Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
BY:
B Masarath Zaiba
Reg.no. N1711287
Submitted to
VIJAYANAGARA SRI KRISHNADEVARAYA UNIVERSITY,
BALLARI
In partial fulfilment of the requirement of the award of the degree of
Bachelor of Business Administration
Ward no.35, Ganesh nagar, opp. KSRTC Bus Depot, Siruguppa Road,
BALLARI-583101
1
Online Share Trading as a Risk Instrument 2020
CERTIFICATE
Declaration
Place: Ballari
Date:
B Masarath Zaiba
(Register no:N1711287)
BBA 6thsem
Ballari Business College,
Ballari
CHAPTER 5 1.Finding
2.suggestions 41-45
3.Conclusion
4.Bibilography
5.Questionnaire
CHAPTER :1
Introduction
INTRODUCTION
THE dimensions of business finance have undergone phenomenal transformation during the last
few decades until the recent past, business finance was considered as an economic activity
concerned with procurement of funds for business purpose and the financial manager was
considered as keeper of books of accounts and provides of capital needed by the enterprise.
But in today's world his role has become vital in the organisation this report specifies the
online share trading with the help of derivative instruments to mitigate losses.
Methodology of research;
*TYPE OF RESEARCH:
RESERCH DESCRIPTION:
Descriptive research is used for the study.
*Secondary Data
Sampling Technique
simple random sampling technique was used while compiling information provided in the
survey. In addition to the sampling a detailed study is made on the various activated carried on in
the stock exchange.
*sample size
The samples are taken from two categories of people.
*Brokers
*Investors
A total of 20 were collected from brokers to analyze the various speculative activities they
various speculative activities they performing in the India info line.
A detailed study was conducted on the broker's awareness level and usage of derivatives
instrument.
A total of 10 samples were collected from the investors who are operating with derivatives
instrument.
*It covers only share trading, commodity trading and currency trading is not taken for study.
Derivative instruments only are taken for assessing the risks involved in share trading
*It is not possible to cover each and every client of each and every broking house and hence and
hence a sample of 30 people was taken.
*The market share of all the online share trading products is only for the city of Bangalore. The
market share of all the companies may differ in different cities. It may also differ nationally.
CHAPTER:2
INDUSTRY PROFILE
Capital market is the backbone of any country's economy. It facilitates conversion of savings to
investments. Capital market can be classified as primary and secondary market. The fresh issue
of securities takes place in primary market and trading among investors takes place in secondary
market. Primary market is also known as new issues market. Equity investors first enter capital
market thought investment in primary market. In india, common investors participating in the
equity primary markets increased continuously and the post independence period till the year
1995.After 1995,there is a continuous slumps experienced by the primary markets offering
equity. The main reason for slump is lack of investor confidence in the primary market. So it is
important to understand the causes and measures of revival of investor confidence leading to
capital mobilization and investment in right avenues creating, economic growth in the country.
Globally, there are increases evidences to suggest that investor confidence has assumed an
important role in the economic development of a country. The economist (1998) indicates that a
lot of issues need to be addressed to make capital markets safer. Transporency, strengthening
financial system and managing crises are the issues which cannot be quickly fixed. But they add
up to a stronger system.
"The securities market is the market for equity, debt and derivative. The securities
market has essentially three categories i.e. The issuer of securities, investors in the securities and
the intermediaries. The issuers are borroers or deficit savers, who issue securities to rise funds.
The investors, who are surplus savers, deploy their saving by subscribing to these securities. The
intermediaries were the agents who match the need of users and suppliers of funds for a
commission. These intermediaries pack and unpack securities to help both issuers and investors
to achieve their respective goals. There are a large variety and number of intermediaries
providing various services in the India securities market.
This process of mobilization of resources is carried out under the supervision and
overview of 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 interest of the investors. The regulator ensures a high
service standard from the intermediaries and supply of quality securities and non manipulated
demand for them in the market.
* 9040 brokers in cash segment and 1064 in derivative segment of the market.
