DECLARATION

I, Megha Sheth, hereby declare that the project work has been carried out through my own efforts and under the guidance of Mr. Taral Pathak and Mr. Mayank Joshipura, faculty of AES PGIBM, Ahmedabad. This project has been submitted as a part of study curriculum of MBA program. The report has not been submitted to any other university.

DATE PLACE Signature

 ACKNOWLEDGEMENT
It is my great pleasure to present this report. I thank all those people who helped me to make this project, by providing necessary information. I would like to express my gratitude towards Mr. Amit Buch of Sharekhan who spent his most valuable time and provided with all the necessary details regarding the company. I would also like to thank Mr. Shrinivas Bhatt and Mr. Tejas Doshi, who shared their knowledge and expertise. I would also like to thank Mr. Taral Pathak and Mr. Mayank Joshipura of AESPGIBM for their guidance throughout the preparation of the project and for their valued suggestion. At last I would like to thank all those people who helped me bring this project to fruitism

Date: Place: Signature

 EXECUTIVE SUMMARY
This project mainly focuses on Share Market as a whole, its history and development. Herein, I discuss the basic concepts of the share market, what is equity market, commodities market and derivatives market, how do they function and how are the margins set. It also contains industry analysis based on Michael Porters Five Force Model and Competition analysis. It discusses Sharekhan as a stock broking company, its products and services. It discusses the Seven S Model as applied to Sharekhan. The report also contains the analysis of the Market survey carried out by me. Lastly, it includes an analysis on The Historic Market Crash of May 2006.

 INDEX
SR TITLE .
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. Industry Overview Stock Exchanges Transaction Cycle Major Players Industry Analysis Entry Barriers Competition Analysis Traditional vs E-broking About Sharekhan 7S Model Sharekhan Stock Cluster Publications Products and Servicies Comparision SWOT Analysis Derivatives Commodities Research at Sharekhan Market Crash Analysis Market Survey Conclusion Recommendation My Learning Bibliography

PAGE NO.
6 9 14 15 21 24 25 26 28 42 44 45 46 54 64 66 77 85 87 94 105 106 107 108

 INDUSTRY OVERVIEW INTRODUCTION

Stock exchanges to some extent play an important role as indicators, reflecting the performance of the countrys economic state of health. Stock market is a place where securities are bought and sold. It is exposed to a high degree of volatility, prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buy and sell securities on behalf of individuals and institutions for some commission. The Securities and Exchange Board of India (SEBI) is the authorized body, which regulates the operations of stock exchanges, banks and other financial institutions. The past performances in the capital markets especially the securities scam by Hasrshad Mehta has led to tightening of the operations by SEBI. In addition the international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve, discipline and bring greater transparency in this sector, constant efforts are being made and to a certain extent improvements have been made.

HISTORY
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.

DEVELOPMENT
An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers Association at Bombay in 1875, the precursor of the present-day Bombay Stock Exchange. This was followed by the formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. In order to check such aberrations and promote a more orderly development of the stock market, the central government introduced a legislation called the Securities Contracts (Regulation) Act, 1956. Under this legislation, it is mandatory on the part of a stock exchanges to seek government recognition. As of January 2002 there were 23 stock exchanges recognized by the central Government. They are located at Ahmedabad, Bangalore, Baroda, Bhubaneshwar, Calcutta, Chennai,(the Madras stock Exchanges ), Cochin, Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur, Ludhiana, Mangalore, Mumbai(the National Stock Exchange or NSE), Mumbai (The Stock Exchange), popularly called the Bombay Stock Exchange, Mumbai (OTC Exchange of India), Mumbai (The Inter-connected Stock Exchange of India), Patna, Pune, and Rajkot. Of course, the principle bourses are the National Stock Exchange and The Bombay Stock Exchange , accounting for the bulk of the business done on the Indian stock market. While the recognized stock exchanges have been accorded a privileged position, they are subject to governmental supervision and control. The rules of a recognized stock exchanges relating to the managerial powers of the governing body, admission, suspension, expulsion, and re-admission of its members, appointment of authorized representatives and clerks, so on and so forth have to be approved by the government. These rules can be amended, varied or rescinded only with the prior 9

approval of the government. The Securities Contracts (Regulation) Act vests the government with the power to make enquiries into the affairs of a recognized stock exchange and its business, withdraw the recognition the task of regulating the stock exchange to the Securities Exchanges Board of India.

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 BSE(BOMBAY STOCK EXCHANGE) The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956. The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs. A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.

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 NSE(NATIONAL STOCK EXCHANGE) NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in June 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments. NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. The standards set by the exchange in terms of market practices, Products , technology and service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service.

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 NCDEX (NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE)

NCDEX started working on 15th December, 2003. This exchange provides facilities to their trading and clearing member at different 130 centers for contract. In commodity market the main participants are speculators, hedgers and arbitrageurs. Promoters of NCDEX are National Stock Exchange(NSE) ICICI bank Life Insurance Corporation(LIC) National Bank for Agricultural and Rural Development (NABARD) IFFICO Punjab National Bank (PNB) CRISIL
WHY NCDEX?

NCDEX is nationalized screen based system which is providing transparent, private and easy services. NCDEX is one of the traditional media which gives online information NCDEX is one of the Indian commodity exchange, constructed on the basis of the current national institutes the exchange has been established with the coloration of leading institutes like NABARD, LIC, NSI etc. In India NCDEX has maximum settlement guarantee fund. NCDEX has appointed two exports for checking quality at the time of delivery
FACILITIES PROVIDED BY NCDEX

NCDEX has developed facility for checking of commodity and also provides a wear house facility By collaborating with industrial partners, industrial companies, news agencies, banks and developers of 13

kiosk network NCDEX is able to provide current rates and contracts rate. To prepare guidelines related to special products of securitization NCDEX works with bank. To avail farmers from risk of fluctuation in prices NCDEX provides special services for agricultural. NCDEX is working with tax officer to make clear different types of sales and service taxes. NCDEX is providing attractive products like weather derivatives

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 MCX(MULTI COMMODITY EXCHANGE)

MULTI COMMODITY EXCHANGE of India limited is a new order exchange with a mandate for setting up a nationwide, online multi-commodity marketplace, offering unlimited growth opportunities to commodities market participants. As a true neutral market, MCX has taken several initiatives for users In a new generation commodities futures market in the process, become the countrys premier exchange. MCX, an independent and a de-mutualized exchange since inception, is all set up to introduce a state of the art, online digital exchange for commodities futures trading in the country and has accordingly initiated several steps to translate this vision into reality.
Market Watch:

The market watch window is used to view the market details for a particular or group of contracts and for a particular instrument type. This window displays the following details: Symbol, Expiry, price quotation unit, buy qty, buy price, sell price, sell qty, last traded price, D.P.R, volume (in 000s), value (in lac),% change, average trade price, high, low, open, close & open interest.

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16

 TRANSACTION CYCLE

FUNDS OR SECURITIES

PLACING AN ORDER

FUNDS OR SECURITIES

TRADE EXECUTION

SETTLEMENT OF TRADES

CLEARING OF TRADES

A person holding assets (Securities/Funds), either to meet his liquidity needs or to reshuffle his holdings in response to changes in his perception about risk and return of the assets, decides to buy or sell the securities. He selects a broker and instructs him to place buy/sell order on an exchange. The order is converted to a trade as soon as it finds a matching sell/buy order. At the end of the trade cycle, the trades are netted to determine the obligations of the trading members securities/funds as per settlement cycle. Buyer/seller delivers funds/ securities and receives securities/funds and acquires ownership of the securities.

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A securities transaction cycle is presented above. Just because of this Transaction cycle, the whole business of Securities and Stock Broking has emerged. And as an extension of stock broking, the business of Online Stock broking/ Online Trading/ E-Broking has emerged.

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 MAJOR PLAYERS
1. S S KANTILAL ISHWARLAL SECURITIES PVT LTD. (www.sharekhan.com) 2. ICICI WEB TRADE LTD. (www.icicidirect.com) 3. 5 PAISA.COM (www.5paisa.com) 4. KOTAK SECURITIES LTD. (www.kotakstreet.com) 5. INDIABULLS (www.indiabulls.com) 6. MOTILAL OSWAL SECURITIES LTD. 7. HDFC SECURITIES LTD. (www.hdfcsec.com) 8. UTI SECURITIES LTD. 9. IDBI CAPITAL MARKET SERIVICES LTD. 10. REFCO SIFY SECURITIES PVT LTD.

Parameters

A/c Opening Fee Trading Demat

Brokerage Delivery 0.50 0.75 0.40 0.20 Square Off 0.10 0.18 0.10 0.05

Interface Banks Associated with HDFC, UTI, OBC, IDBI & Citibank ICICI Bank N.A. Citibank, HDFC, OBC, UTI & ICICI Bank Kotak Bank & Citibank HDFC & Other 4 Banks

Sharekhan ICICI Direct Indiabulls 5 paisa

A/c 750 750 750 800

NIL NIL 250 NIL

Kotak Street HDFC Securities

500 700

N.A. NIL

0.59 0.50

0.06 0.15

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 S. S. KANTILAL ISHWARLAL SECURITIES PVT. LTD. (sharekhan.com):

Sharekhan, Indias leading stockbroker is the retail arm of SSKI, and offers you depository services and trade execution facilities for equities, derivatives and commodities backed with investment advice tempered by decades of broking experience. A research and analysis team is constantly working to track performance and trends. Thats why Sharekhan has the trading products, which are having one of the highest success rates in the industry. Sharekhan is having 240 share shops in 110 cities; the largest chain of retail share shops in India is of Sharekhan. In future, Sharekhan is planning to enter in Mutual funds, Insurance sector and banking sector to expand beyond the market currently covered by it. And it has started MF (Mutual Funds) on priority basis but wants to grow in it.

ICICI Web Trade Ltd. (ICICIdirect.com):

ICICIdirect.com was the first entrant into e-broking. ICICdirect.com provides the 3-in-1 to the users which tie in their saving bank account and their Demat account to their brokerage account electronically. This integration ensures that money is transferred to/from their bank account and the shares are transferred from/to their Demat account automatically without writing any cheques or transfer instructions while carrying out their trades in shares. ICICIdirect.com has the option of trading in shares in cash, margin or spot segments. An investor can also invest in 14 Mutual Funds (Prudential ICICI MF, Franklin Templeton India MF, Alliance Capital MF, JM MF, Birla Sun Life MF, Sundaram MF, IL&FS MF, Principal MF, HDFC MF, Standard Chartered MF, Reliance Capital MF, Kotak Mahindra MF, TATA MF and DSP MERRILL LYNCH MF) through their trading account. 20

ICICIdirect.com doesnt provide the facility of trading in a traditional way.

5PAISA.COM
5paisa is the trade name of India Infoline Securities Private Limited (5paisa), member of National Stock Exchange and The Stock Exchange, Mumbai. 5paisa is a wholly owned subsidiary of India Infoline Ltd, Indias leading and most popular finance and investment portal. 5paisa has emerged as one of leading players in e-broking space in India. The companys brokerage is one of the lowest in the industry. It also provides the research on commodities. Investors can benefit from its analysis and advice available at the click of the mouse. For those who prefer to trade the traditional way, India Infoline investor points are available across the country. India Infoline was founded by a group of professionals in 1995. Its institutional investors include Intel Capital, one of the leading technology companies in the world promoted by the UK government, ICICI, TDA and Reeshanar. The company offers a slew of products such as stock and derivatives broking, commodities broking and mutual funds.

KOTAK SECURITIES LIMITED (kotakstreet.com):

Kotak Securities Ltd., a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% one of the worlds leading investment banks and brokerage firms) is Indias leading stock broking house with a market share of 5 - 6 %. Kotak Securities Ltd. has been the largest in IPO distribution - It was ranked number One in 2003-04 as Book Running Lead Managers in public equity offerings by PRIME Database. It has also won the Best Equity House Award from Finance Asia - April 2004. 21

Kotak Securities Ltd is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) providing dual benefit services wherein the investors can use the brokerage services of the company for executing the transactions and the depository services for settling them. The company has 42 branches servicing around 1, 00,000 customers. Kotakstreet.com the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets over 1700 crores under Portfolio Management Services (PMS) which is mainly to the high end of the market. Kotak Securities Limited has newly launched Kotak Infinity as a distinct discretionary Portfolio Management Service, which looks into the middle end of the market.

