A

Project Report

On

Investors Attitude towards Share Market

“Sharekhan Limited”

POORNIMA UNIVERSITY, JAIPUR

Submitted to:- Submitted by:-

Ms. Shikha bhargava Ankush kumar

Asst. Professor B.com (Hons.)

SOC&SOM 2013BCHX1011

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ACKNOWLEDGEMENT

Every individual from dusk to dawn of life need some co-operation from the surrounding

environment. Myself too is not an exception to others. It is very difficult to complete a project

work without the help of some well-wisher.

I consider it is a great privilege to acknowledge my gratitude to Mr. surendra kumawat (Sales

Manager, Share Khan Ltd. Jaipur) for giving his kind cooperation and valuable guidance.

I am indeed grateful to Mr. Hemant sir for helping me in the collection of valuable information

about the topic selected and also for his guidance in the preparation of the project.

I am greatly in debt to all the employees of Sharekhan Ltd. For their kind co-operation during

collection of data and information that helped me in conducting such project-work.

I am deeply indebted to my project mentor Ms. Shikha bhargava ma`am whose help, stimulating

suggestions and encouragement helped me in completing my project.

I want to thank them for all their help, support, interest and their valuable hints.

In the end I wish to thank all those whose names have not been mentioned above, but who have

directly or indirectly helped in various ways in successful carrying out the project.

Ankush kumar

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EXECUTIVE SUMMARY

Share trading in India is undergoing a transition and consolidation phase witnessed never before.

The competition is likely to become so severe after the entry of many players, retaining a

customer is most difficult practice for any service provider.

Though India has a very big untapped market but the players will not flourish unless they change

the way the customers are being served. Given the awareness level of today customers every

player has to treat with care and make the customer feel that he is the king. Number of Online

Share trader in India has crossed the line. customer retention and satisfaction is now more

important as it was never before .Players keep coming with new schemes in order to attract new

customers and retain the existing one. This is being supplemented with increased advertising and

brand building efforts. Success of any organization depends upon its being proactive.

I am very lucky as I got an opportunity to work with SHARE KHAN LTD which is showing

phenomenal growth and success in the Securities.

My topic of study was “capital market in India” This project is an effort to do a depth study and

analysis of various known and unknown reasons for customer satisfaction and retention.

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TABLE OF CONTENTS

S.No. Chapter Name Page No.

1. Introduction1.1 Aim and Objective……………………………………….1.2 Scope of study ……………………………………………1.3 Selection of Company and Industry……………………..1.4 Duration and Location of Industry……………………….

666

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2. About Organization 2.1 Introduction of Organization……………………………. 2.2 Overview………………………………………………… 2.3 Background of industry………………………………….. 2.4 Products and Services……………………………………. 2.5 Competitors …………………………………………….. 2.6 Derivatives……………………………………………… 2.7 Bullish and Bearish………………………………………

10142329323444

3. 3.1Review of literature…………………………………………………. 48

4. Research methodology 4.1 Objective of the Study…………………………………..4.2 Method of Research……………………………………..4.3 Type of Research………………………………………..4.4 Data Type……………………………………………….4.5 Sampling Plan…………………………………………..

5151515252

5. Data Analysis, Results and Interpretation5.1 Data Analysis and Results……………………………….5.2 Interpretation…………………………………………….5.3 Recommendations……………………………………….5.4 Limitations…………………………………………5.5 Conclusion……………………………………………….

63

646566

6. Appendices6.1 Questionnaire………………………………………………..

69

7. 7.1 Bibliography………………………………………………… 70

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Chapter 1

INTRODUCTION

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INTRODUCTION

1.1 Aims and Objectives of the ProjectAim of this project is to learn the practical knowledge of market. Learn the significance of my

Title in today’s share market.

To find factors influencing on a customer investing behavior

To identify the investment preference of investors

To identify the information sources for demat A/C

1.2 Scope of the studyThe benefits of the study for the researcher are that it helped to gain knowledge and experience

and also provided the opportunity to study and understand the investment behavior of investor in

share market.

1.3 Selection of the company and industryPoornima University (department of management) is the conscientious learning centre where

students at different levels prepare to meet the challenges and opportunities of the 21st century. It

offers premier graduate program of (B.COM) which requires the students to complete internship

program. During the internship, the students are required to prepare a project report on a topic

relevant to the work they were assigned during the internship.

An intern has to prepare project report during the internship period but the main objective of the

internship is to get the hands-on experience of the real world organization. It also helps to

develop the skills required to handle the day to day operation in an organization. This will allow

the students to be prepared for the upcoming corporate challenges by experiencing real time

working environment. Upon subsequent research to find the best suitable organization to match

both my major and area of interest, I selected the SHAREKHAN supremely known for its well

defined quality service-. This internship program was approved by Poornima University.

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1.4 Duration and Location of the company

As my summer internship schedule was for sixty days at SHAREKHAN LTD.

The location of the company is in Raja park, jaipur

Training schedule

Office timing: 10:30 Am to 4:00 Pm

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Chapter 2About Industry/ Organization

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SHAREKHAN LIMITED

Sharekhan is one of the leading retail broking House of SSKI Group which was running

successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI

Group, which has over eight decades of experience in the stock broking business. Sharekhan

offers its customers a wide range of equity related services including trade execution on BSE,

NSE, Derivatives, depository services, online trading, investment advisory, Mutual Fund

Advisory etc.

The firm’s online trading and investment site - www.sharekhan.com - was launched on Feb 8,

2000. The site gives access to superior content and transaction facility to retail customers across

the country. Known for its jargon-free, investor friendly language While online trading currently

accounts for just over 8 per cent of the daily trading in stocks in India, Sharekhan alone accounts

for 32 per cent of the volumes traded online.

The content-rich and research oriented portal has stood out among its contemporaries because of

its steadfast dedication to offering customers best-of-breed technology and superior market

information. The objective has been to let customers make informed decisions and to simplify

the process of investing in stocks.

On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application that

emulates the broker terminals along with host of other information relevant to the Day Traders.

This was for the first time that a net-based trading station of this caliber was offered to the

traders. In the last six months Speed Trade has become a de facto standard for the Day Trading

community over the net.

On October 01, 2007 sharekhan again launched his another integrated software based product

trade tiger, a net-based executable application that emulates the broker terminals along with host

of other information relevant to the day traders. It has another quality which differs it from other

that it has the combined terminal for equity and commodities both.

Share khan’s ground network includes over 1005 centers in 450 cities in India, of which 210 are

fully-owned branches. Sharekhan has always believed in investing in technology to build its 9

business. The company has used some of the best-known names in the IT industry, like Sun

Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign

Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and

content. Previously the Morakiya family holds a majority stake in the company but now a world

famous brand CITI GROUP has taken a majority stake in the company. HSBC, Intel & Carlyle

are the other investors.

With a legacy of more than 80 years in the stock markets, the SSKI group ventured into

institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading

players in institutional broking and corporate finance activities.The Corporate Finance section

has a list of very prestigious clients and has many ‘firsts’ to its credit, in terms of the size of deal,

sector tapped etc. The group has placed over US$ 1 billion in private equity deals. Some of the

clients include BPL Cellular Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and

Shopper’s Stop.

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INDUSTRY OVERVIEW

A Brief History of Stock Exchanges

Do you know that the world's foremost marketplace New York Stock Exchange (NYSE), started

its trading under a tree (now known as 68 Wall Street) over 200 years ago? Similarly, India's

premier stock exchange Bombay Stock Exchange (BSE) can also trace back its origin to as far as

125 years when it started as a voluntary non-profit making association.

You hear about it any time it reaches a new high or a new low, and you also hear about it daily in

statements like 'The BSE Sensitive Index rose 5% today'. Obviously, stocks and stock markets

are important. Stocks of public limited companies are bought and sold at a stock exchange. But

what really are stock exchanges? Known also as News on the stock market appears in different

media every day. he stock market or bourse, a stock exchange is an organized marketplace for

securities (like stocks, bonds, options) featured by the centralization of supply and demand for

the transaction of orders by member brokers, for institutional and individual investors. The

exchange makes buying and selling easy.

All stock exchanges perform similar functions with respect to the listing, trading, and clearing of

securities, differing only in their administrative machinery for handling these functions. Most

stock exchanges are auction markets, in which prices are determined by competitive bidding.

Trading may occur on a continuous auction basis, may involve brokers buying from and selling

to dealers in certain types of stock, or it may be conducted through specialists dealing in a

particular stock.

But where did it all start? The need for stock exchanges developed out of early trading activities

in agricultural and other commodities. During the middle Ages, traders found it easier to use

credit that required supporting documentation of drafts, notes and bills of exchange.

