0602002 EXPLORING FINANCIAL MARKET AND SALES POTENTIAL FOR ICICI DIRECT ONLINE SHARE TRADING ACCOUNT

8/7/2019 0602002 EXPLORING FINANCIAL MARKET AND SALES POTENTIAL FOR ICICI DIRECT ONLINE SHARE TRADING ACCOUNT

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A Project Report

On

EXPLORING FINANCIAL MARKET

And

SALES POTENTIAL OF ICICI DIRECT

ONLINE SHARE TRADING ACCOUNT

For

ICICI SECURITIES LIMITEDS

ICICI DIRECT.COM

BY

ABHISHEK SAXENA

Under the guidance of

Prof. Mrs. Ashwini Sovani

Submitted To

University of Pune

In partial fulfillment of the requirement for the award of the degree of

Master of Marketing Management (MMM) 2006-2008

Through

Vishwakarma Institute of Management

PUNE-4


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ACKNOWLEDGEMENT

First off all, I would like to extend my gratitude towards Pune University for giving

me an opportunity to take up this project as preparing this project has definitely

broadened my horizons.

Next, I would like to extend my thanks to Vishwakarma Institute of Management,

Pune for providing me with the necessary ware withal to successfully complete this

project.

I would also like to thank my institute director Dr. Prof. Sharad Joshi, my very helpful

project guide Prof.Ashwini Sovani for her continuous support and guidance.

I would specially like to thank Mr.Shrikrishna Tirodia and Mrs.Supriya Khatri (Area

Sales Manager) and Mr. Ninad Indulkar( Sales Manager) ICICI Direct.Com for

encouraging me and providing me with the necessary information and material, the

blend of which has made it a Knowledgeable project.

I would also like to express my gratitude towards Mr. Nikesh Mulchandani and

Mr.Himanshu Srimali (Sales Managers) at ICICI, for helping me whenever the need

arise in spite of their busy schedules.

Last but not the least, my sincere thanks to my family and friends without whose

support this project would not have become a reality.


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To Whom It May Concern

This is to certify that the project titled EXPLORING FINANCIAL MARKET AND SALES

POTENTIAL OF ICICI DIRECT ONLINE SHARE TRADING ACCOUNT is a bonafide

work carried out by Mr.Abhishek Saxena. He has successfully completed project

work for the partial fulfillment of two year course in Master of Marketing

Management (2006-08) under University of Pune

Mrs. Ashwini Sowani Dr. Sharad Joshi

Project Guide Director

Vishwakarma

Institute of Management,

Pune


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INDEX

S.No. Title Page Number

1. Executive Summary 5

2. Company Profile 6-7

3. Objective of the Study 8

4. Overview of financial Services 9-15

5. Overview of Indian Securities Market 16-18

6. Introduction to Derivatives 19-25

7. Brief Introduction To Commodities 2630

8. Sales Potential of ICICI Direct Online Share Trading

Account-Survey Analysis

31-38

9. Research Methodology 39-40

10. Data Analysis 41-55

11. Conclusion, Findings & Suggestions 56-58

12. Limitations 59

13. Bibliography 60

14. Appendices 61-62


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Chapter-I

EXECUTIVE SUMMARY

The history of e trading goes back to 1983, when a doctor in Michigan placed the first

online trade using E-TRADE technology. What began with a single click over 16

years ago has now taken the world by storm. The concept was visualized by one Bill

Porter, a physicist and inventor who provided online quotes and trading services to

many US firms like Fidelity, Charles Schwab, and Quick & Reilly.

This led Bill to wonder why, as an individual investor, he had to pay a broker

hundreds of dollars for stock transactions.

With incredible foresight, he saw the solution at hand: someday everyone would own

computers and invest through them with unprecedented efficiency and control. And

today his dream has become a reality.

With the global firms turning their eyes on INDIA as a country with immense

potential for growth thanks to globalization and various economic reforms, the Indian

stock markets are places receiving a lot of attention.

Trading and investing in shares is gaining momentum and with the Internet facility

virtually at every part of the country, it has become a reality for even a smallest

person wanting to invest his surplus money but did not know where to go until

recently.


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Chapter-II

Company Profile: ICICI Securities Ltd.

A 99.91 per cent subsidiary of ICICI Bank, I-Sec is one of the largest Primary Dealers

in the country, in terms of its net worth and bidding commitments. Apart from its

proprietary debt trading business, the company offers fee-based services like

merchant banking, debt capital market services and corporate advisory services. It is

also present in the equity broking business through its wholly owned subsidiary,

ICICI Brokerage Services Limited. I-Sec had a net worth of Rs.4.56 billion (on a

consolidated basis) as on March 31, 2006 and reported a PAT of Rs.1.56 billion in

2005-06 (Rs.4.58 billion and Rs.0.64 billion respectively in the previous year).

The Managing Director of ICICI Securities Ltd. India, Subrata Mukherji and the

President & CEO of ICICI Securities Inc. USA, Gopakumar hosted a dinner to

commemorate the opening of their Bay Area office, on May 3 at the Hyatt Regency in

Santa Clara, CA. Besides Mukherji and Gopakumar, Atul Sharma, the Regional Head,

was also present. They talked to Bay Area movers and shakers at the exclusive

function where they showcased ICICI Securities and its parent organization, the ICICI

Group.

The ICICI Group was founded over 50 years ago at the initiative of the World Bank,

Indian Government and representatives of Indian industry. They are one of the market

leaders in Investment Banking, private sector life and general insurance, asset

management, consumer credit, private equity and venture capital.


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As of March 31, 2007 ICICI Bank was the largest private sector bank with balance

sheet strength of about US$ 56 billion and over 17 million retail customer accounts. It

is listed both on NYSE and Indian Stock Exchanges. ICICI Securities Ltd., India is

the investment banking arm of ICICI Bank. It is a top tier player in each of its

businesses - Equities, Fixed Income, Investment Banking/M&A. ICICI Securities,

India has managed some of the most prestigious public equity offerings and landmark

transactions in India. ICICI Securities Inc., USA is a subsidiary of ICICI Securities

Ltd. It is a NASD registered broker dealer and is also registered with the Financial

Services Authority, UK (FSA) and the Monetary Authority of Singapore (MAS) to

conduct equity & corporate finance business.

