CHAPTER-I

INTRODUCTION

OVERVIEW OF DEMAT ACCOUNT

Demat account allows you to buy, sell and transact shares without the endless paperwork and
delays. It is also safe, secure and convenient.

In India, a demat account, the abbreviation for dematerialized account, is a type of banking
account which dematerializes paper-based physical stock shares. The dematerialized account
is used to avoid holding physical shares: the shares are bought and sold through a stock
broker.

This account is popular in India. The Securities and Exchange Board of India (SEBI)
mandates a demat account for share trading above 500 shares. As of April 2006, it became
mandatory that any person holding a demat account should possess a Permanent Account
Number (PAN), and the deadline for submission of PAN details to the depository lapsed on
January 2007.

Is a demat account a must?

Now a day, practically all trades have to be settled in dematerialized form. Although the
market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of
up to 500 shares to be settled in physical form, nobody wants physical shares any more. So a
demat account is a must for trading and investing.

Why demat?
The demat account reduces brokerage charges, makes pledging/hypothecation of shares
easier, enables quick ownership of securities on settlement resulting in increased liquidity,
avoids confusion in the ownership title of securities, and provides easy receipt of public issue
allotments.
It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of
certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and
loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as
against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain
quick receipt of such benefits as stock splits and bonuses.

Steps involved in opening a demat account

First an investor has to approach a DP and fill up an account opening form. The account
opening form must be supported by copies of any one of the approved documents to serve as
proof of identity (POI) and proof of address (POA) as specified by SEBI. Besides, production
of PAN card in original at the time of opening of account has been made mandatory effective
from April 01, 2006.
All applicants should carry original documents for verification by an authorized official of
the depository participant, under his signature.

Further, the investor has to sign an agreement with DP in a depository prescribed standard
format, which details rights and duties of investor and DP. DP should provide the investor
with a copy of the agreement and schedule of charges for their future reference. The DP will
open the account in the system and give an account number, which is also called BO ID
(Beneficiary Owner Identification number).

The DP may revise the charges by giving 30 days notice in advance.  SEBI has rationalized
the cost structure for dematerialization by removing account opening charges, transaction
charges for credit of securities, and custody charges vide circular dated January 28, 2005.

Further, SEBI has vide circular dated November 09, 2005 advised that with effect from
January 09, 2006, no charges shall be levied by a depository on DP and consequently, by a
DP on a Beneficiary Owner (BO) when a BO transfers all the securities lying in his account
to another branch of the same DP or to another DP of the same depository or another
depository, provided the BO Account/s at transferee DP and at transferor DP are one and the
same, i.e. identical in all respects.  

In case the BO Account at transferor DP is a joint account, the BO Account at transferee DP

should also be a joint account in the same sequence of ownership.

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Rights

1. You can open more than one depository account in the same name with single DP/
multiple DPs.
2. No minimum balance is required to be maintained in a depository account.
3. You can give a onetime standing instruction to your DP to receive all the credits
coming to your depository account automatically.

Procedure

1. Fill account opening form (available with your DP).

2. Give your DP the duly filled account opening form with introduction documents as may
be required.
3. Sign agreement with DP (agreement will state rights & obligations of both parties). The
agreement will contain the fee structure of your DP. Your DP would give you a copy of
this signed agreement for your record.
4. DP would give you Client Id no. (Account no.) Once your depository account is opened.
This Client Id no. along with your DP Id no. Forms a unique combination. Both these
nos. should be quoted in all your future correspondence with DP/NSDL / Issuing
Company/their registrar & transfer (R&T) agent.
5. Your DP would give you pre-printed instruction slips for depository services viz.,
dematerialization, delivery instruction for trades, etc..Preserve these carefully.
6. Your DP would give you a list of deadlines for giving instructions for various depository
activities viz., transfer for effecting sale, purchase etc.. If not, check with the DP.

Required Documents

The extent of documentation required to open a demat Account may vary according to your
relationship with the institution. If you plan to open a demat account with a bank, a savings
account holder has an edge over the non-account holder. In fact, banks usually offer
additional incentives to customers who open a demat account with them.
Along with the application form, your photographs (with co-applicants) and proof of

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identity/residence/date of birth have to be submitted. The DPs also ask for a DP-client
agreement to be executed on non-judicial stamp paper. Here is a broad list (you won’t need
all of them though):

 PAN card 
 A canceled check,
 Voter’s ID 
 Passport 
 Ration card 
 Driver’s license 
 Photo credit card 
 Employee ID card 
 Bank attestation 
 IT returns 
 Electricity/ Landline phone bill

While they only ask for photocopies of the documents, they will need the originals for
verification. You will have to submit a passport size photograph on which you sign across.

Procedure
1. Fill account opening form (available with your DP).
2. Give your DP the duly filled account opening form with introduction documents as may
be required.
3. Sign agreement with DP (agreement will state rights & obligations of both parties). The
agreement will contain the fee structure of your DP. Your DP would give you a copy of
this signed agreement for your record.
4. DP would give you Client Id no. (Account no.) once your depository account is opened.
This Client Id no. along with your DP Id no. forms a unique combination. Both these
nos. should be quoted in all your future correspondence with DP/NSDL / Issuing
Company/their registrar & transfer (R&T) agent.
5. Your DP would give you pre-printed instruction slips for depository services viz.,
dematerialization, delivery instruction for trades, etc..Preserve these carefully.
6. Your DP would give you a list of deadlines for giving instructions for various depository
activities viz., transfer for effecting sale, purchase,etc.. If not, check with the DP.

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Indiabulls Demat Account Services

Indiabulls Broking – Transacting and investing simplified. Get ready to change the way you
transact and invest in financial products and services. Whether you wish to transact in equity,
equity & commodity derivatives, IPO’s offshore investments or prefer to invest in mutual
funds, life & general insurance products or avail money transfer and money changing
services, you can do it all through Indiabulls. Simply open a Indiabulls account and enjoy the
convenience of handling all your key financial transactions through this one window.

Benefits of having an Indiabulls account.

• It’s cost effective

You pay comparatively lower transaction fees. As an Introductory offer, we invite you to pay
a flat fee of just Rs. 750/- and transact through Indiabulls.

• Its offers single –

Through Indiabulls’s associates, you can transact in equity, equity and commodities
derivatives, offshore investments mutual funds, IPO’s life insurance, general insurance,
money transfer, money changing and credit cards, amongst others.

• Its convenient
You can access Indiabulls’s services through
•The internet
•Transaction kiosks
•The phone (call & transact)
•Our all – India network of associates on an assisted trade.

• Its Safe your account is safeguarded with a unique security number that changes every 32
seconds. This number works as a dynamics password to keep your account extra safe.

It provide you value- added services at www.Indiabullsbroking.com, you get

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• Reliable research, including views of external experts with an enviable track record
• Live news updates from Reuters and Dow Jones
• CEO’s / expert views on the economy and financial markets
• Tools that help you plan your investments, tax, retirement, etc. in the personal finance
section
• Risk Analyzer for analysis of your risk profile
• Asset allocators to build an appropriate investment portfolio
• Innovative use of technology for facilitating

The benefits:-

Benefits of Demat Account

• A safe and convenient way to hold securities;

• Immediate transfer of securities;
• No stamp duty on transfer of securities;
• Elimination of risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc.;
• Reduction in paperwork involved in transfer of securities;
• Reduction in transaction cost;
• No odd lot problem, even one share can be sold;
• Nomination facility;
• Change in address recorded with DP gets registered with all companies in which investor
holds securities electronically eliminating the need to correspond with each of them
separately;
• Transmission of securities is done by DP eliminating Correspondence with companies;
• Automatic credit into demat account of shares, arising out of
bonus/split/consolidation/merger etc.
• Holding investments in equity and debt instruments in a single account.
Benefit For Investors

Demat account has become a necessity for all categories of investors for the following
reasons/ benefits:

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  SEBI has made it compulsory for trades in almost all scrip’s to be settled in Demat
mode. Although, trades up to 500 shares can be settled in physical form, physical
settlement is virtually not taking place for the apprehension of bad delivery on
 account of mismatch of signatures, forgery of signatures, fake certificates,etc.
 It is a safe and convenient way to hold securities compared to holding securities in
physical form..
 No stamp duty is levied on transfer of securities held in Demat form.
 Instantaneous transfer of securities enhances liquidity.
 It eliminates delays, thefts, interceptions and subsequent misuse of certificates.
 Change of name, address, registration of power of attorney, deletion of deceased's
name, etc. - can be affected across companies by one single instruction to the DP.
 Each share is a market lot for the purpose of transactions - so no odd lot problem.
 Any number of securities can be transferred/delivered with one delivery order.
Therefore, paperwork and signing of multiple transfer forms is done away with. It
facilitates taking advances against securities on low margin/low interest.

