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SUMMER INTERNSHIP REPORTON

COMPARATIVE STUDY OF FULLERTON SECURITIES &WEALTHADVISORS LTD. WITH VARIOUS BROKERAGE FIRMS

SUBMITTED BY

Navjot Singh Khurana

Univ.Roll. No. 8100132030

UNDER THE GUIDANCE OF

Approved by All India Council for Technical Education, Govt. of India.

Punjab Technical University, Jalandhar

Mr. Nipun Aggarwal

Faculty of Research Methodology,GJ-IMT, Mohali

Mr. Amardeep Mahalwar

Senior Relationship Manager - Marketing,FULLERTON SECURITIES & WEALTH ADVISORS LTD,

Chandigarh


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Declaration

I hereby declare that this report on COMPARATIVE STUDY OF BROKERAGE PLANS OF

FULLERTON SECURITIES & WEALTH ADVISORS LTD. WITH VARIOUS BROKERAGE

FIRMS has been written and prepared by me during the SUMMER INTERNSHIPPROGRAM. This project was done under the able guidance and supervision ofProf. NipunAggarwal, Faculty, Gian Jyoti Institute of management and Technology and Mr. AmardeepMahalwar, Senior Relationship Manager, Fullerton Securities & Wealth Advisors Ltd.,Chandigarh in partial fulfillment of the requirement for the Bachelor of Business AdministrationDegree course of the Gian Jyoti Institute of management and Technology (GJ-IMT).

I also declare that this project is the result of my own effort and has not been submitted to anyother institution for the award of any Degree or Diploma.

Place:Chandigarh Date: August 7, 2010Navjot Singh8100132030


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Acknowledgements

Sometimes words fall short to show gratitude, the same happened with me during this project.

The immense help and support received from Fullerton Securities & Wealth Advisors Ltd.overwhelmed me during the project.

My sincere gratitude Mr. Amardeep Mahalwar, (Senior Relationship Manager, Fullerton

Securities & Wealth Advisors Ltd.) and MR.MOHIT SINGLA (Relationship Manager, Fullerton

Securities & Wealth Advisors Ltd.), for providing me with an opportunity to work with Fullerton

Securities & Wealth Advisors Ltd.

I also thankProf. Nipun Aggarwal

, (Faculty, Gian Jyoti Institute of management andTechnology) who has sincerely supported me with the valuable insights into the completion of

this project.

Last but not the least; my heart felt love for my parents, whose constant support and blessings

helped me throughout this project.


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CERTIFICATE-II

This is to certify that the study entitled COMPARATIVE STUDY OF BROKERAGE PLANS OFFULLERTON SECURITIES & WEALTH ADVISORS LTD. WITH VARIOUS BROKERAGEFIRMS submitted by Navjot Singh, Roll no 8100132030 BBA 5th semester (batch 2008-2011)to Punjab Technical University, Jalandhar in partial fulfillment of requirement by BBA degreehas been approved by me.

NIPUN AGGARWAL

(PROJECT GUIDE)


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Table of Content

S.no Topic Page number

1. Chapter - 1

i. Introduction to projectii. Fullerton Financial Holdings

iii. Fullerton Securities & Wealth Advisors Ltd

1-6

7-14

15-29

2. Chapter - 2

Review of Literature 30-52

3. Chapter 3

Research Methodology 53-56

4. Chapter 4

Findings and Analysis 57-66

5. Chapter 5Conclusion & Summary 67-70


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List of Tables


1. Financial & Operating Highlight 102. Financial & Operating Highlight 113. Financial & Operating Highlight 124. History Of Indian Stock Market 325. Pre-Independence Scenario Establishment of

Different Stock Exchanges33

6. No. of stock exchanges 34


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List of Figures


1. Increasing Internet Trading Volume 32. Milestones 93. Locations in World 174. Process of receipt 465. Process of delivery 466. Violation of Margin 49


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I. Introduction to Project

Globalization has proved to be a boon for the Indian economy. After globalization there has beena tremendous growth in the Indian economy.

Every sector of the economy has shown an outstanding performance after globalization.

The project was under taken as to study the Indian online trading. Earlier Trading was confinedin limited boundaries but now the scenario has been totally different after the entrance of onlinetrading. There is a cut throat competition between the broking houses. Now the brokers are moreconcerned about their customers to improve their performance. The sector is undergoingfundamental changes that have diluted its traditional role of protecting small deposits againstcapital and income risk and facilitating the conversion of Savings into investment.

This project has been a great learning experience for me and at the same time it gave me enoughscope to implement my analytical ability. The project in Fullerton Securities is to figure out thepotential brokerage plans, which can undertake the various products and services offered by theFullerton Securities.

With the advent of the internet, investors can now enter orders directly online, or even trade withother investors via ECN's (electronic communication networks). Most of the brokerage houseshave started providing the facilities of online trading to their customers. Today even the bankswith the view of expansion and large number of customers has started providing the onlinetrading terminal to the customers.

Also there have been a drastic increase in the volume of share traded on stock exchange and withthat the online trading has shown Bull Run.

As the competition from big players of online trading like Fullerton, Share khan, KotakMahindra, ICICI Direct etc is rising Fullerton Securities intends to built up a loyal customer base, the project is a step towards the same. In this era of competition its becoming difficult for theorganizations to acquire and retain the customers. Hence, for Fullerton Securities it is of utmostimportance to have satisfied existing customers as well as to attract the other customers.

With the help of this project Fullerton Securities & Wealth Advisors Ltd. could tap the

Customers potential in investment and which would provide them various opportunities ofincreasing the customer base.

Customer Relationship and Branch Operations believes that They would not remember whatyou did but they will always remember what you said.


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IncreasingInternet trading volume

Online trading is the service offered on the internet for purchase and sales of shares. In the realworld you place orders on your stock broker either verbally or in a written form. In onlinetrading you will access a stock brokers website through your internet enabled PC and place

orders through the brokers internet based trading engine. These orders are routed to the stockexchange without manual intervention and executed their own in the matter of a few seconds.From the past two years the volume of the internet trading has increased largely.

(Figure no. 1)


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What is investing?

Financial planning is a systematic approach by which you get to maximize your existingfinancial resources by utilizing several financial tools to achieve your financial goals.

Investing is an essential and indispensible element of financial planning. Broadly, it meansmaking your money grow or appreciate to fulfill long term financial goals. It is a way of savingyour money to meet your financial plans - children's education, retirement to purchasing yourown home etc. In simple words, Investing means making your idle money work for you.

There are different ways of making an investment. It includes placing money into stocks, bonds,mutual funds, real estate or even starting an enterprise. These options are referred to as'investment vehicles'.

Investments have a risk-reward spectrum. In accordance to your financial plans, you may investin instruments with compatible risk and return ratios. As a general rule of thumb, higher the riskan investor takes on an investment, the greater potential returns he/she stands to make and viceversa. The focus is on returns and the spectrum, in terms of risk, runs from conservative to veryaggressive. One way to measure results is by weighing expected returns against anticipated risks.

Along the risk-reward spectrum, investments can be classified into three basic categories: cash,bonds and stocks. Each category has its own set of characteristics and plays an important role instructuring a sound investment portfolio.

Time in the market

Investing in the stock market does not depend on timing the market, but time in the market.Stock prices fluctuate on a day-to-day basis, sometimes drastically. That's the nature of the stockmarket. While past performance does not guarantee future results, history has shown that, over alonger term, stock market investing has been rewarding.

Long-term investing does not have to span a period of 50 years. Even five years can make a bigdifference. Long-term investing in the stock market pays off quite generously too.

It is known that trying to time the market is next to impossible. Timing the market is basicallythe strategy of buying and selling financial instruments (most often stocks) by attempting topredict future market price movements. It's better to stay fully invested during all market cycles.This has, historically, given investors the greatest average return by comparison. Hence, it's timein the market that's important, not timing the market.


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Basic Investment Principles

Establishing realistic financial goals is an essential first step towards successful investing.Understanding investments that are best suited to help achieve your goals is equally important.

Investment principles guide you in your investment choices. Following these time-testedinvestment principles enable you to build a strong foundation of financial security.

Rupee-Cost AveragingA systematic approach to long-term investing is called rupee-cost averaging. This refers to thepractice of investing the same amount of money in the same investment vehicle at regularintervals, regardless of market conditions. If the investor takes the rupee-cost averagingapproach, the amount invested is always the same. Thus, the investor automatically buys moreshares when the price is low and fewer when the price is high.

The investor's natural instinct might be to stop investing if the price starts to drop but historysuggests that the best time to invest may be when you are getting good value. Rupee-costaveraging can be an effective strategy with funds or stocks that can have sharp ups and downs,because it gives more opportunities to purchase shares less expensively.

