1

Contents:
Page No
Chapter No Content
1 Introduction 7 - 17
2 Objective and Scope 17
3 Review of literature 19-52
Research and Methodology
4 53-55
5 Company Profile 56-58
Data Analysis and Interpretation
6 59-66
7 Findings and Suggestions 67-71
8 Conclusion 72
9 Bibliography 74

9 Annexure 76

Chapter 1
 2

INTRODUCTION
Introduction to the capital market

The capital market is the market for securities, where companies and the government can raise
long term funds. The capital market includes the stock market and the bond market. Financial
regulators ensure that investors are protected against fraud. The capital markets consist of the
primary market, where new issues are distributed to investors, and the secondary market,
where existing securities are traded.

Capital market thus plays a vital role in channelizing the savings of individuals for Investment in
the economic development of the country. As a result the investors are not constrained by their
individual abilities, but by the abilities of the companies, which in turn enhance the savings and
investments in the country, liquidity of capital market is an important factor affecting growth.

Since projects require long term finance, but on the other hand, the investor may not like to
relinquish control over their savings for a long time. A liquid stock market ensures a quick exit
without incurring heavy losses or costs. Thus development of efficient market system is
necessary for creating conductive climate for investment and economic growth.\

Capital market Segment – Primary And Secondary

Broadly , the comprises of two segments – the new issue market which is
commonly known as primary market and the stock market which is known as secondary
market.

Primary
A primary offering, such as with a corporate bond, means you are buying it directly
from the issuer, at par value, usually. A secondary market is where you sell or buy
existing issues. I.E. If you bought a bond last year, now need to get your principal, you
can sell it in the secondary market. You may not get par value. If rates are up since you
bought the bond, then you will likely have to sell it at a discount to be able to get rid of
it. If rates have fallen since you bought it, you could get a premium for it.
 3

Secondary

The market where securities are traded after they are initially offered in the primary market.
Most trading is done in the secondary market. To explain further, it is trading in previously issued
financial instruments. An organized market for used securities. Bombay Stock Exchange (BSE),
National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage
loans, governmental guaranteed loans etc

Secondary Market refers to a market where securities are traded after being initially offered to
the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is
done in the secondary market. Secondary market comprises of equity markets and the debt
markets. For the general investor, the secondary market provides an efficient platform for
trading of his securities. For the management of the company, Secondary equity markets serve
as a monitoring and control conduit—by facilitating value-enhancing control activities, enabling
implementation of incentive-based management contracts, and aggregating information (via
price discovery) that guides management decisions.
18 Trading of shares of east India company in Kolkata And
00 Mumbai
18 Joint stock company came into existence
50
18 Speculation and feverish dealing in securities
60
18 Formulation of stock exchange of Mumbai
75
18 Formulation of Ahmadabad stock exchange
94
INDIAN CAPITAL MARKET AT GLANCE

20th century
19 Formulation of Calcutta stock exchange
08
19 Formulation of Lahore and madras stock exchange
39
19 Formulation of U.P and Delhi stock exchange
40
19 Securities contract and regulation act enacted
56
 4

19 Scam of Haridas Mundhra

57
19 Securities and exchange board of India set up
88
19 Scam of MS Shoes
91
19 SEBI given power Under SEBI act,1992
92
19 Formation of National stock exchange
93
19 HARSHAD MEHTA Scam
95
19 SESA GOA Scam
95
19 CRB scam
97
19 BPL And Videocon Scam
98

21st century
200 Depositories came into existence
0 (electronic form of shares)
200 Ketan Parekh scam
1
200 Start of rolling settlement and banning of Badla trading
2
200 Introduction of T+3 settlement in April
2
200 Introduction of T+2 settlement in April 3
200 BSE Sensex touches all time high 6954 in January
5
 5

200 BSE Sensex touches all time high 12500,the highest intraday
6 fall of 1100
200 BSE reaches the level of
7
200 BSE touches all time high in January 2008
8
200 Sensex saw its highest ever loss of 1,408 points at the end of
8 the session.
200 Sexsex saw its 15 month low,from its all time high
8
200 Sexsex saw its down trend & highest ever loss because of
9 Satyam case.

BRIEF ABOUT THE STOCK EXCHANGES

Stock Exchange is a market like any other centralized
market where both buyers and sellers come and conduct their business of purchase and sale of
shares & securities. In other words, it is a market place for shares and securities where trading
takes place in a controlled and protected environment.

MEANING OF STOCK EXCHANGE

A stock exchange, share market or bourse is a corporation or mutual organization which provides
"trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock
exchanges also provide facilities for the issue and redemption of securities as well as other
financial instruments and capital events including the payment of income and dividends. The
securities traded on a stock exchange include: shares issued by companies, unit trusts and other
pooled investment products and bonds. To be able to trade a security on a certain stock
exchange, it has to be listed there. Usually there is a central location at least for recordkeeping,
but trade is less and less linked to such a physical place, as modern markets are electronic
networks, which gives them advantages of speed and cost of transactions. Trade on an exchange
is by members only. The initial offering of stocks and bonds to investors is by definition done in
the primary market and subsequent trading is done in the secondary market. A stock exchange is
often the most important component of a stock market. Supply and demand in stock markets is
driven by various factors which, as in all free markets, affect the price of stocks (see stock
valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be
subsequently traded on the exchange. Such trading is said to be off exchange or over-the-
counter. This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a
global market for securities.
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CONCEPT OF SHARE TRADING

The concept of share broking emerged after the establishment of the joint stock companies. The
ownership of the companies was divided into small parts and that every part was called share.
So, the term “Share” denominates some part in the ownership of the company. The shares are
freely transferable subject to the some certain restrictions. When the need was felt to sell the
shares by the owner of the shares, it was difficult to find out the buyers of the shares who want
to buy the shares at the price the seller want to sell. At that time a need was felt to bring the
buyers and sellers on a common platform. To solve this problem, a group of persons came into
picture, which used to bring the buyers and sellers together for the trade of the shares. These
persons are called the share Brokers who find the persons who wish to buy or sell their
securities. The whole process of finding the buyers and sellers of the securities by the brokers is
called the Share Broking.

The origination of the Indian securities market may be traced back to 1975, when 22 enterprise
brokers under a Banyan tree established the Bombay Stock Exchange (BSE). Over the last 130
years, the Indian securities market has evolved continuously to become one of the most
dynamic, modern international standards both in terms of structure and in terms of operating
efficiency.
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OPERATIONS OF NATIONAL STOCK EXCHANGE

TURNOVER

NATIONAL Stock Exchange is one of the leading Stock Exchanges among the national Stock
Exchanges of the country, and has been providing trading platform for investors situated across
the country. At present, it has 7570 listed companies and among them, 231 are listed as regional
companies. It had been generating significant amount of the business in the secondary market.
It recorded a peak turnover of Rs.915400 crores during the year 2008-2009. The structural
changes that took place in the recent past in the Capital Market of the country had a negative
impact on the trading volume of the Regional Stock Exchanges. There has been a significant
reduction of turnover during the financial year 2008-2009, but the reduction in the turnover of
the Exchange has been more than adequately compensated by substantial rise in the turnover of
NSE Securities Limited, a subsidiary of NATIONAL Stock Exchange.

LISTING

Listing is one of the major functions of a Stock Exchange wherein the securities of the
Companies are enlisted for trading purpose. Any Company incorporated under Companies
Act,1956, coming out with an IPO, has to mandatorily list its shares on a Stock Exchange.