Points To Remember

1. You may choose your DP based on your evaluation of their reputation, service
standards, charges, other conveniences, etc.
2. Open depository account with the same holding pattern as there on existing physical
securities. You will need to open separate accounts for every different combination of
holding pattern. Eg.: If 100 securities of company ABC & 200 securities of company
PQR are registered in the name of X as first holder & Y as second holder, one account in
name of X as first holder & Y as second holder is sufficient. Whereas, if 100 securities
of company ABC are registered in the name of X as first holder & Y as second holder &
200 securities of company PQR are registered in the name of Y as first holder & X as
second holder, you will need to open two accounts, one in the name of X as first holder
& Y as second holder and the second in the name of Y as first holder and X as second
holder.
3. Account opening procedure should typically take 2-5 days.
4. In case of holdings of a partnership firm, the account should be opened in the name of
the partner(s).
5. In case of holdings of a HUF, the account should be opened in the name of the Karta.

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 6. In case of a minor, the depository account should be opened in the name of the minor
and the guardian’s name should be mentioned. The guardian will sign as signatory on
behalf of the minor. For selling the securities of the minor, a court order should be
obtained.
7. In case of any difficulties, contact your DP.
8. Only securities admitted by NSDL can be dematerialized. The list is available with
your DP.
9. Only securities registered in the name of the account holder can be dematerialized.
10. Dematerialization is normally completed within 15 days after the share certificates
have reached the issuer/their R&T Agent. Thus it may take you a month from the date
you hand over shares, to receive demat credit.
11. Dematerialization would be done only when the issuer / their R&T Agent is satisfied
of genuineness of securities & ownership status
12. All the joint holders should sign the DRF.
13. The pattern of holding in the DRF should match the pattern of holding on the share
certificate & the pattern in which account is opened.
14. Demat requests with name(s) not matching exactly with the name(s) appearing on the
certificates merely on account of initials not being spelt out fully or put after or prior to
the surname, would be processed, provided the signature(s) of the client(s) on the DRF
tallies with the specimen signature(s) available with the issuer/ their R & T agent.
15. If the signature in the DRF does not match with the signature available with the
issuer/ their R & T agent, the issuer/ their R & T agent may at the time of demat
confirmation, ask for additional documentation (like bank attestation/ notarization, etc.)
to prove that the certificate belongs to the person who forwarded the DRF.
16. In case there is any problem in processing the DRF, contact your DP and if he cannot
resolve the problem you may contact NSDL.

Buying and Selling of Dematerialization

INTRODUCTION

The procedure for buying and selling dematerialized securities is similar to the procedure for
buying and selling physical securities.  The difference lies in the process of delivery (in case
of sale) and receipt (in case of purchase) of securities.

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In case of purchase:-

 The broker will receive the securities in his account on the payout day
 The broker will give instruction to its DP to debit his account and credit investor’s
account
 Investor will give ‘Receipt Instruction to DP for receiving credit by filling appropriate
form. However one can give standing instruction for credit in to ones accounts that will
obviate the need of giving Receipt Instruction every time.

 In case of sale:-

The investor will give delivery instruction to DP to debit his account and credit the broker’s
account. Such instruction should reach the DP’s office at least 24 hours before the pay-in as
otherwise DP will accept the instruction only at the investor’s risk.

Rights

1. Dematerialized securities can be traded on those stock exchanges connected to

NSDL. At present, NSE, BSE, CSE, DSE, LSE, BGSE, OTCEI, MSE, ISE & ASE are
connected to NSDL. At these stock exchanges, two segments would be available to trade
in dematerialized securities :
o Unified (erstwhile physical) segment - In this segment delivery obligation can
be met by delivering dematerialized or physical securities at the option of the seller.
However, for a select list of securities prescribed by SEBI, securities cannot be
delivered in physical form in the unified segment, of stock exchanges connected to
NSDL. This list presently covers 160 securities. This list has been expanded to
cover a total of 200 securities with effect from January 17, 2000. Over a period, this
list would cover all actively traded securities.
o Exclusive demat segment - In this segment delivery obligation can be met by
delivering dematerialized securities only. Physical securities cannot be delivered in
the exclusive demat segment.

2. Procedure
Trading in dematerialized securities is done through your broker just like trading in
physical securities. After your broker executes the trade, your DP will help to deliver

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 shares to your broker (in case you sell) on the basis of valid instruction given by you
to your DP and receive shares from your broker (in case you buy) on basis of valid
instruction given by your broker to his DP.

Buy dematerialized securities

1. You purchase securities in any of the stock exchanges connected to NSDL through a
broker of your choice and make payment to your broker. Make sure you tell your broker
you want only demat shares.
2. Broker arranges payment to clearing corporation/ clearing house of the stock
exchange.
3. Broker receives credit in his clearing account with his DP on the pay-out day. He can
immediately transfer these securities to your depository account, provided your account
is already active.
4. Broker gives instructions to his DP to debit his clearing account and credit your
depository account.
5. You give instruction to your DP for receiving credit in your depository account. If
you have given standing instruction to receive credits, no separate instruction for
receiving credit will be required.
6. If the instructions match, your account with your DP is credited.

Sell dematerialized securities

1. You sell your dematerialized securities in any of the stock exchanges linked to NSDL
through a broker of your choice.
2. You give instruction to your DP for debit of your depository account and credit of
your brokers clearing member account at least 24 hours i.e. one working day prior to the
pay-in date or before the deadline prescribed by your DP, so that your brokers clearing
account is credited at the time arranged with him.
3. On the pay-in day, your broker gives instruction to his DP for delivery to clearing
corporation/clearing house of the relevant stock exchange.
4. The broker receives payment from the clearing corporation / clearing house.

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 5. You receive payment from the broker for the sale in the same manner you would
receive payment for a sale in the physical mode.

Points To Remember

1. Trading continues to be through brokers. In case of any problem in execution of trade,

contact your broker and if he fails to resolve the problem you may contact the stock
exchange.
2. When you buy securities through the stock exchange, your brokers clearing account is
credited to the extent of the securities purchased, on receipt of instruction from clearing
corporation/ clearing house of the stock exchange. Your depository account is credited
only when your broker gives a delivery instruction to his DP. Securities are not directly
credited to your account by the clearing corporation/ clearing house of the stock
exchange. In case your broker does not give a delivery instruction, contact him or
concerned stock exchange or SEBI. If your depository account is not credited, in spite of
your broker giving valid instruction to his DP, contact the DP and if he fails to resolve
the same you may contact NSDL.
3. When you sell securities, you have to give a delivery instruction to your DP to
transfer the securities to your brokers clearing account. They are not automatically
debited from your account by NSDL or by the clearing corporation/ clearing house of
the stock exchange. In case the DP defaults in executing your instruction, the DP is
liable to compensate you for the loss incurred, provided your instruction was in
order and has been submitted to the DP at least 24 hours i.e. one working day prior to
the pay-in date or before the deadline prescribed by DP. In case the DP fails to resolve
your problem, you can contact NSDL.

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 CHAPTER-II
REVIEW OF LITERATURE

J. Ravichandran (2007) argued the younger generation investors are willing to invest
in capital market instruments and that too very highly in Derivatives segment. Even though
the knowledge to the investors in the Derivative segment is not adequate, they tend to
take decisions with the help of the brokers or through their friends and were trying to invest
in this market. He also argued majority the investors want to invest in short-term funds
instead of long-term funds that prefer wealth maximization instruments followed by
steady growth instruments. Empirical study also shows that market risk and credit risk
are the two major risks perceived by the investors, and for minimizing that risk they take
the help of news paper and financial experts. Derivatives acts as a major tool for
reducing the risk involved in investing in stock markets for getting the best results out of
it. The investors should be aware of the various hedging and speculation strategies, which
can be used for reducing their risk. Awareness about the various uses of derivatives can
help investors to reduce risk and increase profits. Though the stock market is subjected to
high risk, by using derivatives the loss can be minimized to an extent.

12
Nicole Branger and Beate Breuer (2007) showed that investors can benefit from
including derivatives into their portfolios. For retail investors, however, a direct
investment in derivatives is often too complicated. They argued if the investor can trade
only in the stock and money market account, the exposure of his portfolio to volatility
risk will be zero, and the relation between the exposure to stock diffusion risk and jump
risk will be fixed. They proved through documentation both theoretically and empirically
that investors can increase their utility significantly by trading plain vanilla options. And
also told that in a complete market and with continuous trading, it does not matter which
derivatives an investor uses to realize his optimal asset allocation. But with incomplete
markets, and in particular, discrete trading, on the other hand, the choice of derivatives
may actually matter a lot. This problem particularly sever for retail investor, who are
hindered from implementing their optimal payoff profile by too high minimum
investment amounts, high transaction costs or margin requirements, short-selling
restrictions and may be also lack of knowledge.

Philipp Schmitz and Martin Weber (2007) exposed that the trading behavior is also
influenced if the underlying reaches some exceptional prices. The probability to buy calls
is positively related to the holding of the underlying in the portfolio, meaning that
investors tend to leverage their stock positions, while the relation between put purchases
and portfolio holdings of the underlying is negative. They also showed higher option
market trading activity is positively correlated with past returns and volatility, and
negatively correlated with book-to-market ratios. In addition they report that investors
open and close long and short call positions if past week's return is positive and write
puts as well as close bought and written put positions if the past returns are negative.