The benefit of this approach is that, over time, you may reduce the risk of having shares with thehighest cost price. Instead, as the example below demonstrates, the average cost of your shareswill be lower.

However, rupee-cost averaging does not assure a profit and it does not protect against investmentlosses in declining markets.

CompoundingCompounding is the ability of an asset to generate earnings, which are then reinvested in order togenerate their own earnings. In other words, compounding refers to generating earnings fromprevious earnings.

Through compounding, a small amount of money over time can grow into a substantial sum.

Investments can increase in value over time - and the longer the time frame, the greater thevalue. This is achieved through returns that are earned, but not spent. When the return isreinvested, investor earns a return on the return and a return on that return and so on. Therefore itis important to start saving early in order to benefit from the power of compounding returns.


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DiversificationDiversification is a strategy that can be neatly summed up by the timeless adage "Don't put allyour eggs in one basket." In other words, your funds are spread over a variety of investmentinstruments. It is a risk-management technique that mixes a wide variety of investments within aportfolio. The rationale behind this technique contends that a portfolio of different kinds ofinvestments will, on average, yield higher returns and pose a lower risk than any individualinvestment found within the portfolio.

For example, diversification could mean that you own several stocks, but they all come fromvarious types of industries or different parts of the world. By having a variety of different stocks,your funds are more protected. If a certain company is badly hit, you will have other stocks thatmay be able to "take up the slack."

Asset Allocation

Asset allocation involves dividing an investment portfolio among different asset categories, suchas stocks, bonds, and cash. These asset categories have different risk-return characteristics, so ifyou have them in your portfolio, their different patterns of behavior offset each other. Forinstance, while one asset category increases in value, another may be decreasing or notincreasing as much.

Asset allocation aims to balance risk and reward by apportioning a portfolio's assets according toyour investment objectives, your risk tolerance and your investment horizon.

Asset allocation is generally the most important factor in determining the return on yourinvestments. In fact, according to many researches and studies, asset allocation determinesapproximately 90% of the return. The remaining 10% of the return is determined by whichparticular investments (stock, bond, mutual fund, etc.) you select and when you decide to buythem.

RebalancingRebalancing your mutual fund portfolio on a regular basis maintains the desired asset allocation

in your investment strategy. Basically, rebalancing is bringing portfolio back to original assetallocation mix. This is necessary because over time some of the investments may become out ofalignment with the investment goals, as investments don't all move the same way at the sametime. Some will grow faster than others. By rebalancing your portfolio, you will ensure that youstick to original plans and have the kind of discipline that leads to long-term success.


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For example, let's say it is determined that stock investments should represent 60% of portfolio.But after a recent stock market increase, stock investments represent 80% of portfolio. You willneed to either sell some of stock investments or purchase investments from an under-weightedasset category in order to reestablish original asset allocation mix.

Rebalancing can be based either on the calendar or on the investments. Many financial expertsrecommend that investors rebalance their portfolios on a regular time interval, such as every sixor twelve months. The advantage of this method is that the calendar is a reminder of wheninvestor should consider rebalancing.

Others recommend rebalancing only when the relative weight of an asset class increases ordecreases more than a certain percentage that investor has identified in advance. The advantageof this method is that investments will tell you when to rebalance.


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II. Fullerton Financial Hodings Pte. Ltd.

Fullerton Financial Holdings Pte. Ltd. already has a presence in India through Fullerton IndiaCredit Company Limited, targeting the mass market segment. Fullerton Securities & WealthAdvisors Limited will target different segments i.e mass affluent and affluent customers acrossTier I and Tier II cities in India.

Fullerton Financial Holdings Pte. Ltd. invests in financial institutions in emerging markets,bringing an operational perspective to all investment decisions. As on 31st December, 2007, thetotal assets of Fullerton Financial Holdings Pte. Ltd. stood at $59.7 billion and its portfoliocomprised investments in 15 different financial institutions. Fullerton Financial Holdings Pte.Ltd. supervises and influences its banks to achieve the right risk-reward balance. It seeks tocreate shareholder value by differentiating through great people, disciplined development andexecution of unique business models.

Primarily, it focuses on both Business banking and Consumer banking. Within Business banking,Fullerton Financial Holdings Pte. Ltd. focuses on the Commercial, SME and Self-employedmass market segments. On the other hand, it focuses on the Mass affluent and Mass salariedsegments within Consumer banking.

Fullerton Financial Holdings Pte. Ltd. is a wholly owned subsidiary of Temasek Holdings, anAsia investment house, headquartered in Singapore, focused on creating and maximizing long-term shareholder value as an active investor and shareholder of successful enterprises.

Temasek Holdings is an Asia investment house, managing a portfolio of over S$185billion or

US$134 billion. Guided by an independent board, they operate autonomously on commercialprinciples to maximize long term shareholder returns. Rated AAA / Aaa by Standard & Poors and Moodys, respectively Diversified portfolio in a wide range of industries Telecommunications & Media : SingTel, Bharti Airtel, Global Crossing Financial Services : DBS, Standard Chartered Bank, Merrill Lynch, Barclays Real Estate : Capital Land, Mapletree Transportation & Logistics Singapore Airlines, Neptune Orient Lines, PSA Energy & Resources Singapore Power, Senoko Power, Powerseraya Infrastructure, Industrial & Engineering Keppel Corporation, Sembcorp Technology Chartered Seminconductor, StatsChipPAC Respectable returns to shareholder over last 34 years Total shareholder returns of more than 18% per annum since inception 34yrs ago 100% owned by the Minister of Finance of Singapore.


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Key Milestones

16 financial institutes in 9 countries. Total headcount in FFH now 104, and close to 65,000 employees in our investee

institutions


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DANAMON BANK

Established in 1956, PT Bank Danamon Indonesia Tbk (Danamon) is the second largest privatenational bank and the fifth largest commercial bank in Indonesia, with a 5% share of the

domestic system loans and deposits.

Danamon has one of the widest geographic distribution networks of all Indonesian banks with1,483 operational branch offices, and provides its customers with access to over 14,000 ATMsacross all 33 provinces of Indonesia. It is well supported by more than 25,359 employees.Danamon is recognized as an innovative community bank to the mass market through itsDanamon Simpan Pinjam, as Indonesias leading SME bank and as a bank that also servesconsumer and large multinational and Indonesian corporate customers across Indonesia.

Danamon is the majority owner of PT Adira Finance, Indonesias leading auto finance company.With over 357 branches and 16,258 employees, Adira and Danamon work closely to ensure theneeds of the mass market customers in Indonesia are fulfilled.

www.danamon.co.id

Financial & Operating HighlightFullerton Financial Holdings acquired a majority stake in Danamon in June 2003.

Year ending 31 December (IDR

bn)

2003 2005 2007 2008

Number of Branches (including

Adira)

477 1,327 1,426 1,840

Number of Employees (including

Adira)

13,225 28,829 35,242 41,617

Total Assets 52,682 67,803 89,410 107,268Shareholders Equity 6,822 8,589 10,833 10,579Net Income 948 2,003 2,117 1,530Normalized ROE % 9.7 15.2 22.9 22.3


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NIB BANK

NIB Bank has had an outstanding growth pattern since its creation over 4 years ago. It started asNDLC-IFIC Bank Ltd, commencing operations in October 2003 when the assets and liabilities ofthe former National Development Leasing Corporation (NDLC) and Pakistan operations of IFIC

were amalgamated with and into NIB, with a paid up capital of Rs.1.2bn. In April 2004 thePakistan operations of Credit Agricore Indosuez were also amalgamated with NIB. In early 2005Fullerton Financial acquired a 25% shareholding in NIB Bank. This was further enhanced whenNIB's paid up capital was increased to Rs.3.4bn in June '05.

NIB Bank has accelerated organically from 2 branches in 2003 to 45 in the 4th quarter of 2007and assets of Rs.9bn in December 2003. Its vision is to rank amongst the top 5 banks in thecountry. The acquisition of PICIC with its subsidiaries and subsequent merger with PICIC &PCBL on 31st December '07 was part of NIB's strategy to achieve this objective and establishitself as a leading bank in Pakistan. This merger resulted in a vastly expanded network of 240

branches, with total assets of over Rs.180 billion. It now ranks number 7 amongst commercialbanks in term of distribution network. NIB's paid up capital of Rs.28.4 billion is the secondhighest of all banks in Pakistan. The PICIC acquisition included its subsidiary PICIC AssetManagement Company and a general insurance associate. Fullerton Financial Holdings remainsthe largest single investor in NIB Bank. PACRA has recently upgraded NIB rating to AA- (longterm) and A1+ (short term), depicting its strong credit worthiness.

