Khyati Sharekhan

CHAPTER --- I
TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -1-

OBJECTIVE OF THE PROJECT
The basic objective behind undergoing this project is to gain knowledge of

the capital market and to learn how the research are conducted. As the
sensex and nifty are on boom we thought that we should do our summer
project in any BROKING COMPANY. SHAREKHAN gave us opportunity
for undergoing our summer training in their company. Our learnings have
enhance our knowledge and we are thankful to all those who behind the
success of this project.
Our project title is “MARKETING RESEARCH ON CUSTOMER

SERVICE AND SATISFACTORILY HANDLING OF TRADING
ACCOUNT”.
We selected this title to gain more knowledge related to handling of trading

accounts in broking firms. Our main focus of research is on services that the
firms provides to clients for TRADING. As the market is on boom more
people are opening their trading account with the broking firms. Our aim
was to learn handling of trading account in the firms.

Vision followed by Share khan
“Our aim is to empower the investor to make better investment decision

through quality advice and superior service.”
INTRODUCTION OF THE COMPANY
Sharekhan, India’s leading stockbroker is the retail arm of SSKI, an

organization with over eight decades of stock market experience. With more
than 300+ share shops in over 130 cities, and a presence on internet through
www.sharekhan.com, India’s premier online trading destination, they reach
out to customers like no one else.
Sharekhan offers you trade execution facilities on the BSE and the NSE, for
cash as well as derivatives, depository services and most importantly,
investment advice tempered by 80 years of research and broking experience.
To ensure that your trading experience with Sharekhan is fast, secure, we
offer a suite of products and services, providing you with a multi-channel
access to the stock market.
The features of SHAREKHAN are:
• Sharekhan was the retail broking arm of SSKI Securities Pvt. Ltd.
• SSKI stands for Shri Shevantilal Kantilal Ishwarlal Securities Pvt.
Ltd.
• SSKI was having 56% stake in Sharekhan.
• Sharekhan is into broking business since 80 years.
• Share khan has become itself a separate entity.
• Company focus in providing equity solutions to every segment.
• It has largest ground network of 210 Branded share shops in 90 cities.

AWARDS and ACHIEVEMENTS
• Share khan is amongst the top 2 online trading websites from India.
• Share khan is the most preferred financial destination amongst the
online banking customers.
• Share khan is the winner of “Best Financial Website Award”.
• Share khan is awarded at the Awaaz “Consumer Awards 2005” in the
India’s stock broking firm.
Chairman of the company is Mr. Shripal Morakhia and the CEO of the
company is Mr. Tarun Shah. Head office is located at Mumbai. It has
reached 100 in number of branches all over India.
Share khan is one of India’s leading broking houses providing a complete
life-cycle of investment solutions in EQUITIES, DERIVATIVES and
COMMODITIES.
ABOUT BARODA BRANCH
This branch was opened as franchise in partnership between Mrs.

AnahitaVora and Mr. Girish Parikh four years back. And then it was
converted to branch and Mrs. Anahita Vora was appointed as a Branch
Head. Now Mrs. .Anahita Vora has become vice-president of Gujarat region
and Nirav Patel is branch manager.

CUSTOMERS OF THE COMPANY
Baroda branch of Sharekhan have around 3000 customers.

Types of customers in Share khan:
INTRADAY : 25% of the customers are trading on intraday

basis.
DELIVERY : 50% of the customers are trading on delivery
basis.
F&O : 12% of the customers are investing in futures
and options.
COMMODITY : 5% Customers are investing in commodities.
HNI (initial investment > 2,00,000) : 8% of the customers are
Investing.
CORE ACTIVITIES
Sharekhan is India’s leading broking houses providing a complete life cycle

of investment solution in:
• Equities and Derivatives Trading
• Commodity Trading
• Depository Service
• Portfolio Management Services
• Mutual Fund
• IPO Services
• Fundamental and Technical Research
• Online Trading

BUSINESS OF THE COMPANY
Business is categorized into SIX areas :
1. Equity
2. Derivatives
3. PMS
4. Commodities
5. Mutual Funds
6. IPO’s
TRADER’S are having two options for trading:
• Online
• Offline

ORGANISATION
CHART
Branch
Head
Regional
Equity Back Office
Sales Advisors Dept.
Manager
Customer care
Territory sales
manager
Relationship
Managers
c acccr Accounting
Department
e
Assistant
Manager
Trainees
Direct Sales
Executive

CHAPTER --- II

METHODOLOGY TO WORK
THE JOB WE DID IN SHAREKHAN DURING OUR SUMMER

TRAINING
PROBLEM
There are few customers who are having their account with company
but for any reason they have not started trading.
They are the inactive customers of SHAREKHAN. Our job was to
call them and take their feedback on weather they have received their
account opening kit? Have they got demo of online trading? Are they
aware about the other different products of SHAREKHAN? Have
they started trading through SHAREKHAN?
We got a list of 1117 retail clients of SHAREKHAN. These are those

clients who have freshly opened their account with company but due
to any reason they have not started trading through SHAREKHAN.
We made call to all they clients and taken their feedback and made a
report of the same and submitted the same to concern authority. It is
because our project title suited the same job it was given to us. By this
we get to know about reasons and the service satisfaction related to
their trading account with SHAREKHAN.
Our job was to take the feedback from the clients and make a report of
the same. During this job we were given full freedom and authority to
take feedback from the clients of the SHAREKHAN.
We were provided a list of 1117 retail clients to whom we spoke. The

list provided all the details of the clients such as Name of the client,
Form number, Phone number, ASSISTANT MANAGER or SALES
EXECUTIVE name who opened their account, product sold and
account opening date. Our job was to check their status on kit
received, demo provided, product knowledge and trade initiated.
Customer Kit status Product Demo Trade

name knowledge initiation

Some of the REASONS:
When we called the customers we found the following reasons for not
trading:
• Some of the customers didn’t get demonstration on time.
• Some of customers are not aware of the SHAREKHAN

products such as commodities, IPO, PMS, mutual funds.
• Some of the clients didn’t receive the account opening kit on

time.
• Even some customers found the brokerage charges of

SHAREKHAN very high.
• Some customers are not getting tips regularly through SMS or

on their e-mail ID.
SOURCES OF DATA :
PRIMARY DATA : Our learnings in SHAREKHAN
SECONDARY DATA : INTERNET SURFING
TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 10 -

CHAPTER --- III

EQUITIES PRODUCTS OF SHAREKHAN
ONLINE ACCOUNT TYPES

• Classic Account / Applet : Investor in
equities
• SpeedTrade : Trader in equities and
Derivatives

]
FEATURES OF CLASSIC ACCOUNT
1) Nil paper work

2) Trade anywhere
3) Research mails
4) Web based product
5) Online fund transfer facilities
6) Phone trading facility
7) After hour orders
BENEFITS OF CLASSIC ACCOUNT
Live terminal (NSE, BSE, NSE F&O)

No deposits
1. Four time exposure limit
2. Buy today sell tomorrow facility
3. Phone trading on toll free number
4. Reasonable brokerage charges
5. Relationship manager facility
6. Quarterly statement
7. Digital contract
ACCOUNT OPENING CHARGES
• 750 Rs. Lifetime membership fees + 5000 Rs. Margin OR

• 375 Rs. Lifetime membership fees + 10000 Rs. Margin OR
• 375 Rs. Lifetime membership fees + Contract note
+ 5000 Rs. Margin

BROKERAGE CHARGES
FOR CASH SEGMENT:
Intraday Transactions: 10 paisa per 100Rs. on

purchase as well as sell transaction.
Delivery Transactions: 50 paisa per 100Rs. on

purchase as well as sell transaction.
FOR F&O SEGMENT:
Same day square off: 10 paisa single side
For long positions: 10 paisa

SPEED TRADE
Speedtrade is a next generation online trading product that brings the power
of your broker’s to your PC. It provides on a single screen streaming quotes,
trade confirmations for equity
cash market. It is ideal for active traders who transact frequently during days
trading session to capitalize on intra-day price movements.
Speed trade is a net based application that provides everything a trader needs
on one screen, thereby reducing the maximum time required to execute a
trade by a huge margin.

FEATURES OF SPEEDTRADE
• Software based product
• Live terminal with 140 scrips like a broker’s terminal
• Nil paperwork
• Instant access
• Online banking facility
• Toll free trading facility
• After market hour orders
BENEFITS OF SPEEDTRADE
• Live terminal of NSE, BSE, NSE F&O

• 5 times credit limit
• Buy today sell tomorrow facility
• Suitable for high volume and intraday traders
• One sided brokerage on intraday trading
• Phone trading from toll free numbers
• Advice by highly qualified portfolio managers
• Digital contract
• Quarterly transaction statement
ACCOUNT OPENING CHARGES
• Rs1000 Account opening fees & 10000 Margin for trading purpose.
• Rs500 Account opening fees & 20000 Margin for trading purpose.
• Rs500 Account opening fees & contract note of any other broking
house if available & 10000 Marin for trading purpose.
• 1 year Demat account free
• Rs300 annual maintenance charges for demat account (After 1 year)

BROKERAGE CHARGES
FOR CASH SEGMENT
Intraday transactions: 10paisa per 100Rs single side
Delivery transactions: 50paisa per 100Rs on

purchase as well as sell transactions.