India's other major stock exchange National Stock Exchange (NSE), promoted by leading

financial institutions, was established in April 1993. Over the years, several stock exchanges

have been established in the major cities of India. There are now 23 recognised stock exchanges

— Mumbai (BSE, NSE and OTC), Calcutta, Delhi, Chennai, Ahmedabad, Bangalore,

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Bhubhaneswar, Coimbatore, Guwahati, Hyderabad, Jaipur, Kochi, Kanpur, Ludhiana,

Mangalore, Patna, Pune, Rajkot, Vadodara, Indore and Meerut. Today, most of the global stock

exchanges have become highly efficient, computerized organizations. Computerized networks

also made it possible to connect to each other and have fostered the growth of an open, global

securities market.

STOCK EXCHANGESThe Securities Contract (Regulation) Act, 1956 (SCRAS) defines ‘Stock Exchange’ as anybody

of individuals, weather incorporated or not, Constituted for the purpose of the assisting,

regulating or controlling the business of buying selling or dealing in securities. Stock exchange

could be a regional stock exchange whose area of operation/jurisdiction is specified at time of its

reorganization or national exchanges, which is permitted to have nationwide trading since

inception. NSE was incorporated as a national stock exchange.

Securities Market or Stock exchange is a place where buyers and sellers of securities can enter

into transaction to purchase and sell shares, bonds, debentures etc. Further, it performs an

important role of enabling corporate entrepreneur to raise resources for their companies and

business ventures through public issues.

The first organized stock exchange in India was started in Mumbai in 1875 with the formation of

the Native Share and Stock Broker Association. Thus the Mumbai stock exchange is the oldest

one in the country with the growth of joint stock companies, the stock exchange also made a

steady growth and at present there are 23 recognized stock exchanges in our country with about

6000 stock brokers.

In India, there are only two online trading stock exchanges, one is BSE and other is NSE.

Functioning

Stock exchange is a place where buyers and sellers of securities can enter into transaction to

purchase and sell shares, bonds, debentures to raise resources for their companies and their

business ventures through public issues transfer of resources from those having idle resources to

other who have a need for them is most effectively achieved through a security market. Stated

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formally, security market provides channels for reallocation of saving to investments and

entrepreneurship. Savings are linked to investments by a variety of intermediaries, through a

range of financial products called ‘Securities’.

In all there are 23 stock exchanges in India, but the two most popular amongst all of them are:-

National Stock Exchange(NSE)

Bombay stock exchange(BSE)

Now, let’s discuss the history, functionality and other important details about these two

important stock exchanges of India.

Sharekhan business1. Brokering business.

2. White feathering house production.

VisionTo be the best retail broking brand in the retail business of the stock market.

Mission To educate and empower the individual investor to make better investment decisions through

quality advices and superior services.

SWOT OF SHAREKHAN

STRENGTH

1. Big client base

2. In-house research house

3. online as well as offline trading

4. Online IPO/ MF services

5. Share shops

6. Transparent

7. User friendly tie ups with 10 banks

8. Excellent order execution speed and reliability13

WEAKNESS

1. Lack of awareness among customer

2. Less focus on customer retention

3. Less Exposure

OPPORTUNITIES

1. Diversification

2. Product modification

3. Improve Web based trading

4. Provide competitive brokerage

5. Concentrate on PMS

6. Focus on Institutional investors

7. Concentrate on HNI’s (high net worth investor)

THREATS

1. Aggressive promotional strategies by close competitor like Religare, Angel Broking and India

bulls.

2. More and more players are venturing into this domain, which can further reduce the earning of

Share Khan.

SECURITIES AND EXCHANGE BOARD OF INDIA

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The Securities and Exchange Board of India Act, 1992 has been enacted to provide for the

establishment of a Board to protect the investors in securities and to promote the development

and to regulate the securities market and for matters connected there with or incidental there to.

It came into force on the 30th day of the January 1992.

Establishment and Incorporation of BoardMajor part of the liberalization process was the repeal of the capital issues (control) Act, 1947 in

May 1992. With this, government’s control over issues of the capital, pricing the issues, fixing of

premium and rates of interest on debentures etc. ceased, and the office which administered the

Act, was abolished.

The market was allowed to allocate resources to competing uses. However to ensure effective

regulation of the market, SEBI Act 1992 was entered to empower SEBI with the statutory

powers for (a) Protecting the interests of investors in securities. (b) Promoting the development

of the securities and (c) regulating the securities market. Its regulatory jurisdiction extends over

corporate in the insurance of the capital and transfer of securities, in addition to all intermediaries

and person associated with the securities market. SEBI can specify the matters to be disclosed

and the standard of disclosure required for the protection of investors in respect of issues; can

issue direction to all intermediates and other persons associated with the securities market in the

interest of the investors or of orderly development of the securities market and can conduct

enquiries, audits and inspection of all concerned and adjudicate offences under the Act. In short,

it has been given necessary autonomy and authority to regulate and develop an orderly serious

market. A code of conduct for each intermediary has been prescribed in the regulations; capital

adequacy and other norms have been specified; a system of monitoring and inspiring their

operations has been specified a system of monitoring and inspecting their operations has been

instituted to enforce compliance and disciplinary actions are being taken against the

intermediaries violating any regulation.

The Central Government may, by notification appoint for the purpose of this Act, a Board by the

name of the securities and exchange board of India under section 3 of the SEBI Act. The board

shall be a body corporate by the name aforesaid having perpetual succession and a common seal

with proper subject to the provision for this act to acquire the hold and dispose of the property,

both movable and immovable and to contract, and shall by the said name, sue or sued. The head

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office of the Board shall be at Mumbai. The Board may establish officers at other places in India.

The SEBI has offices in Mumbai, Calcutta, New Delhi and Chennai.

The board shall consist of the following members namely:-

A Chairman.

Two members from amongst the officials of the Ministers of the Central Government

dealing with Finance and Law.

One member from amongst the officials of the Reserve Bank of India constituted under

section 3 of the Reserve Bank of India Act, 1934.

Two other members, to be appointed by the Central Government.

Functions of the BoardThe SEBI shall protect the interest of the investors in securities and to promote and development

of and to regulate the securities market by such measures as it thinks fit.

The measures referred to therein may provide for:-

Regulating the business in stock exchange and any other securities markets.

Registering and regulating the working of stock brokers, sub-brokers, share transfer

agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant

bankers, underwriter, portfolio managers, investment advisers and such other

intermediates who may associated with securities markets in any manners.

Registering and regulating in working of the depositories, participants, custodians of

securities, foreign institutional investors, credit rating agencies and such other

intermediaries as the board may, by notification specify in this behalf.

Registering and regulating the working of venture capital funds and collective

investments schemes including mutual funds.

Promoting and regulating self regulatory organizations.

Prohibiting fraudulent and unfair trade practices relating to securities markets.

Prohibiting insider training in securities.

Regulating substantial acquisition of shares and take over of companies.

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Performing such functions and exercising according to securities contract (regulation)

Act, 1956, as may be delegated to it by the Central Government.

Levying fees or other charges for carrying out the purpose of this section.

Conduction research for the above purpose.

Performing such other functions as may be prescribed

Registration with SEBI

A person in the following capacity shall buy, sell or deal in securities after obtaining a certificate

of registration from SEBI, as required by Section 12.

An application shall be made for registration in the prescribed manner with the prescribed fee.

But the SEBI may, by order, suspend or cancel a certificate of registration.

Stock broker.

Sub – broker.

Share transfer agent.

Bank to an issue.

Trustee of trusted deed.

Registrar to an issue.

Merchant banker.

Underwriter.

Portfolio manager.

Investment adviser.

Depository.

Mutual Fund.

VARIOUS DEPARTMENTS REGULATED BY SEBI

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The following departments of SEBI take care of the activities in the secondary market.

Name of the Department Major Activities

1. Market Intermediaries

Registration and

Supervision department

(MIRSD)

Registration, supervision, compliance monitoring and

inspections of all market intermediaries in respect of all

segments of the markets viz. equity, equity derivatives, debt

and debt related derivatives.

2. Market Regulation

Department (MRD)

Formulating new policies and supervising the functioning

and operations (except relating to derivatives) of securities

exchanges, their subsidiaries, and market institutions such as

Clearing and settlement organizations and Depositories

(Collectively referred to as ‘Market SROs’.)

3. Derivatives and New

Products Departments

(DNPD)

Supervising trading at derivatives segments of stock

exchanges, introducing new products to be traded, and

consequent policy changes

Bombay Stock Exchange (BSE):-

Indian stock markets are one of the oldest in Asia. Its history dates back to 200 years ago. The

East India Company was the dominant institution in those days and business in its loan securities

used to be transacted towards the end of eighteenth century.

By 1830’s business on corporate stocks and shares in the bank and cotton took place in Bombay.

The 1850’s witnessed a rapid development of commercial enterprise and the brokerage business

attracted many men into this field and by 1860 the number of brokers increased to 60.

