I can calculate the motions of the heavenly bodies but not the Movements of the Stock market Sir

Isaac Newton

HISTORY OF STOCK EXCHANGES Though the historical records relating to securities market in India is meager and obscure, there is evidence to indicate that the loan securities of the East Indian Company used to be traded towards close of the 18th century. By 1830s, the trading in shares of banks started. The trader by the name of broker emerged in 1830 when 6 persons called themselves as share brokers. This number grew gradually. Till 1850, they traded in shares of banks and securities of the East India Company in Mumbai under a sprawling Banyan Tree in front of the Town Hall, which is now in the Horniman Circle Park. It is no surprise that the majestic Phiroze Jeejeebhoy Towers is located at the Horniman Circle. In 1850, the Companies Act introducing limited liability was enacted heralding the era of modern joint stock company which propelled trading volumes. The American Civil War broke out in 1861 which cut off supply of cotton from the USA to Europe. This heightened the demand for cotton from India. Cotton prices increased. Exports of cotton grew, payments were received in bullion. The great and sudden spurt in wealth produced by cotton price propelled setting up companies for every conceivable purpose. Between 1863 and 1865, the new ventures raised nearly Rs.30 crore in the form of paid up capital and nearly Rs. 38 crore of the premia. Rarely was a share which did not command a premium between 1861 and 1865. The Back Bay Reclamation share with Rs.5,000 paid up was at Rs.50,000 premium, the Port Canning share with Rs. 1,000 paid up was at Rs.11,000 premium, etc. There was a share mania and every body was after a piece of paper, variously called allotments, scrips and shares. The people woke up only when the American Civil war ended. Then all rushed to sell their securities but there were no buyers. They were left with huge mass of unsaleable paper. This occurred then. This also occurs today at regular intervals. The bubbles and burst continue to be a perennial feature of the securities market world over. The depression was so severe that it paved way for setting up of a formal market. The number of brokers, which had increased during the civil war to about 250, declined. During the civil war, they had become so influential and powerful that even the police had only salams for them. But after the end of the civil war, they were driven from pillar to post by the police. They moved from place to place till 1874 when they found a convenient place, which is now appropriately called Dalal Street after their name. They organized an informal association on or about 9th July 1875 for protecting their interests. On 3rd December 1887, they established a stock exchange called Native Share and Stock Brokers Association. This laid the foundation of the oldest stock exchange in India. The word native indicated that only natives of India could be brokers of the Exchange. In 1880s a number textile mills came up in Ahmedabad. This created a need for trading of shares of these mills. In 1894, the brokers of Ahmedabad formed "The Ahmedabad Share and Stock Brokers' Association". As a result of Swadesi movement and the coal boom of 1904-08, Calcutta became another major center of share trading and an exchange was set up in 1908. During interwar years, as the demand for industrial goods kept increasing, existing enterprise expanded and new ones were floated. Yet another stock exchange was started in Madras in 1920. Stock exchanges in Hyderabad and Delhi started operations in the year 1943 and

1947, respectively. At the time of independence, there were seven stock exchanges functioning in major cities of the country. From 7 stock exchanges in 1946, the country moved to form a total of 19 stock exchanges by 1990. There were 5968 companies listed as against 1125 in 1946. The paid up capital of these companies multiplied many fold from Rs 270 crore in 1946 to 27761 crore in 1990. The market capitalization of listed companies jumped from Rs. 971 crore in 1946 to 70521 crore in 1990. From the nineties, started the current phase under which Indian stock exchanges are undergoing a rapid transition to be at par with stock exchanges in the developed world. Before 1990, the trading system was the open out cry system with scrips classified as specified and non-specified or cash scrips that were compulsorily settled with delivery at the end of the settlement. There were long and varying periods for specified and nonspecified shares in the old clearing system because of the intricacies involved in the physical form of shares. The membership of stock exchanges was initially open to individuals and partnership firms and was later opened to companies. While the Bombay Stock Exchange, Ahmedabad Stock Exchange and Madhya Pradesh Stock Exchange, were organized as voluntary non-profit associations of persons, the Calcutta Stock Exchange, Delhi Stock Exchange, Uttar Pradesh Stock Exchange, and others including Ludhiana, Cochin, Gauhati, Jaipur and Manglore Stock Exchanges were organized as public limited companies. The governance of stock exchanges rests in a governing board comprising of the members of the board and an Executive Director. Members of the governing board include brokers and non-brokers including government nominees. Earlier, the investor service levels were low and the regulatory laws inadequate. In the mid- eighties, the G.S. Patel committee on stock exchange reforms and the Abid Hussain Committee on capital markets recommended the creation of a second tier stock market. In 1991, the Department of Economic Affairs, Ministry of Finance, and Government of India to instituted an expert study: 1. Study the trading system, covering both specified and non-specified shares on major stock exchange. 2. Review effectiveness of regulation and surveillance over trading operation, 3. Look in to the working of badla and its impact on trading, and 4. Make recommendations for investors for investor confidence.

The expert group suggested for a union one-week settlement, replacing the old margining system with marking to market, to do away with the carry forward system, introduction of formal market making, more investor representation on governing board and the introduction of MIS. In 1991, another high-powered study group on establishment of new stock exchanges, popularly known as the Pherwani Committee recommended the promotion of a new stock exchange at new Bombay as a model exchange and to act as a

National Stock Exchange (NSE). So, NSE was granted recognition as a stock exchange in April 1993 and it started operation with wholesale debt market (WDM) segment in June 1994. It started equity trading in November 1994 and, in a short span of the one year, surpassed the volume at BSE, the largest stock exchange in the world to the first place in the country in the first year of its operations. Then afterwards OTCEI was promoted jointly by the ICICI, UTI, SBI Capital markets Ltd., Canbank financial services Ltd., GIC, and LIC. It was recognized as a stock exchange under Securities Contracts (Regulation) Act, 1956 with effect from August 23, 1989. The exchange was incorporated as a company under section 25 of the Companies Act, 1956 on September 20, 1990, with an authorized capital of Rs 10 crore and a paid-up capital of Rs. 5 crore. It is based on the model of National Association of Securities Dealers Automated Quotation (NASDAQ) of USA, with modification to suit the Indian conditions. It commenced operations from October 6, 1992. OTCEI arose out of the need to have a second tier market in the country. It was set up to provide small and medium companies an access to capital market for raising finance in a cost-effective manner and investors with a convenient, transparent, and efficient avenue for capital market investment. The national reach of BSE and NSE and cutthroat competition between them, threatened the existence of the regional stock exchanges (RSEs). The survival of these RSEs, which once had a secure position, had now become a cause for concern. So these RSEs formed the Federation of Indian Stock Exchanges (FISE) in early 1996. The eroding market share, dwindling volumes, and declining profitability of members at the RSEs left the FISE with the two options: join the hands with the BOLT expansion plan or maintain status quo and wait until capital market revived. It was impossible for most of the RSEs to become members of NSE or BSE. Hence, to improve market efficiency and facilitate trading among the RSEs, FISE proposed an interconnected market system (ICMS). It sought technical assistance from the US Agency for International Development-Financial Institutions Reforms and Expansion (USAIDFIRE) Project, administered by Price Waterhouse. With its assistance the Interconnected Stock Exchange of India (ISE) was set up as the twenty-third stock exchange in the country. The ISE was granted recognition under the Securities Contracts (Regulation) Act, 1956 by SEBI in November 1998. ISE commenced its trading operations on February 26, 1999.

DEFINITION
Although common, the term stock market is a somewhat abstract concept for the mechanism that enables the trading of company stocks. It is also used to describe the totality of all stocks and sometimes other securities, with exception of bonds, commodities, 4

and derivatives. The term is used especially to apply within one country as, for example, in the phrase The stock market was up today or in the term stock market bubble The Securities Contract (Regulation) Act,1956 defines stock exchange as any body of individuals, whether incorporated or not constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. Stock exchange could be a regional stock exchange whose area of operation/jurisdiction is specified at the time of the recognition or national exchanges, which are permitted to have nationwide trading since inception. NSE was incorporated as a nation stock exchange.

BOMBAY STOCK EXCHANGE (BSE)

Bombay Stock Exchange Limited (the Exchange) is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE(Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).Bombay Stock Exchange Limited received its Certificate of Incorporation on 8th August, 2005 and Certificate of Commencement of Business on 12th August, 2005. The 'Due Date' for taking over the business and operations of the BSE, by the Exchange was fixed for 19th August, 2005, under the Scheme. The Exchange has succeeded the business and operations of BSE on going concern basis and its recognition as an Exchange has been continued by SEBI. For the premier Stock Exchange that pioneered the stock broking activity in India, 125 years of experience seem to be a proud milestone. A lot has changed since 1875 when 318 persons became members of what today is called "Bombay Stock Exchange Limited" by paying a princely amount of Re1. Since then, the stock market in the country has passed through both good and bad periods. The journey in the 20th century has not been an easy one. Till the decade of eighties, there was no measure or scale that could precisely measure the various ups and downs in the Indian stock market. Bombay Stock Exchange Limited (BSE) in 1986 came out with a Stock Index that subsequently became the barometer of the Indian Stock Market. SENSEX, first compiled in 1986 was calculated on a "Market Capitalization-Weighted" methodology of 30 component stocks representing a sample of large, well-established and financially sound companies. The base year of SENSEX is 1978-79. The index is widely reported in both domestic and international markets through print as well as electronic media. SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. From September 2003, the SENSEX is calculated on a free-float market capitalization methodology. The "free-float Market CapitalizationWeighted" methodology is a widely followed index construction methodology on which majority of global equity benchmarks are based. The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. More recently, the bourses in India witnessed a similar frenzy in the 'TMT' sectors. The SENSEX captured all these happenings in the most judicial manner. One can identify the booms and bust of the Indian equity market through SENSEX. The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five major stock exchanges in India at Mumbai, Calcutta , Delhi , Ahmedabad and Madras . The BSE

National Index was renamed as BSE-100 Index from October 14, 1996 and since then it is calculated taking into consideration only the prices of stocks listed at BSE. The Exchange launched dollar-linked version of BSE-100 index i.e. Dollex-100 on May 22, 2006. With a view to provide a better representation of the increased number of companies listed, increased market capitalisation and the new industry groups, the Exchange constructed and launched on 27th May, 1994, two new index series viz., the 'BSE-200' and the 'DOLLEX200' indices. Since then, BSE has come a long way in attuning itself to the varied needs of investors and market participants. In order to fulfill the need of the market participants for still broader, segment-specific and sector-specific indices, the Exchange has continuously been increasing the range of its indices. The launch of BSE-200 Index in 1994 was followed by the launch of BSE-500 Index and 5 sectoral indices in 1999. In 2001, BSE launched the BSE-PSU Index, DOLLEX-30 and the country's first free-float based index the BSE TECk Index. The Exchange shifted all its indices to a free-float methodology (except BSE PSU index) in a phased manner. The Exchange also disseminates the Price-Earnings Ratio, the Price to Book Value Ratio and the Dividend Yield Percentage on day-to-day basis of all its major indices. The values of all BSE indices are updated every 15 seconds during the market hours and displayed through the BOLT system, BSE website and news wire agencies.

