Professional Documents
Culture Documents
INDIABULS
INDIABULS
On
“AN OVERVIEW OF INDIAN STOCK MARKET”
(Batch—2008-2010)
ASTHA SCHOOL OF
MANAGEMENT,BBSR
ORISSA
1
CANDIDATE DECLARATION
2
Dated MR.SAROJ
KUMAR DAS
REG,0806998022
ACKNOWLEDGEMENT
3
SAROJ KUMAR DAS
Astha school of management
Reg. 0806998022
Executive Summary
4
maximize the return. Some of the main characteristics of the brokerage
industry include growth in e-broking; growing derivatives market,
decline in brokerage fees etc. An endeavor was also made to
understand the role played by Indiabulls Securities compared to its
competitors in Indian retail brokerage market.
Table of Contents
Particulars
Chapter 6 Derivatives..............................................
Chapter 7 Competitors............................................
5
Questionnare……………………………………………………………
Conclusion ………………………………………………………………
Bibliography...........................................................
Appendix................................................................
Chapter 1
Indian Stock Markets is one of the oldest in Asia. Its history dates back
to nearly 200 years ago. The earliest records of security dealings in
India are meager and obscure. The East India Company was the
dominant institution in those days and business in its loan securities
used to be transacted towards the close of the eighteenth century.
6
cotton supply from United States to Europe was stopped; thus, the
'Share Mania' in India began. The number of brokers increased to
about 200 to 250.
At the end of the American Civil War, the brokers who thrived out of
Civil War in 1874, found a place in a street (now appropriately called as
Dalal Street) where they would conveniently assemble and transact
business. In 1887, they formally established in Bombay, the "Native
Share and Stock Brokers' Association”, which is alternatively
known as “The Stock Exchange". In 1895, the Stock Exchange
acquired a premise in the same street and it was inaugurated in 1899.
Thus, the Stock Exchange at Bombay was consolidated.
The two major stock exchanges in India are National Stock Exchange
(NSE) and Bombay Stock Exchange (BSE).
7
Pherwani Committee, the National Stock Exchange was incorporated in
1992 by Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation of India,
all Insurance Corporations, selected commercial banks and others.
8
treasury bills, public sector unit bonds, commercial paper, certificate of
deposit, etc.
• Trading members
• Participants
9
• Delays in communication, late payments and the malpractice’s
prevailing in the traditional trading mechanism can be done away
with greater operational efficiency and informational
transparency in the stock market operations, with the support of
total computerized network.
NSE Nifty
S&P CNX Nifty is a well diversified 50 stock index accounting for 22
sectors of the economy. It is used for a variety of purposes such as
benchmarking fund portfolios, index based derivatives and index funds.
NSE came to be owned and managed by India Index Services and
Products Ltd. (IISL), which is a joint venture between NSE and CRISIL.
IISL is India's first specialised company focused upon the index as a
core product. IISL have a consulting and licensing agreement with
Standard & Poor's (S&P), who are world leaders in index services. CNX
stands for CRISIL NSE Indices. CNX ensures common branding of
indices, to reflect the identities of both the promoters, i.e. NSE and
CRISIL. Thus, 'C' stands for CRISIL, 'N' stands for NSE and X stands for
Exchange or Index. The S&P prefix belongs to the US-based Standard &
Poor's Financial Information Services.
10
SENSEX
The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock
index that subsequently became the barometer of the Indian stock
market.
The SENSEX captured all these events in the most judicial manner. One
can identify the booms and busts of the Indian stock market through
SENSEX.
11
The launch of SENSEX in 1986 was later followed up in January 1989 by
introduction of BSE National Index (Base: 1983-84 = 100). It comprised
of 100 stocks listed at five major stock exchanges. The Exchange
launched dollar-linked version of BSE-100 index i.e. Dollex-100 on May
22, 2006.
In order to fulfill the need of the market participants for still broader,
segment-specific and sector-specific indices, the Exchange has
continuously been increasing the range of its indices. The launch of
BSE-200 Index in 1994 was followed by the launch of BSE-500 Index
and 5 sectoral indices in 1999. In 2001, BSE launched the BSE-PSU
Index, DOLLEX-30 and the country's first free-float based index - the
BSE TECK Index. The Exchange shifted all its indices to a free-float
methodology (except BSE PSU index) in a phased manner.
The values of all BSE indices are updated every 15 seconds during the
market hours and displayed through the BOLT system, BSE website and
news wire agencies.
Chapter 2
OVERVIEW OF INDIABULLS
12
2.1 Introduction
History
Indiabulls has over 640 branches all over India. The customers of
Indiabulls are more than 4,50,000 which covers from a wide range
of financial services and products from securities, derivatives
trading, depositary services, research & advisory services, consumer
secured & unsecured credit, loan against shares and mortgage &
housing finance. The company employs around 4000 Relationship
managers who help the clients to satisfy their customized financial
goals. Indiabulls entered the Real Estate business in the year 2005
with its group of companies.
13
Indiabulls Financial Services Ltd is listed on the National Stock
Exchange, Bombay Stock Exchange and Luxembourg Stock
Exchange. The market capitalization of Indiabulls is around USD
2500 million (29th December 2006). Indiabulls and its group
companies have attracted USD 500 million of equity capital in
Foreign Direct Investment (FDI) since March 2000. Some of the large
shareholders of Indiabulls are the largest financial institutions of the
world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan
Stanley and Farallon Capital.