In 1860-61, the American civil war broke out and cotton supply from United States stopped; and

thus the “share mania” in India begun, due to which the share brokers increased to about 200 to

250.

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At the end of the American civil war, the brokers who thrived out of this war in 1874, found a

place in a street, where they would easily assemble and transact business. This street is

nowadays, popularly known as DALAL STREET.

In 1887, they formally established in Bombay, and were known as “Native Shares and Stock

Brokers Association”.

In 1895, it acquired a premise in the same street and finally was inaugurated in 1899 with the

name Bombay Stock Exchange (BSE).

In this way the stock market at Bombay was consolidated.

Mumbai Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.

Popularly known as BSE it was establish as “the Native Share and Stock Brokers Association” in

1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from

the government of India under the Securities Contracts (Regulation) Act, 1956. The Exchange

pivotal and pre eminent role in the development of Indian capital market is widely recognized

and its index. SENSEX is tracked worldwide. Earlier an Association of Persons (AOP), the

exchange is now a demutualised and corporatized entity incorporated under the provision of the

Companies Act, 1956, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005

notified by the Securities and Exchange Board of India (SEBI)

National Stock Exchange (NSE):-With the liberalization of Indian economy it was found necessary to lift the Indian stock markets

on par with the international standards. The NSE was incorporated in 1992 by industrial

development bank of India, industrial credit and Investment Corporation of India, industrial

finance corporation of India, all insurance corporations, selected commercial banks and others.

The National Stock exchange of India Limited has genesis in 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 form all across the country

on a equal footing. Based on the recommendation, NSE was promoted by leading Financial

Institution at the behest of the government of India and was incorporated in November 1992 as a

taxpaying company like 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 whole sale Debt Market (WDM) segment in June

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1994. The Capital Market segment commenced operations in November 1994 and operations in

Derivatives segment commenced in June 2000.

NSE stated trading in the equities segment (Capital Market segment) on November 3, 1994 and

within a short span of 1 year became the largest exchange in India in terms of volumes

transacted.

Trading volumes in the equity segment have grown rapidly with the average daily turnover

increasing from Rs 17 crores during 1994-95 to Rs 6,253 crores during 2005-06. During the year

2005-06, NSE reported a turnover of Rs 1,569,556 crores in the equities segment.

NSE is India’s leading stock exchange covering more than 160 cities and towns across the

country. It provides the modern fully computerized trading system designed to offer investors

across the country a safe and easy way to invest to liquidate investment and securities.

Investors in many areas of country did not have the same access and opportunity to trade so there

arise the need for setting up the national stock exchange. The NSE network has been designed to

provide equal access to investors from anywhere in India and to be responsive to their needs.

On its recognition as a stock exchange under the Securities Contract Act, 1956 in April 1993,

NSE started operations in the Wholesale Debt Market (WDM) segment in June 1994. Capital

market (equities) segment commenced operations in November 1994, and operations in

derivative segment started in June 2000.

NSE started trading in the capital market segment on November3, 1994 and within one year

became the largest exchange in India, in terms of volumes transacted. During the year 2005-06

NSE reported, a turnover of Rs 1,569,556 crores in the equity segment.

NIFTYNIFTY is the sensitivity index NSE (NATIONAL STOCK EXCHANGE) NIFTY is a basket of

50 constituent stocks. It consists of the 50 largest and most actively traded stocks, representative

of various sectors, on the National Stock Exchange.

DEPOSITORY PARTICIPANT

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A depository is an organization which holds securities of investors in electronic form at the

request of the investor through a registered Depository Participant. It also provides services

related to transaction in securities.

A depository participant (DP) is an agent of the depository through which it interfaces with the

investors. A DP can offer depository services only after it gets proper registration from SEBI.

Banking and services can be availed through the branch whereas depositary services can be

availed through a DP.

As per the available statistics at BSE and NSE, 99.9% settlement takes place in Demat mode

only. Therefore, in view of the convenience in settlement through Demat mode it is advisable to

have a beneficiary owner (BO) account to trade the exchanges.

At present two Depositers viz. National securities depository limited (NSDL) and Central

Depositary Services (I) Limited (CSDL) are registered with SEBI.

NSDLThe first depositary in India established in Aug 1996 and promoted by Institutions of National Stature

Responsible for Economic Development of the country has since established a national infrastructure of

international standard that handles most of the settlement of securities in dematerialized from in Indian

capital market.

Using innovative and flexible technology systems, NSDL work to support the investors and brokers in the

capital market of the country. NSDL aims at ensuring the safety and soundness of Indian market places

by developing settlement solution that increase efficiency minimize risk and reduce costs. At NSDL, we

play a quiet but central role in developing products and services that will continue to nature the growing

needs of the financial industries.

CSDLCSDL was set up with the objective of providing convenient, dependable and secure depository

services at affordable cost to all market participants. CSDL received the certificate of

commencement of business from SEBI in February, 1999. Honorable Union Finance Minister,

Shri Yashwant Sinha flagged off the operations of CSDL on July 15, 1999. Settlement of trades

in the demat mode through BOI shareholding Limited, the clearing house of BSE, standard in

July 1999.

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All leading stock exchanges like the National Stock Exchange, Calcutta Stock Exchange, Delhi

Stock

At the end of Dec 2005, over 5000 issuers have admitted their securities units of mutual funds,

certificate of deposits etc. into the CSDL system.

The categories that is eligible to become DP’s As per regulation 19 (a) of SEBI (Depositories and Participants) Regulations, following are

the categories that are eligible to become DP’s.

A public financial institution as defined in section 4A of the Companies Act, 1956 (1 of

1956).

A bank included for the time being in the second schedule to the Reserve Bank of India Act,

1934. (2 of 1934)

A foreign bank operating in India with the approval of Reserve Bank of India.

A state financial corporation established under the provision of the section 3 of the State

Financial Corporations Act, 1951 (63 of 1951)

An institution engaged in providing financial services promoted by any of the institution

mentioned in sub clause (i), (ii), (iii), (iv) jointly or severally.

A custodian of securities who has been granted a certificate of registration by the Board

under sub section (1A) of section 12 of the Act.

A clearing corporation or a clearing house of a stock exchange.

A stock broker who has been granted certificate of registration by the Board under sub

section (1) of section 12 of the Act.

A non – banking finance company, having a net worth of not less than rupees fifty lakhs.

Provided that such company shall act as a participant only on behalf of any other person.

The Regulations empower NSDL to set its own selection criteria in the Bye Laws. Therefore,

the applicants must also adhere to the following criteria stated in NSDL bye Laws.

The applicant should have a minimum net worth of Rs 1 crore.

The applicant should not have been convicted in any of the five years immediately preceding

the filling of the application in any manner involving misappropriation of funds and

securities, theft, embezzlement of funds, fraudulent conversion or forgery.

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The applicant should not have been expelled, barred or suspended by SEBI, self regulatory

organization or any stock exchange.

Stock Exchange Mumbai Share khan is the retail broking arm of SSKI, an organization with more then eight

decade of trust and credibility in the stock market.

Amongst pioneers of investment research in the Indian market.

In 1984 venture into institutional broking and the corporate finance.

Leading domestic player in the Indian institutional business.

Over US$5 billion of private equity deal.

SSKI group companies

SSKI investor services ltd (Sharekhan)

S.S. Kantilal Isharlal securities

SSKI corporate finance

SHAREKHAN PROFILE

SHAREKHAN RETAIL BROKING Among the top three (3) branded retail services providers (Rs 856 crs average daily

volume.

NO. 2 player in online business

Large network of branded broking outlets in the country servicing around 5, 45, 000

Clients

Branch - Head OfficeA-206, Phoenix House, 2nd Floor, Senapati Bapat Marg, Lower Parel, Mumbai- 400 013.

Telephone No: 67482000 

Email: myaccount@sharekhan.com 

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PRODUCTS OF SHAREKHAN

Some of the services offered by Sharekhan are:

1) Online Services: With a Sharekhan online trading account, one can buy and sell shares in

an instant. Anytime and from anywhere. One can choose the online trading account that

suits their trading habits and preferences. The various online accounts are:

Classic Account: This account enables to buy and sell shares through the website. The features

offered are Streaming quotes, multiple watch list, Integrated banking, demat and digital

contracts , instant credit & transfer, IPO bookings and real time portfolio tracking with price

alerts.

Speed Trade: Speed trade is an Internet-based executable application that provides

everything a trader needs on one screen. It provides services such as Real time streaming

quotes, live Tic by Tic intra-day charting and trading in cash and derivatives on a single

screen.

