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Project Report Based OnComparative Study On Demat Schemes of Various Broking Firms in Association with :
Project Report Based OnComparative Study On Demat Schemes of Various Broking Firms in Association with Submitted By: Roll No Enrolment
No. Adarsh Menon B 014956 097010592009 AHMEDABAD INSTITUTE OF TECHNOLOGY GUJARAT TECNOLOGICAL UNIVERSITY, AHMEDABAD
Thursday, August 19, 2010 1

Vision :
Vision To be a leader and role model in financial services sector with a broad based and integrated business. Thursday, August 19, 2010 2

Aditya Birla Financial Service Group :


Aditya Birla Financial Service Group Thursday, August 19, 2010 3

ABML SERVICES :
ABML SERVICES Thursday, August 19, 2010 4

PROGRESS OF ABML :
PROGRESS OF ABML Thursday, August 19, 2010 5

DEMAT :
DEMAT Dematerialization of financial securities is the first sign of financial reforms in India. Finance Ministry and SEBI realized the need of
more efficient financial system started in the early 1996 with NSE. As a result of this NSDL and CDSL came into picture. DEMAT is just like a
bank account where actual money is replaced by shares. ONE don't have to possess any physical certificates showing that HE/SHE own the
shares. They are all held electronically in your account. Thursday, August 19, 2010 6

Depository Participants :
Depository Participants NSDL NSDL works to support the investors and brokers in the capital market of the country. NSDL aims at ensuring the
safety and soundness of Indian marketplaces by developing settlement solutions that increase efficiency, minimize risk and reduce costs.
CDSL The second depository, Central Depository Services (India), was promoted by the Stock Exchange, Mumbai (BSE). Thursday, August 19,
2010 7

Comparative Study :
Comparative Study Comparison of Aditya Birla Money Ltd with other firms

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Slide 11:
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Slide 12:
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Slide 13:
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Slide 14:
Thursday, August 19, 2010 14

Conclusions from Comparisons :


Conclusions from Comparisons Thursday, August 19, 2010 15 Minmum margin cheque is 5000/-. If the customer is an employee of an aditya
birla group then he can open an demat account with the margin cheque of 1000/- only which is lowest in broking industry. A/c can be opened
with cancelled cheque also Rs 750/- which is charged for a/c opening scheme is also refunded if the customer prefers pay out. If the customer
wishes his 750/- opening charge can be transferred as AMC for three years. We provide brokerage of 3 ps & 30ps(further negotiable) to every
new customer while other firms charge 5ps & 50 ps. The advance brokerage scheme of aditya birla named as I-DECIDE PLAN is also the best
plan available with broking firm.

Analysis And Interpretation :


Analysis And Interpretation Based on the research done with broking firms we have carried out the analysis and interpretation of
Questionnaire in graphical format.

Table I: Demat charges :


Table I: Demat charges Thursday, August 19, 2010 17 The result of the survey indicates that the market price for opening a demat account is
Rs 500 which is charged by maximum companies

Table II: Margin Cheque :


Table II: Margin Cheque Thursday, August 19, 2010 18 It can be interpreted that maximum company are demanding the margin cheque
between 5001-10000 and the starting margin cheque is not less than 5000.these figures are further negotiable with the customers with some
of the companies

Table III: Credit limit :


Table III: Credit limit Thursday, August 19, 2010 19 It can be said that many companies provide credit for 5 to 10 times in intraday and
delivery based. Reliance money is the only firm that provides exposure for 20 times for intraday only

Table IV: Brokerage Charge :


Table IV: Brokerage Charge Thursday, August 19, 2010 20 For new customer brokerage charged is fixed for 5ps & 50ps which is negotiable up
to 3ps & 30ps. This is being reduced by many broking firms to 2ps to 20ps if turnover exceed 100000 per day. Many other are also available
with the firm to reduce brokerage

Table V: Interest Charge :


Table V: Interest Charge Thursday, August 19, 2010 21 If credit limit is crossed all broking firms charge interest on late payment, which differs
with the entire firm. The market rate 18% which is charged by seven companies and the highest interest charge is 24% by Icici

