Manoj Final Project Really Worked

7/31/2019 Manoj Final Project Really Worked

1/59

1

EXECUTIVE SUMMARY

Stock exchanges to some extent play an important role as indicators, reflecting the performance of the countrys economic state of health. Stock market is a place wheresecurities are bought and sold. A stock broker is a regulated professional broker whobuys and sells shares and other securities through stock exchanges on behalf of investors. Stockbrokers also sometimes or exclusively trade on their own behalf, asa principal, speculating that a share or other financial instrument will increase ordecline in price.

Data for the project is collected from primary and secondary sources. The majorlimitation of this study is the large number of stock brokers and their un-willingnessto reveal the details. The major finding of this study is the penetration of stock brokerin Kerala. The tool used for primary data collection is questionnaire. The source of secondary data includes website, information from other sources etc.
http://en.wiktionary.org/wiki/principalhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wiktionary.org/wiki/principal


2/59

2

CHAPTER- 1INTRODUCTION


3/59

3

1. INTRODUCTION

Kerala has unique features when compared to other states of India. It ranks very highin the terms of the quality of life index, literacy level, reach of print media, education,medical facilities, banking facilities, access to NRI funds and rate of householdsavings. The state appears to be particularly equipped to develop a very largeconstituency of investors in corporate securities. Kerala is blessed with abundance of monsoon. For millions of people around the world, this state has come to mean a landof lush green lagoons and scenic back waters. Kerala is blessed with abundance of natural resources and human resources to turn the state into an industrial one.

An investor is a party that makes an investment into one or more categories of assets-equity, debt, securities, real estate, currency, commodity, derivatives such as put andcall options, etc with the objective of making profit. Investors may be institutions orindividuals. In a capital democracy the investors are considered uncrowned kings. Theplayers and regulators in the capital market cannot afford to ignore the aspirations,attitudes, perceptions and expectations of individual investors.

Stock brokers are penetrating into the market to fulfill the needs of the investors. Theyare doing this by making their appearance in different places. Stock brokers areworking with the help of franchises. Franchising is the practice of using another firmfor increase the business. The franchise is said to have a greater incentive than a directemployee because he or she has a direct stake in the business. A franchise is a rightgranted to an individual or gro up to market a companys goods or services within a

certain territory or location.Market survey is an important requirement for initiating any successful business. Theobjective of the survey is to collect information on various aspects of the business.This survey is a tool through which we can minimize risk. After the survey, the resultmust be analysed to finalize a business plan. In this project the study of the stock brokers has been done with the help of the market survey.

The stock broking industry is a service-oriented industry where brokers act as agentsfor investors when a security is bought or sold and are compensated with acommission. Investors would not hesitate to switch to alternative brokerage houses if

they do not obtain satisfaction. Providing quality service and hence customersatisfaction should thus be recognised as a key strategy and a crucial element of long-run success and profitability for stock broking businesses.

Little has been done towards understanding the expectations investors hold from theirstockbrokers. Since expectations serve as benchmark to gauge the service level of brokers, the delivery of services that exceed customer expectations is one strategy thatcan give firms a competitive advantage.


4/59

4

1.1 STATEMENT OF PROBLEM

The project is a market survey and the financial analysis of stock brokers in Kerala.

There are large number of stock brokers are present in Kerala especially in Ernakulamand Kottayam. The penetration level of stock brokers is increasing day by day. The

stock brokers are expanding themselves by opening new franchises in new places.

Comex is a training and research providers along with its services to stock and

commodity brokers and sub-brokers. Comex wants to know the trends in the stock

brokers market penetration since they are into the service providing area to the sub-

brokers. As the needs and wants of the sub-brokers keeps on changing it is necessary

for Comex to understand the present market situations. So that Comex can move

ahead if they can understand the sub-brokers.

The project also included the study of investors in Kottayam and Ernakulam.


5/59

5

1.2 REVIEW OF LITERATURE

MARKETING

Marketing deals with identifying and meeting human needs and social needs. One of

the shortest definition s of meeting is meeting needs profit ability. Marketing boasts

a rich array of concepts and tools.

We can distinguish between a social and a managerial definition of marketing. A

social definition shows the role marketing plays in society. One marketer said that

marketings role is to role deliver a higher standard of living. Here is a social

definition that serves our purpose. Marketing is a societal process by which

individuals and groups obtain what they need and want through creating, offering and

freely exchanging products and services of value with others. For managerial

definition, marketing has been described as the art of selling products, but the most

important part of marketing is not selling. Selling is only tip of the marketing iceberg.

Peter F Drucker, a leading management theorist, puts in this way:

There will always, one can assume be need for some selling. But the aim of marketing

is to make selling superfluous. The aim of marketing is to know and understand the

customer so well that the product or service fits him and sells itself. All that should be

needed then is to make the product or service available.

As per the report released by the American Marketing Association,

"Marketing is an organizational function and a set of processes for creating,

communicating and delivering value to customers and for managing customer

relationships in ways that benefit the organization and its stakeholders."


6/59

6

A market survey is a research technique used to gather consumer preferences and

purchase i ntent of a companys products and services within a geographical area.

Market surveys are conducted either in-house by the company or through a marketing

research agency. Market surveys are extremely important because companies learn

what their customers like and dislike about their products and services, so that the

companies can better meet their customers demands. After the collection of data, it is

usually summarize with the key findings. For example, customers may feel that a

company does not offer enough flavors of a particular food product. The top

management can use this information to make necessary changes.

Types of Market Survey

1. Companies use telephone interviews to gather specific information from their

customers. The questions are developed ahead of time in the form of a

questionnaire. Telephone interviews can be conducted relatively inexpensively

versus other survey methods.

2. Some companies use direct mail surveys to collect information from their

customers. A series of yes/no and agree/disagree questions are simple and

can be completed within few minutes.

