A Study On Online Trading of Shares"

A STUDY ON ONLINE TRADING OF SHARES.
A STUDY ON ONLINE TRADING OF SHARES

Dissertation submitted in partial fulfillment of the requirements for the
Award of the Degree of
MASTERS IN BUSINESS ADMINISTRATION
SURANA PG CENTRE
BANGALORE-60
2007-08
DECLARATION
Surana PG Centre, Bangalore.
-1-
ACKNOWLEDGEMENT
The successful accomplishment of any task is incomplete without

acknowledging the contributing personalities who both assisted and
inspired and lead us to way of success.
It is my pleasure to thank Department of MBA, Bangalore
University, for having provided me with such an opportunity to undergo
the Project Work.
I thank the Almighty God for his grace bestowed on us throughout
this project. My special thanks to my project Guide Dr.Sudha B S, who
guided me with the timely advice and expertise and has helped
remarkably to complete the project.
Last, but not the least, I express my deep sense of gratitude to my
beloved Parents & Sister for their constant inspiration throughout my
study and I thanks to all my Friends and I thank all who helped me
directly or indirectly during my study.
-2-
Date
Place: Bangalore
Basavaraj Bagewadi.
(06KXCM6002)
CONTENTS
Sl.
No.
1.
2.
3.
Particulars
EXECUTIVE SUMMARY
INTRODUCTION
- Definitions of Online Trading
- Online Trading Patterns
- Sources of Marketing
- Background of Study
- Online Trading of Stock Exchange
- Types of Stock Exchange
- Function of Stock Exchange
- Online Trading of Shares
- Advantages
- Disadvantages
- Effectiveness
- Why Online Share Trading
RESEARCH DESIGN
- Introduction
- Title of the Project
- Statement of the Problem
- Review of The Literature
- Objectives of the Study
- Scope of the Study
- Sources of Data
- Sample Design
- Sample Procedure
- Conceptual Definitions of the Study
- Respondent Profile
- Limitations of the Study
PROFILE OF NSE/BSE
- History of Online Trading
- Technology and NSE/BSE
- Online Trading Potential
- Securities Exchange Board of India (SEBI)
PROCESS AND REQUIREMENTS OF ONLINE TRADING
OF SHARES
- Online Trading Process
- Benefits of Online Trading
Page
No
1-14
15-23
24-36
-3-
4.
5.
- Basic Risks Involved in Trading the Stock Exchange

- Investors Rights and Obligation
- General Conditions of NSE/BSE
ANALYSIS AND INTERPRETATION OF THE DATA
SUMMARY OF FINDINGS, SUGGESSION AND
CONCLUSIONS
BIBILIOGRAPHY
ANNEXURES
37-76
77-92
LIST OF TABLE
-4-
Sl.
NO
Particulars
Page
No.
GENDER WISE DISTRUBUTION OF INVESTORS
37
AGE GROUP DISTRUBUTION OF INVESTORS
38
QUALIFICATION OF RESPONDENTS
39
OCCUPATION OF INVESTORS
40
ANALYSIS OF THE INVESTMENT
41
DURATION INVESTMENT OF INVESTORS
42
SOURCES OF INFORMATION FOR INVESTORS
44
OBSERVATION OF BSE / NSE SENTIVE INDEXES
46
FACTORS CONDUCTED BY INVESTORS
47
10
FACTORS INFLUENCING ON INVESTMENT
51
11
CONSIDERSTION OF RISK FACTORS WHILE INVESTING
55
12
IMPORTANT FACTORS WHILE SELECTING A COMPANY

TO INVESTMENT
57
13
STAGES OF LIFE CYCLE WHILE INVESTING
59
14
STAGES OF THE LIFE CYCLE OF THE INDUSTRY

PREFERED TO INVEST
61
15
INCOME FROM INVESTMENT
63
16
ANNUAL SAVINGS OF INVESTORS
65
17
ANALYSIS OF PREFERED MARKET STRUCTURE
67
18
IMPORTANCE OF THE SHARE PRICE MOVEMENT BSE /

NSE INDEXES ON THE INVESTMENTS
69
19
ANALYSIS OF THE TERMS OF PATTERN
71
20
ANALYSIS OF AVERAGE HOLDING PERIOD FOR

INVESTORS
73
21
ANALYSIS OF THE FAMILIARITY OF ONLINE TRADING

SERVICES AMONG INVESTORS
75
GRAPH LIST
Sl.No.
Headings
Page
No.
-5-

1
2
3
4
5
6
7
8
9
9.1
9.2
9.3
9.4
9.5
10
10.1
10.2
10.3
10.4
10.5
11
12
13
14
15
16
17
18
19
20
21
COMPOSITION OF MALE AND FEMALE

AGE GROUP OF INVESTORS
QUALIFICATION OF INVESTORS
OCCUPATION OF INVESTORS
ANALYSIS OF INVESTMENTS
THE DURATION OF INVESTMENT
SOURCES OF INFORMATION FOR INVESTORS
FOLLOW THE CHARTPATTERN OF BSE/NSE SENSITIVE
INDEXES BEFORE INVESTMENT
FACTORS CONDUCTED BY INVESTORS
MOST IMPORTANT
VERY IMPORTANT
IMPORTANT
UN IMPORTANT
NOT AT ALL IMPORTANT
FACTORS INFLUENCING ON INVESTMENT
MOST IMPORTANT
VERY IMPORTANT
IMPORTANT
UNIMPORTANT
NOT AT ALL IMPORTANT
CONSIDERATION OF RISKS FACTORS BEFORE
INVESTMENT
IMPORTANCE OF FACTORS BEFORE INVESTING IN A
COMPANY
STAGES LIFE CYCLE INDUSTRYBEFORE INVESTMENT
STAGE LIFE CYCLE OF THE INDUSTRY PREFFERED TO
INVEST
INCOME FROM INVESTMENT
ANNUAL SAVINGS OF INVESTORS
TYPE OF MARKET STRUCTURE PREFERED
IMPORTANCE OF MOVEMENT OF SHARE PRICES IN
THE BSE/NSE INDEXES
SHORT TERM OR LONG TERM INVESTORS
AVERAGE HOLDING PERIOD OF INVESTORS
FAMILIARITY OF ONLINE TRADING SERVICE
37
38
39
40
41
42
44
46
48
48
49
49
50
51
52
52
53
53
55
57
59
61
63
65
67
69
71
73
75
EXECUTIVE SUMMARY
-6-
Stock exchange is an organized market place where securities are traded.

The Government, semi- Government bodies, public sector undertakings
and companies for borrowing funds raising resources issue these
securities. Securities are defined as any monetary claims and include
stock, shares, debentures, bonds etc. Under
the
securities
Contract
Regulation Act 1956, the Central Government regulates securities trading

and such trading can take place only in stock exchanges recognized by
Government under this Act. As referred to earlier there are at present 23
such recognized stock exchanges in India. Of these, major stock
Exchanges, like Mumbai, Delhi, Calcutta, Chennai, Hyderabad,
Bangalore etc.
A project entitled A Study on Online Trading of Shares. deals with
the priorities of the investors in investing their resources.
The study considers the preferences of the investors in Bangalore, taking
into consideration their age group, income earning capacity and their
educational qualification. The data for the study was collected using a
structured questionnaire.
The main limitation of the study is that, the survey was conducted on
investors only in Bangalore, due to lack of time.
-7-
CHAPTER - I
INTRODUCTION
E-business describes the use of electronic means and platforms to conduct
business. By this means the company has reduced all kinds of the paper
work and all information are flowing through the computer screen only.
E-commerce is more specific than e-business. It means that in addition to
provide information to visitors about the company, its history, policies,
and job opportunities the company or the site offer to transact or facilitate
the selling of the products and services online. E-commerce has given rise
in turn to e-purchasing and e-marketing. E-purchasing means companies
decide to purchase the goods and information or services from various
online suppliers. Smart e-purchasing has already saved companys
million of rupees.
E marketing describes companys effort to inform, communicate, promote
and sell its products and services over the Internet. E-business and ecommerce take place over four Internet domains
B 2 B business to business:
Online business selling to other businesses. Example
eSteel.com is a steel industry exchange that creates an
electronic market for steel producers and users.
At first B2B e-commerce primarily involved inter-business
exchanges, but a number of other B2B business models have
developed, including e-distributors, B2B service providers
matchmakers, and infomediaries that are widening the use of
B2B e-commerce.
-8-
B 2 C business to consumer:
Online business selling to individual consumers.
Example amazon.com is a general merchandiser that sells
consumer products to retail consumer. Grown exponentially
since 1995, and is the type of e-commerce that most
consumers are likely to encounter.
C 2 C consumer to consumer e-commerce:
Consumer selling to other consumers. Example
eBay.com creates a market space where consumers can
auction or sell goods directly to other consumers.
P 2 P Peer-to-Peer e-commerce:
E-commerce provides a way for consumers to sell to each
other, with the help of an online market such as auction site
eBay.
Use of peer-to-peer technology, which enables internet
users to share files and computer resources directly without
having to go through a central web server, in e-commerce.
Examples Gnutella is a soft ware application that permits
consumers to share music with one another directly, without
intervention of a market maker as in C2C e-commerce.
-9-
Definition of Online Trading on the web:

