COMPARATIVE STUDY OF INDIA INFOLINE WITH OTHER BROKING FIRMS

REPORT SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT FOR POST GRADUATE PROGRAM IN MANAGEMENT

BY

BAIJAYANTA MAJUMDAR

SARVASIS SAHA BRANCH MANAGER in DECRES LANE at INDIA INFOLINE

INTERNATIONAL BUSINESS SCHOOL KOLKATA

NOTICE The presentation of this project is truely based on my knowledge and it may have some defaults and errors which is to the subject knowledge. this project can be taken for the purpose of understanding only and should not be taken as the real. Charges and other services provided in it may vary slightly or wholly.

Acknowledgement:
I would like to express our gratitude to all those who have gave us the possibility to complete this project. I am very much thankful to our Director of EIILM Dr.R.P.Banerjee, who has given me this opportunity to be a part of a corporate house for Two months. He provided me to do our Summer Internship Programme in India Infoline. I want to thank to our Internal Faculty Guide Prof. Chandrajyoti Chakraborty for showing us the path to commence this project in the first instance, to do the necessary research work and to help for using departmental data. He looked closely at the final version of the project for correction and offered suggestions for improvement. Especially, I would like to give our special thanks to our External Faculty Guide Mr. Sarvasis Saha whose patient love enabled us to complete this work. He has shown me the real corporate world and gave me the suggestion that when you are selling something, sell yourself

Date: Place

Thank you

B.MAJUMDAR

DECLARATION

I B.MAJUMDAR here by declare that the project entitled comparative study of India infoline with other broking firms has been done solely by me only. The project report I am submitting is not a part of any publication or any project which has been published before. I had done this project as a part of my curriculum needed for the training purpose for the completion of post graduate program in management by the institute eastern institute for integrated learning in management.

B.MAJUMDAR

2008-2010

CONTENT 1) Introduction 2) Methodology 3) Company Profile 4) Products of the Company 5) De-Mat a/c, Re-Mat a/c and Trading a/c 6) Different Types of De-Mat A/c 7) Comparative analysis 8) Result 9) Recommendation and Conclusion 10) Bibliography 11) Appendix

INTRODUCTION

Every modern economy is based on a sound financial system .A financial system is a set of institutional arrangements through which financial surpluses are mobilized from the units generating surplus income and transferring them to the others in need of them. The activities include production, distribution, exchange and holding of financial assets/instruments of different kinds by financial institutions, banks and other intermediaries of the market. The financial markets have two major components; they are money market and capital market. Financial Markets

Money Market

Capital Market

Securities Market

other forms of Lending And Borrowing Stock (Secondary)

New issue (Primary) Market

MONEY MARKET: The Money Market refers to the market where borrowers and lenders exchange short-term funds to solve their liquidity needs. CAPITAL MARKET: The Capital Market is a market for financial investments that are direct or indirect claims to capital (Gart, 1988).

SECURITIES MARKET: It refers to the markets for those financial instruments/claims/obligations that are commonly and readily transferable by sale. It has two inter-dependent and inseparable segments, the new issues (primary) market and the stock (secondary) market. SECONDARY MARKET: The secondary market enables those who hold securities to adjust their holdings in response to changes in their assessment of risk and return. PRIMARY MARKET: The Primary Markets provides the channel of sale of new securities.

OBJECTIVES OF THE PROJECT:

To know the awareness of people about Share market. To find out the COMPETITIVE POSITION of India infoline . To promote the sales of India Infoline.

METHODOLOGY OF STUDY:
The research was carried out through survey method, fieldwork in order to collect data. Data collected through questionnaire and verbal discussion. The analysis of the data was done through simple statistical technique, such as drawing of percentage for generalization. The use of different types of graphs gives a better pictorial understanding about the whole project. PLACE OF STUDY: The study was conducted in different Retail outlets in Kolkata, different people selecting through random sampling and India Infoline Securities Pvt. Ltd. SAMPLING PLAN: A sample design is definite plan for obtaining an overall analysis from a given population. It refers to the technique or the procedure, the researcher would adopt in selecting items to be included in the sample research should select design which would be reliable and appropriate for the study. SAMPLE SIZE: For the present study respondents have been selected from different places in Kolkata. The sample was taken as 100 respondents. SOURCES OF DATA: Data collection is an actively in marketing research. The design of the data collection method is the spine of research design. The sources of data are classified in to two types. The Primary Data. The Secondary Data.

PRIMARY DATA: The primary data are fresh data collected directly from the field and therefore consist of original information gathered for the specific purpose. It is expensive, laborious, and time consuming. But it assures a greater degree of accuracy and reliability as it comes straight from the horses month. The information is collected with the help of questionnaires a set of 15 questions

SECONDARY DATA: The secondary data are the data, which the investigator borrows from other who have collected it for various other purposes. Therefore it may not entirely be reliable. It is less expensive and involves less expensive and involves less time and labor than the collection of primary data. The Sources of collecting Data: I. II. III. IV. V. Reports and publication of Government department and international bodies. Newspaper, magazines, trade journals. Publication of books company records, brochures, catalogues and other documents. Data related by statistical organization. In this study the main sources of data collection is the primary data using the method of structured questionnaire.

Sampling Procedure: For a statistical survey of a population, the investigator may collect information from each and every unit belonging to the population or he may

collect information from some selected representative units only. The group of representative units from which information is collected is called sample. A sample is a representative position of the population. A statistical survey in which a sample is made use of is known as sample survey. The procedure of extracting a sample from a population is called as sampling procedure. Since validity of results of a survey depends mainly on the selection of the sample, the sample should be obtained with utmost care. Important methods of sampling procedure are:

i. ii. iii.

Random sampling. Judgment sampling. Quota sampling.

Random Sampling: A sampling procedure in which units are selected in such a way that all the units in the population have equal change of being selected is random sampling.

Judgment Sampling: When the population is small the investigator personally, according to his judgment way select the units which from the sample, such a sample is called purposive or a judgment sampling. Quota Sampling: If the population has various categories of units the investigators may decide to fix specified quotas for representation for all major categories. In this study Random sampling method is used. FIELD WORK:

This study involves the field work of around 60 days, wherein the target segment i.e. consumers were contacted individually. Prepared questionnaire were administrated to them and answers were collected. Fieldwork was done in different areas in Kolkata. The study was conducted from India Infoline Securities Pvt. Ltd.The Study attempts to analyze and determine The position of India infoline in Securities Market.

