GROWTH OF ONLINE TRADING

THE DETAILED COMPARITIVE ANALYSIS ABOUT

CONSUMER AWARENESS ON ONLINE COMMODITY AND EQUITY TRADING

A report submitted towards the partial fulfillment of the requirements of the two years

full-time Post Graduate Diploma in Management.

Submitted by: ANUPAM PANDEY

MBA (2007-2009)

K.R.MANGLAM GLOBAL INSTITUTE OF MANEGEMENT

GREATER KAILASH 2 , NEW DELHI
 PREFACE

In this fast changing competitive world everything is going on changing and upgrading themselves
to equip with the environment. Here we find ourselves absolutely in miserable conditions. The lack
of resources to satisfy need, want or demand acts as the backing power behind this suffering.
Among the resources the most easily convertible in economic terms what we define is money. In
the present competitive world to earn this greatest resource (money) is the most hazardous and
difficult one. The fear of future in security force people sought the most convenient manner to earn
and save money. But increasing high rate of inflation and decreasing interest rate has washed away
this concept of saving money in the minds of people. Among the options left online trading is the
best and most flourishing platform to earn money with a scope of high returns in a very short
duration of time

To maintain and cope up with the growing competition from the various online trading providers,
Unicon Investment Ltd. needs to find potential clients, also the new investors and satisfy their
needs.

The Broad objective of the project is to show the growth of online trading across the county these
days. The project will focus on the factors affecting the online trading. The project will also throw
some light on the advantages and disadvantages of online trading.

This project will accomplish to understand how the people attract with technology, charges,
services and other facility provided by these online trading providers. If they are ready for doing
all the trading through net. The project also helps in understanding the trend of the two sectors that
is equity and commodity. The investors perceptions regarding online trading are also taken into
account

As a summer trainee in the esteemed organization i.e. UNICON INVESTMENTS SOLUTIONS.

in the field of marketing, I have tried my level best to flourish and enrich my skills and upgrade
my knowledge to meet the demand of the highly competitive corporate world.

2
 ACKNOWLEDGEMENT

The duration for summer training in the esteemed organization Unicon investment Solution Ltd
started from 1Oth Of May and lasted up to 10th July, as a part of course curriculum of MBA at
K.R.Manglam Global Institute of Management, New Delhi. The experience in the summer
training was a homogeneous mixture of challenge, hard work, interest, and learning, attaining
knowledge and having a broad out look of the real corporate world. It is true that a single emperor
can rule no kingdom. This was also applicable in case of my summer training. I am highly thankful
and grateful to be blessed by a number of well wishers without whom success was lying unreachable
to my whole time and me and effort of training would have run into vain.

First of all, I would like to thank institute for arranging my summer training and letting me a chance
to work with such type of esteemed company for two months. And also I would like to extent my
sense of gratitude towards Mr.Apoorv Wadhwa for selecting and allowing me to have summer
training and assigning me a marvelous and challenging project. I would also like to thank
Mr.Sarvesh Sharma (Project Guide and Country Head). I would also like to thank again Ms.
Ritu Anand (Programme Director) for his time-to-time guidance, support and kind cooperation to
complete the project and also thankful to all Unicon Solutions Pvt. Ltd Karol Bagh Branch. for
their cooperation and inspirational motivation. At last but not least high degrees of gratitude to my
parents, friends and above almighty God for standing by my side whenever I felt it hard to
perform.

In spite of all sincere efforts there might be some mistakes or errors in the due course of project and
in this report, any error or mistake committed is requested to look over sympathetically and may
please pointed out to improve my level of performance.

WITH REGARDS

ANUPAM PANDEY

MBA (2007-09)

3
 TABLE OF CONTENTS

• ABSTRACT………………………………………………….5

• INTRODUCTION…………………………………………...6

• INDUSTRY OVERVIEW…………………………………..7

• COMPANY PROFILE……………………………………..27

• COMPARATIVE ANALYSIS……………………………..31

• SWOT ANALYSIS…………………………………………50

• INTRODUCTION TO THE PROBLEM………………...55

• RATIONALE……………………………………………….56

• SCOPE………………………………………………………57

• LIMITATIONS……………………………………………..58

• OBJECTIVE………………………………………………..59

• RESEARCH METHODOLOGY………………………….61

• DATA ANALYSIS………………………………………….68

• RESEARCH FINDINGS…………………………………..76

• RECOMMENDATION……………………………………77

• CONCLUSION…………………………………………….78

• EXECUTIVE SUMMARY………………………………..80

• BIBLIOGRAPHY………………………………………….81

• ANNEXURE………………………………………………..82

4
 ABSTRACT

To maintain and cope up with the growing competition from the various online trading

providers, Unicon needs to find that which prospective are important to attract new clients

towards these broking services.

The project is being done to know the growth of online trading from past, when physical

delivery was done to now, when online trading is focused for more transparency. The project

will help in exploring the factors behind growth, participants involved, and the limitations of

online trading. It would also help in knowing the investor’s perception towards online trading.

5
 INTRODUCTION

The research work is all about to have a broad look into this field of online trading. I have

examined thoroughly areas such as- The trading which was done earlier when internet was not

at all used and now by rapid advancement of technology, online trading has become an

emerging issue. The areas analyzed are the factors which lead to growth of online trading .The

advantages and disadvantages of online trading are also taken into account. during these

online trading many problems are faced by the individuals which are also grouped up in the

project. .

The Indian scenario has been evaluated considering the facts like, players in the market,

advantages, drawbacks, and connectivity hazards. Still, in due course of time, Indian online

trading will be able to find its hold; there is no doubt about that.

The next phase the research work executed by the team had an object oriented and realistic

approach towards the online trading scenario in India.

The team did follow Market Research procedure to get an extensive idea about the general

perception in the mass when online trading considered, the exact figures are involved in share

trading online. To acquire customers in favor of Unicon was also an integral part of the job.

The team members covered Delhi and NCR for this purpose. A brief profile about the

organization (in terms of services and charges) was also intimated to each and every

respondent in order to increase the popularity of Unicon.

