ACKNOWLEDGEMENT

It would be a great pleasure for me o take this opportunity in thanking everybody who had

been of great help in the completion of my summer project. This project has been a

platform in my learning about the financial sector and gave the platform to acquire

knowledge in this area.

First & foremost I would like to think miss. Kalpana kotalwar for giving me an

opportunity to work on my final project in KOTAK SECURITIES, LTD.Nanded.

It is my earnest endeavor. Express sincere thanks to Dr.s.v. Mane my internal

guide of MBA and other faculty member of Swami Ramanand Teerth Marathwada

University School of Management Sub Center Latur, for their kind co-operation which

made me worthy of being able to purse such a challenging project and complete it

successfully.

KOTALWAR V. A.

MBA

1

Index

2

EXCUTIVE SUMMARY

A typical investor , less than a decade ago, would have invested only in bank FD’s ,

company FD’s , post office savings and the assured – return schemes of UTI. The most

aggressive foray for such an investor would have been either a small holding in equity

funds or a small investment in direct equities which he would have acquired more by

default rather than by design.

Today the time has changed; investor are directly participating in the equities with

considerable proportion of there savings. That is why BSE indices are gaining a lot. BSE

sensex gained impressive point. It has touched 21206.77 marks.

Since retail investor is directly participating in to equities, brockers and online service

have also got a lot of business. To invest in equities, retail investors have two providers

option with them viz.., through online share trading or through brokers. People have no

doubt in their mind that the introduction of online trading is going to bring a great change

in the securities market. People have highly voted for transparency feature of online

trading. The small investor or who seldom trade and often would like to hold the stocks for

very long period are unwilling to go online. Minimum charges or an annual charge levied

by e- trading companies is the barrier for small investors.

There is still one class of people who still depend on their brocker and brockers are also

providing services on competitive charges. This class of people, which is comparatively

less educated, and consist of small traders and old generation people. People gave

preferences to KOTAK stock Broking on the creditability criteria.

Kotak is an experienced player in the finance sector, having been in the field for twenty

five years now KOTAK stock Broking, has provided me an opportunity to work with them

and to conduct the survey. During the project along with the survey I was also promoting

the product of KOTAK dealing in online securities.

3

The survey was conducted to analyze the prospective customer awareness for various

online trading services available in the market, to find out the interests of the prospective

customer in online trading. How Kotak online process is is held? With this objective in

mind, a small survey was conducted in the selected areas of Nanded.

4

COMPANY PROFILE

KOTAK MISSION STATEMENT

Our mission is to be a leading, preferred services provider to our customer, and we aim to

Achieve this leadership which will set highest standards of service and business ethics.

VISION & VALUES

VISION

To be one of the most trusted and globally reputed financial distribution companies.

VALUES CUSTOMER-CENTRIC APPROACH

At kotak , customer come first. And the satisfaction is not just our top priority but also

the driving force for us, every single day.

TRANSPARENCY

Honesty is our forte. We believe in dealing on thoroughly ethical grounds, being fair and

transparent with our customers.

MERITOCRACY

We recognize and appreciate efforts put in by our employees. And we, as a matter of fact,

reward and distinguish each one of them, ceaselessly.

SOLIDARITY

We believe in sharing a forthright and respectful relationship with our business partners

and employees. We consider them both as our team associates, who work together.

Succeed together.

5

MANAGEMENT

Senior ManagementCore Kotak Mahindra Group team

Mr. Uday S. KotakExecutive Vice Chairman & Managing Director

Mr. Uday Kotak, B.Com, MMS (Masters in Management Studies), aged 50 years, is the Executive Vice-

Chairman and Managing Director of the Bank, and its principal founder and promoter. Mr. Kotak is an

alumnus of Jamnalal Bajaj Institute of Management Studies.

Mr. C JayaramExecutive Director

Mr. C. Jayaram, aged 53 years, is an Executive Director of the Bank and is currently in charge of the Wealth

Management Business of the Kotak Group. An alumnus of IIM Kolkata, he has been with the Kotak Group

since 1990 and came on the Kotak board in October 1999. He also oversees the international subsidiaries

and the alternate asset management business of the group. He is the Director of the Financial Planning

Standards Board, India. He varied experience of over 25 years in many areas of finance and business, has

built numerous businesses for the Group and was CEO of Kotak Securities Ltd. An avid player and follower of

tennis, he also has a keen interest in psychology.

6

Mr. Dipak GuptaExecutive Director

An electronics engineer and an alumnus of IIM Ahmedabad, Mr. Gupta has been with the Kotak Group since

1992 and joined the board in October 1999.

Mr. Dipak Gupta, aged 48 years, is an Executive Director of Kotak Bank. He heads commercial banking, retail

asset businesses and looks after group HR function. Early on, he headed the finance function and was

instrumental in the joint venture between Kotak Mahindra and Ford Credit International. He was the first CEO

of the resulting entity, Kotak Mahindra Primus Ltd.

7

MILESSTONE

CNBC Financial Advisor AwardsBBest Performing Equity Broker, 2008 & 2009

Asia money Brokers PollBest Local Brokerage, 2006, 2007, 2008 & 2009 Best Analyst in India – Sanjeev Prasad, 2005, 2006, 2007, 2008 & 2009

Finance Asia Country Awards for AchievementBest Broker in India, 2006, 2009 & 2010

Thomson Extel Surveys AwardsIndia's Leading Equity House, 2007

Super Brands Council of IndiaBusiness Superb rand India, 2008

OVERVIEW

8

9

KOTAK Group Companies

10

KOTAK gotx SCREEN

11

The trader Workstation screen of the trading is divided into the following Windows:

TITLE BAR : It displays trading system name i.e. gotx , the date and current time .

TICKET WINDOWS: The ticker displays information of all trades in the system as and

when it takes place. The user has the option of selecting the securities that should appear

in the ticker. Securities in ticker can be selected for each market type. On the extreme

rights hand of the ticker is the on line index window that displays the current index value

of NSE indices namely S&PCNX Nifty ,S&P CNX Defty, CNX Nifty Junior, S&P

CNX500 and CNX Midcap 200. The user can scroll within these indices and view the

index values respectively. Index point change with reference to the previous close is

displayed along with the current index value. The difference between the previous close

index value and the current index value becomes zero when the Nifty closing index is

computed for the day . The ticker window displays all securities of both derivatives and

capital market segment. The first ticker window, by default, displays all the derivatives

contracts traded in the Futures and Option segment.

