1. INTRODUCTION TO THE STUDY

EXECUTIVE SUMMARY

I had the opportunity to take summer project at IL&FS Investsmart Securities Ltd. Kota. The training was from 1st May to 12th July 2009. During the training I had the privilege of being guided by Mr. Niren Bhat Branch manager and Mr. Deepak Gupra Associate Sales Manager.

The main objectives of this training are to study about the equity market, to understand the concept of equity shares, derivatives market, mutual fund, trading and investment of equity shares in the secondary market.

The essential information of this project has been collected by both primary data and secondary sources of data.

This project report includes the overview of the company profile, stock market, secondary market, equity trading, comparative analysis of the stock brokers, findings and suggestions.

TITLE OF THE PROJECT

“Perception of investors about equity trading”

NEED FOR THE STUDY

This study is important to understand Equity Trading in

Secondary Market with respect to individual and individual in a

group like age, education and social class.

SCOPE OF THE STUDY

The study covers to understand the Equity Trading in Secondary

Market in Kota (Rajsthan, India).

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OBJECTIVES OF THE STUDY

To study the equity share trading in secondary market.

To find whether investment in equities is better than other

investment.

STATEMENT OF THE PROBLEM

This project is mainly focused on “Equity Trading in Secondary Market”.

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2.RESEARCH METHODOLOGY

Research design

The research design used for the study was exploratory in nature,

so as to identify and explore the people perception level towards equity

share trading in secondary market.

Sampling Design

Sample size:

The sample size is selected 100 respondents.

Research tool: questionnaire – closed ended questions.

Sources of data

Data collected for this project study is inclusive of both primary as well

as secondary data.

Primary data:

The primary data for this study has been gathered with the help of a

following:

●Well structured questionnaire

●Personal interview

Secondary data: Secondary data source was used for getting information

that is books were used are.

●Research Methodology (C.R Kothari)

● Portfolio Analysis and Management (Prasanna Chandra)

●Investment management (V.K. Bhalla)

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3. Type of Capital Market

The Capital Market consists of two types:

1. Primary Market

2. Secondary Market

Primary Market:-

Primary market provides opportunity to issuers of securities government as well as corporates, to raise resource to meet their requirement of investment. They may issue the securities at face value or at discount/ premium and these securities may take a variety of forms such as equity,debt or hybrid.Features of primary markets are:

(1) This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).

(2) In a primary issue, the securities are issued by the company directly to investors.

(3) The company receives the money and issues new security

certificates to the investors.

(4) Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business.

(5) The primary market performs the crucial function of facilitating capital formation in the economy.

(6) The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public."

(7) The financial assets sold can only be redeemed by the original

holder.

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Secondary Market:-

The secondary market refer to the market where securities are traded after

being initially offered to the public in the primary market and or listed on

the stock exchange. Secondary market provides liquidity to the investors.

Majority of the trading is done in the secondary market.

The secondary market, also known as the aftermarket, where previously

issued and such as, , ,and are bought and sold. The term "secondary market" is also used to refer to the market for any or assets, or an alternative use for an existing product or asset where the customer base is the second market (for example, corn has been traditionally used primarily for food production and feedstock, but a second- or third- market has developed for use in ethanol production).

The secondary market for a variety of assets can vary from to stocks, from fragmented to centralized, and from illiquid to very liquid. The major stock exchanges are the most visible example of liquid secondary markets in this case, for stocks of publicly traded companies. Exchanges such as the, and the provide a centralized, liquid secondary market for the investors who own stocks that trade on those exchanges. Most bonds and structured products trade “over the counter,” or by phoning the bond desk of one’s broker- dealer. Loans sometimes trade online using a.

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4. INDUSTRY PROFILE

Introduction

Stock market is an organized is a set-up with a regulatory body and the members who trade in shares are registered with the stock market and regulatory body SEBI. It is a place where securities are bought and sold. It is exposed to a high volatility, price fluctuates within minutes and determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buy and sell securities on behalf of individuals and institutions for some commission.

The Securities Exchange Board of India (SEBI) is the authorized body which regulates the operations of stock exchange, banks and other financial institutions. The past performances in the capital markets especially the securities scam by Ketan Parekh and Harshal Mehta has led to tightening of the operations by SEBI. In addition the International Trading and investment exposure has made it imperative to better operational efficiency.

History of Indian Stock Market

The history of Indian Stock Market is about 200 years old. Prior to this the Hundis and bills of exchange were in use, especially in the medieval period, which can be considered as a form of virtual stock trading but it was certainly not an organized stock trading. The recorded stock trading can be traced only after the arrival of East India Company. The first organized stock market that was governed by the rules and regulations came into the existence in the form of the Native share and Stock Broker’s Association in 1875. After gone through numerous changes this association is today better as Bombay Stock Exchange, which remains the premier stock exchange since its inception. During this period other exchanges were launched and some of which were closed also. Presently, there are 19 recognized stock exchanges out of which four are National level exchanges and the remaining are regional exchange. National Stock Exchange, established in 1992, was the last exchange. Although the regional level exchanges are in existence the volume of trading in these exchanges is negligible. National Stock Exchange and Bombay Stock Exchange are the leaders of Indian Securities Market in terms of listing, trading and volumes. The last 15 years of the Indian Securities Market can be consider as the most important part of the history where the

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market gone through the post liberalization era of Indian economy and witnessed the formation of Securities and Exchange Board of India (SEBI) which brought substantial transparency in share market practices and thus managed to bring in trust of not only domestic investors but also the International ones.

What is a Stock Exchange?

“Stock exchange means, anybody or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in Securities”. It is an association of member brokers for the purpose of self regulation and protecting the interests of its members. It can operate only if the Government under securities contracts recognizes it regulation act, 1956. The recognition is granted under section of the act by the Central Government, ministry of finance.

The traditional structure of the stock exchange in India? There are 22 recognized stock exchanges in India. Mangalore stock exchange was refused renewal of recognition vide SEBI order dated August 31, 2004.

