
are accumulating at a faster rate than salary or any other source of regular income.
When to Invest?
The sooner the better. By investing into the market right away allows investments
more time to grow, whereby the concept of compounding interest swells income by
accumulating earnings and dividends. Considering the unpredictability of the markets,
research and history indicates these three golden rules for all investors
1. Invest early
2. Invest regularly
3. Invest for long term and not short term.
Trust in the power of compounding is growth via reinvestment of returns earned on
savings. Compounding has a snowballing effect because one earns income not only
on the original investment but also on the reinvestment of returns accumulated over
the years. The power of compounding is one of the most compelling reasons for
investing as soon as possible. The earlier one starts investing and continues to do so
consistently the more money will be made. The longer the money remains invested
and the higher the interest rates, the faster the money will grow. There is always a first
time for everything so also for investing. To invest, one needs capital free of any
obligation. If he is not in the habit of saving sufficient amount every month, then he is
not ready for investing.
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How much money is needed to Invest?
There is no statutory amount that an investor needs to invest in order to generate
adequate returns from his savings. The amount that should be invest will eventually
depend on factors such as:
Investors risk profile
Time horizon of investment
Savings made
The investing options are many, to name a few
Stocks
Bonds
Mutual funds
Fixed deposits
Metals
Others
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here Can I Invest?
The possible avenues for investment can be divided into following categories:
Equities
Options available are secondary market (buying and selling shares in the stock
exchanges) or the primary market (IPOs). Generally classified as a high risk high
return asset. But after the completion of this project I personally do not consider them
high risk investment yes one need to be knowledgeable enough to make money
through this investment
Fixed Income Instruments
This product class includes options such as Fixed Deposits, Debentures, Bonds,
Preference shares etc. These investments are relatively safer but limited upside onreturns. In analysis of project I found that generally investment trends have started
moving against these investments because of returns they generate. It has been
observed that such instrument generate a return in range of 4% - 9% and given the
current level of inflation of about 2% - 5% actually people end up having a negative
return on their investment.
Foreign Currency Investments
Wherever allowed by government regulations, investors particularly in developing
countries will prefer to keep their assets in foreign currency. Hard currencies like the
US dollar or Pound or Euro are relatively stable. The risk of currency depreciation in
case of economic / political turmoil is high. This was evident when all major South
East Asian currencies collapsed last year. People at individual level or so called retail
level do not make investment in these instruments as the threshold limit itself is very
high for investing in these instruments. Apart for it requires far more indepthknowledge about world market, inflation, interest rates to make investment in these
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instruments. During the projectI have learned that it is better for retail or individual
investor to remain away from investing in these instruments.
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Commodities
However these investments do not for part of my study but because of its close
relation with stock market I have got fair enough insight in to these instrument as
well. A trader or speculators, who generally are skilled, do investing in commodities
on a large scale typically. Normally in commodities high risk investors would invest
for high returns in a short period. A proxy for this is the way retail households stock
up commodities in anticipation of price increase, such as stocking sugar or wheat
requirement for the full year.
Art/ Antiques, Etc
Art has proved to be an important investment avenue, particularly for the rich and
wealthy. However, one has to be an expert in evaluating the value of art. Wrong
decisions might just leave a piece of paper hanging on your wall (not to mention the
hole in your pocket). Investment in paintings is illiquid and has a long gestation
period, entails high risk but with high rewards too. Other collector items can be
stamps, antiques, cards, signatures, letters, etc. In general, it is difficult for the
common man to explore investment opportunities in this segment. I have kept them
out of my study.
Mutual Funds
Mutual funds are surrogate direct investment in debt or equity. In effect, any mutual
fund is an effective retail (can be institutional also) fund accumulator. Mutual funds
can be classified on the basis of their investment strategy and avenues. Equity funds
invest in shares while debt funds invest in debentures, and other debt instruments. A
balanced fund tries to maintain an optimum balance of debt and equity. Real Estate
This offers a limited option to investors as in India most people buy a house to live in.
Only the very rich buy property as an investment. In the early 90s, property prices
rose sharply, creating a fancy for real estate. In the last 3 years, the real estate market
has taken a real beating, which coincided with the economic slowdown. Real estate is
very illiquid investment option.
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INVESTMENTS
IN
INDIAN CAPITAL MARKET
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EQUITY MARKET
INTRODUCTION
Investment in shares of companies is investing in equities. Stocks can be bought/sold
from the exchanges (secondary market) or via IPOs i.e. Initial Public Offerings
(primary market). RELIGARE SECURITIES provide an investor all the required
services to invest in Indian equity market both through initial public offerings and
through secondary market. Stocks are the best long-term investment options wherein
the market volatility and the resultant risk of losses, if given enough time, is mitigated
by the general upward momentum of the economy. There are two streams of revenue
generation from this form of investment.
1. Dividend: Periodic payments made out of the company's profits are termed as
dividends. Dividend is the part of profit distributed by the company among its
investors. It is usually declared as a percentage of the paid-up value or face value of
the share.
2. Growth: The price of a stock appreciates commensurate to the growth posted by
the company resulting in capital appreciation.
An insight to some technical terms
Equity share
An equity share represents the form of ownership. The holder of such a share is a
member of the company and has voting rights.
Equity shares are high-risk high-return investments. The major distinction of Equity
investment from all other investment avenues is that while the return from many
avenues such as Bank Deposits, Small Saving schemes, Debentures, Bonds etc are
fixed and certain, the earnings from equity investments are highly uncertain and
varied. A good scrip picked up at the right time could fetch fairly good returns else
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the return may be meager or it may even turn negative, i.e. the invested fund itself
may be eroded. In short, if the investment in fixed income category instruments is
secured and risk-free to a large extent, investment in equities and related fields could
be termed as risky.