Its key business lines include Equities (Institutional equity sales, ADR/GDR

underwriting and syndication), Corporate Finance (Indo-US cross border transactions)

and Wealth Management (Provide investment & wealth management solutions to

expatriate Indians and leverage India and overseas presence to offer the best of both

worlds to NRI clients) According to them, what sets them apart from others/ key

differentiators is their strong parentage (as part of the well known financial

powerhouse, the ICICI Group); they know India well (corporate & investment

banking, asset management, retail banking, rural banking and insurance businesses)

and have strong investment expertise across asset classes (manages / advises

investments across fixed income, equity, private equity, real estate & derivatives to all

categories of investors).


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Chapter-III

Objective of the Study

The objective of this project titled EXPLORING FINANCIAL MARKET AND SALES

POTENTIAL OF ICICI DIRECT ONLINE SHARE TRADING ACCOUNT

1. To understand financial market for various financial services.

2. To understand Indian securities market.

3. To understand Derivatives and Commodities.

4. On the basis of above finding out what is the sales potential for ICICI direct

Online share trading account?


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Chapter-IV

An overview of Financial Services

Financial services is a term used to refer to the services provided by the

finance industry.

Banks, insurance companies, investment banks, and brokerage / Share trading

companies, are examples of the types of firms forming this industry:

They provide money and investment and related services.

Financial services is the largest industry (or category of industries) in the

world in terms of earnings (20% of market cap in the S&P 500)

What is the starting point?

The ECONOMY

You and me make the economy

We earn, consume and save

The economic activity starts from here

The Major Sectors

The economy is made up of three major sectors

The Primary sector

Made up of Agriculture and Agro based industries

The Secondary sector

Made up of Manufacturing industries

The Tertiary sector

Made up of service industries


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The Delivery boys

The Corporates ultimately deliver the goods

The Private sector

The Public sector

The MNCs

The Mobilisers of savings

Banks

Mutual Funds

Insurance Companies

Financial Institutions

NBFCs

Others

Other important market participants

Venture Capital Funds

Foreign Institutional Investors

Hedge Funds

Private Equity Funds

Angel Investors

Pension funds

Portfolio Managers


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Markets, the important aspect of the economy

Capital market

to raise capital

Debt market

to borrow money

Forex market

to operate in international markets

Derivatives market

to hedge

Commodities market

to sell and buy products

Products make the markets

Each market has different types of instruments called the Products to meet different

requirements of the market players, to bring flexibility and efficiency in market

operations.

Capital Market

Equity Shares, Pref Shares, Conv Debentures

Debt Market

Bond Market and Money Market (less than 1 year)

Govt bonds, Corp bonds, Treasury bills, Commercial Papers, Repos, CDs,

Securitized debts etc

Foreign Exchange Market

Spot and Forwards

Commodities

Futures and options


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Derivatives

Equity: Stock Futures, Index Futures and Stock Options-put and call,

index options

Debt: Interest Rate Swaps, Plain Vanilla Options and Interest Rate

Futures

Forex: Buy/Sell and Currency Swaps, Rupee Options and Forwards

Commodities: Futures

Other structured products

CDO

CLO

ABS

MBS

Asset Swaps

CDS

Investment Banking defined.

Managing IPOs, rights and other issues

Raising Debt and Debt Capital

Private Placements of Debt and Equity

Treasury and Forex Advisory

Structuring of products

Underwriting of issues

Transaction Advisory (structuring deals)

Advising on M&As, Take overs

Valuing Firms and Pricing of issues

Management Buyouts and Leveraged Buyouts


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Bought out deals

Settlement System

Stock Exchanges

Clearing Corporations

Custodians

Trading Systems NDS,Reuters,Bloomberg etc

RBI

DVP, RTGS

Financial Services

Broking (mid way in the value chain)

Distribution (lower end of the value chain)

Advisory (higher end of the value chain)

Custodial Services (lower end of the value chain)

Transaction cost

Stamp duties

Tax Capital gain, Dividend tax

Brokerage

Transfer fee

STT


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Market Regulators

RBI

Banking

SEBI

Capital Markets

IRDA

Insurance

FIMMDA

Debt Markets

FEDAI

Forex Markets

AMFI

Mutual Funds

The Intermediaries

The service providers who act between the mobilisers of savings namely

Banks, MFs etc and the users of funds namely the Corporates:

Investment Bankers

Brokers

Distributors

Rating Agencies

Custodians

Advisors/ Consultants

Primary Dealers

Market Research


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Financial Services

Fee based / advisory services

Issue Management

Asset Management

Portfolio Management

Corporate Counseling

Loan Syndication

Mergers & Acquisition

Capital Restructuring

Credit Rating

Stock Broking

Distribution of financial products

Asset based / fund based services

Equipment leasing / finance

Hire Purchase and Consumer Credit

Bill Discounting

Venture Capital

Housing Finance

Insurance Services

Factoring

Credit Cards


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Chapter-V

Overview of Indian Securities Markets

Organization of the Securities Market

Primary markets

Market where new securities are placed and funds go to issuing entity

Secondary markets

Market where outstanding securities are bought and sold by investors. The

issuing entity does not receive any funds in a secondary market transaction

Why Secondary Markets Are Important

Provides liquidity to investors who acquire securities in the primary market

Without secondary market the issuers should compensate for lower liquidity,

increasing the overall cost for issuers

Helps determine market pricing for new issues

Indian Stock Market Overview

Two primary exchanges BSE and NSE

22 Regional Stock Exchanges

BSE was established in 1875 and NSE in 1994

NSE has over 1016 companies listed with a market cap of Rs.35 lac Crores

appox

BSE has over 4826 companies (2500-2600 trade regularly) listed with a

market cap of over Rs.38 lac Crores approx

The primary index of BSE is SENSEX comprising of 30 stocks. (April 1979 =

100)


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NSE has S&P NSE 50 index called NIFTY comprising of 50 stocks

BSE Sensex is more widely followed. (Other indices : BSE 100, BSE 500,

BSEPSU, BSEMIDCAP, BSEBANKEX, BSESMLCAP)

The volume is more in NSE than in BSE

Average volume is around Rs.10000 Cr to Rs.15000 Cr

The indices are calculated based on the market cap and contain heavily traded

shares from key sectors.