In terms of legal structure, the stock stock exchanges in India could be segregated into two broad groups- 19 stock exchanges which were set up as companies, either limited by guarantees or by shares, and the 3 stock exchanges which were association of persons (AOP) viz. BSE, ASE, and Madhya Pradesh Stock Exchange. The 19 stock exchanges which have been functioning as companies include, the stock exchanges of Bangalore, Bhubaneswar, Calcutta, Cochin, Coimbatore, Delhi, Gauhati, Hyderabad, Interconnected Se, Jaipur, Ludhiana, Madras, Magadha, NSE, Pune, OTCEI, Saurashtra-Kutch, Uttar Pradesh, and Vadodhara. Apart from NSE, all stock exchanges whether established as corporate bodies or Association of Persons (AOP), were non profit organizations.

At present, there are 21 stock exchanges recognized under the securities contract regulation act, 1956. They are located at Bombay, Calcutta, Madras,

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BOMBAY STOCK EXCHANGE (BSE)

Of the 22 stock exchanges in the country, Bombay Stock Exchange (BSE) is the largest, with over 6000 stock listed. The BSE accounts for over two thirds of the total trading volume in the country. Established in the year 1875, the BSE exchange is also the oldest in Asia. Among the 22 Stock Exchanges recognized by the Government of India under the securities contracts (regulation) Act, 1956 it was the first one to be recognized and it is the only one that had the privileges of getting permanent recognition ab-intio.

Approximately 70,000 deals are executed on a daily bases, giving it one of the highest per hour of trading in the World. There are around 3500 companies in the Country, which are listed and have a serious trading volume. The market capitalization of the BSE is Rs. 5 trillion. The Sensex is widely used market index for the BSE.

The main aims and objective of the BSE are to provide a market place for the purchase and sale of security evidencing the ownership of business property or of a public or business debt. It aims to promote, develop and maintain a well regulated market for dealing in securities and to safeguard the interest of members and the investing public having dealings on the exchange. It helps industrial development of the Country through efficient resources mobilization. To establish and promote honorable and just practices in securities transaction.

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NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange (NSE), located in Bombay, is India’s first debt market. It was set up in 1993 to encourage stock reform through system modernization and competition. It opened for trading in mid 1994. it was recently accorded recognition as a stock exchange by the Department of Company Affairs. The instruments traded are Treasury Bills, Government Securities and Bonds issued by public sector companies. The number of members trading on the exchange has been on steady increase, helping integrate the National Market and providing a modern system with a complete audit trail of all transactions.

NSE started trading in the equity segment on Nov 3, 1994 and within a short span of 1 year became the largest exchange in Indian volumes transaction.

Trading volumes in the equity segment have grown rapidly with average daily turnover increasing from Rs.17 crores during 1994-95 to Rs.14, 148 crores during FY 2007-08. During the year 2007-08, NSE reported a turnover of Rs.35, 51,038 crores in the equities segment.

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5. Time line of event of Indian stock market

1800 Trading of shares of east India company in Kolkata And Mumbai

1850 Joint stock company came into existence

1860 Speculation and feverish dealing in securities

1875 Formulation of stock exchange of Mumbai

1894 Formulation of Ahmadabad stock exchange

20 th century

1908 Formulation of Calcutta stock exchange1939 Formulation of Lahore and madras stock

exchange1940 Formulation of U.P and Delhi stock exchange1956 Securities contract and regulation act enacted1957 Scam of Haridas Mundhra1988 Securities and exchange board of India set up1991 Scam of MS Shoes1992 SEBI given power Under SEBI act,19921993 Formation of National stock exchange1995 HARSHAD MEHTA Scam1995 SESA GOA Scam1997 CRB scam

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1998 BPL And Videocon Scam

21 st century

2000 Depositories came into existence (electronic form of shares)

2001 Ketan Parekh scam2002 Start of rolling settlement and banning of

Badla trading2002 Introduction of T+3 settlement in April2003 Introduction of T+2 settlement in April2005 BSE Sensex touches all time high 6954 in January 2006 BSE Sensex touches all time high 12500,the

highest intraday fall of 11002007 BSE reaches the level of 16850 (Appro)2008 BSE touches all time high in January 20082008 Sensex saw its highest ever loss of 1,408

points at the end of the session.2008 Sexsex saw its 15 month low,from its all

time high 2009 Sexsex saw its down trend & highest ever

loss because of Satyam case.

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6. COMPANY PROFILE

IL&FS Investsmart Limited

IL&FS Investsmart Limited (IIL) is one of India’s leading financial services organizations providing varied range of services for Corporate as well as Individual customers. IIL has a strong presence across wide rang of products and operates in the areas of Investment Management and Advisory services, Equity and Debt broking, Commodity broking, Distribution of financial products, Merchant banking, Securities financing and related activities, IPO, and Depository services.

IIL provides various services through its wholly subsidiaries as below:1. IL&FS Investsmart Securities Limited (IISL)2. IL&FS Investsmart Commodities Limited (IICL)3. IL&FS Investsmart Insurance and Risk Management Services

Limited (IIIRMSL)4. IL&FS Academy for Insurance & Finance Limited (IAIFL)5. IL&FS Investsmrt Asia Pacific Private Limited (IIAPPL)

Products Offerings of IL&FS Investsmart Group

Retail Business Wholesale Business Institutional Equity Business Division Merchant Banking Division Debt Broking Division Promoters and Shareholders of IL&FS Investsmart Limited

Management

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The company is, currently managed by a Board Of Directors comprising 11 Directors. Mr. Ravi Partasarathy is currently the Chairman and Mr. Hemang Raja is the Managing Director and CEO of the Company. Mr. Ravi Partasarathy, Chairman has experience in infrastructure, banking and finance services sector for over three decades. Mr. Hemang Raja, Managing Director and CEO, has more than Twenty years of experience. His core competencies in financial services industry encompasses the functions of accounts, finance, project relted exposure, all Indi marketing and investment banking. Mr. R.C.Bava, Dy. Managing Director has more than 2 decades of experience in the Indian banking sector, with an intimate knowledge of the banking sector.Vision, Mission and corporate action

Vision statement

To become the preferred long term financial partner to a wide base of customers whilst optimizing stakeholders value !

Mission statement

To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner !

Corporate action

An Approach to Business that reflects Responsibility, Transparency and Ethical Behaviour. Respect for Employees, Clients & Stakeholder groups.

