Understanding The Functioning Of Secondary Market Investments And Analysis Of Daily Market (1).docx

Summer Training Report On UNDERSTANDING THE FUNCTIONING OF SECONDARY MARKET INVESTMENTS AND ANALYSIS OF DAILY MARKET MOVEMENTS COMPLETED IN—IIFL Submitted In Partial Fulfillment Of the Requirement Of Masters of Business Administration Corporate Mentor:

Submitted By:

Name:

Name of the student

Designation:

ENRNo:

Organisation:

Batch

Submitted To: Banarsidas Chandiwala Institute of Professional Studies, Dwarka, New Delhi

(Affiliated to Guru Gobind Singh Indraprastha University) CERTIFICATE This is to certify that the project work done on “--------Title----“ Submitted to Guru Gobind Singh Indraprastha University, Delhi

by --------Name of the student----- in partial

fulfillment of the requirement for the award of degree of Bachelor of Business Administration, is a bonafide work carried out by him/her under my supervision and guidance. The work was carried during --------to ----- in ……..Name of the organization.

During the training period his/her behavior & performance was satisfactory.

Date: Seal/Stamp of the Organization

Name of the guide Address:

DECLARATION

I

hereby

declare

that

__________________________________________

this

submitted

Project

Report

by

to

me

titled

Banarsidas

Chandiwala Institute of Professional Studies, Dwarka is a bonafide work undertaken during the period from _______to_________by me and has not been

submitted to any other

University or Institution for the award of any degree diploma / certificate or published any time before.

(Signature of the Student)

Date: / / 2012

Name: Enroll. No.:

Signature of the Student

BONAFIDE CERTIFICATE

This is to certify that as per best of my belief the project entitled

“ (Title of the

Project) ” is the bonafide research work carried out by (Name of the Candidate) student of BBA, BCIPS, Dwarka,New Delhi during June-July 2012, in partial fulfillment of the requirements for the Summer Training Project of the Degree of Bachelor of Business Administration. He / She has worked under my guidance.

-------------------Name Project Guide (Internal) Date: Counter signed by ------------Name Director Date:

CONTENTS Topic Certificate (s) Acknowledgements List of Tables List of Figures List of Symbols Executive Summery Introduction  Objective of the study  Literature Review Company profile with its SWOT analysis Research Methodology Data Collection And Data Analysis Conclusions, and Suggestions References/Bibliography Appendices

Page No -

EXECUTIVE SUMMARY Since the early 1990s, India has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment. The Stock Exchanges have become a prominent player in this economic reform and has now become a key driver of India's Economy. With this, Indian stock broking firms are on an expansion drive. One Such firm is India Infoline Ltd. (IIFL). This summer internship project was done at IIFL, which is one of the largest broking firms in India. This Project does not involve any Research. It is an Exploratory Study undertaken understand the various aspects related to the functioning of Stock Markets. In the first part of the document, a brief overview of the stock market in India is given followed by an overview of the company India Infoline Ltd. It also gives the detailed options available in the financial markets where an investor can invest which includes Equity Market, Derivatives Market, Currency Market and Commodity Market.

The next part gives a track record of the various financial and non-financial events which created an impact on the Stock Market. These events have been described and their impact on the Stock Markets has been discussed.

In the next section an attempt has been made to understand the by interacting with them. The corporate clients have a different need from a retail client, so specific needs of both the category of clients have been analyzed. In the final section, suggestions have been given from my side to improvise the revenue model at IIFL and then the report is concluded.

CHAPTER 1 INTRODUCTION

Overview of the Stock Brokerage Industry A stock market or equity market is a public entity for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. Stock exchanges have multiple roles in the economy, this may include the following:

Raising Capital for Businesses The Stock Exchange provides companies with the facility to raise capital for expansion through selling shares to the investing public.

Mobilizing Savings for Investment 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 and firms.

Facilitating Company Growth Companies view acquisitions as an opportunity to expand product lines, increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary

business assets. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion.

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 By having a wide and varied scope of owners, companies generally tend to improve on their management standards and efficiency in order to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. Consequently, it is alleged that public companies (companies that are owned by shareholders who are members of the general public and trade shares on public exchanges) tend to have better management records than privately-held companies (those companies where shares are not publicly traded, often owned by the company founders and/or their families and heirs, or otherwise by a small group of investors).

Creating Investment Opportunities for Small Investors As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors. Segments of Capital Market Capital Market is divided into two categories: a) Primary Market Securities generally have two stages in their lifespan. The first stage is when the company initially issues the security directly from its treasury at a predetermined

offering price. This is a primary market offering. It is referred to as the Initial Public Offering (IPO).

b) Secondary Market Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors Secondary market could be either auction or dealer market.

Major Stock Exchanges In India The two major stock exchanges in India are: a) Bombay Stock Exchange The Bombay Stock Exchange (BSE) is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was US$1 trillion as of December 2011, making it the 6th largest stock exchange in Asia and the 14th largest in the world. The BSE has the largest number of listed companies in the world.

b) National Stock Exchange The National Stock Exchange (NSE) is a stock exchange located at Mumbai, India. It is the 16th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around US$985 billion and over 1,646 listings as of December 2011. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalization.

Stock Broker A Stock Broker is a firm that acts as an agent for a customer, charging the customer a commission for its services. It charges a fee or commission for executing "buy" and "sell" orders submitted by an investor. It used to be that only the wealthy could afford a broker and have access to the stock market. With the internet came the explosion of discount brokers that let you trade at a smaller fee, but don't provide personalized advice. Because of discount brokers, nearly anybody can afford to invest in the market now.

Market Participants Market participants include individual retail investors, institutional investors such as mutual funds, banks, insurance companies and hedge funds, and also publicly traded corporations trading in their own shares. Some studies have suggested that institutional investors and corporations trading in their own shares generally receive higher risk-adjusted returns than retail investors.

A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, usually with long family histories to particular corporations. Over time, markets have become more "institutionalized"; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds, investor groups, banks and various other financial institutions).

The rise of the institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for "fixed" (and exorbitant) fees being markedly reduced for the 'small' investor, but only after the large institutions had managed to break the brokers' solid front on fees. They then went to 'negotiated' fees, but only for large institutions.

Importance of Stock Markets

Stock market is an important part of the economy of a country. The stock market plays a play a pivotal role in the growth of the industry and commerce of the country that eventually affects the economy of the country to a great extent. That is reason that the government, industry and even the central banks of the country keep a close watch on the happenings of the stock market. The stock market is important from both the industry's point of view as well as the investor's point of view.

Whenever a company wants to raise funds for further expansion or settling up a new business venture, they have to either take a loan from a financial organization or they have to issue shares through the stock market. In fact the stock market is the primary source for any company to raise funds for business expansions. If a company wants to raise some capital for the business it can issue shares of the company that is basically part ownership of the company. To issue shares for the investors to invest in the stocks a company needs to get listed to a stocks exchange and through the primary market of the stock exchange they can issue the shares and get the funds for business requirements. There are certain rules and regulations for getting listed at a stock exchange and they need to fulfill some criteria to issue stocks and go public. The stock market is primarily the place where these companies get listed to issue the shares and raise the fund. In case of an already listed public company, they issue more shares to the market for collecting more funds for business expansion. For the companies which are going public for the first time, they need to start with the Initial Public Offering or the IPO. In both the cases these companies have to go through the stock market.

This is the primary function of the stock exchange and thus they play the most important role of supporting the growth of the industry and commerce in the country. That is the reason that a rising stock market is the sign of a developing industrial sector and a growing economy of the country.

Of course this is just the primary function of the stock market and just an half of the role that the stock market plays. The secondary function of the stock market is that the market plays the role of a common platform for the buyers and sellers of these stocks that are listed at the stock market. It is the secondary market of the stock exchange where retail investors and

institutional investors buy and sell the stocks. In fact it is these stock market traders who raise the fund for the businesses by investing in the stocks.

For investing in the stocks or to trade in the stock the investors have to go through the brokers of the stock market. Brokers actually execute the buy and sell orders of the investors and settle the deals to keep the stock trading alive. The brokers basically act as a middle man between the buyers and sellers. Once the buyer places a buy order in the stock market the brokers finds a seller of the stock and thus the deal is closed. All these take place at the stock market and it is the demand and supply of the stock of a company that determines the price of the stock of that particular company.