Stock Exchange
A Stock Exchange is a place where the buyer and seller meet to trade in shares in an
organized manner. There are at present 23 recognized stock exchanges in the country
that are governed by the Securities Contact (Regulation) Act, 1956. Anyone can buy
the shares that are listed on any of the recognized Stock Exchanges to be able to buy
or sell shares in the stock markets a client would need to be registered with a stockbroker (Kotak securities) who holds membership in stock exchanges and who is
registered with SEBI.
Buying and Selling
There are several types of orders that client can dictate to a broker. The most common
type, which is a regular buy or sells order, is called a market order. Another type of
order is a limit order wherein you ask the broker to trade only if the price reaches a
specific level. In a stop order, client tells the broker to sell shares if the price drops to
a certain level to prevent significant loss because if it drops to that level it is likely to
drop further and losses are likely to increase.
Placing Orders
Trading can be done via the phone or by coming in person to the office of Broker or
through any other facility provided by Broker like Internet trading. The dealer is
employee of Broker who is supposed to input the investors order into the stock
exchange order system. After checking the authenticity of the person calling and after
checking the margin available in the account would put/enter the order into the stock
exchange system.
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Taking a Position
When one acts upon a stock and buy into it, he is taking a position. A position is an
amount of money committed to an investment in anticipation of favorable price
movements. There are two kinds of positions: -
a) Long positions are what most people do. When investor buys long, that means he
is anticipating an upward movement in the price, and that is how he profits. People
usually buy stocks at prices expecting to sell them later at higher prices and hence
make profits.
b) Short positions are the tricky ones. When investor buys short, he is anticipating a
fall in the price and the fall is the source of his profits. The shares will be sold and
when the price falls they will be repurchased and given back and the difference is the
where the investor profits. Of course, the investor who borrowed the shares carries the
risk of not having the price move as anticipated, in which case he may lose money in
repurchasing the stocks.
Index
An index is a stock-market indicator created as a statistical measure of the
performance of an entire market or segment of a market based on a sample of
securities from the market. An index is thus a means to evaluate the overall
performance of a market or of a segment of the market. Index measures aggregate
market movements.
We have 2 renowned indices viz.
(a) BSE Sensitive (BSE Sensex) and
(b) S&P Nifty 50 (Nifty)
BSE Sensex comprises of 30 large-cap companies. As the name suggests, it is a
premier index on Bombay Stock Exchange (BSE). Nifty comprises of 50 large-cap
companies on the National Stock Exchange (NSE).
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Index Fluctuations
Theoretically, index fluctuations reflect changing expectations of the stock market
about future stock returns. An upward movement in the market index on a particular
day implies that the stock markets expect higher future returns from the stocks as
compared to the expectations on previous day and vice versa. However, since indices
are derived from the market capitalization of stocks, it is quite possible that a few
stocks account for a major portion of the index. Thus, fluctuation inn prices of a few
stocks may affect the overall index too which will give an incomplete picture. Hence,
it is advisable to follow a broad-based index that is an index constructed using a large
number of stocks spread across a wide range of sectors to gauge overall performance.
Also, an index should not consist of illiquid stocks in its portfolio since in such cases;
the index can be easily manipulated by manipulating the prices of such illiquid stocks.
Constructions of Index Most market indices are constructed using the value-weighted
method. In this method, the initial market value of these stocks is assigned a base
index value. Say, we take the base year as 1982 and take 30 stocks, which have a total
market capitalization of Rs 3,000 crore. Let us assume that the base value on the first
day is 100.
Importance of an Index
The index has practical applications too in the world of finance. Derivatives and index
funds both make extensive use of indices. Both the NSE and BSE have launched
index futures based on the S&P CNX Nifty and BSE Sensex respectively. The global
market for index services and their applications is a multi-trillion dollar industry.
Indices also serve as a benchmark for measuring the performance of fund managers
and their respective funds. For gauging the performance of individual sectors or
sectoral mutual funds, sector specific indices can be used.
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Methodology Of Trades
The market watch, i.e. the screen kept open normally on the trade screen would show
the following columns -
1. Best bid price 2. Best bid quantity 3. Best offer price 4. Best offer quantity
5. Last traded price
The first 2 columns as given above show the available buyers for a particular share in
the stock exchange and the next 2 columns show the available sellers, and the fifth
column shows the price at which the last trade took place. Hence when a investor
wants to buy a share at market price ideally the 3rd and the 4th column would depict
how many shares one can get at a stipulated price. The client can also put a limit price
order which would sit in the order book till it reaches a price time priority when the
trade can be executed.
Contract Note
Contract Note is a confirmation of trades done on a particular day on behalf of the
client. It establishes a legally enforceable relationship between the client and Broker
with respect to the settlement of the trades. The Contract Note would show settlement
number, order number, trade number, time of trade, quantity and price of the trades,
brokerage charged, etc and it would be signed by an authorized person of Broker.
Depository
A depository can be compared to a bank. A depository holds securities (like shares,
debentures, bonds, Government Securities, units etc.) of investors in electronic form.
Besides holding securities, a depository also provides services related to transactions
in securities. There are two main depositories in India, namely, a) National Securities
Depository Ltd. (NSDL) and b) Central Depository Securities Ltd. (CDSL), both of
which are regulated by SEBI. One can approach any DP of his choice and fill up an
account opening form. At the time of opening an account, He has to sign an
agreement with DP in a NSDL prescribed standard agreement, which details your and
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your DPs rights and duties. Religare securities is depository participant having a
membership of NSDL, thus provides all its client service of demat accounts too.
Market Trades And Off Market Trades
Any trade settled through a clearing corporation is termed as a Market Trade. These
trades are done through stockbrokers on a stock exchange. Off Market Trade is one,
which is settled directly between two parties without the involvement of a clearing
corporation. The same delivery instruction slip can be used either for market trade or
off-market trade by ticking one of the two options.