HSBC ACQUIRES 93.86 PER CENT OFIL&FS INVESTSMART IN INDIA

*** A controlling interest in one of India's leading retail brokerages * **** Gains foothold in a market with 20 million retail investors ****

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HSBC has completed the acquisition of 93.86 per cent of IL&FS Investsmart Limited (Investsmart), a leading retail brokerage in India, for a total consideration of INR1, 311.0 crore (approximately US$296.4 million).

Sandy Flockhart, Group Managing Director and Chief Executive Officer of HSBC Asia- Pacific, said: "Investsmart gives HSBC access to the world's third-largest investor base, with over 20 million retail investors. In fact, the business already has 143,000 customers and operates in 128 cities. With Indian GDP expected to grow by 7.8 per cent in 2009, the Opportunity here is obvious and underlines why HSBC has a stated strategic aim of focusing on high-growth economies."

Under the transaction agreement, HSBC acquired 43.85 per cent of Investsmart from E*TRADE Mauritius Limited, an indirectly wholly-owned subsidiary of E*TRADE Financial Corporation and 29.36 per cent from Infrastructure Leasing and Financial Services Limited (IL&FS). The decision to acquire a controlling stake in Investsmart triggered an Open offer to public shareholders, through which HSBC has accepted shares equivalent to 20.65 per cent of Investsmart's capital.

E*TRADE Mauritius Limited, IL&FS and those that tendered shares through the open offer received INR200 per share for their Investsmart shares. In addition, IL&FS was paid, as part of a three-year non-compete agreement, INR82.0 crore (approximately US$17.9 million). In accordance with local regulations, HSBC paid interest of INR2.3 per share to the public shareholders who tendered their shares. This amounted to INR3.31 crore approximately US$0.72 million).

Naina Lal Kidwai, Group General Manager and Chief Executive Officer, HSBC in India, added: "Investsmart is a great addition to our current operations, which already constitute the second largest foreign banking network in India. We look forward to working with Investsmart's management team and growing this business."

HSBC was advised on the acquisition by the investment banking division of HSBC Global Banking and Markets.

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7. Company Info rmation

I. Company History:

a) Incorporation

The Company was set up as Investsmart India Limited, a wholly owned subsidiary of Infrastructure Leasing & Financial Services Limited for carrying on capital market activities such as share and stock broking, underwriting, placement of securities etc. The Company was incorporated on September 01, 1997 and received the Certificate of Commencement of Business on October 07, 1997.

b) Change In the Registered office of the Company

IL&FS has set up a financial centre in Bandra Kurla Complex in Mumbai with a view to house all its subsidiaries, ventures etc. at the same place for administrative convenience and to pursue group synergy. Pursuant to this, on June 14, 2000 the registered office of the Company was changed from Mahindra Towers, 4th Floor, 'B1 Wing, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 018 to The IL&FS Financial Centre, Plot C-22, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051.

c) Subscription by ORIX Corporation, Japan in 2000

ORIX subscribed to 80,00,000 equity shares in March 2000 representing 27.59% of the paid up capital at that point of time. ORIX is an integrated financial services group based in Tokyo, Japan, providing innovative value-added products and services to both corporate and retail customers. With operations in 24 countries worldwide, ORIX's activities include leasing, corporate finance, real estate-related finance and development, life insurance, and investment and retail banking. ORIX is made up of 202 consolidated subsidiaries and 74 affiliates. ORIX has 974 offices in Japan, with 234 locations throughout the United States, Asia, Oceania, Europe, the Middle East and Northern Africa.

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Amalgamation of IL&FS Merchant Banking Services Limited (IMBSL) and DebtonNet India Limited (OIL) with IL&FS In vests mart Ltd (erstwhile In vests mart India Limited)

IL&FS, in addition to its core activity of infrastructure financing, was also registered with SEBI as a Category merchant banker since the inception of the SEBI (Merchant Banking Regulations) 1992. Consequent to changes in SEBI regulations on segregating merchant banking from fund based activities, IL&FS set up IL&FS Merchant Banking Services Limited (IMBSL) as a wholly owned subsidiary. IMBSL was set-up to provide full-fledged merchant banking services and was registered as a Category I merchant banker with SEBI.

IL&FS also had a 50% stake in another company called DebtonNet India Limited (OIL), which was set up along with. National Stock Exchange of India Limited. DIL was set up to provide an automated and transparent platform, using the Internet, for book built debt issuances. Over a period of time DIL had enhanced the scope of the platform to provide a wide range of information, news and analytics relevant to the debt market.

With a view to consolidate IL&FS's interests in the capital markets IMBSL and DIL were merged into the Investsmart India Limited. Prior to this, IL&FS had taken over the 50% stake of National Stock Exchange of India Limited in DIL. The scheme of amalgamation was approved by the High Court on August 01, 2002 and was effective from January 01, 2002.

d) Benefits of the Merger

The main benefits of the merger of IMBSL and DIL with IL&FS Investsmart Limited were as follows:

1. The merger resulted in making available to the parties the benefit of financial resources and the expertise of each other.

2. The activities undertaken by the three companies were supplementary and complementary to the activities of each other. It was felt that it would be advantageous to combine the activities of all the three companies in to a single company. The merger of IMBSL and DIL with IL&FS Investsmart Limited would provide synergy besides economies in costs by combining total business functions and the related activities and thus contribute to the profitability of the amalgamated company.

3. All the three companies had within themselves the wholesale and retail relationships and multiple resources capabilities that could be better leveraged under a common umbrella.

4. IL&FS Investsmart Limited was primarily focused on the retail segment through its broking and other distribution activities, IMBSL was

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focused on wholesale and institutional segments of the financial market and DIL was focused on the wholesale and institutional segments of the debt market. It was expected that the amalgamated company would have diversified income profile insulating itself from adverse market conditions and have better competitive positioning.

5. It was also expected that the amalgamated company would have the benefit of the combined resources, man-power and cash flows of all the three companies It was envisaged that with the enhanced capabilities and resources at its disposal, the amalgamated company would have greater flexibility to market and meet customer needs and compete more effectively, thus strengthening the position of the merged entity.