INDIA BULLS
Indiabulls is India's leading retail financial services company with 77 locations spread across 64 cities. Its size and strong balance sheet allows providing varied products and services at very attractive prices, our over 750 Client Relationship Managers are dedicated to serving your unique needs. Indiabulls is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides real-time service & 24/7 access to all information and products. The Indiabulls Professional Network offers real-time prices, detailed data and news, intelligent analytics, and electronic trading capabilities, right at your fingertips. This powerful technology is complemented by our knowledgeable and customer focused Relationship Managers. Indiabulls offers a full range of financial services and products ranging from Equities, Derivatives, Demat services and Insurance to enhance wealth and to achieve the financial goals. 22

 Motilal Oswal Securities Ltd. (MOSt):

One of the top-3 stock-broking houses in India, with a dominant position in both institutional and retail broking, MOSt is amongst the best-capitalized firms in the broking industry in terms of net worth. MOSt was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology have enabled it to blossom into a thousand-member team. The institutional business unit has relationships with several leading foreign institutional investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent media report MOSt was rated as one of the top-10 brokers in terms of business transacted for FIIs. The retail business unit provides equity investment solutions to more than 50,000 investors through 270 outlets spanning 150 cities and 22 states. MOSt provides Advice-Based Broking, Portfolio Management Services (PMS), E-Broking Services, Depository Services, Commodities Trading, and IPO and Mutual Fund Investment Advisory Services. Its Value PMS Scheme gave a 160% post-tax return for the year ended March 2004 In AsiaMoney Brokers Poll 2003 MOSt has been rated as the Best Domestic Research House- Mega Funds, while in 2000 and 2002 it has been rated as the Best Domestic Equity Research House and Second best amongst Indian Brokerage firms respectively.

HDFC SECURITIES LTD (HDFCsec):

HDFC securities is a brand brought to you by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base of the HDFC Group and other investors a capability to transact in the Stock Exchanges & other 23

financial market transactions. The services comprise online buying and selling of equity shares on the National Stock Exchange (NSE). Buying and selling of select corporate debt and government securities on the NSE would be introduced in a subsequent phase. In a few months, they will also start offering the following online trading services on the BSE and NSE: Buying and selling of shares on the BSE Arbitrage between NSE & BSE 3. Trading in Derivatives on the NSE 4. Margin trading products. They are also planning to include buying and selling of Mutual Funds, IPO subscriptions, Right issues, purchase of Insurance policies and asset financing.

UTI SECURITIES LTD.: (UTISEL)

Unit Trust of India incorporated UTI SECURITIES LTD on June 24, 1994 as a 100% subsidiary and on the repealing of the UTI Act, the capital is now held by the Administrator of the Specified Undertaking of Unit Trust of India (ASUUTI). UTI Securities has been working as an independent professional entity for providing financial intermediary and advisory services to its corporate and retail clientele. The Company has presence in major cities with 20 branches and 50 franchisees to service a wide range of clients. The company has also invested in the jointventure company with Standard Chartered Bank viz. Standard Chartered UTI Securities (P) Ltd. that is engaged in primary dealership and Government securities. The company is very soon going to start Commodity Trading through its subsidiary, USEc Commodities Ltd, which provides facility of commodity trading on NCDEX and MCX. 24

 IDBI Capital Market Services Ltd.

IDBI Capital is a leading Indian securities firm offering a complete suite of products and services to individual, institutional and corporate clients. IDBI Capital Market Services Ltd. (IDBI Capital), a wholly owned subsidiary of Industrial Development Bank of India (IDBI), is a leading Indian securities firm, offering a complete suite of products and services to individual, institutional and corporate clients. The services include fixed income trading, equities brokerage, debt and equity derivatives, research, private placements, depository services, portfolio management and distribution of financial products. Over the last five years, we have emerged as a leading player in each of these businesses. March 1995 - Commenced Equity Broking on NSE CM segment July 1995 - Built agent Distribution Network across the country October 1996 - Commenced Debt Broking on NSE WDM segment December 1996 - Started operations as a Depository Participant 1996 - Started to act as Arranger to Privately Placed Bond issues April 1998 Manager - Commenced operations as a Portfolio

February 1999 - Acquired membership of BSE, Mumbai November 1999 - Started operations as a Primary Dealer June 2000 - Acquired Derivatives memberships of BSE and NSE

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March 2002 - Achieved an outright secondary market turnover exceeding Rs100,000 October 2002- Commenced trading in Interest Rate Swaps

REFCO - SIFY SECURITIES INDIA PVT. LTD

Refco-Sify Securities India Pvt. Ltd., headquartered in Mumbai, is a joint venture between the Refco Group Holding Ltd., USA; and Satyam Infoway Limited (NASDAQ: SIFY) to offer online and offline equity and derivatives trading for retail customers as well as execution and clearing services for financial institutions. Refco also provides clients with prime brokerage services, fixed income, equities, foreign exchange, OTC derivatives and asset management. Refco is a leader in providing clients with the latest technological advances in products and services. Its proprietary systems and global infrastructure provide the flexibility to meet all client requirements.

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INDUSTRY ANALYSIS

INDUSTRY ANALYSIS USING PORTERS 5 FORCES MODEL

POTENTIAL ENTERANT Investmart Various Banks Geojit Cipher UTI Securities Ltd. Refco Group Ltd. IDBI Capital Mkt. Services Ltd.

SUPPLIERS SUPPLIERS Web maintainers Web maintainers NSCL NSCL CSDL CSDL NSE NSE BSE BSE MCX MCX NCDEX NCDEX

COMPETITORS COMPETITORS ICICI Web Trade Ltd ICICI Web Trade Ltd 5paisa.com 5paisa.com Kotak Securities Ltd Kotak Securities Ltd India Bulls India Bulls Motilal Oswal Securities Ltd Motilal Oswal Securities Ltd HDFC Securities Ltd HDFC Securities Ltd Marwadi Finance Ltd Marwadi Finance Ltd

BUYERS BUYERS Small Investors Small Investors Franchise/Business Franchise/Business Partners Partners HNIs HNIs MF Companies MF Companies HUF HUF Institutional Investors Institutional Investors

SUBSTITUTES SUBSTITUTES Mutual Funds Mutual Funds Insurance Insurance Bank FD Bank FD

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 SUPPLIERS

NSDL & CSDL are the regulatory bodies for Depository Participants like SSKI, SHCIL, ICICIdirect.com, etc. Also these regulatory bodies have got an upper hand as the bargaining power stock broking houses like SSKI, etc. would be less. NSE & BSE are playgrounds where common investors trade through stock broking houses, for which they have to take permission from NSE/BSE. NSE & BSE are under the purview of SEBI, thats why stock broking houses like SSKI, have low bargaining power. But here NSE/BSE have one advantage, they cannot go for forward integration. MCX & NCDEX are stock exchanges, which trade in commodities and derivatives. Here again stock broking houses have to follow rules and regulation of the same.

BUYERS
There are various types of investors who trade through stock broking houses like SSKI, which includes investors like small investors, medium net worth investors, business partners, institutional investors and mutual fund companies. Here the bargaining power of stock broking houses depends on how big the investor is. So here we can say that bargaining power of stock broking houses is high in case of small investors & HUF. While, the bargaining power is moderate in case of HNI (High New Worth Investors)/ MNIs (Medium Net Worth Investors) and business partners. 28

 But in case of mutual fund companies institutional investors bargaining power is less.

and

There is competitive buzz in stock broking industry; competitors are offering low brokerage and best services with added feature. So switching cost is pretty much less. So the buyer can easily switch over to competitors product.

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 COMPETITORS
The company is facing the competition from local as well as national level players. The local players provide facility for off-line trading while the national players like ICICIdirect.com and Kotakstreet.com, HDFC Security provide online trading services.

There are also other big names like Indiabulls, Motilal Oswal, 5paisa and Marwadi, which encircle the company from both the sides by providing online and off-line trading with competitive services.

POTENTIAL ENTRANTS
The potential entrants like Investmart, Jeojit and Cipher, which are coming in near future to Rajkot City. Nationalized banks are also planning to enter this field by tying up with broking houses. E.g. Bank Of Baroda.

SUBSTITUES
Here substitutes are such instruments, which can be used instead of investing in shares. The instruments like Bank FD, insurance, mutual funds are the substitutes. If the use of this instruments increase this may be disadvantageous for the stock broking houses. The companies and banks, which are having these instruments, can plunge into this industry.

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 ENTRY BARRIERS
Huge capital:- Capital is necessary not only for fixed facilities but also for customers credit and absorbing start up losses. To start a stock broking house, one needs huge capital for technology up gradation and skilled manpower. Technology:- Technology for stock broking houses is life saving device. Stock broking requires huge capital to make their products user friendly, which in turn requires capital to employ skilled manpower. Thus, technology could be one of the entry barriers. Regulatory Constraints:- Obtaining a license is a tedious job for a stock broking house. It should comply with the regulation of the governing bodies like SEBI, NSDL, etc. For a stock broking houses to plunge into the stock broking industry, it needs to have some kind of financial background and expertise. Thus, regulators constraints could be an entry barrier.

Experience curve:- The core competency in this industry is the services, which are provided to the end-users and the research, based activities which includes TIPS, fundamental as well as technical script analysis. Also the most important thing which helps the already established firms is-TRUST which people would be having on firms like SSKI , Motilal Oswal, etc. which is very difficult for new companies to imitate. Network:- The Reach to the customer is the key factor in the industry. The network of the companies like Motilal Oswal, Sharekhan, and ICICI is very efficient and spread all over India. It will take time for a new entrant to establish such a huge network (e.g. Marwadi), which says, Network can come up as the most difficult entry barrier to overcome. 31

Expected Retaliation:- Whenever a new player comes in the industry, the old companies have an option to reduce the prices of their product. This kind of practice is called expected Retaliation, which is also possible in this industry in terms of less brokerage rates and reduced account opening charges. E.g. before the entry of so many new companies, Sharekhan was having two types of accounts viz. speed trade and speed trade plus, which were costing 1000 & 1500 account opening charges respectively. But due to competition, they have come up with only one account i.e. speed trade plus with the account charges of Rs.1000.

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COMPETITION ANALYSIS
Follower:

The followers are those who just blindly follow the other players, which are leaders and challengers. The players like 5 paisa, Motilal Oswal, HDFC Securities, Kotakstreet are the followers.
LEADER:

ICICIdirect.com is a leader in the online account which is having 1, 24,000 accounts in the country. While in offline account Sharekhan is leading with 64,000 offline accounts.
NICHER:

ICICIdirect.com and Kotakstreet.com are the two stock broking houses, which are focusing only on online investors.
CHALLENGER:

Sharekhan, Kotakstreet and Indiabulls come under this head. Sharekhan challenges competitors by providing quality services and research based advice. Indiabulls is also challenging with low brokerage rates and class one services.

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 TRADITIONAL VS E-BROKING
TRADITIONAL BROKING
Traditionally in Stock Market, the investors invested their money in shares under the guidance of the Brokers of any stock broking company. This was convenient to those investors who were not familiar with the computer and the use of internet. But it required more dealers to the share broking companies to give guidance related to investment. There was a chance of inaccuracy of price because it was a time consuming process. The costs of the company also use to increase due to more paperwork. From the investors point of view, there was a problem of privacy. The broker may leak the information of investor. So, to remove these limitations of traditional broking, there was an emergence of new concept e-Broking.

