EXECUTIVE SUMMARY

Executive Summary
A good broker system must be able to cope up with an extremely complex and dynamic environment. The microstructure of the stock market in which the broker works is highly volatile and dynamic. Many stocks are available to be bought and sold, each exhibiting its own patterns and characteristics. With so many options and considerations that need to be taken into account, it is an extremely arduous task for a broker to investigate aspects about stock market and consistently provide effective advice to their clients. Thus broker perform their day to day tasks with the aid of a broker system. Such a system provides tools for interacting with stock exchanges and performing analysis. As a consequence, these broker systems are quite large and complicated by themselves. This research aims is to analyze stock brokers on the basis of their services, products, growth, and their subsidiaries.
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Because stock brokers are one of the main participants in stock exchanges worldwide, they often act as an agent for their clients, making trades on their behalf. They also act as advisers, providing suggestions to their clients on what stock to buy and sell. There is a growing competition between brokerage houses in post reform India. For an investor it is always difficult to decide which brokerage firm to choose. Research was carried out to find the stand of Fairwealth Securities Limited among the influential brokerage houses of the city and to figure out what people prefer while investing in stock market. The study suggests that people are reluctant while investing in stock and commodity market due to lack of knowledge. Main purpose of investment is returns and liquidity, commodity market is less preferred by investors due to lack of awareness. In this study the performance of FairWealth Securities is compared with India bulls Ltd, Religare Ltd, Karvy Ltd, Anand Rathi, and Kotak Securities and on the basis of the various charges they take and their services. A survey was also done

in order to know companys competence over other companies and the convenience level they offer to their customers.

Evolution of Stock Markets

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 meagre and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. 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 `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. 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.

Indian Stock Exchanges - An Umbrella Growth

The Second World War broke out in 1939. It gave a sharp boom, which was followed by a slump. But, in 1943, the situation changed radically, when India was fully mobilized as a supply base. On account of the restrictive controls on cotton, bullion, seeds and other commodities, those dealing in them found in the stock market as the only outlet for their activities. They were anxious to join the trade and their number was swelled by numerous others. Many new associations were constituted for the purpose and Stock Exchanges in all parts of the country were floated. The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940) and Hyderabad Stock Exchange Limited (1944) were incorporated. In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the Delhi Stocks and Shares Exchange Limited were floated and later in June 1947, amalgamated into the Delhi Stock Exchange Association Limited.

Post-Independence Scenario
Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963. Most of the other exchanges languished till 1957 when they applied to the Central Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta, Madras, Ahmedabad, Delhi, Hyderabad and Indore, the well-established exchanges, were recognized under the Act. Some of the members of the other Associations were required to be admitted by the recognized stock exchanges on a concessional basis, but acting on the principle of unitary control, all these pseudo stock exchanges were refused recognition by the Government of India and they thereupon ceased to function. Thus, during early sixties there were eight recognized stock exchanges in India (mentioned above). The number virtually remained unchanged, for nearly two decades. During eighties, however, many stock exchanges were established:
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Cochin Stock Exchange (1980), Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Guwahati Stock Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently established exchanges - Coimbatore and Meerut. Thus, at present, there are totally twenty-one recognized stock exchanges in India excluding the Over the Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).

STOCK BASIS

Stock Basis
Introduction
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Wouldn't you love to be a business owner without ever having to show up at work? Imagine if you could sit back, watch your company grow, and collect the dividend checks as the money rolls in! This situation might sound like a pipe dream, but it's closer to reality than you might think.

As you've probably guessed, we're talking about owning stocks. This fabulous category of financial instruments is, without a doubt, one of the greatest tools ever invented for building wealth. Stocks are a part, if not the cornerstone, of nearly any investment portfolio. When you start on your road to financial freedom, you need to have a solid understanding of stocks and how they trade on the stock market. Over the last few decades, the average person's interest in the stock market has grown exponentially. What was once a toy of the rich has now turned into the vehicle of choice for growing wealth? This demand coupled with advances in trading technology has opened up the markets so that nowadays nearly anybody can own stocks. Much is learned from conversations around the
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water cooler with others who also don't know what they're talking about. Chances are you've already heard people say things like, "Bob's cousin made a killing in XYZ Company, and now he's got another hot tip..." or "Watch out with stocks--you can lose your shirt in a matter of days!" So much of this misinformation is based on a get-rich-quick mentality, which was especially prevalent during the amazing dotcom market in the late '90s. People thought that stocks were the magic answer to instant wealth with no risk.

The Definition of a Stock

Plain and simple, stock is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing. Being an Owner Holding a company's stock means that you are one of the
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many owners (shareholders) of a company and, as such, you have a claim (albeit usually very small) to everything the company owns. Yes, this means that technically you own a tiny sliver of every piece of furniture, every trademark, and every contract of the company. As an owner, you are entitled to your share of the company's earnings as well as any voting rights attached to the stock.

Example stock certificate

A stock is represented by a stock certificate. This is a fancy piece of paper that is proof of your ownership. In today's computer age, you won't actually get to see
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this document because your brokerage keeps these records electronically, which is also known as holding shares "in street name". This is done to make the shares easier to trade. In the past, when a person wanted to sell his or her shares, that person physically took the certificates down to the brokerage. Now, trading with a click of the mouse or a phone call makes life easier for everybody.

Being a shareholder of a public company does not mean you have a say in the day-to-day running of the business. Instead, one vote per share to elect the board of directors at annual meetings is the extent to which you have a say in the company.

The management of the company is supposed to increase the value of the firm for shareholders. If this doesn't happen, the shareholders can vote to have the management removed, at least in theory. In reality, individual investors like you and I don't own enough shares to have a material influence on the company. It's really the big boys like large institutional investors and

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billionaire

entrepreneurs

who

make

the

decisions.

