1

SUMMER TRAINING PROJCT REPORT ON

€€RESPONSIVENESS€OF€THE€CLIENTS€TO€THE€NEWEST€SEGMENT € OF€COMMODITY€&€CURRENCY€TRADING € A
SHAREKHAN LTD.
KOLKATA PREPARED BY SUMAN PAUL ENROLLMENT NO.- 08FC116 BATCH- 2008-10 UNDER THE
GUIDENCE OF Prof. A.K. MISHRA (INTERNAL GUIDE) SUBHRAJEET MISHRA (EXTERNAL GUIDE
)
As a Partial Fulfillment of PGPFC Programme of IMIS
Institute of Management & Information Science Bhubaneswar
TABLE OF CONTENTS
2
TITLE FLY PAGE………………………………………………. . . 2. TITLE PAGE………………………………………………….......... 3. TABLE O
TUDY……………………………… 1.2) SCOPE & LIMITATION OF STUDY……………………………………………..
1.
9. CHAPTER-2: MAIN TEXT /BODY 2.1) ABOUT PROJECT……………………………………. 2.2) ABOUT SHAREKHAN LTD………
CY……………..
10.
CHAPTER-3: DERIVATIVE………………………………. 3.1) TYPES OF DERIVATIVES: FORWARDS……………………………………… FUTUR
ATIVES MARKET…… 3.5) COMMODITY MARKET: A PERSPECTIVE………. CHAPTER- 4: ELEMENTS OF COMMODITY
MARKET…….. 4.1) CASH MARKET…………………………….. 4.2) FORWARDS & FUTURES MARKET……… 4.3) FORWARD CO
RACT FORMAT: SOYABIN…………
3
11.
12.
CHAPTER-5: HISTORY/ BACKGROUND……………………… 5.1) GLOBAL SCENARIO……………………… 5.2) INDIAN SCENARIO…
DITY MARKET IN INDIA………………………… CHAPTER-6: PROCESS/MECHANISM……………………….... 13.1) How to earn
?............................ CURRENCY FEATURES
13.
CHAPTER-7: HISTORY/BACKGROUND……………………… 7.1) THE EVOLUTION & MECHANICS IN CURRENCY FUTURES……
14. 15.
CHAPTER-8: TYPES OF FUTURES…………………………. 8.1) PARTICIPANTS…………………………… 8.2) PRICING……………………………
HANISM……………………… 9.1) CONTRACT DESIGN…………………….. 9.2) SIZE OF CONTRACT…………………….. 9.3) TENOR O
LEMENT CYCLE……………………
16.
17. CHAPTER-10: 10.1) ELIGIBLE PERTICIPANTS…………… 10.2) UNIQUE IDENTIFICTION NO……….. 10.3) M
TIMINGS…………………… 10.4) MEMBERSHIP TYPES…………………
4
18.
CHAPTER-11: 11.1) GOLD & USD RELATIONSHIP…………. 11.2) STOCK & GOLD RELATIONSHIP………
19. CHAPTER-12: RESEARCH & METHODOLOGY…………………. 12.1) PRIMARY DATA……………………… … 12.2) SECONDAR
NDINGS……………………………………………………… 21. CONCLUSIONS……………………………………………….
22.
RECOMMENDATIONS……………………………………….
23. REFERENCES………………………………………………….
5
DECLARATION I, SUMAN PAUL student of PGPFC Programme (Batch: 2008-10) of Institu
te of Management and Information Science have happily declare that I have succes
sfully completed my SUMMER TRAINING Programme form SHAREKHAN LTD. on the project
that the company assigned me. The project which I was assigned is “RESPONSIVNESS
OF THE CLIENTS TO THE NEWEST SEGMENT OF COMMODITY & CURRENCY TRADING”. This is com
pletely a new segment in India and so it was a different challenge for me to ass
ess & analysis customer reaction to this new concept. But I think I am successfu
lly done my project & write this project report. For the purpose of the project
I have taken few appointments of some customer of Sharekhan Ltd., some HNI (High
Net worth Individual) and some general customer who has regularly trade in shar
e market. Prior to the election their reaction was very negative, even they were
not ready to listen about the share market also. But after the election the pic
ture turn into 180 degree opposite direction. So I have prepared a questionnaire
and did a survey on the basis of those questions about the awareness of the cus
tomer of commodity and currency. I have taken 200 sample sizes and to make it au
thentic and concrete I did that survey.
6
ACKNOWLEDGEMENT Through out this project I have connected so many personalities,
whose are unforgettable from my mind ever. It was great experience from my side
to work with them, work under them. With out their contribution & help it was a
lmost impossible for me to do this project. First of all I thank my internal gui
de Prof. A.K.Mishra, who support me a lot and encourage me through mailing. Seco
nd I like to thank MR. NILESH SHAW, (ASSOCIATE VICE PRESIDENT) of SHAREKHAN LTD.
who assess this project report & evaluate it and give me the certificate. Third
I must thank my external guide MR. SUBHRAJEET MISHRA (HEAD OF THE COMMODITY DEP
ARTMENT) of the company. Next I like to thank MR. LALIT KEDIA (Group Head, Easte
rn region), MR. ANKIT RUIA (RELATIONSHIP MANAGER, COMMODITY), MR. SUKUMAR BHAREC
H (REGIONAL HEAD, EQUITY DEPARTMENT). I like to thank two of my group members Mr
. Debasish Das (08FC078) and Mr. Sumanto Chowdhury (08FC031) during the project.
These guys also help me a lot. And finally I am thanking to all those customer
who help me to do the survey. Thank you.
7
ABSTRACT
The project which I had done during the summer training programme is completely
a marketing research based project. In this group project we introduce, identifi
ed and explore a dimension & direction of investment in commodity & currency der
ivatives. For assessing the reaction of the customer I have done a survey, by pr
eparing a questionnaire. We have taken 200 sample sizes in the survey & conduct
them in our project. As a result of that survey we have observed 95% of the samp
le (investors) not showing any sort of willingness to invest in the share market
; they have no interest to at least listen about the commodity & currency deriva
tive. As a reason for their this kind of unwillingness they have produced so man
y factors. One of those factors is lack of self confidence to reinvest their mon
ey after that shocking global turmoil. Rest of those 5% showed some kinds of cou
rage to listen about the upcoming segments- commodity & currency derivatives. We
really appreciate their thoughts. They are the true investors not speculators.
8
CHAPTER - 1 INTRODUCTION
1.1.
OBJECTIVE OF STUDY:
The basic reason or objectives behind this project are
1. To watch the market condition within these few months prior of election & pos
t election period. 2. To watch customer responsiveness to the newest segment of
commodity & currency trading. 3. Watch their behavior to invest in those new seg
ments. 4. To study & learn from their motivation & sentiment about investment in
commodities & currencies. 1.2.
SCOPE & LIMITATION OF STUDY:
This project has number of scope to study. The main scopes that I find out are:
1. To learn about the reason behind the difference between their interest to inv
est in share market. 2. To study & sort out those factors which influence a lot
to motivate them about invest in the market. 3. To know much more about the proc
ess that the company followed year after year how to invest, when & why to inves
t. 4. To know in which segment they prefer the customer to invest & the reason l
ying behind that. 5. How the customer react on the upcoming segments. This proje
ct has some limitations which I feel to explain. Those are: 1. Time that has bee
n allowed to me is not enough to do the technical analysis over the market condi
tion.
9
2. The survey what we did together result showed a one sided result. 3. Though t
he market was growing after election but investors were not agree to take initia
tive to invest in the market, while this the right time to invest. The reason be
hind this abstract decision has been completely unknown.
10
CHAPTER - 2
MAIN€TEXT/€BODY
2.1)
ABOUT€PROJECT:
The project on which I was assigned is simply marketing oriented project. It is
about the customer responsiveness to the newest segments i.e. commodity & curren
cy. Their level of awareness and their confidence in this particular unknown sec
tion was my primary object of study of that survey. Commodity concept has came i
nto the market in the year 2003-04. There 60 different types of commodities has
been traded in the market. According to the global demand and supply their price
has been determined. It has been fluctuated through out the day. So customer re
sponse towards this variation is quiet different in the market. 2.2) ABOUT€SHAREKH
AN€LTD. Sharekhan Ltd. is one of the leading broking farm in India. They are being
in this field more than 80 years. They are one of the founder member of BSE & N
SE index. They basically deals with stock market, commodities, mutual fund, PMS
(Portfolio Management Services), IPO. They have a strong research team in Mumbai
.€ Sharekhan, India’s leading stockbroker is the retail arm of SSKI, an organization
with over eight decades of stock market experience. With more than 220 share sh
ops in 90 cities, and India’s premier portal, www.sharekhan.com, we reach out to c
ustomers like no one else. Sharekhan offers you trade execution facilities on th
e BSE and the NSE, for cash as well as derivatives, c, a ,depository services an
d most importantly, investment advice tempered by 80 years of research and broki
ng experience. 2.3)
ABOUT€COMMODITY€&€CURRENCY:
Before starting about commodity I will say some words about DERIVATIVES. Because
commodity & currency both itself is an important part of Derivative Segment. Wh
ich I will discussed in the next chapter. It is a vast chapter. All the Commodit
y & currency trading is a part of derivative market.
11
CHAPTER- 3 €€€€€€€€€€€€€€€€€€€€€€€€€€€€ DERIVATIVE€ €: Derivative is a product whose value
s, called underlying. The underlying could be equity, index, Forex, commodity, o
r any other asset. Derivatives are legal & valid only if such contracts are trad
ed on a recognized stock exchange, therefore, precluding OTC derivatives. 3.1) T
ypes of Derivatives:
•
€ €FORWARDS: A FORWARD contract is a customized contract €€€
between two entities, where settlement takes place on a specific date in the fut
ure at today’s pre-agreed price.
•
€ Futures: A FUTURE contract is an agreement between two €€€
parties to buy or sell an asset at a certain time in the future at a certain pri
ce. Futures contracts are special types of contracts in the sense that the forme
r are standardized exchange -traded contracts, such as futures of nifty index.
•
€ OPTIONS:€ An OPTION is a contract, which gives the right, but not €
an obligation, to buy or sell the underlying at a stated date and a stated price
. While buyers of a option pays premium and buy the right to exercise their opti
on, The writer of an option receives the option premium. The writer is, therefor
e, obliged to sell or buy the asset if the buyer exercises it on the writer. The
types of options are Calls and Puts option.
•
€ Warrants: Options generally have lives up to one year. The €€€
majority of options traded on exchanges have the maximum maturity of the nine mo
nths, longer dated options are called warrants and are generally traded OTC.
12
Last decade one of the most eventful decades in international markets. On one si
de, just a few derivatives disasters stories were enough to bring the entire bus
iness of derivatives under the limelight, make every one worry about unknown ris
ks associated with derivatives, and elevate derivatives into mysterious ‘something’;
while, on the other side, there were people who started to understand the deriv
atives and used the derivatives for hedging and mitigating risks while adding li
quidity to the market.
3.2)€The€S&P€CNX€Nifty:
The S&P CNX Nifty is an market capitalization index based upon solid economic re
search. It was designed not only as a barometer of market movement but also to b
e a foundation of the new world of financial products based on the index like in
dex futures, index options and index funds. A trillion calculations were expende
d to evolve the rules inside the S&P CNX Nifty index. The results of this work a
re remarkably simple: (a) the correct size to use is 50, (b) stocks considered f
or the S&P CNX Nifty must be liquid by the ‘impact cost’ criterion, (c) the largest
50 stocks that meet the criterion go into the index. S&P CNX Nifty is a contrast
to the ad hoc methods that have gone into index construction in the preceding y
ears, where indexes were made out of intuition and lacked a scientific basis. Th
e research that led up to S&P CNX Nifty is well-respected internationally as a p
ioneering effort in better understanding how to make a stock market index. The N
ifty is uniquely equipped as an index for the index derivatives market owing to
its (a) low market impact cost and (b) high hedging effectiveness. The good dive
rsification of Nifty generates low initial margin requirement. Finally, Nifty is
calculated using NSE prices, the most liquid exchange in India, thus making it
easier to do arbitrage for index derivatives.