The markets are closed on Saturdays and Sundays.

BSE has switched over from outcry system to fully automated system

BOLT.

NEAT is the trading system of NSE

BSE scripts are classified into A,B1,B2,S,T,TS & Z groups

Both BSE and NSE trades on rolling settlement on a T+2 basis i.e. on 2nd

working day. (Typically Trades of Monday are settled on Wednesday and so

on)

In a compulsory rolling settlement cycle you can go short only intra day and

should be covered by the end of the day.

NSDL and CDSL are the two depositories.

Banks, brokers, FIs and custodians could be depository participants.

SEBI specifies scripts which need to be traded compulsorily in demat form

from time to time.

Demat helps in saving stamp duty on transfer, against bad deliveries, courier

delays, mutilation etc.


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Margin Trading and Securities Lending Scheme (SLS) are governed by SEBI

guidelines.

Sensex and Nifty have market wide circuit breakers of 10%, 15% and 20% for

different periods of time depending upon the breach timing. Scripts have

different CB ranging from 2% to 20% depending upon the volatility and

market price.

Economies and Markets

A strong relationship exists between the economy and the stock market

Security markets reflect what is going on in an economy because the value of

an investment is determined by

its expected cash flows

required rate of return

Economic Activity and Security Markets

Stock Market As A Leading Indicator

Stock prices reflect expectations of earnings, dividends, and interest

rates

Stock market reacts to various leading indicator series

Stock prices consistently turn before the economy does


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Chapter-VI

INTRODUCTION TO DERIVATIVES

Derivatives

Derivative is a product whose value is derived from the value of one or more

basic variables which could be equities, currencies, commodities or any other

asset.

Futures trading first commenced on Chicago Board of Trade in 1865

Derivatives definition:

Derivative is a product whose value is derived from the value of one or more underlying

variables or assets in a contractual manner. The underlying asset can be equity, forex,

commodity or any other assets.

Why derivatives

Increased volatility in asset prices in financial markets

Increased integration of domestic markets with international markets

Marked improvement in communication facilities and reduction in their costs

Innovations

Derivative Products

Futures

Options

Swaps

Forwards

Participants in derivative markets

Hedgers

Speculators

Arbitrageur


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Economic function of derivative products

Enables discovery of future and current prices

Enables transfer of risks

Enables more participation

Enables monitoring of speculative trades

About derivative products

An option gives the buyer a right to enforce a certain contract but without

any obligation.

An option seller is obliged to the buyer of the option in consideration of

having received an option premium but without any right.

In an options contract, the options lies with the buyer.

When the spot value of Nifty is 2140 and if an investor buys a one month

Nifty 2157 call option for a premium at Rs.7/-, the option is out of money

option.

The break even price for a call option at a strike price of 176/- selling at a

premium of Rs.18/- will be Rs.194/-

Typically, option premium is equal to sum of the intrinsic value and time

value

A stock is currently selling at Rs.70/-. If the call option to buy the

stock at Rs.65/- cost Rs.9/-, then the time value of the option is Rs.4/-

A stock currently sells at Rs.120/-. The put option to sell the stock at

Rs.134/- costs Rs.18/-. The time value of the option is Rs.4/-

When two person agree to exchange 100 gms of gold three months later at

Rs.400/- per gm is an example for forward contract

The potential returns on a futures position are unlimited


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A speculator who is bullish on a security can buy stock futures and who is

bullish on the market can buy index futures

If you own 1000 shares of a company X, and if you want to hedge your

position, you can sell 10 future contracts of company X to hedge your position

( if 100 shares is equal to 1 contract for company X)

If you have sold a May Nifty Futures contract for Rs.400000/- with each Nifty

futures contract is for a delivery of 100 Nifties, if on 25th May the index

closes at 4100, you will incur a loss calculated as follows:

(4000 4100)*100 = Rs.-10000/-

Hedging - if you are long on stocks have underlying buy puts.

Speculation Bullish security buy calls or sell puts

Speculation Bearish security sell calls or buy puts

Some operational issues

Futures trading is for a minimum lot size of 100 units. Thus if the index is at

4000, then the value of single index futures contract would be Rs.400000/-.

All futures and options position are cash settled including for individual

stocks.

Daily MTM settlement happens on a continuous basis at the end of each day

for all futures contracts. Each Client member either receives or makes

payment depending upon whether his positions made profit or loss on a daily

basis.

The pay-in and pay-out settlement is carried out on the next day following the

trade day.


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In case a futures contract is not traded on a particular day, for MTM purposes,

a theoretical value is arrived using a formula, which is based on spot price,

MIBOR and time of the futures contract till expiration.

Exercise settlement for option contracts take place at the closing price of the

underlying.

All index options are European Style Options and all stock options are

American Style Options.

On the last day of trading, settlement for futures contracts take place at the

closing price of the underlying.

In case of Options, final exercise settlement is automatic and there could be

interim exercise settlement also for in-the-money options.

The exercise settlement value for option contracts is as follows:

Call Options : Closing price of the security on the day of exercise

Strike Price

Put Options : Strike Price Closing price of the security on the day of

exercise.

New Option contracts are introduced on the next trading day following the

expiry of the near month contract.

All Option contracts expire on the last Thursday of the month.

All In-The-Money option contracts are compulsorily settled on exercise date.


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Facts affecting Option premiums

The Option premium is affected by the following:

Underlying market price

Strike Price

Volatility of underlying price

Time to expiration

Interest rate

Products of Derivatives market:

Derivative contracts are of different types. The most common ones are forwards, futures,

options, warrant and swaps.