As per the web the sale of goods or services over the
Internet. Customers must enter and submit their credit card
details online; the sale will often proceed without the retailer
and customer ever having personal contact.
Online Trading Patterns:

Online Trading should be screen-based system only.
T+ 2 settlement (T means trading day).
It is a Stock wise and Financial wise.
Shares or security should be in D-Mat only.
Penalty clauses should be applied
Notionally any trade will be done by buying / selling took
place by NSE.
It is only cheque system but no cash system.
This is no intermediaries from 1-10-2004.
It is agreement between stockbrokers and investors.
It not even through authorized person.
It is transaction is franchisee (hand post) or directly should
register with SEBI (Securities Exchange Board of India)
through respective brokers.
- 10 -
Sources of the online marketing:

In the online marketing the most important is to know the
customer, and in order to know the customers the company must collect
information and store it in the customers database and do the database
marketing. A customer database is the organized collection of
comprehensive information about individual customers or prospects that
are current, accessible and actionable for such marketing purpose as lead
generation led qualification.
Database marketing is the process of building, maintain and using
customers databases and other databases for the purpose of contacting,
transacting, and building relationship.
Customer mailing list is totally different from customer database. A
customer mailing list is simply a set of names, address and telephone
numbers. A customer database contains much more information.
Companies accumulate this information through customer transactions,
registrations, and telephone queries. A customer database would ideally,
contain the customer past purchase, demographic, psychographics and
other useful information.
- 11 -
BACKGROUND OF THE STUDY

Online community is defined as a gathering of individuals in a
computer mediated environment who are united by a common purpose
and governed by self-determined policies.
Online community has five characteristics they are Purpose, Boundary,
Mutuality Rules, and Self-organization.
Why do people join online trading?

Internet has changed the pace of all activities in all over the world.
The share trading has also been affected with the winds of the changes.
Now the complicated procedure of share trading in share market has
become very easy because of the usage of the Internet in this type of
trading. The customers are getting the trading accounts through which
they can trade in the market. And for paying the money also they have no
need to go any where, the money will be debited or credited to customers
account automatically. So in the online trading the customers can by
sitting in the home only, trade in the share market.
Online trading will probably be one of the biggest drivers of
penetration as well as successes on the net. Even in India, however far
fetched the idea might be seen, right now. The reasons for this are
A lot more than shares will be traded on the net.
The savings on customers brokerage expenses on online trading
will be one of the most satisfying wages to gate.
The transparency, anonymity and certainty it offers are surefire
ways to enhance loyalty.
- 12 -
Online Trading on Stock Exchanges:

Stock exchange is an organized market place where
securities are traded. The Government, semi- Government bodies,
public sector undertakings and companies for borrowing funds raising
resources issue these securities. Securities are defined as any monetary
claims and include stock, shares, debentures, bonds etc.
Under the securities Contract Regulation Act 1956, the Central
Government regulates securities trading and such trading can take
place only in stock exchanges recognized by Government under this
Act. As referred to earlier there are at present
23 such recognized
stock exchanges in India. Of these, major stock Exchanges, like

Mumbai, Delhi, Calcutta, Chennai, Hyderabad, Bangalore etc.
Function of Stock Exchange:

The function of stock exchange can be set out as follows:
Provides quotation for shares/stocks for facilitating trading and
market ability.
Extends liquidity to such stock, as they are easily marketable
and traded.
Promotes savings and investment in the economy by attracting
funds for investment in corporate shares and securities.
- 13 -
Leading Stock Exchanges:

a) National Stock Exchange
b) Bombay Stock Exchange
NSE:
NSE in the world 6th best stock exchange it is introduced first
online trading later on regional stock exchange
BSE:
BSE is one of the regional stock exchanges it is private oldest stock
exchange in India, 26 regional stock exchanges in India.
- 14 -
Online trading of shares:

A share is a unit or part of the share capital of the company
having a special value of amount
Sec 2(46) of the company Act of 1956 defines a Share as a a
share in the share capital of the Co. and includes stock and share is
expressed or implied.
Advantages of online trading:

Investment benefits
Liquidity is very high
Transparency trade is available
To easy for transferability
Storage stocks are not needed
Pledge and hypothecation is easy.
Quality control is not needed.
Any loss or gain enjoyed by investors directly.
We can buy / Sell the share quickly or directly anywhere in the
world.
Which company shares we want, it can be opted at a faster
phase.
- 15 -
Disadvantages of online trading:

Assessment of the company performance is not proper
means suffering from financial losses.

The process of Online Trading of Shares is very difficult
to understand for common people.

Facing problems in Internet like Hackings and Hangings.
EFFECTIVENESS:
Rates are changing at every second
We can find easily true value
We can do technical analysis and charts
Total number of companies volume is very high compare
to manual trading
Why online share trading?

Safety
Security of money and demoting the shares
Easy
Economic
Independence
Updated and latest price
Two way access
- 16 -
Competitive brokerage
Internet safety:
The safety of transaction on the Internet depends on the encryption
system used. The better this transaction system, the more difficult for any
person to back the site.
Secondly, customers can too ensure the safety of the transaction
online. They normally gets a secured user ID and pass word, the secrecy
of which is to be maintained by customers only.
Thirdly, if the transaction system requires no manual intervention,
customers further improve the safety of the transactions. This enables the
elimination of the possibility of any manual intervention. This means
orders are directly send to the exchanges, ensuring that the customers get
the best right price.
Security of money:
In systems where the broking, banking and demat accounting are
completely integrated, customers money remain in his own bank
account, and does not get transferred to the brokers pool.
Easy:
The experience of trading through Internet depends a great deal on
the type of product offered by the site. Say, for example one of the issues
bothering customers may be tiered of the paper work after every trading
in writing cheques or TIFDs. Customer would then seek a system that
eliminates these processes. In online trading sites, the greater the backend integration of the system, the greater the amount of work do the site
- 17 -
for the customers. Therefore, the greater convenience is available for

them.
For example, in case of ICICIDirect.com broking account, bank
account, and demat account are linked electronically. So when customers
punch in a buy or sell order, the system checks the funds/shares
availability and automatically credits/debits the accounts once the order
been executed by the exchange.
Economical:
Contrary to common perception, trading through Internet does not
require either any expertise in working on computer, or any special
financial skills. Customers could try the demo (demonstration) of the
online trading sites like ICICIDirect.com to find that customers can, with
little or no knowledge about the Internet or finance, have switched on to
online trading. Or they can attend the demonstration sessions held by
such websites in their city. The convenience provided by online trading is
even then worth the cost involved. And online trading sites are not that
costly. For example, a trader can trade shares on margin at rate as low as
0.10% on ICICIDirect.com and if one wishes to trade in cash, then rates
applicable as low as 0.4%. However it is important to compare various
online trading sites on brokerage rates, inclusive of all sub changes.
Independence:
Many of those customers, who have chosen to trade shares online
today, had at one point of time been trading through offline brokers. They
took a change to go online trading and trade shares. After realizing the
- 18 -
advantages of trading shares online, they have shifted to online trading

now. In fact there are more than one lakh customers already opened an
account with ICICIDirect.com.
Updated Prices:
The tickers available at online trading sites provide instantaneous
updates. Also, some websites con offer to transact in those shares
instantaneously and with convenience. The solution to this problem could
be provided in different ways in different online trading sites.
At ICICIDirect.com, for any trade order, customer is asked to click
Proceed after he has the opportunity to completely check the order
verification form.
Moreover the customers have the option to modify or canceling the
order till the moment the order is executed at the exchange.
Finally the online trade confirmation reaches customers within 4
minutes. While contract notes are dispatched at the end of the day and
reach within 24 to 36 hours, with ICICIDirect.com customer can decide
what they want to buy and buy the share at price they want to and
therefore they are in total control of their trade.
Two Way Access:

