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Investors preference on financial services.


Economic development of a nation is depends on the performance of the financial process and capital formulation of the nation. Efficient financial system will automatically formulate required capital for investment. The non banking financial services in India have growing continuously over a period of time, in terms of number, deposit and so on. Indian financial sector has reviving of its positive sentiments, formation of a stable newly elected government, has the ripple effect on all the financial services in India. Financial sector including banking and insurance, and mutual funds and share broking business are beginning to reap the benefits of a good closure for 2008-09. In 2008-09, the Indian economy is estimated to have grown by 6.7 per cent. According to the latest Central Statistical Organization (CSO) data, financial services and real estate sector rose by 9.5 per cent in the first quarter of 200910.

The government has taken a number of steps in recent months to revive the economy, including slashing interest rates, lowering factory levies and more than doubling the limit on foreign investment in corporate bonds. The financial services space is a rapidly growing one in India. With constant deregulatory measures, exposure to international financial markets, introduction of IT enabled service facilities and the introduction of new products and services, the Indian financial service sector is charting an impressive growth path.

Introduction of communication and network technologies has created paradigm shifts in the share market operations. Technology has enabled organizations to bring about innovations in products and services. Exchanges all over the world has moved to electronic trading systems which are cheaper, wider reach and provide a better mechanism for trade and post trade execution.

The country received US$ 45 billion in foreign currency remittances from non-resident Indians in 2008, the highest in the world. April-May 2009 saw increased inflow in to equity with investors steadily turning positive on equity according to mutual fund analysts. As per the Securities and Exchange Board of India (SEBI), on May 15, net investment of mutual funds in equity was around US$ 83.3 million lowering to US$ 20.5 million on May 21. As against this, net investment of mutual funds in debt has more than tripled from US$ 42.9 million on May 15 to US$ 134.2 million on May 31, 2009.

Financial Services

Service is something that consumers use at any moment of any day. Financial services constitute a large and growing sector in almost all economies. Quality and effective financial service is the backbone of a healthy economic system. Trade and investment flows in financial services have been growing rapidly with the emergence of new and growing markets in developing and transition economies, with modernization, rapid technological change, use of new financial instruments, and financial and trade liberalization. The financial services sector is also quite large and complex and covers a wide range of activities and instruments, including Financial services organizations are striving to achieve increasingly ambitious profit and growth targets against a background of heightened risk, regulation and market pressures. Customer needs and expectations are evolving in the face of increasing personal wealth. Intense competition has squeezed industry margins and forced organizations to cut costs while still seeking to enhance the quality of client choice and service. The battle for talent is also heating up as companies seek to enhance innovation, customer loyalty and investment returns. The corollary of this market evolution is increasing risk as products become more complex, organizations more diffuse and the business environment ever more uncertain. Regulation is also tightening in the wake of public and government pressure for improved governance, transparency and accountability.

In this environment, the winners will be companies that can turn the challenges into opportunities to build stronger and more enduring customer relationships; sharpen process efficiency; unlock talent and creativity; use improved risk management processes to deliver more sustainable returns; and use new regulatory demands as a catalyst for strengthening the business and enhancing market confidence. Organic growth, operational cost reduction, and risk and regulatory compliance are among the most pressing issues facing financial institutions today.

Indian Capital Market

Capital market reforms are a major constituent of the overall economic reforms in India. A series of measures announced in Union Budgets beginning FY92 laid the road map for the growth and A new phase of securities market regulation in India began with the setting up of Securities and Exchange Board of India in 1992. Over the period, the Board has brought in several changes in the way securities markets are organized and conducted in India. Major reforms that were brought in the Indian securities markets since 1992 are summarized below: In tune with the global stock markets that began to recover from the second half of 2003; Indian stock markets too witnessed rapid growth. India's two leading indices, the most popular BSE Sensex, and the one most used by the markets the National Stock Exchanges' S&P CNX Nifty rose to record levels. Both primary and secondary market activity experienced sharp surge. Much progress was made in further strengthening and streamlining risk management, market regulation and supervision. A few aspects of the major developments in the India's stock markets are: Corporate memberships, product offerings, Greater reliance on research, Accessing equity capital markets, Specialised services/niche broking, Online broking, Compliance oriented, Focus on training and skill sets, From owners to traders, Fragmentation, Capital Adequacy, Global Opportunities, Opportunities from regional finance, Product Dynamics, Competition from foreign firms, Investor Protection, Customer retention, Wealth maximization, Customer satisfaction, Services quality, and Speed.

India's share in the total world m-cap has risen to 2.79 per cent currently. India's market capitalization (m-cap) has touched US$ 1.04 trillion making it the ninth largest in the world. Further, according to global consultancy firm, Deloitte Haskins & Sells, the Indian economy and capital markets are expected to witness a turnaround within six to nine months. Fund raising by India Inc through initial public offers (IPOs) rose by a whopping 62 per cent since the beginning of 2008 to May 29, 2008 to US$ 4.2 billion, against US$ 2.6 billion during the same period in 2006, according to global deal data provider, Dealogic. According to Goldman Sachs, Indian companies may raise US$ 4 billion-6 billion from IPOs in the fiscal year ending March 31, 2010.

Share Brokers

The market intermediaries play an important role in the development of securities market by providing different types of services. Major intermediaries in the securities market regulated by SEBI are brokers, sub-brokers, portfolio managers, merchant bankers, depository participants, bankers to an issue and share transfer agents. During 2007-08, there was an increase in the number of intermediaries registered. As on March 31, 2008, the highest increase in absolute terms, was observed in case of depository participants (DPs) of CDSL (52) followed by portfolio managers (47). A decline was witnessed, in the number of underwriters followed by registrar to an issue and share transfer agent and debenture trustees as compared to 2006-07. The details are provided in Table 3.1. Some of the intermediaries' applications for registration were in the process, the details of which are provided in

Indian stock market has essentially three categories of participants, the issuer of securities the investors in the securities and the intermediaries. The issuers are the borrowers, who issue securities to raise funds.