Forwards: A forward contract is an agreement between two entitles to buy orsell the

underlying assets at a future date, at today s pre-agreed price

Futures: A futures contract is an agreement between two parties to buy or sell the

underlying assets at a future date, at today s future price. Futures contracts differ from

forward contracts in the sense that they are standardized and exchange traded.

Options: There are two types of options Calls and Put. Calls give the buyer the right but

not the obligation to buy a given quantity of the underlying assets, 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: Options generally have lives of up to one year, the majority of options traded

on options exchanges having a maximum maturity of nine months. Longer-date options

are called warrants and are generally traded Over- the- counter

Baskets: Basket options on portfolios of underlying assets. The underlying asset is

usually a weighted average of assets. Equity index options are a form of basket options.


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Swaps:Swaps are private agreements between two parties to exchange cash flows in thefuture according to a prearranged formula. They can be regarded as portfolios of forward

contracts.

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.

Participants in Derivatives market.

Participants who trade in the derivatives market can be classified under the following

three broad categories: Hedgers, speculators and arbitragers.

- Hedgers: Ones who offset the price risk inherent in any cash market position

by taking the opposite position in the futures market. Hedgers use the market to

protect their businesses from adverse price changes.

- Speculator: One who tries to profit from buying and selling future contracts

by anticipating future price movements.

- Arbitragers:Ones simultaneously purchase and sale of similar commoditiesin different exchanges or in different contracts of the same commodity in one

exchange to take advantage of a price discrepancy.

Functions of derivatives:

The prices of derivatives converge with the prices of the underlying at the expiration of

the derivative contract. Thus derivatives help in discovery of future as well as current

prices.the derivatives market helps to transfer risks from those who have them but may

not like them to those who have an appetite for them.

Derivatives, due to their inherent nature, are linked to the underlying cash market. With

the introduction of derivatives, the underlying market witness higher trading volumes

because of participation by more players who would not otherwise participate for lack of

an arrangement to transfer risk.


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Speculative traders shift to amore controlled environment of the derivatives market. In the

absence of organized derivatives markets, speculators trade in the underlying cash

markets. Margining, monitoring and surveillance of the activities of various participants

become extremely difficult in these kind of mixed markets.

An important incidental benefit that flows from derivatives trading is that it acts as a

catalyst for new entrepreneurial activity. Derivatives have a history of attracting many

bright, creative, well-educated people with an entrepreneurial attitude. They often

energize others to create new businesses, new products and new employment opportunity,

the benefit of which are immense.

Derivatives markets help increase savings and investment in the long run. The transfer of

risk enables market participants to expand their volume of activity.


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Chapter-VII

BRIEF INTRODUCTION TO COMMODITIES

What is a commodity?

Commodities are an integral part of our life

- We can not live without the food we eat: Wheat and Rice

- Cotton is the king of yarn

- Gold and Silver are eternally attractive to mankind

All the above are commodities.

Commodity market in India

Precious Metal Other metals

Gold

Silver

Aluminum,

Zinc, Brass, etc

Agriculture Energy

Cotton,

Soya bean,

Rapeseed.

Gas and

Petroleum


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Commodity market

Different commodity exchange markets in the world

Country Exchange

United States of

America

Chicago Board of Trade (CBOT)

Chicago Mercantile Exchange

New York Cotton Exchange

New York Board of Trade

United Kingdom The London International Financial Futures

Options Exchange

The London Metal Exchange

Canada The Winnipeg Commodity Exchange

Brazil Brazilian Futures Exchange Commodities

Australia Sydney Futures Exchange Ltd.

People s Republic of

China

Beijing Commodity Exchange Shanghai

Metal Exchange

Hong Kong Hong Kong Futures Exchange

Japan Tokyo International Financial Futures Exchange

Malaysia Kuala Lumpur commodity Exchange

New Zealand New Zealand Futures and Options Exchange Ltd

Singapore Singapore commodity Exchange Ltd

France Le Nouveau Marche MATIF


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Contd.

Italy Italian Derivatives Market

Netherlands Amsterdam Exchanges option Traders

Russia The Russian Exchange

Petersburg Futures Exchange

Spain The Spanish Options Exchange

Citrus Fruit and Commodity Futures Market of

Valencia

Structure of the commodity market in India

Ministry of Consumer Affairs,

Food and Public Distribution

Forward Market commission

Open outcry

Exchanges Online

Exchanges

NCDEX NMCE MCX NBOT

Participants in Commodities Market: Hedgers, speculators, investors and arbitragers

Producers Farmers

Consumers, refiners, food processing companies, jewelers, textile mills,

exporters and importers

Institutional proprietary traders ( currently disallowed)


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Different commodity exchanges in India

1. National Commodity & Derivatives Exchange Ltd.

Website: ncdex.com

2. National Multi Commodity Exchange of India Limited.

Website: nmcex.com

3. Multi Commodity Exchange of India Ltd.

Website: mceindia.com

4. The Meerut Agro Commodities Exchange Co. Ltd., Meerut

5. The Spices and Oilseeds Exchange Ltd.

6. Ahmedabad Commodity Exchange Ltd.

7. Vijay Beopar Chamber Ltd.,Muzaffarnagar

8. India Pepper & Spice Trade Association.Kochi

9. Rajdhani Oils and Oilseeds Exchange Ltd. Delhi

10. National Board of Trade. Indore.

11. The Chamber Of Commerce,Hapur

12. The East India Cotton Association Mumbai.

13. The Central India Commercial Exchange Ltd, Gwaliar.

14. The East India Jute & Hessian Exchange Ltd.

15. First Commodity Exchange of India Ltd, Kochi

16. Bikaner Commodity Exchange Ltd., Bikaner.

17. Esugarindia Limited.

18. The Bombay Commodity Exchange Ltd.Mumbai

19. Surendranagar Cotton oil & Oilseeds Association Ltd,

20. The Rajkot Seeds oil & Bullion Merchants` Association Ltd

21. Bhatinda Om & Oil Exchange Ltd., Batinda.


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22. Haryana Commodities Ltd., Hissar

23. The Bullion Association Limited

24. e-Commodities Ltd


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Chapter-VIII

SALES POTENTIAL OF ICICI Direct ONLINE SHARE TRADING

ACCOUNT-SURVEY ANALYSIS:

ONLINE SHARE TRADING ACCOUNT:

1) WHAT IS ONLINE TRADING?

