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DECLARATION
I, Ankur Tiwari a student of PGDM VI trimester , hereby solemnly declare that the Research
project titled “INVESTMENT IN SHARE MARKET” is the outcome of my own research
prepared by me and the same has not been submitted to any university or institute for the award
of any degree or diploma.
ANKUR TIWARI
Roll No. 201202
ACKNOWLEDGEMENT
I am also thankful and would like to express my Gratitude to the honorable Mrs. Karuna Gupta
and the entire Institute for giving me a Platform to have this wonderful opportunity and being
able to get a glimpse of the Corporate World.
WITH REGARDS
ANKUR TIWARI
PGDM VI TRIMESTER
PREFACE
As a Part of PGDM Program, Student has to pursue a project duly approved by the Faculty of
Concerned area. I had the privilege of undertaking the project on “Investment In Share
Market” in Religare Securities Limited. Main aim of the Project is to study How to, When and
where we can invest our money to gain more profit.
My finding was that the extensive reforms introduced over the last few years have enhanced the
integrity, transparency and efficiency of the operations in the securities market. There has been
appreciable improvements in trading and settlement of securities in secondary market, and the
market has become a safer place as revealed by the interest of investors through trading volumes.
ANKUR TIWARI
CONTENTS
S.NO. TOPIC PAGE NO.
1. Executive Summary……………………….. 1
2. Objective of project………………………… 3
3. Introduction................................................... 4
4. Company Profile…………………………. 7
5. Depository services………………………... 20
6. Basic service……………………………….. 30
7. Financial derivatives……………………… 45
8. Research objective………………………… 73
9. Research methodology…………………….. 74
10. Data collection……………………………… 75
11. Sampling plan……………………………….. 76
12. Findings……………………………………… 81
13. Conclusion……………………………………. 81
14. Limitations……………………………………. 82
15. Questionnaire…………………………………. 84
16. Bibliography………………………………….. 86
EXECUTIVE SUMMARY
The Present business scenario is totally consumer oriented. Every company faces stiff
competition from its competitors, each provides the best product at competitive rates. As a result
customers have lot of choices to get the best with the least cost. To face this competition, it is
very important to know customer’s behavior, their needs, preferences and also the motivational
factors.
Religare Securities Limited Provide its Expert service in share market Operations to institutional
Investors. Company is a Member of National Stock Exchange as well as Bombay
StockExchange. Religare is slowly but steadily gaining market share and goodwill in the
Market. Its strategies for marketing its services as well as developing a good Relationship with
its client has given an edge over the other service providers. Religare is on expansion path and is
looking forward to be in the top. Religare is a very flexible organization and it gives equal
opportunity to its young and energetic staff to work so as to bring this organization among the
top. to be dynamic in this industry. The comparative analysis done in this project show how
Religare has built competitive edge on some ground
The Project help you understand the strategies of this industry right from De-Mat to Trading,
Margin to analysis and risk to return. I hope this project prove to be beneficial for the Company
and also give the idea about the industry.I learnt a lot through out the process of undertaking this
project report.
To fulfill my task I had to visit the client personally who are dealing in share trading with this
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company or some other broking house.
For this project I was assigned the target of 10 accounts, for which I first generated the database
and made appointment with them and convert them in as traders of Religare Securities Limited,
for this I have to convince them and explain the concept and collect the Trading Form and a
cheque of Rs. 5000 only.
After going through the exercise I found that RSL is one of the
up-coming companies in the Share Market, as the credibility of other companies are going down
in the market and it is the right time for the RSL to built its reputation in the market. The Main
reason for RSL low market share is because of local brokers in the market which a charging very
less Margin as initial investment for Trading in Stock Market.
But No doubt it is having lots of scope to grow in the financial Market, and I wish it is having a
shining future in the coming years.
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OBJECTIVES
Primary Objective:
To Study how to invest money in Share- Market.
Secondary Objective:
To study various financial products like Equity, Mutual Funds, Commodity& Portfolio
Management Services.
To Study the various services provided by Broker house to their clients.
To know investors experience in capital market
To study what other services investors expect from their broker house.
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INTRODUCTION
About shares or stocks
In simple words, a share or stock is a document issued by a company, which entitles its holder
to be one of the owners of the company. A share is issued by a company or can be purchased
from the stock market.
By owning a share you can earn a portion and selling shares you get capital gain. So, your return
is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you
have sold the share at a price below your buying price.
Quick Facts on Stocks and Shares
Owning a stock or a share means you are a partial owner of the company, and you get
voting rights in certain company issues
Over the long run, stocks have historically averaged about 10% annual returns however,
stocks offer no
guarantee of any returns and can lose value, even in the long run
Investments in stocks can generate returns through dividends, even if the price
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Religare is driven by ethical and dynamic process for wealth creation. Based on this, the
company started its endeavour in the financial market; Religare Enterprises Limited (A
Ranbaxy Promoter Group Company)
Through Religare Securities Limited, ReligareFinvest Limited, ReligareComdeLimited and
Religare Insurance Advisory Services Limited provides integrated financial solutions to its
corporate, retail and wealth management clients.
Religare is proud of being a truly professional financial service provider managed by a highly
skilled team, who have proven track record in their respective domains.
Branches Today, we have a growing network of 150 branches and more than 300 business
partners spread across 180 cities in India and a fully operational
Unlike a traditional broking firm, Religare group works on the philosophy of partnering for
wealth creation. We not only execute trades for our clients but also provide them critical and
timely investment advice. The growing list of financial institutions with which Religare is
empanelled as an approved broker is a reflection of the high level service standard maintained by
the company.
Religare has a very credible team research & Analysis division, which not only caters to the need
of our institutional client but also gives there valuable input to investment dealers.
Religare is among the capital market fraternity and the most vibrant place in terms of
information and every day it is consolidating its efforts to provide more customized services to
its clients.
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Religare deals with… Products :_
EQUITIES…..
MUTUAL FUND
DERIVATIVES (F & O)
COMODITIES
P M S
WEALTH MANAGEMENT
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COMPANY PROFILE
Our Brand Identity
Name
Religare is a Latin word that translates as 'to bind together'. This name Religare was chosen to
reflect the integrated nature of the financial services the company offers. The name is intended to
unite and bring together the phenomenon of money and wealth to co-exist and serve the interest
of individuals and institutions, alike.
Symbol
The name is paired with the symbol of a four-leaf cover, a rare mutation of the common three-
leaf clover. Traditionally, it is considered good fortune to find a four leaf clover as there is only
one four-leaf clover for every 10,000 three-leaf clovers found.Each leaf of the four-leaf clover
has a special meaning in the sphere of Religare.Religare Securities Ltd. is one of the leading
broking house of India. It is known for its strong belief in Value-Investing ideas, which forms the
core of its investment philosophy. Religare provides end-to-end equity solutions to institutional
and individual investors.
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RELIGARE SECURITIES LIMITED
MISSION:Providing integrated financial care driven by the relationship of trust and confidence.
VISION:
To be India's first Multinational providing complete financial services solution
across the globe.
Religare Group of Companies:
Religare Enterprises Limited group comprises of Religare Securities Limited, Religare Comdex
Limited, ReligareFinvest Limited and Religare Insurance Advisory Limited which deal in equity,
commodity and financial services business.
RSL is one of the leading broking houses of India and are dealing into Equity Broking,
Depository Services, Portfolio Management Services, Institutional Equity Brokerage &
Research, Investment Banking and Corporate Finance
Extension of services has been a constant feature in Religare to regard the needs of our clients.
Consequently, company is soon going to launch Internet Trading and Merchant Banking. This
would take care of different investment needs of different classes of investors
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To facilitate free and fare trading process Religare is a member of major financial institutions
like, National Stock Exchange of India, Bombay Stock Exchange of India, Depository
Participant with National Securities Depository Limited and Central Depository Services (I)
Limited, and a SEBI approved Portfolio Manager
RSL serves a platform to all segments of investors to avail the opportunities offered by investing
in Indian equities either on their own or through managed funds in Portfolio Management.
Religare Comdex Limited:
Religare is a member of NCDEX and MCX and provides platform for trading in commodities,
which is an online facility also.
RCL provides platform to both agro and non-agro commodity traders to derive the actual price of
the commodity and also to trade and hedge actively in the growing commodity trading market in
India.
With this realization, Religare Comdex is coming up with its branches at 42-mandi locations. It
is a flagship effort from our team which would be helpful in facilitating trade and speculating
price of commodities in future.
ReligareFinvest
ReligareFinvest Limited (RFL), a Non Banking Finance Company (NBFC) is aggressively
making a name in the financial services arena in India. In a fast paced, constantly changing
dynamic business environment, RFL has delivered the most competitive products and services.
RFL is primarily engaged in the business of providing finance against securities in the secondary
market. It also provides finance for application in Initial Public Offers to non-retail clients in the 10
primary market
RFL is also planning to initiate personal loan portfolio as fund based activity and mutual fund
distribution as fee based activities.Along with this, the company also undertakes non-fund based
advisory operations in the field of Corporate Financing in the nature of Credit Syndication which
includes inter alias, bills discounting, inter corporate deposit, working capital loan syndication,
placement of private equity and other structured products
Religare Insurance Advisory Ltd.
Religare has been taking care of financial services for long but there was a missing link.
Financial planning is incomplete without protective measure i.e. structured products to take care
of event of things that may go wrong
Consequently, Religare is soon coming up with Religare Insurance Advisory Services Limited.
As composite insurance broker, we would deal in both insurance and reinsurance, providing our
clients risk transfer solutions on life and non-life sides.
This service will take benefit of Religare’s vast business empire spread throughout the country
providing our valued clients insurance services across India. We aim to have a wide reach with
our services – literally! That’s why we are catering the insurance requirements of both retail and
corporate segments with products of all the insurance companies on life and non-life side still,
there is more in store. We also cater individuals with a complete suite of insurance solutions,
both life and general to mitigate risks to life and assets through our existing network of over 150
branches – expected to reach 250 by the end of this year!
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Religare Securities Ltd. (RSL)
We feel immensely privileged in introducing Religare Securities Limited, a company managed
and controlled by Ranbaxy promoters and presently among the leading brokerage house of India.
The primary focus of RSL is to cater to services in Capital Market Operations to Institutional
Investors. The Company is a member of the National Stock Exchange (NSE) and OTCEI. The
growing list of the financial institutions with whom RSL is empanelled, as approved Broker
which is a reflection of the high levels of services maintained by the Company. As on date the
Company is empanelled with Alliance Capital AMC, UTI, IDBI, IFCI, SBI, BOI-MF, Punjab
National Bank, PNB-MF, Oriental Insurance, GIC, UTI-Offshore, ICICI Can bank MF, Punjab
& Sind Bank, Pioneer ITI, SUN F&C, IDBI Principal, Prudential ICICI, ING Baring and J M
Mutual Fund.
