PROJECT REPORT ON

“ONLINE TRADING”
SUBMITTED TO THE
UNIVERSITY OF MUMBAI
IN THE PARTIAL FULFILLMENT OF THE DEGREE
B.COM (ACCOUNTING & FINANCE)

SUBMITTED BY:
VARSHA DINDAYAL GUPTA
T.Y.BAF
ACADEMIC YEAR: 2024-25
PROJECT GUIDE:
ASST. PROF. SEJAL V. PANCHAL
M.COM (ADVANCED ACCOUNTANCY)

SUBMITTED TO:
UNIVERSITY OF MUMBAI

SONOPANT DANDEKAR ARTS, V.S. APTE COMMERCE AND M.H.

MEHTA SCIENCE COLLEGE, PALGHAR DIST: PALGHAR PIN:
401404
UNIVERSITY OF MUMBAI
 PROJECT REPORT ON
“ONLINE TRADING”
SUBMITTED TO THE
UNIVERSITY OF MUMBAI
IN THE PARTIAL FULFILLMENT OF THE DEGREE
B.COM (ACCOUNTING & FINANCE)

SUBMITTED BY:
VARSHA DINDAYAL GUPTA
T.Y.BAF
ACADEMIC YEAR: 2024-25
PROJECT GUIDE:
ASST. PROF. SEJAL V. PANCHAL
M.COM (ADVANCED ACCOUNTANCY)

SUBMITTED TO:
UNIVERSITY OF MUMBAI

SONOPANT DANDEKAR ARTS, V.S. APTE COMMERCE AND M.H.

MEHTA SCIENCE COLLEGE, PALGHAR DIST: PALGHAR PIN:
401404
UNIVERSITY OF MUMBAI
 DECLARATION

I, VARSHA DINDAYAL GUPTA, A STUDENT OF SONOPANT DANDEKAR

ARTS, V.S. APTE COMMERCE AND M.H. MEHTA SCIENCE COLLEGE,
PALGHAR DIST: - PALGHAR, PIN: - 401 404 STUDYING IN T.Y.BAF
HEREBY DECLARE THAT I HAVE COMPLETED THIS PROJECT ON
“ONLINE TRADING” DURING THE ACADEMIC YEAR 2024-25. THE
INFORMATION SUBMITTTED IS TRUE AND ORIGINAL TO THE BEST OF
MY KNOWLEDGE.

DATE: SIGNATURE OF STUDENT

PLACE: PALGHAR
 CERTIFICATE

I, ASST. PROF. SEJAL V. PANCHAL, HEREBY CERTIFY THAT VARSHA

DINDAYAL GUPTA OF SONOPANT DANDEKAR ARTS, V.S. APTE
COMMERCE AND M.H. MEHTA SCIENCE COLLEGE, PALGHAR DIST: -
PALGHAR, PIN: - 401 404 OF T.Y.BAF HAS COMPLETED HIS / HER
PROJECT ON “ONLINE TRADING” DURING THE ACADEMIC YEAR
2024-25. THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO
THE BEST OF MY KNOWLEDGE.

ASST. PROF. SEJAL V. PANCHAL SIGNATURE OF THE

SIGNATURE OF PROJECT GUIDE PRINCIPAL OF THE COLLEGE

ASST. PROF. MAQSOOD MEMON SIGNATURE OF

SIGNATURE OF CO-ORDINATOR EXTERNAL EXAMINER

 ACKNOWLEDGEMENT

If words are considered as a symbol of approval and token of appreciation, then let
the words play the heralding role expressing my gratitude. My successful
completion of this project report involved more than just my desire to earn a valued
degree working on this project has presented me with many insights and challenges.
I would like to thank the University of Mumbai for introducing an Accounting and
Finance course, thereby giving its students a platform to abreast with changing
business scenario, with the help of theory as a base and practical as a solution. I am
also thankful to the management of Sonopant Dandekar Arts, V.S. Apte Commerce
and M.H. Mehta Science College of Palghar for making all the facilities available
and espousing the cause of the research. I would like to thank our honourable
principal Dr. Kiran Save.

I would like to express my earnest gratitude to Asst. Prof. Sejal V. Panchal for his
superlative guidance and unflinching support throughout the project work. No
development would have been feasible had it not been for their excellent
supervision, constant encouragement and careful perusal, in completion of the
project successfully.

Last but not the least, I would like to thank my parents & teachers for giving the
best education and friends for their support and feelings without which this project
would not have been possible. Many others, without whose invaluable help and
expert advice this project would not have been the same ought to be cited.

With the completion of my project entitled “ONLINE TRADING”

-VARSHA D. GUPTA
 INDEX

SR. CONTENT PAGE

NO. NO.
1. INTRODUCTION 1-18

2. TYPES OF TRADING 19-39

3. TYPES OF CHART PATTERNS 40-43

4. RESEARCH METHODOLOGY 44-46

5. OVERVIEW OF ONLINE TRADING 47-51

6. REVIEW OF LITERATURE 52-54

7. DATA ANALYSIS & INTERPRETATION 55-58

8. FINDINGS 59-61

9. SUGGESTIONS 62-63

10. CONCLUSION 64-66

11. BIBLIOGRAPHY 67-68

12. ANNEXUER 69-78

 1: INTRODUCTION

Online trading has revolutionized the way individuals and institutions

participate in financial markets, and India is no exception. Over the past two
decades, the advent of the internet, technological advancements, and regulatory
reforms have transformed the Indian financial landscape, making online
trading accessible to millions of retail investors. Today, online trading is not
just a tool for seasoned investors but also a gateway for beginners to explore
opportunities in stocks, commodities, currencies, and more.

1.1 THE EVOLUTION OF ONLINE TRADING IN INDIA:

The journey of online trading in India began in the late 1990s with the
introduction of electronic trading platforms by the Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE). Before this, trading was
conducted through open outcry systems, which were time-consuming and
lacked transparency. The shift to electronic trading brought efficiency, speed,
and transparency, laying the foundation for online trading.

The real breakthrough came in the early 2000s when internet penetration
increased, and brokerage firms started offering online trading platforms. This
allowed investors to trade from the comfort of their homes or offices,
eliminating the need for physical presence on trading floors. The Securities and
Exchange Board of India (SEBI), the regulatory body overseeing the securities
market, played a pivotal role in ensuring fair practices and investor protection,
further boosting confidence in online trading.

1.1.1 Why Online Trading is Popular in India?

1. Accessibility and Convenience:

Online trading platforms have made it easy for anyone with a smartphone
or computer and an internet connection to participate in financial markets.
Investors can trade anytime, anywhere, without relying on brokers or
intermediaries.

1
2. Lower Costs:
Traditional trading involved high brokerage fees and hidden charges.
Online trading platforms offer competitive brokerage rates, making it
cost-effective for retail investors.

3. Transparency and Control:

Online trading provides real-time access to market data, charts, and
research tools, enabling investors to make informed decisions. Investors
have full control over their trades, from placing orders to monitoring
portfolios.

4. Diverse Investment Options:

Online trading in India is not limited to stocks. Investors can trade in
derivatives, commodities, currencies, mutual funds, and even
cryptocurrencies through various platforms.

5. Educational Resources:
Many online trading platforms offer educational resources, tutorials, and
demo accounts, helping beginners learn the ropes before diving into live
trading.

1.1.2 Key Players in Indian Online Trading:

1. Stock Exchanges:
The NSE and BSE are the two primary stock exchanges in India where
most of the trading activity takes place. They provide the infrastructure
for buying and selling securities.

2. Brokerage Firms:
Brokerage firms like Zerodha, ICICI Direct, HDFC Securities, and Share
khan act as intermediaries between investors and the stock exchanges.
They offer trading platforms, research tools, and customer support.

3. Regulatory Bodies:
SEBI is the primary regulator overseeing the securities market in India. It
ensures fair practices, protects investor interests, and promotes market
transparency.

4. Retail Investors:
The rise of online trading has empowered retail investors, who now form
a significant portion of the market participants. Platforms like Groww and
Upstox have made it easier for millennials and first-time investors to enter
the market.

2
1.1.3 How Online Trading Works in India?

1. Opening a Demat and Trading Account:

To start trading online, an investor needs to open a Demat
(Dematerialized) account and a trading account with a registered broker.
The Demat account holds securities in electronic form, while the trading
account is used to place buy/sell orders.

2. Choosing a Trading Platform:

Investors can choose from a variety of trading platforms offered by
brokers. These platforms provide tools for technical analysis, real-time
market data, and order execution.

3. Placing Orders:
Investors can place different types of orders, such as market orders (executed
immediately at current prices) or limit orders (executed at a specified price).
Advanced orders like stop-loss and take-profit help manage risk.

4. Monitoring and Managing Portfolios:

Online trading platforms allow investors to monitor their portfolios in real-
time, track performance, and make adjustments as needed.

1.1.4 Challenges in Online Trading in India:

Despite its popularity, online trading in India faces certain challenges:

 Lack of Financial Literacy: Many retail investors lack the knowledge and
skills to make informed trading decisions, leading to losses.

 Market Volatility: The Indian stock market is influenced by global events,

economic policies, and geopolitical factors, making it unpredictable.

 Cybersecurity Risks: Online trading platforms are vulnerable to

cyberattacks, which can compromise sensitive investor data.

Online trading has democratized access to financial markets in India,

empowering individuals to take control of their investments. While it offers
numerous opportunities, it also comes with risks. Investors must equip
themselves with knowledge, adopt sound risk management practices, and stay
updated with market trends to succeed in the dynamic world of online trading.
As India continues to embrace digital transformation, online trading is set to
play an even more significant role in shaping the country's financial future.

3
 1.2 HISTORY OF ONLINE TRADING IN INDIA:

Online trading in India actually began way back in the late 1990s with the
likes of ICICI Direct and Sharekhan among the early pioneers in the online
trading business. The online trading business has traversed a long way and it is
gradually becoming the default mode of trading in the Indian markets. More
and more retail and HNI investors are now shifting to the online trading mode
due to the benefits and convenience that it offers.

How did online broking evolve in India over the years?

If you look at online trading in India, there are 4 distinct phases that it has gone
through.

 FIRST PHASE (1999 till about 2004)

The first phase was the rise of the bankers / brokers where the client deposit
worked as a float to the bank and hence the entire online booking model made
a lot of sense for the bank. That is how the likes of ICICI, Kotak, HDFC, and
SBI among others embarked on this online trading. This phase lasted from 1999
till about 2004.

 SECOND PHASE (brokers investing in infrastructure)

The second phase involved brokers investing in infrastructure as they realized
that online broking was the way ahead. The introduction of STT added a new
layer of cost to the customers and brokers had to make efforts to reduce the
costs. This was the second big phase when most of the full-service brokers
came into online broking in a big way.

 THIRD PHASE (evolution of device)

The third phase started post the financial crisis of 2008. That was the time smart
phones came into the market with the likes of Apple and Samsung dominating
our communication ecosystem. Now, online trading did not require a PC but
could be conducted on the move from your mobile smartphone itself.