II. Sale and Lease back of property from IL&FS

The Company had purchased office premises for its registered office from IL&FS in September 2001 through two separate agreements for a total consideration of Rs 2382.66 lakhs. Out of these two agreements, one agreement covering an area of 7010 sq ft was entered into with IL&FS Merchant Banking Services Limited (which was subsequently merged with IL&FS Investsmart Limited) for a total consideration of Rs 736.05 lakhs. The other agreement covering an area of 15682 sq ft was entered into with Investsmart India Limited for a total consideration of Rs 1646.61 lakhs.

On January 30, 2004, the Company, through a Sale Deed sold the entire area aggregating 22692 sq ft for a total consideration of Rs 2541.50 lakhs to IL&FS. The Company has subsequently entered into business services agreements dated April 23, 2004 and December 31, 2004 with IL&FS pursuant to which it occupies the said premises.

Change in name of the Company from Investsmart India Limited to IL&FS Investsmart Limited

Pursuant to the merger of IMBSL and DIL with Investsmart India Limited, the stake of IL&FS increased from 53.33% to 60% and consequently IL&FS became a major shareholder of the Company. Further to reap the benefits of IL&FS brand and parentage, it was proposed to change the name from Investsmart India Ltd to IL&FS Investsmart Limited. A fresh certificate of incorporation was issued by

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the Registrar of Companies consequent to change of name on March 25, 2003.

Induction of Strategic Investors

SAIF Investment Company Limited, Mauritius

SAIF has acquired 20% equity stake in 2004-05 in the Company. SAIF is a wholly-owned subsidiary of Softbank Asia Infrastructure Fund (SBAIF). SBAIF is a leading Asian private equity firm headquartered in Hong Kong. SBAIF is a strategic joint venture between Softbank Corporation and Cisco Systems that was formed in early 2001 to make investments in information technology, media, and telecom related companies based (or with significant operations) in the Asia Pacific region. SBAIF focuses its efforts primarily on China, India and Korea. Cisco Systems, Inc. is the sole limited partner of the Fund and has committed $404 million in the first of a series of funds. Over the years, Softbank has made investments in E*TRADE FINANCIAL, Yahoo!, UTStarcom, Shanda, Sify Limited, & Intelligroup.

E*TRADE Mauritius Limited (ETM) ETM acquired 13.94% equity stake in the Company. E*TRADE Mauritius Limited, is a wholly-owned Mauritius based subsidiary of Converging Arrows, Inc formed and existing under the laws of Nevada, which in turn is wholly-owned subsidiary of E*TRADE FINANCIAL Corporation.

E*TRADE FINANCIAL provides financial services including brokerage, banking and tending for retail, corporate and institutional customers. With 2.7 million households and 3.5 million customer accounts worldwide, U.S.-based E*TRADE FINANCIAL Corporation operates branded web sites in 12 countries.

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Shareholding

Shareholding as on :

 31/03/2009  31/12/2008  30/09/2008

Face Value  10.00  10.00  10.00

 No. Of Shares

% Holding

No. Of Shares

% Holding

No. Of Shares

% Holding

PROMOTER'S HOLDINGForeign Promoters

 30625692

 43.85 30625692

 43.85 30625692

 43.85

Indian Promoters

 34922751

 50.01 34922751

 50.01 34930251

 50.02

Sub Total 65548443

 93.86 65548443

 93.86 65555943

 93.87

NON PROMOTER'S HOLDINGInstitutional InvestorsMutual Funds and UTI

 36077  0.05  36077  0.05  36077  0.05

Banks Fin. Inst. and Insurance

 300  0.00  0  0.00  0  0.00

FII's 1485031

 2.13 1485031

 2.13 1385031

 1.98

Sub Total 1521408

 2.18 1521108

 2.18 1421108

 2.03

Other InvestorsPrivate Corporate Bodies

 475476  0.68  576450  0.83  594948  0.85

NRI's/OCB's/  575764  0.82  12347  0.02  13691  0.02

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Foreign OthersOthers  146601  0.21  613712  0.88  714095  1.02

Sub Total 1197841

 1.72 1202509

 1.72 1322734

 1.89

General Public 1568581

 2.25 1564213

 2.24 1536488

 2.20

GRAND TOTAL

 69836273

100.00

 69836273

100.00

 69836273

100.00

(Sources: www.moneycontrol.com)

Financial Results A). Profit & Loss: The following is the Income statement for the last 5 years.

(Rs in Cr.)

 Mar ' 09 

Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

Income :          Operating Income

 7.32  23.35  110.54  212.81  107.41

Expenses          Material Consumed

 0.00  0.00  0.00  0.00  0.00

Manufacturing Expenses

 0.00  0.00  0.00  0.00  0.00

Personnel Expenses

 10.64  5.84  26.07  42.91  23.14

Selling Expenses

 0.38  0.61  8.83  28.60  1.24

Adminstrative Expenses

 3.53  5.64  22.59  37.96  28.13

Expenses Capitalised

 0.00  0.00  0.00  0.00  0.00

           Cost Of Sales  14.55  12.09  57.49  109.46  52.51           Operating  -7.23  11.26  53.05  103.35  54.90

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Profit           Other Recurring Income

 17.92  17.62  12.89  4.16  0.93

           Adjusted PBDIT

 10.69  28.88  65.94  107.50  55.83

           Financial Expenses

 0.00  3.38  3.63  1.92  3.49

Depreciation  0.83  0.09  2.12  4.64  3.40Other Write offs

 0.00  0.00  0.00  0.22  0.12

           Adjusted PBT  9.85  25.41  60.18  100.73  48.82           Tax Charges  4.21  9.82  19.85  31.28  15.59           Adjusted PAT  5.64  15.59  40.33  69.45  33.23Non Recurring Items

 -20.85  -0.01  -1.07  -0.16  -0.11

Other Non Cash adjustments

 0.00  0.00  -0.80  -0.17  -0.07

           Reported Net Profit

 -15.21  15.58  38.46  69.12  33.06

           Earnigs Before Appropriation

 66.29  107.57  116.29  108.42  51.56

           Equity Dividend

 0.00  20.95  17.49  20.77  7.87

Preference Dividend

 0.00  0.00  0.00  0.00  0.00

Dividend Tax  0.00  3.56  2.97  2.91  1.07

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Retained Earnings

 66.29  83.06  95.83  84.74  42.61

B). Balance Sheet:The following is the balance sheet for the last 5 years.