B. Das, Ms. S. Mohanty and N. Chandra Shil (2008) studied the behavior of the
investors in the selection of investment vehicles. Retail investors face a lot of problem
in the stock market. Empirically they found and concluded which are valuable for both the
investors and the companies having such investment opportunities. First, different
investment avenues do not provide the same level of satisfaction. And majority of investors
are from younger group.

Gupta and Naveen Jain (2008) found that majority of the investors are from younger
group and as per occupation, salaried persons are more inclined towards investment.

13
Study also argued education qualification is the major influenced factor in investment.
Their most preferred investment is found to be shares followed by mutual funds.
Empirically they found and argued the Indian stock market is considerably dominated by
the speculating crowd, the large scale of day trading and also fact the futures trading in
individual stocks is several times the value of trading in cash segment. They also found the
largest proportions of the investors are worried about too much volatility of the market. For
trader and speculators, price volatility is an opportunity to make quick profits. In the
study, high proportions of investors have a very favorable opinion about the capital market
regulation.

Prasanna P. K. (2008) empirically fond that foreign investors invested more in

companies with a higher volume of shares owned by general public. Foreign investors
choose the companies where family shareholding of promoters is not essential. The study
concluded that corporate performance is the major influencing factor for investment
decision for any investor. As far as financial performance is concerned the share return and
earnings per share are significant factors influencing investment decision. The study
concluded that it is required to understand when FII withdraw their funds and when they
pump in more money.

Deleep Kumar P M and Deyanandan M N (2009) analyzed the opinion of retail

investors on the major market reforms as well as their investment performance. The
study revealed introduction of derivatives trading and internet trading are found useful by
only a marginal group of investors. The empirical results of the study concluded that
even though SEBI claims itself to be the champion of investor protection, it has not been
successful in instilling a sense of confidence in the minds of majority of investors.

G. Ramakrishna Reddy and Ch. Krishnudu (2009) summarized that a majority of

the investors are quite unaware of corporate investment avenues like equity, mutual funds,
debt securities and deposits. They are highly aware of traditional investment avenues
like real estate, bullion, bank deposits, life insurance schemes and small saving
schemes.Study argued the primary motive of investment among the small and
individual investors is to earn a regular income either in form of interest or dividend
on the investment made. The other motives like capital gains, tax benefits, and
speculative profits are stated to be the secondary motives of investment. From empirical

14
research they argued to motivate the people to invest their savings in the stock market to
be achieved only if the regulatory authorities succeed in providing a manipulation free
stock market.

K. Logeshwari and V. Ramadevi (2009) advocated that a commodities market provides

a platform for the investors as well as hedgers to protect their economic interests as
well as increase their investible wealth. Commodity prices are generally less volatile than
the stocks. Therefore it‟s relatively safer to trade in commodities. But the volume
being traded in commodities is much less than the stock market. This is because of the
two reasons that the investors are less aware about the commodities market and their risk
perception.

Nidhi Walia and Ravi Kiran (2009) studied that to satisfy the needs of investors‟
mutual funds are designing more lucrative and innovative tools considering the appetite
for risk
taking of individual investors. A successful investor is one who strives to achieve not
less than rate of return consistent with risk assumed. They also argued as per
observation by survey responses of the individual investor‟s fact is clear that overall among
other investment avenues capital market instruments are at the priority of investors but
level of preference varies with different category/ level of income, and an association
exists between income status of investors and their preference for capital market instrument
with return as objective.

Vinay Mishra and Harshita Bhatnagar (2009) documented that Derivatives are
considered to be extremely versatile financial instruments, as they help to manage risks,
lower funding costs, enhance yields and diversify portfolios. The contributions made by
derivatives have been so great that they have been credited with having „changed the
face of finance‟ in the world. Derivatives markets are an integral part of capital markets
in developed as well as in emerging market economies. These instruments assist business
growth by disseminating effective price signals concerning exchange rates, indices and
reference rates or other assets, thereby, rendering both cash and derivatives markets more
efficient.

15
 CHAPTER-III
RESEARCH METHODOLOGY

NEED OF THE STUDY

The need of the study arises because of the reason that a trainee must understand the
company, its achievements and tasks, products and services and also to collect information
about its competitors, its products and services offered. So that, after understanding and
collecting information about the organization and its competitors, a trainee will be able to
work well for the organization.
From the study I have learned very much, about the company as well as the strategy of the
customers, which helps me a lot at my working days.

Objectives of the study:

An objective is the brainchild behind any project report. A project report will always
have a certain objective which needs to be accomplished. Following are the objectives behind
the preparation of my project at Indiabulls securities Ltd.

 To Compare Indiabulls Online share trading account with the big players in the
Market i.e. ICICI, KARVY, HDFC, RELIENCE MONEY as well as with
INDIA INFOLINE
 Identify the areas where INDIABULLS Scores above its competitors and what are
its weak links. Know the market potential of INDIABULLS considering the fact
that there are many competitors in this field with some more firms expected to

16
 join the fray in the near future. This will be done with the help of a questionnaire.
Provide suggestions to the company regarding what else it can do to stand apart in
this ever competitive field and thereby emerge as a market leader.
 To Study present online share trading
 To find Potential customers of India Bulls in Hyderabad.
 To determine the satisfaction levels of consumers with India bulls securities private
limited.
 To assess the satisfaction level of traders regarding services of India bulls.

RESEARCH METHODOLOGY

 Sample size - 100

 Sources of data - Primary data &
Secondary
 Sampling used in data collection - Random sampling

Primary Data: The required data was collected by way of distribution of questionnaires
to investors at random and by way of telephonic interviews and online distribution of
questionnaire.

Tools/Technique of data collection -

 Personal Interview

 Close observation
 Survey conduction

Secondary data: - already existing data is called secondary data. I collected

them by following method –
 Internet
 Books

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 Area selected for data collection - Hyderabad

Scope of Study
 It provides a complete knowledge of various fundamental concepts of share market
and online trading.

 It will help in analyzing the behavior of consumers and help in Knowing the
parameters of investment on which they would like to invest..

 Through this project I am not only bringing long term clients for my organization but
also creating a word of mouth publicity of my organization by offering the best
services to the clients so that more and more potential customer will come and stick to
my organization.

 Also through this project I suggest the organization the behavioral pattern of investor
towards different instruments.

 From the study I have learned very much, about the company as well as the strategy
of the customers, which helps me a lot at my working days.

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 Limitations of study:

 The respondents who have not given any information are not included in the sample
but do come under the population.

 It was not possible to cover each and every client of each and every broking house
and hence a sample of 100 people was taken.

 The market share of all the online share trading products is only for the city of
Varanasi. The market share of all the companies may differ in different cities. It
may also differ nationally.

 Due to the tough competition each & every broking firm is offering different
schemes like, free opening A/c or different advance brokerage schemes where
Indiabulls is lacking in this area.

19
 CHAPTER-IV
THERITICAL FRAME WORK

DEPOSITORY SYSTEM IN INDIA:

The Indian capital market witnessed an explosive growth between mid Eighties and mid
Nineties. The total number of companies listed in the stock exchanges had grown by 72.3%
from 2729 in 4702 in 1995. The market capitalization of the companies listed with stock
exchanges had gone up from Rs.21, 000 crores in 1985 to more than Rs.4, 50,000 crores in
1995.The secondary market trading activity also gathered momentum. There has been
tremendous growth in secondary market trading at BSE and NSE. Other regional exchanges
like Calcutta, New Delhi have also become active players in the market. This sudden growth
had exposed the limitations of the system. The system used was not able to withstand the
strain caused by the tremendous growth in the securities market.

The entire securities market started experiencing a gridlock, posing obstacles in its growth.
Moreover, this sudden growth has also magnified the risks that have always been plaguing
the Indian system, viz., credit risk and systematic risk. International institutional investors
wanting to invest in India had become apprehensive about the reliability of the trade
settlement mechanisms used in the country, which did not match international standards.

Besides affecting the inflow of foreign capital, the lack of efficient settlement systems had
affected all those operating in the stock market, be it institutional investors, individual
investors or brokers. They suffered due to lost trading days (liquidity), lost scrips improperly
paid dividends, mistaken registration, unnecessary financing cost, inappropriate risk like
failure of counter party and fraud.

20
Era of Scripless and Paperless trading:

To sort out the above mentioned problems and to restore the investors confidence in the stock
market the depository system was set up. It was against this background that the Government
of India enacted the Depositories Act in 1996, which an era of scrip less trading and
settlement, efficient market infrastructure, investor protection, reduced risks and transparency
of transaction in the securities market.
Depository Act, 1996:

The concept of Depository is known to the world since 1949 when the first depository was set
up in Germany. There were 112 depositories in operation by the year 2001. Every depository
operates under a country‘s specific law and regulation in order to ensure safety, liquidity,
rights and liabilities to the security holders.

