Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Undertaken at
Submitted By
C.ASWIN KUMAR
ROLL NO. 09BSHYD1044
Submitted To
Mr. G.K.SRIKANTH
STUDENT’S DECLARATION
Submitted By
C.Aswinkumar
ACKNOWLEDGEMENT
Regards
C.Aswinkumar
TABLE OF CONTENTS
ABSTRACT……………………………………………………………………………….5
MAIN TEXT………………………………………………………………………………7
COMPANY PROFILE……………………………………………………………………7
• ABOUT ANARATHI……………………………………………………………..7
• MILESTONES…………………………………………………………………….8
• AR CORE STRENGTHS………………………………………………………..11
• MANAGEMENT TEAM………………………………………………………..11
INTRODUCTION……………………………………………………………………….14
• BEAR…………………………………………………………………………….15
• BULL…………………………………………………………………………….15
• CONTRACT NOTE……………………………………………………………..15
• ARBITRAGE…………………………………………………………………….16
• MAJOR ENTITES INVOLVED IN STOCK MARKET………………………..16
INTRODUCTION TO BSE-SENSEX…………………………………………………..17
• BSE INDICES…………………………………………………………………...18
• TRANSACTIONS ON INDIAN STOCK EXCHANGE………………………..19
• TRADING TYPES………………………………………………………………20
LIST OF ILLUSTRATIONS…………………………………………………………….19
• TABLE 1.............................................................................................................................19
• TABLE 2……………………………………………………………………………………………………………………….25
• TABLE 3……………………………………………………………………………………………………………………….27
• GRAPH 1………………………………………………………………………………………………………………………24
• GRAPH 2………………………………………………………………………………………………………………………36
LITERATURE RIVIEW………………………………………………………………..39
(REFERENCES)
REFERENCES………………………………………………………………………….41
ATTACHMENTS………………………………………………………………………44
ABSTRACT
First part(what has done):
The project basically involves an analysis of financial markets and financial Instruments
and measurements of financial risk by various risk analysis factors, by comparing various
types of portfolios & measure the Risk & Return. The returns will be considered based on
the performance of the financial markets and the past ten financial years returns i.e.., (01-
04-2000 to 31-03-2010) has taken for the anlysis.The financial markets which has taken
into the analysis are,
Once this was done, and before analyzing the financial performance of the markets,Some
theoretical concepts of Finance were revisited. This includes an understanding of the
objectives of Financial Management , the Risk and Return Factor, Valuation of bonds ,
forecasting the financial performance of the markets ,and understanding the various
concepts like hedging , futures trading , forward trading etc..,
The purpose of this reading was to refresh the concepts learned till now in the MBA
curriculum and to apply these concepts in understanding the firm & markets to analyze its
operations better.
A brief analysis of the financial markets in comparison with the analysis of these new
instruments such as currency rate futures and interest rate futures which are recently
implemented in the market to ascertain the extent the risk can be minimised through these
instruments, if it is then whether it is for the long term or medium or short term.
In the subsequent stages of the project the relationship between the Gold and the
USD,USD and INR to know whether these relationships are affecting the stock market
and the analysis of these in the previous years .
So that by doing this analysis we can easily find whether the market has to come up with
some new financial instruments or not, if it is required then what can be the instruments
whether in currency or interest rates. For example, what are all the interest rate futures
available in the market whether it is easy to liquidate or not. Since we are not having
corporate papers in the markets so these are the instruments which in turn be used in
determining optimum Financial Instruments in the market for the better returns.
This helps the organisation to suggest which type of financial instruments has to be their,
in their portfolios to increase profits of the wealth clients as well as to increase the wealth
of the organisation.
COMPANY PROFILE
Organization History:
¾ Company Profile
¾ Milestones
¾ AR Core Strengths
¾ Management Team
I. About AnandRathi
AnandRathi (AR) is a leading full service securities firm providing the entire gamut of
financial services. The firm, founded in 1994 by Mr. AnandRathi, today has a pan India
presence as well as an international presence through offices in Dubai and Bangkok. AR
provides a breadth of financial and advisory services including wealth management,
investment banking, corporate advisory, brokerage & distribution of equities,
commodities, mutual funds and insurance, structured products - all of which are
supported by powerful research teams.
