A SUMMER TRAINING PROJECT REPORT

ON

INVESTMENT PATTERN ON THE BASIS OF RISK PROFILE

OF INVESTORS
SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD OF
DEGREE OF MASTER IN BUSINESS ADMINISTRATION 2015-2017

UNDER THE GUIDANCE OF:

Ms. Shailly Bhasin
Assistant Professor, DIAS
SUBMITTED BY:
Prashanth
Enrollment No. 06912303915
MBA, Semester 3rd
Batch 2015 - 2017

DELHI INSTITUTE OF ADVANCED STUDIES

(NAAC Accredited A Grade Institute)
Approved by AICTE and Affiliated to
G.G.S. Indraprastha University, Delhi

CERTIFICATE (From Guide)

1

This is to certify that the project titled Investment Pattern on the basis of Risk Profile of
Investors is an academic work done by PRASHANTH submitted in the partial fulfillment of
the requirement for the award of the degree of Masters in Business Administration from Delhi
Institute of Advanced Studies, New Delhi. under my guidance and direction. To the best of my
knowledge and belief the data and information presented by him in the project has not been
submitted earlier elsewhere.

Name- Ms. Shailly Bhasin

Assistance Professor
DIAS

STUDENT DECLARATION
2

This is to certify that I have completed the Project titled Investment Pattern
on the basis of Risk Profile of Investors under the guidance of Ms. Shailly
Bhasin in the partial fulfillment of the requirement for the award of the degree
of Master in Business Administration from Delhi Institute of Advanced
Studies, New Delhi. This is an original work and has not been submitted
anywhere else.

Name of the student: PRASHANTH

(Sign)

Course: MBA
Batch: 2015-17

ACKNOWLEDGEMENT

I offer my sincere thanks and humble regards to Delhi Institute Of Advanced Studies, GGSIP
University, New Delhi for imparting us very valuable professional training in MBA.
I pay my gratitude and sincere regards to Ms Shailly Bhasin, my project Guide for giving me the
cream of his knowledge. I am thankful to her as she has been a constant source of advice,
motivation and inspiration. I am also thankful to her for giving her suggestions and
encouragement throughout the project work.
I take the opportunity to express my gratitude and thanks to our computer Lab staff and library
staff for providing me opportunity to utilize their resources for the completion of the project.
I am also thankful to my family and friends for constantly motivating me to complete the project
and providing me an environment which enhanced my knowledge.

TABLE OF CONTENT

CHAPTERS

CONTENTS

PAGE NUMBERS

Executive summary

6-7

Introduction of topic

8-12

Introduction of Company

13-29

Literature Review

30-33

Research methodology

34-84

Data analysis & interpretation

85-115

Findings & conclusions

116-117

Suggestions

118-119

Bibilography

120

10

Annexures

121-123

EXECUTIVE SUMMARY
People invest their money for generating good returns. But in this investment some kind of risk
is involved. All investors have different attitudes towards risk. When it comes to investing, it is
important to consider your risk profile or tolerance carefully, including how comfortable you are
with the possibility of losing money, or that returns on your investments. The risk profile of
investors depends upon their demographic structures or characteristics.
The project deals with the analyzing the investment pattern on the basis of risk profile of
investors at Sharekhan Limited and what are the risk factors that influence the type of investment
made by individuals . As we all know that every person who wants to gain better returns in
future they must have to invest their money in stock market or anywhere else. This study
describes the investment pattern use by different persons while doing investment in stock market
keeping different risk in mind.
The main reason to choose this research is to find out the investment pattern behavior in respect
of their risk bearing capacity and this research helps the company to target the investors
according to their risk ability. The research process chosen by me is qualitative and quantitative
research. Questionnaires in part help me a lot in finding the actual position of the market under
the survey method.
.A sample size of about 96 respondents which includes individual investors as well as corporate
investors was taken for purpose from various parts of Delhi and N.C.R . After the survey was
completed, the data was first stored and then analyzed on the chosen parameters. This analyzed
data was later on converted into graphs. Such as pie chart, bar graphs, etc this was to make result
easily comprehensible by any one going through the report. Later on, all this information was
compiled in the form of a presentable and highly comprehensible report.
After analyzing the data, the problem which has been identified that most of the investors are
ready to bear risk in expectation of higher returns. There is a strong relationship in investment
pattern and risk bearing capacity of investors while doing investment. For analyzing the data we
used chi- square and phi-Cramer V test in SPSS V 19.0 and use MS Excel 2007 for making
graphs.

INVESTMENT PATTERN ON THE BASIS OF RISK PROFILE OF INVESTORS

WHAT IS RISK?
The word risk has a definite financial meaning. It refers to possibility of incurring a loss in a
financial transaction. In a broad sense, investment is considered to involve limited risk and is
confined to those avenues where the principal is safe. Speculation is considered as an
involvement of funds of high risk.

TYPES OF RISK
1. SYSTEMATIC RISK
2. UNSYSTEMATIC RISK

SYSTEMATIC RISK
Systematic risk refers to that portion of the total variability of the return caused by common
factor affecting the prices of all securities alike through economic, political and social factors.

UNSYSTEMATIC RISK
Unsystematic risk refers to that portion of the total variability of the return caused due to unique
factors, relating that firm or industry, through such factors as management failure, labour strikes,
raw material scarcity etc.

WHAT IS INVESTMENT?
Investment is the purchase of an asset or item with the hope that it will generate income or
appreciate in the future and be sold at the higher price.

INVESTMENT RISK PROFILE

All investors have differing attitudes towards risk. When it comes to investing, it is important to
consider your risk profile or tolerance carefully, including how comfortable you are with the
possibility of losing money, or that returns on your investments could vary widely from year to
year.
Understanding your personal risk tolerance will help you choose an appropriate asset allocation the following points can help you to determine an investment mix that's appropriate for your
needs.

INVESTMENT EXPERIENCE
How would you describe your investment experience and understanding of financial markets?

Just started investing in the last year

You understand the basics of investing

You have been investing on your own for several years and are reasonably confident of
your knowledge of financial markets

Your knowledge of financial markets is well above average and you make investment
decisions confidently

RISK TOLERANCE
To establish investment strategies that suit your profile of risk and will be comfortable with, you
need to consider the possibility that the value of your investment may decline even though this
may be temporary. Are you prepared to accept the possibility of a negative return at any time in
exchange for potentially higher long term returns? What percentage of your money would you be
prepared to invest in higher-risk investments?
Which of the following is important to you:

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Avoiding any short-term losses

Receiving regular income from investments

Long-term growth in the value of investments

Protection against inflation

In October 1987 the stock market fell more than 20% in one day. If you owned an
investment that fell by 20% in a short time what would you do or what did you do in
1987:Sell all of the remaining investment (Conservative)

Sell a portion of the remaining investment (Conservative to Balanced)

Hold the investment and sell nothing (Balanced or Aggressive)

Buy more of the investment (Aggressive)

INVESTMENT GOALS AND OBJECTIVES

Why are you investing? Is it for something in the near future (new car, or down payment on a
home) or something farther off (a young child's education or your own retirement)? If your
investing goals are short term you want your money to be there - with interest - when you need
it. Therefore you will need to focus on relatively short term investments like term deposits or a
cash management trust. If on the other hand, you are investing for the long term, you may be
able to afford to take some risk in pursuit of a higher return. Shares, property, and growth
orientated managed which historically have provided higher returns than fixed interest or cash
over time, may be more appropriate.
INVESTMENT TIMEFRAME
When do you expect to need to access all or part of your investments:

Less than 1 year (immediate access)

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Less than 2 years (short term)

2 to 5 years (short to mid-term)

6 to 10 Years (mid to long term)

Over 10 Years (long term)

LIQUIDITY / CASH REQUIREMENTS

How much money do you need to keep available for emergencies such as house repairs, a
dental emergency or serious car repairs? These emergencies can be a serious setback if
you are not prepared. The amount of your emergency fund will depend on your current
lifestyle and expenses. As a general rule you should have about 3 months of income set
aside to meet emergencies without needing to rely on credit cards. A cash management
trustthat pays high interest can be a good place to keep emergency funds.
Risk Profile

Investment Style

Conservative

Your primary investment goal is capital protection. You require

stable growth and/or a high level of income, and access to your

Age
and

investment within 3 years.

Cautious

Your primary investment goal is capital protection. Investors in

this risk profile require fairly stable growth and/or a moderate
level of income. Your investment term is 3 years or more.

Moderate

Your primary investment goal is capital growth. You can tolerate

some fluctuations in the value of your investment in the
anticipation of a higher return. You don't require an income and
you are prepared to invest for 5 years or more.

Moderatley

Your primary investment goal is capital growth. Investors in this

aggressive

risk profile can tolerate a fair level of fluctuations in the value of

you investment in anticipation of possible higher returns. You
don't require an income and you are prepared to invest for 5 to 10
years.

Aggressive

Your primary investment goal is long-term capital growth. You

can tolerate substantial fluctuations in the value of your
investment in the short-term in anticipation of the highest possible
return over a period of 10 years or more.

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Income
Your age and your income - particularly the stability of your income - are important factors to
consider when determining your investment profile. If you are young you can afford to take a
longer term view and any short-term losses may have minimal effect. If your income or
employment is unstable you will need to take this in to account when setting your investment
goals.

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SHAREKHAN LIMITED
INTRODUCTION
Sharekhan is one of the leading retail broking House of SSKI Group which was running
successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI
Group, which has over eight decades of experience in the stock broking business. Sharekhan
offers its customers a wide range of equity related services including trade execution on BSE,
NSE, Derivatives, depository services, online trading, investment advisory, Mutual Fund
Advisory etc.
The firms online trading and investment site - www.sharekhan.com - was launched on
Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers
across the country. Known for its jargon-free, investor friendly language and high quality
research, the site has a registered base of over two lakh customers. The number of trading
members currently stands More than 8 Lacs. While online trading currently accounts for just
over 8 per cent of the daily trading in stocks in India, Sharekhan alone accounts for 32 per cent
of the volumes traded online.
The content-rich and research oriented portal has stood out among its contemporaries
because of its steadfast dedication to offering customers best-of-breed technology and superior
market information. The objective has been to let customers make informed decisions and to
simplify the process of investing in stocks.
On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application
that emulates the broker terminals along with host of other information relevant to the Day
Traders. This was for the first time that a net-based trading station of this caliber was offered to
the traders. In the last six months Speed Trade has become a de facto standard for the Day
Trading community over the net.

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On October 01, 2007 Sharekhan again launched his another integrated Software based
product Trade Tiger, a net-based executable application that emulates the broker terminals along
with host of other information relevant to the Day Traders. It has another quality which differs it
from other that it has the combined terminal for EQUITY and COMMODITIES both.
Share khans ground network includes over 1005 centers in 410 cities in India, of which
210 are fully-owned branches. Sharekhan has always believed in investing in technology to build
its business. The company has used some of the best-known names in the IT industry, like Sun
Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign
Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and
content. Previously the Morakiya family holds a majority stake in the company but now a world
famous brand CITI GROUP has taken a majority stake in the company. HSBC, Intel & Carlyle
are the other investors.
With a legacy of more than 80 years in the stock markets, the SSKI group ventured into
institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading
players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of
the market in each of these segments. SSKIs institutional broking arm accounts for 7% of the
market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional
portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK
and US. Foreign Institutional Investors generate about 65% of the organizations revenue, with a
daily turnover of over US$ 4 million. The Corporate Finance section has a list of very prestigious
clients and has many firsts to its credit, in terms of the size of deal, sector tapped etc. The group
has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular
Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shoppers Stop.

15

Sharekhan business
1. Brokering business.
2. White feathering house production.

Vision
To be the best retail broking brand in the retail business of the stock market.
Mission
To educate and empower the individual investor to make better investment decisions through
quality advices and superior services.

Stock exchange Mumbai

16

Share khan is the retail broking arm of SSKI, an organization with more then eight
decade of trust and credibility in the stock market.

Amongst pioneers of investment research in the Indian market.

In 1984 venture into institutional broking and the corporate finance.

Leading domestic player in the Indian institutional business.

Over US$5 billion of private equity deal.

SSKI group companies

SSKI investor services ltd (Sharekhan)

S.S. Kantilal Isharlal securities

SSKI corporate finance.

17

SSKI - Corporate Structure

80 years of taming Bulls & Bears

18

SHAREKHAN PROFILE
SHAREKHAN RETAIL BROKING

Among the top three (3) branded retail services providers (Rs 856 crs average daily
volume.

NO. 2 player in online business

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

Some of the outlets are

BRANCH

MANAGER

MUMBAI(LOWER PAREL)
BANGALORE-JAYANAGAR
BANGALORE-GANDHI NAGAR
CALICUT
CHENNAI-CHETPET
CHENNAI
COIMBATORE
ERODE
GOA-MAPUSA
GOA-PANAJI
HYDERABAD
JODHPUR
KOLKATA
KOCHI
NAVSARI
NEW DELHI
PALAKKAD
PUNE
RAJKOT
SALEM
SURAT
THRISSUR
VADODARA
MUMBAI-ANDHERI
MUMBAI-FORT
MUMBAI-GHATKOPAR
MUMBAI-OPERA HOUSE

Mr. SANDEEP JAIN

Mr. CHANNARAJ K.J.
Mr. BASAPPA D.M.
Mr. GOPAKUMAR
Mr. RAJIV PUROHIT
Mr. V.KRISHNAMURTHY
Mr. V.MOHANKRISHNAN
Mr. T.V.N.GIRISHKUMAR
Mr. KAMATH TRIVIKRAM
Mr. PRAVEEN SHAMAIN
Mr. D.HEM KUMAR
Mr. VINOD BHANDARI
Mr. SANJAY VORA
Mr. DINSENA KALLIDIL
Mr. NUTAN PATEL
Mr. HEMENDRA AGARWAL
Mr. V.RAGUNATHAN
Ms. SUJATHA RAMAN
Mr. NARENDRA TANNA
Mr. R M PANDIYAN
Mr. DARSHAN VANIAWALA
Mr. RAMAKRISHNAN T.B.
Mrs. ANAHITA VORA
Mr. SAMEER ASHER
Mr. BHUSHAN SHAH
Mr. MUSTAFA PARDIWALA
Mr. JAYESH SHAH
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BOARD OF DIRECTORS
DESIGNATION
CEO
CFO
CTO
EXECUTIVE DIRECTOR
CUSTOMERSERVICE REPRESENTATIVE
(CSR)
SALES AND MARKETING

NAME

MR. TARUN SHAH

MR. SHANKAR VALIVA
MR. KETAN PARIAH
MR. JAIDEEP ARORA
MR. GEETA RAMESH
MR. AJAI BATHIJA

BENEFITS

Free Depository A/c

Secure Order by Voice Tool Dial-n-Trade.