2) Share Shops: A Sharekhan outlet offers the following services:

Online BSE and NSE executions

Free access to investment advice from Sharekhan's Research team

Sharekhan ValueLine (a monthly publication with reviews of recommendations, stocks

to watch out for etc)

Daily research reports and market review (High Noon & Eagle Eye)

Pre-market Report

Daily trading calls based on Technical Analysis

Cool trading products (Daring Derivatives and Market Strategy)

Personalized Advice

Live Market Information

Depository Services: Demat Transactions

Derivatives Trading (Futures and Options)

Commodities Trading

IPOs & Mutual Funds Distribution

3) Mutual Funds24

4) Commodities Trading: Through Sharekhan one can trade in on both the leading

commodity exchanges MCX and NCDEX. They provide with various commodity reports

and analysis, daily commodity data and end of day statistics.

5) Portfolio Management Services

PMS Pro-Prime: Ideal for investors looking at steady and superior returns with low to

medium risk appetite. This portfolio consists of a blend of quality bluechip and growth

stocks ensuring a balanced portfolio with relatively medium risk profile. The portfolio

will mostly have large capitalization stocks based on sectors & themes who have

medium to long term growth potential.

PMS Pro-Tech: Protect uses the knowledge of technical analysis and the power of

derivatives market to identify trading opportunities in the market. The protect line of

product is designed around various risk/reward/volitality profiles for different kinds of

investment needs.

6) Demat Services: Dematerialization and trading in the demat mode is the safer and faster

alternative to the physical existence of securities. This system works through depository

participants (DPs) who offer demat services and the securities are held in the electronic

form for the investor directly by the Depository. Sharekhan Depository Services offers

dematerialization services to individual and corporate investors.

7) Sharekhan Valueline: This is the monthly investment report based on fundamental

research with stock ideas, stock updates, earning guide, Stock recommendations, Mutual

fund guide, Market outlook and sector updates

Other services offered by Sharekhan: Online BSE and NSE executions (through BOLT and NEAT terminals).

Free access to investment advice from Share Khan Research team.

Daily research report and market review (High Noon, Eagle Eye).

Pre Market report (Morning Cuppa).

25

Daily trading calls are based on technical analysis.

Cool Trading products (Daring Derivatives, Trading Ring and Market Strategy).

Personalized advice.

Live Market information.

Depository services: Demat and Remat transaction.

Derivatives trading (Futures and options).

CLASSIC ACCOUNT

This account allows the client to trade through the website www.sharekhan.com and is suitable

for the retail investor who is risk-averse and hence prefers to invest in stocks or who do not trade

too frequently.

It allows investor to buy and sell stocks online along with the following features like multiple

watch lists, Integrated Banking, De-mat and Digital contracts, Real-time portfolio tracking with

price alerts and Instant money transfer.

FEATURES

· Online trading account for investing in Equity and Derivatives via www.sharekhan.com

· Live Terminal and Single terminal for NSE Cash, NSE F&O, BSE & Mutual Funds (online

and offline).

· Integration of On-line trading, Saving Bank and De-mat Accounts.

· Instant cash transfer facility against purchase & sale of shares.

· Competative transaction charges.

· Instant order and trade confirmation by E-mail.

· Streaming Quotes (Cash & Derivatives).

· Personlized market watch.

· Single screen interface for Cash and derivatives and more.

· Provision to enter price trigger and view the same online in market watch.

26

TRADE TIGERTRADE TIGER is an internet-based software application which is the combination of EQUITY

& COMMODITIES, that enables you to buy and sell share and well as commodities item

instantly. It is ideal for every client of SHAREKHAN LTD.

FEATURES Integration of EQUITY & COMMODITIES MARKET.

Instant order Execution and Confirmation.

Single screen trading terminal for NSE Cash, NSE F&O & BSE & Commodities.

Technical Studies.

Multiple Charting.

Real-time streaming quotes, tic-by-tic charts.

Market summary (Cost traded scrip, highest value etc.)

Hot keys similar to broker’s terminal.

Alerts and reminders.

Back-up facility to place trades on Direct Phone lines.

OTHER FEATURES TO INVEST IN SHAREKHAN No Demat Transaction Charges in case of buying and selling through share khan.com

For the fund transfer and withdrawal, we have tie-up with HDFC Bank.

If you are having bank a/c in HDFC Bank you can transfer the funds and withdraw the

funds online from your trading a/c at anytime.

BTST (Buy today Sell Tomorrow) Facility in all scripts.

DIAL-N-TRADE: - Call and Trade through Toll free no. From anywhere in India

(CUSTOMER CARE: 1600227500, TRADING: 1-600-22-7500,39707500

27

Demat and Trading Account

Sharekhan Demat AccountA Demat Account is an account which you need in India in order to buy and sell shares. Earlier shares or stocks or a company were bought and sold in paper format. Now they are stored electronically. Just like money is saved in your bank account, Shares are stored in your Demat Account (sometimes also called DMAT account). You can open a Demat Account with sharekhan. This is especially recommended if you have an online trading account with Sharekhan. You can then link you Sharekhan trading account with your Sharekhan Demat Account so that any shares bought with the trading account can be directly transferred to your Demat. Here is all information you need about Sharekhan Demat Account.

Documents Needed to Open a Sharekhan Demat Account.

1. PAN Card. Pan card is now mandatory in order to open a Demat Account.

2. Address Proof. Example- your ration card, driver's license, electricity bill, voters id or

election card, etc.

3. Your recent photographs. Two or three.

4. A cancelled check. This may or may not be required. But carry your bank passbook and

check book when you go to open a Sharekhan Demat Account.

Sharekhan Demat Account Charges

1. Sharekhan Demat Account Opening Charges: NIL

2. Sharekhan Demat Account Maintenance Charges: Rs. 75 per quarter, i.e. Rs. 300 per annum.

3. Sharekhan Demat Account Closing Charges: Rs. 100.

4. Sharekhan Demat Account Charges for Buying Shares: 0.02%, Minimum Rs. 15.

5. Sharekhan Demat Account Charges for Selling Shares: 0.04%, Minimum Rs. 15.

6. Sharekhan Dematerialization Charges: Rs. 3 per certificate or Rs 15 per request,

whichever is higher.

7. Sharekhan Rematerialization Charges: Rs. 25 per certificate of 0.12% of the value of the

securities, whichever is higher.

8. Sharekhan Demat Account Custody Fee: NIL

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9. Charges for Requests to freeze or defreeze Sharekhan Demat Account: Rs. 25 per

request.

10. Sharekhan Demat Account Charges for pledge creation/closure: 0.02%, minimum Rs. 15.

Sharekhan Trading Account and Brokerage Charges

Sharekhan offers two types of online trading Accounts suited to different investor needs.

1. Sharekhan Classic Trade - Website Based trading, suitable for long term investors who do

not worry about stock price fluctuations minute-by-minute. Sharekhan Classic Trade is not

suitable for Intraday traders.

2. Sharekhan Tiger Trade - Terminal based trading, especially suited for intraday traders.

The brokerage charged by Sharekhan is negotiable and if you are going to trade heavily do

negotiate with Sharekhan for a good brokerage deal. Sharekhan Brokerage Charges are not too-

high nor too-low and comparable with other online brokers like SBICAP Securities

BENEFITS Free Depository A/c

Secure Order by Voice Tool Dial-n-Trade.

Automated Portfolio to keep track of the value of your actual purchases.

24x7 Voice Tool access to your trading account.

Personalized Price and Account Alerts delivered instantly to your Cell Phone & E-mail

address.

Special Personal Inbox for order and trade confirmations.

On-line Customer Service via Web Chat.

Anytime Ordering.

NSDL Account

Instant Cash Tranferation.

Multiple Bank Option.

Enjoy Automated Portfolio.

Buy or sell even single share.

29

COMPETITORS:-

KOTAK SECURITIES LTD

Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of the Kotak Mahindra Group. One of the oldest broking houses in India, its operations include stock broking and distribution of various financial products. It is a corporate member of both the Bombay Stock Exchange and the National Stock Exchange of India. Kotak Securities was founded in 1994 and is headquartered in Mumbai, India.

Corporate affairs

As of June 30, 2010, Kotak Securities has Rs. 2250 crore of "assets under

management" (AUM). The company also has a research division involved in

macroeconomic studies, sectoral research and company-specific equity research,

which regularly publishes stock market analysis.

Milestones

• 2007: Kotak lines up PMS based on small caps

• 2008: Kotak Securities launches a GEMS portfolio.

• 2009: Kotak Securities launches online trading in currency derivatives

Awards and accolades • Fastest growing Equity Broking House by BSE IPF - D&B Equity Broking Awards for

the year 2012

• The Best Equity House in India by FinanceAsia for the year 2012.

• Voted as Best Local Cash Manager.

• Awarded Best Brokerage Firm in India by Asiamoney three times in a row from 2006 to 2008.

• Named Best Performing Equity Broker in India in the CNBC Financial Advisor Awards

2008.

