Consumer Behaviour Sharekhan
summer training project...
A SUMMER TRAINING PROJECT REPORT ON CONSUMER BEHAVIOUR
(Conducted on behalf of SharekhanLimited, Delhi) (From 4th June, 2012 to 4th July, 2012)
Submitted by Name Roll. No
Recognized by UGC U/S 2(F) Affiliated to GGS Indraprastha University, Delhi Hamidpur, Delhi
Myself …………………, student of HMR Institute of Technology for M.B.A. who is presently undertaking education in the spare of “Master of Business Administration” which covers total business activities. As students of management, I must be encouraged by the growth and rapid developments taken place in Various Sectors, in India. Still recently, management is growing baby. Keeping in mind the ever development field of management and great demand for Finance in our country, our university (GGSIPU) has arranged specialization program in many field of management. Thus, it is our moral and obligatory duty to take this part of our studies with great enthusiasm and seriousness and give it the due importance. My report gives information about the “Behavior of Consumer s in various sectors regarding Equity market”. The report contains graphical representation & interpretation with each graphs and charts. For the preparation of this report, I have used simple random sampling method for survey purpose. This training proved to be an experience, which is required to become a true student of management and administration.
Ms. Khushbu Vora without whose kind help this project study would have been extremely difficult. She has helped me with her valuable suggestions right from the beginning till the final draft of the report. The sheer mention of my project study shall ever commemorate her kind guidance. I am also grateful to Mrs. Varsha Patel, faculty of the HMR Institute of Technology and Management for MBA. For his kind effort to make all the required facilities available and gave his valuable suggestions in preparing this project report. The library facility of the college has been of immense use to me for reference of books and old project reports. I am also thankful to Mr. Zubin Bhat poria (Associate Vice President) of Share khan Ltd., Delhi for giving me an opportunity for getting in valuable experience in such reputed organization. I am also thankful to Mr. Darwin Variava who is presently working with Share khan Limited for providing me actual training and the required knowledge & guidance in completing this training successfully. Finally, I would like to record my special thanks to my parents, friends, and colleagues help me directly or indirectly in preparation of project work.
Name….. MBA Roll No.
CHAPTER – 1: INTRODUCTION
CHAPTER – 2: OBJECTIVE AND METHODOLOGY
CHAPTER – 3: CONCEPTUAL DISCUSSION CHAPTER – 4: DATA ANALYSIS CHAPTER – 5: RECOMMENDATION ANNEXURES BIBLIOGRAPHY
INTRODUCTION OF SHAREKHAN
Share khan is one of the leading share broking and retail brokerage firms in the country. It is the retail broking arm of the Mumbai-based SSKI Group (Serial SevantilalKantilalIshwarlal Pvt. Ltd), which has more than88 years of experience in the stock broking business. SSKI is a veteran equities solutions company with more than 8 decades of trust and credibility in the Indian stock markets. It helps the customers/people to make informed decisions and simplifies investing in stocks. Share khan brings to you a user- friendly online trading facility, coupled with a wealth of content that will help you stalk the right shares. SSKI named its online division as a Share khan and it is into retail broking. The business of the company overhauled10 years ago on February 8, 2000. It acts as a discount brokerage house to a full service investment solution provider. It has specialized research product for the small consumer s and day traders. Sharekhan‟s online trading and investment site ww.sharekhan.com was launched in 2000. Though the www.sharekhan.com, have been providing consumer s a powerful online trading platform, the latest news, research and other knowledgebased tools and Share khan‟s equity related services include trade execution on BSE, NSE, Derivatives, commodities, depository services, online trading and investment advice. Share khan‟s ground network includes over 640 Share shops across 280 cities in India. With branches and outlets across the country, Share khan‟s ground network is one of the biggest in India! They have talent pool of experienced professionals specially designated to guide you when you need assistance, which ashy investigating with us is bound to be a hassle-free experience for you!
The Share khan provides its Customers First Step program, built specifically for all consumer s, so testament is –
“YOU’RE GUIDE TO THE FINANCIAL JUNGLE “means “Our commitment to being your guide throughout your investing lifecycle” The institutional broking arm of SSKI was also awarded „India‟s best broking house for 2004 by Asia Money brokers poll recently &It has also won the prestigiousAwaaz Consumer Vote Awards 2005 for the Most Preferred Stock Broking Brand in India, in the Investment Advisors category. They have 640 share shops across 280 cities in India to get a host of trading related services – our friendly customer service staff will also help you with any account related queries you may have. Share khan won the award by the vote of consumers around the country, as part of India‟s largest consumer study cover 7000 respondents – 21 products and services across 21 major cities. The study, initiated by Awaaz – India‟s first dedicated Consumer Channel and member of the worldwide CNBC Network, & AC Nielsen–ORG Marg, was aimed at understanding the brand preferences of the consumers & to decipher what are the most important loyalty criteria for the consumer in each vertical. The reasons behind the preferences for brands were unveiled by examining the following:
Tangible features of product / service.
Softer, intangible features like imagery, equity driving preference.
Tactical measures such as promotional / pricing schemes.
Sharekhan completes 10 years in Retail Broking Business: Share khan Ltd, India‟s leading online retail broking house with a strong online trading platform, has completed a decade in the business offering services such as portfolio management, trade execution in equities, futures & options, commodities and distribution of mutual funds, insurance and structured products. In a short span of 10 years, the company has scripted a remarkable growth story. Starting from beginnings in 8th February2000 as an online trading portal, Share khan today has a pan-India presence as well as global footprint in UAE and Oman with over 1,200 outlets serving 9,50,0000 customers across 400 cities.
Mr. Tarun Shah, CEO, Sharekhan, Says
completing a decade of setting new standards
journey has been eventful. And the journey couldn‟t have been such a rewarding one without the support of our patrons who infused immense faith in our services in the last 10 years.
patrons for the same.” Sharekhan in its decade-old journey has set category leadership through pioneering initiatives like „Trade Tiger‟; a net based executable application that emulates a broker terminal besides providing information and tools relevant to traders. Through its „First Step‟ program Sharekhan has been guiding first-time consumer s and helping them makes informed decisions.
ABOUT SHAREKHAN SSKI named its online division as SHAREKHAN and it is into retail broking. The business of the company overhauled 10 years ago on February 8, 2000. It acts as a discount brokerage house to a full service investment solutions provider. It has specialized research product for the small consumer s and day traders. Largest chain of 640 shares shops in 280 cities across India. The site was also launched on February 8, 2000 and named it as www.sharekhan.com. The Speed Trade account of Share khan is the next generation technology product launched on April 17, 2002. It offers its customers with the trade execution facilities on the NSE and BSE, for cash as well as derivatives, depository services. Ensures convenience in Trading Experience: Share khan‟s trading services are designed to offer an easy, hassle free trading experience, whether trading is done daily or occasionally. Share khan providing the customers with a multichannel access to the stock markets. It gives advice based on extensive research to its customers and provides them with relevant and updated information to help him make informed about his investment decisions. Share khan offers its customers the convenience of a broker-DP. It helps the customers meet his pay in obligations on time thereby reducing the possibility of auctions. And execute the instruction immediately on receiving it and thereafter the customer can view his updated account statement on Internet. Share khan depository services offer Demat services to individual and corporate consumer s. A customer can avail of Demat, repurchase and transmission facilities at any of the Share khan branches and business partners outlets.
RESEARCH METHODOLOGY Introduction: Research is one of the best instruments to identify the investing pattern of consumer s to invest in various sectors & to study different sectors of Capital market.
Definition: “Research is careful inquiry or examination to discover new information and relationship and to expand and to vary existing knowledge.” Research always starts with question or any problem and finds answer of problem by using scientific method. It gives complete knowledge about any problem or question.
Objective of Study (research): Every study is conducted within for some specific purpose or to solve some problem. When any research is conducted it has some primary objective that helps to solve the main problem whereas a secondary objective helps to solve peripheral problems. The primary and secondary objectives of this research are:
Primary Objective: The primary objective of carrying out this research is:-“Consumer s behavior for Investing in Equity Market in Various Sectors”
Secondary Objectives: To find out in which investment option people invests most. To find out how consumer s are motivates for investing in Equity Market. To study the general investment criteria of people. To know the peoples time horizon for investing in Equity Market and to know the rate of return expected by them. To study the interest of people for further investment in Equity Market. To assess the customer satisfaction level for investing in equity market. To classify the different sector on the basis of consumer s behavior regarding investing in equity market. To identify various motivation factor which affect to consumer while investing in various selected sectors?
BENEFITS OF STUDY: The study carried out under the title of “Consumer s Behavior for Investing in Equity Market in Various Sectors “will give benefits as under: The research will be help to know in which sector consumer s are investing more. The study will be helpful in knowing that what factors consider most important while selecting the Sectors and company under the sectors. The study will be helpful in knowing that how the consumer s are trade in Equity market. The study will be helpful in knowing responses regarding problems faced by the consumer s while investing in Equity Market The study will be helpful in knowing that what are the motivational factors that encouraging to the consumer s for investing in Equity Market.
LIMITATIONS OF THE STUDY:
As no human being is perfect, it is not possible for anyone to make the best or perfect report. Each person has some level of knowledge and is affected by some uncontrollable factors within which he/she has to work. So, it might possible that there can be some limitations in this report that may be due to my knowledge level or some other factors. According to me following limitations can be prevailing in my report: Respondents might have felt hesitation in providing information related to their age, income etc. So, there can be some data that might questionable because of unwillingness of respondents to give right information. Sample selected may not represent whole population, as sample size selected is very small in proportion to population due to time and cost constraints. Even many of the respondents may give bias answer.
Research Design: “Research design is the plan structure and strategy if investigation conceived so as obtain answers to research question and to control variance” A research design is the master plan or model for the conduct of formal investigation and survey. It is a specification of methods and procedures for acquiring the information needs for solving the problem. It decides the source of information and methods for gathering the data. A questionnaire and other forms are tested to use the collection of data. In the research study there is no perfect study to solve the problem. The research design has broadly three categories as follow.
I have used Descriptive Research Design for research purpose.
1. Exploratory Research 2. Descriptive Research 3. Casual Research
2. Descriptive Research: Descriptive research, also known as statistical research. It describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how. This study is complex and determines high degree scientific skill to study the problem. The description is used for frequencies, averages and other statistical calculations. Often the best approach, prior to writing descriptive research, is to conduct a survey investigation. Qualitative research often has the aim of description and researchers may follow-up with examinations of why the observations exist and what the implications of the findings are. In short descriptive research deals with everything that can be counted and studied. In this report, I have used this Descriptive Research Design for conducting survey on “Consumer s behavior for Investing in Equity Market in Various Sectors”
Data Collection Method: Data collection usually takes place early on in an improvement project, and is often formalized through a data collection plan which often contains the following data collection methods. The source of data collection method is as follows. Primary Data Secondary Data
Primary Data: Primary data means data collected directly from first-hand experience. Means data collected for the first time by any researcher for any research use. There are many methods of collecting primary data and the main methods include: Methods of collecting the primary data are: Questionnaire method Interviews method Focus group interviews Observation method Case-studies method Diaries method
I have used Questionnaire method for the Primary data collection for the study.