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

24x7 Voice Tool access to your trading account.

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

Special Personal Inbox for order and trade confirmations.

On-line Customer Service via Web Chat.

Anytime Ordering.

NSDL Account

Instant Cash Tranferation.

Multiple Bank Option.

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Enjoy Automated Portfolio.

Buy or sell even single share.

Branch - Head Office

A-206, Phoenix House, 2nd Floor, Senapati Bapat Marg, Lower Parel, Mumbai- 400 013.
Telephone No: 67482000 Email: myaccount@sharekhan.com

PRODUCTS OF SHAREKHAN
CLASSIC ACCOUNT
This account allows the client to trade through the website www.sharekhan.com and is suitable
for the retail investor who is risk-averse and hence prefers to invest in stocks or who do not trade
too frequently.
It allows investor to buy and sell stocks online along with the following features like multiple
watch lists, Integrated Banking, De-mat and Digital contracts, Real-time portfolio tracking with
price alerts and Instant money transfer.
FEATURES

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

Live Terminal and Single terminal for NSE Cash, NSE F&O, BSE & Mutual Funds (online
and offline).
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Integration of On-line trading, Saving Bank and De-mat Accounts.

Instant cash transfer facility against purchase & sale of shares.

Competative transaction charges.

Instant order and trade confirmation by E-mail.

Streaming Quotes (Cash & Derivatives).

Personlized market watch.

Single screen interface for Cash and derivatives and more.

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

TRADE TIGER
TRADE TIGER is an internet-based software application which is the combination of
EQUITY & COMMODITIES, that enables you to buy and sell share and well as commodities
item instantly. It is ideal for every client of SHAREKHAN LTD.

FEATURES

Integration of EQUITY & COMMODITIES MARKET.

Instant order Execution and Confirmation.

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

Technical Studies.

Multiple Charting.

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

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

Hot keys similar to brokers terminal.

Alerts and reminders.

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

Live market debts.

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DIAL-N-TRADE
Along with enabling access for your trade online, the CLASSIC and TRADE TIGER
ACCOUNT also gives you our Dial-n-trade services. With this service, all you have to do is dial
our dedicated phone lines which are 1800-22-7500, 3970-7500.
PORTFOLIO MANAGEMENT SERVICES
Sharekhan is also having Portfolio Management Services for Exclusive clients.
1. PROPRIME -

Research & Fundamental Analysis.

Ideal for investors looking at steady and superior returns with low to medium risk appetite. This
portfolio consists of a blend of quality blue-chip and growth stocks ensuring a balanced portfolio
with relatively medium risk profile. The portfolio will mostly have large capitalization stocks
based on sectors & themes that have medium to long term growth potential.
2. PROTECH

- Technical Analysis.

Protech uses the knowledge of technical analysis and the power of derivatives market to identify
trading opportunities in the market. The Protech lines of products are designed around various
risk/reward/ volatility profiles for different kinds of investment needs.
THRIFTY NIFTY: Nifty futures are bought and sold on the basis of an automated
trading system that generates calls to go long/short. The exposure never exceeds value of
portfolio i.e. there is no leveraging; but being short in Nifty allows you to earn even in
falling markets and there by generates linear
BETA PORTFOLIO: Positional trading opportunities are identified in the futures
segment based on technical analysis. Inflection points in the momentum cycles are
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identified to go long/short on stock/index futures with 1-2 month time horizon. The idea
is to generate the best possible returns in the medium term irrespective of the direction of
the market without really leveraging beyond the portfolio value. Risk protection is done
based on stop losses on daily closing prices.
STAR NIFTY: Trailing Stops Momentum trading techniques are used to spot short term
momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss method of
risk management or profit protection is used to lower the portfolio volatility and
maximize returns. Trading opportunities are explored both on the long and the short side
as the market demands to get the best of both upwards & downward trends.
3. PROARBITRAGE -

Exploit price analysis

ONLINE IPO'S AND MUTUAL FUNDS ADVISORY IS AVAILABLE.

PROCESS OF ACCOUNT OPPENING

LEAD MANAGEMENT SYSTEM (LMS) / REFERENCES
CONTACT
TELEPHONE AND PRESONAL VISIT
APPOINTMENT
DEMONSTRATION
AGREE

DISAGREE (CLOSE)

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DOCUMANTATION
FILLING THE FORM
SUBMISSION THE FORM
LOGIN OF THE FORM
SENDING THE ACCOUNT OPENING KIT TO THE CUSTOMER FOR TRADING

CHARGE STRUCTURE
1)- PRE PAID OR AMC A/C: Advance Amount which will be fully adjsted against your brokerage you paid in One
year.
Following Schemes Are Available: -

Brokerage will be chagred -

1) -

750/- Scheme:-

0.05 / 0.50 %

2) -

1000/- Scheme

3)

2,000/- Scheme: -

0.035 / 0.40 %

4)

6,000/- Scheme: -

0.025 / 0.25 %

5)

18,000/- Scheme: -

0.020 / 0.20 %

6)

30,000/- Scheme: -

0.015 / 0.18 %

7)

60,000/- Scheme: -

0.010 / 0.15 %

0.045 / 0.45 %

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8) 1,00,000/- Scheme: -

0.0075 / 0.10 %

Minimum Margine of Rs. 25000/- is Required for Account Opening.

Annual Maintanance Charges will NIL for 1st year and Rs. 400/- from 2nd year.
- EXPOSURE : 4 TIMES (ON MARGINE MONEY)
- EXPOSURE : 10 TIMES (ON MAX TRADING)
- ONLINE IPO'S AND MUTUAL FUNDS ADVISORY IS AVAILABLE.
We are having tie-up with Eleven banks for online fund transfering i.e. HDFC, ICICI, IDBI,
CITI, Union Bank of India,
Bank of Punjab,

Oriental Bank of Commerce, INDUSIND, AXIS, Centurian

Bank of India and Yes Bank.

Company Provide 4-6 E-mail to there customers per day.

Online Trade in Share
Sharekhan customers can online trade through there computers, through internet during the
market timings.
Online Fund Transfer
We have tie up with Eleven Banks for online fund transferring i.e. HDFC, IDBI, CITI, UBI,
OBC, INDSLANDAND and UTI BANK, Yes bank, Bank of India for Online Money Transfer.

Research based investment advice

Investment and trading services

Trading and seminars

Technology based investment tools

Integrated demat facility

CUSTOMER CAN TRADE IN

o Equities
o Derivatives
o Commodities
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SWOT ANALYSIS OF SHAREKHAN

(My observation)
STRENGTHS
1. Big client base
2. In-house research house
3. online as well as offline trading
4. Online IPO/ MF services
5. Share shops
6. Transparent
7. User friendly tie ups with 10 banks
8. Excellent order execution speed and reliability

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WEAKNESS
1. Lack of awareness among customer
2. Less focus on customer retention
3. Less Exposure

OPPORTUNITIES
1. Diversification
2. Product modification
3. Improve Web based trading
4. Provide competitive brokerage
5. Concentrate on PMS
6. Focus on Institutional investors
7. Concentrate on HNIs (high net worth investor)

THREATS
1. Aggressive promotional strategies by close competitor like Religare, Angel Broking and India
bulls.
2. More and more players are venturing into this domain, which can further reduce the earning of
Share Khan.
3. Stock market is very volatile, risk involves is very high.

28

29

LITERATURE REVIEW
A number of academic studies have provided evidence of demographic and non demographic
characteristics related to the financial risk tolerance of individuals. The most common variables
researched by academics to determine their relationship with financial risk tolerance are gender,
age, marital status, number of dependents, income, wealth, education and financial knowledge.
We report the main findings as well as a number of less-researched variables. Gender differences
have been widely examined, with a large number of studies reporting higher financial risk
tolerance for males (Grable, 2000; Grable and Joo, 2000; Bemasek and Shwiff, 2001; Chaulk,
Johnson, and Bulcroft, 2003; Yook and Everett, 2003; Grable, Lytton, and O'Neill, 2004;
Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006;
Van de Venter and Michayluk, 2007; Gilliam, Chatterjee, and Zhu,2010).
Studies have also argued that financial risk tolerance decreases with age (Xiao,
Alhabeeb, Hong, and Haynes, 2000; Chaulk, Johnson, and Bulcroft, 2003; Hallahan, Faff, and
McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006; Van de Venter and
Michayluk, 2007; Faff, Hallahan, and McKenzie, 2009). Furthermore, a nonlinear aspect to age
has been observed (Hallahan, Faff, and McKenzie, 2004; Grable, Lytton, O'Neill, Joo, and
Klock, 2006; Faff, Hallahan, and Mckenzie, 2009). The primary explanation for the observation
of a significantly negative coefficient for age and the nonlinear relationship has been attributed to
the time horizon to recover losses that is lower with age and the higher reliance on investment
funds as individuals age.
Marital status has been widely studied, especially because of its interaction with
age and gender. Financial risk tolerance is higher for single individuals (Grable and Joo, 2004;
Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao,2006).
The main justification for this result is that single individuals do not hold the same
responsibilities as those that are married and thus the single individuals are willing to accept
more financial risk. For example, Chaulk, Johnson, and Bulcroft (2003) propose that married
individuals tend to have a lower financial risk tolerance because of a greater need for wealth
protection. When gender and marital status are incorporated together, Jianakoplos and Bemasek
(1998) and Bemasek and Shwiff (2001) find that single men tend to be more risk tolerant than
single women. A negative relationship between financial risk tolerance and the number of
30

dependents is identified by Chaulk, Johnson, and Bulcroft (2003) and Hallahan, Faff, and
McKenzie (2004), with Faff, Hallahan, and McKenzie (2009) proposing a statistically significant
nonlinear linkage. This negative relationship has been identified with marital status and may
exist because of the added responsibilities and more conservative outlook to risk when
dependents are considered.
Higher financial risk tolerance is reported for individuals in high income and
wealth categories (Grable, 2000; Chaulk, Johnson, and Bulcroft, 2003; Yook and Everett, 2003;
Chang, DeVaney, and Chiremba, 2004; Grable and Joo, 2004; Grable, Lytton, and O'Neill, 2004;
Hallahan, Faff, and McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006).
In addition, Grable and Joo (1999) indicate a significantly positive relationship between financial
risk tolerance and an individual's level of financial solvency.
A positive relationship has been identified between financial risk tolerance and education
(Grable, 2000; Chang, DeVaney, and Chiremba, 2004; Grable and Joo, 2004; Hallahan, Faff, and
McKenzie, 2004; Yao, Hanna, and Lindamood, 2004; Fan and Xiao, 2006). Hallahan, Faff, and
Mckenzie (2004) also observe high positive correlations between income, wealth, and education,
suggesting that financial risk tolerance could be a function of income and wealth rather than
education.
Financial or investment knowledge has a positive relationship with financial risk tolerance
(Grable, 2000; Grable and Joo, 2000, Grable and Joo, 2004; Van de Venter and Michayluk,
2007). However, Davey (2004) challenges the view that educating individual investors about
financial markets and instruments will necessarily increase their financial risk tolerance.
Although the financial education of an advisor's clients is considered best practice, it will most
likely not have any direct influence on the risk preference of an individual as even the most
knowledgeable and educated could potentially have a low financial risk tolerance.
When advising clients about investment decisions, financial advisors have to consider both their
financial goals and financial risk tolerance. In many cases these two could conflict, leading
advisors to recommend that individuals take on more risk than they are comfortable with to meet
their financial goals. Bemasek and Shwiff (2001) report that individuals generally tend to
increase the level of risk of their retirement savings after they have consulted a financial advisor.
Furthermore, this increase was found to be statistically significant for both the respondent and
31

the spouse or partner consulting a financial advisor, possibly suggesting the existence of a
relationship between gender and marital status as well.
In contrast to the earlier finding. Van de Venter and Michayluk (2007) find no statistically
significant effect on financial risk tolerance when a financial advisor is consulted. When
examining whether a financial advisor has any impact on investment behavior. Hung and Yoong
(2009) conclude that unless financial guidance is actively sought by the individual, consulting a
financial advisor has no impact on investment behavior. This finding highlights the difficulty
when interpreting survey questions that encompass financial advisors, and whether their advice
is undertaken.
Finally, Grable (2000) reports that individuals with positive economic expectations have higher
financial risk tolerance scores than those with less positive expectations, with Van de Venter and
Michayluk (2007) also finding evidence that financial risk tolerance is positively related to both
future expectations and previous investment performance. These previous findings identify many
factors that might influence risk tolerance on their own or in combination with others.

32

33

RESEARCH METHODOLOGY
Research methodology is way to systematically solve the research problem. Research, in
common terms refers to a search for knowledge. Research methodology consists of different
steps that are generally adopted by a researcher to study the research problem along with the
logic behind them.

RESEARCH DESIGN:
Research design is the plan, structure and strategy of investigation conceived so as to
obtain answers to research question.
There are two types of research design. One is exploratory research and other is
descriptive research
EXPLORATORY RESEARCH:
We studied the company report, talked to the customers and employee of the company. We
identified that inspite of providing various opportunities customers may not be aware of
derivative and commodity products.

