SUMMER TRAINING PROJECT REPORT

ON
“THE STUDY OF STOCK MARKET”
AT
TATA SECURITIES

Submitted in partial fulfillment of the requirement

For the award of degree
Of
BACHELOR OF BUSINESS ADMINISTRATION
SESSION (2016-2019)
SUBMITTED BY: SUBMITTED
TO:
ABHISHEK CHAUHAN. MUNISH TIWARI SIR
BBA 6th semester
Roll No.-168779002

RAKSHPAL BAHADUR MANAGEMENT INSTITUTE,

Greater Noida
(Affiliated to Chaudhary Charan Singh University, Meerut)
 ACKNOWLEDGEMENT

I would like to express my heartfelt thanks to many people. This dissertation is an effort
to contribute towards achieving the desired objectives. In doing so, I have optimized all
available resources and made use of some external resources, the interplay of which,
over a period of time, led to the attainment of the set goals.

I take here a great opportunity to express my sincere and deep sense of gratitude to my
esteemed faculty MR. MUNISH KUMAR TIWARI for giving me an opportunity to work
on this project. The support & guidance from sir, was of great help & it was extremely
valuable.

I also express my sincere thanks to all the people who, directly or indirectly, contributed
in time, energy and knowledge to this effort.

Your name

ABHISHEK CHAUHAN
 DECLARATION BY THE STUDENT

I ABHISHEK CHAUHAN S/O MR. SHYAM SINGH CHAUHAN

student of BBA SEM-6 (2016-19) Hereby declare that I have completed a project as
Summer trainee on the topic Study of Stock Exchange at TATA SECURITIES for the
partial fulfilment of the degree of BBA course, it is my original work and it has not been
copied from others.

Place;-
Date; SIGNATURE –
ABHISHEK CHAUHAN
 TABLE OF CONTENTS
S.
TOPICS Page no.
NO.

1. INTRODUCTION TO TOPIC 1
2. BOMBAY STOCK EXCHANGE 4
3. NATIONAL STOCK EXCHANGE 8
4. STOCK EXCHANGE
5. SEBI 17
6. TATA SECURITIES 25
7. DEMAT SERVICES 34
8. CLIENT FOCUS 36
9. WIDE OPTION WHILE TRADING 42
10. TRADING DERIVATIVES 45
11. STOCK MARKET 48
12. HISTORY
13. IMPORTANCE OF STOCK MARKET 51
14. BEHAVIOUR OF STOCK MARKET 58
15. MARGIN BUYING 64
16. BASIC RISK IN TRADING 66
17. FINDING AND RECOMMONITION 67
18. CONCLUSION 69
19. BIBLIOGRAPHY 70
 PREFACE

The microstructure of the stock market in which brokers work is highly Dynamic and
volatile. Many stocks are available to be bought and sold, each exhibiting its own
patterns and characteristics that are highly unpredictable. With so many options and
considerations that need to be taken into account, it is an extremely difficult task for a
broker to investigate aspects of the stock market and consistently provide effective
Advice to their clients.
Thus, brokers perform their day-to-day tasks with the aid of a broker system. Such a
system should provide tools for interacting with Exchanges and performing analysis. As
a consequence, these broker Systems are quite large and complicated by themselves.
This research aims to analysis Stock broker on the basis of their Services, products,
growth, and their competitiveness. Because Stockbrokers are one of the main
participants in stock exchanges Worldwide, they often act as an agent for their clients,
making trades on their behalf. They also act as advisors, providing suggestions to their
Clients on what stocks to buy and sell.
 INTRODUCTION TO TOPIC

In most industrialized countries, a substantial part of financial wealth is not managed

directly by savers, but through a financial intermediary, which implies the existence of
an agency contract between the investor (the principal) and a broker or portfolio
manager (the agent). Therefore, delegated brokerage management is arguably one of
the most important agency relationships intervening in the economy, with a possible
impact on financial market and economic developments at a macro level. In most of the
metros, people like to put their money in stock options instead of dumping it in the bank-
lockers. Now, this trend picks pace in small but fast developing cities like Chandigarh,
Gurgaon, Jaipur, Ambala etc. My research is based on the residents of NOIDA and its
nearby areas. As the per-capita-income of the city is on the higher side, so it is quite
obvious that they want to invest their money in profitable ventures. On the other hand, a
number of brokerage houses make sure the hassle free investment in stocks. Asset
management firms allow investors to estimate both the expected risks and returns, as
measured statistically.

There are mainly two types of Portfolio management strategies.

1. Passive Portfolio Strategy
2. Active Portfolio Strategy

1. Passive Portfolio Strategy: A strategy that involves minimal expectation

Input, and instead relies on diversification to match the performance of
Some market index. A passive strategy assumes that the marketplace will
Reflect all available information in the price paid for securities

2. Active Portfolio Strategy: A strategy that uses available information and

Forecasting techniques to seek a better performance than a portfolio that is

1
There is growing competition between brokerage firms in post reform India. For investor
it is always difficult to decide which brokerage firm to Choose.
Research was carried out to find which brokerage house people prefer and to figure out
what people prefer while investing in stock market. This study suggests that people are
reluctant while investing in stock and Commodity market due to lack of knowledge.
Main purpose of investment is returns and liquidity, commodity market is less preferred
by investors due to lack of awareness. The major findings of this study is that people
are interested to invest in stock market but them Lack knowledge. Through this report
we were also able to understand, what our Company’s (Tata securities) positive are and
strong points, on the basis of which we come to know what can be the basis of pitching
to a potential Client.
At the end of the report limitations, SWOT analysis, conclusion of the research and
Appendix which includes questionnaire and the list of the city where the Argent capital
are running. Last there is Bibliography, FAQ, and Glossary that has the technical terms
of the report.

2
.

3
BSE SENSEX 30

4
 • Started on 01 January, 1986
• Value-weighted index
• Consists of the 30 largest and
most actively traded stocks

BOMBAY STOCK EXCHANGES:

This stock exchanges, Mumbai, popularity known as “BSE” was established in 1875 as
“The native share and stock brokers associations”, as a voluntary non-profit making
association.

It has an evolved over the years into its status as the premiere stock exchanges in the
country. It may be noted that the stock exchanges the oldest one in Asia, even older
than the Tokyo Stock Exchanges, which was founded in 1878.

The exchanges, while providing an efficient and transparent market for trading in
securities, upholds the interests of the investors and ensures redressed of their
grievances, whether against the companies or its own members brokers.

It also strives to educate and enlighten the investors by making available necessary
informative inputs and conducting investor’s education programmers.

5
A governing board comprises of elected directors, 2SEBI nominees, 7 public
representatives and an executive director is the apex body, which decides the policies
and regulates the affairs of the exchanges.

The executive director as the chief executive officer is responsible for the day today
administration of the exchanges. The average daily turnover of the exchange during the
year 2000-01 (April-March) was Rs 3984.19 crores and average numbers of daily trades
5.69 Lakhs

However, the averages daily turnover of the exchanges during the year 2001-2002 has
declined to Rs. 1224.10 crores and number of average daily trades 5.69 Lakhs.

The average daily turnover of the exchanges during the year 2001-2003 has declined
and number of average daily trades during the period is also decreased. The Ban on all
deferral products like BLESS AND ALBM in the Indian capital markets by SEBI with
effect from July 2, 2001, abolition of account period settlements, introduction of
compulsory rolling settlements in all scripts trades on the exchanges. With effect from
dec31, 2001 etc. have adversely impacted the liquidity and consequently there is a
considerable decline in the daily turnover at the exchanges. The average daily turnover
of the exchanges present scenario is 110363 (Laces) and number of average daily
trades 1057(Laces)

NSE NIFTY 50

6
The 50 stocks that were most
favored by institutional
investors in the 1960s and
1970s.

7
 NATIONAL STOCK EXCHANGES:

The NSE was incorporated is now 1992 with an equity capital of Rs 25 crores. The
international securities consultancy (ISC) of Hong Kong has helped in setting up NSE.

ISE has prepared the details business plans and installation of hardware and software
system. The promotion for NSE were financial institutions, insurances companies,
banks and SEBI capital markets Ltd, infrastructure leasing and financial services Ltd
and stock holding corporation Ltd.

It has been set up to strengthen the move towards professionalization of the capital
market as well as provide nationwide securities trading facilities to investors. NSE is not
an exchange in the traditional sense where broker own and manage the exchanges.

A two tier administrative set up involving a company board and a governing aboard of
the exchanges is envisaged. NSE is a national market for shares PSU bonds,
debentures and government securities since infrastructure and trading facilities are
provided.

National Stock Exchange

The National Stock Exchange of India Limited (NSE) is the leading stock exchange of
India, located in Mumbai. The NSE was established in 1992 as the first demutualized
electronic exchange in the country. NSE was the first exchange in the country to provide
a modern, fully automated screen-based electronic trading system which offered easy
trading facility to the investors spread across the length and breadth of the country.
Vikram Limaye is Managing Director & Chief Executive Officer of NSE.
National Stock Exchange has a total market capitalization of more than US$2.27 trillion,
making it the world's 11th-largest stock exchange as of April 2018. NSE's flagship
index, the NIFTY 50, the 50 stock index is used extensively by investors in India and
around the world as a barometer of the Indian capital markets. Nifty 50 index was
launched in 1996 by the NSE. However, Vaidyanathan (2016) estimates that only about
4% of the Indian economy / GDP is actually derived from the stock exchanges in India.

Unlike countries like the United States where nearly 70% of the GDP is derived from
larger companies and the corporate sector, the corporate sector in India accounts for
only 12-14% of the national GDP (as of October 2016). Of these only 7,800 companies
are listed of which only 4000 trade on the stock exchanges at BSE and NSE. Hence the
stocks trading at the BSE and NSE account for only around 4% of the Indian economy,
which derives most of its income related activity from the so-called unorganized sector
and households.

Economic Times estimated that as of April 2018, 60 million (6 crore) retail investors had
invested their savings in stocks in India, either through direct purchases of equities or
through mutual funds. Earlier, the Bimal Jalan Committee report estimated that barely
1.3% of India's population invested in the stock market, as compared to 27% in USA
and 10% in China.

History
NSE is mainly set up in the early 1990s to bring in transparency in the markets. Instead
of trading membership being confined to a group of brokers, NSE ensured that anyone
who was qualified, experienced and met minimum financial requirements was allowed
to trade. In this context, NSE was ahead of its times when it separated ownership and
management in the exchange under SEBI's supervision. The price information which
could earlier be accessed only by a handful of people could now be seen by a client in a
remote location with the same ease. The paper-based settlement was replaced by
electronic depository-based accounts and settlement of trades was always done on
time. One of the most critical changes was that a robust risk management system was
set in place, so that settlement guarantees could protect investors against broker
defaults.

