Online Trading Bhse

8/13/2019 Online Trading Bhse

1/55

INTRODUCTION TO THE STUDY

In stock market the trading of already listed companies stock aretaken place during the time period of 9.15 am to 3.30 pm on every

working day. These securities are issued by the government semi!

government bodies public sector undertakings and companies for

borrowing funds and raising resources. "ecurities are defined as any

monetary claims #promissory notes or I.$.%& and also include shares

debentures bonds and etc. if these securities are marketable as in the

case of the government stock they are transferable by endorsement andalike movable property. They are tradable on the stock e'change. "o is

the case shares of companies.

%nder the "ecurities (ontract )egulation *ct of 195+ securities,

trading is regulated by the (entral -overnment and such trading can take

place only in stock e'changes recognied by the government under this

*ct. *s referred to earlier there are at present such recognied stocke'changes in India. /ombay "tock 'change #/"& ational "tock

'change #"& are national and /hubaneswar 2elhi (hennai

yderabad madras and /angalore etc. are some of the regional

recognied stock e'changes of India . The above act has also laid down

that trading in approved contract should be done through registered

members of the e'change.


2/55

OBJECTIVES OF THE STUDY

The ob4ectives of the study are as follows

To know the on!line screen based trading system

To know about the software used for online trading purpose .

To know the investors awareness label and perception towards

mutual fund investment.

To know the online trading mechanism


3/55

SCOPE OF STUDY:

The scope of the project is to study and know about Online Trading and investors

perception towards online trading.By studying the Online Trading and Clearing & Settleents! a clear option of

dealing in stock e"change is been understood. #nlike olden days the concept of trading

anually is been replaced for fast interaction of shares of shareholder. By this we can access

anywhere and know the present dealings in shares.


4/55

RESEARCH METHODOLOGY :

DATA COLLECTION METHODS

The data collection methods include both the primary and

secondary collection methods.

Primary Colle!io" Me!#o$% :This method includes the data

collection from the personal discussion with the authoried clerks

and members of the broking house my company guide and theinvestors those are coming to the branch for trading purpose .

Seo"$ary Colle!io" Me!#o$%: The secondary collection

methods includes the lectures of the superintend of the department

of market operations and also the data has been collected from

the news magaines various books and websites.

First Phase:

Secondary inforation review & desk study of e"isting literature are conducted. $

fle"ible! creative! open and dynaic social dialogue with the staff and the project

functionaries is carried out.


5/55

Second Phase:

%reliinary visits to the field! observation! interactive group interviews! and

nvestors 'iew are also conducted.

Third Phase:

Stakeholders consultation involving the project tea for consensus building on a

sensitive fraework to guide field work.

Fourth Phase:

(ata collection through )uestionnaire round.

2.1. Sampling:

Sample Size:

$ saple of *++ individual nvestors was selected.

Sampling Technique,

Both stratified as well as convenient rando sapling techni)ues were used for

the study.


6/55

2.2. Data Collection:

Saple survey was conducted using a closed )uestionnaire.

-ocused group discussions were conducted aong the ebers to cross verify

the certain critical inforation such as individual investors savings! investent !

etc. provided by the individual investors


7/55

FINDINGS

6ost of the investors are investing in stock market

Investors are preferring more to online trading than offline

The investors are facing some problems while operating in

computer

Investors are also facing some problems on online software

SUGGESTION


8/55

The broking firms and stock e'changes should conduct

more awareness programs for the investors

The broking companies should conduct some training

program for the investor to make them familiar with the

software .

The broking companies should concentrate on their

software while preparing it taking into consideration the

computer illiterate investors.

LIMITATIONS OF THE STUDY

The study on investor,s perception is not an easy task to come outas it is believed. The main limitations of my study are!

1. It is the s7ueeed time boundary

8. It is not possible to obtain responses to all 7uestionswhich could have enable to capture the total perception

of investors due to structured 7uestionnaire.

3. "ome important 7uestions which could have yieldedmore valuable information were deleted intentionally to

increase the response rate.

. The secondary data was insufficient.


9/55

(*:T) ! 8

ORGANI&ATION PROFILE

/hubaneswar "tock 'change #/h"& was initially incorporated on

the 1;th *pril19


10/55

of $rissa. "ubse7uently /hubaneswar "tock 'change was

incorporated on 1;th *pril 19


11/55

3. "hri E.. )avindra )epresentative of the "hareholder of the /h"

ational *luminium (ompany Atd. #*A($&

. "hri 2eelip Eumar (houdhury "hareholder of the /h" 5. "hri *nil

Eumar :atro "hareholder of the /h"

+. "hri Tarun Eumar *grawalla "hareholder of the /h"Trading 6ember 2irectors

;. "hri Thomas 6athew Trading 6ember of the /h"


12/55

OPERATIONAL INFRASTRUCTURE

%pon automation of the trading activities Trading all of the "tock

'change has been modernised with the latest capital market

infrastructures.SETTLEMENT SYSTEM

The "ettlement system of the 'change is carried out on B2aily

)olling /asisC #TF1& as per the "/I -uidelines issued from time to

time. :ay!inGpay!out in terms of "ettlement (alender are effected

well in time through the (entralied /anking "ystem of the "tock

'change. (anara /ank has established a /ranch to facilitate the

pay!inGpay!out operation as well as the banking transactions of the"tock 'change and its trading members.