The firm's philosophy is entirely client centric, with a clear focus on providing long term
value addition to clients, while maintaining the highest standards of excellence, ethics
and professionalism. The entire firm activities are divided across distinct client groups:
Individuals, Private Clients, Corporate and Institutions and was recently ranked by Asia
Money 2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich.
In year 2007 Citigroup Venture Capital International joined the group as a financial
partner.
Clients can trade through us online on BSE and NSE for both equities and derivatives.
They are supported by dedicated sales & trading teams in our trading desks across the
country. Research and investment ideas can be accessed by clients either through their
designated dealers, email, web or SMS
II. Milestones:
1994:
1995:
1997:
1999:
2001:
2002:
2003:
2004:
2005:
2006:
Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by
Asia Money 2006 poll
Ranked 9th in the Retail Category having more than 5% market share
Completes its presence in all States across the country with offices at 300+
locations within India
2007:
2008:
2009:
III. AR Core Strengths:
Breadth of Services: In line with its client-centric philosophy, the firm offers to its clients
the entire spectrum of financial services ranging from brokerage services in equities and
commodities, distribution of mutual funds, IPO’s and insurance products, real estate,
investment banking, merger and acquisitions, corporate finance and corporate advisory.
Clients deal with a relationship manager who leverages and brings together the product
specialists from across the firm to create an optimum solution to the client needs.
IV. Management Team:
In-Depth Research: Our research expertise is at the core of the value proposition that we
offer to our clients. Research teams across the firm continuously track various markets
and products. The aim is however common - to go far deeper than others, to deliver
incisive insights and ideas and be accountable for results. The senior Management
comprises a diverse talent pool that brings together rich experience from across industry
as well as financial services.
Chartered Accountant
Past President, BSE
Held several Senior Management positions with one of India's largest
industrial groups
ACQUISITION:
ANZ Grind lays : $ 1.34 bn from August 2000.
Standard Chartered PLC is listed on both the London Stock Exchange and the Stock
Exchange of Hong Kong and is in the top 25 FTSE-100 companies, by market
capitalization.. Offices of ANANDRATHI are in 197 cities across 28 states & it has also
branches in Dubai & Bangkok with more than 44000 employees. It has daily turnover in
excess of Rs.4bn. It has 1, 00,000+ clients nationwide. It is also leading distributor of
IPO’s. In India where ANANDRATHI is present in 21 STATES:
Andhra Pradesh
Assam
Bihar
Chhattisgarh
Delhi
Goa
Gujrat
Haryana
Jammu & Kashmir
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
Uttaranchal
West Bengal
LIST OF PRODUCTS :
¾ Demat Accounts
¾ Mutual Funds
¾ Derivatives
¾ Commodities
¾ Bonds
¾ Trading Account
¾ Insurance
VISION:
INTRODUCTION
The Main objective of the project is mainly based on “ Analysis of Financial markets” is
to understand the various markets, and Stock market is mechanism that allows people to
buy and sell securities , commodities , and fungible items of value at low transaction
costs and at prices that reflects the efficient market hypothesis. Markets work by placing
many interested buyers and sellers in one "place", then it will be easier for them to find
each other. A market which relies primarily on interactions between buyers and sellers to
allocate resources is known as a market economy.
9 Collection of money
9 Minimum subscription
9 Record keeping
a) Bear:
A stock market operator who expects share prices to fall in the immediate future and
keeps selling with the intention to pick up the shares later at a lower price for actual
delivery causing selling pressure and lowering the prices further.
b) Bull:
A stock market operator who expects share prices to rise and keeps buying to sell the
shares later at higher price causing buying pressure and increasing the prices further.
c) Contract note:
Contract Note is a document given by the stockbroker to his clients giving particulars of
the securities bought / sold, rate and date of transaction and the broker’s commission. The
broker sends the contract note after executing the client’s order as an agreement. The
contract note must be carefully preserved. It also serves as an evidence to income tax
authorities.
d) Arbitrage :
It means buying shares on one stock exchange at a lower rate and selling the same on
other stock exchange at a higher price.