Brokers too gain. In physical setup, they generally refrain from
taking and retain clients, as the cost of service as percentage of the
volume of their transactions tends to be at higher side. With a Net trading
platform, however, the number of profile of clients has little bearing a
brokers operational efficiency.
- 19 -
Competitive Brokerage:
Net trading has turned out to be a cost effective proposition.
Brokerage is similar to that under the physical setup 0.25% to 0.35% up
to the transaction value for delivery-based trades and 0.05% to 0.15% for
speculative trades. The only additional cost for investors opting for the
Net trading route is that of the computer, modem and Internet connection.
Other Services:
Internet has brought to retail investors, what was till some times
ago the sole prerogative of large brokerage houses, high net worth
individuals. For example, at ICICIDirect.com one can access multitude of
resources to arrive his stock picks.
Reliable research with an enviable track record is available for
customers. An investor can now access ICICIDirect.com and do his
technical analysis to know what other leading brokers think about a
company, whether it is a buy or a sell.
An investor can access live news from international news agencies
such as Rulers, CNBC, read abut what the leading CEOs think about the
state of economy and capital market.
- 20 -
CHAPTER - II
RESEARCH DESIGN OF THE STUDY
Introduction:
Research methods are all those methods/techniques that are used
for conducting to the researchers use in performing research. Here more
emphasis is made on collection of the data directly through the customers
with directly interacting with them.
Title of the study:

A Study on Online Trading of Shares A special reference to
investors.
Statement Of The Problem:

As online trading of securities has been introduced very recently in
India, so as to help the common people from all over the country to invest
in the share market. To make the share market truly democratic in nature,
it is considered as a vital step.
We are unaware of the market condition. This study is totally
concerned about the expectations and behavior of the online-traders. We
are totally unaware of the investors choice of portfolios, their mode of
selecting and investing on securities in net trading and their method of
collection of information about the securities. And it is an effort to know
the online trading of securities and the investors in online trading in a
better way.
- 21 -
Review Of The Literature:

Review of the literature is nothing but the subs seeing fact or
retiring or viewing back of the literature, which is available of the same
time. To the best of the knowledge and believe of the researcher, online
trading is new to the market. So review of the literature is not available
and as per as the study concerned, it is immaterial to review of the
literature.
Objectives Of The Study:

The importance objectives of the study are as follows
1. To study the investors preferences towards the portfolios.
2. To study the various methods available to the investors for
investing as per as the portfolios.
3. To study various sources of information for traders/investors.
4. To knows awareness of customers about the online trading.
5. To understand the various online trading patterns utililsing by the
investors.
6. To study the customers opinion towards online trading.
7. To give suggestions and recommendations to the investors.
- 22 -
Scope Of The Study:

The study mainly covers the whole Bangalore City. And
respondents are from all age group and all type of profession.
This study finds out the customers choice towards the share
trading and their opinion about their investment. This study gives the
information about the performance of online traders, brokers and the
online sites available as a whole.
Sources Of Data:
Two types of data is collected in this study
1. Primary Data
2. Secondary Data
1. Primary Data:
It involves collection of data from sources from which the
researcher directly collect data that have not been previously
collected. In this study, primary data are collected by the use of two
types of methods:
i. Questionnaire
ii. Interviews
In this study questionnaires are used to collect the data from the
respondents, since where the questionnaires are not adequate,
researcher has used personal interview method for collecting data to
draw the effective conclusion.
- 23 -
2. Secondary Data
These are the data collected from various sources, used in addition
to the primary data in the research. The various sources are the
government publications, research organizations, journals, newspapers,
websites etc.
The website under are.
www.nseindia.com
www.bseindia.com
www.investmentz.com
www.sharekhan.com
www.icicidirect.com
Data Collection Instruments:

1) The research instrument in the study is questionnaire method.
2) Personal interview was conducted along with it.
3) The set of questionnaires were used for all respondents.
Research has mainly one instrument for collecting the primary data,
i.e. questionnaire. Here the questionnaire has been made much easy to
understand and answer, and hence clearly it takes lesser time to respond.
Sampling Design:
Sampling methods or technique may be classified into two generic
types.
a. Probability or random sampling and
b. Non-probability of non-random sampling
- 24 -
a. Probability or random sampling:

It is based on theory of probability. It provides known zero change
for selection of each population element. Under this sampling design
every item of the universe has an equal chance of inclusion in the sample.
It is so to say a lottery method in which individual units are picked up
from the whole group, not deliberately but by some mechanical process.
b. Non-probability or non-random sampling
It is not based on the theory of probability. This simply does not
provide change of selection of each population element. The only
merits of this type of sampling are simplicity convenience and low
cost.
Non-probability sampling is classified into.
1) Convenience or accidental sampling
2) Judgment sampling
Sample Unit:
In this study the respondents are from whole Bangalore City.
Sample Size:
Sample size has taken 50 respondents.
Sampling Procedure:
In this study non-probability sampling and particularly the
Convenience sampling has been used.
- 25 -
Conceptual Definition Of The Study:

Shares:
Share is a share in the Share Capital of the Company. Shares are
the tools, which are giving the ownership rights to its holders.
Bonus shares:
Bonus shares are shares issued by a company out of its accumulated
profits to the existing equity shareholders either as fully paid shares or as
partly paid shares free of cost.
Demat:
Demat is the abbreviation for the dematerialization. In this the
shares are kept in the electronic form. In other words Demat means
dematerialization it means from physically form converted into
electronically form.
Demat shares introduced in 1998 earlier days is transaction only
physically like bonds.
Remat:
Remat is the abbreviation for rematerialization. In this electronic
shares are transferred in to the physical form.
Cash Trading:
This is delivery based trading system. This is generally done with
the intention of taking delivery of shares on monies.
- 26 -
Margin Trading:
Customers can also do an intra-trading up o four times their
available funds. Where in they take in long buy/short sell position in
stokes with the intension of squaring of the position within the same
settlement cycle.
Spot Trading:
When customers are looking at an immediate liquidity option,
cash on spot may work best for them. On selling shares through cash
on spot, money is credited to their bank account the same evening and
not on the exchange payout date.
T + 2 settlements:
T (Trading day) + 2 settlement means the settlement of transaction
will be taken place after 3 days from day of transaction. Government of
India under SEBI (Securities Exchange Board of India) controls it.
BTST:
Buy Today Sell Tomorrow (BTST) is a facility that allows
customers to sell shares even on day after the buy order date. Without
this, they have to wait for the receipt of shares into their demat account.
CallNTrade:
CallNTrade allows customers to call on a local number in their city
and trade on the Telephone through customer Service Executives.
- 27 -
Call in Advance:
The amount received from the shareholders before a call is made is
known as calls paid in advance or calls in advance.
Calls in Arrears:
When a call is not paid by the members within the date specified in
the call notice, the amount of call unpaid on the shares is called calls in
arrears.
Surrender of shares:
Surrender of shares means the return (i.e. giving back) of shares by
a shareholder to the company voluntarily for cancellation. It is a shortcut
to the long and cumbersome procedure of forfeiture of shares.
Market Order:
Customers can trade by placing market orders during market hours
that allow them to trade at the best obtainable price in the market at the
time of execution of the order.
Limit Order:
This allows customer to place a buy/sell order at a price defined by
them. The execution can happen at a price more favorable than the price,
which is defined by them. They can place limit orders during holidays
and non-marketing hours too.
- 28 -
Respondent Profile:
The numbers of respondents are 50. The respondents belong to the
Bangalore.
The respondents were from various age groups.
The respondents behavior towards the researcher is friendly and
helping attitude.
The respondents were eager to give suggestions.
Limitations Of The Study:

1. Questionnaire contained a few number of the questions to
facilitate the respondent.
2. Area under the study was limited.
3. I had limited time to get the detailed information about
Online trading of Shares.
- 29 -
CHAPTER - III
PROFILE OF NSE/BSE
History Of Online Trading in India:
In the mid-nineties screen based trading changed the face of
transactions on Indian business. Net came as a helping hand, which
also enhanced the comfort factor of the investors. Now, it is Internet
based trading. Buying and selling shares via Net that is promising to
take the investing experiences to another plane.
BSE and NSE are the two leading stock exchanges in India. BSE
was established in 1875 and is the oldest in Asia. The NSE was
established as a corporate body in 1993, with the primary objectives of
ensuring nation wide electronic trading, high level of transparency and
faster settlement circle.
The NSE has been playing a catalytic role and has significantly
contributed to the reforming of the secondary market in India in terms
of micro-structure; market practices, trading volumes and use of state
of the art technology. The use of satellite communication technology
for trading, using Very Small Aperture Terminals (VSATs), enabled
NSE to rapidly expand across the length and breadth of the country.
Subsequently, after the BSE was granted the required site permissions,
it expanded its trading facilities to the remote corners of the land.
- 30 -
Technology in NSE and BSE:

NSE:
TATA Consultancy Services, a division of Tata Sons Ltd. was
selected as the prime contractor and system integrator by the NSE to
provide a total turnkey solution for the money markets and capital
markets floor less trading system.
The aim was to enable NSE to provide nation wide electronic
trading with highest transparency in the market place. Using the client
server architecture, fault-to-learn computing and in-memory database,
Tata Consultancy Services, solution gave NSE high visibility and impact.
For the year 2006-07, the National Security Clearing and
Settlement System (NSCS) processed settlements for over 172 million
trades with a turnover of around Rs 5, 08,121 crores. In the year 2006-07
nearly 2 million contracts were traded on NSE Future and Option system,
with a national turnover of Rs. 1, 01,925 crores. Here approximately 818
companies listed in NSE.
NSE has the option for trading of securities in both Cash Trading
and Future trading. Hence, while dealing with securities an investor can
negotiate with the price listed in the NSE index.
BSE:
The stock Exchange Mumbai, popularly known as the Bombay
stock Exchange limited is the oldest stock exchange in Asia with a rich
heritage. It was established as The Native Shares & Stock Brokers
Association in July 1875 with 22 share brokers. It is the first stock
exchange in the country to obtain permanent recognition in 1956 from the
Government of India under the securities contracts (Regulation) Act
1956.
- 31 -
BOLT, i.e. BSEs online trading system is designed and developed

by CMC Ltd., now a Tata Group company. This screen based trading
system manual entry method of trading in the ring, and went line on
March 1995. This enabled BSE to provide floor-less and fully automated
screen based trading facilities in capital market instruments, with equal
access to investors all over the country.
BSE has only the option for trading of securities in Cash Trading.
Hence, while dealing with securities an investor can not negotiate with
the price listed in the BSE index.
Approximately 5639 companies listed in BSE & around 9400
brokers are trading in BSE & NSE along with 29 foreign brokers
participating in Online Trading.
One big advantage of web trading is that, market lot ceases to
matter. A registered user, just need to log in the corresponding site and
place order confirmation, which may be followed by physical slip.
With Net trading it make little different, where the investor is,; ebroker gives him real time quotes and a chance to react immediately.
Still to catch on:

Online trading has not yet been taken off for various reasons:
I. The concept is very new.
II. Security concerns (Hacking and Connectivity)
III. Potential investors in India are yet to trust their e-brokers.
Hacking is a problem even with e-banking or e-commerce, and
potential users may well fear to live with this. Connectivity is another
major problem. Right in the middle of hectic trading one may go offline,
or the web may jam during heavy trading.
- 32 -
SECURITIES EXCHANGE BOARD OF INDIA (SEBI)

SEBI, which was a earlier established as an administrative
body in April 1988, was given a statutory status January 1992. Controller
of Capital Issue (CCI) was abolished with a view to have SEBI as a
single agency to look after control over capital market.
SEBI Act mainly deals with formation, management,
staffing, accounts, reports, and audit of SEBI etc. It is the supervisory and
regulatory authority for the stock and capital markets.
SEBI functions:
The SEBI can take following measures to fulfill its objectives: Regulate business in stock exchanges and other securities market.
Control and Regulation of the stock Exchanges and stock brokers.
Development of stock and capital markets in the right direction.
Registering and regulating self-regulatory organizations (like stock
Exchanges).
Promoting investors education and training of intermediaries.
Prohibiting fraudulent and unfair trade practices relating to
Securities Market.
Prohibiting insider trading in securities.
To ensure investor protection.
- 33 -
SEBI Guidelines:
Highlights of the guidelines issued by SEBI are summarized below.
At least 60% of each kind of securities issued by company must
offer to public subscription.
Offer must be made through a prospectus in news papers for a
period not less than three days,
Minimum capital for listing on stock exchanges It should be
noted that minimum equity capital requirement for listing on
Bombay Stock Exchange is Rs. 10 crores.
Fresh issue must be de-materialized All fresh issue of capital
will have compulsorily get their securities admitted with all
depositories for de-materialization.
Company shall promptly forward to Stock Exchange copies of
Annual reports, notice, circulars sent to Share Holders.
- 34 -
PROCESS AND REQUIREMENTS OF ONLINE

TRADING OF SHARES:
Online Trading is one the true revolutions brought about by the
internet. Few things have changed as much as trading stocks and other
securities, especially for the average person. Where any can come to take
part in the amazing opportunities of the stock market.
But this kind of access also has dangers. While the average person
can now buy stock, participate in the forex market, buy bonds, and
purchase shares in mutual funds, the average person is certainly not
guaranteed success in those investments. The information is provided
here is designed to help familiarize the beginning investor with of the
most basic concepts of the stock market and stock market trading. Stock
market trading system or form of analysis for your investing strategy.
Online Trading is the mechanism of buying /selling securities via
the Internet.
- 35 -
Online Trading Process:
The client places an order via net by logging

on to his brokers site
The broker accepts and executes the order. And
places it with the exchanges
The exchange accepts the order after

checking the share limit for the day
The broker makes the payment either directly

via the clients bank account or pays through
his own account and recovers it later from the
client
The exchange receives money and completes
the settlement
The client is intimated about the settlement
either through the De-Mat account or via email
- 36 -
The various transaction involved in the online trading can be

shown from the point of view of the
Client
Broker
Stock Exchange
Client:
Client is a person and he receiving some benefits from brokers
or institutions and is an ultimate consumer.
Broker:
An individual or firm who acts as an intermediary between a
buyer and seller, usually charging a commission. For securities and
most other products, a license is required.
Stock Exchange:
Stock Exchange is an organized market place where securities are traded.
The Government, semi- Government Bodies, public sector undertakings
and companies for borrowing funds and rising resources issue these
securities
- 37 -
Benefits of Online Trading:

This mode of trading has shifted the trading power from stockbrokers to
individual investors. The advantages are that it:
Ensures the best price for the investors:
This technique offers the best price for the buying and selling
transactions of the investors, by ensuring proper matching of their
orders within the communication network itself.
Offers liquidity to the investors:
Online trading offers 24-hour trading facilities for longer
hours when compared to the traditional stock exchanges. This
provides added liquidity to the investors.
Offers greater transparency:
Online trading gives transparency to the investors by providing
them an audit trail.
Enables hassle free trading:
Online trading integrates the bank, the brokerage firm and the
demat accounts, which leads to easy and paperless trading for the
client.
- 38 -
Allows quick trading:

The investor will be able to execute the entire trading transaction,
right from logging on to the brokers site to the execution and
settlement of his bank account, in very short period of time.
Provides a level playing field:
Trading on the net, gives even the smallest retail investor access
to information that earlier was available only to the big traders.
Reduces the settlement risk:
This method of trading reduces the settlement risk for the
investor, as in this case no short sale is possible I.e. the seller will not
be able to sell the securities unless he has their actual possession.
Basic Risks Involved in Trading on the Stock Exchanges:

In considering whether to trade or authorize someone to trade for
you, you should be aware of or must get acquainted with the
following:
Risk of higher volatility:
Volatility refers to the dynamic changes is price that securities
undergo when trading activity continues on the stock exchange.
Generally, higher the volatility of a security /contract, greater is its
price swings.
- 39 -
Risk of lower liquidity:

Liquidity refers to the ability of market participants to buy and
/or sell securities / contracts expeditiously at a competitive price and
with minimal price difference. Generally, it is assumed that more the
numbers of orders available in a market, greater are the liquidity.
Risk of wider spreads:
Spreads refer to the difference in best buy and best sell price. it
represents the differential between the piece of buying a security and
immediately selling it or vice versa.
Risk reducing orders:
Most exchanges have a facility for investors to place limit
orders, stop loss orders, etc.
A market order will be executed promptly, subject to
availability of orders on opposite side.
A limit order will be executed only at the limit price
specified for the order or a better price.
A stop loss order is generally placed away from
the current price of stock/contract, and such order gets

activated if and when the stock/ contract reaches, or trades
through, the stop price.
Risk of News Announcements:
Issuers make news announcements that may impact
the price of the securities/ contract.
- 40 -
Investors Rights and Obligations:

You should familiarize your self with the protection accorded to the
money or other property you may deposit with your member, particularly
in the event of a default in the stock market or the broking firms
insolvency.
Before you begin to trade, you should obtain a clear idea from your
member of all brokerage, commission, fees and other charges, which will
be levied on you for trading.
In case where a member surrenders his membership, NSE/BSE gives a
public notice inviting claims, if any, from investors.
In case where a member is expelled form trading membership,
NSE/BSE gives a public notice inviting claims, if any, from investors.
- 41 -
General Conditions Applicable to Deal in Cash /Derivative

Segments of NSE/BSE:
(These conditions shall be apply on and effective from the date of this
agreement)
Definition:
Meaning of the phrases used in the agreement unless otherwise
specified or unless the context otherwise requires, the meaning of the
following words and phrases used in this agreement shall be under
He means she and she means he
Singular means plural and plural means singular
SEBI means Securities Exchange Board of India
CLIENT means any person, natural or legal with
whom this agreement is entered into.
Exchange/s means National Exchange of India
Limited and Stock Exchange Mumbai.
Sub broker means any person appointed as sub broker
and holding valid certificate of registration issued
bySEBI
Shares means and include all kinds of securities
permitted by Exchange/s permitted for trading or
dealing by the Exchange/s.
- 42 -
CHAPTER - IV
ANALYSIS AND INTERPRETAION OF DATA
Based on the primary data collected the analysis has been made the
following data.
TABLE 1
THE TABLE SHOWING SEX WISE DISTRIBUTION OF
RESPONDENTS
PARTICULARS
NO OF
RESPONDENTS
PERCENTAGE
Male
40
80 %
Female
10
20 %
Total
50
100 %
CHART NO-1
- 43 -
ANALYSIS
From the above table among 50 respondents the majority of
respondents are from a male group whose count was 40 (80%) The
female group makes a share of 10 (20%) total sample respondents.
INTERPRETATION
The above data clearly specifies that male respondents are more then
female respondents
TABLE 2
THE TABLE SHOWING AGE GROUP DISTRIBUTION
OF THE RESPONDENTS
PARTICULARS
Less Than 25 Years
25 35 Years
35 45 Years
45 55 Years
55 & above
Total
CHART NO- 2
NO OF
RESPONDENTS
7
10
15
10
8
50
PERCENTAGE
14 %
20 %
30 %
20 %
16 %
100 %
- 44 -
ANALYSIS
From the above table shows among the 50 respondents 7 (14%)
respondents are below 25 years of age, 10 (20%) respondents are 25 35
years of age, 15(30%) of respondents are comes under 35 45 age
groups , 10 (20%) respondents are comes under 45-55 years and only 8
(16%) respondents are above 55 years.
INTERPRETATION
The majority of investors are 35- 45 age group who trades on line.
TABLE NO-3
TABLE SHOWING QUALIFICATION OF RESPONDENT
PARTICULARS
Under Graduate
Graduate
Post Graduate
Others
Total
NO OF
RESPONDENTS
12
18
20
0
50
PERCENTAGE
26 %
36 %
40 %
0
100 %
CHART NO- 3
- 45 -
ANALYSIS
The above table shows among the 50 respondents 12 (24%) respondents
are graduate, 18 (36%) respondents are graduate, 20 (40%) respondents
are comes under post graduate.
INTREPRETATION
With reference to qualification of members trading on line post graduates
contribute 40%.
TABLE NO 4
THE TABLE SHOWS THE OCCUPATION OF THE
INVESTORS
PARTICUALARS
Business men
Salaried Employee
Retired Employee
Professional
Student
Others
Total
NO OF
RESPONDENTS
20
10
6
10
4
0
50
PERCENTAGE
40 %
20 %
12 %
20 %
8%
0
100 %
CHART NO-4
- 46 -
ANALYSIS
From the above table out of 50 respondents, 20 (40%) are business men,
10 (20%) respondents are salaried employees, 6 (12%) are Retired
employees and Professional are 10 (20%) and only 4 (8%) respondents
are Students.
INTERPRETATION
With reference to occupation businesses men majorly use on line trading
contributing 40%.
TABLE NO 5
ANALYSIS OF THE INVESTMENTS
SECTORS
Banking
Insurance
Manufacturing
Infrastructure
IT
Others
TOTAL
FREQUENCY
8
13
3
10
11
5
50
PERCENTAGE
16 %
26 %
6%
20 %
22 %
10 %
100 %
CHART NO-5
- 47 -
ANALYSIS
Among the 50 respondents, 16 % of them have invested in
Banking, 26 % in Insurance, and 6 % in Manufacturing, 20 % in
Infrastructure, 22 % in I T and 10% in others.
By the above table we can consider that 26% insurance, and 20% in
infrastructure, 22%in I T it has are the major investments sectors in online
trading of shares.
INTERPRETATION
Major investment is done by investors through insurance sectors i.e 13%.
TABLE NO 6
ANALYSIS OF DURATION OF INVESTMENT OF
INVESTORS
PARTICULARS
Less then 1 year
1 to 2 year
2 to 4 year
4 to 6 year
More than 6 Year
TOTAL
NO OF
RESPONDENTS
21
7
12
5
5
50
PERCENTAGE
42 %
14 %
24 %
10 %
10 %
100 %
CHART NO - 6
- 48 -
ANALYSIS:
Among 50 respondents, only 21 people are investing in Online
Trading of Shares for less then 1 year, 7 for1-2 years, 12 for2- 4 years, 5
for 4-6 years and 5 for more than 6 years. It means that 42 % people are
investing for less then 1 year, 14% for 1-2 years, 24 % for 2-4 years, and
10 % each for 4-6 years and more than 6 years.
INTERPRETATION
The numbers of investors in Online Trading of Shares are
increasing due to increased awareness and prospects of this form of
investment. A gradual increase in the participation in Online Trading of
shares can be easily seen in the above table and following graph.
The proper mix of moderate risks and high returns are attracting the
investors to Online Trading of Shares.
- 49 -
TABLE NO 7
ANALYSIS OF SOURCES OF INFORMATION FOR
INVESTORS
PARTICULARS
News Papers
Journals
T.V News
Internet
Family & Friend
Brokers
TOTAL
NO OF
RESPONDENTS
14
4
9
10
2
11
50
PERCENTAGE
28 %
8%
18 %
20 %
4%
22 %
100 %
CHART NO-7
ANALYSIS
In Bangalore are among 50 respondents, 28 % get the required
information from News Paper, followed by 22 % from Broker, 20
% from Internet, 18 % from T.V. News, 4 % from Family &
Friends, and remaining 8 % from Journals respectively for their
requirement.
- 50 -
INTERPRETATION
Online traders in Bangalore still depend upon the News Papers
for their required information in the Online Trading. Being the cheapest
and readily available means of information, the news papers are more
favorite among them. The second favorite source of information is the
brokers themselves. The brokers give all the necessary information to the
online traders with the periodic updated information of those, followed by
T.V News, Family and Friends and Journal
In the century of Electronic Media, the Printed Media is still a
reliable and favorite source of information for online traders.
- 51 -
TABLE NO 8
OBSERVATION OF THE BSE/NSE SENSITIVE INDEXES
ON THE INVESTMENT
PARTICULARS
Yes
No
NO OF
RESPONDENTS
41
50
82 %
18 %
100 %
PERCENTAGE
TOTAL
CHART NO-8
ANALYSIS
Among 50 respondents, 41 people analyze the chart pattern of
BSE/NSE sensitive indexes before they go for investing in any security,
while 9 do not. That is 82 % of the investors go for the analysis of chart
pattern and remaining 18 % does not.
- 52 -
INTERPRETATION
Analysis of chart pattern of sensitive indexes is concerned with
Technical Analysis. Since the technical analysis deals with the supply
and demand of securities as reflected in the behavior of the market, the
investors go for it. They are more concerned about the demand and
supply position of securities, as they influence the price of the securities.
Online traders thus do not distinguish between current income and capital
gains.
TABLE NO 9
FACTORS CONDUCTED BY INVESTORS FOR MAKING
INVEVESTMENT
FACTORS
Most
Very
Important
Un
Not at all TOTAL
Important Important
Important Important
Time
14
14
19
50
Liquidity
13
19
13
50
Returns
19
10
13
50
Safety
16
19
50
Risk
Past
Performance
19
10
21
50
16
19
Marketability
Capital
Appreciation
9
11
7
16
18
14
16
4
6
5
50
50
50
- 53 -
CHART N0-9.1
CHART N0-9.2
- 54 -
CHART N0 - 9.3
CHART N0 - 9.4
- 55 -
CHART N0 - 9.5
ANALYSIS
The 18 % investors has preferred to analyze Return at first as the
Most Important factor followed by, 17 % called Safety as the Very
Important factor, 18 % called Risk as Important factor, 36 % called
Marketability as the Un Important factor, and 42 % called Capital
Appreciation as the Not at all Important factor, before investing in
Online Trading of any Security. This can be clearly understood by the
following graphs.
INTERPRETATION
The investors of Online Trading of Security, are very sensitive
towards the return they expect from their investments. Along with this
fact, they are seeking safety in their investments with avoiding risk as
much as possible. These investors do not consider difference between the
capital appreciation of their fund and the growth of their capital invested.
- 56 -
TABLE NO-10
ANALYSIS OF FACTORS INFLUENCING ON
INVESTMENTS
PARTICULARS
Economic
Growth
Monsoon and
Agriculture
Inflation
Interest Rates
Foreign
Exchange
Reserve
Tax Rates
Political
Situation
International
Changes in
Capital Market
Most
Important
Very
Important
18
TOTAL
Important
Un
Important
Not At All
Important
10
16
13
16
11
50
18
20
11
14
20
50
50
50
15
14
11
14
14
11
11
11
15
10
50
50
50
50
10
11
11
14
CHART NO 10.1
- 57 -
CHART NO 10.2
CHART NO 10.3
- 58 -
CHART NO 10.4
CHART NO 10.5
- 59 -
ANALYSIS
The 21 % investors has preferred to analyze Economic Growth at
first as the Most Important factor followed by, 18 % called Inflation
as the Very Important factor, 16 % called Interest Rates as
Important factor, 20 % called International in Capital Market and
Tax Rates as the Un Important factor, and 29 % called Foreign
Exchange Reserve as the Not at all Important factor, before
investing in Online Trading of any Security. This can be clearly
understood by the following graphs.
INTERPRETATION
The Stock market does not operate in vacuum. It is an integrated
part of the whole economy of the country. The growth rate of the
Economy increases the participation in the Online Trading of
Securities. As inflation erodes the purchasing power of the investors,
they prefer to have a close watch on inflation rates before investing. A
low rate of interest is preferred by investors, since when cost of money is
high one cannot compete effectively.
The effect of monsoon is seemed to be less on the online traders. And the
foreign exchange reserve gets the lowest concern from investors, since
our country has enough of it, i.e., second highest in the world.
- 60 -
TABLE NO11
CONSIDERATION OF RISK FACTORS WHILE
INVESTING
Rank
1
Rank
2
Rank
3
Rank
4
Rank
5
Rank
6
Market Risk
11
10
Interest-rate Risk
Purchasing Power
Risk
14
16
11
14
Business Risk
15
10
Financial Risk
Default/Insolvency
Risk
14
12
14
15
10
TYPE OF RISKS
TOTAL
50
50
50
50
50
50
CHART NO-11
- 61 -
ANALYSIS
Among the risks, 27.5 % investors ranked Financial Risk the
first, followed by 30 % ranked Business Risk as the second, 28. %
ranked Purchasing Power Risk as third, 32. % Ranked Interest-rate
Risk as fourth, 30 % ranked Default/Insolvency Risk as fifth, and
remaining 17.5 % ranked Market Risk as they prefer to cover for their
investments.
INTERPRETATION
The investors want to withdraw their funds as and when required
by them, to make specific payments at specific time periods. They thus