Findings :
Findings Thursday, August 19, 2010 22 Maximum broking firm charge Rs. 500 for opening demate accounts The margin cheque is between
5000 and 10000 All broking firm are providing time limit of T+2 Credit limit varies customers to customer, even with intraday and on delivery
basis Average investment charge by all the broking firms is 18% Annual maintenance charge is between 250 to 500 New schemes of life time
maintenance charge are introduced in the market by some broking firms New system of advance broking scheme is also introduce recently by
many broking firms

Suggestions :
Suggestions Thursday, August 19, 2010 23 MORE BRANCHES Need to open more branches to be a topper in market because it has a low
distribution of network LESS TIME They should try to make some arrangements to reduce account opening time by verifying documents at
branch itself. LINK-BANK A/Cs Linked as many accounts as client wants to its online account

Suggestions Cont… :
Suggestions Cont… Thursday, August 19, 2010 24 NEW BANKS IN THE KITTY Need to tie up with major banks like HSBC, Punjab national bank,
canara bank etc CUSTOMER SATISFACTION The company should focus on the customer satisfaction not on just taking money from their pocket
CONTROLLED BRANCHES The company would have to make some arrangements to control the branches and make standardized procedures
for all of them for their better control and performance appraisal

Consumer Survey :
Consumer Survey

2. Are you aware of Share Market? :


2. Are you aware of Share Market? From the chart, we came to know that, 68% are having knowledge related to share market and 32 % don’t
have the knowledge of share market Thursday, August 19, 2010 26

3.1 Do you have DEMAT & Trading Account? :


3.1 Do you have DEMAT & Trading Account? From the chart, we came to know that there are 58% people that have DEMAT account and they
trade, while 42% still don’t have the DEMAT account. Thursday, August 19, 2010 27

3.2 If YES then how many DEMAT Accounts you have? :


3.2 If YES then how many DEMAT Accounts you have? From the survey , we came to know that 72% of people have 1 Demat account and very
few have more than 3 Demat accounts. Thursday, August 19, 2010 28

4. Since how many years you trade? :


4. Since how many years you trade? Survey connected suggests that there are 20% people that trade from last 1 year and maximum people
are trading for more than 7 year. Thursday, August 19, 2010 29

5. What type of trading you prefer? :


5. What type of trading you prefer? From the chart, we can conclude that maximum people do intraday trading to earn the short term income,
while those who wish for the safe investment, they prefer the Delivery trade. Thursday, August 19, 2010 30

6. What type of trading you prefer? Offline or Online :


6. What type of trading you prefer? Offline or Online Maximum people prefer offline trading because sensex works from Monday to Friday
which is the working hours for business as well as for service sector and the trading is ban in many organization in between work Thursday,
August 19, 2010 31

7. In Which Sector you invest the most? :


7. In Which Sector you invest the most? We can conclude that maximum people invest in saving bank account, insurance and ppf as Indian
people prefer less risk Thursday, August 19, 2010 32

8. What amount of Saving You Invest yearly? :


8. What amount of Saving You Invest yearly? From this we can conclude that people investing in share market are highest risk taker and there
distribution investment in share market is shown next Thursday, August 19, 2010 33

9. What things you will consider while getting the DEMAT account? :
9. What things you will consider while getting the DEMAT account? Maximum people who are interested to open new demat account they first
ask the brokerage of the firm which can be further reduce according to the trade done by the customer second preference is for the credit
limit for share purchase Thursday, August 19, 2010 34

10.1 Who provide you the Tips? :


10.1 Who provide you the Tips? All though providing tips is totally banned by the SEBI but still the broking firms are providing tips in the
indirect form of SMS, mail, online chat Thursday, August 19, 2010 35

10.2 Are you satisfied with tips and Information provided by your dealer? :
10.2 Are you satisfied with tips and Information provided by your dealer? This question is related with the above question and only 67% of
people are satisfied with the tips provided by the broking firms Thursday, August 19, 2010 36

11.1 Are you aware of life-time Scheme ? :


11.1 Are you aware of life-time Scheme ? Lifetime scheme is newly launched by many companies hence people are still not aware of this
scheme and those who are aware are still not wishing to get it, as the charges of lifetime scheme is quite high Thursday, August 19, 2010 37