Secondary Data: Secondary data means data which are collected by any one for a particular research purpose and which are used by others for different purpose. I have also used the secondary data for the study like some company resources like broachers, websites etc.
“Sampling is the process to analyze the whole population by analyzing a part of it.”
The effectiveness of the report depends on the sample size selected from the population.
Sampling Unit: Here, target population is decided who are the actual and potential consumer s, each sample has the chance to be selected on an equal basis & this research has been conducted through surveying the whole of the equity market of Delhi city
Sample Size: For getting better result of the given problem I have to determine the perfect sample size as on 90% confidence level which is calculated statically by the given formula.
n = p*q (z /c) 2 Where, n= sample size p = percentage picking a choice (expressed as decimal) q = (1 - p) Z = Z value (e.g. 1.645 for 90% confidence level) c = confidence interval, expressed as decimal (e.g., 0.05 = ±5)
For Example: p = 0.80
q = 0.20
z = 1.645
c = 0.05
n = p*q (z /c) 2 = 0.80*0.20 (1.645/0.05) 2 = 173.1856 = 175 Therefore, I used sample size is 175
Confidence interval: In statistics, a confidence interval (CI) is a particular kind of interval estimate of a population parameter. Instead of estimating the parameter by a single value, an interval likely to include the parameter is given. Thus, confidence intervals are used to indicate the reliability of an estimate. The end points of the confidence interval are referred to as confidence limits. A confidence interval is always qualified by a particular confidence level, usually expressed as a percentage. The calculation of a confidence interval generally requires assumptions about the nature of the estimation. For example, Here, I have used a confidence interval of 0.05 and 80% percent of sample picks an answer is to be "sure" that if I had asked the question of the entire relevant population between 80% (100-20) and 20% (100-80) would have picked that answer.
Confidence level: The confidence level tells you how sure you can be. It is expressed as a percentage and represents how often the true percentage of the population who would pick an answer lies within the confidence interval. The confidence level associated with a confidence interval estimate is the success rate of the method used to construct the interval. The 90% confidence level means you can be 90% sure; When I put the confidence level and the confidence interval together, I can say that I am 90% sure that the true percentage of the population is between 20% and 80%. So, I have taken 90% confidence level means I am 90% sure. As on 90% confidence level value of Z = 1.645 Here, I have calculated formula on the basis of 90% confidence level.
Sampling frame is the actual set of units from which a sample has been drawn. In sampling frame, I have used simple random sampling method for conducting survey. In a simple random sample ('SRS') all units from the sampling frame have an equal chance to be drawn and to occur in the sample. Here, I have used sampling frame as an actual and potential consumer s from whole of the equity market of Delhi city and also from Share khan Securities Pvt. Ltd. Here, each sample has the chance to be selected on an equal basis because I have used simple random sampling method for surveying purpose.
The response rate was average. I have used questionnaire method for the financial information of the respondent, most of the people hesitated to provide the required information and also the questionnaire contained some financial terms that were technical in nature, which resulted into reduced response rate. I have visited nearly 200 potential respondents, out of which only 175 gave proper response. Hence, Response Rate = 175/200 = 87.5%
Data analysis tools:
I have used SPSS software (Statistical Package for the Social Sciences) for analysis purpose. In that I have used Mean, Median, Mode, Frequency Table, and Cross Tabulation, Graphical representation interpretation with each graphs and charts. Microsoft Office is used for data typing formatting and analyzing the data.
SHAREKHAN’S MISSION & VISION: MISSION “To educate and empower the retail consumer to help him/her take better investment decisions.”
VISION “To be the best retail broking brand in the Indian equities market.”
ROLE OF SHAREKHAN: Interface between the stock exchange and the consumer . Assistance to consumer s in precise allocation of funds. Building awareness amongst general public about stock market.
Core Services of Sharekhan: As a Share khan customer you can decide the channel through which you want to receive different Services.
OTHER SERVICES PROVIDED BY SHAREKHAN 1. Online Services 2. Offline Services 3. Depository Services: Demat &Remat Transactions
4. Derivatives Trading (Futures and Options) 5. Commodities Trading 6. IPOs & Mutual Funds Distribution 7. Fundamental Research 8. Technical Research 9. Portfolio Management 10. Free access to investment advice from Sharekhan's Research team 11. Sharekhan Value Line (a monthly publication with reviews of recommendations, stocks to watch out for etc)
12. Daily research reports and market review (High Noon & Eagle Eye) 13. Pre-market Report (Morning Cuppa) 14. Daily trading calls based on Technical Analysis 15. Cool trading products (Daring Derivatives and Market Strategy) 16. Personalized Advice 17. Live Market Information 18. Internet-based Online Trading: Speed Trade
1. Online Services: Online BSE and NSE executions (through BOLT & NEAT terminals Mutual Funds Commodity Futures PMS(Portfolio Management Services) Technical PMS Demat Services Share shops
2. Offline Services: Trading with the help of Dealer Trading without credit By calling to the Share shops
Credit facility (Only in Delivery-based) Special website for Offline Clients: www.mysharekhan.com Physical contract notes
It provides various On-line trading services through various account:
TYPES OF DEMAT ACCOUNT
Trade Tiger Account
Dial – N – Trade
The company provided mainly two types of services to their customers for the Demate Accounts. (1) Online Account and (2) Offline Account
1. Online Account: In the Online account, the company simply provides the terminal to the customers or clients and the clients can do trading himself/herself when he/she
wants. The charges of online account is Rs. 750 /-, which is varies from company to company. Online accounts are most popular than the Offline accounts. In the Online A/C, the company provides 3 types of facilities to their clients as per the requirements. A. Classic Accounts B. Trade Tiger Accounts C. Dial – n –Trade
A. Classic Accounts:
Investing Online is so much easier! In Classic accounts, it is very simple to do trading. Here customer has first to open a Demat account with Sharekhan and after opening an account he can get the login ID and password. With the help of login ID and password, the client can login to the Sharekhan.com and in the classic a/c whatever company‟s information the clients wants, he has to type the company‟s name or code and he will get all the necessary information about that company and he can buy or sell the that company‟s stock or shares. But, here in the classical account the client can access only one scrip at a time.
Features of Classic Account: Classic account enables you to buy and sell shares through our website. You get features like
Online trading account for investing in Equities and Derivatives via sharekhan.com
Integration of: Online trading + Bank + Demat account
Instant cash transfer facility against purchase & sale of shares
Make IPO bookings
You get Instant order and trade confirmations by e-mail
Personalised Market Scan with your own customized stock ticker!
Single screen interface for cash and derivatives
Your very own Portfolio Tracker!
B. Trade Tiger Account: -
Earlier it was known as Speed Trade and now it is known as Tiger Trade. This account is same as fast trade account. But, difference between these two accounts is that in the Tiger Trade Account the client can access more than 25 scripts at a time and buy and sell the share from wherever they wants. This account also provides the charts and graphs, so that the clients can easily understand about the stock of the company. This is only for big clients and dealer kind of customers. This account is mainly for active traders who trade frequently during the trading session.
Features of Trade Tiger Account:
A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX, NCDEX, Mutual Funds, IPOs
Multiple Market Watch available on Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with various Studies
Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD, RSI, etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template, that is, saving the layout for future use
User-defined alert settings on an input Stock Price trigger
Tools available to gauge market such as Tick Query, Ticker, Market Summary, Action Watch, Option Premium Calculator, Span Calculator
Shortcut key for FAST access to order placements & reports
Online fund transfer activated with 12 Banks
Features of Dial-n-trade:
TWO dedicated numbers for placing your orders with your cell phone or landline. Toll free number: 1-800-22-7050. For people with difficulty in accessing the toll-free number, we also have a Reliance number (Your Local STD Code) 30307600 which is charged at as a local call.
Simple and Secure Interactive Voice Response based system for authentication
No waiting time. Enter your TPIN to be transferred to our tele brokers
You also get the trusted, professional advice of our tele brokers
After hours order placement facility between 9.00 am and 9.30 am (timings to be extended soon)
2. Offline Account: This is simple way to do trading. In the offline account, the client can place the order by telephone or through personal visit in the office. The client who is very busy in their jobs or business, they can directly place the order by the telephone or the client who are not much busy; they can come to the office of Sharekhan. Sharekhan also provide the Dial-n-trade service to their customers. So that customers can directly place the order by the telephone.
Demat Account Opening & Brokerage Charges: -
Fee structure for General Individual: Charges
Account Opening Charges
Annual Maintenance Charges
Trade Tiger Account Rs. 1000/-
Intra-day : 0.10 %
Delivery : 0.50 %
Rs. NIL first year Rs. 300/= p.a. from second year onwards
For Intra-day Trades: This is subject to a minimum brokerage of 5 paisa per share. This means that if the share price you trade in is Rs 50/- or less, a minimum brokerage of 5 paisa per share will be charged. For Delivery Based Trades : This is subject to a minimum brokerage of 10 paisa per share. Minimum brokerage of 10 paisa per share will be applicable when the share price is Rs 20/- or less.
Sharekhan launchsShareMobile, an exclusive live streaming quotes and trading facility for its online trading customers
Next time when you are on move, you need not worry about your favorite stocks price movement. You can carry stock market terminal with you anywhere – anytime.
Have you ever missed an investment or an opportunity to book profit / loss, just because you were on move?
Sharekhan brings your freedom of being Mobile. Yes, it‟s so easy with ShareMobile to track your favorite stocks price movement tick-by-tick.
How ShareMobile does empower you?
Live tick by tick stock price.
Latest News Headlines
Track your My Trade Portfolio investments
Live Research Fundamental & Trading Calls
Sharekhan Depository Services:
Sharekhan Depository Services offers dematerialization services to
individual and corporate consumer s.
Sharekhan has a team of professionals and the latest technological
expertise dedicated exclusively to our Demat department, apart from a national network of franchisee, making the services quick, convenient and efficient.
Trading in Commodity Futures:
It provides with facility to trade in commodities (Bullion: Gold, silver and agricultural commodities) through a wholly owned subsidiary of its Parent SSKI.
Sharekhan is a member of 2 Commodity Exchanges and offers trading facility at both these exchanges: 1. Multi Commodity Exchange Of India (MCX)
2. National Commodity And Derivative Exchange, Mumbai (NCDEX)
Software (Technology) Used In Sharekhan: Sharekhan is using different technology for the running of their daily transactions. Mainly for the trading, the company using three software. 1. ODIN (VSAT Based) 2. Trade Tiger (WEB Based) 3. Classic/Fast Trade (WEB Based)
And also NEAT System Used for making transaction in NSE listed company & same way BOLT System Used for making transaction BSE listed company. And for the client information or customer service, the company using two software. 1. CIS – Client Information System. 2. BOC – Back Office.