Delivering or Receiving the Shares To or From Broker
In case of sales, the investor would need to transfer the shares to the pool account of
Broker for the specified settlement number. The pool account number for shares sold
on BSE is IN630043 and for NSE it is IN558537. The delivery should necessarily
come from the demat account of the investor and not from any other person. Similarly
Broker would directly transfer shares bought to the account of the investor.
Making or Receiving the Payments To or From Broker
Payments to Broker had to be made via an Account Payee cheque / Demand Draft in
favor of Brokers name ( RELIGARE SECURITIES LIMITED). The payment
should necessarily come from the bank account of the investor and not from any other
person. Similarly Broker would pay an Account Payee cheque in the name of the
investor, which will also contain the Bank name and account number of the client.
The payout of funds and securities to the clients by Broker will be within 24 hours of
the payout
Rolling Settlement
In a Rolling Settlement trades executed during the day are settled based on the net
obligations for the day. In NSE and BSE, the trades pertaining to the rolling
settlement are settled on a T+2 day basis where T stands for the trade day. Hence
trades executed on a Monday are typically settled on the following Wednesday
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(considering 2 working days from the trade day). The funds and securities pay-in and
pay-out are carried out on T+2 day.
Auction
The securities are put up for auction by the Exchange on account of non-delivery of
securities by the selling trading member to ensure that the buying trading member
receives the securities due to him. The non-delivery by the trading member could
arise on account of short delivery. The Exchange purchases the requisite quantity in
the Auction Market and gives them to the buying trading member.
In case of purchase on clients behalf, the member broker has the liberty to close out
transactions by selling securities in case client fails to make full payment to the broker
for the execution of contract before pay-in day as fixed by Stock Exchange for the
concerned settlement period unless client already has an equivalent credit with the
broker. The shortages in case of sales are met through auction process and the
difference in price indicated in Contract Note and member pays price received
through auction to the Exchange, which is then liable to be recovered from the client.
In both the cases any loss in transactions will be deductible from the margin money
paid by client.
In case a broker fails to deliver to client on time and make the proper payment of
money/shares or client has a complaint against the conduct of the broker, he can file a
complaint with the respective stock exchange. The exchange is required to resolve all
complaints. To resolve the dispute the complainant can also resort to arbitration as
provided on the reverse of Contract Note /Purchase or Sale Note. However, if the
complaint is not addressed by the Stock Exchanges or is unduly delayed then the
complaints along with supporting documents may be forwarded to Secondary Market
Department of SEBI. Clients complaint would be followed up with the exchanges for
expeditious redressal.
In case of a complaint against a sub-broker, for redressal the complaint may be
forwarded to the concerned broker with whom the sub broker is affiliated.
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Additional Charges Other Than Brokerage Levied On the Investor
The trading member can charge:
1. Securities Transaction Tax.
2. Service tax as applicable.
3. Transaction charges levied by NSE, Stamp duty and other charges directly
attributable to the transaction.
The brokerage and service tax is indicated separately in the contract note.
Rights of Investors
The investor has right to get
Proof of price/brokerage charged
Money/shares on time
Statement of Accounts and Contract Note from trading member.
Obligations of Investor
The obligations to investor are
Sign a proper Member-Constituent Agreement
Possess a valid contract or purchase/sale note
Deliver securities & make payment on time
Provide Margin before trade
Various kinds of accounts that are needed to trade via Internet with Broker
This facility is provided by RELIGARE through its online trading website
www.religaresecurities.in
Three kinds of accounts are required to be able to trade on-line. They are:
E-Broking account with Broker
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Depository Participant (DP) account with RELIGARE
Bank account that has developed an interface with Broker i.e. designated
banks like HDFC Bank, UTI Bank, ICICI Bank.
Tax implications of investing in Indian equities
Tax rates on investments gains are categorized as long term & short-term capital
gains.
(a) Long term capital gains
Long Term investments that are held for more than 12 months are termed as long-
term capital assets. Profit on sale of such assets is termed as long-term capital gain
(LTCG), which as per the latest Budget notification will attract nil tax.
(b) Short term capital gains
Shares that are held for less than 12 months are classified as short-term capital assets
that as per the latest Budget notification will attract 10% tax.
Fair value of share
We all like bargains but, but few investors attempt to estimate a company's worth
before buying a stock. Investing requires the same discipline one exerts when
purchasing a house, a car or even groceries, literally. The problem arises when
investors don't anticipate the amount of risk they are taking when purchasing stocks
that trade at high premiums to the intrinsic value of the business. Because buying
securities at over inflated levels can lead to serious loss of capital.
From a purely static point of view, the fair value of an equity share is a point of
indifference. A price level, below which we would buy the stock. Or a price level,
above which we would sell the stock. Real life, however, is more dynamic and as a
stock investor, we are dealing with moving targets. Where stock prices fluctuate
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madly, as much as eight or 12 per cent every day. Thankfully, the fair value of a
company does not fluctuate with the price of its share. It is important to understand
this before we proceed with our equity investments.
How to determine fair value?
A simple method is to use the price-to-earning multiple, where the earnings per share
of a company divide the price of a companys stock. Which makes sense since growth
in earnings is a proxy for how well a company is performing within a given market
opportunity. However, as long-term investors we are interested in absolute value,
irrespective of how the stock market is currently pricing the company. Here, the P/E
loses relevance since it is will be continuously influenced by the demand or supply for
a company's stock on the numerator side.
Earnings per share, which represents the denominator side of the P/E, also may not
help. Since all earnings do not equal free cash flows. Most of it is ploughed back into
the company via capital expenditures. And as investors we are interested in the
surplus cash (though this term has many variations, it is loosely defined as the cash
after providing for recurring capital expenditures plus depreciation and taxes, the later
being a non-cash charge), which can be returned to equity shareholders.