E-BROKING
Today is a world of technology. So the person who adapt to it achieves success. E-broking is broking through electronic means. E-broking is the broking in which the investors who are familiar with the use of computer and internet directly trade in stock market. They trade anytime at any place when the stock market is open. The cost of transaction is also reducing with time. The investors have large range of options for trading. It is a paperless transaction so it reduces the cost of the company. There is facility of live streaming quotes, which gives exact price of the share prevailing in the market at that time. There are two types of online trading services: discount broker and full service online broker. Discount online brokers allow you to trade via internet at reduced rate. Some provide quality research, others dont. Full service online brokerage is linked to existing brokerage. These brokers allow their clients to place online orders with the option of talking/chatting with 34

brokers if needed. Brokerage rates here are higher. Online trading is still in its infancy stage in India with trading turnover at around Rs.10 crores per day from online trading as compared to a combined gross turnover of around Rs.9000 to 10,000 crores handled by BSE and NSE together.

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 INTERNET TRADING IN INDIA:

In the past, investors had no option but to contact their broker to get real time access to market data. The net brings data to the investor online and net broking enables him to trade on a click. Now information has become easily accessible to both retail as well as big investors. The development of broking in India can be categorized into 3 phases. Stock brokers offering on their sites features such as live portfolio manager, live quotes, market research and news to attract more investors. Brokers offering online broking and relationship management by providing and offering analysis and information to investors during broking and non broking hours based on their profile and needs i.e. customized services Brokers (e-brokers) will offer value management or services such as IPO online, asset allocation, portfolio management, financial planning, and tax planning, insurance services and enable the investors to take better and well-considered decisions. Presently internet trading can take place through the order routine system, which will route client orders to exchanges trading systems for execution of trades on stock exchanges (BSE and NSE). This will also require interface with banks to facilitate instant cash debit or credit and depository system for debit or credit of securities.

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37

 ABOUT SHAREKHAN
INTRODUCTION
Share khan is a stock broking company. Share khan comes under retail arm of SSKI (Shripal Sevantilal Kantilal Ishwarlal) investors services pvt. Ltd. It offers world-class facilities for buying and selling shares on BSE and NSE demat services (DP) and derivatives (F&O). SSKI group also comprises of institutional broking and corporate finance. Sharekhan is also about focus. Sharekhan does not claim expertise in too many things. Sharekhan's expertise lies in stocks and that's what he talks about with authority. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is something that is spoken with years of focused learning and experience in the stock markets. And these beliefs are reflected in everything Sharekhan does. Share khan is an eight decades old company, which started its online services in the year 2000, and it is the first who started online in 1984 that ventured into institutional broking and corporate finance. Share khan as a retail broking arm of SSKI, caters to the needs of individual investors. While the investment world abounds with Jack of all trades, share khan chose to build their business by focusing on what they know bestmarket driven investment avenues like equities, derivatives and commodities. They facilitate the investment process for their clients and also provide value added services like research, stock ideas, demat, online trading etc. to make their investment experience rewarding.

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39

VISION
To empower the investor with quality advice and superior service to help him take better investment decisions. We believe that our growth depends on client satisfaction.

MISSION
To provide the best customer service and product innovation tuned to diverse needs of clientele Continuous up-gradation with changing technology, while maintaining human values. Respond to progressive globalization and achieving international standards. Efficiency and effectiveness built on ethical practices.

CORE VALUES
Customer satisfaction through Providing quality service effectively and efficiently Smile, it enhances your face value is a service quality stressed on periodic customer service Audits Maximization of stakeholder value Success through Teamwork, integrity and People

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 GENERAL INFORMATION

NAME

: S. S. KANTILAL ISHWARLAL SECURITEIS PVT. LTD.

HEAD OFFICE

: SHAREKHAN LTD. A 206, PHOENIX HOUSE, PHOENIX MILL COMPOUND, SENAPATI BAPTA MARG, LOWER PAREL, MUMBAI - 400013

PH NO E-MAIL WEB SITE BRANCH OFFICES

: 1800 - 22 7500 , 3970 75 00 : shrinivasb@branch.sharekhan.com : www.sharekhan.com : 100 BRANCHES

CHIEF EXECUTIVE OFFICER: TARUN SHAH

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CHANGING TREND
Remember the time when you left orders with your broker in the morning and received a confirmation fax late in the evening? You wondered whether you had acquired the shares at the best possible price for the day. Today, the picture is different. Imagine a scenario where you log on to your account, get the live quotes of scripts you are interested in, get advise from experts and research reports on your investment choice and then just click the mouse to place your order, pay the amount due (which automatically gets debited into your account with the on line brokerage firm), get your account statement, and the delivery of your shares into your Demat account. All this through just one click of a mouse. Seems like a dream? But with online trading this has become a reality. A few seconds later, you get the confirmation on your screen. And after the trade settlement, your bank and DP accounts will reflect the changes accordingly. The speed of transaction, confidentiality about the prices and ease of settlement in the paperless mode should be good reasons for retail investors to jump on to the Net. All they need is a PC, a modem, a subscription to an ISP, an account with a bank (which has a web presence) and a depository account. And they can choose from a plethora of e-trading web sites. So, finally the changing trend is known as E-trading which really means Buying and selling securities via the Internet or other electronic means such as wireless access, touchtone telephones, and other new technologies with online trading. In most cases customers access a brokerage firm's Web Site through their regular Internet Service Provider. Once there, customers may consult information provided on the Web Site and log into their accounts to place orders and monitor account activity"

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 SSKI Group - Corporate Structure

Owns 56% of Owns 50.5% of

SSKI Securities Pvt. Ltd. Morakhia Family & Associates

SSKI Investor Services Pvt. Ltd.

Retail broking arm of the group Shareholding pattern 56% Morakhia family (promoters) 18.5% HSBC Private Equity Management, Mauritius 18.5% First Carlyle Ventures, Mauritius 7% Intel Pacific Inc.

SSKI Corporate Finance Pvt. Ltd.

Investment Banking arm of the group Shareholding pattern 50.5% SSKI Securities Pvt. Ltd. 49.5 % Morakhia family

Integrated Equity Solutions Provider

Among the top 3 branded retail service providers (Rs. 200+crs average daily Vol- FY 03-04) Multi-channel access to clients Tailor made research and products Depository Services Derivatives Innovative products for enhanced performance

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 COMPANY OVERVIEW
SSKI named its online division as SHARE KHAN and it is into retail Broking The business of the company overhauled 4 years ago on February 8, 2000. It acts as a discount brokerage house to a full service investment solutions provider It has specialized research product for the small investors and day traders Largest chain of share shops, 68 Branches across India. It has $25m/trades every day. Leading player today with 20% market share Over 10,000 online clients The site was also launched on February 8, 2000 and named it as www.sharekhan.com The SpeedTrade account of share khan is the next generation technology product launched on April 17, 2002

SpeedTradePlus was launched on October 28, 2002 for trading in Derivatives It offers its customers with the trade execution facilities on the NSE, for cash as well as derivatives, depository services It gives advice based on extensive research to its customers and provides them with relevant and updated information to help them take their investment decisions. Share khan offers its customers the convenience of a broker-DP.

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 MARKET COVERAGE Ground Network Largest in India

122 Franchisees and 68 branches Covers 82 cities in 17 states across India Trade execution facility on BSE and NSE for Cash as well as Derivatives Depository/Demat account services Personalized Sharekhan research advice Uniform service standards

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 Award-Winner

Winner of Chip magazines Best Financial Website Award

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SEVEN PS OF SHAREKHAN PRODUCT

Product Variety

Share khan offers 3 types of online trading accounts for its customers specially designed according to their volume in share trading. Those 3 varieties are: Classic- for retail investors Speed Trade: for high net worth investors with large and active equity portfolio who need to monitor and action swiftly Speed trade Plus- for high net worth investors dealing in derivative market.
Quality

User Friendly, attractive & colorful Website.

Design

The website of Share khan namely www.sharekhan.com has been specially designed to facilitate its users to buy and sell shares in an instant at anytime and from anywhere they like. The site is user friendly allowing even a layman to easily operate without any hassles.
Features:

- Share khans product comes with the following features: - Trade execution in a fraction of a second! - Single Screen Trading Terminal - Real time streaming quotes. Price watch on any number of scripts. - Back up Facility to place trades on Direct Phone Lines. - Intra day charts, updated live, tick-by-tick. - Instant Order\ Trade Confirmation in the same window - Market depth, i.e. Best 5 bids and offers, updated live for all scripts - Online access to both accounts and DP. - 128 - bit super safe encryption. - Online fund transfer facility from leading Banks - Online intra-day technical calls. 47

- Exhaustive database of over 2000 companies

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Brand Name

The company as a whole in its offline business has named itself as SSKI Securities Pvt. Ltd -Sevaklal Sevantilal Kantilal and Ishwarlal Securities Pvt. Ltd. The company has preferred to name themselves under a Blanket Family Name. But in its online division started since 1997, the company preferred to name itself as SHARE KHAN. The Brand Name SHARE KHAN itself suggests the business in which the company is dealing so that the consumer could easily identify the product or service category.
Services

Share khan offers its customers, depository services and trade execution facilities for equities, derivatives and commodities backed with investment advice tempered by decades of broking experience. The teams of its dedicated analysts are constantly at work to track performance and trends. Dial-n-trade is also an exclusive service available to all Sharekhan customers for trading in shares via the telephone. On dialing the toll free number 1600-22-7050 and on entering the customers TPIN number, the customer will be directed to a telebroker who will buy or sell shares for him.

PRICE
List Price

CLASSIC SPEED TRADE One time 750 registration fee Minimum Nil brokerage Charges Quarterly
Brokerage

1000 1000

SPEED TRADE PLUS 1500 1500

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Share khan in its online business charges brokerage as follows: - In equity Market: On Trading: 0.1% On Delivery: 0.5% - In Derivative Market On Trading: 0.12% (Total brokerage) On Delivery: 0.1% Service Tax -8% on Brokerage. Turnover tax + Stamp duty -0.015% (Rs. 15 on every turnover of Rs. 100000) Custody Charge

Re. 1 per script held per month.

Discounts

For investors with High Net worth, there are slabs in brokerage rates.
Payment Period

The transaction settlement date in the securities market is T+ 2 days i.e. the payment of the transaction taken place has to be made within two days of its occurrence.
Credit terms

Share khan allows its customers to trade up to 4 times i.e. by keeping 1/4th margin with them.
Dematerialization charges

Re. 3 per certificate or Rs.15 per requests whichever is higher.

PROMOTION
Online share trading is totally a new concept in Indian Market. Generally investor doesnt like to come out from conventional way of share trading. Share khan has introduced this product in. The concept and Product are still new in the market. Therefore the company has undertaken extensive promotion campaign to create awareness about the product. 50

Share khan adopts the following tools for promoting the product
Advertising

Company advertises its product through TV media on channels like CNBC, Print Media-in leading dailies and outdoors media. It advertises itself as an innovative Brand with a cartoon of tiger-called SHERU. Besides attractive and colorful brochures as well as posters are used giving full details about the product. Mails are sent to people logging on to sites like moneycontrol.com and rediff.com. Also, stalls are opened up now and then at places where prospective customers can be approached.

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 Sales Promotion

The Company offers Rs.500 instead of Rs.750 for corporate accounts (more than 20 accounts). Also, it provides online trading accounts for just Rs.300 for IIM students.
Sales Force

The Company has an aggressive sales force, which is given incentives, based on their sales. The sales force is given intensive training continuously.
Seminar

The Company also arranges seminar in corporate world for creating awareness about the product. Recently, it had organized for a seminar in ONGC, IIM.
Direct Marketing

Company emphasizes more on direct marketing, as many people are still not aware of this new way of smart trading. For this, the company recruits and trains sales representatives so as to explain the product and solve customer queries related to the product. This is the most effective way to communicate the three-in-one concept which company offers.
Telemarketing

This is another promotional tool company is using to boost up its sales. For this, the company collects the database of the people belonging to different professional segments.