NIB aspires to become a partner in prosperity for all its stakeholders and believes it will addsignificant value to the segments its serves. It is committed to further expanding its franchise inPakistan and serving the under banked sectors.

http://www.nibpk.com

Financial & Operating Highlights

Fullerton Financial Holdings first invested in NIB in February 2005. Financial results for y/eDecember 2007 include the merger with PICIC and PCBL.

Year ending 31 December (Rupees millions) 2005 2006 2007

No. of Branches 27 41 240Number of Employees 786 1632 5580Total Assets 32,019 46,424 176,653Shareholder Equity 4,213 4,327 36,592


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ALLIANCE BANK

Alliance Financial Group is a dynamic, integrated financial services group offering end-to-endfinancing solutions through its consumer banking, commercial banking, wholesale banking,

Islamic banking, investment banking and stock broking businesses as well as unit trust and assetmanagement by providing products and services that are suited for every customer at every stageof their life.

The Group has five decades of proud history in contributing to the financial community inMalaysia with its innovative and entrepreneurial business spirit. Today, the Group is involved inthe provision of financial services through its principal subsidiaries, Alliance Bank MalaysiaBerhad, Alliance Investment Bank Berhad, Alliance Investment Management Berhad andAlliance Islamic Bank Berhad. It provides easy access throughout the country by serving itsbroad base of customers via multi-pronged delivery channels which include retail branches,Alliance Personal Concept Stores, Alliance Rakan branches, Privilege Banking Centres, HirePurchase hubs, Business Centres, Investment Bank branches, direct marketing offices and unittrust agent offices located nationwide in a mix of rural and urban areas.

The Group's aspiration is to be Malaysia's premier integrated financial services group deliveringthe best customer experience and creating long-term shareholder value. Strategic alliances,enhanced group synergy, excellent technology and human capital will be the key to creatinglong-term value for all stakeholders.

www.alliancegroup.com.myFinancial & Operating Highlights

Fullerton Financial Holdings acquired a minority stake in Alliance Financial Group in March2005. Since then, the financial performance of the group has grown from strength to strength

Year ending 31 March 2006 2007 2008

Number of Branches 77 81 92Total Assets (RM billions) 23,582 26,390 27,682

Shareholders Equity (RM billions) 1,742 1,984 2,594Net Income (RM millions) (201) 107 380ROE (%) (10.9) 5.8 16.8


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FULLERTON INDIA

Fullerton India undertook an unique mission for itself in the Indian financial industry, to servethe large underserved mass market in India. It aimed to foster sustainable development of thepeople who constituted the target mass market in India, comprising micro-entrepreneurs, self-

employed and the salaried. It is believed that this segment forms the backbone of the Indianeconomy and can contribute significantly to the growth of the economy

The company tries to recognize the potential of every small enterprise and small salary earnerand help them grow and make their growth sustainable. Inspired by our vision "We care andmake a difference to the lives and future of our customers", Fullerton India believes, that it canmake a difference and have a positive impact on the future of people in this segment. FullertonIndia's Parivaar branches target the salaried mass market and Vyapaar branches target thecommercial mass market.

These segments in the urban mass market were hitherto grossly under-served. No organizedfinancial institution catered to their financial requirements. They had little or no access tobanking services and most of them had not dealt with a financial institution before. FullertonIndia found this market to have a large untapped potential and set up several pilot branches totest its uniquely designed business model.

Fullerton India's business model is community oriented, branch centric and endeavors to buildenduring relationships with customers. Fullerton India successfully established over 775branches across the country with over 14000 of its own employees. It has already achieved a

sustainable customer acquisition rate of 50,000 customers a month.By the end of 2008 Fullerton India's plans are to grow to a network of over 850 branches andreach an annual acquisition rate of 1 million customers. Fullerton India is also testing a viablebusiness model for the rural market which has the potential to grow its operations three-fold.

Fullerton India's aim is to become the preferred financial partner to its customers in the massmarket and already markets loans and insurance products to them. Fullerton India's tag line inHindi is "Humse kariye dil ki baat" which means "come express your aspirations to us and wewill help you fulfill them."

www.fullertonindia.com


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DUNIA FINANCE LLC

Building on Fullerton Financial Holdings' unique business approach and its desire to cater toeach customer's unique needs, an opportunity was recognized in the United Arab Emirates'

(UAE) financial services sector. UAE ranks amongst the best performing economies of theworld, enjoying rapid economic expansion underpinned by favorable macro-economicfundamentals arising from strong GDP and population growth. With the emergence of the UAEas a major regional hub with influence over a catchment of over 1.5 billion people in theneighboring countries, this growing population is very diverse, and hence the financial needstend to be very specific for different segments. Based on a detailed assessment of the market,FFH found that despite the existence of 46 banks in the UAE, large segments of the populationstill remain unserved or underserved.

Dunia means the world in many languages - Arabic, Urdu, Hindi, Malaysian, Bengali, Turkish,Indonesian, Tagalog, Hausa, Swahili, Punjabi and Pashto.

We are named Dunia because we want to mean 'the world' to someone. We believe we canchange the way people see life, and put a smile on someone's face.

Recognizing the need for a financial institution which truly cares about its customers, and isavailable to serve all communities, FFH entered into a strategic partnership with MubadalaInvestment Company PJSC, Waha Capital PJSC (formerly known as Oasis International LeasingCompany PJSC), and A.A.Al Moosa Enterprises LLC, with 40% ownership by FFH. "Dunia

Finance LLC" or "Dunia", as it is more commonly known, was created.This is a significant event as it sees two of the largest government owned investment companies,Temasek of Singapore and Mubadala of Abu Dhabi come together as partners in their maidenfinancial services venture in the UAE.

Dunia's strategy is to address the current gap that exists in terms of coverage and penetration offinancial products and services, by building a customercentric, relationshipbased businessmodel focused on serving the large unserved and underserved customer segments, inline withthe unique value proposition for each customer segment which was identified through markets

research. Dunia's aspiration is to be a complete financial solutions provider for its targetcustomer segments across the UAE. Dunia will cater to the salaried mass market, mass affluent,affluent, self employed mass market and the SME customer segments.


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III. Fullerton Securities & Weakth Advisors Ltd.

The Indian economy is the third largest economy in the world today in terms of purchasingpower and is expected to touch new heights in coming years. As predicted by Goldman Sachs,

the Global Investment Bank, by 2035 India would be the third largest economy of the world justafter US and China. It will grow to 60% of the size of the US economy.

With positive indicators such as a stable 8-9% annual growth, rising foreign exchange reserves, abooming capital market and rapidly expanding FDI inflows, India has emerged as the secondfastest growing major economy in the world.

The number of Indian dollar millionaires jumped 22.7 per cent last year to 123,000, which is thehighest percentage growth in the world for the year, followed by China where the number ofhigh rollers jumped 20.3 per cent to 415,000, said the 12th annual World Wealth Report which

was released on 25th June, 2008, prepared by United States investment bank Merrill Lynch andinformation technology group Capgemini. Within this growing number of USD millionaires &affluent customers there are a number of banks and Wealth Management entities that are focusedon this High Net Worth segment. However in the middle income segment customer needs aregiven lower priority and product-centricity prevails.

According to an estimate by a leading agency, one of the fastest growing segments in India arehouseholds in the mass affluent segment. There are upwards of 22 million households in thissegment and this category is expected to grow at a CAGR of 20% for the next 5 years. Therevenue pool of this segment is expected to cross USD 8.9 billion by 2011 as per the agency's

estimates.

This large rapidly growing segment requires execution excellence and differentiated delivery.Fullerton Securities' strategy is to address the current gap that exists in terms of coverage andpenetration of financial products and services, by building a customercentric, relationshipbased business model focused on serving the large underserved customer segments, inlinewith the unique value proposition for the Mass Affluent and Lower Affluent customer segmentwhich was identified through market research.

FFH's product centric approach and India's regulatory desire to ensure product suitability and

appropriateness is the Fullerton Securities product model.

Fullerton Securities & Wealth Advisors Limited is a company registered under IndianCompany Law, incorporated on 8th February 2008 and was launched on 6th April, 2009 with 10Financial Centre across 9 cities in India. It offers world-class financial planning and a wide rangeof wealth management products to mass affluent and affluent customer segments. FullertonSecurities & Wealth Advisors Limited provides a complete range of financial products and


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services that include equity broking (internet based online trading as well as offline trading),financial planning, insurance, investment products, equity research and more.

Our Shareholders

Fullerton Financial Holdings Pte. Ltd. already has a presence in India through Fullerton IndiaCredit Company Limited, targeting the mass market segment. Fullerton Securities & WealthAdvisors Limited will target different segments i.e mass affluent and affluent customers acrossTier I and Tier II cities in India.