TOOL BAR The tool bar has functional button which can be used with the mouse for

quick access t o various function such as Buy Order Entry, Sell Order Entry ,Market By

Price {MBP}, Previous trades,{ PT}, Outstanding Order {OO} Activity Log

{AL}, Order status , Market Watch, Snap Quote {SQ}, Market Movement{MM}, Market

Inquiry{MI},Action Inquiry {AI}, Order Modification{OM}, Order Cancellation{OC},

Security List, Net position, Online Backup, supplementary Menu, Index Inquiry, Index

Broadcast and Help. All these function are also accessible through the keyboard.

12

Market Watch window: The Market Watch window is the main area of focus for a trading

member. This screen allows continues monitoring of the securities that are of specific

interest to the user. It displays trading information for the selected securities.

INQUORY WINDOW This screen enables the user to view information such as market

By Price {MBP}, Previous Trades {PT}, Outstanding Orders {OO}, Activity Log {AL},

and so on. Relevant information for selected security can be viewed.

SNAP QUOTE: The snap quote feature allows a trading member to get instantaneous

market information on any desired security. This is normally used for securities that are

not already set in the Market Watch window. The information presented is the same as

that of the market watch window.

Order / Trade Window: This window enables the user to enter/ modify / cancel orders and

also for to send request for trade cancellation and modification.

Message window : This enables the user to view message broadcast by the exchange such

as corporate action, any market news, auction related information etc. and other messages

like order confirmation, order modification, order cancellation, orders which have resulted

in quantity freezes /price freezes and the exchange action on them, trade confirmation,

trade cancellation/modification request and exchange action on them, name and time when

the user logs in/ logs off from the system, messages specific to the trading member, etc.

These messages appear as and when the event takes place in a chronological order.

Inquiry screen

MARKET WATCH

The market watch window is the third window from the top of the screen that is always

visible to the user. The Market Watch is the focal area for users. The purpose of market

Watch is to setup and view trading details of securities that are of interest to users. For

each security in the Market Watch, market information is dynamically updated.

13

The blue colour indicates that price/ quantities have improved, while the red colour

indicates that the price /quantities have worsened. If the last traded price is better than the

previous last traded price than the indicator “+”appears or if the last traded price is worse

than the previous last traded price than the indicator“-”appears. If there is no change in last

traded price , no indicator is displayed. One of the best features of this software is that the

user has the facility to set up 500 securities in one page of the market watch screen. Markrt

Watch setup can be sorted alphabetically.

Multiple Index Broadcast and Graph

This screen displays information of NSE indices namely S&P CNX Nifty, S&P CNX

Defty, CNX Nifty Junior, S&P CNX 500 and CNX Midcap 200. The indices are labeled

vertically and the information is displayed against each indexhorizontally. The data

displayed for each index is as follows.

Current Index

High Index

Low Index

Open Index

Close Index

% change in current Index

52 Week high

52 Week Low

Up Moves

Down Moves

<Market Capitalization [ in Rs. Lakh]

This information displayed on –line for S&P CNX Nifty, S&P CNX Deftty, CNX Nifty

Junior, S&P CNX 5000and CNX Midcap 200.Index Graph displays all the indices on a

real time basis to the market.

Market by price

The purpose of Market By Price {MBP} is to enable the user to view outstanding orders

in the market aggregated at each price and are displayed in order of best prices. The fields

that are available on the selection screen are symbol, series and Book type. The options

14

available in the book type field are Regular Lot and RETDEBT. Buy orders are displayed

on left side of the window and sell order on the right side. The orders appear in a

price/time priority with the “best priced” order at the top . When any regular lot

information , currently displayed on on the window , is changed [ for ex. As the result of

trade], this information is automatically reflected in the MBP i.e. dynamic updation of

MBP screen is present . all buyback orders are indentified by an “*” in MBP screen. In

case of a buyback order appears in the best orders in the MBP an “*” will precede such an

order record.

Special Features Of MBP

1. Regular Lot and special term orders can be viewed in the MBP>

2. The status of a security is indicated in this screen. ’P’ indicates that the security is

in the pre –open phase and ‘S’ indicates that the security is suspended.

3. The percentage change for the last trade price with respect to previous day’s

closing price and the average trade price of the security in the given market are the

additional fields in the screen.

4. No untriggered stop –loss order will be displayed on the MBP screen.

5. Only orders for the best 5 prices, information is displayed.

BUY /SELL ORDERS ENTRY

15

Picks up information from the last invoked screen [ e.g. Market Watch /MBP/OO/SQ and

security List] . When the user invokes the order entry screen , the fields that are taken as

default are Symbol, Series and Book Type. In case of other fields, the system takes the

following defaults;

Price: Price of best counter order

Pro: Trading Member ID of the user

Order Duration: Day

Disclosed Quantity: Fully Disclosed

Participant ID: Trading member ID of the user

The orders are listed on the basis of price/ tlme priority.

The trading system operates on a strict price time priority. All orders received on the

system are sorted with the best priced order getting the first priority for matching i.e. the

best buy orders match with the best sell order. Similar priced orders are sorted on time

priority basis , i.e. the one that came in early gets priority over the later one. Orders are

16

matched automatically by the computer keeping the system transparent, objective and fair.

Where an order does not find a match, it remains in the system and is displayed to the

whole market, till afresh order comes in or the earlier order is cancelled or modified. the

trading system provides tremendous flexibility to the users in terms of orders that can be

placed on the system. Several time – related [good till cancelled, good till day, immediate

or cancel], price related [buy/ sell limit and stop loss order.] or volume related [ all or none

,minimum fill , etc] condition can be easily built in to an order. The trading system also

provides complete information on total order depth in security , the five best buys and sells

available in the market, the quantity traded during the day in that security , the high and

the low, the last treaded price ,etc. Orders screen is split into First Line and Detail Line.

The first line contains symbol, series, market types ,security status, label, current time and

current date. The detail line contains Book Type , User ID, Client a/c number, Order

Number, Order quantity Pending and Order price.

