A PROJECT REPORT

ON
“RISK MANAGEMENT REGARDING WORKING OF A
BROKING FIRM, AND ITS INVESTORS”

AT

RELIGARE SECURITIES LTD

SUBMITTED TO UNIVERSITY OF PUNE
IN PARTIAL FULFILMENT OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED
BY
KIRAN V. SHENDE
MBA Finance

UNDER THE GUIDANCE OF

PROF. RAJESH KUMAR HUKRE

SSMS’s,
INSTITUTE OF MANAGEMENT & RESEARCH,
PARVATI, PUNE-09.
(2008-2010)

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 DECLARATION

I, the undersigned, hereby declare that the Project Report entitled “RISK
MANAGEMENT REGARDING WORKING OF A BROKING FIRM, AND ITS
INVESTORS” written and submitted by me to the University of Pune, Pune in
partial fulfillment of the requirement for the award of degree of Master of
Business Administration under the guidance of Prof. Rajesh Kumar Hukre is
my original work and the conclusions drawn therein are based on the material
collected by myself.

Place: Pune Kiran Shende

Date: /09/2009 Research Student

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 ACKNOWLDGEMENT

It’s a great privilege that I have done my project in such a well-organized and
diversified organization. I am great full to all those who helped and supported me
in completing the project.

First of all I would sincerely like to thank Mr. Rajendra Vadzirkar (Branch
Manager, Ahmednagar), for his valuable guidance and kind co-operation during
the project. I am highly grateful to Mrs. Priya Venkatraman (Sr. Relationship
Manager) for the help provided by them in various forms.

I am also thankful to our director Dr. P. D. Nare and my project guide

Prof. Rajesh Kumar Hukre for helping me in completing the project.

Last but not least, I am also thankful to my parents, all college staff and my
friends for helping me directly or indirectly in my project

KIRAN VITTHAL SHENDE

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 INDEX

Sr No. Contents Page No.

Executive Summary I-III

1 INTRODUCTION 1-15
1.1 Basic Concepts of the Topic
1.2 Literature Review
1.3 Need for the Study
1.4 Statement of the Problem
1.5 Objectives of the Project
1.6 Research Hypothesis
1.7 Scope of the Study

2 PROFILE OF THE ORGANISATION 16-24

2.1 Name of the Organisation
2.2 Vision and Mission
2.3 History and Background
2.4 Group Structure
2.5 Services
2.6 Organisation Structure
2.7 Competitors of Religare Sec. Ltd.
2.8 About Religare Sec. Ltd.
2.9 The Religare Edge

3 RESEARCH DESIGN & METHODOLOGY 25-28

3.1 Introduction to Research Methodology
3.2 Sampling Design
3.3 Sources of Data Collection
3.4 Limitations of Study

4 DATA PRESENTATION, ANALYSIS 29-37

INTERPRETATION

5 FINDINGS & SUGGESTIONS 38-41

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 5.1 Main Findings (Conclusions)
5.2 Policy Suggestions
5.3 Scope of Development

6 BIBLIOGRAPHY 42-43

7 ANNEXURE 44-46

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 LIST OF TABLE

Table No. Title of the Table Page No.

5.1 Preference of Investment 30

5.2 Awareness of Online Share Trading 31

5.3 Awareness of Religare as a Brand 32

5.4 Awareness of Religare’s Facilities 33

5.5 DEMAT Account Market 34

5.6 Satisfaction level of Customer 35

5.7 Frequency of Trading % of Earning Invested in 36

Trading

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 LIST OF CHART

Chart No. Title of the Chart Page No.

5.1 Preference of Investment 30

5.2 Awareness of Online Share Trading 31

5.3 Awareness of Religare as a Brand 32

5.4 Awareness of Religare’s Facilities 33

5.5 DEMAT Account Market 34

5.6 Satisfaction level of Customer 35

5.7 Frequency of Trading % of Earning Invested in 36

Trading

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EXECUTIVE SUMMARY

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Project Title: - “Risk Management Regarding Working of a Broking Firm and
Its Investors”
Name of the Organisation: - Religare Securities Ltd
Introduction: - All investments are risky, whether in stock, capital market,

banking, financial sector, real estate, bullion, gold etc. The degree of risk however

varies on the basis of the features of the assets, investments instrument, the mode

of investment, time frame or the issuer of the security etc.