Year 2000-01:
Year 2004-05: This was one of the most important years in the history
of Indiabulls. In this year:
14
• Indiabulls came out with its initial public offer (IPO) in September
2004.
• Indiabulls started its Consumer Finance business.
• Indiabulls entered the Indian Real Estate market and became the
first company to bring FDI in Indian Real Estate.
• Indiabulls won bids for landmark properties in Mumbai.
15
Diversified Business Group of Indiabulls
Securities &
Secured
Derivatives
Financing
Broking
Consumer
Financing
16
Financial products distribution: distribution of mutual funds and
insurance products.
• Administration
• Operations & Service quality
• Technology
• Finance
• Corporate affairs
• Human resources
• Marketing
17
• Corporate communications
• Legal
Director-Online Director-Offline
Operations Corporate
Technolog Corporate Human
Administration & Finance Communi Legal
y Affairs Resources cation
Service
Customer
Recruitment Marketing Training
Service
Regional Manager
Branch Manager
Relationship
Manager
18
Figure 2.2 Department based organizational Structure
of Indiabulls
19
Senior Vice President
Regional Manager
Branch Manager
Senior Sales Manager
RM/SRM
Back Office Local Compliance
Executive Officer
ARM
Dealer
20
Figure 2.3 Regional hierarchies of Indiabulls
Key Positions
Chairman
Chief Executive
Executive Director Executive Director
Officer
21
2.5 Products and Services of Indiabulls
• Stocks
• Options and Futures
• Depository Services
• Commodities
• Insurance Products
• Mutual Funds
• Bonds and Debt Products
Services
.Mortgage Loans:
22
Indiabulls Housing Finance Ltd. which is a flagship of Indiabulls has
started lending of Mortgage Loans to prospective customers. This
company enables the home-seekers to access finance to buy their
homes. They provide different types of loans like plot loans, Loan
against Residential, Commercial and Rental Property, thereby enabling
the borrower to leverage the property owned to fund any genuine
needs be it Business Expansion, Child's Education, Child's Marriage or
for Holiday Abroad.
Consumer Finance:
23
Chapter 3
3.1 Introduction
Indiabulls Securities Ltd is engaged in the business of Internet based
trading and is registered with SEBI as a stockbroker, trading and
clearing member of NSE, member of BSE and as a depositary
participant with National Securities Depository Limited (“NSDL”) and
Central Depository Services (India) Limited (“CDSL”). ISL is also a
member of the National Securities Clearing Corporation Limited.
History
Indiabulls Securities Limited (ISL) was incorporated as GPF Securities
Private Limited on June 9, 1995.
The name of the company was changed to Orbis Securities Private
Limited on December 15, 1995 to change the profile of the company
and subsequently due to the conversion of the company into a public
limited company; the name was further changed to Orbis Securities
Limited on January 5, 2004.
The name of the company was again changed to Indiabulls Securities
Limited on February 16, 2004 so as to capitalize on the brand image of
the term “Indiabulls” in the company name. ISL is a corporate member
of capital market & derivative segment of The National Stock Exchange
of India Ltd.
24
Trading With Indiabulls
This section will introduce us about the process and instruments used to help
a customer or a client to trade with Indiabulls securities. This process is
almost similar to any other trading firm but there will be some difference in
the cost of brokerage commission.
Document Required
• 3 photographs ( signed across)
• Photo Identification Proof - any of the following - Voter ID/Driving
License/Passport.
• Address Proof any of the following - Voter ID/Driving License/ Passport/
Bank statement or pass book sealed and attestation by bank official/
BSNL landline bill.
• A crossed Cheque favoring “India bulls Securities Ltd”. of the required
amount. The amount for Demat as well as trading will be Rs. 900/-(free
Demat +900 Trading Account) the minimum amount being Rs. 900 a
cheque can be given for a larger amount.
• Copy of PAN Card is mandatory.
• Registration Kit
25
• CDSL Demat Kit
• Bank and address proof declaration. (Master undertaking)
• PAN name discrepancy form
These documents may not be consumer friendly but it is to avoid illegal
transaction and to prevent black money this ensures that money invested
is accounted.
• Online business
• Offline business
• Other Sales
26
some large institutional players in India and is qualified broker for
Equities, F&O and Debt markets for 145 such institutional clients.
You need to open a Demat account if you want to buy or sell stocks. So
it is just like a bank account where actual money is replaced by shares.
We need to approach the Depository Participants (DP, they are like
bank branches), to open Demat account.
Think of it like a bank. The head office where all the technology rests
and details of all accounts held is like the depository. And the DPs are
the branches that cater to individuals.
27
3.4 Trading Products of Indiabulls Securities
Indiabulls
Securities
Trading Products
Fig
28
Indiabulls Securities provide three products for trading. They are
• Cash account
• Intraday account
• Margin trading (Mantra)
Cash account provides the client to buy 4 times of cash balance in his
trading account.
Chapter 4
4.1 Income: Indiabulls Securities Ltd income unit has the following
components
29
• Brokerage
• Equities
• F&O
Income from Offline Business: The offline business unit has one of
the widest branch networks in India with a pan India presence with
large market share. The revenues have grown from Rs. 96.02 million in
FY 2002 to Rs. 447.25 million in FY 2004 and have changed from
72.52% of total business in FY 2001 to 64.34% of business in FY 2004.