(A*)I- $%"

/hubaneswar "tock 'change has its own (learing ouse. The

transactions entered among the trading members of the 'change

are settled by delivery and payment obligations through the (learing

ouse of the "tock 'change in accordance with the prescribed

settlement program under a (entralied 2elivery and :ayment

"ystem.

IT)!($(TIDIT?

/hubaneswar "tock 'change has played an instrumental role

among others in mooting the idea of establishing of an Inter!

connected 6arket "ystem #I(6"&. This effort was resulted in

establishing BInter!connected "tock 'change of India of Atd.C to

providea nationwide e7uity market through the trading members of

participating "tock 'changes. It has also facilitated the trading

members of participating "tock 'changes including /hubaneswar

"tock 'change to trade on the ational "tock 'change segment.

AI"T2 "T$(E"2espite introduction of "/I 2elisting

-uidelines8003 /hubaneswar "tock 'change continued to have

listing of securities of several companies having aggregate paid!up

capital of around )s.8800 crores.


13/55

PRIMARY MAR)ET

/hubaneswar "tock 'change has been playing an active role for the

growth of primary market activities with the support of its trading

members. The "tock 'change ensures promotional steps for

participation of investing public at a large scale in the public offers

of several companies.

CUSTOMERS* PROTECTION FUNDInvestors, protection is the cornerstone of a vibrant market.

/hubaneswar "tock 'change has established a "tatutory =und

namely B/hubaneswar "tock 'change (ustomers, :rotection =undC

with an ob4ect to protect the customers from the risk of defaulting

trading members. *t present as per the )ules of the said =und a

customer is entitled to be indemnified to a ma'imum of )s.85000G!

towards his claim against a defaulter trading member of the "tock

'change.

INVESTORS* SERVICE CELL

/hubaneswar "tock 'change has an BInvestors, "ervice (ellC which

also ensures protection of the investors. It promptly attends the

complaints of various nature lodged by the investors against

companies as well as the trading members of the "tock 'change

and plays an important role in a friendly approach to redress the

investors, grievances The Investors, "ervice (ell undertakes due

care to build up confidence of the common investors on the capital

market.

LIBRARY

/hubaneswar "tock 'change has a good library. It has a list of

several books and guidelines relating to capital market. It also

subscribes :eriodicals and =inancial ews 2ailies for readers. In


14/55

addition to this prime magaines for new issues annual reports of

several listed companies are available with it. The library of the "tock

'change is thus playing a promotional role for enrichment of

knowledge of the staff trading members investors and researchscholars at large. The "tock 'change with the support of its library

also helps the management students to prepare their pro4ect reports.

EMPLOYMENT/hubaneswar "tock 'change has also been instrumental in

generating various nature of employment both directly and

indirectly in the "tate of $rissa. *s a result apart from direct

employment for its own purpose it has created opportunity for

generation of a number of indirect appointments in various

capacities such as sub!brokers authorised assistants authorised

representatives and other staff in the stock!broking firms.

FUTURE UNDERTA)INGS

/hubaneswar "tock 'change has undertaken a number of measures

to activate business in securities and to spread the message of

goodwill among the investing public. "uch measures are H To provide 2epository "ervice so that the trading in securities and

supporting depository operation connected to it shall be carried out

under an umbrella.

To upgrade the infrastructural facilities to facilitate e'pansion of

trading activities.


15/55

To host Training :rogram for trading member as well as employees

of the "tock 'change.

To introduce provide and conduct a (ourse for imparting education

on Indian "tock 6arket to the aspirants. To construct a modern hi!tech building of the "tock 'change.

LITERATURE REVIE+

STOC) MAR)ET :

* stock market or e7uity market is a public market #a loose

network of economic transactions not a physical facility or discrete

entity& for the trading of company stock and derivatives at an agreed

priceJ these are securities listed on a stock e'change as well as those

only traded privately.

STOC) E,CHANGES

The stock e'changes are the e'clusive centres for trading of

securities. Aisting of companies on a "tock 'change is mandatory to


16/55

provide an opportunity to investors to invest in the securities of local

companies. The trading volumes on e'changes have been witnessing

phenomenal growth for last few years. "ince the advent of screen

based trading system in 199!95 it has been growing by leaps andbounds and reported a total turnover of )s.5130


17/55

into picture which used to bring the buyers and sellers together for

the trade of the shares. These persons are called the share /rokers

who find the persons who wish to buy or sell their securities. The

whole process of finding the buyers and sellers of the securities bythe brokers is called the "hare trading.