(Rs in Cr)

 Mar ' 09 

Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

SOURCES OF FUNDS

         

Owner's Fund          Equity Share Capital

 69.84  69.84  69.84  66.92  35.00

Share Application Money

 0.00  0.00  0.00  1.62  0.00

Preference Share Capital

 0.00  0.00  0.00  0.00  0.00

Reserves & Surplus

 597.39  612.59  621.53  591.86  51.85

Loan Funds          Secured Loans  0.00  0.00  73.71  1.47  2.81Unsecured Loans

 0.23  0.00  0.00  0.00  20.00

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Total  667.46  682.43  765.08  661.87  109.66

           USES OF FUNDS

         

Fixed Assets          Gross Block  12.49  1.20  2.22  32.36  25.85Less : Revaluation Reserve

 0.00  0.00  0.00  0.00  0.00

Less : Accumulated Depreciation

 1.27  0.49  1.14  17.46  13.28

Net Block  11.23  0.71  1.09  14.91  12.57Capital Work-in-progress

 0.00  0.00  0.00  0.00  0.00

           Investments  478.49  448.99  433.99  37.43  16.04           Net Current Assets

         

Current Assets, Loans & Advances

 180.18  261.77  370.60  919.87  184.08

Less : Current Liabilities & Provisions

 2.44  29.04  40.60  310.34  103.26

Total Net Current Assets

 177.74  232.73  330.00  609.54  80.82

Miscellaneous expenses not written

 0.00  0.00  0.00  0.00  0.22

Total  667.46  682.43  765.08  661.88  109.65

Note :          Book Value of Unquoted

 478.49  448.99  433.99  37.43  16.04

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InvestmentsMarket Value of Quoted Investments

 0.00  0.00  0.00  0.00  0.00

Contingent liabilities

 191.17  345.76  290.00  6.70  1.27

Number of Equity shares outstanding (in Lacs)

 698.36  698.36  698.36  669.21  350.00

(Source: www.moneycontrol.com)

C). Ratios

 Mar ' 09 

Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

PER SHARE RATIOS

       

           Adjusted E P S (Rs.)

 0.80  2.23  5.77  10.38  9.49

Adjusted Cash EPS (Rs.)

 0.92  2.25  6.08  11.10  10.50

Reported EPS (Rs.)

 -2.18  2.23  5.51  10.33  9.45

Reported Cash EPS (Rs.)

 -2.06  2.24  5.81  11.05  10.45

Dividend Per Share

 0.00  3.00  2.50  3.00  2.25

Operating Profit Per Share (Rs.)

 -1.04  1.61  7.60  15.44  15.69

24

Book Value (Excl Rev Res) Per Share (Rs.)

 95.54  97.72  99.00  98.44  24.75

Book Value (Incl Rev Res) Per Share (Rs.)

 95.54  97.72  99.00  98.44  24.75

Net Operating Income Per Share (Rs.)

 1.05  3.34  15.83  31.80  30.69

Free Reserves Per Share (Rs.)

 84.92  87.09  88.37  87.79  13.50

PROFITABILITY RATIOS

         

           Operating Margin (%)

 -98.80  48.22  47.99  48.56  51.11

Gross Profit Margin (%)

 -110.12  47.83  46.07  46.38  47.95

Net Profit Margin (%)

 -60.26  38.03  31.16  31.85  30.51

Adjusted Cash Margin (%)

 25.62  38.26  34.39  34.24  33.92

Adjusted Return On Net Worth (%)

 0.84  2.28  5.83  10.54  38.35

Reported Return On Net Worth (%)

 -2.27  2.28  5.56  10.49  38.16

Return On long Term Funds (%)

 1.47  4.21  8.34  15.54  58.34

           LEVERAGE RATIOS

         

           Long Term Debt / Equity

 0.00  0.00  0.10  0.00  0.03

Total Debt/Equity  0.00  0.00  0.10  0.00  0.26Owners fund as % of total Source

 99.96  100.00  90.36  99.77  79.20

25

Fixed Assets Turnover Ratio

 6.48  20.00  50.56  8.72  5.68

           LIQUIDITY RATIOS

         

           Current Ratio  73.96  9.01  9.13  2.96  1.78Current Ratio (Inc. ST Loans)

 67.48  9.01  9.13  2.96  1.49

Quick Ratio  73.69  6.32  7.96  2.95  1.56Inventory Turnover Ratio

 0.00  0.29  0.00  0.00  0.00

(Source: www.moneycontrol.com)

D). Cash Flow Statement:

(Rs in Cr)

 Mar ' 09 

Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

Profit Before Tax

 -10.99  25.41  59.11  100.57  48.70

Net CashFlow-Operating Activity

 14.15  118.55  -89.91  -21.48  19.91

Net Cash Used In Investing Activity

 -74.49  -14.23  1.26  -468.76  5.81

26

NetCash Used in Fin. Activity

 -24.51  -20.87  59.32  501.79  -8.84

Net Inc/Dec In Cash And Equivlnt

 -84.85  83.45  -29.33  11.55  16.88

Cash And Equivalnt Begin of Year

 86.71  3.37  32.70  21.15  4.27

Cash And Equivalnt End Of Year

 1.86  86.81  3.37  32.70  21.15

(Source:www.moneycontrol.com)

E). Quarterly Results:

 Mar ' 09 

Dec ' 08 

Sep ' 08 

Jun ' 08 

Mar ' 08 

           Sales  3.33  4.29  9.02  3.05  1.69Other Income  0.11  0.46  -0.08  5.06  4.83Stock Adjustment  0.00  0.00  0.00  0.00  0.00Raw Material  0.00  0.00  0.00  0.00  0.00Power And Fuel  0.00  0.00  0.00  0.00  0.00Employee Expenses  0.11  7.03  1.96  1.55  0.95