Activities in the Secondary market:
9 Trading of securities
9 Risk management
TABLE 1:
30% drop Any time during day Close for the day
i. BSE Indices:
BSE in 1986 came out with stock index sense that subsequently became the barometer of
the Indian Market. All BSE Indices are reviewed periodically by the BSE Index
Committee. This Committee which comprises eminent independent finance professionals
frames the broad policy guidelines for the development and maintenance of all BSE
indices. The BSE Index Cell carries out the day-to-day maintenance of all indices and
conducts research on development of new indices. The values of all BSE indices are
updated on real time basis during market hours and displayed through the BOLT system,
BSE website and news wire agencies.
BSE displays the information based on Price Earning Ratio, the prices to Book Value
Ratio and the Dividend Yield Percentage on day to day basis of all its major indices. The
various indices are,
2. Forward Transactions
Spot delivery transactions that require delivery and payment within the stipulated time
period at the time of entering the contract, this period shall not be more than 14 days
following the date of the contract.
Forward transactions in which delivery and the payments both can be extended by further
period of 14 days each ,the overall period should not 90 days from the days of the
contract, these transactions can be permitted in case of specified shares .
a) Day Trading
b) Swing Trading
c) Position trading
Day trading requires the most intense approach to stock market trading, to be on top of
the fluctuations in stock prices, day traders spend hours together in monitoring the
market. Day traders could make dozens of trades any day, sometimes in a matter of
minutes hoping to grab the wave of price change. They avoid the risks of long term buy
and hold. Day trading could be exciting, the fast pace attracting risk takers. Yet this
strategy for stock market trading is only effective for day traders, who apply analysis
rather then emotion to trading decision. Savvy day traders could turn profits quick.
Emotional traders usually lose fast and leave disenchanted.
Swing trading uses a slightly longer time horizon than day trading, watching a stock for
weeks or months before trading. This type of stock market trading depends on careful
monitoring of fundamental and technical analysis. Swing traders has to be specialize in a
certain business or industry so that they become experts in the movement within those
stocks. They also have more time to study the company financial reports and industry
forecasts. Since swing trading does not require hours of daily monitoring, it is a good
strategy for the trader who wants to make money from stock market trading without
turning it into a full time job. Even the study of reports could be done during the daily
commute or lunch hour so that the swing trader should be well informed.
Position trading helps well for investors who want to be involved in the stock market
trading, but run short of time. Stocks are being held for months awaiting any changes in
the trend. Position traders keep up with the fundamental and technical analysis as well as
news events but apply a long term strategy to their stock market trading.
1. Milestones of BSE Sensex :
Here is a timeline on the Raise of the Sensex through Indian Stock Market History,
¾ 1000, July 25, 1990 - On July 25, 1990, the Sensex touched the four-digit figure for
the first time and closed at 1,001 in the wake of a good monsoon and excellent
corporate results.
¾ 2000, January 15, 1992 - On January 15, 1992, the Sensex crossed the 2,000-mark
and closed at 2,020 followed by the liberal economic policy initiatives undertaken by
the then finance minister and current Prime Minister Dr Manmohan Singh.
¾ 3000, February 29, 1992 - On February 29, 1992, the Sensex surged past the 3000
mark in the wake of the market-friendly Budget announced by Manmohan Singh.
¾ 4000, March 30, 1992 - On March 30, 1992, the Sensex crossed the 4,000-mark and
closed at 4,091 on the expectations of a liberal export-import policy. It was then that
the Harshad Mehta scam hit the markets and Sensex witnessed unabated selling.
¾ 5000, October 11, 1999 - On October 8, 1999, the Sensex crossed the 5,000-mark as
the Bharatiya Janata Party-led coalition won the majority in the 13th Lok Sabha
election.
¾ 6000, February 11, 2000 - On February 11, 2000, the information technology boom
helped the Sensex to cross the 6,000-mark and hit and all time high of 6,006.
¾ 7000, June 21, 2005 - On June 20, 2005, the news of the settlement between the
Ambani brothers boosted investor sentiments and the scripts of RIL, Reliance Energy,
Reliance Capital and IPCL made huge gains. This helped the Sensex crossed 7,000
points for the first time.
¾ 8000, September 8, 2005 - On September 8, 2005, the Bombay Stock Exchange's
benchmark 30-share index – the Sensex - crossed the 8000 level following brisk
buying by foreign and domestic funds in early trading.
¾ 9000, December 9, 2005 - The Sensex on November 28, 2005 crossed 9000 to touch
9000.32 points during mid-session at the Bombay Stock Exchange on the back of
frantic buying spree by foreign institutional investors and well supported by local
operators as well as retail investors.