Steps Involved Market Survey

Step.1: Defining the objectives and specify information to be collected

Identifying sources of information

Assessing the time and cost required for the survey

Selecting the methodology

Preparing an action plan


7/59

7

Step.2: Select a sample

Determining where to conduct the survey

Determining when to conduct the survey

Step.3: Prepare a questionnaire for the survey

Step.4: Collect data and analyze the information obtained

Step.5: Prepare a report based on data analyzed

What is Franchise?

Franchising is the practice of using another firm's successful business model. Theword 'franchise' is of anglo-French derivation - from franc- meaning free, and is usedboth as a noun and as a (transitive) verb. For the franchisor, the franchise is analternative to building 'chain stores' to distribute goods and avoid investment andliability over a chain. The franchisor's success is the success of the franchisees. The

franchisee is said to have a greater incentive than a direct employee because he or shehas a direct stake in the business. A franchise is a right granted to an individual orgroup to market a company's goods or services within a certain territory or location.Some examples of today's popular franchises are McDonald's, Subway, Domino'sPizza, and the UPS Store. There are many different types of franchises. Many peopleassociate only fast food businesses with franchising. In fact, there are over 120different types of franchise businesses available today, including automotive, cleaning& maintenance, health & fitness, financial services, and pet-related franchises, just to

name a few.

Different types of Franchise

For those who are not familiar with the details of franchising, there are four types of such business:
http://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Business_model


8/59

8

1. The Product Franchise.

With this the manufacturer uses the franchise agreement to determine how the productis distributed by the person buying the franchise. A retail company can be provided

with a franchise to distribute, for example, a range of tyres. The franchisee can utilizethe brand name and the trademark owned by the manufacturer to distribute or sell thecar tyres. The owner of the store will pay the manufacturer a franchising fee or agreeto purchase a minimum inventory to sell on to their customers. The manufacturer getsthe income from the purchase of the retailer, and/or the franchise fee, and the retailergets the benefit of the brand and experience of the franchisor.

2. The Manufacturing Franchise.

The franchisee is permitted to manufacture the products under license and sell themusing the originator's trademark and name. They also get the benefit of the nationaladvertising of the product they manufacture. The company owning the product getsthe franchise fee and sometimes a fee for every unit sold. Examples include the foodand beverage industry.

3. The Business Franchise Venture.

The franchisee purchases and distributes the products for the franchise owner. Aclient base is provided by the product owner for the franchisee to maintain. Vendingmachines are a classic example of this, where the franchisee purchases the vendingmachines and distributes and services them, taking their share of the takings of themachines.

4. A Business Format Franchise

This opportunity is very popular, and involves providing the franchisee a provenbusiness model using a recognized product and brand. Training is provided by thefranchise owner and assistance in setting up the business. Supplies are purchased fromthe franchisor and the franchisee pays a royalty fee. Frequently the franchisor will sellthe franchisee the products or raw materials to provide the same quality of product.


9/59

9

Most well known fast food franchises are of this type, and also many jewelers andother ubiquitous High Street names.

Franchising is a very popular way that many use to grow their already successful

businesses, and a few end up going global. You need to get the right product and theright business in the right area, but if you achieve that and build the right model, thenyou can create a very successful franchise opportunity.

Advantages & dis-advantages of franchise

Advantages

Your business is based on a proven idea. You can check how successful otherfranchises are before committing yourself.

You can use a recognised brand name and trade marks. You benefit from anyadvertising or promotion by the owner of the franchise - the 'franchisor'.

The franchisor gives you support - usually including training, help setting upthe business, a manual telling you how to run the business and ongoing advice.

You usually have exclusive rights in your territory. The franchisor won't sellany other franchises in the same territory.

Financing the business may be easier. Banks are sometimes more likely tolend money to buy a franchise with a good reputation.

You can benefit from communicating and sharing ideas with, and receivingsupport from, other franchisees in the network.

Relationships with suppliers have already been established.

Disadvantages

Costs may be higher than you expect. As well as the initial costs of buying thefranchise, you pay continuing management service fees and you may have to

agree to buy products from the franchisor. The franchise agreement usually includes restrictions on how you can run the

business. You might not be able to make changes to suit your local market. The franchisor might go out of business. Other franchisees could give the brand a bad reputation, so the recruitment

process needs to be thorough You may find it difficult to sell your franchise - you can only sell it to

someone approved by the franchisor. All profits (a percentage of sales) are usually shared with the franchisor.


10/59

10

1.3 OBJECTIVE AND SCOPE OF STUDY

Primary Objective

To study the penetration of stock brokers in Kerala market.

To study the investment behavior of individuals.

Secondary Objective

To find out the attitude of the investors towards appointment stock brokers. To measure the satisfaction level of sub-broker. To put forward possible suggestions that can help to increase the effectiveness

of sub-brokers.

The study was conducted in Ernakulam and Kottayam district. The field work for

the study was conducted during the months of June and July2011.


11/59

11

1.4 RESEARCH DESIGN

1.4.1 TYPE OF RESEARCH DESIGN

The research design used was descriptive in nature. Through this study I am

trying to gain a specific knowledge about the stock broker penetration level, the

investment behavior of investors and sub-broker loyalty towards their respective stock

brokers.

1.4.2 DATA COLLECTION METHOD

The data has been collected from both primary and secondary sources. The methods

through which the data collected are:

a. Collection of primary data - The primary data is collected through structured

questionnaire.

Formal interview with sub-broker of different stock brokers,

In-formal interview with the stock brokers,

Telephonic interview of different sub-brokers,

In-formal interview of some individual investors, Formal interview with our project guide in Comex Services LTD.

b. Collection of Secondary data It was collected from the following:

i. Magazines

ii. Text Books

iii.

Annual reports of the company

1.4.3 SAMPLING TECHNIQUES

The study was targeted to the society in general. The sample of this particular

study comprises of stock brokers and their sub-brokers and individual investors.