Some Information about Sharekhan:
Rs. 15 corers daily
More than 640 outlets in 280 cities
Clients : Demat A/c
More than 400 corers Sharekhan Classic Account
Sharekhan Trade Tiger Account Dial – n - Trade
Share khan provide right investment decision to Consumer s according to their needs
Why Customer‟s first choice is SHAREKHAN…? 1. EXPERIENCE: SSKI has more than eight decades of trust and Credibility in the Indian stock market. In the Asia Money broker‟s poll held recently, Sharekhan won the „India best broking house for 2004‟ award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institutionallevel research & broking services to consumer s.
2. TECHNOLOGY: With Sharekhan online trading account you can buy and sell shares in an instant from any PC with an internet connection. You will get access to our powerful online trading tools that will help you take complete control over your investment in shares.
3. KNOWLEDGE: In a business where the right information at the right time can translate into direct profits, you get access to a wide range of information on Sharekhan‟s website www.sharekhan.com. You will also get a useful set of Knowledge-based tools that will empower you to take informed decisions.
4. ACCESSIBILITY: In addition to Sharekhan online and phone trading services also very useful. Sharekhan also have a ground network of 640 share shops across 280 Cities in India where you can get personalize Services.
5. CONVENIENCE: You can call Sharekhan‟s Dial-n-Trade number to get investment advice and execute your transactions. Sharekhan have a dedicated Call Center to provide this service via a toll-free number from anywhere in India.
6. CUSTOMER SERVICE: Sharekhan‟s customer service team will assist you for any help that you need relating to transactions, billing, demat and other queries. Sharekhan‟s customer service can be contacted via a toll-free number-mail or live chat on Sharekhan.com.
7. INVESTMENT ADVICE: Sharekhan has dedicated research teams for fundamental and technical research. Share khan‟s analysts constantly track the pulse of the market and provide timely investment advice to you in form of daily research e-mail, online chat, printed reports and SMS on your phone.
SWOT ANALYSIS of Sharekhan STRENGTHS:
Online Trading Facility
Largest Chain of Retail Share Shops in India
88 years of Experience in securities market
Dedicated and responsive workforce/staff
Value added service for HNI client
Membership of NSE & BSE
Trading option like Future & Option and Commodities
Volume based differentiated product.
Less informative website
Does not have slab rate brokerage which is provided by competitors
Problems due to network crash
Unawareness Among Consumer s
Collaboration with international financial institution
To tap the Untapped market
To capture the market lost to its Competitors.
To focus on developing a superior and powerful portal
To spread awareness of its Brand Name.
Follow government laws
Prolonged depression and high volatility in the market
Awards &Achievements of SHAREKHAN:
2001- Web Award winner of Chip magazines
2004- Best Local Brokerage by Advisory Poll of Poll 2004.
2005- Awaaz Consumer AwardsBest Broking House by CNBC channel.
Sharekhan is amongst top 3 online Brokers in India.
OF BROKING FIRMS
INDUSTRY PROFILE OF BROKING FIRMS The Indian retail brokerage industry consists of companies that primarily act as agents for the buying and selling of securities (e.g. stocks, shares, and similar financial instruments) on a commission or transaction fee or Brokerage basis. An agent that charges a fee or commission for executing buys and sell orders submitted by an consumer . The firm that acts as an agent for a customer, charge the customer the commission for its service. Roles similar to that of a stockbroker include investment advisor, financial advisor and probably many others. A stockbroker may or may not be also an investment advisor. A stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of consumer s. Typically, a broker who receives an order from a customer will communicate with a company employee located at a particular exchange, who will execute the order at the exchange and report details of the transaction to the broker. Customers typically keep their securities in an account with the broker. Brokers charge customers commissions for conducting transactions and fees for maintaining their accounts. Some of the main characteristics of the brokerage industry include growth in e-broking, decline in brokerage fees and growing derivative market and many more. There are several national as well as local players in stock trading services which are providing various services to their customers like online trading, portfolio management system, stock broking etc. They are helping the consumer s to take decision about where to invest because there is lots of Investment Avenue available with consumer s. Some of them are as follows working at the national level.
5Paisa.com - Online trading, live stock quotes and market research
Anagram Capital - Stock broking, portfolio management and investment banking services
Angel Broking -Stock-Broking and Wealth Management services
Advani Share Brokers - Share broking and market research services
AnandRathiSecurities - Portfolio management, corporate finance, equity & fixed income brokerage services
Brescon Group - Advisory and broking services
CIL Securities- Stock broking & merchant banking services
CRN India- Trends of stock market, trading tips, chat etc
Churiwala Securities - Stock trading, quotes and market analysis
DSP Merrill Lynch- Investment banking and brokerage services
Dalmia Securities - Stock broking & depository services
Equity Trade - Stock trading, company news & market research
Gandhi Securities - Stock broking and investment services
Gogia Capital Services - Stock broking and market analysis
HasmukhLalbhai - Stock trading services
Idafa Investments - Stock broking services
India Info lineSecurities - Stock broking, portfolio management and investment banking services
India Market Access - Offers stock broking, portfolio management and investment banking services
Investsmart India - Personal finance advisory & online brokerage services
KisanRatilalChoksey Shares - Stock broking and e-trading services
Kotak Securities - Brokerage services & retail distributor of financial securities
ManubhaiMangaldas Securities - Stock broking and market analysis
Moneypore - Investment and broking services
MotilalOswalSecurities - Online trading, live BSE and NSE quotes
Navia Markets - Stock broking, IPO and mutual funds services
Parag Parikh - Stock broking and portfolio management
Parsoli Corporation - Investment management & stock trading services
PratibhutiViniyog - Stock broking services
Prudential - Investment management services
Quantum Securities - Offers broking and portfolio management services.
Religare Enterprises Limited - Stock broking services and diversified financial services group with in multiple international locations
Sivan Securities - offers services related investment banking & stock broking with a focus on South India.
Lots of brokerage companies are moving towards consolidation with the smaller ones becoming either franchisee for the larger brokers or closing operations. There is an increasing demand for online trading due to consumer‟s growing preference for Internet as compared to approaching the brokers. New forms of trading including T+2 settlement system, dematerialization etc. are strengthening the retail brokerage market and attracting foreign companies to enter the Indian industry Various alternative forms of investment including fixed deposits with banks and post offices etc act as substitutes to retail broking products and services.
Stock markets refer to a market place where consumer s can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock). A stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market was estimated at about $36.6 trillion USD at the beginning of October 2008. The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. In fact, the stock market is often considered the primary indicator of a country's economic strength and development. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. In this way, investing in stock market, the stock exchanges also play importance role. Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. So, here we also understand about Stock Exchanges as follows.
Stock exchange A stock exchange is an entity which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock Exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks or 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 consumer s 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. There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities.
Bombay Stock Exchange (BSE)
The Bombay Stock Exchange Limited is the oldest stock exchange not only in the country, but also in Asia with a rich heritage of over 133 years of existence. In the early days, BSE was established as "The Native Share & Stock Brokers Association." It was established in the year 1875 and became the first stock exchange in the country to be recognized by the government. In 1956, BSE obtained a permanent recognition from the Government of India under the Securities Contracts (Regulation) Act, 1956. Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in handling of transactions through its electronic trading system. The companies listed on BSE command a total market capitalization of USD Trillion 1.06 as of July, 2009. BSE reaches to over 400 cities and town nation-wide and has around 4,937 listed companies, with over 7745 scripts being traded as on31st July 09.
The BSE Index, SENSEX, is India's first and most popular stock market benchmark index. The BSE SENSEX (SENSitiveindEX), also called the "BSE 30", is a widely used market index in India and Asia. Sensex is tracked worldwide. It constitutes 30 stocks representing 12 major sectors. The SENSEX is constructed on a 'free-float' methodology, and is sensitive to market movements and market realities. Apart from the SENSEX, BSE offers 23 indices, including 13 sectoral indices. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives.
BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certifications. It is also the first exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-line Trading System (BOLT). BSE continues to innovate. In 2006, it became the first national level stock exchange to launch its website in Gujarati and Hindi and now Marathi to reach out to a larger number of consumer s.
The BSE On-line Trading (BOLT): BSE On-line Trading (BOLT) facilitates on-line screen based trading in securities. BOLT is currently operating in 25,000 Trader Workstations located across over 359 cities in India.
BSE Vision The vision of the Bombay Stock Exchange is -
"To Emerge as the premier Indian stock exchange by establishing global benchmarks."
:- PhirozeJeejeebhoy Towers, Dalal Street Mumbai-400001, India
:-Monday-Friday, 9:00am to 3:30pm
:-Stocks, derivatives, debt
MD & CEO
History of BSE The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the 1850s, when stockbrokers would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition.
Indices of BSE: Sensex BSE 100(This covers Banking Sector) BSE 200(This covers Capital goods) BSE 500(This covers Consumer goods) BSE mid-cap index BSE small-cap index
BSE mid-cap index covers the FMCG sector and BSE small-cap index covers the IT, Metal, Oil & gas, Power industry, PSUs, etc. BSE disseminates information on the Price-Earnings Ratio, the Price to Book Value Ratio and the Dividend Yield Percentage on day-to-day basis of all its major indices. The values of all BSE indices are updated every 15 seconds during market hours and displayed through the BOLT system, BSE website and news wire agencies. All BSE Indices are reviewed periodically by the BSE Index Committee. This Committee which comprises eminent independent finance professionals frames the broad policy guidelines for the development and maintenance of all BSE indices. The BSE Index Cell carries out the day-to-day maintenance of all indices and conducts research on development of new indices.
Awards achieved by BSE The World Council of Corporate Governance has awarded the Golden Peacock Global CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR). ICAI award for excellence in financial reporting for the year 2006-07 BSE has won the Asia - Pacific HRM awards for its efforts in employer branding through talent management at work, health management at work and excellence in HR through technology.
National Stock Exchange(NSE) The National Stock Exchange of India Limited (NSE), is a Mumbaibased stock exchange. It is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around Rs 47,01,923 crore (7 August 2009) and is expected to become the biggest stock exchange in India in terms of market capitalization by 2009 end. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock
exchanges in India, and between them are responsible for the vast majority of share transactions. NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities. There are at least 2 foreign consumer s NYSE Euro next and Goldman Sachs who have taken a stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India. In October 2007, the equity market capitalization of the companies listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities. It is the second fastest growing stock exchange in the world with a recorded growth of 16.6%.
Origins: The National Stock Exchange of India was promoted by leading Financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000.
Markets: Currently, NSE has the following major segments of the capital market:
Futures and Options
Retail Debt Market
Wholesale Debt Market
NSE became the first stock exchange to get approval for Interest rate futures as recommended by SEBI-RBI committee, on 31 August,2009, a futures contract based on 7% 10 Year GOI bond (NOTIONAL) was launched with quarterly maturities.
