1.Page |1PART-1 EXECUTIVE SUMMARY:The present repot is prepared for the partial of M.B.A and as a part of curriculum. The survey isan attempt to determine and INDIAN BROKING INDUSTRY ANALYSIS WITH RESPECTTO NIRMAL BANG SECURITIES. To pursue research area are Lucknow was chosen wherethe survey conducted through personnel interview.The data collection is an analyzed and some practical tools were applied to get inferences fromthe survey. The results are printed in the graphs and diagrams.The research report has two sections in its first section company and industry profile is given,where as second Research Methodology is given which includes samples design, analysis onsample and presentation is in the form of diagram and charts.Finally some suggestions with respect to the survey for the future improvement is given toimprove the survey because their competitors have also taken up the surveys.At the end of the report limitations, SWOT analysis, conclusion of the research and Appendixwhich includes questionnaire and the list of the city where the Sriram insight share brokers Ltdare running. Last there is Bibliography, FAQ, and Glossary that has the technical terms of thereport.

2. Page |2 COMPANY PROFILEINTRODUCTION:Nirmal Bang Group is one of the largest retail broking houses in India, providing the investorsstate of art services in capital markets in the country. The Group has memberships of BombayExchange Limited, National Stock of India Limited, Multi Commodity Exchange of IndiaLimited, National Commodity and Derivatives Exchange Limited and is also a depositoryparticipant of NSDL and CDS (I) L, the depositories of the country.Nirmal Bang Securities Pvt Ltd. is the stock-Broking arm of the Rs. 7,500 crore (approx) NirmalBang. With over 450 branches, 8000 employees (approx), 28 lakh investors, Nirmal Bang, withevolved into a premier financial supermarket providing a host of services including stock-broking, distribution of investment products, properly, property development, industrialinvestment, risk management, insurance products and consumer finance.Founded in 1986 by Shri Nirmal Bang, the Nirmal Bang Group is recognized as one ofthe largest retail broking houses in India, providing an array of financial products andservices.Our retail and institutional clients have access to products such as equities, derivatives,commodities, currency derivatives, mutual funds, IPOs, insurance, depository services andPMS.Nirmal Bang Securities Private Limited, a retail broking house, provides an online share tradingplatform to customers to trade on equities, derivatives, commodities, currency derivatives,insurance, depository services, and subscription to initial public offerings and mutual funds inIndia. The company offers daily and company reports, stock ideas, and sector updates. It also 3. Page |3provides franchising opportunities to individual to use its infrastructure by being its channelpartnersNIRMAL BANG consultant:As the flagship company of the NIRMAL BANG Group, NIRMAL BANG Private Limited hasalways remained at the helm of organizational affairs, pioneering business policies, work ethicand channels of progress. NIRMAL BANG believes that they were best positioned to ventureinto that activity as a Depository Participant. They were one of the early entrants registered asDepository Participant with NSDL (National Securities Depository Limited), the first Depositoryin the country and then with CDSL (Central Depository Services Limited). Today, It service over1Lac customer accounts in this business spread across over 350 cities/towns in India and areranked amongst the largest Depository Participants in the country. With a growing secondarymarket presence. It has transferred this business to NIRMAL BANG SECURITIES PRIVATELIMITED (NBSPL), their associate and a member of NSE, BSE, and MCX & NCDEX.Throughout our history, we have fostered one overriding purpose to provide each clientwith personal service and quality work. By adhering to this principle, we have grown tobecome a successful land well-respected of highly qualified professionals. The Group isheaded by Mr. Dilip Bang and Mr. Kishore Bang who bring forward industry expertise,insight and most importantly, create an environment of unmatched commitment to clients.We are registered members of the Bombay Stock Exchange Limited (BSE), NationalStock Exchange of India Limited (NSE), Multi Commodity Exchange of India Limited(MCX), National Commodity & Derivatives Exchange Limited (NCDEX), National MultiCommodity Exchange of India Limited (NMCE) and MCX Stock Exchange Limited and arealso depository participants of NSDL and CDSL. 4. Page |4Vision:TO CREATE VALUABLE RELATIONSHIPS AND PROVIDE THE BEST FINANCIALSERVICES MOST PROFESSIONAL.Mission:To work together with integrity and make customer feel valued.Core value:RESPECT OUR COLLEAGAUES AND THE BUSINESS ITSELF.NIRMAL BANG --- Early Days:The birth of NIRMAL BANG was on a modest scale in 1986. It began with the vision andenterprise of a small group of practicing Chartered Accountants who founded the flagshipcompany. NIRMAL BANG Securities Private Limited. It started with consulting and financialaccounting automation, and carved inroads. Since then, They have utilized their experienceand superlative expertise to go from strength to strengthto better their services, to providenew ones, to innovate, diversify and in the process, evolved NIRMAL BANG as one ofIndias premier integrated financial service enterprise.Thus over the last 20 years NIRMAL BANG has traveled the success route, towards building areputation as an integrated financial services provider, offering a wide spectrum of services. Andthey have made this journey by taking the route of quality service, path breaking innovations inservice, versatility in service and finally totality in service.Their highly qualified manpower, cutting-edge technology, comprehensive infrastructure andtotal customer-focus has secured for them the position of an emerging financial services giant 5. Page |5enjoying the confidence and support of an enviable clientele across diverse fields in the financialworld. Their values and vision of attaining total competence in their servicing has served as thebuilding block for creating a great financial enterprise, which stands solid on their fortresses offinancial strength - their various companies.With the experience of years of holistic financial servicing behind them and years of completeexpertise in the industry to look forward to, they have now emerged as a premier integratedfinancial services provider. And today, they can look with pride at the fruits of their mastery andexperiencecomprehensive financial services that are competently segregated to service andmanage a diverse range of customer requirements.Business Focus:The focus of the businesses the Customer service, Customer education, Customer support,Customer relations and last but not the least Customer acquisition. Trade execution transparency,timely settlements, risk monitoring and superior service shall have topmost priority, in the bestinterests of all concerned.HISTORY: 6. Page |6Founded in 1986 by Shri Nirmal Bang, the Nirmal Bang Group is recognized as one ofthe largest retail broking houses in India, providing an array of financial products andservices.Our retail and institutional clients have access to products such as equities, derivatives,commodities, currency derivatives, mutual funds, IPOs, insurance, depository services andPMS.Throughout our history, we have fostered one overriding purpose to provide each clientwith personal service and quality work. By adhering to this principle, we have grown tobecome a successful and well-respected of highly qualified professionals. The Groupisheaded by Mr. Dilip Bang and Mr. Kishore Bang who bring forward industry expertise,insight and most importantly, create an environment of unmatched commitment to client.We are registered members of the Bombay Stock Exchange Limited (BSE), NationalStock Exchange of India Limited (NSE), Multi Commodity Exchange of India Limited(MCX), National Commodity & Derivatives Exchange Limited (NCDEX), National MultiCommodity Exchange of India Limited (NMCE) and MCX Stock Exchange Limited and arealso depository participants of NSDL and CDSL.Historian Fernando Braudel suggested that in Cairo in the 11th century, Muslim andJewish merchant and already set up every form of trade association and had knowledgeof many methods of financial dealings, disproving the belief that these were originallyinvented later by Italians.In 12th century France the courratiers de changes were concerned with managing andregulation the debts of agricultural communities and behalf of the bank. Because thesemen also trade with debts, they could be called the first brokers. 7. Page |7A common misbelieve is that in late 13th century Bruges commodity traders gatheredinside the house of a man called Van der Beurze, and in 1309 they became the BrugesBeurse institutionalizing what had been.Until then, an informal meeting, but actually, the family Van der Beurze had a building inAntwerp where those gathering occurred; the Van der Beurze had Antwerp, as most of themerchants of that period.As their primary place for trading. The idea quickly spread around Flanders and neighboringcountries and Beurzen soon opened in Ghent and Amsterdam.In the middle of the 13th century, Venetian market began to trade in government securities. In1351 the Venetian government outlawed spreading rumors intended to lower the price ofgovernment securities during the 14th century.This was only possible because these were independent city states not ruled by a duke but acouncil of influential citizens. The Dutch later started joint stock companies, which letshareholders invest in business venures and get a share of their profits or losses.In 1602, the Dutch East India Company issued the first share on the Amsterdam stock exchange.It was the first company to issue stock and bonds.The Amsterdam stock Exchange (Ro Amsterdam Beurs) is also said to have been the first stockexchange to introduction continuous trade in the early 17th century.The Dutch pioneered short selling, option trading, debt-equity swaps, and merchant banking.Units trust and other speculative instrument, much as we know them (Murray Sayle,JapanGoes Dutch, London Review of books XXIII.7, April 5, 2001).There are now stock markets in virtually every developed and most developing economy, withthe worlds biggest market being in the United stated, UK, Japan, China, Canada, Germany andFrance. 