6
 COMPANY PROFILE

INTRODUCTION

Unicon has been founded with the aim of providing world class investing experience to

underserved investor community. The technology today has made it possible to reach out to the

last person in the financial market and give him the same level of service which was available

to only the selected few.Unicon is currently providing broking services on the NSE, BSE,

Derivative market and Commodity Exchange.

Unicon allows individual investors too conveniently, comfortably and cost-efficiently place

trades online and offline. While offering the service we also give you the added assurance of

93 branch offices. The company, created to provide premium service with reasonable

commissions, currently maintains more than 40000 individual accounts.

Unicon distributes Insurance (Life & General) and Mutual Funds through its subsidiary

Unicon Insurance Advisors Pvt. Ltd. We also distribute IPO's through the same entity. The

objective here is to offer our customers all the investments related products under same roof.

Unicon is staffed by financial and technology experts, unicon provide a certified, skilled

environment for individuals to receive trading information and execute trades, both online and

offline. The company consists of over 2000 employees nationwide, including over 400 at the

headquarters. Unicon employees work together as a team to continue the tradition of

excellent customer service and support.

7
Mission

To create long term value by empowering individual investors through superior financial

services supported by culture based on highest level of teamwork, efficiency and integrity.

Vision

“To provide the most useful and ethical Investment Solutions - guided by values driven

approach to growth, client service and employee development.”

MANAGEMENT:

Mr. Gajendra Nagpal- Founder & CEO:

Mr. Ram M Gupta- Co-Founder & President:

Mr. Sandeep Arora- Chief Operating Officer:

Mr. Vikas Mallan- Chief Financial Officer:

8
 PRODUCTS AND SERVICES

Unicon customers have the advantage of trading in all the market segments together in the

same window, as we understand the need of transactions to be executed with high speed and

reduced time. At the same time, they have the advantage of having all kind of Insurance &

Investment Advisory Services for Life Insurance, General Insurance, Mutual Funds, and IPO's

also.

Unicon is a customer focused financial services organization providing a range of investment

solutions to our customers. We work with clients to meet their overall investment objectives

and achieve their financial goals. Our clients have the opportunity to get personalized services

depending on their investment profiles. Our personalized approach enables clients to achieve

their Total Investment Objectives. Our key product offerings are as follows:

• Equity Trading

• Commodity Trading

• PCG

• NRI Services

• Mutual Fund

• Life Insurance

• General Insurance

• Depository Services

• Portfolio Tracker

9
 • Back office

PRODUCTS OFFERINGS FOR TRADING

Unicon Plus

It enables users to get a browser based trading terminal that can be accessed by a unique ID

and password. This facility is available to all our customers the moment they get registered

with us.

Unicon Swift

Self directed investors get an application based terminal which is replica of NEAT terminal for

trading actively with more speed, greater analytical features and priority access to relationship

manager to trade over the phone.

10
 ON-LINE TRADING

The rapidly advancing technology, particularly the Internet, has drastically changed the

social and economic landscapes and every aspect of our daily lives.In the securities industry,

the Internet has facilitated on-line trading, changing the way the market works, as well as the

way the investors access the market. Having taken advantage of information technology at an

opportune time, INDIA has emerged as a front-running country of on-line trading in the

global securities markets.

“On-line trading” is broadly defined as a trading mechanism where investors place orders and

confirm trading results via electronic communication channels, such as the Internet, mobile

phones, and Personal Digital Assistants (PDA).

In INDIA now, the whole process of securities transactions, from order placement

and routing, order execution, to trade confirmation, is fully automated, thus

enabling the investors who have placed orders to confirm their trading results

within a few seconds.

THE PROJECT CONSISTS OF TWO PARTS:

1) ON-LINE TRADING IN EQUITY

2) ON-LINE TRADING IN COMMODITIES

11
PART A

EQUITY

12
INDUSTRY OVERVIEW

Technology has changed the way we do trading. The entire process is speedy with limited to

zero paper work. NSE launched internet trading in early February 2000. It is the first stock

exchange in the country to provide a web-based access to investors to trade directly on the

exchange

.PROCESS: Log on to the brokers’ site of your choice where you get real time quotes, place a

buy or sell order on the spot, and direct the site to debit the requisite amount and depository

account will reflect the changes which you can view anywhere, anytime. All that you need is a

PC, a modem, subscription to an Internet Service Provider (ISP), a saving and a depository

account with any bank providing online trading facility.

NSE introduced for the first time in India a fully automated screen based trading. It uses a

modern fully computerized trading system designed to offer investor across the length and

breadth of country a safe and easy way to invest. The NSE trading system called “National

Exchange for Automated Trading” (NEAT) is a fully automated screen-based trading

system which adopts the principle of an order driven market.

13
 OVERVIEW INDUSTRY AS A WHOLE

CAPITAL MARKET

The capital market is a system or framework, which facilitates savings and investment. The

securities markets provide channels for the allocation of savings to investments. Through the

capital market:

• Companies can raise resources from the people (investors); and

• Households can invest their savings in industrial or commercial activities to earn a

return

Hence, the capital market is a mechanism by which capital (funds) moves from those with

surplus funds (investors) to those in need of funds (companies)

Savings are linked to investments through a range of financial products called securities.

Main participants in the capital market:

The capital market framework consists of the following participants:

• Stock Exchanges

• Market intermediaries, such as stock-brokers and Mutual Funds

• Investors

• Regulatory institutions (e.g. SEBI)

14
PRIMARY AND SECONDARY MARKET

The securities market consists of two inseparable and interdependent segments, namely the

primary market and the secondary market.

The primary market in the channel for the sale of new securities, while the secondary market

deals in securities previously issued. So, the secondary market refers to a market where

securities are traded after being initially offered to the public in the primary market and/or

listed on the Stock Exchange.