For ordinary shareholders, not being able to manage the company isn't such a big deal. After all, the idea is that you don't want to have to work to make money, right? The importance of being a shareholder is that you are entitled to a portion of the companys profits and have a claim on assets. Profits are sometimes paid out in the form of dividends. The more shares you own, the larger the portion of the profits you get. Your claim on assets is only relevant if a company goes bankrupt. In case of liquidation, you'll receive what's left after all the creditors have been paid. This last point is worth repeating: the importance of stock ownership is your claim on assets and earnings. Without this, the stock wouldn't be worth the paper it's printed on.

Another extremely important feature of stock is its limited liability, which means that, as an owner of a stock, you are not personally liable if the company is not able to pay its debts. Other companies such as partnerships are set up so that if the partnership goes bankrupt the creditors can come after the partners
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(shareholders) personally and sell off their house, car, furniture, etc. Owning stock means that, no matter what, the maximum value you can lose is the value of your investment. Even if a company of which you are a shareholder goes bankrupt, you can never lose your personal assets.

Debt vs. Equity

Why does a company issue stock? Why would the founders share the profits with thousands of people when they could keep profits to themselves? The reason is that at some point every company needs to raise money. To do this, companies can either borrow it from somebody or raise it by selling part of the company, which is known as issuing stock. A company can borrow by taking a loan from a bank or by issuing bonds. Both methods fit under the umbrella of debt financing. On the other hand, issuing stock is called equity financing. Issuing stock is advantageous for the company because it does not require the company to pay back the money or make interest payments along the way. All that the shareholders get in return for their money is the hope that the shares will
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someday be worth more than what they paid for them. The first sale of a stock, which is issued by the private company itself, is called the initial public offering (IPO). It is important that you understand the distinction between a company financing through debt and financing through equity. When you buy a debt investment such as a bond, you are guaranteed the return of your money (the principal) along with promised interest payments. This isn't the case with an equity investment. By becoming an owner, you assume the risk of the company not being successful - just as a small business owner isn't guaranteed a return, neither is a shareholder. This means that if a company goes bankrupt and liquidates, you, as a shareholder, don't get any money until the banks and bondholders have been paid out; we call this absolute priority. Shareholders earn a lot if a company is successful, but they also stand to lose their entire investment if the company isn't successful.

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Risk
It must be emphasized that there are no guarantees when it comes to individual stocks. Some companies pay out dividends, but many others do not. Without dividends, an investor can make money on a stock only through its appreciation in the open market. On the downside, any stock may go bankrupt, in which case your investment is worth nothing. Although risk might sound all negative, there is also a bright side. Taking on greater risk demands a greater return on your investment. This is the reason why stocks have historically outperformed other investments such as bonds or savings accounts.

Types of Stock

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1.

Common Stock: Common stock is, well, common. When people talk about
stocks they are usually referring to this type. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid.
2.

Preferred Stock: Preferred stock represents some degree of ownership in a

company but usually doesn't come with the same voting rights. With preferred shares, investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation, preferred shareholders are paid off before the common shareholder (but still after debt holders). Preferred stock may also be callable, meaning that the company has
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the option to purchase the shares from shareholders at anytime for any reason (usually for a premium).
3.

Different Classes of Stock: Common and preferred are the two main forms
of stock; however, it's also possible for companies to customize different classes of stock in any way they want. The most common reason for this is the company wanting the voting power to remain with a certain group; therefore, different classes of shares are given different voting rights.

How Stock Trade

Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price.

Some exchanges are physical locations where transactions are carried out on a trading floor. The other type of exchange is virtual, composed of a network of computers where trades are made electronically.

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The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing.

Just imagine how difficult it would be to sell shares if you had to call around the neighborhood trying to find a buyer.

Really, a stock market is nothing more than a super-sophisticated farmers' market linking buyers and sellers. Before we go on, we should distinguish between the primary market and the secondary market.

The primary market is where securities are created (by means of an IPO) while, in the secondary market, investors trade previously-issued securities without the involvement of the issuing-companies.

The secondary market is what people are referring to when they talk about the stock market. It is important to understand that the trading of a company's stock does not directly involve that company.

The New York Stock Exchange:

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The most prestigious exchange in the world is the New York Stock Exchange (NYSE).

The NYSE is the first type of exchange (as we referred to above), where much of the trading is done face-to-face on a trading floor.

This is also referred to as a listed exchange. Orders come in through brokerage firms that are members of the exchange and flow down to floor brokers who go to a specific spot on the floor where the stock trades.

At this location, known as the trading post, there is a specific person known as the specialist whose job is to match buyers and sellers.

Prices are determined using an auction method: the current price is the highest amount any buyer is willing to pay and the lowest price at which someone is willing to sell.

Once a trade has been made, the details are sent back to the brokerage firm, who then notifies the investor who placed the order.

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The NASDAQ:
The second type of exchange is the virtual sort called an over-the-counter (OTC) market, of which the NASDAQ is the most popular. These markets have no central location or floor brokers whatsoever. Trading is done through a computer and telecommunications network of dealers. It used to be that the largest companies were listed only on the NYSE while all other second tier stocks traded on the other exchanges. The tech boom of the late '90s changed all this; now the NASDAQ is home to several big technology companies such as Microsoft, Cisco, Intel, Dell and Oracle. This has resulted in the NASDAQ becoming a serious competitor to the NYSE. .