DESCRIPTIVE RESEARCH
Survey method was adopted for this research

DATA SOURCES:
The study is mainly based on the data collection from primary as well as secondary
sources.
Primary data: Data collected for specific purposes in the form of questionnaire
Secondary data: Data existing in the form of Books, Internet, Catalogues etc.

SAMPLING DESIGN:
Definition of population: All the customers of share khan.
Sampling procedure: A non probability sampling technique i.e. convenient sampling procedure
was adopted.
Sampling size: A sample of 96 customers was selected from the target population for the study.
34

RESEARCH METHODOLOGY:
Research design

: descriptive in nature.

Data source

: data collected from primary and secondary sources.

Primary data

: primary data is collected from the respondent through

these structured questionnaires.

SAMPLING DESIGN:
Sample size

: 96

Sampling procedure

: Convenience sampling

Statistical tool

: Percentage method, mean, chi-square test.

STATISCAL TOOLS:
For the purpose of analysis, Mean and percentage methods are used for the calculation
and the result was interpreted. This test was used to minimize the error of the data collected.

STATISTICAL TOOLS USED:

Sample tools are used for analyze purpose, they are follows:
1. Cross tab method
2. Chi square test
3. Phi and Cramer V test

Null hypothesis (HO) states: the two attributes are independent of each other.
Alternative hypothesis (HI) states: the two attributes are dependent of each other.

35

OBJECTIVES OF THE STUDY

1. To understand the risk profile of investors.
2. To study risk bearing capacity on the basis of gender, education, occupation, age, family
income and number of dependents.
3. It is to analyze the changes in trading after the exchange shifted from outcry to online
trading system.
4. To analyze and conclude what is customers perception towards online trading, its
usefulness and its ease in availability.
5. It is to study the functions of SHAREKHAN and through various departments.
6. To know the online screen based trading system adopted by SHAREKHAN and about its
communication facilities. The appropriate configuration to set the network, which would
link the SHAREKHAN to individual / members.
7. To know about the latest and future development in the stock exchange trading system,
clearly defining each term of the stock exchange procedure.
8. To study the effect of the changing trends in the capital market on the investor, the broker
and on the country largely, particularly in Hyderabad.
9. To study the functions of SSKI through various departments and committees.
10. To study the effect of the changing technology on the Capital Market.
11. To study the procedure of trading in online trading and finding its advantages over the
manual trading.

36

NEED FOR THE STUDY

Stock exchanges are an integral part of the capital market. It is the
perfect type of market for securities whether of govt. or semi govt. bodies or other bodies
as for share and debentures issued by the joint stock enterprises.
Stock exchanges provide liquidity to the listed companies; they give quotations to the
listed companies and help in trading and raising funds from the market.
An exchange provides ready market for the sale and purchase of securities.
Stock market in India is more than century old and has been functioning effectively through
the medium of recognized stock exchanges. The stock market, which is integral part of the
capital, has a major impact on the functioning of the corporate sector in particular. Since
the capital market is playing, major role in the Indian economy from the past several years
there is an essential need to study the overall functioning of stock exchange.

This method includes the data collected from the personal interaction with authorized members
of Share Khan Securities limited.

SCOPE OF THE STUDY:

37

The scope of the study analyses us to know how the Customers perceive the On-line Trading
activities are carried out in SHAREKHAN.
DATA COLLECTION METHODS:

The data collection methods include both the primary

and secondary collection methods.

Primary method: This method includes the data collected from the personal interaction with
customers from different classes, government employees, corporate, executives at MNCs etc. A
total of 300 people were contacted through various mediums like phone, e-mail, personal
interviews, chats etc. 100 customers agreed to share their perception towards this industry.
Secondary method: The secondary data collection method includes:

The lecturers delivered by the superintendents of respective departments.

The brochures and material provided by Share Khan Securities limited.

The data collected from the magazines of the NSE, economic times, etc.

Various books relating to the investments, capital markets and other related topics.
LIMITATIONS OF THE STUDY:
The study is confined to the past 2-3 years and present system of the trading procedure in the
SSKI and the study is confined to cover all the related issues in brief. Online-trading procedure
only exhaustive analysis, problems of listing, management of trade, SEBI guidelines relating
there to be not covered due to limited time and to keep the study in manageable limits.

Following diagram gives the structure of Indian financial system:

38

FINANCIAL MARKETS:

39

Financial markets are helpful to provide liquidity in the system and for smooth
functioning of the system. These markets are the centers that provide facilities for buying and
selling of financial claims and services. The financial markets match the demands of investment
with the supply of capital from various sources.
According to functional basis financial markets are classified into two types.
They are:
Money markets (short-term)
Capital markets (long-term)
According to institutional basis again classified in to two types.
They are:
Organized financial market
Non-organized financial market.
The organized market comprises of official market represented by recognized institutions,
bank and government (SEBI) registered/controlled activities and intermediaries. The
unorganized market is composed of indigenous bankers, moneylenders, individual professional
and non-professionals.
MONEY MARKET:
Money market is a place where we can raise short-term capital.
Again the money market is classified in to
Inter bank call money market
Bill market and
Bank loan market Etc.
E.g.; treasury bills, commercial papers, CD's etc.

40

CAPITAL MARKET:
Capital market is a place where we can raise long-term capital.
Again the capital market is classified in to 2 types and they are
Primary market and
Secondary market.
E.g.: Shares, Debentures, and Loans etc.
My emphasis is more on capital market.

PRIMARY MARKET

Primary market is generally referred to the market of new issues or market for mobilization of
resources by the companies and government undertakings, for new projects as also for
expansion, modernization, addition, and diversification and up gradation. Primary market is also
referred to as New Issue Market. Primary market operations include new issues of shares by new
and existing companies, further and right issues to existing shareholders, public offers, and issue
of debt instruments such as debentures, bonds, etc.
The primary market is regulated by the Securities and Exchange Board of India (SEBI a
government regulated authority).
FUNCTIONS:The main services of the primary market are origination, underwriting, and distribution.
Origination deals with the origin of the new issue. Underwriting contract make the shares
predictable and remove the element of uncertainty in the subscription. Distribution refers to the
sale of securities to the investors.

41

The following are the market intermediaries associated with the market:
1. Merchant banker/book building lead manager
2. Registrar and transfer agent
3. Underwriter/broker to the issue
4. Adviser to the issue
5. Banker to the issue
6. Depository
7. Depository participant

INVESTORS PROTECTION IN PRIMARY MARKETS:To ensure healthy growth of primary market, the investing public should be protected. The term
investor protection as a wider meaning in the primary market. The principal ingredients of
investors protection are
Provision of all the relevant information
Provision of accurate information and
Transparent allotment procedures without any bias.
SECONDARY MARKET:The primary market deals with the new issues of securities. Outstanding securities are traded in
the secondary market, which is commonly known as stock market or stock exchange. The
secondary market is a market where scrips are traded. It is a market place which provides
liquidity to the scrip issued in the primary market. Thus, the growth of secondary market depend
on the primary market. More the number of companies entering the primary market, the greater
is the volume of trade at the secondary market. Trading activities in the secondary market are
done through the recognized stock exchanges which are 23 in number including Over The
Counter Exchange of India, National Stock Exchange of India and Interconnected Stock
Exchange of India.

42

Secondary market operations involve buying and selling of securities on the stock
exchange through its members. The companies hitting the primary market are mandatorily
required to list their shares on one or more stock exchanges in India including stock exchanges.
Listing of scrips provides liquidity and offers an opportunity to the investors to buy or sell the
scrips.
The following intermediaries in the secondary market:
1. Broker/member of stock exchange buyers broker and sellers broker
2. Portfolio Manager
3. Investment advisor
4. Share transfer agent
5. Depository
6. Depository participants.

STOCK MARKETS IN INDIA

Stock exchanges are the perfect type of market for securities whether of government and semigovt bodies or other public bodies as also for shares and debentures issued by the joint-stock
companies. In the stock market, purchases and sales of shares are affected in conditions of free
competition. Government securities are traded outside the trading ring in the form of over the
counter sales or purchase. The bargains that are struck in the trading ring by the members of the
stock exchanges re at the fairest prices determined by the basic laws of supply and demand.

DEFINITION OF STOCK EXCHANGE:Stock exchange means any body or individuals whether incorporated or not, constituted
for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities.
The securities include:
1. Shares, scrip, stocks, bonds. Debentures stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate;
43

2. Government securities; and

3. Rights or interest in securities.

HISTORY OF STOCK EXCHANGE:The only stock exchanges operating in the 19 th century were those of Mumbai
setup in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non-profitmarking associations of brokers to regulate and protect their interests. Before the control on
securities under the constitution in 1950, it was a state subject and the Bombay securities
contracts (control) act of 1925 used to regulate trading in securities. Under this act, the Mumbai
stock exchange was recognized in 1927 and ahemedabad in 1937. During the war boom, a
number of stock exchanges were organized. Soon after it became a central subject, central
legislation was proposed and a committee headed by a.d.gorwala went into the bill for securities
regulation. On the basis of the basis of the committees recommendations and public discussion,
the securities contract (regulation) act became law in 1956.

FUNCTIONS OF STOCK EXCHANGE:Stock exchanges provide liquidity to the listed companies. By giving quotations to the
listed companies, they help trading and raise funds from the market, savings of investors flow
into public loans and to joint-stock enterprises because of this ready marketability and
unequalled facility for transfer of ownership of stocks, shares and securities provided by the
recognized stock exchanges as a result, over the hundred and twenty years during which the
stock exchanges have existed in this country and through their medium, the central and state
government have raised crores of rupees by floating public loans; municipal corporations,
improvement trust, local bodies and state finance corporations have obtained from the public
their financial requirements, and industry, trade an commerce- the backbone of the countrys
economy-have secured capital of
crores or rupees through the issue of stocks, shares and debentures for financing their day-to-day
activities, organizing new ventures and completing projects of expansion, diversification and
modernization. By obtaining the listing and trading facilities, public investment is increased and

44

companies were able to raise more funds. The quoted companies with wide public interest have
enjoyed some benefits and assets valuation has become easier for tax and other purposes.

VARIOUS STOCK EXCHANGES IN INDIA:At present there are 23 stock exchanges recognized under the securities contracts (regulation),
Act, 1956. Those are

Region
Northern
Region

Exchange
Ludhiana Stock Exchange

City
Ludhiana

Delhi Stock Exchange

Delhi

Jaipur Stock Exchange

Jaipur

U.P. Stock Exchange

Kanpur

Southern

Hyderabad Stock Exchange

Hyderabad

Region

Bangalore Stock Exchange

Bangalore

Mangalore Stock Exchange

Mangalore

Madras Stock Exchange

Chennai

Coimbatore Stock Exchange

Coimbatore

Cochin Stock Exchange

Cochin

Eastern

Calcutta Stock Exchange

Calcutta

Region

Gauhati Stock Exchange

Gauhati

Magadh Stock Exchange

Patna

45

Bhubaneswar Stock Exchange

Bhubaneswar

Western

Bombay Stock Exchange

Mumbai

Region

National Stock Exchange

Mumbai

OTCEI Stock Exchange

Mumbai

M.P. Stock Exchange

Indore

Pune Stock Exchange

Pune

Vadodara Stock Exchange

Vadodara

Saurashtra Stock Exchange

Rajkot

OUT OF THESE MAJOR STOCK EXCHANGES ARE:NSE

The Organization
The National Stock Exchange (NSE) of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations, NSE
was promoted by leading Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the
country.

46

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in
April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994. The Capital Market (Equities) segment commenced operations in November 1994 and
operations in Derivatives segment commenced in June 2000.

NSE's mission is setting the agenda for change in the securities markets in India. The NSE was
set-up with the main objectives of:

Establishing a nation-wide trading facility for equities, debt instruments and hybrids,

Ensuring equal access to investors all over the country through an appropriate
communication network,

Providing a fair, efficient and transparent securities market to investors using electronic
trading systems,

Enabling shorter settlement cycles and book entry settlements systems, and

Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology has become industry
benchmarks and is being emulated by other market participants. NSE is more than a mere market
facilitator. It's that force which is guiding the industry towards new horizons and greater
opportunities.
BSE

INTRODUCTION:

47

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 redresses 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 programmers 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 nine 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 (CEO)
& a Chief Operating Officer (COO).
The Executive Director as the Chief Executive Officer is responsible for the day-to-day
administration of the Exchange and the Chief Operating Officer and other Heads of Departments
assist him.
The Exchange has inserted new Rule No.126 A in its Rules, Byelaws pertaining to constitution of
the Executive Committee of the Exchange. Accordingly, an Executive Committee, consisting of
three elected directors, three SEBI nominees or public representatives, Executive Director &
CEO and Chief Operating Officer has been constituted. The Committee considers judicial &
quasi matters in which the Governing Board has powers as an Appellate Authority, matters
regarding annulment of transactions, admission, continuance and suspension of member-brokers,
declaration of a member-broker as defaulter, norms, procedures and other matters relating to
48

arbitration, fees, deposits, margins and other monies payable by the member-brokers to the
Exchange, etc.

