Professional Documents
Culture Documents
MARKET PENETRATION
STRATEGIES
MEGHA GROVER
KIAMS, HARIHAR
5/28/2010
ACKNOWLEDGEMENT
MEGHA GROVER
PGDM STUDENT
KIAMS, HARIHAR
TABLE OF CONTENTS
Acknowledgement
Project Summary
1. Industry Profile
2. Recent development in Brokerage Industry
3. Major changes in the recent years
4. Regulation of securities market by SEBI
5. SEBI’s regulation for Demat or Depository
6. Mode of investment-Capital Market
7. Top 20 exchanges of the world.
8. Trading network
9. Corporate Hierarchy
10. Competitive analysis of Securities Industry
11. Depository and Depository Participant
12. Religare Enterprises Limited- Vision and Mission
13. Management and Company profile
14. Religare subsidiaries
15. Religare Products offerings
16. Swot analysis of Religare Securities Limited (RSL)
17. Analysis and Details of RSL competitors
18. RSL margining in Capital Markets
19. Article on Institutional Brokerage in India
20. Evaluating Customer satisfaction and strengthening customer
retention.
21. MasterCard Consumer Confidence survey
22. Questionnaire preparation and Precautions to be followed.
23. A copy of Questionnaire
24. Questionnaire analysis and Interpretation
25. Conclusion
26. Recommendation
PROJECT SUMMARY
The project objective included finding the customer
satisfaction, expectations from stockbrokers in Delhi and
NCR regions and deriving the market penetration
strategies for Religare Securities Limited (RSL). In this
project I did a telephonic survey of the customers other
than the Religare and on dead account holders of
Religare Securities to enquire satisfaction level of
customers and to providing recommendations on
increasing customer base.
I also tried to find out that there were some clients who
denied shifting
their existing brokerage firm & why some clients were
ready to change their broker firm.
The Indian Brokerage Industry consists of companies that primarily act as agents
for the buying and selling of securities (e.g. stocks, shares, and similar financial
instruments) on a commission or transaction fee basis.
Security market has two main interdependent segments: Primary market and the
Secondary market.
The basic function of a brokerage firm is to execute buy and sell orders for clients
and offer information about possible investments free of charge. This activity of
bringing free of charge stock investment reports is one of the main tools that are
utilized by brokerage houses to compete against other firms and to investors it
continues to be an important service.
Full service brokerage firms continue to offer informative stock reports and a level
of service much higher than other brokerage houses. Discount brokerage houses
only dedicate themselves to execute orders for clients. It is many times possible
that a client will not even know who is taking care of the buy or sell order that
they placed. These differences in services and philosophies may lead to great
differences in commission costs and turned in important factor in the return of an
investment.
Source-www.dnb.co.in
Source-www.dnb.co.in
The trading on stock exchanges in India used to take place through open out cry
without the use of information technology for immediate matching or recording of
trades, this was very time consuming and inefficient. This imposed limits on
trading volumes and efficiency, in order to provide efficiency, liquidity and
transparency, NSE introduced a nation-wide on-line fully automated screen based
trading system (SBTS)., where a member can punch into the computer quantities
of securities and the price at which he likes to transact and the transaction is
executed as soon as it finds a matching sale or buy order from a counter party.
SBTS matches order on a strict price/time priority and hence cuts down on time,
cost and risk of errors, as well as fraud resulting in improved operational
efficiency, it enables market participants, irrespective of their geographical
locations, to trade with one other simultaneously, improving the depth and
liquidity of the market.
The Stock Exchange provide companies with the facility to raise capital for
expansion through selling shares to the investing public.
When people draw their savings and invest in shares, it leads to a more
rational allocation of resources because funds, which could have been
consumed, or kept in idle deposits with banks, are mobilized and redirected
to promote business activity with benefits for several economic sectors
such as agriculture, commerce and industry, resulting in stronger economic
growth and higher productivity levels of firms.
Facilitating company growth
Profit sharing
Both casual and professional stock investors, through dividends and stock
price increases that may result in capital gains, will share in the wealth of
profitable businesses.
Corporate governance
At the stock exchange, share prices rise and fall depending, largely, on
market forces. Share prices tend to rise or remain stable when companies
and the economy in general show signs of stability and growth. An
economic recession, depression, or financial crisis could eventually lead to
a stock market crash.
