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I
A
GRAND PROJECT
ON
SATISFACTION LEVEL OF INVESTORS WITH
THEIR BROKING FIRM
In partial fulfillment of the requirement of the
MBA programmeSubmitted To:
Dr. Parag Sanghani(Guide)
Prof. Bijal Mehta(C0-Guide))
Submitted By:
Kunal Vaghela(55)
Yogita Patel(38)
Batch: 2006Batch: 2006Batch: 2006Batch: 2006----08080808
AES Post Graduation Institute of Business Management
Gujarat University
Ahmedabad.
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II
CERTIFICATE
This is to certify that Mr. Kunal Vaghela & Ms. Yogita Patel have
successfully completed their Grand Project titled Satisfaction Level of
Investors with their Broking Firm under the guidance of Dr. Parag
Sanghani & Co-guide Prof. Bijal Mehta, for the partial fulfillment of the
M.B.A. program (batch 2006-2008) from AES Post Graduate Institute of
Business Management, Gujarat University.
We wish them all the best for future endeavors.
---------------------------- ----------------------------
Executive Director Project guides
Dr. A. H. Kalro Dr. Parag Sanghani
Prof. Bijal Mehta
Date:
Place: Ahmedabad
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III
PREFACE
MBA is a professional course wherein for a student to posses only
theoretical knowledge alone is not enough but also to improve practicalskill which is helpful to them in every field of life in their future.
Students needs to have a practical implementation in the current
scenario.
As a part of final semester syllabus of MBA we visited Stock Broking
Companies for practical training and also studied on the working of its
different services and prepare report on particular topic.
This training has expanded our horizon of knowledge in practical as well
as theoretical which are vital for any student in management level
studies. After completion of this Project we came to know that when we
study theory but practice it is very difficult to understand. Therefore to
serve dual purpose of practical training has been made compulsory for the
student of MBA.
Such training promotes a student to boost his potentials and the inner
qualities, and thereby students come to know about their reality that how
the theoretical knowledge works in actual sense in any unit. This has
indeed proved to be very useful to us.
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IV
ACKNOWLEDGEMENT
It gives us a great pleasure and personal satisfaction in presenting this report
as a part of our Grand Project on Satisfaction level of Investors with their broking
firm which has helped us to understand the preferences of investors for choosing any
stock broking firm.
We are indebted to many individuals who have either directly or indirectly made an
important contribution in the preparation of this report.
We are also grateful to Dr.A.H.Kalro, (Director, AES PGIBM), for giving us an
opportunity to experience the corporate world, and for his valuable inputs on the
project.
With immense sense of gratitude, I hereby take this opportunity to thank my project
guide and mentor, Dr. Parag Sanghani for his Expert guidance and contribution in
the project.
We are also thankful to our co guide Prof Bijal Mehta for her valuable guidance and
support.
We would like to thank the entire staff of AESPGIBM library, computer lab
especially Hitanshu sir and Anvesha madam for their immense support. We would
also like to thank all the respondents, without whom the report would not have been
completed.
Last but not the least We would like to place special thanks to our parents and friends
for their help and support.
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V
EXECUTIVE SUMMARY
Stock exchange to some extent plays an important role as indicators, reflecting
the performance of the countrys economic state of health.
Stock market is a place where securities are bought & sold. To serve this
purpose various firms are providing service.
We have conducted this research project to find out consumers preference for
choosing broking firm.
We have used convenience sampling method for selecting the respondents we
have elicited the response from 125 respondents.
We have taken response of various respondents through questionnaire &
analyzed it through pi-chart & hypothesis for large proportion of a population.
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VI
INDEX
Ch. No. Contents Page No.
Chapter-1 Introduction to Stock Market 01
Chapter-2 Industry Overview 05
2.01 History of stock Broking Industry 07
2.02 Development 09
2.03 BSE( Bombay Stock Exchange) 11
2.04 NSE(National Stock Exchange) 13
2.05NCDEX(National Commodity & Derivative
exchange)
15
2.06 MCX (Multi Commodity Exchange) 18
2.07 Transaction Cycle 19
2.08 Introducton to equity market 21
2.09 Indian capital market classification 23
2.10 Capital market intermediaries 27
2.11 Capital market processes 30
2.12 Equity market 33
2.13 Major Players in Stock Broking 40
2.14 Highlight of major Stock Broking Firms 41
Chapter-3 Project Work 49
3.01 Research Design 50
3.02 Research Methods 52
3.03 Data Collection Methods 52
3.04 Sampling Design Process 53
3.05 Field Work 54Chapter-4 Data Analysis 55
Chapter-5 Findings 69
Chapter-6 Recommendations 71
Webography 73
Questionnaire 74
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CHAPTER-1
(Introduction to stock Market)
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INTRODUCTION TO STOCK MARKET
WHY INVEST?
If you were to open a book on economics and look up the
word investing, chances are that you would find the following
definition: Investing is building up to meet future consumption
demands with the intention of making surpluses or profits, as
they are popularly known.
And after reading it, the last trace of your eagerness to
invest is likely to evaporate.
But investing is essential. Here is why
While the life expectancy of the average human being
has increased, we are productive only between the ages of 30
and 60 years. Hence the short time span that we are able to
earn money needs to provide for our future when we may not
be capable of earning.
Everything being the same, we could keep away a part of
our earnings every year (save) that will come in handy when we
will not be able to earn. However inflation destroys the value
of what we save. A sum of Rs10,000 saved this year will not
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have the same purchasing power ten years down the line. Hence
we need to preserve the purchasing power of what we save.
The only way to hedge inflation is to invest in shares,
debentures, bonds, gold or real estate, to earn returns from
these assets that compensate for the decline in our purchasing
power.
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WHAT IS A SHARE?
Share or Equity represents part of an ownership of a
business. So as a shareholder you own a piece of the actionthat happens in that business. Why would you want a piece of
the action? For the rewards of course. As a shareholder you
have a right over the profits generated by your business. Your
company might pay out the profits generated every year as
dividends or it may retain the profits to further grow them.
Theres another way you as a shareholder can make
money. If your company does well, then its shares listed on the
stock market become more valuable and the stock price
appreciates. On the other hand, the company might perform
badly. Then not only do you not get dividends but the stock
price also declines. Hence investing in shares is a risky
proposition.