Religare in recent past has been constantly innovating in terms of the product and
services, which it offers, and in this respect it has started a premium NRI, FIs, HNIs and
Corporate Servicing group. This group specifically caters to the growing investment
needs of these premium client categories by taking all their portfolio investment decisions
depending upon their risk / return parameter.
Religare has a very credible team in its Research & Analysis division, which not only
caters to the need of our Institutional clientele but also gives their valuable input to
Investment Dealers.
Religare is also giving in house depository services to its clientele and it is among one the
leading depository services provide among country. Presently it manages more than Rs.
3000 Crores worth of shares under its electronic custody.
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Background of Religare Securities Ltd
Religare Securities Limited, a Ranbaxy Promoter Group Company, was founded by late Dr.
Parvinder Singh (CMD Ranbaxy Laboratories Limited), with the vision of providing integrated
financial care driven by the relationship of trust & confidence. To realize its vision the Religare
group provides various financial services which include broking (stocks & commodities),
depository participant services, portfolio management services, advisory on mutual fund
investments and many more. Working on the philosophy of being “Financial Care Partner”,
Religare unlike other traditional broking firms not only executes the trades for the clients but
also provides them critical and timely investment advice. The growing list of financial
institutions with which Religare is empanelled as an approved broker is a reflection of the high
levels of service standard maintained by the company. Religare is a truly professional financial
service provider managed by a team of highly skilled professionals who have proven track record
in their respective domains. Religare has the widest reach through its Regional, Zonal and
Branch Offices spread across the length & breadth of the country.
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Nowadays Religare
is driven by ethical and dynamic process for wealth creation. Based on this, the company started
its endeavor in the financial market.
- An ISO 9001 : 2000 company
- Member of National Stock Exchange (NSE) since November 1994, first deposit based
- Member of BSE.
- Depository Participant with
- National Securities Depository Limited (NSDL) since July 2000 -
- Central Depository Services (India) Limited (CDS) since February 2003
- SEBI Approved Portfolio Manager
- Working on the Philosophy of being “Financial Care Partner”
- Among the leading service provider in Capital Market
Religare Enterprises Limited (A Ranbaxy Promoter Group Company) through Religare
Securities Limited, Religare Finevest Limited, Religare Commodities Limited and Religare
Insurance Advisory Services Limited provides integrated financial solutions to its corporate,
retail and wealth management clients. Today, we provide various financial services which
include Investment Banking, Corporate Finance, Portfolio Management Services, Equity &
Commodity Broking, Insurance and Mutual Funds. Plus, there’s a lot more to come your way.
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Presence
Religare is present in more than 150 branches all over India and the target is to cross 350
branches very soon. Our branches are fully equipped with high bandwidth internet lines and high
end computers i.e. the latest IT tools. There are efficient branch managers and dealers to give
you tips of highest quality and accuracy with support from our analysts. Our branches would
make you feel like doing business in Dalal Street however, in a more sophisticated manner. You
get to work with more traders and learn more and also trade more.
Infrastructure
Offices
The company has offices located at prime locations in Mumbai, New Delhi,
Kolkatta and Chennai. The offices are centrally located to cater to the requirements
of institutional and corporate clients and retails clients, and for ease of operations
due to proximity to stock exchanges and banks. Today, we have a growing network
of 150 branches and more than 300 business partners spread across 180 cities in
India and a fully operational international office at London
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MANAGEMENT
Religare is led by individuals who are professionals and leaders in every sense of the word.
Board of Directors
Mr.Harpal Singh
More than 27 years of experience in the corporate sector
Director – Ranbaxy Laboratories Limited
Chairman-Fortis Healthcare Limited and Fortis Financial Services Limited
Mr. Shivinder Mohan Singh
Joint Managing Director of Fortis Healthcare and SRL Ranbaxy
Director in Fortis Financial Services Limited and Fortis Comdex Limited.
Mr. Malvinder Mohan Singh
President, Pharmaceuticals and Executive Director at Ranbaxy Laboratories Limited
Director in Fortis Healthcare Limited, Fortis Financial Services Limited and Fortis
Comdex Limited.
Mr. Sunil Godhwani
Chief Executive Officer and Managing Director of Fortis Securities Limited
Experience of managing large businesses for more than 15 years.
Mr. ShacindraNath :
Group Chief operating Officer, Religare securities ltd.
Mr. Anil Saxena
Group chief Finance Officer, Religare Securities .ltd16
STRUCTURE OF THE ORGANIZATION
The company owes its success to its strong management team, most of which has been there since its inception.
Organization Structure:
National Sales and Marketing Head
Vice President-Investment Vice President-Sales
Assistant Vice President-Investment Assistant Vice President-Sales
Zonal manager investment Regional Sales Head
Senior Investment manager Branch Manager
Manager Investment Team Leader
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Relationship Manager
Associate Relationship Manager
Asst. Relationship Managers
Relationship Executive
We are providing Offline trading facility through ODIN Software.
DIET ODIN
Business Profile
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Religare Enterprises, a Ranbaxy promoter group company, is the holding company for integrated
financial services. The company was incorporated as a private limited company on Jan. 30, 1984
and the status changed to a public limited company on Aug. 11, 2006.
The company is the holding company for all businesses, structured and being operated through
various subsidiaries. It offers a wide range of financial products and services across the three key
business verticals of retail, wealth management and the institutional spectrum. Retail services
include equity and commodities brokerage, personal financial services (including insurance
brokerage and mutual fund distribution), LAS, personal loans, and internet trading. Wealth
services include PMS, wealth advisory services and private client equity services (including
international equity services). The Institutional services include institutional distribution
services, investment banking and transaction advisory services.
The subsidiaries of the company include Religare Securities, Religare invest, Religare
Commodities, Religare Insurance Broking, Religare Venture Capital, Religare Realty,
ReligareInsurance Holding Company, Religare Finance, Religare Capital Markets and Religare
Wealth Management Services. The company has a 50:50 joint venture with Australia`s
Macquarie Bank for expanding its wealth management business in India.
Religare is proud of being a truly professional financial service provider managed by a highly
skilled team, who have proven track record in their respective domains. Religare operations are
managed by more than 2000 highly skilled professionals who subscribe to Religare philosophy
and are spread across its country wide branches.
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The company`s retail network is spread across more than 1217 locations in more than 392 cities
and towns. It operates from six regional offices and 25 sub-regional offices with business
associates all over India and a representative office in London. Religare has a growing network
of more than150 branches and more than 300 business partners spread across more than180 cities
in India and a fully operational international office at London.
The company is a member of the National Stock Exchange of India, Bombay Stock Exchange of
India, depository participant with National Securities Depository and Central Depository
Services India, and SEBI approved portfolio manager.
The registered and corporate office of the company is located at Malad(West),Mumbai
FUTURE PLANS
The vision is to build Religare as a globally trusted brand in the financial services domain and
present it as the 'Investment Gateway of India'. All employees of the group, currently more than
9,500 in number, ceaselessly strive to provide financial care driven by the core values of
diligence and transparency.
The company will use funds raised through the initial public offering IPO to expand domestic
operations and network of branches, fund retail finance business, and expand financing activity.
DEPOSITORY SERVICES
Depository is a facility for holding securities, which enables securities transactions to be
processed by book entry. In addition to the core services of electronic custody and trade
settlement services, it provides special services like pledge, hypothecation of securities,
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automatic delivery of securities to clearing corporations, distribution of cash and non-cash
corporate benefits, stock lending, distribution of securities allots in case of public issues.
A depository can be compared to a bank. A depository holds securities like shares investors in
electric form. Besides holding securities, a depository also provides services related to
transactions in securities.
A depository interfaces with the investors through it’s agents called Depository
Participants(D.P.s).If an investor wants to avail the services offered by depository, the investor
has to open an account with associate relationship manager. This is similar to opening an account
with any branch of a bank in order to utilize the bank’s services.
Depository Participant (DP):The investor obtains Depository Services through a depository
participant of NSDL. ADP can be a bank, financial institution, a custodian, a broker, or any
entity eligible as per SEBI (Depositories and Participants) Regulations, 1996. The SEBI
regulations and NSDL bye laws also lay down the criteria for any of these categories to become
A DP.
Just as one opens a bank account in order to avail of the services of a bank, an investor opens a
depository account with a depository participant in order to avail of depository facilities. Though
NSDL commenced operations with just three DPs, Depository Participant Services are now
available in most of the major cities and towns across the country.
Issuing Companies/ their Registrar & Transfer Agents: Securities issued by issuers who have
entered into an agreement with NSDL are admitted into the NSDL depository. As per this
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agreement, issuer agrees to verify the certificates submitted for dematerialisation before they are
dematerialised and to maintain electronic connectivity with NSDL. Electronic connectivity
facilitates dematerialisation, rematerialisation, daily reconciliation and corporate actions.
NSDL is electronically linked to each issuer company or its R&T agent. This facilitates
dematerialisation, rematerialisation, daily reconciliation and corporate actions.
Clearing Corporation / House:The clearing corporations/houses of stock exchanges also
have to be electronically linked to the depository in order to facilitate the settlement of the trades
done on the stock exchanges for dematerialised shares. At present, all the major clearing
corporations/houses of stock exchanges are electronically connected to NSDL.
RSL provides depository services to investors as a Depository Participant with NSDL and
CDSL.
The Depository system in India links issuers, Depository Participants, Depositories National
Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL)
and clearing houses / clearing Corporation of Stock Exchanges. These facilitate holding of
securities in dematerialized form and securities transactions are processed by means of account
transfers.
Our customer centric account schemes have been designed keeping in mind the investment
Psychology. With a competent team of skilled professionals, we manage over 410,000
accounts and have a dedicated customer care centre, exclusively trained to handle queries
from our customers. With our country wide network of branches, you are never far from
depository services of Religare.
Religare’s depository service offers you a secure, convenient, paperless and cost effective way to
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keep track of your investment in shares and other instruments over a period of time, without the
hassle of handling physical documents. Your DP account with us takes care of your depository
needs like dematerialization, re-materialisation, transfer and pledging of shares, stock lending
and borrowing.
Your demat account is safe and absolutely secure in our hands, every debit instruction is
executed only after its authenticity is established.
