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EXECUTIVE SUMMERY
Share trading, whether it is online or offline is becoming acceptable these days. There are a handful of reasons for this. Reasons like getting profit or earning money by just sitting in home or office in front of the system. The main feature of share trading is analysis of current market growth through stock market. There are many companies which will help customer to know and invest in stock market by opening DE mat account; Edelweiss Financial Services Ltd. is one of them. It is a matter of fact that how many people are really interested in share trading and their perception towards it.
Share trading means buying and selling of company’s shares which are listed in NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). This trading is done through DE mat account which customer has already opened in any broking company. This DE mat account is connected with customer’s bank saving account for fund or money transfer and DE mat account is for holding of stocks.
The banking scenario in India is itself huge, covering the different facets of the economy. By and large, investment banks in India are itself an institution which generates funds in two different ways. The first manner in which it works is by drawing public funds via the capital market by way of selling stock in their company. The other way in which it operates is to seek for venture capital or private equity, as a substitute for a stake in their company way in which it operates is to seek for venture capital or private equity, as a substitute for a stake in their company.
At the macro level, investment banking is related with the primary function of assisting the capital market in its function of capital intermediation, i.e., the movement of financial resources from those who have them (the investors), to those who need to make use of them for producing GDP (the issuers). Over the decades, investment banks have always suited the needs of the finance community and thus become one of the most vibrant and exciting segment of financial services.
The project emphasizes on financial aspects of an investment banking firm through ratio analysis, and comparison has been done with other investment banking firm, to see how this firms are growing with respect to its financials. The study will help to understand the competency between different investments banking firm. It also emphasises on which company is financially strong as compared to other firms.
Many people think that share trading is risky for them in terms of money loss. Some people are not interested in share trading because they don’t have time to trade; some of them fears of sudden market down, some people are not interested in investment of their money in any of the things. So it is customer’s psychology or thinking or perception towards share trading.
Edelweiss Financial Services Ltd. having many facilities to minimize these risks and company has successfully done that. Company started in 1995 by Rashesh Shah with investment banking and now it enters into broking market. Edelweiss has applied strategies like Edelstar, Edeltracker and facilities like Quant Basket, free online cum offline and weekly picks. So now company has grown a lot to provide different and beneficial facilities to their customer. As investment in share market through Edelweiss Financial Services Ltd. is handy for customer with the help of relationship manager which they have to suggest where to invest, how much to invest and when to invest.
As Edelweiss group has major role in investment banking and its past data shows that is growing a lot in broking sector also. It will help to change perception of people towards share trading in different way.
Study mainly related with people’s thinking towards share trading. People are not easily accepting share trading due to their mindset to lose money in share market. To solve this problem, first company needs to find out solution on it so that they can convince the customer and make them to trade. This can be achieve only by making understand them about trading, it’s profit and by providing them facilities which suits them.
Indian markets started 2008 on a positive note with the euphoria of December continuing in full swing. In the first week of January, the Nifty traded well above the previous resistance of 6000 mark and BSE mid and small cap indices continued to roar louder. Major Indian indices— Nifty and Sensex— hit lower circuit levels twice during January (21 and 22) on the back of cascading effect of global sell off and then with the forced unwinding of long future positions that hit margin calls.
According to Edelweiss report in 2008-2009 Indian market had impact of Recession but it was not that much effective as it was in other countries.
“Money is better than poverty, if only for financial reason” – Woody Allen
India is a developing economy. It’s prospering in all spheres. Share Market is a compelling determination of the economy and the financial situation of a country. Share market is an area which fascinates each and every individual who is craving for more money. Some common phrases are “If we want to earn just try with share market. This is a good start to start education on investing – putting your money where it can gain greater returns then just earning interest in a high-interest account. Investments in shares or stock can be daunting as there is vast and various amounts of information on investments and everyone is ready and willing to take your money.
Steps are to be taken for start Share trading:-
As beginners we should understand one thing. If we are planning to invest in share market, first we have to categorize our self.
Are we a long term investor?
Are we a sort term investor? (Daily trading).
Long term investor:-
Its here we invest. We are most secured in this case because we don’t consider to be used for emergency. Any company will one day have a growth curve for more we have more chances to lose more.
Short term investor (Risky):-
Remember it’s here we play not invest.
1. Make investment break ups: If we have “x” RS in our hand don’t get carried away to buy shares for all “x” RS. Always we should have fifty percent in our hand.
2. Reinvest only when profits: Make the profit what we earn on the first trader (if so happens) to buy extra share. Suppose if our stock didn’t go up after first investment wait till (may be months) till our holding goes up.
Since the liberalization, privatization and globalization, the foreign investment in our country is booming. Share Market is a dear indicator of the developing trend prevailing in our country. Statistics reveal that the trade volume has been increasing continuously, coupled with the ups & downs which is a nature of share trading.
We are living in interlinked world. With growing volume of trade, it has become a necessity that people are aware of the intricacies of the web world.
The Indian broking industry is one of the oldest trading industries that have been around even before the establishment of the BSE in 1875. Despite passing through a number of changes in the post Liberalization period, the industry has found its way towards sustainable growth.