PLACE
Channels

Share khan uses various channel alternatives to reach to its customers through
Internet Tele Marketing Retail Share Shops Franchisee Owners Sales Force

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 Coverage

Access to the website from any part of the globe.

Locations

Share khan has the largest chain of retail share shops in India. It has 180 share shops located in 90 cities all over India like Pune, Thane, Chennai, Kolkata, Banglore, Luckhnow, Darjleeng, Kanpur, Baroda, Midnapore, Surat, Delhi, Gaziabad, Hydrabad, Allahbad, etc.

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 PEOPLE
Employees

Selection: Employees are selected on the basis of their experience and qualification as applicable to the job. Training: Intensive training is provided to the employees till a week once they join and even at times required after that. Motivation: The employees are motivated through incentives they are provided.
Research Team

Share khan has a team of dedicated analysts who have years of working experience in the industries that they track, and a proven track record in using their knowledge of the investment science to deliver results. Customers, The heart of sharekhan are really treated loyally like the kings. The customer care, which comprises of highly trained executives operating from 9:30 to 8:00 p.m.

PHYSICAL EVIDENCE
Locality of the office: In Ahmedabad, two franchise outlets are located in posh areas like Navrangpura and Maninagar. A new franchise is going to open up in Vastrapur. Office Environment: The ambience within the office is what can make the customer feel comfortable in trading. The cordial and friendly atmosphere at office is like a full time motivation for the employees. Interiors and Infrastructure: 54

The office is well furnished and has 24 computer terminals on which tick-by-tick price movements of the securities are displayed.

PROCESS
In this service organization, the ways in which the customers receive delivery of the service constitutes the process. Here, the process involves adding value or utility so that the customers get full satisfaction for the money spent by them. Here the process begins from the step when customer wants to open e-invest account and ends when his account is actually activated. All Indian residents and NRI are eligible to avail this service. Customers can open a sharekhan e-invest account by filling a single application form. This form includes 9 agreements like 1. Main form with customer details 2. Agreement between sharekhan and client in respect of the ONLINE-INVESTMENT SUPPORT service offered. 3. Agreement between the Depository Participant and the client for providing the transaction statement through Internet. 4. Irrevocable power of attorney 5. Agreement between the DP and the person seeking to open an account with the DP. 6. Maintenance of clients account on a running account bases by SSKI. 7. Agreement giving the right of lien on the credit balance of client in NSE trading. 8. Agreement giving the right of lien on the credit balance of client in BSE trading. 9. Risk disclosure document (cash segment)

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 SEVEN S MODEL

Structure

Strategy Super -ordinat e Goals

System

Skills

Style

Staff

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 STRUCTURE:
Share khan is flexible in terms of making temporary structural changes to cope up with specific strategic tasks without any hassles. If need arises, the top management can assign the role to any of its employees which it considers capable and skillful.

STRATEGY:
Share khan believes not only in developing the strategies but also in its successful execution.

SYSTEMS:
This constitutes of all the training and development systems, estimating budgets and the accounting system of Share khan.

STYLE:
Style refers to all the symbolic actions undertaken by top managers of Share khan and its influence on the subordinates.

STAFF:
Share khan values its employees as its assets and therefore carefully trains and motivates them by giving them incentives at regular intervals. Talented employees are assigned as mentors and given real responsibility and moved into higher positions.

SKILLS:
The term skills refer to those activities organizations do best and for which they are known. Share khan is known for its timely advice (suggestions/tips), which it caters to its customers and it boasts of 70-90% strike rates in booking recommendations.

SUPERORDINATE GOALS:
This refers to guiding concepts, values and aspirations that unite an organization in some common purpose. It provides the customers the 57

best service as it believes in customer satisfaction and retention.

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 SHAREKHANS

STOCK CLUSTER

Share khan categorizes the stocks under coverage into six clusters. Each cluster represents a certain profile in terms of business fundamentals as well as the kind of returns you can expect over a certain time horizon. So a stock like Hindustan Lever, a market leader with strong brands and top-quality management, sails into the Evergreen category. And a stock like Hindustan Construction, trading at an unwarranted discount and due for a re-rating, is an Ugly Duckling. And so on.This helps you in identifying the stocks that fit your time horizons and return objectives best.
Evergreen

Dominant players with strong brands, robust management credentials, supernormal shareholder returns. Will steadily compound 18-20% per year for next five to ten years.
Applegreen

Potentially steady compounders, but five to ten years graph bit unclear. Could gallop at 25-30 per year over the next two to three years.
Emerging Star

Young companies likely to rule chosen niches. Even better, the niches could balloon into full-blow markets. Potentially ten-baggers if youre patient.
Ugly Duckling

Trading below fair value or at huge discount to peer group. But somethings cooking. Could double in two to three years time.
Vultures Pick

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Companies with valuable assets at throwaway prices. Buy & await predators.Stratlingly high returns possible. Cannonball Seasons favorites. Typically fast gainers in rising markets, could return 30-50% within six months. Get in, cash in, get out.

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PUBLICATIONS OF SHAREKHAN
Sharekhans Valueline Derivatives Digest Eagle Eye High Noon Investors Eye Commodities Buzz Commodities Beat Commodity Traders Corner Sharekhan Xclusive

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 PRODUCTS OF SHAREKHAN
ShareKhans product

Offline

Online

Other Services

Classic A /C

Speed Trade A/C

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OFFLINE
Offline A/c is the A/c for the investors who are not familiar with the use of computer. The A/C opening charges Rs.500(One time) For 1st Year Demat A/C is Free, On 2nd Year AMC charge is applicable.

ONLINE
7 ways you benefit from online trading!

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CLASSIC ACCOUNT

This account allows the client to trade through our website and is suitable for our retail investors. Our online trading website also comes with a dial-n-trade service that enables you to buy and sell shares by calling our dedicated toll free number (1-600-22-7050).

Suitable for:
Retail investors who are risk averse, invest long-term and do not trade too frequently

Features: Free Depository Account 24 x 7 Orders Any time ordering Multiple bank options Instant Cash transfer Mobile Phone Alerts 24 x 7 Phone Responses One Share at a time

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Benefits: Trouble-free and secure storage for shares Flexibility to order after market closes Flexibility to choose a bank Flexibility to buy/sell even 1 share at a time Price: Account Opening : Rs 750 Monthly Access fee : None Sharekhan has a tie up with 7 banks through which one can transfer or withdraw his fund online. 1. HDFC BANK 2. IDBI 3. UTI 4. OBC 5. CITY BANK 6. INDUSLAND BANK 7. UNION BANK OF INDIA Anyone who has an account with either of the abovementioned banks can use this facility. Otherwise one has to transfer or withdraw the funds by cheque. This account enables the customer to buy and sell shares through sharekhans website. Its features are: streaming quotes(using the applet based system) Multiple watch lists integrated banking, demat and digital contracts instant credit and transfer real-time portfolio tracking with price alert and of course the assurance of secure transactions.

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66

 SPEEDTRADE

Speedtrade is the next generation online trading product that brings the power your brokers terminal to your PC. It is ideal for active traders and jobbers who transact frequently during days trading session to capitalize on intra-day price movements. With speed trade a customer gets: 1. instant order execution and confirmation. 2. single screen trading terminal( cash and derivatives) 3. real-time streaming quotes, tic-by-tic charts 4. market summary(most traded scrip, highest value) 5. hot keys similar to a brokers terminal 6. alerts and reminders 7. back up facility to place trades on direct phone lines. 8. trading in derivatives Sharekhan has a tie up with 7 banks through which one can transfer or withdraw his fund online. 1. 2. 3. 4. 5. 6. 7. HDFC BANK IDBI UTI OBC CITY BANK INDUSLAND BANK UNION BANK OF INDIA

Anyone who has an account with either of the abovementioned banks can use this facility. Otherwise one has to transfer or withdraw the funds by cheque. 67

 Benefits: ALL BENEFITS OF CLASSIC A/C plus SPEED critical for traders and arbitrageurs Streaming quotes Customized Market Watch a maximum of 2 at a time. Detailed and up-to-date market information and analysis example, market depth of a scrip- up to 6 charts visible at a time.

Price:
Account opening charges: Rs 1000 Monthly Access charge: Rs 500

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 Charges of Different companies for online A/C

Parameters Opening Fee
Trading A/C Demate A/c NIL NIL 250 NIL 500 700 NIL

Brokerage
Delivery 0.50 0.75 0.40 0.20 0.59 0.50 Square Off 0.10 0.18 0.10 0.05 0.06 0.15

Interface
Bank Associated HDFC,UTI, OBC, IDBI, City Bank ICICI Bank

Sharekhan ICICI Direct IndiaBulls 5 Paisa Kotak Street HDFC Securities

750 750 750

ICICI Bank UTI,OBC,HDFC City Bank Kotak Bank, City Bank HDFC & Other Bank

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EQUITIES

Your Guide to the Financial Jungle

PORTFOLIO MANAGEMENT SERVICES

DERIVATIVES

Company announces IPO and distributes forms RESEARCH

COMMODITIES

IPO & MUTUAL FUNDS

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 OTHER SERVICES
DIAL-N-TRADE

Trade in Equity by using your phone! Dial-n-trade is an exclusive service available to all Share Khan customers for trading in shares via the telephone. Just dial 1-800-22-7050, enter your TPIN number and you will be directed to a telebroker who will buy or sell shares for you. Features: 7 dial-n-trade features, customers just cannot do without ! 1. dedicated numbers for order placements [1-800-227500 (toll free)/ 39707500 (local charges)] 2. automatic fund transfer with phone banking (for city bank and hdfc bank customer) 3. simple and secure IVR (interactive voice response) based system for authentication 4. no waiting time. Enter your TPIN to be transferred to our telebrokers 5. trusted, professional advice from our telebrokers 6. after-hours order placement facility between 8am and 9.30 am 7. reliable services wherever you are

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PORTFOLIO MANAGEMENT SYSTEM

With the Sharekhan Team Managing Your Portfolio, you can be assured that your investments are in safe hands!

Sharekhan follows a multi-disciplined approach incorporating quantitative analysis (use of models and statistical analyses), fundamental analysis (industry and company analysis, market and economic trends) and technical analysis (buying and selling patterns of stocks). This multi-pronged approach enables the portfolio managers in controlling risks and provides risk-controlled returns for you. Our portfolio managers try to develop a core equity portfolio based on quality and broad diversification, controlling risks in the process. The common attributes that can be found across all our equity portfolios are: High-quality securities Holdings widely diversified among industry sectors Stocks with adequate market capitalization and free float Stock concentration as per client risk profile but generally greater than equal to 20. Right from choosing the combination of stocks most suitable for customers based on their risk appetite to monitoring their movements and discussing them with customers at special events. This is how Sharekhan makes investing completely hassle-free for customers.

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MUTUAL FUND

Introduction
Everybody talks about mutual funds, but what exactly are they? Are they like shares in a company, or are they like bonds and fixed deposits? Will I lose all my money in funds or will I become an overnight millionaire? Big questions that get answered in just five minutes.

Meaning
A mutual fund is a pool of money that is invested according to a common investment objective by an asset management company (AMC). The AMC offers to invest the money of hundreds of investors according to a certain objective - to keep money liquid or give a regular income or grow the money long term. Investors buy a scheme if it fits in with their investment goals, like getting a regular income now or letting the money accumulate over the long term. Investors pay a small fraction of their total funds to the AMC each year as investment management fees.

Categories of Mutual Fund

There are three broad categories of funds in the Indian market - money market, debt and equity. A money market fund invests in short-term government debt paper and is good for parking money for the short term since the principal is safe, returns better than a bank deposit and liquidity high. Debt funds invest mainly in debt instruments like government securities, corporate and 75

institutional debt paper. They are also called income funds since people buy them for their income needs. Equity funds invest in the stock market and suit long-term investors who want capital appreciation. Commodity, property and gold funds are yet to come into India.