SEBI committee has approved the use of Internet as an order routing system (ORS)

for communicating clients orders to the exchanges through brokers. ORS enables

investors to place orders with his broker on an online basis. Once the broker s system

receives the order, it checks the authenticity of the client electronically and then

routes the order to the appropriate exchange for execution. On execution of the order,

it is confirmed on real time basis.

The orders originating from the PC s of the investors are routed through the Internet

to the trading terminals of the designated brokers with whom they are connected and

further to the exchange for trade execution. Soon after these orders are matched and

result into trades, the investors get confirmation about them on their PC s through the

same Internet route.

Online trading allows you to buy and sell shares on the stock exchanges (BSE and

NSE) through the Internet. It is truly a powerful medium to be in direct control of

your investments.

The Internet revolution has been changing the fundamentals of our society. It shapes

the way we communicate and the way we do business. It brings us closer and closer to

vital sources of information. It provides us with means to directly interact with service

oriented computer systems tailored to our specific needs; therefore, we can serve

ourselves better by making our own decisions.


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Today, investors can use revolutionary Internet Client-Server technology to buy and

sell stocks nearly anywhere, anytime This new access by the online trading customers

to low-cost transactions and cutting-edge, real-time market information that formerly

belonged only to brokers has opened up extraordinary new investment opportunities

as well as a crucial need for state-of-the-art information.

2) WHY SHOULD ONE INVEST ONLINE?

WHAT ARE THE ADVANTAGES OF INVESTING ONLINE?

There are many reasons that convince people to invest online. Today investors can use

revolutionary internet-client-server technology to buy and sell stocks nearly

anywhere, anytime. It saves a lot of time as well as the extra hidden cost that one

incurs while dealing with a normal broker.

Online investing has reached mainstream proportions. With Internet transmission

times of less than a second to anywhere in the world, dealing over the Internet is

faster. It is a powerful medium to be in control of your investments

One can now get the latest quotes of scrips on the Internet and place an order almost

instantly. One can quickly sift through over thousands stocks to find those with the

greatest potential.

One can maximize his/her return on investment using technical indicators that can

help him/her quickly identify favorable investment opportunities


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WHY ONLY CHOOSE ICICI Direct.Com?

1) FREDOM OF INFORMATION: The Internet can provide a new sense of control

over your financial future. The amount of investment information available online is

truly astounding. It's one of the best aspects of being a wired investor. For the first

time in history, any individual with an Internet connection can:

Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock markets and the

global economy

Conduct extensive financial research on any company

Talk with other investors around the world

At ICICI one can get real-time stock quotes, daily roundups of the stock market,

expert commentary, and a deep community of fellow investors.

2) CONTROL YOUR MONEY: One of the great appeals of using an ICICI online

account is the fact that the account belongs to the customer, and is under his direct

control. When he wants to buy or sell stock, he need not call his broker anymore;

hope that he is in the office to place his order; possibly argue with the broker about

the order; and hope that the transaction is executed instantly.

3) ACCESS TO MARKET: At the most basic level, an online trading account with

ICICI gives more agility in buying and selling stocks. This is through sophisticated

information streams, dedicated trading platforms and sophisticated tools for accessing

the markets.


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4) ENSURES THE BEST PRICE FOR INVESTOR: ICICI specializes in the

technique that offers the best price for the buy and sell orders of the investors and

traders. Also due to the high level of transparency with regard to display of

information relating to the specific stocks and company profiles, one will be able to

get the best quote for his orders.

5) OFFERS GREATER TRANSPARENCY: Online trading at ICICI offers a

greater transparency by providing its customers with an audit trail. This involves a

complete integrated electronic chain starting from order placement, to clearing and

settlement and finally ending with a credit into your depository account. All these

stages are subject to inspection, thus bringing in transparency into the system.

6) ENABLES HASSLE FREE TRADING: Online trading integrates the bank

account, trading account and the demat accounts of the customer, which leads to easy

and paperless trading

7) ALLOWS INSTANT TRADE EXECUTION: An ICICI online customer will be

able to execute the entire trading transaction, right from logging on to our site, to the

execution and settlement of your bank account, in a very short period of time.

8) PROVIDES A LEVEL PLAYING FIELD: Trading on the net, gives even the

smallest retail investor access to information that earlier was available only to the big

traders. This provides a level playing field for all investors in the securities market.

9) REDUCES SETTLEMENT RISK: This method of trading reduces the settlement

risk for the investor, as in this case all short sell orders are squared off at the specified

cut-off time and not allowed to be carried forward.

10) LIVE FINANCIAL NEWS AND ANALYSIS: As a client of ICICI , you are

given free access to streaming news to give you the latest financial information as it

occurs.


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11) ONLINE HELP DESK: You can contact the Tele Trading Executives from the

Tele Trading team during and after market hours. Any questions you might have will

be addressed quickly and your trading ideas and strategies can be discussed with

them.

12) INSTANT ORDER TRADE CONFIRMATIONS: Every trade is confirmed

immediately and you will receive an on-screen confirmation following every trade

with full details for your records. This avoids costly errors that would have been

discovered when it is too late.

13) INTEGRATED ACCOUNTS: Your Bank, Depository and online account are

integrated for your convenience. As an ICICI client you have the choice of opening a

bank account ICICI bank.

14) SECURITY: ICICI works hard to keep your account and personal information

secure. From updated security technology to advanced fraud prevention measures, we

have the people and tools in place to provide a strong defense against electronic scams

and fraud.


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36

MEDIUMS USED BY ICICI TO REACH OUT TO THE POTENTIAL

CUSTOMERS

As mentioned earlier, ICICI covers virtually the entire country. the company has a

sound base in every part of the country and can cater to different types of customers

from different parts, having a different point of view as well as different financial

capabilities.

However, this is not an easy task and considering all the hurdles coming in the way of

reaching out to the customers everywhere across the country. As a result ICICI has

not just used one channel to reach out to the customers but has various different

mediums to communicate with them.