17

TRADE BOOK

18

When an order is traded the trade appears in the trade book for each trade the quantity

executed and average trade prices are displayed. A trade is an activity in which a buy and

sell order match with each other. Matching of two orders is done automatically by the

system. Whenever a trade takes place, the system sends a trade confirmation message to

each of the users involved in the trade. The trade confirmation slip gets printed at the

trader workstation of the user with a unique trade number. The system also broadcasts a

Message to describe trade related activities like viewing the trades, trade modification/

cancellation, etc.

19

STOCK TRANSFER

You can transfer stocks between your collateral and D-mat account are also available for

withdrawal to an external DP account. In this case you will have to provide a DP account

to which the stocks need to be transferred.

20

EQUITY NET POSITION REPORT

21

The user can interactively view his net position across securities. The net Position screen

displays Symbols, Series, and Buy value [in lakhs] , Buy Qty, buy Avg Price, Sell Avg

Price, sell qty, Sell Value[in lakhs], Net Qty and Net Value[in lakhs]. It also displays the

grand Total of Buy Value[in lakhs] , Buy Qty, Sell Qty, Sell Value[in lakhs], Net Value[in

lakhs] and Net Value Mark to Market[ in lakhs]. Net position screen displays the Net

Mark to market value scrip wise as well as total net mark to market value.

EQUITY MARGINS

22

The quantity margin screen show stock information, buy trade position i.e. buy quantity

buy value, sell trade position i.e. sell quantity, sell value, buy pending order position, sell

pending order position, and margins information.

23

INDUSTRY PROFILE

SECURITIES MARKET – AN OVERVIEW

The definition of securities as per the securities contracts Regulation act [SCRA],1956,

includes instrument such as share, bonds, scrip, stocks or other marketable securities of

similar nature in or of any incorporate company or body corporate, government securities,

derivatives of securities, units of collective investment scheme, interest and rights in

securities, security receipt or any other instrument so declared by the central government.

Securities Market is a place where buyers and sellers of securities can enter into

transactions to purchase and sell share, bonds, debenture etc. Further , it performs an

important role of enabling corporate, entrepreneurs to raise resources for their companies

and business ventures through public issues. Transfer of resources from those having idle

resources [investor] to others who have need for them [corporate] is most efficiently

achieved through the securities market. Stated formally, securities markets provide

channels for reallocation of savings to investments and entrepreneurship. Savings are

linked to investments by a variety of intermediaries, through a range of financial products,

called ‘Securities’.

The securities one can invest in are given below:

Shares

Government Securities

Derivative Products

Units of Mutual Funds etc., are some of the securities investors in the securities market

can invest in.

24

The responsibility for regulating the securities market is shared by Department of

Economic Affairs (DEA), Department of Company Affairs (DCA), Reserve Bank of India

(RBI) and Securities and Exchange Board of India (SEBI).

The absence of conditions of perfect competition in the securities market makes

the role of the Regulator extremely important. The regulator ensures that the market

participants behave in a desired manner so that securities market continues to be a major

source of finance for corporate and government and the interest of investors are protected.

ROLE OF SEBI IN SECURITES MARKET

The securities and Exchange Board of India (SEBI) is the regulatory authority in

India established under Section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for

establishment of Securities and Exchange Board of India (SEBI) with statutory powers for

25

a) Protecting the interests of investors in securities

b) Promoting the development of the securities market and

c) Regulating the securities market.

In the regulatory jurisdiction extents over corporate in the issuance of capital and

transfer of securities, in addition to all intermediaries and persons associated with

securities market. SEBI has been obligated to perform the aforesaid functions by such

measures as it thinks fit. In particular, it has powers for

Regulating the business in stock exchanges and any other securities market.

Registering and regulating the working of stock brokers, sub-brokers etc.

Promoting and regulating self-regulatory organizations

Prohibiting fraudulent and unfair trade practices

Calling for information from, undertaking inspection, conducting inquiries and

audits of the stock exchanges, intermediaries, self-regulatory organizations, mutual

funds and other persons associated with the securities market.

26

PARTICIPANTS IN THE SECURITIES MARKET

The securities market essentially has three categories of participants, namely, the

issuers of securities, investors in securities and the intermediaries, such as merchant

bankers, brokers etc. While the corporate and government raise resources from the

securities market to meet their obligations, it is households that invest their savings in the

securities market.

It is advisable to conduct transactions through an intermediary. For example you

need to transact through a trading member of a stock exchange if you intent to buy or sell

any security on stock exchanges. You need to maintain an account with a depository if you

intent to hold securities in d-mat form. You need to deposit money with a banker to an

issue if you are subscribing to public issues. You get guidance if you are transacting

through an intermediary. Chose a SEBI registered intermediary, as he is accountable for its

activities. The list of registered intermediaries is available with exchanges, industry

associations etc

27

SEGMENTS OF SECURITIES MARKET

The securities market has two interdependent segments: the primary (new issues)

market and the secondary market. The primary market provides the channel for sale of

new securities while the secondary market deals in securities previously issued.

Primary Market

28

The primary market provides the channel for sale of new securities. Primary

market provides opportunity to issuers of securities; Government as well as corporate, to

raise resources to meet their requirements of investment and/or discharge some obligation.

They may issue the securities at face value, or at a discount/premium and these

securities may take a variety of forms such as equity, debt etc. They may issue the

securities in domestic market and/or international market.

Secondary Market

Secondary market refers to a market where securities are traded after being initially

offered to the public in the primary market and/or listed on the Stock Exchange. Majority

of the trading is done in the secondary market. Secondary market comprised of equity

markets and the debt markets.

Role of the Secondary Market

For the general investor, the secondary market provides an efficient platform for

trading of his securities. For the management of the company, Secondary equity markets

serve as a monitoring and control conduit – by facilitating value – enhancing control

activities, enabling implementation of incentive-based management contracts, and

aggregating information (via price discovery) that guides management decisions.

29

DIFFERENCE BETWEEN THE PRIMARY MARKET AND THE SECONDARY

MARKET

In the primary market, securities are offered to public for subscription for the

purpose of raising capital of fund. Secondary market is an equity trading venue in which

already existing/pre-issued securities are traded among investors. Secondary market could

be either auction or dealer market. While stock exchange is the part of an auction market,

Over-the-Counter (OTC) is a part of the dealer market.

