Bonanza Awareness of DMAT & E-Broking of Bonanza

111
A Project Study REPORT ON Training Undertaken at Bonanza Pvt.ltdTitled “Awareness of DMAT & E-Broking of Bonanza” Submitted in partial fulfillment for the Award of degree of Master of Business Administration Jitendra 1

Transcript of Bonanza Awareness of DMAT & E-Broking of Bonanza

Page 1: Bonanza Awareness of DMAT & E-Broking of Bonanza

A

Project Study REPORT

ON

Training Undertaken at

“Bonanza Pvt.ltd”

Titled

“Awareness of DMAT & E-Broking of Bonanza”

Submitted in partial fulfillment for the

Award of degree of

Master of Business Administration

Jitendra

1

Page 2: Bonanza Awareness of DMAT & E-Broking of Bonanza

Virahyas

[email protected]

2008-2010

AUTHORISATION

2

Page 3: Bonanza Awareness of DMAT & E-Broking of Bonanza

Jasoda Devi College, Jaipur

(Affiliated to Rajasthan Technical University)

Preface/Prelude

The MBA Curriculum has been designed to provide to the future Manager’s

ample practical exposure to the business world. The training is necessary part for

the fulfillment of the MBA degree course helps the students to gain knowledge

about various aspect to the industry, emphasizing on the development of skills in

analyzing and interpreting practical problem through application of concept &

theory. One’s a project is selected, suitable financing arrangements have to be

made. Flexibility, risk, income, control and taxes are the key business

3

Page 4: Bonanza Awareness of DMAT & E-Broking of Bonanza

considerations that influence the capital structure decision and the choice of

specific instruments of financing. Performance review should be done periodically

to compare actual performance with projected performance. The researcher has

undertaken her project in one such company Bonanza Pvt.ltd ,JAIPUR.

My project title is “Awareness of DMAT & E-Broking of Bonanza” It has

helped me to enhance my knowledge about the functions of the industry.

I tried my best to explore the truth in our project for understanding practical way of working.

““ACKNOWLEDGEMENTACKNOWLEDGEMENT””

“Continuous value addition is vitally important in today’s

dynamic corporate environment. The world is full of savvy, agile

professionals who know knowledge & exposure make the

difference. We are seeing a revolution in quality & coverage of

educational curriculums and training & development needs of

corporate for their employees throughout the world.”

The feeling of enthusiasm continues with this Summer Training Report

on the “Awareness of DMAT & E-Broking of Bonanza”, which is an

integral part of the Programme’, and it increased with being a part of the

batch of “MBA” organized by the institute for the year 2008-2010.

4

Page 5: Bonanza Awareness of DMAT & E-Broking of Bonanza

With a will and effort to show my gratitude towards all those who have

helped me during this amazing learning process, I have contributed my

best to draft this report and make it an enriched source of reference

not only for management people but also for those who seek knowledge.

At the outset I express my sincere gratitude to all the Faculty Members,

for their help in each and every possible manner.

I would also like to thank Miss ma and all the members of the

Company’s administration for their invaluable cooperation.

Executive Summary

5

Page 6: Bonanza Awareness of DMAT & E-Broking of Bonanza

TABLE OF CONTENTS

S. No. CONTENT P. No.

1 ACKNOWLEDGEMENT 2

2 CHAPTER-1 INTRODUCTION 3

2.1 Abstract 4

2.2 History of Stock Market in India 5

2.3 Risk Involved in Stock Market 9

2.4 Nuances in Marketing of DMAT a/c and Study of Consumer Behavior 15

6

Page 7: Bonanza Awareness of DMAT & E-Broking of Bonanza

3 CHAPTER-2 COMPANY PROFILE 19

3.1 About Bonanza 20

3.2 E-Broking 31

4 CHAPTER-3 OBJECTIVE AND METHODOLOGY 37

5 CHAPTER-4 REVIEW OF LITERATURE 39

5.1 Existing Literature on DMAT a/c and Consumer Behavior 40

6 CHAPTER-5 FINDINGS 42

6.1 Comparison Table 43

6.2 SWOT Analysis 42

6.3 Exhaustive Sales Pitch 46

6.4 Analysis of Consumer Behavior 50

7 CHAPTER-6 CONCLUSION AND RECOMMENDATIONS 62

7.1 Conclusion and Recommendations 63

8 APPENDIX 65

9 BIBILIOGRAPHY 67

7

Page 8: Bonanza Awareness of DMAT & E-Broking of Bonanza

CHAPTER – 1

INTRODUCTION

8

Page 9: Bonanza Awareness of DMAT & E-Broking of Bonanza

ABSTRACT

The project is basically divided into two parts, the first part of the project deals with

Nuances in Marketing of Dmat and Trading accounts, offered by Bonanza.Under

this, I had to get new clients for the company, using our contacts, databases of

prospective clients, existing clients, references, internet and last but not the least, by

going on to the field and thus convince people and sell the Dmat accounts to them.

I also called up and met inactive clients of Bonanza and try to make them active by

solving their problems and convincing them to trade in the market, which will lead to

increase in the revenue of the company. I have also performed a comparative

analysis of different companies which are into marketing of Dmat and trading a/c and

compared and contrast this with Bonanza.9

Page 10: Bonanza Awareness of DMAT & E-Broking of Bonanza

I also developed an exhaustive pitch to approach the clients by interacting with

company official and faculty guide. This sales pitch is developed to show the logical

sequence of how a client is approached by Bonanza.

The second part of the project includes the study of Consumer Behavior while

deciding to invest in Equities and Derivative market. This also includes analysis of

certain factors which would increase investor’s confidence to invest in Equities

market in future.

Under this study I have considered certain factors like broker’s advice, analyst’s

recommendation, personal analysis, share price and online services and then a

factor analysis on these factors is being carried out.

From the data analyzed I came out with a conclusion that investors appear to seek

three major kinds of benefits from trading firms: Analysis (Broker’s Advice and

Personal Analysis), Market Condition (Analyst Recommendation and Market Price)

and Online Facility.

History of stock market in India

The working of stock exchanges in India started in 1875. BSE is the oldest stock

market in India. The history of Indian stock trading starts with 318 persons taking

10

Page 11: Bonanza Awareness of DMAT & E-Broking of Bonanza

membership in Native Share and Stock Brokers Association, which we now know by

the name Bombay Stock Exchange or BSE in short. In 1965, BSE got permanent

recognition from the Government of India. National Stock Exchange comes second

to BSE in terms of popularity. BSE and NSE represent themselves as synonyms of

Indian stock market. The history of Indian stock market is almost the same as

the history of BSE.

The country's capital markets have passed through both good and bad periods. The

journey in the 20th century has not been an easy one. Till the decade of eighties,

there was no scale to measure the ups and downs in the Indian stock market. The

Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that

subsequently became the barometer of the Indian stock market.

SENSEX is not only scientifically designed but also based on globally accepted

construction and review methodology. First compiled in 1986, SENSEX is a basket

of 30 constituent stocks representing a sample of large, liquid and representative

companies. The base year of SENSEX is 1978-79 and the base value is 100. The

index is widely reported in both domestic and international markets through print as

well as electronic media.

The Index was initially calculated based on the "Full Market Capitalization"

methodology but was shifted to the free-float methodology with effect from

September 1, 2003. The "Free-float Market Capitalization" methodology of index

construction is regarded as an industry best practice globally.

Due to its wide acceptance amongst the Indian investors; SENSEX is regarded to be

the pulse of the Indian stock market. As the oldest index in the country, it provides

the time series data over a fairly long period of time (From 1979 onwards). Small

wonder, the SENSEX has over the years become one of the most prominent brands

in the country.

SENSEX Calculation Methodology

SENSEX is calculated using "Free-float Market Capitalization" methodology. As per

this methodology, the level of index at any point of time reflects the Free-float market

11

Page 12: Bonanza Awareness of DMAT & E-Broking of Bonanza

value of 30 component stocks relative to a base period. The market capitalization of

a company is determined by multiplying price of its stock by the number of shares

issued by company. This market capitalization is further multiplied by the free-float

factor to determine free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. This

is often indicated by the notation 1978-79=100. The calculation of SENSEX involves

dividing the Free-float market capitalization of 30 companies in the Index by a

number called the Index Divisor. The Divisor is the only link to the original base

period value of the SENSEX. It keeps the Index comparable over time and is the

adjustment point for all Index adjustments arising out of corporate actions,

replacement of scripts etc. During market hours, prices of the index scripts, at which

latest trades are executed, are used by the trading system to calculate SENSEX

every 15 seconds and disseminated in real time.

The National Stock Exchange of India Limited (NSE) is a Mumbai-based stock

exchange. It is the largest stock exchange in India in terms daily turnover and

number of trades, for both equities and derivative trading.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance

companies and other financial intermediaries in India but its ownership and

management operate as separate entities. As of 2006, the NSE VSAT terminals,

2799 in total, cover more than 1500 cities across India.

In October 2007, the equity market capitalization of the companies listed on the NSE

was US$ 1.46 trillion, making it the second largest stock exchange in South Asia.

NSE is the third largest Stock Exchange in the world in terms of the number of trades

in equities. It is the second fastest growing stock exchange in the world with a

recorded growth of 16.6%.

The National Stock Exchange of India was promoted by leading financial institutions

at the behest of the Government of India, and was incorporated in November 1992

as a tax-paying company. In April 1993, it was recognized as a stock exchange 12

Page 13: Bonanza Awareness of DMAT & E-Broking of Bonanza

under the Securities Contracts (Regulation) Act, 1956. NSE commenced operations

in the Wholesale Debt Market (WDM) segment in June 1994.

The Capital Market (Equities) segment of the NSE commenced operations in

November 1994, while operations in the Derivatives segment commenced in June

2000.

Stock Exchange organized market for buying and selling financial instruments

known as securities, which include stocks, bonds, options, and futures. Most stock

exchanges have specific locations where the trades are completed. For the stock of

a company to be traded at these exchanges, it must be listed, and to be listed, the

company must satisfy certain requirements. But not all stocks are bought and sold at

a specific site. Such stocks are referred to as unlisted. Many of these stocks are

traded over the counter—that is, by telephone or by computer.

IMPORTANCE OF STOCK EXCHANGE

13

Page 14: Bonanza Awareness of DMAT & E-Broking of Bonanza

Stock exchanges perform important roles in national economies. Most importantly,

they encourage investment by providing places for buyers and sellers to trade

securities. This investment, in turn, enables corporations to obtain funds to expand

their businesses.