12/59

12

The sample unit was a cross section of the market since the objective of the study is to

know the stock broker penetration level and the loyalty of the sub-broker towards

their respective stock brokers and the investment behavior.

The sample size was Through questionnaire 260 investors and 206 sub-brokers

The respondents of different age group and varied background were covered. Hence,

the systematic sampling could not be done or followed in the absence of brokers

response, but a convenience sampling was conducted in the course of this study.

1.4.4 DATA ANALYSIS TOOL AND TECHNIQUES

The primary tool for the data collect ion used in this study is the respondents

response to the questionnaire given to them and the responses of various types of

stock brokers were collected.

The various research measuring tools used are:

a) Questionnaire

b) Tables

c) Percentages

d) Pie-charts


13/59

13

1.5 LIMITATIONS

Extensive study was not possible due to time constraints.

There are changes of bias in the data collected from the respondents. Respondents are reluctant to answer certain questions. Area of my study was limited to Ernakulam and Kottayam district. The sampling is done on the basis of convenience sampling. It has the

disadvantages of the same.

1.6 CHAPTERISATION

The first chapter deals with the introduction of the project, the problem

statement, objectives and scope, research design used etc. The second chapter

explains about the stock broking industry. The third chapter gives a brief description

about the company, Comex Services Limited. The fourth chapter deals with the data

interpretation and analysis. The final chapter deals with the findings, conclusions and

suggestions.


14/59

14

CHAPTER 2.

INDUSTRY PROFILE


15/59

15

INDUSTRY PROFILE

STOCK MARKETS:

Stock exchanges to some extent play an important role as indicators, reflecting the performance of the countrys economic sta te of health. Stock market is a place wheresecurities are bought and sold. It is exposed to high degree of volatility; pricesfluctuate within minutes and are determined by the demand and supply of stocks at agiven time. Stock brokers are the ones who buys and sells the securities on behalf of individuals and institutions for some commission.

The Securities and Exchange Board of India (SEBI) is the authorized body, whichregulates the operations of stock exchanges, banks and other financial institutions.The past performances in the capital markets especially the securities scam byHasrshad Mehta has led to tightening of the operations by SEBI. In addition theinternational trading and investment exposure has made it imperative to betteroperational efficiency. With the view to improve, discipline and bring greatertransparency in this sector, constant efforts are being made and to a certain extentimprovements have been made.

HISTORY OF THE STOCK BROKING INDUSTRY:

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200years ago. The earliest records of securities dealings in India are meager and obscure.

By 1830s business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half adozen brokers recognized by banks and merchants during 1840 and 1850. The 1850switnessed a rapid development of commercial enterprise and brokerage businessattracted many men into the field and by 1860 the number of brokers increased into60. In 1860-61 American Civil War broke out and cotton supply from United Statesof Europe was stopped; thus the Share Mania in India begun. The number of brokersincreased to about 200 to 250. However at the end of the American Civil War, in1865, a disastrous slump began (for example, Bank of Bombay Share which hadtouched Rs.2850 could only be sold at Rs.87). At the end of American Civil War, thebrokers who thrived out of Civil War in 1874, found a place in a street (nowappropriately called as Dalal Street) where they would conveniently assemble andtransact business.

In 1887, they formally established in Bombay, the Native Share and Stock BrokersAssociation (which is alternatively known as The Stock Exchange). In 1895, the


16/59

16

Stock Exchange acquired a premise in the same street and it was inaugurated in 1899.Thus, the Stock Exchange at Bombay was consolidated.

Thus in the same way, gradually with the passage of time number of exchanges wereincreased and at currently it reached to the figure of 24 stock exchanges.

The history of stock broking in the United States parallels the growth of the nation'seconomy since colonial times. The industry has tended to be cyclical in nature, andhas survived several downturns, including a major economic depression in the 1930s.Government regulations have been introduced at times in an effort to place controlson what were viewed as harmful trading practices.

Origin

The first stock brokerage house in the United States started in Philadelphia in 1800.While the practice had been around since the early 1700s, the Philadelphia Stock Exchange was the first organized body that brought brokers together and served tocodify the rules and regulations under which business had been conducted. Theprofession continued to expand with the growth of corporations and the dawning of the Industrial Revolution.

Crash

The first major negative event in the industry occurred when the stock market crashed

in 1929, which was followed by the Great Depression. The result of the crash was dueto investors who had borrowed heavily to purchase stocks and began to realize thatthey were hugely overvalued and attempted to sell them off, resulting in a panic.

Securities Act

In an effort to prevent the recurrence of the 1929 crash, the Securities Act wasimplemented in 1933 as a way to regulate the industry. Eventually, the stock market

began to rebound, and continued a general pattern of steady growth over the nextseveral decades.

Change

In the early 1970s the growth of technology led to reforms in the United States whichhelped to reopen the markets to more liberalized trading. In the late 1980s, anothercrash in the market occurred due to the dropping of prices of stock index futures.Much like the Great Depression, this led to a mass-selling of these securities, causingthe stock market to plummet.


17/59

17

Rebound

Stock broking again saw a boom as tighter regulations were put in place following the1987 crash. The markets reached new heights in the late 1990s. The terrorist attacksof September 11, 2001 slowed the pattern of growth.

Another Crash

In 2008, the largest single-day drop since 1987 occurred, as the market lost $1.2trillion of its value on September 29. The drop occurred as a result of several factors,including the collapse of the mortgage industry and a worsening credit crisis. Themarket has rebounded only slightly as of mid-2009.

DEVELOPMENT:

An important early event in the development of stock market in India was theformation of the Native Share a nd Stock Brokers Association at Bombay in 1875, theprecursor of the present-day Bombay Stock Exchange. This was followed by theformation of associations/exchanges in Ahmedabad (1894), Calcutta (1908) andMadras (1937). In addition a large number of ephemeral exchanges emerged mainlyin buoyant periods to recede into oblivion during depressing times subsequently.