Fullerton Securities & Wealth Advisors Limited is a part of CEEMEA organisation withinFullerton Financial Holdings Pte. Ltd. The core of Fullerton Securities offering is FinancialPlanning by actively listening. Fullerton Securities aims to be a relationship focused organizationwhich understands customers' needs and provides solutions and not just products by listening toits customers.

Fullerton Securities plans to offer maximum value and an integrated offering through:

A need based & relationship centric approach Online view of entire relationship through performance measurement tools Dedicated touch points Call Centre, Website & Financial Centers Support team of RM's and Product Sales Specialists Superior advisory and execution capability Offering a full range of 3rd party & proprietary financial products

Certified and trained RMs, to offer competent, problem free and timely service withempathy & care, while ensuring suitability to customer needs at all times.

The product range includes:

Financial Planning Equity Account F&O Investment Products - Mutual Funds, GOI Bonds & Company Fixed Deposits Life Insurance Health Insurance Vehicle Insurance Home Insurance Travel Insurance Equity Research


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Corporate Governance

Corporate governance is the system by which business corporations are directed and controlled.The corporate governance structure specifies the distribution of rights and responsibilities amongdifferent participants in the corporation, such as, the board, managers, shareholders and otherstakeholders, and spells out the rules and procedures for making decisions on corporate affairs.By doing this, it also provides the structure through which the company objectives are set and themeans of attaining those objectives and monitoring performance". (OECD definition)

Corporate governance at Fullerton Securities

At Fullerton Securities, we have chosen a framework, which incorporates guidelines

recommended by leading international and regional regulators as well as the practices adopted byleading financial institutions. This comprises of a two-tier system of committees comprising ofmembers drawn from Executive Management for the first tier and the Board of Directors for thesecond.

This framework ensures that whilst accountability for decision-making at an operational levelremains with functional specialists, Executive Management will engage in cross functionalsharing of knowledge and expertise via these committees in a structured manner. This helpsensure that synergies are identified and efficiencies are optimised when decisions impacting theorganisation are taken. The Executive Management Committees are:

oProduct Approval CommitteeoBusiness Risk & Compliance Committee

oExecutive Operating CommitteeoIT Steering CommitteeoHuman Resources CommitteeoVendor Management Committee


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Board Committees provide strategic oversight and guiding principles for the company withrespect to key business matters. The deliberations and recommendations by the managementteam are carefully considered as the Directors draw on their collective experience and expertiseto discuss and opine on key policies and critical corporate decisions. The Board Committees are:

oBoard of Directorso Audit Committee

o Risk Management Committeeo Employee Remuneration Committee

Fullerton Securities Board of directors

Francis Rozario, ChairmanFrancis Rozario is currently the Executive Director and CEO of Fullerton Financial

Holdings Pte Ltd. Prior to his current appointment, Mr Rozario was the President Director

of Bank Danamon...

Rajeev Kakar, DirectorRajeev Kakar is the Executive Vice President & Regional CEO, for the Central Europe,

Middle East & Africa (CEEMEA) region for Fullerton Financial Holding, Executive

Director & CEO, for Dunia Finance LLC and Global Management Board Member, for

Fullerton Financial Holdings

Pallav Sinha, MD & Chief Executive OfficerPallav Sinha is currently the Managing Director and Chief Executive for Fullerton Securities

& Wealth Advisors Limited, India. He has over 20 years of professional working experience

in the banking...

Tej Pal Singh Hora, DirectorTejpal Singh Hora is currently the group head for Risk Management in Fullerton Financial

Holdings and has more than 41 years of banking experience, having worked with Citibank

for 35 years before joining Fullerton...

Sng Seow Wah, DirectorMr Sng is currently Executive Vice President and Head of Human Resources, SpecialProjects & Corporate Communications at Fullerton Financial Holdings. Mr Sng is a

seasoned banker with more than 24 years...


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Why choose Fullerton

Our broking services are designed keeping the requirements of investors in mind. With us youwill find unmatched features to make your experience complete:

1. Value pricing2. Research3. Planning Towards Customers Goals4. Support5. Easy-to-use tools6. Parentage

Simply open a Demat account & Trading account with us and experience the convenienceyourself. We provide you with demo of our trading interfaces for better understanding.Customers need not trade regularly, however we ensure that you make the most of theirinvestments at every single opportunity with us!

Our philosophy: Baat faayde ki

It is one thing to ask them what they need out of their wealth and get them talking. It is quiteanother to really listen to them, to create new possibilities and truly unfold and expand theirhorizons. At Fullerton Securities, this very act of listening actively is at the root of who we areand the seed of the outstanding broking services we offer them.

The Fullerton Securities Broking Advantage

Tired of being on the listening side with your financial advisor at all times? Not getting yourbroker to listen to you your side of the story, your needs and financial requirements?

Take a look at Fullerton Securities. Whether you need a little support from your broker or a lot,we at Fullerton Securities listen to you and help you gain by delivering an extensive array ofstate-of-the-art tools, straightforward pricing and outstanding personal service.

With us, you can enjoy a personal relationship with investment professionals. We see investingfrom your perspective and make recommendations based on actually listening to you andunderstanding your needs.

It's not just about the lowest-priced trade or the latest hot stock tip. It's about getting more foryour money in terms of a long-term, consistent performance.

Fullerton offers you quality personal service, remarkable investing and trading insights at a greatprice.


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Fullerton has solutions for the full spectrum of investors for those just starting out tosophisticated active investors to clients seeking investment advice.

While other brokerage houses offer you a plain vanilla, one size fits all, 'trading' or 'broking'account, we offer you Fullerton Financial Broking Advantage tailored to your requirements.

Fullerton Freedom Account

Investments are no more confusing! Presenting, Fullerton Freedom. An account that brings aworld of customised investment offerings with a reasonable price tag of Rs. 1,995/-*

Privileges

y Complimentary Broking & Demat account Maximum Complimentary Turnover :-Rs. 5 Lakhs of delivery turnover OR Rs. 50 Lakhs of Intraday/Futures/Options

y Special Reports (Sector/Economy/Event) every Quartery SMS Alertsy Choice of Internet based online trading terminalsy Intraday Market Viewy Access to browser based terminaly Well researched investment ideasy Java Applet with streaming quotes

Other Product Options

Benefit from Advantage Accounts


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Fullerton Advantage

Plan for tomorrow! Live for today!

What would you say if there was a way that you could plan for your future, while enjoyingfinancial and lifestyle benefits worth thousands today? What if this way also meant that youcould receive complimentary insurance coverage? What if this way also meant that you could besure of never missing out on an investment opportunity again?

Introducing, the Fullerton Advantage Account. Were hoping you too will say, What a greatway to plan for tomorrow and live for today!"

At Fullerton, we believe in actively listening to you and offering you a no obligation FinancialPlan to help you meet all your financial goals. Our unique Fullerton Advantage Account saves

you time, through a one-time documentation process, so you are ready for any financialopportunity that arises. What's more, your relationship with us starts on a highly rewarding note.

For the first time ever, you get complimentary insurance coverage up to Rs. 3 lacs, automaticallywith the Fullerton Advantage Account. This account also brings you great savings across yourfavorite brands in apparel, electronics, health and entertainment! So that while you plan for thefuture, youre current desires are not ignored.

What's more, you also get ready-to-use investment, insurance & broking accounts with greatsavings on account opening fees (savings of up to Rs. 1100 per year!). Take a look at the 4variants of the Fullerton Advantage Account and simply choose the one that matches your needsbest.


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Depository Charges


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The Competitors

The existing major players in the stock broking industry besides Fullerton Securities & WealthAdvisors Ltd. are:

1. ICICI Direct2. India Bulls3. Share Khan4. Fullerton Securities5. India Infoline6. Kotak7. Reliance money

ICICI DIRECT

ICICI Direct (or ICICIDirect.com) is stock trading company of ICICI Bank. Along with stocktrading and trading in derivatives in BSE and NSE, it also provides facility to invest in IPOs,Mutual Funds and Bonds. Trading is available in BSE and NSE.

Trade In: BSE and NSE

Type of Account

ICICI Direct offers 3 different online trading platforms to its customers:

1. Share Trading Account

Share Trading Account by ICICI Direct is primarily for buying and selling stocks in NSE andBSE. This account allows Cash Trading, Margin Trading, Margin PLUS Trading, Spot Trading,Buy Today Sell Tomorrow and Call and Trade on phone.

ICICIDirect.com website is the primary trading platform for this trading account. They alsoprovide installable application terminal based application for high volume trader.

