A Project Study Report On Training Undertaken At

India bulls Portfolio Limited Titled

ONLINE TRADING
Submitted in partial fulfillment for the Award of degree of

Master of Business Administration

ARYA INSTITUTE OF ENGINEERING AND TECHNOLOGY

Submitted By: Submitted TO SANTU KUMAR KHINCHI Ms. Nisha Goyal

y of MBA)

MBA 3rd SEM

Arya Institute of Engineering and technology Preface

The training is a practical approach of learning by experience and

it helps in earning a

good wealth of knowledge and experience that may help us in our near future of career endeavor. My project was pertaining to online trading at India bulls Portfolio Ltd., Jaipur a leading Financial Services in execution and & Brokerage House with acknowledged industry Leadership clearing services on Exchange Traded Derivatives and cash market

products. I made myself to learn and gain the methods, procedures as well as regulation which makes a online trading successful and amicable for new investors and existing players of trading in securities. Indeed it was a great opportunity for me to undertake the significance of corporation atmosphere and how employees coordinated with the policies and procedures being issued by their seniors and superiors. Also, how senior management lead the best planning efforts and guiding them to entire personnel in the organization in order to obtain the utmost efforts for th achievement of the goals and objectives. As the Indian economy continues to surge ahead, its power sector has been expanding concurrently to support the growth rate. The demand for power is growing exponentially and the scope of of this sector is immense.growth

ACKNOWLEDGEMENT

I express my, sincere thanks to my project guide, Mr.Piyush pandey (Regional Manager) for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge her for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of the project.

I would also like to thank the supporting staff of all the departments of the company, for their help and their cooperation throughout, our project. I would like to thank my faculty guide Ms.Nisha goyal for his valuable guidance and support during my summer internship.

Santu kumar khinchi

EXECUTIVE SUMMARY
The summer internship project Online Trading mainly focused on the methodology of online trading in financial market. I did complete study about stock market and trading system. A stock exchange, (formerly a securities exchange) is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation). Trading markets may be defined as systems consisting of an order routing system, an information network, and a trade execution mechanism (Stoll, 1992). A trading system is a communications technology for passing allowable messages between traders, together with

a set of rules that transform traders' messages into transactions prices and allocations of quantities of stock among market participants. Investors are generally not given free access to trading systems. Entry into the exchange's systems is intermediated by brokers. Brokers may simply route orders to exchanges The summer internship project Online Trading mainly focused on the methodology of online trading in financial market. I did complete study about stock market and trading system. A stock exchange, (formerly a securities exchange) is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation). Trading markets may be defined as systems consisting of an order routing system, an information network, and a trade execution mechanism (Stoll, 1992). A trading system is a communications technology for passing allowable messages between traders, together with a set of rules that transform traders' messages into transactions prices and allocations of quantities of stock among market participants. . They sometimes make decisions as to what exchange, and what system within the exchange, should process various parts of an order. In open outcry markets, brokers also physically represent orders on the floor of the exchange. Exchanges are differentiated most by a class of intermediaries known as market makers. Market makers trade for their own accounts, usually providing an offer to sell and an offer to

buy at the same time, but at different prices. In doing so, they both contribute to the pricing process and supply immediacy to the market by a willingness to be a counterparty to an order for which another investor may not be immediately available. On some exchanges, most notably the NYSE, there is one primary market maker designated by the exchange, known as the specialist. The specialist obtains consideration for the supply of immediacy and the maintenance of an orderly market by having private access to orderflow information through the order book for the stock. There may be multiple market makers in a given stock, regardless of the precise form of trading system. The prototype example is that of dealer markets, in which the dealers are the market Makers. They post bids and offers, and trade out of their own inventory. Electronic practice, however, market makers exist on electronic markets as well. Multiple market makers in a security are often designated by an exchange, fulfill Anyone with direct access to the trading system can function as a market maker, simply by continuously offering quotes for stock on both sides of the market. obligations however, not dissimilar to those of a specialist, and receive some consideration for the service. limit order book markets offer the possibility of trading without such financial intermediation. In

TABLE OF CONTENTS

S.No. 1. 2. 2. 1 2. 2 2. 3 2. 4 2. 5 2 .6 2 .7 2 .8 2

Topic Name INTRODUCTION OF INDUSTRY INTRODUCTION OF ORGANIZATION Company profile Product & service India bullss affilition India bulls strength India bullss Management Team India bullss Vision India bullss Value India bullss Research Desk India bullss technology
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Page No. 09 14 16 18 22 23 24 26 26 28 29

.9 2. 10 3 3 .1 3 .2 3 .3 3 .4 3 .5 4 4 .1 4 .2 4 .3 4 .4 4 .5 4 .6 4 Type of sampling
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India bullss Achievement

INTRODUCTION ONLINE TRADING

30 31 35 39 43 49 55 60 61 61 61 62 63 63 63

What is Capital Market Process & Mechanic Online Trading Terminology Benefit & problem Online Trading Growth of online trading
RESEARCH METHODOLOGY

Title of study Duration of the project Objective of study Type of research Area of research My role

.7 4 .8 4 .9 5 6 7 8 9 10 Limitation of study
FACTS & FINDINGS QUESTIONNAIRE SWOT ANALYSIS CONCLUSION RECOMMENDATION BIBLIOGRAPHY

Data type

63 64 66 80 93 95 97 99

INTRODUCTION OF INDUSTRY

Broking industry is growing for last ten year with leaps & bounces to Indian economy and stock market. Brokerages houses are known as intermediaries between market and investor and play a key role in execute the functions to carry on the stock market. All the brokerage houses having different sort of charges and fee according to their facilities and

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efficiency provided to investors. They manage the portfolio, risk management and providing guidance to investor for dealing in security market the major players of Indian broking industry are as follows:1. 2. 3. 4. 5. 6. 7. India bulls Portfolio Limited Sharekhan Limited Religare Limited Hem Securities Limited Angle Broking Limited India bulls Securities Limited Anand Rati Securities Limited

Analysis of players in the industry

Unicon Unicon has been founded with the aim of providing world class investing experience to hitherto underserved investor community. The technology today has made it possible to reach out to the last person in the financial market and give him the same level of service which was available to only the selected few. We give personalized premium service with reasonable commissions on the NSE, BSE & Derivative market through our Equity broking arm Unicon Securities Pvt. Ltd. With our sophisticated technology you can trade through your computer and if you want human touch you can also deal through our Relationship Managers out of our more than 100 branches spread across the nation.

Religare securities
Trading In Equities with Religare truly empowers you for your investment needs. We ensure you have a superlative trading experience through A highly process driven, diligent approach Powerful Research & Analytics and One of the best-in-class dealing rooms

Further, Religare also has one of the largest retail networks, with its 11

presence In more than 1800* locations across more than 490* cities and towns. This means, you can walk into any of these branches and connect to our highly skilled and dedicated relationship managers to get the best services .

The Religare Edge Pan India footprint Powerful research and analytics supported by a pool of highly skilled research analysts Ethical business practices Offline/Online delivery models Single window for all investment needs through your unique CRN

Anand rathi
AnandRathi (AR) is a leading full service securities firm providing the entire gamut of financial services. The firm, founded in 1994 by Mr. Anand Rathi, today has a pan India presence as well as an international presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance, structured products all of which are supported by powerful research teams.

How India bulls differ from other in the industry

India bulls Portfolio Ltd is an emerging leader in the high growth retail financial services sector in India.

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India set to emerge as one of the worlds largest retail financial services markets * Indias GDP growth has averaged 6.5% since 1994 and expected to continue to grow at 8+% * Increasing sophistication of financial markets * Indian consumers affinity for equity Emergence of large domestic retail brokerage houses *India has nearly 10,000 brokers; most of them are small family businesses

* The last 5-7 years has witnessed the emergence of large institutional players driving consolidation of the retail financial services market Global players are starting to make strategic inroads into the retail financial services market *Foreign broking houses dominate FII based institutional broking * Some global majors like Citigroup are making inroads into retail by leveraging their network * E-trade has announced majority ownership of IL&FS Investment * BNP Paribas has invested in Geojit *ABN Amro has started its own retail broking network in India

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14

Introduction of Organization

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Head office (Delhi) 2/2-A, insurance Laxmi 1ST Floor, Building, Asaf Ali Road, New Delhi -110002

Corporate office (Mumbai ) India bulls House, plot no.M2, Cama Industrial Estate Walbhat road, Behind the hub, Goregaon(east) Mumbai-400063 Regional office Raj. (Jaipur) 410-413,4th floor, Silver Square, Near Raj MandirCinema, Bhagwandas Road, Jaipur-01

Registered office (Delhi) 4353/4C,Madan Mohan Street, Ansari Road, Drayman, New Delhi-110002

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Company Profile

India bulls, a leading financial services &brokerage house working diligently since 1994 can be describe in a single word as a financial powerhouse. With acknowledged industry leadership in execution and clearing services on exchange traded derivatives and cash market products, india bulls has spread its trustworthy tentacles all over the country with more than 1050 outlets spread across 350 cities. It provides an extensive range of services in equity, commodities, currency derivatives, wealth management, distribution of third party product, etc. Being at par with the modern tech-savvy world, india bulls makes an integrated and an innovative use of technology. It also enables its clients to trade online as well as offline the strategic tie-ups with he latest technology partners has earned india bulls a prestigious place as one of the top brokerage houses in the country. Client-focused philosophy backed by membership of all principal Indian stock and commodity exchange makes india bulls stand apart from competitor as a preferred services provider in the industry for value-based services.