9
NSE was set up by a group of leading Indian financial institutions at the behest of the
government of India to bring transparency to the Indian capital market. Based on the
recommendations laid out by the Pherwani committee, NSE has been established with
a diversified shareholding comprising domestic and global investors. The key domestic
investors include Life Insurance Corporation of India, State Bank of India, IFCI Limited,
IDFC Limited and Stock Holding Corporation of India Limited. And the key global
investors are Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE
Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited and PI
Opportunities Fund I.

The exchange was incorporated in 1992 as a tax-paying company and was recognized
as a stock exchange in 1993 under the Securities Contracts (Regulation) Act, 1956,
when P. V. Narasimha Rao was the Prime Minister of India and Manmohan Singh was
the Finance Minister. NSE commenced operations in the Wholesale Debt Market
(WDM) segment in June 1994. The capital market (equities) segment of the NSE
commenced operations in November 1994, while operations in the derivatives segment
commenced in June 2000. NSE offers trading, clearing and settlement services in
equity, equity derivatives, debt and currency derivatives segments. It was the first
exchange in India to introduce electronic trading facility thus connecting together the
investor base of the entire country. NSE has 2500 VSATs and 3000 leased lines spread
over more than 2000 cities across India.

NSE was also instrumental in creating the National Securities Depository Limited
(NSDL) which allows investors to securely hold and transfer their shares and bonds
electronically. It also allows investors to hold and trade in as few as one share or bond.
This not only made holding financial instruments convenient but more importantly,
eliminated the need for paper certificates and greatly reduced the incidents of forged or
fake certificates and fraudulent transactions that had plagued the Indian stock market.
The NSDL's security, combined with the transparency, lower transaction prices and
efficiency that NSE offered, greatly increased the attractiveness of the Indian stock
market to domestic and international investors.

Markets
The National Stock Exchange of India Limited (NSE) commenced trading in derivatives
with the launch of index futures on 12 June 2000. The futures and options segment of
NSE has made a global mark. In the Futures and Options segment, trading in NIFTY 50
Index, NIFTY IT index, NIFTY Bank Index, NIFTY Next 50 index and single stock
futures are available. Trading in Mini Nifty Futures & Options and Long term Options on
NIFTY 50 are also available. The average daily turnover in the F&O Segment of the
Exchange during the financial year April 2013 to March 2014 stood at ₹1.52236 trillion
(US$21 billion).

On 29 August 2011, National Stock Exchange launched derivative contracts on the

world's most followed equity indices, the S&P 500 and the Dow Jones Industrial
Average. NSE is the first Indian exchange to launch global indices. This is also the first
time in the world that futures contracts on the S&P 500 index were introduced and listed
on an exchange outside of their home country, USA. The new contracts include futures
on both the DJIA and the S&P 500, and options on the S&P 500.

On 3 May 2012, the National Stock exchange launched derivative contracts (futures and
options) on FTSE 100, the widely tracked index of the UK equity stock market. This was
the first of its kind of an index of the UK equity stock market launched in India. FTSE
100 includes 100 largest UK listed blue chip companies and has given returns of 17.8
per cent on investment over three years. The index constitutes 85.6 per cent of UK's
equity market cap.

On 10 January 2013, the National Stock Exchange signed a letter of intent with the
Japan Exchange Group, Inc. (JPX) on preNparing for the launch of NIFTY 50 Index
futures, a representative stock price index of India, on the Osaka Securities Exchange
Co., Ltd. (OSE), a subsidiary of JPX.

Moving forward, both parties will make preparations for the listing of yen-denominated
NIFTY 50 Index futures by March 2014, the integration date of the derivatives markets
of OSE and Tokyo Stock Exchange, Inc. (TSE), a subsidiary of JPX. This is the first
time that retail and institutional investors in Japan will be able to take a view on the
Indian markets, in addition to current ETFs, in their own currency and in their own time
zone. Investors will therefore not face any currency risk, because they will not have to
invest in dollar denominated or rupee denominated contracts.

In August 2008, currency derivatives were introduced in India with the launch of
Currency Futures in USD–INR by NSE. It also added currency futures in Euros, Pounds
and Yen. The average daily turnover in the F&O Segment of the Exchange on 20 June
2013 stood at ₹419.2616 billion (US$5.8 billion) in futures and ₹273.977 billion (US$3.8
billion) in options, respectively.

11
Interest Rate Futures

In December 2013, exchanges in India received approval from market regulator SEBI
for launching interest rate futures (IRFs) on a single GOI bond or a basket of bonds that
will be cash settled. Market participants have been in favour of the product being cash
settled and being available on a single bond. NSE will launch the NSE Bond Futures on
21 January on highly liquid 7.16 percent and 8.83 percent 10-year GOI bonds. Interest
Rate Futures were introduced for the first time in India by NSE on 31 August 2009,
exactly one year after the launch of Currency Futures. NSE became the first stock
exchange to get an approval for interest-rate futures, as recommended by the SEBI-RBI
committee.

Debt Market

On 13 May 2013, NSE launched India's first dedicated debt platform to provide a liquid
and transparent trading platform for debt related products.

The Debt segment provides an opportunity to retail investors to invest in corporate

bonds on a liquid and transparent exchange platform. It also helps institutions who are
holders of corporate bonds. It is an ideal platform to buy and sell at optimum prices and
help Corporates to get adequate demand, when they are issuing the bonds.

Trading schedule

Trading on the equities segment takes place on all days of the week (except Saturdays
and Sundays and holidays declared by the Exchange in advance). The market timings
of the equities segment are:

(1) Pre-open session:

Order entry & modification Open: 09:00 hrs

Order entry & modification Close: 09:08 hrs

(2) Regular trading session

Normal/Retail Debt/Limited Physical Market Open: 09:15 hrs

Normal/Retail Debt/Limited Physical Market Close: 15:30 hrs.

Exchange Traded Funds and Derivatives on National Stock Exchange

The following products are trading on NIFTY 50 Index in the Indian and international
Market:

7 Asset Management Companies have launched exchange-traded funds on NIFTY 50

Index which are listed on NSE

15 index funds have been launched on NIFTY 50 Index

Unit linked products have been launched on NIFTY 50 Index by several insurance
companies in India

World Indices

Derivatives Trading on NIFTY 50 Index:

Futures and Options trading on NIFTY 50 Index

Trading in NIFTY 50 Index Futures on Singapore Stock Exchange(SGX)

Trading in NIFTY 50 Index Futures on Chicago Mercantile Exchange(CME)

Technology

NSE's trading systems, is a state of-the-art application. It has an up time record of

99.99% and processes more than a billion messages every day with sub millisecond
response time.

NSE has taken huge strides in technology in these 20 years. In 1994, when trading
started, NSE technology was handling 2 orders a second. This increased to 60 orders a
second in 2001. Today NSE can handle 1,60,000 orders/messages per second, with
infinite ability to scale up at short notice on demand, NSE has continuously worked
towards ensuring that the settlement cycle comes down. Settlements have always been
handled smoothly. The settlement cycle has been reduced from T+3 to T+2/T+1.

13
Financial Literacy
NSE has collaborated with several universities like Gokhale Institute of Politics &
Economics (GIPE), Pune, Bharati Vidyapeeth Deemed University (BVDU), Pune, Guru
Gobind Singh Indraprastha University, Delhi, Ravenshaw University of Cuttack and
Punjabi University, Patiala, among others to offer MBA and BBA courses. NSE has also
provided mock market simulation software called NSE Learn to trade (NLT) to develop
investment, trading and portfolio management skills among the students. The simulation
software is very similar to the software currently being used by the market professionals
and helps students to learn how to trade in the markets.

NSE also conducts online examination and awards certification, under its Certification in
Financial Markets (NCFM) programmes. At present, certifications are available in 46
modules, covering different sectors of financial and capital markets, both at the beginner
and advanced levels. The list of various modules can be found at the official site of NSE
India. In addition, since August 2009, it offered a short-term course called NSE Certified
Capital Market Professional (NCCMP). The NCCMP or NSE Certified Capital Market
Professional is a 100-hour program for over 3–4 months, conducted at the colleges, and
covers theoretical and practical training in subjects related to the capital markets.
NCCMP covers subjects like equity markets, debt markets, derivatives,
macroeconomics, technical analysis and fundamental analysis. Successful candidates
are awarded joint certification from NSE and the concerned.

NSE v. Moneylife case

On 8 July 2015, Sucheta Dalal wrote an article on Moneylife alleging that some NSE
employees were leaking sensitive data related to high-frequency trading or co-location
servers to a select set of market participants so that they could trade faster than their
competitors. NSE alleged defamation in the article by Moneylife. On 22 July 2015, NSE
filed a ₹1 billion (US$14 million) suit against Moneylife. However, on 9 September 2015,
the Bombay High Court dismissed the case and fined NSE ₹5 million (US$70,000) in
this defamation case against Moneylife (www.moneylife.in). The High Court asked NSE
to pay ₹150,000 (US$2,100) to each journalist Debashis Basu and Sucheta Dalal and
the remaining ₹4.7 million (US$65,000) to two hospitals.

The Bombay High Court has stayed the order on costs for a period of two weeks,
pending the hearing of the appeal filed by NSE.
 Stock Exchange
What is the role of a Stock Exchange in buying and selling shares?
The stock exchanges in India, under the overall supervision of the regulatory
authority, the Securities and Exchange Board of India (SEBI), provide a trading
platform, where buyers and sellers can meet to transact in securities. The
trading platform provided by NSE is an electronic one and there is no need for
buyers and sellers to meet at a physical location to trade. They can trade
through the computerized trading screens available with the NSE trading
members or the internet based trading facility provided by the trading members
of NSE.
What is Demutualization of stock exchanges?
Demutualization refers to the legal structure of an exchange whereby the
ownership, the management and the trading rights at the exchange are
segregated from one another.
How is a demutualized exchange different from a mutual exchange?
In a mutual exchange, the three functions of ownership, management and
trading are concentrated into a single Group. Here, the broker members of the
exchange are both the owners and the traders on the exchange and they
further manage the exchange as well. This at times can lead to conflicts of
interest in decision making. A demutualized exchange, on the other hand, has
all these three functions clearly segregated, i.e. the ownership, management
and trading are in separate hands.

15
A stock exchange, securities exchange or bourse, is a facility where stock brokers and
traders can buy and sell securities, such as shares of stock and bonds and other
financial instruments. Stock exchanges may also provide for facilities the issue and
redemption of such securities and instruments and capital events including the payment
of income and dividends. Securities traded on a stock exchange include stock issued by
listed companies, unit trusts, derivatives, pooled investment products and bonds. Stock
exchanges often function as "continuous auction" markets with buyers and sellers
consummating transactions at a central location such as the floor of the exchange.
Many stock exchanges today use electronic trading platforms, in place of an open
outcry system.
To be able to trade a security on a certain stock exchange, the security must be listed
there. Usually, there is a central location at least for record keeping, but trade is
increasingly less linked to a physical place, as modern markets use Electronic
communication networks, which give them advantages of increased speed and reduced
cost of transactions. Trade on an exchange is restricted to brokers who are members of
the exchange. In recent years, various other trading venues, such as electronic
communication networks, alternative trading systems and "dark pools" have taken much
of the trading activity away from traditional stock exchanges.
Initial public offerings of stocks and bonds to investors is done in the primary market
and subsequent trading is done in the secondary market. A stock exchange is often the
most important component of a stock market. Supply and demand in stock markets are
driven by various factors that, as in all free markets, affect the price of stocks (see stock
valuation).
There is usually no obligation for stock to be issued through the stock exchange itself,
nor must stock be subsequently traded on an exchange. Such trading may be off
exchange or over-the-counter. This is the usual way that derivatives and bonds are
traded. Increasingly, stock exchanges are part of a global securities market. Stock
exchanges also serve an economic function in providing liquidity to shareholders in
providing an efficient means of disposing of shares.