The Listing Department of NATIONAL Stock Exchange deals with listing of securities, further
listing of issues like bonus and rights issues, post listing compliance of the companies which
are already listed with NATIONAL Stock Exchange. The Companies desirous of listing its
securities on the Exchange have to sign a Listing Agreement with the Stock Exchange. After
getting the listing approval, the Company has to ensure and report compliance of the post
listing requirements. The listing section of the NSE monitors the postlisting compliance of all
the listed companies and follows up with the companies,which are found deficient in
compliance.

PRESIDENTS/ CHAIRMEN
 8

Sh. S.P. Oswal 16.08.1983 to 27.07.1986

Sh. B.M. Lall Munjal 28.07.1986 to 15.10.1989

Sh. V.N. Dhiri 16.10.1989 to 30.10.1992

30.09.1998 to 04.10.2000

Sh. G.S. Dhodi 31.10.1992 to 22.12.1993

Sh. Jaspal Singh 23.12.1993 to 05.10.1995

01.10.1996 to 29.09.1998
06.10.2001 to 01.07.2002

Sh. M.S. Gandhi 06.10.1995 to 30.09.1996

Sh. R.C. Singal 05.10.2000 to 05.10.2001

Dr. B. B. Tandon, Chairman 25.06.2007 to 10.12.2007

Sh. S.P. Sharma, Chairman 15.12.2007 to

Sh.Jagmohankrishan, Chairman

List of directors of NSE

Sh.Jagmohankrishan, Chairman

Sh.Padam parkash kansal,vice chairman

Sh.yash paul mahajan,Public intrest director

Sh.Joginder kumar, director

Sh.Ashok kumar, director

Sh.Sarbjit garg, Public intrest director

Sh.Varun chhabra, director

Sh.T.S.Thapar, director

Sh.Raj Singh,Registrar of conpanies

Sh.Sunil Gupta, director

Sh.Sanjeeev Kumar Gupta, director

 9

SETTLEMENT CYCLE SCHEDULE

SR. NO. DAY DESCRIPTION OF ACTIVITY TRADE

1 T Trading Day

2 T+2 PAY IN BY 10.30 am.

3 T+2 PAY – OUT BY 2 pm.

4 T+3 deliveries Auction of shortage in

5 T+5 Auction pay-in by

10.30 (1 am/ pay
Out by 2
pm.)

Functions of Stock Exchange

Stock exchange is established into the main purpose of providing a market place
for the members to deal in securities under well laid down regulations and to protect the
interest of the investors. The main functions of stock exchange are;

1. It brings the companies and investors together so that the investors can put risk capital into
companies and thus, companies can use the capital.
2. It provides an orderly regulated market for securities.
3. It provides continuous, ready and open market for selling and buying securities.
 10

4. It promotes savings and investment in the economy by attracting funds from the investors.
5. It facilitates take overs by means of acquiring majority of shares traded on the stock market.
6. It acts as a clearing house of business information.

7. It motivates the managers of well reputed companies, to retain their shares in ‘A’ group, to
improve performance.
8. It induces the managers to improve performance for converting nonspecified shares into
specified shares in the exchange.
9. It enables the investors to evaluate the net worth of their holdings.
10.It also allows the companies to float their shares in the market.

Chapter 2
 11

OBJECTIVES
OBJECTIVES OF THE STUDY

1. To understand the appropriate organizational structure of the NATIONAL STOCK EXCHANGE

LTD and trading through online.

2. To Analyse the online trading and its mechanism on NSE.

3. How the investors can avail this kind of trading facility.

4. Find the differences of conventional trading and online trading.

5. Study the pros and cons on online trading

Chapter 3
REVIEW OF LITERATURE
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On Line Trading
Meaning of Online Trading:

“Change is the law of nature”. There were times when man was a wanderer or a normal. He
himself had to go place to place in search of food, water and now everything is available at your
doorstep just at the click of the mouse. The growth of information technology has affected
almost all sectors of life. Internet has enabled us to get every information at our doorstep. When
Internet has affected all sectors he could “stock markets” the most important player of the
economy, has remained far behind? Like all other sectors Internet has set its feet in the stock
markets also.

Internet trading commissions are clearly posted on the websites of the various services, and are
typically a fixed rate charge, depending upon the type of security being traded and the size of
trade. In theory, therefore, an Interest investor always knows what commission he is being
charged on each trade. Internet investors can take as much time as they would like to take prior
to placing a trade order. Similarly the online investor likely does not have to worry that his broker
is making unauthorized trades. Since there is no individual broker making a commission, the only
person who is authorized to trace in a the account is the actual investor. Furthermore, the
internet investor can never become a victim of excessive trading (where for the broker) since the
investor maintains total control over the number of transactions which take place in the account.

All of these positive features of internet trading may lead the unwary investor to believe that
Internet trading is a way to take control of their finances and save more money in the process.
Unfortunately, this is not always the case. The advantages of Internet stock trading have also its
weaknesses and these weaknesses present significant drawbacks for the average investor.

First and foremost, the average investor is not an expert in the financial markets. There is a
danger for allowing the autonomy of online trading to hull you into the belief that you are an
expert investor. An online investor sitting at home at a personal computer also foregoes proper
investment advice and financial planning, perhaps among the most valuable services provided
by traditional brokers.
 13

There are, of course, additional risks relative to performing transactions over the Internet
especially on a shared computer. Those people whom investors have provided their account
number and password can freely trade that account while the investor will have little, if any,
resource against the brokerage firm for the breach of security.

When was online trading introduced in INDIA?

Online trading started in India in February 2000 when a couple of brokers started offering an online
trading platform for their customers.

ONLINE TRADING BY NSE & BSE

The central computer located at the Exchange is connected to the workstations of the Brokers
through satellite using Very Small Aperture Terminals (VSATs). Orders placed at the Brokers'
workstations reach the central computer and are matched by the computer based on price and
time priority.

Both the exchanges have switched over from the open outcry trading system to a fully
automated computerized mode of trading known as BOLT (BSE On Line Trading) and NEAT
(National Exchange Automated Trading) System. It facilitates more efficient processing,
automatic order matching, faster execution of trades and transparency. The scrips traded on the
BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent
those, which are in the carry forward system (Badla). The 'F' group represents the debt market
(fixed income securities) segment. The 'Z' group scrips are the blacklisted companies. The 'C'
group covers the odd lot securities in 'A', 'B1' & 'B2' groups and Rights renunciations. key
regulator governing Stock Exchanges, Brokers, Depositories, Depository participants, Mutual
Funds,
FIIs and other participants in Indian secondary and primary market is the Securities and Exchange
Board of India (SEBI) Ltd.
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DIFFERENCE BETWEEN ONLINE AND OFFLINE TRADING

Nevertheless, with all the convenience of online trading there are still investors who
prefer the old fashion way of offline trading. Offline trading has lost some popularity but it is still
the main form of investing. Offline trading offers many benefits as well.

1. The one benefit that an investor appreciates the most is that they are not alone when making
investment decisions.

2. There are experienced and professional brokerage companies that handle their investments
for them.

3. Investors are not faced with the challenge of making these vital investment decisions;
especially, if they do not have the experience necessary to make the appropriate investments.

4. Also, there is someone there to answer any questions that may cause concerns. Not to
mention, with offline trading mistakes are less likely to take place. No one wants to throw their
money away or stand by and watch someone eNSE throw their money away. It may be wise to hire
a professional to assist you in making the correct investment decisions if you feel you lack the
knowledge necessary.

Points of difference between online trading and ofline trading are as follows:

1. Online trading is very expensive as compare to manual trading or offlinetrading.

2. Online trading consumes less time as compare to manual trading.

3. Online trading has very helpful to finding the records easily but offline trading takes more time to
finding the records.