This dictum is codified in the discounted cash flow model. Which says, that the value
of a stock is equal only of the free cash flows it produces in the future, discounted
back to the present. When we discount future income, we essentially adjust for the
fact that a rupee in hand today is more valuable than a rupee to be received in the
future because today's rupee can be invested elsewhere to generate a return. The DCF
allows us to discount incoming cash flows by a rate, which we believe equates the
level of risk we are assuming. This risk-adjusted value then is compared with the
prevailing stock price to check a company's investment worthiness. If a stock is said
to be trading at fair value, it simply means that the market is pricing it according to
the value it represents. Otherwise, it could either be bought or sold short. With minor
modifications, the DCF can be used to value a range of companies, from those
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growing faster than the economy to those growing slower, or matching the pace of the
economy.
Limitations
However, like all other valuation models, the DCF too has its limitations. For decades
it served analysts and investors well until faced with the prospect of valuing
companies in the so-called new economy businesses.
Not that the basic premises of the DCF are under question, but how does one account
for companies where revenues are growing at a rate, which have a high element of
surprise. And small changes in the amount of information available can bring about
large changes in stock prices. How does one come up with an appropriate discountrate, which reflects the high level of technological risk for many such companies?
Hence distinguish between 'price' and 'value'
In the end, instead of grasping on the appropriate valuation for these companies,
investors can caution themselves by thinking more carefully in terms of 'price' versus
'value'.
Price is not value. Price is what we pay. Value is what we get in return for owning a
piece of a company. When we shop for a consumer durable, we don't pay the list price
without being sure of the quality of the product and consistency of its expected
performance.
Similar issues should matter more while investing--the quality of management, nature
of the company's business, the ability of the management to sustain growth and so on.
Alternatively, think about the return that we will need to compensate for the
investment risk given the quality of the management and the nature of business. If we
cannot see a company providing such a return over a longer term, do not invest.
When it comes to investing choosing a great company is only the starting point. In
order to make good profit investors must buy the stocks of great companies at sensible
prices.
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Modes of Investment in Equity Market
Direct Investment In Equities
Options available are secondary market (buying and selling shares in the stock
exchanges) or the primary market (IPOs). Generally classified as a high risk high
return asset. But after the completion of this project I personally do not consider
them high-risk investment yes one need to be knowledgeable enough to make
money through this investment
Mutual funds
A mutual fund pools together sums from individual investors and invests it in
various financial instruments. Each mutual fund has its own investment objective,
which broadly falls into two categories: capital appreciation and current income.
Suppose a mutual fund sells one million units or shares (used as synonyms in this
context) at Rs 10 a share and collects a total Rs 10 million. If the fund objective
stated investment in blue-chip stocks, the fund manager would invest the entireproceeds (less any commissions and management fee) of that sale in buying equity
shares of companies like Hindustan Lever, Reliance Industries, Hero Honda and
so on. And each individual who bought shares of the fund would own a
percentage of the total portfolio only to the extent of money invested.
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Mutual funds over direct investment in equities
As financial intermediaries, they do not come without risk. Also when defined in
terms of our chances of losing money, the risk in mutual funds is no different than
that present in other financial instruments. Still they are relatively safer and a more
convenient way on investing. They offer quick liquidity. Most private mutual funds
can be redeemed in three to four working days, unlike a fixed deposit that is more
likely to be received a month after its maturity, or an equity share after the end of its
settlement period (or depending up on our broker). This too cuts the overall risk
associated with investing, often not so visible and hence not accounted by many
investors. But the market risk or the risk that exists due to economy-wide factors
remains. And there is always the possibility that a fund fails to stick to its pre-
determined objectives or invests in securities that alter its risk profile. In which case,
the blame goes straight to the fund manager and the Asset Management Company
(AMC), which manages the mutual fund. All said and done mutual funds still have
following advantage over direct investment in equities.
Affordable
Almost everyone can buy mutual funds. Even for a sum of Rs 1,000 an investor
can invest in a mutual fund.
Professional Management
This is the biggest advantage mutual fund have over direct investment over equity.
For an average investor, it is a difficult task to decide what securities to buy, how
much to buy and when to sell. By buying a mutual fund, we acquire a professional
fund manager who manages our money. This is the person who decides what to
buy for us, when to buy it and when to sell. The fund manager takes these
decisions after doing adequate research on the economy, industries and
companies, before buying stocks or bonds. Most mutual fund companies charge a
small fee for providing this service, which is called the management fee.
Diversification
According to finance theory, when our investments are spread across severalsecurities, our risk reduces substantially. A mutual fund is able to diversify more
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easily than an average investor across several companies, which an ordinary
investor may not be able to do. With an investment of Rs 5000, you can buy
stocks in some of the top Indian companies through a mutual fund, which may not
be possible to do as an individual investor.
Liquidity
Unlike several other forms of savings like the public provident fund or National
Savings Scheme or real assets, you can withdraw your money from a mutual fund
on immediate basis.
Transparency
Regulations for mutual funds have made the industry very transparent. We can
track the investments that have been made on our behalf and the specific
investments made by the mutual fund scheme to see where our money is going. In
addition to this, we get regular information on the value of our investment.
Tax Benefits
Mutual funds have historically been more efficient from the tax point of view. A
debt fund pays a dividend distribution tax of 12.5 per cent before distributing
dividend to an individual investor or an HUF, whereas it is 20 per cent for all
other entities. There is no dividend tax on dividends from an equity fund for
individual investor.
MUTUAL FUND INVESTING - RISK VS REWARDS
Having understood the basics of mutual funds the next step is to build a successfulinvestment portfolio. Before we can begin to build a portfolio, one should understand
some other elements of mutual fund investing and how they can affect the potential
value of our investments over the years. The first thing that has to be kept in mind is
that when we invest in mutual funds, there is no guarantee that we will end up with
more money when we withdraw our investment than what we started out with. That is
the potential of loss is always there. The loss of value in our investment is what is
considered risk in investing.
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Even so, the opportunity for investment growth that is possible through investments in
mutual funds far exceeds that concern for most investors. Heres why.