So the stock market is not only providing the much required funds for boosting the business, but also providing a common place for stock trading. It is the stock market that makes the stocks a liquid asset unlike the real estate investment. It is the stock market that makes it possible to sell the stocks at any point of time and get back the investment along with the profit. This makes the stocks much more liquid in nature and thereby attracting investors to invest in the stock market.

Securities and Exchange Board of India The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI is headquartered in the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. The SEBI is managed by six members, i.e. by the chairman who is nominated by central government & two members, i.e. officers of central ministry, one member from the RBI & the remaining two are nominated by the central government. The office of SEBI is situated at Mumbai with its regional offices at Kolkata, Delhi & Chennai.

Functions and Responsibilities SEBI has to be responsive to the needs of three groups, which constitute the market: 

the issuers of securities



the investors



the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasiexecutive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court.

Powers For the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are: 1. To approve by−laws of stock exchanges. 2. To require the stock exchange to amend their by−laws. 3. Inspect the books of accounts and call for periodical returns from recognized stock exchanges. 4. Inspect the books of accounts of financial intermediaries. 5. Compel certain companies to list their shares in one or more stock exchanges. 6. Levy fees and other charges on the intermediaries for performing its functions. 7. Grant license to any person for the purpose of dealing in certain areas. 8. Delegate powers exercisable by it.

9. Prosecute and judge directly the violation of certain provisions of the Companies Act.

Relation of the Stock Market to the Modern Financial System The financial system in most western countries has undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via banks' traditional lending and deposit operations. The general public's heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades shares have made up an increasingly large proportion of households' financial assets in many countries. The major part of this adjustment in financial portfolios has gone directly to shares. The Stock Broking Scenario in India The trading on stock exchange in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a nationwide online fully automated screen based trading system (SBTS) where a member can punch into the computer quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds matching sale or buy order from a counter party. SBTS electronically matches order on strict time/price priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the information efficiency of markets. It enables market participants, irrespective of their geographical locations, to trade with one another simultaneously, improving the depth of liquidity market. It also provides a perfect audit trail, which helps to resolve disputes by logging in the trade execution process in entirety. Today India can boast that almost 100% trading take place through electronic order matching. Technology was used to carry the trading platform from the trading hall of stock exchanges to the premises of brokers. NSE carried the further platform further the PCs at the residence of Clients through the Internet for users in geographically vast country like India.

OBJECTIVE OF THE STUDY      

To know the functioning of a Secondary Market. To review the history & growth of Stock Broking Firms in India To know about the various investment options available in the Stock Market To study the impact of various financial and non-financial events on the Stock Market To know about the preferences and interest of potential investors in the Stock Market To give suggestions for improving the revenue model of the company

LITRATURE REVIEW Structure of Financial Market

The financial markets can be divided into different subtypes:



Capital markets which consist of: 1. Equity markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof. 2. Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof. 3. Commodity markets, which facilitate the trading of commodities. 4. Derivatives markets, which provide instruments for the management of financial risk 5. Foreign exchange markets, which facilitate the trading of foreign exchange.



Money markets, which provide short term debt financing and investment.

4.1 Equity Market The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. According to the latest report by ADB, it has a market capitalization of nearly $600 billion. As of March 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined valuation of the Asia region. The market was slow since early 2007 and continued till the first quarter of 2009.

A stock exchange has been defined by the Securities Contract (Regulation) Act, 1956 as an organization, association or body of individuals established for regulating, and controlling of

securities.

The Indian equity market depends on three factors  Funding into equity from all over the world  Corporate houses performance  Monsoons(climatic factors)

The stock market in India does business with two types of fund namely private equity fund and venture capital fund. It also deals in transactions which are based on the two major indices - Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE).

The market also includes the debt market which is controlled by wholesale dealers, primary dealers and banks. The equity indexes are allied to countries beyond the border as common calamities affect markets. E.g. Indian and Bangladesh stock markets are affected by monsoons.

The equity market is also affected through trade integration policy. The country has advanced both in foreign institutional investment (FII) and trade integration since 1995. This is a very attractive field for making profit for medium and long term investors, short-term swing and position traders and very intraday traders. The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and NSE. The smaller and medium companies are listed with OTCEI (Over The counter Exchange of India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange Board of India).

Derivatives Market Starting from a controlled economy, India has moved towards a world where prices fluctuate every day. The introduction of risk management instruments in India gained momentum in the last few years due to liberalization process and Reserve Bank of India's (RBI) efforts in creating currency forward market.

Derivatives

are

an

integral

part

of

liberalization

process

to

manage

risk.

NSE gauging the market requirements initiated the process of setting up derivative markets in India. In July 1999, derivatives trading commenced in India.

Chronology of Instruments

1991

Liberalization process initiated

14-Dec-95

NSE asked SEBI for permission to trade index futures.

18-Nov-96

SEBI setup L.C.Gupta Committee to draft a policy framework for index futures.

11-May-98

L.C.Gupta Committee submitted report.

07-Jul-99

RBI gave permission for OTC forward rate agreements (FRAs) and interest rate swaps.

24-May-00

SIMEX chose Nifty for trading futures and options on an Indian index.

25-May-00

SEBI gave permission to NSE and BSE to do index futures trading.

09-Jun-00

Trading of BSE Sensex futures commenced at BSE.

12-Jun-00

Trading of Nifty futures commenced at NSE.

25-Sep-00

Nifty futures trading commenced at SGX.

02-Jun-01

Individual Stock Options & Derivatives

In less than three decades of their coming into vogue, derivatives markets have become the most important markets in the world. Today, derivatives have become part and parcel of the day-to-day life for ordinary people in major part of the world. Until the advent of NSE, the Indian capital market had no access to the latest trading methods and was using traditional out-dated methods of trading. There was a huge gap between the investors' aspirations of the markets and the available means of trading. The opening of Indian economy has precipitated the process of integration of India's financial markets with the international financial markets. Introduction of risk management instruments in India has gained momentum in last few years thanks to Reserve Bank of India's efforts in allowing forward contracts, cross currency options etc. which have developed into a very large market.

Commodities Market India commodity market consists of both the retail and the wholesale market in the country. The commodity market in India facilitates multi commodity exchange within and outside the country based on requirements. Commodity trading is one facility that investors can explore for investing their money. The India Commodity market has undergone lots of changes due to the changing global economic scenario; thus throwing up many opportunities in the process. Demand for commodities both in the domestic and global market is estimated to grow by four times than the demand currently is by the next five years.

Commodity Trading Commodity trading is an interesting option for those who wish to diversify from the traditional options like shares, bonds and portfolios. The Government has made almost all commodities entitled for futures trading. Three multi commodity exchanges have been set up in the country to facilitate this for the retail investors. The three national exchanges in India are:  Multi Commodity Exchange (MCX)  National Commodity and Derivatives Exchange (NCDEX)  National Multi-Commodity Exchange (NMCE) Commodity trading in India is still at its early days and thus requires an aggressive growth plan with innovative ideas. Liberal policies in commodity trading will definitely boost the commodity trading. The commodities and future market in the country is regulated by Forward Markets commission (FMC).

Wholesale Market The wholesale market in India, an important component of the India commodity market, traditionally dealt with farmers and manufacturers of goods. However, in the present scenario, their roles have changed to a large extent due to the enormous growth that the economy has witnessed. The lengthy process of wholesalers buying from manufacturers; then selling it to retailers who in turn sold it to consumers does not seem feasible today. An improvement in the transport facility has made the interaction between the retailer and manufacturer easier; the need for a wholesale market is gradually diminishing.

Retail Market The retail market in India is currently witnessing a boom. The growth in the India commodity market is largely attributed to this boom in the retail market. Policy reforms and liberal government policies have ensured that this sector is growing at a good pace. Some of the reasons attributed to the growth of retail sector in India include the large population of the country who has an increased purchasing power in their hand. Another factor is the heavy inflow of foreign direct investment (FDI) in this sector. More than 80% of the retail industry in the country is concentrated in large cities.

India Commodity Market - Global Scenario Despite having a robust economy, India's share in the global commodity market is not as big as estimated. Except gold the share in other sectors of the commodity market is not very significant. India accounts for 3% of the global oil demands and 2% of global copper demands. In agriculture India's contribution to international trade volume is rather less compared to the huge production base available. Various infrastructure development projects that are being undertaken in India are being seen as a key growth driver in the coming days.