When you invest in shares, you can expect certain returns
based on the fundamentals of a business. However you have no
control over it. What you have control over is managing risks
associated with it.
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CHAPTER-2
(Industry Overview)
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INDUSTRY OVERVIEW
INTRODUCTION
Stock exchanges to some extent play an important role as
indicators, reflecting the performance of the countrys
economic state of health. Stock market is a place where
securities are bought and sold.
It is exposed to a high degree of volatility; prices fluctuate
within minutes and are determined by the demand and supply
of stocks at a given time. Stock brokers are the ones who buy
and sell securities on behalf of individuals and institutions for
some commission.
The Securities and Exchange Board of India (SEBI) is
the authorized body, which regulates the operations of stock
exchanges, banks and other financial institutions.
The past performances in the capital markets especially
the securities scam by Hasrshad Mehta has led to tightening
of the operations by SEBI. In addition the international
trading and investment exposure has made it imperative to
better operational efficiency.
With the view to improve, discipline and bring greater
transparency in this sector, constant efforts are being made
and to a certain extent improvements have been made.
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HISTORY OF THE STOCK BROKING INDUSTRY
Indian Stock Markets are one of the oldest in Asia. Its history
dates back to nearly 200 years ago. The earliest records of
security dealings in India are meager and obscure.
By 1830's business on corporate stocks and shares in Bank and
Cotton presses took place in Bombay. Though the trading list
was broader in 1839, there were only half a dozen brokers
recognized by banks and merchants during 1840 and 1850. The
1850's witnessed a rapid development of commercial
enterprise and brokerage business attracted many men into
the field and by 1860 the number of brokers increased into 60.
In 1860-61 the American Civil War broke out and cotton supply
from United States of Europe was stopped; thus, the 'Share
Mania' in India begun. The number of brokers increased to
about 200 to 250. However, at the end of the American Civil
War, in 1865, a disastrous slump began (for example, Bank of
Bombay Share which had touched Rs 2850 could only be sold at
Rs. 87). At the end of the American Civil War, the brokers
who thrived out of Civil War in 1874, found a place in a street(now appropriately called as Dalal Street) where they would
conveniently assemble and transact business.
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In 1887, they formally established in Bombay, the "Native
Share and Stock Brokers' Association" (which is alternatively
known as "The Stock Exchange"). In 1895, the Stock Exchange
acquired a premise in the same street and it was inaugurated in
1899. Thus, the Stock Exchange at Bombay was consolidated.
Thus in the same way, gradually with the passage of time
number of exchanges were increased and at currently it
reached to the figure of 24 stock exchanges.
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DEVELOPMENT
An important early event in the development of the stock
market in India was the formation of the Native Share and
Stock Brokers Association at Bombay in 1875, the precursor
of the present-day Bombay Stock Exchange. This was followed
by the formation of associations /exchanges in Ahmedabad
(1894), Calcutta (1908), and Madras (1937). IN addition, a
large number of ephemeral exchanges emerged mainly in
buoyant periods to recede into oblivion during depressing times
subsequently.
In order to check such aberrations and promote a more orderly
development of the stock market, the central government
introduced a legislation called the Securities Contracts
(Regulation) Act, 1956. Under this legislation, it is mandatory
on the part of a stock exchange to seek government
recognition. As of January 2002 there were 23 stock
exchanges recognized by the central Government. They are
located at Ahmedabad, Bangalore, Baroda, Bhubaneshwar,
Calcutta, Chennai,(the Madras stock Exchanges ), Cochin,Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur,
Ludhiana, Mangalore, Mumbai(the National Stock Exchange or
NSE), Mumbai (The Stock Exchange), popularly called the
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Bombay Stock Exchange, Mumbai (OTC Exchange of India),
Mumbai (The Inter-connected Stock Exchange of India),
Patna, Pune, and Rajkot.
While the recognized stock exchanges have been accorded a
privileged position, they are subject to governmental
supervision and control. The rules of a recognized stock
exchanges relating to the managerial powers of the governing
body, admission, suspension, expulsion, and re-admission of its
members, appointment of authorized representatives andclerks, so on and so forth have to be approved by the
government. These rules can be amended, varied or rescinded
only with the prior approval of the government. The Securities
Contracts (Regulation) Act vests the government with the
power to make enquiries into the affairs of a recognized stock
exchange and its business, withdraw the recognition the task
of regulating the stock exchange to the Securities Exchanges
Board of India.
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BSE (THE STOCK EXCHANGE OF MUMBAI)
The Stock Exchange, Mumbai, popularly known as "BSE" was
established in 1875 as "The Native Share and Stock Brokers
Association". It is the oldest one in Asia, even older than the
Tokyo Stock Exchange, which was established in 1878. It is a
voluntary non-profit making Association of Persons (AOP) andis currently engaged in the process of converting itself into
demutualised and corporate entity. It has evolved over the
years into its present status as the premier Stock Exchange in
the country. It is the first Stock Exchange in the Country to
have obtained permanent recognition in 1956 from the Govt. of
India under the Securities Contracts (Regulation) Act, 1956.
The Exchange, while providing an efficient and
transparent market for trading in securities, debt and
derivatives upholds the interests of the investors and ensures
redressal of their grievances whether against the companies or
its own member-brokers. It also strives to educate and
enlighten the investors by conducting investor education
program and making available to them necessary informative
inputs.
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A Governing Board having 20 directors is the apex body, which
decides the policies and regulates the affairs of the Exchange.
The Governing Board consists of 9 elected directors, who are
from the broking community (one third of them retire ever
year by rotation), three SEBI nominees, six public
representatives and an Executive Director & Chief Executive
Officer and a Chief Operating Officer.
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NSE (NATIONAL STOCK EXCHANGE)
NSE was incorporated in 1992 and was given recognition as a
stock exchange in April 1993. It started operations in June
1994, with trading on the Wholesale Debt Market Segment.
Subsequently it launched the Capital Market Segment in
November 1994 as a trading platform for equities and the
Futures and Options Segment in June 2000 for various
derivative instruments.
NSE has been able to take the stock market to the
doorsteps of the investors. The technology has been harnessed
to deliver the services to the investors across the country at
the cheapest possible cost. It provides a nation-wide, screen-
based, automated trading system, with a high degree of
transparency and equal access to investors irrespective of
geographical location. The high level of information
dissemination through on-line system has helped in integrating
retail investors on a nation-wide basis. The standards set by
the exchange in terms of market practices, Products,
technology and service standards have become industry
benchmarks and are being replicated by other market
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participants. Within a very short span of time, NSE has been
able to achieve all the objectives for which it was set up. It
has been playing a leading role as a change agent in
transforming the Indian Capital Markets to its present form.
