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MARKETING STRATEGIES AT SSJ FINANCE
METAS OF SEVENTH DAY ADVENTIST COLLEGE
REF NO:
DATE: .
COMPLETION LETTER
TO,
THE ADVENTIST COLLEGE,
ATHWALINES
SURAT.
TO WHOM EVER IT MAY CONCERN
SUB-COMPLETION OF TRAINING
WE, hereby confirm that Ms. PRATIKSHA BAID has undergone the
training and has gained all the required knowledge and information needed
for this project at ssj finance for 210 hours, that is from 15-4-2012 to 30-5-
2012. Therefore we certify her as a member of our company.
HEREBY, STATING THE CONFIRMATION
THANKING YOU
SSJ FINANCE
BRANCH HEAD.
C-402, EMPIRE STATE BUILDING NEAR UDHNA DARWAZA RING ROAD, SURAT -
395002
PHONE-9979915208 E-MAIL- [email protected]
A
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MARKETING STRATEGIES AT SSJ FINANCE
METAS OF SEVENTH DAY ADVENTIST COLLEGE
Summer Project
On
MARKETING STRATEGIES OF STOCK BROKER
At
SSJ FINANCE AND SECURITIES PVT. LTD.
SUBMITTED IN PRACTICAL FULFILLMENT FOR THE
REQUIREMENT OF THE MASTERS DEGREE OF BUSINESSADMINISTRATION
Prepared By
PRATIKSHA BAID
F.Y.M.B.A
I.D NO: GB-047
[MARKETING]
Under the guidance of
MR. RITESH KHATWANI SIR
MR. ZACHARIAH SAMUEL SIR
Submitted To
METAS OF SEVENTHDAYADVENTISTCOLLEGE
Athwalines
Surat
2011-2012
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PREFACE
Indian Capital Market is seeing a bullish trend since few quarters. It had touched the level
which it had never reached earlier. In a very short duration of time sensex touched 20000
points . Still people are very bullish for the market and expecting sensex to reached
25000 points.
Current scenario is that market is over performing than then it actual potential and where
major investors are just attracted by the high short term returns and ignoring the actual
facts and figures of the company. In such condition it became very necessary that
investor dont work on greater fool theory rather invest in the company whose
fundamentals are strong by doing proper analysis and invest keeping long term
perspective.
This project involves fundamental analysis of SSJ Finance and Securities Pvt. Ltd.
The project is done for the partial requirement of fulfillment of degree of MASTERS of
Business Administration (M.B.A). This project is done under SSJ finance and securities
Pvt. Ltd., Surat.
Sincere efforts have been made to make this project live up to the expectation to
Department of MARKETING where this project is to be submitted.
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DECLARATION
I undersigned, PRATIKSHA BAID declare that this project is the result of my own
training work carried out during May, 2012 and has not being previously submitted
to any university/institutions for any other purpose by any other person.
I will not use this project report in future as submission to any other
university/institution without written permission of my guide.
I also promise not to allow any person to copy any part/full material of this report inany form.
Yours faithfully,
Pratikisha Baid
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ACKNOWLEDGEMENT
I take this opportunity to thank all those who have contributed their support in
preparing this project. Firstly I would like to express my deep sense of gratitude
towards METAS OF ADVENTIST COLLEGE, SURAT for providing me this
opportunity to study STOCK MARKET in depth as a part of course curriculum.
Secondly I would like to thank president of my college MR.JEREMIAH SIR for
allowing me to do my project on this topic. I would also like to take an opportunity
to thank my mentor MR.MOHAN RAO SIR for guiding me throughout my projectwork.
Working on such a project where information is quite enormous and unacquainted
to me required guidance at each and every stage. I am highly thankful to MR.AMIT
DWIVEDI, the business development manager of SSJ FINANCE & SECURITIES
PVT LTD. for his continuous direction and guidance while preparing this project
and also for sharing his rich experience for the content of this project.
Last but not the least; I am also grateful to my parents, colleagues and friends
whose continuous support has always boosted my moral towards working on this
report.
Thank you
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MARKETING STRATEGIES AT SSJ FINANCE
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INDEX
SR. No TOPIC PAGE NO
1 INDUSTRY PROFILE
INTRODUCTION OF SSJ FINANCE AND SECURITIESPVT
LTD.
RANKING OF INDUSTRY.
COMPETITORS OF SSJ FINANCE AND SECURITIES
BOMBAY STOCK EXCHANGE
NATIONAL STOCK EXCHANGE
ECONOMIC UPS AND DOWNS
WHAT DO SHARE MARKETS DO?
INDIAN STOCK MARKET
5 YEAR PLANS OF INDIA
MARKET VOLUME
MARKET WATCH(GLOBAL MARKET)
5-27
2 COMPANY PROFILE
PAST,PRESENT AND FUTURE OF SSJ
STRENGTH OF COMPANY
TRAINING AND DEVELOPMENT
REASONS FOR SUCCESS
COMPANYS VISION
BUSINESS PHILOSOPHY
COMPANYS VALUE
MANAGEMENT TEAM
CORE BUSINESS
MEMBERSHIP
QUALITY ASSURANCE POLICY
CRM POLICY
LEADERSHIP MODEL
CODE OF ETHICS
DISTRIBUTION MODEL
INFRASTRUCTURE
REGIONAL OFFICES
28-79
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FUTURE PLANS
COMPANY NOW
HR INFORMATION IN DETAIL
FINANCIAL INFORMATION IN DETAIL
DEALINGS OF COMPANY
3 RESEARCH METHODOLOGY
SAMPLE DESIGN
TYPES OF DATA
DATA COLLECTION TOOLS
SURVEY METHODS
RESEARCH INITIATIVES
WHEN &WHY RESEARCH?
ANGEL RESEARCH STRENGTH
RESEARCH AND INVESTMENT ADVISORY
RESEARCH PRODUCTS
RESEARCH PROCESS
TECHNICAL RESEARCH CALLS
80-88
4 ANALYSIS OF DATA 89-104
5 FINDINGS 105
6 CONCLUSION 106
7 SUGGESSIONS 107
8 GLOSSARY 108-109
9 BIBLOGRAPHY 110
10 ANNEXURE 111-117
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INDUSTRY PROFILE
INTRODUCTION TO THE INDUSTRY
INDIAN EQUITY MARKET:-
The Indian Equity Market is also known as Indian share market or Indian stock market.
The Indian market of equities is transacted on the basis of two major stock indices,
National Stock Exchange of India Ltd. (NSE) and The Bombay Stock Exchange (BSE).
Indian Equity Market at present is a lucrative field for the investors and investing in
Indian stocks are profitable for not only the long and medium-term investors, but also the
position traders, short-term swing traders and for intra-day traders. In terms of market
capitalization, there are over 5000 companies in the BSE chart list. Generally the bigger
companies are listed with the NSE and the BSE, but there is the OTCEI or the Over the
Counter Exchange of India, which lists the medium and small sized companies. There is
the SEBI or the Securities and Exchange Board of India which supervises the functioning
of the stock markets in India.
The growing financial capital markets of India being encouraged by domestic and foreign
investments is becoming a profitable business more with each day. If all the economic
parameters are unchanged Indian Equity Market will be conducive for the growth of
private equities and this will lead to an overall improvement in the Indian economy.
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THE INDIAN CAPITAL MARKET:-
The function of the financial market is to facilitate the transfer of funds from
surplus sectors (lenders) to deficit sectors (borrowers). Normally, households haveinvestible funds or savings, which they lend to borrowers in the corporate and public
sectors whose requirement of funds far exceeds their savings. A financial market consists
of investors or buyers of securities, borrowers or sellers of securities, intermediaries and
regulatory bodies. Financial market does not refer to a physical location. Formal trading
rules, relationships and communication networks for originating and trading financial
securities link the participants in the market.
