A REPORT ON A STUDY ON INVESTOR’S PERCEPTION TOWARDS ONLINE TRADING
BY ANKEM LAKSHMI PRADEEP RELIGARE SECURITIES LTD
MATS School of Business & IT BANGALORE
2006-2008
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ACKNOWLEDGEMENT: The satisfaction that is generated by the successful completion of a task would remain unfulfilled without mentioning people who have encouraged and guided at every step toward the completion of the task. I express my sincere thanks to Prof. NVH Krishnan and
Prof.
Udayachandra, Deans of MATS School of Business and IT, Bangalore, for their valuable suggestions and help to prepare this project. I express my deep sense of gratitude to my external guide Mrs. Bernali & Mr.Dhimant (Manager online trading), Mr.vijay, mr.Tarique, Mr.pardeep, & Mr. Manish for offering me suggestions and help in successfully completing my project report. . He has been a constant source of inspiration and motivation. I wish to take this opportunity to express my deep sense of gratitude to Dr R K Panigrahi , MATS School of Business, Bangalore, for his invaluable guidance in this endeavor. I sincerely thank him for his suggestions and help to prepare this report I would like to express my sincere thank all the department heads, in-charge and the administrative staff of the organizations for giving me relevant information and support required to complete my study. I humbly acknowledge there is always some scope for further improvement and to that end sincerely I invite valuable suggestions of your by which my future assignments, projects could be benefited
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INTRODUCTION Constructive uses of new technologies have always contributed positively towards improving human life standards and the economy of a country .Such as online trading, in equity markets it increased trade volumes and number of investors trading in stock markets. Online trading was started in India in the year 1995,where a new system is formed which allows the investor to trade through an internet site where banks and demat accounts are electronically integrated .Such services are provided by many financial institutions like ICICI, Religare, HDFC, India bulls and so on.
Data Collection Methods: A)Primary Data – Interview will be collected with trading advisors, investors and company professionals and questionnaires will be collected from targeted customers. B)Secondary Data • Company records and reports • Magazines, journals, pamphlets, advertisements. • Standard reference textbooks •
Websites like nseindia.com and money control.com
The purpose of using the secondary data is to increase the accuracy of analysis. 1.5 PLACE OF THE STUDY The study was conducted in Bangalore.
Limitations to the study Getting appropriate response from the respondents Getting appointment from the investors. The study is limited to the curriculum.
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Literature Review “Marketing management 12e-Analysing consumer markets” by Philip Kotler states that perceptions are more important than reality and it affects the consumers actual behaviour.Perception is defined as the process by which an individual selects,organizes,and interprets information inputs to create a meaningful picture of the world. “Online stock trading in India: An empirical investigation” In 2007,Nidhi walia and Ravinder kumar’s research report examined the investor’s preference for traditional trading and online trading, investor’s perception on online trading and comparing current usage of online trading and offline trading. This study reveals that out of every 100 investors only 28 trade online, which points out a question as why investors were not able to realize the importance of technology in stock trading. Online trading has gained momentum from just 0.5% of total traded volumes 5 Years back, which now accounts for 5% of the total trading volume of approximately Rs 14000 Cr on NSE. Over the past 2 years, the value of all trades executed through internet on NSE has grown from less than Rs 100 cr in June 2003 to over Rs 700 Cr in June 2005. The major findings of the study are that Indian investors are more conservative, they do not change easily and indian traditional traders still choose brokers for trading ,whereas net traders are more comfortable with online trading for its transparency and complete control of the terminal. Understanding and managing customers perceptions
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In September 2006, “Effective executive” special edition speaks about understanding customers perception to get a distinctive competitive advantage in the market.