STOCK EXCHANGE

The market or place, where securities, viz. shares are exchange / traded or simply where

buying and selling talks place, is called stock exchange or stock market. Presently, the

stock market in India consists of twenty-three regional stock exchanges and two national

exchanges, namely, the National Stock Exchange (NSE) and over the Counter Exchange

of India (OTCEI)

The Bombay Stock Exchange (BSE) is the largest Stock Exchange, in the country, where

maximum transactions, in terms of money and shares take place. The other major stock

exchanges are Calcutta, Madras and Delhi Stock Exchanges. Other one at Ahmedabad, Jaipur,

Bangalore, Kanpur, Rajkot, Hyderabad, Cochin, Pune, Bhubaneshwar, Guwahti, Indore,

Mangalore, Ludhiana, Patna, Saurashtra, Vadodara, Coimbatore, Meerut, and Surat.

15
The National Stock Exchange of India (NSE)

• The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges.

• NSE was promoted by leading Financial Institutions at the behest of the Government of

India and was incorporated in November 1992.

• It is a tax-paying company unlike other stock exchanges in the country.

• On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,

1956 in April 1993, NSE commenced operations in the Wholesale Debt Market

(WDM) segment in June 1994.

• The Capital Market (Equities) segment commenced operations in November 1994 and

operations in Derivatives segment commenced in June 2000.

NSE Group

1. NSCCL, The Organization

2. NSE.IT Ltd.

3. India Index Services & Products Ltd. (IISL)

4. Dot Ex International Limited

5. National Securities Depository Ltd. (NSDL)

16
1. NSCCL, The Organization

The National Securities Clearing Corporation Ltd. (NSCCL), a wholly owned subsidiary of

NSE, was incorporated in August 1995. It was set up with the following objectives:

• to bring and sustain confidence in clearing and settlement of securities;

• to promote and maintain, short and consistent settlement cycles;

• to provide counter-party risk guarantee, and

• To operate a tight risk containment system.

2) NSE.IT Ltd

NSE.IT, a 100% subsidiary of National Stock Exchange of India Limited (NSE), is the

information technology arm of the largest stock exchange of the country.

NSE.IT possesses the wealth of expertise acquired in the last six years by running the

trading and clearing infrastructure of largest stock exchange of the country.NSE.IT is

an Export Oriented Unit with STP and plans to go global for various IT services in

due course. In the near future the company plans to release new products for Broker

Back-office Operations and enhance NeatXS / Neat iXS to support Straight through

Processing on the net.

2. India Index Services & Products Ltd. (IISL)

• India Index Services and Products Limited (IISL), a joint venture between NSE

and CRISIL Ltd. (formerly the Credit Rating Information Services of India

Limited).

17
 • Was set up in May 1998 to provide a variety of indices and index related

services and products for the Indian capital markets.

• It has a consulting and licensing agreement with Standard and Poor's (S&P), the

world's leading provider of investible equity indices, for co-branding equity

indices.

• It maintains over 80 equity indices comprising broad-based benchmark indices,

sect oral indices and customized indices.

• Many investment and risk management products based on IISL indices have

been developed in the recent past, within India and abroad. These include index

based derivatives traded on NSE and Singapore Exchange (SIMEX) and a

number of index funds.

3. DotEx International Limited

• DotEx was a joint venture between I-flex Solutions Ltd. and NSE.IT Ltd.

Recently NSE has taken over the shareholding and management of DotEx.

• DotEx was formed to provide world-class internet trading platforms which

allow members of NSE to offer online trading facilities to their customers.

• Members of NSE can service a larger clientele by using the automated risk

management features and thus increase volumes.

18
 • Investors get comprehensive and updated information necessary to trade, along

with a single-click convenience to fulfill their obligations.

The initial offering of DotEx is DotEx Plaza where multiple market participants

such as members of NSE, depository participants and banks can offer web-based

services to their customers.

• As a neutral aggregator and infrastructure provider, DotEx offers choice and

convenience to investors.

• DotEx products may be classified under the following broad categories:

• Equity Trading Module and F&O Trading Module

4. National Securities Depository Ltd. (NSDL) :

• In order to solve the myriad problems associated with trading in physical

securities, NSE joined hands with the Industrial Development Bank of India

(IDBI) and the Unit Trust of India (UTI) to promote dematerialization of

securities.

• Together they set up National Securities Depository Limited (NSDL), the first

depository in India.

• NSDL commenced operations in November 1996 and has since established a

national infrastructure of international standard to handle trading and settlement

19
 in dematerialized form and thus completely eliminated the risks to investors

associated with fake/bad/stolen paper.

FUNCTIONING OF STOCK EXCHANGE

LISTING

Listing of shares, on a stock exchange, means, such shares can be bought and sold, in stock

exchange.A Company, which intends to issue shares, through prospectus, shall have to apply to

one or more stock exchanges, for getting its shares listed.The detailed and elaborate procedure

of getting the shares listed on a stock exchange is monitored by SEBI. The SEBI, issues

guidelines and notifications, from time to time, with regard to listing of securities.

Once the shares are listed, they are divided into two categories:

GROUP "A" SHARES: are referred to as “Cleaned Securities” or “specified shares".

Group "A" shares represent companies, with huge amount of capital, and equally a

large scope for investment. These shares are frequently traded and command higher

price earning multiples.

GROUP "B" SHARES: are referred to as, Non-cleaned securities or non-specified

shares.

20
 VARIOUS ORDERS AND TRANSACTIONS

SETTLEMENT CYCLES

There are various types of orders, which can be placed by the buyer or seller. They are:

 Market Order

A market order is to be executed as soon as possible at the best prevailing price in the

market.

 Limit order

A limit order is constrained by the price limits specified by the investor. The seller

specifies the minimum price that the security must fetch, and the buyer specifies the

maximum price that he is willing to pay.

 A Day order

A day order remains valid only for the day when it is placed. If the order is not executed on

that day, it automatically lapses.

 A Week order

A week order is one, which is active for a week

 A Month order A month order is an order, which is valid for one month.
 An open order An open order is an order, which is valid for one month. An open
order remains in effect until it is executed or cancelled.

21
Similarly there are certain types of transactions, which are allowed on the stock exchanges.

They are:

Transactions for Spot delivery The delivery and payment is affected within the time or on

the date stipulated when entering into the transaction or within fourteen days, whichever is

shorter.

