INTRODUCTION

Investment may be defined as an activity that commits funds in any financial form
in the present with an expectation of receiving additional return in the future. The
expectations bring with it a probability that the quantum of return may vary from a
minimum to a maximum. This possibility of variation in the actual return is known as
investment risk. Thus every investment involves a return and risk.

Investment is an activity that is undertaken by those who have savings. Savings can be
defined as the excess of income over expenditure. An investor earns/expects to earn
additional monetary value from the mode of investment that could be in the form of
financial assets.

The three important characteristics of any financial asset are:

 Return-the potential return possible from an asset.
 Risk-the variability in returns of the asset form the chances of its value going
down/up.
 Liquidity-the ease with which an asset can be converted into cash.

Investors tend to look at these three characteristics while deciding on their individual
preference pattern of investments. Each financial asset will have a certain level of each of
these characteristics.

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 Investment avenues

There are a large number of investment avenues for savers in India. Some of them
are marketable and liquid, while others are non-marketable. Some of them are highly
risky while some others are almost risk less.
Investment avenues can be broadly categorized under the following heads:

1. Corporate securities
 Equity shares.
 Preference shares.
 Debentures/Bonds.
 Derivatives.
 Others.

The classification of corporate securities that can be chosen as investment

avenues can be depicted as shown below:

Equity Preference Bonds Warrant Derivative

Shares shares s s

Major out come of this study was as under

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  SEBI must make a policy to give guide lines to companies that certain
portion of their capital must be from house hold sector/small investors. This
will give perfection to small investor because companies are issuing shares
to private operations. For this SEBI can defined small investors investment
quantum as ≤ Rs 10000 for e.g., reserve says 50% of the issue amount to
small investors to attract funds from this sector. This is good for the
companies also, because small investors do not expect abnormal returns.

 Companies are getting the public issue and under written by banks and
financial institutions. So, companies are not keen to reach general public
hence norms must be fixed for under writing only a limited portion [50%]
of the issue and balance 50% from the public

 Public also invests in government securities and funds floated by

government. Companies are getting loan return market. How every private
company is operating in high risk and return markets because they can
predict risk well. Hence government companies must change over current
out look of safe investments and operating high risk and high return
markets. So, they can give high returns to small investors.

 Investor must choose blue chip shares for investment. It is recommended that
future studies can be conducted to further understand capital markets.

Need for the study:

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The purpose of studying share price movements is to know how economic, business, and
sometimes human factors play important role in trading & to study proper monitoring,
market research and market timing for business. Stock trading entails a lot of analysis
from a company’s retained earnings for its outstanding shares to the more complex
algorithms expressed in stock market charts with all the technical signals. Studying price
movements and market fluctuations are now made easier through computer monitor with
the development of analysis software. Equity analysis forms an integral part of the share
trading experience. Equity analysis decides the instance one would take in the share
trading industry. Finding out the highs and lows in the market and analyzing the equity is
of utmost importance before making any sort of investment. Technical analysis,
fundamental analysis and others form a part of the equity analysis.

OBJECTIVES:-

 To analyse the online trading and its process.

 To study the analysis of price movement of shares and company

performance with respect to information available with India info line.

 To review secondary literature on capital market trading to understand the

basics.

 To evaluate present system of trading of securities at India Info line, Abids,

Hyderabad

 To bring out suggestions on how to improve the trading system to reach

maximum people.

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RESEARCH METHODOLOGY:

Primary data has been collected by observing the share price movements at
India info line Hyderabad consisting of trading faculty experts and stock
exchange people & experts opinion from marketing.

Sources used to collect data are secondary data are as the following sources:

 News paper
 Books
 Stock exchange bulletins
 BSE data
 NSE data
 GOVT reports (SEBI)

.
Statistical tools used for data analysis are graphs of price movements or fluctuations of
different companies trading for specified period.

Scope of the study:

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 This study covers introduction to capital markets and trading to serve as basic
material for capital market operations.
This study is conducted at Hyderabad and will not represent all India data. However basic
fundamentals have been brought out which can be for the study in large scale studies.

Limitations of the study:

Despite of the training I have tried my level best, there were still some limitation which I
think remains there to draw fruitful conclusion. There were some practical problem
which come across and could not be properly death with

 Since the study is conducted at the trading terminal at India info line securities,
Hyderabad, time and cost are the constraints.

 The advisory services being promised by the brokers would be of little use to
investors looking for an insight into the market.

 As a client one will access the India Bullsserver for the online brokerage and this
may involve queuing delays.

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

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 REVIEW OF LITERATURE:

INTRODUCTION OF STOCK EXCHANGE:

The concept of capital market is in a way 127 years old. Capital market was known as
“share bazaar” it was also treated as a ”satta bazaar” starting of capital market
concept in India took place with the birth of Bombay Stock Exchange.

A securities contract (Regulation) Act of 1956 of India was first major step to
recognize capital market. Bombay Stock Exchange got first recognition in 1956 under
this act.
Bombay Stock Exchange, which was the major stock exchange, in way had
monopoly in the Indian capital market till the birth of National Stock Exchange. Bombay
Stock Exchange celebrated its 125th jubilee year in the 2000. The capital market, the
stock exchange, the Equity concept was baby till 1960. And the concept of mutual fund
was introduced by the government with the formation of Unit Trust of India in 1963-64.

Capital market in India is a new development compared to the western world.

India was known as under developed country from the view point of economic and
industrial growth. After getting freedom in 1947, India started thinking about planned
development in 1948. The first industrial policy development statement was made on
April 6th 1948.

The concept of capital market is directly linked with industrial development of

country. It is also treated as barometer of economic growth. Industrial development
started in India in 19th century, there were very few entrepreneurs known as Tatas,
Birlas, etc. who started industries in their own country i.e. India. In the 20 th century first
quarter, this group started big industries in major metropolitan cities.

By providing a market quotation of the prices of shares and bonds a sort of

collective judgment simultaneously reached by many buyers and sellers in the market.

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The stock exchanges serve the role of barometer, not only the state of health of individual
companies, but also of the nation’s economy as a whole.

Another important function that the stock exchange in India discharge is of

providing market for gilt-edged securities i.e. securities issued by the government sectors,
municipalities, improvement trust, and other public bodies.

There are 22 stock exchange in India, the first being the Bombay Stock Exchange
(BSE),which began formal trading in 1875, making it one of the oldest in Asia. Over the
last few years, there has been a rapid change in the Indian securities market, especially in
the secondary market. Advanced technology and online-based transactions have
modernized the stock exchanges. In terms of the number of companies listed and total
market capitalization, the Indian equity market is considered large relative to the
country’s stage of economic development.

BOMBAY STOCK EXCHANGE:

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich
heritage. Popularly known as “BSE”, it was established as “The Native Share & stock
Brokers Association” in 1875. It is the first stock exchange in the country to obtain
permanent recognition in 1956 from the Government of India under the Securities
Contract Act, 1956. The Exchange’s pivotal and pre-eminent role in the development
of the Indian capital market is widely recognized and its index, SENSEX, is tracked
worldwide. Earlier an Association of persons (AOP), the Exchange is now a
demutualised and corporative entity incorporated under the provisions of the
Companies Act, 1956, pursuant to the BSE Scheme, 2005 notified by the securities
and Exchange Board of India (SEBI). With demutualization, the trading rights and
ownership rights have been de-linked effectively addressing concerns regarding
perceived and real conflicts of interest. The Exchange is professionally managed
under the overall direction of the Board of Directors. The Board comprises eminent

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 professionals, representatives of Trading members and the Managing Director of the
Exchange. The Board is inclusive and is designed to benefit from the participation of
market intermediaries. In terms of organization structure, the Board formulates larger
policy issues and exercises over-all control. The committees constituted by the Board
are broad-based.

NATIONAL STOCK EXCHANGE:

NSE was incorporated in November 1992 with an equity capital of Rs. 25

crores. The International Securities Consultancy (ISC) of Hong Kong has helped
in setting up NSE. ISE has prepared the detailed business plans and installation of
hardware and software systems. The promotions for NSE were financial
institutions, insurances companies, banks and SEBI Capital Market Ltd.
It has been set up to strengthen the move towards professionalizing of the
capital market was well as provide nation wide securities trading facilities to
investors.
NSE is not an exchange in the traditional sense where brokers own and
manage the exchange. A two tier administrative set up involving a company board
and a governing board in envisaged.
NSE is a national market for shares PSU bonds, debentures and government
securities since infrastructure and trading facilities are provided.

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INTRODUCTION OF CAPTIAL MARKET:

Introduction:
Companies raise long term funds from the capital markets. Finance managers
should, therefore, know the ways in which securities are traded and pried in the capital
markets. They should also know the procedures to be followed in issuing securities.
Securities will be fairly priced in the capital markets if they are efficient.

Capital Market Efficiency:

Capital markets facilitate the buying and selling of securities such as shares and
bonds. They perform two valuable functions: liquidity and pricing securities.

Liquidity means the convenience and speed of transforming assets into cash, or
transferring assets from one person to another without any loss of value. Cash in the most
liquid asset as it can be readily converted into any other asset, or transferred to another
person without any decline in value.

Capital markets make securities liquid. They facilitate the buying and selling of
securities by a large number of investors continuously and instantaneously without
incurring significant cost. They help to reduce, if not eliminate, transaction costs. For
ensuring the liquidity, capital markets do require certain investors who are always ready
to buy or sell securities. These market makers enhance liquidity and reduce transaction
cost.

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STRUCTURE OF THE CAPITAL MARKET

CAPITAL
MARKET

BUYING / SELLING

AMBI MARKET REGULATOR

(SEBI)
RAIN
SROs

AMFI

Investment
Bankers MARKET Portfolio
Managers
INTERMEDIARIES
R&T
Agents Investment
Analyssts

Mutual
Funds Under-
S tock writers
Brokers
Ecxhanges

Measures to promote Capital Market:

Many important policy measures were announced by the Government in Nineties to

promote the capital market which may be briefly setout below.

1. The utilization of the proceeds of the Mega issues of more than Rs.50 crores will be
monitored by the concerned financial institutions. A provision is also made for a
minimum subscription of 90% for a public issue before allotment can be made.
2. The Government has approved the creation of over the counter exchange of India
(OTC) sponsored by leading financial institutions which would help the introduction
of a multi-tiered market for securities.

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3. The employee’s option scheme was partially modified restricting the allotment of the
unavailed portion of the public/rights issues earmarked for employee only to financial
or investment institutions or mutual funds.
4. In January 1990, the Government modified the guidelines for bonus shares.
According to the new guidelines, a company may make a further application for issue of
bonus shares after 12 months instead of 24 months previously, from the date of sanction
of the earlier issue, besides, it was announced in January 1991 that no prior sanction of
Govt. is necessary for the issue of bonus share up to Rs.1 crore, provided the companies
follow the normal guidelines.

Special features of the Indian Capital Market:

The capital market in India has exhibited some special features in the recent years which
are noting here.

1. Greater reliance on debt instruments as against equity and in particular, borrowing

from financial institutions.

2. Issue of debentures, particularly convertible debentures with automatic or

compulsory conversion into equity without the normal option given to investors.

3. Floatation of mega issues for the purpose of take over amalgamation, etc. and
avoidance of borrowing from financial institutions for the fear of their discipline
and conversion clause by the bigger companies, which has now become optional.

4. Avoidance of underwriting by some companies to reduce the costs.

5. Fast growth of mutual funds and subsidiaries of banks for financial services
leading to larger mobilization of saving from the capital market.

