poddar final unicon
TRANSCRIPT
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A
Project Report
ON
ANALYSIS OF THE POTENTIAL OF EQUITY
MARKET AND EQUITY PRODUCT
at Unicon Investment
Submitted in partial fulfillment of therequirement of MIB program of
University of RajasthanCompany Guide
VIKAS AGGARWALBranch Head (Alwar)
SUBMITTED TO: SUBMITTED BY:
RAMESHWAR PRASAD
MIB II nd year
PODDAR INTERNATIONAL COLLEGE1
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(2009 2011)
DECLARATION
I Rameshwar Prasad, student of MIB-II, hereby declare that the
survey report entitled to me is
ANALYSIS OF THEPOTENTIAL OF EQUITY MARKET AND EQUITY
PRODUCT .This report is a result of my own efforts which
is based on the guidance given by the company guide &
faculty guide.
PLACE: Jaipur
(Rameshwar Prasad)
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ACKNOWLEDGEMENT
Its my privilege and pleasure to thank to all thosewho have extended their full cooperation
individually or collectively to me and encouragedme to carry out this project as a part of mytraining.
I take this opportunity to express mygratitude towards division of Unicon investment &solution ltd. as a whole. I am extremely thankful to
Mr Vijay Chopra Regional Head, for permitting meto carry out the summer project in thisorganization.
I am highly grateful to Mr.Vikas Aggarwal,Branch Head and to Mr. Jitendra Jaiswal,Relationship Manager for their valuable guidanceto carry out this study. It is only because of hisunavoidable cooperation I managed to successfullycomplete my project on time.
I am also very thankful to all the concernedrelationship officers and staff members who aredirectly or indirectly involved in carrying out myproject and have extended their able guidance andcooperation in this project work.
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Finally I thank to Mr. S K Khandelwal, Directorof Poddar International College and all other facultymembers and all my colleagues those whoprovided their guidance and enthusiastic supportto carry out this project work.
(Rameshwar Prasad)
PREFACE
To excel in any field practical training is integral part to imply
theoretical studies to a practical approach. It makes the individual to the
actual practical condition, which could have been impossible to betought in classroom. A trainee learns dealing with the client and
management-working environment along with todays market, which is
changing at incredible pace.
It is good to have good knowledge. It is good to have good will but it
is essential to have a good training.
(Pandit Jawaharlal Lal Nehru)
In addition technological changes we are witnessing power shift
from old hectic and weird ways of doing business. These technological
developments have brought revolutionary changes in the market and also
in the mindset of the people, which might be positive and encouraging
for a section of society and adverse for the others. Introduction of paper
less working in stock market and any where trading has given a fresh
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impetus to the market and has secure a distinct image in the minds of the
potential clients.
It is always desirable by the management to know the perception
and the new segment if any to foray to increase the consumer base and
business eventually.
CONTENTS
COMPANY PROFILE
1. ORGANIZATION & MANAGEMENT2. HR PROCESS
3. PRODUCT & SERVICE
4. COMPETITORS
5. VISION & MISSION
6. FUTURE PLAN
7. ON THE JOB TRAINING
8. ACCOUNT OPNINIG
9. DEMAT PROCESS
OBJECTIVE OF THE STUDY
RESEARCH & METHADOLOGY5
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1. ABOUT MARKET
2. BSE
3. NSE
4. OPPURTUNITIES AVAILABLE OF FOREIGN INVESTERS
QUESTIONNAIRES
FINDINGS
CONCLUSION
BIBLIOGRAPHY
COMPANY PROFILE
Unicon has been founded with the aim of providing world classinvesting experience to hitherto underserved investor community. The
technology today has made it possible to reach out to the last person in
the financial market and give him the same level of service which was
available to only the selected few.
We give personalized premium service with reasonable
commissions on the NSE, BSE & Derivative market through our Equity
broking arm Unicon Securities Pvt Ltd. and Commodities on NCDEX
and MCX through our Commodity broking arm Unicon Commodities
Pvt. Ltd. With our sophisticated technology you can trade through your
computer and if you want human touch you can also deal through our
Relationship Managers out of our 97 branch network spread across the
nation.
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We also give personalized services on Insurance (Life & General)& Investments (Mutual Funds & IPO's) needs, through our Insurance &
Investment distribution arm Unicon Insurance Advisors Pvt. Ltd. Our
tailor-made customized solutions are perfect match to different financial
objectives. Our distribution network is backed by in-house back office
support to serve our customer promptly.
The company, created to provide premium service with reasonablecommissions, currently maintains more than 40000 individual accounts.
Unicon distributes Insurance (Life & General) and Mutual Funds
through it's subsidiary Unicon Insurance Advisors Pvt. Ltd. We
alsodistributes IPO's through the same entity. The objective here is to
offer our customers all the investments related products under same roof.
Unicon is staffed by financial and technology experts, unicon
provides a certified, skilled environment for individuals to receive
trading information and execute trades, both online and offline. Thecompany consists of over 2000 employees nationwide, including over
400 at the headquarters. Unicon employees work together as a team to
continue the tradition of excellent customer service and support.
ORGANISATION AND
MANAGEMENT7
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Unicon is a professionally managed organization with a board
of directors consisting of eminent persons who represent variousfields. The board primarily focuses on strategy formulation, policy
and control, designed to deliver increasing value to shareholders.
Mr. Gajendra Nagpal, Founder & CEO: Mr. Nagpal is responsible
for day to day running of the company. A management graduate by
qualification, Mr. Nagpal brings with him over 14 years of experience
in the stock market. Before joining Unicon he has served at seniorpositions for 5 years with Kotak securities at a regional level and
Indiabulls securities for 4 years at national level assignments. Mr.
Nagpal brings with him the rich experience of building a retail
broking network.
Mr. Ram M Gupta, Co-Founder & President: Mr. Gupta through
his aggression and dynamism brings energy to the team. He has 8years of stock market experience behind him and is responsible for
driving the sales team. Mr. Gupta has held senior level positions in
Karvy stock broking and Indiabulls Securities. Mr. Gupta is
supported by a team of over 850 relationship mangers spread over 94
locations across the country.
Mr. Sandeep Arora, Chief Operating Officer:
Mr. Arora bringswith him over 11 years of experience of managing operations of stock
broking company. Mr. Arora before taking over as head of operations
at Unicon was responsible for managing the operations of Indiabulls
Securities Ltd. Mr. Arora is supported by his team of over 400 people
helping him to give world class service to the clients.
Mr. Vikas Mallan, Chief Financial Officer: Mr. Mallan A
Chartered Accountant, Company Secretary and Cost Accountant byprofession. Mr. Mallan has over 14 years of experience in the area of
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finance. Before joining Unicon he has served at senior level positions
with Rediff.com, Reliance Telecom and Koshika Telecom. Hisexperience includes a Nasdaq listing of an Indian internet company
and Head of Finance of a leading Law firm. Mr. Mallan is heading
Distribution / Mutual Fund initiative and is supported by 850
employees nationwide.