The Indian Capital Markets are a far cry from what they used
to be a decade ago in terms of market practices,
infrastructure, technology, risk management, clearing and
settlement and investor service.
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NCDEX
(NATIONAL COMMODITIES AND DERIVATIVESEXCHANGE)
NCDEX started working on 15th December, 2003. This
exchange provides facilities to their trading and clearing
member at different 130 centers for contract.
In commodity market the main participants are speculators,
hedgers and arbitrageurs.
Promoters of NCDEX are
National Stock Exchange(NSE)
ICICI bank
Life Insurance Corporation(LIC)
National Bank for Agricultural and Rural Development
(NABARD)
IFFICO
Punjab National Bank (PNB)
CRISIL
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WHY NCDEX?
NCDEX is nationalized screen based system which is
providing transparent, private and easy services.NCDEX is one of the traditional media which gives online
information
NCDEX is one of the Indian commodity exchange,
constructed on the basis of the current national
institutes the exchange has been established with the
coloration of leading institutes like NABARD, LIC, NSI
etc.
In India NCDEX has maximum settlement guarantee fund.
NCDEX has appointed two exports for checking quality at
the time of delivery
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FACILITIES PROVIDED BY NCDEX
NCDEX has developed facility for checking of commodity
and also provides a wear house facilityBy collaborating with industrial partners, industrial
companies, news agencies, banks and developers of kiosk
network NCDEX is able to provide current rates and
contracts rate.
To prepare guidelines related to special products of
securitization NCDEX works with bank.
To avail farmers from risk of fluctuation in prices
NCDEX provides special services for agricultural.
NCDEX is working with tax officer to make clear
different types of sales and service taxes.
NCDEX is providing attractive products like weather
derivatives
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MCX (MULTI COMMODITY EXCHANGE)
MULTI COMMODITY EXCHANGE of India limited is a new
order exchange with a mandate for setting up a nationwide,online multi-commodity marketplace, offering unlimited growth
opportunities to commodities market participants. As a true
neutral market, MCX has taken several initiatives for users
In a new generation commodities futures market in the
process, become the countrys premier exchange.
MCX, an independent and a de-mutualized exchange since
inception, is all set up to introduce a state of the art, online
digital exchange for commodities futures trading in the
country and has accordingly initiated several steps to translate
this vision into reality.
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TRANSACTION CYCLE
A person holding assets (Securities/Funds), either to
meet his liquidity needs or to reshuffle his holdings in response
to changes in his perception about risk and return of the
assets, decides to buy or sell the securities. He selects a
broker and instructs him to place buy/sell order on an
exchange. The order is converted to a trade as soon as it finds
a matching sell/buy order. At the end of the trade cycle, the
trades are netted to determine the obligations of the trading
members securities/funds as per settlement cycle.
Placing
Order
Settlement
of trades
Decision to
trade
Trade
Execution
Clearing of
Trades
Funds or
Securities
Transaction
Cycle
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Buyer/seller delivers funds/ securities and receives
securities/funds and acquires ownership of the securities.
A securities transaction cycle is presented above. Just
because of this Transaction cycle, the whole business of
Securities and Stock Broking has emerged. And as an extension
of stock broking, the business of Online Stock broking/ Online Trading/
E-Broking has emerged.
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INTRODUCTON TO EQUITY MARKET
The Capital Market
INDIAN CAPITAL MARKET
The function of the financial market is to facilitate the
transfer of funds from surplus sectors (lenders) to deficit
sectors (borrowers). Normally, households have excess of
funds or savings, which they lend to borrowers in the
corporate and public sectors whose requirement of funds far
exceeds their savings. A financial market consists of investors
and buyers, sellers, dealers and does not refer to a physical
location. Formal trading rules and communication networks for
originating and trading financial securities link the participants
in the market.
As elsewhere in the world, the Indian financial system
consists of: -
Money Market
Capital Market
The money market has two components.
Organized Market
Unorganized Market
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The organized market is dominated by commercial banks.
The other major players are the Reserve Bank of India, Life
Insurance Corporation, General Insurance Corporation, and
Unit Trust of India, Securities Trading Corporation of India,
other primary dealers and the various mutual funds. Despite
rapid expansion of the organized money through a large
network of banking institutions that have extended their reach
even to the rural areas,
there is still an active unorganized money market. It
consists of indigenous bankers and moneylenders.
In the unorganized market, there is no clear demarcation
between short-term and long-term finance and even between
the purposes of finance. The unorganized sector continues to
provide finance for trade as well as personal consumption. The
inability of poor to meet the creditworthiness requirements of
the banking sector makes them take recourse to the
institutions that still remain outside the regulatory framework
of banking. But this market is shrinking.
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INDIAN CAPITAL MARKET CLASSIFICATION
Indian capital market can be broadly classified, into the
following:
I. MONEY MARKET:
It is a market, which deals in short term securities
such as treasury bills, certificate of deposits etc.
II. DEBT MARKET:
It is a market dealing in debt securities such as
debentures, bonds etc.
III. SECURITIES MARKET:
It is a market dealing in equity and equity linked
securities. This market comprises of primary
market and second market.
The capital market provides the framework in which
savings and investment take place. On the one hand it enables
companies to raise resources from the investors and on the
other, it facilitates households to invest their saving in
industrial or commercial activities. Those saving instruments
that can be bought or sold freely are called securities. These
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include a range of products debt and equity that can be
traded. The market where such trades take place is the
securities market or capital market and comprises the various
exchanges, intermediaries and its regulatory institutions.
The capital market consists of these segments.
Primary Segments
Secondary Segments
The primary market deals with the issue of new
instruments by the corporate sector such as equity shares,
preference shares, and debentures. The public sector
consisting of central and state governments, various public
sector industrial units (PSUs) and statutory and other
authorities such as state electricity boards and port trusts
also issue bonds. The primary market in which public issue of
securities is made through a prospectus is a retail market and
there is no physical location. Direct mailing, advertisements
and brokers reach the investors. Screen based trading
eliminates the need trading floor.