Currency (Foreign Exchange or Forex) Market The foreign exchange market in India started in earnest less than three decades ago when in 1978 the government allowed banks to trade foreign exchange with one another. Today over 70% of the trading in foreign exchange continues to take place in the inter-bank market. The market consists of over 90 Authorized Dealers (mostly banks) who transact currency among themselves and come out "square" or without exposure at the end of the trading day. Trading is regulated by the Foreign Exchange Dealers Association of India (FEDAI), a self regulatory association of dealers. Since 2001, clearing and settlement functions in the foreign exchange

market are largely carried out by the Clearing Corporation of India Limited (CCIL) that handles transactions of approximately 3.5 billion US dollars a day, about 80% of the total transactions. The liberalization process has significantly boosted the foreign exchange market in the country by allowing both banks and corporations greater flexibility in holding and trading foreign currencies. The growth of the foreign exchange market in the last few years has been nothing less than momentous. In the last 5 years, from 2000-01 to 2005-06, trading volume in the foreign exchange market (including swaps, forwards and forward cancellations) has more than tripled, growing at a compounded annual rate exceeding 25%. In March 2006, about half (48%) of the transactions were spot trades, while swap transactions (essentially repurchase agreements with a one-way transaction - spot or forward - combined with a longer- horizon forward transaction in the reverse direction) accounted for 34% and forwards and forward cancellations made up 11% and 7% respectively. About two-thirds of all transactions had the rupee on one side. In 2004, according to the triennial central bank survey of foreign exchange and derivative markets conducted by the Bank for International Settlements (BIS (2005a)) the Indian Rupee featured in the 20th position among all currencies in terms of being on one side of all foreign transactions around the globe and its share had tripled since 1998. As a host of foreign exchange trading activity, India ranked 23rd among all countries covered by the BIS survey in 2004 accounting for 0.3% of the world turnover. Trading is relatively moderately concentrated in India with 11 banks accounting for over 75% of the trades covered by the BIS 2004 survey.

Market Analysis

A stock market analysis is an evaluation of the market in an attempt to predict future market actions or to provide a general insight into the market. Basically there are two types of stock market analysis: a) Fundamental analysis. b) Technical analysis

Fundamental Analysis Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and management. When analyzing a stock, futures contract, or currency using fundamental analysis there are two basic approaches one can use; bottom up analysis and top down analysis. Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives: 

To conduct a company stock valuation and predict its probable price evolution



To make a projection on its business performance



To evaluate its management and make internal business decisions



To calculate its credit risk

Technical analysis

A technical analyst performs a stock market analysis by looking at market trends and chart patterns, and analyzes past market actions. In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis build on and incorporate many of the same tools of technical analysis, which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. Technical analysts examine what investors fear or think about those developments and whether or not investors have the wherewithal to back up their opinions; these two concepts are called psych (psychology) and supply/demand.

Technical Analysis depends on: -Price -Volume -Demand & Supply

Price Fields Relevant to Technical Analysis: -Open: The opening price for a stock in a day. -Close: The closing price of a stock in a day. -High: The highest price of a stock in a day. -Low: The lowest price of a stock in a day. Volume: Quantity of a particular Asset traded on a particular day, including: =

(no of shares/contracts bought) + (no. of shares/contracts sold)

Tools Used Technicians employ many techniques, one of which is the use of charts. Using charts, technical analysts seek to identify price patterns and market trends in financial markets and attempt to exploit those patterns. Technicians use various methods and tools, the study of price charts is but one. Technicians using charts search for archetypal price chart patterns, such as the well-known head and shoulders or double top/bottom reversal patterns, study technical indicators, moving averages, and look for forms such as lines of support, resistance, channels, and more obscure formations such as flags, pennants, balance days and cup and handle patterns.

Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation. Technicians also look for relationships between price/volume indices and market indicators. Examples include the relative strength index, and MACD. Other avenues of study include correlations between changes in options (implied volatility) and put/call ratios with price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility, etc. There are many techniques in technical analysis.The most popular technique involves the use of candlestick charting.

Some technical analysts use subjective judgment to decide which pattern(s) a particular instrument reflects at a given time and what the interpretation of that pattern should be.

Others employ a strictly mechanical or systematic approach to pattern identification and interpretation.

Principles A fundamental principle of technical analysis is that a market's price reflects all relevant information, so their analysis looks at the history of a security's trading pattern rather than external drivers such as economic, fundamental and news events. Price action also tends to repeat itself because investors collectively tend toward patterned behavior - hence technicians' focus on identifiable trends and conditions.

Market Action Discounts Everything Based on the premise that all relevant information is already reflected by prices, technical analysts believe it is important to understand what investors think of that information, known and perceived.

Prices Move In Trends Technical analysts believe that prices trend directionally, i.e., up, down, or sideways (flat) or some combination. The basic definition of a price trend was originally put forward by Dow Theory.

History Tends To Repeat Itself Technical analysts believe that investors collectively repeat the behavior of the investors that preceded them. To a technician, the emotions in the market may be irrational, but they exist. Because investor behavior repeats itself so often, technicians believe that recognizable (and predictable) price patterns will develop on a chart. Technical analysis is not limited to charting, but it always considers price trends. For example, many technicians monitor surveys

of investor sentiment. These surveys gauge the attitude of market participants, specifically whether they are bearish or bullish. Technicians use these surveys to help determine whether a trend will continue or if a reversal could develop; they are most likely to anticipate a change when the surveys report extreme investor sentiment. Surveys that show overwhelming bullishness, for example, are evidence that an uptrend may reverse; the premise being that if most investors are bullish they have already bought the market (anticipating higher prices). And because most investors are bullish and invested, one assumes that few buyers remain. This leaves more potential sellers than buyers, despite the bullish sentiment. This suggests that prices will trend down, and is an example of contrarian trading.

Analysis through Charts Charting Terms and Indicators 

Resistance - a price level that may prompt a net increase of selling activity



Support - a price level that may prompt a net increase of buying activity



Breakout - the concept whereby prices forcefully penetrate an area of prior support or resistance, usually, but not always, accompanied by an increase in volume.

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Trending - the phenomenon by which price movement tends to persist in one direction for an extended period of time

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Average true range - averaged daily trading range, adjusted for price gaps

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Chart pattern - distinctive pattern created by the movement of security prices on a chart



Dead cat bounce - the phenomenon whereby a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement

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Momentum - the rate of price change

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Cycles - time targets for potential change in price action (price only moves up, down, or sideways)



Market Condition - the state of price movement as being in a state of range expansion or a range contraction.

Types of Charts 

Open-high-low-close chart - OHLC charts, also known as bar charts, plot the span between the high and low prices of a trading period as a vertical line segment at the trading time, and the open and close prices with horizontal tick marks on the range line, usually a tick to the left for the open price and a tick to the right for the closing price.



Candlestick chart - Of Japanese origin and similar to OHLC, candlesticks widen and fill the interval between the open and close prices to emphasize the open/close relationship. In the West, often black or red candle bodies represent a close lower than the open, while white, green or blue candles represent a close higher than the open price.



Line chart - Connects the closing price values with line segments.

Overlays Overlays are generally superimposed over the main price chart. 

Resistance - a price level that may act as a ceiling above price



Support - a price level that may act as a floor below price



Trend line - a sloping line described by at least two peaks or two troughs

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Channel - a pair of parallel trend lines

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Moving average - the last n-bars of price divided by "n" -- where "n" is the number of bars specified by the length of the average. A moving average can be thought of as a kind of dynamic trend-line.

Criticism of Technical Analysis Whether technical analysis actually works is a matter of controversy. Methods vary greatly, and different technical analysts can sometimes make contradictory predictions from the same data. Many investors claim that they experience positive returns, but academic appraisals often find that it has little predictive power.

Contrasting the Two Types of Analysis Technical analysis is frequently contrasted with fundamental analysis, which is the study of economic factors that influence the well-being of the economy, industry groups and companies, and eventually, how these factors affect investors in financial markets. Technical analysis holds that prices already reflect all such trends before investors are aware of them. Uncovering those trends is what technical indicators are designed to do, imperfect as they may be. Fundamental indicators are subject to the same limitations, naturally. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions. Technical analysis stands in contrast to the fundamental analysis approach to security and stock analysis. Technical analysis analyzes price, volume and other market information, whereas fundamental analysis looks at the facts of the company, market, currency or commodity. Most large brokerage, trading group, or financial institutions will typically have both a technical analysis and fundamental analysis team.