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INDIA BULLS GROUP OF COMPANY

India bulls group of companies

India bulls portfolio Limited

India bulls Commodity Brokers (p) Ltd.

India bulls Insurance Broker (p) Ltd.

India bulls Global DMCC, Dubai

Sunglow Fin invests Pvt. Ltd.

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India bulls Product and Service

India bullss service encompasses the spectrum of wealth creation, management and preservation. India bulls offers a wide range of product and services to help client reach their financial goal.

India bulls Product &Services

Brokerage Services

Wealth Management

Demat

Distribution

Equity

PMS

NSDL

Insurance

Commodity

Advisory

CSDL

Mutual Fund

Derivatives

IPOS

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Prime Brokerage Services:

Equity and equity derivatives Trading Platform offers online Equity & Equity Derivatives trading facilities

for investors. This high-end, efficiently integrated application makes trading convenient, quick and hassle free. Added advantages - Having access to resources like research charts, advice, live quotes online assistance - to take well-versed decisions. Trading through our branch network or phone available, by simply registering with us.

Commodity Derivatives We offer access to future trading via multiple exchanges in wide-ranging

commodities agricultural commodities, base metals, energy and precious metals. We also provide investment opportunities in gulf commodities futures and currency market.

Currency Derivatives

Known as being predecessors in contributing to unique financial products, This service, we provide both offline and online.

we have now added to our stable - currency Derivative.

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Asset Management:

Portfolio Management Services (PMS)

Our team of portfolio managers design portfolios to suit every customers

needs. Constantly scrutinizing the developments in market and moving stocks, we aim for maximum capitalization. We suggest the most appropriate product to customers, based on factors like their investment spheres, return expectation and risk tolerance. Our experience, expertise and research helps us give our customers investments the best upshots.

Advisory

India bulls guides and supports its clients to re-structure and streamline their

portfolios based on changing market conditions and client objectives.

Depository Services:
India bulls is a depository participant with NSDL and CDSL.

We provide an array of Depository Services to make share transactions

quicker, easier and cheaper for both Equity and Commodity.

Distribution:

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Insurance

India bulls offers insurance products in Life and General Insurance.

Our IRDA certified advisors offer prudent advice on policy selection and assists Our advisory team matches the insurance products to financial profiles of

through the claim redressal process. customers to offer the best solution options, maintaining transparency and professionalism.

Mutual Funds

India bulls is one of the largest distributors of mutual fund in India. With the help of our in-depth research across categories covering 20 parameters Keeping in mind customers' budgets, needs and securities, our AMFI certified

and our expertise, we guide our clients to take appropriate investment decisions. investment advisors offer the best deals.

Initial Public Offer (IPO)

We offer our customers online investment access for Public offerings. In-depth research advice for the forthcoming IPOs.

India bullss Affiliations

Equity National Stock Exchange of India Ltd. (NSEIL) 22

The Bombay Stock Exchange Ltd. (BSE) OTC Exchange of India Ltd (OTCEIL)

Commodities Multi Commodity Exchange (MCX) National Commodity and Derivatives Exchange Ltd (NCDEX) Dubai Gold Commodities Exchange (DGCX) National Multi Commodity Exchange (NMCE)

Currency National Stock Exchange of India Ltd. The Bombay Stock Exchange Ltd. (BSE) MCX-SX Ltd.

Depository participant with CDSL and NSDL

India bullss Strengths

2011)

India bulls has over 1050 outlets in more than 350 cities in India. (as on March India bulls has more than 2 lakh clients comprising of Corporate Financial India bulls has a young dynamic team of 1900 professionals. Strong infrastructure supporting over 3000 trading terminal supporting more than 24x7 service and support via our federal support system.

Institution Investors, Mutual Funds, High Net-worth Individuals and Retail Investors.

350 VSAT's to support geographic reach and servicing capabilities.

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India bullss Pillars: Management Team

Meet the minds behind the corporation India bulls - the Directors who are leading this gigantic force.

S.P. Goel

The Founder Director of India bulls who has been instrumental in chartering critical and strategic initiatives. With an experience of 25 years in the finance business, Mr. Goel has also been appointed as the director of the OTC Exchange of India. He represents NSEIL for the SEBI constituted Dr. J R Verma Advisory committee for the development of the derivatives market in India.

He started his career as a CA in 1987 and soon after he embodied several prominent committees on settlement issues (COSI), a policy generating body at the NSE of India Ltd and Dispute Resolution Committee (DRC) of National Stock Exchange Clearing Corporation Limited (NSCCL).

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Shivkumar Goel Being the Founder Director of India bulls, he has been handling IT & risk initiatives since inception. Formerly, designated as the CEO of SRF Finance Limited, Delhi; Mr. Shivkumar Goel had also spearheaded the IT committee of the DELHI Stock Exchange. A CA & CS with more than 30 years of experience, he recently was nominated as the executive committee member of Depository Participants Association of India. He is currently a functional member with Association of National Exchanges Members of India - NR S.K. Goel Has been India bullss Founder Director and a prominent CA for more than 35 years now. Being actively involved in managing the Business initiatives and Accounting across India; Mr. S.K.Goel has been mainly heading India bullss northern and eastern zone. He was formerly with the Modis & OSWALS - one of the leading manufacturing companies, in addition to being empanelled with various major banks as their Internal Auditor. Vishnu Kumar Agarwal The Founder Director of India bulls with over 30 years of experience; Mr. Vishnu has proficiently taken charge of Administration, Real Estate Investments and Initiatives for all the group companies of India bulls.

Anand Prakash Goel He has been playing a pivotal role as India bullss Founder Director by resourcefully managing Taxation, Compliance and DP. A qualified CA with more

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than 30 years of experience in his stride, he has undertaken audits for leading banks across India. Saurabh Shukla He plays a pivotal role as the Group COO and one of the Directors of India bulls Commodity Brokers Ltd. He has been actively involved in varied key strategic functions and management of retail business. Previously, designated as Head of Marketing for the Refco Group, he has also worked for Merchant and Investment Banking and Corporate Finance. He was also ardently involved in developing and servicing corporate / institutional customers at Blue Blends Finance Ltd. and Natsons Pvt. Ltd.

India bullss Vision

To be one of the most trusted and globally reputed financial Distribution companies.

India bulls Values

Transparency Honesty is our forte. We believe in dealing on thoroughly ethical grounds, being fair and transparent with our customers

We recognize and appreciate efforts put in by our employees. And we, as a matter of fact, reward and distinguish each one of them, ceaselessly. Solidarity 26

We believe in sharing a forthright and respectful relationship with our business partners and employees. We consider them both as our team associates, who work together. Succeed together. Started at zero Its biggest strength is that it started its business with a zero level, merely as sub broker then taken the self trading membership, hence it understand the needs of its clients and business partners very well. Integrated and transparent services It values integrity and transparency in clients transaction and providing the best value for money to its clients. Value of client service Its dedicated relationship managers are trained to provide excellent services and complete satisfaction to all their clients, strongly believes that success is only the end result of clients growth. All the service is one umbrella All the memberships are in one company name, no hassle of account transfer, deliveries adjustments, and buy stock in one exchange and sale in another, get arbitrage opportunities.