Corporations issue new securities in what is known as the primary market, usually

with the help of investment bankers. The investment bank acquires the initial issue of

the new securities from the corporation at a negotiated price and then makes the

securities available for its clients and other investors in an initial public offering (IPO).

In this primary market, corporations receive the proceeds of security sales. After this

initial offering the securities are bought and sold in the secondary market. The

corporation is not usually involved in the trading of its stock in the secondary market.

Stock exchanges essentially function as secondary markets. By providing investors

the opportunity to trade financial instruments, the stock exchanges support the

performance of the primary markets. This arrangement makes it easier for

corporations to raise the funds that they need to build and expand their businesses.

STOCK TRADING

Stocks are shares of ownership in companies. People who buy a company’s stock

may receive dividends (a portion of any profits). Stockholders are entitled to any

capital gains that arise through their trading activity—that is, to any gain obtained

when the price at which the stock is sold is greater than the purchase price. But

stockholders also face risks. One risk is that the firm may experience losses and not

14

Page 15: Bonanza Awareness of DMAT & E-Broking of Bonanza

be able to continue the payment of dividends. Another risk involves capital losses

when the stockholder sells shares at a price below the purchase price.

STOCK BROKERS

A stockbroker is an employee of a brokerage firm. The individual investor contacts

his or her stockbroker and provides the stockbroker with the details of the transaction

the investor wants to complete. Stockbrokers, however, are more than order takers

or sales representatives for their firms; they frequently provide advice to the investor.

They may have their own client list and call clients when they see transactions that

will fit the client’s investment objectives. Stockbrokers almost always have

certification from, or registration with, a state government agency or an exchange or

both. For this reason they are sometimes referred to as registered representatives.

Risk involved while investing in Stock Market

Risk is a complex, multidimensional concept that manifests itself in various ways.

Risk is omnipresent and includes stock market crashes, corporate bankruptcies and

15

Page 16: Bonanza Awareness of DMAT & E-Broking of Bonanza

currency devaluations, changes in sentiment, in inflation and interest rates, and even

major changes in the tax code.

Risk is generally defined as return volatility, or the degree of ups and downs of

returns. But there's more to risk than volatility. Risk and long-term reward are

generally related. Risk is the chance that your actual return will be less than you

expected.

People sometimes think that a good return can be achieved with little or no risk.

Unfortunately, that's impossible. To achieve your objectives, you need to assume

certain risks and avoid others.

Thoughtful investment selections that meet your goals and risk profile keep individual

stock and bond risks at an acceptable level.

However, other risks are inherent to investing you have no control over. Most of

these risks affect the market or the economy and require investors to adjust

portfolios or ride out the storm.

Major types of such risks are:

Economic Risks

One of the most obvious risks of investing is that the economy can go bad. Following

the market bust in 2000 and the terrorists’ attacks in 2001, the economy settled into

a sour spell.

A combination of factors saw the market indexes lose significant percentages. It has

taken years to return to levels close to pre-9/11 marks.

For young investors, the best strategy is often to just hunker down and ride out these

downturns. If you can increase your position in good solid companies, these troughs

are often good times to do so.

Foreign stocks can be a bright spot when the domestic market is in the dumps if you

do your homework. Thanks to globalization, some U.S. companies earn a majority of

their profits overseas. 16

Page 17: Bonanza Awareness of DMAT & E-Broking of Bonanza

Older investors are in a tighter bind. If you are in or near retirement, a major

downturn in stocks can be devastating if you haven’t shifted significant assets to

bonds or fixed income securities.

Inflation

Inflation is the tax on everyone. It destroys value and creates recessions.

Although we believe inflation is under our control, the cure of higher interest rates

may at some point be as bad as the problem. Investors historically have retreated to

“hard assets” such as real estate and precious metals, especially gold, in times of

inflation.

Inflation hurts investors on fixed incomes the most, since it erodes the value of their

income stream. Stocks are the best protection against inflation since companies

have the ability to adjust prices to the rate of inflation. It is not a perfect solution, but

that is why even retired investors should maintain some of their assets in stocks.

Market Value Risk

Market value risk refers to what happens when the market turns against or ignores

your investment. This happens when the market goes off chasing the “next hot thing”

and leaves many good, but unexciting companies behind.Some investors find this a

good thing and view it as an opportunity to load up on great stocks at a time when

the market isn’t bidding up the price.

On the other hand, it doesn’t advance your cause to watch your investment flat-line

month after month while other parts of the market are going up.

The lesson is don’t get caught with all you investments in one sector of the economy.

By spreading your investments across several sectors, you have a better chance of

participating in growth of some of your stocks at any one time.

How to evaluate a company before Investing17

Page 18: Bonanza Awareness of DMAT & E-Broking of Bonanza

For stock investors that favor companies with good fundamentals, a "strong" balance

sheet is an important consideration for investing in a company's stock. The strength

of a company's balance sheet can be evaluated by three broad categories of

investment-quality measurements: working capital adequacy, asset performance and

capital structure.

A company's capitalization describes the composition of a company's permanent or

long-term capital, which consists of a combination of debt and equity. A healthy

proportion of equity capital, as opposed to debt capital, in a company's capital

structure is an indication of financial fitness.

Optimal Debt-Equity Relationship

In financial terms, debt is a good example of the proverbial two-edged sword. The

use of leverage (debt) increases the amount of financial resources available to a

company for growth and expansion. The assumption is that management can earn

more on borrowed funds than it pays in interest expense and fees on these funds.

However, as successful as this formula may seem, it does require that a company

maintain a solid record of complying with its various borrowing commitments.

A company considered too highly leveraged (too much debt versus equity) may find

its freedom of action restricted by its creditors and/or may have its profitability hurt as

a result of paying high interest costs. Of course, the worst-case scenario would be

having trouble meeting operating and debt liabilities during periods of adverse

economic conditions.

Unfortunately, there is no magic proportion of debt that a company can take on. The

debt-equity relationship varies according to industries involved, a company's line of

business and its stage of development. However, because investors are better off

putting their money into companies with strong balance sheets, common sense tells

us that these companies should have, generally speaking, lower debt and higher

equity levels.

18

Page 19: Bonanza Awareness of DMAT & E-Broking of Bonanza

Capital Ratios and Indicators

In general, analysts use three different ratios to assess the financial strength of a

company's capitalization structure. The first two, the so-called debt and debt/equity

ratios, are popular measurements; however, it's the capitalization ratio that delivers

the key insights to evaluating a company’s capital position.

The debt ratio compares total liabilities to total assets. Obviously, more of the former

means less equity and, therefore, indicates a more leveraged position. The problem

with this measurement is that it is too broad in scope, which, as a consequence,

gives equal weight to operational and debt liabilities. The same criticism can be

applied to the debt/equity ratio, which compares total liabilities to total shareholders'

equity. Current and non-current operational liabilities, particularly the latter, represent

obligations that will be with the company forever. Also, unlike debt, there are no fixed

payments of principal or interest attached to operational liabilities.

The capitalization ratio (total debt/total capitalization) compares the debt component

of a company's capital structure (the sum of obligations categorized as debt + total

shareholders' equity) to the equity component. Expressed as a percentage, a low

number is indicative of a healthy equity cushion, which is always more desirable than

a high percentage of debt.

Balance Sheet Strength

For stock investors, the balance sheet is an important consideration for investing in a

company's stock because it is a reflection of what the company owns and owes. The

strength of a company's balance sheet can be evaluated by three broad categories

of investment-quality measurements: working capital adequacy, asset performance

and capitalization structure.

Fixed Asset Turnover Ratio

Property, plant and equipment (PP&E), or fixed assets, is another of the "big"

numbers in a company's balance sheet. In fact, it often represents the single largest

component of a company's total assets

19

Page 20: Bonanza Awareness of DMAT & E-Broking of Bonanza

A company's investment in fixed assets is dependent, to a large degree, on its line of

business. Some businesses are more capital intensive than others. Natural resource

and large capital equipment producers require a large amount of fixed-asset

investment. Service companies and computer software producers need a relatively

small amount of fixed assets. Mainstream manufacturers generally have around 30-

40% of their assets in PP&E. Accordingly, fixed asset turnover ratios will vary among

different industries.

The fixed asset turnover ratio is calculated as:

This fixed asset turnover ratio indicator, looked at over time and compared to that of

competitors, gives the investor an idea of how effectively a company's management

is using this large and important asset. It is a rough measure of the productivity of a

company's fixed assets with respect to generating sales. The higher the number of

times PP&E turns over, the better. Obviously, investors should look for consistency

or increasing fixed asset turnover rates as positive balance sheet investment

qualities.

Return on Assets Ratio

20

Page 21: Bonanza Awareness of DMAT & E-Broking of Bonanza

Return on assets (ROA) is considered to be a profitability ratio - it shows how much

a company is earning on its total assets. Nevertheless, it is worthwhile to view the

ROA ratio as an indicator of asset performance.

The ROA ratio (percentage) is calculated as:

The ROA ratio is expressed as a percentage return by comparing net income, the

bottom line of the statement of income, to average total assets. A high percentage

return implies well-managed assets. Here again, the ROA ratio is best employed as

a comparative analysis of a company’s own historical performance and with

companies in a similar line of business.

Bullish and Bearish Market

Origin of the term

One common myth is that the terms "bull market" and "bear market" are derived from

the way those animals attack a foe, because bears attack by swiping their paws

downward and bulls toss their horns upward.

This is a useful mnemonic, but is not the true origin of the terms.

Long ago, "bear skin jobbers" were known for selling bear skins that they did not

own; i.e., the bears had not yet been caught. This was the original source of the term

"bear."

This term eventually was used to describe short sellers, speculators who sold shares

that they did not own, bought after a price drop, and then delivered the shares.

Because bull and bear baiting were once popular sports, "bulls" was understood as

the opposite of "bears." I.e., the bulls were those people who bought in the

expectation that a stock price would rise, not fall.

21

Page 22: Bonanza Awareness of DMAT & E-Broking of Bonanza

A stock market bull is someone who has a very optimistic view of the market; they

may be stock-holders or maybe investors who aggressively buy and sell stocks

quickly.

A bear investor, on the other hand, is pessimistic about the market and may make

more conservative stock choices. Sometimes, the terms are used to refer to specific

funds or stocks.

What Drives Bear and Bull Markets?

