LDRP Institute of Technology and Research,

Gandhinagar.

Report Proposal

To: Prof.Surya Krishna Mantrala

Head of Department, MBA,
LDRP Institute of Technology and Research,
Gandhinagar

From: Pankaj Dholakia (15)

Vinod Patel (38)

Date: 31st January, 2010.

Subject: Proposal for the Grand Project report for the academic year 2009-10.

Topic: ‘Derivatives In India’

Respected Sir,

We, the students of MBA-III (Finance), LDRP Institute of Technology and Research, hereby
submit our proposal for Grand project report on above mentioned topic as a fulfillment for our
curriculum.

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  Importance of Derivatives in India:

A derivatives instrument broadly is a financial contract whose payoff structure is determined by

the value of an underlying commodity, security, interest rate, share price index, and exchange
rate. Thus a derivative instrument derives its value from some underlying variable. A derivative
instrument by itself does not constitute ownership. It is, instead, a promise to convey ownership.

Derivatives have become very important in the field finance. They are very important financial
instruments for risk management as they allow risks to be separated and traded. Derivatives are
used to shift risk and act as a form of insurance. This shift of risk means that each party involved
in the contract should be able to identify all the risks involved before the contract is agreed. It is
also important to remember that derivatives are derived from an underlying asset. This means that
risks in trading derivatives may change depending on what happens to the underlying asset.

• Objective of study:

 To study the derivatives market in India.

 To study how derivatives market has evolved in India in the last few years.

 To understand how derivatives market work, how contract is executed, how settlement
of a contract takes place, what are the different factor which had contributed to the
success of derivatives in India.

 To Study the relationship of different derivatives parameters on Cash price of a

particular share.

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 • Scope of the Study:
Since the very beginning of derivatives, players started finding out relationship between the Cash
Market and the Derivatives Market. We shall study the relationship between the Cash Market and
different derivatives market parameters like “Put call Ratio (open interest), Put call Ratio
(volume), Volume Traded in derivatives Market, Open Interest”.

• Importance of the study

The study is very much important in the financial sector. Because it will help us to know how
it affects the corporate and their Risk Management techniques.

• Research Methodology

A) Area of Study : Ahmedabad Gandhinagar and Baroda.

B) Sample Technique : Interview.

C) Research Design : Exploratory Study.

D) Data : Primary and Secondary Data.

E) Sources of Data :

I. Primary Data will be collected from corporate.

II. Secondary Data will be collected from Books, Magazines, Journals, Newspaper
and Internet.

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 • Tentative chapter plan

Section One: Introduction

Section Two: History of Derivatives
Section Three: Types of Derivatives
Section Four : Types of Traders
Section Five: Other theoretical aspects of Derivatives
Section Six: Regulations related to Derivatives
Section Seven: Recent trends in Derivative markets
Section Eight: Research & Findings
Section Nine: Conclusion
Bibliography

Thanking you,

Pankaj Dholakia. (15)

Vinod Patel. (38)