At the cornerstone of investing is the basic principal that the greater the risk we
take, the greater the potential reward. Or stated in another way, we get what we
pay for and we get paid a higher return only when we're willing to accept more
volatility.
Risk then, refers to the volatility -- the up and down activity in the markets and
individual issues that occurs constantly over time. This volatility can be caused by a
number of factors -- interest rate changes, inflation or general economic conditions. It
is this variability, uncertainty and potential for loss, that causes investors to worry.We all fear the possibility that a stock we invest in will fall substantially. But it is this
very volatility that is the exact reason that we can expect to earn a higher long-term
return from these investments than from a savings account.
We might find it helpful to remember that all financial investments will fluctuate.
There are very few perfectly safe havens and those simply don't pay enough to beat
inflation over the long run.
Investing in mutual fund choosing the right scheme/option
Choosing a mutual fund is not an easy task with so many funds. Rarely do investors-
normal investors, who do something else for a living-have a systematic checklist of
things that they should evaluate about a fund, which they are considering buying.
Here's my blueprint for a structured approach to fund selection. There are four basic
areas that one must evaluate in a fund to decide whether it's a good investment.
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Performance:
Performance comparisons must be used only to compare the same type of fund. They
are meaningless otherwise. Only when used within the same category of funds
performance numbers tell anything at all.
Portfolio:
Unlike performance and risk, portfolio is one of the 'internals' of a fund. It is internal
in the sense that the result of good, bad or ugly portfolios is already reflected in the
first two measures and it's perfectly OK to choose funds on the basis of those two
measures alone without actually bothering about what they own. My basic analysis of
portfolios measures whether a fund (I am talking about equity funds here) holds
mostly large, medium or small companies. It also looks at whether a fund prefers
companies that may be overpriced but which are growing fast or whether it prefers
low-priced stocks belonging to companies that are growing at a more gentle pace.
Management:
Fund management is a fairly creative and personality-oriented activity. This may not
be true of some types of funds like shorter-term fixed-income funds and, of course,
index funds, but equity investment is more of an art than a science. When we are
buying a fund because we like its track record (and unless we can foresee the future,
that's the only way to buy a fund), what we are actually buying is a fund manager's (or
sometimes a fund management team's) track record. What we need to make sure is
that the fund manager who was responsible for the part of the fund's track record that
we are buying into is still there. A high-performance equity fund with a new manageris a like a new fund.
Cost:
Funds are not run for free and nor are they run at an identical cost. While the
difference in different funds' cost is not large, these can compound to significant
variations, especially for fixed income funds where the performance differential
between funds is quite small to begin with. Even for equity funds, it may not be worth
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buying a higher cost fund that appears to be only slightly better than a lower cost one.
There is no reason for one AMC to have much higher costs than others, apart from the
fact that it wants to have a higher margin, or that it wants to spend more on things like
marketing, which are of no relevance to you. If an AMC wants higher returns from its
business, then it must justify it by giving you higher returns on your investments.
Loads:
Entry Load/Sale Load
It is the charge imposed on the investor at the time his entry into the fund.
Thus, the investor has to pay for the value of the units plus an additional
charge. This additional charge is called the entry/sale load.
Exit Load/Repurchase Load
It is the charge imposed on the investor at the time of his exit from the
scheme. Operationally, therefore, the mutual fund will pay back to the investor
the value of the units reduced by the charge levied on exit.
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PORTFOLIO MANAGEMENT SERVICES
INTRODUCTION
Based on the Risk Appetite and Risk Expectation of the investor, the fund houses
designs and develops a personalized investment plan, The Portfolio Management
Services, to match your expectations of safety, return and liquidity. Your account is
always managed the way you want and your investment does not get lost in a crowd
as in the case of most mutual funds.
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Why PMS?
In todays scenario there is a new emerging breed of investors, who has a high
disposable income and a sizeable amount to invest, who wants a share of the higher
earnings potential of equities, but doesnt have the time or expertise to do it himself.
So, he leans on experts. But not for him the one size-fits-all approach of mutual funds.
Instead, he prefers the personalized touch of a PMS, where professionals construct an
equity portfolio exclusively for him based on his investment needs and risk profile,
manage it regularly, while keeping him updatedfor, roughly, the same fee as a
mutual fund.
Now PMS is not just the preserve of High Net Worth individuals, but also within
reach of the well-heeled salaried person.
Benefits to Investors
a) Personalized service.
Unlike an equity fund, a PMS tailors a portfolio to an individuals needs. There might
be a possibility that: "A retired person might wantbluechips, yuppie fast-moving
stocks. But a fund gives them identical portfolios." Clients have different life
circumstances and risk-reward profiles. Such nuances are bettered captured and
serviced continuously by a PMS.
Most portfolio managers aim to generate long-term returns, with the choice of stocks
and investing styleaggressive or buy-and-holdbeing driven by an investors risk
preferences. There is also diversity in product offerings.
b) Competitive costs.
The good PMS providers operate on similar lines as funds. They have a strong
research set-up. And for all the personal attention they give you, their management
fee compares well with that of funds.
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Return guarantees are illegal. Due to the profit-sharing structure, the schemes on offer
are mostly discretionary in nature stock selection is the prerogative of the portfolio
manager.
c) Transparency.
Most entities give you a client ID and password, with which you can access your
portfolio detailslike list of shares, performance, transaction details and tax liability
online. Although portfolio managers call the shots, they are willing to sit with you and
explain the philosophy behind your portfolio, even get into specifics.
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Discretionary portfolio Vs non- discretionary portfolio
In the discretionary portfolio manager individually and independently manages the
funds of each client in accordance with the needs of the client in a manner, which
does not partake character of a Mutual Fund, whereas the non-discretionary portfolio
manager manages the funds in accordance with the directions of the client.
PMS Vs Mutual Fund
a) The client has control over the asset allocation, which is automatic in a
Mutual Fund.
b) The portfolio can be customized to suit the client's risk return profile.
c) The client has access to the Portfolio Manager which is not possible in a
Mutual Fund.
d) The Portfolio Manager has the flexibility to move into cash as and when
required.