8. Page |8BOARD OF DIRECTORS OF NIRMAL BANG:NAMEPOSITIONMr. Dilip M. Bang DirectorMr. Kishor M. BangDirectorMr.Rakesh BhandariChartered Accountant 9. Page |9Mr. Deepak AgarvalChartered AccountantMr.Suvinay Sharma Chartered AccountantMr.Naresh Samdani Chartered AccountantMr. Deepak PatelChartered AccountantMr. Sunil JainChartered AccountantMr.Anup Agarval Chartered AccountantMr.Brijmohan BohraChartered AccountantMiss. Monika BafnaChartered AccountantMr.Brijmohan BohraCompany Secretaria PRODUCT AND SERVICES:PRODUCTS:Mutual fund schemesPortfolio Management SystemShares online and offlineBonds 10. P a g e | 10 Fixed Deposits Commodities CurrencySERVICES: Equities, and Derivatives trading on the National Stock Exchange of India Ltd. (NSE),and Bombay Stock Exchange Ltd. (BSE), Commodities trading on National Commodity and Derivatives Exchange India (NCDEX)and Multi Commodity Exchange of India Ltd. (MCX), Depository services, Online trading services, IPO Services, Dial-n-Trade Portfolio management services, Fundamental and Technical Research services, In addition to this they also provide advisory services and distributions for mutualfunds. Daily research reports and market review (High Noon & Eagle Eye) Pre-market Report Daily trading calls based on Technical Analysis 11. P a g e | 11Personalized AdviceLive Market InformationWIDE OPTION WHILE TRADING AT NIRMAL BANG:A product for every need:Nirmal Bang is the most comprehensive website, which allows you to invest in shares, mutualfunds, derivatives (Future and Option) and other financial products. Simply put, we offer youproducts for every investment need of yours.Trading in shares:Nirmal Bang offers you various options while trading in shares.Cash trading:This is a delivery based system, which is generally done with the information of taking deliveryof shares or monies.Margin Trading:You can also do an intra-settlement trading up to 3 to 4 times your available funds, where inyou take long buy/short sell position in stocks with in the intention of squaring off the positionwithin the same day settlement cycle.In margin trading, you take buy/sell position in stocks(s) with the intention of acquiring off theposition within the same settlement cycle. If, during the course of the settlement cycle, he pricemoves in your favor (rises in case you have a buy position or falls in case you have a sellposition), you make profit. In case you have the option to take/give delivery of buy/sell positionrespectively if you have sufficient cash/securities to do so.Normally to buy shares, you have to place (ensure availability of limit) 100% of the ordervalue, while to sell shares, you need to have shares in your Demat account. However, margins 12. P a g e | 12are blocked only to safeguard any adverse price movement. At present, you have to place33.33% of the order value as margin. With margin trading, you can leverage on your tradinglimit by taking buy/sell positions much more than what you could have taken in cash segment.However, the risk profile of your transaction goes up.Margin PLUS Trading:Through Margin PLUS you can do an intra-settlement trading up to 10 times your availablefunds, where in you take long buy/sell position in stock with the intention of squaring off theposition within the same days settlement cycle. Margin PLUS will give a much higher leveragein your limits.Margin PLUS is an order placement feature where you can take a position at market price andalso place a cover order for the position specifying the SLTP and the limit price. This willminimize the loss cover at the time of taking the position itself. There by it gives a clear view ofmaximum downside involved in a particular position at a particular price, Nirmal Bang wontlevy a normal margin ranging from 21% to 50%. It would block he maximum loss whichcustomer can suffer.Spot Trading:This facility can be used only for selling you is demat stocks which already exist in youre demataccount. When you are looking at an immediate liquidity option, cash on spot may work thebest for you, on selling shares through cash on spot, money is certified to your bank a/c thesame evening & not on the exchange payout date.BTST: 13. P a g e | 13Buy today sell tomorrow (BTST) is a facility that allows you sell shares even on 1 st and 2nd dayafter the buying order date, without you having to Waite for the receipt of shares into your demataccount.Call N Trade:Call N Trade allow you call on a local number in your city & trade on the telephone through ourcustomer services Executive. Trading in NSE/BSE: through Nirmal Bang you can trade on NSEand BSE.Market order:This is an order to buy sell securities at the best price obtainable in the market at the time it ismatched by the exchange. Therefore, change of its getting executed are better. In case of marketorder for NSE, all market order placed which are not executive fully; it becomes a limit order forthe balance quantity at the last traded price.Market Order in BSE: Explanation:Market order can be placed only during market hours (i.e., when the Exchanges is open fortrading).You could trade by placing market orders during market hours that allows you to trade at the bestobtainable price in the market at the time of execution of the order.Limit Order:Limit Order is an order to buy or sell securities in which you specify the maximum price per unitin case of a buy order and the minimum price per unit in case of sell order. The actual transactioncan be at a price more favorable than the price specified. 14. P a g e | 14Allow you to place a buy/sell order at a price defined by you. The execution can happen at aprice more favorable than the price, which is defined by you, limit orders can be placed by youduring holidays & non market hours too.Online confirmation of Order and trade:You get online confirmation of orders and trades- the status of any order is updated on real-timebasis in the Order Book. As soon as you place your order they are validated by the system andsent to the exchange for execution. The entire process is fully automation and there are nomanual interventions.GTC, GTD and IOC Order:A Good Till cancelled (GTC) order remains in the system until the trading members cancels it.However, the system cancels this order if it is not trade within a number of days parameterizedby the Exchanges. A Good Till Days/Date (GTD) order allows the user to specify the number ofdays/date till which the order should stay in the system if not executed. The maximum number ofdays for which the GTC/GTD order can remain in the system is notified by the exchange fromtime to time after which the day/date on which the order is placed and inclusive of holidays. Animmediate or cancel (IOC) order allows the user to buy or sell a security as soon as the order isreleased into the system, falling which the order is cancelled from the system. Partial match ispossible for the order and the unmatched portion of the order is cancelled immediately.Disclose Quantity (DQ) Order:Normally, the order quantity is disclosed in full to the market. An order with a disclosed quantity(DQ) condition/attribute allows the trading members to disclose only a part of the order quantityto the market. For example, an order of 1000 with a disclosed quantity condition of 200 willmean that 200 is displaced to the market at a time. After this traded, another 200 is automatically 15. P a g e | 15released soon till the full order is executed. DQ (Disclosed Quantity) should not be less that 10%of the order quantity and at the same time should not be greater than or equal to the orderquantity.Stop Loss Order:A stop loss order allows the client to place an order which gets activated only when the marketprice of the relevant securities reached or crosses a threshold price specified by the investors inthe form of stock loss trigger price. When a stop loss trigger price (SLTP) is specified in a limitorder, the order becomes one which is conditional on the market price of the stock crossing thespecified SLTP. The order remains passive (i.e. not eligible for execution) till the condition issatisfied. Once the last traded price of the stock reached or surpasses the SLTP, the orderbecomes activated (i.e. eligible for execution by being taken up in the matching process of theexchange) and then on behave like a normal limit order. It is used as a tool to limit the maximumloss on a position.Stop Loss by Order:A short sell reliance shares at Rs. 325 in experience that the price will fall. However, in theevent the price rises above his buy price A would like to limit sell order specifying a stock losstrigger price Rs. 305 and a limit price of Rs. 300. The stop loss trigger prices price has to bebetween the limit prices an trade price at the time of placing the stop loss order. Once the lasttrade price touches or crosses Rs. 305, the orders get converted into a limit sell order at RS. 300.Trade in derivatives:Future market: 16. P a g e | 16Through Nirmal Bang you can now trade in index and stock futures on the NSE in future trading,you take buy/sell position in index or stock (S) contract having a longer contract period of upto 3month.Trading in FUTURE is simple if, during the course of the contract life, the price moves in favor(i.e. rises in case you have a by position or sell in case you have a sell position), you make aperfect. Presently only selected stock, which meet the certain liquidity and volume, have beenenabled for future trading.Calculate index and now your margin are tools to help you in calculating your marginrequirement and also the index & stock price movement.Option market:An option is a contract, which gives buyer the right to buy or sell shares at a specific prices, on abefore a specific date. For this, the buyer has to pay to the seller some money, which is calledpremium. There is now obligation on the buyer to complete the transaction if the price is notfavorable to him.To take the buy/sell position on index/stock option, you have to place certain % of order value asmargin. With option trading, you can leverage on your trading limit buy taken buy/sell positionmuch more that what you could have taken in cash segment.The buyer of a call option has the right but not the obligation to purchase the underlying asset atthe specified strike price buy paying a premium whereas the seller of the call has the obligationof selling the underlying asset at the specified strike price.The buyer of a put option as the right but not the obligation to sell the underlying asset at thespecified strike price paying a premium whereas the seller of the put has the obligation of buyingthe underlying the asset at the specified price. Buy paying lesser amount of premium, you cancreate position order option and take advantage of more trading opportunities. 17. P a g e | 17Systematic investment plans (SIP):SIP allows you to invest a certain some of money over a period of time periodically. Just fill ininvestment amount, the period of investment and the frequency of investing and submit. We willdo the rest for you automatically investing periodically for you.Systematic withdrawal plan:This allows you to withdraw or certain some money over up period of time periodically.Transfer-in: we can convert to existing mutual funds into electronic more through a transfer-inrequest.IPOS and BONDS Online:You can also invest in initial public offers (IPOs) and bonds online without going through thehassles of filling any application form/paperwork.Get in-depth analysis for new IPOs issue (initial public offering) which are about to hit themarket and analysis on these. IPO calendar, recent IPO listing, prospectus/offer document, andIPO analysis are few of the features, which helps you keep, keep on talk of the IPO markets.DEMAT SERVICES OF NIRMAL BANG:Company offeringNirmal Bang is a registered member (Depository participant) of CDSL.In this system, physical security holding are converted into electronic (or in other words,dematerialized) holdings.Why NIRAML BANG Demat Account?Demat A/C free open.Demat access through internet and phone.Portfolio valuation on the account statements. 