De.i"i!io"% :

* transaction of a security or commodity.

/uying and selling securities or commodities on a short!term

basis hoping to make 7uick profits.

6ore generally any buying and selling of securities

commodities goods or services.

Ty(e% o. !ra$i"/:

Two types 1. $nline trading

8. $ffline trading

MEANING OF ONLINE TRADING :B(hange is the law of natureC. There were times when man

was a wanderer or a normal. e himself had to go place to place in

search of food water and now everything is available at your

doorstep 4ust at the click of the mouse. The growth of information

technology has affected almost all sectors of life. Internet has

enabled us to get every information at our doorstep. Lhen Internet

has affectedall sectors he could Bstock marketsC the most importantplayer of the economy has remained far behindM Aike all other

sectors Internet has set its feet in the stock markets also.

Internet trading commissions are clearly posted on the

websites of the various services and are typically a fi'ed rate

charge depending upon the type of security being traded and the

sie of trade. In theory therefore an Interest investor always knows


18/55

what commission he is being charged on each trade. Internet

investors can take as much time as they would like to take prior to

placing a trade order. "imilarly the online investor likely does not

have to worry that his broker is making unauthoried trades. "incethere is no individual broker making a commission the only person

who is authoried to trace in the account is the actual investor.

=urthermore the internet investor can never become a victim of

e'cessive trading #where for the broker& since the investor maintains

total control over the number of transactions which take place in the

account.

*ll of these positive features of internet trading may lead theunwary investor to believe that Internet trading is a way to take

control of their finances and save more money in the process.

%nfortunately this is not always the case. The advantages of Internet

stock trading have also its weaknesses and these weaknesses

present significant drawbacks for the average investor.

=irst and foremost the average investor is not an e'pert in the

financial markets. There is a danger for allowing the autonomy of

online trading to hull you into the belief that you are an e'pert

investor. *n online investor sitting at home at a personal computer

also foregoes proper investment advice and financial planning

perhaps among the most valuable services provided by traditional

brokers.

There are of course additional risks relative to performing

transactions over the Internet especially on a shared computer.

Those people whom investors have provided their account number

and password can freely trade that account while the investor will

have little if any resource against the brokerage firm for the breach

of security.

+#e" 0a% o"li"e !ra$i"/ i"!ro$'e$ i" I"$ia 1


19/55

$nline trading started in India in =ebruary 8000 when a couple

of brokers started offering an online trading platform for their

customers.

+#y o"li"e !ra$i"/ e"!ere$ la!e i" I"$ia 1

The Indian e'changes and brokering houses have been very

slow in moving their transactions online and the ma4or reason has

been the lots of government regulations. The initial delay was due to

laying down the specifications for creating (losed %ser -roups

#(%-s&. This issue was resolved between the 2epartment of

Telecommunications #2oT& and the =inance 6inistry around 199< and

after that soon came the online trading portals like IA @ =" invest

smart I(I(I 2irect.com motilaloswal.com sharekhan.com etc.

(onnectivity related issue was perhaps the most important

technological factor. )/I made regulation that it is mandatory for

company to store at least ;year financial and transactional data.

In the non!stop 8 hours a day seven days a week world of

investing we are able to $btain investment news around the clock.

(heck 7uotes on e'changes all over the world ! day or night.

asily compare one investment to another via numerous ratios

charts graphs and tables.

"creen for the best ur individual goals and re7uirements.

Trade stocks as easily and 7uickly as professiona

linvestmentsto fit o traders.

(alculate retirement needs based on various scenarios.

)egularly monitor portfolios and make necessary changes

7uickly and almost effortlessly.


20/55

(ontrol the routing of individual trades for the be ven many

years after the launch of the first online brokerage firm there

remain a large contingent of individual investors who still pick

up the phone and call their stock broker to buy and sellinvestments. owever every year a growing number of

investors are placing their trades using online brokers.

PROCESS OF ONLINE TRADING :

*n investor interesting in trading through Internet shall have

to firstly register himself with an Internet brokerage firm. "ome

formalities such as filling the account opening form of the e!broker

copies of identity proof copy of residence proof are made to register

himself with the e!trader. "econdly the investor would be re7uired to

open a bank account with a scheduled bankand sufficient balance

should be kept in the account.

S!e(23 :

Those investors interested in doing the trading over Internet

system that is *T!I"N #"& should approach the brokers andregister with the "tock /roker.

S!e(24 :

*fter registration the broker will provide to them a login name

password and a personal identification number #:I&.

S!e(25 :

*ctual placement of an order %sing the place order window as

under can then place an order

a& =irst by entering the symbol and series of stock and other

parameters such as 7uantity and price of the scrip on the

place order window.

b& "econd fill in the symbol series and the default 7uantity.