COMPANY PROFILE
Trader Terminal (TT)
Trader Terminal is for the dedicated day traders, who churn their portfolio on minor movements
in the market, sometimes several times a day. Their rapid and high volume trading requires a
powerful interface for lightning fast order execution. They monitor marked to market positions
on a minute-to-minute basis, with facilities for panic exit. They need all the analysis
-fundamental and technical, market gossip, price and volume information and much more-all the
one click.
Chapter-3
THEORITICAL BACKGROUND
OF STUDY
Derivatives:
It's a financial instruments or product where the value will be derived from the underlying assets
such as a commodities, securities, interest rate, exchange rates, and share price index. Thus
derivatives are very important tools for risk management
*Mutual funds
*Future contract
*Forward contract
*options
VISION:
To become the most respected company in the financial services space in India.
VALUES:
Values are Indian feline are summarised in one acronym: GIFTS
*Fairness in all our dealings employees, customer, vendors, and share holders all included
*Services orientation is our core value, imbibed by all the sales has well has support teams.
MISSION:
To become a full-fledged financial services company known for its quality of advice.
COMPITATORS:
1. Share khan
2. Indian bulls
3. Angel broking
SWOT ANALYSIS
STRENGTHS:
1. Wide range of financial products
WEAKNESSES
1. High risk explore as seen by conservative population
OPPORTUNITIES:
1. High income urban families
THREATS:
1. Stringent economic measures by government and RBI
Forward contract
In the Derivative market there are two kinds of market i.e. spot market and forward market, in
case of spot market where trader will be buying assets by immediately paying over the assets
value then he will be taking delivery of the assets this is about spot market.
In the case of forward market trader will be fixes the price of the particular assets
then after the certain period. Then he will making payment on whatever he agreed price, as well
as he takes. Delivery of assets
Trader will be preferring forward contract in order to avoid risk associated with particular
product i.e. Product in the sense it may be a either agriculture Product, or it may a non-
agriculture product. As we know that risk is uncertainty which is associated price of
commodities, price of product it never be a stagnant, so it keeps on changing according to the
fluctuation in the time, as well as risk is a inevitable factor which cannot be completely
eliminated But it can be minimized by using proper technique such as forward contract, future
contracts, options, swaps
Practical example I can quote here farmer is expecting that market price of cotton would come
down in future, so in order to avoid future loss, then he would be entering one month period
contract at forward rate of Rs 1000 per quintal, so after one month period he sell the cotton at Rs
1000 per quintal with a irrespective of market prices. Here farmer would gain a profit when
market price comes down below the Rs 1000, in contrast farmer would incur loss when the
market prices increases above the Rs 1000 standard definition of the Forward contract is "it's a
customized contract between the two parties for buying and selling of the underlying assets at
specified date in the future at specified agreed forward rate, such as the commodities, currency,
securities, index, stock etc."
In the case of forward contract there is no payment of the margin amounts for forward
contract, because that is customized contract so anybody can enter forward contract there was no
rules, and regulation for making a forward contract.
"In the forward contract periods of contract will be a one month contract i.e.30 days, two month
contract i.e.60days, and three month contract i.e.90days".
* There is a possibility of counter party risk, or negotiations, or conflicts between the buyer and
seller of due to the adverse price movements in the market.
* There was no standard rules and regulation for exercising the forward contract.
EXAMPLE: If the trader X has entered one month forward contract with a trader Y for buying
rice at the price of Rs 1000 per quintals, after the one month period, he would not buy the rice
has fall down to bellow Rs 1000, so due to this reason he would be terminating the one month
forward contract here there is no obligation for exercising the contract as well as parties are not
paying any kind of margins or Deposit so its not standardized contract.
FUTURE CONTRACTS
In order to overcome the problems of Forward contract in terms of performance, standards,
Liquidity, so future contract has been established.
"Future contract is a standardized contract between the two parties for buying and selling the
underlying assets at certain date in the future at certain prices. Here underlying assets such as
stocks, index, currency, securities, commodities etc.
Forward contract have been existence since quite some time, the forward contracts are trade
started first in Japan in early eighteenth century in Chicago board of trade CBOT then after
division of its it Chicago mercantile exchange CME, then after currency future contract traded in
the international monetary exchanges IME.