The rapid growth of the Offline business is driven by growth in total
clients, increased geographical presence.
• Brokerage
• Equities
• F&O
• Wholesale Debt Markets
Brokerage Income
30
• Wholesale Debt market is focused on institutional clients.
31
Brokerage Income of Indibulls Securities of 3 Years( in Crore)
300
261.11
250
Brokerage Income
200
150
99.65
100
47.2
50
0
2004 2005 2006
Years
32
S e g m e n tw ise S a le s o f In d ia b u lls S e cu ritie s F o r M a rch 2005(in C ro re )
9.88 , 9 %
2, 2% 1 .9 3 , 2 %
0 .8 4, 1 %
33
Segmentwise sales of Indiabulls Securities For March 2006(in
Crore)
21.16, 7%
23.06, 7%
9.08, 3%
3.57, 1%
261.11, 82%
34
Profitability ratios:
35
Indiabulls Securities Ltd. Mar 2004 Mar Mar 2006
2005
Per cent (Non-Annualized) 12 12 12 months
months months
-
Margins ratios (%)
-
As % of operating income
PBDT 43.05 44.75 58.76
PBT 41.45 42.87 56.7
PAT 25.92 27.25 37.49
PBDT (NNRT) 43.01 44.52 58.72
PBT (NNRT) 41.41 42.63 56.66
PAT (NNRT) 25.88 27.02 37.45
-
Corporate tax as per cent of 35.83 33.69 32.47
PBT
-
Returns ratios (%)
-
As % of total assets
PBDT 18.95 31.35
PBT 18.15 30.25
PAT 11.54 20
PAT (NNRT) 11.44 19.98
Operating cash flow 77.78 65.19
-
As % of net worth
PBDT 53.48 128.77
PBT 51.23 124.25
PAT 32.57 82.16
PAT (NNRT) 32.29 82.07
Operating cash flow 219.53 267.75
-
As % of capital employed
PBDT 47.39 58.11
PBT 45.39 56.06
PAT 28.86 37.07
PAT (NNRT) 28.61 37.03
Operating cash flow 194.53 120.82
-
Appropriation of profits (as %
of PAT)
Dividends 3.89 19.66 0.52
36
Equity dividends 0.44 2.27 0.07
Preference dividends 3.44 17.39 0.45
Retained profits 96.11 80.34 99.48
-
Dividends / net worth 6.4 0.43
Equity dividends / equity capital 3.98 0.45
Equity dividends / equity cap. & sh. 3.98 0.45
prem.
Liquidity ratios:
Indiabulls Securities Ltd. Mar 2004 Mar 2005 Mar 2006
Times (Non-Annualized) 12 12 12 months
months months
-
Short term liquidity
-
Cash / current liabilities & 0.67 0.86 1.7
provisions
Quick ratio 1.6 0.86 1.89
-
Medium to long term liquidity
-
Current ratio 1.776 1.141 2.137
Solvency ratio 1.567 1.561 1.269
Debt equity ratio 1.237 0.848 2.056
-
Interest incidence (%) 11.42 19.13 11.67
-
Interest cover
-
PBIT / interest 3.63 4.01 5.2
PBIT (NNRT) / interest 3.63 4 5.2
Operating cash flow / interest -2.99 11.97 8.91
-
(Rs. Crore)
Current assets 231.47 261.19 914.49
Current liabilities 130.34 228.86 427.87
Working capital 101.13 32.33 486.62
Net worth 83.34 108.43 181.77
Reserves & surplus 20.24 45.33 163.94
37
Asset utilization ratios
Indiabulls Securities Ltd. Mar Mar Mar 2006
2004 2005
Times (Non-Annualized) 12 12 12 months
months months
-
Efficiency ratios
-
Operating cash flow / total assets 0 0.78 0.65
Operating cash flow / gross fixed 0 17.46 14.15
assets
Operating cash flow / capital 0 1.95 1.21
employed
-
Operating income / total assets 0.42 0.53
Operating income / GFA / leased 9.51 11.58
assets
Operating income / capital 1.06 0.99
employed
-
PBDT (NNRT) / total assets 0.19 0.31
PBDT (NNRT) / gross fixed assets 4.23 6.8
PBDT (NNRT) / capital employed 0.47 0.58
-
PBT / total assets 0.18 0.3
PBT / gross fixed assets 4.05 6.56
PBT / capital employed 0.45 0.56
-
PAT / total assets 0.11 0.2
PAT / gross fixed assets 2.57 4.34
PAT / capital employed 0.29 0.37
4.3 Interpretation:
38
Profitability Ratios: Profitability is the net result of a number of
policies and decisions. The ratios examined thus far provide useful
clues to the effectiveness of firms operations.
Liquidity Ratios: liquidity ratios deal with firm’s ability to pay off its
debts. It includes
Current Liabilities
39
Debt equity ratio is the related contribution of creditors and owners of
the business in its financing.