27

Excise  0.00  0.00  0.00  0.00  0.00Admin And Selling Expenses

 0.00  0.00  0.00  0.00  0.00

Research And Devlopment Expenses

 0.00  0.00  0.00  0.00  0.00

Expenses Capitalised  0.00  0.00  0.00  0.00  0.00Other Expeses  0.51  0.87  1.52  1.13  1.86Provisions Made  0.00  0.00  0.00  0.00  0.00Operating Profit  2.72  -3.61  5.55  0.36  -1.12Interest  0.00  0.00  0.00  0.00  0.10Gross Profit  2.82  -3.15  5.46  5.42  3.62Depreciation  0.32  0.33  0.16  0.01  0.02Taxation  1.64  -1.14  1.83  1.89  2.18Net Profit / Loss  -0.01  -14.55  -4.17  3.52  1.42Extra Ordinary Item  -0.87  -12.21  -7.64  0.00  0.00Prior Year Adjustments

 0.00  0.00  0.00  0.00  0.00

           Equity Capital  69.84  69.84  69.84  69.84  69.84Equity Dividend Rate  0.00  0.00  0.00  0.00  0.00Agg.Of Non-Prom. Shares (in lacs)

 42.88  42.88  42.80  187.09  187.09

Agg.Of Non PromotoHolding(%)

 6.14  6.14  6.13  26.79  26.79

OPM(%)  81.53  -84.15  61.47  11.87  -66.33GPM(%)  82.07  -66.28  61.11  66.86  55.48NPM(%)  -0.29  -306.36  -46.65  43.44  21.77EPS (in Rs.)  0.00  -2.08  -0.60  0.50  0.20 (Source: www.moneycontrol.com)G). Annual Results :

 Mar ' 09 

Mar ' 08 

Mar ' 07 

Mar ' 06 

Mar ' 05 

           Sales  24.31  23.35  110.54  212.81  106.94Other Income  0.93  17.62  12.89  4.16  0.93Stock Adjustment  0.00  0.00  0.00  0.00  0.00Raw Material  0.00  0.00  0.00  0.00  0.00

28

Power And Fuel  0.00  0.00  0.00  0.00  0.00Employee Expenses  10.64  5.84  26.07  42.70  23.08Excise  0.00  0.00  0.00  0.00  0.00Admin And Selling Expenses

 0.00  0.00  0.00  0.00  0.00

Research And Devlopment Expenses

 0.00  0.00  0.00  0.00  0.00

Expenses Capitalised  0.00  0.00  0.00  0.00  0.00Other Expeses  4.03  6.26  32.49  67.14  29.19Provisions Made  0.00  0.00  0.00  0.00  0.00Operating Profit  9.63  11.25  51.98  102.97  54.67Interest  0.00  3.38  3.63  1.92  3.49Gross Profit  10.56  25.50  61.23  105.21  52.10Depreciation  0.83  0.09  2.12  4.64  3.40Taxation  4.21  9.83  20.65  31.28  15.59Net Profit / Loss  -15.21  15.58  38.46  69.29  33.11Extra Ordinary Item  -20.72  0.00  0.00  0.00  0.00Prior Year Adjustments

 0.00  0.00  0.00  -0.17  -0.05

           Equity Capital  69.84  69.84  69.84  66.92  35.00Equity Dividend Rate

 0.00  30.00  0.00  30.00  0.00

Agg.Of Non-Prom. Shares (in Lacs)

 42.88  187.09  184.89  464.19  170.33

Agg.Of Non PromotoHolding(%)

 6.14  26.79  26.47  69.36  48.67

OPM(%)  39.63  48.20  47.02  48.38  51.12GPM(%)  41.84  62.23  49.61  48.48  48.30NPM(%)  -60.26  38.03  31.16  31.93  30.70EPS (in Rs.)  -2.18  2.23  5.51  10.35  9.46

8. HOW TO ACQUIRE EQUITY SHARES

A. Acquiring equity shares

1. From primary market

29

There are two methods to issues made by corporate in the primary market. In the primary market, resources are mobilized by the corporate through fresh public issues (IPO’s) or through private placements.

2. From secondary market

You may purchase shares from the secondary market. To buy and sell securities you should approach a SEBI registered member (broker) of a recognized stock exchange.

For the purchasing of shares a person have need of a DEMAT account, without DEMAT account a person cannot purchase shares, because in new system shares come in electronic form in DEMAT account

Components of DEMAT Account Trading Account DP Account

B. Demat Account

DEMATACCOUNT

TRADINGACCOUNT

DPACCOUNT

30

In India, a demat account, the abbreviation for dematerialized account, is

a type of banking account which dematerializes paper-based physical

stock. The dematerialized account is used to avoid holding physical

shares: the shares are bought and sold through a stock broker.

This account is popular in. PHISICALLY ONLY 500 SHARES CAN

BE TRADED AS PROVISION GIVEN BY SEBI. As of April 2006, it

became mandatory that any person holding a demat account should

possess a (PAN).

1. Fill demat request form (DRF) (obtained from a depository participant or

DP with whom your depository account is opened).

2. Deface the share certificate(s) you want to demateri alise by writing across Surrendered for dematerialisation.

3. Submit the DRF & share certificate(s) to DP. DP would forward them to the issuer / their R&T Agent.

4. After dematerialisation, your depository account with your DP, would be credited with the dematerialised securities.

1). The Benefits Of Demate Account

- A safe and convenient way to hold securities;

31

- Immediate transfer of securities;

- No stamp duty on transfer of securities;

- Elimination of risks associated with physical certificates such as bad

delivery, fake securities, delays, thefts etc.;

- Reduction in paperwork involved in transfer of securities;

- Reduction in transaction cost;

- No odd lot problem, even one share can be sold;

- Nomination facility;

- Change in address recorded with DP gets registered with all companies

in which investor holds securities electronically eliminating the need to

correspond with each of them separately;

- Transmission of securities is done by DP eliminating correspondence with Companies.

- Automatic credit into demat account of shares, arising out of bonus / split/ consolidation/ merger etc.

- Holding investments in equity and debt instruments in a single account.

II). Required Documents

32

The extent of documentation required to open a demat account may vary

according to your relationship with the institution. If you plan to open a

demat account with a bank, a savings, current and, or other account for

which the holder has been issued a check book, such holder has an edge

over the non-account holder. In fact, banks usually offer additional

incentives to customers who open a demat account with them. Along with

the application form, your photographs (with co-applicants) and proof of

identity/residence/date of birth have to be submitted. The DPs also ask for

a DP-client agreement to be executed on non-judicial stamp paper. Here is

a broad list:

- A cancelled check, preferably MICR

- Proof of Identification

- Proof of Address

- Proof of PAN card (mandatory)

- Recent photographs, one and/or more

For proof of identification and, or address self-attested facsimile copies of

PAN card, Voter’s ID, Passport, Ration card, Driver’s license, Photo credit

card, Employee ID card, Bank attestation, latest IT returns and, or latest

Electricity/Landline phone bill are sufficient. While they only ask for

photocopies of the documents, they will need the originals for verification.

