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A STUDY
ON
“INVESTOR AWARENESS TOWARDS ONLINE TRADING”
AT
“ZEN SECURITIES LIMITED”
PROJECT REPORT
Submitted to KAKATIYA UNIVERSITY
In partial fulfillment of the requirement for the award of the
MASTER OF BUSINESS ADMINISTRATION
BY
(Affiliated to Kakatiya University, Warangal)
1
CERTIFICATE
This is certify that project entitled “INVESTORS AWARENESS TOWARDS ON-LINE TRADING
SYSTEM” at “ZEN SECURITIES LIMITED”, Peddapelly by -------- bearing -------------for the
requirement of partial fulfillment of completion of Post Graduation course “MASTER OF BUSINESS
ADMINISTRATION” from -------------------------- affiliated to KAKATIYA UNIVERCITY,
WARANGAL for the academic period of 2007-2009 is a bonafide work carried out by her under my
guidance and supervision.
guide
2
DECLARATION
I, the undersigned hereby declare that the project work entitled “INVESTER AWARENESS
TOWARDS ONLINE TRADING SYSYTEM” with reference to ZEN SECURTIES LTD, written
and submitted by me to “------------------” is of my own efforts. The empirical finding in this report is
based on the data collected by myself during my practical exposure to the problem. I declare that this
report is original and had not been copied from others submitted earlier to any other universities.
Place :.
Date :
3
ACKNOWLEDGEMENT
I wish to express my deep sense of gratitude to the people who have given their valuable
suggestion, guidance and their valuable time in the successful completion of my analysis.
I sincerely express my heart full thanks to -----------------, Principal, --------------- COLLEGE for
giving me an opportunity to do my project in “INVESTORS AWARENESS TOWARDS ONLINE
TRADING SYSTEM”
I am thankful to --------------------------, for his valuable guidance which helped me to bring a
satisfactory shape to my project. I also thank other faculty members for guiding me for the project work
and helped me to complete this project.
I am indebted to Mr. K.VENU, B.M., ZEN SECURITIES LTD for giving me this opportunity
do the project from their Organization for providing helpful information and his support and guidance for
this project.
I would like to extend my heart full gratitude especially to my parents and other family members
and friends for their constant support and encouragement.
4
CONTENTS
CHAPTER-I 1 - 5
- Introduction.
- Need of the study.
- Objective of the study
- Methodology of the study
- Limitation of the study
- Scope of the study
CHAPET-II - Company profile. 6 - 25
CHAPET-III - Conceptual Framework. 26 - 36
CHAPET-IV - Analysis is Interpretation. 37 – 56
CHAPETR-V - Conclusion & Suggestion. 57 – 61
CHAPETR-VI - Bibliography. 62 -63
5
CHAPTER-I
INTRODUCTION
6
A STUDYON
“INVESTOR AWARENESS TOWARDS ON LINE TRADING”
INTRODUCTION ON ONLINE TRADING:
The actual definition of On-Line Trading is as explained below:
“On-Line trading is service offered on the internet for purchase and sale of shares, in the real world an investor places orders to stock brokers. Either verbally or in a written form (fax)”.
OFFLINE :
Offline trading is benefit from discussing with financial advisor the benefits’ of trading online.
A brief explanation about Internet:-
Internet is a world wide self governed network connecting several other smaller network
and million of computers and persons to merge sources of information. This technology is vast
distance accelerating the pace of business forms and revolutionizing the many companies are
managed, it allow direct links to anyone anywhere and any time to build up interactive
relationship.
A combination of time and space called the internet promises to bring un precendented
changed in our lives and business Internet or net is an inter connection of computer
communication network spanning the entire globe crossing all geographical boundaries it has re
defined the method of communication work study education, Business leisure health trade
7
banking commerce and what not it is virtually changing everything and we are living in dot.com
age.
Net being an interactive two way medium through various websites enables participation
by individually in business to business to consumer commerce visit to shopping arcades, games,
etc., in cyber space even the information can be copying, down loaded and retransmitted.
The use of internet has grown 2000 percent in last decade and is correctly growing 10 percent per
month in India growth of internet is of recent times.
It is expected to bring changes in every functional area of business activity including marketing
and financial services.
It offers stock trading at a lower cost, internet can change the nature and capacity of stock broking
business in India.
E- COMMERCE:
Electronic Commerce is associated with buying and serving over computer
communication networks, it helps conduct traditional commerce through new way of transferring
and processing of information.
Information is electronically transferred from computer to computer in an automated
way. E- Commerce refers to the paperless exchange to business information using electronic
dates interchange electronic technology, it is not only reduce manual process and paper
transaction but also helps organization more to a fully electronic environment and change the
way they operated PCs and networking attempts to introduce banks of the tools and technologies
required for electronic commerce. The computers are either workstation of individual office
work or serves where large database and information resides.
Networks connects both categories of computer the various operating system are the most
basis programmed with is a computer it manages the resources of the computer system in a fair
and efficient manner.
8
Now we can enter into the concept known as “On Line Trading”.
In the past investor had no option but contact their broker to get real time access to
market data, the net brings data to the investor On line and net broking enables him to trade on a
click of mouse, Now information has because easily accessible to both retail as well as big
investor.
NEED FOR THE STUDY:
The purpose into review the On-line Trading procedure a case study of On-Line trading
at zen securities as the exchanges has changes its trading from the out cry mode to On-Line
trading 20th February, 1997 there is need to assets the performance of the capital market.
OBJECTIVES OF THE STUDY:
1) It is to analyze the change in trading after the exchange shifted from outcry to On-line
trading system.
2) To analyze conceptual frame work regarding On-line trading.
3) To evaluate about the latest development in the stock exchange trading system.
4) To analyze the investors awareness about On-line trading.
5) To bring out the investors expectations regarding on-line trading to be simplified further.
6) To offer suitable suggestions up on drawn conclusions.
9
METHODOLOGY OF THE STUDY :
The data collection methods include both Primary and Secondary collections methods:
- Primary data collection Method.