35
%
30.7
30 %
%
25 22.3
% % 21.9
18.8 %
20 %
% 17.5
%
15
%
10
%
5.5
3.4
5 %
1.1 1.9 2.2 %
%
% % %
0
%
FY200 FY200 FY200 FY200 FY200 (1)
2 3 4 5 6
40
Graph 4.3 Market share of Indiabulls on NSE trading
Volumes
40%
35%
35%
30%
24%
25%
20%
20%
14% 12%
15%
10% 7%
5%
0%
Top 5 Top 10 Top 25
FY02 FY05
41
5.1 Project Framework
42
The Indian capital markets have witnessed a transformation over the
last decade. India now finds its place amongst some of the most
sophisticated and largest markets of the world. With over 20 million
shareholders, India has the third largest investor base in the world after
the USA and Japan. The Indian capital market is significant in terms of
the degree of development, volume of trading and its tremendous
growth potential.
Over the past few years, the capital markets have also witnessed
substantial reforms in regulation and supervision. Reforms, particularly
the establishment and empowerment of SEBI, market-determined
prices and allocation of resources, screen-based nation-wide trading,
dematerialization and electronic transfer of securities, rolling
settlement and derivatives trading have greatly improved both the
regulatory framework and efficiency of trading and settlement.
43
• Exchanges
• Clearing Corporations
• Brokers
• Custodians
• Depositories
• Investors
• Merchant Bankers
44
• Delivery refers to buying stocks today with a plan of selling it in
future. In India there is a concept of T+2 settlements. Which
means a stock bought on trade day is credited to your Demat
account (or delivered) into your Demat account after 2 days.
• Square off- making the position nil. Say selling off the stocks.
(or buying back in case of short selling)
• Short selling- selling without having the possession of the
stocks (possible in intraday trade). Selling the stocks initially and
buying them back later. It is a concept used in the falling
markets.
45
Chapter 6
DERIVATIVES
By far the most significant event in finance during the past decade has
been the extraordinary development and expansion of financial
derivatives. These instruments enhance the ability to differentiate risk
and allocate it to those investors most able and willing to take it
6.1 Definition:
Derivatives are instruments whose value is ‘derived’, in whole or in
part, from the value of one or more underlying assets.
History of Derivatives
46
contracts is attributed to the need for farmers to protect themselves
from any decline in the price of their crops due to delayed monsoon, or
overproduction.
The first 'futures' contracts can be traced to the Yodoya rice market in
Osaka, Japan around 1650. These were evidently standardized
contracts, which made them much like today's futures.
47
accounting for around 55% of the total turnover of derivatives at NSE,
as on April 13, 2005.
48
a certain price (exercise price), when the crop is ready in three months
time (expiry period).
In this case, say the merchant agrees to buy the crop at Rs 9,000 per
ton. Now, the value of this derivative contract will increase as the price
of soybean decreases and vice-a-versa.
If the selling price of soybean goes down to Rs 7,000 per ton, the
derivative contract will be more valuable for the farmer, and if the price
of soybean goes down to Rs 6,000, the contract becomes even more
valuable.
This is because the farmer can sell the soybean he has produced at Rs
9000 per ton even though the market price is much less. Thus, the
value of the derivative is dependent on the value of the underlying.
49
Derivative contracts can be standardized and traded on the stock
exchange. Such derivatives are called exchange-traded derivatives. Or
they can be customized as per the needs of the user by negotiating
with the other party involved.
• Futures
• Option
50
Futures and options are traded on the NSE platform, with a normal
IndiaBulls trading account the client get the access to trade in the
F&O contracts.
As the name suggests, futures are derivative contracts that give the
holder the opportunity to buy or sell the underlying at a pre-specified
price some time in the future.
They come in standardized form with fixed expiry time, contract size
and price. Forwards are similar contracts but customizable in terms of
contract size, expiry date and price, as per the needs of the user.
6.5 Options
Option contracts give the holder the option to buy or sell the underlying
at a pre-specified price some time in the future.
51
• Spot Price: the price at which an asset trades in the spot
market.
• Futures Price: the price at which the futures contract trades
in the futures market
• Contract Cycle: The period over which the contract trades.
The index futures contracts on the NSE have a one-month,
two-month and three-month expiry cycles which expire on the
last Thursday of the month. On the Friday following the last
Thursday, a new contract having a three-month expiry is
introduced for trading.
• Expiry Date-the date specified in the futures contract. It is
the last Thursday of the month
• Contract Size: the amount of asset that has to be delivered
less than one contract. For instance, the contract size on NSE
futures market is 100 Niftiest. It is prescribed by NSE for
stocks. Each stock had a different lot size.
• Basis – the futures price minus the spot price. There will be a
different basis for each delivery month for each contract. In a
normal market, basis will be positive. This reflects that futures
prices normally exceed spot prices.
• Cost of Carry – the storage cost plus the interest that is paid
to finance the asset less the income earned on the asset.
• Initial Margin – the amount that must be deposited in the
margin account at the time the futures contract is first entered
into. These margins are prescribed by the exchange. It varies
from stock to stock.
• Marking to Market – the adjustment made at the end of
each trading day to the investor’s margin account to reflect
the investor’s gain or loss depending upon the futures closing
price. It is the difference between today’s closing price and
yesterdays closing. The MTM profit /loss are credited to the
52
client account on day to day basis. Thus we call this a T+0
settlement.
• Maintenance Margin – somewhat lower than the initial
margin; the balance in the margin account must never
become negative and in case it does, the investor receives a
margin call that must top-up the account to the initial margin
level before trade commences the following day.
•
There are around 152 companies which are underlying for future
and options in NSE. There are
53
6.7 Option Contracts: The owner of an option has the OPTION to buy
or sell something at a predetermined price. Option provides the buyer
of the contract the right but not the obligation to exercise.