21/55

S!e(26 :

It is the process of review. Thus the investor has to review the

order placed by clicking the review option. e may also re!set to

clear the values.S!e(27 :

*fter the review has been satisfactoryJ the order has to be sent

by clicking on the send option.

S!e(28 :

The investor will receive an B$rder (onfirmationC message

along with the order number and the value of the order.

S!e(29 :

In case the order is re4ected by the /roker or the "tock

'change for certain reasons such as invalid price limit an

appropriate message will appear at the bottom of the screen. *t

present a time lag of about ten seconds is there in e'ecuting the

trade.

S!e(2 :

It is regarding charging payment for which there are different

modes. "ome brokers will take some advance payment from the

investors and will fi' their trading limits. Lhen the trade is e'ecuted

the broker will ask the investor for transfer of funds by the investor

to his account.

Me#a"i%m o. o"li"e !ra$i"/ :

:lace an order onthe net on the

broker,s websitethrough the

distinctive I.2.

(lient

*ccept the orderchecks the ideaand place theorder with the

stock e'change.

/roker

*ccept the orderafter checking thescript limit of the

broker for the day.

'ecute the order.

"tock 'change


22/55

DIFFERENCE BET+EEN

ON2LINE AND OFF2LINE

TRADING :

evertheless with all the convenience of online trading there

are still investors who prefer the old fashion way of offline trading.$ffline trading has lost some popularity but it is still the main form of

investing. $ffline trading offers many benefits as well.

1. The one benefit that an investor appreciates the most is that

they are not alone when making investment decisions.

8. There are e'perienced and professional brokerage companies

that handle their investments for them.

3. Investors are not faced with the challenge of making these vital

investment decision especially if they do not have the

e'perience necessary to make the appropriate investments.

. *lso there is someone there to answer any 7uestions that may

cause concerns not to mention with offline trading mistakes

are less likely to take place. o one wants to throw their money

The settlement of

the deal #buy andsell order& getsreflected in thedemat account.

The client isintimated about the

e'ecution of thedelay by e!mailpays the broker

pending physical

:ays the e'changethrough his account

and received itsfrom the client,s

account.

)eceive the moneycomplete thesettlement.


23/55

away or stand by and watch someone else throw their money

away. It may be wise to hire a professional to assist you in

making the correct investment decisions if you feel you lack

the knowledge necessary.

DEFINITIONS AND E,PLANATIONS OF SOME TERMS RELATED

TO ONLINE TRADING :

3; S#are% :

In everyday language when we talk of shares we normally

refer to e7uity shares or ordinary shares of a company. The terms

shares and stock essentially means the same things the letter being

a more common *merican usage.

*n e7uity share is evidence of ownership in a company. The

physical evidence of this ownership of this document is called the

"hare (ertificate. ow days shares are usually kept in electronic or

dematerialied form with a depository participant #/anks brokers

financial institutions& of the ational "ecurities 2epository Aimited

#"2A&. owever if one wants one can still hold the share in the

physical form which has your name endorsed on it and is proved

that you are a part owner of the company. ?our ownership rights are

proportionate to the number of share you own. (ompanies issue

shares of a certain fi'ed denomination called face value or par value

of that share which is clearly indicated on a share certificate in the

physical form.

4; I"


24/55

constantly going down as a result of inflation. #The value of money is

4udged by the 7uantity of goods and services you can buy with it&.

Therefore if you want to maintain or increase the value of your

savings you have to keep them in forms other than cash. This iswhat investment is all about deployment of your saving with the

intentions of preserving or increasing their value. This deployment

can be done by using your savings to buy land residential properties

commercial properties gold 4ewelry works of art fi'ed deposits in

banks and companies shares bonds in fact anything whose value is

likely to either remain constant or appreciate with time. Investment

also refer to using one,s savings with the intention of earning anincome.

5; Dema! A= :

$n doing an online business ever customer has to open and

demat account in any bank whichever he likes. 2emat account is the

account in which the trading done by the customer is mentioned. If

the customer sales or purchases any share the details of this sale

and purchasing are in demat account. This account contents the

name of the shares and also the number of shares held or sold and

also the rate of the share with this demat account. It is also

compulsory for every customer to open a saving account in the bank

because the amount which is to be received when the customers

sales the shares are transferred from the demat account to thesaving account.

It is the responsibility of the customers that the share which he

purchased or sales are properly transferred in demat account from

the stock e'change whichever he deals. The amount of dividend

whichever to be received on the shares when held for one or more

year are also transferred in this demat account. It is compulsory for


25/55

every customer to have a :* no. =or opening an demat account. If

:* no. Is not there is no chance for the customer to do any trading

on line. There is no limit of amount to deal in this account.

6; Tra$i"/ Ao'"! :

*n account similar to a traditional bank account holding cash

and securities and is administered by an investment dealer. Though

trading accounts are traditionally thought to hold only stocks a

trading account can hold cash foreign cash securities and a number

of other types of investments.

2ifference between trading account and demat account istrading account is only for a specific branch @ demat account is

global means in all branch.

7; Se"%e> :

Lhen the shares are issued to the public the stock e'change

gives a particular group to the company. =or e'. The )eliance -roup

is given the group B*C like this there are several companies which fall

in B*C -roup. The weightage mean is calculated according to its

e7uity when all the companies of -roup B*C has calculated this

weightage mean they are added all together when this addition is

done the result which comes down is known as B"ense'C.

The trading of shares of B*C group is totally depended on this

sense' value. The price of the share rises this sense' value also rises

and when the price of thisshare comes down the sense' value also

comes down with the sense'.

8; Sri(!% :

The company which has more than one working area it has to

issue the share separately than that company is the company which

has the script of its name. =or '. The )eliance this company has its


26/55

several working area amely )eliance (apital )eliance Infocom

)eliance nergy )eliance Industry. "o reliance company issues

separate share for separate working area but the bold name which is

given to the working area is B)elianceC. "o in this case )eliance hasits own scripts. $ther e'ample *mbu4a /irla etc.

9; Gro'(% :

Lhen the shares are issued by the company they are given the

particular group by the "tock e'change according to its demand in

the market. There are mainly ; groups.

#i& -roup B*C

#ii& -roup B/C

#iii& -roup B(C

#iv& -roup BEC

#v& -roup BTC

#vi& -roup BT"C

#vii& -roup BOC

The companies which are in great demand is given as -roup

B*C company. *nd the companies which are not in so demand are

given in other group. This means that the companies are given the

group according to its demand.

; Co"!ra! "o!e :

(ontract note is a confirmation of trades done on a particular

day on behalf of the client. It establishes a legally enforceable

relationship between the client and the trading member with respect

to the settlement of the trades. It also helps to settle


27/55

disputesGclaimGdifferences in terms of the contract note. It is a

prere7uisite for filling a complaint or arbitration proceeding against

the trading memberGsub!broker in case of a dispute. * valid contract

note should be in the prescribed form contains the details of tradesstamped with re7uisites value and duly signed by the authoried

signatory.

(ontract notes are made in duplicate the trading members

and the client should keep one copy each. *fter verifying the details

contained therein the client keeps the one copy and returns the 8nd

copy to the trading member duly acknowledge by him. 2o not accept

unsignedGduplicate contract note confirmation memo or contract notconfirmation memo signed by any authoried person.

ADVANTAGES OF ONLINE TRADING :

3; Pro


28/55

e may also consult with other investors online present around

the world.

"ome online stock broking companies provide real!time stock

7uotes daily roundups of the stock market e'pert commentary and

a deep community of fellow investors.

4; Pro


29/55

account of the investor. *ll these stages are inspected which brings

the transparency into the system.

8; Proe'!io" :

$nline transactions helps in the 7uick e'ecution of the entire

trading transaction right from logging to the traders site and to the

settlement of the bank account in a very short period of time.

; I! (ro


30/55

"ome companies provide online help desk an investor cancan

contact the Tele Trading 'ecutives from the Tele Trading team

during and after market hours and can clarify 7uestions.

34; I"%!a"! or$er !ra$e o".irma!io"% :Through online trading every trade is confirmed immediately

and investor receives an on!screen confirmation following every

trade with full details for the investors records which avoids costly

errors that would have been discovered when it is too late.

35; )ee(% I".orma!io" Se're :

*s per the guideline provided by "/I every effort has to be

made to keep the investors account and personal information secureby use of encryption technology and updated security technology to

advanced fraud prevention measures.

DISADVANTAGES OF ONLINE TRADING :

1. In online terminal investor canPt get customied e'pert advice

whereas in offline the broker gives suggestions according to

investors strategy #i.e. short term or long!term&.

8. /rokerage is highly comprises to off!line.

3. :rivacy is less due to hacking scandals.

. Transactional errors due to technical problems.

TYPES OF ONLINE TRADING :

1. 7uity market trading.


31/55

8. =G$ trading #future and option&.

1. 7uity market trading

This type trading is done in both " and /".

7uity market trading include trading of stocks of all the

companies listed in /" and ".

In the e7uity market trading there is two modes of trading.

1. Intraday Trading.

8. 2elivery /ased Trading.

3; I"!ra$ay Tra$i"/ :

Intraday Trading is the most popular Trading that many

Traders use this type Trading to cash their money soon. If you buy

and sell shares in a single day then the type of Trading is called as

Intraday Trading. In Intraday Trading you can sell shares within

seconds minutes and hours after you buy whenever you want and

when your you feel that your profit Target has been reached. /ut all

the shares you bought with the intraday option should be sold 80

minutes prior to the closing time. The general closing time of "tock

6arket is 330 pm. "o you should sell all your shares those you

bought with intraday option should be sold before 3.10pm.

)emember if you sell the shares which bought on previous Trading

day then it will not be considered a Intraday Trading. In Intraday

Trading if you buy shares on 88ndyou should sell them on 88nditself.

Intraday Trading gives you high profits when you analye and trade

perfectly and also makes you big loss if you donPt trade perfectly.


32/55

The great advantage of Intraday Trading is that in Intraday

Trading brokerage is very less. Intraday /rokerage is 4ust about

0.08K to 0.0K depending on the broker you choose. *nd the

disadvantage of Intraday Trading is that In Intraday Trading fear ofloss of money is more compared to other types of trading. "o you

may also book more losses in Intraday trading if you do wrong

analysis. *s we cannot guarantee returns on our Investment in

Intraday Trading you should be ready for loses that may occur when

you Trade. ?ou should know all the current news and issues about

share market and analye the shares that you buy with more care if

you want to Trade in Intraday Trading.4; Deli


33/55

Lhen you are making a long term investment with delivery

based trading you can also benefit from other things like

dividends split of stocks bonus shares and so on. These are

benefits that the companies offer to their share holders fromtime to time and you can make significant profit from these

offers if you are holding the stocks for long periods.

Di%a$


34/55

circuit limit. This circuit limit is generally fi'ed on the percentage

basis. This circuit limit is applied to both the ends of the share. That

is to the upper limit also and also to the lower limit actually circuit

limit is of two types 1& %pper limit.

8& Aower limit.

It is compulsory for every company to fi' the circuit limit. This

limit is beneficial to both. The customer and also to the company

generally every company fi' below l0K of the rate of per share.

U((er Limi! :

Lhile issuing the shares to the public the company has to fi'

the upper limit this limit is also calculated in percentage the limit is

also beyond which the rate of the shares cannot e'ceed nor that the

customer doing the trading can sell above the level. =or e'.

(ustomer wants to sell a share which is of )s. 10 and its upper limit

is fi'ed at 10K so in this case the person will have to sell it at )s. 11or the rate whichever he wants but the person cannot sell it beyond

this )s. 11 because by addition of upper limit to the rate of share the

ma'imum amount of the shares is )s. 11 only and not above.

Lo0er Limi! :

*t the time of issuing share the company has to fi' the lower

limit also. This lower limit is calculated on the basis of the rate of the

shares. This limit bears the same percentage which is mentioned for

the upper limit of the share. Aike upper limit in this limit also the

share minimum rate of the share is fi'ed the customer who wants to

seeJ the holding shares has to first consider the upper@ lower limit of

the share he cannot sell the share below the lower limit and not

above the upper limit like the upper limit :ercentage generally in this


35/55

limit also the percentage is below 10K of the face value of the

shares the percentage is below 10K of the face value of the shares

the percentage of the upper @ lower limit is e7ual to every type of

share. =or e'. "uppose the person wants to sell the shares and therate of the share is )s. 10G! and the lower limit percentage is 10K of

the rate. "o in this case the person cannot sell the share at below )s.

9G!. e will have to sell at above )s. 9G! or up to the upper limit of the

share.

Pay2I" :

:ay!in day is the day when the securities sold are delivered to

the e'change by the sellers and funds for the securities purchasedare made available to the e'change by the buyers.

Pay2O'! :

:ay!out day is the day the securities purchased are delivered

to the buyers and the funds for the securities sold are given to the

sellers by the e'change.

*t present the pay!in and pay!out happens on the 8nd working

day after the trade is e'ecuted on the stock e'change.

A'!io" :

$n account of non delivery of securities by the trading

member the securities are put for auction by the e'change. This

ensures that he buying trading member receives the securities on

time. on!delivery by the selling trading member can arise on

account of short delivery and deliveries not rectified. The e'change

purchases the re7uisites 7uantity in the auction market and gives

them to the buying trading member.

Rolli"/ Se!!leme"! :

%nder rolling settlement all open positions at the end of the

day mandatorily result in paymentQ delivery Rn, days later. (urrently

trades in rolling settlement are settled on TF8 basis where T is the


36/55

trade day. =or e'ample a trade e'ecuted on 6onday is mandatorily

settled by Lednesday #considering two working days from the trade

day&. The funds and securities pay!in and pay!out are carried out on

TF8 days.

Se!!leme"! yle %#e$'le :

T Trading 2ay

TFl :ay!in by 10.30 *.6

TF8 :ay!out by 8 :.6

TF3 *uction of shortage in delivery

TF5 *uction :ay!in by 10.30 *.6

4;F=O MAR)ET:

=G$ market is future @ option market.

FUTURES MAR)ET:

It is different from e7uity market.

%nlike the e7uity market here an investor can buy stocks value

more than the money available in his account by giving the

margin money.

=or eg! suppose the price of "/I stock in nifty future is 8300G!

today an investor wants to buy this the lot sie of "/I is 185

so total amount is 8300S18508


37/55

*fter buying the stocks the investors has to sell within a

specified date.

ifty future is closed last Thursday of every month.

If the investor will not sell the contract will be broken.

*n investor can also carry forward the contract to ne't month.

It is 4ust like commodity trading which is discussed later in this

report.

It is a standardied contract with standard underlying

instrument a standard 7uantity and 7uality of the underlying

instrument that can be delivered #or which can be used for

reference purposes in settlement& and a standard timing of

such settlement.

The standardied items in a futures contract are

Uuantity of the underlying.

Uuality of the underlying.

The date and the month of delivery.

The units of price 7uotation and minimum price change.

Aocation of settlement

Co"!ra! %(ei.ia!io": S!o? .'!'re% :

Trading cycle The futures contracts will have a ma'imum of

three month trading cycle ! the near month

#one& the ne't month #two& and the far

month #three&. ew contract will be


38/55

introduced on the ne't trading day following

the e'piry of near month contract.

'piry day The last Thursday of the e'piry month or the

previous trading day if the last Thursday is atrading holiday.

"ettlement In (ash on TFl /asis.

"ettlement price 2aily settlement price will be the closing

price of the futures contracts on the trading

day and final settlement price will be the

closing price of the underlying on the last

trading day of the options contract.F'!'re% !ermi"olo/y :

S(o! (rie :The price at which an asset trades in the spot

market.

F'!'re% (rie : The price at which the futures contract

trades in the futures market.

Co"!ra! yle :The period over which a contract trades.

The inde' futures contracts on the " have one month two!

month and three month e'piry cycles which e'pire on the last

Thursday of the month. Thus a >anuary e'piration contract

e'pires on the last Thursday of >anuary and a =ebruary

e'piration contract ceases trading on the last Thursday of

=ebruary. $n the =riday following the last Thursday a new

contract having a three month e'piry is introduced for trading.

E>(iry $a!e :It is the date specified in the futures contract.

This is the last day on which the contract will be traded at the

end of which it will cease to e'ist.


39/55

Co"!ra! %ie : The amount of asset that has to be

delivered under one contract. *lso called as lot sie.

I"i!ial mar/i":The amount that must be deposited in the

margin account at the time a futures contract is first entered

into is known as initial margin.

OPTIONS :

$ptions are fundamentally different from forward and futures

contracts. *n option gives the holder of the option the right to do

something. The holder does not have to e'ercise this right. In

contrast in a forward or futures contract the two parties have

committed themselves to doing something. Lhereas it costs nothing

#e'cept margin re7uirements& to enter into a futures contract the

purchase of an option re7uires an upfront payment.

Two types of option 1. call option.

8. put option.

3; Call o(!io" :

* call option gives the holder the right but not the obligation to

buy an asset by a certain date for a certain price.

4; P'! o(!io" :

* put option gives the holder the right but not the obligation to

sell an asset by a certain date for a certain price.

*ll stock trading depends on 8 terms. ither you could be

bullish or bearish. 2epending on whether you are bullish or bearish

on the underlying stock you could purchase either a call option or a

put option.

B'yi"/ a all O(!io" :


40/55

Lhen you buy a call option you hold the right to buy a

specified 7uantity of the underlying stock at the strike price on or

before the e'piration date.

If you are bullish on a stock you could purchase a call option ata predetermine #(alled it as the strike price& that is lower than the

appreciation you e'pect then if all goes well and the stock price

does rise beyond the strike price F the premium you have paid on or

before the e'piration of the contract you can e'ercise your option to

buy the stock at the strike price and simultaneously sell it in the spot

market i.e. the cash market to book your profit.

If on the other hand the price of the stock in the cash marketdoes not rise beyond the strike price F premium you can let the

contract lapse i.e. you do not buy the underline stock at the strike

price. ?our loss in such a case would be premium you have paid.

owever in India e7uity options and futures are currently cash

settled and are not settled by delivery.

E>am(le

(urrent spot price per share )s. 100.:remium payable per share )s. 10.

*/( company has a lot sie 50 shares.

If the spot prices rises to )s 180 per share before the contract

e'pires you could e'ercise your option to buy the shares at )s 100

and then sell them in the market for )s 180. ?our profit in this

transaction would be )s. 500 #"ale price of )s 180 ' 50 ! purchase of

100 ' 50&! premium of 10 ' 50&.If on the other hand if the price does not go beyond )s 100

until the e'piry date you could 4ust let the contract lapse. In this

case your loss would be e7ual the premium that you have paid i.e.

)s 500.

B'yi"/ a ('! O(!io" :


41/55

Lhen you buy a put option you hold the right to sell a

specified 7uantity of the underlying stock at the strike price on or

before the e'piration date.

If you are bearish on a stock you could purchase a put optionat a pre!determine #strike price& that is higher than the fall you

e'pect in the price of the stock.

If all goes well and the stock price does fall beyond the strike

priceFthe premium you have paid on or before the e'piration of the

contract you can e'ercise your option to sell the stock at the strike

price and simultaneously buy it in the spot market i.e. the cash

market to book your profit.If on the other hand the price of the stock in the cash market

does not fall to the strike price F premium you can let the contract

lapse i.e. you do not sell the underlying stock at the strike price.

?our loss in such a case would be premium you have paid.

-oing with the above e'ample if the spot prices depreciate to

)s


42/55

option lapse the option writerPs income is the premium you have

paid to buy the option.

)emember the $ption writer Breturn is limitedC and Brisk is un!

limitedC.

DATA ANALYSIS INTERPRETATION

GRAPHICAL ANALYSIS


43/55

*ge group known about share market

/ellow 80 80!30 30!0 0!50 *bove 508 ;0 1 + +

3

4

5

6

7

8

9

Bello0 4 425 526 627 A@o


44/55

7

3

37

4

47

5

57

6

Ba"? i"%'ra"e M'!'al .'"$ S!o? mar?e!

*bove figure shows the investment of money in different sectors.6ost of the people are interested to invest in the mutual fundfollowed by bank stock market and insurance #0K30K1+K and1K& accordingly.


45/55

6onthly income group are investing

/elow 5000 5000!10000 10000!80000 *bove 800005 80 0 35

7

3

37

4

47

5

57

6

Belo0 7 723 324 A@o


46/55

:eople know about share market.

?es o++ 3

3

4

5

6

7

8

9

Ye% No

In the above figure we come to know that ++K people know aboutshare market and 3K people have no idea. *ccording to =igurema'imum number of people aware about share market.


47/55

=rom which sources people know about share market.

=riends *gent *dvertisement88 1< 8+

This figure indicates from which sources people get the informationabout share market. It shows that most of the people get informationabout share market from the advertisement

SOURCE

33K

8;K

90K

FRIENDS AGENTS ADVERTISE


48/55

In which sector people wants to invest more

:rivate :ublic3; 13

0 10 20 30 40

PRIVATE

PUBLIC

SECTOR OF INVESTMENT

Series1

*ccording to servey of 50 persons 3; number of people are

interested to invest private companies and 13 people are interested

in the public sector.


49/55

Lhich type of people are interested to invest

"ervice /usiness :rofessional33 8+ 1

33%

26%

41%

SERVICE BUSINESS PROFESSIONAL

*ccording to servey of 100 people 1 number of professionals 33

service holder and 8+ businessmen invest their money in the share

market.


50/55

FINDINGS

6ost of the investors are investing in stock market

Investors are preferring more to online trading than offline

The investors are facing some problems while operating in

computer

Investors are also facing some problems on online software

SUGGESTION

The broking firms and stock e'changes should conduct

more awareness programs for the investors

The broking companies should conduct some training

program for the investor to make them familiar with the

software.

The broking companies should concentrate on their

software while preparing it taking into consideration the

computer illiterate investors.


51/55

CONCLUSION

*fter having the practical knowledge of online trading and the

work of /hubaneswar stock e'change towards investor,s awareness I

am very glad that I got a chance to work in such a wonderful

organiation. I am sincerely grateful to all members of /hubaneswar

stock e'change for allowing me to do summer pro4ect in their

organiation.

/efore concluding I will suggest the investors that whenever you are

going for stock market investment 4ust gain the detail knowledge

about the software of the broking company and the company you are

going to invest.


52/55

BIBILOGRAPHY

1. V.E. Dallah!Investment management! :ublished by

(hand and (ompany AT2. :ublished house ew 2elhi!

13thdition.

+e@%i!e%

000;@%ei"$ia;om

000;"%ei"$ia;om

000;@#%eio"$ioa;om

000;%e@i;/o


53/55

U%"TI$*I)

*6

2.$./

*2)""

($T*(T $6*IA I2

1.Lhich age group of people knows about share

marketM

*. /ellow 80 /. 80!30(. 30!0 2. 0!50

. *bove 50

8. Lhere people want to investM

*. /ank /. Insurance

(. 6utual fund 2. "hare market

3.ow much the monthly income group are investingM

*. /ellow 5000 /. 5000!10000

(. 10000!80000 2. *bove 80000

. ave you any idea about share marketM

*. ?es /. o

5. =rom which source people know about share marketM


54/55

*. =riends /. *gent

(. *dvertisement

+. Lhat is the perception about online tradingM

*. /ad /. *verage

(. -ood 2. 'cellent

;. 2o you like to trade online M

*. ?es

/. o


55/55

Online Trading Bhse

Documents

Transcript of Online Trading Bhse