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					                                          AN
                                  ASSIGNMENT ON


                          “STRATEGIC MANAGEMENT”

                  SUBMITTED TOWARDS PARTIAL FULFILLMENT
                                  OF
             POST GRADUATE DIPLOMA IN BUSINESS MANAGEMENT


                        (APPROVED BY AICTE, GOVT. OF INDIA)
                                ACADEMIC SESSION
                                      2009 -2011




SUBMITTED TO:                                             SUBMITTED BY:
Prof. Vijendra Dhyani                                     Harish Kumar    (09267)
Associate Chairperson                                     Karn Sinha      (09268)
(PGDM-MM)                                                 Kavish Wadhava (09269)
IMS, Ghaziabad                                            Khushbu         (09270)
                                                          Kunal Pupneja   (09271)
                                                          Myank Dwevedi   (09272)




                        INSTITUTE OF MANAGEMENT STUDIES
                             C-238, Bulandshahar G.T. Road,
                                 Lal Quan, P.B. No. 57,
                                   Ghaziabad-201009
DECLARATION

I hereby declare that all information and data provided in this report are collected from
secondary source and are true to the best of my knowledge. References are quoted and due
credit given to the sources.




                                                                      HARISH KUMAR
                                                                      Roll No. BM-09267
                                                                            PGDM-MM
                                                                              Section - E




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                            2
                              ACKNOWLEDGEMENTS




It is my immense pleasure to present the Project report on “Study of Fundamentals of share
market and market research on Investor preference for online trading in Delhi/NCR”. Here I
would like to express my deep sense of gratitude to my industry mentors, Mr. Pankaj
Bhatnagar Sales Manager Relegate Securities Private Limited, Mr. Nitin Dogra Relationship
Manager for their timely guidance, valuable support and encouragement at every step of
preparing this report. I would also like to thank my project guide and my mentor Dr. Sanjay
Jain (Associate professor IMS, Ghaziabad) and all faculty members and all those persons who
have directly or indirectly helped me in providing the books and amenities which have helped
in development of this report, without such help this report would not have been possible.

I would like to also thank all those respondents who spent their valuable time to fill up the
questionnaire.




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  3
      Certificate from the organization:




INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   4
                                    CERTIFICATE
This is to certify that the project entitled “Fundamentals of share market and market
research on Investor perception for online trading” carried out by Harish Kumar during the
summer Internship in “Religare Securities Ltd. Is a bonafide record of work done by Harish
Kumar and has been submitted in the partial fulfillment of award of “Post Graduate Diploma
in Business management” from Institute of Management Studies, Ghaziabad.




Faculty Guide
Dr. Sanjay Jain
Faculty IMS, Ghaziabad




                  INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                            5
TABLE OF CONTENT
                                                                          Page
            Particulars           Literature Review                       No.
            Declaration                                                           2
            Acknowledgement                                                       3
            Certificate                                                           4
Chapter 1   Abstract                                                              8
Chapter 2   Objective of the study                                               10
Chapter 3   Introduction                                                         11
        3.1 About the company:                                                   12
        3.2 About the study:                                                     29
        3.3 Comparison of Share Trading with Other investment options            46
Chapter 4   Literature review                                                    58

Chapter 5
        5.1 Research Methodology                                                 53
                    5.1.a Research Design                                        54
                   5.1.b Sampling Design                                         54
                        i. Sample Unit                                           54
                       ii. Sample Size                                           54
                      iii. Sampling Technique                                    54
                      iv. Sampling Area                                          54
                    5.1.c Data Collection                                        54
                        i. Sources                                               54
                       ii. Tools                                                 54
      5.1.d Analysis of data      Statistical Tool                               55
                           Graphical Representation of responses of the
                         i online trading                                        55
                        ii Interpretation & findings of Factor Analysis          79
                       iii Interpretation & findings of Chi Square               89




Chapter 6    Conclusion                                                          91
Chapter 7    Limitations                                                         92
             Bibliography                                                        93

             Annexure                                                            94
                        (a) Questionnaire                                        94




               INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                             6
List of graphs, tables and figure:
S.    Particulars                                                 Page
No.                                                               no.
1     Pan India presences expanding                               12
2     Schemes and plan of Trumph Account                          24
3     Freedom Account                                             26
4     Increasing Internet trading                                 38
5     Turnover of NSE from online trading                         40
6     DMAT A/c registered by customer                             41
7     Comparison between shares & Mutual Fund                     46
8     Comparison between shares & Deposites                       47
9     Comparison between shares & Insurance                       47
10    Comparison between shares & Gold                            47
11    Responses of Gender                                         55
12    Responses to Age                                            56
13    Responses to monthly income                                 57
14    Responses to marital status                                 58
15    Responses to educational qualification                      59
16    Responses to experience in online trading                   60
17    Responses to company‟s product is better than competitors   61
18    Responses to products design according to needs             62
19    Responses to products give more benefits                    63
20    Responses to timely update                                  64
21    Responses to company give service at the time promise       65
22    Responses to brokerage house influence                      66
23    Responses to take advice of manager                         67
24    Responses to satisfactory return                            68
25    Responses to enough knowledge                               69
26    Responses to regular trading                                70
27    Responses to easy and fast way of trading                   71
28    Responses to feel safe at the time of transaction           72
29    Responses to online trading give more benefits              73
30    Responses to better than offline                            74
31    Responses to secure way of trading                          75
32    Responses to reliable                                       76
34    Responses to instant online transfer                        77
35    Responses to speed of transaction is high                   78
36    KMO and Bartlett‟s Test                                     79
37    Communalities                                               79
38    Total Variance Explained                                    81
39    Component Matrixa                                           82
40    Rotated Component Matrixa                                   83
41    Component Transformation matrix                             84
42    Component Score Coefficient Matrix                          85
43    Component Score Covariance Matrix                           86
44    Factor analysis theme table                                 88
45    Case Processing Summary                                     89

                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD               7
 46    EDUCATION * KNOWLEDGE Cross tabulation                               89
 47    Chi-Square Tests                                                     90



                                         ABSTRACT:

This project is great learning experience and at the same time this gave me enough scope to
implement my analytical abilities. The project in Religare Securities Ltd. Is to figure out the
Investor preference for online trading” in Delhi/NCR in great depth and is very helpful in
understanding Investor preference.

With the advent of the Internet Investor can now enter their order directly online.            Now
Investor wants to buy or sell stock he no longer need to call his/her broker on the phone that
helping in the execution of the order instantly on the internet. So brokerage houses have started
providing the facility of online trading to their customers.

In this project we discuss various products and services of Religare Securities where they
provide to their customers in securities market. Than we discuss what is online trading how it
works and what are the things that will be consider while you are going for online trading also
we discussed fundamentals of share market. Here we will know what are the stocks, depository
services, advantages and disadvantages of online trading.

Here our study on Investor preference for online trading. Means what are the factors considered
by investor and their need and wants while they go for online trading. In this research objective
is to identify the investor preference for online trading in Delhi/NCR. And to know how much
they are familiar with online trading. To trace the gap between perception and reality we use
the Chi square test and factor analysis as statistical tool to know the result of our study.

In our study reliability of data has been checked using Kaiser-Meyer-Olkin Test (KMO) Where

Measure of sampling adequate = 0.647

In factor analysis strength of relationship among variables is strong. It presents good idea to
precede factor analysis for the data.




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                      8
In our conclusion there is huge potential in India still Investor think
that online trading is not fast way of trading and fear towards online
trading that‟s why they do not trade on regular basis but online trading is secure way of trading
and it is more reliable, speed of transaction is high. There are some limitations like sampling
error and respondents bias can be occur.




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                    9
1.2 OBJECTIVES OF THE STUDY

The main objectives of this study are

Primary objective:

      To identify the investor preference for online trading in India. And to know how much
       they are familiar with online trading

Secondary objective

      To measure the investors' satisfaction level with respect to there existing broker.
      To trace the gaps between perception and reality.

This project will accomplish to understand the problem faced by the existing online investor
and find a way to solve their problem.

We have to be in regular contacts with our online investor so that we come to know about the
problem they are facing.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                     10
            INTRODUCTION:
INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   11
Religare Enterprises Ltd.

Religare Enterprises Ltd. (REL), incorporated in 1984 and promoted by RENBAXY group, is
the holding company of 11 subsidiaries. It is among the leading integrated financial service
group in the country. Religare is a diversified financial services group of India offering a
multiple investment options. Each of its subsidiaries is engaged in a wide area of financial
products and services targeted at retail, high net worth individuals, corporate and institutional
clients. The services offered by the group include share broking, wealth management, advisory
services, private equity, merchant banking and trading in arts and aircrafts. The major revenue
comes from the company are its retail equity broking arm Religare Securities and Religare
Finvest, which finances loans against shares.

Religare has a pan India presence, 1837* locations across 498* cities and towns. It also
currently operates from nine international locations following its acquisition of London‟s
brokerage & investment firm, Hichens, Harrison & Co. plc. (Now Religare Hichens, Harrison
Plc.

                               Pan India Presences Expanding




                                           (Graph 1)



Religare has grown rapidly from what was largely an equity trading company into a diversified
financial services company operating through its 11 subsidiaries.


                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   12
As on June 30, 2008, have operations at 1,575 locations across 465
cities and towns and a large management team-leading group of 9,500 employees.


Acquisition to boost the institutional and investment banking operation of Religare and extent
its geographical reach to London, South Africa, Argentina, Brazil, Dubai, Qatar, Singapore,
Malaysia and Indonesia.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 13
  CORPORATE STRUCTURE OF
             RELIGARE




                                RELIGARE
                               FINVEST LTD

                                                         RELIGARE
   RELIGARE
                                                       COMMODITIES
  SECURITIES                                               LTD
     LTD




                                                                RELIGARE
  RELIGARE                   RELIGARE                          REALTY LTD
FINANCE LTD
                            ENTERPRISES
                              LIMITED



 RELIGARE
 WEALTH                                                       RELIGARE
 MANAGEMENT                                                  INSURANCE
 SERVICES                                                   BROKING LTD




                      RELIGARE            RELIGARE
                      CAPITAL             VENTURE
                     MARKET LTD          CAPITAL LTD




               INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD            14
 Products & Services




INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   15
  Promoter Groups



                      Fortis Healthcare Limited



                      Super Religare Laboratories Limited




                      Religare Wellness Limited

        (Formerly Fortis Health world)



                     Religare Technova Limited
(formerly Fortis Financial Services Limited)




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD      16
          RELIGARE SECURITIES LTD.