The stock market is affected by many economic factors. High employment levels,

strong economy, and stable social and economic conditions generally build investor

confidence and encourage investors to put their money in the stock market. Often,

this can bolster bull markets. Also, new technologies and companies that encourage

investors to put their money in stocks can create bull markets. For example, in the

1990s, the dot com craze encouraged many investors to put their money in stocks

that they felt would keep increasing. In some cases, a bullish market is simply self-

perpetuating. Since the market is doing well, it only encourages investors to invest

more money or to start investing.

On the other hand, discouraging economic or social political changes in a society

can push the market down. Sudden instability or unemployment -- or even fears of

unemployment caused by wars and other problems -- can start to make investors

more conservative and therefore lead to bear markets. Of course, again this

becomes a self-perpetuating trend. As the economy slows down, companies begin

downsizing. Increased unemployment makes people far less willing to gamble on the

stock market. Sometimes, a panic caused by dire predictions about the market can

also create bearish conditions.

22

Page 23: Bonanza Awareness of DMAT & E-Broking of Bonanza

Investing During Bear and Bull Markets

New investors often assume that they need to avoid investing during bear markets,

and invest heavily during bull markets. This is not the case. Experienced investors

know that you need to be able to invest in any sort of market condition, provided that

you do so wisely. Each investor has a different strategy for dealing with a bull market

or bearish markets. Many investors try to take advantage of bull markets by buying

stocks as soon as the market gets bullish, and then starting to sell when prices seem

to have reached their peak. The difficulty, of course, is that it is almost impossible to

tell when the trend is beginning and when it will peak. In general, investors can take

more chances with the market during a bullish phase. Since overall prices will rise,

the chances of making a profit are good.

In bearish market conditions, prices are falling and the possibility of loss is pretty

good. What is worse, it is not always possible to tell when bearish conditions will

end. Therefore, if you invest during such market conditions, you may have to suffer

some losses before bullish times return and you're able to realize a profit. For this

reason, many investors decide on short selling or fixed income securities and other

more conservative types of investment. Defensive stocks are another good option

that remains stable during bearish conditions. On the other hand, some investors

see bearish market conditions as an ideal time to invest in more stocks. Since many

people are selling off their stocks -- including valuable blue-chip stocks -- at low

prices, it is possible to set up long-term investments that will prove valuable during

bullish times.

Now during the time of our Summer Internship Program the market trend was

Bearish and the investors were not trading actively during this time. Our

objective in Bonanza was to approach clients and educate them that this is the

best time for them to invest in stock market. This is the time when they should

do long term investments that will prove them valuable during the Bullish

phase.

This in turn helped Bonanza to generate more business from inactive clients.

23

Page 24: Bonanza Awareness of DMAT & E-Broking of Bonanza

NUANCES IN MARKETING OF DEMAT AND TRADING A/C

Dmat is short form of dematerialization. In a Demat account, securities like shares,

corporate bonds etc are kept in electronic format. The idea of a dematerialized

account is to avoid the need to hold anything in physical form.

Investors have to open a Demat account with depository through a depository

participant (DP). A depository is similar to a bank which holds securities in an

account, transfers securities between accounts on the instruction of the account

holder, facilitates transfer of ownership without having to handle securities and

ensures safe-keeping of securities.

Currently, there are two depositories — National Securities Depository Ltd (NSDL)

and Central Depository Services Ltd (CDSL) — which are registered with the

Securities and Exchange Board of India (SEBI). These depositories operate through

a number of DPs, who are agents of these depositories.

Though SEBI has allowed for transactions of less than 500 shares in physical format,

not many people accept physical shares these days as it is difficult to sell them.

Keeping Demat securities is also far more advantageous. It does away the need for

paperwork, making transactions faster and more efficient. It saves investors from

destruction or loss of securities in transit, name transfer, stamp duties etc.

Our job in Bonanza was to get such clients for the company, who not only wish to

open a Demat account but also willing to trade regularly. As the company earns

through brokerage charged per transactions (i.e. when a client buys or sells shares)

and to earn this brokerage, they need such clients, who trade on regular basis.

This is been done by various methods like

Cold Calls – Here I collect the details of people from corporate databases, yellow

pages, internet and references and try to fix an appointment with these people by

calling them.

24

Page 25: Bonanza Awareness of DMAT & E-Broking of Bonanza

Personal Network – I also tried to make some clients based on my personal

network. I tried to contact my friends and family to give me prospective leads of

people who all are interested in share market.

Going on the field – I also tried to get some clients by directly approaching to big

offices, multiplexes and some complexes.

Apart from this our job in Bonanza was to also look at such clients who were not

been trading in recent times. We tried and fixed an appointment with such clients

and tried to help them out if could be done with the help of company so that these

clients can trade with ease in future.

Important things one needs to keep in mind while opening a Demat

account

Zero balance: Unlike a normal bank account, one doesn’t need to deposit any

shares or cash for opening a Demat account. Even after opening the account, there

is no need to hold any securities in that account. If and when you buy any share, this

share will be shown in your account electronically. The account will be adjusted to

the extent of any sale/purchase of any securities as and when the transaction takes

place.

One ID: The DP will open the account in the system and give an account number,

which is also called BOID (Beneficiary Owner Identification number). This account is

enough to hold all kinds of securities like shares, debentures and other debt

instruments like bonds and G-secs. However, there is no restriction on the number of

Demat accounts that can be held by a person.

One can open any number of Demat accounts with different DPs. Even post office

instruments like Kisan Vikas Patra and National Savings Certificates can be held in

Demat form. However, at present, the facility is available only in 35 nominated post

offices in Mumbai.

Two documents: PAN has been made compulsory for all Demat accounts with

effect from April 2006. Anyone opening a Demat account needs to produce his PAN

card at the time of opening it. The PAN card also doubles as a proof of identity

document, which is mandatory.

25

Page 26: Bonanza Awareness of DMAT & E-Broking of Bonanza

The other important document is proof of address. Passport, driving license, voter’s

ID card, bank statement and electricity bills are among the various documents

accepted as identity proofs.

Three accounts: A Demat account will be fully operational only if it’s accompanied

by two other accounts — trading account and bank account. While the former is

optional, the latter is a pre-requisite as it is needed for crediting any dividend

warrants.

Trading account is necessary to buy/ sell securities in the market and can be opened

with a broker. If one does not intend to trade but only to convert existing physical

instruments into Demat form, the trading account is not necessary. Since many

banks these days have broking and DP arms, you can open all three accounts at

one place itself.

Four types of charges: There are four fees usually levied on a Demat account:

conversion fee, annual maintenance fee, custodian fee and transaction fee. All the

charges vary from DP to DP.

Conversion fees: The DP charges a fee for converting shares from the physical to

the electronic form or vice-versa. This fee varies for both Demat and Remat

requests. For Demat, some DPs charge a flat fee per request in addition to the

variable fee per certificate, while others charge only the variable fee.

Annual maintenance fees: This is generally charged in advance.

Custodian fee: This is charged monthly and depends on the number of securities

held in the account. Each security is identified by a unique international securities

identification number (ISIN). Custodian fee is linked to this numbers and ranges

between Rs 0.5 to Rs 1 per ISIN per month. DPs will not charge custodian fee for

ISIN on which the firms have paid one-time custody charges to the depository.

Transaction fee: Transaction fee is charged for crediting/debiting securities to and

from the account on a monthly basis. While some DPs charge a flat fee per

transaction, others peg the fee to the transaction value, subject to a minimum

amount. For example, while SBI charges Rs 3 per transaction, ICICI Bank does not

charge ‘buy’ trades, but charges 0.04% of the transaction value in case of sell

trades, subject to a minimum of Rs 10.

The fee also differs on the kind of transaction (buying or selling). Some DPs charge

only for debiting the securities while others charge for both. The DPs also charge if

26

Page 27: Bonanza Awareness of DMAT & E-Broking of Bonanza

your instruction to buy/sell fails or is rejected. In addition, service tax is also charged

by the DPs.

SEBI has removed account opening charges, transaction charges for credit of

securities, and custody charges vide circular dated January 28, 2005.

Consumer Behavior while taking decisions related to his

Investment in Equities and Derivative Market

This study is based on various factors which affect consumer while taking decisions

related to his investment in Equities and Derivative Market. The study is based on

the questionnaire survey. Amongst the various factors outlined by experts taking up

studies related to consumer behavior certain factors like current market price,

confidence in broker’s advice, analyst recommendation, inclination towards online

trading, personal analysis etc are found to be most important and are analyzed.

Though trading in equities and derivatives is no longer a novel concept to the Indian

investor yet the predominant sentiment among investor’s is that of apprehension

while investing in capital markets. The main objective here is to study the Indian

investor behavior that was undertaken through the analysis of primary and

secondary data. The primary data collected from investors belonging to different age

group and having different professional background were analyzed through SPSS to

arrive at those factors that actually influenced investor behavior. The analysis of the

secondary data involved research papers and articles involving study of investor

behavior published by both Indian and Foreign researchers.

Through the comprehensive use of SPSS, an attempt has been made to establish a

correlation among various factors influencing consumer behavior.

From the analysis conducted we can see that investors appear to seek three

major kinds of benefits from trading firms: Analysis (Broker’s Advice and

Personal Analysis), Market Condition (Analyst Recommendation and Market Price)

and Online Facility

27

Page 28: Bonanza Awareness of DMAT & E-Broking of Bonanza

The study also includes the analysis of factors which would increase investor’s

confidence in Equities and Derivative Market.

CHAPTER-2

COMPANY

PROFILE

28

Page 29: Bonanza Awareness of DMAT & E-Broking of Bonanza

Delhi Registered Office:

4353/4, Madan Mohan Street,

Ansari Road, Darya Ganj,

New Delhi – 110 002.

Tel.:011-23242022-26

Delhi Head Office:

2/2A Lakshmi Insurance Building,

1st Floor, Asaf Ali Road,

New Delhi – 110 002

Tel.: 011-301412600 / 30112900

Mumbai Corporate Office:

Plot No. M-2, Walbhat Road, Cama Industrial Estate, Goregoan (E),

Mumbai – 400 063. Tel.: 6760 5500 / 6760 5600

29

Page 30: Bonanza Awareness of DMAT & E-Broking of Bonanza

COMPANY PROFILE

Bonanza is a leading Financial Services & Brokerage House with acknowledged industry

Leadership in execution and clearing services on Exchange Traded Derivatives and cash

market products.

Key elements that place Bonanza amongst the leading Brokerage Houses and makes it

the preferred service provider for value based financial services are:

A Client-driven foundation and strategy committed to client-specific investment

needs and objectives.