Other Exchanges: The third largest exchange in the U.S. is the American
Stock Exchange (AMEX). The AMEX used to be an alternative to the NYSE,
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but that role has since been filled by the NASDAQ. In fact, the National Association of Securities Dealers (NASD), which is the parent of NASDAQ, bought the AMEX in 1998. Almost all trading now on the AMEX is in small-cap stocks and derivatives. There are many stock exchanges located in just about every country around the world. American markets are undoubtedly the largest, but they still represent only a fraction of total investment around the globe. The two other main financial hubs are London, home of the London Stock Exchange, and Hong Kong, home of the Hong Kong Stock Exchange. The last place worth mentioning is the over-the-counter bulletin board (OTCBB). investing in an OTCBB stock very risky. This makes

The important things to grasp about this subject are the following:

1. At the most fundamental level, supply and demand in the market determines stockprice.

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2. Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of two companies is meaningless. 3. Theoretically, earnings are what affect investors' valuation of a company, but there are other indicators that investors use to predict stock price. Remember, it is investors' sentiments, attitudes and expectations that ultimately affect stock prices. 4. There are many theories that try to explain the way stock prices move the way they do. Unfortunately, there is no one theory that can explain everything

Using a Brokerage: The most common method to buy stocks is to use a

brokerage. Brokerages come in two different flavors. Full-service brokerages offer you (supposedly) expert advice and can manage your account; they also charge a lot. Discount brokerages Offer little in the way of personal attention but are much cheaper. At one time, only the wealthy could afford a broker since only

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the expensive, full-service brokers were available. With the internet came the explosion of online discount brokers.

DRIPs & DIPs: Dividend reinvestment plans (DRIPs) and direct investment
plans (DIPs) are plans by which individual companies, for a minimal cost, allow shareholders to purchase stock directly from the company. Drips are a great way to invest small amounts of money at regular intervals.

How to Read a Stock Table/Quote

Any financial paper has stock quotes that will look something like the image below:

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Columns 1 & 2: 52-Week High and Low - These are the highest and lowest prices at which a stock has traded over the previous 52 weeks (one year). This typically does not include the previous day's trading.

Column 3: Company Name & Type of Stock - This column lists the name of the company. If there are no special symbols or letters following the name, it is common stock. Different symbols imply different classes of shares. For example, "of" means the shares are preferred stock.

Column 4: Ticker Symbol - This is the unique alphabetic name which identifies the stock. If you watch financial TV, you have seen the ticker tape move across the screen, quoting the latest prices alongside this symbol.

Column 5: Dividend per Share - This indicates the annual dividend payment per share. If this space is blank, the company does not currently pay out dividends.

Column 6: Dividend Yield - The percentage return on the dividend. Calculated as annual dividends per share divided by price per share.
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Column 7: Price/Earnings Ratio - This is calculated by dividing the current stock price by earnings per share from the last four quarters. For more detail on how to interpret this, see our P/E Ratio tutorial.

Column 8: Trading Volume - This figure shows the total number of shares traded for the day, listed in hundreds. To get the actual number traded, add "00" to the end of the number listed.

Column 9 & 10: Day High and Low - This indicates the price range at which the stock has traded at throughout the day. In other words, these are the maximum and the minimum prices that people have paid for the stock.

Column 11: Close - The close is the last trading price recorded when the market closed on the day. If the closing price is up or down more than 5% than the previous day's close, the entire listing for that stock is bold-faced. Keep in mind, you are not guaranteed to get this price if you buy the stock the next day because the price is constantly changing.

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Column 12: Net Change - This is the dollar value change in the stock price from the previous day's closing price. When you hear about a stock being "up for the day," it means the net change was positive.

The Bulls: A bull market is when everything in the economy is great, people
are finding jobs, gross domestic product (GDP) is growing, and stocks are rising. Things are just plain rosy! Picking stocks during a bull market is easier because everything is going up. Bull markets cannot last forever though, and

sometimes they can lead to dangerous situations if stocks become overvalued. If a person is optimistic and believes that stocks will go up, he or she is called a "bull" and is said to have a "bullish outlook".

The Bears: A bear market is when the economy is bad, recession is looming
and stock prices are falling. Bear markets make it tough for investors to pick profitable stocks. One solution to this is to make money when stocks are falling using a technique called short selling. Another strategy is to wait on the sidelines
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until you feel that the bear market is nearing its end, only starting to buy in anticipation of a bull market. If a person is pessimistic, believing that stocks are going to drop, he or she is called a "bear" and said to have a "bearish outlook".

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NATIONAL STOCK EXCHANGE

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National Stock Exchange (NSE)

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards.

On the basis of the recommendations of high-powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.

The National Stock Exchange of India (NSE), is one of the largest and most advanced stock markets in India.

Its index is NIFTY which comprises stocks of 50 companies.

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 The NSE is the world's third largest stock exchange in terms of transactions. It is located in Mumbai, the financial capital of India.
st

The NSE VSAT terminals, 2799 in total (31 December 2005), cover 320 cities in India.

The NSE was set up in 1992 by leading financial institutions (IDBI, LIC, UTI, ICICI, SBI and others) and was the first one to offer screen based trading all over India.

Trading at NSE takes place through a fully automated screen-based trading mechanism.

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BOMBAY STOCK EXCHANGE

BSE (Bombay Stock Exchange)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.

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 Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875.

It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.

The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX (an index of stocks of 30 companies), is tracked worldwide.

Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatized entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). The Stock Exchange, Mumbai (BSE)

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 The BSE is the oldest stock exchange in India, with the largest number of quoted securities.

Today it has over 6,000 stocks traded, with a total market capitalization of around `10,000 billion. The average daily turnover on the BSE varies between `25 billion and `40 billion. The number of trades executed on the Exchange increased from 80,000 in 1997-1998 to 295,000 in 1999-2000.

With demutualization, the trading rights and ownership rights have been delinked effectively addressing concerns regarding perceived and real conflicts of interest.

The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange.

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 The Board is inclusive and is designed to benefit from the participation of market intermediaries.