2. Wise Investment Account

Along with stock trading and IPO investing in BSE and NSE, Wise Investment account alsoprovide options to invest in Mutual Funds and Bonds online.

Online Mutual funds investment allows investor to invest on-line in around 19 Mutual Fundcompanies. ICICI Direct offers various options while investing in Mutual Funds like PurchaseMutual Fund, Redemption and switch between different schemes, Systematic Investment plans,Systematic withdrawal plan and transferring existing Mutual Funds in to electronic mode. Thisaccount also provides facility to invest in Government of India Bonds and ICICI Bank Tax


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Saving Bonds. ICICIDirect.com website is the primary tool to invest in Mutual Funds, IPOs,Bonds and stock trading.

3. Active Trader Account

Active Trader account gives more personalized investment options to the investors. It allowsinvestor to use online and offline stock trading. It also provides with independent marketexpertise and support through a dedicated Relationship Manager from ICICI. Active Trader alsoprovides commodity trading.

Brokerage and fees

Account opening fees: Rs 750/- (One time non-refundable)

Brokerage: ICICIDirect.com brokerage varies on volume of trade and inclusive of transactioncharges, service taxes and courier charges for contract notes. It ranges from 0.1% to 0.15% for

margin trades, 0.2% to 0.425% for squared off trades and 0.4% to 0.85% on delivery basedtrades.

Advantages of ICICI Direct

3-in-1 account integrates your banking, broking and demat accounts. All accounts arefrom ICICI and very well integrated. This feature makes ICICI the most interestingplayer in online trading facility. There is absolutely no manual interfere require. This istruly online trading environment.

Unlike most of the online trading companies in India which require transferring money tothe broker's pool or towards deposits, at ICICI Direct you can manage your own demat

and bank accounts through ICICIdirect.com. Money from selling stock is available inICICI bank account as soon as the ICICI Direct receives it. Investment online in IPOs, Mutual Funds, GOI Bonds, and Postal Savings Schemes all

from one website. General Insurance is also available from ICICI Lombard. Trading is available in both BSE and NSE.

Disadvantages of ICICI Direct

Getting access to ICICIDirect.com website during market session can be frustrating. ICICI Direct brokerage is high and not negotiable. Not all stocks are available under Margin Plus.


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INDIABULLS

Indiabulls is India's leading Financial Services and Real Estate Company having presence over414 locations in more than 124 cities. Indiabulls Financial Services Ltd is listed on the NationalStock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock

Exchange.

Type of Account

Indiabulls Equity Trading Account

Indiabulls Equity Trading Account is standard Online trading account from India bulls and alongwith online trading it also provides priority telephone access that gives you direct access to yourRelationship Manager and full access to 'Indiabulls Equity Analysis'.

Application Trading Terminal (Need Installation)

PowerIndiabulls

Power Indiabulls trading terminal is the most advanced new generation trading platform withgreat speed. This trading terminal is built in JAVA.

Power Indiabulls is extremely reach in features including Live Streaming Quotes, Fast OrderEntry and execution, Tic by Tic Live Charts, Technical Analysis, Live News and Alerts,Extensive Reports for Real-time Accounting.

Brokerage and fees:

Account opening fees: Rs 1200/- (One time non-refundable) as below:

250/- Equity Trading Account opening charge 200/- Demat Account opening charge 750/- Software changes

Advantages of Indiabulls Equity Trading Account

Brokerage is less compare to other online trading companies. Provide trading terminal 'power bulls', a java based software. It's very fast in terms of

speed and execution.


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SHAREKHAN

Sharekhan is online stock trading company ofSSKI Group, provider of India-based investmentbanking and corporate finance service. ShareKhan is one of the largest stock broking houses in

the country. S.S. Kantilal Ishwarlal Securities Limited (SSKI) has been among Indias leadingbroking houses for more than a century.

Sharekhan's equity related services include trade execution on BSE, NSE, Derivatives,commodities, depository services, online trading and investment advice. Trading is available inBSE and NSE. Along with Sharekhan.com website, ShareKhan has around 510 offices (shareshops) in 170 cities around the country.

Share khan has one of the best state of art web portal providing fundamental and statisticalinformation across equity, mutual funds and IPOs. You can surf across 5,500 companies for in-

depth information, details about more than 1,500 mutual fund schemes and IPO data. You canalso access other market related details such as board meetings, result announcements, FIItransactions, buying/selling by mutual funds and much more.

Trade In: BSE and NSE

Type of Account

1. ShareKhan Classic account

Allow investor to buy and sell stocks online along with the following features like multiplewatch lists, Integrated Banking, demat and digital contracts, Real-time portfolio tracking withprice alerts and Instant credit & transfer.

1. Online trading account for investing in Equities and Derivatives2. Free trading through Phone (Dial-n-Trade)

(a)Two dedicated numbers for placing your orders with your cell phone or landline.(b)Automatic funds transfer with phone banking (for Citibank and HDFC bank

customers)(c)Simple and Secure Interactive Voice Response based system for authentication(d)get the trusted, professional advice of our tele-brokers(e)After hours order placement facility between 8.00 am and 9.30 am

3. Integration of: Online trading + Bank + Demat account4. Instant cash transfer facility against purchase & sale of shares5. IPO investments6. Instant order and trade confirmations by e-mail7. Single screen interface for cash and derivatives


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2. ShareKhan Speed Trade account

This accounts for active traders who trade frequently during the day's trading session. Followingare few popular features of Speed Trade account.

1.

Single screen interface for cash and derivatives2. Real-time streaming quotes with Instant order Execution & Confirmation3. Hot keys similar to a traditional broker terminal4. Alerts and reminders5. Back-up facility to place trades on Direct Phone lines

Brokerage:

Some stock trading companies charge direct percentage while others charge a fixed amount perRs 100. Sharekhan charges 0.5% for inter day shares and 0.1% for intra day or you could saySharekhan charges 50 paise per Rs 100.

Advantages of Sharekhan:

Online trading is very user friendly and one doesn't need any software to access. They provide good quality of services like daily SMS alerts, mail alerts, stock

recommendations etc. Sharekhan has ability to transfer funds from most banks. Unlike ICICI Direct, HDFC

Sec, etc., so investor not really needs to open an account with a particular bank as it canestablish link with most modern banks.

Disadvantages of ShareKhan

They charge minimum brokerage of 10 paisa per stock would not let you trade stocks below20Rs. (If you trade, you will loose majority of your money in brokerage).

Lots of hidden rules and charges. They do not provide facility to book limit order trades during after-hours. Classic account holders cannot trade commodities. Cannot purchase mutual funds online.


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RELIGARE SECURITIES LTD.

Religare Securities Limited (RSL) is the wholly owned subsidiary of REL and a securities firmin India. Religare Securities Ltd. (RSL) is a leading equity and securities firm in India. The

company currently handles sizeable volumes traded on NSE and in the realm of online tradingand investments it currently holds a reasonable share of the market. The major activities andofferings of the company today are Equity broking, Depository Participant Services, PortfolioManagement Services, Institutional Brokerage & Research, Investment Banking and CorporateFinance.

Type of Account

1. R-ACE (Basic)

It's the basic online trading account provided by Fullerton. Investor can trade and access theiraccount information online and over the phone as well. This account comes with a browser basedonline trading platform and no additional software installation needed.

This account also provides Lifetime free DP account with no annual maintenance charges.

2. R-ACE Lite (Advanced)

It's the advanced account option for the investor with Fullerton. This trading account providesthe entire feature of R-ACE (Basic) account. In addition it also provides real-time streamingstock quotes and alerts.

This trading platform is also browser based and no software installation is needed.

3. R-ACEPro (Professional)

As the name indicates this account is for high volume traders. Along with the features fromabove 2 accounts, this account also comes with a Trading Terminal, software which needs toinstall on your computer. This terminal directly connects the investor to stock market and havingall industry standard Treading terminal features including technical charting (intra-day andEOD), multiple watch list, advanced hot-key functions for faster trading, derivative chains,futures & options calculator. As in basic and advance account, trading is available online through

internet and offline though phone.

Brokerage and Account opening fees:


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Religare offers three kinds of accounts as above. Below are detail about fees and activationcharges for each account:

R-ACE Account activation charges Rs.299/-.

R-ACE Lite Account activation charges Rs.499/-..R-ACE Pro Account activation charges Rs.999/-.

Brokerage at Religare

On the basis of volume and frequency of trading, Fullerton provide different options forbrokerages. On the broader way they divided into three categories:

Intraday brokerage varies from 0.3% to 0.5%. Delivery brokerage varies from 0.30% to 0.50%

Advantages of Religare

Religare gives interest on unutilized cash when investor is waiting to make next trade oronline investment.