Depository:

A depository is an organization where the securities of an investor are held in electronic form.
A depository can be compared to a bank. To avail of the services of a depository, an investor
has to open an account with the depository through a depository participant, just as he opens
an account with the bank. Holding shares in the account is a kin to holding money in the bank

At present, India has only two depositories-National Securities Depository Ltd. (NSDL) and
Central Depository Services Ltd (CDSL).

NSDL is the first depository in the county, which is promoted by three major financial
institutions - Unit Trust of India, Industrial development Bank of India and National Stock
Exchange of India Limited. The second depository of the country (CSDL) is set up in 1999
by the Bombay Stock Exchange and Bank of India

21
However, most of the services offered by both these depositories are similar. Today almost
all the companies listed in dematerialized from with NSDL are available with CDSL.

BANK DEPOSITORY
Holds funds in accounts Holds securities in accounts
Transfers funds between accounts Transfers without handling securities
Safekeeping of Money Safekeeping of securities

Depository participant:

A depository participant is an agent appointed by the depository and is authorized to offer

depository services to all investors. An investor cannot directly open a Demat account with
the depository. An investor has to open his account through a DP only. The DP in turn opens
the account with the depository. The DP in turn takes up the responsibility of maintaining the
account and updating them as per the instructions given by the investor from time to time.
The DP generates and provides the holdings statement from time to time as required by the
investor. Thus, the DP is basically the interface between the investor and the depository.

The person who holds a Demat account is a beneficiary owner. In case of a joint account, the
account holders will be beneficiary holders of that joint account. The Demat account number
of the beneficiary holder(s) is known as the BO Id. A DP id is the number of the depository
participant allotted by the depository.

Functions of Depository:

In the depository system, securities are held in depository accounts, which is more or less
similar to holding funds in bank account.
Transfer of ownership of securities is done through simple account transfers. This method
does away with all the risks and hassles normally associated with paperwork. Consequently,
the cost of transacting in a depository environment is considerably lower as compared to
transacting in certificates. The depository system also allows distribution of dividends

22
through the RBI‘s ECS system, whenever the participating company has agreed to such
services. Other entitlements such as bonuses, split-ups are also directly effected by the
depository into the investor‘s account. The following can be held in the depository
(electronic) form:
Shares (listed or unlisted) ,Stocks ,Bonds ,Debentures ,RBI Relief Bonds ,Government
Securities (through a primary Dealer) ,Units of Mutual Funds ,Commercial Paper ,Money
Market Instruments etc.

OPENING A DEMATERIALIZATION ACCOUNT (DEMAT A/C)

Demat refers to a dematerialized account. Just as we have to open an account with a bank if
we want to save your money, make cheque payments etc, we need to open a demat account if
we want to buy or sell stocks. So it is just like a bank account where actual money is replaced
by shares. We have to approach the DPs (remember, they are like bank branches), to open our
demat account.
Demat account allows you to buy, sell and transact shares without the endless paperwork and
delays. It is also safe, secure and convenient.
Let’s say our portfolio has 100 of Satyam, 50of Suzlon, 20 of ICICI BANK, 50 of Tech
Mahindra and 100 of TCS shares. All these will show in our demat account. So we don’t
have to possess any physical certificates showing that us own these shares. They are all held
electronically in our account. As we buy and sell the shares, they are adjusted in our account.
Just like a bank passbook or statement, the DP will provide you with periodic statements of
holdings and transactions.

Individuals, companies, Trusts, Partnership firms, NRIs, HUF, Banks and Institutions are
allowed to open a depository account with any depository through a depository participant.
The investor would need to execute a standard form giving all his details, bank details,
instruction details, nomination details and off-course photograph and signature. Along with
this form, the investor would also have sign an agreement with the depository participant
which usually forms a standard part of the account opening process. The details on the form
have to be matched with a photocopy of the investor‘s passport, driving license etc. to certify
the mentioned details. If the investor is an NRI, then the client will have to provide overseas
address, provide copy of RBI Approval, if any. The RBI Approval is not mandatory for

23
opening of a DP. Account but is required to receive shares into the account when purchased
through the secondary market.

A: Procedure for purchasing dematerialized securities

The procedure for purchasing dematerialized securities is also similar to the procedure for
buying physical securities.

1. Investor instructs DP to receive credits into his account in the

Prescribed form. There may be one time standing instruction or
Separate instruction each time to receive credits.

2. Investor purchases securities in any of the stock exchanges linked to

Depository through a broker.

3. Broker receives payment from investor and arranges payment to

Clearing corporations.

4. Broker gives instructions to DP to debit clearing account and credit

Client’s account. Investor receives shares into his account by way of book entry.

24
B: Procedure of selling dematerialized securities

The procedure for selling dematerialized securities in stock exchanges is similar

as selling physical securities. The only major difference is that instead of delivering physical
securities to the broker, the investor instructs his DP to debit his demat account with the
number of securities sold by him and credit the brokers clearing account. The procedure
for selling dematerialized securities is given below:

1. Investor sells securities in any of the stock exchange linked to depository through a broker.

2. Investor instructs his DP to debit his demat account with the number of
securities sold and credit the broker’s clearing account.

3. Before the pay-in-day, broker of the investor transfers the securities to clearing
corporation.

4. The broker receives payment from the stock exchange.

5. The investor receives payment from the broker for sale of securities in the
same manner as received in case of sale of physical securities.

25
 BENEFITS OF DEMATERIALIZATION ACCOUNT

Primary benefits:

1- Safety: If we are holding our shares, bonds etc in physical (paper) form, there are
chances of its theft, mutilation, and loss. Moreover, we are also exposed to the risks of
fake papers, bad-delivery or delays at the time of transfer of physical securities.
However, in DEMAT accounts; we can preserve our long-term investments safely and
securely.

2- Convenience: When we want to sell our dematerialized shares or redeem our

debentures in DEMAT account; there are no hassles of filling up transfer forms,
sending redemption requests or any other messy, costly and time-consuming paper
work. We can conveniently transfer our securities through electronic transfers or just
by signing one ‘Delivery Instruction Slip’, which is nothing but our chequebook for
DEMAT Accounts.

Other Benefits:

Apart from the safety and convenience, there are lot more advantages of opening DEMAT
accounts. Here are few of the most necessary reasons for having a DEMAT account. 

 We can park most of our investments including shares, bonds, debentures, Gold Units,
NSC and bonds in our DEMAT account. We might not immediately realize the
benefits of having all the investments in DEMAT form. For instance, if we change our

26
 residence, we just have to write to the DP (Depository Participant), which
automatically gets our new address registered with all the companies where we have
invested our money.

 We do not have to remember the due dates of maturity of bonds, NSC and debentures,
as the redemption proceeds are automatically credited to our bank account, which is
linked with our DEMAT account.

 We receive all the dividends and interests directly in our linked bank account.

 In case of bonus, rights, split, merger or any other corporate actions, everything takes
place automatically. We do not have to do anything except to file the physical
intimation letters sent by the Registrar and Transfer Agents.

 Nowadays with the advent of online trading, we can perform online all the activities
associated with buy, sell and transfer of shares.

 With a single nomination in your DEMAT account, we are nominating our legal heirs
to all the investments held by us.

 For many public issues of bonds and debentures of reputed and trustworthy
companies, it is necessary to have a DEMAT Account, as the companies do not allot
securities in paper form.

 Since most of the process of buying and selling dematerialized securities is electronic,
there are no chances of signature mismatch.

 Elimination of problems related to selling securities on behalf of a minor.

 Elimination of problems related to change of address of investor, transmission etc.

 Reduction in handling of huge volumes of paper periodic status reports.

So with Dematerialized Securities, the entire process of transferring shares, bonds and other
financial assets has become smooth and swift. DEMAT Accounts offer numerous advantages

27
and hence it makes sense for the retail investors to open DEMAT Accounts as early as
possible.

ONLINE TRADING:

Change is the law of nature”. There were times when man was a Wanderer or a
normal. He himself had to go place to place in search of food, water and now everything is
available at your doorstep just at the click of the mouse. The growth of information
technology has affected almost all sectors of life. Internet has enabled us to get
every information at our doorstep.
When Internet has affected all sectors he could “stock markets” the most important player of
the economy, has remained far behind? Like all other sectors Internet has set its feet in the
stock markets also.
The Stock Market system provides single, nation wide securities. It enables LAN investors in
one part of the country to trade at the best quotes with an investor located in any other part of
the country through the members of the stock exchange and subsequently clears and settle the
trade in an efficient and cost effective manner. The primary objective of the Stock Market is
to provide clear opportunity to the investors throughout the country to trade any security
irrespective of the size of the order or the broker through whom the order is routed. This
provides the facility to execute the buy order at the lowest price in the stock market located
anywhere in the country without any extra cost to the investors.