Trader Terminal at IIFL

India Infoline Ltd. has a trader terminal which has been designed and built as comprehensive trading tool, with superior charting and analytical capabilities, which allows you to place orders and get them executed very fast. Market watch window shows the following details of particular scrip/stock: 1. Category 2. Exchange 3. Percentage change 4. Indicator 5. Last rate 6. Bid quantity 7. Bid rate 8. Offer quantity 9. Offer rate 10. Previous close 11. Total quantity

II.

Action Watch Equity This particular window provides real time data of the latest High or Low hit by any of stocks listed on the exchange.

III.

Equity Calls This window is specifically meant for receiving the equity calls or other such investment calls that come from the research centre for daily trading or position holding.

Key Market Events Stock Market is like a roller-coaster ride. Not every stage lasts for long. If something goes up, then it has to come down. We often come across these terms - 'Go catch the rally', 'Markets seem bearish', 'Square-off your position', 'Markets may crash', etc.

Market follows two different trends i.e. upward and downward which are also known as 'Bulls n Bears phase' and the stream from one trend to another create profits and losses. Up moves are referred to as Bull and downturns are bear.

Factors impacting stock market trends There are five factors which impact stock market trends and traders use them as triggers to take decisive direction. They watch these factors closely and predict a possible market direction.

1. Economic Indicators

Stock markets react on various economic factors, such as interest rates, inflation, GDP growth, money supply, unemployment rate, change in fiscal policies, Index of Industrial Production (IIP) numbers, etc.

All these factors are directly or indirectly related to each other. Any change in these indicators will have an impact on stock markets. It may impact any particular stock, particular sector or stock market as a whole. These economic indicators play a major role driving the stock market trend. For example, inflation - it has a great impact on stock market. Government usually raises interest rates during high inflation, which in turn increases company's borrowing cost and that results into low profitability. And, during high inflation, short-term financial instruments like short-term bonds perform well, so investors move their money from

stock

market

to

such

instruments.

2. Global markets If other economies are performing quite well compared to our economy, investors prefer investing into those economies. For example, currently US and Europe are struggling hard to come out of crisis, so investors are shying off investing in their economies because they prefer investing in economy with strong GDP growth rate. Investors and traders usually track global markets because that directly or indirectly impact domestic markets. For example, IT companies, they have good revenues from abroad. If global markets are not performing well, that may impact their sales.

3. Foreign Institutional Investors (FIIs)

Foreign capital is free and unpredictable and is always on the lookout of profits. Flls frequently move market trends, and those swings can be expected to bring severe price fluctuations resulting in increasing volatility. Good performance of domestic companies and strong economic growth of the country can attract large number of FIIs. More FII inflows drive markets up and vice versa.

4. Speculative Activities Speculators are usually risk takers. They are rational investors and they predict trends by looking at the fundamental factors of the stock. They invest when the prices are too low and sell when prices are too high. When investors become speculators they are purchasing a stock with the sole purpose of selling it to someone else at a higher price. They can easily lift and move the prices down by any point of time.

5. Supply and Demand Supply and Demand forces play a vital role in stock market. Price of stock changes as supply or demand changes. Demand is positively related to price of the stock i.e. if demand is more than supply, prices will rise. Supply is inversely related to the stock i.e. if supply increases beyond current demand, prices will fall. Stocks fluctuate on a short and long-term scale, creating trends. The threat of supply drying up at current prices forces buyers to buy at higher and higher prices, creating large price increases. If a large group of sellers were to enter the market, this would increase the supply of stock available and would likely push prices lower.

we saw 2 major market developments that had a huge effect on the entire Stock market apart from various other events while working on this project:

I. RBI Credit Policy II. IGL shares tanked 40% IGL shares tanked 40% Shares in gas utilities firm Indraprastha Gas (IGL) plunged 33.7% to end at Rs 229.80 on the Bombay Stock Exchange on 10th feb 2014. In contrast, the Sensex gained 22 points to 17,244. IGL stocks closed off the day's low. In early trade, shares of the company had touched a low of Rs 170.

The sharp fall was over a government regulator's directive to cut gas tariffs retrospectively from April 2008. IGL has approached the Delhi High Court against the regulator's order, the company confirmed.

Five reasons why stocks tanked: 1. Government regulator Petroleum and Natural Gas Regulatory Board had ordered Indraprastha Gas Ltd (IGL) to cut tariff by around 60%. The new tariff will be applicable on retrospective basis from April 2008. This is the first time the regulator has determined tariff for any City Gas Distribution player. L Mansingh, ex-chairman of PNGRB claims that this is not a retrospective order and had been on the cards from the beginning. The tariff determination for the network is the statutory responsibility of the regulator for which the regulator has notified the regulations in March 2008. So from that day, the tariff determination as provided in the regulation takes hold.

2. Impact on financials: The total refund on account of the retrospective nature of the order could be Rs 900-1,200 crore, which is 20-25% of current market capitalization, Citigroup said. The potential downside is to the tune of 45-65% to earnings before interest, tax, depreciation and amortization. IGL will struggle to make even normative returns on the capital, Citi noted. 3. The regulator wants IGL to return the excess tariff charged till now. However, it has not yet provided a framework to return the excess tariff charged. Since the entire business of CNG and PNG is a retail business, which is a cash and carry business, there are no identifiable customers so retrospective refund is not possible. This the basis on which IGL has gone to High court. 4. Tariff order also requires selling prices to be reduced immediately. 5. The selling price for gas includes cost of gas, network tariff, compression charge and marketing margin. The regulator has determined the network tariff & 'compression charge.' For now, marketing margins remains a key variable for earnings as margins are not regulated currently. So, IGL has the option to increase marketing margins. HSBC downgraded the stock to ‘underweight' and cut the target price to Rs 150 per share from Rs 366 per share. The company can make up for lower tariff by higher marketing margin, but it may be short-lived. Other government firms that had significant stake in IGL also saw selling pressure. Oil marketing firm BPCL, which owns 22.5% stake in IGL, declined 2%. Another gas distributor GAIL India Limited that owns 22.5% stake in IGL ended 1.8% lower. Pipeline firm Gujarat State Petronet and gas distribution firm Gujarat Gas Company may soon get tariff revision orders from the regulator. Natural gas importer Petronet LNG may also come under the purview of the gas regulator. The regulator will also decide on the marketing margin that can be charged by any gas marketing entity. Until now, the margins have been agreed on between the buyers and the sellers. The regulator had asked

for data regarding marketing margins from all companies though it is yet to decide on a cap on marketing margins.

RBI Credit Policy The Reserve Bank of India on 17th jan 2014 surprised the money and stock markets by cutting the benchmark repo rate by 50 basis points to 8%, twice the 25 basis point cut that most players were expecting. It, however kept the cash reserve ratio unchanged, and warned of inflationary risks and limited room for further interest rate cuts. Key highlights of the Credit Policy:

1. Reasons for the Repo Rate Cut 

Growth decelerated significantly to 6.1 per cent in Q3 of 2013-14, though it is expected to have recovered moderately in Q4. Based on the current assessment, the economy is clearly operating below its post-crisis trend.



As earlier projected, headline WPI inflation as well as non-food manufactured products inflation moderated significantly by March 2014.

2. Outlook for the Economy 

Industry is expected to perform better than in last year as leading indicators of industry suggest a turnaround in IIP growth. The global outlook also looks slightly better than expected earlier. Overall, the domestic growth outlook for 2013-14 looks a little better than in 2012-13.



Growth has fallen significantly in the past three quarters. Projections suggest that the economy will revert close to its post-crisis trend growth in 2013-14, which does not leave much room for monetary policy easing without aggravating inflation risks.



The apparent decline in the trend rate of growth relative to the pre-crisis period is the emergence of significant supply bottlenecks on a variety of fronts like infrastructure, energy, minerals and labor. A strategy to increase the economy's potential by focusing on these constraints is an imperative.

3. Outlook on Inflation 

Keeping in view the domestic demand-supply balance, the global trends in commodity prices and the likely demand scenario, the baseline projection for WPI inflation for March 2014 is placed at 6.5 per cent.



Going forward, the inflation scenario remains challenging. Upside risks to inflation persist. These considerations inherently limit the space for further reduction in policy rates.