Ms. Anjali MukhijaCCO: heads compliance. She brings with her 12
years of experience in the stock markets. Her current job profile
includes broking operations, client relations & grievance redressal,coupled with Public dealings. Prior to joining Unicon, she was with
the National Stock Exchange, Delhi Regional Office for 10 years and
had held senior position for a brief period in a reputed broking house.
Mr.Trinadh Kiran National Head(E-Broking): is an MBA
marketing professional from Aligarh Muslim University and has done
10 months research in Capital Markets from IIM-Ahmedabad. Hebrings with him a total work experience of 7 years and has worked
with almost all big giants of capital market like India Infoline, India
Bulls and Net worth Stock Broking. He is associated with Unicon
since June 2005. He has extensive knowledge of Retail Broking and
expertise in E-Broking.
Mr.Vijay Chopra National Head (Business Alliances): Mr. Vijay
Chopra is a management graduate from Indian Institute of ForeignTrade, New Delhi. He has a illustrious professional track record of
spanning over 11 years wherein he has handled various assignments
at a senior levels with some of the best names in the Consulting,
FMCG & healthcare space. His forte has been supply chain
management, New Product Launches, Sales, Marketing, Product
management & Training. Mr. Chopra along with his team handles
over 300 business partner network which is spread over the entire
geographical spread of the country.
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Mr.Ashish Kukreja Head-PCG: Has the responsibility of handlingPCG business with Unicon. He brings with him a wide industry
exposure and joined Unicon in July 2006 after rendering his services
to Kotak Securities, where he was taking care of franchisee business
and later started handling HNI desk. He is an MBA (finance) from
ICFAI Business School.
Ms. Deepa Mohamed Vice President -HR & Training: Sqn. Ldr.
(Retd.) Deepa Mohamed, pioneer as first batch of women Officer in
Indian Air Force is an Electronics & Communications engineer from
Netaji Subhas Institute of Technology(Delhi). She has also undergone
Aeronautical Engineering course from AFTC, Bangalore and Post
graduation specialization in Human Resource Management from
XLRI-Jamshedpur. She has 12 years of working experience in
personnel management and administration and is associated with
Unicon since September, 2006. She has been instrumental in setting
up Human resource and Training division. She has worked as an ODconsultant and her expertise lies in Organization development and
change management.
HUMAN RESOURCES
PROCESSES
Unicon prides itself on being an employee friendly company. We have
adopted an extremely positive HR policy that ensures the best possible
results through effective pre-induction and post-induction of personnel
and imparting of requisite training.
Retention :10
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In order to get the best out of its employees and retain them in a high
attrition rate industry, Unicon has established a number of attractiveschemes and incentive programs for its employees. All employees are
full time salaried employees. These salaries, which are among the top
tier of industry earnings, are complemented by performance based
incentives. Impeccable attendance rates and employee longevity are also
recognized and bonuses paid accordingly. Unicon believes that
recognition programs are vital to maintaining the highest levels of
motivation. Career Development
For promising employees, Unicon has a career development program inplace. Employees ready to take on higher responsibilities are identified
and relevant training is imparted upon them. Employees are also
encouraged to upgrade their skills from external sources if these skills
are relevant to their current profiles. Training
Unicon adopts a scheduled training process and a modular approach for
imparting theoretical and practical knowledge in its trainees.
Training Schedule :
Employees, on being hired, go through an intensive induction training
module, which covers technical enhancement and orientation in cross
cultural sensitization. The induction training is followed by process
specific training, which is tailor-made to the client's requirement
Training Tools
Unicon's trainers make use of a wide variety of training tools and
applications to make the learning process both fun and interesting. Tools
and methodologies used include Discussions, Lecture Debates,
Assignments, Shadowing Process, Movie Clips, Reading exercises.
Portfolio:
The Portfolio Tracker is a simple yet powerful tool that lets you monitor
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the value of your investments and other securities you have got your eye
on. To set up your portfolio, all you need to do is enter the quantities ofyour investments in different things, and the price you made your
purchases and sales at. The Portfolio Tracker is an information service
only. You do not buy, sell, exchange or hold securities through the
Portfolio Tracker. Although the Portfolio Tracker lets you monitor
certain securities, it is not intended to reflect your actual holdings or
account information at any broker/dealer.
PRODUCT AND SERVICES
Unicon customers have the advantage of trading in all the market
segments together in the same window, as we understand the need of
transactions to be executed with high speed and reduced time. At the
same time, they have the advantage of having all kind of Insurance &
Investment Advisory Services for Life Insurance, General Insurance,Mutual Funds, and IPO's also.
Unicon is a customer focused financial services organization providing a
range of investment solutions to our customers. We work with clients to
meet their overall investment objectives and achieve their financial
goals. Our clients have the opportunity to get personalized services
depending on their investment profiles. Our personalized approach
enables clients to achieve their Total Investment Objectives. Our keyproduct offerings are as follows:
1. Equity Trading
2. Commodity Trading
3. PCG
4. NRI Services
5. Mutual Fund12
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6. Life Insurance
7. General Insurance
8. Depository Services
9. Portfolio Tracker
10. Backoffice
1) Equity Trading Unicon offers a unique feature where our customersget to trade on NSE, BSE and Derivatives all on one screen. Unicon also
provides the facility to put orders over the phone through Relationship
Managers. You can always have access to our 97 branch offices located
in the prime locations of the city, should you wish to trade "walk in".
Products offerings for Trading
Unicon Plus
Unicon Swift
i)UniconPlus
It enables users to get a browser based trading terminal that can be
accessed by a unique ID and password. This facility is available to all
our customers the moment they get registered with us. Features
Trading at NSE, BSE and Derivatives on single screen.
Add multiple scraps on the market watch.
Greater exposure for trading on the available margin.
Common window for display of market watch and order execution.
Real time updating of exposure and portfolio while trading.
Offline order placement facility.
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Stop-loss feature.
Competitive commissions.
Banking integration with ICICI Bank and HDFC Bank.
Online Integration of trading a/c with two common depositories to
help move your shares to and fro with ease.
Proxy link to enable trading behind firewalls.
ii) Unicon swift
Self directed investors get an application based terminal which is replica
of NEAT terminal for trading actively with more speed , greater
analytical features and priority access to relationship manager to trade
over the phone.
COMPETITORS
These are the competitors of our company: -
Motilal oswal securities
India Bulls
KARVY
Religare
Reliance Money
Anand Rathi
VISION14
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To provide the most useful and ethical Investment Solutions - guided
by values driven approach to growth, client service and employee
development.
MISSION
To create long term value by empowering individual investors
through superior financial services supported by culture based on
highest level of teamwork, efficiency and integrity.
Retail Broking Arm of unicon
Share Holding Pattern
55%
18%
19%
8%
Promoters HSBC Pvt Equity India Fund Ltd
First Cartyle Ventures Mauritius Intel Pacific Inc
SERVICES OFFER BY UNICON15
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FUTURE PLANS
Maximum use of available resources and maintaining the clients,
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Training and
Seminars
Investment and
Trading Services
Research BasedInvestment
Advice
Integrated Demat
Facility
Technology Based
Investment Tools
EQUITIES
DERIVATIVES
COMMODITIES
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Strong advisory role through Fundamental & technical research.