Internet trading in India is discussed in chapter 11,Dalal street journal’s stock market book, which highlights the introduction to online trading, advantages and disadvantages of it and value added services provided by online trading service providers. Trading: Trading is defined as buying and selling shares in stock exchange. There are two types of trading i.e. Online trading(via internet) and Offline trading(via broker or call). Online Trading: Online trading refers to trading via the internet .The onset of online trading changed the traditional value proposition of trading ,allowing online brokers to supply investors with rich ,interactive information in real time including market updates ,investment research and robust analytics. The result is an integrated trading experience that combines execution with interactive analysis shown by the growth of the online customer community from a mere 23000 average trades on NSE per day in a year 2000 to over 52000 average trades in 2002.
Advantages of Online trading : 1 Time:
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Customers can trade online with a real time basis and buying and selling of shares happens with a press of a button.
2 Flexibility: Customers can modify the placing orders according to the market movements. 3
Standardized Procedure: When the order is accepted by the exchange ,it will give pay-in and pay-out dates and customer can easily expect the cash or shares to be credited to his account.
4 One stop shop: Bank statements and transaction statements can be viewed at the click of a button. 5 Informed Research: Service providers carry stock analysis like intraday and EOD(End of day) technical charting which helps the customer to make right choices 6 Flexibility of timing Customers can place orders before start of a trading session. Disadvantages of Online Trading: 1 Limited Knowledge: In online terminal, investor can’t get customized expert advice, whereas in offline the broker gives suggestions according to investors strategy (i.e. short term or long-term) 2 Brokerage is high compared to offline.
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3 Privacy is less due to hacking scandals 4 Transactional errors due to technical problems Value added services 1 Trading in shares 1 Spot Trading: When an investor is looking at an immediate liquidity option . ‘Cash on spot’, money is credited to his bank a/c the same evening and not on the exchange pay-out date. This money can then be withdrawn from any of bank ATMs. 2 BTST: Buy today and sell tomorrow is a facility that allows investor to sell shares even one day after the buy order date ,without investor having to wait for the receipt of shares into his demat a/c. 3 Trading on NSE/BSE: Through some of the service providers, we can trade on both NSE and BSE 4 Margin Trading :Investor can trade an intra-settlement trading up to 4 times of the investor’s available funds ,wherein investor take long buy/short sell positions in stocks with the intention of squaring off the position within the same settlement cycle. 2 Investing in Mutual funds: Some of the major service providers bring the same convenience while investing in Mutual Funds as well as Hassle free and paperless investing. Once the investor place a request for investing in a particular fund, there are no manual process involved .Investor’s funds are automatically debited or credited while simultaneously crediting or debiting investors unit holdings. 3 Derivatives:
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Futures: Through online trading service providers, one can trade in index and stock futures on the NSE. In futures trading, investor takes buy/sell positions in index or stocks contracts having a long contract period of up to 3 months. Options: Through online trading service providers ,one can trade in index and stock options. 4 IPO’s Online: Investors could also invest in Initial Public Offers(IPO’s) online without going through the hassles of filling any application form/paperwork. They can get in-depth analysis of new IPO’s issues (Initial Public Offerings) that are likely to hit the market and analysis on these. IPO calendar ,recent IPO listings, prospectus/offer documents ,and IPO analysis are also provided. 5 Other services: Displaying indices of major world markets, nifty futures, daily share prices of all scrip’s ,monthly and yearly highs/lows of share prices are listed, technical charts of intraday and EOD(End of Day) are also provided. Company profiles, breaking news and snapshots of latest developments in the market are displayed in the website. The major internet service trading providers in the Indian markets are Religare, HDFC, ICICIdirect, Share khan and India bulls. The major comparative analysis parameters taken by customers are a/c opening charges, brokerage and annual charges. Scope for online Trading: “Profiling internet shoppers: A study of expected adoption of online shopping in India”, a research paper submitted by Darshan Parikh suggests that the continuous growth in the number of internet users and broadband subscribers, and