11.2 Would you like to get the facility life time scheme? :
11.2 Would you like to get the facility life time scheme? This is question is related with the above question. Only those people purchase life
time scheme who wish to trade for long-term Thursday, August 19, 2010 38

12. Are you satisfied with your soft ware provided with the firm for online trade? :
12. Are you satisfied with your soft ware provided with the firm for online trade? Out of 23% people only 85% people are satisfied with the
software facility provided by the broking firms as a single firm has many up gradation with the software which is only provided to the premium
customer Thursday, August 19, 2010 39

13. Are you satisfied with your company service? :


13. Are you satisfied with your company service? Maximum people are satisfied with their broking firms, as the customer start trading which
directly become fruitful to broking firms and they provide good service to the individuals Thursday, August 19, 2010 40
14. Please Rank the following Broking Firms According to you? :
14. Please Rank the following Broking Firms According to you? From the survey we can rank the firms as under : Rank Firm 1. India Infoline 2.
Share Khan 3. Angel 4. Reliagre Thursday, August 19, 2010 41

15.Will you be the future Customer of Aditya Birla Money Ltd? :


15.Will you be the future Customer of Aditya Birla Money Ltd? After explaining schemes to the consumers 24% of people were ready to get the
new Demat account with the aditya birla while 30% strongly neglected Thursday, August 19, 2010 42

FINDINGS… :
FINDINGS… Preference of Investment: Consumers want to invest 30% in banks, 19 % in insurance, 13% in PPF and 8% & 12% in commodity
and equity market respectively Awareness on Online Share Trading: 23% consumers are aware of online share trading and 44% consumers
are not aware of online share trading Future customer of ABML: 37% of respondent are willing to be the future customer of ABML and 17% are
not interested to change their existing broking firm Thursday, August 19, 2010 43

FINDINGS… :
FINDINGS… Satisfaction about facilities provided by broking firms: 61% consumers are satisfied with the facilities provided by broking firms
were as 3% of consumers are not at all satisfied by the facilities provided by broking firms Provide a large no. of Products and services: Now
days to beat competition many broking firms are providing multiple product in the collaboration with their subsidiary financial company
Thursday, August 19, 2010 44

Recommendations :
Recommendations Thursday, August 19, 2010 45 Brokerage should be reduce to the possible extent, so that new customers can be attracted
They should offer demonstration for on line share trading and other seminars for cultivation of knowledge to the customers Advertisement
should be given in newspapers, so that the persons who do not know about online facility of share trading can be attracted

Recommendation cont… :
Recommendation cont… Thursday, August 19, 2010 46 After opening of account, customer should provide a guidebook, so that they can
easily learn and transact with ABML Some discount/offer can be given to those who are opening accounts in groups The customers who want
to open a savings bank account as well as Demat account can be call for open an online share trading Offer can be give to the existing Demat
account holder Company should give Tip through Phone to customer

Recommendation cont… :
Recommendation cont… Thursday, August 19, 2010 47 Company should try to reduce size of Account Opening Form Company should develop
live Terminal

THANK YOU :
THANK YOU Thursday, August 19, 2010 48

In today’s troubled economic scenario, we prefer the kind of investments that will protect our wealth rather than create wealth for us. Gold is one such
investment. It is a bedrock of investments that can weather any storm. Gold as an asset has long-term intrinsic value, which helps shield our investment
from inflation, currency debasement and equity market declines. At the same time, it saves the country’s purchasing power from nosediving. In fact, it
offers the best protection against volatile markets. The reason: gold prices are maintained or increased irrespective of the country’s economy moves in an
upward or a downward direction. From the last 20-30 years, gold prices have been on a steady and continuous rise. The precious metal has given returns
of around 9.45 per cent as the prices went up from Rs 1,000 per 10 gram in 1979 to its present value of Rs 15,000 per 10 gram.

Highlights
o Gold helps shield investment from
inflation, currency debasement and
equity market declines
o Gold prices are generally not affected
by the economic conditions
o One should allocate at least 10-20
per cent of one’s investment portfolio
towards gold, irrespective of the risk
appetite

Why should we invest in gold?