NATIONAL STOCK EXCHANGE (NSE)

NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in June 1994, with trading on the wholesale debt market 7

segment. Subsequently it launched Capital market segment in November 1994 as a trading platform for equities and the futures and options segment in June 2000 for various derivative instruments. NSE was set up with the objectives of: 1. Establishing a nationwide trading facility for all type of securities: 2. Ensuring equal access to investors all over the country through an appropriate communication network. 3. Providing a fair, efficient and transparent securities market using electronic trading system 4. Enabling shorter settlement cycles and book entry settlements; NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nationwide, screen-based, automated trading system, with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information dissemination through online system has helped in integrating retail investors on a nationwide basis. The standards set by the exchange in terms of market practices, products, technology and service standards have become industry benchmark and are being replicated by other market participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. The Indian Capital Market are a far cry from what they used to be a decade age in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service.

Benefits of listing on NSE The benefits of listing on NSE are as enumerated below: NSE provides a trading platform that extends across length and breath of the country. Investors from approximately 345 centers can avail of trading facilities on the NSE trading network. Listing on NSE thus, enables issuers to reach and service investors across the country.

 NSE being the largest stock exchange in terms of trading volumes, the securities trade at low impact cost and are highly liquidity. This in turn reduces the cost of trading to the investor. The trading system of NSE provides unparallel level of trade and post information. The best five by and sell orders are displayed on the trading system and the total number of securities available for buying and selling is also displayed. This helps the investor to know the depth of the market. Further, corporate announcements, results, corporate actions etc, are also available on the trading system, thus reducing scope for price manipulation or misuse. The facility of making initial public offer (IPOs), using NSEs network and software, results in significant reduction in cost and time of issues. NSE s website www.nseindia .com provides a link to the websites of the companies that are list on NSE, so that visitors interested in any company can visit that companiys websites form the NSE sites. Listed companies are provided with monthly trade statistics for the securities of the company listed on the exchange. The listing fee is nominal.

INDIAN STOCK EXCHANGES

List of Indian Stock Exchanges Bombay Stock Exchange National Stock Exchange

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 Regional Stock Exchanges Ahmedabad Stock Exchange Bangalore Stock Exchange Bhubaneshwar Stock Exchange Calcutta Stock Exchange Cochin Stock Exchange Coimbatore Stock Exchange Delhi Stock Exchange Guwahati Stock Exchange Hyderabad Stock Exchange Jaipur Stock Exchange Ludhiana Stock Exchange Madhya Pradesh Stock Exchange Madras Stock Exchange Magadh Stock Exchange Mangalore Stock Exchange Meerut Stock Exchange OTC Exchange Of India Pune Stock Exchange Saurashtra Kutch Stock Exchange Uttar Pradesh Stock Exchange Vadodara Stock Exchange

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HISTORY OF ANGEL BROKING

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Mr. Dinesh Thakkar Promoter and Managing Director In a short span of 18 years since inception, The Angel Group has emerged as one of the 5 retail stock broking houses in India, having membership BSE, NSE and the two leading commodity exchanges in the country i.e. NCDEX and MCX. Angel Broking Ltd is also registered as a depository participant with CDSL. The group is promoted by Mr. Dinesh Thakkar, who started this enterprise as a small subbroker in 1987 with staff strength of 3 personnel. As on date, the group is managed by a team of 1589 + direct employees and a nation wide network comprising 12 Regional Centers , 58 branches, 2014 + registered sub brokers and business associates and 5552+ active trading terminals which cater to the requirements of 162085 + retail clients. At Angel, It habitually generate value added features without the cost burden being passed onto the clients as we strongly believe that better understanding of clients needs and wants is our top priority. Our e-broking facility is one such effort, which gives you a platform to access state of art trading facility at the click of a button. MANAGEMENT Professional and highly experienced people headed by Mr. Dinesh Thakkar manage the group. He has 14 years experience in the field of stock broking. He is well supported by Mr.Mukesh R. Gandhi , a 19 years veteran in stock markets & Mr. Lalit Thakkar with 10 years experience in the field of equities research team and dependable operation team.

GROUP ACTIVITIES

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Angel group has very well set research division managed by strong professional team. They provide fundamental as well as technical analysis to clients. They have subscribed to various software packages including cline 2000,capita Clips, Trends, DART,VITAL,INFAC reports ,CMIE reports fundamental package form internet securities etc.Angel Group has 165 Bolt terminals spread all over the country amongst its branches and sub-brokers Angel has expanded their might in to institutional broking segment also to provide the highest level of services to Indian financial institutions, banks, mutual funds and foreign institutional investors. MISSION STATEMENT The main mission statement of Angel broking Ltd. Is to be on the top in and around Rajkot and SAURASTRA peninsula with the help of retail, bulk business within three years. For FY 2007-08 will be on Bulk business from existing sub-brokers of competitors by giving those competitive pricing, better connectivity and Post trading Back-up software in post centralized and direct billing era. BUSINESS PHILOSOPHY Ethical practices & transparency in all our dealings Customer interest above our own Always deliver what we promise Effective cost management

ACHIEVEMENT Angel Broking has once again been awarded the prestigious Major Volume Driver award for the second consecutive year of 2005-2006 by The Bombay Stock Exchange. This coveted title was earlier conferred upon Angel by the BSE for the year 2004-2005

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QUALITY ASSURANCE POLICY

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We are committed to being the leader In providing World Class Product & Services Which exceed the expectations of our customers Achieved by teamwork and A process of continuous improvement

CORE COMPETENCE Top quality research & portfolio advisory services for equities Retail focused research products Robust internet trading facility Commodities research & broking services Depository services through CDSL Web based 24 x 7 back office software Good understanding the sub-broker and retail customer needs Professional work culture with a personal touch Cost effective processes State-of-the-art technology Streaming quotes & real time charts for BSE/NSE [cash / derivatives] Single connectivity and speedy execution of trades Private V-sat network for remote areas Online technical support & help desk

CRM POLICY A Customer is a Most Important Visitors On Our Promises He is Not Depend On Us But We Are Dependant On Him He Is Not Interruption In Our Work But Is The Purpose of It We Are Not Doing Him A Favour By Serving He Is Doing Us A Favour By Giving Us An Opportunity To Do So

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BUSINESS NETWORK
Regional Offices

(1) Ahmedabad
(2) Bangalore (3) Chennai (4) Hyderabad (5) Indore (6) Jaipur Branch Offices

(7) Kolkata (8) Mumbai (9) New Delhi (10) Pune (11) Rajkot (12) Surat

Andheri(W) Bandra(W) 2 Offices Borivali(W) 2 Offices Chembur Fort Ghatkopar(E) Goregaon(W) Kalbadevi Kandivali Lokhandwala Malad(W) Malad(E) Mulund(W) Santacruz(W) Thane(W) Vile Parle(W) Ahmedabad 7 Offices Amreli Anand Ankaleshwar Baroda Bhavnagar

Gandhinagar Gondal Indore Jalgaon Jamnagar Jodhpur Junagadh Mehsana Nadiad Nasik New Delhi 4 Offices Palanpur Porbandar Pune Rajkot - 4 Offices Secunderabad Surat Surendranagar Valsad Vapi Vijayawada Vishakhapatnam

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PRODUCT OFFERED BY ANGEL

Angel Broking Ltd. Provides its best services by its products which represent the whole image of the mind of clients and those products are:

ANGEL

Offline

Online

Angel Trade

Angel Diet

Angel Anywhere

OFFLINE The Off-Line account is trading account through which one can buy and sell through his/her telephone or by personal visit at Angel shop. This facility is for those who are not comfortable with computer and want to trade ONLINE The Online trading facilities provided by Angel is basically divided into three types i.e. Angel Diet, Angel Anywhere, and Angel Trade. Angel-DIET Application based ideal for traders User friendly & simple navigation Robust & Speedier execution of trade 5 segment BSE, NSE, F&O, MCX, and NCDEX

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Angel Trade Browser based for investors No installation required Advantage of mobility Trading as simple as internet surfing 5 segment BSE, NSE, F&O, MCX, and NCDEX

Angel Anywhere Application based ideal for traders using technical tools Intraday / Historical charts with various indicators 3 segment BSE, NSE, Derivatives

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E-BROKING SERVICES
On-line trading facilities on BSE/NSE (Cash & F&O), NCDEX, and MCX through our 3 unique e-trading softwares especially designed for traders as well as investors. Trading in securities / Commodities using the intrenet platform is a convenient option. We provide you an opportunity to trade on BSE / NSE (Cash & F&O), NCDEX, and MCX from the comfort of tour home or office. Our internet trading platform gives you state-of-the-art trading facility, order and trde confirmation, e-contracts and 24x7 on-line web-enabled back-office system at the click of a button.