The Secondary Market Or Stock Exchange where
existing securities are traded is an auction arena. It may have
a physical location like a stock exchange or a trading floor.
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Since 1995, the trading in securities is screen-based. Screen-
based training eliminates need for a trading floor. And, since
the last few years Internet-based trading has also made an
appearance in India.
The Secondary Market consists of 23 stock exchanges
including the National Stock Exchange (NSE) and the Over-the
Counter Exchange Of India (OTCEI) and also Bombay Stock
Exchange (BSE). The secondary market provides a tradingplace or terminals for the securities already issued to be
bought and sold. It also provides liquidity to the initial buyers
in the primary market to re-offer the securities to any
interested buyer at any price, if mutually accepted. An active
secondary market actually promotes the growth of the primary
market and capital formation because investors in the primary
market are assured of a continuous market and they can
liquidate their investments in the stock exchange.
There are several major players in the primary market. These
include the merchant bankers, mutual funds, financial
institutions, foreign institutional investors (FIIs) and individual
investors. R & T agents, Custodians and Depositories are
capital market intermediaries that provide important
infrastructure services for both primary and secondary
markets.
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It is important to ensure a smooth working of this market, as
it is the arena where the players in the economic growth of a
country interact. Various laws have been passed from time to
time to meet this objective. The financial market in India was
highly segmented until the initiation of reforms in 1992-93 on
account of a variety of regulations and administered prices
include barriers to entry. The reform process was initiated
with establishment of securities and exchange of India (SEBI).
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CAPITAL MARKET INTERMEDIARIES
Merchant Bankers
Merchant Bankers means any person who is engaged in thebusiness of issue management either by making arrangements
regarding selling, buying or subscribing to securities or acting
as manager, consultant, adviser or rendering corporate
advisory service in relation to such issue management.
Stock Brokers
Stockbrokers are regulated by SEBI {Stock brokers and Sub
brokers} Regulations, 1992. The stock broker is a member
of the stock exchange. Stock brokers are the intermediaries
who are allowed to trade in securities on the exchange of
which they are members. They buy and sell on their own behalf
as well as on behalf of their clients.
Stock brokers expand their business by engaging sub
broker. Sub brokers means any person not being a member
of a stock exchange who acts on behalf of a stock broker as an
agent or otherwise for assisting the investors in buying, selling
or dealing in securities through such stock brokers.
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Custodians
Custodians of securities mean any person who carries on or
proposes to carry on the business of providing custodial
services. Custodian services in relation to securities mean
safekeeping of securities of a client.
SHCIL, Citibank N.A., Deutsche Bank, Standard Chartered
Bank, HSBC Bank, IIT Corporate Services, HDFC Bank is among
the few registered custodians in the country.
R & T Agents Registrars to Issue
R & T agents are governed by SEBI. R & T agents are
intermediaries who provide services to shareholders on behalf
of issuers. Issuers may engage share transfer agents for
maintaining Register of Members {ROM}, managing corporate
benefits like distribution of dividends, interest on debentures,
bonus shares, right forms etc. R & T agents extend the
depository connectivity services in the depository environment.
More information of R & T agents is given in the business
activities of Karvy.
Mutual Funds
MFs are financial intermediaries, which collect the savings of
small investors and invest them in a diversified portfolio of
securities to minimize risk and maximize returns for their
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participants. MFs have given a major filliped to the capital
market both primary as well as secondary. The units of MFs,
in turn are also tradable securities. Their price is determined
by their net asset value that is declared periodically. More
information of mutual fund is given in the business activities of
Karvy.
Depositories
The principle function of a depository is to dematerializesecurities, custody and trading in electronic book entry form.
A depository established under the Depositories Act can
provide any service connected with recording of allotment of
securities or transfer of ownership of securities in the record
of a depository. There are two depositories in India, which are
given below.
NSDL
CDSL
Depository participants (DPs):
DPs are described as an agent of the depository. They are
intermediaries between the depository and the investors. The
relationship between the DPs and the depository is governed
by an agreement made between the two under depositories
Act.
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A DP is responsible for maintaining the securities account of
the investor and handling it in accordance with the investors
instructions. A DP can offer depository-related services only
after obtaining a certificate of registration from SEBI.
CAPITAL MARKET PROCESSES
There are various processes that issuers of securities follow
or utilize in order to tap the savers for raising resources.
Some of the commonly used processes and methods are
described below: -
Private Placement:
Method of raising funds directly from investors without issue
of prospectus to the public is known as private placement.
SEBI has prescribed the eligibility criteria for companies and
instruments as well as procedures for private placement.
Privately placed securities can also be listed if such placement
fulfills all listing criteria.
Preferential Offer/Right Issue:
Companies can expand their capital b offering the new shares
to their existing shareholders. Such offers for sale can be
made to the existing shareholders by giving them a
preferential treatment in allocation or the offer can be on a
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right basis i.e. the existing holders can get by the way of their
right, allotment of new share in certain proportion to their
earlier holding. If the shares are offered to a few of the
existing shareholder instead to all shareholders or at a price
different from the price at which they are issued to all, such
issues are called preferential allotments. Preferential
allotment requires shareholders approval in the general body
meeting. Further, all such offers have also to e in compliance
with criteria laid down by SEBI.
Internet broking:
With the Internet becoming ubiquitous, many institutions have
set up securities trading agencies that provide online trading
facilities to their clients from their homes. This has been
possible since all the players in the securities market, viz.
stockbrokers, stock exchange, clearing corporation,
depositories, DPs etc are linked electronically. Thus
information flows amongst them on a real time basis.
Initial Public Offer (IPO):
Companies, new as well as old, can offer their shares to the
investors in the primary market. This kind of tapping the saving
is called an IPO or Initial Public Offering. SEBI guidelines
regulate various procedures involved in making a public issue
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but price of shares, size of the issue, timing of issue, listing of
the issue is decided by the issuer. Issuers have to disclose all
relevant facts and information in the prospectus. Prospectus
also has to disclose risk factors and management perception
about those risks.
Stock trading:
An investor in securities needs assurance that they can
convert their security holding to cash to meet their cashrequirements. The ability to convert value of securities into
cash is called liquidity. The liquidity is provided by the stock
exchange. Stock exchange is a platform where buyers and
sellers of securities will match their bids and offer for
securities and exchange securities with cash. The offers and
bids are routed through members of the stock exchange,
popularly known as a broker. Stock exchange regulates the
transaction are conducted fairly and transparently with justice
to both buyers and sellers.