16
 SEBI

The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in
India. It was established in 1988 and given statutory powers on 30 January 1992 through the
SEBI Act, 1992.

History
Securities and exchange Board of India (SEBI) was first established in the year 1988 as
a non-statutory body for regulating the securities market. It became an autonomous
body by The Government of India on 12 May 1992 and given statutory powers in 1992
with SEBI Act 1992 being passed by the Indian Parliament. SEBI has its headquarters
at the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern,
Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and
Ahmedabad respectively. It has opened local offices at Jaipur and Bangalore and is
planning to open offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in
Financial Year 2013 - 2014.

Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.

Initially SEBI was a non statutory body without any statutory power. However, in 1992,
the SEBI was given additional statutory power by the Government of India through an
amendment to the Securities and Exchange Board of India Act, 1992. In April 1988 the
SEBI was constituted as the regulator of capital markets in India under a resolution of
the Government of India. The SEBI is managed by its members, which consists of
following:

The chairman who is nominated by Union Government of India. Two members, i.e.,
Officers from Union Finance Ministry. One member from the Reserve Bank of India. The
remaining five members are nominated by Union Government of India, out of them at
least three shall be whole-time members. After amendment of 1999, collective
investment scheme brought under SEBI except NIDHI, chit fund and cooperatives.
Organization structure

SEBI headquarters, Mumbai

Ajay Tyagi was appointed chairman on 10 January 2017, replacing U K Sinha,[3] and
took charge of the chairman office on 1 March 2017.

The board comprises:[4]

Name Designation

Ajay Tyagi Chairman

Gurumoorthy Mahalingam Whole time member

S.K Mohanty Whole time member

Ananta Barua Whole time member

Madhabi Puri Buch Whole time member

Subhash Chandra Garg Part-time member

Injeti Srinivas Part-time member

N.S. Vishwanathan Part-time member

Arun P. Sathe Part-time member

List of Chairmen:[5]

Name From To

Ajay Tyagi 10 February 2017 present

U K Sinha 18 February 2011 10 February 2017

C. B. Bhave 18 February 2008 18 February 2011

M. Damodaran 18 February 2005 18 February 2008

G. N. Bajpai 20 February 2002 18 February 2005

18--
D. R. Mehta 21 February 1995 20 February 2002

S. S. Nadkarni 17 January 1994 31 January 1995

G. V. Ramakrishna 24 August 1990 17 January 1994

Dr. S. A. Dave 12 April 1988 23 August 1990

Functions and responsibilities

The Preamble of the Securities and Exchange Board of India describes the basic
functions of the Securities and Exchange Board of India as "...to protect the interests of
investors in securities and to promote the development of, and to regulate the securities
market and for matters connected there with or incidental there to".

SEBI has to be responsive to the needs of three groups, which constitute the market:

Issuers of securities

Investors

Market intermediaries

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-
executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its
judicial capacity. Though this makes it very powerful, there is an appeal process to
create accountability. There is a Securities Appellate Tribunal which is a three-member
tribunal and is currently headed by Justice Tarun Agarwala, former Chief Justice of the
Meghalaya High Court.[6] A second appeal lies directly to the Supreme Court. SEBI has
taken a very proactive role in streamlining disclosure requirements to international
standards.[7]

Powers
For the discharge of its functions efficiently, SEBI has been vested with the following
powers:
To approve by−laws of Securities exchanges.

To require the Securities exchange to amend their by−laws.

Inspect the books of accounts and call for periodical returns from recognized Securities
exchanges.

Inspect the books of accounts of financial intermediaries.

Compel certain companies to list their shares in one or more Securities exchanges.

Registration of Brokers and sub-brokers

There are two types of brokers:

Discount brokers

Merchant brokers

SEBI committees

Technical Advisory Committee

Committee for review of structure of market infrastructure institutions

Advisory Committee for the SEBI Investor Protection and Education Fund

Takeover Regulations Advisory Committee

Primary Market Advisory Committee (PMAC)

Secondary Market Advisory Committee (SMAC)

Mutual Fund Advisory Committee

Corporate Bonds & Securitization Advisory Committee

Eliminate mal practices in security market

20
Major achievements
SEBI has enjoyed success as a regulator by pushing systematic reforms aggressively
and successively. SEBI is credited for quick movement towards making the markets
electronic and paperless by introducing T+5 rolling cycle from July 2001 and T+3 in
April 2002 and further to T+2 in April 2003. The rolling cycle of T+2[8] means,
Settlement is done in 2 days after Trade date.[9] SEBI has been active in setting up the
regulations as required under law. SEBI did away with physical certificates that were
prone to postal delays, theft and forgery, apart from making the settlement process slow
and cumbersome by passing Depositories Act, 1996.[10]

SEBI has also been instrumental in taking quick and effective steps in light of the global
meltdown and the Satyam fiasco.[citation needed] In October 2011, it increased the
extent and quantity of disclosures to be made by Indian corporate promoters.[11] In light
of the global meltdown, it liberalised the takeover code to facilitate investments by
removing regulatory structures. In one such move, SEBI has increased the application
limit for retail investors to ₹ 2 lakh, from ₹ 1 lakh at present.[12]

Controversies
Supreme Court of India heard a Public Interest Litigation (PIL) filed by India
Rejuvenation Initiative that had challenged the procedure for key appointments adopted
by Govt of India. The petition alleged that, "The constitution of the search-cum-selection
committee for recommending the name of chairman and every whole-time members of
SEBI for appointment has been altered, which directly impacted its balance and could
compromise the role of the SEBI as a watchdog." [13][14] On 21 November 2011, the
court allowed petitioners to withdraw the petition and file a fresh petition pointing out
constitutional issues regarding appointments of regulators and their independence. The
Chief Justice of India refused the finance ministry's request to dismiss the PIL and said
that the court was well aware of what was going on in SEBI.[13][15] Hearing a similar
petition filed by Bengaluru-based advocate Anil Kumar Agarwal, a two judge Supreme
Court bench of Justice SS Nijjar and Justice HL Gokhale issued a notice to the Govt of
India, SEBI chief UK Sinha and Omita Paul, Secretary to the President of India.[16][17]

Further, it came into light that Dr KM Abraham (the then whole time member of SEBI
Board) had written to the Prime Minister about malaise in SEBI. He said, "The
regulatory institution is under duress and under severe attack from powerful corporate
interests operating concertedly to undermine SEBI". He specifically said that Finance
Minister's office, and especially his advisor Omita Paul, were trying to influence many
cases before SEBI, including those relating to Sahara Group, Reliance, Bank of
Rajasthan and MCX.

SEBI and Regional Securities Exchanges

SEBI in its circular dated May 30, 2012 gave exit - guidelines for Securities exchanges.
This was mainly due to illiquid nature of trade on many of 20+ regional Securities
exchanges. It had asked many of these exchanges to either meet the required criteria or
take a graceful exit. SEBI's new norms for Securities exchanges mandates that it should
have minimum net-worth of Rs.100 crore and an annual trading of Rs.1,000 crore. The
Indian Securities market regulator SEBI had given the recognized Securities exchanges
two years to comply or exit the business.

Process of de-recognition and exit

Following is an excerpts from the circular:

1.Exchanges may seek exit through voluntary surrender of recognition.

2.Securities where the annual trading turnover on its own platform is less than Rs 1000
Crore can apply to SEBI for voluntary surrender of recognition and exit, at any time
before the expiry of two years from the date of issuance of this Circular.

3.If the Securities exchange is not able to achieve the prescribed turnover of Rs 1000
Crores on continuous basis or does not apply for voluntary surrender of recognition and
exit before the expiry of two years from the date of this Circular, SEBI shall proceed with
compulsory de-recognition and exit of such Securities exchanges, in terms of the
conditions as may be specified by SEBI.

22
4.Securities Exchanges which are already de-recognised as on date, shall make an
application for exit within two months from the date of this circular. Upon failure to do so,
the de-recognized exchange shall be subject to compulsory exit process.

SEBI departments
SEBI regulates Indian financial market through its 20 departments.

Commodity Derivatives Market Regulation Department (CDMRD)

Corporation Finance Department (CFD)

Department of Economic and Policy Analysis (DEPA)

Department of Debt and Hybrid Securities (DDHS)

Enforcement Department – 1 (EFD1)

Enforcement Department – 2 (EFD2)

Enquiries and Adjudication Department (EAD)

General Services Department (GSD)

Human Resources Department (HRD)

Information Technology Department (ITD)

Integrated Surveillance Department (ISD)

Investigations Department (IVD)

Investment Management Department (IMD)

Legal Affairs Department (LAD)

Market Intermediaries Regulation and Supervision Department (MIRSD)

Market Regulation Department (MRD)

Office of International Affairs (OIA)

Office of Investor Assistance and Education (OIAE)

Office of the Chairman (OCH)

Regional offices (ROs)

See also
Forward Markets Commission (India)

Securities Commission

Financial regulation

List of financial regulatory authorities by country

Securities exchange

Regulation D (SEC)

Institute of Chartered Accountants of India

Institute of Company Secretaries of India

List of stock exchanges in the Commonwealth of Nations

24
 COMPANY PROFILE

The securities and trading business is brought to you by Tata securities limited, a wholly
owned subsidiary of Tata capital limited. A Tata security limited is engaged in the
business of providing broking and distribution services to both retail and institutional
customers.

Tata securities limited distributes third party investment products and offer stock broking
services in its capacity as a member of the Bombay stock exchange limited (BSE), the
national stock exchange of India limited (NSEIL) and association of mutual funds of
India (AMFI). Tata securities limited is also a depository participant with the central
depository services (India) limited (CDSL) and national securities Depository limited
(NSD)

25
 TATA CAPITAL
Tata Capital is a finance company that fulfills the financial needs of retail and
institutional customers in India. It was established in 2007 as a wholly owned subsidiary
of Tata Sons and is registered with the Reserve Bank of India as a systemically
important non-deposit taking non-banking financial company (NBFC).
The company is focused on providing multiple financial services through an extensive
network of over 1,000 customer touch-points covering tier I, tier II and tier III cities.