4. In the help of online trading, there is no chance of any errors while doing the trading. in offline
trading there are some errors exist like barriers of communication .

5. With the help of online trading, we know the international market rate of share very easily.
 15

DEMATERIALISATION OF SHARES

Dematerialization is the process wherein shares certificates or other securities held in physical
form are converted into electronic form and credited to demat account of an investor opened
with a depository participant. SEBI has made compulsory trading of shares of all the companies
listed in stock exchanges in demat form with effect from 2nd January 2002.The procedure of
opening a demat account with DP is similar to opening an account with a bank.

ELECTRONIC SETTLEMENT OF TRADE

A. Procedure for purchasing dematerialized securities

The procedure for purchasing dematerialized securities is also similar to the procedure for buying
physical securities.

1. Investor instructs DP to receive credits into his account in the prescribed form. There may
be one time standing instruction or separate instruction each time to receive credits.
2. Investor purchases securities in any of the stock exchanges linked to depository through a
broker.
3. Broker receives payment from investor and arranges payment to clearing corporation.
4. Broker receives credit to securities in clearing account on the payout day.
5. Broker gives instructions to DP to debit clearing account and credit client’s account.
Investor receives shares into his account by way of book entry.

B. Procedure of selling dematerialized securities

The procedure for selling dematerialized securities in stock exchanges is similar as selling
physical securities. The only major difference is that instead of delivering physical securities to
the broker, the investor instructs his DP to debit his demat account with the number of securities
sold by him and credit the brokers clearing account. The procedure for selling dematerialized
securities is given below:
 16

1. Investor sells securities in any of the stock exchange linked to depository through a
broker.
2. Investor instructs his DP to debit his demat account with the number of securities
sold and credit the broker’s clearing account.
3. Before the pay-in-day, broker of the investor transfers the securities to clearing
corporation.
4. The broker receives payment from the stock exchange.

5. The investor receives payment from the broker for sale of securities in the same
manner as received in case of sale of physical securities.

REMATERILISATION OF SHARES

Rematerialization is the process of conversion of electronic holdings of securities into

physical certificate form. For rematerilisation of scrips, the investor has to fill up a remat request
form (RRF) and submit it to the DP. The DP forwards the request to depository after verifying the
investor’s balances. Depository in turn initiates the registrars and transfer agent or the issuer
company. RTA/ Company prints the certificates and dispatches the same to the investor.

Market timings:
Trading on the derivatives segment takes place on all days of the week (except Saturdays and
Sundays and holidays declared by the Exchange in advance). The market timings of
the derivatives segment are:

Normal Market / Exercise Market Open time : 09:55 hours

Normal market close : 15:30
hours
Set up cut of time for Position limit/Collateral value : till 15:30
hrs
Trade modification end time / Exercise Market : 16:15
hours
 17

Advent of online trading

The history of e-trading goes back to 1983, when a doctor in Michigan placed the first online
trade using E*TRADE technology. what began with a single click over 16 years ago has now taken
the world by storm. The concept was visualized by one bill porter, a physicist and inventor with
more than dozen of patents to his credit, who provided online quotes and trading services to
fidelity, Charles Schwab, and quick and Reilly. This led bill to wonder why, as an individual
investor, he had to pay a broker hundreds of dollars for stock transactions. with incredible
foresight, he saw the solution at hand, some day everyone would own computers and invest
through them with unprecedented efficiency and control. And today his dream has become a
reality.
 18

SHARE OF ONLINE TRADING IN TOTAL CASH TURNOVER OF NATIONAL

STOCK EXCHANGE
Table 1.1(Year 2003)

MONTH CASH TURNOVER(cr.) ONLINE TURNOVER(cr.) RATIO(%)

January 64,762.24 1,923.34 2.97

Feb 48,289.18 1,559.07 3.23
March 43,159.93 1,302.69 3.02
April 48,971.31 1,425.83 2.91
May 54,690.14 1,981.36 3.62
June 61,585.35 2,142.41 3.48
July 78,877.63 2,720.59 3.45
August 85,346.58 3,301.88 3.87
September 1,03,345.50 3,825.88 3.70
October 1,15,595.32 4,344.33 3.76
November 92,885.71 4,024.02 4.33
December 1,10,372.64 5,876.21 5.32
Source: NATIONAL stock exchange

TABLE-1.2 (Year 2006)

MONTH
CASH TURNOVER ONLINE TURNOVER RATIO
 19

January 1,34,268.72 6,015.04 4.48

February 1,08,718.06 5,170.01 4.76
March 1,04,876.53 4,330.23 4.13
April 1,00,951.17 5,244.27 5.20
May 98,919.93 5,187.01 5.24
June 84,898.47 5,358.95 6.31
July 93,836.13 6,819.45 7.27
August 86,855.72 6,192.31 7.13
September 88,508.05 6,976,.41 7.88
October 75,697.32 6,261.90 8.27
November 82,035.27 7,490.16 9.13
December 1,15,593.10 11,000.62 9.52

Source: NATIONAL Stock Exchange

Table 1.3(Year
2007222222222220
MONTH CASH TURNOVER
ONLINE TURNOVER RATIO

January 68,718.95 1,251.84 . 1.82

February 49,563.77 917.80 1.85

March 44,262.50 868.85 1.96
 20

April 53,320.02 914.73 1.72

May 54,979.06 1,237.28 2.25
June 44,241.07 1,108.66 2.51
July 51,398.43 1,290.57 2.51
August 46,113.05 1,310.78 2.84
September 46,498.62 1,318.01 2.84
October 51,902.22 1,476.51 2.85
November 51,351.48 1,639.28 3.19
December 61,973.34 1,915.65 3.09
Source: NATIONAL Stock Exchange

TABLE-1.4(Year 2008)
MONTH RA TIO
CASH TURNOVER ONLINE TURNOVER

April 57,229.44 5.85 0.01

May 79,036.68 29.1 0 0.04
June 1,19,373.43 88.58 0.07
July 1,10,056.22 97.49 0.09
August 1,25,347.04 165.09 0.13
September 1,42,479.78 229.98 0.16
October 1,06,854.21 190.18 0.18
November 1,22,731.11 350.79 0.29
December 1,31,414.65 366.75 0.28
Source: NATIONAL Stock Exchange

TABLE-1.5(year 2009)

MONTH CASH TURNOVER ONLINE RATIO

TURNOVER

January 1,48,829.84 1,130.49 0.76

Februmy 1,35,932.23 1,573.62 1.16
 21

March 60,226.21 849.81 1.41

April 35,615.63 268.9 0.76
May 48,329.11 343.92 0.71
June 42,783.00 238.47 0.56
July 27,227.76 401.68 1.48
August 29,417.15 388.98 1.32
September 35,322.82 453.58 1.28
October 35,326.454 604.17 1.71
November 42,132.23 805.86 1.91
December 54,467.79 1,048.24 1.92
Source: NATIONAL Stock Exchange

Internet Based Trading through Order Routing

Systems
Internet based trading on conventional exchanges, uses the Internet as a medium for
communicating client orders to the exchange, through broker web sites. Broker’s web sites may serve a
variety of functions. These may include;

• Allowing the clients to directly trade through investors;

 22

• Advertise the broker dealers’ services to potential investors;

• Offer market information and investment tools similar to those offered by information
vendor or SRO web sites;
• Offer real-time or delayed quote information, continuously update quotes while the user
visits other sites, or allow investors to create a personal stock ticker;
• Provide market summaries and commentaries, analyst reports and trading strategies and
market data on currencies, mutual funds, options, market indices and news; and
• Offer investors access to portfolio management tools and analytic programs;
• Information on commission and fees; and
• Account information and research reports.