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EQUITY MARKET
Equity represents an ownership position in a corporation. It is a
residual claim, in the sense that creditors and preference
shareholders must be paid as scheduled before equity
shareholders can receive any payment. In bankruptcy equity
holders are in principle entitled only to assets remaining after
all prior claimants have been satisfied.
Thus, risk is highest with equity shares and so must be its
expected return. When investors buy equity shares, they
receive certificates of ownership as proof of their being part
owners of the company. The certificate state the number of
states the number of shares purchased and their par value.
A Brief History of the rise of the Equity trading in India
July 9, 1875: Native brokers from the Native share and
Stock Brokers Association in Bombay. Membership fee is Re. 1.
The association has 318 members.
1899 : Bombay stock Exchange acquires own premises.
1921 : Clearing houses are established for settlement of
trades as volumes increase.
1923 : K R P Shroff becomes the honorary president of BSE.
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1925 : Bombay Securities Contract control Act (BSCCA) comes
into force.
Dec 1, 1939 : Stock Exchange building is acquired.
1943 : Forward trading banned till 1946. Only ready to deliver
and hand delivery contracts permitted.
1956 : Securities Contract Regulation Act drafted on the lines
of BSCCA comes into force.
1957 : BSE becomes the first exchange in India to get thepermanent recognition.
1964 : Unit Trust of India (UTI) is born.
Apr 1, 1966 : K R P Shroff retires and Phiroze J Jeejeebhoy
becomes chairman.
Jun 29, 1969 : Morarji Desai bans forward trading.
1973 : Construction of P J Towers, named after late Phiroze
Jamshedji Jeejeevhoy, starts.
Jan, 2 1986 : BSE Sensesex launched as the first stock
market index with1978-79 as the base year.
Nov 1987 : SBI Mutual Fund launches Magnum Regular Income
Scheme.
Apr 1988 : Securities and Exchange Board of India (SEBI) set
up.
Jan 1992 : SEBI had given statutory powers.
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May 1992 : Harshad Mehta securities scam breaks.
May 27, 1992 : Reliance is the first Indian company to make a
GDR issue.
May 30, 1992 : The capital Issues Control Act, 1947 is
replaced.
Sep 1992 : Foreign Institutional Investors are permitted to
invest in the Indian securities market.
Nov 1992 : Finance Minister Manmohan Singh inaugurates
Over the Counter Exchange of India.Oct 30, 1993 : The first private sector mutual fund, Kothari
Pioneer Mutual fund, begins operations.
1993 : SEBI bans badlatrading on BSE.
June 1994 : NSE commences operations in wholesale debt
market segment.
Nov 1994 : The capital market segment of NSE goes o stream.
Trading is screen based for the first time in India.
March1995 : BSE online trading system (BOLT) replaces open
outcry system.
Apr 1995 : The National Securities Cleaning Corporation
Limited, Indias first clearing corporation is set up.
Oct 1995 : NSE overtakes BSE as the largest stock exchange
in terms of volume of trading.
Apr 1996 : The National Securities Depository Limited is
created.
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Feb 1997 : SEBI releases norms for takeovers and
acquisitions.
May 1997 : BSE introduces screen based trading.
Nov 1998 : SEBI recognized Interconnected Stock Exchange
founded by 15 regional stock exchanges. This exchange starts
functioning in Feb., 1999
Feb 1999 : Launch of automated lending and borrowing
mechanism (ALBM) on NSE.Mar 11, 1999 : Infosys Technologies is the first company to
be listed on NASDAQ through a public offering of American
Depository Receipts.
Mar 22, 1999 : Central Depository Services (India) promoted
by BSE operations.
Sep 1999 : ICICI is the first India Company to be listed on
the New York Stock Exchange (NYSE).
Oct 11, 1999 : For the first time in BSEs history, the
Sensex closes above the 5,000 mark at 5,031.78.
Jan 2000 : BSE creates a Z category of scrips in addition to
A, B1, and B2 comprising scrips that breached or failed to
comply with the listing agreement.
Feb 2000 : Internet trading commences on NSE. On Feb 14,
2000, BSE Sensex hits all-time high of 6150. On Feb. 21, NSE
records peak market capitalization of Rs. 11, 94,282 crore.
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Apr 10, 2000 : The Sensex is revamped to include Dr. Reddys
Lab, Reliance Petroleum, Satyam Computers and Zee Telefilms
replacing Indian Hotels, Tata Chemicals, Tata power, and IDBI.
June 2000 : BSE and NSE introduce derivatives trading in the
form of index futures.
July 9, 2000 : BSE turns 125.
Oct 19, 2000 : Wipro lists in the NYSE.
Jan 22, 2001 : Borrowing and Lending Securities Scheme
(BLESS) launched on BSE to promote securities lending andborrowing activities.
Mar 2001 : Ketan Parekh scam breaks. SEBI suspends all the
broker directors of the BSE in relation to KP scam.
May 2001 : BSE advises compulsory demat for B2 scrips.
June 2001 : Index options start trading on NSE.
July 2001 : A SEBI directive bans carry forward. All major
securities are moved to rolling settlement. Options of
individual scrips start trading NSE.
Nov 9, 2001 : BSE and NSE launch futures in individual
stocks.
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Changing Attitude towards Equity Ownership
With a broadening of the corporate sector, volume of business
on the exchange s in India is likely to increase. The greater
interest shown in recent years by investors is partly reflected
in the over-subscription of new issues.
There has been great demand for growth issues. I.e. shares
of companies with growth prospects. It has been observed that
the wider the distribution of corporate securities amonginvestors, the grater the reception accorded to new or
additional issues of capital; the more mobile the additional
issues of capital; the more mobile the market, the grater the
participation of investors and traders in the raising of
corporate capital.
The available data about the share ownership in the country
show that there is gradual widening if ownership. The
increasing participation in stock market activities by financial
and non financial intermediaries, particularly of institutions
which are mainly investors has tended to create an orderly and
stable market.Further, the various growth-permitting factors including
regulatory measures, progressive spread of literacy and
dissemination of investment information all tend to
contribute to a healthy growth of the stock market. In the
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security market, equity shares are the most romantic of all the
form of securities.
