Escolar Documentos
Profissional Documentos
Cultura Documentos
OF
SHAREKHAN
Study on
Currency Derivatives Trading In India
Submitted to
Submitted by:-
ACKNOWLEDGEMENT
I would like to express my deepest appreciation to all those who provided me the possibility to
complete this report. A special gratitude I give to our project mentor Dr. Preeti Sharma (jims)
whose contribution in stimulating suggestions and encourage me and helped me to coordinate
my project especially in writing this report.
Furthermore I would also like to acknowledge with much appreciation the crucial role of Mr.
Amit Sharma (Territory Manager), who gave the permission to use all required equipment and
the necessary materials to complete the task.
CONTENTS
CHAPTER 1- OVERVIEW OF THE INDUSTRY
Introduction of Capital Market
1.1 About Currency Derivatives
A. Introduction to Currency Derivatives
B. Introduction to Currency Futures
CHAPTER 2- SHAREKHAN
2.1 Company Profile
2.2 Reasons to choose Sharekhan Limited
2.3 Products of Sharekhan
2.4 Portfolio Management Services
2.5 Charge Structure
2.6 Depository Charges
2.7 Documents required for account opening
2.8 SWOT Analysis of Sharekhan
BIBLIOGRAPHY
ANNEXURES
CHAPTER 1
The capital market, like the money market, has three important Components, namely the
suppliers of loan able funds, the borrowers & the Intermediaries who deal with the leaders on the
one hand & the Borrowers on the other.
The demand for capital comes mostly from agriculture, industry, trade the government. The
predominant form of industrial organization developed. Capital Market becomes a necessary
infrastructure for fast industrialization. Capital market not concerned solely with the issue of new
claims on capital, But also with dealing in existing claims.
commodity traders gathered inside the house of a man called Van der Beurze, & in 1309 they
became the "Brugse Beurse", institutionalizing what had been, until then, an informal meeting,
but actually, the family Van der Beurze had a building in Antwerp where those gatherings
occurred; the Van der Beurze had Antwerp, as most of the merchants of that period, as their
primary place for trading. The idea quickly spread around Flanders & neighboring counties &
"Beurzen" soon opened in Ghent & Amsterdam.
In the middle of the 13th century, Venetian bankers began to trade in government securities. In
1351 the Venetian government outlawed spreading rumors intended to lower the price of
government funds. Bankers in Pisa, Verona, Genoa & Florence also began trading in government
securities during the 14th century. This was only possible because these were independent city
states not ruled by a duke but a council of influential citizens. The Dutch later started joint stock
companies, which let shareholders invest in business ventures & get a share of their profits - or
losses. In 1602, the Dutch East India Company issued the first share on the Amsterdam Stock
Exchange. It was the first company to issue stocks & bonds.
The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock
exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short
selling, option trading, debt-equity swaps, merchant banking, unit trusts & other speculative
instruments, much as we know them" There are now stock markets in virtually every developed
& most developing economies, with the world's biggest markets being in the United States,
United Kingdom, Japan, India, China, Canada, Germany, France, South Korea & the
Netherlands.
History has shown that the price of shares & other assets is an important part of the dynamics of
economic activity, & can influence or be an indicator of social mood. An economy where the
stock market is on the rise is considered to be an up-and-coming economy. In fact, the stock
market is often considered the primary indicator of a country's economic strength &
development. Rising share prices, for instance, tend to be associated with increased business
investment & vice versa. Share prices also affect the wealth of households & their consumption.
Therefore, central banks tend to keep an eye on the control & behavior of the stock market &, in
general, on the smooth operation of financial system functions. Financial stability is the raison
d'tre of central banks.
Exchanges also act as the clearinghouse for each transaction, meaning that they collect & deliver
the shares, & guarantee payment to the seller of a security. This eliminates the risk to an
individual buyer or seller that the counterparty could default on the transaction.
The smooth functioning of all these activities facilitates economic growth in that lower costs &
enterprise risks promote the production of goods & services as well as employment. In this way
the financial system contributes to increased prosperity. An important aspect of modern financial
markets, however, including the stock markets, is absolute discretion.
For example, American stock markets see more unrestrained acceptance of any firm than in
smaller markets. For example, Chinese firms that possess little or no perceived value to
American society profit American bankers on Wall Street, as they reap large commissions from
the placement, as well as the Chinese company which yields funds to invest in China. However,
these companies accrue no intrinsic value to the long-term stability of the American economy,
but rather only short-term profits to American business men & the Chinese; although, when the
foreign company has a presence in the new market, this can benefit the market's citizens.
Conversely, there are very few large foreign corporations listed on the Toronto Stock Exchange
TSX, Canada's largest stock exchange. This discretion has insulated Canada to some degree to
worldwide financial conditions. In order for the stock markets to truly facilitate economic growth
via lower costs & better employment, great attention must be given to the foreign participants
being allowed in.Relation of the stock market to the modern financial system
The financial systems in most western countries has undergone a remarkable transformation.