OTHER PRODUCTS
COMMODITIES
Commodity derivative comprise of raw material and products that can be

traded on special commodity exchanges across the country. It includes crude
oil, gold, silver, grains etc.
Commodities expand your investing horizon from investing in a metal
company to trading in the metal itself. Trading in commodities provides
unique market opportunities for a wider section of participants.
There are two exchanges for trading in commodities:

• Multinational Commodity Exchange Of India Ltd., Mumbai
(MCX) www.mcxindia.com
• National commodity and derivative exchange, Mumbai
(NCDX) www.ncdx.com
HOW TO START TRADING IN COMMODITIES WITH

SHAREKHAN.
To trade in commodities you need to first open an account with Share

khan. Existing clients need to just sign an agreement to the effect that
they wish to trade in commodity futures. If you are not a Share khan
client yet, all you have to do is to open an account with us by filling up
the account opening form and deposit the required margin to start trading
in commodities futures.
PORTFOLIO MANAGEMENT SERVICES

What is a Portfolio?
A Portfolio is a combination of different investment assets mixed and
matched for the purpose of achieving an investor's goal(s). Items that are
considered a part of your portfolio can include any asset you own-from
shares, debentures, bonds, mutual fund units to items such as gold, art and
even real estate etc. However, for most investors a portfolio has come to
signify an investment in financial instruments like shares, debentures, fixed
deposits, mutual fund units.
What is Diversification?
It is a risk management technique that mixes a wide variety of investments
within a portfolio. It is designed to minimize the impact of any one security
on overall portfolio performance. Diversification is possibly the best way to
reduce the risk in a portfolio.
What are the advantages of having a diversified portfolio?

A good investment portfolio is a mix of a wide range of asset class. Different
securities perform differently at any point in time, so with a mix of asset
types, your entire portfolio does not suffer the impact of a decline of any one
security. When your stocks go down, you may still have the stability of the
bonds in your portfolio. If you spread your investments across various types
of assets and markets, you'll reduce the risk of your entire portfolio getting
affected by the adverse returns of any single asset class.
Portfolio Management Services, popularly known as PMS is one of the ideal

ways of investment in equities.
It is a process of:
1. Investment profiling
2. Returns expectation
3. Choice recommendation
4. Exclusive meets
5. Tracking targets
6. Portfolio tracking
There are three types of PMS of SHAREKHAN:

• Pro prime
• Pro tech
• Pro arbitrage
Pro Prime
Pro Prime is targeted at long term investor. The minimum amount that can
be invested in pro prime is Rs.5lakhs (as per SEBI guidelines). An investor
can expect a return of 20 to 25 percent per annum when investing in pro
prime. Pro prime is a moderate risk and moderate return product
It is recommended that client who invest in Pro Prime look at a long term
tenure that is a period of minimum one year, in order to achieve the return
objective.
Pro Tech
Pro Tech ensures high risk, high return. Invest in Pro Tech are based on the
technical analysis of price movement. The minimum amount that can be
invested in Pro Tech is Rs.5lakhs (as per SEBI guidelines). In Pro Tech there
are two products:
• Nifty Thrifty
• Beta Portfolio
Pro Arbitrage
Pro Arbitrage is low risk and low return product. The expected returns are
not sure or guaranteed. There are no annual maintenance charges and there is
no profit sharing.
MUTUAL FUNDS

A mutual fund is a pool of money that is invested according to a common
investment objective by an asset management company (AMC). The AMC
offers to invest the money of hundreds of investors according to a certain
objective – to keep money liquid or give a regular income or grow the
money long term. Investors buy a scheme if it fits in with their investment
goals, like getting a regular income now or letting the money accumulate
over the long term. Investors pay a small fraction of their total funds to the
AMC each year as investment management fees.
Sharekhan acts as a distributor to the various Asset Management
Companies. It does not have it’s own mutual fund.
CATEGORIES OF MUTUAL FUNDS
There are three broad categories of funds in the stock market:

• Money market
• Debt
• Equity
The objectives of mutual fund are:
FUND OBJECTIVE WHAT THE FUND WILL

INVEST IN
Equity (Growth) Only in stocks
Debt (Income) Only in fixed income

Securities
Money market In short term market
instrument

What are the benefits of investing in Mutual Funds?
There are several benefits from investing in a Mutual Fund:
Small investments: Mutual funds help you to reap the benefit of

returns by a portfolio spread across a wide spectrum of companies
with small investments.
Professional Fund Management: Professionals having

considerable expertise, experience and resources manage the pool of money
collected by a mutual fund. They thoroughly analyze the
markets and economy to pick good investment opportunities.
Spreading Risk: An investor with limited funds might be able to

invest in only one or two stocks/bonds, thus increasing his or her
risk. However, a mutual fund will spread its risk by investing a
number of sound stocks or bonds. A fund normally invests in
companies across a wide range of industries, so the risk is
diversified.
Transparency: Mutual Funds regularly provide investors with

information on the value of their investments. Mutual Funds also
provide complete portfolio disclosure of the investments made by
various schemes and also the proportion invested in each asset type.
Choice: The large amount of Mutual Funds offer the investor a wide variety
to choose from. An investor can pick up a scheme depending upon his risk/
return profile.
Regulations: All the mutual funds are registered with SEBI and they
function within the provisions of strict regulation designed to protect the
interests of the investor.

Are there any risks involved in investing in Mutual Funds?
Mutual Funds do not provide assured returns. Their returns are linked to
their performance. They invest in shares, debentures, bonds etc. All these
investments involve an element of risk. The unit value may vary depending
upon the performance of the company and if a company defaults in payment
of interest/principal on their debentures/bonds the performance of the fund
may get affected. Besides incase there is a sudden downturn in an industry
or the government comes up with new a regulation which affects a particular
industry or company the fund can again be adversely affected. All these
factors influence the performance of Mutual Funds. Some of the Risk to
which Mutual Funds are exposed to is given below:
Market risk
If the overall stock or bond markets fall on account of overall
economic factors, the value of stock or bond holdings in the fund's
portfolio can drop, thereby impacting the fund performance.
Non-market risk
Bad news about an individual company can pull down its stock price, which
can negatively affect fund holdings. This risk can be reduced by having a
diversified portfolio that consists of a wide variety of stocks drawn from
different industries.
Interest rate risk

Bond prices and interest rates move in opposite directions. When
interest rates rise, bond prices fall and this decline in underlying
securities affects the fund negatively.
Credit risk
Bonds are debt obligations. So when the funds invest in corporate
bonds, they run the risk of the corporate defaulting on their interest
and principal payment obligations and when that risk crystallizes, it leads to
a fall in the value of the bond causing the NAV of the fund to take a beating.

What are the different types of Mutual funds?
Mutual funds are classified in the following manner:

(a) On the basis of Objective
]Equity Funds/ Growth Funds

Funds that invest in equity shares are called equity funds. They carry the
principal objective of capital appreciation of the investment over the
medium to long-term.
Diversified funds
These funds invest in companies spread across sectors. These
funds are generally meant for risk-averse investors who want
a diversified portfolio across sectors.
Sector funds
These funds invest primarily in equity shares of companies in
a particular business sector or industry. These funds are
targeted at investors who are bullish.
Index funds
These funds invest in the same pattern as popular market
indices like S&P CNX Nifty or CNX Midcap 200. The money
collected from the investors is invested only in the stocks,
which represent the index. For e.g. a Nifty index fund will
invest only in the Nifty 50 stocks. The objective of such funds
is not to beat the market but to give a return equivalent to
the market returns.
Tax Saving Funds

These funds offer tax benefits to investors under the Income Tax Act.
Opportunities provided under this scheme are in the form of tax rebates
under the Income Tax act.