REGULATORY FRAME WORK OF STOCK EXCHANGE:

The Securities Contract Regulation Act, 1956 and Securities Exchange Board of India 1952
provided a comprehensive legal framework. Three tier regulatory structure comprising
Ministry of finance
The Securities And Exchange Board of India
Governing body

MEMBERS OF STOCK EXCHANGE:The securities contract regulation act 1956 has provided uniform regulation for the admission of
members in the stock exchanges. The qualifications for becoming a member of a recognized
stock exchange are given below:
The minimum age prescribed for the members is 21 years.
He should be an Indian citizen.
He should be neither a bankrupt nor compound with the creditors.
He should not be convicted for fraud or dishonesty.
He should not be engaged in any other business connected with a company.
He should not be a defaulter of any other stock exchange.
The minimum required educational is a pass in 12th standard examination.
SECURITIES AND EXCHANGE BOARD OF INDIA {SEBI}
The securities and exchange board of India was constituted in 1998 under a resolution of
government of India. It was later made statutory body by the SEBI act 1992.according to this

49

act, the SEBI shall constitute of a chairman and five other members appointed by the central
government.
With thee coming into effect of the securities and exchange board of India act, 1992 some of the
powers and functions exercised by the central government, in respect of the regulation of stock
exchange were transferred to the SEBI.
OBJECTIVES AND FUNCTIONS OF SEBI
I. To protect the interest of investors in securities.
II. Regulating the business in stock exchanges and any other securities market.
III. Registering and regulating the working of intermediaries associated with securities
market as well as working of mutual funds.
IV. Promoting and regulating self-regulatory organizations.
V. Prohibiting insider trading in securities.
VI. Regulating substantial acquisition of shares and take over of companies.
VII. Performing such functions and exercising such powers under the provisions of
capital issues (control) act, 1947and the securities to it by the central government.

SEBI GUIDELINES TO SECONDARY MARKETS: (STOCK EXCHANGES):

1. Board of Directors of Stock Exchange has to be reconstituted so as include nonmembers, public representatives and government representatives to the extent of 50%
of total number of members.
2. Capital adequacy norms have been laid down for the members of various stock
exchanges depending upon their turnover of trade and other factors.
3. All recognized stock exchanges will have to inform about transactions within 24 hrs.
Types of order:
50

Buy and sell orders placed with members of the stock exchange by the investors. The orders are
of different types.
Limit orders: Orders are limited by a fixed price buy Reliance Petroleum at Rs.50.Here, the
orders has clearly indicated the price at which it has to be bought and the investor is not willing
to give more than Rs.50.
Best rate order: Here, the buyer or seller gives the freedom to the broker to execute the order at
the best possible rate quoted on the particular date for buying. It may be lowest rate for buying
and highest rate for selling.
Discretionary order: The investor gives the range of price for purchase and sale. The broker can
use his discretion to buy within the specified limit. Generally the approximation price is fixed.
The order stands as this buy BRC 100 shares around Rs.40.
Stop loss order: The orders are given to limit the loss due to unfavorable price movement in the
market. A particular limit is given for waiting. If the price falls below the limit, the broker is
authorized to sell the shares to prevent further loss. E.g., Sell ANDHRABANK at Rs.105 stops
loss at Rs.100.
Buying and selling shares: The to buy and sell the share the investor has to locate register
broker or sub broker who render prompt and efficient to service to him. The order to buy or sell
specified number of shares of the company of investors choice are placed with the broker. The
order may be of any of the above any mentioned type. After receiving the order the broker tries
to execute the order in his computer terminal. Once matching order is found, the order is
executed. The broker the delivers the contract note
To the investor. It gives the details regarding the name of the company, number of shares bought,
price, brokerage, and the date of delivery of share. In this physical trading form, once the broker
gets the share certificate through the clearing houses he delivers the share certificate along with
transfer deed to the investor. The investor has to fill the transfer deed and stamp it. The stamp
51

duty is one of the percentage considerations, the investor should lodge the share certificate and
transfer deed to the register or transfer agent of the company. If it is bought in the DEMAT form,
the broker has to give a matching instruction to his depository participant to transfer shares
bought to the investors account. The investor should be account holder in any of the depository
participant. In the case of sale of shares on receiving payment from the purchasing broker, the
broker effects the payment to the investor.
Share groups: The listed shares are divided into 3 categories:
Group A shares, B1 shares, B shares. The last 2 groups are referred to cleared securities or non
specified shares. The shares that come under the specified group can avail the carry forward
transaction. In A group, shares are selected on the basis of equity, market capitalization and
public holding. Further it should have good track record and dividend paying company. It should
have good growth potential too. The trading volumes and the investors base are high in A
group shares. Any company when it satisfies these criteria would be shifted from B group to A
group.
In the B1 group actively traded share are included. Carry forward transactions are not allowed in
this group. Settlement takes place through the clearinghouse along with the A group shares. The
settlement cycle and the procedure are identical to A group security. The rest of the company
shares listed from the B group.
Rolling settlement system:
Under rolling settlement system, the settlement takes place n days (usually 1, 2, 3 or 5days) after
the trading day. The shares bought and sold are paid in for n days after the trading day of the
particular transaction. Share settlement is likely to be completed much sooner after the
transaction than under the fixed settlement system.
The rolling settlement system is noted by T+N i.e. the settlement period is n days after the
trading day. A rolling period which offers a large number of days negates the advantages of the
system. Generally longer settlement periods are shortened gradually.
SEBI made RS compulsory for trading in 10 securities selected on the basis of the criteria
that they were in compulsory demat list and had daily turnover of about Re.1 crore or more. Then
it was extended to A stocks in Modified Carry Forward Scheme, Automated Lending and
52

Borrowing Mechanism (ALBM) and Borrowing and lending Securities Scheme (BELSS) with
effect from dec 31, 2001.
SEBI has introduced T+5 rolling settlement in equity market from July 2001 and subsequently
shortened the cycle to T+3 from April 2002. After the T+3 rolling settlement experience it was
further reduced to T+2 to reduce the risk in the market and to protect the interest of the investors
from 1st April 2003.
Activities on T+1: conformation of the institutional trades by the custodian is sent to the stock
exchange by 11.00 am. A provision of an exception window would be available for late
confirmation. The time limit and the additional changes for the exception window are dedicated
by the exchange.
The exchanges/clearing house/ clearing corporation would process and download the obligation
files to the brokers terminals late by 1.30 p.m on T+1. Depository participants accept the
instructions for pay in securities by investors in physical form up to 4 p.m and in electronic form
up to 6 p.m. the depositories accept from other DPs till 8p.m for same day processing.

T+2 activities: The depository permits the download of the paying in files of securities and
funds until 10.30 am on T+2 from the brokers pool accounts. The depository processes the pay
in requests and transfers the consolidated pay in files to clearing House/clearing Corporation by
11.00am/on T+2. The exchange/clearing house/clearing corporation executes the pay-out of
securities and funds latest by 1.30 p.m on T+2 to the depositories and clearing banks. In the
demat mode net basis settlement is allowed. The buy and sale positions in the same scrip can be
settled and net quantity has to be settled.

KEY FEATURES OF ONLINE TRADING WITH SHAREKHAN:

Freedom from paperwork.

53

Instant credit and money transfer.

Trade from any net enabled PC.

Online orders on the phone.

Timely advice and research reports.

Real-time Portfolio tracking.

After-hour orders.

TRADING PROCEDURE
OUTCRY SYSTEM
TRADING IN THE STOCK EXCHANGE:
-THE CONVENTION DAY
The broker has to buy or sell securities for which he has received the orders. For
this, the broker or his authorized representatives goes to the stock exchange. This method is
called the open outcry system. Basically the brokers shout while buying or selling the securities.
The floor of the stock exchange is divided into a number of markets also known as post pit or
wing based on particular securities dealt there.
In the post pit or wing, the broker using open outcry method makes an offer or bid price. For
making the necessary bargain, he quotes his purchase or sale price, also known as offer or bid
price. The dealer, to whom the price is quoted, quotes his own price when the quotation of the
dealer suits the broker, he may loose the bargain. If he is not satisfied with the quote price, he
may turn to some other dealer. On the close of the bargain, the dealer as well as the broker makes
a brief not of the particulars of the deal. Such notes are made on some pad and on it the number
of shares, the price agreed upon, the name of the party, what membership number etc., are noted.
54

DISADVANTAGES OF OUTCRY SYSTEM:

It lacks transparency.

The scope of manipulation, speculation and mal practice more.

The time gap between many of the trading operations used to be met quickly and easily.

Signal were more important in the outcry system any member who could not interpret the
buy/sell signal correctly often landed himself in disastrous situation.

In audibility was another disadvantage of the outcry system.

Due to the above disadvantages of the outcry system, the SHAREKHAN has shifter from outcry
system to online trading from February 29 1997.
MANUAL TRADING

TRADING PROCEDURE BEFORE INTRODUCTION OF ONLINE TRADING:Trading on stock exchanges is officially done in the trading ring. In the trading ring the space is
provided for specified and non-specified sections, the members and their authorized assistants
have to wear a badge or carry with them on identity card given by the exchange to enter the
trading ring. They carry a sauda book or confirmation memos, duly authorized by the exchange
and carry a pen with them. The stock exchanges operations are floor level are technical in
nature .Non-members are not permitted to enter in to stock market. Hence various stages have to
be completed in executing a transaction at a stock exchange .The steps involved in this method
of trading have given below:

CHOICE OF BROKER:The prospective investor who wants to buy shares or the investors, who wants to sell shares and
transact business, have to act through member brokers only. They can also appoint their bankers
for this purpose as per the present regulations.
55

PLACEMENT OF ORDER:The next step is the placing order for the purchase or sale of securities with a broker. The order is
usually placed by telegram, telephone, letter, fax etc or in person. To avoid delay, it is placed
generally over the phone. The orders may take any one of the forms such as At Best Orders,
Limit Order, Immediate or Cancel Order, Limited Discretionary Order, and Open Order, Stop
Loss Order.

EXECUTION OF ORDER OR CONTRACT:Orders are executed in the trading ring of the BSE. This works from 11:30 to 2.30 P.M on all
working days Monday to Friday, and a special one-hour session on Saturday. The members or the
authorized assistants have to wear a badge given by the exchange to enter into the trading ring.
They carry a suada Block Book or conformation memos, which are duly authorized by the
exchange when the deal is struck; both broker and jobber make a note in their suada block books.
From the suada book, the contract notes are drawn up and posted to the client. A contract note is
written agreement between the broker and his clients for the transaction executed.

DRAWING UP AND BILLS:Both sale and purchase bills are prepared along with the contract note and it is posted on the
same day or the next day. This in a purchase transaction, once the shares are delivered to the
client effects payment for the purchases and pays the stamp fees for transfer, a bill is made out
giving the total cost of purchase, including other expenses incurred by the broker in the price
itself. With this, the process ends.

56

DEMATERLIZATION:
Dematerialization is the process by which physical certificates of an investor are converted to an
equipment number of securities in electronic from and credited in the investor account with his
DP. In order to dematerialization his certifies an investor has to first open an account with a DP
and then request for the Dematerialization Request Form, which is DP and submit the same
along with the share certificates. The investor has to ensure that he marks Submitted for
Dematerialization on the certificates before the shares are handed over to the DP for demat.
Dematerialization can only be done to those certificates, which are already registered in your
name and belong to the list of securities admitted for Dematerialization at NSDL.
Most of the active scrips in the market including all the scrips of S&P CNXNIFTY and BSE
SENSEX have already joined NSDL. This list is steadily increasing.
Briefly, the process is as follows: after completion of transfer, the investor gets the option to
dematerialize such shares. Investors willing to exercise this option sends a Demat request along
with the option letter sent by the company to his DP. The company or its R&T agent would
confirm the Demat request on its receipt from the DP to reduce risk of loss in transit.
Dematerialized shares do not have any distinctive or certificate numbers. These shares are
fungible-which means that 100 shares of a security are the same as any other 100 shares of the
security. Odd lot shares certificates can also be dematerialized.

57

Dematerialization normally takes about fifteen to thirty days. To get back dematerialized
securities in the physical form, request DP for Rematerialization of the same is made.
Rematerialization is the process of converting electronic shares in to physical shares.
BENEFITS OF DEMAT:Transacting the depository has several advantages like

It reduces the risk of bad deliveries, in turn saving the cost and wastage of time associated with
follow up for rectification. This has lead to reduction in brokerage to the extent of 0.5% by quite
a few brokerage firms.

In case of transfer of electronic shares, you save 0.5% in stamp duty. You avoid the cost of
courier / notarization. The need for further follow-up with your broker for the
Shares returned for company objection.

You can receive your bonuses and rights issues into your DA as a direct credit, this eliminating
risk of loss in transit.

You can also expect a lower interest charge for loans taken against Demat shares as compared t
internet for loans against physical shares.

There is no lost in transit, thus the overheads of getting a duplicate copy in such circumstances is
reduced.

RBI has increased the limit of loans against dematerialized securities as collateral to Rs.1 per
borrower in case of loans against physical securities.

RBI has also reduced the minimum margin to 25% for loans against dematerialized securities as
against 50% for loans against physical securities.
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ONLINE TRADING
Before getting in to the online trading we should know some things about the internet, ecommerce and etc.

1. What is Internet?
Internet is a worldwide, self-governed network connecting several other smaller networks
and millions of computers and persons, to mega sources of information. This technology
shrinks vast distances, accelerating the pace of business reforms and revolutionizing the way
companies are managed. It allows direct, ubiquitous links to anyone anywhere and anytime
to build up interactive relationships.
A combination of time and space, called the Internet promises to bring unprecedented
changes in our lives and business. Internet or net is an inter-connection of computer
communication networks spanning the entire globe, crossing all geographical boundaries. It
has re-defined the methods of communication, work study, education, business, leisure,
health, trade, banking, commerce and what not it is virtually changing every thing and we are
living in dot.com age. Net being an interactive two way medium, through various websites,
59

enables participation by individuals in business to business and business to consumer

commerce, visit to shopping arcades, games, etc. in cyber space even the information can be
copied, downloaded and retransmitted.
The use of Internet has grown 2000 percent in last decade and is currently growing at 10
percent per month. In India, growth of Internet is of recent times. It is expected to bring
changes in every functional area of business activity including management and financial
services. In offers stock trading at a lower cost. Internet can change the nature and capacity
of stock broking business in India.

2. E-commerce
Electronic commerce is associated with buying and selling over computer communication
networks. It helps conduct traditional commerce through new way of transferring and
processing of information. Information is electronically transferred from computer to
computer in an automated way. E-commerce refers to the paperless exchange of business
information using electronic data inter change, electronic technologies. It not only automates
manual processes and paper transactions but also helps organization move to a fully
electronic environment and change the way they operated.