Accurate and timely research It is always endeavored to provide timely research based advice to its clients, its research team comprises of experienced fundamentals and technical analysis,

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sector specialist and derivatives strategist, who are constantly looking for new trading and investment opportunities. Wide range of services:It is offering Sock broking, Investment Advisory Services, Depository Services, Commodities Trading, Portfolio Management, IPO & Mutual Fund Distribution etc. to its esteemed clients. 24*7 online back office software Web enabled centralized back office software installed at head office, having direct access to all branches. Business associates, sub broker and client to have online information about their transaction, account derivatives, open position and so many things live updated. Its all client can obtain up to date information online at click of a button on their desktop PC.

India bullss growth:

Clientele growth After spreading our wings across varied segments, we are now growing in all direction with more than 2 lakh clients under the banner.

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India bulls Research Desk

India bulls Research desk has a dedicated team of research analysts and experts that have an in-depth knowledge of the market place. They offer value perspectives, focus on opportunities for investment and growth and endeavor to reduce risk potential. It's premium advisory services are based on technical and fundamental views and strategies. Equity - SMS alert - Daily market strategy - Weekly market strategy - Monthly market strategy - 'Equity talk' - Daily derivative strategy Commodity

- SMS alert
- Daily report - Weekly report - Monthly report: Commodity Review

Mutual funds - Daily Performance Sheet - Weekly Mutual Fund Report 'The Edge' - Monthly free News Letter 'The Perspective' Regular updates on products, performance and new launches.

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Currency Derivatives -Daily Forex Insight report

India bullss Technology

Single VSAT Connectivity for NSE/BSE/F&O/NCDEX /MCX/MCX-SX through Virtual Private Network (VPN) Other connectivity links to branches through Leased Lines, ISDN, Radio Frequency and Broadband. High Speed and Streaming live quote access via Internet for NCDEX/MCX/MCX-SX for branches and retail clients. Internet based Depository access (Speed-e/Easiest) to offer DP services to Retail investors.

24x7 online access to a centralized support structure for all products offerings.

India bullss Achievement

Top Equity Broking House in terms of branch expansion for 2010 3rd in terms of Number of Trading Accounts for 2008

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 6th in terms of Trading terminals in for two consecutive years 2007- 2008 1. 9th in terms of Sub Brokers for 2007 Awarded by BSE 'Major Volume Driver 07-08,08-09,09-10. Nominated among the Top 3 for the "Best Financial Advisor Awards '08" in the category of National Distributors Retail instituted by CNBC-TV18 and Opti Mix.

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The Online Trading is having many features which make it most suitable for the investors to go for. Some of
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These Freedom of Information features are as follows:

The Internet can provide a new sense of control over your financial future. The amount of investment informatio available online is truly astounding. It's one of the best aspects of being a wired investor.For the first time in history, any individual with an Internet connection can: Know the price of any stock at any time Review the price history of any stock in chart format Follow market events in-depth Receive a wealth of free commentary and analysis about stock markets and the global economy Conduct extensive financial research on any company

Control of Money One of the great appeals of using an online trading account is the fact that the account belongs to you, and is under your direct control. When you want to buy or sell stock, you no longer need to call your broker on the phone; hope that he is in the office to place your order; possibly argue with the broker about the order; and hope that the transaction is executed instantly. Access to market At the most basic level, an online trading account gives you more agility in buying and selling stocks. This is through sophisticated information streams, dedicated trading platforms and sophisticated tools for accessing the markets. Ensure thw price for investors Every broker house aims at providing the investor with the best price available. Also due to the high level of transparency with regard to display of information relating to the specific stocks and company profiles, you will be able to get the best quote for your orders.

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Offers greater transparancy Online trading offers you greater transparency by providing you with an audit trail. This involves a complete integrated electronic chain starting from order placement, to clearing and settlement and finally ending with a credit into your depository account. All these stages are subject to inspection, thus bringing in transparency into the system . Enables hassle free trading Online trading integrates your bank account, your trading account and your demat accounts, which leads to easy and paperless trading for you. Allow instant Trade execution You as an Investment online customer will be able to execute the entire trading transaction, right from logging on to our site, to the execution and settlement of your bank account, in a very short period of time. Provides a level free Field Trading on the net, gives even the smallest retail investor access to information that earlier was available only to the big traders. This provides a level playing field for all investors in the securities market. Reduces the settlement risk This method of trading reduces the settlement risk for the investor, as in this case all short sell orders are squared off at the specified cut-off time and not allowed to be carried forward.

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In the case of a demat account your demat account is checked by us before executing your sell transaction. This reduces the settlement risk for the buyer, who is assured of the delivery of the securities and for you as a seller of the securities Instant order trade confirmation Every trade is confirmed immediately and you will receive an on-screen confirmation following every trade with full details for your records. This avoids costly errors that would have been discovered when it is too late. Integrated accounts Your Bank, Depository and online account are integrated for your convenience. Various broking houses provide access to many of the popular banks.

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Introduction to the capital market

The capital market is the market for securities, where companies and the government can raise long term funds. The capital market includes the stock market and the bond market. Financial regulators ensure that investors are protected against fraud. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded. Capital market thus plays a vital role in channelizing the savings of individuals for Investment in the economic development of the country. As a result the investors are not constrained by their individual abilities, but by the abilities of the companies, which in turn enhance the savings and investments in the country, liquidity of capital market is an important factor affecting growth. Since projects require long term finance, but on the other hand, the investor may not like to relinquish control over their savings for a long time. A liquid stock market ensures a quick exit without incurring heavy losses or costs. Thus development of efficient market system is necessary for creating conductive climate for investment and economic growth.

Capital market Segment Primary And Secondary

Broadly , the comprises of two segments the new issue market which is commonly known as primary market and the stock market which is known as secondary market.

Primary
A primary offering, such as with a corporate bond, means you are buying it directly from the issuer, at par value, usually. A secondary market is where you sell or buy existing issues. I.E. If you bought a bond last year, now need to get your principal, you can sell it in the secondary market. You may not get par value. If rates are up since you bought the bond, then you will likely have to sell it at a discount to be able to get rid of it. If rates have fallen since you bought it, you could get a premium for it.

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Secondary
The market where securities are traded after they azre initially offered in the primary market.Most trading is done in the secondary market. To explain further, it is trading in previously issued financial instruments. An organized market for used securities. Bombay Stock Exchange (BSE), National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental guaranteed loans etc

BRIEF ABOUT THE STOCK EXCHANGES

Stock Exchange is a market like any other centralized market where both buyers and sellers come and conduct their business of purchase and sale of shares & securities. In other words, it is a market place for shares and securities where trading takes place in a controlled and protected environment.

MEANING OF STOCK EXCHANGE

A stock exchange, share market or bourse is a corporation or mutual organization which providess "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation)There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently

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traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a global market for securities.

SETTLEMENT CYCLE SCHEDULE

SR. NO. 1 2 3 4 5 DAY T T+2 T+2 T+3 T+5 DESCRIPTION OF ACTIVITY TRADE Trading Day PAY IN BY 10.30 am. PAY OUT BY 2 pm. Auction of shortage in deliveries Auction pay-in by 10.30 (1 am/ pay Out by 2)

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Functions of Stock Exchange

Stock exchange is established into the main purpose of providing a market place for the members to deal in securities under well laid down regulations and to protect the interest of the investors. The main functions of stock exchange are; 1. It brings the companies and investors together so that the investors can put risk capital into companies and thus, companies can use the capital. 2. It provides an orderly regulated market for securities. 3. It provides continuous, ready and open market for selling and buying securities. 4. It promotes savings and investment in the economy by attracting funds from the investors. 5. It facilitates take overs by means of acquiring majority of shares traded on the stock market. 6. It acts as a clearing house of business information. 7. It motivates the managers of well reputed companies, to retain their shares in A group, to improve performance. 8. It induces the managers to improve performance for converting non-specified shares into specified shares in the exchange. 9. It enables the investors to evaluate the net worth of their holdings. 10. It also allows the companies to float their shares in the market.

ONLINE TRADING BY NSE & BSE

The central computer located at the Exchange is connected to the workstations of the Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders placed at the Brokers' workstations reach the central computer and are matched by the computer based on price and time priority. Both the exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE On Line Trading) and NEAT 39

(National Exchange Automated Trading) System. It facilitates more efficient processing, automatic order matching, faster execution of trades and transparency. The scrips traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent those, which are in the carry forward system (Badla). The 'F' group represents the debt market (fixed income securities) segment. The 'Z' group scrips aretheblacklistedcompanie

PROCESS & MECHANICS OF ONLINE TRADING:

An investor would be required to open a bank account with a scheduled bank and sufficient balance should be kept in the account. Thirdly he would be required to open account with a depository participant because only dematerialized shares can be traded on Internet. interesting in trading through Internet shall have to, firstly register himself with an Internet brokerage firm. Some formalities such as filling the account opening form of the e-broker, copies of identity proof, copy of residence proof are made to register him self with the etrader. Secondly, the investor

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PROCESS:-

The client places order via the net by logging on to his Brokers site.