like to have a close watch on the debt financing of the firm they want to
invest. They don not want to invest on those firms which have uncertain
income sources. The purchasing power of the income from a given
investment is also having a great importance on their decision of
investment on a given firm. Uncertainty of future income due to
fluctuation in general level of interest-rate also concerns the investors.
- 62 -
TABLE NO 12
IMPORTANT FACTORS WHILE SELECTING A
COMPANY TO INVEST
Most
Important
Very
Important
Important
Un
Important
Not At All
Important
Promoters
23
11
Management
23
11
Technology
Product
Range
11
16
18
10
21
10
Marketing
15
16
10
PARTICULAR
TOTAL
50
50
50
50
CHART NO -12
- 63 -
50
ANALYSIS
Before investing in a given company, 23 online traders out of 50,
rank Promoters as the Most Important factor, followed by 23 online
traders who think Management of the company is Very Important
factor to analyze. Out of 50 investors 21 take Product Range of the
company as Important factor to analyze, and 10 think, as Marketing
is a Un- Important factor. None of the traders selected any of the above
factors as Not At All Important factor.
INTERPRETATION
The investors are well aware of any company before investing in it.
They know who are the promoters, the efficiency of the management of
the company, the types of technology it is adopting, its product range, its
marketing policies and practices, etc. Online traders give much
importance to the promoters of the company before investing into it. As it
can be seen in above table. Management of the company is also
considered as a very vital factor; as people like to invest in a company
with an efficient management. A company with a number of products in
its hand is also considered as a good one to invest in.
People less often go for evaluating the marketing strategies of the
company before investing into it, as well satisfied with other factors like
Management, Promoters, Product Range etc., they find it
unnecessary.
- 64 -
TABLE NO 13
CONSIDERATING OF STAGES OF LIFE CYCLE WHILE
INVESTING
PARTICULARS
NO OF
RESPONDENTS
PERCENTAGE
Yes
36
72 %
No
14
28 %
TOTAL
50
100 %
CHART NO 13
- 65 -
ANALYSIS
Among 50 respondents, 36 people use to analyze the life-cycle of
the particular industry before investing into it, and 14 people do not. Thus
72 % of them go for the study of industry life cycle before investing into
it, and 28 % not.
INTERPRETATION
The purpose of industry analysis is to identify those industries with
potential to earn profit for itself and for the investors. Every industry
undergoes a life-cycle. An industry doing well today may be faced with
stagnation and decline in future.
Investors like to study the phases of life-cycle of industries before
investing into a particular industry. Since Industrial Analysis is one of the
major parts of Fundamental Analysis, knowingly or unknowingly they are
conducting Fundamental Analysis within their limits.
- 66 -
TABLE NO 14
STAGE OF LIFE CYCLE OF THE INDUSTRY
PREFERRED TO INVEST
PARTICULARS
Pioneering
Stage
Expansion
Stage
Stagnation
Stage
Declining
Stage
TOTAL
11
14
36
31 %
38 %
24 %
7%
100 %
NO OF
RESPONDENTS
PERCENTAGE
CHART NO 14
- 67 -
ANALYSIS
Among 36 respondents who study the life-cycle of the industries
before investing in a particular industry, 11 like to invest in Pioneering
Stage, 14 like to invest in Expansion Stage , 9 like to invest in
Stagnation Stage, and remaining 2 in Declining Stage.
INTERPRETATION
The online traders prefer to stay as secured as possible by investing
in an industry which is growing or which has grown to its maturity. Thus
they seek benefit by investing in these two stages of life-cycle. A large
percentage of investors also like to invest in industries at Pioneering
Stage, showing their ability to take more risk in anticipation of more
return. A very small percentage of investors, 7 % goes for investing in
Declining Stage, in expect of unknown benefit they can extract with
sudden boom in the industry.
- 68 -
TABLE NO 15
INCOME FROM INVESTMENTS OF ON LINE
TRADING SHARES
Particulars
No Income
Below Rs.1, 00,000
Rs.1, 00,000 to Rs.2, 00,000
Rs.2, 00,000 to Rs.3, 00,000
Rs.3, 00,000 to Rs.4, 00,000
Rs.4, 00,000 & Above
Total
NO OF
RESPONDETS
10
30
6
4
0
0
50
Percentage
20 %
60 %
12 %
8%
0
0
100 %
CHART NO-15
- 69 -
ANALYSIS
Among the 50 respondents, 10 have no income, 30 are getting below
1,00,000., 6 are getting 100,000 2,00,000., 4 are getting 200,000. 3,00,000., and no one is getting 3,00,000 4,00,000, and above.
INTERPRETAION
Majority of respondents are getting income in online trading of shares in
the range of below 1, 00,000 (60%). 20% of respondents are getting
negatives income because of their neglected or improper information
about shares. Who are not satisfied in getting the online shares, so
increasing the awareness about Online Trading of Shares?
- 70 -
TABLE NO 16
ANALYSIS OF ANNUAL SAVINGS OF INVESTORS
Particulars
Percentage
Below Rs.10,000
NO OF
RESPONDENTS
30
Rs.10,000 to Rs.20,000
Rs.20,000 to Rs.30,000
Rs.30,000 to Rs.40,000
Rs.40,000 & Above
Total
6
4
0
0
40
15 %
10 %
0
0
100 %
75 %
CHART NO 16
- 71 -
ANANLYSIS
Among the 40 respondents 75% were saving below 10,000., 15% are
Rs.10,000 to 20,000., 10% are Rs. 20,000 to 30,000., and No one is
saving are saving are Rs.30,000 to 40,000 and Rs.40,000 & above.
INTERPRETATION
Maximum respondents are savings (30) in this scale of below 10,000
which majorly contributes 75%.
- 72 -
TABLE NO 17
ANALYSIS OF PREFERRED MARKET STRUCTURE
PARTICULARS
Absolute
Monopoly
Perfect
Competition
Imperfect
Competition
TOTAL
FREQUENCY
24
17
50
PERCENTAGE
48
34
18
100
CHART NO-17
- 73 -
ANALYSIS
Among 50 respondents, 48 %age of online trader prefer Absolute
Monopoly, followed by 34 % of them preferring Perfect
Competition and remaining 18 %age go for Imperfect Competition.
INTERPRETATION
Online traders prefer to invest in a company which is market
dominant by nature. As these companies dominate the market because of
their core competence like technology or patent rights etc. thus allowing
the investors to milk their investment. 35 % investors, who prefer to
invest in an industry where no single company is dominating, follow
them, thus they go for moderate risk involved investments with limited
growth of their money.
Still a percentage of investors, that is, 18 % of them, like to invest in
an industry with Imperfect Competition, since it lies between
Absolute Monopoly and Perfect Competition, thus enjoying benefits
of both the form of markets.
- 74 -
TABLE NO 18
IMPORTANCE OF THE SHARE PRICE MOVEMENT
BSE/NSE INDEXES ON THE INVESTMENTS
PARTICULARS
Most
Very
Important
Un
Not At All Total
important Important
Important Important
FREQUENCY
14
18
11
50
14
100
PERCENTAGE
28
36
22
CHART NO-18
- 75 -
ANALYSIS
Among 50 respondents when asked about the importance of the
share price movements in BSE/NSE indexes on their decision of
investing in a particular security, 28 % says its Most Important, 36 %
says its Very Important, 22 % says its Important, 14 % says its Un
Important, and none says its Not At All Important.
INTERPRETATION
Online traders prefer technical analysis of the chart pattern. Most
of them take care of the movements of the share prices in the BSE/NSE
indexes. Only a few of them, that is, 15 % of them take it as un-important
factor, it shows their inability to analyze the chart patterns. Though this
group has not rejected the importance of the movement of share prices in
these indexes on their investments
- 76 -
TABLE NO 19
ANALYSIS OF THE TERMS OF PATTERN
PARTICULARS
NO OF RESPONDENTS
PERCENTAGE
Short term
30
60
Long term
20
40
Total
50
100
CHART NO-19
- 77 -
ANALYSIS
Among the 50 respondents 30 respondents are investing in Short term and
20 respondents in Long term investments.
INTERPRETATION
There fore Short term investors is popular because it has 60% of the
investment in Online Trading of Shares. Short term investments yields
probably the higher returns.
- 78 -
TABLE NO 20
ANALYSIS OF AVERAGE HOLDING PERIOD FOR
INVESTORS
PARTICULARS
1 Week
1 Month
to 3
Months
Within 6
Months
14
17
34 %
16 %
4%
NO OF
RESPONDENTS
More
Within 1 than 1
Year
Year
TOTAL
50
PERCENTAGE
18 %
28 %
100 %
CHART NO-20
- 79 -
ANALYSIS
Among 50 respondents, the average holding period for 9 is 1
Week, 14 is 1 Month to 3 Month, 17 is Within 6 Month, 8 is
Within 1 Year, and 2 is More than I Year. Their respective
percentages are 18 %, 28 %, 34 %, 16 %, and 4 % respectively.
INTERPRETATION
Investors of online trading of securities like to hold their securities
for a minimum period. It can be seen by the fact that 80 (18+28+34) % of
the investors hold their securities for 6 or less than 6 months. But they
like to watch the movements of the market for a while before going for
selling their assets, as only 18 % of them hold their securities for 1 week
or less than 1 week.
But still investors are there who would like to hold the securities for
almost one year, and a negligible of them for more than one year. The fast
moving prices of securities and the updated information helps the online
traders to take quick and effective decision at right time.
- 80 -
TABLE NO 21
FAMILIARITY OF ONLINE TRADING SERVICES
PARTICULARS
NO OF
RESPONDENTS
ICICI
18
HDFC
12
Peninsular capital market Ltd
10
Motilal Oswal
Kotak
Tata td Waterhouse
TOTAL
0
50
PERCENTAGE
36 %
24 %
20 %
8%
12 %
0
100 %
CHART NO-21
- 81 -
ANALYSIS
Among the 50 respondents, 36 % are familiar with ICICI, 26 %
with HDFC, 20 % with Peninsular capital market Ltd, 8 % with
Karvy, 12 % with Kotak, and none with Tata td Waterhouse.
INTERPRETATION
In Bangalore, the online traders are aware of ICICI, HDFC and
Peninsular capital market Ltd. As they count for 84 (36+24+20) %. An
excellent service and awareness helps them to win the confidence of
investors.
- 82 -
CHAPTER - V
SUMMARY OF FINDINGS, SUGGESTIONS AND
CONCLUSION
A) FINDINGS:
1. The Male investors 80 % are highly interested in online trading of
shares and Female investors are not so much interested.
2. In the age group of 35 45 years (30%) are more interested
investment in Online Trading of Shares and at the age of 25 35
years (20%) and 45 55 years (20%) are equally interested, only
16% are interested above 55 years.
3. The majority of investors are post graduates (40%) because they
are highly interested in share market. The next majority is Graduate
(36%), and under graduates are only 24%.
4. The Business men 40% are more interested in investments of
shares because of them are having very good knowledge about
share market and its dealings Salaried employee (20%) and
Professional 20% are not having much knowledge about share
market and retired employees and Students 24% are least interested
in investment in online trading of shares.
5. In the insurance sectors 26% are majority invested because it is
more beneficial to the investors and following the next majority IT
22% and Infrastructure 20% are also benefit to the investors and
32% are much selected from other sectors.
- 83 -
6. The majority of investors 42% are investing lessthan one year

