This project as a whole can be divided into two parts. ? First part gives an insight about online trading and Dematerialization account. What is share trading and how buying and selling takes place. For trading, it is mandatory for us to have a demat or dematerialization account.
How to open a demat account and what all documents are required was part of our study. Various terms used in share market such as bears and bulls, intraday, delivery, settlement, index, etc. ? The second part of project represents the major players of India and a small comparative analysis has been done on their basis of services given by these different online trading portals with their brokerage rates, annual maintenance charges, account opening charges and customer base.
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Background of Stock Exchange of India
The emergence of stock market can be traced back to 1830.
In Bombay, business passed in the shares of banks like the commercial bank, the chartered mercantile bank, the chartered bank, the oriental bank and the old bank of Bombay and shares of cotton presses. In Calcutta, Englishman reported the quotations of 4%, 5%, and 6% loans of East India Company as well as the shares of the bank of Bengal in 1836. This list was a further broadened in 1839 when the Calcutta newspaper printed the quotations of banks like union bank and Agra bank. It also quoted the prices of business ventures like the Bengal bonded warehouse, the Docking Company and the storm tug company.
Between 1840 and 1850, only half a dozen brokers existed for the limited business. But during the share mania of 1860-65, the number of brokers increased considerably. By 1860, the number of brokers was about 60 and during the exciting period of the American Civil war, their number increased to about 200 to 250. The end of American Civil war brought disillusionment and many failures and the brokers decreased in number and prosperity. It was in those troublesome times between 1868 and 1875 that brokers organized an informal association and finally as recited in the Indenture constituting the “Articles of Association of the Exchange”.
On or about 9th day of July,1875, a few native brokers doing brokerage business in shares and stocks resolved upon forming in Bombay an association for protecting the character, status and interest of native share and stock brokers and providing a hall or building for the use of the members of such association. As a meeting held in the broker’ Hall on the 5th day of February, 1887, it was resolved to execute a formal deal of association and to constitute the first managing committee and to appoint the first trustees.
Accordingly, the Articles of Association of the Exchange and the Stock Exchange was formally established in Bombay on 3rd day of December, 1887. The Association is now known as “The Stock Exchange”. The entrance fee for new member was Re. 1 and there were 318 members on the list, when the exchange was constituted. The numbers of members increased to 333 in 1896, 362 in 1916and 478 in 1920 and the entrance fee was raised to Rs. 5 in 1877, Rs. 1000 in 1896, Rs. 2500 in 1916 and Rs. 48,000 in 1920. At present there are 23 recognized stock exchanges with about 6000 stock brokers.
Organization structure of stock exchange varies. 14 stock exchanges are organized as public limited companies, 6 as companies limited by guarantee and 3 are non-profit voluntary organization. Of the total of 23, only 9 stock exchanges have been permanent recognition. Others have to seek recognition on annual basis. These exchange do not work of its own, rather, these are run by some persons and with the help of some persons and institution. All these are down as functionaries on stock exchange. These are
- market makers
- Portfolio consultants
Stockbrokers Stock brokers are the members of stock exchanges. These are the persons who buy, sell or deal in securities. A certificate of registration from SEBI is mandatory to act as a broker. SEBI can impose certain conditions while granting the certificate of registrations. It is obligatory for the person to abide by the rules, regulations and the buy-law. Stock brokers are commission broker, floor broker, arbitrageur etc. Detail of registered brokers |Total no. of registered brokers as on 31. 03. 2008 |Total no. of sub-brokers as on 31. 03. 008 | |9000 |24,000 | 2. ) Sub-broker A sub-broker acts as agent of stock broker. He is not a member of a stock exchange. He assists the investors in buying, selling or dealing in securities through stockbroker. The broker and sub-broker should enter into an agreement in which obligations of both should be specified. Sub-broker must be registered SEBI for a dealing in securities. For getting registered with SEBI, he must fulfill certain rules and regulation.