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Salient Features of Angel Trade

Multiple exchanges on a single screen: You online trading on BSE / NSE (Cash and F&O), MCX and NCDEX on a single screen. Speed: We use the latest technology to generate efficient uptime and greater stability to give you high speed. Competitive brokerage rates: We believe in providing our clients the best value added services at the most competitive brokerage rates. Optimum margins: Angel gives you the trading exposure at optimum margin level Online funds transfer: The clients enjoy the convenience of online transfer of funds from their bank accounts, to the margin account of Angel, online. Personalized service: HNI clients can avail of personalized advisory services from our trained and experienced dealers, regarding trading opportunities. Off line services: You are free to make a telephone call to any of our 71 well equipped branches across the country. Technology: Angel provides the latest infrastructure tools to support and integrate the backend and front office functionalities.

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Back office infrastructure: We provide an automated web enabled centralized back-office whereby the clients can have access to their trade confirmation reports, holding statement, their net position, the margins and the statement of accounts and ledgers on a 24 X 7 basis. Technical support: We remove technical difficulties through an online support system managed by qualified professionals E - Contract notes cum bills: We provide contract notes cum bills in electronic form resulting in ease of access to trades carried out by the clients on any particular day

WEB-ENABLED CENTRALIZED BACK-OFFICE

Web-Enabled Centralized Back-Office:
All the clients registered with Angel Group have a 24*7 access to our web enabled centralized software. The clients can view their trade confirmation reports specific to BSE & NSE correspondingly for a specific day, view their ledger extracts and statements and analyze holding statement along with delivery report status, net position, margin and cash & non cash collateral related to the NSE F&O segment and evaluate profit and loss statement linked to the cash statement. Centralized Help Desk Services: The angel group has commissioned a centralized help desk team at its corporate office under direct supervision of the cmd. This team is available from 9:00a.m. to 7:00p.m. and it is empowered to resolve all your queries and complaints on an online basis. The team is available either via the telephone (022) 2835 5000 or the e-mail feedback@angelbroking.com. E-contract Notes cum Bills We provide contract notes cum bills in electronic form. The software facilitates downloading of relevant contract notes and bills.

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 We have taken adequate care and precaution about the data security, so that all our clients are assured that the data is only accessed by them and not shared with anyone else. Chat Facility Angel provides chat facility to all its clients whereby they can solve their queries in an online manner with the help of our research analysts and other key personnel. The most recent, updates are provided to the clients.

DEMAT SERVICES
Depository Participant You must be aware that Angel Broking Ltd has started its depository services by registering with CDSL. There are various benefits of holding your demat account with us but the biggest advantage is that you shall be ensured of a risk free, prompt and efficient depository process.

What differentiates angel DP from other DPs? : Since our association is slated for a long time, we are in a much better position to know your requirement regarding your holding and transfer of securities. No physical instructions are required for your sell obligations. We also offer to our clients the automated pay in facility for trade done through Angel Broking Ltd / Angel Capital and Dept Market Ltd. The transaction charges that are being levied by us are the lowest in the industry as we believe in providing quality services at the most affordable costs. You have an option of choosing the products offered by CDSL: (1) Easy facility: You can view, download and print the updated holding of your demat account along with valuation of holding. (2) Easiest facility:

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You can, by using this facility, submit your own delivery instructions on the internet without the intervention of your DP. This is in addition to all the facilities provided under the Easy facility. We would like you to know that the state of art technology being arranged for you is the best in the industry and all this is done so that you have convenience of accessing information from any desired location.

You will enjoy the following distinctive benefits by registering with us: No risk of loss, wrong transfer, mutilation or theft of share certificates. Hassle free automated pay-in of your sell obligations by your clearing members; ABL / ACDL (No need for physical instruction at all). Reduced paper work. Speedier settlement process. Because of faster transfer and registration of securities in your account, increased liquidity of your securities. Instant disbursement of non-cash benefits like bonus and rights into your account. Efficient pledge mechanism. Wide branch coverage. Personalized / attentive services of trained help desk. Zero upfront payment. No charges for extra transaction statement & holding statement. All in one combined Monthly Bill-cum-Transaction-cum-Holding-cum-ledger statement.

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COMMODITIES
About Angel Commodities: ANGEL COMMODITIES BROKING (P) LIMITED promoted by ANGEL GROUP, started its operations in Indian commodities market by acquiring memberships in India's premier multi-commodity exchanges of NCDEX (Membership No:00220) and MCX (Membership No: 12685). ANGEL COMMODITIES offers trading opportunities in commodity markets through the chain of its branches spread across the country. ANGEL COMMODITIES provides expert research / analysis to its clients in various commodities, listed in NCDEX and MCX including the international perspective of the commodities traded. It provides best technical analysis from desk of its trained and qualified analysts. The research team of angel commodities consists of professionals who are industry veterans. The team is capable of formulating trading strategies depending on risk-return profile of the client. Today we offer a gamut of financial products to satisfy an array of financial needs. Why trade with Angel Commodities? Online application based trading software Online web based trading platform Online daily, weekly and monthly research Transparent and fair trade execution Individual client attention 27

24*7 online back office Training/education facilities / conduct of seminars State-of-the-art technology Digital contract notes cum bill: View your accounts from any where, any time Efficient risk management Competitive brokerage rates

PERSONALIZED INVESTMENT ADVISORY SERVICE

Angel offers personalized Advisory services to HNI and Retail Clients to build their Wealth through long term investments in equities of fundamentally sound companies. Investment Advisory process at Angel starts with an understanding of each investors risk Appetite and Expectations, thus guiding them accordingly. Customers can seek guidance on stocks in their portfolio and can get proactive advice for timely entry and exit in thoroughly researched companies. We also provide our valuable customers with regular portfolio restructuring services based on sound Investment themes identified by our fundamental research team. The research and advisory team at Angel continuously tracks, on an ongoing basis, each and every news that can have an impact on stock markets in general and Angels Universe of Stocks in particular. This is supported by timely updates on various stocks that we cover. We also come out with Angel Top Picks a list of fundamentally researched companies across sectors that one can invest in. This list is updated on a weekly basis and acts as a guide to investors with regards to various investment avenues (within equities) available in the current market scenario.

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RESEARCH SERVICES

There are three types of research services provided by Angel Broking: (1) (2) (3) (4) Daily Services Fundamental Services Technical Services Commodities Services

The Angel Broking has a special research team for making qualitative research. The research is done for the purpose giving qualitative advice to their client, so that it can work as a helping hand for their client. The Angel Broking has software named Angel Anywhere that make graphical representation of different kind of scrips.

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Daily Services
Market Outlook at 9:30 AM A crisp pre-market report that arms our clients with sensitive information before the opening bell. Key corporate developments, policy announcements, geo-political news and views are analyzed for their impact on the market.

Technical Report at 6:00 PM This report analyses trading patterns, historical background, market position of key stocks and offer short term (1 to 5 days) as well as medium term (10 to 20 days) views. Tracking individual scrips as well as the Sensex and Nifty, its insight cuts through the market maze. Derivative Analysis Report The report provides FII activity in derivative segments, change in open interest, put call ratio, cost of carry of stock and index based derivative products. Our derivative analysts use the above tolls to project the movement during the next trading sessions

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Fundamental Services
The Sunday Weekly Report This weekly report is ace of all the reports. It offers a comprehensive market overview and likely trends in the week ahead. It also presents top picks based on an in-depth analysis of technical and fundamental factors. It gives short term and long term outlook on these scrips, their price targets and advice trading strategies. Another unique feature of this report is that it provides an updated view of about 70 prominent stocks on an ongoing basis. The Industrial Watch This report provides an in-depth look at specific industries which are likely to outperform others in the economy. It analyses their strength and weaknesses and ascertains their future outlook. The final view is arrived at after thorough interaction with industry experts. Stock Analysis Angels stock research has performed very well over the past few years and angel model portfolio has consistently outperformed the benchmark indices. The fundamentals of select scrips are thoroughly analyzed and actionable advice is provided along with investment rationale for each scrip. Flash News Key developments and significant news announcement that are likely to have an impact on market / scrips are flashed live on trading terminals. Flash news

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keeps the market men updated on an online basis and helps them to reshuffle their holdings.

Technical Services
Intra-day Calls For day traders angel provides intraday calls with entry, exit and stop loss levels during the market hours and our calls are flashed on our terminals. Our analysts continuously track the calls and provide the recommendations according to the market movements. Past performance of these calls in terms of profit/loss is also available to our associates to enable them to judge the success rate.

Posting Trading Calls Angels Position Trading Calls are based on a through analysis of the price movements in selected scrips and provides calls for taking positions with a 10 - 15 days time span with stop losses and targets. These calls are also flashed on our terminals during market hours.

Derivative strategies Our analyst take a view on the NIFTY and selected scrips based on derivatives and technical tools and devise suitable Derivative Strategies , which are flashed on our terminals and published in our derivative reports.

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Commodities Services
Agro Tech Speak Mainly gives the investors insight into and a forecast for agro commodities viz. pulses (urad channa etc); reports on oil complex (soyabean castor etc.) along with spices with reports on kapas guar seed. Call Evaluation A report designed for evaluating the calls given by the angel research team where the reports are classified in 3 broad categories viz. achieved, triumph, not achieved along with the trade recommendations

Commodities Tech Speak This report mainly equips the investors dealing in MCX segment in commodities like gold, silver, crude oil, copper etc with the market insight and expert recommendation on the trading strategies.

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PORTFOLIO MANAGEMENT SERVICES

Angel model portfolio was first launched in the year 2002. since then 5 model portfolio have been launched. The model portfolio has consistently outperformed the SENSEX by 80 % each time. Portfolio construction & advice is based on the principle of value investing.

Angel Gold In a volatile market it is very difficult for an investor to pick up value stocks which will give decent returns in the long run. We at Angel Gold realize your need for a professional financial advisor and hence are here to assist you in making wise and profitable decisions. We strongly believe that right decisions taken at the right time are always beneficial and that's why our entire research team comprising of 12 sector specialists along with our research head will understand your need, return expectation, risk profile and time horizon to design your portfolio accordingly. This portfolio will be tracked regularly and our efforts would be to optimize your returns in the long run. Features of the Angel Gold: A premium service for clients who need professional guidance on long term investments.