You buy a call option when you are bullish or have an upward
target.
You buy a put option when you are bearish or have a downward
target.
54
• Strike Price – the target price or the expected price.
• Contract Cycle – the period over which the contract trades.
There are three month contracts just like the futures.
• Expiry Date – the date specified in the option contract. It is the
last Thursday of the month, just as in futures.
• Contract Size – the amount of asset that has to be delivered
under one contract.
• In-The-Money Option (ITM) – an option that would lead to a
positive cash-flow to the holder if it were exercised immediately.
• A call option on the index is said to be ITM if the current index
stands higher than the strike price (Spot Price > Strike Price).
• A put option is ITM if the index is below the Strike price (Spot
Price < Strike Price).
• At-The-Money (ATM) – an option that would lead to zero cash
flows to the holder if it were exercised immediately.
• Out-Of-The-Money Option (OTM) – an option that would lead
to a negative cash-flow to the holder if it were exercised
immediately.
• A call option on the index is said to be OTM if the current index
stands at a level which is less than the strike price (Spot Price <
Strike Price).
55
Chapter 7
THE COMPETITORS
7.1 Major Competitors of Indiabulls Securities Ltd
Indiabulls Securities faces significant competition from companies
seeking to attract client financial assets, including traditional and
online brokerage firms, mutual fund companies and institutional
players having wide presence and a strong brand name. They are;
56
Management Services, Mutual Funds, Life Insurance, Fixed deposits
and other small savings instruments to loan products and Investment
banking. India Infoline also owns and manages the websites,
www.indiainfoline.com and www.5paisa.com .
Features of 5 paisa.com:
Paisa sense - They offer a good value for money proposition. Their
brokerage rates are very competitive, charging only 5 paise for Rs100
of trade done, which is 0.05% brokerage. They offer the most
reasonable rates, independent of your net worth or volumes. In case of
trades that result in delivery, they charge an additional 0.20% for back
office and securities handling.
57
Personalized service - At 5paisa.com, they are committed to provide
you with unparalleled service, using e-mail, call centers and support
staff. They have also invested in physical infrastructure.
58
of an IVR infrastructure and a team of customer agents to receive
orders over the telephone.
FEATURES
Integrity: A company honoring commitment with highest ethical and
business practices.
Team Work: Attaining goals collectively and collaboratively.
59
Meritocracy: Performance gets differentiated, recognized and
rewarded in an apolitical environment.
Passion & Attitude: High energy and self motivated with a “Do It”
attitude.
Excellence in Execution: Time bound results within the framework of
the company’s value system.
7.5 Karvy
The birth of Karvy was on a modest scale in the year 1982. It began
with the vision and enterprise of a small group of practicing Chartered
Accountants based in Hyderabad, who founded Karvy. They started
with consulting and financial accounting automation, and then carved
inroads into the field of Registry and Share Transfers. Karvy has built a
reputation as an integrated financial services provider, offering a wide
spectrum of services for over 20 years.
60
Karvy Securities Limited
Deals in distribution of various investment products, viz., equities,
mutual funds, bonds and debentures, fixed deposits, insurance policies
for the investor.
• Institutional Equities,
• Retail (equities and other financial products),
• Portfolio Management and
• Depository Services.
61
Kotak Securities Ltd is also a depository participant with National
Securities Depository Limited (NSDL) and Central Depository Services
Limited (CDSL), providing dual benefit services wherein the investors
can use the brokerage services of the company for executing the
transactions and the depository services for settling them.
• Intraday calls
• Daily Technical View
• Daily Morning Brief
• Weekly Technical Report
• Sectoral Reports
62
• Stock Ideas
• Derivative Reports
• SMS Alerts: Kotak Securities also provides SMS alerts to
customers providing useful tips about stocks & shares.
• Internet Banking
• Mobile Banking
• ATM banking
• Phone Banking
• ICICI Securities is amongst the largest arranger of funds in Debt
and Equity segments and also amongst the leading advisors in
Mergers and Acquisitions.
63
Chapter 8
64
Indian Retail Brokerage Market
Interdepende
nt
Segments
65
is enabled by telecom connectivity and low costs
• Increasing access to capital and the ability to provide margin
finance
Competitive analysis
Quote Software: This is used mainly for technical study and for live
quotes. Many people don’t evaluate quote software. Some Investors
don’t pay attention to the quality of data (how accurate it is). Or how
fast and often it refreshes. Does it allow us to back test our strategy?
Does it allow customizing technical signals/parameters?? Does it allow
us to see historic data? For, what period is intra day data available?
They might need all this information. They should be clear on what
they need and ensure quote software provides it all.
67
execute our trade fast. It should automate trade management and
execution, and should automatically give protection against human
errors.
68
In tra d a y B ro ke ra g e C h a rg e s
0.3
0.25
0.25
0.2
Charges
0.15
0.1 0.1 0.1 0.1
0.1
0.05 0.05
0.05
0
Indiabulls K o tak India-infolineIC IC I direc t K arvy M otilal S harek han
S ec urities os w al
F in a n c ia l B ro k e ra g e F ir m s
69
Delievery Brokerage Charges
0.8 0.75
0.7
0.6
0.5 0.5 0.5 0.5 0.5
0.5 0.45
Charges
0.4
0.3
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Indiabulls Kotak India- ICICI Direct Karvy Motilal oswal Sharekhan
Securities infoline
Financial Broke rage Firms
Indiabulls Kotak Securities India-infoline ICICI Direct Karvy Motilal oswal Sharekhan
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We were interpreting the blogs written by customers, their experiences
and their review on brokerage firms.