Market maker is a designated specialist in the specified securities. They make both bid and offer at the same time. A market maker has to abide by bye-laws, rules regulations of the concerned stock exchange. He is exempt from the margin requirements. As per the listing requirements, a company where the paid-up capital is Rs. 3 crore but not more than Rs. 5 crore and having a commercial operation for less than 2 years should appoint a market maker at the time of issue of securities. Portfolio consultants A combination of securities such as stocks, bonds and money market instruments is collectively called as portfolio.
Whereas the portfolio consultants are the persons, firms or companies who advise, direct or undertake the management or administration of securities or funds on behalf of their clients.
THEORY OF SHARE MARKET
Stock Exchange: A common platform where buyers and sellers come together to transact in shares and stocks. Electronic Trading: Eliminates the need for physical trading floors. Brokers can trade from their offices using fully automated screen based processes. Their workstations are connected to a stock exchange’s central computer via satellite using Very Small Aperture Terminus (VSATs).
The orders placed by the brokers reach the exchange’s central computer and are matched electronically. Stock Exchanges in India: The stock exchange Mumbai (BSE) and National Stock Exchange (NSE) are the country’s two leading stock exchanges. There are 20 other regional stock exchanges connected via Interconnected Stock exchange (ICSE). Index: An Index is a comprehensive measure of market trends intended for investors who are concerned with general stock market price movements. An index comprises stocks that have large liquidity and market capitalization.
At NSE, the capitalization of NIFTY (fifty selected stocks) is takes as a base capitalization, with the value set at 1000. Similarly BSE sensitivity index consists of 30 stocks. The index value compares the day’s market capitalization vis-a-vis base capitalization and indicates how prices in general have move over a period of time. Stock: In financial market, stock refers to the supply of money that a company has raised. This supply comes from the people who have given the company money in hope that the company will make their money grow. Bears and Bulls:
Bears are cautious animals who don’t like to move too fast. Bulls are bold who might charge right ahead. An investor is said to be bearish if he or she believes that the stock market will go down. A bearish investor will buy the stock cautiously. A “Bullish” investor believes that the market will go up. He or she will charge ahead and put more money into the market. An investor can be bearish or bullish about a particular kind of stock. Likewise the term “Bear Market” describes the time the stock prices have been falling on the whole. A “Bull Market” is a period when stock prices are generally rising.
The shares move from investors account to Brokers Clearing Member account via NSDL. A Broker clearing member accounts is credited. 3. Before settlement day broker transfers shares from his clearing member account to Clearinghouse via NSDL. His account is debited. 4. On settlement day Broker receives payment from clearing house which he passes on to the investor. Intraday Based Trading: Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions will usually (not necessarily always) be closed before the market close of the trading day.
This is the opposite of After-hours trading. Traders that participate in day trading are called day traders. Delivery Based Trading: Delivery based trading involves buying shares on a market day, holding them and selling them only after receiving the delivery of those shares in demat account.
ONLINE SHARE TRADING
Online Trading involves investment activity which takes place over the internet and it does not require physical inclusion of broker. An investor has to register with an online trading portal like Sharekhan. com, India Infoline. om and many companies like that and investor gets into an agreement with the firm to trade in different securities according to terms and conditions in the agreement. As the servers of the online portal are connected all the time to the stock exchange and designated banks the order processing is done in real time and the investors can also have updates on trading. They can also check the status of their order either through e-mails or through interface that it cannot be accessed by the third party. Some options are usually given to the users such as to link their bank account, Demat accounts and Brokerage account into a single interface.
A single window is there for all exchanges and a single screen is there for the complete order routing mechanism. There are two broad models in play in the online brokerage space
- Bank-backed firms
- Entrepreneur- floated firms
Bank-backed firms: Bank-backed firms such as ICICIdirect. com and HDFC Securities have expanded on the basis of their brand name and trust of investors in them. The integrated 3-in-1 account offered by these companies help their parent bank by giving it accounts along with float income. Entrepreneurship-floated firms:
MAJOR PLAYERS OF INDIA
The following are the major players:
- A. G. Shares & Securities
- India Bulls
- India Infoline
- Karvy Share khan
- Motilal oswal Secureties
- HDFC Securities
- Reliance Money A. G.