Pressure on prices of protein-rich items will continue to be a risk factor for food inflation.



Crude oil prices are expected to remain high and the pass-through of past price increases in the international market to domestic petroleum product prices remains significantly incomplete.



There also remains an element of suppressed inflation in respect of coal and electricity. However, non-food manufactured products inflation is expected to remain contained reflecting the lagged effect of past monetary policy tightening on aggregate demand.



Corporate performance numbers also indicate that the pricing power has reduced.

4. Government Action Needed 

Even though the Union Budget envisages a reduction in the fiscal deficit in 2013-14, several upside risks to the budgeted fiscal deficit remain. In particular, containment of non-plan expenditure within the budget estimates for 2013-14 is contingent upon the Government's ability to adhere to its commitment of capping subsidies.



The budgeted net market borrowings through dated securities for 2013-14 at Rs 4.8 trillion were even higher than the expanded borrowings of Rs 4.4 trillion last year. Such large borrowings have the potential to crowd out credit to the private sector. Crowding out of the more productive private credit demand will become more critical if there is fiscal slippage.



Persistent demand pressures emerging from inadequate steps to contain subsidies as indicated in the recent Union Budget will further reduce whatever space there is.

5. Outlook on Liquidity 

On liquidity, conditions are steadily moving towards the comfort zone of the Reserve Bank, as reflected in the decline in banks' borrowings from the LAF and the behavior of money market rates. The increase in the MSF limit will provide additional liquidity comfort.



To provide greater liquidity cushion, the borrowing limit of scheduled commercial banks under the marginal standing facility (MSF) has been raised from 1 per cent to 2 per cent

of their net demand and time liabilities (NDTL) outstanding at the end of second preceding fortnight with immediate effect. 

Banks can continue to access the MSF even if they have excess statutory liquidity ratio (SLR) holdings, as hitherto.

6.1 Individual Clients In earlier times Investor had the option of investing in Bank Deposits, Government Bonds, Post Office schemes like NSC, Indira Vikas Patra, Kisan Vikas Patra and Monthly Income Schemes. If he wanted exposure in real estate, he was buying land primarily. He bought gold mainly for his personal use on occasions like festival, marriage etc. and never seriously thought of it as an asset class. In today's scenario we have to take into account a major change i.e. economic prosperity all over. The entire world is talking about the robust growth rates in this part of the world. Higher income levels and booming stock markets have led to more and more numbers of HNIs. This means the availability of huge investible surplus. The investors with higher risk appetite want to experiment and try new and exotic products in the name of diversification. This has resulted in emergence of new options within the same or fresh asset classes. There are more products available within each asset class be it Equity, Mutual Fund, Gold, Real Estate etc. Let us examine the same in little more detail.

6.1.1 Equity One can invest in direct equity himself through a local broker or by utilizing the online platform of any large bank/NBFC. The other option is to avail the service of a reputed Broker/Asset Management Company (AMC) and sign on the Portfolio Management Scheme

(PMS) offered by them. For Primary market investment, one can apply for Initial Public Offers of various corporate. In the earlier era, people used to apply regularly and make some money on listing day. This still continues for some investors and actually it has become quite easier now if you are a tech savvy investor. Everything is instant now right from applying for new shares to getting back your refund in your bank account in less than a month's time. To decide on PMS provider one has to be careful though as most of them will talk about capital preservation with quality growth. They will assure the investor about good model and research-based advice and obviously about consistent returns. One has to then see whether they have process driven methods of capturing periodic gains and their performance history during volatile periods. One has to look at the margin of safety and kind of churning in the portfolio and last but not the least the kind of fee model i.e. flat or hurdle approach and understand the risk. At the end our investor is again at the crossroad and struggling to take the decision.

6.1.2 Derivatives Derivatives are primarily financial agreements derived from some underlying assets. These underlying has to be quantifiable and can be anything from Equity/Forex/Loan etc. Derivatives can be used for Hedging, Speculating or Arbitrage. This is a double edged sword and if not used judiciously this can destroy the total net worth of an investor so when to use it and how to use it is a big question for the investor today.

6.1.3 Commodities Indian markets have recently thrown open a new avenue for investors in the form of Commodity derivatives. For those who want to diversify their portfolios beyond shares, bonds and real estate, commodities are another option available now. Commodities offer potential to become a separate asset class for market savvy investors in times to come. This

can be a hedging tool also if one has specific interest in a particular commodity. Investors who claim to understand the equity markets may find commodities an unfathomable market. With the setting up of three multi-commodity exchanges in the country, retail investors can now trade in commodity futures without having physical stocks. These exchanges are regulated by the Forward Markets Commission. Unlike the equity markets, brokers don't need to register themselves with the regulator. The FMC deals with exchange administration and will seek to inspect the books of brokers only if foul practices are suspected or if the exchanges themselves fail to take action. Now to invest in this asset class one has to go to a member broker. Several already established equity brokers have sought membership with these exchanges. Some of them also offer trading through Internet just like the way they offer equities. You can also get a list of more members from the respective exchanges and decide upon the broker you want to choose from. At the end the investor is left with few questions again which commodity has to be bought and why. There is a global market for most of such commodities so it has lot of depth but the risks are also inherent in this form of investment.

In recent times gold has appreciated and everybody is now talking about this new asset class and it is termed as a very good hedge also. In Indian Context, earlier people used to buy gold in form of jewellery on occasions like marriage, festival etc. On the investment front, few investors used to buy gold bars. Today there are more options and slightly better options to invest in Gold. More and more investors are buying Gold ETFs, as this is one of the best ways to invest in Gold. Another variant is investing in gold mines across the world. This option is also available through MF route as there are specific MF scheme investing in gold mining companies across the world.

6.1.4 Mutual Funds

This is an option which has shown mindboggling growth and it has become one of the most important and popular choice in recent times. Under this option if we look at earlier era we had few MF schemes like Master Share and Master Gain from Unit Trust of India, Morgan Stanley Growth Fund which generated huge response. Today, there are over 600 MF schemes available and there are at least 20 types of variants like Diversified, Sectoral, Floaters, Liquid, and Arbitrage etc. There were more than 150 New Fund Offers last year. Even for investment/disinvestments there are several ways known as Systematic Investment Plans (SIPs), Systematic Withdrawal Plans (SWP). The SIPs actually works on rupee cost averaging and then there is another concept called "Value Averaging" thus ultimately leaving investor wandering how to select the best option

6.1.5 Real Estate The only way one could invest in this asset class earlier was to buy a piece of land or house/shop. However, the property market is not that efficient, not very transparent at times, the liquidity a major constraint and the transaction costs very high thus making the decision to invest very difficult. One has to look at the options then like reality funds. A reality fund is an entity established usually in the form of a trust or a company for collecting funds from various investors (known as contributors) which then invest these funds in portfolio companies engaged in developing real estate projects with the objective of realizing profits from such investments with in a defined time frame. These funds are typically structured as pooled vehicles into portfolio companies or special purpose vehicles (SPVs), which offer the contributors a number of benefits such as leveraging and tax efficiency. The portfolio companies generate cash flows in the term of periodical income and/or sales realization and generate returns largely through dividend and capital gains for the contributors. One can also

buy stocks of Real Estate companies being listed on exchanges. There is a possibility now for Real Estate Mutual Funds to be introduced soon.

6.2 Corporate Clients Finance is the money available to spend on business needs. Right from the moment someone thinks of a business idea, there needs to be cash. As the business grows there are inevitably greater calls for more money to finance expansion. The day to day running of the business also needs money.

6.2.1 Need for Financing The main reasons for which a business needs finance have been discussed below:

Start A Business Depending on the type of business, it will need to finance the purchase of assets, materials and employing people. There will also need to be money to cover the running costs. It may be some time before the business generates enough cash from sales to pay for these costs. Link to cash flow forecasting.