Company Overview:

Religare Securities Ltd. Is a Ranbaxy Promoter group company is one of India‟s largest and
fast growing integrated financial services institutions. The company offers a large and diverse
bouquet of services ranging from equities, commodities, insurance broking, to wealth advisory,
portfolio management services, personal finance services, Investment banking and institutional
broking services. And there is more to come your way.

Religare‟s retail network spreads across the length and breath of the country with its presence
through more than 900 locations across more than 300 cities and towns. Having spread itself
fairly well across the country and with the promise of not resting on its laurels, it has also
aggressively started eyeing global geographies.

Religare Securities Limited (RSL), a 100% subsidiary of Religare Enterprises Limited (REL) is
a leading equity and securities firm in India. The company currently handles sizeable volumes
on NSE and the realm of online trading and investment, it currently holds a reasonable share of
the market. The major activity and offerings of the company today are Equity broking,
Depository participant services, and Institutional Broking and research services. To broaden the
gamut of services to its investors, the company offers an online investment portal armed with a
host of revolutionary features.

Religare Securities Ltd. Is a member of the National Stock Exchange (NSE) of India, Bombay
Stock Exchange (BSE) of India, Depository Participant with National Securities Depository
Limited and Central Depository Services (I) Limited.

Religare has been constantly innovating in terms of product and services and to offer such
incisive services to specific user segments it has also started the NRI, FII, HNI and corporate
Servicing groups.

Religare has a very credible Research and Analysis division, which not only caters to the need
of our institutional clientele, but also give their valuable inputs to investment dealers.




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  17
    Products offered by Religare Securities

,




           INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   18
   1. Equities and derivatives:

Trading in derivatives is an art and science that professional traders can master with the right
knowledge, right tools and lot of discipline. Religare provides a software portal which is a next-
generation trading and research software that allow you to easily execute your intraday or F&O
trades, access the latest market news and trading calls, and comes with some exquisite features.

   Live Streaming Quotes
   Access all trading calls
   Advanced charting features
   Create your own technical rules for trading
   A single trading screen for NSE & BSE

   With a Religare online trading account, you can buy and sell shares in an instant! Anytime
   you like and anywhere you like! You can select an online trading account that suits your
   needs.

   2. Portfolio management services (PMS)

Religare offers PMS to address varying investment preferences. As a focused service, PMS pay
attention to details, and portfolios are customized to suit the unique requirement of investors.
Religare PMS currently extends five portfolio management schemes, viz Panther, Tortoise,
Elephant, Caterpiller and Leo.

Each scheme is design keeping in mind the varying tastes, objectives and risk tolerance of our
investors.

Investment Philosophy

Religare believes that their investors are better served by a disciplined investment approach,
which combines an understanding of the goals and objective of the investors with a fine tuned
strategy backed by research.

       Stocks specific selection procedures based on fundamental research for making sound

       investment decisions.

       Focus on minimizing investment risk by following rigorous valuation disciplines.

       Capital preservation.



                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                    19
3*International Advisory

Religare provides its wealth clients an opportunity to invest in international financial
instruments (currently limited to the US). Equities, Mutual Funds debts some of the key
instruments available and the clients have the option to choose from various asset allocation
modules.

4. *Investment Banking

We provide innovative, integrated and best-fit solutions to our corporate customers. It is our
continues endeavor to provide value enhancement through diverse financial solutions on an
ongoing basis, through offerings like corporate debt, Private equity, IPO, ECB, FCCB,
GDR/ADR.




Vision: - To build Religare as a globally trusted brand in the financial services domain and
present it as the „Investment Gateway of India‟.

Mission: - To provide financial care driven by the core values of diligence & transparency.

Brand Essence: - Diligent, dynamic & ethical processes for wealth creation.

Brand Identity:

Name: - Religare is a Latin word that translates as „to bind together‟. This name has been
chosen to reflect the integrated nature of financial services the company offers.

Symbol: - The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it
is considered good fortune to find a four-leaf clover, as there is only one four-leaf clover for
every 10,000 three-leaf clovers found.




4.Equity and Trading:
                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   20
RACE and RALLY are the two mode of share trading offered by Religare Securities Ltd.
Which comes under equity and derivatives.




While RALLY deals with offline facilities, R-ACE provides for complete online package and
facility. There is difference between both offline and online modes of trading. The difference
lies on account of its schemes, platforms and facilities provided. Initially the clients used to go
for offline modes of trading, but now with increasing use of Internet online mode has become
the preference.




                     Religare Advanced Client Engine (R-ACE)

                  INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                    21
Type of Account: - Religare securities provides three types of
account-

R-ACE (Basic)

It‟s the basic online trading account provided by Religare. Investor can trade and access their
account information online and over the phone as well. This account comes with a browser
based online trading platform and no additional software installation needed.

This account also provides lifetime free DP account with no annual maintenance charges.

    Account activation charges Rs.299/-
    No software installation required, easily accessible on browser
    NSE cash segment, NSE F&O and BSE on single platform
    Trade online and over phone
    Access your ledger balance and account information over internet and phone
    Online transfer of fund through internet payment gateway


R-ACE Lite (Advanced)
   It's the advanced account option for the investor with Religare. This trading account
   provides the entire feature of R-ACE (Basic) account. In addition it also provides real-time
   streaming stock quotes and alerts.

    Account activation charges Rs.499/-
    No software installation required, easily accessible on browser
    NSE cash segment, NSE F&O and BSE on single platform
    Real-time streaming quotes
    Hot key function for faster trading
    Trade online or over phone
    Access your ledger balances and account information over internet and phone
    Online transfer of fund through internet payment gateway




R-ACE Pro (Professional)
                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  22
As the name indicates this account is for high volume traders. Along
with the features from above 2 accounts, this account also comes with:

    Account activation charges Rs.999/-
    Traders terminal on your desktop
    NSE cash segment, NSE F&O and BSE on single platform
    Real-time streaming quotes
    Technical charting (Intraday and EOD)
    Multiple watch list
    Advanced hot key function for faster trading
    Derivatives chains
    Future &option calculator
    Access your ledger balances and account information over internet and phone
    Online transfer of fund through internet payment gateway
    Trade online and over phone




                                  Schemes and plans for investors

                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                         23
 (a) Trumph Account:

 (1) R-ACE Lite +Trumph plus

 Account opening- Rs. 499 and Rs. 2500 as an advanced Brokerage for a year.




 Table 1.1: Represents R-ace lite+ Trump plus

Particulars                                          Trumph Plus



Cost of Subscription                                   Rs. 2500



Validity Period                                       12 Months


Brokerage on Delivery                                    0.25


Brokerage on Intraday                                   0.025


Brokerage on F&O Trade                                  0.025




 (2) R-ACE Lite +Trumph Super


              INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                      24
 Table 1.2: Represents R-ace lite+ Trump Super

Particulars                                        Trumph Super



Cost of Subscription                                 Rs. 15000



Validity Period                                     12 Months


Brokerage on Delivery                                 0.15%


Brokerage on Intraday                                 0.015%


Brokerage on F&O Trade                                0.015%




(2) R-ACE Lite +Trumph Super Star

 Table 1.3: Represents R-ace lite+ Trump Super

Particulars                                      Trumph Super Star



Cost of Subscription                                 Rs. 50000



Validity Period                                     12 Months


Brokerage on Delivery                                 0.10%


Brokerage on Intraday                                 0.010%


Brokerage on F&O Trade                                0.010%




 Terms & Conditions:


              INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD             25
              Brokerage will be charged at the rates as mentioned
               in the applicable brokerage table, during the tenure of
               scheme.
              During the tenure of scheme brokerage charged shall be reversed to a maximum
               of cost of subscription only. Brokerage over and above it within the tenure of
               plan will have to be paid by the client at the same rate as quoted above.
              Taxes, duties and other charges shall be charged apart from the above-specified
               brokerage as applicable from time to time.
              This plan would expire at the expiry of applicable validity period of account;
               and thereafter it shall be renewed on the same terms and conditions.
              The plan may be terminated if circumstances beyond the control of Religare
               arise due to the Regulatory directions, etc.




(b) R-ace lite + Freedom

       Account opening- Rs. 499 and Rs. 4000 as an advanced Brokerage for a year.

       Table 1.4: Represents R-ace lite+ Freedom

Free Volume Allowed

Daily Free Intraday & Derivatives Volume                      Rs. 3,00,000

Daily Free Delivery Volume                                    Rs. 40,000




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                26
     Calculation of Free Volume in Rupees

     Table 1.5

Segment                  NSE         NSE    NSE               BSE           BSE          Total
                         CASH        FUTURE T2T               CASH          T2T          (Rs.)


Free Intraday/           1,00,000    1,00,000    N.A.         1,00,000      N.A.         3,00,000
Derivatives Volume



Free Delivery            10,000       N.A.        10,000          10,000        10,000      40,000
Volume




     Brokerage (on daily volume)#

     Table 1.6

Intraday/Derivatives                            Delivery

Volume (in Rs.)           Brokerage Rate        Volume (in Rs.)            Brokerage Rate
Up to 1 Lakh              0%                    Up to 10000                0%

1 Lakh to 10 Lakh         0.03%                 10,000 – 1Lakh             0.30%

10 Lakh – 1 Cr.           0.02%                 1Lakh – 10 Lakh            0.20%

1 Cr. – 3 Cr.             0.015%                10 Lakh – 30 Lakh          0.15%

Above 3 Cr.               0.01%                 Above 30 Lakh              0.10%



     # Brokerage will be calculated on exchange wise and segment wise basis




     Features of Freedom Account:

               No minimum brokerage requirement per contract note.
               No minimum brokerage requirement per trade.

                        INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   27
      Lifetime free AMC in Depository Account
      Interest on cash margin lying with us @ 3.5% p.a.



(3) Classic Plus (Rs 1175/-)

A/C Opening: - Rs 499+ Rs 675 as brokerage for a period of six months.