30

Won the Avaya Customer Responsiveness in the Financial Services Sector Award consecutively

in 2006 and 2007.

INDIABULLs

Brief Introduction

India Bulls Power Limited develops and intends to operate and maintain power projects in

India. The company was established in 2007 to capitalize on emerging opportunities in Indian

Power sector. The company has five thermal power projects under development which will have

a combined installed capacity of 6615 MW. The company intends to sell the power generated

from these projects under a combination of long term PPA‟s to industrial and state owned

consumers and on merchant basis.The company is also developing 4 medium sized hydro power

projects aggregating to 167 MW in Arunachal Pradesh.The company is a part of the Adani

Group which is a leading business group in India.The company was incorporated in August

1996 and received a certificate of commencement of business in September 1996. The company

converted into a private limited company in June 2002, but finally converted back into a public

limited company in April 2007 under the present name.

1. SMC GLOBAL SECURITIES

Main Focus: Investor Care

SMC is one of the leading firms in financial services in India. It basically deals in Mutual

Fund, Fixed Deposit Schemes, Capital Gain Bonds, GOI Taxable Bonds, NABARD Bonds

and Life and General Insurance.

31

SMC: A ONE STOP INVESTMENT SHOP

SMC Group, a leading financial service provider in India is a vertically integrated investment

solutions company. Over the years, SMC has expanded its domestic & international operations.

Existing network includes regional offices at Mumbai,

Kolkata ,Chennai ,Bangalore ,Cochin ,Jaipur, Hyderabad. The company has expanded

internationally and has established office in Dubai Gold and Commodities Exchange

(DGCX).Its products and Services include Institutional and retail brokerage of equity,

commodity, currency, derivatives, online trading, investment banking ,depository services,

clearing services, IPO‟s and mutual funds distribution, Portfolio management, wealth advisory,

insurance broking, equity and commodity research. SMC is one of the most active trading

organizations in India, averaging over 3,50,000 trades per day. Currently, SMC has a highly

efficient workforce of over 4,000 employees & one of the largest retail network in India

currently serving the financial needs of more than 5,50,000 satisfied investors.

PARTIES INVOLVES IN ONLINE TRADING

The various parties involved in online trading

Client

Broker

Stock Exchange

EQUITY SHARES

Total equity capital of the company is divided into equal units of small denomination, each

called a share. For example, in a company total equity capital of Rs. 2,00,00,000 is divided into

20,00,000 units of Rs 10 each. Each such unit of Rs. 10 is called a Share. Thus, the company

then is said to have 20,00,000 equity share of Rs 10 each. The holders of such shares are member

of the company and have voting rights.

Why do company need to issue Shares to the public?32

Most of the company are usually started privately by their promoter(s). However, the promoter’s

capital and the borrowing from bank and financial institution may not be sufficient for setting up

and running the business over a long term. Therefore, companies invite the public to contribute

toward the equity and issue share to individual investors. The way to invite share capital from the

public is through a ‘Public Issue’. Simply stated a public issue is an offer to the public to

subscribe the share capital of a company. Once this is done, the company allot share to the

applicants as per the prescribed rules and regulation laid down by SEBI.

How can one acquire equity shares?The investors may subscribe issue made by corporate in the primary market. In the primary

market, resources are mobilized by the corporate through fresh public issues (IPO’s) or through

private placements. Alternately, investor may purchase shares from the secondary market. To

buy and sell securities you should approach a SEBI registered trading member (broker) of a

recognized stock exchange.

INVEST IN EQUITIESWhen an individual buy a share of a company he become a shareholder in that company. Shares

are also known as Equities. Equities have a potential to increase in value over time. It also

provides investors portfolio with the growth necessary to reach investor’s long-term investment

goals. Research studies have proved that the equities have outperformed most than other forms

of investments in the long term. This may be illustrated with the help of following.

Examples:

Over a 15-year period between the periods 1990 and 2005. Nifty has given an annualized

return of 17%.

Mr. Raja invests in Nifty on January 1, 2000 (index value 1592.90). The Nifty value as of

end December 2005 was 2836.55. Holding this investment over this period Jan 2000 to

Dec 2005, he gets a return of 78.07%. Investment is shares of ONGC Ltd. For the same

period gave a return of 465.86%, SBI 301.17% and Reliance 281.42%.

Therefore,

33

Equities are considered the most challenging and the rewarding, as compared to other

investment option.

Research studies have proved that investments in some shares with a longer tenure of

investment have yielded far superior returns than any other investment.

Average return on Equities in India:Since 1990, till date, Indian share market has returned about 17% to investors in an average in

terms of increase in share prices or capital appreciation annually. Beside these stocks have paid

on an average 1.5% dividend annually Dividend is a percentage of the face value of a share that a

company returns to its share holder from its annual profits. Composed topmost other form of

investments, investing in equity share offers a highest rate of return, if invested over a longer

duration.

Factors that influence the price of stocksBroadly, there are two factors:

Stock specific and

Market specific.

The stock – specific factor is relates to people’s expectation about the company, its future

earning capacity, financial health and management, level of technology and marketing skills.

The market specific factors are influenced by the investor’s sentiments towards the stock market

as a whole. This factor depends on the environment rather than the performance of any company.

Events favorable to an economy, political or regulatory environment like high economic growth,

friendly budget, stable government etc. can fuel euphoria in the investors, resulting in a boom in

the market. On the other hand, unfavorable event like war, economic crisis, communal riots,

minority government etc. depress the market irrespective of certain companies performing well.

34

DERIVATIVES

TRADE IN DERIVATIVE

Trading in Derivatives is an art and science that professional traders can master with the right knowledge, right tools and a lot of discipline. This is where Trade Tiger comes in. Trade Tiger is a next-generation trading and research software platform that allows you to easily execute your intra-day or F&O trades, access the latest market news and trading calls, and comes with some exquisite features

Trade Tiger Features

Live Streaming Quotes

Access all Trading Calls

Advanced Charting features

Create your own technical rules for trading

A Single Trading Screen for BSE & NSE

Derivative is a product whose value is derived from the value of one or more basic variable

called underlying assets. The underlying asset can be equity, index, foreign exchange (forex),

commodity or any other asset.

Derivative product initially emerged as heading devices against fluctuation commodity prices

and commodity linked derivatives remained the sole from of such products for almost three

hundred years .The financial derivatives came into spotlight in post-1970 period due to growing

instability in the financial markets. However, since their emergence, these products have became

very popular and by 1990s, they accounted for about two-thirds of total transactions in

derivatives’ products.

Uses of Derivatives

1. HEDGING

The benefit of trading in index futures is to hedge your portfolio against the risk of trading. In

order to understand how one can protect his portfolio from value erosion let us take an example.35

Let us try understanding how one can use hedging in a real life scenario. Stocks carry two

types risk- company specific and market risk. While company risk can be minimized by

diversifying your portfolio, market risk cannoy be diversified but has to be hedged.

So how does one measure the market risk? Market risk can be known from Beta.

Beta measures the relationship between movements of the index to the movement of the stock.

The Beta measures the percentage impact on the stock prices for 1% change in the index.

Therefore, for portfolio whose value goes down by 11% when the index goes down by 10%, the

beta would be 1.1.When the index increase by 10%, the value of the portfolio increase by 11%.

The idea makes beta of your portfolio zero to nullify your losses.

2. SPECULATION

Speculators are those who do not have any position on which they enter in futures and option

market. They only have a particular view on the market, stock, commodity etc. In short,

speculators put their money at risk in the hope of profiting from an anticipated price change.

They consider various factors such as demand supply, market positions, open interest, economic

fundamentals and other data to take their positions.

3. ARBITRAGE

An Arbitrageur is risk averse. He enters into those contracts were he can earn risk less profits.

When markets are imperfect, buying in one market and simultaneously selling in other market

give risk less profit. Arbitrageurs are always in a lookout for such imperfections.

In the Futures market one can take advantages of arbitrage opportunities by buying from lower

priced market and selling at the higher priced market. In index futures arbitrage is possible

between the spot market and the future market (NSE has provided special software of buying all

50 Nifty stocks in the spot market).

Take the case of the NSE Nifty.

Assume that Nifty is at 1200 and 3 month’s Nifty Futures is at 1300.

The Future price of Nifty can be worked out by taking the interest cost of 3 months into the

account.

36

FUTURE AND OPTION

Types of derivatives and futures:-Derivatives and future are three types.

– Forwards and futures

– Options

– Swaps

Forward contractA forward contract is simplest mode of a derivative transaction. It is an agreement to buy or sell

an asset (of a special quantity) at a certain future time for a certain price. No cash is exchanged

when the contract is entered into.

Futures and Stock IndicesFor understanding of stock index future, a through knowledge of the composition of indexes is

essential. Choosing the right index is important in choosing the right contract for speculation or

hedging. Since for speculation, the volatility of the index is important whereas for hedging the

choice of index depends upon the relationship between the stock being hedged and the characters

of the index.