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the rapid pace of technological improvements and innovations also held the promise of greater acceptance of the digital medium by consumers. Understanding online Investors perception is a major marketing challenge in financial service sector because lack of awareness in the minds of customers about the emerging financial service products, frequent scams , privacy and noncompliance of rules etc. in the financial service industry is resulting in the loss of confidence of the investors. Interference of regulatory bodies like SEBI and often changes in the guidelines and policies of these regulatory bodies. Confused government policies with regarding to tax and legal issues also affect marketing of the financial products. CRM(Customer Relationship Management)-a digital perspective: “CRM(Customer Relationship Management)-a digital perspective” by Dr S V Gole discusses about e-CRM, critical aspects of CRM and advantages of applying CRM digitally. CRM provides means and methods to enhance the experience of the individual customers so that they will remain loyal and provides technical and functional tools for customer identification , capturing and retention. e-CRM helps internet trading service providers in segmenting, targeting and positioning the market. It also helps in identifying potential traders and provide more value added services like flexible brokerage charges and giving more exposure in the investments. The Characteristics of online Investors: This article is taken in “Journal of Behavioral science” submitted by Konnari Uchida. It explores the characteristics of Japanese online investors. Main findings of the research are young men are more likely to engage in online trading ,employed investors trade online more frequently ,implying that proximity to the information network of the workplace investor decisions to trade online. Japanese online investors prefer capital gains, do not prefer low-volatility stocks, refer to 10
chart data when making investing decisions more frequently , and tend to choose stocks to buy and sell on their own.
OBJECTIVES OF THE STUDY The main objectives of the study are: To study investor’s perception on online trading like safety regarding
online frauds ,transaction errors and speed/connectivity problems. To identify innovative value added services To identify STP(Segmentation, Targeting and Positioning) strategy for
online trading To study a comparative analysis on the services provided by major online
trading service providers in the market. To identify customer rankings on user friendliness of online terminal To help the company in building a strategy for their online services. To study CRM aspects in online trading services.
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FINANCIAL SERVICES SECTOR INTRODUCTION: Financial services are vital tools of machinery for economy and they lubricate the wheels of economic development. In advanced nations, giant economies like USA,UK,Japan,etc..,.major portion of the national income is accounted from the services sector and minimum from the product sector. Indian economy has undergone a sea change in its structure, policy and regulation, due to liberalization and globalization, since 1991.Markets for services are no exception to this. The contribution of service sector (including financial services sector) for GDP has increased to 51% in 2003,from 36 % in 1980.The financial service sector include factoring, merchant banking, venture capital ,etc. Financial services like banking, merchant banking, factoring, Insurance, Venture capital ,act as vital machinery of an economy. These financial services that facilitate, financial transactions of individuals and institutional services resulting in their resources allocation activities through time. The sector that deals with such financial services is known as “financial services sector”. Once the economy crosses the subsistence level, financial services become more prominent and important to that economy. Financial services in current days are emerging as a crucial industry world over and is termed as a sun rise industry. The services offered by this sector not only raise the required funds, but also lead to the efficient management of funds.Today,the financial service products, as turned out 13
to by financial services industry are innovative and paving ways for vivid opportunities for further economic development.