In this web site they have conducted opinion poll on broker preferences
of customers & reasons for choosing the particular brokerage firm. In
this poll opinion, customers have shared their viewpoint about pros &
cons of different brokerage firms.
Experiences of Customers
Poll Options
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Which Online Broker You Prefer? Poll Results of Blog(Voters 457)
Kotak, (34), 7%
Sharekhan, (83), 18%
HDFC, (14), 3%
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• Well capitalized player, with strong banking relationships and
credit ratings
• Ability to combine people and technology in unique ways
• Strong market presence and increased market share leading to a
virtuous cycle of growth and Profitability.
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De-Merits of Indiabulls Securities
• You have to open a bank account with the banks mentioned
in Indiabulls site for Credit/ Debit Facility as they don’t have their
own bank. And In ICICI direct , you have a direct debit/credit
facility with the bank
• Most customers feel that it is difficult to understand the
ledger reports of Indiabulls securities, so proper customer
guidance should be given.
• Lack of Banking arm
• Rural market is yet to be tapped.
• More importance should be given to promotions &
advertisements.
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relationship managers who are available 24X7 to assist the
clients.
• In Depth Market Analysis and Research
Their special research cell bring you intensive research reports
on how the stock market is faring, when is the right time to
invest, when to execute your order and more. Depending on what
kind of investor you are, they bring you fundamental or basic
research and technical research.
800 750
Number of Branches
667
700
600
500
500
400
400
306 257
300 250
200
100
0
Kotak Indiabulls ICICI Sharekhan India- Motilal- Karvy
Infoline oswal
Competitors
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Number of Customers Using Online Trading Terminal as per Year 2005
800,000
Number of Customers using Online Trading 675,000
700,000
600,000
500,000
400,000
Terminal
300,000
140,000
200,000
75,000 60,000 90,000
100,000
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• Can apply for mutual funds online and can also sell them online.
• Internet banking demo which gives customers an opportunity to
learn.
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at a lower cost. Now with "Speak to transfer", you can also
transfer or pledge instructions through our customer care officer.
ShareKhan
Merits of ShareKhan Securities
• Low brokerage charges, intraday 0.1% and 0.5% for
delivery.
• Live streaming quotes
• Customer support is good
• No monthly charges
• Can trade in both BSE and NSE
De-Merits of ShareKhan Securities
No BTST (buy today sell tomorrow), in ShareKhan you can’t sell a share
today which you bought yesterday.
• You have to open a bank account with the banks mentioned
in ShareKhan site.
• Streaming quotes requires JVM (Java Virtual Machine); this
may be big headache for customers.
• Annual charges are Rs330.
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• Their trading terminals are certainly not for "investors",
only for active traders. That is because, you have to trade a
certain volume every month, otherwise you end up paying a fine
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India Infoline
Merits of India Infoline (5 Paisa.com) Securities
• Low brokerage charges, intraday 0.10% and 0.50% for
delivery and it is negotiable.
• Minimum brokerage per share will be 1 paisa for trading
transactions and 5 paisa for delivery based transactions.
• 5 paisa provides 6 times margin for Intraday & 8 time’s
margin for Delivery.
• All customers will get Digital Contract Notes. Physical
contract notes could be provided on request which would entail a
nominal charge.
Kotak Securities
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Merits
• They provide streaming quote software free.
• Low Brokerage charges with 0.05% for Intra-day & 0.45% for
delivery.
• Kotak Securities will offer small-time retail investors with invest
able surpluses as low as Rs.5, 000 a chance to invest in capital
markets.
• Transactions are transparent with effective back office support.
• They provide Simple Ledger reports, which customers feel easy
to understand than any other brokerage firms.
De-Merits
• Unethical act: Geojit Securities Ltd has accused kotak securities
stock broking firm of hacking into its account to steal critical
business information and blocking information access. (Report:
dated 2002, Ref: www.domain-b.com).
• Some investors have bad experience with accounts opening &
they complain that it takes a long time for opening accounts.
• Some customers are not happy with customer care of Kotak
securities.
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You can always choose your brokerage based on your style and
quantum of trading.
High Quality of software (KEAT)
K.E.A.T is a special software that Koataksecurities.com provides its
customers using which they can view live market rates of scrip’s on
both the NSE and BSE, create a watch list and simultaneously place
orders, view order reports, research companies etc. It is a complete
online trading terminal.
Mobile trading
The facility is exclusively designed to give you instant access to
the stock market through mobile phone.
• Phone Trading – Call and Trade
Call & Trade is a service offered by Kotak Securities for its
customers, which provides customers with a facility to trade over
the phone. Kotak Securities provides you a toll free number that
you can call from anywhere in India.
Chapter 9
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9.1 STRENGTHS
• Integrated technology platform: - Since the launch of their
website, www.indiabulls.com their online trading platform, they
have invested in building a technology platform. They have also
developed software called “power Indiabulls”. Their trader
terminal is an application which allows customers to trade on
both the BSE and the NSE, has features like live intra-day tick by
tick charts, historical charts, price alerts and other features. The
features allow them to seamlessly integrate across delivery
channels, online or offline through branches or telephone.