New initiatives - Portfolio Management Services & Commodities
trading
Maintaining a highly professional team.
Developing our own highly developed software.
By 2009 Unicon will be listed among the most reputed
companies in India.
ON THE JOB TRAINING
Objective:-
The objective of the on the job training are-
To open Demat a/c according to target given to me.
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To create awareness among the customers about the demat a/c &
now to open it.
To Undertake assignment/jobs along with the day-to-day
functions of the company.
To gain a deeper understanding of the work culture, deadlines,
pressure etc. of an organization.
Strategy:-
The Strategies employed to achieve the proposal target are: -
Generate the leads by work in branch and talk to the
target customer and take their contact no. and address.
Call the customers on the given contact no. And take
appointment and meet them personally and convince them to
open demat a/c.
Arrange canopy and contact the customer.
Visit any corporate office and take where H.R. manager
appointment and given all detail about the schemes which is
offer by the Unicon like open a/c free of cost.18
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Use the references of the existing customers.
Use personal contacts.
Limitation:-
In On the job training when we try to open demat a/c some problem
that we face it this is some limitation: -
Some time customer doesnt know about demat a/c and how to the
process is done so we need to gives more explanations to customer.
Some customer compare Unicon brokerage rate to another
companys brokerage.
Some time old or existing customer complains Unicon facilities.
Unawareness about the allotted area for survey
Lack of cooperation from the employees of other companies:
During the visit to the area of the project the customers were not
co-operative. They were engrossed in their work and could hardly
spare much time for detailed discussions.
Customers dont have trust in private companies.
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To get contact numbers of individual is a difficult task.
Even after getting contact numbers of individuals it is somewhat
difficult to make them interested towards different schemes and get
the next appointment.
METHODOLOGY
My training includes the following stages:
In the first phase we are trained and they taught us different things
about capital market as well as share market.
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After that they conduct a mock viva & asked about the real life
problems faced by the customers and our understanding with the
services offered by Unicon.
I got practical understanding of the services by the seniors.
They provide leads and I have tried converting them into clients.
Providing them live information about stock trading.
Understanding of technical as well as fundamental researchreports.
Help company in its promotional activities, as company is an
expansion mode.
ACCOUNT OPENING
The investor can open an account with any depository participant of
CDSL. An investor may open an account with several DPs or he may
open several accounts with a single DP. There are several DPs offering
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various depository-related services. Each DP is free to fix its own fee
structure.
Investors have the freedom to choose a DP based on criteria like
convenience, comfort, service levels, safety, reputation and charges.
After exercising this choice, the investor has to enter into an agreement
with the DP. The form and contents of this agreement are specified bythe business rules of CDSL.
1. TYPE OF ACCOUNT
Type of depository account depends on the operations to be performed.There are three types of Demat accounts, which can be opened with a
depository participant viz.
(a)Beneficiary Account
(b)Clearing Member Account and
(c) Intermediary Account.
2. DOCUMENT FOR VERIFICATION
For the purpose of verification, all investors have to submit the
following documents along with the prescribed account opening form.
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2.1 PROOF OF IDENTITY
A beneficiary account must be opened only after obtaining a proof of
identity of the applicant. The applicant's signature and photograph must
be authenticated by an existing account holder or by the applicant's bank
or after due verification made with the original of the applicant's
Valid passport,
Voter ID, driving license
PAN card with photograph;
And further,
2.2 PROOF OF ADDRESS
The account opening form should be supported with proof of address
such as :
Verified copies of ration card
Passport
Voter ID
PAN card
Driving license
Bank passbook.
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An authorized official of the Participant, under his signature, shall verify
the original documents. In case any account holder fails to produce the
original documents for verification within the aforesaid period of 30
days, it must be immediately brought to the notice of CDSL.
Failure to produce the original documents within the prescribed time
would invite appropriate action against such account holders, which
could even include freezing of their accounts.
THE DEMAT PROCESS
A holder of depository eligible securities may get his physical holding
converted into electronic form by making a request through the DP with
whom he has his beneficiary account.
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1. He company/issuer should have established connectivity with CDSL.
Only after such connectivity is established, the securities of that
company/issuer are recognized to be "available for dematerialization".
2. The holder of securities should have a beneficiary account in the same
name as it appears on the security certificates to be dematerialized.
3 The request should be made in the prescribed dematerialization request
form.
STEPS
1. Client/ Investor submit the DRF (Demat Request Form) and physical
certificates to DP. DP checks whether the securities are available for
demat. Client defaces the certificate by stamping Surrendered for
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Dematerialization. DP punches two holes on the name of the company
and draws two parallel lines across the face of the certificate.
2. DP enters the demat request in his system to be sent to CDSL. DP
dispatches the physical certificates along with the DRF to the R&T
Agent.
3. CDSL records the details of the electronic request in the system and
forwards the request to the R&T Agent.
4. R&T Agent, on receiving the physical documents and the electronic
request, verifies and checks them. Once the R&T Agent is satisfied,
dematerialization of the concerned securities is electronically confirmed
to CDSL.
5. CDSL credits the dematerialized securities to the beneficiary account
of the investor and intimates the DP electronically. The DP issues a
statement of transaction to the client.
STEPS FOLLOWED TO OPEN AN
ACCOUNT
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Step: 1 Step: 2
Get the Leads Make calls
Step: 4 Step: 3
Attend the Appointment Fix the Appointment
Step: 5 Step: 6Documentations Account Opened
Step: 8 Step: 7
Make the client traded Trading Kit
OBJECTIVES OF THE STUDY
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INTRODUCTION: STOCK MARKET
One of the major factors causing todays volatility is the unanimity
in investors inclination towards new economy stocks and their shunning
of old economy stocks. This has led to a huge polarization in the
markets. Todays markets are characterized by large investment flows
into companies with emerging businesses -- which typically have lowfloating stock -- leading to wild price swings.
Volatility has gone up as actively managed funds churn their
portfolios more often. Momentum investing by day traders and fund
managers exacerbates this. Soon, stocks are not bought on the basis of
their fundamental value but on the greater fool theory.
Unrealistic investor expectations driven by the recent history of the
boom in IT stocks is a cause for concern: now, the quality of the stock
and fundamentals are ignored in a market characterized by daily
assessment of profits and losses. Recent price history clouds the
investors minds so much that they start treating that price as the real
value of the stock and dont take a longer perspective of the company.
The new economy stocks are a different breed. There is a lot of
theme or concept investing taking place in these stocks now. It is
difficult to quantify the future of the businesses and put a value to those.
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To discount all the future cash flows and put a value to the company is
passe and PEG ratios based on the next couple of years earnings is inthe near term high growth rate in these businesses is overshadowing the
pricing of risk and technological obsolescence for a particular company.
Market volatility is a sign that investors are unsure of how to value these
stocks. In the minds of investors, there is a battle going on between this
great new paradigm and the valuations of the stocks. In such a scenario,
mood swings between hope and fear cause volatility.