In an Order Routing system, a broker offering Internet trading facility provides an electronic
template for the customer to enter the name of the security, whatever it is to be bought or sold, the
quantity and whatever the order is a market or limit order.
Once the broker’s system receives this information.

Use of Internet as Alternative Trading Systems (Provision for price discovery and
matching outside conventional exchanges)

In foreign jurisdiction, Alternative trading systems have been developing outside conventional
securities markets, which provide investors with additional proprietary electronic trading facilities for
securities that are traded principally on securities exchanges, or other organized markets. They have
price discovery functions, matching systems and crossing systems. The systems that are currently in use
in outside jurisdictions are closed systems and are not accessible to the general public through the
Internet. The securities markets regulators abroad the maintained flexible and open policies designed to
encourage innovation in the secondary securities markets. As a result, a number of market participants,
usually brokerdealers, have developed computerized “alternative trading systems” by which the system
centralize, display, match, cross or otherwise execute trading interest.

Use of Internet for making Initial Public Offerings

Issues of securities of using the Internet to communicate directly with their shareholders,
potential investors and analysts by disseminating corporate information. In foreign jurisdiction, they are
also using the Internet to communicate to the public for the following:
 23

• Public offerings;
• Private offerings; and
• Disclosure and communication
Issuers are using the Internet to market themselves to potential investors. The Internet is also being
used for fulfilling necessary disclosure requirements, for disseminating the prospects in electronics form
and even for receiving share applications in public issues electronically. In India, SEBI has taken initiative
in permitting use of the network of stock exchange for collection of investor applications in public
offerings by the issuer companies.

Investment Advisory Services

Brokers as well as other service provides such as investment firms, research outfits etc. are using
the Internet for marketing and advertising purposes, for presenting information on portfolio analysis and
market information, and for communicating with and receiving orders from potential investors. The
services offered by the service providers to the investors are generally the following:

• Advertising
• Providing investment information and investment advice;
• Underwriting

• Communicating with the investors;

• Customer orders; and
• Record keeping

Working Groups set up by the Committee

Considering the present state of capital markets in India and keeping in view the ongoing
developments in Internet based securities business, it was felt that SEBI as a regulator could strive to
identify areas where use of Internet in the capital market is possible within the existing legal framework.
One such area identified by the Committee, which is also the central within the existing legal framework.
One such area identified by the Committee, which is also the central theme of this report, is the area of
Internet trading on existing electronic exchange. In this area, through early introduction of Cyber Laws
would be highly describe but their existence is not a necessary precondition. To look into the existing
regulatory scenario and to bring out some ground rules for use of the medium of Internet, the
Committee therefore constituted the following two working groups to look into the area of:
 24

i. Security protocols and standardization of interfaces for Interest based securities trading,
chaired by Prof. Deepak B. Phatak, IIT, Pawai, Mumbai
ii. Surveillance and monitoring related issues arising due to Interest based securities trading,
chaired by Shri. L.K. Singhvi, Sr. ED, SEBI

The committee also requested Ms D N Raval, Executive Director, SEBI to examine the legality of
introduction of Internet trading and issue of Alternative trading systems. This report of the standing
committee examines the regulatory and security requirements Internet Based Trading on Conventional
Exchanges. Separate reports (s) will cover the other areas related to Internet applications in the
securities markets.

The report of the first working group on security protocols and standardization of interfaces has since
been submitted and incorporated in the report. The committee would like to place on record its sincere
thanks to Dr. D.B. Phatak, Ms. D.N. Raval and their team members. The global financial market is
undergoing a transformation due to rapid technological developments. It thus becomes imperative that
for developing in effective regulatory framework developments in other parts of the world should be
studies and analyzed.

With nearly who million on-line investors, Internet trading in the United States is growing by leaps and
bounds. Internet trading is being facilitated by large brokerage houses, thus changing the total concept
of securities trading. A team comprising of members from stock exchanges and SEBI visited the United
states to these development and had interactions with brokerages houses, Internet service providers
and other agencies involved in facilitating Internet trading. The team also discussed the developments in
the emerging regulatory and supervisory framework in United States with the Securities and Exchange
Commission officials. They were also tripped of the various initiatives taken by SEC in this regard. These
inputs have been utilized while drafting this report.

Recommendations of the Committee

Application for Permission by Brokers

SEBI registered Stock Brokers interested in providing Internet based trading services will be required to
apply to the respective stock exchange for a formal permission. The stock exchange should grant
approval or reject the application as the case may be, and communicate its decisions to the number
within 30 calendar days of the date of completed application submitted to the exchange. The stock
 25

exchange, before giving permission to brokers to start Internet based services shall ensure the fulfillment
of the following minimum conditions.

Net worth Requirement

The broker must have a minimum net worth of Rs. 50 lacs if the broker is providing the Internet based
facility on his own. However, if some brokers collectively approach a service provider for providing the
interest trading facility, net worth, criteria as stipulated by the stock exchange will apply. The net worth
will be computed as per the SEBI circular no FITTC/DC/CIR-1/98 dated June 16, 1998.

Operational and System Requirements:

Operational Integrity:

The stock Exchange must ensure that the system used by the broker has provision for security, reliability
and confidentiality of data through use of encryption technology. This stock exchange must also ensure
that records encryption technology. The stock Exchange must also ensure the records maintained in
electronic from by the broker are not susceptible to manipulation.

System Capacity

The stock Exchange must ensure that the brokers maintain adequate backup systems and data storage
capacity. The stock Exchange must also ensure that the workers have adequate system capacity for
handling data transfer, and arranged for alternative means of communications in case of Internet link
failure.

Qualified Personnel:

The stock Exchange must lay down the minimum qualification fro personnel to ensure that the broker
has suitably qualified and adequate personnel to handle communication including instructions as well as
other back office work which is likely to increase because of higher volumes.

Written Procedures:

Stock Exchange must develop uniform written procedures to handle contingency s tuations and for

review of incoming and outgoing electronic correspondence.

Signature Verification/ Authentication:

 26

It is desirable that participants use authentication technologies. For this purpose is should be mandatory
for participants to use certification agencies as and when notified by Government/SEBI. They should also
clearly specify when manual signatures would be required.

Client Broker Relationship

Know Your Client:

The stock Exchange must ensure that brokers have sufficient, verifiable information about clients, which
would facilitate risk evaluation of clients.

Broker- Client Agreement:

Brokers must enter into an agreement with clients spelling out all obligations and rights. This agreement
should also inter alia, the minimum service standards to be maintained by the broker for such service
specified by SEBI/Exchange for the internet based trading from time to time. Exchange will prepare a
model agreement for this purpose. The broker agreement with clients should not have any clause that is
less stringent/contrary to the conditions stipulated is the model agreement.

Investor Information:

The broker web site providing the internet based trading facility should contain information meant for
investor protection such as rules and regulations affecting client broker relationship arbitration rules,
investor protection rules etc. The broker web site providing the Internet based trading facility should also
provide and display prominently, hyper link to the web site/page on the web site of the relevant stock
exchange (s) displaying rules/ regulations/ circulars. Ticker/quote/order book displayed on the web-site
of the broker should display the time stamp as well as source of such information against the given
information.

Order/Trade Confirmation:

Order/Trade confirmation should also be sent to the investor through email at client’s discretion at the
time specified by the client in addition to the other made of display of such confirmation of real time
basis on the broker web site. The investor should be allowed to specify the time interval on the web site
itself within which he would like to receive this information through email. Facility for reconfirmation of
orders which are larger than that specified by the member's risk management system should be
provided on the internet based system.
 27

Handling Complaints by Investors:

Exchanges should monitor complaints from investors regarding service provided by brokers to ensure a
minimum level of service. Exchange should have separate cell specifically to handle Internet trading
related complaints. It is desirable that exchanges should also have facility for on-line registration of
complaints on their web site.