There will be no trading floor in the exchange. Instead, each trading member will have a
computer at his own office anywhere in India which will be connected to the central
computer system at the NSE through leased line or VSATs (very small aperture terminals),
for an interim transition period of 6 months & subsequently by satellite link. VSATs are
relatively smaller dishes similar to dish antenna for cable TV & have the benefit of not being
very expensive. A satellite network makes it possible to connect almost all the parts of the

28
nation quickly as it is easy to install, as against the ground lines such as dial up modems
leased lines, which are prone to disruptions, satellite links, on the other hands ensure high
speed, availability and quality of the connection. This mode of trading is known as "Online
Trading"

Introduction of online trading in India

Online trading started in India in February 2000 when a couple of brokers started offering an
online trading platform for their customers.

Online trading by NSE & BSE:

The central computer located at the Exchange is connected to the workstations of the
Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders placed at
based on price and time priority. Both the exchanges have switched over from the open
outcry trading system to a fully automated computerized mode of trading known as BOLT
(BSE On Line Trading) and NEAT (National Exchange Automated Trading) System. It
facilitates more efficient processing, automatic order matching, faster execution of trades
and transparency. The scrips traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F'
and 'Z' groups.
The 'A' group shares represent those, which are in the carry forward system (Badla). The
'F' group represents the debt market (fixed income securities) segment. The 'Z' group
scrips are the blacklisted companies. The 'C' group covers the odd lot securities in 'A',
'B1' & 'B2' groups and Rights renunciations. key regulator governing Stock Exchanges,
Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants
in Indian secondary and primary market is the Securities and Exchange Board of India
(SEBI) Ltd.

29
 Objectives of Present Trading System:

 Reduce and eliminate operational inefficiencies inherent in manual system

 Increased trading capacity in Stock Market Improve market transparency

 Eliminate unmatched trades and delayed reporting Provide for on-line and off-line
monitoring control and surveillance of the market.

 Promote fairness and speedy matching Smooth market operations using technology
while retaining the flexibility of conventional treading practices

 Set up various limits, rules and controls centrally.

 Consolidate the trades data on electronic media to interface will the broker‘s back

office system

 Provide public information on scrip prices, indices for all users of the system

 Provide analytical data for use of Stock Market.

30
 MECHANICS OF ONLINE TRADING

BROKER STOCK EXCHANGE

CLIENT

Accepts the Accepts the order

Places an order order, Checks after checking the
the net of the the client’s scrip limit of the
Broker’s Identity and broker for the day
website Places the
through the Order
distinctive Id
code

The settlement of Pays the

the deal (buy/sell Exchange
order) gets through his Receives the
reflected in his owns account money and
Demat account. and receives it completes the
from the client settlement
account.

The client is
intimated about
the execution of
the deal by e-mail.

31
Features Of Online Trading

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

Freedom of Information:

The Internet can provide a new sense of control over your financial future. The
amount of investment information available online is truly astounding. It's one of
the best aspects of being a wired investor. For the first time in history, any
individual with an Internet connection can:

 Know the price of any stock at any time

 Review the price history of any stock in chart format
 Follow market events in-depth
 Receive a wealth of free commentary and analysis about stock
 markets and the global economy
 Conduct extensive financial research on any company

Control our money:

One of the great appeals of using an online trading account is the fact that the
account belongs to you, and is under your direct control. When you want to buy or
sell stock, you no longer need to call your broker on the phone; hope that he is in
the office to place your order; possibly argue with the broker about the order; and
hope that the transaction is executed instantly.
Access to the market:

At the most basic level, an online trading account gives you more agility in buying

32
and selling stocks. This is through sophisticated information streams, dedicated
trading platforms and sophisticated tools for accessing the markets.
Offers greater transparency:
Online trading offers you greater transparency by providing you with an audit trail.
This involves a complete integrated electronic chain starting from order placement,
to clearing and settlement and finally ending with a credit into your depository
account. All these stages are subject to inspection, thus bringing in transparency
into the system.

Reduces the settlement risk:

This method of trading reduces the settlement risk for the investor, as in this case
all short sell orders are squared off at the specified cut-off time and not allowed to
be carried forward.
Instant trade order confirmations:
Every trade is confirmed immediately and you will receive an on-screen
confirmation following every trade with full details for your records. This
avoids costly errors that would have been discovered when it is too late.
Integrated Accounts:

Our Bank, Depository and Trading account are integrated for our convenience.
Various broking houses provide access to many of the popular banks.

33
 BENEFITS OF ONLINE TRADING:

1) Less Costly:

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

2) Peace of Mind:

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

3) Keeping Records:

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

34
4.) Ease of trade:

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

PROBLEMS OF ONLINE TRADING

.1) Server not found:

This may appear on one’s screens when he is desperately trying to get out of an
unprofitable position. Some of the online sites are providing a telephone number for
use in case their sites are overloaded or their server down.

2.) Connectivity of the Broker with NSE:

Recently ICICI Direct had a connectivity problem with the NSE for two and halfhours
during trading hours. This problem is rare but be alive to its possibility.

3.) Cyber attack:

In the event of a malicious attack on the systems of one’s broker he is protected

only if the company is taking proper precautions against such attacks and if proper
backup is regularly been taken. He may like to choose a brokerage that has a stated
security policy and contingency plan in place.

4) Non-availability of a seamless interface:

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

35
orders are processed the more seamless is the interface.

5.) Non- availability of personalized advice:

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

6.) Margin:

If Internet trading alone is not fast and furious enough; many people are trading on margin.
That is where the brokerage firm lends you money by leveraging his account,
allowing him to buy a large amount of securities by putting up only a small amount of
money. He may have forgotten what he read in the small print of his agreement, but the
brokerage firm has the right to change the maintenance margin requirements without any
warning or notice to him. In fact, the firm has the right to liquidate his securities holdings
(and it can pick and choose which ones) without any notice to one if he fail to meet the
margin call. And there he was leveraged to the hilt, hoping to hit a home run when he
discovered that he is required to make a large deposit that he cannot make. The next thing one
know, the firm is selling off his securities at a point in time that is not the best for him.
Theseare the perils of trading on margin.

36
Recent Developments:

The current recession in the economy is affecting the stock market which has triggered a
slowdown in the opening of new account by the depository participants (DPs). Faced with the
sudden dip in the number of new accounts being opened, the DPs are devising ways to
attracts customers. On offer is Interactive Voice Response (IVR) for the latest update on
Demat accounts and services through the Internet. There is a 42% decline in the number of
new account opening. Perhaps the volatility in the market has made investors worry. Analysts
said there was booms in Demat account opening as retail customers were riding high on the
loans extended to pick up initial public offers. Most of these Demat accounts are now
dormant.

Several DPs are planning to launch Interactive Voice Response (IVR) units and Demat
services on the Net, Through these IVR units , investor will be able to know the current value
of their portfolio, current holdings, transaction list, etc.

Some DPs are providing Demat services on the internet to enable customer to access their
account and get the holding and transaction statement on a daily basis..

37
 COMPARATIVE ANALYSIS OF VARIOUS STOCK BROKING
COMPANIES IN VARANASI ON THE BASIS OF ACTIVATION
CHARGES, BROKERAGE, SERVICES

Angel Broking

Criteria Angel stock broking

Demat a/c opening charges 750

Brokerage intra day, delivery 5 paise,50 paise

AMC(Annual Maintenance Charges) Rs.300

Trading funding intra day, delivery 6times,4 times(minimum stock Rs 50000)

Debit period T+2 Days

Mode of trading Both online and offline

Margin money 5000

Software installation charges No extra charges

38
 IndiaInfoline

Criteria India infoline

Demat a/c opening charges 550

Brokerage intra day, delivery 5 paise,50 paise

AMC(Annual maintaince charges) NIL

Trading funding,intraday,Delivery 10 times, 4times

Debit period T+2

Mode of trading Both online and offline

Margin Money 2000

39
 Software Installation charges No extra charges

Religare Securities

Criteria Religare Securities

Demat a/c opening charges 550

Brokerage intra day, delivery 4 paise,40 paise

AMC(Annual maintaince charges) 250

6times,4 times(minimum stock Rs 50,000)
Trading funding,intraday,Delivery

Debit period T+2

Mode of trading Both online and offline

Margin Money No limit

Software Installation charges No Extra charges

40
 ICICI Direct

Criteria ICICI Direct

Demat a/c opening charges Rs.975

50Paise,75Paise
Brokerage intra day, delivery

AMC(Annual maintaince charges) Rs.500

6times,4 times(minimum stock Rs 50,000)
Trading funding,intraday,Delivery

Debit period T+2

Mode of trading Both online and offline

Margin Money No limit

Software Installation charges No Extra charges

41
 CHAPTER—V
INDUSTRY PROFILE AND COMPANY PROFIEL

Basic Information:-
The history of trading goes back to 1983, when a doctor in Michigan placed the first Online
trade using E TRADE technology. What began with a single click over 16 years ago has now
taken the world by storm. The concept was visualized by one BILL PORTER, a physicist
and inventor who provide online quotes and trading services to many US firms like fidelity,
Charles Schwab, and Quick and Reilly. This led Bill to wonder why, as an Individual
investor, he had to pay a broker hundreds of dollars for stock transaction.
With incredible foresight, he saw the solution at hand; someday everyone would own
computers and invest through them with unprecedented efficiency and control. And today his
dream has become a reality.
With the global firms turning their eyes on INDIA as a country with immense potential for
growth thanks to globalization and various economic reforms, the Indian stock markets are
places receiving a lot of attention. Trading and investing in share is gaining momentum and
with the Internet facility virtually at every part of the country, it has become a reality for even
a smallest person wanting to invest his surplus money but did not know where to go until
recently.
Besides familiarity with the stock market, the transaction process, and having an account at s
broker or sub-broker, knowledge of basic investment information is also important to making
investment decisions.