Integrated and innovative use of Technology enabling clients to trade offline, online

and Strategic tie-ups with latest technology partners to facilitate trading access and direct

processing across more than 900 Branches spread over 310 cities.

Client-focused philosophy backed by memberships of all principal Indian Stock and

Commodity Exchanges makes Bonanza a preferred service provider in the Industry for

value based services.  

Bonanza confidently steers you through a challenging Financial and Trade Market

every moment, whether you are present or not.

The Management

Mr. Shiv Kumar Goel is a Promoter / Director, CA by profession and a

qualified Company Secretary. He has more than 25 yrs of experience in financial

service and brokerage. Prior to venturing into business he was Chief Executive

30

Page 31: Bonanza Awareness of DMAT & E-Broking of Bonanza

Officer (CEO) of SRF Finance Ltd., New Delhi. He has been a pioneer in

innovating technological advancements and its implementation methodologies.

Mr. S. P. Goel is a Promoter/Director, qualified CA operating from the

country's financial capital Mumbai, is credited of having represented on the Board

of directors of OTCEIL. Mr. Goel has represented various prestigious committees

oF SEBI including that of JR Verma Committee, NSEIL (Executive Committee,

Committee on Settlement of issues), NSCCL. He has also represented as a

member of the Disinvestment and Privatisation Committee of the Indian Merchants

Chamber (IMC).

Mr. S. K. Goel is a Promoter/Director, a qualified Chartered Accountant by

profession and experience of more than 25 years, has in past worked with leading

Indian industrial groups like Modi's & Oswals's.

Mr. Vishnu Kumar Agarwal is a Promoter/Director, is a Bullion Dealer, real

estate developers & consultant. He has been credited with setting up various

trading & investment channels in the field of commodity futures trading for Indian

residents & investors.

Mr. Anand Prakash Goel is a Promoter/Director and a practicing Chartered

Accountant with over 23 years of experience.

The management team of Bonanza comprises of Chartered Accountants, MBAs, IT

Professionals and Engineers, in addition to senior professionals in the financial field.

Bonanza Affiliation and Distribution Network :-

Proven and accredited leaders in the Financial Services business, Bonanza

provides you the unique opportunity to trade offline and online while cutting across

all geographic barriers.

Strategic Tie-ups that provide latest technology for access and processing.

Trading over 900 locations across 310 cities in India

31

Page 32: Bonanza Awareness of DMAT & E-Broking of Bonanza

24 hour access to Account Information via the Net or Electronic File

Transfer (FTP) facilities.

Membership of all Principal Indian Stock and Commodity Exchanges

National Stock Exchange of India Ltd (NSEIL)

Bombay Stock Exchange (BSE)

Futures & Option Segment of NSEIL & BSE

Dubai Gold Commodities Exchange (DGCX)

National Commodity & Derivatives Exchange Ltd. (NCDEX)

Multi Commodity Exchange (MCX)

National Multi Commodity Exchange (NMCE)

OTC Exchange of India Ltd (OTCEIL) Depository Participant with

NSDL & CDSL

Corporate Agents  for Life & Non-Life Insurance (both foreign / private and

state owned insurance companies)

One of the largest distributors of leading Mutual Funds in India

Depository Participant with NSDL & CDSL

Group Representation

Bonanza Portfolio Ltd.

Bonanza Global DMCC, Dubai

Bonanza Commodity Brokers Pvt. Ltd.

Bonanza Insurance Brokers Pvt. Ltd.

32

Page 33: Bonanza Awareness of DMAT & E-Broking of Bonanza

Bonanza Online.com Ltd.

Bonanza Research Desk

Our Research Desk Philosophy :-

“Investing means laying out money today to receive money in real terms

after taking inflation into account, tommorrow” That’s because we’re realistic,

experienced, backed by research and study and most importantly, client-driven.

Empowering the Investor: -

The Bonanza Research Desk has one key objective – to empower you completely

with Market Knowledge, Analysis and Advisory Services to help you prosper. Our

team provides expert and timely analysis on equity and commodity to help you

maximize your trading decisions.  We offer value perspectives, suggest strategy,

focus on opportunities for investment and growth, and endeavors to reduce risk

potential. Trading Ideas

Daily Market Strategies

Monthly Updates

Investment Ideas

Trading Calls

Commodity Views

Bonanza Future Innovations: -

In an ever-evolving Market, we constantly seek value for our clients. Some of our

plans include: Value-based proactive Portfolio Management Services (PMS) to

Resident & Non-Resident Indians (NRI).

Significant market-share in Commodities Futures Trading Segment in India.

Value based Global Portfolio & Asset Allocation access to Resident Indians. 33

Page 34: Bonanza Awareness of DMAT & E-Broking of Bonanza

Clearing, execution & custodian services for Non-Resident Indians, Foreign

Institutional Investors & Overseas Corporate Bodies.

BONANZA PORTFOLIO MANAGEMENT SERVICES (PMS)

This is probably the most professional and customized Portfolio Management

Service you will discover. Our key objective is your key objective – Significant

Wealth Creation for you.

A PMS offers all the benefits of a Mutual Fund Plus other advantages that include

the Flexibility to buy stocks in a phased manner and in a conducive market.  Our

PMS Managers are highly experienced professionals who respond swiftly to

changes, rallies, patterns and move your stocks around to capitalize on Market

situations.

Value Plus! PMS levies charges only on actual performance. No profit – No fee.

Highlights of the Bonanza PMS

Bonanza provides a highly professional fund management services that is yet

flexible to deliver maximum returns to our clients. Here are some highlights of our

process:

Professional research brings out the brightest stock and sector ideas for

your portfolio.

Proactive management means monitoring the operational and stock market

performance of all companies in your portfolio regularly.

Prudent risk management practices mean the better downside protection for

your portfolio and also help convert paper gains into real profits.

Greater flexibility to hold cash and allocate investments across sectors and

adjust for market trends.

34

Page 35: Bonanza Awareness of DMAT & E-Broking of Bonanza

Professional Fund Management

It is important to realize that an investment in bonanza PMS does not automatically

become an equity investment. The flexibility of the PMS allows us to convert cash

to equity over period of time- this process can be speeded up or slowed down to

adjust for market trends.

Recent Past Performance

Returns % (From Aug 13, 2004 to Nov 30, 2007)

 Absolute       Annualised

Bonanza PMS    327.28 % 99.22 %

Sensex  277.68 %  84.18 %

Nifty     260.58 %        79.00 %

Other benefits

35

Page 36: Bonanza Awareness of DMAT & E-Broking of Bonanza

Dedicated portfolio manager contact Expert initial and ongoing advice Continual

fund monitoring In-depth reporting on portfolio performance, including graphs &

charts.

Features & fee structure:

Minimum portfolio size: Rs.10 lakhs. You can also open a PMS account by transferring

your existing portfolio of stocks or mutual funds.

PMS Fees: 15% of profits plus government taxes. Charged quarterly -due only if the

portfolio has made profits in that quarter.

Brokerage: 0.50% plus all applicable regulatory charges and government taxes. Bonanza

portfolio Ltd. And Bonanza Stock Broker Ltd. will be appointed as brokers Ltd. Will be

appointed as brokers to the scheme.

Other charges: Depository and other charges, expenses and taxes will be on actuals.

Exit: No lock-in period. No exit charges. Exit any time with a notice of minimum 3 working

days.

BROKERAGE SERVICES

Equity

Being a member of the National Stock Exchange (NSE), Bombay Stock Exchange (BSE)

and dealer with Over The Counter Exchange of India (OTCEI) we handle your trading needs,

through a network of experienced dealers across the country, and through our

comprehensive website.

36

Page 37: Bonanza Awareness of DMAT & E-Broking of Bonanza

Commodities

Investors looking for a fast paced dynamic market with excellent liquidity can now trade in

the Commodity Futures Market. Bonanza is a registered trading and clearing member of

NCDEX , MCX and DGCX(DUBAI). You can participate by easily opening an account with

us and we shall suggest and advise you on the strategy you could employ in your

investments. We will also provide you with research on your investments, and you will

receive regular portfolio valuation reports to enable you to monitor performance and view the

progress towards the investment objective.

Derivatives

We are clearing-cum-trading members in Future & Options segment in NSE as well as BSE 

and we provide this facility to our clients.

SERVICES AS DEPOSITORY PARTICIPANT

We are please to introduce you Bonanza as a Depository Participant for NSDL and CDSL

and offer the whole range of depository services to its investor like:-

Account Opening :- Individual/Corporate/CM/in Equity/Commodity.

Dematerialization/Rematerilisation :- Conversion of physical shares into Electronic

from and vice versa.

Facilitation Repurchase/Redemption of Units of Mutual Funds.

Electronic settlement of tracks in stock Exchanges.

37

Page 38: Bonanza Awareness of DMAT & E-Broking of Bonanza

Pledging of dematerialized securities against loan

Nomination facility

Electronic credit of securities allotted in Public Issues, right issue.

24x7 Web access form viewing of transaction for our clients through Speed-e

(nsdl.co.in) and Easiest (cdslindia.com)

Internet based services like Speed-e and Easiest

Providing better services at competitive rates.

Charge Structure

Sr. Particulars New Charge Structure w.e.f. 1st Aug.

2007

1 Demat Account Opening

Documentation Charges,

Including stamp agreement

Power of Attorney (POA)

FAX indemnity

Nil

Rs. 100/-

Rs. 100/-

Rs. 200/-

2 Annual Maintenance : Individual

CM/Corporates/Others

Rs. 250/-

Rs. 800/-

3 Account Closing Charges Nil

4 Rematerialization Per certificate Rs. 15/-

38

Page 39: Bonanza Awareness of DMAT & E-Broking of Bonanza

5 Debit Transaction :

Market Off market/Inter Depository Rs. 15/-

6 Pledge : Creation Rs. 35/-

7 Demeb Rs. 31/- per certificate

E-BROKING

You can easily in Equities, commodities and derivatives by signing up into

www.bonanzaonline.com at Bonanza online, you can choose between two products.

Bonanza Value

All beginners start somewhere and it’s easier with a guide. Your investments may be small,

but our experience, research base and guidance are vast. Register on to the Bonanza Value

module and you will find all information and processes customized to beginners.

Bonanza Max

Bonanza Max is the ultimate module for dynamic traders and jobbers working through the

daily trading session. In order to clearly distinguish the two products and to encourage the

use of right product by the person with right mindset, the characteristics and system

requirements for the two products is explained in detail in the chart below.