Gold is a proven way to preserve wealth, especially when the local currency is losing value. It is also valuable for things beyond investments as
demonstrated by its ever-increasing demand. The demand for the yellow metal is so high that its current consumption has exceeded its production. The
production of gold is controlled by a few companies; whenever the prices of gold fall below its production costs, these companies stop their operations.
This mechanism creates a stable floor price for gold. Thus when market plunges, like stock prices gold prices do not get affected, and cushion our
investment portfolio against downturns.
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Ways to invest in gold
We Indians have been the largest buyers of natural gold, but it’s not long ago that we recognised its value as an asset and start adding it to our
investment portfolio. Investments in gold are made through gold coins, gold jewellery, gold bullion (biscuits or bars trading through demat account), gold
futures, gold ETFs and the recently-acknowledged gold mining companies. Gold jewellery, no doubt, carries high emotions and intrinsic value in real sense,
however it is not the smartest way to invest in gold, mainly on account of the uncertainty of quality of gold used and high additional making costs. In
terms of return too, you find variations in the forms of gold investment. You can make 100 per cent in gold stocks, 50 per cent in gold coins or bars, or
even 500 per cent in gold futures. Table 1 briefly describes the different aspects of gold investment while Table 2 delves into the tax structure of the
different forms of gold investment. Let us understand both in detail:

Table 1: Comparison between Different Forms of Gold Investments


Cost of Liquidit
Purity Return Safety/Storage Risk
Buying y

Uncertain; comes in different Low; high initial cost involves in


Gold ornaments High Moderate Storage risk
carats making ornaments

Low as banks charges storage


Gold coins High Highest Low Storage risk
cost, insurance, etc.

Gold ETFs Lowest Highest High Comparable to market returns No storage risk

Gold mining Company performance defines Depends upon company


Lowest High Market and company risk
companies its existence performance

Storage risk; needs to take


Gold futures Lowest Highest High Used as a hedge
delivery on expiry

Bullion Gold Lowest Highest High Comparable to market returns Storage risk
Table 2: Tax Treatments of Different Gold Investments
Short-term Gains1 Long-term Gains2