Risk Management:

Exchanges must ensure that brokers have a system-based control on the trading limits of clients, and
exposures taken by clients. Brokers must set predefined limits on the exposure and turnover of each
client. The broker systems should be capable of assessing the risk of the client as soon as the order
comes in. The client should be informed of acceptance/rejection of the order within a reasonable period.
In case system based control rejects an order because of client having exceeded limits etc., the broker
system may have a review and release facility to allow the order to pass through.

Contract Notes:

Contract notes must be issued to clients as per existing regulations, within 24 hours of the trade
execution.

Cross Trades:

As a matter of abundant precaution, the committee seeks to reiterate that as III the case of existing
system, brokers using Internet based systems for routing client orders will also not be allowed to cross
trades of their clients with each other. All orders must be offered to the market for matching.

It is emphasized that in addition to the requirements mentioned above, all existing obligations of the
broker as per current regulation will continue without changes. Exchanges may also like to specify more
stringent standards as they may deem fit for allowing Internet based trading facilities to their brokers.

Enforcement: A separate working group has been set to look into the surveillance and enforcement
related issues arising due to Internet based securities trading. However, general anti-fraud provisions
(SEBI Fraudulent and Unfair Trade Practices Regulations, 1995) would apply to all transactions involving
securities or financial services, regardless of the medium.

FEATURES OF ONLINE TRADING: The Online Trading is having many

features which make it most suitable for the investors to go for. Some of these features are as follows:
 28

The Internet can provide a new sense of control over your financial future. The amount of investment
information available online is truly astounding. It's one of the best aspects of being a wired investor. For
the first time in history, any individual with an Internet connection can:

• Know the price of any stock at any time

• Review the price history of any stock in chart format
• Follow market events in-depth
• Receive a wealth of free commentary and analysis about stock markets and the
global economy
• Conduct extensive financial research on any company

One of the great appeals of using an online trading account is the fact that the account belongs to you,
and is under your direct control. When you want to buy or sell stock, you no longer need to call your
broker on the phone; hope that he is in the office to place your order; possibly argue with the broker
about the order; and hope that the transaction is executed instantly.

At the most basic level, an online trading account gives you more agility in buying and selling stocks. This
is through sophisticated information streams, dedicated trading platforms and sophisticated tools for
accessing the markets.

Every broker house aims at providing the investor with the best price available. Also due to the high level
of transparency with regard to display of information relating to the specific stocks and company profiles,
you will be able to get the best quote for your orders.

Online trading offers you greater transparency by providing you with an audit trail. This involves a
complete integrated electronic chain starting from order placement, to clearing and settlement and
finally ending with a credit into your depository account. All these stages are subject to inspection, thus
bringing in transparency into the system.
 29

Online trading integrates your bank account, your trading account and your demat accounts, which leads
to easy and paperless trading for you.

You as an Investment online customer will be able to execute the entire trading transaction, right from
logging on to our site, to the execution and settlement of your bank account, in a very short period of
time.

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

This method of trading reduces the settlement risk for the investor, as in this case all short sell orders are
squared off at the specified cut-off time and not allowed to be carried forward.

In the case of a demat account your demat account is checked by us before executing your sell
transaction. This reduces the settlement risk for the buyer, who is assured of the delivery of the
securities and for you as a seller of the securities

Every trade is confirmed immediately and you will receive an on-screen confirmation following every
trade with full details for your records. This avoids costly errors that would have been discovered when it
is too late.

Your Bank, Depository and online account are integrated for your convenience.
Various broking houses provide access to many of the popular banks.

Broking houses work hard to keep our account and personal information secure. From updated security
technology to advanced fraud prevention measures, they have the people and tools in place to provide a
strong defense against electronic scams and fraud.

BENEFITS OF ONLINE BROKING

1) Less Costly:
 30

The most significant advantage of the Online broking is the cost reduction in the brokerage. Due to the
power of the Internet one has the privilege of becoming the clients of really large brokerages with the
benefits of enjoying the low charges hithelio before enjoyed only by the big players. As the DP account
has got linked to the trading account most players do not charge a minimum transaction cost thus truly
allowing one to buy a single share and achieve meaningful rupee price averaging whatever be your
buying power.

2) Peace of Mind:

One can never have complete peace of mind but online investing does away with the hassles of filling up
instruction slips, visits to the broker for handing over these slips and consequent costs.

3) Keeping Records:

The site one trades on keeps a record of all transactions down to unexecuted orders and cancelled orders
thus keeping one abreast of all your transactions 24 hours a day. No paperwork means more time at
one’s disposal for research and analysis.

4) Access to Information and investment Tools:

Most online investing sites have a wealth of information for their registered members. This includes
research reports, results, analysis and even gossip and the buzz in the market.

5.) Unparalleled Liquidity:

The. bank account linked with the trading account invariably has an A TM free. Most partner banks offer
Internet banking as well. This results in one’s money becoming available to him whenever he like from
his trading account. Conversely in case he spot an opportunity in the market he can immediately allocate
money from his savings account to his trading account and make profits.

6.) Unparalleled Safety:

Most sites are secure using 128-bit algorithms -highest available commercially anywhere in the world.
Moreover even if somebody broke in and tampered with one’s account the money from the stocks he
sold or the stock bought from the money in his account is in his account only.
 31

7.) Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in this case no Short sale is
possible i.e. the seller will not be able to sell the securities unless he has their actual possession. In the
case of a demat account (required for an online transaction), when a seller wants to sell the securities,
his demat account is checked by the Depository Participant before executing the sale transaction. This
reduces the settlement risk for the buyer, who is assured of the delivery of the securities.

8.) Offers greater transparency:

Online trading gives greater transparency to the investors by providing them an audit trail. This involves a
complete integrated electronic chain starting from order placement, to clearing and settlement and
finally ending with a credit to the depository account of the investor. All these stages are subject to
inspection, thus bringing in transparency into the system.

9.) Ease of trade:

It is the ease of doing the trade through net, with a click of mouse, one can buy or sell any share that is
dematerialized.

Other than the above-mentioned advantages, Internet trading provides some additional advantages to
the investors, brokers and also helps the nation to channelize the resources. Net trading would increase
competition in the market hence increase in the bargaining power of the investors. The entire
communication between the investor, broker and exchange would take place within milliseconds .

PROBLEMS OF ONLINE BROKING

There is a flip side to everything and online trading is no exception.

Chart
 32

4%
Source:-
14% 21%
www.NSE.co.in

27% Loyality is of
11 % traditional broker
More Costly
23% Lack Of Knowledge
Loyalty to Traditional Broker
Lack of Trust
27%
Slow Speed
Other

23% people says that online trading is more costly than manual trading.

21% people not prefer online trading because of lack of knowledge.

So, the main problems of online trading are as follows:

1.) "Server not found":

This may appear on one’s screens when he is desperately trying to get out of an unprofitable position.
Some of the online sites are providing a telephone number for use in case their sites are overloaded or
their server down.

2.) Connectivity of the Broker with NSE:

Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours during trading
hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of one’s broker he is protected only if the company is
taking proper precautions against such attacks and if proper backup is regularly been taken. He may like
to choose a brokerage that has a stated security policy and contingency plan in place.