60

E-TRADING INTERFACE

61

INVESTOR
SATELLITE LINK

STOCK BR

DEPOSITORY

DEPOSITORY PARTICIPANT

STOCK

62

PCs and networking attempts to introduce banks of the tools and technologies
required for electronic commerce. The computers are either workstations of individual office
works or serves where large databases and information reside. Network connects both
categories of computers; the various operating systems are the most basis program within a
computer. It manages the resources of the computer system in a fair and efficient manner.
Now we can enter in to the concept known as online trading.
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 on line and net broking enables him to trade
on a click of mouse. Now information has become easily accessible to both retail as well as
big investor. Once investors learn to research on line, they will demand more market
information.
EVOLUTION OF BROKING IN INDIA:The evolution of a broking in India can be categorized in three phases
1. Stockbrokers will offer on their sites features such as live portfolio manager, live quotes,
market research and news, etc. to attract more investors.
2. Brokers will offer on line 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.
3. Brokers (now e-brokers) will offer value management or services like initial public
offering online, on-line asset allocation, portfolio management, financial planning, tax
planning, insurance services, etc. and enables the investors to take better and well
considered decisions.

63

The actual definition of Online Trading is as explained below:

Online trading is a service offered on the internet for purchase and sale of shares. In the real
world you place orders on your stockbroker either verbally (personally or telephonically) or in a
written form (fax). In online trading, you will access a stockbrokers website through your
internet enabled PC and place orders through the brokers internet based trading engine. These
orders are routed to the stock exchange without manual intervention an executed thereon in a
matter of a few seconds.
The net is used as a modem of trading in internet trading. Orders are communicated to the stock
exchange through website.
In India:
Internet trading started in India on 1st April 2000 with 79 members seeking permission for
online trading. The SEBI committees on internet based securities trading services has allowed
the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf
of their clients for execution of transaction. Under the ORS the client enters his requirements
(security, quantity, price buy/sell) on brokers site.
OBJECTIVES:Internet trading is expected to

Increase transparency in the markets,

Enhance market quality through improved liquidity, by increasing quote continuity and
market depth,

Reduce settlement risks due to open trades, by elimination of mismatches,

Provide management information system,

Introduce flexibility in system, so as to handle growing volumes easily and to support

nationwide expansion of market activity.

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Besides, through internet trading three fundamental objectives of securities regulation can be
easily achieved, these are:

Investor protection

Creation of a fair and efficient market, and

Reduction of the systematic risks.

Some of the brokers offering net trading include ICICI web trade, investment India, Geojit
securities, etc.
REQUIREMENTS FOR NET TRADING:

For investors:

1. Installation of a computer with required specification

2. Installation of a mode
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
The following should be produce to get a demat account and online trading account:
As identity, proof &address proof produce the following things:

Voter ID card

Driving license

PAN card( in case of to trade more than 50000)

Ration card

Bank pass book

65

Telephone bill

Other requirements, which are necessary

First page of the bank pass book and last 6 months statement.

Bank managers signature along with banks seal, manager registration code on
photograph.
For stock brokers:

1. Permission from stock exchange for net trading

2. Net worth of Rs. 50 lac
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website.
The net is used as a medium of trading in internet trading. Orders are communicated
to the stock exchange through website. Internet trading started in India on 1st April 2000 with 79
members seeking permission for online trading. The SEBI committees on internet based
securities trading services has allowed the net to be used as an Order Routing System (ORS)
through registered stock brokers on behalf of their clients for execution of transaction.
Under the Order Routing System the client enters his requirements (security, quantity, price, and
buy/sell) in broker's site. They are checked electronically against the clients account and routed
electronically to the appropriate exchange for execution by the broker. The client receives a
confirmation on execution of the order. The customer's portfolio and ledger accounts get updated
to reflect the transaction. The user should have the user id and password to enter into the
66

electronic ring. He should also have demat account and bank account. The system permits only a
registered client to log in using user id and password. Order can be placed using place order
window of the website.
PROCEDUR FOR NET TRADING:Step 1: Those investors, who are interested in doing the trading over internet system i.e. NEATIXS, should approach the brokers and get them self registered with the Stock Broker.
Step 2: After registration, the broker will provide to them a Login name, Password and personal
identification number (PIN).
Step 3: Actual placement of an order. An order can then be placed by using the place order
window as under:
(a) First by entering the symbol and series of stock and other parameters like quantity and price
of the scrip on the place order window.
(b) Second, fill in the symbol, series and the default quantity.
Step 4: It is the process of review. Thus, the investor has to review the order placed by clicking
the review option. He may also re-set to clear the values.
Step 5: After the review has been satisfactory, the order has to be sent by clicking on the send
option.
Step 6: the investor will receive an "Order Confirmation" message along with the order number
and the value of the order.
Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such
as invalid price limit, an appropriate message will appear at the bottom of the screen. At present,
a time lag of about 10 seconds is there in executing the trade.

67

Step 8: It is regarding charging payment, for which there are different mode. Some brokers will
take some advance payment room the investor and will fix their trading limits. When the trade is
executed, the broker will ask the investor for transfer of funds by the investor to his account.
Internet trading provides total transparency between a broker and an investor in the
secondary market. In the open outcry system, only the broker knew the actually transacted price.
Screen based trading provides more transparency. With online trading investors can see them
sleeves the price at which the deal take place.
The time gap has narrowed in every stage of operation. Confirmation and execution of trade
reaches the investor within the least possible time, mostly within 30 seconds. Instant feedback is
available about the execution. Some of the websites also offer;

New and research report

BSE and NSE movements

Stock analysis

Freebies

IPO and mutual fund centers and

Movements of interaction stock exchanges.

STEP BY STEP PROCEDURE IN ONLINE TRADING:Following steps explain the step by step approach to on-line trading:

Log on to the stock broker's website

Register as client/investor

Fill the application form and client broker agreement form on the requisite value stamp
paper

Obtain user ID and pass word

Log on to the broker's site using secure user ID and password

Market watch page will show real time on-line market data

Trade shares directly yourself by entering the symbol or number of the security

68

Brokers server will check your limit in the on-line accountant demat account for the
number of shares and execute the trade

Order is executed instantly (10-30 seconds) and confirmation can be obtained.

Confirmation is e-mailed to investor by broker

Contract note is printed and mailed in 24 hours

Settlement will take place automatically on the settlement day

Demat account and the bank account will get debited and credited by electronic means.

ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS:

Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this
leeway facility since one need to hold a price.
Market orders: orders can be filled at unexpected prices, but this type is much more
risky, since you have to buy stock at the given price.
Cash account: where funds have to be available prior to placing the order.
Margin account: where orders can be placed against stocks, to increase Purchasing
power.

ADVANTAGES OF ONLINE TRADING:

Online trading has made it possible for anyone to have easy and efficient access to more
reports and charts than it was previously possible if one went to any brokers' office. Thus,
we have access to a lot more information online to self teaches ourbrokerslves.

Online trading has let room for smaller organizations to compete with multinational
organizations since is no longer a legit issue. Being online does not identify the size of
any particular organization, therefore, this additional power to the underdogs.

Online trading has allowed companies to locate themselves where they want, as physical
location is not an issue anymore. Companies can establish themselves according to their
69

gains and losses, for instance where tax (sales and value added taxes) is best suited to
them.

Online trading gives control to individuals and they can exercise it over accounts thus
comprehend what is going on when they trade. It is like going back to school and reeducating oneself on how to trade online.

Individuals benefit by saving comparatively a lot more when trading online as the cost
per trade is less.

Individuals can invest in a variety of products, unlike earlier when people bought bonds,
mutual funds, and stock for long-term basis and sat on them. Now they can invest in
stocks, stock and index options mutual funds, individual, government, and even
insurance.

Online trading has made it possible for one fid investment options that were not available
on a regular basis like offbeat net stocks eccentric unique things and trading in global
market.

INVESTORS REASONS TO TRADE ONLINE:

They have control over their accounts can make their own decisions and dont have to
give reasons for their actions. They are independent.

They have a reason to participate in the market and learn about it.

It interesting, cheap, easy, fast, and convenient.

A lot of information is online so they can keep up-to-date with what is happening in
the trading world.

It is the interest of the small investors because rates will be available immediately
across the country execution will be immediately across the country and execution
will be immediate.

It will give investors a greater choice and better realization.

The immediate impact will be competition and benefits will accrue to the investors.

It will lead to brokerage commissions going down and brokers striving to increase
business afloat.
70

Investors will now go to place, which have better trading conditions and also
members to offer them better facilities.

They have access to numerous tools to invest, and can create their own portfolio.

HERE ARE THE POSSIBLE DISADVANTAGES:

When network crashes, there will be problems and delays due to a large influx of rapid
online trading criteria.

Individuals are restricted to first-hand financial guidance. This simply means that the
individual is himself / herself alone to.

A tax (sales tax and value added tax) evaluation becomes an issue, especially when you
are trading internationally.

Chances are that one has no idea who one is dealing with on the other end, so it is
advisable to gather all the possible information about the party one is dealing with. In
short, do the home work and be prepared.

Online trading has left individuals open to too much information. This is harmful since it
leaves brokerages wide open to sensitive data.

According to a study conducted by Mary Rowland, careful investor: is online trading bad
for your portfolio, the more one trades the less returns one gets, meaning that an addicted
trader gets, carried away online and begins to trade for too much which causes losses for
him / her.

The study also shows that smart investment is better than fast investment. Simply put
speed should be considered to be a major factor would lead any online trader to think
they know the market.

Individuals think that they are trading with the market directly and know what they are
doing, but the truth is that even through technology has taken over the basic rules of
trading are the same. It seems that the middleman has been removed, but that is not so.
When the individuals click on the mouse, his trade goes through a broker. The
commissions online pertain to the intermediary.
71

There is a need for more effective communication links over the Internet and the ability
of the server to deal with a large volume of visitors.

TRADING AND SETTLEMENT AT SHARE KHAN

The NSE first introduced online trading in India. The Online trading system imparted a greater
level of transparency and investors preferred exchanges that offered Online trading because of
the following factors:

The ease of operation from the view of the both members and the investors.

Increase in the confidence of the investors because at higher level of transparency.

Facilities better monitoring of the market by the exchange.

The best price achieved in buying and selling.

All these resulted in ever-increasing volumes on the exchanges offering the online trading.

TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING

Share Khan deals in buying and selling equity shares and debentures on the National
Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-Counter
Exchange of India (OTCEI).
Share Khan is provided with a computer and required software from their registered stock
exchanges. These centers are called Broker Work Stations. These computers are connected to
the server at the stock exchanges through cable.
The member or broker sitting in his office can send the quotations, orders, negotiations, deals, inhouse deals, auction orders etc., through the computer.
The central trading system (CTS) will accept these orders and send it for match.

72

If there is any mistake in the order, CTS will reject the orders and send respective error
message to the member concern. All these operations are in built. The main objective of CTS is
to monitor the Stock Exchanges operations.
Order placed by the broker will be sent for a match and if the match is found suitable, the
transaction will be executed. Otherwise, the order will be deleted automatically after completion
of trading time the carry forward transactions (Good Till cancellation) are forward to the next
day. Even if the match is not found with in the prescribed period, the order will not cancel.

TRADING SESSION
Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period. Monday to
Friday is the trading period in all the stock exchanges. SEBI has stipulated that all the stock
exchanges in India must have same trading period.
BROKER WORK STATION:
At the broker workstation the best BBOs the last traded price, the day s opening price, previous
days closing price, highest and lowest prices, the weighted average price, the total trade value
and total trade value will be available continuously, as the BBO for each scrip.
Other information will be available on query from the BWS. These include top gainers /losers of
the day. Trader-wise, scrip wise net position, client wise net position, top scrip by the
volume/value, market summary etc.
The BWS as a powerful profiling future which enables each trader to customize his/her screens
layouts as is convenient, profiles may be set at the BWS by the individual users, for the scrips
that he/she is interested in watching columns of information available, etc.
Brokers are also provided with information relating to the companies in the matter of Book
closure, Dividend declarations, resolutions in board meeting, information about liquidated
companies, company report etc.

73

Broker can visualize his personal details relating to trade done he can have scrip wise details,
sub-broker wise details, and client-wise details and can also take the point of daily volume
reports and adjustment reports.

ORDERS:
Orders can be done one at a time or in a batch mode.
The submitted order will be accepted at the CTS after validation if found any invalid reason the
order is return back to the BWS, with the appropriate error message. If
Accepted at the CTS it will be added to the local pending order book.
The order will then be taken up for matching if it is a buy order the system tries to find a sell
order, which fits the requirement of the buy order when such match is found a trade, gets
executed. Each trade involves two brokers and respective traders who sent the order. Both these
traders are informed of the trade being executed at their respective BWS.
At the BWS the trade is added to the local trade book, land the pending quantity decreased by the
trade quantity in the local pending order book.
Orders sent by the brokers are two types:

Good For the Day (GFD)

Good Till Cancellation(GTC)

Good for the Day:

74

This also called as market order. For an order if the member selects the deal as good for day,
the order is treated as market order. If a best bid founds match with best order then the
transaction executes. If the match is not found then after trade time the order is cancelled that
day. Next day he has to place a new order.
For example if a member wants to purchase 1000 shares of satyam info @ 400, each through
Good for Day order. If the correct match is not found, order is cancelled automatically and new
quotation has to be placed the next day.
Good till Cancellation:
This order is forwarded to the last trading day of that settlement period. This is also called as
carry forward order like GFT; broker has to select the option of GTC for the order. If the order
finds match with in the trading settlement period, the order is executed. If no match is found, the
order is cancelled on the last day of settlement period. This order is not carried forward to the
next settlement period.
For example, if a member places a purchase order of 500 shares of SBI @ 690 per share, selects
the order as GTC, and places an order. If the match is not found on that day it will be forwarded
to the next day until trading settlement period day.
SETTLEMENT OF TRANSACTIONS:
Clearing of transaction in the form of shares and cash is called settlement, which was held in
clearing house of stock exchange (for example, SHAREKHAN is a clearance house is member
in NSDL (National Securities Depository Limited). Buyers will take the delivery of shares
through the Depository Participants (DPS) like SHARE KHAN and others. Finally, the
settlement is made by means of delivering the share certificates along with the transfer deeds.
The transferor (or the seller) duly signed transfer deed. It bears a stamp of the selling broker. The
buyer then fills up the certificates fills up the particulars in the transfer deed. Settlement can be
done in the following way.