Our hi-tech in-house capabilities cater to the needs of software maintenance, database
administration, network maintenance, backups and disaster recovery. This extra cover of
security has gained the trust of our clients
COMMODITIES:-
Introduction
We at Religare believe in providing independent research for clients to make investment
decisions, with strict emphasis on self-regulation, avoiding possible conflict of interest in
objectivity.
Varied research reports are prepared on different categories of commodities.
Reports on Metals :
Daily Market Commentary on exchange turnover along with turnover of top traded
commodities; national and international news update on commodities.
Daily Research Reports on metals and energy.
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Evening Capsule on LME stocks, Support, Resistance and market outlook, Daily
Economic releases.
Weekly Economic Calendar
Reports on Agriculture :
Daily Spot Market Overview on spot market price trends, top traders outlook and
important news with regard to particular commodities.
Daily Report on agri-commodities
INSURANCE
Introduction
Religare Insurance Broking Limited(RIBL), a subsidiary of Religare Enterprises Limited
with a mission to create and institutionalize an ethical, process driven client centric approach
backed by the right expertise, sharp insights and innovation, benchmarked against global best
practices. We envisage to become India's most credible, trusted and holistic multi brand
Insurance solutions partner.
Religare Insurance Broking Limited (RIBL), a Religare Enterprises Limited venture is one of
India's leading insurance broking firms, with one of the largest retail networks in the
country. The company holds a composite broker's license operating in the Life, Non-life and
Reinsurance domains.
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As part of its recent initiatives the group has also started expanding globally. Religare has
also successfully partnered with Aegon, one of the global leaders to launch Life Insurance
and Mutual fund products in India.
RIBL not only provides customized solutions to individual clients but also to some of the
leading corporate houses and institutions across the country.
True to its spirit, the company proactively represents and champions the interests of its
clients tirelessly to leading insurance companies. Within a short span of time we have built a
close relationship with all the leading insurance companies in the country. Our team across
the country is driven by the core philosophy of creating and delivering value to its
customers. Our strengths are a team of passionate professionals, a robust IT infrastructure
and strong risk analysis teams adept at identifying & analyzing your risks and providing you
with tailor made solutions.
Investment Banking
We provide innovative, integrated and best-fit solutions to our corporate customers. It is our
continuous endeavor to provide value enhancement through diverse financial solutions on an
ongoing basis, through offerings like Corporate Debt, Private Equity, IPO, ECB, FCCB,
GDR/ADR etc.
Investment Banking with Religare offers the following services:
Corporate Finance
We focus on finding right and relevant partners for our clients, who not only help in adding value
but also improve the future valuation of the organization. We specialize in structured financing
and providing advisory services related to financial planning, modeling and advising on financial
25
requirements.
Corporate finance products offered by us: Placement of Debt
Syndication of Domestic Loan / Foreign Currency Loan
Securitisation
Debt Swap & Loan Restructuring
Short Term Corporate Debt
Working Capital (Cash Credit & Short term Loan)
Capital Market Instruments
Overseas Acquisition
Placement of Equity (Private Equity)
Both for listed and unlisted companies
Merchant Banking
IPO/FPO/RIGHTS
Mergers & Acquisitions
Corporate Advisory Services
ADR/GDR/FCCB
Buy back of shares
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Religare Securities Limited (RSL)is a leading equity and securities firm in India. The
company currently handles sizeable volumes traded on NSE and in the realm of online trading
and investments it currently holds a reasonable share of the market. The major activities and
offerings of the company today are Equity broking, Depository Participant Services, Portfolio
Management Services, Institutional Brokerage & Research, Investment Banking and Corporate
Finance. To broaden the gamut of services offered to its investors, the company has also recently
unveiled a new avatar of it's online investment portal armed with a host of revolutionary features
RSL is a member of the National Stock Exchange of India, Bombay Stock Exchange of India,
Depository Participant with National Securities Depository Limited and Central Depository
Services (I) Limited, and SEBI approved Portfolio Manager
International Advisory:-International Advisory Fund Management Services (AFMS) - A
new horizon for international investments.
We provide our wealth clients an opportunity to invest in international financial instruments
(currently limited to the US).
Equities, Mutual Funds and Debts are some of the key instruments available and the clients have
the option to choose from various asset allocation modules.
Why Invest Overseas?
portfolio diversification
Global outreach of opportunities
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Pre-approved route for resident individuals to invest (Healthy Govt. Patronage and
favorable regulatory developments).
Contact Information
www.religareonline.com
www.religare.in
Website http://www.religare.in
Institutional Broking Services
The mission of this division is to institutionalize and implement a process driven approach to
cater to the needs of leading corporate houses and institutions.
The division would like to be seen as a one stop investment gateway and knowledge repository
for its clients servicing their unique and sophisticated needs.
The division is structured as a separate SBU and is housed out of Mumbai, manned by a small
yet fleet footed and extremely skilled group of top notch professionals drawn from the best in the
industry.
The key highlights of our service platter are:
Highly skilled, dedicated dealing, research and sales teams
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Dealing capabilities on the NSE, BSE and in the cash and derivatives segment
In-depth, detailed and insightful coverage of more than 60 stocks across diverse sectors.
The sectors covered are FMCG, Hotels, Media, Pharma, Auto, Cement, Steel pipes,
Logistics, Telecom, Construction and much more.
Our Current clientele includes some major domestic Mutual Funds, Insurance Companies, Banks
and FII’s
Benefits of depository:-
Immediate transfer of securities;
Immediate transfer of securities;
No stamp duty on transfer of securities;
Elimination of risks associated with physical certificates such as bad delivery, fake
securities,etc.;
Transmission of securities is done by DP eliminating correspondence with companies;
Convenient method of consolidation of folios/accounts;
Holding investments in equity, debt instruments and G-Secs in a single account;
faster settlement cycle
faster disbursement of non cash corporate benefits like rights, bonus, etc
reduction in handling of huge volumes of paper.
Facilities offered by depository system
Dematerialization i.e., converting physical certificates to electronic form;
Rematerialization i.e., conversion of securities in demat form into physical certificates;
Electronic settlement of trades in stock exchanges connected to NSDL;
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Freezing of demat accounts, so that the debits from the account are not permitted;
Nomination facility for demat accounts;
Services related to change of address;
Effecting transmission of securities;
Depository system safety features
Strict norms for becoming a depository participant (DP), Net worth criteria, SEBI approval
etc. is mandatory.
DP.These investors can transfer their holdings to an account held with another DP.
Compulsory internal audit of operations of DP by practicing company secretary or chartered
accountant every quarter.
Various procedures for backup and safekeeping of data at all levels.
Depositors:-
There are two depositories in India:-
1. National Securities Depository Limited(NSDL).
2. Central Depository Services(India)Limited(CDSL)
BASIC SERVICES
Under the provisions of the depositories Act,NSDL provides various services to investors and
other participants in the capital market like,
Accounts maintenance
Dematerilization
Rematerilization
Market transfers
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Off-market transfers
Inter-depository transfers
Corporate actions
Transmission
Auction
Account maintenance:-
Opening of account
Just as in a bank, opening an account is the first step that an investor intends to hold scrips in
demat form in the depository system. The investor can open account with Religare.An investor
may open an account with several DPs or he may open several accounts with a single DP.
Types of account
On this basis, depository account of various market participants may be
categorized into the following types:-
(a) Beneficiary Account
(b) Clearing Member Account
(c) Intermediary Account
(a) Beneficiary Account:
This is an account opened by investors to hold their securities in dematerialized form with a
depository and to settle the transactions of sale and purchase of securities in book-entry form
through the depository system. An account holder is legally entitled for all rights and liabilities
attached to the securities (i.e., equity shares, debentures, government securities, etc.)held in that
account. Therefore, the account is called “beneficial owner account” also.For the purpose of
verification, all investors have to submit the following documents along with the prescribed
account opening form.
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1. Proof of Identity in the form of applicant’s signature and photograph authenticated by an
existing account holder or by applicant’s bank
2. Proof of residence in the form of ration card, passport, election voting card, income tax
PAN card, driving license, bill for electricity or gas, etc. This is required to confirm an
ascertain the correct identity and establish correct address of the account holder.
3. Passport-size photograph.
After the form is filled and a/c is opened, a client master list is given to the client that is the copy
of the a/c opened along with the client id, DP ID no. The client ID no. and DP Id no.
(b) Clearing Member Account:
Member brokers of those stock exchanges which have established electronic connectivity with
NSDL need to open a clearing member account, with Religare( DP of his choice), to clear and
settle trades in the demat form. This account is meant only to transfer shares to and receive
shares from the clearing corporation/ house and hence, the member broker does not have any
ownership (beneficiary) rights over the shares held in such an account.
1. All members of a stock exchange popularly known as brokers are clearing members;
2. Custodians who are permitted by the stock exchange to act as a clearing member.
Once these details are entered in the system, a “Clearing Member Business Partner” identity
number is generated (CM-BP-ID). With this ID, the account gets activated.
(c) Intermediary Account:
Any person desiring to act as an approved 'intermediary' for stock lending and borrowing needs
to open an intermediary account with any DP of his choice. As per SEBI Regulations on stock
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lending and borrowing, only a qualified intermediary can lend and borrow stocks from clients.
This intermediary borrows from lenders and lends to borrowers. Intermediaries registered with
SEBI as approved intermediary account with Religare (a DP of its choice), for executing stock
lending and borrowing transactions made through them. An intermediary account may be opened
only after obtaining registration from SEBI under an approved Stock Lending Scheme, and
getting the approval of the depository for opening the account. The intermediary does not have
any ownership (beneficiary) rights over the shares held in such an account. An a/c can have
maximum three joint holders. Holders may be more than three after following some instructions
given by SEBI. There is separate a/c of each holder.
Various services offered by DPs with respect to these accounts are as follows:
Freezing of Accounts:
Account freezing means suspending any further transaction from the depository account till the
account is de-frozen. A depository account maintained with a DP can be frozen if the DP
receives a written instruction in prescribed form from the client. A frozen account can be de-
frozen or re-activated if the client submits written instruction in prescribed form to the DP.
Nomination:
A client can make a nomination of his account in favour of any person by filing the nomination
form with his DP. Such nomination is considered to be conclusive evidence of the account
holder'(s) disposition in respect of all the securities in the account for which the nomination is
made.
Change in Address:
The client can change his address by submitting the changes in writing to the DP. The changes
conveyed to the DP will be automatically communicated to the companies in which he is holding
shares in dematerialised form.
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Bank Account Details:
Details of bank account of the client:-
1. 9-digit code number of the bank and branch appearing on the MICR cheques issued by the
bank have togiven to the DP at the time of account opening.