Areas of business
Tata Capital has financial products and services in the following seven sectors:

1. Distribution and broking: Third-party investment products, equity and commodity

trading for retail and institutional customers.
2. Retail finance: Passenger and commercial vehicle loans, used car loans, personal
loans, home loans, credit cards and consumer durable loans for retail customers.
3. Commercial finance: Financial products for small and medium enterprises and
project finance for capital equipment and infrastructure.
4. Investment banking: Advisory and debt and equity market products for corporate
and small and medium enterprises.
5. Private equity: Investments in India and other countries.
6. Wealth management: Suite of advisory and investment offerings for high net worth
individuals.
7. Rural finance: Relevant financial products for rural customers, including financing of
farm equipment, agricultural inputs and agricultural enterprises.

The company has entered into an understanding with Japan-based Mizuho Securities
Co to promote an alliance in private equity, investment banking including cross border
merger and acquisition, securities business including broking and distribution, structured
finance and other business areas such as wealth management. It has also entered into
an understanding with Equifax Inc. and CRISIL to develop plans to create a credit
information company in India.
The Central and State elections were a mixed bag. India has a single party majority at
the Centre after a long time, resulting in high policy intent, but, moderate action due to
constraints. The Government’s recent usage of the ordinance route to pass reforms in
key issues such as land acquisition, coal auctions, mining and Foreign Direct
Investment in insurance, reflects its conviction behind reforms and willingness to act
outside of conventional avenues. The Government’s flagship initiative ‘Make in India’
aims to promote manufacturing, which currently constitutes approximately 18% of the
GDP versus a targeted 25%. India’s unique combination of democracy, demography
and demand would also help make it a suitable manufacturing destination. The Finance
Minister presented the Budget, which addresses some pending concerns such as (i)
laying out a transformative tax regime in terms of GST, GAAR, phased reduction in
corporate taxes, abolition of wealth tax (ii) higher public investments to kick start growth
(iii) direct benefit transfers/Jan Dhan to streamline/plug leakages in subsidies delivery
and (iv) institutionalization of inflation targeting monetary policy framework. However, it
has extended the fiscal consolidation roadmap with fiscal deficit target of 3.9% in FY
2016; 3.5% in FY 2017 and 3% in FY 2018. Overall, the budget is a fine balancing act
between fiscal consolidation and creating enabling conditions for growth and job
creation. India’s growth story got a boost with the rebasing of GDP data. Based on the
new series, the real GDP growth stands at 7.4% in FY 2014-15 and 6.9% in FY 2013-14
i.e. approximately 180 bps higher than earlier estimates. While the data shows that
growth recovery has been swift and substantial, several on-ground indicators like
growth in industrial output, credit and net tax revenues, suggest that activity is still sub-
par. Even within the revised GDP data, fixed capital formation has been weak at 4%
YOY, in FY 2015. RBI commenced its easing cycle with an inter-meeting cut in January
2015. RBI kept rates unchanged in February 2015 policy and reiterated its guidance,
‘further easing will be dependent on data that confirm continuing disinflationary
pressures and sustained high quality fiscal consolidation’. The Government and RBI
entered into an agreement on a framework for monetary policy. India imports 80% of its
crude oil requirements and crude oil imports constitute 30% of India’s total import bill.
After factoring in petro product exports, a US$1/bbl decline in oil prices reduced the
trade deficit by US$900 million, annually. Given the changes in the crude price
assumption of ‘net’ oil import bill to come in at US$57 billion in FY 2016, which
represents an approximate US$45 billion decline over the last two fiscal years, it is likely
to help keep inflation under control. However, the international crude prices are firming
up. If the trend continues, it could deal a blow to the low inflation scenario. Closer home,
the NBFCs in India, have evolved over the last fifty years to emerge as notable alternate
sources of credit intermediation especially for the last mile credit delivery. Regulation of
the NBFC sector over the last decade and a half has been incremental. As and when
risks have been detected, they were sought to be addressed. RBI has taken major
steps in FY 2014-15 to align asset classification norms with that of Banks (90 day norm
phased in over 3 years). Higher Standard Asset provisioning has been put in place
(0.40% against the existing 0.25%, phased in over 3 years). The sector will report
higher NPAs in the initial period, however, the sector as a whole will emerge stronger
after the implementation of these initiatives.

RBI issued many new guidelines for NBFCs. These include: identifying early, the
stress in the system. NBFCs are required to identify stress in their portfolio by creating a
sub-asset category viz. ‘Special Mention Accounts’ (SMA) and were also directed to
report relevant credit information to the Central Repository of Information on Large
Credits (CRILC);

harmonizing the definition across classes of NBFCs and eliminating any benefits of
asset reclassification in the process of restructuring; and stricter guidelines on
outsourcing. The industry will be stronger and safer because of the new regulations for
well-run NBFCs. The year ahead will be challenging on the credit quality front. However,
if the Government and private spending revive, partially assisted by interest rate cuts,
FY 2015-16 could witness an improvement in asset quality and growth.

28
Risk Management is an integral part of the Company’s business strategy. The risk
management process is governed by the Enterprise Wide Risk management
framework. The Risk Management oversight structure includes Committees of the
Board and Senior Management Committees. The Risk Management Committee of the
Board (“RMC”) reviews compliance with risk policies, monitors risk tolerance limits,
reviews and analyzes risk exposure related to specific issues and provides oversight of
risk across the organization. The Board of Directors have adopted a Risk Management
Policy. The Risk Management Framework covers integrated risk management mainly
comprising Credit Risk, Market Risk, Operational Risk, Fraud Risk and other Risks.The
Credit Risk management structure includes separate credit policies and procedures for
various businesses. The risk policies define prudential limits, portfolio criteria,
exceptional approval metrics, etc. and cover risk assessment for new product offerings.
Concentration Risk is managed by analysing counter-party, industry sector,
geographical region, single borrower and borrower group. While Credit Committees
approve counter-party credit exposure in line with the Delegation of Power and Authority
assigned by the Board of Directors, the Credit Monitoring Committee primarily focuses
on post sanction monitoring. Retail Finance credit approval is based on product /
programs and monitoring is primarily done at the portfolio level across products and
programs. Periodic stress tests of the credit portfolio are conducted and a Risk
Mitigation Plan based on the analysis, has been implemented. Management of Liquidity
(Asset Liability and Interest Rate) and Market Risk is carried out using quantitative
techniques such as sensitivity and stress testing. The Finance and Asset Liability
Supervisory Committee reviews liquidity risk and the interest rate risk profile of the
organization on a regular basis.The Company has a Board approved Operational Risk
Management framework. Ongoing monitoring of Key Risk Indicators (“KRI”) is done by a
dedicated Operational Risk Management team. Causal analysis is carried out and
corrective actions are implemented on KRI exceptions. A Senior Management oversight
committee i.e. the Operational Risk Management Committee meets periodically to
review the operational risk profile of the organization. Risks associated with frauds are
mitigated through a Fraud Risk Management framework. A Fraud Risk Management
 Committee comprising Senior Management representative’s reviews matters relating to
fraud risk, including corrective and remedial actions as regards people and processes.

joint ventures, subsidiaries, associates

1. Tata Securities (TSL): A wholly owned subsidiary of Tata Capital Limited engaged
in retail and institutional distribution and broking. TSL distributes third-party
investment products and offers stock broking services of buying, selling or dealing in
securities, including futures and options, in its capacity as a member of the Bombay
Stock Exchange and the National Stock Exchange. TSL is also a depository
participant.
2. Tata Capital Markets (TCML): A wholly owned subsidiary of Tata Capital engaged
in debt and equity capital markets and M&A advisory. TCML has a category I
merchant banking license from the Securities and Exchange Board of India.
3. E-Next: A KPO unit specializing in the area of financial services; owned by Tata
Capital, Tata Sons and others.
4. Tata Capital also owns around 4 per cent of equity capital of Development Credit
Bank, a growing private sector bank.
5. Location the company is headquartered in Mumbai, India.

MANADATORY DOCUMENT: -

1. PROOF FO IDENTITY (For individual /Karta / Sole proprietor / Authorized person (s)
for Partnership, corporate and Trust)
Photocopy of PAN card

2. PROOF OF ADDRESS (For individual / Karta / Sole proprietor / Authorized

person (s) for Partnerships, Corporate and Trust)
Photocopy of any one of the following:
30
 Passport, Voter ID Card, driving license, Bank Passbook, Rent Agreement, Ration
Card, Current Telephone Bill, Current Electric Bill, Flat Maintenance Bill, and
Certificate Issued by employer registered under MAPIN, Insurance Policy.

3. BANK AND DP PROOF:

1. Letter from client’s banker certifying the account number and the period
from which the accounts in operation as per prescribed format.
2. Copy of a passbook / bank statement containing name of the client
3. Copy of current transaction statement / holding statement / certification by
DP containing the name of DP and client

4. PROOF OF INCOME AND ASSETS:

1. Copy of the salary of the constituent for the last month

2. Income tax statement for the last 2 financial years
3. Assets liability statement
4. Copy of the values certificate in case of immovable property

5.FOR MINORS:

In additional to the abovementioned documents, the following documents would also

be required for minors.
1.Birth certificate of Minor.

31
1. ADDITIONAL DOCUMENTS FOR NON-INDIVIUALS:

1. Copy of the balance sheet for the last 2 financial years (copies of annual balance
sheet to be submitted every years)
2. Copy of latest share holding pattern including list of all those holding more than
5% in the share capital of the company, duly certified by the company secretary/
whole time Director/MD. (copy of updated shareholding patterns to be submitted
every year)
3. Copies of the memorandum and articles of association in case of a company /
body corporate or partnership deed in case of a partnership firm
4. Copy of the Resolution of Board of Directors’ approving participation in equity /
derivatives/ debts trading and naming authorized persons for dealing in securities.
5. Photographs of partners/whole time directors, individual promoters holding 5% or
more, either directly or indirectly, in the shareholding of the company and of
persons authorized to deal in securities.
6. Net worth certified by Chartered accountant.
7. Declaration on letterhead of firm as per prescribed format for sole proprietorship
and partnership Firms.

32
 TATA SECUIRITIES LTD.
World class services that we offer for you:

1. DEMAT A/C opening is free and after 1-year annual maintenance charge (AMC)
Rs/- 200 only.
2. Trading software provided to its customers is made by TATA CONSULTANCY
SERVICES (TCS).
3. Calls made by TATA dealer hit’s 85% to 90%
4. Online Pay In-Pay out by self if you have trading software.
5. All market info. Regarding shares will notify you by calls, messages and email.
6. Providing one stock dealer.

Our Brokerage rates:

INTRADAY DELIVERY

.03 paisa (Flexible) .30 paisa (Flexible)

Limits 4-6 times Limits 4-6 times

Documents needed for opening DEMAT A/C are: -

1. PAN card.
2. Address proof (voter ID, driving license, aadhar card)
3. One Photograph passport size.
4. 6 months’ bank statement.
5. Cheque with margin.

