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a study on india infoline

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 Online TradingCONTENTS CHAPTER – I INTRODUCTION 3 CHAPTER – II COMPANY PROFILE 5 CHAPTER – III METHODOLOGY OF STUDY 12 ã Objectives ã Need for the Study ã Data source ã Scope and limitations CHAPTER – IV INDUSTRY PROFILE 17 ã Bombay stock exchange ã National stock exchange CHAPTER – V 1  2. Online Trading ONLINE TRADING SYSTEM 23 ã System for online trading ã Trading membership ã NSDL ã Clearing and settlementCHAPTER – VI CONCLUSION 69 SUGGESTION & RECOMMENDATION 71CHAPTER – VII ANNEXURE 7
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     Online TradingCONTENTS CHAPTER  –  I INTRODUCTION 3 CHAPTER  –  II COMPANY PROFILE 5 CHAPTER  –   III METHODOLOGY OF STUDY 12 ã Objectives ã Need for the Study ã Data source ã Scope and limitations CHAPTER  –   IV INDUSTRY PROFILE 17 ã Bombay stock exchange ã National stock exchange CHAPTER  –  V 1    2.  Online Trading ONLINE TRADING S YSTEM 23 ã System for online trading ã Trading membership ã NSDL ã Clearing and settlementCHAPTER –  VI CONCLUSION 69 SUGGESTION & RECOMMENDATION 71CHAPTER  –  VII ANNEXURE 73 BIBLIOGRAPHY 77 2    3.  Online Trading INTRODUCTION :- The trading on stock exchanges in India used to take place through open outcrywithout use of information technology for immediate matching or recording of trades.This was time consuming and inefficient. This imposed limits on trading volumesand efficiency. In order to provide efficiency, liquidity and transparency, NSEintroduced a nation-wide on-line fully automated Screen Based Trading System(SBTS) where a member can punch into the computer quantities of securities and theprices at which he likes to transact and the transaction is executed as soon as it finds amatching sale or buy order from a counter party. SBTS electronically matches on astrict price/time priority and hence cuts down on time, cost and risk of error, as wellas on fraud resulting in improved operational efficiency. It allows fasterincorporation of price sensitive information into prevailing prices, thus increasing theinformational efficiency of markets. It enables market participants, irrespective oftheir geographical locations, to trade with one another simultaneously, improving thedepth and liquidity of the market. It provides full anonymity by accepting orders, bigor small, from members without revealing their identity, thus providing equal accessto everybody. It also provides a perfect audit trail, which helps to resolve disputes bylogging in the trade execution process in entirety. This sucked liquidity from otherexchanges and in the very first year of its operation, NSE became the leading stockexchange in the country, impacting the fortunes of other exchanges and forcing themto adopt SBTS also. Today India can boast that almost 100% trading take placethrough electronic order matching. 3    4.  Online Trading The trading network in NSE has main computer, which is connectedthrough Very Small Aperture Terminal (VSAT) installed at its office. The maincomputer runs on a fault tolerant STRATUS mainframe computer at the exchange.Brokers have terminals installed at their premises, which are connected throughVSETs/leased lines/modems. An investor informs a broker to place an order on his behalf. The broker entersthe order through his PC, which runs under Windows NT and sends signal to theSatellite via VSAT/leased line/modem. 4    5. Online TradingCOMPANY PROFILE 5    6. Online Trading India Infoline was Launched on 11 May 1999 with SEBI REGN. NO. :INB 231097537 & CODE NO. : 10975, Regd. & Dealing Office : BuildingNo. 24, 1st Floor, Nirlon Limited Compound, Western Express Highway,Goregaon (E), Mumbai - 400 063.www.indiainfoline.com is India‟s leadingand most comprehensive business and financial information website. The sitemade available quality information and analysis - earlier restricted to a fewpeople - to the common man absolutely free. The site met with anoverwhelming response and has been reviewed as the most comprehensivefinancial content website in India by BBC World - Money Watch, BusinessWorld, Business Line and others. The company also won the Golden MouseAward in India Internet World 2000 for the Best Finance site. In May 2001,our website was included in the Top 200 Best of the Web list by Forbes Globalunder the Asia Investing category. We were the only website from India to befeatured in any category. Since then it has been nominated twice to this list. Inits last review, Forbes editors have said, www.indiainfoline.com is a mustread for the investors in South Asia... Our research is also disseminatedelectronically through Bloomberg, Investext, First Call/Thomson Financial andInternet Securities. On First Call/Thomson Financial, we have been one of thelargest read research houses from Asia, which is a testimony to the quality andtimeliness of our reports. 6    7. Online Trading The offerings on the site include a combination of information and transaction services. Transaction services include mutual funds, personal loans and online broking through www.5paisa.com. India Infoline was the first company to offer many of these services in the country.  In online broking, we have emerged as a leading player offering online trading facilities with significant market share. As on date, the Group employs 4000 plus employees, most of them are placed at its various branches across India. About INDIA INFOLINEIt is a one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technologyVisionIts vision is to be the most respected company in the financial services spaceIndia Infoline Ltd. India Infoline Ltd is listed on both the leading stockexchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the NationalStock Exchange (NSE). The India Infoline group, comprising the holdingcompany, India Infoline Ltd and its subsidiaries, straddles the entire financialservices space with offerings ranging from Equity research, Equities andderivatives trading, Commodities trading, Portfolio Management Services,Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other smallsavings instruments to loan products and Investment banking. India Infoline alsoowns and manages the websites, www.indiainfoline.com and www.5paisa.com . 