Company Profile Of India Infoline

About India infoline India Infoline Group The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites http://www.indiainfoline.com/and http://www.5paisa.com/ The company has a network of 976 business locations (branches and sub-brokers) spread across 365 cities and towns. It has more than 800,000 customers.

India Infoline Ltd A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients. These services are offered to clients as different schemes, which are based on differing investment strategies made to reflect the varied risk-return preferences of clients.

India infoline ltd

India infoline comodities ltd

India infoline investment services ltd

IIFL(asia) pse ltd

India infoline media &research services ltd

India infoline marketing services ltd

Moneyline credit ltd

India infoline housing finance ltd

India infoline distribution co ltd

India infoline insurance services ltd

India infoline insurance brokers ltd

India Infoline Media and Research Services Limited. The content services represent a strong support that drives the broking, commodities, mutual fund and portfolio management services businesses. l.

It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the Web' and 'a must read for investors in Asia'. India Infoline's research is available not just over the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where India Infoline is amongst the most read Indian brokers. India Infoline Commodities Limited. India Infoline Commodities Pvt Limited is engaged in the business of commodities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DGCX. We have a multi-channel delivery model, making it among the select few to offer online as well as offline trading facilities. India Infoline Marketing & Services India Infoline Marketing and Services Limited is the holding company of India Infoline Insurance Services Limited and India Infoline Insurance Brokers Limited. (a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Limited. India Infoline was the first corporate agent to get licensed by IRDA in early 2001. (b) India Infoline Insurance Brokers Limited India Infoline Insurance Brokers Limited is a newly formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for the insurance broking license and the clearance for the same is awaited. India Infoline Investment Services Limited Consolidated shareholdings of all the subsidiary companies engaged in loans and financing activities under one subsidiary. Recently, Orient Global, a Singaporebased investment institution invested USD 76.7 million for a 22.5% stake in India Infoline Investment Services. India Infoline Investment Services Private Limited consists of the following step-down subsidiaries. (a) India Infoline Distribution Company Limited (distribution of retail loan products) (b) Money line Credit Limited (consumer finance) (c) India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Pte Limited IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in Singapore to pursue financial sector activities in other Asian markets. Further to obtaining the necessary regulatory approvals, the company has been initially capitalized at 1 million Singapore dollars. India Infoline.com Distribution Services Ltd. They have developed a retail distribution infrastructure (Investor Points) to support our online presence. This network, spread over 60 locations, is engaged in the distribution of financial products including fixed deposits, GoI Relief bonds, insurance, mutual funds and IPO's. These Investor Points help us service our broking customers also. Money Tree Consultancy Services (MTCS) Is a group company of India Infoline Ltd., focusing distribution on Home Loans, Personal Loans, Credit Cards and Non Life Insurance. MTCS extends the distribution reach of financial services providers by using alternate channels like the Internet, telephone, wireless, sales force and events.

CORPORATE PHILOSOPHY: PEOPLE ORGANIZATION It is rightly said about the services sector that our most prized assets go down the elevator at the end of every day. Being in the services industry, people are their biggest and most important assets. They believe that people make all the difference. OWNER MINDSET What distinguishes India Infoline from other organizations is the fact that all employees are driven by Owner Mindset. This is a privilege as well as a responsibility. They think and behave like one. While there is no the way of doing things, there are millions of things which an owner would do differently as compared to a typical person with an employee mindset. We believe in the Olympic motto and have made it our principle for the coming year. We have been preparing to move into a new orbit of growth for several years now. We believe that the real growth has yet not happened. Each member of Team India Infoline has been putting up an Olympian fight and is capable, confident, and certain and ready to deliver faster, higher and stronger performance.

Vision Our vision is to be the most respected company in the financial services space.

Mission To become a full-fledged financial services company known for its quality of advice, personalized services and cutting edge technology

PRODUCTS
EQUITY

MUTUAL FUND

COMMODITIES

PMS

DERIVATIVES

Demat account Definition: De-mat account is a safe and convenient means of holding securities just like a bank account is for funds. Today, practically 99.9% settlement (of shares) takes place on De-mat mode only. Thus, it is advisable to have a Beneficiary Owner (BO) account to trade at the exchanges. Benefits Of De-mat Account:
1. A safe and convenient way of holding securities (equity and debt

instruments both). 2. Transactions involving physical securities are costlier than those involving dematerialized securities (just like the transactions through a bank teller are costlier than ATM transactions). Therefore, charges applicable to an investor are lesser for each transaction. 3. Securities can be transferred at an instruction immediately. 4. Increased liquidity, as securities can be sold at any time during the trading hours (between 9:55 AM to 3:30 PM on all working days), and payment can be received in a very short period of time. 5. No stamp duty charges. 6. Risks like forgery, thefts, bad delivery, delays in transfer etc, associated with physical certificates, are eliminated. 7. Pledging of securities in a short period of time. 8. Reduced paper work and transaction cost. 9. Odd-lot shares can also be traded (can be even 1 share). 10. Nomination facility available. 11. Any change in address or bank account details can be electronically intimated to all companies in which investor holds any securities, without having to inform each of them separately. 12. Securities are transferred by the DP itself, so no need to correspond with the companies. 13. Shares arising out of bonus, split, consolidation, merger etc. are automatically credited into the De-mat account of the investor. 14. Shares allotted in public issues are directly credited into De-mat account of the applicants in quick time.

Opening a De-mat Account To start dealing in securities in electronic form, one needs to open a De-mat account with a DP of his choice. An investor already having shares in physical form should ensure that he gets the account opened in the same set of names as appearing on the share certificate; otherwise a new account can be opened in any desired pattern by the investor. Note:

The agreement required to be signed by the investor details the rights and duties of the investor and DP. DP may revise the charges by giving a 30 days prior notice. SEBI has rationalized the cost structure for inaction by removing account opening charges, transaction charges for credit of securities and custody charges, effective from January 28, 2005.