GROWTH OF INDIAN CAPITAL MARKET

The Indian equity market has developed tremendously since the 1990s. The market

has grown exponentially in terms of resources mobilization, number of listed stocks,

market capitalization, trading volumes, turnover and investors base. Along with this

growth, the profiles of the investors, issuers and intermediaries have changed significantly.

The market has witnessed a fundamental institutional change resulting in drastic reduction

in transaction costs and significant improvement in efficient, transparency and safety. In

the 1990s, reform measures initiated by the SEBI such as, market determined allocation of

resources, rolling settlement, sophisticated risk management and derivatives trading have

greatly improved the framework and efficiency of trading and settlement. Almost all

equity settlements take place at two depositories. As a result, the Indian capital market has

become qualitatively comparable to many developed markets.

30

31

The trading volumes on stock exchanges have been witnessing phenomenal growth

over the past years. The trading volume, which peaked at Rs.28,809,900 million (US $

617,708 million) in 2000-01, posted a substantial fall of 68.91 % to Rs.8,958,180 million

(US $ 183,569 million) in 2001-02. However, from 2002-03 the trading volumes picked

up. It stood at Rs.9.689,098 million (US $ 203,981 million) in 2002-03 and further

witnessed a year-on-year increase of 67.29 % in 2003-04 standing at Rs.16,209,326

million (US $ 373,573 million). The upsurge continued and in 2006-07, the turnover

showed an increase of 21.40% to Rs.29,014,715 million (US $ 665,628 million) from

Rs.23,901,030 million (US $535,777 million) in 2005-06. the relative importance of

various stock exchanges in the market has undergone dramatic changes over a decade. The

increase in turnover took place mostly at the big stock exchanges. The NSE yet again

registered as the market leader with 90.34% of total turnover (volumes on all segment) in

2006-07. Top two stock exchanges accounted for 99.98% of turnover, while the rest 20

stock exchanges had negligible volumes during 2006-07.

32

MARKET CAPITALIZATION AND TURNOVER FOR MAJOR MARKETS

The stock markets worldwide have grown in size as well as depth over the year. As

can be observed from, the turnover of all markets taken together have grown from US

$39.61 trillion in 2004 to US $67.91 trillion in 2006. it is significant to note that US alone

accounted for about 48.99% of worldwide turnover in 2006. Despite having a large

number of companies listed on its exchanges, India accounted for a meager 0.94% in total

world turnover in 2006. The market capitalization of all listed companies taken together

on all markets stood at US $54.19 trillion in 2006 (US $43.68 trillion in 2005). The share

of US in worldwide market capitalization decreased from 38.85% as at end 2004 to

35.84% as at end 2006, while Indian listed companies accounted for 1.51% of total market

capitalization in 2006.

33

MAJOR PLAYERS IN SECURITIES MARKET

Motilal Oswal Securities

Kotak Securities

Sharekhan

Bonanza Stock Broking

Religare

Anand Rathi Securities

Indiabulls

ICICI direct

HDFC Securities

Reliance Money Stock Trading

Angel Broking

34

RESEARCH PROBLEM AND ITS BACKGROUND

A research was conducted to study & understand the importance of online share

trading & compare broker charges provided by different companies and the process

applied by them.

Today in the competitive and busy life schedule, people are not getting some time

even to spend with their families so how can they think to give 5 to 6 hr in documentation,

market watch, transaction (money/securities) for trading purpose. This is the main reason

why many of people were not able to trade in stock market even if they have capital and

interest in stock market.

The trading on stock exchanges in India used to take place through open outcry

without use of information technology for immediate matching or recording of trades. This

was time consuming & inefficient. This imposed limits on trading volumes & efficiency.

In order to provide efficiency, liquidity & transparency, NSE introduced a nation-wide on

line fully-automated screen based trading system (SBTS) where a member can punch into

the computer quantities of securities on the prices at which he likes to transact & the

transaction is executed as soon as it finds a matching sale or buy order from a counter

party. SBTS electronically matches orders on a strict price/time priority & hence cuts

down on time, cost & risk of error, as well as on fraud resulting in improved operational

efficiency. It allows faster incorporation of price sensitive information into prevailing

prices, thus increasing the informational efficiency of markets. It enables market

participants, irrespective of their geographical locations, to trade with one another

simultaneously, improving the depth & liquidity of the market. It provides full anonymity

by accepting orders, big or small, from members without revealing their identity, thus

providing equal access to everybody. It also provides a perfect audit trail, which helps to

resolve disputes by logging in the trade execution process in entirely. This sucked liquidity

from other exchange & in the very first year of its operation, NSE became the leading

stock exchange in the country, impacting the fortunes of other exchanges & forcing them

to adopt SBTS also. Today India can boast that almost 100% trading take place through

electronic order matching.

35

The SBTS has made the stock trading easy but still there is a big amount of people who

are unaware of online trading . They don’t know about the “DMAT Account” . some

people who know little about the SBTS & DMAT Accounts are not to know the current

status of the market because of unavailability of the resources like internet & other

necessary facility. There are companies which are providing the services to the customers

but it is difficult to decide that which company is to be chosen among them. The topic has

been chosen after considering all these points the research will help in providing the result

of awareness about the online trading & the comparison of the services of companies will

also help in choosing better service provider.

36

OBJECTIVE OF THE STUDY

Kotak consultants have been in business for about the past 25 years & were one of the

pioneers of the financial investment field, but with time many other firms came into the

picture. Thus one of the objectives of this project is to analyze the various competitors in

the market of online service in capital market. Also compare the major service provider on

various parameters.

The aim of this research study is to the awareness & interest among prospective customers

of online trading services.

PRIMARY OBJECTIVE

1. To compare the Brokerage of online share trading providers

2. To study the customer satisfaction on the basis of features of online trading

that is being provided by Kotak securities ltd.

3. To help the customers of Kotak securities ltd to understand the concept of

online trading.

4. To study various concepts in Capital market.

5. To construct strong customer base for Kotak securities ltd.

SECONDARY OBJECTIVE

1. To promote the product of Kotak securities ltd.

2. To create awareness about the Kotak securities ltd.

3. To enhance knowledge of share trading

4. To actively participate in the share trading.

5. To increase the knowledge of securities analyses.

37

SCOPE OF THE STUDY

In today’s modernized banking, technology plays a very major & important role. A

technology make banking more convenient without investing more in infrastructure and

thus cuts down the cost simultaneously. It also helps the bank to make its presence felt in

any particular area.