 FOURTH PHASE (enter of low-cost brokers)

The fourth phase was, perhaps, the biggest shift in online broking when low-
cost brokers (discount brokers) offered only the online platform but offered
extremely low rates of brokerage. This was a no-frills model and it gave the
real big boost to online trading. Combined with the cheaper and more efficient
smartphones, low-cost booking was a force multiplier for online trading.

4
1.3 CONCEPTUAL FRAMEWORK:

“On-line trading” is broadly defined as a trading mechanism where investors

place orders and confirm trading results via electronic communication
channels, such as the Internet, mobile phones, and Personal Digital Assistant
(PDA). The whole process of securities transactions, from order placement and
routing, order execution, to trade confirmation, is fully automated, thus
enabling the investors who have placed orders to confirm their trading results
within a few seconds.

1.3.1 How Online Trading Works?

Most of the investment in stock markets nowadays for retail investors

happens online. Online trading as the name suggests is buying and selling of
financial instruments online.

For Example:

Just compare it with your savings account; when you see your savings
statement you see the net balance in your account – but you do not have that
cash physically. Similarly, if you buy 40 shares of Infosys and 15 shares of
Reliance Communications and then you sell 10 shares of Infosys and buy 5
more shares of Reliance Communications over a month; at the end of the month
your statement will show a net balance of 30 shares of Infosys and 20 shares
of Reliance Communications without you having either bought or sold these
shares physically.

1.3.2 Components of a Trading Account

An online trading account is made up of three components, these are the:

1. Savings Account:
The savings account is linked to the trading account. So when you want to
buy online – the money from your savings account is used to make the
purchase and in case you sell online then the proceeds from the transaction
are directly credited to your savings account
.

5
2. Demat Account:
The demat account is the account which reflects the balance of the various
instruments you hold electronically. In case you have physical shares, you
can send them to the respective company registrar and get them
dematerialized (converted to electronic form). These dematerialized shares
will also reflect in your account even if you have not bought them online.

3. Trading Account:
The third component is the actual trading account which provides you a
platform for trading. It is an agreement that you have with a portal of your
choice so that you can use their platform for trading in the primary and the
secondary market. The type of account that you get will vary according to
the portal you choose; some like 5paisa.com do not have a savings account
of their own, so they allow you to link your savings account from HDFC,
ICICI, CITI Bank etc while ICICI and AXIS Bank offer you all three
accounts under one umbrella.

1.3.3 Opening a Trading Account:

For opening a trading account, the first thing that you will have to do is
choose a portal that you want to register yourself with. Here the choice is huge
which can be a vice and a virtue as well. The large choice helps you in getting
good rates and a user-friendly portal but at the same time trying to find a safe
and reliable choice can be a daunting task.

Most private and public sector banks offer this service and some NBFCs
(Non-Banking Finance Company) also do it. You need to do your homework
well before you make your choice. The service providers listed below are
known to be amongst the best in the market and are market leaders in terms of
volume of the total business

Most popular names:

a. ICICI Direct.com from ICICI Bank

b. India bulls
c. Kotak Securities from the Kotak Mahindra Group
d. Sharekhan.com
e. HDFC Securities from HDFC Bank).

6
 You would be required to comply with a set of guidelines for account
opening. These are more or less similar irrespective of the financial institution
and are laid down by SEBI (Securities Exchange Board of India) which is the
governing body for stock markets, depositories and depository.

Documents required for account opening include:

 PAN Card
 Identity Proof
 Proof of Residence
 Photograph

Apart from this you will also require an internet connection and some
basic knowledge about markets before you start trading. Most sites offer tips
and tutorials online so these can help you in familiarizing yourself to the world
of trading. All the sites also have helpline numbers listed and the address for
your nearest branch as well; you could choose to visit the branch or ask for a
representative to visit you to complete the account opening formalities.
Alternatively, you could fill in the form online and a representative will visit
you to collect the required documents.

How Much Do I Pay?

Again, this factor will vary with the service provider you choose. There is a
onetime cost which is the account opening cost and there is recurring cost
which is based on the volume of your transaction.

What all Can I Buy Online?

Below mentioned is a list of what all you can buy through your online trading
account. Please remember each bank will not offer all products so you must
check exactly what all you can do with your account before you open one.

7
Reliance money offers the largest range of products that you can purchase
online.

o Stocks
o Initial Public Offers (again stocks, etc)
o Mutual Funds
o Government of India Bonds
o Postal Savings Schemes
o General Insurance
o Life Insurance
o Derivatives Trading
o Commodity Trading

8
 1.4 STOCK MARKET

The stock market is concerned with the public market meant for issuing,
purchasing, and selling stocks that trade over the counter or on a stock
exchange. A stock market, equity market, or share market is the aggregation of
buyers and sellers of stocks (also called shares), which represent ownership
claims on businesses; these may include securities listed on a public stock
exchange, as well as stock that is only traded privately. Stock markets have an
impact on economic activity through the creation of liquidity. The liquid
financial market was an important enabling factor behind most of the early
innovations that characterised the early phases of the Industrial Revolution.
Companies enjoy permanent access to capital raised through equity issues. By
facilitating longer-term and more profitable investments, liquid markets
improve the allocation of capital and enhance the prospects for long-term
economic growth.

The BSE is the older stock market but the NSE is the largest stock
market, in terms of volume in India. Both exchanges compete for the order
flow that leads to reduced costs, market efficiency, and innovation. Now the
BSE is measured as the world’s 11th-largest stock exchange, and the market
capitalization is likely to be around $1.7 trillion. The market capitalization of
the NSE is estimated to be over $1.65 trillion. The financial marketplace in
India is a thriving and developing financial marketplace, with two dominant
stock exchanges: Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE).

1.4.1 Key Points:

 BSE: Founded in 1875, it is Asia's oldest stock exchange 1. As of January 2024,

it boasted over 5,300 listed companies.

 NSE: Established in 1992, it is India's largest trading volume stock exchange

1. As of December 2023, it had approximately 2,266 listed companies.

 Market Indexes: There are two important market indexes, namely, Nifty 50
(Nifty) and Sensex (BSE 30).

9
o The 30 companies traded in the BSE form the Sensex, and 50 companies
traded in NSE form Nifty.

 Regulation: Security and Exchange Board of India (SEBI) regulates the stock
exchanges and ensures transparency in the marketplace and investors'
protection.

 Trailing mechanism: There is an electronic book system for trading in both

exchanges, offering transparency and anonymity for both buyers and sellers.

 Settlement Cycle: Equity spot markets have a rolling settlement period of T+1,
with settlements being executed one working day after a transaction.

 Market Capitalization: India's market value in January 2024 surpassed that

of Hong Kong at approximately $4.33 trillion.

o STOCK MARKET INDEX: -

INDEX NAME EXCHANGE DESCRIPTION

SENSEX BSE BSE 30-stock

benchmark index

NIFTY 50 NSE NSE 50-stock

benchmark index

NIFTY Next NSE Next 50 large-

50 cap stocks

NIFTY NSE 100 midcap

Midcap 100 stocks

NIFTY Small NSE 100 small cap

cap 100 stocks

BSE 500 BSE Top 500

companies listed
on BSE

BSE Midcap BSE Midcap segment

of BSE

10
BSE Small BSE Small cap
cap segment of BSE

NIFTY Bank NSE Index of top

banking sector
stocks

NIFTY IT NSE Index of top IT

sector stocks

NIFTY NSE Index of top

Pharma pharmaceutical
stocks

NIFTY NSE Index of top

FMCG FMCG stocks

NIFTY Auto NSE Index of top

automobile
stocks

NIFTY Metal NSE Index of top

metal sector
stocks

NIFTY NSE Index of top

Energy energy sector
stocks

NIFTY NSE Index of top real

Realty estate stocks

11
1.4.2 Role of the Indian Stock Market

The financial market, in its largest form, represented through Bombay

Stock Exchange (BSE) and National Stock Exchange (NSE), is a driving force
in India's financial integration and development. It has, over years, emerged
one of the most vibrant and significant stock exchanges in the world. It is not
only a security trading platform but an economy reflection of India, a source of
raising capital, and a mechanism for wealth creation and distribution. In this
essay, India's multi-faceted role through its stock market in financial growth,
development of companies, investors' empowerment, and impact at a
worldwide level is discussed.

1. Capital and Economic Growth:

One of its most important roles in the Indian economy is to stimulate capital
creation. Business ventures, both new and mature, require funding to expand
operations, invest in new technology, and introduce new processes and goods
and services. The stock market provides a platform for companies to raise funds
through issuing stocks to the general public. This mechanism, an Initial Public
Offering (IPO), enables companies to raise funds from a pool of a lot of
investors, including retail investors, institution investors, and foreign entities.
The availability of capital through the stock market encourages
entrepreneurship and growth in industries. For instance, India's IT industries,
including Infosys, TCS, and Wipro, received a boost with a significant
contribution through the stock market. Capital for such companies was
mobilized through IPOs, and it facilitated them in opening operations abroad,
earning India a seat in IT service industries. In a similar manner, industries such
as banking, pharmaceuticals, and renewable energy have experienced a
significant contribution through the stock market. Moreover, the stock market
induces savings and investments for citizens. By offering a variety of
investment options, such as stocks, unit trusts, and Exchange traded funds
(ETFs), it channels family savings into productive investments. In return, it
hastens economic growth through augmented funding for companies and
infrastructure development.

2. Wealth Creation and Financial Inclusion:

The stock market has been a wealth creator for investors in general. Over the
past few decades, it has produced enormous wealth for long-term investors in
high-value stocks. For example, stocks including Reliance Industries, HDFC

12
Bank, and Bajaj Finance have produced enormous wealth for investors, and
investors have become wealthy and secure and have enjoyed financial
independence. The stock market also promotes financial inclusion through its
function in providing retail investors with an opportunity to contribute towards
developing the economy. With electronic platforms and discount brokerages,
investing in stocks is no longer an expensive and sophisticated activity for
common Indians but a relatively inexpensive and accessible one. This financial
democratization empowered a whole lot of Indians with an opportunity to
become wealthy and secure financial future for them.

3. Transparency and Corporate Governance:

The Indian stock market helped in strengthening corporate governance and
transparency. Public companies must abide by high level of compliance and
disclose financial and operational information at a public level at a specific
interval of time. It enables investors to receive proper and correct information
at a timely manner, and make proper and prudent investments. The Security
and Exchange Board of India (SEBI), a regulating board for the stock
market, has initiated a range of actions for enhancing corporate governance.
Compulsory disclosures, audits, and having boards of companies with
independent directors have been a part of them. All these have boosted
accountability in corporate management and reduced fraud and
mismanagement risks. The concern for corporate governance has boosted
confidence in Indian companies in the global marketplace, as well. Foreign
investors make investments in stocks in India when they believe in
transparency and accountability in companies. That is why, with increased
confidence in transparency and accountability, India gained a boost in terms of
increased foreign direct investment (FDI) and foreign institutional
investment (FII) in its stock market, and its growth and stability grew even
larger.

4. Integration Global at Investment:

The financial system of India is no longer in a vacuum and forms a part of a
worldwide financial system. It is under constant observation by investors
worldwide, and they view it as a reflection of India's financial health and future
growth potential. With its stocks being a part of worldwide indices, such as
stand for financial times stock exchange (FTSE) Emerging Markets Index and
Morgan Stanley Capital International (MSCI) Emerging Markets Index, its
international visibility grew even further. FIIs contribute a significant role in
India's financial market. Investment inflows through them make the market
secure and liquidity, and bring in beneficial foreign exchange to the country.

13
With growing inflows of foreign funds, India companies have been in a
position to enter abroad, expand, and become competitive at a global level.

5. Economic Indicators and Policy Formulation:

The economy of India is measured in terms of its stock market, and its
fluctuations in its key indices, such as NSE Nifty and BSE Sensex, speak
volumes about investors' moods and a general direction of economy. For
instance, a booming stock market can be a reflection of an economy growing,
companies' growing earnings, and a bullish investors' outlook, and a
downmarket can denote an economy in a downturn period or uncertainty
regarding its future direction. Stocks are closely monitored by regulators and
policymakers in an attempt to assess the effectiveness of economic policies and
make sound judgments. For instance, trends in the stock market inform the
Reserve Bank of India (RBI) in its creation of monetary policy, with shifts in
the marketplace having a bearing on inflation, interest, and exchange rates. By
floating state-owned companies in terms of stocks in the stock market, funds
can be mobilized for checking fiscal deficits and financing development works.
Not only is it a source of efficiency for such companies, but it is an opportunity
for investors to become a part of them and see them growing and developing.

6. Innovation and Technological Development:

The Indian stock market embraced technological advancements in an attempt
to enhance efficiency, transparency, and access. Adoption of electronic trading
platforms, algorithm trading, and use of blockchain technology have
revolutionized trading and settlement of securities irreversibly. All these have
reduced trading costs, lessened errors, and added liquidity in the marketplace.
The fintech startups and web investment platforms have gone on to
revolutionise even the face of the stock market. Online portals and mobile
platforms have eased access to information regarding the marketplace, trading,
and portfolio management for retail investors. Consequently, retail investing,
particularly for millennials and new investors, has experienced a sharp boost
in activity.

14
 1.5 AN INITIAL PUBLIC OFFERING (IPO)

An initial public offering is the process through which a private

company offers shares of its stock to the public for the first time. This is
typically done to raise capital to fund expansion, pay off debt, or for other
corporate purposes.

Here are some key points about IPOs:

1. Private to Public: Prior to an IPO, the company is privately held, often by a

small group of investors such as founders, venture capitalists, or private
equity firms. Through an IPO, the company becomes publicly traded,
meaning its stock is available on a public stock exchange like the New York
Stock Exchange (NYSE) or Nasdaq.

2. Raising Capital: The primary reason companies go public is to raise capital.

This money can be used for various purposes such as business expansion,
paying off existing debt, or funding new projects.

3. Stock Exchange Listing: After the IPO, the company’s stock is listed on a
stock exchange, where it can be bought and sold by public investors. The
price of the stock is determined by supply and demand in the market.

4. Underwriters: Investment banks or underwriters are typically involved in

managing the IPO process. They help set the offering price, ensure
regulatory compliance, and assist in marketing the shares to potential
investors.

5. Due Diligence and Regulatory Compliance: Before going public,

companies undergo a thorough process of due diligence, including
submitting a prospectus to the relevant regulatory body (such as the SEC in
the U.S.). This document contains detailed financial statements, business
plans, and risk factors.

6. Price Fluctuation: Once the shares are listed, their price can fluctuate based
on market conditions, investor sentiment, and the company’s performance.

Overall, an IPO marks a significant milestone for a company, providing

it with access to a broader pool of capital while also exposing it to the
demands of public shareholders.

15
 1.6 MUTUAL FUND MARKET

The mutual fund market is a financial market where pooled funds from
multiple investors are invested in a diversified portfolio of securities. A mutual
fund is a money pool investment vehicle that collects funds from numerous
investors to invest in a wide range of assets like stocks, bonds, money market
instruments, or other securities. Mutual funds in India are managed by expert
fund managers who work for Asset Management Companies (AMCs) and are
monitored by the Securities and Exchange Board of India (SEBI) to maintain
transparency and protect investors' interests

 Major Mutual Fund Features

1. Diversification: Investors receive exposure to a diversified portfolio through
an investment in a mutual fund, reducing the risk.

2. Professional Management: Qualified investment decisions are taken by fund

managers on investors' behalf to achieve the fund's stated goals.
3. Liquidity: High liquidity is provided by open-ended mutual funds, and
investors can purchase or sell units at the current Net Asset Value (NAV) on any
business day.

4. Regulation: SEBI oversees mutual funds in India to ensure they work

according to the stipulated guidelines to safeguard investors' interests

 Mutual Fund Types in India

1. Equity Funds: Invest mostly in shares and are appropriate for investors
looking for long-term capital appreciation. They are further divided into:

2. Large-Cap Funds: Invest in large, established businesses.

3. Mid-Cap Funds: Invest in medium-cap organizations with growth potential.

4. Small-Cap Funds: Invest in smaller businesses with high growth potential.

5. Debt Funds: Invest in fixed-income securities like government securities,

corporate securities, and money market securities. They are best suited for
investors looking for regular income with lower risk.

16
 6. Hybrid Funds: Also called balanced funds, they invest in a combination
of equities and debt securities to balance risk and reward

.7. Money Market Funds: Invest in short-term debt securities and are best
suited for investors who need liquidity and protection of capital.

8. Sectoral/Thematic Funds: Invest in a specific sector or theme, say

technology, healthcare, or infrastructure. These are riskier since they are
highly concentrated.

9. Tax-Saving Funds (ELSS): Equity Linked Savings Schemes are tax-free

under Section 80C of the Income Tax Act and have a three-year lock-in.

1.7 COMMODITY TRADING

Commodity trading involves buying and selling raw materials or primary

agricultural products, often in futures markets. Commodities are typically
classified into two categories:

1. Hard Commodities: These are natural resources that are mined or extracted.
Examples include:

o Oil

o Gold

o Silver

o Natural gas
o Metals (copper, aluminium, etc.)

2. Soft Commodities: These are agricultural products or livestock. Examples

include:

o Wheat

o Coffee

o Sugar

o Cotton

o Livestock (cattle, pigs)

17
  Key Aspects of Commodity Trading:

1. Futures Contracts: A common way to trade commodities is through futures

contracts, which are agreements to buy or sell a commodity at a predetermined
price on a specified future date.

2. Spot Trading: This involves the immediate delivery of the commodity at the
market price. It’s usually short-term and is based on the current market value.

3. Options and ETFs: Commodities can also be traded using options (giving the
right but not the obligation to buy/sell) or exchange-traded funds (ETFs), which
provide exposure to commodities without owning them directly.

 Factors Influencing Commodity Prices:

 Supply and Demand: The basic economic principle of supply and demand plays
a major role. For example, if there’s a drought, the supply of agricultural
products might decrease, causing prices to rise.

 Geopolitical Events: Political instability, wars, or sanctions can affect supply

chains, especially for commodities like oil and natural gas.

 Economic Indicators: Economic growth or recession can influence the demand

for commodities, particularly industrial ones like metals and energy.

 Weather Conditions: For soft commodities, weather conditions (e.g., droughts,

floods) can significantly impact production and, thus, prices.

 Risks in Commodity Trading:

 Volatility: Commodity prices can be highly volatile, influenced by unpredictable

events (e.g., natural disasters, political events).
 Leverage: Trading on margin (using borrowed money) can amplify both profits
and losses.

 Market Manipulation: Commodities can sometimes be subject to manipulation

by large players or cartels (e.g., OPEC for oil).

18
 2: TYPES OF TRADING

1. INTRADAY TRADING:

In intraday trading or day trading, the trader buys or sells the stock on the same
day. The day traders book profits or losses quickly and close their trade before
the closing hours of the stock market. The stocks can be held for a few hours or
few seconds and multiple times in a single day. Intraday trading is highly
volatile and requires fast decision making. This aggressive style of trading is
meant for the active traders who can take quick actions by tracking the stock
market movements regularly. Intraday trading is not advisable to beginners due
to the high amount of risk associated with it

2. SWING TRADING:

Swing traders wish to hold stocks for more than one day to capture additional
momentum in the price of stocks. They try to predict short term fluctuations
overnight. The prime difference between day traders and swing traders is the
time frame of holding the stock. Most of the technical traders you might have
known come under this category

3. POSITIONAL TRADING:

In positional trading, the stock holding time period is quite longer stretching
over a few months to years. Positional traders anticipate big price movements
over longer periods in expectation of a large gain. Their trading decisions are
based on technical as well as fundamental analysis to some extent. So, any
minor short-term fluctuations are just ignored in this type of stock trading style

4. TECHNICAL TRADING:

The different trading activities revolve around technical market analysis. Most of
the traders utilise their technical analysis skills to determine price variations in
Indian stock market.

19
2.1 BASED ON HOLDING

1. INTRADAY TRADING

Securities listed in a stock exchange that are purchased and sold in a day
are called intraday trading. The primary motive of trading in this way is to earn
capital gains on purchased securities as well as minimize risks by investing
funds for a very long period of time.

1) How to Do Intraday Trading: It is required to determine the best intraday

stocks while making such an investment, as it involves comparatively
higher risks.
2) Select Highly Liquid Stocks: Liquidity is one of the primary features of
intraday stocks, as without this feature, such trade is not possible. Equity
shares of small and mid-cap companies can be purchased and sold easily,
as well as experience huge volatility due to the volatility of the market. The
cyclical volatility should be monitored carefully by looking at 52-week
high and low values, as it gives a true idea about whether an individual
should take long or short positions while making an investment.
3) Volatility: Best intraday stocks should have medium to high price
movement volatility. It is generally recommended to avoid market value
movements of over 3% while making intraday trading, as the probability of
incurring a loss is gigantic in the event of an unfavourable downturn in the
stock market of an economy.
4) Strong Correlation: It is recommended to purchase an intraday share with
high correlation with a benchmark index of a well-established stock
exchange. Thus, high movement in share prices can be observed when
index value tends to move.
5) Increased Trade Volume: Intraday traders can note the trade volume index
of a given security to be able to note price movement. A high trade volume
index indicates either over-supply or over-demand, based on the

20
 performance of a base company. Capital appreciation returns can be gained
through buying and selling transactions in such a scenario.

 Advantages of Intraday Trading:

1) Less Risk: As the securities are purchased on the same day in intraday trading,
risk of suffering large losses is curtailed. However, in normal trading where
the principal is held for a longer duration, price volatility can be humongous,
causing an investor to be worse off in case of a decline in the stock market.
2) Less Commission Charges: Stockbrokers charge low charges while dealing
in intraday trading shares, as delivery charges of transferring security in the
name of an investor are waived off. Stock transaction tax, trade charges,
services tax, etc. constitute a part of brokerage fees, and such deductions
reduce the earnings of an investor.
3) Greater Profits: Intraday trading is well known to create huge wealth for
investors, provided right investment strategies are adopted. Capital
appreciation in a bull market can be easily achieved. In case of a poor market
condition, intraday share traders adopt the strategy of short selling to generate
profits.
4) Liquidity: Another benefit of intraday trading is that total financial resources
invested can be withdrawn at any point of time. It is not locked up through a
purchase transaction of an asset. This keeps liquidity requirements of an
investor to meet any personal needs.
5) Capital Gains Through Market Volatility: Investors can generate profits
through intraday trading in bull and bear markets, subject to the investment
strategy adopted in such a situation. Capital appreciation in a bull market can
be achieved through purchase and sale of securities of a stock exchange. In
case of the stock market going down, profits can be generated through short-
selling financial instruments.
6) Associated Risks: An investor should have in-depth knowledge about the
complex nature of the stock market for generating sufficient profits. It can
prove to be numbersome for a new investor expecting to realize capital gains.

21
 It is required to select securities of appropriate companies in such a situation,
for which in-depth financial records analysis is to be performed. Market
volatility plays a significant role in the context of intraday trading stocks. In
case of sudden market volatility, investors can incur losses. Technical market
analysis is based on past volatility, and hence, may not be 100% accurate in
all cases.

 Tips to Follow for Intraday Trading

1) Research: Proper research and analysis of the current market scenario,
company fundamentals, and awareness of macroeconomic factors, such as the
debt status of the country or currency fluctuations.
2) Invest the Extra: Intraday trading is risky. It is recommended that you invest
only what you can afford to lose.
3) Don't Overtrade: The stock market is not necessarily clockwork. The best
intraday trading approach is to trade a few scripts at a time.
4) Performance Evaluation: Intraday trading is dynamic. Keeping a record of
your results - wins and losses - will tell you what worked and what did not.
Previous performance assessments will allow you to make improved trading
decisions in the future.
5) Intraday Trading Indicator: In intraday trading, while making profits, you
need to perform an in-depth analysis. There are some indications that need to
be followed for the same. Intraday tips are most often believed to have been
the Holy Grail; however, this is not true. Intraday Trading Indicators will be
helpful in case you have a good plan to maximize your returns.

22
2. SWING TRADING:

Swing trading is a method where traders buy and sell stocks based on
expected price trends, which could last from a single night to several weeks.
The goal is to profit from the short-term ups and downs within a larger trend.
Traders use technical indicators to spot when a stock has momentum and
decide the best time to buy or sell. Since swing trading focuses on quick moves,
traders need to act fast to maximize their chances of making a profit. This
approach is all about capturing gains from brief price shifts within the broader
market trend.

How Swing Trading Works?

Swing trading targets short term price fluctuations both upward and
downward, within a broader market trend. Instead of holding onto a stock for
months to make a large profit, in swing trade traders aim to capture smaller,
more frequent gains that can add up over time. For instance, while some traders
wait months for a 25% profit, swing traders might achieve multiple 5% gains
weekly, potentially earning more in the long run.

23
 Indicators for Swing Trading:
1. Moving Averages: Moving averages smooth out price fluctuations to show the
overall trend direction. When prices are above the moving average, it suggests
an uptrend, when below, a downtrend.
2. Bollinger Bands: Bollinger Bands is an indicator that shows high and low
points for stock prices based on the average price over a certain time period,
like 20 days. These bands help traders figure out if a stock is overbought or
oversold compared to its usual price. When prices hit the top band, it might
mean the price is too high and when prices hit the bottom band, they might be
too low.
3. Relative Strength Index: RSI is a momentum indicator used in trading,
showing if a stock is overbought or oversold. Values range from 0 to 100, with
over 70 indicating overbought and under 30 indicating oversold.
4. MACD: MACD is a popular technical indicator used in trading to identify
trend changes and momentum shifts. MACD uses two lines a fast one and a
slow one. It compares two exponential moving averages of a stock's price over
different time periods, like 12 days and 26 days.

3. POSITIONAL TRADING:
Positional trading is a trading style where the traders hold their positions
for a long period, typically from a few weeks to months or years. The aim of
the strategy is to earn money from long-term market trends and not worry about
short-term price fluctuations.

 Is position trading for you?

Now that you have understood the positional trading meaning, suitability
depends on your investment goal, risk tolerance, and trading style. Positional
trading can be an apt strategy for investors looking for long-term growth and
willing to hold positions for a long period. This strategy can be less stressful
than day trading and allows you to benefit from major market trends.

24
 Positional Stock Trading Strategies:
1) Positional trading stocks is holding positions for a long period, typically a
few weeks to a few months. Below are some popular strategies employed
by positional traders in the stock market.
2) Trend-following strategy: This positional trading strategy is about
identifying and following long-term stock market trends.
3) Growth investing strategy: Growth investors buy stocks with high growth
potential in the future. Positional traders using this strategy search for
companies with good fundamentals.
4) Value investing strategy: Value investors buy stocks that are undervalued
by the market. Positional traders using this strategy search for undervalued
companies with a low price-to-earnings (P/E) ratio or a low price-to-book
(P/B) ratio.
5) Momentum trading strategy: This strategy is to purchase stocks showing
upward momentum in their price and sell them when the momentum starts
to decline.

 How is the trend identified?

The positional trading trend is identified with technical analysis tools that
help traders determine the long-term direction of the market. Following are
some of the most popular technical analysis tools for identifying the
positional trading trend.
1. Moving Averages: Moving averages smooth out price data and help
determine trends. Traders use longer-term moving averages, such as the 50-
day or 200-day moving average, to determine the long-term trend.
2. Relative Strength Index (RSI): The RSI ranges from 0 to 100 and is used
to determine overbought or oversold conditions. Traders use RSI to
determine bullish or bearish divergences, which can indicate a trend
reversal.
3. Bollinger Bands: Bollinger Bands are a two-standard deviation moving
average-based volatility indicator and a band created around the price.

25
 4. Moving Average Convergence Divergence (MACD): MACD is a trend-
following momentum indicator that shows the relationship between two
moving averages. Traders use the MACD to identify trend changes and to
validate the strength of a trend.
5. Fibonacci Retracement: Fibonacci Retracement is a technical analysis
tool to identify potential support and resistance levels in a trend. Traders
use the Fibonacci levels to identify potential entry and exit points for trades.

 50-Day Moving Average Trading

The 50-day moving average is a technical analysis indicator that traders
employ to determine short-term trends in the stock market. It is determined by
taking the average closing price of a stock over the last 50 days, each day's
price having equal weight. When the price of a stock crosses over its 50-day
moving average, it is a bullish signal, i.e., there is a possibility of the price of
the stock going higher. When the price of a stock goes below its 50-day moving
average, it is a bearish signal, i.e., there is a possibility of the price of the stock
going down.

 Support And Resistance Trading

Support and resistance trading is a widely used technical analysis
strategy that traders employ to determine potential buying and selling
opportunities in the financial markets. Support is a price level where buying
pressure has been strong enough in the past to stop the price from going down
further. Resistance, on the other hand, is a price level where selling pressure
has been strong enough in the past to stop the price from going up further.
Traders employ these levels to determine potential entry and exit levels.

 Trading breakouts
Breakout trading is one of the popular techniques used by traders to profit
from large price movement in the financial markets. A breakout occurs when

26
the security price breaks through a significant support or resistance level, which
is a sign of a potential trend reversal. Technical analysis indicators like moving
averages and trend lines can be used by traders to identify potential areas of
breakout. After a breakout, traders can sell short or buy long, depending on the
direction of the breakout.

 Pullback and retracement strategy

The strategy involves identifying an uptrend or downtrend in the security
price and waiting for a short-term pullback or retracement against the trend.
After the pullback, traders can buy long or sell short, respectively, hoping that
the trend will persist. The pullback and retracement strategy can be useful for
traders to take positions with lower risk since they are entering the market at a
better price level than at the top or bottom of the trend. However, traders must
use good risk management techniques, such as stop-loss orders, to cap losses
if the trend does not persist.

 LONG-TERM INVESTMENTS
Long-term investments are those assets which an individual or an
organization intends to keep for more than three years. Modes that facilitate
long-term investments are real estate, stocks, cash, etc. Long-term investors
take a high risk in return for higher returns.

 Advantages of Long-Term Investing

1) Long-term investing is most likely to lead to the generation of huge wealth
in the long term. Individuals who are not competent enough to invest in
derivative market depend on long-term investment returns to plan their
financial future. It may include dividend income on shareholding and
interest on fixed deposits.
2) Less time-consuming: Long term investing is less time-consuming as
investors do not need to monitor markets for marginal fluctuations on a
daily basis.

27
 3) Lower transaction fees: Brokerage fees and capital gains taxes cover most
of the costs of investing, apart from the risk factor. Long-term investors pay
transaction fees less frequently, if not at a lower rate, than short-term
investors. Many investors can allow returns to compound in their bank
accounts while deferring capital gains tax. Capital gains tax is also charged
at a lower rate than short-term profits.

 Strategies for Long-Term Investments

1. Current income strategy: Current income strategy includes a range of
allocation decisions to identify established organizations that provide
above-average distributions without the risk of default, such as large-cap
and blue-chip equities. It is most suitable for an investor who wants a
relatively stable and steady strategy. In order to find companies that are
ideal, the investor should look to the key drivers of long-run shareholder
returns. They are the competitive advantage of a business, its growth
prospects, and its management team rather than stock prices and quarterly
reports.
2. Additional Resources: CFI can stand for (Consolidated Fund of India)
or (Corporate Finance Institute) is the official provider of the global
Financial Modelling & Valuation Analyst (FMVA)™ certification
program, designed to help anyone become a world-class financial
analyst.

28
 2.2 BASED ON MARKET AND INSTRUMENT

1. EQUITY TRADING (STOCK TRADING):

Equity trading refers to selling and buying the shares of quoted companies.
Stock traders buy the stocks in the expectation of benefitting from an
appreciation in their prices and by receiving dividends.

 Types of Equity Trading

1. Intraday Trading: Buying and selling shares in the same day of trading.
2. Swing Trading: Holding a stock for some days to a few weeks with a view
to earning money through short-term movement.
3. Positional Trading: Investment in the longer term on a fundamental basis.
4. Arbitrage Trading: Capturing the disparity in price levels between two
exchanges or markets.
5. Algorithmic Trading: Using automated computer programs in executing
trades by pre-programmed rules.
 Major Features of Equity Trading
o Direct holding of shares, returns in terms of capital growth and
dividends.
o Depends upon company performance, economic climate, and sentiment
in the market, Higher volatility but potential long-term growth.

2. DERIVATIVES TRADING:
Derivatives trading refer to financial agreements whose value rests on an
underlying asset such as stocks, commodities, or indexes. The best-known
derivatives are options and futures.
 Types of Derivatives
1. Futures Contracts: Contract to buy or sell an asset at a predefined price on
some future date.

29
2. Options contracts: Grant the right (but not the obligation) to purchase (Call
Option) or sell (Put Option) an asset at a predetermined price before expiration.

 Key Features of Derivative Trading

Applied for speculation, hedging, and risk management, High leverage
(enables control of large position with minimal margin), No ownership of
underlying assets, High risk and potential for high returns or losses.
 Example of Derivative Trading
A buyer purchases a Nifty 50 futures contract hoping the index will go up. If
the index goes up, he profits, but if the index goes down, he loses.

3. COMMODITY TRADING:
Commodity trading involves the purchase and sale of physical
commodities like metals, energy, and agro-commodities.
It is executed through commodity exchanges like the Chicago Mercantile
Exchange (CME), Multi Commodity Exchange (MCX), and London Metal
Exchange (LME).

Types of Commodities Traded

Metals: Gold Silver Copper Aluminium

Energy: Crude Oil Natural Coal
Gas
Agricultural: Con Coffee Soybeans
Wheat

 Key Features of Commodity Trading

Applied for hedging against price fluctuations (particularly by producers &
manufacturers), Influenced by global demand, supply, geopolitical tensions,

30
 and weather conditions, Needs understanding of macroeconomic trends and
supply chain dynamics.

 Example of Commodity Trading

A coffee producer can sell coffee futures to fix today's price and prevent
losses due to potential future price drops.
1. National Multi Commodity Exchange India (NMCE)
2. National Commodity and Derivative Exchange (NCDEX)
3. Multi Commodity Exchange of India (MCX)
4. Indian Commodity Exchange (ICEX)
5. National Stock Exchange (NSE)
6. Bombay Stock Exchange (BSE)

3. BONDS
Bonds are fixed-income instruments that signify a loan forwarded by an
investor to a borrower. The issuer promises to pay a specific interest for the life
of the bond and the principal amount or the face value at maturity. Bonds are
generally issued by governments, corporations, municipalities and other
sovereign bodies. Bonds can be traded, just like securities.

31
 What is the Bond Market?
The market for trading debt securities like government bonds, corporate
bonds and tax-free bonds is known as a bond market. A bond market is
generally less volatile than an equity market and is more suitable for investors
with lower risk tolerance. Investing in bond markets is an efficient way to
diversify your portfolio. The primary role of a bond market is to help the
government and large private entities access long-term capital.

 Types of Bonds

1. Convertible bond
Unlike regular bonds that are redeemed upon maturity, a convertible
bond gives the purchaser a right or an obligation to convert the bond into
shares of the issuing company. The quantum of shares and the value of the
shares are usually predetermined by the issuing company. However, an
investor can convert the bond into stock only at certain specified times during
the bond’s tenure.
Convertible bonds can be further classified as
a. Regular convertible bonds – Regular convertible bonds come with a fixed
maturity date and a predetermined conversion price but they give the
investor merely the right, and not an obligation, to convert. Companies
generally prefer to issue these types of convertible bonds to the public.
b. Mandatory convertible bonds – Unlike regular convertible bonds, these
bonds obligate the investor to convert them into equity shares of the issuing
company upon maturity. Since investors are essentially forced to convert
their bonds, companies usually offer a higher rate of interest on mandatory
convertible bonds. Reverse convertible bonds – With reverse convertible
bonds, the issuing company holds the right to convert them into equity
shares upon maturity at a predetermined conversion price.

32
 2. Government Bonds
Bonds can be issued by the central as well as state governments of the
country when the issuer is faced with a liquidity crisis and is in need of funds
such that they can develop infrastructure. Serving as long-term investment
tools they can be issued for periods that range from 5 to 40 years. Government
bonds form a bulk of the Indian bond market. Government bonds generally
offer stable returns and are considered extremely safe as they are guaranteed
by the Indian government. The interest rate on G-sec varies between 7% and
10%. G-Secs nowadays target not just large investors ranging from companies
to commercial banks, but also individual investors and cooperative banks.

 Types of Government Bonds

1) Fixed-rate bonds – The interest rate applicable on these government bonds is

fixed for the entire tenure of the investment regardless of fluctuating market
rates. The lock-in period for such bonds is usually one to five years. For
example, 6.5% GOI 2020 implies a rate of interest applicable on the face value
amounting to 6.5%, with the government of India being the issuer and the year
of maturity being 2020. However, premature withdrawal of bonds can lead to
penalties for investors. Also, due to the year-on-year rise of inflation, the
higher the bond term, the more it runs the risk of reducing bond value.

2) Floating rate bonds (FRBs) – These bonds have variable interest rates based
on periodic changes experienced by the rate of returns. The intervals within
which these changes occur are made clear prior to the bonds being issued.
These bonds can also exist with the rate of interest being split into a base rate
and a fixed spread. This spread is determined via auction and remains stable
right up to maturity the best time to buy such bonds is when their rates are low
and are expected to increase. The change in the interest rate is heavily
dependent on the performance of the benchmark rates.

33
3) Sovereign Gold Bonds (SGBs) – Under this scheme, entities are allowed
to invest in digitized forms of gold for an extended period of time without
having to avail of gold in its physical form. Interest generated via these
bonds is tax-free. Ordinarily, the nominal value of an SGB is arrived at by
calculating the simple average of the closing price of gold that has a purity
level of 99 percent three days prior to the issuance of the bond in question.
There exist limits that are imposed on what amount of SGB an individual
entity may hold. Liquidity of SGBs is possible following a period of 5
years. Redemption, however, is only possible based on the date of interest
disbursal.
4) Inflation-Indexed Bonds – the principal and interest earned on such bonds
are in accordance with the inflation. Ordinarily, these bonds are issued for
retail investors and are indexed in accordance with the consumer price
index (or CPI) or wholesale price index (or WPI)
5) 7.75% GOI Savings Bond – This government security was launched in
2018 in order to replace the 8% savings bond. The interest rate applicable
here is 7.75%. The RBI stipulates that these bonds can be in the possession
of individual(s) who aren’t NRIs, minors, or are a Hindu undivided family.
Interest earned via these bonds is taxable as per the Income Tax Act of 1961
keeping in mind an investor’s income tax slab. Bonds are issued for a
minimum amount of INR 1000 and in multiples of INR 1000 as well.
6) Bonds with Call or Put Option – Issuers are entitled to buy back such
bonds via a call option or the investor has the right to sell the same with the
put option to the issuer.
7) Zero-Coupon Bonds – These bonds don’t earn interest. Instead, investors
accrue returns via the difference that exists between the issuance price and
the redemption value. They aren’t issued via auction but are created via
existing securities. Barring the 7.75% GOI Savings Bond, interest-earning
on other G-Sec bonds is lower.

34
 3. Municipal Bonds
Municipal bonds (or Muin) are debt instruments that are issued on
behalf of municipal corporations or bodies associated with them across the
country aimed at socio-economic development. Municipal bonds can be
purchased with a maturity period that amounts to three years. No taxes –
interest rates developed via municipal bonds are also free of taxation.
Minimal risk.

4. Retail Bonds
A retail bond offering allows a company to raise additional capital by
borrowing at a fixed rate from an investor for a specific length of time.
Companies typically issue retail bonds to expand their business, pay off
debt, or fund a specific project, as with any capital raising. Retail bonds are
typically listed and can thus be bought and sold during regular market hours,
allowing investors more flexibility.

5. Junk Bonds
Also known as high-yield bonds, junk bonds those bonds that fall
below investment grade made clear by the three large bond rating agencies
i.e., Moody’s Standard & Poor’s, and Fitch. Junk bonds are characteristic of
having a higher risk of default in comparison to other bonds as well as higher
returns. Should more investors be amenable to buying junk bonds, their
willingness to incur risk highlights an optimistic outlook towards the
economy and vice versa.
6. Electoral Bonds
General public can issue these bonds to fund eligible political parties.
A political party that classifies as eligible to run campaigns must be
registered in the Representation of the People Act, 1951, under Section 29A.
Additionally, to classify as a registered political party, the party should
secure not less than 1% of votes polled from the prior general election to the
legislative assembly. There are tax benefits to issuing electoral bonds.

35
 Features of Bonds
1) Face value: The face value or par value, of the bond, implies the price of a
single unit of bond fixed by the issuer. It’s the fixed amount the bondholder
will receive at maturity. The face value helps create a predictable stream of
income for the investor.
2) Interest or coupon rate: The interest rate of the bond is also known as the
coupon rate. Usually, the issuer promises to pay a certain amount as interest
to the bondholder. The coupon rate can be either fixed or floating,
depending on the bond’s terms.
3) Yield: The bond yield is the return the investor earns on the bond. It is
different from the bond price and shares an inverse relationship. The bond’s
yield can be higher or lower than the bond’s current price.
4) Maturity date: Bonds are fixed-tenure investment tools. They have a pre-
determined maturity date when the issuer is obligated to repay the bond’s
face value to the bondholder.
5) Credit quality: Bonds are rated by credit rating agencies based on the
creditworthiness of the issuer. AAA is the highest-rated bond, while D is
the lowest rating. The higher the rating, the lower the default risk. But these
bonds may also have a lower interest rate.
6) Liquidity: Liquidity refers to the ease of buying and selling bonds in the
secondary market. Some bonds have higher liquidity, while others are less
liquid.
7) Convertible and non-convertible: Investors can convert these bonds into
common stocks at a certain date. Non-convertible bonds don’t have this
feature. This feature gives bondholders the potential for equity
participation.

 The factors to consider before investing in bonds are the following:

1) Credit rating: The credit rating refers to the creditworthiness of the bond
issuer. A higher rating signifies lower default risk but also lower yields.

36
 2) Coupon rate: Bonds are exposed to interest rate risk, which impacts the
bond’s price and yield. Bond prices fall when the interest rate is high. So,
consider the prevailing interest rate to determine whether a bond
investment is right for you.
3) Investment horizon: Bonds with a longer tenure offer higher returns, but
they are also exposed to interest rate risk. Short-term bonds are less
sensitive to interest rate changes but also offer lower returns.
4) Yield: The bond yield is the return the investor will receive on the
investment, depicted as a percentage. The current yield of the bond is the
bond’s coupon rate divided by its market price. The return on bond is the
profit/loss earned during the lifetime of the investment, measured as the
difference in the holding’s currency value.
5) Risk tolerance: Bonds are less risky than stocks, but they are still exposed
to certain types of risk. You should evaluate your risk tolerance level before
investing
6) Liquidity: Liquidity is different for different bond types. Consider your
liquidity needs before you invest in bonds.

 Suitability of Investments in Bonds:

1) Income generation: Bonds are an excellent choice for investors who want
to generate regular income from investments. Bond investments generate a
steady stream of income from coupon payments, making them suitable for
investors who want to supplement their income.
2) Capital Preservation: Investors seeking capital preservation and lower
volatility in their portfolios often turn to bonds. Bonds are less volatile and
generate a steady income over time, making them suitable for risk-averse
investors.
3) Diversification: Bonds included in an investment portfolio can offer
diversification and stability. Bonds usually have a negative correlation with
stocks and can be used to offset losses in a volatile market.
4) Risk mitigation: Bonds can be used to create a safety net when the stock
market is volatile. When stock prices decline, bonds can provide stability
and help offset losses from stock investments.
5) Short-term goals: Bonds can be used to meet short-term financial goals.
Short-term bonds offer higher liquidity and fixed returns at a time of need.

37
2.3 BASED ON TRADING STRATEGY

ARBITRAGE

Arbitrage can be defined as the simultaneous buying and selling of the

same asset in different markets to gain from the difference in price in both the
markets. While arbitrage opportunity can arise in any asset class that is traded
in different markets in a standardised form, it is more common in currency and
stock markets. Arbitrage opportunities are often short-lived, lasting only a few
seconds or minutes. Contrary to popular economic beliefs, markets are not
completely efficient, which gives rise to arbitrage opportunities. The price of
an asset is a result of the demand and supply in the market.

How does arbitrage trading work?

Arbitrage trading is dependent on the ability of the trader to capitalise on

the price differential of the same asset in different markets. Since arbitrage
opportunities are very short, most traders use computers to conduct arbitrage
trades. Let us understand with an example of how arbitrage works in the stock
market. Let us assume that a stock XYZ is listed on the 48 National Stock
Exchange and the New York Stock Exchange. The price of XYZ is quoted in
US Dollar on the NYSE, while the same is quoted in INR on the NSE. The
share price of XYZ on NYSE is $4 per share. On the NSE, the share price is
Rs 238. Now, if the USD/INR exchange rate is Rs 60, the share price of XYZ
on the NYSE in INR will be Rs 240. In this situation, the same stock is being
quoted at Rs 238 on the NSE and Rs 240 on the NYSE, if the USD is converted
to INR. To exploit the arbitrage opportunity, a trader will buy the shares of
XYZ at Rs 238 per share on the NSE and sell the same number of shares at Rs
240 on the NYSE, earning a profit of Rs 2 per share. Traders have to take into
account certain risks while participating in arbitrage trades. The price
differential is a result of a favourable exchange rate, which remains in constant
flux. Any substantial change in the exchange rate while the trade is being
executed can lead to losses. Another important factor to take into account is the
transaction charges. If the transaction cost exceeds Rs 2 per share, it will nullify
the advantage of the price differential.

38
39
 3: TYPES OF CHART PATTERNS

 Head and Shoulders

Head and shoulders is a chart pattern in which a large peak has a slightly
smaller peak on either side of it. Traders look at head and shoulders patterns to
predict a bullish-to-bearish reversal the first and third peak will be smaller than
the second, but they will all fall back to the same level of support, otherwise
known as the ‘neckline’.

HEAD AND SHOULDERS

 Double Top
A double top is another pattern that traders use to highlight trend reversals.
Typically, an asset’s price will experience a peak, before retracing back to a
level of support. It will then climb up once more before reversing back more
permanently against the prevailing trend

DOUBLE TOP

 Double Bottom
A double bottom chart pattern indicates a period of selling, causing an asset’s
price to drop below a level of support. It will then rise to a level of resistance,
before dropping again. Finally, the trend will reverse and begin an upward
motion as the market becomes more bullish. A double bottom is a bullish
reversal pattern, because it signifies the end of a downtrend and a shift towards
an uptrend.

DOUBLE BOTTOM

40
 Rounding Bottom Pattern
Traders will seek to capitalise on this pattern by buying halfway around the bottom,
at the low point, and capitalising on the continuation once it breaks above a level of
resistance.

ROUNDING BOTTOM PATTER

 Cup and Handle

The cup and handle pattern are a bullish continuation pattern that is used to show a
period of bearish market sentiment before the overall trend finally continues in a
bullish motion. The cup appears similar to a rounding bottom chart pattern, and the
handle is similar to a wedge pattern – which is explained in the next section.
Following the rounding bottom, the price of an asset will likely enter a temporary
retracement, which is known as the handle because this retracement is confined to
two parallel lines on the price graph. The asset will eventually reverse out of the
handle and continue with the overall bullish trends.

CUP AND HANDLE

 Wedges
Wedges form as an asset’s price movements tighten between two sloping trend
lines. There are two types of wedges: rising and falling. A rising wedge is
represented by a trend line caught between two upwardly slanted lines of support
and resistance. In this case the line of support is steeper than the resistance line.
This pattern generally signals that an asset’s price will eventually decline more
permanently – which is demonstrated when it breaks through the support level.

WEDGES

41
 Uptrend Wedge Pattern
A falling wedge occurs between two downwardly sloping levels. In this case the
line of resistance is steeper than the support. A falling wedge is usually
indicative that an asset’s price will rise and break through the level of resistance,
as shown in the example below.

UPTREND WEDGE

 Downtrend Wedge Pattern

Both rising and falling wedges are reversal patterns, with rising wedges
representing a bearish market and falling wedges being more typical of a bullish
market.

DOWNTREND WEDGE

 Pennant or Flags
Pennant patterns, or flags, are created after an asset experiences a period of upward
movement, followed by a consolidation. Generally, there will be a significant
increase during the early stages of the trend, before it enters into a series of smaller
upward and downward movements. Pennants can be either bullish or bearish, and
they can represent a continuation or a reversal. The above chart is an example of a
bullish continuation.

PENNANT OR FLAGS

42
 Ascending Triangle Pattern
Ascending triangles often have two or more identical peak highs which allow for
the horizontal line to be drawn. The trend line signifies the overall uptrend of the
pattern, while the horizontal line indicates the historic level of resistance for that
particular asset.

ASCENDING TRIANGLE

 Descending Triangle Pattern

Descending triangles generally shift lower and break through the support because
they are indicative of a market dominated by sellers, meaning that successively
lower peaks are likely to be prevalent and unlikely to reverse. Descending triangles
can be identified from a horizontal line of support and a downward-sloping line of
resistance.

DECENDING TRIANGLE

 Symmetrical Triangle
The symmetrical triangle pattern can be either bullish or bearish, depending on
the market. In either case, it is normally a continuation pattern, which means the
market will usually continue in the same direction as the overall trend once the
pattern has formed.

SYMMETRICAL TRIANGLE

43
 4: RESEARCH METHODOLOGY

Research methodology refers to the systematic approach researchers

use to collect, analyse, and interpret data to answer specific research questions.
It encompasses the strategies, methods, and procedures employed throughout
the research process, ensuring that the study is conducted rigorously and the
findings are valid and reliable.

4.1 KEY COMPONENTS OF RESEARCH METHODOLOGY:

1) Research Design: This is the blueprint of the study, outlining the overall
strategy to address the research problem. It includes decisions on the type
of study (e.g., descriptive, experimental), data collection methods, and
analysis techniques.
2) Data Collection Methods: Researchers choose appropriate techniques to gather
information, such as surveys, interviews, experiments, or observations. The
choice depends on the research objectives and the nature of the data required.
3) Data Analysis: Once data is collected, it must be analyzed to draw meaningful
conclusions. This can involve statistical analysis for quantitative data or
thematic analysis for qualitative data.
4) Interpretation and Reporting: The final step involves interpreting the results
in the context of the research question and reporting the findings in a clear and
structured manner. This includes discussing the implications, limitations, and
potential areas for future research.

4.2 TYPES OF RESEARCH METHODOLOGIES:

1) Quantitative Research: Focuses on quantifying data and phenomena. It

involves statistical analysis and is often used to test hypotheses or examine
relationships between variables.
2) Qualitative Research: Aims to understand the meaning and experiences behind
phenomena. It employs non-numerical data collection methods like interviews
and focus groups.
3) Mixed-Methods Research: Combines both quantitative and qualitative
approaches to provide a more comprehensive analysis of the research problem.

44
 Selecting the appropriate research methodology is crucial, as it directly
impacts the validity and reliability of the study's findings. Researchers must
align their methodology with their research questions, objectives, and the
nature of the data they intend to collect.

4.3 SIGNIFICANCE OF RESEARCH:

 By having a demat account, you can avoid the jeopardy of bad-delivery.

 By having a demat account, you can avoid the delay in transferring the
securities physically or holding duplicate documents.
 Demat account enables the investor to store entire portfolio of investment,
shares and other securities in electronic form in one account.
 You are assured of the safety of your continuing investments by electronically
holding your investments.
 You can keep persistent track of your investments and securities without
worrying about the handling of physical papers.
 Investors having demat account are capable of enjoying quicker benefits like
bonuses and stock splits.

4.4 LIMITATION OF RESEARCH:

 I was not able do survey in every area.

 Many traders and consumer were not revealing their investment as they were
not trusting.
 Sample size is limited to only 50 people.
 I was unable to survey to actual traders who trade and use demat account.
 I was only able to survey in limited locality which is near my house.

Sampling Procedure

 By adopting convenience sampling, approximately 50 respondents were

selected. The essential data were collected with people of questionnaire.
 It was collected thro tool.

45
 4.5 KEY CHARACTERISTICS OF RESEARCH OBJECTIVES:

 Clarity: They should be easily understandable, leaving no room for ambiguity.

 Specificity: Objectives must be narrowly focused on particular aspects of the

research topic.
 Measurability: They should be formulated in a way that allows for
measurement and evaluation.
 Relevance: Objectives should align with the overall research question or
hypothesis.
 Realism: They should be attainable within the study's constraints, including
time and resources.
 Time-bound: Objectives may have associated timelines or deadlines to indicate
when they should be accomplished.

4.6 SCOPE:

In research, the scope refers to the boundaries and extent of the study,
detailing what is included and excluded. It defines the specific aspects of the
research problem that will be addressed, ensuring the study remains focused
and manageable.

Key Elements of Research Scope:

 Subject Matter: Clearly specifies the topic or phenomenon under investigation.

 Geographical Boundaries: Indicates the physical location or area where the

research is conducted.

 Time Frame: Defines the period during which the study is conducted or the data
is collected.

46
 5: OVERVIEW OF ONLINE TRADING

Online Trading has created a lot of opportunities for new-age traders. If you
are a stock market enthusiast and want to Trade Online then, this can be the best
time to start investing online.

With the advent of the technologies that are used in the trading arena, it is
becoming better day by day for the traders. Online trading is more or less like you
do online shopping.

You just need a few basic things like a bank account, internet connection,
and internet banking facilities. Along with these, last but not the least, a device
from which you can place the order.

It is the same for online trading as well– A Demat account, trading account and
bank account, internet facility and trading platform on your device and you are
sorted.

5.1 WHY TO DO ONLINE TRADING?

Online trading has a lot of benefits; here are the 7 main benefits:

 It is convenient
 It is cheaper
 You can monitor your investments anytime
 Investor has greater control
 Faster Transactions
 Better understanding of one’s money

47
5.2 DIFFERENCE BETWEEN ONLINE AND OFFLINE TRADING:

1) Trading:
With an online share trade account, the users can place their own orders. On the
other hand, an offline account means that users need to avail the services of a broker
to place orders. Instructions are specifically given to the brokers in an offline trade,
which creates dependence on the broking agency. Such dependence is non-existent
when you choose to trade through an online account.

2) Convenience:
An online stock trading account is a good option for people who have an Internet
connection and track their orders from the convenience and comfort of their homes
or offices. In case users are not able to access stock broking sites or do not have
access to an Internet connection, placing orders on the phone with their brokers is
more advisable.

3) Fraud:
Because online share trading provides users complete control over the transactions,
the risk of potential frauds is eliminated. There are certain instances when the
brokers execute trades on behalf of their clients without receiving permission,
which can cause significant losses to the users who choose offline trading.

4) Expertise and Knowledge:

When users opt for an online stock trading account, they may get carried away.
Without doing proper research and understanding more about how the stock market
works, they may buy or sell shares, which can result in huge losses. This is
avoidable with offline trading because the brokers have several years of experience
and knowledge, which can be beneficial for users as they receive accurate guidance
through the broking service providers. Fortunately, most of the agencies that offer
online trading services offer access to research reports and other technical and
fundamental analyses to assist account-holders to gain a deeper understanding to
make the right investment decisions.

48
5.3 ADVANTAGES OF ONLINE TRADING:

The Advantages of Online Trading are:

1. It is simple:
It enables a trader to have a hassle-free trading experience. Anyone can use these
platforms as specific skill is not required to carry out trading online.

2. It is less expensive:
It is less expensive as compared to traditional mode of trading. Brokers also
promote online trading as it reduces maintenance and other costs incurred by the
broker.

3. Quick and less time consuming:

Trading can be done in a seamless manner and in less time. Before the advent of
online technologies, trading was a cumbersome process as you had to visit the
broker or call your broker for placing or cancelling trade orders. Now, you can
carry out trading even through a smartphone in the simplest way.

4. Complete control:
It allows you to have complete control over your portfolio. You can place trade
orders from anywhere anytime. That is the kind of flexibility you get due to online
trading.

5. Chances of error are less:

In case of traditional offline trading, there were more chances of errors due to
miscommunication between the traders and brokers. But in online trading, you can
place trade orders or cancel without broker’s interference and hence can manage
trade transactions by yourself.

6. Monitor investment at all times:

You can monitor investments anytime. There are mobile trading apps that can be
downloaded in your smartphone which help you stay in touch with the markets and

49
also monitor your investment anytime and take proper strategic moves accordingly.
Loss making stocks can be removed and profit-making stocks can be added to your
portfolio by observing the way the market moves.

7. Access to research reports:

You can get access to top research recommendations, reports, analysis on stock
price based on various charts. There are various brokerage websites through which
you can have discussions with research experts as well. You can take the best move
with the help of financial advisors too.

5.4 DISADVANTAGES OF ONLINE TRADING:

The coin has two sides. Just as there are advantages to online trading, there are also
some disadvantages to online trading.

1. Technical knowledge:
Since the trading terminal runs on a computer system, those who do not have
knowledge of computer internet have to spend a lot of time learning it

2. System error:
Sometimes the website may run slow, the internet may not be up to speed, the
computer may not respond, the server may go down, and the trading terminus
may not be convenient to use. The mechanism or systems fail due to the less
speed of internet connections, it causes huge loss in trading.

3. No control over decision:

Greed, Fear and Patients are the main factors for stock market success. It is
very difficult to control your emotions at the time of heavy market fluctuations.
placement they charge 2- or 3-times higher fees for that.

4. Limited knowledge:

 Elimination of a broker could be mean trouble.

 Without proper investment advice could cause big losses.

50
  In a bull market every decision of yours earns good profit but once the
market changes gears then it's very hard to survive in the stock market. 4.5
Safety measures that have to be taken in case of online trading

5.5 SAFETY MEASURES THAT HAVE TO BE TAKEN IN CASE OF

ONLINE TRADING:

 Trade orders should not be placed from shared PCs or cyber cafes.
 Always log out after carrying out trade in order to avoid any misuse of your
account.
 Personal computers have to be protected against viruses by installing anti-
virus solutions.
 Do not click on the “remember me” option when you sign in to your trading
account from a different location.

Investment in financial assets is offered by several brokers. You can choose

that which suits your needs and demands after comparison of brokers on the basis
of services, brokerage charges, etc. Online trading helps you trade or invest in the
most secure way. It's simple, easy and fast to trade online.

51
 6: REVIEW OF LITERATURE

Bhatt & Bhatt (2012)

 Financial Performance Evaluation of depositories in India: -
In their paper entitled "Financial Performance Evaluation of depositories in India
(A comparative study of NSDL & CDSL)" explores the fact that the trend of
automation especially, Dematerialization, has enabled the Indian capital market to
take the world centre stage & scale to unprecedented heights. Securities market in
India has grown exponentially. The analysis of the progress of NSDL & CDSL in
economic terms clearly reveals that both the depositories have shown a remarkable
progress in terms of DEMAT accounts; DEMAT value &quantity, Settlement value
and quantity and the number of depository participants. Their study reveals that
both the depositories have been working financially smoothly over a period of last
six financial years.

Chaudhary & Malik (2011)

 Depository System in India: -
In their paper "Depository system in India: An appraisal" states that majority of the
participants are resided with NSDL with stake of 55 percent. Thus, it acts as the
primary organization with the majority of participants in the system. Further the
paper analysis concludes that the respondents have no clear & crisp idea regarding
the services offered by the DPs to their clients. In order to overcome geographical
& time barriers formal & informal communication need to be developed. The
majority of respondents were comfortable with the prevailing fee structure of
depository which shows the existing fee structure followed by NSDL is benevolent.

George (1996)
 Towards a Paperless Settlement System: -
In his article "Towards a paperless settlement system" explains about the role of
the NSDL in revolutionizing the paperless stock settlement system in the country.
He has examined steps taken by the depository to ensure that the scruples trading
system is a success. He has also stressed the importance of the role of regulatory
body in making the depository system successful.

52
 Jayanthi (2007)
 A study on National Stock Exchange of India Limited: -
for the national & international investors to park their funds in the years to come.
In his research work "A study on National Stock Exchange of India Limited" has
highlighted that the NSE has created a niche for itself not only in the national arena
but also in the international market with the adaptation of required structural
changes. Therefore, there is no doubt that NSE will be an attractive destination

Javaid (2003)
 A study of operations of stock exchanges with the special reference to Delhi Stock
Exchange

in his analysis "A study of operations of stock exchanges with the special
reference to Delhi Stock Exchange" discussed that Indian stock market has emerged
as a major source of finance for the corporate sector. It is an institution evolved in
the industrial developed capitalistic economies with free market mechanism. Stock
exchange was termed as institutional allocator of resources par excellence.

Kaur (2013)
 Awareness Regarding Depository & Its Various Laws
in her paper "Investors preference between DEMAT & REMAT and awareness
regarding depository & its various laws" explains the depository system in India,
focusing on the reasons for investors preference between REMAT & DEMAT. To
sum up she concludes that the growth rates of DEMAT account holder is increasing
over years. The Indian system of capital market is two tier system-Indian
government allows holding securities in any form i.e. either in physical securities
or in electronic (DEMAT) form. The respondents feel that the dematerialization
provides enough services & it is convenient to use. Majority of people are shifting
towards dematerialization as compared to the past history & study.

Olekar & Talwar (2013)

 Online Trading & DEMAT Account in India Some Issues: -
In their paper "Online trading & DEMAT account in India Some issues" observed
that the banks normally levy a lower service charge compared to other depository
participants. He also found that when the numbers of users are more online, the
speed of transactions is affected.

53
 Rao (1995)
 "Depository System:
in his paper "Depository System: A boon for India capital markets" holds the
view that the introduction of depositories would improve the market efficiency. It
is also expected to arrest the prolonged depression in the stock market. The paper
analysis shows the manner in which the depository would help to revive the stock
market. To sum up, he states that the eligibility criteria will require companies to
improve their internal systems. He is hopeful that depository system will bring a
sea change in corporate democracy, particularly in corporate management, price
discovery in market place & proxy exercise etc.

Sahoo (1995)
 The depositories ordinance, 1995
in his article "The depositories ordinance, 1995 explained" has explained the
provisions of Depositories Ordinance 1995, which provides a legal basis for the
establishment of depositories in securities with a view to ensure free & expeditious
transfer of securities.

54
 7:DATA ANALYSIS & INTERPRETATION

 ANALYSIS OF VARIOUS STOCK BROKING COMPANIES

ANGEL BROKER

Criteria Angle stock broking

Demat A/C opening charges 750

Brokerage intraday, delivery 5 paise,50 paise

AMC (Annual Maintenance Charges) Rs.300

Trading funding intraday, delivery 6times,4times (minimum stock

Rs.50,000)
Debit period T+2 day

Mode of trading Both online and offline

Software installation charges No extra charges

55
 INDIAN INFOLINE

Criteria IndiaInfoline

Demat A/C opening charges 550

Brokerage intraday, delivery 5 paise, 50 paise

AMC (Annual Maintenance Charges) NIL

Trading funding intraday, delivery 10 times, 4 times

Debit period T+2

Mode of trading Both online and offline

Margin money 2000

Software installation charges No extra charges

56
 RELIGARE SECURITIES

Criteria Religare Securities

Demat A/C opening charges 550

Brokerage intraday, delivery 5 paise, 50 paise

AMC (Annual Maintenance 250

Charges)

Trading funding intraday, delivery 6 times, 4 times (minimum stock Rs.50,000)

Debit period T+2

Mode of trading Both online and offline

Margin money No limit

Software installation charges No extra charges

57
 ICICI DIRECT

Criteria ICICI Direct

Demat A/C opening charges Rs.945

Brokerage intraday, delivery 5 paise, 50 paise

AMC (Annual Maintenance Charges) Rs.500

Trading funding intraday, delivery 6 times, 4 times (minimum stock

Rs.50,000)

Debit period T+2

Mode of trading Both online and offline

Margin money No limit

Software installation charges No extra charges

58
 8: FINDINGS

Online trading has reshaped the financial landscape, offering both

opportunities and challenges. Here are some key findings based on research
and studies:

1. Accessibility and Convenience:

o Online trading platforms have made it easier for individuals to access

global financial markets from anywhere.
o They provide 24/7 access, allowing users to trade at their convenience.

2. Cost-Effectiveness:

o Lower transaction fees compared to traditional brokers make online trading

attractive to retail investors.

o Many platforms offer competitive pricing models.

3. Increased Market Participation:

o Online trading has democratized access to financial markets, attracting

younger and tech-savvy investors.

o It has contributed to market liquidity and growth.

4. Challenges:

o Cybersecurity risks and technical glitches are significant concerns.

o The ease of trading can lead to impulsive decisions, especially among

inexperienced investors.

5. Technological Advancements:

o Integration of artificial intelligence (AI) and machine learning has

enhanced user experience through personalized recommendations and
predictive analytics.

o Cryptocurrency trading has gained popularity, with many platforms

offering digital asset options.

59
6. Customer Satisfaction:

o Studies indicate that most users are satisfied with the ease of use and
features provided by online trading platforms.
o However, the lack of personalized guidance remains a drawback.

7. Empowerment Through Education:

 Many online trading platforms are integrating educational tools, including

webinars, tutorials, and market insights.

 This helps novice investors to build confidence and develop their trading
strategies.

8. Rise of Mobile Trading:

 Mobile apps have played a significant role in boosting the popularity of

online trading.

 Investors can monitor their portfolios and execute trades on the go, making
trading more dynamic.

9. Social and Copy Trading:

 Some platforms allow users to observe and copy the trades of experienced
investors.

 This social aspect has fostered collaboration and learning among traders.

10. Gamification of Trading:

 To make trading more engaging, platforms are incorporating gamification
elements, such as rewards, badges, and leaderboards.

 While entertaining, this trend raises concerns about promoting excessive

trading.

11. Market Volatility:

 Online trading has contributed to increased market volatility due to the

rapid execution of trades by retail investors.
 High-frequency trading algorithms also add to the fluctuations.

60
12. Psychological Impact:

 The accessibility of online trading can sometimes lead to overtrading or

emotional decision-making.
 Many platforms are now offering features like alerts and limits to
encourage disciplined trading.

13. Regulatory Developments:

 Governments and regulatory bodies are keeping a close watch on online

trading platforms to ensure transparency and protect investors.

 Stricter compliance measures are being introduced to curb fraudulent

activities.

14. Global Connectivity:

 Online trading allows users to invest in international markets, diversifying

their portfolios.

 This connectivity has bridged the gap between retail investors and global
investment opportunities.

15. Impact on Traditional Brokerage Firms:

 The growth of online trading has forced traditional brokerage firms to

adopt digital strategies.

 Many have launched their own online platforms to stay competitive.

61
 9: SUGGESTIONS

SUGGESTIONS:

1) Investing in stock market is a good way for making more money but at the
same time it is very risky too.

2) Even common man should be made to understand stocks as stocks is not

understood by everyone.

3) More of the people should invest in derivatives, commodities and

currencies market.

4) Measures should be taken to create better awareness about the various

products and services provided by Angel broking in newspaper.

5) Most of the respondents are expecting more services from Angel Broking,
so they should concentrate to fulfil their expectation of their investor.

6) Facilities at the office like waiting hall, seating arrangement for on-line
trading, and drinking water/washroom facility need to be improved.

7) The problem faced regarding the technicalities like on-line trading. speed
of the services provided etc. need to be improved.

8) More improvement should be done in services like improvement should be

made in email and telephone interactions.

 As online trading is useful people should start doing online trading.

 Every people should have knowledge and experience in online trading.

 People should have demat account for online trading.

 People should start doing online trading.

62
Suggestions for Managing a Demat Account Effectively:

1) Choose a Reliable Depository Participant (DP)

Option for a reputed stockbroker or bank registered with NSDL or CDSL to ensure
secure transactions.

2) Keep Your KYC Details Updated

Ensure your PAN card, Aadhaar, and bank details are correctly linked to avoid
issues with transactions.

3) Enable Two-Factor Authentication

Use secure login credentials and enable two-factor authentication to prevent
unauthorized access.

4) Monitor Your Holdings Regularly

Check your portfolio and account statements frequently to track investments and
detect discrepancies.

5) Be Aware of Hidden Charges

Understand brokerage fees, annual maintenance charges (AMC), and transaction
costs before opening an account.

6) Link Your Demat Account with Trading Account

A seamless connection between Demat & Trading Accounts ensures quick buy/sell
transactions.

7) Avoid Dormant Accounts

If you don’t use your account frequently, it may become inactive. Make at least
one transaction periodically.

8) Beware of Fraudulent Calls & Emails

Do not share account details, OTPs, or passwords with anyone to prevent scams.

9) Option for a Nominee.

Assign a nominee to ensure smooth transfer of holdings in case of unforeseen
events.

10) Use a Trusted Trading Platform.

Choose a trading app or website with user-friendly features and real-time updates
for better decision-making.

63
 10: CONCLUSION

Online trading represents a monumental shift in how individuals

engage with financial markets, making it an essential aspect of modern
investing. Over the past two decades, the rise of online trading platforms has
democratized access to financial markets, giving millions of people—ranging
from seasoned investors to beginners—unprecedented control over their
investments. This transformation has been fuelled by technological
advancements, changing consumer behaviours, and the increasing digitization
of financial services. While online trading has brought numerous benefits, it also
presents challenges that require a disciplined and informed approach to navigate
effectively.

Key Benefits of Online Trading

Online trading has redefined convenience in the world of finance.
Unlike traditional methods that required investors to contact brokers over the
phone or visit physical offices, online trading platforms allow users to trade
anytime and anywhere. The 24/7 availability of these platforms enables
investors to monitor global markets in real-time and seize opportunities as they
arise. This accessibility has particularly resonated with younger, tech-savvy
generations who value speed and flexibility.

Cost-effectiveness is another major advantage of online trading.

Traditional brokers often charge high transaction fees and commissions, making
investing less accessible to smaller retail investors. Online platforms have
disrupted this model by offering lower fees or even zero-commission trades in
some cases. This affordability has widened participation in financial markets,
empowering individuals from diverse economic backgrounds to invest their
money.

Transparency is a cornerstone of online trading. Users have access to

real-time data, detailed market analyses, and tools that enable them to make
informed decisions. Many platforms also provide educational resources such as
tutorials, webinars, and market research to help users improve their trading
skills. This wealth of information puts more power in the hands of individual
investors, fostering a sense of control over their financial decisions.

64
 The diversity of investment options available on online trading platforms
is another key strength. From stocks and bonds to cryptocurrencies, commodities,
and mutual funds, users can build diversified portfolios tailored to their financial
goals. Additionally, innovative features like fractional investing allow users to buy
partial shares, making high-value stocks more accessible to smaller investors.

Challenges and Risks

Despite its many advantages, online trading is not without risks and
challenges. One of the most significant concerns is cybersecurity. The digital
nature of online trading makes it a target for cyberattacks, data breaches, and
phishing scams. Protecting sensitive financial information requires robust
security measures from platforms and vigilance from users.

Technical glitches are another challenge. Server downtimes, software

bugs, and slow processing speeds can disrupt trading activities, especially
during high market volatility. Such issues can lead to missed opportunities and,
in some cases, financial losses.

The ease of online trading, while convenient, can also lead to impulsive
decision-making. The ability to execute trades with a few clicks may encourage
inexperienced investors to act on emotions rather than sound analysis. This
behaviour can result in significant financial losses, particularly in volatile
markets.

Moreover, the lack of personalized guidance is a drawback of many

online platforms. While traditional brokers provide tailored advice based on an
investor's financial goals and risk tolerance, online platforms often leave users
to navigate the complexities of investing on their own. This gap highlights the
importance of education and self-discipline for successful online trading.

Regulatory compliance is another critical aspect. The regulatory

framework for online trading varies across jurisdictions, creating challenges for
cross-border transactions. Ensuring that platforms adhere to local laws and
regulations is essential to protect investors and maintain market integrity.

65
 In conclusion, online trading has fundamentally transformed the
investment landscape, offering unprecedented benefits while presenting unique
challenges. Its accessibility, cost-effectiveness, and diversity of options have
made it a powerful tool for investors worldwide. However, the risks associated
with cybersecurity, impulsive trading, and regulatory compliance underscore the
need for caution and education.
1) Most of the people are aware of online trading.

2) Most of the traders consider unsatisfactory services of broking firm as biggest

problem in trading.

3) Most of people are having demat accounting and online trading account.

4) 50% of my sample sizes are not investing in share market.

5) Equal numbers of people in sample size do intraday and delivery trading and
most of them do both intraday as well as delivery trading.

6) According to my selected sample of group. 75% people prefer to invest less

than 10k and some of them prefer to invest more than 10k but less than 20k.

7) Many people of my sample group would invest money for I month, some for 3
months, and some for more than 6 months and very few for 3 to 6 months.

8) More than 50% of me sample size thinks that online trading is preferable.

9) Lack of knowledge and experiences is the biggest problem faced by a trader

while doing online trading.

10) Many people get proper facility by their trading firm or company.

11) Almost every people of selected sample group say that online trading is useful.

As technology continues to evolve, the future of online trading holds

immense potential. Innovations such as AI-driven tools, blockchain technology,
and sustainable investing will likely shape the next phase of its development.
While online trading has democratized access to financial markets, the key to
long-term success lies in informed decision-making, disciplined practices, and
a commitment to ongoing learning. This balance will ensure that online trading
remains a force for positive change in the world of finance.

66
 11: BIBLIOGRAPHY

http://www.tradersplace.in
https://www.slideshare.net/slideshow/an-analysis-of-demat-account-
and-online-trading/7808285
http://www.tradersplace.in
http://www.berkeleygains.wordpress.com
http://www.shodh.inflibnet.ac.in

Bhatt & Bhatt (2012)

 Financial Performance Evaluation of depositories in India: -
http://paperssrn.com

Chaudhary & Malik (2011)

 Depository System in India: -

http://www.semanticsscholar.org

George (1996)
 Towards a Paperless Settlement System: -

http://www.jetire.org

Jayanthi (2007)
 A study on National Stock Exchange of India Limited: -

http://researchgate.net
Javaid (2003)
A study of operations of stock exchanges with the special reference to Delhi Stock
Exchange

http://jmi.ac.in
Kaur (2013)
67
 Awareness Regarding Depository & Its Various Laws
http://www.ijfmr.com

Olekar & Talwar (2013)

 Online Trading & DEMAT Account in India Some Issues

http://www.ijfmr.com

Rao (1995)
 "Depository System
http://www.srcc.edu

Sahoo (1995)
 The Depositories Ordinance, 1995
http://www.srcc.edu

68
 12: ANNEXUER

ONLINE TRADER SURVEY:

1) Gender
o Male
o Female

2) Age
o 18-25
o 25-35
o 35-50
o 50 Above

69
3) Do you Know about Online Trading?
o Yes
o No
o Maybe
o Other

4) Do you make your investment online?

o Always
o Never
o Sometime

70
5) From where you used to trade?
o Home
o office
o Stock broking office
o through mobile app
o Other:

6) Your Occupation?
o Student
o Private Employee
o Public Employee
o Self-Employed

71
7) How Long are you trading online?
o Less than 1 year
o 1-2 years
o 2-3 years
o more than 3 years

8) Do you have Demat account?

o Yes
o No

72
9) Income Level of trader
o Less than 1 lakh
o 1 lakh to 3 lakhs
o lakhs to 5 lakhs
o 5 lakhs to above
o NIL

10) Which stock exchange do you prefer?

o National Stock Exchange
o Bombay Stock Exchange

11) Which part of their modes have you made a major part of your investment

73
o Equity Shares
o Bonds
o Golds
o Mutual Funds
o Other

12) Is there any review system after placing the order?

o Yes
o No
o Don't know

74
13) Which means do you get confirmation of trading?
o By mail directly
o By post
o By broker email

14) Is cash received immediately after placement of order?

o Received immediately
o T+ 2 DAY
o Don’t' know

75
15) While investing what does an investors see?
o Current status
o Future estimate
o Other

16) Online trading is friendlier as compared to offline trading ?

o Agree
o Disagree

76
17) Do you feel secured while trading online?
o Yes
o No

18) Which factor do you think affect your investment?

o Interest rate
o Economic Growth
o Productivity of capital
o other

77
19) Do you think online trading has helped in growth and development of Indian
stock market?
o Yes
o No
o Maybe

20) Will you continue your E-TRADING?

o Yes
o No
o Maybe

78