Online Share Trading Portal

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On-Line Share Trading Portal___________________________________________________________________________

Why invest?

If you were to open a book on economics and look up the word investing, chancesare that you would find the following definition: Investing is building up to meetfuture consumption demands with the intention of making surpluses or profits, as

they are popularly known.

And after reading it, the last trace of your eagerness to invest is likely to evaporate.

But investing is essential. Here is why

While the life expectancy of the average human being has increased, we areproductive only between the ages of 30 and 60 years. Hence the short time spanthat we are able to earn money needs to provide for our future when we may not becapable of earning.

Everything being the same, we could keep away a part of our earnings every year(save) that will come in handy when we will not be able to earn. However inflationdestroys the value of what we save. A sum of Rs10,000 saved this year will not havethe same purchasing power ten years down the line. Hence we need to preserve thepurchasing power of what we save.

The only way to hedge inflation is to invest in shares, debentures, bonds, gold or realestate, to earn returns from these assets that compensate for the decline in ourpurchasing power.

What is a share?

Share or Equity represents part of an ownership of a business. So as ashareholder you own a piece of the action that happens in that business. Why wouldyou want a piece of the action? For the rewards of course. As a shareholder youhave a right over the profits generated by your business. Your company might payout the profits generated every year as dividends or it may retain the profits to furthergrow them.

Theres another way you as a shareholder can make money. If your company doeswell, then its shares listed on the stock market become more valuable and the stock

price appreciates. On the other hand, the company might perform badly. Then notonly do you not get dividends but the stock price also declines. Hence investing inshares is a risky proposition.

When you invest in shares, you can expect certain returns based on thefundamentals of a business. However you have no control over it. What you havecontrol over is managing risks associated with it.

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CHAPTER - 1

INDIAN SECURITIES MARKET

1.1 Introduction

Securities market has essentially three categories of participants, namely theissuer of securities, investors in securities and the intermediaries and two categoriesof products, namely the services of the intermediaries, the securities includingderivatives.

The securities market has two interdependent and inseparable segments, thenew issues (primary market) and the stock (secondary market). The primary marketprovides the channel for sale of new securities while the secondary market deals insecurities previously issued.

1.2 History

1850 Shares of banks and securities of East India Company traded inMumbai under a sprawling banyan tree in front of Town Hall, which is now inthe Horniman Circle Park.

1875 Brokers organized an association known as the Native Share BrokersAssociation, and the countrys first stock exchange the Bombay StockExchange (BSE), set up in Mumbai with 318 members. The membership feegradually increased from Re 1 in 1887 to Rs 1,000 in 1896, and Rs 48,000 in1920.

1956 Securities Contract Regulation Act passed

1957 The BSE and eight other stock exchanges registered under theSecurities Trading Contract Act.

1982 The BSE classifies scripts into Group A for carry forward, and Group Bfor cash transactions.

1986 The BSE 30-share Sensitivity Index (a.k.a. the Sensex) compiled;updated every two minutes.

1987 Stock Holding Corporation of India set up.

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1992 Ordinance promulgated for granting statutory powers to the SEBI. TheOver-The-Counter Exchange Of India begins operations. The National StockExchange incorporated. The new 9,000-sq. ft ring in the rotunda of the newannexe to Jeejeebhoy Towers inaugurated.

1994 The NSEs debt segment begins operations on June 30; and thecapital market segment begins on-line script less trading on November 3.

1995 The BSE computerizes its trading operations, signaling the end of 120years of floor-trading with open out-cry system of share-trading and thebeginning of screen-based trading on the BSE.

1996 NSE 50 index launched April 22. NSDL set up as the first depository inIndia, and the NSE commences trading in dematerialized securities onDecember 26.

2000 The SEBI approves the report on Net trading brought out by the SEBIcommittee on Net based trading and services. Pursuant to the circular, stockexchanges are required to give permission to members to start Net-basedtrading after ensuring fulfillment of the minimum conditions. The NSE is thefirst exchange to grant provisional permission to Cochin-based Geojit

Securities to commence Net-based trading.

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1.3 Changing Trend

Remember the time when you left orders with your broker in the morningand received a confirmation fax late in the evening?

You wondered whether you had acquired the shares at the best possibleprice for the day. Today, the picture is different. Imagine a scenario where you logon to your account, get the live quotes of scripts you are interested in, getadvise from experts and research reports on your investment choice and then justclick the mouse to place your order, pay the amount due (which automaticallygets debited into your account with the on line brokerage firm), get your accountstatement, and the delivery of your shares into your Demat account. All thisthrough just one click of a mouse. Seems like a dream? But with online trading thishas become a reality. A few seconds later, you get the confirmation on your screen.

And after the trade settlement, your bank and DP accounts will reflect the changesaccordingly.

The speed of transaction, confidentiality about the prices and ease ofsettlement in the paperless mode should be good reasons for retail investors tojump on to the Net. All they need is a PC, a modem, a subscription to an ISP, anaccount with a bank (which has a web presence) and a depository account. Andthey can choose from a plethora of e-trading web sites.

So, finally the changing trend is known as E-trading which really meansBuying and selling securities via the Internet or other electronic means such aswireless access, touch-tone telephones, and other new technologies with onlinetrading. In most cases customers access a brokerage firm's Web Site through theirregular Internet Service Provider. Once there, customers may consult informationprovided on the Web Site and log into their accounts to place orders and monitoraccount activity"

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CHAPTER - 2

Important Terms

2.1 Depository

What is a Depository?

A Depository is a Company where the shares of an individual are held in theelectronic form, at the request of the shareholder. This eliminates the physical formof holding.The National Securities Depository Limited (NSDL) was promoted by IDBI, UTI, SBIand NSE.The Central Securities Depository Limited (CDSL) was promoted by BSE .

What is the Depository System?

Your money may be held in the form of liquid cash at your home or may bedeposited in a bank. The bank holds your funds in the electronic form andsubsequently debits or credits the account. Depending on your issuance of chequesor deposit of cheques. The advantages of safety and convenience of dealing with aBank overweigh the reasons for holding liquid cash in your home. Your financialassets such as Equity Shares may be compared to the above example. You mayhold physical share certificates in your home and be exposed to the various risks oflack of safety, mutilation, loss etc. Alternatively, person may deposit your shares inan organization called a Depository, which holds your shares in the electronic form.

The advantages of the Depository System can be further compared with physicalshares as below:

The risk of loss, mutilation is common for physical certificates and completelyremoved in electronic shares. Handling of a large number of physical certificates isended in the Depository mode. In the electronic segment, there are no bad deliversas in physical segment. There is no stamp duty payable in electronic sharescompared to the duty of 0.50% in the physical segment while transferring ownership.In loans against shares, banks usually charge a lower interest rate and margin

money than in the physical share certificates. Settlements in the Stock Exchangeshave commenced in the electronic segment and have proven to be far more efficientand convenient compared to physical shares.

How can Person Deal with the Depository directly?

You cannot deal with the Depository directly. However, if person have anyunresolved grievances against your DP, person can make a complaint to theDepository at the below mentioned address.

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2.3Dematerialisation

What is meant by Dematerialisation?

Dematerialisation is a process in which person can convert physical share

certificates into electronic shares. Shares should have been transferred in your name/ joint names before sending it for Dematerialisation.

Why should Person buy shares in the demat form?

The single biggest reason over buying shares in the physical form is that dematshares credited to your account within 2 to 3 days after the end of the settlement.This is unlike the average 30 to 40 days taken in receiving back physical shares fromthe R&T Agent and sometimes with objections. Further, possibility of loss or theft ofthe certificates is eliminated. This is in addition to the 0.50% stamp duty savings,which works out to Rs.50 for transfer of shares worth of Rs.10, 000

How does Person benefit by selling demat shares?