This topic was chosen by me to study the compare the online share trading. The

data required for this stage was regarding the detail study of Online Share Trading i.e.

study what is the impact of online share trading in the current scenario of share market

identifying the prospects clients for Kotak portfolio. Also to get some idea about the image

of Kotak portfolio in the minds of the existing customers. The behavior and perception of

the existing customers towards the products and services provided by the Kotak Stock

Broking was also studied so that it could give a clear picture of the Kotak Stock Broking

positioning in the minds of the customers and what Kotak Stock Broking is doing different

to maintain good customer base & create new customers in the competitive scenario of

online share trading as many companies are providing such services.

38

RESEARCH METHODOLOGY

I have collected the data both from Primary as well as Secondary resources. Most

of the Primary data in my research was collected through direct interaction to the clients &

direct visit to IT Park, shops. The methodology used for the study was very rigorous.

Questionnaires were made, interview with customers were held and various books and

websites were checked for any type of information related to the study. Random selection

procedure was used and a sample of 100 customers was taken. The methodology so

applied is briefly discussed below step-by-step.

1. SOURCES OF DATA COLLECTION

PRIMARY DATA SOURCE

The data required for this stage was regarding the behavior and perception of the

existing customers towards the online trading service providers. The data could have been

collected by just interviewing the customers but to get a reasonable conclusion and fair

accuracy, questionnaires were prepared and customers were interviewed. Though the

primary source was not enough for the study but it did give some accurate conclusions.

The above questions were really helpful in the conclusion part of the study. Some

customers were very cooperative but some didn’t even care to listen. Overall, the study

was a success as far as primary source was concerned.

SECONDARY SOURCE

The secondary data was collected with the help of various books, websites, bank

and employees of the company. The data collected from the websites and books was good

enough to be included in the study analyzed and concluded but the data got from the

employees of the company was most accurate and reliable. Various newspapers, company

magazines, websites, etc were checked out for information.

2. SAMPLE SIZE

Random sampling was chosen as the sample selection procedure. The sample size

was 100 people. They were interviewed individually and asked to fill the questionnaires.

On the whole, such methodology was adopted that would give accurate results and

the study be a success.

39

3. RESEARCH INSTRUMENT

The research instrument used in the study is a questionnaire. Field survey was

carried out and the responses received were recorded.

4. DURATION OF THE PROJECT

The duration of the project was of two months, stating from the

40

REVIEW IOF LITERATURE

Traditionally, settlement system on Indian stock exchanges gave rise to settlement

risk due to the time that elapsed before trades were settled by physical movement of

certificates. There were two aspects: first relating to settlement of trade in stock exchanges

by delivery of shares by the seller and payment by the buyer. The stock exchange

aggregated trades over a period of time and carried out net settlement through the physical

delivery of securities. The process of physically moving the securities from the seller to

his broker to Clearing Corporation to the buyer’s broker and finally to the buyer took time

with the risk of delay somewhere along the chain. The second aspect related to transfer of

shares in favour of the purchaser by the issuer. This system of transfer of ownership was

grossly inefficient as every transfer involved the physical movement of paper securities to

the issuer for registration, with the change of ownership being evidenced by an

endorsement on the security certificate. In many cases the process of transfer took much

longer than the two months as stipulated in the Companies Act, and a significant

proportion of transactions wound up as bad delivery due to faulty compliance of paper

work. Theft, mutilation of certificates and other irregularities were rampant, and in

addition the issuer had the right to refuse the transfer of a security. Thus the buyer did not

get good title of the securities after parting with good money. All this added to the costs

and delays in settlement, restricted liquidity and made investor grievance redressal time-

consuming and at times intractable. To obviate these problems, the Depositories Act, 1996

was passed to provide for the establishment of depositories in securities with the objective

of ensuring free transferability of securities with speed, accuracy and security by

a) Making securities of public limited companies freely transferable subject to certain

exceptions;

b) D-materializing the securities in the depository mode; and

c) Providing for maintenance of ownership records in a book entry form.

In order to streamline both the stages of settlement process, the Depositories Act

envisages transfer of ownership of securities electronically by book entry without making

the securities move from person to person. The Act has made the securities of all public

limited companies freely transferable by restricting the company’s right to use discretion

in effecting the transfer of securities, and dispensing with the transfer deed and other

procedural requirements under the Companies Act. A depository holds securities in d-

41

materialized form. It maintains ownership records of securities and effects transfer of

ownership through book entry. By fiction of law, it is the registered owner of the securities

held with it with the limited purpose of effecting transfer of ownership at the behest of the

owner. The name of the depository appears in the records of the issuer as registered owner

of securities. The name of actual owner appears in the records of the depository as

beneficial owner. The beneficial owner has all the rights and liabilities associated with the

securities. The owner of securities intending to avail of depository services opens an

account with a depository through a depository participant (DP). The securities are

transferred from one account to another through book entry only on the instructions of the

beneficial owner. In order to promote d-materialization of securities, NSE joined hands

with leading financial institutions to establish the National Securities Depository Ltd.

(NSDL), the first depository in the country, with the objective of enhancing the efficiency

in settlement systems as also to reduce the menace of fade/forged and stolen securities.

This has ushered in an era of d-materialized trading and settlement. SEBI has made d-

materialized settlement mandatory in an ever-increasing number of securities in a phased

manner, thus bringing about an increase in the proportion of shares delivered in d-

materialized form. There is an increasing preference to settle trades, particularly in high

value securities, in d-mat form. Such high level of D-mat settlement reassures success of

rolling settlement. CDSL was set up in February, 1999 to provide depository services. All

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

Delhi Stock Exchange, the Stock Exchanges, Ahmadabad, etc have established

connectively with CDSL.

Technology was used to carry the trading platform from the trading hall of stock

exchanges to the premises of brokers. NSE carried the trading platform further to the PCs

at the residence of investors through the Internet and to handheld devices through WAP

for convenience of mobile investor. This made a huge difference in terms of equal access

to investors in a geographically vast country like India. The trading network is depicted in

Figure 1.0. NSE has main computer which is connected through Very Small Aperture

Terminal (VSAT) installed at its office. The main computer runs on a fault tolerant

STRATUS mainframe computer at the Exchange. Brokers have terminals (identified as

the PCs in the Figure 1.1) installed at their premises which are connected through

VSAT/leased lines/modems. An investor informs a broker to place an order on his behalf.

