A STUDY ON ONLINE TRADING AND OFFLINE TRADING AT JRG SECURITIES LTD. G.LAXMI NARAYANA P.PREMCHANDER RAO Dr K. SRINIVAS

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1 A STUDY ON ONLINE TRADING AND OFFLINE TRADING AT JRG SECURITIES LTD G.LAXMI NARAYANA P.PREMCHANDER RAO Dr K. SRINIVAS 1 Associate Professor, Aurora's Engineering college, Bhongir, Dist: Nalgonda, Telengana. 2 Sr. Assistant Professor, Aurora's Engineering college, Bhongir, Dist; Nalgonda, Telengana. 3 Assistant Professor, Nizam College, Osmania University, Hyderabad. ABSTRACT Online stock trading is an internet based stock trading facility where Investor can trade shares through a website without any manual intervention from the broker. It also provides investors with rich, interactive information in real time including market updates, investment research and robust analysis. Still some people like offline stock trading where the customer calls the broker to enquire about the stock prices. Then the broker asks some personal details to verify his identity. After that customer can order the amount and the price at which he wants to buy a particular stock. The broker places the order on behalf of the customer. Similarly, the customer can also sell the shares in offline mode. And the customer can monitor all these transactions by logging into his account. The main advantage in offline trading is time-saving. INTRODUCTION Traditionally stock trading was done through stock brokers personally or through telephones. As number of people trading in stock market increased enormously in last few years, some issues like location constrains, busy phone lines, miss communication etc. started growing in stock broker offices. Then Information technology helped stock brokers to solve those problems by Online Stock Trading method ("Online stock brokers, ). Online stock trading is an internet based stock trading facility where Investor can trade shares through a website without any manual intervention from the broker. It also provides investors with rich, interactive information in real time including market updates, investment research and robust analysis. Still some people like offline stock trading where the customer calls the broker to enquire about the stock prices. Then the broker asks some personal details to verify his identity. After that customer can order the amount and the price at which he wants to buy a particular stock. The broker places the order on behalf of the customer. Similarly, the customer can also sell the shares in offline mode. And the customer can monitor all these transactions by logging into his account. The main advantage in offline trading is time-saving. OBJECTIVES OF THE STUDY The objective of the study include the study of the below mentioned aspects. To know how the settlement procedure of transaction takes places. To know how the on-line trading process take place. To know difference between online trading and Offline trading To know the trading procedure at "JRG SECURITIES LTD". To analyze the equity behavior of particular banks (ICICI,HDFC&AXIS) 1 icmrrjournal@gmail.com

2 SCOPE OF THE STUDY: The study is about the process of dematerialization of shares and how the online &offline trading will function. This study also includes the performance NSE & BSE. The study includes the trading and settlements procedure in stock exchange. METHODOLOGY OF THE STUDY: The data collection methods include both the primary and secondary collection methods DEFINITION OF ONLINE AND OFFLINE TRADING ONLINE TRADING: Online trading is done to trade shares in the market through computer. The investor has to register with company or firm and a user name and password is given afterwards the individual can do online trading The act of placing buys or sells orders for financial securities and/or currencies with the use of brokerage s internet-based proprietary trading platform. The use of online trading increased dramatically in the mid-to late -90swith the introduction of affordable high speed computers and internet connections. OFFLINE TRADING: When a computer or other device is not turned on or connected to other devices it is said to be offline. Offline can also mean not being connected to the internet. Offline trading means purchasing shares from stock broking houses or from dealer. The order can be done by phone. TYPES OF INVESTMENT Investing is the act of committing money to an endeavour with the expectation of obtaining an additional income. Simply, it means putting the money to work for you and maximizing the earning potential. The more time you give your investments, the more you are able to accelerate the income potential of the original investment ("Types of investments,"). There are various ways to invest money such as: Bonds: They are called fixed-income securities and refer to any securities that are founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out. Bonds are relatively safety but the rate of return is lower. Stocks: When you purchase stocks or equities you become a part owner of the business. This entitles you to vote at the shareholders' meeting and allows you to receive any profits that the company allocates to its owners. Stocks are volatile and they fluctuate in value on a daily basis. When you buy a stock, you aren't guaranteed anything. But compared to bonds, stocks provide relatively high potential returns. 2 icmrrjournal@gmail.com