2. Companies use this information for printing them on dividend/interest warrants etc. to
prevent its misuse
Consolidation of Accounts:
Some clients could have opened multiple accounts to dematerialise their shares held in multiple
combinations & sequence of names. However, they may not need so many accounts after they
have dematerialised their shares and may want to bring all their shareholdings into one or fewer .
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DEMATERIALIZATION
Dematerialization is the process by which physical certificates of an investor are converted to
equivalent number of securities in electronic form and credited in the investor’s account with his
DP.
Demat account allows you to buy, sell and transact shares without the endless paperwork and
delays. It is also safe, secure and convenient.
What is De-mat account!
Just as you have to open an account with a bank if you want to save your money, make cheque
payments etc, you need to open a demat account if you want to buy or sell stocks. So it is just
like a bank account where actual money is replaced by shares.
For example:-
Let’s say your portfolio of shares looks like this:-
40 - of Infosys.
25 - of Wipro
45 - of HLL and
100 - of ACC.
All these will show in your demat account. So you don't have to possess any physical certificates
showing that you own these shares. They are all held electronically in your account. As you buy
and sell the shares, they are adjusted in your account. Just like a bank passbook or statement.
Is a demat account a must?
Nowadays, practically all trades have to be settled in dematerialised form. Although the market
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regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500
shares to be settled in physical form, nobody wants physical shares any more. So a demat
account is a must for trading and investing.
Why demat?
The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier,
enables quick ownership of securities on settlement resulting in increased liquidity, avoids
confusion in the ownership title of securities, and provides easy receipt of public issue
allotments.
It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of
certificates in transit. Further, it eliminates risks associated with forgery.
you can check on your holdings, transactions and status of requests through the net banking
facility
Documents required
Here is a broad list (you won't need all of them though):
• PAN card
• Voter's ID
• Passport
• Ration card
• Driver's license
• Photo credit card
• Employee ID card
• Bank attestation
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Charges:-
Account-opening fee
Depending on the DP, there may or may not be an opening account fee. Private banks, such as
ICICI Bank,Indiabulls ,HDFC Bank and UTI Bank, do not have one. However, players such as
Karvy Consultants and the State Bank of India do so. But most players levy this when you re-
open a demat account, though the Stock Holding Corporation offers a lifetime account opening
fee, which allows you to hold on to your demat account over a long period. This fee is
refundable.
Annual maintenance fee
This is also known as folio maintenance charges, and is generally levied in advance.
Custodian fee
This fee is charged monthly and depends on the number of securities (international securities
identification numbers — ISIN) held in the account. It generally ranges between Rs 0.5 to Rs 1
per ISIN per month. DPs will not charge custody fee for ISIN on which the companies have paid
one-time custody charges to the depository.
Transaction fee
The transaction fee is charged for crediting/debiting securities to and from the account on a
monthly basis. While some DPs, such as SBI, charge a flat fee per transaction, HDFC Bank and
ICICI Bank peg the fee to the transaction value, subject to a minimum amount. The fee also
differs based on the kind of transaction (buying or selling). Dematerialization normally takes
about 1-2 week.
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REMATERIALIZATION
Rematerilization is the exact reverse of dematerialization. It is the process by which a client
can get his electronic holdings converted into physical certificates. It refers to the process of
issuing physical securities in place of the securities held electronically in book-entry form
with a depository.
Under this process, the depository account of a beneficial owner is debited for the equivalent
number of securities is/are issued. The client has to submit the rematerilization request to
the DP with whom he has an account.
A client can rematerialise his dematerialised holdings at any point of time.
Therematerialisation process is completed approx 10 days.
The securities sent for rematerialisation cannot be traded.
Margin Trading: Introduction
Imagine this: you're sitting at the blackjack table and the dealer throws you an ace. You'd love to
increase your bet, but you're a little short on cash. Luckily, your friend offers to spot you $50 and
says you can pay him back later. Tempting, isn't it? If the cards are dealt right, you can win big
and pay your buddy back his $50 with profits to spare. But what if you lose? Not only will you
be down your original bet, but you'll still owe your friend $50. Borrowing money at the casino is
like gambling-on-steroids: the stakes are high and your potential for profit is dramatically
increased. Conversely, your risk is also increased.
Off market traders
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Trading in dematerialised securities is quite similar to trading in physical securities. The major
difference is that at the time of settlement, instead of delivery/receipt of securities in the physical
form, the same is affected through account transfers.
Transmission
One of the lesser-known but widely experienced problems with respect to dealing in share
certificates is transmission of shares. The Companies Act distinguishes transmission of shares
from transfer of shares. While transfer of shares relates to a voluntary act of the shareholder,
transmission is brought about by operation of law. The word 'transmission' means devolution of
title to shares otherwise than by transfer.
Example:- devolution by death, succession, inheritance, bankruptcy, marriage, etc.
ACCOUNT TRANSFER
The clients send delivery instructions to the DP.A form is filled along with the specifications of
the shares, which have to be transferred. These clients regularly purchase and sell securities.
Account transfer can be off-market or on-market. First ‘captured’ then ‘in transit to NSDL’ and
lastly ‘accepted by NSDL’ is shown on the forms.
Trading in BSE:-
The software used is Bombay On Line Trading (BOLT).The index used is Sensex i.e. sensitivity
index. Following items are shown on the BOLT screen.
Order entry: shows the volume of transactions entered (in lacs)
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Touchline: the current rate of the scrip mentioned.
Market lot.
Code: This code no. is assigned by BSE for identification of each scrip.
Scrip group: On BSE securities are classified into groups like B1, A etc. These
groups are assigned on the basis of different time period on which they were
declared for demat.
The next line is for order placement in which the quantity to be bought and sold and the price
is mentioned in the ‘retain till box’.
With the order client, no. is mentioned. One can also see the net position and the average rate
of particular scrip.
Trading in NSE
The software used is National Exchange for Automated Trading (NEAT).The index used is
NIFTY (National Index of Fifty Companies).There are about 900 scrips listed on this exchange.
The screen appears as follows:
Selling price i.e. the price at which NSE is willing to sell along with volume/quantity of
transaction.
Buying price i.e. the price at which NSE is willing to buy along with volume/quantity of
transaction.
Price shown in red rectangle denotes a decrease in the price of securities.
Price shown in blue rectangle denotes increase in the price of securities.
Highest and lowest price.
Software tools
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Trading confirmation slip
Place order window
Modification and cancellation of bid
Trading mechanism
Trading in Equity Derivative Instruments has commenced in India in a separate segment of
existing stock, exchanges known as 'Derivatives Segment'. Thus, for all practical purposes, both
the parties to an Equity derivative Instruments contract would be assured that the obligations of
the other party would be met -either by the party itself or, in the event of default on the party or
the party, by the Clearing Corporation.
A Client can trade in Equity Derivative instruments only through a Trading Member, of the
exchange. The Settlement Date/Expiry Date adopted by BSE and NSE is the last Thursday
of a Contract Month. In both BSE and NSE, the Equity Derivative Instruments contracts
will have a maximum of three month trading cycle-the near month (one), the next month
(two) and the far month (three). Thus, in August 2009, one would be able to enter into
futures contracts for the months of August 2009, September 2009 and October 2009. On
28th August, 2009 (last Thursday of August 2009) the Equity Derivative Instruments
contracts for August 2009 series will be finally settled/will expire and thereafter trading in
November 2009 series will start.
Every Client is required to pay an initial margin to the Trading Member/Clearing Member at
the time of entering into an Equity Derivative Instruments contract. Such a margin is
calculated by using Software called 'Standard Portfolio Analysis of Risk' (SPAN). SPAN
calculates risk arrays for all the open positions on an overall basis and gives the output in the
form of a risk parameters file. This risk parameters file is made available to all the
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participants of Derivatives Segment. Members and Clients use the data from SPAN risk file,
together with their position data, to calculate SPAN margin requirements on their respective
positions on daily basis. SPAN calculates the margin by determining the worst possible loss
using 16 risk scenarios. The Clients pay the deficit margin to, or receive the refund of excess
margin from, the Trading Member/Clearing Member on daily basis.
payRs. 20 to the Clearing House. The position for the subsequent days up to March 31
would be as follows:
Assumed Daily Settlement Price
(Rs.)
March 30 1,435 Receive Rs. 35
March 31 1,430 Pay Rs.5
Buy or sell orders:-
The system functions on a price-time priority basis. The system arranges order in the priority of
price and within price by time. If a buy of 100 shares of Reliance at Rs.300 is placed by one
investor and another investor has placed a buy order for 100 shares of Reliance at Rs.310 then
anybody who places a sell order in Reliance will be first matched with the second investors he is
offering a better price. This is price priority. If both the quotes are at suppose Rs.300 then any
sell order, which comes under the system at this price, will be matched against the first order.
This is time priority.
Every buyer has to place his order on system and the system will automatically match the order
with the best sell order available in the system at that point of time. If there is no order existing at
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that time, the system will store the order books until such time a suitable order materializes. This
is known as the bid order. A bid can be modified or cancelled before traded. Hence,
manipulation of price is possible. After 3:30 p.m., all untraded bids are automatically cancelled.
The icon for buy is (+) and sell is (-). This is often used terminology.
While executing the order, information entered is
a) Type of transaction (buy or sell)
b) Scrip name
c) Market price
d) Order no.
e) Client no.
FIFO (first in first out) method is used to determine the value of any item moving out of a stock
a/c at any point of time as demat securities are fungible. It implies that out of existing holding,
the item that first entered into the a/c is deemed to be the first sold out.
. The contents of the net position are:
Client no.
Securities
Quantity bought
Quantity sold
Net position (+/-)
Funds receipt (+)/pay(-)
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Trading average
Current closing rate
AUCTION
Auction is a mechanism utilized by the exchange to fulfill the obligation to a counter party
member when a member fails to deliver good securities or make the payments. Through auction,
the exchange arranges to buy good securities and deliver them to the buying broker or arranges
to realize the cash and pay it to the selling broker. Three factors primarily give rise to an auction:
Short deliveries
Unrectified bad delivery
Unrectified company objection
Short delivery:
This refers to a situation where a client, who has sold certain shares during a settlement cycle,
fails to deliver the shares to the member either fully or partly.
Bad delivery:
SEBI has formulated uniform guidelines for good and bad delivery of documents. Bad delivery
may pertain:
To transfer deed being torn, mutiliated, overwritten, defaced
If there are spelling mistakes in the name of the company or the transferor
Erasure or crossing out in the characters of folio no., distinctive no. range or certificate no.
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In case of compulsory demat securities physical securities are sent.However, error in folio
no. upto three characters is allowed and physical securities are transferred uptil 90 days of
being included in demat list. After that, any transfer in physical form will be bad delivery.