The broker accepts and executes the order and places it with the exchange
The exchange accepts the order after checking the share limit for the day. The broker makes the payment either directly via the client bank account or pays through its own account and recovers it later from the client.

The exchange receives money and completes the settlement.

The client is intimated about the settlement either through the demat or via e-mail.

Second, fill in the symbol, series and the default quantity. So, generally following steps are followed while doing the trading through the Internet: Step-I: Those investors interested in doing the trading over Internet system, that is,NEAT ISX (NSE), should approach the brokers and register with the Stock Broker. Step-2: After registration, the broker will provide to them a login name, password and a personal identification number (PIN).

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Step-3: Actual placement of an order, Using the place order window as under can then place an order: (a) First by entering the symbol and series of stock and other parameters such as quantity and price of the scrip on the place order window. Step-4: It is the process of review. Thus, the investor has to review the order placed by clicking the review option. He may also re-set to clear the values. Step-5: After the review has been satisfactory; the order has to be sent by clicking on the send option. Step-6: The investor will receive an "Order Confirmation" 'message along with the order number and the value of the order. Step- 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about ten seconds is there in executing the trade. Step-8: It is regarding charging payment, for which there are different modes. Some brokers will take some advance payment from the, investors and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds by the investor to his account.

42

THE MECHANICS OF ONLINE TRADING

CLIENT

BROKER

STOCK EXCHANGE

Places an order on the net on the brokers website through the distinctive I.D. code The settlement of the deal (buy/sell order) gets reflected in his Demat account. The client is intimated about the execution of the deal by e-mail. Pays the broker pending physical delive ry.

Accepts the order, Checks the clients Identity and places the order with the stock exchange

Accepts the order after checking the scrip limit of the broker for the day Executes the order

Pays the Exchange though his owns account and receives it from the client account.

Receives the money and completes the settlement

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TERMINOLOGY

Shares:In everyday language, when we talk of shares we normally refer to equity shares or ordinary shares of a company. The terms shares and stock essentially means the same things, the letter being a more common American usage. An equity share is evidence of ownership in a company. The physical evidence of this ownership of this document is called the Share Certificate. Now days, shares are usually kept in electronic, or dematerialized, form with a depository participant (Banks, brokers, financial institutions) of the National Securities Depository Limited (NSDL). However, if one wants one can still hold the share in the physical form which has your name endorsed on it, and is proved that you are a part owner of the company. Your ownership rights are proportionate to the number of share you own. Companies issue shares of a certain fixed denomination, called face value or par value of that share, which is clearly indicated on a share certificate in the physical form.

Investment: Investment essentially refers to what you do with your savings in order to preserve them and make them grow or yield an income. If you keep your savings in the form of cash, they are certainly going to diminish in value because the purchasing power of money is constantly going down as a result of inflation. (The value of money is judged by the quantity of goods and services you can buy with it). Therefore, if you want to maintain or increase the value of your savings, you have to keep them in forms other than cash. This is what investment is all about, deployment of your saving with the intentions of preserving or increasing their value. This deployment can be done by using your savings to buy land, residential properties, commercial properties, gold, jewelry, works of art, fixed deposits in banks and companies, shares, bonds, infact, anything whose value is likely to either remain constant or appreciate with time. Investment also refer to using one's savings with the 44

intention of earning an income.

Demat A/c:On doing an online business ever customer has to open and demate account in any bank whichever he likes. Demate account is the account in which the trading done by the customer is mentioned. If the customer sales or purchases any share the details of this sale and purchasing are in demate account. This account contents the name of the shares and also the number of shares held or sold and also the rate of the share with this demate account. It is also compulsory for every customer to open a saving account in the bank because the amount which is to be received when the customers sales the shares are transferred from the demate account to the saving account. It is the responsibility of the customers that the share which he purchased or sales are properly transferred in demate account from the stock exchange whichever he deals. The amount of dividend whichever to be received on the shares when held for one or more year are also transferred in this demate account. It is compulsory for every customer to have a PAN no. For opening an demate account. If PAN no. Is not there is no chance for the customer to do any trading on line. There is no limit of amount to deal in this account.

Circuit Limit:While issuing the shares to the public the company has to fix a particular limit of the rate of the per share this limit is called as circuit limit. This circuit limit is generally fixed on the percentage basis. This circuit limit is applied to both the ends of the share. That is to the upper limit also and also to the lower limit actually circuit limit is of two types 1) Upper limit 2) Lower limit It is compulsory for every company to fix the circuit limit. This limit is beneficial to both. The customer and also to the company generally every company fix below 10%of the rate of 45

per share.

Upper Limit: While issuing the shares to the public the company has to fix the upper limit this limit is also calculated in percentage the limit is also beyond which the rate of the shares cannot exceed nor that the customer doing the trading can sell above the level. For ex. Customer wants to sell a share which is of Rs10 and its upper limit is fixed at 10% so in this case the person will have to sell it at Rs11 or the rate which ever he wants but the person cannot sell it beyond this Rs 11 because by addition of upper limit to the rate of share the maximum amount of the shares is Rs 11 only and not above.

Lower Limit: At the time of issuing share the company has to fix the lower limit also. This lower limit is calculated on the basis of the rate of the shares. This limit bears the same percentage, which is mentioned for the upper limit of the share. Like upper limit in this limit also the share minimum rate of the share is fixed the customer who wants to see; the holding shares has to first consider the bupper& lower limit of the share he cannot sell the share below the lower limit and not above the upper limit like the upper limit Percentage generally in this limit also the percentage is below 10% of the face value of the shares the percentage is below 10% of the face value of the shares the percentage of the upper &lower limit is equal to every type of share For ex. Suppose the person wants to sell the shares and the rate of the share is Rs. 10/and the lower limit percentage is 10% of the rate. So in this case the person cannot sell the share at below Rs. 9/-. He will have to sell at above Rs. 9/- or up to the upper limit of the share.

Sensex:46

When the shares are issued to the public the stock exchange gives a particular group to the company. For ex. The Reliance Group is given the group A like this there are several companies which fall in A Group. The weightage mean is calculated according to its equity when all the companies of Group A has calculated this weightage mean they are added all together when this addition is done the result which comes down is known as Sensex. The trading of shares of A group is totally depended on this sensex value. The price of the share rises this sensex value also rises and when the price of this share comes down the sensex value also comes down. With the sensex

Scripts:-

The company, which has more than one working area, it has to issue the share separately than that company is the company which has the script of its name. For Ex. The Reliance this company has its several working area Namely Reliance, Capital Reliance, Infocom Reliance Energy, Reliance Industry. So reliance company issues separate share for separate working area but the bold name which is given to the working area is Reliance. So in this case Reliance has its own scripts. Other example Ambuja, Birla, Etc.

Groups:When the shares are issued by the company they are given the particular group by the Stock Exchange according to its demand in the market. There are mainly 7 groups

DIFFERENCE BETWEEN ON LINE AND

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OFF LINE TRADING

1. 2. 3. 4.

while doing the trading. in offline trading there are some errors exist like barriers of Online trading consumes less time as compare to manual trading. Online trading has very helpful to finding the records easily but offline trading takes more In the help of online trading, there is no chance of any errors1 5. With the help of online trading, we know the international market rate of share very easily.

communication Online trading is very expensive as compare to manual trading or offline trading.

time to finding the records.