Debt/Income Funds
These funds invest predominantly in high-rated fixed-income-bearing
instruments like bonds, debentures, government securities,
commercial paper and other money market instruments. They are
best suited for the medium to long-term investors who are averse to risk and
seek capital preservation. They provide a regular income to the investor.
Liquid Funds/Money Market Funds

These funds invest in highly liquid money market instruments. The
period of investment could be as short as a day. They provide easy
liquidity. They have emerged as an alternative for savings and short term
fixed deposit accounts with comparatively higher returns. These funds are
ideal for corporates, institutional investors and business houses that invest
their funds for very short periods.
Gilt Funds
These funds invest in Central and State Government securities. Since they
are Government backed bonds they give a secured return and also ensure
safety of the principal amount. They are best
suited for the medium to long-term investors who are averse to risk.
Balanced Funds
These funds invest both in equity shares and fixed-income-bearing
instruments (debt) in some proportion. They provide a steady return and
reduce the volatility of the fund while providing some upside for capital
appreciation. They are ideal for medium to long-term investors who are
willing to take moderate risks.
b) On the basis of Flexibility
Open-ended Funds
These funds do not have a fixed date of redemption. Generally they
are open for subscription and redemption throughout the year. Their prices
are linked to the daily net asset value (NAV). From the investors'
perspective, they are much more liquid than closed-ended funds.
Close-ended Funds

These funds are open initially for entry during the Initial Public
Offering (IPO) and thereafter closed for entry as well as exit. These funds
have a fixed date of redemption. One of the characteristics of the close-
ended schemes is that they are generally traded at a discount to NAV; but
the discount narrows as maturity nears. These funds are open for
subscription only once and can be redeemed only on the fixed date of
redemption. The units of these funds are listed on stock exchanges (with
certain exceptions), are tradable and the subscribers to the fund would be
able to exit from the fund at any time through the secondary market.
What are the different investment plans that Mutual Funds

offer?
The term ’investment plans’ generally refers to the services that the funds
provide to investors offering different ways to invest or reinvest:
Growth Plan and Dividend Plan

A growth plan is a plan under a scheme wherein the returns from
investments are reinvested and very few income distributions, if any, are
made. The investor thus only realizes capital appreciation on the investment.
Under the dividend plan, income is distributed from time to time. This plan
is ideal to those investors requiring regular income.
Dividend Reinvestment Plan
Dividend plans of schemes carry an additional option for

reinvestment of income distribution. This is referred to as the
dividend reinvestment plan. Under this plan, dividends declared by a fund
are reinvested in the scheme on behalf of the investor, thus
increasing the number of units held by the investors.
Active Fund Management

When investment decisions of the fund are at the discretion of a fund
manager(s) and he or she decides which company, instrument or class of
assets the fund should invest, is based on research, analysis, market news
etc. such a fund is called as an actively managed fund. The fund buys and
sells securities actively based on changed perceptions of investment from
time to time. Based on the classifications of shares with different
characteristics, ‘active’ investment managers construct different portfolio.
Two basic investment styles prevalent among the mutual funds are
• Growth
• Investing and Value Investing:
Growth Investing Style
The primary objective of equity investment is to obtain capital appreciation.

A growth manager looks for companies that are expected to give above
average earnings growth, where the manager feels that the earning prospects
and therefore the stock prices in future will be even higher. Identifying such
growth sectors is the challenge before the growth investment manager.
Value investment Style
A Value Manager looks to buy companies that they believe are currently
undervalued in the market, but whose worth they estimate will be recognized
in the market valuations eventually.
Passive Fund Management
When an investor invests in an actively managed mutual fund, he or she

leaves the decision of investing to the fund manager. The fund manager is
the decision- maker as to which company or instrument to invest in.
Sometimes such decisions may be right, rewarding the investor handsomely.
However, chances are that the decisions might go wrong or may not be right
all the time which can lead to substantial losses for the investor. There are
mutual funds that offer Index funds whose objective is to equal the return

given by a select market index. Such funds follow a passive investment
style. They do not analyze companies, markets, economic factors and then
narrow down on stocks to invest in. Instead they prefer to invest in a
portfolio of stocks that reflect a market index, such as the Nifty index. The
returns generated by the index are the returns given by the fund.
WHAT IS AN IPO?

It is an acronym for Initial Public Offering. This is the first sale
of stock by a company to the
public. The main purpose of an IPO is to raise
capital for the corporation. An initial public offering occurs
when a company first sells common shares to investors in the
public.
WHY DO COMPANIES OFFER IPOs?
In general, companies offer IPOs in order to raise money that they need for
business expansion and new business opportunities. By offering shares to
investors, a company stands to bring in a lot of money. They can then use
this money to grow their business. The more their business grows, in turn,
the higher the share prices grow and the more money is generated by
investors purchasing shares. Unlike business loans, which need to be repaid
with interest, IPOs do not have this disadvantage. It is investors who take the
risk.
If the company loses money and they will not have to repay their
investors, although investors in general demand high accountability from a
company they are buying stocks from.
WHO CAN JOIN THE IPO PROGRAM?
Public investors can purchase IPOs through their regular investment

channels, although they will need to act fast to take advantage of the initial
low IPO costs. Business can take advantage of IPOs simply by offering
public shares in the market.
BENEFITS OF IPOs
For businesses, stocks and shares are a fast way to raise revenue for business
expansion and growth. By becoming a publicly traded company a business
can take advantage of new, larger opportunities and can start working
towards incorporation and even world wide expansion. IPO gives a company
fast access to public capital. IPOs are also a relatively low risk for business
and have the potential for huge gains and for huge opportunities.

DIFFERENT KINDS OF ISSUES
Primarily issues can be classified as a public, right or preferential issues

(also known as private placements). While public and right issues involves s
detailed procedure, private placements or preferential issues are relatively
simpler. The classification of issues is illustrated below:
• PUBLIC ISSUE: When an unlisted company makes either fresh issue
of securities or an offer for sale of its existing securities or both for the
first time to the public.
• RIGHT ISSUE: 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 the
companies who would like to raise capital without diluting stake of its
existing shareholders.
• PREFRENTIAL ISSUE: An issue of shares or of convertible

securities by listed companies to a selected group of persons under
section81 of Companies Act, 1956 which is neither a right issue nor a
public issue. This is a faster way for a company to raise equity capital.
DIFFERNCE BETWEEN PUBLIC ISSUE AND PRIVATE
When an issue is not only made to select set of people but also 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.
TYPES OF MARKET

There are mainly two types of market:
• Primary Market
• Secondary Market
Primary Vs Secondary Market
• Since buying an IPO means buying directly from the company

issuing the shares, IPO constitute the primary market.
• Buying shares from stock exchange is buying from secondary
market.
• All shares which are traded in the secondary market have come
through primary market as IPO.
WHY DO COMPANIES GO PUBLIC?
The reasons are:

• To raise funds for expansion/start up.
• Gain credibility through more security.
• Easier mergers and acquisitions through availability of more
number of stocks.
• To get listed in a major stock exchange
THE PRIMARY MARKET

COMPANY ANNOUNCES IPO AND DISTRIBUTES FORMS
ROHAN FILLS ROHIT FILLS

UP THE FORM UP THE FORM
AND SUBMIT TO AND SUBMIT
THE COMPANY TO THE
COMPANY ALLOT SHARES
ROHAN ROHIT IS NOT

ALLOTED SOME ALLOTED ANY
SHARES AT Rs95 SHARES
PER SHARE
ROHAN BUYS FROM THE PRIMARY MARKET
THE SECONDARY MARKET

ROHIT IS NOT ALLOTED SHARES BY THE COMPANY.THERE
WERE NOT ENOUGH SHARES ON OFFER
ROHAN SELLS SOME OF HIS SHARES IN THE MARKET AT A

HIGHER PRICE, SAY Rs105
ROHIT BUYS SOME SHARES FROM THA STOCK MARKET

THROUGH A BROKER AT THIS PRICE
ROHIT BUYS FROM THE SECONDARY MARKET
NOTE
Rohit buys from the stock market whereas Rohan buys from the
company (Primary Market) and sells in the secondary market.
BID AND ASK PRICE
The ‘Bid’ is the buyer’s price. It is this price that you need to know
when you have to sell a stock. Bid is the rate/price at which there is a
ready buyer for the stock, which you intended to sell.
The ‘Ask’ (or offer) is what you need to know when you are buying
i.e. this is the rate/price at which there is a seller ready to sell his
stock. The seller will sell his stock if he gets the quoted ‘Ask’ price.
If an investor looks at a computer screen for a quote on the stock of
say XYZ Ltd., it might look something like this.
BID PRICE ASK PRICE

QTY PRICE (Rs.) QTY PRICE(Rs.)

1000 50.25 2000 50.35
500 50.10 1000 50.40
550 50.05 1500 50.50
2500 50.00 3000 50.55
1300 49.85 1450 50.65
TOTAL TOTAL TOTAL TOTAL
5850 250.25 8950 252.45
Here on the left hand side is Bid quantity and price whereas on the
right hand side is Ask quantity and price.
The best buy (Bid) order is the order with the highest price and
therefore sits on the first line of the Bid side (1000 shares @ Rs.
50.25). The best sell (Ask) order is the order with the lowest selling
price (2000 shares @ Rs. 50.35). the difference in the price of the best
bid and ask is called as the Bid-ask spread and often is an indicator of
liquidity in a stock. The narrower is the difference, the more liquid or
highly traded is the stock.
DERIVATIVES

A derivative is a financial instrument whose value depends on the values of
other more basic underlying asset. From the view point of investors and
portfolio managers, futures and options are the two most important financial
derivatives
What are Types of Derivatives?

Forwards: A forward contract is a customized contract between two
entities, where settlement takes place on a specific date in the future at
today’s pre-agreed price.
Futures: A futures contract is an agreement between two parties to buy or
sell an asset at a certain time in the future at a certain price. Futures contracts
are special types of forward contracts in the sense that the former are
standardized exchange-traded contracts, such as futures of the Nifty index.
Options: An Option is a contract which gives the right, but not an
obligation, to buy or sell the underlying at a stated date and at a stated price.
While a buyer of an option pays the premium and buys the right to exercise
his option, the writer of an option is the one who receives the option
premium and therefore obliged to sell/buy the asset if the buyer exercises it
on him. Options are of two types –
Calls and Puts options:
‘Calls’ give the buyer the right but not the obligation to buy a given quantity
of the underlying asset, at a given price on or before a given future date.
‘Puts’ give the buyer the right, but not the obligation to sell a given
quantity of underlying asset at a given price on or before a given
future date. Presently, at NSE futures and options are traded on the Nifty,
CNX IT, BANK Nifty and 116 single stocks.
What is an ‘Option Premium’?