In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broadbased.

The day-to-day operations of the Exchange are managed by the Managing Director and a management team of professionals. The Exchange has a nationwide reach with a presence in 417 cities and towns of India.

The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

OPERATION OF STOCK EXCHANGES

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The stock exchanges are managed by Board of Directors or Council of Management consisting of elected brokers and representatives of Government and Public appointed by SEBI. The Boards of stock exchanges are empowered to make and enforce rules, bye-laws and regulations with jurisdiction over all its members. Their enrolment as member is regulated and controlled by SEBI. A non-member can deal in securities only through members. A member can act as a Badla Financier, Commission Broker, and Dealer in Odd lots, Government Securities, Jobber, and Market Maker or under writer. INSTITUTIONAL STRUCTURE OF THE INDIAN STOCK MARKET Market Intermediaries Stock exchanges (cash Market) Stock Exchanges (Derivative Market) Brokers (Cash Segment) Corporate Brokers (Cash Segment) Sub Brokers (Cash Segment) Brokers (Derivatives) FII
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Number of Intermediaries 19 2 9487 4183 44073 1442 1319

Custodians Depositors Merchant bankers Bankers to an issue Mutual funds 40

15 2 155 50

STOCK BROKING

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STOCK BROKING

A stock broker is a person or a firm that trades on its clients behalf, you tell them what you want to invest in and they will issue the buy or sell order. Some stock brokers also give out financial advice that you a charged for. Brokerage service is a service that enables one to buy or sell equity shares, debentures, mutual fund units or related financial instruments. The brokerage house receives a commission for trading in such securities.

Types of stock brokers:1. Full Service Broker - A full-service broker can provide a bunch of services such as investment research advice, tax planning and retirement planning.

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2. Discount Broker A discount broker lets you buy and sell stocks at a low rate but doesnt provide any investment advice. 3. Direct-Access Broker- A direct access broker lets you trade directly with the electronic communication networks (ECNs) so you can trade faster.

Function of a stock exchange member:Members of a stock exchange are popularly called Brokers. Broadly speaking, they have two clearly distinguishable functions: (a) The members act as Brokers, that is, as agents for buying and selling securities on behalf of their clients and charging a commission on the proceeds. (b) The members can also act as Dealers, that is as principals (or jobbers as we shall see later) for buying and selling securities on their own account for a profit or at a loss. A member can thus act as a Broker or Principal or both. ROLE PLAYED BY THESE SPECIALISTS IN STOCK EXCHANGE:-

1)

Commission Broker:-A commission broker executes buy and sale order

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of his clients against a commission (termed as brokerage) prescribed by the authority. By and large, every member acts as commission brokers.

2)

Floor Broker:-A floor broker is officially not attached to other members.

He executes buy or sale orders on behalf of any commission broker and earns a share of the brokerage from the commission broker. Floor brokers are now a day very few in number.

3)

Taravaniwala or Jobber:-A member in addition to being a broker can

also act as a dealer or principal. A jobber is a member who acts as a principal, that is, he himself buys and sells stocks. A jobber specializes in stocks located at the same trading post and trades in and out of the market for a small difference in price. For instance, a jobber in Asian Paints can buy Asian Paints shares from a commission broker (who is willing to sell) at `100 and sell the same to other broker (who is willing to buy) at `105. The `5 difference in price will be the jobber's margin.

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4)

Dealer in Non-Cleared Securities:-These members act as principals for

buying and selling those shares that are not actively traded in the market. Though they buy or sell any volumes of shares, the price at which they trade depends on the trading activity of the shares during transactions. At times, jobbers too specialize in trading in inactive stocks. They receive orders from other members at a price recorded in their books and the orders are executed when business is possible.

5)

Arbitrageur:-Most of the shares these days are quoted in more than one
stock exchange and therefore, prices of a same company's share may vary at two different exchanges. An arbitrageur (who is a dealer in foreign securities, that is, securities listed in other stock exchanges) specializes in transacting in different markets at the same time and profits by the difference in prices between the two centers.

6)

Security Dealer:-A security dealer is a member who specializes in buying

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and selling of gilt-edged securities. Only few members are invited to such dealings, due to lack of public interest in such securities.

REGULATORY FRAMEWORK

The four main legislations governing the securities market are: (a) The SEBI Act, 1992 which establishes SEBI to protect investors and develop and regulate securities market: (b) The Companies Act, 1956, which sets out the code of conduct for the corporate sector in relation to issue, allotment and transfer of securities, and disclosures to be made in public issues;
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(c)

The Securities Contracts (Regulation) Act, 1956, which provides for regulation of transactions in securities through control over stock exchanges; and

(d)

The Depositories Act, 1996 which provides for electronic maintenance and transfer of ownership of demat securities.

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INTRODUCTION OF THE COMPANY

INTRODUCTION TO COMPANY
In most industrialized countries, a substantial part of financial wealth is not managed directly by savers, but through a financial intermediary, which implies
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the existence of an agency contract between the investor and a broker. Therefore, delegated brokerage management is arguably one of the most important agency relationships intervening in the economy, with a possible impact upon financial market and economic developments at a macro level. In most of the metros, people like to put their money in stock options instead of dumping t in the bank. Now, this trend has picked pace in small but fast developing cities like Ludhiana, Patiala, Chandigarh, Gurgaon, etc. My research is based on the residents of Patiala and its nearby areas.