DEMATERIALISATION OF SHARES
Dematerialization is the process wherein shares certificates or other securities held in physical form are converted into electronic form and credited to demat account of an investor opened with a depository participant. SEBI has made compulsory trading of shares of all the companies listed in stock exchanges in demat form with effect from 2nd January 2002.The procedure of opening a demat account with DP is similar to opening an account with a bank

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Market timings:
Nomal Market / Exercise Market Open time : 09:00 hours

Normal market close

: 15:30 hours

Set up cut of time for Position limit/Collateral value

: till 15:30 hrs

Trade modification end time / Exercise Market

: 16:15 hours

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Internet Based Trading through Order Routing Systems

Internet based trading on conventional exchanges, uses the Internet as a medium for communicating client orders to the exchange, through broker web sites. Brokers web sites may serve a variety of functions. These may include; 1. 2. 3. Allowing the clients to directly trade through investors; Advertise the broker dealers services to potential investors; Offer market information and investment tools similar to those offered by information Offer real-time or delayed quote information, continuously update quotes while the user Provide market summaries and commentaries, analyst reports and trading strategies and Offer investors access to portfolio management tools and analytic programs; Information on commission and fees; and Account information and research reports. In an Order Routing system, a broker offering Internet trading facility provides an electronic template for the customer to enter the name of the security, whatever it is to be bought or sold, the quantity and whatever the order is a market or limit order. Once the brokers system receives this information.

vendor or SRO web sites; visits other sites, or allow investors to create a personal stock ticker; market data on currencies, mutual funds, options, market indices and news; and

Use of have developed computerized alternative trading systems by which the system
centralize, display, match, cross or otherwise execute trading interest. Internet as

Alternative Trading Systems (Provision for price discovery and matching outside conventional exchanges)
In foreign jurisdiction, Alternative trading systems have been developing outside conventional securities markets, which provide investors with additional proprietary electronic trading facilities for securities that are traded principally on securities exchanges, or other organized markets. They have price discovery functions, matching systems and crossing systems. The systems that are currently in use in outside 50

jurisdictions are closed systems and are not accessible to the general public through the Internet. The securities markets regulators abroad the maintained flexible and open policies designed to encourage innovation in the secondary securities markets. As a result, a number of market participants, usually broker-dealers,

BENEFITS & PROBLEMS OF ON LINE BROKING Benefits:Less Costly:

The most significant advantage of the Online broking is the cost reduction in the brokerage. Due to the power of the Internet one has the privilege of becoming the clients of really large brokerages with the benefits of enjoying the low charges hithelio before enjoyed only by the big players. As the DP account has got linked to the trading account most players do not charge a minimum transaction cost thus truly allowing one to buy a single share and achieve meaningful rupee price averaging whatever be your buying power.

Peace of Mind:
One can never have complete peace of mind but online investing does away with the hassles of filling up instruction slips, visits to the broker for handing over these slips and consequent costs.

Keeping Records:
The site one trades on keeps a record of all transactions down to unexecuted orders and cancelled orders thus keeping one abreast of all your transactions 24 hours a day. No paperwork means more time at ones disposal for research and analysis.

Access to Information and investment Tools:

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Most online investing sites have a wealth of information for their registered members. This includes research reports, results, analysis and even gossip and the buzz in the market.

Unparalleled Liquidity:
The. bank account linked with the trading account invariably has an A TM free. Most partner banks offer Internet banking as well. This results in ones money becoming available to him whenever he like from his trading account. Conversely in case he spot an opportunity in the market he can immediately allocate money from his savings account to his trading account and make profits.

Unparalleled Safety:
Most sites are secure using 128-bit algorithms -highest available commercially anywhere in the world. Moreover even if somebody broke in and tampered with ones account the money from the stocks he sold or the stock bought from the money in his account is in his account only.

Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in this case no Short sale is possible i.e. the seller will not be able to sell the securities unless he has their actual possession. In the case of a demat account (required for an online transaction), when a seller wants to sell the securities, his demat account is checked by the Depository Participant before executing the sale transaction. This reduces the settlement risk for the buyer, who is assured of the delivery of the securities.

Offers greater transparency:

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Online trading gives greater transparency to the investors by providing them an audit trail. This involves a complete integrated electronic chain starting from order placement, to clearing and settlement and finally ending with a credit to the depository account of the investor. All these stages are subject to inspection, thus bringing in transparency into the system.

Ease of trade:
It is the ease of doing the trade through net, with a click of mouse, one can buy or sell any share that is dematerialized. Other than the above-mentioned advantages, Internet trading provides some additional advantages to the investors, brokers and also helps the nation to channelize the resources. Net trading would increase competition in the market hence increase in the bargaining power of the investors. The entire communication between the investor, broker and exchange would take place within milliseconds.

PROBLEMS :There is a flip side to everything and online trading is no exception.

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4% 14% 21% More Costly Lack Of Know ledge 11% Loyalty to Traditional Broker Lack of Trust Slow Speed 23% Other

27%

Chart Source:- www.lse.co.in 27% Loyality is of traditional broker 23% people says that online trading is more costly than manual trading. 21% people not prefer online trading because of lack of knowledge. So, the main problems of online trading are as follows: Server not found" This may appear on ones screens when he is desperately trying to get out of an unprofitable position. Some of the online sites are providing a telephone number for use in case their sites are overloaded or their server down. Connectivity of the Broker with NSE: Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours during trading hours. This problem is rare but be alive to its possibility. Cyber attack: In the event of a malicious attack on the systems of ones broker he is protected only if the company is taking proper precautions against such attacks and if proper backup is regularly been taken. He may like to choose a brokerage that has a stated security policy and contingency plan in place.

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Non-availability of a seamless interface: As a client one will access the NSE through a server of the online brokerage and this may involve queuing delays. If a number of client access the server the server takes its own time sending the orders to the NSE server. He must check out the seamlessness of this interface before selecting an online brokerage. The faster the orders are processed the more seamless is the interface.

Non- availability of personalized advice: If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If he want advice on a particular stock in his portfolio he may not even be able to get that.

Margin: If Internet trading alone is not fast and furious enough; many people are trading on margin. That is where the brokerage firm lends you money by leveraging his account, allowing him to buy a large amount of securities by putting up only a small amount of money. He may have forgotten what he read in the small print of his agreement, but the brokerage firm has the right to change the maintenance margin requirements without any warning or notice to him. In fact, the firm has the right to liquidate his securities holdings (and it can pick and choose which ones) without any notice to one if he fail to meet the margin call. And there he was leveraged to the hilt, hoping to hit a home run when he discovered that he is required to make a large deposit that he cannot make. The next thing one know, the firm is selling off his securities at a point in time that is not the best for him. These are the perils of trading on margin. Little use of advisory services: The advisory services being promised by the brokers would be of little use to investors looking for an insight into the market. Many would not like to rely on research reports, which are there for all. So, net investors will have to do their own research and take their own decision, whether wild or wise. Increased charges: Some of the brokers are of the view that they would have to provide advisory services to the customers. But with increased volumes, they will have to follow the international 55

practice of charging a little more than the normal charges from a customer looking for personal advice. WHY PEOPLE ARE BENDING TOWARDS ONLINE TRADING Several broking houses now offer online trading facilities. You can trade online with brokerages such as ICICI Direct, Kotakstreet, India bulls, India info lines 5paisa.com and HDFC securities. If you are already comfortable trading with your regular broker, here are few reasons why you may consider switching to trading online, or at least another avenue of trading. an obvious advantage of online trading is that your transaction would be virtually paperless. Your trading account would be linked to your demat and bank account, ensuring a smooth transaction process. This is especially helpful in the extent T+2 settlement system, where you have just two days to settle your transaction. The normal process of issuing of delivery note, in case of a sale, or arranging for a payment in case of purchaser of shares, is all taken care of the minute your order is manual intervention ensures that you are completely in executed online. The absence of control of all transaction. There is also little room for error, as your order is always confirmed before it is executed. You can also make better decision as you have a clear record of all your previous transaction. When you trade offline, a demat statement is normally sent to you only on a quarterly basis .keeping track of your portfolio can be a hassle in such a case. The inter net can provide a new sense of control over your financial future. The amount of investment information available online is truly astounding. Its one of the best aspect of being a wired investor for the first time in history, any individual with an internet connection can: Know the price of any stock at any time Review the price history of any stock in chart format Follow market events in-depth

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 economy.