Religare Allow their investor to trade without having to worry about cash margin.Investor can get exposure (on cash segment) as high as 20 times for intraday trades.

They provide intraday reports and historical charting. Lifetime free DP account. Varity of fee structure to fulfill need of different type of investors.


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Investments & Stock Broking

The primary thing before investing in stock markets is to have an understanding of how the stock

markets operate. Companies need capital for various purposes like expansion, research anddevelopment etc. Many companies choose to raise funds by offering the company's shares to thepublic. When investors own the shares of a company they become part owners of that company.The company gets listed on a stock exchange(s) after which its shares start getting traded. Stockexchange is a marketplace where sale and purchase of shares take place.

In order to buy or sell shares, investors need to open a trading account with a stock broker.Investors give instructions to their broker to buy or sell shares on treir behalf. Trading can bedone through telephone, internet, or in person. The price at which trade takes place is determinedby the market forces i.e. demand and supply of that particular share in the market. Investors hope

to earn profits by buying shares at a low price and selling them at a higher price. Some peopleinvest into the stock market for a long period time (3-5 years or more) and some people investwith an objective of earning short term profits (less than a year). The following terms are usedfrequently in stock markets.

About Stock Markets: A marketplace where investors gather to buy and sell securities Trading Terminology: Frequently used terms in stock market Capital Gains/Taxes: Gains arising out of sale of capital assets like shares, property etc. Securities Transaction Tax: An easy-to-administer tax that helps in eliminating tax

avoidance on sale of securities

Bonds: Debt securities issued for a period longer than one year.


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Stock Market of India

Stock markets refer to a market place where investors can buy and sell stocks. The price at whicheach buying and selling transaction takes is determined by the market forces (i.e. demand andsupply for a particular stock).

Let us take an example for a better understanding of how market forces determine stock prices.ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an upwardmovement in its stock price. More and more people would want to buy this stock (i.e. highdemand) and very few people will want to sell this stock at current market price (i.e. less supply).Therefore, buyers will have to bid a higher price for this stock to match the ask price from theseller which will increase the stock price of ABC Co. Ltd. On the contrary, if there are moresellers than buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in themarket, its price will fall down.

In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction butnow with the dawn of IT, most of the operations are done electronically and the stock marketshave become almost paperless. Now investors dont have to gather at the Exchanges, and cantrade freely from their home or office over the phone or through Internet.

History of the Indian Stock Market - The Origin

One of the oldest stock markets in Asia, the Indian Stock Markets has a 200 years old history.18th Century East India Company was the dominant institution and by end of the century,

business in its loan securities gained full momentum1830's Business on corporate stocks and shares in Bank and Cotton presses started

in Bombay. Trading list by the end of 1839 got broader1840's Recognition from banks and merchants to about half a dozen brokers1850's Rapid development of commercial enterprise saw brokerage business

attracting more people into the business1860's The number of brokers increased to 601860-61 The American Civil War broke out which caused a stoppage of cotton supply

from United States of America; marking the beginning of the "Share Mania"in India

1862-63 The number of brokers increased to about 200 to 250

1865 A disastrous slump began at the end of the American Civil War (as anexample, Bank of Bombay Share which had touched Rs. 2850 could only besold at Rs. 87)


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7. Bangalore8. Indore

Many more stock exchanges were established during 1980's, namely:y

Cochin Stock Exchange (1980)y Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)y Pune Stock Exchange Limited (1982)y Ludhiana Stock Exchange Association Limited (1983)y Gauhati Stock Exchange Limited (1984)y Kanara Stock Exchange Limited (at Mangalore, 1985)y Magadh Stock Exchange Association (at Patna, 1986)y Jaipur Stock Exchange Limited (1989)y Bhubaneswar Stock Exchange Association Limited (1989)y Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)y Vadodara Stock Exchange Limited (at Baroda, 1990)y Coimbatore Stock Exchangey Meerut Stock Exchange

At present, there are twenty one recognized stock exchanges in India which does not include theOver The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange ofIndia Limited (NSEIL).

Government policies during 1980's also played a vital role in the development of the IndianStock Markets. There was a sharp increase in number of Exchanges, listed companies as well as

their capital, which is visible from the following table:

S. No. As on 31st December 194619611971197519801985 1991 19951 No. of Stock Exchanges 7 7 8 8 9 14 20 222 No. of Listed Cos. 1125 1203 1599 1552 2265 4344 6229 8593

3 No. of Stock Issues of Listed Cos. 1506 2111 2838 3230 3697 6174 8967 117844 Capital of Listed Cos. (Cr. Rs.) 270 753 1812 2614 3973 9723 32041 59583

5Market value of Capital of Listed Cos.(Cr. Rs.)

971 1292 2675 3273 6750 25302 110279 478121

6 Capital per Listed Cos. (4/2) (Lakh Rs.) 24 63 113 168 175 224 514 693

7Market Value of Capital per Listed Cos.(Lakh Rs.) (5/2)

86 107 167 211 298 582 1770 5564

8Appreciated value of Capital per ListedCos. (Lak Rs.)

358 170 148 126 170 260 344 803

Trading Pattern of the Indian Stock Market


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Indian Stock Exchanges allow trading of securities of only those public limited companies thatare listed on the Exchange(s). They are divided into two categories:

Types of Transactions

Indian stock exchange allows a member broker to perform following activities:y Act as an agent,y Buy and sell securities for his clients and charge commission for the same,y Act as a trader or dealer as a principal,y Buy and sell securities on his own account and risk.

The flowchart below describes the types of transactions that can be carried out on the Indianstock exchanges:


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Over The Counter Exchange of India (OTCEI)

Traditionally, trading in Stock Exchanges in India followed a conventional style where peopleused to gather at the Exchange and bids and offers were made by open outcry.

This age-old trading mechanism in the Indian stock markets used to create much functionalinefficiency. Lack of liquidity and transparency, long settlement periods and benami transactionsare a few examples that adversely affected investors. In order to overcome these inefficiencies,OTCEI was incorporated in 1990 under the Companies Act 1956. OTCEI is the first screen

based nationwide stock exchange in India created by Unit Trust of India, Industrial Credit andInvestment Corporation of India, Industrial Development Bank of India, SBI Capital Markets,Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries andCanBank Financial Services.


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Advantages of OTCEIy Greater liquidity and lesser risk of intermediary charges due to widely spread trading

mechanism across Indiay The screen-based scripless trading ensures transparency and accuracy of pricesy Faster settlement and transfer process as compared to other exchangesy Shorter allotment procedure (in case of a new issue) than other exchanges

BOMBAY STOCK EXCHANGE (BSE)

Bombay stock exchange is the oldest stock exchange of India For the premier Stock Exchangethat pioneered the stock broking activity in India, 128 years of experience seems to be a proudmilestone. A lot has changed since 1875 when 318 persons became members of what today iscalled "The Stock Exchange, Mumbai" by paying a princely amount of Re1.Since then, the country's capital markets have passed through both good and bad periods. Thejourney in the 20th century has not been an easy one. Till the decade of eighties, there was noscale to measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai(BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indianstock market.

SENSEX

SENSEX is not only scientifically designed but also based on globally accepted construction andreview methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocksrepresenting a sample of large, liquid and representative companies. The base year of SENSEXis 1978-79 and the base value is 100. The index is widely reported in both domestic andinternational markets through print as well as electronic media.


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The index is calculated on the Free-float Market Capitalization methodology. The "Free-floatMarket Capitalization" methodology of index construction is regarded as an industry bestpractice globally. All major index providers like NIKKEI, NASDAQ and DOW JONES use thefree float methodology.

The growth of equity markets in India has been phenomenal in the decade gone by. Right fromearly nineties the stock market witnessed heightened activity in terms of various bull and bearruns. The SENSEX captured all these events in the most judicial manner. One can identify thebooms and busts of the Indian stock market through SENSEX.

NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High PoweredStudy Group on Establishment of New Stock Exchanges, which recommended promotion of aNational Stock Exchange by financial institutions (FIs) to provide access to investors from all

across the country on an equal footing. Based on the recommendations, NSE was promoted byleading Financial Institutions at the behest of the Government of India and was incorporated inNovember 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 TheCapital Market (Equities) segment commenced operations in November 1994 and operations inDerivatives segment commenced in June 2000.

When Indias National Stock Exchange (NSE) was started in 1994, few believed it wouldsurvive. How could a stock exchange run by a team of untested professionals headed by a formerdevelopment banker succeed against existing stock exchanges run by third generation, savvy

stockbrokers?