At the time of buying an option contract, the buyer has to pay premium. The
premium is the price for acquiring the right to buy or sell. It is price paid by
the option buyer to the option seller for acquiring the right to buy or sell.
Option premiums are always paid upfront.
FACTS ABOUT FUTURES
• Future expires on last thursday of every month.

• If an individual has not squared off his position by the last
Thursday, his futures will be compulsory sold off at closing
cash market price of that scrip and the profits will be transferred
to him.
• If markets are bullish, one can make money by buying futures.
In times of bearish market conditions, money making
possibilities exist through selling futures.
• An individual who has bought a stock for Rs.100 can sell its
future at Rs.105 and pocket Rs.5
FACTS ABOUT OPTIONS
• Options expire on last Thursday of every month.

• All options are settled and expiry and the holder is paid the
difference between strike price and going market rate. This is
called Automatic Exercise of Option.
A DERIVATIVE is a financial instrument whose value depends on

values of other more basic underlying variables. It does not constitute
ownership but a promise to convey ownership.
LET US TAKE AN EXAMPLE TO EXPLAIN HOW FUTURES

WORK
Suppose you are bullish on a stock say HLL which is currently selling
@ Rs 280/ share. You believe that it could touch Rs 330/ share in one
month. What would you do?
You can take a position in HLL cash market, buy HLL shares today & sell
them off if & when they touch Rs 330/share thereby making a profit of Rs
50 on an investment of Rs 280 i.e. a return of 18% in one month. This is one
option.
Second option will be instead to buy HLL one month futures, this way you
don’t have to pay the entire amount i.e. Rs 280 but only a certain margin say
20% . so you pay Rs 56 & take the same position as you would in cash

market. The price rises to Rs 330, you will still earn Rs 50 as profit. The
investment is now 9% instead of 18% on same stock.
This is the advantage that stock future provides, by investing a small margin
of 10 to 20% an individual can get into the same position as in cash market.
The returns therefore get multiplied accordingly.
Talking of risk, suppose HLL prices instead of rising to Rs 330 fall of Rs

250, the loss would be Rs 30. in the cash market, this would translate a loss
of 11% only but in future market this would mean a loss of 54%.
How to reduce these losses. It is possible to square off one’s position

anytime to buying the futures. Suppose we are bullish on HLL & hence have
bought the shares but the price starts falling, after that you can sell off the
shares immediately.
OPTION’S
Option’s are derivative product which when bought entitles the buyer to
certain right.
CALL OPTION --- Right to buy a share.
PUT OPTION --- Right to sell a share.
Let us take an EXAMPLE to understand how option works:
Suppose you are bullish on the market. HLL shares are trading in the market
for Rs 242. you buy HLL Rs 240 call option, this entitles you to buy HLL
shares @ price of Rs 240/share. This is called the strike price or the exercise
price. The cost you pay for the buying the option also called the premium or
option price say Rs 20.
Suppose your view turns right & HLL prices are actually rises to Rs 270 in
10 days time. The price of call will simultaneously rise to say Rs 35 from Rs
20, you could sell off the call & make Rs 15. this is @75 % returns. If you
had simply bought the shares @ Rs 242 & sold them @ Rs 270 i.e. buy &
sell the shares proper & not the option, you would have earn a return of 12%
only.

Let us see what happen if your view does not go right;
Suppose HLL prices fall to Rs 225. in this case the price of option will fall
to Rs 10. you can sell it off & bear a loss of Rs 10/share. In the case that
HLL prices fall the way to Rs 200, the option will loose all value you will be
left amount you had paid for buying each option.
The biggest advantage of option is that they ensure limited loss & unlimited
profit for the buyer. Who bears the loss: the option seller or the option
righter. He is a skilled market player with in-depth market knowledge who
by selling options is taking a risk because selling option’s means limited
income & unlimited loss.
Let us now see how put option works;
Suppose you are bearish with HLL. It is trading @ Rs 262 & you think it
will go down further; you buy a put option @ strike price of say Rs 260 @ a
premium of say Rs 11. this gives you a right to sell HLL for Rs 260 even of
share price went down to say Rs 235.
FUNDAMENTAL RESEARCH PRODUCTS

Features of Share khan’s Fundamental Research:
Research plays a vital role in the success of Share khan. Share khan’s
fundamental research team carries out in-depth research while analyzing
companies. The following criteria are looked into while investigating a
company:
• Background
• Management
• Business
• Product and services
• Facilities
There are five key fundamental products of Share khan:
• Stock idea
• Investor’s eye
• Share khan valueline
• Share khan top picks
• Market strategy
STOCK IDEA
It includes:
• The company background
• The investment arguments
• The key financials of the company
• The shareholding pattern of the company
• The price chart for the stock
• The performance of the stock in absolute terms and relative to the
sensex.
If the investors do not have the time to read the entire report then the first
page would give them important information that they need to know about
the stock, thereby helping them to make an informed decision.

INVESTOR’S EYE
Investor’s eye is a daily newsletter from the fundamental research team

which is aimed at helping investors to take informed decisions.
The following are the contents of the Investor’s Eye:
• View on the most important news report of the day.
• Stock idea reports
• Stock update reports
• Special reports
SHARE KHAN VALUELINE
It is a fundamental monthly investment magazine targeted at investors.

Share khan’s valueline gives a wrap-up of the previous month. It is
published in Hindi, English and Gujarati. It gives the following information:
• Name of the scrip
• Recommended price
• Date of recommendation
• Price as on beginning of current month
• Percent gain or loss
SHARE KHAN TOP PICKS
It presents the best twelve of share khan stock ideas. This report is aimed at
investors.
Each stock in the list is accompanied by its current market price, price target
and the price expected. The list is revised on the monthly basis.
MARKET STRATEGY
Market strategy outlines share khan’s expectations of the broad market and
defines the investment strategy.
The broad view on the market expressed through a market strategy report
holds till the same is changed and notified through a new market strategy
report.
DIAL n TRADE

It is a tele broking facility which sharekhan give to its customers.
Dial n Trade is offered as a back up service for customers who prefer
to go for online trading account.
FEATURES OF DIAL n TRADE
• It is a call center totally dedicated to market activities.

• Two numbers – one toll free and other local
1800-22-7050: This number can be accessed from any BSNL or

MTNL landline anywhere in India and is toll free that is for the
customer it is free of cost.
30307600: This is single response number i.e. to access this number a

customer has to dial the local STD code before dialing the number.
For eg. : To make a call from Delhi a customer has to dial (011)
30307600. This will be treated as local call. Thus customer has to pay
only local charges for his or her calls.
• Dial n Trade does not charge any access charges for its
services, i.e. dial n trade as a service is absolutely free. Dial n
Trade has not set any limit for the number of calls that can be
made.
• In case if the customer faces any problem with the toll free
number or with the local one, he or she can always contact Dial
n Trade through the number 24989191, which is a backup
number. The backup number is not a toll free number.
• The Dial n Trade recording system helps to deal with conflicts.
It facilitates smooth functioning of Dial n Trade service. The
conversation between a client and Dial n Trade executive is
automatically recorded on Dial n Trade recording server.
• Dial n Trade provides clients with a customer service cell to
take care of queries and complaints.

• The Dial n Trade IVR (interactive voice response) system
provides live data about the number of calls that are in queue.
This feature help Dial n Trade executive to adjust his or her call
handling speed. The waiting time at peak hours does not exceed
more than 55 seconds.
• Dial n Trade regularly extends outbound campaigns to educate
the clients on futures and options.
• All Dial n Trade executives are given regular training on
various aspects of the stock market and share khan research
products.
• Any client who wants to complain about Dial n Trade can
easily do so by sending a mail to my account at sharekhan.com
• Dial n Trade also advice clients on IPO’s that are covered by
share khan’s fundamental research team.
• Clients can make online IPO application by calling up Dial n
Trade.
• Share khan’s well trained customer service executives will
solve any query that the client has about his or her trading
account.