¾ 10,000, February 7, 2006 - The Sensex on February 6, 2006 touched 10,003 points
during mid-session. The Sensex finally closed above the 10,000-mark on February 7,
2006.
¾ 11,000, March 27, 2006 - The Sensex on March 21, 2006 crossed 11,000 and
touched a peak of 11,001 points during mid-session at the Bombay Stock Exchange
for the first time. However, it was on March 27, 2006 that the Sensex first closed at
over 11,000 points.
¾ 12,000, April 20, 2006 - The Sensex on April 20, 2006 crossed 12,000 and touched a
peak of 12,004 points during mid-session at the Bombay Stock Exchange for the first
time.
¾ 13,000, October 30, 2006 - The Sensex on October 30, 2006 crossed 13,000 for the
first time. It touched a peak of 13,039.36 and finally closed at 13,024.26.
¾ 14000, December 5, 2006 - The Sensex on December 5, 2006 crossed 14,000.
¾ 15,000, July 6, 2007 - The Sensex on July 6, 2007 crossed 15,000 mark.
18
8000
16
6000
14
4000
12
2000
10
0000 OPENING PRICE
8
8000
HIGH
6
6000
LOW
4
4000
2
2000 CLOSING PRICE
0
GRAP
PH 1 :Trend
d Analysis off the BSE-SE
ENSEX from the year 2000-2010
ANALYSIS OF FIN
NANCIAL MA
ARKETS, CUR
RRENCY & IN
NTEREST RATE FUTURESS INDIA 2
24
SUMMER INTERNSHIP PROJECT
The BSE Sensex ended Year 2000 with a loss of 26%. The loss was fueled by the TMT
(Technology, Media and Telecom) sector. To underscore the impact on the Sensex it
needs to be highlighted that the TMT stocks lost 46% of their market value during the
period under study.
The petrochemical and energy sectors on the other hand logged an increase in an
otherwise falling market. Attractive valuations and improving fundamentals attracted
investors to these sectors. The sector leader, Reliance Industries, gained an impressive
34%. Among others, ITC (the tobacco major) and Nestle (a foods company) gained a
remarkable 25% and 22% respectively. On the other hand, FMCG giant HLL lost 14% of
its market value due to concerns regarding top line growth.
In the year 2002:
Many investors, one would imagine, are disillusioned by the stock market performance
over the past ten years. Stock markets, as acquaintances put it, is where they made their
millions. If that is the way it really happened, wave it off as the graciousness of lady luck.
Many, in their pursuit to beat the street, have burnt their fingers.
TABLE 2:
Year Jan-91 Jan- Jan- Jan- Jan- Jan-96 Jan- Jan- Jan-99 Jan- Jan-01 Jan-02
92 93 94 95 97 98 00
% Returns 27.6 95.9 29.8 36.5 13.5 -20.5 4.2 13.3 -17.2 75.6 -26.4 -17.9
Investment 10,000 - - - - - - - - - - -
Profit/Loss 2,762 9,588 2,975 3,647 1,345 (2,045) 424 1,331 (1,717) 7,564 (2,642) (1,792)
Stock market yields from past ten years
Incremental Cash flow-21,440
Analysis:
Starting 1990, had a participant invested Rs 10,000 in an equity portfolio replicating the
index, and kept that amount invested in every succeeding year i.e. booking any profit or
loss, he would have earned a compounded return of 10% year to date . Being invested in
the market would have yielded positive returns. However, on a comparative basis, for
lower risk, an investor could have earned as much if not more by investing in fixed
income avenues. Interest rates have been declining only in the past couple of years. Over
a ten year period -- the previous decade -- a similar strategy would have yielded a
Compounded Return of 13.6%.
If an investor did not book his profit or loss and exited at the start of 2000 the
Compounded returns earned would be 21.2%. But if he held on till start of the current
year the returns would have dwindled to 12.6% annually. Considering a similar
investment pattern over the preceding ten years (from 1992 onwards), the annual returns
fall to an even lower 5.3%. It does look like the markets have completed a cycle and
investors are back at the start line. But if one adopted a more disciplined methodology,
not wanting to time the market, the strategy offers a systematic plan.
likely to be normal and well distributed, and this acted as a fillip for the stock markets.