History of broking house in India:-
Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock).
In earlier times, buyers and sellers used to assemble at Stock Exchanges to make a transaction but now with the dawn of IT, most of the operations are done electronically and the stock markets have become almost paperless. Now, investors do not have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet.
A broker is a person or firm that facilitates trades between customers. A broker acts as a go between and, in doing so, does not assume any risk for the trade.
The broker does, however, charge a commission. A broking firm acts as an intermediary between NSE and Client.
What is NSE & BSE?
1. NSE (National Stock Exchange):-
The National Stock Exchange (NSE) is a stock exchange located at Delhi, India. It is the 9th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around US$1.59 trillion and over 1,552 listings as of December 2010. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India, and between them are responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalisation.
NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have taken a stake in the NSE As of 2006, the NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities. It is the second fastest growing stock exchange in the world with a recorded growth of 16.6%.
Markets:-
Currently, NSE has the following major segments of the capital market:
Equity
Futures and Options
Retail Debt Market
Wholesale Debt Market
Currency futures
Mutual Fund
Stock Lending & Borrowing
2. BSE (Bombay Stock Exchange):-
The Bombay Stock Exchange (BSE) is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was US$1.63 trillion as of December 2010, making it the 4th largest stock exchange in Asia and the 8th largest in the world. The BSE has the largest number of listed companies in the world.
As of December 2010, there are over 5,034 listed Indian companies and over 7700 scraps on the stock exchange, the Bombay Stock Exchange has a significant trading volume. The BSE SENSEX, also called "BSE 30", is a widely used market index in India and Asia. Though many other exchanges exist, BSE and the National Stock Exchange of India account for the majority of the equity trading in India. While both have similar total market capitalization (about USD 1.6 trillion), share volume in NSE is typically five times that of BSE.
BSE Index Cell carries out the day-to-day maintenance of all indices and conducts research on development of new indices. SENSEX is significantly correlated with the stock indices of other emerging markets.
Demat Account:-
The term Demat, in India, refers to a dematerialized account for individual Indian citizens to trade in listed stocks or debentures, required for investors by The Securities Exchange Board of India (SEBI). In a demat account, shares and securities are held electronically instead of the investor taking physical possession of certificates. A Demat Account is opened by the investor while registering with an investment broker (or sub broker). The Demat account number is quoted for all transactions to enable electronic settlements of trades to take place.
Access to the Demat account requires an internet password and a transaction password as well as initiating and confirming transfers or purchases of securities. Purchases and sales of securities on the Demat account are automatically made once transactions are executed and completed.
Objective of Demat System:-
India has adopted this system of electronic bookkeeping, eliminating the need for paper when shares or securities are held in electronic form. Before the introduction of the depository system by the Depository Act, 1996, the process of sale, purchase and transfer of shares was difficult and there was a high risk of loss.
Basics of Stock Market:-
Investing in equity involves purchasing shares of a company listed on a stock exchange. You can acquire these shares in two ways - either through the Primary Market, i.e., when a company makes an offer to issue its equity for the first time (this is called Initial Public Offering (IPO)) or through the secondary market, i.e. via a stock exchange. When you trade in equity through a stock exchange, you have to make use of the services of a brokerage firm, which acts as your agent whenever you buy or sell.
Equity is considered a high risk-high return investment avenue. This is because there is scope for considerable appreciation or loss of the capital that you invest, depending on various factors such as the performance of the company that you have invested in, general market conditions, the state of the economy, etc. However, it forms an integral part of any well-balanced portfolio, since it is at one end of the risk-return spectrum.
How should I decide whether equity investing is right for me?
Equity is a must for any well-balanced portfolio. So, irrespective of whether you are a high net worth investor or a small retail investor and irrespective of whether you have a large or timid appetite for risk, you must hold some portion of your assets in equity. This is because it is the only instrument that has the ability to truly deliver a high return, when held over a long period of time.
However, the amount of equity that you hold in your portfolio is a very subjective decision and will depend upon various factors. These include your investment objectives, time horizon and risk appetite. But as a general guideline, there’s a rule of thumb that states that to decide upon the proportion of your assets that should go into equities, reduce your age from 100 and that’s the proportion of your money which should be put in equities. The remaining can be invested in fixed income securities.
How should I study stocks before I make my selection?
Every investor must do some homework before investing money in equities…
• While recommendations and tips received from your broker, a friend, etc. may be the starting point of your selection, let it not be the only reason that makes you purchase a particular stock, even if these tips have come from ‘market experts’. Short list the shares that you want to buy on the basis of your investment objective, risk profile and the stock’s fundamentals.
• If you feel that the price of a stock is high, don’t purchase it. Buy stocks that you believe still have scope for appreciation.
• Don’t try to time your purchases. That could turn you into a speculator instead of an investor.
• Lastly, once you have purchased shares, if the business prospects of the company change to its detriment, get rid of the stock. Don’t hesitate to liquidate your portfolio before your target time horizon if circumstances lead you to believe that it’s necessary.
How do I know whether I am paying the right price for the stock?