The volatility in new economy stocks reflects systemic changes
taking place in the underlying businesses. In the boardrooms of
companies, long gone are the months of planning and debate on capital
allocation, mergers/acquisitions and joint ventures. In the Internet age, a
three-month delay can be the difference between success and failure.
Also, we are now in an age when companies can think of becoming
multinationals in a short span (e.g. Yahoo, Amazon), when established
age old companies see their fortunes dip very fast (e.g. Britannica) and
when companies can go boom and then come tumbling down in a couple
of years (e.g. Netscape). When businesses are witnessing such rapid
stratospheric booms and busts, it is natural to expect their stocks to be
volatile.
In times of extreme volatility, investments in diversified equity
funds offer a hedge against stock specific risk. The regulator should
leave the pricing of the stocks to markets and its play on fear and greed,
but should come down heavily on rigging induced volatility. It should
clamp down on insider trading and selective information leaks.
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Information dissemination when done timely and uniformly to all
investors would bring in transparency and should help arrest volatility tosome extent.
The margin requirement in the new economy stocks should be
fixed at a high level, as investors will have to learn to live with high
volatility in these stocks.
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ABOUT BOMBAY STOCK EXCHANGE
(BSE)
INTRODUCTION
The Stock Exchange, Mumbai, which was established in 1875 as "The
Native Share and Stockbrokers Association" (a voluntary non-profit
making association), has evolved over the years into its present status as
the premier Stock Exchange in the country. It may be noted that the
Stock Exchange is the oldest one in Asia, even older than the Tokyo
Stock Exchange, which was founded in 1878.
The Stock Exchange, Mumbai (BSE) is generally referred to as the
Gateway to the capital market in India. It is a lynchpin of the IndianCapital market. Its governing board and administration are keenly aware
of the future needs of the exchange to maintain its lead role. As Indian
economy is opening up, the Exchange has brought its operations at par
with international standards. It is poised to take advantage of changes in
Indian economic deregulation to expand the market and make the
security market, in India, more transparent and more liquid.
However, the objectives and the role of the Stock Exchange, Mumbai
has remained the same as enunciated by our founding fathers and given
to us as a mandate in 1887 through the charter. These objectives are:
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1. To safeguard the interest of investing public having dealings on the
Exchange and the members.
2. To establish and promote honorable and just practices in securities
transactions.
3. To promote, develop and maintain a well-regulated market for
dealing in securities.
4. To promote industrial developments in the country throughefficient resource mobilization by way of investment in corporate
securities.
The Exchange while providing an efficient market also upholds the
interests of the investors and ensures redressal of their grievances,
whether against the companies or its own member-brokers. It also strives
to educate and enlighten the investors by making available necessary
informative inputs.
A Governing Board comprising of 9 elected directors (one third of them
retire every year by rotation), an Executive Director, three Government
nominees, a Reserve Bank of India nominee and five public
representatives, is the apex body, which regulates the Exchange anddecides its policies.
The Governing Board following the election of directors annually
elects a President, Vice-President and an Honorary Treasurer from
among the elected directors.
The Executive Director as the Chief Executive Officer is
responsible for the day-to-day administration of the Exchange.
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The Exchange has obtained permission from Securities and
Exchange Board of India (SEBI) for expansion of its BSE-On-Line-Trading (BOLT) network to locations outside Mumbai. In terms of the
permission granted by SEBI, the members of the Exchange are free to
install their trading terminals to cities where there are no Stock
Exchanges. However, at centres where the other Exchanges are located,
the Exchange is required to sign a Memorandum of Understanding with
these Exchanges permitting it to install the BOLT terminals in their
jurisdictional areas.
In terms of organization structure, the Board formulates larger
policy issues and exercises over-all control. The committees constituted
by the Board are broad-based. The Managing Director and a
management team of professionals manage the day-to-day operations of
the Exchange.
The Exchange has a nation-wide reach with a presence in 417
cities and towns of India. The systems and processes of the Exchange
are designed to safeguard market integrity and enhance transparency in
operations. During the year 2005-2006, the trading volumes on the
Exchange showed robust growth.
The Exchange provides an efficient and transparent market for
trading in equity, debt instruments and derivatives. The BSE's On Line
Trading System (BOLT) is a proprietary system of the Exchange and is
BS 7799-2-2002 certified. The surveillance and clearing & settlement
functions of the Exchange are ISO 9001:2000 certified.
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LISTING OF SECURITIES
Listing means admission of the securities to dealings on a
recognized stock exchange. The securities may be of any public limited
company, Central or State Government, quasi-governmental and other
financial institutions/corporations, municipalities, etc.
The objectives of listing are mainly to:
Provide liquidity to securities;
Mobilize savings for economic development;
Protect interest of investors by ensuring full disclosures.
The Exchange has a separate Listing Department to grant approval for
listing of securities of companies in accordance with the provisions of
the Securities Contracts (Regulation) Act, 1956, Securities Contracts
(Regulation) Rules, 1957, Companies Act 1956, Guidelines issued by
SEBI and Rules, Bye-laws and Regulations of the Exchange.
A company intending to have its securities listed on the Exchange has tocomply with the listing requirements prescribed by the Exchange, which
are as under:
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[I] New Companies
a. Minimum Capital: New companies can be listed on the Exchange,
if their Issued & Subscribed Equity Capital after the public issue, is
Rs.5 crores and above.
b. Minimum Public Offer: As per Rule 19(2) (b) of the Securities
Contracts (Regulation) Rules, 1957, securities of a company can be
listed on a Stock Exchange only when at least 25% of each class or
kind of securities is offered to the public for subscription. For this
purpose, the term "offered to the public" means only the portion
offered to the public and does not include reservations of securities on
firm or competitive basis.
SEBI may, however, relax this condition on the basis of
recommendations of stock exchange(s), only in respect of a Government
company defined under Section 617 of the Companies Act, 1956.
[II] Companies listed on other stock exchanges
The companies listed on other Stock Exchanges and seeking listing on
this Exchange are required to fulfill the following criteria:
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Minimum Issued Equity Capital of Rs.3 crores to Rs.10 crores;
Profit track record for at least three years;
Minimum Market Capitalisation of Rs.20 Crores, based on average
price of last six months;
Trading for a minimum 50% of the total trading days during the
same six months on any stock exchange;
Minimum average volume traded per day during the last three
complete months should be 500 shares and minimum 5 trades per
day;
25% of the issued capital should be with public (including body
corporates) and minimum 15 shareholders per Rs. 1 lakh of capital in
the public category.
[III] Companies delisted by this Exchange seeking relisting on this
Exchange
The companies delisted by this Exchange and seeking relisting are
required to have a minimum Issued & Subscribed Equity Capital of
Rs.10 crores
"Z" Group
The Exchange has introduced a new category called "Z Group" from
July 1999 for companies who have not complied with and are in breach
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of provisions of the Listing Agreement. The numbers of companies
placed under this group as of August 31, 1999 are 293.
One Window Clearance
Since April 1997, the Exchange has introduced the concept of "One
Window Clearance" for listing of public issue of securities of
companies, by allocating the companies public issues alphabeticallyamongst the Exchange officials. A company is served by one official of
the Listing Department during the entire process of listing of its
securities, commencing from approval of its Memorandum and Articles
of Association upto granting of trading permission for its securities and
release of 1% security deposit.
