MAHATMA EDUCATION SOCIETYS PILLAI COLLEGE OF ARTS, COMMERCE AND SCIENCE RE-ACCREDITED BY NAAC WITH A GRADE A PROJECT ON STUDY

OF ONLINE DEMAT AND TRADIND A/C In the subject RESEARCH METHODOLOGY IN COMMERCE SUBMITTED TO UNIVERSITY OF MUMBAI FOR SEMESTER-III OF MASTER OF COMMERCE BY DARSHANA JAGTAP Roll num. 3528 UNDER THE GUIDANCE OF PROFESSOR SHABAB RIZVI YEAR 2013-2014

Mahatma Education Societys PILLAI COLLEGE OF ARTS, COMMERCE AND SCIENCE RE-ACCREDITED BY NAAC WITH A GRADE ___________________________________________________________________ Dr. KM. Vasudevan Pillais Campus, Sector 16, New Panvel DECLARATION BY THE STUDENT IDARSHANA JAGTAP, student of M.com part -2 Roll Number 3528, hereby Declare that the project for the Paper RESEARCH METHODOLOGY IN COMMERCE semester III during The academic year 2013-2014, is based on actual work carried out by me under the guidance of PROFESSOR SHABAB RIZVI .I further state that this work is origin and not submitted anywhere else for any examination.

Signature of student EVALUATION CERTIFICATE This is to certify that the undersigned have assessed and evaluated the project on STUDY OF ONLINE DEMAT AND TRADING A/C submitted byDARSHANA JAGTAP, student of M.com Part-2. This project is original to the best of our knowledge and has been accepted for Internal assessment.

Internal Examiner

External Examiner

principal

PILLAI COLLEGE OF ARTS, COMMERCE AND SCIENCE Internal Assessment : project 40 Marks Name of the Student First Name : Father Name : Surname : DARSHANA SANTOSH JAGTAP Class MCOM PART-2 SEM III Dvision Roll Number 3528

SUBJECT
TOPIC FOR THE PROJECT

: Research Methodology
: CHALLENGES AND OPPORTUNITY OF E-MARKETING
Marks Awarded DOCUMENTATION Internal Examiner (Out of 10 Marks) External Examiner (Out of 10 Marks) Presentation (Out of 10 Marks) Viva and Interaction (Out of 10 Marks) Signature

TOTAL MARKS (Out of 40)

INDEX
Serial number
1

Topic
INTRODUCTION DEFINITION/DRAWBACK/FEATURES OF DEMAT A/C

Page number

DEFINATION FEATURES OF ONLINE TRADING

OBJECTIVE OF TRADING A/C MACHANISM OF TRADING A/C QUESTIONAIR CANCLUSION

OPENING A DEMATERIALIZATION ACCOUNT (DEMAT A/C)

Demat refers to a dematerialized account. Just as we have to open an account with a bank if we want to save your money, make cheque payments etc, we need to open a demat account if we want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. We have to approach the DPs (remember, they are like bank branches), to open our demat account. Demat account allows you to buy, sell and transact shares without the endless paperwork and delays. It is also safe, secure and convenient. Lets say our portfolio has 100 of Satyam, 50of Suzlon, 20 of ICICI BANK, 50 of Tech Mahindra and 100 of TCS shares. All these will show in our demat account. So we dont have to possess any physical certificates showing that us own these shares. They are all held electronically in our account. As we buy and sell the shares, they are adjusted in our account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions.

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

A: Procedure for purchasing dematerialized securities

The procedure for purchasing dematerialized securities is also similar to the procedure for buying physical securities. 1.Investor instructs DP to receive credits into his account in the

Prescribed form. There may be one time standing instruction or Separate instruction each time to receive credits. 2.Investor purchases securities in any of the stock exchanges linked to Depository through a broker. 3.Broker receives payment from investor and arranges payment to Clearing

corporations. 4. Broker gives instructions to DP to debit clearing account and credit Clients account. Investor receives shares into his account by way of book entry.

B: Procedure of selling dematerialized securities

The procedure for selling dematerialized securities in stock exchanges is similar as selling physical securities. The only major difference is that instead of delivering physical securities to the broker, the investor instructs his DP to debit his demat account with the number of securities sold by him and credit the brokers clearing account. The procedure for selling dematerialized securities is given below: 1. Investor sells securities in any of the stock exchange linked to depository through a broker. 2. Investor instructs his DP to debit his demat account with the number of securities sold and credit the brokers clearing account. 3. Before the pay-in-day, broker of the investor transfers the securities to clearing

corporation. 4. The broker receives payment from the stock exchange.

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

BENEFITS OF DEMATERIALIZATION ACCOUNT

Primary benefits:

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

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

Other Benefits:
Apart from the safety and convenience, there are lot more advantages of opening DEMAT accounts. Here are few of the most necessary reasons for having a DEMAT account. We can park most of our investments including shares, bonds, debentures, Gold Units, NSC and bonds in our DEMAT account. We might not immediately realize the benefits of having all the investments in DEMAT form. For instance, if we change our residence, we just have to write to the DP (Depository Participant), which automatically gets our new address registered with all the companies where we have invested our money.