Share of service sector in GDP 60
% of share
50 40 India
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China
20 10 0 1980
1990
2000
2001
2002
2003
Year
Emergence of financial services industry in India Services sector industry has started gaining large scale momentum since the process of liberalization in 1991.Prior to its contribution to GDP was around 40 % ,but since 1992 it has been grown rapidly and reached a value of 51 % GDP.Contribution of service sector to GNP in advanced counties like USA is as high as 75%.In India many innovative financial products and services like credit cards,ATMs,consumer finance, venture financing have been emerging since 1980s And these financial services have become an integral component of Indian financial system. This integration is largely attributed to the liberalization of economic policies and deregulation that led to economic changes ,development and contemporary evolution of capital market and financial dis-intermediation. The far-reaching change in the Indian economy since liberalization in the early 1990s have had a deep impact on the Indian financial sector. The
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financial sector has gone through a complex and sometimes painful process of restructuring, capitalizing on new opportunities as well as responding to new Challenges. During the last decade, there has been a broadening and deepening of financial markets. Several new instruments and products have been introduced. Existing sectors have been opened to new private players. This has given a strong impetus to the development and modernization of the financial sector. New players have adopted international best practices and modern technology to offer a more sophisticated range of financial services to corporate and retail customers. This process has clearly improved the range of financial services and service providers available to Indian customers. The entry of new players has led to even existing players upgrading their product offerings and distribution channels. This continued to be witnessed in 2002-03 across key sectors like commercial banking and insurance, where private players achieved significant success. These changes have taken place against a wider systemic backdrop of easing of controls on interest rates and their realignment with market rates, gradual reduction in resource pre-emption by the government, relaxation of stipulations on concessional lending and removal of access to concessional resources for financial institutions. Over the past few years, the sector has also witnessed substantial progress in regulation and supervision. Financial intermediaries have gradually moved to internationally acceptable norms for income recognition, asset classification, and provisioning and capital adequacy. This process continued in 2002-03, with RBI announcing guidelines for risk-based supervision and consolidated supervision. While maintaining its soft interest rate stance, RBI cautioned banks against taking large interest rate risks, and advocated a move towards a floating rate interest rate structure. The past decade was also an eventful one for the Indian capital markets. 15
Reforms, particularly the establishment and empowerment of securities and Exchange Board of India (SEBI), market-determined prices and allocation of resources, screen-based nation-wide trading,dematerialisation and electronic transfer of securities, rolling settlement and derivatives trading have greatly improved both the regulatory framework and efficiency of trading and settlement. On account of the subdued global economic conditions and the impact on the Indian economy of the drought conditions prevailing in the country, 2002-03 was a subdued year for equity markets. Despite this, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) ranked third and sixth respectively among all exchanges in the world with respect to the number of transactions. The year also witnessed the grant of approval for setting up of a multicommodity exchange for trading of various commodities.
The US$ 28 billion Indian financial sector has grown at around 15 per cent and has displayed stability for the last several years, even when other markets in the Asian region were facing a crisis. This stability was ensured through the resilience that has been built into the system over time. The financial sector has kept pace with the growing needs of corporate and other borrowers. Banks, capital market participants and insurers have developed a wide range of products and services to suit varied customer requirements. The Reserve Bank of India (RBI) has successfully introduced a regime where interest rates are more in line with market forces. Financial institutions have combated the reduction in interest rates and pressure on their margins by constantly innovating and targeting attractive consumer segments. Banks and trade financiers have also played an important role in
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promoting foreign trade of the country. Here we will study the three industries with respect to India.
INSURANCE AND INDIA
The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National
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Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
Key Players in insurance Sector of India Reliance General Insurance Company Ltd Life Insurance Corporation of India HDFC Insurance Kotak Mahindra ICICI Prudential SBI Life Insurance Company Ltd Oriental Insurance Company Ltd National Insurance Company Ltd Bajaj Allianz Life Insurance Company Ltd
MUTUAL FUNDS AND INDIA Let us start the discussion of the performance of mutual funds in India from the day the concept of mutual fund took birth in India. The year was 1963. Unit Trust of India invited investors or rather to those who believed in savings, to park their money in UTI Mutual Fund. For 30 years it goaled without a single second player. Though the 1988 year saw some new mutual fund companies, but UTI remained in a monopoly position. The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders was accustomed with guaranteed high returns by the beginning of liberalization of the industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the preparedness of risks factor after the liberalization. The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me concentrate about the performance of mutual funds in India through figures. From 18
Rs. 67bn. the Assets Under Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance by April 2004. It rose as high as Rs.1,540bn. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative investments. There were rather no choice apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary market. The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the losses by disinvestments and of course the lack of transparent rules in the whereabouts rocked confidence among the investors. Partly owing to a relatively weak stock market performance, mutual funds have not yet recovered, with funds trading at an average discount of 1020 percent of their net asset value. The supervisory authority adopted a set of measures to create a transparent and competitive environment in mutual funds. Some of them were like relaxing investment restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual funds to launch pension schemes. The measure was taken to make mutual funds the key instrument for long-term saving. The more the variety offered, the quantitative will be investors. At last to mention, as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time, more and more people will be inclined to invest until and unless they are fully educated with the dos and don’ts of mutual funds.
