A STUDY ON PORTFOLIO MANAGEMENT NSE With special reference to (KOTAK Securities.

Ltd, Visakhapatnam)

A Project Report Submitted to JNTU KAKINADA in Partial fulfillment For the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by BINAY KUMAR Regd. No: 106G1E0003

Under the Guidance of

VARAHA LAKSHMI NARASIMHA SWAMY EDUCATIONAL TRUSTS GROUP OF INSTITUTIONS

Affiliated to JNTU KAKINADA

(2010-2012)

DECLARATION
I hereby declare that the project work entitled A STUDY ON PORT FOLIO MANAGEMENT (NSE) with special reference to (KOTAK securities ltd) is being submitted by me to the Department of Management Studies. VARAHA LAKSHMI NARASIMHA SWAMY EDUCATIONAL TRUSTS GROUP OF INSTITUTION, Visakhapatnam in partial fulfillment for the Award of the Degree of Master of Business Administration is entirely based on my own study and efforts.

It has not been submitted to any other University for the Award of any Degree or Diploma.

Place: VISAKHAPATNAM Date: (BINAY KUMAR)

CERTIFICATE
This is to certify that the project work entitled A STUDY ON PORT FOLIO MANAGEMENT (NSE) with special reference to kotaksecurities ltd. is being submitted by BINAY KUMAR to the VARAHA LAKSHMI NARASIMHA SWAMY EDUCATIONAL TRUSTS GROUP OF INSTITUTIONS, Visakhapatnam in partial fulfillment for the Award of the Degree of Master of Business Administration is entirely based on my own study and efforts.

P.NAGI REDDY,
Cluster head-coastal Kotak securities ltd Vizag.

ACKNOWLEDGEMENT

I express my sincere thanks to correspondent Sri VENKAT of VLNV college of Management Studies and Prof: director of VLNV college of Management Studies for giving me this opportunity to do the project work. I extend my heart full thanks to Mr. Professor of

Management Studies, VARAHA LAKSHMI NARASIMHA SWAMY EDUCATIONAL TRUSTS GROUP OF INSTITUTIONS for giving me his valuable suggestions to carry out the project work.

I wish to express my deep gratitude to the management of kotak securities ltd for giving me the opportunity to do the project on A Study on PORTFOLIO MANAGEMENT (NSE) for the partial fulfillment of Master of Business Administration.

And finally I would like to thank my parents and friends whose unremarkable encouragement had helped me throughout my educational endeavor and this project work.

(BINAY KUMAR)

INTRODUCTION
India can boast of being one of the oldest stock markets in Asia. Earlier in the initial days trading in securities was done in a Very informal or Unsystematic manner Company agents or representatives representing different corporate Companies, already listed in the Stock Exchange. These representatives has to openly outcry the necessary details about the company and give a brief description of the number of shares allotted to issue and their quoted prices. After this the bidding process takes Place.

This system was lacking the information technology for immediate matching or recording of trades. This was time consuming and inefficient. In order to provide efficiency, liquidity and transparency, NSE (National Stock Exchange) introduced a nationwide online fully automated screen based trading system(SBTS) where a member can punch into the computer Quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds matching sell or buy orders from a Counter party.

Today India can boast that almost 100% trading takes place through Electronic order matching. NSE has main computer which is connected through Very Small Aperture Terminal (VSAT) installed at its office. Brokers have terminals (identified as PCs) installed at their premises which are connected through VSATS/ Leased Lines/ Modems.

With the emergence of online trading in Indian Stock Exchanges the volume of the securities traded, the size of the market and the market turnover has increased tremendously. This accounts for about 2/3rd of the National Income of the Economy.

DERIVATIVES MARKET IN INDIA

Derivatives products initially emerged as hedging devices against fluctuations in underlying asset. In recent years the market for financial derivatives has grown tremendously in terms of variety of instruments available and it marks by a very high volatility. Futures and options on stock indices have gained more popularity than on

individual stocks. Through the use of derivatives products it is possible to partially (or) fully transfer price risks by locking in asset prices.

NEED FOR THE STUDY

Performance Evaluation makes the reader understand about

the performance of the particular scrips since last 2months. My study can make the investor understand various operations done in Stock Exchange. This gives them a clear idea about the performance of the scrips and how and where to invest. After going through my study the reader can be very well benefited by not only knowing about Stock Exchange but also its operation, various guidelines and by learning the performance on scrips.

OBJECTIVES

To study various operations of various Stock Exchange in India. To study the fluctuations of selected scrips that is traded regularly in NSE and suggestions given. To study the derivatives trading in the Indian Capital Market. To study the Futures and forwards contract in the derivative markets.
To study the factors which determine or influence the Option

price. To study about Futures and Options as a hedging tools. To study clearing and Settlement procedure of Futures and Options. To study the payoff for Future and Options in the long and short run.
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METHODOLOGY

The study was under taken in the trading floor of kotak. The Information regarding the derivatives is collected from both primary as well as secondary sources of data.

Primary data

Watching the online trading live.

Interacting with the operators at the computer terminals the

clients trading in kotak .

Collecting information from the head of each department and

from the staff working in those departments.

Secondary data
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 Collecting the data from the website of NSE.

Referring the topics in textbooks and journals relating to stock

exchange operations.

Collecting information through internet and also from kotak Securities Limited.

LIMITATIONS

As the subject chosen comparatively new one, the study suffers from certain limitations. 1. Stock Exchange is an ocean and study is an attempt to understand which a drop in the ocean. The activities in stock exchange and derivatives market are vast and to understand all the activities is a difficult task, as there are only few persons who can provide information.

2. To know the entire activities of stock exchange is very difficult as it takes understand. a long period to

3. Though the system, people and time were there, some information regarding certain topics in stock trading was not collected due to
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non availability of time to the key persons from their busy schedule.

4. Because of the comprehensive nature of some information is not disclosed though sources of information are available.

INTRODUCTION TO FINANCIAL MARKETS

Finance is the integral part of modern business. Financial markets refer to the institutional arrangements for dealing in financial assets and credit instruments of different types, such as currency cheques, bank deposits bills, etc.

The main functions of the financial markets are: (i) To facilitate creation and allocation of credit and liquidity

(ii) To serve as intermediaries for mobilization of savings; (iii) To assist the process of balanced economic growth; (iv) To provide financial convenience; (v) To cater to the various credits needs of the business houses.
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TYPES OF FINANCIAL MARKETS:

Financi Financia Financial al l Instrume Market instituti on credit requirement for short-term and long-term Based nts s ons markets are divided into two categories: Money Capital 1. Money Market Market 2. Capital Market Market Financi al Service purposes, financial s

Organized

Financial Unorganized

Stock Market Gift edged Securities market

Term Lending Institutions Industrial securities market

Primary market Secondary market Stock Exchange

NSE

BSE

OTCEI

OTHERS

Wholesale debt market segment

Capital Market Segment Derivative segment Option Interest Rate Put

Cash Segment Future

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Stock

Index

Call

STOCK EXCHANGES IN INDIA

At the end of the June 1989, there were 18 recognized stock exchanges in India. Among the 18 stock exchanges, the first organized stock exchange set up at Bombay in 1857 is distinguished not only by its size but also it has been recognized permanently, while the recognition for other markets is renewed every 5 years. Stock markets are organized either as voluntary, non-profit making associations (Bombay, Ahmadabad, Indore) or public limited companies (Calcutta, Delhi, Bangalore) or company limited by guarantee (Madras, Hyderabad).