 We do not have to remember the due dates of maturity of bonds, NSC and debentures, as the redemption proceeds are automatically credited to our bank account, which is linked with our DEMAT account. We receive all the dividends and interests directly in our linked bank account. In case of bonus, rights, split, merger or any other corporate actions, everything takes place automatically. We do not have to do anything except to file the physical intimation letters sent by the Registrar and Transfer Agents.

Nowadays with the advent of online trading, we can perform online all the activities associated with buy, sell and transfer of shares. With a single nomination in your DEMAT account, we are nominating our legal heirs to all the investments held by us. For many public issues of bonds and debentures of reputed and trustworthy companies, it is necessary to have a DEMAT Account, as the companies do not allot securities in paper form. Since most of the process of buying and selling dematerialized securities is electronic, there are no chances of signature mismatch. Elimination of problems related to selling securities on behalf of a minor. Elimination of problems related to change of address of investor, transmission etc. Reduction in handling of huge volumes of paper periodic status reports.

So with Dematerialized Securities, the entire process of transferring shares, bonds and other financial assets has become smooth and swift. DEMAT Accounts offer numerous advantages and hence it makes sense for the retail investors to open DEMAT Accounts as early as possible.

ONLINE TRADING:

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

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

to disruptions, satellite links, on the other hands ensure high speed, availability and quality of the connection. This mode of trading is known as "Online Trading"

Introduction of online trading in India

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

Online trading by NSE & BSE:

The central computer located at the Exchange is connected to the workstations of the Brokers through satellite using Very Small Aperture Terminals (VSATs). Orders placed at based on price and time priority. Both the exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE On Line Trading) and NEAT more (National Exchange Automated Trading) System. It facilitates

efficient processing, automatic order matching, faster execution of trades and

transparency. The scrips traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent those, which are in the carry forward system (Badla). The 'F' group represents the debt market (fixed income securities) segment. The 'Z' group scrips are the blacklisted companies. The 'C' group covers the odd lot securities in 'A', 'B1' & 'B2' groups and Rights renunciations. key regulator governing Stock Exchanges, Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants in Indian secondary and primary market is the Securities and Exchange Board of India (SEBI) Ltd.

Objectives of Present Trading System:

Reduce and eliminate operational inefficiencies inherent in manual system Increased trading capacity in Stock Market Improve market transparency Eliminate unmatched trades and delayed reporting Provide for on-line and off-line monitoring control and surveillance of the market. Promote fairness and speedy matching Smooth market operations using technology while retaining the flexibility of conventional treading practices Set up various limits, rules and controls centrally. Consolidate the trades data on electronic media to interface will the brokers back office system Provide public information on scrip prices, indices for all users of the system Provide analytical data for use of Stock Market.

MECHANICS OF ONLINE TRADING

BROKER
STOCK EXCHANGE

CLIENT

Places an order the net of the Brokers website through the distinctive Id code

Accepts the order, Checks the clients Identity and Places the Order

Accepts the order after checking the scrip limit of the broker for the day

The settlement of the deal (buy/sell order) gets reflected in his Demat account.

Pays the Exchange through his owns account and receives it from the client account.

Receives the money and completes the settlement

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

Features Of Online Trading

The Online Trading is having many features which make it most suitable for the investors to go for. Some of these features are as follows: Freedom of Information: The Internet can provide a new sense of control over your financial future. The amount of investment information available online is truly astounding. It's one of the best aspects of being a wired investor. For the first time in history, any individual with an Internet connection can: Know the price of any stock at any time Review the price history of any stock in chart format Follow market events in-depth Receive a wealth of free commentary and analysis about stock markets and the global economy Conduct extensive financial research on any company

Control our money: One of the great appeals of using an online trading account is the fact that the account belongs to you, and is under your direct control. When you want to buy or sell stock, you no longer need to call your broker on the phone; hope that he is in the office to place your order; possibly argue with the broker about the order; and hope that the transaction is executed instantly. Access to the market: At the most basic level, an online trading account gives you more agility in buying and selling stocks. This is through sophisticated information streams, dedicated trading platforms and sophisticated tools for accessing the markets. Offers greater transparency: Online trading offers you greater transparency by providing you with an audit trail. This involves a complete integrated electronic chain starting from order placement, to clearing and settlement

and finally ending with a credit into your depository account. All these stages are subject to inspection, thus bringing in transparency into the system. Reduces the settlement risk: This method of trading reduces the settlement risk for the investor, as in this case all short sell orders are squared off at the specified cut-off time and not allowed to be carried forward. Instant trade order confirmations: Every trade is confirmed immediately and you will receive an on-screen confirmation following every trade with full details for your records. This avoids costly errors that would have been discovered when it is too late. Integrated Accounts: Our Bank, Depository and Trading account are integrated for our convenience. Various broking houses provide access to many of the popular banks.