Most of the economic research organizations like CMIE (Centre for Monitoring Indian
Economy) revised GDP growth estimates upwards, the RBI topping with expectations of
6.5% to 7% GDP growth in the mid-term monetary policy.
Upto certain extent, be observed that political uncertainty has a bigger impact on the
stock markets than the performance of the economy. This is because, for any economy to
grow and prosper, it needs to implement policies and reform measures that may bring
fruit only over the long term. So, while the stock market participants may factor in the
benefits of a stable government very early, it will take some time to reflect on broader
economic parameters like per capita income, interest rates, inflation and so on.
In 1991, when the economy was liberalized, it was more so out of compulsion than out of
choice. In the Indian context, while the economic liberalization was gradual, results
started to show in the latter years of the Congress rule of 1991-96. The stock markets
rewarded this performance in the period between 1991 and 1996 by way of a huge 210%
rise in the Sensex levels. This directly corroborates the argument that a stable government
at the Centre is of significance for the stock markets. Without taking political sides, we
observe similar performance in the stock market in the period since 1999 and now. Even
if one were to discount the 2000 stock market rally, which may have been an anomaly, on
a point-to-point basis (1999-04), the Sensex has gained 94%.As is evident, during period
of a stable government rule early 1990s and in the last five years, more number of steps
seems to have been taken as far as economic policies are concerned. All these reforms
carried out over the period of the last 14 years have managed to make India Inc. more
competitive in the global scenario. The investing community, recognizing this
improvement and potential of Indian companies, has shown its confidence in the stock
market.
In the year 2008:
2008 was a mixed year for most of us, but also like to remember it for the hard lessons it
taught us.
• Fall of financial Berlin Wall:
15th September 2008 was the day Lehman Brothers filed for bankruptcy. An era
ended on Wall Street. This 158-year old institution, which had earlier survived the
two world wars and the Great Depression, was finally liquidated on this day.
None of the other financial firms was willing to acquire Lehman considering the
magnitude of its potential losses.
• Global recession :
The realization that economies, especially those in the developed world are in a
stage of stagnation and decline finally set in during 2008. The National Bureau of
Economic Research (NBER) confirmed the ‘recession’, twelve months after it
actually began in the US. This late realization was in spite of the increasing
unemployment rates, lower consumer spending and the slowdown in real estate
and auto industries.
• Lot of bubbles burst :
There have been bull runs aplenty in the past. But never have they been as
coordinated as the one that has preceded the current bear market. Coordinated
because virtually every asset class, right from stocks and commodities, to real
estate went up in perfect synchronization. And investors made merry while the
fun lasted., leaving them with no place to hide. Almost a year into the carnage,
most stocks and commodities are now trading at their multi year lows, with the
very same people who did not hesitate to invest in crude at US$ 147, shying away
from the commodity at US$ 40 a barrel. While US$ 147 may prove to be an
extreme in hindsight, few years from now, US$ 40 might also prove to be the
same.
• Myth of a Decoupled India broken :
While the Indian economy is domestically driven and as a result rather insulated
from the world, Indian financial markets have very strong global linkages. This is
the age of electronic capital flows. And it glides across the world with great ease.
If foreign money drove the Sensex to the heydays of 21,000, its flight out of India
also plugged the rug under its (Sensex) feet. No one will speak of the decoupling
of financial markets for a long time to come.
• Inflation goes for a toss :
Wholesale Price Index (WPI) which is the metric on which inflation is commonly
measured in India trooped dangerously close to its decade highs. The final months
of 2008 although offering some notional relief on the inflation number, failed to
kick the consumption demand. The onset of 2009 is expected to do most of that.
• Bailouts flying thick and fast, liquidity crunch, real estate crash :
While the subprime crisis reared its ugly head in 2007, the crisis escalated in 2008
and the demise of Lehman Brothers only aggravated the situation further.
Governments all over the world went on an overdrive to announce bailout
packages to ensure that the financial community and economies did not collapse
under the strain of the crisis. With the era of investment banking coming to an
end, liquidity suddenly dried up as banks (also hit hard in this crisis) became vary
of lending to one another.