PRIMARY MARKET
Primary market refers to the long term flow of funds from the surplus sector to the
government and corporate sector (through primary issue) and to banks and non bank
financial intermediaries (through secondary issues).Primary issues of the corporate sector
lead to capital formation (creation of net fix asset and incremental change in inventories)
thus primary market is again sub divided into:
Public issue
Right issue
Private placement
Professional allotment
SECONDARY MARKET
Secondary market is a market for outstanding securities. An equity instrument, being an
eternal fund, provides an all-time market while a debt instrument with a defined maturity
period, is traded at the secondary market till maturity. Unlike primary issues in the
primary market which result in capital formation, the secondary market facilities only
liquidity
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and marketability of outstanding debt and equity instruments. The secondary market
contributes to economic growth by channelising funds into the most efficient channel
through the process of disinvestment to reinvestment. The secondary market also provide
instant valuation of securities made possible by changes in the internal environment, thatis , through companywide and industry wide factors. Such a valuation facilities the
measurement of the cost of capital and rate of return of economic entities at the micro
level.
For trading in issue of corporate and financial intermediaries, there are:
Recognized stock exchanges,
National stock exchange of India limited (NSE)
ORGANIZED MONEY MARKET
Indian financial system consists of money market and capital market. The money
market has two components - the organized and the unorganized. The organized market is
dominated by commercial banks. The other major participants are the Reserve Bank of
India, Life Insurance Corporation, General Insurance Corporation, Unit Trust of India,
Securities Trading Corporation of India Ltd. and Discount and Finance House of India,
other primary dealers, commercial banks and mutual funds. The core of the money
market is the inter-bank call money market whereby short-term money borrowing/lending
is affected to manage temporary liquidity mismatches.
UN- ORGANIZED MONEY MARKET
Despite rapid expansion of the organized money market through a large network
of banking institutions that have extended their reach even to the rural areas, there is still
an active unorganized market. It consists of indigenous bankers and moneylenders. In the
unorganized market, there is no clear demarcation between short-term and long-term
finance and even between the purposes of finance.
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SECURITIES AND EXCHANGE BOARD OF INDIA
With the objectives of improving market efficiency, enhancing transparency,
checking unfair trade practices and bringing the Indian market up to international
standards, a package of reforms consisting of measures to liberalize, regulate and develop
the securities market was introduced during the 1990s. This has changed corporate
securities market beyond recognition in this decade. The practice of allocation of
resources among different competing entities as well as its terms by a central authority
was discontinued. The secondary market overcame the geographical barriers by moving
to screen-based trading. Trades enjoy counter party guarantee. Physical security
certificates have almost disappeared. The settlement period has shortened to three days.
The following paragraphs discuss the principal reform measures undertaken since 1992.
A major step in the liberalization process was the repeal of the Capital Issues (Control)
Act, 1947 in May 1992. With this, Government's control over issue of capital, pricing of
the issues, fixing of premium and rates of interest, on debentures, etc., ceased. The office,
which administered the Act, was abolished and the market was allowed to allocate
resources to competing uses and users. Indian companies were allowed access to
international capital market through issue of ADRs and GDRs. However, to ensure
effective regulation of the market, SEBI Act, 1992 was enacted to empower SEBI with
statutory powers for (a) protecting the interests of investors in securities, (b) promoting
the development of the securities market, and (c) regulating the securities market. Its
regulatory jurisdiction extends over corporates in the issuance of capital and transfer of
securities, in addition to all intermediaries and persons associated with securities market.
SEBI can specify the matters to be disclosed and the standards of disclosure required for
the protection of investors in respect of issues.
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MAJOR STOCK PLAYERS
Eighteen Stock Exchanges in the World: Market Capitalization & Year-to-date Total
Turnover at the end of May 2010
Region Stock Exchange
Market Value
(millions
USD)
Total Share
Turnover
(millions USD)
Africa Johannesburg Securities Exchange 605,040.2 117,424.7
Americas NASDAQ 2,773,684.3 12,256,704.3
Americas So Paulo Stock Exchange 920,263.9 191,926.1
Americas Toronto Stock Exchange 1,347,674.0 490,912.4
Americas New York Stock Exchange 9,574,066.6 7,986,835.8
Asia-Pacific Australian Securities Exchange 839,062.7 273,205.9
Asia-Pacific Bombay Stock Exchange 1,032,589.6 83,906.6
Asia-Pacific Hong Kong Stock Exchange 1,773,002.2 519,465.7
Asia-Pacific Korea Exchange 640,357.6 618,607.8
Asia-Pacific National Stock Exchange of India 968,815.1 242,641.7
Asia-Pacific Shanghai Stock Exchange 2,069,937.1 1,685,862.2
Asia-Pacific Shenzhen Stock Exchange 563,103.3 880,744.6
Asia-Pacific Tokyo Stock Exchange 3,102,492.9 1,561,888.8
Europe Euronext 2,262,751.6 742,885.6
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Region Stock Exchange
Market Value
(millions
USD)
Total Share
Turnover
(millions USD)
EuropeFrankfurt Stock Exchange (Deutsche
Brse1,132,126.2 1,101,064.6
Europe London Stock Exchange 2,204,320.0 1,483,263.3
EuropeMadrid Stock Exchange (Bolsas y
Mercados Espaoles1,084,606.4 591,217.3
Europe Milan Stock Exchange 554,613.9 341,421.1
Opportunity in Future in India Will the Indian Stock Market
still going on and on i.e. BOOM period in Indian Stock Market still
alive?
India just keeps getting better and better. The economy is growing rapidly surpassing
some of Asias biggest economies. India is now becoming the third largest country in
Asia economically. It has grown so much and is expected to continue to grow like this for
a long time. The Indian Government is doing everything it can do to propel the growth
rates in the Indian Industry, primarily in: India Stock Market, Indian Companies, Indias
manufacturing index, India Business Sector, Indias Company sector and other India
investment industries.
The yearly salaries are rising and the command to buy is under the command to spend.
The Investment GDP ratio is at a high. It is now over 30 percent and between the years
1990 and 2004 the average was only 25 percent. It has been said that, once it reaches 30
percent, it is going to take off rapidly. So India is expected to move rapidly.
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The down side to Indias big movement is that there is a limit to how high it can go. India
has grown so much, making the costs of everything go up so frequently. It can turn into
the most expensive country in the world. The companies are now working above their
finest ability.A lot of professionals say that this is a problem, but that people over-exaggerate while
talking about it. Their main worry about India is that the roads are so bad in India and the
amount of terrible roads may increase, but the government is addressing this issue. The
prices of cement, used to make good roads, have also gone up a lot with the prices of
everything else. There are so many road related projects that need to be done soon.
A lot of people try to People undervalue Indias accomplishment in growth. The growth
rates are very good and it wouldnt be wrong for people to overvalue it. India has created
the best growth story that happen over a long time. Although India is growing, there can
still be corrections in the market. No matter how well a country is doing, there is always
something that can be fixed. Some say that they would like to wait until the market is
fixed to invest.
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INTRODUCTION OF INDUSTRY INDIA LEVEL
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BSE
The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as
"The Native Share and Stock Brokers Association". It is the oldest one in Asia, even
older than the Tokyo StockExchange, which was established in 1878. It is a voluntary
non-profit making Association of Persons (AOP) and is currently engaged in the process
of converting itself into demutualized and corporate entity. It has evolved over the years
into its present status as the premier Stock Exchange in the country. It is the first Stock
Exchange in the Country to have obtained permanent recognition in 1956 from the Govt.
of India under the Securities Contracts(Regulation) Act, 1956
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NSE
NSE was incorporated in 1992 and was given recognition as a stock exchange in April
1993. It started operations in June 1994, with trading on the Wholesale Debt Market
Segment. Subsequently it launched the Capital Market Segment in November 1994 as a
trading platform for equities and the Futures and Options Segment in June 2000 for
various derivative instruments.
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REGIONAL STOCK EXCHANGE
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Comparative Assessment of different companies
SHCIL (STOCK HOLDING CORPORATION OF INDIA LIMITED)
Stock Holding Corporation of India Limited (SHCIL) was promoted by public financial
institutions and insurance majors like IDBI, UTI, ICICI, LIC, GIC and its subsidiaries,
IFCI and IIBI.