In order to check such aberrations and promote a more orderly development of thestock market, the central government introduced a legislation called the SecuritiesContracts (Regulation) Act, 1956. Under this legislation, it is mandatory on the part of stock exchanges to seek government recognition. As of January 2002 there were 23stock exchanges recognized by the central government. They are located at

AhmedabadBangaloreBarodaBhubaneshwarCalcuttaChennai(the Madras Stock Exchanges)CochinCoimbatoreDelhiGuwahati


18/59

18

HyderbadIndoreJaipurKanpur

LudhianaMangaloreMumbai (the National Stock Exchange or NSE)Mumbai (the Stock Exchange), popularly called The Bombay Stock ExchangeMumbai (OTC Exchange of India)Mumbai (the Inter-connected Stock Exchange of India)PatnaPuneRajkot

Of course, the principal courses are The National Stock Exchange and The BombayStock Exchange, accounting for the bulk of the business done on the Indian Stock Market.

While the recognized stock exchanges have been accorded a privileged position, theyare subject to governmental supervision and control. The rules of a recognized stock exchanges relating to the managerial powers of the governing body, admission,suspension, expulsion and re-admission of its members, appointment of authorizedrepresentatives and clerks, so on and so forth have to be approved by the government.

These rules can be amended, varied or rescinded only with the prior approval of thegovernment.

Broking Insights

The Indian broking industry is one of the oldest trading industries that has beenaround even before the establishment of the BSE in 1875. Despite passing through anumber of changes in the post liberalisation period, the industry has found its waytowards sustainable growth. With the purpose of gaining a deeper understanding

about the role of the Indian stock broking industry in the countrys economy, wepresent in this section some of the industry insights gleaned from analysis of datareceived through primary research.

For the broking industry, we started with an initial database of over 1,800 brokingfirms that were contacted, from which 464 responses were received. The list wasfurther short listed based on the number of terminals and the top 210 were selectedfor profiling. 394 responses, that provided more than 85% of the information soughthave been included for this analysis presented here as insights. All the data for thestudy was collected through responses received directly from the broking firms. Theinsights have been arrived at through an analysis on various parameters, pertinent to


19/59

19

the equity broking industry, such as region, terminal, market, branches, sub brokers,products and growth areas.

HISTORICAL EVOLUTION

Early Years

The equity brokerage industry in India is one of the oldest in the Asia region. Indiahad an active stock market for about 150 years that played a significant role indeveloping risk markets as also promoting enterprise and supporting the growth of industry.

The roots of a stock market in India began in the 1860s during the American CivilWar that led to a sudden surge in the demand for cotton from India resulting insetting up of a number of joint stock companies that issued securities to raise finance.This trend was akin to the rapid growth of securities markets in Europe and the NorthAmerica in the background of expansion of railroads and exploration of naturalresources and land development.

Historical records show that as early as 1864, there were about 1,000 brokers withthe stock markets functioning from three places in Mumbai; between 9 am to 7 pm atthe junction of Meadows Street and Rampart Row, from day break till 9 am and from7 pm to early hours of next morning at Bazargate.

Share prices rose sharply even at that time. A share of Colaba Land Company duringthe boom period of the 1860s rose from Rs 10,000 at par to Rs 120,000 and that of Backbay Shares went up from Rs 2,000 to Rs 54,000. Bombay, at that time, was amajor financial centre having housed 31 banks, 20 insurance companies and 62 jointstock companies.

Reports on stock markets around that time indicate that an ordinary broker in 1864earned about Rs 200 per day, a huge sum in those days. The boom period came to anabrupt end in 1865. In Jul 1865, what was then used to be called the share maniaended with burst of the stock market bubble. Never I witnessed in any place a run sowidely distributed nor such distress followed so quickly on the heels of such

prosperity thus wrote Richard Temple, who served as the Governor of Bombay atthat time. An interesting aspect is that despite the collapse of the stock market, mostof the brokers met their payment commitments.

In the aftermath of the crash, banks, on whose building steps share brokers used togather to seek stock tips and share news, disallowed them to gather there, thusforcing them to find a place of their own, which later turned into the Dalal Street. Agroup of about 300 brokers formed the stock exchange in Jul 1875, which led to theformation of a trust in 1887 known as the Native Share and Stock BrokersAssociation.


20/59

20

A unique feature of the stock market development in India was that that it wasentirely driven by local enterprise, unlike the banks which during the pre-independence period were owned and run by the British. Following the establishmentof the first stock exchange in Mumbai, other stock exchanges came into being inmajor cities in India, namely Ahmedabad (1894), Calcutta (1908), Madras (1937),

Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gainedfrom surge and boom in several industries such as jute (1870s), tea (1880s and1890s), coal (1904 and 1908) etc, at different points of time.

Beginning of a new equity culture

A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity bythe multinational companies, which created a surge in retail investing. The early1980s witnessed another surge in stock markets when major companies such asReliance accessed equity markets for resource mobilisation that evinced huge interestfrom retail investors.

A new set of economic and financial sector reforms that began in the early 1990sgave further impetus to the growth of the stock markets in India. As a part of thereform process, it became imperative to strengthen the role of the capital markets thatcould play an important role in efficient mobilisation and allocation of financialresources to the real economy. Towards this end, several measures were taken tostreamline the processes and systems including setting up an efficient marketinfrastructure to enable Indian finance to grow further and mature. The importance of an efficient micro market infrastructure came into focus following the incidence of market abuses in securities and banking markets in 1991 and 2001 that led toextensive investigations by two respective Joint Parliamentary Committees.