One feature of this development is disintermediation. A portion of the funds involved in saving
& financing, flows directly to the financial markets instead of being routed via the traditional
bank lending & deposit operations. The general public's heightened interest in investing in the
stock market, either directly or through mutual funds, has been an important component of this
process.
Statistics show that in recent decades shares have made up an increasingly large proportion of
households' financial assets in many countries. In the 1970s, in Sweden, deposit accounts &
other very liquid assets with little risk made up almost 60 percent of households' financial
wealth, compared to less than 20 percent in the 2000s. The major part of this adjustment in
financial portfolios has gone directly to shares but a good deal now takes the form of various
kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds,
hedge funds, insurance investment of premiums, etc.
The trend towards forms of saving with a higher risk has been accentuated by new rules for most
funds & insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to
be found in other industrialized countries. In all developed economic systems, such as the
European Union, the United States, Japan & other developed nations, the trend has been the
same: saving has moved away from traditional (government insured) bank deposits to more risky
securities of one sort or another.
With each passing year, the noise level in the stock market rises. Television commentators,
financial writers, analysts,& market strategists are all overtaking each other to get investors'
attention. At the same time, individual investors, immersed in chat rooms & message boards, are
exchanging questionable & often misleading tips. Yet, despite all this available information,
investors find it increasingly difficult to profit. Stock prices skyrocket with little reason, then
plummet just as quickly, & people who have turned to investing for their children's education &
their own retirement become frightened. Sometimes there appears to be no rhyme or reason to
the market, only folly.
This is a quote from the preface to a published biography about the long-term value-oriented
stock investor Warren Buffett. Buffett began his career with $100, and $100,000 from seven
limited partners consisting of Buffett's family and friends. Over the years he has built himself a
multi-billion-dollar fortune.
The capital market, however, is not without risk. It is important for investors to understand
market trends before fully investing in the capital market. To that end, there are various market
indices available to investors that reflect the present performance of the market.
new long-term capital. The secondary market handles the trading of previously-issued securities,
& must remain highly liquid in nature because most of the securities are sold by investors. A
capital market with high liquidity & high transparency is predicated upon a secondary market
with the same qualities.
Interest Rates
Common shares/stock
The following four currency futures are allowed on the Indian exchanges.
Symbol
Country
Currency
Nickname
USD
United States
Dollar
Geenback
EUR
Euro members
Euro
Fiber
JYP
Japan
Yen
Yen
GBP
Great Britain
Pound
Cable
1.2
India is 16th largest forex market in the world. The daily global FX turnover USD 4 Trillion.
Market Share in World FX Market has increased from 0.1% (in 1998) to 0.9% ( 2010)
Main trading centers are London, NY, Tokyo, Singapore &now In MUMBAI
FUTURE :
A currency futures contract provides a simultaneous right and obligation
particular currency at a specified future date, a specified price and a standard quantity. Future
contracts are special types of forward contracts in the sense that they are standardized exchangetraded contracts.
SWAP
Swap is private agreements between two parties to exchange cash flows in the future according
to a prearranged formula.
OPTIONS:
In other words, a foreign currency option is a contract for future delivery of a specified currency
in exchange for another in which buyer of the option has to right to buy (call) or sell (put) a
particular currency at an agreed price for or within specified period.
FUTURE TERMINOLOGY
SPOT PRICE:
The price at which an asset trades in the spot market. The transaction in which securities and
foreign exchange get traded for immediate delivery. Since the exchange of securities and cash
is virtually immediate, the term, cash market, has also been used to refer to spot dealing. In the
case of USD/INR, spot value is T + 2.
FUTURE PRICE:
The price at which the future contract traded in the future market.
CONTRACT CYCLE:
The period over which a contract trades. The currency future contracts in Indian market have
one month, two month, and three month up to twelve month expiry cycles. In NSE/BSE will
have 12 contracts outstanding at any given point in time.
EXPIRY DATE:
It is the date specified in the futures contract. This is the last day on which the Contract will be
traded, at the end of which it will cease to exist. The last trading day will be two business days
prior to the value date / final settlement date.
CONTRACT SIZE:
The amount of asset that has to be delivered under one contract, also called as lot size. In
case
COST OF CARRY:
The relationship between futures prices and spot prices can be summarized in terms of what is
known as the cost of carry. This measures the storage cost plus the interest that is paid to
finance or carry the asset till delivery less the income earned on the asset.
For equity
INITIAL MARGIN:
When the position is opened, the member has to deposit the margin with the clearing house as
per the rate fixed by the exchange which may vary asset to asset. Or in another words, the
amount that must be deposited in the margin account at the time a future contract is first entered
into is known as initial margin.