There are various factors that determine the value of a stock. Understanding these will help you to pay a price that reflects the true value of a stock.
Demand and Supply:
In the short term, the basic economic theory of demand and supply determines a stock’s worth. So, when the demand for a stock exceeds its supply (that is, there are more buyers than sellers), its price tends to rise. And, when supply overtakes demand (that is, sellers exceed buyers), the stock loses value. However, these are short-term market trends, which tend to get evened out over a period of time. In the medium to long-term, a stock is driven by the company’s fundamental strength i.e. business potential, past performance, competence and credibility of its promoters and management, etc.
Growth potential:
Investors are willing to pay a premium for stocks of companies that have the potential to increase their revenues and net profits. The greater this growth potential, the higher the premium given to the stock. If a company proves that it is capable of sustaining growth, the market will continue to give it high valuations. And, that’s likely to be the major driver for stock valuations.
Fundamentals: A company’s growth outlook is linked to its business prospects and how well its management is capitalizing on the existing opportunities. The quality of a company’s management is crucial. So, pay attention to the management practices of a company and its level of corporate governance.
When should I buy to minimize my costs and sell to maximize the profits?
Buy low and sell high is the ultimate guide to successful stock investing. It is also the reverse of what many investors do, although they don’t intend to. They tend to buy high and sell low because they use price, and in particular, the price movement, as their only signal to buy or sell.
Investors are tempted to buy stocks that have shot up and are basking in the media spotlight just to get a part of the action. They jump at a stock that is already trading at a premium that’s how they buy high. Ironically, if a stock has had a good run up it may be time to sell, not buy (sell high).
On the flip side, when a stock price is falling, most investors may want to sell in a panic, although the company has not lost any intrinsic value and still remains a sound investment that’s how they sell low. In fact, when a stock’s price has fallen, it’s a great time to buy (buy low), if your research on the company suggests that it is a good long term buy.
Experienced traders can make money jumping in and out of a stock that’s caught the public’s attention, but it’s not a game for the inexperienced and it can definitely not be called ‘investing’, in the true sense of the word. There are risks involved and tax consequences that apply to such trading, along with other issues, which means that most investors should leave this tricky activity to short-term traders.
What is Asset Allocation?
Asset allocation means diversifying your money among different types of investment categories, such as stocks, bonds and cash. The goal is to help reduce risk and enhance returns.
This strategy can work because different categories behave differently, Stocks, for instance, offer potential for both growth and income, while bonds typically offer stability and income. The benefits of different asset categories can be combined into a portfolio with a level of risk you find acceptable.
Establishing a well-diversified portfolio may allow you to avoid the risks associated with putting all your eggs in one basket.
Right allocation for an investor:-
Asset allocation decisions involve tradeoffs among 3 important variables:
• Investors’ time frame
• Their risk tolerance
• Their personal circumstances
Edelweiss is one of the leading financial services company in India. Its current businesses include investment banking, securities and retail broking and investment management. The core inspiring thought of ideas creating wealth and values protecting it is translated into an approach that is led by entrepreneurship and creativity and protected by intellectual rigor, research and analysis. At Edelweiss you can build a personal relationship with our investment professionals. We see investing from your perspective, and offer recommendations based on your needs and preferences. To all the investors - From access to top research to investment guidance and portfolio planning, we offer it all!
Chairman, CEO and Founder of Edelweiss. Mr. Rashesh Shah has previously worked for ICICI (now ICICI Bank, India’s largest private sector financial conglomerate) where he handled a World Bank aided program for export- oriented projects. He was subsequently with Prime Securities as Head of Research. Mr. Shah’s relentless focus is on organization building and human capital development. He has been featured in a variety of publications, including The Far Eastern Economic Review, Business India, Business World and The Economic Times. Mr. Shah earned an MBA from the Indian Institute of Management, Ahmedabad and a Bachelor’s degree in Science from the University of Bombay.
Its Current Businesses Include:
• Investment Banking,
• Securities Broking, and
• Investment Management.
Edelweiss also provides a wide range of services to:
• Corporations,
• Institutional Investors
• High Net-Worth Individuals
Services offered by the company:
• Investment Banking.
• Institutional investment.
• Asset management.
• Wealth management.
• Private client brokerage.
• Insurance brokerage.
• Wholesale financing.
Various Products Offered by the Company:
• Products: Stocks, Derivatives, IPO, MF, Strategies
• Trading Accounts with different features: Trader, Investor
• Brokerage Plans: To suit needs of every client
• Model Portfolio based on comprehensive analysis of your investment objectives
• Advanced Data tools
• Customized investment Strategies
• Manage all asset classes under My Portfolio
• Financial Research on your fingertips
Objective of Study:-
1. To know the condition of equity market.
2. To know Pros and Cons involve in share trading.
Chapter- Research Methodology
“Research Methodology is the science of methods for conducting research work”
Research methodology is a systematic way, which consists of series of action steps, necessary to effectively carry out research and the desired sequencing to these steps.
• Formulating the objective of the study
• Designing the methods of data collection
• Selecting the sample plan
• Collecting the data
• Processing and analyzing the data
• Reporting the findings