Brokers have no fear of bad delivery while selling demat shares. Due to this, theyoffer lower brokerage to you. As bad deliveries are eliminated shares are notreturned due to objections, resulting in saving of costs and follow up.

What is meant by Companies in compulsory Demat?

Only share certificates in these companies can be dematerialized by the investor.

Shares must be registered in your name to allow for Dematerialisation. Sharesdelivered by your Broker on Purchase (known as street name deliveries) cannot bedematerialized.

What if Person hold shares of Companies not in Demat?

You may approach the company and request them to sign up with NSDL Vigorouslyfollow up as Demat is in your favor.

Is it true that Demat is not compulsory?

Yes. Person has the option to hold shares either in the physical OR in thedematerialized form. This is as per the Depositories Act, 1996.However, whenperson buy shares person may receive delivery in the demat form as per theoption of the seller.

Can physical AND Demat shares be held for a company?

Yes. Person may dematerialize only a part of your holdings.

In Demat does Person need a Transfer Deed?

No, there is no need for a Transfer deed in order to get your share certificatesdematerialized.

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How does Person demat his/her Shares?

In order to demat your shares/certificates, person has to fill in a DematerialisationRequest Form in triplicate along with the relevant details and submit the same toyour DP along with the certificates to be dematerialized. The combination of names

in the shares must be same as that in the account.

What is a DRF?

In order to get your shares converted from the physical to the electronic form, personhas to submit your certificates along with a request form asking for the conversion.This request form is called a DRF or a Demat Request Form.

What is Defacing of Shares?

When the certificates are surrendered for demat they are to be canceled at the face

of the certificate by putting a stamp "Surrendered for Demat" so that the certificatecannot be traded. This process of affixing the "Surrendered for Demat" stamp on theshares is known as defacing of shares.

How long would it take Persons account to be credited when he/she submitshares for Dematerialisation?

Your account will be credited typically in 15 days.

Are there Distinctive Numbers & Certificate Nos. in Demat Shares?

No. Dematerialized shares do not have any distinctive or certificate numbers. Theshares are in FUNGIBLE ~ 100 shares of a company are the same as any other 100in that company.

Why dematerializing, can a sole holder add a Joint Holder?

No. At this point, ownership cannot be transferred from an individual name to a jointname. To do this, person should first open a Depository Account as the sole holderand dematerialize the shares. You should open another Depository Account in thejoint names (AB).Now make an off-market transaction from account A to account AB.

The DP will charge a nominal amount for this transaction. As an alternate, thecertificate can be sent for transfer in the joint names AB and then surrendered fordemat with the DP.

What are the various reasons for Rejections in Demat?

Fake Certificate, Signature difference, Third Party Claim, Court Cases are thereasons as to why a demat request is rejected by R&T Agent.

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2.4 Rematerialisation

What is meant by rematerialisation?

Rematerialisation is a process in which person can convert your electronic holding

into physical share certificates

Does the NSDL issue fresh certificates in Remat?

In the rematerialisation process, a request goes from the DP to the R&T Agentthrough the NSDL for the remat. The R&T Agent will process the request, print andthen dispatch the new share certificates directly to you. Thus, the NSDL does notissue or handle share certificates.

What are the rules for Odd lot Rematerialisation?

There is no concept, any longer, of a market lot in the electronic segment. Thus,person may remat your odd lot shares at any time. This would be done in exactly themanner as person would remat market lot shares.

What are the rules for stamp duty in Remat?

The Depository is the registered holder in the Companys records. In a remat,transfer from the Depository to person will NOT be liable to a levy of Stamp Duty.This is as per the Depositories Act. However, the Depository will charge nominalcharges for this process.

How to remat persons securities?

For Remat of Securities, person have to submit a Remat Request Form (RRF)tothe DP mentioning the relevant details for the rematerialisation process to takeplace.

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CHAPTER - 3

TRADING SYSTEMS

3.1 Offline Trading System

As the internet has taken over the physical trade, the same is thesituation in trading in shares. Even the internet has not spared trading in sharesand still the conventional system of offline trading continues in todays world.

What is meant by Offline trading?

In offline trading system, two parties i.e. an individual and a brokercome into contact with each other and the transaction takes place. The investorgoes to the broker for the purpose of buying or selling of securities and for that hehas to make a payment to settle the transaction.

Here both the parties would be facing some risk. Brokers would befacing the risk of default. In a typical situation, a customer would be allowed totrade on margin, either by way of transferring it to trade account with the brokeror giving the broker authority to keep a hold on his bank or depository account tillthe time of settlement.

If the margin goes below the specified limit, the website of the brokerwould give warning to the investor to replenish the same. Brokers can either askfor blanket permission/power of attorney from the customer to replenish the sameor take risk on that, in which case they may also square off the contract.

For settlement, different brokers may follow different models:

1. They would require full funding before the pay in day.

2. They may debit the customer's account with the margin money and keephold on balance amount. On pay-in day, the balance amount will betransferred to broker's trade.

3. The broker would debit only the margin amount and would wail to thecustomer to pay on the pay-in day.

As a matter of prudence, the broker would have checked the balance in thecustomer's account, but the balance may go down between trade day and thepay-in day. Here, brokers would have to decide the extent of risk if at all they areready to take. In periods of volatility, especially when markets are failing,decision-making of the broker as to the extent of risk he is willing to take wouldbe very important.

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Customers would face the risk of leakage of personal information.

Merits of Offline trading

Low Brokerage

In case of offline trading, brokerage charged by the broker is quite lowbecause of some personal relations, low cost of installation as compared toonline trading.

Less Margin

Generally, company charges 25% margin while the brokers charge

nearly 10%margin from the investors in case of trading in derivatives.Sometimes broker charges negligible amount and he allows trading up to hislimit. This shifts the investors from trading online to the trading with thebrokers. Foe example: Local Brokers like Motilal Oswal, Ratnakar, PravinRatilal etc. allow trading in shares with less margin and low brokerage.

Flexibility in credit period

Local Brokers allow their customers to trade in shares with longercredit periods which facilitate the payments for the investors. Whereas inOnline trading a customer is required to make the payment in less than 2days which is not the case in offline trading. The conventional system alsoallows to make delay in settlement of payment if the relation with the broker isgood.

Customized Advice

Normally, investors would like to take to the broker before taking aninvestment decision. Internet trading would lack this personal touch. As far ascustomization of data using data mining is concerned, that would not attractcustomers looking for something different. Some of the brokers are of the

view that they would have to provide advisory services to the customers. But,with increased volumes they will have to balance their preferences and needsof the customers.

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Demerits of Offline Trading System

Problems in getting in touch with the Broker Limited Clientele

Problem of Attention from the Broker due to load

Reliance on the Broker's information

Customer has to believe what the broker says

Broker might not give the best price

Reconciliation of accounts and cash settlements

Paperwork

Geographical Restriction

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3.2 Online Trading - A New Dimension of Trading

Walter, business professional logs on to the Internet, punches in his idcode and places an order for 100 shares of Microsoft. His broker checks to see ifWalter has the necessary bank balance to buy the shares and then places anorder with the Stock Exchange. The exchange accepts the order after checkingthe scrip's limit for the day. Then Walter's Demat account gets credited with theshares.

Time taken: 2 minutes.

Welcome to the world of e-Trading.....

No more phone calls to your stockbroker for placing an order.

No confirmation problem.

No cash/cheque payments and no physical delivery of shares.

Just log onto the net for a few minutes and everything will be taken care of.

WHAT IS E-TRADING?

E-trading is the mechanism of buying/selling securities via the Internet.

E-trading is considered as a logical extension of e-commerce.