39

Page 40: Bonanza Awareness of DMAT & E-Broking of Bonanza

Bonanza Opportunity

Bonanza Opportunity is targeted towards aggressive investors who prefer more active

management of their equity portfolio. The scheme will aim to capitalize on value

opportunities thrown up by sudden price changes. It will also target event-based

opportunities. Though the scheme will position its portfolio with an aggressive stance, this

remains an investment product.

a) Portfolio Management Fee Nil

b) Brokerage @ 1% of the value of the transaction+ Regulatory Charges.

c) Other Costs on actuals (DP Charges/Bank Charges.)

Component. Bonanza-Value Bonanza-Max

Account Opening Charges 500/- 500/-

Minimum initial

Margin Amount

2000/- (Adjustable against

market exposure)

1000/- (Adjustable against

market exposure)

Brokerage (%)

Delivery

Intraday

F&O segment

0.40

0.05

0.05

0.30

0.04

0.04

DP Charges – AMC

- Transaction

First year Nil

Rs. 300/- 2nd yr. Onwards

Sale Transaction 12/-

First year Nil

Rs. 250/- 2nd yr. Onwards

Sale Transaction 10/-

Exposure 7X of Total Credit

(Including shares)

10X of Total Credit

(Including shares)

Bank Tie-up for payments HDFC/UTI/ICICI HDFC/UTI/ICICI

Minimum Monthly Nil 1000/- (compound on

40

Page 41: Bonanza Awareness of DMAT & E-Broking of Bonanza

Membership commitment quarterly basis)

SMS charges for research

on Mobile

Free Free

Software Charges Nil Nil

Minimum Charge per

contract Note

Rs. 15/- Rs. 15/-

41

Page 42: Bonanza Awareness of DMAT & E-Broking of Bonanza

42

Page 43: Bonanza Awareness of DMAT & E-Broking of Bonanza

There are two types of trading environment available for online trading

1. Installable software based stock trading terminals: This trading environment

requires software to be installed on investor’s computer. This software is provided by

the stock broking firm. This kind of trading terminal is used by high volume intraday

equity traders.

Advantages

Orders are directly sent to stock exchange rather than stock broker which make

order execution very fast.

It provides much more information as compared to web based version including

stock market charts, price alerts, stock market news etc.

Disadvantages

You cannot trade if you are not on the same computer where you have installed the

software.

2. Web (Internet) based trading application: This does not require any special

software installation. This is just like any other website which can be opened from

anywhere around the world for trading purpose.

43

Page 44: Bonanza Awareness of DMAT & E-Broking of Bonanza

Advantages

Real time stock trading is possible without calling or visiting broker’s office.

It displays real time market watch, graphs, historical data etc.

Trading history, Demat a/c balance and saving a/c balance can be checked at any

time

Also provides valuable analysis to investors on various stocks.

Secured transactions through unique ID’s

Customer service through Email and chat

Disadvantages

Some people don’t have much proficiency of internet and computers.

Websites are not that user friendly as compared to personalized service of broker’s

Nevertheless, with all the convenience of online trading there are still investors who

prefer the old fashion way of offline trading. Offline trading has lost some popularity

but it is still the main form of investing. Offline trading offers many benefits as well.

Pro’s of offline trading

The most important point which investors appreciates is that they are not alone while

taking any decisions so they can take the advice of their Relationship Manager when

investing in a particular script.

They are not faced with the challenge of making these vital investment decisions;

especially, if they do not have the experience necessary to make the appropriate

investments.

The advantage of trading offline is higher exposure limit. Investors get higher

Exposure while trading Offline as compared to Online.

44

Page 45: Bonanza Awareness of DMAT & E-Broking of Bonanza

With the ever booming share prices and the market scaling new heights more and

more people are getting attracted towards this sector but as per the SEBI norms one

must have a Demat a/c.

To sell Demat a/c to a client it is required to collect all the information regarding

Demat a/c in general and demat a/c offered by Bonanza.

I also studied and compared the features of Demat a/c offered by various other

companies in the industry to get fully prepared in order to sort the queries a client

could ask about the product.

I visited some of the main companies as a client and enquired about their offerings

and compared these offerings with those of Bonanza.

Some of the main companies I visited were-

India Infoline

Reliance Money

ICICI Direct

IndiaBulls

45

Page 46: Bonanza Awareness of DMAT & E-Broking of Bonanza

CHAPTER-3

OBJECTIVE

AND

METHODOLOGY

46

Page 47: Bonanza Awareness of DMAT & E-Broking of Bonanza

Objectives

To increase the client base of the company by targeting new clients for Bonanza.

To help the organization provide better service to customer by analyzing the

problems faced by the customer and their satisfaction level with the service of

Bonanza.

To understand the marketing strategies of Dmat a/c of Competitor companies and to

compare and contrast with Bonanza.

To suggest strategies to Bonanza regarding marketing of Dmat and trading a/c.

To study the factors affecting consumer behavior while taking decision before

investing in Equities and Derivative market.

Methodology

The methodology of the project includes a combination of both primary as well as

secondary data collection.

Collected Database of the prospective clients from the company officials and making

calls to them to explain about the offering.

We used our Personal Database and tried to create market for Demat and Trading

a/c.

Fixed an appointment with the Client and explained them thoroughly about the

Demat a/c of Bonanza and tried to convince them to open a/c with Bonanza.

Completed the Registration Formalities with the Clients who were interested in

opening an account with Bonanza.

Developing an Effective Sales Pitch

Based on Primary Research data collected from the Interviews with company

officials and Faculty Members.

Factors affecting Consumer Behavior

This study is based on the questionnaire survey. Various factors such as current

market price, confidence in broker’s advice, analyst recommendation, inclination

towards online trading etc are studied and analyzed.

47

Page 48: Bonanza Awareness of DMAT & E-Broking of Bonanza

The study also includes factors that would improve investor’s confidence in capital

markets.

COMPILIATION OF DATA:

To perform Competitive Analysis of different Companies which are into Marketing of

Demat a/c

Perform an Exhaustive Strength Weakness Opportunity Threat (SWOT) analysis

report of Bonanza Portfolio Ltd.

Developing an exhaustive pitch to approach the clients by interacting with company

official and faculty guide, which would help new recruits of Bonanza in increasing

client base for the company.

48

Page 49: Bonanza Awareness of DMAT & E-Broking of Bonanza

CHAPTER-4

REVIEW OF

LITERATURE

49

Page 50: Bonanza Awareness of DMAT & E-Broking of Bonanza

Existing literature on Consumer Behavior

Globally, there are increased evidences to suggest that investor confidence has

assumed an important role in the economic development of a country. Though

research relating to importance of investor behavior in the Indian capital markets are

yet to be undertaken there has been ample instances wherein behavioral patterns of

the investor has be considered essential. The Economist (1998) indicated that a lot

of issues need to be addressed to make capital markets safer. Transparency,

strengthening financial system and managing crises are the issues, which cannot be

quickly fixed. But they add up to a stronger system. David Bullard (1998) in Business

Times has indicated that the private investors are the big losers on South African

listings scam. Companies with no earning record and with inexperienced directors

got listed on stock exchanges. Their only objective was profit making out of inflated

market price. The net result is private investors lost confidence in the market. Lee

Hsien Loong (2000) while addressing Financial Institutions in Bangkok stressed the

importance of rebuilding investor confidence for prosperity of ASEAN countries. He

indicated that for investor confidence, rebuilding of sound fundamentals, dealing with

capital account risks, economic co-operation among ASEAN, corporate restructuring,

banking sector reforms and improvement of political and social conditions is

important. Joseph.J.Oliver (2002) in his presentation to the senate standing

committee on banking, trade and commerce, suggested that close to half of all

Canadians have investments in equities and their confidence is essential to healthy

and dynamic capital market. Deep bear market, corporate scandals, insider trading,

high levels of executive compensation and in accuracy of published financial

statements are cited as reasons for lack of investor confidence in Canadian capital

markets. He indicated that regulators, the accounting professionals, analysts,

brokerage firms, public companies, shareholders and Government must contribute to

ensure good corporate governance and reduce corporate failures. McCall (2002) in

his testimony before the committee on financial services United States house

representatives, observed that integrity of the financial markets and economic well

being of the country depend on corporate accountability and investor confidence. The

Hindu (2002), online edition of Indian national newspaper has indicated that the spate of

50

Page 51: Bonanza Awareness of DMAT & E-Broking of Bonanza

scandals in United States were being addressed by stricter laws and strong actions against

culprits to prevent any recurrence of these events and to restore investor confidence.

The subject related to consumer behavior of investors participating in the capital

markets have been undertaken by many prominent researchers in the last decade.

Dale W. Jorgensen, (1966) Dept. of Economics, Harvard University in his paper on

capital theory and investment behavior had cited tax policy as a determinant of

investment expenditures through rental price of capital service. Stiglitz and Weiss

(1984) have indicated that any bunch of new entrants into the equity market contains

a number of frauds. Common investors know this, but they cannot identify the frauds.

Heath and Tversky (1991) found that people’s willingness to act on their judgment is

dependent on their subjective competence. They cited that people are willing to bet

on their own judgment when they feel they are knowledgeable and skilful.

Bumgarner and Pime (2000) have studied the capital flows to and from Hong Kong

in the years prior to its reversion to Chinese sovereignty and during the transition.

They have indicated that Government policies have an impact on investor

confidence and capital mobility. Fieldstein and Yitzhaki (2000) have presented

evidence to suggest that the corporate stock owned by high-income investors

appreciate substantially faster than stock owned by investors with lower incomes.

They have indicated that high-income individuals have larger portfolios and can

therefore denote more time or resources to their investments, thus resulting in higher

returns. Dechow, Hutton and Sloan (2001) found that analysts growth forecasts are

routinely over optimistic around new equity offerings, but the most over optimistic are

those analysts employed by the lead underwriters of the offerings. Bloomfield, Libby

and Nelson (2002) have indicated that less informed investors are over confidant in

investments. Providing more information to professional investors only could harm

the welfare of less informed investors if less informed investors are not aware of the

extent of their informational disadvantage. Statman (2002) in his research compared

the investors a century ago with investors today. He concluded that today’s investors

are more rapidly informed than their predecessors, but they are neither better

informed nor better behaved. Hall (2002) has conducted research on broker’s

recommendations. He found that investors, who invested in the Johannesburg

Securities Exchange (JSE) based on their brokers’ advice, were able to get risk

adjusted returns superior or equal to the market. Stout (2002) has indicated that 51

Page 52: Bonanza Awareness of DMAT & E-Broking of Bonanza

investors have adaptive and not rational expectations. Adaptive expectations result

in both trust and mistrust in securities market based on past actions. Graham and

Harvey (2006) in their paper had cited that the “competence effect” influenced

frequency trading and home bias (tendency to overweight domestic equities and

underweight foreign equities). They had also cited in their findings that male

investors and investors with larger portfolios or more education are likely to perceive

themselves as more competent than female investors and investors with smaller

portfolios and lesser education.