75

 Spot settlement: under this method, the delivery of securities and payment for them are affected
on the day of the contract itself.
Rolling settlement: Under this rolling settlement the trading is on T+2,basis i.e. if Monday is
trading day then Wednesday is the paying day . In case on non-delivery, the securities will go for
auction.

DETAILS OF PROCEDURES:
Delivery in : The members who is in PAY-OUT position delivers share certificates in to clearing
house with in the settlement period along with the delivery Chelan filled in with the details of
share certificates which has folio numbers or distinctive numbers etc.
Delivery out: The buyer of shares who made pay in position will take delivery of shares from
the clearinghouse.
Pay-in: The member who is in paying position shall pay for value of shares with in the trading
settlement period (T+2).
Payout: The cheques paid in the clearinghouse will be paid members who are in paying position.
All disputes arising between members regarding non-deliveries, non-payments, good and bad
deliveries pertaining to the settlement will be here by Share Khan and settled by the settlement
committee of the exchange.
BROKERAGE STRUCTURE AT SHAREKHAN
Trading

- 0.1 %( on each side)

Delivery - 0.5%
76

Exposure - 4 times of deposit

Sharekhan provides offline trading too. For this sharekhan is providing a toll-free number i.e. 1600-22-7500.

The given flow chart clearly explains the process of online trading:

77

L o g in

S e ll t r a n s c a t io n

B u y t r a n s c a t io n

T h e s y s te m w ill c h e c k y o u r
d p a c c o u n t q u a n tity

T h e s y s te m w ill c h e c k b u y in g
lim its

O rd e rs a c c e p te d

R e je c t e d o r d e r s w o u l d b e
c o m m u n i c a t e d a lo n g w it h r e a s o n s

o rd e rs a c c e p te d

y o u r o r d e r is t r a n s m it t e d t o e x c h a n g e f o r e x e c u t io n

p e n d in g b u y o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c ree n

y o u m a y e d it y o u r
p e n d in g o r d e r

y o u m a y d e le t e
y o u r p e n d in g o r d e r

f la s h e d o n y o u r
s c r e e n im m e d ia t e ly
o n e x e c u t io n

o n e x e c u t io n
o f y o u r o rd e rs

y o u m a y e d it y o u r
p e n d in g o r d e r

c o n f o r m a t io n c o u l
d b e s e n d to y o u r
e - m a il a n d m o b ile

p e n d in g s e ll o r d e r s
w o u ld b e d is p la y e d
o n y o u r s c re e n

y o u m a y d e le t e y o u r
p e n d in g o r d e r

c o n t r a c t n o t e w o u ld
b e s e n t t o b y m a il
o r h a n d d e liv e r y

THE WINDOW WHICH DISPLYAS IS BUYING SHARES ONLINE THROUGH

SHAREKHAN.COM
78

THE WINDOW WHICH DISPLYAS IS SELLING SHARES ONLINE THROUGH

SHAREKHAN.COM

79

SURVEILLANCE:
Surveillance can be done during the continuous trading session for monitoring the
broker scrip and the market, this is referred to as online may be used for analysis. Analysis and
monitoring reports that can generate. For the continuous trading session the surveillance
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workstation user can set up a member of alerts any scrip broker or index the workstation profile
will be automatically reported to the user.
The market event list will be available to the BWS user. During the continuous
trading session details of the scrip broker or index that pass the alert or violate their circuit
breakers are displayed on message window. There are three messages windows i.e., one for each
scrip and index, different colors indicate the importance and BWS user is modified when BWS
user is denied access to the system a number of are available for the SWS user.

PROBLEM AREAS:
When internet trading was first launched in Feb. 2000, the stock markets were experiencing an
unprecedented boom and it held out a lot of promise. However, two years down the line we find
the system as failed to deliver up to its potential. The main reasons for declining volume of
trading are:
Bearish market:
The poor performance in the on line market segment can be attributed to lack of Bull Run in the
stock market. This is the reason for which the overall trading as come down. Almost ever since
internet trading has started the markets have remained bearish. This relationship between the
mood of the market and the internet in trading indeed gets reflected in the volumes.

Poor penetration of the internet:

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Besides the bearishness in the equity market, another reason for low acceptance of net trading
could be poor penetration of the internet. In India it is a fact that internet has not been able to
spread its tentacles in rural areas and small towns.
The very basis of net trading is based on two factors:
1. An equity market in good shape.
2. Deep penetration of the internet.
Poor internet connectivity:
In the Indian context, the quality of internet connections also comes into play for determining the
reasons for the lack in response. Here, we have connectivity problems and there are instances of
clients panicking, as they could not execute their trades. Many times at particularly at places
other than Mumbai, sudden stoppage of electricity results in disconnection.
Long supply chain:
In case of conventional or offline, trading the chain is small as the clients directly interact with
the brokers. However, in case of internet trading the chain is quite long as it involves a client, an
internet service provider, server, stock exchange, depositor and a broker and a problem can rise
up at any stage of the chain, breaking down the entire system.
A Costly Affair:
Other than the technological hassles, there is an element of cost as well. For active traders, doing
online trading he has to remain connected all the time and the cost of connecting through dial up
can work out to Rs 3500 per month which is over and above the brokerage and other service
charges. This is the reason offering online trading facility

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Allows the clients to use the conventional system as well in order to retain them. A part from a
dealing room, most broking houses have a separate room for the clients. Where the stock
exchanges terminals are kept for their use.
Low Investor Confidence:
Investor confidence in the country has been badly hurt due to the escalating IndoPak tensions.
This sentiment has got reflected in the stock markets, which have gone down. The global
recession has also dampened the mood of the stock market. Although, the US economy is
showing signs of recovery, but any tangible outcome is yet to be felt.

DATA COLLECTION:PRIMARY DATA as the decision of the investor keeps on changing from time to time.
Collection of primary data is reliable as it avoids self report bias and cannot record what cannot
be said.
Due to time and financial constraint Marketing Research is done through Sampling. Sample
offers various benefits as:
1) It saves time.
2) It helps in cutting expense.
SECONDARY SOURCES The data had been collected through Books, Journals and Websites.

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SAMPLE DESIGN
POPULATION: 100 people
SAMPLE SIZE: The sample size is 60 persons.

Sampling Method:Judgment sampling and Convenience Sampling Technique

Judgment sampling is mainly done on the basis of the knowledge of the respondent about stock
market and Convenience Sampling is the technique in which the researcher just simply picks up
the respondents on the basis of their availability.

Methods of Data Collection:Instrument for data collection:

The study to be conducted is about the Derivative Market in Shakarpur, NirmaanVihar and
Laxmi Nagar and members of Share Khan so the method of data collection used is SURVEY
METHOD with the help of Questionnaire.
Drafting of a questionnaire :
To frame questionnaire or schedule, we have at first to decide regarding various questions to be
incorporated. This decision of the selection of questions depends upon the purpose of enquiry. In
this regard, precaution should be adopted to avoid irrelevant or unnecessary questions.

LIMITATIONS
1) For performing these king of research large data base is required. The data collected for this
study is not sufficient to analyze the investment pattern of retail investors in India.
2) There may be many variables which influences the result but this analysis reveals only few
variables.
3) There can be some deviations in the data as the human psychology changes from time to time.
4) The feedback we got may not be correct as the respondent might have filled in the information
with no interest or in hurry.
5) Scientific research on the part of research is also required.
84

6) Accuracy level may be effected when data is subjected to weighing.

7) Time was the biggest constraint as these studies cannot be completed with accuracy in two
month.
8) Understanding the psychology of human is not the cup of every one tea so, might be some
interpretations go wrong.
9) Some respondents might have taken the question in different sense which can change the data
collected.
10) Cost was also the constraint as collection of Primary data required huge amount of spending.

85

86

1. To understand the risk profile of investors

Q1.

What do you expect when you invest ?

CHART-1

RISK
45
40
35
30
25
20
15
Axis Title 10
5
0

Interpretation:- This chart-1 shows, out of 96 respondents 40 people are ready to bear nominal
risk and 36 people dont want to take any risk. This shows that around 79% respondents are
conservative in terms of taking risk and only 21% respondents are ready to bear risk and out of
these 21 % only 3% are ready for high risk situation.

87

Q2

. How long do you normally hold investment?

CHART -2

TIME PERIOD
35
30
25
20
15
Axis Title 10
5
0

Interpretation:- As per Chart-2,most of the respondents invest for a longer time period i.e.
around 32% and rest of the respondents have very less variability regarding holding of
investment as all other respondents are equally interested in daily, weekly or monthly holding of
investment i.e. around 20% go for each kind of investment holding.

88

Q3.
will

If your investments were to fall in value by 15 per cent over a one-year period, you

Chart -3

INVESTMENT FALL BY 15%

30
25
20
Axis Title

15
10
5
0
WITHDRAW ALL MONEY FROM SHARE MARKET

.
Interpretation:- Chart-3 is giving the overview regarding respondents reaction related to their
investment, if market falls in value. We can see here the respondents /investors are neither very
conservative nor aggressive in market condition i.e. only 15% investors are willing to withdraw
all money or invest more money in such situation. Most of the respondents are aware & ready for
such condition. They want to be in the market in expectation of money of market.

89

Q4. You are ready for limited losses in expectation of higher long-term returns?
Chart-4

LIMITED LOSSES IN EXPECTATION OF HIGHER RETURNS

40
35
30
25
20
15
10
5
0
Axis Title

Interpretation:- Chart-4 is about that whether investors are ready to bear limited loss in
expectation of high returns we find that only around 30% investors are not agree for this but
around 70% are considering the idea i.e. most of the respondents are aware about the ups &
downs of stock market & ready for risks involved in it in expectation of getting higher returns.

90

Q.5. I am willing to experience the ups and downs of the market for the potential of
greater returns.
Chart-5

EXPERIENCE UPS AND DOWNS OF MARKET

45
40
35
30
25
20
15
10
5
0
Axis Title

Interpretation:- Chart-5 is about that whether investors are ready to experience ups and downs
of market we find that only around 16% investors are not agree for this but around 84% are
considering the idea i.e. most of the respondents are aware about the ups & downs of stock
market & want to experience that.

91

Q6. My main concern is security; keeping money safe is more important than earning
high returns.
Chart-6

MAIN CONCERN IS SAFETY

40
35
30
25
20
15
10
5
0
Axis Title

Interpretation:- This chart -6 shows the investors are aware about the highs and lows of security
market and want to experience that also they are quite positive towards market as they expect
after a low market will recover & give them higher return still the safety is major concern of
investors. Out of total 96 respondents only less than 10% disagree with the fact.

92

Q7. I am fairly experienced in investment.

Chart-7

FAIRLY EXPERIENCED IN INVESTMENT

50
45
40
35
30
25
20
15
10
5
0
Axis Title

INTERPRETATION:- As we can see in the chart-7, most of the respondents i.e. around 50%
are not sure about their investment capabilities. They are not very sure that their expectation of
decision is fair enough. Here I want to mention that the market is so volatile in India that very
less investors find themselves fairly enough experienced & dont bear losses.

93

Q8. I am very secure related to my future income (such as from salary, pension or other
investments)?
Chart-8

SECURE RELATED TO FUTURE INCOME

60
50
40
30
20
10
0
Axis Title

Interpretation:- Chart-8 shows that most of people involve in security market are quite secured
related to their future income. We can also understand the statement that the people who have
fair enough income resources, comes in security investment as they consider all the pros. & cons.
Of the market they know that the market is good place to get better returns but it also contain risk
so losses bearable only in the case of secured future returns.

94

2. To study risk bearing capacity on the basis of gender, education, occupation,

age, family income and number of dependents
To fulfill this objective I used cross tabs & chi-square test
The results are compiled in a sheet which shows the significance value & chi- square values of
all the cross tabs. Here I am providing 2 null hypothesis & 2 alternative hypothesis conditions as
sample.

Sample- Null Hypothesis

Gender in respect of expectation from an investment
X1 * X9 Crosstabulation
Count
X9
NO RISK

NOMINAL RISK

Total
MODERATE

HIGHER RISK

RISK
X1

MALE
FEMALE

Total

27

29

13

71

11

25

36

40

18

96

Chi-Square Tests
Value

Df

Asymp. Sig. (2-sided)

Pearson Chi-Square

.797a

.850

Likelihood Ratio

1.299

.729

.011

.917

Linear-by-Linear Association
N of Valid Cases

96

a. 3 cells (37.5%) have expected count less than 5. The minimum expected count is .52.

Interpretation: - As the chi-square shows the value of P is higher than .05, we will accept null
hypothesis i.e. there is no significant relationship in between the expectation from investment
with change in gender. Males and females are equally risk averse & conservative related to
taking risk in stock market.

95

Gender in respect of holding time of investment

X1 * X10 Crosstabulation
Count
X10
DAY
X1

MALE
FEMALE

Total

WEEK

Total
MONTH

YEAR

15

19

13

24

71

25

22

25

18

31

96

Chi-Square Tests
Value

Df

Asymp. Sig. (2-sided)

.656a

.883

Likelihood Ratio

.647

.886

Linear-by-Linear Association

.384

.536

Pearson Chi-Square

N of Valid Cases

96

a. 1 cells (12.5%) have expected count less than 5. The minimum expected count is 4.69.

Interpretation :- As the chi-square shows the value of P is higher than .05, we will accept null
hypothesis i.e. there is no significant relationship in between the investment holding with change
in gender. Males and females are equally risk averse & conservative in holding the investment.