Major Players
The major Players in the market providing Portfolio Management Services (PMS) are
as follows:
a) Religare Securities
b) KOTAK Securities Limited.
c) Motilal Oswal
d) HDFC
e) Geojit
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I OBJECTIVE OF THE STUDY
To compare all the financial instruments and the services provided by Top five retail broking companies on different
parameters.
46
MOTILAL
OSWAL
RELIGARE
KOTAK
SECURITIE
S
INDIABULLS
SHAREKHA
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PARAMETERS OF COMPARISON
47
Turnover
Of the Company
Benefits
Provided
By Company
Infrastructure
Goodwill
Ofthe Company
Services provided
by theCompany
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II METHODOLOGY
Research methodology that I undertook for the purpose of this study is
enumerated below: -
PRIMARY RESEARCH
This consisted Questionnaire and interaction with various people. A focusgroup study was conducted to design the customer survey Questionnaire with a
sample size of 85 respondents. The survey was conducted in Delhi and NCR.
SECONDARY RESEARCHSources were primarily the Internet, Newspapers, annual reports and
presentations available to employees.
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IMPORTANCE OF BROKING HOUSE
Industry Overview
The securities market achieves one of the most important functions of channeling idle
resources to productive resources or from less productive resources to more
productive resources. Hence in the broader context the people who save and investors
who invest focus more towards the economys abilities to invest and save
respectively. This enhances savings and investments in the economy, the two pillars
for economic growth. The Indian Capital Market has come a long way in this process
and with a strong regulator it has been able to usher an era of a modern capital market
regime. The past decade in many ways has been remarkable for securities market in
India. It has grown exponentially as measured in terms of amount raised from the
market, the number of listed stocks, market capitalization, trading volumes and
turnover on stock exchanges, and investor population. The market has witnessed
fundamental institutional changes resulting in drastic reduction in transaction costs
and significant improvements in efficiency, transparency and safety.
Dependence on Securities Market
Three main sets of entities depend on securities market- the corporate, the government
& households. While the corporate and governments raise resources from the
securities market to meet their obligations, the households invest their savings in
securities.
Primary Market & Secondary Market
The securities market comprises two segments- primary market (new issues, offer for
sale) & secondary market (trading of stocks). There are two major types of issuers
who issue securities. The corporate entities issue mainly debt and equity instruments
(shares, debentures, etc.), while the governments (central and state governments) issue
debt securities (dated securities, treasury bills).
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Background of Companies
About
Kotak Securities
Kotak Securities Ltd. is India's leading stock broking house with a market share of
around 8.5 % as on 31st March. Kotak Securities Ltd. has been the largest in IPO
distribution
The accolades that Kotak Securities has been graced with include:
` Prime Ranking Award (2003-04)- Largest Distributor of IPO's
Finance Asia Award (2004)- India's best Equity HouseFinance Asia Award (2005)-Best Broker In India
Euro money Award (2005)-Best Equities House In India
Finance Asia Award (2006)- Best Broker In India
Euro money Award (2006) - Best Provider of Portfolio
Management: Equities
The company has a full-fledged research division involved in Macro Economic
studies, Sectoral research and Company Specific Equity Research combined with a
strong and well networked sales force which helps deliver current and up to date
market information and news. Kotak Securities Ltd is also a depository participant
with National Securities Depository Limited (NSDL) and Central Depository Services
Limited (CDSL), providing dual benefit services wherein the investors can use the
brokerage services of the company for executing the transactions and the depository
services for settling them. Kotak Securities has 195 branches servicing more than
2,20,000 customers and a coverage of 231 Cities. Kotaksecurities.com, the online
division of Kotak Securities Limited offers Internet Broking services and also online
IPO and Mutual Fund Investments. Kotak Securities Limited manages assets over
2500 crores of Assets Under Management (AUM) .The portfolio Management
Services provide top class service , catering to the high end of the market. Portfolio
Management from Kotak Securities comes as an answer to those who would like to
grow exponentially on the crest of the stock market, with the backing of an expert.
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About
Indiabulls
Indiabulls is Indias leading Financial Services and Real Estate company having
presence over 648 locations in more than 124 cities. Indiabulls serves the financial
needs of more than 3,00,000 customers with its wide range of financial services and
products from securities, derivatives trading, depositary services, research & advisory
services, insurance, consumer secured & unsecured credit, loan against shares and
mortgage & housing finance. With around 5000 Relationship Managers, Indiabulls
helps its clients to satisfy their customized financial goals. Indiabulls through its
group companies has entered Indian Real Estate business in 2005. It is currently
evaluating several large-scale projects worth several hundred million dollars.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange, BombayStock Exchange, Luxembourg Stock Exchange and London Stock Exchange. The
market capitalization of Indiabulls is around USD 800 million, and the consolidated
net worth of the company is around USD 500 million. Indiabulls and its group
companies have attracted USD 300 million of equity capital in Foreign Direct
Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are
the largest financial institutions of the world such as Fidelity Funds, Capital
International, Goldman Sachs, Merrill Lynch, Lloyd George and Farallon Capital.
Indiabulls is ranked 82nd in the list ofmost valuable companies in India in BT500.
Business of the company has grown in leaps and bounds since its inception. Revenue
of the company grew at a CAGR of 184% from FY03 to FY06. During the same
period, profits of the company grew at a CAGR of 268%.
Indiabulls became the first company to bring FDI in Indian Real Estate through
a JV with Farallon Capital Management LLC, a respected US based investment
firm. Indiabulls has demonstrated deep understanding and commitment to
Indian Real Estate market by winning competitive bids for landmark properties
in Mumbai and Delhi. In April 2006, Indiabulls announced demerger of its real
estate division to a separate entity.
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About
Motilal Oswal Securities Ltd.
Motilal Oswal Securities is a leading research and advisory based stock broking house
of India, with a dominant position in both institutional and retail broking. Asia money
Brokers Poll 2005 has ranked us the best Indian brokerage firm. There are various
other categories where the Brokers Poll has rated us number one most independent
research, sales and service etc.
In March 2006, AQ Research, a firm that analyses the accuracy of a brokers research
call, declared Motilal Oswal Securities the best research house for Indian stocks.
Motilal Oswal Securities has witnessed rapid organic growth due to favorable market
conditions as well as efforts put in by the company itself. FY05 and FY06 saw the
company grow inorganically through acquisition of three significant regional broking
firms from Andhra Pradesh, Karnataka and Kerala. Over a period of time many more
regional broking firms may be acquired to gain solid footing in various regions of
India.
The company was founded in 1987 as a small sub-broking unit, with just two people
running the show. Focus on customer-first-attitude, ethical and transparent business
practices, respect for professionalism, research-based value investing and
implementation of cutting-edge technology have enabled us to blossom into an almost
two thousand-member team.
Our institutional business unit has relationships with several leading foreign
institutional investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent
media report we were rated as one of the top-10 brokers in terms of business
transacted for FIIs.
The retail business unit provides equity investment solutions to more than 1,75,000
investors through 1017 outlets spanning 375 cities and 24 states. We provide advice-
based broking (equities and derivatives), portfolio management services (PMS), e-
Broking, depository services, commodities trading, IPO and mutual fund investment
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advisory services. Its Value PMS Scheme gave a 402.74% return since inception
(Feb 2003), (Sensex is 270.69% & Nifty is 245.11%). The performance of Value
Hedging since inception (Oct 2005) is 32.76%.
Such an outstanding performance can be only attributed to our single-minded focus on
research-based value investing. Motilal Oswal Securities invests almost 5-10% of its
revenue on equity research and hires and trains the best resources
to become advisors to its valued clients.
Ourunique Wealth Creation Study,authored by Mr. Raamdeo Agrawal, Managing
Director, is now in its eleventh year. Investors keenly await this annual study for the
wealth of information it has on how companies created wealth during the preceding
five years.
The organization finds its strength in its team of young, talented and confident
individuals. Qualified professionals carry out different functions under the able
leadership of its promoters, Mr.Motilal Oswal and Mr. Raamdeo Agrawal.
Stringent employee selection process, focus on continuous training and adoption of
best management practices drive the quest to achieving ourVision.
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RESULTS
SUMMARY:
Out of the total of 85 correspondent (60 questionnaire based & 25 telephonic
interview) it was found out that
India bulls have the highest market share as it has 37% of the
respondents as its customers.
Religare followed up with 21% and further followed by Kotak and Share
khan.
Market Share
kotak
19%
india bulls
37%
Religare
21%
others
13%
Sharekhan
10%
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The results of Appendix I (Questionnaire) are summarized
as follows:
WHAT IS THE PURPOSE OF INVESTMENT?
We have found that most of the investor has the spare money to put in stock market.
The major objective we have found out in our survey that investor put their money in
stock market to earn short to medium term return. Investor does not consider stock
market for their long-term investment. However this is not standard phenomenon as
people also invest for long term on the basis of stock they are investing. Broadly we
can say that in stock market all types of investor exist. The difference comes in the
nature of investment they do means in what kind of stock they are investing. A long-
term investor put money in more stable and fundamentally strong stocks while some
one with an objective of quick gain would invest in more aggressive stock where can
be high
How long have you been investing?
29%
46%
14%
11%
below 2 yrs
2-5 yrs
5-10 yrs
above 10 yrs
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VOLUME OF INVESTMENT
SUMMARY:
As according to the respondents response it was found out that most of the
investors were into the category of (1-10) lakh followed by (0-1) lakh followed
by the following.
It was found out that people take many Factors into considerations before
investing into the market
23%
38%
21%
11%
7%
Volume of Investment
0-1 lakh
1-10 lakh
10-20 lakh20-50 lakh
above 50 lakh
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The results of Appendix I (Ques.7, 8, 9, 10, 11) are summarized as
follows:
Summary of Satisfaction survey
0
5
10
15
20
25
satisfied 18 13 10 4 4
dissatisfied 3 24 9 6 9
Religare
(21)
Indiabulls
(37)
Kotak
(19)
Sharekhn
(10)
Others
(13)
METHOD OF TRADING YOU PREFERS?
Comfort with trading methodology varies from person to person. We have found that
people are pretty comfortable with offline as well as online mode of transit. Howeverwe have seen a shift towards online mode of trading preferred these days to offline
mode of trade. This trend is most visible amongst the new generation investors who
are majorly employees of IT companies and BPOs. Religare is the only player,
which provides the ODIN trading platform so that they have best of both worlds i.e.
online trading at offline platform.
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TIME TAKEN TO ACTUALLY EXECUTE A TRADE?
All the broking houses today are technologically at par so there is not much of
variation in time taken to execute a trade. However in some branches where customer
rush is very high, execution of trade gets delayed. RELIGARE stands ahead in this
regard compared to its competitors as in RELIGARE, trade is executed in flick of a
second because of efficient dealers.
DO YOU HAVE AN ACCOUNT OPENING CHARGES FOR DEMAT? (YES,
NO)
We have found that most of the broking houses have various charges in their standard
template for charges, but companies are flexible in their approach to charge a client
according to potential of business expected of him. We have found that companies
like Religare and Indiabulls are very aggressive in their approach to charge a client
and can reduce and waive charges very quickly whereas there are broking house like
Kotak who are not ready for such differentiation.
HOW MUCH TIME IS TAKEN TO RECEIVE A PAYMENT?
This is the area where organization differs significantly. In some organizations we
have found that it takes around a week for a client to take a payment cheque. However
some organizations adopt innovative methods to improve their efficiency in these
areas. Broking house like Kotak and Religare have tied up with major banks in the
country and can arrange online transfer of funds in the same day. But, the industry as
a whole needs to do a lot in this area.