FairWealth Securities Limited

is a leading Indian Financial Services

firm established in the year 2005 with an objective of becoming a financial powerhouse providing all financial solutions under one roof with dedicated customer service and commitment to provide value for Money to the clients. FairWealth Group has diversified interests in multiple asset classes including Financial Services, Currency and Commodities. The company

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has its network spread over 300 cities and towns comprising 450 Business Associates, 34 Branch Offices across Pan India. FairWealth Securities is a professionally managed company, led by a team with outstanding managerial acumen. The company is supported by more than 200 professionals keeping an eye on the intricate financial needs of its clients and caters to both their short term and long term financial needs through a comprehensive bouquet of investment services. In the Financial Services Domain, FairWealth Securities Ltd. and FairWealth Commodity Pvt. Ltd. provides customer centric services in the areas of Equity and Commodities Broking, Currency Broking, Depository Participant Services, Risk and Investment Planning through Insurance, Mutual Funds, Portfolio Management Services and Deposits. After successfully creating a stable platform for dealing in various Financial Products the Company is perfectly poised to launch its Institutional Business and use its experience and exposure in the Financial Markets to add
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value to the clients who do not have adequate resources in terms of time or research capabilities

MANAGEMENT

Mr. DhirendraGaba (Managing Director)

Mr. DhirendraGaba, Founder and Managing director could foresee the opportunities offered by the stock market and thus FairWealth Securities were evolved in 2005. Mr. GABA, a law graduate, has a vast experience of 15 years in the stock market. He has been actively associated with the stock markets operations since 1995. Under his leadership, the organization has rapidly expanded and made a widespread presence across India. FairWealth has seamlessly grown into a financial services company par excellence. Mr. GABA is valued for his understanding of the stock market, in analyzing and advising companies, researching and investing in stocks. He gives top priority to 'competitive ability', 'scalability' and 'management quality' of the enterprise.
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Mr. Naveen GABA (Director- Sales & Marketing)

Mr. Naveen GABA, co-promoter of the Company, is an Art Graduate. He has a wide experience of 15 years. He joined the business as a Director of FairWealth and took charge of the entire marketing and customer support division of the company. He heads the sales and marketing activities Pan India. His prime area of focus is institutional business and maintaining investor relations. He is also responsible for retail business and institutional business development. Mr. Naveen GABA has been instrumental in encouraging professional marketing in the organization and has immense experience in the marketing of financial products and services.

Mr. Arvinder Singh Nanda (Chief Operating Officer)

Mr. Arvinder Singh Nanda has 15 Years of extensive experience in Broking sphere. He is a strategic planner and has an expertise in managing profit centers,

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product development and IT management. During his last assignments, he has worked with companies of repute in the financial services industry.

Ms. Sharmila Joshi (Head-Equity)

Sharmila Joshi brings with her a rich experience of over 17 years in managing large brokerage business. She has an expertise in Research and Institutional sales and is instrumental in scaling up the Institutional Equities business. Sharmila has worked with reputed organization within the industry namely Asit. C. Mehta, Prabhudas Lilladhar, Emkay. She has insight knowledge of the Indian Equity markets and is known as a person of repute within the Indian Financial Services Industry.

Mr. Surendra Mehta (Executive Director-Business Development

Mr. Surendra Mehta is one of the Director of FairWealth Securities Limited. He has been associated with the company since inception. Mr Mehta, a Commerce Graduate and a Qualified Accountant from UK is a professional with over 20+

50

years of experience in the field of Stock Markets. In the company Mr. Mehta is looking after all the activities related to the Business Development of the company across Pan India.

Mr. Rajesh Gupta (Chief Investment Officer)

Mr. Rajesh Gupta is credited for the acclaimed Research Capabilities at FairWealth. He possesses expertise in equity research. Mr. Gupta started his investment and advisory services in the year 1988-89. His fundamental outlook has provided impetus to the organizations research team. When it comes to analyzing the market, Mr. Gupta is truly a genius. His hands-on experience and fundamental knowledge of the market can predict the market trend in initial stages. He has managed to identify numerous multi-baggers in the past decade, notable being Visaka Industries, Indoco Remedies, Hyderabad Industries and Everest Industries.

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MANAGEMENT PHILOSOPHY

VISION
In our Endeavour to serve more customers across geographies FairWealth Securities plans to be a leading stock and commodity broker and a distribution proving a bouquet of services. It wants to be known to its customers for our excellent customer service, its research advice and putting our clients priority at the top.

MISSION:
It aims to provide wealth maximization solution for its clients and guide its clients in talking sober investment decisions.

Broking with Human touch State of the art IT infrastructure, choice of connectivity available Quality Research Empowering the client

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Decentralized operations

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PRODUCTS OFFERED BY FAIRWEALTH SECURITIES LTD

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PRODUCTS AND SERVICES

1. Equity Trading The best way to amass wealth is by investing in the stock market. However, it can be a risky proposition considering the high risk-return trade off prevalent in the stock market. Therefore before investing, the clients should know how to go about it. By opening an account with FairWealth, an investor can avail additional benefits like access to various intraday and fundamental calls.

2. Commodity Broking Investment in commodities is advisable in the portfolio, as it is generally considered as defensive because stocks and bonds witnesses adverse performance during times of inflation. It offers advisory services with enhanced research and knowledge aims to capitalize the immense potential of the commodities market
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3. Derivatives Trading

FairWealth Securities have endeavored to make trading in derivatives simpler. It strives to educate new entrants in the derivatives trading market so that they are more equipped with knowledge and techniques. 4. Portfolio Management Services

Its Portfolio Management Service is well suited for high-net worth customers who want to invest in Indian Equities and desire to create wealth over longer period After understanding varied risk appetites and financial goals of individuals FairWealth has created an Investment Strategy called Wealth- MAX Strategy

5. Research FairWealth carries out extensive research in equity and commodity

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Equity Research: It has a dedicated research team which is engaged in

analyzing the Indian economy and corporate sectors to identify multi-bagger stocks. Their team also provides positional and medium term calls. It also comes out with a report called Market Pulse on a daily basis. Daily Market Outlook which is a daily newsletter is well-known among the industry. We are also into Derivative research which covers Call-Put Strategy and Covered Call strategy.