In India, the growth of stock exchanges has been linked to the growth of corporate sector. Though a number of stock exchanges Every stock exchange followed its own were set up before independence but, there was no All India legislation to regulate theyre working. methods of working .To rectify this situation, The SECURITY CONTRACTS (REGULATIONS) ACT was passed in 1956.
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In 1965, 22 separate provincial stock exchanges were merged into 3 regional stock exchanges and in 1973 these, in turn, were combined to form the National Stock Exchange (NSE) under the title of the stock exchange that has trading floors in many former provincial center. At present, there are 26 stock exchanges in our country. The over-the counter exchange of India began its operations in 1992. Since 1995, trading in securities is screen based (on-line)

BOMBAY STOCK EXCHANGE (BSE):

Bombay stock exchange is the first organized stock exchange set up at Bombay in 1857. It is the premier or apex stock exchange in India as it is distinguished not only by its size but also it has been recognized permanently while recognition of other stock exchanges is renewed every 5 years. It is the oldest stock market. Bombay Stock Exchange raised the threshold limit for listing to Rs.10 crores, moved on to weekly settlement and quicker actions for each settlement. Settlement is through the clearinghouse. 12 days carry forward is allowed on BSE. Index in BSE is SENSEX. BSE membership fee in 1857 was just Rs1lakh and now it in about 2crores. NATIONAL STOCK EXCHANGE (NSE) Rs

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National Stock Exchange of India Ltd was started in 1992 with a paid-up equity of Rs.25 crores. The government recognized it in the same year and NSE started its operations in wholesale in Nov 1994.

NSE MISSION

NSE mission is setting the agenda for change in the securities markets in India.

The NSE was set-up with the main objectives of:

establishing a nation-wide trading facility for equities, debt instruments and hybrids, ensuring equal access to investors all over the country through an appropriate communication network, providing a fair, efficient and transparent securities market to investors using electronic trading systems, enabling shorter settlement cycles and book entry settlements systems, and
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 meeting the current international standards of securities

markets.

NSE LOGO

The logo of the NSE symbolizes a single nationwide securities trading facility ensuring equal and fair access to investors, trading members and issuers all over the country. The initials of the Exchange viz., N, S and E have been etched on the logo and are distinctly visible. The logo symbolizes use of state of the art information technology and satellite connectivity to bring about the change within the securities industry. The logo symbolizes vibrancy and unleashing of creative energy to constantly bring about change through innovation.

NSE MILE STONES

November 1992 Incorporation April 1993 May 1993 June 1994 Recognition as a stock exchange Formulation of business plan Wholesale Debt Market segment goes live

November 1994 Capital Market (Equities) segment goes live March 1995 April 1995 June 1995 July 1995 Establishment of Investor Grievance Cell Establishment of NSCCL, the first Clearing Corporation Introduction of centralized insurance cover for all trading members Establishment of Investor Protection Fund
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October 1995 April 1996 April 1996 June 1996 November 1996

Became largest stock exchange in the country Commencement of clearing and settlement by NSCCL Launch of S&P CNX Nifty Establishment of Settlement Guarantee Fund Setting up of National Securities Depository Limited, first depository in India, co-promoted by NSE

November 1996 Best IT Usage award by Computer Society of India December 1996 Commencement of trading/settlement in dematerialised securities

December 1996 Dataquest award for Top IT User December 1996 Launch of CNX Nifty Junior February 1997 Regional clearing facility goes live

November 1997 Best IT Usage award by Computer Society of India May 1998 May 1998 July 1998 August 1998 February 1999 April 1999 October 1999 January 2000 February 2000 June 2000 Promotion of joint venture, India Index Services & Products Limited (IISL) Launch of NSE Web-site: www.nse.co.in Launch of NSE Certification Programme in Financial Market CYBER CORPORATE OF THE YEAR 1998 award Launch of Automated Lending and Borrowing Mechanism CHIP Web Award by CHIP magazine Setting up of NSE.IT Launch of NSE Research Initiative Commencement of Internet Trading Commencement of Derivatives Trading (Index Futures)
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September 2000 November 2000

Launch of 'Zero Coupon Yield Curve' Launch of Broker Plaza by Dotex International, a joint venture between NSE.IT Ltd. and I-flex Solutions Ltd.

December 2000 Commencement of WAP trading June 2001 July 2001 Commencement of trading in Index Options Commencement of trading in Options on Individual Securities Commencement of trading in Futures on Individual Securities

November 2001

December 2001 Launch of NSE VaR for Government Securities January 2002 Launch of Exchange Traded Funds (ETFs) NSE wins the Wharton-Infosys Business Transformation May 2002 Award in the Organization-wide Transformation category October 2002 January 2003 June 2003 August 2003 June 2004 August 2004 March 2005 June 2005 December 2006 January 2007 March 2007 Launch of NSE Government Securities Index Commencement of trading in Retail Debt Market Launch of Interest Rate Futures Launch of Futures & options in CNXIT Index Launch of STP Interoperability Launch of NSE electronic interface for listed companies India Innovation Award by EMPI Business School, New Delhi Launch of Futures & options in BANK Nifty Index 'Derivative Exchange of the Year', by Asia Risk magazine Launch of NSE CNBC TV 18 media center NSE, CRISIL announce launch of IndiaBondWatch.com
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June 2007 October 2007 January 2008

NSE launches derivatives on Nifty Junior & CNX 100 NSE launches derivatives on Nifty Midcap 50 Introduction of Mini Nifty derivative contracts on 1st January 2008 Introduction of long term option contracts on S&P CNX Nifty Index Launch of NCFM - Derivatives Market (Dealers) Module Test in Hindi language

March 2008

June2008 September 2008

Launch of FEDAI-NSE Currency Futures (Basic) Module

Jan2009 Feb2009

Launch of Mutual Funds : A Beginners Module Launch of NCFM - Capital Market (Dealers) Module Test in Gujarati and Hindi languages

Feb2009 Mar2009

Launch of Shariah BeEs on Feb 4, 2009 Launch of "Options Trading Strategies Module"

NSE Technology

Across the globe, developments in information, communication and network technologies have created paradigm shifts in the securities market operations. Technology has enabled organizations to build new sources of competitive advantage, bring about innovations in products and services, and to provide for new business
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opportunities. Stock exchanges all over the world have realised the potential of IT and have moved over to electronic trading systems, which are cheaper, have wider reach and provide a better mechanism for trade and post trade execution. NSE believes that technology will continue to provide the necessary impetus for the organization to retain its competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact that technology will continue to redefine the shape of the securities industry, NSE stresses on innovation and sustained investment in technology to remain ahead of competition. NSE IT set-up is the largest by any company in India. It uses satellite communication technology to energies participation from around 400 cities spread all over the country. In the recent past, capacity enhancement measures were taken up in regard to the trading systems so as to effectively meet the requirements of increased users and associated trading loads. With up gradation of trading hardware, NSE can handle up to 1 million trades per day.

CIRCUIT BREAKERS

The Exchange has implemented index-based market-wide circuit breakers in compulsory rolling settlement with effect from July 02, 2001

INDEX-BASED MARKET-WIDE CIRCUIT BREAKERS

The S & P CNX The index-based market-wide circuit breaker system applies at 3 stages of the index movement, either way viz. at 10%, 15% and 20%. These circuit breakers when triggered bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by
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movement of either the BSE Sensex or the NSE S&P CNX Nifty, whichever is breached earlier.

In case of a 10% movement of either of these indices, there would be a one-hour market halt if the movement takes place before 1:00 p.m. In case the movement takes place at or after 1:00 p.m. but before 2:30 p.m. there would be trading halt for hour. In case movement takes place at or after 2:30 p.m. there will be no trading halt at the 10% level and market shall continue trading.

In case of a 15% movement of either index, there shall be a twohour halt if the movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00p.m. but before 2:00 p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00 p.m. the trading shall halt for remainder of the day.

In case of a 20% movement of the index, trading shall be halted for the remainder of the day.

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S&PCNX NIFTY:

NIFTY is based upon solid economic research it the new world of financial product on the index like index futures, index options and index funds. A trillions calculations were expanded to evolve the rules inside the S&P CNX Nifty index. The result of this work is remarkably simple:

The correct size is to use is 50.