4.) Non-availability of a seamless interface:

As a client one will access the NSE through a server of the online brokerage and this may involve queuing
delays. If a number of client access the server the server takes its own time sending the orders to the
NSE server. He must check out the seamlessness of this interface before selecting an online brokerage.
The faster the orders are processed the more seamless is the interface.
 33

5.) Non- availability of personalized advice:

If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If he want advice
on a particular stock in his portfolio he may not even be able to get that.

6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading on margin. That is
where the brokerage firm lends you money by leveraging his account, allowing him to buy a large
amount of securities by putting up only a small amount of money. He may have forgotten what he read
in the small print of his agreement, but the brokerage firm has the right to change the maintenance
margin requirements without any warning or notice to him. In fact, the firm has the right to liquidate his
securities holdings (and it can pick and choose which ones) without any notice to one if he fail to meet
the margin call. And there he was leveraged to the hilt, hoping to hit a home run when he discovered
that he is required to make a large deposit that he cannot make. The next thing one know, the firm is
selling off his securities at a point in time that is not the best for him. These are the perils of trading on
margin.

7.) Little use of advisory services:

The advisory services being promised by the brokers would be of little use to investors looking for an
insight into the market. Many would not like to rely on research reports, which are there for all. So, net
investors will have to do their own research and take their own decision, whether wild or wise.

8.) Increased charges:

Some of the brokers are of the view that they would have to provide advisory services to the customers.
But with increased volumes, they will have to follow the international practice of charging a little more
than the normal charges from a customer looking for personal advice.

WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING

Several broking houses now offer online trading facilities. You can trade online with ebrokerages such as
ICICI Direct, Kotakstreet, India bulls, India info line’s 5paisa.com and HDFC securities.

If you are already comfortable trading with your regular broker, here are few reasons why you may
consider switching to trading online, or at least another avenue of trading. an obvious advantage of
online trading is that your transaction would be virtually paperless. Your trading account would be linked
 34

to your demat and bank account, ensuring a smooth transaction process. This is especially helpful in the
extent T+2 settlement system, where you have just two days to settle your transaction.

The normal process of issuing of delivery note, in case of a sale, or arranging for a payment in case of
purchaser of shares, is all taken care of the minute your order is executed online. The absence of manual
intervention ensures that you are completely in control of all transaction.

There is also little room for error, as your order is always confirmed before it is executed. You can also
make better decision as you have a clear record of all your previous transaction. When you trade offline,
a demat statement is normally sent to you only on a quarterly basis .keeping track of your portfolio can
be a hassle in such a case. The inter net can provide a new sense of control over your financial future.
The amount of investment information available online is truly astounding. Its one of the best aspect of
being a wired investor for the first time in history, any individual with an internet connection can:

• Know the price of any stock at any time

• Review the price history of any stock in chart format
• Follow market events in-depth
• Receive a wealth of free commentary and analysis about stock markets and globe economy.
• Conduct extensive financial research on any company
• Talk with other investors around the world

At investsmart you can get real-time stock quotes, daily roundups of the stock market, experts
commentary, and a deep community of fellow investors.

Convenience is probably the greatest advantage online trading offers investors. if don’t have time to
trade during market hours ,perhaps you are at work, you can log on the web-trading site and place your
order offline, during off market hours. Your order would join the queue and be expected the next day.
You would need to enjoy a good relationship with your broker, for you to be able to reach him in the late
hours. For non-resident Indians (NRI), trading online is perhaps their easiest option to invest in the Indian
stock markets.

What is more, the time difference, in some cases, can work to their advantage .Antony, an NRI-based in
New York, places his order in the evening after work, when it is day time India and the markets are open.
 35

We also have access to considerable information online. By just logging on to ICICI direct online, for
instance, we can get the latest news, market information and company research.

Moreover, if our connection is maddeningly slow and we want to get your order executed immediately,
most e-brokerages also provide a facility to trade offline by placing our order via the phone.

PROCESS OF ONLINE TRADING

An investor interesting in trading through Internet shall have to, firstly register himself with an Internet
brokerage firm. Some formalities such as filling the account opening form of the e-broker, copies of
identity proof, copy of residence proof are made to register himself with the e-trader. Secondly, the
investor would be required to open a bank account with a scheduled bank and sufficient balance should
be kept in the account. Thirdly he would be required to open account with a depository participant
because only dematerialized shares can be traded on Internet.

The client places order via the net by logging on to his

Broker’s site.

The broker accepts and executes the order and

places it with the exchange

The exchange accepts the order after checking the share

limit for the day.

The broker makes the payment either directly via the client bank account
or pays through its own account and recovers it later from the client.

The exchange receives money and completes the

settlement
.

The client is intimated about the settlement either

through the demat or via e-mail.
 36

So, generally following steps are followed while doing the trading through the Internet:

Step-I:

Those investors interested in doing the trading over Internet system, that is,NEAT - ISX (NSE), should
approach the brokers and register with the Stock Broker.

Step-2:

After registration, the broker will provide to them a login name, password and a personal identification
number (PIN).

Step-3:

Actual placement of an order, Using the place order window as under can then place an order:

(a) First by entering the symbol and series of stock and other parameters such as quantity and price of
the scrip on the place order window.

(b) Second, fill in the symbol, series and the default quantity.

Step-4:

It is the process of review. Thus, the investor has to review the order placed by clicking the review
option. He may also re-set to clear the values.

Step-5:

After the review has been satisfactory; the order has to be sent by clicking on the send option.

Step-6:

The investor will receive an "Order Confirmation" 'message along with the order number and the value
of the order.

Step- 7:

In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price
limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about ten
seconds is there in executing the trade.

Step-8:
 37

It is regarding charging payment, for which there are different modes. Some brokers will take some
advance payment from the, investors and will fix their trading limits. When the trade is executed, the
broker will ask the investor for transfer of funds by the investor to his account.
 38

THE MECHANICS OF ONLINE TRADING

CLIENT BROKER STOCK EXCHANGE

Accepts the Accepts the order

Places an order on
order, Checks after checking the
the net on the
the client’s scrip limit of the
broker’s website
Identity and broker for the day
through the
places the
distinctive I.D.
order with the
code
stock exchange Executes the order
The settlement of
the deal (buy/sell
order) gets
reflected in his
Demat account.
Pays the

Exchange
The client is
though his
intimated about Receives the
owns account
the execution of money and
and receives it
the deal by e-mail. completes the
from the client
Pays the broker settlement
account.
pending physical
delivery.
Rolling Settlement Cycle :

In a rolling settlement, each trading day is considered as a trading period and trades executed during the
day are settled based on the net obligations for the day. At NSE and BSE, trades in rolling settlement are
settled on a T+2 basis i.e. on the 2nd working day. For arriving at the settlement day all intervening
holidays, which include bank holidays, NSE/BSE holidays, Saturdays and Sundays are excluded. Typically
trades taking place on Monday are settled on Wednesday, Tuesday's trades settled on Thursday and so
on.