All bad deliveries have to be reported to the CH (clearing house) by the buying broker within
48 hours of receiving the payout, generally on Friday.
The delivering broker picks up bad deliveries, generally on Saturday. They are to be rectified
or replaced by the delivering broker within 48 hours, generally on the following Monday. All
the rectified or replaced bad deliveries are paid out to the receiving broker generally on
wednesday.
Company objection:
When the securities are received for transfer, they are done as per the provisions of the law. In
case transfer does not take place due to signature difference or shares are fake, forged, or stolen,
the company returns the securities giving the details of the ground under which the transfer could
not be affected. This is known as the company objection.
When a company objection for transfer is received, that error/discrepancies may be corrected by
the transferor (seller) either directly or through the broker for replacement with good securities.
If errors are not rectified or replaced, one has to recourse to the seller and his broker through the
stock exchange to get back the money. However, if the transaction was directly with the seller,
then the matter is to be settled directly.
FINANCIAL DERIVATIVES
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Financial derivatives are not new, they have been around for years. A description of the first
known options contract can be found in Aristotle’s writings. He tells the story of Thales, a poor
philosopher from Mellitus who developed a “financial device, which involves a principle of
universal application.” People reproved Thales, a poor philosopher saying that his lack of wealth
was proof that philosophy was a useless occupation and of no practical value. But Thales knew
what he was doing and made plans to prove to others his wisdom and intellect.
Thales had great skill in forecasting and predicted that the olive harvest would be exceptionally
good next autumn. Confident in his prediction, he made agreements with area olive-press owners
to deposit what little money he had with them to guarantee him exclusive use of their olive
presses when the harvest was ready. Thales successfully negotiated low prices because the
harvest was in the future and no one knew whether the harvest would be plentiful or pathetic and
because the olive-press owners were willing to hedge against the possibility of a poor yield.
Aristotle’s story about Thales ends as one might guess: “When the harvest-time came, and many
[presses] were wanted all at once and of a sudden, he let them out at any rate which he pleased,
and made a quantity of money. Thus so Thales exercised the first known options contracts some
2500 years ago. He was not obliged to exercise the options. If the olive harvest had not been
good, Thales could have let the option contracts expire unused and limited his loss to the original
price paid for the options. But as it turned out, a bumper crop came in, so Thales exercised the
options and sold his claims on the olive presses at a high profit.
Options are just one type of derivative instrument. Derivatives, as their name implies, are
contracts that are based on or delivered from some underlying asset, reference rate, or index.
Most common financial derivatives, described later, can be classified as:
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Futures
Forwards
Options
Three primary forces brought about the explosive use of financial derivative products in recent
years:
More volatile markets
Deregulation
New technologies
Derivatives are risk-shifting devices. Initially; they were used to reduce exposure to changes in
foreign exchange rates, interest rates, or stock indexes.
The key to understanding derivatives is the notion of a premium. Some derivatives are compared
to insurance. Just as you pay an insurance company a premium in order to obtain some
protection against a specific event, there are derivative products that have a payoff contingent
upon the occurrence of some event for which you must pay a premium in advance
DERIVATIVES DEFINED
A derivative is an instrument (security or contract) that derives its value from the value of an
underlying asset (security or a commodity).
For example, wheat farmers may wish to sell their harvest at a future date to eliminate the risk of
achange in prices by that date. Such a transaction is an example of a derivative. The price of this
derivative is driven by the spot price of wheat, which is the underlying.
In the Indian context the Securities Contracts (Regulation) Act, 1956 defines derivative to
include-
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1. A security derived from a debt instrument, share, and loan whether secured
or unsecured, risk instrument or contract for differences or any other form of security.
2. A contract that derives its value from the prices, or index of prices, of
underlying securities.
PRODUCTS, PARTICIPANTS AND FUNCTIONS
Derivative contracts have several variants. The most common variantsare :
Forwards
Futures and
Options.
The following are the three broad categories of participants:
Hedgers
Speculators
Arbitrageurs
Hedgers:
They face risk associated with the price of an asset. They use futures or options markets to
reduce or eliminate this risk.
Speculators:
They are based on future movements in the price of an asset. Futures and options can give them
extra leverage; i.e.; they can increase both the potential gains and potential losses in a speculative
venture.
Arbitragers:They are in business to take advantage of a discrepancy between prices in two
different markets.
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The functions performed are:-
Prices in an organized derivatives market reflect the perception of market participants about the
future and lead the prices of underlying to the perceived future level. The prices of derivatives
converge with the prices of the underlying at the expiration of the derivatives contract. Thus,
derivatives help in discovery of future as well as current prices.
The derivatives market helps to transfer risks from those who have them but may not like
them to those who have an appetite for them.
Derivatives due to their inherent nature are linked to the underlying cash markets. With the
introduction of derivatives, the underlying market witnesses high trading volumes because of
participation by more players who would not otherwise participate for lack of an arrangement
of transfer risk.
Speculative trades shift to a more controlled environment of derivatives market. In the
absence of an organized derivatives market, speculators trade in the underlying cash market.
An important incidental benefit that flows from derivatives trading is that it acts as a catalyst
for new entrepreneurial activity. The derivatives have a history of attracting many bright,
creative, well-educated people with an entrepreneurial attitude. They often energize others to
create new businesses, new products and new employment opportunities-the benefits of
which are immense.
Derivatives markets help increase savings and investment in the long run. Transfer of risk
enables market participants to expand their volume of activity.
FORWARD CONTRACTS
A forward contract is an agreement to buy or sell an asset on a specified date for a specified
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price. One of the parties to the contract agrees to buy the underlying asset on a certain specified
future date for a certain specified price. The other party agrees to sell the asset on the same date
for the same price. Other contract details like delivery date, price, and quantity are negotiated
bilaterally by the parties to the contract. The forward contracts are normally traded outside the
exchanges.
Features
They are bilateral contracts and hence exposed to counter-party risk.
Each contract is custom designed, and hence is unique in terms of contract size, expiration
date and the asset type and quality.
The contract price is generally not available in public domain.
On the expiration date, the contract has to be settled by delivery of the asset.
Limitations
(a)Lack of centralization of trading
(b)Illiquidity
(c)Counter-party risk
FUTURES CONTRACTS
Futures markets were designed to solve the problems that exist in forwards markets. A futures
contract is an agreement between two parties to buy or sell an asset at a certain time in the future
at a certain price. The futures contracts are standardized and exchange traded. To facilitate
liquidity in the futures contracts, the exchange specifies certain standard features of the contract.
It is a standardized instrument that can be delivered, (or which can be used for reference
purposes in settlement) and a standard timing of such settlement. A futures contract may be
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offset prior to maturity by entering into an equal and opposite transaction. More than 99% of
futures, transactions are offset this way.
Distinction between futures and forwards contracts
Forward contracts are often confused with futures contracts. The confusion is primarily because
both serve essentially the same economic functions of allocating risk in the presence of future
price uncertainty. However futures are a significant improvement over the forward contracts as
they eliminate counter-party risk and offer more liquidity.
Futures Forwards
Trade on an organized exchange OTC in nature
Standardized contract terms Customized contractterms
More liquid Less liquid
Requires margin payments No margin payment
Follows daily settlement Settlement happens at theend of period
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OPTION CONTRACTS
Options are fundamentally different from forward and futures contracts. An option gives the
holder of the option, the right to do something. The holder does not have to exercise this right. In
contrast, in a forward or futures contract, the two parties have committed themselves to doing
something. Whereas it costs nothing (except margin requirements) to enter into a futures
contract, the purchase of an option requires an upfront payment.
An option gives the holder the right to buy or sell a certain asset (called the underlying) by/on a
certain date for a certain price.
Types Of Options
Type-I
Call option:
gives the holder the right to buy the underlying asset by a certain date for a certain price.
Put option:
gives the holder the right to sell the underlying asset by a certain price.
Type-II
American option:
can be exercised at any time up to the expiration date.
European option:
can be exercised only on the expiration date itself.
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Primary option varieties
Buyer of the option-long position
Writer / seller of the option-short position
Stock option:
The underlying is a stock/share. All numerical procedure in their simplest form are derived for
these.
Forex option:
Contracts on foreign currencies. Each contract is to buy/sell a certain quantum of the stipulated
currency.
Index options:
Contracts where the underlying is the set of stocks that constitute a given index. Each contract is
on a certain multiple of the index value settled in cash on maturity.
Futures option:
Underlying is a futures contracts. Exercise of a call option yields a long position in a futures
contract and some cash. Exercise of a put option yields a short position in a future contract and
some cash.
How Options Work
1. Options give you the right to buy or sell an underlying instrument.
2. If you buy an option, you are not obligated to buy or sell the underlying instrument; you
simply have the right to.
3. If you sell an option and the option is exercised, you are obligated to deliver the underlying
asset (call) or take delivery of the underlying asset (put) at the strike price of the option
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regardless of the current price of the underlying asset.
4. Options are good for a specified period of time, after which they expire and you lose your
right to buy or sell the underlying instrument at the specified price.
5. Options when bought are done so at a debit to the buyer.
6. Options when sold are done so by giving a credit to the seller.
7. Options are available in several strike prices representing the price of the underlying
instrument.
8. The cost of an option is referred to as the option premium. The price reflects a variety of
factors including the current price of the underlying asset, the strike price of the option, the time
remaining until expiration, and volatility.
9. Options are not available on every stock. There are approximately 2,200 stocks with tradable
options. Each stock option represents 100 shares of a company's stock.
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CALL OPTION
1. Call options give traders the right to buy the underlying stock at the strike price until market
close on the 3rd Friday of the expiration month. A call option is In-The-Money (ITM) if its strike
price is below the current price of the underlying stock. A call option is out-of-the-money (OTM)
if its strike price is above the current price of the underlying stock. A call option is at-the-money
(ATM) if its strike price is the same as (or close to) the current price of the underlying stock.
2. Buying Calls - If bullish - believe the market will rise - buy (go long) calls. Buyers have
rights. A call buyer has the right, but not the obligation, to buy the underlying stock at the strike
price until the expiration date. If you buy a call option, your maximum risk is the money paid for
the option, the debit. The maximum profit is unlimited depending on the rise in the price of the
underlying asset. To offset a long call, you have to sell a call with the same strike price to close
out the position. By exercising a long call, you are choosing to purchase 100 shares of the
underlying stock at the strike price of the call option.