The number of companies listed at the Exchange as on August 31, 1999
was 5852. This is the highest number among the Stock Exchanges in the
country.
TRADING
The Exchange has switched over from the open outcry trading system to
a fully automated computerized mode of trading known as BOLT (BSE
On Line Trading) System. This system, which is both order and quote
driven, was commissioned on March 14, 1995. It facilitates more
efficient processing, automatic order matching and faster execution of
trades. Above all, the system is more transparent. The members now
enter orders/quotes on their Trader Work Stations (TWSs) in their
offices instead of assembling in the trading ring.
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The scrips traded on the Exchange have been classified into A, B1,
B2, C F and Z group. The number of scrips listed on the Exchange
under A, B1 and B2 groups which represent the equity segments as
on August 1999 was 149, 1116 and 4740 respectively. The F group
represents the debt market (fixed income securities) segment wherein
650 securities were
listed as at the end of August 1999. The 'Z group comprises of 293
scrips as of August 1999. The C group covers the odd lot securities in
A, B1 & B2 groups and Rights renunciations.
The Stock Exchange, Mumbai, is the only Stock Exchange in the
country to provide a facility of on-line trading in odd lot securities and
Rights renunciations. This facility of trading in odd lots of securities and
Rights renunciations not only offers an exit route to investors to dispose
of their odd lot of securities but also provides them an opportunity to
consolidate their securities into market lots. Trading in this segment
covers all the scrips listed in the equity segment.
The trading cycle for all these groups of securities is weekly.
The trading cycle for A, B1, B2 and C group securities representing
the physical segment is from Monday to Friday and that for F group
securities is from Thursday to Wednesday. The transactions in A group
scripts are allowed to be carried forward from one settlement to another
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settlement subject to a maximum of 75 days from the date of original
transaction. The Stock Exchange, Mumbai is the first Exchange in thecountry to provide the facility of carry-forward of outstanding positions
in A group scrips. The trading session for carry forward of transactions
from one settlement to another is conducted on Saturdays, i.e., at the end
of every trading cycle in the physical segment.
Trading on the BOLT system is conducted from Monday to Friday
between 10:00 a.m. and 3:30 p.m. while the carry-forward session for
A group securities is conducted on Saturdays between 10:00 a.m. and
12:30 p.m.
The Information Systems Department of the Exchange generates the
following statements, which can be downloaded by the members in their
back offices on a daily basis:
a. Statements giving details of the daily transactions entered into by the
members.
b. Statements giving details of margins payable by the members in
respect of the trades executed by them.
The members are allowed to enter into transactions on behalf of their
Institutional clients, viz., Scheduled Commercial Banks, Indian
Financial Institutions (IFIs) & Foreign Institutional Investors (FIIs) andMutual Funds registered with SEBI. The settlement of the trades (money
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and securities) done on behalf of the Institutions may be either through
the member himself or through a SEBI registered Custodian appointedby an Institution. In case the delivery/payment is to be given or taken by
a Custodian on behalf of an Institution, the former has to confirm the
trade done by a member. For this purpose, the Custodians have been
admitted as members of the Clearing House. In case the Custodian does
not confirm an institutional transaction, the liability for pay-in of funds
or securities devolves on the concerned member.
SETTLEMENT AND CLEARING
Pay-in and Pay-out for "A, B1, B2 & C group of securities
The trades done by the members during the weekly trading period from
Monday to Friday are settled by payment of money and delivery ofsecurities in the following week. All deliveries of securities are required
to be routed through the Clearing House, except for certain off-market
transactions, which, although are required to be reported to the
Exchange, may be settled directly between the members concerned.
The Information Systems Department of the Exchange nets off all
deliverable trades (purchases and sales in each scrip) done by a member
during a settlement and generates delivery/receive orders and money
statements which are downloaded by the members in their back offices.
The delivery orders provide information like scrip, quantity and the
name of the receiving member to whom the securities are to be delivered
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through the Clearing House. The Money Statement provides details of
payments/receipts for the settlement.
Earlier the members were required to submit along with the balance
sheet (Form 31-A) which includes the details of Money Statement,
margins payable/receivable, and other credits/debits arising out of
auction for shortages, objections, bad delivery, etc., a cheque /draft
depending on whether the settlement liability is a payable or receivable
position on Thursday, i.e., pay-in day. However, with effect from
December 22, 1997 (i.e., Sett.No.39/97-98), the bank accounts of
members maintained with Bank of India, Stock Exchange Branch, the
only clearing bank at that time, were directly debited through
computerized posting on the pay-in day for their settlement dues. The
list of clearing banks has since been expanded to include HDFC Bank
Ltd., Global Trust Bank Ltd. and Standard Chartered Bank. Thus, the
members are no longer required to submit physical Form 31-A and
cheque/draft, as was the earlier practice.
Auction is conducted for those securities which members fail to
deliver/short deliver during the Pay-in. In case the securities are not
received in an auction, the positions are closed out as per the closeout
rate fixed by the Exchange in accordance with the prescribed rules. The
close out rate is calculated as the highest rate of the scrip recorded in the
settlement in which the trade was executed or in the subsequent
settlement upto the day prior to the day of auction or 20% above the
closing price on the day prior to the day of auction, whichever is higher.
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The following table summarizes the steps in the trading and settlement
cycle for "A+B1, B2& C group securities:
DAY ACTIVITY Monday to Friday
(Monday is the 1st day
and Friday is the last
day of trading)
Trading on BOLT and daily
downloading of statement showing
details of transactions and margin
statement, at the end of each trading
day.
Saturday Carry Forward Session (for A Group
Securities) and downloading of
money statement.
Monday Marking the mode of delivery -
physical or demat
Wednesday Pay-in of physical securities.Thursday Delivery of securities in the Clearing
House as per prescribed time slots
upto 1:00 p.m. only. Debiting of
members bank accounts having
payable position at 5:00 p.m.
Reconciliation of securities delivered
and amounts claimed.
Friday Pay-out (Physical securities only)
Saturday Funds pay-out
If a transaction is entered on the first day of the settlement, i.e., Monday,
the same will be settled on the 8th
working day excluding the day of
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transaction. However, if the same is done on the last day of the
settlement, i.e., Friday, it will be settled on the 4th working day excluding
the day of transaction.
The trading and settlement cycle for "F" group, i.e., Debt Market is
indicated below:
DAY ACTIVITY Thursday First day of TradingWednesday Last day of Trading
Thursday Issue of Delivery Orders, Money
statements
Friday Debiting of the members bank
accounts at 10:30 a.m. Payout of
securities from 4.30 p.m. to 5.30 p.m.
and crediting the bank accounts of
members with payout.
The settlement schedules for various groups of securities have been
strictly adhered to by the Exchange and there has been no case of
clubbing of settlements or postponement of pay-in and pay-out during
the last over three years. The Exchange is also maintaining a database of
fake/forged/stolen securities with the Clearing House so that distinctive
numbers submitted by members on delivery may be matched against the
database to weed out bad paper from circulation.