BENEFITS OF ONLINE TRADING:

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

2) Peace of Mind: One can never have complete peace of mind but online investing does away with the hassles of filling up instruction slips, visits to the broker for handing over these slips and consequent costs. 3) Keeping Records: The site one trades on keeps a record of all transactions down to unexecuted orders and cancelled orders thus keeping one abreast of all your transactions 24 hours a day. No paperwork means more time at ones disposal for research and analysis.

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

PROBLEMS OF ONLINE TRADING

.1) Server not found: This may appear on ones screens when he is desperately trying to get out of an unprofitable position. Some of the online sites are providing a telephone number for use in case their sites are overloaded or their server down.

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

3.) Cyber attack: In the event of a malicious attack on the systems of ones broker he is protected only if the company is taking proper precautions against such attacks and if proper backup is regularly been taken. He may like to choose a brokerage that has a stated security policy and contingency plan in place.

4) Non-availability of a seamless interface: As a client one will access the NSE through a server of the online brokerage and this may involve queuing delays. If a number of client access the server the server takes its own time sending the orders to the NSE server. He must check out the seamlessness of this

interface before selecting an online brokerage. The faster the orders are processed the more seamless is the interface. 5.) Non- availability of personalized advice: If one like to ask his broker "Aaj kya achcha lag raha hai" he may not be able to do so. If he wants advice on a particular stock in his portfolio he may not even be able to get that. 6.) Margin: If Internet trading alone is not fast and furious enough; many people are trading on margin. That is where the brokerage firm lends you money by leveraging his account, allowing him to buy a large amount of securities by putting up only a small amount of money. He may have forgotten what he read in the small print of his agreement, but the brokerage firm has the right to change the maintenance margin requirements without any warning or notice to him. In fact, the firm has the right to liquidate his securities holdings (and it can pick and choose which ones) without any notice to one if he fail to meet the margin call. And there he was leveraged to the hilt, hoping to hit a home run when he discovered that he is required to make a large deposit that he cannot make. The next thing one know, the firm is selling off his securities at a point in time that is not the best for him. These are the perils of trading on margin.

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

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

RESEARCH OBJECTIVES
The Survey Was Conducted With Following Objectives:
To find out the point of view of Investors regarding the services provided by DP. To find the awareness of Demat account among employed investors. To find Potential customers of IndiaBulls in Varanasi City. To know about problems faced in trading by traders in Varanasi city. To know the challenges faced in trading by traders in Varanasi city. To assess the perception of traders about Indialbulls securities private limited in Varanasi City. To determine the satisfaction levels of consumers with Indiabulls securities private limited in Varanasi city. To assess the satisfaction level of traders regarding services of India bulls Securities private limited in Varanasi city. To know the market share of Indiabulls. To know the competitors of IndiaBulls in Varanasi city.

RESEARCH METHODOLOGY
Sample size Sources of data Secondary Sampling used in data collection Random sampling 100 Primary data &

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

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

them by following method

Internet Books

DATA INTERPRETATION AND ANALYSIS

Questions regarding problems in trading:Q.1) Do you invest in share market? a) Yes b) No

70 60 50 40 30 20 10 0 Yes
No. of respondents

NO
% of respondents

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

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

45 40 35 30 25 20 15 10 5 0 intraday
No. of respondents

delivery

both

percentage of respondent

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

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

50 40 30 20 10 0 Less than 1 1 to 6 month More than 6 month months

No. of respondents % of respondents

Interpretation: - Maximum people prefer to invest for 1 to 6 months and amount of investment for majority of people was found to be between Rs. 20,000 to Rs. 1 lac.

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

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

50 45 40 35 30 25 20 15 10 5 0

a.) Lack of knowledge or experience

b.) Unsatisfactory services of broking firms

c.)Market uncertainty

d.)Charges by broking firm

No. of respondents

% of respondents

Interpretation: - Most of the people facing biggest problem in trading, Lack of knowledge and believe that unsatisfactory services by their broking firms create problem in trading while 25 % people consider charges of broking firm as a problem in trading.

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

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

% of respondents

No. of respondents

Interpretation: - majority of people consider market uncertainty as a big problem, around 19% people consider it as an opportunity and rest says it is manageable.

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

60 50 40 30 20 10 0 Yes a little No
No. of respondents % of respondents

Interpretation :- 54.5% consider the Unsatisfactory services provided by the broking firm create problem in trading, 20.5% people consider it a little and 25% were not agree to that.

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

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

No. of respondents

% of respondents

Interpretation: - Most people considered undisclosed hidden charges and annual maintenance charge as their problem in trading.

Questions regarding perception of traders regarding Indiabulls:-

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

45 40 35 30 25 20 15 10 5 0

a.)India bulls

b.)Share khan

Angel Broking

Religare

Karvy

others

No. of respondents

% of respondents

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

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

50 45 40 35 30 25 20 15 10 5 0

a.)Satisfied

b.)Neither satisfied nor dissatisfied

c.)Dissatisfied

No. of respondents

% of respondents

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

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

60 50 40 30 20 10 0 Yes
No. of respondents

NO
% of respondents

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