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Investing in Mutual Funds through Sharekhan

We're glad to announce that you will now be able to invest in Mutual Funds through us! We've started this service for a few mutual funds, and in the near future will be expanding our scope to include a whole lot more. Applying for a mutual fund through us is open to everybody, regardless of whether you are a Sharekhan customer. You have two choice through which you can invest in Mutual Fund. A) On the main page of this micro-site and scheme snapshot page we have provided with a link to PDF version of application form, which you just need to download, print and fill up relevant details. Submit the duly filled copy with payment either to Nearest Sharekhan Branch Or Mutual Fund Company. B) Alternatively you can call up our customer service 1600-22-7500 and give your contact detail whereby we will arrange to mail you a hard copy of application of desired schemes from the list offered by Sharekhan.

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SHAREKHAN DEPOSITORY SERVICE

Dematerialization and trading in the demat mode is a safer and faster alternative to the physical existence of securities. Demat as a parallel solution offers freedom from delays, thefts, forgeries, settlement risks and paperwork. This system works through depository participants(DPs) who offer demat services and hold the securities in the electronic form for the investor. Sharekhan depository services offers dematerialization services to individual and corporate investors. It has a team of professionals and the latest technological expertise dedicated exclusive to their demat department, apart from a national network of franchisee, making their services quick, convenient and efficient. At Sharekhan, their commitment is to provide a complete demat solution which is simple safe and secure. The services offered by depository participants:1. convert physical holding into electronic holding (which is called dematerialization of securities) 2. keep custody of holdings in electronic form. 3. transfer the shares in the electronic form from one account to another. 4. facilitate pledge of electronic securities. 5. give electronic credit of new share allotments such as public issue, bonus, rights etc. 6. convert electronic holding into physical holding. ( which is called rematerialization)
Research based advice

Every investors needs and wants are different. To meet these needs share khan provides a comprehensive e set of 78

research reports so that one can take the right investment decision regardless of his investing preference. The research and development at sharekhan is done at its head office in Mumbai. The R&D department forwards all the details regarding all stocks and scripts to all the branches through internet. At the end of each trading day there is a teleconference through which the R &D department head talks with each branch head and discusses about each days closing position and shows their predictions about next days opening position. The queries regarding stock positions and other relevant matters of the branch heads of each branch is solved through teleconference.

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 IPO IPO is an acronym for Initial Public Offering. This is the first sale of stock by a company to the public. Primary and Secondary Market Since buying an IPO means buying directly from the company issuing the shares, IPOs constitute the PRIMARY MARKET. Buying shares from the stock exchange is buying from the SECONDARY MARKET. All shares, which are traded in the secondary market, have come through the primary market as IPOs. Why Do Companies Go Public? To raise funds for expansion/startup. Gain credibility through more scrutiny. Easier mergers and acquisitions through availability of more number of stocks. To get listed in a major stock index (meaning prestige, respect, credibility).

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TYPES OF MARKETS FOR EQUITY INVESTMENT

Primary Market
Company announces IPO and distributes forms RESEARCH Mohan fills up form and submits it to the company

Shyamlal fills up form and submits it to the company

FUNDS OR SECURITIES

Shyamlal is allotted some shares @ Rs 95 per share

Secondary Market
Mohan is NOT allotted shares by the company. There were not enough shares to offer

Shyamlal sells some of his shares in the market (at a higher price, say Rs. 105).

Mohan buys some shares from the stock market through a broker at this price

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ONLINE IPO

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 SWOT ANALYSIS
During this training at sharekhan, we had come to know the Strengths-Weaknesses-Opportunities-Threats for the company and it is very useful for a company to analyze them. Therefore, the SWOT analysis is presented here and the suggestions for maintaining strengths and removing weaknesses are explained. Strengths:
Well-maintained infrastructure. Dedicated, Intelligent and Loyal staff. On-line Trading products. Lowest brokerage and other charges w.r.t. Competitors. The best investment advice correct up to 70-90 % through dedicated research and reports. Wide product range to enable the clients to choose the best alternative. One of the best DPs in India. A positive image in the existing clients.

Weaknesses:
Less awareness in the market. Time consuming process for account opening, resolving the problems of the customers, etc. Service quality is not maintained accordingly how they are promoted.

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 Opportunities:
Slope of stock market towards delivery based transaction. Large potential market for delivery and intra-day transactions. Open interest of the people to enter in stock market for investing. Attract the customers who are dissatisfied with other broker & DPs. An indirect opportunity generated by the market from its bullishness. Large untapped market in the Saurashtra region of Gujarat.

Threats:
Decreasing rates of brokerage in the market. Increasing competition against other brokers & DPs Poor marketing activities for making the company known among the customers. A threat of loosing clients for any kind of weakness of the company. Loosing the untapped market with the entry of the competitors.

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 DERIVATIVES
INTRODUCTION
Keeping in view the experience of even strong and developed economies the world over, it is no denying the fact that financial market is extremely volatile by nature. Indian financial market is not an exception to this phenomenon. The attendant risk arising out of the volatility and complexity of the financial market is an important concern for financial analysts. As a result, the logical need is for those financial instruments, which allow fund managers to better, manage or reduce these risks. Out of various risks, Credit Risk and Interest Rate risk are the two core risks, which are commonly acknowledged by various categories of Financial Institutions particularly banks. Effective management of these core risks is a critical factor in comprehensive risk management and is essential for the long-term financial health of business organizations, especially banks.

MEANING
A derivative is a financial instrument, which derives its value from some other financial price. This other financial price is called the underlying. The underlying asset can be equity, FOREX, commodity or any other asset. A wheat farmer may wish to contract to sell his harvest at a future date to eliminate the risk of a change in prices by that date. The price for such a contract would obviously depend upon the current spot price of wheat. Such a transaction could take place on a wheat forward market. Here, the wheat forward is the derivative and wheat on the spot market is the underlying. The terms derivative contract, derivative product, or derivative are used interchangeably. The most important derivatives are futures and options. Example: A very simple example of derivatives is curd, which is derivative of milk. The price of curd depends upon the 85

price of milk, which in turn depends upon the demand, and supply of milk.
See it this way. American depository receipts/ global depository

receipts of ICICI, Satyam and Infosys traded on stock exchanges in the USA and England have their own values? No. They draw their price from the underlying shares traded in India. Consider how the value of mutual fund units changes on a day-to-day basis. Dont mutual fund units draw their value from the value of the portfolio of securities under the schemes? Arent these examples of derivatives? Yes, these are. And you know what, these examples prove that derivatives are not so new to us. Nifty options and futures, Reliance futures and options, Satyam futures and options etc are all examples of derivatives. Futures and options are the most common and popular form of derivatives.

DERIVATIVES: IN INDIAN CONTEXT:

In Indian context, the intensity of derivatives usage by institutional investors (viz. Banks, Financial Institution; Mutual Funds, Foreign Institutional Investors, Life and General Insurers) depend on their ability and willingness to use derivatives for one or more of the following purposes: Risk containment: using derivatives for hedging and risk containment purposes Risk Trading/Market Making: Running derivatives trading book for profits and arbitrage; and/or Covered Intermediation: On-balance-sheet derivatives intermediation for client transaction, without retaining any net-risk on the balance sheet (except credit risks).

TYPES OF DERIVATIVES
Derivative as a term conjures up visions of complex numeric calculations, speculative dealings and comes across as an instrument, which is the prerogative of a 86

few smart finance professionals. In reality it is not so. In fact, a derivative transaction helps cover risk, which would arise on the trading of securities on which the derivative is based and a small investor can benefit immensely. A derivative security can be defined as a security whose value depends on the values of other underlying variables. Very often, the variables underlying the derivative securities are the prices of traded securities.

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Derivatives and futures are basically of 3 types:

Forwards and Futures Options Swaps

DERIVATIVES

Options

Futures

Swaps

Forwards

Put

Call Commodit y

Interest Rate Security

Currency

FORWARDS: A forward contract is the simplest mode of a derivative transaction. It is an agreement to buy or sell an asset (of a specified quantity) at a certain future time for a certain price. No cash is exchanged when the contract is entered into.
Illustration: - Shyam wants to buy a TV, which costs Rs 10,000 but he has no cash to buy it outright. He can only buy it 3 months hence. He, however, fears that prices of televisions will rise 3 months from now. So in order to protect himself from the rise in prices Shyam enters into a contract with the TV dealer that 3 months from now he will buy the TV for Rs 10,000. What Shyam is doing is that he is locking the current price of a TV for a forward contract. The forward contract is settled at maturity. The dealer will deliver the asset to Shyam at the end of three months and Shyam in turn will pay cash equivalent to the TV price on delivery.

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FUTURES:

It is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price through exchange traded contracts. A Future represents the right to buy or sell a standard quantity and quality of an asset or security at a specified date and price. Futures are similar to Forward Contracts, but are standardized and traded on an exchange, and are valued, or "Marked to Market daily. The Marking to Market provides both parties with a daily accounting of their financial obligations under the terms of the Future. Unlike Forward Contracts, the counterparty to a Futures contract is the clearing corporation on the appropriate exchange. Futures often are settled in cash or cash equivalents, rather than requiring physical delivery of the underlying asset. Parties to a Futures contract may buy or write Options on Futures. OPTIONS: An option is a contract, which gives the buyer the right, but not the obligation to buy or sell shares of the underlying security at a specific price on or before a specific date. Option, as the word suggests, is a choice given to the investor to either honor the contract; or if he chooses not to walk away from the contract. There are two kinds of options: Call Options and Put Options. A Call Option is an option to buy a stock at a specific price on or before a certain date. When you buy a Call option, the price you pay for it, called the option premium, secures your right to buy that certain stock at a specified price called the strike price. If you decide not to use the option to buy the stock, and you are not obligated to, your only cost is the option premium. 89

Put Options are options to sell a stock at a specific price on or before a certain date. In this way, Put options are like insurance policies. With a Put Option, you can "insure" a stock by fixing a selling price. If something happens which causes the stock price to fall, and thus, "damages" your asset, you can exercise your option and sell it at its "insured" price level. If the price of your stock goes up, and there is no "damage," then you do not need to use the insurance, and, once again, your only cost is the premium. Technically, an option is a contract between two parties. The buyer receives a privilege for which he pays a premium. The seller accepts an obligation for which he receives a fee.

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 CALL OPTIONS Call options give the taker the right, but not the obligation, to buy the underlying shares at a predetermined price, on or before a predetermined date.
Illustration: - Raj purchases 1 Satyam 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 this 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. Now let us see how one can profit from buying an option; Sam purchases a December call option at Rs 40 for a premium of Rs 15. That is he has purchased the right to buy that share for Rs 40 in December. If the stock rises above Rs 55 (40+15) he will break even and he will start making a profit. Suppose the stock does not rise and instead falls he will choose not to exercise the option and forego the premium of Rs 15 and thus limiting his loss to Rs 15.

Call Options-Long & Short Positions

When 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.

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 PUT OPTIONS A Put Option gives the holder of the right to sell a specific number of shares of an agreed security at a fixed price for a period of time.
Illustration:- Raj is of the view that the a stock is overpriced and will fall in future, but he does not want to take the risk in the event of price rising so purchases a put option at Rs 70 on X. By purchasing the put option Raj has the right to sell the stock at Rs 70 but he has to pay a fee of Rs 15 (premium). So he will breakeven only after the stock falls below Rs 55 (70-15) and will start making profit if the stock falls below Rs 55.

Put Options-Long & Short Positions

When you expect prices 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 If you expect a fall in price(Bearish) If you expect a rise in price (Bullish) Short Long PUT OPTIONS Long Short

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IMPORTANT FACTORS IN DERIVATIVES H EDGING We have seen how one can take a view on the market with the help of index futures. The other 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.
Illustration: Ram enters into a contract with Shyam that six months from now he will sell to Shyam 10 dresses for Rs 4000. The cost of manufacturing for Ram is only Rs 1000 and he will make a profit of Rs 3000 if the sale is completed. Cost (Rs) 1000 Selling price 4000 Profit 3000

However, Ram fears that Shyam may not honor his contract 6 months from now. So he inserts a new clause in the contract that if Shyam fails to honor the contract he will have to pay a penalty of Rs 1000. And if Shyam honors the contract Ram will offer a discount of Rs 1000 as incentive. Shyam defaults 1000 (Initial Investment) 1000 (penalty from Shyam) - (No gain/loss) Shyam honors 3000 (Initial profit) (-1000) discount given to Shyam 2000 (Net gain)

As we see above if Shyam defaults Ram will get a penalty of Rs 1000 but he will recover his initial investment. If Shyam honors the contract, Ram will still make a profit of Rs 2000. Thus, Ram has hedged his risk against default and protected his initial investment. The above example explains the concept of hedging.