Maximum Number of holders in a De-mat Account A maximum of three persons are allowed to open a joint De-mat account in their names.

DEMATERIALISATION Definition: Dematerialization is the process of converting physical shares (share certificates) into an electronic form. Shares once converted into dematerialized form are held in a De-mat account. Dematerialization Process: An investor having securities in physical form must get them dematerialized, if he intends to sell them. This requires the investor to fill a De-mat Request Form (DRF) which is available with every DP and submit the same along with the physical certificates. Every security has an ISIN (International Securities Identification Number). If there is more than one security than the equal number of DRFs has to be filled in. The whole process goes on in the following manner :--

Dematerialization Process
Investor surrrenders the physical certificates to the DP for dematerialization

DP informs the Depository about the request

DP submits the certificates to the registrar of the of the issuer Company

Registrar communicates with the Depository to comfirm the request

Dematirialisation of the certificates is done by the register

Account are updated by the Register and the Depository informed about the completion of Dematerialization Accounts are updated by the Depository and Dp is informed about the same

Demat account of the invester is updated by DP

THINGS INVESTORS SHOULD KNOW ABOUT ACCOUNT OPENING AND DEMATERIALISATION Providing the bank account details at the time of account opening It is mandatory for an investor to provide his bank account details at the time of opening a De-mat account. This is done to safeguard investor's own interests. There are two major reasons for this: 1. The interest and dividend warrants can't be en-cashed by any unauthorized person, as the bank account number is mentioned on it. 2. It is convenient and time saving, as dividends and interests given by the companies can be directly credited to the investor's bank account (through ECS facility, wherever available). Change in bank account details It is possible for an investor to make changes to the details of his bank account. The investor must inform any change in his bank account details to his DP. This enables him to receive the cash corporate benefits (such as dividends, interests) directly into his account in time and discourages any unauthorized use by any second party. Change in the address of investor as provided to the DP Any change in your address should be immediately informed to DP. This enables DP to make necessary changes in the records and informing the concerned companies about the same. Opening multiple accounts An investor is allowed to open more than one account with existing DP or with different DPs. Minimum balance of securities required in De-mat account There is no stipulated minimum balance of securities to be kept in a De-mat account. Account opening and ownership pattern of securities One must make sure to open a De-mat account in the same ownership pattern in which the physical securities are held. For example: If you have two share certificates, one in your individual name (say 'X') and the other held jointly with

some other individual (say 'XY'), then in such a case you will have to open two different accounts in respective ownership patterns (one in your name i.e. 'X' and the other account in the name of 'XY'). Same combination of names on certificates but different sequence of names on the certificates or De-mat account Regulations provide that the client receives a contract note indicating details like order number, trade number, time, price, brokerage, etc. within 24 hour of the trade. In case of any doubts about the details of the contract note, you (investor) can avail the facility provided by NSE, wherein you can verify the trades on your website www.nseindia.com/content/equities/eq_trdverify.htm. The Exchange generates and maintains an audit trail of orders/trades for a number of years, and you can counter check details of order/trade with the Exchange. Holding a joint account on "Either or Survivor" basis like a bank account No investor can open a De-mat account on "E or S" basis like a bank account. Allowing somebody else to operate your De-mat account It is possible for an account holder (Beneficiary Owner) to authorize some other person to operate the De-mat account on his behalf by executing a power of attorney. After submitting the power of attorney to the DP, that person can operate the account on behalf of the beneficiary owner (BO).. Addition/deletion of the names of the account holders after opening the account It is not possible to make changes in the names of the account holders of a BO account. A new account has to be opened in a desired holding/ownership pattern. Closing a demat account and transfer of securities to another account with same or different DP An investor, if he wants, can also close his demat account with one DP and transfer all the securities to another account with existing or a different DP. As per a SEBI circular issued on November 09, 2005, there are no charges for account closure or transfer of securities by an investor from one DP to another Freezing/Locking a demat account The account holder can freeze his demat account for a desired time period. A

frozen account prevents securities to be transferred out of (Debit) and transferred into (Credit) the account. Dematerialized shares do not have any distinctive number Dematerialised securities are fungible assets. Therefore they are interchangeable and identical.

Rematerialization
The process of getting the securities in an electronic form, converted back into the physical form is known as Dematerialization. An investor can rematerialize his shares by filling in a Remat Request Form (RRF). The whole process goes on as follows: --Rematerialization Process

Investor makes a request for rematerialization to the DP

DP informs the Depository about the request

Depository confirms the request to the registrar of the issuer Company

Registrar updates accounts and prints certificates for theinvestor

Accounts are updated by the Depository and details are provided to the DP

Investor receives the certificates from the register

Note:

Depository - An organization that facilitates holding of securities in the electronic form and enables DPs to provide services to investors relating to transaction in securities. There are two depositories in India, namely NSDL and CDSL. As per a SEBI guideline, the minimum net worth stipulated for a depository is Rs.100 crore. NSDL/CDSL - The securities are held in depository accounts, like the funds are held in bank accounts. There are two depositories in India namely NSDL and CDSL. NSDL (National Securities Depository limited) was established in August 1996 and is the first depository in India. CDSL (Central Depository Securities Limited) is the other depository and was established in 1999. DP (Depository Participant) - A Depository Participant can be a financial organization like banks, brokers, financial institutions, custodians, etc., acting as an agent of the Depository to make its services available to the investors. There are a total of 1334 DPs registered with SEBI, as on March 31, 2009 and each DP is assigned a unique identification number known as DP-ID.

Trading account:
It is that type of account with the help of which a De-Mat account holder can buy or sell shares. India Infoline Ltd. Provide their customer software Trade Terminal for trading by free of cost and unlimited number of scripts.

Formalities required for opening of De-Mat and Trading a/c in India Infoline Ltd. For Individual PAN Card(compulsory for all joint holders) Address proof of all joint holders Specimen copy of cheque For NRI Foreign and Indian Address proof PAN Card(compulsory) Bank a/c indicating type of a/c as NRE/NRO Specimen copy of cheque For HUF Address proof and identity proof of karta PAN Card of HUF(compulsory) Specimen copy of cheque Declaration giving details of the family members of the HUF with their names, date of birth & relationship with the karta. For Minor Minor PAN Card Birth certificate of minor Address and identity proof of guardian Specimen copy of cheque

India Infoline offer three types of De-Mat a/c and Trading a/c these are as follows:Individual Account Account opening charge 555/Margin Money- 2555/- (minimum) Exposure 3 times for intraday & 5 times for delivery. Software installation charge- NIL Annual Maintenance Charge- NIL Brokerage- Intraday-.05% & Delivery-.50% Joint Holders Account Account opening charge-555/Margin money- 2555/-(minimum) Exposure- 3 times for intraday & 5 times for delivery Software installation charge- NIL Annual Maintenance Charge- NIL Brokerage- Intraday-.05% & Dilivery-.50%

NRI ACCOUNT

IndiaInfoline outlet offers the following services: Online BSE and NSE executions. Free access to invest advice from IndiaInfolines Research team. Daily Research Reports and Market Review (Market Mantra). Pre Market Report (Market Mantra by inserting proper dates). Daily trading calls based on Technical Analysis. Personalized Advice Live Market Information. Depository Services: De-mat and Re-mat Transactions. Derivatives Trading. Commodities Trading. IPOS & Mutual Funds Distribution. Internet- based Online Trading(TT-Manager).

COMPARITIVE STUDY BETWEEN DIFFERENT BROKERAGE FIRMS:

A/C opening charge- 0/Name of the software used- Trader Terminal. Software installation charge- Nil. No. of scripts provided by the software- Unlimited. Maintainance charge- Nil. Exposure- 8 times (intra day) 3 times (delivery). Name of the bank with the help of which customer get the facility of net banking- HDFC Bank, Axis Bank, ICICI Bank. Services provided- Equity,IPO,MF,PMS,Commodities,Insurance,Wealth Management Services, Mortgages. DP sells charge- 15 per instruction + service tax. Brokerage- 0.05% intraday 0.50% deliveries. Transaction Report- SMS, mail, daily courier, Prepaid Scheme- Not available. Types of trading accounts provided- De-Mat a/c, Trading a/c , Margin a/c. Network- 1341 branches and 800000 customers. Margin money-Minimum 2555/Secrecy- Telephone logger with recorder.

A/C opening charge-500/Name of the software used- Not available one can access through net. Maintenance charge- Rs.450/- from 2nd year. Exposure- 5 times for margin and 25 times for margin plus. Name of the bank with the help of which customer get the facility of net bankingICICI(providing zero balance in saving account) Services provided- Equity,IPO,Commodities,Insurance,Mutual Funds, GOI bonds,Derivatives, Postal Savings. Brokerage- Intra day-0.10%-0.15% Delivery- 0 .4%-0.85% Transaction Report- Through Courier(free of cost) Prepaid Scheme- Not available. Types of trading accounts provided- De-Mat a/c, Trading a/c , Saving a/c. Network- 2124 branches across the countries and 19 foreign branches. Margin money- Rs.975/Secrecy- Password provided to the customers and it can be changed by the customer only.

A/C opening charge- 900/Name of the software used- PIB(Power India Bulls) Software installation charge- 750/No. of scripts provided by the software- unlimited Maintenance charge- nil Exposure- 20 times intraday and 8 times delivery. Name of the bank with the help of which customer get the facility of net bankingHDFC,IDBI,ICICI and Axis Bank. Services provided- Equity, Housing Loan, Personel Loan, Insurance. DP sell charge- 10/Brokerage- Intraday-.03% & Delivery-.50% Transaction Report- Through mail & courier(Free of cost) Prepaid Scheme- not available. Types of trading accounts provided- Cash a/c , Intra a/c, Margin a/c. Network- 718 branches and 4500000 customers across the country. Margin money- NIL Secrecy- use logger phone so that the broker cannot go beyond their word.

A/C opening charge-750/Name of the software used- Keat Software installation charge- NIL Maintainance charge- Rs.360/Exposure- 4 times of intraday. Name of the bank with the help of which customer get the facility of net banking- HDFC, AXIS Bank, ICICI Bank, SBI,City Bank,KOTAK. Services provided- Equity,IPO,MF. DP sell charge- 23/Brokerage- intraday- .03%-.06% & Delivery-.59%-.98% Transaction Report- Through mail (free of cost) Prepaid Scheme- not available. Types of trading accounts provide- De-Mat a/c ,Trading a/c, Margin a/c. Network- 890 branches and 63500 customers across the country. Margin moneySecrecy- Log in password changes after 14 days.

A/C opening charge- 415/Name of the software used- Java Software installation charge- 500/Maintenance charge- 300/Exposure- 4 times( For Intraday) Name of the bank with the help of which customer get the facility of net banking- HDFC, ICICI , AXIS Bank, City Bank, Standard Chartered Bank. Services provided- Equities,Derivatives,ebroking,PMS,IPO,Commodities,Depository Services. DP sell charge- included in the a/c opening. Brokerage- intraday-0 .03% & Delivery-0.30% Transaction Report- Through Courier(Free of Cost) Prepaid Scheme- not available. Types of trading accounts provided- De-Mat a/c, Trading a/c ,Bank a/c. Network- 5,30,234 customers in over 377 cities and 1200 business locations Margin money- it is not restricted. Secrecy- 128-bit SSL technology to ensure the highest security on online transactions.

A/C opening charge- 750/Name of the software used- Java Software installation charge-NIL Maintainance charge-Rs.50/-p.a Exposure- 5 times(For Intraday) Name of the bank with the help of which customer get the facility of net banking- ICICI bank, AXIS bank, HDFC bank, IDBI. Services provided- Equity Trading,Derivatives,Forex,Commodity,IPO,MF & Insurance. DP sell charge- 12/Brokerage- intraday-0.05%-0.07%& Delivery-0.25%-0.40% Transaction Report- By mail(Free of Cost) Prepaid Scheme- not available. Types of trading accounts providedDe-Mat a/c ,Trading a/c ,Commodity a/c. Network- 10000 outlet in5000 different cities and 22 lakh customers. Margin money- it is not restricted. Secrecy- Extra Security Features with Security Token which is the most secure and tested technology in the computer world. Customers account is safeguarded with a unique security number that changes every 32 seconds.

A/C opening charge- 450/Name of the software used- Odin Software installation charge- 900/Maintenance charge- 250/- from 3rd year. Exposure- 20 times for intraday. Name of the bank with the help of which customer get the facility of net banking- AXIS bank ,ICICI bank, HDFC bank. Services provided- Equity, Commodities,Insurance,Wealth Management Services,Insurance,Investment Banking. DP sell charge- 8/Brokerage- intraday-.03% & Delivery-.3% Transaction Report- Through mail(Free of Cost) Prepaid Scheme- Not available. Types of trading accounts provided- De-Mat a/c, Trading a/c, Margin a/c. Network- 1837 locations more than 498 cities. Margin money-50000/- for R-ALLY & R-ALLY Lite. 10000/-for R-ALLY Pro. Secrecy- Password provided to the customer has to change every after 15 days.

A/C opening charge- 750/Name of the software used- Java ssn. Software installation charge- nil Maintenance charge- unlimited Exposure- 4 times for intraday and delivery both. Name of the bank with the help of which customer get the facility of net banking- AXIS bank, HDFC bank, UBI, IDBI,City Bank. Services provided- Equity,IPO,MF,Derivatives,Commodities. DP sell charge- NIL Brokerage- intraday-0.05%-.07% & Delivery-.25%-.40% Transaction Report- Through mail(Free of Cost) Prepaid Scheme- yes Types of trading accounts provided- Classic a/c (for sudden user) Spend Trade a/c(for frequent user) Network- 510 centers across 170 cities 2,18,000 customers. Margin money- Rs.5000/Secrecy- Security Socket Layer(SSL),a security that the information transmitted between customer and agent , given by Versign , universally accepted world wide web.The security encripton level in Sharekhan is 128 bit.

A/C opening charge- 650/Software installation charge- NIL Maintenances charge- NIL Exposure- 5 times for intraday and 7 times for delivery. Name of the bank with the help of which customer get the facility of net banking- HDFC Bank, SBI, ICICI Bank. Services provided- Equity,MF,Commodities,Derivatives,IPO,PMS. DP sells charge- 5/Brokerage- Intraday-.03% , Delivery-.30% Transaction Report- Through mail and courier (Free of Cost) Prepaid Scheme- not available. Types of trading accounts provided- De-Mat a/c, Trading a/c, Bank a/c. Network- 500 branches across 85 countries and 450000customers. Margin money- NIL/Secrecy- telephone with recorder.

A/C opening charge- 731/Name of the software used- Odin. Software installation charge- NIL Maintenances charge- 300/Exposure- 4 times, and if the person cant return money within 5 days then extra 15 days he will get and 16% charge will be taken for that. Name of the bank with the help of which customer get the facility of net banking- AXIS bank, ICICI bank, HDFC bank, SBI. Services provided- E broking, PMS, Investment advisory, Wealth Management Services, Commodity Trading. DP sells charge- 12/Brokerage- intraday-.03% & Delivery- .3% Transaction Report- Through courier(Free of Cost) Prepaid Scheme- Not available. Types of trading accounts provided- De-Mat a/c, Trading a/c , Margin a/c. Network- 120 branches across 120 cities and 31 regional offices. Margin money- 5000/Secrecy- Log in ID and Password change on a regular basis and telephone with recorder.

A/C opening charge- 799/Name of the software used- Sun Java. Software installation charge- NIL Maintenances charge- 500/- from 2nd year. Exposure- 5 times for intraday. Name of the bank with the help of which customer get the facility of net banking- HDFC ,SB I, ICICI, Axis Bank. Services provided- Equity,IPO,PMS,Derivatives,Mutual Funds. Brokerage- Delivery-.50% & Intraday-.05% Transaction Report- Through mail/courier(Free of cost) Prepaid Scheme- not available. Types of trading accounts provided- De-Mat a/c, Trading a/c, Margin a/c. Network- 480 branches in 230 cities. Margin money- 5000/Secrecy- password cannot be accessed through internet.HDFC Secuerities offer the highest level of security such as 128-bit encrypton and SSL(Secured Socket Layer) technology.

Comparative Analysis of charges and facilities provided by different companies

Company

Account Opening 0/750/500/415/299/731/650/900/750/750/799/-

Margin Money 2555/5000/975/Not Restricted 5000/5000/Nil Nil Not Restricted 5000/5000/-

Brokerage IntraDelivery(%) 0.05-0.50 0.06- 0.59 0.075- 0.05 0.03- 0.30 0.025-0.25 0.03- 0.30 0.03- 0.30 0.03- 0.30 0.05- 0.25 0.03- 0.30 0.05-0.50

AMC

Exposure (for intra) 8 times 4 times 5 times 4 times 20 times 4 times 20 times 20 times 5 times 4 times 5 times

branches

India infoline Kotak securities ICICI direct Motilal oswal Religare Angel broking Geojit India bulls Reliance money Share khan Hdfc

250/360/450/300/Nil 300/Nil Nil 50/500/500/from 2 nd yr

607 890 2124 430 1837 120 500 718 10000 250 NA

Graphical representation Of Survey Report

Customer awareness towards Share Market

150

Not Interested Interested

450

TOTAL 600 INTERESTED IN SHARE MARKET- 150 NOT INTERSTED IN SHARE MARKET -450

Customer holding demat a/c

50 Not Having Demat A/C Having Demat A/C

100

TOTAL- 150 NOT HAVING DEMAT ACCOUNT-50 HAVING DEMAT ACCOUNT- 100 Out of 150 people who were interested in share market 100 peoples already had demat a/c, and 50 doesnt have demat a/c.

Customers holding demat a/c in different broking firms

no of customers
35 30 30 25 20 15 10 10 5 0 8 no of customers 6 5 3 3 18 15

T0TAL CUSTOMERS 100

The graph indicates distribution of number of customers of different broking firms among hundred customers who are already having demat account.

Customer Segmentation

30% online offline 70%

TOTAL -100 ONLINE CUSTOMERS -30 OFFLINE CUSTOMERS -70

Among the 100 customers who are having demat account in various broking firms the pie chart shows that 30%of the customers are doing online trading, and 70% of the customers are offline trading in the share market.

Customer approach to a broking firm

60 50 40 30

56

19 20 10 0 RM Approach friends internet hand bills news paper 12 7 6

TOTAL-100 RELATIONSHIP MANAGER APPROACH-56 FRIENDS RECOMMANDATION -19 THROUGH INERNET ADVERTISEMENT- 12 VIA HAND BILLS- 7 READING ADVERTISEMENT IN NEWS PAPER- 6

Customer satisfaction

35 30 30 25 20 15 10 6 5 1 0 1 5 24

18 15 13 9 6 10 9 8 total customers satisfied dissatisfied 7 6 4 2 5 3 2 33 0 3 2 1 22 0

The graphical representation shows the number of customers who are satisfied or unsatisfied with the various broking firms operating in the market.

Customer dissatisfaction of India infoline in different services

Dissatisfaction of customers of India infoline in different services.

00

1 online

offline transaction customer care 3 secrecy sms

Total customers : 6 Online service: 1 Offline service : 3 Transaction : 1 Secrecy : 0 Customer care : 0 Sms : 1

Findings
Brokerage of India infoline is higher than Others broking firms like Religare,Motilal Oswal,Indiabulls,they are charging 0 .03% for Intraday and 0 .30% for Delivery where India Infoline is taking 0 .05% for Intraday and 0 .50% for Delivery. Margin money of India infoline is higher than other firm like Indiabulls,Geojit,Motilal Oswal,there is no restriction of margin moneye.But in India Infoline,the minimum margin money should be 5000/2555 rs.. Exposure is less than other firms. India Infoline offers eight times exposure on margin where as Religare and Indiabulls offer twenty times exposure on margin money. HDFC, ICICI direct provide their customers three types of account (de-mat a/c, trading a/c, bank a/c) but India infoline provide only De-mat a/c and Trading a/c. Religare takes Rs.299 for lifetime services, where as India infoline takes Rs.555. Relationship manager changes many times, it creates problem for the offline customers . Securities are not so much reliable. India Infoline has hidden charges, Customer are not much aware about that. Customer satisfaction of India infoline not so good. Most of the customers are trading offline. Most of the customers approach towards the broking firm is through the relationship manager. Most of the people are not much aware of share market and its benefit.

Recommendation
To increase awareness about Share Market and the name India Infoline itself, the company should organize campaign. The campaign can be weakly, monthly, yearly, it will give a good result to the company to capture market in the competitive position. The company should reduce the margin money. It can help to acquire more customers, if the firms bring plans for no boundation of margin money. The Company should increase their focus on the less margin money customers also .It can help to make more customers of low margin money which can increase the revenue of the firm. The Relationship managers focus only to the high margin money customer because from them they will get high brokerage that should not be happened from the less margin money customer. Transaction error should be avoided .Transaction should be done properly, taking in consideration that it is one of the most required quality of a firm. Wrong transaction or default transaction may lead the prestige of the company to be down. Brokerage rate should be reduced. Religare,Motilal Oswal,Indiabulls, are charging as 0 .03% for Intraday and 0 .30% for Delivery where as India Infoline is charging 0 .05% for Intraday and 0 .50% for Delivery.Though it is negotiable but for high margin money customer not for less margin money customer. The Company should increase Exposure. It is the good tool to capture the market.

Conclusion:
I am much thankful to india infoline for providing me the opportunity for doing training programme in the organization as management trainee. While doing my sip in the reputed broking firm India infoline I had got a chance for knowing and analyzing the share market. I was also able to know about the business environment and business ethics of the business world. I also came to know about what does a firm or an organization require or wants from a employee or a trainee. From the survey, I found that India infoline is in the top three position in the share market.

LIMITATIONS: the project survey is carried out only in Kolkata region the results are based only according to customers response which may vary. Sample size of survey to determine the position of the firm is only 100, hence the level of significance may vary. brokerage rate of the different firms are based on the information collected by me via visiting the broking firms and using website of the firms which may vary. The project survey for comparison was carried only on the basis of demat account.

reference
I had collected the datas from various recourses from Internet,Library,Company itself.The sources are given below..

1. www.traderji.com 2. reliance money obtain approval for acquiring stake in nmce www.reliancemoney.com 3. executive summary available at www.indiainfoline.com accessed 10 July 2009 4. annual audited consolidate results available at www.www.motilaloswal.com. 5. www.5paisa.com 6. www.indiabulls.com 7. www.icicidirect.com 8. www.sharekhan.com 9. www.tradersedgeindia.com 10. www.tradingpicks.com 11. www.masteroftrading.com 12. www.kotaksecurities.com 13. www.religareonline.com 14. www.angeltrade.com 15. www.google.com 16. www.scribd.com

annexure
QUESTONARIE FOR CUSTOMERS

1) You are customer of

2) For how many years are you investing in share trading? a)6 months or less than 1 year b)1 year c)greater than1 year

3) How you came to know about .? a)internet b)news paper c) friend d)rm approach e)others

4) Are you trading online or offline? a)online b)offline

5) Are you satisfied with the broking firm services? Service Online Offline Transaction Secrecy Customer care Sms Satisfied Unsatisfied

6) How would you categorize the firm? a)Excellent b)Good c)Ok d)Bad 7) Would you like to change or shift to other broking firm? a)yes b)no

8) Which broking firm you would like to shift? a)Share khan b)India bulls c)India infoline d)Il&fs e)Religare f)Motillal oswal g)Kotak securities h)Icici direct i)others

9) Do you have any suggestion for the broking firm? .

Name: Phone no: Date:

QUESTONARIE FOR BROKERAGE FIRM

1) What is the rate of your brokerage? Intra day delivery

Future

option

2) What is the margin for De-mat A/c? 3) Do you have lifetime facility? a) Yes b) no

4) The broking firm is registered with? SEBI IRDA NSE BSE 5) What are your products? Equity Mutual funds Demat Gold coins Derivatives Commodities Insurance Others

6) Which is the most popular product? . 7) Do you provide both online and offline facility? a)onine only b)offline only c)both 8) What is the name of the terminal or what kind of software is used for online trading? 9) The transaction report is provided to customer through ? a)sms b)courier c)email d)call 10) How many branches do you have in kolkata/India?

..
11)Does your brokerage firm have service? a)pre paid b)post paid 12)How does the secrecy of the customer is maintained? ..

Name: Designation: Phone no: Broking firm: Date:

PART-2
ANALYSIS OF RISK, RETURN AND PORTFOLIO IN LINE WITH CUSTOMER DEMAND

RESEARCH METHODOLY

 MEAN

VARIANCE

STANDARD DEVIATION

BETA

CORRELATION CO-EFFICIENT

CO VARIANCE

CO EFFICIENT OF DETERMINATION

Our project comprises of various steps to analyse the performance of some stocks & at the same time to judge the potentiality of theirs to be included in a portfolio.

We have made the analysis over a period of two year.

We have analysed a total stock of 7 Companies of different sectors. Those are:

SAMPLE SIZE :-

STEEL SECTOR

TATA STEEL

INFRASTRUCTURE SECTOR

DLF

STEEL SECTOR
SAIL

INFRASTRUCTURE SECTOR
GMR

BANKING SECTOR
SBI HDFC

RESOURCE SECTOR

RNRL

Then we have calculated Beta, Standard Deviation of stocks & market, Variance of stocks & market, Correlation Co-efficient, Co-efficient of Determination, Systematic & Unsystematic Risk.

For computing Annual Return we have used Holding Period Method.

The next step was to calculate the Alpha, an independent variable

The next step followed was to calculate the Expected Rate of Return under Capital Asset Pricing Model(CAPM) & under

Sharpes Model of Expected Return and compare it with the Actual Rate of Return to determine whether the stock is Undervalued or Overvalued.

We have segregated all the above mention steps into various part of this project.

UNDERSTANDING OF KEY TERMS

RETURN

RETURN is the primary motivating force that drives investment. It represents the reward for undertaking investment. Return can be realized (historical or ex post factor) return and estimated (prospective or future or ex ante) return.

The return of an investment consists of two components:

(a) Current Return and (b) Capital Return (Capital Gain/Loss).

RISK

The possibility of variation of the actual return from the expected return is termed RISK. It can be defined in terms of variability of returns.

There are two types of risk:

(a)

Systematic Risk and (b) Unsystematic Risk

MEAN

In statistics, MEAN has two related meanings:

the arithmetic mean (and is distinguished from the geometric mean or harmonic mean). the expected value of a random variable, which is also called the population mean. It is sometimes stated that the MEAN means average. This is incorrect if MEAN is taken in the specific sense of Arithmetic Mean as there are different types of averages: the mean, median and mode. For

instance, average house prices almost always use the median value for the average. These three types of averages are all measures of locations. Other simple statistical analyses use measures of spread, such as range, interquartile range or standard deviation. For a real valued random variable X, the mean is the expectation of X. Note that not every probability distribution has a defined mean (or variance); see the Cauchy distribution for an example.

The Arithmetic Mean is the standard average, often simply called the mean. X = 1/n * xi

The MEAN may often be confused with the median, mode or range. The MEAN is the arithmetic average of a set of values, or distribution; however, for skewed distributions, the mean is not necessarily the same as the middle value (median), or the most likely (mode). For example, mean income is skewed upwards by a small number of people with very large incomes, so that the majorities have an income lower than the mean. By contrast, the median income is the level at which half the population is below and half is above. The mode income is the most likely income, and favours the large number of people with lower incomes. The median or mode are often more intuitive measures of such data.

CAPITAL ASSET PRICING MODEL (CAPM)

A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities.

ra = rf + a ( rm rf )

Where: rf = Risk free rate a = Beta of the security rm = Expected market return

The general idea behind CAPM is that investors need to be compensated in two ways: time value of money and risk. The time value of money is represented by the risk-free (rf) rate in the formula and compensates the investors for placing money in any investment over a period of time. The other half of the formula represents risk and calculates the amount of compensation the investor needs for taking on additional risk. This is calculated by taking a risk measure (beta) that compares the returns of the asset to the market over a period of time and to the market premium.

SYSTEMATIC RISK

SYSTEMATIC RISK refers to that portion of total variability in return caused by factors affecting the prices of all securities. Economic, political and sociological changes are sources of systematic risk. Their effect is to cause prices of nearly all individual common stocks and/or all individual bonds to move together in the same manner. For example, if the economy is moving toward a recession and corporate profits shift downward, stock prices may decline across a broad front.

SYSTEMATIC RISK: 2 X2

Where = is the beta co-efficient of the security & x2 is the variance of the market.

UNSYSTEMATIC RISK

UNSYSTEMATIC RISK is the portion of total risk that is unique to a firm or industry. Factors such as management capability, consumer preferences and labour strikes cause systematic variability of returns in a firm. Unsystematic factors are largely independent of factors affecting securities markets in general. Because these factors affect one firm, they must be examined for each firm.

UNSYSTEMATIC RISK:

(Variance of Stock Systematic Risk)

STANDARD DEVIATION

It represents the variability forecast returns when such returns approximate a normal probability distribution. Standard deviation is generally regarded as one of the best measures of variability or dispersion. The greater the value of S.D. the greater would be the risk and vice versa.

STANDARD DEVIATION () of NIFTY (x) =

[(x- mean x)/n]

STANDARD DEVIATION () of STOCK (y) =

[(y- mean y)/n]

CORRELATION CO-EFFICIENT

CORRELATION indicates the strength & direction of the relationship between two variables during a period of time.

By the word RELATIONSHIP we mean the tendency of the variables to move together.

If the movement is in the positive direction i.e. the two variables move in the same direction, the correlation will be positive.

If the variables move in the opposite direction i.e. if one increases another decreases, then the correlation will be negative.

CORRELATION = xy/s.d of x s.d of y

Where x = NIFTY and y = STOCK

BETA CO-EFFICIENT

= BETA CO-EFFICIENT of the security, which measures the systematic or unavoidable risk.

The risk premium amount in the CAPM equation depends on the relative value of Beta Co-Efficient, other factors remain constant.

The higher the value of beta the greater the risky ness of a share & vice versa.

If = 0, then the share is neutral share.

If > 1, then the share is called high risky share.

And if < 1, then the share is called less risky share.

= Co Variance of (x, y)/ Variance of x = 1/n (y-mean y) (x-mean x)/ Variance of x

Where x = NIFTY and y = STOCK

ALPHA of the Individual Stocks

Independent return of the stock.

CO-EFFICIENT of DETERMINATION

It indicates the percentage of variance explained by the variation of return on the market index.

SECURITY MARKET LINE

SECURITY MARKET LINE CURVE or commonly known as SML curve is basically a graphical representation of the CAPM model. It represents a relationship between the degree of risk and the expected return. It shows that the higher the risk the greater would be the return. We noticed that the rate of return is depended upon the degree of risk in a security. Thus risk is an independent variable and return is dependant variable.

In SML we introduce the concept of risk free return and risk premium i.e. BETA.

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

9.51 6.98 4.08 2.52 5.51 5.24 3.63

60 50 40 30 20 10 0 1 2 3 4 5 6 7 Series1

CO EFFICIENT OF DITERMINATION

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

0.67 0.56 0.64 0.56 0.84 0.76 0.65

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 TATA STEEL SBI GMR HDFC SAIL RNRL DLF Series1

CALCULATION OF BETA

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

1.34 1.45 0.69 0.56 1.84 0.45 1.59

60 50 40 30 20 10 0 1 2 3 4 5 6 7 Series1

CALCULATION OF CORRELATION

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

0.44 0.65 0.35 0.65 0.76 0.63 0.48

60 50 40 30 20 10 0 1 2 3 4 5 6 7 Series1

CALCULATION OF STANDARD DEVIATION

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

0.44 0.65 0.35 0.65 0.76 0.63 0.48

1.17 1.17 1.17 1.17 1.17 1.17 1.17

60 50 40 30 20 10 0 1 2 3 4 5 Series1 6 7 Series1 Series2

SYSTEMATIC & UNSYSTEMATIC RISK table of all the stocks

SYSTEMATIC RISK TATA STEEL 10 SBI 6.4 GMR 5.8 HDFC 3.4 SAIL 2.2 RNRL 1 DLF 4.3

UNSYSTEMATIC RISK 7.5 16 3.4 3.6 3.9 11 4.3

TABLE SHOWING SYSTEMATIC RISK OF ALL STOCKS IN RESPECT 0f %AGE

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

23.44 56.68 34.56 34.65 23.56 12.89 34.49

60 50 40 30 20 10 0 1 2 3 4 5 Series1 6 7 Series1 Series2

TABLE SHOWING UN- SYSTEMATIC RISK OF ALL STOCKS IN RESPECT OF %

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

40.66 56.67 45.68 89.65 45.67 12.75 34.49

90 80 70 60 50 40 30 20 10 0 TATA STEEL SBI GMR HDFC SAIL RNRL DLF Series1

TABLE SHOWING THE EXPECTED AND ACTUAL RETURN OF STOCKS.

COMPANY

EXPECTED RETURN (CAPM)

61.09 48.29 55.45 22.17 37.43 36.19 14

ACTUAL RETURN
27.63 54.08 36.88 32.43 21.85 67.85 93.22

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

X
SECURITES

BETA CAPM RISK-FREE RETURN

0 4.46 5.34 0.4 3.68 5.48 4.43 3.5 3.69 3.09 3.29 32.45 33.17 44.43 53.19 45.18 5.69 5.69 5.69 5.69 5.69 5.69 5.69 5.69

TATA STEEL SBI GMR HDFC SAIL RNRL DLF

SECURITY MARKET LINE

y-CAPM Z- RISK FREE RETURN 14.45 5.69 34.54 5.69 34.56 5.69 38.65 5.69 29.58 5.69 46.64 5.69 38.39 5.69

50 45 40 35 30 25 20 15 10 5 0 1 2 3 4 5 6 7 Series1 Series2

FINDINGS & DECISIONS

We have used the HOLDING PERIOD method in calculating actual return and CAPM model for expected return.

The next step, that we have taken to make decisions, was to compare the actual return with the expected return (CAPM method) &comment whether the stock is UNDERVALUED or OVERVALUED

UNDERVALUED represents a situation where actual return of stock exceed the expected return

OVERVALUATION represents a situation where excepted return of stock exceed the actual return

Now we look into the findings & decisions part in the next page

STEEL SECTOR

TATA STEEL : Here Actual Return -27.63% is less than Expected Return 41.69%. So the stock is OVERVALUED here. Here a new investor may not want to buy the stock. On the other hand existing investor in the long run surely want to hold the stock on the assumption that the situation will improved in near future.

SAIL : Here Actual Return 46.36% is more than the Expected Return i.e, 37.32%. So the stock is UNDERVALUED. Here a new investor may not want to buy the stock on the basis that the dividend is already paid by the company, on the other hand an existing investor surely want to sell the stock.

INFRASTRUCTURE SECTOR
GMR : Here Actual Return -32.71% is less than Expected Return 32.75%. So the stock is OVERVALUED here. Here a new investor may not want to buy the stock. On the other hand existing investor in the long run surely want to hold the stock on the assumption that the situation will improved in near future.

BANKING SECTOR

SBI : Here Actual Return 93.44% is more than the Expected Return i.e, 32.65%. So the stock is UNDERVALUED. Here a new investor may not want to buy the stock on the basis that the dividend is already paid by the company, on the other hand an existing investor surely want to sell the stock.

HDFC : Here Actual Return 42.71% is more than the Expected Return i.e, 34.51%. So the stock is UNDERVALUED. Here a new investor may not want to buy the stock on the basis that the dividend is already paid by the company, on the other hand an existing investor surely want to sell the stock.

INFRASTRUCTURE SECTOR

DLF : Here Actual Return -34.04% is less than Expected Return 38.29%. So the stock is OVERVALUED here. Here a new investor may not want to buy the stock. On the other hand existing investor in the long run surely want to hold the stock on the assumption that the situation will improved in near future.

RESOURCE SECTOR

RNRL: Here Actual Return -29.20% is less than Expected Return 37.61%. So the stock is OVERVALUED here. Here a new investor may not want to buy the stock. On the other hand existing investor in the long run surely want to hold the stock on the assumption that the situation will improved in near future.