3 Mutual Funds: A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors which enables you to pay a professional manager to select specific securities for you. The major advantage of a mutual fund is that you can invest your money without the time or the experience that are often needed to choose a sound investment. Futures: A futures contract is just what it's called a contract. It is not equity in a stock or commodity. It is a contract to make or take delivery of a product in the future, at a price set in the present. In formalized trading of futures contracts on exchanges, agreements specify price, quantity and the month of delivery. Futures can be used either to hedge or to speculate on the price movement of the underlying asset ("Futures,").. Options: It is a financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price during a certain period of time or on a specific date ("Option,"). There are also other alternative investment opportunities such as: Forex, Gold, Real estate etc. Market Regulation: It is important to ensure smooth working of capital market, as it is the arena for the players associated with the economic growth of the country. Various laws have been passed from time to time to meet this objective. The financial market in India was highly segmented until the initiation of reforms in on account of a variety of regulations and administered prices including barriers to entry. The reform process was initiated with the establishment of Securities and Exchange Board of India (SEBI). The legislative framework before SEBI came into being consisted of three major Acts governing the capital markets: TYPES OF ORDERS: Buy and sell orders placed with members of the stock exchange by the investors. The orders are of different types. 1. Limit orders: Orders are limited by a fixed price buy Reliance Petroleum at Rs.50. here the orders has clearly indicated the price at which it has to be brought and the investor is not willing to give more than Rs Best rate order: Here the buyer or seller gives the freedom to the broker to execute the order at the best possible rate quoted on the particular data for buying. It may be lowest rate for buying and highest rate for selling. 3. Discretionary order: The investor gives the range of price for purchase and sale. The broker can use his discretion to buy within the specified limit. Generally the approximation price is fixed. The order stands as this buy BRC 100 shares around Rs icmrrjournal@gmail.com

4 4. Stop loss order: The order is given to limit the loss due to unfavorable price movement in the market. A particular limit is given for waiting. If the price falls below the limit the broker is authorized to sell the shares to prevent further loss. E.g. sell ANDHRABANK at Rs. 105 stop loss at Rs 100. JRG Securities Profile JRG Securities Ltd. is one of India s leading financial services providers with strong presence in South India. It was incorporated in 1994 and over the years it acquired a name of trust through Equity and Commodity Broking businesses. In 2007, Baring India Private Equity Fund II Ltd., a leading private equity firm of international repute acquired a majority stake in the Company. With the investment of BIPEF came fresh inflow of talent and a focused team committed to taking this company to greater heights. Since then JRG has undergone several transformations - expanding into new geographies, adopting state-of-the-art technology, strengthening credit and risk management systems, creating new products and strengthening client relationships through service focus. The company is committed to fully compliant with all regulatory compliances with the exchanges, SEBI, IRDA, FMC and RBI. JRG is listed on the Bombay Stock Exchange As the company transforms itself to being a professionally run, high quality brokerage house in India, the focus is on providing best-in-class services to the customers. The new management team consists of high quality professional talent from within the company and from the marketplace. The company strives to attract and retain the best talent, which is amongst the key building blocks for the company. The new growth strategy has four key building blocks Trust, Transparency, Technology and Talent. Today, along with its subsidiaries, JRG caters to a gamut of financial products and services ranging from Equity Trading, Commodity Trading, Currency Derivatives, Insurance Broking and Loans (Loan against shares, Margin Funding, Gold Loans etc.) all catering to the mass affluent retail customers. The Company is a member of the National Stock Exchange of India (NSE), the Bombay Stock Exchange (BSE), the National Multi Commodity Exchange of India Ltd (NMCEIL), the National Commodities Derivatives Exchange Ltd (NCDEX), the Multi Commodity Exchange of India Ltd (MCX) and the Indian Pepper and Spices Trades Association (IPSTA). JRG is a full-fledged depository participant of the National Securities Depository Ltd and Central Depository Services (India) Limited. Besides these, it is also a leading Insurance Broker. Order to expand its reach, JRG has launches its internet trading services through The online services will provide customers an opportunity to trade from the comfort of their home or offices and also trade while traveling. Inditrade.com will empower customers to trade and invest in equities, commodities, currencies, mutual funds and insurance. DATA ANALYSIS OF OFFLINE TRADING 1. ECONOMY ANALYSIS Economic analysis is the analysis of forces operating the overall economy a country. Economic analysis is a process whereby strengths and weaknesses of an economy are analyzed. Economic analysis is important in order to understand exact condition of an economy. 4 icmrrjournal@gmail.com