Transaction for Hand delivery These transactions also referred to as the transaction for "the

account", are cleared and settled through the clearinghouse.

Transactions for special delivery The delivery and payment is affected within any time

exceeding fourteen days following the date of the contact as may be stipulated when entering

into the transaction, provided the governing board or the president of the exchange permits the

same.

INVESTOR PROTECTION IN THE INDIAN CAPITAL MARKETS

Disclosure and Investor Protection (DIP) Guidelines:

22
In order to protect the interests of the investors, SEBI has issued the DIP guidelines. The

guidelines contain a substantial body of requirements that issuers of securities and

market intermediaries are supposed to comply with. The salient points in the DIP

guidelines are:

• They aim to secure full disclosure relevant information about the issuer and the nature

of the securities so that investors can make fully informed decisions

Distribution of Accounts with NSDL at the end of Feb. 2007

S.No. States / Union Beneficial Accounts

Territories Number % To total

1. Andhra Pradesh 194405 6.08
2. Bihar 27340 0.85
3. Chandigarh 7891 0.25
4. Delhi 323693 10.12
5. Goa 11374 0.36
6. Gujarat 536720 16.78
7. Himachal Pradesh 3706 0.12
8. Jammu & Kashmir 7320 0.23
9. Karnataka 195159 6.10
10. Kerala 76793 2.40
11. Madhya Pradesh 71158 2.23
12. Maharashtra 911997 28.52
13. Orissa 14701 0.46

23
14. Pondicherry 2481 0.08

15. Punjab 52434 1.64

16. Rajasthan 72316 2.26

17. Tamil Nadu 230407 7.20

18. Uttar Pradesh 188835 5.90

19. West Bengal 214432 6.71

20. Others 54802 1.71

Total 3197964 100.00

DISTRIBUTION OF BENEFICIAL ACCOUNTS

1
WITH NSDL AT THE END OF feb.2007 2
3
1.71 0.85 4
0.25 5
7.2 6.71 6.08 10.12 6
2.26 5.9
0.36 7
1.64 8
0.08 28.52 16.78 9
10
0.46 11
0.12 12
2.4 13
0.23
2.23 14
6.1 15
16
17

24
 GROWTH OF CAPITAL MARKET (NSE)

YEAR TOTAL TURNOVER DEMAT TURNOVER

(IN CRORES) (IN CRORES)

NOV 94- MARCH 95 1805 NA

1995-1996 67287 NA

1996-1997 295403 NA

1997-1998 370193 NA

1998-1999 414474 23818

1999-2000 839052 711706

2000-2001 1339510 1264337

2001-2002 513167 512866

2002-2003 617989 617989

2003-2004 1099534 1099534

2004-2005 1140072 1140072

We can find that there is a great rising trend in the demat account day by day which proves
that more and more people are inclining towards online trading. The demat account
resembles that the people are trading online rather than the previous system of exchange of
securities.

25
 PART B

COMMODITY

26
 OVERVIEW OF MARKET

The Derivative market is divided in two markets. Those are 1- Futures & 2- Option market.

Market

Derivative Spot

Futures

Option

What is derivative?

A type of financial instruments whose value is ‘derived’ from the price of some underlying asset

(e.g. an interest level, security, exchange rate, oil price or stock market index etc). They are designed

to help companies “hedge” (protect themselves against the risk of price changes) or as speculative

investments from which great profits can be made. The rapid growth in derivatives trading has

played a major part in the growing volatility of the global financial system. Thus a derivative

instrument by itself does not constitute ownership. It is instead a promise to convey ownership.

All derivatives are based on some cash products. The underlying basis of a derivative instrument
may be any product including
a) Commodities including grain, coffee beans, orange juice etc
b) Precious metals like gold and silver
c) Foreign exchange rates
d) Bonds of different types, including medium to long term negotiable debt securities issued by
govts, companies, etc
e) Short term debt securities such as T-bills and
f) Over-the-counter (OTC) money market products such as loan or deposits.

27
 What is future contract?

A future contract is a standardized contract between two parties where one of the parties commits to
sell, and the other to buy, a stipulated quantity and quality (where applicable) of a commodity,
currency, security index or some other specified item at an agreed price on a given date in the future.

The future contracts are standardized ones, so that

i. The quantity of the commodity or the other asset which would be transferred or would from the
basis of gain/loss on maturity of a contract,
ii. The quality of the commodity – if a certain commodity is involved and the place where
delivery of the commodity would be made,
iii. The date and month of delivery,
iv. The units of price quotation,
v. The minimum amount by which the price would change and the price limits for a day’s
operations, and other relevant details are all specified in a futures contract. Thus, in a way, it
becomes a standard asset, to be traded.

What is option?

An option is the right, but not the obligation, to buy or sell a specified amount (and quality) of a
commodity, currency, index or financial instruments, or to buy or sell a specified number of
underlying futures contracts, at a specified price on or before a given date in future. Like other
contracts there are two parties to an options contracts. The buyer who takes a long position, and the
seller who takes a short position. The option contract gives the owner a right to buy/sell a particular
commodity or other asset at a predetermined price by a specified date. It is important to understand
that such a contract gives its holder the right and not the obligation to buy/sell. The option writer on
the other hand undertakes upon himself the obligation to sell/buy the underlying asset if that suits the
option holder.

What is spot market?

Commodities and foreign currencies are traded for immediate delivery and payment on the spot
market-also known as a cash market. The term refers to the fact that the full cash price is paid "on
the spot," or within a short period of time. A cash sale, whether arranged in person, over the
telephone, or electronically, is the opposite of a forward contract, where delivery and settlement are
set for a date in the future, or a futures contract, which is an agreement to trade a commodity for a
set price on a specific date in the future.

28
Terms used in this market

What is hedging?

Taking a position in a futures market opposite to a position held in the cash market to minimize the
risk of financial loss from an adverse price change; a purchase or sale of futures as a temporary
substitute for a cash transaction that will occur later.

What is arbitraging?