Initial margin
It is a certain amount that which deposited in the margin a/c whenever the investor
enters the futures contract, usually when the investors buy and sells future contract, the both
parties has to pay a certain amount i.e called margin
so when the person enters the futures contracts they would paying margin amount which
will be deposited in margin a/c, this margin a/c balance would adjusted with a according to the
performance of investors i.e profit/loss of future contract, its depend on how the future contract
has been changing and as well as the price fluctuation in end of the future contract, its depend on
how the future contract has been changing and as well as the price fluctuation in end of the each
trading day, one more thing future contract profit/loss of contract is settle daily basis not on
maturity of contracts is settle daily basis not on maturity of contracts so this process known as
mark-in-to-market"
If price increase in future contract then margin will updated according to that, If the prices
decrease in future contract then it will reduces balance in the margin a/c. so it will be informed to
the parties to maintain the balance in margin a/c at maintenance level, suppose he has not
maintaining the minimum margin then he would not be allowed to commence trading at next day
and as well as his future contract will be squared off and cancelled.
The buying of future would called as", selling of future would called as 'short position".
Generally future contract will be a one-month contract i.e.30 days, two-month contract i.e.60
days, three-month contract i.e.90 days.
In case of stock future contracts payments of margin will be 15% to 20% while for index futures
contract payment of margin will be 70% to10%
In order to exchange investors to investing in future contract, the Derivative market will allows
the investors to enter future contract which is large volume by making small investment i.e.
margin
Example:
Call option of set yam computers with strike price (exercise price) of Rs 220 expiry in February
is available at premium of Rs 5. The market lot of sat yam is 1200,it means that he talking call
options contract of Rs 264000 i.e. (220*1200)by making margin of Rs 6000
Example: The investors sold futures when the index was at 2220, if the index goes up his futures
position starts making loss, in the contract i.e index falls his futures position starts showing
profits.
Examples: spot rate of SBI shares is Rs 270 and you buy 1-month SBI futures at Rs280 investors
would gain profit, if the SBI shares prices move above the Rs 280 after 1-month.In contract
investors would be losing the profit, if the SBI shares prices falls below the Rs 280
*on expiry of future contract, if the market price goes above the Rs180, then it would be
beneficial to the investor's .in contrast if the market prices moves below the Rs 180, then it
would be the loss for investors.
Future contracts:
1. Future contract are traded in the organized stock exchanges
3. Both the parties has to requires margin payment in order to avoiding the default payments and
terminating the contracts
4. In case of futures contracts settlement will happens daily i.e end of the each trading day,
performance of future contract will be display daily
1.Standardization
A Forward contract is a tailor made contract between the buyer and seller where terms are settled
by mutual agreements between the parties. On the other hand a futures contract is standardized in
regard to the quality. quality, place of delivery of assets etc.
a. There is no secondary market for the forward contract, while the futures contract are traded on
organized exchanges, Accordingly, futures contracts are usually much more liquid than the
forward contract
2.Conclusion of contract
In forward contract is generally the buyer of the forward contract can terminate contract, in case
of market prices are not favourable to him
As same thing seller of the futures contract can buy a another contract by terminating the existing
contract, in order to offset his profit/loss position before the maturity of the existing contract, if
and only if the market prices are not favourable to him, this kind of trading are called as
Offsetting trade".
3.Margin payments:
20 Ballari Business College
Online Share Trading as a Risk Instrument 2020
In forward contract there is no payment of both parties. But in futures contract in order to
exercise futures contract both the parties has to pay margin i.e deposit and there is involve of
third party i.e "clearing house" is an agency which will be having many clearing members such
as "India info line, India bulls, karvy, sharkhan, mothilal etc.
These clearing members will give the guarantee of the performance of future contract.
4.Profit/loss settlement
The settlement of a forward contract takes place on the date of maturity so investor would be
knowing the profit/loss only on the date of maturity. in case of futures contract performance i.e
Profit/loss would be knowing at end of the each trading day, because the settlement would done
on daily basis, i.e futures contracts are follows the method called mark-in-to-market.
when the contract entered the both the parties i.e. buyer and seller has to keep a deposit in margin
a/c i.e known as initial margin depends on value of the contract. This margin amount determined
by the exchanges and clearing house according to volatility of the risk factor and demand of the
underlying assets as well as period of the contract.