MARKING TO MARKET:
At the end of trading session, all the outstanding contracts are reprised at the settlement price of
that session. It means that all the futures contracts are daily settled, and profit and loss is
determined on each transaction. This procedure, called marking to market, requires that funds
charge every day. The funds are added or subtracted from a mandatory margin (initial margin)
that traders are required to maintain the balance in the account. Due to this adjustment, futures
contract is also called as daily reconnected forwards.
MAINTENANCE MARGIN:
Members account are debited or credited on a daily basis. In turn customers account are also
required to be maintained at a certain level, usually about 75 percent of the initial margin, is
called the maintenance margin. This is somewhat lower than the initial margin.This is set to
ensure that the balance in the margin account never becomes negative. If the balance in the
margin account falls below the maintenance margin, the investor receives a margin call and is
expected to top up the margin account to the initial margin level before trading commences on
the next day.
The Ask price is the price at which seller at the exchange are ready to sell their currency to the
buyers.
BASIS:
Basis refers to difference between the spot rate & the future contract price
USD- Base
For Example,
If one US dollar is worth of Rs. 64 in Indian rupees then it implies that 64 Indian rupees will
buy one dollar of USA, or that one rupee is worth of 0.0156 US dollar which is simply
reciprocal of the former dollar exchange rate.
Direct- $1 = Rs. 64
Indirect. Re 1 = 0.0156
on 15th July 11
100,000
SPECULATION:
Take the case of a speculator who has a view on the direction of the market. He would like
to trade based on this view. He expects that the USD/INR rate presently at Rs.64, is to go up in
the next two-three months. How can he trade based on this belief? In case he can buy dollars
and hold it, by investing the necessary capital, he can profit if say the Rupee depreciates to
Rs.64.50. Assuming he buys USD 10000, it would require an investment of Rs.6,40000. If the
exchange rate moves as he expected in the next three months, then he shall make a profit of
around Rs.5000. This works out to an annual return of around 4.76%. It may please be noted
that the cost of funds invested is not considered in computing this return.
A speculator can take exactly the same position on the exchange rate by using futures
contracts. Let us see how this works. If the INR/USD is Rs.62 and the three month futures trade
at Rs.62.40. The minimum contract size is USD 1000. Therefore the speculator may buy 10
contracts. The exposure shall be the same as above USD 10000. Presumably, the margin may
be around Rs.21, 000. Three months later if the Rupee depreciates to Rs. 62.50 against USD,
(on the day of expiration of the contract), the futures price shall converge to the spot price (Rs.
62.50) and he makes a profit of Rs.1000 on an investment of Rs.21, 000. This works out to an
annual return of 19 %. Because of the leverage they provide, futures form an attractive option
for speculators.
ARBITRAGE:
Arbitrage is the strategy of taking advantage of difference in price of the same or similar
product between two or more markets. That is, arbitrage is striking a combination of matching
deals that capitalize upon the imbalance, the profit being the difference between the market
prices..
One of the methods of arbitrage with regard to USD-INR could be a trading strategy between
forwards and futures market. As we discussed earlier, the futures price and forward prices are
arrived at using the principle of cost of carry. Such of those entities who can trade both
forwards and futures shall be able to identify any mis-pricing between forwards and futures. If
one of them is priced higher, the same shall be sold while simultaneously buying the other
which is priced lower. If the tenor of both the contracts is same, since both forwards and futures
shall be settled at the same RBI reference rate, the transaction shall result in a risk less profit.
It has been observed that in most futures markets, actual physical delivery of the underlying
assets is very rare and hardly it ranges from 1 percent to 5 percent. Most often buyers and sellers
offset their original position prior to delivery date by taking an opposite positions. This is
because most of futures contracts in different products are predominantly speculative
instruments.
COMPARISION
OF
FORWARD
AND
FUTURES
CURRENCY
CONTRACT
BASIS
FORWARD
Structured as per requirement of the
Size
parties
Delivery Date
Method
transaction
electronic media
brokers,
multinational
Maturity
Settlement
Market place
Accessibility
Delivery
forex
companies,
dealers,
institutional
Margins
Standardized
Standardized
Banks,
Participants
FUTURES
Banks,
brokers,
multinational
traders,
speculators,
arbitrageurs,
Standardized
Over
the
telephone
worldwide
and
computer networks
Limited
to
large
worldwide communications
customers
banks,
institutions, etc.
to speculate
delivery
Symbol
USD/INR
Instrument Type
FUTCUR
Unit of trading
Underlying
USD
Quotation/Price Quote
Tick size
Trading hours
Contract trading cycle
Last trading day
The last working day will be the same as that for Interbank
Settlements in Mumbai.
Base price
Theoretical price on the 1st day of the contract. On all other days,
DSP of the contract.