42
 COMPANY PROFILE:

Type Public (NSE: [1])

Founded 2000 As Indiabulls Financial Services Ltd.

Mumbai, India.
Headquarters

Sameer Gehlaut, Chairman & CEO Rajiv Rattan,

Key people
President & CFO, Saurabh Mitten Director.

Industry Financial Services.

Products Securities, Consumer Finance, Mortgages, Real Estate,

Power, Retail services

Employees Around 4000

Website http://www.indiabulls.com

43
HISTORY

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis
InfoTech Private Limited at New Delhi under the Companies Act, 1956 with Registration No.
55 - 103183. The name of Company was changed to. Indiabulls Financial Services Private
Limited on March 16, 2001 due to change in the main objects of the Company from InfoTech
business to Investment & Financial Services business. It became a Public Limited Company
on February 27, 2004 and the name of Company was changed to M/s. Indiabulls Financial
Services Limited. And now this company has achieved milestone by voted as The Youngest
Company of the year in ET500.
The group started its business as a stock-brokerage firm and pioneered online brokerage
business in India before diversifying into other financial services areas such as consumer
credit (2004) and mortgages (2005). The group partnered with Farallon Capital to purchase
landmark Mumbai land assets and is currently building one of the largest integrated
commercial real estate projects in India (valued at more than $2 billion). The group recently
entered the power generation business and aims to have more than 5000 MW of power
generation under construction before the end of 2008.
Indiabulls Financial Services Ltd is a public company and listed on the National Stock
Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock
Exchange. The market capitalization of Indiabulls is approx US $ 800 million, and the
consolidated net worth of the company is approx US $ 400 million. Indiabulls and its group
companies have attracted US $ 300 million of equity capital in Foreign Direct Investment
(FDI) since March 2000.
Indiabulls ranks at 82nd position in the list of most valuable companies in India. Indiabulls is
promoted by three engineers from the Indian Institute of Technology (IIT) Delhi. Foreign
Institutional Investors (FIIs) and foreign funds hold over 60 percent shareholding of
Indiabulls. Some of the large shareholders of Indiabulls are the largest financial institutions of
the world such as Fidelity Funds, Capital International, Goldman Sachs, Merrill Lynch, Lloyd
George and Farallon Capital. There are approximately over 40,000 shareholders.

44
 PROFILE

Indiabulls is India’s leading Financial Services and Real Estate Company having over 640
branches across India. Indiabulls serves the financial needs of more than 4,50,000 customers
with its wide range of financial services and products from securities, derivatives trading,
depositary services, research and advisory services, consumer secured and unsecured credit,
loan against shares and mortgage & housing finance. Having around 4000 Relationship
Managers, Indiabulls helps its clients to satisfy their customized financial goals. An India bull
through its group of companies has entered into the Indian Real Estate business in 2005. It is
currently evaluating several large-scale projects worth several hundred million dollars.
Indiabulls Financial Services Ltd is a public company and listed on the National Stock
Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock
Exchange. The market capitalization of Indiabulls is approx US $ 800 million, and the
consolidated net worth of the company is approx US $ 400 million. Indiabulls and its group
companies have attracted US $ 300 million of equity capital in Foreign Direct Investment
(FDI) since March 2000.
Indiabulls ranks at 82nd position in the list of most valuable companies in India. Indiabulls is
promoted by three engineers from the Indian Institute of Technology (IIT) Delhi. Foreign
Institutional Investors (FIIs) and foreign funds hold over 60 percent shareholding of
Indiabulls. Some of the large shareholders of Indiabulls are the largest financial institutions of
the world such as Fidelity Funds, Capital International, Goldman Sachs, Merrill Lynch, Lloyd
George and Farallon Capital. There are approximately over 40,000 shareholders of the
company.
Indiabulls Financial Services is a retail financial services company providing a diverse array
of financial products and services, through its nationwide network of over 300 Indiabulls
offices, and services over 2,50,000 clients spread across 110 cities in India. Indiabulls, along
with its subsidiary companies, offer consumer loans, brokerage and depository services,
personal loans, home loans and other financial products and services to the retail markets.
Indiabulls, which has a workforce of over 10,000 full time employees, reported US $ 60
million in Profit before Tax and US $ 45 million in Net Profit for the first nine months of the
current financial year.

45
Business of the company has grown in leaps and bounds since its inception. Indiabulls
became the first company to bring FDI in Indian Real Estate through a JV with Farallon
Capital Management LLC, a respected US based investment firm, Indiabulls has
demonstrated deep understanding and commitment to Indian Real Estate market by winning
competitive bids for landmark properties in Mumbai and Delhi.
Indiabulls Group is one of the top business houses in the country with business interests in
Real Estate, Infrastructure, Financial Services, Retail, Multiplex and Power sectors. India
bulls Group companies are listed in Indian and overseas financial markets. The Net worth of
the Group exceeds USD 2 billion. India bulls has been conferred the status of a “Business
Super brand” by The Brand Council, Super brands India.
India bulls Financial Services is an integrated financial services powerhouse providing
Consumer Finance, Housing Finance, Commercial Loans, Life Insurance, Asset Management
and Advisory services. India bulls Financial Services Ltd is amongst 68 companies
constituting MSCI - Morgan Stanley India Index. India bulls Financial is also part of CLSA’s
model portfolio of 30 Best Companies in Asia. India bulls Financial Services signed a joint
venture agreement with Sogecap, the insurance arm of Societé Generale (SocGen) for its
upcoming life insurance venture. India bulls Financial Services in partnership with MMTC
Limited, the largest commodity trading company in India, is setting up India’s 4th Multi-
Commodities Exchange.
India bulls Real Estate Limited is India’s third largest property company with development
projects spread across residential projects, commercial offices, hotels, malls, and Special
Economic Zones (SEZs) infrastructure development. India bulls Real Estate partnered with
Farallon Capital Management LLC of USA to bring the first FDI into real estate. India bulls
Real Estate is transforming 14 million sqft in 16 cities into premium quality, high-end
commercial, residential and retail spaces. India bulls Real Estate has diversified significantly
in the following business verticals within the real estate space: Real Estate Development,
Project Advisory & Facilities Management: Residential, Commercial (Office and Malls) and
SEZ Development. Power: Thermal and Hydro Power Generation.

ABOUT FOUNDERS:

46
The fast paced growth, diversification and consolidation of the Group has been possible due
to the vision and leadership of the co-founders of Indiabulls.
Sameer Gehlaut is the Chairman, CEO and Whole Time Director of Indiabulls. Sameer is an
engineer from IIT, Delhi (1995) and has worked internationally with Halliburton in its
international services business in 1995. He has utilized his experience with the international
best practices and professional work culture at Halliburton to lead Indiabulls successfully.
Rajiv Rattan is the President, CFO and Whole Time Director of Indiabulls. Rajiv is an
engineer from IIT, Delhi (1994) and has rich experience in the oil industry, having worked
extensively across the globe in highly responsible assignments with Schlumberger. Rajiv has
managed remote exploration projects providing evaluation services for different clients in
India as well as abroad.
Saurabh Mittal is a Director at Indiabulls. Declared the best graduating student in IIT, Delhi
in (1995), Saurabh was also one of the engineers selected by Schlumberger to work for its
international services business in 1995 and gained experience of working in various global
locations. He graduated as a Baker Scholar with an MBA from the Harvard Business
School. He has also developed in-depth understanding of international financial markets.

Board Of Directors

NAME DESIGNATION
Mr.Sameer Gehlaut Chairman & Whole time Director
Mr.Shamsher Singh Director
Mr.Aishwarya Katoch Director
Mr.Kartar Singh Gulia Director
Mr.Gagan Banga Director
Mr.Saurabh K Mittal Director
Mr.Karan Singh Director
Mr.Rajiv Rattan Whole Time Director

INDIABULLS SECURTIES LTD.

47
Indiabulls Securities Limited is India’s leading capital markets company with All-India

Presence and an extensive client base. Indiabulls Securities is the first and only brokerage

house in India to be assigned the highest rating BQ – 1 by CRISIL. Indiabulls Securities Ltd

is listed on NSE, BSE & Luxembourg stock exchange.

The company through various types of brokerage accounts provides product and services

related to purchase and sale of securities listed in NSE and BSE. It also provides depository

services, equity research services, mutual fund, IPO distribution to its clients. The company

provides these services through on-line and off-line distribution channel.

Power Indiabulls Indiabulls Signature Account

 
   
Depository Services
NRI Trading
 
.
 