The broker enters the order through his PC, which runs under Windows NSE send signal

to the Satellite via VSAT/leased line/modem. The signal is directed to mainframe NSE

42

MAINFRAME Broker’s premised computer at NSE via VSAT at NSE office. A message

relating to the order activity is broadcast to the respective member.

MEANING AND FUNCTION OF ONLINE TRADING

There is nothing more exciting and more rewarding that making the right trade at

the right time. Go Trade – online Stock broking platform of Kotak provides you with a

unique, completely secure means of online trading – anyplace, anytime. Trading of shares

is now in your hands along with the comfort of sitting at home or in your office. Visits to

brokers are a thing of the past. Enjoy the convenience of online trading through a fully

secure, packed with facilities and a trusted E-Broking platform.

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 (personally or

telephonically) or in a written form (fax). In Online Trading, you will access a

stockbroker’s website through your internet-enabled PC and place orders through

the broker’s internet-based trading engine. These orders are routed to the Stock

Exchange without manual intervention and executed thereon in a matter of a few

seconds.

Many companies have used the Internet to increase their reach to the convenience

and access to the doorstep of the customers. Financial service sector was no different. E-

brokers have used the net lubricant the entire investment process so as to speed up and

increase the reach of e-broking services. Online trading is essentially and extension of e-

shopping experience.

Online trading system known as National Exchange For Automated Trading

(NEAT) system, is an online, fully automated nationwide, anonymous, order driven,

screen based trading system where a number can punch into the computer quantities

of securities and the prices at which he likes to transact and the transaction is

executed as soon as it finds matching sale or buy order from a counter party. It

electronically matches order a strict price/time priority and hence, cuts down on

time, cost and risk of error, as well as on fraud resulting in improved operational

efficiency. It provides tremendous flexibility to the users in terms of kinds or orders

(Good-Till-Can-Till-Day, Immediate-or-Cancel, Limit Stop-Loss) that can be placed

on the system.

43

E-Broking

E-broking is short for “Electronic Broking”. It is a means of buying and selling

shares on the stock exchange electronically i.e. through the Internet. E-broking has been

able to deliver its purpose of making investment process a fast, simple, and hassle free

experience for the investor.

The speed of transaction, confidentiality about the prices and ease of settlement in

the paperless mode should be good reason for the retail investor to jump on to the net. All

they need is a personal computer, a modem, a subscription to an ISP, an account with a

bank (which has a Web presence) depository accounts. And they can choose from a

plethora of e-trading website.

With the online trading where the basic requirements are a personal computer and

a modem, one could log on to an online analytical tool and pass on once instructions to the

friendly online broker. The rest of the weekend can be passed on to enjoy.

Online trading really is the perfect combination of the medium of the net catering

to real life concept. Given the trading is all about having, access to multiple information

sources, from the company’s performance to the industrial and economical scenarios, as

well as processing the analytical tools to process this information. The net really is the

relevant factor to enable an informed investment is what online trading is all about, and

that too really cheaply to the used.

44

SEVERAL TERMS USED IN ONLINE SHARE TRADING

1. D-MAT A/C

This is the account where d-materialization takes place. D-materialization is the

process by which physical securities of an investor are converted to an equivalent number

of securities in electronic form and credited into the investor’s account with his/her DP.

2. DEPOSITORY

A depository is like a bank wherein the deposits are Securities (viz. shares,

Debentures, bonds, government securities, units etc.) in electronic form. Besides holding

securities, a depository also provides services related to transactions in securities.

3. DEPOSITORY PARTICIPANT (DP)

Depository provides its services to Investors through its agents called as depository

participant (DP). These Agents are appointed by the depository with the approval amongst

others, three categories of entities i.e. Banks, Financial institutes and Members of stock

exchanges registered with SEBI can become DP’s.

Ex. Bonanzaonline.com

ICICIdirect.com

Sharekhan.com

4. SAVING A/C

This the regular bank saving A/C linked to D-mat A/C and Online Trading A/C.

required amount of money is used for trading from Saving A/C.

5. ONLINE TRADING A/C

This is the account through which actual trading i.e. buying and selling takes place.

In Online Share Trading Accounts all these three accounts are interlined.

D-mat A/C

Saving A/C Trading A/C

45

TRANSACTION CYCLE

The trades executed each trading day are considered as a trading period and trades

executed during the day are settled based on the net obligations for the day. At NSE,

trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. Typically

trades taking place on Monday are settled on Wednesday. Tuesday’s trades settled on

Thursday and so on.

46

DOCUMENTS REQUIREMENT GIVEN BELOW

1. 4 color photos

2. Pan Card copy

3. Address Proof photocopy – MSEB Bill, Telephone Bill

4. Cancelled Ch. Of you’re saving A/C.

5. Xerox copy of saving Accounts Pass Book 1st page & last 3 months

6. Xerox copy of latest D-mat’s holding statement

VARIOUS CHARGES

Online Trading Account charges Rs.450 (one time charge)

Including software charge

Brokerage Intraday 0.05%

Delivery 0.5%

F& O 0.05%

*Excluding Tax.

47

ADVANTAGES OF KOTAK E- BROCKING

National Network of over 500 branches.

Member of NSE, BSE.

Personalized Services.

Backed by research

Facility to put order through live screen.

Trading Workshops & seminars.

Latest Technology implemented.

Powerful risk Management.

NSE (cash,F&O) , BSE (cash) on the same screen.

Secure Transaction authentication based model

Online reports & contract notes.

Online transfer of cash & stocks

Tie up with major banks for account facilities.

Competitive brokerage

Any existing D-mat Account can be used. No need for opening a new D-mat

Invest in the forthcoming IPO’s in a completely hassle-free way.

Make informed decisions with expert advice invest. Calls & live market

commentary.

48

FEATURES

Kotak would also assist the in financial planning. Kotak, being a major player

in financial field can handle this responsibility very effectively.

Kotak would provide a dedicated Relationship Manager to handle the queries.

Kotak would also assist in all types of investments. Any employee of kotak

willing to invest in any MF, IPO’s. Insurance, etc would just need to give a call

to the Relationship Manager and the requirement would be taken care of at the

office itself. This would save a lot of time and energy of the employees.