Finance Expansions To Production Capacity As a business grows, it needs higher capacity and new technology to cut unit costs and keep up with competitors. New technology can be relatively expensive to the business and is seen as a long term investment, because the costs will outweigh the money saved or generated for a considerable period of time. And remember new technology is not just dealing with computer systems, but also new machinery and tools to perform processes quicker, more efficiently and with greater quality.

b)To Develop And Market New Products In fast moving markets, where competitors are constantly updating their products, a business needs to spend money on developing and marketing new products e.g. to do marketing research and test new products in "pilot" markets. These costs are not normally covered by sales of the products for some time (if at all), so money needs to be raised to pay for the research.

c)To Enter New Markets When a business seeks to expand it may look to sell their products into new markets. These can be new geographical areas to sell to (e.g. export markets) or new types of customers. This costs money in terms of research and marketing e.g. advertising campaigns and setting up retail outlets.

d)Take-Over Or Acquisition When a business buys another business, it will need to find money to pay for the acquisition (acquisitions involve significant investment). This money will be used to pay owners of the business which is being bought.

Moving To New Premises Finance is needed to pay for simple expenses such as the cost of renting of removal vans, through to relocation packages for employees and the installation of machinery.

Risk Management

A business faces various types of risks which need to be properly hedged in order to minimize losses in case of occurrence of unfavorable events.

To Pay For The Day To Day Running Of Business A business has many calls on its cash on a day to day basis, from paying a supplier for raw materials, paying the wages through to buying a new printer cartridge.

6.2.2 Choosing the Right Source of Finance A business needs to assess the different types of finance based on the following criteria:

a) Amount of money required - a large amount of money is not available through some sources and the other sources of finance may not offer enough flexibility for a smaller amount. b) How quickly the money is needed - the longer a business can spend trying to raise the money, normally the cheaper it is. However it may need the money very quickly (say if had to pay a big wage bill which if not paid would mean the factory would close down). The business would then have to accept a higher cost. c) The cheapest option available - the cost of finance is normally measured in terms of the extra money that needs to be paid to secure the initial amount - the typical cost is the interest that has to be paid on the borrowed amount. The cheapest form of money to a business comes from its trading profits. d) The amount of risk involved in the reason for the cash - a project which has less chance of leading to a profit is deemed more risky than one that does. Potential sources of finance (especially external sources) take this into account and may not lend money to higher risk business projects; unless there is some sort of guarantee that their money will be returned.

e) The length of time of the requirement for finance - a good entrepreneur will judge whether the finance needed is for a long-term project or short term and therefore decide what type of finance they wish to use.

CHAPTER 2 COMPANY PROFILE WITH ITS SWOT ANALYSIS

The IIFL (India Infoline Ltd.) group, comprising the holding company, India Infoline Ltd (NSE: INDIAINFO, BSE: 532636) and its subsidiaries, is one of India's premier providers of financial services. IIFL offers advice and execution platform for the entire range of financial services covering products ranging from Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, Gold bonds and other small savings instruments.

3.1 Business Model IIFL, started as a company providing independent and unbiased research. But over the years, they have added almost the entire gamut of financial products and services to their portfolio of offerings. They not only offer advice and products to customers, but also execute their orders and provide constant service thereafter.

3.2 Evolution

1995



Commenced operations as an Equity Research firm

1997



Launched research products sectors and the economy

1999



Launched www.indiainfoline.com

2000



Launched online trading through www.5paisa.com Started distribution of life insurance and mutual fund

2003



Launched proprietary trading platform Trader Terminal for retail customers

2004

 

Acquired commodities broking license Launched Portfolio Management Service

2005



Maiden IPO and listed on NSE, BSE



Acquired membership of DGCX Commenced the credit & finance

2006 2007 2008 2009





 

 

 

2011

Commenced institutional equities business under IIFL Formed Singapore subsidiary, IIFL (Asia) Pvt. Ltd Launched IIFL Wealth Transitioned to insurance broking model Acquired registration for Housing Finance Obtained Venture Capital license



Received membership of the Singapore Stock Exchange and Colombo Stock Exchange Commenced operations in Singapore & Colombo



Received SEBI final approval for IIFL Mutual Fund



2010

of leading Indian companies, key

3.3 IIFL Network

IIFL has a wide distribution network with:   

Over a million customers all over India Presence in over 3,000 business locations across 500 cities. Global footprint extends across geographies with offices in Colombo, Dubai, Singapore and New York.

3.4 IIFL Businesses IIFL offers almost the entire gamut of financial services in India They can be broadly categorized into:      

Equities, commodities and currency broking Wealth Management services Investment banking Distribution of Life Insurance products Distribution of Mutual funds, Fixed Deposits, RBI Bonds and Small Savings Distribution of Mortgages and other Loan products

Therefore as on date they are into the following businesses:     

They are registered with BSE and NSE for securities trading. They are registered with MCX, NCDEX and DGCX for commodities trading. They are registered with CDSL and NSDL as depository participants. They are a SEBI registered portfolio manager. They are the first Indian broker to have memberships of the Colombo Stock Exchange



and also on the Singapore Stock Exchange. Distribution of Mutual funds, Fixed Deposits, RBI Bonds and Small Savings among



others. India Infoline Housing Finance Ltd, the housing finance arm, is registered with the National Housing Bank for distribution of Mortgages and other Loan products



They are Insurance brokers registered with the IRDA and we distribute insurance



products of all leading insurance companies. They are one of the fastest growing companies in the Indian Wealth Management



space. They have received approval in 2011 to start our Mutual Funds operations

3.5 Corporate Structure

3.6 Key Initiatives 3.6.1 IIFL Mutual Fund During the year 2011, IIFL received final regulatory approval from the

Securities and Exchange Board of India (SEBI) to commence operations of the IIFL Mutual Fund. This will enable commencement of mutual fund business and launching of mutual fund schemes in due course. IIFL, with its distribution reach spanning over 500 cities/towns, is well placed to take the mutual fund penetration wider and deeper. The company sees an opportunity for mutual fund mobilization in tier‐II and tier‐III cities. It aims to leverage upon the in-depth understanding of technology and reach to offer retail investors a variety of products with minimal expense ratio and encourage them to invest for the long term.

3.6.2 Asia Expansion During the year, on the global financial services business, the Company's Singapore subsidiary received the final approval from Singapore Stock Exchange for its equity broking business. The subsidiary commenced its broking operations from December 2010. Similarly the Company's subsidiary in Sri Lanka received the approval from Colombo Stock Exchange and SEC, Sri Lanka for undertaking broking business in July 2010, thereby becoming the first Indian broking Company to set up broking business in Sri Lanka. We expect both these subsidiaries to scale up their business substantially during the current year and going forward.

3.6.3 Other International Initiatives

Under the advisory, wealth management and distribution business, the Company has set up subsidiaries in UK and Dubai and received approvals from the overseas regulators during the year. It is expected that these subsidiaries will commence business during the current year.

3.6.4 New Memberships The company has received Trading and Clearing membership of Currency Derivative Segment of United Stock Exchange of India Limited. Further IIFL Capital Limited, the wholly owned subsidiary received Trading and Clearing membership from National Stock Exchange of India Limited, Bombay Stock Exchange Limited and MCX Stock Exchange Limited.

3.6.5 Financial Literacy Campaign The company has taken a pioneering initiative to spread financial literacy. It launched a comprehensive financial education and awareness initiative, FLAME ‐ Financial Literacy Agenda for Mass Empowerment on February 18, 2011. FLAME was launched by Dr. K.C. Chakrabarty, Deputy Governor, RBI and Mr. Deepak S Parekh, Chairman, HDFC at a function attended by the leading luminaries from the financial services space. Under this initiative IIFL Group has launched a series of advertisements in leading newspapers on financial literacy and also plans to conduct seminars and issue training materials to the public for spreading financial literacy.

3.6.6 Awards and Recognitions The company has been awarded the ‘Best Equity Broker of the Year' at the Bloomberg UTV Financial Leadership Awards, 2011. The award was presented by the Honorable Finance Minister of India, Shri Pranab Mukherjee on March 26, 2011.

4. Financial Markets A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods. There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded). Markets work by placing many interested buyers and sellers, including households, firms, and government agencies, in one "place", thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. In finance, financial markets facilitate: 

The raising of capital (in the capital markets)



The transfer of risk (in the derivatives markets)



Price discovery



Global transactions with integration of financial markets



The transfer of liquidity (in the money markets)



International trade (in the currency markets)

Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. This return on investment is a necessary part of markets to ensure that funds are supplied to them.