Receive a wealth of free commentary and analysis about stock markets and globe Conduct extensive financial research on any company Talk with other investors around the world

At investsmart you can get real-time stock quotes, daily roundups of the stock market, experts commentary, and a deep community of fellow investors. Convenience is probably the greatest advantage online trading offers investors. if dont have time to trade during market hours ,perhaps you are at work, you can log on the web-trading site and place your order offline, during off market hours. Your order would join the queue and be expected the next day. You would need to enjoy a good relationship with your broker, for you to be able to reach him in the late hours. For nonresident Indians (NRI), trading online is perhaps their easiest option to invest in the Indian stock markets. What is more, the time difference, in some cases, can work to their advantage .Antony, an NRI-based in New York, places his order in the evening after work, when it is day time India and the markets are open. We also have access to considerable information online. By just logging on to ICICI direct online, for instance, we can get the latest news, market information and company research. Moreover, if our connection is maddeningly slow and we want to get your order executed immediately, most e-brokerages also provide a facility to trade offline by placing our order via the phone

Concept Of Buying Limit

Suppose you have sold some shares on NSE and are trying to figure out that if you can use the money to buy shares on NSE in a different settlement cycle or say on BSE. To simplify things for ICICI Direct customers, we have introduced the concept of Buying Limit (BL). Buying Limit simply tells the customer what is his limit for a given settlement for the desired exchange. Assume that you have enrolled for a ICICI Direct account, which requires 100% of the money required to fund the purchase, be available. Suppose you have Rs 1,00,000 in your Bank A/C and you set aside Rs 50,000 for which you would like

57

to make some purchase. Your Buying Limit is Rs 50,000. Assume that you sell shares worth Rs 1,00,000 on the NSE on Monday. The BL therefore for the NSE at that point of time goes upto Rs 1,50,000. This means you can buy shares upto Rs 1,50,000 on NSE or

BSE. If you buy shares worth Rs 75,000 on Tuesday on NSE your BL will naturally reduce to Rs75,000. Hence your BL is simply the amount set aside by you from your bank account and the amount realized from the sale of any shares you have made less any purchases you have made. Your BL of Rs 50,000, which is the amount set aside by you from your Bank account for purchase is available for BSE and NSE. As you have made the sale of shares on NSE for Rs.100000, the BL for NSE & BSE rises to 1,50,000. The amount from sale of shares in NSE will also be available for purchase on BSE. ICICI Direct

3.5 GROWTH OF ONLINE TRADING

According to an article by Krishnamurthy B in 2005 after inception of online trading in India in the year 2000 online trading is gained momentum with trading volumes growing by 150 per cent per annum in the years 2003-2005 and it was more than approx. 200% in the year 2008 The volume of all trades executed through the Internet on the National Stock Exchange had grown from less than Rs 100 crore (Rs 1 billion) in June 2003 to over Rs 700 crore (Rs 7 billion) in July 2005 which was a handsome growth in the year 2005in the starting of 2008 the growth of online share was good but at the mid of the year when subprime crisis affected India including all over the world, market of online trading got shrunk by more than 50%

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Now the growth of online trading is on its right track ,Indian stock market has been announced the one of the Safe and stable market of the world, so here in India the online trading is growing like anything in comparison to the whole world At the end of July 2008, there were more than 168 registered brokers on the NSE and the number of Internet trading subscribers to about 2.024 million. In the year 2007 India has 8 crore (80 million) internet user, the % of internet user is growing in each year At the same time the number of subscribers trading through the portal of Kotak Securities had gone up significantly by 150 per cent and the number of online trading customers had grown from 30,000 to 75,000. And the company expected to have at least 130,000 customers by the end of that fiscal. In the recent past years of 2005 ICICI Direct and Indiabulls recorded an annual volume growth of 100 per cent and Indiabulls had about 30 per cent of India's online trading volumes. Today the total volume of online trade in India is about 29-31% of total trades. According to brokers the better broadband connectivity across the country and wider awareness of equity as an asset class will raise the online trade volumes to over 50% of total trade.In India the demography is such that 75% of the population is under the age of 36 and more than 50% of the 75% is under age of 25 and this is another supporting factor The Chief Executive of Reliance Money Ltd says that online investing is still at a nascent stage in India and expects that Internet-based trading will eventually take about half of the total stock market trading as like with developed markets such as the US. Philippines has the highest online trade with about 55-60% execution of trade is online. The reason is because they had wider Internet connectivity years before India. The biggest challenge in India remains better Internet connectivity. The earlier Web-based technology used for Internet trading has been replaced by specialized software which gives real-time global data streaming rates to trader helping investors to analyze the market trends and helps in faster execution of trades. Earlier the investors made trade calls over the phone which sometimes led to the delays. Online share trading in India was at a boom in the end of 2006 with daily-traded volumes more than tripling from Rs 1,500 crore to Rs 5,000 crore in the last one year and terminals was set up in small towns such as Rajkot, Hubli and Vijayawada .In that year

59

the share of online trading rose dramatically from 7% last year to 20% as a percentage of overall traded volumes. Due to this factor the top five US brokerage firms decided to make a foray into India in the next year driven by strategic interest. Also at that time nonmetros accounted for half of the daily turnover of online trading. Graph is showing the declining in the turnover of online trading in Indian stock exchange during slowdown in economy due to subprime mortgage crisis.

A crash of the market in the early February 2008 the investors remained away from online trading the turnover of the NSE from internet-based trading dipped to a daily average of Rs 1,648 crore between February 1 and February 8 as compared with Rs 3,450 crore in January 2008 Rs 3,587 crore in December 2007 and Rs 4,417 crore in November 2007 in the exchanges cash market segment. In the mid February 2008 it accounted for just 12% of NSEs total cash turnover as compared with a high of 24% in November last year. "Issues that need to be addressed are education on cyber crime and the security solutions around it," says Vinesh Menon, Deputy CEO & Head for Online Investment & Branch Channel, Bajaj Capital

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"It's a matter of time when we will see exponential growth in the online trading segment, not just through the computer but also through our mobile phones," adds Menon. With over 20 million investors, India boasts of the third highest investor base in the world, unthinkable till a few years ago. The most online stock broking companies started from 2000 onwards because of development of global Internet economy and for years 2000 to 2003 the stock market was under a bear hug. The intense competition among a new wave of online brokerage companies hammered down brokerage rates from 1% (in 2000) to 0.25 %, or even lower to 5 paisa The number of investors opting for online trading has gone up manifold, according to the recently published 'Indias Leading Equity Broking Houses, 2008' by Dun & Bradstreet (D&B). The publication says that less than 10% of the 191 broking firms surveyed reported huge growth in opening of e-broking accounts and some firms saw a surge in value of up to 400% in e-broking during 2007

According to the report, numbers of e-broking accounts registered in 2007 have grown exponentionally. Indiabulls Securities Ltd added 4,51,611 accounts while a relatively new firm in the industry, Reliance Money added 2,15,678 accounts during the same time

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period. Motilal Oswal Securities Ltd managed to add 19,065 accounts while Unicon Financial Intermediates Pvt Ltd could increase their e-broking accounts by 13,787 According to market watchers, the rise in the value of on line transactions is also because of sustained bull run witnessed in 2007, when the 30-share Sensex of the Bombay Stock Exchange (BSE) gained from 13,842 points to 20,207 points, a gain of 6,365 points (up 47%).

E-broking is contributing a sizeable portion to the trading volumes and also to the revenue generated for leading stock broking firms. Some examples of the percentage contribution to trading volumes contributed by e-broking are 91% in case of Reliance Money, 62% for India Bulls, 20% each for ASL Capital and Shreyas Stock, 19% Angel Broking, and 15% Farsight Capital. In respect of revenues generated from e-broking, India Bulls (63%), Reliance Money (54%), Unicon Financial (30%) and Shreyas Stock (20%) reported higher shares in 2007. Ashika reported 98% growth in e-broking business in the first 10 months of 2007. Another significant trend is the growth in international business of broking firms. Firms that reported presence of offices outside India include Reliance Money, Motilal Oswal, Karvy Stock Broking, JRG securities, Vogue and India bulls Portfolio. HDFC Securities have 500,000 online customers deals in daily online trades worth Rs 250-300 crore is also in the black. The revenues it had in 2007-08 is Rs 100 crore. HDFC Securities had revenues of Rs 67 crore and a net profit of Rs 7.21 crore in 2006-07. ICICIdirect has 1.5 million online broking accounts and parent ICICI Securities reported revenues of Rs 750 crore for March 2008. The new player Reliance Money has 2 million online accounts trades worth Rs 2,000 to Rs 3,000 crore per day.

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4.1 Title of study Study of online trading

4.2 Duration of project

15-05-11 to 01-07-11

4.3 Objective of the study

The objective of the present study can be accomplished by conducting a systematic market survey and online trading . Market Research is a systematic design, collection, analysis and reporting of data and finding that are relevant to different market situation facing by the company.

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As I have done my project training in India bulls Portfolio Limited. The following are the objectives, which I kept in mind while doing summer training: 2. 3. 4. recession. To know about practical concept in online trading in customer preference. To gain an insight and knowledge with respect to online trading of shares and securities To know what a common thinks for stock market and is he interested in the times of

in the growing organization INDIA BULLS PORTFOLIO.

1. 2. 3. consumer. 4.