Kotak would assist you in managing your complete investment and financial

portfolio.

Online risk exposure calculation

Mark to Market Alert for loss position

Receivables and Payables statements for stock & Cash

Cash & Delivery Alerts

49

DATA PRESENTATION AND ANALYSIS

The responses were collected by way of survey through questionnaire which is

based on the following parameters.

Cost:

Cost includes cost of trading, i.e. brokerage, d-mat charges, stamp duties, STT

(Securities Transaction Tax), and surcharges, online software charges.

Speed:

It refers to speed of accessing the quotes (i.e. real time price of individual

company’s shares). Brokers have their own terminal where they get quotes whereas Kotak

Stock Broking provides then on client’s terminal through Internet.

Control:

It refers to control over price, i.e. a price at which investor wants to buy / sell and

can wait till they get desired price for their trade.

Information:

It is the most important aspect of share trading. Proper and exact information helps

investors to take decisions. Rumors and unconfirmed information may lead to losses.

Kotak Stock Brokering provides a lot of information on companies. Also provides indices,

price history, expert’s view, etc.

Convenience:

Convenience in trading refers to how client can place orders. How can they verify

their orders? From where can they place their orders?

In short it refers to ease of trading without hassles of writing cheque, delivery instruction

notes, difficulty in accessing without trading hours etc.

Trust:

Trust cannot be built in a single day. It takes time to have track record and

goodwill. Kotak Stock Brokering 25 year create goodwill every know. There are brokers

who deal in shares from decades. It’s the investor who is to decide with whom he/she

wants to deal.

Independence:

Independence of transferring money, d-mat a/c and bank a/c Kotak Stock

Brokering provides 3 – in – 1 account, which integrates bank a/c, broking a/c and d-mat

a/c.

Security:

50

Security refers to security of shares and funds, Kotak Stock Brokering can be

operated independently and all the shares are directly transferred to d-mat account and

funds are also transferred from bank account. Client is given with the password through

which he/she enters on to trading page. Brokers have access to clients trading account and

every order is executed through brokers.

Service:

Service refers to the service provided by the companies to their clients regarding

the different types like call center, demonstrations, call n trade etc.

Paperwork:

Writing cheque for buy orders, delivery instruction notes for sell orders, receiving

and depositing cheque with bank for the amount they get through trading, etc. involves

paperwork. Kotak Stock Brokering has eliminated all this by providing service through

online.

Questionnaire is so designed that each of the above parameter is addressed clearly.

The language of questionnaire is maintained as simple as possible. It was guided survey

where in if any question is not understood, respondents are guided to clear the purpose of

question.

All the question in the questionnaire is close ended. This is because it takes very

little time to give responses without any confusion.

51

COST

KOTAK ONLINE (%) BROKERS (%)

Trough which channel cost

of trading is high.

62 38

1. Respondents have given 62% of weightage for Kotak Online Trading and 38% to

Brokers. The normal charges for the delivery based trading comes to 0.5% of total

values whereas in case of other brokers it ranges from 0.75% to 1.00%.

52

SPEED

KOTAK ONLINE (%) BROKERS (%)

Who provides better speed

of accessing quotes? 51 49

2. There is not much difference found in speed of accessing quotes in both the cases.

But from interaction we found that the quotes were not available as quickly as it

appeared on Kotak Online Trading. 51% responses were in favour of Kotak Online

Trading and 49% with other online stock brokers.

53

INFORMATION

KOTAK ONLINE (%) BROKERS (%)

Who provides better,

sufficient & Reliable

information?

59

41

3. It is the most important aspect of share trading. Proper and exact information helps

investors to take decisions. Rumors and unconfirmed information may lead to

losses. Kotak Stock Brokering provides a lot of information on companies. Also

provides indices, price history, experts views, etc.

54

CONVENIENCE

KOTAK ONLINE (%) BROKERS (%)

With whom trading is

most convenient?

55 45

4. Convenience in trading refers to how client can place orders. How can they verify

their orders? From where can they place their orders?

In short it refers to ease of trading without hassles of writing cheque, delivery

instruction notes, difficulty in without trading hours, etc.

TRUST

KOTAK ONLINE (%) BROKERS (%)

Whom do you trust most?

55

45

55

5. Reliability / Trust factor plays vital role when it comes to money. The brand name

of Kotak Stock Brokering has its added advantage when it comes to trust factor.

People are ready to pay more 5or brands, which is associated with trust. From our

observation we have found that 55% were in favor of Kotak Stock Broking.

SERVICE

KOTAK ONLINE (%) BROKERS (%)

Who provides better

service?

56

54 46

6. Service refers to the service provided by the companies to their clients regarding

the different types like Call Center, Demonstrations, Call-N-Trade etc.

FUND SECURITY

57

KOTAK ONLINE (%) BROKERS (%)

Who provides secured

service? 60 40

7. Security refers to security of shares and funds, Kotak Stock Brokering can be

operated independently and all the shares are directly transferred to d-mat account

and funds are also transferred from bank account. Client is given with the

password through which he/she enters on to trading page. Brokers have access to

clients trading account and every order is executed through brokers. Security of

shares, funds were found more in Kotak Stock Broking that broker. 79% favored

Kotak Stock Broking and remaining 21% favored brokers.

PAPERWORK

KOTAK ONLINE (%) BROKERS (%)

With whom hustle of

58

paperwork is minimum. 72 28

8. Paper work involved before opening d-mat account was found to be more tedious

in case of Kotak Stock Broking as one has to sign about 40 signatures and going

through these papers was found to be more hectic. 72% agreed that there is no

paper work involved in Kotak Stock Broking and still 28% found it is not so

tedious job and favored brokers.

OVERALL

KOTAK ONLINE (%) BROKERS (%)

From overall point of view

which one is best.

59

56 44

9. Overall Kotak Stock Broking has scored 56% whereas brokers scored 44%. This

states that both Kotak Stock Broking and brokers were not fare away from each

other. There are people who like Kotak Stock Broking and there are people who

like brokers. Both of them have their own advantages as well as disadvantages.

They both comparatively stand near to each other in the minds of the investors.

FINDINGS AND CONCLUSIONS

From the data available through survey we found the following information

Approximately 90% found to be aware of online trading of securities.

60

Newspaper and Magazine are found to be a major source of information.