Settlement
Mode of settlement
Daily
settlement
Final settlement : T + 2
Cash settled in Indian Rupees
Standardized Contracts, small lot size US$ 1,000. Encourages retail and SME
participation.
Intraday volatility (43 Bps): Short term profits for the traders.
Lower margins: 3- 3.5% of the contract value compared to average of 10- 15% on
index/stock futures.
turnover. From about $ 60 million per day in August September 2008, the current rate is
nearly $1 billion per day in each of the two.
The Financial Express Feb 6th, 2010
The total turnover in the segment has increased incredibly from $ 3.4 bn in October2008 to $84
bn in December 2009. The average daily volume reached $4 bn in December 2009. India had
witnessed enhanced FIIs thus Indian currency is becoming an important currency in world
market. According to BIS, the total share of Indian rupee in total daily average foreign
exchange has increased from 0.1% in 1998 to 0.9% in April 2007. Since the exchange rate is
volatile during the last few years and hence increased importance of ETF.
Currency Movement
Fig. 1.1
Exporter
Re - STRONG
Gain
Re - STRONG
Loss
Re - WEAK
Loss
Re - WEAK
Gain
Tab. 1.6
trend
for
demand/supply
USD/INR rate
of
Appreciates
Depreciates
Appreciates
Depreciates
Appreciates
Depreciates
Appreciates
Supply
of
USD
increases
on
Depreciates
in the country
Impact
INR
India
on
USD
USD
Increase in exports of
Impact
Tab 1.7
Factors: Depreciation of INR
Events
impact
likely
to
USD/INR
rate
Increase in imports of
India
General
trend
for Impact
USD
Appreciates
Depreciates
Appreciates
Depreciates
Appreciates
Depreciates
Appreciates
Depreciates
of commodities
to costlier imports
Impact on INR
demand/supply of USD
on
Tab
1.8
CHAPTER 2
SHAREKHAN
2.1 COMPANY PROFILE
Sharekhan is one of the leading retail broking House of SSKI Group which was running
successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI
Group, which has over eight decades of experience in the stock broking business. Sharekhan
offers its customers a wide range of equity related services including trade execution on BSE,
NSE, Derivatives, depository services, online trading, investment advisory, Mutual Fund
Advisory etc.
The firms online trading and investment site - www.sharekhan.com - was launched on Feb 8,
2000. The site gives access to superior content and transaction facility to retail customers across
the country. Known for its jargon-free, investor friendly language and high quality research, the
site has a registered base of over two lakh customers. The number of trading members currently
stands More than 6 Lacs. While online trading currently accounts for just over 8 per cent of the
daily trading in stocks in India, Sharekhan alone accounts for 32 per cent of the volumes traded
online.
The content-rich and research oriented portal has stood out among its contemporaries because of
its steadfast dedication to offering customers best-of-breed technology and superior market
information. The objective has been to let customers make informed decisions and to simplify
the process of investing in stocks.
On April 17, 2002Sharekhan launched Speed Trade, a net-based executable application that
emulates the broker terminals along with host of other information relevant to the Day Traders.
This was for the first time that a net-based trading station of this caliber was offered to the
traders. In the last six months Speed Trade has become a de facto standard for the Day Trading
Technology
With our online trading account you can buy and sell shares in an instant from any PC with an
internet connection. You will get access to our powerful online trading tools that will help you
take complete control over your investment in shares.
Accessibility
Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for
investors. These services are accessible through our centers across the country (Over 721
locations in 210 cities) over the internet (through the website www.sharekhan.com) as well as
over the Voice Tool.
Knowledge
In a business where the right information at the right time can translate into direct profits, you get
access to a wide range of information on our content-rich portal, Sharekhan. You will also get a
useful set of knowledge-based tools that will empower you to take informed decisions.
Convenience
You can call our Dial-N-Trade number to get investment advice and execute your transactions.
We have a dedicated call-centre to provide this service via a Toll Free Number 1800-227500,1800-22-7050 from anywhere in India.
Customer Service
Our customer service team will assist you for any help that you need relating to transactions,
billing, demat and other queries. Our customer service can be contracted via a toll-free number,
Investment Advice
Sharekhan has dedicated research teams of more than 30 people for fundamental and technical
researches. Our analysts constantly track the pulse of the market and provide timely investment
advice to you in the form of daily research emails, online chat, printed reports and SMS on your
mobile phone.
BENEFITS
Personalized Price and Account Alerts delivered instantly to your Cell Phone & E-mail
address.
Anytime Ordering.
NSDL Account
KEY OFFICIALS
DESIGNATION
1. Mr. ShripalMorakhia
Chairman
CEO
Online Sales Head
DP Head
Mr. Pradeep
5. Mr. HemendraAggarwal
6. Mr Amit pal Singh and
Mr. ManeetRastogi
Cluster Head
Regional Sales Manager
FEATURES
Online trading account for investing in Equity and Derivatives via www.sharekhan.com
Live Terminal and Single terminal for NSE Cash, NSE F&O, BSE& Mutual Funds.