MAJOR STOCK MARKETS IN THE WORLD
Source: World Federation of Exchanges - Statistics/Monthly as on December’2009
NSE has mainframe computer which is connected through Very Small Aperture
Terminal (VSAT). Installed at its office. The main computer runs on a fault
tolerant STRATUS mainframe computer at the Exchange broker have terminal
installed at their premises which are connected through VSATs/leased lines.
An investor informs a broker to place an order on his behalf, the broker enters the
order through his PC and it send signals to VSAT lines. The signal are directed to
mainframe computer at NSE via vsat at NSE’S office. A message related to the
order activity to the order activity is broadcast is broadcast to the respective
member. The order confirmation matches with the existing passive orders,
otherwise it waits for the active orders to enters the system. On order matching a
message is flashed is broadcast to the respective member. The trading system
operates on a strict price time priority. All orders received on the system are
sorted with the best priced order getting the first priority for matching i.e.
Order is cancelled or modified. The best buy order match with the best sell order.
Similar priced orders are sorted on the time priority basis, i.e. the one that came
in early gets priority over the later one. Orders are matched automatically by the
computer keeping the system transparent, objective and fair. Where an order
does not find a match , it remains in the system and is displayed to the whole
market, till a fresh order comes in or the earlier
.
CORPORATE HIERARCHY
The trading member has the facility of defining a hierarchy amongst its user of the
NEAT system. This hierarchy comprises.
CORPORATE MANAGER
BRANCH 1 BRANCH 2
A number of banks (HDFC Bank, ICICI Bank, SBI, and so on), brokers
(Religare,India Infoline, Motilal Oswal and Indiabulls ) and institutions
function as DPs.
MANAGEMENT PROFILE
COMPANY PROFILE
BSE Book
Industry Finance - General 532915 25/09/2009
Code Closure
Market Face
ISIN No INE621H01010 1 Rs. 10.00
Lot Value
Source: www.religare.in
RELIGARE SUBSIDIARIES
Religare is driven by ethical and dynamic process for wealth creation. Based
on this, the company started its endeavour in the financial market.
Along with this, the company also undertakes non-fund based advisory
operations in the field of Corporate Financing in the nature of Credit
Syndication which includes inter alia, bills discounting, inter corporate
deposit, working capital loan syndication, placement of private equity
and other structured products.
Religare has divided its product and service offering under three broad client
interface categories:
Retail Spectrum
Equity Broking
The equity brokerage business in India is segregated into discount brokerage
and full service brokerage
and Religare Securities Limited (RSL) has positioned itself in both these
market segments. RSL full service advisory brokerage business is conducted
under the “RALLY” brand, where a physical and online interface is available
to the client.
For our equity trading services, the business model combines a dedicated
relationship and dealing team behind each client to ensure that RSL services
continuously grow not only in terms of revenue but also in terms of numbers
of clients. While the dealing teams continuously keep equity trading clients
updated with market information and are responsible for execution of trades,
the relationship team continues to acquire and enroll new clients for
Religare.
R-ALLY
(Religare-Ally) as the name suggests is the perfect partner for savvy
investors. Major volumes of stock
trading ( more than 95%) of Religare business at present is being done
through Rally trading platform.
This is a CTCL (Computer to computer link) based trading engine provided &
maintained by M/S Financial Technologies Limited & we are using their Odin
product for this trading platform.
RALLY clients have the advantage to trade from our branches or trade on
their own through internet for which separate product called odin diet is
available.
This application can be downloaded on your system and can be run from any
location.
Products Subscription Fee (Rs.) Enrolment Deposit
(Rs.)
RALLY Nil Nil
• Subscription fee is a yearly fee, which is refundable to the client if the total
brokerage generated
by such client over a period of one year from the date of subscription
exceeds the subscription
amount paid by the client.
• Clients opting for RALLY LITE would be required to maintain a minimum of
Rs. 5000/- as
Enrolment deposit by way of cash/stock.
• Advance Depository charges are as applicable.
Relationship managers
The company has a team of relationship managers who are dedicated
to the service of clients.
These RMs take care of clients’ even smallest problem and make
efforts to solve them through their expertise.
They also help their clients to invest their wealth in the market.
Distribution Network
Religare with almost 2092 business locations in 557 cities briefed up by
comprehensive online research, advice and transaction services.
In near future expect to make 200000+ retail customers being
serviced through centralized call centre / web solution.
Marketing
Religare (previously Fortis securities) is a veteran equities solutions
company with loads of experience in the Indian stock markets. It does
not claim expertise in too many things.