ACCESSING DIAL N TRADE
Client call up 1800-22-7050/30307600 which is either toll free number or

local number.
After welcome message, system prompts client to dial phone ID.
System prompts client to dial T-pin
Call is System
If data If data
forwarded to prompts
entered is entered is
phone client to
correct incorrect
-trading redial phone
executive ID and T -
pin
If data is If data is
correct incorrect
Call
disconnect
-ed

CHAPTER --- IV

STOCK MARKET
What is STOCK MARKET?
A market where people buy and sell shares of different companies. The
main purpose of share market is to facilitate the exchange of stock
between buyers and sellers. It is the place where buyers and sellers meet
and discuss on the price of shares.
There are two main exchanges in India:
• BOMBAY STOCK EXCHANGE ( BSE )

• NATIONAL STOCK EXCHANGE ( NSE )
The Bombay Stock Exchange and the National Stock Exchange of India are
the two primary exchanges in India. In addition, there are 22 Regional Stock
Exchanges. However, the BSE and NSE have established themselves as the
two leading exchanges and account for about 90% of the equity volume
traded in India.
Most key stocks are traded on both the exchanges and hence the investor
could buy them on either exchange. The primary index of BSE is BSE
Sensex
comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which
consists of 50 stocks.
The BSE Sensex is the older and more widely followed index. Both these
indices are calculated on the basis of market capitalization and contain the
heavily traded shares from key sectors. The markets are closed on Saturdays
and Sundays. Both the exchanges have switched over from the open outcry
trading system to a fully automated computerized mode of trading known as
BOLT (BSE online trading) and NEAT (National Exchange Automated
Trading) System. It facilitates more efficient processing, automatic order
matching, faster execution of trades and transparency. The scrips traded on
the BSE have been classified into ‘A’, ‘B1’, ’B2’, ‘C’, ‘F’, and ‘Z’ groups.
The ‘A’ group shares represent those, which are in the carry forward system
(Badla). The ‘F’ group represents the debt market (fixed income securities)
segment. The ‘Z’ group scrips are the blacklisted companies. The ‘C’ group

covers the odd lot securities in ‘A’, ‘B1’, & ‘B2’ groups. The key regulator
governing Stock ,Exchanges, Brokers, Depositories, Depository participants,
Mutual Funds, FIIs and other participants in Indian secondary and primary
market is the Securities and Exchange Board of India (SEBI) Ltd.
Points taken into consideration before investing in stock market:
1. From where shares are to be bought?

2. How to identify which company to invest in?
3. Deciding when to invest in the market?
What are the various ways to invest money?
• The first way is to buy shares when prices are low and sell them
when prices are high.
• The second way is to buy a stock from NSE and sell at a higher
price at BSE.
• The third way is to investing in mutual funds and takes care of risk
and return.
• Doing speculation by keeping a strong watch on the market.
• Shares are risky so investing in good companies means high
returns and investing in bad companies means low returns.
FACTORS AFFECTING THE PRICE OF A STOCK
Broadly there are two factors that affect the rise of a stock. They are:
• STOCK SPECIFIC
• MARKET SPECIFIC

The stock specific factor is related to the people’s expectations about the
company, its future earnings capacity, financial health and management,
level of technology and marketing skills.
The market specific factor is influenced by the investor’s sentiment

towards the stock market as a whole. This factor depends on the
environment rather than the performance of any particular company.
Events favorable to an economy, political or regulatory environment like
high economic growth, budget, stable government etc. can result in a
boom in the market. On the other hand, unfavorable events like war,
economic crisis, communal riots etc depress the market irrespective of
certain companies performing well. However, the effect of market
specific factor is generally short term. Despite ups and downs, price of a
stock in the long run gets stabilized based on the stock specific factors.
Therefore, a prudent advice to all the investors is to analyze and invest
and not speculate in shares.
STOCK INVESTMENT ADVICE
So many people trade in the stock market with the same chance, but few
percent of them earn enough return.
The reasons why people don’t earn enough return in the stock market are the
emotions and strategies. Successful traders act without emotions and they
have a strategy and follow the principles of their strategy.
To success in the stock market, you should avoid some mistakes and learn
some investment tips.
One should avoid the following mistakes:
• LACK OF STRATEGY
Having a strategy in the stock market is very important. You should

when buy a stock, what is selling price and how long you will hold the
shares. When choose a strategy follow its principles and don’t change
your strategy everyday.

• WAITING FOR MARKET
Many traders when lose in a stock don’t sell the stock and stay till the
stock price return to the price they have bought. This is one of the
greatest mistakes that the new traders do it because they may be lose
much more money and time with holding a fail position.
• NOT TAKING THE PROFIT
When a reasonable profit has already been made, overcome to Greed

and sell the stock for taking the profit.
• OVERTRADING
Many traders especially day traders feel the need to hold positions in
the market at all times on every trading day. Often they will break
their own rules in order to get all of their capital into the market.
Sometimes it is best to stand aside and avoid holding any position in
the markets at all.
• FALLING IN LOVE WITH A STOCK
Some people stick to stock because they believe it is a good stock.

They even lose much money, but don’t sell it.
• A WAY TO GET RICH QUICKLY
People will often expect to get rich in the market overnight,

but they fail to realize that trading is like any profession, you must
learn how to do it first.
If you are planning to go into the stock market investment, then

there are some general tips before investing in the stock market:
• UNDERSTAND THE BASICS OF ECONOMICS
The stock market follows the laws of economics, particularly the law
of supply and demand. If there is a greater demand for the stocks of a
particular company, the price of its stock will go up accordingly. On
the other hand if there are more stocks available for selling than stock
buyers, the unit price of that company’s stocks will go down.
• CHOOSE COMPANIES THAT ARE MORE LIKELY TO STAY
With so many existing companies in the stock market, choosing

becomes a big challenge for beginners. Government owned
companies and businesses are relatively stable, unless there is a
political revolution in the horizon. Telecommunications and gasoline
companies are also stable and profitable since the demand for these
products and services is constant. Although IT companies are the
fastest growing in the market today, choose IT companies that have
proven track records of profitability and stability of at least 10 years.
• ALWAYS READ AND WATCH THE NEWS
Dealing with the stock market is not a guessing game. Sound

decisions and good intuition are results of constantly learning about
the local and global political and economic happenings. Give
particular attention to the industry where your company belongs. Even
stable companies can suddenly go bankrupt or experience a big blow
that can bring them down.

• SPREAD YOUR INVESTMENTS
Avoid investing in just one company. If all your stocks are

concentrated to one company, the chance for loses is also greater.
Spread them out so that earning investments can cushion those
investments that earn less.
• DO NOT BE GREEDY
Although stock market investment is all about profits, becoming

greedy will make an investor lose his/her better senses.
BEAR AND BULL MARKETS
A bull market is one where prices are rising, whereas a

bearish market is one where prices are falling. These terms gives a
general impression of how the market is doing.
A stock market bull is someone who has a very optimistic view of the
market, they may be stock holders or may be investors who
aggressively buy and sell stocks quickly.
A bear investor is pessimistic about the market and may make more
conservative stock choices.

GAINS FROM STOCK
The gains from stock are:
DIVIDENDS
PRICE APPRECIATION
PLAYERS IN STOCK MARKET
The major players in stock market are divided under two heads:
INDIVIDUALS INSTITUTIONS
FIIs Indian Mutual

LONG TRADERS companies funds
TERM
INVESTORS
DAY POSITION
TRADERS TRADERS

INDIVIDUALS consist of:
1. Long term investors

2. Traders
LONG TERM INVESTORS

Long term investors are those who invest over a long period of time
i.e. for 2 years or 3 years. They do not frequently buy
or sell shares.
TRADERS
Traders are those who buy and sell frequently.
There are two types of traders:
1. DAY TRADERS
2. POSITION TRADERS
DAY TRADERS
Day traders trade over intraday price fluctuations
POSITION TRADERS
Position traders buy stock and hold them and wait for price to rise.
Position traders trade over weeks.

INSTITUTIONS consist of:
1. FIIs
2. Indian companies
3. Mutual funds
WHAT IS AN FII?
An institution established or incorporated outside India and which

makes investment in Indian stocks.
For eg:
Fidelity
Franklin Templeton
Capital International
FACTORS THAT MAKE MARKET VOLATILE
There are various factors which brings volatility in the share market.
They are:
• Price fluctuations occur due to demand and supply imbalances.

• Such imbalances are cause by the news related to:
Economy
Company
Sector
• These imbalances make the investors reassess their
expectations of the company profitability and hence make
them either buy or sell.
• This inturn creates demand and supply imbalances.
OTHER FACTORS THAT MAY AFFECT THE MARKET

MOOD:
• Dollar Value
• FII Inflows
• Annual Budget
• Oil Prices

Updated information is needed on stock market because of its
volatility.
PARAMETERS ON WHICH COMPANY’S

PERFORMANCE CAN BE MEASURED:
• Market capitalization
• Earning per Share
• Price Earning Ratio
• Dividend per Share
WHAT IS STOCK INDEX?
An index is a composite of stocks that indicates how the overall

market is moving.
It is a composite figure that tracks average change in a number of
related numerical variables over a period of time.
ROLE OF INDEX
• The stock index is a barometer for market behaviour.
• The role of good index is to reflect the state of overall

market at a very moment and indicate how the stock market
perceives the Indian corporate sector.
• Higher the value of index the better is health of market and

vice versa.
Who is a Broker?
A company or an individual who:

• Is a member of stock exchange,
• Is registered with SEBI,
• Acts as a middleman between the buyer and seller of securities
in the market.
A broker charges fees for his services. This is known as Brokerage.