To put it simply, e-commerce is buying and selling through electronicmedium. There could be not be a better place than the stock market, wheretremendous volumes are traded, to exploit the opportunities of e-commerce. But,there are certain inherent characteristics of this market, which make it morevulnerable to risks associated with e-commerce. The market requires knowledge,information, ability to analyze and quick decision-making. This requires utmostcare while trading on the net. A single click can make or destroy investor's wealth.

E-Trading is a service offered on the Internet for purchase and sale ofshares. In the real world, you place orders on your stockbroker verbally(personally or telephonically).

In Online Trading, a customer can access a stockbroker's websitethrough his internet-enabled PC and place orders through the broker'sinternet-based order routing and trading engine. These orders are routed tothe Stock Exchange without manual intervention and executed thereon. The

order routing to the exchange will happen in a matter of seconds. The order

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execution once it reaches the exchange system is similar to that of an offlinetransaction,

3.2.1 History of E-Trading In Global Scenario

The history of e-trading began in 1983, when a doctor in Michiganplaced the first online trade using E*TRADE technology. What began with asingle click over 16 years ago has now taken the world by storm. The conceptwas visualized by one Bill Porter, a physicist and inventor with more than a dozenpatents to his Credit: who provided online quotes and trading services to Fidelity,Charles Schwab, and Quick & Reilly. This led Bill to wonder why, as an individualinvestor, he had to pay a broker hundreds of dollars for stock transactions.

Today his dream has become a reality. E-trading has become a way ofinvesting in the developed world and is soon catching on in developing countriestoo. Since that time, online trading has increased dramatically - according to anunprecedented efficiency and control.

Recent estimate, there are 7.8 million individuals trading online, making807000 trades per day. Currently, there are over 200 broker-dealers providingretail investors with the ability to trade online. Along with the growth in onlinetrading, there has been a surge in investor complaints related to online trading.The downfall of a few international dotcom like Value America Inc, NetInoperative Ltd, Toysmart.com, boo.com has not diminished the opportunitiesthrown by internet trading. There are investment banking firms which offer a suitof services such as online trading, research reports, real-time marketcommentary, Java-based charts, analysis and other professional services. E-Trade has presence in around 119 countries, as one of the renowned players inthe international market.

E-Trade Securities Inc was floated in 1992 to offer online investingservices through America Online and CompuServe and launchedwww.etrade.com in 1996. Recently, it announced strategic alliances with WitSound Vies, the online banking subsidiary of Wit Capital Group Inc, to capitalizeon the complementary core strengths of the two groups. TD Waterhouse, thesecond largest global brokerage, has over 2.9 million customer accountsworldwide and more than $150 billion in customers' assets under administration.In addition to securities trading services, it also provides banking, mutual fundsand other financial products/services to its customers.

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History of e trading in Indian context

Net trading begins in India....

On Jan 31st 2000, the Securities Exchange Board of India (SEBI)formally notified all the stock exchanges, giving them a green signal forNet/Online trading. The various players of the securities market, which includesNSE, BSE, other regional stock exchanges and the brokers, had been waitinglong for the go-ahead sign. Trading via the net is expected to generate greatervolumes than ever before and this has attracted a large number of players. Oneday after SEBI announced its regulations for net trading, Kerala based Geojit

Securitiestook the lead and started online trading in Mumbai. The Kerala StateIndustrial Development Corporation (KSIDC) decided to join Geojit Securities in1994. It has a 24% stake in the equity, the balance belonging to Geojit Securitiesitself. This is the only venture in India where a state owned developmentinstitution is participating in the equity of a stock broking company. The first nettransaction was a trade for 100 shares of Reliance executed by DR Metha,Chairman, and SEBI for the Chairman of Geojit Securities. Today there are manyother big brokerage firms like Motilal Oswal, Kotak Securities, SSKI and ICICIDirect running successfully.

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But I am not comfortable with Internet, or with finance, how can online tradingbe easy for me?

Contrary to common perceptions, trading through Internet does not require eitherany expertise in working on the computer, or any special financial skills.

You could try the demo (demonstration) of the online trading sites likeSharekhan.com to find out why others like you, with little or no knowledge about theInternet or finance, have switched on to online trading. Or you could attend thedemonstrations sessions held by such websites in your city.

Is trading through the Internet a costly affair?

The convenience provided by online trading is even then worth the costs involved.

And online trading sites are not that costly. For example, a trader can trade shareson margin at rates as low as 0.10%on Sharekhan.com and if one wishes to trade incash, then the rates applicable are as low as 0.5%.

However, it is important to compare various online trading sites on brokerage rates,inclusive of all sub-charges.

I am pretty satisfied with my present broker who serves me offline. Whyshould I choose to go online to trade shares?

Many of those customers who have chosen to trade shares online today, had at onepoint of time been trading through offline brokers, just like you are today. They took achance to go online and trade shares. After realising the advantages of tradingshares online, they have shifted to online trading now. In fact, there are manycustomers who have already opened an account with sharekhan.com. Just trytrading shares after opening an account with any online trading site. However, beforechoosing an online trading site, please compare all such websites and then make adecision.

How frequently is the prices updated at all these online trading sites?The tickers available at online trading sites provide instantaneous updates. Also,some websites can offer to transact in those shares instantaneously and withconvenience.

How can I be sure that I shall be trading at a price I want to or at a priceappearing in the website?

The solution to your problem could be provided in different ways by different onlineshare trading sites. At sharekhan.com, for any trade order, the customer is asked toclick "Proceed" after he has the opportunity to completely check the order verification

form.

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Moreover, you have the option of modifying or canceling the order till the moment theorder is executed at the exchange.

Finally, online trade confirmations reach reaches our customers within 4 minutes,while contract notes are dispatched at the end of the day and reach within 24-36

hours.

With Sharekhan, you decide what you want to buy and buy the share at the price youwant to and therefore you are in total control of your trades.

What other services can I get by trading shares online?

Internet has brought to the retail investores what was till sometime ago the soleprerogative of large brokerage houses and high net worth individuals. For example atSharekhan.com one can access multitude of resources to arrive at his stock picks.

Reliable research with an enviable track record is available free of cost.

An investor can now access sharekhan.com and do his technical analysis, knowwhat other leading brokers think about a company and whether it is a buy or a sell,(Multex Global estimates), access live news from international news agencies suchas Reuters, CNBC, read about what the leading CEOs think about the state of theeconomy and the capital market.

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3.2.2 WORKING OF E-TRADING

How it works?

Trading has two aspects of working one is technical and second One isprocedural. We will see both aspect and how it is working?

Procedure:

Sitting in ones own home or office or even from your car, as long asyou can access the net, you can trade on the market. There are three basicthings needed for e-trading:

A bank account,

A D-Mat account and

A brokerageaccount.

The steps in e-trading replicate the real life situation and are fairly simpleto follow. Once these three accounts are opened, the money and shares aretransferred to your bank and Demat account automatically, electronically andwithout any paper work.

The first step is of course to open an account. One can open multipleaccounts with himself or herself as the first name in the account. Then it isnecessary to determine the type of account that you want and how you wantto pay for the trades you make. Joint accounts are allowed but for that you willneed to have certain information about those people. Accounts can beIndividual, Joint, Sole Proprietorship, Corporate, or Partnership etc.

The form filling requires simple personal details like full legalname, Citizenship status, Residency status, employer's name andaddress, your passport\PAN number, Date of birth etc.' One can download the

forms or request for them by post or even request for a representative of thefirm to come over to help you with the form. Post-submitting, you are allotted aUSERID and PASSWORD while giving details for registration. Then anAccount reference Number is generated and displayed to you. These threethings are unique to an individual and ensure security of transactions. Theacceptance of the application is communicated by email.