Karvy is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate in India. Karvy has a professional management team and ranks among the best in technology, operations and research of various industrial segments. History of Karvy: The birth of Karvy was on a modest scale in 1981.
It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company, Karvy Consultants Limited. They started with consulting and financial accounting automation and carved inroads into the field of registry and share accounting by 1985. Since then, karvy utilized its experience and superlative expertise to go from strength to strength, to better their services, to innovate, diversify and in the process, evolved as one of India’s premier integrated financial service enterprise.
MOTILAL OSWAL SECURITIES
Incorporated in 1987, Motilal Oswal Securities Ltd is a well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies.
Company have a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. They are headquartered in Mumbai and as of September 30th, 2009, had a network spread over 576 cities and towns comprising 1,257 Business Locations operated by them. As at September 30th, 2009, company had 5,80,667 registered customers.
Following are the features of MOSt E-Broking account:
- Easy single screen trader with instant trade confirmation similar to exchange based trading terminals.
- Access to various online reports like margin report, Demat A/c details, trades executed, turnover report, net position report with mark to market profit/loss and realized profit.
- Online transfer funds through HDFC Bank Awards
- 2005, Asiamoney Brokers ranked MOSt the best Indian brokerage firm in India.
- March 2006, AQ Research declared MOSt the best research house for Indian stocks.
Religare Enterprises Limited is Ranbaxy Laboratories Limited promoted financial product and service provider company. Religare provide its service in three different segments including Retail, Wealth management and the Institutional spectrum. Company offers wide range of services including equities, commodities, insurance broking, wealth advisory, portfolio management services, personal finance services, Investment banking and institutional broking services. Religare retail network has more than 900 locations in 300 cities and towns in India.
Religare provides the online gateway to their investors so investor can trade online in Equities, Commodities, apply for IPOs, invest in Mutual Funds, and buy Insurance. Religare Securities Limited (RSL) is a subsidiary company of Religare Enterprises Ltd and involve in equity related services include online trading at BSE and NSE, Derivatives, commodities, IPO, Mutual fund, Investment banking and institutional broking services. People who wonder where Religare word came from, it's a Latin word meaning 'to bind together'. Type of Account
Religare offers its wide range of financial services though a sophisticated and customized trading platform - R-ACE (Religare Advanced Client Engine). Below are 3 flavors of R-ACE accounts available to the investors. 1. R-ACE (Basic) R-ACE (Religare Advanced Client Engine) the basic online trading account provided by Religare. Investor can trade and access their account information online and over the phone as well. This account comes with a browser based online trading platform and no additional software installation needed. 2. R-ACE Lite (Advanced)
R-ACE Lite is the advanced trading platform for the investor of Religare. This trading account provides the entire feature of R-ACE (Basic) account. In addition it also provides real-time streaming stock quotes and alerts. This trading platform is also browser based and no software installation is needed. 3. R-ACE Pro (Professional) As the name indicates this account is for high volume traders. Along with the features from above 2 accounts, this account also comes with Trading Terminal software which needs to install on your computer.
METHODOLOGY OF STUDY
Research can be defined as a systemized effort to gain new knowledge.
A research is carried out by different methodologies which have their own pros and cons. Research methodology is a way to solve research in study and solving research problems along with logic behind them are defined through research methodology. Thus while talking about research methodologies we are not only talking of research methods but also consider the logic behind the methods. We are in context of our research studies and explain why it is being used a particular method or technique and why the others are not used.
So that research result is capable of being evaluated either by researcher himself or by others. Research Methodology: Research has its special significance in solving various operational and planning problems of business and industry. Research methodology is a way to systematically analyze the research problem. Sampling Methods: A sample is the representative of the population which will predict the behavior of the whole universe While deciding about the method of data collection to be used for the study the researcher should keep two types of data. .
- http://www. chittorgarh. com/newportal/online-stock-brokers-list. asp
- www. indiainfoline. com
- www. 5paisa. com
- www. sharekhan. com
- www. indiabulls. com
- www. agssl. com
- www. karvy. com
- www. wikipedia. com
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