SHCIL was incorporated as a public limited company on July 28, 1986.
SHCIL provides depository, post trading, custodial services, securities lending to
institutional investors and retail investors.
Other auxiliary services provided by SHCIL include derivatives clearing,
PF fund accounting, SGL constituent account services, mutual funds and other
capital market instruments distribution.
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ICICI direct
ICICI Bank is India's second-largest bank with total assets of about
Rs.1,67,659 crores at March 31, 2005 and profit after tax of Rs. 2,005 crores for
the year ended March 31, 2005 (Rs. 1,637 crores in fiscal 2004). ICICI Bank has
a network of about 560 branches and extension counters and over 1,900 ATMs.
ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through
its specialized subsidiaries and affiliates in the areas of investment banking, life
and non-life insurance, venture capital and asset management.
ICICI Bank set up its international banking group in fiscal 2002 to cater to
the cross border needs of clients and leverage on its domestic banking strengths
to offer products internationally. ICICI Bank currently has subsidiaries in the
United Kingdom, Canada and Russia, branches in Singapore and Bahrain and
representative offices in the United States, China, United Arab Emirates,
Bangladesh and South Africa.
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SHAREKHAN
Sharekhan is an equities focused organization tracing its lineage to SSKI, a veteran
equities solutions company with over 8 decades of experience in the Indian stock
markets.
In the stock markets. Sharekhan does not claim expertise in too many things. Sharekhan's
expertise lies in stocks and that's what he talks about with authority. So when he says that
investing in stocks should not be confused with trading in stocks or a portfolio-based
strategy is better than betting on a single horse, it is something that is spoken with years
of focused learning and experience
Sharekhan brings a user- friendly online trading facility, coupled with a wealth of content
that will help investors stalk the right shares.
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UTI SECURITIES
UTI Bank is a registered member (Depository Participant) of NSDL. Indias first
depository. We can avail all of the depository-related services by just opening an account
with NSDL through UTI Bank.
UTI Bank provides services like dematerialization of shares, rematerilialization, pledge-
Hypothecation, freezing/ locking Of Accounts, transfer of shares and settlements, receipt
of corporate benefits, holdings & transaction statements on email, tele depository
services.
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MARWADI SHARES AND FINANCE PRIVATE LIMITED
Marwadi Shares And Finance Pvt. Ltd. Was incorporated in 1992.Marwadi Group
servicing more than 75000 clients, more than 554 pin codes. The company ranked among
top 50 broking houses. It has 250 franchisee / subbrokers and authorized persons
network.
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HDFC SECURITIES
HDFC Securities, a trusted financial service provider promoted by HDFC
Bank and JP Morgan Partners and their associates, is a leading stock broking
company in the country, serving a diverse customer base of institutional and
retail investors.
HDFCsec.com provides investors a robust platform to trade in Equities in
NSE and BSE , and derivatives in NSE. Our website will support you with the
highest standards of service, convenience and hassle-free trading tools.
Our research team tracks the economy, industries and companies to
provide you the latest information and analysis. Our content offers financial
information, analysis, investment guidance, news & views, and is designed to
meet the requirements of everyone from a beginner to a savvy and well-informed
trader.
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KOTAK SECURITIES
Kotak Securities, an affiliate of Kotak Mahindra Bank, is the stock-broking
and distribution arm of the Kotak Mahindra Group. The institutional business
division, which brings you AKSESS, primarily covers secondary market broking.
It caters to the needs of foreign and Indian institutional investors in Indian
equities (both local shares and GDRs, Global Depository Receipts). The division
also has a comprehensive research cell with sectorial analysts covering all the
major areas of the Indian economy.
The group a net worth of over Rs.1, 550 crores and employs over 3,000
employees in its various businesses. With a presence in 59 cities in India and
offices in New York, London, Dubai and Mauritius, it services a customer base of
over 5, 00,000
Kotak Mahindra has partnerships with Goldman Sachs (one of the world's
largest investment banks and brokerage firms), Ford Credit (one of the world's
largest dedicated automobile financiers) and Old Mutual (a large insurance,
banking and asset management conglomerate).
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KARVY STOCKBROKING LIMITED
Karvy offers a full range of financial services and products ranging from Equities
to Research to enhance your wealth and hence achieve your financial goals.
Equities & Derivatives
Comprehensive services for independent investors, active traders & Non-
Resident Indians.
Karvy Research
Premium research on all most all companies updated daily.
Depository Services
Value added services for seamless delivery.
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RELIANCE MONEY
Reliance Money is an endeavour to change the way India trades in financial markets and
avails of various financial services. Reliance Money ensures maximum security with a
unique security token to keep your online account safe.
ANAGRAM SECURITIES
Anagram Securities is the part of the Rs. 2000 crores Lalbhai Group. It was found in
1993 and is a member of the National Stock Exchange. Last year their trading crossed Rs.
17000 crores with around 5000 people making.
They are dealing only in Stock Market and nothing else. Though they are doing good
research work regarding companies and market which will be the beneficial to the
investors.
Gujarat state is one of the most important fields of their business. And they have about 30
branches throughout Gujarat.
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COMPANY PROFILE
About SSJ
SSJ FINANCE is a well-diversified financial services entity offering clients advice
on structuring a complete investment portfolio. We have written for ourselves the
mandate to be a single-point, unbiased financial advisor to our clients. Our vision is
to be the preferred financial services entity through a nation-wide network of
Branches, Financial Advisors and Business Associates.
We listen, analyze, advice and act - focused solely on our clients financial interest.
With services in equities, derivatives, commodities and depository, we seek to giveclients a well balanced exposure into the myriad financial products available, taking
into consideration their risk profile and investment outlook.
The SSJ Finance Group is a clearing cum trading member of various Equity and
Commodity Exchanges and market segments through these entities:
SSJ Finance & Securities (P) Ltd.
Member: The National Stock Exchange (NSE);
Member: Bombay Stock Exchange Ltd. (BSE);
Cash & Derivatives SegmentsMember: Calcutta Stock Exchange Association (CSE)
Depository Participant: Central Depository Service (I) Ltd. (CDSL)
SSJ Commodities (P) Ltd.
Member: Multi-Commodity Exchange (MCX)
Member: National Commodity & Derivatives Exchange (NCDEX)
Member: National Multi-Commodity Exchange of India Limited (NMCE)
M/s Sureshchand S. Jain
Member: The National Stock Exchange (NSE);
Cash & Derivatives Segments
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Promoter Group and Intellectual Capital
The SSJ Finance team comprises a diverse group of talented and experienced
individuals whose expertise and guidance will enable you to meet your investment
objectives. We owe our success to the combined efforts of our Promoters and
executives, both at the senior and junior management level.
Mr. Sureshchand Jain - Founder-Promoter and Chairman
Mr. Saurabh Jain - Managing Director
Our Intellectual Capital
Mr. Sureshchand Jain
Mr. Sureshchand S. Jain, the founder-promoter and Chairman of the Group, hasover 35 years of experience in the Equity and Commodity markets. He has seen
the financial markets through various economic cycles over these years. His
experience, vision and far-sightedness have been a great source of wisdom for all
at SSJ Finance. He spent the initial 15 years of his career in the Bullion markets as
member of The Bombay Bullion Association and The Bombay Commodity
Exchange Ltd. (the erstwhile Bombay Oilseeds & Oils Exchange Ltd.) and has
acquired domain expertise in gold and silver.
His acquaintance with the Indian Equity bourses began in 1987 as member of
Bombay Stock Exchange (BSE); which eventually gave shape to the present SSJ
Finance Group. The SSJ Finance Group subsequently acquired memberships of all
the major Equity & Commodity Exchanges in the country. Mr. Sureshchand Jain
has been a pioneer in the development of arbitrage trading strategies in the Indian
equity & commodity markets and leads the entire trading / arbitrage activities at
SSJ Finance including the proprietary book of the Group.