Brokerage: - Intraday – 0.05%

              Delivery – 0.50%

*Brokerage will be deducted from these 675.



(4) Classic lite (Rs. 5499/-)

A/C Opening: - Rs. 499 + Rs 5000 as margin which will reflect in your account and you can
trade upon that money.

Features: -

     Lifetime free Depository Account.
     Interest on cash margin
     Online offline trading facility
     Research report available on your website



Requirement for opening a Trading cum Demat Account

All investor have to submit their proof of identity and proof of address along with prescribed
account opening form.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 28
PART- (B). ABOUT THE STUDY




The history of e trading goes back to 1983, when a doctor in Michigan placed the first online
trade using E*TRADE technology. What begin with a single click over 16 years ago has now
taken the world by storm. One Bill Porter, a physicist and inventor with more than dozen
patents to his credit, who provided online quotes and trading services to Fidelity, visualized the
concept.

What is trading: Trading is all about buying and selling of share in the share market.
Trading can be done through online and offline.



What online trading: Online trading means trading/investing in equities, derivatives,
commodities etc through the Internet. It enables the investor to electronically connect (through
internet, using a broker like Religare) to buy or sell stocks, derivatives etc with the other
investors. In online trading, one can access a stockbroker‟s website through an Internet-enabled
PC and can placed orders.

Earlier the organization‟s that provided the facility of online trading was not safe enough to
invest but some of the changes in the past years in the Indian share market have created the
interest of trading in the shares by the people. Broadly we can classify three important factors,
which have contributed to the development of online trading in India.


Firstly the National Stock Exchange (NSE) in the year 1994, which allowed the electronic
trading, took the major step and seeing to this various other stock exchanges in India followed
soon. This helped in making the fast, accurate and transparent transactions saving a lot of time
then the traditional method of trading. The investors were also saved by the clutches of the
fraud brokers at the times when the clients were not aware of the true prices of the shares.
Second I N . In the year 1996 the dematerialization of the shares came [ago known as DEMAT)
which avoided the online presence of shares in an electronic form avoiding them from theft
pilferage or from other losses like counterfeiting and frauds regarding share transfer.

                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                    29
The third step was the rapid growth of computer education and
learning of Internet by the people. With the evolving of Internet the online trading became a hit
and the investors became confident in investing just with a click of a mouse.
The benefits are-


      A person can sec the latest market movement through streaming quotes.

      Reduces time lag due to self-execution and instant confirmation.

      Empower traders to have a complete control over their trading decisions.

      A person can access his accounts and related information on the Website.

      Provides greater convenience of trade as a person can trade from home or other

convenient location.

      It is cheap in terms of cost associated and offers reduction in overheads

      A trader can view the historical charts on his computer.




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   30
Stock Exchange - Business Trends:

INDIAN STOCK MARKETS AND EXCHANGES:

There are 23 recognized stock exchanges in India, including the Over the Counter Exchange of
India for small and new company and the National Stock Exchange (NSE) that was set up as a
model exchange to provide nation-wide services to investors.

SENSEX:

SENSEX is not only scientifically designed but also based on globally accepted construction
and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks
representing a sample of large, liquid and representative companies. The base year of SENSEX
is 1978-79 and the base value is 100. The index is widely reported in both domestic and
international markets through print as well as electronic media.


The index is calculated on the "Free-float Market Capitalization" methodology. The "Free-float
Market Capitalization" methodology of index construction is regarded as an industry best
practice globally. All major index providers like NIKKEI. NASDAQ and DOW JONES use the
free float methodology.
The growth of equity markets in India has been phenomenal in the decade gone by. Right from
early nineties the stock market witnessed heightened activity in terms of various bull and bear
runs. The SF; NSBX captured all these events in the most judicial manner. One can identify the
booms and busts of the Indian stock market through




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 31
BOMBAY STOCK EXCHANGE (BSE):

Bombay stock exchange is the oldest stock exchange of India For the premier Stock Exchange
that pioneered the stock broking activity- in India, 128 years of experience seems to be a proud
milestone. A lot has changed since 1875 when 318 persons became members of what today is
called "The Stock Exchange, Mumbai" by paying a princely amount of Ref. Since then, the
country's capital markets have passed through both good and bad periods. The journey in the
20th century has not been an easy one. Till the decade of eighties, there was no scale to
measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai (BSE) in
1986 came out with a stock index that subsequently became the barometer of the Indian stock
market.



NATIONAL STOCK EXCHANGE (NSE):

The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges, which recommended promotion of a
National Stock Exchange by financial institutions (FEs) lo provide access to investors from all
across the country on an equal fooling. Based on the recommendations. NSE was promoted by
leading Financial Institutions at the behest of the Government of India and was incorporated in
November 1992 as a tax-paying company unlike other stock exchanges in the country.
When India's National Stock Exchange (NSE) was started in 1994, few believed it would
survive. How could a stock exchange run by a team of untested professionals headed by a
former development banker succeed against existing stock exchanges run by third generation,
savvy stockbrokers?



STOCKS BASICS:

This category of financial Instruments is one of the tools invented for building wealth. Stocks
are a part of nearly any investment portfolio. When you star on your

Road to financial freedom, you need to have a solid understanding of stocks and how they trade
on the stock market.




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What is Stock?

Definition

The stock is a share in the ownership of a company. Stock represents a claim on               the
company‟s assets, earnings and profits. As you acquire more stock, the ownership stake in the
company becomes greater. Whether you can say shares, equity, or stock, it all means.

Stock is represented by a stock certificate. This is proof of your ownership. In today‟s you
won‟t actually get to see this document because your brokerage keeps these records
electronically. This is done to mark the shares that a person physically took the certificates
down to the brokerage. Now, trading with a click of the mouse or over phone call makes life
easier for everybody.

Being a shareholder of a public company does not mean you have a say running of the
business. Instead one vote per share to elect the board of directors at annual meeting is the
extent to which you have a say in the company. The management of the company is supposed
to increase the value of the film for shareholders. If this doesn‟t happen, the shareowner can
vote to have the management removed.

   a. Stocks basics Different types of stocks

There are two main stocks, which are categorized a follows.

Common Stock

When people talk about this they are usually referring to this type. In fact the majority of stock
is issued is in the form. We went over features of common stock in the last section. These
shares represent ownership in a company and a claim (dividends) on a portion of profits.
Investors have a right for one vote per share to elect the board members, who oversee the major
decisions made by management.

Common stock is a security representing a legal claim to a company‟s earnings and assets.
Holders of common stock have some rights into choosing company management, but do not
generally have much say in the day-to-day operations. If the common stock is publicly traded
the common will generally be required to meet




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                    33
Regulatory obligations such as filing audited financial reports. Holders of common stock are
offered the chance to participate in annual meeting, where the company

Preferred stock

Preferred stock represents ownership in a company but usually doesn‟t come with the same
voting rights (this may depending on the company). With preferred shares, investors are usually
guaranteed fixed dividends that are never guaranteed. Another advantage is that in the event if
liquidation, preferred shareholders are paid off before the common shareholder (but still after
debt holders). Preferred stock may also be callable, meaning that the company has the right to

Stocks Basis: How Stocks trade

Stock trading depends upon exchanges, which are places where buyers and sellers meet and
decide on a price of share. There are some exchanges that are physical locations where
transactions are carried out on a trading floor. We have probably seen pictures of a trading
floor, in which traders are widely throwing their arms up, waving, yelling and signaling to each
other. The other type of exchange is virtual, composed of a network of computers where traders
are made electronically.

The purpose of a stock market is to facilitate the exchanges of securities between buy sellers,
reducing the risks of investing. It would be different to sell shares if we had to call around the
neighborhood trying to find a buyer. Really, a stock market is nothing more than super-
sophisticated farmers‟ market linking buyers and sellers.

Moving further, we should know difference between the primary market and secondary
market. The Primary market is where securities are created (IPO) while in the secondary
market; investors trade previously can issue securities without the involvement of the issuing
companies. Companies, government and public sector institutions can attain funding thought
the sale of a new stock or bond issue. It is typically done through a syndicate of securities
dealers. The process of selling new issues to investors is called underwriting (IPO). In the case
of a new stock issue, sale is an initial public offering (IPO). Dealers earn a commission that is
built into the price of the security offering; through it can be found in the prospectus.




                  INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   34
Features of primary market are:

           Primary market is for new long-term capital. This is the market where the
            securities are sold for the first time. Therefore this is also called the new issue
            market (NIM).
           In a primary issue, the company issues the securities directly to investors.
           The company takes the money and issues new security certificates to the investors
           Primary issues are used by companies for the purpose of setting up new business or
            for expanding or the existing business.
           The primary market performs the major role and crucial function of facilitating
            capital formation in the economy.
           The original holder can only redeem the financial assets sold.

The secondary market is what people are referring to when they talk about the stock market or
share trading. It is important to understand that the trading of a company‟s stock does not
directly invite that company.




   b. Stock basis: What causes stock Prices to change?

A stock‟s price is an indication of what investors believes a company is worth. The price of a
stock not only reflects a company‟s current it also reflects the investor‟s expectations of future
growth and earnings.

This lesson discusses events and situations that influence stock‟s price. For example, market
forces such as supply and demand impact share prices.

Stock prices change every day as result of market forces. By this we can that share prices
change because of supply and demand. If more people want to buy a sock (demand) than sell it
(supply), than the price moves up. Conversely, if more people wanted to sell as stock than buy
it there would be grater supply than demand and the prices would fall.

Analysts base their opinions about future value of a company on its earnings projections. If a
company‟s result is than analysts expected, the stock price rises. If a company‟s result are
worse than expected the stock price falls.



                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                    35
Investors have developed literally hundreds of variables, ratios and
indicators to predict stock price changes. The main forms of stock
analysis are: fundamental, technical and quantitative. Each approach involves following various
market indicators to decide whether to buy, sell, or hold.

The important things to grasp about this subject are the following:

   1. At the most fundamental level, supply and demand in the market depends upon stock
       price.
   2. A Price time the number of shares outstanding (market capitalization) is the value of a
       company comparing just the shares price of two companies is meaningless.
   3. Theoretically earnings are what effect investor‟s valuation of a company but there are
       other indicates that investors use to predict stock price. Remember it is investor‟s
       sentiments, attitudes and expectations that ultimately affect stock prices.
   4. Here are many theories that try to explain the way stock prices move the way they do.
       Unfortunately, there is no theory that can explain everything.