- Secondary data collection Method.
PRIMARY METHOD:
Primary method includes the data collected directly from the authorized members of Zen
securities. An appropriate questioner is served to the investing community for collection primary
data. And also data collected from discussion with Zen securities officially.
SECONDARY METHOD:
The secondary data collection method includes the lecturers delivered and material
provide by Zen securities Ltd., the date collections from the magazines of the NSE, Economics
time various books relating the investment, Capital Market and other related topics.
10
LIMITATIONS OF THE STUDY:
The study is confined to On-line trading procedure On-line problem of listing are not
covered due to time and to keep the study in manageable limits. The study reflects the
awareness of Karimnagar investors only.
SCOPE OF THE STUDY:
The present study is to know the details regarding the trading through On-line system.
The project also studies the impact of On-line trading system in the market and also
trading of Government Securities in stock exchange.
11
CHAPTER - II
COMPANY PROFILE – II
12
ZEN SECURITIES:
Zen Securities Limited is one of the leading financial service companies providing
financial and investing related service and products.
The Company commenced as a proprietary concern of M/s. Ravindra Babu in 1986 was
converted to a Limited Company in February 1995 as Zen securities ltd., Zen has the distinction
of being ( First corporate member from Hyderabad and also the first A.P., based broking Firm to
start trading on the National Stock Exchange).
We at Zen totally rededicate our served to continue to build the organization on sound
foundation of trust, values and relationship with clients servicing their investment needs a set our
by founder Sri K. Ravinder Babu.
29th August 2008 Zen Securities launches BRAND NAME as ZEN MONEY.
17th April 2008 Zen Securities appoints new MD and Jt.MD.
31st May 2005 Zen Securities opens branch in Jubilee Hills, Hyderabad.
5th July 2005 Zen Securities opens new branch in Tarnaka, Hyderabad.
Directors of Zen Securities Ltd., have considerable experience and expertise ranging over
many industries such as financial services Pharmaceuticals manufacturing banking and
information technology among others. They are some of most highly respected people in their
professional circles.
13
Mr. PRATHAP KANTHETI, Managing Director:
Mr. Prathap Kantheti is the Managing Director of the Company. He is a chartered
Financial Analyst (CFA) and also has a Masters in Business Administration (MBA) in Finance.
He has a deep understanding of and exposure to the financial service.
DIRECTORS:
Mr. K. Gandhi - Director
Mr. Sathyanarayana Ch. Ravi - Whole Time Director
Mr. Sambasiva Rao Pratibandla - Executive Director
Mr. Narayanan - Director
Mr. Ajay Kumar Mikkilineni - Director
Mr. D. Madhusudhan Rao - Director
Mr. K. Narasimha Rao - Director
Mr. Namashivaya Renukuntla - Director & Head of Compliance.
Mr. Pratap Kantheti - Managing Director
Mr. Satish Kantheti - Managing Director
Directors of Zen Securities Ltd have considerable experience and expertise ranging over
may industries such as financial service Pharmaceutical Manufacturing banking and information
Technology among others. They are some of the most highly respected people in their
professional.
Zen is also a depository participant with National securities depository Ltd., and also with
Central Depositaries service ltd., Zen is also a SEBI Registered Portfolio Management offering
Portfolio Management service to client.
ZEN Com Trade Pvt. Limited:
14
Services offered by Zen Securities Ltd.,:-
→ Investment Advisory Services.
→ Trading in Cash Market of NSE and BSE
→ Trading in Future and options on NSE and BSE
→ Internet Trading in stocks futures and options both NSE and BSE.
→ Mutual funds advisory service.
→ Depository services in both NSDL and CPSL.
→ Trading in commodities on MCX and NCDEX.
→ Portfolio Management service.
→ NRI Investor services.
→ PAN Application service.
→ Mutual fund KYC Registration service.
→ Fixed Income securities/ Fixed Deposits/ RBI Bonds (TAN Serving bonds).
STOCK BROKING:
Zen Securities limited provided the following equity related trading service to the
investors.
→ Capital Market segment of NSE and BSE.
→ Future and options segment of NSE and BSE.
ZEN operates from Hyderabad as its head office and has branches and associated in
Andhra Pradesh, Tamilnadu, Maharashtra, Karnataka, West Bengal and Orissa. The Company
operates from over 140 locations with over 50 trading terminal. Internet trading is easy,
convenient and reliable with Zen trade.
Advantages of Zen Trade – Internet Trading Platform:
Flexible and advanced trading platform.
15
→ Simple reliable and easy to use.
→ Future & options segment of NSE & BSE.
→ Integrated payment gateways – facilitates online transfer of funds from your banks (ICICI
/ AXIS / Corp / YES Bank) for instant limit.
→ Integrated with Zen DP Account – Seamless settlement.
→ Take full control of trading and trade with privacy from any place of your choice.
→ Choice of trading from internet or branch.
→ Choice of browser based or exe based trading.
Market Watch:
→ Streaming market notes.
→ Multiple Market Watch.
→ Integrated Market watch for viewing NSE/BSE/NSE FAO on one screen.
→ Access to trade in NSE/BSE and NSE FAO segments.
INTRADAY AND DELIVERY DIFFERENCIATION:
→ Different limits for in trade and delivery.
16
→ Auto square off of an intraday orders 15 minutes before close of trading.
→ Convert intraday trades to delivery trade on availability of credit/ margin source.
ACCESS TO STATEMENTS:
→ Stock statements- view stocks in your DP Account and also Zen Bank Account.
→ Statement – view cash available in your Zen broking account.
→ Mutual funds – view transaction / holding statements with latest NAV’s.
→ Net worth statement – Net worth statement of assets with Zen (Stocks + Cash +Mutual
funds).
DEPOSITORY:
Zen is a depositary participant offering flexible cost effective and transparent depository
services to its clients. Zen is a Depository Participant with the National Securities (India) limited
for trading and settlement of dematerialized shares. Zen performs clearing services for all
securities transactions, through its accounts. Zen offers Depository services to create a seamless
transaction platform execute trades through Zen securities and settle these transaction through
the Zen depository services.