3. Selling Calls - If bearish - believe the market will fall - sell (go short) calls. Sellers have
obligations. A call seller has the obligation to sell 100 shares of the underlying stock at the strike
price to the person to whom the option was sold, if that person chooses to exercise the call
option. Sellers have obligations. If you sell a call option, your risk is unlimited to the upside. The
profit is limited to the credit received from the sale of the call. When selling calls, make sure to
choose options with little time left until expiration. Call sellers want the call to expire worthless
so that they can keep the whole premium. To offset a short call, you have to buy a call with the
same strike price to close out the position.
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PUT OPTION
1. Put options give traders the right, but not the obligation, to sell the underlying stock at the
strike price until market close on the 3rd Friday of the expiration month. A put option is In-The-
Money (ITM) if its strike price is above the current price of the underlying stock. A put option is
out-of-the-money (OTM) if its strike price is below the current price of the underlying stock. A
put option is at-the-money (ATM) if its strike price is the same as (or close to) the current price
of the underlying stock.
2. Buying Puts - If the options trader is bearish -- i.e. believes the underlying stock or index will
fall in price -- the trader can buy (go long) puts. When the put is purchased, it is called an
opening transaction. Now, the buyer has rights. A put buyer has the right, but not the obligation,
to sell the underlying stock at the strike price of the option until the expiration date. Furthermore,
if a trader buys a put option, the risk of the trade equals the money paid for the option, or the
debit. The profit is equal to the fall in the price of the underlying asset. The profit will result if
the underlying security moves lower. The profit is limited because the underlying asset will not
fall below zero. Finally, to offset a long put, the trader will sell a put with the same terms (strike
price and expiration) to "close" out the position. On the other hand, if the trader exercises a long
put, then he or she is selling, or short, the underlying stock or index at the strike price of the put
option.
3. Selling Puts - If the options trader is bullish -- believes the market will rise -- the trade can sell
(go short) puts. Sellers have obligations. A put seller has the obligation to buy 100 shares (per
option) of the underlying stock at the put strike price. In other words, the option seller must be
56
ready to have the stock "put" to him or her. The put seller's risk is the drop in the stock price,
which is limited to the stock falling to zero. The profit equals the credit received from the sale of
the put. Put sellers often prefer options with little time left until expiration because they want a
put to expire worthless. In that way, the seller keeps the entire premium.
FUTURES AND OPTIONS
Options are different from futures in several interesting senses. The option buyer pays for the
option in full at the time it is purchased. After this, he only has an upside. There is no possibility
of the options’ position generating any further losses to him (other than the funds already paid
for the option). This is different from futures, which is free to enter into, but can generate very
large losses. This characteristic makes options attractive to many occasional market participants,
who cannot put in the time to closely monitor their futures positions.
Buying put options is buying insurance. To buy put option on Nifty is to buy insurance, which
reimburses the full extent to which Nifty drops below the strike price of the put option. This is
attractive to many people.
INDEX DERIVATIVES
Index derivatives are derivative contracts, which derive their value from an underlying index.
The two most popular index derivatives are index futures and index options. Index derivatives
have become very popular worldwide. The popularity of index derivatives are due to the
advantages they offer:
Institutional and large equity-holders need portfolio-hedging facility. Index-derivativesare
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most suited to them and more cost-effective than derivatives based on individual stocks.
Pension funds in the US are known to use index futures for risk hedging purposes.
Stock index is difficult to manipulate as compared to individual stock prices, more so in
India, and the possibility of cornering is reduced. This is partly because an individual stock
has a limited supply, which can be cornered.
Stock index, being an average, is much less volatile than individual stock prices. This implies
much lower capital adequacy and margin requirements.
Index derivatives are cash settled and hence do not suffer from settlement delays and
problems related to bad delivery, forged/fake certificates.
FUTURES AND OPTIONS TRADING SYSTEM
The futures and options trading system of NSE, called NEAT-F&O trading system, provides a
fully automated screen based for Nifty futures and options and stock futures and options on a
nationwide basis as well as online monitoring and surveillance mechanism. It supports an order
driven market and provides complete transparency of trading operations. It is similar to that of
trading of equities in the cash market segment.
Entities In Trading System
There are four entities in the trading system:
Trading member:
Trading members are of NSE. They can trade either on their own account or on behalf of their
clients. The exchange assigns a trading member ID to each trading member. Each trading
member can have more than one user. The number of users allowed for each trading member is
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notified by the exchange from time to time. Each user of a trading member must be registered
with the exchange and is assigned a unique user ID. The unique trading member ID functions as
a reference for all orders/trades of different users. This ID is common for all users of a particular
trading member. It is the responsibility of the trading member to maintain adequate control over
persons having access to the firm’s user IDs.
Clearing member:
Clearing members are members of NSCCL. They carry out risk management activities and
confirmation/inquiry of trades through the trading system.
Professional clearing member:
A professional clearing member is a clearing member who is not a trading member. Typically,
banks and custodians become professional clearing members, clear, and settle for their trading
members.
Participant:
A participant is a client of trading members like financial institutions. These clients may trade
through multiple trading members but settle through a single clearing member.
BASIS OF TRADING
The NEAT F&O system supports an order driven market, wherein orders match automatically.
Order matching is essentially on the basis of security, its price, time and quantity. All quantity
fields are in units and price in rupees. The lot size on the futures market is for 200 Nifties. The
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exchange notifies the regular lot size and tick size for each of the contracts traded on this
segment from time to time. When any order enters the trading system, it is an active order. It
tries to find a match on the other side of the book. If it finds a match, a trade is generated. If it
does not find a match, the order becomes passive and goes and sits in the respective outstanding
order book in the system.
Order type and conditions
The system allows the trading members to enter orders with various conditions attached to them
as per their requirements. These are:
Day order:
A day order, as the name suggests is an order which is valid for the day on which it is entered. If
the order is not executed during the day, the system cancels the order automatically at the end of
the day.
Good till cancelled: (GTC):
A GTC order remains in the system until the user cancels it. Cosequently, it spans trading days if
not traded on the day the order is entered. The maximum number of days an order can remain in
the system is notified by the exchange from time to time after which the order is automatically
cancelled by the system. Each day counted is a calendar day inclusive of holidays. The days
counted are inclusive of the day on which the order is cancelled from the system at the end of the
day of the expiry period.
Goods till days/date:(GTD):
A GTD order allows the user to specify the number of days/date till which the order should stay
in the system if not executed. The maximum days allowed by the system are the same as in GTC
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order. At the end of this day/date, the order is cancelled from the system. Each day/date counted
are inclusive of the day/date on which the order is placed and order is cancelled from the system
at the end of the day/date of the expiry period.
Immediate or Cancel:(IOC):
An IOC order allows the user to buy or sell a contract as soon as the order is released into the
system, failing which the order is cancelled from the system. Partial match is possible fo the
order, and unmatched portion of the order is cancelled immediately.
Market spread/combination order entry:
The NEAT F&O trading system also enables to enter spread/combination trades. This enables
the user to input two or three order simultaneously into the market. These orders will have the
condition attached to it that unless and until the whole batch of orders find a counter match, they
shall not be traded. This facilitates spread and combination trading strategies with minimum
price risk .
Basket trading:
In order to provide a facility for easy arbitrage between futures and cash markets, NSE
introduced basket-trading facility. This enables the generation of portfolio offline order files in
the derivatives trading system and its execution in the cash segment. A trading member can buy
or sell a portfolio through a single order, once he determines its size. The system automatically
works works out the quantity of each security to be bought or sold in proportion to their weights
in the portfolio.
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NEED OF INVESTMENT
Investment activity includes buying and selling or trading on money and/or promissory notes.
The objectives of investors can be:
Income
Appreciation of capital safty
Liquidity
Hedge against inflation
The mix of these objectives may also depend on the time frame of his investment.
Short-term/day-to-day trading gains.
Short term capital gains.
Long term capital gains.
Secondary market is the market where investors buy or sell securities in exchange through
brokers/sub brokers. Settlement guarantee is ensured for transaction on stock exchanges. If the
investor does not get money/securities for whatsoever reason, then there is an institutional
arrangement to settle his claims in the exchange. If the brokers default, the investors can seek
protection from the Investor Protection Fund of the Exchange.
Stock Exchange means anybody or individuals whether incorporated or not, constituted for the
purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities. It is an association of member brokers for the purpose of self-regulation and
protecting the interests of its members.
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To know what geo-political factors affected the marketplace up till 31stMay.
How did the stock market react.
Impact on various sectors.
How Common Minimum Programme (CMP) affected the marketplace.
Where the investors should invest now.
To know about the various sectors’ outlook.
Methodology
The index is a market capitalization weighted index
Selection Criteria
Selection of the index set is based on the following criteria:
1. Company's market capitalisation rank in the universe should be less than 500
2. Company's turnover rank in the universe should be less than 500
3. Company's trading frequency should be at least 90% in the last six months.
4. Company should have a positive net-worth.
A company which comes out with a IPO will be eligible for inclusion in the index, if it fulfills
the normal eligiblity criteria for the index for a 3 month period instead of a 6 month period.
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WHERE TO LOOK NOW?
Oil & Gas-
The fundamentals of the Indian Oil & Gas sector remain strong. The refining margins in the year
2009 are expected to be quite high. There is an expected increase in the demand of petrol, diesel
and LNG in India with expected increase in the number of vehicles in India. It was also helped
by the ban placed by the Indian government on the import of kerosene. This will improve the
marketing and overall margins of the refineries as auto fuels provide better margins. India’s
marketing segment was thrown open for private participation. Yet the public sector undertakings
(PSU) seem to have another 18-24 months of virtual monopoly ahead of them as it is quite
expensive to set up retail an outlet which also requires time.
Though the fundamentals of the sector are strong, the change in the government at the Centre
puts a question mark on the policies governing this sector. The major worry points are: (1) No
price hikes in auto fuels (petrol, diesel) and cooking fuels (kerosene, LPG), which affects the
company bottom-lines and (2) In spite of the high crude oil & product prices, no increase in
LPG-kerosene subsidy from the government. The companies likely to be adversely affected are
BPCL, HPCL and IOC-IBP which have been asked to bear the marketing costs. The
counters worth considering are ONGC, Gail, IOC, IPCL and MRPL.
Shipping–
Shipping stocks have been on a rollercoaster ride with shipping rates rising, both in the dry bulk
and tanker segment. The hike in the dry-bulk rates were a natural off-shoot of the increased
demand from China but the slowdown in the Chinese demand has had an impact on the freight
rates. China had been the major factor for the surge in the freight rates. It had also emerged as
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the world’s second largest consumer of oil boosting tanker rates. The slowdown in the overall
global economy has also had a negative bearing on the shipping rates in the past few months.