Both NSE and BSE have switched over from open trading system
to a fully automated computerized mode of trading known as
BOLT and NEAT i.e. BSE online trading and National Exchange
Automated Trading.
It facilitates more efficient processing, automated order matching,
transparency and faster execution of traders. Broker sits on BOLT
and need terminals and execute order through the same.
SETTLEMENT
It is the process which ensures that the buyer receives the shares he
has paid for and that money is paid to the person who has sold the
shares.
STOCK
SHARE EXCHANGE BROKER
KHAN PAYS IT TO FINALLY
THE SELLER’S PAYS THE
BROKER SELLER
BROKER MONEY TO
BUYER PAYS
THE
PAYS MONEY TO
SELLER
MONEYTO STOCK
BROKER EXCHANGE
This is the process from buyer to seller and similar process occurs for the
transfer of shares from the seller’s end.
A fixed process is followed for easy transfer of money and shares.
It is termed as a settlement cycle of “T+2” or “Transaction + 2” days,
which means that if you buy shares on Monday then you will get delivery
of the shares after two working days i.e. on Monday. Similarly if you sell
shares on Monday then you will receive your money on Wednesday.

AUCTION
If the seller doesn’t transfer shares by morning of T+2 days then:

The exchange buys the shares from open market at market price.
The shares are transferred to the buyer at promised price.
The difference in the price is deducted with penalty from the seller.
TYPES OF ORDER
There are three types of order:
• Market Order
• Limit Order
• Stop Loss Order
MARKET ORDER
An order to buy or sell at current market price. In this case, no specific
price is specified and order gets executed at current market price.
LIMIT ORDER
An order placed with a brokerage to buy or sell a predetermined
amount of shares at a specified price. This is generally better than the
current market price. In this case order gets executed only when
market price reaches specified level.
STOP LOSS ORDER

A stop loss order allows the client to place an order which gets
activated only when price of relevant shares reaches a threshold price
specified by investor in form of “Stop Loss Trigger Price”.

TRADING
There are three types of trading:

• Delivery trading
• Margin trading
• Day trading
Delivery trading Margin trading Day trading
DELIVERY TRADING
In delivery base trading, you have Rs.100; you buy the shares worth
rs.100 and take delivery of those shares.
MARGIN TRADING
In margin trading, you have Rs.100; you buy the shares with 4 times
the amount (i.e. Rs.400). On T+2 day, you either arrange for borrowed
amount or sell back the shares.
DAY TRADING
Day trading involves taking a position in the markets with a view of

squaring that position before the end of that day.
A day trader typically trades several times a day and the goal of a day
trader is to capitalize on price movement within one trading day.
Unlike investors, a day trader may hold positions for only a few
seconds or minutes and never overnight. This is really the safest way
to do day trading because you are not exposed to the potential losses
that can occur when stock market is closed due to news that can affect
the prices of your of your stocks.

In day trading, you have Rs.100; you buy shares 4-8 times the amount
and make sure that you square off at the end of day.
Day trading can be further subdivided into:
SCALPERS: This style of day trading involves the rapid and
repeated buying and selling of a large volume of stocks within
seconds or minutes. The objective is to earn a small per share profit on
each transaction while minimizing the risk.
MOMENTUM TRADERS: This type of day trading involves
identifying and trading stocks that are in a moving
pattern during the day in an attempt to buy such stocks at bottom and
sell at top.
SHORT SELLING
Shorting means something you don’t own. Short sellers assume that
they will be able to buy the stock at lower amount than the price at
which they sold short.
People short sell because of their bearish expectations from the
market.

DEMAT ACCOUNT
Demat refers to a dematerialized account. Just as you have to open an

account with a bank if you want to save your money, make cheque
payments etc. you need to open a demat account if you want to buy or
sell stocks. So its just like a bank account where actual money is
replaced by shares
For eg:
Let’s say your portfolio of shares look like this:

40 of Infosys
25 of Wipro
45 of HLL
100 of ACC
All this will show in your demat account.

So you don’t have to possess any physical certificates showing that
you own these shares. They are held electronically in your account.
As you buy and sell the shares, they are adjusted in your account.
DEPOSITORY
The organization responsible to maintain investor’s securities in the

electronic form is called the depository. In other words, a depository
can therefore be conceived of as a “Bank for securities”. In India there
are two such organizations i.e. NSDL and CDSL. The depository
concept is similar to the banking system with the exception that banks
handle funds whereas a depository handles securities of the investors.
An investor wishing to utilize the services offered by a depository has
to open n account with the depository through a Depository
Participant.

DEPOSITORY PARTICIPANT
The market intermediary through whom the depository services can

be availed by the investors is called a Depository Participant. As per
SEBI regulations, DP could be organizations involved in the business
of providing financial services like banks, brokers, and financial
institutions.
BENEFITS OF DEMAT ACCOUNT
Demat account has become a necessity for all categories of investors

for the following reasons:
• A safe and convenient way to hold securities.
• Immediate transfer of securities.
• Elimination of risk associated with physical certificates such as
bad delivery, fake securities, delays, theft etc.
• Reduction in paper work involved in transfer of securities.
STEPS INVOLVED IN OPENING A DEMAT ACCOUNT
1. First an investor has to approach a Depository Participant

(DP) and fill up an account opening form.
2. The account opening form must be supported by copies of
any of the approved documents to serve as proof of identity
(POI) and proof of address as specified by SEBI.
3. Besides, production of PAN card in original at the time of
opening of account has been made mandatory effective from
April 01,2006
4. All applicants should carry original documents for
verification by an authorized official of the depository
participant, under his signature.

5. Then the investor has to sign an agreement with DP in a
depository prescribed standard format, which details rights
and duties of investor and DP.
6. The DP will open the account in the system and give an
account number, which is also called Beneficiary Owner
Identification Number.
7. If you want to sell your shares, you need to place an order
with your broker and give a delivery instruction to your DP.
8. The DP will debit your account with the number of shares
sold and you will receive payment from your broker.
9. If you want to buy shares, inform your broker about your
depository account number, so that shares bought are
credited in your account.
A broker is separate from a DP. A broker is a member of the

stock exchange who buys and sells shares on his behalf and on
behalf of his clients.
While a DP will just give you an account to hold those
shares.
There are two main authorities in India for handling of demat
account. They are:
• NSDL i.e. National Securities Depository Limited.
• CDSL i.e. Central Depository Services Limited.
DEMAT PROCESS
SUBMIT REQUEST TO DP FOR DEMATERIALISATION ALONGWITH CERTIFICATES TO

BE DEMATERIALISED
DEPOSITORY PARTICIPANT ISSUES AN ACKNOWLEDGEMENT SLIP DULY SIGNED

AND STAMPED
REGISTER OF ISSUING COMPANY ACCEPTS REQUEST
DEMAT ACCOUNT CREDITED AUTOMATICALLY

BANK ACCOUNT Vs DEMAT ACCOUNT
BANK ACCOUNT DEMAT ACCOUNT

Store s cash Stores shares
Holder’s get pass book Holder’s get statement of account
Holder’s get cheque book Holder’s get depository slip

ONLINE & OFFLINE TRADING
ONLINE TRADING
In online exchanges the trading is done on a computer network. The sellers

and buyers log on to the network and propose their bids. The system is
designed in such a way that at any given instance, the buyers/sellers are
bidding at the best prices. The live quotes of the market are available on the
screen. The top bids are displayed. There is facility to buy and sell at the
same time.
For eg. : a seller Mr.Anil wants to sell securities of a company Satyam at
Rs.180 per security. In case of a manual exchange, he will place his order
with the broker who in turn will employ a jobber to sell the securities in the
Stock Market. The jobber is a person who bids in the ring. The jobber may
sell Mr.Anil’s securities at Rs.185 but he may be unaware of a better bid of
Rs.188 because he cannot be omnipresent in the market. He is bound to
make errors. In case of an online Stock Exchange his system will take bids
for Mr.Anil’s shares from all the people on the network. And it will display
the top bids offered. Thus Mr.Anil may end up getting Rs.188 for his
securities. The same case is applicable in a buying scenario.
MAJOR PLAYERS IN ONLINE TRADING
• SHAREKHAN.COM
• 5PAISA.COM
• KOTAKSTREET.COM
• INDIABULLS.COM
• ICICIDIRECT.COM
• HDFCS EC.COM

FEATURES OF ONLINE TRADING
• Easily operated
• Time convenience
• Paper less work
• Live order status
• You can check your DP, Bank balance, Portfolio status
• Save other expenditure
• Live tips
BENEFITS OF ONLINE TRADING
• Increase trader’s capacity in the stock exchange

• Eliminate unmatched traders and delayed reporting
• Speedy matching
• Provide for online and offline monitoring, control and surveillance of
the market
• Single screen order without going through the hassels of giving
transfer instruction, writing cheques
• Instant order/ trade confirmation gives you similar trading experience
as exchange based software without the burden of overhead and
maintenance cost
• A refreshing experience of getting outstanding research based advice
on intraday and delivery trades on the same screen
• Live quotes of NSE-cash /derivative, BSE cash, commodity. Create
multiple market watches, default market watch – NIFTY, SENSEX.
You can add NSE-cash, Derivative and BSE script on the same
market watch

• Get access to various online reports like margin reports, Demat
account details, trade executed, turnover report, net position report
with mark to market profit/loss and realized profit
• View top 20 shares by value or volume traded, alongwith top gainers/
losers
OFFLINE TRADING
• In offline trading customer not directly trade in the market but trading
is done through broker or sub-broker
• Documentation work is more in offline trading because customer not
trading in the market directly so all the transaction required some
signature process
• In case of offline, customer not directly trading in IPO’s because it
requires form fill up process.
DIFFERENCE BETWEEN THE OFFLINE AND ONLINE TRADING
Following is the difference point between the online and offline trading:
• In online trading customer can trade through the net, he can trade
online through the user ID and password provided to him. While in
case of offline trading is done through the broker and sub-broker.
• In online trading there is no need to give cheques when we are
purchasing the securities and no need to sign in any document of the
securities purchased, while in offline we have to follow all the
procedures then securities is transferred in our Demat account.
• In online customer can invest in shares, mutual funds, IPO’s,
government securities and many more investment is done without any
paper work and just click on the mouse you can purchase and sell the
securities while in offline we have to fill up the form and many more
formalities for the IPO’s , mutual funds and other securities.
• Online trading is done through sitting in home or by sitting in the
cyber café. No need to visit any broker and sub-broker for the

purchase and sell of securities while in offline, we have to maintain
good contact with the sub-broker for the trading purpose.
• In online you show the price and you yourself done the sale and
purchase transaction, no chance of misinterpretation while in case of
offline, price shown by the client is different from on which it is
purchase this may be lower or higher, also it depends upon the broker
at which time he purchase and sell the securities.
• Brokerage charges for both offline and online is same but looking at
the account opening charges and annual maintenance charges of
online trading account is slightly higher than the offline but its worth
against the facility provided by the online trading account.
• In offline customer can trade only in VSE (Vadodara Stock Exchange)
while in online customer can trade in NSE (National Stock Exchange)
and BSE (Bombay Stock Exchange).

CHAPTER --- V

ANALYSIS AND FINDINGS
MARKET RESEARCH ON CUSTOMER SERVICE AND

SATISFACTORILY HANDLING OF TRADING ACCOUNTS
The main objective of our topic was to conduct research on customer

service and to find out that the retail clients of SHAREKHAN are
satisfied with the way their TRADING A/C is handled at
SHAREKHAN. To conduct research we drafted a questionnaire and
taken feedback for the same from the retail clients of SHAREKAN.
We fill up these questionnaires from the 100 RETAIL CUSTUMERS
of SHAREKHAN. After the filling up of questionnaire the job of
analyzing the questionnaire was to be done. We conducted the
research on telephone by asking the clients about the services the
sharekhan provide and what they feel about SHAREKHAN. Are they
really satisfied with the services SHARKHAN provide? Are they
satisfied with the way their trading account is handled at
SHAREKHAN?
We talk to 100 customers during this process.
While drafting the questionnaire we kept in mind the following

things.
Our main focus was on trading account handling of the clients of the
sharekhan and the services related to it.
While drafting the questionnaire we discuss with the concern

authority and also taken their guidance for drafting the questionnaire.
We target the retail clients of the SHAREKHAN to take feedback

related to services.
We drafted the questionnaire and taken the approval for the same
from the authority.

TARGET MARKET --- RETAIL CLIENTS OF SHAREKHAN BARODA
INTERVIEW CONDUCTED --- TELEPHONIC INTERVIEW
SAMPLE SIZE --- 100 CLIENTS
PRETEST CONDUCTED ON --- 10 CLIENTS

Questions and Analysis
Q1. Do you invest in stock market?
Yes No
This question was set in questionnaire as a warm – up question. This

question was set for easy start up of questionnaire, so that customers can
take it as an easy question.
100
90
80
70
60
IN
50
PERCENTAGE YES
40
30 NO
20
10
0
YES NO
RESPONSES
As this was a simple question and set as a warm up question, we got 100%
responses in YES. It was implied that the responses will be in YES because
we ask the question to those who are having their trading a/c with
SHAREKHAN. It was just a formal question to start with.

Q2. On what basis you take investment decisions?
On your own friends and relatives
Broker’s tips Experience consultants
This question was set to know how do client’s take their investment
decision’s so that we can know that how many clients use the research tips
that SHAREKHAN provide for their investment decisions. what influences
their investment decision. What are the bases client’s c sets before taking
investment decisions. By this we can know how many client’s use
SHAREKHAN research tips for their investment decision.
70
60
50
40 ON OWN
IN PERCENTAGE
30 BROK TIP
20 FRI N REL
10 EXP. CON
0
ON OWN BROK TIPS FRI N REL EXP. CON
CUSTOMER RESPONSES
As the chart shows 61% of the clients take their investment decision on their
own. 56% of the clients use broker’s tips for their investment decision, 15%
clients take the help of friends and relatives and remaining 3% people take
clues from the experience consultants. This above analysis gives us idea that
how people take their investment decisions. Main purpose of setting this
question is to find out that how many clients use SHAREKHAN research
tips while taking investment decision and how many of them get influence
through the sharekhan’s tips. As per above analysis 56% of the clients use
SHAREKHAN research tips while taking their investment decisions, which
is a considerable figure
Q3. You are having your trading account with SHAREKHAN since

how long?
0-6 months 7-12 months
>24 months
This question was set to know about the tenure of the clients account with
the SHAREKHAN. We were having a list of the retail clients and many of
them have opened their account with SHAREKHAN newly. By this we will
get to know from how much time the client is having their account with
SHAREKHAN and since how long the client is pursuing the services of
SHAREKAN. The main objective was to know about the tenure of the
clients account with SHAREKHAN, since how long client is trading through
SHAREKHAN.
100
90 0-6 mth
80 7-12 mth
70
60 13-18 mth
IN
50 19-24 mth
PERCENTAGE 40
>24 mth
30
20
10
0
0-6 mth 7-12 13-18 19-24 >24 mth
mth mth mth
MONTHS
From the above analysis we can make out that 74% of the clients are having
their account with SHAREKHAN from last 6 months. 21% of the clients are
having their account with SHAREKHAN from the period between 7-12
months, 2% of the clients are having their account from the period between

13-18 months, 2% of the clients having account from 19-24 months and 1%
the clients having account from more than 24 months. From the above
analysis we can make out that 74% of the clients are having account with
SHAREKHAN from last 6 months, so they are they new clients of company
availing the services from past 6 months. The main objective to set this
question was to know about the tenure of the client with company so that we
can make out how the client are availing the services of SHAREKHAN with
the tenure passes.
Q4. How frequently you trade through SHAREKHAN in a month?

0-10 times 11-20 times
>40 times
This question was set to find out the frequency of trading of a client through
SHAREKHAN, so that we get to know how frequently the client needs the
services of the company. The higher the frequency the more times clients
will avail the services of the SHAREKHAN.
100
0-10 times
80
11-20 times
60
RESPONSE IN % 21-30 times
40
31-40 times
20
> 40 times
0
0-10 11-20 21-30 31-40 > 40
times times times times times
NUMBER OF TIMES TRADED IN
MONTH
From the above analysis we get to know about the frequency of trading of a
client in a month. 56% of the client between 0-10 times in a month, 25% of
the clients trade between 11-20 times, 9% of the client’s trade between 21-
30 times, 5% of clients between 31-40 times and 5% trade more than 40
times in a month. From this we can get to know how frequently a client
trades through company and from this we can also get a rough idea about the
earnings of SHAREKHAN in terms of brokerage.
Q5. What is the hit ratio of SHAREKHAN Research tips?

0-25% 26-50%
51-75% 76-100%
As it is the part of the service of SHAREKHAN to provide research tips to

the clients, we set this question to know about the success ratio of the
SHAREKHAN tips from the clients. As per above analysis 56% of the
clients use their tips while taking investment decision’s. So we did ask them
how they find the tips provided by the company and what is its success
ratio? The main objective was to know that how clients find the
SHAREKHAN research tips.
100
0-25 %
80
26-50 %
CUSTOMER 60 51-75 %
RESPONSES
IN % 40 76-100%
20
0
0-25 % 26-50 % 51-75 % 76-100%
PERCENT
As per above analysis 50% of the clients find the SHAREKHAN tips
success ratio between 0-25%, 30% of the clients find the success ratio
between 26-50%, 16% of the clients find it between 51-75% and 4% of the
clients find it between 76%-100. many of the clients responded very low for
the success ratio, this can be because many clients complain for not getting
tips timely and regularly.
Q6. Are you satisfied with the way your trading account is handled
at SHAREKHAN?

Yes No
The above question was set to take the feedback of the clients on the
satisfaction of the trading account handled @ SHAREKHAN. By this we
will get to know the satisfaction ratio of the clients for their trading account
handled by the company. The main objective is to find the satisfaction ratio.
100
80
IN 60
PERCENT 40 YES
NO
20
0
YES NO
RESPONSES
As per the above analysis 76% of the clients responded YES and 24% of the
clients responded NO. We can easily make out from this that the clients are
satisfied with the way their trading account is handled at sharekhan and the
related services to it. 76% of the clients are SATISFIED.
Q7. Out of these products, which of the products of SHAREKHAN you are
aware of?