Key Players in Mutual Funds Sector in India
ABN AMRO Mutual Fund. Birla Sun Life Mutual Fund. Bank of Baroda Mutual Fund (BOB Mutual Fund). . ING Vysya Mutual Fund. Prudential ICICI Mutual Fund. Sahara Mutual Fund. State Bank of India Mutual Fund. Tata Mutual Fund.
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DEMAT ACCOUNT AND INDIA
There are quite a few institutions that are directly and/or indirectly connected with dematerialized operations of securities. Understanding the inter-linkages and functional responsibilities of these institutions will help us to have correct and holistic perspective about functioning of dematerialization. The institutions connected with demat operations include; a) Depositories, b) Stock Exchanges (SEs), c) Clearing Corporations (CCs) / Clearing Houses (CHs), d) Depository Participants (DPs), e) Registrars and Transfer Agents (RTAs). Both the depositories NSDL and CDSL are primarily promoted by the two leading stock exchanges viz., National Stock Exchange of India Ltd (NSE) and The Stock Exchange, Mumbai (BSE) respectively. Besides, there are many other institutional promoters in both the depositories. Both are registered as organizations-for-profit and professionally managed. Inter-connectivity between these two depositories has been established, thus DPs and investors can transfer smoothly their shares from one account to another between the depositories. Most of the stock exchanges are connected with the depositories to provide trading in dematerialization segment. Eventually, all the exchanges will be connected to either of or both the depositories. Resultantly, functioning of exchanges altered with the commencement of depositories; shorter trade cycles, negligible bad-deliveries, immediate transfer of beneficial ownership and lower transaction costs. An indepth study on transaction cost for equity shares in India by Raju (2000) revealed substantial decrease in transaction costs and observed that the dematerialization as one of the important factor for this trend. Functioning of clearing corporations / clearing houses materially changed after the entry of depositories; reduced manpower requirements and faster clearing operations. It also helped them to diversify into related businesses such as on-line stock lending. Depository participants are the new commercial intermediaries that sprang up. They interpose between investor and depository. It can be stated that they are the back-bone for the success of dematerialization. RTAs facilitate dematerialisation and rematerialisation of shares. Major Players In Online Trading Brokerage Houses in India ICICI Securities Ltd. Kotak Securities Ltd. India bulls Financial Services Limited India Infoline IL&FS investmart Limited SSKI Ltd. 20
Motilal Oswal Securities
Religare Securities Ltd. Geojit Securities HDFC Securities Online Trading: Indian scenario In the Indian context ,online trading can be rightly called as a recent phenomenon ,which took root with the change of century i.e. April 2000,and even till day online trading is not much popular among investors for which a list of factors can be blamed. This fact is more clear from the information available that where number of stocks exchanges in India has grown from 7 exchanges in 1946 to total 23 exchanges till 2005,only 2 stock exchanges are providing online share trading .Indian stock exchanges have started adopting technology because it provides the necessary impetus for the organization to retain its competitive edge and ensure timeliness and satisfaction in customer service. Market share in Online Trading
Others 24% ICICIdirect ICICIdirect 50%
India Bulls Others
India Bulls 26%
Online trading has gained momentum from just 0.5% of total traded volumes 5 Yrs back, which now account for 5% of total trading volume of approximately Rs 14000 Cr. On Once-Over the past two years ,the value of all trades executed through internet on NSE has grown from less than Rs 100 Cr in June 2003 to over Rs 700 Cr in June 2005.Online trading is growing by 150 % per annum.Now NSE has 108 registered brokers and 1.053 million internet trading subscribers. However mainly 5 companies control 90 % of the market in Internet trading.ICICIdirect.com has around 50 % market share ,whereas India Bulls hold 26% share ,other dominant players are Kotak securities and Share Khan .ICICI has 21
been able to gain its dominant presence in Internet trading because they have strong connectivity of stock trading,demat account, bank account ,etc.ICICIDirect has recorded 6,75,000 registered customers and has become 10th largest online broker in US whereas share khan and 5paisa are loosing their way.