TYPES OF TRADING

33

TYPE OF TRADING ACCOUNTS1.On line account

2.Off line account

Comparative analysis

SHARE TRADING

CASH DERIVATIVE

INTRA DAY DELIVERY FUTURES OPTIONS

CALLOPTION

PUTOPTION

34

BASIS IL&FSINVESTSM

ART

INDIABULLS

KARVYSTOCK BROKI

NG

MOTILALOSWAL

SECURITIES

ANANDRATHI

SECURITIES

No. of branches

300 640 200 1160 132

BrokerageIntraday

0.05 0.10 0.05 0.04 0.05

BrokerageDelivery

0.50 0.50 0.50 0.40 0.50

BrokerageFutures

0.05 0.10 0.05 0.04 0.05

DEMAT A/C andTrading A/C

Rs.950 Rs.900 Rs.455 Rs.500 Rs.450

AMC Rs.300 NIL NIL Rs.450 NIL

ExposureIntraday

Delivery

Days limit

Depends

Depends

Depends

8 times

4 times

7 times

Depends

Depends

Depends

2 times

Depends

Depends

Depends

Depends

Depends

35

NUMBER OF BRANCHES:

Comparative Intraday Brokerage Charges:

Number of branches

0

200

400

600

800

1000

1200

1400

IL&FS KARVY INDIABULLS MOTILALOSWAL

ANANDRATHI

Number of branches

Intraday Brokerage

0

0.02

0.04

0.06

0.08

0.1

0.12

IL&FS KARVY INDIABULLS MOTILALOSWAL

ANANDRATHI

Intraday Brokerage

36

DEMAT and Trading A/C charges:

DMAT and Trading A/C charges

0100200300400500600700800900

1000

IL&FS

KARVY

INDIA

BULLS

MOTIL

AL OSW

AN

ANAND RATHI

DMAT and Trading A/C charges

9. DATA ANALYSIS

37

Gender: -

Table no. 1

Gender

0

1020

30

4050

60

70

8090

100

Male Female

Respondant

%

Interpretation:

I have asked the questionnaire 93% of the male investor and 7% of

female investor.

Gender Respondent %

Male 93 93Female 07 07

38

Ages of respondents:

Table no. 2

Age of Respondent

0

5

10

15

20

25

30

35

40

20 to 25 26 to 30 31 to 35 36 to 40 40 & above

Respondent

Years Respondent

20 to 2504

26 to 30 1331 to 35 2536 to 40 3740 & above 21

Interpretation:

I divided survey in different age segments that is from 20 to 40 and

above.

1. What is your profession?

39

Table no.3

Respondent %

Doctor 11 11Businessmen 43 43Professors 4 4Student 13 13Other 29 29

Interpretation:

I found that most of the investors are businessmen and 43% of the

investors are businessmen have more interested in equity trading.

2. What is your annual income?

Respondent

11%

43%

4%

13%

29%DoctorBusinessmen

ProfessorsStudentOther

40

Table no. 4

Respondant

16%

23%

32%

19%

10%

<100000

100000 to 200000

200000 to 300000

300000 to 400000

>500000

Respondent %<100000 16 16100000 to 200000 23 23200000 to 300000 32 32300000 to 400000 19 19>400000 10 10

Interpretation:

Most of the investors that is 55% of the investors have the annual income

of Rs.100000 – 300000.

3. How much amount you have invested in equity trading?

41

Table no. 5

Respondant

17%

21%

20%

19%

23%

10000 – 25000

25000 – 50000

50000 – 75000

75000 – 100000

Above 100000

Respondent %10000 – 25000 17 1725000 – 50000 21 2150000 – 75000 20 2075000 – 100000 19 19Above 100000 23 23

Interpretation:

Most of the investors are businessmen and I found that they invested

more than 100000 in equity trading.

4. How often do you trade in equity market?

42

Table no. 6

Respondant

21%

29%26%

17%

7%

Daily

Weekly

Monthly

Quarterly

Half yearly

Interpretation:

29% of the investors like to trade weekly basis but daily investors is also

more, that is 21%.

5. Which sector you want to invest your money?

Respondent %Daily 21 21Weekly 29 29Monthly 26 26Quarterly 17 17Half yearly 7 7

43

Table no. 7

Respondant

17%

21%

11%17%

34% Software sector

Real state

Banking sector

Infrastructure

All of the above

Respondent %Software sector 17 17Real state 21 21Banking sector 11 11Infrastructure 17 17All of the above 34 34

Interpretation:

There is no particular sector that is investors wants to invest there money

in one sector. I found that more of the investors wants to invest there

money in different sector but most of them invest there money in real

estate and infrastructure sector.

44

6. Are you satisfied the company you have invested your money in

equity market?

Table no. 8

Respondant

41%

27%

9%

3%

20%

Highly satisfied

Satisfied

Dissatisfied

Highly dissatisfied

Neither satisfied nor dissatisfied

Respondent %Highly satisfied 41 41Satisfied 27 27Neither satisfied nor dissatisfied

21 21

Dissatisfied 9 9Highly dissatisfied 3 3

Interpretation:

68% of the investors are satisfied with they have invest there money in

different sector.

45

7. What do you feel about services provided by IL&FS Investsmart

Securities Ltd?

Table no. 9

Interpretation:

75% of the investors are satisfied with the services provided by IL&FS

Investsmart Securities Ltd.

Respondent %Very good 21 21Good 43 43Can’t say 19 19Bad 17 17

46

8. If it’s good, why do you think so?

Table no. 10

Respondant

23%

19%

16%

13%

29%Delivery brokerage is low

Options brokerage is low

Intraday brokerage is low

Low account op. charges

Services

Respondent %Delivery brokerage is low 23 23Options brokerage is low 19 19Intraday brokerage is low 16 16No account op. charges 13 13Services 29 29

Interpretation:

They are satisfied because they think that the service and brokerage rate

is low compared to other companies.