The buying of foreign exchange, securities, or commodities in one market and the simultaneous
selling in another market, in terms of a third market. By this manipulation a profit is made because
of the difference in the rates of exchange or in the prices of securities or commodities involved.
What is speculation?
Speculation is the buying, holding, and selling of stocks, commodities, futures, currencies,
collectibles, real estate, or any valuable thing to profit from fluctuations in its price as opposed to
buying it for use or for income - dividends, rent etc. Speculation is one of three market roles in
western financial markets, distinct from hedging and arbitrage.
What is a day order? Orders at limited prices, which are understood to be good for the
day unless expressly designated as an open order or "good-till-canceled" order.
What is limit order? An order given to a broker by a customer, which has some
restrictions upon its execution. Such as price or time.
What is margin money? Cash or equivalent posted as guarantee of fulfillment of a
futures contract (not a down payment).
What is margin call? Demand for additional funds or equivalent because of adverse price
movements or some other contingency.
What is market order? An order for immediate execution at the best available price.
What is spread? Usually refers to a simultaneous purchase of a contract and sale of another.
Spreads can be transacted between contracts with the same underlying commodity but different
months; the same month but different commodities; or the same month and commodity but traded
on different exchanges.

29
What is Technical analysis? In price forecasting, the use of charts and other devices to
analyze price-change patterns and changes in volume and open interest to predict future market
trends (opposite of fundamental analysis).
What is Fundamental analysis? An approach to market forecasting that emphasizes the
analysis of factors affecting supply and demand (opposite of technical analysis).
How to play in the market?
There are two ways to trade in this market.
1) Offline trading and
2) Online trading.

What is offline trading?

Taking a buy or sell position in any exchanges through any broker and getting the quote on
telephonic or through personalize service.
What is online trading?
If you trade online, you use a computer and an Internet connection to place your buy and sell
orders. Some online traders are day traders; buying securities and selling them within a few hours-
or less-to take advantage of price changes as they occur. Others use online trading to place orders
outside of normal trading hours. While online trading may become the norm in the future,
especially as after-hours trading and electronic communications networks (ECNs) gain popularity,
there are a number of issues to be resolved. These include, for example, the responsibility of online
brokerage firms to monitor.
Though the journey started from offline trading its ended in online trading. Today is the era of
information technology and derivative market is not an exception to it. In most of the exchanges
online trading is being done successfully.

Disadvantages of offline trading

1. Manipulation by brokers
2. Lack of transparency in trading
3. Delay in getting price quote
4. Time consuming

Keeping these lacunas in mind the concept of online trading was introduced which avoided the
manipulation, became transparent, time saving (which results into highly rewarding) and increased
swiftness in getting price quote.

30
 Platform providers of online trading in India
1) Indian nationalized banks
2) Brokers

Why platform is needed?

As this market is a high volume traded market, to trade in this market a large amount of money is
required also a terminal and listing in different exchanges is needed. So it is quite expensive for an
individual to get listed in the exchanges and having private terminals. That’s why platform is
needed.
Trading through Indian nationalized banks
If an individual is interested to trade in this market with the help of the nationalized banks, he/she
needs to have an account with that bank with the minimum investment of $100000, which is too
much amount for a normal investor. The amount is that much only because of the high volume
trading. On an average the normal lot size of a component is $100000.
Till today not all the banks are providing online platform to trade. In many cases the client can’t
trade of his own. Only the bank trades on behalf of him.

31
INTRODUCTION TO THE PROBLEM

SIGNIFICANCE

This project will accomplish to understand the growth of online trading in Indian scenario.

Previously the trading was done through outcry system but rapid increase in technology has led

to increase in dealings through online. The study also aims to highlight the possible hurdles

that a prospective client faces who are interested in investing through online trading .It’s also

aims at finding out the advantages and disadvantages of online trading. The factors which had

fostered the growth are also taken into account. The survey has also been conducted which had

proved that there is a rapid shift in this field.

RATIONALE

The motive behind this topic is the advancement in the technology. The online trading has been the

most preferred issue as people are rather interested in earning money at a greater speed which is

not possible by fixed deposits so they are investing in shares and commodity market.

It focuses on
1) The problems faced before and after online trading.
2) The advantages and disadvantages of online trading
3) Factors behind the growth
4) Investors perception

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 SCOPE

• From the study, Unicon will come to know about the problems faced by its existing as

well as prospective investors...

• The study will denote the growth in next years.

• The data was enough to fulfill the objective of the study..

• The study helps to learn the work culture in and around the organization.

• The study a lot to know about consumer behavior while investing in the market.

• The study provides first hand information regarding the required services.

This information is a good guide to management as it brings out the strengths of the

competitors and the areas where the company needs to improve.

Limitations
• Lack of awareness of Stock market: Since the area is not known before it takes lot of

time in convincing people to start investing in shares primarily in IPO’s.

• Mostly people comfortable with traditional brokers: As people are doing trading

from there respective brokers, they are quite comfortable to trade via phone.

• Lack of Techno Savy people and poor internet penetration: Since most of the

people are quite experienced and also they are not techno survey. Also internet

penetration is poor in India.

• Some respondents are unwilling to talk: Some respondents either do not have time or

willing does not respond as they are quite annoyed with the phone call.

33
 • Misleading concepts: -- Some people think that Shares are too risky and just another

name of gamble but they don’t know it’s not at all that risky for long investors.

OBJECTIVES

The Broad objective of the project is:

1) To get an insight about the growth trend of on-line trading.

The problems faced by the clients before online trading when exchange of trade documents

i.e.; certificates was done.

2)It will also focus on the factors behind drastic growth of online trading

3) The limitations faced by clients and find ways to solve there queries at your level

otherwise let the above level know about there problem.

Investigate the difficulties faced by the existing clients of Unicon with respect to its internet

trading services

• To ascertain the problems those are hindering the acceptance of internet trading among

the prospective investors.

• Customer Acquisition through sales of Trading / Demat Accounts in order to get a deep

insight as to how the Organization actually performs these functions.

• To conduct Market Research in various parts of the city in order to get statistical data

for commenting on the future of online share trading in India.