Risk can be defined as “Possibility of suffering losses”

“The chance of something happening that will have an impact upon objectives. It

is measured in terms of consequences and likelihood”.

Risk management in a Broking Industry is a new concept in India, since it

Posses’ maximum risk in the financial market, managing it was felt most essential

by the regulatory bodies and exchanges.

Objectives of the Project:-

➢ To get familiar with the working of a broking firm.
➢ To understand various risks involved in the broking firm.
➢ To understand various risk for the investors of the broking firm.
➢ To manage and reduce the identified risks.

Need of the Study:-

➢ Create awareness among investors about the different risks involved in the
broking firms.
➢ Understand the total transparency and automation of broking firm
➢ Give basic knowledge to investors regarding risk in broking firm
➢ Also understand the equity market and different way of trading

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Research Hypothesis: - Capital Market is growing very fast, turnover wise as
well as area of operation wise. The activities have reached through lengths and
breadth of the country. So there is increase in various broking firms. The working
of a broking firm is a very risky job because risk is involved in each and every
activity of the business.

Conclusions:-
➢ The researcher found that the working of a broking firm is a very risky job
because risk is involved in each and every activity of the business.
➢ The risk prevailing in the business is recognized therefore an efficient risk
management department is essential in every broking firm.
➢ Broking business is a client-based business. The recent trend of
voluminous increase in investors has also increased the risk involved in it.
There is need of continuous up gradation of internal control measures
➢ Staff in a broking firm is continuous busy and due to which they are
always under stress.

Suggestions:-
➢ An Organization should have a risk management function that is
independent of its trading staff i.e. personnel responsible for the risk
management function should be separate from trading floor personnel.
➢ A periodical compliance review should be conducted to ensure conformity
with the rules and regulations.
➢ The designated compliance officer should perform a review of trading
Practices annually.
Limitations of Study:-
➢ To understand the overall working of share market, the period of 60 days
is not enough.
➢ Moreover, very few investor and agents have a detail knowledge of the
study.

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➢ The study was conducted in Ahmednagar only, which restricted the scope
of the study.

CHAPTER I
INTRODUCTION

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1.1 Basic Concepts of the Topic

Introduction to Capital Markets

Financial System

The financial system of every economy consists of various constituents such as

1) Financial Institutions
2) Financial Companies
3) Financial Markets
4) Financial Instruments
5) Financial Services
6) Financial regulations
The financial market in India comprised of capital market and money market
whereas the financial system of the country comprised of institutions, which
operate the financial markets and the financial instruments with which the
financial system is put into operation.
Tax anomy of financial markets can be understood on functional, sectoral and
institutional basis. On a functional basis we can divide financial markets into

1. Capital market (long term)

2. Money market (short term)

What is Capital Market?

A Capital Market deals in financial assets, excluding coins and currency. The
financial assets comprise of banking accounts, pension funds, provident fund,
mutual fund, insurance policy, shares, debentures, and other securities. If the
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stock exchanges are well regulated and function smoothly, then it is an indication
of healthy capital market. Stock exchange provide a good leverage of the capital
market and their relationship is directly proportional. India has multi-stock
exchange system with more than 24 stock exchanges functioning across the
country. In our country, capital markets are generally also known as
security/stock market.
The Indian Capital Markets can be broadly classified into three types of markets.

1. Money market

2. Primary market

3. Secondary market

Money market

The money market is part of overall financial system and securities or capital
market. It deals in short term financial assets which can be readily converted into
cash. Money market is a place for trading in money and short tern financial assets
that are as liquid as money. It provides a platform for short term surplus funds of
lenders or investors and short term requirements of borrowers, the instruments
can be traded at low cost and are highly liquid.

Primary market

The primary market provides the channel for sale of new securities. Primary
market provides opportunity to issuers of securities; Government as well as
corporates, to raise resources to meet their requirements of investment and/or
discharge some obligation.
They may issue the securities at face value, or at a discount/premium and these
securities may take a variety of forms such as equity, debt etc. They may issue the
securities in domestic market and/or international market.

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Secondary Market

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. Majority of the trading is done in the secondary market. Secondary
market comprises of equity markets and the debt markets.

RISK MANAGEMENT

Risk is defined as “possibility of suffering losses”

This risk in itself is not bad, risk is essential to progress, and failure is often key
part of learning, but we must learn to balance the possible negative consequences
of risk against the potential benefits of its associated opportunities. This is risk
management.