SEBI AND ITS ROLE

The Securities and Exchange Board of India (SEBI) is the regulatory

Authority in India established under Section 3 of SEBI Act, 1992. SEBI Act, 1992
provides for establishment of Securities and Exchange Board of India (SEBI) with
statutory powers for (a) protecting the interests of investors in securities (b) promoting

12
the development of the securities market and (c) regulating the securities market. Its
regulatory jurisdiction extends over corporate in the issuance of capital and transfer of
securities, in addition to all intermediaries and persons associated with securities market.
SEBI has been obligated to perform the aforesaid functions by such measures as it thinks
fit. In particular, it has powers for:

 Regulating the business in stock exchanges and any other securities

Markets
 Registering and regulating the working of stock brokers, sub–brokers etc.
 Promoting and regulating self-regulatory organizations
 Prohibiting fraudulent and unfair trade practices
 Calling for information from, undertaking inspection, conducting
Inquiries and audits of the stock exchanges, intermediaries, self –
Regulatory organizations, mutual funds and other persons
associated with the securities market.

PARTICIPANTS IN THE SECURITIES MARKET

The securities market essentially has three categories of participants,namely, the

issuers of securities, investors in securities and the intermediaries, such as merchant
bankers, brokers etc. While the corporate and government raise resources from the
securities market to meet their obligations, it is households that invest their savings in the
securities market.

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The securities market can again be classified into :

Primary Market:
A primary market is a market where securities are issued to the public for the
first time. New issues are dealt within this market. The new issues market has three
functions to perform – origination, underwriting and distributions. There are two ways by
which a company may raise capital in primary market.

i. Public issue
ii. Private placement

Primary market provides opportunity to issuers of securities; Government as well

as Corporate, to raise resources to meet their requirements of investment and/or discharge
some obligation. They may issue the securities at face value, or at a discount/premium
and these securities may take a variety of forms such as equity, debt etc. They may issue
the securities in domestic market and/or international market.
Intermediate in the primary market are merchant bankers, collecting bankers,
registrants and transfer agents, broker underwriters, underwriters, advertising agencies,
printers, sub-brokers and solicitors and mailing agents.

FACE VALUE OF A SHARE / DEBENTURE

The nominal or stated amount (in Rs.) assigned to a security by the issuer. For
shares, it is the original cost of the stock shown on the certificate; for Bonds, it is the
amount paid to the holder at maturity. Also known as par Value or simply par. For an
equity share, the face value is usually a very small amount (Rs. 1, Rs. 10) and does not
have much bearing on the price of the share, which may quote higher in the market, at Rs.
100 or Rs. 1000 or any other price. For a debt security, face value is the amount repaid to
the investor when the bond matures (usually, Government securities and corporate bonds
have a face value of Rs. 100). The price at which the security trades depends on the
fluctuations in the interest rates in the economy.

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PREMIUM AND DISCOUNT IN A SECURITY MARKET
Securities are generally issued in one to any denominations. This is known as the
Face Value or Par Value of the security as discussed earlier. When a security is sold
above its face value, it is said to be issued at a Premium and if it is sold at less than its
face value, then it is said to be issued at a Discount.

ISSUE OF SHARES
Why do companies need to issue shares to the public?
Most companies are usually started privately by their promoter(s). However, the
promoters’ capital and the borrowings from banks and financial institutions may not be
sufficient for setting up or running the business over a long term. So companies invite the
public to contribute towards the equity and issue shares to individual investors. The way
to invite share capital from the public is through a ‘Public Issue’. Simply stated, a public
issue is an offer to the public to subscribe to the share capital of a company. Once this is
done, the company allots shares to the applicants as per the prescribed rules and
regulations laid down by SEBI.

What are the different kinds of issues?

Primarily, issues can be classified as a Public, Rights or Preferential issues (also
known as private placements). While public and rights issues involve a detailed
procedure, private placements or preferential issues are relatively simpler.

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The classification of issues is illustrated below:

Initial Public Offering (IPO)

Is when an unlisted company makes either a fresh issue of securities or an offer
for sale of its existing securities or both for the first time to the public. This paves way for
listing and trading of the issuer’s securities.
A follow on public offering (Further Issue) is when an already listed company makes
either a fresh issue of securities to the public or an offer for sale to the public, through an
offer document.

Rights Issue
Is when a listed company which proposes to issue fresh securities to its existing
shareholders as on a record date. The rights are normally offered in a particular ratio to
the number of securities held prior to the issue. This route is best suited for companies
who would like to raise capital without diluting stake of its existing shareholders.

A Preferential issue
Is an issue of shares or of convertible securities by listed companies to a select
group of persons under Section 81 of the Companies Act, 1956 which is neither a rights
issue nor a public issue. This is a faster way for a company to raise equity capital. The
issuer company has to comply with the Companies Act and the requirements contained in
the Chapter pertaining to preferential allotment in SEBI guidelines which inter-alias
include pricing, disclosures in notice etc.

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What is meant by Issue price?
The price at which a company's shares are offered initially in the primary market
is called as the Issue price. When they begin to be traded, the market price may be above
or below the issue price.

What is an Initial Public Offer (IPO)?

An Initial Public Offer (IPO) is the selling of securities to the public in the
primary market. It is when an unlisted company makes either a fresh issue of securities or
an offer for sale of its existing securities or both for the first time to the public. This
paves way for listing and trading of the issuer’s securities.

For example: RELIANCE POWER

Anil pumps Rs 450/share as promoter equity into RPL IPO

Anil Ambani and his energy flagship Reliance Energy Ltd (REL) have put in Rs
1,440 crore as promoters’ contribution to the initial public offering (IPO) of shares in
group arm Reliance Power Ltd (RPL), this works out to a subscription price of Rs 450 a
share or the upper end of the price-band.
The issue is scheduled to open on January 15 and will close on January 18. The
price-band has been set at Rs 405-450 per share. The offering is being billed as the
country’s largest and is expected to mop up between Rs 10,700 crore and Rs 11,700 crore
from the market. Many bankers see demand exceeding Rs 200,000 crore from the issue of
a total of 260 million shares. Of this, 228 million scrips have been earmarked for the
public and the promoters’ share has been pegged at 32 mn shares. Retail investors have
been offered a discount of Rs 20 per share. This means the net cost of subscription will be
Rs 430 per share. If bid at Rs 450 per share. Retail investors also have the option of
making part payment of the application amount, wherein they will have to put in Rs 115
per share while seeking allotment. The balance will be asked for after the allotment of the
shares

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.

RPL IPO oversubscribed about 14 times till day 2

An initial public offering (IPO) by Anil Dhirubhai Ambani group (Adag) firm
Reliance Power (RPL) has been oversubscribed by about 14 times, with investors
demanding shares worth Rs 1,42,000 crore till second day of issue on January 16.

The issue has received one million applications, a record, from retail investors in the two
days of launch of the IPO on January 15, merchant banking sources said.
According to data available on the National Stock Exchange (NSE), the IPO got
subscribed 13.85 times at the end of working hours on the second day of the issue. It
received bids for over 315.87 crore shares as against 22.80 crore shares on offer. The
issue would close on January close on January 18. “Looking at the rush of investors for
the issue, time for accepting the applications has been increased to 11 pm”, a member
involved in the syndicating process for the IPO said. Investors have pulled out money
from the secondary market to subscribe to the mega IPO, which seeks to raise Rs 11,700
crore, leading to the bench-mark Sensex falling more than 800 points on the two days to
19,868.11 points from 20,728.05 points on January 14. The investors wealth has

18
witnessed a fall of about Rs 2, 66,218.56 crore. “The RPL IPO is attracting a lot of
liquidity,” Rajesh jain of SMC Global said.

It’s Raining Money

IPO Amount Subscribed

(in ‘000 cr)
Rel Power 1.42 14
DLF 9.2 5
Cairn 5.8 1.1
TCS 5.4 10.3
NTPC 5.4 11
Power Grid 3 64.5
RPL 2.7 52
Idea 2.4 57
Mundra Port 1.8 115

Who decides the price of an issue?

Indian primary market ushered in an era of free pricing in 1992. Following this,
the guidelines have provided that the issuer in consultation with Merchant Banker shall
decide the price. There is no price formula stipulated by SEBI. SEBI does not play any
role in price fixation. The company and merchant banker are however required to give
full disclosures of the parameters which they had considered while deciding the issue
price. There are two types of issues, one where company and Lead Merchant Banker fix a
price (called fixed price) and other, where the company and the Lead Manager (LM)
stipulate a floor price or a price band and leave it to market forces to determine the final
price (price discovery through book building process).

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PRICE DISCOVERY THROUGH BOOK BUILDING PROCESS:
Book Building is basically a process used in IPO’s for efficient price discovery. It is a
mechanism where, during the period for which the IPO is open, bids are collected
from investors at various prices, which are above or equal to the floor price. The offer
price is determined after the bid closing date.

Secondary Market:
Secondary market is a market where securities, which have already issued in the
primary market, are traded. Secondary market comprises of equity markets and the debt
markets. This market consists of all stock exchanges recognized by the Govt. of India,
and is regulated under the securities contract (regulation) Act 1956. The BSE is the
principle stock exchange in India, which sets the tone of the other stock markets.
Intermediate in secondary market are brokers, jobbers, dealers, arbitrators, investment
advisors, portfolio managers and sub-brokers.

ROLE OF SECONDARY MARKET

For the general investor, the secondary market provides an efficient
platform for trading of his securities. For the management of the company, Secondary
equity markets serve as a monitoring and control conduit—by facilitating value-
enhancing control activities, enabling implementation of incentive-based management
contracts, and aggregating information (via price discovery) that guides management
decisions.

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PRODUCTS IN THE SECONDARY MARKET
Following are the main financial products/instruments dealt in the Secondary
market which may be divided broadly into Shares and Bonds:

Shares:

Equity Shares:
An equity share, commonly referred to as ordinary share, represents the form of
fractional ownership in a business venture.

Rights Issue/ Rights Shares:

The issue of new securities to existing shareholders at a ratio to those already
held, at a price. For e.g. a 2:3 rights issue at Rs. 125, would entitle a shareholder to
receive 2shares for every 3 shares held at a price of Rs. 125 per share.

Bonus Shares:
Shares issued by the companies to their shareholders free of cost based on the
number of shares the shareholder owns.

Preference shares:
Owners of these kind of shares are entitled to a fixed dividend or dividend
calculated at a fixed rate to be paid regularly before dividend can be paid in respect of
equity share. They also enjoy priority over the equity shareholders in payment of surplus.
But in the event of liquidation, their claims rank below the claims of the company’s
creditors, bondholders/debenture holders.

Cumulative Preference Shares:

A type of preference shares on which dividend accumulates if remained unpaid.
All arrears of preference dividend have to be paid out before paying dividend on equity
shares.

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Cumulative Convertible Preference Shares:
A type of preference shares where the dividend payable on the same accumulates,
if not paid. After a specified date, these shares will be converted into equity capital of the
company.

Difference between the Primary Market and the Secondary Market

In the primary market, securities are offered to public for subscription for the
purpose of raising capital or fund. Secondary market is an equity trading venue in which
already existing/pre-issued securities are traded among investors. Secondary market
could be either auction or dealer market. While stock exchange is the part of an auction
market, Over-the-Counter (OTC) is a part of the dealer market.

STOCK EXCHANGE

STOCK EXCHANGE STANDS FOR

S - Security provider for investor

T - Tax benefits, planning & exemption
O - Optimum return on investment
C - Cautious approach
K - Knowledge of market
E - Eligibility for accruals
X - xchange of securities transactions
C - Cyclopedia of listed companies
H - High yield
A - Authentic information
N - New entrepreneurs encouraged
G - Guidance for investors and companies
E - Equity cult

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Role of a Stock Exchange in buying and selling of shares:

The stock exchanges in India, under the overall supervision of the regulatory
authority, the Securities and Exchange Board of India (SEBI), provide a trading platform,
where buyers and sellers can meet to transact in securities. The trading platform provided
by NSE is an electronic one and there is no need for buyers and sellers to meet at a
physical location to trade. They can trade through the computerized trading screens
available with the NSE trading members or the internet based trading facility provided by
the trading members of NSE.