5 Economy analysis include 1. INTEREST RATES 2. INFLATION RATES 3. EXCHANGE RATES Interest rates will have an effect on stocks. If interest rates decrease then borrowing capacity of a company increases so company can go for further expansion and generates more profits. So demand for stock increases and stock price will rise. The benchmark interest rate (reverse repo) in India was last reported at 7.5 percent. In India, interest rate decisions are taken by the Reserve Bank of India's Central Board of Directors. The official interest rate is the benchmark repurchase rate. INFLATION RATES Inflation rates will also an effect on stock. If inflation rates decreases then company can purchase items at lower rates so that it can increase profits and finally the stock price raises. The inflation rate in India was last reported at 6.5 percent in December of 2012From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an historical high of percent in September of 1974 and a record low of percent in May of Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. 5 icmrrjournal@gmail.com

6 EXCHANGE RATES Exchange rates will also have an impact on stock. If exchange rates decrease then company can import at lower rates which leads to increase in profits and causes an increase in profits. The Indian Rupee exchange rate appreciated 7.89 percent against the US Dollar during the last month. During the last 12 months, the Indian Rupee exchange rate depreciated 6.08 percent against the US Dollar. Historically, from 1973 until 2013 the USDINR exchange averaged reaching an historical high of in December of 2011 and a record low of 7.19 in March of The Indian Rupee spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the INR. While the Indian Rupee spot exchange rate is quoted and exchanged in the same day, the Indian Rupee forward rate is quoted today but for delivery and payment on a specific future date. ANALYSIS OF BANKING & FINANCE SECTOR The banking system in India is significantly different from that of other Asian nations because of the country s unique geographic, social, and economic characteristics. About 92 percent of the country s banking segment is under State control while the balance comprises private sector and foreign banks. The public sector commercial banks are divided into three categories. State bank group (eight banks): This consists of the State Bank of India (SBI) and Associate Banks of SBI. The Reserve Bank of India (RBI) owns the majority share of SBI and some Associate Banks of SBI. SBI has 13 head offices governed each by a board of directors under the supervision of a central board. The boards of directors and their committees hold monthly meetings while the executive committee of each central board meets every week. Nationalized banks (19 banks): In 1969, the Government arranged the nationalization of 14 scheduled commercial banks in order to expand the branch network, followed by six more in A merger reduced the number from 20 to 19. Nationalized banks are wholly owned by the Government, although some of them have made public issues. In contrast to the state bank group, nationalized banks are centrally governed, i.e., by their respective head offices. Thus, there is only one board for each nationalized bank and meetings are less frequent (generally, once a month). Regional Rural Banks (RRBs): In 1975, the state bank group and nationalized banks were required to sponsor and set up RRBs in partnership with individual states to provide low-cost financing and credit facilities to the rural masses. 6 icmrrjournal@gmail.com

7 CREDIT FLOW AND INDUSTRY: India Inc is completely dependent on the Banking System for meeting its funding requirement. Industries and Public borrow from the banks to meet their funding requirements. Banks meet this demand for funding by raising deposits from public. Certain banks also offer Investment services to clients through their subsidiaries. CASH RESERVE RATIO (CRR): Banks are required to maintain a percentage of their deposits with the RBI.. RBI can vary this rate between 3% and 15%. RBI uses this tool to increase or decrease the reserve requirement depending on whether it wants to affect a decrease or an increase in the money supply. An increase in Cash Reserve Ratio (CRR) will make it mandatory on the part of the banks to hold a large proportion of their deposits in the form of deposits with the RBI. This will reduce the size of their deposits and they will lend less. This will in turn decrease the money supply. Statutory Liquidity Ratio (SLR): Apart from the CRR, banks are required to maintain liquid assets in the form of gold, cash and approved securities. Higher liquidity ratio forces commercial banks to maintain a larger proportion of their resources in liquid form and thus reduces their capacity to grant loans and advances, thus it is an anti-inflationary impact. A higher liquidity ratio diverts the bank funds from loans and advances to investment in government and approved securities. Repo (Repurchase) rate: is the rate at which the RBI lends shot-term money to the banks against securities. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate. Reverse Report rate is the rate at which banks park their short-term excess liquidity with the RBI. The banks use this tool when they feel that they are stuck with excess funds and are not able to invest anywhere for reasonable returns. An increase in the reverse repo rate means that the RBI is ready to borrow money from the banks at a higher rate of interest. As a result, banks would prefer to keep more and more surplus funds with RBI. BANK RATE: The interest rate that is charged by a country s central or federal bank on loans and advances to control money supply in the economy and the banking sector. This is typically done on a quarterly basis to control inflation and stabilize the country s exchange rates. A fluctuation in bank rates triggers a ripple-effect as it impacts every sphere of a country s economy. For instance, the prices in stock markets tend to react to interest rate changes. A change in bank rates affects customers as it influences prime interest rates for personal loans. The bank rate acts as the penal rate charged on banks for shortfalls in meetings their reserve requirements(cash reserve ratio and statutory liquidity ratio).the bank rate is also used by several other organizations as a reference rate for indexation purposes. BPLR( Benchmark Prime Lending Rate): This is the rate at which a bank lends its money to its prime customers that is the minimum rate at which the bank gives loans to its prime customers. BASE RATE: The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except for DRI advances, loans to bank's own employees and loan to banks' depositors against their own deposits. (i.e. cases allowed by RBI). MARGINAL STANDING FACILITY RATE: Under this scheme, Banks will be able to borrow up to 1% of their respective Net Demand and Time Liabilities". The rate of interest on the amount accessed from this facility will be 100 basis points (i.e. 1%) above the repo rate. This scheme is likely to reduce volatility in the overnight rates and improve monetary transmission. 7 icmrrjournal@gmail.com