Principles of Risk management are as follows

1 Global Perspective

– Viewing development within the context of large level developments

– Recognizing both the potential value of opportunity and the potential
impact of adverse effects
1 Forward looking view

– Thinking towards tomorrow, identifying uncertainties, anticipating

potential outcomes
– Managing project resources and activities while anticipating uncertainties
1 Open Communications

– Encouraging free-flowing information at and between all project levels

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 – Enabling formal, informal, and proper communication
– Using processes that value the individual voice (bringing unique
knowledge and insight to identifying and managing risk)

4 Integrated management

– Making risk management an integral and vital part of project management

– Adapting risk management methods and tools to a projects infrastructure
and culture

5 Continuous processes

– Sustaining constant vigilance

– Identifying and managing risks routinely through all phases of the projects
lifecycle

6 Shared product vision

– Mutual product vision based on common purpose, shared ownership, and

collective communication
– Focusing on results

7 Team work

– Working cooperatively to achieve common goal

– Pooling talents, skills, and knowledge

Functions of Risk Management are as follows

i. Identify - Search for and locate risks before they become problems
ii. Analyze - Transform risks data into decision-making information. Evaluate
impact, probability, and time frame, classify risks, and prioritize them

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 iii. Plan - Translate risk information into decision and mitigating actions (both
present and future) and implement those actions
iv. Track - Monitor risk indicators and mitigation actions
v. Control - Correct for deviations from the risk mitigation plan.
vi. Communicate - Provide information and feedback internal and external to
the project on the risk activities, current risks, and emerging risks.

RISK MANAGEMENT IN A BROKING FIRM

Risk management in a Broking Industry is a new concept in India, since it poses

maximum risk in the financial market, managing it was felt most essential by the
regulatory bodies and exchanges. Therefore NSE introduced for the first time in
India, risk containment measures that were common internationally but were
absent from the Indian Securities Market. NSCCL has put in place a
comprehensive risk management system, which is constantly upgraded to pre-
empt market failures. These measures were taken to reduce the brokers’ risks.
Whereas SEBI has given some guidelines under Investors Protection to protect
investors risks. NSE has given the following risk management measures

Margins

NSE has specified Different margins for different instruments like stocks futures
and options etc. Margins depend upon the volatility and market conditions, It vary
from stock to stock and instrument to instrument
Categorization of stocks for imposition of margins
Daily margins payable by members consists of the following:

1. Value at Risk Margins

2. Mark to Market Margins

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Daily margin, comprising of the sum of VaR margin and mark to market margin
is payable.

Value at Risk Margin

VaR margin is applicable for all securities in rolling settlement. All securities are
classified into three groups for the purpose of VaR margin.

The VaR based margin would be rounded off to the next higher integer (For E.g.:
if the VaR based Margin rate is 10. 0 1, it would be rounded off to
11. 00) and capped at 100%.
The VaR margin rate computed as mentioned above will be charged on the net
outstanding position (buy value-sell value) of the respective clients on the
respective securities across all open settlements. The net positions at a client level
for a member are arrived at and thereafter, it is grossed across all the clients for a
member to compute gross exposure for margin calculation.

For example, in case of a member, if client A has a buy position of 1000 in a

security and client B has a sell position of 1000 in the same security, the net
position of the member in the security would be taken as 2000. The buy position
of client A and sell position of client B in the same security would not be netted.
It would be summed up to arrive at the member's exposure for the purpose of
margin calculation. VaR margin rate & Security category

Mark-to-Market Margin

Mark to market margin is computed on the basis of mark to market loss of a

member. Mark to market loss is the notional loss which the member would incur
in case the cumulative net outstanding position of the member in all securities, at
the end of the relevant day were closed out at the closing price of the securities as
announced at the end of the day by the NSE. Mark to market margin is calculated
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by marking each transaction in scrip to the closing price of the scrip at the end of
trading. In case the security has not been traded on a particular day, the latest
available closing price at the NSE is considered as the closing price.

In the event of the net outstanding position of a member in any security being nil,
the difference between the buy and sell values would be considered as notional
loss for the purpose of calculating the mark to market margin payable.

Some Risk management are also taken by BSE they are as follows

1. Know your client scheme

Under the procedure the member brokers of the exchange are compulsory
required to obtain detailed information of clients prior to commencement
of any transactions with new clients. A similar procedure is also to be
followed for existing clients. This information is to be made available to
the exchange authorities whenever called for. In case the member broker
fails to furnish the same it is viewed seriously.