Concept Of Buying Limit

 39

Suppose you have sold some shares on NSE and are trying to figure out that if you can use the money to
buy shares on NSE in a different settlement cycle or say on BSE. To simplify things for ICICI Direct
customers, we have introduced the concept of Buying Limit (BL). Buying Limit simply tells the customer
what is his limit for a given settlement for the desired exchange. Assume that you have enrolled for a
ICICI Direct account, which requires 100% of the money required to fund the purchase, be available.
Suppose you have Rs 1,00,000 in your Bank A/C and you set aside Rs 50,000 for which you would like to
make some purchase. Your Buying Limit is Rs 50,000. Assume that you sell shares worth Rs 1,00,000 on
the NSE on Monday. The BL therefore for the NSE at that point of time goes upto Rs 1,50,000. This means
you can buy shares upto Rs 1,50,000 on NSE or BSE. If you buy shares worth Rs 75,000 on Tuesday on
NSE your BL will naturally reduce to Rs75,000. Hence your BL is simply the amount set aside by you from
your bank account and the amount realized from the sale of any shares you have made less any
purchases you have made. Your BL of Rs 50,000, which is the amount set aside by you from your Bank
account for purchase is available for BSE and NSE. As you have made the sale of shares on NSE for
Rs.100000, the BL for NSE & BSE rises to 1,50,000. The amount from sale of shares in NSE will also be
available for purchase on BSE. ICICI Direct

Future Agenda:

Under the existing legal and regulatory framework, SEBI registered brokers can offer trading on Internet
through order is routing systems. However, with the rapid development of the technology, we have to
evolve fisher steps in this direction it is therefore proposed that as the next step link between the
depositories and banks shall be established after the necessary regulations have been passed. This would
reduce the clearing and settlement time and would also minimize the risk of all the participants involved
in the transactions. We have to look forward towards achieving an ideal scenario where all the services
related to securities markets including marketing of initial public offers on internet, providing investment
advisory services to the clients, broking, clearing and settlement etc., are provided on the Internet by an
intermediary. In a nutshell it can be said that we are moving towards a one-stop service center.
 40

Chapter 4

RESEARCH AND

METHODOLOGY
RESEARCH METHODOLOGY

The basic task of research is to generate accurate information for use in decision making.

Research can be defined as the systematic and objective process of gathering, recording and analyzing

data for aid in making business

decisions.

There are basically two techniques adopted for obtaining information:

 41

1. Primary Data.

2. Secondary Data.

Primary Data is gathered specifically for the project at hand through personal interviews with the

accounts officers.

Secondary data is previously collected and assembled for some project other than the one at hand.

It is gathered and recorded by someone eNSE prior to current needs of the researcher. It is less expensive

than the primary data.

SECONDARY DATA

Secondary data was collected from NATIONAL Stock Exchange

Scope of study:

The study is limited to NATIONAL Stock Exchange

Data Collection:

Data is collected from secondary sources.

Sources of data collection are:

1) NATIONAL Stock Exchange

2) www.nseindia.com

3) www.bseindia.com

4) www.on-linetrading.com

For the successful research the manipulation of certain things, concepts, and Symbols for the purpose of
generalization is inevitable. Research is simply the pursuit of truth with the help of the study.
 42

Chapter 5
COMPANY PROFILE

About Company:

CommodityFresh (www.CommodityFresh.com) is owned by True Infotec, an information research and

analysis base on commodities and Equities. True Infotec, incorporated in 2009, is a Hyderabad-based
commodity Research and Consultancy firm.

CommodityFresh serves its clients with consultancy services using mobile SMS format on trading,
advisory for trading desk setup and procurement related activities. CommodityFresh also conducts
training programs for NCFM certifications, Technical analysis and Projects for MBA students. It also
provides training on trade and research for non-finance and non-trading professionals from other
domains.

Services
Personal Advisory
 43

Our commodity trading advisory service will teach you to cut your losses and let your profits run. It will
also help you to avoid overtrading the prime reason for failure in commodity market trading.

Our service helps you make the most out of each specific trade action so that you can make decisions
based on facts not feelings. It’s like having your own personal commodity trading advisor.

As a commodity trading advisory service, at Commodity Fresh we see our job as being two-fold.

• To provide you with informed commodity trading advice and specific trade recommendations
that include well-defined risk parameters

• And to assist you with money management advice plus tips on developing an effective,
personalized trade management system

Trading Calls

Our analysis is highly accurate and deemed to be reliable by most trade houses.

• Limited but quality calls. 3-4 calls on a daily basis.

• SMS service is very fast and takes not more than few seconds to reach you.

• An accuracy of 85-90% maintained on all our intraday calls.

• Recommendations are given in Bullion, base Metals, Energy and Agri Commodities.

• Complete support through SMS and chat room

Trading Desk Setup

As a ‘Consultancy’ we support with the ‘Trading Desk set up’ for manufacturing units, Spot traders and
Export houses for hedging and jobbing with well researched outputs to the trading desk along with our
decision enabled pricing.

Our expertise in the form of ‘Trading Desk set up’ would enable our clients to take reliable decisions on
the ‘timing of purchase’ or ‘timing of buy / sell’ in their trades.

The service is aimed to cater research analysis and pricing needs of the trading/ procurement
departments of a company. The service delivery is primarily through decision enabling market mentor
reports and through the telephonic interaction with our research team.

We also provide commodity wise research for manufacture industries and export houses to hedge with
unfinished commodity and arbitrage with spot against future parity.

NCFM Training

Our team comprises of well experienced industry experts to train the MBA students/freshers on financial
markets. We provide live market watch to get knowledge on Trading and Research.
 44

NCFM: NSE’s Certified Financial Markets is a certification issued by National stock exchange. We train on
various modules in NCFM and NISM stream. As a fresher, this is best career option to start career with
financial services industry or KPOs. As per SEBI guideline, NCFM is mandatory for the employees of stock
markets/commodities markets.

We provide result oriented certification training program with live practice on trading and research.

MBA Projects

As part of the MBA course curriculum, students need to submit project in their final year. We provide live
projects to the students of Osmania University, Kakatiya University, Krishna Universitiy and JNTU. We
have vast experience of over three years and delivered more than 400 projects to the students.

Chapter 6

DATA ANALYSIS AND

 45

INTERPRETTAION

Analysis and Interpretation

1. For how long you have been trading with on line-trading?

(a) 1 year (b) 2 year

(c) 3 year (d) 4 year

Sample size 100

50
1 ye
40
ar
30 2 ye
ar
20
3 year
10 4 year

0
YEAR
According to this survey we find that 44% people says that we are investing the money
online from one year and 26% people says that we are investing the money online from
2 years and 19% to 11% people says that we are investing money online from 3 to 4 year.
so we can say that now online trading is very popular in the modern market.

2. How will you describe your experience with on-line trading till date?

(a) very easy to operate

 46

(b) very difficult to operate

(c) not secure

(d) Any other

Sample size 100

60
50 I find it very easy to
operate
40
30 I find it very difficult to
operate
20
I feel it is not secure
10

0 Any other
Experience
According to this survey we find that 60% of people find very easy to operate and 15% people
find diffcuilt two operate and 10% and 15% people find no secure and any other. so we can say
that online trading is very simple to operate and easy to understand.

3. what amount of money you invest normally ?

(a) 50000 (b) 100000 to 150000
(c) 150000 to 2000000 (d) Any other amount
Sample size 100

35
30 50000
25
20
15 100000to150000
10 150000to200000
5 Any Other
0
Money

According to this survey we find that 35% of people invest money normally 50000 and 28% of
people invest money 100000to150000 and 23% and 14% of people invest money between
150000to200000 and any other. So we can say that the people are not invest more money in the
share market because there is a great risk involved while doing the trading.
 47

4 . How often do you trade?

(a)Daily (b) Weekly
(c) Monthly (d) More than one month
Sample Size 100

40
35 daily weekly
30 monthly more
than 1 month
25
20
15
10
5
0
Time
According to this survey we find that 10% of people do trade Daily and 40% people do trade
weekly and 32% and 18% people do trade month and more than month. So we can say that people
are generally invest in stock market weekly basis.
5. which trading you prefer?