Religare’s expertise lies in stocks and that's what it talks about with
authority. So when it says that investing in stocks should not be
confused with trading in stocks or a portfolio-based strategy is better
than betting on a single horse, it is something that is spoken with
years of focused learning and experience in the stock markets.
Products
Company’s product line is a basket of Financial services offered to its
clients.
It’s a all product single shop for investors. Here we offer Along with
Equity, Mutual funds, personal loans, PMS, Corporate Finance and
Investment banking etc to its customers. Its products are customized
according to individual demand and preference.
WEAKNESS
Customer Satisfaction
As far as customer satisfaction goes Religare has to tighten its Boots.
Branding
Though the company has a efficient products but large part of
investment interested population does not know the company.
The most basic expectation for a trader or investor when one begins
trading is that one must get timely delivery of shares and proceeds
from sale of shares.
Also ones cash balances with the broker must be safe and secure.
Though this confidence in the broker comes with time and experience,
good and transparent practices also play a major role in imbibing
confidence in traders.
Also banks like HDFC Bank and ICICI Bank have the advantage of
linking the trading accounts of their customers to saving accounts. This
makes trading easier, and at the same time a trader withdraws exactly
as much money from his account as is needed to complete the trade.
OPPORTUNITIES
The external environment analysis may reveal certain new opportunities for
profit and growth.
Ever-increasing market
After the NSE brought the screen based trading system, stock markets
are now more secured which has attracted lot of retail investors and
the demand is increasing day by day.
This has resulted in improved liquidity and heavy volumes on
transactions. Religare has been a mega player and is known for
being a mover of stocks. It is also known for putting big deals through
and enjoys good networking with the FIIs.
Improving Technology
In country like India technology is always improving which gives the
company a chance to keep on improving their product with time with
respect to the small brokers.
Also with SEBI lying down some strict guidelines small brokers are
finding it harder to retain the customers with no research departments
and small capital.
The traditional business model is highly dependent on a large network
of sub-brokers, and many established players may not have systems
(technology, customer service, etc.) capable of directly servicing so
many retail customers.
Education Level
The education level in the country is improving year after year as far
as technology goes. With that the understanding of the stock market is
also increasing and a lot of retail investors are steeping in the markets
which is being shown by increasing volumes, transactions and indices.
THREATS
New Competitors
A lot of new competitors are trying to enter the market in this bullish
run to taste the flavor of this cherry resulting in lots of competition and
is creating little confusion in the minds of the customers about the
services provided by the broker.
Also many banking firms are entering into the market with huge
investment. Competitors like ICICI, kotak, hdfc are posing a lot of
threats to the company.
Technology based business
Online trading is totally based on the technology which is quite
complex. Typically, the technology solution has to start from the
Internet front-end (or the screen that you see when you begin
trading).
Then it needs to get into the ‘middle tier' of risk management systems
that assess data from banks and depository participants (DP), calculate
client risk at that point in time, and give the 'Go/No go' advice to the
trade. So technology is a kind of threat because unless until it is
working properly it is good but internet is not that safe.
COMPETITORS OF RELIGARE
Company Background:
India infoline started e-broking was started under the brand name of 5
paisa.com. Apart from offering online trading in stock market the company offers
mutual funds online. It also acts as a distributor of various financial services i.e.
GOI securities, Company Fixed Deposits, Insurance. It has a limited ground
network, present in 20 Cities.
Investor Terminal
Brokerage
Brokerage:
Problems Of 5 Paisa
Downtime
Manual Accounting
The 5 paisa accounting system is manual, Online fund transfer through bank is
not credited instantly. Limit is provided EOD for shares sold from DP, or call
Similarly limit released for shares sold under BTST is manual Delay in receiving
pay-out of clear funds from trading to Bank Account.
Min Account Balance
• Free Way: Flat Rs 999 Cover Charge p.m, 0.03% per transaction
• High Trader: 6 Times Exposure Cash & Derivatives, Auto sq off 2:55
Pricing of Kotak
• Brokerage Slab wise: Higher the volume, lower the brokerage. Even older
customers (on 0.25% & 0.40%) have been moved to the slab wise
structure.
Other Charges:
• Signature Account: Plain Vanilla Account with focus on Equity Analysis. The
equity analysis is a paid service even for A/c holders
• Power India bulls: Account with sophisticated trading tools, low commissions
and priority access to R.M
Pricing of IB Accounts
Signature Account
•Brokerage: Negotiable
•Brokerage: Negotiable.
The interest on funding starts on leveraged delivery trades from T+1 day itself
@21% p.a , on a daily basis.