The Securities and Exchange Board of India (SEBI), which was set up in 1988 as anadministrative arrangement, was given statutory powers with the enactment of theSEBI Act, 1992. The broad objectives of the SEBI include

to protect the interests of the investors in securities to promote the development of securities markets and to regulate the

securities markets

The scope and functioning of the SEBI has greatly expanded with the rapid growthof securities markets in India in the last fifteen years.

Following the recommendations of the High Powered Study Group on Establishmentof New Stock Exchanges, the National Stock Exchange of India (NSE) waspromoted by financial institutions with an aim to provide access to investors all overthe country. NSE was incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were trusts, being run onno-profit basis. NSE was recognized as a stock exchange under the SecuritiesContracts (Regulations) Act 1956 in Apr 1993. It commenced operations inwholesale debt segment in Jun 1994 and capital market segment (equities) in Nov

1994. The setting up of the National Stock Exchange brought to Indian capital


21/59

21

markets several innovations and modern practices and procedures such as nationwidetrading network, electronic trading, greater transparency in price discovery andprocess driven operations that had significant bearing on further growth of the stock markets in India.

Faster and efficient securities settlement system is an important ingredient of asuccessful stock market. To speed the securities settlement process, The DepositoriesAct 1996 was passed that allowed for dematerialization (and rematerialisation) of securities in depositories and the transfer of securities through electronic book entry.The National Securities Depository Limited (NSDL) set up by leading financialinstitutions, commenced operations in Oct 1996. Regulations governing selection of various types of market intermediaries as depository participations were made.Subsequently, Central Depository Services (India) Limited promoted by BombayStock Exchange and other financial institutions came into being.

Branches & Sub-Brokers

The maximum concentration of branches is in the North, with as many as 40% of allbranches located there, followed by the Western region, with 31% branches. Around24% branches are located in the South and East constitutes for 5% of the totalbranches of the total sample.

In case of sub-brokers, almost 55% of them are based in the South. West and Northfollow, with 30% and 11% sub-brokers respectively, whereas East has around 4% of total sub-brokers.

Graph.1


22/59

22

Financial Markets

The financial markets have been classified as cash market, derivatives market, debtmarket and commodities market. Cash market, also known as spot market, is themost sought after amongst investors. Majority of the sample broking firms are

dealing in the cash market, followed by derivative and commodities. 27% firms aredealing only in the cash market, whereas 35% are into cash and derivatives. Almost20% firms trade in cash, derivatives and commodities market. Firms that are intocash, derivatives and debt are 7%. On the other hand, firms into cash andcommodities are 3%, cash & debt market and commodities alone are 2%. 4% firmstrade in all the markets.

Graph.2

In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade atboth exchanges. In the equity derivative market, 48% of the sampled broking housesare members of NSE and 7% trade at BSE, while 45% of the sample operate in bothstock exchanges. Around 43% of the broking houses operating in the debt market,trade at both exchanges with 31% and 26% firms uniquely at NSE and BSErespectively.


23/59

23

Graph.3

Of the brokers operating in the commodities market, 57% firms operate at NCDEXand MCX. Around 20% and 21% firms are solely in NCDEX and MCX respectively,whereas 2% firms trade in NCDEX, MCX and NMCE.

Graph.4


24/59

24

Products

The survey also revealed that in the past couple of years, apart from trading, thefirms have started offering various investment related value added services. Thesustained growth of the economy in the past couple of years has resulted in brokingfirms offering many diversified services related to IPOs, mutual funds, companyresearch etc. However, the core trading activity is still the predominant form of business, forming 90% of the firms in the sample. 67% firms are engaged in offeringIPO related services. The broking industry seems to have capitalised on the growthof the mutual fund industry, which was pegged at 40% in 2006. More than 50% of the sample broking houses deal in mutual fund investment services. The averagegrowth in assets under management in the last two years is almost 48%. Company

research is another lucrative area where the broking firms offer their services; morethan 33% of the firms are engaged in providing company research services.Additionally, a host of other value added services such as fundamental and technicalanalysis, investment banking, arbitrage etc are offered by the firms at different levels.


25/59

25

CHAPTER 2.

COMPANY PROFILE


26/59

26

About the Company:

COMEX SERVICES LIMITED:

Comex was incorporated in 2003 to service the then nascent commodity futures

market. Comex has been servicing the broking industry through various models and iscatering to over 90 business associates and over 6000 customers.

Comex has been expanding the scope of services it has been providing and hasincluded servicing mutual fund and IPO distributors, insurance brokers, training andresearch providers along with its services to stock and commodity brokers and sub-brokers.

Comex manages physical commodity requir ements of processors and traders of commodities such as black pepper, turmeric, chillies, natural rubber, cardamom and

coconut oil. Comex works along with multiple sellers of these commodities to procureon behalf of our clients, process it to meet the requirements of exchange deliveries

Comex has entered into commodity warehousing industry in a major way and areservicing numerous clients which include major names in the agriculturecommodities, FMCG, Cement and Steel sector.

Comex is working with various analysts and researchers of stock and commoditymarkets to provide trading tips and analysis on a continuous basis. Objective of suchservices is to allow individual investors and day traders to take advantage of expert

analysis.

Comex organizes training to individual investors, aspiring traders and students of financial markets are structured with leading education providers to train on thetechnology side of the trading and trading techniques.

Consulting services of Comex caters to hedge advisory on commodities andcurrencies, business evaluation services, business advisory on financial structuringand financial modeling.

Comex is promoted and managed by seasoned professionals with experience insectors such as commodities, stock markets, consulting, and technology andcommodity exchanges.