Mr. Saurabh Jain
Overall management and strategic planning of the Group vest with senior
executives including Mr. Saurabh Jain, Managing Director of the Group.
Saurabh, a Chartered Accountant and an MBA by qualification, has more than 5
years of exposure to the Financial Services Industry with experience in Audit &
Consulting, Investment Banking, Equity Sales & Trading, Asset Management and
Investment Research.
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Our Intellectual Capital
The senior management of the Group comprises of professional executives having
broking, investment, trading & specialized research experience of over 10 years.
They have prior experience in structuring Indices, carrying out Risk-freeArbitrage, Index Arbitrage as well as Risk Arbitrage strategies, executing Private
Equity Placement, Project Finance, Currency Swap transactions, Fixed Income
and Equity research and portfolio structuring. SSJ Finances broking & researchteam has the experience of trading, hedging and developing strategies in Equities,
Derivatives & Commodities. Members of the team analyze alternative investment
avenues and prepare Special Situation Reports.
SSJ Finances network of branches across the country is headed by seniorprofessionals with exhaustive experience and knowledge of the Capital Markets.
The Group is supported in its daily operations by senior executives who have been
with the Group for several years now with extensive training and experience in
their respective areas. Not only has this given them an excellent grasp over daily
operations combined with knowledge of compliance requirements, it has also
resulted in huge loyalty to the firm, the value of which is indeterminable. The
heads of each department are easily approachable at all points of time.
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SSJ Finance Broking ActivitiesOur History
SSJ Finance Group provides Equity & Commodity Broking services on
the NSE, BSE, MCX and NCDEX through the following entities:
M/s. Sureshchand S. Jain (NSE)
SSJ Finance & Securities (P) Ltd. (BSE, NSE, CSE, and CDSL)
SSJ Commodities (P) Ltd. (MCX, NCDEX)
M/s. Sureshchand S. Jain (NSE)
M/s. Sureshchand S. Jain is a proprietary concern, which acquired membership of
NSE as a Clearing-cum-Trading Member at the time of the Exchanges inceptionin 1994. Membership of the Derivatives segment was acquired in the year 2001 at
the time of its introduction to the Indian capital markets.
SSJ Finance & Securities (P) Ltd. (BSE, NSE, CSE, and CDSL)
The Company was incorporated in December 1996 and acquired membership of
the Bombay Stock Exchange (BSE) in April 1997. It subsequently became a
composite member (dual membership) of BSE in the year 2000. In the same year,
the Company also acquired membership of the Calcutta Stock Exchange (CSE) as
well as became a Depository Participant (DP) with Central Depository Services
(India) Ltd. (CDSL).
With a surge in volumes and the Groups intentions of expanding its clientelebusiness, a corporate membership of NSE was acquired under the name of SSJ
Holdings (P) Ltd. in the year 2000 for Cash Market segment and in the year 2001
for the Derivatives segment. SSJ Holdings (P) Ltd. has been amalgamated with
SSJ Finance & Securities (P) Ltd.
SSJ Commodities (P) Ltd. (MCX, NCDEX)
The SSJ Finance Group ventured into the commodities arena to leverage upon the
rich experience of the promoters in the bullion market. It acquired membership of
the Multi Commodity Exchange (MCX) and the National Commodity &
Derivatives Exchange of India (NCDEX) in the year 2003 and National Multi-
Commodity Exchange (NMCE) in the year 2007.
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OUR VISION
Our vision is to be a leading wealth management service provider acting solely in the
financial interest of our clients through a nationwide network of qualified professionals
and business associates.
Our Philosophy Our business is built upon three important cornerstones our Client,Business Associates and Employees. Our philosophy is unique and clearly defined.
Towards our Client
Towards our Business Associates
Towards our Employees
Towards our ClientThe Client is the driving force behind what we do. Our goal is to
provide the highest quality of products and services, along with value-added advice and
guidance based on the clients needs. We look to develop long-term relationships withour clients built on strong ethics and trust.
Towards our Business AssociatesThe power of partnership engenders involvement,
respect and mutual support. This is precisely the relationship that we foster with our
Business Associates and Financial Advisors. We provide a complete platform built upon
the best infrastructure and technology to enable our Business Associates and Financial
Advisors to efficiently service the financial needs of our investing clients.
Towards our EmployeesOur employees are what set us apart. Were all here for one
reason - to serve our clients best interests. It is through leadership and accountabilityacross our organization that we establish a common direction, encourage creative
collaboration and provide an inspiring environment for our people.
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Our Values
Upholding these values is the primary responsibility of leaders at every level within
SSJ.
Respect for the Individual:We respect the dignity of each individual, whether an
employee, shareholder, client or member of the general public.
Partnership: Relationships among our staff members as well as our clients are
driven by the power of partnership. The power of partnership engenders
involvement, respect, contribution and mutual support. We encourage free exchangeof ideas and demand teamwork.
Striving for excellence: While serving our clients we constantly strive forexcellence to ensure that they derive complete satisfaction in their dealings with us.
Client focus:We aim to provide the highest quality of products and services to best
serve the changing needs of clients.
Teamwork: We strive for seamless integration of services through cooperation and
collaboration within and across workgroups and teams.
Meritocracy:We invest in our employees development and actively strive to be thebest at attracting and retaining talented people. Our success calls for entrepreneurial
spirit and initiative from each individual.
Integrity:At SSJ, our goal is to act in ways that help us to exemplify the highest
standards of personal and professional ethics in all aspects of our business.
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Our SSJ Logo
The SSJ alphabets in an ascending chain formation signify the strong link that we
strive to build between the company, our clients and employees. We work in the best
interest of our clients, always!
The upward direction of the SSJ chain signifies growth as the prime focus of the
company.
Extension of the SSJ chain beyond the Logo borders symbolizes unbounded
prosperity for all its constituents as per Vaastu philosophy.
The Green Colourdepicts wealth and an ethical work environment.
Why SSJ
At SSJ, we believe that investing is not a one size fits all proposition. Individualinvestors are real people, each with his or her own personal long-term financial goals. We
offer financial solutions tailored specially to your individual needs.
So if you are interested in high quality investments, we invite you to explore this site and
learn more about the unique services we have to offer to help you reach your financial
goals.
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Locate Us
Contact our Investment Centre closest to you to help you get started with SSJ Finance.