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Company profile Religare Securities Ltd. Religare Securities Ltd is a Ranbaxy promoter group company, is one of India’s largest and fastest growing integrated financial services institutions. The company offers a large and diverse bouquet of services ranging from equities, commodities, insurance broking, to wealth advisory, portfolio management services, personal finance services, Investment banking and institutional broking services. The services are broadly clubbed across three key business verticals- Retail, Wealth management and the Institutional spectrum. Religare Enterprises Limited is the holding company for all its businesses, structured and being operated through various subsidiaries. Religare’s retail network spreads across the length and breadth of the country with its presence through more than 900 locations across more than 300 cities and towns. Having spread itself fairly well across the country and with the promise of not resting on its laurels, it has also aggressively started eyeing global geographies. Vision
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To build Religare as a globally trusted brand in the financial services domain and present it as the ‘Investment Gateway of India’ Mission Providing financial care driven by the core values of diligence and transparency.
Brand Essence Religare is driven by ethical and dynamic processes for wealth creation KEY PERSONS Mr. Sunil Godhwani - CEO & Managing Director, Religare Enterprises Limited Mr. Shachindra Nath - Group Chief Operating Officer, Religare Enterprises Limited Mr. Anil Saxena - Group Chief Financial Officer, Religare Enterprises Limited
SERVICES RENDERED by Religare Securities Ltd:
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Lending Services
Equity & Derivative Trading Institutional Distribution Services
Insurance Broking
Depository Services
Private Equity Commodities Broking Services
Internet Trading
Investment Banking
Wealth Management Services
International Equity & Commodities
EQUITY AND DERIVATIVE TRADING: The term equity derivative describes a class of financial instruments whose value is at least partly derived from one or more underlying equity securities. Market participants trade equity derivatives in order to transfer or transform certain risks associated the underlying. Options are by far the most common equity derivative, however there are many other types of equity derivatives that are actively traded. INSTITUTIONAL DISTRIBUTON SERVICE The Client Service Manager will be responsible for all aspects of client reporting for institutional investment clients and industry organizations. The candidate will also be responsible for client servicing which includes working with clients, internal groups and UK based portfolio management. DEPOSITORY SERVICES Depository is an organisation which holds your securities in electronic (also known as ‘book entry’) form, in the same manner as a bank holds your money. Further, a
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depository also transfers your securities without actually handling securities, in the same day as a bank transfers funds without actually handling cash.
COMMODITIES BROKING SERVICES Commodity Broking Services specialises in offering online accounts to clients wishing to deal in the Foreign Exchange, Bullion, Futures, Commodities, CFDs and International/Domestic Equities markets all from the one account. Commodity Broking Services specialise in offering commodity price risk management to agricultural producers and end users. WEALTH MANAGEMENT SERVICES Wealth management services are provided by banks, professional trust companies, and brokerages. For those with sizeable assets [usually over $500,000], professional wealth management can help you plan your estate or invest your assets based on personal criteria and financial goals. INVESTMENT BANKING Investment Banking is facing a strangle of challenges today – lower margins, compliance issues, workflow disconnects and data redundancies. Investment banks need a partner who can work in market-time to address all these business challenges. INSURANCE BROKING The term Insurance Broker became a regulated term under the Insurance Brokers (Registration) Act 1977which was designed to thwart the bogus practices of firms holding themselves as brokers but in fact acting as representative of one or more favoured insurance companies. Insurance brokerage is largely associated with general insurance (car, house etc.) rather than life insurance, although some brokers continued to provide investment and life insurance brokerage until the onset of more onerous Financial Services Authority regulation in 2001. Insurance broking is carried out today by many types of organizations including traditional brokerages, Independent Financial Advisers (IFAs) and telephone or web-based firms. 26
SWOT ANALYSIS OF RELIGARE STRENGTHS • It is the Ranbaxy promoter group company. • It has a good research team. •
No Annual maintenance charges for their online broking services.