2. Verification of shares at members office

The exchange has outlined the process i.e. in case the transaction in a
script with one particular client in a settlement exceeds Rs 10 laks then the
member are to send the photocopies of the transfer deeds and the share
certificates to the company/ registrar for verification of the material
particulars. The basic idea behind the introduction of this procedure is to
prevent fake/forged/stolen shares from being introduced in the market.
3. Inspection

The department is carrying out inspection of the member brokers records

as regards compliance of the risk management procedures

4. Insurance

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 The exchange presently has in place insurance policies to protect itself in
the event of losses on account of fire, damage to computer systems and a
comprehensive policy that covers risks faced by the exchange, its member
brokers and the clearinghouse.

The risks covered under the basic cover of the policy are detailed as below.
– Loss to members on account of infidelity of employees
– Loss of member on account of fake/forged/ stolen shares being introduced
by his clients
– Direct financial losses suffered by the member broker on account of
physical loss, destruction, theft or damage to securities and cash.
– Loss on account of securities lost in transit
– Loss suffered on account of incomplete transaction
– Loss sustained as final receiving member on exchange on account of
default of the introducing member
– Loss on account of errors and omission
– Directors and officials liability cover

Measures taken by SEBI for Investors protection are as follows

Government of India and SEBI have been stressing upon the need for regulating
the secondary market and bringing transparency in transactions on the floor of
stock exchanges

The steps taken by SEBI to regulate and control the business of stock exchanges
and reduce the risks of investors are as follows

1. Regulation on insider trading with the object to curb it completely and

punish the guilty

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2. Uniform Trading hours at all the stock exchanges in the country to check
arbitrage.
3. Registration of market players- brokers, non member brokers, sub brokers,
registrars to issues, merchant bankers, portfolio managers, underwriters,
debenture trustees, custodians etc so as to have access/inspection of their
books, records and verification of transactions..
4. Indirect supervision through stock exchanges in day-to-day business by
fixing margins, imposing curbs, penalties and fines.
5. Gradual automation to reduce paper work and ensure transparency in
transactions this is now almost complete and all stock exchanges have
been computerized.
6. Brokers contact notes to mention brokerage separately.
7. Nationwide paperless trading through over the counter exchange of India,
National Stock Exchange, BSE, DSE and other exchanges.
8. Brokers to keep clients money in a separate bank account.
9. Forward trading being banned on stock exchanges
10. Stress upon shorter settlement period.
11. Dematerialization of securities permitted on a selective basis. By March
2001, about 3500 companies will have compulsory trading in Demat
mode.
12. Stern action against erring brokers, stock exchanges, companies, merchant
bankers, etc.
13. Regulation for fraudulent trade practices
14. Total transparency and automation of stock exchanges.
15. Effective margin system for smooth settlement.
16. Circuit breaker system to check volatility on the exchanges
17. Introduction of modified carry forward system and automated lending
borrowing mechanism (ALBM).
18. Introduction of Internet trading.
19. Derivative trading in index based futures of 30, 60 and 90 days.

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 20. Practicing prudent governance norms.

Recent Development steps taken by SEBI for Investor protection

1. Appointment of administrators to check bad deliveries

To get rid of bad deliveries, SEBI has decided to appoint administrator to

implement the signature guarantee and certificate authentication programs.
The administrators appointed by SEBI act on behalf regulator in resolving
problems arising out of signature mismatch

2. Streamlining Investor protection fund

The committee set up by SEBI to review the sources and utilization of

investor protection fund of stock exchanges has made following
recommendations
– Funds should be on trust structure and set upon under Indian Trust
Act, 1882 with independent trustees
– Regular contributions from active member brokers and stock
exchanges
– Fund to be utilized only for investor claims and not broker claims.
– Trustees to ensure that fund is not deployed in risky instruments or
for the benefit of any member but only in prescribed avenues.
– Time schedule to be specified while setting investor claims.

1. Service centers for investors

SEBI has directed all stock exchanges to constitute service centers for
investors to enable the investors to have a form for recording and
counseling of their grievances as well as access financial and other
information of companies on government policies, rules, regulations, etc.

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2. Compliance Officer

Each company is required to appoint compliance officer who would be

able to verify rumors and information floating in the market about the
company to the stock exchange. This will reduce motivated rumors about
companies, which aids in price manipulation.