Further more, equity analysis is more complicated than bond
appraisal, and greater skill is required in selecting equity than
fixed income securities. The attitude towards equity shares
has varied from extreme pessimism to optimism from time to
time.
It is equity shares that entice most investors, and some
investors have been known to feel grater sympathy for theirequity than their spouses. Presence of market and business
risks associated with such investments fails to keep the
investing public and institution out of the market because of
their confidence in the ultimate success of the equity shares,
i.e. towards overshadow risks. In fact the advantages of equity
shares ownership are enough to lure the investors and change
their attitude towards securities.
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MAJOR PLAYERS
1. UTI Securities
2. Angle Broking
3. INDIAINFOLINE SECURITIES PVT.LTD.
4. S S KANTILAL ISHWARLAL SECURITIES PVT LTD.
(www.sharekhan.com)
5. KOTAK SECURITIES LTD. (www.kotakstreet.com)
6. INDIA BULLS (www.indiabulls.com)
7. HDFC SECURITIES LTD. (www.hdfcsec.com)
8. RELIANCE MONEY
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Introduction to stock broking Firms
S. S. KANTILAL ISHWARLAL SECURITIES PVT. LTD.
(SHAREKHAN.COM):
Sharekhan, Indias leading stock broker is the retail arm of
SSKI, and offers you depository services and trade execution
facilities for equities, derivatives and commodities backed with
investment advice tempered by decades of broking experience.
A research and analysis team is constantly working to track
performance and trends. Thats why Sharekhan has the trading
products, which are having one of the highest success rates in
the industry. Sharekhan is having 240 share shops in 110 cities;
the largest chain of retail share shops in India is of
Sharekhan.
In future, Sharekhan is planning to enter in Mutual funds,
Insurance sector and banking sector to expand beyond the
market currently covered by it. And it has started MF (Mutual
Funds) on priority basis but wants to grow in it.
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KOTAK SECURITIES LIMITED (kotakstreet.com):
Kotak Securities Ltd., a strategic joint venture between Kotak
Mahindra Bank and Goldman Sachs (holding 25% - one of the
worlds leading investment banks and brokerage firms) is
Indias leading stock broking house with a market share of 5 -
6 %. Kotak Securities Ltd. has been the largest in IPO
distribution - It was ranked number One in 2003-04 as Book
Running Lead Managers in public equity offerings by PRIME
Database. It has also won the Best Equity House Award from
Finance Asia - April 2004.
Kotak Securities Ltd is also a depository participant with
National Securities Depository Limited (NSDL) and Central
Depository Services Limited (CDSL) providing dual benefitservices wherein the investors can use the brokerage services
of the company for executing the transactions and the
depository services for settling them. The company has 42
branches servicing around 1, 00,000 customers.
Kotakstreet.com the online division of Kotak Securities Limited
offers Internet Broking services and also online IPO and
Mutual Fund Investments.
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Kotak Securities Limited manages assets over 1700 crores
under Portfolio Management Services (PMS) which is mainly to
the high end of the market. Kotak Securities Limited has newly
launched Kotak Infinity as a distinct discretionary Portfolio
Management Service which looks into the middle end of the
market.
INDIA BULLS:
An India bull is India's leading retail financial services company
with 77 locations spread across 64 cities. Its size and strong
balance sheet allows providing varied products and services at
very attractive prices, our over 750 Client Relationship
Managers are dedicated to serving your unique needs.
India bulls is lead by a highly regarded management team that
has invested crores of rupees into a world class Infrastructure
that provides real-time service & 24/7 access to all
information and products. The India bulls Professional
Network offers real-time prices, detailed data and news,
intelligent analytics, and electronic trading capabilities, right
at your finger-tips. This powerful technology is complemented
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by our knowledgeable and customer focused Relationship
Managers.
Indiabulls offers a full range of financial services and products
ranging from Equities, Derivatives, Demat services and
Insurance to enhance wealth and to achieve the financial goals.
HDFC SECURITIES LTD (HDFCsec):
HDFC sec is a brand brought to you by HDFC Securities Ltd,
which has been promoted by the HDFC Bank & HDFC with the
objective of providing the diverse customer base of the HDFC
Group and other investors a capability to transact in the Stock
Exchanges & other financial market transactions. The services
comprise online buying and selling of equity shares on the
National Stock Exchange (NSE). Buying and selling of select
corporate debt and government securities on the NSE would be
introduced in a subsequent phase. In a few months, they will
also start offering the following online trading services on the
BSE and NSE:1. Buying and selling of shares on the BSE
2. Arbitrage between NSE & BSE
3. Trading in Derivatives on the NSE
4. Margin trading products.
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UTI SECURITIES LTD.: (UTISEL)
UTI Securities Ltd was incorporated on June 24, 1994 by Unit
Trust of India as a 100% subsidiary and on the repealing of the
UTI Act, the capital is now held by the Administrator of the
Specified Undertaking of Unit Trust of India (ASUUTI). UTI
Securities has been working as an independent professional
entity for providing financial intermediary and advisory
services to its corporate and retail clientele.
The Company has presence in major cities with 20 branches
and 50 franchisees to service a wide range of clients. The
company has also invested in the joint-venture company with
Standard Chartered Bank viz. Standard Chartered UTI
Securities (P) Ltd. that is engaged in primary dealership and
Government securities. The company is very soon going to start
Commodity Trading through its subsidiary, USEc Commodities
Ltd, which provides facility of commodity trading on NCDEX
and MCX.
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ANGEL BROKING
The Angel Group has emerged as one of the top 3 retail
broking houses in India. Incorporated in 1987, it has
memberships on BSE, NSE and the two leading commodityexchanges in India i.e. NCDEX & MCX.
Angel has always believed in offering the best of services totheir customers. Be it in form of focused research or state of
the art technology or customized product offering or
personalized touch to our services. Angel is the only 100%
retail stock broking house offering a gamut of retail centricservices.
E broking
Investment Advisory
Portfolio Management Services
Wealth Management Services
Commodities Trading
Angel Broking Ltd.Member on the BSE and DepositoryParticipant with CDSL
Angel Capital & Debt
Market Ltd.
Membership on the NSE Cash and
Futures & Options Segment
Angel Commodities
Broking Ltd.Member on the NCDEX & MCX
Angel Securities Ltd. Member on the BSE
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INDIA INFO LINE
India info line one-stop financial services shop, most respected
for quality of its advice, personalized service and cutting-edgetechnology.