8 ICICI Bank Comparative Balance Sheets (Rs. in Crores) Particulars Mar-13 Mar-12 Mar-11 SOURCES OF FUNDS Capital 1, , , Reserves Total 54, , , Minority Interest 1, , Deposits 259, , , Borrowings 125, , , Other Liabilities & Provisions 92, , , TOTAL LIABILITIES 534, , , APPLICATION OF FUNDS : Cash & Balances with RBI 21, , , Balances with Banks & money at Call 18, , , Investments 209, , , Advances 256, , , Fixed Assets 5, , , Other Assets 23, , , Miscellaneous Expenditure not written off TOTAL ASSETS 534, , , Contingent Liability 1,022, , , Bills for collection 8, , , icmrrjournal@gmail.com

9 ICICI Bank Comparative Profit & Loss Accounts (Rs. in Crores) Particulars Mar-13 Mar-12 Mar-11 INCOME : Sales turnover 39, , , Excise duty Net sales 39, , , Total INCOME 40, , , II. Expenditure Manufacturing expenses Material consumed Personal expenses 3, , , Selling expenses Administrative expenses 4, , , Provision made Expenses Capitalized TOTAL EXPENDITURE 8, , , Operating profit 8, , , EBITDA 8, , , III. Profit & Loss Net Profit before Minority Interest 6, , , Minority Interest Net Profit after Minority Interest 6, , , Extraordinary Items Adjusted Net Profit 6, , , Profit brought forward 1, IV. Appropriations Transfer to Statutory Reserve 1, , Transfer to Other Reserves , Trans. to Government /Proposed Dividend Balance carried forward to Balance Sheet 1, , , , , Equity Dividend (%) Equity dividend 1, , , EPS after Minority Interest Book Value (Unit Curr.) icmrrjournal@gmail.com

10 HDFC Bank Comparative Profit & Loss Accounts (Rs. in Crores) Particulars Mar-13 Mar-12 Mar-11 INCOME : Interest Earned 19, , , Other Income 4, , , Total I 24, , , II. Expenditure Interest expended 9, , , Payments to/provisions for Employees 2, , , Operating Expenses & Administrative Expenses 2, , , Depreciation Other Expenses, Provisions & Contingencies 3, , , Provision for Tax 2, , , Fringe Benefit tax Deferred Tax Total II 20, , , III. Profit & Loss Reported Net Profit 3, , , Extraordinary Items Adjusted Net Profit 3, , , Prior Year Adjustments Profit brought forward 4, , , IV. Appropriations Transfer to Statutory Reserve Transfer to Other Reserves Trans. to Government /Proposed Dividend Balance carried forward to Balance Sheet 6, , , Equity Dividend % Earnings Per Share-Unit Curr Earnings Per Share(Adj)-Unit Curr Book Value-Unit Curr icmrrjournal@gmail.com