Hours: NSE's normal trading sessions are conducted from 9:00 am India Time to 3:30 pm India Time on all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange (or by the Government of India) in advance. The exchange in association with BSE (Bombay Stock Exchange Ltd.,) thinking to revise its timings from 9.00 am India Time till 5.00 pm India Time. However, on Dec 17, 2009, after strong protests from brokers, the Exchange decided to postpone the change in trading hours till Jan 04, 2010. NSE new market timing from Jan 04, 2010 is 9:00 am till 3:30 pm India Time.
NSE Group: National Securities Clearing Corporation Ltd. (NSCCL) National Securities Depository Ltd. (NSDL) India Index Services & Products Ltd. (IISL) NSE.ITltd. DotEx International Limited
History of N.S.E
Capital market reforms in India and the launch of the Securities and Exchange Board of India (SEBI) accelerated the incorporation of the second Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a few years of operations, the NSE has become the largest stock exchange in India. Three segments of the NSE trading platform were established one after another. The Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today the NSE takes the 14th position in the top 40 futures exchanges in the world. In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The Indices are owned and managed by India Index Services and Products Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor's. In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian financial market by gaining many awards such as 'Best IT Usage Award' by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).
Indices of N.S.E NSE also set up as index services firm known as India Index Services & Products Limited (IISL) and has launched several stock indices, including: S&P CNX Nifty(Standard & Poor's CRISIL NSE Index) CNX Nifty Junior CNX 100 (= S&P CNX Nifty + CNX Nifty Junior) S&P CNX 500 (= CNX 100 + 400 major players across 72 industries) CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)
Mission of N.S.E. NSE's mission is setting the agenda for change in the securities markets in India. The NSE was set-up with the main objectives of:
Establishing a nation-wide trading facility for equities, debt instruments and hybrids,
Ensuring equal access to consumer s all over the country through an appropriate communication network,
Providing a fair, efficient and transparent securities market to consumer s using electronic trading systems,
Enabling shorter settlement cycles and book entry settlements systems, and
Meeting the current international standards of securities markets. The standards set by NSE in terms of market practices and technology
have become industry benchmarks and are being emulated by other market participants. NSE is more than a mere market facilitator. It's that force which is guiding the industry towards new horizons and greater opportunities.
Theoretical aspect about topic What is Investment? “The money you earn is partly spent and the rest saved for meeting future Expenses. Instead of keeping the savings idle you may like to use savings in Order to get return on it in the future.” This is called Investment.
Why should one invest? One needs to invest to:
Earn return on your idle resources Generate a specified sum of money for a specific goal in life Make a provision for an uncertain future One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live.
Consumer : An consumer is any party that makes an investment. An individual who commits money to investment products with the expectation of financial return.
The term has taken on a specific meaning in finance to describe the particular types of people and companies that regularly purchase equity or debt securities for financial gain in exchange for funding an expanding company.
Consumer 's Behaviors: Generally, Consumer s Behavior regarding the any investment is primary concern with to minimize risk while maximizing return, as opposed to a speculator,
who is willing to accept a higher level of risk in the hopes of collecting higherthan-average profits.
While, some people are also believes in “High Risk, High Return “Many consumer s purchase a particular stock with the intention of making a big profit over a short period of time. However, this action is not investing, but a pure gambling. The stock market is characterized by the trade-off between risk and return. The higher the risk the consumer is willing and able to take, the higher the potential rewards from the investment. Therefore, if a particular investment offers you high returns, it is an indication that it will come with a high risk burden. Some people are also believes in that there is no safe investment that will provide you with high returns over a short period of time. Therefore, you should direct your resources toward long-term investments that are more likely to reward you for the patience with high returns.
Information of Equity Market & various sectors What is Equity Market? “A market where consumer s buy and sell securities providing ownership of a company's shares.” The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one
of the most vital areas of a market economy because it gives companies access to capital and consumer s a slice of ownership in a company with the potential to realize gains based on its future performance. Equity market, or stock market, is a system through which company shares are traded. The equity market offers consumer s an opportunity to participate in a company's success through an increase in its stock price. With enhanced opportunity, however, the equity market usually carries greater risk than debt markets.
Indian Equity Market
The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. According to the latest report by ADB, it has a market capitalization of nearly $600 billion. As of March 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh core) which is one-tenth of the combined valuation of the Asia region. The market was slow since early 2007 and continued till the first quarter of 2009.
The Indian equity market depends on three factors Funding into equity from all over the world Corporate houses performance Monsoons
The equity market is also affected through trade integration policy. The country has advanced both in foreign institutional investment (FII) and trade integration since 1995. This is a very attractive field for making profit for medium and long term consumer s, short-term swing and position traders and very intraday traders. The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and NSE. The smaller and medium companies are listed with OTCEI (Over The counter Exchange of India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange Board of India).
The Indian Equity Market was not well organized or developed before independence. After independence, new issues were supervised. The timing, floatation costs, pricing, interest rates were strictly controlled by the Controller of Capital Issue (CII). In the 1950s, there was uncontrollable speculation and the market was known as „Satta Bazaar'. Speculators aimed at companies like-Tata Steel, Kohinoor Mills, Century Textiles, Bombay Dyeing and National Rayon. The Securities Contracts (Regulation) Act, 1956 was enacted by the Government of India. Financial institutions and state financial corporation were developed through an established network. Two new stock exchanges, NSE (National Stock Exchange of India) established in 1994 and OTCEI (Over the Counter Exchange of India) established in 1992 gave BSE a nationwide competition. In 1995-96, an amendment was made to the Securities Contracts (Regulation) Act, 1956 for introducing options trading. In April 1995, the National Securities Clearing Corporation (NSCC) and in November 1996, the National Securities Depository Limited (NSDL) were set up for demutualised trading, clearing and settlement.
INTRODUCTION OF VARIOUS SECTORS
A. Meaning of Sector: “There are many companies or scrip that manufacturer the same products and provide services are specified under the particular name that called Industry or Sector.”
There are many other different kinds of industries, and often organized into different classes or variety of industrial classifications it‟s called Sector.
In this report, I have study on these Five Sectors which are:
1. 2. 3. 4. 5.
• Oil & Gas Sector • Banking Sector • IT Sector • Infrastructure Sector • Automobile Sector
SECTORS Agro Inputs Sector
Auto Ancillaries Sector
Media & Entertainment Sector
Oil & Gas Sector
Consumer Durables Sector
Courier & Logistic Services Sector
Cycle & Accessories Sector
Real Estate Sector
Financial Institutions Sector
Food Products Sector
Tele communication Sector
Health Care Sector
Li st of v ar io u s se ct o r: IN T R O D U
CTION OF selected SECTORS 1. Oil & gas Sector: The oil & gas industry in recent years has been characterized by rising consumption of oil products, declining crude production & low reserve accretion. India remains one of the least-explored countries in the world, with a well density among the lowest in the world. India is the fourth largest oil consumption zone in Asia, even though on a per capita basis the consumption is a mere 0.1 tonne, the lowest in the region- This makes the prospects of the Indian Oil industry even more exciting.
The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. The petroleum and natural gas sector which includes transportation, refining and marketing of petroleum products and gas industry constitutes over 15 per cent of the GDP. India's domestic demand for oil and gas is on the rise. As per the Ministry of Petroleum, demand for oil and gas is likely to increase which is 186.54 million tonnes in 2008-09. India is emerging as the global hub for oil refining with capital costs lower by 25 to 50 per cent over other Asian countries. Already, the fifth largest country in the world in terms of refining capacity, with a share of 3 per cent of the global capacity, India is likely to boost its refining capacity by 45 per cent or 65.3 to 242 mtpa (million tonne per annum) over the next five years.
2. Banking Sector: Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a governmentowned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India. The banking sector will navigate through all the aspects of the Banking System in India. It will discuss upon the matters with the birth of the banking concept in the country to new players adding their names in the industry in coming few years. The banker of all banks, Reserve Bank of India (RBI), the
Indian Banks Association (IBA) & top 20 banks like IDBI, HSBC, ICICI, ABN AMRO, etc. With the Indian economy moving on to a high growth trajectory, consumption levels soaring & investment riding high, the Indian banking sector is at a watershed. Further, as Indian companies globalize & people of Indian origin increase their investment in India, several Indian banks are pursuing global strategies, In the Third Quarter Review of Monetary Policy for 2009-10, the RBI observed that the Indian economy showed a degree of resilience as it recorded a better-than-expected growth of 7.9 percent during the second quarter of 200910. The industry has been growing faster than the real economy, resulting in the ratio of assets of commercial banks to GDP increasing to 92.5 per cent at end-March 2007. The Indian banks have also been doing exceptionally well in the financial sector with the price-to-book value being second only to china, according to a report by (BCG)Boston Consultancy Group.
3. IT Sector: Over the past decade, the Information Technology (IT) industry has become one of the fastest growing industries in India. The key segments that have contributed significantly (96 percent of total) to the industry‟s exports include – Software & services (IT services) & IT-enabled services (ITeS) i.e. business services. Over a period of time, India has established itself as a preferred global sourcing base in these segments & they are expected to continue to fuel growth in the future. At present, India is emerging as one of the popular Software outsourcing locations to offer cost effective software solutions. The contribution of India in Software Outsourcing is remarkable. One just cannot reject the reality that currently India is described as the most prospering name in software outsourcing.
Now there are several grounds for this flourishing popularity of the offshore IT outsourcing services of India. The prime reason for choosing India, as an offshore development partner in software outsourcing business is the availability of enormous pool of educated manpower combined with world-class quality offerings. The Indian information technology (IT) industry has played a key role in putting India on the global map. Thanks to the success of the IT industry, India is now a power to reckon with. According to the National Association of Software and Service Companies (NASSCOM), the apex body for software services in India, the revenue of the information technology sector has risen from 1.2 per cent of the gross domestic product (GDP) in FY 1997-98 to an estimated 5.8 per cent in FY 2008-09. Further, the industry body expects the sector to grow between 4 per cent and 7 per cent during 2009-10 and return to over 10 per cent growth next year. India's IT growth in the world is primarily dominated by IT software and services such as Custom Application Development and Maintenance (CADM), System Integration, IT Consulting, Application Management, Software testing, and Web services. According to NASSCOM, software and services exports (including exports of IT services, business process outsourcing (BPO), engineering services and research and development (R&D) and software products) reached US$ 47 billion in FY 2008-09, contributing nearly 78 per cent to the total software and services revenue of US$ 59.6 billion. India's domestic market has also become a force to reckon with, as the existing IT infrastructure evolves both in terms of technology and depth of penetration. According to NASSCOM, domestic IT market (including hardware) reached US$ 24.3 billion in FY 2008-09 as against US$ 23.1 billion in FY 200708, a growth of 5.3 per cent.