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 Minimum fund / portfolio of Rs. 1 lac and maximum of Rs. 4 lac eligible for Angel Gold. Appropriate risk profiling before taking investment decisions Periodic group meetings and seminars in branches. Monthly Newsletter from the desk of Angel Gold. Browser based back-office software.

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BIRD'S EYE VIEW OF DIFFERENT DEPARTMENTS

An Angle Broking Ltd. Has different department like other firms.It has mainly three departments which are as follows: Trading department Back-office department DP department

TRADING DEPARTMENT
Introduction

Angel is one of the broker who is acting as wholesalers and as a broker it is the duty of it to provide service of collecting funds and securities from the investors and send it to clearing house respectively for this an account is to be opened i.e Trading Account. According to SEBI investor has to open trading account, he can open an account in any depository but investor should not be partnership firm or proprietorship firm. Trading department is again divided into three parts: Pre-trading Trading Post-trading

(1) Pre-trading department

Any person who wants to open an trading account first of all pre-trading activity is done which include: Account opening Deposits 36

 Complients

PROCEDURE FOR OPENING TRADING ACCOUNT

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1. first client will ask for opening trading account 2. The Angel will give proof details and client will have to fill up form and submit

to Angel with documents required 3. collection of form from the client 38

4. 5. 6. 7. 8.

checking of the form scanning of the form This form will be dispatch to Head Office Angel branch will have collection of code by E-mail or manually. Now Angel office informs client or sub-broker through phone or E-mail about Internet Id. 9. Now Client will be able to trade through accessing www.angeltrade.com or application software Closing procedure 1. First client will give written request for closing an account 2. Then this request is forwarded to Head Office 3. Head office will inform branch that account has been closed and whole procedure about closing will be completed at Head office 4. Angel will inform client about closing of account

Deposits
Retail client:

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Cash market Intra-day Sub-broker: For one segment For all five segment

Minimum Rs. 5000 Rs. 10000 with E Broking service

Rs. 1,00,000 Cash or Shares(flexible) Rs. 3,50,000 if clients want V-SAT which includes installation, transportation charges etc..

Complients
Part -A Demat (photo proof) Pan card Driving license Election card Bank Attestation/Verification

Part - B (Residence proof) Bank passbook Ration card Electric Bill Telephone Bill LIC policy Blank cancelled cheque without signature

Trading Account proof

Following are the proof required for opening trading account. Client master copy (DP proof) Pan card for photo proof/form-60 Any one from Part-A Any one from Part-B

(2) Trading department

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After pre-trading next comes trading which include: Dealing room Sauda punching Confirmation

Dealing Room
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Dealing room is the place where dealing of various securities are done which include: NSE Cash BSE Cash NSE Derivatives

TRADING IN NSE, BSE AND DERIVATIVES

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TREADING

BSE

NSE

CASH MARKET

CASH MARKET

DERIVATIVE MARKET

(3) Post Trading

Payout process

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 Bills Pay-in-process Contract note

Introduction
After completion of trading the further process is done through this department. It handles two processes which are known as pay-in and pay-out process. further description is given below.

Pay-Out-Process
When transaction is done between the two members of same DP then it is called internal pay out process, but it can be known only after 4 oclock when trading gets over. It can be known that whether the transaction is done internally or not. Otherwise all the transactions are done through only. Now if the situation arises in which one of the member of DP has sold a definite quantity of shares, but against which no one has purchased the same amount of quantity of shares belonging to same company then the whole lot will go to the exchange. On the other hand if one of the parties has bought comparatively less quantity than sold by another party then it is called shortfall of shares. Now let us understand the above concept with the help of a practical example. Suppose, one of the members of Angel in RAJKOT has sold 700 shares of Reliance Ltd., but against which member of Angel at Mumbai branch has purchased only 300 shares of the same company then it is called SHORTFALL. Now, after the closing of trading activity (i.e. after 4 o'clock) Exchange will prepare a shortfall report & this will be directly sent to H.O.Now, department will prepare a summary from the report. After that if DP has access then dealing will be done internally otherwise auction will be done by exchange in which exchange will purchase or sell shortfall of shares from the market. Payout process mainly indicate access amount to be paid by DP i.e. when purchase of share is comparatively higher than selling.

Bills
In the same way Angel HO will prepare bill of clients name and this will be send to the respective branches to different places and now branches would be dispatching to their respective clients.

Pay In Process

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Now if we look from the other side the same concept, then it is called Pay In Process. In this process if selling is done comparatively higher than purchase, then DP will earn i.e. DP will get relatively more amount against which it has to pay fewer amounts. In both the transaction i.e. pay in and Pay out transaction the payment will be done through cheques only.

Contract note
Contract note is a confirmation of trades done on a particular day for and on behalf of client. Angel shall issue a contract note to his client for trades (purchase/sale of securities) executed with all details as required therein to be filled in (refer to SEBI circular no. SMD/SED/CIR/23321 dated June 8, 2005). A contract note shall be issued to a client within 24 hours of the execution of the contract duly signed by the TM or his authorized signatory or client attorney.

BACK OFFICE DEPARTMENT

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DP DEPARTMENT
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Depository An Organization
A depository is an organization where the securities of investors are held in electronic form. Investors open an account in the depository system through a Depository Participant and hold securities in that account. There are two depositories in India which are National Securities Depository Ltd.(NSDL) And Central Depository Service Ltd.(CDSL). Depository system is quite similar to a banking system. If an investor wants to utilize the service offered by a depository, he/she has to open an account with the depository through a DEPOSITORY PARTICIPANT. This can be compared to the opening of an account with any of the branches of a bank in order to utilize the services of the bank. Holding securities in Depository is now a normal practice across the world. All depositories operate under countrys specific rules and regulations to assure safety, liquidity and right/liability. A depository may be defined as facilities of holding securities in the electronic form that means without holding any certificates in physical form and which subsequently enable securities transaction to be processed by electronic book entry system, without movement of papers. A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP). Whop as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks custodians, stock brokers etc.are eligible to act as DPs.The investor who is known as Beneficial Owner has to open a Demat account through any DP for dematerialization of his holdings and transferring securities. Angel is having DP of CDSL where 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 interval, a statement of account which gives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of securities.

BRIEF HISTORY OF DEPOSITORY PARTICIPANT IN INDIA

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Although India had a vibrant capital market which is more than a century old. The paper based settlement or 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 National Securities Depository Limited, The first depository in India. This depository promoted by institution of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handle most of the trading and settlement in dematerialized form in Indian capital market. NATIONAL SECURITIES DEPOSITORY LIMITED was promoted by UTI, IDBI and NSE. It started providing depository services in November 1996, Afterwards, CENTRAL DEPOSITORY SERVICE LIMITED flagged of its operation in July 1999. The CENTRAL DEPOSITORY SERVICE LIMITED was promoted by BSE jointly with leading banks such as SBI, BOI, BOB, HDFC, Standard Chartered, Union Bank Of India & Centurion Bank. Trading in dematerialization share commenced on NSE in December 1996, on BSE in December 1997. In January 1998 compulsory demat trading for retail investor started for selected scrips. Thus scrips in compulsory demat trading included the once with highest market capitalization and most traded scripts. This step led to phenomenon growth of the depository environment in Indian capital market. Until CENTRAL DEPOSITORY SERVICE LIMITED commenced its operations it was a one man show handled by DEPOSITORY PARTICIPANTS of NATIONAL SECRURITES DEPOSITORY LIMITED. NATIONAL SECRURITIES DEPOSITORY LIMITED had there fore covered a large chunk of market before CENTRAL DEPOSITORY SERVICE LIMITED came into picture and it has remained the largest depository till date. Investors were opening the account in NATIONAL SECURITIES DEPOSITORY LIMITED and dematerializing their shares in the first phase . That was a booming period for the depository industry. Thus in the initial years of the industry there was only one depository and the competition was between DEPOSITORY PARTIPANTS only .The service was newly launched and SEBI was increasing the scope and compulsion by way of introducing more and more scrip in the least of compulsory demat trading.

ROLE OF DP

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 A depository is an organization firm to provide electronic depository facilities for securities traded. Securities are then held in the electronic form though the medium of DP. The NSDL is the first depository of India. The functions of NSDL are regulated by the Securities and Exchange control board of India (SEBI). The Depository is not just another custodian. The Depository can legally transfer beneficial ownership, which a custodian can not. The chief objective of a depository is to reduce risk by minimizing the paper work involved in trading, settlement and transferring securities. To utilize the services offered by a depository, you must open an account with the depository through a DP. The DPs are the link between the shareholders and the company and NSDL. Banks, financial institutions custodians and stock brokers can become DPs subject to their meeting certain requirement prescribed by NSDL and SEBI. NSDL publishes the list of DPs registered with them from time to time. The DP will provide you with a passbook or statement of account periodically to inform you on your holdings. You can ever have a zero balance in your account.

Benefits of Opening account with CDSL

The unique centralized database of CDSL enables DPs in Debit/Credit securities instantaneously to the Beneficial Owners account, thereby avoiding any transit position. CDSLs unique client ID number ensures debit/credit of securities only to the intended account as the system does not accept a transaction where account number is keyed incorrectly. CDSL offers facilitates to the Clearing House. Clearing Corporation under which securities sold/purchased by any BO on BSF can be directly delivered from/received in the BO account, without routing them through the brokers pool account. CDSL does not collect ay custody fees from DPs. Thus, BO can expect a lower charge in respect f securities held in CDSL account. The transaction cost for settlement of securities through CDSL as lower in most cases.

TYPES OF DEPOSITORY ACCOUNT

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To avail the various services offered by CDSL an investor or a broker or an approved intermediary has to open a CDSL depository account. Depository accounts are three types:

Beneficiary Account:
An investor or a broker who wants to hold shares on dematerialized form and undertake script less trading must have depository account called Beneficial Owner account (BO) with a DP of his choice.

Clearing Member Account:

Member brokers of the stock exchange which have established electronic connectivity with CDSL need to open a clearing member account with a DP of his choice to clear and settle trades in the Demat form. This account is meant to transfer shares and receive shares for the clearing corporation/house. Hence, the member broker does not have any ownership rights over the shares running held in such n account.