Demutualization of stock exchanges

Demutualization refers to the legal structure of an exchange whereby the
Ownership, the management and the trading rights at the exchange are segregated from
one another

LISTING OF SECURITIES
Listing of securities means that the securities are admitted for trading on a
recognized stock exchange. Transaction in the securities of any company cannot be
conducted on stock exchanges unless they are listed by them. Hence, listing is the very
basis of stock exchange operations. It is the green signal given to the selected securities to
get the trading privileges of the stock exchange concerned. Securities become eligible for
trading only through listing.
Listing is compulsory for those companies which intended to offer shares /
debentures to the public for subscription by means of issuing a prospectus. Moreover, the
SEBI insists on listing for granting permission to a new issue by a public limited
company. Again, financial institutions do insist on listing for underwriting new issues.
Thus, listing becomes an unavoidable one today.

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For example: listing of Reliance Power

Anil Dhirubhai Ambani Group calls foul on price fall

Demands for SEBI probe in IPO Blues; Investors suffer Rs 1,352-cr Loss

Blaming a vicious campaign by rival corporate interests for pulling down

Reliance Power and other group firms stocks. Anil Dhirubhai Ambani group (Adag)
demanded for a probe by market regulator Sebi into market abuse that hit millions of
investors.The decline in the Reliance Power stock prices has been compounded by a
vicious and orchestrated campaign of market manipulation and market abuse, the
company said. Investors in the company lost over Rs 1,700 crore on February 11, day the
scrip listed on stock exchanges.
While the company did not name anybody, who it felt had attempted to
undermine the ada group’s “fair name and reputation and caused losses to millions of

24
genuine investors,” the statement said that Reliance Power has formally written to Sebi
seeking an investigation into the same.
Even before launching the IPO, the group chairman Anil Ambani had said that it
had written a complaint to sebi but had not received any response on the same.
In its earlier complaint, Reliance Energy a promoter company of Reliance Power, had
named over a dozen top-executives and associates of Mukesh Ambani headed Reliance
Industries for allegedly sabotaging the IPO.
At that time, a spokesperson of RIL has said that the company had nothing to do with
Reliance Power and countered the attack saying Anil Ambani group was raising this to
divert attention from the corporate governance issues.
Reliance Power IPO was given a clearance by sebi only in December, after a prolonged
delay-which sources say was due to investigation into various complaints filed with the
government and other authorities against the issue.
In its statement, Reliance Power said that the company has the world’s largest share
holder family of nearly 500 overseas and domestic institutional investors and over four
million retail investors.
In the run up to its IPO, the company had faced numerous litigations, filed in
different courts by some investor group. Even two days before the launch of the IPO, a
petition had been filed in the Gujarat High Court seeking a stay. But the company had
moved the Supreme Court for relief and launched the issue on January 15.

 Largest IPO in Indian history mobilized Rs 11,560 crore.

 The issue was priced at Rs 430/share for retail investors and Rs 450 for others.
 When the bids opened on Jan 15, within 60 seconds it was oversubscribed two
times. Funds committed on Day 1 were a staggering $25 billion or about Rs 1
lakh crore.
 The IPO closed on Jan 18, with book-size of $190 billion or Rs 7.5 lakh crore.
It was subscribed 73 times from 50 lakh applications.
 Listed on the bourses on Feb 11, opens trading at Rs 548. Within seconds,
fails to Rs 430. Stock hammered in first three sessions, with all-time low of Rs
333 and a high of 599. On listing day, the sensex crashes 834 points.
 Current price Rs 385

25
EQUITY:

Meaning:
Equity is a term whose meaning depends very much on the context. In general
you can think of equity as ownership in any asset after all debts associated with that are
paid off.Stocks are equity because they represent ownership of a company, whereas
bonds are classified as debt because they represent on obligations to pay and not
ownership of assets.In a brokerage account the market value of security amount borrowed
equity is particularly important for margin accounts for which minimum standards must
met.

Meaning of share:
Any business has a lot of assets: The machinery, buildings, furniture, stock-in-
trade, cash, etc. It will also have liabilities. This is what the company owes other people.
Banks loans, money owed to people from whom things have been bought on
credit, are examples of liabilities.
Take away the liabilities from the total assets, and you are left with the capital.
Capital = Assets - Liabilities.
Capital is the amount that the owner has in the business. As the business grows and
makes profits, it adds to its capital.
This capital is subdivided into shares (or stocks).
So if a company’s capital is Rs10 crores (Rs 100 million), that could be divided into 1
crore (10 million) shares of Rs10 each.
Part of this capital, or some of the shares, is held by the people who started the business,
called the promoters.

26
Ordinary (equity) shares:
Ordinary shares are issued to the owners of a company. The ordinary shares of UK
companies typically have a nominal or ‘face’ value (usually something like 50p).

However, it is important to understand that the market value of a company’s shares has
little relationship to their nominal or face value. The market value of a company’s shares
is determined by the price another investor is prepared to pay for them.
In the case of publicly quoted companies, this is reflected in the market value of the
ordinary shares traded on the stock exchange (share price).

Deferred ordinary shares:

These are a form of ordinary shares, which are entitled to a dividend only after a
certain date or only if profits rise above a certain amount. Voting rights might also differ
from those attached to other ordinary shares.

Why might a company issue ordinary shares?

A new issue of shares might be made for several reasons:

1. The company might want to raise more cash:

Might be needed for the expansion of a company’s operations. For example a

company with 5,000,00 ordinary shares in issue decides to issue 1,25,000 new shares to
raise cash, should it offer the new shares to existing shareholders, or should it sell them to
new shareholders instead?

- Where a company sells the new shares to existing shareholders in proportion to

their existing shareholding in the company, this is known as a “rights issue”.

2. The company might want to issue new shares partly to raise cash but more importantly
to ‘float’ its shares on a stock market.

27
3. The company might issue new shares to the shareholders of another company in order
to take it over:

There are many examples of businesses that use their high share price as a way of
making an offer for other businesses. The shareholders of the target business being
acquired received shares in the buying business and perhaps also same cash.

Sources of equity finance:

There are three main methods of raising equity:

1. Retained profits:
retaining profits, rather than paying them out as dividends. This is the
most important source of equity.

2. Rights issues:
Issues of new shares, after retaining profits, rights issues are the next most
important source.
3. New issues of shares to the public:
An issue of new shares to new shareholders.

EQUITY INVESTMENT

Why should one invest in equities in particular?

When you buy a share of a company you become a shareholder in that company.
Shares are also known as Equities. Equities have the potential to increase in value over
time. It also provides your portfolio with the growth necessary to reach your long term
investment goals. Research studies have proved that the equities have outperformed most
other forms of investments in the long term. This may be illustrated with the help of
following examples:

28
a) Over a 15 year period between 1990 to 2005, Nifty has given an annualized return of
17%.
b) Mr. Raju invests in Nifty on January 1, 2000 (index value 1592.90). The Nifty value as
of end December 2005 was 2836.55. Holding this investment over this period Jan 2000 to
Dec 2005 he gets a return of 78.07%. Investment in shares of ONGC Ltd for the same
period gave a return of 465.86%, SBI 301.17% and Reliance 281.42%. Therefore,

 Equities are considered the most challenging and the rewarding,when compared
to other investment options.
 Research studies have proved that investments in some shares with a longer
tenure of investment have yielded far superior returns than any other investment.
However, this does not mean all equity investments would guarantee similar high returns.
Equities are high risk investments. One needs to study them carefully before
investing.

If you had invested Rs 1 lakh in any of these stocks on Jan 11,2011, when the Sensex
hit 21k, you would lost...

Closing on Jan Closing on Jan Your Rs1L

Scrip Name 11 (Rs) 22 (Rs) % loss would now be
worth
REL 2,486 1,716 31 69,027
NTPC 272 197 28 72,426
RCOM 793 575 27 72,509
ONGC 1,307 962 26 73,604
HINDALCO 202 150 26 74,257
RIL 3,128 2,358 25 75,384
GRASIM 3,378 2,589 23 76,643
ICICI BANK 1,440 1,124 22 78,056
TATA STEEL 853 671 21 78,664
M&M 774 611 21 78,941
ACC 898 722 20 80,401
TCS 989 799 19 80,789
HDFC 3,060 2,480 19 81,046
BHEL 2,435 1,985 18 81,520
HDFC BANK 1,762 1,439 18 81,669
BAJAJ AUTO 2,517 2,062 18 81,923
ITC 222 184 17 82,883

29
HUL 224 186 17 83,036
AMBUJA 138 116 16 84,058
CIPLA 204 175 14 85,784
RANBAXY 395 340 14 86,076
TATA MOTORS 762 658 14 86,352
SATYAM 411 355 14 86,375
INFOSYS 1,580 1,377 13 87,152
DR.REDDY’S 681 596 12 87,518
L&T 4,175 1,655 12 87,545
BHARTI ARTL 966 849 12 87.888
WIPRO 485 429 12 88,454
SBI 2,437 2,159 11 88,593
MARUTISUZUKI 899 800 11 88,988

THE AVERAGE RETURN ON EQUITIES IN INDIA

Since 1990 till date, Indian stock market has returned about 17% to investors on
an average in terms of increase in share prices or capital appreciation annually. Besides
that on average stocks have paid 1.5% dividend annually. Dividend is a percentage of the
face value of a share that a company returns to its shareholders from its annual profits.
Compared to most other forms of investments, investing in equity shares offers the
highest rate of return, if invested over a longer duration

Why the Stock Market Falls:

Generally Stock Markets falls due to the increase in the number of sellers than the
buyers in the Stock Market. Sellers in the stock Market sell their respective shares
because of expected decrease in their share prices of their respective share holdings
resulting in the increase in the sellers number in the stock market leading to the
downfall in the stock market. The majority of sellers are especially the FII’s (Foreign
Institutional Investors).For Example: Recent Stock Market fall on Jan 21,2011.

30
INDIA'S BIGGEST ODI LOSS: Jan 21 ‘09’

One day investor damages: Rs 6.6 L cr

Mumbai : On Monday head line writers were left desperately searching for a word that
would capture the mind boggling fall of the sensex… plunge , plummet free fall
everything that had worked earlier now seemed so tame. Even blood bath, carnage or
mayhem wasn’t bloody enough..

Till Monday the steepest fall in the history of the sensex had been 826 points. A
fall of over 2,000 points in five hours was like the forces of gravity going in to devilish
overdrive. There was some rearguard action in the closing minutes of trading. But the
day’s loss was still a record-battering 1,408points.
Yes, the market which lost 687points last Friday and 1,814 points in the space of a week
had expected what insiders like to call a further correction. But nothing had prepared
them for something like this. Between the time they woke up and the time they went to
sleep, investors had lost Rs 6.6lakh crore.

31
 Over the last fortnight global cues had been weak o growing uncertainty about
the future of the US economy. There was even talk about the worlds largest economy
going on to a recession as major financial institutions wrote off billions of dollars in
losses arising from sub-prime home loans.

But a big factor that came into play on Monday was the triggering of margin
calls. As stock prices rose several investors had jumped into market many of then
had leveraged their positions by paying only a percentage if their total investments
(called margin) with banks or brokerage houses putting in the rest. The shares
bought on borrowed money were kept as collateral with the lender. It was smooth
sailing s long as the markers were rising, but with the sudden drop on Friday, the
value of investments dipped sharply and subsequently, the value of collateral
dropped. So if an investor wanted to hold on to his positions, he would need to fork
over more money to maintain the value of collateral at a constant. Since many
investors did not have this kind of liquidity, they cut their losses by offloading their
investments. That selling pressure caused the markets to tank even further as
brokerages also sold their clients positions to mitigate losses. “Reliance power and
future capital IPOs pulled put a lot of liquidity from the markets,” said Ajay Bagga,
CEO Lotus India AMC. At least Rs 3 lakh crore of the funds committed to Rs
11,700 creore REPL issue was collected and this money will not come back into the
market for at least ten days. Until that happens the market is unlikely to see
recovery.