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Introduction of the Demat Segment
The Exchange has commenced trading in the Dematerialized
(Demat) segment with effect from December 29, 1997 where there is no
physical delivery of securities as in the physical segment. Trading in the
Demat segment is on a Rolling Settlement basis (T+5) where T stands
for Trade Day. The pay-in and payout for the transactions in this
segment are both conducted on a single day. The Pay-in & Pay-out for
transactions executed on Monday is conducted on the following
Monday, i.e., corresponding day in the following week. Auction session
for shortages in demat segment is conducted on BOLT on the day after
pay-in/pay-out. The pay-in / pay-out (money part) takes place through
computerized posting of debits and credits in the members bank
accounts as in the case of physical segment.
With effect from April 6, 1998, deliveries in the demat mode are
permitted in the physical segment. This is so because sellers are allowed
to give delivery in demat or electronic form. As of today, this is
applicable to 278 scrips. As such, a break-up session is scheduled every
Monday where members may mark the mode of delivery, i.e., physical
or demat. They, however, have an option to change the mode of delivery
till the pay-in day, i.e., Thursday.
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SEBI has directed the stock exchanges in January 1998 that all the trades
done by institutional investors, viz., domestic financial institutions,
banks, mutual funds, FIIs and overseas corporate bodies in certain select
scrips should be compulsorily settled in dematerialized form. This list
has been expanded by SEBI from time to time and as on December 31,
1998 trades in 114 scrips for institutional investors are required to be
compulsorily settled in dematerialized form. 29 more scripts have been
specified for compulsory demat trading for institutional investors with
effect from April 15, 1999 making the total scrips in demat form for
institutional investors to 143.
Further, under directions from SEBI, trades in 12 and 19 scrips are to be
compulsorily settled by all investors in dematerialized form with effect
from January 4, 1999 and February 15, 1999 respectively. Further,
trades in another 33 scrips and 40 scrips are to be compulsorily settled in
demat form by all investors with effect from April 5 & May 31, 1999
respectively. Thus, as of now, trades in 104 scrips are to be compulsorily
settled by all investors in dematerialized form.
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ABOUT NATIONAL STOCK EXCHANGE (NSE)
THE ORGANISATION
The National Stock Exchange of India Limited has genesis in the report
of the High Powered Study Group on Establishment of New Stock
Exchanges, which recommended promotion of a National Stock
Exchange by financial institutions (FIs) to provide access to investors
from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions
at the behest of the Government of India and was incorporated in
November 1992 as a tax-paying company unlike other stock exchanges
in the country.
On its recognition as a stock exchange under the Securities Contracts
(Regulation) Act, 1956 in April 1993, NSE commenced operations in
the Wholesale Debt Market (WDM) segment in June 1994. The Capital
Market (Equities) segment commenced operations in November 1994
and operations in Derivatives segment commenced in June 2000.
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NSE Milestones
November
1992Incorporation
April 1993 Recognition as a stock exchange
May 1993 Formulation of business plan
June 1994 Wholesale Debt Market segment goes live
November
1994Capital Market (Equities) segment goes live
March 1995 Establishment of Investor Grievance Cell
April 1995Establishment ofNSCCL, the first Clearing
Corporation
June 1995 Introduction of centralized insurance cover for alltrading members
July 1995 Establishment of Investor Protection Fund
October 1995 Became largest stock exchange in the country
April 1996Commencement of clearing and settlement by
NSCCL
April 1996 Launch ofS&P CNX Nifty
June 1996 Establishment of Settlement Guarantee Fund
November
1996
Setting up ofNational Securities Depository
Limited, first depository in India, co-promoted by
NSE
November
1996 Best IT Usage award by Computer Society of India
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December
1996
Commencement of trading/settlement in
dematerialized securities
December
1996Dataquest award for Top IT User
December
1996Launch ofCNX Nifty Junior
February
1997 Regional clearing facility goes live
November
1997Best IT Usage award by Computer Society of India
May 1998Promotion of joint venture, India Index Services &
Products Limited (IISL)
May 1998 Launch of NSE's Web-site: www.nse.co.in
July 1998Launch ofNSE's Certification Programme in
Financial Market
August 1998CYBER CORPORATE OF THE YEAR 1998
award
February
1999
Launch of Automated Lending and Borrowing
Mechanism
April 1999 CHIP Web Award by CHIP magazine
October 1999 Setting up ofNSE.IT
January 2000 Launch ofNSE Research Initiative
February
2000Commencement ofInternet Trading
June 2000 Commencement of Derivatives Trading (Index
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Futures)
September
2000Launch of'Zero Coupon Yield Curve'
November
2000
Launch ofBroker Plaza by Dotex International, a
joint venture between NSE.IT Ltd. and i-flex
Solutions Ltd.
December
2000 Commencement ofWAP trading
June 2001 Commencement of trading in Index Options
July 2001Commencement of trading in Options on Individual
Securities
November
2001
Commencement of trading in Futures on Individual
Securities
December
2001Launch ofNSE VaR for Government Securities
January 2002 Launch ofExchange Traded Funds (ETFs)
May 2002
NSE wins the Wharton-Infosys Business
Transformation Award in the Organization-wide
Transformation category
October 2002 Launch ofNSE Government Securities Index
January 2003 Commencement of trading in Retail Debt Market
June 2003 Launch ofInterest Rate Futures
August 2003 Launch of Futures & options in CNXIT Index
June 2004 Launch of STP Interoperability
August 2005 Launch of NSEs electronic interface for listed51
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companies
Feb. 2006 Launch of Futures & options in BANK Nifty Index
Developments on the Exchange
NSE and NSCCL went live with the inaugural session for
Automatic Lending and Borrowing Mechanism (ALBM) for lending
and borrowing of securities on February 10,1999. This is the first
time an Indian agency approved by SEBI will be conducting the
securities lending & borrowing transactions based on international
practices.
Membership
890 trading members on the Capital Market
segment, of which around 86% account for corporates
and the remaining are individuals and firms.
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Out of these 890 trading members, 89 trading
members are also members of Wholesale Debt Market
segment, all of which are corporates and there are 7
trading members excclusively on Wholesale Debt
Market Segment.
Geographic Distribution
Over 6839 trading terminals given to the members as on November
25, 1999
Over 2342 VSAT's across the country with a 24 hour Network
monitoring system in over 291 cities as of November 01, 1999.
Future Plans
The Capital Market segment of the Exchange became operational in
November 1994.The entire turnover accounted from Mumbai.
After stabilizing operations in Mumbai, NSE expanded its
operations to other cities. The turnover from Mumbai accounts for
43%, Delhi accounts for 19%, Calcutta accounts for 11% and 28%
from other centres. NSE will add more terminals in cities where it
already has presence to provide better services to investors.
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The satellite hub and computer equipment for the disaster recovery site
at Pune has been procured, installed and tested for proper operations. A
detailed Business Continuity Plan (BCP) has been worked out to put the
disaster recovery site for live operations. The back-up site of the
Exchange at Pune will be made operational soon. This facility is in line
with international practices and the NSE will be able to commence
normal business operations within a very short time frame should adisaster occur.