Provision to enter price trigger and view the same online in market watch
TRADE TIGER
TRADE TIGER is an internet-based software application which is the combination of
EQUITY & COMMODITIES, that enables you to buy and sell share and well as commodities
item instantly. It is ideal for every client of SHAREKHAN LTD.
FEATURES
Single screen trading terminal for NSE Cash, NSE F&O & BSE & Commodities.
Technical Studies.
Multiple Charting.
DIAL-N-TRADE
Along with enabling access for your trade online, the CLASSIC and TRADE TIGER
ACCOUNT also gives you our Dial-n-trade services. With this service, all you have to do is dial
our dedicated phone lines which are 1800-22-7500, 3970-7500.
Ideal for investors looking at steady and superior returns with low to medium risk appetite. This
portfolio consists of a blend of quality blue-chip and growth stocks ensuring a balanced portfolio
with relatively medium risk profile. The portfolio will mostly have large capitalization stocks
based on sectors & themes that have medium to long term growth potential.
2. PROTECH
- Technical Analysis.
Protech uses the knowledge of technical analysis and the power of derivatives market to identify
trading opportunities in the market. The Protech lines of products are designed around various
risk/reward/ volatility profiles for different kinds of investment needs.
THRIFTY NIFTY: Nifty futures are bought and sold on the basis of an automated
trading system that generates calls to go long/short. The exposure never exceeds value of
portfolio i.e. there is no leveraging; but being short in Nifty allows you to earn even in
falling markets and there by generates linear
BETA PORTFOLIO: Positional trading opportunities are identified in the futures
segment based on technical analysis. Inflection points in the momentum cycles are
identified to go long/short on stock/index futures with 1-2 month time horizon. The idea
is to generate the best possible returns in the medium term irrespective of the direction of
the market without really leveraging beyond the portfolio value.
STAR NIFTY: Trailing Stops Momentum trading techniques are used to spot short term
momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss method of
risk management or profit protection is used to lower the portfolio volatility and
maximize returns. Trading opportunities are explored both on the long and the short side
as the market demands to get the best of both upwards & downward trends.
2,000/- Scheme: -
0.070 / 0.40 %
6,000/- Scheme: -
0.025 / 0.25 %
18,000/- Scheme: -
0.040 / 0.20 %
30,000/- Scheme: -
0.030 / 0.18 %
60,000/- Scheme: -
0.020 / 0.15 %
1,00,000/- Scheme: -
0.015 / 0.10 %
2) Normal Account: Cash Trading : - 0.50% or 10 Paisa per share. Min. Rs.16/- per script.
Margin Trading
0.02% (2nd Leg if square off same day) 0.10% (2nd Leg)
Rs. 750
EXPOSURE:
It is the limit or turnover that a depository participant allows to its client to take positions at a
time on margin money in his account. Sharekhan offers an Exposure of 4 to 6.6 times of margin
TIE UPS: Tie up with eleven banks i.e. HDFC Bank Ltd, ICICI Bank, Oriental Bank Of
Commerce, IDBI Bank Ltd, Citi Bank, United Bank of India, Axis bank, Bank of India,
Indusland Bank, Centurian Bank of Punjab for online money transfer.If you are having bank a/c
in one of them, you can transfer the funds and withdraw the funds online from your trading a/c at
anytime.
Passport (valid)
Passport
Voter's ID
Driving License
Voter's ID
WEAKNESS
1. Lack of awareness among customer
2. Less focus on customer retention
3. Less Exposure
OPPORTUNITIES
1. Diversification
2. Product modification
3. Improve Web based trading
4. Provide competitive brokerage
5. Concentrate on PMS
6. Focus on Institutional investors
7. Concentrate on HNIs (high net worth investor)
THREATS
1. Aggressive promotional strategies by close competitor like Religare, Angel Broking and India
bulls.
2 More and more players are venturing into this domain, which can further reduce the earning of
Share Khan.
3 Stock market is very volatile, risk involves is very high
CHAPTER 3
DISCUSSIONS ON TRAINING
3.1 ROLES AND RESPONSIBILITIES
The company placed me as a Trainee. I have been handling the Following responsibilities:
My first and most important responsibility was to reach for training on time at 10:30am.
My next responsibility was to open my own de-mat account to enter in the share market.
I was given a responsibility to complete my target.
Checking the daily movement of all the stock assigned us.
Keeping a record of the movement of all the share.
Trading in various instruments in the market.
Interpreting the various transactions done in the demat account, i.e., amount of taxes
deducted, brokerage, etc.
Factors to be kept in mind while investing in any shares.