Mutual Funds Commodities
P.M.S. IPO’s
No Idea
The main objective to set the above question was to know about the
awareness of the clients of the other products of the SHAREKHAN. From
this we can get that how many clients aware of the other services
SHAREKHAN provide. Is the sales team of the company is telling the
clients about the different products SHAREKHAN deal in?
100
90
80
70
% CLIENT 60 MF
50
AWARENESS COM
40
30 PMS
20 IPO's
10
NO IDEA
0
MF COM PMS IPO NO
IDEA
PRODUCTS
From the above analysis we can make out that 67% of the clients are aware
about mutual funds, 58% of the clients are aware about the commodities,
50% of the clients are aware of p.m.s. 73% of clients are aware about the
IPO’s services that SHAREKHAN provide and 15% of the clients were not
having any idea about any product. This shows the different product
awareness among the clients, so that they can look in to business. Highest
awareness is of IPO’S.
Q8. Are you looking forward to invest in any of the above products
of SHAREKHAN?

Yes No
If YES then which
The basic objective behind this question was to generate leads if any client is
interested in any of the above products so SHAREKHAN can look forward
for business with them. The question was set to generate leads.
100
80
60
IN
PERCENTAGE YES
40
NO
20
0
YES NO
RESPONSES
From the above analysis we can see that 32% of the clients responded in
YES and 68% of the clients responded in NO. Hence sharekhan can look
forward for business with this 32% of the clients. Out of this 32% of the
clients 12% are interested in MUTAL FUNDS, 12% in IPO’S, 6% in
COMMODITIES and 2% in P.M.S.
Q9. Do you have trading account in any other company?

Yes No
If YES then specify
The above question set to know that the clients are having their trading
account only with SHAREKHAN or having trading account with any other
company too. By this we can know that if the client wishes to execute trade
how many options will be with him and also the other competitor companies
with whom the clients are having their trading account.
100
80
IN 60
PERCENTAGE 40 YES
NO
20
0
YES NO
RESPONSES
From the above analysis we can make out that 39% of the clients said that
they are having their trading account with other companies too. 61% of the
clients said that they are having their trading account with SHAREKHAN.
The 39% of the client who responded YES are having their trading account
with , ANGEL, HDFC SEC, VSE, ICICI DIRECT, INDIABULLS ,
KOTAK, KARVY, MOTILAL OSWAL, ZAVERI. The most common
companies are ANGEL, MOTILAL OSWAL, ZAVERI, ICICI DIRECT.
Q10. Is SHAREKHAN better than others?

Yes No
If NO then what are the reasons
This question was set to know that how the client’s perceive SHAREKHAN
in so many competitors in the market. By this we will get to know about the
general perception of the clients toward’s SHAREKHAN.
100
YES
80 NO
IN 60
PERCENTAGE 40
20
0
YES NO
RESPONSES
From the above analysis we can make out that 74% of the clients responded
in YES and 24% of the clients responded in NO. we can make out from this
that the client perceives SHAREKHAN as better from the other companies.
The 24% of the client who responded NO are having problems such as
Brokerage is high
Want more exposure on scrips.
Sms tips should be made free.
More phone lines needed to install.
Q11. Are you satisfied with the after sale service (DEMO) of

SHAREKHAN?
Yes No
As our market segment was newly open accounts with SHAREKHAN the
demonstration of online trading is very important so that client can execute
trade thereafter. The main objective was to know about that the clients have
got the demo timely or not.
100
80
IN 60
PERCENTAGE 40 YES
20 NO
0
YES NO
RESPONSES
From the above analysis we can make out that 70% people responded in
YES and 30% people responded in NO. From this we can get to know that
30% of them are still finding online trading difficult, so SHAREKHAN
should arrange one session for such clients for demonstration.
Q12. Any suggestions for SHAREKHAN to serve you better?

.
Many of the clients of SHAREKHAN are satisfied with the services and the
way their trading account is handled at SHAREKHAN. Few suggestion to
improve are given below.
THE MOST COMMON SUGESSTIONS ARE :
Brokerage should be reduce.
Demo service should be given timely.
More exposure on scrips should be given.
More phone lines should be installed.
Sales team should meet the promises.
Many of clients are not getting tips regularly, so SHAREKHAN should look
forward to this.
Mobile sms tips should be made free.
Customer service should work for 24 hours.

CHAPTER--- VI

CONCLUSION
We will like to thank SHAREKHAN and the entire staff of the company for
giving us opportunity in their organization. We had very nice experience in
the company. The entire staff was very co-operative and we learn many
things such as EQUITIES, DERIVATIVES, MUFUAL FUND,
COMMODITIES, P.M.S.
It is really a nice learning experience we had with SHAREKHAN. We learn

their and done the work of batch processing. Our job was to call the inactive
clients and make them active by taking their feedback. This means that we
have to convert those clients who were not trading in to those who trade
regularly. Our boss gave this job to us because he thought that this job we
suit our project learning.
The same job gave us more understanding of the custumer service which is
necessary for trading through company. We call more than 1000 retail
clients of SHAREKHAN and taken their feedback for the same and made a
report of the same. This job raise our understanding of the services that
company is providing. This knowledge help us in turn for drafting a
questionnaire of the services related to TRADING A/C. First we drafted a
questionnaire and taken feedback from clients for the same. We have tried to
put in all our findings and knowledge in this report.
Hope our report and the project will be appreciated by the concern authority.
Finally we will again like to all those who have help us in making our report
and the project successful.

ANNEXTURE
SHAREKHAN
YOUR GUIDE TO THE

FINANCIAL JUNGLE
QUESTIONNAIRE
CUSTOMER NAME:
CONTACT NUMBER:
Q1. Do you invest in stock market?
Yes No
Q2. On what basis you take investment decisions?
On your own friends and relatives
Broker’s tips Experience consultants

Q3. You are having your trading account with SHAREKHAN since
how long?
>24 months
Q4. How frequently you trade through SHAREKHAN in a month?
>40 times
Q5. What is the hit ratio of SHAREKHAN Research tips?
0-25% 26-50%
51-75% 76-100%
Q6. Are you satisfied with the way your trading account is handled
at SHAREKHAN?
Yes No

Q7. Out of these products, which of the products of SHAREKHAN you are
aware of?
Mutual Funds Commodities
P.M.S. IPO’s
No Idea
Q8. Are you looking forward to invest in any of the above products
of SHAREKHAN?
Yes No
If YES then which
Q9. Do you have trading account in any other company?
Yes No
If YES then specify
Q10. Is SHAREKHAN better than others?
Yes No
If NO then what are the reasons
Q11. Are you satisfied with the after sale service (DEMO) of
SHAREKHAN?
Yes No

Q12. Any suggestions for SHAREKHAN to serve you better?
1.
2.
3.

BIBILIOGRAPHY
• www.nseindia.com
• SHAREKHAN e – learning program
• www.bseindia.com
• BUSSINESS RESEARCH METHODS – WILLIAM G. ZIKMUNDS

Khyati Sharekhan

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CHAPTER --- I

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -1-

The basic objective behind undergoing this project is to gain knowledge of

Our project title is “MARKETING RESEARCH ON CUSTOMER

We selected this title to gain more knowledge related to handling of trading

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -2-

“Our aim is to empower the investor to make better investment decision

INTRODUCTION OF THE COMPANY

Sharekhan, India’s leading stockbroker is the retail arm of SSKI, an

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -3-

ABOUT BARODA BRANCH

This branch was opened as franchise in partnership between Mrs.

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -4-

Baroda branch of Sharekhan have around 3000 customers.

INTRADAY : 25% of the customers are trading on intraday

Sharekhan is India’s leading broking houses providing a complete life cycle

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -5-

Business is categorized into SIX areas :

TRADER’S are having two options for trading:

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -6-

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -7-

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -8-

THE JOB WE DID IN SHAREKHAN DURING OUR SUMMER

We got a list of 1117 retail clients of SHAREKHAN. These are those

We were provided a list of 1117 retail clients to whom we spoke. The

Customer Kit status Product Demo Trade

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH -9-

• Some of customers are not aware of the SHAREKHAN

• Some of the clients didn’t receive the account opening kit on

• Even some customers found the brokerage charges of

• Some customers are not getting tips regularly through SMS or

PRIMARY DATA : Our learnings in SHAREKHAN

SECONDARY DATA : INTERNET SURFING

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 10 -

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 11 -

ONLINE ACCOUNT TYPES

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 12 -

1) Nil paper work

BENEFITS OF CLASSIC ACCOUNT

Live terminal (NSE, BSE, NSE F&O)

ACCOUNT OPENING CHARGES

• 750 Rs. Lifetime membership fees + 5000 Rs. Margin OR

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 13 -

FOR CASH SEGMENT:

Intraday Transactions: 10 paisa per 100Rs. on

Delivery Transactions: 50 paisa per 100Rs. on

FOR F&O SEGMENT:

Same day square off: 10 paisa single side

For long positions: 10 paisa

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 14 -

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 15 -

• Live terminal of NSE, BSE, NSE F&O

ACCOUNT OPENING CHARGES

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 16 -

FOR CASH SEGMENT

Intraday transactions: 10paisa per 100Rs single side

Delivery transactions: 50paisa per 100Rs on

TOLANI INSTITUTE OF MANAGEMENT STUDIES, ADIPUR, KACHCHH - 17 -

Commodity derivative comprise of raw material and products that can be

There are two exchanges for trading in commodities:

HOW TO START TRADING IN COMMODITIES WITH

To trade in commodities you need to first open an account with Share