47

9. If it's bad, why do you think so?

Table no. 12

Respondant

47%

16%

0%

26%

11%

Delivery brokerage is high

Options brokerage is high

Intraday brokerage is high

High account op. charges

Service is bad

Respondent %Delivery brokerage is high 9 47Options brokerage is high 3 16Intraday brokerage is high 0 0Account op. charges is high 5 26Service is bad 2 11

Interpretation:

25% of respondents are not satisfied because they think that the

brokerage cost is high and also the account opening charges is high.

10. CALCULATIONS

48

1. Hypothesis testing – satisfaction level of customers.

As the scale used is ordinal, chi-square test – Goodness of fit is used.

H0:.The investors are satisfied with service provided by IL&FS Investsmart Securities Ltd

H1: The investors are not satisfied with service provided by IL&FS Investsmart Securities Ltd

Let, Oi = Observed frequency

Ei = Expected frequency

Therefore, Ei = Total Value / Number of categories

λ² = ∑ (Oi – Ei) 2 Ei

Table 7: Computation of Test Statistics - Television

Oi Ei Oi-Ei (Oi-Ei)² Λ²21 20 1 1 0.0511 20 -9 81 4.0534 20 -14 196 9.821 20 -1 1 0.0517 20 -3 9 0.45

Total 14.4

Assumed, Level of Significance (α) = 5%

Degree of freedom (v) = k – 1

Where k = number of categories

Therefore, v = 5 – 1 = 4

Critical value = 9.488

As the calculated λ² = 14.4 is more than the critical value 9.488. Therefore H0 is accepted and H1 is rejected.

49

Conclusion: The investors are satisfide with service provided by IL&FS Investsmart Securities Ltd.

2. Hypothesis testing – satisfaction level of customers.

As the scale used is ordinal, chi-square test – Goodness of fit is used.

H0: The investors are satisfied the company with they have invested their money in equity market

H1: The investors are not satisfied the company with they have invested their money in equity market

Let, Oi = Observed frequency

Ei = Expected frequency

Therefore, Ei = Total Value / Number of categories

λ² = ∑ (Oi – Ei) 2 Ei

Table 18:

Oi Ei Oi-Ei(Oi-Ei)² Λ²

40 20 20 400 2027 20 7 49 2.4521 20 1 1 0.059 20 -11 121 6.053 20 -17 289 14.45

Total 43

Assumed, Level of Signoficance (α) = 5%

Degree of freedom (v) = k – 1

Where k = number of categories

Therefore, v = 5 – 1 = 4

Critical value = 9.488

50

As the calculated λ² = 43 is more than the critical value 9.488. Therefore H0 is accepted and H1is rejected.

Conclusion: The investors are satisfied the company with they have invested their money in equity market.

51

11. Findings:

Amongst the 100 respondent majorities of respondents come

under income of Rs200000 to 300000 and least of respondent’s

lies in the annual income of above Rs300000.

The small investors usually invest their money on monthly or

quarterly basis.

All the investor would like to invest there money in different

sector mostly in IT, Software, Real-estate, Infrastructure etc.

More than 60% of the investors are satisfied with they have

invested there money in stock market.

Now a day every one should want enter in to contract of stock

market. Because everyone wants to make profit in short period

of time.

Mostly investors invest there money in NSE rather than BSE.

52

12. Suggestions:

Investors should undertake an analysis before investing into

the stock market, as most of the investors do not undertake any

study before into a particular stock.

Before making an investment or trade on particular script the

in-depth analysis of that script is very important to yield more

on our investment and to minimize the amount of risk involved.

Company should create the awareness about investment in

securities among the investors. They should visit the general

public, businessmen, government offices and other work places

and guide them about the stock market. This will help the

company to large customer base.

Conduct seminars, workshops on capital markets, so that

customers will come to know about the risk and return

involved in investing equity market.

For attracting the new customers it should increase the number

of sales executives.

The company has to provide proper training to new investors

to avoid losses. New customer’s ma not be having the sufficient

knowledge of the basic concept.

53

13. Conclusion:

In IL&FS Investsmart Securities Ltd, I was able to learn the

real practical World of the stock market. The market risk

involved in share trading. The customer’s action when the

market price fluctuates. Stock market or capital market

provides the industry with a lot of capital needed by the

industry, which leads to the growth of the industry and

economy as a whole. Hence the stock market plays an

important role in the development of the industry. As more

and more people are attracted towards share market

because of the returns they get, stock broking is growing day

by day.

14. Annexure:

54

A). Questioner:

“Perception of investors about equity trading”

Name:

Address:-

Contact no ……...............

1. What is your profession?

Doctor Professor

Businessman Student

Others, specify-------------------------

2. What is your annual income?

<100000 100000-200000

200000-300000 300000-400000

>400000

3. How much amount you have invested in equity trading?

10000-25000 25000-50000

50000-75000 75000-100000

More than 100000

4. How often do you trade in equity market?

55

Daily Monthly

Weekly Half yearly

Quarterly

5. Which sector you want to invest your money?

Software sector Real estate

Banking sector Infrastructure

All of the above

6. Are you satisfied the company you have invested your money in equity

market?

Highly satisfied Dissatisfied

Satisfied Highly unsatisfied

Neither satisfied nor dissatisfied

7. What do you feel about services provided by IL&FS Investsmart

Securities Ltd.?

Very good Can’t say

Good Bad

8. If it’s good, why do you think so?

56

Delivery brokerage is low Intraday brokerage is low

Options brokerage is low Low account op.charges

Services

9. If it's bad, why do you think so?

Delivery brokerage is high Intraday brokerage is high

Options brokerage is high Account op. charges is

high

Service is bad

Signature respondent

Thank you……

57

15. Bibliography:

Books;

Research Methodology (C.R Kothari)

Portfolio Analysis and Management (Prasanna Chandra)

Dalal Street (magazine)

Websites;

www.nseindia.com

www.bseindia.com

www.moneycontrol.com

www.google.com

www.investsmart.com

www.buzzingstock.com

www.hsbcinvestdirect.co.in

www.ilfsdp.com

www.ilfsinvestsmart.co.in

58