34
Primary objective

• Checking the awareness level of online trading.

• Evaluation of preferred investments in various mode and industry.

• Study of influencing factors affecting the purchase decision.

• Checking the satisfaction level of customers towards preferred broking house.

Secondary objective

• To understand the problem faced by customers and finding way to solve the queries

• To understand that though there is rapid increase in online trading, there are still some

factors which had lead to deficiency in this system as a whole.

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RESEARCH METHDOLOGY

In this research, we will use both primary and secondary sources of data for collecting the

information regarding our topic. Our research will be based more on exploratory research and

less on experimental research model. It will be based on both qualitative and quantitative

information. We will be trying to the information through focus groups, in depth interviews

and other suitable techniques. Data will mostly be qualitative and the analysis will be done on

SPSS

Research Design

. Research design is the conceptual structure within which the research would take place. The

presentation of such a design facilitates research to be as efficient as possible yielding

maximum information.

Deciding the Objective of the Study

Questionnaire

Sample Selection

Feedback Collection

Data Analysis

36
 TYPES OF RESEARCH

I used a descriptive type of research. It is one which includes surveys and fact – finding,

Enquiries of different kinds. The major purpose of such research is description of the state of

affairs, as it exists at present.

Data Sources

There are 2 types of data. They are:

1. Primary data

2. Secondary data

Primary Data are those, which are collected a fresh and for the first time and thus happen to

be original in character. Primary data will not only be relevant for research project but it is also

reliable, accurate and dependable.

And for my research I collected Primary Data through Dealers Customers, Organization.

Secondary Data are those which have already been collected by someone else and which have

already been passed through the statistical process.

And collect Secondary Data from Newspapers, Magazines and Websites.

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 RESEARCH APPROACH

There are 2 basic types of approaches to research. They are,

1. Quantitative Approach

2. Qualitative Approach

Quantitative Approach involves the generation of data, which can be subjected to rigorous

quantitative analysis in a formal and rigid fashion. This approach can be further sub classified

into inferential, experimental and simulation approaches to research. The purpose of inferential

approach to research is to form a database to infer characteristics or relationships of population.

Qualitative Approach to research is concerned with subjective assessment of attitudes,

opinions and behavior; research in such a situation is a function of researcher’s insight and

impressions.

In this research a quantitative as well as Qualitative approach was used.

Sample Plan

A sample plan 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 items for the sample. It

includes the following.

Sample size:-

This refers to the number of items to be selected from the universe to constitute a sample.

38
 For my research the sample size 200 customers surveyed.

DATA ANALYSIS

Q.1 Are you aware of online trading?

1) YES 2) NO
Are you aware of online trading?

Cumulative
Frequency Percent Valid Percent Percent

Valid Yes 126 62.7 63.0 63.0

No 73 36.3 36.5 99.5

12 1 .5 .5 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

ANALYSIS
From the research we came to know that out of 200 sample 62.7%(126) people are aware of online
trading & rest of 36.3%(73) are not aware of online trading. Though the people were aware about
this concept they were not willing to disclose it. People think this concept as gambling. So the
company has to make clear about this concept that though it’s a speculative market, its totally
different from gambling.

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Q.2 According to you, which would be the most preferred investment option for online
trading? (Choose only One Option)
1) Equity
2) Commodity
3) Mutual Funds
4) Others

According to you,which would be the most preferred

investment option for online trading?

Frequenc Valid Cumulative

y Percent Percent Percent

Valid Equity 82 40.8 41.0 41.0

Commodity 53 26.4 26.5 67.5

Mutual
65 32.3 32.5 100.0
Funds

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

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 ANALYSIS
We can see that 40.85% are interested in Equity,26.4% in commodity and 32.3% in Mutual
funds. Investment options are the routes through which investors' can invest in stock market.
There are plenty of investment options available. But the most preferred is Equity.

Q.3 Which among the following would be your strategy for Investments in Equity?
1) High Risk-High Return
2) Medium Risk-Medium Return
3) Low Risk-Low Return
4) Not Yet Decided

Which among the following would be your strategy for investment in Equity?

Cumulative
Frequency Percent Valid Percent Percent

Valid High Risk-High Return 58 28.9 29.0 29.0

Medium Risk-Medium Return 81 40.3 40.5 69.5

Low Risk-Low Return 43 21.4 21.5 91.0

Not yet Decided 18 9.0 9.0 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

41
ANALYSIS
The people are tending towards Medium risk-Medium Return.There is very less scope for Low
risk and low return.The people neither want to go for high risk and not for low risk.They want
to keep them safe investing in medium risky shares.

Q.4 Which among the following would be your strategy for Investments in Commodity?
1) High Risk-High Return
2) Medium Risk-Medium Return
3) Low Risk-Low Return
4) Not Yet Decided

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 Which among the following would be your strategy for investment in Commodity?

Cumulative
Frequency Percent Valid Percent Percent

Valid High Risk-High Return 61 30.3 30.5 30.5

Medium Risk-Medium Return 91 45.3 45.5 76.0

Low Risk-Low Return 29 14.4 14.5 90.5

Not Yet Decided 19 9.5 9.5 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

ANALYSIS
The chart reveals that in commodities the people want them to be in safer side there by
choosing the medium risk and medium return i. e 45.3%.There are then people who wanted
high returns but they have to face high risk i.e.30.3%.Rest are the people who are happy with
low risks

Q.5 How many times you invest your money in a month (frequency) ?
1) Less than 10 Times 2) 10 - 20 Times

3) More than 20 Times

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 How many times you invest your money in a month?

Frequency Percent Valid Percent Cumulative Percent

Valid Less Than 10 Times 124 61.7 62.0 62.0

10-20 Times 55 27.4 27.5 89.5

More Than 20 Times 21 10.4 10.5 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

ANALYSIS
The analysis proves that there 124 people(61.7%),who trades less than 10 times.Rest 55
people(27.4%) trades 10-20 times in a month and at last very few people i.e.21 people (10.4%)
more than 20 times which reveals that thoug the people are inrtered in online trading but there
frequency of trades are very less in a month.