(a) On line trading (b) Manual trading

(c) Both

Sample Size 100

50
On line
40 trading
Offline
30
trading
20 Both

10

0
Relationship
According to this survey we find that 20% people prefer online trading and 32% people
prefer offline trading rest of 48% people prefers both. So we can say that mostly people are
awareness about the on line trading and because of this reason the mostly people are
optimizing offline trading.
 48

6. Whether online trading settled in Indian investor psyche

(a) Yes(b) No

Sample Size 100

70
60
50 Yes

40
No
30
20
10
0
Settleled
According to this survey we find that 30% people says yes and 70% people says no. so we
can find that on line trading is not settled in the Indian psyche because some people are not
experience towards online trading.

7. What shortcomings do you feel in Indian On-Line trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(c) any other

Sample Size 100

50
Lack of
40 awareness

30 Shortage of
expertise
20 Shortage Of
Infra
10 structure any
other
0
Shortcomings
 49

According to this survey we find that 15% of people says lack of awareness 49% says
Shortage of expertise and 14% people says Shortage Of Infra structure and 22% says any
other. So we can say that mostly people are shortage of experience about the Indian
derivatives market or share market.

8. Which media would you prefer the most for investment?

(a) T.V (b)
Newspaper

(c) Magazines (D) Journals

60

50 T.V

40

30
Newspaper
20
Magazines
10 Journals
0
Media
According to this survey we find that 55% people Prefer T.V and 25% people prefer newspaper
and 10% people prefer magazines and 10% people prefer journals. So we can suggest that mostly
people are very easily grapped the knowledge through T.V.
 50

Chapter 7

FINDINGS AND
SUGGESTIONS
FINDINGS

1. For how long you have been trading with on line-trading?

According to this survey we find that 44% people says that we are investing the money
online from one year. 11% people says that we are investing money online from 4 year.
so we can say that now online trading is very popular in the modern market.

2. How will you describe your experience with on-line trading till date?
According to this survey we find that 60% of people find very easy to operate. and15% people
find no secure. so we can say that online trading is very simple to operate and easy to
understand

3. what amount of money you invest normally ?

 51

According to this survey we find that 35% of people invest money normally 50000. 14% of
people invest money between
150000to200000. So we can say that the people are not invest more money in the share
market because there is a great risk involved while doing the trading.

4. How often do you trade?

According to this survey we find that 10% of people do trade Daily. 18% people do trade
more than month. So we can say that people are generally invest in stock market weekly
basis.

5. which trading you prefer?

According to this survey we find that 20% people prefer online trading and 32% people
prefer offline trading. So we can say that mostly people are awareness about the on line
trading and because of this reason the mostly people are optimizing offline trading.

6. Whether online trading settled in Indian investor psyche

According to this survey we find that 30% people says yes and 70% people says no. so we
can find that on line trading is not settled in the Indian psyche because some people are not
experience towards online trading.

7. What shortcomings do you feel in Indian derivatives market?

According to this survey we find that 37% of people says lack of awareness 49% says
Shortage of expertise and 14% people says any other. So we can say that mostly people are
shortage of experience about the Indian derivatives market or share market.

8. Which media would you prefer the most for investment?

According to this survey we find that 41% people Prefer T.V and 39% people prefer
newspaper and 20% people prefer magazines. So we can suggest that mostly people are very
easily grapped the knowledge through T.V.
 52

Suggestions

The introduction of the Internet has surprisingly changed our way of life as a society. It has defined the
way we do business and the way we correspond. The Internet has opened many opportunities for online
trading. The financial industry revolves around the Internet. Every thing is just a few clicks away. This
makes online trading most convenient. But there are still investors who prefer the old fashion way of
offline trading and they mainly prefer offline trading for security reasons.

Internet has introduced a way for consumers to manage their money online. Not to mention, Internet
has transformed the way investment companies operate their business and has made it easy for private
investors to gain straight access to a range of different markets and online tools that were at one point
only reserved by the use of investment professionals. Consumer investing and online trading has
dramatically changed over the last decade. Online trading dynamically continues to be redefined.
Services have expanded to include integrated management of additional financial accounts. Not to
mention, it has subsequently expanded in conjunction with groundbreaking improvements to the
traditional trading interface, such as telephone interface systems.

Of course, online trading has many pros. There are several wonderful reasons to invest online and
consider online trading.

1. Money saving opportunities The amount of money you save depends primarily on the online
brokerage firm that you choose. No two firms are the same. There may be different regulations, similar
to bank regulations. There are minimum deposits required that must be maintained. As mentioned
above, this will depend on the online brokerage firm.

2. Instant online access You can gain instant access to your account, the value of your portfolio
updates immediately before your eyes.

3. Enter online trades at anytime You can enter online trades at anytime and from anywhere. This is
very convenient if you live in a different time zone than the country you are trading in. Not to mention, it
is especially fit for investors with busy schedules.

4. With online trading you are in charge You are in control of your investments. No sales pitches
and no hassle. You decide where to invest your money.

LIMITATIONS

Despite of the training my level best, there were still some limitation which I think remains there
to draw fruitful conclusion. There were some practical problem which come across and could not
be properly death with
 53

 The advisory services being promised by the brokers would be of little use to investors looking
for an insight into the market.

 As a client one will access the NSE through a server of the online brokerage and this may
involve queuing delays

 If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If he
want advice on a particular stock in his portfolio he may not even be able to get that.

Chapter 8

CONCLUSI ON
 54

CONCLUSION
Online trading is the new concept in the stock market. In India, online trading is still at its infancy stage.
Online trading has made it easy to trade in the stock market as now people can trade while sitting at
their home. Now stock market is easily accessible by the people. There are some problems while doing
the trade through the internet. Major problem faced by online trader is that the investors are loyal to
their traditional brokers, they rely upon the suggestions given by their brokers. Another major problem is
that the people don't have full knowledge regarding online trading. They find it difficult to trade
themselves, as a wrong entry made by them, can bring them huge losses.

Nevertheless to say that online trading has the bright future as the percentage of the trade done through
online trading is increasing day by day.
 55

Chapter 9

BIBLOGRAPH
Y

BIBLIOGRAPHY

BOOKS
• C. R. Kothri, Research Methodology, Vishwa Prakshan

MAGAZINES
• Business World
• NSE’s Magazine
 56

INTERNET SITES
• www.nseindia.com

• www.bseindia.com

• www.on-linetrading.com

• www.sebi.gov.in

• www.nseindia.com

Chapter 10
QUESTIONNAI
RE
 57

Questionnaire
Dear respondent,

I am student of MBA. I am working on the project of “On-Line trading”. You

are requested to fill the questionnaire to enable, to undertake the study on the
said Project.

Name………………………. Occupation………………
Address …………………… Phone
no………………….

1. For how long you have been trading with on line-trading?

(a)1 year (b) 2 year

(c) 3 year (d) 4 year

2 .How will you describe your experience with on-line trading till date?

(a) very easy to operate

(b) very difficult to operate

(c) not secure

(d) Any other

3. what amount of money you are invested normally ?

(a) 50000 (b) 100000 to 150000
(d) Any other amount
(c) 150000 to 2000000 4.
How often do you trade?

(a)Daily (b) Weekly

(c) Monthly (d) More than one month
5. In which trading you will prefer?

(a) Online trading (b) offline trading

 58

(c) Both

6. According to you online trading setteled in Indian investor psyche

(a) Yes(b) No

7. What shortcomings do you feel in Indian On-line Trading ?

(a) Lack of awareness the investors about on-line trading

(b) Shortage of domestic technical expertise

(c) Shortage Of Infra structure

(d) If any other

8. Which media would you prefer the most for investor?

(a) T.V (b) Newspaper
(c) Magazines (d) Journals