SWOT ANALYSIS

CHAPTER 4 RESEARCH METHEDOLOGY

4.1 SCOPE OF THE STUDY This study is undertaken to measure the Stock Broking Firms in of New Generation private sector commercial stock companies in India. The study will provide details about the growth of deposits and advances, profitability analysis of the selected banks. It is hoped that the result of this study will propose policy measures for the betterment of the new generation private sector banks to achieve the good financial performance. Data has been collected through one to one interaction and discussion with various people who are involved in the business of finance manager, financial Advisors, Marketing Manager

Customers and others. Newspapers, Internet, Magazines and Journals would provide ample material about latest trends and practices in Power industry. Mother Dairy. Various outdoor activities to boost its business and brand. Interaction with customers during such outdoor activities would enable to understand the success ratio of such kind of outdoor activities. Various products of the company would be discussed with respect to their benefits and advantages. Various tours & Power s players would be compared with respect to their market share and products that they offer.

CHAPTER 5 RESEARCH METHODOLOGY 4.2 SAMPLE SIZE Sr. no.

Respondent

1.

Users

Number of respondents

4.3 Sampling Method/Technique sampling frame/unit ,

100

/Sample

size,

Different types of data analysis techniques used in the research project should be specifically mentioned. Such as:  Basic analytical tools, which include Tabular Analysis, Graphical Analysis, Percentage Analysis. 4.2.3 Sample procedure:I have prepared this project as descriptive type, as the objective of the study. 4.3 Sources of data It involves use of secondary and primary sources such as web and other research articles printed by various companies and other journals and magazine.

4.4 Methods of data collection

Primary data: It is original data, first hand and for the specific purpose of the

research

project. For this project, I have used the following common research instrument:

Questionnaire: Questionnaire development is the critical part of primary data collection

job. For this I have prepared a questionnaire in such away that it is able to collect all relevant information regarding the project. In this questionnaire, I have used mostly close-ended questions that are easier to be answered by respondents (consumers) and also easier for interpretation and tabulation & one open-ended question to take the opinion of the respondents in their own words. The questions were asked to the consumers covering perception towards their purchase, price of the product, purpose for using the product, characteristic of the product, brand image, effectiveness of the advertisements, sales promotional activities, overall opinion about the product, etc. For collecting the answers from the above questionnaire, I have used the following common method:

Interview: It is the most common method for contacting consumers & collecting

primary data. For this project I have used following type of interview:

Personal interview: It is the most extensively used method. It enables better control of the

sample and ensures answers from the respondents. It also provides for a tactful approach to the respondent since it is based on a person-to-person talk. But this method is generally more expensive and time consuming. For this project each interview was taking 15 to 20 minutes to complete. Interview was also delayed due to un-availability of respondent in house. Secondary data. It was collected to add the value to the primary data. Data regarding IMRB, International (Indian Marketing Research Bureau) history, its profile and other necessary records and information was collected by referring to website, magazines, annual reports, reference books, daily newspapers, etc.

4.5 Tools and techniques of analysis E.g Ratio Analysis

Basic analytical tools, which include Tabular Analysis, Graphical Analysis, Percentage Analysis.

4.6 Statistical/ Instrument used E.g Ms. Excel, SPSS etc  Excel  SPSS

CHAPTER 6 DATA COLLECTION AND DATA ANALYSIS Survey Analysis

1. Male Vs Female

Female No. of People Percentage Male

0

10

20

30

40

50

60

70

80

90

2. No. of people participated in survey on the basis of different age group.

No. of People Different Age Group 40-50; 23.33%

50-60; 5.00% 20-30; 43.33%

30-40; 28.33%

In this survey total 60 persons participated. Out of 60, 54 are male and 6 are female. If we take the people age group wise then 20-30(44%), 30-40(28%), 40-50(23%) and 50-60(5%). This shows that younger generation more attract towards privatisation means private sector.

3. No. of people participated in survey from different occupation.

Others

Businessman No. of People Percentage

Private

Government 0

10

20

30

40

50

60

4. No. of people from different income group.

According to Income Group No. of People Above 5.5; 13.33%

4.5 - 5.5; 36.67%

2.5 - 3.5; 20.00%

3.5 - 4.5; 30.00%

Here we easily see that the 55% people are businessman and 40% are from private jobs. And in income group 37% people are from income group 4.5 -5.5 lakh and the 30% are 3.5-4.5 lakh. So conclusion that here the majority of businessman and private job person are interested in saving account.

1. What is your position within the company?     

Middle Management (Manager, Senior Manager, General Manager.) Senior Management(Above than General Manager) No answer Other Executive Grade

Middle Management

Survey Result 20

Senior Management

25

No Answer

0

Other

15

Executive

40

Survey Result

Middle Management; 20; 20.00% Executive; 40; 40.00% Senior Management; 25; 25.00% Other; 15; 15.00%

Our survey result contributed out of 100 people 20 % people are working in cedar to Middle management of the company adding with this 25% respondent from different company Working as a senior management major chuck which contributed in our survey because generally decision control found more in this segment is executive i.e. 40% . Other signifies a junior level of employee from different company.

2. For how long do you Investing in Indian stock market ?     

Less than 3 months Between 3-6 months Between 6-12 months Between 1-2 years Between 3-5 years

 More than 5 years  No answer  Other

Duration of tenure Other; 2; 2.00% More than 5 Years; 3; 3.00% 3-5 Years; 8; Duration 8.00% of tenure; 17; 17.00%

Less than 3 Months; 16; 16.00% 1-2 years; 28; 28.00% 3-6 Months; 12; 12.00% 6-12 Months; 14; 14.00%

Out of 100 people for our survey 28% people responded that they are in investing there money in Indian stock market are in between of 3 to 5 years which is largest in the pie. Adding to this 17% respondent working with this investing there money in Indian stock market is more than of 3 months which is basically junior management also 16% said they investing there money in Indian stock market is more than with range of 3-6 Months.14% respondent said they investing there money in Indian stock market last 1-2 Years. While 8% respondent said they investing there money in Indian stock market more than 5 years

3. What is your investing money per month in Indian stock Market?       

Between 15,000-20,000 Between 20,001-25,000 Between 25,001-30,000 Between 30,003001-35,000 Above 40,000 I prefer not to answer Other

Investing Pattern By Indian Investor In Indian Stock Market 15000-20000

10

20001-25000

9

25001-30000

26

30001-35000

14

Above 40000

28

Not Answer

8

Other

3

No answer

2

Investment in Indian Stock

Other; 3; 3.00%

No answer; 2; 2.00%

15000-20000; 10; 10.00% Not Answer; 8; 8.00% 20001-25000; 9; 9.00%

Above 40000; 28; 28.00%

25001-30000; 26; 26.00%

30001-35000; 14; 14.00%

Investment in Indian stock market by the individual investor is we going to find out with this chart. 14% of the our people said who is involved in investing in the Indian stock market in between of INR 30000 to 35000 which is very good. Now 26% of the person who is investing in the Indian stock market is investing between 25000 to 30000 while 28% of the Individual

investor investing in the Indian Stock market which is Rs. Above than 40000 which is very good.

3. Are you agree with the recession hit in India? A. Yes

B. No.

Recession Hit in India Yes

96

No

4

Recession Hit in India No; 4; 4.00%

Yes; 96; 96.00%

96% of the people out of 100 think that recession would have very bad impact in the Indian subcontinent while 4% suggested that no recession does not has any impact on India. It is seems to have a very surprisingly result where 96% of the people are still agree that recession does have impact on the Indian stock market.

4. Do you think Recession has directly impacted to the Indian Stock Market? A. Yes

B.

No

Recession impacted In Indian stock Market Yes

99

No

1

Recession impacted In Indian stock Market Yes

No

No; 1; 1.00%

Yes; 99; 99.00%

Recession Impacted in Indian stock market we just try to focus on this about how many people actually think that recession showing there impact on the Indian stock market. While 99% of the people who is either related with Indian stock market says yes the think recession has double impact on the Indian Stock Market while 1% of the people suggested that no Recession does not has any negative impact on the Indian stock market. Perception of the individual investor also influence the PEST of the business. 5. Do you think investing money in Indian stock market will gives you profit for? A. Yes, Long run B. It Does not C. Short term Gain D. Institutional Investor Return on Investment Long Run Not

34 46

Short term Gain Institutional Investor

12 8

Return on Investment

Institutional Investor; 8; 8.00% Short term Gain; 12; 12.00% Long Run; 34; 34.00%

Not; 46; 46.00%

We ask this question to the individual investor how they will expected return on their investment 34% of the individual investor said they will get return on investment only if they will go for the Long Run. 46% of the people said according to him they will not get any return on there investment while it is real judging point for us because we try to find out how recession will impacting on the Indian Stock market.

6. How long do you think this effect would be symbolised in the Indian Stock Market? A. 2 to 4 Month B. 4 to 6 Month C. whole year D. No comment Impacting on Indian Stock market 2 to 4 Month

34

4 to 6 Month

57

Whole year

5

No comment

4

Impacting on Indian Stock market

No comment; 4; 4.00%

Whole year; 5; 5.00%

2 to 4 Month; 34; 34.00%

4 to 6 Month; 57; 57.00%

This question will tell us about how long this recession will impact on the Indian Inc. Or stock market of India. 34% of the people expected that this impact will continue 2 to 4 months while 57% of the people said this will impacting for 4 to 6 month which is quite high if we look at and compare Indian stock market. 7. What other option do you have for investment? A. B. C. D.

Bond Market Fixed Deposit Share Market Mutual fund Investment Option

Bond Market

67

Fixed Deposit

12

Share Market

17

Mutual Fund

4

Investment Option

Mutual Fund; 4; 4.00% Share Market; 17; 17.00%

Fixed Deposit; 12; 12.00% Bond Market; 67; 67.00%

Now in this time of recession how would individual investor has a different investment plan in this time this would be to analyze how individual investor has a different option to invest. 67% of the people suggested for Individual investor Bond market is the only secure option to be invest either way because that will give return on investment as well as the secured fixtures not 12% of the people suggested in this time they only go for the Fixed deposit or treasury bill 17% still preferred Share market to be invested because from there they will get maximum gain.

8. What other option do you have for investment? A. B. C. D.

Bond Market Fixed Deposit Share Market Mutual fund Investment Option

Bond Market

67

Fixed Deposit

12

Share Market

17

Mutual Fund

4

Investment Option

Mutual Fund; 4; 4.00% Share Market; 17; 17.00%

Fixed Deposit; 12; 12.00% Bond Market; 67; 67.00%

Now in this time of recession how would individual investor has a different investment plan in this time this would be to analyze how individual investor has a different option to invest. 67% of the people suggested for Individual investor Bond market is the only secure option to be invest either way because that will give return on investment as well as the secured fixtures not 12% of the people suggested in this time they only go for the Fixed deposit or treasury bill 17% still preferred Share market to be invested because from there they will get maximum gain.

CHAPTER 7 CONCLUSIONS, AND SUGGESTIONS

CONCLUSION To sum up, this project really helped me in understanding the stock market through many aspects which hovers around the market and plays influential role in moving it up and down. Finally, from all this it has come to my knowledge that Stock markets can give better returns to an investor as compared to any other investment option but there is always an element of risk involved with it. With proper knowledge and proper strategy one can always limit or minimize the losses and thus can be better off.

SUGGESTIONS The brokerage charge is the major means of earning for a brokerage house like India Infoline Ltd. Therefore, it gets increasingly difficult to maintain an edge in the extremely competitive industry with such low margins of brokerages. Though IIFL has diversified into other ways of earning like loans, selling third party insurance policies, property solutions, etc; brokerage charge continues to rule its balance sheet and there is no other way to improve than working on strength. Listed below are some suggestions which might help a brokerage firm to increase client base, number of transactions, which in either case would result in increased revenue.

Suggestions for Existing Clients

Suggestion I



Client with the highest trading volume could be given a reward of "NO



BROKERAGE WEEK". In this reward week that particular client could be allowed to do trading without any



brokerage fees. This strategy would motivate other clients for more trading.

Suggestion II



Customers could be sent weekly reports of top ten earners amongst the existing clients in a particular region. The same need not contain the name of the top earners, rather



just the amount they have earned through trading tips and assistance provided. It could contain a detailed description of when the top earners invested in which



shares. This could motivate people to invest more and think more on lines of investing.

8.2 Suggestions for New Clients

Suggestion I



To attract new clients, a unique plan for the first month to prospective clients could be provided. The plan would be "Nil Brokerage" if the client loses from a transaction.  "Double brokerage", if the client gains from a transaction.



Significance : A lost transaction always de-motivates an investor, specially a new one. So, adding cost of transaction acts like insult to injury.  When a customer makes profit, incurring some extra cost does not act as a dampener.  System feasibility should be checked and modified to implement this idea.

Suggestion II



Create a list of people who have been previously inactive in trading.



Use either emails or weekly journals to update them about the top stories with a list of highest earners, consistent earners without mentioning the names.



Now the weekly email or journals sent to these people should consist of highlighted contact section with subsection as a. Equity Specialist- Mr. W b. F&O Specialist- Mr. X

c. Commodity Specialist- Mr. Y d. Currency Specialist- Mr. Z The same can also be categorized on the basis of industry as some people have inclination of investing in a particular industry.

CHAPTER 8 LIMITATIONS Since my project deals with the research on a listed company, the limitations were very few because of the availability of sufficient data for the technical analysis. But for the fundamental analysis the current data for many key analyses were not available. The major limitations of the project can be grouped as follow:



The Balance sheet of the company for the FY 20011-16 was not available. This was a big limitation for the ratio analysis. Also, the Balance sheet of the



competitors was not published yet. The company does not provide a detailed analysis of its product portfolio and this was a big limiting factor while analysing the growth of the company over the last



year in different sector of financing viz Dairy Finance, Vehicle Finance etc. The economic survey for this year has not been done yet and because of that the key statistics like the expenditure on infrastructure, education and social sector



was not available which was vital for the economic analysis. Sometimes, the availability of too many data also poses a great problem and this happened during the project work as well. The different websites use to show

different figures over the same period of time and this ambiguity in data was quite problematic.

Despite these limitations, the project was completed in a smooth manner and the interesting nature of the project made all these limitations too small to think of.

Bibliography, Glossary Books:   

Portfolio Management : S. Kevin Financial Management : I M Pandey Financial Management : Dr. M Y Khan

Websites:

1. 2. 3. 4. 5. 6. 7. 8. 9.

India Infoline Research http://www.indiainfoline.com http://www.moneycontrol.com http://www.economictimes.indiatimes.com http://www.capitalmarket.com http://www.chartink.com http://www.onlinetradingconcepts.com http://www.nseindia.com http://www.stockcharts.com

Annexure Section A: Personal Information

1. NAME:

2. GENDER: a) Male

b) Female

3. MARTIAL STATUS: a) Single

b) Married

4. AGE: a) 15-20 yrs

b) 21-30 yrs

c) 31- 40 yrs

d) 41-50 yrs

e) >50 yrs

5. OCCUPATION: a) Government

b) Private Service

c) Business

d) other

6. ANNUAL INCOME: a) Up to 2 lacs

b) Between 2-3 lacs

c) 3-5 lacs

d) Above 5 lacs

7. If given an option, which bank will you prefer to deal with as a customer? a) Axis Bank Other______

b) HDFC Bank

c)SBI

d)

8. In terms of saving bank account opening, which bank would you prefer? a) Axis Bank b) HDFC Bank c)SBI d) Other______

9. What are the services you use of a bank, in saving account? a) ATM/Debit Card

b) Internet Banking

d) Mobile Banking

c) Cheque book at Par

f) Relationship Manager

10. Which bank as per your experience provides the best customer service when you personally visit the Bank? a)

Axis Bank

b) HDFC Bank

c) SBI

d)

Other______

11. What average balance account services you usually avail from your existing bank? a) < = Rs. 1000 d) = > Rs. 25000

b) = > Rs. 5000

c) = > Rs.10000

e) = > Rs. 100000

12. Which Bank’s ATM you use the most for cash withdrawal? a) Axis Bank

b) HDFC Bank

c) SBI

d)

Other______

13. Which is the most customer friendly Bank in terms of charges as per you? a) Axis Bank

b) HDFC Bank

c) SBI

Other______

14. Are all the Bank informed to you at the time of Saving Bank Account opening

d)

a)

Yes

b) No

15. If you have to do an investment, which Bank would you consult for Portfolio Management? a) Axis Bank

b) HDFC Bank

c)SBI

d) Other______

16. Kindly rate the below mentioned banks as per the ambience and infrastructure facilities provided to the customers? NOTE: in Ranking 1 being the Best and 5 being the Last preference.

a) b) c) d) e)

Axis Bank Ltd. HDFC Bank SB I ICICI PNB

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