In keeping with the fast changing scenario in the Capital Markets, NSE
has chalked out plans for the various business segments, some of which
are.
Initial Public Offerings
Initial Public Offerings in India have been typically fixed price
offers. A major problem with such fixed price offerings has been the
information asymmetries between the issuers and the investors. To
revive the primary market, NSE is proposing to provide a facility for
conducting primary issues for Initial Public Offers (IPOs), subsequent
issues by companies, private placements as well as book building
through screen based automated trading system. The advantages of this
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system will be on-line issue of securities thereby reducing the cost of
issue of securities and an efficient retail distribution network among
others.
Retail Debt Market
Fixed income securities such as debentures are an ideal
investment avenue for risk adverse investors. It provides a fixed and
regular income with safety of capital. The deregulation of interest rates
has led to borrowings by the Government, Corporates and Institutions at
market-determined rates. This has enabled retail investors to invest in
fixed income securities particularly Corporate and Institutional bonds in
favourable terms vis a vis other investment opportunities.
With a view to providing liquidity to these instruments, the
Exchange plans to start a retail debt segment to cater to the growing
demands of the investors in the debt segment. Debentures are presently
traded on the Capital Market (CM) and the Wholesale Debt Market
(WDM) segment of the Exchange. However, as WDM segment
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continues to be wholesale in nature and CM segment focuses on equity,
there was a need for a separate market for debentures. A separate RDM
trading system would be developed for the same.
The securities traded on the Retail Debt Market segment
would comprise of Corporate Debentures and Institutional Bonds.
Members of the Exchange from all the NSE centres would be eligible to
trade on the RDM system.
The National Securities Clearing Corporation Ltd. (NSCCL)
would settle the trades done on the RDM segment on a net basis. The
NSCCL would also extend settlement guarantee for trades done on NSE.
OPPORTUNITIES AVAILABLE FORFOREIGN INVESTORS
DIRECT INVESTMENT
Foreign companies are now permitted to have a majority stake in their
Indian affiliates except in a few restricted industries. In certain specific
industries, foreigners can even have holding upto 100 percent.
INVESTMENT THROUGH STOCK EXCHANGES
Foreign Institutional Investors (FII) upon registration with
the Securities and Exchange Board of India (SEBI) and the Reserve
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Bank of India (RBI) are allowed to operate in Indian stock exchanges
subject to the guidelines issued for the purpose by SEBI.
Important requirements under the guidelines are as under:
1. Portfolio investment in primary or secondary markets will be
subject to a ceiling of 30 percent of issued share capital for the
total holding of all registered FII's. In any one company an FII
holding is subject to a ceiling of 10 percent of the total issued
capital. However, in applying the ceiling of 30 percent the
following are excluded:
Foreign investment under a financial collaboration, which is,
permitted upto 51 percent in all priority areas.
Investment by FII's through offshore single/regional funds,
GDR's and euro convertibles.
2.Disinvestment is allowed through a broker of a Stock Exchange.
3.A registered FII is required to buy or sell only for delivery. It is not
allowed to offset a deal. It is also not allowed to sell short.
Investment in Euro Issues/Mutual Funds floated overseas
Foreign investors can invest in Euro issues of Indian companies and in
India-specific funds floated abroad.
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Broking Business
Foreign brokers upon registration with the SEBI are now allowed to
route the business of registered FIIs. Guidelines for the purpose have
been issued by SEBI.
Asset Management Companies / Merchant Banking
Foreign participation in Asset Management Companies and Merchant
Banking Companies is permitted.
STOCK AUCTIONS
The word auction, in simple terms, implies a public sale in
which property or items of merchandise are sold to the highest bidder.
Did you know that auctions used to take place way back
during the Homeric period in Greece? It was a means of transferring the
ownership of slaves from one person to the other. This same underlying
concept of auction has taken a more refined form in recent times - like
the auction of commodities or the belongings of famous personalities.
Have you ever been to an auction house like Christie or Sotheby's,
where works of art are sold to the highest bidder in auction?
Now, you are probably beginning to wonder what we are
doing discussing auctions of slaves and commodities or art auction
houses like Christie and Sotheby's here, in the investment jungle! Allow58
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us to clarify that our intention is not to discuss art auctions per se, but
auctions conducted on the bourses. Auctions are not conducted only to
sell merchandise or works of art in big auction houses; they are also a
common feature on stock exchanges.
Why conduct auctions in the stock market?
Auctions are conducted on the exchanges when, for some reason,shares (physical or demat) are not delivered to the exchange on time.
Exchanges conduct auctions to penalize the party for defaulting
on delivering the shares on time, and thereby to protect the sanctity of
settlements. It is a necessary evil - imagine the chaos if the defaulting
party went scot-free and delivered shares at its own free will. This wouldtrigger a chain reaction of defaults.
If the defaulting party fails to deliver the shares on time to the
exchange, the exchange in turn is unable to deliver the shares to the
party who purchased them. The purchasing party in turn might have
already sold those shares before receiving them from the exchange andnow it would be unable to deliver those shares on time. This vicious
chain could go on and on.
Therefore, it becomes imperative that auctions are held so that pay-
in and payout of shares take place on time, in accordance with the
settlement cycle of the respective exchanges.
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Reasons for shares to go on auction
Shares come under the hammer when they have been either delivered
short or found to be objectionable by the exchange. Based on the reasons
why shares qualify for auction, they have been categorized into two
types:
1. Auction due to shortages
2. Auction due to objection
Auction due to shortages
As has been discussed above, an auction due to shortages
takes place when the delivering party fails to deliver its share on time to
the exchange, thereby triggering the vicious chain reaction of the
exchange being unable to deliver the shares on time to the purchasing
party and purchasing party in turn being unable to deliver shares on time
if it has already sold it and so on... One of the common reasons why
shares come under auction due to shortages is the confusion that arises
about the delivery date of the shares, if they are going into the 'no
delivery' period.
Auction due to objection
Physical shares go in for auctions not only if they are
delivered short, but also if they are found to be objectionable and not
rectified on time by the party concerned. There are many reasons why
shares could come under objection. To list a few:
Transfer deed attached to the share certificate is out of date
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Details like distinctive number, folio number, certificate number,
transferor names etc are not filled or filled incorrectly on thetransfer form attached with the share certificate
Witness stamp or signature on transfer deed is missing
Signature of the transferor is missing
Delivering broker's stamp is missing on the reverse of the transfer
deed.
QUESTIONNAIRES
Dear sir/madam,
I am student of Poddar International College, Jaipur. I
am conducting a survey to find out the potential market for securities.
For this purpose, I would like to spare few minute and share your view
with me.
Q1 Do you have your own demat account?
Yes No
Q2 Are you planning to get a demat account?
Yes No
Q3 what type of investment do you want?
a. Securities
b. Mutual Funds
c. Life Insourance
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Q4 If security, which of the following institutions will go for enquiry?
a. Unicon
b. Icici direct.com
c. Share khan
d. India bulls
Q5 Through which source did you get to know about the oboveinstitution?
a. Television
b. Newspaper
c. Camps and canopies
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Q.1 Do you have their own DEMAT Account?