• From irrationality to sheer panic :
At the start of the year, speculation was the name of the game .The financial crisis
translated to a significant amount of panic seeping into sentiments. This led to
steady sell-off at the bourses throughout the year by both domestic and overseas
investors. The global crisis put the Indian stocks under the heat as overseas
investors pulled out nearly US$ 13 bn during the year. This is the highest amount
of net outflow in 15 years. Also, this is the first time in 11 years that there has
been a net outflow of FII money from India. FIIs invested nearly US$ 17 bn in the
markets during 2008.
• Rupee appreciates, depreciates, then appreciates, and then depreciates again:
The rupee’s movement in the past two years was highly volatile keeping those
relying heavily on exports and imports on their toes. The sharp appreciation of the
rupee against the US dollar in 2007 had adversely restricted the revenue of
companies in sectors like software, textiles and pharmaceuticals as these largely
depend upon exports for business. However, given that India imports nearly 70%
of the oil that it consumes, oil companies benefited to some extent from the rise in
the rupee although crude prices remained firm. The situation reversed completely
in 2008. The intensity of the financial crisis led many to question the safety of
emerging nations including India, thereby driving down the value of the rupee.
While this was expected to be a major boon for the software and pharma sectors,
it ended up being only a consolation prize. With the global economy slowing
down, software sector had more serious issues to deal with. For pharma, the rupee
depreciation only aggravated forex losses as many companies had foreign debt on
their books which were marked-to-market. For oil companies, it was a double
whammy till the middle of the year at least, as oil prices escalated to a record high
and the rupee deteriorated sharply.
• Investors dealt with dirty lies :
In India, while investors did not have to contend with losses of such magnitude,
there was awe and fear with which promoters treated minority shareholders.
While minority shareholders were dealt a poor hand by Reliance Infrastructure
and Sterlite, it was Satyam Computers that took the cake. The last few days of the
year saw a spate of asatya (lie) fall out of the baggage of Satyam, India’s fourth
largest software services company and the most prominent in corporate
governance malpractices. After a failed “funds transfer to promoters” scheme, the
promoters have tried hands at damage control without much success.
• FCCBs… not convertible anymore :
When markets were in their boom phase, FCCBs (foreign currency convertible
bonds), the new financial instrument, were the easiest way for cash strapped
companies to raise capital. It offered companies the advantage of almost nil
interest rates and equity dilution that was a comfortable 3-4 years away. In fact,
companies never thought of FCCBs as debt, always thinking of it as an equity
infusion, which was not to require any cash outlay. suddenly, the holders of
FCCBs who are strapped for cash themselves do not want any conversion to
equity. Instead, they are looking at calling back their debt instead. For companies
that are already substantially leveraged, this would mean a huge cash outflow.
And there aren’t enough avenues to replace the current one. If they go for equity
financing, it would mean huge dilution for promoters at current depressed prices
and if they go for debt financing, it may well prove very costly at current interest
rates.
In 1996, the National Stock Exchange of India launched Standard& Poor CRISIL NSE
INDEX Nifty and CNX Junior Indices that make up 100 most liquid stocks in India.
CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The
Indices are owned and managed by India Index Services and Products Ltd that has a
consulting and licensing agreement with Standard & Poor's. In 1998, the National Stock
Exchange of India launched its web-site and was the first exchange in India that started
trading stock on the Internet in 2000. The NSE has also proved its leadership in the
Indian financial market by gaining many awards such as 'Best IT Usage Award' by
Computer Society in India in 1996 and 1997 and CHIP Web Award by CHIP magazine
1999.
NSE S&P CNX Nifty 50 is the prime stock index in India. The NIFTY index is made of
top 50 listed companies in the national stock exchange. These companies are selected on
the basis of market capitalization and the 50 stocks that have made the NIFTY account
for about 58.64% of the total market capitalization. In fact these stocks are the most
actively traded stocks in the national stock exchange and NIFTY stocks make about 50%
of the total trading volume in NSE. The companies that are listed in the NIFTY index are
selected from 21 different sectors and they represent the leading companies in the
country. Therefore, NIFTY is a profitable investment proposition for any investor who is
looking forward to invest in the index. In fact the growth of the NIFTY index in the
recent years have attracted retail investors, institutional investors and foreign investors to
invest in the NIFTY either directly or through the index funds.