All these different types of channels make the decision of the potential customer to be

or not to be with ICICI very easy as all the information that he wants can be received

quickly and efficiently.

CALL

SMS

E_MAIL

REGISTER ONLINE

BRANCH

COURIER

CHANNELS/MEDIUMS: Relationship managers, Voluntary sales associates, Agents


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COMPARING ICICI Direct.Com WITH ITS COMPETITORS:

ICICI has entered long back into the online share trading market and faces

Competition with many giants such as Indiabulls, HDFC and

KOTAK,Sharekhan,Religare etc.It also has a new competitor in the name of 5PAISA,

which has been promoted by INDIAINFOLINE. With so many firms in this field as

well as some big brokers it becomes very crucial for ICICI to bring the right kind of

product that suits it target customers and achieves competitive advantage as well. We

will now compare mentioned firms with ICICI and later conclude as to what are the

advantages that ICICI has and what are the areas where it needs an improvement. The

following table and the points that follow will give a useful insight regarding the same

NAME ICICI

DIRECT

HDFC MOTILAL

OSWAL

KOTAK 5 PAISA

Account

Type

3 in 1 3 in 1 2 in 1 3 in 1 2 in 1

Account

Opening

Charges

Rs. 750 Rs. 700 Rs 500 if margin

money is

more than

1000000

than no

charges

Rs.750

Rs. 500

MinBalance

in E-

brokerage

account

Nil Nil Nil Nil Nil


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Min

balance in

trade

account

Nil Nil Nil Nil 5000

Type of

Trading

Cash

YES YES YES YES YES

Exposure 5 times 5 times 5 times 5 times 5 times

Brokerage

structure

Delivery

0.75% of

the value

trade

0.50% of

the trade or

Rs.15

whichever

is lower

0.40% of the

value trade

0.5% to

0.18%

depend on

slab

0.25%

advance

brokerage

Square off 0.10 0.15 0.4 0.6 0.2

Trading

plateforms

1 1 1 1 1

Links With

Banks

1 All Major

pvt bank

1 1 1


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39

Chapter-IX

RESEARCH METHODOLOGY:

Research Methodology is a systematic method of discovering new facts or verifying

old facts, their sequence, inter-relationship, casual explanation and the natural laws

which governs them.

Research Methodology explained by Redman and Mory are as follows systematized

effort to gain new knowledge Research Methodology is original contribution to the

existing stock of knowledge making for its advancement. It is the purist of truth with

the help of study. Observation, comparison and experiment. In short also covers the

systematic method of finding solution to a problem is research. It also covers the

systematic approach concerning generalization and the formulation of the theory.

Different stages involved in research consists of enacting the problem, formulating a

hypothesis, collecting the facts or data, analyzing the facts and reaching certain

conclusion either in the form of solution towards the concerned problem or in

generalization for some theoretical formulation.

In Research Methodology mainly Data plays an important role.

The Data is divided in two parts:

a) Primary Data.

b) Secondary Data.

Primary is the data, which is collected directly by direct personal interview, interview,

indirect oral investigation, Information received through local agents, drafting a

schedule, drafting a questionnaire.


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Secondary is the data, which is collected from the various books, magazine and

material, reports, etc. The data which is stored in the organization and provide by the

HR people are also secondary data. The various information is taken out regarding

that subject as well other subject from various sources and stored. The last years data

stored can also be secondary data. This data is kept for the internal use of the

organization. this is the Research Methodology used in the project. The primary and

secondary data method has been used in this project. Unless the data is collected no

project can be complete. So both these data is very important in the project. The

research instrument used for this survey is a structured questionnaire.

The questionnaire contains both open-ended and closed-ended questions. The

questionnaire provides a provision with respect to rating scales.


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Chapter-X

DATA ANALYSIS:

All the above firms charge an annual maintenance charge of Rs 500 over and above

the normal account opening charge, which is waived off for the first year. However it

can be observed that apart from this there are many differences between the products

of all the above-mentioned firms.

It can be observed that all the above products differ not only in the way they charge

the brokerage to their customers but also the services they give to them which also

means that they may be targeting different types of customers.

Some provide a 3 in 1 account which links the customer s demat account with his

trading and savings account while some of them only provide a 2 in 1 account which

only links the customer s demat account with his trading account.

The advantage in a 3 in 1 account is that the customer can trade smoothly without

facing any obstacles as his amount gets credited to the service provider s account

quickly as there is a link between the demat account and the saving account of the

customer. The advantage in having a 3 in 1 account especially with ICICI is that one

can not only trade online but also trade offline. One can give cheques of a particular

amount to ICICI in advance and can later trade within that much amount. This also

reduces the risk of over trading which can prove very costly at times. However, with a

3 in 1 account the rigidity increases as the customer does not have a direct link

between his demat and savings account or salary account.

Another difference especially between ICICI and its various other competitors is

regarding its account opening fees .ICICI charges Rs 750 while all its competitors i.e.


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into as there are many traders who would like to get exposure on delivery and not just

on daily trading.

The next and one of the most important aspects to be considered is the difference in

brokerage structure between all the firms providing the online share trading account.

While ICICI direct (ICICI s online share trading wing) charges the highest brokerage

of 0.75 %, 5 PAISA and KOTAKSTREET (KOTAK s online share trading wing) are

those companies whose brokerage on delivery is one of the lowest. KOTAK charges a

brokerage of a mere 0.18% on select slabs on delivery. but certainly a little above

average considering the fact that even the big players such as HDFC and KOTAK

charge a brokerage which is less than 0.50%. This aspect needs some attention as the

company is have to compete with their competitors and brokerage is the first and the

foremost thing, which attracts or detracts a potential customer.

In addition to the above mentioned distinction between ICICI and its various other

competitors providing a similar product with their own unique selling propositions

there is one more set of competitors who are called as brokers.