   Trading in Futures Derivatives (F&O)

   Stock future trending

   In simple language one future contract is groups of stocks (one lot) that has to be bought
   with certain expiry period and has to be sold within that expiry period.

   Suppose if we buy futures of any company for example Wipro of one-month

   Major Advantages of futures Trading over Stock Trading

   Margin is available

    In future trading we get margin to buy (but can hold only up to maximum of 3 months),
   while in stock trading you must of amount in our account to buy.

   For example- if we plan to buy stock XYZ at Rs.100 and quantity 1000 shares then you to
   pay 1 Lakh rupees (RS100x1000qty). But if you plan to buy XYZ future contract and that
   contract Lot size has 1000 quantity of shares then instead of paying 1 Lakh rupees you have
   to pay just 20% to 30% of whole amount which comes to 20 thousand to 30 thousand
   rupees.



                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 36
   Brokerages are low

   Brokerages offered for future trading are less as compare to stock delivery trading.




   C. DEPOSITORY SERVIES-AN OVERVIEW

    THE Act defines Depository as, “An organization where the securities of a holds money.
   The Depository holds electronic custody of securities, and also arrange for transfer of
   ownership of securities on the settlement date”.

   Depository System is connected with conversion of securities from physical to electronic
   form, settlement of trading in securities segment, transfer of ownership of shares and
   electronic custody of securities. Offering depository service to the shareholder is a positive
   sign a company can send about its concern for the welfare of its shareholders.




   BENEFITS OF DEPOSITORY SYSTEM

In the depository system, the ownership and transfer of securities takes place by means of
electronic book entries. At the outset, this system rids the capital market of the dangers related
to handing of paper. NDSL provides numerous direct and indirect benefits, like:

   a. Elimination of bad delivery.
   b. Elimination of all risks associates with physical certificates.
   c. No stamp duty.
   d. Immediate transfer and registrations of securities.
   e. Faster settlement.




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Increasing Internet trading volume:

In today‟s time people are using more online trading this is the service offered on the Internet
for purchase and sales of shares. In online trading you will access a your broker's website
through your Internet enabled PC and place orders through the brokers Internet based trading
engine. These orders are placed within a few seconds. From the past two years the volume of
the Internet trading has increased largely, as we can see that in 2003 only 4,318 (USD mn)
invest through online trading that has increased 2,65,140 (USD mn).




                                        (Graph 2)




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   38
                      GROWTH OF ONLINE TRADING:

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

     Now the growth of online trading is on its right track. Indian stock market has been
announced the one of the Safe and stable market of the world, so here in India the online
trailing is growing like anything in comparison to the whole world At the end of July 200S,
there were more than 168 registered brokers on the NSE and the number of Internet trading
subscribers to about 2.024 million. In the year 2007 India has 8 crore {80 million) Internet user,
the % of Internet user is growing in each year.
     At the same lime the number of subscribers trading through the portal of Kotak Securities
had gone up significantly by 150 per cent and the number of online trading customers had
grown from 30.000 to 75.000. And the company expected to have al least 130.000 customers
by the end of that fiscal.

     Today the total volume of online trade in India is about 29-31% of total trades. According
lo brokers the better broadband connectivity across the country and wider awareness of equity,
as an asset class will raise the online trade volumes to over 50% of total trade. In India the
demography is such that 75% of the population is under the age of 36 and more than 50% of
the 75% is under age of 25 and this is another supporting factor

One year and terminals was set up in small towns such as Rajkot, Hubli and Vijayawada .In
that year the share of online trading rose dramatically from 7% last year to 20% as a percentage
of overall traded volumes. Due to this factor the top five US brokerage firms decided to make a
foray into India in the next year driven by strategic interest. Also at that time non-metros
accounted for half of the daily turnover offline trading.

     Graph is showing the declining in the turnover of online trading in Indian stock exchange
during       slowdown         in      economy         due       to      subprime        mortgage


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crisis




                                             (Graph3)
Crash of the market in the early February 2008 the investors away from online trading the
turnover of the NSE from internet-based trading dipped to a daily average of Rs 1,648 crore
between February 1 and February 8 as compared with Rs 3.450 crore in January 2008 Rs 3,5X7
crore in December 2007 and Rs 4.417 crore in November 2007 in the exchange's cash market
segment. In the mid February 200X it accounted for just 12% of NSE‟s cash turnover as
compared with a high of 24% in November last year.

         The number of investors opting for online trading has gone up manifold, according to
the recently published 'India's Leading Equity Broking Houses, 2008' by Dun & Bradstreet
(D&B). The publication says that less than 10% of the 191-broking firms surveyed reported
huge growth in opening of e-broking accounts and some firms saw a surge in value of up to
400% in e-broking during 2007




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                               40
DMAT Account Registered By Customer:




                                              (Graph4)




        According to the report, numbers of e-broking accounts registered in 2007 have grown
exponentionally. Indiabulls Securities Ltd added 4.51,611 accounts while a relative!) New firm
in the industry, Reliance Money added 2,15,678 accounts during the same time period. Motile
Oswal Securities Ltd managed lo add 19,065 accounts while Unicon Financial Intermediates
Pvt. Ltd could increase their e-broking accounts by 13.787

        According to market watchers, the increase in the value of online transactions is also
because of sustained Bull Run witnessed in 2007. When the 30-share Sensex of the Bombay
Stock Exchange (BSE) gained from 13.842 points to 20.207 points, a gain of 6,365 points (up
47%).
    E-broking is contributing a sizeable portion to the share trading volumes and also to the
revenue generated for stock broking firms. Some examples of the percentage contribution lo
trading volumes contributed by e-broking are 91% in case




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                41
    Of Reliance Money. 62% for India Bulls, 20% each for ASL Capital and Shreyas Stock,
19% Angel Broking, and 15% Farsight Capital In respect of revenues generated from E-
broking. India Bulls (63%), Reliance Money (54%), Unicon Financial (30%) and Shreyas
Stock (20%) reported higher shares in 2007. Ashika reported 98% growth in e-broking business
in the first 10 months of 2007.
      One another significant trend is the growth in international business of broking
companies, companies that reported presence of offices outside India, like Reliance Money,
Motilal Oswal. JRG securities, Karvy Stock Broking, Vogue and Bonanza Portfolio.

     HDFC Securities have 500.000 online customers' deals in daily online trades worth Rs
250-300 crore is also in the black. The revenues it had in 2007-08 are Rs 100 crore. HDFC
Securities had revenues of Rs 67 crore and a net profit of Rs 7.21 crore in 2006-07. IClCldirect
has 1.5 million online broking accounts and parent ICICI Securities reported revenues of Rs
750 crore for March 2008. The new player Reliance Money has 2 million online accounts
trades worth Rs 2,000 to Rs 3,000 crore per day.




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  42
                                    ADVANTAGE OF ONLINE TRADING:

1. Provides with the Freedom of Information:

Internet provides a new sense of controlling our financial future as the amount of investment
information available online is truly well. An investor can't Know the price of any stock he
wants at any point of time on the Internet.



             An investor can review the price history of any stock in chart format online
             An investor can follow in-depth the events happening in the market

             Helps an investor in receiving a wealth of free commentary and analysis about stock
              markets in the global economy
             Helps an investor to conduct an extensive financial research of any company he
              desires
             He may also consult with other investors online present around the world


Some online stock broking firms provide real-time stock quotes, daily ups and downs of the
stock market, expert commentary, and a deep community of fellow investors.



2. Provides Control to Investors Money

When an investor wants to buy or sell stock he no longer need to call his/her broker on the
phone that helping in the execution of the order instantly on the internet.

3.        Provides access to the market

     Through the sophisticated information streams, dedicated trading platform and sophisticated
tools so that investor can access the market that provide more agility in buying and selling
stocks.




                   INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  43
4.      Ensures the best price for investors

Some companies like Invest smart specialize in the techniques which offers the best price deals
for the buy and sell orders of the investors and traders providing the high level of transparency
and information relating to the specific stocks and company profiles which helps in getting the
best quote for the orders.




5.   Online trading offers greater transparency

Online trading offers the investors with greater transparency by providing with an audit trail.
This process involves a complete electronic chain starting from order placement, to clearing
and settlement and finally ending with a credit into the depository account of the investor. All
these ages are inspected which brings the transparency into the system.



6. Provides hassle free trading

Online trading provides an integration of the bank account, trading account and denial
accounts, which leads to easy and paperless trading for the client.



7. Online trading allows instant trade execution

Online transactions helps in the quick execution of the entire trading transaction right from
logging to the traders site and settlement of the bank account in a very short period of time.

8. It provides a level playing field

Trading online gives even the smallest retail Investor access to information that was earlier
available only to the big traders. It provides a level playing field for all investors in the
securities market.


9. Online trading reduces the settlement risk

This method of trading reduces the settlement risk for the investor as when a short sell order is
played the orders are squared off at the specified cut-off time and arc not allowed to be carried
forward.




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10. Provides live financial news *& analysis

The online sites also provide live terminals that provide streaming news to give investor the
latest financial information as it occurs.


11. Online help desk

Some companies provide online help desk an investor cancan contact the Tele Trading
Executives from the Tele Trading team will help you out during and after market hours and can
solve your questions.


12. Instant order trade confirmations

Through online trading every trade is confirmed immediately and investor receives an on-
screen confirmation following every trade with full details for the investors records that avoids
costly errors that would have been discovered when it is late.



DISADVANTAGES OF ONLINE TRADING

In online terminal, investor can"! Gel customized expert advice, whereas in offline the broker
gives suggestions according to investor‟s strategy (i.e. short term or long-term)
          Brokerage is high compared to offline.
          Privacy is less due to hacking scandals transactional errors due to technical
           problems
          Speed of Internet
          Online frauds by hackers




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   45
1.3 COMPARISON OF SHARE TRADING WITH OTHER INVESTMENT OPTIONS:

(i) Risk Associated With Stocks




       Market Risk – The share prices fluctuate daily, so the investor is not aware of the next
        day opening of the market. Therefore trading in shares involves high market risk as
        compared to other financial instruments.
       Timing The Market – It is difficult to identify which is the right time to invest and
        which is the right time to take out the money. There may be situations where stocks
        may not be rightly timed according to the market leading to loss in the value of shares.
       Liquidity- Investment made in unlisted equities might only be realized upon the listing
        of the securities. Settlement problems could miss certain investment opportunities.