Gold ornaments within 3 years After 3 years

Gold coins within 3 years After 3 years


Gold ETFs Within 1 year After 1 year

Gold mining companies Within 1 year After 1 year

Gold futures Within 1 year After 1 year

Bullion Gold within 3 years After 3 years


1
Taxed as per applicable income slab, 2
Taxed at 20 per cent with indexation benefit

Gold jewellery
We all love the yellow metal, don’t we? Be it in whatever form, jewellery or others. Nothing can match the emotions that are attached to the buying of
gold jewellery. In India, we buy gold jewellery either out of desire (to wear gold ornaments) or needs (mandatory purchase in marriages and other
functions). This is an expensive way of buying the precious metal since a buyer has to pay for the craftsmanship associated with the making of jewellery,
which increases the total cost. Moreover, selling of the jewellery may not fetch the same price in case the current market price does not exceed the buying
price.
Gold coins
It is one of the purest forms of gold. All the commercial banks and financial distributors are authorised to sell gold coins of 24 karat (the purest), with a
certification from an independent agency. The prices of gold coins depend on the daily market rates of gold. But banks don’t buy the coins back, so our
only option to get our money back in this case will be by selling the coins to jewellers at the prevailing market price.
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Gold mining companies
It is not a direct investment in gold but in the stocks or shares of a gold mining and exploration company. It brings additional rewards as well as its share
of risks. The price of these stocks moves with the price of the gold and also depends on the company’s future outlook. In India, there are not many gold
mining companies but on the international front one will find companies such as Newcrest Mining, Barrick Gold, Impala, Gold Corp, Lihir Gold, etc.
However, we can invest in world (gold) mining stocks through mutual funds such as DSL BlackRock (DSPBR World Gold Fund) and AIG India MF (AIG
World Gold).
Gold futures
Gold futures are a sophisticated tool to invest in gold markets. But be cautious: Risks attached to gold futures are of the highest level. One can make 500
per cent in a single day by trading in gold futures or even lose all the money put up. However, gold futures are not about minuses only. Its plus point is it
eliminates the hassle and costs of settlement and storage. Investors need much less money (margin money) to participate in quite large scale. Even
traders can short sell as the market is deep and liquid. But these options are not recommended for retail investors.
Gold ETFs
It is a very recent development that the market regulator SEBI allowed gold Exchange Traded Funds (ETFs) in India. Gold ETFs enable investors to
purchase and sell shares of a mutual fund whose primary asset is gold. These funds are listed on the stock exchanges, i.e., can be bought or sold like
other stocks or shares. But one needs to have a demat account and a share trading account to invest in gold ETFs. The unit size in a gold ETF is as small
as one gram of gold equivalents. Investments in gold ETFs are eligible for tax treatments similar to that in a debt mutual fund and subject to long-term
capital gains after one year against three years for physical gold. The cost involved is also less and investors do not face the risk involved in holding gold
like theft. Some of the gold ETFs are UTI Gold ETF, Gold BeES, Kotak Gold ETF and Reliance Gold ETF.
Want to invest in Gold ETFs, apply for Demat Account: Click here
Gold bullion
This investment avenue is open for investors with a higher investment corpus or greater risk profile. Gold bullion or bars can be bought or sold with the
help of brokerage firms or gold dealers. It is traded on commodity exchanges, i.e., MCX and NCDEX, at an amount above the market price of gold.
Investors can keep the bars in their custody or leave them with the broking firm. Though the brokerage charged in this case is very low compared to
market price, its overall cost is more as it also involves storage and assay (analyse gold to determine its composition) costs.
Historical returns of different gold investment options
Let us analyse the performance of different gold products as on July 31, 2009 with the help of Table 3. The data has been obtained from
www.mcxindia.com and www.mutualfundsindia.com, an online arm of Financial Technologies and ICRA Online Ltd, respectively. The table shows that all
investments with gold as an asset have given comparable returns of around 16 per cent while the return of gold mining dedicated mutual fund (AIG World
Gold) is stipulated to a paltry 3.48 per cent. The fall in return in the mutual fund can be attributed to underperformance of gold mining stocks due to a
slump in gold demand. But in case of gold ornaments and gold coins, the return would be comparatively less than gold bullion and gold ETFs as they also
involve making costs and storage costs.

Table 3: Historical Returns1 in One-year Category


Forms of Gold Investment One Year

Gold ETFs 15.98%

Gold mining companies (AIG World Gold) 3.48%

Gold futures 16.58%

Gold bullion 17.54%


1
As on July 31, 2009
Source: MCX, ICRA Online

Gold in portfolio
Since gold has emerged as an asset class, fund managers are advising investors to allocate at least 10-20 per cent of their investment portfolio towards
gold, irrespective of their risk appetite. It has seen that trading in Gold ETFs is the best way to invest in gold given its low cost of buying, high liquidity,
low risk associated with it, etc. Moreover, whatever be the economic scenario, gold will always remain the best hedge against inflation and also help in
achieving our long-term goals.
Published on May 11, 2010 · Filed under: Investment Case Studies; Tagged as: fixed cum floating interest rate, floating interest rate, home
loan, income tax benefit, invest in property, loan transfer, Mutual funds
5 Comments

5 Responses to “How to invest in gold”

1. News on Personal Finance in India – Home Loans, Credit Cards, Personal Loans, Car Loans, Life Insurance, Health Insurance,
Stocks, Fixed Deposits, Tax » Gold and gold ETFs are the right investment for this gold season said on May 17th, 2010 at 12:48
pm
[...] in units and prices of gold are reflected in value of each unit. At present there are seven gold ETF fund listed on the BSE. Another advantage with gold
ETFs is that investments in paper gold are not [...]
2.

Rishi said on September 20th, 2010 at 1:45 pm


Excellent article on Gold investment, Thanks for the information

3.

Yogesh said on October 29th, 2010 at 5:39 pm


I want to start investing in Gold ETF. Please tell the Procedure.

4.

Subramoniam said on December 20th, 2010 at 11:59 am


Very good article and easy to read.
How is the gold rate arrived at each day? My bank updates their rates as on 10am everyday.
But when I went to buy some jewellery here in Abu Dhabi lost some money in just one hour. I selected the pieces and went to nearby supermarket before
returning to get the jewellery. By then the world gold price had gone up and the shop charged me accordingly. Likewise isn’t the fluctuating price used
when I purchase gold from bank

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