The rates are expected to stabilize at the current levels given the fact that demand from China
will grow but at a slower rate. No additional tonnage is expected to be added in the short run and
it looks like the worst in terms of declining tanker freight rates may be over. SCI disinvestment
has been put in the cold storage due to the change in the government. The company being the
largest fleet owner in the country had to shelve its plans to expand its fleet to make full use of the
boom in the freight market. The company is planning to go ahead with a plan to replace around
20-25% of its tanker fleet within the next few years. Investors can continue to hold as well as
consider fresh buying in SCI, GE Shipping and Mercator Lines while continue to hold Varun
Shipping and Concor.
Pharmaceuticals–
MNC and domestic pharma companies acted as perfect defensives in the past two weeks of May,
given the uncertainty in the markets. MNC’s are expected to launch more drugs in 2009 given
the fact that India will become a regulated market. Indian companies have been actively
increasing their research activities and expanding capacities in the wake of increased
opportunities, primarily through exports. The total value of drugs expected to go off patent over
the next five years is over $ 15 billion. Opportunities have been spotted in the global generic
markets, with many drugs going off patent in the near future. Contract manufacturing activities
due to cheaper costs are also expected to shore up in the coming years. However, there are fears
of DPCO returning with the change in the government. Some good counters for buy and hold
include Ranbaxy, Aurobindo, Biocon, Cipla, DRL, Divis, Glenmark, IPCA, Krebs, Sun Pharma.
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Information Technology-
This is one sector which has the least interference from the government. The new government
does not aim at making any major policy changes in this sector as it is in some of the other
sectors. The tax exemptions were to be continued in the forthcoming budget. The BPO backlash
has died down considerably in April indicating the need for this economic rationale. Few good
counters that may be considered for investing are Infosys, Wipro, Satyam, Hughes, I-Flex,
Infotech Enterprises, Moser Baer, NIIT and Polaris.
Banks-
The banking sector had good times until with the declaration of dividend norms by the RBI,
many banks, particularly the PSU pack, witnessed a sharp fall in their stock prices. According to
these guidelines, banks with net NPAs greater than 3% of the net assets or Capital Adequacy
ratio lower than 11% will not be able to declare dividends without the prior permission of the
RBI. Moreover, the RBI has also capped the dividend payout ratio at 33% for the banks who are
eligible for doing so. These guidelines will be helpful for all the banks in the medium to long
term as it will enable them to strengthen their balance sheets and prepare themselves for the
forthcoming Basel II regime.
Consequently, not many PSU banks have enough room for raising funds from capital markets.
Limiting the FII holdings and the 10% cap on voting rights will put further consolidation in the
sector under the carpet. If the government doesn’t allow their holdings to fall below the 51%
mark, additional funds will have to be pumped in by the government itself. In the next 2-3 years,
as banks grow their balance sheets and Basel II norms need to be complied with, this will
definitely become an issue. Likelihood of rising interest rates will also have a negative impact on
the treasury holdings of banks.
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Automobiles-
The outlook for the sector still remains good in the medium term. The easy loan schemes,
improved roads, increased income and the effort to bring in small cars at cheaper rates should
give a boost to the industry. Tractor segment is likely to get further impetus with agriculture-
friendly policies of the new government which is expected to enhance the rural disposable
income. Any incentive on the excise duty front will improve the realizations of the auto
manufacturers and is likely to be reflected in the growth of the auto companies. The only concern
here is the likelihood of increase in the interest rate in future that makes auto financing an
expensive affair. Also the rise in oil prices might discourage the growth of two and four wheeler
segment. Good Investment counters are M&M, Maruti, Tata Motors, Hero Honda, Bajaj Auto,
Sundaram Fasteners, Omax Auto, Bharat Forge, Amtek and Ashok Leyland.
Power-
The Power sector has been hurt badly by the announcements in the Common Minimum Program
(CMP). An earlier regulation proposed a split in the transmission and distribution business of the
SEB’s and power distribution grids were to be sold to private players. This was supposed to be
completed by June 10 and has now been postponed. This meant that players like Reliance Energy
and Tata Power, which would have had access to newer markets in the country, would now get
adversely affected. These players had already planned to bid for power grids when they were to
be sold and also proposed power plants in U.P.
The share prices of most players had already factored the future earnings from newer markets.
The postponement has drawn a lot of uncertainty, which has got reflected in the drubbing that
these scrips have faced. Tata Power, REL, Neyveli Lignite, KEC and PTC may be considered
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strong in this sector.
Cement-
Cement sector has seen an increase in dispatches and realizations in the past few months. The
Import duties have been drastically slashed on coking coal and there has been an improvement in
operating efficiencies which should improve the bottom lines of cement companies. The good
monsoon last year coupled with some major infrastructural and housing activity is expected to
increase the off take of cement in this fiscal. As per the official data released by the Commerce
and Industry Ministry on May 25, 2009, cement production grew by 16.1 per cent to 1.11
croretonnes in April 2009, the highest among infrastructural industries. As per FICCI estimates,
the industry is estimated to grow at 8 to 9% over the next couple of quarters. The outlook for the
industry for this calendar year is positive. ACC, GACL, India Cement and Shree Cement are
worth considering for investment.
India is viewed as still the solid long-term story it was a year ago. It’s just as well that too much
of a good thing too soon is bad for even the equity markets. This period of adaptation is perhaps
running itself out now. The stabilization process is underway. The next few months would see
the markets picking up the pieces from a more benign political environment as the Government
hunkers down to business and corporate earnings, the progress of the Monsoon and valuations
come back to the fore. Through the rest of the year the market is expected to gingerly trade
higher all the way upto a maximum of 13566.83 for the Sensex (4378 for the Nifty).
Medium-term strategy
India will be less of a stock-pickers market in the next six months than it was over the past one
year. Institutional activity could get further polarized driven by liquidity considerations and the
need to seek cover from potential external shocks. Also, sectoral investing could gain currency as
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compared to the favoured bottom-up, cherry picking approach we have been accustomed to in
the past. This could lead to a degree of under-performance for several mid-cap and small-cap
stocks across the market.
Plumb for defensives, global outsourcing themes.
Sectors such as IT and pharmaceuticals, the flag-bearers of the Indian outsourcing story, have in
fact under-performed for a large part of the last twelve months and its only in the recent crash
that they have outperformed. These sectors are already benefiting from their perceived
preclusion from being politically sensitive. Other emerging India outsourcing themes such as
auto-components, pharmaceuticals and textiles too should find takers through the year. The
currency risk associated with the manufacturing sector may be difficult to determine since not all
companies hedge their receivables fully. However the external opportunity being so large,it is
expected that the currency to impact marginally overall.
SECTORS OUTLOOK
Software services continue to be well supported for now with growing volume growth and stable
price environment. The global opportunities for Indian software companies continue to expand
and their earnings models have now been cast to deliver stable and growing returns. The big risk
and negative long-term surprise to this sector emanates from a potential turbulence in the U.S.
economy and stock markets, chiefly the banking and financial sectors. However a period of
stability may prevail in the medium term although longer term .Continuing weakness for the
greenback can be foreseen. In any case, Indian software companies have come to terms with this
risk and are hedged adequately.
Indian pharmaceutical companies continue to file ever-increasing number of DMFs and ANDAs
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in their bid to prize open the U.S. generic market. The sector as a whole is poised critically to
deliver a sharp increase in earnings from FY08-09 onwards, from where the men will be
proverbially separated from the boys. In the medium term though much of the good news is in
the price and therefore the sector has ceased to rally any further, indicating that there may be
event/execution risk yet. The natural propensity of this sector to
providesuccour during hard times is what’s driving and may well continue to drive near term
outperformance. Core sectors like cement and capital goods over commodities, banks and
cyclicals are preferred since the former have a more durable underlying story to tell while the
latter would be more swayed by factors like Chinese demand, subject to greater volatility and
uncertainties. These sectors would therefore be more favoured to play for a swift short-term
rebound but no more, since the concerns that have led to their crash have perhaps been overdone
in the short - term. It must be noted, that the recent price debacles may have been exaggerated
and rendered some stocks even within our non-preferred sectors attractive from a medium-term
basis, such as TISCO, Hindalco, SBI and OBC to name a few. As such we would advocate an
individualistic approach to stocks within the sectoral strategy.
Cement looks particularly good given the improving demand-supply dynamics in the next few
years. Valuations in the sector vary sharply based on different parameters like EV/tonne and
EV/EBIDTA.
Automobiles should continue to grow further through 2009-10 as the key growth drivers remain
intact and are unlikely to change much, except interest rates, which could harden later in the
year. Automobiles also offers a direct play on growing consumer spending in urban India as well
as being a major beneficiaries from an expected good Monsoon this year.
Capital Goods sector offers a stable long term play on infrastructure growth in India. The best
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part is that it’s a stock picker's paradise here with several excellent large and mid-sized
companies to chose from. Regardless of the current policy framework, capital goods companies
have been delivering strong double-digit growth in sales and profits. Order bookings are robust
and cost structures de-risked largely from inflationary pressures. As such we see great long-term
value here.
Cyclicals, chiefly commodities like metals, allied support industries and chemicals have
benefited from the strong Chinese consumption story for the past twelve months. A softening of
prices in the past quarter 2008-09 has already seen a sharp trend reversal in these stocks.
Continued weakness through much of 2008-09 thereby keeping a lid on sentiment and stock
prices in this period is expected..
Politics throws the gauntlet
If the elections threw up a surprise then what transpired in the aftermath of the result has
stupefied financial markets. The Sensex crashed 11% on May 17th, the highest in a single day in
its history and the stock market came to a grinding halt as it hit the 10% systemic circuit-breaker
limit. The reckless utterances of the Left party leaders that raised the scepter of the country being
dragged back into the dark days of socialism, regional and global concerns relating to the price
of oil, the greenback and the direction of interest rates in the U.S. have weighed heavily on
investors.
Manic Monday will perversely be called the ‘red letter day’ in history books for more reasons
that one. Post-mortem aside, politics, after a long time has thrown the gauntlet at investors. The
markets will take it up of course, but not before it fires a volley of questions back, which this
new Government must answer unequivocally and soon when it presents its Union Budget in July.
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High institutional ownership – creates stock overhang
Reports as well as anecdotal evidence including the huge surge in FII inflows in the last one year
suggest that the FII ownership of Indian stocks has risen sharply in this period. This, from a
technical perspective portends negatively, given the weakening global position for emerging
market equities. Also note that India has been among the chief recipients of capital flows in the
region in 2008 and 2009. The FII capital flow figures in 2009 show that barring May 2009 (MTD
net FII sales are $738mn) there has been a net inflow of $3.41bn on a YTD basis. This figure is
second only to South Korea, which received over $10bn. On a
yearly basis India was third highest recipient after South Korea and Taiwan. When view against
this backdrop, the quantum of funds that have flowed out is not much.