• Pan India distribution network: - They have 640 branches
across India. These branches help in customer acquisition as well
as customer service. Their distribution network is well spread to
capture the target audience and cater to the needs of their
potential customers.
• Relationship manager facility: - This is one of the unique
services that Indiabulls offer’s its customers. Every customer is
provided with a relationship manager, where in the customers
can contact these managers at anytime of the day to get
information on the market or get their queries clarified.
• Growth rate: - The Company is growing at a very rapid rate,
from 25 branches in the year 2003 it has grown to 650 branches
in the beginning of 2007. Not only has it seen a fast growth rate
in the number of branches but also it has grown in the number of
clients and the employee strength. They have a customer base of
more than 450,000 and over 4500 relationship managers.
Indiabulls has been rated as the “Fastest Growing Large Cap
Company” in India in a report by Business Today magazine in
April, 2006.
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• Power Indiabulls has developed into brands: -
Indiabulls.com and power Indiabulls which is their software are
well known brands amongst retail investors across India. In all the
cities that they have expanded into, they have been able to
leverage upon brand awareness and have established a customer
base.
• Strong sales and marketing teams that deliver market
leading product innovation: - their relationship manager
channel offers a single point contact to all their retail customers.
These managers offer personalized services to their customers
and help to build strong and continuing relationships with them.
The marketing associates help the company in client acquisition
at minimal cost and they also help the company and its
subsidiaries in increasing their penetration into smaller towns and
cities.
• Strong banking relations and credit ratings: - Indiabulls has
banking relation with some of the major banking institutions in
the country such as HDFC Bank, ICICI Bank, Standard Chartered
Bank, etc, for easy mobilization of funds of the customers.
• Strong market presence and increased market share: -
Their growing client base and market share have increased their
market presence and brand recognition has enhanced their
profitability. Their brand and profitability allows them to recruit
good and efficient employees, compensate them attractively and
provides the flexibility for them to invest in the business and
technology systems these attributes in turn has a positive effect
on the growth of the company.
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9.2 WEAKNESSES
9.3 OPPORTUNITIES
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have a virtuous cycle effect by improving the economic growth
and per capita income which would result in higher savings and
investments.
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from equity, F & O and wholesale debt, insurance and IPO
distribution, depository services to cater to the specific needs of
the retail and institutional investors thus providing all these
services in a single platform. Thus Indiabulls is not dependent on
any single of its subsidiary for survival and failure of any one
subsidiary will not have an adverse effect on the company as a
whole.
9.4 THREATS
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market. Stock market falls will have a cascading effect on the
investors and economy of the country.
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CHAPTER 10
RESEARCH METHODOLOGY
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Analysis and presentation of data
Making inference
Research can be conducted by researcher by:-
An in depth study of the Organization's working was done. The motive was to
know the working of the Organization and why INDIA BULLS is considered as
number one. Current status of the competitors is considered as to analyse their
competitive situation.
3. CONDUCT SURVEY:
After finalizing the sample, who may be old or new, meetings were scheduled and
survey conducted. We contacted the Customers, fixed appointment with them
and collected data. Data obtained was then analyzed.
The collected data should be properly analysed ,so that some fruitful information
can be yield out of it. The data must then be interpreted in a manner that the
analysis may be easily presented before anyone and easy to understand.
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TYPES OF RESEARCH:-
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Qualitative research is concerned with qualitative
phenomenon, i.e., phenomena relating to or involving quality or kind.
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evaluation of the material. In analytical research, the research has to use facts or
information already available, and analyze these to make a critical evaluation of
the material.
The data colleted to conduct this type of research has been prepared from
Magazines , newspaper annual and weekly issues, books on stock exchanges.
Websites:-
<http://www.Indiabulls.com>.
<http://www.sharekhan.com>.
<http://trade.indiainfoline.com>.
<http://www.5paisa.com>.
<http://www.kotaksecurities.com>.
<http://www.ICICIsecurities.com>.
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" Karvy” Karvy.Com. 25 Mar. 2007 <http://www.karvy.com>.
<http://www.motilaloswal.com>.
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METHOD AND PRINCIPLE USED:
PRIMARY INFORMATION:
To know why INDIA BULLS is standing at a reputative position among stock
exchanges and its competitive advantage. The competitor companies were also
analysed to find out their current status and how close competition exists.
SECONDARY INFORMATION:
To present the specialities of INDIA BULLS which are shown through secondary
data analysis.
The task of data collection begins after research problem has been defined
and research design /plan checked out. While deciding about the method of data
collection to be used for the study, the researcher should keep in mind the two
types of data viz. primary and secondary.
.
Primary Data
They are those which are collected a fresh and for the first time, and thus
happened to be in original in character. Data is collected by:-
-Survey
-Observation method
-Interview Method—personal interview, telephonic interview.
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Secondary Data
Are those which has already been collected by someone else and which have
already been past through the statisal process. Data is collected by:-
-Publications of central state and local govt.
-Publication of foreign.
-Journal
-Books, magazines and newspaper
-Reports and publication of business house
-Reports and publication of scholars and universities.