Choosing and understanding the right index in important as the movement of stock index future

is quite similar to that of the underlying stock index. Volatility of the futures indexes is generally

greater than spot stock indexes.

Understanding index futures

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. Index futures are all futures contract where the underlying is the

stock index (Nifty or Sensex) and helps a trader to take a view on the market as a whole.

In India, we have index futures contracts based on S&P CNX Nifty and BSE Sensex and near 3

months durations contracts are available at all times. Each contract expires on the last Thursday

of the expiry month and simultaneously a new contract is introduced for trading after the expiry

of the contract.37

Options An option is a contract between two parties giving the taker (buyer) the right, but not the

obligation, to buy or sell a parcel of shares at a predetermined price possibly on, or before a

Stock market by their very nature is fickle. While fortunes can be made in a jiffy more often than

not the scenario is the reverse. Investing in stocks has two sides to it.

Unlimited profit potential from any upside (remember Infosys, HFCL etc.)

A downside which could make you a pauper.

Types of optionThere are two types of options.

Call Options

Put Options

Call Options

Call option give the taker the right, but not the obligation, to buy the underlying shares at a

predetermined price, on or before a predetermined date.

IllustrationRaj purchases 1 Shyam Computer (SATCOM) AUG 150 Call – premium 8.

This contract allows Raj to buy 100 shares of SATCOM at Rs 150 per share at any time between

the current date and the end of next August for the privilege, Raj pays a fee of Rs 800 (Rs eight a

share for 100 shares).

The buyer of a call has purchased the right to buy and for that, he pays a premium.

Call options – Long & Short PositionsWhen you expect prices to rise, then you take a long position by buying calls. You are Bullish.

When you expect prices to fall, then you take a short position by selling calls. You are Bearish.

Put options

38

A Put Options gives the holder of the right to sell a specific number of share of an agreed

securities at a fixed price for a period.

Put Options-Long & Short Positions

When you expect to fall, then you take a long position by buying Puts. You are bearish.

When you expect prices to rise, then you take a short position by selling Puts. You are bullish.

CALL OPTIONS PUT OPTIONS

If you expect a fall in price (Bearish) Short Long

If you expect a rise in price (Bullish) Long Short

Summary:

CALL OPTION( BUYER) CALL OPTION WRITER (Seller) Pays premium

Right to exercise and buy the shares

Profits from rising prices

Limited losses, Potentially unlimited

gain

Receives premium

Obligation to sell shares if exercised

Profits from falling prices or remaining

neutral

Potentially unlimited losses, limited

gain

PUT OPTION( BUYER) PUT OPTION WRITER (Seller)

Pays premium

Right to exercise and sell shares

Profits from falling prices

Limited losses, Potentially unlimited

gain

Receives premium

Obligation to buy shares if exercised

Profits from rising prices or remaining

neutral

Potentially unlimited losses, limited

gain

TRADING STRATEGIES

39

BULL MARKET STRATEGIES Calls in a Bullish Strategy.

Puts in a Bullish Strategy.

Bullish Call Spread Strategy.

Bullish Put Spread Strategy.

Calls in a Bullish StrategyAn investor with a bullish market outlook should buy a call options. If you expect the market

price of the underlying asset to raise, then you would rather have the right to purchase at a

specified price and sell later at a higher price than have a obligation to deliver later at a higher

price.

The investor’s profit potential buying a call option is limited. The investor’s profit is the market

price less the exercise price less the premium. The grater increase in the price of underlying

stock, the grater the investor’s profit.

The investor’s potential loss is limited. Even if the market takes a drastic decline in price levels,

the holder of a call is under no obligation to exercise the option. He may let the option expire

worthless.

The investor breaks even when the market price equals the exercise price plus the premium.

Puts in a Bullish StrategyAn investor with a bullish market outlook can also go short in a Put option. An investor

anticipating a bull market could write put options. If market price increases and puts become out-

of-the-money, investor with long put positions will let their option expire worthless.

By writing Puts, profit potential is limited. A Puts writer profits when the price of the underlying

asset increases and the option expires worthless. The maximum profit is limited to the premium

received.

An increase in volatility will increase the value of your put nad decrease your return. As an

option writer, the higher price you will be forced to pay in order to buy back the option at the

later date, lower is the return.

40

Bullish Call Spread Strategies– A vertical call spread is the simultaneous purchase and sale of identical call option but

with different exercise profit.

– To “buy a call spread” is to purchase a call with a lower exercise price and write a call

with a higher exercise price. The trader pays a net premium for the position.

– To “sell a call spread” is the opposite here the trader buys a call with a higher exercise

price and write a call with a lower exercise price receiving net premium for the position.

– An investor with a bullish market outlook should buy a call spread. The “Bull Call

Spread” allows the investor to participate to a limited extent in a bull market, while at the

same time limiting risk exposure.

Bullish Put Spread Strategies – A vertical Put spread is the simultaneous purchase and sale of identical Put option but with

different exercise prices.

– To “buy a put spread” is to purchase a Put with a higher exercise price and to write a Put with

a lower exercise price. The trader pays a net premium for the opposition.

– To “sell a put spread” is the opposite: the trader buys a put with a lower exercise price and

writes a put with a higher exercise price, receiving a net premium for the position.

– An investor with a bullish market outlook should sell a Put spread. The “vertical bull put

spread” allows the investor to participate to a limit extent in a bull market, while at the same

time limiting

BEAR MARKET STRATEGIES– Puts in Bearish Strategy

– Calls in a Bearish Strategy

– Bearish Put Spread Strategies

– Bearish Call Spread Strategies.

Puts in a Bearish Strategy

41

An Investor’s profit potential is practically unlimited. The higher the fall in price of the

underlying asset, higher the profits.

The investor’s potential loss is limited. If the price of the underlying asset rises instead of falling

as the investors has anticipated, he may let the option expire worthless. At the most, he may lose

the premium for he option.

The trader’s breakeven point is the exercise price minus the premium. To profit, the market price

must be below the exercise price. Since the trader has paid the premium, he must recover the

premium he paid for the option.

An increase in volatility will increase the value of your put and increase your return. An increase

in volatility will make it more likely that the price of the underlying instrument will move. This

increases the value of the option.

Calls in a Bearish StrategyAnother option for the bearish investor is to go short on a call with the intent to purchase it back

in the future. By selling a call, you have net short position and needs to be bought back before

expiration and cancel out your position. For this, an investor needs to write a call option. If the

market price falls, long call holder will let their out-of-the-

money option options expire worthless, because they could purchase the underlying asset at the

lower market price.

The investor’s profit potential is limited because the trader’s maximum profit is limited to the

premium received for writing the option.

An increase in volatility will increase the value of your call and decrease your return. When the

option writer has to buy back the option in order to cancel out his position he will be forced to

pay a higher price due to the increased value of the calls

Bearish Put Spread Strategies– A vertical out spread is simultaneous purchase and sale of identical put option but with

different exercise prices.

– To “buy a put spread” is to purchase a put with a higher exercise price to write a put with a

lower exercise price. The trader pays a net premium for the position.

42

– To “sell a put spread” is the opposite. The trader buys a put with a lower exercise price and

writes a put with a higher exercise price, receiving a net premium for the position.

– To put on a bear put spread by you the higher strike put and sell the lower strike put. You

sell the lower strike and buy the higher strike of either calls or puts to set up a bear spread.

– An investor with a bearish market outlook should buy a put spread. The “Bear put Spread”

allows the investors to participate to a limit extent in a bear market, while at the same time

limiting risk exposure.

Bearish Call Spread StrategyA vertical call spread is the simultaneous purchase and sale of identical call option but with

different exercise prices.

A vertical call spread is the simultaneous purchase and sale of identical call option but with

different exercise profit.

To “sell a call spread” is the opposite here the trader buys a call with a higher exercise price and

write a call with a lower exercise price receiving net premium for the position.

To put on a bear call spread you sell the mower strike call and buy the higher strike call. An

investor sells the lower strike and buys the higher strike of either calls or puts to put on the bear

spread.

An investor with a bearish market outlook should sell a call spread. The “Bear Call Spread”

allows the investor to participate to a limited extent in a bear market, while at the same time

limiting risk exposure.

The investor’s profit potential is limited. When the market price falls to the lower exercise price

both out-of-the-money option will expire worthless. The maximum profit that the trader can

realize is the net premium: The premium he receives for the call at the higher exercise price.

43

Chapter 3

Review of Literature

44

LITERATURE REVIEW

A number of academic studies have provided evidence of demographic and non demographic

characteristics related to the financial risk tolerance of individuals. The most common variables

researched by academics to determine their relationship with financial risk tolerance are gender,

age, marital status, number of dependents, income, wealth, education and financial knowledge.