Examples:
let us consider the investors who buys the futures contract on September suppose
contract size is 100 quintals and current futures prices is RS 6000 per quintal, so he has to keep a
margin of RS 6000.After the margin deposited a change in the price of the futures contract would
changes the margin value as well contract value. At the end of the each trading day the margin
a/c is adjusted to reflect the investors 'the investors position this is called as markin-to-market.
Now assume that by the end of September 2 contract will expiry, during the day futures prices
has fall down from Rs 600 to 598. investor loses 100*2=Rs 200 this is because contract for 100
quintals of wheat that the investor has agreed to buy at Rs 600 per quintal now can be sold only
for Rs 598.Thus the balance in margin a/c will be reduced by Rs 200 to Rs 5800.
In similar manner margin a/c would increase to Rs 6400 if the futures prices had instead been Rs
602 at end of contract a trade is market to market.
In marking to market day after day, it is just possible that the margin may become
too low or may go negative, to prevent this kind of situation ,an investors is to ensure a
maintenance margin, in the process of marring to market if the balance. In the margin. hence
investors would be call up for to maintain a margin at maintenance level, whatever extra money
he has depositing is called as variation margin. If suppose the investors not making deposit then
his con
Trading day Future prices Daily gain or Cumulative Margin a/c Margin cell
September loss gain or loss balance
2 600
598.20 180 180 5820
3 593.60 460 640 5360
4 594 40 600 5400
5 589.50 450 1050 4950
6 584.80 470 1520 4480 1520
Types of future contract:
There are 2 types of futures contracts:
1. Commodities futures contracts.
The first financial futures contract has traded in USA with introduction of currency futures in
international monetary funds(IMM) then to Chicago mercantile exchanges (CME)
2. British pond
3. Canadian dolor
4. Japanese yen
5. Swiss France
6. Australian Dolor
Options
Options is type of derivative which will provides the right to option holder for buying or selling
the underlying assets, such as stocks, index, currency, commodities etc.
suppose it is January now and an investors buys a march call options contract on
reliance shares with an exercise price of Rs 210 with this the investors options the right to buy
100 shares of the Reliance at rate of 210 Rs per shares on particular day in the month of march
the investors is not obliged to buy the shares, on expiry of options contract .if the market prices
goes up above the Rs 210 then it would be beneficial for him to exercises options because the
buying an reliance shares at Rs 210 and selling at Rs 220 it would be profit for the investors
2. Put Options:
put options is contract or agreement which will provides the right to the option holder for
selling of underlying assets such as commodities, or currency, shares, index, etc... at exercise
price on within the expiry of time is called as put options.
Thus one more thing that in case of put options writer has obliged to delivery the assets when
only when the if option holder would exercises the put options.
Examples:
Investors buy the march put options contract of Reliance shares at Exercise price as Rs 210
per shares here investors has right to sell the shares when and only when the options holder has
willing at the exercise price of Rs 210 on specific day in the month of march (before the expiry
period),the investors would be getting benefit when the market price of shares goes below the Rs
210 because the market price is lower than exercise price i.e.200<20.
In the contrast investors would be getting loss when the market prices of shares goes above the
Rs 240>210.
For buying or selling an option does require paying amount i.e premium,
So premium is amount ,which is given by the option holder to option holder to option writer
,option holder, is one who buys the shares ,and option writer is one sells the shares.
2. Spot price
"Spot price is also called as market price."
3. Expiry date:
"Expiry date that specified in the option contract"
2. European options:
1. American options
American options are the options that can be exercised any time up to expiration
period and most of the options are traded in India are American option.
2. European options:
Analysis
Options are the best available strategy computer to the shares market because in the share
will pay the whole amount on the sharer whereas in the options market we will pay only the
premium amount and not the whole amount in the share market we can sell the share whenever
we wish to sell but in the options market we should sell options premium goes up then if will be
profit and act the same time if the option premium comes down then there will loss on the
premium paid
Inference
In an option contract, the loss is pegged to the minimum of amount i.e.to the extent of the option
premium alone. Hence the players in the option market know that their losses can be quantified
and limited to the amount of premium paid this may also lead to high speculative. Therefore it is
very essentials that option trading must be encouraged for the purpose of hedging risks and not
for speculation.