The Andhra Pradesh Government expects the IT-related SEZs and Software Technology Parks of India (STPI) in the State to receive about US$ 3.27 billion investments in the next five years.
Mahindra Satyam has tied up with defence and security company Saab to develop its operations in India for the global defence and homeland security market. The estimated deal value is US$ 400 million.
San Francisco-based Virtualizations solutions provider VMware Inc plans to invest US$ 100 million in India by end 2010.
The total investments of EMC Corporation, a leading global player of information infrastructure solutions, in India will touch US$ 2 billion by 2014.
The Indian information technology sector continues to be one of the sunshine sectors of the Indian economy showing rapid growth and promise.
4. Infrastructure Sector: Infrastructure is the basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, water supply, sewers, power grids, telecommunications, and so forth. India's Infrastructure has been expanding at an accelerated pace to support the economic growth rate of over 9 per cent. The six coreinfrastructure industries, which account for a combined weight of 26.68 percent in the index of industrial production (IIP), registered a growth of 8.6 percent in 2006-07 as against 6.2 percent during 2005-06.
The growth has continued apace during the current fiscal, with the six core-infrastructure industries growing at the rate of 6.9 percent during AprilSeptember 2007. Significantly, electricity recorded a growth rate of 7.6 per cent compared to 6.7 per cent in the same period last year. Other sectors recording major growth include: petroleum refinery products (9.8 per cent), cement (8.3 per cent) & finished (carbon) steel (6.6 per cent). Infrastructure investment in India is set to grow dramatically accelerated by 5.3 percent in 2008-09. India has become a major outbound consumer and people are engaging with Indians to seek investment into their countries, said the Minister for Road Transport and Highways, Mr Kamal Nath,According to investment banking company Goldman Sachs, India's infrastructure sector will require US$ 1.7 trillion investment in the next 10-years. It also added that such investment would come more from the domestic market than overseas.
5. Automobile Sector: Automobile industry is one of the fastest growing industries of the world. With more than 2 million new automobiles rolling out each year, on roads of India, the industry is set to grow further.
Automobile industry made its silent entry in India in the nineteenth century. Since the launch of the first car in 1897, India automobile industry has come a long way. Today India is the largest three wheeler market in the world and is expected to take over China as the second largest automobile market, in the coming years. Some facts on Automobile industry in India:
India has the fourth largest car market in the world
India has the largest three wheeler market in the world
India is the second largest producer of two wheelers in the world
India ranks fifth in the production of commercial vehicles The growth of the Indian middle class along with the growth of the
economy over the past few years has attracted global auto majors to the Indian market. Moreover, India provides trained manpower at competitive costs making India a favored global manufacturing hub. The attractiveness of the Indian markets on one hand and the stagnation of the auto sector in markets such as Europe, US and Japan on the other have resulted in shifting of new capacities and flow of capital to the Indian automobile industry. Global auto majors such as Japanese auto majors Suzuki, Honda and Korean car giant Hyundai are increasingly banking on their Indian operations to add weight to their businesses, even as numbers stay uncertain in developed markets due to economic recession and slowdown.
According to figures released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales have increased 32.28 percent to reach 145,905 units in January 2010 from 110,300 units in the same month last year. Across all categories, total sale of vehicles increased 44.94 per cent to 1,114,157 units in January 2010, against 768,698 units in the January 2009. The Indian auto industry is likely to see a growth of 10-12 percent in sales in 2010, according to a report by the global rating firm. India has become the second-largest maker of small cars, overtaking Brazil. Small cars account for 80 per cent of the domestic market (up from 75 per cent last year) and exports are growing at top speed. According to SIAM, small car exports rise 53 percent between April and September 2009 to 197,249 units against 129,090 units a year ago.
In order to make India a power to reckon with in the automotive sector the government launched the Automotive Mission Plan (AMP)
The vision of the AMP is "to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by 2016." As per the AMP, it is estimated that the total turnover of the automotive industry in India would be in the order of US$ 122 billion - US$ 159 billion in 2016. Further, by 2016, the automotive sector would double its contribution to the country's GDP from current levels of five percent to 10-12 per cent.
List of companies underselected SECTORS OIL & GAS SECTOR: Indian Oil Corporation ONGC (Oil and Natural Gas Corporation India.) Essar Oil Limited Gas Authority of India Limited Oil India Limited Gujarat Gas Indian Oil Aban Tata Petrodyne Gas Projects (India) Private Limited Hindustan Oil Exploration Company Limited India LPG
Oil Gas India etc…
BANKING SECTOR: State Bank of India ICICI Bank Unit Trust of India (UTI) HDFC (Housing Development Financial Corporation) ABN Amro Bank HSBC IDBI Bank Union Bank of India Central Bank of India Bank of Baroda etc…
IT SECTOR: Infosys TCS Limited Wipro Microsoft L&T Infotech Ltd. Lenovo HCL Mahindra Satyam etc…
INFRASTRUCTURE SECTOR: DLF Reliance Infrastructure HCC Infrastructure
Maytas Infra Limited GMR Infrastructure IBR Infrastructure etc…
AUTOMOBILE SECTOR: Hero Honda Ford Motor Honda Motors Bajaj Auto Tata Motors Maruti Suzuki TVS Motors Mihindra Motors Yamaha Motors etc…
INTRODUCTION OF CAPITAL MARKET
Concept: Capital market is the markets for funds which have a long or undefined maturity i.e. it deal with long term funds. Generally capital market supplies long term and medium term securities and funds, which have a maturity period of above one year. Capital market generates the funds from the saver and transfer to user. Generally it done with ordinary share, stocks, debentures and bonds of corporations and securities of the government. They do so by converting financial assets into productive physical assets. Capital market provides a market mechanism for those who have savings and to those who need funds for productive investments. It diverts resources from wasteful and unproductive channels to productive investment.
The Capital Market: The origination of the Indian securities market may be traced back to 1875, when 22 enterprising brokers under a Banyan tree established the Bombay Stock Exchange (BSE). Over the last 133 years, the Indian securities market has evolved continuously to become one of the most dynamic, modern and efficient securities markets in Asia. Today, Indian markets conform to international standards both in terms of structure and in terms of operating efficiency. A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets
Structure and Size of theMarkets: Corporation of the exchanges assumes the counter-party risk of each member and guarantees settlement through a fine-tuned risk management system and an innovative method of online position monitoring. It also ensures the financial settlement of trades on the appointed day and time irrespective of default by members to deliver the required funds and/or securities with the help of a settlement guarantee fund. Today India has two national exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Each has fully electronic trading platforms with around 9400 participating broking outfits. BSE reaches to over 400 cities and town nation-wide and has around 4,937 listed companies, with over 7745 scripts being traded as on31st July 09. The companies listed on BSE command a total market capitalization of USD Trillion 1.06 as of July, 2009.
NSE has a market capitalization of around Rs 47,01,923 core (7 August 2009) There are some 9600 companies listed on the respective exchanges. Any market that has experienced this sort of growth has an equally substantial demand for highly efficient settlement procedures. In India 99.9% of the trades, according to the (NSDL) National Securities Depository Limited, are settled in dematerialized form in a T+2 rolling settlement environments. In addition, trades are guaranteed by the National Clearing Corporation of India Ltd (NSCCL) and Bank of India Shareholding Ltd (BOISL), Clearing Corporation houses of NSE and BSE respectively. The main functions of the Clearing Corporation are to work out (a) what counter parties owe and (b) what counter parties are due to receive on the settlement date. Furthermore, each exchange has a Settlement Guarantee Fund to meet with any unpredictable situation and a negligible trade failure of 0.003%.
Highlights of the highly attractive Indian capital markets: Two major reasons why Indian securities are now increasingly regarded as attractive to international consumer s are: 1. The relatively high returns compared with more developed global markets as well as the low correlation with world markets. 2. However until the early 90s, the foreign consumer s‟ only way of accessing the Indian capital markets was through listed country funds
India’s Security Market A Brief History “The capital market is one of the most exciting sectors in the financial system, marking an important contribution to economic development.”
Asia Focus was launched by the Unit Trust of India (UTI) in London in 1986. The success of this initiative ensured that this fund was followed by numerous others. Indian companies are now also allowed to raise equity capital in the international market through the issue of GDRs. In 2004, there are 498 Foreign Institutional Consumer s who hold1325 sub-accounts with a net investment of approximately $15billion. India‟s regulator, the Securities Exchange Board of India (SEBI) is playing more of a development role rather than being merely a watchdog. Transparency, competitiveness and equal opportunity to all market participants has been the driving philosophy behind all the development and regulatory initiatives of SEBI. The availability of derivative products including index futures, index options, individual stock futures and individual stock options re-enforces the overall attractiveness of this market to foreign and domestic consumer s. The derivatives market in only two years has shown spectacular growth. Compared to last financial year the annual turnover grew by over 300%. As if further evidence was needed of India‟s willingness to embrace change, the availability of Internet trading and dual fungibles of American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) provides a clear indication of the vibrancy and dynamism of the Indian securities market.
Meaning of Capital Market “Capital market refers to the market for rising of financial resources by the business enterprises, firms, government,
government bodies, public sector units and other organization.” OR
“A market where debt or equity securities are traded.” A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market).
The capital market includes the stock market (equity securities) and the bond market (debt). Capital markets may be classified as: 1) Primary markets 2) Secondary markets In primary markets, new stock or bond issues are sold to consumer s via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among consumer s or traders, usually on a securities exchange, over-the-counter, or elsewhere. Consumer s purchase securities in the capital markets in order to extract a return and earn profit on the securities.
CHART OF CAPITAL MARKET
Long term Loans Market
Types of Capital/Security Market: The securities market can be divided in to three parts: A. Industrial securities market B. Government securities market C. Long term loans market
A. Industrial Security Market:
The industrial securities market consists of two complementary parts i.e. the New Issue Market, and Secondary Market. It is a market for industrial securities namely: (i) Equity shares or ordinary shares or common stock. (ii) Preference shares (iii) Debenture or Bonds.
The corporate sector raises their capital through these above three types of securities. This is the physical or tangible asset through which the market functions.
1. Equity Shares: Equity shares represent proportionate ownership in the company. Consumer s who own equity shares of a company are entitled to ownership rights, like voting for selection of directors on the Board, share in profits of the company, etc. Consumer s who own equity shares in a company are called shareholders. They are ordinary shares with no guarantee of dividend. Equity shares gain maximum returns when there are high profits. The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. According to the latest report by ADB, it has a market capitalization of nearly $600 billion. As of March 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh crore)which is one-tenth of the combined valuation of the Asia region. The market was slow since early 2007 and continued till the first quarter of 2009.
2. Preference Shares: “Stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights” Preference shareholders do not have voting rights. They generally bear a fixed dividend, payable if the company declares dividends. Preference shares have different features and are accordingly available as: Cumulative and non-cumulative preference shares Redeemable and non-redeemable preference shares Convertible and non-convertible preference shares Preference shares with a combination of the above features.