Market research, i.e., factors affecting prices of commodities.
Target assigned
To sell 4 De-mat accounts.
Target market
Different properties dealers.
Charted accountants.
Lawyers
Travel agencies
Transport business
House wives
Businessmen
Corporate Employees, etc
CHAPTER - 4
RESEARCH METHODOLOGY
To know the driving attributes of retail investors for each asset market.
To study how currency derivative impact the investor market , and how currency
movement influence the indian forex market
Euro(EUR)-INR
Pound Sterling(GBP)-INR
The main factor that affects the USD/INR EXHANGE RATE or any other currency is the
Demand/supply dynamics for the individual currencies. However the Demand/supply dynamics
is influenced by many other factors such as interest rates, inflation, money supply, trade
balance, growth in imports, exports, capital flows, and overall economic growth in the country
and global developments.
Due to time constraints only one major economic indicators are selected for analysis
SECONDAY DATA:1. The secondary data is also collected from the newspapers, magazines, different websites
report submitted by RBI/SEBI committee and NCFM/BCFM modules periodicals.
2. A major bulk of the data has been obtained from India Indexmundi.
the
sample
size
is
taken
from
the
peers.
It makes this research limited to the scope of very small investors who are either student or
invest less than 1,00,000.
Smaller sample size may not give the result of complete population.
CHAPTER - 5
Gender:
Gender
No. of persons
No. of persons in %
Male
38
76%
Female
12
24%
80%
75%
NO. OF PERSONS IN %
70%
60%
50%
40%
30%
24%
20%
10%
0%
Male
Female
GENDER
INTERPRETATION:
76% of the male are interested in currency market.
Only 24% of the females are interested in currency market.
Age:
Age (years)
No. of persons
No. of persons in %
20-30
16%
30-40
21
42%
40-50
11
22%
50 & Above
10
20%
45%
42%
NO. OF PERSONS IN %
40%
35%
30%
25%
20%
22%
20%
16%
15%
10%
5%
0%
20 - 30
30 - 40
40 - 50
AGE (YEARS)
INTERPRETATION:
16% persons of 20 30 age group are interested in currency market.
42% persons of 30 40 age group are interested in currency market.
22% persons of 40 50 age group are interested in currency market.
20% persons of 50 & above age are interested in currency market.
50 & Above
Education Qualification:
Education Qualification
No. of persons
No. of persons in %
H.S.C
10%
Graduate
27
54%
Post Graduate
16
32%
Other
4%
60%
54%
NO. OF PERSONS IN %
50%
40%
32%
30%
20%
10%
10%
4%
0%
H.S.C
Graduate
Post Graduate
EDUCATION QUALIFICATION
INTERPRETATION:
10% persons are H.S.C.
54% persons are Graduates.
32% persons are Post Graduates.
4% persons are others.
Other
Occupation:
Occupation
No. of persons
No. of persons in %
Business
22
44%
Self Employment
10
21%
Service
13
26%
Student
4%
Housewife
6%
Other
0%
50%
45%
44%
NO. OF PERSONS IN %
40%
35%
30%
26%
25%
21%
20%
15%
10%
4%
5%
6%
0%
0%
Business
Self
Employment
Service
Student
Housewife
OCCUPATION
INTERPRETATION:
44% persons are investors in currency market which belongs to business.
21% persons are investors in currency market which are self employed.
26% persons are investors in currency market which belongs to service.
4% persons are investors in currency market are students.
6% persons are investors in currency market are housewives.
Other
Annual Income:
No. of persons
No. of persons in %
2,00,000
8%
2,00,000 3,50,000
19
38%
3,50,000 5,00,000
20
40%
5,00,000
14%
45%
NO. OF PERSONS IN %
40%
38%
40%
35%
30%
25%
20%
14%
15%
10%
8%
5%
0%
2,00,000
2,00,000 3,50,000
3,50,000 5,00,000
5,00,000
INTERPRETATION:
8% persons are having income less than or equal to 2,00,000.
38% persons are having income between 2,00,000 3,50,000.
40% persons are having income between 3,50,000 5,00,000.
14% persons are having income more than or equal to 5,00,000.
Q1. What are investment avenues which you are presently investing?
Investment Avenues
No. of persons
No. of persons in %
Equity
16%
Currency
15
30%
Commodity
14%
IPO
12%
Mutual funds
12%
Insurance
8%
SIP
4%
Bonds
4%
Others
0%
NO. OF PERSONS IN %
35%
30%
30%
25%
20%
15%
10%
16%
14%
12%
12%
8%
4%
5%
4%
0%
0%
INVESTMENT AVENUES
INTERPRETATION:
16% persons are presently investing in equity share.
30% persons are presently investing in currency.
14% persons are presently investing in commodity.
12% persons are presently investing in IPO.
12% persons are presently investing in mutual funds.
Currency
No. of persons
No. of persons in %
USD
20
40%
EURO
15
30%
GBP
11
22%
YEN
6%
Others
2%
45%
40%
NO. OF PERSONS IN %
40%
35%
30%
30%
25%
22%
20%
15%
10%
6%
5%
2%
0%
USD
EURO
GBP
CURRENCY
INTERPRETATION:
40% persons prefer to invest in USD.
30% persons prefer to invest in EURO.
22% persons prefer to invest in GBP.
6% persons prefer to invest in YEN.
2% persons prefer to invest in other currencies.
YEN
Others
Objectives
No. of persons
No. of persons in %
Hedging
23
46%
Volatility
17
34%
Speculation
16%
Arbitrage
4%
50%
46%
45%
NO. OF PERSONS IN %
40%
34%
35%
30%
25%
20%
16%
15%
10%
4%
5%
0%
Hedging
Volatility
Speculation
OBJECTIVES
INTERPRETATION:
46% persons primary objective for investment in currency is hedging.
34% persons primary objective for investing in currency is volatility.
16% persons primary objective for investing in currency is speculation.
4% persons primary objective for investing in currency is arbitrage.
Arbitrage
Time Period
No. of persons
No. of persons in %
Intraday
10%
26
52%
1-2 months
14
28%
2-3 months
6%
4%
60%
52%
NO. OF PERSONS IN %
50%
40%
28%
30%
20%
10%
10%
6%
4%
0%
Intraday
1-2 months
TIME PERIOD
INTERPRETATION:
10% persons invest currency on intraday.
52% persons invest currency for less than 1 month.
28% persons invest currency for 1-2 months.
6% persons invest currency for 2-3 months.
4% persons invest currency for more than 3 months.
2-3 months
Factors to Determine
No. of persons
No. of persons in %
Economy
20
40%
Political
10%
Industrial
10
20%
Export-Import
12
24%
Infrastructure
6%
Other
0%
45%
40%
40%
NO. OF PERSONS IN %
35%
30%
24%
25%
20%
20%
15%
10%
10%
6%
5%
0%
0%
Economy
Political
Industrial
Export-Import
Infrastructure
Other
FACTORS
INTERPRETATION:
40% persons determine economy factors at the time of investing in currency.
10% persons determine political factors at the time of investing in currency.
20% persons determine industrial factors at the time of investing in currency.
24% persons determine export-import factors at the time of investing in currency.
6% persons determine infrastructural factors at the time of investing in currency.
Q6. How many percentage of money do you invest in currency from your income?
% of money
No. of persons
No. of persons in %
10%
11
22%
11% - 20%
25
50%
21% - 30%
18%
31%
10%
60%
50%
NO. OF PERSONS IN %
50%
40%
30%
22%
18%
20%
10%
10%
0%
10%
11% - 20%
21% - 30%
% OF MONEY
INTERPRETATION:
22% persons invest 10% of their income in currency.
50% persons invest 11% -20% of their income in currency.
18% persons invest 21% - 30% of their income in currency.
10% persons invest 31% of their income in currency.
31%
Currency
No. of persons
No. of persons in %
USD
18
36%
EURO
16
32%
GBP
11
22%
YEN
10%
Other
0%
40%
36%
35%
32%
NO. OF PERSONS IN %
30%
25%
22%
20%
15%
10%
10%
5%
0%
0%
USD
EURO
GBP
CURRENCY
INTERPRETATION:
36% persons rely on USD.
32% persons rely on EURO.
22% persons rely on GBP.
10% persons rely on YEN.
YEN
Other
Scale
Very low
Low
Nutral
High
Very high
No. of persons
16
22
No. of persons in
%
4%
12%
32%
41%
8%
50%
44%
45%
NO. OF PERSONS IN %
40%
35%
32%
30%
25%
20%
15%
12%
8%
10%
5%
4%
0%
Very low
Low
Nutral
SCALE
INTERPRETATION:
4% persons expect very low return in currency.
12% persons expect low return in currency.
32% persons expect nutral return in currency.
44% persons expect high return in currency.
8% persons expect very high return in currency.
High
Very high
Scale
Very low
Low
Nutral
High
Very high
No. of persons
20
16
10
No. of persons in %
40%
32%
20%
6%
2%
45%
40%
40%
35%
NO. OF PERSONS IN %
32%
30%
25%
20%
20%
15%
10%
6%
5%
2%
0%
Very Low
Low
Nutral
SCALE
INTERPRETATION:
40% persons say currency market is very low riskier.
32% persons say currency market is low riskier.
20% persons say currency market is nutral.
6% persons say currency market is highly riskier.
2% persons say currency market is very highly riskier.