Alternatively, you may also e-mail us based on your nature of query:
Online Trading: [email protected] [email protected]
Business Associate / Franchisee: [email protected]
Corporate Office: Registered Office:
1st Floor,Merchant Chamber 1st Floor, Surya Mahal
41,New Marine Lines.Opposite Patkar Hall 5, Burjorji Bharucha Marg, Fort,
Mumbai - 400 020 Mumbai 400 001
Maharashtra Maharashtra
India India
T: +91-22-4300 8800 T: +91-22-4347 2271
F: +91-22-4300 8899 F: +91-22-2264 4090
Regional Offices
SrNo State City Address Telephone Fax
1 Maharashtra Mumbai116 Linkway Estate, Link Road,
Malad (W), Mumbai - 400 064
+91-22-
67415130-36
+91-22-
28769409
Regional Offices
SrNo State City Address Telephone Fax
1 Maharashtra Nashik G-10/11, Suyojit Trade Centre,
Sharanpur Road, Nashik422 002+91-0253-
3018541 / 42 / 43
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SrNo State City Address Telephone
1 Gujarat SuratNo. 216, Empire State Building, Near Udhna
Darwaja, Ring Road, Surat - 395 002
0261-
3024309/312(B)
0261-3024308(D)
Maharashtra India
Regional Offices
SrNo State City Address Telephone Fax
1 Maharashtra Pune
303, 3rd Floor, Karan Selene Building, Above
Yes Bank, Bhandarkar Institute Road, Shivaji
Nagar, Pune-411004
020-
30261111-13
Regional Offices
SrNo State City Address Telephone Fax
1 Maharashtra Thane
101-104, 124-126, O. P. Commerce
Centre Jesal Park, Bhayendar (E), Mumbai
- 401 105 Maharashtra India
+91-22-
28162402 / 03 /
07
Regional Offices
SrNo State City Address Telephone Fax
1 Gujarat Rajkot
201, Star Chambers, Hari Har Chowk,
Dr. Rajendra Prasad Road, Rajkot - 360
001 Gujarat India
+91-0281-
3048652
+91-0281-
3045649
Regional Offices
SrNo State City Address Telephone Fax
1 Madhya Pradesh Indore406-407, D M Tower, Race Course
Road, Indore- 452001
0731-3024783-
92
Regional Offices
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Regional Offices
SrNo State City Address Telephone Fax
1 Gujarat Ahmedabad
303, Iscon Avenue, Opposite Choice
Restaurant, C.G. Road, Ahmedabad
- 380 009 Gujarat India
+91-79-
30073800
+91-79-
30007675
2 Gujarat Ahmedabad
M-12, Ghadiali Complex, Jawahar
Chowk, Maninagar, Ahmedabad -
380 008 Gujarat
079-
30480284-92
Regional Offices
SrNo State City Address Telephone Fax
1 West Bengal Kolkata (AJC BOSE ROAD)
FMC Fortuna,
Suit No. A-14,
4th Floor,
234/3-A, AJC
Bose Road,
Kolkata - 700
+91-33-
30588996 /
97 / 98 / 99
+91-33-
30588995
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Regional Offices
SrNo State City Address Telephone Fax
1 West Bengal Kolkata (Camac Street)
Shanti Niketan,
Room No. 9, 10th
Floor, 8, Camac
Street, Kolkata -
700 017 West
Bengal India
+91-033-
22825425 /
033-32992260
+91-033-
40061241
Regional Offices
SrNo State City Address Telephone Fax
1 Gujarat GandhinagarG-32/33, Megh Malhar Complex, Sector -
11, Gandhinagar382 011 Gujarat India+91-07930580301
Regional Offices
SrNo State City Address Telephone Fax
1 Jharkhand Ranchi
2nd Floor, Baldeo House, Shradhanand
Road, Upper Bazaar, Ranchi834 001Jharkhand, India
+91-651-
6455109
+91-651-
6455110
Regional Offices
SrNo State City Address Telephone Fax
1 New Delhi New DelhiUGF-4, Kanchanjunga Building, 18,Barakhamba Road, Connaught Place,
New Delhi - 110001
+91-11-
30238906
Regional Offices
SrNo State City Address Telephone Fax
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1 Rajasthan Jaipur
Off No.302 , Luhadia Tower, K-11, Ashok
Marg ,Near Ahinsa Circle, C Scheme
,JAIPUR
9314451122
,0141-3928700
egional Offices
SrNo State City Address Telephone Fax
1 Uttar Pradesh Kanpur
114-117, Kan Chambers, 14/113 Civil
Lines, Adjacent To UP Stock Exchange,
Kanpur-208001
0512-3067880
to 87
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Benefits of Equity Investing with SSJ...
As an investor, you would want quality services from a full-service brokerage firm
whose function goes far beyond mere execution of buy-and-sell transactions.
Congratulations! Your search has just come to an end.
At SSJ Finance, we assure you that you will have a rewarding investing experience.
We help you assimilate the massive amount of information trends in the economy,the markets, specific industries and individual companies that may affect your
particular investments or investment decisions. The role of SSJ Finance is to helpyou, the investor, make deliberate, thoughtful decisions that match your personal
needs with suitable investment alternatives.
We particularly enhance your investing experience with:
Excellent trade execution capabilities on BSE, NSE, MCX and NCDEX
Futures & Options / Derivatives trading for those with a higher risk appetite
Online Trading Facility with integrated Depository and Bank Gateway
Arbitrage trading strategies
Daily Market Analysis, Advisory reports & Special Situation Research
Reports Online real-time back office, available 24/7
Online Depository Services with Auto Pay-in facility
Seamless transaction flow.
We have made investing and trading much simpler for you. By opening an
account with SSJ Finance, you can enjoy the freedom to trade in any of the
following 3 ways:
Trade Onlineon your desktop through different trading platforms
Call-n-Trade (for online trading clients) Contact or visit your nearest SSJ Finance branch office to place your orders.
To start trading in Equities, Derivatives and / or Commodities, using any of the 3
methods mentioned above, all you need to do is open an account with us
or Contact us for any related queries.
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Equtiy Basics
What is Share/ Stock/ Equity?
A share is one of a finite number of equal portions in the capital of a company, mutual
fund or limited partnership, entitling the owner to a proportion of distributed, non-
reinvested profits known as dividends and to a portion of the value of the company in case
of liquidation. Dividends are not guaranteed. They may be increased if the company
performs well, but they may also be reduced or eliminated if the company performs
poorly.
So when you purchase shares, you become part owner of a company. As an owner, you
are usually entitled to voting rights on the board of directors and corporate policy.
Modes of Stock Purchase
Stocks can be purchased individually (meaning you purchase shares of stock in one
particular company) or as part of a pool investments, such as mutual funds.
Mutual funds are baskets of stocks that are available for the fraction of the price you
would need to buy the same stocks individually. That's because a large number of
investors pool their money together and invest in the entire portfolio of stocks.
Professional money managers direct the investments within mutual funds, choosing each
of the individual investments based on the mutual fund's investment goals. For example,
some equity mutual funds invest in well-established companies that pay regular
dividends. Others invest in younger, more growth-oriented firms or companies that have
been operating below expectations for several years.
Note: As with the purchase of individual stocks, your investment return and principal
value of an investment in mutual funds will fluctuate. Your shares may be worth more or
less than your original investment when redeemed.
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What are the different kinds of risks one should consider while investing?
Risk in investments can be of the following types:
Market Risk or Volatility: This refers to the fluctuation in the value ofinvestments due to changes in the price of the stocks included in an investorsportfolio which could be caused by a variety of factors such as performance of the
company, policy announcements, political factors etc. Even a portfolio of well-
diversified assets cannot escape all risk.
Inflationary risk: Also known as purchasing power risk, this is the decline in the
purchasing power of money over time, so that even the "safest" investments can
leave investors with substantially less purchasing power. For example, assumingan inflation rate of 4% for the next 10 years, if you have Rs.100 today, 10 years
from now inflation will have eroded that Rs.100 so that it is worth only Rs.68.
Investment or credit risk: This is the possibility that a company in which an
investor is invested in may not be sufficiently profitable to remain in business.
Another manner of classifying risk in securities is as follows:
Unsystematic Risk: Unsystematic risk affects a very specific group of securities
or an individual security. Internal risks such as strikes, management policies, etc.are to a large extent controllable and are examples of non-systematic risks. An
investor can easily manage such non-systematic risks by having a well-diversified
portfolio spread across the companies, industries and groups so that a loss in onemay easily be compensated with a gain in other.
Systematic Risk: The risk inherent to the entire market or entire market segment
is called Systematic Risk. It is also known as "un-diversifiable risk". Such risks
are external and beyond the control of the company. Examples of such risks areeconomic, political and sociological changes. Their impact is on prices of all
individual stocks and they move together in the same manner. Therefore quite
often the stock prices may be falling despite good company performance and vice
versa.
Since higher returns are associated with higher risks, you, as an investor, need to
understand your risk tolerance level and certain principles of investing which can helpyou diversify and mitigate this risk. Before venturing into the world of stock investments,
consider:
Are you conservative, aggressive or speculative in your approach to investing?
Are you comfortable owning aggressive stocks?
Are you looking for a steady stream of income, long-term returns from growth or
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very high returns from risky short-term trading?
Factors affecting Investment Decisions
Before you begin investing, it's helpful to understand some of the factors that will affectyour investment decisions, such as:
Risk
Liquidity
Time Horizon
Total Return
Diversification
Tax Consequences
Rupee Cost Averaging
Risk: Risk in investments can take various forms. For details click here.
Liquidity: A "liquid" investment is one that can be readily turned into
cash if you need the funds on short notice. Investments can vary greatly intheir degree of liquidity. Shares can be traded on any business day at their
current market value, which may be more than, equal to or less than the
amount initially invested.