because in recent times share market is very popular to invest and
have high returns and 4 6 years and above 6 years investors are
only 20%.
7. The majority collected information through the newspapers (28%)
because it is cheaper than any other sources of information and
have a detailed data and following the next brokers 22% and
internet 20%.
8. From the analysis of data collected we can know that 82% of
investors follow the BSE/NSE sensex chart pattern. 18% investors
are not following chart pattern.
9. Risk (18%) and Return (18%) are both considered most important
factors while investing in shares because they are more effective
factors and capital appreciation are not at all important.
10.The growth rate of the economy 21% increases the participation in
the Online Trading of Shares. As inflation 18% erodes the
purchasing power of the investors, they prefer to have a close
watch on inflation rates before investing. A low rate of interest is
preferred by investors, since when cost of money is high one can
not compete effectively.
11.The effect of monsoon is seemed to be less on the online traders.
And the foreign exchange reserve gets the lowest concern from
investors, since our country has enough of it, i.e., second highest in
the world.
- 84 -
12.Financial risks 27.5% is most important while investing and it is

considered by the investors followed by business risks and
investment risks.
13.Online traders give much importance to the promoters (23)of the
company before investing into it. Management (23) of the
company is also considered as a very vital factor; as people like to
invest in a company with an efficient management. A company
with a number of products (21) in its hand is also considered as a
good one to invest in.
14.Investors like to study 72 % the phases of life-cycle of industries
before investing into a particular industry.
15.The online traders prefer to stay as secured as possible by investing
in an industry which is growing 38% or which has grown to its
maturity 24%.
16.The majority investors 60 % are getting income form shares below
Rs. 1, 00,000. And respondents who are earning income above Rs.
100,000 (20%) are only 10.
17.Online traders prefer technical analysis of the chart pattern. Most
of them take care of the movements of the share prices in the
BSE/NSE indexes.
18.The majority of investors 75 % the making saving below Rs.
10,000 and above 10,000 savings is only by 25 %.
19.Short term investors are more than the Long term investors because
they have fear that if they hold shares for long period then will
incur the loss.
- 85 -
20.Investors of online trading of shares like to hold their shares for a