3. Corporate Governance

SEBI has prescribed prudent corporate governance norms for all listed
companies to ensure transparency and better disclosure practices.

4. Investor Education

SEBI has taken steps to educate investors through various awareness

programmes and publications

1.2 Literature Review

No one has done work over there yet, on this topic.

In literature review I read various documents provided by the manager of
Religare Sec. In this I reffer the Demat form of the Religare Sec. And
Visiting various websites.
In this I also read the various modules of NCFM. And also read the
following books:
i) FINANCIAL SERVICES AND MARKETS
Author: - Dr. Gurusamy

ii)RESEARCH METHODOLOGY METOHDS & TECHNIQUES

Author: - C.R.Kothari

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 iii)PROJECT REPORT WRITING
Author: - M.K.Rampal & S.L. Gupta

1.3 Need for the Study

➢ Create awareness among investors about the different risks involved in the
broking firms.
➢ Understand the total transparency and automation of broking firm
➢ Give basic knowledge to investors regarding risk in broking firm
➢ Also understand the equity market and different way of trading
➢ Convert our therotical knowledge in to practical knowledge

1.2 Statement of the Problem

There are several financial security companies playing their roles in

Indian equity market. But People don’t have basic knowledge regarding
stock market. So they not understand there is various risk involved in the
working of broking firm. Due to none availability of the proper guidance
most of the person take stock market as gambling.

1.3 Objectives of the Project

➢ To get familiar with the working of a broking firm.

➢ To understand various risks involved in the broking firm.

➢ To understand various risk for the investors of the broking firm.

➢ To manage and reduce the identified risks.

2
1.2 Research Hypotheses

Capital Market is growing very fast, turnover wise as well as area of

operation wise. The activities have reached through lengths and breadth of
the country. So there is increase in various broking firms. The working of a
broking firm is a very risky job because risk is involved in each and every
activity of the business.

1.3 Scope of the Study

Company can take review from market through this project. Management
people can get overall idea about the risk management regarding working
of broking firms. They also understand what information provide to
investor for avoiding the risk.

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 CHAPTER II
PROFILE OF THE
ORGANISATION
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2.1 NAME-

RELIGARE SECURITIES LTD.

Corporate Office:
19 Nehru Place, New Delhi – 110019
Website : www.religare.in
Email : info@religare.in
SMS : RELIGARE to 58888

PUNE:
Ground Floor, Amar Caliber,
BMCC Road, Shivajinagar,
Pune – 411004

AHMEDNAGAR:
5&6, Himalaya Tower,
Opp. Deepak Hospital,
Savedi Road,
Ahmednagar - 414003

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2.2 VISION & MISSION-

Company’s Vision –

“To build Religare as a globally trusted brand in the financial services domain
and present it as the ‘Investment Gateway of India”.

Company’s Mission –

“Providing complete financial care driven by the core values of diligence and
transparency”.

Brand Essence –

“Core brand essence is Diligence and Religare is driven by ethical and dynamic
processes for wealth creation”.

2.3 History and background

RELIGARE Securities Ltd. (RSL) is a wholly owned subsidiary

of RELIGARE Financial Services Ltd. (RFSL), a Company promoted by the late
Dr.Parvinder Singh, Ex-CMD of Ranbaxy Laboratories Ltd.
The primary focus of Religare Securities Ltd. is to cater to services
in Capital Market Operations to Institutional Investors. The Company is a
member of the National Stock Exchange (NSE) and OTCEI. The growing list of
financial institutions with whom RSL is empanelled as approved Broker is a
reflection of the high levels of services maintained by the Company.

REL operates from seven domestic regional offices, 43 sub-regional offices, and
has a presence in 498* cities and towns controlling 1,837* business locations all
over India.

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To make a mark in the global arena, REL acquired UK-based Hichens, Harrison
& Co. in 2008 which was subsequently re-named as Religare Hichens Harrison
PLC ("RHH"). Hichens, Harrison & Co. was incorporated in London in the year
1803 and is believed to be one of the oldest firms of stockbrokers in the City of
London. Pursuant to expansion of REL's business, the company has grown from
largely an equity trading company into a diversified financial services company.
With the addition of RHH the REL group now operates out of multiple global
locations, other than India, (the UK, the USA, Brazil, South Africa, Dubai and
Singapore).

RELIGARE was founded with the vision of providing integrated

financial care driven by the relationship of trust. The bouquet of services offered
by RELIGARE includes Broking (Stocks and Commodities), Depository
Participant Service, Advisory on Mutual Fund Investments and Portfolio
Management Services.
RELIGARE is a pioneer in the concept of partnership to reach multiple locations
in order to effectively service its large base of individual clients. Besides the
reach of RELIGARE, the clients of the company greatly benefit by its strong
research capability, which encompasses fundamentals as well as technical
knowledge.

RELIGARE GROUP:

RELIGARE in recent years has expanded its reach in health care and
financial services wherein it has multiple specialty hospital and labs which
provide health care services and multiple financial services such as secondary
market equity services, portfolio management services, depository services etc.
RELIGARE financial services group comprises of Religare Securities
Limited, RELIGARE Comdex Limited and RELIGARE Finvest Limited which
provide services in Equity, Commodity and Financial Services business &
Religare Insurance Advisory Ltd.

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RELIGARE SECURITIES LIMITED

1. Member of National Stock Exchange of India and Bombay Stock Exchange

of India.
2. Depository Participant with National Securities Depository Limited
(NSDL) and Central Depository Services Limited (CDSL). A SEBI
approved Portfolio Manager.

RSL provides platform to all segments of the investor to leverage the immense
opportunity offered by equity investing in India either on their own or through
managed funds in Portfolio Management.
The ARN No. of the Religare Securities Ltd. is 33764. The ARN No. is
required by to be available with the broker who deals on behalf of investors or
sell the mutual funds of the different companies present in the market.

2.4

Religare Enterprises Limited

Religare Securities Limited
• Equity Broking
• Online Investment Portal
• Portfolio Management Services
• Depository Services
Religare Finvest Limited
• Lending and Distribution business
• Proposed Custodial business

Religare Commodities Limited Religare Insurance Broking Limited

• Commodity Broking • Life Insurance
• General Insurance
• Reinsurance

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Religare Capital Markets Limited Religare Arts Initiative Limited
• Investment Banking • Business of Art
• Proposed Institutional Broking • Gallery launched - arts-i

Religare Realty Limited Religare Venture Capital Limited

• In house Real Estate • Private Equity and
• Management Company • Investment Manager

Religare Hichens Harrison** Religare Asset Management*

• Corporate Broking • Derivatives Sales
• Institutional Broking • Corporate finance

2.5 SERVICES :-

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2.6 Organization Structure:

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2.7 Competititors of Religare:-

There are several financial security companies playing their roles in Indian equity
market. But Religare faces competitions from these few companies.
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 ➢ ICICI Direct.com

➢ Share Khan (SSKI)

➢ Kotak Securities.com

➢ India Bulls

➢ HDFC Securities

➢ 5paisa.com

➢ Motilal Oswal

➢ IL&FS

➢ Karvy

2.8 About Religare Securities Limited (RSL)

 One of the leading integrated financial services groups of India

 Diverse range of offerings

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  Client base of more than 5000,000 and growing across the retail, wealth
and Institutional Spectrum.

 Pan India and global footprint.

 Width and depth of management leading a formidable employee base.

 Best-in-class Research.

 “Sweetly placed” to spot new opportunities and power ahead.

2.9 The Religare Edge

 Diverse offerings
 Dynamic Management Team
 State-of-the art technology
 Vast Distribution and Reach
 Robust Brand Recognition
 Synergistic partnerships
 Innovative Initiatives

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 CHAPTER III
RESEARCH DESIGN &
METHODOLOGY

3.1Introduction to Research Methodology-

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Research Methodology comprises defining and redefining the problem,
formulating hypothesis or suggesting solution, collecting, organizing and
evaluating the data, making deduction and reaching to conclusions and
determines whether the formulated hypothesis is right and wrong.

Research Methodology is a way to solve research in study and solving research

problems along with logic behind them are defined through research
methodology. Thus while talking about research methodologies we are not only
talking of research methods but also consider the logic behind the methods.
During my project, I collected data through various sources primary & secondary.

3.2Sampling Design –

I have taken sample size of 50 respondents. Because the population is too large so
it is difficult to survey.
Any organization whether big or small, private or public need different types of
information are to know its popularity. I have gathered secondary data and
primary data and collected information from the combination of these two data.

3.3 Sources of Data Collection-

Primary source includes:-

1) Discussion with branch manager

2) Discussion with experts

3) Discussion with investors of the firm.

4) Live trading in the market

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 5) Data collected from questionnaire.

Secondary source includes:-

1) Various books related to stock market

2) Books related to Financial Management

3) Web sites were used as the vital information source

4) References given by Relationship Manager

3.4 LIMITATIONS OF STUDY

➢ To understand the overall working of share market, the period of 60 days
is not enough.

➢ Moreover, very few investor and agents have a detail knowledge of the
study.

➢ The study was conducted in Ahmednagar only, which restricted the scope
of the study

➢ The data provided by the investor and the agents can’t be held true as
100% correct.

➢ The study was conducted to understand with respect to Risk involved in

broking firm and investors, which is a part of the equity share market.

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 CHAPTER IV
DATA PRESENTATION,
ANALYSIS &
INTERPRETATION

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1) Preference of Investment:

Financial Instruments No. Of Investors (50)

Shares 37
Mutual Funds 8
Bonds 4
Derivatives 1
Source: Primary Data (Table No. 5.1)

Chart 5.1

Interpretation: This shows that although the mutual funds market is on the rise
yet, the most favored investment continues to be in the Share Market. So, with a
more transparent system, investment in the Stock Market can definitely be
increased.

2) Awareness of online Share trading :

YES NO
45 5
Source: Primary Data (Table No. 5.2)

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 Chart 5.2

Interpretation: With the increase in cyber education, the awareness towards

online share trading has increased by leaps and bounds. This awareness is
expected to increase further with the increase in Internet education.

3) Awareness of Religare as a Brand.

YES NO
29 21
Source: Primary Data (Table No. 5.3)

AWARENESSOF RELIGAREASABRAND

43%
YES
NO
57%

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 Chart 5.3

Interpretation: This pie chart shows that Religare has a reasonable amount of
Brand awareness in terms of a premier Retail stock broking company. The
company to increase its market share over its competitors should further leverage
this brand image.

4) Awareness of the facilities provided by Religare :

YES NO
42 8

Source: Primary Data (Table No. 5.4)

Chart 5.4

Interpretation: Although there is sufficiently low brand equity among the target
audience yet, it is to be noted that the customers are not aware of the facilities
provided by the company meaning thereby, that, the company should concentrate
more towards promotional tools and increase its focus on product awareness
rather than brand awareness.

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5) DEMAT Account Market :

BROKING FIRMS INVESTORS

Religare Securities 6
ICICI Direct 15
Kotak Securities 4
India Bulls 12
Others 13
Source: Primary Data (Table No. 5.5)

Chart 5.5

Interpretation: This shows that even with sufficiently high Brand Equity,
Religare ranks only 3rd amongst the Demat account providers. This is probably
because of two main reasons:

1. Lack of promotion and unfocussed approach towards Product awareness

1. Non – transparent marketing policies of the company

Hence, the company should crystallize its products and should indulge in
aggressive marketing and promotion.

1) Satisfaction level among Customers with current Broker :

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 YES NO
46 4
Source: Primary Data (Table No.5.6)

Satisfaction level among Customers with

current broker

Yes - 92% No- 8%

Chart 5.6

Interpretation: This pie chart accentuates the fact that Strategic marketing,
today, has gone beyond only meeting Sales targets and generating profit volumes.
It shows that all the competitors are striving hard not only to woo the customers
but also to make them Brand loyal by generating customer satisfaction.

2) How often do you trade:

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 FREQUENCY OF NO. OF INVESTORS
TRADING
Daily 5
Weekly 13
Monthly 26
Yearly 6
Source: Primary Data (Table No. 5.7)

Frequency of T rading

D aily - 9%
W ee kly - 27%
M o n th ly -53%
Yea rly -11%

Chart 5.7

Interpretation: In spite of the huge returns that the share market promises, we
see that there is still a dearth of active traders and investors. This is because of the
non – transparent structure of the Indian share market and the skepticism of the
target audience that is generated by the volatility of the stock market. It requires
efficient bureaucratic intervention on the part of the Government.

3) Percentage of earnings invested in Share Trading :

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 % of Earning No. of Investors
Invested
Up to 10 % 35
Up to 25 % 9
Up to 50 % 4
Above 50 % 2
Source: Primary Data (Table No. 5.8)

Chart 5.8

Interpretation: This shows that people invest only upto 10% of their earnings in
the stock market, again reiterating the volatile and non-transparent structure of the
Indian stock market. Hence, effective and efficient steps should be undertaken to
woo the customers to invest more in the lucrative stock market.

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 CHAPTER V
FINDINGS &
SUGGESTIONS

5.1 MAIN FINDINGS (CONCLUSION)

Working with a broking firm especially was really a great experience.

➢ The researcher found that the working of a broking firm is a very risky job
because risk is involved in each and every activity of the business.

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➢ The risk prevailing in the business is recognized therefore an efficient risk
management department is essential in every broking firm.

➢ Capital Market is growing very fast, turnover wise as well as area of

operation wise. The activities have reached through lengths and breadth of
the country. All these necessitated in the introduction of latest technology
in the form of advanced software’s.

➢ Broking business is a client-based business. The recent trend of

voluminous increase in investors has also increased the risk involved in it.
There is need of continuous up gradation of internal control measures

➢ Staff in a broking firm is continuous busy and due to which they are
always under stress.

5.2 POLICY SUGGESTIONS

➢ An Organization should have a risk management function that is

independent of its trading staff i.e. personnel responsible for the risk
management function should be separate from trading floor personnel.

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 ➢ Senior management should regularly evaluate the risk management
procedure in place to ensure they are appropriate and sound.

➢ Senior management should also foster and participate in active discussions

with the board of directors, sub brokers, franchisee, staff of risk
management function and investors regarding procedures for measuring
and managing risk.

➢ Highly qualified staff not only in front office positions such as trading
desk, relationship officer and sales but also all back office functions
responsible for risk management and internal control.

➢ Risk management or control function should be able to produce a risk

management report that highlights positions, limits and excess on a basis
commensurate with trading activity. This report should be sent to senior
management, reviewed, signed and returned to control staff.

➢ Auditors should perform a comprehensive review of risk management

annually, emphasizing segregation of duties and validation of data
integrity.

➢ The designated compliance officer should perform a review of trading

Practices annually.

5.3 SCOPE FOR DEVELOPMENT RELIGARE

SECURITIES)

RELIGARE SECURITIES have set themselves very stringent and high standards
of Risk Management. However I would like to make a few points, which would
help the organization in a big way.

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➢ Recording of trader and dealer telephone calls, which will facilitate to
resolve the disputes at different levels.

➢ Fast and frequent interaction between the risk managers, the sub brokers
and client will help in reducing the delay in giving limits.

➢ Periodical visits to the sub brokers and franchisee by the RELIGARE

SECURITIES personnel for interaction and inspection will help in
minimizing the risk to great extent.

➢ Regarding dealers risks, well-trained and less stressed dealers will help in
reducing the mistakes. It has been observed that most of the mistakes are
done when they are under stress. HRD must help in this matter.

➢ In settlement department the persons have be appointed with utmost care

and their periodic check can be conducted to avoid any employee fraud.

➢ Along with large client base, quality of clientele will help in balanced
growth of business and minimizing the risk.

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 CHAPTER VI

BIBLIOGRAPHY
&
WEBLIOGRAPHY

➢ FINANCIAL SERVICES AND MARKETS

Author: - Dr. Gurusamy

➢ RESEARCH METHODOLOGY METOHDS & TECHNIQUES

Author: - C.R.Kothari

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➢ PROJECT REPORT WRITING
Author: - M.K.Rampal & S.L. Gupta

➢ www.religare.in

➢ www.bseindia.com

➢ www.nseindia.com

➢ www.google.co.in

➢ Dalal Street

➢ Various books of Equity Management.

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 ANNEXURE

QUESTIONNAIRE

Q1. In which of these Financial Instruments do you invest into?

Shares Mutual Funds Bonds Derivatives

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 Q2. Are you aware of online Share trading?
Yes No

Q3. Heard about Religare?

Yes No

Q4. Do you know about the facilities provided by Religare?

Yes No

Q5. With which company do you have your DEMAT account?

Religare ICICI Direct Kotak Mahindra India Bulls
Others (please specify) __________

Q6. Are you currently satisfied with your Share trading company?
Yes No

Q7. How often do you trade?

Daily Weekly Monthly Yearly

Q8. What percentage of your earnings do you invest in share trading?

Up to 10% Up to 25% Up to 50% Above 50%

Q9. Is broking firms are always risk free?

Yes No
Q10.What more facilities do you think you require with your DEMAT
account?
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