35179615 MT on Online Trading

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A Thesis onStudy on the attitude of investors towards online trading.

By CHINMAYA H P IUD NO 0801214200

A report submitted in partial fulfillment of The requirements of THE MBA PROGRAM(The Class of 2010)1|Page


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CERTIFICATE

This is to certify that the Management Thesis titled ___________________________________ ______________________________________________________________________submitte d during Semester _________________ of the MBA Program (The Class of 2010) embodies original work done by me.

Signature of the Student Name (in Capitals) Enroll Number Campus :______________________________________________________ : ______________________________________________________ : ______________________________________________________

Signature of the Faculty Supervisor Name (in Capitals) Designation Campus : : :

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ACKNOWLEDGEMENT

First, I would like to thank The Almighty for his perpetual blessings and guidance through out this thesis work. I express my deep sense of gratitude to our Campus head and the faculty guide for this thesis work MR.: Ramachandra gunari, ICFAI national college shimoga, for providing me an opportunity and continuous encouragement for doing this thesis. His suggestions benefited immensely. Further, he also provided me with valuable inputs and guidance in writing this live project.

I thank Mr. Nagaraj, Comtrade accounts officer in Karvy The finapolis, for his valuable guidance, co-operation and support, which has been a major contributingfactor in the completion of this thesis.

I also like to remember and thank all the respondents who cooperated and answered all my questions with patience. Last but not the least, I thank my family andwell wishers for their encouragement and support who have stood by me during this project.

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Contents

TABLE OF CONTENTS

page no.

i. Title page.1 ii. Certificate1. Introduction.... 6-101.1 Definition and Overview..7 1.2 BSE and NSE online trad

2. Literature review... 11-282.1 literature review...............................12 2.2 Res

3. Industry profile...... 29-472.1 Industry Overview.............................30 2.2 Inves4|Page


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4. Data analysis and interpretation... 48-624.1 Data Analysis49

5. Discussions and implications. 63-675.1 Discussions & Implications.64

6. Conclusions and recommendations..68-716.1 Conclusions.69 6.2 Recommendations

7. References72-737.1 reference sources.73

8. Annexure74-778.1 Questionnaire..75

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CHAPTER - IIntroduction1.1 Definition and Overview 1.2 BSE and NSE online trading system

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1.1 INTRODUCTION: In olden days there was credence that, investments are for securing the future and that was the only genuine objective of the people. Investments were also happening only on government security instruments. But the trend have changed and people like to invest on different type of government as well assemi government and private securities not only to secure the upcoming but alsoto have the benefit of present by making the large profit by their investments.A Share market is the place where buying and selling of shares takes place. Nowadays due to internet and advanced technology buying and selling of shares takesplace anywhere in India and also from foreign country, there is no need to be physical present in exchanges like NSE and BSE. When the people start accepting the changes, even the surrounding environment also facilitates for the changes. The same when the people stated thinking about a mixture of investments to make the profit, the existing market also stared facilitating the investor. From thesechanges, the different type of investment market came into existence. When themarket gets the importance as never seen before, many studies will go on happening on the highlighted investment market. Similarly this study puts the light onthe different type of markets and the instruments which are available for the investors to devote their money for their requirements furthermore, the study tryto come across the grounds, why people like to transact with stock brokers or with any other support instead of doing the transactions independently.7|Page


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As mentioned, the main objective of the study is to know about the various reasons why investors like to have support from the any means instead of doing the same independently even though they have experience and knowledge in investing andgetting the adequate profit. Along with the main idea of the study, there are some other objectives are also integrated with the study like, what is trading online, the procedure included in trading online, materialized shares trading, andwhat all the unidentified facts involved. The study completely involves in detailing about the online trading system. Here the different types of online trading system serviced by different stock exchanges are given.

1. BSE online trading system[BOLT] BSE On-Line Trading System, popularly known as the BOLT System took its genesis in the year 1994, as part of the four-phase computerization program to create an automated trading

environment. BOLT system aimed at converting the Open Outcry System of trading to a Screen-based trading system (SBT). BSE had the requisite knowledge base andvirtue of more than 115 year track record in the capital markets; BSE embarked on the specified project in 1991 and seamlessly completed the fourth phase in March 1995.

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BOLT is supported on the hardware front by the Tandem NonStop Himalaya System which is specifically designed to cater to the requirements of the On Line Transaction Processing (OLTP) environment. BOLT System works on the Tandem S88016 * 2 platform running on 32 CPUs. The existing set-up, a fault tolerant system with scalable architecture can handle a maximum of 2.5 million trades a day against a daily average of 75000 trades a day when BOLT was started. Further, the average time of execution is 200 orders per second with a peaking speed of 250 orders persecond. The system comprises of a Tandem Himalaya S88016 machines acting as backend to more than 17000 Trader Work Stations (TWS) networked on Ethernet, VSAT and LAN network.

2. National exchange for automated trading[NEAT] The NEAT is an online trading system which is similar to the BOLT online system of BSE. But the difference is like the interface of operating and design of the system and software. The othertrading methodology is similar in both the systems.

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The NEAT online trading system operates on the basis of four type of market conditions like, a. Normal market. b. Odd lot market. c. Auction market. d. RTDEBT market. The details will be discussed in analytical parts. The study goes in detail about why investor takes the help of intermediary to carry out with the stockmarket instruments when they have direct access to the market through internetand other services and even there are few software to transact in the market independently and also the help through online is also available. Even investor canobtain the paid help services for the healthier investments suggestions.

The literature review briefs the main theme of the report and tells ensures thesignificance of conducting survey, and tells about the reliability and validityof the things. Research design and analysis provides the sufficient data regarding the findings and gives enough supports for the recorded proofs of the information. Methodology enlightens the way of doing the work, and as a final point results, analysis, conclusion and recommendations puts the ultimate outcome into picture.10 | P a g e


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CHAPTER - IILiterature review

2.1 literature review 2.2 Research design method2.3 Objective of the study 2.4 data collection techniques

2.5 Scope of the study

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2.1 LITERATURE REVIEW: In a broadest intelligence, investment is a sacrifice ofthe current money or any other resources for the future benefits. Numerous investment opportunities are available in the market these days. Investor can simplydeposit his/her money in the bank to be risk free or they can invest their fundson the different source of the investments like government secured investmentsor on the equity market or any other type of investments if at all ready to bearrisk factors. The two factors of investments are time and risk factors. When itcomes to the government investment instruments, time element dominates but in the same time, risk elements dominates if the investments are like share market instruments. This factor mostly decides the investment alternatives and it changes the investors attitude towards the investments.

There are various factors to be considered while studying about the investmentsand particularly about share market investments. Here the study goes towards thesearching of the factors which influences the investor to go towards the sharemarket investments and why investors likely to have an additional support for their investments, but why they do not go autonomously as an alternative. Investors have several alternatives for their funds to be invested with. Like that theyhave several people to support for the investments decisions like, stock brokerswho keep on updating the investors knowledge if they had put the investments through the stock brokers. The main factors why the people like to12 | P a g e


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go with the stock broker are the market unpredictability and the risk factor. General investor always can not keep on thinking about their investment variationsso they may take the external support. Mainly the Indian market conditions arealways unsecured and it will be varying all the time according to the main few stocks changeability in the stock market. Doing the investments online with stockmarket independently is possible with the support of the software which is provided for the transactions at the same time few venture investors do the transactions independently but most of the investors go with the stock brokers because ofthe lack of additional knowledge and lack of confidence to go with the risk factors. Here the main objective of the literature review is to detail the facts regarding the study and to see an overview of the literatures which supports the study. Basically a survey of the different investors in must for this type of study because these studies are highly depended upon primary data. An interaction with people makes the study better and comprehensible. Still many books and othersources help the study to make more realistic.

For the further reference on the study, I studied the literatures of K Sreepathifrom his book, The Dynamics of Indian financial markets, Investment analysis andportfolio management written by Prasanna Chandra, financial management written by BV Ragunandan.

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From the study of the above literatures, book written by Prasanna Chandra, The Dynamics of Indian financial markets contributed to a great extent. The literaturepenned the main points regarding the approaches of the investments also gave theprincipal reasons regarding the various investment alternatives and the perception of the investor regarding the stock market returns. The author has answeredmany questioned like, what is the relationship between risk and return. What isthe importance of diversified investments and how risks can be shared within thediversification, how successful are the various strategies followed by investment practitioners. As he says in the portfolio management process, investment hasfive attributes like, rate of return, risk factor, marketability, tax shelter,and convenience. Further he says, portfolio management process has steps like, 1. Specification of investment objectives and constraints. 2. Choice of the assetmix. 3. Formulation of portfolio strategy. 4. Selection of securities. 5. Portfolio execution, revision and evaluation. These are the main process involved inselecting the best alternative for the investments and to select an intermediaryfor the investment suggestions. When it comes to the process of port folio strategy and choice of asset mix and securities, every investor feel to have an external help or support instead going for independent investment decisions. So whymost of the investments happens14 | P a g e


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through stock brokers and other intermediaries. Even every investor need to complete some formalities which can not be done independently. Like creating a demataccount is mandatory for the investment on shares. Maintaining the accounts andtime to time portfolio evaluation. Each and every person who invests cant keep on checking the port folio because he may have other tasks too and even selectionof securities needs much knowledge than having experience so it needs good qualified suggestions. On the other hand, one more author BV Ragunandan who says inhis book as, usually shares are bought through a stock broker, who is a licensedmember of a recognized stock exchange. So while buying shares, one need to locate a registered stock broker. Further he says, there are many participants in the market like, A. Regulators who are the key agencies that have a significant regulatory influence over the securities market. B. Stock exchanges, brokers who are the institution where securities are bought and sold and brokers who are theagents of the stock exchanges respectively. C. Other participants are, depositors who maintains the demat accounts which are mandatory for the transactions. Merchant bankers, primary dealers, registrars, underwriters, bankers, these are allthe people come in stock market transactions. When it comes to the trading withthe stock market instruments that means, investing on stocks, we have two typeof trading. Those are,15 | P a g e


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1. Open outcry system[offline trading] 2. Screen based trading[offline trading]3. Internet trading[online trading] As the literature of the different books andother sources reviles that, under the open outcry system, trader need to be onthe floor where trading happens. Usually in stock exchanges where trader, meansbuyer have to bid their price and seller have to offer his shares and finally closes with a mutually agreed prices.

When it comes to screen based trading the trading, the trading happens through computer screen and here distant participants can trade with each other through the computer by having the internet connections. Screen based trading system enhances the efficiency of the market. Speed of the transactions, establishes transparency in the transactions and documentations. Till 1994, trading on the stock market in India was based on the open outcry system and trading was not dematerialized at that time. But after establishing national stock exchange and SEBI, in1994 the screen based system entered to India and in a short span of time Indiacould able establish the transparency like no other countries did like that tillnow. Internet trading or online trading was introduced in the year 2000.currently, ICICI Web trade, Sherekhan, kotakstreet, geogit securities, investsmart, andothers are offering the internet trading. To do internet trading,16 | P a g e


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investor has to register himself as a client with the internet stock broker apart from having a computer, a modem, and a telephone connection. Investor has to keep a minimum balance with his bank account with the stock broker so that brokercan directly debit or credit. Further, Dates of beginning of electronic tradingby top leading exchange in 120 nations is provided in a Journal of Finance article published in 2005 Financial market design and the equity premium: Electronicvs. floor trading. Leading academic research in this field is carried out by Professor Ian Domowitz and Professor Pankaj Jain. The same report states that, thereare broadly two type of trading in financial markets like, Business-to-business(B2B) trading. It conducted frequently on exchanges, where large investment banks and brokers trade directly with one another, transacting huge amounts of securities. Business-to-client (B2C) trading. Where retail (e.g. individuals transacting literally small amounts of stocks and shares) and institutional clients (e.g. hedge funds, fund managers or insurance companies, trading far larger amountsof securities) buy and sell from brokers or "dealers", who act as middle-men between the clients and the B2B markets.

Many of the existing analysis and findings by the reports have already given what all the impacts of the electronic trading system, we shall have a look on it. Reduced cost of transactions- from the automation, many of the works can be donepossibly in a short time so the cost can be decreased.17 | P a g e


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Better liquidity- electronic systems make it easier to let many companies to trade with one another, no matter where they are located. This leads to greater liquidity for the security instruments. Greater competition- there will be a greater competition when there are many companies existing in the market to provide the e trading system. So the investor can catch out better service and he is deserved for that. Enhanced transparency level- E trading made the markets less opaque and the market has given a greater transparency in transacting the instrumentsand other securities. There will be direct access to the customer for his transactions.

Moreover, some of the findings of several existing thesis reports said these points about online trading system; The central computer located at the Exchange isconnected to the workstations of the Brokers through satellite using Very SmallAperture Terminals (VSATs). Orders placed at the Brokers

workstations reach thecentral computer and are matched by the computer based on price and time priority.

The given information is like; both the exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading knownas BOLT (BSE on Line Trading) and NEAT (National Exchange

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Automated Trading) System. It facilitates more efficient processing, automatic order matching, faster execution of trades and transparency.

The scrips traded on the BSE have been classified into A , B1 , B2 , C , F and Z groups. The A group shares represent those, which are in the carry forward system (Badla). The

F

group represents the debt market (fixed income securities) segment. The Z group scrips are the blacklisted companies. The C group covers the odd lot securities in

A

,

B1

&

B2

groups and Rights renunciations. Key regulator governing Stock Exchanges, Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants in Indian secondary and primary market is the Securities and Exchange Board of India (SEBI) Ltd. DIFFERENCE BETWEEN ONLINE AND OFFLINE TRADING: With all the ease of online trading, there are still investors who favor the old fashion way of offline trading. Offline trading has lot its recognition but it is still the core form of investing. Offline trading offers many benefits as well. 1. The one benefit that an investorbe grateful for the most is that they are not alone when making investment decisions. 2. There are experienced and professional brokerage companies that handletheir investments for them.

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3. Investors are not faced with the challenge of making these vital investment decisions; especially, if they do not have the experience necessary to make the appropriate investments. 4. Also, there is someone there to answer any questionsthat may cause concerns. Not to mention, with offline trading mistakes are lesslikely to take place. No one wants to throw their money away or stand by and watch someone else throw their money away. It may be wise to hire a professional toassist you in making the correct investment decisions if you feel you lack theknowledge necessary. DIFFERENCE BETWEEN ONLINE TRADING AND OFFLINE TRADING SYSTEM ARE: 1. Online trading is very expensive as compare to manual trading or offline trading.

2. Online trading consumes less time as compare to manual trading.

3. Online trading has very helpful to finding the records easily but offline trading takes more time to finding the records.

4. In the help of online trading, there is no chance of any errors while doing the trading. In offline trading there are some errors exist like barriers of communication. 5. With the help of online trading, we know the international marketrate of share very easily.20 | P a g e


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INTERNET BASED TRADING THROUGH ORDER ROUTING SYSTEMS: Internet based trading onconventional exchanges, uses the Internet as a medium for communicating client orders to the exchange, through broker web sites. Brokers web sites may serve a variety of functions. These may include; Allowing the clients to trade directly trough investors; promote the broker dealers services to potential investors; Offer market information and investment tools similar to those offered by information vendor or SRO web sites; Offer real-time or delayed quote information, continuously update quotes while the user visits other sites, or allow investors to create a personal stock ticker; Provide market summaries and commentaries, analystreports and trading strategies and market data on currencies, mutual funds, options, market indices and news; and Offer investors access to portfolio managementtools and analytic programs; Information on commission and fees; and Account information and research reports.

In an Order Routing system, a broker offering Internet trading facility providesan electronic template for the customer to enter the name of the security, whatever it is to be bought or sold, the quantity and whatever the order is a marketor limit order. Once the brokers system receives this information.21 | P a g e


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NET WORTH REQUIREMENT The broker must have a minimum net worth of Rs. 50 lacs ifthe broker is providing the Internet based facility on his own. However, if some brokers collectively approach a service provider for providing the interest trading facility, net worth, criteria as stipulated by the stock exchange will apply. The net worth will be computed as per the SEBI circular no FITTC/DC/CIR-1/98dated June 16, 1998. The Bombay stock exchange as well as national stock exchange has given the highlighted points as the main features they are providing forthe investors through online trading system. These are given by the stock exchanges in its websites; 1. Freedom of information. 2. Control and security of investors money. 3. Access to the market directly. 4. Ensures the best price for the investors. 5. Offers enhanced transparency. 6. Enables irritation free trading. 7. Allows instant trading execution. 8. Reduces settlement risk.22 | P a g e


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9. Integrated depositary accounts with bank accounts. Further more, the famous writer of the book Intelligent stock market investing Mr. N J Yasaswy, and the bookfinancial markets and services by Mr. Y Chandra sekhar written in their book regarding the benefits of the online trading as, 1. It is less costly. 2. Peace of mind. It means, one can never have complete peace of mind but online investing does away with the hassles of filling up instruction slips, visits to the broker for handing over these slips and consequent costs. 3. Keeping records properly and access to information and investment tools trough direct internet access. 4. It reduces the settlement risk and offers superior transparency. The books whichare mentioned above are very much useful to give suggestions on the findings because the authors have explained the topic thoroughly and given the good suggestions to overcome the problems regarding the investment decisions and trading decisions. Investors expectations are very high most of the times and very rarely they have come down with the changing realities like softening of inflation, interest rates, excess capacity in the industry, reduction of the import duties etc. there is a strong need for a shift in the investors mental programming of high return on equity investments opines the author.

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So from the above reviews of the literatures we can give further as, under the existing legal and regulatory framework of SEBI registered brokers can offer trading on Internet through order is routing systems. This would reduce the risk factors which are in offline trading system and also increases the transparency. Still there are few problems are there in trading online like problem of hacking the data, online crimes, phishing the banking information and passwords, problemof taking the decision independently, breakdown of the computers, servers and internet connection etc. still we need to adapt the changes and further technologyso its better to en cash the opportunity of changes.

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2.2 RESEARCH DESIGN AND METHODOLOGY:

Problem definition: A research problem, in general, refers to some difficulty which a researcher experiences in the context of either a theoretical or practicalsituation and wants to obtain a solution for the same.

A problem clearly stated is a problem half solved. Thus, defining a researchproblem properly is a prerequisite for any study and is a step of highest importance. It is only on careful detailing the research problem that we can work outthe research design and can smoothly carry on all the consequential steps involved while doing the research.

The investments are subjected to risk. What ever may the type of investment theinvestor like to make but it has its risk factors. There are several type of investments available in the market but here the topic is only concentrated on share market transactions hence, we are going to discuss upon the various factor influences the investor to go for these investments and investors are like to havea good intermediary for their transactions.

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In the light of the above background, we can illustrate the main problem definition for the study as, what are the different type of investments are available for the investor in the stock market, through what all the way an investor can transact and why most of the investors desire to have assistance from an adviser of the investments though he can transact independently through online.

2.3 OBJECTIVES OF THE STUDY: 1. To make out what stock market investments is andwhat is online trading system. 2. To know the peoples awareness regarding onlinestock market transactions. 3. To study the investors opinion towards independenttrading and de materialized share trading. 4. Revealing what all the unknown things involved in the stock trading.

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2.4 METHODOLOGY OF RESEARCH: Effective research need to take up the following steps so these are the steps taken largely for the study.1) Defining the problem and research objectives. 2) Developing the research plan. 3) Collecting the information. 4) Analyzing the information. 5) Presenting thefindings.

2.5 DATA COLLECTION: The required data for the study collected from the primarysource of data as well as secondary source of the data. Time required to obtainthe primary data is higher compared to that required for collecting secondary data. Primary data collection is directly from respondents. The respondents are the people who are already invested on shares and other type of investments and people who are interested to invest and people who have information regarding theindependent online trading. Primary data collection is through structured questionnaire as well as personal meetings. Secondary data is collected through different books, magazines, E books and from various web sites. The details regardingthe secondary data source is given in the bibliography at the end of the report.27 | P a g e


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2.6 SCOPE OF THE STUDY: The scope of the study is mainly to bring out the totaland true facts regarding the share market and the trading system through onlinetransactions. The research was focused on various reasons for the investments and the ways of investments the investor goes to make hence the findings are fairreflection of the respondents.

2.7 LIMITATIONS OF THE STUDY: Every study will have its own limitation and limitation for further study of the topic. Like that this study also has its own limitation. The very few limitations are given below:

1. Enough investors for the sample size. Finding out the investor who trade online is a bit difficult task. 2. Availability of information is limited regardingonline trading system. 3. Truthfulness of the information provided by the investors. Each and every information may not be the fact.

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CHAPTER - IIIIndustry Profile2.1 Industry Overview 2.2 Investment 2.3 Capital Market and Depository 2.4 Trading online and its requirements

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2.1 INDUSTRY OVERVIEW:Globalization of the financial market has led to a manifold increase in investment. New markets have been opened; new instruments have been developed and new services have been launched. India has a well established capital market mechanismwhere in effective and efficient transfer of money capital or financial resources from the investing class to the entrepreneur class in the private and publicsector of the economy occurs. Indian capital market has a long history of organized trading which started with the transaction in loan stocks of the East IndiaCompany from that time it has undergone drastic changes to meet the requirementsof the globalization. The Indian Capital Market had been dormant in the 70

s and 80 s has witnessed unprecedented boom during the recent years. There has beena shift of household savings from physical assets to financial assets, particularly the risk bearing securities such as shares and debentures. Capital markets structure has also undergone sea changes with number of financial services and banking companies, private limited companies coming in to the scene which made thecompetition in the market stiffer. The Companies Act 1850, introduced the concept of limited liability to India, served to stimulate the activity in the stockmarket. From then number of acts are passed to boost the revolutionary change. The global capital market registered spectacular growth in the decade of 1990 s which had an effect on the growth of Indian market. The world market capitalization grew at an average annual rate of 16% during the decade, it grew from about US $ 9.3 trillion in 1990 to about US $ 36 trillion in 2000 but fell to about US$ 28 trillion by 2001. The30 | P a g e


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turnover on all markets taken together has grown nearly 19 times from US $ 5.5 trillion in 1990 to US $ 48 trillion in 2000 before depleting to about US $ 42 trillion in 2001. The turnover in developed markets has, however, grown more sharply than that in emerging markets. The US alone accounted for about 70% of worldwide turnover in 2001. Despite having a large number of companies listed in itsstock exchanges, India accounted for a merger of 59% in 2001 down from 1.06% in2000. The stock markets world wide has grown in size as well as depth over lastone decade. During the decade 1990-2000, the world market

capitalization/GDP ratio more than doubled from 51% to 120%. Value traded GDP rose from 29% to 103% and turn over ratio shot up from 48% to 89%. The combined market capitalization of a select 22 emerging economies increased from US $ 339 billion in 1990 to US $ 2.2 trillion in 2000. The average market capitalization increased from 3.6% to 7%, annual value of shares traded increased from $ 180 billion to $ 2.2 trillion and GDP increased from 16.7% to 45.5%. For India the totalcapitalization grew from $ 38,567 million at the end of 1990 to $ 110,396 million at the end of 2001. Turn-over of stocks Increased from $ 21,198 million in 1990 to $ 249,298 million in 2001. Market capitalization as a percentage of GDP grew from 12.2% in 1999 to 32.4% in 2001 while turnover ratio went up from 65.9% in 1999 to 191.4% in 2000. The number of listed companies in India was 5,975 as at end of 2001. There are very few countries, which have higher turnover ratio than India. Standard and Poor (SP) ranked India, 25th in terms of market capitalization, 15th in terms of total value traded in stock-exchanges and 6th in terms of turn-over ratio.

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2.2 Investment:Investment means buying securities or other monetary or paper (financial) assetsin the money markets or capital markets, or in fairly liquid real assets, suchas gold as an investment, real estate, or collectibles. Valuation is the methodfor assessing whether a potential investment is worth its price. Types of financial investments include shares or other equity investment, and bonds (includingbonds denominated in foreign currencies). These investments assets are then expected to provide income or positive future cash flows, but may increase or decrease in value giving the investor capital gains or losses

Characteristics of Investment:

(i) Interest (return)When we borrow money, we are expected to pay for using it this is known as Interest. Interest is an amount charged to the borrower for the privilege of using the lenders money. Interest is usually calculated as a percentage of the principalbalance (the amount of money borrowed). The percentage rate may be fixed for thelife of the loan or it may be variable, depending on the terms of the loan.

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What factors determine interest rates?

The factors which govern these interest rates are mostly economy related and arecommonly referred to as macroeconomic factors. Some of these factors are: Demand for money Level of Government borrowings Supply of money Inflation rate

(ii) RiskRisk may relate to loss of capital, delay in repayment of capital nonpayment ofinterest, or variability of return. While some investment such as government securities and bank deposits are almost without risk, others are more risky. The risk of an investment is determined by the investments maturity period, repayment capacity, nature of return commitment, and so on.

(iii) SafetyEvery investor expects to get back the initial capacity on maturity without lossand without delay. Investment safety is gauged through the reputation established by the borrower of the fund. A highly reputed and successful corporate entityassures investors of their initial capital.33 | P a g e


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(iv) LiquidityAn investment which is easily saleable or marketable without loss of money and without loss of time is said to be possess the characteristic of liquidity. Someinvestments such as deposit in unknown corporate entities, bank deposit, post office deposit, national saving certificate, and so on are not marketable. An investor tends to be prefer maximization of expected return, minimization of risk, safety of fund, and liquidity of investment

The three golden rules for all investors are: Invest early Invest regularly Invest for long term and not short term

One needs to invest for Earn return on your idle resources Generate a specified sum of money for a specific goal in life Make a provision for an uncertain future To meet the cost of inflation

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Sources of study for investors:A look out for new investment opportunities helps investors to beat the market.There are many sources from which investors can gather the required information.Such as;

(i) Financial institutions Corporate house, government bodies and mutual funds are the main source of investment information. Many of these enterprises have their own website and post investment related information on their websites.

(ii) Financial market Stock exchange and regulated bodies also provide useful information to investor to make there investment decisions. With respect to secondary market, the Securities and Exchange Board of India uses various modes to promote investors education and takes great effort to achieve an investor friendlysecondary market in India. The Reserve Bank of India also provide useful information relating to the prevent interest rates and non-banking financial intermediaries that mobiles money through deposit schemes.

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(iii) Financial service intermediaries These are intermediaries who promote securities among the public. Many of these intermediaries are the agencies of specific instruments especially tax saving instruments. These intermediaries offer toshare their commission from there concerned organization with the individual investor thus investor get additional advantages while investing through intermediaries.

(iv) Media Press sources such as financial news papers, financial magazine, business news channel, websites etc. provide information related to investment to the public. Besides information on securities, these sources also provide analysisof information and in certain instance suggest suitable investment decisions tobe made by investor

2.3 Capital Markets and Depository:About Capital Market:The function of the financial market is to facilitate the transfer of funds fromsurplus sectors (lenders) to deficit sectors (borrowers). A financial market consists of investors or buyers of securities, borrowers or sellers of securities,intermediaries and regulatory bodies. Indian financial system consists of moneymarket and capital market.36 | P a g e


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The capital market consists of primary and secondary markets. The primary marketdeals with the issue of new instruments by the corporate sector such as equityshares, preference shares and debt instruments. The secondary market or stock exchange is a market for trading and settlement of securities that have already been issued. The investors will holding securities or sell securities through registered brokers/sub-brokers of the stock exchange. The introduction of NSE & BSEhas increased the reach of capital market manifold which in turn increased the number of investors participating in the capital market and thus creates the possibility of a bad delivery. The cost & time spend by the brokers for rectification of this bad delivery tends to be higher with the geographical spread of the clients. The increase in trade volumes leads to exponential rise in the back office operation. The inconvenience faced by the investors (in area that are far long& away from the main metros) in the settlement of the trade also limits the opportunity for such investors in participating in auction trading. This has made the investors as well as brokers wary of Indian capital market. The erstwhile settlement system on Indian stock exchanges was inefficient and increased risk, dueto the time that elapsed before trades was settled. The transfer was by physical movement of papers. There had to be a physical delivery of securities - a process fraught with delays and resultant risks. The second aspect of the settlementrelated to transfer of shares in favor of the purchaser by the company. The system of transfer of ownership was grossly inefficient as every transfer involvesphysical movement of paper securities to the37 | P a g e


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issuer for registration, with the change of ownership being evidenced by an endorsement on the security certificate. In many cases the process of transfer wouldtake much longer than the two months stipulated in the Companies Act and a significant proportion of transactions would end up as bad delivery due to faulty compliance of paper work. Theft, forgery, mutilation of certificates and other irregularities were rampant. In addition, the issuer had the right to refuse the transfer of a security. All this added to costs and delays in settlement, restricted liquidity and made investor grievance redress time consuming and, at times, intractable. To obviate these problems, the Depositories Act, 1996 was passed. Itprovides for the establishment of depositories in securities with the objectiveof ensuring free transferability of securities with speed, accuracy and security.

2 Depository:Depository is an organization where the securities of a shareholder are held inthe electronic form at the request of the shareholder through a medium of a Depository Participant (DP). The principal function of a Depository is to dematerialize securities and enables their transaction in book-entry form electronically.Depository functions like a security bank, where the dematerialized securities are traded and held in custody. This facilitates faster, risk-free and low cost settlement similar to bank.

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Following tables compares the two; BANK Hold funds in account Transfer funds between accounts DEPOSITORY Hold securities in accounts Transfer securities betweenaccounts

Transfer without physically handling Transfer without physically handling moneySafekeeping of money securities Safekeeping of securities

In India the Depository Act defines a Depository to mean, a company formed and registered under the Companies Act, 1956 and which has been granted a certificateof registration under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992

Depositories in IndiaThere are two depositories in India, which provide dematerialization of securities. National Securities Depository Limited (NSDL) Central Depository Services Limited (CDSL)

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Benefits of participation in a depository

Immediate transfer of securities No stamp duty on transfer of securities Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc. Reduction in paperwork involved in transfer of securities Reduction in transaction cost Ease of nomination facility

Depository ParticipantThe Depository provides its services to investors through its agents called Depository Participants (DPs). These agents are appointed by the depository with theapproval of SEBI. According to SEBI regulations, amongst others, three categories of entities, i.e. Banks, Financial Institutions and SEBI registered trading members can become DPs. The depository has not prescribed any minimum balance. Customer can have zero balance in his account.

ISINISIN (International Securities Identification Number) is a unique identificationnumber for a security.

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CustodianA Custodian is basically an organization, which helps register and safeguard thesecurities of its clients. Besides safeguarding securities, a custodian also keeps track of corporate actions on behalf of its clients:

Maintaining a clients securities account Collecting the benefits or rights accruing to the client in respect ofsecurities

Keeping the client informed of the actions taken or to be taken bythe issue of securities, having a bearing on the benefits or rights accruing tothe client.

Dematerialization of securitiesIn order to dematerialize physical securities, one has to fill a Demat Request Form (DRF) which is available with the DP and submit the same along with physicalcertificates. Separate DRF has to be filled for each ISIN number. Odd lot sharecertificates can also be dematerialized. Dematerialized shares do not have anydistinctive numbers. These shares are fungible, which means that all the holdings of a particular security will be identical and interchangeable. One can dematerialize his debt instruments, mutual fund units, government securities in his single demat account.

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Re-materializationIf one wishes to get back his securities in the physical form means, he has to fill in the Remat Request Form (RRF) and request his DP for rematerialisation ofthe balances in his securities account.

Legal framework:The Depositories Act 1956 provides the regulation of depositories in securities.SEBI formulated the Depositories and participants Regulation Act, 1996 to oversee the matter regarding admission and working of Depositories and its participant. The Depositories Act passed by parliament received the Presidents assents on August 10, 1996. The Act enables the setting up of multiple depositories in the country. Only a company registered under the companies Act (1956) and sponsored by the specified categories of institution can setup depository in India. The Depository offers services relating to holding of securities and facility processing of transaction in such securities in book entry form. The transaction handledby depositories includes settlement of market trades, settlement of off-market trades, securities lending and borrowing, pledge & hypothecations.

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Function of Depository Participant: Dematerialization: One of the primary functions of depository is to eliminate orminimize the movement of physical securities in the market. This is done through converting securities held in physical form in to holdings in to back entry form. Account Transfer: The depository gives effects to all transfer resulting from the settlement of trade and other transaction between various beneficial owners by recording entries in the accounts of such beneficial owners. Transfer & Registration: A transfer is a legal change of ownership of a security in the records of the insurer. Transfer of securities under demat occur merely by passing bookentries in the records of the depositories, on the instruction of beneficial owners. Pledge and hypothecation: Depositories allow the securities with them to be used as collateral to secure loans and other credits. The securities pledged are transferred to a segregated or collateral account through book-entries in therecords of the depository. Linkage with clearing system: The clearing system performs the function of ascertainment in the pay in (sell) or payout (buy) of brokers who leave traded on the stock exchange. Actually delivery of securities from the clearing system is from the selling brokers and delivery of securities from the clearing system to the buying broker43 | P a g e


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is done by depository. To achieve this depositories and the clearing system arelinked electronically. To handle the securities in electronic form as per the Depositories Act 1996 two depositories are registered with SEBI. They are 1) NSDL-- National securities depository limited. 2) CDSL -- Central depository service(India) limited.

NSDLIndia had a vibrant capital market, which is more than a century old, the paper-based settlement of trades caused substantial problems like bad delivery and delayed transfer of title till recently. The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first depository in India. NSDL promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standard that handles most of the trading and settlement in dematerializedform. Using an innovative and flexible technology system, NSDL works to supportthe investors and brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settlementsolutions that increase efficiency and minimizing risk and cost. In the depository system, securities are held in depository accounts, which is more or less similar to holding funds in bank accounts. Transfer of ownership of securities is done through simple account transfers.44 | P a g e


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This method does away with all the risks and hassles normally associated with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower as compared to transacting in certificates.

CDSLCDSL was set up with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants. CDSL received the certificate of commencement of business from SEBI in February 1999. Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book-entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialization of his holdings and transferring securities. The balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the investor, at regular intervals, a statement of account, whichgives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates, which were prone to befake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficientand instantaneous transfer of securities.

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Trading online and its requirement.There are many stock broking companies which are providing the account for the customers to trade online and here the investor need to be the member of that company and its depository to have an account with the broking company. The companyitself provides the software which is to be used to trade directly through online and the customer can not trade with the other companies software unless and until he makes an account with them or trade with them .the investor can take thesuggestion from the broking company at any time of the working hour. The majorthing which comes under consideration is, the investor who trades independentlyis needed to maintain a bit high amount in his account. Means nearly the doubleof the amount which a traders trade offline. Here investor will be in contact tothe trade directly and will be in contact with the market. The software on which the BSE online system works is given in the next page as a snapshot image. This is the software which is used by the Bombay stock exchange people who trade over there but the software which is provided by the stock brokers to the investors are some what different from the software which is given in the image.

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CHAPTER IVData Analysis and Interpretation

4.1 Data Analysis Findings & Interpretations.

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As I have explained in the methodology section that, the study is based on the opinions of the different authors who wrote books regarding the online trading and also a large amount of the analysis is based on the opinion of the investors regarding the online and offline trading. The data which is collected for the analysis is through the questionnaires which are given to the customers who trade offline and online. Searching for the investors who trade online is a bit difficult in the sub urban cities and the people stay over there, they will not be ready to take financial risk. In cities like shimoga, hardly we found people who trade completely through online. Still I have taken the opinion of those investorswhich I met. The analysis of the data and findings will be given in the next continuing pages.

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Respondents on the basis of age groupage group below 20 20-35 35-50 50 and above respondents 0 10 8 2

Findings:From the above information which is given in the table, we can interpret as, hepeople who belongs to the age group of 35 to 50 will invest more due to the sufficiency of the earning and the people who belongs to the age group of 20 to 35 will invest comparatively less than the latter group because may be the time andfund deficiency and other reasons. Here most of the online traders come in the age group of 20 to 35 because of their knowledge and fast thinking and decision making as well as interest to do the trade.

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Table showing the occupation of the investors:Occupation Employed Self employed Retired Not employed students Total Respondents 9 10 1 0 0 20 Percentage 45 50 5 0 0 100

Findings:From the above information we can say that the people who are self employed, they show much interest to invest in the equity market and it is comparatively lessin the case of employed in different organization. Reason may be the time required to do the transaction and the availability of the fund to invest. The data says, nearly 55% of the people who trade in stock, they are self employed and therest 45% of people are employed in different organizations. The people who arein the evening of their life is less in stock trading due to the security reason.

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Respondents based on the annual incomeAnnual income Below 150000 150000-300000 300000-450000 450000- Above Total Respondents 0 6 10 4 20 annual investments[weighted avg] 0 50000 75000 100000 Percentage 0 30 50 20 100

Findings: From the above information we can understand that, the people in the income group below 150000Rs per annum, they do not show much interest in investing their money on share market. The people belongs to the group in between 300000RS and 150000RS, they show interest towards share investments. But the large group of investors who belong to the higher income group like the group which has income more than 4 lacks and above they shows much significance for share trading. Here we can say that, the income of the investors ought to be taken in to consideration whether they are interested in long term or short term and whether they are concerned in online or offline trading.52 | P a g e


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Based on the terms of the investmentsTerm of investments Long term Short term Both Total respondents 5 12 3 20 Percentage 25 60 15 100

Findings:From the above information we can interpret the survey as, half of the investorwould like invest for the short term gains because as per their mind set they say they like to gain more from the short term instead putting money in the long term investments. The rest of the people, means the rest 25% of the people wouldprefer long term due to the increasing and balanced returns and 10% of the people like to deploy their funds in both the investment types. Also we can state that, the people who belongs to the income group of 300000 and less, they mostly gofor the long term investment because the loosing percentage is less and returnwill be balanced than loosing more.53 | P a g e


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Analysis based on showing frequent investment:Gap of investments Weekly Monthly Quarterly half yearly Yearly Total respondents8 5 3 2 2 20 Percentage 40 25 15 10 10 100

Findings:The table says that, most of the investors are time oriented. It means the shortterm investors who trade online as well as offline, they go for the frequent trading like daily trading or few days in a week or once in month like but when itcomes to the long term investors, they trade once or twice for months or for quarterly once. Even many of the long term investors go for the trading jus once in six months and in a year also. The table says that, weekly traders are high. Long term investors mostly go for the initial public offers and they go for the banking shares also most of the time.54 | P a g e


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Analysis on the basis of reason for opting online trading system:Type of trading adopted online trading system offline trading system Both Totalrespondents 6 14 0 20 percentage 30 70 0 100

Findings:This is the major deciding factor for this thesis work because the whole work isbased on the choice of trading system by the investor. Here we can make out that people like to for the offline trading more than the online trading system. Reason may the risk factor or may be lack of information regarding the market andmay be lack of experience and decision making power. There might be many more reasons for the right selection of the system to work on with. 70 to 75% of the people still like to go with the offline trading and the rest of the people may opt for the online trading system. The main reason behind the choice is the risk factor involved in the decision making and lack of knowledge about trading online.55 | P a g e


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Reasons for opting independent trading [online trading]:Reason for opting online trading A freedom of trading B direct access to the market C frequent transactions D less brokerage charges E other reasons total Respondents 6 out of 6 6 out of 6 6 out of 6 3 out of 6 4 out of 6 6 Percentage 100 100 100 50 65 100

Findings:Here the highlighted reasons for choosing the online trading are freedom of trading so the investor can trade independently. Direct access to market so that theinvestor need not to ask the broker every time for his transactions. Frequent transactions can be made by having online trading system and also the other reasons are brokerage charges. Brokerage charges are less but the trader may occur other charges like installation of computer, telephone charges and other such costs. There were some other reasons like, no need of going to the brokers for the documentation and no risk of transactions without permission, 100% transparency will be there in dealings.56 | P a g e


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Selection of offline trading facilitators:type of offline service providers A. Independent brokers B. brokerage agencies C. banks and IPO D. others Total respondents 2 11 5 2 20 percentage 10 55 25 10 100

Findings: The selection of the service providers is depending upon the securityfor the transactions and even emotions also attached with it. Partially it is based on how the service provider treats the customer and how the customer gets the respect for the small transactions etc. Here in this most of the investors gofor reputed brokerage agencies like Karvy, geojit, way to wealth etc. these investors are all short term frequent traders. When it comes to the reason like going for banking shares and initial public offers, the percentage is quite less andonly up to 25% and 10% of the investors go for the suggestions of independent brokers and they even trade on the basis of others account also. And 10 of the investors go for the other sources.57 | P a g e


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Reasons for opting offline trading:Reasons for opting offline trading. Helps in decision making No much risk in handling transaction Provision of additional limit Others Total Respondents 12 outof 14 14 out of 14 8 out of 14 8 out of 14 14 Percentage 85.7142857 100 57.1428571 57.1428571 100

Findings:Many reasons may affect the choice of offline trading system because as per thesurvey we got the expected finding as people like to go with offline trading than online trading because of the reasons which are given already in the discussion. Here we can see the opinions of the sample group of investors which I selected for the study. As per the answers given by the investors, all the investors accept that, risk involved in handling transaction is less when it compared to theonline trading. 85% of the investors states that, doing trading offline helps in decision making because there the investor will get the suggestions from the trading people and they will suggest which shares are in good movement and whichshares can be bought and sold.58 | P a g e


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When it comes to the reason of availability of the extra limit of the fund for the transaction, 50% of investors accept this reason and the rest of investors says, additional limit is available only to the investor who transact large amountin trading and who have a good image in the eyes of the stock brokers. Each andevery investor can not make out this option without having goodwill and image.50% of investors add their own reasons for opting the offline system for tradinglike, time matters because in offline trading the investor can call the brokerand say to trade on behalf of the investor and even he can give permission to the trader up to a limit without asking for the permission.

This is because for small amount of trading the investor cant spend his time. Theother reasons are like documentation, remainder service and research calls. Brokers will do all the required documentation for the convenience of the customerand they will be informing the investors about the increasing and decreasing ofthe share values. Even they inform the status of the trading account and what are need to be done and other things. One more thing is the research calls. This calls will be given from the R&D department of the company about which is the next move can be done to trade. Brokers will suggest the investors according to theresearch call. This helps the investor to feel secured because they think thatsomeone is taking care about their investments.

one of the other reason which the investor felt important is lacking in computerknowledge and skills. They feels that they are not capable of doing the computer work and they do not have enough time to learn the basi computer skills also.

Even they feels that maintaining the telephone connections and other things arerisky so it is better to go for offline trading.

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Basis of investments:Basis of investments A. Self analysis B. financial advice from investors C. advice from brokers D. friends and relatives advice E. chartered accountants adviceF. others G. Total Respondents 1 2 10 3 2 2 20 Percentage 5 10 50 15 10 10 100

Findings:From the above information we can understand that, half of the offline traders would like to go for the suggestions of the brokers and a very few people do selfanalysis for the investments. Fifteen to twenty percent of the people take thesuggestions from the family members and friends and rest of the people goes forthe suggestions of chartered accountants and other people like tax consultants and others. It means that, people prefer to go for the experienced advice than just few suggestions. Investor looks over the return and in the same time they expect the security also for their investments.60 | P a g e


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Analysis based on grounds to choose various investment alternatives:Grounds to choose alternatives Risk involved Returns on investments Future growth past performance Others Total Respondents 20 out of 20 20 out of 20 15 out of20 15 out of 20 10 out of 20 20 percentage 100 100 75 75 50 100

Findings:The above table shows the data of the grounds on which the investor prefer to choose one investment instrument amongst the available. All the investors most ofthe time looks upon the risk involved in the instrument or we can say a share. Return on the investment also they take in to consideration like how much returnthe company is giving on its share and what is the market value of the share etc...

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75% and above people look upon the future growth of the share in the market as well as the growth of the company too. Even they come across the past performanceof the share resembling what was the issue value and what is the market value the company gained in last few years etc. Many additional causes are there to choose the better alternative like, better for long term investment, to gain loansfrom banks by pledging the shares, to have a part in the ownership value of thecompany and also to gaining the reputation by holding certain most valued shares. This is the analysis and findings part of the study where we could able to find the answer for the defined objectives of the study and we could interpret theinvestors opinions concerning to the trading system. In this part we searched out the major facts regarding why investors prefer to go offline trading more thangoing towards online trading. We found out many other reasons which affect theinvestors to go towards the different trading system and also what are the reasons behind the choice of different alternative investment instruments. Here our study is only based upon the trading of the shares and not based on the commodities market and multi commodities exchange market. That market is entirely different and the investors opinion about that market also different. Though the commodities trading also done by the same system and the trading techniques also same.Still we can not consider both markets in to consideration because it is beyondthe scope of the project work. In this work, I included the analysis and findingpart in the same chapter so that the reader can understand the questions and the answer from the investors and the reader can make out the findings and what exactly the investor is telling about his opinion. Instead of putting the findingsin the different chapters and making the reader to come again and again to the

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CHAPTER VDiscussions and implications

5.1 Discussions. Implications.

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5.1 Discussion and implications:Most of the topics, questions answers and opinions of the investors are alreadydiscussed in the analysis and findings part. Here we can discuss regarding the final results of the study and the points what I mentioned in the part of literature review and we need to compare the results with the points which I mentionedin the literature review and need to give justification for the study so we needto look over the points which different authors mentioned, what journals givenand points which are given by the different books. Most of the points which aregiven by the authors regarding the opinions of the investors towards online trading are true because the study revealed those particulars and investors behavessame most of the time as told by the authors in their books. As Mr. Prasanna Chandra has mentioned three types of trading like open outcry system, screen basedsystem and internet based system. Here in the real market, open outcry system isnot in existence but only the next two are in use. Like that many things will come to know in this study even many unknown factors regarding the selection of trading system also will come to know. In the beginning days of online trading there was a myth that, comparing to offline trading system online trading is verycostly and it requires greater skill so only few people can only handle the trading through online but recent days the phenomenon has changed and comparing to the brokerage charges and time required for offline trading both the online and offline costs similar and regarding the knowledge, now a days everybody use computers for one or the other purpose so knowledge is not the problem for handling the trading through online.64 | P a g e


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There is a saying that, it is hard to become good analyst but it is harder to become good trader. It means what ever may be the trading system but the trade iscompletely depends upon the knowledge and experience of the investor. How much he knows about the market trends. Which is the better time to invest and other thins. An unknown person also can invest on the stock market but very soon he willgo out of the market because the active mind is important and also knowledge matters much for the investment value variation. Just knowing about the computer is not at all sufficient for trading in stock market. Beginners often assume thatthey can make money because they are smart, elegant, and Computer-literate andhave a record of victory in business. You are capable of getting a speedy computer and even buy a back tested system from a vendor, but putting money on it is like trying to sit on a three-legged stool with two legs missing. The two other factors are psychology and money management. Dr. Alexander elder says in his book, Come in to my trading room as People buy and sell on the basis of their knowledge and the latest price represents everything known about that market. This is avalid observation, from which the efficient market gang draws the curious conclusion that no one can beat the market. Markets know everything, they say, and trading is like playing chess against someone who knows more than you. Dont waste your time and moneysimply index your portfolio and select stocks based on volatility. This says what the observation skill needed for the investor and based on thevolatility investor must go for investing his/her money.