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SPECULATION

Speculators are those who do not have any position on which they enter in futures and options 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 interests, economic fundamentals and other data to take their positions.
Illustration: Ram is a trader but has no time to track and analyze stocks. However, he fancies his chances in predicting the market trend. So instead of buying different stocks he buys Sensex Futures. On May 1, 2001, he buys 100 Sensex futures @ 3600 on expectations that the index will rise in future. On June 1, 2001, the Sensex rises to 4000 and at that time he sells an equal number of contracts to close out his position. Selling Price : 4000*100 Less: Purchase Cost: 3600*100 Net gain = = Rs 4,00,000 Rs 3,60,000 Rs 40,000

Ram has made a profit of Rs 40,000 by taking a call on the future value of the Sensex. However, if the Sensex had fallen he would have made a loss. Similarly, if would have been bearish he could have sold Sensex futures and made a profit from a falling profit. In index futures players can have a long-term view of the market up to atleast 3 months.

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A RBITRAGE An arbitrageur is basically risk averse. He enters into those contracts were he can earn riskless profits. When markets are imperfect, buying in one market and simultaneously selling in other market gives risk less profit. Arbitrageurs are always in the look out 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 futures market.
Assume that Nifty is at 1200 and 3 months Nifty futures is at 1300. The futures price of Nifty futures can be worked out by taking the interest cost of 3 months into account. If there is a difference then arbitrage opportunity exists.

Let us take the example of single stock to understand the concept better. If Wipro is quoted at Rs 1000 per share and the 3 months futures of Wipro is Rs 1070 then one can purchase ITC at Rs 1000 in spot by borrowing @ 12% annum for 3 months and sell Wipro futures for 3 months at Rs 1070. Sale Cost= 1000+30 Arbitrage profit = = = 1070 1030 40

These kinds of imperfections continue to exist in the markets but one has to be alert to the opportunities as they tend to get exhausted very fast.

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M ARGINS The margining system is based on the JR Verma Committee recommendations. The actual margining happens on a daily basis while online position monitoring is done on an intra-day basis. Daily margining is of two types: 1. Initial margins 2. Mark-to-market profit/loss The computation of initial margin on the futures market is done using the concept of Value-at-Risk (VaR). The initial margin amount is large enough to cover a one-day loss that can be encountered on 99% of the days. VaR methodology seeks to measure the amount of value that a portfolio may stand to lose within a certain horizon time period (one day for the clearing corporation) due to potential changes in the underlying asset market price. Initial margin amount computed using VaR is collected upfront. The daily settlement process called "mark-to-market" provides for collection of losses that have already occurred (historic losses) whereas initial margin seeks to safeguard against potential losses on outstanding positions. The mark-to-market settlement is done in cash.
Let us take a hypothetical trading activity of a client of a NSE futures division to demonstrate the margins payments that would occur.

A client purchases 200 units of FUTIDX NIFTY 29JUN2001 at Rs 1500. The initial margin payable as calculated by VaR is 15%. = = Rs 3,00,000 (200 x 1500) Rs 45,000

Total long position Initial margin (15%)

Assuming that the contract will close on Day + 3 the mark-to-market position will look as follows: POSITION ON DAY 1 Net cash outflow 17,000 (20,000 3000)

Close Price 1400 x 200 = 2,80,000

Loss 20,000 (3,00,000 2,80,000)

Margin released 3,000 (45,000 42,000)

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Payment to be made NEW POSITION ON DAY 2 Value of new position = 1,400*200= 2,80,000 Margin = 42,000
Close Price Gain Addn Margin

(17,000)

Net cash inflow

1510 x 200 = 3,02,000 Payment to be recd

22,000 (3,02,000 - 2,80,000)

3,300 (45,300 - 42,000)

18,700 (22,000 - 3300) 18,700

POSITION ON DAY 3 Value of new position = 1510*200 = Rs 3, 02,000 Margin = Rs 3,300 Close Price 1600*200 =3,20,000 Payment to be recd Gain 18,000 (3,20,000-3,02,000) Net cash inflow 18,000 + 45,300* = 63,300 63,300

Margin account*
Initial margin Margin released (Day 1) Position on Day 2 Addn margin Total margin in a/c Net gain/loss Day 1 (loss) Day 2 Gain Day 3 Gain Total Gain = = = = (Rs 17,000) Rs 18,700 Rs 18,000 Rs 19,700 = = = Rs 45,000 (-) Rs 3,000 Rs 42,000 (+) Rs 3,300 Rs 45,300*

The client has made a profit of Rs 19,700 at the end of Day 3 and the total cash inflow at the close of trade is Rs 63,300.

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 COMMODITIES

Commodities Market In India

Organized futures market evolved in India by the setting up of "Bombay Cotton Trade Association Ltd." in 1875. In 1893, following widespread discontent amongst leading cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association, a separate association by the name "Bombay Cotton Exchange Ltd." was constituted. Futures trading in oilseeds was organized in India for the first time with the setting up of Gujarati Vyapari Mandali in 1900, which carried on futures trading in groundnut , castor seed and cotton. Before the Second World War broke out in 1939 several futures markets in oilseeds were functioning in Gujarat and Punjab. A three-pronged approach has been adopted to revive and revitalize the market. Firstly, on policy front many legal and administrative hurdles in the functioning of the market have been removed. Forward trading was permitted in cotton and jute goods in 1998, followed by some oilseeds and their derivatives, such as groundnut, mustard seed, sesame, cottonseed etc. in 1999. A statement in the first ever National Agriculture Policy, 98

issued in July, 2000 by the government that futures trading will be encouraged in increasing number of agricultural commodities was indicative of welcome change in the government policy towards forward trading. Secondly, strengthening of infrastructure and institutional capabilities of the regulator and the existing exchanges received priority. Thirdly, as the existing exchanges are slow to adopt reforms due to legacy or lack of resources, new promoters with resources and professional approach were being attracted with a clear mandate to set up demutualized, technology driven exchanges with nationwide reach and adopting best international practices. Most of the existing Indian commodity exchanges are single commodity platforms; are regional in nature, run mainly by entities which trade on them resulting in substantial conflict of interests, opaque in their functioning and have not used technology to scale up their operations and reach to bring down their costs. But with the strong emergence of: National Multi-commodity Exchange Ltd., Ahmedabad (NMCE), Multi Commodity Exchange Ltd., Mumbai (MCX), National Commodities and Derivatives Exchange, Mumbai (NCDEX), and National Board of Trade, Indore (NBOT), all these shortcomings will be addressed rapidly. These exchanges are expected to be role model to other exchanges and are likely to compete for trade not only among themselves but also with the existing exchanges. The current mindset of the people in India is that the Commodity exchanges are speculative (due to non delivery) and are not meant for actual users. One major reason being that the awareness is lacking amongst actual users. In India, Interest rate risks, exchange rate risks are actively managed, but the same does not hold true for the commodity risks. Some additional impediments are centered around the safety, transparency and taxation issues.

WHY STRUCTURED COMMODITY MARKET?

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Today the business is not limited to our area only. Where the production is less but, demand is comparatively high prices of the product will go up. On the contrary where the production is high but demand is comparatively low the prices will go down. If sellers and buyers come together at a place then it will create a market. Here against one seller there will be more then one buyer. In this market buyers will come across the country for transactions. In this market not only producer and seller are included but arbitrageur, speculator, and hedger can tread. In this way the total area of market will become broad. In our country agricultural products form 25% of GDP. Total turnover of commodity of market is nearly Rs.1, 10,000 corer. In which 60,000 corer comes from agriculture and left is coming from coal, crude, etc Today in our country most of the trade is done in unorganized market. In the market current and future contracts are done. Promissory contracts have been started science 1875. But due to some restriction it was not properly worked. Presently nearly in 122 commodities tread is being done

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Transaction in the organized market:

Organized markets have structured forms of transactions. The commodity exchanges are regulated as per rules and regulations define in The Forward Contracts (Regulation) Act, 1952 for regulating forward\future contracts. In December 2003, the National Commodity and Derivative Exchange Ltd (NCDEX) launched futures trading in nine major commodities. MCX To begin with contacts in gold, silver, cotton, soyabean, soya oil, mustered seed, rapeseed oil, crude palm oil and RBD Palmolive are being offered. Now more then 40 commodity items are included. Day by day number of commodity items is incising. The various commodities that tread on the NCDEX and look at some commodity specific issues. In this commodity market classified as agriculture products, precious metal, other metal and energy, which we discuss above. COMMODITIES

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Commodities are suitable for Future Trading

The following are some of the key factors, which decide the suitability of the commodities for future trading: The commodity should be competitive, i.e., there should be large demand for and supply of the commodity - no individual or group of persons acting in concert should be in a position to influence the demand or supply, and consequently the price substantially. There should be fluctuations in price. The market for the commodity should be free from substantial government control. The commodity should have long shelf life and be capable of standardization and gradation.

THE FOLLOWING ITEMS ARE TRADED IN THE MULTI COMMODITY EXCHANGE

Bullion:
Gold, Gold M, Gold HNI, Silver, Silver M

, Silver HNI

Oil & Oil Seeds : Spices: Pepper, Metal: Fibre:

Castor Seeds, Soy Seeds, Castor Oil, Refined Soy Oil, Soymeal, RBD Palmolein, Crude Palm Oil, Groundnut Oil, Mustard Seed, Mustard Seed Oil, Cottonseed Oilcake, Cottonseed Red Chilli, Jeera, Turmeric

Steel Long, Steel Flat, Copper, Nickel, Tin Kapas, Long Staple Cotton, Medium Staple Cotton Chana, Urad, Yellow Peas, Tur Rice, Basmati Rice, Wheat

Pulses:

Cereals: Others:

, Maize, Sarbati Rice

Energy: Crude Oil

Rubber, Guar Seed Cashew Kernel, Guarseed Bandhani

, Gur, Guargum Bandhani, Guargum,

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NEED FOR FUTURES TRADING IN COMMODITIES

Commodity Futures, which forms an essential component of Commodity Exchange, can be broadly classified into precious metals, agriculture, energy and other metals. Current futures volumes are miniscule compared to underlying spot market volumes and thus have a tremendous potential in the near future. Futures trading in commodities results in transparent and fair price discovery on account of large-scale participations of entities associated with different value chains. It reflects views and expectations of a wider section of people related to a particular commodity. It also provides effective platform for price risk management for all segments of players ranging from producers, traders and processors to exporters/importers and end-users of a commodity. It also helps in improving the cropping pattern for the farmers, thus minimizing the losses to the farmers. It acts as a smart investment choice by providing hedging, trading and arbitrage opportunities to market players. Historically, pricing in commodities futures has been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option. Raw materials form the most key element of most of the industries. The significance of raw materials can further be strengthened by the fact that the "increase in raw material cost means reduction in share prices". In other words "Share prices mimic the commodity price movements". Industry in India today runs the raw material price risk; hence going forward the industry can hedge this risk by trading in the commodities market. HEDGING 103