The investors, who are surplus savers, deploy their savings by subscribing to these securities. The intermediaries' are the agents who match the needs of users and suppliers of funds for a commission. These intermediaries perform functions to help both the issuers and investors to achieve their respective goals. There is large variety and number of intermediaries providing various services in the Indian securities market. The process of mobilizations of resources is carried out under the supervision and overview of the regulators. The regulators develop fair market practices and regulate the conduct of issuers of securities and the intermediaries. They are also in charge of protecting the interests of the investors. The regulator ensures a high service standard from the intermediaries.

Share brokers are the persons or firms who execute buy/sell order on behalf of the investors and charge a commission for rendering the service. They are one of the most important constituent of the whole share dealing process. Any investor has to place an order through a recognized share broker of a stock exchange.

Share Brokers Type & Share Treading

Share Brokers are of various types such as, Floor Brokers These share brokers place and execute orders on behalf of their clients (who are not allowed to the trading area) on the floor of the exchange. Upstairs Brokers These brokers locate counterparties (out of their known traders) and negotiate trade terms with them on behalf of their clients (who are usually heavy-weight ones). They then execute the transaction at a rate better than the market rate and also at a less time. Discount Brokers These share brokers charge less commission than the full service brokers but at the same time doesn't give any investment advice to their clients. Value Brokers These are a type of discount brokers who charge commissions at a percentage rate of the currency value of each transaction. This is typically helpful for the small traders who generally trade in small quantities and generally invest in low-priced shares because the brokerage costing is relatively less.

Share Brokers offer two types of share trading, Offline Share Trading In this form of trading the customer either goes to the share broker's place and sits before the share trading terminal and asks the dealer to place orders in his account or rings the share broker, asks the share quotes and other relevant information, and accordingly places orders over the phone. Online Share Trading The client could avail the share market and could place his order on his own from any place he wants, provided he has a computer with an Internet connection.

Electronic Treading

Electronic trading is a method of trading securities currency and exchange traded derivatives electronically. With the help of information technology buyers and sellers are brought together through electronic media to create a virtual market place. It is believed reliable than older methods of trade processing in the stock exchanges. Electronic trading system reduces cost of transactions, greater liquidity, and greater competition increased transparency, tighter spreads, convenience, and speed.

Trading Software is an absolute requirement for one to watch every up and down ticks, monitor your short positions, and stay on top of your stop loss settings etc. There are so many different stock market software packages are available at present. The share broking firms offer different software to different clients. Many professionals use some type of software to keep their emotions in check and to enable them to focus on their strategies while avoiding the effects of fear and greed.

Software has no emotions. It doesn't love or hate the stock that you own and it doesn't want to get rich. It simply crunches numbers and tells you what it "thinks" about when to buy, sell, or hold. And while it is not flawless, it's a lot smarter than most of us are.

Significance of the Study

Financial service institutions are playing a vital role both in national economy construction and individual wealth creation but the investors are facing number of problems and uncertainties to name a few: Regularity norms, Capital market trends, International financial market trends, Economic issues, Share market volatiles, Money market trends, Brokerages, Ineffective service facilities provided by the share brokers, Reliability of information, Market rumors and so on. According to Hand book of statistics on Indian securities market 2008, Securities &Exchange Board of India had been received about 33, 76,888 compliant from investors during the period 1991-92 to 2007-08. This is about an average of 1, 98,640 Compliant per year which is about 800 compliant per treading day. This statistics is about the compliant reported by the investors in fact the real number could be more than 4 to 5 times of dissatisfactions reported.

Share broking firms are also struggles to provide effective service to their customers because of Difficulties in understanding investors needs, Complicated service standards,Service satisfaction measurement issues, Non availability of defined service models for different type of customers, Categorization of investors, Difficult to distinguish investors behavior, Customers satisfaction and so on. The study Investors Preference on Financial Services (With special reference to Share broking services) provided by share brokers with special reference to Coimbatore tries to define the problems faced by the share brokers and investors and proposed to suggest to improve the level of investors satisfaction

Research Methodology

The objectives of this research are to study the level of customer's satisfaction about various services provided by the share broking institutions and to study the investment preference of the investors. Primary data has been collected from 500 investors in Coimbatore--India. Secondary data has been collected from various sources like journals, magazines, previous researches, books and websites. A well-structured questionnaire is developed to collect primary data from the investors. It is found sampling method is the most appropriate to do the research. The sampling plan for the study is stratified proportionate systematic sampling plan for selecting investors. List of investors are obtained from the share brokers, from the list 40 investors from each share brokers has been selected for the research.

The researcher identified 20 important services namely; Research reports, Live news, Securities News, Intraday calls, Daily Technical review, Morning corporate news, Weekly Technical Report, Sectoral Reports, SMS Alerts, Trinity Account, Call and Trade, Trading software, M-Trade, Stock Ideas, Derivative Reports, Portfolio Advice, Report on Company Fundamentals, Technical Company Charts, IPOs, After Market Orders and Market exposure for the analysis. The following are the share breaking institutions identified for the research they are; ICICI Direct, Kotak Securities, India info line, Karvy, Reliance Money, Indi bull financial, Angal broking ltd, Giojit Securities, Mothilal Oswal, Emkay Global Financial Services, Stock holding Corporation of India Ltd, and Others. The others include some regional brokers.

Primary data has been collected with the help of a well structured questionnaire consisting of all appropriate questions for the research. In order to analysis the collected data various statistical tools like correlation analysis, weighted average to rank the factors and factor analysis has been carried out and inference also drawn.

Results and Discussion

Stock Brokers

Share Brokers (individuals or firms) are registered agents of stock exchange(s) who act as intermediary between buyers and sellers of shares and in return charge a commission for doing the same. They buy or sell share on behalf of their clients. The number of share brokers in India is in increasing trend because the requirement of financial services in India.

The above table shows the number of share brokers during 2007and 2008. The total number of registered stock brokers as on March 31, 2008, was 9,487 as compared to 9,443 in 2006-07. The share of corporate brokers to the total stock brokers increased marginally to 44.1 per cent in 2007- 08 from 43.5 per cent in 2006-07. NSE had the highest number of 1,129 registered stock brokers, followed by the Calcutta Stock Exchange (957), Bombay Stock Exchange Ltd. (946) and Inter-connected Stock Exchange (ISE) (935). NSE had also the highest number of corporate brokers (1,039), constituting 92.0 per cent of the total stock brokers of NSE. The proportion of corporate brokers at BSE and OTCEI was 81.1 per cent and 76.6 per cent, respectively. Coimbatore stock exchange the registered share brokers and corporate brokers are constant 135and 48 respectively for the year 2007 and 2008. It seems that Coimbatore stock exchange is not very active and business activities are restricted for the last two years.

Registered Intermediaries

Indian brokerage industry is highly fragmented. Numerous small and medium firms operate in this space. Given the growing importance of technology in operations and increasing emphasis on regulatory compliance, smaller firms might find it constrained to make right type of investments that will help in business growth and promotion of investor interests.

The intermediaries involved in share market operations are Registrar to issue and share Transfer Agent, Banker to an issue, Debenture Trustee, Merchant banker, Portfolio Manager, Underwriter, DPs-NSDL, DPs-CDSL and Credit Rating Agency. The number of portfolio managers are increased 158 in 2007 and 205 in 2008 ie 30% increase. The Customers are expecting more advice of experts in recent years. Whether it is on choosing a stock or sector or anything regarding investments all the customers' queries will be answered. DPs-CDSL number also increased from 363 during 2007 and 415 during 2008 ie 14% increase.


Sub-broker means any person not being a member of a stock exchange who acts on behalf of a stock-broker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stock-brokers. The stock broking business of regional stock exchange (RSE) subsidiaries has been in increasing trend. This is because of new norm that implemented by SEBI barring the RSE members from dealing directly with clients. The numbers of sub-brokers are increased in BSE 13,482 during 2007 and 20,616 in 2008. The growth of sub-brokers in Bombay stock exchange is 53%.and National stock exchange is 74% the is due to SEBI s new norms. The figure remains consent in Coimbatore.


Investors Profile

The investors profile includes information relating to the average number of family members, their monthly income, number of family members and earning members, investment preference and investment amound.

The above table revels that the income cateogries of the investors and the number of investors. The analsis also demonstrate the average number of earning members and average family members. The analysis revels that there is a positive correlation between income and number of investors (r=0.09). It is found there is a perfect correlation between the monthly income of the investors and the average number of earning members in the family (r=0.96) and average family members income (r=0.75). There is a positive correlation between number of investors and average number of investors (r=0.32) and average fanily members (r=0.58).

Investment Preference

There is a wide verity of investment opportunities available to the investors while they like to invest. The investment options considered for the research is Bank, Gold, Mutual, Fund, Small savings, Share market, Real Estate, Insurance, Commodity Market, Currency Market, Others (others include EPF schemes, Government bonds, and all other kind of investments). The product offerings of brokerage firms today go much beyond the traditional trading of equities. The investors preferences also changed to a great extend. A typical brokerage firm today offers trading in equities and derivatives, commodities futures, exchange traded funds, distributes mutual funds and insurance and also offers personal loans for housing, consumptions and other related loans, offers portfolio management services, and some even go to the extent of creating niche services such as a brokerage firm offering advisory services. The investor's investment options are displayed in the above table shows the investors preference. It is found from the research that an average of 58 investors prefers to invest in bank, 51 in Gold and 74 in insurance. Currency market and commodity market are not very popular among the Indian investors.


The above analysis revels that there is a close correlation between investor's profession and their investment pattern. The investors mostly like to invest in Gold and bank since both are very safe investment. It is found the investors are almost invested in insurance this is may be due to the security aspect of their life.

The above analysis revels the investors preference on share market. Investors prefer to invest in Nifty fifty, Bank Nifty, Nifty IT, Nifty Junior, Nifty mid cap, BSE, and others. The research revels that an average of 24 investors prefer to invest their money in Nifty fifty and 22 investors prefer to invest in Nifty mid-cap. The srudy also revels the closerness of income and investment in share market.

The above analysis discloses the average money saved by the investors. SEBI-NCAER Survey of Indian Investors, March 2003 reveals that only 0.4% of the investors invest in equity market. The research proves that there is a perfect correlation between income and investment in various investment opportunities. SEBI-NCAER Survey of Indian Investors, June 2000 shows that 76.2% of the house hold investors invest in bank deposit. The present study also proves that the investor's first preference is bank deposit.


Service Providers

There are about 48 corporate share brokers in Coimbatore out of which 12 share brokers has been selected for the research. Reliance Money, It is a one-stop-shop, providing end-to-end financial solutions (including mobile and web-based services). Kotak Securities Ltd. 100 % subsidiary of Kotak Mahindra Bank is one of the oldest and largest broking firms in the Industry. Its offerings include stock broking through the branch and Internet, Investments in IPO, Mutual funds and Portfolio management service. India bulls Group is one of India's top Business houses with businesses spread over Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and Power sectors. Indiabulls Financial Services is an integrated financial services powerhouse providing Consumer Finance, Housing Finance, Commercial Loans, Life Insurance, Asset Management and Advisory services. The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to loan products and Investment banking. Stock Holding Corporation of India Ltd. (SHCIL) was incorporated at the special initiative of the Government of India as a Public Limited Company in 1986. It has been jointly promoted and owned by the All India Banks and Financial Institutions, viz., IDBI Bank Ltd, ICICI Bank, SU-UTI, IFCI Ltd, LIC, GIC, NIA, NIC, UIC, and TOICL all leaders in their fields of business. SHCIL has established itself in India as a one-stop solution provider in the Financial Services domain. Emkay Global Financial Services Ltd. (EMKAY), a truly Indian, dynamic and visionary firm, and a trusted name in the financial services arena, offers the entire gamut of advisory services under one roof. Right from investing, trading, research and financial planning to portfolio management services, we provide our clients with integrated, robust and reliable solutions to satisfy all their financial needs. Geojit BNP Paribas Financial Services Ltd. provides a range of trading and investment products and solutions primarily in India. It offers various products and services, including equities, derivatives, currency futures, custody accounts, mutual funds, life and general insurance, initial public offerings, portfolio management services, property services, margin funding, and loans against shares. Motilal Oswal Securities Ltd. (MOSL) was founded in 1987 as a small sub-broking unit. A well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies. Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has emerged as one of the most respected Stock-Broking and Wealth Management Companies in India. With its unique retail-focused stock trading business model, Angel is committed to providing 'Real Value for Money' to all its clients. The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top player in almost all the fields it operates

Service quality is a concept that has aroused considerable interest in the share broking institutions in both defining it and measuring it. Institutions striving hard to formulate a definite service quality measurement models so that institutions and investors could understand each other. The investors also give first preference to service quality. While supermarkets approach are adopted in general by broking firms, there are some which are creating niche services that attract a particular client group such as day traders, arbitrage trading, investing in small cap stocks etc, and providing complete range of research and other support to back up this function. Issues of investor interest and Customer care will assume centre stage. Firms found not having suitable infrastructure and processes to ensure investor safety and protection will encounter constraints from regulation as also class action suits that investors might bring against erring firms. The present study revels that the customers are note very much satisfied with the customer care taken by the share brokers. It is important for brokerage firms to establish strong and streamlined systems and procedures for ensuring investor safety and protection. Retaining the investor is the most challenging situation for any share broking service institution. Since the growth of media and information technology the customer's expectations are changed to a great extent. When the institution fails to deliver the required service expectation the customer quickly swing to other service provider. Creating an ideal environment and atmosphere for the customer within is certainly a difficult task but a firm should understand the investors.

It is very important to match the customer's expectation and institutions objectives in this regard. Share broking firms must take utmost care to understand investor's short term as well as long term requirement to frame a definite plan of action in the stock market considering internal and external market environment.

One thing which is certain in the uncertain Share Markets is the need for speed. Response time is of extreme importance and every second can be an opportunity or a failure. This need for speed coupled with technology escalating market data volumes across all asset classes have forced to re-look at their service provider. The investors evaluate share brokers ability to adopt the latest information technology by their broker and the one who could convert the best possible information service to their customer is well appreciated.

The rank analysis revels that the customers' satisfaction level is high in India Info Line and Low in Emkay Global financial services. Client advising in India has graduated from personal insights, market tips to becoming extensively research oriented and governed by fundamentals and technical factors. Vast progress has been made in developing company research and refining methods in technical and fundamental analysis. The research and advice are made online giving ready and real time access to market research for investors and clients, thus making research important brand equity for the brokerage firms.

Investor's satisfaction towards their service providers

The above correlation matrix explains the relationship between the various factors and the investors ranking. The table revels that the ranking factors one two and three are closely correlated than other variables.

Factor Importance

The Factor Importance table shows the relative and cumulative amount of variance explained by each factor.
Factor   Eigenvalue   Variance %   Cumulative %   Scree Plot

1         2.73651       54.730        54.730      ********************
2         1.13884       22.777        77.507      ********
3         0.12076       2.415         79.922
4         -0.00302
5         -0.11792

Stop when cumulative explained variance = 80%

Minimum allowed eigenvalue = 0.50000

Number of factors retained = 2

The factor importance chart lists each factor, its associated eigenvalue, the percent of total variance explained by the factor, and the total cumulative variance explained by all factors up to and including this one. One popular rule of thumb in determining how many factors to use is to only use factors whose eigenvalues are at least 1.0.

Communalities did not converge. After 101 iterations, final difference = 2.7913e-004

Communality is the percent of variance in a variable that is accounted for by the retained factors.

There are several methods of rotating the factor matrix that make the relationship between the variables and the factors easier to understand. The factor matrix presented above is the result of rotating the factor matrix. In this case Varimax rotation was used. The research reveals that the rank one two and three are closely related so we could conclude that the customer satisfaction towards various share brokers are highly satisfied.

Services offered by the share brokers

Research reports are the key for any investor to decide weather to invest or not, most of the share brokers provide extensive research report to their customers Most of them are having Securities Research Centers, the special research cell bring intensive research reports on how the stock market is faring, when is the right time to invest, when to execute your order and ore. Depending on the kind of investor they provide fundamental, technical research reports.

Securities News: They have access to all news related to a stock, right from its results, earnings, bonus, share holding patterns etc. Also know about market developments, latest happenings, stock movements and lots more.

Intraday calls: these calls are provided according to changing market situations. Be in news, momentum or technical perspectives be updated with what are experts advice are communicated during the market hours.

Daily Technical View summarizing the previous day's movement and what is expected to happen on the current day. This report will also provide calls for trading along with various supports and resistances of chosen stocks.

Morning Corporate News: the investors also have information on all daily economic, political and various other factors which affect the fundamentals of a company.

Weekly Technical Report: This weekly technical report brings a complete round up of the week gone by--recommendations, major supports and resistances, what to look forward to and lots more.

Sectoral Reports are the other important information for the customers to decide which sector will boom. Sectoral report can guide them to know the details including the effect of government policies and regulations and estimates about how the sector is expected to behave.

SMS Alerts: All the broker houses are providing expert tips and recommendations as SMS on customer's mobile phone so that he knows what to invest in at all times.

Trinity Account: A 3 in 1 account that integrates the Trading, Bank and Demat account. With Trinity Account all the transactions will be seamless and very convenient for the customers.

Call and Trade: The customer can capitalize on market opportunities even when his computer is inaccessible. Call & Trade essentially provides him the convenience of trading in equities by making a simple phone call.

Trading software: Most of the share brokers are providing Securities E-trading Access Terminal with most sophisticated software this superior trading platform is to monitor market movements, view gains and losses and order placements instantaneously.

M-Trade: It is exclusively designed to give instant access to the stock market through mobile phone, thereby allowing the customer to catch every little market movement when he is on the move.

Stock Ideas: Share brokers are providing stock ideas. Stock brokers picks out potential stocks which can provide immense scope for returns on investments. This is report is completely based on fundamentals.

Derivative Reports: Customers can view the put call ratio, the most active derivative contracts and the top change in open interest. Investors can also get FII statistics, the top gainers and losers and the cost of carrying out various derivative contracts.

Report on Company Fundamentals: Investors get access to information on results, profit and loss statements, company specific news, announcements, share holding pattern, promoters, auditor reports, bonus, dividend and lots more.

Technical Company Charts: Every stock can be seen on a chart, both for Intraday as well as EOD analysis. Along with the charts you also get to use 52 different indicators and additional studies to do your technical analysis.

IPOs: Investors get to know each and every IPO details, the ones which are currently on, which have listed and also the ones which are due. Customers can get every bit of information related to these IPOs.

After Market Orders: Many brokers allow the customer to place orders after and before the market hours ie before 9.55am and after 4.15pm. This facility will be of very useful for the customers who can predict the market even after or before the trading hours.

Market exposures are the multiple received against the margin money. The exposure varies from brokers to broker. Some brokers provide exposure against the shares lying in the Depository Participant (DP) account also called as De mat account.

The share brokers are not only confined themselves to the above said services they are also providing much more personalized services to their customers i.e. Personalized investment advice, Finance against securities, investors camp,

Survival of any service institution is purely based on the customer's satisfaction. There are number of services offered by the share brokers the most important services are analysised. The customers are very much satisfied about IPO facilities offered by the service providers. The customers are also happy with the research report and trading software. Most of the customers are having problems with the service providers relating to their market exposure. They were also not very happy with mobile trading facilities offered and derivatives report. The ranks express the view that the modern services are not reaching properly and customer's satisfaction is also poor. Share brokerage firms in India made much progress in pursuing growth and building professionalism in operations.

The brokerage industry being very dynamic, changes could be rapid and so as the challenges that emerge from time to time. As domestic finance matures and greater flow of cross border flows continue, new market segments will come into force, which could benefit the domestic brokerage firms, if they are well prepared. Brokerage firms had newer opportunities in the form of commodities futures, distribution of insurance products, wealth management, mutual funds etc, and as the market momentum continues, broking firms will have an opportunity to introduce a wider number of products also. At this juncture it is essential that share brokers must care a great deal about the customers and their satisfaction.


Investor's Satisfaction on Service Provider and their Services.

Several brokers are extending benefits of online trading through creation of separate windows to satisfy the customers. The customer satisfaction is the key for success of any firm. The researcher has made factor analysis to know the relationship between variables.

The above table explains the relationship between the various share brokers and the customer's satisfaction towards their service offerings. The tables explain the customers are having a positive opinion towards their service providers since the correlation matrix revels in positive values.

The above table shows the relative and cumulative amount of variance explained by each factor. The analysis revels that the variance for the factor 1 (Service Quality) has the high degree of variance when it has been compared with other factors.

Communality is the percent of variance in a variable that is accounted for by the retained factors. The study reveals that communality variance higher for Emkay Financial Services (95%) and for ICICI Direct it is less (36.5).

The factor matrix presented above is the result of rotating the factor matrix. In this case Varimax rotation was used. The research reveals that the customers satisfaction towards various services provided by the share brokers. The level of customer satisfaction is high for the share brokers like Kotak Securities (0.8197), India bull Financial Services (0.8925), Angel Broking ltd (0.8732), Giojit Securities (0.9481), Mothilal Oswal (0.9301) Emkay Services (0.9733), Stock Holding (0.8540) and Others (0.8315). The customers' satisfaction is low in the case of ICICI Direct (0.5630) India Info Line (0.5512) Karvy (0.4774), Reliance money (0.5293).

Concluding Remarks

According to Hand book of statistics on Indian securities market 2008, Securities &Exchange Board of India had been received about 33, 76,888 compliant from investors during the period 1991-92 to 2007-08. This is about an average of 1, 98,640 Compliant per year, which is about 800 compliant per treading day. This shows the customers' dissatisfaction towards the service provider and the regulatory norms.

* The share of corporate brokers to the total stock brokers increased marginally to 44.1 per cent in 2007-08 from 43.5 per cent in 2006-07.

* An average of 58 investors prefers to invest in the bank, 51 in Gold and 74 in insurance. Currency market and commodity market are not very popular among the Indian investors.

* Service quality is a concept that has aroused considerable interest in the share broking institutions in both defining it and measuring it.

* The customers are very much satisfied about IPO facilities offered by the service providers.

* The level of customer satisfaction is high for the share brokers like Kotak Securities (0.8197), India bull Financial Services (0.8925), Angel Broking ltd (0.8732), Giojit Securities (0.9481), Mothilal Oswal (0.9301) Emkay Services (0.9733), Stock Holding (0.8540) and Others (0.8315). The customers' satisfaction is low in the case of ICICI Direct (0.5630) India Info Line (0.5512) Karvy (0.4774), Reliance money (0.5293).

There is a growing surge of corporate memberships (92% in NSE and 75% in BSE), and the scope of functioning of the brokerage firms has transformed from that of being a family run business to that of professional organized function that lays greater emphasis on observance of market principles and best practices. Brokerage firms are giving importance to training on skill sets of the service employees that could prove to be beneficial in the long run to retain the customers. With the nature of markets and products becoming more complex, it becomes imperative for the broking firms to keep their staff continuously updated with latest development in practices and procedures. Greater emphasis on aspects such as research and analysis is giving scope for in-depth training and skills sets on topics such as trading programs, valuations, economic and financial forecasting and company research.

Corresponding Author

Sasi Kumar can be contacted at:

K.C. John Sasi Kumar and P. Vikkraman

Anna University, India
Table 1: Grievances Received from the investors

Year      No. of Grievances Received

1991-92              18794
1992-93             110317
1993-94             584662
1994-95             516080
1995-96             376478
1996-97             217394
1997-98             511507
1998-99              99132
1999-00              98605
2000-01              96913
2001-02              81600
2002-03              37434
2003-04              36744
2004-05              54435
2005-06              40485
2006-07              26473
2007-08              54933

Source: Hand book of statistics on Indian securities market 2008

Table 2: Exchange-wise Stock Brokers Registered with SEBI

                    As on March 2007

                                 Number of
Stock         Total Number of    Corporate
Exchange       Stock Brokers      Brokers

Ahmadabad           317             153
Bangalore           256             125
BSE                 901             722
Bhubaneswar         216              19
Calcutta            960             204
Cochin              432              80
Coimbatore          135              48
Delhi               374             213
Gauhati             104               3
ISE                 925             336
Tripura             492              18
Ludhiana            293              85
MPSE                174              35
Madras              181              71
NSE                1077             988
OTCEI               752             574
Pune                188              55
UPSE                384              82
Vadodara            311              64

                   As on March 2008

                                 Number of
Stock         Total Number of    Corporate
Exchange       Stock Brokers      Brokers

Ahmadabad           321             157
Bangalore           256             124
BSE                 946             767
Bhubaneswar         214              19
Calcutta            957             204
Cochin              435              80
Coimbatore          135              48
Delhi               374             213
Gauhati             103               3
ISE                 935             245
Tripura             488              18
Ludhiana            297              85
MPSE                174              34
Madras              181              71
NSE                1129            1039
OTCEI               714             551
Pune                188              55
UPSE                354              78
Vadodara            311              64

Source: Source: Hand book of statistics on Indian securities market 2008

Table 3: Registered Intermediaries

Type of Intermediaries      As on March 2007   As on March 2008

Registrar to issue and             82                 76
  share Transfer Agent
Banker to an issue                 47                 50
Debenture Trustee                  30                 28
Merchant banker                   152                155
Portfolio Manager                 158                205
Underwriter                        45                 35
DPs-NSDL                          230                239
DPs-CDSL                          363                415
Credit Rating Agency                4                  5

Table 4: Registered Sub-brokers

                    As on March 2007         As on March 2008
Stock Exchange   Number of Sub-Brokers    Number of Sub-Brokers

Ahmedabad                   97                       97
Bangalore                  156                      156
BSE                      13482                    20616
Bhubaneswar                 17                       17
calcutta                    87                       87
Cochin                      42                       42
Coimbatore                                           21
Delhi                      292                      227
Gauhati                      4                        4
ISE                          3                        3
Taipure                     33                       33
Ludhiana                    37                       37
MPSE                         5                        5
Madras                     112                      112
NSE                      12724                    22144
OTCEI                       19                       19
Pune                       158                      158
UPSE                        14                        8
Vadodara                    38                       38

Table 5: Average number of Family members and Income

                              Average No        Average
                   No. of     of earning        family
Income            investors     Members         members

Below 10000           50            1             3.8
10001-20000           65          1.4             4.2
20001-30000          110            2             4.4
30001-40000          150          2.2             4.5
40001-50000           75          2.4             4.5
Above 50000           50          2.5               4
r                  0.095         0.96            0.75
                                0.32            0.58
Source: Primary data

Table 6
                                   Mutual      Small      Share
Income        Bank     Gold        Fund        Savings    Market

Below 10000   32       28          12          15         8
10001-20000   42       39          18          19         18
20001-30000   87       78          29          21         48
30001-40000   97       84          43          36         65
40001-50000   42       38          30          15         52
Above 50000   50       39          15          19         38
Average       58.33    51          24.5        20.83      38.16
Median        46       39          23.5        19         43
SD            26.88    23.68       11.67       7.80       21.56
Variance      722.66   560.8       136.3       60.96      464.97

              Real                 Commodity   Currency
Income        Estate   Insurance   Market      Market     Others

Below 10000   12       41          0           0          1
10001-20000   17       57          2           2          3
20001-30000   29       98          7           6          7
30001-40000   38       136         12          8          8
40001-50000   24       67          10          9          4
Above 50000   20       48          8           7          6
Average       23.33    74.5        6.5         5.33       4.83
Median        22       62          7.5         6.5        5
SD            9.24     36.11       4.637       3.55       2.63
Variance      85.46    1304.3      21.5        12.66      6.96

Source: Primary data

Table 7: Investor Profession and Investment Preference

Profession and                           Mutual      Small      Share
Investment          Bank     Gold        Fund        savings    Market

Private Employees   84       69          25          12         87
Govt. Employees     93       121         54          63         31
Self Employed       72       56          25          14         54
Professionals       47       37          21          21         36
Others              54       23          22          15         21

Profession and      Real                 Commodity   Currency
Investment          estate   Insurance   Market      Market     Others

Private Employees   42       91          4           4          2
Govt. Employees     31       100         2           1          2
Self Employed       34       90          14          12         14
Professionals       21       100         15          10         7
Others              12       66          4           5          4

Source: primary data

Table 8: Investment preference on Share Marker

                Market     Nifty       Bank
Income         (Total)     Fifty      Nifty     Nifty IT

Below 10000       8          4          2          1
10001-20000       18         10         5          4
20001-30000       48         24         12         10
30001-40000       65         40         28         14
40001-50000       52         43         32         16
Above 50000       38         24         18         12
Average           38         24         16         10

                Nifty      Nifty
Income          Junior    Mid Cap      BSE       Others

Below 10000       4          2          3          3
10001-20000       8          7          4          5
20001-30000       21         28         12         14
30001-40000       19         24         12         21
40001-50000       32         37         15         19
Above 50000       27         32         12         24
Average           19         22         10         14

Source: primary data

Table 9: Investment Amount (Rs. Average Per month)

                                    Mutual      Small     Share
Income         Bank      Gold        Fund      Savings    Market

Below 10000    1864      1624         689         784       582
10001-20000    2089      1950         748         854       739
20001-30000    2850      2415         954         987      1124
30001-40000    2800      2200        1230        1000      1400
40001-50000    4210      3125        1500        2000      3450
Above 50000    5200      4012        3200        1800      4812
r               1        0.99        0.93        0.73      0.92

               Real                Commodity   Currency
Income        Estate   Insurance    Market      Market    Others

Below 10000     540       621           0           0       500
10001-20000     600       700         350         320       521
20001-30000     800       921         500         514       321
30001-40000    1240      1230         425         542       452
40001-50000    3200      2140         625         687       514
Above 50000    4125      2560         900        1120      1500
r              0.99      0.99        0.87        0.98      0.73

Source: primary data

Table 10: Investment in Share Market

                Nifty       Bank                 Nifty
Income          Fifty      Nifty     Nifty IT    Junior

Below 10000      100        120          0        220
10001-20000      120        139          0        250
20001-30000      150        170          0        400
30001-40000      200        200          0        350
40001-50000      700        450        200        640
Above 50000     1100        700        362        680

Income         Mid Cap      BSE       Others

Below 10000      142          0          0
10001-20000      150                    80
20001-30000      350                    54
30001-40000      250        100        300
40001-50000      580        200        680
Above 50000      690        380        900

Source: primary data

Table 11: Factors considered for selection of a specific share broker


Factors                              1     2     3     4     5

Service quality                    216   126    84    27    31
Popularity of the share brokers     48    98    34    87    46
Service providers                   27    42    42    45    54
Service facility                    12    33    41    42    63
Technology                          49    51    48    55    54
Price                               15     9    24    42    21
Service products offered            26    12    27    54    32
Communication                        9     7    24    25    24
Advertisement                        6     7    21    14    41
Investment advises                  21    24    31    19    42
Promotion schemes                    7     9    27    17    21
Customer care                       24    42    43    15    15
Service delivery process            12    15    27    31    24
Service standards                   28    25    27    27    32

Source: Primary data

Table 12: Investor's satisfaction towards their service providers

Share brokers                                              Rank

ICICI Direct                                  104           6
Kotak Securities                              118           2
India info line                               129           1
Karvy                                          90           12
Reliance Money                                 98           10
Indi bull financial                           102           9
Angal broking ltd                             104           6
Giojit Securities                             116           3
Mothilal Oswal                                105           5
Emkay Global Financial Services                97           11
Stock holding Corporation of India Ltd        104           6
Others                                        163           4

Source: Primary data

Table 13: Correlation Matrix

    1        2        3        4        5

1   1.0000   0.8451   0.9063   0.0648   0.0087
2   0.8451   1.0000   0.8409   0.4066   0.2460
3   0.9063   0.8409   1.0000   0.0562   0.1898
4   0.0648   0.4066   0.0562   1.0000   0.4686
5   0.0087   0.2460   0.1898   0.4686   1.0000

Table 14: Investor's satisfaction

Factors                Weighted Average Score   Rank

Research report                374.25             2
Security news                   335               7
Intraday call                  322.75            10
Daily technical View           330.5              9
Morning Corporate News         311.5             15
Weekly tech Report             337.5              7
Sectorial report               317.75            14
SMA Alerts                     292.5             16
Trinity Acc                    344.25             6
Call & trade                   368.75             4
Trading software               372.5              3
M-trade                        261.5             19
Stock ideas                    274.25            17
Derivative Report              265.25            18
Portfolio Advice                318              13
Com rep                        321.25            12
Tech                           323.75            11
IPO                            397.5              1
After Market Orders            360.25             5
Market Exposure                251.5             20