Time Horizon:Different investors have different time frames in which toachieve their investment objectives. Generally, young investors with long
time horizons should be able to assume greater risks because they havemore time to offset any losses with the higher return potential of
investments with greater risk. Older investors, however, often choose to
reduce risk because they have less time to recoup losses.
Total Return: All investments provide one or a combination of two
different types of returns to investors - income or growth. Income is thedividend earned from stocks. Growth is the price appreciation of thesecurity. The total return of an investment is the combination of income
and growth realized over a given time period. In selecting investments
based upon their expected total return, you should understand which
portion is generated from income and which from growth. Usually, thegreater the reliance on income, the lower the market risk but the greater the
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long-term purchasing power (or inflationary) risk.
Diversification: Building a diversified portfolio with securities spreadacross different investment classes can help you avoid the risk of having
all of your eggs in one basket. By mixing industries and types of assets,
you spread your risk. A particular market condition may have less impactif your portfolio consists of a wide assortment of securities than if you
purchase only one type of security.
Most beginning investors don't have sufficient capital to properly diversifytheir portfolio by purchasing individual securities. Investing in mutual
funds allows you to buy a professionally managed, diversified portfolio
with relatively small rupee amounts. In addition, many mutual funds allowyou to take advantage of rupee cost averaging by investing at regular
intervals.
Note: Mutual fund investing involves risk. Your principal and investmentreturn in a mutual fund will fluctuate in value. Your investment, when
redeemed, may be worth more or less than the original cost.
Tax Consequences: Not all investment returns are subject to the same
taxation. Short term and long term returns are taxed at different capital
gains rates or even taxed as business income. The taxation policy should
be kept in mind while deciding which investments to make.
Rupee Cost Averaging: Rupee cost averaging, the practice of committinga fixed amount of money to an investment program on a regular basis, is a
popular practice with many long-term investors. By investing a set amountregularly (usually monthly or quarterly), investors are able to avoid the
pitfalls of trying to time market peaks and valleys. Also, because the
amount of the investments is set, investors who practice rupee cost
averaging buy more shares of a stock or mutual fund when they are lesscostly and fewer shares when they are more expensive.
Like any investment strategy, rupee cost averaging doesn't guarantee a
profit or protect against loss in a declining market. Because rupee cost
averaging requires continuous investment regardless of fluctuating prices,
you should consider your financial and emotional ability to continue the
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program through both rising and declining markets.
What are the different kinds of risks one should consider while investing?
Risk in investments can be of the following types:
Market Risk or Volatility: This refers to the fluctuation in the value of
investments due to changes in the price of the stocks included in an investorsportfolio which could be caused by a variety of factors such as performance of thecompany, policy announcements, political factors etc. Even a portfolio of well-
diversified assets cannot escape all risk.
Inflationary risk: Also known as purchasing power risk, this is the decline in thepurchasing power of money over time, so that even the "safest" investments can
leave investors with substantially less purchasing power. For example, assuming
an inflation rate of 4% for the next 10 years, if you have Rs.100 today, 10 years
from now inflation will have eroded that Rs.100 so that it is worth only Rs.68.
Investment or credit risk: This is the possibility that a company in which an
investor is invested in may not be sufficiently profitable to remain in business.
Another manner of classifying risk in securities is as follows:
Unsystematic Risk: Unsystematic risk affects a very specific group of securities
or an individual security. Internal risks such as strikes, management policies, etc.
are to a large extent controllable and are examples of non-systematic risks. An
investor can easily manage such non-systematic risks by having a well-diversifiedportfolio spread across the companies, industries and groups so that a loss in one
may easily be compensated with a gain in other.
Systematic Risk: The risk inherent to the entire market or entire market segmentis called Systematic Risk. It is also known as "un-diversifiable risk". Such risks
are external and beyond the control of the company. Examples of such risks are
economic, political and sociological changes. Their impact is on prices of all
individual stocks and they move together in the same manner. Therefore quiteoften the stock prices may be falling despite good company performance and vice
versa.
Since higher returns are associated with higher risks, you, as an investor, need to
understand your risk tolerance level and certain principles of investing which can help
you diversify and mitigate this risk. Before venturing into the world of stock investments,
consider:
Are you conservative, aggressive or speculative in your approach to investing?
Are you comfortable owning aggressive stocks?
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Are you looking for a steady stream of income, long-term returns from growth or
very high returns from risky short-term trading?
Benefits of Derivatives trading with SSJ
Derivatives are a key part of the financial system, with the various derived contracts
accounting for a significant share of all capital market transactions in the domestic
and global markets. In India, derivative contracts are heavily traded on the National
Stock Exchange (NSE). Derivate contracts are increasingly being traded on the
Bombay Stock Exchange (BSE) as well. With our membership of the Derivatives
Segment on both these exchanges, we, at SSJ Finance, encourage you to avail of the
several benefits of derivatives trading, including, researched trading ideas, hedging
and arbitrage strategies, strong risk management of leveraged positions, lower cost
of trading and many more.
The SSJ Derivative Market segment has a composite understanding of the equity and
derivatives market reflected in our unique Trading / Hedging /Arbitrage strategies.
We offer the latest technological infrastructure for hassle-free trading, live market
reports, in-depth analysis and tracking services to enable you to adopt appropriate
derivative strategies (Bull Spread, Bear Spread, Cover call writing, hedging
strategies etc.) specific to your individual portfolio.
We have made investing and trading much simpler for you.By opening anaccount with SSJ Finance, you can enjoy the freedom to trade in any of the
following 3 ways:
Trade Onlineon your desktop through different trading platforms Call-n-Trade (for online trading clients)
Contact or visit your nearest SSJ Finance branch office to place your orders.
To start trading in Equities, Derivatives and / or Commodities, using any of the 3
methods mentioned above, all you need to do is open an account with us
or Contact us for any related queries.
Come and enhance your investing experience with us!
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Derivatives
Derivatives are financial contracts between two or more parties whose values are derived
from the value of an underlying primary financial instrument, commodity or index, such
as interest rates, exchange rates, commodities, bonds and equities. Derivatives include a
wide assortment of financial contracts, including forwards, futures, swaps and options.
Most derivatives are characterized by high leverage.
Since derivatives are mere contracts, just about anything can be used as an underlying
asset. There are even derivatives based on weather data, such as the amount of rain or the
number of sunny days in a particular region.
Derivatives are generally used to hedge risk, but can also be used for speculative and
arbitrage purposes.
History of Derivatives in India
In India, derivative contracts are heavily traded on both the national exchanges, NSE and
BSE. History of Derivatives in India can be outlined as follows:
Date Event
9th June 2000First exchange traded Index Derivative ProductSensex Futureswas launched by BSE
12th June 2000 NSE commenced Trading in Index Futures
1st June 2001 BSE commenced Trading in Index Options
4th June 2001 NSE introduced Trading in Index Options
2nd July 2001 NSE commenced Trading in Options on Individual Securities
9th July 2001 BSE commenced Trading in Stock Options
November 2001 NSE commenced Trading in Futures on Individual Securities
9th November 2002 BSE commenced Trading in Futures on Individual Securities
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June 2007 NSE launched derivatives on Nifty Junior & CNX 100
Why consider Derivative Contracts?
With the present volatile market conditions and the continuous national and international
developments making it risky to have overnight positions, clients need a way to safeguard
their profits and at the same time minimize their losses. Derivative contracts are ideal for
this purpose.
Futures investors have long recognized that they have the potential to profit from both
upward and downward movement of investments. Derivatives help to improve market
efficiency because risks can be isolated and sold to those who are willing to accept takingthese risks at the least cost. The use of derivatives breaks risk into pieces, which can be
managed independently. Thus, from the market prospective, derivatives offer the free
trading of financial risks.
Speculators can take advantage of highly leveraged exposures in both financial and non-
financial markets. That means they can buy futures contracts by depositing just a small
percentage of the overall contract price. Their goal is to profit from changes in the price
of the futures contract.