Commodity Research: The commodity research team enables the investors

to tap appropriate opportunities in the commodity market. 6. Risk Management through Life and General Insurance

It has a sizable presence in the distribution of 3rd party financial products like Life Insurance and General Insurance Products. It provides expert Advisory on Life Insurance and General Insurance.

Major Competitors of FairWealth Securities Ltd

1. India bulls Limited

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2. Anand Rathi Limited 3. Kotak Securities 4. Karvy Limited 5. Religare Limited

Reason for the choice of Company:As I chose to study the stock market, I needed a financial firm, dealing in stocks and shares, so I chose FairWealth Securities ltd. because it is one of the fastest growing stock broking houses and has occupied a major place among the other broking houses in a very short span.

Trading through FairWealth securities offers you an unbeatable combination of convenience, transparency and trust.

Convenience comes from buying or selling shares over the phone or over the
Internet sitting at your home/office or through any of their branches. You dont
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necessarily have to be connected to the internet; our off-line service allows calling us on a land line and executing your transactions. All activities are also seamlessly integrated so that you need to call or click just once and the entire cycle right up to the settlement of your trade is taken care of.

Transparency comes in the form of information that it supplies to you, in

dealing with your accounts, in keeping you updated on your transactions, your fund/share balances and your positions in your securities account and a host of other relevant information to help you with your own investment decisions. Needless to say FairWealth securities will adhere to the finest standards of corporate behaviour while dealing with your finances.

Trust

originates from the pedigree of the Group, FairWealth from the high

quality of its service standards exhibited over previous years and through the strong commitment it has shown to its clients, shareholders and external agencies.

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OBJECTIVE OF THE STUDY

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Objectives of the Study:

1. To study the position of FairWealth Securities Ltd among its major competitors in the region.

2. To study the competence level of FairWealth among major brokers.

3. To analyze the preferences of investors while investing in stock market.

4. To compare the position of FairWealth with its major competitors.

.
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REVIEW OF LITERATURE
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REVIEW OF LITERATURE According to SEBI, as a concept, is a matter of debate and discussions. The
need for rating is felt not only from the point of view of greater disclosure requirements for investors interests, considering the important role such intermediaries play, being an interface between investors and exchanges but also from the point of view of measuring the adequacy of systems and controls to meet internal as well as external compliance requirements. According to SEBI and Intermediaries Regulation and Supervision Department, different factors are consider for rating process Organization structure, Policy on

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Investors interest, Risk Management Policy and System, Organization process and procedures, Management policy on compliance, Financials,

History/Background, Firms positioning.

According to Michal Parness, Founder & CEO:

Investors dont make Money in the Stock Market. One reason the institutions make so much money is that they are trading. They make money every time you buy or sell. They make money whether you win or lose. That means that when youre investing, youre basically just sitting there. Youre not going anywhere. Youre not making money as an investor. Trend Trading means trading trends based on human emotions. With trend trading, you look for market movement. That could mean stocks that are going to move up or down during the course of a day (intraday). The Trend trading means being aware and taking advantage of trends like the run-ups that happen around earning sessions. These are trends that have worked time and time again

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY
No work can be completed without the research methodology. Research methodology is an important tool which provides a technique to conduct the study efficiently and effectively. Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically.

TYPES OF RESEARCH
On the basis of theoretical study a research has many types. All of these are distributed on the nature of research. Some of these are like 1. Descriptive and Analytical 2. Qualitative and Quantitative 3. Conceptual and empirical 4. Applied and fundamental 5. One time My research is based on Descriptive, Qualitative and Quantitative research.

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Descriptive Research:-Descriptive research includes surveys and fact

finding enquires of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. Researcher has no control over the variables of this type of research.

Qualitative Research:-In my research i need comparison between different

stock brokers. So this based on all qualitative data. In short, Qualitative research is especially important in the behavioral sciences where the aim is to discover the underline motives of human behavior. Through such research we can analyses various factors which motivate to people to behave in a particular manner or which make people like or dislike a particular thing.

Quantitative research:-Quantitative

research

is

based

on

the

measurement of quantity or amount. It is applicable to phenomena that can be expressed in terms of quantity. So i can use it in my research for collection of all the numerical data.

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SAMPLE DESIGN
A sample design is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting item for the sample Generally Sample designs are two types 1. PROBABILITY RESEARCH DESIGN 2. NON PROBABILITY RESEARCH DESIGN

I used the probability research design.

SAMPLING UNITS
Sampling unit may be a geographical one, such as state, district, village etc. The researcher will have to decide one or more of such units that he has to select for this study.

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SIZE OF SAMPLE This refers to the number of items to be selected from the universe to constitute
a sample

In our research sample size is 50.

SOURES OF DATA COLLECTION Primary Data:The primary Data are those that are collected afresh and for the first time and thus happen to be original in character. The primary data has been collected through some face to face talks with employees of FairWealth, observations at the company, personal visits to the competitors companies and a questionnaire
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has got filled from 50 respondents in order to understand what they feel about different brokerage houses in the region and stock markets.

Secondary Data:The secondary data are those which have already collected by someone else and which have already been passed through the statistical process. I have also collected secondary data for my project report. The secondary data refers to those which are gathered for some other purpose & are already available in the firms internal records and commercial, trade or government publications. Secondary data includes those which are collected for some earlier research work & are applicable in the fitness of things that the researcher attempts to look into sources of secondary data before starting to primary data.

RESEARCH DESIGN
A research design is purely and simply the framework or plan for the collection and analysis of data. It is a blue print that is followed in complying the study. It resembles the architects blue print for constructing a house. It may be worthwhile to mention here that a research design is nothing more than the framework for the study.