High
Very high
Particulars
Rank 1
Rank 2
Rank 3
Rank 4
20
18
Low margin
12
10
24
14
Low brokerage
18
20
10
12
31
35
31
NO. OF PERSONS
30
24
25
20
20
18
18
15
10
5
20
14
12
10
12
10
0
Research & advisory
based call
Low margin
Low brokerage
PARTICULARS
Rank 1
Rank 2
Rank 3
Rank 4
INTERPRETATION:
Here I have used rank order to measure the customers preference towards service provided from
the broker. There are several type of investors and their preference also varies. The 20 persons
rated Research & Advisory call on the first rank. On second rank 20 persons prefer the low
brokerage. The fewer margin is on third position 24 persons rank it & on forth good trading
software is preferred. The person who does online trading are prefer a good trading software.
And the most preferable service is advisory calls & low brokerage. To attract new clients broker
can attract with low brokerage slab % research & advisory call.
CHAPTER 6
and it facilitates the investors to extend their settlement through the future contracts. It provides
extra liquidity in the stock market.
Derivatives are assets, which derive their values from an underlying asset. These underlying
assets are of various categories like
Commodities including grains, coffee beans, etc.
Precious metals like gold and silver.
Foreign exchange rate.
Bonds of different types, including medium to long-term negotiable debt securities issued by
governments, companies, etc.
Short-term debt securities such as T-bills.
Over-The-Counter (OTC) money market products such as loans or deposits.
Equities
For example, a dollar forward is a derivative contract, which gives the buyer a right & an
obligation to buy dollars at some future date. The prices of the derivatives are driven by the spot
prices of these underlying assets.
However, the most important use of derivatives is in transferring market risk, called Hedging,
which is a protection against losses resulting from unforeseen price or volatility changes. Thus,
derivatives are a very important tool of risk management.
There are various derivative products traded. They are;
1. Forwards
2. Futures
3. Options
4. Swaps
A Forward Contract is a transaction in which the buyer and the seller agree upon a delivery of a
specific quality and quantity of asset usually a commodity at a specified future date. The price
may be agreed on in advance or in future.
A Future contract is a firm contractual agreement between a buyer and seller for a specified as
on a fixed date in future. The contract price will vary according to the market place but it is fixed
when the trade is made.
The contract also has a standard specification so both parties know exactly what is being done.
An Options contract confers the right but not the obligation to buy (call option) or sell (put
option) a specified underlying instrument or asset at a specified price the Strike or Exercised
price up until or an specified future date the Expiry date. The Price is called Premium and is
paid by buyer of the option to the seller or writer of the option.
A call option gives the holder the right to buy an underlying asset by a certain date for a certain
price. The seller is under an obligation to fulfill the contract and is paid a price of this, which is
called "the call option premium or call option price".
A put option, on the other hand gives the holder the right to sell an underlying asset by a certain
date for a certain price. The buyer is under an obligation to fulfill the contract and is paid a price
for this, which is called "the put option premium or put option price".
Swaps are transactions which obligates the two parties to the contract to exchange a series of
cash flows at specified intervals known as payment or settlement dates. They can be regarded as
portfolios of forward's contracts. A contract whereby two parties agree to exchange (swap)
payments, based on some notional principle amount is called as a SWAP
RECOMMENDATIONS
Females should also be aware of share market and should be provided with proper
guidance about shares.
Students and housewives can also do trading through sharekhan as it provide the proper
guidance that in which currency they should invest.
People dont prefer much to invest in YEN.
Arbitrage is not the primary objective to invest in currency for most of the people.
YEN and other currencies are not much reliable.
BIBLIOGRAPHY
WEBLIOGRAPHY
www.sebi.gov.in
www.mcx-sx.com
www.nseindia.com
www.investopedia.com
www.worldbank.org
www.indiainfoline.com
www.indexmundi.com
ANNEXURES
QUESTIONNAIRE
Name:
Gender:
Male
Age:
Female
20 - 30
30 40
40 50
50 Above
Education Qualification:
H.S.C
Graduate
Post Graduate
Ocuupation:
Annual Income:
Other
Business
Self Employment
Service
Student
House Wife
Other
2,00,000
2,00,000 3,50,000
3,50,000 5,00,000
5,00,000
Q1. What are investment avenues which you are presently investing?
Equity
Currency
Commodity
IPO
Mutual Fund
Insurance
SIP
Bonds
Others
EURO
JPY
Other
GBP
Volatility
Arbitrage
Other
Speculation
2-3 months
1-2 months
Industrial
Political
Export-Import
Infrastructure
Other
Q6. How many percentage of money do you invest in currency from your income?
10%
11% - 12%
21% - 30%
31%
EURO
JYP
Other
GBP
High
High
Q10. Which service of broker you give highest age? (rate among 1 to 4)
Particulars
Research & Advisory Based Call
Less Margin
Low Brokerage
Good Trading Software
Rank