“A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity.” A bond is a formal contract to repay borrowed money with interest at fixed intervals. While the size of Indian dept market is 239.2 (US$ billion) which is 34.5% of GDP as on 2004 -05. Many financial institutions like IDBI, ICICI, and IFCI, have been raising capital for their operations by issuing of bonds. These too are available in a large variety. These include Income bonds, Tax-free bonds, Capital gains bonds, Infrastructure bonds, Retirement bonds etc… Company raises it capital in the primary market though:
1) Primary Market(New Issue Market): Primary market is the market for those securities which are issued first time in the market for the public. The New Issue Market deals with new securities i.e. securities which were not previously availably and are offered to the investing public for the first time. Primary market is a market for new issues or new financial claims. Hence, it is called New Issue Market. In the Primary market, borrowers exchange new financial securities for long term funds. It facilitates capital formulation. Companies raise its capital in the primary market though: (i)
(iii) Primary placement/subscription
Public Issue is most popular method of raising capital is sale of securities to the public by new companies is called Public Issue. Right Issue means, when existing company first offered. The security to existing shareholders on Pre–emptive bases, while company want to raise additional capital is called capital is called Right Issue. Private placement imagine private sale of securities to small group consumer s.
2) Secondary Market: Secondary market is the market for those securities which have already been available in the market and listed on a stock exchange. The main benefit of Secondary market is securities sold and purchased continuously among consumer s without involvement of company. This market consists of all stock exchange recognized by the Government of India. The stock exchange in India are regulated under the securities contracts (Regulation) Act, 1956.
B. Government Security Market: The government securities market (G-secs) is the largest segment of the long term debt market in India, accounting for nearly two-thirds of the issues in the primary market and more than four –fifths of the turnover in the secondary market. It is otherwise called Gilt-Edged securities market. It is a market where Government securities are traded. In India there are many kinds of Government Securities-short term and long term. Long term securities are traded in this market while short term securities are traded in the money market. Securities issued by the Central Government, State Government, Semi –Government authorities like city Corporation, Port Trusts etc. Improvement Trusts, State Electricity Boards, All India and State level financial institutions and public sector enterprise are dealt in this market.
Participants in the G-secs Market:
Banks are the largest holders of G-secs. About one–third of the net demand and time liabilities of the banks are partly in government securities market mainly to meet statutory liquidity requirements and partly for investment purpose. Other consumer in G-secs includes mutual funds, primary and satellite dealers, and trusts. Government securities are issued in denominations of RS. 100. Interest is payable half- yearly and they carry tax exemptions also. The role of brokers in marketing these securities is practically very limited and the major participant in this market in the “commercial banks” because they hold a very substantial portion of these securities to satisfy their S.L.R. requirements. The secondary market for these securities is very narrow since most of the institutional consumer s tends to retain these securities until maturity.
The Government securities are in many forms. These are generally: (i)
Stock certificates of inscribed stock
Carrier Bonds which can be discounted.
Government securities are sold through the Public Debt Office of the RBI while Treasury Bills are sold through auctions. Government securities offer a good soured of raising inexpensive finance for the Government exchequer and the interest on these securities influences the prices and yields in this market. Hence this market also plays a vital role in monetary management.
C. Long Term Loan Market: Development banks and commercial banks play a significant role in this market by supplying long term loans to corporate customers.
Long term loans market may further be classified into: (i)
Term loans market
Financial Guarantees market
Term Loans Market: Term loans: A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate. Term loans almost always mature between 1 and 10 years. In India, many industrial financing institutions have been created by the Government both at the national and regional levels to supply long term and medium term loans to corporate customers directly as well as indirectly. These development banks dominate the industrial finance in India. Institutions like IDBI, IFCI, ICICI, and other state financial corporation‟s come under this category. These institutions meet the growing and varied long term loans. They also help in identifying investment opportunities, encourage new entrepreneurs and support modernization efforts.
Mortgages Market: The mortgage market refers to these centers which supply mortgage loan mainly to individual customers. A mortgage loan is a loan against the security of immovable properly like real estate. The transfer of interest in a specific immovable properly to secure a loan is called mortgage. These mortgages may be equitable mortgage or legal one. Again it may be a first charge of title deeds to properties as security whereas in the case of a legal mortgage the title in the property is legally transferred to the lender by the borrower. Legal mortgage is less risky. Similarly, in the first charge, the mortgages transfer his interest in the specific property to the mortgagee as security. When the properly in question is already mortgaged once to another creditor, it becomes a second charge when it is subsequently mortgaged to somebody else. The mortgagee can also further
transfer his interest in the mortgaged property to another, in such a case; it is called a sub mortgage. The mortgage market may have primary market as well secondary market. The primary market consists of original extension of credit and secondary market has sales and re-sales of existing mortgages at prevailing prices. In India residential mortgages ate the most common ones. The Housing and Urban Development Corporation and the LIC play a dominant role in financing residential projects. Besides, the Land Development Banks provides cheap mortgages loans for the development of lands, purchase of equipment etc. These development banks raise finance through the sale of debentures which are treated as trustee securities.
Financial Guarantees Market: “Financial Guarantees is a non-cancelable indemnity bond guaranteeing the timely payment interest and repayment of principal to the buyers (holders) of a debt security at a maturity date.”
A guarantees market is a centre where finance is provide against the guarantee of a reputed person in the financial circle. Guarantee is a contract to discharge the liability of a third party in case of his default. Guarantee acts as a security from the creditor‟s point of view. In case the borrower fails to repay the loan, the liability falls on the shoulders of the guarantor. Hence the guarantor must be known to both the borrower and the lender and he must have the means to discharge his liability. Though there are many types of guarantees, the common forms ate: (i)
Performance guarantees cover the payment of earnest money, retention money, advance payments, non-completion of contracts etc. On the other hand financial guarantees cover only financial contracts. In India, the market for financial guarantees is well organized. The financial guarantees in India relate to: (i)
Deferred payments for imports and exports
Medium and long term loans raised abroad
Loans advanced by banks and other financial institutions
These guarantees ate provided mainly by commercial banks, development banks, Governments both central and states and other specialized guarantee institutions like ECGC (Export Credit Guarantee Corporation) and DICGO (Deposit Insurance and Credit Guarantee Corporation). This guarantee financial service is available to both individual and corporate customers. For a smooth functioning of any financial system, this guarantee service is absolutely essential.
Capital Market Instruments
There are a number of capital market instruments used for market trade, including stocks, bonds, debentures, T-bills, foreign exchange, fixed deposits, and others. These are used by the consumer s to make a profit out of their respective markets. All of these are called capital market instruments because these are responsible for generating funds for companies, corporations, and sometimes national governments. This market is also known as securities market because long term funds are raised through trade on debt and equity securities. These activities may be conducted by both companies and governments. Stocks and bonds are the two basic capital market instruments used in both the primary and secondary markets.
There are different types of capital market instruments…Like….
DEBENTURES BONDS PREFERENCESHARES EQUITY SHARES GOVERNMENT SECURITIES
DEBENTURES: “A type of fixed-interest security, issued by companies (as borrowers) in return for medium and long-term investment of funds. A debenture is evidence of the borrower's debt to the lender.” These are issued by companies and regulated under the SEBI guidelines of June 11, 1992. The following are types of debentures: Convertible debentures Non-Convertible debentures Zero coupon convertible notes Zero interest fully convertible debentures Fully convertible debentures with interest
Partly convertible debentures.
BONDS: “A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity.”
A bond is a formal contract to repay borrowed money with interest at fixed intervals. International Bond Market is very big and has an estimated size of nearly $47 trillion. The size of the US bond market is the largest in the world. The US bond market's outstanding debt is more than $25 trillion. While the size of Indian dept market is 239.2 (US$ billion) which is 34.5% of GDP as on 2004 -05. Indian development financial institutions like IDBI, ICICI, and IFCI, have been raising capital for their operations by issuing of bonds. These too are available in a large variety. These include: Income bonds Tax-free bonds Capital gains bonds Deep discount bonds Infrastructure bonds Retirement bonds etc…
“Stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights” Preference shareholders do not havevoting rights. They generally bear a fixed dividend, payable if the company declares dividends. Preference shares have different features and are accordingly available as: Cumulative and non-cumulative preference shares Redeemable and non-redeemable preference shares Convertible and non-convertible preference shares Preference shares with a combination of the above features.
EQUITY SHARES: Equity shares represent proportionate ownership in the company. Consumer s who own equity shares of a company are entitled to ownership rights, like voting for selection of directors on the Board, share in profits of the company, etc. Consumer s who own equity shares in a company are called shareholders. They are ordinary shares with no guarantee of dividend. Equity shares gain maximum returns when there are high profits. As a shareholder, the extent of your ownership (your stake) in a company depends on the number of shares you own in relation to the total number of shares available For example, if you buy 1000 shares of stock in a company that has issued a total of 100,000 shares, you own one per cent of the company.
A shareholder or a beneficial owner can exit from the ownership by selling the shares. An consumer can become shareholder/beneficial owner of a company by purchasing shares of the company. Shareholders are entitled to share profit of the company in the form of "dividend" on "bonus shares", if Board of Directors and majority of the shareholders agree. If a company is wound up for any reason, equity shareholders may receive money from the residual funds after satisfying all other liabilities.
GOVERNMENT SECURITIES: Government securities (G-secs) are sovereign securities which are issued by the Reserve Bank of India on behalf of Government of India. The term Government Securities includes: Central Government Securities State Government Securities Treasury bills The Central Government or State Governments issue securities periodically for the purpose of raising loans from the public. There are two types of Government Securities – I.
Dated Securities: Dated Securities have a maturity period of more than one year. Treasury Bills: Treasury Bills have a maturity period of less than or up to one year. The Public Debt Office (PDO) of the Reserve Bank of India performs all functions with regard to the issue management, settlement of trade, distribution of interest and redemption. Although only corporate and institutional consumer s subscribe to government securities, individual consumer s are also permitted to subscribe to these securities. A consumer has to approach RBI to receive government securities in physical form. Consumer s can invest in book entry form with Banks and other institutions like NSDL, SHCIL, and NSCCL etc. NSDL facility to buy and hold government securities is convenient because of its reach and depository account opened for other securities can be used for holding government securities.
Importance of Capital Market Capital market is important as it plays an important role in bringing rapid industrial development in a country. The savings are invested profitably for economic development because of the services offered by capital market. Mobilization of investable surplus and provision of expert services to consumer s and companies are two significant activities undertaken by the capital market. Capital market is importance due to: It enables the consumer s to adopt their investment to their expectations which are constantly changing. It acts as a link between those who want to save funds and those who need funds and are in a position to invest them with safety and reasonable return. It provided the capital to those enterprises which can apply it profitably, productively and increase the aggregate national income.