Before online trading was introduced in the BSE and the NSE, trading used to be

carried out only by these brokers. However, this type of trading was highly

ambiguous, froth with the danger of scams and frauds, involved a lot of paper work

and also resulted in the customer getting cheated by the broker who most of the times

used to provide him with unreal information about a particular company. As a result,

the customer used to end up picking up a wrong stock and make huge losses.

However, with the advent of online trading, the impact of these type of brokers has

lessened as there is no paper work, prices of the stocks come streaming online which

are there for everyone to see along with their annual results, their annual sales.etc.


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However, the facilities such as general economy news, company news and analysis,

streaming quotes, multiple watch lists of the stocks listed at both THE BSE and THE

NSE, ability to create own market watch list and viewown portfolio anytime are not

provided by the normal broker.

A customer need not call his broker but straight away log on to the company s website

and trade himself. This also saves time, which is a very important factor in stock

trading as share prices change by every minute. Further at ICICI, the customer is

provided with a unique client identity number, which no one apart from the customer

himself has. Thus all the important facts about the customer s portfolio, his stocks and

their market value can be viewed by none other than that particular himself and are

kept 100% secret. This increases the security level as well as makes the product

authentic. Again there are no hidden charges with an ICICI online share trading

account such as delivery charges, service tax, demat charges and other charges which

one might face when trading with a normal broker.

ICICI thus, is a clear winner when compared to a normal broker, as there is more

security and greater satisfaction to a customer when trading with the former than with

the latter.


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SALES POTENTIAL OF ICICI Direct ONLINE SHARE TRADING

ACCOUNT-SURVEY ANALYSIS:

Online trading in India started in February 2000 when a couple of broking houses

started offering online trading to their customers. As of today there are more than 7

big players offering the online share trading product and this number is sure to rise.

The last six years has seen a lot of changes in the Indian markets. With the boom in

the Indian economy and the stock markets going through a bull run the popularity and

the attraction towards trading in shares has increased manifold. Again its knowledge

has also increased amongst the people. The market is huge but it also needs to be

tapped appropriately.

Anything less offered by ICICI as compared to its competitors or any feature not

convincing enough from the customer s point of view can be detrimental to the

success of the firm s product.

Hence in order to know the market potential of ICICI vis--vis its competitors, a

survey was conducted to assess the popularity and awareness among people about

shares and ICICI online share trading account.


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SAMPLING METHOD:

The sampling method so as to obtain a representative sample is the Non-probability

sampling methods. Under Non-probability sampling, the question addressed the basic

questions relating to investing or trading in stocks and whether trading takes place

online or offline, if online-which broking house and why.

A random sample of 50 people was taken. I selected the respondents to the survey on

the basis of judgment sampling with convenience taken into account.

ASSUMPTIONS:

The sample selected represents the population fully The data has been collected by

administering an open and close-ended questionnaire of end investors with the

assumption that the primary data collected is true and reflects the actual preferences

of the investors/traders.

The sample selected has thorough knowledge of the subject of shares.


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INTERPRETATION OF DATA:

Schedule 1:

Online Offline

45 5

Chart 1: Penetration of online trading products among respondents

Out of the 50 respondents, 43 (86%) had invested in shares through any online trading

product. this shows that the penetration of online share trading product among the

populace is high inspite of the fact that it was introduced only 6 years ago. However,

this reach is in a city like Pune, which is considered the commercial hub of the

country; hence one can expect the penetration level of online share trading products to

be a little low in other smaller cities/towns.

Penetration of on line share

trading

0204060

on line share

Trading

Offline

trading

Type of trading

No. of people

Series1


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Schedule 2:

18 to 35 36 to 50 50 above

25 18 7

Chart 2: Age wise distribution of online trading products

Age wise distribution of on line

share trading products

0

10

20

30

18-35 36-50 50 above

Age group

Noofp

eople

Series1

As can be seen from above charts, 50% of the people using online share trading

products fall in the age group of 18-35 years, which shows that the popularity of

online share trading products is at its peak in this age group and is the lowest for the

age group of 50 years and above. This may be due to the fact that people in the age

group of 18-35 years are well versed with computers, have fewer responsibilities and

can afford to take risks.

The age group of 35-50 years shows a little smaller figure, which may be because at

this stage some people use computers while some don t and some are just unwilling to

put money into shares due to increasing responsibilities and hence the question of

online trading does not arise. People above 50 years are nearing retirement and in

some cases even retired, so they might have some excess cash and hence they too are

willing to invest in shares through Internet, which is less cumbersome and tedious as

compared to offline trading.


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Schedule 3:

Male Female

35 15

Chart3: Gender wise distribution of online trading products

Gender wise Distribution of

online share trading products

0

20

40

Male Female

Gender

No.ofp

eople

Series1

In the sample of 50 respondents although 72 % of the male respondents traded online,

28 % females also used online trading products to buy and sell shares which is an

encouraging sign as it means that online trading has made it possible even for females

to participate in an area which was untreaded by them until recently. It s an

encouraging sign as the number of potential customers has now increased.


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Schedule 4:

Print TV Newsletter Internet others

10 5 24 30 5

Chart 4: Information source

Information source

0

10

20

30

40

1

medium

percentage

Print

TV

Newsletter

Internet

Others

30% of the respondents came to know about the online trading account through the

Internet itself, hence it may be concluded that the Internet is the most effective

medium as far as getting the customers attention is concerned. Second most popular

medium turned out to be newsletters, which are not much far from the internet.28% of

the respondents, came to know about the online trading account through the

newsletter subscription. The potential of television and print medium of promotion

doesnt seem to have been utilized fully as they lag behind with only 5% and 10%

respectively of the total respondents interviewed came to know about the online

trading accounts them.7% of the respondents also came to know about the online

share trading products through other sources such as getting messages on the phone,

getting calls from the company call centre, getting influenced by friends or relatives


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etc which again means that there are many other mediums apart from those specified

above which can be tapped to market this product.

Schedule 5:

YES NO

65 35

Chart5: Satisfaction with their choice.

Satisfy with their choice

0

20

40

60

80

Yes No

Respose

percentage

Series1

Most of the people are satisfied with their choices. However 35 % of the total

respondents were not satisfied with their products, which could be a potential avenue

for consumers waiting to be tapped by the competitors as well as new firms entering

into the e-trading market.