The design decisions happen to be in respect of:

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What is the study about? Why is the study being made? Where will be the study carried out? What type of data is required? How will the data be analyzed? In what style will the report be prepared?

NEED FOR RESEARCH

Research design is needed because it facilitates the smooth working of various research operators, thereby making research as efficient as possible yielding maximum information with minimum expenditure of effort time and money. Just as for a better economical house we need a blue print by an expert architect; similarly we need a research design or a plan in advance of data collection an analysis for our research project.

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ANALYSIS & INTERPRETATION

ANALYSIS AND INTERPRETATION

Q1. Do you know the investment options available?

Total Yes No 50 90% 10%

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RES PONS EIN %

10%

YES 90% NO

It shows that 90% of the people are aware of the investment options available in the market. For other 10% investment means buying property or some lack of awareness regarding various investment tools. But in law terms investing in property is not called investment as it does not yield constant or frequent profits to the owner.

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Q.2: Knowledge related to the securities market?

Complete Partial Nil

20% 70% 10%

It shows that 20% people have complete knowledge about the securities market. Maximum number i.e.70% of the people are partially aware

Whereas 10% of people do not know about securities market.

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 This shows there is a need of promotional activities regarding security markets so that people can diversify their investment portfolio.

Q.3: what is your most preferable investment scenario?

TYPE %OF RESPONDENTS Banking Insurance Derivatives and securities market Bonds Real estate Others Bonds, insurance & securities & derivatives market Real estate and derivatives and securities market 16% 12% 42% 4% 16% 4% 4% 2%

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%OFRES POND ENTS

BANKING INSURANCE 4.00% 4.00% 2.00% 16.00% DERIVATIVES AND SECURITIES MARKET BONDS 16.00% 12.00% 4.00% REAL ESTATE

OTHERS

42.00%

BANKS,INSURANCE AND DERIVATIVES AND SECURITIS MARKET REAL ESTATE AND DERIVATIVES AND SECURITIES MARKET

It shows 42% of the people securities and derivative market is the most preferable investment option. Followed by 16% who are inclined towards investment in banking sector. 16% in real estate,

4% in bonds,
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 4% in other investment options,

12% in insurance,

4% in banking, insurance and derivatives and securities market and

2% in real estate and derivatives and securities market both.

Among all investment options derivatives and securities market accounts for highest percentage of people.

Q.4: In which company you have a demat and trading account?

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TYPE FairWealth securities Religare limited Anandrathi India bulls Kotak securities Karvy limited Others FairWealth and Anandrathi

% OF RESPONDENTS 18% 8% 14% 24% 8% 6% 18% 4% Out of

FAIRWEALTH SECURITIES

the all those who prefer

RELIGARE LIMITED 4.00% 18.00% 6.00% 8.00% 24.00% 18.00% 8.00% 14.00% ANADRATHI

INDIABULLS

KOTAK SECURITIES

KARVY LIMITED

OTHERS

FAIRWEALTH AND ANANRATHI

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derivatives and securities market for investing 24% have trading account with India bulls securities ltd. this is highest among all, Whereas FairWealth securities ltd. accounts for 18% of the investors, this is second highest. 8% have their account with Religare limited,

14 with Anandrathi securities,

8% with Kotak securities,

6% with Karvy ltd.,

18% prefer brokerage firm other than the above stated and

4% have their trading account with Fairwealth and Anandrathi both.

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Q.5 Is this the only stock trading company you deal with?

Yes No

68% 32%

RES PONS EIN %

32.00% YES NO 68.00%

Out of t

The all surveyed people 68% said that they deal with the current broking house only regarding their investments and only 32% of them prefer some other broking houses.
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Q.6: What do you prefer most?

Intraday Delivery Both

50% 22% 28%

Out of all the respondents 50% prefer intraday and

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 22% prefer delivery.

28% respondents prefer the both. Intraday basis of trading is preferred by most of the people because of the uncertain market trends.

Q.7: How do you trade?

Phone calling Walk-in Through software

42% 22% 36%

RES PONS EIN %

36.00%

PHONE CALLING 42.00% WALKIN THROUGH SOFTWARE

22.00%

It shows that 42% respondents prefer phone calling,

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 22% prefer walk-in

36% trading through software.

This implies that company should reduce the software cost.

Q.8 Which sector do you prefer most?

Banking Retail Steel/Oil IT Auto FMCG Auto and banking

28% 14% 4% 24% 8% 14% 8%

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 banking sector is most preferred by the investors which accounts for the 28%

all investors, followed by 24% in IT, 14% in retail, 14% in FMCG

8% in automobile industry, 4% in steel/oil. 8% in automobile industry

Q.9 what is the basic purpose of your investment?

Liquidity Return Capital appreciation Tax benefits
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8% 42% 24% 16%

Others and capital appreciation

10%

42% like to make investments for returns,

while 24% of them are more interested in capital appreciation on

investment followed by 16% those who invest their money in order to save taxes. 8% of the investors invest because of liquidity, 10% invests for some other purpose as well as for capital appreciation.

Q.10: Specify that satisfaction with the current broking house?

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Operating expenses Services Brokerage Operating expenses and brokerage Operating expenses and services

26% 20% 34% 10% 10%

Thus brokerage is one of the most fundamental factors taken into consideration while making investment. 34% look for brokerage charges, followed by

26% for operating expenses,

20% for services.

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 Investors like to stick with that company which charges 10% for both minimal operating expenses and services with minimum brokerage.

FINDINGS

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FINDINGS

Many people are unaware of the derivatives and securities market. And among those who are aware, most of them possess partial knowledge about the derivative and securities market.