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Before completing this chapter we need to know that, there are certain importantbarriers which make some losses for the investors without knowing. Those costsare unstoppable and investor has to bear those losses while trading on stock market. They are, 1. Slippage: Slippage is the difference between the price at thetime you placed your order and the price at which that order got filled. Slippage tends to be a much bigger expense than commissions. Slippage means nothing but, lets take an example. Think that we are buying the shares of reliance when theprice reaches to a level of 150Rs. We places an order of buying 100 shares at 11.45am but the order executes at 11.55 am but at that time the price falls to 148Rs. So here the investor bears a loss of 2Rs without knowing. He should bear theloss of 2Rs. This is nothing but slippage. 2. Commissions: Commissions may appear to be a minuscule expense. Most traders Neglect them, but if you add them up,youre likely to find that your broker ends up with much of your profit. Usuallybrokers charges 0.05% commission on the traded amount every time whether it maybe buying transaction or may be selling but they charge this fixed amount and they may charge for the stamp duties of the transactions from investor itself. Brokers provide discount for the regular investors and for large trading also but the discounts will be jus 0.02% maximum.

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3. Expenses: Some expenses are unavoidable. Especially in the beginning investorwill have to buy a few books, download or subscribe trading software, sign up with a data service, opening several accounts and documentation process and so on. It is important to keep your expenses as low as possible. Brokers and brokerage agencies sometime facilitates traders tradingrelated expenses, such as computers, subscriptions, and advisory services, and software in a discounted costs without taking full money. That helps the investor to lessen their expenses. These are the few barriers in trade profits which can be avoided and which will incur every time.

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CHAPTER VIConclusion and recommendations

6.1 Conclusions. 6.2 Recommendations

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CONCLUSIONS:We have examined all the reasons which affect the selection of the trading system and we have discussed about the Indian stock market, which all comes under thestock market, who all trades inside the stock market, what all the things willbe traded under the stock market and many other facts regarding the stock marketand the stock market transactions. In the meanwhile we discussed about the stock traders, who all can trade the equities, what all the minimum requirements forthe equity trading, Bodies and boards who controls the share market and the stock exchanges etc many more thing we discussed in detail in this study so this isthe time to give a better conclusion regarding the study what I performed. As inthe discussion space we have seen that who ever trades in the market or which ever may be the system of trading, knowledge is essential for trading and possession of the skill is an important task. Attentive mind will succeed in the stockmarket trading. Still most of the time the trading system puts its effect on trading. Main thing is decision making about the shares because people unaware regarding the stock market variation most of the time so they need a better advisersto understand the situation so preferably they go for the brokers. So we say here that the offline screen based trading is much popular than online independenttrading.

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Both the system has its own advantages but as per the survey, as per the analysis, as per the investors opinions we can say that people attitude and perceptionsupports the offline trading much more than online trading. From the study we came to know that most of the investors are unaware about the online trading and they are not confident that they can also do trading independently. They lack indecision making. One more thing we can state here that, online trading has a bright future in the upcoming days because of the technological development and people can get the market information easily from media and also investors becomingmore and more time conscious so they like to do other works also along the trading in market so online trading is getting importance more and more in India. Foreign markets are already covered with online trading. In USA people do not go for the suggestions from the brokerage agencies and they trade independently. Thesame trend is coming to India also.

Recommendations & suggestions:As already we have discussed the advantages of the online trading and even we have discussed about the future development of the online trading system and the opportunities which are awaiting form the side of online trading so here I wouldlike to suggest few points how the online trading can be well developed and whatare the corrections to be done to erase the myths which are stuck in the mind of the investor. They are,

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1. Investor awareness should be done to teach the investor regarding the usage of the internet trading so the investor can trade independently. 2. Investor orientation programs can be done by the institutional trader so that they can make the common man to learn how to invest. 3. The brokerage agencies should provide enough trading limit to the online traders also. Than only the investors show interest on investments through online. 4. Brokerage agencies should provide the updated information to the online investors also and they should provide the information which they get from the research calls of their R&D department. 5. Totally when the investor gets all the information which he gets from offline, than only he will show interest upon the online trading so that should be done to assure that he is going to get all the information. 6. Service provider of IT shouldsecure the investor against the system breakdown. He must give all the securities. 7. Finally, investors goes to the option where the cost is less so when the total cost goes down for trading online than offline, automatically investor shows a greater interest and sure they will try to learn the new system which are helpful for them.

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PART VIIReferences

7.1 reference sources.

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6.1. REFERENCE SOURCES.

i. N J Yasaswy., Intelligent stock market investing. ii. Y Chandra sekar. Financialmarkets and services. iii. B V Raghunandan. financial management iv. Prasanna Chandra, The Dynamics of Indian financial markets v. Professor Ian Domowitz and Professor Pankaj Jain., Financial market design and the equity premium: Electronic vs. floor trading. Journal. 2005. vi. Training material of BOLT, Bombay stock exchangeLtd BSE Training institute [BTI]. vii. National stock exchange. Understanding theNEAT system, Chapter 1. Issued by National stock exchange. viii. Stock market. Article published by Wikipedia the German

encyclopedia. Link, file:///D:/SHARE%20MARKET/Stock%20market%20-

%20Wikipedia,%20the%20free%20encyclopedia.htm. ix. Come in to my trading room. Alexander elder.

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PART VIIIAnnexure.

8.1 Questionnaire.

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QuestionnaireDear Respondent, As I am a Management Student, undertaking my management thesiswith the topic "study on investors attitude towards online trading " I request you to spare some time of yours to fill this questionnaire to provide me the information regarding the reasons of using online trading or offline trading [tradingthrough brokers and stock brokerage agencies].Your response will be kept strictly confidential. Name of investor: ________________________________ 1. Age group: Below 20 20 to 35 35 to 50 50 and above 3. Occupation: Employed: Private Sector Self-Employed: Business Retired Profession Not Employed Public Sector

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4. Annual income: Below 150000 300000 to 450000

150000 to 300000 450000 and above

5. Are you a short term investor or long term investor? Short term investment Long term investment Both

6. What is your investment per annum? Below 20000 20000 to 40000 40000 to 8000080000 and above

7. How frequently do you invest: Weekly Monthly Quarterly Half yearly yearly

8. Do you personally follow the stock market? Yes No

9. If yes, then how frequently do you watch market? Daily Twice a week Weekly Frtnightly

10.Do you trade independently? Yes No76 | P a g e


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11.If yes, why do you like to trade independently? Freedom of trading direct access to the market Frequent transactions free of brokerage charges

others

12. If you are not trading independently, in which way do you like to trade? Through independent brokers through broking agencies Through banks others

Others please specify: __________________ 13. What is the reason to go for the above way one which you selected? Help for decision making Provision of additional limit option 14.Basis for Investment: Self Analysis Brokers Advice Charted Accountant Advice 13. Source of study: Business Channels Business Magazines Business Papers Internet No risk of handling transaction Others

Financial Advice from investors Friends/Relatives Advice Others

14. How do you choose your various investment alternatives? Risk involve Futuregrowth Return they give Past performance

If others, please specify: _____________________________________________________________77 | P a g e


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Date post:	03-Apr-2018
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35179615 MT on Online Trading

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