To know practical concept about equity research and portfolio management. To study the general operation of the India bulls Portfolio Limited. Analyzing the market survey and thereby finding out the investment pattern of the

To impart knowledge about the general working of the stock exchange and PMS. The marketing research processes that will be adopted in the present study consist of the following stages:

Defining the problem and research objective: The research objective state that what information is needed to solve the problem. Here the objective of other research is awareness and Investigation of investors overconfidence and familiarity and Challenges faced by Reliance Money. Developing research plan: Once the problem is defined, the next step is to prepare a plan for getting the information needed for the research. The present study will adopt exploratory

65

approach where in there is a need to gather a large amount of information before making a conclusion if required. The descriptive and casual approaches may also be used. We can summarize objective as:To understand the Stock market and process from account opening to settlement of securities. To understand the securities, securities market, function of securities market and who regulates the securities market. To know the types of sectors available in the security market and methods for analysis. To gain the knowledge, how one can invest in securities.

4.4 Type of Research

The type of research is descriptive Exploratory

4.5 Area of research

India bulls Portfolio Ltd

4.6 My Role
My role in India bulls portfolio ltd. was as a project trainee for the duration of the training program. In that I had to do Meet with the executives, know the procedure of online trading of shares and securities, order processing and balancing at the day end. Also I made myself to know regarding the interest, capability as well as how far can the customer is willing to invest in various shares and securities.

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4.7 Type of sampling

Stratified sampling

4.8 Data type

To collect the data, relevant information is necessary as regards to the project; as a result data was collected by using two ways: 5. Primary Data 6. Secondary Data. Primary Data: In this the information is being possessed with first hand information, which is new and fresh. The tools used by us for the primary data are: Questionnaire Face-to-Face Interview Observation

Secondary data:

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The information that is received with the help of Journals, Magazines, Financial reports or which is already present with the company References used from management books Gathered information through World Wide Web (www). Support and knowledge provided by Faculty and Company guide.

4.9 Data collection technique

Questionnaire and Personal interview Customer preference in online trading Analyze the collected information: This involves converting raw material in to useful information. It involves tabulation of data and using statically measures on them for developing frequency distribution and calculating the averages and dispersions. Report research findings: This phase will mark the culmination of the marketing research efforts. The report with the research finding is a formal written document.

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69

1. For how long you have been trading with on line-trading? According to this survey we find that 44% people says that we are investing the money market. 2. . How will you describe your experience with on-line trading till date? According to this survey we find that 60% of people find very easy to operate. and15% people find no secure. so we can say that online trading is very simple to operate and easy to understand 3. . What amount of money you invest normally? According to this survey we find that 35% of people invest money normally 50000. 14% of people invest money between 150000to200000. So we can say that the online from one year. 11% people says that we are investing money online from 4 year. so we can say that now online trading is very popular in the modern

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people are not invest more money in the share market because there is a great risk involved while doing the trading. 4. How often do you trade? According to this survey we find that 10% of people do trade Daily. 18% people do trade more than month. So we can say that people are generally invest in stock market weekly basis. 5. which trading you prefer? According to this survey we find that 20% people prefer online trading and 32% people prefer offline trading. So we can say that mostly people are awareness about the on line trading and because of this reason the mostly people are optimizing offline trading. 6. Whether online trading settled in Indian investor psyche According to this survey we find that 30% people says yes and 70% people says no. so we can find that on line trading is not settled in the Indian psyche because some people are not experience towards online trading.

7.

What shortcomings do you feel in Indian derivatives market? According to this survey we find that 37% of people says lack of awareness 49% says Shortage of expertise and 14% people says any other. So we can say that mostly people are shortage of experience about the Indian derivatives market or share market.

8.

Which media would you prefer the most for investment? According to this survey we find that 41% people Prefer T.V and 39% people prefer newspaper and 20% people prefer magazines. So we can suggest that mostly people are very easily grapped the knowledge through T.V

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ANALYSIS & INTERPRETATION OF THE DATA

Knowing the awareness and perception of the provide insight into the customer behavior and his expectation from the industry players. A proper understanding of the awareness and perception would definitely benefit the players. This survey attempt to know the Stock market investor better. It examines some interesting choices of the investor including the reasons behind investing in stock market and the risk tolerance levels of the investors. The investor knowledge about the stock market and what according to him are customers is very important in any industry. This kota city survey was conducted to know the investor awareness and perception about stock market.

The total sample for the study was 100 across Kota city. What is your education qualification? 73

To invest in the stock market minimum 100000 or more than this should be the annual income level of the people. In India the per capita income in also increasing so we can say that there is a good opportunity for the online trading market.

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1.

For how long you have been trading with on line-trading? (a)1 year (c) 3 year Sample size 100 (b) 2 year (d) 4 year

45 40 35 30 25 20 15 10 5 0

1 yea r 2 yea r 3 yea r 4 yea r

Y AR E

According to this survey we find that 44% people says that we are investing the money online from one year and 26% people says that we are investing the money online from 2 years and 19% to 11% people says that we are investing money online from 3 to 4 year. so we can say that now online trading is very popular in the modern market.

2.

How will you describe your experience with on-line trading till date? (a) very easy to operate (b) very difficult to operate (c) not secure (d) Any other

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Sample size 100

60 50 40 30 20 10 0 Ex perience I find it very easy to operate I find it very difficult to operate I feel it is not secure Any other

According to this survey we find that 60% of people find very easy to operate and 15% people find difficult two operate and 10% and 15% people find no secure and any other. so we can say that online trading is very simple to operate and easy to under

3.

what amount of money you invest normally ? (a) 50000 (c) 150000 to 2000000 Sample size 100
35 30 25 20 15 10 5 0 Money 50000 100000to150000 150000to200000 Any Other

(b) 100000 to 150000 (d) Any other amount

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According to this survey we find that 35% of people invest money normally 50000 and 28% of people invest money 100000to150000 and 23% and 14% of people invest money between 150000to200000 and any other. So we can say that the people are not invest more money in the share market because there is a great risk involved while doing the trading.

4.

How often do you trade? (a)Daily (c) Monthly Sample Size 100
40 35 30 25 20 15 10 5 0 Tim e daily weekly m onthly m than 1 m ore onth

(b) Weekly (d) More than one month

According to this survey we find that 10% of people do trade Daily and 40% people do trade weekly and 32% and 18% people do trade month and more than month. So we can say that people are generally invest in stock market weekly basis.

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5.

which trading you prefer? (a) On line trading (c) Both Sample Size 100
50 40 30 20 10 0 Relationship On line trading Offline trading Both

(b) Manual trading

According to this survey we find that 20% people prefer online trading

and 32%

people prefer offline trading rest of 48% people prefers both. So we can say that mostly people are awareness about the on line trading and because of this reason the mostly people are optimizing offline trading.

6.

Whether online trading settled in Indian investor psyche (a) Yes Sample Size 100 (b) No

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70 60 50 40 30 20 10 0 Settleled Yes No

According to this survey we find that 30% people says yes and 70% people says no. so we can find that on line trading is not settled in the Indian psyche because some people are not experience towards online trading.

7.

. What shortcomings do you feel in Indian On-Line trading ? (a) Lack of awareness the investors about on-line trading (b) Shortage of domestic technical expertise (c) Shortage Of Infra structure (d) any other

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Sample Size 100 50 40 30 20 10 0 Shortcomings According to this survey we find that 15% of people says lack of awareness 49% says Shortage of expertise and 14% people says Shortage Of Infra structure and 22% says any other. So we can say that mostly people are shortage of experience about the Indian derivatives market or share market. Lack of awareness Shortage of expertise Shortage Of Infra structure any other

8.

Which media would you prefer the most for investment? (a) T.V (c) Magazines (b) Newspaper (D) Journals

SAMPLE SIZE 100

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60 50 40 30 20 10 0 Media T.V Newspaper Magazines Journals

According to this survey we find that 55% people Prefer T.V and 25% people prefer newspaper and 10% people prefer magazines and 10% people prefer journals. So we can suggest that mostly people are very easily grapped the knowledge through T.V.

9.

.What is your annual income?

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INTERPRETATION 58%respondent are having the income level of 100000-200000 ,21% is having 200000300000 , 12% in having300000-400000 , 7% of the total respondent are having income more than 400000 per annum and only 2% are having less than 100000 per annum. To invest in the stock market minimum 100000 or more than this should be the annual income level of the people. In India the per capita income in also increasing so we can say that there is a good opportunity for the online trading market. 10.What percentage of your monthly household income could be available for investment?