Major concern of the investors is return and capital appreciation.

Brokerage charges and other expenses affect the investors decision to deal with particular brokerage firm.

Commodity market is less preferred by the investors whereas

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stocks of banks are most preferred. Businessmen are more interested in investing in stock market than others.

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CONCLUSIONS

CONCLUSION

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 Now, going through all these points on comparative analysis, we have concluded that FairWealth securities Pvt. Ltd. definitely have an upper edge over some of its competitors.

But the main areas as of risk management and personalized services FairWealth is providing these services with ease to its clients and because of which it has now in list of leading brokerage houses.

These two are the largest and the strongest selling USPs. So, these areas

should be made stronger by giving more personal touch.

With the increasing competition in securities market, FairWealth have managed to survive healthily due to its constant up gradation of services and changing financial structure.

With FairWealth as the established brokerage house, investors have a platform to explore profitable sectors.

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 But in order to gain upper edge in this cut throat competition FairWealth needs to update itself with the changing financial scenario and customers expectations level, as one rightly said

There will be hunters and hunted, winners and losers. What counts in global competition is the right strategy and success.

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SUGGESTIONS AND RECOMMENDATIONS

SUGGESTIONS AND RECOMMENDATIONS

Software cost should be reduced in order to compete with other brokerage houses who charge quite less.

Company should send the list of shares whose price has gone up and down in

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last week, with a trend to willing customers. The report should be send online on their mail accounts weekly.

The clients of outgoing RMs (Relationship Managers) should be properly allocated to the current RMs so that they should be serviced as per the standards of the company.

There should be centralized and dedicated system for lead generations so that RMs is provided with genuine leads.

The team should be motivated enough to handle the clients concern in these volatile markets.

Limits should be provided at the branch level so as to remove the bottlenecks.

The Risk Management System should be strictly followed.

The data for the account opening kits should be properly maintained so as to check the actual performance of the RM.
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LIMITATIONS

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LIMITATIONS OF STUDY:-

Every study has certain limitations. In my study, also there were certain limitations, which I could not able to solve. The employees filled the questionnaire mostly in careless manner, so it was difficult to make them hold for time. Sometime employees were found to be inactive . They didnt take it seriosly. It was difficult for me to take proper sampling. Certain confidential matters were not disclosing which might have made the findings as little of the mark and increase the error variances. Time factor was also important for me. I had only 60 days to complete my research, for which a full-fledged report was insufficient for me.

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DETAILED ANALYSIS OF TABULATED DATA

1. In regard to account opening charges, in FairWealth it is `500/- which is lowest as compared to its competitors except Anandrathi- `430 and equivalent to Religare `500. Kotak `750, Karvy-`650, Indiabulls`900. It is in fact cheap as if compared to its competitor India bulls, Karvy and Kotak

2. We see some of its competitors might have an upper edge in regard to account opening charges but in regard to minimum margin FairWealth sledges whole of its competitors except India bulls. Minimum margin of its various competitors are Karvy `50,000, Kotak `50,000, Religare No specific requirement, Anand Rathi- `10,000, India bulls- nil.

3. Though brokerage is of all leaders in this arena is almost same, but India bulls has an upper edge over India bulls securities which charges 64 paisa (with taxes and all the other charges per 100) for delivery and 12 paisa for
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intraday. So here what matters is the customer expectation and satisfaction level in which FairWealth really has substantial name.

4. Software cost of FairWealth securities is highest among all its competitors India bulls- `700, Religare- `800, Anand Rathi- `1236, Kotak- does not provide software till brokerage of `8000 after that free software is provided and Karvy- `750.

5. In FairWealth an investor has three ways to deal through- Walk-in, phone and software but not all its competitors are providing all these three options to its clients.

6. Regarding exposure on cash FairWealth has edge over its competitor Religare. Religare provides 6 times exposure on cash in intraday and 3 times in delivery, whereas FairWealth provides 8 times on intraday and 4 times on delivery

7. In regard to the annual maintenance charges Fairwealth-`250 has an upper

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edge over Anandrarhi-`430, Kotak-`360, Karvy-`390. Whereas India bulls does not have any maintenance charges

BIBLIOGRAPHY

1. Data provided by FairWealth securities.

2. Newspapers:

Economic Times

3. Books

Pandey, I.M. (2004); Financial Management, Vikas Publishing House Pvt.

99

Ltd, New Delhi

Security analysis and portfolio management, Kalyani publishers

4. Internet sites

http://www.bseindia.com/about/introbse.asp

http://www.nseindia.com/

http://www.investopedia.com/articles/02/051502.asp

http://en.wikipedia.org/wiki/Stock_broker

http://www.finance.con/

Questionnaire
Q 1. Do you know the investment options available? a) Yes b) No
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Q2. Knowledge related to security markets? a) Complete b) Partial c) Nil Q3. What is your most preferable investment scenario? a) Banks b) Insurance c) Derivatives and Securities market d) Bonds e) Real Estate f) Others

Q4. In which company you have dematted and trading account? a) FairWealth securities b) Religare limited c) Anandrathi d) India bulls
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e) Kotak securities f) Karvy Limited g) Others Q 5. Is it the only stock trading company you deal with? a) Yes b) No Q 6. What do you prefer most? a) Intraday b) Delivery c) Both Q 7. How do you trade? a) Phone calling b) Walk-in c) Through software Q8. Which sector do you prefer most? a) Banking b) Retail c) Steel/Oil
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d) IT e) Auto f) FMCG

Q9. What is the basic purpose of your investment? a) Liquidity b) Returns c) Capital Appreciation d) Tax Benefits e) Risk Covering f) Others

Q10. Specify the reason of satisfaction with current broking house. a) Operating Expenses b) Services c) Brokerage

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