Most Active Securities during 2011-2011

Market
% Share in % Share in
Turnover Capitalisation
Rank Name of the Security Total Total Market
(Rs. crore) as on 31.3.2007
Turnover Capitalisation
(Rs. crore)
1 Reliance Industries Ltd. 115726.62 5.95 190952.41 5.67
2 Infosys Technologies Ltd. 68436.53 3.52 113999.62 3.39
3 Satyam Computer Services Ltd. 49061.12 2.52 30968.90 0.92
4 Tata Steel Ltd. 48777.68 2.51 26100.96 0.78
5 Reliance Communications Ltd. 48128.60 2.47 86057.84 2.56

32
 6 Oil And Natural Gas Corp. Ltd. 37617.77 1.93 188391.89 5.59
7 State Bank Of India 34177.36 1.76 52337.79 1.55
8 Tata Motors Ltd. 32929.28 1.69 28062.87 0.83
9 Indiabulls Fin. Ser. Ltd. 28234.31 1.45 7503.24 0.22
10 ACC Ltd. 28030.51 1.44 13771.70 0.41
11 Tata Consultancy Serv Ltd. 26848.24 1.38 120745.86 3.59
12 ICICI Bank Ltd. 26107.99 1.34 76378.67 2.27
13 Larsen & Toubro Ltd. 25908.66 1.33 45470.97 1.35
14 ITC Ltd. 25887.82 1.33 56866.00 1.69
15 BHEL 25577.16 1.31 55348.80 1.64
16 Reliance Capital Ltd. 25481.92 1.31 14965.43 0.44
17 India Cements Ltd. 24228.68 1.25 3568.95 0.11
18 Century Textiles Ltd. 23951.31 1.23 5076.11 0.15
19 Sterlite Inds (Ind) Ltd. 23373.31 1.20 26204.16 0.78
20 Steel Authority Of India 22665.94 1.17 47210.48 1.40
21 Tech Mahindra Ltd. 22415.65 1.15 16744.42 0.50
22 Hindalco Industries Ltd. 21066.59 1.08 16883.97 0.50
23 Maruti Udyog Ltd. 21065.20 1.08 23696.40 0.70
24 IVRCL Infrast & Proj Ltd. 20411.81 1.05 3792.62 0.11
25 Suzlon Energy Ltd. 19237.51 0.99 28819.64 0.86
26 Hindustan Lever Ltd. 19124.82 0.98 45284.19 1.34
27 Siemens Ltd. 18675.24 0.96 18387.03 0.55
28 Mahindra Gesco Developers Ltd. 18048.49 0.93 2106.36 0.06
29 IFCI Ltd. 17554.82 0.90 2145.95 0.06
30 Zee Entertainment Ent Ltd. 17535.18 0.90 10869.52 0.32
31 Bombay Dyeing & Mfg. Co Ltd. 17161.69 0.88 2089.56 0.06
32 Bharti Airtel Ltd. 16184.78 0.83 144825.39 4.30
33 Bajaj Auto Ltd. 16080.06 0.83 24563.31 0.73
34 Unitech Ltd. 15953.52 0.82 31448.83 0.93
35 Videsh Sanchar Nigam Ltd. 15944.97 0.82 11465.55 0.34

Indian equities open strong on global cues

Mumbai, Feb 14: Indian equity markets opened with a sizeable gain of over 300
points Thursday on the back of strong cues from Asian peers, with stocks of power,
realty and metal companies leading the rally in initial trades.

The 30-share sensitive index (Sensex) of Bombay Stock Exchange (BSE)

opened at 17,265.19 points with a gain of 316.05 over Wednesday's day's close and the
broader 50-share Nifty of the National Stock Exchange (NSE) started some 15 points
higher at 4,944.65.
An hour into trading, the Sensex was up by 606.75 points, or 3.58 percent, while Nifty
was trading with a gain of over 200 points, data available with the two premier bourses.

33
The market breadth was also strong, with 1,350 stocks on the BSE registering advances,
compared with the 486 that declined, while 26 remained unchanged.
Reliance Industries led the gainers with a rise of 4.82 percent at Rs.2,405, while Anil
Dhirubhai Ambani Group's Reliance Power, which debuted on the stock markets Feb11,
rose 2.05 percent at Rs.358.60.

The other top Sensex gainers were Hindustan Unilever, Bharat Heavy Electricals, DLF
and HDFC bank at the initial trade.

Other Asian markets were also trading higher. Hong Kong's Hang Seng was up 3.05
percent, Japan's Nikkei gained 2.79 percent, Taiwan Weighted rose 2.93 percent,
Singapore's Straits Times advanced by 2.91 percent and Seoul Composite was up 2.55
percent.

Equity markets:

31st December 30th November 1 Month 12 Month

Indices 2011 2011 Return (%) Returns (%)

BSE Sensex 20,287 19,363 4.77 47.15

Nifty 6,139 5,763 6.52 54.77

BSE Mid Cap 9,789 8,554 14.45 68.63

BSE Small Cap 13,348 10,526 26.81 93.67

34
Markets were quite volatile during the month of December and the key indices managed
to register gains month on month. BSE Sensex and Nifty inched up by 4.8% and 6.5%
respectively during the month. Overall, the year2011 was a spectacular year for the
markets as indices scaled new highs. The key indices touched all-time highs during the
month of December. Sensex was up by 47.2% and Nifty gained 54.8% year on year.
FII’s stepped up their purchases after remaining tepid in November. FII’s were net buyers
in equities to the tune of Rs.56bn. Mutual funds followed suit and were net buyers in
equities to the tune of Rs.32bn.
After taking a breather mid cap and small cap shares witnessed high buying interest and
outperformed the key indices. BSE Mid Cap and BSE Small Cap indices gained 15% and
27% respectively for the month of Dec’09.
Sectors like Pharmacy & Metals were out-performers for the month registering gains
while sectors like Auto & Banking under performed the benchmark indices.

Our observations

1) There was a slowdown in FII inflow on Indian bourses but overall they remained net
buyers in December. Net FII inflows have crossed $19.43bn in2011 out of which
investment in equities stood at around $17.24bn.
2) US Fed cut benchmark interest rates by 25bps raising expectations of further capital
inflows in emerging economies like India.
3) Belying expectations of slowdown, manufacturing-led industrial growth leapfrogged to
11.8% in October from 4.5 % a year ago. The manufacturing sector saw an impressive

35
growth of 13.3 % during the month, up from a mere 3.8% during October 2006.
However, the mining and electricity showed a decline in growth to 3.7% (5.9%) and
4.2%(9.7%) respectively. The consumer durables sector showed signs of revival with a
growth of 9.3% in October as against 0.2% in October 2008.The other sectors that
performed well during the month include capital goods where production increased
20.5% as against 6.5% in October 2008, and intermediate goods that saw a healthy
growth rate of 14.2% during the month as against 5.9% in the year ago period.
Infrastructure sector output grew 4.5%in October from a year earlier, slowing from a
downwardly revised 5.5% in September. Except coal, all other sectors registered a
decline.
4) Markets traded strong on the back of the news that government has permitted trusts to
invest their money in Indian stock markets.
5) US sub-prime mortgage crisis continued to haunt global equity markets. Fresh worries
over threatening losses on the sub-prime market front due to be reported in December
year end results dampened the sentiments during the early part of the month. Significant
to note that according to European Central Bank, India is a striking example of insulation
from the US sub prime crisis because of its domestic consumption led growth.

Which are the factors that influence the price of a stock?

Broadly there are two factors: (1) stock specific and (2) market specific.

The stock-specific factor is related to people’s expectations about the company,

its future earnings capacity, financial health and management, level of technology and
marketing skills.
The market specific factor is influenced by the investor’s sentiment towards the
stock market as a whole. This factor depends on the environment rather than the
performance of any particular company.

36
How can one acquire equity shares?
You may subscribe to issues made by corporates in the primary market. In the
primary market, resources are mobilized by the corporates through fresh public issues
(IPO’s) or through private placements. Alternately, you may purchase shares from the
secondary market. To buy and sell securities you should approach a SEBI registered
trading member (broker) of a recognized stock exchange.

What is Bid and Ask price?

The ‘Bid’ is the buyer’s price. It is this price that you need to know when you
have to sell a stock. Bid is the rate/price at which there is a ready buyer for the stock,
which you intend to sell.
The ‘Ask’ (or offer) is what you need to know when you're buying i.e. this is the
rate/ price at which there is seller ready to sell his stock. The seller will sell his stock if he
gets the quoted ‘Ask’ price.

If an investor looks at a computer screen for a quote on the stock of say

RNRL, it might look something like this:

Bid (Buy side) Ask (Sell side)

______________________________________________________
Qty. Price (Rs.) Qty. Price (Rs.)
___________________________________________________________
500 136.40 20 136.45
100 136.35 1000 136.60
150 136.20 200 136.65

37
 50 136.15 700 136.55
100 136.10 1450 136.25
___________________________________________________________
Total 900 3370
__________________________________________________________
Here, on the left-hand side after the Bid quantity and price, whereas on the right hand
side we find the Ask quantity and prices.

The best Buy (Bid) order is the order with the highest price and therefore sits on the first
line of the Bid side (500 shares @ Rs. 136.40).

The best Sell (Ask) order is the order with the lowest sell price (1450 shares @ Rs.
136.25).
The difference in the price of the best bid and ask is called as the Bid-Ask spread and
often is an indicator of liquidity in a stock.

The narrower the difference the more liquid or highly traded is the stock.

EQUITY REPORT OF TATA POWER FROM 01-JAN-2011 TO 08-

FEB-2011
Total Traded Turnover
Series Date Prev Close Open Price High Price Low Price Last Price Close Price
Quantity in Lacs
EQ 01-Jan-2011 1,470.05 1,450.00 1,572.90 1,450.00 1,558.00 1,543.75 872936 13,249.44
EQ 02-Jan-2011 1,543.75 1,565.50 1,565.50 1,500.00 1,542.00 1,543.00 1782296 27,116.92
EQ 03-Jan-2011 1,543.00 1,524.00 1,624.40 1,480.35 1,610.00 1,601.90 902422 14,277.57
EQ 04-Jan-2011 1,601.90 1,595.00 1,649.80 1,595.00 1,638.50 1,629.15 1073430 17,425.80
EQ 07-Jan-2011 1,629.15 1,628.70 1,628.70 1,576.35 1,608.00 1,609.35 777672 12,447.09
EQ 08-Jan-2011 1,609.35 1,608.00 1,628.95 1,518.15 1,565.00 1,564.55 819641 12,897.64

38
EQ 09-Jan-2011 1,564.55 1,560.00 1,600.00 1,530.00 1,563.00 1,566.35 626449 9,824.42
EQ 10-Jan-2011 1,566.35 1,579.90 1,579.90 1,480.20 1,500.00 1,500.30 569380 8,724.60
EQ 11-Jan-2011 1,500.30 1,547.80 1,547.80 1,436.25 1,475.00 1,457.90 412193 6,023.97
EQ 14-Jan-2011 1,457.90 1,499.00 1,551.00 1,440.00 1,547.00 1,531.60 717801 10,795.03
EQ 15-Jan-2011 1,531.60 1,540.00 1,584.90 1,532.00 1,537.45 1,548.05 1571745 24,474.56
EQ 16-Jan-2011 1,548.05 1,519.65 1,534.00 1,429.95 1,461.00 1,459.65 1388121 20,342.67
EQ 17-Jan-2011 1,459.65 1,473.00 1,525.00 1,387.05 1,467.00 1,479.35 1678456 24,501.72
EQ 18-Jan-2011 1,479.35 1,430.00 1,510.00 1,430.00 1,455.00 1,457.40 1110891 16,319.55
EQ 21-Jan-2011 1,457.40 1,438.65 1,439.00 1,190.00 1,250.00 1,239.35 927505 12,315.99
EQ 22-Jan-2011 1,239.35 1,139.00 1,180.00 1,040.00 1,070.00 1,082.50 1095651 12,038.61
EQ 23-Jan-2011 1,082.50 1,150.00 1,385.00 1,105.00 1,215.00 1,257.45 1175020 14,335.79
EQ 24-Jan-2011 1,257.45 1,289.90 1,334.90 1,181.00 1,200.00 1,205.05 813302 10,071.05
EQ 25-Jan-2011 1,205.05 1,245.00 1,294.90 1,225.00 1,274.20 1,257.60 296286 3,774.00
EQ 28-Jan-2011 1,257.60 1,250.00 1,290.10 1,200.20 1,280.00 1,276.90 265977 3,320.17
EQ 29-Jan-2011 1,276.90 1,300.00 1,323.50 1,260.25 1,310.00 1,311.55 799066 10,321.63
EQ 30-Jan-2011 1,311.55 1,312.00 1,340.00 1,261.00 1,331.00 1,316.75 660689 8,575.03
EQ 31-Jan-2011 1,316.75 1,320.00 1,334.00 1,260.00 1,305.00 1,277.95 969942 12,464.52
EQ 01-Feb-2011 1,277.95 1,280.00 1,360.00 1,270.00 1,349.00 1,341.45 531709 7,029.33
EQ 04-Feb-2011 1,341.45 1,375.00 1,435.00 1,347.00 1,405.10 1,405.25 584300 8,255.51
EQ 05-Feb-2011 1,405.25 1,400.00 1,464.00 1,351.40 1,451.00 1,448.20 394209 5,663.29
EQ 06-Feb-2011 1,448.20 1,420.00 1,454.85 1,379.00 1,419.00 1,424.20 823774 11,763.01
EQ 07-Feb-2011 1,424.20 1,401.00 1,468.00 1,395.00 1,405.00 1,416.65 461921 6,631.35

Meaning of rise in value:

If the company has divided its capital into shares of Rs10 each, then Rs 10 is
called the face value of the share.
When the share is traded in the stock market, however, this value may go up or down
depending on supply and demand for the stock. If want to sell the shares, the price will
fall.
The value everyone wants to buy the shares, the price will go up. If nobody wants
to buy them, and many of a shares in the market at any point of time is called the price of
the share or the market value of a stock. So the share with a face value of Rs 10, may be

39
quoted at Rs 55 (higher than the face value), or even Rs 9(lower than the face value). If
the number of shares in a company is multiplied by its market value, the result is market
capitalization.

Procedure of buying a share:

Shares are brought and sold on the stock exchange—the two main ones in India
are the National Stock exchange (NSE), and the Bombay Stock Exchange (BSE).You can
use three different routes to buy shares: Through your broker, trade directly online, or
buy shares when a company comes out with a fresh issue of shares. This is called an
initial public offering (IPO).
MEANING OF SENSEX
It is the benchmark index for the Indian stock market. It is the most frequently
used indictor while reporting on the state of the market.
The index has just one job: To capture the price movement. So a stock index will reflect
the price movements of shares while a bond index captures the manner in which bond
prices go up or down.
If the sensex rises, it indicates the market is doing well .Since stocks are supposed
to reflect what companies expect to earn in the future; a rising index indicates investors
expect better earnings from companies.

Sensex is made of:

Thirty stocks. Just 30 stocks tell you how the market is faring. Before you throw
up your hands in protest, there is something you should know about these 30 stocks. For
one, they are the most actively traded stocks in the market. In fact, they account for half
the BSE’s market capitalization. Besides, they represent 13 sectors of the economy and
are leaders in their respective industries.

The 30 stocks and selection procedure.

40
 These 30 stocks are selected by the Index Committee. This committee consists of
all sorts of individuals including academicians, mutual fund managers, finance
journalists, independent governing board members and other participants in the financial
markets. They don’t do on the basis of individual whims and fancies. Some of the criteria
they follow include:
~The stock should have been traded on each and every trading day (the days on which the
stock market works) for the past one year.
~It should be among the top 150 companies listed by average number of trades (buying
or selling of shares) and the average value of the trades (in actual rupee terms)per day
over the past one year.

The Nifty

The National Stock Exchange has an index called the Nifty (officially called S&P
CNX Nifity). This name can be credited to the 50 stocks that comprise its index.
In case you are shaking your head about 50 also being too small a number, these 50
stocks account for around 60 percent of the market capitalization.
If these indices tell us about the market, why do people talk about sectoral indices?
The price of every stock price increases or decreases for two possible reasons:

~News about the company, like a product launch, closure of a factory, the government
providing tax or duty exemptions to the sector so more profits expected, a feud among the
company’s top bosses, etc. This will be stock specific news.

~News about the country, like testing a nuclear bomb, a terrorist attack, a budget
announcement, etc. This will be called index news.
The job of an index is mainly to capture the news about the country. This will reflect the
movement of the stock market as a whole. A good index will only capture news that is
common to all stocks in India. This is what the Sensex and the Nifty do.

Why do people buy shares?

41
 Because they can make big money on it. There’s a huge difference between the
gains and losses you can make by investing in the stock market as compared to your
returns form bank fixed deposits.In stocks, you can make unbelievable money—it’s not
uncommon for people to have doubled their money in the last one year.
On the flip side (there is always one), when the markets crashed in May, many people
lost more than a quarter of their investment.
Compare this with your bank fixed deposit. Your FD will only fetch you around
five to six percent per annum, but you can be sure of getting your money back.
When you put your money in a bank deposit, you loan the money to a bank for a fixed
return (rate of interest) and a fixed tenure (number of months or years). At the end, you
get back your original amount and you are paid interest on the same.

Dividend
Usually, a company distributes a part of the profit it earns as dividend.

Capital Gain

As the company expands and grows, acquires more assets and make more profit,
the value of its business increases. This, in turn, drives up the value of the stock. So,
when you sell, you will receive a premium over (more than) what you paid.
This is known as capital gain and this is the main reason why people invest in stocks.
They want to make money by selling the stock at a profit.
It is not as easy as it sounds. A stock’s price is always on the move. It could either
appreciate (increase in value) or depreciate (decrease in value) with respect to the price at
which you purchased it.

Dividend and Capital Gain

If you buy a stock for Rs 10 and sell it for Rs 20 after a year, then your return from
that stock is Rs 10, or 100 percent. Add the Rs 5 per share you have received as
dividend, and your total return will be Rs 10 plus Rs 5=Rs 15 or 150 percent. If you
buy a stock for Rs 10 and sell it for Rs 9 after a year, you would lose Rs1 per share.

42
 However, you would have got Rs 5 as dividend. So you would net Rs 4 as earnings
from the company. In percentage terms, your returns would be 40 percent.

TRADING SYSTEMS:

NSE introduced for the first time in India fully automated screen based trading
system. It uses a modern, fully computerized trading system designed to offer investors
across the length and breadth of the country a safe and easy way to invest.
The NSE trading system called ’National Stock Exchange for automated trading’
(NEAT) is a fully automated screen based trading system, which adopts the principle of
an order driven market.

INTERNET BASED TRADING SYSTEM

The Securities and Exchange Board of India (SEBI) approved the report on
Internet Trading brought out by the SEBI Committee on Internet Based Trading and
Services in January 2000. Internet trading can take place through order routing systems,
which will route client orders to exchange trading system for execution. Thus client
sitting in any part of the country would be trade using the Internet as a medium through
brokers’ Internet trading systems.

SEBI- registered brokers can introduce Internet based trading after obtaining
permission from respective Stock Exchanges. SEBI has stipulated the minimum
conditions to be fulfilled by trading members to start Internet based trading and services,
vide their circular no. SMDRP/POLICY/CIR-06/2000 dated January 31, 2000.

TRADING PERMISSION

As per Securities and Exchange Board of India Guidelines, the issuer company
should complete the formalities for trading at all the Stock Exchange where the securities
are to be listed within 7 working days of finalization of Basis of Allotment.
A company should scrupulously adhere to the time limit for allotment of all securities and
dispatch of allotment letters/share certificates and refund orders and for obtaining the

43
listing permissions of all the exchange whose names are stated in its prospectus or offer
documents. In the event of listing permission to a company being denied by any stock
exchange where it had applied for listing of its securities, it cannot proceed with the
allotment of shares. However, the company may an appeal before the securities and
exchange board of India under section 22 of the securities contracts (Regulation) Act,
1956.

Margin system

SEBI has in place an elaborate risk management system in consultation with both stock
exchanges and market and market participants. However, over time the system acquired
complexity and rigidity. SEBI therefore constituted a committee review the entire risk
management system comprising the margin system, exposure norms, circuit filter, capital
adequacy, etc. and make recommendations designed to simplify the system without in any
way diluting safety and efficiency aspects.

Clearing & Settlement and Redressal

What is a Clearing Corporation?

A Clearing Corporation is a part of an exchange or a separate entity and
performs three functions, namely, it clears and settles all transactions, i.e. completes the
process of receiving and delivering shares/funds to the buyers and sellers in the market, it
provides financial guarantee for all transactions executed on the exchange and provides
risk management functions. National Securities Clearing Corporation (NSCCL), a 100%
subsidiary of NSE, performs the role of a Clearing Corporation for transactions executed
on the NSE.
Rolling settlement:
Under rolling settlement all open positions at the end of the day mandatorily
result in payment/ delivery ‘n’ days later. Currently trades in rolling settlement are settled
on T+2 basis where T is the trade day. For example, a trade executed on Monday is
mandatorily settled by Wednesday (considering two working days from the trade day).
The funds and securities pay-in and pay-out are carried out on T+2 days.

44
 Member-wise carry forward position under MCFS or on the trade positions under
ALBM has been raised from Rs. 20 crore to Rs. 40 crore as an aggregate exposure of
account period and rolling settlement.
The slabs for volatility margins and the margins rates for account period have
been revised: for volatility range of more than 80 percent but up to 100 percent at 10
percent, more than 100 percent but up to 150 percent at 15 percent and more than 150
percent at 25 percent.
No volatility margin has been prescribed under compulsory rolling settlement
system.
The minimum cash component to be deposited by the broker has fixed at 30
percent of the total margin.
To encourage delivery-based transaction, it has been decided that margins can be
provided as bank guarantee; cash component need not be insisted.
Pay-in and Pay-out:
Pay-in day is the day when the securities sold are delivered to the exchange by the
sellers and funds for the securities purchased are made available to the exchange by the
buyers.
Pay-out day is the day the securities purchased are delivered to the buyers and the funds
for the securities sold are given to the sellers by the Exchange.At present the pay-in and
pay-out happens on the 2nd working day after the trade is executed on the stock exchange

Book-closure/Record date:
Book closure and record date help a company determine exactly the shareholders
of a company as on a given date. Book closure refers to the closing of the register of the
names of investors in the records of a company. Companies announce book closure dates
from time to time. The benefits of dividends, bonus issues, rights issue accrue to
investors whose name appears on the company's records as on a given date which is
known as the record date and is declared in advance by the company so that buyers have

45
enough time to buy the shares, get them registered in the books of the company and
become entitled for the benefits such as bonus,
rights, dividends etc. With the depositories now in place, the buyers need not send shares
physically to the companies for registration. This is taken care by the depository since
they have the records of investor holdings as on a particular date electronically with
them.

THE FUNDAMENTALS AND TECHNIQUES OF TRADING

FUTURES :

FUTURES CONTRACT
What is a futures contract? A futures contract is a contract between two parties
where the buyer agrees to accept delivery at a specified price from the seller of a
particular commodity, in a designated month in the future, if it is not liquidated before the
contract reaches maturity. A futures contract is not an option; nothing in it is conditional.
Each contract calls for a specified amount and grade of product. For example: A person
buying a March Silver Contract at $4.25 in effect is making a legal obligation now to
accept delivery of 5000 ozs. Of silver bullion, to be delivered during the month of March,
for which the buyer will pay $4.25 per ounce.
Contracting Online
The laws throughout the UK allow, and have slowly been varied to encourage the
spread of commerce online. On the whole, most contracts for the sale of goods and
services do not require being in writing to be legally binding between the parties.
However, in practice and from a risk management point of view, the terms of any
contract and especially one created online, and not face to face between the parties,
should be agreed between the parties and documented in a durable form. An important
point to consider when forming contracts online is at what point has the contract been
formed.
If your online offer is accepted by a customer, has a contract been formed at that point?
Or, is your website merely inviting offers from customers which you can agree to accept

46
or reject (depending upon considerations such as whether the particular goods are still in
stock or the service is still available). Just because you happen to be selling goods and
services online does not mean that the normal legal considerations in doing business no
longer apply. When conducting online commerce, thought must still be given to the legal
considerations which affect offline sales such as the Consumer Credit Act, Sale of Goods
Act, Unfair Contract Terms Act and advertising regulations. Please see the ‘Formation of
Contracts via the Net’ fact sheet for more information.
Terms and Conditions
Terms and Conditions are important as they set out what your intention is in
relation to the sale and if properly incorporated into a contract, what has been agreed
between the parties. Careful consideration should be given as to the terms and conditions
that should apply to online commerce. Offline terms and conditions are often not
adequate or tailored for contracting online. Clear, understandable, plain English terms
and conditions are likely to give customers greater confidence thereby promoting further
online business. Conversely, ill thought-out and confusing terms and conditions will be
unattractive, may not be enforceable and could be unlawful. Please see the ‘Legal
Considerations for Websites’ fact sheet for more information.

Incorporation of Terms and Conditions

How terms and conditions are to be incorporated into a contract with a customer
is one of the most important considerations for a business. Often terms and conditions are
found via a link located at the bottom of the homepage; however, this approach is not
likely to be sufficient. In the event of a dispute the courts may rule that the terms and
conditions were not adequately drawn to the attention of the customer. If so, they may not
have been accepted by the customer and therefore, they will not govern the relationship
between the business and the customer. It is therefore advisable, from a legal perspective,
to build into the architecture of your site a process whereby the customer must read and
accept your terms and conditions and may not continue to place any order until they have
done so. However, you may need to balance up the attractiveness and usability of a site
for customers against the legal risks which may be involved. Thought also needs to be

47
given on this issue for transactions made via mobile and Personal Digital Assistant
(PDA) devices.

Regulatory Requirements
There are a number of legislative requirements that must also be borne in mind.
The E-Commerce Directive, (Which was implemented in the UK by the Electronic
Commerce (EC Directive) Regulations 2002), was introduced to harmonies the rules
relating to online trading and advertising throughout Europe. It sought to encourage
consumers to go Online by providing protections and legal certainty. The Directive states
that certain information needs to be given to customers if a business is selling goods and
services online. For more information please see the ‘Legal Considerations for Websites’
fact sheet.

Distance Selling
The Consumer protection (Distance Selling) Regulations 2000 also set out some
additional requirements for a business selling goods and services online to consumers.
Prior to a sale of the vast majority of goods and services (although there are some
exceptions) the following information must be disclosed: the name of the business; the
price of the goods; delivery costs; a description of the goods or services; arrangements
for payment; delivery arrangements (there is a statutory assumption that delivery must be
within 30 days unless otherwise specified); their right to cancel the order; if the
customer is required to pay up front, the sellers’ postal address; and the duration of the
offer. At the time when the customer makes the decision to buy you must ensure that the
customer has the information above in writing or in some other durable form (this
includes in a form capable of being saved to hard drive). The regulations give the
consumer the unconditional right to cancel an order for certain products. This allows
consumers a 7-day ‘cool off’ period commencing on the day of delivery of the goods if
the right is brought to the consumers attention.

Tax

48
 Tax is an important issue. All business carried out in Europe will be subject to
some form of sales tax or VAT. The position in relation to trade out side Europe may be
less straightforward. It is important to obtain good tax advice to ensure that your business
is operating efficiently.

Online Payment
If you are accepting credit card payment online then you ought to comply with the
Payment Card Industry (PCI) Data Security standard, which was introduced on 30 June
2005. The PCI Data Security Standard is based on the security requirements and
standards of the major credit card companies, including Visa and MasterCard. Failure to
comply with the standard may result in financial penalties and the possibility of the
defaulting online business being prohibited from accepting credit card payments online.
The Standard sets out different categories for compliance based upon the number of
transactions processed and whether you have suffered any security breach in the past
while trading online. The types of criteria for compliance include the installation and
maintenance of a firewall, the use of system passwords, anti-virus software and
encryption and evidence of company-wide security policies and procedures.

Action Points:
 Ensure that your terms and conditions are appropriate at all times;
 Consider how your terms and conditions are to be incorporated into a contract;
 Take notice of the E-commerce legislation;
 Consider who you are dealing with; and
 Take tax advice.

This fact sheet sets out a brief description of the law in this field at the time of
writing and is for information purposes only. It should not be regarded as legal advice or
relied upon. Specific advice should always be sought for particular facts and
circumstances.

49
DE-MAT SETTLEMENT IN INDIAN CAPITAL MARKETS

Securities depository limited has established an infrastructure of international

standards that handles most of the trading and settlement in dematerialized form for the
Indian market. NSDL works to support investors and brokers in the capital market,
ensuring safety and soundness of the capital market. When physical share corticated
along with transfer deeds are delivered in the market there are certain details that need to
be filled in the transfer deed. Any improper execution of these details results in a bad
delivery. However, paper based transactions ate prone to counterfeit dealings.
Bad deliveries, counterfeit signatures, theft and mutation of shares were major
problems that plagued the trading of securities. An internet based settlement system,
SPEED-e, was developed to allow investors to deliver online instructions to their
Depository Participants, thus making demat transactions hassle free. Demat account
holders, including Clearing Members, subscribing to SPEED-e submit delivery
instructions to their Depository Participants (DPs) online to https://speed-e.nsdl.com,
instead of submitting paper based delivery instruction slips. The users can also check
latest balances and transactions in their demat accounts as well as monitor the status of
execution of instructions. SPEED-e thus made it possible for NSDL to provide Internet
based services to their DP’s for transmitting time critical and secure instructions to make
online transactions.

AUCTION
On account of non-delivery of securities by the trading member on the pay-in day,
the securities are put up for auction by the Exchange. This ensures that the buying trading
member receives the securities. The Exchange purchases the requisite quantity in auction
market and gives them to the buying trading member.

The continuous double auction

In the continuous double auction (CDA) market mechanism ([7]) buyers and
sellers are free at any time to publicly announce bids and offers. Any buyer can accept
the offer of a seller, and any seller can accept the bid of a buyer. The CDA originated
from informal gatherings of sellers and buyers in local markets, (such as wheat farmers
and millers) and is now a well-established mechanism used in the international financial
markets. Buyers and sellers place bids and offers on a web-based trading floor. They

50
revise their bids/offers in response to other trading activity. When a bid and offer meet,
they are deleted and a trade takes place. The New York Stock Exchange also uses a form
of order queue; the NYSE rule states that the current bid and offer persist, and any new
bid or offer must improve on the existing one. However, unlike the Fast Parts market
place, a ‘reset’ occurs when a trade is made, and previous bids/offers must be repeated.

The call Auction

The second institution for commodity trading we shall consider is the call auction.
This differs from the double auction in two major ways: There is a central auctioneer
who plays an active role in calculating which trades take place. All trades take place
at the same price. In the call auction, traders do not publicly announce bids or offers.
Instead, they privately prepare information about how many units they would like to
buy or sell at a given price.

Comparing the institutions

These two institutions each have advantages and disadvantages. The negotiations
in the double auction will result in trades taking place at different prices. In the early
stages the differences can be quite significant 161. Prices can start one side of
equilibrium and swing to the other side. Traders who could trade at equilibrium may fail
to make a trade, while those that can’t may succeed, due to this initial instability. The call
auction eliminates this element of luck as all trades take place at equilibrium. The call
auction is therefore fairer. Another interesting point of comparison is the time taken to
trade. The negotiations in the CDA take time

What is fundamental analysis?

Fundamental analysis is the examination of the underlying forces that affect the
well being of the economy, industry groups, and companies. As with most analysis, the
goal is to derive a forecast and profit from future price movements. At the company level,
fundamental analysis may involve examination of financial data, management, business
concept and competition. At the industry level, there might be an examination of supply
and demand forces for the products offered. For the national economy, fundamental
analysis might focus on economic data to assess the present and future growth of the
economy.

51
General steps to fundamental evaluation
Even though there is no one clear-cut method, a break down is presented below in
the order an investor might proceed. This method employs a top-down approach that
starts with the overall economy and then works down from industry groups to specific
companies. As part of the analysis process, it is important to remember that all
information is relative. Industry groups are compared against other industry groups and
companies against other companies. Usually, companies are compared with others in the
same group.

Economic Forecast
First and foremost in a top-down approach would be an overall evaluation of the
general economy. The economy is like the tide and the various industry groups and
individuals companies are like boats. When the economy expands, most industry groups
and companies benefit and grow. When the economy declines, most sectors and
companies usually suffer. Many economists’ link economic expansion and contraction to
the level of interest rates. Interest rates are seen as a leading indicator for the stock
market as well. Below is a chart of the S&P 500 and the yield on the 10_years note over
the last 30 years.
Group selection
If the prognosis is for an expanding economy, then certain groups are likely to
benefit more than others. An investor can narrow the field to those groups that are best
suited to benefit from the current or future economic environment. If most companies are
expected to benefit from an expansion, then risk in equities would be relatively low and
an aggressive growth- oriented strategy might be advisable. A growth strategy might
involve the purchase of technology, biotech, semiconductor and cyclical stocks, If the
economy is forecast to contact, an investor may opt for a more conservative strategy and
seek out stable income-oriented companies. A defensive strategy might involve the
purchase of consumer staples, utilities and energy- related stocks.

52
 Company Analysis

With a shortlist of companies, an investor might analyze the resources and

capabilities within each company to identify those companies that are capable of creating
and maintaining a competitive advantage. The analysis could focus on selecting
companies with a sensible business plan, solid management and sound financials.

Business Plan
The business plan, model or concept forms the bedrock upon which all else is
built. If the plan, model or concepts stink, there is little hope for the business. For a new
business, the questions may be these: Does its business make sense? Is it feasible? Is
there a market? Can a profit be made? For an established business, the questions may be:
Is the company’s direction clearly defined? Is the company a leader in the market? Can
the company maintain leadership?
Management
In order to execute a business plan, company requires top-quality management.
Investors might look at management to assess their capabilities, strengths and
weaknesses.
Conclusions
Fundamental analysis can be valuable, but it should be approached with caution.
If you are reading research written by a sell-side analyst, it is important to be familiar
with the analyst behind the report. We all have personal biases, and every analyst has
some sort of bias. There is nothing wrong with this, and the research can still be of great
value. Learn what the ratings mean and the track record of an analyst before jumping off
the deep end. Corporate statements and press releases offer good information, but they
should be read with a healthy degree of skepticism to separate the facts from the spin.
Press releases don’t happen by accident; they are an Important PR tool for companies

Technical Analysis

What Is Technical Analysis?

53
 Technical analysis is a method of evaluating securities by the statistics generated
by market activity, such as past prices and volume. Technical analysts do not attempt to
measure a security’s intrinsic value, but instead use charts and other tools to identify
patterns that can suggest future activity.
Just as there are many investment styles on the fundamental side, there are also
many different types of technical traders. Some rely on chart patterns; others use
technical indicators and oscillators, and most use some combination of the two. In any
case, technical analysts’ exclusive use of historical price and volume data is what
separates them from their fundamental counterparts. Unlike fundamental analysts,
technical analysts don’t care whether a stock is undervalued – the only thing that matters
is a security’s past trading data and what information this data can provide about where
the security might move in the future.

The field of technical analysis is based on three assumptions:

1. The market discounts everyt
2. Price moves in trends.
3. History tends to repeat itself.

1. The Market Discounts Everything

A major criticism of technical analysis is that it only considers price movement,
ignoring the fundamental factors of the company. However, technical analysis assumes
that, at any given time, a stock’s price reflects everything that has or could affect the
company- including fundamental factors. Technical analysts believe that the company’s
fundamentals, along both broader economic factors and market psychology, are all priced
into the stock, removing the need to actually consider these factors separately. This only
leaves the analysis of price movement, which technical theory views as a product of the
supply and demand for a particular stock in the market.

2. Price Moves In Trends

54
 In technical analysis, price movements are believed to follow trends. This means
that after a trend has been established, the future price movement is more likely to be in
the same direction as the trend than to be against it. Most technical trading strategies are
based on this assumption.

3. History Tends to Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself,
mainly in terms of price movement. The repetitive nature of price movements is
attributed to market psychology; in other words, market participants tend to provide a
consistent reaction to similar market stimuli over time. Technical analysis uses chart
patterns to analyze market movements and understand trends. Although many of these
charts have been used for more than 100 years, they are still believed to be relevant
because they illustrate patterns in price movements that often repeat themselves.

COMPANY PROFILE:

INTRODUCTION

55
Indiabulls is India’s leading Financial, Real Estate and Power Company with a wide
presence throughout India. They ensure convenience and reliability in all their
products and services. Indiabulls has over 640 branches all over India. The
customers of Indiabulls are more than 4,50,000 which covers from a wide range of
financial services and products from securities, derivatives trading, depositary
services, research & advisory services, consumer secured & unsecured credit, loan
against shares and mortgage & housing finance. The company employs around 4000
Relationship managers who help the clients to satisfy their customized financial
goals. Indiabulls entered the Real Estate business in the year 2005 with its group of
companies. Large scale projects worth several hundred million dollars are evaluated
by them.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE),
Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The market

capitalization of Indiabulls is around USD 2500 million (29thDecember, 2006).

Consolidated net worth of the group is around USD 700 million. Indiabulls and its
group companies have attracted USD 500 million of equity capital in Foreign Direct
Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls
are the largest financial institutions of the world such as Fidelity Funds, Goldman
Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.
Indiabulls Group is one of India’s top business houses with businesses spread over
Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and
Power sectors. The group companies are listed on important Indian and Overseas
markets. Indiabulls has been conferred the status of a “Business Superbrand” by
The Brand Council, Superbrands India.

VISION

To be the largest and most profitable financial services organization in Indian retail
market and become one stop shop for all non banking financial products and

56
services for the retail customers. To become the preferred long term financial
partner to a wide base of customers whilst optimizing stake holder’s value

MISSION

Rapidly increase the number of client relationships by providing a broad array of

product offering to emerge as a clear market leader. To establish a base of 1 million
satisfied customers by 2014. We will create this by being a responsible and
trustworthy partner.

COMPANY’S HISTORY IN INDIA

In 1999, three IIT-Delhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal
acquired Orbis,a Delhi based stock broking company. Young entrepreneur Sameer
Gehlaut established Indiabulls in 2000, after acquiring  orbis Securities, a stock
brokerage company in Delhi. The group started its operations from a small office
near HauzKhas bus terminal in Delhi.The office had a tin roof and two computers.
The idea of leveraging technology for trading stocks led to the creation of Indiabulls
Incorporated on 10th January 2000, it was converted into a public limited company
on 27th February 2004.
Its original idea of leveraging technology bore fruit when Indiabulls was accorded
permission to conduct online trading on Indian stock exchanges.The company had
achieved the distinction of becoming only the second brokerage firm in India to be
granted this consent. The challenges facing it were immense – not least of all the
mind set of investors who were called to make the big leap from traditional stock
trading to a completely online interface. Having overcome this resistance, the
company later expanded its service portfolio to include equity, F&O, wholesale debt,
mutual fund distribution and equity research.
In 2003/04, Indiabulls ventured into insurance distribution and commodity trading.
It successfully floated its IPO in September 2004 and in the same year entered the
consumer finance segment. Real estate, the new sunrise industry, was the next
frontier for Indiabulls. In 2004/05, it entered this sector. But it wasn’t just real
estate that was booming. Opportunities were opening up in retail and infrastructure
as well. To cement its position in the Indian business and industry firmament,

57
Indiabulls acquired Pyramid Retail in 2007 and marked its presence in the power
sector by launching Indiabulls Power.

India bulls Financial Services Limited

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as
M/s OrbisInfoTech Private Limited at New Delhi under the Companies Act,
1956. The name of company was changed to M/s. Indiabulls Financial Services
Private Limited on March 16, 2001. In the year 2004, Indiabulls came up with it
own public issue & became a public limited company on February 27, 2004. The
name of company was changed to M/s. Indiabulls Financial Services Limited.
The company was promoted by three engineers from IIT Delhi, and has attracted
more than Rs.700 million as investments from venture capital, private equity and
institutional investors and has developed significant relationships with large
commercial banks such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN
Amro Bank, Standard Chartered Bank and IL&FS.
Brand Values
Indiabulls is amongst the largest non-banking financial services companies in India
and enjoys strong brand recognition and customer acceptance. The company
attributes its dominant position in the brokerage industry to the preferential status
it enjoys with investors Coupled with its forays into various segments; the Group
believes that the bulk of its brand story is yet to be written. Indeed, when a case
study on India’s youngest brands which have had a profound impact on the
economy is crafted, Indiabulls will feature prominently in it

INDIABULLS GROUP

 Total Group Networth – Rs. 19,502 Cr

 Total Group PAT for 9M FY 12-13 – Rs. 1,034 Cr.
 Total Group Capital Expenditure – Rs. 6,200 Cr. (US $ 1.2 bn.) capex in FY
10-11. Planned capex of Rs. 29,000 (US $ 5.7 bn.) by FY 2014-15.
 Focus on Execution and on ground results translating into profits.

58
Products offeredEquities and Derivatives
 Offers purchase and sale of securities (stock, bonds, debentures etc.)
 Broker assisted trade execution
 Automated online investing
 Access to all IPO's

Our Management Team:

 Mr. Divyesh Shah ( Chief Executive Officer )

 Mr. Sujitraychowdary ( Vice President )
 Mr. R.Venkataraman (Executive Director)

The Board of Directors:

 Mr. Sat Pal Khattar (Non Executive Director)

 Mr. SanjivAhuja (Independent Director)
 Mr. NileshVikamsey (Independent Director)
 Mr. KrantiSinha (Independent Director)

Milestones Achieved

 Developed one of the first internet trading platforms in India

 Amongst the first to develop in-house real-time CTCL (computer to

computer link) with NSE

 Introduction of integrated accounts with automatic gateways to client bank

accounts

 Development of products such as Power Indiabulls for high volume traders

 Indiabulls Signature Account for self-directed investors

59
  Indiabulls Group Professional Network for information and trading service

STRATEGY AND FOCUS

 Consolidation – aim to be among top 3 players in existing businesses within
next 3 years
 No new products – focus on gaining size and scale in existing core areas
 No capital market fund raising – all businesses are well funded to achieve
growth and size
 Goal- FY 2013/14 – target of US $ 1.5 billion in cash generation from the 3
companies (Finance, Real Estate and Power)
.MAJOR COMPETITORS

 KOTAK SECURITIES
 SHAREKHAN

ANALYSING THE COMPETITORS STRENGTH &WEAKNESS :-

Competition, being an important market force needs to be tracked, analyzed
&preempted. Market leader always have a system to help them preempt
anycompetitive moves. For this, it is not just important to know competitor by name
, but also critical to understand its major strength & weaknesses.
 A competitor’s strength may be its marketing systems, aggressive sales force, and it
srelationship with major external environmental variables like government &financ
ial institute or a financial resources base. For the effective competitiveanalysis only
strength & weaknesses are not sufficient we need to consider other key factors like
market share of the company & 7p s of service marketing i.e.
 Product
 Price
 Place

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 DATA ANALYSIS & INTERPRETATION
COMPARISON OF MARKET PRICES BETWEEN DIFFERENT
COMPANIES

BHARAT PETROLEUM CORPORATION LTD

Splits: none
Last Trade: 468.95 Day's Range: 450.00 - 479.00
Trade Time: Feb 15 52wk Range: N/A
Change: 3.95 (0.85%) Volume: 360,710
Prev Close: 465.00 Avg Vol (3m): N/A
Open: 460.00 Market Cap: N/A
Bid: 468.95 P/E (ttm): N/A
Ask: 469.00 EPS (ttm): N/A
1y Target Est: N/A Div & Yield: N/A (N/A)

The graph represents price percentage on Y-axis and time on X- axis. The trading started
at negative value and as the day passed on, it reached +3% after 10.20 am .from there
fluctuations took place and finally it got down and closed at +0.85%.
Bharat Petroleum’s previous day share price was closed at 465.00 and last trade closed at
468.95. The difference between the two share prices is 3.95 Rs approximately 0.85 %
increase.

61
Hindustan Petroleum Corporation

Splits: none
Last Trade: 309.55 Day's Range: 290.20 - 319.70
Trade Time: Feb 15 52wk Range: 205.00 - 404.80
Change: 11.15 (3.74%) Volume: 3,115,436
Prev Close: 298.40 Avg Vol (3m): 1,872,510
Open: 301.00 Market Cap: N/A
Bid: 309.55 P/E (ttm): N/A
Ask: 305.90 EPS (ttm): N/A
1y Target Est: N/A Div & Yield: N/A (N/A)

The graph represents price percentage on Y-axis and time on X- axis. The trading
started at positive value i.e 298.40 and as the day passed on, it reached nearly 320
points after 12. 00pm from there fluctuations took place and finally it got down and
closed at 309.55.On Feb 14 the share price of Hindustan Petroleum was closed at
298.40 and last trade share price on Feb. 15 was 309.55. The difference between the
share price of previous and last days trade is 11.15 Rs increase i.e. 3.74% greater than
the previous days share price.

62
HINDUSTAN PETROLEUM CORPORATION VS BHARAT PETROLEUM
LIMITED :-

Splits: none
Hindustan Bharat Hindustan Bharat Petroleum
Petroleum Petroleum Petroleum
Last Trade: 309.55 468.95 Day's Range: 290.20 - 319.70 450.00 - 479.00
Trade Time: Feb 15 Feb 15 52wk Range: 205.00 - 404.80 N/A
Change: 11.15 (3.74%) 3.95 (0.85%) Volume: 3,115,436 360,710
Prev Close: 298.40 465.00 Avg Vol (3m): 1,872,510 N/A
Open: 301.00 460.00 Market Cap: N/A N/A
Bid: 309.55 468.95 P/E (ttm): N/A N/A
Ask: 305.90 469.00 EPS (ttm): N/A N/A
1y Target Est: N/A N/A Div & Yield: N/A (N/A) N/A (N/A)

63
 On Feb 14 the share price of Hindustan Petroleum was closed at 298.40 and last trade
share price on Feb. 15 was 309.55. The difference between the share price of previous
and last days trade is 11.15 Rs increase i.e. 3.74% greater than the previous days
share price. While that of Bharat Petroleum’s previous day share price was closed at
465.00 and last trade closed at 468.95. The difference between the two share prices is
3.95 Rs approximately 0.85 % increase.

The increase in the percentage i.e. 3.74% of Hindustan petroleum and 0.85 % of
Bharat Petroleum is due to increase in the volumes of both petroleum companies.