Hedgers, those who hold a specific asset or have a specific exposure in the cash market,often take a position in the derivatives market opposite to that in the cash market to help
reduce the risk of rising or falling prices.
FuturesTrading Strategies
For a market to succeed it must have all kinds of participantshedgers, speculatorsand arbitragers. The confluence of these participants ensures liquidity and efficientprice discovery on the market. We, at SSJ Finance can help you choose the right
trading strategy that suits your profile and requirement.
The main trading strategies that can be formulated using futures are listed below:
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Hedging
Speculation
Arbitrage
Hedging
Hedging is the act of taking a position in the futures market that is exactly
opposite to ones position in other segments of the market such as the equity
segment, commodity physical market etc., with a view of offsetting losses in one
segment (say ,in equities/commodities spot market) with a gain in the other (say
,futures segment). Hedging does not necessarily improve financial outcome or
result in increased profit. This strategy helps in reducing or limiting riskassociated with unpredictable changes in prices, in other words, it increases the
certainty of the outcome. Hedging strategy can be adopted in the following two
ways:
Buying Hedge or Long HedgeIn the equities market, if you are short in thecash segment, you can buy futures contracts and hedge your cash position. Based
on the rationale that both cash and futures segment move in tandem, in case
prices rise, you will make a profit in the futures contract which will offset your
loss in the cash segment. If prices fall, you will make a profit in the cash segment
and a loss in the futures segment. In case of commodities market, this strategy is
quite useful for exporters / traders who have made commitments to deliver the
specified amount of raw materials / processed products / manufactured goods at a
later date at a price currently agreed upon, but do not have the stock of raw
materials to fulfill their commitments for forward deliveries.
Selling Hedge or Short HedgeThis means selling futures contracts to hedgelong position in cash market. For example, in the commodities market,
manufacturers and dealers who have bought raw materials or are maintaining
inventory for future sale, can protect the prices of their future sales by sellingfutures contracts.
Speculation
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Under the hedging strategy, profit is minimal since profit generated in one
segment is eaten up by loss in the other segment. If risk minimization is not your
motive, and you are interested in making maximum gains from your investment,
you can become a speculator. Under the speculation strategy, when an investor
thinks that the market is bullish, he buys the Index futures contract. Similarly, ifhe is bearish about the market, he sells the Index futures contract. The same
strategy can be applied to individual stock futures as well.
The advantage of this strategy is that without any existing position in the cash
market, and even without having the physical resources to take delivery of the
underlying asset or the desire to take delivery of the underlying asset, a
speculator can make use of price movements to make a profit, based on his
expectations. Another advantage to the market as a whole is that speculators
provide liquidity to the market, since they accept the risk which hedgers wish to
transfer. Without them, the hedging function would have proved to be a very
expensive option.
Note: Futures market provides you with the advantage of leverage, since you
can trade large volumes with only a small investment in the form of margin
money. While profits can be huge, ones losses can also be large. Hence, you
must step into the futures market with great caution, only after
understanding the risks involved.
Arbitrage
Arbitrage involves the simultaneous purchase and sale of an asset in order to
profit from a temporary price differential, usually taking place on different
exchanges or marketplaces. When used by academics, an arbitrage is a
transaction that involves no negative cash flow at any probabilistic or temporal
state and a positive cash flow in at least one state; in simple terms, a risk-freeprofit. Ifyou want to replace the returns from your idle funds in fixed depositswith higher yielding returns, arbitrage is a good risk free investment option for
you.
A person who engages in arbitrage is called an arbitrageur. The term is mainly
applied to trading in financial instruments, such as bonds, stocks, derivatives,
commodities and currencies.
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OptionsStrategy Guide
With various option strategies such as long call/put, short call/put, straddle, strangle,
butterfly, spread etc. possible, it is very easy to get confused as to which strategy one
should adopt to fulfill ones objective of maximizing gains or hedging. If you have a
view on market trend (bullish / bearish / neutral / volatile), you can make optimum
use of the strategy guide given below. Click on the appropriate link to get details of
the strategy that you should adopt in the given scenario.
BULLISH STRATEGY
Very Bullish Buy Call
Moderately Bullish + Certain that the market will not fall Sell Put
Moderately Bullish + Fairly certain that the market will not fall Bull Spread
Bearish in immediate near-term (weeks) + bullish in long term(months)
DiagonalSpread
BEARISH
Very Bearish Buy Put
Certain that the market will not rise Sell Call
Moderately bearish + Fairly certain that the market will not rise Bear Spread
Flat/mod. bullish in near-term(weeks) + bearish in longer term(months)
DiagonalSpread
Hold stock and bearish Put Hedge
NEUTRAL
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Expect prices to fluctuate in very narrow range Sell Straddle
Expect prices to fluctuate in a broader range Sell Strangle
Moderately certain that prices will not fluctuate much Long Butterfly
Expect short-term weakness but longer-term rally Calendar Spread
Hold stock but expect no movement Covered Call
VOLATILE
Expect prices to be very volatile Buy Straddle
Expect prices to be volatile Buy Strangle
Moderately expect prices to be volatile Short Butterfly
BULLISH
Very BullishBUY CALL
Strategy View You think that the market will rise significantly in the short-term.
Strategy
Implementation
Buy Call option with a strike price x. The more bullish you are,the higher the strike price should be, i.e. the more out-of-the-
money the option you buy. (However, the more out-of-the-money the option is, the less likely that it will make money)
Upside Potential Profit potential is unlimited and rises as the market rises.
Breakeven Point
at ExpiryStrike Price + Premium
Downside RiskLimited to the premium paid for the option and is incurred if the
market at expiry is at, or below, the strike x.
Margin Not Required
CommentOnce you have bought the option, the strike price is fixed. Other
things remaining constant, the value of the option decays as time
passes. This is why some people say, a call is a wasting asset.
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If price goes up or volatility increases, the erosion slows. If price
drops or volatility decreases, the erosion speeds up.
Moderately Bullish + Certain that the market will not fallSELL PUT
Strategy ViewYou are certain that the market will not go down, but unsure /
unconcerned about whether it will rise.
Strategy
Implementation
Sell Put option with a strike price x. If you are very bullishand aggressive, then sell in-the-money puts. If conservative,
sell out-of-the-money puts.
Upside Potential
Profit potential is limited to the premium received. The more
the option is in-the-money, the greater will be the premium you
will receive.
Breakeven Point at
ExpiryStrike PricePremium
Downside Risk
Loss is almost unlimited (almost as the underlying pricecannot fall below Zero!). [ If the strategy appeals, but not the
downside risk, investors may prefer a Bull Spread]
Margin Always Required
CommentIf the market does little, and time passes, this helps as the short
position gains when the time value erodes.
Moderately Bullish + Fairly certain that the market will not fallBULL
SPREAD
Strategy View
You are bullish but unsure. You think that the market will not
fall, but want to cap the risk. Conservative strategy for one who
thinks that the market is more likely to rise than fall.
Strategy
ImplementationUSING CALLS USING PUTS
Long a Call with strike price xand Short another Call with a
higher strike price y,
Long a Put at a strike price xand Short another Put with a
higher strike price y,
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producing a net initial debit. producing a net initial credit.
Upside Potential
Limited to Difference between
Strikes minus Initial Debit.Limited to Net Initial Credit
Maximum Profit if market at expiry is above the higher strike
price.
Downside Risk
Limited to Net Initial DebitLimited to Difference between
Strikes minus Initial Credit.
Maximum Loss if market at expiry is below the lower strike
price.
Margin Possibility for Margin Requirements to be off-set.
Comment
Time value erosion not too significant due to balanced position.
The benefit of buying a spread is that it requires a smaller
investment than buying a single call / put. The cost is that it
makes less money (limited) than the call (unlimited) should the
stock rise sharply.
Bearish in immediate near-term (weeks) + bullish in long term (months)
DIAGONAL SPREAD
Strategy ViewYou think that the market will be weak in the short term, but
then rally later.