In the Indian context, Gupta (1996) has indicated that from the angle of investor protection,

the regulation of the primary market is important for several reasons. The number of small

investors in primary market is massive. Most of new investors make their first entry into

equity investments via the new issue market. So retaining common investor confidence in

primary markets is important. Madhusoodan (1997) has indicated that in the Indian stock

market, higher risk is not commensurately well priced, hence investment in higher risk

instruments may be of no use. Gokaran (2000) has studied the financing patterns of the

corporate growth in the country. The study indicated that equity markets suffer serious

inadequacies as a mechanism for raising capital. Murali (2002) has indicated that New

issues market (NIM) focuses on decreasing information asymmetry, easy accessibility of

capital by large sections of medium and small enterprises, national level participation in

promoting efficient investments, and increasing a culture of investments in productive sector.

In order that these goals are achieved, a substantial level of improvement in the regulatory

standards in India at the voluntary and enforcement levels is warranted. The most crucial

steps to achieve these goals would be to develop measures to strengthen the new

issues market.

52

Page 53: Bonanza Awareness of DMAT & E-Broking of Bonanza

CHAPTER – 5

FINDINGS

53

Page 54: Bonanza Awareness of DMAT & E-Broking of Bonanza

COMPARISON TABLE REGARDING THE OFFERING FROM DIFFERENT COMPANIES

Name of the Company

Charges for opening Demat and Trading a/c

Exposure Brokerage for Intraday

Brokerage for Delivery(cash)

Annual Maintenance Charge

Minimum Balance Required

Indiabulls

Rs 900 for both

Up to 8 times in General Trading and Up to 2 times in Marginal Trading

0.03 to 0.05%

0.3 to 0.5 %

Nil Nil

India Infoline

Rs 5555 in which Rs 5000 would be used for Trading

Up to 8 times 0.05% 0.25% Yes Rs 2000

Reliance Money

Rs 750 for both

Up to 5 times Prepaid Brokerage Card *

Prepaid Brokerage Card *

Yes Nil

ICICI Direct

Rs 750 for all three types of a/c

Margin – in which exposure is 5 times and u can convert to delivery

Margin Plus- in which exposure is 20 times but no conversion

0.05% 0.75% Yes Nil

Bonanza Portfolio Limited

Rs.200 are for Trading a/c and Rs. 400 are for Demat a/c

5 to 7 times 0.03% 0.3% No Nil

* Prepaid Brokerage Card is been given to clients in which there brokerage charge

gets automatically charged e.g. brokerage charge of Rs. 500 on Trading of Rs.

1crore gets charged

54

Page 55: Bonanza Awareness of DMAT & E-Broking of Bonanza

SWOT ANALYSIS

STRENGTH

Customized Brokerage Charges – The brokerage charge by Bonanza is among

the least as compared to other brokerage firms in the industry. The brokerage for

Intraday varies from 0.01 to 0.03% and for Delivery it is 0.1 to 0.3%. The brokerage

varies on the basis of volumes of trading expected from the client. Bonanza also

charges brokerage of 0.01% and 0.1% from some HNI’s.

No Annual Maintenance Charges – There is no Annual Maintenance Charges

(AMC) on Demat and Trading a/c which is there in almost every other big brokerage

firm.

Value Added Services – There are no charges for calling RM’s (Relationship

Managers) in relation to their a/c or trading. A client can call any number of times to

his RM to enquire about his a/c status or to place any order which is chargeable in

other brokerage firm. e.g. ICICI DIRECT charges Rs 12 for enquiring about the a/c

and Rs. 20 for placing any order.

User Friendly Software - The software provided by Bonanza (Power Bonanza) is

very easy to use and reflects the price changes immediately without any time lag.

The client can easily place his order and see the movement of price change of his

favorite scripts without any time delay while other companies like ICICI DIRECT has

a time lag of almost 20-25 seconds or more.

Organized RMS (Risk Management System) – Bonanza has an organized RMS

and this is the reason why clients doesn’t suffer much losses and his position is

squared off automatically with the help of RMS. This is the only reason why Bonanza

suffered least losses as compared to other big brokerage firm when market crashed.

WEAKNESS

Trading of Z category stocks - Z (b1, b2, s, t) category stocks are not allowed to

buy because there is danger of liquidity in the stocks and attracts higher speculation.

These are the stocks which are mainly traded in BSE and Bonanza encourages its

clients to trade only in NSE.

Time consuming process – Every documentation has to be send to HQ (Gurgaon)

because of which the processing of documentation takes time. This centralization is 55

Page 56: Bonanza Awareness of DMAT & E-Broking of Bonanza

costly also when it comes to sending each document from different parts of the

country to HQ.

OPPORTUNITY

The way ahead - There is a lot of opportunity available in mutual funds and

insurance sector being a pioneer in financial sector in its own way Bonanza should

foray into mutual fund and insurance sector.

Limited reach - Since Bonanza is not present in 2tier cities because of which there

is huge untapped market of rural and small urban sector.

THREATS

FDI in stock broking – As the competition in stock broking increasing and SEBI’s

new norms which allow FDI to enter in stock broking can post a threat to Bonanza.

EXHAUSTIVE SALES PITCH FLOW CHART

56Start

Page 57: Bonanza Awareness of DMAT & E-Broking of Bonanza

57

Other References Personal Contacts

Telling him about the Company Products

Making calls

Fixing an Appointment

Company Personnel

Ending the Conversation

Saving the data for future

Response

Perspective Log

Completing the Formalities and closing

the deal

Positive Negative

PositiveNegative

Response

Stop

Page 58: Bonanza Awareness of DMAT & E-Broking of Bonanza

EXHAUSTIVE SALES PITCH

1. Acquiring Contacts – The first and the foremost thing in sales is to acquire the

contacts. The contacts can be acquired from the following sources –

Company Personnel – The contacts given by company personnel can be of

extreme help. The leads provided by Sr. Relationship Manager are very useful

because they have very good experience in the industry and their contacts with

people from other industry are also good. E.g. A Sr. Relationship Manager having

contacts with a bank official can help to provide some good leads.

Personal Network – The contacts can also be gathered from personal network.

Contacts from families, friends and known sources are much easy to contact and

convince as compare to contacts from any other sources.

Other Sources - Contacts can also be gathered from various other sources.

Contacts can be gathered from internet, yellow pages etc.

2. Preparing Perspective Clients Log – The next step is to give preferences to

contacts gathered. Contacts should be properly sorted out for calling purpose. E.g if

we are approaching the weekend then it is better to sort out those clients first who

are into service because they are busy to fix an appointment during weekdays.

It is also required to call a limited number of people at a particular time and fix an

appointment accordingly because too many appointments can also result in

inefficiency.

3. Making Calls – The next and the main step is to call the database sorted out. During

this stage it is required to tell the client that we have been calling on behalf of

Bonanza and this is in relation to Demat and Trading a/c.

If the client says that he already has a Demat a/c then we need to ask that with

which company he is having a Demat a/c and try to tell the advantages of opening a

Demat a/c with Bonanza as compared to the Demat a/c he is having at present.

58

Page 59: Bonanza Awareness of DMAT & E-Broking of Bonanza

If the client says that he is not having the Demat a/c then briefly telling about the

offerings and try fixing an appointment with the client.

If the client says that neither he is having any Demat a/c nor he wishes to have one

now then ending the conversation and saving that contact in the database and trying

to contact him again in future when market is good or is in bullish phase to see that if

he is interested now to open the a/c or not.

4. Approaching the Client – When the client agrees for an appointment then we need

to follow Customer Centric Approach. We need to do our homework before

approaching the client. We need to collect all the basic information about the industry

in which the client is. E.g. if the client is in steel sector then we need to collect the

basic information related to steel sector so that we can talk to him related to his field.

We also need to tell the client that how the customer can get good returns by

investing in certain stocks and what is the current position of the stocks in which he

is interested in.

Then it is required to tell the offerings which Bonanza would be giving to him when

he opens the Demat a/c. At this stage it is also required to tell the advantages of

Bonanza in comparison to other players in the market.

Advantages of opening a Demat a/c with Bonanza

No Annual Maintenance Charges – The biggest advantage of opening a Demat a/c

with Bonanza is that it does not charges anything to maintain Demat and trading a/c

in comparison to its competitors.

Excellent service by Relationship Mangers – The service provided to clients is

amongst the best when compared to competitors. The clients are not charged for

making any number of calls to relationship managers in relation to managing their

a/c or trading. The clients are also informed about the latest happenings of share

prices through SMS and through online messengers.

Brokerage charges – The brokerage charges charged to clients varies according to

the clients. Normally the prices which are charged to clients in all the companies are

the same.

0.03% - Intraday

59

Page 60: Bonanza Awareness of DMAT & E-Broking of Bonanza

0.3% - Delivery (cash)

But if the client is ready to invest more with Bonanza then brokerage charges are

bought to as low as

0.01% - Intraday

0.1% - Delivery (cash)

User friendly software – The software Bonanza Power provided by Bonanza is very

easy to use. The advantage of such software is that it shows the price changes on

regular basis there is no time lag. The software provided by its competitor are neither

that friendly and do not show price changes immediately , there is always some

difference which exist between the market price and price shown by their software.

Marginal trading – Bonannza not only provides general trading to its clients but also

provides marginal trading. In this, the client can take an exposure of up to 7 times

the amount of money he is having in his Trading a/c.

If the response of the client after all this is still negative then asking him the reason

and saving that contact in the database so that if we could solve his query or if

suppose the reason because of which he is not entering the market does not exist

then contacting again and approaching him.

If the response of the client is positive after knowing about the Demat a/c offered by

Bonanza then completing the formalities and closing the deal.

5. Completing the Formalities and Closing the Deal – In the end when the client has

agreed to open the a/c it is required to complete all the formalities.

Requirements to open a Demat a/c are-

Photocopy of Pan Card

Identity Proof

4 Passport size Photographs

Cheque of Rs.900

60

Page 61: Bonanza Awareness of DMAT & E-Broking of Bonanza

After taking all these things we need to take signature of client on the kit of Bonanza

and thank client for opening a/c with Bonanza.

STUDY OF CONSUMER BEHAVIOR

Sources and Methods:

Collection of Data and Methodology

This survey uses questionnaire (included in annexure A) as the medium to extract

relevant responses that would enrich the study to be undertaken.

A questionnaire is a research instrument consisting of a series of questions and

other prompts for the purpose of gathering information from respondents. Although

they are often designed for statistical analysis of the responses, this is not always

the case. The questionnaire was invented by Sir Francis Galton.

Questionnaires have advantages over some other types of surveys in that they are

cheap, do not require as much effort from the questioner as verbal or telephone

surveys, and often have standardized answers that make it simple to compile data.

The questionnaire is basically a Likert scale model. A Likert scale is a type of

psychometric response scale often used in questionnaires, and is the most widely

used scale in survey research. When responding to a Likert questionnaire item,

respondents specify their level of agreement to a statement. The scale is named

after Rensis Likert, who published a report describing its use.

The responses were expected to be received from those investors who were willing

to spend their time and wished contribute to research willingly only. So it constitutes

a convenience sample which would be collected from people pursuing various

occupations and belonging to different age group. Data collection would be carried

out at major business centers of Indore.

Depending upon the responses received, the investor preferences for the decisions

in capital market issues would be graded using a favorable scale. In the first part the

data collected from the questionnaires would be analyzed using factor analysis.

61

Page 62: Bonanza Awareness of DMAT & E-Broking of Bonanza

The second part would consist of queries relating to measures that would improve

investor’s confidence in capital markets.

Factor Analysis

Factor analysis was carried out to find out the significant factors affecting investor

decisions. Using data, factor analysis applies an advanced form of correlation

analysis to the responses to a number of statements. The purpose of this analysis is

to determine if the responses to statements are highly correlated.

Broker’s Advice: It can be seen that 58% of the sample had somewhat agreed that

their investment decision depended on the advice of the brokers. Thus the brokerage

firm’s need to concentrate on the credibility the investor’s attach to the broker’s

advice during investment.

Personal Analysis: It can be clearly seen that 45% of the sample were confident in

their own personal analysis to arrive at a decision related to investment. This may be

the result of the efforts undertaken by various organizations in improving the

investor’s attitude towards the market.

62

Page 63: Bonanza Awareness of DMAT & E-Broking of Bonanza

Online Facility: From the survey it can be seen that there has been an increase in

the degree of confidence an investor attaches towards online trading of shares as

the majority of the sample comprised of people who professionals who are

conversant with the internet. But the majority of the people from the business

community depend on offline trading through their broker’s.

Market Price: The chart shows that majority (68%) of the investors strongly agree

that the current market price of the equities is the most dominant factor affecting their

investment. This figure implies the relative immaturity of the majority of the sample

as most technical analyst’s are of the opinion that historical data pertaining to the

performance of the equities should influence investor’s decisions.

63

Page 64: Bonanza Awareness of DMAT & E-Broking of Bonanza

Analyst Recommendation: From the figure it can be seen that majority (55%) of

the investors consults publicized articles related to investment before reaching a

decision.

Factors to improve Investors Confidence in future: It is clearly seen from the

survey that investor’s confidence in capital market would increase if there would be

Lesser Scandals.

64

Page 65: Bonanza Awareness of DMAT & E-Broking of Bonanza

How do you prefer Trading: We can see from the following figure that 63% of the

people prefer doing trading online. This shows the inclination of people towards

online, they are more dependent on online analysis as compared to broker’s advice.

Some people also believe that in online trading transactions are carried out faster as

compared to offline.

65

Page 66: Bonanza Awareness of DMAT & E-Broking of Bonanza

Why Online Trading: It can be clearly seen that out of 38 people who preferred

Trading Online 37% preferred trading because of the faster transactions in Online as

compared to Offline. They thought that their transactions are carried out much faster

in Online and there is no hard cash engaged in it. Some people also preferred online

just because of the convenience and online analysis.

Why Offline Trading: Out of 22 people who preferred Offline trading 36% of people

preferred it because of the valuable suggestion of Broker. They carried out their

transactions by consulting with their broker. Some people also preferred Offline

Trading because of higher exposure limit in Offline Trading as compared to Online

Trading.

66

Page 67: Bonanza Awareness of DMAT & E-Broking of Bonanza

Factor Analysis

Factor analysis was carried out to find out the significant factors affecting investor

decisions. Using data, factor analysis applies an advanced form of correlation

analysis to the responses to a number of statements. The purpose of this analysis is

to determine if the responses to statements are highly correlated.

Correlation Matrix

1.000 -.186 -.038 .033 -.009

-.186 1.000 -.028 -.025 .042

-.038 -.028 1.000 -.070 -.030

.033 -.025 -.070 1.000 -.086

-.009 .042 -.030 -.086 1.000

.078 .388 .400 .474

.078 .415 .424 .374

.388 .415 .299 .409

.400 .424 .299 .256

.474 .374 .409 .256

brokeradvice

personalanalysis

onlinefacility

marketprice

analystrecomm

brokeradvice

personalanalysis

onlinefacility

marketprice

analystrecomm

Correlation

Sig. (1-tailed)

brokeradvicepersonalanalysis onlinefacility marketprice

analystrecomm

A correlation matrix is a lower triangle matrix showing the simple correlations

between all possible pairs of variables included in the analysis. For factor analysis to

be appropriate, the variables must be correlated. From the above correlation matrix it

could be derived that there exists a certain degree of correlation between the

selected variables assumed to influence investor behavior related to equity trading.

67

Page 68: Bonanza Awareness of DMAT & E-Broking of Bonanza

Personal Analysis is correlated with Broker’s Advice and Market Price is correlated

with Analyst Recommendation.

Bartlett’s Test of Sphericity can be used to test the null hypothesis that the

variables are uncorrelated in the population; in other words the population correlation

matrix is an identity matrix.

In an identity matrix all the diagonal terms are 1 and all off diagonal terms are 0. The

test statistics for sphericity is based on chi-square transformation of the determinant

of the correlation matrix. A large value of the test will favor the rejection of the null

hypothesis. The approximate chi square statistics is 66.865 with 10 degree of

freedom which is significant at the 0.05 level. Moreover the Kaiser-Meyer-Olkin

(KMO) measure of sampling adequacy is an index used to examine the

appropriateness of factor analysis. This index compares the magnitudes of the

observed correlation coefficients to the magnitudes of the partial correlation

coefficients. The value of the KMO statistics (0.573) is also large (> 0.5). Thus, factor

analysis can be considered an appropriate technique for analyzing the correlation

matrix.

Communality is the amount of variance that a variable shares with all the other

variables considered. This is also the proportion of variance explained by the

common factors. Under “communalities,” “Initial” column, it can be seen that the

communality for each variable from Broker Advice to Analyst Recommendation is 1.0

as unities are inserted in the diagonal of the correlation matrix.

68

KMO and Bartlett's Test

.573

66.856

10

.000

Kaiser-Meyer-Olkin Measure of SamplingAdequacy.

Approx. Chi-Square

df

Sig.

Bartlett's Test ofSphericity

Page 69: Bonanza Awareness of DMAT & E-Broking of Bonanza

Communalities

1.000 .622

1.000 .616

1.000 .764

1.000 .617

1.000 .705

brokeradvice

personalanalysis

onlinefacility

marketprice

analystrecomm

Initial Extraction

Extraction Method: Principal Component Analysis.

The second column under the “communalities” gives relevant information after the

desired numbers of factors have been extracted. The communalities of the variables

under “Extraction” are different than under “Initial” because all the variances

associated with the variables are not explained unless all the factors are retained.

Total Variance Explained

1.212 24.236 24.236 1.212 24.236 24.236 1.186 23.721 23.721

1.074 21.478 45.714 1.074 21.478 45.714 1.083 21.652 45.373

1.039 20.777 66.491 1.039 20.777 66.491 1.056 21.118 66.491

.874 17.474 83.965

.802 16.035 100.000

Component1

2

3

4

5

Total % of Variance Cumulative % Total % of Variance Cumulative % Total % of Variance Cumulative %

Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Extraction Method: Principal Component Analysis.

The eigenvalue represents the total variance explained by each factor. The table

“initial Eigenvalues” gives the Eigenvalues. The Eigenvalues for the factors are, as

expected, in decreasing order of magnitudes as we go from factor 1 to factor 5. The

Eigenvalues for a factor indicates the total variance attributed to that factor. The total

variance accounted for all the five variables is 5.00, which is equal to the number of

variables. Factor 1 account for a variance of 1.212, which is (1.212/5) or 24.236

percent of the total variance. Likewise, the second factor accounts for (1.074/5) or

21.478 percent of the total variance, and the third variable accounted for (1.039/5) or

20.777 percent of the total variance therefore the first three variables accounted for

66.491 percent of the total variance.

“Extraction Sums of Squared Loadings” give the variance associated with the factors

that are retained. These are the same as under “Initial Eigenvalues” as the technique

implemented would is principal component analysis.

69

Page 70: Bonanza Awareness of DMAT & E-Broking of Bonanza

A Scree plot is a plot of Eigenvalues against the number of factors in order of

extraction. The slope of the plot is used to determine the number of factors.

Typically, the plot has a distinct break between the steep slope of factors, with large

Eigenvalues and gradual trailing off associated with the rest of the factors. This

gradual trailing off is referred to as a scree.

54321

Component Number

1.3

1.2

1.1

1.0

0.9

0.8

Eig

en

va

lue

Scree Plot

With reference to the above scree plot it can be observed that a distinct break occurs

at three factors. Finally, from the cumulative percentage of variance accounted for,

we see that the first three factors accounts for 66.491 percent of the variance, and

that the gain achieved in going to four factors is marginal. Furthermore, the

eigenvalue determination also indicates that an assumption of three factors is fairly

reasonable.

The component matrix contains the factor loadings of all the variables on all the

factors extracted. The factor matrix contains the coefficients used to express the

standardized variables in terms of factors. These coefficients, the factor loadings,

represent the correlations between the factors and the variables. A coefficient with a

large absolute value indicates that the factor and the variable are closely related.

70

Page 71: Bonanza Awareness of DMAT & E-Broking of Bonanza

The coefficients of the factor matrix can be used to interpret the factors. But although

the initial factor matrix indicates the relationship between the factors that can be

interpreted, because the factors are correlated with many variables.

Component Matrixa

.704 -.343 .044

-.703 .242 .264

-.350 -.701 -.067

.103 .510 -.702

.297 .383 .685

personalanalysis

brokeradvice

marketprice

onlinefacility

analystrecomm

1 2 3

Component

Extraction Method: Principal Component Analysis.