Company Background:
ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an affiliate of
ICICI Bank Limited and the Website is owned by ICICI BankLimited.
Account Types:
ICICI Direct e-invest Account:
Premium trading interface of ICICI Direct Link is given to DBC partners and HNI’s
Plain Vanilla Account with focus on 3 in 1 advantage .Differentiated in services
within the account.
1. Cash on spot
2. Margin Plus
Demat: NIL, 1st year charges included in Account Opening Plus a facility to open
additional 4 DP’s without 1st yr AMC.
Brokerage: All brokerage is inclusive of stamp duty and exclusive of other taxes.
The margin trading system is available up to 2:45 p.m, with outstanding net
positions under margin segment automatically squared off at any time between
2:45 – 3:30 p.m. Thus no control of square off price.
Being one of the websites with largest no of after hour orders which are pushed
1st thing in the morning, creates a choking of orders to the exchange, causes
delay of confirmations for new order placed during the early morning trades.
Restriction of BTST
The sale of shares purchased is restricted to T+1 day and is not permitted on T+2
Day.
Delivery is restricted to the total money allocated into the trading account.
Religare Securities Limited (RSL) has adopted upfront margining system in both
capital market which is explained as follows:
In the following system, exposure / trading is allowed to the client after validating
his available deposits/capital against Value at Risk (VAR) margin & Span margins in
capital market. Further such validation is carried out at order entry level that means
if the exposure taken by the client results into the margin requirement in excess of
his available capital with RSL the order shall be rejected by the system & will not
get through.
Religare has classified total stocks being traded on the stock exchanges into six
categories from A to E & differential VAR margins ranging from 15% TO 100% are
assigned based on the stock category as upfront VAR margin in capital market
segment & span margin in derivative segment. At present there are 586 scrips in
approved category of Religare.
Add-Ons
The study also notes the growing popularity of direct market access (DMA)
among proprietary trading desks and domestic mutual funds, and the
increasing use of algorithms for the equity markets. Tight regulatory
restrictions on algorithms have led many firms to use low-touch DMA,
which requires more human intervention compared to direct DMA.
According to Celent, DMA in India accounted for 5% of trading by
institutional brokers in 2009, but this is expected to rise to 35% by 2012.
Unlike trends seen other in market centres across the world, Celent
suggests proprietary trading is likely to increase in India to 32% of total
trading in 2012, from 22% in 2007.
Source-www.thetradenews.com
Confidence Index
India Asia- Pacific Region
RESEARCH METHODOLOGY
SAMPLE SIZE
A sample size of about 200 respondents was taken into consideration on
the basis of different brokerage house all over Delhi and NCR regions.
PRECAUTIONS FOLLOWED BEFORE AND DURING THE
COMMENCEMENT OF THE RESEARCH
PREPARED QUESTIONNARE
YES NO
Q.3 Which mode of trading do you prefer?
ONLINE OFFLINE
Q.6 What do you look for when you are going to invest in stock markets?
Q.8 How would you rate the services provided by your broker?
Conclusion: As the survey was conducted on the people who are either
customers of broking houses other than Religare or are the holders of dead
accounts in Religare. Therefore, the inference was as correct as expected.
Most of the past customers of Religare have shifted to other broking houses
and are still trading.
Which mode of trading do you prefer?
Conclusion: As most of the traders have their own business or are self
employed and can make huge investments of both time and money,
therefore the mode of trading they prefer is Online, as they trust their
abilities and experience more in managing their portfolio than on
relationship managers. People in service although are big investors lacks
time and hence prefer offline mode.
Conclusion: this data represents the people who are the customers of
other broking houses, other than Religare. Dissatisfied group of people
forms the major chunk mainly due to unreliable RM’s, undisclosed charges,
and unfulfillment of the promised services. These are the most target
customers for Religare to acquire. Other customers were even non
bothered or having good experience with their current broking house.
What extra services do you expect from your broker?
Conclusion
Most of the traders are having their own business and generally trade
on intraday basis. They carry huge experience and have been in
market for a numerous years. Such people are ready to trade with
high risk and high returns basis.
Recommendations
As it was concluded, that most of the female population have fears
and misconceptions towards investments in stock markets. The
company should employ more female employees, which will not only
understands the problems of women’s customers and also tried to
resolve them in the required way.
It was also seen that the company pays more attention on high net
worth individuals rather than on small investors which is the major
reason for less customer retention, less customer loyalty and hence
more customer loss. Company should remember that if nurtured
properly, these small investors can be converted into huge traders.