Q.6 Approximately what amount you invest in a year?

1) Less than Rs.50000
2) Rs.50,000 – Rs.1 Lakh
3) Rs. 1 Lakh – Rs.2 Lakh
4) More Than Rs. 2 Lakh

44
 Approximately what amount you invest in a year?

Frequency Percent Valid Percent Cumulative Percent

Valid Less Than Rs.50000 51 25.4 25.5 25.5

Rs.50000-Rs.1 Lakh 92 45.8 46.0 71.5

Rs.1 Lakh-Rs. 2 Lakh 38 18.9 19.0 90.5

More Than 2 Lakhs 19 9.5 9.5 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

ANALYSIS

The highest number of people who trade in online trading is investing Rs.50000-RS1
lacs.i.e.92 people(45.8%).Then people with 25.4% is investing less than Rs.50000 which
indicates that the amount is less but there frequency of investment is more.

Q.7 Divide 100 points to factors that have fostered the drastic growth of online trading.
1) Government Policies
2) Market Operators
3) Securities Companies
4) Investors.

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 Does Government policies foster the growth of online trading?

Frequency Percent Valid Percent Cumulative Percent

Valid 10 72 35.8 36.0 36.0

15 18 9.0 9.0 45.0

20 9 4.5 4.5 49.5

25 18 9.0 9.0 58.5

30 4 2.0 2.0 60.5

40 46 22.9 23.0 83.5

50 25 12.4 12.5 96.0

55 4 2.0 2.0 98.0

60 4 2.0 2.0 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

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ANALYSIS
The analysis proves that 72 people have given it a grade of 10 which reveals that though it
affects the growth of trading but not at much extend there may be other factors also.

Q.8 The problems faced while on-line trading are:

1) Lack of internet penetration; Strongly Agree 5 4 3 2 1 Strongly Disagree
bandwidth and ISP infrastructure

2) Errors in processing orders and Strongly Agree 5 4 3 2 1 Strongly Disagree

best executing issues

3) Difficulty in accessing accounts Strongly Agree 5 4 3 2 1 Strongly Disagree

Lack of internet penetration;Bandwidth and ISP infrastructure is the problem faced while online trading?

Frequency Percent Valid Percent Cumulative Percent

Valid Strongly Disagree 22 10.9 11.0 11.0

Disagree 22 10.9 11.0 22.0

Undecided 18 9.0 9.0 31.0

Agree 65 32.3 32.5 63.5

Stongly Agree 73 36.3 36.5 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

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ANALYSIS
The Graph proves that very large amont of people i.e.73 people (36.3%) agree that lack of
internet penetration is the major problem in online trading.

Q.9 The Key advantages of Internet based trading by individual investor are:
1) Offers the spot price. Strongly Agree 5 4 3 2 1 Strongly Disagree

2) Transparency in trading Strongly Agree 5 4 3 2 1 Strongly Disagree

3) Speedy transactions. Strongly Agree 5 4 3 2 1 Strongly Disagree

The key advantage of internet based trading is that it offers Speedy transactions?

Frequency Percent Valid Percent Cumulative Percent

Valid Disagree 12 6.0 6.0 6.0

Undecided 31 15.4 15.5 21.5

Agree 44 21.9 22.0 43.5

Strongly Agree 113 56.2 56.5 100.0

Total 200 99.5 100.0

Missing System 1 .5

Total 201 100.0

48
ANALYSIS

The above analysis results that out of three advantages of internet based trading system, the
speedy transactactions had strongly accepted by people i.e. approximately 57%.Rest are also
the advantages but people are at most satisfied by this one.

RESEARCH FINDINGS

This research helped us identify following problems where online trading has an immense

scope of improvement: Though on-line trading has had positive effects on the securities market

1) There are many people who are trading in Equity,the most,then mutual funds
and at last in commodities due to level of risk.

2) The people trade with less amount but the frequency of there trade is more.

3) The securities companies is the majoe factor which affects the growth

49
 4) Excessive day trading increased the price volatility,

5) Misleading to the investors by placing fake orders.

6) Rumors or fictitious information were floated on the cyber space

7) It is expected that securities firms will pursue restructuring to reduce

their operating costs and enhance their competitiveness.

RECOMMENDATIONS

We suggest following measures, which could be taken so as to further improve the online

trading

• People are unaware of the new market of commodities is new into the market so people

companies related to these has to go for their promotion at various places in Delhi and

NCR.

• Try to reduce cost, as brokerage,so that benefits can be passed on to customers.

• If charges can’t be reduced because of costs involved, make the services customized, so

that services are provided to only those customers who are willing to pay the price for

50
 services they are getting and let the other customers enjoy costs benefits without getting

services.

• Companies should contact with their clients regularly for knowing the problems faced

by them. This will help them in providing best services to customers. This will result in

additional customer base by getting further references from satisfied clients.

• Lastly the people have lots of scope of earning through online trading but this is

possible if they are properly guided by their brokers or they must have full information.

CONCLUSION

In spite of these optimistic numbers, online trading in India is at a very nascent stage (about 5-

8 percent of total traded volumes) compared to countries like South Korea (60 percent), US (40

percent) and UK (20 percent). Online trading in the year 2000-2001 accounted for only Rs

50,170 crore out of total traded volume of Rs 25,08,445 crore.

There are currently close to 50 online brokerages in India with Unicon, ICICIDirect,

KotakStreet, Sharekhan, Motilal Oswal, IndiaBulls and 5Paisa being some major players.

However, due to limited volumes, no online brokerage is currently making money and a

shakeout is imminent in the near future. The going is expected to get tougher with the advent

of capital account convertibility. On an average, Rs 40 crore per day (Rs 1,000 crore per

51
month) is likely to be the threshold breakeven for online brokerages. There is scope for

multiple players as the entire segment is in a growth stage.