Source: primary data

Table 15: Correlation Matrix

Share          ICICI    Kotak    India                Reliance
Brokers        direct   Sec.     info line   karvy    money

ICICIDirect    1.00     0.6364   0.1559      0.0424   0.5181
Kotak Sec.     0.63     1.0000   0.3961      0.2236   0.5152
India. Info.   0.15     0.3961   1.0000      0.5894   0.5301
karvy          0.04     0.2236   0.5894      1.0000   0.4413
Reliance       0.51     0.5152   0.5301      0.4413   1.0000
Indi bulls     0.40     0.6441   0.4302      0.3671   0.3893
Angel          0.35     0.6840   0.4732      0.4610   0.4431
Giojit Sec.    0.52     0.7635   0.5142      0.4707   0.4693
Mothilal       0.48     0.7999   0.5088      0.3808   0.4025
Emkay          0.58     0.8026   0.5091      0.4755   0.4385
SHC ltd        0.57     0.6823   0.3265      0.3353   0.2918
Others         0.46     0.6821   0.2225      0.3254   0.3522

Share          Indi bull   broking   Giojit   Mothilal
Brokers        financial   ltd       Sec.     Oswal

ICICIDirect    0.4096      0.3568    0.5232   0.4881
Kotak Sec.     0.6441      0.6840    0.7635   0.7999
India. Info.   0.4302      0.4732    0.5142   0.3808
karvy          0.3671      0.4610    0.4707   0.3808
Reliance       0.3893      0.4431    0.4693   0.4025
Indi bulls     1.0000      0.8396    0.7791   0.7939
Angel          0.8396      1.0000    0.9196   0.8714
Giojit Sec.    0.7791      0.9196    1.0000   0.9138
Mothilal       0.7939      0.8714    0.9138   1.0000
Emkay          0.8566      0.8117    0.8709   0.8905
SHC ltd        0.6852      0.6610    0.8118   0.7916
Others         0.6862      0.6796    0.7583   0.7530

Brokers        EGFS     SHCI     Others

ICICIDirect    0.5856   0.5720   0.4685
Kotak Sec.     0.8026   0.6823   0.6821
India. Info.   0.5091   0.3265   0.2225
karvy          0.4755   0.3353   0.3254
Reliance       0.4385   0.2918   0.3522
Indi bulls     0.8566   0.6582   0.6862
Angel          0.8117   0.6610   0.6796
Giojit Sec.    0.8709   0.7916   0.7530
Mothilal       0.8905   0.8118   0.7583
Emkay          1.0000   0.8706   0.8594
SHC ltd        0.8706   1.0000   0.9162
Others         0.8594   0.9162   1.0000


    Initial   Final    Common Var. %   Unique Var. %

1   0.8832    0.9301      93.008           6.992
2   0.8708    0.9102      91.020           8.980
3   0.8866    0.8896      88.956          11.044
4   0.5786    0.8967      89.672          10.328
5   0.4080    0.2486      24.860          75.140

Rotated Factor Matrix

         Fac1       Fac2

1      0.9643 *   -0.0119
2      0.8752 *    0.3798
3      0.9414 *    0.0575
4      0.0451      0.9460 *
5      0.0845      0.4913
Var.   2.737       1.139

Factor Importance

Factor   Eigenvalue   Variance %   Cumulative %

1         7.38309       61.526        61.526
2         1.02454        8.538        70.064
3         0.48974        4.081        74.145
4         0.29050        2.421        76.566
5         0.08761        0.730        77.296
6         0.07966        0.664        77.959
7        -0.04086
8        -0.06880
9        -0.11360
10       -0.15826
11       -0.18409
12       -0.38189

Stop when cumulative explained variance = 80%

Minimum allowed eigenvalue = 0.50000

Number of factors retained = 1


                                              Common   Unique
                           Initial   Final    Var. %   Var. %

ICICI Direct               0.6364    0.3650   36.503   63.49
Kotak Securities           0.8026    0.6903   69.027   30.9
India Info line            0.5894    0.7345   73.445    6.55
Karvy                      0.5894    0.4860   48.600   51.40
Reliance Money             0.5301    0.3641   36.413   63.58
Indi Bull Financial        0.8566    0.6882   68.817   31.18
Angal Broking ltd          0.9196    0.7693   76.933   23.06
Giojit Securities          0.9196    0.8992   89.919   10.08
Mothilal Oswal             0.9138    0.8669   86.692   13.30
Emkay Financial Services   0.8905    0.9525   95.246    4.75
Stock Holding India ltd    0.9162    0.8091   80.909   19.09
Others                     0.9162    0.7826   78.258   21.74

Communalities converged after 36 iterations.

Rotated Factor Matrix


ICICI Direct            0.5630
Kotak Securities        0.8197 *
India Info Line         0.5512
karvy                   0.4774
Reliance money          0.5293
India Bull Financial    0.8295 *
Angel Broking ltd       0.8732 *
Giojit Securities       0.9481 *
Mothilal Oswal          0.9301 *
Emkay Services          0.9733 *
Stock Holding           0.8540 *
Others                  0.8315 *
                   Var. 7.383
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Author:Kumar, K.C. John Sasi; Vikkraman, P.
Publication:Global Business and Management Research: An International Journal
Article Type:Report
Geographic Code:9INDI
Date:Apr 1, 2010
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