It provides proper flow of funds and brings about the rational allocation of resources through the conversion of financial assets into physical assets. Thus, the capital market facilitates capital formation. It provides incentives to saving and facilitates capital formation by offering suitable rate of interest as the price of capital. It facilitated buying and selling of securities at listed price by providing continuously marketability to the consumer s. The securities offered in the capital market are transferable in character. The changing business conditions in the economy are immediately reflected on capital market. Booms and depression can be identified by capital market. So suitable monitory and fiscal policies can be taken by government. Capital market supplies securities of different kinds with different maturity and yields in unable the consumer s to diversify their risk by wider portfolio of investment.
ANALYSIS OF QUESTIONNAIRE
Que. 1. Do you investing in Equity Market? [ ] Yes [ ] No
Investing In Equity Market 140 120
60 40 20 0 Yes
Investing In Equity Market ( In Percentage)
According to the above chart we can see that:
68%of consumer s (119) are investing in Equity Market.
While 36% of consumer s (56) are not investing in Equity Market.
Que. 2. If you want to invest, which investment option will provide the best returns? [ ] Equity Share [ ] IPO [ ] Mutual Funds [ ] Bonds [ ] Fixed Deposits [ ] If any other _________
Consumer s in Percentage
Investors are investing in various Investment option (Investors in Percentage) 10% 4%
Equity Share IPO
Mutual Funds 8%
Bonds Fixed Deposits Other
Interpretation: According to the previous chart: According to 53% of consumer s, Equity market will provide the best returns in compare to other investment option.
18% of consumer s believes that IPO (Primary Market) will provide the best returns. 8% of consumer s thinks that Mutual Funds will provide the best returns. 7% of consumer s believes that Bonds Market will provide the best returns. 4% of consumer s trusts that Fixed Deposits will provide the best returns. According to 10% of consumer s, other investment option will provide the best returns. According to them other investment options are: Commodity Market Insurance Government Securities etc.
Que.3. which factors motivate you for investing in Equity Market? [ ] Return [ ] Liquidity [ ] Safety [ ] Capital Appreciation [ ] Other _____________
Consumer s in Percentage
Motivating factors for Investors to invest in Equity Market (Investors in Percentage) 5% 16%
Return Liquidity Safety
Capital Appreciation Other
According to the Previous Figure:
49% of consumer s are motivated by Return to invest in Equity market.
26%of consumer s are motivated by Liquidity to invest in Equity market.
6%of consumer s are motivated by Safety to invest in Equity market.
16%of consumer s are motivated by Capital Appreciation to invest in Equity market. While 5%of consumer s are motivated by other factors like-Investment, Profit etc. to invest in Equity market.
Que. 4. How much percentage of your income you invest in Equity Market? [ ] Less than 5% [ ] 5%-10% [ ] 10%-15% [ ] 15%-20% [ ] 20%- 25% [ ] More than 25%
Percentage of Income
Consumer s in Percentage
Less than 5%
More than 25%
Percentage of income investors are investing in Equity Market (Investors in Percentage) 5%
Less than 5% 5%-10%
10%-15% 15%-20% 20%- 25% More than 25% 45%
Interpretation: According to the Previous Figure:
23% of the consumer s are investing Less than 5% of their income in Equity Market.
45%of the consumer s are investing5%-10% of their income in Equity Market.
17% of the consumer s are investing10%-15% of their income in Equity Market.
7% of the consumer s are investing15%- 20%of their income in Equity Market.
5% of the consumer s are investing20%-25% of their income in Equity Market.
While 3% of the consumer s are investing More than25%of their income in Equity Market.
Que. 5. How do you trade in Equity Market? [ ] Intraday [ ] Delivery [ ] Speculation [ ] Arbitragers [ ] Hedging [ ] If any other please specify _____________
Types of Trade
Consumer s in Percentage
Investors are Trade in Equity Market (Investors in Percentage) 11%
Intraday Delivery Speculation
17% Arbitragers 31%
Interpretation: According to the Previous Figure:
13% of the consumer s are doing Intraday trading in Equity Market. “Intraday Trading is trading for that one day only. Means any securities are purchase & sell “within the day.”
31%of the consumer s are investing in Equity Market as a Delivery base Trading. “Delivery based trading is normally considered as a safer approach for trading in shares when compared to day trading. Delivery based trading involves buying shares on a market day and selling them only after receiving the delivery of those shares in demat account.”
26% of the consumer s are trading in Equity Market as a Speculator. “Speculators are those classes of consumer s who willingly take higherthan-average risk in return for a higher-than-average profit potential in future. Speculators aim primarily at quick profit from a term acquisition of assets.”
17% of the consumer s are Arbitragers in Equity Market. “Arbitrager means who purchases securities in one market for immediate resale in another in the hope of profiting from the price differential”
11% of the consumer s are trading in Equity Market as Hedgers. “Hedging means reducing or controlling risk. Hedgers wish to eliminate or reduce the price risk to which they are already exposed.”
While 2% of the consumer s are trade in Equity Market for Other Purpose.
Que.6.What is the time horizon for investing in Equity Market? [ ] Less than 1 Months [ ] 1 to 3 Months [ ] 3 to 6 Months [ ] 6 to 12 Months [ ] More than 12 Months
Consumer s in Percentage
Less than 1 Months
1 to 3 Months
3 to 6 Months
6 to 12 Months
More than 12 Months
Investors Time Horizon for investing in Equity Market (Investors in Percentage) 28%
Less than 1 Months
1 to 3 Months
3 to 6 Months 6 to 12 Months
More than 12 Months
Interpretation: According to the Previous Figure:
14%of consumer s invests in Equity market for Less than 1 Months.
28% of consumer s invest in Equity market for the period of 1 to 3 Months. 15% of consumer ‟s time horizon for in Equity market is 3 to 6 Months. 18% of consumer ‟s time horizon for in Equity market is 6 to 12 Months.
25%of consumer invest in Equity market for more than12 Months.
Que.7. What is the rate of return expected by you from Equity Market in a year? [ ] 5% – 10 % [ ] 10% – 15 % [ ] 15% – 20% [ ] 20% – 25% [ ] 25% –30% [ ] 30% and above
5% – 10 %
Consumer s in Percentage 12%
10% – 15 %
15% – 20%
20% – 25%
30% and above
Rate of Return
12% Rate of Return 5% – 10 %
10% – 15 % 15% – 20%
20% – 25% 25% –30% 30% and above
Interpretation: According to the above Figure: 12% of consumer s are expects 5%-10%return from Equity market. 18% of consumer s are expects 10%-15%return from Equity market. 32% of consumer s are expects 15%-20%return from Equity market. 26% of consumer s are expects 20%-25%return from Equity market. Here, above two cases consumer s are more expects from Equity market. 8% of consumer s are expects 25%-30%return from Equity market. While 4% of consumer s are expects more than30%return from Equity market.
Que.8. Are you satisfied with the current performance of the Equity Market in terms of expected return? [ ] Fully Satisfied [ ] Satisfied [ ] Neutral [ ] Unsatisfied [ ] Fully Unsatisfied
Rate of Return
No. of Consumer s
Investors satisfaction level From Equity Market (Investors in Numers)(Total 175) 80 70 60 50 40 30 20 10 0
73 49 30 18 5 Fully Satisfied
Interpretation: According to the Previous Figure: 30 consumer s are Fully Satisfied from current performance of Equity market. 73 consumer s are Satisfied from Equity market. 49 consumer s are Neutral with current performance of Equity market. 18 consumer s are Unsatisfied from Equity market. While 5 consumer s are Fully Unsatisfied from Equity market.
Que. 9. Who advise you to enter in Equity Market? [ ] Friends [ ] Relatives [ ] Advisers [ ] Media [ ] Research Report [ ] Magazines [ ] If any other ___________
Consumer s in Percentage 28%
Investor's Referance for enter into Equity Market (Investors in Percentage) 5% 3% 10%
Relatives Advisers Media
Research Report 12%
Interpretation: According to the Above Figure: Friends motivate 28% of the consumer s to enter into the equity market. Relatives motivate 12%of the consumer s to enter into the equity market. 25% of consumer center in Equity market by the Advise of Financial Advisor. Media motivate 17% of the consumer s to enter into the equity market. Magazines motivate 10% of the consumer s to enter into the equity market. 5% of consumer sure motivates by Reading Magazines to enter in Equity market. While other factors like self-Study, their own View etc .motivate 3%of the consumer s to enter into the equity market.
Que.10. Which Factors do you consider most important while selecting the Sectors? [ ] Market Trend [ ] Profitability [ ] Economic Condition [ ] Industry Condition [ ] Existence of well established Companies under Sectors [ ] Government Policy [ ] If any other please specify _____________
Existence of well established Companies under Sectors
Factors Consider by Investors while selecting sector (Investors in Percentage) 5% 1%
Profitability Economic Condition Industry Condition
16% Existence of well established Companies under Sectors Government Policy
Interpretation: According to the Previous Figure:
29%of the consumer shave considered Market Trend as a most important factor while selecting the Sector.
23%of the consumer shave considered Profitability as a most important factor while selecting the Sector.
14%of the consumer shave considered Economic Condition as a most important factor while selecting the Sector.
16%of the consumer shave considered Industry Condition as a most important factor while selecting the Sector.
12%of the consumer shave considered Existence of well established Companies under Sectors as a most important factor while selecting the Sector.
5%of the consumer shave considered Government Policy as a important factor while selecting the Sector.
While 1%of the consumer shave considers Other Factor like Global Position of the company and etc. important factor while selecting the Sector.
Que.11. Which Sectors do you prefer the most? (Give 1 to 5 Orders in given boxes) Here, I have decided to study only these five sectors.
Oil & Gas Sector Banking Sector IT Sector Infrastructure Sector Automobile Sector
Orders(Ranks) Given by Respondents
Oil & Gas Sector
0% Oil & Gas Sector Banking Sector IT SectorInfrastructure Sector Automobile Sector
On the basis of above chart: How many consumer s given 1st to 5th Rank to which sector?
Oil & Gas Sector
Interpretation: On the basis of Previous Figures:
Oil & Gas Sector: 44 Consumer s gave 1st rank, 30 Consumer s gave 2nd rank, 49 consumer s gave 3rd Rank, 21 Consumer s gave 4th Rank, &31 Consumer s gave 5th Rank to this sector. Here, over all 44 consumers have selected oil & gas sector as a First Rank in comparison with First Rank of all sectors.
IT Sector: 20 Consumer s gave 1st rank, 40 Consumer s gave 2nd rank, 47 consumer s gave 3rd Rank, 35 Consumer s gave 4th Rank, & 33 Consumer s gave 5th Rank to this sector. Here, over all 40 consumers have selected IT sector as a 2ndRank in comparison with 2nd Rank of all sectors.
Banking Sector: 26 Consumer s gave 1st rank, 24 Consumer s gave 2nd rank, 53 consumer s gave 3rd Rank, 42 Consumer s gave 4th Rank, & 30 Consumer s gave 5th Rank to this sector. Here, over all 53 consumers have selected Banking sector as a 3ndRank in comparison with 3nd Rank of all sectors.