Hedging is a sophisticated mechanism, which provides the necessary immunity to the above interests in the marketing of commodities from the risk of adverse price fluctuations. A Hedge is a countervailing contract transacted in a futures market through which those who have bought in the ready market will sell in the futures market and those who have sold in the ready market would buy in the futures market. In each of these two cases, a purchase in the ready market is off-set by an opposite sale in the futures market and a sale in the ready market is off-set by purchase in the futures market. When the purchase or sale commitment in the ready market is fulfilled, the sale or purchase hedge contract is closed out by an offsetting reverse purchase or sale contract in the futures market. The practice of hedging is based on the assumption that the ready and futures prices of the commodity move more or less parallel to each other. The ready and futures prices of a commodity ordinarily do move together in sympathy with each other because both ready and futures prices are basically determined by the demand and supply factors of that particular commodity. When the price of a commodity has declined in the ready market, its price in the futures market would normally have also declined so that the loss incurred in the ready market would be recovered by the profit made in the futures market. Similarly, if the price rises in the ready market after the hedge sale had been entered into the futures market, there would be a loss in the futures market, which would, however, be made up with the profit made in the ready market. But, in certain circumstance, the ready and futures prices may not move together or the spread between the two may increase or decrease sharply. To the extent that they do not move together by the same extent, hedging itself may be a source of minor gains or losses. But a dealer, manufacturer or exporter is not, per 104

se, interested in such speculative losses or gains. His only interest is to ensure that he gets the necessary insurance against unforeseen fluctuation in prices. By and large, hedging in a futures market does afford such a protection to the various functionaries. Hedging on futures markets cannot be practiced unless there are operators willing to assume the risk of adverse price fluctuations which the hedgers desire to transfer. These operators are called speculators. They, thus provide the much needed breadth and liquidity to the futures markets which in their absence would remain narrow and unstable. A speculator operating in a futures market is the one who buys or sells futures contracts without any countervailing commitments or transactions in the actual commodity with a view to making profit from the fluctuations in the prices. The basic distinction between a hedge and speculative transaction on a futures market is that while in the case of a hedge transaction there is a corresponding opposite transaction in the ready market, in the case of a speculative transaction, there is no corresponding transaction in the ready market. While the motives of the speculator in entering into futures trans actions are different from a hedger, the form or nature of transactions entered into by both in the futures market is similar. When a transaction takes place in a futures market, the transaction may well be between two hedgers or two speculators or between a hedger and a speculator. While it is possible for the individual parties to enter into futures contracts, such contracts are generally entered under the auspices of commercial bodies known as commodity exchanges or associations. The need for organizing futures trading under the auspices of such commodity exchanges or associations arises mainly in order to ensure that payment of differences arising from settlement of purchase and sale contracts entered into by the members of such exchanges or associations take place in a smooth and orderly manner and thus defaults on account of non-payment of such 105

differences are avoided. Futures trading in these commodity exchanges/associations are confined to or conducted through its members in accordance with the procedure laid down in its rules members in accordance with the procedure laid down in its rules and bye-laws. Further, these exchanges/associations also help in evolving standard terms of contracts in which the quantity and quality of the goods traded, period of delivery and all other terms are pre-determined, the only variable being the price at which the contracts helps the members of associations in entering into uniform types of contracts in which the quantity and quality of goods, period of delivery etc. are pre-determined so that they can be entered into primarily for the purpose of exchange of money differences.

REGULATORY BODY
The Forward Markets Commission (FMC) is the regulatory body for commodity futures/forward trade in India. The commission was set up under the Forward Contracts (Regulation) Act of 1952. It is responsible for regulating and promoting futures/forward trade in commodities. The FMC is headquartered in Mumbai while its regional office is located in Kolkata. Curbing the illegal activities of the diehard traders who continued to trade illegally is the major role of the Forward Markets Commission.

WHY COMMODITIES MARKET?

India has very large agriculture production in number of agri-commodities, which needs use of futures and derivatives as price-risk management system. Fundamentally price you pay for goods and services depend greatly on how well business handle risk. By using effectively futures and derivatives, businesses can minimize risks, thus lowering cost of doing business. Commodity players use it as a hedge mechanism as well as a means of making money. For e.g. in the bullion 106

markets, players hedge their risks by using futures EuroDollar fluctuations and the international prices affecting it. For an agricultural country like India, with plethora of mandis, trading in over 100 crops, the issues in price dissemination, standards, certification and warehousing are bound to occur. Commodity Market will serve as a suitable alternative to tackle all these problems efficiently.

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FUTURE PROSPECTS
With the gradual withdrawal of the government from various sectors in the post-liberalization era, the need has been felt that various operators in the commodities market be provided with a mechanism to hedge and transfer their risks. India's obligation under WTO to open agriculture sector to world trade would require futures trade in a wide variety of primary commodities and their products to enable diverse market functionaries to cope with the price volatility prevailing in the world markets. Government subsidy may go down as a result of WTO. The MSP programme will not be sustainable in such a scenario. The farmer will have to look at ways of being in a position to trade on commodity exchanges in future. Also, corporate will feel the pressure to hedge their price risk once the frontiers open up for free trade. Indian markets have recently thrown open a new avenue for retail investors and traders to participate: commodity derivatives. For those who want to diversify their portfolios beyond shares, bonds and real estate, commodities are the best option.

KEY BENEFITS OF COMMODITIES @ SHAREKHAN:

You are getting 20time exposer in MCX &10 time in NCDEX depends on commodity to open an account We have sms facility where u getting market information as well as buy/sell call You are also getting yahoo chat, where our dealer/RM are always help for market information as well as buy/sell call

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 RESEARCH AT SHAREKHAN

Research at Sharekhan is broadly categorized into three categories: Fundamental analysis Technical analysis Market analysis

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RESEARCH
MARKE T ANAYSI S
DEALIN G ROOM

FUNDAMENTAL ANALYSIS
SHAREKHA N EDITORIAL Stock Idea
INFORMATION RECOMMENDATION REPORT - BUY - HOLD - SELL - SPOT LIGHT - LIVE

TECHNIC AL ANALYSIS
SSKI CAS H Institutional Research -CHART BUSTERS - DAY TRADERS
HITLIST RATING - DERIVATIVES INFO KIT - FUTURES - BRAVE HEART

DERIVATIVE S

Market Strategy

Sector Watch ch

-INTRA DAY MARKET CALLS COMMENTARY

- PRE MKT REPORT &

STRATEGY

CLUSTER

- POST MKT

- PUNTERS CALL

- APPLE

- EVERGREEN SPECIAL - EMERGING

SHAREKHAN

- OUTPERFORMER - NEUTRAL - UNDERPERFORMER

STAR - CANNON BALL - UGLY DUCKLING - VULTURE PICK

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ANALYSIS ON THE HISTORIC MARKET CRASH IN MAY

AT A TRADING house in Kolkata, on May 22, when the markets crashed..

In the U.S. stock market that took the Standard & Poor's 500 ($INX) down 5.5% from May 5 through May 22. Or the 7% pounding that the Nasdaq Composite ($COMPX, news, msgs) absorbed in the same period to turn that index negative for 2006. In India, they had to suspend trading for an hour when the Bombay Stock Exchange index, the Sensex, fell by 10% during the first two hours of the May 22 trading day. Trading was also halted for the session in Russian equities after the main index on the Moscow exchange fell 11% late in the day. The Sensex, despite an end of the day rally, still fell 4.2% for the day and at the end of the day was down 22% over the last eight trading sessions. Russian equities are down 25% from their May 5 high. It was inevitable, yet it took many by surprise. In May, the Bombay Sensex, the benchmark index for India's stock 111

markets, fell by more than 1,800 points or by close to 15 per cent of its value, after experiencing a near-relentless climb over the preceding months. The decline began after May 10, when the market closed with the Sensex at an alltime high of 12,612. The decline from that day to June 1 amounted to 2,541 points or more than 20 per cent. A fifth of paper wealth created from nothing disappeared in a matter of three weeks. Any disinterested observer, not influenced by those talking the market up, would see this decline as inevitable. In the preceding rise, moderated occasionally by limited volatility, the Bombay Sensex had moved from 5054 on July 22, 2004 to 7,077 on June 21, 2005, 9,067 on December 9, 2005, and 12,612 on May 10, 2006. This implies an increase of 35 per cent in the second half of 2004, a smaller 8 per cent in the first half of 2005, 31 per cent in the second half of 2005 and 33 per cent in the period between January 1 and May 10, 2006. This persistent and rapid rise had taken the price-earnings (P/E) ratio of Sensex companies from 14.5 on July 1, 2004 to 22.2 on May 10, 2006. If investors expect a reasonable return of 15 per cent on their investments and the price to earnings ratio reflects expected earnings from holding equity, P/E ratios in May would indicate that investors believed that average returns from holding shares would rise by more than 300 per cent. Since this was unlikely, investments that triggered the boom must have been driven by expectations of capital gains from share price appreciation, and therefore, been largely speculative. Yet, the euphoria generated by this rise in stock prices spawned a number of arguments on the implications of the rise. The first was that the stock market was merely reflecting the confidence generated by the robust performance of the Indian economy, with growth rates moving to the 8-9 per cent range. Second, that this economy-wide performance was leading to much better corporate performance, so that the appreciation in the share prices of individual companies was warranted by their expected profitability. Third, that these features made the Indian stock market experience different from 112

that in other emerging market countries, in that the boom was warranted and should provide no cause for concern. And, finally, that all this suggests that financial liberalization has taken the Indian stock market to maturity, making it a good indicator of the health of the economy. What the substantial volatility and downturn in May proves is that none of these arguments is valid. It is indeed true that the rate of growth of the Indian economy has improved, though the extent of the improvement may be exaggerated by modifications in methods of computation. But in explaining this improvement, what needs to be taken into account is the rise in government expenditures supported by increased receipts, the change in the composition of government expenditure and an improvement of exports of both goods and services.

The contribution of the stock market to these factors is virtually nil: market players are more beneficiaries of tax concessions rather than contributors to government receipts; market sentiment is in favor of reduced rather than increased government expenditures and there is no direct way in which stock market activity can influence export performance. That there is no relationship between growth performance and stock market activity was demonstrated amply by the fact that the revised estimates of GDP (gross domestic product), released on May 31, showing a creditable 8.4 per cent growth during 2005-06 and a remarkable 9.3 per cent during the first quarter of 2006, did little to stop the 113

market's decline. Expectations that drive the market seem to have little to do with the actual performance of the economy. If it is not growth in the real economy but speculation that triggered the boom, it is not surprising that the downturn did occur in Indian markets, as it did in other emerging markets that have experienced speculative booms in the past. This, contrary to what was argued, makes the experience in India similar to that in other liberalized "emerging markets". In fact, what is striking about the recent slump in the Indian market is that though steeper it was synchronized with similar declines in markets worldwide. Led by the United States, the downturn occurred in a number of emerging markets, including Russia, Turkey, Indonesia South Korea and Taiwan. India is as vulnerable as these countries to periodic booms and busts. The most-quoted reason why global investors have gone bearish on all markets, resulting in the generalized downturn, is the expectation of a rise in interest rates led by rates in the U.S. This is indeed surprising since, in the past, a rise in interest rates in the U.S. was seen as a factor that would direct capital flows to and generate a boom in U.S. financial markets, while inducing sluggishness elsewhere. The reason why this has not happened this time is that investments during the recent speculative boom have been financed with borrowing. As Financial Times of May 30 reported: "Low interest rates in the developed world would have allowed investors to leverage, borrowing cheaply to pick up the higher returns on offer elsewhere. It is these investors who are likely to have unwound trades over the past fortnight, weakening stocks and local bonds." Thus, it is not speculation alone that is at issue, but leveraged speculation, which makes expectations of a rise in interest rates the cause for a global downturn. Limit speculative investors In the circumstances, the only way in which damaging financial crises can be avoided is to regulate the market 114

and limit the presence and activity of speculative investors. There have been too many instances in East Asia, Latin America, Turkey and elsewhere where a financial crisis was preceded by a surge in capital flows other than foreign direct investment (FDI) and a simultaneous boom in stock and/or real estate markets. Independent of their inclinations, the exact causal mechanisms they identify and where they place the burden of blame, analysts of those periodic crises have accepted the reality that liberalized financial markets are prone to boom-bust cycles. Hence, there was little reason to view the India-boom as being "different" and "warranted by fundamentals", justifying further financial liberalization in the process. Financial liberalization driven by the belief that a boom was a sign of strength rather than vulnerability inevitably went bust. Unfortunately, the Indian government seems committed to pursuing financial liberalization without much caution. The result has been that while official spokesmen have listed periodically the gains that India can make from FDI, an overwhelming share of capital flows into India has been contributed by portfolio investors, especially foreign institutional investors (FIIs). The recent boom has been clearly the result of a surge in FII investments. Having averaged $1,829 million during the period 1999-2000 to 2001-02, and fallen to $377 million in 2002-03, FII investments surged thereafter. Inflows averaged $9,599 million a year during 2003-05. More recently, FIIs are estimated to have pumped in $10.7 billion into India's markets in 2005 and a further $5 billion by May 11 this year. It is widely acknowledged that the stock market surge was the direct result of these investments, though it is true that domestic investors, including mutual funds have rushed to the market recently to profit from the boom.