Yes No
4, 40%
6, 60%
YES NO
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Q.2 Are you planning to get a DEMAT Account?
Yes No
8, 80%
2, 20%
YES NO
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Q.3 What type of investment do you want?
Securities
Mutual Funds
Life Insurance
3, 30%
5, 50%
2, 20%
Security Mutual fund Life insourance
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Q4 If security, which of the following institutions will go for enquiry?
Unicon
Icici direct.com
Share khan
India bulls
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4, 40%
2, 20%
1, 10%
3, 30%
UNICON ICICI DIRECT.COM SHAREKHAN INDIABULLS
Q5 Through which source did you get to know about the obove
institution?
d. Television
e. Newspaper
f. Camps and canopies
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5, 50%
2, 20%
3, 30%
TELEVISION NEWSPAPER CHAMPS & CANOPIES
FINDINGS
The stock market plays a cardinal role in promoting thelevel of capital formation by assisting in the effective mobilization (and
also augmentation) of savings and their canalization into appropriate
avenue of investment. This it does by providing an organized market in
diverse type of securities to suit the varying notions and whims of a vast
mass of savers about liquidity, profitability and risk element in their
investments. The opportunity of constant evaluation of returns on ones
investment compared to others, the liquidity that is imparted to
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investment in fixed capita and price continuity that is being ensured,
instill confidence in the minds of savers. On the other hand, by creatingconditions, which reasonably ensure availability of financial resources
for creating real capital, whether in private sector or in public sector they
give impetus to development.
In underdeveloped economies not only is the volume of
savings low but a large part of it is dissipated in conspicuous
consumption and in hoards because of lack of knowledge of investment
opportunities, high liquidity preference and other factors mainly of a
non-economic character. The stock market promoters conditions which
take care of some of these inhibiting factors. It offers a ready market for
conversion of securities into cash and thus encourages investment and
discourages hoardings. Again, its widely published operations and price
quotations bring home to the savers the various productive and desirable
opportunities of investment. In the absence of this institution not only
would the saving of the community the sinews of economic progress
and productive efficiency be used much less completely owing to the
absence of adequate incentive to save? Moreover, the health and vitality
of an industry and the individual units comprising it and the savers
preferences are reflected on the stock exchanges in the relative prices of
different securities and movements therein. This ensures finaldisposition of funds in right amounts and in the most desirable directions
of investment decisions in a judicious and rational manner which stock
exchanges permit, ensures canalization of only the optimum amount of
funds into any line of industries and checks the inflow of capital into an
industry just when it begins to show the signs of subnormal return. Stock
exchanges are thus pre-requisites for mobilization and creation of
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savings, their proper and profitable allocation and also for inducing
large-scale investment.
A stock exchange creates a cluster of shares and stockbrokers,
underwriters and other well-versed in financial matters who educate
public opinion about the soundness of the new issues and offer expert
advice to the prospective investors regarding the appropriate securities
and the opportune time for transaction in them.
Alongside extending help to the private sector industrial
enterprises, a stock exchange also proves to be a boon for governments
who need to borrow large funds for financing developmental
programmes, which it has taken upon itself for betterment of the
economic lot of the people. This it does through providing an organized
market for government bonds.
Thus a stock exchange serves the nation in several ways
through its diversified economic services, which include imparting
liquidity to investments and providing marketability, enabling evaluation
and ensuring price continuity of securities.
INDIAN stock markets are still attractive for foreign investors,according to Mr. Alan Jacobs, Senior International Economist and
Strategist, AMP Capital, Australia.
Return on equity in India was higher than in countries such
as the US, China and Japan, he said, adding that Indian corporate
earnings were rising faster than earnings of companies in other countries
ever since the reforms process was set in motion.
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Besides, the present stock market rally was qualitatively better
than the boom of 2000, because, this time around, stock prices trackedcorporate earnings closely.
The Indian economy would grow by 6.6 per cent in 2005 with
the potential to grow further. But the country faced two risks: inflation
and government backtracking on reforms. Liquidity overhang and rising
oil prices could lead to inflation.
As long as the deficit was less than the nominal GDP growth
rate, the situation was not alarming. It was important that India did not
have any external debt.
Stressing that it was important for the country to attract more
foreign direct investments, he said it needed to build better
infrastructure. He also added that the economic outlook for India
depended much upon whether the government stayed on the reformscourse.
Over-capacity in China was a potential problem, he said. In the
previous years, China had invested too much about half its GDP in
creating capacities.
How it managed the slowdown of the current year would have a
bearing on economies such as India. China could be "exporting"
problems arising out of over-capacity.
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SIGNIFICANCE OF THE STUDY
Investors want to get higher rate of returns at a lower risk. For
this purpose he makes several investments strategies and market
efficiency has an influence on the investments strategy of an investor,
because if market is efficient, trying to pick up winners will be a waste
of time. In efficient market there will be no undervalued securities
offering than deserved expected returns, given their risk. On the other72
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hand if markets are not efficient, excess returns can be made correctly
picking the winners.
For this purpose analysis will be carried out to test the
efficiency level in Indian stock market using run test analysis and the
auto correlation function.
CONCLUSION
Indian economy has been globalizes and the capital
market has been linked to the international financial market. Foreign
individuals and institutional investors have encouraged participating into
it. So, there is a need for raising the Indian Capital market in to the
international standards in terms of efficiency and transparency. One such
measure is the passing out of the Depository Act during the year 1996.
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Dematerialization of securities and under this system is one of
the major steps aimed at improving and modernizing the capital market
and enhancing the levels of investors protection measures which
aims at eliminating the bad deliveries and forgery of shares and
expediting the transfer of shares.
During this whole process of training I came to learn a lots of new thing
regarding
The demat-process, how it works & what is the future aspect of it.
This part of the project is purely learning processes, which make me
teach on the following:
Concept of Financial Product Selling
Customer Handling
Day to day Fluctuation in Stock Market --- Why?
Major Players in this field
Potentiality of this market
How to analyze the Research Report
Finally, practical knowledge of Group Activity
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So, to conclude I want to say that these two months of summer
training is very much beneficial for me that enriches my knowledge at a
greater level?
BIBLIOGRAPHY
Macroeconomics Theory and Policy: Gardner Ackley, MacMillan
Publishing Co., Inc. New York, International Edition, 1978.
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The Rise and the fall of the big bull, Business World, April 16, 2004,
pp. 18-26.
Indias Stock Markets, Business Today
Will BSE Survive, CFA, August 2004, pp. 24-28.
Dalal Street, Outlook
Valueline, May 2007 July 2007 issues
Business Standard, July 2007
WEBSITES:
www.nseindia.com
www.bseindia.com
WWW.indiabulls.com
www.indiaweekly.com
www.indiainfoline.com
www.CDSL.com
www. investopedia.com
www. Uniconindia.com
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Valueline, May 2007 July 2007 issues
Business Standard, July 2007
Research Reports
Unicon research report
Book
Fundamental Statistics, by Goon, Gupta & Dasgupta, Vol. 2
Marketing Research, by Kotler
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