€€3.3)€COMMODITY:
A commodity is a product that has commercial value, which can be produced, bough
t, sold, and consumed. Commodities are basically the products of the primary sec
tor of an economy. The primary sector of an economy is concerned
13
with agriculture and extraction of raw materials such as metals, energy (crude o
il, natural gas), etc., which serve as basic inputs for the secondary sector of
the economy. FCRA Forward Contracts (Regulation) Act, 1952 defines goods are eve
ry kind of movable property other than actionable claims, money and securities.
Future trading is organized in such goods or commodities that are permitted by c
entral govt. At present, all goods and products of agricultural, including plant
ation, mineral, and fossil origin are allowed for futures trading under the ausp
ices of the commodity exchanges recognized under the FCRA. To qualify as a commo
dity for futures trading, an article or a product has to meet some basic charact
eristics: 1. The product must not have gone through any complicated manufacturin
g activity, except for certain basic processing such as mining, cropping, etc. I
n other words, the product must be in a basic, raw, unprocessed state. There are
of course some exceptions to this rule. For example, metals, which are refined
from metal ores, and sugar, which is processed from sugarcane. 2. The product ha
s to be fairly standardized, which means that there cannot be much differentiati
on in a product based on its quality. For example, there are different varieties
of crude oil. Though these different varieties of crude oil can be treated as d
ifferent commodities and traded as separate contracts, there can be a standardiz
ation of the commodities for futures contract based on the largest traded variet
y of crude oil. This would ensure a fair representation of the commodity for fut
ures trading. This would also ensure adequate liquidity for the commodity future
s being traded, thus ensuring price discovery mechanism. 3. A major consideratio
n while buying the product is its price. Fundamental forces of market demand and
supply for the commodity determine the commodity prices. 4. Usually, many compe
ting sellers of the product will be there in the market. Their presence is requi
red to ensure widespread trading activity in the physical commodity market. 5. T
he product should have adequate shelf life since the delivery of a commodity thr
ough a futures contract is usually deferred to a later date (also known as expir
y of the futures contract).
14
€€€€3.4)€COMMODITY€DERIVATIVES:
a) COMMODITY EXCHANGE: A Commodity Exchange is an organization, such as stock ex
change, organizing futures trading in commodities. The main commodity exchanges
in India are the NCDEX and Multi Commodity Exchange of India Ltd. (MCX) both of
which online trading facility. b) COMMODITY DERIVATIVES MARKET: Commodity Deriva
tives market trade contracts for which the underlying asset is commodity. It can
be agriculture commodity such as wheat, soybeans, rapeseed, cotton or precious
metal like gold and silver.
3.5) Commodity Market: A Perspective
A market where commodities are traded is referred to as a commodity market. Thes
e commodities include bullion (gold, silver), non-ferrous (base) metals such as
copper, zinc, nickel, lead, aluminum, tin, energy (crude oil, natural gas, etc.)
, agricultural commodities such as Soya oil, palm oil, coffee, pepper, cashew, e
tc. Existence of a vibrant, active, and liquid commodity market is normally cons
idered as a healthy sign of development of a country’s economy. Growth of a transp
arent commodity market is a sign of development of an economy. It is therefore i
mportant to have active commodity markets functioning in a country. Markets have
existed for centuries worldwide for selling and buying of goods and services. T
he concept of market started with agricultural products and hence it is as old a
s the agricultural products or the business of farming itself. Traditionally, fa
rmers used to bring their products to a central marketplace (called mandi / baza
ar) in a town/village where grain merchants/ traders would also come and buy the
products and transport, distribute and sell them to other markets.
15
In a traditional market, agricultural products would be brought and kept in the
market and the potential buyers would come and see the quality of the products a
nd negotiate with the farmers directly on the price that they would be willing t
o pay and the quantity that they would like to buy. Deals were struck once mutua
l agreement was reached on the price and the quantity to be bought/ sold. In tra
ditional markets, shortage of a commodity in a given season would lead to increa
se in price for the commodity. On the other hand, oversupply of a commodity on e
ven a single day could result in decline in price—sometimes below the cost of prod
uction. Neither farmers nor merchants were happy with this situation since they
could not predict what the prices would be on a given day or in a given season.
As a result, farmers often returned from the market with their products since th
ey failed to fetch their expected price and since there were no storage faciliti
es available close to the marketplace. It was in this context that farmers and f
ood grain merchants in Chicago started negotiating for future supplies of grains
in exchange of cash at a mutually agreeable price. This type of agreement was a
cceptable to both parties since the farmer would know how much he would be paid
for his products, and the dealer would know his cost of procurement in advance.
This effectively started the system of commodity market forward contracts, which
subsequently led to futures market too.
16
CHAPTER- 4 ELEMENTS OF COMMODITY MARKET
4.1. Cash Market
Cash transaction results in immediate delivery of a commodity for a particular c
onsideration between the buyer and the seller. A marketplace that facilitates ca
sh transaction is referred to as the cash market and the transaction price is us
ually referred to as the cash price. Buyers and sellers meet face to face and de
als are struck. These are traditional markets. Example of a cash market is a man
di where food grains are sold in bulk. Farmers would bring their products to thi
s market and merchants/traders would immediately purchase the products, and they
settle the deal in cash and take or give delivery immediately. Cash markets thu
s call for immediate delivery of commodities against actual payment.
4.2 Forwards and Futures Markets
In this case, the agreements are normally made to receive the commodities at a l
ater date in future for a pre-determined consideration based on agreed upon term
s and conditions. Forwards and Futures reduce the risks by allowing the trader t
o decide a price today for goods to be delivered on a particular future date. Fo
rwards and Futures markets allow delivery at some time in the future, unlike cas
h markets that call for immediate delivery. These advance sales help both buyers
and sellers with long-term planning. Forward contracts laid the groundwork for
futures contracts. The main difference between these two contracts is the way in
which they are negotiated.
For forward contracts, terms like quantity, quality, delivery date, and price ar
e
17
discussed in person between the buyer and the seller. Each contract is thus uniq
ue and not standardized since it takes into account the needs of a particular se
ller and a particular buyer only. On the other hand, in futures contracts, all t
erms (quantity, quality, and delivery date) are standardized. The transaction pr
ice is discovered through the interaction of supply and demand in a centralized
marketplace or exchange. Forward contracts help in arranging long-term transacti
ons between buyers and sellers but could not deal with the financial (credit) ri
sk that occurred with unforeseen price changes resulting from crop failures, ina
dequate storage or bottlenecks in transportation, factors beyond human control (
floods, natural calamities, etc.), or other economic factors that may result in
unexpected changes, and hence counterparty default risks for parties involved. T
his in turn led to the development of futures market. As mentioned above, since
futures are standardized contracts that are traded through an exchange, they can
be used to minimize price risk by means of hedging techniques. Since the exchan
ge standardizes the quality and quantity parameters and offers complete transpar
ency by using risk management techniques (such as margining system with mark-to-
market settlement on a real-time basis with daily settlement), the counterparty
default risk has been greatly minimized. There are many commodity exchanges worl
dwide. They deal in many commodities. In India, there are 24 commodity derivativ
es exchanges, including three at the national level. Together, these exchanges d
eal in commodity futures for approximately 80+ commodities. It is interesting an
d also necessary to know more about the historical evolution of commodity market
s, commodity exchanges and their operations globally as well as in India.
€
Forward€&€futures€contracts € €FORWARD€CONTRACTS: 4.3)€ €
In the Commodity market, there are two types of contracts.
market, usually between two financial institutions and a client. One of the part
ies
18
€€€€€€€A Forward contract is traded in the over the counter (OTC)
assumes a long position€and agrees to buy the underlying asset on certain specifie
d future date for a certain specified price. The other party assumes a short pos
ition and agrees to sell the asset on the same date for the same price. The pric
e in a Forward contract is known as the delivery price.€€
€ €FUTURE€CONTRACTS: 4.4)€ €
Future contracts have evolved out of forward contracts and are exchange-traded v
ersions of forward contracts. The futures contract, there is an agreement to buy
or sell a specified quantity of financial instrument/ commodity is a designated
future month at a agreed price determine by both buyer & seller. The contracts
have certain standardized specifications with the date and time expiry of the co
ntract. The following table shows an example of a future contract specification
at NCDEX. € €€€€€€€€€€€€€€€€€€€€€€€€€€4.5)€Contract:€Soya€Bean Future Contract Trading Syst
value Tick Size Delivery unit Quantity version Quality Specification Specificati
on NCDEX trading system Monday to Friday 10.00 am to 4.00 pm 10 quintal = 1 mega
tonne (MT) Rupees per quintal Rs. 0.05 100 quintal = 10 MT +/- 2% • Moisture : Ma
ximum 10 percent • Sand/ silica : Maximum 2 percent • Damaged : Maximum 2 percent • Gr
een seed : Maximum 7 percent Indore Three concurrent months contracts. Trading i
n any month will open on the 21st day of the month, three months prior to the co
ntract month, for e.g. a
19
Delivery Centre Number of active contracts Opening of contracts
Due date Closing of contract Price band
Position limits
December 2006 contract opens on 21st September 2006. 20th day of the delivery mo
nth. If 20th day happens to be a holiday then the due date is the previous worki
ng day. All open positions will be settled according to general and product spec
ific regulations. Limit 10 percent or as specified by an exchange from time to t
ime. Limits will not apply if the limit reached during final 30 minutes of tradi
ng. • MEMBER-WISE: Maximum Rs. 40 crores, 15 % of open interest. • CLIENT WISE : Max
imum Rs. 20 crores, 10 % of open interest.
CHAPTER- 5
20
HISTORY/ BACKGROUND 5.1)
Global Scenario
It is widely believed that the futures trade first started about approximately 6
,000 years ago in China with rice as the commodity. Futures trade first started
in Japan in the 17th century. In ancient Greece, Aristotle described the use of
call options by Thales of Miletus on the capacity of olive oil presses. The firs
t organized futures market was the Osaka Rice Exchange, in 1730. Historically, o
rganized trading in futures began in the US in the mid-19th century with maize c
ontracts at the Chicago Board of Trade (CBOT) and a bit later, cotton contracts
in New York. In the first few years of CBOT, weeks could go by without any trans
action taking place and even the provision of a daily free lunch did not entice
exchange members to actually come to the exchange! Trade took off only in 1856,
when new management decided that the mere provision of a trading floor was not s
ufficient and invested in the establishment of grades and standards as well as a
nation-wide price information system. CBOT preceded futures exchanges in Europe
. In the 1840s, Chicago had become a commercial centre since it had good railroa
d and telegraph lines connecting it with the East. Around this same time, good a
griculture technologies were developed in the area, which led to higher wheat pr
oduction. Midwest farmers, therefore, used to come to Chicago to sell their whea
t to dealers who, in turn, transported it all over the country. Farmers usually
brought their wheat to Chicago hoping to sell it at a good price. The city had v
ery limited storage facilities and hence, the farmers were often left at the mer
cy of the dealers. The situation changed for the better in 1848 when a central m
arketplace was opened where farmers and dealers could meet to deal in "cash" gra
in—that is, to exchange cash for immediate delivery of wheat. Farmers (sellers) an
d dealers (buyers) slowly started entering into contract for forward exchanges o
f grain for cash at some particular future date so that farmers could avoid taki
ng the trouble of transporting and storing wheat (at
21
very high costs) if the price was not acceptable. This system was suitable to fa
rmers as well as dealers. The farmer knew how much he would be paid for his whea
t, and the dealer knew his costs of procurement well in advance. Such forward co
ntracts became common and were even used subsequently as collateral for bank loa
ns. The contracts slowly got “standardized” on quantity and quality of commodities b
eing traded. They also began to change hands before the delivery date. If the de
aler decided he didn t want the wheat, he would sell the contract to someone who
needed it. Also, if the farmer didn t want to deliver his wheat, he could pass
on his contractual obligation to another farmer. The price of the contract would
go up and down depending on what was happening in the wheat market. If the weat
her was bad, supply of wheat would be less and the people who had contracted to
sell wheat would hold on to more valuable contracts expecting to fetch better pr
ice; if the harvest was bigger than expected, the seller s contract would become
less valuable since the supply of wheat would be more. Slowly, even those indiv
iduals who had no intention of ever buying or selling wheat began trading in the
se contracts expecting to make some profits based on their knowledge of the situ
ation in the market for wheat. They were called speculators. They hoped to buy (
long position) contracts at low price and sell them at high price or sell (short
position) the contracts in advance for high price and buy later at a low price.
This is how the futures market in commodities developed in the US. The hedgers
began to efficiently transfer their market risk of holding physical commodity to
these speculators by trading in futures exchanges. A comparison of the derivati
ves markets, over last few years among various countries given rise to an intere
sting pattern. The exchanges of the developed markets have shown robust growth a
nd maintain their leadership position since last 5 years; at the same time devel
oping/ emerging markets exchanges have gained a position of eminence of strong g
rowth trends. It is an evident from the presented in the tables below that India
n market has emerged forth strongly along with markets in Korea, Spain & Israel.
TABLE- 1 TOP FIVE EXCHANGES
22
(BY NUMBER OF STOCK INDEX FUTURE CONTRACT TRADED) EXCHANGES Eurex NSE-India Osak
a-SE Euronext.liffe Singapore Exchange No. of contracts traded in 2008* 371,504,
525 141,261,516 90,965,674 76,525,955 45,256,382 No. of contracts traded in 2003
155,988,661 10,557,224 13,231,287 56,898,050 8,609,973 % change 138.16 % 1238.0
8 % 587.50 % 34.50 % 425.63%
Source: World Federation Organization. * January to October 2008. TABLE- 2 TOP 5
EXCHANGES (BY NUMBER OF STOCK INDEX OPTION CONTRACT TRADED) EXCHANGES Korea Exc
hange Chicago Board Options Exchanges Eurex NSE-India Taifex No. of contracts tr
aded in 2008* 2,011,059,741 435,860,762 371,155,699 89,099,694 77,154,336 No. of
contracts traded in 2003 3 110,822,096 108,504,304 1,332,417 21,720,084 % chang
e # 293.30 % 242.07 % 6587.07 % 255.22 %
Source: World Federation Organization. # = very large due to very small base. *
= January to October 2008. TABLE- 3 TOP 5 EXCHANGES
23
(BY NUMBER OF SINGLE STOCK FUTURE CONTRACT TRADED) EXCHANGES No. of contracts tr
aded in 2008* JSE 307,836,600 NSE INDIA 165,706,741 EUREX 121,656,741 EURONEXT.L
IFFE 94,223,989 BME Spanish 35,301,142 Exchange No. of contracts traded in 2003
4,585,919 25,572,505 7,004,235 N.A 12,492,568 % change 6,612.65 % 547.99 % 1636.
90 % N.A 182.58 %
Note: The 2003 data pertains to that of Euronext. TABLE- 4 TOP 5 EXCHANGES (BY N
UMBER OF SINGLE STOCK OPTIONS CONTRACT TRADED) EXCHANGES International Securitie
s Exchanges Chicago Board Options Exchange Philadelphia SE EUREX Sao Paulo SE NS
E India No. of contracts traded in 2008* 767,805,138 463,710,159 409,010,094 276
,165,919 260,696,612 8,009,365 No. of contracts traded in 2003 220,988,837 173,0
33,965 89,458,901 188,239,823 175,622,679 5,607,990 % change 247.44 % 167.99 % 3
57.20 % 46.71 % 48.44 % 42.82 %
5.2)
Indian Scenario
History of trading in commodities in India dates back to several centuries. But
organized futures market in India emerged in 1875 when the Bombay Cotton
24
Trade Association was established. The futures trading in oilseeds started in 19
00 when Gujarati Vyapari Mandali (today’s National Multi Commodity Exchange, Ahmed
abad) was established. The futures trading in gold began in Mumbai in 1920. Duri
ng the first half of the 20th century, there were many commodity futures exchang
es, including the Calcutta Hessian Exchange Ltd. that was established in 1927. T
hose exchanges traded in jute, pepper, potatoes, sugar, turmeric, etc. However,
India’s history of commodity futures market has been turbulent. Options were banne
d in cotton in 1939 by the Government of Bombay to curb widespread speculation.
In mid-1940s, trading in forwards and futures became difficult as a result of pr
ice controls by the government. The Forward Contract Regulation Act was passed i
n 1952. This put in place the regulatory guidelines on forward trading. In late
1960s, the Government of India suspended forward trading in several commodities
like jute, edible oil seeds, cotton, etc. due to fears of increase in commodity
prices. However, the government offered to buy agricultural products at Minimum
Support Price (MSP) to ensure that the farmer benefited. The Government also man
aged storage, transportation, and distribution of agriculture products. These me
asures weakened the agricultural commodity markets in India. The government appo
inted four different committees (Shroff Committee in 1950, Dantwala Committee in
1966, Khusro Committee in 1979 and Kabra Committee in 1993) to go into the regu
latory aspects of forward and futures trading in India. In 1996, the World Bank
in association with United Nations Conference on Trade and Development (UNCTAD)
conducted a study of Indian commodities markets. In the post-liberalization ear
of the Indian economy, It was the Kabra Committee and the World Bank–UNCTAD study
that finally assessed the scope for forward and futures trading in commodities m
arkets in India and recommended steps to revitalize futures trading.
5.3) Relevance and Potential of Commodity Markets in
India
Majority of commodities traded on global commodity exchanges are agrobased. Comm
odity markets therefore are of great importance and hold a great
25
potential in case of economies like India, where more than 65% of the population
are dependent on agriculture. There is a huge domestic market for commodities i
n India since India consumes a major portion of its agricultural produce locally
. Indian commodities market has an excellent growth potential and has created go
od opportunities for market players. India is the world’s leading producer of more
than 15 agricultural commodities and is also the world’s largest consumer of edib
le oils and gold. It has major markets in regions of urban conglomeration (citie
s and towns) and nearly 7,500+ Agricultural Produce Marketing Cooperative (APMC)
mandis. To add to this, there is a network of over 27,000+ haats (rural bazaars
) that are seasonal marketplaces of various commodities. These marketplaces play
host to a variety of commodities everyday. The commodity trade segment employs
nearly five million plus traders. The potential of the sector has been well iden
tified by the Central government and the state governments and they have investe
d substantial sources to boost production of agricultural commodities. Many of t
hese commodities would be traded on the futures markets as food-processing indus
try grows at a phenomenal pace. The government also has recognized three nationa
l level commodity exchanges, which are trading in more than 85 commodities at pr
esent, and the list continues to expand. According to the experts in the commodi
ties markets, global trends indicate that the volume in futures trading tends to
be 5-7 times the size of commodities spot trading in the country (Internationa
lly, the multiple for physical versus derivatives is much higher at 15 to 20 tim
es). Many nationalized and private sector banks have announced plans to disburse
substantial amounts to finance commodity-trading business. The Government of In
dia has initiated several measures to stimulate active trading interest in commo
dities. Steps like lifting the ban on futures trading in commodities, approving
new exchanges, developing exchanges with modern infrastructure and systems such
as online trading, and removing legal hurdles to attract more participants have
increased the scope of commodities derivatives trading in India. This has booste
d both the spot market and the futures market in India. The trading volumes are
increasing as the list of commodities traded on national commodity exchanges als
o continues to expand. The volumes are likely to surge further as a result of th
e increased interest from the international
26
participants in Indian commodity markets. If these international participants ar
e allowed to participate in commodity markets (like in case of capital markets),
the growth in commodity futures can be expected to be phenomenal. It is expecte
d that foreign institutional investors (FIIs), mutual funds, and banks may be ab
le to participate in commodity derivatives markets in the near future. The launc
h of options trading on commodity futures is also expected after the amendments
to the Forward Contract Regulation Act (1952). Commodity trading and commodity f
inancing are going to be a rapidly growing business in the coming years in India
. With the liberalization of the Indian economy in 1991, the Commodity prices (e
specially International commodities such as base metals and energy) have been su
bject to price volatility in international markets, since India is largely a net
importer of such commodities. Commodity derivatives exchanges have been establi
shed with a view to minimize risks associated with such price volatility. It is
well known fact that ‘derivatives’ are well traded in Indian market, as private cont
racts, long before of introduction of exchange traded contract. Being private co
ntracts these contracts faced the usual problems associated with such contracts.
The pathway for exchange-traded, cleared and settled derivatives contracts was
laid out with removal of prohibition of options on securities vide Securities la
ws (Amendments) Ordinance, 1995. Subsequently, SEBI set up a committee under the
chairmanship of L.C.Gupta to recommend the appropriate regulatory framework for
derivative trading in India. The committee submitted its reporting October 1998
giving operational details of managing system, methodology for charging initial
margins, broker net worth, deposit requirement, and real time monitoring requir
ement. In December, 1999, amendment of SCR(A) was notified , making way for deri
vatives trading in INDIA. In June, 2000, future contracts on Nifty & Sensex were
launched, followed by Options contracts on nifty and Sensex (European Style), O
ptions contracts on stocks (American style) and Future contracts on stocks on Ju
ne, July and November 2001, respectively. The number of underlying stocks and in
dexes has increased over 10 years.
27
In the Indian market the index option contracts are cash settled European style
options. Stock options are also cash settled American style Contracts. Interest
rate derivatives are based on national 10 year bond and 91days T-bill. All excha
nge-traded equity derivative contracts are cash settled contracts. TABLE- 5 F& O
Contracts traded in NSE & BSE Financial year NSE-stocks 2001-02 12002-03 2003-0
4 2004-05 2005-06 2006-07 2007-08 31 41 53 52 117 155 265 NSEIndex(es) 1 1 2 2 3
3 7 BSE-Stocks 31 38 42 46 76 89 126 BSE-Index(es) 1 1 1 1 7 7 7
Source : NSE & BSE. Turnover in the derivative segments since inception is prese
nted in the table below. During 2001-02, turnover on NSE was Rs. 101,925 crores
and during 2007-08 it was Rs. 13,090, 478 crores. Likewise the turnover on BSE w
as Rs. 1,917 crores & during 2007-08 it was 242,308 crores. Turnover on BSE incr
eased till 2004-05 but there was a noticeable decrease in turnover. The turnover
on BSE has started increasing since 2006-07.
TABLE- 6 Total derivatives since inception (Rs. in Crores) # Period NSE BSE
28
Total
2001-02 101,925 2002-03 439,865 2003-04 2,130,447 2004-05 2,547,053 2005-06 4,82
4,245 2006-07 7,356,271 2007-08 13,090,478 04/2008 to 5,963,894 09/2008 # exclud
ing currency derivatives Source = NSE & BSE.
1,917 2,475 12,074 16,112 9 59,007 242,307 11,491
103, 842 442,340 2,142,521 2,563,165 4,824,254 7,415,278 13,332,786 5,975,385
total derivatives since inception
30,000,000 Rs. in Crores 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 04/2008 to 09/2008 year Total 1
03, 842 BSE 1,917 101,925
At NSE, during the period April 2001 to September 2008, turnover was highest for
the month of October 2007, i.e. Rs. 1,833,633 crores At BSE, practically no tra
ding took place in the period May, 2005 to January, 2006. However since November
has started increasing. Over the given time period, maximum turnover was in the
month of October, 2007 (Rs. 23,985 crore).
INDEX FUTURE No. of value of contracts (in contracts cr.) 1641779 34322 10557024
296736 23354782 813026 47375214 1233364 70286227 2330311 INDEX OPTION No. of va
lue of contracts (in contracts cr.) 314478 6633 1332417 34940 2812109 99488 1014
0239 264612 18702248 638077
Calendar Year 2002 2003 2004 2005 2006
29
2007 01/2008 to 09/2008
138794235
3381599
52707150
1284499
2002 2003 2004 2005 2006 2007 01/2008 to 09/2008
141261516 3164560 STOCK OPTION No. of value of contracts (in contracts cr.) 2773
524 77279 5607990 194296 4874958 175332 5224485 177484 5214191 201146 9048495 34
8409 8009365 186147
89099694 2051669 SINGLE STOCK FUTURE No. of value of contracts (in contracts cr.
) 8557332 227207 25573756 904968 44051780 1498892 68911754 2251384 100285737 387
7131 179324970 6925970 165706741 3735830
Source: NSE Future on Interest rate priced off at zero-coupon yield curve was in
troduced in June 2003. Futures and options contract on sectoral Indexes were int
roduced in Indian derivative market in August 2003. This was followed by permiss
ion for introduction of future contracts on a basket of GoI securities in Januar
y 2004. However, this segment has seen very little activity. The introduction of
new products based on the interim recommendation of this committee has resulted
in market activity. For example, mini contracts and longer dated options have s
hown their specific segments of markets have specific interest.
CHAPTER-6
PROCESS / MECHANISM
30
The commodity part in Investment is one of the major important part. In Equity w
e invest in a number of shares such as 100 or 1000 no. of equities, but in commo
dity the investment has been done in a lot size. For every commodity there is a
lot size has been specified. Like in gold there is three different types have be
en classified according to their size i.e. GOLD GUIENE (8 grams), GOLD MINI (100
grams) & PURE GOLD (1 K.g.). If anyone wants to invest his or her money he has
to invest that amount in either 1 K.G. or 100 grams or 8 grams lot size. Today t
he lot price has been around Rs. 14557/ 100 gram. So if a person wants to invest
his money in 1 K.G. gold he has to pay Rs. 1, 45,570. Investors can invest thei
r money also in Nickel, Coffey, Zinc, Crude oil, Copper, Aluminum, Lead, Silver,
Tin, Palm oil, Cashew etc. – they also been traded here. But maximum trade has be
en done on GOLD. Because of it’s trustworthiness and just like share market it doe
sn’t fluctuate every time. It gives a steady return which is very important for th
e investors. For investment purpose the investor has to open a commodity account
along with an equity account. And they have to maintain certain % amount as mar
gin money just like in case of gold 5% margin money has to maintain in their own
account. For example, Mr. Roy purchase 1 k.g. gold today @ Rs. 14577 per 100 gr
am. So the total amount has been traded is Rs. 145770, of which Rs. 7288.5 amoun
t he has to keep in his own account every time. The price of the gold goes up &
down every time. But it does not effect that margin money. Suppose the gold pric
e has been goes down by Rs. 14500 per 100 gram. So for 1 k.g. lot the price will
be Rs. 145000, which means the margin money should be 5% of that Rs. 145000. i.
e. Rs.7250. But Mr. Roy has to keep the amount of Rs. 7288.5 as per rule.
6.1.) How to get the profit? Suppose the price goes up by Rs. 200, so the Change
s for every Re. 1 , the profit should be multiple of 100 grams or 1 k.g. whateve
r the lot size.
31
For 100 grams profit will be Rs. (200 * 100) i.e. Rs. 20000. This amount has bee
n added to customer account after deducting the brokerage. In the same way if th
e value goes down the margin money will remain same but no profit will be added
with it. For online trading the company provides the customer a software name TR
ADE TIGER through which he can directly trade in a terminal. He can trade in off
line also. But for every commodity account there should be an equity account exi
st. This is the way that the company trade. Brokerage charge is minimum 5 paise
for intraday trading & 50 paise on delivery.
CHAPTER-7
CURRENCY FEATURE
32
HISTORY/ BACKGROUND: 7.1) The Evolution and Mechanics of Currency Futures: 7.2)
The€Origin
The origin of futures can be traced back to 1851 when the Chicago Board of Trade
(CBOT) introduced standardized forward contracts which were being traded in non
standard bilateral form for the preceding three years. In comparison, the birth
of currency futures is of a recent origin and was a sequel to the breakdown of t
he Bretton Woods system. The resultant currency volatility provided a business o
pportunity for launching futures contracts in foreign currencies. The Chicago Me
rcantile Exchange (CME) first conceived the idea of a currency futures exchange
and it launched the same in 1972 amidst considerable skepticism, since tradition
ally futures market had traded agricultural commodities and not financial instru
ments. The CME commissioned Professor Milton Friedman to write a paper on curren
cy futures in order to gain credibility in the market. Prof. Milton Friedman sta
ted: “Changes in the international financial structure will create a great expansi
on in the demand for foreign cover. It is highly desirable that this demand be m
et by as broad, as deep, as resilient a futures market in foreign currencies as
possible in order to facilitate foreign trade and investment. Such a wider marke
t is almost certain to develop in response to the demand. The major open questio
n is where. The U.S. is a natural place and it is very much in the interests of
the U.S. that it should develop here.” The CBOT saw this as a competitive challeng
e, as also an opportunity to launch other financial futures and proposed trading
options and futures on stocks.
7.3)
The€Basic
33
A futures contract is a standardized contract, traded on an exchange, to buy or
sell a certain underlying asset or an instrument at a certain date in the future
, at a specified price. Where the underlying asset happens to be a commodity, th
e futures contract is termed as ‘commodity futures’ whereas in cases where the under
lying happens to be a financial asset or instrument, the resultant futures contr
act is referred to as ‘financial futures’. A currency futures contract, also called
an FX future, is a type of financial futures contract where the underlying is an
exchange rate. In other words, it is a futures contract to exchange one currenc
y for another at a specified date in the future at a price (exchange rate) that
is fixed on the last trading date. The buyer or seller in a futures market locks
into an exchange rate for a specific value date or delivery date. In other word
s, currency futures are used primarily as a price setting mechanism rather than
for physical exchange of currencies. The future date is called the delivery date
or final settlement date. The pre-set price is termed as future price, while th
e price of the underlying asset on the delivery date is termed as the settlement
price. The future price normally converges towards the spot price on the settle
ment date. The futures contract gives the holder the right to buy or sell, in co
ntrast to the option contract which gives the holder the right, but not the obli
gation to buy or sell the underlying. Thus, both the parties of the futures cont
ract must fulfill their contractual obligations on the settlement date. However,
such contracts do provide options to deliver the underlying asset or settle the
difference in cash. The holder of a contract could exit from his commitment pri
or to the settlement date by either selling a long position or buying back a sho
rt position (offset or reverse trade). The futures contracts are exchange traded
derivatives and the exchange’s clearing house acts as counterparty to all contrac
ts, sets margin requirements, etc.
CHAPTER- 8
34
€€€€€€€€€€€€€€€€€€€€ €Types€of€Futures
Many types of futures contracts, mirroring the underlying assets – Forex, bonds, i
nterest rates, index, stocks, commodities, etc are available in exchanges. While
trading in commodities began in the 18th century, the contracts on financial in
struments were introduced in the 70’s.
8.1)€Participants
Traditionally, the futures market meets the needs of the three distinct sets of
market users - those who wish to discover price information, those who wish to s
peculate and those who wish to hedge. Though speculation may not be a socially u
seful activity, the three types of users contribute to price discovery and hedgi
ng as well as add to liquidity. A speculator is a trader who enters the futures
market, with no initial risk in pursuit of profit, thereby accepting an increase
in risk. A hedger is a trader with a preexisting risk who enters the futures ma
rket to reduce or eliminate his currency exposure. There is a category of specul
ators called scalpers who have an extremely short horizon view – ranging from a fe
w seconds to a few minutes. Since they are not looking for huge profits, they ma
nage to generate a large volume of trades and contribute to increase in liquidit
y. Day traders take a far sighted approach to the market attempting to profit fr
om the price movements that may take place over the course of a trading day. Pos
ition trader maintains positions overnight, weeks or months.
8.2)€Pricing
In the foreign exchange market, every price or exchange rate is a relative price
. Fundamental factors influence the exchange rates between two currencies. Inter
est rate parity theorem explains how the forward/ futures exchange rate is essen
tially determined on the cost of carry model. In addition in the long run the ex
change rates are expected to follow Purchasing Power Parity (PPP). In the future
s market, there are situations where the price of a currency for future delivery
may be higher than the spot price, which is known as contango and where the fut
ure price is lower than the spot price, the phenomenon is known as backwardation
.
35
Theoretically, if risk neutral speculators are available in sufficient numbers,
their profit seeking activity will drive the futures price toward equality with
the expected future spot price. The same process is expected to occur in the for
ward segment of Forex markets. The linkages among interest rates, exchange rates
, expected inflation rates emphasize the fundamental relationship between future
s and forward prices on one hand and the expected future currency value on the o
ther. The efficiency of Forex futures markets has been researched and found to b
e generally poor. The same also applies to the forward market. The existence of
premium in forward or futures market exist due to several possible reasons such
as non-stationary risk premia, bias in regression coefficients arising from syst
ematic error components due to nonrational response, microstructure and behavior
al issues. Ideally in the futures market, the difference between the spot and fu
ture prices reflect the covered interest rate arbitrage, which fosters interest
rates in the two relevant countries. However, imperfections in the market, regul
atory restrictions, capital controls, etc, may prevent the arbitrage activity fr
om operating efficiently. In such a scenario, futures price may reflect more of
a consensus forecast of prospective exchange rates rather than classical arbitra
ge pricing theory.
8.3)€Clearing€House
The margin system functions through a hierarchy of market participants that link
s the clearing house with the individual trader. The members of an exchange may
be classified as clearing members or non clearing members. A clearing member is
a member of the exchange and the clearing house. The clearing house deals with c
learing members only. Any non clearing member has to clear his transactions thro
ugh a clearing member. The clearing house collects margin deposits from clearing
members to cover all futures positions that are on account of the particular me
mber. For e.g., if a bank is a member of the clearing house, it has to maintain
margins on account of all the trades executed though it. In turn the clearing me
mber would insist on receiving margins from all traders whose trade handles and
thus the margin requirements travel down the chain to brokers hand actual trader
s.
36
The clearing house does not take any active positions on the exchange, but inter
poses itself between two parties to a trade. The number of contracts bought in a
futures market must therefore be exactly equal to the number of contracts sold.
Without the clearing house, it would have been difficult for two totally unknow
n parties separated geographically to trust each other and trade. Because of the
clearing house, the two parties to the trade are only concerned with the financ
ial soundness of the clearing house. The clearing house is invariably a large we
ll capitalized financial institution. In the history of futures, there has never
been a known failure of the clearing house. There are four identifiable tiers i
n the futures market – the broker, the exchange and clearing house, a self regulat
ory body and the government agency. The KYC of the customer is the broker’s respon
sibility. He is also responsible to the clearing house for all accounts handled
by him directly or indirectly. Any restrictions on specific types of trades or l
imits on positions etc laid down for smooth functioning and free determination o
f price have to be implemented through brokers. A broker has a duty to report an
y violation or attempt at price manipulation to the exchange. A code of conduct
for brokers framed by the exchange, regulator or a self regulatory agency is gen
erally put in place. The futures exchange and the clearing house are themselves
self regulated entities. They prescribe and enforce rules for trading and cleari
ng on the exchange. Exchange rules inter alia prohibit fictitious trading, rumou
r mongering, disclosure of customer positions, false declarations and statements
, etc. by members. Any attempt at price manipulation by pre-arranged trades is s
trictly forbidden. Brokers are also forbidden from a practice called front runni
ng where a broker trades on his own account to the detriment of the customer. Fu
tures exchanges can also set daily price limits, position limits and margin requ
irements. These will be within the framework of any limits set by the higher lev
el regulator. Often the various futures exchanges in a market form a self regula
tory association. This helps promote just and equitable principles of trade, rem
ove impediments to free and open futures trading and generally protect public in
terest. Such associations undertake the tasks of screening and testing applicant
s for membership, prescribe record keeping and disclosure standards, etc. The ul
timate regulator is the one with powers derived from statute, e.g. the
37
Commodity Futures Trading Commission (CFTC) in USA. The ultimate regulator can l
ay down rules relating to trading, daily permitted price fluctuations, rules for
delivery process, etc. It has powers to intervene by suspending trading if warr
anted by price manipulation. It can also prescribe competency standards for brok
ers, members, etc.
8.4)€Margins
The credit risk in futures market is assumed by the exchange. In order to minimi
ze the credit risk to the exchange, traders are required to post margins, typica
lly in the range of 5 per cent – 15 per cent of the contracts’ value. In some jurisd
ictions, different margin regimes are followed for hedgers and speculators. Ther
e are three types of margins initial margin, maintenance margin and the variatio
n margin. The initial deposit called the initial margin is the amount a trader (
buyer and seller), must deposit before trading in any futures. This normally is
approximately taken as the maximum daily price fluctuation permitted for the con
tract being traded. The initial margin can be kept so small because of the safeg
uard built into the system of daily mark to market. Whenever the position held o
n the exchange shows a loss on mark to market, the same is deducted from the mar
gin deposited. When this drops below a threshold level called the maintenance ma
rgin, established by the exchange, a margin call is made on the trader to replen
ish the margin and the additional amount deposited is called the variation margi
n.
8.5)€Settlement
Settlement of futures contract can take place through physical delivery or cash
Settlement. Under physical delivery, the amount specified of the underlying is d
elivered by the seller to the buyer. Physical delivery is common in commodities
and bonds. Under the cash settlement system, a cash payment is made based on the
underlying reference rate at the time of expiry.
8.6)€The€Contract€format
The contract specifications are summarized below in tabular form:
Category Underlying 38 Description
Rate of exchange between one US
Contract Size Contract Months Expiration Date and time Minimum Price fluctuation
Settlement
Margins
dollar and INR USD 1000 12 near calendar months Last business day of the month 0
.25 paisa or INR 0.0025 Cash settled in INR based on Reserve Bank reference rate
of expiry date As specified by the clearing corporation
39
€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€C
HAPTER- 9
PROCESS/€MECHANISM
Just like commodities the calculation has been done in currency trading. The dif
ference is lying between them is in commodity the trade has been done in cash or
by using future option but in currency trading the trade has taken place in exc
hange of Euro, Dollar, Yen etc. The margin in currency trading is 5-5.2%. Today
dollar value is around equal to Rs. 47-48. This means if tomorrow this value goe
s up, FII will come in, dollar value automatically goes up, the GDP will grow up
.
9.1)€Contract€design
The Group pondered as to whether the contract design should be left to the excha
nges or the regulator should pre-specify the availability of uniform contracts a
cross various exchanges. It was concluded that while attracting liquidity throug
h product innovation is a feature of the competitive markets, in the initial pha
se, a standardized product across various exchanges (in terms of contract size,
final settlement dates, settlement procedure of contracts, tenors of contracts,
etc) would invite greater participation and add to the liquidity of futures mark
ets.
9.2)€Size€of€the€contract
The Group acknowledged that since the currency futures segment is meant to provi
de non-institutional market participants a means to hedge their currency exposur
es in a transparent and price-efficient manner, the size of the currency futures
contract may not be unduly large. Large institutional and corporate customers a
re able to manage beneficial rates even in the OTC segment. The price discovery
function of the exchanges is significant for the individuals and SMEs. Further,
price discovery should be such that the individuals and SMEs
40
are able to trade on the same prices as are available to the large customers. If
the price discovery is done for a large size lot, the individuals and SMEs may
not be able to capture the fineness of that rate for their small-sized lots. Thi
s is the bane of the OTC markets. Hence, it is important that the contract size
be kept at such a level that it facilitates price discovery as well as trading,
particularly for retail segment of the market. The retail focus of the contract
should not in any manner disenchant the institutional clients since in the era o
f electronic trading, the cost efficiency is not compromised at all even if mult
iple contracts have to be purchased. A single contract would also ensure that ma
rket frictions are avoided, which could occur in case of multiple contracts. Hen
ce, the Group recommends that a single contract of notional value USD 1,000 may
be introduced.
9.3)€Tenors€of€contracts
There is likely to be adequate interest in currency futures contracts beyond the
first three months as is the case with the OTC forwards contract. Moreover, cer
tain segments of the market expressed a desire for introduction of contracts wit
h maturity of two years and beyond as currently such currency exposures cannot b
e hedged in the OTC market. The Group debated extensively on the issue and felt
that while certain segments of the market may stand to benefit through introduct
ion of long tenor currency futures contract, the liquidity in such contracts in
the absence of an underlying OTC market of corresponding tenor is by no means as
sured. The Group recommends that, initially, the tenors of the contract may larg
ely replicate the tenors of the currency forwards and to this end, the currency
futures maturing in the first 12 calendar months may be offered.
9.4)€Settlement€of€contracts
As has been argued, a section of the participants in the currency futures segmen
t may not have underlying currency exposures at all while a few participants may
have economic exposures to exchange rate movements. In the absence of underlyin
g flows, settlement based on delivery may impede participation from such segment
s of the market. While delivery based settlement provide tight cash – derivatives
linkage, given the complications that delivery based settlement entail, and the
fact that Indian Rupee is not fully convertible on capital account, the Group re
commends that in the initial phase,
41
settlement only on cash basis, based on spot Reserve Bank reference rate on the
expiry date, may be permitted. Cash settlement would also ensure convergence bet
ween regulations in respect of OTC markets and currency futures market, since ca
ncellation of a forward contract on the date of maturity is akin to cash settlem
ent.
9.5)€Settlement€Cycle
Certain sections of the market participants felt that the settlement cycle of th
e currency futures contract should be co-terminus with the settlement of month e
nd forward contracts. They argued that settlement at the month-end would enable
SMEs and individuals to benchmark the prices available in the futures market wit
h the OTC prices. The experiences of the equity markets also suggest that settle
ment cycle of similar underlying across various exchanges eventually converge. H
owever, FEDAI and some large banks opined that separating the maturity of forwar
d contracts and currency futures contracts may be better for effective managemen
t of liquidity. The Group felt that the futures contracts settling in the mid mo
nth may allow the banks to transfer/ seek exposure on the futures segment. After
taking into account the market feedback on the draft proposals, and the expert
views of the TAC, the Group recommends that the futures settlement cycle may be
co-terminus with the settlement of month end forward contracts.
42
CHAPTER-10
10.1)€Eligible€Participants
The Group agreed that the requirement of an underlying exposure to trade in OTC
foreign exchange market is very difficult to implement in an exchangetraded regi
me. The international experience in this regard also supports the Group s views.
Currently, resident individuals are allowed to hedge their underlying or antici
pated exposures up to USD 100,000 in the OTC market without going through comple
x documentation formalities. Similarly, the SMEs which have direct and indirect
exposure to foreign exchange have also been provided flexibility in hedging thei
r exposures without going through the rigors of complex documentation formalitie
s. All other categories of residents in India are permitted to access the OTC ma
rkets only if they have an underlying exposure or under the past performance win
dow. As to whether any exposure limit need to be placed on the residents, the pa
rticipation of residents in currency futures even in countries with capital cont
rols, as is the case with India, has been generally unconstrained. Moreover, res
idents in the Indian context represent an amorphous group –day traders with limite
d capital and virtually no underlying exposure to foreign exchange to multinatio
nal corporate, relatively unconstrained by margin requirements and with fairly s
izeable balance sheet foreign exchange exposures. We may also take note of the f
act that in major markets and increasingly in certain emerging markets, manageme
nt of foreign exchange rate risk in respect of cash flow, balance sheet and econ
omic exposures through forwards and futures involve a dynamic combination of hed
ging, unhedged and speculative positions with a motive to either reduce hedging
cost or gain from exchange rate movements, within a proper risk management frame
work. This approach needs to be adopted/facilitated in India as well, if the rea
l sector in India are to be able to face competition both at home and abroad vis
-à-vis their competitors overseas. In view of the foregoing, the Group recommends
that no quantitative restrictions may be imposed on residents to trade in curren
cy futures. This is likely to ensure greater liquidity and wider participation a
nd
43
would be in line with usual policy where liberalization is done first for reside
nts. As regards non residents, the participation may be permitted in a gradual a
nd phased manner. The Group is of the view that at the inception, the participat
ion in the futures market may be restricted to residents alone in the interest o
f financial stability. This is suggested purely from the perspective of evaluati
ng the robustness of various systems such as surveillance, monitoring, reporting
, etc. Once it is established that the systems are working properly, the partici
pation of Foreign Institutional Investors (FIIs) and Non Resident Indians (NRIs)
, as hedgers, may be considered. Currently, in the OTC market, FIIs have been pe
rmitted to hedge their underlying exposures with flexibility for canceling and r
ebooking only up to 2 per cent of the underlying exposure. This stipulation cann
ot be replicated in the exchange format. However, it may be noted that allowing
the FIIs, without any limits, in the futures market would mark a quantum leap fo
r FIIs since effectively they would be able to dynamically hedge (freely cancel
and rebook contracts) their entire portfolios, something that they are not permi
tted to do in OTC segment. This could possibly result in increase in volatility
in the foreign exchange market but at the same time enhance liquidity in the cur
rency futures market. Keeping in mind the current stipulation of participation o
f FIIs in OTC markets, the Group recommends that once the currency futures marke
t systems established, including execution procedures, risk management framework
and surveillance mechanism, FIIs may be allowed as hedgers with suitable positi
on limits on their exposures in the futures market. In order to ensure adherence
to the limits stipulated, the FII trades in currency futures may only be routed
through the designated Authorized Dealers. Currently, the NRIs are allowed to h
edge their exposures to the extent of their underlying exposures. Further, balan
ces in the NRO account are repatriable up to USD 1 million per financial year. T
he Group, therefore, proposes that in line with the stipulation for FIIs, after
establishing the effective functioning of all systems, the NRIs may be allowed t
o hedge their exposures in the futures market with suitable position limits. The
transactions by the NRIs may also be routed through the designated AD banks. Gi
ven the current regulations in the OTC market, the categories excluded from the
futures market, in the initial stages, are not being disadvantaged.
10.2)€Unique€Identification€Number
44
In order to distinguish across various classes of participants in the futures ex
changes, allotment of unique client identification numbers, preferably the PAN,
as practiced in futures exchanges in other jurisdictions, may be considered.
10.3)€Market€Timings
The spot markets operate between 9 am – 5 pm every day. The OTC forward market too
is bound by similar timings. Hence, the currency futures market may also operat
e between 9 am – 5 pm on every working day.
10.4)Membership€Type
The participation in the exchange can be for two reasons, viz., hedging and spec
ulation. While in the equity markets such nomenclature is given as per the under
lying transactions based on declaration by the participants, in the context of c
urrency futures, whether the same format may be followed or certain participants
can participate only as hedgers need to be resolved. While the former regime gi
ves the flexibility to the participants, enabling participation of the non resid
ents only to hedge their underlying INR exposure makes their participation, by d
efinition, as hedgers only. It is appreciated that the segregation of the partic
ipants as hedgers and speculators and fixing differential margin is difficult to
administer, as the Exchanges would be depending on declarations. It is also dif
ficult to segregate and monitor the positions since the requirement of underlyin
g is not extended to the futures Exchanges. Further, only non-residents are envi
saged as pure hedgers in the market and suitable safeguards have been proposed f
or their participation in the futures market. Detailed study needs to be underta
ken on the feasibility of segmenting the participants and fixing differential ma
rgins.
Gold€and€USD€Relationship
The U.S. dollar has lost his value against the euro by 50 %. Due to this central
banks, large institutions, and investors are starting to move away from the US
dollar. The Federal Reserve Bank has started to stimulate the dollar market by l
owering interest rates, which how ever consequently reduces the value of the
45
dollar.19 At this point investors at that point are starting to look to alternat
ives to dollar based stock, bond, and mutual funds markets. “Gold has long been re
garded by investors as good protection against depreciation in a currency s valu
e, both internally (i.e. against inflation) and externally (against other curren
cies). In the latter case, gold is widely considered to be a particularly effect
ive hedge against fluctuations in the US dollar, the world s main trading curren
cy.”20 Historically the correlation between US dollar and gold has been moderate.2
1 This means that gold is an effective regarding USD risks. Since the dissolutio
n of the Bretton Woods system, the value of the US dollar has fluctuated against
the price of gold. The reason why dollar couldn’t be tied to gold any longer was
simply due to the U.S. dollars overvaluation against the fixed price of gold. U.
S. president Nixon had no other choice but to abandon the Bretton Woods’s system.
The dollar was now free. The cost of the Vietnamese War, increased inflation and
led to the overvaluation of U.S. dollar as a base currency. This is also indica
ted in the following graph, which shows a declining dollar until the early 1980’s
as gold moves in the opposite direction.
During the mid 1980s the US economy had overcome high inflation and dollar again
st gold was strong. On Black Monday in 1987 the dollar fell and gold prices gain
ed momentum. The price of gold stayed strong against the dollar with small ups a
nd downs till 1998 Asian stock crisis, whereas South-Korea sells 300 tons of gol
d against dollar in order to mitigate a foreign exchange rate crisis.23 The valu
e of the dollar then strengthened against the price of gold. In 2003, the price
of gold started to move up in respect to the dollar. The confidence in the US ec
onomy floundered after the announcement regarding a record high trade deficit. S
ince then the dollar has been in constant decline against gold. “Gold is not only
a potent hedge against risk attached to the US dollar compared with other commod
ities, but also provides protection when
46
most needed i.e. when the dollar is losing value, with relatively little loss up
side during periods of USD appreciation.”
Stock€and€gold€relationship
Investors like to have different kinds of comparisons. One of this is the relati
onship between stock price and gold price. As the graph Long Term Dow/ Gold Rati
o shows gold price and stock price have historically had a solid inverse price c
orrelation. The first peak for Dow Jones to gold price 18.4 ensued in a ratio be
fore the Great Depression in 1929 in the USA. Although the price of gold was fix
ed to $20.67 per ounce at that time, the analysis of the graph shows that uncert
ainty and crisis situations tend to appreciate the value of gold against stock v
alues. The ratio dropped in 3 years to a low of 2.0, while stocks were still rec
overing from the Great Depression. Shortly after, the fixed gold price was pegge
d to $35 per Oz. The cyclical ratio climbs upwards to the peak of Dow in 1966 wi
th a ratio of 27.9 and starts to fall after the re-opening of the London Gold Ma
rket in 1968, which meant that gold prices were no more fixed. The ratio drops t
o a long time low of 3.1 as a result of the stock marker crisis between 1973 and
1974 and gold prices jump from the 1973 average of $97 to the 1974 average of $
158, which was due to increasing oil prices, world -wide double digit inflation
and the stock crisis. By 1976, gold is making price corrections and stocks adjus
t to their usual path. The largest gap between stock and gold prices occur in 19
80, when gold hits its record price of 875 against the US dollar. After gold pri
ce outbursts and after inflation is under control people start believing in stoc
ks again. The ratio did a short upset in 1987, during Black Monday on the stock
market. The ratio is 3.6 at that moment. From 1987 till 2000 and 2001, the ratio
climbed up till its peak of 43.2, when the dot-com bubble burst and the 2001 ev
ents of September 11th. The ratio then started its downfall pattern again
47
. To conclude, according to the relationship between gold prices and stocks as p
resented in this thesis, during the times of uncertainty in the stock market, go
ld prices rise, the reason being that investors start to look for alternatives.
48
€€€€€€€€€€€€€€€€€€€€€€€€€€€€€ €€€€€€€€€€€€€€€€€€€€€€€€€€€€€CHAPTER-11 Research€&€methodolog
The research has been developed on the basis of the survey. Research is somethin
g which gives at the end of the day the analyzed and a concrete result of the re
port. Concrete means some research which is supported by some authentic proof. I
n this report we produce a survey which is a questionnaire prepared by the compa
ny itself, developed on the basis of responsiveness of the clients towards the c
ommodity & currency segments. Basically a research consists with primary data &
secondary data. In this report survey was the primary data, while the encrypted
format of those primary data to the excel sheets was the secondary data. To dete
rmine the positive/negative responsiveness of the customer we did a survey in co
mbine. We had been provided a questionnaire format which includes various segmen
t or option where the customer has an opportunity to invest where he had already
invest their money or looking for investment.
PRIMARY€DATA:
A Primary data usually been collected on the basis of conducted survey. It is th
e raw form of the research. As it is a research oriented survey, so the primary
data should be mentioned while the report is writing. On the basis of those prim
ary data we will get a collective result, that could be analyzed. In the questio
nnaire format we set up some reasonable queries about customer responsiveness to
wards the newest segment of commodity. 1. 2. 3. 4. 5. 6. If he/she is a Sharekha
n customer or not? If yes, is it online or offline account? In which segment doe
s he trade with Sharekhan? Is he/she is aware about the trading product offer by
Sharekhan or not? Is he /she interested about commodity & currency? what is the
time that they prefer to take the appointments?
49
So, the customer response to this survey we saw that they were not aware about t
hese upcoming segments. Their general awareness about Equity cash or Equity Futu
re & Option is very high while about commodity & currency their knowledge base i
s very poor. It came in figure when we put them into numerical. The questionnair
e which was provided to us for survey purpose, is given below:
Questionnaire€for€a€study€on€ “Responsiveness€of€clients€to€the€newest€segment Commodity€&€
rading”€€
a)€Are€you€a€Client€of€Sharekhan? Ans.€1)€Yes □ Will€think€later 2)€No □ □ 3)€Thinking€Abou
b)€If€yes,€then€Online€or€Offline€with€Customer€ID/Client€Code? Ans. c)€In€which€Segment€yo
Ans.€ 1)€Equity€Cash Commodity □ 4)€Currency □ □ 2)€Equity€F€&€O □ 3)€
d)€Are€you€aware€about€the€following€trading€products€offered€by€ Sharekhan? Ans. 1)€Equity
□ □ 2)€Equity€F€&€O □ 3)€Commodity
e)€Which€of€the€segments€you€know€or€aware€of? Ans.€ 1)€Equity€Cash Commodity □ 4)€Currency
f)€Which€of€the€segments€you€would€like€to€know€about?
50
Ans.€ 1)€Equity€Cash Commodity □ 4)€Currency □
□
2)€Equity€F€&€O
□
3)€
g)€Are€you€interested€to€trade€in€Commodity€or€Currency€Futures? Ans.€ 1)€Yes □ 2)€No 4)€Wi
g€About€it □
h)€What€will€be€your€convenient€time€to€meet? Ans.€ 1)€Morning€(1012€AM) □ □ 2)€Afternoon€
3)€Evening€(0406€PM)
SEONDARY€DATA:
Secondary data means when those primary data has been put in a encrypted format
so that those data can be framed in Excel sheet. In excel sheet we can do some g
raphical presentation to obtain the percentage of population aware about Equity
Cash or Equity Future & Option or commodity or currency. We put them in Excel sh
eet from word document. The secondary data has been provided in a table format g
iven below.
Name : Affiliation : Email ID : Tel/Mobile No : Location of Training : Branch :
Sl. No. Name Clien t/No n Clien t On lin e/ Off lin e Client Code Existin g Segm
en t Aware ness of Tradin g Produ cts Aware ness of segme nts Furthe r segme nt
interes t Interest on Commo dity/Cur rency Futures Appoi ntment Given Remar ks
1 2 3
Purabi Chakraborty Ms. Anjum Ara Anindita Majumdar
no yes no
no On lin e no
n.a. IN300513 17212876 na
Equity Cash Equity cash n.a.
Equity Cash Equity cash n.a.
Equity cash Equity cash Equity cash
curren cy Equity cash Equity cash
no no no
After 6 p.m. After 6 p.m. After 6 p.m.
n.i n.i n.i
51
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Tridib kumar Bala A. Alam Sumita Kedia Ajay kr. Agarwal Joydeep Ghosh Sankar Pra
manik Mithali Roy Chowdhury Jollybasu Ghosh Indra Deo Garg Runa Roychoudhury Ami
t Kumar Sampa Baruah Achintya Bain Subrata Mukherjee Atanu Paul Shivtosh Nath Sa
ket Agarwal Monoj Kr. Sharma Santanu Chatterjee Kunal Basu Samir kr. Basu
yes yes yes yes yes yes yes yes no yes yes yes yes no yes yes yes yes no no no
yes 297998 yes n.a yes 45135 yes 505530 yes n.a yes n.a no no no n.a n.a n.a
Equity cash Equity cash commo dity Equity cash Equity cash Equity cash Equity ca
sh Equity cash n.a. Equity cash Equity cash Equity cash Equity cash n.a Equity F
&O Equity cash Equity cash commo dity n.a n.a n.a
Equity Cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity c
ash Equity cash n.a Equity cash Equity cash Equity cash Equity cash n.a Equity F
&O Equity cash Equity cash comm odity Equity cash Equity cash Equity cash
Equity cash Equity cash comm odity Equity cash Equity cash Equity cash Equity ca
sh Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equit
y cash Equity F&O Equity cash Equity cash comm odity Equity cash Equity cash Equ
ity cash
comm odity Equity cash Equity cash comm odity comm odity comm odity Comm odity c
omm odity curren cy comm odity comm odity comm odity Equity cash Equity cash Equ
ity F&O comm odity Equity F&O comm odity comm odity Equity cash Equity F&O
no no no no no no no no no no no yes no no no no no yes no no no
yes n.a yes 51617 yes 185466 yes 365333 no n.a
yes n.a yes n.a yes 141223 yes n.a no no no n.a. n.a. n.a.
After 6 p.m After 12-04 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 12
-04 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 12-04 p.m
After 6 p.m. After 12-04 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After
6 p.m. After 6 p.m. After 12-04 p.m. After 12-04 p.m. After 12-04
n.i n.i n.i n.i n.i n.i. n.i n.i n.i. n.i n.i. n.i n.i n.i n.i n.i n.i i n.i n.i
n.i.
52
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46
Rama Batra Kantra Tewari Amit Sengupta J. Mitra Satadal Saha Mahendra Chowdhury
Animesh Nashkar Gopi Krishna Rathi Sanjib Kr. Singh Sudipta Mitra N.K. Nandi Kal
yan kr. Ghosh Om Prakash Chamaria Ajit kr. Singh Debasish Mallick Debasish Chatt
erjee Harendra nath Sarkar Vinod Saha Ajit Pandey Swarup Biswas Manindranath Bag
Debdas Khanna
no no no no no no no no no yes no no no yes yes yes no no no no no No
no no no no no no no no no no no no no no no no no no no no no No
na n.a. n.a. na na na n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a. n.a. n.a. n.a.
n.a. n.a. n.a Na
n.a n.a n.a n.a n.a n.a Equity cash n.a n.a Equity cash n.a. n.a n.a Equity cash
Equity cash Equity cash n.a n.a n.a. n.a n.a n.a 53
Equity cash Equity F&O Equity cash Equity cash Equity cash Equity cash Equity ca
sh Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equit
y cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash E
quity cash Equity
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity c
ash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equi
ty cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity F&O E
quity cash Equity
Equity F&O Equity F&O Equity F&O Equity cash Equity F&O Equity F&O Equity F&O Eq
uity F&O comm odity comm odity comm odity comm odity Equity cash comm odity comm
odity comm odity Equity F&O Equity F&O comm odity comm odity Equity F&O Comm
no no no no no no no no yes yes no no no no no no no no no no no No
p.m. After 6 p.m. After 6 p.m After 6 p.m. After 6 p.m. After 6 p.m. After 12-04
p.m. After 6 p.m. After 6 p.m. After 6 p.m. After 6 p.m. After 6 p.m. After 6 p
.m. After 12-04 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 12-04 p.m.
After 6 p.m. After 12-04 p.m. After 12-04 p.m. After 04-06 p.m. 4-6
n.i n.i n.i n.i n.i n.i. n.i n.i. I I n.i n.i n.i n.i n.i n.i n.i n.i n.i n.i n.
i NI
47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71
Nasiruddin Ansari Aniruddha Bhattacharya Ramesh Ch. Sharma Tapan kr. Banerjee Ka
lyani Panda Uma shankar Agarwal Puspa Agarwal Mira Beriwal Rabi Kiran Bala Ram C
handra singh Goutam Biswas Dipak Mukherjee Goutam Mukherjee Bhaskar Sengupta Asi
t Baran Chatterjee Sanjay Sarkar Tapan Bhattacharya Tapan Chatterjee Sadhan Patr
a Maitri Sen Naba kr Shaw Tapti Mondal Gopi kishan Rathi Surendra Das Sagarmal A
garwal
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
cash Equtiy cash Equity cash Equity cash Equity cash Equity cash Equity cash Equ
ity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash
Na Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equi
ty cash Equity cash Equity cash Equity cash Equity cash 54
cash Equity cash Equity cash Equity cash Equity cash Equity F&O Equity cash Equi
ty cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity c
ash Equity cash Equity cash Equity cash Equity cash Equity cash
odity Equity F&O Comm odity Equity F&O Equity F&O Comm odtiy Equity cash Equity
cash Equity cash Comm odity Equity F&O Comm odity Curren cy Comm odity Equity ca
sh Equity F&o Equity cash Equity F&O Equity F&O Equity F&O Equity F&O Comm odity
Equity cash Equity cash Comm odity Comm odity
No No No No No No No No No No No No No No No No No No No No No No No No No
12-4 12-4 10-12 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 12-4 4-6 4-6 4-6 4-6 4-6
4-6 4-6 4-6 4-6 4-6 4-6
NI NI NI NI NI Ni NI NI Ni NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI
72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97
Surjit Chandra Deb kr Mukherjee R.L. Das Aparna Bhattacharya Asit Samanta Subhas
is Chatterjee Barunava choudhury Kalyan Dutta Roy Basudeb Adak Amitabh Guha Bijo
y dutta Ray Pranab Mukherjee Mohindra singh Subhabrata dutta Uma kant sharma Rad
ha shyam Agarwal Jyoti ranjan Banik Ram kishor Gupta Deori nandan Agarwal Subhoj
it Roychudhury Kamal Sarkar Kripa nath Das Mrityunjoy Das Sushil kanti Paul Subh
asis Paul Swapan kr. Das
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na 55
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity c
ash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equi
ty cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity c
ash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equi
ty cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity
Equity F&O Comm odtiy Equity F&O Equity F&O Comm odity Equity F&O Comm odity Com
m odity Comm odity Equity F&O Equity F&O Equity F&O Comm odity Equity F&O Comm o
dity Equity F&O Curren cy Comm odity Comm odity Equity F&O Comm odity Equity F&O
Equity F&O Comm odity Equity F&O Comm
No No No No No No No No No No No NO No No NO No No No No NO No No No No No No
4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6
4-6 4-6 4-6 4-6 4-6 4-6
NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI
98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 11
8 119 120 121 122
Mrityunjoy Ghosh Sahadeb Majhi Debabarata Bhattacharya Chanchal Sarkar Vinod Sha
h Bharat Jaiswal Pradip Kapoor Sriram Bajoria M.K. Markand Swapan Biswas Dinkar
Betai Chandan Bhattacharya Ashok Chakraborty Prosit Ghosh Ajit Pandey Subhas Muk
herjee Tapan Kr. Basu
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na na Na Na
Na Na Na Na Na Na Na Na Na NA Na Na Na Na Na Na Na Na Na Na Na Na Equity cash Eq
uity cash Na
Subhas Agarwal Na Pravin Agarwal Ram niwas Agarwal Asadullah Sisir kr. Banerjee
Anita saha Chandrajit Saha Pankaj Tebriwala Na Na Na Na Yes Yes Na
cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equ
ity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity
cash Equity cash Equity cash Equity cash Equity cash Equity cash
cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equ
ity cash Equity cash Equity F&O Equity cash Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity c
ash Equity cash Equity cash Equity cash Equity cash Equity F&O
odity Equity F&O Comm odity Equity F&O Comm odity Curren cy Equity F&O Comm odit
y Comm odity Comm odity Comm odity Equity F&O Comm odity Equity cash Comm odity
Equity F&O Comm odity Equity F&O Comm odity Equity F&O Comm odity Comm odity Com
m odity Equity F&O Equity F&O Comm odity
No No No No No No No No No No No No No No No Na Na No No No No No No No No
4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6 4-6
4-6 4-6 10-12 4-6 10-12
NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI
56
123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142
143 145 146 147 148 149
Kanika Dutta Sahana Ali Manju Devi Singhania Mina Guha Arobindo Sen Sant Kaskar
Vikas Prasad Parasramka Hansha Goenka Rina Chakraborty Suman Jana Surinder Kumar
Babu Paul Sangita Chaudhury Mukesh Damani Montu Dutta Soumya Shankar Mitra Prod
yot Ranjan
Yes Yes Na Na Na Na Na Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Equity cash Equity cash Na Na Na Na Na Equity cash Equity cash Equity cash Equit
y cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash N
a Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity
cash Na 57
Equity cash Equity cash Equity cash Equity cash Equity cash Na Na Equity cash Eq
uity F&O Equity cash Equity cash Equity cash Equity cash Equity F&O Equity F&O E
quity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity ca
sh Equity cash Equity cash Equity F&O Equity
Srotaswati Na Panda Kusum Agarwal Yes Shiv shankar Agarwal Rupak Roy Ashraful Is
lam Aditi Barh Tapas Banerjee Yes Yes Yes Yes Yes
Ramprit Sharma Yes Mr. Sudarshan Na
Equity F&O Equity F&O Equity F&O Equity F&O Equity F&O Equity cash Equity cash E
quity F&O Equity F&O Equity F&O Equity F&O Equity cash Equity cash Equity F&O Eq
uity cash Equity cash Equity cash Equity F&O Equity F&O Equity F&O Equity F&O Eq
uity F&O Equity F&O Equity cash Equity F&O Equity
Comm odity Comm odity Comm odity Comm odity Curren cy Equity cash Comm odity Com
m odity Comm odity Equity F&O Curren cy Equity F&O Equity F&O Curren cy Equity F
&O Equity F&O Equity F&O Comm odity Comm odity Comm odity Comm odity Comm odity
Comm odity Equity F&O Comm odity Comm
No No NO No NO No No Na No No No No No No No No No No No No No No No No No No
4-6 10-12 4-6 10-12 10-12 10-12 4-6 4-6 4-6 10-12 10-12 10-12 10-12 4-6 4-6 10-1
2 10-12 4-6 4-6 4-6 10-12 4-6 4-6 4-6 4-6 4-6
NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI
150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169
170 171 172 173 174
Leela Sharma Shankar Prasad Das Syeed Aseef Iqbal Amal Kanti Chakraborty Simanta
Chatterjee Somen Chatterjee Tapan kr. Chatterjee Tarun kr. Chatterjee Amal Kr.
Chaoudhury Ahin Choudhury Amalendu Choudhury Aniruddha Choudhury Arun Choudhury
Vijay Kr. Chirimar Anil kr. Das Jai narayan Shaw Amit Goswami Kamal Ahmed Shrigo
pal Agarwal Tanushree Sarkar & Dilip Paul Santanu Roy Khokon Rong Sujit Chatterj
ee Raghunath Sen Ranjan
Yes Yes Yes Na Na Na Na Yes Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Equity cash Equity cash Equity cash Na Na Na Na Equity cash Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na 58
F&O Equity cash Equity cash Equity cash Na Equity cash Equity cash Equity cash E
quity F&O Equity cash Equity cash Equity F&O Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity
cash Equity cash Equity cash Equity cash Equity
cash Equity F&O Equity F&O Equity cash Equity cash Equity F&O Equity F&O Equity
cash Comm odity Equity F&O Equity F&O Equity cash Equity cash Equity F&O Equity
cash Equity cash Equity F&O Equity F&O Equity F&O Equity cash Equity cash Equity
cash Comm odity Equity cash Equity F&O Equity
odity Curren cy Comm odity Equity F&O Comm odity Comm odity Equity F&O Equity F&
O Curren cy Comm odity Equity F&O Curren cy Equity F&O Equity cash Equity cash E
quity cash Curren cy Equity F&O Comm odity Equity F&O Equity F&O Equity F&O Equi
ty F&O Equity F&O Comm odity Equity
No No No Na No No No No No No No No No No No No No No No No No No No No No
4-6 4-6 4-6 4-6 4-6 10-12 10-12 10-12 4-6 4-6 10-12 10-12 4-6 4-6 4-6 4-6 12-4 4
-6 12-4 10-12 10-12 10-12 4-6 10-12 4-6
NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI
175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194
195 196 197 198
Chakraborty Ratna Mitra Arun kr. Rastogi Chandan Choudhury Debudutt Khetawal Mah
asweta Bhattacharya Soumen Saha Navin Puri S.N. Bhiwaniwals Benu gopal Menon Hir
ak Jyoti Mukherjee Kingshuk Banerjee Narayan Das Mohta Kalyan Mukherjee Anupam C
hatterjee Mihir kr. Saha Yawar Gazi Shakti pada Acharya Goutam Majumdar Abhishek
Choudhury Tapas Chakraborty Ranendra kr. Sen Soumitra Kundu Rabindra Ch. Dutta
Shraboni Banerjee
Na Na Na Na Na Na Yes Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
Na Na Na Na Na Na Equity cash Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na
cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equ
ity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Na Na N
a Equity cash Equity cash 59
cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equ
ity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash
Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity
cash Equity cash Equity cash Equity cash Equity cash
F&O Comm odity Comm odtiy Comm odity Comm odity Comm odity Comm odity Comm odity
Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Co
mm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm
odity Comm odity Equity cash
No No No No No No No No No No No No No No No No No No No No No No No No
12-4 12-4 10-12 4-6 12-4 12-4 4-6 4-6 12-4 12-4 4-6 4-6 10-12 4-6 12-4 12-4 12-4
12-4 4-6 12-4 4-6 4-6 12-4 12-4
NI NI NI NI NI NI New custom er NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI NI
NI
199 200
Bipul Saha Ajay kr. Banerjee
Na Na
Na Na
Na Na
Na Na
Equity cash Equity cash
Equity cash Equity cash
Comm odity Equity cash
No No
12-4 4-6
NI NI
The above table shows customer response towards the market. The above sample siz
e of 200 gives a small practical picture of the investors response to the market
.
DATA€INTERPRTATION:
We put these data in excel sheet, as we see that the project what we conduct is
not assist to use some statistical tools like hypothesis testing or regression a
nalysis by using spss software, hence it is better to use some graphical form of
the survey report.
CUSTOMER€RESPONSE€TO€THE€EXISTENCE€ € SEGMENT:€ €€
Customer response to existence segments in this particular area is absolutely sh
ocking. Out of 200 population only 46 invest in equity cash, 1 in equity F & O,
2 in commodity, no one in currency and rest 151 people is not interested at all
to invest in the current market, though the market is growing.
existing segment 160 140 120 100 80 60 40 20 0 existing segment equity F & O equ
ity cash equity F & O 46 1 commodity commodity 2 currency currency 0 NA. 151 equ
ity cash existing segment NA.
60
The above picture shows that 23 % people are interested in equity cash, .05 % in
Equity F & O, 1 % in commodity & rest 75.5 % are interested in other segment li
ke, FD or Insurance.
Awareness€of€trading€product:
If we see about the awareness of the trading product offer by Sharekhan ltd. its
elf, we will see out of 200, 181 people was aware about Equity cash, 9 people wa
s aware about Equity F & O, only 1 in commodity, no one in currency and only abo
ut 9 people we have no news. In a pie chart I have shown the percentage of their
awareness.
0% 1% 4%
AWARENESS OF TRADING PRODUCT
5% equity cash equity F & O commodity currency NA. 90%
€€ €€AWARENESS€of€SEGMENTS:€€
If we see the about the awareness of the population to segments we will see that
out of 200 population, 164 are aware about equity cash only, which means they a
re not aware about the market at all. 32 was aware about Equity F & O and rest 4
people was aware about commodity a little bit only. So the graph if we observe
we see
61
AWARENESS of SEGMENTS
NA. currency commodity equity F & O equity cash 0
0 0 4 32 164 50 100 150 200 AWARENESS of SEGMENTS
We see that 82 % in Equity cash, 16% in equity F & O, & 2 % in commodity has bee
n find out. €€€€€€€
FURTHER€SEGMENTS€INTEREST:
This time the related figure has shown a different direction, a different respon
se of the customer towards showing interest in other segments. Out of 200 popula
tion only 11 in equity cash, 63 in equity F & O, 114 in commodity and rest 12 pe
ople in currency has shown their awareness. In graphical presentation I have sho
wn their status.
FURTHER SEGMENTS INTEREST 120 100 80 60 40 20 0 equity cash equity F & O commodi
ty currency 11 12 0 NA. 114
63
FURTHER SEGMENTS INTEREST
62
FURTHER SEGMENTS INTEREST
6%
0%
6% 32% equity cash equity F & O commodity currency NA.
56%
The above table has shown the percentage position of the investment opportunity
of the customer.
INTERESTED€IN€COMMODITY€&€CURRENCY:
Though we have seen a lot of huge response from the customer about awareness in
commodity and currency a little bit. But about interest in commodity and currenc
y we got a heartbreaking response only 4 out of 200 population gave a little res
ponse to listen about commodity. And rest 98 % was not interested at all. In bel
ow in a pie chart I have described it.
INTERESTED IN COMMODITY & CURRENCY
2%
YES NO
98%
€€€€€€€€€€€€€€€€€€€€€€€€€€€€ findings:
63
To assess the customer responsiveness towards investment in commodity & Currency
trading we have done a survey. We have provided a questionnaire from Mumbai hea
d office. Then we modified the format of that questionnaire. There we met lot pe
ople who regularly invest in the market or keep in touch with the market conditi
on. Some of those people conversation I have put in my project report Customer 1
: Name: Mr. N. K. Nandi Address: Jadavpur, Kolkata. Age: 65-66 years. Profession
: Ex-Investor. Mr. Nandi had been involved in the share market more than 30 year
s. He had invested regularly in the market. But he hasn’t heard ever investment in
commodity or currency trading. So we introduce himself about this new segment.
He understood, he confirm us to invest in these two segment later. His Son is al
so a regular investors in the market. Customer 2 : Name: Jolly Basu Ghosh Add: T
ollygunj. Kolkata. Age: 31 years. Profession: housewife. Mrs. Ghosh has invested
in the market since last 5-6 years. She is an existing customer of SHAREKHAN LT
D but it is a local franchisee. But she hasn’t heard about commodity & currency tr
ading. So we tell her about this matter. She was convinced about it. She assured
us that she will invest in the month of September. Customer 3: Name: Office Add
: Debasish Chatterjee Nilpur Marketing Pvt. Ltd. Dalhausi Square, Kolkata. Age:
36 years Profession: Chief Operating Officer of the company.
Mr. Chatterjee has not get in touch with the market last 1 year. He is an existi
ng customer of Sharekhan ltd. He has some shares of TATA TELE
64
SERVICES for a long time, he hold those shares. At that time the prices of those
share was around Rs. 550. Mr. Chatterjee always invested in equity cash, nothin
g else. He never invests in commodity or currency either. So we told him about i
t. He asked for a broacher. We gave him that. And he asked for some times to ana
lysis all those factors. Customer 4: Name: Debasish Mallick. Add: Ballygaunge Ci
rcular Road, Kolkata. Age: 40 years. Profession: Tax Officer. When I took his ap
pointment in the telephone, the response from his side was quite different. He h
ad not asked me about the type of investment or where to invest like others did.
It seemed to me that he was waiting for some investment offer from any broking
farm and I am the first person who catch him at time. When we met him, told him
about our product, he asked us some question: 1. How I invest? In which particul
ar commodity do you prefer to invest & why? 2. How it is profitable to me? Do I
will get my profit in cash or can I en cash my profit into liquidity? 3. Do I ge
t any tax advantage while invest in commodity or in currency? This sort of quest
ion we faced while in our conversation. I realize that commodity is completely a
new segment and people become more conscious, conservative and serious in inves
ting in a new segment rather in those segments where he is familiar. But we appr
eciate his thinking power and his market knowledge. He hasn’t lost his temper for
a second, while we saw in the others case.
Customer 5: Name: Add:
Arun Rasthogi. Pretoria Street, Kolkata.
65
Age: 52 years. Profession: Officer. Mr. Arun Rasthogi has been investing in the
market since 1998. In his voice we found out that he is not quite surprise for t
he major downfall of economy last year. But he is hopeful that the market will b
e grow again and will reach that position where it has lost. He has tracking the
market regularly. But he hasn’t decide to invest in commodity right now. So durin
g the project I have learnt a lot of their investment thought & motivation. They
prefer the market will grow again while they themselves made the obstacles. The
y are waiting when the market will reach at the top level, they will start to in
vest. While at time when I am writing this report UPA govt. has already taking t
he charge of our country. Mr. Pranab Mukherjee becomes our Finance Minister. So
it is a factor of reason that the market is smoothly growing. This is the right
time to parking their money, not only in commodity or in currency, but also in e
quity, mutual fund or insurance.
CONCLUSION:
If we see the record of last 2 years of commodity movement in the market, we wil
l see that prior to economic downfall when the market was getting the ultimate s
peed, Sensex was moving around 18000-18400 points, commodity & currency was also
gave the same response. But after the eco-quack and its aftershock has complete
ly demolished their i.e. investor’s confidence for an uncertain time. Though the m
arket is growing smartly as maintain the theoretical concept but the investors p
articipation has been down, their response towards the market is so pathetic to
explain. For an example the hypothesis testing that I did, approved that custome
r responsiveness towards investment object is completely nullifying. Most of the
people is so scare to invest, that many of them just cut their phone line while
we were going to peach them about commodity & currency derivative trading. Many
of them not ready to listen the term Investment. It became like an nightmare fo
r them. So for the common people who has lost their money. But for the HNI who a
re literally true investors, can’t
66
find out any logical reason why they are stay back. In this paper we integrated
two streams of research in order to improve the insight into the viability of co
mmodity futures contracts. First, we elaborated on the non-subject level that is
concerned with the technical aspects of the commodity and the contract. It appe
ars that hedging effectiveness has an important influence on volume. The market
is taking not only basis risk into account, but also market depth risk, the latt
er seems particular important in small commodity markets as well as new futures
markets. As a result, measuring the hedging effectiveness with an extended versi
on of the Ederington measure, taking market depth risk into account, yielded in
a stronger relationship between hedging performance and volume than when market
depth risk was not taken into account. Second, we elaborated on the subject-hedg
er level that is concerned with owner managers’ characteristics that influence the
ir use of futures contracts. In contrast to previous research regarding the use
of futures contracts by managers of large 28 cooperation, we acknowledge the fac
t that our owner-managers operate firms where all functional departments are com
bined. Perceptions and psychometric constructs influence the owner-manager’s decis
ion process. In our empirical study it was found that the owner-manager’s decision
unit, owner-manager’s level of market orientation and entrepreneurial freedom wer
e influencing (at least for a particular segment of owner managers) the use of f
utures contracts, something not found in previous research. Owner managers are n
ot homogenous regarding the factors influencing their use of futures. For differ
ent segments, different factors were found such as the debt-to-asset ratio, risk
attitude and perceived risk exposure.
RECOMMENDATION:
One of the major indicator in Indian economy and is SENSEX. Foreign investors li
ke FIIs FDIs in Indian economy has made it very strong participator. But last ye
ar the global economic crisis did a major shock shake the entire world economy t
hat still alive in the investors’ mind, for them it is like a nightmare. But we ho
pe after every darkness over there will be a beautiful morning is waiting for us
. But still don’t know when that moment will come to us. But right now some import
ant initiative steps we should take to bring back
67
the confidence of investors as well as market. No doubt the market is growing ri
ght now, especially after election result. But most of those investors must be a
ware about that making investment in market is not like preparing food and grab
it. Investment in the market is an analytical object. While without study or ana
lyze it making investment is not a right decision. Indian market is high volatil
e by nature of investment. Investment in such kinds of market is very risky. Whe
n this kind of market is growing, first of all the big & blue chip companies sha
re value goes up, then the middle size company and finally the small size compan
ies share goes up. It is a slow but steady process. For an example of building a
pyramid, which consist with millions of bricks, cements, sands etc. It takes ti
me to be completed. But when it has been completed it becomes one of the seventh
wonder. But if an earth quack happens the entire pyramid will annihilate and co
llapsed with its glory and fame. Similarly if one of the foreign company collaps
ed that shocking wave will also affect the domestic company and it was happened
in India also. But there is a good news that Indian economy is growing. The shar
e prices is increasing. So overall it’s a good time for investment. They have nume
rous options as reason of investment. In brief I will explain.
RECOMMENDATION€FOR€INVESTORS:
• Investor should opt for long term investment. Because, Short term investment wil
l not give constant high return, while long tem investment is a reasonable optio
n for investment. • Commodity & Currency market is an upcoming market. As I say th
at this market is low volatility by nature. Because, this market does not fluctu
ate regularly, specially, investment in GOLD is always give steady return and Be
cause of it’s trustworthiness. • Keep trust on the voice of market expert, they alwa
ys give correct advice. • Keep in touch with market regularly.
RECOMMENDATION€FOR€COMPANIES:
I have few words for the company itself as my own recommendation. Though I know
there lots of expert is sitting there regularly and trade
68
on behalf their customers as a guide. Lots of responsibilities has been imposed
on their shoulder. Some of those recommendation should be like as below I have w
ritten: a. Company has recently started online trading system, which absolutely
unknown to many customer around the city, so make them aware about it is necessa
ry. b. During the training session I observe only 5 or 6 person came to the offi
ce regularly and trade by themselves and rest of those customer do the same thin
g through telecommunication. I want all those people should come regularly into
the office & learn from those expert about the trading process. I mean to say th
at our customer should be independently educated about the trading process and t
rade time, it is crucial as well as important also. c. Company should provide pr
oper guidance to their customer and let them allow to gather knowledge from diff
erent websites and books. d. Company should arrange some seminar for the investo
rs, like it is happening in every management colleges today. e. Company should p
ublish their own magazine as investor’s guide, at least to helps them.
REFERENCE
WEBSITES:
1. 2. 3. 4. 5. 6. 7. 8. 9.
www.mcxindia.com www.ncdex.com www.sharekhan.com www.nmce.com www.indiamart.com
www.fxstreet.com www.forexindia.com www.bloomberg.com www.cnnmoney.com.
69
MAGAZINE & BOOKS : SHAREKHAN COMMODITES DIGEST. COMMODITY MAGAZINE. SECURITY ANA
LYSIS & PORTFOLIO MANAGEMENT BY PRASANNA CHANDRA. 4. SHAREKHAN COMMODITIES DIGES
T. 5. SECURITIES MARKET & PRODUCTS by TAXMAN PUBLICATION. 6. RESEARCH METHODOLOG
Y BY DIPAK KUMAR BHATTACHARYA. 1. 2. 3.
70