27/59

27

In short COMEX is the

Home for the stock and commodity brokers, insurance companies and brokers,business associates and prospective business associates of financial

intermediaries; and investors

Centre for training in the areas of financial and commodity markets

Organizer of Events, Seminars and Awareness programmes for financial andcommodity markets

Provider of Advisory services for product launches

Specialist service provider for delivery related aspects in Black Pepper,Rubber, Cardamom, Chillies, Turmeric and Coconut Oil

Provide r of Advisory services for price risk management in commodities andcurrencies

Provider of Warehousing services

Provider of Structured Finance Advisory services

Arranger Loans against shares and commodities

Provider of Consulting services

Advisor for Wealth and portfolio management services

Serving the Stock and Commodity Brokers

Comex acts as an extended marketing and services arm for stock and commoditybrokers. Comex works towards acquiring business associates (sub-brokers/authorizedpersons) for stock and commodity brokers and acts as the service interface betweenthe principal broker and business associate.

The Comex interface is not just to serve the business associates; we will also servethe individual customers that the business associates acquire and also will acquireretail clients for the business associates.

Our marketing team will continuously interact with all the business associates to assist

them in acquiring clients, to update and educate them and their clients on new


28/59

28

investments products and avenues; and address any issues or concerns they have sothat the focus of the business associate is always on increasing business opportunities,volume and number of clients.

Our customer service team extends its services to business associates and their clientsto assure them that they are always serviced by their Broker.

COMEX performs as the comprehensive services and solutions provider to stock andcommodity brokers, franchisees of stock and commodity brokers, sub-brokers,insurance brokers; wealth and portfolio managers; and mutual fund and IPOdistributors. We train the franchisees, their staff and investors so that franchisees canfunction efficiently; investors can invest and trade with knowledge and confidence.

Business Associates

Being a Business Associate of a financial services provider is a lucrative businessopportunity which could be capitalized through our business model. You couldbecome a Business Associate through Comex to facilitate stock and commoditiestrading, insurance, mutual funds, IPO and wealth management for your clients. Wehave multiple models through which you could access the prominent financialservices companies of India and utilize such access in a profitable manner.

Individual Investors

Equity investments provide the best possible return in the long term. Investments inequities are among the best possible option to create wealth. Investments in equitiescan be done directly by buying shares of various companies, by investing in mutualfunds and investing in Insurance cum investment products of various insurancecompanies.

Commodity Services

Commodity markets are thriving with activities which include futures exchanges andspot exchanges. Commodity as an asset class (an area worth investing in) is growingin stature and COMEX is pioneering the move through its services in managing theneeds of commodity market players with regard to physical delivery, financingagainst warehouse receipts and logistics.

Comex also provides investments solutions to individual investors in commoditiessuch as gold and silver along with exchanges and commodity brokers. Theinvestments solutions structured by Comex will allow customers to secure borrowingat competitive rates to build up wealth in a systematic way.


29/59

29

Training

Financial and commodity literacy are top on agenda of COMEX; and provides tailor

made training solutions to investors, traders, students and corporate. Comex hasstructured courses to prepare management and economics students employment-readyfor the financial and commodity sector. Courses cover the basics of financial andcommodity markets, functioning of stock and commodity exchanges, functioning of stock and commodity markets, products and services in the financial and commoditysectors and hand-on training in technology applications used by the stock andcommodity brokers.

Risk Management

Commodity price, quantity and quality risk management is vital to traders,aggregators, processors, exporters and importers. COMEX has the expertise;experience and skill-set provide services in these areas. The risk management modelcan be designed and implemented across commodities. The risk management modelscan be structured for Jewellers, Steel Traders and Gold Loan providers using futurescontracts and spot markets.

Investment spectrum for Investors

Comprehensive view of investments avenues is important for wealth creation.Balancing investments across the spectrum is of utmost importance to investors tocreate the right portfolio that will act as the driver in wealth creation withoutincreasing risk of overall investments.

COMEXs objective is to provide the complete spectrum of opportunities to its clientsto facilitate the right selection of the investments avenues. Accessing these avenuesthrough the right channels is equally important for effective implementation of investments goals. Comex continuously assists its clients in identifying the rightchannel and execution of the investment plans.We assist individual investors to explore the following investment avenues

Equities Commodities Gold and Silver Real Estate Mutual Funds Public Provident Fund National Pension System Insurance


30/59

30

CHAPTER 4.

DATA ANALYSIS AND

INTERPRETATION


31/59

31

DATA ANALYSIS AND INTERPRETATION

This chapter includes the analysis and interpretation of the collected data.

Statistical tools or techniques like percentage were used for classifying the

respondents. Interpretations were made on the basis of the result of analysis

.

NEED FOR INTERPRETATION

Interpretation is essential for the simple reason that the usefulness and vitality of

the research findings lies in proper interpretation. It is being considered as a basic

component of research process because researcher can better appreciated only through

interpretation. This can make others understand the real significance of his research

findings. Through interpretation only the researcher can understand the abstract

principle that works beneath his findings.


32/59

32

4.1 Individual Investor in Kerala- Profile

Kerala has a large reservoir of small investors belonging to the middle-class

households. According to the stock brokers the individual investors can be classified

on the basis of income, profession, educational status, geographical area, sex and age.

S.No. Profile of Investor Frequency Percentage Cumulative

Frequency

1. SEX

Male

Female

Total

235

25

260

90.4

9.6

100

90.4

100

100

2. Marital Status

Married

Un-Married

Total

243

17

260

93.5

6.5

100

93.5

100

100

3. Place

Ernakulam

Kottayam

Total

150

110

260

57.7

42.3

100

57.7

100

100

4. Market Preference

Primary Market

Secondary Market

Both P&S Market

Total

123

57

80

260

47.3

21.9

30.8

100

47.3

69.2

100

100


33/59

33

One of the objectives of this study was to get a profile of individual investors in the

Kerala market. Primary data were collected with the help of a survey.

Table 4.1 shows that men (90.4%) outnumber women investing in the capital market,

93.5% are married, more or less evenly distributed with regard to the place and 47.3%

prefer the primary market.