Automobile Sector: 35 Consumer s gave 1st rank, 30 Consumer s gave 2nd rank, 28 consumer s gave 3rd Rank, 52 Consumer s gave 4th Rank,& 30 Consumer s gave 5th Rank to this sector. Here, over all 52 consumers have selected Automobile sector as a 4thRank in comparison with 4th Rank of all sectors.
Infrastructure Sector: 37 Consumer s gave 1st rank, 32 Consumer s gave 2nd rank, 33 consumer s gave 3rd Rank, 28 Consumer s gave 4th Rank, &45 Consumer s gave 5th Rank to this sector. Here, over all 45 consumer shave selected Infrastructure sector as a 5ndRank in comparison with 5nd Rank of all sectors.
Que. 12. Mention the most important factors for selecting a company of your choice. [ ] Earning Per Share [ ] Dividend [ ] Broker‟s advise [ ] Market capitalization [ ] Performance of company [ ] P.E. Ratio [ ] If any other __________
Factors affect for selecting company
Consumer s in Percentage
Earnings Per Share
Performance of company
Factors affect to Investors for for selecting company (Investors in Percentage) 2% 19%
Earning Per Share
24% Dividend Broker’s advise 17%
Market capitalization Performance of company
P.E. Ratio 7%
Interpretation: On the basis of above Figures:
19%of the consumer shave considered Earning Per Share as a most important factor to select a Company under the sector of their Choice.
17%of the consumer shave considered Dividend as a most important factor to select a Company under the sector of their Choice.
While 15% of the consumer s are select a company under the sector of their choice on the basis of Broker‟s advises. 7%of the consumer shave considered Market capitalization by the company as a important factor to select a company under the sector.
16%of the consumer shave considered as a Performance of company most important factor to select a company under the sector of their choice.
24% of the consumer s have considered Price Earnings Ratio as a most important factor select a company under the sector of their choice.
Suggestion from reference group, External advisors, Stakeholders, Growth of Company, Market Trend, Profitability and their own view etc. to select a company under the sector.
As the main objective of the research is to find out the “Consumer s behavior for Investing in Equity Market in Various Sectors “in Delhi city. So, I have questionnaire method on 175 sample size for research and found out the views of consumer s on various parameters. From the research I found out that 68%of consumer s (119)are investing in Equity Market. While 36% of consumer s (56) are not investing in Equity Market as per my sample size 175. I also found out that, 53% of consumer s believes that Equity Market is better investment option and will provide the best returns in compare to other investment option.
I found out that the 49% of consumer s who are dealing inequity market they are motivated by return factor and 26%of consumer s are motivated by Liquidity and some consumer also consider capital appreciation and safety factor while investing in equity market in various sectors.
I also found out that the45%of the consumer sure ready or interested to invest their 5%-10%of income in Equity Market. It means many consumers s trust on the growth of equity market as they are ready to spend major proportion of their income. Going ahead I found out that very few consumer s want to deal in intraday trading which shows that they consider safety factors while investing.
the consumer s are investing in Equity Market as a Delivery base Trading and 26% of the consumer s are trading in Equity Market as a Speculator. Means 26% of consumer s who willingly take higher-than-average risk in return for a higher-than-average profit potential. 28% of consumer s invest in Equity market for the period of 1 to 3 Months and the same proportion of consumer s are invest for long period more than year.
also found out that 32%of consumer s are expects 15%-20%return from
Equity market and 26%of consumer s are expects 20%-25%return from Equity market. Here, consumer s are more expects from Equity market.
42% of consumer sure satisfied with the current performance of the Equity Market in terms of expected return, while 28% of consumer sareNeutral about equity market.
I found that most of consumer s are motivated by their friends to enter in the equity market and some consumer s are motivated by Advisers, Media, Research Report and other factors like and self study of current scenario of equity market. Other thing I found out that 29% of the consumer s have considered market trend and 23%of the consumer s have considered Profitability as a most important factor as a most important factor while selecting the Sector. There are also other factors like - government policy, industry condition, and economic condition also important factor while selecting the Sector Then I found that 44 consumer s selected Oil & gas sector as a First Rank (in comparison with First Rank of all sectors) 40 consumers have selected IT sector as a 2nd Rank. 53 consumers have selected Banking sector as a 3ndRank 52consumer s have selected Automobile sector as a 4thRank 45 consumer s selected Infrastructure sector as a 5ndRank I also found out that 24% of the consumer s have considered Price Earnings Ratio, 19% of the consumer s have considered Earning per Share and17% of the consumer s have considered Dividend as a most important factor while selecting a company from these selected sectors. Consumer s also consider other factors like - Suggestion from reference group, External advisors, Stakeholders, Growth of Company, Market Trend, Profitability and their own view etc. areas an important factor while selecting a company from these selected sectors.
During my training period I have study on “Consumer s Behaviors for Investing in Equity Market in Various Sectors “by using Descriptive Research Design as a Questionnaire method where respondents are from whole of the equity market of Delhi city and also from Share khan Securities Pvt. Ltd. From the survey I found that major people are investing in equity market only due to Earn High Return and Hedge the Risk by investing their major proportion of income in Equity Market. Here, the most of people are trade in equity market as a speculation and they are invests for one to three months. Generally, the consumer s who are invest for long period more than year they are surely beneficial in equity market. Majority of people are motivated by their friends &medias advise to enter into equity market. Majority people are expecting something more from the equity market. So, finally some are satisfied and some are not satisfy with equity market. Major consumer s prefer the Oil & gas sector as a first rank on the basis of Market trend, Profitability, industry condition and economic condition also important factor while selecting the Sector and consumer s have also considered Price Earnings Ratio, Earning per Share and Dividend as a most important factor while selecting a company under these selected sectors.
Recommendation to Consumer s: Prefer investment for long term investment strategy that provides you moderate return with liquidity. Consumer s should not invest in only equity market but, also invest in other Safe Securities Like- Fixed Deposits, Government Securities, Bonds, Mutual fund and Insurance etc. which also provides moderate return. For Example: One should prefer o Equity – 50% o Other Safe Securities– 50% So, one can get moderate return with liquidity. Consumer s should invest money at lower level price and sale the stock at higher price. Consumer s should select company on the basis of PE ratio, EPS ,Current Growth of Company and Market capitalization and many more. So, consumer s can get higher return on their investment. Always invest extra money in stock market. Do not invest by taking loan from banks or other resources.
Recommendation to Company:
From my research, I found that only 68% of consumer s are investing in equity market, so more focus should on 32% of consumer s who are not investing inequity market.
aggressively for long term investment purpose.
Majority of consumer s (53%)are investing secondary market (equity market)and very few (18%) consumer s are investing in Primary Market. So, here broking firm should promote to their client for investing in Primary Market also. Company should have to concentrate on those people who are not investing in Equity Market because of High risk than convert them in investing other security like-Mutual Fund, Bonds, and Insurance etc. which also provides moderate return. The Stock Broking firm should also provide better services to the consumer to increase the satisfaction level of the consumer s.
Company should focus on students also because equity market has risk and the younger generation likes to take risk. Majority consumer s are investing in Oil & gas sector and IT sector. So,
Company should also suggest to consumer s for investing other sector which is also profitable.
@. BOOKS: Gordon & Natrajan, “Financial Markets And Services” Second Revised Edition Reprint, Himalaya Publishing House, 2005. Investment Management – V.A. AVADHANI
@. Websites: www.sharekhan.com www.nseinda.com www.bseindia.com www.moneycontrol.com www.investopedia.com www.wikipedia.com www.autherstream.com www.myrisis.com
@.NEWS PAPER: ECONOMICS TIMES TIMES OF INDIA
@.OTHER: Share khan‟s Broachers NCFM – Capital Market Dealers Module Other Magazines for Capitals Markets
On “CONSUMER S BEHAVIOUR FOR INVESTING IN EQUITY MARKET IN VARIOUS SECTORS” IN Delhi CITY 1. Do you investing in Equity Market? [ ] Yes[ ] No 2. If you want to invest, which investment option will provide the best returns? [ ] Equity Share [ ] Bonds
[ ] IPO [ ] Mutual Funds [ ] Fixed Deposits [ ] If any other _________
3. Which factors motive you investing in Equity Market? [ ]Return [ ]Capital Appreciation
[ ]Liquidity [ ]Safety [ ]If any other please specify _____________
4. How much percentage of your income you invest in Equity Market? [ ]Less than 5% [ ]15%-20%
[ ]5%-10% [ ]10%-15% [ ]20%- 25% [ ]More than 25%
5. How do you trade in Equity Market? [ ]Intraday [ ]Delivery[ ]Speculation [ ]Arbitragers [ ]Hedging [ ]If any other please specify _____________ 6. What is the time horizon for investing in Equity Market? [ ]Less than 1 Months [ ]6 to 12 Months
[ ]1to 3 Months [ ]More than 12 Months
[ ]3 to 6 Months
7. What is the rate of return expected by you from Equity Market in a year? [ ]5% – 10 % [ ]20% – 25%
[ ]10% – 15 % [ ]25% –30%
[ ]15% – 20% [ ]30% above
8. Are you satisfied with the current performance of the Equity Market in terms of expected return? [ ] Fully Satisfied
[ ] Satisfied
[ ] Unsatisfied
[ ]Fully Unsatisfied
[ ] Neutral
9. Who advise you to enter in Equity Market? [ ] Friends
[ ]Relatives[ ]Advisers
[ ] Research Report[ ]Magazines[ ]If any other ___________
10. Which Factors do you consider most important while selecting the Sectors? [ ]Market Trend
[ ]Economic Condition
[ ]Industry Condition [ ]well established Companies under Sectors [ ]Government Policy [ ]If any other please specify _____________
11. Which Sector do you prefer the most? (Give 1 to 5 Orders in given boxes) Oil & Gas Sector
Banking Sector Automobile Sector IT Sector
If any other please specify _____________
12. Mention the most important factors for selecting a company of your choice. [ ]Earning Per Share[ ]Dividend[ ]Broker‟s advise[ ]Market capitalization[ ]Performance of company
[ ]P.E. Ratio[ ]If any other _____________
13. If any Suggestion from your side, then please specify.
E-mail ID: …………………………………..………………………………
Contact No.: …………………………………..
[ ] Male
[ ] Female
[ ] Below 20 Years[ ] 21 TO 30 Years[ ] 31 TO 40 Years [ ] 41 TO 50 Years
[ ]51 TO 60 Years[ ] Above 60 Years
Occupation: [ ] Business[ ] Service
[ ] Employee
[ ] Student
[ ]Other please specify _____________
Income (Yearly): [ ]Less than 100000 Rs.[ ] 100000 to 200000 Rs.[ ] 200000 to 300000 Rs. [ ] 300000 to 400000 Rs.[ ] 400000 to 500000 Rs.[ ] Above 500000 Rs.