Vision is to be the most respected company in the financial
services space.
The India Info line group, comprising the holding company,
India Info line Limited and its wholly-owned subsidiaries,
straddle the entire financial services space with offerings
ranging from Equity research, Equities and derivatives trading,Commodities trading, Portfolio Management Services, Mutual
Funds, Life Insurance, Fixed deposits, GoI bonds and othersmall savings instruments to loan products and Investment
banking. India Info line also owns and manages the websites
www.indiainfoline.com and www.5paisa.com The Company has a
network of 596 branches spread across 345 cities and towns.
It has more than 500,000 customers.
India Info line Ltd India Info line Limited is listed on both
the leading stock exchanges in India, viz. the Stock Exchange,
Mumbai (BSE) and the National Stock Exchange (NSE) and is
also a member of both the exchanges. It is engaged in thebusinesses of Equities broking, Wealth Advisory Services and
Portfolio Management Services. It offers broking services in
the Cash and Derivatives segments of the NSE as well as the
Cash segment of the BSE. It is registered with NSDL as well
as CDSL as a depository participant, providing a one-stopsolution for clients trading in the equities market. It has
recently launched its Investment banking and Institutional
Broking business.
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RELIANCE MONEY
Reliance money belongs to Anil Dhirubhai Ambani Group. It is aReliance capital company. It believes in simplifying trade.
Reliance money is mainly into:
IPO
Personal finance
Equity
Derivatives
Commodity
Forex
Mutual funds
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CHAPTER-3
(Project Work)
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PROJECT WORK
Research Design/ Research Methods
Research Design
A research design is simply a frame work or plan for a
study that is used as a guide in collecting and analyzing the
data. It is the overall operational pattern or frame work of the
project that stimulate, what information is to be collected
from which sources and by what procedure.
As far as the project is concerned, our study focuses on the
following design:
Exploratory Research Design:
The objective of our exploratory research is to find new
ideas of relationships between several facts. Exploratory
research reveals and helps us to understand the practices of
Stock broking.
The exploratory research includes the experts opinion
with the help of the company personnel and an interview
with customers,,
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Descriptive Research Design:
Descriptive design is a sound basis for making predictions
pertaining to the specific marketing practices which is a part
of the conclusive research. Its main aim is to collect data with
a definite purpose, which makes the facts practical and
valuable.
The descriptive research data would be collected bysecondary data sources like books, magazines, newspapers.
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Research Methodology
Research Philosophy:
Research Philosophy depends on the way we think about
the development of knowledge. Research Philosophy applied in
our project on Studying Customer satisfaction level is that
of Interpretivism.
We will use this research to understand the various
practices of company. It is therefore the role of the
interprevists (us) to seek, to understand the subjective realityof those that they study in order to be able to make sense of
and understand their motives, actions and intentions in a way
that is meaningful.
Data Collection Methods
The data would be collected in the form of Primary data
through an interview with the company personnel and survey at
Ahmedabad city with the help of Questionnaires for personnel
who are customers of broking firm and Secondary data.
DATA SOURCES
Primary Data:Primary data would be collected by taking the interview
of the brokerage firms customers. Qualitative, descriptive
research would be conducted with the help of structured
questionnaires.
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Secondary Data:
The secondary data will be gathered through company
brochures, company internal data already collected by the
company researchers and websites and websites of other
companies.
Sampling Design Process
Target Population:
As far as the project is concerned, the target population
would be people of Ahmedabad city who are associated in
trading activities.
Sampling Technique:
The Probability technique which will be used in the
project is that of Simple Random Sampling.
Sample Size:
Total Sample size would be 125.
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Field Work
The Project work is limited to Ahmedabad city.
Field work would include the following:
Taking the prior appointment from the respondents
and filling up the Questionnaires
Phone interviews.
Personnel interview with the company personnel
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CHAPTER-4
(Data Analysis)
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DATA ANALYSIS
1) In which brokerage house presently you have demat a/c?
Particulars No of Respondents
India Infoline 30
India bulls 18
Angel broking 35
Kotak securities 8
Reliance money 12
Sharekhan 6
Others 16
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2) What is the reason for choosing this brokerage house?
Particulars No. of respondents
Brokerage 34
Funding 46
SMS tips 25
ON-OF line trading facility 66
Exposure 77
Convenience 95
RM facility 20
Majority of the respondents have given the verdict that
convenience is at the top for them while choosing the broking
firm. Exposure is their second choice for their brokerage
house.RM facility is least preferred by the customers.
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3) What is your monthly turnover?
Particulars No. of Respondents
5000-10000 16
10001-25000 24
25001-50000 21
50001-100000 19
100001-500000 30
500000 or above 15
From the above graph we can say that 22.4% peoples monthly
turnover is between 100001 to 500000 while at the second position
19.2% respondents told that their monthly turnover is between
10001 to 25000.
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4) Do you have any other demat a/c along with this?
Yes 50
No 75
40% respondents have more than one demat A/C
Some of them have opened more than one A/C for good trading
tips.
Various firms provide tips so they analyze tips and trade
accordingly.
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5) WHAT IS ANNUAL MAINTENANCE CHARGE YOU ARE PAYING?
Company name AMC
India Infoline 0
Indiabulls 300
Kotak securities 350
Reliance money 0
Sharekhan 300
Angle Broking 200
Kotak Securities is charging the highest annual maintenance charge
Rs.350.
India Infoline & Reliance money are not charging the annual
maintenance charge. In the survey most of the respondents are of the view that annual
maintenance charge should not be there.
Most of the firms are charging AMC at an average of Rs.300
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6) FOR HOW LONG HAVE YOU BEEN TRADING ?
Particulars No of Respondents
< 1 month 12
1 to 6 month 37
6 to 12 month 20
1 to 5 years 25
> 5 years 31
Looking at the graph we can say that people who trade in the
market 1 to 6 months is highest 30% .
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7) HOW IS THE SERVICE OF YOUR BROKERAGE HOUSE?
Particulars No of Persons
Excellent 9
Very good 41
Good 37
Very bad 24
Bad 11
Poor 3
Most of the respondents have favored their broking firm and toldthat their firms service is very good. Only 2% respondents have
told that their firms service is poor.