While there are many factors that need to be understood to justify this assertion, one simple

fact is worthy of note. The average age of the Indian Internet user as cited by a recent IDC

survey is 27 years. The average age of the head (and financial decision taker) of the Indian

equity-investor household, as revealed by the SEBI-NCAER study of Indian investors in 2000

is 45 years. The older, experienced equity investor is not online today and the fact that older,

mature investors are not ‘tech-positive’ and hence unlikely to move to online trading is Here,

the numbers of banks with a strong online presence are very few - again, dominated by new

private banks and foreign banks. Both have lesser reach owing to a smaller network in the

country. The relative inability of large public-

sector banks to offer-facilities for Internet banking is a barrier in this regard. Besides, Internet

penetration in India is still very low and concerns about security also tend to predominate. In

markets like the US, online brokerages are advertised very heavily. Online trading in India has

so far not seen similar levels of aggressive advertising, with the exception of ICICI Direct and

India bulls. Besides, only scripts that have been compulsorily dematerialized can be traded on

the net here.

Brand building, assurances of security, developing multiple delivery channels with anytime

telephonic grievance redressed options is some directions, which may be of use for the

immediate future. Online trading firms can also market themselves aggressively to students

52
who are entering the professional arena, ensuring that their entry into equity happens online.

One of the major issues governing trading is the prevailing uncertainty in the market.

Hence, not withstanding the current sentiment in the market, potential for online trading is still

immense in India. With a more transparent system, increased awareness, and a sustained

bullish market we would surely be heading to become the largest online stock trading country

by the turn of the next decade.

EXECUTIVE SUMMARY

This project report throws light on the growth of online trading. The project is being done to

know the growth of online trading from past, when physical delivery was done to now, when

online trading is focused for more transparency.

The project will help in exploring the factors behind growth, participants involved, and the

limitations of online trading. It would also help in knowing the investor’s perception towards

online trading.

So the retail investors' perception is the best way to study the investment through online

trading. We have a sample size of 200 retail investors. Random stratified sampling method was

53
considered to be best suited to the fulfill the project hypothesis. A structured questionnaire was

designed will be a very simple one and will look to bring out the very basics of stock

market ,mutual funds and commodities market.A structured questionnaire was constructed in

order to measure the responses of respondents on suitable scale so that they can be analyzed on

SPSS. Primary data collection was done through questionnaire and interviews and secondary

data collection through company websites and various previous research reports. The whole

survey will be based on the research objectives.

The world of online trading is huge. Obviously our survey will not bring out each and every

aspect of it. Retail investors' try to look in for very simple things and the investment basics. We

are trying to bring in all those important factors.

BIBLIOGRAPHY

Books and Newspapers:

• The Economic Times, Business Standard, Business line

• Securities Market (Basic) Module :--NCFM

• Economic Times.

• Training Kit Provided by the Unicon.

• Indian financial system by M.Y KHAN

• NSDL Depository operations module :--NCFM

URLs:

54
 • http://www.5paisa.com/fiti/faqs/oeb.html

• www.uniconindia.co.in

• http://www.kotaksecurities.com/accountsection/index.html

• www.nseindia.com

• www.bseindia.com

• www.moneycontrol.com

• http://www.sharekhan.com/OnlineServices/

• http://content.icicidirect.com/mailimages/feeschedule.htm

• http://www.hdfcsec.com/Equity/EquityContent.aspx?

Heading=OurEquityOffering&ArticleID=D29C9FB9-6A7B-4678-BDB9-

5D22896C3FB0

SURVEY QUESTIONNAIRE
Dear respondents,
Our research has the sole objective of:
 To get an insight about online trading.
 To identify factors behind drastic growth of online trading.
 To find out consumer awareness about online trading.
Your honest answers would lead to a valid conclusion.

Note:- 1) Please tick (√) in front of your preferred option.

2) The details given will be kept highly confidential

Q.1 Are you aware of online trading?

1) YES 2) NO

55
Q.2 According to you, which would be the most preferred investment option for online
trading? (Choose only One Option)
1) Equity

2) Commodity

3) Mutual Funds

Q.3 Which among the following would be your strategy for Investments in Equity?
1) High Risk-High Return

2) Medium Risk-Medium Return

3) Low Risk-Low Return

4) Not Yet Decided

Q.4 Which among the following would be your strategy for Investments in Commodity?
1) High Risk-High Return

2) Medium Risk-Medium Return

3) Low Risk-Low Return

4) Not Yet Decided

Q.5 How many times you invest your money in a month (frequency) ?
1) Less than 10 Times 2) 10 - 20 Times

3) More than 20 Times

56
Q.6 Approximately what amount you invest in a year?
1) Less than Rs.50000
2) Rs.50, 000 – Rs.1 Lakh
3) Rs. 1 Lakh – Rs.2 Lakh
4) More Than Rs. 2 Lakh

Q.7 Divide 100 points to factors that have fostered the drastic growth of online trading.

a) Government Policies
b) Market Operators
c) Securities Companies
d) Investors.

Q.8 The problems faced while on-line trading are:

a) Lack of internet penetration; Strongly Agree 5 4 3 2 1 Strongly Disagree

Bandwidth and ISP infrastructure

b) Errors in processing orders and Strongly Agree 5 4 3 2 1 Strongly Disagree

best executing issues

c) Difficulty in accessing accounts Strongly Agree 5 4 3 2 1 Strongly Disagree

Q.9 The Key advantages of Internet based trading by individual investor are:

a) Offers the spot price. Strongly Agree 5 4 3 2 1 Strongly Disagree

b) Transparency in trading Strongly Agree 5 4 3 2 1 Strongly Disagree

c) Speedy transactions. Strongly Agree 5 4 3 2 1 Strongly Disagree

Demographic profile

1) Age:

a) 20-30
b) 30-40
c) 40-50

57
2) Occupation:-
a) Student
b) Professional
c) Businessman

3) Annual Income:- 1 lac-1.5 lacs ( ) 1.5 lacs- 2 lacs ( )

2 lacs-2.5 lacs ( ) 2.5 lacs-3 lacs ( )
3 lacs-5 lacs. ( ) more than 5 lacs ( )

Thank you for participating in our research,

your views are valuable for us, and will help
in finding out right investment options for
retail investors. Have a Good Day!!!!!!!!!

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