     
IPO Online Indiabulls Equity Analysis
   
 

Power Indiabulls (PIB)

48
Power Indiabulls (PIB) is the advanced online trading platform from Indiabulls Securities

Limited, the leading stock broker in India with a branch network spread across the country.

PIB provides the best in the class internet trading features and delivers a seamless and rich

online trading experience for its users. Whether we are a Day-Trader who buy/sell stocks

during the day or a Stock Research Analyst who believes in taking a stock trading call after

doing extensive fundamental research & technical analysis, PIB fulfills our every stock

trading need from the comfort of our desktop.

PIB comes with a whole host of online features for the internet trading users ranging from

real-time stock prices, to live trading reports, charting, News Room. For Market Experts &

Stock Research Analysts, PIB provides features like Technical Analysis to help them analyze

the behavior of a particular stock using popular technical analysis indicators like Simple

Moving Average, Stochastic, Relative Strength Index, etc. Besides, one can also view Market

Statistics section to view the day’s Top Gainers / Losers, Most Active, Most Volatile, etc.

For day traders, PIB offers trading features like Intraday Charting, Hourly Tick List and

Alerts to help them track the movement of underlying scrip / index during the day. Besides,

one can also create multiple Market Watch windows to view the latest market price of the

stocks they want to track.

PIB provides an integrated online trading platform for the internet trading community to

invest in equity, F&O, Online IPOs and base their decision on sound fundamental research

and technical analysis. It also provides various kinds of trading reports, each developed to

cater to internet trading users’ distinct needs. For ex., we can access Net Portfolio Report to

view a list of stocks that are available in our portfolio. To view our

open positions in F&O segment, we can access F&O Complete Position Report. PIB also

provides details about our current day's obligations in Current Obligations Report.

49
With whole host of advanced online trading features, PIB aims to fulfill the needs of every

genre of investors & help them gain profits in every possible way.

Features of PIB:
 Live Streaming Quotes
 Fast Order Entry
 Tic by Tic Live Charts
 Technical Analysis
 Live News and Alerts

Signature Account

With Indiabulls Signature account you will always remain on top of your investments. It
provides you the platform to trade in Equity and Derivatives. With an unmatched service and
nationwide presence, the Indiabulls Signature account comes bundled with a variety of
exclusive features.
 Ease of trading – With Indiabulls Signature account we have the flexibility to place
your orders either by logging on the website, calling at the branch or walking in the
branch.
 Dedicated Service Branch and Relationship Manager: we can get in touch with
our Relationship Manager and Service Branch for all our trading related requirements.
 Power Indiabulls (PIB): We can trade smarter and faster using the Power Indiabulls
application. Access the broad spectrum of sophisticated trading tools and get an edge
in the stock markets.
 Online Payment Gateways: Use Indiabulls online payment gateways facility and get
instant credit in our Trading Account. Indiabulls currently provide online gateway
payment facility with four major banks – HDFC, ICICI, AXIS and IDBI.
 IPOs – Indiabulls provides flexibility to apply in ongoing IPOs through either online
or offline channels. For applying online, we do not need to fill tedious forms and
write cheques. We can apply conveniently in IPOs from the comfort of our home /
office through our Website/PIB. For applying offline, we can contact our Relationship
Manager/ Service Branch.
 Portfolio Tracker: We can track our investments online through Indiabulls portfolio
tracker functionality. We can conveniently track the daily movement, notional /
booked profits and losses in your portfolio.

50
  Equity Analysis Report – A qualified and dedicated team of equity analysts at
Indiabulls publishes various research reports. We can view these reports to gain
insight into the companies of your interest.
 News Room: The News Room provides real-time news from stock-markets,
corporate sector, economy and other segments that have a bearing on the market
sentiment.
 Market Statistics: This functionality facilitates tracking the market trend by
providing us real time data on top gainers, top losers, volume toppers and most
volatile stocks.
 Mobile Power Indiabulls (MPIB): MPIB is a mobile-phone based application,
developed exclusively for Indiabulls customers. Using MPIB, we can view the live
market rates of your favorite stocks and futures contracts on your mobile device. Thus
with MPIB, we can always remain connected with the market, even on the move.
 Electronic Contract Notes on Email: This facility enables us to get digitally signed
Electronic Contract Notes on email within 24 hours of executing trades in our Trading
Account.

Depository Services

Indiabulls is a depository participant with the National Securities Depository Limited and
Central Depository Services (India) Limited for trading and settlement of dematerialised
shares. Indiabulls performs clearing services for all securities transactions through its
accounts. We offer depository services to create a seamless transaction platform – execute
trades through Indiabulls Securities and settle these transactions through the Indiabulls
Depository Services. Indiabulls Depository Services is part of our value added services for
our clients that create multiple interfaces with the client and provide for a solution that takes
care of all your needs.

51
Indiabulls Equity Analysis

Indiabulls Equity Analysis complements its equity broking and advisory services with high
quality comprehensive report which can be accessed online. Research report assess the
potential strength and investment risk by doing in-depth and exhaustive analysis of
operational and financial performance of company, Peer group analysis, present Industry
scenario using advanced and sophisticated forecasting tools and models. These research
reports identify, examine and distill attractive investment opportunities to help you in
building and maintaining your ideal portfolio.
Salient features of Indiabulls Equity Analysis:

 Covers report of more than 540 company

 Updated on a daily basis
 Scorecard on Fundamentals, Valuations and risk
 Peer Analysis
 Valuation of potential growth
 Industry Scenario
 Expansion plan
 Details of Mergers and Acquisitions

NRI Trading

Non-Resident Indians (NRIs) can also enjoy the state of the art Online trading Platforms
of Indiabulls to trade in Indian Capital Markets. We, at Indiabulls, provide NRI clients a fast
and secure trading platform which would perfectly cater to NRI's Trading
requirements.  To start trading through Indiabulls , the following simple steps need to be
followed:
Opening of Online NRI Trading and NRI Demat account with Indiabulls: Get in touch with
your nearest Indiabulls service branch (Branch Locator) to complete all the Trading and
Demat account opening formalities.
Opening of a NRI PIS account with Axis bank: A NRI is required to open a PIS account
(Portfolio Investment Scheme) with a designated bank in India. Indiabulls Securities Limited
has tied up Axis bank to offer this facility to NRIs to enable them to trade in the Indian
Capital markets.

52
 GROWTH STORY

2000- India bulls Financial Services Ltd. established one of India’s first trading platforms
01 with the development of an in house team.

2001- Indiabulls expands its service offerings to include Equity, F&O, Wholesale Debt,
03 Mutual fund, IPO distribution and Equity Research.

2003- India bulls ventured into Insurance distribution and commodities trading.
04 Company focused on brand building and franchise model.

India bulls came out with its initial public offer (IPO) in September 2004.
India bulls started its consumer finance business.
2004-
India bulls entered the Indian Real Estate market and became the first company to
05
bring FDI in Indian Real Estate.
India bulls won bids for landmark properties in Mumbai.
India bulls has acquired over 115 acres (0.47 km2) of land in Sonepat for residential
home site development.
Merrill Lynch and Goldman sac, one of the renowned investment banks in the world
have increased their shareholding in India bulls.

2005- India bulls is a market leader in securities brokerage industry, With around 31% share
06 in online trading, Farallon Capital and its affiliates, the world’s largest hedge fund
committed Rs. 2000 million for India bulls subsidiaries Viz. India bulls Credit Services
Ltd. and India bulls Housing Finance Ltd.
Steel Tycoon Mr. LN Mittal promoted LNM India Internet venture Ltd. acquired 8.2%
stake in India bulls Credit Services Ltd.

2006-07 India bulls entered in a 50/50 joint venture with DLF, Kenneth Builders &
Developers (KBD). KBD has acquired 35.8 acres (145,000 m2) of land from

53
 Delhi Development Authority through a competitive bidding process for Rs 450
crore to develop residential apartments.
India bulls Financial Services Ltd. is included in the prestigious Morgan Stanley
Capital International Index (MSCI).
Farallon Capital has agreed to invest Rs. 6,440 million in India bulls Financial
Services Ltd. India bulls ventured into commodity brokerage business.
India bulls has received an “in principle approval” from Government of India for
development of multi product SEZ in the state of Maharashtra.
Dev Property Development plc. has subscribed to new shares and has also
acquired a minority shareholding from the Company.
India bulls Financial Services Ltd. Board resolves to Amalgamate India bulls
Credit Services Limited and demerge India bulls Securities Limited.

SWOT ANALYSIS

Strengths

54
  Very Strong Brand Image.

 Low Charges with respect of its Services.

 Free annual maintenance of Demat account.

 Facility to trade in office.

 Very Good Customer Care Unit.

Weaknesses

 Only One branch in Varanasi City.

 Weak Advertisement Policies.

 Trading on BSE stocks is not available

 Commodity trading is not available in Branch

Opportunities
 Large Untapped Market.
 Opportunity to educate investors about their products & inspire them to invest more &
encourage others.
 Good Opportunity to Cash its Brand Image and People Trust.