Critics even went to the extent of warning that NSEs sophisticated systems would be a misfit inan Indian capital market dominated by physical deliveries, arbitrary speculative trade, andlengthy trade settlements.

Today, with number of trades touching 2.5 million a day and turnover touching turnovertouching Rs 100 billion in value terms, NSE towers over all the other stock exchanges in thecountry.

In a ten-year period (NSE completed a decade on June 30, 2004) the National Stock Exchangehas tilted the market system in favour of investors and away from a significant bias in favour ofintermediaries. For a mass of investors across the country, the NSE is now the focal point fortrading in stocks, and futures and options.

The Stock Exchange, (NSE) came out with a stock index that subsequently became anotherbarometer of the Indian stock market known as NIFTY.


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Nifty is the focal point of investors, as it provides trading the shares as well as index in futuresand options. Before Nifty came into existence trading of index concept was not present it wasintroduced by Nifty and is present in it only, till date.

Cash market and derivatives

National stock exchange gives the investors different option where an investor can deal theequities into different market situations like cash market and derivatives.

Cash market is simply the equity market where investors have to pay the security amount whichis done in BSE also but in NSE investors has the choice of dealing in derivatives. Derivatives arethe future market where investors have the option of dealing in the price list of futures for whichthere a separate index is present known as NIFTY FUTURE.

In Derivatives there are two choices available for an investor FUTURES AND OPTIONS.

FUTURE In future market shares are deal in lots these lots could be of different numbers like100, 200, 500 etc. Investors while taking over these lots and coming under the contract takes theposition of the shares by paying the 1/3rd amount of the total holdings. (could be understood by aformula).

Holdings of investors = (shares lot * price of the lot) / 3.

This formula explains that as investor is interested in taking 2 lots of reliance of 100 shares ofRs. 900 , the investor has to pay:- (2*100*900) / 3 = 60000/-

Which shows the investor is taking the position of Rs. 180000/- in just Rs. 60000/- in futuremarket which the area of attraction of this particular market. These holdings are taken for 1month, 2 months and three months according to the investors preference. The beauty of thiscontract is that the remaining 2/3rd money of the holdings are paid by the broking house theinvestors dealing with. Investor coming into this contract should know that by the time ofcontract he is in like of 1 or 2 months investor should clear its position before the last Thursdayof the expiry month.

OPTIONS Option is a contract where the investor has two options to deal with CALL andPUT. The concept of call and put is opposite to each other call is the contract where the investorsbelieve that the market is going to be BULLISH in near future and put option is taken when he

thinks that the market is going to be BEARISH in the future.

In the call option investors is benefited if market drives up in future and in put will be benefitedif it slips down.


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Funds mobilized in primary market rose to Rs 1, 74,143 cr through 558 issues in 2007-08against Rs 55,654 cr through 451 issues in 2006-07. Out of this Rs 87,029 cr were raisedthrough 124 public and right issues against Rs 33,508 cr through 124 issues in 2006-07.Total of Rs 42,595 cr was raised through 85 IPOs in 2007- 08 against Rs 28,504 cr

raised through 77 IPOs in 2006-07.Net resource mobilization by mutual funds grew to Rs 1,53,801 cr in 2007-08 with a

63% rise from Rs 93,984 cr in 2006-07. Cumulative Assets under management rose to Rs5,05,152 in March 2008 from Rs 3,26,292 in March2007.

Stock Trading

Traditionally stock trading is done through stock brokers, personally or through telephones. Asnumber of people trading in stock market increase enormously in last few years, some issues likelocation constrains, busy phone lines, miss communication etc start growing in stock brokeroffices. Information technology (Stock Market Software) helps stock brokers in solving theseproblems with Online Stock Trading.

Online Stock Market Trading is an internet based stock trading facility. Investor can trade sharesthrough a website without any manual intervention from Stock Broker.

In this case these Online Stock Trading companies are stock broker for the investor. They areregistered with one or more Stock Exchanges. Mostly Online Trading Websites in India trades inBSE and NSE.

There are two different type of trading environments available for online equity trading.

Installable software based Stock Trading TerminalsThese trading environments require software to be installed on investors computer. Thissoftware is provided by the stock broker. This software requires high speed internetconnection. These kind of trading terminals are used by high volume intraday equity traders.

Advantages:

Orders directly send to stock exchanges rather than stock broker. This makesorder execution very fast. It provide almost each and every information which is required to a trader on a

single screen including stock market charts, live data, alerts, stock market newsetc.


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Disadvantages:

Location constrains - You cannot trade if you are not on the computer where youhave installed trading terminal software.

It requires high speed internet connection. These trading terminals are not easily available for low volume share traders.

Web (Internet) based trading applicationThis kind of trading environment doesn't require any additional software installation. Theseare like other internet websites which investor can access from around the world throughnormal internet connection. Below are few advantages and disadvantages of Online StockMarket Trading:-

Advantages of Online Stock Trading (Website based):

Real time stock trading without calling or visiting broker's office. Display real time market watch, historical datas, graphs etc. Investment in IPOs, Mutual Funds and Bonds. Check the trading history; D-mat account balance and bank account balance at

any time. Provide online tools like market watch, graphs and recommendations to do

analysis of stocks. Place offline orders for buying or selling stocks. Set alert to inform you certain activity on the stock through email or SMS. Customer service through Email or Chat.

Disadvantages of Online Stock Trading (Website based):

Website performance - sometime the website is too slow or not enough userfriendly.

Little long learning curve - especially for people who dont know much aboutcomputer and internet.


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Trading Terminology

Trading terminology explains some of the commonly used terms related to stock trading.Investors can get detailed information regarding the same by clicking on the following links:

Shares : A share represents a unit of ownership in a company Demat Account : An account where securities are held in an electronic form Trading : An activity of buying and seling shares to earn capital gains Types of Analysis : Analyzing which is a good company to invest in Indices : An index is an average of stocks representing the market Contracts : Confirmation given by the broker to his client for a trade executed Settlement : Process of determination of obligations standing against parties to trade Limits/Margins : Collateral that a member has to deposit with the exchange Dividends : Payouts made by the companies to shareholders as a reward for buying stock in

that company

Shares

Shares are the best investment available over a long period of time. The growth of share pricescomfortably out-paces inflation most years because the best share prices represent the growth inearnings of the best companies. Although the stock market is seen as "high risk" this dependsvery much on timing and the sort of shares you invest in. It is possible to invest in shares withvery little risk if you are willing to put in a great deal of effort in learning the art of investmentand doing ample research.

Shares have acquired a high-risk reputation because the majority of people only participate in thestock market during bull markets, buying at or near historic high prices in the belief that past

returns may by a good indicator of future results. Those that buy just before a crash do notappreciate share valuations and upside potential vs downside risk. In fact such considerationsactually bore them and many newcomers choose to trade shares in a highly speculative fashion,making the stock market into little more than a casino.

The rewards are great, but the penalty for laziness is also great. Those that buy on "hot tips" andrely on the opinions of others, without any knowledge of what they are doing are often those whosuffer the greatest loss.

A "share" is nothing more, and nothing less than a partial ownership of a business. If you look at

shares investment as the partial purchase of businesses, you are already half way to becoming asuccessful investor (the other half is to get some idea of what a business is worth, economically,and hence to be able to value a share). If you think of shares as part ownership of businesses youhave a substantial advantage over those who think of them only as abstract pieces of paper with arandomly fluctuating price tag.


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Direct share investment is not suitable for everyone, many simply do not have the time or theinclination to research a portfolio adequately, and will be exposed to the greatest dangers whenthey do take the plunge and buy something. Managed funds are available that give returnsroughly in line with market averages (if you take into account tax and trading expenses) andthese are by far a superior investment for those that do not wish to make investment theirprofession.

Shares, as a whole, are not highly speculative investments with a low probability of success. Thechances of making money in shares over all but the shortest time frames are excellent, howeveryou need more than just money and a desire to succeed in order to invest successfully.

No one should be afraid of the stock market; it does not crash without reason at any randomtime. If you choose to ignore stocks out of fear of a market downturn, you ignore the bestinvestment that there is.

Demat Account

Demat account is a safe and convenient means of holding securities just like a bank account isfor funds. Today, practically 99.9% settlement (of shares) takes place on demat mode only. Thus,it is advisable to have a Beneficiary Owner (BO) account to trade at the exchanges.