INTERPRETATION According to the data 23% of the total respondent invest less than 5% of their income, 41% respondents are saying that they invest 5%-10% of their monthly income (which is highest)

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Whereas the 21% investor do the investment 10%-15% of their total monthly income,13 invest between 15%-20% of the total income and only 2% does more than 20% of their income invest in the market We can easily understand that 75% of the total population is having a good amount of investment, so the investment is their in the market, good number of people are ready to invest a good amount in the market 91% of respondent is in the income level of 100000 300000 (according to the last question analysis). So we can say that stock brokerage houses will have to do a good business with the help of Online trading system with few value addition services

10.

Where do you often invest your money?

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INTERPRETATION Highest number of respondent is having their investment in the equity that is 65% whereas the investment available for the mutual fund, term deposit and insurance is 14% ,12% and 9% So the investor for equity is high which is again showing the n number of opportunity for online trading .what is the primary objective of your investment?

INTERPRETATION 13% of the respondent invest the money for the reason capital appreciation but most of the investor is having same motive that is source of income and retirement plan, wealth preservation and education funding for children or other are only 10% From the analysis we can have idea that the main objective of the investor to earn the money through trading in stock market77% of the respondent achieve their objective with the help of investment in the equity market, because most of the investment take place in the form of equity (explanation of 4th ans. ) So we can say that there is a huge potential in the market for the trading in the stock market

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11.

.Do you owe a Computer?

INTERPRETATION 78% of the total respondent who are dealing with the stock market is having computer in their house and only 22% is not having computer in their house The people who is having computer that is 78% can also go for online trading which can be a large number of people who will go for online trading. they dont need to do a additional investment for computer to go for online trading

13. To operate a computer is easy for me

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INTERPRETATION 76% (26+51) of the total respondent believe that operate a computer is easy for me whereas 20%(13+7) of the respondent is having problem to operate a computer out of that 20% , 75 believe that they cant go for computer So ,if 78% of the people who are dealing with the stock market is having computer at their house and around 76% of the same population dont have any problem to operate a computerSo around 60 % is their who is having computer and they dont have problem to operate a computer. 14. Online trading is a secure way of trading

INTERPRETATION 71% of the respondent is having a positive thinking that online trading is a secure way of tradingwhereas 185 of the respondent believes that online trading is not a secure way of trading Satisfaction about the process, by which they will be going to do a trading that is online trading, should be there in the mind of the customer. If they believe that their is no risk over the money which they are going to invest in the market with the help of online trading, there will be a perception to go for online trading at least one time

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15,online trading is easy and fast way of trading?

INTERPRETATION 51% of the total respondent believe that online trading is a easy task Whereas 41% of the respondent believes that to deal with online Trading is not a easy task and 85 was confused to anything about that the trading via internet is a easy task or not There is a difference between the people who believe and who dont believe is not very big that is only 10% , the reason of this problem can be if a person is doing its investment on its own he or she think of the problem of being mistaken in the transaction. So there is a need of proper training to do trading online

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16. Introduction of online trading helped to attract the new Investors thus increasing the trading volumes at Stock Market?

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QUESTIONNARIE

I am student of MBA. I am working on the project of On-Line trading. You are requested to fill the questionnaire to enable, to undertake the study on the said Project.
Name: _______________________ Mobile No.:___________________ Address: ______________________ ______________________. Age: _______________ landline no.:___ Occupation: _______________

Q1. For how long you have been trading with on line-trading? (a)1 year (b) 2 year (c) 3 year (d) 4 year

Q2..How will you describe your experience with on-line trading till date? (a) very easy to operate (b) very difficult to operate (c) not secure (d) Any other Q3. What amount of money you are invested normally? (a) 50000 (b) 100000 to 150000 90

(c) 150000 to 2000000 Q4. How often do you trade? (a)Daily (c) Monthly Q5. In which trading you will prefer? (a) Online trading (c) Both

(d) Any other amount

(b) Weekly (d) More than one month

(b) offline trading

Q6. According to you online trading settled in Indian investor psyche (a) Yes (b) No

Q7. What shortcomings do you feel in Indian On-line Trading ? (a) Lack of awareness the investors about on-line trading (b) Shortage of domestic technical expertise (c) Shortage Of Infra structure (d) If any other Q8. Which media would you prefer the most for investor? (a) T.V (c) Magazines Q9. What is your annual income? (a) Below 100000 (c) 2,00,000 3,00,000 (b) (d) 1,00,000 2,00,000 3,00,000 4,00,000 (b) Newspaper (d) Journals

Q10. What percentage of your monthly household income could be available for m investment? (a) Less than 5% (b) 5% to 10%

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(c)

10% to 15%

(d) 15% to 20%

Q11. Where do you often invest your money?

(a) (c) Equity Insurance (b) (d) Mutual fund Term deposits

(e)

Others

Q12. What is the primary objective of your investment? (a) Capital appreciation (c) Retirement planning (e) Education funding /others Q13. Do you owe a Computer?
(a) Yes (b) No

(b) Source of income (d) Wealth preservation

Q14. online trading is a secure way of trading

(a) (c) Strongly agree Cant say (b) (d) Agree Disagree

Q15. online trading is easy and fast way of trading?

(a) (c) Strongly agree Cant say (b) (d) Agree Disagree

Q16. Introduction of online trading helped to attract the new Investors thus increasing the trading volumes at Stock Market?
(a) (c) Strongly agree Cant say (b) (d) Agree Disagree

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Strength
Quality provider Advisory service Reputation of company Strong management

Weakness
In the sense of weakness no one is complete, and mostly in this sector, it is a booming sector, earlier it was not like now. It is growing like rising moon. Weakness is only that every company has a wide product range.

Opportunity
Top equity broking house in branch expansion 3rd in terms of trading account 6th in term of trading terminal

Threats
Tough competition in sector Same service provider companies Reduction in prices by various competitors

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Conclusion
Online trading is the new concept in the stock market. In India, online trading is still at its infancy stage. Online trading has made it easy to trade in the stock market as now people can trade while sitting at their home. Now stock market is easily accessible by the people. There are some problems while doing the trade through the internet. Major problem faced by online trader is that the investors are loyal to their traditional brokers, they rely upon the suggestions given by their brokers. Another major problem is that the people don't have full knowledge regarding online trading. They find it difficult to trade themselves, as a wrong entry made by them, can bring them huge losses. Nevertheless to say that online trading has the bright future as the percentage of the trade done through online trading is increasing day by day.

This securities market is about to grow in future very much with the growth of equity research.

There is very high competition in this market , there are many companies which are providing different type of services to there clients and, this market is centre of attraction to new entrepreneur because it is already successful market and it is for sure that it will grow further, and there are many opportunities lying ahead in the way.

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The introduction of the Internet has surprisingly changed our way of life as a society. It has defined the way we do business and the way we correspond. The Internet has opened many opportunities for online trading. The financial industry revolves around the Internet. Every thing is just a few clicks away. This makes online trading most convenient. But there are still investors who prefer the old fashion way of offline trading and they mainly prefer offline trading for security reasons. Internet has introduced a way for consumers to manage their money online. Not to mention, Internet has transformed the way investment companies operate their business and has made it easy for private investors to gain straight access to a range of different markets and online tools that were at one point only reserved by the use of investment professionals. Consumer investing and online trading has dramatically changed over the last decade. Online trading dynamically continues to be redefined. Services have expanded to include integrated management of additional financial accounts. Not to mention, it has subsequently expanded in conjunction with ground-breaking improvements to the traditional trading interface, such as telephone interface systems. Of course, online trading has many pros. There are several wonderful reasons to invest online and consider online trading. Money saving opportunities The amount of money you save depends primarily on the online brokerage firm that you choose. No two firms are the same. There may be different regulations, similar to bank regulations. There are minimum deposits required that must be maintained. As mentioned above, this will depend on the online brokerage firm.

2. Instant online access You can gain instant access to your account, the value of your portfolio updates immediately before your eyes.

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3. Enter online trades at anytime You can enter online trades at anytime and from anywhere. This is very convenient if you live in a different time zone than the country you are trading in. Not to mention, it is especially fit for investors with busy schedules. 4. With online trading you are in charge You are in control of your investments. No sales pitches and no hassle. You decide where to invest your money. There should be more awareness made about the portfolio management services by giving more advertisement. The india bulls PMS should go for tie-ups with the corporate to increase business. India bulls portfolio limited should organize some events to build its Brand Image in the minds of the people towards PMS. As per customers point of view, they feel that india bulls portfolio limited should open more number of branches for the convenience of people.

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Books:
NCFM books:

Capital market Derivatives

Newspaper & Magazines:

Economic times Business standard Business world

Business today Money times

Websites :
www.nseindia.com www.google.com www.yahoo.com www.india bullsonline .com

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