96

Sample- Alternate Hypothesis

Family income in respect of risk bearing capacity

X7 * X9 Crosstabulation
Count
X9

X7

Total

NO

NOMINAL

MODERATE

HIGHER

RISK

RISK

RISK

RISK

< 5LAKH

21

17

43

5-15 LAKH

15

23

10

49

36

40

18

96

15-25
LAKH
Total

Chi-Square Tests
Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

df

Asymp. Sig. (2-sided)

21.932a

.001

18.359

.005

9.013

.003

96

a. 6 cells (50.0%) have expected count less than 5. The minimum expected count is .08.

Interpretation :-As the chi-square shows the value of P is higher than .05, we will accept
alternative hypothesis i.e. there is a significant relationship in between the expectation from
investment with change in family income. Investors are balanced & aggressive related to taking
risk in stock market.

97

X4 * X10 Crosstabulation
Count
X10
DAY
X4

UNDER GRADUATE

WEEK

Total
MONTH

YEAR

10

15

14

15

17

51

POST GRADUATE

26

PH.D.

22

25

18

31

96

GRADUATE

Total

Education in respect of holding time period for investment

Chi-Square Tests
Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

Df

Asymp. Sig. (2-sided)

20.330a

.016

22.004

.009

6.992

.008

96

a. 9 cells (56.3%) have expected count less than 5. The minimum expected count is .75.

Interpretation :- As the chi-square shows the value of P is higher than .05, we will accept null
hypothesis i.e. there is a significant relationship in between the investment holding with change
in education. Investors are risk averse & conservative related to holding the investment.
As from the above crosstabs the table- 1 is drawn in reference with the chi- square values and the
significance values on different parameters and fills the box with yellow color who gives the best
alternative hypothesis value. Then after interpret that value which is come under that yellow box
and show their cross tabs.

98

TABLE-1
S.No
.

QUESTIONS

GENDER

OCCUPATION

AGE

EDUCATION

Pearson
chi-square

Significa
nce

Pearson
chisquare

Signific
ance

Pearson
chisquare

signifi
cance

Pearson
chisquare

Significance

What do you expect

when you invest?

0.797

0.85

9.13
1

0.42
5

8.871

0.44
9

8.854

0.451

How long do you

normally hold
investments?

0.656

0.883

5.66
9

0.77
3

4.203

0.89
8

20.33
0

0.016

If your investments
were to fall in value by
15 per cent over a oneyear period, you will

6.934

0.139

13.7
07

0.32

16.94
3

0.15
2

11.25
3

0.507

You are ready

for limited losses in
expectation of higher
long-term returns?

6.266

0.18

17.3
61

0.13
7

9.682

0.64
4

28.13
3

0.005

I am willing to
experience the ups and
downs of the market
for the potential of
greater returns.

3.639

0.457

7.38
9

0.83
1

14.93
4

0.24
5

10.85
5

0.541

My main concern is
security; keeping
money safe is more
important than earning
high returns.
I am fairly experienced
in investment.

2.453

0.653

13.0
83

0.36
3

9.164

0.68
9

9.537

0.657

0.570

0.966

2.561

0.634

0.78
5
0.69
5

16.54 0.16
7
7
5.942 0.9
19

11.66
5
3.830

0.473

I am very secure
related to my
future income (such as
from salary, pension or
other investments)?

7.99
7
9.09
2

7
8

S.No
.

QUESTIONS

What do you expect

when you invest?

INCOME

No. of
dependents
in Family

FAMILY
INCOME

0.986

PERCENTAGE
OF TOTAL
INVESTMENT

Pearson
chi-square

Significa
nce

Pearson
chisquare

Signific
ance

Pearson
chisquare

signifi
cance

Pearson
chisquare

Significance

12.718

0.176

10.8
80

0.53
9

21.93
2

0.0
01

11.36
0

0.078

99

7.112

0.625

10.0
15

0.61
5

5.675

0.46
1

10.96
6

0.089

If your investments
were to fall in value by
15 per cent over a oneyear period, you will

11.086

0.522

12.4
48

0.71
3

7.197

0.51
6

7.471

0.487

You are ready

for limited losses in
expectation of higher
long-term returns?

21.667 0.041

26.9
48

0.04
2

21.37
1

0.0
06

15.92
0

0.044

I am willing to
experience the ups and
downs of the market
for the potential of
greater returns.

9.029

0.7

16.9
15

0.39
1

5.955

0.65
2

2.999

0.934

My main concern is
security; keeping
money safe is more
important than earning
high returns.
I am fairly experienced
in investment.

10.156

0.602

23.0
13

0.11
3

4.279

0.83
1

10.89
9

0.207

9.603

0.651

0.529

0.814

0.67
9
6.356 0.6
07

7.066

7.621

0.12
5
0.14
1

5.714

I am very secure
related to my
future income (such as
from salary, pension or
other investments)?

22.6
05
22.0
73

3.412

0.906

How long do you

normally hold
investments?

7
8

100

Expectation of risk from an investment

From the Table-1 we can see that the all respondents views are indifferent in terms of
expectation of risk from investment irrespective of their gender, occupation, age, education,
income, No. of dependent in the family and the percentage of total income they invest as most of
the respondents wish to tale either no risk or nominal risk. This defines the conservatism related
to risk profile of the respondents. But on the basis of Family income it shows a significant
relationship as p-value is less than .05, which suggests accepting alternate hypothesis. The
relationship is defined as follows:
Table-2
Family income in respect of expectation of risk from an investment
X7 * X9 Crosstabulation
Count
X9

X7

Total

NO

NOMINAL

MODERATE

HIGHER

RISK

RISK

RISK

RISK

< 5LAKH

21

17

43

5-15 LAKH

15

23

10

49

36

40

18

96

15-25
LAKH
Total

Family income in respect of expectation of risk

NO RISK

NOMINAL RISK

MODERATE RISK

HIGHER RISK
100%

49%

47%

40%

31%
9%

< 5LAKH

20%

2%

2%
5-15 LAKH

0%15-25
0% LAKH0%

101

Chi-Square Tests
Value

Df

Asymp. Sig.
(2-sided)

.001

Likelihood Ratio

18.359

.005

Linear-by-Linear

9.013

.003

Pearson Chi-Square

21.932

Association
N of Valid Cases

96

a. 6 cells (50.0%) have expected count less than 5. The minimum

expected count is .08.

Symmetric Measures
Value

Approx.
Sig.

Nominal by Nominal

N of Valid Cases

Phi

.478

.001

Cramer's V

.338

.001

96

Here from Table -2, it is clear that all the respondents belong to the family income group of < 5
Lakh and 5-15 Lakh are willing to take only nominal or no risk. In this situation as the income
level increases the risk taking ability is shifted towards the bearing the more risk.
This chart shows that most of the respondents lie in the income level group of <5 lakh want to go
for no risk situation but as the income level increases to 5-15 lakh people get shifted from no risk
to nominal risk situation. In the chart it is shown that out of 43 respondents who lies between the
income level group of<5lakh around 50% respondents do not want any risk in their investments.
are go for no risk and only 2% are going for high risk investments. Out of 49 respondents who
lies in between income group of 5-15 lakh 46% are go for moderate risk ,30% are for no risk . So
it defines that there is direct relationship between income and risk bearing capacity of persons.
People belong to the income group of 15-25 Lakh as are more towards taking moderate risk. But
the strength of relationship is very low as the value of Cramers V is .338.

102

Investment holding
From the Table-1 we can see that the all respondents views are indifferent in terms of
expectation of risk from investment irrespective of their gender, occupation, age, education,
income, No. of dependent in the family and the percentage of total income they invest as most of
the respondents wish to hold investments either for a week or for a year. This defines the
conservatism related to risk profile of the respondents. But on the basis of Education it shows a
significant relationship as p-value is less than .05, which suggests accepting alternate hypothesis.
The relationship is defined as follows:
Table-3
Education in respect of their investment holding
X4 * X10 Crosstabulation
Count
X10
DAY
X4

UNDER GRADUATE

MONTH

YEAR

10

15

14

15

17

51

POST GRADUATE

26

PH.D.

22

25

18

31

96

GRADUATE

Total

WEEK

Total

103

Education in respect of investment holdings

80%
67%

70%
60%
50%
40%

27%29%

30%

7% 7%

MONTH

27%
23%

25%

YEAR

25%

15%

10%

0%
UNDER GRADUATE

WEEK

35%

33%

20%

20%
10%

DAY

50%

GRADUATE

PH.D. 0%

POST GRADUATE
Chi-Square Tests
Value

Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

Df

Asymp. Sig. (2-sided)

20.330a

.016

22.004

.009

6.992

.008

96

a. 9 cells (56.3%) have expected count less than 5. The minimum expected count is .75.

Symmetric Measures
Value
Nominal by Nominal

N of Valid Cases

Approx. Sig.

Phi

.460

.016

Cramer's V

.266

.016

96

Here from Table -3, it is clear that all the respondents belong to the education group of graduates
are willing to hold investments for a week or for a year.
This chart shows that most of the respondents lie in the education level group of graduate wants
to go for week or a year trading but as the education level increases to post graduates people get
diversify their investment holding period. In the chart it is shown that out of 51 respondents who
lies between the education level group of graduates around 33% respondents go for a year based
investment holding. And only 7% are going for a day investment holding. Out of 26 respondents
who lies in between education group of post graduates 35% are go for month investment holding,
15% are for year investment holding. So it defines that there is direct relationship between
education and investment holding tenure.
104

People belong to the education group of graduates are more towards the holding investment for a
week or a year . But the strength of relationship is very low as the value of Cramers V is .266.

105

Limited losses in expectation of higher long term returns

From the Table-1 we can see that the all respondents views are indifferent in terms of bearing
limited losses in the expectation of higher long term returns irrespective of their gender,
occupation, age, education, income, No. of dependent in the family and the percentage of total
income they invest as most of the respondents wish to tale either agree or neither agree or
disagree in respect of bearing losses in expectation of higher long term returns. This defines the
balanced approach related to risk profile of the respondents. But on the basis of Education it
shows a significant relationship as p-value is less than .05, which suggests accepting alternate
hypothesis. The relationship is defined as follows:
Table-4 ( Education in respect of bearing limited losses in expectation of higher long term
returns)
X4 * X12 Crosstabulation
Count
X12

Total

STRONGLY

DISAGRE

NEITHER

AGREE

DISAGREE

AGREE NOR

STRONGLY
AGREE

DISAGREE
X4

UNDER

15

GRADUATE

17

17

51

POST GRADUATE

15

26

PH.D.

14

16

24

36

96

GRADUATE

Total

106

80%

75%

70%
58%

60%
50%

47%

40%
33%33% AGREE NOR DISAGREE
STRONGLY DISAGREE
DISAGREE
NEITHER
AGREE
STRONGLY AGREE
30%
25%
20%
16%16%
15%
20%
13% 13%
12%
12%
7%
10%
4%
2%
0%
0% 0%PH.D. 0%
UNDER GRADUATE
GRADUATE
POST GRADUATE

80%

75%

70%
58%

60%
50%

47%

40%
33%33% AGREE NOR DISAGREE
STRONGLY DISAGREE
DISAGREE
NEITHER
AGREE
STRONGLY AGREE
30%
25%
20%
16%16%
15%
20%
13% 13%
12%
12%
7%
10%
4%
2%
0%
0% 0%PH.D. 0%
UNDER GRADUATE
GRADUATE
POST GRADUATE

Chi-Square Tests
Value

df

Asymp. Sig.
(2-sided)

12

.005

Likelihood Ratio

29.565

12

.003

Linear-by-Linear

10.020

.002

Pearson Chi-Square

28.133

Association
N of Valid Cases

96

a. 13 cells (65.0%) have expected count less than 5. The minimum

expected count is .25.

107

Symmetric Measures
Value

Approx.
Sig.

Nominal by Nominal

N of Valid Cases

Phi

.541

.005

Cramer's V

.313

.005

96

Here from Table -4, it is clear that all the respondents belong to the education group of
graduate are willing to take limited losses in expectation of higher returns.
This chart shows that most of the respondents lie in the education level group of graduate and
under graduates wants to bear limited losses in expectation of higher returns but as the education
level decreases to under graduates people is more concern about bearing limited losses in
expectation of higher returns. In the chart it is shown that out of 51 respondents who lies between
the education level group of graduates around 33% respondents are agree with bearing limited
losses in expectation of higher returns . And only 13% are not agree with it. Out of 26
respondents who lies in between education group of post graduates 58% are agree, 12% are
strongly agree with it. So it defines that there is direct relationship between education and
bearing limited losses in expectation of higher returns.
People belong to the education group of graduates as are more towards in taking the limited
losses in expectation of higher returns. But the strength of relationship is very low as the value of
Cramers V is .313.

108

Income in respect of limited losses in expectation of higher long term

returns
From the Table-1 we can see that the all respondents views are indifferent in terms of bearing
limited losses in the expectation of higher long term returns irrespective of their gender,
occupation, age, education, income, No. of dependent in the family and the percentage of total
income they invest as most of the respondents wish to tale either agree or neither agree or
disagree in respect of bearing losses in expectation of higher long term returns. This defines the
balanced approach related to risk profile of the respondents. But on the basis of income it shows
a significant relationship as p-value is less than .05, which suggests accepting alternate
hypothesis. The relationship is defined as follows:
Table -5
Income in respect of limited losses in expectation of higher long term returns
X5 * X12 Crosstabulation
Count
X12

Total

STRONGLY

DISAGRE

NEITHER

AGREE

DISAGREE

AGREE NOR

STRONGLY
AGREE

DISAGREE
X5

< 3 LAKH

10

13

36

3-5 LAKH

10

13

41

5-10 LAKH

10

18

10-20

14

16

24

36

96

LAKH
Total

120%
100%

100%
80%
60%
STRONGLY DISAGREE
40%
20%

DISAGREE

36%
28%
19%
11%
6%

56%
NEITHER AGREE NOR DISAGREE

32%
22%24%
17%

17%

< 3 LAKH

3-5 LAKH

STRONGLY AGREE

22%
6%

5%

0%

AGREE

0% LAKH
5-10

0%10-20
0% 0%
0%
LAKH

Chi-Square Tests

109

Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association

Df

Asymp. Sig. (2-sided)

21.667a

12

.041

14.983

12

.242

.978

.323

N of Valid Cases

96

a. 11 cells (55.0%) have expected count less than 5. The minimum expected count is .06.