Once you have got your USER ID and PASSWORD and your account hasbeen set up, you can access the website and login using the same. Thesecond step is then to Fund Your Account. In order to start trading online it isimportant that you deposit money in your bank account before placing a buyorder. In order to place a sell order you must have shares in your DEMAT

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Account. You can sell your shares anytime as long as shares are there in yourDEMAT Account. In order to place a buy order you need to fund your account.You can do this by depositing money in your bank account or else you cansell some shares existing in your Demat account and use the proceeds of saleto fund your purchase transaction. The amount of money required before

placing a buy order would depend on the value of order and the type of e-invest account you have enrolled for - whether cash or margin.

In a Margin account one can use a line of credit to buy marginablesecurities or for overdraft protection. Such an account is opened after takinginto consideration Annual income, Net worth, description of your investmentobjectives, as it involves lending a line of credit. In a cash account, theamount of securities bought has to be backed by the cash in the account.

Then comes placing the order:

For this you enter your Trading password and go to trade.

From the Trading tab, select Enter Order under the Stocks heading.

Select a transaction type: Buy, Sell, ShortSell.

At Number of Shares', type the number of shares that you want to buy.

At 'Stock Symbol or Name(s)', type the stock symbol. If you don't know thesymbol click 'Find Symbol', type the company name, click 'Search' andclick the symbol that you want from the list.

For a market order, select 'Market'. Otherwise, select 'Limit'. 'Stop Loss' or'Stop Limit and enter the price.

'Market Order': you just ask the broker to buy or sell your stocks at thebest price available.

'Limit Order': you tell the broker to trade only when the stock hits acertain price or better.

'Stop Loss': you tell the broker to sell your shares if the stock dropsbelow a certain price.

Select either 'Good for Day' or 'Good Until Canceled'. If you want to place

an 'All-or-None' order, click 'All or None'. Type your trading password andclick 'Preview Order'.

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If you want to change your order, click 'Modify' and make your changes.

To see if your order has been executed and filled as you expect, checkyour account balance. The 'Account Balances' page shows your account

equity (the value of your account) and your buying power. To check youraccount balance, click the 'Accounts Services' tab, make sure the correctaccount number displays at 'Select Account' and click 'Go'. At TotalAccount Value', see your account balance.

For a new price, select the appropriate option button and then enter theprice (unless you're changing it to a market order). You cannot change thestock symbol or the transaction type (Buy. Sell, Sell Short, or Buy tocover). Enter your trading password and click 'Preview Change Order'. Or,if you want to cancel your changes, click 'Do Not Change'.

In order to cancel a stock order, from the Trading' tab, select 'View OpenOrders' under the 'Stocks' heading. Make sure you're currently in thecorrect account. Click 'Cancel' beside the order you want to cancel.Review the information presented to make sure this is the order you wantto cancel. Click 'Cancel Order'. Enter the symbol or the name of the scrip,press "GO" or the relevant button.

The Account Opening Charge, commission rates and the minimum limit oftransaction vary from site to site. Other charges can include Annual ServicesCharges, Custody charges, D-Mat account charges etc. Also most online tradersoffer a host of other tools to aid the investment decision. A full research back upin terms of reports, articles, opinions, etc., live time quotes, latest news on thescrip, technical charts to see how the stock's price has changed over time.

So sitting at home one can take an investment decision at ease afterhaving researched and read up fully about the stock. With the advent of onlinetrading, it would seem that the markets are just a click away. Please however, doremember that currently in India the handful of online trading offers are mereorder routing systems. But it will not be long enough before the entire systemgoes online.

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3.2.3 Benefits of E-broking

Seamless Trading

E-broking integrates Bank, Demat account and Brokerage account.Transfer of money and shares from and to Bank account and Demat account is

done automatically.

No Geographical Restriction

Customers have access to site from anywhere in world. So even ifcustomer is out of station, customer can take the advantage of market condition.

No Time Restriction

Customer can trade not only during market hours but also when market isclosed. He is required to give limit as to at what price he wants to buy or sell theshares. When market will open, the shares will be purchased or soldautomatically at that particular price or best favorable price.

Online Brokers Make Investing Cheaper

By charging drastically lowered commissions; online brokers offer cheaperaccess to financial markets, consequently encouraging more investing, as isevident by the increasing number of day-traders. The latter are individuals whohave tried to make a career out of buying and selling stocks very quickly, often

making and closing dozens of trades in a single day.

TheOnlineInvestorIsSelf-Reliant

Because online trading greatly diminishes the role of brokers. Investors havemore freedom when making investment decisions and come to rely onthemselves when developing strategies. The online investor is responsible forresearching, making decisions, entering an order and using a computer. All thismakes online investors the masters of their domain and leaves them with no oneto blame. Thus, online trading promotes self-empowerment.

Offers Greater Transparency

Online trading gives greater transparency to the investors by providingthem an audit trail. This involves a complete integrated electronic chain startingfrom order placement, to clearing and settlement and finally ending with a creditto the depository account of the investor. Each of the above mentioned stagesare subject to inspection, thus bringing in transparency into the system. Greatertransparency helps in reducing the systematic risk for the investor. This ispossible as the market related information affecting the stocks gets

communicated to the investor on a regular basis. Due to this increased exposure,

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the investor can take necessary steps, which would reduce his overall marketrisk.

Enables Hassle Free Trading

Online trading integrates the bank, the brokerage firm and the demataccounts which leads to easy and paperless trading for the client.

Quick Trading

The investor will be able to execute the entire trading transaction,right from logging on to the broker's site, to the execution and settlement ofhis bank account, in a very short period of time.

Provides A Level Playing Field

Trading on the net, gives even the smallest retail investor access toinformation that earlier was available only to the big traders. This providesa level playing field for all investors in the securities market.

Reduces The Settlement Risk

This method of trading reduces the settlement risk for the investor,as in this case no short sale is possible i.e. the seller will not be able to sell

the securities unless he has actual possession of them. In the case of ademat account (which is required for an online transaction), when a sellerwants to sell the securities, his demat account is checked by theDepository Participant before executing the sale transaction. This reducesthe settlement risk for the buyer, who is assured of the delivery of thesecurities.

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3.2.4 Loopholes in E-Broking

Lack Of Speed

If customers in large number access the site at the same time, server getsoverloaded, so it results into delay in process.

Security Aspect

There may be chances of hacking of password if customer is not alert.This may cause a major loss to the investor.

Lack Of Flexibility

If the customer is not alert about his position on last trading day and if he isnot able to square off his position, he has to take delivery compulsory or if hedoesn't have enough liquidity, the site will automatically square off his position.This action may or may not be in benefit of customer. Whereas in conventionalbroking, broker will inform the customer time to time or will take the decisionhimself in favor of the customer.

Network Crash:

There will be problems and delays due to a large influx of traffic and

rapid online trading criteria as it happened on 17th May, 2004 which isreferred to asBlack Monday.

Computer Illiteracy:

Literacy of Computers is mandatory for traders using this online tradingservice. So for those who are computer illiterate, using websites serves as ahandicap for them.

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3.3 Trading Vs E-Trading

The advent of technology has added a new dimension to broking system.Through E-broking system, broking has become more transparent and faster. It

has reduced the back office paper work. It settles the account within a couple ofdays rather than long period of time. It has also eliminated physical transfer ofshares and money by invent of Demat account and on line banking.

When anyone wants to enter into the market for trading purpose, there iscommon process through which individual has to pass either in conventionalbroking or E-broking which is basically divided in three parts.

Decision -> Execution -> House keepingNow let us understand how E-broking makes itself different from conventionalbroking in this process.

Decision

Decision about choosing particular scrip is made by investor himself basedon his knowledge and his experience about market condition. Sometimesinvestors seek advice from broker and they both decide about investment. Thusin conventional broking and E-broking decision parts remain same.

Execution

In execution part of broking, E-broking is completely different fromconventional system. This can be explained from graph below.

Conventional Broking E-broking

Call Logon

Get Rates See the rates online

Give order Punch in order

Confirmation Confirmation

through phone through e-mail

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House Keeping

After matching of order at a predetermined price, the question of paymentsand deliveries of securities /transfer of shares take place where also wide

difference in terms of operation can be seen.

Conventional Broking E-broking

Payment through Payment through

Physical Cheque Online Banking

Transfer of shares Transfer of shares

in paper form in paper less form

House keeping of Demat Keeping of

materialized shares dematerialized shares

Advantage of Online Trading Over Conventional Trading

The speed of transaction

Ease of settlement in the paperless mode

Confidentiality of transaction

More transparent

More convenient

Broker's reach to large number of customers with less cost

Limitation Of On Line Trading Over Conventional Trading

Lack of internet penetration

Lack of expertise in share market

High brokerage

High operating cost

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3.4 Grey Market

In this type of market, there are only two parties i.e. the broker and theinvestor. The Exchange does not come into picture at all. So the transactions

taking place are out of the purview of the exchange, which in other words canalso be termed as illegal. In this type of market the brokerage is quite low asthere isnt actual transaction or delivery of security as such. The transaction iswritten in a book as to keep record of buying and selling price and quantity. If buyprice is higher than sell price then difference is paid by investor and that amountis profit for broker and loss of investor and vice versa.

Major Driving Forces of Grey Market:

Nowadays even grey market is also quiet popular because of many

advantages: -

No Margin

The trader is not required to keep any deposit as margin to buy or sellthe shares. There is credit flexibility allowed to a large extent.

Trading of Index

Prediction of Index is Easier than of Security. In a SEBI regulated

market, a trader is not allowed to trade in Nifty or Sensex in equity market, whilein grey market, trading in Nifty or Sensex in equity market is permitted.

Longer Trading Period (One Week)

The trading duration in this market is of one Week and the settlements aremade on the end of each week (Friday). So investor can take 5 days position inthe trading. This can be considered as a major driving force for this market.

Advantage Of Future And Equity Price Difference

There is one simple rule known by everyone that on the Last Thursdayof every month security and its futures value matches. How to take advantage ofit??? Its possible on grey market with a fix profit not affected with the marketmovement.

i.e.: -

Reliance security price is :- 440

Reliance Future is traded at :- 400

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Now, Investor will Sell (Shortsell) Reliance Shares at 440 and Buy reliancefuture at 400so on the last Thursday of the month when both the prices match,investor will reverse the transaction.

Last ThursdaysPrice

Profit in Equity Profit in Futures Net Profit **

420 20 20 40

480 (-40) 80 40

360 80 (-40) 40

** Brokerage is not deducted in Net Profit

This can be possible legally in some cases but with very large investment

because futures are traded only in lot sizes.

Negative Factors

Risk of Defaulting Broker

Illegal

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CHAPTER - 4

COMPANY AT A GLANCE

4.1 SSKI History

Founded 1922, it is one of Indias oldest brokerage houses having over eightyyears of Broking experience

Founding member of The Stock Exchange, Mumbai and pioneer institutionalBroker

SSKI is the only domestic player in a market crowded by 44 multinationalsecurities firms.

Foray into Institutional Broking and Corporate Finance 18 years ago

SSKI group also comprises Institutional broking and CorporateFinance 18 years ago. While the Institutional broking division caters to thelargest domestic and foreign institutional investors, the corporate financedivision focuses on niche areas such as infrastructure, telecom andmedia. SSKI holds a sizeable portion of the market in each of thesesegments.

Forerunner of investment research in the Indian market,

SSKI provide the best research coverage amongst broking housesin India. The companys research team was set up in dec.1992 and is rated as

one of the best in the country. Voted four times as the Top DomesticBrokerage House by Asia money Survey, SSKI is consistently rankedamongst the top domestic brokerage houses in India.

Retail broking started in 1985

Research group was set up in December 1992

It acts as a pioneer of investment research in the Indian market aimed atgenerating quick investment ideas

Its Research team is rated as one of the best in the industry. Across retail &institutional

Group interest in Investment Banking, Institutional Broking and Retail Broking

It is an Integrated equity solutions provider

It commands good market share of the institutional business.

It has over 60 institutional clients spread over India, Far East, UK and US

It occupies 65% of business share from Foreign Institutional Investors

Its daily turnover averages to US$ 2 million.

The private equity deals sum over US$ 1billion.

SSKI named its online division as Sharekhan on February 8, 2000 coincidingwith the launch of its website

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3.2 SSKI Group - Corporate Structure

Integrated Equity Solutions Provider

Among the top 3 branded retail service providers

(Rs. 200+crs average daily Vol- FY 03-04)

Multi-channel access to clients

Tailor made research and products

Depository Services

Derivatives

Innovative products for enhanced performance

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Owns 50.5% of

SSKI Corporate Finance Pvt. Ltd.

Investment Banking arm of the group

Shareholding pattern

50.5% SSKI Securities Pvt. Ltd.

49.5 % Morakhia family

SSKI Investor Services Pvt. Ltd.

Retail broking arm of the group

Shareholding pattern

56% Morakhia family (promoters)

18.5% HSBC Private EquityManagement, Mauritius

18.5% First Carlyle Ventures, Mauritius

7% Intel Pacific Inc.

SSKI Securities Pvt. Ltd.

Morakhia Family & Associates

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4.2 About Sharekhan

SSKI named its online division as SHARE KHAN and it is into retailBroking

The business of the company overhauled 4 years ago on February 8,2000.

It acts as a discount brokerage house to a full service investment solutionsprovider

It has a 150 member strong team.

It has specialized research product for the small investors and day traders

Largest chain of share shops, 103 Franchisees & 17 Branches acrossIndia.

It has $25m/trades every day.

Leading player today with 20% market share

Over 8000 online clients

The site was also launched on February 8, 2000 and named it aswww.sharekhan.com

The SpeedTrade account of share khan is the next generation technologyproduct launched on April 17, 2002

SpeedTradePlus was launched on October 28, 2002 for trading inDerivatives

It offers its customers with the trade execution facilities on the NSE, forcash as well as derivatives, depository services

Ensures convenience in trading experience:

Share Khans trading services are designed to offer an easy,hassle free trading experience, whether trading is done daily or

occasionally. The customer will be entitled to a host of value addedservices, in the investment process depending on his investing style andfrequency. and offers a suite of products and services, providing thecustomer with a multi-channel access to the stock markets.

It gives advice based on extensive research to its customers and providesthem with relevant and updated information to help him make informedabout his investment decisions.

Share khan offers its customers the convenience of a broker-DP.

It helps the customer meet his pay-in obligations on time thereby reducing

the possibility of auctions. The company believes in flexibility and thereforeallows accepting late instructions without any extra charge. And execute

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the instruction immediately on receiving it and thereafter the customer canview his updated account statement on Internet.

Sharekhan Depository Services offers demat services to individual andcorporate investors. It has a team of professionals and the latesttechnological expertise dedicated exclusively to their demat department. Acustomer can avail of Demat \ Remat, Repurchase, Pledge, Transmissionfacilities at any of the Share khan branches and business partners outlets.

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Ground Network Largest in India

122 Franchisees and 28 branches

Covers 82 cities in 17 states acrossIndia

Trade execution facility on BSE andNSE for Cash as well asDerivatives

Depository/Demat account services

Personalized Sharekhan researchadvice

Uniform service standards


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4.3 Organization Structure

ALTERNATE CHANNEL DEVELOPMENT

The alternate channel was founded in December 2003. Till then onlydirect channel existed which aimed at targeting only HNI customers. Thealternate Channel was started with an aim of targeting the retail customers whotraded on small volumes. This channel was launched in Delhi, Mumbai, Gujarat,Pune and Bangalore for experiment. Ms. Jignasha Sevak acts as a RegionalProduct Manager of alternate channel of Gujarat zone and handles theAhmedabad and Baroda branches. This Channel is very successful in all the five

cities and Sharekhan is planning to launch it in many other cities of India. InGujarat even they are working on starting alternate channel in Surat and Rajkot.In short span of 6 months Sharekhan has more than 600 retail customers inGujarat.

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4.4 What does Share khan offer?

Share khan offers online trading account through which a customer can buy andsell 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 forcarrying out a transaction or any type of settlement of payment. It facilitates thecustomer a speedy and hassle free transaction. Share khans product consists ofa 3-in-1 concept, which integrates:

1. Trading Account

2. Demat Account

3. Linking with the Savings account.

Through its trading account, a share khan customer can directly transfer his fundsfrom his savings bank account affiliated to share khan to his trading accountwithout any paper work. He can buy and sell shares from the website and alsoview the market prices of the shares he trades on the terminal.

Share khan .com allows trading at present only on NSE. BSE trading will beshortly available. To open an account a customer requires filling up a formconsisting of 12 agreements, a passport size photograph, a residential proof, aphoto id proof and a cheque drawn of respective amount in favour of S. S.Kantilal Ishwarlal securities Pvt. Ltd.

After opening an account with Share khan, a customer will be given User id,Membership password and trading password, which will enable him to access hisaccount and trade.

Share khan offers 3 types of products according to the volume-basedrequirements of the investors that are as follows:

1. CLASSIC ACCOUNT

This account allows the client to trade through the website and is suitable forthe retail investors.

Here maximum scripts that can be shown on the terminal are only 25. Also thetechnical charts are not available.

Its a JAVA based applet, which allows trading only through website and seelatest prices of the scripts of your choice.

This account also allows trading in Derivatives.

The lifetime registration charge for this account is Rs.750 and there is noconstraint of minimum turnover.

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AFTER HOUR ORDERS

Share khan customers also enjoy the facility of placing orders even after thetrading hours, and the orders are executed as soon as the market opens.

DIAL-N-TRADE

It is also an exclusive service available to all Share khan customers for trading inshares via the telephone. On dialing the toll free number 1600-22-7050 and onentering the customers TPIN number, the customer will be directed to a tele-broker who will buy or sell shares for him.

TIMELY ADVICE

Last but not the least, the USP of share khan is its timely advice that it gives to itscustomers 4 times in a day through e-mails. Among these e-mails sent,

One is pre-market mail indicating the position of the market (i.e. either bullishor bearish trend) when it opens.

The other two e-mails are the during market hours mails which indicate as tohow the market will move and in which direction.

The fourth e-mail that is called the post market mail or the eagle eye is themost important and valuable suggestion.

In this e-mail, all the scripts that are under coverage are segregated into 5clusters. Each cluster represents a certain profile in terms of businessfundamentals as well the kind of returns the customer expects over a certain timehorizon. This he3lps the customer identify the stocks that match to his objectives.

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4.5 SEVEN Ps OF SHARE KHAN

1. PRODUCT

Product VarietyShare khan offers 3 types of online trading accounts for its customersspecially designed according to their volume in share trading. Those 3varieties are:

Classic- for retail investors Speed Trade: for high net worth investors with large and activeequity portfolio who need to monitor and action swiftly Speed trade Plus- for high net worth investors dealing inderivative market.

QualityUser Friendly, attractive & colorful Website.

. Design

The website of Share khan namely www.sharekhan.com has beenspecially designed to facilitate its users to buy and sell shares in aninstant at anytime and from anywhere they like. The site is user friendlyallowing even a layman to easily operate without any hassles.

Features:Share khans product comes with the following features:

Trade execution in a fraction of a second! Single Screen Trading Terminal Real time streaming quotes. Price watch on any number of

scripts. Hot keys similar to Brokers Terminal. Customized Alerts based on Multiple Parameters. Back up Facility to place trades on Direct Phone Lines. Intra day charts, updated live, tick-by-tick. Instant Order\ Trade Confirmation in the same window Live margin, position, marked to market profit & loss report. Competitive Brokerage. Flexibility to customize screen layout and setting. Facility to customize any number of portfolios & watch lists. Facility to cancel all pending orders at one click. Facility to square off all transactions at one click. Top Gainers, Top Losers, and Most Active, updated live. Index information; index chart, index stock information live. Market depth, i.e. Best 5 bids and offers, updated live for all

scripts Online access to both accounts and DP. Live updated Order and Trade Book.

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Details of pending, executed and rejected orders. Online access to Customer Service. 128 - bit super safe encryption. Facility to place after market orders Online fund transfer facility from leading Banks

Online intra-day technical calls. Exhaustive database of over 2000 companies Historical charts and technical analysis tools. Last but not the least, ideas that help you to make money!!!

Brand Name

The company as a whole in its offline business has named itselfas SSKI Securities Pvt. Ltd -Sevaklal Sevantilal Kantilal andIshwarlal Securities Pvt. Ltd. The company has preferred to namethemselves under a Blanket Family Name.

But in its online division started since 1997, the companypreferred to name itself as SHARE KHAN. The Brand NameSHARE KHAN itself suggests the business in which the companyis dealing so that the consumer could easily identify the product orservice category.

Services

Share khan offers its customers, depository services and tradeexecution facilities for equities, derivatives and commodities backed

with investment advice tempered by decades of broking experience.The teams of its dedicated analysts are constantly at work to trackperformance and trends.

Dial-n-trade is also an exclusive service available to all Sharekhancustomers for trading in shares via the telephone. On dialing the tollfree number 1600-22-7050 and on entering the customers TPINnumber, the customer will be directed to a telebroker who will buy orsell shares for him.

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2. PRICE

List Price

CLASSIC SPEEDTRADE

SPEEDTRADE PLUS

One timeregistration fee

750 1000 1500

Minimum brokerageCharges Quarterly

Nil 1000 1500

BrokerageShare khan in its online business charges brokerage as follows:- In equity Market:

On Trading: 0.1% On Delivery: 0.5%- In Derivative MarketOn Trading: 0.12% (Total brokerage) On Delivery: 0.1%

Service Tax-8% on Brokerage.

Turnover tax + Stamp duty-0.015% (Rs. 15 on every turnover of Rs. 100000)

Custody Charge

Re. 1 per script held per month.

DiscountsFor investors with High Net worth, there are slabs in brokerage rates.

Payment PeriodThe transaction settlement date in the securities market is T+ 2 daysi.e. the payment of the transaction taken place has to be made withintwo days of its occurrence.

Credit termsShare khan allows its customers to trade up to 4 times i.e. by keeping1/4th margin with them.

Dematerialization chargesRe. 3 per certificate or Rs.15 per requests whichever is higher.

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3. PROMOTION

Online share trading is totally a new concept in Indian Market. Generallyinvestor doesnt like to come out from conventional way of share trading. Sharekhan has introduced this product in. The concept and Product are still new in the

market. Therefore the company has undertaken extensive promotion campaign tocreate awareness about the product. Share khan adopts the following tools forpromoting the product

AdvertisingCompany advertises its product through TV media on channels

like CNBC, Print Media-in leading dailies and outdoors media. Itadvertises itself as an innovative Brand with a cartoon of tiger-calledSHERU. Besides attractive and colorful brochures as well as posters areused giving full details about the product.

Mails are sent to people logging on to sites likemoneycontrol.com and rediff.com.

Also, stalls are opened up now and then at places whereprospective customers can be approached.

Sales Promotion The Company offers Rs.500 instead of Rs.750 for corporate

accounts (more than 20 accounts).

Also, it provides online trading accounts for just Rs.300 for IIMstudents.

Sales ForceThe Company has an aggressive sales force, which is givenincentives, based on their sales. The sales force is given intensivetraining continuously.

SeminarThe Company also arranges seminar in corporate world for

creating awareness about the product. Recently, it had organized for aseminar in ONGC, IIM.

Direct MarketingCompany emphasizes more on direct marketing, as many

people are still not aware of this new way of smart trading. For this, thecompany recruits and trains sales representatives so as to explain theproduct and solve customer queries related to the product. This is themost effective way to communicate the three-in-one concept whichcompany offers.

TelemarketingThis is another promotional tool company is using to boost up its

sales. For this, the company collects the database of the peoplebelonging to different professional segments.

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6. PHYSICAL EVIDENCE

Locality of the office: In Ahmedabad, two franchise outlets are locatedin posh areas like Navrangpura and Maninagar. A new franchise is going

to open up in Vastrapur.

Office Environment: The ambience within the office is what can makethe customer feel comfortable in trading. The cordial and friendlyatmosphere at office is like a full time motivation for the employees.

Interiors and Infrastructure: The office is well furnished and has 24computer terminals on which tick-by-tick price movements of thesecurities are displayed.

7. PROCESS

In this service organization, the ways in which the customers receivedelivery of the service constitutes the process. Here, the processinvolves adding value or utility so that the customers get fullsatisfaction for the money spent by them.

Here the process begins from the step when customer wants to open e-invest account and ends when his account is actually activated.

All Indian residents and NRI are eligible to avail this service.

Customers can open a sharekhan e-invest account by filling a singleapplication form.

This form includes 12 agreements like

1. Main form with customer details2. Agreement between sharekhan and client in respect of the

ONLINE-INVESTMENT SUPPORT service offered.3. Agreement between the Depository Participant and the client for

providing the transaction statement through Internet.4. Irrevocable power of attorney5. Agreement between the DP and the person seeking to open an

account with the DP.6. Maintenance of clients account on a running account bases by

SSKI.7. Agreement giving the right of lien on the credit balance of client in

NSE trading.8. Agreement giving the right of lien on the credit balance of client in

BSE trading.9. Risk disclosure document (cash segment)

10.Power of attorney11.Member and client agreement.

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12.Web-online agreement between member-broker and client.

4.6 Seven - S Model

STRUCTURE:Share khan is flexible in terms of making temporary structural changes tocope up with specific strategic tasks without any hassles. If need arises,the top management can assign the role to any of its employees which itconsiders capable and skillful.

STRATEGY:Share khan believes not only in developing the strategies but also in itssuccessful execution.

SYSTEMS:This constitutes of all the training and development systems, estimatingbudgets and the accounting system of Share khan.

STYLE:Style refers to all the symbolic actions undertaken by top managers ofShare khan and its influence on the subordinates.

STAFF:Share khan values its employees as its assets and therefore carefullytrains and motivates them by giving them incentives at regular intervals.

Talented employees are assigned as mentors and given real responsibilityand moved into higher positions.

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SuperordinateGoals

goalsStyle

Syste

ms

Structure

Strategy

Skills

Staff


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SKILLS:The term skills refer to those activities organizations do best and for whichthey are known. Share khan is known for its timely advice(suggestions/tips), which it caters to its customers and it boasts of 70-90%

strike rates in booking recommendations.

SUPERORDINATE GOALS:This refers to guiding concepts, values and aspirations that unite anorganization in some common purpose. It provides the customers the bestservice as it believes in customer satisfaction and retention.

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4.7 SWOT Analysis

STRENGTHS

80 years of experience insecurities market

Largest chain of retail shareshops in India

Volume based differentiatedproduct.

User friendly website. Dedicated and responsive

workforce/staff.

WEAKNESSES

Problems due to Network crash Unawareness among investors. Sales Promotion is not effective. Low customer satisfaction and

retention.

OPPORTUNITIES

To tap the untapped market To capture the Market lost to its

Competitors. To focus on developing a

superior and powerful portal To spread awareness of its

Brand Name To increase its Market Share

THREATS

Competitor develops a superiorportal

Prolonged depression and highvolatility in the market

New Entrants.

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4.8 CPA (CUTOMER PROFITABILITY ANALYSIS)

Share khan classifies its customers according to their volume in trade into thefollowing:

PLATINUM AND GOLD CUSTOMERS

Share khan pays exclusive attention to its speed trade and speed trade customersand considers them as platinum (most valuable) customers as they yield highvolume to the company and earn them high income in terms of brokerage. Itspecially cares for its speed trade customers in terms of rendering quick response toattend to their queries and complaints, because these are the customers who once ifsatisfied properly would word and recommend the company and its service to other

investors also.

IRON CUSTOMERS

Share khan recognizes its classic account holders as its iron customers as these arethe retail customers who are very small players and yield income to the company interms of small brokerage. Share khan always believed in a policy to be responsive tocustomers queries and complaints.

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Platinum Customers-Speed Trade Plus

Gold Customers-Speed Trade

Iron Customers-Classic


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4.9 Analysis of the Application Form of Online trading

1. Main formIn main form all important details about customers are covered up.

Like his correspondence address, residential address, bank details, Pan No.details , details about nominee etc.

2. Web online agreement between member broker and client

This form includes: Who can be member broker Definition of client Duties and responsibilities of both Requirements for opening a online demat account Rules and regulations of cash segment and derivative segment on web

3. Member and client agreement

This form contains the provisions as to what are terms and conditionsin capital market segment. Derivative segment operative Clauses

4. Agreement between Share khan and the client in respect of the onlineinvestment support services offered

What all facilities sharekhan.com would be providing Up to what client is liable and what are authority responsibility in

relation to transactions Registration and account opening Subscription rates and regulations Transaction processing Clearing and settlement of transaction

5. Agreement between the DP and the person seeking to open an accountwith the DP

It mainly contains charges charged by Share khan as DP to its clientsfor various services offered by him.

6. Irrevocable power of attorneyThe power of attorney is irrevocable until all dues payable by client to

member broker are satisfactorily settled and agreed between them.

7. Agreement between the DP and client for providing the transaction

statement through internet

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It contains the agreement of in what way client would be gettingtransaction through internet

8. Power of attorney

Here Share khan is irrevocably nominated, appointed as true andlawful attorney for certain acts for Demat account.

9. Risk disclosure documentRisk involved for cash segment to client,. Investors rights and

obligations.

This form will help him open the sharekhan trading account along with abank account and DMAT account.

There are three options available to the customer for applying:

1. Through toll free number: 1-1600-11-70502. Through visit to any of the sharekhan centers in the city.3. Through filling up the application form online.

Customer is required to give residential proof and an identity proofalong with the application form.

On submitting the application form, it will be processed at Bombay andall the required accounts will be set up. If the application is notprocessed because of lack of details, application will be rejected and

the customer will be contacted by companys representative or by mail.

Once the application is accepted the customer will be informed by mailas well as through post.

Customer will be sent a login ID, membership and trading password,DP number, customer ID once the form is processed.

Now the customer can login to the account from any place and starttrading. In case, he faces some difficulty, he can contact the companythrough mail or can give a call to customer care or personally visit the

center.

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CHAPTER - 5

EQUITY RESEARCH

All the suggestions, tips and high performance tradingrecommendations are received from the research team of Share khan consistingof 38 dedicated analysts who have years of working experience in the industriesthat they track, and a proven track record in using their knowledge of theinvestment science to deliver results.

Share khan boasts of strike rates as high as 70-90% in bookingrecommendations in the money. The company believes in not to lose money andto make some.

Efficient Execution on BSE, NSE, Derivatives

Depository Services

Advice in many shapes

Wealth of content and tools to help you make sound investmentdecisions

Stability and Security

Good risk management

Substantial shareholding by prestigious foreign institutions. Personalized attention

RESEARCH

The scientific approaches that determine market direction and help youdecide what stocks to buy or sell. Whether it is for the short term or the long term,there is method in this madness!

Research is classified into 3 analysis:

Fundamental Analysis Technical Analysis Market Analysis

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5.1Fundamental Analysis

This science analyses balance sheets, management quality, sectoraltrends and the economy. Value investing or cash flow analysis. In depth andclose tracking of company related performance.

Doing it the Sharekhan way using the bottom-up approach, the idea isto focus on stock picking, ie identifying winning ideas for our clients.

It is classified into two: Sharekhan Research SSKI Research

Sharekhan Research

Our tigers dig meaty Stock Ideas out of the heart of the market andbring them to you. Their skill at identifying their prey--Stock Ideas--while keeping your taste for investment in mind is reflected in the depthof their research and the performance of the ideas. The MarketStrategy reports, on the other hand, identify the hunting-ground forStock Ideas, ie sectors and stock groups that are ripe for performance,discuss the state of the economy and its impact on the stock market aswell asadvise you on dealing with the impact of socio-political issueson the market.

It is classified into two : Market Strategy Stock Ideas

Market Strategy

The Market Strategy reports identify the hunting-groundfor Stock Ideas, ie sectors and stock groups that are ripe forperformance, and discuss the state of the economy and itsimpact on the stock market. Market Strategy also takes a longer-term view on stocks, ie three to six months. It outlines ourexpectations of the broad market and defines a broad strategy.It gives a five-legged rating to a list of stocks that we think willoutperform the market during the given time period.

Stock Ideas

Stock Ideas is aimed at Sharekhan's trading clients. Itpresents our best stock picks in today's market. We categorisethese companies into six clusters to help you identify the stocks

that fit your time horizons and return objectives the best. Eachcluster represents a certain profile in terms of business

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fundamentals as well as the kind of returns you can expect of itover a certain time horizon.

Stock Ideas are given in form of two ways :

1. Recommendation In recommendation we give advice toclients which shares to buy, hold and sell.

2. Cluster

o Evergreen: Dominant players with strong brands, robustmanagement credentials, supernormal shareholderreturns. Will steadily compound 18-20% pa for next 5 to10 years.

o

Apple Green: Potentially steady compounders, but 5-10-year graph is a bit unclear. Could gallop at 25-30% paover the next 2-3 years.

o Emerging Star: Young companies likely to rule chosenniches. Even better, the niches could balloon into full-blown markets. Potentially ten- baggers if youre patient.

o Ugly Duckling: Trading below fair value or at hugediscount to peer group. But somethings cooking. Coulddouble in two to three years time. Swans, anybody?

o Vultures Pick: Companies with valuable assets atthrowaway prices. Buy and await predators. Startlinglyhigh returns possible. Patience is vital, my dear.

o Cannonball: Seasons favorites. Typically fast gainers inrising markets could return 30-50% within 6 months. Getin, cash in, and get out.

SSKI Research

Institutional Research - Each individual company is analyzed and itsresults are placed on our site. Here Rating is given on relative basis, inthe form of underperformer, neutral and outperformer.

Outperformer: This stock will outperform the market bygiving a relatively higher return than a market-basedindex.

Neutral: This stock is expected to more or less give youthe index rate of return or a return not significantly higheror lower than the market index.

Underperformer: This stock is expected to lose value ona relative basis when compared to a market-based index.

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Sector Watch Here each sector is analyzed thoroughly. For eg.Pharma sector, Automotive sector, and various other sectors.

5.2 Technical Analysis

Price, Volume and Open Interest. The scientific study of these parametersusing charts to simulate accumulation and distribution patterns. Use of the Dowtheory, Elliott wave analysis, moving averages and momentum indicators.Forecasting of stock and index trends plus developing trading strategies based onthe forecasts with appropriate risk-reward ratio. It is again divided into two

Cash

The cash market encompasses the entire gamut of listed stocks on Indianstock exchanges. The cash market refers to the secondary market where you mayday trade or take delivery. Every product developed for the cash market can bereplicated in the futures & options market (if it is listed there) by following the tradinglevels of the cash market for execution in the derivatives market.

Braveheart: Braveheart Strategies outline the market forecast for the medium term.Braveheart uses the strategy to identify aggressive stocks to maximize gains basedon trend-based position trading. The portfolio has matured from a cash product to acash and futures product to allow investors to take advantage of the short side of themarket. The risk-reward ratio is pegged at 1:3 with average targeted returns of 30%on stock recommendations.

Day Traders Hit List:The hottest product in terms of penetration and usage, it is

found on everyones dealing desk in the morning. The list of 15 liquid stocks that arein action identifies 2 support and resistance levels for the stocks and provides a biasfor the stock to allow day traders to trade effectively.

Momentum Calls:The demand for catching fast movements in stocks for a 1-7-dayperiod has led to the emergence of this product. Momentum Calls help you make aquick buck with the use of stop losses and a risk-reward ratio of 1:2 at least. Theidea is to identify momentum the moment it begins and get onto the bandwagon. Butif the move does not happen we move out as fast at minimum loss rather than waitfor stop losses to be triggered. This improves efficiency in trading and maximizes

profits.

Punters Call: A daily view on how the market and the major indices, ie the Sensexand Nifty, are expected to behave during the day. Closest support and resistancelevels plus moving averages are provided to help traders take decisions.

Fortnightly View:A fortnightly recap and analysis of our market view over the short,medium and long term.

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Derivatives

Derivatives are about opportunities in derivatives market. In DaringDerivatives, stock option premiums are traded to capture price movements; margintrading is carried out using the futures segment; and low-priced options of stocks thatare about to make a big move in the last week before expiry of the options areidentified to help you make a killing. The calls cover index futures too.

Advantage Gamma: Options premiums fall at the end of the month. We spotmomentum stocks to take advantage of the cheap options during this period.

Idhar bhi-Udhar bhi: Expecting a large trend reversal either after a large

move or before a major event. Hedge yourself by buying both a call and a put.Whichever way it goes you should make money.

Quarter Delta: One should write a call option when the underlying stock isexpected to stay at the same level or fall. Similarly one should write a putoption when the underlying stock is expected to stay at the same level or rise.However it is less risky to write out-of-the-money options (delta = 0.25) than towrite at-the-money options.

Covered Calls: If you have an equities portfolio you can make consistentgains on your stocks and that too without selling them or losing delivery of

them most of the time. How? Write call options against the portfolio.

Derivatives Info Kit: The only exhaustive report on the derivatives markettrading data including stock-wise open interest, put-call ratios, strike sizes,margins and much more than you can dream of.

Futures Commentary: An end-of-day analysis of the activity observed in thefutures & options segment. It discusses where the open interest hasincreased and if options traders are buying puts and calls.

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5.3 Market Analysis

If you dont care about balance sheets or charts and only want to know whatthe market grapevine has to offer, this is for you. Whats moving and who is buyingwhat? Our networking and years of experience bring all such information to you.

It is analyzed in two ways:

Dealing Room The most experienced dealing room with years of experiencein stock market research, always in touch with what is happening. We providethis information to clients through SpeedTrade, and to our branches andfranchisees through Yahoo Messenger, telephone and SMS.

Dealing Rooms Favourites: Straight from the horse's mouth, the

product is an outcome of our ability to have our finger on the pulse of themarket. It's about stocks that are part of the market grapevine, on top of thedealing room's watch-list and vetted by our charts. You could hold the stocksfor a few days to a few weeks. That you need to use stop losses with themgoes without saying.

o Intra-day Market Calls & Information: Based oninformation from informed sources we push intra-daycalls and information related to the market that allowclients to take advantage of day trading opportunities.

Editorial: The editorial keeps a track of all the market information andfeeds it live into the Web and brings it to you at the end of the day via the dailynewsletter Eagle Eye

o Live Markets: The Live Markets section begins yourmorning with the latest news from the corporate worldand analy

Documents

Online Share Trading Portal