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Schedule 6:

ICICI KOTAK MOS HDFC 5 PAISA

40 20 20 15 5

Chart6: popularity of various online trading products

Popularity of online share

trading products

0

20

40

60

1

company

percentage

ICICI

KOTAK

MOS

HDFC

5 PAISA

ICICI is the most popular online share trading product followed by KOTAK but there

is a huge difference between them. MOS is at par with KOTAK. HDFC is at the

fourth position with 14% popularity and 5 PAISA is fifth with less than 10%

popularity.

ICICI popularity is quite encouraging from the company s point of view.


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Schedule 7:

Brokerage Advise Efficient and

quick trading

Security

5 45 45 5

Chart 7: Reasons for choosing ICICI online trading account

Reasons for choosing icici

trading account

0

20

40

60

1

reasons

percentages

Brkg

Advise

Eff and quick

Trading

Security

The main reasons behind choosing icici trading account is mainly advice tips provided

by the company and efficient and quick trading platform, but the company is lagging

behind because of their higher brokerage rate and security.


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Schedule 9:

Up to 1 lakh 1-3 3-5 Above 5 lakh

60 20 15 5

Chart 9: Likely investment in coming one year.

Likely investment in one year

0

20

40

60

80

1

investment

percentage

s

Up to I lakh

1 to 3 lakh

3 to 5 lakh

above 5 lakh

People are likely to invest on average 1 lakh rupees in coming year, because mostly

they belong to middle class earners. But there are people who also ready to invest up

to 5 lakh in coming year.


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Chapter-XI

CONCLUSIONS & SUGGESTIONS :

It can be concluded that ICICI, is veteran to the online share trading field, has been

able to build a sound customer base if the survey conducted is to be believed. ICICI

has a strong presence in almost every part of the country which can eventually lead to

a very big customer base.

The company will find it relatively easy to further introduce its other latest

products through its strong reach throughout the country.

It has varied product platforms which are specifically designed to cater to

varied customer needs which leads to a conclusion that the firm has designed

the product keeping the customer in mind.

A sound base in almost the entire country and as much as six different

mediums used by the company to reach out to potential customers means that

the company is going all out to increase its market share.

The brokerage charged by ICICI is relatively high as compared to some of the

big players in the market such as HDFC and KOTAK and Motilal Oswal.

An ICICI online trading customer can even trade offline and he/she need not

have an internet connection. This facility is not available with all the

companies providing online trading facility.

Considering the data it can be concluded that there is a high level of

penetration of online trading products, women are also beginning to trade

online and it is the younger generation (18 to 35 yrs) that trades the most.


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Considering the data it can also be concluded that most of the people are

satisfied with their choices of online trading accounts and that ICICI DIRECT

is a clear market leader as far as the popularity of the various online trading

companies are concerned.


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SUGGESTIONS:

The brokerage structure needs to be revised. It is already on the higher side as

compared to HDFC and KOTAK. Again, the brokerage charged should be

customized.

It should be based on the client s turnover. Slabs should be made on the basis

of the client s turnover. Higher the turnover- lesser the brokerage.

ICICI should also try and increase its level of presence in certain sections of

the media such as Television and Radio. Tie-ups with business channels such

as CNBC, NDTV PROFITor ZEE BUSINESS can be of great advantage.

ICICI can also sponsor certain business related events or programmes .It may

lead to greater awareness about the product amongst the people .Already

certain business houses are doing it. It is also a good idea from the point of

view of maintaining corporate social responsibility. This will not only benefit

the company s online share trading product but will also benefit the other

products which may be launched later on.

Increase the distribution network for in form of drop boxes and get in tie ups

with mobile phone galleries with reliance web shops or set up drop boxes at

railways stations which will facilitate easy payment opportunities for the

client.

The above mentioned steps might increase the company s expenditure initially but it

can be a profitable exercise in the long run.


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Chapter-XIII

BIBLIOGRAPHY:

Websites:

www.icicidirect.com

www.kotakstreet.com

www.hdfcsec.com

www.5paisa.com

www.INVESTools.com

www.motilaloswal.com

www.google.com

Books:

NSE s capital markets module

Financial Management

(Khan & Jain)


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APPENDICES:

QUESTIONNAIRE

1) WHAT IS YOUR NAME?

ANS:

2) WHAT IS YOUR AGE?

1] MALE 2] FEMALE

3) WHAT IS YOUR OCCUPATION?

1] STUDENT 2] SERVICE

3] PROFESSIONAL 4] SELF EMPLOYED

4) WHAT WOULD BE YOUR LIKELY INVESTMENT OVER THE

NEXT ONE (1) YEAR?

1] UPTO RS 1 LAKH 2] RS 1- 3 LQKH

3] RS 3- 5 LAKH 4] RS 5 LAKH AND ABOVE

5) DO YOU TRADE OFFLINE OR ONLINE?

ANS:

6) THROUGH WHICH ONLINE SHARE TRADING ACCOUNT

DO YOU TRADE?

1] ICICI 2] KOTAK 3] HDFC 4] MOS

5] 5 PAISA

7) HOW DID YOU COME TO KNOW ABOUT ICICI ONLINE

TRADING ACCOUNT?

1] TV 2] PRINT 3] INTERNET 4]

NEWSLETTER 5] OTHERS


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8) WHY DID YOU CHOOSE ICICI ONLINE TRADING

ACCOUNT?

1] BROKERAGE 2] ADVISE 3] EFFICIENT AND

QUICK TRADING 4] SECURITY

9) ARE YOU SATISFIED WITH YOUR CHOICE? IF NOT, WHY?

ANS:

10) GIVEN AN OPPORTUNITY, WOULD YOU LIKE TO

CHANGE OVER TO ANOTHER ONLINE SHARE TRADING

ACCOUNT AND FOR WHAT REASONS?

Documents

0602002 EXPLORING FINANCIAL MARKET AND SALES POTENTIAL FOR ICICI DIRECT ONLINE SHARE TRADING ACCOUNT