(ii) Shares & Mutual Fund




                        Shares                                Mutual Fund

       Risk             Risk is large in shares               Mutual funds are less risky

       Return           Returns are very high in shares       The         returns        are
                                                              comparatively less

       Tracking         It is easy to track                   It‟s difficult as it involves a
       Investment                                             portfolio of different shares




                  INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                    46
(iii) Shares & Deposits

                    Shares                               Deposits

Risk                High risk when compared to Minimal risk
                    deposits

Returns             High return when compared to Return less than that of
                    deposits                             shares

Diversification     Investment can be diversified        Investment at only one
                                                         place

Awareness           Investment is transparent            Little     is     disclosed    to
                                                         investors




(iv) Shares & Insurance

                    Shares                                               Insurance

Risk                Same level of risk as in Insurance when Same level of risk as in
                    invested in equity                                   equity

Cost                Costs      are   simple,    transparent       and Insurance costs are not very
                    standardized                                         transparent.

Return              Stock markets score over insurance                   Returns are low




(v) Shares & Gold

                     Shares                                   Gold

       Risk          High risk when compared to gold          Risk factor is on the lesser
                                                              side in investment in gold

       Return        Fluctuation in returns                   Fluctuations are less in gold



                  INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  47
INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   48
LITERATURE REVIEW:

Foreign Institutional Investors: Investment Preferences in India


P. Krishna Prasanna

As the Indian equity market is growing, the trend and future prospects in foreign
Institutional investments have become a topic of great concern. A recent research survey by
Japan Bank for international operation (JBIC) shows that in the next 3 years, India will be the
third most favored investment destination for Japanese investors. A Smith Barney (a CITI
group Division) study says estimated market value of foreign institutional investment in the top
200 companies in India (including ADRs and GRDs) at current market prices is US$43 billion.
This is 18% of the market capitalization of BSE 200.


It is established in literature that block shareholders influence the firm performance (Cho &
Padmanabhan, 2001). Governance of listed companies plays an important role in foreign
intuitional investment decisions. Further more management of businesses run by family groups
plays a distinctive role. When governments become block share shareholder their objective will
be quite different from those of private investors.


Douma, Pallathiatta and Kabir (2006) investigated the impact of foreign institutional
Investment on the performance of emerging market firms and found that there is positive effect
of foreign ownership on firm performance. They also found impact of foreign investment on
the business group affiliation of firms. Aggarwal, Klapper and Wysocki (2005) observed that
foreign investors preferred the companies with better corporate governance.             Investor
protection is poor in case of firms with controlling shareholders who have ability to expropriate
assets. The block shareholders affect the value of the firm and influence the private benefits
they receive from the firm. Companies with such shareholders will find it expensive to raise
external funds. Yin-Hua and Woidtke (2005) found that when members who are affiliated to
the controlling family dominate company boards, investor protection will be relatively weak
and it is difficult to determine the degree of




Separation of management from ownership. They also observed that firm value is negatively
related to board affiliation in family controlled firms. Li (2005) observed that in case of poor

                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   49
corporate governance the foreign investors choose foreign direct
investment (FDI) rather than indirect portfolio investment.      It is
generally believed that FDI could be better protected by private means.


Dahlquist et al. (2003) analyzed foreign ownership and firm characteristics for the Swedish
market. They found that foreigners have greater presence in large firms, firms paying low
dividends and in firms with large cash holdings. They explained that firm size is driven by
liquidity. They measured international presence by foreign listings and export sales. They
reiterated that foreigners tend to underweight the firms with a dominant owner. Covirg et al.
(2007) concluded that foreign fund managers have less information about the domestic stocks
than the domestic fund managers. They found that ownership by foreign funds is related to size
of foreign sales, index memberships and stocks with foreign listing.


Li and Jeong-Bon (2004) found that foreign investors tend to avoid stocks with high cross-
corporate holdings. They suggested that FII are likely to be efficient processors of public
information and are attracted to Japanese firms with low information asymmetry. Morin (2000)
explored the influence of French model of shareholding and management on FII. They
commented that France has undergone rapid change from a financial network economy to a
financial market economy. The new pattern has broken the traditional system of cross holding
and facilitated the arrival of FII who bring with them new techniques and demands efficient
corporate management.


What could be firm level factors that influence foreign capital from an economic standpoint is
the question yet to be answered? Outside investors will lower the price they pay if they fear
consumption of private benefits of control family. Choe, Kho, Stulz (2005) found that US
(United States) investors do indeed hold fewer shares in firms with ownership structures that
are more conducive to expropriation by controlling insiders. In companies where insiders are
dominating information access and availability to the shareholders will be limited. With less
information, foreign Investors face an adverse selection problem. So they under invest in such
stocks.




Leuz, Nanda and Wysocki (2003) further asserted that the information problems cause

                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 50
foreigners to hold fewer assets in firms. Firm level characteristics
can be expected to contribute to the information asymmetry
problems. Concentrated family control makes it more likely that information is communicated
via private channels. Informative insiders have incentives to hide the benefits from outside
investors by providing opaque financial statements and managing earnings. Haw, Hu, Hwang
and Wu, (2004) also found that firm level factors cause information asymmetry problems to
FII. Their paper found evidence that investment is lower in firms where managers do not have
effective control. Foreign investment in firms that appear to engage in more earnings
management is lower in countries with poor information framework.


There is a growing literature on the determinants of global investment flows and allocations.
Prior research focused on international portfolio flows and examined the relationship between
portfolio flows and stock returns. Most of these studies have analyzed global and country level
factors that influence investment allocations. This paper investigated empirically the firm
specific variables, which influence the investment decision of foreign investors.



"Online stock trading in India: An empirical investigation" In 2007, Nidhi Walia and
Ravinder Kumar's research report examined the investors' preference for traditional trading and
online trading, investor's perception on Online trading & comparing current usage of online
trading and offline trading. This study reveals that out of every 100 investors only 28 trade
online, which points out a question as why investors were not able to realize the importance of
technology in stock trading. The major findings of the study are the Indian investors are more
conservative, they do not change brokers for trading, whereas net traders are more comfortable
with online trading for its transparency and complete control of the terminal.



1. ONLINE TRADING INFRASTRUCTURE

  (Article from Business India)

The emergence of online exchanges has facilitated faster transaction by providing online
trading portals and brokerage house ease and flexibility. The Internet has indeed opened up
new opportunities for conducting the business. The worldwide stock exchanges has made a
major shift from the traditional method of trading and now conduct a bulk of its business online
through its brokers and partners. In the developed countries majority all the exchange


                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  51
transaction arc conducted online. The trend took off slowly in India
and the National Stock Exchange (NSE) and the Bombay Stock
Exchange (BSE) two of the largest exchanges in India have been conducting online trades
successfully for some time.


2. INDIAN EXCHANGES: NSE AND BSE
  (Article from capital market)
The NSE and BSE arc among the largest exchanges in the country handling vary large daily
trading volumes, support large amount of data traffic, and have a very large nationwide
network. The trading volumes in year 2000 was huge with the average daily turnover in the
capital markets segment at NSC is around Rs 2300 crore and in the derivative segment, around
Rs 1300 crore. The average daily traffic
Volume was around one million traders per day in the capital market segment and around
50.000 traders per day in the derivatives segment and there were around 13.000 registered users
in both segment and an average of around 9500 users is logged in at a time. At BSE the daily
turnover in 2004-05 (April- March) was Rs 1244.10 crore and the number of average daily
traders was Rs 5.17 lakh.



3. RECOMMENDATION OF SEBI (Article from
  Capital Market)

The SEBI has also played an important role in the issue of the guidelines regarding online
trading so that the changes of fraud and misrepresentation are minimized. The some of
recommendation are as follows:
   1.   The online trading company must have a minimum net worth of Rs 50 lakh
   2.   The encryption technology should be there in the system used by the brokers to ensure
        the provision for confidentiality, security, justifiability and reliability of data.
3. The broker must maintain adequate back-up system and data storage capacity which must be
checked by the stock exchanges.




                  INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   52
INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   53
5.1 RESEARCH METHODOLOGY

2.1.a Research Design

Research design is a framework or blueprint for cunducting the market research project. It
specifies the details of the procedures necessary for obtaining the information needed to
structure and /or solve marketing research problem.

Research design is descriptive for this project which comes under conclusive research design.
Conclusive research design is to assist the decision maker In determining, evaluating and
selecting the best course of action to take in a given situation. And a decriptive research has its
major objectives the description of something- usually market characteristics or functions. It is
used to determine the perceptions of people toward product.

5.2.b Sampling Design

Sample Size: 100

Sampling Unit: Sample units are all the existing investor of the various broking firms in
DELHI/NCR

Sampling Technique: Sampling technique is used for this project is non-probability sampling
because of time and resource available for the project is limited. Convenience sampling is used,
which is a type of non probability sampling

Sampling units: Delhi/NCR

5.1.c Data Collection

12.3.1 Source

Primary Data is collected through questionnaire in DELHI/NCR region.

Secondary data collected from books, journals and Internet etc.

2.1.c Statistical tools used: Factor Analysis, Chi Square




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                     54
5.1.d DATA ANALYSIS:

2.3 Graphical representation of various responses of the online trader:

                             Gender

                Frequenc                Valid       Cumulative
                    y    Percent       Percent       Percent

Valid Male              89      89.0         89.0           89.0

       Female           11      11.0         11.0         100.0

       Total           100     100.0        100.0

Graph:1




Interpretation: Here 88 percent respondents are male and only 12 percent respondents are
female so we can focus more on female Investors.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                           55
                              Age

                 Frequenc                Valid       Cumulative
                     y    Percent       Percent       Percent

Valid 20-25              14      14.0         14.0          14.0

       25-30             26      26.0         26.0          40.0

       30-35             27      27.0         27.0          67.0

       35-40             21      21.0         21.0          88.0

       Above4
                         12      12.0         12.0         100.0
       0

       Total           100     100.0         100.0



Graph:2




Interpretation: Here 14 percent respondents are under the age group of 20-25 and 26, 27 and
21 percent respondents are under the age group of 26-30, 31-35 and 36-40 respectively. Only
12 percent are above 40.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                              56
                         Monthly income

                     Frequenc               Valid       Cumulative
                         y    Percent      Percent       Percent

Valid >10000                 7       7.0          7.0           7.0

       10000-
                            32      32.0         32.0          39.0
       20000

       20000-
                            35      35.0         35.0          74.0
       30000

       30000-
                            18      18.0         18.0          92.0
       40000

       <40000                8       8.0          8.0         100.0

       Total               100     100.0        100.0



Graph:3




Interpretation: Here 7 percent respondents have monthly income less than 10000 and 32, 35
and 18 percent respondents have monthly income 10000-20000, 20000-30000, and 30000-
40000 respectively. Only 8 percent have greater than 40000.


                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                            57
                         Marital status

                   Frequenc                Valid      Cumulative
                       y    Percent       Percent      Percent

Valid Married             76      76.0         76.0          76.0

       Unmarrie
                          24      24.0         24.0         100.0
       d

       Total             100     100.0        100.0

Graph:4




Interpretation: Here 76 percent respondents are married and 24 percent are unmarried those
who prefer online trading.




                             Qualification




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                             58
                         Frequenc                 Valid       Cumulative
                             y    Percent        Percent       Percent

Valid Higher
                                 27      27.0          27.0          27.0
      Secondary

       Senior
                                 43      43.0          43.0          70.0
       secondary

       Gradation                 24      24.0          24.0          94.0

       Post-gradation             5       5.0           5.0          99.0

       Higher
                                  1       1.0           1.0         100.0
       education

       Total                    100     100.0         100.0



Graph:5




Interpretation: Here 27 percent respondents have professional degree and 43 percent are post-
graduate which is much higher than the other educational qualification only one percent is
higher secondary.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                59
                            Experience

               Frequenc                   Valid      Cumulative
                   y    Percent          Percent      Percent

Valid >1               16       16.0          16.0          16.0

       1-2             36       36.0          36.0          52.0

       2-3             27       27.0          27.0          79.0

       3-4             14       14.0          14.0          93.0

       <4               7        7.0           7.0        100.0

       Total         100       100.0        100.0



Graph:6




Interpretation: Here 16, 36 and 27 percent respondents have 1-2 to 2-3 and less than one year
experience in online trading only 7 percent investor have a experience more than 4 years which
is concluding that there is a lot of scope for the brokerage firm to capture new Investor.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 60
               Company product is better than competitors

                                Frequenc                Valid        Cumulative
                                    y    Percent       Percent        Percent

Valid Highly agree                       2       2.0           2.0           2.0

       Agree                            14      14.0         14.0           16.0

       Neither agree nor
                                        46      46.0         46.0           62.0
       disagree

       Disagree                         33      33.0         33.0           95.0

       Highly disagree                   5       5.0           5.0         100.0

       Total                          100     100.0         100.0

Graph:7




Interpretation: Here 2 and 2 percent respondents are highly agree and agree with the products
of brokerage firm and 14 percent are neutral. 46 and 33 percent respondents are disagree and
highly disagree respectively. So this saying those products are not up to the mark.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                61
               Products are design according to my needs

                                Frequenc                 Valid       Cumulative
                                    y    Percent        Percent       Percent

Valid Highly agree                       3       3.0           3.0            3.0

       Agree                            18      18.0          18.0           21.0

       Neither agree nor
                                        44      44.0          44.0           65.0
       disagree

       Disagree                         30      30.0          30.0           95.0

       Highly disagree                   5       5.0           5.0         100.0

       Total                           100     100.0         100.0



Graph:8




Interpretation: Here only 3 percent respondents are highly agree and 14 percent are agree with
the design of products of brokerage firm and 44 percent are neutral. 30 and 5 percent
respondents are disagree and highly disagree respectively. So this saying that there should be
some modification in products by the firms.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 62
                      Products give me more benefits

                                Frequenc                 Valid       Cumulative
                                    y    Percent        Percent       Percent

Valid Highly agree                       2        2.0          2.0            2.0

       Agree                            14      14.0          14.0           16.0

       Neither agree nor
                                        32      32.0          32.0           48.0
       disagree

       Disagree                         24      24.0          24.0           72.0

       Highly disagree                  28      28.0          28.0         100.0

       Total                           100     100.0         100.0

Graph:9




Interpretation: Here only 2 percent respondents are highly agree and 14 percent are agree with
the benefits of products of brokerage firm and 32 percent are neutral. 24 and 28 percent
respondents are disagree and highly disagree respectively. So this saying that there should be
some modification in products by the firms so that they will give more ROI,




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 63
                                Timely update

                                Frequenc                 Valid       Cumulative
                                    y    Percent        Percent       Percent

Valid Highly agree                       4       4.0           4.0            4.0

       Agree                            12      12.0          12.0           16.0

       Neither agree nor
                                        32      32.0          32.0           48.0
       disagree

       Disagree                         33      33.0          33.0           81.0

       Highly disagree                  19      19.0          19.0         100.0

       Total                           100     100.0         100.0

Graph:10




Interpretation: Here only 4 percent respondents are highly agree and 12 percent are agree with
the timely update by brokerage firm and 32 percent are neutral. 33 and 19 percent respondents
are disagree and highly disagree respectively. So this saying that company should give the
timely update about any type information that is beneficial for the investors.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 64
               Company give service at the time it promise

                                 Frequenc                 Valid        Cumulative
                                     y    Percent        Percent        Percent

Valid Highly agree                        3        3.0           3.0            3.0

       Agree                             14      14.0          14.0           17.0

       Neither agree nor
                                         39      39.0          39.0           56.0
       disagree

       Disagree                          38      38.0          38.0           94.0

       Highly disagree                    6        6.0           6.0         100.0

       Total                           100      100.0         100.0

Graph:11




Interpretation: Here only 3 percent respondents are highly agree and 14 percent are agree with
the brokerage firm‟s service at the time it promise and 39 percent are neutral. 38 and 6 percent
respondents are disagree and highly disagree respectively. So this saying that there should be
some changes in procedure so that they can give service when they promise.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                   65
                  Brokerage house influence my decision

                                Frequenc                  Valid       Cumulative
                                    y    Percent         Percent       Percent

Valid Agree                             15       15.0          15.0           15.0

       Neither agree nor
                                        55       55.0          55.0           70.0
       disagree

       Disagree                         28       28.0          28.0           98.0

       Highly disagree                    2       2.0           2.0         100.0

       Total                           100     100.0         100.0

Graph 12




Interpretation: Here only15 percent respondents are agree with the influence by brokerage
house and 55 percent are neutral. 28 and 2 percent respondents are disagree and highly disagree
respectively. So we can say that brokerage house does not have much influence on investing
decision of investors.




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                  66
                            Take advice of manager

                                 Frequenc                  Valid       Cumulative
                                     y    Percent         Percent       Percent

Valid Highly agree                        8        8.0           8.0            8.0

       Agree                              9        9.0           9.0           17.0

       Neither agree nor
                                         18      18.0           18.0           35.0
       disagree

       Disagree                          38      38.0           38.0           73.0

       Highly disagree                   27      27.0           27.0          100.0

       Total                            100     100.0         100.0



Graph:13




Interpretation: Here only 8 percent respondents are highly agree and 9 percent are
agree for taking advice of professional before investing and 18 percent are neutral. 38
and 27 percent respondents are disagree and highly disagree respectively. So this
saying that there is only few investor those who take advice of professional

            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                67
                              Satisfactory return

                                Frequenc                 Valid       Cumulative
                                    y    Percent        Percent       Percent

Valid Highly agree                      10      10.0          10.0          10.0

       Agree                            11      11.0          11.0          21.0

       Neither agree nor
                                        23      23.0          23.0          44.0
       disagree

       Disagree                         34      34.0          34.0          78.0

       Highly disagree                  22      22.0          22.0         100.0

       Total                          100     100.0         100.0

Graph:14




 Interpretation: Here only 10 percent respondents are highly agree and 11 percent
are agree on satisfactory return on investment and 23 percent are neutral. 34 and 22
percent respondents are disagree and highly disagree respectively.




           INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                              68
                             Enough knowledge

                                Frequenc                 Valid       Cumulative
                                    y    Percent        Percent       Percent

Valid Highly agree                      11      11.0          11.0          11.0

       Agree                             9       9.0           9.0          20.0

       Neither agree nor
                                        24      24.0          24.0          44.0
       disagree

       Disagree                         34      34.0          34.0          78.0

       Highly disagree                  22      22.0          22.0         100.0

       Total                          100     100.0         100.0

Graph:15




 Interpretation: Here only 11 percent respondents are highly agree and 9 percent are
agree on enough knowledge about online trading and 24 percent are neutral. 34 and
22 percent respondents are disagree and highly disagree respectively. So brokerage
firm should give enough knowledge on online trading to the Investors.




           INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                              69
                                 Regular trading

                                 Frequenc                  Valid       Cumulative
                                     y    Percent         Percent       Percent

Valid Highly agree                        6        6.0           6.0            6.0

       Agree                              8        8.0           8.0           14.0

       Neither agree nor
                                         24      24.0           24.0           38.0
       disagree

       Disagree                          34      34.0           34.0           72.0

       Highly disagree                   28      28.0           28.0          100.0

       Total                            100     100.0         100.0

Graph:16




 Interpretation: Here only 6 percent respondents are highly agree and 8 percent are
agree that they do trading on regular basis and 23 percent are neutral. 34 and 28
percent respondents are disagree and highly disagree respectively. Here investor
should take the benefits of trading and brokerage firm should tell them the benefits of
this.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                70
                               Easy and fast

                               Frequenc                Valid      Cumulative
                                   y    Percent       Percent      Percent

Valid Highly agree                    14      14.0         14.0          14.0

       Agree                          17      17.0         17.0          31.0

       Neither agree nor
                                      19      19.0         19.0          50.0
       disagree

       Disagree                       25      25.0         25.0          75.0

       Highly disagree                25      25.0         25.0         100.0

       Total                         100     100.0        100.0

Graph:17




Interpretation: Here only percent respondents are highly agree and 11 percent are
agree on satisfactory return on investment and 23 percent are neutral. 34 and 22
percent respondents are disagree and highly disagree respectively.


           INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                           71
                     Feel safe at the time of transaction

                                Frequenc                  Valid       Cumulative
                                    y    Percent         Percent       Percent

Valid Highly agree                        8       8.0           8.0            8.0

       Agree                             10      10.0          10.0           18.0

       Neither agree nor
                                         31      31.0          31.0           49.0
       disagree

       Disagree                          30      30.0          30.0           79.0

       Highly disagree                   21      21.0          21.0          100.0

       Total                           100     100.0          100.0

Graph:17




Interpretation: Here only 8 percent respondents are highly agree and 10 percent are
agree on safety and 31 percent are neutral. 30 and 21 percent respondents are disagree
and highly disagree respectively.


            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                               72
                                More benefits

                               Frequenc                Valid       Cumulative
                                   y    Percent       Percent       Percent

Valid Highly agree                      9       9.0          9.0            9.0

       Agree                            5       5.0          5.0          14.0

       Neither agree nor
                                       27      27.0         27.0          41.0
       disagree

       Disagree                        29      29.0         29.0          70.0

       Highly disagree                 30      30.0         30.0         100.0

       Total                         100     100.0         100.0

Graph:18




Interpretation: Here only 9 percent respondents are highly agree and 5 percent are
agree on online trading give more benefits and 27 percent are neutral. 29 and 30
percent respondents are disagree and highly disagree respectively.




           INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                             73
                          Online is better than offline

                                 Frequenc                  Valid        Cumulative
                                     y    Percent         Percent        Percent

Valid Highly agree                        14      14.0           14.0           14.0

       Agree                              12      12.0           12.0           26.0

       Neither agree nor
                                          19      19.0           19.0           45.0
       disagree

       Disagree                           27      27.0           27.0           72.0

       Highly disagree                    27      27.0           27.0           99.0

       6                                   1       1.0            1.0         100.0

       Total                            100      100.0         100.0

Graph:19




 Interpretation: Here only 14 percent respondents are highly agree and 12 percent
are agree on online is better than offline and 19 percent are neutral. 27 and 27 percent
respondents are disagree and highly disagree respectively.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 74
                            Secure way of trading

                                 Frequenc                 Valid       Cumulative
                                     y    Percent        Percent       Percent

Valid Highly agree                       30      30.0          30.0           30.0

       Agree                             15      15.0          15.0           45.0

       Neither agree nor
                                         17      17.0          17.0           62.0
       disagree

       Disagree                          22      22.0          22.0           84.0

       Highly disagree                   16      16.0          16.0          100.0

       Total                           100      100.0         100.0

Graph:20




Interpretation: Here only 30 percent respondents are highly agree and 15 percent are
agree on online is secure way of trading and 17 percent are neutral. 22 and 16 percent
respondents are disagree and highly disagree respectively. So here people want
security.



            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                               75
                                     Reliable

                                 Frequenc                 Valid       Cumulative
                                     y    Percent        Percent       Percent

Valid Highly agree                       30      30.0          30.0           30.0

       Agree                             19      19.0          19.0           49.0

       Neither agree nor
                                         14      14.0          14.0           63.0
       disagree

       Disagree                          24      24.0          24.0           87.0

       Highly disagree                   13      13.0          13.0          100.0

       Total                           100      100.0         100.0

Graph:21




Interpretation: Here only 30 percent respondents are highly agree and 19 percent are
agree on online trading is more reliable and 14 percent are neutral. 24 and 13 percent
respondents are disagree and highly disagree respectively.


            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                               76
                             Instant online transfer

                                 Frequenc                  Valid        Cumulative
                                     y    Percent         Percent        Percent

Valid Highly agree                        36      36.0           36.0           36.0

       Agree                              18      18.0           18.0           54.0

       Neither agree nor
                                          20      20.0           20.0           74.0
       disagree

       Disagree                           19      19.0           19.0           93.0

       Highly disagree                     7       7.0            7.0         100.0

       Total                            100      100.0         100.0

Graph:22




Interpretation: Here only 36 percent respondents are highly agree and 18 percent are
agree that they get instant online transfer and 20 percent are neutral. 19 and 7 percent
respondents are disagree and highly disagree respectively.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                 77
                         Speed of transaction is high

                                 Frequenc                 Valid       Cumulative
                                     y    Percent        Percent       Percent

Valid Highly agree                       35      35.0          35.0           35.0

       Agree                             16      16.0          16.0           51.0

       Neither agree nor
                                         19      19.0          19.0           70.0
       disagree

       Disagree                          20      20.0          20.0           90.0

       Highly disagree                   10      10.0          10.0          100.0

       Total                           100      100.0         100.0

Graph:23




Interpretation: Here only 35 percent respondents are highly agree and 16 percent are
agree on speed of transaction is high in online trading and 19 percent are neutral. 20
and 10 percent respondents are disagree and highly disagree respectively.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                               78
FACTOR ANALYSIS: -

This technique is usually used for the data summarization. With the help of this
technique we can arrange some correlated sets of variables under one factor. This
helps in saving time and cost. Here factor analysis technique has been used to identify
Investor perception towards the online share trading.

Table: 1

                         KMO and Bartlett's Test


Kaiser-Meyer-Olkin Measure of Sampling Adequacy.              .647


Bartlett's Test of Sphericity   Approx. Chi-Square         267.812


                                Df                            153


                                Sig.                          .000




Table: 2

                  Communalities

                                               Extractio
                                     Initial       n

Company product is
better than                            1.000       .581
competitors

Product are design
according to my                        1.000       .527
needs

Products give me
                                       1.000       .613
more benefits

Timely update                          1.000       .528




               INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                           79
Company give
service at the time it    1.000   .571
promise

Brokerage house
                          1.000   .617
influence my decision

Take advice of
                          1.000   .664
manager

Satisfactory return       1.000   .779

Enough knowledge          1.000   .660

Regular trading           1.000   .503

Easy and fast             1.000   .468

Feel safe at the time
                          1.000   .797
of transaction

More benefits             1.000   .642

Online is better than
                          1.000   .500
offline

Secure way of trading     1.000   .749

Reliable                  1.000   .714

Instant online transfer   1.000   .614

Speed of transaction
                          1.000   .652
is high

Extraction Method: Principal Component
Analysis.




           INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   80
                   Table: 3

                                                      Total Variance Explained


                      Initial Eigenvalues             Extraction Sums of Squared Loadings    Rotation Sums of Squared Loadings
Compon
ent        Total     % Of Variance Cumulative %       Total     % Of Variance Cumulative %   Total     % Of Variance Cumulative %


1            3.076            17.091         17.091     3.076         17.091        17.091     2.991         16.617        16.617


2            1.592             8.846         25.937     1.592          8.846        25.937     1.488          8.264        24.881


3            1.564             8.689         34.626     1.564          8.689        34.626     1.461          8.118        32.999


4            1.485             8.247         42.874     1.485          8.247        42.874     1.426          7.924        40.923


5            1.245             6.919         49.792     1.245          6.919        49.792     1.364          7.577        48.500


6            1.197             6.648         56.441     1.197          6.648        56.441     1.283          7.125        55.625


7            1.020             5.666         62.107     1.020          5.666        62.107     1.167          6.482        62.107


8             .933             5.183         67.289


9             .888             4.935         72.224


10            .800             4.444         76.668


11            .695             3.859         80.527


12            .649             3.603         84.130


13            .608             3.380         87.510


14            .544             3.022         90.531


15            .504             2.798         93.330


16            .436             2.423         95.753


17            .400             2.222         97.975


18            .365             2.025        100.000


Extraction Method: Principal Component Analysis.




                                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                       81
Interpretation: Here we are considering first seven factor which has
a cumulative frequency is 62.107% and all the seven factor has a
value greater than 1 because these seven factor is explaining maximum.

Table: 4

                                                                  a
                                           Component Matrix


                                                                  Component


                                1          2           3              4          5           6          7


Company product is better
                                    .740
than competitors


Product are design according
                                    .646
to my needs


Products give me more
                                    .771
benefits


Timely update                       .674


Company give service at the
                                    .623
time it promise


Brokerage house influence
                                    .648
my decision


Take advice of manager                         -.553                                             .437


Satisfactory return                                                       .688                   .404


Enough knowledge                                                          .700


Regular trading                                .469


Easy and fast                                  .529


Feel safe at the time of
                                                           .426                      -.581       .432
transaction


More benefits                                  -.480                                 .501


Online is better than offline                              .543


                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                       82
     Secure way of trading                              .516                       .453


     Reliable                                                      -.466                         .602


     Instant online transfer                                       .403                   .456


     Speed of transaction is high                                  -.551


     Extraction Method: Principal Component Analysis.


     a. 7 components extracted.




     Table: 5

                   Rotated Component
                   Matrixa

                                              Compone
                                              nt

Components                                    1                2      3    4   6   7

C1                 Company product is
                   better than                .711
                   competitors

C2                 Product are design
                   according to my            .666
                   needs

C3                 Products give me
                                              .753
                   more benefits

C4                 Timely update              .690

C5                 Company give
                   service at the time it     .688
                   promise

C6                 Brokerage house
                                         .616
                   influence my decision



                   INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                             83
C7              Take advice of
                                                          .628
                manager

C8              Satisfactory return                              .861

C9              Enough knowledge                                 .593

C10             Regular trading                           .446

C11             Easy and fast                                               .470

C12             Feel safe at the time
                                                                                    .865
                of transaction

C13             More benefits                             .756

C14             Online is better than
                                                                            .681
                offline

C15             Secure way of trading                                               .822

C16             Reliable                                                                   .827

C17             Instant online transfer

C18             Speed of transaction
                                                                            .776
                is high




     Table: 6

                               Component Transformation Matrix


     Compo
     nent       1          2           3          4              5            6            7


     1              .976       .112        .093       -.099          .034          .119        -.034




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                             84
2                 .102      -.753           -.255          -.062           .570           -.109          .132


3                 .007        .124          -.235           .709           .306            .391          -.425


4                 .018      -.305            .839           .401          -.007           -.192          -.067


5                 .027        .512          -.011           .220           .498           -.547          .377


6                 -.185       .203           .403          -.377           .524            .577          .113


7                 .043      -.101           -.061           .365          -.239            .390          .801


Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.




Table: 7

                                           Component Score Coefficient Matrix


                                                                               Component


                                     1              2              3               4              5              6           7


Company product is better
                                         .227           .081           .022            -.050          -.006          .056        .120
than competitors


Product are design according
                                         .234           -.008          .034            .042           -.001          -.070       .233
to my needs


Products give me more
                                         .246           .034           .045            -.034          -.071          .000        -.044
benefits


Timely update                            .238           -.041          -.031           -.024          -.016          -.116       -.183


Company give service at the
                                         .264           -.049          -.169           .218           -.095          -.050       .083
time it promise


Brokerage house influence
                                         .185           -.102          .008            -.142          .208           .102        -.213
my decision


Take advice of manager                   -.066          .412           .040            -.075          -.019          .368        .198



              INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                                             85
Satisfactory return                     -.017        -.011        .596         -.059       .068        .042    .127


Enough knowledge                        .041         -.131        .392         .215        -.145       .012    -.259


Regular trading                         .059         -.317        -.300        .093        -.021       .234    .127


Easy and fast                           -.052        -.283        .181         -.094       .275        -.007   .052


Feel safe at the time of
                                        -.037        -.067        -.011        -.030       -.031       .675    -.107
transaction


More benefits                           .018         .527         -.025        .055        .151        -.145   -.090


Online is better than offline           .036         .053         -.022        .479        .078        -.079   -.008


Secure way of trading                   -.038        .063         -.092        -.037       .613        -.145   -.119


Reliable                                .029         -.057        .001         .042        -.029       -.024   .712


Instant online transfer                 .034         .063         .127         .184        .421        .260    .193


Speed of transaction is high            .033         .021         .004         -.554       .074        -.062   -.094


Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.




Table: 8

                                Component Score Covariance Matrix


Compo
nent            1           2             3            4            5           6           7


1               1.000            .000         .000         .000         .000        .000        .000


2                   .000        1.000         .000         .000         .000        .000        .000


3                   .000         .000      1.000           .000         .000        .000        .000


4                   .000         .000         .000      1.000           .000        .000        .000




                INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                             86
5              .000        .000        .000           .000   1.000    .000    .000


6              .000        .000        .000           .000    .000   1.000    .000


7              .000        .000        .000           .000    .000    .000   1.000


Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.




INTERPRETATION: - As from the KMO BARTLETT MEASURE SAMPELING
ADEQUACY coefficient is coming out to be 0.647 which is greater than 0.500 so we
can say that factor analysis can be applied to our data.

From the total VARIANCE EXPLAINED table we can conclude that variance is only
explained by 7 variables so here only 7 factors can be extracted. Namely




             INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                              87
     Table: 9- Factor analysis theme table


Products and     Benefits    ROI and         Time saving   Quick      Safety        Reliability
services                     advantages                    result

Company          Take
                             Satisfactory    Easy and      Instant    Feel safe at Reliable
product is       advice of
better than      manager     return          fast          online     the time of
competitors                                                transfer   transaction

Product are      Regular     Enough          Online is                Secure way
design           trading     knowledge       better than              of trading
according to                                 offline
my needs

Products         More                        Speed of
give me          benefits                    transaction
more                                         is high
benefits

Timely
update

Company
give service
at the time it
promise

Brokerage
house
influence my
decision




                 INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                         88
CHI SQUARE ANALYSIS: -

Chi square technique is usually used to find the dependency of different variables or
in other words we can say that it is used to find out the whether there exists a
relationship between two variables or not.




1) H0: Knowledge is independent of Education.

   H1: Knowledge is dependent on Education.




Table: 10

                                 Case Processing Summary


                                                            Cases


                                  Valid                     Missing                        Total


                             N         Percent          N            Percent          N         Percent


EDUCATION *
                                 100      100.0%                0         .0%             100      100.0%
KNOWLEDGE




Table: 9

              EDUCATION * KNOWLEDGE Cross tabulation


                                             KNOWLEDGE


                                             1              2            Total


EDUCATION     1      Count                         39               55           94


                     Expected Count              41.4           52.6           94.0


              2      Count                         5                1            6




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                               89
                            Expected Count               2.6           3.4           6.0


Total                       Count                           44            56        100


                            Expected Count              44.0          56.0        100.0




Table: 10

                                                 Chi-Square Tests


                                                             Asymp. Sig. (2-     Exact Sig. (2-     Exact Sig. (1-
                                    Value          df            sided)             sided)             sided)

                                             a
Pearson Chi-Square                   4.008              1                 .045

                        b
Continuity Correction                 2.489             1                 .115


Likelihood Ratio                      4.204             1                 .040


Fisher's Exact Test                                                                          .084               .057


Linear-by-Linear Association          3.968             1                 .046

                   b
N of Valid Cases                        100


a. 2 cells (50.0%) have expected count less than 5. The minimum expected count is 2.64.


b. Computed only for a 2x2 table




INTERPRETATION: - from the above table we can conclude that p value is coming
out to be .045, which is less than the significant value .05. So here we have to reject
the null hypothesis. So we can say that knowledge is dependent on the education so
the company needs to provide education regarding the online trading to persons
coming from different educational backgrounds differently.




              INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                                   90
                         CONCLUSION


The online trading is growing with a rapid pace with the rising level of education
among the customer. The other factors being that the Indian Investor nowadays wants
to deal himself in trading rather than upon other middleman. They also consider the
factors like time saving in doing the online transactions, convenience etc. although
some people feel that online is secure and they are happy about the increasing security
concerns among the companies.

Year 2008 has not been so good for the stock market and the Sensex and Nifty has
been dipping and affecting the business negatively for investor and brokerage firm.
This is due to the fact that at these times people do not prefer to open DEMAT and
trading accounts. So the companies have to reduce their account opening fees to
attract more and more people. The Internet penetration is growing in India this
business holds more potential for growth.

There is huge potential in India still Investor think that online trading is not fast way
of trading and fear towards online trading that‟s why they do not trade on regular
basis but online trading is secure way of trading and it is more reliable, speed of
transaction is high

If the existing company wants to capture the market they will have to look for the
innovation in their product as well as service mix because investor perception for the
products and services of brokerage firm is not up to the mark.

The mantra for success in the current situation will be educating the existing Investor
as well as new customer about the benefits of online trading and the amount of ROI
that can be generated through it because online trading is increasingly drawing market
share from the offline world.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                                91
LIMITATIONS
The project taken is very vast so it will surely have some flaws. Every attempt will be
made to overcome these flaws but still there may be some limitations to this study that
are given below:




      There may be certain sampling errors also associated with the sample involved
       in the study.
      The primary data will be collected from only Delhi-NCR region so it may also
       be geographically biased.
      Due to the paucity of time, the study couldn‟t be conducted in great details and
       some part may be missing.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                              92
   BIBLIOGRAPHY:
1) Websites like,
                   www.iupindia.org
                   www.nseindia.com
                   www.bseindia.com
                   www.sebi.com
                   www.finance.indiamart.com
                   www.ftse.com
                   www.economictimes.indiatimes.com
                   http://www.religareonline.com
                   http://religaresecurities.com/trade.asp



   From print materials

2) From books:
                   K Malhotra, Naresh An Applied Oriantation (2009), Marketing
                    Research, Pearson Publication India
                   Brown David L, Stock market strategies
3) Articles on various magazines like:
          Business world
          Economic times
          The Mint
          Business Standard
          Equity news etc.
4) Research papers
   Deanlebaron (1999), "Investor Psychology", Available from
   http://www.deanlebaron.com/book/ultimate/chapters/invpsy.html, Accessed
   July 6, 2005.

   Chandra Abhijit, (2009), Individual Investors' Trading Behavior and the
   Competence Effect, Journal of Behavioral Finance, Icfai University, (March 2009)




               INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                        93
                                      ANNEXURE:



   (a) Questionnaire: “Fundamentals of share market and study on
         investor preference for online trading.”

                            QUESTIONNAIRE FOR INVESTER


       Date:                                                       Company:


 Dear Sir/Madam,


We the trainee of Religare security, NOIDA are conducting a market research to
know your preference towards online trading. Kindly extend your cooperation
in filling up this questionnaire and enable us in doing the research successfully.
1.Your Gender



Gender           Tick

Male       (1)

Female     (2)



2. You belong to the age group of

Age               20-25   (1)   26-30   (2)   31-35   (3) 36-40   (4)   Above 40 (5)

Tick



  3.     I have a monthly income of

                                              20000-30000 30000-40000 Above 40000
Income (Rs.)       <10000       10000-20000
                                              (3)         (4)         (5)


               INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                      94
 Married          (1)

 Unmarried         (2)

Tick

  4.   Marital status-




Q5 Educational qualification
1) Professional degree                                  2) Post-Graduate
3) Graduate                                             4) Senior secondary
5) Higher secondary


6. My experience in online trading is.
1) Less than one year                                2) One year to less than two year.
3) Two year to less than three year.                 4) Three to less than four years.
5) Four years or more




Now answer the following questions on the basis of the scale provided:


                   1                     Highly agree

                   2                     Agree

                   3                     Neither agree nor Disagree

                   4                     Disagree

                   5                     Highly Disagree


              INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                             95
Q 7 I know products of my company better than the products provided by
competitors.

Q 8. Products are designed according to the needs of its costumers.



Q 9. My company products give me more profit than competitors.



Q 10. I get the timely updates in my company



Q 11. Company giving services at the time it promise to do so.



Q 12. My Brokerage House influences my investing decision.



Q 13 I take advice of a Professional Fund Manager before investing.



Q 14 I am getting satisfactory return on investment.



Q 15. I know enough about online trading.



Q 16. I do the trading on regular basis.



Q 17. I believe online trading is easy and fast way of trading.



Q 18. I feel safe at the time of transactions in online trading.


Q 19. Online trading provides me more benefits.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD                96
Q 20. Online trading is better than offline.



Q 21. I know online trading is a secure way of trading.



Q 22 Online trading is more Reliable.


Q 23 I get Instant online transfer.


Q 24 Speed of transaction is high in online trading.




            INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD    97
INSTITUTE OF MANAGEMENT STUDIES, GHAZIABAD   98

				
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