Bank Account Vs Demat Account

S. No. Basis OfDifferentiation Bank Account Demat Account

1. Form ofHoldings/Deposits

Funds Securities

2. Used for Safekeeping of money Safekeeping of shares3. Facilitates Transfer of money (withoutactually handling money)

Transfer of shares (withoutactually handling shares)

4. Where to open A bank of choice A DP of choice (can be abank)

5. Requirement of PANNumber

Not Mandatory Mandatory (effective fromApril 01, 2006)

6. Interest accrual onholdings

Interest income is subject to theapplicable rate of interest

No interest accruals onsecurities held in demataccount

7. Minimum balancerequirement AQB* maintenance is specifiedfor certain bank accounts No such requirement

8. Either or Survivorfacility Available Not available

*AQB - Average Quarterly Balance


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Benefits Of Demat Account1. A safe and convenient way of holding securities (equity and debt instruments both).2. Transactions involving physical securities are costlier than those involving

dematerialized securities (just like the transactions through a bank teller are costlier than

ATM transactions). Therefore, charges applicable to an investor are lesser for eachtransaction.3. Securities can be transferred at an instruction immediately.4. Increased liquidity, as securities can be sold at any time during the trading hours

(between 9:55 AM to 3:30 PM on all working days), and payment can be received in avery short period of time.

5. No stamp duty charges.6. Risks like forgery, thefts, bad delivery, delays in transfer etc, associated with physical

certificates, are eliminated.7. Pledging of securities in a short period of time.8. Reduced paper work and transaction cost.9. Odd-lot shares can also be traded (can be even 1 share).10.Nomination facility available.11.Any change in address or bank account details can be electronically intimated to all

companies in which investor holds any securities, without having to inform each of themseparately.

12.Securities are transferred by the DP itself, so no need to correspond with the companies.13.Shares arising out of bonus, split, consolidation, merger etc. are automatically credited

into the demat account of the investor.14.Shares allotted in public issues are directly credited into demat account of the applicants

in quick time.

S. No. BASIS OF SIMILARITY PARTICULARS

1. Security and Convenience Both are very safe and convenient means of holdingdeposits/securities

2. Number of accounts No legal barrier on the number of bank or demataccounts that can be opened

3. Transfer of deposits (funds orsecurities)

Funds/securities are transferred only at theinstruction of the account holder

4. Physical transfer ofmoney/securities Physical transfer of money/securities is not involved

5. Nomination Facility Available


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Opening a Demat Account

To start dealing in securities in electronic form, one needs to open a demat account with a DP ofhis choice. An investor already having shares in physical form should ensure that he gets theaccount opened in the same set of names as appearing on the share certificate; otherwise a new

account can be opened in any desired pattern by the investor.Getting started

1. Choose a DP2. Fill up an account opening form

provided by DP, and sign anagreement with DP in a standardformat prescribed by thedepository.

3. DP provides the investor with acopy of the agreement andschedule of charges for his futurereference.

4. DP opens the account and providesthe investor with a unique accountnumber, also known asBeneficiary Owner IdentificationNumber (BO ID).

Documents to be attached

y Passport size photographsy Proof of residence (POR) - Any one of

Photo Ration Card with DOB/PhotoDriving License with DOB/Passportcopy/Electricity bill/Telephone bill

y Proof of identity (POI) - Any one ofPassport copy / Photo Driving License

with DOB / Voters ID Card / PAN Card /Photo Ration Card with DOBy PAN card

Note:y

The agreement required to be signed by the investor details the rights and duties of theinvestor and DP.y DP may revise the charges by giving a 30 days prior notice. SEBI has rationalized the

cost structure for isation by removing account opening charges, transaction charges forcredit of securities and custody charges, effective from January 28, 2005.

Maximum Number of holders in a Demat Account

A maximum of three persons are allowed to open a joint demat account in their names.


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Trading

Trading is the process of buying and selling securities. The procedure of trading consists of twoprocesses, i.e. Delivery (when securities are sold) and Receipt (when securities are purchased).These two processes can be understood as follows:

I. Process of Receipt

Note:One can also give "Standing Instruction" to receive credits into the account directly without

having to give the receipt instruction to the broker every time.II. Process of Delivery

Note:

This instruction should reach the DP's office at least 24 hours before the pay-in. Failure in doingso transfers the entire risk upon the investor.


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Forms of Trading

Trading can be of following two types:

y Delivery Basedy Intra-day

Delivery Based

Delivery based trading is normally considered as a safer approach for trading in shares whencompared to day trading. Delivery based trading involves buying shares on a market day andselling them only after receiving the delivery of those shares in demat account.

Things Investors Should Know About Trading - Standing InstructionIn order to receive credit into the demat account it is important to submit the "Receipt-in form",

which is similar to filling in pay-in slips to receive credit into your bank account. StandingInstruction is a facility provided for the convenience of the investors, where in an investor whohas opted for this facility doesn't need to submit the receipt in forms every time he wants to buysecurities. However, this facility is discretionary and can be availed only when an investor optsfor it.

Delivery Instruction Slip (DIS)DIS of a depository account is similar to a cheque book of a bank account, which is needed to besubmitted by the investor whenever he wants to sell securities. When opening a depositoryaccount, investor must ensure that:

1. DP issues a DIS book.2. Every slip contains a pre-printed DIS slip acknowledged by the DP.3. The account number (Client ID) must be pre-stamped on every slip.4. All the account holders sign the instruction slip, in case it is a joint account.5. They don't leave signed slips with the broker or sub-broker, or any other person.6. DIS slip is kept in a secured place when not in use.7. The remaining space in the DIS slip is striked out, if only one entry is made, to prevent

its misuse.8. Target Account ID, Client ID and other details in the slip are personally filled in by the

investor himself.

Giving Delivery Instruction to the DP over Internet

Well known as SPEED-e and EASI, this facility (provided both by NSDL and CDSL) enables anaccount holder to deliver instructions to the DP over Internet, eliminating the need to submit DISto the DP. This facility can be availed by paying necessary charges.


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Clearing & settlement

For all trades executed on a given day, it is important to determine the obligations standing at theend of the day against parties to trade. This process of ascertaining obligations is known asclearing, and the process of meeting or discharging these obligations is known as settlement.

NSCCL is the corporation that deals with all clearing and settlement activities at NSE.

NSCCL

The National Securities Clearing Corporation Limited, a subsidiary of National Stock Exchangeof India Ltd., was incorporated in August 1995 to carry out the clearing and settlement of thetrades executed in the Equities and Derivatives segments of NSE. It also operates SubsidiaryGeneral Ledger (SGL) for settlement of trades in government securities and undertakessettlement of transactions on other stock exchanges like the Over the Counter Exchange of India(OTCEI). NSCCL commenced clearing operations in April 1996. The purpose behind setting up

NSCCL was:1. To bring and sustain confidence in clearing and settlement of securities.2. To promote and maintain, short, consistent and well defined settlement cycles without

any deviations.3. To provide counter-party risk guarantee.4. To operate a tight risk containment system.

NSCCL aggregates trades executed over a trading period, assesses the net positions in order tofind out the liabilities of the members. Finally, it ensures that the respective liabilities are metwith a regular movement of funds and securities.

Settlement Calendar

NSCCL issues a notification on a monthly basis which represents the schedule for settlement oftrades taking place in that particular month.


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MARGINS

In simple terms, margin refers to the collateral that a member has to deposit with the exchangeto be able to trade on any given day. It is a risk management system backed with the objectiveof protecting the exchange against any potential adversity that may arise in the future.

Margin payment by the members

It is necessary to pay the daily margins for all clients (for a rolling settlement) on the workingday that follows the trading day, i.e. on (T+1) day. It is the responsibility of the members tocalculate margin amount payable by them on the due date. Margin money can be deposited inmultiples of Rs 10,000/-, in form of cash/bank fixed deposits (FDRs)/bank guarantee.

Margin payout

NSCCL, at its own discretion, may return the margin amount back to the member on the

subsequent day (after adjustment for dues), or may choose to retain whole/part of the cashmargin amount payable to a specific member to contain risk.

Collecting Margins from the Client

Just like the Exchange, the members should also have a good risk management system to protectthemselves from any possible client defaults. However, it is completely at the discretion of themember to make decision regarding the amount and mode of margins collection.

Violation of Margins

The member shall face following consequences in an event of non-payment of margin or anyshortage in margin payment:


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Review 2nd

: Smart ways to invest in Equity (Publication: Financial Chronicle,

Avian Media).

A thought fully planned financial plan can lend a lot of comfort in times of need. Start early andinvest in equities to your wealth grow faster. We all have dreams. Dreams of celebrating somespecial events in life with complete vigor, making sure that our children get the best in educationand life, spending our sunset days relaxing or cultivating our most cherished hobbies. Whiledreams remain for some people, some do achieve their goals by saving early and investsmartly. For a better tomorrow, we all need to plan our investments and manage our spendingand debt today. By starting early, we can achieve our medium and long term financial needs andgoals whether it is paying off credit cards b