-Public records
PRIMARY
For collecting the data we used questionnaire method. The questionnaire was
design mainly of objective nature and partially of descriptive nature to get
suggestion regarding housing finance compares. We visited various government
department and business organization and also to individuals for required
information according to our Performance knowing the views of the people and
get their suggestions.
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Personal Interviews: Personal interview is the most versatile and flexible
kind of technique. Direct face-to-face conversation helps in getting
accurate data. Personal interview were done with the people in order to
get the required information.
SECONDARY
Websites.
Brochures
and Company Magazines.
CANOPY PROGRAM
The conducted a five days canopy program in which we were asked get
questionnaire filled by the individuals. The activity was conducted in groups. Each
group was allotted a definite area for it’s work .Every evening the response of the
day was given to the reporting officer in INDIA BULLS. The reporting officer was
Mr. Maya Sarin (Relationship Manager).
The data collected from it was of 50 persons (in round figures). The area allotted
to us was at Noida, Greater noida, and in delhi at Lakshmi nagar.The response
was good. This program enabled them as a feedback program which would help
them in further innovation and make nessary changes
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RESEARCH DESIGN
The formidable problem that follows the task of defining the research is
preparation of the design of the research project, popularly known as research
design. Decisions regarding what, where, when, how much by what means
considering an inquiry or research study constitute a research design .
Types:-
EXPLORATORY RESEARCH
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DESCRIPTIVE RESEARCH
Descriptive research studies are those studies which are concerned with
describing the characteristics if a particular individual ,or of a group.this type of
study is concerned with specific predicitions, with narration of facts and
characteristics considering individual and groups. The decision regarding what to
measure and find adequate method of measuring along with the clear cut
definition of ‘population’. “As data collected, they should be examined for
completeness, comprehensibility, consistency and reliability.”
This type of research design is adopted since it takes into account all the steps
involved in a survey concerning a phenomenon to be studied. This type of study
makes enough provision for protection against bias and must maximize reliability.
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SAMPLING PLAN
Research is basically depend up on the data and that data depend upon
the size of sample we want. So deciding of sample size is mainly based on the
nature of objective of the research. Sample size has to . confirm the objective on
each and every respect.Suppose we are going to decide any effective decision
on the base of this report or set up any new facts. On that position we have
require large size of sample on comparison to find out a trend.
Here our objective is simply go to "comparative analysis and make an overview of
Indian Stock Market "So we preferred to go with a sample size of only 250 data.
Systematic Sampling
In some instances , the most practical way of sampling is to select every
next item on the list. Sampling of this type is known as systematic sampling. An
element of randomness is introduced into this kind of sampling by using random
numbers to pick up the unit with which to start.
In the project the samples are drawn from different zone including 50
persons in each zone constituting 250 persons all together.
Stratified Sampling
If a population from which as ample is to be drawn does not constitute a
homogenous group stratified sampling technique is generally applied in order to
obtain a representative sampling. Under stratified sampling the poplation is
divided into several sub population that are individually more homogenous than
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the total population (the different sub population are called ‘STRATA’ and then we
select item from each stratum to constitute a sample.
In the project ,the population was selected randomly from each zone
having equal chances to be selected as a sample. The population in each zone is
called strata which includes 25 persons from each zone.
Sequential Sampling
This sampling design is somewhat complex sample design the number of sample
one more than two but it is neither certain nor decided in advance this type of
system is often referred to as sequential sampling. thus in brief we can say that in
sequential sampling one can go on taking samples one after another as long as
one desire to do so.
In the project, the samples are being surveyed in a sequential manner from
every zone.
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SAMPLE DESIGN
The selected respondents constitute what is technically called a sample and the
selection process is called sampling technique. the survey so conducted is known
as sample survey.
Researcher must prepare a sample design for his study i.e., he must plan
how a sample should be selected and of what size such a sample would be.
1. Types of universe: - The sample design is clearly define the set of objects,
technically called the universe. The total population of India is universe for INDIA
BULLS. The population of the whole country may be considered as the sampling
population.
4 Size of sample: - This refers to the number of items to be selected from the
universe to constitute a sample size. The sample size chosen by me is 125
persons, 25 persons in every zone.
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Measurement and Scaling Techniques
The method used to represent the collected data is tables, graphs, charts,
pie charts, bar graphs, supported by written statement.
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Chapter 11
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the brokerage charges for large investors which will encourage them to
invest more in the company.
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APPENDIX
Mar
Mar 2004 2005 Mar 2006
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Depreciation 1.11 2.16 6.57
PBT 28.8 49.12 180.28
Tax provision 10.79 17.89 61.06
PAT 18.01 31.23 119.22
-
Appropriation of
profit
Dividends 0.7 6.14 0.62
Retained earnings 17.31 25.09 118.6
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QUESTIONNAIRE
Name of Person:
Contact Number:
E-mail Id
Signature
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Brokerage & Tax break up format of Indiabulls
(For Security reasons all data are not revealed)
Stamp duty
Total
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CONCLUSION
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of Applied Research Projects in the company, they can do more
research on the market and identify the major factors which will drive
the market in the future.
BIBLIOGRAPHY
<http://www.Indiabulls.com>.
<http://www.sharekhan.com>.
<http://trade.indiainfoline.com>.
<http://www.5paisa.com>.
<http://www.kotaksecurities.com>.
<http://www.ICICIsecurities.com>.
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" Motilal Oswal Securities” . 25 Mar. 2007
<http://www.motilaloswal.com>.
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