minimum period. The fast moving prices of the shares and the
updated information helps the online traders to take quick and
effective decision at right time.
21.In Bangalore, the online traders are aware of ICICI 36%, HDFC
24% and Peninsular Capital Market Ltd. services 20 %. An
excellent service and awareness helps them to win the confidence
of investors.
22.Online trade the awareness of Online Trading of Shares is less in
the traditional investors, showing the need to inform them about it,
and educate them for the investments.
- 86 -
B) SUGGESTIONS
1. The investors should make more investments in Online Trading of
Shares as constructing their portfolio. This way they can get more
return from their portfolio.
2. The female investors are less interested in investments so they have
to be encouraged.
3. In the age group of above 55 years are invested very low they have
encourage to invest in online trading shares. Because the age group
includes retired employees.
4. In the shares market retired employee and professionals and
students is less knowledge about share trading they have help to
increases the knowledge about online trading of shares.
5. While constructing the portfolio, the investors should stress more
on capital appreciation, as mere growth of capital without the
growth of purchasing power nullify the growth of capital.
6. Online traders should also take into account the Monsoon and
Agricultural factor before investing. Still large part of the earning
of our country come from the agriculture and it ultimately depends
on monsoon. So the economic condition of our country is lot more
dependent on this factor.
7. People should analyze the marketing strategy of a company, before
investing into it. The marketing function brings the revenue and
ultimately profit to the company and its owners.
- 87 -
8. Online traders should make use of Internet more while making

decision on their investments in online Share market. The use of
Internet can help them to get more and more accurate information,
and hence increase their efficiency.
9. The government and concerned authority like SEBI should take
more efforts to educate people about the Online Trading of
Shares, and increase the awareness among them.
- 88 -
C) CONCLUSION:
The investors of Online Trading of Shares are very sensitive to
the return on their investment. They use to have a close watch on the debt
financing, the promoters, the product range and the management of the
company, where they want to invest. As a part of their Economic
Analysis, they prefer to consider inflation and interest rates of the
economy. While selecting a given industry to invest, these investors like
to invest an industry, which is growing, or at its maturing stage.
The preferred market structure of investors to invest is one, which
is dominated by a single company. Online traders analyze the BSE/NSE
sensitive indexes to know the demand and supply situation of shares in
the market. The fast moving prices of the securities and the updated
information helps the online traders to take quick and effective decision
at right time. Online traders do not like to hold their assets for a long
time. Preferably, they dispatch them within six month.
In the century of Electronic Media, the Printed Media is still a
reliable and favorite source of information for online traders. Their
favorite source of information is news papers followed by e-brokers.
The people who have not invested in share market earlier usually
not show interest in Online Trading of Shares. They are interested in
the traditional instruments of investments like insurance, Infrastructures,
IT etc. These investors need to make aware of Online Trading of
Shares, and educate them to make investments in this instrument. The
proper mix of moderate risks and high returns are attracting the investors
to Online Trading of Shares.
- 89 -
Investors investments in Online Trading Shares, the investor in

equity enjoys some unique advantages of safety, liquidity and
marketability. In addition, any investment in shares is wealth of the
investor, which is free from for wealth tax. There is no limit to such
investments, which can be made for wealth tax purposes.
Totally we have concluded that for investors if increase the
awareness on online trading and investment in shares at correctly
defiantly will increase his/her future income.
- 90 -
BIBILIOGRAPHY
1. V.A.Avadhani- Securities Analysis and Portfolio ManagementHimalayan Publication.
2. V.S.Datey- Student guide to Corporate Law-Taxmann Allied
Services Private Ltd.
3. Reddy and Appanniah- Company Law and Secretary PracticeUnited Publishers.
WEBSITES
www.nseindia.com
www.bseindia.com
www.google.com
www.sharekhan.com
- 91 -

A STUDY ON
ONLINE TRADING OF SHARES
[With special reference to investors of Bangalore]
I Mr. Basavaraj Bagewadi. pursuing MBA in Surana PG Centre, conducting
research on above topic to submit dissertation to fulfill requirements of the award of
MBA , Bangalore University .
In this connection, may I request you to help by responding to this
questionnaire? I assure you that the information collected will be kept highly
confidential and will only be used for the academic purpose.
Signature
IDENTIFICATION DETAILS
1] Name: ..
2] Gender:
Male {
Female {
3] Address and Contact No:
.
4] Age Group:
a) Less than 25 {
c) 35-45
{
e) 55 and above {
}
}
}
b) 25-35 {
d) 45-55 {
}
}
5] Educational Qualification:
a) Under Graduate {
c) Post Graduate {
}
}
b) Graduate {
d) Others {
}
}
6] Occupation:
a) Business
b) Salaried Employee {
- 92 -

c) Retired Employee
e) Student
{
{
}
}
d) Professionals
f) Other Specify
{
{
}
}
DATA FOR THE STUDY

1] Have you invested in Shares?
Yes {
No {
2] In which Sector have you invested?

a) Banking
c) Manufacturang
e) Services
{
{
{
}
}
}
b) insurance
{
d) infrastructure {
f) other specify {
}
}
}
3) How long have you been investing in shares?

a) Less than 1 {
c) 2-4
{
e) 6 and above {
}
}
}
b) 1-2 {
d) 4-6 {
}
}
4) From which source you get your required information? Rank them on their
Importance?
a) News Papers {
}
c) Family & Friends {
e) Internet { }
b) TV News
d) Journals
{
{
}
}
5) Do you follow the Stock Indices before investing?

Yes {
No {
- 93 -

6) How do you consider these factors before Investing?
Factors
Most
Important
Very
Important
Important
Un
Important
Not at all
Important
Time
Liquidity
Returns
Safety
Risk
Past
Performance
Marketability
Capital
Appreciation
Others
7) How do you consider the influences of the following factors on your investment in
a particular share?
Factors
Most
Important
Very
Important
Important
Un
Important
Not at all
Important
Economic
growth
Monsoon &
Agricultural
activity
Inflation
Interest Rate
Foreign
Exchange
Reserves
Tax Rates
Political
Situation
International
Changes in
Capital
Market
- 94 -

8] Rank the Risks which you want cover accordingly in your investment?
a) Market Risk
{
}
c) Purchasing Power Risk
{
}
e) Financial Risk
{
}
g) Any Other
.
b) Interest Rate Risk {

d) Business Risk
{
f) Insolvency Risk
{
}
}
}
9] How do you feel the importance of the following factors while selecting a
particular
company to invest?
Factors
Most
Important
Very
Important
Important
Un
Important
Not at all
Important
Promoters
Management
Technology
Product
Range
Marketing
Any Other
10] Do you like to analyze the stage of the life-cycle of the particular industry where
you invest?
Yes
No
If Yes in which stage of the life-cycle of the industry you will like to invest?
a) Pioneering Stage
c) Stagnation Stage
{
{
}
}
b) Expansion Stage {
d) Declining Stage {
{
{
{
} b) 1, 00,000-2, 00,000 {
} d) 3, 00,000-4, 00,000 {
}
{
{
{
}
}
}
}
}
11) Annual income of shares

a) Less than 100,000
c) 2, 00,000-3, 00,000
e) 4, 00,000 and Above
}
}
12) Annual savings

a) Less than 10,000
c) 20,000-30,000
e) 40,000 and Above
b) 10,000-20,000
d) 30,000-40,000
{
{
}
}
- 95 -

13) The types of market structure you will prefer while selecting in industry to invest?
a) Absolute monopoly
b) Perfect competition
c) Imperfect competition
{
{
{
}
}
}
14) The importance of past movement of share price in BSE/NSE on your

investment?
a) Most Important
c) Important
e) Not at all important
{
{
{
}
}
}
b) Very Important {
d) Un Important {
}
}
15) Are you a short term or long term investor?

Short term
Long term
16) The average time of holding your shares?

a) 1 Week
b) 1 Month to 3 Months
c) With in 6 Months
d) With in 1 year
e) More than 1 Year
{
{
{
{
{
}
}
}
}
}
17) Among Online trading Services whom you are familiar with?
a)
b)
c)
d)
e)
ICICI
HDFC
KOTAK
Motilaloswal
PENENSULAR CAPITAL MARKET LTD
{
{
{
{
{
}
}
}
}
}
f) Any other ......

18) Are you satisfied with returns from your investment?
Yes
No
If No
Reason .
- 96 -

19) Please give your awareness of Online Trading?
---------
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
20) What are your suggestions for efficient growth of capital market, with special
reference to Online Trading of Shares, in the post budget scenario?
*********************************
Thank You
- 97 -

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