WEAKNESS • It has changed its name from FORTIS to RELIGARE where the maximum Customers don’t know about this.
OPPORTUNITY • Financial services sector in India is growing by leaps and bounds. •
In the up coming days RELIGARE is coming up with their own mutual fund and Banking.
THREATS • Cut-throat competition from corporate big houses like Reliance and ICICI • As they have changed the name of their company the customer still did not know about RELIGARE.
Products offered by Religare:
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Religare products are well known for Online Trading ,Offline Trading, Portfolio Management Services , Commodity Trading and Intuitional Broking services. 1.Online Trading in Equity Markets: Online Trading products in Equity markets are named as RACE, which is divided into three segments ,RACE-basic, lite and Pro. Features of RACE products: Fixed Brokerage and Exposure Call center support provided for trading, back-office and IT support Minimum branch level support Fully automated processes Feature-rich software Interest on cash margin deposited with Religare Target Group – Mass Market USP o Interest on cash margin deposited with Religare o Better quality product at competitive brokerage
Offline Trading Products in Equity markets are named as R-ALLY,which is divided into R-ALLY Classic Trade over the phone R-ALLY Lite A browser based internet trading facility R-ALLY Pro An application based diet odin(software) over Internet Features of R-ALLY products: Flexible brokerage & exposure No call center support Full branch level support High level of manual intervention for flexible processes Basic software No interest on cash margin Target Group – High Volume Traders. 2. DEPOSITORIES: 28
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Religare is among the few major Depository Participants holding securities worth more than Rs.6000 crores under its management. RSL provides depository services to investors as a Depository Participant with NSDL and CDSL.
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The Depository system in India links issuers, depository participants, depositories National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and clearing house / clearing corporation of stock exchanges. These facilitate holding of securities in dematerialized form and securities transactions are processed by means of account transfers.
3. PORTFOLIO MANAGEMENT: SCHEMES: Panther The Panther portfolio aims to achieve higher returns by taking aggressive positions across sectors and market capitalizations. It is suitable for the “High risk high return” investor with a strategy to invest across sectors and take advantage of various market conditions. Tortoise The Tortoise portfolio aims to achieve growth in the portfolio value over a period of time by way of careful and judicious investment in fundamentally sound companies having good prospects. The scheme is suitable for the “Medium Risk Medium Return” investor with a strategy to invest in companies which have consistency in earnings, growth and financial performances. Elephant The Elephant portfolio aims to generate steady returns over a longer period by investing in securities selected only from BSE 100 and NSE 100 index. This plan
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is suitable for the “Low Risk Low Return” investor with a strategy to invest in blue chip companies, as these companies have steady performance. Caterpillar The Caterpillar portfolio aims to achieve capital appreciation over a long period of time by investing in a diversified portfolio. The investment strategy would be to invest in scrips which are poised to get a re-rating either because of change in business, potential fancy for a particular sector in the coming years/months, business diversification leading to a better operating performance, stocks in their early stages of an upturn or for those which are in sectors currently ignored by the market. 4. INSTITUTIONAL BROKING SERVICES The mission of this division is to institutionalize and implement a process driven approach to cater to the needs of leading corporate houses and institutions. The division would like to be seen as a one stop investment gateway and knowledge repository for its clients servicing their unique and sophisticated needs. The division is structured as a separate SBU and is housed out of Mumbai, manned by a small yet fleet footed and extremely skilled group of top notch professionals drawn from the best in the industry.
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