64
JK CEMENT LIMITED
JK Cement Limited (NSE)

Splits: none

Last Trade: 168.30 Day's Range: 162.10 - 170.00

Trade Time: Feb 15 52wk Range: 125.05 - 252.90
Change: 5.30 (3.25%) Volume: 19,004
Prev Close: 163.00 Avg Vol (3m): 150,220
Open: 165.90 Market Cap: N/A
Bid: 167.05 P/E (ttm): N/A
Ask: 168.30 EPS (ttm): N/A
1y Target Est: N/A Div & Yield: N/A (N/A)

The graph represents price percentage on Y-axis and time on X- axis. The trading
started at 163.00 as the day passed on, it increased 5.30 points and finally it reached
and closed at 168.30.JK Cements Ltd previous day share price was closed at 163.00
and last trade closed at 168.30. The difference between the two share prices is 5.30 Rs
approximately 3.25 % increase.

65
ULTRATECH CEMENT LTD

Splits: none

Last Trade: 901.65 Day's Range: 850.00 - 920.00

Trade Time: Feb 15 52wk Range: 662.00 - 1,165.00
Change: 35.05 (4.04%) Volume: 31,971
Prev Close: 866.60 Avg Vol (3m): 90,390.2
Open: 865.00 Market Cap: N/A
Bid: 901.65 P/E (ttm): N/A
Ask: 904.95 EPS (ttm): N/A
1y Target Est: N/A Div & Yield: N/A (N/A)

The graph represents price percentage on Y-axis and time on X- axis. The trading
started at 866.60 as the day passed on, it increased 35.05 points and finally it reached and
closed at 901.65.Ultratech Cement Ltd previous day share price was closed at 866.60 and
last trade closed at 901.65. The difference between the two share prices is 35.05 Rs
approximately 4.04 % increase.

JK CEMENT LIMITED VS ULTRATECH CEMENT LTD

66
JK Cement Limited (NSE)

Splits: none
JK CEMENT ULTRATECH JK CEMENT ULTRATECH
CEMENT CEMENT
Last Trade: 168.30 901.65 Day's Range: 162.10 - 170.00 850.00 - 920.00
662.00 -
Trade Time: Feb 15 Feb 15 52wk Range: 125.05 - 252.90
1,165.00
35.05
Change: 5.30 (3.25%) Volume: 19,004 31,971
(4.04%)
Prev Close: 163.00 866.60 Avg Vol (3m): 150,220 90,390.2
Open: 165.90 865.00 Market Cap: N/A N/A
Bid: 167.05 901.65 P/E (ttm): N/A N/A
Ask: 168.30 904.95 EPS (ttm): N/A N/A
1y Target
N/A N/A Div & Yield: N/A (N/A) N/A (N/A)
Est:

This graph represents the comparison of JK Cements and Ultratech Cements. In

which JK Cements is represented by blue colour while Ultratech Cements indicated
by Red colour.

67
 JK Cements Ltd previous day share price was closed at 163.00 and last trade
closed at 168.30. The difference between the two share prices is 5.30 Rs approximately
3.25 % increase
Ultratech Cement Ltd previous day share price was closed at 866.60 and last trade closed
at 901.65. The difference between the two share prices is 35.05 Rs approximately 4.04 %
increase

Reason:
The reason behind the difference between the percentages of share prices of both JK
Cement i.e 3.25% and Ultratech Cement i.e 4.04% has occurred due to good will of
compaines.

68
 RELIANCE POWER LIMITED
.

Splits: none

Last Trade: 384.50 Day's Range: 356.00 - 388.95

Trade Time: Feb 15 52wk Range: 355.30 - 530.00
Change: 14.55 (3.93%) Volume: 17,584,303
Prev Close: 369.95 Avg Vol (3m): 75,988,400
Open: 359.10 Market Cap: N/A
Bid: 384.50 P/E (ttm): N/A
Ask: 384.50 EPS (ttm): N/A
1y Target Est: N/A Div & Yield: N/A (N/A)

69
TATA The graph represents price percentage on Y-axis and time on X- axis. The
trading started at 369.95 as the day passed on, it increased 14.55 points and finally it
reached and closed at 384.50.Reliance Power Ltd previous day share price was closed at
369.95 and last trade closed at 384.50. The difference between the two share prices is
14.55 Rs approximately 3.93 % increase.

POWER
TATA POWER (Bombay)

Splits: none

Last Trade: 1,294.65 Day's Range: 1221.10 - 1335.00

Trade Time: Feb 15 52wk Range: N/A
Change: 18.85 (1.48%) Volume: 81,066
Prev Close: 1,275.80 Avg Vol (3m): N/A
Open: 1,270.00 Market Cap: N/A
Bid: 1290.00 P/E (ttm): N/A
Ask: 1294.65 EPS (ttm): N/A
1y Target Est: N/A Div & Yield: N/A (N/A)

70
The graph represents price percentage on Y-axis and time on X- axis. The trading
started at 1,275.80 as the day passed on, it increased 18.85 points and finally it
reached and closed at 1,294.65.Tata Power previous day share price was closed at
1,275.80 and last trade closed at 1,294.65. The difference between the two share
prices is 18.85 Rs approximately 1.48 % increase.

71
RELIANCE POWER VS TATA POWER
Reliance Power Limited (NSE)

Splits: none

RELIANCE TATA RELIANCE TATA

POWER POWER POWER POWER
356.00 - 1221.10 -
Last Trade: 384.50 1,294.65 Day's Range:
388.95 1335.00
355.30 -
Trade Time: Feb 15 Feb 15 52wk Range: N/A
530.00
14.55 18.85
Change: Volume: 17,584,303 81,066
(3.93%) (1.48%)
Prev Close: 369.95 1,275.80 Avg Vol (3m): 75,988,400 N/A
Open: 359.10 1,270.00 Market Cap: N/A N/A
Bid: 384.50 1290.00 P/E (ttm): N/A N/A
Ask: 384.50 1294.65 EPS (ttm): N/A N/A
1y Target Est: N/A N/A Div & Yield: N/A (N/A) N/A (N/A)

This graph represents the comparison of Reliance Power and Tata Power. In
which Reliance Power is represented by blue colour while Tata Power indicated by Red
colour.Reliance Power Ltd previous day share price was closed at 369.95 and last trade

72
closed at 384.50. The difference between the two share prices is 14.55 Rs approximately
3.93 % increase.
Tata Power previous day share price was closed at 1,275.80 and last trade closed
at 1,294.65. The difference between the two share prices is 18.85 Rs approximately 1.48
% increase

Reason:
Accumulation/ Distribution:

The accumulation/ distribution line is one of the more popular volume indicators
that measures money flows in a security. This indicator attempts to measure the ratio of
buying to selling by comparing the price movement of a period to the volume of that
period.

FINDINGS:

73
 The trading started at negative value and as the day passed on, it reached +3%
after 10.20 am .from there fluctuations took place and finally it got down and
closed at +0.85%.Bharat Petroleum’s previous day share price was closed at
465.00 and last trade closed at 468.95. The difference between the two share
prices is 3.95 Rs approximately 0.85 % increase.

 The trading started at positive value i.e 298.40 and as the day passed on, it
reached nearly 320 points after 12. 00pm from there fluctuations took place and
finally it got down and closed at 309.55.On Feb 14 the share price of Hindustan
Petroleum was closed at 298.40 and last trade share price on Feb. 15 was 309.55.
The difference between the share price of previous and last days trade is 11.15 Rs
increase i.e. 3.74% greater than the previous days share price.

 On Feb 14 the share price of Hindustan Petroleum was closed at 298.40 and last
trade share price on Feb. 15 was 309.55. The difference between the share price
of previous and last days trade is 11.15 Rs increase i.e. 3.74% greater than the
previous days share price. While that of Bharat Petroleum’s previous day share
price was closed at 465.00 and last trade closed at 468.95. The difference between
the two share prices is 3.95 Rs approximately 0.85 % increase

 The trading started at 163.00 as the day passed on, it increased 5.30 points and
finally it reached and closed at 168.30.JK Cements Ltd previous day share price
was closed at 163.00 and last trade closed at 168.30. The difference between the
two share prices is 5.30 Rs approximately 3.25 % increase.

 The trading started at 866.60 as the day passed on, it increased 35.05 points and
finally it reached and closed at 901.65.Ultratech Cement Ltd previous day share
price was closed at 866.60 and last trade closed at 901.65. The difference between
the two share prices is 35.05 Rs approximately 4.04 % increase.

74
 JK Cements Ltd previous day share price was closed at 163.00 and last trade
closed at 168.30. The difference between the two share prices is 5.30 Rs
approximately 3.25 % increase Ultratech Cement Ltd previous day share price
was closed at 866.60 and last trade closed at 901.65. The difference between the
two share prices is 35.05 Rs approximately 4.04 % increase

 The trading started at 369.95 as the day passed on, it increased 14.55 points and
finally it reached and closed at 384.50.Reliance Power Ltd previous day share
price was closed at 369.95 and last trade closed at 384.50. The difference between
the two share prices is 14.55 Rs approximately 3.93 % increase.

 The trading started at 1,275.80 as the day passed on, it increased 18.85 points and
finally it reached and closed at 1,294.65.Tata Power previous day share price was
closed at 1,275.80 and last trade closed at 1,294.65. The difference between the
two share prices is 18.85 Rs approximately 1.48 % increase.

 Tata Power previous day share price was closed at 1,275.80 and last trade closed
at 1,294.65. The difference between the two share prices is 18.85 Rs
approximately 1.48 % increase

75
Suggestions:
Of course, a price movement in online trading has many pros. There are several
wonderful reasons to invest online and consider online trading.

 Money saving opportunities depends primarily on the online brokerage firm

that you choose. No two firms are the same. There may be different

regulations, similar to bank regulations. There are minimum deposits required

that must be maintained. As mentioned above, this will depend on the online

brokerage firm.

 Instant online access we can gain instant access to our account, the value of

our portfolio updates immediately before our eyes.

 Online traders can enter online trading at anytime and from anywhere. This is

very convenient if you live in a different time zone than the country you are

trading in. Not to mention, it is especially fit for investors with busy

schedules.

 With online trading traders can control of there investments. No sales pitches

and no hassles can occurred.

76
 CONCLUSIONS

1] SEBI must make a policy to give guidelines to companies that certain portion of their
capital must be from house hold sector/small investors. This will give perfection to small
investor because companies are issuing shares to private operators. For this SEBI can
defined small investors investment quantum as ≤ Rs 10000 for e.g., reserve says 50% of
the issue amount to small investors to attract funds from this sector. This is good for the
companies also, because small investors do not expect abnormal returns.

2] Guidelines should also be issued to advertise such a way that the issue details reach
general public.

3] Companies are getting the public issue and under written by banks and financial
institutions. So, companies are not keen to reach general public hence norms must be
fixed for under writing only a limited portion [50%] of the issue and balance 50% from
the public.

4] Public also invests in government securities and funds floated by government.

Companies are getting loan return market. How every private company is operating in
high risk and return markets because they can predict risk well. Hence government
companies must change over current out look of safe investments and operating high risk
and high return markets. So, they can give high returns to small investors.

5] SEBI must prepare norms and make it compulsory for companies to refund with in a
few days {say 25 days}. The applicable money and pass certificate.
6] Investor must choose blue chip shares for investment.

7] Mutual funds is the best option for a rural investor.

8] A single window for grievances redressal system

77
 BIBLIOGRAPHY

 Security Analysis and portfolio management

By Donald .Fisher, Ronald J. Jordan

 Security analysis and portfolio management

 Equity valuation and analysis ICFAI UNIVERSITY.

 Indian management journal.

Websites:

 www.bseindia.com

 www.capitalmarket.com

 www.indiainfoline.com

 www.nseindia.com

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