33
DEMAT SERVICES

A Tata security is a registered member (Depository participant) of CDSL.

In this system, physical security holding are converted into electronic (or in other words,
dematerialized) holdings.

Why Tata securities Demat Account?

1. Demat A/C free open.

2. Demat access through internet and phone.
3. Portfolio valuation on the account statements.
4. Online execution of transactions at branches.
5. Special rates for stock market intermediaries and sub brokers.
6. Transaction update from back-office four times a day.

Transfer of shares and settlements

Transfer and settlements have never been easy as it under the depository system. All
that is required is an instruction slip from you. If you are selling securities, then it has to
be a delivery instruction slip. If you are purchasing securities it has to be a receipt
instruction slip or standing instruction for credit.

Receipt of Corporate Benefits

Even securities establishment like bonus and right can be credit to your Demat account
electronically. All you have to do is choose the right option in the share application from.
Crash benefits like dividend and interest will, however be forward to you directly and not
through the depository.

34
Holding & Transaction Statements

We provide statements of holding cum transaction every month at Zero cost.

Dematerialization of shares

At you request we arrange to convert your physical holding into electronic from. To do
this would require opening an account with CDSL through us called “Beneficiary
Account” in the name and style in which the shares are held and lodge the share
certificates with us accompanied by a dematerialized request from, separate for each
scrip.

You are required to only make sure that CDSL has admitted that scrip for
dematerialization. An up to date list will be provided to you who will be constantly
updated.

Dematerialization

You have the option to convert your electronic shares back to physical shares.

Pledge-Hypothecation

You can also avail against your electronic shares. This process is also much faster than
in the case of physical shares

35
WHY CHOOSE US?

CLIENT FOCUS

1. Client relationship from the core of our business. We value each client, no matter
what size, as a long-term relationship. And we seek to provide unmatched
services to each client and place him as a partner at the center of everything we
do.

2. From the very beginning of the relationship, we work closely with every client to
identify his financial goals and risk tolerance levels and leverage our strength of
the product offering, research and financial strength to help achieve his goals. In
the process, we become a professional partner, creating opportunity, and adding
value and transform vision into reality.

Diverse services offering

3. In addition to traditional broking services, we are also equipped to handle

commodity trading facility as well as currency derivatives and have access to a
wide range of financial services like IPOs, mutual funds and insurance.

Timely services

4. In an increasingly competitive environment, clients today require personalized

solution and greater flexibility and responsiveness than ever before. Our
professionals are always ‘on call’. We provide them services throughout the year
and not just at the end of the year. We believe such service is essentials for
delivering solution and constructive relationship.

36
Able team

5. We have developed a strong and enduring team by recruiting from leading

graduate and postgraduate universities and promoting from within. Our team
work together to provide superior results to our client. At the same time, each of
our clients is assigned a specific team member who ‘owner’ the relationship,
providing continuity, responsiveness and a point of easy access to the firm.

Culture

6. We strive to maintain standards at all times and lay emphasis on honesty,

integrity and confidentiality. We speak and act to ensure transparency at all
levels and in everything we do.

Financial strength

7. The strength of our balance sheet is such that it gives greater confidence to all
our retail and institutional clients in detail with us. The financial strength of the
group helps in future building the network and infrastructure to cater to the larger
market.
Back office:

For back office operations, we use the lidha Didha system of Apex Soft Cell Pvt. Ltd.
This is one of the top most back office software in the industry. It has the capacity to
process over one lakh traders in a five-minute frame. Our operation teams have an
easy-to-navigate client login system, which is used to generate activity reports, short-
terms and long-term tax reports, holding and portfolio valuation reports as well as
trading to delivery activity reports. We also have the requisite infrastructure needed to
handles STP, upload and download and download information to or from exchanges,
bank and depositories, support units to ensure delivery notes, bills and ledgers of
trading accounts and cash management services for efficient and effective fund
management within the group.
Client interface: We have trading terminal (both direct and indirect), online

monitoring, control terminal (administration terminals) and back office support terminal
(settlement terminal) across all location and centers.
We have India’s best single screen Multi Exchanges Trading Software platform. Our
entire centers across the country are connected through our own network, leased ISDN
lines and LAN network, MPLS and internet.
The high-end IBM serves with sophisticated security features that we use caters to
trading points across the country. This also gives rate advantage of scalability in terms of
location and size of our planned operations. We provide telephonic and chat support for
technical and functional issues of branches, franchises and all our clients. Our websites
www.Tata securities.com is comprehensive and provides online feeds, net trading and
provides online feed, net trading portfolio tracking tool. Investors also have access to a
wide range of financial news, information and various research reports facilitating quick
decision-making.

Our online trading portal at www.Tata securities.com is equipped with facilities like all
segment broadcasts, multi-features graphs, online payment gateways and automatic
password mailer utility for better security. It user-friendly navigation allows easy viewing
of trading accounts, depository accounts and research reports, which are linked to the
trading platform.

The website also has a provision for creating portfolios and monitoring them on a
regular basis. Our ‘wealth trackers’ module helps investors in getting ready updates on
their investment so that they can know the changing trends of the markets and the
impact of the same on their portfolio.

38
Internal control:

Compliance and internal control play a major role in determining business strategies as
well as day-to-day operation of the group. A well-equipped risk management
department ensures that the delinquency rates are minimal, while efficient risk
management software provides online MTM margin data to branches and franchisees.
Our efficient back-up system and software have been developed specially for branches
and channel partners with a capacity to handle numerous transactions. Our online
position monitoring system ensures better risk management and surveillance from our
head office as well as branches and franchises

Experienced professional:

Our teams of professional consist of individual with significant experience in securities

trading, market structure, trading technology and portfolio management. They have a
strong experience in trade execution and understanding of order flow dynamics. This
combined with technical analysis of market momentum, help our clients to determine
the price at which they buy and /or sell. We believe, we are the first choice for our
clients because we among the very best at trade executive solution and assets
management services. At Tata securities, each and every professional is focused on
turning the initial trade or investment into a collaborative, person-to-person relationship
that keeps delivering true added value.

Human Resources:

Human resources are the key to any services sectors industry. We have a strong and
vibrant workforce in every field or our activity, be it research, system, accounts,
marketing or networking. With the manpower strength of over 1100 employees, the
Company is managed by a highly motivated, qualified & talented team of professional
qualified CA’s, MBA, s, Engineers, etc. with proven track records.

39
Technology:

Stock-broking being a process intensive activity, issues such as speed, accuracy,

round-the-clock system availability and system securities are of paramount importance
and technology forms the backbones of the business.

This is why Tata securities are technology driven. We boast of state-of-the-art

technology and an in-house team of highly competent software and networking
engineers who constantly review system and procedures to ensure operational
efficiency.

All our branches are connected through Wide Area Network (WAN) and are served by a
centralized back office processing system, which enables clients to obtain up to date
information online at the click of a button.

Customer Focus:

Despite a rapidly expanding client base and a dizzying increase in transaction volumes,
each client at Tata securities is special. We specialize in building long term relationship
with our customers by providing them with the four things they desire most, viz., speed,
convenience, reliability and personalized services.

Our continuous strive to provide best services to our clients, results in receipt of not a
single Arbitration Award against the company since its inception.

40
WIDE OPTION WHILE TRADING:

A product for every need:

4. A Tata security is the most comprehensive website, which allows you to invest in
shares, mutual funds, derivatives (Future and Option) and other financial
products. Simply put, we offer you products for every investment need of yours.

Trading in shares:

5. A Tata security offers you various options while trading in shares.

Cash trading:

6. This is a delivery based system, which is generally done with the information of
taking delivery of shares or monies.

Margin Trading:

You can also do an intra-settlement trading up to 3 to 4 times your available funds,

where in you take long buy/short sell position in stocks with in the intention of squaring
off the position within the same day settlement cycle.

In margin trading, you take buy/sell position in stocks(s) with the intention of acquiring
off the position within the same settlement cycle. If, during the course of the settlement
cycle, he prices moves in your favor (rises in case you have a buy position or falls in
case you have a sell position), you make profit. In case you have the option to take/give
delivery of buy/sell position respectively if you have sufficient cash/securities to do so.
Normally to buy shares, you have to place (ensure availability of limit) 100% of the order
value, while to sell shares, you need to have shares in your Demat account. However,
margins are blocked only to safeguard any adverse price movement.

41
Margin PLUS Trading:

7. Through Margin PLUS you can do an intra-settlement trading up to 10 times your

available funds, where in you take long buy/sell position in stock with the
intention of squaring off the position within the same day’s settlement cycle.
Margin PLUS will give a much higher leverage in your limits.
8. Margin PLUS is an order placement feature where you can take a position at
market price and also place a cover order for the position specifying the SLTP
and the limit price. This will minimize the loss cover at the time of taking the
position itself. There by it gives a clear view of maximum downside involved in a
particular position at a particular price, Tata securities won’t levy a normal margin
ranging from 21% to 50%. It would block he maximum loss which customer can
suffer.

Spot Trading:

9. This facility can be used only for selling you is demitting stocks which already
exist in your Demat account. When you are looking at an immediate liquidity
option, ‘cash on spot’ may work the best for you, on selling shares through “cash
on spot”, money is certified to your bank a/c the same evening & not on the
exchange payout date.

BTST:

10. Buy today sell tomorrow (BTST) is a facility that allows you sell shares even on
1st and 2nd day after the buying order date, without you having to Waite for the
receipt of shares into your Demat account.

Call N Trade:

11. Call N Trade allow you call on a local number in your city & trade on the
telephone through our customer services Executive.
12. Trading in NSE/BSE: through Tata securities you can trade on NSE and BSE.
Market order:

13. This is an order to buy sell securities at the best price obtainable in the market at
the time it is matched by the exchange. Therefore, change of its getting executed
are better. In case of market order for NSE, all market order placed which are not
executive fully; it becomes a limit order for the balance quantity at the last traded
price.

Market Order in BSE: Explanation:

Market order can be placed only during market hours (i.e., when the Exchanges is open
for trading). You could trade by placing market orders during market hours that allows
you to trade at the best obtainable price in the market at the time of execution of the
order.

Limit Order:

Limit Order is an order to buy or sell securities in which you specify the maximum price
per unit in case of a buy order and the minimum price per unit in case of sell order. The
actual transaction can be at a price more favorable than the price specified.

Allow you to place a buy/sell order at a price defined by you. The execution can happen
at a price more favorable than the price, which is defined by you, limit orders can be
placed by you during holidays & non market hours too.

Online confirmation of Order and trade:

You get online confirmation of orders and trades- the status of any order is updated on
real-time basis in the Order Book. As soon as you place your order they are validated
by the system and sent to the exchange for execution. The entire process is fully
automation and there are no manual interventions.

43
GTC, GTD and IOC Order:

A Good Till cancelled (GTC) order remains in the system until the trading members
cancels it. However, the system cancels this order if it is not trade within a number of
days parameterized by the Exchanges. A Good Till Days/Date (GTD) order allows the
user to specify the number of days/date till which the order should stay in the system if
not executed. The maximum number of days for which the GTC/GTD order can remain
in the system is notified by the exchange from time to time after which the day/date on
which the order is placed and inclusive of holidays. An immediate or cancel (IOC) order
allows the user to buy or sell a security as soon as the order is released into the system,
falling which the order is cancelled from the system. Partial match is possible for the
order and the unmatched portion of the order is cancelled immediately.

Disclose Quantity (DQ) Order:

Normally, the order quantity is disclosed in full to the market. An order with a disclosed
quantity (DQ) condition/attribute allows the trading members to disclose only a part of
the order quantity to the market. For example, an order of 1000 with a disclosed
quantity condition of 200 will mean that 200 is displaced to the market at a time. After
this traded, another 200 is automatically released soon till the full order is executed. DQ
(Disclosed Quantity) should not be less than 10% of the order quantity and at the same
time should not be greater than or equal to the order quantity.

44
Stop Loss Order:

A stop loss order allows the client to place an order which gets activated only when the
market price of the relevant securities reached or crosses a threshold price specified by
the investors in the form of ‘stock loss trigger price’. When a stop loss trigger price
(SLTP) is specified in a limit order, the order becomes one which is conditional on the
market price of the stock crossing the specified SLTP. The order remains passive (i.e.
not eligible for execution) till the condition is satisfied. Once the last traded price of the
stock reached or surpasses the SLTP, the order becomes activated and then on
behaves like a normal limit order. It is used as a tool to limit the maximum loss on a
position.

Stop Loss by Order:

‘A’ short sell reliance shares at Rs. 325 in experience that the price will fall. However, in
the event the price rises above his buy price ‘A’ would like to limit sell order specifying a
stock loss trigger price Rs. 305 and a limit price of Rs. 300.

Trade in derivatives:

Future:

Through Tata securities you can now trade in index and stock futures on the NSE in
future trading, you take buy/sell position in index or stock (S) contract having a longer
contract period of up to 3 months.

Trading in FUTURE is simple if, during the course of the contract life, the price moves in
favor (i.e. rises in case you have a bye position or sell in case you have a sell position),
you make a perfect. Presently only selected stock, which meet the certain liquidity and
volume, have been enabled for future trading. Calculate index and now your margin are
tools to help you in calculating your margin requirement and also the index & stock price
movement.

Option:

An option is a contract, which gives buyer the right to buy or sell shares at a specific
prices, on a before a specific date. For this, the buyer has to pay to the seller some
money, which is called premium. There is now obligation on the buyer to complete the

transaction if the price is not favorable to him. To take the buy/sell position on
index/stock option, you have to place certain % of order value as margin. With option
trading, you can leverage on your trading limit buy taken buy/sell position much more
that what you could have taken in cash segment.

The buyer of a call option has the right but not the obligation to purchase the underlying
asset at the specified strike price buy paying a premium whereas the seller of the call
has the obligation of selling the underlying asset at the specified strike price.

The buyer of a put option as the right but not the obligation to sell the underlying asset
at the specified strike price paying a premium whereas the seller of the put has the
obligation of buying the underlying the asset at the specified price. Buy paying lesser
amount of premium, you can create position order option and take advantage of more
trading opportunities.

Switch:
To suit your changing needs you may wish to shift monies between different schemes.
You can switch your monies online form one schemes to another in some fund family
without any hassles.

46
Systematic investment plans (SIP)

SIP allows you to invest a certain some of money over a period of time periodically. Just
fill in investment amount, the period of investment and the frequency of investing and
submit. We will do the rest for you automatically investing periodically for you.

Systematic withdrawal plan:

This allows you to withdraw or certain some money over up period of time periodically.

Transfer-in: we can convert to existing mutual funds into electronic more through a
transfer-in request.

IPOS and BONDS Online:

You can also invest in initial public offers (IPO’s) and bonds online without going
through the hassles of filling any application form/paperwork.

Get –in-depth analysis for new IPO’s issue (initial public offering) which are about to hit
the market and analysis on these. IPO calendar, recent IPO listing, prospectus/offer
document, and IPO analysis are few of the features, which help you, keep

You can also invest in initial public offers (IPO’s) and bonds online without going
through the hassles of filling any application form/paperwork. Get –in-depth analysis for
new IPO’s issue (initial public offering) which are about to hit the market and analysis on
these. IPO calendar, recent IPO listing, keep on talk of the IPO markets

47
Issue of Shares
Why do companies need to issue shares to the public?
Most companies are usually started privately by their promoter(s). However, the
promoters' capital and the borrowings from banks and financial institutions may
not be sufficient for setting up or running the business over a long term. So
companies invite the public to contribute towards the equity and issue shares to
individual investors. The way to invite share capital from the public is through a
'Public Issue'. Simply stated, a public issue is an offer to the public to subscribe
To the share capital of a company. Once this is done, the company allots shares
to the applicants as per the prescribed rules and regulations laid down by SEBI.
What are the different kinds of issues?
Primarily, issues can be classified as a Public, Rights or Preferential issues
(also known as private placements). While public and rights issues involve a
detailed procedure, private placements or preferential issues are relatively
simpler. The classification of issues is illustrated below:
Initial Public Offering (IPO) is when an unlisted company makes either a fresh
issue of securities or an offer for sale of its existing securities or both for the first
time to the public. This paves way for listing and trading of the issuer's
securities.
A follow on public offering (Further Issue) is when an already listed
company makes either a fresh issue of securities to the public or an offer for
sale to the public, through an offer document.
Rights Issue is when a listed company which proposes to issue fresh
securities to its existing shareholders as on a record date. The rights are
normally offered in a particular ratio to the number of securities held prior to the
issue. This route is best suited for companies who would like to raise capital
without diluting stake of its existing shareholders.

48
A Preferential issue is an issue of shares or of convertible securities by listed
companies to a select group of persons under Section 81 of the Companies
Act, 1956 which is neither a rights issue nor a public issue. This is a faster way
for a company to raise equity capital. The issuer company has to comply with
the Companies Act and the requirements contained in
the Chapter pertaining to preferential allotment in SEBI guidelines which interiliac
include pricing, disclosures in notice etc.
Classification of Issues
What is meant by Issue price?
The price at which a company's shares are offered initially in the primary
market is called as the Issue price. When they begin to be traded, the
market price may be above or below the issue price.
What is meant by Market Capitalization?
The market value of a quoted company, which is calculated by multiplying
its current share price (market price) by the number of shares in issue is
called as market capitalization. E.g. Company A has 120 million shares in
issue. The current market price is Rs. 100. The market capitalization of
company A is Rs. 12000 million.

What is the difference between public issue and private placement?

When an issue is not made to only a select set of people but is open to the
general public and any other investor at large, it is a public issue. But if the
issue is made to a select set of people, it is called private placement. As per
Companies Act, 1956, an issue becomes public if it results in allotment to 50
persons or more. This means an issue can be privately placed where an
allotment is made to less than 50 persons.

49
What is an Initial Public Offer (IPO)?
An Initial Public Offer (IPO) is the selling of securities to the public in the
primary market. It is when an unlisted company makes either a fresh issue of
securities or an offer for sale of its existing securities or both for the first time to
the public. This paves way for listing and trading of the issuer's securities. The
sale of securities can be either through book building or through normal public
issue.
Who decides the price of an issue?
Indian primary market ushered in an era of free pricing in 1992. Following this,
the guidelines have provided that the issuer in consultation with Merchant
Banker shall decide the price. There is no price formula stipulated by SEBI.
SEBI does not play any role in price fixation. The company and merchant
banker are however required to give full disclosures of the parameters which
they had considered while deciding the issue price. There are two types of
issues, one where company and Lead Merchant Banker fix a price (called fixed
price) and other, where the company and the Lead Manager (LM) stipulate a
floor price or a price band and leave it to market forces to determine the final
price (price discovery through book building process).
What does 'price discovery through Book Building Process' mean?
Book Building is basically a process used in IPOs for efficient price discovery. It
is a mechanism where, during the period for which the IPO is open, bids are
collected from investors at various prices, which are above or equal to the floor
price. The offer price is determined after the bid closing date.

50
 Importance of Stock Market:

Function and purpose

The stock market is one of the most important sources for companies to raise money.
This allows businesses to be publically traded or raised additionally capital for
expansion by selling share of ownership of the company in a public market.

The liquidity that an exchange provides affords investors the ability to quickly and easily
sell securities. This is an attractive feature of investing in stocks, compared to other less
liquid investment such as real estates.

History has shown that the price of shares and other assets is an important part of the
dynamic of economies activity, and can influence or be an indicator of social mood.

An economy where the stock market is on the rise is considered to be an up and

coming economy.

In fact, the stock market is often considered the primary indicators of a country’s
economic strength and development. Rising share prices, for instance, tend to be
associated with increased business investment and vice versa.

Share prices also affect the wealth of household and their consumption.

Therefore, central banks tend to keep an eye on the control and behavior of the stock
market and, in general, on the smooth operation of financial system functions. Financial
stability is the raison d’être of central banks.

Exchanges also act as the clearinghouses for each transaction, meeting that they
collect and deliver the shares, and guarantee payment to the seller of a securities. This
eliminates the risk to an individual buyers or seller that the counterparty could default on
the transaction.
51
The smooth functioning of all these activities facilities economies growth in that lower
costs enterprise risks promote the production of goods and services as well as
employment.

In this way the financial system contribution to increased prosperity. An important

aspect of modern markets, however, including the stock markets, is absolute discretion.

For example, in the USA stock we see more unrestrained acceptance of any firm than in
similar markets. Such as, Chinese firms with no significant value to American society to
just name one segment.

This profit USA banker on Wall Street, as they reap large commissions from the
placement, and the Chinese company which yields funds to invest in china.

Yet accrues no intrinsic value to the long-term stability of the American economy, rather
just short-term profits to American business man and the Chinese; although, when
foreign company has a presence in the new market, there can be benefits to the
market’s citizens.

Conversely, there are very few large foreign corporations listed on the Toronto Stock
exchange TSX, Canada’s largest stock exchange. This discretion has insulated Canada
to some degree to worldwide financial condition.

In order for the stock markets to truly facilitate economy’s growth via lower costs and
better employment, great attention must be given to the foreign participants being
allowed in. Relation of the stock market to the modern financial system.

The financial system in most western countries has undergone a remarkable

transformation. One features of this development is disintermediation. A portion of the
funds involved in saving and financing bank lending and deposit operation.

The general public’s heightened interest in investing in the stock market, either directly
or through mutual funds, has been an important component of this process. Statistics
show that in recent decades share have made up an increasingly large proportion of
household’s financial assets in many countries.
In the 1970’s, in Sweden, deposit account and other very liquid assets with little risk
made up almost 60 percent of households’ financial wealth, compared to less than 20
percent in the 2000s.

The major part of this adjustment in financial portfolio has directly to shares but a good
deal now takes the form of various kinds of institutional investment for groups of
individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of
premiums, etc.

The trend towards form of saving with a higher risk has been accentuated by new rules
for most funds and insurance, permitting a higher proportion of shares to bonds.

Similar tendencies are to be found in other industrialized countries. In all developed

economies system, such as the European Union, the United State, Japan and other
developed nations, the trend has been the same: saving has moved away from
traditional (government insured) bank deposits to more risky securities of one sort or
another.

Stock market is an important part of the economy of a country. The stock market plays a
play a pivotal role in the growth of the industry and commerce of the country that
eventually affects the economy of the country to a great extent. That is reason that the
government, industry and even the central banks of the country keep a close watch on
the happenings of the stock market. The stock market is important from both the
industry’s point of view as well as the investor’s point of view.
Whenever a company wants to raise funds for further expansion or settling up a new
business venture, they have to either take a loan from a financial organization or they
have to issue shares through the stock market. In fact the stock market is the primary
source for any company to raise funds for business expansions. If a company wants to
raise some capital for the business it can issue shares of the company that is basically
part ownership of the company. To issue shares for the investors to invest in the stocks
a company needs to get listed to a stocks exchange and through the primary market of
the stock exchange they can issue the shares and get the funds for business
requirements. There are certain rules and regulations for getting listed at a stock
exchange and they need to fulfill some criteria to issue stocks and go public. The stock
market is primarily the place where these companies get listed to issue the shares and
raise the fund. In case of an already listed public company, they issue more shares to
the market for collecting more funds for business expansion. For the companies which
are going public for the first time, they need to start with the Initial Public Offering or the
IPO. In both the cases these companies have to go through the stock market.
This is the primary function of the stock exchange and thus they play the most important
role of supporting the growth of the industry and commerce in the country. That is the
reason that a rising stock market is the sign of a developing industrial sector and a
growing economy of the country.
Of course this is just the primary function of the stock market and just a half of the role
that the stock market plays. The secondary function of the stock market is that the
market plays the role of a common platform for the buyers and sellers of these stocks
that are listed at the stock market. It is the secondary market of the stock exchange
where retail investors and institutional investors buy and sell the stocks. In fact, it is
these stock market traders who raise the fund for the businesses by investing in the
stocks.
For investing in the stocks or to trade in the stock the investors have to go through the
brokers of the stock market. Brokers actually execute the buy and sell orders of the
investors and settle the deals to keep the stock trading alive. The brokers basically act
as a middle man between the buyers and sellers. Once the buyer places a buy order in
the stock market the brokers finds a seller of the stock and thus the deal is closed. All
these take place at the stock market and it is the demand and supply of the stock of a
company that determines the price of the stock of that particular company.
So the stock market is not only providing the much required funds for boosting the
business, but also providing a common place for stock trading. It is the stock market
that makes the stocks a liquid asset unlike the real estate investment. It is the stock
market that makes it possible to sell the stocks at any point of time and get back the
investment along with the profit. This makes the stocks much more liquid in nature and
thereby attracting investors to invest in the stock market.

54
Role of Stock Exchange

Role of Stock Exchanges are varied an1d highly important in the development of
economy of a country. They measure and control the growth of a country.

Stock markets are the places, where exactly you do your business. Your stock trading
transactions are executed at the stock exchanges through your broker, unless you have
a membership with that exchange, which enable you to trade directly.

Stock exchange apart from being hub of primary and secondary market, they have very
important role to play in the economy of the country. Some of them are listed below.

 Raising capital for businesses

Exchanges help companies to capitalize by selling shares to the investing public.

 Mobilizing savings for investment

They help public to mobilize their savings to invest in high yielding economic
sectors, which results in higher yield, both to the individual and to the national
economy.

 Facilitating company growth

They help companies to expand and grow by acquisition or fusion.

 Profit sharing

They help both casual and professional stock investors, to get their share in the
wealth of profitable businesses.

 Corporate governance
 Stock exchanges impose stringent rules to get listed in them. So listed public
companies have better management records than privately held companies.

 Creating investment opportunities for small investors

Small investors can also participate in the growth of large companies, by buying
a small number of shares.

 Government capital raising for development projects

They help government to rise fund for developmental activities through the issue
of bonds. An investor who buys them will be lending money to the government,
which is more secure, and sometimes enjoys tax benefits also.

 Barometer of the economy

They maintain the stock indexes which are the indicators of the general trend in
the economy. They also regulate the stock price fluctuations.

56
 The Stock Market, Individual Investors, and Financial Risk:

Riskier long-term saving required that an individual possess the ability to manage the
associated increased risks. Stock prices fluctuated widely, in marked contrast to the
stability of (government insured) bank deposits or bonds.

This something that could affect not only the individual investors or households, but also
the economy on a large scale. The following deals with some of the risks of the financial
sectors in general and the stock market in particular.

This is certainly more important now that so many newcomers have entered the stock
market, or have acquired other ‘risky’ investment (such as ‘investment’ property, i.e.,
real estate and collectables.)

With each passing year, the noise level in the stock market rises. Television
commentators, financial writers, analysis, and market strategies are all over taking each
other to get investors ‘attention’.

At the same time, individual investors, immersed in chat rooms and message boards,
are exchanging questionable and often misleading tips.

Yet, despite all this available information, investors find it increasingly difficult to profit.
Stock prices skyrocket with little reasons, then plummet just as quickly.

And people who have turned to investing for their children’s education and their own
retirement become frightened. Sometimes there appears to be no rhyme or reason to
the market, only folly.

This is a quote from the prefaces to a published biography about the long-terms value
oriented stock investors warren Buffett.
 The behavior of the stock market:

From experiences we know that investors may ‘temporarily’ move financial prices away
from their long terms aggregate price ‘trend’ (positive or up trends are referred to as bull
markets: negative or down trends are referred to as bear markets.)

Over-reaction may occur so that excessive optimism (euphoria) may drive prices unduly
high or excessive pessimism may drive unduly low. New theoretical an empirical
argument has since been put forward against the notion that financial markets are
‘generally’ efficient (i.e., in the sense that prices in the aggregate tends to follow a
Gaussian distribution.)

(But this largely theoretic academic viewpoint- knows as ‘hard’ EMH- also predicts that
little or no trading should take place, contrary to fact, since prices are already at or near
equilibrium, having priced in all public knowledge.) The ‘hard’ efficient-market
hypothesis is sorely tested by such events as the stock market crash in 1987, when the
Dow Jones index plummeted 22.6 percent—the largest-ever one-day fall in the United
States.

This events demonstrated that share prices can fall dramatically even though, to this
day, it is impossible to fix a generally agreed upon definite cause: a thorough search
failed to detect any ‘reasonable’ development that might have accounted for the crash.
(But note that such events are predicted to occur strictly by chance, although very
rarely.)

It seems also to be the case more generally that many price movements (beyond that
which are predicted to occur ‘randomly’) are not occasioned by new information: a study
of the fifty largest one-day share prices movements in the United States in the post-war
period seems to confirm this.

However, a ‘soft’ EMH has emerged which does not require that prices remain at or
near equilibrium, but only that market participants not be able to systematically profits
from any momentary market ‘inefficiencies’.
58
Various explanation for such large and apparently non-random prices movement have
been promulgated. For instance, some research has shown that change in estimated
risks, and the use of certain strategies, such as stop-loss limit and value at Risk limits,
theoretically could cause financial markets to overcorrect.

But the best explanation seems to be that the distribution of stock market prices is non-
Gaussian (in which case EMH, in any of its current forms, would not be strictly
applicable.)

Other research has shown that psychological factors may result in exaggerated
(statically anomalous) stock prices movement (contrary to EMH which assumes such
behaviors’ cancel out’).

Psychological research has demonstrated that peoples are predisposed to ‘seeing’

patterns, and often will perceive a pattern in what is, in fact, just noise, (something like
seeing familiar shapes in clouds or ink blots.)

In the present context this means that a succession of good new items about a
company may lead investors to overreact positively (unjustifiably driving the prices up).
A period of good returns also boosts the investor’s self-confidence, reducing his
(psychological) risk threshold.

Another phenomenon—also from psychology—that works against an objective

assessment is group thinking. As social animal, it is now easy to stick to an opinion that
differs markedly from that of a majority of the group.

An example with which one may be familiar is the reluctance to enter a restaurant that is
empty; people generally prefer to have their opinion validated by those of other in the
group.

In one paper the authors draw an analogy with gambling. In normal times the market
behaves like a game of roulette; the probabilities are known and largely independent of
the investment decision of the different players.
59
In times of market stress, however, the game becomes more like poker (herding
behavior takes over). The players now must give heavy weight to the psychology of
other investors and how they are likely to react psychology.

The stock market, as any other business, is quite unforgiving of amateurs.

Inexperienced investors rarely get the assistance and support they need.

In the period running up to 1987 crash, less than 1 percent of the analysis
recommendation had been to sell (and even during the 2000-2002 bear market, the
average did not above 5%).

In the run up to 2000, the media amplified the general euphoria, with reports of rapidly
rising share prices and the notion that large sums of money could be quickly earned in
the so called In the run up to 2000, the media amplified the general euphoria, with
reports of rapidly rising share prices and the notion that large sums of money could be
quickly earned in the so called new economy stock market.

(And later amplified the glom which descended during the 2000-2002 bear market, so
that by summer of 2002, prediction of a DOW average below 5000 were quite common).

Irrational behavior:
Sometimes the market seems to react irrationally to economic or financial news, even if
that news is likely to have no real effect on the technical value of securities itself.

But this may be more apparent than real, since often such has been anticipated, and a
counter reaction may occurs if the news is better (or worse) than expected.

Therefore, the stock market may be swayed in either by press releases, rumors
euphoria and mass panic; but generally only briefly, as more experienced investors
(especially the hedge funds quickly rally to take advantage of even the slightest,
momentary hysteria.

Over the short-term, stock and other securities can be battered or buoyed by any
number of fast market-changing events, making the stock market behavior difficult to
predict. Emotion can drive prices up and down, people are generally not as rational as
they think, and the reasons for buying and selling are generally obscure.
Behaviorists argue that investors often behave ‘irrationally’ when making investment
decision thereby incorrectly pricing securities. This causes market inefficiencies, which,
in turn, are opportunities, to make money.

However, the whole notion of EMH is that these non-rational reactions to information
cancel out, leaving the prices of stock determined. The Dow Jones industrial Average
biggest gain in one day was 936.42 points or 11 percent, this occurred on October 12,
2008.

Crashes:
Robert schiller’s plot of the S&P composite Real prices, Earning, Dividends, and interest
Rates, from irrational exuberance, 2nd. In the prefaces to this edition, Shiller warns, “The
stock market has not come down to historical levels: the prices-earnings ratio as I
defined it in his book is still, at this writing [2005], in this mid-20s, far higher than the
historical average…. people still place too much confidence in the market and have too
strong a belief that paying attention to the gyration in their investment will someday
make them rich, and so they do not make conservative preparation for possible bad
outcomes.”