Strategy
Implementation
A near-dated call option is sold, and a longer dated, further out-
of-the-money call option is bought.
Upside Potential
Unlimited, if the bought option is held after the short option
expires (the position then becomes a straight-forward buy call).
If the position is closed at expiry of the near option, maximum
profit will accrue if the market is at the level of the sold strike.
Downside RiskLimited to the difference in strikes plus / minus the initial debit /
credit when establishing the spread.
Margin Yes, but off-set may apply
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CommentThere is a risk of the sold options being called (i.e. being
exercised).
BEARISH
Very BearishBUY PUT
Strategy ViewYou think that the market will fall significantly in the short-
term.
Strategy
Implementation
Buy Put option with a strike price x. The more bearish you are,the lower the strike price should be, i.e. the more out-of-the-
money the option you buy. (However, the more out-of-the-
money the option is, the less likely that it will make money)
Upside PotentialProfit potential is unlimited (well, not really unlimited of course,
as the market cannot fall below Zero!)
Breakeven Point
at ExpiryStrike PricePremium paid
Downside RiskLimited to the premium paid for the option and is incurred if the
market at expiry is at, or above the strike x
Margin Not Required
CommentIf the market does little, and time passes, the value of the
position will decrease as the option time value erodes.
Certain that the market will not riseSELL CALL
Strategy ViewYou are certain that the market will not rise, but unsure /
unconcerned whether it will fall.
Strategy
Implementation
Sell Call option with a strike price x. If conservative, sell out-of-the-money calls. If you are not so conservative and believe
the stock is stagnant, sell at-the-money options. If you are
aggressive and confident that the market is going down, sell in-
the-money call options.
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Upside Potential
Profit potential is limited to the premium received. The more the
option is in-the-money, the greater will be the premium you will
receive.
Breakeven Pointat Expiry
Strike Price + Premium
Downside Risk
Downside risk is unlimited. Losses on the position will increase
as the market rises. [ If the strategy appeals, but not the
downside risk, investors may prefer a Bear Spread]
Margin Always Required
CommentIf the market does little, and time passes, this helps as the short
position gains when the time value erodes.
Moderately bearish + Fairly certain that the market will not riseBEAR
SPREAD
Strategy View
You are bearish but unsure. You think that the market will not
rise, but want to cap the risk. Conservative strategy for one who
thinks that the market is more likely to fall than rise.
Strategy
Implementation
USING CALLS USING PUTS
Sell a Call with strike price xand Buy another Call with a
higher strike price y,producing a net initial credit.
Sell a Put at a strike price xand Buy another Put with a
higher strike price y,producing a net initial debit.
Upside Potential
Limited to Net Initial CreditLimited to Difference between
Strikes minus Initial Debit.
Maximum Profit if market at expiry is below the lower strikeprice.
Downside Risk
Limited to Difference between
Strikes minus Initial Credit.tLimited to Net Initial Debit
Maximum Loss if market at expiry is above the higher strike
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price.
Margin Possibility for Margin Requirements to be off-set.
Comment
Time value erosion not too significant due to balanced position.The benefit of a bear spread is that it requires a smaller
investment. The cost is that it makes less money than a pure long
put position should the stock fall sharply.
Flat / moderately bullish in near-term(weeks) + bearish in longer term (months)
DIAGONAL SPREAD
Strategy ViewYou think that the market will be flat or rise only slightly in the
short term, but then fall later.
Strategy
Implementation
A near-dated put option is sold, and a longer dated, further out-
of-the-money put option is bought.
Upside Potential
Large, if the bought option is held after the short option expires
(the position then becomes a straight-forward buy put). If the
position is closed at expiry of the near option, maximum profit
will accrue if the market is at the level of the sold strike.
Downside RiskLimited to the difference in strikes plus / minus the initial debit /
credit when establishing the spread.
Margin Yes, but limited
CommentThere is a risk of the sold options being called (i.e. being
exercised).
Hold stock and bearishPUT HEDGE
Strategy View
You hold stock and are worried about a market fall. You can
buy Put Options to protect the value of the stock position, whileallowing the position to benefit in the event of a market rise.
Strategy
Implementation
Buy Put Options with a strike price x. The number of putoptions bought will depend on your bearishness and the size of
your stock holding.
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Upside PotentialProfit potential is unlimited, being the ordinary return on the
stock minus the fixed premium paid for the put options.
Downside Risk
Potentially limited (depending on the hedge-ration initially
applied). The gains on the put options as the market falls, willoff-set the loss in the value of the stock.
Margin Not Required
Comment Strategy characteristics are similar to a Buy Call.
NEUTRAL
Expect prices to fluctuate in very narrow rangeSELL STRADDLE
Strategy View You are certain that the market will not be very volatile, but willstagnate (neither go up or down very much).
Strategy
ImplementationShort a Call and a Put option at the same strike price x
Upside PotentialLimited to the 2 premiums received. This will be realized if market at
expiry is exactly at the level of the strike price.
Breakeven Point
at Expiry
The lower point a will be the strike minus the value of the 2premiums received. The upper point b will be the strike plus the 2premiums received. (If you would like to broaden this band, a Sell
Strangle might appeal to you)
Downside Risk Unlimited, should the market rise or fall greatly.
Margin Always Required
CommentIf the market does little, and time passes, then the value of the position
will benefit as the short positions gain when the time value erodes.
Expect prices to fluctuate in a broader rangeSELL STRANGLE
Strategy View You expect the market to stagnate within a broadish band.
Strategy
Implementation
Sell Put option with a strike price x and Sell Call option with ahigher strike price y
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Upside Potential Limited to the 2 premiums received.
Breakeven Point at
Expiry
Lower point a will be the lower strike x minus the value of the 2premiums received. The upper point b will be the higher strike yplus the 2 premiums received.
Downside Risk
Unlimited, should the market rise or fall greatly. (If you like this
strategy, but not the downside risk, a Long Butterfly might be
interesting)
Margin Always Required
CommentIf the market does little, and time passes, then the value of the position
will benefit as the short positions gain when the time value erodes.
Moderately certain that prices will not fluctuate muchLONG BUTTERFLY
Strategy ViewYou expect that prices will not fluctuate much, but want to cap the
downside risk.
Strategy
Implementation
Buy Call option with low strike a, Sell 2 Call options with mediumstrike x(x > a) and Buy Call option with high strike b (b > x > a)
Upside Potential
Limited to the difference between the lower and the middle strikes
minus the net debit of establishing the spread. This is obtained if the
stock ends up at the middle point (x) on the expiration day
Downside RiskLimited to the initial debit of establishing the spread. This occurs if the
stock is on the wing.
Comment Can be difficult to execute such strategies quickly.
Expect short-term weakness but longer-term rallyCALENDAR SPREAD
Strategy ViewYou think that the market will be weak in the short-term, but rally in the
longer term.
Strategy
Implementation
You Sell a near-dated Call option and Buy a longer-dated Call option,
both options having the same strike price. (If you have the opposite
view, then a comparable strategy can be constructed using puts)
Upside Potential Large, if the bought option is held after the short option expires (the
position then becomes a straightforward Buy Call). If the position is
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closed at expiry of the near option, maximum profit will accrue if the
market is at the level of the sold strike.
Breakeven Point
at ExpiryStrike Price + Premium
Downside Risk Limited to the Initial Debit incurred for establishing the spread.
Margin Off-set maybe available
CommentThere is a risk of the sold options being called (i.e. being exercised).
Sometimes, this strategy is also called Horizontal or Time spread.
Hold stock but expect no movementCOVERED CALL
Strategy ViewYou hold stock but do not think that the stock will rise in the shortterm, or that the stock will be neutral. Income can be earned by selling
call options against the stock holding.
Strategy
Implementation
Sell Call options. The number of call options that you sell will be
determined by your market view and the size of the stock holding.
Upside PotentialLimited. By selling calls, you are writing off the potential profit of the
stock position.
Downside Risk
Large. Similar to that incurred with ordinary stock ownership, only
offset pa