MILESTONES OF NIFTY INDEX:
April 1993: Recognition of a Stock Exchange
November 1994: Capital Market Equities Segment goes live
October 1995: Become largest stock exchange in the country
April 1996: Launch of S&P CNX Nifty
June 2000: Commencement of Derivatives Trading
June 2001: Commencement of trading in Index Options
July 2001: Commencement of trading in options on Individual Securities
November 2001: Commencement of trading in futures on Individual securities
August 2003: Launch of futures & options in CNXIT Index
June 2005: Launch of futures & options in BANK Nifty Index
December 2006: Derivative Exchange of the year by Asia risk Magazine
March 2007: NSE, CRISIL announce of IndiaBondWatch.com
How to enter in nifty and make good profit out of Nifty trading?
There are primarily two ways to invest in the NIFTY – one is the derivative trading on
the index and other is the index funds that are operated by the mutual fund companies.
Derivative trading is a unique financial product that is based on the underlying instrument
that may be a stock or index. In national stock exchange derivative trading was first
introduced in the year 2000. For trading in the NIFTY index directly we have to
derivative instruments – Nifty Future and Nifty Option. In both the cases the value of the
derivative is determined by the position of the index. The Future and the Option are
basically a contract between the buyer and the seller. Like any other derivative trading
the NIFTY is also traded in a lot.
A Future contract is an agreement between the buyer and the seller for buying or selling a
lot of NIFTY on a future date. For buying a Nifty Future we have to pay the margin
amount of about 15% of the total price of the lot. But this margin amount most likely
changes every day depending on the variation of the price in the market that is called the
mark to market. When traders will gain on the Future contract according to this settled
price you will earn the difference and if the index goes down you can wait till the
settlement date. But whatever is the price of the lot on the date of settlement we have to
close the deal on that very day irrespective of the profit or loss.
In an option contract the contract is between the buyer and the seller for buying or selling
one more lots of Nifty on a future date and at a specific price. The buyer of the option
pays a premium for owning the option contract and this premium depends on the current
position of Nifty and the specific option that the buyer is buying. Though the buyer of the
option contract is not liable to honor the option contract the seller of course is obliged to
honor the contract if the buyer is exercising the contract.
These are the two most popular ways to do derivative trading on the NIFTY index. One
of the leading indices in the Indian stock market, the Nifty is preferred by so many
investors from all round the globe along with domestic investors. But if trader a beginner
in stock market investment then the derivative trading mechanics might seem to you bit
difficult, as little difference in the index has great influence on the Future and Option
contracts, it is also too risky to invest in the derivative trading, especially who have little
fund and do not want to take chances. For them the most viable solution for entering
Nifty is the index funds. These are basically mutual funds that invest in the indices and
there are so many profit making Nifty funds that are worth to invest.
Why Trade NSE Nifty 50 & CNX IT Stock Index Futures?
It is difficult for most investors to select and invest only in the top performing stocks,
investing in products that track stock indices, which provide exposure to the whole
market rather a few individual stocks has become increasing popular. The advantage of
indexing is available in mutual funds and exchange-traded funds. A trader should
consider stock index futures instead for two main reasons:
• Flexibility
• Leverage.
So this helps the investors to gain maximum returns in their portfolio ,and it will be very
easy to trade CNX IT Stock Index Futures.
F
Fundam
mental Analyssis of Nifty Fiffty Indeex
60
000
50
000
40
000
OPENING PRICE
30
000
HIGH PRICE
20
000
LOW P
PRICE
10
000 CLOSEEPRICE
0
ANALYSIS OF FIN
NANCIAL MA
ARKETS, CUR
RRENCY & IN
NTEREST RATE FUTURESS INDIA 3
36
SUMMER INTERNSHIP PROJECT
Findings:
Conclusion:
Investors at this stage need to realize that a stable political situation at the Centre is
always beneficial for the investor. Since economic conditions touches each of our lives in
one way or the other, it becomes important that the investment decision has to be depends
on to whom should be voted in to power., one needs to exercise higher weightage to the
overall direction of a economic conditions and the people who are likely to make
decisions on behalf of clients or on behalf of them selves has to take carefully.
Literature review
Note: These were some of the theoretical concepts that were studied till date. The
purpose of this reading is to refresh the concepts learnt till now in the MBA
curriculum and to apply these concepts in understanding the firm and to analyze its
operations better .
REFERENCES