Price-Earnings ratios as predictors of twenty-year returns based up to the plot by Robert

shriller. The horizontal axis shows the real price-earnings ratio of the S&P composite
stock price index as computed in Irrational Exuberance (inflation adjusted price divided
by the prior ten-year mean of inflation-adjusted earning).

The vertical axis shows the geometric average real annual return on investing in the
S&P composite stock prices index, reinvesting dividends, and selling twenty years-did
do well when prices were low relative to earnings at the beginning of the ten years.

Long-term investors would be well advised, individually, to lower their exposer to the
stock market when it is high, as it has been recently, and get into the market when it is
low.”

Stock market crash:

A stock market crash is often defined as a sharp dip in share prices of equities listed on
the stock exchanges. In parallel with various economics factors, a reason for stock
market crashes is also due to panic and investing public’s loss of confidence. Often,
stock market crashes end speculative economics bubbles.

There have been famous stock market crashes that have ended in the loss of billions of
dollars and wealth destruction on a massive scale. An increasing number of people are
involved in the stock market, especially since the social security and retirement plans
are being increasingly privatized and linked to stocks and bonds and other elements of
the market.
There have been a number of famous stock market crashes like the Wall Street crashes
of 1929, the stock market crash of 1973-4, the Black Monday of 1987, the Dot-com
bubble of 2000, and the stock market crashes 2008.

One of the most famous stock market crashes started October 24,1929 on Black
Thursday. The Dow Jones industrial lost 50% during this stock market crash. It was the
beginning of the Great depression.

Another famous crash took place on October 19, 1987 --- Black Monday. On Black
Monday itself, the Dow Jones fell by 22.6% after completing a 5 year continuous roses
in share prices. This event not only shook the USA, but quickly spread across the world.

Thus, by the end of October, stock exchanges in Australia lost 41.8%, in Canada lost
22.5%,, in Hong Kong lost 45.8%, and in Great Britain lost 26.4%. The names, “Black
Monday” and “Black Tuesday” are also used for October 28-29, 1929.

This followed terrible Thursday –the starting day of the stock market crash in 1929. The
crash in 1987 raised some puzzles—main news and events did not predict the
catastrophe and visible reasons for the collapse were not identified.

This event raised question about many important assumptions of modern economics,
namely, the theory of rational human conduct, the theory of market equilibrium and the
hypothesis of market efficiency.

For some time after the crash, trading in stock exchanges worldwide was halted, since
the exchanges computers did not perform well owing to enormous quantity of trades
being received at one time.

This halt in trading allowed the Federal Reserve System and central banks of other
countries to take measures to control the spreading of worldwide financial crisis.

In the United State the SEC introduction several new measures of control into the stock
market in an attempt to prevent a re-occurrence of the events of Black Monday.

Computer systems were upgrades in the stock exchanges to handle larger trading
volumes in a more accurate and controlled manner. The SEC modified the margin
requirement in an attempt to lower the volatility of common stocks, stock option and the
futures markets.

The New York Stock Exchanges and the Chicago Mercantile Exchange introduction the
concept of a circuit breaker. The circuit breaker halts trading if the Dow declines a
prescribed number of points for a prescribed amount of time.

 New York Stock Exchange (NYSE) circuit breakers.

62
 Stock market index

 The movement of the prices in a market or sections of a market are captured in

price indices called stock market indices, of which there are many, e.g., S&P, the
FTSE and the Euro next indices.

 Such indices are usually market capitalization weighted, with the weight reflecting
the contribution of the stock of the index are reviewed frequently to
include/exclude stocks in order to reflects to reflects the changing business
environment.

Leveraged strategies

 Stock that a traders does not actually own may be traded suing short selling;
margin buying may be used to purchase stock with borrowed funds; or,
derivatives may be used to control large blocks of stock for a much smaller of
amount of money than would be required by outright purchases or sale.

Short selling

 In short selling, the traders borrow stock (usually from his brokerage which holds
it’s client’s shares or its own share on account to lend to short sellers) then sells
it on the market, hoping for the price to all.

 The trader eventually buys back the stock, making money if the price fell in the
meantime or losing money if it rose; exiting a short position by buying back the
stock is called “covering a short position”.

 This strategy may also be used by unscrupulous traders to artificially lower the
price of a stock. Hence most markets either prevent short selling or place
restriction on when and how a short sale can occur.

 The practice of naked shorting is illegal in most (but not all) stock markets.\

63
 Margin buying:

 In margin buying, trader borrows money (at interest) to buy a stock and hopes for
it to rise. Most industrialized countries have regulation that requires that if the
borrowing is based on collateral from other stock the trader owns outright, it can
be a maximum of a certain percentage of those other stocks’ value.

 In the United State, the margin requirements have been 50% for many years
(that is, if you want to make a $100 investment, you need to put up$500, and
there is often a maintenance margin below the $500).

 A margin call is made if the total value of the investor’s account cannot support
the loss of the trade.

 (Upon a decline in the value of the margined securities additional funds may be
requires to maintain the account’s equity, and with or wit out the margined
securities or any others within the account may be sold by the brokers to protect
its loan position. This investor is responsible for any shortfall following such
forced sale).

 Regulation of margin requirement (by the Federal Reserve) was implemented

after the crash of 1929. Before that, speculators typically only needed to put up a
little as 10% (or even less) of the total investment represented by the stocks
purchased.

 Other rules may include the prohibition of free-riding: putting in an order to buy
stocks without paying initially (there is normally a three-day grace period for
delivery of the stock.)

 But then selling them (before the three-days are up) and using part of the
proceeds to make the original payment (assuming that the value of the stocks
has not declined in the interim).

64
 New issuance:

 Global issuance of equity and equity-related instrument totaled $505 billion in

2004, a 29.8% increase over the $389 billion raised in 2003. Initial public offer
(IPOs) by US issuers increased 221% with 233offering that raised $45 billion,
and IPOs in Europe, Middle East and Africa (EMEA) increased by 333% from $9
billion to $39 billion.

Investment strategies:

 One of the many thing people always want to know about the stock market is,
“How do I know money investing?” There are many different approaches; two
basic methods are classified as either fundamental analysis or technical analysis.

 Fundamental analysis refers to analyzing companies by their financial statements

founds in SEC Filing, business trends, general economic conditions, etc.

 Technical analysis studies prices action in market through the use of charts and
quantitative techniques to attempt to forecast prices trends regardless of the
company’s financial prospects.

 One examples of a technical strategy is the Trend following method, used by

John W Henry and risk control and diversification.

 Additional, many choose to invent via the index method. One holds a weight or
unweight portfolio consisting of the entire stock market or some segment of the
stock market (such as the S&P 500 or Wilshire 5000).

 The principle aim of this strategy is to maximize diversification, minimize taxes

from too frequent trading and ride the general trend of the stock market (which, in
the U.S, has averaged nearly 10% year, compounded annually, since World War
II).

65
 According to much national or state legislation, large arrays of fiscal obligation
are taxed for capital gains. Taxes are charged by the state over the transactions,
dividends and capital gains on the stock market, in particular in the stock market.

 However, these fiscal obligations may vary from jurisdiction to jurisdiction

because, among other reasons, it could be assumed that taxation is already
incorporated into the stock prices through the different taxes companies pay to
the state, or that tax free stock market operations are useful to boost economic
growth.

Objectives of study:

1. To understand & analyze the marketing strategies and analyze online

2. Trading of Tata Securities ltd.

3. To improve the format of daily sales report (DSR)

4. To get the Demat account opened of potential customers in favor of Tata

Securities. Analysis of need and satisfaction of distribution of financial
services.

5. To give a brief idea about the benefits available from Mutual Funds
investment and idea of types of schemes available.

6. To discuss about the market trends of Mutual Funds investment.

7. To study some of the mutual funds schemes and analyze them observe
the funds management process of mutual funds.

8. Explore the recent developments in the Mutual Funds in India. To give an idea
about the regulations of Mutual Funds.

66
FINDING AND RECOMMENDATION:

During my project analysis I was very keen to find some key areas which need to be
taken care seriously in the future because these are causing dissatisfaction among
distributors.

Most of distribution felt dissatisfaction with their brokers but some of disappointing areas
are-

8. More exposure: Most of distributors want some more exposure for them clients
from their share broking companies. A Tata security is now providing super
exposure p to 15 of the margin (cash segment) the step like this really creates
satisfaction for the distributors.
9. Brokerage problem: Some companies have very high brokerage chares which
create differences of market share of different companies and also dissatisfaction
among distributors.
10. Fewer offers: Most of companies lag behind in giving time to time offers in order
to attract new customers.

LIMITATIONS:

11. The time constraint was one of the major problems.

12. The study of limited to the different schemes available under the mutual funds
selected.
13. The study is limited to selected mutual fund schemes
14. The lack of information sources for the analysis part.

67
Recommendation for the concerned companies:

15. Mass reach- The new and different offers should be communicated to the
large value of potential inventors so that the offers can hit the target.

16. Full information- The companies should reveal all the information regarding
any scheme so that investors can feel free to invest.

17. All risks should be communicated by distributors of financial

services- It is very important for distributors to make the customers aware
about all the risks involved and he could not blame for any loss to the company.

18. Misconceptions- There are many misconceptions in the mind of common

people that Mutual funds, online share trading etc. are only for ‘big ones’ & they
can’t enter in this field and if they will enter they will suffer losses so, by giving
example of active investors various misconceptions should be removed.

19. Simple procedure-many potential investors are computer illiterate so they

never try their hand free.

20. Target rural areas also- many potential investors are also trust in rural
areas. They come to cities (like in Jaipur) for various works. There should some
special offers to attract them in share trading.

21. Employees should be trained- It is very necessary for the employees to

give an effective demo to the client about the use of various services of share
broking etc. many times they fail to make the offer understandable to the client,
this is the drawback to be overcome.
22. Some offers for women should be introduced to get a new share of market.
 CONCLUSION

The expectations of the customers are regularly increasing because of the increasing
competition and emergence of global market. In such conditions it becomes very
necessary for a company to fulfill all the expectations of the customers and give them a
delightful experience.
A Tata security aims to provide better services by consistently improvement. The study
concluded: - Tata securities Ltd. has better Portfolio Management services than
Other Companies Tata securities Ltd. keeps its process more transparent. Tata
securities Ltd. is giving more returns to its investors. Tata securities charges are less
than other stock brokers.
Tata securities are providing daily updates about the stocks information. Investors are
looking for those investment options where they get Maximum returns with less costs.
Market is becoming complex & it means that the individual investor will not have the
time to play stock game on his own. People are less aware about the Services provided
by Tata securities
BIBLIOGRAPHY:

23. Www. Tata securities.com

24. www.hseindia.com
25. www.tatacapital.com
26. www.google.com
27. From Wikipedia, the free encyclopedia

69