34/59

34

4.2 Income profile of Investor

Income-level (Rs. As per

month)

Frequency Percentage

Up to - 50000 60 23.1

50001-10000 142 54.6

10001-15000 40 15.4

15001-20000 6 2.3

Above 20000 4 1.5

Not revealed 8 3.1

Total 260 100

TABLE. 2


35/59

35

GRAPH.5

Inferences: The individual investors are classified into five groups in the terms of their households income as shown in Table 4.2. The majority of the individualsbelongs to the middle income group. Around two-third of the respondents fall in the

middle income group (5,001-10,000) and 15.4% to the upper middle class (10,000-15,000). The table shows that the middle class constitutes a significant place in thecapital market.


36/59

36

4.3 Age-wise profile of Investors

Age Group Frequency Percentage

Below 25 6 2.3

25-35 32 12.3

35-45 116 44.6

45-55 82 31.5

Above 55 24 9.3

Total 260 100

TABLE. 3


37/59

37

GRAPH. 6

Inferences: The table shows age-wise percentage distribution of investors. Investorsbelonging to age group of 35-45 are 44.6%. Investors above the age group of above55 (mostly retired people) form only about 9% of total. Thus, large number of investors is in the age group of 35-45.


38/59

38

4.4 Occupation-wise profile of Investors

Occupation Frequency Percentage

Bank Employees 47 18.1

Business 46 17.7

Company Employees 41 15.8

Government Employees 37 14.2

Teachers 33 12.7

Professional 24 9.2

Retired 10 3.8

Others 22 8.5

Total 260 100

TABLE. 4


39/59

39

GRAPH. 7

Inferences: By profession more investors are from the financial sector, mostly bank employees. Business men in Kerala are very keen to invest and they constitute of 17.7% of total.


40/59

40

4.5 Education wise profile of Investors

Level of Education Frequency Percentage

Non-Matriculate 22 8.5

Pre-Degree 16 6.2

Graduate 122 46.9

Post-Graduate 47 18.1

Professional 31 12

Others 22 8.5

Total 260 100

TABLE. 5


41/59

41

GRAPH.8


42/59

42

4.6 Response of Sub-brokers in Ernakulam

Ernakulam district covers an area of 3068 sq km located on the Western CoastalPlains of India. The district can be divided geographically into highland, midland andcoastal area. The altitude of the highland is about 300 m. In an area of 3068km therewere around 33 stock brokers. These 33 stock brokers are working with near 170 sub-brokers in different parts of Earnakulam.

Responses Frequency Percentage

Given the details 13 9.4

Not Ready to tell 30 21.7

Stopped Business 5 3.7

Not Responding 34 24.6

Wrong Number 56 40.6

Total 138 100

TABLE. 6


43/59

43

GRAPH.9


44/59

44

4.6 Response of Sub-brokers in Kottayam

Kottayam district covers an area of 2208 sq km which is covered by around 73 sub-brokers of different brokers. Stock brokers are expanding themselves with the help of opening up large number of business partners in small areas of different district. Sothat they reachability also increase.



Not Ready to tell 11 16.2




Total68 100

TABLE. 7


45/59

45

GRAPH. 10


46/59

46

4.8 Combine response of both Districts



Not Ready to tell 41 20




Total206 100

TABLE. 8


47/59

47

GRAPH. 11

Inferences: The franchises who had been contacted for the survey can be classified into five categories:

1. Sub-brokers who had given the details,

2. Sub-brokers who are not ready to reveal the details,

3. Sub-brokers who stopped the business,

4. Sub-brokers who are not responding,

5. Sub-brokers who had given wrong number.


48/59

48

1. Sub-brokers who had given the details:

The survey was done to collect the details regarding the franchisesof different brokers. The franchises were reluctant to give away theinformation as, the information will affect their future business. By thecollected information following things can be analysed;

a. Experience: The persons who are doing this franchise has a goodexperience of say 5-10 years,

b. Products Offered: Most of the franchises are doing Equities andFuture&Options, only very few are dealing in other products like mutualfund and insurance.

c. Client: Franchises have a good client data base but out of that only very

few are active. The reason for having fewer clients active is, after openingthe trading account only very few will do trading.

d. Main Business: Most of the people are doing this franchise of stock broker as one of their business. Even though they are fully concentratingon the business as this business is a profit making one.

e. Trading Volume: The trading volume is one of the crucial parts which tellthe actual financial position of the franchise because of that, franchises arenot ready to reveal the detail regarding their daily trading volume.

f. Monthly Expenses: The monthly expenses of franchise are based on thesalary paid to the employees, electricity bill, rent of the room etc. Apartfrom these expenses the franchises has to bear some other expenses at theinitial stage of the franchise ship. The expenses like security deposit,infrastructure, registration charges, software expenses etc.

g. Monthly Income: On the basis of the collected data during the survey itcan be said that, the income of the franchise from the business is purelybased on the market condition or situation.

h. Brokerage: The brokerage charged by the franchises from the clients isdifferent for each client. The franchise may charge less brokerage from theclient who is trading in high volume and charge high brokerage from theclient who is trading in low volume.

Most of the franchises are charging maximum brokerage as 0.05 forintraday and 0.5 for delivery, and the minimum brokerage charged is 0.02for intraday and 0.2 for delivery.


49/59

49

i. Sharing Ratio: There is a sharing ratio between the franchise and thebroker, which may vary from broker to broker. Most of the franchises areworking on the ratio of 60:40.

j. Service Quality: The services qualities provide by the brokers are good, asthey are able to fulfill the needs of franchises. But some franchises are nothappy with the brokers but they are still working with the same broker asits not easy to switch from one broker to another.

k. Criteria: The criteria for the selection of the stock broker vary from personto person, some may look for broker who has good sharing ratio, somelooks for good brand name, some look for the company performance andpast records etc.