33 % respondents have ranked their firm as very good.
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8) SATISFACTION LEVEL OF INVESTORS WITH THEIR BROKING FIRM.
Graph shows that 27.2% respondents are satisfied with their
broking firm. While 9.6% respondents are highly dissatisfied with
their firm.
The dissatisfied respondents were of the view that their service
provider should improve their Service and should provide better
facility. Like their queries should be solved immediately.
Some service provider neglects their customers & that is the major
reason of clients dissatisfaction.
Particulars No of Persons
Highly Satisfied 25
Moderately satisfied 28
Satisfied 34
Dissatisfied 26
Highly dissatisfied 12
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9) WHAT IS YOUR EXPECTATIONS FROM YOUR BROKING FIRM?
Suggestions No. of respondents
Low brokerage 41
Good tips 33
Less formal process 29
Good service 21
No AMC 26
In response to this question 32.8% respondents have demanded low
brokerage.
While 26.4% respondents require good trading tips.
Other suggestion includes RM facility, more exposure, Online fund
transfer facility, profit generation etc.
Some Reliance customer does not want recharge system.
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10) On which trading type you are trading more?
Intraday
Delivery
Trading No. of respondents
Intraday 42
Delivery 55
Both 28
Most of the people would like to trade on delivery basis, because
they want to reduce the risk of their money being lost.
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11) Which company has the highest satisfied customers?
Particulars Satisfied(%) Dis-satisfied(%)
India Infoline 70 30
India bulls 55 45
Angel broking 33 67
Reliance money 58 42
Others 56 44
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HYPOTHESIS TESTING
TESTING OF HYPOTHESIS USING CHI-SQUARE TEST
1) Null Hypothesis (H0): Investors are satisfied with their
broking firm.
2) Alternate Hypothesis (H1) : Investors are not satisfied with
their broking firm.
OBSERVED FREQUENCY(fo) TABLE
Factor Brokerage Exposure Total
Satisfied 42 36 78
Dissatisfied 22 25 47
Total 64 61 125
EXPECTED FREQUENCY(fe) TABLE
Factor Brokerage Exposure Total
Satisfied 39.94 38.06 78
Dissatisfied 24.06 22.94 47
Total 64 61 125
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CHI-SQUARE TABLE
Now Putting these values in the Equation :
(f0 - fe)2
2= -----------
fe
= 0.58 (Chi-Square calculated)
Degree of freedom: (C-1) (R-1) = 1
5% LEVEL OF SIGNIFICANT:
Table value = 3.84
Statistical conclusion:
Table value is grater then the calculated value so null hypothesis is
accepted.
Conclusion:
Here null hypothesis is accepted that means Investors are satisfied
with their broking firm.
Sr no.Observed
Frequency Oi
Expected
Frequency Ei(Oi-Ei) (Oi-Ei)2/Ei
1 42 39.94 2.06 0.11
2 36 38.06 -2.06 0.11
3 22 24.06 -2.06 0.18
4 25 22.94 2.06 0.18
Total 0.58
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CHAPTER-5(Findings)
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FINDINGS
India Infoline is among the best broking firms, preferred by the
customer.
Most of the Investors are satisfied with their broking firm.
Most of the companies provide similar brokerage slab to the
customer.
People trade only in equity; most of the people do not trade in
derivatives & commodity.
People prefer the firm which offers low brokerage & Funding
facility. People are not aware ofthe benefits oftrading in derivatives so lots
need to be done in this direction.
People generally prefers safe & risk less investment avenue.
Some people have fear of stock market in their mind.
Some Investors have more knowledge than employees of brokerage
house about broking services.
People wants to invest in stock market but they do not have adequate
knowledge of stock market so firms should educate people & help
them to invest in stock market.
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RECOMMENDATIONS AND SUGGESIONS
Stock Broking Firms should provide better services to acquire and
retain customers.
Firms should establish efficient Research & Analysis Department
for Security research, so that they can give accurate tips for trading.
Stock should not be sold out in case of debit.
A person sitting on terminal should not be over crowded.
Firms should provide Large screen for displaying stock updates.
Relationship Manager should be more knowledgeable than client.
Operational Activity (System) should be improved to make processless cumbersome.
Stock Broking Firm needs to make its marketing team strong and
also it should increase marketing activities such as promotional
campaigns.
Stock Broking Firm should educate the investors about Derivatives
& Commodities by organizing classes, corporate presentations,
taking part in consumer fairs, organizing events.
Stock Broking Firm should turn existing customers (who are
trading in Equity only) towards Derivatives & Commodities.
Stock Broking Firm may also use its helpline number for giving
education on securities.
Company may appoint special team for giving education &
attracting people towards trading securities.
8/6/2019 Satisfaction Level of Investors With Their Broking Firm
79/81
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Webography
1. www.Google.com
2. www.nseindia.com
3. www.bse-india.com
4. www.India Infoline.com
4 www.5Paisa.com
5 ww.mcx.com
6. www.ncdex.com
8/6/2019 Satisfaction Level of Investors With Their Broking Firm
80/81
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QUESTIONNAIRE
1) In which brokerage house presently you have demat A/C?
Ans. ____________________________________
2) What is the reason for choosing this brokerage house?
Brokerage Online- Offline trading facility
Funding Exposure
SMS Tips Convenience
RM Facility
3) What is your monthly turn over?
5000-10000 10001-25000
25001-50000 50001-100000
100001-500000 500000 or above
4) Do you have any other demat A/C along with this ?
Yes No
If yes, Name the broking firm ___________________________
5) On which transaction you are paying brokerage?
Intraday
Delivery
6) What is the annual maintenance charge you are paying?
Ans._________________________________
7) For how long have you been trading?
< 1Month 1 to 5 years
1 to 6 Months > 5 years
6 to 12 Months
8/6/2019 Satisfaction Level of Investors With Their Broking Firm
81/81
8) How is the service of your brokerage house?
Excellent Very bad
Very good Bad
Good Poor
9) How is the overall satisfaction level of your broking firm?
Highly satisfied Dissatisfied
Moderately Satisfied Highly dissatisfied
Satisfied
10) What are your expectations from your broking firm?
Ans._____________________________________________________
______________________________________________________
Name: ____________________________________
Age : ____________________________________
Occupation : ____________________________________
Address: ____________________________________
____________________________________
Mo: ____________________________________
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