Stocks considered for the S&P CNX Nifty must be liquid by the

'Impact

cost criterion.

The largest 50 stocks that meet the criterion go into the index.

The nifty is uniquely equipped as an index for the index market owing to its Low market impact cost
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 High edging effectiveness

HISTORICAL BACKGROUND OF THE COMPANY:

BASIC INTRODUCTION OF DERIVATIVES: Derivatives are the financial contracts that derive their value from an underlying asset, which could be stocks or stock indices, commodities or currencies or even exchange rates or the rate of interest. Commodities or currencies or even exchange rate may swing in favor of one currency of the other, the price of a commodity may increase or decrease. A feature common to all underlying assets is that they carry the risk of change in value. Derivative contracts seek to transfer these risks from a counter party that is not comfortable with the risk to the one that is.

INTRODUCTION OF KOTAK MAHINDRA GROUP :

THE KOTAK MAHINDRA GROUP:

Kotak Mahindra is one of the Indias leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking ,to stock broking ,to mutual funds, to life
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insurance ,to investment banking, the group caters to the financial needs of individuals and corporate. The group has a net worth of around Rs.3, 200cr, employes around 10,800 people in its various business and has a distribution net work of branches, franchisees, representative officers and satellite officers across 300 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore. The group services around 2.6 million customer accounts.

Kotak Mahindra is one of the Indias leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking ,to stock broking ,to mutual funds, to life insurance ,to investment banking, the group caters to the financial needs of individuals and corporate. As on march 31, 2007, the group has a net worth or over Rs3, 200cr and the AUM across the group is around Rs224 billion and employs over 10,800 employees in its various businesses. With a presence in 300 cities in India and offices in New York, London, Dubai, Mauritius and Singapore. The group services a customer base of over around 2.6 million. The group specializes in offering top class financial services, catering to every segment of the indrusty.The various group companies include:

Kotak Mahindra capital company limited

Kotak Mahindra Securities Limited Kotak Mahindra Inc Kotak Mahindra (International) Limited Global Investments opportunities Fund Limited Kotak Mahindra(UK) Limited Kotak Securities Limited Kotak Mahindra Old Mutual Life Insurance Company Limited Kotak Mahindra Asset Management Company Limited Kotak Mahindra Trustee Company Limited
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Kotak Mahindra Investments Limited Kotak Forex Brokerage Limited Kotak Mahindra Trusteeship services Limited Kotak Mahindra Prime Limited The company has a full-fledged research division involved in Macro Economic studies, scrotal research and company specific Equity Research combined with a strong and well networked sales force which helps deliver current and up to date market information and news.

History of Kotak Mahindra Group

The Kotak Mahindra Group was born in 1985 as Kotak capital management finance limited. This company was promoted Uday Kotak, Sidney A.A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and thats when the company changes its name to Kotak Mahindra Finance Limited. Since then its been a steady and confident journey to growth and success. 1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting 1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market 1990 The Auto Finance division is started

1991 The Investment Banking Division is started. Takes over FICOM, one of India's Largest financial retail marketing networks 1992 Enters the Funds Syndication sector.

1995 Brokerage and Distribution businesses incorporated into a separate company Kotak Securities. Investment Banking division incorporated into a separate Company - Kotak Mahindra Capital Company
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1996 Kotak

The Auto Finance Business is hived off into a separate company

Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, For financing Ford vehicles. The launch of Matrix Information Services Limited Marks the Group's entry into information distribution. 1998 Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company. 2000 Kotak Mahindra ties up with Old Mutual plc. For the Life Insurance business. Kotak Securities launches its on-line broking site (Now www.kotaksecurities.com). Commencement of private equity activity Through setting up of Kotak Mahindra Venture Capital Fund. 2001 Matrix sold to Friday Corporation Launches Insurance Services

2003 Kotak Mahindra Finance Ltd. converts to a commercial bank the first Indian Company to do so 2004 Launches India Growth Fund, a private equity fund.

2005 Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (Formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra Launches a real estate fund 2006 Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak securities.

INTRODUCTION OF KOTAK SECURITIES LTD.

Kotak Securities Limited, a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% - one of the worlds
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leading investment banks and brokerage firms) is Indias leading stock broking house with a market share of 5 - 6 %. Kotak Securities Limited is one of the largest players in distribution of IPOs - it was ranked number One in 2003-04 as Book Running Lead Manager in public equity offerings by PRIME Database. It has also won the Best Equity House Award from Finance Asia - April 2004. The Company has a full-fledged Research division involved in macroeconomic studies, scrotal research and Company specific equity research combined with a strong and well networked sales force which helps deliver current and up-to-date market information and news. The Company has 113 branches servicing around 1,00,000 customers, through our own offices and a large franchisee network. Its has an Online presence through Kotakstreet.com where we offer Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets over Rs. 1700 crores through its Portfolio Management Services (PMS) servicing high net worth clients with a large investible surplus through its preferred client services in the mass affluent and wealth management segments. . Kotak Securities Ltd is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein the investors can use the brokerage services of the company for executing the transactions and the depository services for settling them. Kotak Securities has 813 outlets servicing more than 3,15,000 customers and coverage of 277 Cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets around 2300 crores of Assets Under Management (AUM) .The portfolio Management Services provide top class service , catering to the high end of the market. Portfolio Management from Kotak Securities Comes as an answer to those who would like to grow exponentially on the crest of the stock Market, with the backing of an expert

Kotak securities is all about attracting new customers and building a long term relationship with its existing customers
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Kotak securities have a centralized marketing department located in Mumbai. It broadly looks into four areas i.e. Brand Building Customer acquisition Customer retention and Public relations

Various marketing strategies have been initiated to acquiring building and retaining customers for online and offline broking division, portfolio management services and distribution division and Kotak securities as a whole.

Last year 2004 focused on Easy Mutual Fund and Easy IPO campaigns, which was appropriate as a wide range of IPOs and Mutual Funds were offered in the retail market there are many new marketing initiatives in the pipeline for this year. We give you a glimpse into Kotak securities as you journey through this presentation and familiarize yourself with the organization; its structure , people and product offerings and know what makes Kotak securities limited one of the most enter praising and value driven players in the capital markets

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STRUCTURAL ORGANISTATION OF KOTAK;

KOTAK MAHINDRA BANK; At Kotak Mahindra bank ,we address the entire spectrum of financial needs for individual and corporate .we have the products ,the experience ,the infrastructure and most importantly the commitment to deliver pragmatic ,end to-end solutions that really work.

Deposits accounts
Saving account Current account Term deposits
Loans:

Personal Loans Home Loans Loan against property

Investment Services

Demat Mutual Funds Insurance Gold

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Convenience Banking

Phone Banking Net Banking ATM Network

Kotak Mahindra Old Mutual Life Insurance Ltd.

Kotak Mahindra Old Mutual Life Insurance is a 76:24 joint venture between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life Insurance is one of the fastest growing insurance companies in India and has shown remarkable growth since its inception in 2001. Old Mutual, a company with 160 years experience in life insurance, is an international financial services group listed on the London Stock Exchange and included in the FTSE 100 list of companies, with assets under management worth $ 400 Billion as on 30th June, 2006. For customers, this joint venture translates into a company that combines international expertise with the understanding of the local market.

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd.(KMBL), and Old Mutual plc. At Kotak Life Insurance, we aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.

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Kotak Mahindra asset management company limited( KMAMC):

Kotak Mahindra asset management company limited KMAMC a wholly owned subsidiary of KMBL, is the asset manager for Kotak Mahindra mutual fund KMMF. KMAMC started operations in December 1998 and has over 4lac investors in various schemes. KMMF offers schemes catering to investors with varying risk return profits and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. We are sponsored by Kotak Mahindra bank Ltd, one of Indias fastest growing banks, with a pedigree of over twenty years in the Indian financial markets. Kotak Mahindra asset management co. Ltd., a wholly owned subsidiary of the bank, is our Investment manager. We made a humble beginning in the mutual fund space with the launch of our first scheme in December, 1998. Today offer a complete bouquet of products and services suiting the diverse and varying needs and risk return profiles of our investors.

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Products:
Individual Kotak head start child plans Kotak sukhi jeevan plan Kotak privileged assurance plan Kotak term plan Kotak preferred term plan Kotak money back plan Kotak child advantage plan Kotak endowment plan

Group:
Employee benefits and superannuation group plan Kotak term group plan and credit term group plan Kotak complete cover group plan and gratuity plan

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AWARDS AND RECOGNITION OF KOTAK SECURITIES Ltd.

Securities has been graced with include; Euro money Award (2006 & 2007) - Best Provider of Portfolio Management Equities Asia money Award (2006)- Best Broker In India Euro money Award (2005)-Best Equities House In India Finance Asia Award (2005)-Best Broker In India Finance Asia Award (2004)- India's best Equity House Prime Ranking Award (2003-04)- Largest Distributor of IPO's

The accolades that Kotak Securities has been graced with include:

Prime Ranking Award(2003-04)- Largest Distributor of IPO's Finance Asia Award (2004)- India's best Equity House Finance Asia Award (2005)-Best Broker In India Euro money Award (2005)-Best Equities House In India Finance Asia Award (2006)- Best Broker In India Euro money Award (2006) - Best Provider of Portfolio Management : Equities

Kotak Securities Ltd. is India's leading stock broking house with a market share of around 8.5 % as on 31st March. Kotak Securities Ltd. has been the largest in IPO distribution. Kotaksecurities.com is a world class internet share trading website, offering investment and trading options to individuals with speed & easy
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access. Led by Prasanth Prabhakaran, Kotaksecurities.com has its presence in more than 78 cities in the Country today. Kotaksecurities.com is the only online trading website which gives real time Stock Market access to clients via KEAT, its in-house developed product. Kotaksecurities.com offers convenience of anywhere trading through the net and the telephone.

KOTAK PRODUCTS AND SETRVICES:

Bank Life Insurance Mutual fund Car finance Securities Institutional Equities Investment Banking Kotak Mahindra International Kotak Private Equity Kotak Reality Fund

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CHAPTER:2
OBJECTIVES OF THE STUDY
The title of the study undertaken by the researcher is operations and services offered by Kotak Securities Ltd. And the procedure involved in online equity trading with more emphasis on customer preference. The title given to the researcher found to be very interesting and learning in nature. Although researcher faced various problems seeking information from various sources due to the competitions of various banks, but due to co-operation from various friends, colleagues and specially the staff of Kotak Securities Ltd., he had completed the report.

OBJECTIVES OF THE STUDY

To help the researcher in knowing out the various kinds of services provided by Kotak Group. To study the different products of Kotak Securities Ltd. To maintain the database regarding various To give an in depth about Securities, Derivatives, Futures & Options, Capital Market, Primary and Secondary, NSE &BSE To study how to determine various pricing Strategies involved in online trading. To study the software KEAT used by the company for trading.

SIGNIFICANCE OF THE STUDY:

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Everyone put his or her time, money and efforts because to have some significance. My studies have some significance to:

The Organization:

As organization has got valuable data regarding customer preference and market share of Kotak Securities Ltd., in finance industry. Now the organization can take some significant actions in the direction of customer satisfaction so that the customer can avail more benefits and the organization can get good customers and more business.

The Student:-

It also has significance to me that I got the precious knowledge about the various operation of different department, policies and data regarding various schemes provided by the Kotak Securities Ltd., It will help me in my future for the practical applications in real life.

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RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them.

Entire data has been collected and calculated up to the accurate extent is from primary as well as secondary sources i.e. no previous data was available on the basis of which calculation for graphical presentation is done. As it was assured to the respondents that their response would be kept confidential so they were very free and frank while giving their response.

It was descriptive research. The researcher-collected data from personal interviewed with officials of different banks, by filling questionnaires, surfing on Internet, articles published in magazines, literature available with Kotak Securities Ltd.

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METHODOLOGY OF DATA COLLECTION

To make the report more authentic and valid, the collections of the data should be through reliable sources and the approach is very important. For the purpose of this report the data and information were collected in the following manner: DIRECT CONTACT WITH THE ORGANINIZATION: The organization was visited daily to collect the information about their services and products offered. Their pamphlets were obtained and studied. WEBSITES AND SEARCH ENGINES: The internet being the largest source of information and knowledge proved to be biggest help in data collections. The websites of the Kotak securities Ltd. gave the information regarding the industry in general. BOOKS AVAILABLE: The data was also collected from the book with us and the brochures also proved very useful. The data so collected then sorted and classified to make it suitable for analysis. Several questions proved to be reluctant and were dropped in final analysis. Conclusions were drawn on the basis of the majority opinion. Some points were the conclusions were ambiguous were also removed from analysis.

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DIAGRAM OF RESEARCH METHODOLOGY

DEFINE RESEARCH PROBLEM

REVIEW THE LITERATURE

FORMULATES
HYPOTHESIS

DESIGN RESEARCH

COLLECT DATA

ANALYSE DATA

INTERPRET AND REPORT

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1. BACKOFFICE

To know the trade position of the client, back-office is done in KSL everyday immediately after the trade ends. KOTAK PACK is the package used in back office system. Steel City Software team was designed and maintained this KOTAKPACK Package.

The main modules of back office system are: Trading Finance Importing Exporting Margins Clearing Business Controls Payin-Payout House Keeping

In the back office, first the Import Export module is opened where the trade file of the days trade is collected and the text file was imported to the system. There, the old closing prices are inserted by new prices from the Bhavcopy file. Bhavcopy is the average of last half-an-hour prices of the scrips.

To calculate the net mark to market value, Bhavcopy file is imported from NSE/BSE/NCDEX/MCX. Net mark to market value is to be known to know the profit or loss position of the client, basing
40

on which the Trading Manager of KSL will decide whether the client can trade or not for the next day on comparing it with the margin paid by the client.

After importing the Bhavcopy file, the trading module is opened. Saud In trading module, the sauda status is known from the Sauda manager is the number of trade Confirmation of trading transaction with Manager.

confirmations recorded.

brokerage commission is known as Sauda.

After Sauda Manager, Net positions process is done. In the net positions process, cumulative net position reports, client-wise net position reports and other reports are made and are given to clients and to the accounts department. The bills are prepared and sent to the respective clients.

2. REPORTS:

After selecting REPORTS option from main menu, the member has to specify the criteria for which the report is needed. The types of reports that may be generated are: Net Position Reports Client Wise and Scrip Wise; Contract Note reports; Client Wise Confirmation reports; Bills Summary reports; bad deliveries reports; auctions reports; objections reports; margins reports; securities reports and miscellaneous reports. The daily reports of various aspects relating to the trading activities are maintained.

41

3. CLEARING:

Settlement of trades transacted on an exchange requires smooth, preferably instantaneous, movement of securities and funds in accordance with the prescribed schedule of pay-in / payout. Movement of securities has been almost instantaneous in the dematerialized environment. Two depositories are in place to provide electronic transfer of securities. 10 major stock exchanges accounting for about 99% of turnover have been connected to depositories. All actively traded scrips are held, traded and settled in de-mat form. trades. NSE follows a different model where a clearing corporation guarantees settlement obligations emanating from

4. SETTLEMENT:

The trades accumulated over a trading cycle are clubbed together at the end of the trading cycle, positions (trades) are netted and the balance obligations are settled.

42

THE ONE TYPE OF SETTLEMENT ROLLING SETTLEMENT:

In

rolling

settlement,

each

trading

day

is

considered as a trading period and trades executed during the day are settled based on the net obligations for the day.

At NSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. For arriving at the settlement day all intervening holidays, which include bank holidays, NSE holidays, Saturdays and Sundays are excluded. Typically trades taking place on Monday are settled on Wednesday, Tuesday's trades settled on hursday and so on.

43

The following table and figure represent rolling settlement process. A tabular representation of the settlement cycle for rolling settlement is given below: Table-4.1 Activity Trading Clearing Rolling Settlement Trading Custodial Confirmation Delivery Generation Settlement Securities and Funds pay in Day T T+1 working days T+1 working days T+2 working days

Securities and Funds pay out T+2 working days Valuation Debit Post Settlement Auction T+2 working days T+3 working days

44

SETTLEMENT AGENCIES:

The NSCCL, with the help of clearing members, custodians, clearing banks and depositories settles the trades executed on exchanges. The roles of each of these entities are explained bellow: a. NSCCL b. CLEARING MEMBERS c. CUSTODIANS d. CLEARING BANKS e. DEPOSITORIES f. PROFESSIONAL CLEARING MEMBER

EXPLANATIONS:

1. Trade details from Exchange to NSCCL (real-time and end of day trade file). 2. NSCCL notifies the consummated trade details to CMs/custodians who affirm back. Based on the affirmation, NSCCL applies multilateral netting and determines obligations. 3. Download of obligation and pay-in advice of funds/securities. 4. Instructions to clearing banks to make funds available by pay-intime. 5. Instructions to depositories to make securities available by pay-intime. 6. Pay-in of securities (NSCCL advises depository to debit pool account of custodians/CMs and credit its account and depository does it).

45

7. 8.

Pay-in of funds (NSCCL advises Clearing Banks to debit account of custodians/CMs and credit its account and clearing bank does it). Pay-out of securities (NSCCL advises Clearing Banks to credit account of custodians/CMs and debit its account and depository does it).

9.

Pay-out of funds (NSCCL advises Clearing Banks to credit account of custodians/CMs and debit its account and clearing bank does it).

10. Depository informs custodians/CMs through DPs. 11. Clearing Banks inform custodians/CMs.

5. COST OF TRADING:

The various costs involved in the process of online trading in Steel City Securities Limited, Visakhapatnam are as follows:

a.

MARGINS:

The base capital to set up a trade center is one crore rupees. Earlier, KSL paid Rs.75 lakhs as base capital when it was set-up. The Trade Corporation has to maintain a reserve of some amount with NSE where 30% - 50% will be in the form of cash and the remaining in the form of bank guarantees (securities), FDRs etc. KSL has 7.5. crores as margin with NSE at present.

Gross intra-day turnover (buy and sell) of a member shall not exceed 25 times the base capital. Gross exposure of a member at any time shall not exceed 8.5 times the free base capital of one

46

crore rupees and not exceed 12 times over the free base capital of one crore rupees.

Minimum of Rs.20000 is collected as margin money from professional clients in KSL. For delivery purpose no margin money is collected. Client margin collection is calculated in 16 types known as Span calculation and the maximum margin is collected from the clients. KSL collects 25% margin money in futures from clients. For trading in index 15% margin is charged. For retail clients, the full amount of the value of shares is calculated and collected to allow them to purchase the shares.

Table-5.1

Gross Exposure <= 1 > 1 <=3 > 3& <= 6

Margin Payable ( Rs. Crore) Nil 2.5% in excess of Rs. 1 crores Rs. 5 lakh plus 5% in excess of Rs. 3crores Rs.20 lakh plus 10% in excess of Rs. 6

> 6& <= 8

crores Rs.40 lakh plus 15% in excess of Rs. 8

> & <=20 > 20

crores Rs. 220 lakh plus 20 % in excess of Rs.20

47

b. BROKERAGE:

Brokerage is of two types: i. Speculation brokerage or square up commission:

This brokerage is charged where buying and selling of shares is done in one day only and at the end of the days trade, the position is zero. The speculation brokerage is charged from 0.01% to 0.03%.

ii.

Delivery Brokerage:

This brokerage is charged where there may be buying or selling lot remaining at the end of the days trade. brokerage is charged from 0.03% to 0.30%. The delivery

As per SEBI, maximum brokerage shouldnt exceed 2.5% both in BSE and NSE. For retail clients, the brokerage charged is 0.7%. A sub-broker charge 2.5% from the clients to sell or buy the shares out of which, SCSL charges 1% from the sub-broker.

Service tax:
48

In SCSL, 10.3% service tax on brokerage is collected from the clients. Stamp duty: If the stamp duty of 0.006% on turnover is Rs30 or more, only Rs30 is collected in NSE. In BSE, the minimum is 1Re and the maximum stamp duty is unlimited. Security Transaction Tax This has reference to the Securities Transaction Tax (STT) introduced in the Finance Act 2004. As per the Finance Act 2004, STT on the transactions executed on the Exchange will be as under:

NSE, BSE:

Square up -------------0.25% on Turnover Delivery --------------0.125% on Turnover F&O 0.017% (Its calculate on Turnover only on Selling ) Options 0.017% (Based only on Premium) Exercise (only for options) 0.125% (Strike + Premium Multiplied by quantity)

6) ACCOUNTS:

49

The Accounts/ Finance department maintains the accounts in KSL. The accounts are prepared in three forms. They are: a.Client-wise net positions, b.Scrip-wise net positions, c.Pay-in and Pay-out settlement of funds. 7) DEMATERIALIZATION SECURITIES: Though de-mat was introduced in 1994, it came into existence in 1996. The depositories Act, 1996 was passed to AND ELECTRONIC TRANSFER OF

provide for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed, accuracy and security by dematerializing the securities in the depository model. A depository holds securities in dematerialized form. It maintains ownership records of securities and effects transfer of ownership through book entry.

The two depositories, National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) provide services to investors and clearing members through Depository Participants (DPs). They do not change the investors and clearing members directly but charge their DPs, who are free to have their own charge structure for their clients.

De-mat Process:

50

When a client places his physical shares for de-mat, KSL after inputting the information in depository participants sends the physical shares to the company, which issued the shares. The client code number and the information and the clients signature is sent to Share Holding Registrar.

When a client enters into DP for de-mat purpose, he is given a unique code member. He can know his share position easily. It is known as client ID number.

8)

INTERMEDIARIES:

There are no intermediaries in between SCSL and NSE, BSE, NCDEX and MCX. Similarly there are no intermediaries in between SCSL and professional clients. Since SCSL is a share broker to NSE, BSE ,NCDEX and MCX the clients operating in SCSL directly, on behalf of other clients are sub-brokers to the ultimate clients who doesnt operate the trade directly. So, there may be subbrokers as intermediaries in between KSLand clients who do not trade directly in KSL.

As mentioned earlier, KSL is depository participant. So, KSL acts as an intermediary between clients and NSDL & CDSL.

9) MARKET INFORMATION:

In KSL, daily the research analyst collects the market information and it is analyzed. The market information is used to forecast the index movement, price movement of the shares and enables the
51

clients to make use of the information in trading to get better results. The research analyst in forecasting the market movement follows the technical analysis, fundamental analysis and efficient market hypothesis. The research analyst collects the information about the company, the industry and the economy through different media to know the companys position. Since, the NSE & BSE are markets with strong form efficiency, as the market discounts the information itself very quickly and changes as per the information, the research analyst has only fewer jobs to do here. The research analyst not only analyses the marketing

information but, every day in KSL an edition of the research analysts, suggestions on scrips that have to be bought and sold is also printed which helps the clients of KSL to invest in shares that are profitable.

PMS MONTHLY FUNDAMENTAL OUT LOOK

Lower than expected results from few large caps, resilient inflation and weak global cues kept domestic market sideways during may 2011. Encouraging IIP numbers and softening off commodity prices failed to provide support to the market. Markets continued to drift lower on sustained FII selling. Economic data points have been mixed with healthy IIP number and decent tax collections, but inflation has remained resilient. The RBI has responded with a 50 bps hike repo rates. However , with high non food manufacturing inflation and
52

imminent hike in diesel and cooking gas prices, inflation likely to remain firm in the near-term. Consequently, further rate hikes cannot be ruled out. Impact of rise in interest rates has already slowed down volumes in the real estate sector. We expect other interest-sensitive sectors like auto to also feel pressure in the coming months. Global markets have also weakened in May on fresh reports of worsening off the debt crisis in euro zone. Economic data from the major economies is not very upbeat either. In our view, taking this into cognizance, the liquidity may have begun to move out of commodities to safe assets like the USD (rise in risk aversion). If this phenomenon persists, then one may expect commodity prices to correct further, which should be a significant positive for the Indian economy.

In our view, some of the broad concerns out line above may keep the markets on the side ways. However, on the upsides, the valuations adjustment process is already under way and we believe that stock valuations have now become reasonable. Sell-off in sum heavy weights like SBI, INFOCYS, and BHEL may be overdone and investors can start accumulating these stocks. In terms of sector preference, we continue to be positive on sectors like banking, IT, and METALS. In view of their susceptibility to interest rate movements, we prefer to be selective in construction, auto, media and logistics. We remain positive on select capital goods companies.
GLOBAL MARKETS MOVED UP ON GOOD CORPORATE RESULTS BUT INFLATION WORRIES REMAIN Us markets lost ground during the month due to massive sell off in commodity coupled with subdued employment activity that intensified worries of a faltering economic recovery. For the month, the DJIA, FTSE and HIS are down close to 4% each. There was a strong correlation between the movement in commodities prices and equity markets. Investor seemed concerned whether the decline in commodities is a
53

signal towards weak U.S economic growth, or simply the rotation of money from one asset class to other. Even the consumer outlook as guided by the US retailers has been weak, suggesting that the economic rebound may still be soft.

Adverse report on the euro debt crisis continued to put pressure on markets. Earlier in the month there were reports that Greece was considering abandoning the euro. This was followed by a cut in credit rating of Greece by three notches, thus pushing the Greek bonds further into speculative junk territory.

In addition, standard & poors slashed ltalys out look to negative from stable. The downgrades, combined with a weaker-then-expected reading on manufacturing in Europe, renewed concerns about the eurozones debt crisis. Furthermore, Spains ruling socialist party was hit with its worst election defeat in years, as citizens continued to protest the weak economy and high unemployment. Consequently, the U.S. dollar rose against the euro, which added further downward pressure on commodities that are priced in the U.S. currency, such as oil.

INDIAN markets sold off on disappointing earnings and continued FII out flows

Domestic indices sold off during may 2011 and underperformed developed in domestic markets. The negative trend in domestic markets was led by some weak numbers from SBI coupled with continued selling by Feints. Inflation has continued to remain resilient. The election results in the five states were announced during the month with DMK and TMC emerging as victorious in the crucial states of TM and WB respectively. Immediately post the elections results, the government took some unpopular decisions like hike in petrol price. However, the hike did not go down well with the markets.

Among important earnings announcements, SBI came out with fourth quarter numbers that were way below street expectations. The largest
54

bank in India reported decline in net interest margins and also higher growth of gratuity and pension provisions. The damage to the stock has been significant down 17% for the month. BHEL numbers were in line with expectations but the company disclosed that accounting revisions had boosted profits. The company also announced a 5% divestment in government stake, which dampened stock sentiment. On the other hand, L&T surprised the market with its excellent order intake. The infrastructure major also succeeded in preserving its EBITDA margins despite material costs pressures.

55

56

IIP growth for March came in at enthuse the market;

a strong

7.3% but failed to

Industrial activity in March 2011 came in at 7.3%, higher than the expectations mainly driven by robust growth in capital goods and consumer durables. In terms of sect oral classification, manufacturing (7.9% yoy; highest in last 5 months) and electricity (7.2% yoy) segments helped in pulling out impressive numbers. The capital goods segment rose 12.9% in March 2011, after posting weakness in the previous 3 months, possibly reflecting some bunching up of investments.

Intermediate goods continued to show moderate growth; 3M moving average grew at 7.4% during March 11 as against double digit numbers witnessed till 5-6 months back. This segment is important as it typically tends to exhibit into 3-4 months of lead period over headline IIP number and maps the future growth of production cycle. We believe for next few months IIP numbers would continue to remain soft due to a combination of base effect and moderation in economic growth.

The cumulative growth for the period april-feb, 2010-11 stands at 7.8% vs. 10.4% in FY10. Micro economic factors such as high inflation, high crude oil prices as well as higher interest rate are impacting the investment climate. This is reflecting in sluggish Growth in fixed capital formation. in a scenario of strong consumption, inflation has remained high prompted RBI to increase interest rates. Further increase in interest rates from here on may slow down the consumption coupled with slow down in the capacity Creation. This would have an impounding impact on driving up inflation further, there by making the task of RBI difficult.

57

58

INFLATION REMAINS RESILIENT DESPITE RBIS MOVES RECENT PETROL PRICE HIKES TO PUT FUTHER PRESSURE.

WPI inflation for the month of April, 2011 remained at a elevated levels up 8.66% as compared to 9.0% seen in march, 2011. A continuing worry is the step upward revision to past inflation data with is the February WIP revised to 9.54% from the provisional estimate of 8.31%, an increase of 123 bps. The recent petrol price hike will add approximately 6to10 bps to the May and June inflation, respectively while further pressure could be created out of likely price increases in diesel and kerosene.

Food inflation continues to soften but non food primary articles is a concern. Manufacturing products inflation softened to 6.18% from 6.21% in march while non food Manufacturing inflation , which is closely followed to gauge demand side pressure eased to 6.3% from 7.4% in march. However, the momentum in non food Manufacturing. The strong increases in manufactured products index in the past four months is a causes of cancers as it indicates a continuing robust demand pull.

59

RBI continues monetary tightening hike rates by 50bps

RBI Monterey policy statement inflation scores over growth in the monetary policy announcement in May the RBI affected 50bps increase in repo and reverse repo rates. The move came on the back of sustained high inflation, which can create uncertainties in the economy and may impact investment and growth. RBI end over has been to protect the high growth in the long term at the cost of some moderation in the near term. Its forecast on GDP for FY12 at 7.4%-8.5% (v/s about 9% projected by the government) clearly reflects that.

RBI also hiked savings interest rate by 50bps from 3.5% to 4%. This is expected to have an impact of about 5% on an average on the profits of banks. However, we expect the banks to pass on the higher costs to the customer in due course of time. The apex bank also received the provisioning norms, which will impact banks to some extent. We understand that, most private sector banks and large PSU banks follow a more conservative policy on provisioning. To that extent, they may not be impacted by these higher provisioning requirements.

We expect RBI to raise interest rates further by 75 bps over FY 12E. The stock market reacted viciously to the increases savings account interest rate and reduction in GDP growth rates apart from the hike in repo rate. We believe that an 8% growth if achieved will make India one of the fastest growing economies. Move over, in the immediate term, the comfortable liquidity positions may not lea to sudden spikes in interest rates for corporate India. Thus, earnings growth in FY12E may not suffer significantly despite the higher interest costs, we believe.

60

TABLE NO.1
PORTFOLIO AS ON JULY 31, 2011

Name UTI Bank Ltd Sriram Co Ltd State Bank of Mysore State Bank of Mysore UCO Bank GE Capital Service India Reliance Capital Limited American Express Bank State Bank of Indore State Bank of Saurashtra IDBI Bank Ltd State Bank of Patiala Karnatak Bank Ltd Oil Corp Finance (India) Ltd ICICI Bank Limited Exim Bank Rabo India Finance Limited Yes Bank Ltd Transport Finance

Rating A1+ P1+

% of port folio 7.24 6.10

P1+ A1+ P1+ A1+ A1+ A1+ P1+ P1+ A1+ P1+ A1+ P1+ A1+ P1+ P1+ A1+

0.06 6.01 6.00 5.99 5.99 5.99 4.82 4.80 4.76 2.38 2.10 2.04 1.22 0.43 0.34 0.25
61

CP and CD Total ICICI Bank Ltd Citi Bank NA Corporate Total Net Current Assets Call/Reverse Repo/CBLO Call/Reverse Repo/CELO Total IRFC National Housing Bank Ltd IDBI Bank LIC Housing Finance Ltd Exim Bank PSU Total Infrastructure Dev. Finance Co PSU Bonds/F-Fixed Total Rebo India Finance Limited Mahindra Finance Corporate Floting total Grand Total Debentures & Mahindra AAA P1+ AAA Bonds/FI-Floting AAA AAA AA+ AAA AAA None None Debentures AAA AAA(SO)

66.51 1.99 0.00 1.99 1.14 0.20 1.33

11.82 6.20 2.53 2.46 1.23 24.25 0.99

0.99 2.47 2.46 4.93

100.00
62

FUND PERFORMANCE OF GCF AS ON 31st, 2011

JULY

Performance comparison with Benchmark Index. Period Last one year Last two years Last years three GCF Returns 6.05% 5.59% 5.19% Benchmark Returns 6.10% 5.41% 4.97%

63

Since allotment (02-07-2001)

5.71%

--

INFRENCE:

In the above table shows returns comparison

between SCB schemes with Bench mark returns at various period of time. From last one year the GCF scheme returns was 6.05%,at this period the Benchmark returns was 6.10% which is low return than compared to SCB-GCB returns. From last two years the returns of GCF was 5.59%, which is more than Benchmark returns from last two years (5.41%). From the last three years the GCF returns was 5.19% which is more than returns of Benchmark returns in BSE(4.97%).since allotment the GCF returns was 5.71%.

64

SCB - GRINDLAYS CASH FUND

ASSET ALLOCATION :

fixed bonds floating bonds call reverse repo/ CBL CO & CD

3% 29% 1% 67%

GRINDLAYS SUPER SAVER INCOME FUND Nature of scheme : An open ended income fund
65

Scheme objective

: GGSF is an open ended income scheme; seeking to generate stable returns with low risk strategy by investing in good quality fixed income securities securities . and money market

Investment pattern

Rs 500 and in multiples of Re 1/- in

plan A. Rs 25 Lakhs and in multiples of Re.1 in Plan B (institutional Plan). Rs. 5 Crores and in multiples Re.1 in Plan C (Super Plan) Date of launch Fund size : 14-12-2000 : 66.55 crores institutional Plan). Rs.500/and in multiples of Re.1/- Plan D (MF

NAV per unit as on January 31st, 2010 Growth option Income option Load structure Entry load Exit load : Nil : Nil : 14.6699 : 10.8668

66

PORTFOLIO AS ON JULY 31st, 2011: Name Housing Finance Co. Allahabad Bank Karnatak Bank Ltd State Bank of Patiala ICICI Bank Ltd ICICI Bank Ltd State Bank of Hyderabad CP and CD total Mahidra Finance Corporate Total NTPC PSU Bonds/FI-fixed total Net Current Assets Call /Reveres repo/CBLO Grand Total AAA(SO) 19.68 19.68 1.07 0.01 100.00 Debentures 15.01 and Mahidra AA+ PR1+ A1+ P1+ P1+ A1+ P1+ 10.65 7.35 13.10 3.73 1.49 7.32 64.23 15.01 Development Ratings A1+ % of portfolio 20.60

FUND PERFORMANCE OF GSSIF AS ON JULY 31st, 2011

67

Performance comparison with Benchmark Index. Period Last one year Last two years Last years Since allotment (014-12-2000) 6.45% -three GSSIF Returns 6.19% 5.70% 4.98% Benchmark Returns 5.60% 5.03% 4.37%

68

INFRENCE:

In the above table shows returns comparison

between SCB schemes with Bench mark returns at various periods of time. From last one year the GSSIF scheme returns was 6.19%,at this period the Benchmark returns was 5.60% which is low return than compared to SCB-GSSIF returns From last two years the returns of GSSIF was 5.70%, which is more than Benchmark returns from last two years (5.03%). From the last three years the GSSIF returns was 4.98% which is more than returns of Benchmark returns in BSE (4.37%). since allotment the GSSIF returns was 6.45%.

69

GRINDLAYS FLOATING RATE FUND -Short term: SCB - GRINDLAYS SUPER SAVER SAVER FUND

ASSET ALLOCATION:

corporates - fixed call reverse / repo CD & CP

34.45 % 1.08 % 64.45 %

70

Nature of scheme Scheme objective

: An open ended income fund :GFRF-ST scheme seeking to generate stable returns with a low risk strategy by creating a portfolio that is substantially invested in good quality floating rate4 debt or money market instruments, fixed rate debt or money market instruments swapped for floating returns and fixed rate debt money market instruments. is an open-ended income

Ideal investment horizon : protects investments in rising interest rate environment. Investment pattern : Rs.500/-and in multiples of Rs.1/-in Dividend frequency :monthly daily/weekly with compulsory reinvestment. Date of launch : 18-02-2003 Fund size : Rs.266.96crores

71

NAV per unit as on JULY 31st , 2011 Growth option Load structure Entry load Exit load : Nil : Nil : 12.2687

TABLE NO. 3 PORTFOLIO AS ON JULY 31st, 2011: Name State Bank of Indore Exim Bank ICICI Bank Ltd Federal Bank Ltd ABN AMRO Bank NA State Bank of Sahrashtra CP & CD Total Citi Bank NA Tata Tea Ltd Corporate Total
72

Rating P1+ P1+ A1+ P1+ P1+ P1+

% of portfolio 5.73 0.36 10.60 7.12 7.11 1.83 32.75

AAA(SO) A1+(SO) Debentures

0.00 0.38 18.73

LIC Housing Finance Ltd National Housing Bank IRFC Union Bank of India PSU Bonds /FI-Floting Total Call/Reverse Repo/CBLO Net Current Assets Grand Total

AAA AAA AAA AA+

7.50 3.77 32.22 1.87 45.36

None None

0.20 2.57 100.00

FUND PERFORMANCE OF GFRF ON JULY 31st, 2011

Performance comparison with Benchmark Index.

Period

GFRF Returns

Benchmark Returns
73

Last one year Last two years Since allotment (18-02-2003)

6.19% 5.71% 5.31%

6.89% 6.18% 5.56%

INFRENCE:

In the above table shows returns comparison

between SCB GFRF schemes with Bench mark returns at various periods of time. From last one year the GFRF scheme returns was 6.19%,at this period the Benchmark returns was 6.89% which is high return than compared to SCB-GFRF returns. From last two years the returns of GFRF was 5.71%, which is just less than Benchmark returns from last two years (6.18%). since allotment the GSSIF returns was 5.31% which is just less than returns of Benchmark returns in BSE (5.56%).

74

ASSET ALLOCATION:

floating bonds call/reverse repo/cblo CO & CD

64% 3% 33%

75

GRINDLAYS DYNAMIC BOND FUND:

Nature of scheme

: An open ended income fund GDBF is an open ended income scheme

Scheme objective : seeking to generate

optimal returns with high liquidity by active management of the portfolio; by investing in high quality money market & debt instructions.

Investment pattern Date of Inception Fund size

: Rs.500/- and in multiples of Rs.1/: 25-06-2002 : 14.69Crores

NAV per unit as on January 31st, 2010 Growth option Dividend option Load structure Entry load Exit load : Nil : 0.5% in plan A on redemptions with in six Months up to Rs.5lakhs. : 13.4700 : 10.7281

76

TABLE NO. 4 PORTFOLIO AS ON JULY 31st, 2011 Name 7.94% G.S. M-24-05-2021 GOI 7.59% M-12-04-2016 G.Secs Total American Express Bank Exim Bank Housing Development Finance co. ICICI Bank Ltd State Bank Oil Mysore CP & CD Total Net Current Assets Call/Reverse Repo / CBLO GGSF PF Investment in MF Units Total Grand Total None None None P1+ P1+ A1+ P1+ P1+ Ratings Sovr Sovr % of portfolio 6.82 13.50 20.31 6.75 5.27 10.00 33.12 12.01 73.10 -7.22 6.25 7.56 7.56 100.00

FUND PERFORMANCE OF GDBF AS ON JULY 31st , 2011

Performance comparison with Benchmark Index.

77

Period Last one year Last two years Last years Since allotment (25-06-2002) three

GDBF Returns 6.44% 5.88% 4.10% 6.68%

Benchmark Returns 4.03% 4.29% 2.90% 5.58%

INFRENCE:

In the above table shows returns comparison

between SCB GDBF schemes with Bench mark returns at various periods of time. From last one year the GDBF scheme returns was 6.44%,at this period the Benchmark returns was 4.03% which is low return than compared to SCB-GDBF returns. From last two years the returns of GDBF was 5.88%, which is more than Benchmark returns from last two years (4.29%). From the last three years the GDBF returns was 4.10% which is more than returns of Benchmark returns in BSE (2.90%). since allotment the GDBF returns was 6.68% which is more than returns of Benchmark in BSE(5.58%).

GRINDLAYS GOVERNMENT SECURITIES FUND Nature of the scheme : An open ended dedicated
78

gilt fund Scheme objective returns with returnsWith high liquidity by investing in Government securities Investment pattern Rs.1/Date of launch Fund size :9th march 2002 : 5.90 crores : Rs.500/- and in multiples of : To generate optimal

NAV per unit as on JULY 31st, 2011 Growth option Dividend option Load structure Entry load Exit load redemption with in 6 months up to Rs.10 lakhs : Nil : 0.5% in plan an on : Rs, 13.7922 : Rs, 10.7782

79

TABLE NO. 5 PORTFOLIO AS ON JULY 31st 2011 Name GOI 7.59% M-12-04-2016 7.94 G.S.M-24-05-2021 Rating Sovr Sovr % of portfolio 25.20 16.96

Govt secs Total

42.16

GGSF - PF

None

18.77

GGSF - 51

None

3.66

PORT FOLIO units Total Call/Reverse Repo Net current assets Grand total

22.46 51.51 -16.10 100.00

FUND PERFORMANCE AS ON JULY31st , 2011:

80

Performance comparison with Bench mark index Period Last 1 year Last 2 year Last 3 year Since Allotment GGSF-IP Returns 7.26% 6.22% 3.66% 6.78% Benchmarks Returns 5.31% 5.68% 3.68%

(09-03-2002)

INFRENCE: In the above table shows returns comparison between SCB schemes with Bench mark returns at various period of time. From last one year the GGSF scheme returns was 7.26%, at this period the Bench mark returns was 5.31% which is more than return than compared to SCB-GGSF was 6.22% which is less than Benchmark returns from last two years (5.68%). From the last three years the GGSF returns was 3.66% which is less than returns of Benchmark returns in BSE (3.68%). Since allotment the GGSF returns was 6.78%.

FINDINGS
Kotak Securities Limited established in the year 1995 is a stock

broking company operating in Andhra Pradesh, Orissa, Karnataka and TamilNadu.

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 In KSL, trading in NSE, BSE, NCDEX, MCX and MCX-SX is done on

different terminals. Trading in NSE is done through National Exchange for Automated Trading (NEAT) system.
In this month market rise up from 18thMay and to 7th June, it is falling

from 8th june and get, back to the positive trends in the market. The reason for the Nifty rise is due to positive results of elections.The particular day is called as GOLDEN MONDAY

As soon as the trade ends, back office system is done in KSL to

know the trade positions.

From 2001 to till now derivatives has grown tremendously. Indian markets are literally on the top of the world,going their
returns so far in 2009.

In the month of june,the share price of wipro was drastically fall

down because of due to the impact of global market.

At the end of may contract the Chambal fertilizers, open interest

was fall down,but the price is swings due to heavy profit booking.

SUGGESTIONS

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 In order to increase its customer base KSL. Has to educate the

existing and new investors through awareness programs, which can be conducted periodically.
For an effective trading process KSLshould provide more and

perfect sources of information for the investors or traders.

There is a need to create awareness in the female investors in

order to make the capable of entering into the securities market.

KSL can increase its business by reaching more potential investors

by appointing sales persons and proper advertisements and setting up new branches in potential areas.
It would be more advantageous for KSL if it can explore global stock

markets like NASDAQ by introduction of a terminal.

To overcome the competition from other companies KSL must

offer

better

service

for

the

investors

and

provide

good

infrastructure for the investors.In addition to that they need to issue identity cards for better recognition.
A Griveance cell must be opened and meeting must be

conducted for every 15 days.so that investors can put forward their problems and it can get resolved.

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SUMMARY The focus of the study was on Derivatives in Kotak Securities Limited, Visakhapatnam with an objective to study and understand the real process of stock trading. The on-line trading in NSE is done through National Exchange for Automated Trading (NEAT) system. Trading is done in the 2 types of markets of the NEAT system namely capital market and derivatives market. KSL, which was set up in November 1995, is a stock broking company. It is a trading member of NSE, BSE, MCX and NCDEX. Screen based trading system electronically matches the buyer and seller in an order-driven system or finds the customer the best price available in quote driven system. Today, in India almost 100% trading takes place through electronic order matching. In online trading Back Office provide the clients with all the trading related services in the post market session.

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CONCLUSION

This study is about what is an derivative market, different financial instruments that will be available for trading, its derivative terminology, what is a equity market, the instruments available for trading , the monitoring and controlling authority of equity and derivative markets. It includes the online mode of trading with stock exchanges like NSE & BSE, analysis of various service providers for online trading and the differentiating factors or different products and services offered, comparative to Kotak securities limited.

Superiority of Kotak securities limited over its competitors particularly with special reference to scsl.com Visakhapatnam Branch was analysed.

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BIBLIOGRAPHY

I. BOOKS SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT - FISCHER JORDAN II. INVESTMENT MANAGEMENT - V.K.BHALLA

III. REPORTS
1.

KOTAK SECURITIES LTD

- Annual Report

IV. JOURNALS & MAGAZINES

1. Business line 2. Hindu 3. India today

V. WEB-SITES
1. 2. 3.

www.nseindia.com www.bseindia.com www.moneycontrol.com

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4. 5. 6.

www.scsl.com www.sebi.gov.in www.pmsindia.com

ABBREVATIONS

ALBM BSE CDSL CMs CM-BP-ID number DI DP DRF FIIs ISIN IPO LAN NBFCs NCFM

Automated Lending & Borrowing Mechanism Bombay Stock Exchange Central Depositary Services Limited Clearing Members Clearing Member Business Partner Identification

Delivery Instructions Slip Depository Participant Dematerialisation Request Form Foreign Institutional Investors International Securities Identification Number Initial Public Offer Local Area Network Non - Banking Finance Companies National Certification in Financial Market

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NEAT NSCCL NSDL NSE RAS SKL SEBI SEBI Act SHCIL TWS VSAT WAN

National Exchange for Automated Trading National Securities Clearing Corporation Limited National Securities Depository Limited National Stock Exchange Remote Access Service kotak Securities Limited Securities and Exchange Board of India Securities and Exchange Board of India Act Stock Holding Corporation of India Limited Trading Work Station Very Small Aperture Terminal Wide Area Network

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