The ownership pattern of the BSE-200 companies shows that FIIs own 18% of the stocks there
as of March 2009 as compared to 12% a year ago. For the Sensex that number is expected to be
between 18-20% today as compared to 15-16% a year ago. Of the $4bn odd invested by FIIs
since January 2009, $1.5bn came into the IPOs of ONGC and GAIL alone. These two stocks
comprise 17% of the NSE Nifty and hence suffer from a huge FII stock overhang. All these
figures suggest two things – that India’s overweight position in the benchmark indices (6% in
MSCI Emerging Markets) has perhaps led to it receiving more inflows than it should have so far
and secondly, the FII ownership is at historically high levels today. Such high ownership and
weights exposes it to relative risk of cut/downgrade in its ratings in the benchmark indices like
the MSCI indices. These factors therefore create a negative overhang of stock as far as India is
concerned.
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Global concerns – not to be trifled with
A number of longer-term issues need to be borne in mind that could create tumultuous shifts in
capital markets globally. The U.S. stock market must come to terms with a plethora of issues this
year. Needless to say that despite all the ‘happy’ numbers and projections, structural
contradictions suggests that a hard landing will come to pass. The Fed tightening, the price of the
Dollar and the $80 oil makes it a turbulent market to bet on. The Chinese economy motor too is
downshifting its gears. Prices of commodities
and freight rates have been the first casualties already followed by its stock market. Cooler China
and a flattening U.S. yield curve bodes ill for capital flows towards emerging markets and Asian
economies in general. Further debacles in either will impact global capital flows significantly
and India cannot hide from this. The latter half of fiscal 2008-09 will have several global
uncertainties dogging markets raising the risk premia all round, impacting earnings multiples and
effectively putting a lid on the markets.
In a nutshell
•Politics will mould reform and policy-making initially but economics will make its presence
felt later in the year. The concerns about the Left parties’ presence are overdone and hold lesser
devils than some of the other coalition partners. However it is the Union Budget to be presented
in July which will speak the Government’s mind and what the markets will heed more than any
amount of political double-speak
•It is not enough to take solace in the cliché of continuity of reforms as it is to hope for a
hastened pace. Equity markets will watch for that closely.
•Global economic factors, technical concerns such as FII inflows. In the face of such
resistance, investors have their work cut out for the rest of 2009
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RESEARCH OBJECTIVE
To understand the concept of Depository services.
To know the procedure of various activities-opening of A/c, dematerialization,
rematerialization, pledge, auction etc.
To know about online trading.
To study the derivative market.
To know the various strategies with respect of futures and options.
How did the stock market react.
Impact on various sectors.
How Common Minimum Programme (CMP) affected the marketplace.
Where the investors should invest now.
To know about the various sectors’ outlook.
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RESEARCH METHODOLOGY Research methodology is the way to systematically solve the research problem. In it we study the
various ysteps that are generally adopted by researcher in studying in his research problem along
with the logic behind them.
It is necessary for the researcher to know research method, technique & the methodology,
researcher also need to understand the assumption underlying various technique & they can
decide that certain techniques & procedures will be applicable to certain problem & other
will not be.
To conduct a research in any field. It is necessary that is study method & a way to approach
certain things should be correct & is systematic way. Thus to start a survey of project, its
methodology should be to the point. It is correct “methodology is the key to any survey”
The success of any desertion work largely depends upon correct selection & the application
of the nature of the proposed study, nature of information to be covered in desertion.
“A good methodology is the life blood of work” (PETER EICH)
For the descriptive research undertaken to study the satisfaction level & related issues
among the executive trainees of credit processing agency (under icici bank), mainly two
kind of data were collected viz, primary & secondary.
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DATA COLLECTION
Primary data collection:-
primary data are those which are collected a fresh & for the first time.
Personal unstructured interview of the employee of the bank.
Distribution of the questionnaires among the bank employee to gather information.
Secondary data collection:-
Secondary data which has already been collected & analyzed by some one else
Documents given by bank.
Internet information & websites.
Book & magazines.
Information given by customers
Registration kit and information broacher
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SAMPLING PLAN
Population or
universe
All the individual living in Mumbai.
Sampling unit A customer who invest in share market.
Sampling size 90 people from the selected population.
Sampling method The Judgment sampling method.
Sampling area banksand various markets of Mumbai.
DATA ANALYSIS{BASED ON INVESTORS OF SHARE MARKET IN VARIOUS REGION OF
MUMBAI} Representing in the form of table & chart
There are some areas of MUMBAI region from where I got the investors response which are already
invests their money in share market through Religare. From where I found some persons either most
satisfied or least satisfied. Analysis is given below :-
SANTACRUZ:
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In this area 11 % investors are dissatisfied, 17 % satisfied, 28 % good, 44 % excellent .
44%
28%
17%
11%
EXCELLENT
GOOD
SATISFIED
DISSATISFIED
SANTACRUZ
11 % DISSATISFIED
17 % SATISFIED
28 % GOOD
44 % EXCELLENT
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GHATKOPAR:
In this area 17 % investors are dissatisfied, 22 % satisfied, 22 % good, 39 % excellent .
39%
22%
22%
17%EXCELLENTGOOD
SATISFIED
DISSATISFIED
THANE:
GHATKOPAR
17 % DISSATISFIED
22 % SATISFIED
22 % GOOD
39 % EXCELLENT
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In this area 6 % investors are dissatisfied, 22 % satisfied, 33 % good, 39 % excellent .
39%
33%
22%6%
EXCELLENTGOOD
SATISFIED
DISSATISFIED
THANE
6 % DISSATISFIED
22 % SATISFIED
33 % GOOD
39 % EXCELLENT
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DIVA:
In this area 17 % investors are dissatisfied, 22 % satisfied, 28 % good, 43 % excellent .
33%
17%22%
28%EXCELLENTGOOD
SATISFIED DISSATISFIED
DIVA
17 % DISSATISFIED
22 % SATISFIED
28 % GOOD
43% EXCELLENT
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FINDINGS
During the “Customer Awareness About Share Trading” in relation to Religare main points are founded:
Dematrilization is basic tool of share trading.
Equity fund is not complicated. It is clear and specific fund.
By the increase demand of equity, company can get more profit.
The current knowledge is very compulsory and all the event occurring in the world are also
mention for better profit.
Market is uncertain and fluctuates by a tiny event.
CONCLUSION
What SEBI and its political bosses need to realize is that stock market is by nature a nervous
animal.
There is something else the government can do to make the markets less volatile: get all parties,
not just allies, to agree to a minimum program of reform. But that’s something as impossible as a
stock market.
The organization should paying more attention towards the proper publicity of the product and
facilities which differ the company with his competitors.
Company should open a client problem solving department where clients can fill their problems
so transparency can take place during the trading and any other transaction and try to fulfill
better facilities to the clients.
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LIMITATIONS
Lack of awareness of stock market
Since the area is not known before it takes lot of time in convincing people to start investing in
shares primarily in ipo’s
No proper assurance of right information
The main data sources are websites, telephonic information and offices visit.
The data on websites might be possible, not get updated.
The marketing person might be possible , is not through with all concepts to whom I
contacted.
Sometimes, they try to hide information
Services of competitors
We cannot give proper comment on competitor’s services till we use it. But I try to collect as
accurate information as possible as we all know services are intangible and we cannot predict its
quality, it is a thing a feel not to see.
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Most people are comfortable with traditional brokers
As people are doing trading from there respective brokers, they are quite comfortable to trade via
phone.
Lack of techno savvy people and poor internet penetration
Since most of the people are quite experienced and also they are not techno savvy. Also Internet
penetration is poor in India.
Some respondents are unwilling to talk
Some respondents are unwilling does not respond, as they are quite annoyed with the phone call
and some don’t have time.
Inaccurate leads
Sometimes leads are provided which had error in it which varies from only 5 digit phone
numbers to wrong phone number.
Misleading concepts
Some people think that shares are too risky and just another name of gamble but they don’t know
it’s not at all that risky for long investors.
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QUESTIONNAIRE
ABOUT AWARENESS OF CLIENT FOR SHARE MARKET
Please tick ( ) individually for each of the following parts.
Q.1: Are you interested in share trading ?(a) Yes { }(b) N0 { }
Q.2: In which broker company you prefer for share trading ?(a) Religare { }(b) Carvey { }(c) Sharekhan { }(d) Any other { }
Q.3: Are you satisfied with the return from it ?(a) Yes { }(b) No { }
Q.4: What is expected rate of return ?(a) 5% { }(b) 10% { }(c) 15% { }(d) More than 15% { }
Q.5: What is actual rate of return ?(a) According to expectation { }(b) Below the expectation { }(c) More than expectation { }
Q.6: Which is more profitable business to invest ?1. Agriculture { }2. Textitle { }3. Bank { }4. Any other { }
Q.7: Which is more safer investment ?(a) Share { }
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(b) Debt { }(c) Bank { }(d) Any other { }
Q.8: From where you get the knowledge about your investment?
(a) By broker Co. { }(b) Newspaper { }(c) Television { }(d) Any other { }
Q.9: In which bank you have your saving account ?(a) Nationalized { }(b) Private sector { }
Q.10: Why would you like to invest your money ?(a) For interest { }(b) For future { }(c) Any contingencies { }(d) Any other object { }
Q.11: Have you trading account in Religare ?(a) Yes { }(b) No { }
Q.12: Are you satisfied with the service provided by the Religare?
(a) Yes { } (b) No { }
Q.13: If No, Please specify the reason ? ---------------------------------------
Q.14: Are you interested to invest further with Religare ?(a) Yes { }(b) No { }
Q.15: Why would you like to invest with Religare ?(a) It is safer { } (b) It’s service is faster than any other { }(c) It provide sufficient return { }(d) Any other { }
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BIBLIOGRAPHY
Books & Journal:
Philip Kotler& Kevin Keller, Marketing Management ; 12th Edition , Prentice-Hall India,
2006
Ramaswamy, V.S., &Namakumari, S., Marketing Management: Planning, Implementation & Control, Macmillan India, DaryaGanj,
Marketing Research, Dacid j. luck Ronald S.Rubin Prentice Hall of India Pvt. Ltd
Websites:-
http://www.s-m-a-r-t.com/index.htm
http://www.google.co.in/search?hl=en&q
http://www.religareseurities.com
http://www.nseindia.com
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