Threats
 Presence of very strong competitors Like, Karvy, Angel Broking, Share khan,
Religare etc.
 Aggressive marketing by competitors.
 Low brokerage offerings by competitors.

55
 DATA INTRPRETATION AND ANALYSIS

Questions regarding problems in trading:-

Q.1) Do you invest in share market?

a) Yes
b) No

56
 70
60
50
40
30
20
10
0
Yes NO

No. of respondents % of respondents

Interpretation: -35% people invest in share market in Varanasi city

57
Q.2) Please tick the following:-
a.) Type of trading you generally do intraday / delivery /both

45
40
35
30
25
20
15
10
5
0
intraday delivery both

No. of respondents percentage of respondent

Interpretation: - 26% people prefer intraday trading, 42. % prefer delivery and
32% do both type of trading.

58
b.)Time period of investment less 1 month/ 1-6 month /more than 6 month.

50

40

30

20
10

0
Less than 1 1 to 6 More than 6
month month months

No. of respondents % of respondents

Interpretation: - Maximum people prefer to invest for 1 to 6 months and amount

of investment for majority of people was found to be between Rs. 20,000 to Rs.
1 lac.

59
Q.3) In your opinion what is biggest problem in trading:-

a.) Lack of knowledge or experience

b.) Unsatisfactory services of broking firms
c.) Market uncertainty
d.) Charges by broking firm

50

40

30

20

10

0 a.) Lack of b.) Unsatisfactory c.)Market d.)Charges by

knowledge or services of uncertainty broking firm
experience broking firms

No. of respondents %of respondents

Interpretation: - Most of the people facing biggest problem in trading, Lack of

knowledge and believe that unsatisfactory services by their broking firms create
problem in trading while 25 % people consider charges of broking firm as a
problem in trading.

60
Q.4) What is your opinion about the problem of market uncertainty in trading?
a.) It's a big challenge
b.) It's manageable
c.) It's an opportunity

60
50
40
30
20
10
0
a.)It's a big b.)It's c.)It's an
challenge manageable opportunity

No. of respondents %of respondents

Interpretation: - majority of people consider market uncertainty as a big

problem, around 19% people consider it as an opportunity and rest says it is
manageable.

61
Q.5) Does unsatisfactory services provided by the broking firm create problem
in trading?
a.) Yes
b.) A little
c.) No

60
50
40

30
20

10
0
Yes a little No

No. of respondents %of respondents

Interpretation :- 54.5% consider the Unsatisfactory services provided by the

broking firm create problem in trading, 20.5% people consider it a little and
25% were not agree to that.

62
Q.6) Which charge do you consider charged by the broking firms is a problem
in trading?
a.) Broking charge
b.) Undisclosed hidden charge
c.) Annual maintenance charge

40
35
30
25
20
15
10
5
0
a.)Broking charge b.)Undisclosed c.)Annual
hidden charge maintenance charge

No. of respondents %of respondents

Interpretation: - Most people considered undisclosed hidden charges and annual

maintenance charge as their problem in trading.

63
Questions regarding perception of traders regarding Indiabulls:-

Q.1) Name of the broking firm with which you are making your investment?
a.) India bulls
b) Share khan
c) Angel Broking
d) Religare
e) Karvy
f) Others

45
40
35
30
25
20
15
10
5
0
a.)India b.)Share Angel Religare Karvy others
bulls khan Broking

No. of respondents %of respondents

Interpretation: - Market share of INDIABULLS is around 35% in Varanasi.

64
Q.2) Are you satisfied in trading with your broking firm?
a.) Satisfied
b.) Neither satisfied nor dissatisfied
c.) Dissatisfied

50

40

30

20

10

0
a.)Satisfied b.)Neither satisfied c.)Dissatisfied
nor dissatisfied

No. of respondents %of respondents

Interpretation: - Most of the people are satisfied with their broking firm.

65
Q.3) Are you aware of products and services offered by India bulls?
a.) Yes
b.) No

60

50

40

30

20

10

0
Yes NO

No. of respondents %of respondents

Interpretation: - 47.1% of people are aware of products and services offered by

India bulls.

66
Q.4) Are you satisfied with them?
a.) Satisfied
b.) Neither satisfied nor dissatisfied
c.) Dissatisfied

60
50
40
30
20
10
0
a.)Satisfied b.)Neither satisfied c.)Dissatisfied
nor dissatisfied

No. of respondents % of respondents

Interpretation: - Majority of people are satisfied with them.

67
Q.5) Are you satisfied with the charges charged by India bulls for opening D-
Mat account?
a.) Satisfied
b.) Neither satisfied nor dissatisfied
c.) Dissatisfied

60
50
40
30
20
10
0
a.)Satisfied b.)Neither c.) Dissatisfied
satisfied nor
dissatisfied

No. of respondents %of respondents

Interpretation: - Most of people are satisfied with the charges charged by India
bulls for opening Demat account.

68
Q.6) What is your perception regarding Indiabulls?
a.) Good
b.) average
c.) Bad

50

40

30

20

10

0
Good Avg. Bad

No. of respondents %of respondents

Interpretation: - Except 12 people (17.7%) perceive positive perception about

INDIABULLS.

69
Q.7) Please specify reasons?
a.) Services good /average / bad
b.) Brokerage good /average / bad
c.) Relationship manager's support good /average / bad
d.) Transparency good /average / bad

60

50

40

30

20

10

0 Go o d Avg . B ad Go o d Avg . B ad Go o d Avg . B ad Go o d Avg . B ad

c.)Relationship
a.)Service b.)Brokerage Transparency
manager's support
No. of respondents % of respondents

Interpretation: - In case of transparency and services Indiabulls is considered

good and average in case of brokerage and relationship manager's support.

70
Q.8) At which office location you are more comfortable with Indiabulls:-
a.) Kuber complex
b.) Arihant complex

60

50

40

30

20

10

0
Kuber complex Arihant complex

No. of respondents %of respondents

Interpretation: - Clients of INDIABULLS are more comfortable at Arihant

complex.

71
 CONCLUSION

 Most of the traders consider unsatisfactory services of broking firm as biggest

problem in trading.

 Most of traders perceive Indiabulls as a good broking firm.

 In case of transparency and services Indiabulls is considered good and average in

case, of brokerage and relationship manager's support.

 People aware about Indiabulls are satisfied regarding product and services by
Indiabulls.

 Market share of Indiabulls in Varanasi is about 35%

72
73
 SUGGESTIONS

 Broking charges should revised to make them more competitive.

 More relationship managers should be appointed to increase market share.

 Relationship manager's support to the clients should be improved.

 Facility to trade on commodity and BSE should be added.

 Indiabulls should conduct some kind of mock Classes for new Investors who even
don’t know about share market.

 There should be employee ID-Card for them so that When they go on it shows good
impression and Identity of employee.

 IndiaBulls Organize training Program for their existing clients once or twice in a year.

74
 BIBLIOGRAPHY

 www.Indiabulls.com

 www.Investopedia.com

 www.powerindiabulls.com

 www.bseindia.com

 www.nseindia.com

 www.moneycontrol.com

 www.equitymarket.com

 www.demat.com

75
 ANNEXURE

Questionnaire:

Q.1) Do you invest in share Market?

a) Yes b) No

Q.2) Please tick the following:

a.)Type of trading you generally do intraday / delivery /both
b.)Amount of investment less than 20 k / 20k-l lacs /more than 1 lacs
c.)Time period of investment less than 1 month/1-6 month /more than 6 month

Q.3) In your opinion what is biggest problem in trading:

a.) Lack of knowledge or experience b.)Unsatisfactory services of broking firms
c.)Market uncertainty d.) Charges by broking firm

Q4) What is your opinion 'about the problem of market uncertainty in trading?
a.) It's a big challenge b.) It's manageable c.) It's an opportunity

Q.5) Does unsatisfactory services provided by the braking firm create problem in trading?
a.) Yes b.) Partially c.) No

Q.6) Which charge do you consider charged by the companies is a problem in trading?
a.)Broking charge b.) Undisclosed hidden charge c.)Annual maintenance charge

Q.7) Name of the company with which you are making your investment?

a.) India bulls b.) Reliance money c.) Share khan d.) Other

76
Q.8) Are you satisfied in trading with your broking firm?
a.) Satisfied b.)Neither satisfied nor dissatisfied c) Dissatisfied

Q.9) Are you aware of products and services offered by Indiabulls?

a.) Yes b.) No

Q.10) Are you satisfied with the charges charged by indiabulls for opening D-Mat account
(with annual maintenance charge)?

a.) Satisfied b.) Neither satisfied nor dissatisfied c.) Dissatisfied

Q.11) What is Your perception regarding India Bulls?

a.) Good b.) Average c) Bad

Q.12) Please specify reasons?

a.) Services good/average / bad
b.) Brokerage good / average / bad
c.) Relationship manager's support good / average / bad
d.) Transparency good / average / bad

Q.13) At which office location you are more comfortable with Indiabulls:

a.) Kuber complex b.) Arihant complex

77