7    8. Online TradingIndia Infoline Ltd, being a listed entity, is regulated by SEBI (Securities andExchange Board of India). It undertakes equities research which isacknowledged by none other than Forbes as Best of the Web and …a must readfor investors in Asia. India Infolines research is available not just over theinternet but also on international wire services like Bloomberg (Code: IILL),Thomson First Call and Internet Securities where it is amongst the most readIndian brokers.Its various subsidiaries are in different lines of business and hence are governedby different regulators. The subsidiaries of India Infoline Ltd are India InfolineSecurities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engagedin the businesses of Equities broking and Portfolio Management Services. Itholds memberships of both the leading stock exchanges of India viz. the StockExchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offersbroking services in the Cash and Derivatives segments of the NSE as well as theCash segment of the BSE.A SEBI authorized Portfolio Manager, it offers 8    9. Online TradingPortfolio Management Services to clients. These services are offered to clients asdifferent schemes, which are based on differing investment strategies made toreflect the varied risk-return preferences of clientIndia Infoline Commodities Pvt Ltd India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the business of commodities broking. Our experience in securities broking empowered us with the requisite skills and technologies to allow us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DGCX. We have a multi-channel delivery model, making it among the select few to online as well as offline trading facilities.India Infoline Distribution Co Ltd (IILD) India Infoline.com Distribution Co Ltd is a 100% subsidiary of India Infoline Ltd and is engaged in the business of distribution of Mutual Funds, IPOs, Fixed Deposits and other small savings products. It is one of the largest vendor-independent distribution houses and has a wide pan-India footprint of over 232 branches coupled with a huge number of feet-on-street, which help source and service customers across the length and breadth of India. Its unique value proposition of free doorstep expert advice coupled with free pick-up and delivery of cheques has been met with an enthusiastic response from customers and fund houses alike. Our business has expanded to include the online distribution of mutual funds, wherein users can view and compare different product offerings and download application forms which they can later submit to the product provider 9    10. Online Trading Mortgages & Loans IILD has also entered the business ot distribution of mortgages and loan products during the year 2005-2006. The business is still in the investing phase and We plan to roll the business out across its pan-Indian network to provide it with a truly national scale in operations.India Infoline Insurance Services Ltd India Infoline Insurance Services Ltd is also a 100% subsidiary of India Infoline Ltd and is a registered Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Ltd, which is Indias largest private Life Insurance CompanyIndia Infoline Investment Services Ltd India Infoline Investment Service Ltd is also a 100% subsidiary of India  Infoline Ltd. It has an NBFC licence from the Reserve Bank of India (RBI) and offers margin-funding facility to the broking customersIndia Infoline Insurance Brokers Ltd India Infoline Insurance Brokers Ltd is a 100% subsidiary of India Infoline Ltd and is a newly formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for the insurance broking licence and the clearance for the same is awaited. 10    11. Online TradingServices Offered By India Infoline. ã Here‟s a look at the rocketing list of what‟s on offer from The IndiaInfoline Group:Equity Trading and Stock Broking :- Cash and Derivatives segments. Member - BSE and NSE, DP with NSDL.Portfolio Management :- SEBI-registered, backed by a pool of analysts with over 200 man-years in managing portfolios.Research & Analysis :- Exhaustive information and data mining, covering the spectrum of Indian business, industry and financial markets.Mutual Funds :- Primary agent for the entire phalanx of leading funds. Something to suit every risk profile.Life Insurance :- Leading corporate agent of ICICI Prudential Life Insurance Company, miles ahead of the runner-up!Commodities Broking :- Member of the Multi- Commodities Exchange (MCX). Again, rock-bottom brokerage and quality research support. Fixed Income Instruments: From Fixed Deposits, Post Office Saving schemes to RBI Tax Saving and Infrastructure Bonds. 11    12. Online TradingMETHODOLOGYOF THE STUDY 12    To understand the working of National Securities Depository Limited. 13   To focus upon the features provided in the online trading system for the hassle-free functioning of the trading process and to avoid fraudulence.   To study the services offered by India Info line Securities Pvt Ltd through its various departments.   To highlight the superiority of Online Trading.   The purpose of the study is to understand the complete Gambit of Online Trading.   To know the eon-line screen based trading system and its communication facilities for the appropriate configuration to set network.   The primary objective is to analyze the changes in trading procedures after the exchange shifted from outcry system to online trading system.  