11 AXIS Bank Comparative Balance Sheets (Rs. in Crores) Particulars Mar-13 Mar-12 Mar-11 SOURCES OF FUNDS : Capital Reserves Total 18, , , Minority Interest Deposits 189, , , Borrowings 26, , , Other Liabilities & Provisions 8, , , TOTAL LIABILITIES 242, , , APPLICATION OF FUNDS : Cash & Balances with RBI 13, , , Balances with Banks & money at Call 7, , , Investments 71, , , Advances 142, , , Fixed Assets 2, , , Other Assets 4, , , Miscellaneous Expenditure not written off TOTAL ASSETS 242, , , Contingent Liability 453, , , Bills for collection 32, , , icmrrjournal@gmail.com

12 AXIS Bank Comparative Profit & Loss Accounts (Rs. in Crores) Particulars Mar-13 Mar-12 Mar-11 INCOME : Interest Earned 15, , , Other Income 4, , , Total 19, , , Total 16, , , II. Expenditure Interest expended 8, , , Payments to/provisions for Employees 1, , , Operating Expenses & Administrative Expenses 1, , , Depreciation Other Expenses, Provisions & Contingencies 2, , , Provision for Tax 1, , , Fringe Benefit Tax Deferred Tax Total 19, , , Total 16, , , III. Profit & Loss Net Profit before Minority Interest 3, , , Minority Interest Net Profit after Minority Interest 3, , , Extraordinary Items Adjusted Net Profit 3, , , Prior Year Adjustments Profit brought forward 3, , , IV. Appropriations Transfer to Statutory Reserve Transfer to Other Reserves Trans. to Government /Proposed Dividend Balance carried forward to Balance Sheet 4, , , Equity Dividend (%) EPS before Minority Interest (Unit Curr.) EPS after Minority Interest (Unit Curr.) Book Value (Unit Curr.) icmrrjournal@gmail.com

13 TOTAL INCOME COMPARITIVE ANALYSIS OF ICICI, HDFC AND AXIS BANKS Total Income In Rs Crores Year ICICI Bank 55, , , HDFC Bank 24, , , AXIS Bank 16, , , INTERPRETATIONS ICICI Bank has shown a marginal increase in the total income, while HDFC and Axis Banks have maintained a good growth in their total income in 2013 compared to 2012 The total income of ICICI Bank has remained stable in the last three years while HDFC and AXIS banks are improving their positions quite rapidly. RETURN ON NET WORTH Return on Net Worth % Year ICICI Bank HDFC Bank AXIS Bank icmrrjournal@gmail.com

14 Interpretation Return on Net Worth is one of the most important ratios used for measuring the overall efficiency of a firm and determines whether the investments in the firms are attractive or not. According the graph, Return on Net worth of ICICI has registered a marginal growth, while HDFC and AXIS Banks have maintained a stable ROI. As the investors would like to invest only where the return is higher, AXIS Bank would be again attractive for investment as it still has the highest Return on Net worth. FINDINGS: The people who are working in the stock exchange are not giving the accurate information about the share market. The investors are also lacking knowledge in the shares Lack of awareness on online trading. The investors are not allowed to trade the quotations directly to buy or sell their securities. SEBI is not conducting seminars to get awareness on the share market to the investors SUGGESTIONS: For effectiveness of the capital market reforms, there is a need for investors to be educated. More Transparency desired. It is desirous that there is development of capital markets as against control of markets. It is necessary for growth of nation. It reflects our economy, growth and standard of living of people CONCLUSION In this present competitive world economy plays a vital role in development of the country, if a person is able to have the better life by having sufficient wealth with him. It can be made happen only by means of earnings, any person cannot earn more by staying stagnated at one place there are many ways of earning one among them is by way of investing in the stock exchanges. No person can directly enter into the markets; the only source is through the middle man that is any company that is member in the stock exchange. These member companies are providing many services to the investors or their clients like portfolio investments, derivatives and mutual funds etc., so any company has to provide better services to the costumer in such a way that they can trust the company in investing their wealth 14 icmrrjournal@gmail.com

15 through the company. It can be done only by fallowing the certain guidelines and rule & regulations framed by SEBI. BIBLIOGRAPHY: 1. MY Khan and PK Jain: Financial Management Text and Problems, Tata McGraw-Hill, New Delhi I.M. Pandey-Financial Management,9/e Vikas Publishers, New Delhi S.N. Maheswari, Financial Management, Vikas Publishers, New Delhi.2007 WEB SITES: