Industry profile:

What exactly is the finance and investment industry ? it is a fairly broad

ranging group of institutions that provide various financial services.
Examples of such institutions include commercial banks, merchant (or
investment) banks, insurance companies, brokerage firms, asset
managers, and an assortment of other institutions. Services provided
range from money management for private individuals to debt and equity
underwriting for corporations to insurance of insurance of policies, and
many other services . in today’s global markets, this industry is the
engine of the global economy, enabling corporations and governments to
grow and expand.

The financial services industry includes firms that are engaged in

activities such as investing, lending, insurance, securities trading and
securities insurance. This is not an exhaustive list, but these companies
can be characterized as being in one or more of the following lines of
business.

• Banking
• Insurance
• Securities brokerage
• Investment banking
• Securities trading
• Investment management or money management
• Securities analysis
• Financial planning
Investment industry in India:

Emerging strong even during the scariest phase of global financial

meltdown, India has become one of the favourite investment destinations
for the foreign investors across the globe. The investment scenario in
India is getting better and better with each passing day due to high
confidence level of the investors. Today , India is considered the 4th
biggest economy in the world. Its impressive GDP rate , especially in the
field of purchasing power, has catapulted it to second position among all
the developing nations . according to forecasts, Indian economy will
grow to become 70% in size of the economy of US.. it will also witness
macro-level stability in economic conditions. Behind all this, investment
can be said to be the key player.

Warren buffet has always mentioned that investment in India should

always be a long term story – as the industry has been growing from an
emerging market to a developed one. The next 10 years in India will
surely give good returns. India’s GDP would be around 7% to 9% in
2011. the sustainable growth rate of India would however over around
9% .before becoming the mature economy, India has another 15 to 30
year spare.
Current investment scenario in India :
Globalization and foreign direct investment from an integral part off all
the developed as well as developing economies. In fact, the growth of the
underdeveloped economies is also dependent on these key factors. These
components equip any nations with new skills, new items and provide
smooth access to market and technology. Today, every nation across the
globe is looking for foreign and overseas investors. Whether it’s India or
china. Everyone wants foreign investments.
According to recent trends, India is only second to china in the league of
favourite investment destinations.
In the report issued by department of industrial policy and promotion, the
fund inflow to India reached US$ 27.3 billion in the period 08-09,
considered from the month of April 08 to the month of march 09 . last
quarter of 08-09 alone witnessed an inflow of approx . US$ 6.2 billion in
the reports issued by RBI for outward investment from India, a growth of
29.6% to US$ 17.4 billion has been seen in the period 07-08. the figures
do not include individuals and banks. India is considered the 2nd highest
foreign employer in the united kingdom after the united states.
Global investment scenario :
Along with India, the others who are participating in the race of
investment among the developing economies are china, Singapore,
Malaysia, Russia, and brazil.. most of them are vying for contacts from
USA and Europe .
Indian Stock market:

A stock market or equity market is a public entity for the trading of

company stock (shares) and derivatives at an agreed price; these are
securities listed on a stock exchange as well as those only traded
privately. Stock markets refer to a market place where investors can buy
and sell stocks. The price at which each buying and selling transaction
takes is determined by the market forces (i.e. demand and supply for a
particular stock).

The Indian Equity market is divided in to two parts Primary market -

where the share is first issued in the form of IPO(Initial Public Offering)
and after issuing the share it is listed on exchange and share is traded on
exchange where shares can be bought and sold this is secondary market.
In India mainly there are two exchange -NSE(National Stock Exchange)
BSE-Bombay Stock Exchange. The BSE is the oldest exchange in
India(started in 1875).NSE started operation on 1994.Before 2000 shares
was held in Physical form But the main difficulty with Physical shares is
method of transaction which is open outcry system and process is not
transparent to investor also Physical shares were prone to duplication and
fraud. So in 2000 NSE introduced the electronic screen based trading
system further the introduction of Dematerializations (Conversion of
physical share in to electronic form) and depository(where the electronic
form of share is kept) revolutionized the Indian Stock market. Currently
there are mainly two Depository(DP) -NSDL and CDSL and these DP are
like bank of share. Individual/Firm can deal through Broker(who is
registered and having membership in Exchanges and Depository) for
buying and selling securities. Today NSE outpaced BSE in volume of
trade. Then what is the purpose of stock market? Stock market serves the
company by providing company the finance for long term needs and for
investor an opportunity to park there savings in corporate world and in
turn give their hand in Nation's development so stock exchange have a
very vital role in country's economic development.

To buy the shares investor has to open a trading and demat account. So
investor has to approach a broker/sub broker who has member ship in
Exchange(where the share is listed mainly NSE and BSE) and
depository(where share is kept in Demat form-Electronic form[mainly
CDSL and NSDL).

SENSEX and NIFTY are Index of BSE and NSE Blue chip share.
SENSEX consist of 30 share and NIFTY 50 share(of top most
companies) Index is the barometer of stock exchange forex in NSE there
are about 1350 listed companies listed and we cannot say in general form
market was up or down without fully looking all companies. INDEX
serve this purpose. INDEX is constructed by taking top companies
across different sector in different weightage and INDEX movement will
reflect the overall movement of market. So if NIFTY or SENSEX is up
we can generally assume market was up(does not mean all shares was up)
and vice versa. Now there are index in some sectors which can catch the
movement of that sector like CNXIT-IT sector, BANKNIFTY-Banking
sector etc. General purpose of Stock Market is for Investment but bulk of
activities done in market is day trading. Day trading means
BUYING/SELLING of shares and offsetting the position on same day.
Day traders serves the purpose of bringing the liquidity to market and
they help the market movement and more than 80% of the volume from
market is coming from day trading
Introduction of derivative market had made the day trading to grow more
and introduction of advanced day trading technique. The main tool for
Stock market investment/trading are Fundamental analysis -which studies
about the fundamental of companies and economy and Technical
Analysis-which studies the market by analyzing the past movement of
share and market.
Company profile
Consortium Securities Limited
Consortium is one of the leading broking houses in India that provides a
wide range of services nationwide to a substantial and diversified client
base that includes retail clients, high net worth individuals, corporate and
financial institutions. We are committed to our distinctive culture and
core values, which always place our client's interests first. Our values
emphasise integrity, transparency, commitment to excellence and
teamwork.
Promoters
Mr P.S. Kalra
The Chairman, Mr P. S. Kalra is one of the leading luminaries of the
stock broking arena of the northern region. A chartered accountant by
qualification, Mr Kalra has had extensive experience in taxation, finance
and company law before entering the stock broking field. He was the
Founder Director of Consortium Finance Ltd., a leading non-banking
finance company in North India. He is also a member of the institute of
internal auditors.
Mr Rohit Arora
Mr Rohit Arora is a chartered accountant with over 20 years of
experience in non – fund based financial services. He has advised fortune
1000 corporations on their India entry strategy including identifications,
negations and selection of joint venture partners.
Mr P Khurana
He is a chartered accountant (fellow member of the Institute of Chartered
Accountants of India and Institute of Chartered Accountants, England
and Wales) with over 28 years of experience. He was the Managing
director of Eternity Everest Ltd., Member of Belgian Eternity Group. Mr
Khurana was also the prinicipal with A.F. Ferguson & Company for eight
years.

Late Mr Deepak Chowdhary

He was a chartered accountant (fellow member of the Institute of
Chartered Accountants of India) having over 16 years of experience in
audit, taxation, finance and company law matters. Mr Chowdhary was
also the President of the Delhi Stock Exchange during the year 1997-98.

Nature of the business carried

Consortium is one of the leading broking houses in India that provides a
wide range of services nationwide to a substantial and diversified client
base that includes retail clients, high net worth individuals, corporate and
financial institutions. Founded in 1992 with just DSE trading
membership, we have come a long way since and are now members of all
major exchanges in India namely NSE, BSE, MCX, NCDEX, NSE
Currency & MCX-SX. In addition to this, we are also a depository
participant with NSDL.
We are committed to our distinctive culture and core values, which
always place our client's interests first. Our values emphasize integrity,
transparency, commitment to excellence and teamwork. We have more
than 20,000 clients and a presence in more than 100 locations through our
network of longstanding franchisees and sub brokers. All our offices are
managed by qualified professionals and equipped with state of the art
infrastructure (VSAT connectivity, leased lines, internet connectivity,
telephones, voice loggers, etc) to serve our clients in the best possible
manner.
Vision, mission, and quality policy
Vision
“ to build consortium securities as a globally trusted brand in the financial
services domain”
Mission
“to create values and wealth for all customers through world class quality
services and to be the most trusted and preferred financial service
company with due diligence and transparency”
Quality policy
 they are committed to distinctive culture and core values, which
always place clients interest first.
 Our values emphasizes integrity , transparency, commitment to
excellence and team work.
Products / services profile
 Equity & Derivatives
 Depository
 Currency Derivatives
 Commodities
 Mutual Funds
Equity & Derivatives
Consortium Securities provides online/offline equity & derivative trading
facilities for investors who are looking for the ease and convenience and
hassle free trading experience. Our state of the art technology (fibre
connections, VSAT network powered by Bharti, ODIN trading engine,
etc) ensure our clients the fastest and smoothest trade execution.
 In addition to our research reports, you can access a multitude of
resources like

 live quotes,
 charts,
 research,
 advice, and
 online assistance

Derivative products are structured in manner so as to curtail the risk

exposure of an investor. Index futures and stock options are instruments
that enable you to hedge your portfolio or open positions in the market.
Option contracts allow you to ride your profits while at the same time
limit the downside risk.
Our Edge :
Pan India Footprint (especially strong in North India)
News flow & distribution – We have our ears to the ground and make
sure that we pass this on to our local branches, associates and clients.
Integrity & Ethical Business Practices
Flexibility to trade anywhere/anytime (online/offline)
Depository:
Consortium Securities Private Limited offers you depository accounts
and dematerialization services as a depository participant in NSDL.
NSDL provides you a quick, secure and hassle free alternative to holding
the securities in physical form.

Facilities offered by us :
 Live Online Back Office
  Dematerialization Services
 Inter and Intra depository transfer services
 Electronic execution of DIS slips
 Confirmation SMS’ from NSDL when stock moves in/out of your
Depository account.

Currency Derivatives
Currency trading was introduced in India in 2008 and is one of the fastest
growing segments. Consortium Securities Private Limited is a member of
both the currency exchanges - NSE Currency as well as MCX-SX
Currency.
Our Edge :
 Pan India footprint
 Trade Equities and Currencies in the same account and hedge your
foreign currency exposure
 Online/Offline trading on ODIN as well as NOW (new NSEIT
platform)
Commodities:
As a member of MCX & NCDEX, we provide online/offline
commodities trading facilities for investors who are looking for the ease
and convenience and hassle free trading experience. Our state of the art
technology (fibre connections, VSAT network powered by Bharti, ODIN
trading engine, etc) ensure our clients the fastest and smoothest trade
execution.
Our Edge :
 Pan India footprint
 Ethical business practices
  Single Trading Platform (ODIN powered by Financial
Technologies) for all your Commodities trading
 Trade Anywhere & Anytime – Convenience of trading online from
home or calling/visiting a local office.
 Powerful research and analytics – Intraday trading tips on Yahoo
Messenger & via SMS

Mutual Funds
Our Mutual Fund distribution division offers you the opportunity to
diversify your investment portfolio. Not only do we offer a choice of
investment schemes from all major mutual fund provides, we take this a
step further by helping investors chose the best mutual fund based on
their investment needs.
Our Edge :
 Pan India Footprint (especially strong in North India)
 Schemes of all major fund houses available
 Access to latest news and Fund Manager view
Area of operation
Consortium securities provides a wide range activities nationwide to a
substantial and diversified client base that includes retail clients, high net
worth individuals, corporate and financial institutions. It has its presence
in more than 100 locations through its network of longstanding
franchisee’s and sub brokers.
Registered Office
36 Sant Nagar,
Near East of Kaliash,
New Delhi – 110065,
Ph: (011)-30845011/12, (011)-26422412/13
Fax: (011) 26224108.
Corporate Office
D-17 Sector-3,
Noida Dist.: Gautam Budh Nagar,
Uttar Pradesh - 201301,
Ph: (120) 3361500-09.

Other locations
 Chandigrah
 Delhi
 Uttarnchal
 West Bengal
 Haryana
 Himachal Pradesh
 Karnataka
 Rajasthan
 Uttar Pradesh
Ownership pattern
Consortium securities is a private limited company dealing in the stock
broking . it was promoted by a group of professionals. The founder
members are
Mr P.S. Kalra
Mr Rohit Arora
Mr P Khurana
Late Mr Deepak Chowdhary
Competitors information
Religare Securities Ltd
Religare Securities Ltd. (RSL), a wholly owned subsidiary of Religare
Enterprises Limited (REL), a global financial services group is a market
leading securities firm in India.The company offers equity broking
services to more than half a million clients using both, offline and online
platforms and also offers depository participant services.RSL is a
member of the NSE, BSE, MCXSX, USE and a depository participant
with NSDL and CDSL. RSL employs more than 4800 employees and has
a wide distribution reach that spans across more than 1500 locations
India.

Motilal Oswal Securities Ltd

Motilal Oswal Securities Ltd. (MOSL) was founded in 1987 as a small
sub-broking unit, with just two people running the show. Focus on
customer-first-attitude, ethical and transparent business practices, respect
for professionalism, research-based value investing and implementation
of cutting-edge technology has enabled them to blossom into an almost
2000 member team.
The company diversified client base that includes retail customers
(including High Net worth Individuals), mutual funds , foreign
institutional investors, financial institutions and corporate clients.
Company’s headquartered in Mumbai and as of September 30th, 2010,
had a network spread over 591 cities and towns comprising 1,504
Business Locations operated by Business Partners . As at September
30th, 2010, company had 666,633 registered customers.
Reliance Securities Limited
Reliance Securities Limited is a Reliance Capital company and part of the
Reliance Anil Dhirubhai Ambani Group. Reliance Securities is a
permitted user of the brand "Reliance Money" for promoting its various
products and services.
Reliance Securities endeavours to change the way investors transact in
equities markets and avails services. It provides customers with access to
Equity, Derivatives, Portfolio Management Services, Investment
Banking, Mutual Funds & IPO’s. It also offers secured online share
trading platform and investment activities in secure, cost effective and
convenient manner. To enable wider participation, it also provides the
convenience of trading offline through variety of means, including Call &
Trade, Branch dealing Desk and its network of affiliates.

KARVY Stock Broking Limited

KARVY Stock Broking Limited, one of the cornerstones of the KARVY
edifice, flows freely towards attaining diverse goals of the customer
through varied services. It creates a plethora of opportunities for the
customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes
no boundaries. Helping the customer create waves in his portfolio and
empowering the investor completely is the ultimate goal. KARVY Stock
Broking Limited is a member of: 1) National Stock Exchange (NSE) , 2)
Bombay Stock Exchange (BSE).

Share khan stock broking firm

Share khan’s equity related services include trade execution on BSE,
NSE, Derivatives, commodities, depository services, online trading and
investment advice. Trading is available in BSE and NSE. Along with
Sharekhan.com website, Share Khan has around 510 offices (share shops)
in 170 cities around the country.
Share khan has one of the best state of art web portal providing
fundamental and statistical information across equity, mutual funds and
IPO’s. Here customers can surf across 5,500 companies for in-depth
information, details about more than 1,500 mutual fund schemes and IPO
data.

PCS Securities
PCS Securities, Inc. is a sales and brokerage firm that provides research
products to the institutional investment community. The company offers
research reports, data, and analysis focusing on global equity services,
short selling and special situations, arbitrage services, and behavioural
finance. Additionally, it offers sales and marketing services that include
assistance with marketing materials, strategic planning, and distribution
base expansion. The company was founded in 1989 and is based in
Edmonds, Washington. PCS Securities, Inc. operates as a wholly owned
subsidiary of Segment Research Systems, Inc., as of September 30, 2004.

Kotak Securities Ltd

Kotak Securities Ltd. 100 % subsidiary of Kotak Mahindra Bank is one
of the oldest and largest broking firms in the Industry. The company’s
offerings include stock broking through the branch and Internet,
Investments in IPO, Mutual funds and Portfolio management service.
Kotak Securities has a full-fledged research division involved in Macro
Economic studies, Sectoral research and Company Specific Equity
Research combined with a strong and well networked sales force which
helps deliver current and up to date market information and news. Kotak
`Securities’ network spans over 321 cities with 877 outlets, with an
employee workforce beyond 5100.
Infrastructural facilities
Branch Network
Consortium has a wide network of branches and franchisees spread all
over India to fulfil all your investment needs. We have an extremely
strong footprint in North India (Delhi, Punjab, Haryana & Himachal)
State of the art technology
We believe that technology is one of our biggest strengths and our entire
business process is driven by the latest technology for easy, swift and
secure transactions. All our offices at various locations are integrated
with private VSAT Network and internet connectivity, which enables
access to our back office and depository data on real time basis. Our
clients can also access their back office and depository reports from our
website.
 Single Platform with shared limits for all your trading needs
 Trade Anywhere/Anytime – trade on the internet or call/visit a
local office.
 NEAT terminals in regional offices for faster execution of trades
  Private VSAT network powered by Bharti with Internet Backups
for worst case scenarios.
 CTCL network trading engine powered by Financial Technologies
(ODIN – market leader)
 Real-time access to back office and depository data.
 One of the first few adopter of new NSEIT platform (NOW)

Consortium securities has it head office at Uttar Pradesh and has its 15
branches spread over cities in India . the main server at the head office in
is connected by VSAT to NSE and BSE and all the branch offices are
connected by the branch network , VPN, VSAT and the INTERNET
The consortium have their branches all around India that branches have
the computers, telephones and a brad band internet services as their basic
necessity. They have a very comfortable space office to work with very
good infrastructure provided to both the front desk as well as the back
office executives .
Consortium securities use ODIN and NOW software technology and also
have their own separate accounting software for retrieving all the data
and information about their clients. While for portfolio management
service and mutual fund, there is different software .
The consortium securities over all provides the good and more
satisfactory infrastructure facility which keeps customer happy and also
employees and satisfactory all the time.
Work flow model :
The work flow model is used to describe the trading, clearing, and
settlement process of equities trading in the market. It is also known as
end to end model which is given below.
 customer

Opening of trading and D-mat A/c

Delivery of trading kit

Demonstration to the customer

Receiving of order form

Placing the order in the market The client The dealer

buy sell

Sale of delivery shares from the

Payment by client client by dealer

Transfer the amt to seller’s Receive amt of shares from buyer

broker broker

Dealer receives the delivery in the Deposit the amt Delivery of

name of the client from the in the sellers d- shares to the
seller’s broker. mat a/c buyers broker

Transaction is settled

Future growth and prospectus :

The company is planning to open nearly 10 new branches out of which
major ones are in south India as it focus on south India as the its logo
says “ thoughtful and progressive” consortium securities limited have the
good and targeted plans to keep grow and climb the ladder of success and
shine .

The above inception of the consortium securities limited has always been
growing and strengthening its products wit good services.

Mckensy’s 7s frame work with special reference to organization

under study:
Introduction
The 7-S frame work was developed by the consultants at the Mckinsey
company, a very well known management consistency firm in U.S.A,
towards the end of 1970’s to diagnose the cause of organizational
problems and to formulate programmes for improvement developed the
7-S frame work.
The Mckinsey 7-S model involves seven interdependent factors which are
categorised as either hard or soft elements :
“Hard” elements are easier to define or to identify and management can
directly influence them
“Soft” elements on other hand, can be more difficult to describe, and are
less tangible and more influenced by culture. However, these soft
elements are as important as the hard elements.

Hard elements Soft elements

Strategy Shared valve
Structure Skills
System Style
Staff

The mckinsey’s 7-s frame work is shown in figure:

Strategy : the plan devised to maintain and build competitive advantage
over the competition.
Structure: the way the organization is structured and who reports to
whom.
Systems: the daily activities and procedures that staff members engaged
in to the get the job done.
Shared valves: called “super ordinate goals” when the model was first
developed, these are the core valves of the company that are evidenced in
the corporate culture and the general work ethic.
Style: the style of leadership adopted.
Staff: the employees and their general capabilities.
Skills: the actual skills and competencies of the employees working for
the company.
Placing the shared valves in the middle of the model emphasizes that
these valves are central to the development of all the other critical
elements. The company’s strategy, structure, system, style, staff, and skill
all stem from why the organization was originally created, and what it
stands for. The original vision of the company was formed from the
valves of the creator. As the valves change, so do all the other elements.
Strategy
A strategy is a plan of action designed to achieve a particular goal.
Strategy refers to the systematic action and allocation of resources to
achieve the companies aim the integrated vision and direction of the
company as well as the manner, which it drives, articulate, communicates
and implements that vision and direction. It can also be defined as the
choice of direction and action that the company adopts to achieve its
objectives in a competitive situation .
As per the vision and mission statement of the company, the main
strategy of consortium securities is to gain competitive advantage over
the rivals not by letting the others down but by taking its own standards
to a higher level through better services and customer satisfaction. Their
strategic goal is to excel in its service with integrity, diligence and
transparency in satisfying the customers investment needs and to build
itself as the trusted and a world class financial service provider.
System:
The daily activities and procedures that staff members e engage in to get
job done. System comprises of the main system that run the organization
like the finance or the human resource systems.
At consortium securities they use a computerised information system
(CIS) from where all the important data are being collected and then
processed further as per various needs. And the decision making system
too is dependent on the CIS which is usually in the hands of the top
management. The management control system at consortium is all bound
by the company’s vision and mission statement as well as their immediate
goals and targets. This is taken care of by the responsibility centre at the
head office. While the appraisal and the reward systems are on a merit
rating cum experience basis so that they can encourage and retain the
existing employees as well as attract the most potential employees while
recruiting.
So, this as a whole helps consortium to bind the different constituents of
the organization and positions in fact to facilitate the performance of the
entire organization in a coordinated , cohesive and fruitful manner.

Structure:
Business needs to be organized in a specific form of shape that is
generally referred as organizational structure. Organization are structured
in a variety of ways, dependent on their objectives and culture. The
structure of the company often dictates the way it operates and performs.
Traditionally, the business have been structured in a hierarchical way
with several divisions and departments, each responsible for a specific
task such as human resources management, production or marketing .
many layers of management controlled the operations, with each
answerable to the upper layer of management.

BOARD MEMBERS AND CHAIRMAN

CEO and MD

PRODUCT HEAD

REGIONAL HEAD

ZONAL HEAD

BRANCH MANAGER
Future and option
Depository and D-Mat
Currency trading
Mutual fund
Commodities trading

EXECUTIES

TRAINEES
Shared valves:
Shared valves are the core valves of the company that are evidenced in
the corporate culture and the general work ethics. The valves of
consortium are its core foundation for its excellence in its day to day
business operations which drives it towards the success. They are:
• Integrity
• Transparency
• Commitment to excellence
• Team work.
Style:
Style of leadership refers to the manner in which an individual uses his or
her talent, valves, knowledge, judgement, and attitudes to lead and relate
to others. Style express the person’s character. Style is the leadership
approaches of top management and the organization’s overall operating
approach; also the way in which the organizations employees present
themselves to the outside world, to suppliers and customers.
The company follows a top-down style of management where in the top
level managers would give instructions and the same is followed the
lower levels. However, at consortium they have a very pleasant and
cooperative culture where everyone’s ideas are respected and considered.
All are participative when it comes to working at the office so as to reach
the targets and meet the organizational goals jointly in the least possible
time.
Staff:
Organizations are made up of people and it’s the people who makes the
real differences to the success of the organization in the increasingly
knowledge based society. The importance of human resource as thus got
the central position in the strategy of the organization, away from the
traditional model of capital and land.
The people working in consortium securities have technical skills that are
required for the day to day operations in the company. There are nearly
150 workers working in consortium securities limited.
Skills:
Skills deals wit the strongest skills,, actual skills and competencies of the
employees working for the company and how they are monitored. A skill
is the ability, knowledge, undertaking, and judgement to accomplish a
task . skills may be defined as what the company does best; the
distinctive capabilities and competencies that reside in the organization.
Consortium securities have variety of skills in carrying out business. The
company has its distinctive competency in providing excellent investment
service and known for its strong and long standing relationship with
investors, other companies and its clients.
The company also has potential and proficient, technical and fundamental
analysis who help to analyse the market carefully and correctly before
any investment. The dealers at consortium securities are also well
qualified and fully trained. Thus, the skills which are the dominant
capabilities and core competencies possessed by the organization are very
much in parallel to organizational strategy, structure, systems, and the
culture.
SWOT ANALYSIS OF CONSORTIUM SECURITIES LIMITED
A SWOT analysis is a tool, used in management and strategy
formulation. It can help to identify the strengths, weakness, opportunities,
and threat’s of a particular company.
The swot analysis shown in figure

STRENGTHS :
• Consortium has a wide network of branches and franchisees spread
all over India to fulfil all investment needs of the customers.
• State of the art technology: technology is one of the biggest
strengths and the entire business process is driven by the latest
technology for easy, swift and secure transactions.
-Single Platform with shared limits for all your trading needs
-Trade Anywhere/Anytime – trade on the internet or call/visit a
local office.
-NEAT terminals in regional offices for faster execution of trades
-Private VSAT network powered by Bharti with Internet Backups
for worst case scenarios.
-CTCL network trading engine powered by Financial Technologies
(ODIN – market leader)
-Real-time access to back office and depository data.
- One of the first few adopter of new NSEIT platform (NOW)

• Highly trained work force.

• Competitive cost.
• Large base of skill talent.
• Fully fledged financial services group offering equity broking,
commodities broking, IPO distribution, mutual fund distribution,
internet trading, and investment etc…
• The offices at various locations are integrated with private VSAT
network and internet connectivity, which enables access to its back
office and depository data on real time basis. The clients can also
access their back office and depository reports from the website.
• People: besides the core promoters, the group is having its full
fledged teams headed by young and dynamic professionals like
chartered accountants, company secretaries, MBA’s, IT
professionals etc… to handle the various divisions of the company.
WEAKNESS
• Few branch networks and less physical presence ( which is
currently predominant only in the northern part of India).
• Poor advertisement activities.
• No global reach.
• Weak brand name .

OPPORTUNITIES:
• Scope for taking its business overseas and going global.
• Scope for increasing its branch network especially in the important
financial centres as well as extending its physical presence in other
parts of the country.
• Up gradation of the latest technology to give better and faster
services to its clients.

THREATS:
• The ever increasing and challenging neck-to-neck competition
specially with those established and existing reputed stock broking
companies.
• Uncertainty of the market and volatility and fluctuations in the
stock prices.
• Change in customer needs, preferences and taste.
• Threat from the new entrants into the field of stock broking.
Learning experience
With the help of the college requisition letter I approached many
companies and I got permission in consortium securities limited. This
opportunity makes me to learn from the company and peoples so the
peoples at consortium securities are very friendly and with the their help
and cooperation I could complete the project successfully . I understood
the stock market and how the orders are placing and how the trading is
done and how the brokers receives the order from the clients and execute
the order and how modify , how to cancel the order etc…
Consortium securities are a stock broking company I saw and learned
how the trading is done online using the various software’s , how the
records of the clients are maintained etc…
In the consortium securities daily the some customers coming and placing
the order and going back and they are discussing each together with
employees regarding stock market variations etc…
 Part b
Statement of the problem :
Derivatives are have the product of futures in that the stock futures are
also the one of the various type. It indicate the future price and spot
price,
 Does volatility in spot price increases with introduction of futures
trading in stock market.
 Does the relationship between spot and futures stable?
 Whether spot lead futures or futures lead spot.
So that’s the reason this project titled “ impact of futures trading on spot
price volatility – a case study on stock futures” has been taken up.

Objective of the study:

1. to analyze the future trading
2. to study stock futures
3. to study impact of derivatives futures trading on spot price
volatility.

Scope of study:
Derivative products initially emerged, as hedging devices against
fluctuations in commodity process and commodity-linked derivatives
remained the sole form of such products almost three hundred years. The
financial derivatives came into spotlight in post – 1970 period due to
growing instability in the financial markets. However, since their
emergence these products have become very popular and by 1990’s they
accounted for about two-thirds of total transactions in derivative
products. In recent years , the derivatives market has grown tremendously
both in terms of variety of instruments available, their complexity and
also turnover. In the class of equity derivatives, futures and options on
stock indices have gained more popularity than on individual stocks,
especially among institutional investors who are major users of index-
linked even small investors find these useful due to high correlation of
the popular indices with various portfolios and ease of use.
The impact of futures on spot price volatility little consensus has
emerged. Further more hardly any study has been conducted so far to
examine the effect of futures trading on level of volatility with respect to
Indian market.
This study is done on the basis of assumed prices. This study pertains to
only future prices and spot prices. The future price and spot price are
taken for one or two years for purpose of calculation and the detailed
study is based on the secondary data available at national stock exchange.
Methodology:
Research design
This indicates plan of actions to be carried out in connection with the
proposed objective. It provides a guidance to enable to keep track of
action in order to achieve the goals. this is descriptive study in which an
attempt is made to evaluate the future trading of derivatives and their
impact on the spot price. It includes data collection and the job done as a
the study is conducted on the aspects like:
 Detail study about stock futures.
 Future trading on spot price volatility.

Sources of data:
The study was made through literature collected from the secondary data
which available through different media’s which are as follows.
 Internet
 News papers
 Text books
 Websites
 NCFM books

Limitations of the study:

1. the study limited to the secondary data only.
2. this study is limited to stock futures of derivatives only.
3. due to shortage of time detailed research couldn’t be undertaken.

Review of literature:
Study on derivatives
Derivatives is a contract underlying where value is derived from the valve
of the underlying asset can be index, securities, commodities, currency,
live stock etc… derivatives are contractual in nature. They give the
facility to buy or sell the underlying at a pre specified price and time.

Products in derivatives :
Derivatives have many products like forwards, futures, options, swaps,
swaptions, etc.
Contract value is the value of the contract and its calculated as-
Contract value = future price * lot size.
Minimum contract value:
Exchange has recommended that the minimum contract value of
derivative contracts traded in the Indian markets should fixed not below
Rs 2,00,000 .

Life of derivatives:
The life of derivatives is limi9ted and at any point of time there are three
contracts available for trading one month, two month, three month. The
life of the derivative instruments of a particular month expires on the last.
Thursday and if trading doesn’t take place on that day then it is settled on
the previous day.
Lot size:
Lot size refers to the number of underlying securities in one contract.
Additionally, for stock specific derivative contracts SEBI has specified
that the lot size of the underlying individual security should be in
multiples of 100 and fractions, if any, should be rounded off to the next
higher multiple of 100.
Ex: if shares of TATA ltd are quoted at Rs. 500 each the minimum
contract size is Rs. 2,00,000, then the lot size for the particular script
stands to be 200000/500=2000 shares i.e. one contract in TATA ltd
covers 2000 shares.

Theoretical back ground

Introduction:

The emergence of the market for derivative products, most notably

forwards, futures and options, can be traced back to the willingness of
risk-averse economic agents to guard themselves against uncertainties
arising out of fluctuations in asset prices. By their very nature, the
financial markets are marked by a very high degree of volatility. Through
the use of derivative products, it is possible to partially or fully transfer
price risks by locking-in asset prices. As instruments of risk,
management, these generally do not influence the fluctuations in the
underlying asset prices. However, by locking-in asset prices, derivative
products minimize the impacts of fluctuations in asset prices on the
profitability and cash flow situation of risk-averse investors.
Derivatives defined as “ derivative is a product whose valve is derived
from the valve of one more basic variables, called bases ( underlying
asset, index, or reference rate), in a contractual manner. The underlying
asset can be equity, forex, commodity or any other asset.
In the Indian cont6ext the securities contract (regulation) act, 1956
(SC®A) defines “ derivative” include-
1. a security derived from a debt instrument , share, loan whether
secured or unsecured, risk instrument or contract for differences or
any other form of security.
2. a con6tract which derives its value from the prices, or index of
prices, of underlying securities.

Emergence of financial derivative products:

Derivative products initially emerged as hedging devices against

fluctuations in commodity prices, and commodity-linked derivatives
remained the sole from such products for almost 300 years. Financial
derivatives came into spotlight in the post-1970 period due to growing
instability in the financial markets. However, since their emergence, these
products have become very popular and by 1990’s , they accounted for
about two-thirds of total transactions in derivatives products. In recent
years, the market for financial derivatives has grown tremendously in
terms of variety of instruments available, their complexity and also
turnover. In the class of equity derivatives the world over, futures and
options on stock indices have gained more popularity than on individual
stocks, especially among institutional investors. Who are major users of
index-linked derivatives. Even small investors find these useful due to
high correlation of the popular indexes with various portfolios and ease of
use.

Factors driving the growth of derivatives:

Over the last three decades, the de3rivatives market has seen a
phenomenal growth. A large variety of derivatives contracts have been
launched at exchanges across the world. Some of the factors driving the
growth of financial derivatives are:
1. increased volatility in asset prices in financial markets.
2. increased integration of national financial markets with the
international markets,
3. marked improvement in communication facilities and sharp decline
in their costs,
 4. development of more sophisticated risk management tools,
providing economic agents a wider choice of risk management
strategies, and
5. innovations in the derivatives markets, which optimally combine
the risks and returns over a large number of financial assets leading
to higher returns, reduced risk as well as transaction costs as
compared to individual financial asset.

Derivative products:
Derivative contracts have several variants. The most common variants are
forwards, futures, options and swaps. We take a brief look at various
derivatives contracts that have come to be used.
 Forwards:
a forward contact is a customized contract between two
entities, where settlement takes place on a specific date in the future at
today’s pre-agreed price.
 Futures:
a forward contract is customized contract between two
entities, where settlement takes place on a specific date in the future at
today’s pre-agreed prices.

 Options:
options are two types – calls and puts. Calls give the
buyer the right but not the obligation to buy a given quantity of the
underlying asset, at a given price on or before a given future date. Puts
give the buyer right, but not the obligation to sell a given quantity of
the underlying asset at a given price on or before a given date.
 Warrants:
options generally have lives of up to one year, the
majority of options traded on options exchanges having a maximum
maturity of nine months. Longer-dated options are called warrants and
are generally traded over-the-counter.
 LEAPS:
the acronym LEAPS means long – term equity
anticipation securities. These are options having a maturity of up to three
years.
 Baskets:
Baskets options are options on portfolios of underlying
assets. The underlying asset is usually a moving average of a basket of
assets. Equity index options are a form of basket options.
 Swaps:
 Swaps are private agreements between two parties to
exchange cash flows in the future according to a prearranged formula.
They can be regarded as portfolios of forward contracts. The two
commonly used swaps are:
1.interest rate swaps: these entail swapping only
the interest related cash flows between the parties in the same currency.
2. currency swaps: these entail swapping both
principal and interest between the parties, with the cash flows in one
direction being in a different currency than those in the opposite
direction.
 Swaptions:
swaptions are options to buy or sell a swap that will
become operative at the expiry of the options. Thus a swaptions is an
options on a forward swap. Rather than have calls and puts, the
swaptions market haw receiver swaptions and payer swaptions. A
receiver swaptions is an options to receive fixed and pay fbating. A
payer swaptions is an option to pay fixed and receive fbating.

Participants in the derivatives market:

The following three broad categories of participants-hedgers,
speculators, and arbitrageurs trade in the derivatives market. Hedgers
face risk associated with the price of an asset. They use futures or options
markets to reduce or eliminate this risk speculators wish to bet on future
movements in the price of an asset. Futures and options contracts can
give them an extra leverage; that is, they can increase both the potential
gains and potential losses in a speculative venture. Arbitrageurs are in
business to take advantage of a discrepancy between prices in two
different markets. If, for they see the futures price of an asset getting out
of line with the cash price, they will take offsetting positions in the two
markets to lock in a profit.

Difference between derivatives and equities:

as we have understood derivatives derives its value from the underlying
asset that could be equity or index. Thereby buying derivatives
instruments one gets a chance to play on the price changes in the
underlying. On the other hand, equity is a share in the share capital of a
company. Thus, by buying equity one gets a right to share the profits
earned by the company. Owning shares entitles the investor to corporate
actions such as dividends, bonus, stock-splits etc. this is not the case for
derivatives. A person holding derivatives contracts is not eligible for any
corporate actions like dividend, bonus, stock-split etc.

Economic function of the derivative market:

 1. price in an organized derivatives market reflect the perception of
market participants about the future and lead prices of underlying
to the perceived future level. The prices of derivatives converge
with the prices if the underlying at the expiration of the derivative
contract. Thus derivatives help in discovery of futures as well as
current prices.
2. the derivatives market helps to transfer risks from those who have
them but may not like them to those who have an appetite for them.
3. derivatives, due to their inherent nature, are to the underlying cash
markets. With the introduction of derivatives, the underlying
market witness higher trading volumes because of participation by
more players who would not otherwise participate for lack of an
arrangement o transfer risk.
4. speculative trades shift to a more controlled environment of
derivative market. In the absence of an organized derivatives
market, speculators trade in the underlying cash markets.
Margining, monitoring and surveillance of the activities of various
participants become extremely difficult in these kind of mixed
markets.
5. an important incidental benefit that flows from derivatives trading
is that it acts as a catalyst for new entrepreneurial activity. The
derivatives have history of attracting many bright, creative, well
educated people with an entrepreneurial attitude. They often
energize others to create new business, new products and new
employment opportunities the benefit of which are immense.

NSE’s derivatives market:

The derivatives trading on the NSE commenced with S&P CNX Nifty
index futures on June 12, 2000. the trading in index options commenced
on July 4, 2001 and trading in options on individual securities
commenced on July 2. 2001. single stock futures were launched on
November 9, 2001. today , both in terms of volume and turnover, NSE id
the largest derivatives exchange in India. Currently, the derivatives
contracts have a maximum of 3 month expiration cycles. These contracts
are available for trading, with 1 month, 2 month and 3 month expiry. A
new contract is introduced on the next trading day following the expiry of
the near month contract.

Participants and functions:

NSE admits members on its derivatives segment in accordance with the
rules and regulations of the exchange and the norms specified by SEBI.
NSE follows 2- tier membership structure stipulated by SEBI to enable
wider participation. Those interested in taking membership on F&O
segment are required to take membership of CM and F&O segment or
CM, WDM and F&O segment. Trading and clearing members are
admitted separately. Essentially, a clearing member (CM) does clearing
for all his trading members (TMs), undertakes risk management and
performs actual settlement . there are three types of CMs:
 self clearing member: a SCM clears and settles trades executed by
him only either on his own account or on account of his clients.
 Trading member clearing member: TM-CM is a CM who is also
a TM-CM may clears and settle his own proprietary trades and
client’s trades as well as clear and settle for other TMs.
 Professional clearing member: PCM is a CM who is not a TM.
Typically, banks Or Custodians Could Become A PCM And Clear
And Settle For TMs.

Introduction To Futures:
future markets were designed to solve the problems that exist in forward
markets. a futures contract is an agreement between two parties to buy or
sell an asset at a certain time in the future at a certain price. but unlike
forward contracts, the futures contracts are standardized and exchange
traded. to facilitate liquidity in the futures contracts, the exchange
specifies certain standard features of the contract. it is standardized
contract with standard underlying instrument, a standard quantity and
quality of the underlying instrument that can be delivered,(or which can
be used for reference purposes in settlement) and a standard timing of
such settlement. a future contract may be offset prior to maturity by
entering into an equal and opposite transaction. more than 99% of futures
transaction are offset this way.
The standardized items in a futures contract are:
 Quantity of the underlying
 Quality of the underlying
 The date and month of delivery
 The units of price quotation and minimum price change
 Location of settlement

Various types of futures:

 Stock futures
 Index futures
These contacts derive their value from the value of the underlying index.
Stock futures: these futures contracts where the underlying is a stock.
Ex: futures on SBI, ONGC etc.
Index futures: these future contracts where the underlying is an index
i.e., the underlying asset is the index, are known as index futures
contracts.
Ex: future contracts on NIFTY index.

Difference between futures and forwards:

Futures
Trade on an organized exchange
Standardized contracts terms
Hence more liquid
Requires margin payments
Follows daily settlement
Forwards
OTC in nature
Customized contracts terms
Hence less liquid
No margin payment
Settlement happens at end of period

Futures terminology:
 Spot price : the price at which an asset trades in the spot market.
 Futures price: the price at which at which the futures contract
trades in the futures market.
 Contract cycle
 Expiry date
 Contract size
 Basis
 Cost of carry
 Initial margin
 Marking-to-market
 Maintenance margin

Factors that affect the futures:

The factors that affect the spot price also affect the future price. The
various factors are the sentiments of the investors about the stock and
whole market, the expectations about the results and cost of carrying.

Basis:
Basis is defined as the difference between spot and future price and there
will be difference basis for each delivery month. In a normal market,
basis will be positive. This indicates that futures price generally exceeds
spot rice.

Volatility:
Volatility is the rise or fall of a stock sharply in a set period. Volatility for
an option means the fluctuations in the price of the underlying from the
time the investor buys/sell an option and all till the expirations.
Volatility is typically calculated by using variance or annualized standard
deviation of the price or return. Highly volatile means that there are huge
swings in a very short period.