Zen depository services is a part of our value added services for our clients that creates
multiple interface with the client and provides for a solution that takes care of our your needs.
Basic Services provides by Zen DP.
Accounting Opening.
Account Transfer – Market and Off – Market.
Dematerialization.
17
Pledge.
Services:
→ Stock Broking.
→ Internet Trading
→ Mutual funds
→ Depository Services
DepositoryFeaturesDocumentationDownloadsPool Accounts.
→ Investment Advice→ Commodities Broking→ PAN Application Centre→ Mutual Funds KYC POS→ Portfolio Management→ NRI Services→ IPO’s→ Tax Saving Bonds.
ZEN MONEY The art of investing
K. Venu
Branch Manager
M: 9849838694
ZEN SECURITIES LTD
Branch Off: Door No.2-1-133/A1,
KV Rao Complex,
18
Peddapally,
KARIMNAGAR – 505172
Ph: 08728-224023,
9346908288
9347759194
19
Indian Financial System
Financial InstitutionFinancial Market
Financial Instrument
Financial Service
Regularly OthersOrganize
dUn
organizedPrimary Secondary
Intermediary Non -Intermediary
Primary Secondary Short TermMedium Term
Loan Term
Banking Non Banking
Capital Money Market
20
FINANCIAL MARKET:
Financial Markets are helpful to provide liquidity in the system and for smooth.
Functioning of the system. These markets are the provide facility for buying and selling of
financial times and services). The financial market match the demands of investment with the
supply of capital from various sources.
Based on functions financial markets are classified in two types. They are:
→ Money Market (Short term)
→ Capital Market (Long term)
According to Institutional basis classified into two types they are:
→ Organized financial market
→ Non- organized financial market
The organized market comprises of officials market represented by re organized
institutions bank and govt. (SEBI) registered/ controlled activities and intermediaries. The
unorganized market is of indigenous bank’s money lenders individuals professional and non-
professionals.
MONEY MARKET:
Money market is place where we can raise short term capital.
the money market Is classified into
→ Inter Bank call money market
→ Bill Market, and
→ Bank zone Market etc,
21
CAPITAL MARKET:
Capital Market is a place where we can raise long term capital.
Again the capital market is classified in two types and they are
→ Primary Market
→ Secondary Market
PRIMARY MAREKET:
Primary Market is generously referred to the market of new issues or market or
mobilization of resources by the companies and govt. undertaking for new project as also for
expansion modernization addition and diversification and up gradation. Primary market also
referred to as new issues market primary market operation include new issues shares by new and
existing companies further and right issue to existing shares holders public offers and issue of
debt instruments such as debentures, bonds etc.
The Primary market is regulated by the securities and exchange Board of India (SEBI)
govt. regulated authorities.
FUNCTION:
The main services of the primary market are organization underwriting and distribution origin of the new issue underwriting contract make the shares predicable and remove the element of uncertainty in the subscription, distribution refer to the sale of securities of the investors.
The market inter mediaries associates with the market.
1) Merchant buyer / book building leader manager.2) Register and transfer agent.3) Underwriter / Broker to the issue.4) Advise to the issue.5) Banker to the issue6) Depository7) Depository Participant
22
INVESTORS PROTECTION IN THE PRIMARY MARKET:
To ensure healthy growth of primary market the investing public should be protected, the
term investor protection has widely of investor protection are:
→ Provision of all the relevant information.
→ Provision of accurate information and
→ Transparent automate procedure without any bias.
SECONDARY MARKET:
The primary market deals with new issue of securities are trader in the secondary market
which is commonly known as stock market or stock exchange “the secondary market is a market
where script are traded” , it is a market place which provide liquidating to the script issued in the
primary market, these the growth of secondary market depends on the primary market. More the
number of companies entering the primary market the greater are the volume of trade at the
secondary market.
Trading activities in the secondary market are done through the recognized stock
exchange which the 23 in number including over the counter exchange of India (OTCE) national
stock exchange of India and inter com stock exchange of India.
Secondary market operations involve buying and selling of securities on the stock
exchange through its members, the companies hitching the primary market are mandatory to list
their shares on one or more, stock exchanges in India. Listing of scrips provides liquidity and
offers an opportunity to the investor to buyer sell the scrips.
The following are the intermediaries in the secondary market.
23
HISTORY OF STOCK EXCHANGE:
The only stock exchange operating in the 19th century were those of Bombay set up in
1875 and Ahmadabad set up in 1894. These were organized as voluntary non profit marketing
associated of brokers to regulate and project their interests, before the control on securities under
the Bombay securities contracts act to 1925 used to regulate trading in securities. Under this act
the Mumbai stock exchange was recognized in 1927 and Ahmadabad in 1937, during the war
boom a number of stock exchange were organized. Soon after it became a Central subject
Central legislation was proposed and a committee headed by A.D. Gorwala went into the bill for
securities regulation on the basis of the committee recommendations and public discussion. The
securities recommendations and public discussion the security contract act become law in 1956.
FUNCTIONS OF STOCK EXCHANGE:
Stock Exchange provides liquidity to the listed Companies. By giving to the listed
Companies they help trading and raise funds from the market over the hundred and twenty year
during which the stock exchange have existed in this country and through their medium the
central and state Govt. have raised crores of rupees by floating public loans, municipal
corporations trust and local bodies have oriented from the public their financial requirement and
industry trade and commerce the back bone of the country economy have secured capital shares
and debentures for financing their day-to-day activities, organizing new venture and completing
projects of expansion diversification and modernization. By obtaining the listing and trading
facilities public investment in increased and companies were able to raise more in increased and
companies were able to raise more funds, the quoted companies with wide public interest have
enjoyed some benefits and assets valuation has became easier for tax and other purpose.
1) Broker/ member of stock exchange buyer’s broker and server broker.2) Portfolio Manager.3) Investment Advisor4) Share Transfer agent5) Depository6) Depository Participation.
24
STOCK MARKET IN INDIA:
Stock exchanges are the perfect type of market for securities whether of Govt. and semi
Govt. bodies or other public bodies as also for shares and debentures issued by the Joint stock
Companies in the stock market purchases and sales of shares are affected in conditions of
competition, Govt. securities are traded out side the trading ring in the form of over the counter
sales or purchase.
The bargains that are stock in the trading ring by the member of the stock exchanges are
at the fairest price determined by the basis laws of supply and demand.
DEFINITION OF STOCK EXCHANGE:
Stock Exchange means any body or individuals whether incorporated or not constituted
for the purpose of assisting regulating or controlling the business of buying selling or dealing
securities, the securities includes:
→ Shares of Public Company
→ Government Securities
→ Bonds.
25
NSE:
The National Stock Exchange of India limited has genesis in the report of the high
powered study group on establishment of new stock exchange, which recommended promotion
of a national stock exchange by financial institutions to provide access to investor from all across
the country on an equal footing. Based on the recommendation (NSE was promoted by leading
financial institutions at the best of the government of India and was incorporated in November
1992). As a term paying company unlike other stock exchange in the country on its recognition
as a stock exchange under the securities contracts act 1956 in April 1993 NSE commenced
operations in the wholesale debt market (WPM) segment in June1994. The capital market
segment commenced operations in November 1994 and operations in derivatives segment
commenced in June 2000.
NSE mission is setting the agenda for change in the securities market in India. The NSE
was set up with the main objectives are:
→ Establishing a nation wide trading facility for equities and debt instruments.
→ Ensuring equal access to investor all over the country through and appropriate
communication network.
→ Providing a fair efficient and transparent securities market to investor using electronic
trading system.
→ Establishing shorter settlement cycles and book entry settlement system.
→ Meeting the current international standard of securities market.
The standard set by NSE in terms of market practices and technology, have became
industry bench mark and are being cumulated by other market participants. NSE is more than a
more market facilitator. It’s that force which is guiding the industry towards new horizons and
grater opportunities.
26
BSE :
The stock exchange Bombay popularly known as “BSE” was established in 1875 as “The
Native share and stock broken Associates”. It is the oldest one in Asia even older than the Tokyo
stock exchange which was established in 1878. It is a voluntary non-profit making association of
personal and is currently engaged in the process of converting it self into demutualised and
corporate entity. It has involved over the years into its present status as the premier stock
exchange in the country. (It is the first stock exchange in the country to have obtained permanent
recognition in 1956 from the Govt. of India under the securities contracts Act 1956). The
exchange while providing an efficient and transparent market for trading in securities, debt and
derivatives upholds the interests of the investors and ensure redresses of their grievances whether
against the companies or its own member brokers, it also strives to educate and en lighter the
investor education programmer and making available to them necessary information inputs.
A Governing Board having 20 directors is the apex body which decides the policies and
regulates the affairs of the exchange, the governing board consists of 9 elected directors who are
from the broking community three SEBI nominees six public representatives and an executive
director & chief executive officer and a chief operating officer.
The Executive Director as the chief Executive Officer is responsible for the day to day
administration of the exchange and the chief operating officer and other heads of Department
assist him.
The exchange has inserted new rule No.126 A in its rule By laws pertaining to
Constitution of Executive Committee of the exchange. Accordingly an executive committee
consisting of three elected directors three SEBI nominees or public representative executive
director & CEO and chief operating officer has been constituted, the committee considers
judicial & Quasi matter in which the governing board has power as an appellate Authority
matters regarding annulment of transactions, admission continuance and suspension of member
brokers declaration of a member – broker as defaulter norm procedures and other matter relating
to arbitration fees deposits margins and other monies payable by the member – brokers to the
exchange.
27
Regulatory frame work of Stock Exchange:
A comprehensive legal frame work was provided by the “Securities Contract Regulation
Act, 1956” and “Securities Exchange Board of India 1952”.three tier regulatory structure
comprising.
→ Ministry of Finance.
→ The Securities and Exchange Board of India.
→ Governing Body.
Members of the Stock Exchange:
The Securities Contract Regulation Act 1956 has provided uniform regulation for the
admission of member in the Stock Exchanges; the qualifications for becoming a member of
recognized stock exchange are given below.
→ The minimum age prescribed for the member is 21 years.
→ He should be an Indian citizen.
→ He should be neither a bankrupt nor compound with the creditors.
→ He should not convicted for fraud or dishonesty.
→ He should not be engaged in any other business connected with a company.
→ He should not be a defaulter of any other stock exchange.
→ The minimum required education is a pass in 12th standard examination.
28
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI):
The Securities and Exchange Board of India was constituted in 1988 under a resolution of
Government of India, it was later made statutory body by the SEBI Act, 1992.
According to this act the SEBI shall constitute of a Chairman and four other members
appointed by the Central government.
With the coming into effect of the Securities and Exchange Board of India Act 1992
some of the powers and functions exercised by the Central Government in respect of the
regulation of stock exchanges were transferred to the SEBI.
Objectives and functions of SEBI:
→ To protect the interest of investor in Securities.
→ Regulating the business in Stock Exchange and any other securities market.
→ Registration and regulating the working of intermediaries associated with securities
market as well as working of mutual funds.
→ Promoting and regulating self – regulatory organizations.
→ Prohibiting insider trading in securities.
→ Regulating substantial acquisition of shares and take over of Companies.
→ Performing such function and exercising such powers under the provisions of Capital
issues Act 947 and the Securities to it by the Central Government.
29
SEBI GUIDELINES TO SECONDARY MARKETS (STOCK EXCHANGE):
Board of Directors of Stock Exchange has to be reconstituted so as to include non-
member public representative and Government representative to the extent of 50% of total
number of members.
Capital adequacy norms have been laid down for the members of various stock
exchanges depending upon their turnover of trade and other factors.
All recognized stock exchanges will have to inform about transactions with in 24 hrs.
TYPES OF ORDERS:
Buy and sell orders placed with members of the stock exchange by the investors, the
orders are to different types.
Limit Orders:
Orders are limited by a fixed price, eg.” Buy Reliance Petroleum at Rs.50/- Here the
order has clearly indicated the price at which it has to be bough and the investor is not willing to
give more than Rs.50/-.
Best Rate Order:
Here the buyer or seller gives the freedom to the Broker to execute the order at the best
possible rate quoted on the particular date for buying it may be lowest rate for buying and
highest rate for selling.
Discretionary Order:
The Investor gives the range of price for purchase and sale, the broker can use his discretion to buy with in the specified limit. Generally the approximation price is fixed, the order stands as this “buy BRC 100 shares around Rs.40/-”.
30
Stop Loss Order:
The Orders are given to limit the loss due to unfavorable price movement in the market.
A Particular limit is given the broker is authorized to sell the shares to prevent further loss.
Eg:- Sell BRC Limited at Rs.24/-, stop loss at Rs.22/-.
BUYING AND SELLING SHARES:
To buy and sell the shares the investor has to locate register broker or sub broker who
render prompt and efficient service to him, the order to buy or sell specifying the number of
shares of the company of investors choice is placed with the broker. The order may b of any
type. After receiving the order the broker tries to execute the order in his computer terminal.
Once matching order is found. The order is executed, the broker then delivers the contract note to
the investor, it gives the details regarding the name of the company number of shares bought,
price, brokerage and the date of delivery of share in this physical trading form one the brokers
gets the share certificate through the clearing houses he delivers the share Certificate along with
transfer deed and stamp, it the stamp duty is one of the percentage considerations the investor
should lodge the share certificate and transfer deed to the register or transfer deed to the register
or transfer agent of the company.
If it is bought in the DEMAT Form the broker has to give a matching instruction to his
depository participant to transfer share bought to the investor account, the investor should be
account holder in any of the depository participant to transfer shares case of sale of shares on
receiving payment from the purchasing broker the broker effects the payment to the investor.
31
SHARE GROUPS:
The scrips traded on the BSE have been classified into A1, B1, B2, C, F and Z groups,
the ‘A’ group represent those which are in the carry forward system. The ‘F’ group represents
the debt market segment, the Z group scrips are of the black listed companies, the ‘C’ group
covers the odd lost securities in ‘A’, ‘R1’ & ‘R2’ groups.
HOLDING SETTLEMENT SYSTEM:
Under rolling settlement system the settlement takes place n days, after the trading day
the shares bought and sold paid in for n days after the trading day to the particular transaction,
share settlement is likely to be completed much sooner after the transaction than under the fixed
settlement system.
The rolling settlement system is noted by T+N i.e., the settlement period is n days after
the trading day. A rolling period which offers a large number of days negates the advantage of
the system. Generally settlement periods are short end gradually.
SEBI made is compulsory for trading in 10 securities selected on the basis of the criteria
that they were in compulsory Demat list and had daily turnover of about Rs. one crore or more.
Then it was extended to stocks in modified carry forward scheme automated lending and
borrowing mechanism and borrowing and lending securities scheme with effect from Dec 31
2001.
SEBI has introduced its rolling settlement in equity market from July 2001 and
subsequently shortend the cycle to T+3 from April 2002.
After the T+3 rolling settlement experience it was further reduced to T+2 to reduce the
risk in the market and to protect the interest of the investor from 1st April, 2003.
32
CHAPTER-III
CONCEPTUAL FRAMEWORK
33
TRADING SYSTEM:
A trading system is simply a group of specific rules or parameters that determine entry
and exit points for a given equity. These points known as signals are often marked on a chair in
a real time and prompt the immediate execution of trade.
Here some of the common technical analysis tools used to construct parameters of trading
system.
→ Moving Averages
→ Stochastic
→ Oscillators
→ Relative Strength
→ Bollinger Bonds.
There are numerous internet trade scans related to system trading but there also many
legitimate successful systems perhaps the most famous example the over developed and
implemented by Richard Dennis and Bill Eckharde, who are the original Turtle trader in 1983
these two had a dispute over whether a good trader is born or made. So they took some people
on the street and trained then on their now famous Turtle Trading System, they gathered 13
traders and ended up making 80% annually.
34
TYPES OF TRADING
NORMAL TRADING:
Exposure of 4 times will be given to you for trading depending on various parameters, in
case of Buy position you will have a pay the balance among on the same day, i.e., T day itself
failing which, you will not be around to take further position next day, in case of sell position the
same will be carried forward till T+1 evening we would request you to deliver the shares before
T+1 evening else the shares will be auctioned. Delivered of shares must be done by issuing an
instruction favoring investments and this transfer of shares should be done before T+1 day end.
Alternatively you can give us a standing instruction to debit your Demat account. You will have
to square off the sell position on or before T+1 marked closure by placing square off orders.
MARGIN TRADING:
In margin trading is like cash trading 100% funds are not blocked at the time of order
placement, margin trading provides you with the capital to become a much more active investor,
so you can achieve your wealth creation goals far earlier than ever though possible. You will
have access to a far greater of investment opportunities because you are not limited to using your
own capital.
Margin trading which is also known as intra day trading if you place a buy order, you will
have to place a sell order by the end of the day or vice versa, the transaction placed by you in
margin either needs to be squared off or needs to be converted to delivery square of all your open
position before 3.00pm or else our system will do auto square off for all.
Such position you will have the position to take/give delivery of buy/sell respectively if
sufficient cash/security is available. However the same will be allowed only up to 3.00 pm.
35
CASH TRADING:
For Cash trading is basically delivery based where in 100% funds/shares are blockend at
the time of placement of the order. If you want to buy shares you should have the entire amount
of funds in our cash limit and if you want to sell shares the same should be available in your
Demat account. For sell position your trading limits will be increased immediately with sell
track value. This will enable you to take further position in the market. Cash product will
facilities buy today and sell tomorrow concept. Buy position is carried forward till T+1 end of
day. The same can be viewed in security projection. You can square off this position if required
before T+1 marked closure. On square off, your profit and loss will be adjusted according in
your trading limit.
ON-LINE TRADING:
On-Line Trading is a service offered on the internet for purchase and sale of shares, in the
real work you place a order with your stock broker website through your internet enabled place
order through your internet based trading engine. These orders are routed to the stock exchange
without manual intervention executed their on in a matter of few seconds.
NEED OF ON-LINE TRADING SYSTEM:
1) DISCIPLINED ERROR FREE EXECUTION:
This method of trading is free of human emotion the buy and sell operations are all
automotive hands free with no manual interventions.
2) SPEED AND ACCURACY OF CALCUALTION AN EXECUTION:
Strategy runners servers can rein millions of analysis operations a day decide to buy and
sell upon present conditions making the trading risks very minimum.
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3) HAND FREE EXECUTION:
The client trades automatically even when the clients is busy working, travelling,
sleeping, vacationing – any time of day or night.
4) NON CORRELATED:
System seek to be profitable in both bull and bear market. In other words profit or loss in
trading system is not dependent on economic cycle on matter prices are rising or falling there for
historically, trading system have had very little correlation to the stock and band market.
5) RISK – RETURN:
While there is no guarantee of positive performance in the trading system components of
portfolio the non-correlation statistics of the trading system and their ability to make profits in
any economics environment provide the opportunity for reduced portfolio risk and the potential
for enhanced portfolio returns.
6) TRANSPARENCY:
It allows client monitor there sys performance in real time in additional all portfolio
results are published throughout the trading sessions on participating brokers’ websites providing
tick transparency of the daily performance.
STEPS INVOLVED IN ON-LINE TRADING SYSTEM:
Step-I : Emerging Trends with In your Competitive Environment:
Trading organizations which do this we are positioned to be on-line trading market n the trade
industries while organizations which do not rise being blind sided shifts in on-line trading
demand which they did not anticipated and are not equipped to handle.
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Step-II: How to bring On-Line Trading were demand by targeting most profitable Customer:
On Line trading is neither homogenous non uniform it is composed of distinct segment of
customers who think feel and act in different ways about your trading product category.
Organizations that understand this can ensure a royal customer trading franchise for years on end
because they understand the on-line trading demand they have set to trade better than any else.
Step-III: How to draw a relevant differentiation and Insulation via On-Line Trading Strategic Choices:
An effective trading demand trade value proposition creates relevant and differentiated benefits
the value trade equation for its target customer their by earning their trading loyalty and
premiums for you to ensure continued profitability and competitive trade insulation.
Step-IV: How to Increase pricing in elasticity with specific On-Line trading Strategies and On-Line trading business Systems:
This step aligns business trade system and trading capabilities (your On-line trading supply) with
the trade demand you have chosen to purchase leveraging core capabilities to deliver new trading
products and customer benefits quicking and continuously can generate significant on-line
trading price premiums.
Step-V:How to allocate On-Line trading resources according to the trade priorities established by the On-Line trading value propositions to your targeted trade demand:
The trade resources human financial physical and organizational go towards creating or
strengthening the On-Line trading Business strategies and trader systems developed in step in
trader resources allocation must be conducted intelligently to match On-Line trading supply with
target trade demand.
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Step: VI: How to Plan implement and monitor a successful On-Line trading Strategy:
The importance of the step can hardly be over emphasized. A successful On-Line trading
execution of On-Line trading strategy requires careful preparation structuring and on going trade
observation.
MECHANISM OF ON-LINE TRADING SYSTEM:
The On-Line trading is simple as “dealing sacrifices on net” On-Line trading system from
a singly location anywhere can service investors across the country.
Those interesting in buying and selling a script share had a contact to jobbers brokers
who would to the trading ring and make physical gestures, inviting buy/sell quotes is the trading
session from 11.30 am to 3.30pm.
On-line trading of the On-line screen based/ computerized trading known as “Hyderabad
On-line securities trading (HOST)” sys to cope with growing volume of business ensure
transparency in trading eliminate inherent flawed transaction for investors protection and fall the
growing competition.
TECHNICAL CONFIGURATION:
HOST (Hyderabad On-line Securities Trading) is built upon the proven reactor (versatile
engine for centralized trading and On-Line reporting).
39
ON-LINE TRADING ADVANTAGES:
→ Trading On-Line has revolutionized the stock market.
→ The main benefit of trading on –Line in speed.
→ There is no need dial up your broker wait to speak some body and have him or her enter
the order on their computer.
→ As you can imagine the convenience of On-Line trading attracts money investors.
→ You can enter trade orders day or night from anywhere in cyberspace.
→ The internet is full of advice free technical analysis tool and commentary.
→ You can formulate your own strategy and run investment yourself.
ON-LINE TRADING DISADVANTAGES:
→ If you are going to trade On-Line you are obviously the on-line making all trading
choices.
→ To make your trading decision you need to research your stocks and constantly pay
attention to market news.
This will require sometimes as you purchase your sources of market information and use
on line tools.
40
BROKERS ADVANTAGES:
→ Despite the popularity of On-line trading not every body uses the internet to tracks
stocks.
→ A broker can do everything from making all your stock trading decision for to give you
little advise on what to buy or sell.
→ If you want some investing helps or if you want some body else to deal with everything
using a broken might be right for you.
→ Brokers are stock professionals they watch the market and deal with customers like you
everyday.
→ Finally your broker may offer services other than just trading stocks if you want you can
find a broken that will manage your taxes estate and business.
→ The personal attention available form broker who known your full financial situation is
very calculated.
BROKERS DISADVANTAGES:
→ Taking a percentage of your assets under management making stock tenders taking a flat
fee.
→ However I must stress that the brokerage industry is highly regulated and most brokers
act with integrity nonetheless it is best to best aware of the risks.
→ Get a feel for how much time broker spends marketing and how much attention your
assets will receive.
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→ If your broker gets a paid commission for trading keep in mind that there may be a
conflict of internet.
→ Make sure your broker can consistently justify and stock trades.
→ Find out about your brokers back ground and interests to see if he or she is good match.
→ Finally live brokers are more expensive than On-Line brokers their presence and personal
attention commanded a price.
IMPACT OF ON-LINE TRADING IN THE MARKET:
On the Number of transaction:
The number of transaction has increased considerably after introduction of the On-line
trading system, the factor of influence could be:
1) The case of the operations from the point of view of both the numbers and investors.
2) Facilities better monitoring of the market by the market operations department.
3) The daily that the best price is achieved in buying and selling.
VOLUME OF TRADING:
From the fact that the number of transactions has increased dramatically it is almost
apparent that the volume of trading of would have increased.
Number of Members Participating:The introduction of On-line trading enables to do comfortable sitting in their respective
offices and doing the trading, more members can participate in the trading owning to this which
has been increased in a number of trades from 100 to 200.
42
OTHERS:
From the trader point of view the following are the benefits with the host.
1) Transparency of the system.
2) Desk work reduced to minimum.
3) Free and perfect information is available to all the member and investors.
3) Less number of people needs to do transaction.
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CHAPTER-IV
ANALYSIS & INTERPRETATION.
44
In this study I have served the questionnaire for 120 sample investors out of 120, only 95
questionnaires remained after scrutiny.
In Karimnagar I have approached people who are aware of online trading.
From the collected data of 95 respondents I have prepare 18 tables with this data I am
able to know the invest of various instrument and the people who are responded are invested in
securities and some people are invested in gold, land real estate, etc.,
The data collected organized into 18 tables which is elaborately analyzed in the following
sections.
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1) Are you an Investor in stock market :
TABLE 4.1
From the study it is clear that respondents are aware of investing options. 79% of
respondents are aware of stock market and other financial investment and 16% of respondents
are not aware of investing process in stock market but they are aware of the investments like real
estate, mutual funds and bank deposits etc.,
YES NO
79 16
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2) INVESTMENT OPTION YOU PREFERRED:
Method of Investing
Equity Mutual fund Bank Real Estate
No. of Responses 19 41 44 5
TABLE 4.2
From the study it is clear that investment option preferred is as follows.
About 70% of respondents preferred the investment in mutual funds as well as bank
deposits due to the safely and investment planning by AMC’s .A moderate number of respondent
(about 22%) preferred to invest in stock market .Rest of 8% respondents preferred only real
estate investment.
This data reveals that the common investor is keenly looking at safely of principal in this
volatile stock market.
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3) Do you have DEMAT Account.
TABLE 4.3
This question reveals that the number of respondents opened DEMAT account so far of
the total respondents spread of half are towards DEMAT account which means only 48
respondents are investing electronic form of share and remaining people are invested in other
traditional investment options where there is no need of DEMAT account.
YES NO
48 47
48
4) For online trading what are the essential for an investor:
PAN Card DEMAT A/c Bank A/c All options
24 24 23 24
TABLE 4.4
Only 24 respondents are aware of total requirements for stock trading and investment
remaining 71 respondents does not have awareness on base requirement for stock market
investment and they are not actively investing in stocks.
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5) Are you a Long term investor or short term investor
TABLE 4.5
From the study it is clear that long term investor or short term investor.
→ 43% of people preferred to invest in long term, which enables them to wealth
maximization.
→ 36% of people preferred to invest in short term, by which they want to earn profit from
the fluctuations and volatilizing of stock market remaining 21% of respondents are looking at
their traditional investment avenues like bank deposits and real estate to have the liquidity as
safely.
Long term Short term
43% 36%
50
6) How long you are trading on-line.
Method of Investing
1 year 1yr - 2 yrs 2yr – 5 yrs Above 5 yrs
No. of respondents 25 45 19 6
TABLE 4.6
From the study it is clear that the how long people trading online. 74% of the respondents
are long term users of online trading mechanism. The period of their usage rates from 2 years to
5 years.
Hence the data reveals that many of the investors are fully aware of online trading
mechanism of various financial products.
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7) Is there any difference between On-line trading and Off-line trading.
No Don’t know If yes specify
19 36 40
TABLE 4.7
From the study it is clear that different between on-line trading & Off-line trading.
19 respondents (i.e, 20%) does not distinguish between online and offline trading about
38% of respondents are not aware of any differences of online and offline trading system And a
major chance of respondents have clearly aware of the differences between online trading and
offline trading mechanism.
52
8) Are you aware of trading timings
TABLE 4.8
From the study it is clear that a ware of trading timings.
About 52% of respondents are aware of trading timings of stock exchanges. About 37%
of respondents who are not trading only thorough the brokers are not aware of trade timings at
remaining 11% of respondents are not responded for this questioner.
Hence it is concluded that only the investors executing transactions on their own
computers are well aware of trading timings.
Yes No Not respondents
46 39 10
53
9) The On-line trading started in the year of
1995 1999 2000 Don’t know
14 30 39 13
TABLE 4.9
On-line trading started in the year 1999. From the study shows that only 36% of
respondents are aware of the actual year of commencement of online trading in the country and
rest of 64% respondent are not aware of the fact.
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10) How do you access the On-line trading.
By own By personally meets the broker for instruction
The phone instruction to Broker
36 34 25
TABLE 4.10
From the study it is clear that access the On-line trading.
About 37% of respondents are aware of access online trading by their own. About 355 of
respondents who are not aces online trading only through brokers for instructions and 25% of respondents are also not aware only thorough phone instruction to broker.
Hence it is concluded that the only the investors executing transactions on their own computers so they are well aware of accessing the online trading.
55
11) Who will regulate the On-line Trading
SEBI RBI NSDL &CSDL ALL OF ABOVE
27 36 18 34
TABLE 4.11
From the study it is clear that regulate the On-line trading.
Only 27% of respondents are aware of total SEBI for stock trading and investment.
Remaining 35% of respondents does not have awareness of rules for basic requirement for stock
market.
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12) In cash received immediately after placement of order.
Received immediately
T+2 days Don’t know
23 55 17
TABLE 4.12
From the study it is clear that if cash received immediately after placement of order.
About 57% of respondents are aware of trading T + 2 days in stock market. Remaining 17% of respondent does not have aware of T + 2 days.
13) The transaction will execute in
57
1 day 3 days Trading week
34 30 28
TABLE 4.13
From the study it is clear that transaction will execute in online trading.
About 35% of respondents are aware of transactions in online trading only 1 day. About
31% respondents are also aware of transactions for requirement in online trading only 3 days
about 28% of respondents are aware of trading week transactions will execute.
Hence it is conclude that investors are well known to on executing the transactions only
in one day to buy and sell the shares.
14) Is there any review system after placing the order:
58
Yes No Don’t know
36 30 24
TABLE 4.14
From the study it is clear that review system after placing order.
About 37% of respondents aware of the review system after the placing orders in online
trading. About 31% respondents does not aware of review system after the placing the order.
About 25% of respondents are not aware of review system after the placing order.
Hence it is concluded the investors are well known review the system after the
transactions of the placing the order.
15) By which means you are getting confirmation of trading.
59
By e-mail directly By Post By Broker Email
35 30 20
TABLE 4.15
From the study it is clear that confirmation of trade.
About the 37% respondents are aware of confirmation of trading by e-mail directly. About 31% of respondents are aware of confirmation of trading by post. About 21% of respondents are aware of confirmation of trading by broker e-mail.
Hence it is concluded that investors are well known that after placing the order they are getting confirmation of trading by e-mail directly.16) Do you feel on – line trading is move convenient that out cry method.
60
Good Not Convenient Can’t say
41 19 35
TABLE 4.16
From the study it is clear that On-line trading is convenient the outcry method.
About 43% of respondents are well known online trading is more convenient than outcry
method. About 20% of respondents are not convenient online trading. About 36% of respondents
does not aware of online trading and outcry method.
Hence it is concluded that investor are executing transactions through online trading only
rather then outcry method.
17) Is there any limitation in quality of shares for placing a buying/ selling order.
61
No Don’t know If yes specify
20 25 49
TABLE 4.17
From the study it is clear that limitation in quality of shares for placing buying / selling order.
About 21% respondent does not aware of limitations in quality of shares for placing
buying/selling orders. About 26% of respondents are not aware of limitations of quality of shares
for placing buying/selling order and major chance of respondents have clearly aware of the
limitations in quality of shares for placing buying/selling order mechanism.
18) Is there any difference between common investor and institutional investor.
62
No Can’t say If yes, Specify
21 22 52
TABLE 4.18
From the study it is clear that different between common investor & institutional investor.
About 22% of respondents does not aware of distinguished between common investor and
institutional investor. About 23% of respondents are not aware of any difference between
common investor & institutional investor and 54% of respondent’s majority have clearly aware
of the difference between common investor & institutional investor.
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SUMMARY
&
SUGGESTIAON
64
SUMMARY OF ONLINE TRADING SYSTEM
Lack of transparency in the manual trading system lead to the development of online
trading SYSTEM.
It avoids procedural delay involves in the manual trading system and reduced cost.
Facilititates easy surveillance so that there is less scope for speculation.
Provides the investors with the best possible facilities services.
Bring transparency in the operation of the exchange.
Online trading is said to be dealing of securities on net, which forms a single location any
where we can service investors across the country.
Online trading facilities easy survivalance so that there are possible facilities.
Trading on the Internet has opened opportunities for real investors, the information on
securities is available directly to the investors through online.
Now it provides secure depository system with an extensive network in dematerialized
format.
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SUGGESTIONS
Even through the exchanges were mechanized, there are to accessible to rural areas and
such the capital market should be made more rural friendly.
Investors lack the knowledge of online trading: SEBI should take steps to educate the
investors in this area.
QUESTIONNAIRE
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1) Are you an Investor in stock market?
a)Yes b) No
2) Investment option you preferred ?
a)Method of Investing b) Equity c) Mutual fund d) Bank e) Real Estate
3) Do you have Demat Account?
a)Yes b) No
4) For online trading what are the essential for an investor?
a)PAN Card b) DEMAT A/c c) Bank A/c d) All options
5) Are you a Long term investor or short term investor?
a) Long term b) Short term
6) How long you are trading on-line?
a)Method of Investing b) 1 year c) 1yr - 2 yrs d) 2yr – 5 yrs e) Above 5 yrs
7) Is there any difference between On-line trading and Off-line trading?
a)No b) Don’t know c) If yes specify
8) Are you aware of trading timings?
a)Yes b) No c) Not respondents
9) The On-line trading started in the year of
a)1995 b) 1999 c) 2000 d) Don’t know
10) How do you access the On-line trading?
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a)By own b) By personally meets the broker for instruction c) The phone
instruction to Broker
11) Who will regulate the On-line Trading?
a)SEBI b) RBI c) NSDL &CSDL d) ALL OF ABOVE
12) Is cash received immediately after placement of order?
a)Received immediately b) T+2 days c) Don’t know
13) The transaction will execute in?
a)1 day b) 3 days c) Trading week
14) Is there any review system after placing the order?
a)Yes b) No c) Don’t know
15) By which means you are getting confirmation of trading?
a)By email directly b) By Post c) By Broker Email
16) Do you feel on – line trading is move convenient that outcry method.
a)Good b) Not Convenient c) Can’t say
17) Is there any limitation in quality of shares for placing a buying/ selling order?
a)No b) Don’t know c) If yes specify
18) Is there any difference between common investor and institutional investor?
a) No b) Can’t say c) If yes, Specify
68
BIBILOGRAPHY
69
BIBILOGRAPHY
Journals
www.zenmoney.com
www.nseindia.com
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