In-the-money-options: (ITM)
An in the money option is the options which would provides the positive cash flows to
the investor if he exercising the options immediately and call options is said to be a in-the-money
options when the market price is higher than the spot price i.e. market price> strike price, so it
will advantages to exercising the options when the call options is ITM positions because it
generates the profit to the investors.
Swaps
A Swap is contract in which 2 practices agree to exchanges (SWAP) payments based on some
national principal amount. The national principal amount is not the late 1960 s as a means of
financing investment abroad in the face of exchange control regulations.
Hedging of options
A swap is an agreement between two companies to exchange cash flows in the future. The
agreement defines the dates when the dates when the cash flows are to be paid and the way the
cash flows are to be calculated. Usually, the calculated of the cash flows involves of one more
market variables.
A forward contract can be viewed as a simple example of Swap, suppose it is March 1,2000, X a
company enters into a forward contract to buy 100 ounces of gold for USD 300 per ounces in
one year. The company can sell the gold in one year as soon as it is received, the forward
contract is therefore equivalent to a swap agreement where the company pays a cash flows of the
USD 30000 on march 1, 2005 and receives a cash flows equals to 100s on the same date where S
is market price one ounce of gold.
Index construction
For a proper understanding of the futures on indices, it is necessary to have an idea about the
stock indices. An index number is a statically method by which relative changes by which
relative changes in some variable or group of variable are measured and expressed in percentage
forms. To illustrate the concept, let us consider a hypothetical share that closes at prices of Rs 50
on one day and at Rs 52 on the next day then it has registered an increases of 4% (Rs 2 on Rs
50)in a day we can express this information like this if the closing price of the share on the first
day 1 is the base period and day 2 is the current period. For day 2, the price index is stated to be
104.The index for the base period is usually taken to be 100.To continue with the example if the
price of our hypothetical share is quoted at Rs 47 on the third day, the index for day 1 is
47/50*100=94.The index of a price index can be extended to a group of shares as well, But when
Similarly the current market value for each of scrip is obtained by multiplying the prices of the
shares by the numbers of shares outstanding.
The index on given day is calculated as the percentage of the aggregate, market value of the
same set of companies as are included in the base period calculation.
An index
Number fluctuates due to several corporate actions like bonus issues and right issues, divided
issues, converting the bonds into equity shares, converting the debentures into equity shares.
For example
When a company issues shares, the new weighing factor would be the number of equity shares
factor would be used while computing the index from the date when the change becomes
effective. Similarly, when a company makes Right issues, its weighing factor will be increased
by the number of additional shares issued.
Let us suppose that a company makes rights issues, which increases the market value of the
shares of that company by Rs 50 crores. Suppose that the existing base year average is Rs
2680crore and the aggregate market value of all the shares included in the index before the Right
issues was made is Rs 5264 crores the new base year. Average would then be given by
=2705.46 crores
2. Bills of payments
3. Interest Rate
4. Corporate actions
Right issues
Bonus issues
Dividend issues
Stock index is the barometer of the stock market, so its shows the market fluctuations in terms of
the market prices of the shares, i.e the whether the stock prices are moving downward or moving
upward....Hence the stock prices as well as changes according to the certain corporate actions
such as Bonus issues, Right issues, converting the bond into Equity, converting the debentures
into Equity shares, As well as the issuing of Dividend also it will influence the stock index.
Investors will be investing in stock market by seeing the stock index as well as the market
situational conditions such as the
1. BULLISH MARKET
2. BEARISH MARKET
It is the one of the market situational conditions where the investors will be investing based on
this condition here investors will be buying the shares of the company by expecting the market
prices of the shares will goes up.
Example:
Suppose market prices of Reliance shares will goes up in the futures, so the investors will be
buying call option s of Reliance shares. When the market fluctuates then above the exercise
prices then he would be getting benefits, or else he would be getting loss.
2. Bearish market
It is the one of main important situational conditions of market by which the investors will be
investing in stock market, so here that investors will be expecting that market price will comes
down in the futures, so what he would do that he buying the put options in order to sell the
existing shares, as in order to minimizing the risk over the loss.
Example:
Suppose that investors having the 1000 of the Reliance shares and he expecting that market
prices of the Reliance shares will comes down in the futures, so what he will do that investors
would buying put options in order sell the shares of the Reliance in order to minimizing the risks
over the loss.
Chapter 4:
25-30 5 10%
31-40 15 30%
41-50 20 40%
51-60 5 10%
Total 50 100%
Percentage
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
25-30 31-40 41-50 51-60 60 and above
Percentage
Interpretation:
From the above analysis it can be interpreted that 25-30 age group of respondents 10% and 31-40
age group invest up to 30%, and most of investments comes from age group of 41-50 i.e of 40%
and age group from 51-60 invest about 10% and age group 60 above invest about 10 %
respectively.
percentage
80
70
60
50
40
30
20
10
0
male female
percentage
Interpretation :
From the above analysis it can be found that Male respondents invest 70% compare to female
respondents of 35% in investments.
PUC 5 10%
Graduate 30 60%
Total 50 100
percentage
70%
60%
50%
40% percentage
30%
20%
10%
0%
PUC Graduate Post graduate
Interpretation: from the above analysis it can be found that post graduate investors invest about
15% of investment in shares. 60% graduates and 10% of respondents who have studied PUC
invest.
Employed 15 30%
Professional 20 40%
Others 05 10%
Total 50 100%
percentage
45%
40%
35%
30%
25% percentage
20%
15%
10%
5%
0%
Employed Self employed Professional Others
Interpretation: from respondents are employed and 20% of respondents are self employed and
40% respondents are professional and 10 % of respondents are others the above analysis it can be
interpreted that 30% of respondents of others
total 50 100%
Percentage
45%
40%
35%
30%
25% Percentage
20%
15%
10%
5%
0%
Less than 1 lac 1-3 lac 3-5 lac Above 5 lac
Interpretation:
An the above analysis it can be interpreted that annual group of respondents is about 40% in less
10 in less than 1 lakhs income, and 30% of respondents are in the category s lakhs and 20% of
the customer are in 3-5 lakhs and 10% of customer are under above 5 Lakhs category.
percentage
35%
30%
25%
20%
percentage
15%
10%
5%
0%
Future needs Business Reasons for Health care Tax benifit
savings
Interpretation:
Business, 10% Health care, 20% for Tax Benefit. From the above the analysis it can be
interpreted that the reason for savings for the respondents is 30% for Investment purpose, 20%
Future Needs. 20 % for tax benefits.
Chapter-5
FINDINGS,SUGGESTIONS AND
CONCLUSION
options
This concepts is not familiar to the Indian scenario, but a few brokers in Bangalore dealt with
options and they feel that options writing is a source of additional income for the portfolio
managers with large portfolios of securities. It is also quiet flexible and simple.
Findings of objects-2
*Derivatives are a new concept, but it is catching up faster because of the high volatility in the
market Derivatives provide facility for hedging in most cost efficient way against risk. Hedging
is the equivalent of insurance facility against risk from the market price variation and so on
*It has been analyzed from the study variables, and seen the variables types of risks, i.e. market
risk, liquidity risk, credit risk, systematic and unsystematic risk involved in trading of securities
*As compared to developed countries, developing countries face greater risks. Firstly, the
options available to them for accessing variation financial market are limited, due either to their
unfamiliarity with international banks and merchant banks or to their poor credit rating
moreover, developed countries are required to pay higher spreads over the benchmark interest
rates in different markets.
*For trading purpose though a new financial instruments called derivatives emerged the prime
motive of derivatives is to minimize risk involved in the transaction of the underlying asset,
country etc. Hedging is also being used to reduce risk while trading in derivatives though those
instruments are working efficiently to attain its purpose of reducing risk.
*Derivatives allow us to manage risks more efficiently by unbinding the risks and allow either
hedging (or taking on one more if desired) risk all a time
Initially, it was felt that futures markers merely offered a convenient way to hedge against risks
that could potentially arise in the futures and the futures trading was a risk sharing mechanism,
which enabled such hedging.
*Later however, economists came around to the view that speculation was of significant
importance and that in fact players in the futures market were often both hedging and
speculators. A firm for example, might hedge against its foreign exchange exposure with respect
to its imports and might simultaneously speculate in the forwards /futures markets using the
foreign exchange earnings from its imports and might simultaneously speculate in the
forwards/futures market using the foreign exchange earnings from its exports.
*Further, these middlemen often deal with only large traders who have bank balances, thus
reducing the risk of their portfolio. Futures clearing housed on the other hand, mark asset to the
market daily and require traders to maintain minimum margins with the house. The margin is
debited or credited daily, depending on whether the investors loses or gains at the end of the day
trading and margin calls are made if the margin requirements is not met the portfolio have been
marked to the market.
FINDINDS OF OBJECTIVES
*Majority of the investors fall between the age group of 25-65 and above, who usually have a
annual income ranging between Rs 1 lakh to Rs 3 lakhs with an annual savings of less than Rs
50000/-
*Almost all the investors prefer and read economic times, business line to get more information
on the investment opportunities in addition to other reason like to get latest information, easy
availability to gain knowledge
*Most of the investors are into the habit of investing especially in equity shares and a good
proportion of others invest in real estates, mutual- funds, derivatives and fixed deposits and those
investors generally prefer tenure of 6months to 2 year and above.
*Majority of the investors except a 20% to 30% of returns on their investments and they feel the
most input factors to influences their investment decision is safety and good returns in addition
to other reasons being liquidity, tax benefits and less risk.
*Majority of the investors consult for broker for their investment and feel confidence with
brokers for their investment and certain people believes in self and does not consult; they refer
the business daily and predict self.
*Majority of investors did not know of the existence of derivatives market, but a very few
investors were aware of the new financial instruments of derivatives.
*It was found that hardly few investors who knew the derivatives had invested most of the
people wanted to gain constantly from their investments with minimal risks and sought after
safety in their investments as well.
SUGGESTIONS
*Even most of the investors seem to be familiar with this concept of derivatives, but are hesitant
to transact so it is the duty of the brokers to help the investors, understand these concepts and see
that they transact in them
*The central government should help the brokers should encourage the brokers by fixing better
margins of earnings to the brokers
*It is found that majority of the investors invest only in equity shares so it is recommendation
that investors are motivated by the exchange to invest in other areas like debentures, bonds,
Mutual- funds, preference shares.
*It is found even though investors who aware of derivatives they do not use if efficiently,
therefore, it is recommended that with the help of professional investors should learn the
advantages of hedging and hedge at the right time so on to minimize risk and reap better benefits.
*Many of them feel that hedging risk through derivatives has helped in reducing risk and
sometimes even substantial risk can be reduced, it is recommended that examples to use
instruments.
*It is found that many are of the opinion that derivatives is completed but useful and some feel
the awareness level is low but it help in reducing risk, therefore, it is recommended that all the
exchanged should introduce more sessions or classes to educate individuals on this concepts and
try to provide knowledge because these instruments will solely help in growth of the Indian stock
market by reducing the underlying asset.
*It is found the most of the investors prefer investment transactions rather than speculative
transactions, the reason being risk, so it is recommended that the investors should be educated
about derivatives and the various ways it help in reducing risks.
CONCLUSION
The major derivatives products have been classified as under though not very high it is still
growing stage.
BIBLIOGRAPHY:
WWW.derivatives.com
WWW.goolge.com
WWW.valuenotes.com
WWW.capitalideasonline.com
WWW.sebi.gov.in
WWW.rbi.in
Study materials:
2. Age group
25-30 ( )
31-40( )
41-50( )
51-60( )
60&Above( )
3. Gender
Male ( )
Female ( )
4. Education Qualification
PUC ( )
Graduate ( )
Pos- Graduate ( )
others ( )
Please Specify....
5. Occupation
Employed ( )
Self - Employed ( )
Professional ( )
Please Specify...
Equity share ( )
Mutual funds ( )
Bonds ( )
please Specify....
Safety ( )
Liquidity ( )
Return ( )
tax benefit ( )
less risk ( )