Intermediary Account:
Ay person desiring to act as an approved intermediary account with any DP office choice. An intermediary account may be open with the DP only after the intermediary has obtained registration from Securities and Exchange board of India and with the prior approval of the CDSL. This account is meant only to deposit the securities receive from the lender and borrowing scheme. The intermediary does not have any ownership right over the shares held in such account.

Procedure for opening Demat account

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An investor who wants to hold securities in the electronic form in a depository system should open an account with a participant with following procedure: 51

 The participant will make available the relevant account opening form( depending upon whether the client is a retail investor or corporate client or clearing member) and specify the relevant list of documents regarding references that should be submitted along with the form. It will also give copy of the relevant agreement, to be entered with the client, in duplicate. The client will submit the duly filled in an account opening form. It should also furnish such documents regarding references, as specified electronic form in by the participant, along with the account opening form. The Angel will verify that the account opening is duly filled in. It will also verify the enclosed documents, if any. Uncompleted forms will be forwarded to the client for rectification. The authorized signatories are enclosed. In case the documents are not proper, the form will be rejected and intimated the client of the same, stating the reasons for doing so. The copy of the agreement submitted by the client is destroyed. If the form is in order, the Angel will accept the same and give an acknowledge slip duly signed and stamped, to the client. The Angel will execute the agreement and give a copy of it to the client. After completion of all documentation, the Angel will send to H.O then enter client details as mentioned in the account opening form in the DPM screen provided for the purpose. After entering clients details in the system, a client account number will be generated by the DPM and H.O sends to the Angel Branch Office. The Angel will give a copy of the report listing the client details captured in the DPM database to the client. The report will be generated by DPM. Finally, Angel dispatch Demat account kit to the client by courier.

Demat Requisition Form (DRF)

Now we know that all the transactions are done through electronic form for this investor has to convert all the physical certificates into electronic form this process is to be made for dematerialization of the certificates.

Dematerialization of security
According to the Depositories Act 1996, an investor has the option to hold shares either in physical or electronic form. Now ever, SEBI has notified that settlement of trade in almost all securities should have the Demat mode. Although, trades up to 500 shares can settled in physical form, physical settlement is virtually not taking place for apprehension of bad delivery on account of mismatch of signatures, forgery of signature, fake certificate etc. Before you start trading of your security using Demat account you dematerialize the certificate. Dematerialize means converting security in electronic form from physical form. 52

Only those security can be Dematerialize whose owner company has registered itself for CDSL service. Shareholder can request its owned company to register itself with CDSL if it is not registered only after that security can be dematerialized. Procedure for Dematerialization If client is having physical certificate and wants to convert then requested give to Angel for Dematerialization Then this request is sent to H.O H.O will stamp this request and send this to related Registar & Transfer agent Registar & Transfer agent will on receiving the physical documents and the electronic request verifies and checks them. The DP issues a statement of transaction to the client Then Angel will inform to client

Pledging
Major benefit of the Demat account and holding security in Demat form is that you can put this certificate on pledge and you can get loan on it. E.g. If you have an Demat account with RNSB then you will get loan either from this bank or you will get from other institutions. The person who applied for the loan is called ledger and one need to have Demat account with CDSL. Pledge puts once security under the pledge it can not use for other purpose. These securities pledged are moved from Free Balance to Pledged Balance.

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The origin of derivatives can be traced back to the need of farmers to protect themselves against fluctuations in the price of their crop. From the time it was sown to the time it was ready for harvest, farmers would face price uncertainty. Through the use of simple

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derivative products, it was possible for the farmer to partially or fully transfer price risks by locking-in asset prices. These were simple contracts developed to meet the needs of farmers and were basically a means of reducing risk. A farmer who sowed his crop in June faced uncertainty over the price he would receive for his harvest in September. In years of scarcity, he would probably obtain attractive prices. However, during times of oversupply, he would have to dispose off his harvest at a very low price. Clearly this meant that the farmer and his family were exposed to a high risk of price uncertainty. On the other hand, a merchant with an ongoing requirement of grains too would face a price risk - that of having to pay exorbitant prices during dearth, although favorable prices could be obtained during periods of oversupply. Under such circumstances, it clearly made sense for the farmer and the merchant to come together and enter into a contract whereby the price of the grain to be delivered in September could be decided earlier. What they would then negotiate happened to be a futures-type contract, which would enable both parties to eliminate the price risk. In 1848, the Chicago Board of Trade, or CBOT, was established to bring farmers and merchants together. A group of traders got together and created the `to-arrive' contract that permitted farmers to lock in to price upfront and deliver the grain later. These to-arrive contracts proved useful as a device for hedging and speculation on price changes. These were eventually standardized, and in 1925 the first futures clearing house came into existence. Derivative products initially emerged as hedging devices against fluctuations in commodity prices, and commodity-linked derivatives remained the sole form of such products for almost three hundred years. Financial derivatives came into spotlight in the post-1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two-thirds of total transactions in derivative products. In recent years, the market for financial derivatives has grown tremendously in terms of variety of instruments available, their complexity and also turnover. In the class of equity derivatives the world over, futures and options on stock indices have gained more popularity than on individual stocks, especially among institutional investors, who are major users of index-linked derivatives. Even small investors find these useful due to high correlation of the popular indexes with various portfolios and ease of use. The lower costs associated with index derivatives vis--vis derivative products based on individual securities is another reason for their growing use.

Derivatives defined

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Derivative is a product whose value is from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. For example, wheat farmer may wish to sell their harvest at a future date to eliminate the risk of a change in prices by that date. Such a transaction is an example of a derivative. The price of this derivative is driven by the spot price of wheat which the underlying. In the Indian context the Securities Contracts (Regulation) Act, 1956 defines derivative to include 1. A security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security. 2. A contract which derives its value from the prices, or index of prices, of underlying securities.

Derivative products
Derivative contracts have several variants. The most common variants are forwards, futures, options and swaps. We take abrief look at various derivatives contracts that have come to be used.

Forwards
A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price.

Futures
A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Future contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts.

Options
Options are of two types calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.

Warrants

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Options generally have lives of upto one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer- dated options are called warrants and are generally traded over-the-counter. LEAPS The acronym LEAPS Long-Term Equity Anticipation Securities. These are options having a maturity of upto three years. Baskets Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average of a basket of assets. Equity index options are a form of basket options. Swaps Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula They can be regarded as portfolios of forward contracts. The two commonly used swaps are: Interest rate swaps These entail swapping only the interest related cash flows between the parties in the same currency Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions market has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an option to pay fixed and receive floating.

Products, participants and functions

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Derivative contracts are of different types. The most common ones are forwards, futures, options and swaps. Participants who trade in the derivatives market can be classified under the following three broad categories - hedgers, speculators, and arbitragers.

Hedgers The farmer's example that we discussed about was a case of hedging. Hedgers face risk associated with the price of an asset. They use the futures or options markets to reduce or eliminate this risk. Speculators Speculators are participants who wish to bet on future movements in the price of an asset. Futures and options contracts can give them leverage; that is, by putting in small amounts of money upfront, they can take large positions on the market. As a result of this leveraged speculative position, they increase the potential for large gains as well as large losses. Arbitragers Arbitragers work at making profits by taking advantage of discrepancy between prices of the same product across different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they would take offsetting positions in the two markets to lock in the profit. Types of Derivative Market Derivative contracts are of different types. The four important types of derivatives are: a. Forward contract b. Futures c. Options d. Swap The difference between a share and derivative is that shares/securities are an asset while derivative instrument is a contract. Futures and options can be traded on stock exchanges. Let us discuss each of these in greater depth. However as mentioned earlier, for understanding future contract, it is necessary to understand about forward contract. So, first of all we discussed about the forward contracts

Forward Contracts

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A forward contract is an agreement to buy or sell an asset on a specified date for a specified price. One of the parties to the contract assumes a long position and agrees to buy the underlying asset on a certain specified future date for a certain specified price. The other party assumes a short position and agrees to sell the asset on the same date for the same price. Other contract details like delivery date, the parties to the contract negotiate price and quantity bilaterally. The forward contracts are normally traded outside the exchanges. The salient features of forward contracts are: They are bilateral contracts and hence exposed to counter party risk. Each contract is custom designed, and hence is unique in terms of contract size, expiration date and the asset type and quality. The contract price is generally not available in public domain. On the expiration date, the contract has to be settled by delivery of the asset. If the party wishes to reverse the contract, it has to compulsorily go to the same counter-party, which often results in high prices being charged. However forward contracts in certain markets have become very standardized, as in the case of foreign exchange, thereby reducing transaction costs and increasing transactions volume. This process of standardization reaches its limit in the organized futures market. Limitations of forward markets Forward markets world-wide are affected by several problems: Lack of centralization of trading Illiquidity Counterpart risk

Futures Contracts
Futures markets were designed to solve the problems that exist in forward markets. A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. But unlike forward contracts, the futures contracts are standardized and exchange traded. To facilitate liquidity in the futures contracts, the exchange specifies certain standard features of the contract. It is a standardized contract with standard underlying instrument, a standard quantity and quality of the underlying instrument that can be delivered, (or which can be used for reference purposes in settlement) and a standard timing of such settlement. A futures contract may be offset prior to maturity by entering into an equal and opposite transaction. More than 99% of futures transactions are offset this way.

The standardized items in a futures contract are:

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Quality of the underlying Quantity of the underlying The date and the month of delivery The units of price quotation and minimum price change Location of settlement

Pricing Futures The theoretical price of a futures contract is spot price of the underlying plus the cost of carry. Please note that futures are not about predicting future prices of the underlying assets. In general, Futures Price = Spot Price + Cost of Carry The Cost of Carry is the sum of all costs incurred if a similar position is taken in cash market and carried to expiry of the futures contract less any revenue that may arise out of holding the asset. The cost typically includes interest cost in case of financial futures (insurance and storage costs are also considered in case of commodity futures). Revenue may be in the form of dividend. Though one can calculate the theoretical price, the actual price may vary depending upon the demand and supply of the underlying asset. Settlement of Future Contract At the time of settlement, in case of cash settlement the closing price in the cash segment is considered as the settlement price. The difference between the trade price and the settlement price is ultimately your profit/loss. In case of delivery-based settlement, on expiry of the futures contract, the buyer/seller of the future would receive a long/short position at the closing price in the cash segment on the next trading day. This position in the cash segment would merge with any other position the buyer/seller has. In case the buyer/seller wants he can square up this position by selling/buying the shares. Or else he would be required to deliver/receive the underlying shares on the settlement day (e.g. T+2) in the cash segment.

Advantages and risks of trading in futures over cash The biggest advantage of futures is that you can short sell without having stock and one can carry your position for a long time, which is not possible in the cash segment because of rolling settlement. Conversely you can buy futures and carry the position for a long time without taking delivery, unlike in the cash segment where you have to take delivery because of rolling settlement.

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Further futures positions are leveraged positions. By using you can take a Rs100 position by paying Rs25 margin and daily mark-to-market loss, if any. This can enhance the return on capital deployed. For example, you expect a Rs100 stock to go up by Rs10. One way is to buy the stock in the cash segment by paying Rs100. So, one make Rs10 on investment of Rs100, giving about 10% returns. Alternatively he/she take futures position in the stock by paying about Rs30 toward initial and mark-to-market margin and by using future he/she make Rs10 on investment of Rs30, i.e. about 33% returns. However, taking leveraged position is very risky. One can even lose his/her full capital in case the price moves against your position. Distinction between futures and forwards contracts Forward contracts are often confused with futures contracts. The confusion is primarily because both serve essentially the same economic functions of allocating risk in the presence of future price uncertainty. However futures are a significant improvement over the forward contracts as they eliminate counter party risk and offer more liquidity. Distinction between futures and forwards Futures Forwards Trade on an organized Exchange OTC in nature Standardized contract terms Customized contract terms More liquid Less liquid Requires margin payments No margin payment Follows daily settlement Settlement happens at end of period.

Options
Options are fundamentally different from forward and futures contracts. An option gives the holder of the option the right to do something. The holder does not have to exercise this right. In contrast, in a forward or futures contract, the two parties have committed themselves to doing something. Whereas it costs nothing (except margin requirements) to enter into a futures contract, the purchase of an option requires an up front payment. The understanding of the following terms would make the concept of Option easy to understand. Commodity options: Commodity options are options with a commodity as the underlying. For instance a gold options contract would give the holder the right to buy or sell a specified quantity of gold at the price specified in the contract.

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Stock options: Stock options are options on individual stocks. Options currently trade on over 500 stocks in the United States. A contract gives the holder the right to buy or sell shares at the specified price. There are two basic types of options, call options and put options. Call option: A call option gives the holder the right but not the obligation to buy an asset by a certain date for a certain price. Put option: A put option gives the holder the right but not the obligation to sell an asset by a certain date for a certain price.

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Commodity is defined as any bulk good traded on an exchange or in the cash market. One of the first forms of trade between individuals began by what is called the barter system wherein goods were traded for goods. Lack of a medium for exchange was the sole initiator of this system. Animals were the first few commodities to be exchanged. Some examples of commodities include grain, oats, gold, oil, beef, silver, and natural gas. India has a deep ingrained knowledge in commodity trading (and particularly forward trading in commodities), especially in the interior heartland. For last 40 years or so, such forward (futures) trading was banned in the country for a variety of reasons and it is being revived now. In these intervening years, some regional exchanges specializing in specific commodities, where the bans were lifted, have carried on the baton. Also large informal trading, primarily by the speculative segment of the universe of market participants has remained. This has led to a mindset in the common man in the country that commodity exchanges are purely speculative in nature.

Evolution of Commodity Market in India

India has a long history of futures trading in commodities. In India, trading in commodity futures has been in existence from the nineteenth century with organized trading in cotton, through the establishment of Bombay Cotton Trade Association Ltd. in 1875. Bombay Cotton Exchange Ltd. was established in 1893 following the widespread discontent amongst leading cotton mill owners and merchants over functioning of Bombay Cotton Trade Association. The Futures trading in oilseeds started in 1900 with the establishment of the Gujarati Vyapari Mandali, which carried on futures trading in groundnut, castor seed and cotton. Futures trading in wheat were existent at several places in Punjab and Uttar Pradesh. But the most notable futures exchange for wheat was chamber of commerce at Hapur set up in 1913. Futures trading in bullion began in Mumbai in 1920. Calcutta Hessian Exchange Ltd. was established in 1919 for futures trading in raw jute and jute goods. But organized futures trading in raw jute began only in 1927 with the establishment of East Indian Jute Association Ltd. These two associations amalgamated in 1945 to form the East India Jute & Hessian Ltd. to conduct organized trading in both Raw Jute and Jute goods. Forward Contracts (Regulation) Act was enacted in 1952 and the Forwards Markets Commission (FMC) was established in 1953 under the Ministry of Consumer Affairs and Public Distribution. In due course, several other exchanges were created in the country to trade in diverse commodities. There were booming activities in this market and at one time as many as 110 exchanges were conducting forward trade in various commodities in the country. The securities market was a poor cousin of this market as there were not many papers to be traded at that time.

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Downfall:
The era of widespread shortages in many essential commodities resulting in inflationary pressures and the tilt towards socialist policy, in which the role of market forces for resource allocation got diminished, saw the decline of this market since the mid-1960s. This coupled with the regulatory constraints in 1960s, resulted in virtual dismantling of the commodities future markets. It is only in the last decade that commodity future exchanges have been actively encouraged. However, the markets have been thin with poor liquidity and have not grown to any significant level. Indian Policy makers have traditionally coped with the uncertainty and risks associated with price volatility by resorting to policy instruments which attempted to minimize or eliminate price volatility - a virtually closed external trade regime, price control, pervasive government controls on private sector activities extensive market interventions and crop insurance.

The rising:
Liberalization of Indian economy since 1991 recognized the role of market and private initiative for the development of the economy. The much maligned market instruments such as the futures trading were also given due recognition. After some halting efforts since 1994 when Prof. Kabra Committee submitted its report, the late 1990s spilling into the new millennium, saw some bold initiatives in the commodity market. The year 2003 marked the real turning point in the policy framework for commodity market when the government issued notifications for withdrawing all prohibitions and opening up forward trading in all the commodities. This period also witnessed other reforms, such as, amendments to the Essential Commodities Act, Securities (Contract) Rules, which have reduced bottlenecks in the development and growth of commodity markets. Of the country's total GDP, commodities related (and dependent) industries constitute about roughly 50-60 %, which itself cannot be ignored. Most of the existing Indian commodity exchanges are single commodity platforms; are regional in nature, run mainly by entities which trade on them resulting in substantial conflict of interests, opaque in their functioning and have not used technology to scale up their operations and reach to bring down their costs. But with the strong emergence of: National Multi-commodity Exchange Ltd., Ahmedabad (NMCE), Multi Commodity Exchange Ltd., Mumbai (MCX), National Commodities and Derivatives Exchange, Mumbai (NCDEX), and National Board of Trade, Indore (NBOT), all these shortcomings will be addressed rapidly. These exchanges are expected to be role model to other exchanges and are likely to compete for trade not only among themselves but also with the existing exchanges.

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Commodity Exchanges in India

In India, there are 26 registered commodities exchanges. Out of them only 3 commodities exchanges offer online screen based trading system. They are

1. National Multi Commodities Exchange of India Limited (NMCE)

2. National Commodities and Derivatives Exchange of India Limited (NCDEX) 3. Multi Commodities Exchange of India Limited (MCX) (1) National Multi Commodities Exchange of India Limited: NMCE is the first de-mutualized, Electronic Multi-Commodity Exchange in India. National Multi-Commodity Exchange of India Limited is committed to provide world class services of On-line screen based Futures Trading of permitted commodities and efficient Clearing and guaranteed settlement, while complying with Statutory / Regulatory requirements. We strive to ensure improvement of customer services and remain quality leader amongst all commodity exchanges. NMCE seeks to Integrate the physical markets for commodities with the derivative markets Provide more authentic, efficient price discovery and more efficient price risk management to producers, stockiest, processors, importers, exporters and other market participants. On 25th July 2001, the NMCE has been granted in-principle approval by the Government to organize futures trading in the edible oil complex. The Exchange is operationalised from November 26, 2002. NMCE has garnered support from major institutions like Central Warehousing Corporation, NAFED, National Institute of Agricultural Marketing, Gujarat Agro Industrial Corporation Ltd., Gujarat State Agricultural Marketing Board, besides Neptune Overseas Limited. Recognition of NMCE by the Government of India in October 2002 is one of the most important events in commodity markets reforms in India. NMCE facilitates electronic derivatives trading through robust and tested trading platform, Derivative Trading Settlement System (DTSS), provided by CMC. When an order is placed on the exchange, the server at NMCE scans through the orders posted on it from all its trading terminals. It then locates and matches the best counteroffers/bids by maintaining anonymity of the counter-parties. Anonymity helps is eliminating formation of cartels and other unfair practices, thereby protecting the efficiency of price-discovery at the Exchange. NMCE was the first commodity exchange to provide trading facility through internet, through Virtual Private Network (VPN).

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NMCE follows best international risk management practices. The contracts are marked to market on daily basis. The system of upfront margining based on Value at Risk is followed to ensure financial security of the market. In the event of high volatility in the prices, special intra-day clearing and settlement is held Timing: 10 A.M to 5 P.M on Monday to Friday & 10 A.M. to 2 P.M. on Saturday

(2)National Commodity and Derivatives Exchange Ltd. (NCDEX)

NCDEX is a public limited company incorporated on April 23, 2003 under the Companies Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It has commenced its operations on December 15, 2003. NCDEX is a nation-level, technology driven demutualized on-line commodity exchange with an independent Board of Directors and professionals not having any vested interest in commodity markets. It is committed to provide a world-class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency. NCDEX has been formed with the following objectives: To create a world class commodity exchange platform for the market participants. To bring professionalism and transparency into commodity trading. To inculcate best international practices like de-modularization, technology platforms, low cost solutions and information dissemination without noise etc. into the trade. To provide nation wide reach and consistent offering. To bring together the entities that the market can trust. NCDEX is regulated by Forward Market Commission in respect of futures trading in commodities. Besides, NCDEX is subjected to various laws of the land like the Companies Act, Stamp Act, Contracts Act, Forward Commission (Regulation) Act and various other legislations, which impinge on its working.

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Commodities Traded at NCDEX Agriculture Barley, Cashew, Castor Seed, Chana, Chilli, Coffee - Arabica, Coffee - Robusta, Crude Palm Oil, Cotton Seed Oilcake, Expeller Mustard Oil, Groundnut (in shell), Groundnut Expeller Oil, Guar gum, Guar Seeds, Gur, Jeera, Jute sacking bags, Indian Parboiled Rice, Indian Pusa Basmati Rice, Indian Traditional Basmati Rice, Indian Raw Rice, Indian 28.5 mm Cotton, Indian 31 mm Cotton, Masoor Grain Bold, Medium Staple Cotton, Mentha Oil, Mulberry Green Cocoons, Mulberry Raw Silk, Mustard Seed, Pepper, Potato, Raw Jute, Rapeseed-Mustard Seed Oilcake, RBD Palmolein, Refined Soy Oil, Rubber, Sesame Seeds, Soyabean, Sugar, Yellow Soybean Meal, Tur, Turmeric, Urad, V-797 Kapas, Wheat, Yellow Peas, Yellow Red Maize. Metals Aluminum Ingot, Electrolytic Copper Cathode, Gold, Mild Steel Ingots, Nickel Cathode, Silver, Sponge Iron, Zinc Ingot. Energy Brent Crude Oil, Furnace Oil. Polymers Linear Low Density Polyethylene, Polypropylene, Polyvinyl Chlorine Timing: 10 A.M to 5 P.M for all Commodities & 5.50 P.M to 11.15 P.M for Gold, Silver, Cotton and Soya only on Monday to Friday & 10 A.M. to 2 P.M. on Saturday.

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(3) Multi Commodity Exchange

MCX is an independent and de-mutulised multi commodity exchange. It was inaugurated on November 10, 2003 by Mr. Mukesh Ambani, Chairman and Managing Director, Reliance Industries Ltd.; and has permanent recognition from the Government of India for facilitating online trading, clearing and settlement operations for commodities futures market across the country. Today, MCX features amongst the world's top three bullion exchanges and top four energy exchanges. MCX offers a wide spectrum of opportunities to a large cross section of participants including producers/ processors, traders, and corporate, regional trading center, importers, exporters, co-operatives and industry associations amongst others. Headquartered in the financial capital of India, Mumbai, MCX is led by an expert management team with deep domain knowledge of the commodities futures market. Presently, the average daily turnover of MCX is around USD1.55 bn (Rs.7, 000 crore - April 2006), with a record peak turnover of USD3.98 bn (Rs.17, 987 crore) on April 20, 2006. In the first calendar quarter of 2006, MCX holds more than 55% market share of the total trading volume of all the domestic commodity exchanges. The exchange has also affected large deliveries in domestic commodities, signifying the efficiency of price discovery. Being a nation-wide commodity exchange having state-of-the-art infrastructure, offering multiple commodities for trading with wide reach and penetration, MCX is well placed to tap the vast potential poised by the commodities market. Key Shareholders: Financial Technologies (I) Ltd. State Bank of India, National Bank for Agriculture and Rural Development (NABARD), National Stock Exchange of India Ltd. (NSE), Fid Fund (Mauritius) Ltd. Corporation Bank, Union Bank of India, Canara Bank, Bank of India, Bank of Baroda, HDFC Bank SBI Life Insurance Co. Ltd.

Commodities traded at MCX Bullion: Gold, Gold HNI, Gold M, I- Gold, Silver, Silver HNI, Silver M, Oil & Oil seeds, spices, Metal, Fiber, Pulses, Cereals, Energy, Plantation, Petrochemical, Exchange Timing & Commodities Traded at MCX: Timing: 10 A.M to 5 P.M for all Commodities & 5.50 P.M to 11.30 P.M for Gold, Silver, Cotton and Soya only on Monday to Friday 10 A.M. to 2 P.M. on Saturday. 69

PROBLEM IDENTIFICATION
I have conducted study on awareness about stock market. Now, the Angel broking wants to know about the investment instruments used by the people of Rajkot city. It also wants to know how to educate people about stock market. It wants to know sources which are affecting to the decision of client to invest in stock market.

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RESEARCH OBJECTIVE
The objectives of the study are as under: 1. To know the awareness of stock market. 2. To know the investment habit/pattern of the people of Rajkot city. 3. To know the purpose of investing in stock market. 4. To know the influencing forces behind the decision making while trading in stock market. 5. to know constraints which are affecting investment in stock market. 6. To find out best pattern to educate about stock market.

RESEARCH INSTRUMENT
QUESTIONNAIRE: A structured questionnaire was prepared which consisted a 13 set of questions relating to different investment options particularly stock market. For those who were investing in

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stock market, questions like whether they are investing in equity or derivatives or both and how they want to learn about stock market. SAMPLING METHOD: Convenient sampling method SAMPLE UNIT SAMPLE SIZE : Those who are investing in different investment Options : 100 samples

Type of Questionnaire : Structured Type of Questions No of Questions Place : Closed ended questions : 13 : RAJKOT CITY

DATA COLLECTION METHOD There are mainly two sources of data collection that are as under: (1) Primary Data Primary data are those, which are collected by the researcher at the first time, and they are original in character to study a particular problem. Primary data is collected by questionnaires, personal contact of customer and telephonic interview. The normal procedure is to interview some people individually to get a sense of how they feel about stock market. I have put the questionnaire on behalf of different businessman, students, professionals, service class people and they fill up the questionnaires by themselves. So far as my research is concerned, primary data is the main source of information. I have collected data questionnaire and information from respondents. (2) Secondary data When data are collected and compelled from the published nature or any others primary data is called secondary data. So far my research is concerned; I have not collected any information from any sources. So, I have not used secondary source of data collection for my research work.

BENEFITS OF THE STUDY:

The research that is being conducted by me will be useful in the following respect:

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 This will help the company, how to make people aware about stock market by imparting best education. This will help the know the investment options used by people and turn them towards stock market. This will help the company to frame effective marketing strategy. This will also help to select right media for advertising to create brand awareness as well as to give knowledge of the products. It will help to know how the people take decision to invest in stock market. It will help the company to reduce the obstacles, which come in the way for the development of stock market.

LIMITATION OF THE STUDY

Personal bias: People may have personal bias towards particular investment option so that they may not give correct information. Time limit: The time duration for the research is short, so a census is not possible due to time limit, so I have collected data through sample survey. Area: The survey was limited only to the physical boundary of Rajkot city only, so I can not know the degree of literacy about sock market outside the city. Sample size: I have collected data from 100 sample only, which may not reflect the proper result of the study. Lack of expertise: This research work is prepared by me, so there is chance of lack of expertise knowledge in the particular field.

Data analysis & Interpretation

AGE GROUP WISE INVESTORS

73

Age 21 30 31 40 41 - 50 51 - 60 Above 61 Total

Numbers of investors 32 26 18 19 05 100

30 25 No. of respondents 20 15 10 5 0

27 24 18 19

12

21 30

31 40

41 - 50 Age Group

51 - 60

Above 61

EDUCATION QUALIFICATION WISE INVESTORS Education qualification No. of Investors

74

Under-Graduate Graduate Post-Graduate Professional Illiterate

Total

24 21 26 26 2
100

30 No. of Respondent 25 20 15 10 5 0 UnderGraduate Graduate 24 21

26

26

2 PostGraduate Professional Illiterate

Education Qualification

OCCUPATION WISE DISTRIBUTION OF INVESTORS Occupation No. of Investor 75

Professional Businessman Employee Student Others Total

15 35 20 16 14 100

14%

15%

Professional 16% Businessman Employee Student 35% 20% Others

DO YOU INVEST IN STOCK MARKET?

76

Invest 86

Do Not Invest 14

Total 100

14

Invest Do Not Invest

86

The sample size of my survey was 100, Out of which around 14 persons (i.e.14%) were unable to invest or dont like to invest. Around 86 persons (i.e.86%) were investing in different types of securities. As per their needs and preferences, they were investing accordingly.

INVESTMENT IN DIFFERENT INVESTMENT INSTRUMENTS

Investment option No. of Investors

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Bank Fixed Deposit Mutual Fund Shares/Equity Insurance Real Estate Govt. Securities Bonds/Debenture Postal Scheme P.P.F Pension Fund Jewellery Other
100 90 80 70 60 50 40 30 20 10 0

66 46 86 63 52 37 9 21 10 17 73 5

86 66 46 72 52 37 9 21 10 17 5 73

No. of Investor

an k

It can be seen from the graph that almost respondents have given preference for investment to Jewellery, Shares/equity and Insurance. Now we come to the one of the most risky but at the same time the medium of getting maximum returns Stocks. Here we found that 86 people invest in share market. and we also say that people invest in both primary market and secondary market. The number of people investing in IPOs is increasing day by day. Many investors are opening Demat account only for the purpose of IPOs. The Times of Indias recent publication indicated that Rajkot is stands at the 2nd position in the Gujarat & 6th position in India for investing in the IPOs. In this study, I found that 73 investors invested in jewellery because it can be used for wearing to enhance appearance.