18. P a g e | 18Online execution of transactions at branches.Special rates for stock market intermediaries and sub brokers.Transaction update from back-office four times a day.WHY PEP0PLE GOES TO NIRMAL BNAG FOR SHARE TRADING:Client Focus:Client relationship from the core of our business. We value each client, no matter what size, as along-term relationship. And we seek to provide unmatched services to each client and place himas a partner at the center of everything we do.From the very beginning of the relationship, we work closely with every client to identify hisfinancial goals and risk tolerance levels and leverage our strength of the product offering,research and financial strength to help achieve his goals. In the process, we become anprofessional partners, creating opportunity, adding value and transform vision into reality.Diverse services offering:In addition to traditional broking services, we are also equipped to handle commodity tradingfacility as well as currency derivatives and have access to a wide range of financial services likeIPOs, mutual funds and insurance.Timely services:In an increasingly competitive environment, clients today require personalized solution andgreater flexibility and responsiveness than ever before. Our professionals are always on call. 19. P a g e | 19We provide them services throughout the year and not just at the end of the year. We believesuch service is essentials for delivering solution and constructive relationship.Able team:We have developed a strong and enduring team by recruiting from leading graduate andpostgraduate universities and promoting from within. Our team work together to providesuperior results to our client. At the same time, each of our clients is assigned a specific teammember who owner the relationship, providing continuity, responsiveness and a point of easyaccess to the firm.Culture:We strive to maintain standards at all times and lay emphasis on honesty, integrity andconfidentiality. We speak and act to ensure transparency at all levels and in everything we do.Financial strength:The strength of our balance sheet is such that it gives greater confidence to all our retail andinstitutional clients in detail with us. The financial strength of the group helps in future buildingthe network and infrastructure to cater to the larger market.Infrastructure:We believe or best infrastructure gives a significant advantage allowing us to provide efficient,transparent and qualitative services. Our technology supports everything from executive tradesand managing our investors of stocks to communicating up-to-the-second information to ourclients and monitoring for compliance.Client interface: 20. P a g e | 20We have trading terminal (both direct and indirect), online monitoring, control terminal(administration terminals) and back office support terminal (settlement terminal) across alllocation and centers.We have Indias best single screen Multi Exchanges Trading Software platform. Our entirecenters across the country are connected through our own network, leased ISDN lines and LANnetwork, MPLS and internet. The high-end IBM serves with sophisticated security features that we use caters to tradingpoints across the country. This also gives u rte advantage of scalability in terms of location andsize of our planned operations. We provide telephonic and chat support for technical andfunctional issues of branches, franchises and all our clients. Our websites www.nirmalbang.comis comprehensive and provides online feeds, net trading and provides online feed, net tradingportfolio tracking tool. Investors also have access to a wide range of financial news, informationand various research reports facilitating quick decision-making. Our online trading portal at www.nirmalbang.com is equipped with facilities like all segmentbroadcasts, multi-features graphs, online payment gateways and automatic password mailerutility for better security. It user-friendly navigation allows easy viewing of trading accounts,depository accounts and research reports, which are linked to the trading platform. The website also has a provision for creating portfolios and monitoring them on a regular basis.Our wealth trackers module helps investors in getting ready updates n their investment so thatthey can know the changing trends of the markets and the impact of the same on their portfolio.Back office:For back office operations, we use the lidha Didha system of Apex Soft cell Pvt. Ltd. This is oneof the top most back office software in the industry. It has the capacity to process over one lakhtraders in a five minute frame. 21. P a g e | 21Our operation teams has an easy-to-navigate client login system, which is used to generateactivity reports, short-terms and long-term tax reports, holding and portfolio valuation reports aswell as trading to delivery activity reports.We also have the requisite infrastructure needed to handles STP, upload and download anddownload information to or from exchanges, bank and depositories, support units to ensuredelivery notes, bills and ledgers of trading accounts and cash management services for efficientand effective fund management within the group.Internal control:Compliance and internal control play a major role in determining business strategies as well asday-to-day operation of the group. A well-equipped risk management department ensures thatthe delinquency rates are minimal, while efficient risk management software provides onlineMTM margin data to branches and franchisees. Our efficient back-up system and software havebeen developed specially for branches and channel partners with a capacity to handle numeroustransactions. Our online position monitoring system ensures better risk management andsurveillance from our head office as well as branches and franchises. Our people from themcornerstone of the business and their expertise and motivation delivery of exceptional solutionand services to all our clients.Experienced professional:Our teams of professional consist of individual with significant experience in securities trading,market structure, trading technology and portfolio management. They have a strong experiencein trade execution and understanding of order flow dynamics. This combined with technicalanalysis of market momentum, help our clients to determine the price at which they buy and /orsell. 22. P a g e | 22We believe, we are the first choice for our clients because we among the very best at tradeexecutive solution and assets management services. At Nirmal bang, each and every professionalis focused on turning the initial trade or investment into a collaborative, person-to-personrelationship that keeps delivering true added value.Research Expertise:Our research team is headed by two senior research analysts who have more than 15 years ofexperience in this field.Our team of experienced fundamental research and technical analysts provide reports onindustries, sectors, companies and individual stocks. Our research reports are backed by in-depthresearch and analysis of emerging as well as current market trends. Besides, our researchanalysts also appear on leading business news channel where they share their insights on themarket.Nirmal Bang Groups business strives the largest number of common people. Consider these:Equity* /commodity/ currency*/mutual fund/IPO/PMS/insurance/DP products.Management philosophy:Nirmal Bang Groups business ventures are highly successful due to our Managementphilosophy. Features of this include total empowerment of its employee, decentralized decision-making process and freedom of action. Most of all, the Group views every employee as apotential partner in business. Group Companies has also been instrumental in creatinginnumerable indirect jobs in the communities they serve.Human Resources :Human resources are the key to any services sectors industry. We have a strong and vibrantworkforce in every field or our activity, be it research, system, accounts, marketing or 23. P a g e | 23networking. With the manpower strength of over 1100 employees, the Company is managed by ahighly motivated, qualified & talented team of professional qualified CAs, MBA,s, Engineers,etc with proven track records.Technology used in Nirmal Bang:Stock-broking being a process intensive activity, issues such as speed, accuracy, round-the-clocksystem availability and system securities are of paramount importance and technology forms thebackbones of the business.This is why Nirmal Bang is technology driven. We boast of state-of-the-art technology and an in-house team of highly competent software and networking engineers who constantly reviewsystem and procedures to ensure operational efficiency.All our branches are connected through Wide Area Network (WAN) and are served by acentralized back office processing system, which enables clients to obtain up to date informationonline at the click of a buttonCustomer Focus:Despite a rapidly expanding client base and a dizzying increase in transaction volumes, eachclient at Nirmal Bang is special. We specialize in building long term relationship with ourcustomers by providing them with the four things they desire most, viz., speed,, convenience,reliability and personalized services. Our continuous strive to provide best services to our clients,results in receipt of not a single Arbitration Award against the company since its inception. 24. P a g e | 24 ONLINE SHARE TRADING AT NIRMAL BANGOnline trading means trading/investing in equities, derivatives, commodities etc through theInternet. It enables the investor to electronically connect (through Internet) to buy or sell stocks,derivatives etc with the other investors. In online trading, one can access a stockbrokers websitethrough an Internet-enabled PC and can place orders.Online trading started in February 2000 when a couple of brokers started offering an onlinetrading platform for their customers.Highlights Streaming quotes Self-execution and instant confirmation Complete control over their trading decisions Can access accounts Online 25. P a g e | 25 Convenience of trade Wide access to historical charts and past dataBENEFIT OF ONLINE TRADINGI. Freedom from paperwork:-Integrated trading, bank and de-mat account with digital contracts removers all paperwork. II. Instant credit and transfer:-instant transfer of funds from bank account of the choice to Nirmal Bang trading account.III. Trade anywhere:-enjoy the ease of trading from any part of the world in a completely secure environment.IV.Dial n Trade:-call toll free number to place orders through telebrokers. V.Timey advice:-make informed decisions with expert advice, investment calls and live market commentary. 26. P a g e | 26VI. Real-time portfolio tracking:-benefit from real-time information for investmentand current portfolio value.VII.After-hour orders:-place order after market hours, which get executed as soon as themarkets opens.Advantages:- Live Streaming Quotes Access all Trading Calls Advanced Charting features Create your own technical rules for trading A Single Trading Screen for all segments OFFLINE SHARE TRADING AT NIRMAL BANGIn offline trading the investor places orders with the stockbroker either verbally (personally ortelephonically) or in a written form (fax). This may be because he is not comfortable in accessingthe Internet.Highlights: Trading over the phone No access to live market watch Absence of online Fund transfer 27. P a g e | 27Merits of offline trading Low brokerage Less margin Flexibility in credit period Customized adviceDemerits of offline trading Problems in getting in touch with the broker Limited clientele Problem of attention from the broker due to load Reliance on the brokers information Customer has to believe what the broker says Broker Might not give the best price Reconciliation of account and cash settlements 28. P a g e | 28 Paperwork Geographical RestrictioSWOT ANALYSIS OF NIRMAL BANG:Strengths: Company having young management team which consist of very talented and knowledge. Professional from different fields Nirmal Bang is a well capitalized group with net worth of 3500 crores. Company is unaffected in this global recession which shows companys never say die. Spirits. It means company is armed with proper resources to fight any adverse situation. Companys research team provides tremendous research calls to their clients with high. Success records and generates level of satisfaction level of satisfied to client.Weakness: Investors are not completely aware of Nirmal Bang, so the brand value of the company not yet created. The market share of the company in commodity and equity market in terms of turnover is not significant.Opportunities: The growth of capital market is very high. Investors are now ready to invest their money in this market because the returns is much higher compare to other place for investment, so they are ready to bear factors associated with it. It means volume will increase year by year in this sector. As Nirmal Bang having its presence in 36 location of the country, so company has good opportunity to extend its branches all over the country. Company has not come yet with 29. P a g e | 29 its own IPO; this is a good chance for the company to be a public limited company which will help company to get money created brand awareness in this market.Threats: Company has a face a tough competition from major market leaders, so it will be a difficult task for Nirmal Bang to sustain itself in this cut throat competitions. Recently financial a huge loss, so investors now investing their money at much safer place instead of this market. STRATEGY: The main strategies used in training were as follow.DATA CALLINGIn data calling we were provided data of mobile numbers and our job was to generateappointments. After that we were required to convert that appointment into closure. Apart fromgiven data we also brought latest business directory. We called to different business people andtried to generate appointments.CALLED CALLINGCalled calling means to go at different corporate houses and to meet different People and to gettheir visiting card by it we get lead and our immediate task was to call them & to fixappointment.REFERENCE 30. P a g e | 30Another important strategy was to use our reference means our family, friends, relatives etc. Inmarketing or selling we can never neglect references & they always play a major role.STALL ACTIVITY Stall activity means to make stall at public place. Then our job was to give them a newspaperwith brochures and to take their name and contact number. So it was another process ofgenerating lead. After that our job was to followSTOCK MARKETA stock market is a public market for the trading of company stock and derivatives at an agreedprice these are securities listed on a stock as well as those only traded privately.The since of world stock market was estimated at about $36.6 trillions US at the beginning ofOctober 2008. The total world derivatives market has been estimated at about $791 trillionfaceoff nominal value.11 times the size of the entire world economy. The value of the derivatives market, because it isstated in terms of national values, cannot be directly compared to a stock or a fixed incomesecurity, which traditionally refers to an actual value.Moreover, the vast majority PF derivatives cancels each other out (i.e., a derivatives bet on anevent occurring is offset by a comparable derivatives bet on event not occurring) 31. P a g e | 31Many such relatively illiquid securities are valued as market to model, rather than an actualmarket price. The stock are listed and traded on stock exchanges which are entities of ancorporation of mutual organization specialized in the business of bringing buyers and sellers ofthe organization to a listing of stock and securities together.The stock market in the united states in the united states includes the trading of all securitieslisted on the NYSE Euro next, the NASDAQ, the Amex, as well as on the many regionalexchanges, e.g. OTCBB and Pink sheets. European examples of stock exchanges included theLondon Stock Exchange, the Deutsche Borse. TWO MAJOR STOCK MARKETS BSE(BOMBAY STOCT EXCHANGE) NSE(NATIONAL STOCK EXCHANGE) 32. P a g e | 32 BOMBAY STOCK EXCHANGESThis stock exchanges, Mumbai, popularity known as BSE was established in 1875 as Thenative share and stock brokers associations, as a voluntary non-profit making association.It hasan evolved over the years into its status as the premiere stock exchanges in the country. It may benoted that the stock exchanges the oldest one in Asia, even older than the Tokyo StockExchanges, which was founded in 1878.The exchanges, while providing an efficient and transparent market for trading in securities,upholds the interests of the investors and ensures redressed of their grievances, whether againstthe companies or its own members brokers.It also strives to educate and enlighten the investors by making available necessary informativeinputs and conducting investors education programmers. A governing board comprises ofelected directors, 2SEBI nominees, 7 public representatives and an executive director is the apexbody, which decides the policies and regulates the affairs of the exchanges.The executive director as the chief executive officer is responsible for the day todayadministration of the exchanges. The average daily turnover of the exchange during the year2000-01 (April-March) was Rs 3984.19 crores and average numbers of daily trades 5.69 LakhsHowever the averages daily turnover of the exchanges during the year 2001-2002 has declined toRs. 1224.10 crores and number of average daily trades 5.69 Lakhs. The average daily turnover of 33. P a g e | 33the exchanges during the year 2001-2003 has declined and number of average daily trades duringthe period is also decreased.The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by SEBIwith effect from July 2, 2001, abolition of account period settlements, introduction ofcompulsory rolling settlements in all scripts trades on the exchanges. With effect from dec31,2001 etc. have adversely impacted the liquidity and consequently there is a considerable declinein the daily turnover at the exchanges. The average daily turnover of the exchanges presentscenario is 110363 (Laces) and number of average daily trades 1057(laces).The BSE switched from the open outcry system to the screen based system in 1995. Itaccelerated its computerization programme in response to the thereat from NSE.Jobbers play an important role on the BSE. A jobber is a broker who trades on his own accountand hence offers a two-way quote. The bid price reflects the price at which the jobber is willingto sell.Investors have to transact via a broker. The broker feeds his buy/sell quotes in his terminal,which is linked, to the main server at the BSE, because of this NSE has adopted a quote drivensystem and an order driven system.Shares listed on the BSE are classified into two groups, viz. Specified and cash, also referred toas A and B groups. The A group comprises equity shares of such companies, which have a largevolume of business in the secondary market. Presently, about 150 shares have been classified asA group shares the rest belong to B group.NATIONAL STOCK EXCHANGES:The NSE was incorporated is now 1992 with an equity capital of Rs 25 crores. The internationalsecurities consultancy (ISC) of Hong Kong has helped in setting up NSE. 34. P a g e | 34ISE has prepared the details business plans and installation of hardware and software system.The promotion for NSE were financial institutions, insurances companies, banks and SEBIcapital markets Ltd, infrastructure leasing and financial services Ltd and stock holdingcorporation Ltd.It has been set up to strengthen the move towards professionalization of the capital market aswell as provide nation wide securities trading facilities to investors. NSE is not an exchange inthe traditional sense where broker own and manage the exchanges.A two tier administrative set up involving a company board and a governing aboard of theexchanges is envisaged. NSE is a national market for shares PSU bonds, debentures andgovernment securities since infrastructure and trading facilities are provided.Inaugurated in 1994, the National Stock Exchange seeks for:-1. Establish a notion-wide trading facility for equities, debt, and hybrids.2. Facilitate equals access to investors across the country.3. Impact fairness, efficiency, and transparency to securities.4. Shorten settlement cycle.5. Meet international securities market standards.The NSE, besides operating the traditional market for equities, convertible debentures, non-convertible debentures etc., also operate a wholesale debt market, is a separate segment of theNSE as distinct from the capital market segment.The NSE has adopted fully automated screen based trading system, which allows tradingmembers to trade from their offices through a communication network. Besides there isflexibility with regards to price, time and volume conditions. Features of National Stock Exchange:-Nation-wide Access 35. P a g e | 35The NSE provides nation-wide trading facilities and equal access to investors all over thecountry. High quality services to members are maintained through efficient, transparent and fairtrading systems and procedures.Automation-Screen Based TradingThe NSE market is a fully automated screen based trading environment. There is no trading flooras is prevalent in the traditional stock exchanges, nor do the dealers use the telephone to arrangemoney market deals as was the practice. Rather the market will operate with all marketparticipants stationed at their offices and making use of computer terminals, to enter orders, toreceive the current market status, the traders executed and other market related information.Anonymity of the Trading Member s Identity The identity of the trading member placing theorder is not disclosed in the NSE computer trading system. By enabling the trading members andparticipants to hide their identity, it allows placing large orders into the system by the bigplayers, without fear of large orders influencing the price of the market.Complete Transparency The system provides complete transparency of trading operations.Investors can know whether their orders have been placed into the system, the rate at which theirdeal has taken place the counter party and the time at which the trade was executed. The tradingsystem also provides complete market information online through various inquiry facilities. Thesystem at any point of times gives the member complete information on the total order depth fora security, the best buys and sells available in the market the quantity traded in that security etc.All these information are updated online, enabling the member to make better decisions. All thekey information is updated on a real time basis.The response time is very quick. As a result it is possible for the investors to know the actualposition of the market before placing the orders. Investors can also know the fate of the ordersalmost as soon as they are placed with trading members. 36. P a g e | 36The trading system is top on the line and user friendly. Some of its new features include acorporate hierarchy which gives the trading members an opportunity to set up a network ofbranches and exercise control on their orders. Flexibility in trading. The trading system providesenormous flexibility to trading members. When entering an order, a trading member can placevarious conditions in terms of price, time or size.Benefits from NSE:-To InvestorsThe investor is assured of the best price in the market. Price and brokerage are separately shownon contract notes. Date and time of trade are indicated. The system will be better monitored andregulated ensuring a fair deal to investors. Safety of securities is enhanced in a depository andthere is no problem of bad delivery, loss, theft or forgery. To Trading Members They canprovide efficient service to their clients.Their back office load is reduced considerably as the system generates details of tradeundertaken. They can benefit from high growth in trading volumes which typically takes placewhen on automated trading system is introduced.They can trade from their respective offices and can make use of full back office support fortrading.There is no need to occupy office premises near a stock exchange unlike what was previouslyrequired this can lead to reduced establishment costs.They can install a computer network of their own to receive their own client orders, which theycan interface with the exchange, leading to a large increase in business.Large growth opportunities also emerge on the NSE, as Foreign Financial institutions prefer theautomated and regulated market. 37. P a g e | 37MEMBERS OF THE STOCK EXCHANGE:The securities contract regulation act 1956 has provided uniform regulation for the admission ofmembers in the stock exchanges. The qualifications for becoming a member of a recognized stockexchange are given below: The minimum age prescribed for the members is 21 years. He should be an Indian citizen. He should be neither a bankrupt nor compound with the creditors. He should not be convicted for fraud or dishonesty. He should not be engaged in any other business connected with a company. He should not be a defaulter of any other stock exchange. The minimum required education is a pass in 12th standard examination. Taxation of Indian Resident:The below mentioned FAQs are restricted to tax implication of the resident investors only.Tax on transactions Of Buy and sell securities: Yes, you are liable to play tax on his transaction: on the difference between the price at whichyou sell and the price at which you acquired it. You can also claim deduction for expensesincurred these securities along with cost of buying these securities. Further if these securities areheld or along term before selling them, your cost of acquisition can be increased by theindexations, which reduce your capital gains, indexation benefits, is not available on debentureand bonds. In case these securities are held as stock-in-trade i.e. if you are in the business ofbuying and selling securities. The profit and loss from purchase and sell of securities will betaxed under the head profit of gains of business or profession. 38. P a g e | 38The nature of income under which transaction in securities will be taxed: Profit and loss from purchase and sales of securities will be taxed under the head of incomefrom capital gains, provided such securities are held as investment by you. In case thesesecurities a new held as stock-in-trade. If you are in the business of buying and selling securitiesunder the head profit or gains of business or profession.Capital gain/loss:Capital gain/loss means any profit or loss arising from transfer of a capital asset affected in theprevious year.Capital Assets:Capital asset means property of any kind held by an assesses, whether or not connected with hisbusiness or profession, but does not include 1:stock-in-trade, 2: personal effect such as jewelers,furniture, and motor car held for personal use. 3: 61/2% Gold Bonds. 1980. 4: 7% Gold Bonds.5: National Defiance Gold Bonds 1999. 6. Gold deposit Bond under the gold deposit scheme,1999 notified by the central government.Transfer of a capital asset:Transfer includes sale, exchanges or relinquishment of the asset of the extinguishment on anyright there in or compulsory acquisition thereof under any low. In a case where as asset isconverted by the owner or treated by him, is also treated as transfer. However, the followingspecific transaction are not regarded as transfer e.g. (a) any distribution of capital assets on totalor partial partition of an HUF (a) any transfer of a capital under a gift or will or an irrevocabletrust expect share, debenture or warrants allotted to employee under approved EFOP scheme, 39. P a g e | 39(b) Issue of share by resulting of amalgamated company in lieu of shares held in the demerged oramalgamating company (providing in case of amalgamation, Amalgamation Company in Indiancompany)(c) any transfer by way of conversion of bonds or debentures of a company into shares ordebentures of that company in case of (a) and (b) above, if the resulting owner sells the capitalasst subsequently, the cost of acquisition shall be deemed to be the cost at which the capital assetwas acquire by the previous owner. In case of demerger, it shall be the portion of the cost whichbears to the total cost the same proportion as the net-book value of the assets transferred in thedemerged bears to the net worth of the demerged company immediately before demerged. Thecost of acquisition of the original shares would stand reduced correspondingly.Short term Asset:Capital is divided as long term and short term with reference to the period of holding of the assetby you. The period of holding computed from the date acquisition to the date immediatelypreceding its sale. If the shares, unit os specific mutual fund u/s 10(23D) or any other listedsecurities are held by you for less than 12 months then such shares/ units or listed securitieswould be treated as short term assets. In all other cases, the asset is required to hold for 36 monthso as to quality for long term capital gain.Long Term Asset:If the shares, unit of specified mutual fund u/s 10(23D) or any other listed security are held byyou for more then 12 month then such share/units or listed security would be treated as long termasset.Example:You purchase 1000 shares of ACC on 10.6.2005 for Rs 1, 10,000/- 40. P a g e | 40You were allotted 1000 shares as bonus on 11.8.2005You sold these shares on 12.8.2006 for Rs 1, 30,000/-Calculation of long term capital gain would be as follows:Amount in RsSale consideration 1, 30,000Cost of 1000 shares purchased on 10.6.2000 110000*406/389 (indexation benefits) 1, 14,807Cost of one thousand bonus shares nilLong term capital 15, 193MARKET PARTICIPANTS:A few decades ago, worldwide, buyers and sellers were individuals investors, such as wealthybusinessman, both long family histories (and emotional ties) to particular corporations.Overtime, market have become more institutionalized buyers and sellers are larger institutions(e.g. Pension funds, insurance companies , mutual funds, index funds, exchange traded funds,hedge funds investors groups, banks and various other financial institutions).The rise of the institutional investors has brought with t some improvement in market operations.This, the government was responsible for fixed(and exorbitant) fees being markedly reduced 41. P a g e | 41for the small investors, but only after the large institutions had managed to break the brokerssolid fronts on fees. (They then went to negotiated fees, but only for large institutions.However, corporate governance (at least in the west) has been very much adversely affected byrise of (largely absentee) institutional owners NAME OF THE STOCK EXCHANGES IN INDIA:At present there are 23 stock exchanges recognized under the securities Contracts (regulation),Act, 1956. Those are: Ahmadabad Stock Exchange Association Ltd. Bangalore Stock Exchange Bhubaneswar Stock Exchange Association Calcutta Stock Exchange Cochin Stock Exchange Ltd. Coimbatore Stock Exchange Delhi Stock Exchange Association Guwahati Stock Exchange Ltd Hyderabad Stock Exchange Ltd. Jaipur Stock Exchange Ltd Kanara Stock Exchange Ltd Ludhiana Stock Exchange Association Ltd Madras Stock Exchange Madhya Pradesh Stock Exchange Ltd. Magadh Stock Exchange Limited Meerut Stock Exchange Ltd. Mumbai Stock Exchange 42. P a g e | 42 National Stock Exchange of India OTC Exchange of India Pune Stock Exchange Ltd. Saurashtra Kutch Stock Exchange Ltd. Uttar Pradesh Stock Exchange Association Vadodara Stock Exchange Ltd. ROLE OF STOCK EXCHANGES IN THE MARKET/ORGANIZATION:-Stock exchanges have multiple roles in the economy, this may include the following:1. Raising capital for businessesThe Stock Exchange provide companies with the facility to raise capital for expansion throughSelling shares to the investing public.2. Mobilizing savings for investmentWhen people draw their savings and invest in shares, it leads to a more rational allocation ofResources because funds, which could have been consumed, or kept in idle deposits with banks,are mobilized and redirected to promote business activity with benefits for several economicsectors such as agriculture, commerce and industry, resulting in stronger economic growth andhigher productivity levels and firms.3. Facilitating company growthCompanies view acquisitions as an opportunity to expand product lines, increase distributionChannels, hedge against volatility, increase its market share, or acquire other necessary businessassets. A takeover bid or a merger agreement through the stock market is one of the simplest andmost common ways for a company to grow by acquisition or fusion. 43. P a g e | 434. Redistribution of wealthStock exchanges do not exist to redistribute wealth. However, both casual and professional stockinvestors, through dividends and stock price increases that may result in capital gains, will sharein the wealth of profitable businesses.5.Corporate governanceBy having a wide and varied scope of owners, companies generally tend to improve on theirmanagement standards and efficiency in order to satisfy the demands of these shareholders andthe more stringent rules for public corporations imposed by public stock exchanges and thegovernment. Consequently, it is alleged that public companies (companies that are owned byshareholders who are members of the general public and trade shares on public exchanges) tendto have better management records than privately-held companies (those companies whereshares are not publicly traded, often owned by the company founders and/or their families and18heirs, or otherwise by a small group of investors). However, some well-documented cases areknown where it is alleged that there has been considerable slippage in corporate governance onthe part of some public companies. The dot-com bubble in the early 2000s, and the subprimemortgage crisis in 2007-08, are classical examples of corporate mismanagement. Companies likePets.com (2000), Enron Corporation (2001), One.Tel (2001), Sunbeam (2001), Webvan (2001),Adelphia (2002), MCI WorldCom (2002), Parmalat (2003), American International Group(2008), Lehman Brothers (2008), and Satyam Computer Services (2009) were among the mostwidely scrutinized by the media.7. Creating investment opportunities for small investorsAs opposed to other businesses that require huge capital outlay, investing in shares is open to 44. P a g e | 44both the large and small stock investors because a person buys the number of shares they canafford. Therefore the Stock Exchange provides the opportunity for small investors to own sharesof the same companies as large investors.8. Government capital-raising for development projectsGovernments at various levels may decide to borrow money in order to finance infrastructureprojects such as sewage and water treatment works or housing estates by selling anothercategory of securities known as bonds. These bonds can be raised through the Stock Exchangewhereby members of the public buy them, thus loaning money to the government. The issuanceof such bonds can obviate the need to directly tax the citizens in order to finance development,although by securing such bonds with the full faith and credit of the government instead of withcollateral, the result is that the government must tax the citizens or otherwise raise additionalfunds to make any regular coupon payments and refund the principal when the bonds mature.9. Barometer of the economyAt the stock exchange, share prices rise and fall depending, largely, on market forces. Shareprices tend to rise or remain stable when companies and the economy in general show signs ofstability and growth. An economic recession, depression, or financial crisis could eventually leadto a stock market crash. Therefore the movement of share prices and in general of the stockindexes can be an indicator of the general trend in the economy. Credit rating and information Services of India Ltd. (CRISIL):-It is first credit rating agency in the country to evaluate debt obligations of the companies,depending on their ability to service these obligations and assigns rating to them expressed asnumeric and alphabetical symbols. The ratings convey the credit agency s opinion on the risk 45. P a g e | 45associated with a particular debt obligation. The credit rating is however not the recommendationof the credit rating agency to the investor to buy or sell the securities. INVESTMENT INFORMATION AND CREDIT RATING AGENCY OFINDIA LTD.(ICRA):-The ICRA has been set up with the primary objective of providing guidanceto the investors/ creditor in determining the credit risk associated with a debtInstrument/ credit obligation. Credit Analysis and Research LTD. (CARE):-Its main objective is of rating of all types of debt for the benefit to the investors. It is the thirdCredit Rated Agency in India.Stock Market:-The stock Market is broadly divided into two parts primary market and a secondary market. Newsecurities are issued in the primary market and outstanding securities are traded in the secondarymarket.The secondary market in India comprises about 23 stock exchanges recognized by thegovernment under Securities Contract Regulation Act.The principal exchanges are the National Stock Exchange and Bombay Stock Exchange,accounting for the bulk of the trading on the Indian Stock Exchange. Importance of Stock Market in India:The stock market is one of the most important sources for companies to raise money. Thisallows businesses to be publically traded or raised additionally capital for expansion by sellingshare of ownership of the company in a public market. 46. P a g e | 46The liquidity that an exchange provides affords investors the ability to quickly and easily sellsecurities. This is an attractive feature of investing in stocks, compared to other less liquidinvestment such as real estates.History has shown that the price of shares and other assets is an important part of the dynamic ofeconomies activity, and can influence or be an indicator of social mood.An economy where the stock market is on the rise is considered to be an up and comingeconomy.In fact, the stock market is often considered the primary indicators of a countrys economicsstrength and development. Rising share prices, for instance, tend to be associated with increasedbusiness investment and vice versa.Share prices also affect the wealth of household and their consumption.Therefore, central banks tend to keep an eye on the control and behavior of the stock market and,in general, on the smooth operation of financial system functions. Financial stability is the raisondtre of central banks.Exchanges also act as the clearinghousesfor each transaction, meeting that they collect anddeliver the shares, and guarantee payment to the seller of a securities. This eliminates the risk toan individual buyers or seller that the counterparty could default on the transaction.The smooth functioning of all these activities facilities economies growth in that lower costsenterprise risks promote the production of goods and services as well as employment.In this way the financial system contribution to increased prosperity. An important aspect ofmodern markets, however, including the stock markets, is absolute discretion.For example, in the USA stock we see more unrestrained acceptance of any firm than in similarmarkets. Such as, Chinese firms with no significant value to American society to just name onesegment. 47. P a g e | 47This profit USA banker on Wall Street, as they reap large commissions from the placement, andthe Chinese company which yields funds to invest in china.Yet accrues no intrinsic value to the long-term stability of the American economy, rather justshort-term profits to American business man and the Chinese; although, when foreign companyhas a presence in the new market, there can be benefits to the markets citizensConversely, there are very few large foreign corporation listed on the Toronto Stock exchangeTSX, Canadas largest stock exchange. This discretion has insulated Canada to some degree toworldwide financial condition.In order for the stock markets to truly facilitate economys growth via lower costs and betteremployment, great attention must be given to the foreign participants being allowed in. Relationof the stock market to the modern financial system.The financial system in most western countries has undergone a remarkable transformation. Onefeatures of this development is disintermediation. A portion of the funds involved in saving andfinancing bank lending and deposit operation.The general publics heightened interest in investing in the stock market, either directly orthrough mutual funds, has been an important component of this process. Statistics show that inrecent decades share have made up an increasingly large proportion of households financialassets in many countries.In the 1970s, in Sweden, deposit account and other very liquid assets with little risk made upalmost 60 percent of households financial wealth, compared to less than 20 percent in the 2000s.The major part of this adjustment in financial portfolio has directly to shares but a good deal nowtake the form of various kinds of institutional investment for groups of individuals, e.g., pensionfunds, mutual funds, hedge funds, insurance investment of premiums, etc. 48. P a g e | 48The trend towards form of saving with a higher risk has been accentuated by new rules for mostfunds and insurance, permitting a higher proportion of shares to bonds.Similar tendencies are to be found in other industrialized countries. In all developed economiessystem, such as the European Union, the United State, Japan and other developed nations, thetrend has been the same: saving has moved away from traditional (government insured) bankdeposits to more risky securities of one sort or another. The Stock Market, Individual Investors, and Financial Risk:Riskier long-term saving required that an individual possess the ability to manage the associatedincreased risks. Stock prices fluctuated widely, in marked contrast to the stability of (governmentinsured) bank deposits or bonds.This something that could affect not only the individual investors or households, but also theeconomy on a large scale. The following deals with some of the risks of the financial sectors ingeneral and the stock market in particular.This is certainly more important now that so many newcomers have entered the stock market, orhave acquired other risky investment (such as investment property, i.e., real estate andcollectables.)With each passing year, the noise level in the stock market rises. Television commentators,financial writers, analysis, and market strategies are all over taking each other to get investorsattention.At the same time, individual investors, immersed in chat rooms and message boards, areexchanging questionable and often misleading tips.Yet, despite all this available information, investors find it increasingly difficult to profit. Stockprices skyrocket with little reasons, then plummet just as quickly. 49. P a g e | 49And people who have turned to investing for their childrens education and their own retirementbecome frightened. Sometimes there appears to be no rhyme or reason to the market, only folly.This is a quote from the prefaces to a published biography about the long-terms value orientedstock investors warren Buffett.The behavior of the stock market in India:From experiences we know that investors may temporarily move financial prices away fromtheir long terms aggregate price trend (positive or up trends are referred to as bull markets:negative or down trends are referred to as bear markets.)Over-reaction may occur so that excessive optimism (euphoria) may drive prices unduly high orexcessive pessimism may drive unduly low. New theoretical an empirical arguments have sincebeen put forward against the notion that financial markets are generally efficient (i.e., in thesense that prices in the aggregate tends to follow a Gaussian distribution.)(But this largely theoretic academic viewpoint- knows as hard EMH- also predicts that little orno trading should take place, contrary to fact, since prices are already at or near equilibrium,having priced in all public knowledge.) The hard efficient-market hypothesis is sorely tested bysuch events as the stock market crash in 1987, when the Dow Jones index plummeted 22.6percentthe largest-ever one-day fall in the United States.This events demonstrated that share prices can fall dramatically even though, to this day, it isimpossible to fix a generally agreed upon definite cause: a thorough search failed to detect anyreasonable development that might have accounted for the crash. (But note that such events arepredicted to occur strictly by chance, although very rarely.)It seems also to be the case more generally that many price movements (beyond that which arepredicted to occur randomly) are not occasioned by new information: a study of the fifty largest 50. P a g e | 50one-day share prices movements in the United States in the post-war period seems to confirmthis.However, a soft EMH has emerged which does not required that prices remain at or nearequilibrium, but only that market participants not be able to systematically profits from anymomentary market inefficiencies.Various explanation for such large and apparently non-random prices movement have beenpromulgated. For instance, some research has shown that change in estimated risks, and the useof certain strategies, such as stop-loss limit and value at Risk limits, theoretically could causefinancial markets to overcorrect.But the best explanation seems to be that the distribution of stock market prices is non-Gaussian(in which case EMH, in any of its current forms, would not be strictly applicable.)Other research has shown that psychological factors may result in exaggerated (staticallyanomalous) stock prices movement (contrary to EMH which assumes such behaviors cancelout).Psychological research has demonstrated that peoples are predisposed to seeing patterns, andoften will perceive a pattern in what is, in fact, just noise, (something like seeing familiar shapesin clouds or ink blots.)In the present context this means that a succession of good new items about a company may leadinvestors to overreact positively (unjustifiably driving the prices up). A period of good returnsalso boosts the investors self-confidence, reducing his (psychological) risk threshold.Another phenomenonalso from psychologythat works against an objective assessment isgroup thinking. As social animal, it is now easy to stick to an opinion that differs markedly fromthat of a majority of the group. 51. P a g e | 51An example with which one may be familiar is the reluctance to enter a restaurant that is empty;people generally prefer to have their opinion validated by those of other in the group.In one paper the authors draw an analogy with gambling. In normal times the market behaveslike a game of roulette; the probabilities are known and largely independent of the investmentdecision of the different players.In times of market stress, however, the game becomes more like poker (herding behavior takesover). The players now must give heavy weight to the psychology of other investors and howthey are likely to react psychology.The stock market, as any other business, is quite unforgiving of amateurs. Inexperiencedinvestors rarely get the assistance and support they need.In the period running up to 1987 crash, less than 1 percent of the analysis recommendation hadbeen to sell (and even during the 2000-2002 bear market, the average did not above 5%)In the run up to 2000, the media amplified the general euphoria, with reports of rapidly risingshare prices and the notion that large sums of money could be quickly earned in the so called Inthe run up to 2000, the media amplified the general euphoria, with reports of rapidly rising shareprices and the notion that large sums of money could be quickly earned in the so called neweconomy stock market.(And later amplified the glom which descended during the 2000-2002 bear market, so that bysummer of 2002, prediction of a DOW average below 5000 were quite common).Irrational behavior:Sometimes the market seems to react irrationally to economic or financial news, even if thatnews is likely to have no real effect on the technical value of securities itself.But this may be more apparent than real, since often such has been anticipated, and a counterreaction may occurs if the news is better (or worse) than expected. 52. P a g e | 52Therefore, the stock market may be swayed in either by press releases, rumors euphoria andmass panic; but generally only briefly, as more experienced investors (especially the hedge fundsquickly rally to take advantage of even the slightest, momentary hysteria.Over the short-term, stock and other securities can be battered or buoyed by any number of fastmarket-changing events, making the stock market behavior difficult to predict. Emotion candrive prices up and down, people are generally not as rational as they think, and the reasons forbuying and selling are generally obscure.Behaviorists argue that investors often behave irrationally when making investment decisionthereby incorrectly pricing securities. This causes market inefficiencies, which, in turn, areopportunities, to make money.However, the whole notion of EMH is that these non-rational reactions to information cancel out,leaving the prices of stock determined. The Dow Jones industrial Average biggest gain in oneday was 936.42 points or 11 percent, this occurred on October 12, 2008.Leveraged strategiesStock that a traders does not actually own may be traded suing short selling; margin buying maybe used to purchase stock with borrowed funds; or, derivatives may be used to control largeblocks of stock for a much smaller of amount of money than would be required by outrightpurchases or sale.Short sellingIn short selling, the traders borrow stock (usually from his brokerage which holds itsclients shares or its own share on account to lend to short sellers) then sells it on the market,hoping for the price to all. 53. P a g e | 53 The trader eventually buys back the stock, making money if the price fell in the meantimeor losing money if it rose; exiting a short position by buying back the stock is called covering ashort position. This strategy may also be used by unscrupulous traders to artificially lower the price of astock. Hence most markets either prevent short selling or place restriction on when and how ashort sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets.Margin buying:In margin buying, trader borrows money (at interest)to buy a stock and hopes for it to rise. Mostindustrialized countries have regulation that requires that if the borrowing is based on collateralfrom other stock the trader owns outright, it can be a maximum of a certain percentage of thoseother stocks value.In the United State, the margin requirements have been 50% for many years (that is, if you wantto make a $100 investment, you need to put up$500, and there is often a maintenance marginbelow the $500).A margin call is made if the total value of the investors account cannot support the loss of thetrade.(Upon a decline in the value of the margined securities additional funds may be requires tomaintain the accounts equity, and with or wit out the margined securities or any others withinthe account may be sold by the brokers to protect its loan position. This investors is responsiblefor any shortfall following such forced sale).Regulation of margin requirement (by the Federal Reserve) was implemented after the crash of1929. Before that, speculators typically only needed to put up a little as 10% (or even less) of 54. P a g e | 54the total investment represented by the stocks purchased. Other rules may include theprohibition of free-riding: putting in an order to buy stocks without paying initially (there isnormally a three-day grace period for delivery of the stock.)But then selling them (before the three-days are up) and using part of the proceeds to make theoriginal payment (assuming that the value of the stocks has not declined in the interim).Investment strategies:One of the many thing people always want to know about the stock market is, How do I knowmoney investing? There are many different approaches; two basic methods are classified aseither fundamental analysis or technical analysis.Fundamental analysis refers to analyzing companies by their financial statements founds in SECFiling, business trends, general economic conditions, etc.Technical analysis studies prices action in market through the use of charts and quantitativetechniques to attempt to forecast prices trends regardless of the companys financial prospects.One examples of a technical strategy is the Trend following method, used by John W Henry andrisk control and diversification.Additional, many choose to invent via the index method. One holds a weight or unweightportfolio consisting of the entire stock market or some segment of the stock market (such as theS&P 500 or Wilshire 5000).The principle aim of this strategy is to maximize diversification,minimize taxes from too frequent trading and ride the general trend of the stock market (which,in the U.S, has averaged nearly 10% year, compounded annually, since World War II).Taxation: 55. P a g e | 55According to much national or state legislation, large arrays of fiscal obligation are taxed forcapital gains. Taxes are charged by the state over the transactions, dividends and capital gainson the stock market, in particular in the stock market.However, these fiscal obligations may vary from jurisdiction to jurisdiction because, amongother reasons, it could be assumed that taxation is already incorporated into the stock pricesthrough the different taxes companies pay to the state, or that tax free stock market operationsare useful to boost economic growth. ACCOUNT OPENING KIT IN NIRMAL BANG PVT LTD:MANADATORY DOCUMENT:-PROOF FO IDENTITY (For individual /Karta / Sole proprietor / Authorizedperson (s) for Partnership, corporate and Trust)Photocopy of PAN cardPROOF OF ADDRESS (For individual / Karta / Sole proprietor / Authorizedperson (s) for Partnerships, Corporate and Trust)Photocopy of any one of the following:Passport, Voter ID Card, Driving license, Bank Passbook, Rent Agreement, Ration Card, CurrentTelephone Bill, Current Electric Bill, Flat Maintenance Bill, and Certificate Issued by employerregistered under MAPIN, Insurance Policy.BANK AND DP PROOF: Letter from clients banker certifying the account number and the period from which theaccounts in operation as per prescribed format. 56. P a g e | 56Copy of a pas book / bank statement containing name of the clientCopy of current transaction statement / holding statement / certification by DP containing the name of DP and client.PROOF OF INCOME AND ASSETS:1. Copy of the salary of the constituent for the last month2. Income tax statement for the last 2 financial years3. Assets liability statement4. Copy of the values certificate in case of immovable propertyFOR MINORS:In additional to the abovementioned documents, the following documents would also be requiredfor minors.I. Birth certificate of Minor. ADDITIONAL DOCUMENTS FOR NON-INDIVIUALS:1) Copy of the balance sheet for the last 2 financial years (copies of annual balance sheet to besubmitted every years)2) Copy of latest share holding pattern including list of all those holding more than 5% in the sharecapital of the company, duly certified by the company secretary/ whole time Director/MD. (copyof updated shareholding patterns to be submitted every year)3) Copies of the memorandum and articles of association in case of a company / body corporate orpartnership deed in case of a partnership firm 57. P a g e | 574) Copy of the Resolution of Board of Directors approving participation in equity / derivatives/ debts trading and naming authorized persons for dealing in securities.5) Photographs of partners/whole time directors, individual promoters holding 5% or more, either directly or indirectly, in the shareholding of the company and of persons authorized to deal in securities.6) Net worth certified by Chartered accountant.7) Declaration on letterhead of firm as per prescribed format for sole proprietorship and partnership Firms. BASIC RISKS INVOLVED IN TRADING ON THE STOCK EXCHANGE (EQUITY AND OTHER INSTRUMENT) Of higher volatility: Volatility refers to the dynamic changes in price that securities undergo when trading activity continues on the Stock Exchanges. Generally, higher the volatility of a security/contract, greater is its price swings. There may be normally greater volatility in thinly traded securities/contracts than in active securities/contracts. As a result Of volatility, your order may only be partially executed or not executed at all. Or the price at which your order got executed may be substantially different from the last traded price or changes substantially thereafter, resulting in notional or real losses. Risk of lower liquidity: Liquidity refers to the ability of market participants to buy and or sell securities/ contracts expeditiously at a competitive price and with minimal price difference. 58. P a g e | 58Generally, it is assumed that more the number or order available in a market, greater is theliquidity.Liquidity is important because with greater liquidity, it is easier for investors to buy and/or sellsecurities/ contracts swiftly and with minimal price difference, and as a result, investors are morelikely to pay or receive a competitive price for securities/contracts purchased or sold.There may be a risk of lower liquidity in some securities/contracts as compared to activesecurities/contracts. As a result, your order may only be partially executed, or may be executedwith relatively greater price difference or may not be executed at all. Buying/Selling without intention of giving and or taking delivery of a securities, as part of a daytrading strategy, may also result into losses, because in such a situation, stock may have to besold/purchased at a low/high prices, compared to the executed price levels, so as not to have anyobligation to delivery/receive a security. Risks of wider spreads: Spread refers to the difference in best buy prices and the best sell prices. It represents the differential between the prices of buying a securities and immediately selling it or vice versa. Lower liquidity and higher volatility may result in wider than normal spreads for loss liquid or illiquid securities/contracts. This is turn will hamper better price formation.Risk-reducing orders: Most exchanges have a facility for investors to place limit orders, stop loss orders etc. The placing of such orders (e.g., stop loss limit orders) which are intended to limit losses to certain amount may not be effective many a time because rapid movement in market conditions may make it impossible to execute such orders.. 59. P a g e | 59 A market order will be executed promptly, subject to available of orders on opposite side, without regard to price and that, while the customer may receive a prompt of a market order, the execution may be at available prices of outstanding orders, which satisfy the order quantity, on price time priority. It may be understood that these prices may be significantly different from the last traded prices or the best prices in that security. A limit order will be executed only at the time limit price specified for the order or a better price. However, while the customer receives prices protection, there is a possibility that the order may not be executed at all. A stop loss order is generally placed away from the current price of a stock / contract, and such order gets activated if and when stock/contract reaches, or trades through, the stop price. Sell stop order are entered ordinarily below the current price, and buy stop orders are entered ordinarily above the current price. When the stock reaches the pre-determined price, or trades through such price, the stop loss order convert to a market/limit order and is executed at the limit order. There is no assurance therefore that the limit order will be executable since a stock/contract might penetrate the pre-determined price, in which case, the risk of such order not getting executed arises, just as with a regular limit orderRisk of New Announcements:Issuers make news announcements that may impact the prices of the securities/contracts. Theseannouncements may occur during trading, and when combined with lower liquidity and highervolatility, may suddenly cause an unexpected positive or negative movement in the price of thesecurity/contracts. Risk of Rumors: 60. P a g e | 60Rumors about companies at times float in the market through word of mouth, newspapers,websites or news agencies, etc. the investors should be wary of and should desist from acting onrumors.System Risk: High volume trading will frequently occur at the market opening and before market close. Such high volume may also occur at any point in the day. These may cause delays in order execution or confirmation. During periods of volatility, on account of market participants continuously modifying their order quantity or prices or placing fresh orders, there may be delays in order execution and its confirmation. Under certain market condition, it may be difficult or impossible to liquidate a position in the market at a reasonable price or at all, when there are no outstanding order either on the buy side or the sell side, or if trading is halted in a security due to any action on account of unusual trading activity or stock hitting circuit or for any other reason. Risk of Option Holders: An option holder run the risk of losing the entire amount paid for the option in a relatively short period of time. This risk reflects the nature of an option as a wasting asset which becomes worthless when it expires. An option holder who neither sells his option in the secondary market nor exercises it prior to its expiration will necessary lose his entire investment in the option. If the price of the underlying does not change in the anticipated direction before the option expires to an extent sufficient to cover the cost of the option, the investors may lose all or a significant part of his investment in the option. 61. P a g e | 61 The exchange may impose exercise restrictions and have absolute authority to restrict theexercise of option at certain times in specified circumstances.INVESTORS RIGHTS AND OBLIGATIONS: From the trade date upto five trading days. Where trade on the websites, do not tally with the detail mentioned in the contract note, immediately get in touch with the investors grievances cell of NSE/BSE. Ensure that payment/delivery of securities against is given to the concerned members within one working day prior to the date of pay-in-announced by NSE/BSE or its clearing corporation/clearing House. Payments should be made only by account payee cheque in favors of the firm/company of the trading members and a receipt or acknowledgement towards what such payment is made be obtained from the member. Delivery of securities is made to the pool account of the members rather than to the beneficiary account of the members. In case pay-out of money and /or securities is not received on the next working day after date pay-out announced by NSE/BSE or its clearing corporation/clearing House. 62. P a g e | 62 Please follow-up with the concerned members for its release. In case pay-put is not released as above from the members within five working days, ensure that you lodge a complaint immediately with the investors Grievance cell of NSE/BSE. Every member is required to send a complete statement of Accounts, for both funds and securities settlement to each of its constituents, at such periodicity as may be prescribed by time to time. You should report errors, if any, in the statement immediately, but not later than 30 calendar days of receipt thereof, to the members. In case the error is not rectified or there is a dispute, ensure that you refer such matter to the investors Grievance cell of NSE/BSE, without delaying. In case of a complaint against a members/registered sub-broker, you should address the complaint to the office as may be specified by NSE/BSE from time to time. In case where a member surrenders his membership, NSE/BSE gives a public notice inviting claim, if any from investors. In case of a claim, relating to transaction executed on the trading system of NSE/BSE, ensure that you lodge a claim with NSE/BSE/NSCCL clearing House within the stipulated people and with the supporting documents. In case where a member is expelled from trading membership or declared a defaulter, NSE/BSE gives a public notice inviting claims, if any, from investors. In case of claim, relating to transaction executed on the trading system of NSE/BSE, ensure that you lodge a claim with NSE/BSE within the stipulated period and with the supporting documents. Claims against a defaulter/expelled member found to be valid as prescribed in the relevant Rules/Bye-laws and the scheme under the Investors Protection Fund (IPF) may be payable first out of the amount vested in committee for settlement of claims against Defaulters, on pro-rata basis if the amount is inadequate. 63. P a g e | 63 The balance amount of claims, if any, to a maximum amount of Rs.10 lakh per investors claim, per defaulter/expelled members may be payable subject to such claims being found payable under the scheme of the IPF. GENERAL: Commission and Other Charges Before you begin to trade, you should obtain a clear explanation of all commission, fees and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss. Deposited Cash and Property You should familiarize yourself with the protections accorded to the money or other property you deposit particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdiction, property which has been specifically identifiable as your as your own will be pro-rated in the same manner as cash for purpose of distribution in the event of a shortfall. In case of nay dispute with the member, the same shall be subject to arbitration as per thebyelaws/regulation of the exchange. For right and obligation of the clients, please refer to Annexure-1 enclosed with this document.The terms constituent shall mean and include a client