Kotak Stock Broking is found to be most popular among all general people. Also

people are well aware of various providers like ICICI direct, Share khan and

HDFC securities. Professionals and Executive category people are found to be in

favour of the system. They showed interest in going online.

Approximately 40% people said that they have visited at least one of the websites.

Control over price is referred as advantageous to respondents as they can be

assured that they have in fact placed an order at the price they always wanted for

but they have been able to do till now. There by giving control over their own

trades.

Convenience was most beneficial factor that has been observed in Kotak Stock

Broking A unique 3-in-1 account integrates saving, broking and d-mat accounts.

Reliability / Trust factor plays vital role when it comes to money. The brand name

of Kotak Stock Broking has its added advantage when it comes to trust factor.

People are ready to pay more for brands, which is associated with trust. From our

observation we have found that 55% were in favour of online trading.

Paper work involved before opening d-mat account was found to be more tedious

in case of Kotak Stock Broking as one has to sign about 40 signatures and going

through these papers was found to be more hectic.

COMPARISON TABLE

PARAMETER KOTAK RELIGARE ANAND

RATHI

HDFC ICICI SHAREKH

AN

KARVEY

1.D-mat charge Rs:666/- Rs:500/- Rs:436/- Rs:12 Rs:750/ Rs:49/- Rs :750 /-

61

50/- -

2.Online software

charge

Nil Rs:2400/- Rs:736/- Nil Nil Nil Rs:1800/-

3.Intraday Charges 0.05% 0.075% 0.10% 0.10% 0.10% 0.5% 0.05%

4.Delivery based

charge

0.05% 0.50% 0.50% 0.5% 0.75% 0.50% 0.50%

5.F&O 0.05% 0.075% 0.10% 0.05% 0.10% 0.10% 0.075%

6.Charges to

maintain D-mat a/c

Nil Nil Nil Rs :75

0 PA

Rs :750

PA

Rs :300 PA Nil

7.Intraday for buy

Margin Limit

12 times

of

Amount

6 times of

Amount

6 times

of

Amount

5

times

of

Amou

nt

5 times

of

Amoun

t

4 times of

Amount

8 times

of

Amount

8.Buy/Sell order

closed

3.30 pm 3.30 pm 3.30 pm 3.30

pm

3.30

pm

3.30 pm 3.30 pm

SUGGESTION OR RECOMMENDATIONS

The information gathered by way of survey through questionnaire that kotak stock broking

is mostly selected because of convenience, trust, service, independence and speed. Overall

62

it has been observed that apart from kotak stock broking, ICICI Direct.com, HDFC &

KOTAK are are favorite.

Kotak stock broking should make an arrangement for online chatting with expert

for accessing information and suggestion for investment.

Kotak stock broking should arrange for more and more counseling meet with their

clients at various places to assist them to understand online trading is very

comprehensive site having various kinds of information which clients are not

aware of.

Kotak stock broking should give more and more personalized services to their

clients like toll free SMS alerts on mobile and tips through emails.

Kotak stock broking should increase the trade branches so that investors can go to

clear their doubts and queries.

Anyhow Kotak stock broking is one of the organizations trusted by millions, with good

brand image. This factor is one of the reasons along with others that are making its product

to sell fast in the market.

ANNEXURE

LIMITATION

The study was conducted with in Nanded city. So finding are restricted to

63

Regions only.

The method used in this project for collecting the information is very time

consuming and slow.

Due to lack of time some respondents were reluctant to give detailed

information.

The major limitation was some of the bank’s customers were not all co-

operative.

The analysis cannot be completely relied, as there few customers who didn’t

take the questionnaire seriously and checked any option they liked.

On the whole, the scope was more than the limitation of the study.

Reference:

Books:

Capital Market Book of NSE

Share Market –Gopal Galgali

Research Methodology-C.R.Kothari

64

Website: www.kotaksecurities.com

www.Bonanzaonline.com

www.google.com.

www.Sharekhan.com

www.icicidirect.com

www.hdfcsec.com

www.nseindia.com

www.bseindia.com

www.moneycontrol.com

QUESTIONNAIRE

Respondent’s Personal details………………………………………………… …………

Name of Respondent:………………………………………………………………………

65

Contact no…………………………………………………………………………………..

Instruction to fill questionnaire.

1. Please put a tick mark as your choice.

2. Don’t put two tick marks for the same question.

3. Clarify the question from the surveyor before you pick a tick.

4. Please give genuine responses so that we can take appropriate steps to improve our

service if needed.

Question

1. Cost of trading is high in case of;

a) Kotak securities

b) Brokers

2. Speed of accessing quotes is good in:

a) Kotak securities

b) Brokers

3. You are in control of price while trading with:

a) Kotak securities

b) Brokers

4. Sufficient information available with:

a) Kotak securities

b) Brokers

5. Trading is convenient with:

a) Kotak securities

b) Brokers

66

6. Trust factor plays vital role in:

a) Kotak securities

b) Brokers

7. You are more independent with:

a) Kotak securities

b) Brokers

8. You feel secured or comfortable while trading:

a ) Kotak securities

b) Brokers

9. Paper work ed involved:

a) Kotak securities

b) Brokers

10. From overall point of view which one you prefer:

a) Kotak securities

b) Brokers

Project Report

On

“ONLINE SHARE TRADING” Submitted for the partial fulfillment of the requirement for the award

67

Of

Masters Degree in Management

SUBMITTED BY

Vishal A. Kotalwar

UNDER THE SUPERVISION OF

Dr. S.V. Mane

School of management

Swami Ramanand Teerth Marathwada University Nanded,

Sub Center Latur

2009 - 2011

68

SCHOOL OF MANAGEMENT

SUB – CENTRE LATUR

CERTIFICATE

This is certify that the dissertation entitled “ONLINE SHARE TRADING”

submitted by Vishal A. Kotalwar for the partial fulfillment of the

requirement of MBA (2009-2011), embodies the bonafide work done by him

under my supervision.

Signature of the Guide

69

DECLARATION

I Vishal A. Kotalwar do hereby declare that the project report entitled

“ ONLINE SHARE TRADING” being submitted to S.R.T.M.U.N.,SCHOOL OF

MANAGEMENT, SUB CENTRE LATUR is my own piece of work and it has not been

submitted to any other institute or published at any time before.

KOTALWAR VISHAL A.

70