13. Online TradingOBJECTIVES :-    14. Online TradingNEED FOR THE STUDY :- Capital Markets play a vital role in the development of the economy andstock exchanges are the integral part of the Capital Market. With the advance inInformation Technology, age-old methods of stock trading are gradually fading out.They are replaced by the easier and hassle-free method of trading On-Line throughthe Internet. This study is carried out to explore the changes occurring in stock exchangewith the advancements in the information technology. The major need for this studyis to know the effectiveness of online system in comparison with the outcry system.More emphasis is given to bring out the process of online trading behind the screenand its advantages. The study also includes the emergence of the depository systemin the country to rule out the drawbacks of the system of physical transfer of theshares. 14    Secondary sources are books, website and records from the departments of India Info line Securities Pvt Ltd. 15   Primary sources include data collected from various department members of the India Info line Securities Pvt Ltd.   The study includes the data collected from both the Primary and Secondary sources.  15. Online TradingDATA SOURCES :-    Most of the information collected for study is acquired from secondary source. 16   The study is purely for academic purpose.   The study is limited to current time period.   have slight variation than what the study includes in reality.   The data is collected from the Primary and Secondary sources so the study will   The analysis is made on the online trading activities carried out in India Info line Securities Pvt Ltd.  16. Online TradingSCOPE AND LIMITATIONS OF THE STUDY :-    17. Online TradingINDUSTRY PROFILE 17     18. Online TradingBOMBAY STOCK EXCHANGE This stock exchange, Mumbai, popularly known as “BSE” was established in1857 as “The Native share and stock brokers association” as a voluntary non-profit making association. It has an evolved over the years into its present statusas the premier stock exchange in the country. It may be not that the stock 18    19. Online Tradingexchanges the oldest one in Asia, even than the Tokyo Stock Exchange, whichwas founded in 1878. The exchange, while providing an efficient and transparent market fortrading in securities, upholds the interests of the investors and ensures redressedof their grievances, whether against the companies or its own member brokers.It also strives to educate and enlighten the investors by making availablenecessary informative inputs and conducting investor education programmes. A governing board comprising of 9 elected directors, 2 SEBI nominees,7 public representative and executive director is the apex body, which decidesthe policies and regulates the affairs of the exchange. The executive director as the chief executive officer is responsible forthe day to day administration of the exchange. The average daily turnover of theexchange during the year 2000-01 (April  –  March) was Rs. 3,984.16 crores andaverage number of daily trade 5.69 lakhs. The Ban on all deferral products like BLESS AND ALBM in the IndianCapita Markets by SEBI with effect from 2001, abolition account periodsettlements and introduction of compulsory ruling settlements in all scriptstraded on the exchanges with effect from December 31, 2001 etc, have adverselyimpacted the liquidity and consequently there is a considerable decline in thedaily turnover at the exchange. The average daily turnover of the exchangepresent scenario is 110363 (lakhs) and number of average daily trade 1057(lakhs). 19    20. Online TradingBSE INDICES In order to enable the market participants, etc, to track the various ups anddowns in the Indian stock market, the exchange have introduced in 1986 and equitystock index called BSE  –  SENSEX that subsequent became the barometer if themoments of the share prices in the Indian stock market. It is a “Market capitalizationweighted” index of 30 component stock representing a sample of large, wellestablished and leading companies. The base year of sensex is1978-79.The Sensex iswidely reported in both domestic and international market through print as well aselectronic media. Sensex is calculated using a market capitalization weighted method. As per thismethodology, the level of the index reflects the total market value of all 30component stocks from different industries related to particular base period. The totalmarket value of the company is determined by multiplying the price of its stock by thenumber of shares outstanding. Statisticians call a index of a set of combined variables(such as price and number of shares) a composite index. An indexed number is usedto represent the result of this calculation in order to make the value easier to workwith the track over a time. It is much easier to graph a chart based on Indexed valuesthan one based on actual values worked over majority of the well known indices areconstructed using “Market capitalization weighted method.” In practice, the daily calculation for SENSEX is done by dividing the aggregatemarket value of the 30 companies in the Index by a number called the index Devisor.The devisor is the only link to the srcinal base period value of the sensex. Thedivisor keeps the Index comparable over a period of time and if the reference point forthe entire index maintains adjustments. SENSEX is widely used to describe the mood 20    21. Online Tradingin the Indian Stock Markets. Base year average is changed as per the formula newbase year average = old base year average*(new market value/ old market value).NATIONAL STOCK EXCHANGE The NSE was incorporated in November 1992 with an equity capital of Rs. 25crores. The International Securities Consultancy (ISC) of Hong Kong has helped insetting up NSE. ISE has prepared the detailed business plans and installation ofhardware and software systems. The promotions for NSE were financial institutions,insurances companies, banks and SEBI Capital Market Ltd. It has been set up to strengthen the move towards professionalizing of the capitalmarket was well as provide nation wide securities trading facilities to investors. NSE is not an exchange in the traditional sense where brokers own and managethe exchange. A two tier administrative set up involving a company board and agoverning board in envisaged. NSE is a
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