We report the main findings as well as a number of less-researched variables. Gender differences

have been widely examined, with a large number of studies reporting higher financial risk

tolerance for males (Grable, 2000; Grable and Joo, 2000; Bemasek and Shwiff, 2001; Chaulk,

Johnson, and Bulcroft, 2003; Yook and Everett, 2003; Grable, Lytton, and O'Neill, 2004;

Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006;

Van de Venter and Michayluk, 2007; Gilliam, Chatterjee, and Zhu,2010).

Studies have also argued that financial risk tolerance decreases with age (Xiao, Alhabeeb, Hong,

and Haynes, 2000; Chaulk, Johnson, and Bulcroft, 2003; Hallahan, Faff, and McKenzie, 2004;

Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006; Van de Venter and Michayluk, 2007;

Faff, Hallahan, and McKenzie, 2009). Furthermore, a nonlinear aspect to age has been observed

(Hallahan, Faff, and McKenzie, 2004; Grable, Lytton, O'Neill, Joo, and Klock, 2006; Faff,

Hallahan, and Mckenzie, 2009). The primary explanation for the observation of a significantly

negative coefficient for age and the nonlinear relationship has been attributed to the time horizon

to recover losses that is lower with age and the higher reliance on investment funds as

individuals’ age.

Marital status has been widely studied, especially because of its interaction with age and gender.

Financial risk tolerance is higher for single individuals (Grable and Joo, 2004; Hallahan, Faff,

and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao,2006). The main

justification for this result is that single individuals do not hold the same responsibilities as those

that are married and thus the single individuals are willing to accept more financial risk. For

example, Chaulk, Johnson, and Bulcroft (2003) propose that married individuals tend to have a

lower financial risk tolerance because of a greater need for wealth protection. When gender and

marital status are incorporated together, Jianakoplos and Bemasek (1998) and Bemasek and

Shwiff (2001) find that single men tend to be more risk tolerant than single women. A negative

relationship between financial risk tolerance and the number of dependents is identified by

Chaulk, Johnson, and Bulcroft (2003) and Hallahan, Faff, and McKenzie (2004), with Faff,

45

Hallahan, and McKenzie (2009) proposing a statistically significant nonlinear linkage. This

negative relationship has been identified with marital status and may exist because of the added

responsibilities and more conservative outlook to risk when dependents are considered.

Higher financial risk tolerance is reported for individuals in high income and wealth categories

(Grable, 2000; Chaulk, Johnson, and Bulcroft, 2003; Yook and Everett, 2003; Chang, DeVaney,

and Chiremba, 2004; Grable and Joo, 2004; Grable, Lytton, and O'Neill, 2004; Hallahan, Faff,

and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006). In addition,

Grable and Joo (1999) indicate a significantly positive relationship between financial risk

tolerance and an individual's level of financial solvency.

A positive relationship has been identified between financial risk tolerance and education

(Grable, 2000; Chang, DeVaney, and Chiremba, 2004; Grable and Joo, 2004; Hallahan, Faff, and

McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006). Hallahan, Faff, and

Mckenzie (2004) also observe high positive correlations between income, wealth, and education,

suggesting that financial risk tolerance could be a function of income and wealth rather than

education.

Financial or investment knowledge has a positive relationship with financial risk tolerance

(Grable, 2000; Grable and Joo, 2000, Grable and Joo, 2004; Van de Venter and Michayluk,

2007). However, Davey (2004) challenges the view that educating individual investors about

financial markets and instruments will necessarily increase their financial risk tolerance.

Although the financial education of an advisor's clients is considered best practice, it will most

likely not have any direct influence on the risk preference of an individual as even the most

knowledgeable and educated could potentially have a low financial risk tolerance.

When advising clients about investment decisions, financial advisors have to consider both their

financial goals and financial risk tolerance. In many cases these two could conflict, leading

advisors to recommend that individuals take on more risk than they are comfortable with to meet

their financial goals. Bemasek and Shwiff (2001) report that individuals generally tend to

increase the level of risk of their retirement savings after they have consulted a financial advisor.

Furthermore, this increase was found to be statistically significant for both the respondent and

the spouse or partner consulting a financial advisor, possibly suggesting the existence of a

relationship between gender and marital status as well.

46

In contrast to the earlier finding. Van de Venter and Michayluk (2007) find no statistically

significant effect on financial risk tolerance when a financial advisor is consulted. When

examining whether a financial advisor has any impact on investment behavior. Hung and Yoong

(2009) conclude that unless financial guidance is actively sought by the individual, consulting a

financial advisor has no impact on investment behavior. This finding highlights the difficulty

when interpreting survey questions that encompass financial advisors, and whether their advice

is undertaken.

Finally, Grable (2000) reports that individuals with positive economic expectations have higher

financial risk tolerance scores than those with less positive expectations, with Van de Venter and

Michayluk (2007) also finding evidence that financial risk tolerance is positively related to both

future expectations and previous investment performance. These previous findings identify many

factors that might influence risk tolerance on their own or in combination with other.

47

Chapter 4

Objectives & Research Methodology

48

RESEARCH METHODOLOGY

The research design used in this study is descriptive. The researcher had a discussion with the

customers through a structured interview. The data set include, primary data were collected using

a structured questionnaire and secondary data were collected from previous records, reference

books, company records and internet. The data collected through the various sources was

converted into readable data and was tabulated and analyzed for logical status using appropriate

statistical method. In this study, simple percentage analysis has been employed to interpret the

data.

Prepare a list of information needed.

Frame questionnaire.

Collect data

Analysis and interpretation.

Convert data into information and graph

Title of the Study:

“Study of Investors Attitude towards the Share Market”

49

Objectives

This study has been carried out with the following objectives:

To find out the factors those affect the choice of investors while selecting a broking house. To study and classify the investors based on their age, income, occupation etc and thereby

help Sharekhan in attracting more customers.

To find the investment, trading and market preferences of the investors.

To study the fondness of investors on equity and derivative instruments.

To find the investors opinion about risk and return component involved in equity and

derivative market.

Research Methodology Prepare a list of information needed.

Frame questionnaire.

Collect data

Analysis and interpretation.

Convert data into information and graph

Type of Research

Methodology used for survey was exploratory research methodology. In which emphasis was

given on not only filling the questionnaire but also to get real experiences and the perception of

the investors.

Data Type:Primary data were collected through and secondary data

50

Primary data was collected through interview method using a structured questionnaire from

various investors in Jaipur.

Secondary data were collected from previous records, reference books, company records

and internet.

Sampling Plan:

Random sampling technique was used to ensure the law of statistical regularity

Survey Area: The survey was conducted Jaipur

Survey Timings: The survey for this research study was conducted between 11 am to 4pm.

About data

Collection of both primary and secondary data, understanding and analysis of the

collected data and its interpretation to come to a conclusion.

Scope of the StudyThe facts and findings of this research study are applicable only for the investors of Jaipur.

During the survey mostly customers of Sharekhan and few other brokerage houses were covered.

Data Analysis Technique

Fundamental to the success of any marketing research project is sound research design. Research

design is the basic framework which provides guideline for the rest of research process. It is a

map or blueprint according to which the research is to be conducted. The function of research

design is to ensure that the required data are collected accurately and economically.

51

Chapter-5

Data Analysis, Results and Interpretation

52

DATA ANALYSIS

INTERPRETATION:-

Women see higher returns on their investments. Investment portfolios controlled by women tend

to be more varied, less risky, and generally more successful. Similarly, female entrepreneurs are

more likely to capitalize on ambition and dedication than men—who generally get ahead

by being rebellious and taking risks. Men invest as some amount of their saving for mare profit

in short time of period and they have easy source of income.

53

41

9

MALES FEMALES

GENDER

MALES 4

1

FEMALES 9

1.

12%

51%

26%

11%

Below2525-3534-45above45

INTERPRETATION:-

Age group of below 25 is not more invest in share market because they have not more source of

income to take risk in share market. The age group of 25-35 invests more because they think

Investments are one of the only ways to keep up with inflation. The age group of 35-45 thinks

about the share market that investing is always a risk. Investing could earn you money or lose it.

Just because many people invest doesn't mean it isn't a risk, and just because it's a risk doesn't

54

AGE

GRO

UP

NO.OF

PEOPLE

PERCENTAG

E OF PEOPLE

Below2

5

6 12

25-35 25 51

35-45 13 26

above4

5

6 11

mean you shouldn't invest. Hardly anyone gets rich - or even just secure in retirement - by

always playing it safe.

Then age group of above 45 year old people invests money because interest on money in savings

account is not more, but in the investment they can save more money for their retirement.

2.