3 components extracted.a.

In the case under consideration factor 1 is correlated to two of the variables and

factor 3 is also correlated to two of the variables (absolute value of factor loading is >

0.5). Therefore it becomes difficult to correctly interpret the factors without rotation.

In rotating the factors, the percentage of variance accounted for by each factor does

change. The variance explained by the individual factor is redistributed by rotation. In

the present case we have adopted the varimax procedure that minimizes the number

of variables with high loadings on a factor, thereby enhancing the interpretability of

the factors.

Rotated Component Matrixa

.773 .045 .152

-.767 .078 .147

-.012 .802 .247

.029 -.654 .434

.001 -.049 -.873

brokeradvice

personalanalysis

analystrecomm

marketprice

onlinefacility

1 2 3

Component

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Rotation converged in 4 iterations.a.

71

Page 72: Bonanza Awareness of DMAT & E-Broking of Bonanza

In the rotated factor matrix Factor 1 has high coefficients with Broker Advice and

Personal Analysis, Factor 2 has high coefficients Analyst Recommendation and

Market Price.

Therefore we can summarize the data by stating that investors appear to seek

three major kinds of benefits from trading firms: Analysis (Broker’s Advice and

Personal Analysis), Market Condition (Analyst Recommendation and Market Price)

and Online Facility

Component Transformation matrix generally gives us the correlation between the

two factors.

Component Transformation Matrix

-.905 .401 -.142

.396 .675 -.622

.153 .619 .770

Component1

2

3

1 2 3

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

In this case the Factor 1 is minimally correlated with Factor 2 and negatively

correlated with Factor 3 Factor 2 is minimally correlated with Factor 1 and negatively

correlated with Factor 3. Factor 3 is minimally correlated with Factor1 and not so

high with Factor 2.

Factor scores are composite scores estimated for each respondent on the derived

factors. These factor scores could be used instead of the original variables in

subsequent analysis. The unique factors are correlated with each other and with the

common factors. The common factors can themselves be expressed as linear

combinations of the observed variables.

72

Page 73: Bonanza Awareness of DMAT & E-Broking of Bonanza

Component Score Coefficient Matrix

.653 .077 .138

-.646 .043 .148

.008 -.064 -.828

-.007 -.596 .397

.021 .748 .251

brokeradvice

personalanalysis

onlinefacility

marketprice

analystrecomm

1 2 3

Component

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Component Scores.

Fi = Wi1X1+ Wi2X2+……+WikXk (Where Fi = estimate of ith factor, Wi = weight or fatroe

score coefficients, k = number of variables)

It is possible to select weighs or factor score coefficients so that the first factor

explains the largest portion of the total variance. Then a second set of weighs can be

selected, so that the second factor accounts for most of the residual variance,

subject to being uncorrelated with the first factor. This same principle could be

applied to selecting additional weights for the additional factors. Thus, the factors

can be estimated so that their factor scores, unlike the values of the original

variables, are not correlated. Furthermore, the first factor accounts for the highest

variance in the data, the second factor the second highest, and so on.

LIMITATIONS

In relation to Consumer Behavior

The study will be limited to INDORE only.

Due to recency effect the response of a consumer can vary which can affect the

survey.

A limited sample size of sixty clients only was considered for the primary survey

pertaining to study of investor behavior.

In relation to Marketing of Demat a/c

73

Page 74: Bonanza Awareness of DMAT & E-Broking of Bonanza

Past data on the customer information such as their telephone number and

residential address sometimes inaccurate lead to immense wastage of time.

One of the main problems was Language Problem I do not understand Telegu and

sometimes I came across people who do not understand Hindi and are also not very

verse in English.

74

Page 75: Bonanza Awareness of DMAT & E-Broking of Bonanza

CHAPTER – 6

CONCLUSION

AND

RECOMMENDATION

S

75

Page 76: Bonanza Awareness of DMAT & E-Broking of Bonanza

Conclusion

In this study, the decisions taken by small investors while investing in equity primary

markets were studied. The decisions studied were investment in listed companies

with good current market price, investment based on the advice from the broker,

personal analysis of the offer document, confidence pertaining to electronic trading

and using analysts’ recommendations in investment decisions. 68% of investors

strongly agreed that current market price is important. 58% investors somewhat

agree to the use of investment advice from the broker. 45% of the investors agree to

a great extent that they do personal analysis of the offer document before investing.

35% indicated that they consider online trading to a great extent as reliable. 55%

investors agreed to a great extent that they use analysts’ recommendations in the

investment decisions.

Securities and Exchange Board of India (SEBI) – National Council for Applied

Economic Research (NCAER) report (June 2006) indicates that despite the

expansion of the securities market, a very small percentage (5 %) household savings

is channeled into the securities market. Out of 12.1 million equity investors, 84%

have invested in equity market through primary market. Thus primary markets play

an important role in bringing investments into equity markets. Also the report

indicates that 80% of equity investor households were first generation investors.

So retaining their confidence is important. Report has also indicated that there is a

decrease in preference for equity due to the losses made in investments by the

investors in equity markets. These losses in primary market are due to lower market

price after listing. The study conducted on investor confidence also indicated the

importance of issue price and market price, which were given an overall first and

third respectively.

Another aspect identified by SEBI – NCAER report is that inadequate diversification

of portfolio is the main reason for lack of protection from volatility in the market. For

proper diversification, information about investment avenues or financial assets, also

macro and micro level changes affecting market prices and understanding about

diversification is important. Thus information about the issue and how it is going to

affect one’s own portfolio is to be analyzed.

76

Page 77: Bonanza Awareness of DMAT & E-Broking of Bonanza

The investor confidence survey also indicates that information availability is second

important factor, next to issue price. It indicates that investors prefer personal

analysis to brokers’ advice.

For carrying out personal analysis also information is required. Thus information

plays an important role in investment decisions and needs of the investors in this

area also need to be addressed.

Society for Capital Market Research and Development (SCMRD) (June 2001) report

indicates that the reforms made secondary market safer but primary market is still

perceived riskier than before. Thus policy initiatives are required for reducing this

perceived risk. Investors have suggested number of recommendations in this regard.

As regards the various factors that would increase investor confidence in capital

markets lesser scandals weighed the most with 52% of the investor’s opting for it,

followed by better regulations that added up to 37% which is thereafter followed by

government policies, intermediaries and market information. The last three scoring

less may be considered as increase in investor confidence in the Government

policies, intermediaries and market information sources (such as business

newspapers, magazines etc.

Recommendations

For Brokerage Firms and Investors based on the study

Brokerage firms should consider educational institutes offering professional

and post graduate level courses as avenues of business. Actively participating in

seminars, putting up stalls could help them in generating an interest towards capital

markets.

Domestic Brokerage firms should collaborate with foreign trading firms to

allow investors to invest in foreign markets that offer returns commensurate with the

risk involved.

Brokerage Firms should be a source of reliable market information as most

investors consider personal analysis more important than broker’s advice.

77

Page 78: Bonanza Awareness of DMAT & E-Broking of Bonanza

The investors should be provided information pertaining to studies that are

undertaken by experts to forecast trends.

They should provide tips on investment through messenger and sms’s but this

should be sent directly from the corporate offices rather than individual relationship

managers to increase the veracity of the tips.

The investors should be educated about online trading to avoid

misinterpretation information offered by the relationship managers.

For Bonanza

Bonanza is not present in 2-tier cities which lead to less business generation for the

company. So they should enter in 2 tier cities so that they can capture the untapped

market.

Bonanza does not deal in Z category shares which again lead to less business

generation. It should allow its investors to also trade in Z category shares which

would in turn lead to more business for the company.

Being a pioneer in Financial Sector Bonanza should foray into Mutual Funds and

Insurance Sector.

78

Page 79: Bonanza Awareness of DMAT & E-Broking of Bonanza

APPENDIX

Questionnaire based on awareness of DMAT and consumer behavior while

taking decisions related to his investment in Equities and Derivative market

Name: Organization:

Date:

Please mark √ in the appropriate brackets:

1. In which of the following age brackets do you fall:

18-30 □ 30- 45□ 45 - 60 □ 60 and above □

2. Please select your respective occupation:

Service □ Profession □ Business□ Others □

3. Do you know what is DMAT ?

Yes □ No □

4. DMAT is used for :-

□ for trading in share market □ for Bank Account □ Cann’t say

5. How do you invest in share market ?

□ through share broker □ by yourself

6. How much your decision to invest in securities depends on the advice from your

broker?

79

Page 80: Bonanza Awareness of DMAT & E-Broking of Bonanza

Least agree □ Somewhat agree □ Agree moderately□

Agree to a great extent □ Strongly agree □

7. How much your decision to invest depends on your personal analysis/self evaluation

of the securities/ derivatives?

Least agree □ somewhat agree □ Agree moderately□

Agree to a great extent □ Strongly agree □

8. Please select your level of confidence on online trading of shares and derivatives:

Least confidence □ Somewhat confident □ Moderately confident □

Confident to a great extent □ Absolute confidence □

9. Do you invest in listed companies with good current market price?

Least agree □ Somewhat agree □ Agree moderately □

Agree to a great extent □ Strongly agree □

10. How much your decision to invest depends on using analyst’s recommendations

(privately circulated or published)?

Least agree □ Somewhat agree □ Agree moderately□

Agree to a great extent □ Strongly agree □

11. Factors that would improve the current securities investment scenario:

Better Regulations□ Market information□ Government□

80

Page 81: Bonanza Awareness of DMAT & E-Broking of Bonanza

Lesser scandals□ Intermediaries□

12. How do you prefer Trading?

Online□ Offline□

13. Why do you prefer Trading Online?

Faster Transactions□ Online Analysis□ Convenient□

Lesser Charges□

14. Why do you prefer Trading Offline?

Brokers Advice□ Higher Exposure Limit□ Secure Transactions□

Not Comfortable with Online □

81

Page 82: Bonanza Awareness of DMAT & E-Broking of Bonanza

““BibliographyBibliography””

www.Bonanzaonline.com

www.Reliancemoney.com

www.bseindia.com

www.indiabulls.com

www.investopedia.com

How to Invest in share Market.

Stock Market Analysis For The Intelligent Investors.

-N.J.YASASWY

Statistical Methods

- V.K.Kapoor

Jitendra

82

Page 83: Bonanza Awareness of DMAT & E-Broking of Bonanza

Virahyas

[email protected]

83