Fi xe d D M ep ut os Sh ual it a r Fu es n /E d In qu i su ty R ran e G c ov al E e B t. S st on a ds ecu te /D rit Po eb i es st ent al u Sc re he m e Pe P. ns io P.F n F Je un w d el le ry O th er

Investment Instrument

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Almost of the respondent in the survey has taken an insurance cover. That means almost everyone was giving importance to insurance policies. People are investing in Bank fixed deposit because it gives safety of investment and fixed return. Aged people preferred to invest in P.P.F and Pension fund. As they were more interested in safety, they give more importance to this type of securities. Mutual Funds are considered to be a very good option of investment nowadays. But there are number of people who are not aware of mutual funds. They even dont know what these mutual funds are for and how they are beneficial. We found that professionals are interested in mutual funds and stocks both type of investment options. Real Estate investment is preferred by more than half of the investors. Company should persuade investor to invest in Mutual Funds so it should aware about mutual funds and it should show the past performance record of various mutual fund schemes. Hypothesis Ho: There is no significant difference between the various investment options choose by the investors. H1: There is significant difference between the various investment option choose by the investors Significance Level 5% Calculated Value 212.14 Table Value 19.67

Degree of freedom = 11 the table value is greater than the calculated Value so hypothesis is rejected so null hypothesis is rejected. It means there is difference between the investment option choose by the investors

HOW TO INVEST IN STOCKS:

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IPOS Secondary Market Both

Number of Investors 29 18 39

45 40 35 No. of Investors 30 25 20 15 10 5 0 IPOS Secondary Market 18 29

39

Both

For investing in stock market, the two options available are (1) IPOs (Primary) and (2) Secondary Market. It is said that investing in secondary market is riskier than IPOs. Among the people we surveyed, those who were giving importance to Safety and Less risk , moderate return were investing just in IPOs. Nowadays most of the IPOs are giving higher return to investors.

FACTORS CONSIDERED IN INVESTMENT

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Safety of investment High return Speculation Income

1st Rank 45 24 12 19

2nd Rank 23 41 18 18

3rd Rank 19 23 23 35

4th Rank 13 12 47 28

1st Rank

19% 45% 12% 24% Safety of investment High return Speculation Income

2nd Rank

18%

23% Safety of investment High return

18% 41%

Speculation Income

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3rd Rank 4th Rank

19% 35% 28% 13% 12% 23% 23% 47% Safety of investment High return Safety of investment Speculation High return Income Speculation Income

Moving to the next question of ranks given to different investment options, in chart we can see that 45% people has given 1st rank to Safety of investment. So we can say that more investors are giving much importance to safety. And thus can be interpreted that they want to play safe. This is based clearly on finance funda- High risk, High return and Low risk, low return. For such type of investors, better medium of investments are insurance policies, P.P.F, Government securities, postal scheme and Bank fixed deposit, bonds and debentures. In a developing country like India, where number of lower middle class is the highest therefore prefer safe investment options at the cost of high return. 41% investors have given 2nd rank to high return. So it is clear that investors have an internal fear about high risk taking but they are investing in IPOs because it gives high return at low risk as compared to secondary market.It is also found that businessmen and professionals are higher risk taking class as they have greater purchasing power compared to service class people. some mutual funds also gives higher return so investors also moves towards mutual funds. As per above chart, 35% investors have given third preference to income. there is low risk and low return so investors invest into safe investment to earn regular income they prefer to invest in Bank fixed deposit, postal schemes bonds/debentures and Govt. securities. Above chart indicates that 47% investors given fourth preference to speculation. It is high riskier but it offers high return. Investors dont want to take risk because it requires complete knowledge of stock market trend.Most of people want to invest in safe investment option. Hypothesis

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Ho: There is no significant difference between the various factor considered by Investors while investing H1: There is significant difference between the various factor considered by Investors while investing Significance Level 5% Calculated Value 76.56 Table Value 16.9

Degree of freedom = 9 The table value is greater than the calculated Value so hypothesis is rejected. so null hypothesis is rejected. it means various factors are considered by investors while investing.

INVESTMENT INSTRUMENT IN WHICH PEOPLE WANT TO INVEST

Instruments Equity Derivatives Commodity Others

No. of Investors 34 36 45 37

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41 40 39 38 37 36 35 34 33 32 31

40

No. of Investors

37 36 34

Equity

Derivatives

commodity

Others

Investment Instruments

On asked about their preferences for trading in future, the respondents have shown equal interest in Derivatives, other investment instruments and equity with 40 % followed by commodity. From this I can say that commodity segment has got a brighter future because so many agricultural commodities are traded in the commodity market. It gives wider option to investors.

THE CONSTRAINTS WHICH ARE AFFECTING THE INVESTMENT IN STOCK MARKET

Obstacles Lack of knowledge Fund facilities Risk taking ability regulatory constraints Lack of Guidance Other

Nos. 49 33 21 13 34 7

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60 50 40 30 20 10 0 Lack of knowledge Fund facilities Risk taking ability regulatory constraints Lack of Guidance Other

Constraints

While questioned about the constraints which hold them back from trading in derivatives and commodities, respondents have given the maximum votes to their lack of knowledge and lack of guidance with 49% and 34 % respectively. Many people are affected by lack of guidance. Some regulatory constraints are affecting like PAN card, Demat a/c, etc.

DECISION TAKEN BY INVESTORS WHILE INVESTING INTO STOCK MARKET

85

Factors Independently Advice from friends/colleagues Broker's/Agent's Advice Advice from CA/Tax Consultant News Channels Well-known stock broking house Business Newspapers Business Magazines Internet Internet 12%
Business Magazines Business Newspapers Well-known stock broking house News Channels Advice from CA/Tax Consultant Broker's/Agent's Advice Advice from friends/colleagues Independently

Percentage 43 15 52 15 44 28 25 21 12

21% 25% 28% 44% 15% 52% 15% 43% 0% 10% 20% 30% 40% 50% 60%

On asked to the respondents that while deciding to trade in derivative commodities, whom do they consider the reliable source of information. I come up with the conclusion that most of investors take their decision independently and Take support of Newschannels. Broker/agents advice occupy the first place while taking decision to invest in stock market because brokers provide fundamental and technical research services for that they recruits experts. Advice of friends/colleagues and Advice from friends/colleague. equally important. Also brokers have a good knowledge on investment. So, stock broking houses like Angel can plan out their strategy to increase the trading on derivatives and commodities.

Hypothesis Ho: There is no significant difference between factor affecting while taking decision to Invest in stock market

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H1: There is no significant difference between factor affecting while taking decision to invest in stock market Significance Level 5% Calculated Value 60.28 Table Value 15.5

Degree of freedom = 8 The table value is greater than the calculated Value so hypothesis is rejected So null hypothesis is rejected It means there is difference between the investment option choose by The investors

TOOLS PERFERED BY PEOPLE WHILE LEARNING ABOUT STOK MARKET

87

Tools Literature Classroom Training Documentaries Internet Seminars Self-Experience

Nos. 36 33 23 24 26 63

Self-Experience Seminars Internet Documentaries Classroom Training Literature 0 10 20 30 26 24 23 33 36 40 50 60

63

70

No. of Respondents

When the respondents were asked about the learning technique on stock market, the most of them preferred preference self experience that is they wanted to learn through trial n error: after all Experience is The Best Teacher. People prefer seminars, internet and documentaries equally to learn about stock market. Lastly, about 2/3 of the people want learn through classroom training and literature.

DOES YOUR BROKER PROVIDE RIGHT QUOTATION PRICES OF STOCK YOU INQUIRED?

88

Always Often Sometimes Seldom Never

No. of Respondents 63 14 8 0 1

Never Seldom Sometimes Often Always 0

1 0 8 14 63 10 20 30 40 50 60 70

No. of Respondents

Most of investors receive the right prices of the stocks they inquired. Some investors receive price quotation of the stocks from their brokers but not of the latest news about market trend.

RECOMMENDATION

89

As I have examined that different investors are giving priorities to investment instrument as per their need. Accordingly, as per the needs of the client, a product can be recommended to him. Angel Broking Limited has strength in Top Quality Research, Internet Trading, Investment Advisory Services, Value Added Back office services and DP Services. The firm also deals in commodities and insurance to add more number of clients. Angel broking should increase its promotional activities and it should make aware people of Rajkot city about its product and services. Angel broking should turn the existing customer to trade or invest in other product which they are not aware about or not in vesting in them. Angel broking should organize seminars and presentation of highly experienced person. It should provide classroom training to those who are eager to learn about share market. It should distribute documents about product information. Angel broking should utilize the Radio (FM), Newspaper, local T.V advertisement as a medium of promotion. Angel should recruit more employees who can handle the price quotation call of clients so that they came to know right price quotation of the scrip inquired.

APPENDIX Questionnaire

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The Degree of Literacy about Stock market

(1) Name (2) Age : : _________________________________________________ 21-30 31-40 41-50 51-60 Above 61

(3) Education :

Undergraduate Post Graduate Illiterate

Graduate Professional

(4) Occupation:

Professional Employee Others

Businessman Student

(5) Do you invest in stock market? Yes No

(6) Out of the Following Investment Options, With Which Are you familiar and Invest into it? Bank Fixed deposit Shares/Equity Real Estate Bonds/Debenture P.P.F Jewellery Mutual Fund Insurance Govt. Securities Postal Scheme Pension Fund Other (specify) ________________

(7) How do you invest in Stock/Securities?

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IPOs

Secondary Market

Both

(8) What are the factor do you consider while investing? (Give rank from 1-4) Safety of Investment Speculation (9) Which of these you would like to Invest? Equity Commodity Derivatives (F & O) Others High Return Income

(10) What are the constraints that are holding you back to invest in Stock market? Lack of Knowledge Risk taking Ability Lack of Guidance Other (specify) ________________ (11) How do you take decisions if you want to trade in stock market? Independently Broker/Agents Advice News Channels Business Newspapers Internet Advice from Friends/Colleagues Advice from CA/ Tax Consultant Well-Known Stock Broking House Business Magazines Fund Facilities Regulatory Constraints

(12) How do you want to learn about stock market? Literature Classroom Teaching

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Documentaries Seminars

Internet Self-Experience

(13) Does your broker give you the right quotation of prices of stock you inquired? 1. 2. 3. 4. 5. Always often sometimes seldom never

*******************************

BIBLIOGRAPHY
Websites visited:

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1. www.ncdex.com 2. www.mcxindia.com 3. www.nseindia.com 4. www.bseindia.com 5. www.angletrade.com 6. www.google.com

Books referred: 1. Workbook of NSEs Certification in Financial Markets (NCFM Module)

2. Business Research Methodology - Schindler and Cooper 3. Research Methodology - Kothari

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