H.S.C GRADUATE POST GRADUATE OTHERS02468

101214161820

10

20

14

6

QULIFICATION

Series1

INTERPRETATION:-

55

QULIFICATION NO. OF

PEOPLE

PERCENTAGE OF QUALIFIED PEOPLE

H.S.C 10 19

GRADUATE 20 41

POST

GRADUATE

14 27

OTHERS 6 13

According to survey qualification of graduate people invests more in share market because they

have sufficient income and also knowledge of share market. H.S.C and others have only

knowledge about share market but they have not source of income to take risk and post graduate

person they prefer job and invests their money through broker or bank

3.

50%

20%

6%

24%

OCCUPATIONBUSINESS SERVICES HOUSEWIVES OTHERS

INTERPRETATION:-

According to data 50%investors are businessman they invests in share market more than other

occupation because they have lot of source of income and they can easily take risk and the

contact of the businessman have lot of banks and brokers so they have minimum risk if any type

of uncertainty they can easily bear risk.20%of services people invests because they have not 56

OCCUPATIO

N

NO .OF

PEOPL

E

PERCENTAGE OF

PEOPLE

BUSINESS 25 50

SERVICE 10 20

HOUSEWIFE 3 6

OTHERS 12 24

fully sufficient income for investment and if they have knowledge about stock market then they

invests in the market otherwise they don’t want to take risk. The housewives investors was too

low because they have knowledge but they have not able to take risk. The sectors where the

employees like in the call centers and as compounders etc. are also invests the money in share

market for more profit and beneficial for him for long time of period.

4.

RELY ON THE

INFORMATION

No.

of

peop

le

Percenta

ge of

people

OWN 24 48

FRIENDS 7 14

SHARE BROKERS 16 32

ADVERTISEMENT 3 6

48%

14%

32%

6%

OWNFRIENDSSHARE BROKERSADVERTISEMENT

INTERPRETATION:-

During the survey it was found that nearly 48% of the respondents get investment

information through their own effort because they believe their own knowledge and 57

information and they play on their own day to day information based. 14%of investors

believe on the information which is given by friends or relatives because they invest on

behalf of them or may be as a busy schedule to get information of stock market. 32%of

investor believes on share brokers for transaction of share because they think that brokers

have experience to sale or purchase the shares so they believe in broker. Advertisement in the

shares transaction does not use more because it only indicate about the companies plan and

policy so the investor only invests on the basis of information or some change in the

company.

5.

MARKET

PREFER

No.

of

peop

le

Percentag

es of

people

IPO 37 73

SECONDAR

Y

13 27

IPO SECONDARY0%

10%

20%

30%

40%

50%

60%

70%

80%73%

27%

Series1

58

INTERPRETATION:-

73% of people invest though initial public offer because many different rules and regulations dictate the processes of institutions, but they all follow a general pattern:

A company contacts an underwriting firm to determine the legal and financial details of the public offering. A preliminary registration statement, detailing the company's interests and prospects and the specifics of the issue, is filed with the appropriate authorities

Other 27%people invests in secondary market because ,The secondary market is what people are talking about when they refer to the "stock market". This includes the New York Stock Exchange (NYSE), Nasdaq  and all major exchanges around the world. The defining characteristic of the secondary market is that investor’s trade among themselves. That is, in the secondary market, investor’s trade previously issued securities without the issuing companies' involvement.

6.

Time period of holding

shares

No.

of

peop

le

Percent

age of

people

short-term 9 17

mid-term 27 54

long-term 14 29

59

short-termmid-term

long-term

0%

10%

20%

30%

40%

50%

60%

17%

54%

29%

TIME PERIOD OF HOLDING SHARES

Series1

INTERPRETATION:-

The investors that who choose the short time period they actually wants profit from share

in short time of period and also want to purchase new share and mostly want to play in

intraday. The investors who invest for mid time of period only for because they analysis

the market then they sell or purchase the share

The long term of people they only think about the benefits for long term as company will

go in high then the profit of investor will also high otherwise opposite.

7.

SAFE TRADING IN

YOUR OPINION

No.

of

peopl

es

Percenta

ges of

peoples

INTRADAY 3 6

DELIVERY 47 94

60

INTERPRETATION:-

From the study we can easily interpret that only 6% of the respondents assume intraday is safer

because in the intraday there is no lot size investor can choose no. of share to trade in same day.

Other people invests in delivery because the share has no expiry date investors can easily sale the

share when the price of share will be high

8.

TYPES OF

INVESTMENT PREFER

No. of

people

Percenta

ge of

people

FUTURE MARKET 17 34

CASH MARKET 33 66

61

6%

94%

SAFE TRADING IN OPINION OF INVESTORSINTRADAY DELIVERY

FUTURE MARKET

34%

CASH MARKET

66%

TYPES OF INVESTOR PREFER

INTERPRETATION:-

It is clear that around 34% of the respondents prefer to invest in future market because In the

cash market the deal between the parties is settles within trade date +2 or 3but in the future

market the deal is settled on a future specified date.

9.

PROFIT AND RISK MORE THAN CASH MARKET AS COMPARED TO

FUTURE MARKET

No. of

people

Percentage

of people

STRONGLY AGREE 10 20

AGREE 31 63

62

UNDECIDED 6 11

DISAGREE 2 4

STRONGLY DISAGREE 1 2

STRONGLY AGREE

AGREE UNDECIDED DISAGREE STRONGLY DISAGREE

0%

10%

20%

30%

40%

50%

60%

70%

20%

63%

11%4% 2%

Series1

INTERPRETATION:-

From the above survey it is clear that 20% of the respondents strongly agree with the statement

that Profit and Risk is less in cash market as compared to future market and 63% of the

respondents agree with the statement. 11% of the respondents cannot decide. Around 4% of

respondents disagreed with the statement and 2% of the respondents strongly disagreed with the

statement.

RECOMMENDATIONS

Share Khan Ltd. Should try to track clients from BPO’s and software companies as in these

companies majorities employees fall into the age group of 25-35 that is young influential,

they should be the mainly targeted because these people have disposable income and are high

risk taking people so they would be interested Demat account and Trading.

63

Share Khan Ltd can also target colleges and B-schools for growth. Company can sponsor

event in these places so that more and more people will get to know about the company. The

company can also organize small seminars.

Share Khan Ltd should give knowledge of derivative product. Derivatives product concern

Future and Options for hedging positions.

Share Khan Ltd can also use the method of mass marketing by giving advertisements on

local cable network, newspapers and can distribute pamphlets in public places.

LIMITATIONS OF THE STUDY

The study may suffer from the following limitations:

In such a short span of 45 days, it is very difficult to study the whole capital market

and investment options offered by it.

64

Conversion ratio of customer is very low.

Some of the respondents had conservative thinking and were not willing to reveal

their opinion on the questions asked.

People are not willing to disclose their portfolio.

The major of study is on share market because in such a short span of time it is very

difficult to study the whole capital market and its functions.

CONCLUSION

The overall conclusion that emerges out from this study is:

65

Most of the investors are aware of high risk involved in the derivative market.

To reduce the risk in the market, the investors should strictly follow the stop loss method. The

study reveal that most of the investor prefer cash market were the script can be hold for long

term and the risk is less and it is transferable to others with minimal time period.

Even though risk is higher, some investors prefer derivative market were return is also higher.

The investors are suggested that before going for investment proper study about the script is

essential.

The investors are highly satisfied with equity shares because of many reasons, i.e., liquidity, low

investment, capital appreciation and hedge against inflation.

Chapter-666

Appendices

67

Questionnaire

NAME

Gender

Do you invest in share market?

Q1. Which Age Group did you started investment?

a) Under 25

b) 25 to 34

c) 35 to 44

d) 45 and above

Q2. What is your Qualification?

a) HSC

b) Graduate

c) Post-Graduate

d) Others

Q3. What is your Occupation?

a) Business

b) Professional

c) Housewife

d) Service

Q4. On which of the following Source of Investment Information do you mostly rely on?

a) Self

b) Friends/Relatives

c) Share Brokers

d) Advertisements

68

Q5. Which Market do you prefer to invest in?

a) Primary Market (IPOs)

b) Secondary Market (Stock Market)

Q6. For what Time Period do you usually prefer to hold the scripts?

a) Short-Term

b) Mid-Term

c) Long-Term

Q7. Which of the following Forms of Trading is safer in your opinion?

a) Intraday

b) Delivery

Q8. What Investment Type do you prefer?

a) Future Market

b) Cash Market

Q9. What is your opinion about the statement- “Profit and Risk is less in cash market as

compared to future market”?

a) Strongly Agree

b) Agree

c) Undecided

d) Disagree

e) Strongly Disagree

69

BIBLIOGRAPHY

Books:-

Advance financial management by Khan & Jain

Financial management by I M Panday

Websites:-

www.sharekhan.com.

www.nse.com

www.ncfm.com

www.bse.com

www.msn.com

Newspapers

Economics times

Financial express

Times of India(business times)

70