2. Sub-brokers who are not ready to reveal the details:

Some of the franchises were not ready to reveal the details of theirworking as the feel that the details might be misused. The franchises that werenot ready to reveal any data were more in Kottayam when compared to that of Earnakulam. There were total 138 franchises were contacted in Earnakulamout of which 30 were not ready to reveal the details, on the other hand inKottayam out of 68, 11 were not ready to give the details. By this we can say,that the franchise of Kottayam are more reluctant for giving out the

information.

3. Sub-brokers who stopped the business:

There are many franchises that had stopped their business of thefranchise ship with the stock brokers. The franchises are stopping the businessdue to following reason-

a. The performance of the market is not good,

b. The clients are losing their money on high amount,

c. Some franchises had stopped the business due to the personal reasons,

d. Some of the franchises stopped the business due to the bad name they aregetting in their locality.

During the survey it was also found that the people are losing money in huge amountin share trading, but there were also people who had said that share trading businesscan be profitable if we know when, where and how to invest.


50/59

50

4. Sub-brokers who are not responding:

There are many franchises that were on the first call had given a

response and after that when ever tried to be contacted had given no responses.The reason for not responding to the calls is due to the un-willingness of revealingthemselves to the unknown. The share trading business is one of most competitivebusiness in which the number of players is large and everyone wants to expandthemselves through the acquisition of franchises of other brokers. Therefore, thefranchises will not be ready to reveal themselves.

5. Sub-brokers who had given wrong number :

These are the categories of those franchises who had given wrongcontact number during the time of the registration with SEBI. These are doneby the franchises not to expose themselves in front of their competitors. Due tothe completion prevailing in the field of share trading the franchise does notlike to be visible in front of the competitors.


51/59

51

CHAPTER 5.

FINDINGS, SUGGESTIONS AND

CONCLUSION


52/59

52

FINDINGS

Stock brokers are penetrating in to the Kerala market through opening up bynew partners in different places of Kerala.

The company has a wide range of brokers associated with them which makethe investors to choose their own stock broker.

The company can satisfy the needs of sub-broker like giving a broker whoprovide more sharing ratio to the sub-broker.

As the concept introduced by the company is new it has a great opportunity inthe future market.

The number of investors and sub- brokers is very large in Kerala.

Company evaluate the sub-broker in terms of their relation with the currentbroker and provide the need service.

The company is providing all kind of financial services to the sub-broker aswell as to the individual investors.

Most of the customers are of the opinion that Comex Services Limited has in

to play with a new idea.

Sub-broker are more attracted to the broker who is providing more brokerage

to the sub-broker.


53/59

53

SUGGESTIONS

The company should increase the brand image of the company, as most of therespondents are not aware of the company.

The after sale service of the company should be increased.

The individual investors as well as the sub-broker should be regularly up-

dated about the products.

There are large number of investors who invest in large volume, company

should take steps to attractive them.

Company should provide necessary services to the sub-broker so that the stick

to one broker.


54/59

54

CONCLUSIONS

Comex Services Ltd is a financial service provider which is having variety of

financial products in their portfolio. The company is being tied up with number of

share trading and commodity trading brokers in the share market world. And also it is

having number of franchises and sub brokers.

Comex has been expanding the scope of services it has been providing and has

included servicing mutual fund and IPO distributors, insurance brokers, training and

research providers along with its services to stock and commodity brokers and sub-

brokers.

During my project Market Survey and Financial Analysis of Stock brokers inKerala the major concern of the sub-broker was the services provided by the

respective stock brokers. The company is able to provide the necessary services to the

sub-brokers. Thus, in future the company may able to give the necessary service to the

sub-brokers as well as clients.


55/59

55

BIBLIOGRAPHY


56/59

56

BIBLIOGRAPHY

BOOKS

PHILIP KOTLER, GRAY ARMSTRONG Principle of Marketing

tenth edition, Pearson Education.

CHRISTIAN ANDERSON AND CAROLKERR Marketing

Management, 2 nd edition 2003.

JOHN.W.GOSNEY AND THOMAS.T.DOEHAM, Marketing

Management, Pearson Education

KOTHARI.C.R Research Methodology, New Delhi, Wishwa Prakashan

1998

WEBSITES

www.investopida.com

www.wikipedia.com

Company websites
http://www.investopida.com/http://www.investopida.com/http://www.wikipedia.com/http://www.wikipedia.com/http://www.wikipedia.com/http://www.investopida.com/


57/59

57

APPENDIX


58/59

58

MARKET SURVEY

Conducted By: MANOJ KUMAR

College Name: DC School Of Management & Technology Roll No: 10264

Objective: To assess the market penetration level of various stock brokers in Kerala, and the benefits of being a business associates of such broker.

NAME: . BROKERS NAME:

COMPANY NAME:

ADDRESS: LAND MARK ..

PHONE NUMBER:

Office: .. Mobile:

E-mail: ..

1. How many years you have been into the broking business?

Less than 2years Less than 5years Less than 10years Morethan 10years

2. What are the products offered by you to the customers?

NSE BSE NSE F&O BSE F&OCOMMODITY NCDEX MCX MCX-SX N SPOT E

Mutual Fund IPOs Insurance

3. How many clients you are dealing currently?

100-200 200-400 400-600 More than 600


59/59

4. Is this is your primary business?

Yes No

5. What is the daily trading volume?

Below 10lakh Below 25lakh Below 1crore Below 1.5crore

6. What are the approximate earnings per month?

Above 10,000 Above 20,000 Above 50,000 Above 60,000

7. What are the approximate expenses per month?

Above 10,000 Above 20,000 Above 50,000 Above 60,000

8. How will you rate the service quality of the broker?

Excellent Very good Good Average

9. What are the criteria for the selection of broker?

PLACE: DATE:

Manoj Final Project Really Worked

Documents

Transcript of Manoj Final Project Really Worked