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The results of Appendix I (Ques.6) are summarized as follows:
PATTERNS OF TRADE
27%
20%
53%
Yourself
Follow the tips
Relation mgr
TRADING
PATTERNS
HOW DO YOU TRADE (BASIS OF TRADE)?
We have found out that majority of investors trade on the basis of relationship
managers advice. People who are been investing in stock market for long generally
do not prefer RM advise but the investor (which do form a big chunk today) generally
invest on the basis of advise of their respective RM. This practice is now getting more
and more popular amongst all leading broking house in the country. Religare has a
good strength of RMs in its every branch. However other broking house do lack in
this aspect. Market leader KOTAK leads in the number of RM followed by the
RELIGARE, which has built up very good team of RM in very short period of time.
DO YOU NEED A RELATIONSHIP MANAGER?
We consulted with the investor in Gurgaon area where the response we have got is in
favor of having a RM. We have found that, as majority of the clientele are
professionals working in MNCs or IT companies, these people do not have any
knowledge of stocks and shares, therefore they prefer having a RM. We have also
found that some investor have negative opinion about RM because of certain bad
instances in past. We have found that investors with security houses like
INDIABULLS, Karvy do not have good opinion about RM.
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RESULTS of the telephonic interview..
Telephonic interviews
A total of 25 participated in the telephonic interviews. This included men and
women, out of which were mostly young professionals from IT sector and
BPOs. They were asked a set of questions
1. ARE YOU PROVIDED WITH RM?
When we ask this question with investor we got mixed responses. We have seen
generally majority of the investor are being provided with RM. But in most of the
cases we have found that the role of RM in most of the cases has been limited to
opening of the account rather then being an ally of investor to guide him properly in
ups and downs of the stock market
2. WHAT IS YOUR FREQUENCY OF INTERACTION WITH RM?
We have found that majority of RM interact on need basis with their client. Generally
RM interacts with client on daily basis during the course of trading. Otherwise for a
passive client it is found that RM interact
3. IS ORGANISATION MORE IMPORTANT OR RM?
We have seen people giving more preference to RM then organization. It is because
of this that people shift to new broking house once RM leaves their job.
4. IS BRANCH LOCATION IMPORTANT FOR YOU?
We have seen that branch location is very critical in offline mode of trade but it is also
found that if the comfort with RM is created people are ready to open an account in
branches that are far from their location
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5. DO YOU BELIEVE IN BROKING HOUSE HAVING A BRAND
NAME?
When surveyed we found that there is a visible shift in the preference of the customer
from a non-brand broking house to branded broking house. The professionals who
invest their money in the stock market prefer branded broking house as its easy to
trust on these companies. This has affected companies like PRABHUDAS
LILADHAR and has help companies like RELIGARE and KOTAK who invest
substantial sum in creation of brands for their organization.
6. ADVERTISEMENT RELEVANCE IN DECISION-MAKING
We have found that advertising is important for creating a general level awareness for
the companies and buildup trust in the companies. However many investors who were
surveyed responded that although advertising is important but its not the major
element in decision making about the broking house they want to trade with.
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OBSERVATIONS
Professionalism:
Religare securities as they are known for their brand name still they have to more
emphasize on customer relationship management in Religare Securities type of
services they provide to their client in initial stage is perfectly good but after some
time the services provided by them to the client become low grade due to which the
existing client feel ignored thats why their competitors in the market like Kotak
Securities & India bulls can easily break their client from them so they have to take
care of it.
No of Branches:
No of branches of the Religare securities in the Delhi and NCR region is less as
compared to their competitors. The no. of branches of Kotak & India bulls are
available in every market in Delhi which also help them to be on top of Religare
Securities.
Research Team:
Tips provided by Religare securities to their clients as per the recommendation of
their research team is not as effective as the tips provided by Share khan securities as
the research team of Religare securities is in Mumbai. Also, growing of research teamresults in growth of their market share.
Small services:
Small services like providing tips on email & SMS on cell phone should be taken
undertaken so as to avoid delay in decision making by the clients.
Online Product:
The online product introduced by Religare securities in the market is not good incomparison of ICICI Direct.
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APPENDIX 1
QUESTIONNAIRE
1.Do you deal in any of the following financial instruments?
Cash Market F & O Commodities Mutual Fund
2.From which broking house you are trading?
Kotak securities Indiabulls Religare securities
Share khan Others If yes specify.
3. How long have you been investing?
Below 2 yrs 2-5 yrs 5-10 yrs above 10 yrs
4. What is the volume of your investment?
Below 1 lakh 1-10 lakh 10-20 lakh 20-50 lakh
Above 50 lakh
5. What type of brokerage they are charging from you on delivery & intraday?
.75 & .07 .5 & .05 .4 & .04 .3 & .03
.2 & .02 Others Specify
6.You trade:
Yourself Follow the tips Consult your broker
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7.How much limit your broking house provides you for delivery & intraday?
4 & 10 times 3 & 7 times 2 & 5 times
Others specify
8.Whether your broking house provides you with the software terminal free of
cost?
Yes No
9. Whether your broking house provides you with regular clues through SMS or
e-mail?
Yes No
10. Whether you are fully satisfied with the services provided by your broking
house?
Yes No
11. What are the top three services, which you expect from broking house?
..
..
...
NAME ..
Address ..
..
Mobile No:
Thank you for your cooperation
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BIBLIOGRAPHY
REFRENCES
Following references have been utilized during the progress of project
Web support
https:\\www.myiris.com
https:\\www.moneycontrol.com
http:\\www.religare .in
http:\\www.equitymaster.com
https:\\www.debtonnetindia.com
Magazines and other publications
Religare research report
Dalal street Economic times
Business today publications
http://www.religare/http://www.religare/