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In the course of the boom, the nature of the foreign investor has also changed with a growing presence in India of institutions such as hedge funds, which are not regulated in their home countries and are known to resort to speculation in search of quick and large returns. These hedge funds, among other investors, exploit the route offered by sub-accounts and opaque instruments such as participatory notes to invest in the Indian market. FIIs are permitted to invest on behalf of clients who themselves are not registered in the country. These clients are the `sub-accounts' of registered FIIs. Participatory notes are instruments sold by FIIs registered in the country to unregistered clients abroad and are derivatives linked to an underlying security traded in the domestic market. By the end of August 2005, the value of equity and debt instruments underlying participatory notes that had been issued by FIIs amounted to close to half of the cumulative net FII investment. Through these routes, entities not expected to play a role in the Indian market have had a significant influence on market movements, even though the regulator often does not even know of their presence in the market. And their presence is determined by the 116

objective of quick profit financed with borrowing, if necessary. The damaging effect of these investors came through when, because of changed expectations, they decided to pull out around $2 billion between May 11 and May 25. In the event, a sharp downturn in the Sensex ensued. It is necessary to be clear as to why these expectations changed. They are primarily related to developments outside India, especially expectations of a rise in U.S. interest rates that could increase the cost of funds borrowed by speculators to make their investments. This also explains the synchronized decline in markets worldwide Decline in India's markets is because of concern over the deficit in the current account of the country's balance of payments, estimated to touch 3.6 per cent of GDP in 2006-07. The conclusion is that the country must attract more foreign investment to finance that deficit and must therefore continue with reform, including with financial liberalization that explains the recent mayhem in the stock market. In fact, the same issue of Financial Times approvingly quotes a study by the consulting firm McKinsey that "calculates" that reform of India's banking sector can lift GDP growth to 9-9.5 per cent. The Indian market is driven by global decisions, which in turn are determined by the speculative activities of key investors the government seeks to attract. Once we recognize that financial volatility is the result of the speculative behavior of these firms, measures to reduce the presence and influence of these investors seem to be the need of the day.

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date nifty 10-May 3756 11-May 3701 15-May 3491 17-May 3635 22-May 2896 23-May 3199.35 24-May 3116 25-May 3178 26-May 3210 29-May 3215 30-May 3185 31-May 3071 1-Jun 2962 5-Jun 3017
nifty 4000 3500 nifty 3000 2500
10 -M 11 ay -M 15 ay -M 17 ay -M 22 ay -M 23 ay -M 24 ay -M 25 ay -M 26 ay -M 29 ay -M 30 ay -M 31 ay -M a 1- y Ju n 5Ju n

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date 9-May 10-May 11-May 15-May 17-May 19-May 22-May 23-May 24-May 25-May 26-May 29-May 30-May 31-May 1-Jun 5-Jun

sensex 12514 12612 12435 11822 12217 10938 9826 10822.78 10573.15 10666 10809 10853 10787 10399 10071 10213

1 3000 1 2500 1 2000 1 1 500 1 1 000 1 0500 1 0000 9500 9000 8500 8000

sensex

In the end,

Downward slide: We are not in a bear market as yet. For that to happen, there should be stagnant growth, high inflation and equity should lose charm

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 MARKET SURVEY
RESEARCH OBJECTIVE The main objective of the study is to analysis the awareness of Share market among the people of Rajkot City.

SOURCES OF DATA There are two main sources of data Primary Data 1. Secondary Data Primary Data The data, which is collected directly from the respondent to the base of knowledge and belief of the research, is called primary data. The most preferred way is to interview the individuals to get a sense of how they feel Secondary Data When the data is collected and compiled from the published nature or any others primary data is called secondary data. So far as our research is concerned, we have not collected any information from any sources. So, we have not used secondary data for our research. SAMPLING PROCESS It is very true that to do the research with the whole universe. As we know that it is feasible to go to population 120

survey because of the n number of customers and their scattered location. So for this purpose sample size has to be determined well in advance and selection of sample also must be scientific so that it represents the whole universe. So far as our research is concerned, we have taken sample size of 300 respondents. We have selected Income Earners with savings to invest. All the respondents are stratified on the basis of their profession and savings. We have selected the selected the samples as per per convenience.
Sample Universe Sampling Technique Sample Size Sampling Unit: Rajkot City Convenient Sampling 300 Respondents Professional Business Man Government Employees Employees working in private firms

= Random = Random = Random = Random

SCOPE OF STUDY The research would be useful in the following respect.

This will help the company to know the taste of masses and turn it towards Equity, Derivatives and Commodities. This will help the company, how to make people aware about Equity, Derivatives and Commodities by imparting best education. This will help the company to frame effective Marketing Strategy as well as select the right media for advertising to create brand awareness as well as to give knowledge of the product. Mind share of Sharekhan can be known. 121

 This will also help to select right medium for trading in Equity, Derivatives and Commodities segment.

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LIMITATION OF THE STUDY

The limitations of the study are as follow:

Personal Bias: Individuals may have personal bias towards particular investment option so they may not give correct information and due to which the conclusion may be derived. Time Limit: The time duration given for the research is less. Area: The area was limited to Rajkot City only, so we cannot know the degree of the literacy outside the city. Sample Size: The last limitation is Sample Size, which is of 300 only; due to which we may not get the proper results.

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ANALYSIS & INTERPRETATION

1.Gender Ratio:
Male 196 Female 104

250 200 150 104 100 50 0 Male Series1 Female 196

2.Age:
Below 30 110 30-50 127 More than 50 53

140 120 100 80 60 40 20 0 Below 30 30-50 More than 50

Series1

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3.Education Qualification:
Post Graduate Graduate Under Graduate

112

172

16

200 180 160 140 120 100 80 60 40 20 0

172

112

16 Post Graduate Graduate Series1 Under Graduate

4.Occupation:
Govt. Employee s 120 NonGovt. Employee s 62 Busines s Man 70 Profession al 48

140 120 100 80 60 40 20 0

120

62

70 48

Govt. Employees

Non-Govt. Employees

Business Man

Professional

Series1

125

126

5.Investment Pattern:
Securities Bank F.D. Post office Insurance Mutual Fund Gold Equity Derivatives Commodities No. 114 63 28 30 22 19 10 14 Percentage(% ) 38 21 9 10 7 6 3 5

120 100 80 60 40 20 0

114

63 38 21 28 9
un d

30 10

22 7
G ol d

19

10
es

14

In su ra nc e

qu i ty

os to f fi

ua lF

riv at iv

an k

No.

Percentage(%)

It can be seen from the graph that the respondents have given first preference for investment to Bank F.D. and Gold, Equity, Derivatives and Commodity having almost equal share.

C om m

D e

ut

di tie s

.D .

ce

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6. Preference for investment in Derivatives & Commodity:

Instrume nts Bullion Spices Fiber Oil Metal F&O No. 79 33 19 50 43 76 Percentage(% ) 26 3 11 17 14 25

90 80 70 60 50 40 30 20 10 0

79

76

50 26 33 19 3 Bullion Spices 11 17

43 25 14

Fiber No.

Oil

Metal

F&O

Percentage(%)

When asked to the respondents that out of the given options which one would they prefer? So they prefer Bullion first. So the preference for commodity (Bullion) is more than the Derivatives.

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7. Factors that are to be consider by Individual at the time of investment

Obstacles Risk Reduction Leverage Benefit Arbitrage Benefit Speculative Motive Liquidity preference No. 129 112 12 15 32 Rank 1 2 5 4 3

No.
140 120 100 80 60 40 20 0 Speculative Motive Risk Reduction Leverage Benefit Arbitrage Benefit Liquidity preference

No.

So, each and every investor are not risk taker though they want more return from the investment. 8. Medium preferred by individuals at the time of investment
Factor Broker Magazine Internet Other No. 117 55 102 26 Rank 1 3 2 4

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140 120 100 80 60 40 20 0

117 102

55 26 1 Broker 3 Magazine No. 2 Internet Rank 4 Other

9. Exchange preferred by individuals for Equity & Derivatives

BSE NSE 155 145

156 154 152 150 148 146 144 142 140

155

145

BSE Series1

N SE

10. Commodity
MCX NCDEX
200 180 160 140 120 100 80 60 40 20 0

189 111
189

111

MC X Series1

N EX CD

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11. Constraints that are holding back individuals from investment

No. Lack Lack Lack Lack of of of of knowledge Guidance Fund Availability Risk taking Ability 64 58 70 108 Percentage (%) 21 19 23 36
108

120 100 80 60 40 20 0 Lack of knowledge Lack of Guidance No. Lack of Fund Availability 21 64 70 58

36 19 23

Lack of Risk taking Ability

Percentage (%)

12. Individuals take decision through

Independently Broker/Agent News Channels News Papers Internet Tax consultant No. 97 73 19 20 68 23 Rank 1 2 6 5 3 4

nt ly

el s

120 100 80 60 40 20 0
en de

97 73 19 20
rs

68 23 5
In te rn e

1
ge nt

2
ha nn

6
ap e

3
t co ns ul ta nt

ro ke r/ A

In de p

w s

N e

w s

N e

No.

Rank

T ax

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13. Medium reliable for individual for trading

Stock Broking Companies Franchisees Online
168

168 43 89

180 160 140 120 100 80 60 40 20 0

89 43

Stock Broking C ompanies

Franchisees

O nline

Series1

14. Most preferred Broking Companies of the Rajkot City

Broking Company India Bulls ShareKhan Marwadi Motilal oswal HDFC Securities ICICI Direct Kotek street Skse Rank 3 2 5 8 7 1 6 4

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 CONCLUSION
Most of the people in Rajkot City are investing in fixed return Instruments. But there are investors who use Equity as an investment tool. Those people who want to invest in Derivatives & Commodities are investing mainly for reducing risk and they consider them as investment tool. People generally want to take trading decisions independently or under the guidance of Friends or Well Known Stock Broking Houses. Literature and Self Experience can be taken as the best method to impart education about equity, derivatives & commodities

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 RECOMMENDATION
Sharekhan needs to make its marketing team strong and also it should increase marketing activities such as promotional campaigns. Sharekhan should educate the investors about Equity, Derivatives & Commodities by organizing classes, corporate presentations, taking part in consumer fairs, organizing events Company should show the benefits of trading on Derivatives & Commodities Sharekhan should turn existing customers (who are trading in Equity only) towards Derivatives & Commodities. Sharekhan can also use Newspapers and Local New Channels as a medium of advertising. Company may appoint special team for giving education & attracting people towards trading on Equity, Derivatives & Commodities.

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 MY LEARNING
During the two months training program, I increased my knowledge on stock market. I learned how to trade in the stock market. I learned various aspects of Equity, Derivatives, Commodities. I learned about the various products and services offered by Sharekhan and their practical application.

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 BIBLIOGRAPHY
The Economic Times Sharekhans Publications Websites: 1. www.Google.com 2. www.bseindia.com 3. www.nseindia.com 4. www.sharekhan.com 5. www.ncdex.com. 6. www.mcx.com 7. www.moneycontrol.com

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