Symmetric Measures
Value

Approx.
Sig.

Nominal by Nominal

N of Valid Cases

Phi

.475

.041

Cramer's V

.274

.041

96

Here from Table -5, it is clear that all the respondents belong to the income group of <3 lakh
and 3-5 lakh are willing to take limited losses in expectation of higher returns.

This chart shows that most of the respondents lie in the income level group of <3 lakh are agree
for taking limited losses in expectation of higher returns but as the income level increases to 1020 lakh more people get shifted towards agree for taking limited losses in expectation of higher
returns. In the chart it is shown that out of 41 respondents who lies between the income level
group of 3-5lakh around 32% respondents are agree in taking limited losses in expectation of
higher returns. and only 2% are strongly agree with it.But if the income increases to 10-20 lakh
most of the persons are move towards strongly agree situation. So it defines that there is direct
relationship between income and limited losses in expectation of higher returns.
People belong to the income group of <3 lakh and 3-5 lakh as are more towards in taking the
limited losses in expectation of higher returns. But the strength of relationship is very low as the
value of Cramers V is .274.

110

TABLE-6
(No. of dependents in family in respectof limited losses in expectation of
higher long term returns)
X6 * X12 Crosstabulation
Count
X12

Total

STRONGLY

DISAGRE

NEITHER

AGREE

DISAGREE

AGREE NOR

STRONGLY
AGREE

DISAGREE
X6

NO

1-2

13

3-4

18

19

51

5-7

11

24

>7

14

16

24

36

96

DEPENDENT

Total

80%
70%

67%
60%

60%
50%

46%

40%
STRONGLY DISAGREE

38%
37%
35%NOR DISAGREE
DISAGREE NEITHER AGREE

AGREE STRONGLY33%
AGREE

30%
20%

20%

20%

8%

10%
0%

23% 23%

8%

21%
17%
13%

14%
10%

4%

4%
0%0%
NO DEPENDENT

1 to2

3 to4

5 to7

0%

0%
>70%

111

Chi-Square Tests
Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

Df

Asymp. Sig. (2-sided)

26.948a

16

.042

25.934

16

.055

.233

.629

96

a. 19 cells (76.0%) have expected count less than 5. The minimum expected count is .19.

Symmetric Measures
Value
Nominal by Nominal

N of Valid Cases

Approx. Sig.

Phi

.530

.042

Cramer's V

.265

.042

96

Here from Table -6, it is clear that all the respondents belong to the no. of dependents group of
3-4 and 5-7 members are willing to take limited losses in expectation of higher returns.
This chart shows that most of the respondents lie in the No. of dependents level group of 3-4 are
agree for taking limited losses in expectation of higher returns but as the No. of dependents
level increases to >7 more people get shifted towards disagree for taking limited losses in
expectation of higher returns. In the chart it is shown that out of 51 respondents who lies between
the No. of dependents level group of 3-4 around 37% respondents are agree in taking limited
losses in expectation of higher returns. and only 4% are strongly agree with it. But if the No. of
dependents increases to >7 most of the persons are move towards disagree situation. So it defines
that there is direct relationship between income and limited losses in expectation of higher
returns.
People belong to the income group of 3 -4 and 5-7 members as are more towards in taking the
limited losses in expectation of higher returns. But the strength of relationship is very low as the
value of Cramers V is .265.

112

Family income in respect of limited losses in expectation of higher

long term returns
From the Table-1 we can see that the all respondents views are indifferent in terms of bearing
limited losses in the expectation of higher long term returns irrespective of their gender,
occupation, age, education, income, No. of dependent in the family and the percentage of total
income they invest as most of the respondents wish to tale either agree or neither agree or
disagree in respect of bearing losses in expectation of higher long term returns. This defines the
balanced approach related to risk profile of the respondents. But on the basis of family income it
shows a significant relationship as p-value is less than .05, which suggests accepting alternate
hypothesis. The relationship is defined as follows:
TABLE-7

( Family income in respect of limited losses in expectation of higher long term

returns)
X7 * X12 Crosstabulation
Count
X12

Total

STRONGLY

DISAGRE

NEITHER

AGREE

DISAGREE

AGREE NOR

STRONGLY
AGREE

DISAGREE
X7

< 5LAKH

11

12

12

43

5-15 LAKH

12

23

49

15-25

14

16

24

36

96

LAKH
Total

113

Family income in respect of limited losses in expectation of higher long term returns
60%
50%

50%

47%

40%
STRONGLY DISAGREE DISAGREE
28% 28%
30%
26%
20%

NEITHER AGREE NOR DISAGREE

AGREE

STRONGLY AGREE

25%

24%

25%

16%

14%

10%

8%

5%

4%

0%
< 5LAKH

0% 15-25
0%LAKH

5-15 LAKH

Chi-Square Tests
Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

Df

Asymp. Sig. (2-sided)

21.371a

.006

15.805

.045

3.687

.055

96

a. 7 cells (46.7%) have expected count less than 5. The minimum expected count is .25.

Symmetric Measures
Value
Nominal by Nominal

N of Valid Cases

Approx. Sig.

Phi

.472

.006

Cramer's V

.334

.006

96

Here from Table -7, it is clear that all the respondents belong to the family income group of < 5
Lakh and 5-15 Lakh are willing to take limited losses in expectation of higher returns.
This chart shows that most of the respondents lie in the family income group of 5-15 lakh are
agree for taking limited losses in expectation of higher returns but as the family income level
114

increases to 15-25 lakh no. of people are decreases towards disagree for taking limited losses in
expectation of higher returns. In the chart it is shown that out of 49 respondents who lies between
the family income level group of 5-15 lakh around 47% respondents are agree in taking limited
losses in expectation of higher returns. and only 16% are strongly disagree with it. But if the
family income increases to 15-25 lakh no. of the persons are decreased in disagree situation. So it
defines that there is direct relationship between income and limited losses in expectation of
higher returns.
People belong to the income group of <5 lakh and 5-15 lakh as are more towards in taking the
limited losses in expectation of higher returns. But the strength of relationship is very low as the
value of Cramers V is .334.

115

Percentage of total investment in respect of limited losses in

expectation of long term returns
From the Table-1 we can see that the all respondents views are indifferent in terms of bearing
limited losses in the expectation of higher long term returns irrespective of their gender,
occupation, age, education, income, No. of dependent in the family and the percentage of total
income they invest as most of the respondents wish to take either agree or neither agree or
disagree in respect of bearing losses in expectation of higher long term returns. This defines the
balanced approach related to risk profile of the respondents. But on the basis of percentage of
total investment it shows a significant relationship as p-value is less than .05, which suggests
accepting alternate hypothesis. The relationship is defined as follows:
TABLE -8
(Percentage of total investment in respect of limited losses in expectation of
long term returns)
X8 * X12 Crosstabulation
Count
X12

Total

STRONGLY

DISAGRE

NEITHER

AGREE

DISAGREE

AGREE NOR

STRONGLY
AGREE

DISAGREE
X8

BELOW

11

20

14

53

20%-40%

21

42

40%-60%

14

16

24

36

96

20%

Total

Percentage of total investment in respect of limited losses in expectation of long term returns
120%
100%

100%

80%
STRONGLY DISAGREE DISAGREE NEITHER AGREE NOR DISAGREE AGREE STRONGLY AGREE
60%
50%
40%
20%

38%
26%
21%
11%

4%

19%
12%10%

0%
BELOW 20%

20%-40%

10%
0% 0%
0%
0%
40%-60%

116

Chi-Square Tests
Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

df

Asymp. Sig. (2-sided)

15.920a

.044

17.029

.030

1.860

.173

96

a. 7 cells (46.7%) have expected count less than 5. The minimum expected count is .06.

Symmetric Measures
Value
Nominal by Nominal

N of Valid Cases

Approx. Sig.

Phi

.407

.044

Cramer's V

.288

.044

96

Here from Table -8, it is clear that all the respondents belong to the percentage of total income in
investment group of < 20% and 20%-40% are willing to take limited losses in expectation of
higher returns.
This chart shows that most of the respondents lie in the percentage of total investment group of
below 20% are neither agree or disagree for taking limited losses in expectation of higher returns
but as the percentage of total investment level increases to 40%-60% no. of people are increases
towards agree for taking limited losses in expectation of higher returns. In the chart it is shown
that out of 52 respondents who lies between percentage of total investment level group of below
20% around 38%respondents are neither agree or disagree in taking limited losses in expectation
of higher returns and only 26% are agree with it. But if the percentage of total investment
increases to 40%-60% no. of the persons is increased in agree situation. So it defines that there is
direct relationship between income and limited losses in expectation of higher returns.
People belong to the income group of <20% and 20%-40% as are more towards in taking the
limited losses in expectation of higher returns. But the strength of relationship is very low as the
value of Cramers V is .288.
.

117

118

FINDINGS AND CONCLUSIONS: Most of the respondents are ready to take either no risk or nominal risk while doing the
investment.
Most of the respondents are generally go for longer time horizon.
There is a situation of investment fall by 15% then most of the respondents are neither
conservative nor aggressive.
Most of the respondents are agree to take limited losses in expectation of higher returns.
Most of the respondents are give their opinion in the favor of experiencing the ups and
downs of the market.
Most of the respondents are agreeing with this there main concern is safety.
Most of the respondents are said that they are not sure about fairly experienced in
investment.
Most of the respondents are in favors of they are very much concern with security related
to future income.
This study shows most of the respondents either go for conservative risk profile or
balanced risk profile.
This study helps in describing the risk profile of investors.
This study describes the strong relationship between demographic data in respect of
different parameters.

119

120

SUGGESTIONS:

I suggest the exchange authorities to take steps to educate Investors about their rights
and duties. I suggest to the exchange authorities to increase the investors confidences.

I suggest the exchange authorities to be vigilant to curb wide fluctuations of prices.

The speculative pressures are responsible for the wide changes in the price, not
attracting the genuine investors to the greater extent towards the market.

Genuine investors are not at all interested in the speculative gain as their investment is
based on the future profits, therefore the authorities of the exchange should be more
vigilant in imposing to curb the speculative of securities.

Necessary steps should be taken by the exchange to deal with the situations arising due
to break down in online trading.

121

BIBLOGRAPHY:WEBSITES:
www.google.com
www.wikipedia.com
www.ebscohost.com
www.sharekhan.com
www.bseindia.com
www.sebi.com
www.moneycontrol.com
www.economictimes.com
www.nseindia.com
www.reuters.com

BOOKS:
Investment management

V.K.Bhalla

Investment management

Preethi singh

Security Analysis And Portfolio Management

V.A.Avadhani

Marketing of Financial Services

V.A.Avadhani

Indian Financial System

M.Y.Khan

Secondary market & its functions

I.M. Pandey

Financial derivatives and risk management

L.C. Gupta

122

ANNEXURES:
QUESTIONNAIRE:-

Investment Pattern on the basis of Risk profile of Investors

I am a 3rd semester student currently pursuing my Master of Business Administration at Delhi
Institute of Advanced Studies. I am conducting a research study on An analysis on investor
behavior on various investment avenues. I seek your kind assistance in completing the attached
questionnaire which would take few minutes from your valuable time. Your responses will be
treated as Strictly Confidential.

Personal Information
1. Gender
a) Male

b) Female

2. Occupation
i) Business

ii) Service

iii) Students

iv) House wife

3. Age
i) 20-30

ii) 30-40

iii) 40-50

iv) Above 50

4. Education
i) Under Graduate

ii) Graduate

iii) Post Graduate

iv) Ph. D.

5. Income
a) < 3 Lakh

b) 3-5 Lakh

6. No. of dependents in Family

a) No dependent
b) 1-2
7. Family Income
a) <5 Lakh

c) 5-10 lakh

d) 10-20 Lakh e) > 20 Lakh

c) 3-4

d) 5-7

b) 5-15 lakh

c) 15-25 Lakh

8.
How much percentage of total income he/she invests?
a) Below 20% b) 20 % - 40 %
c) 40 % - 60%

e) >7
d) > 25 Lakh
d) > 60 %

The risk-profile questionnaire

1.

What do you expect when you invest?

123

a)
b)
c)
d)
2.

3.

no risk
nominal risk
moderate risk
higher risk

How long do you normally hold investments?

a) For a day
b) For a week
c) For a month
d) For a year
If your investments were to fall in value by 15 per cent over a one-year period, you
will
a) withdraw all money from share market
b) Take out some money and move it to a safer investment.
c) Wait until market recovers the loss and then consider other investments.
d) Stick to the investment.
e) Invest more money in the same investment as it is 15 per cent cheaper

4.

You are ready for limited losses in expectation of higher long-term returns?
a) Strongly disagree
b) Disagree
c) Neither agree nor disagree
d) Agree
e) strongly agree

5.

I am willing to experience the ups and downs of the market for the potential of
greater returns.
a) Strongly disagree
b) Disagree
c) Neither agree nor disagree
d) Agree
e) Strongly agree

6.

My main concern is security; keeping money safe is more important than earning
high returns.
a) Strongly disagree.
b) Disagree.
c) Neither agree nor disagree.
d) Agree.
e) Strongly agree.

7.

I am fairly experienced in investment.

a) Strongly disagree.
b) Disagree.
c) Neither agree nor disagree.
124

d) Agree.
e) Strongly agree.
8.

I am very secure related to my future income (such as from salary, pension or other
investments)?
a) Strongly disagree.
b) Disagree.
c) Neither agree nor disagree.
d) Agree.
e) Strongly agree.

125