F M :- study on derivatives market in India.

Objectives of the study:-

1. To explore the evolution of Capital Market in India.

2. To assess performance of Indian Derivative Market.

3. To analyze the factors contributing towards the growth of Derivative Markets.

4. To understand investment avenues in derivatives segment.

Literature review :-

Introduction of the study

In finance a derivative is a contract that derives its value from the performance of an

underlying entity. This underlying entity can be an asset, index, or interest rate, and is often
simply called the "underlying". Derivatives can be used for a number of purposes, including
insuring against price movements (hedging), increasing exposure to price movements for
speculation or getting access to otherwise hard-to-trade assets or markets.

Derivatives are contracts between two parties that specify conditions (especially the dates,
resulting values and definitions of the underlying variables, the parties' contractual
obligations, and the notional amount) under which payments are to be made between the
parties.

The assets include commodities, stocks, bonds, interest rates and currencies, but they can
also be other derivatives which adds another layer of complexity to proper valuation. The
components of a firm's capital structure, e.g., bonds and stock, can also be considered
derivatives, more precisely options, with the underlying being the firm's assets, but this is
unusual outside of technical contexts.

Questionnaire

Q1. Please mention your name below?

_____________________________________

Q2. Are you trading in derivative market?

Yes No
Q3. Gender?

Male Female

Q4. Age?

Below 20 years

20 – 25 years

26 – 30 years

31-35 years

Above 35 years

Q5. Education Qualification?

Under Graduate

Graduate

Post Graduate

Professional Degree holder

Others

Q6. Annual Income?

Below 1, 50,000

1, 50,000 - 3, 00,000

3, 00,000 – 5, 00,000

Above 5, 00,000

Q7. If No is the reply in the Q2 question, reasons for not investing in derivative market?

Lack of knowledge

Lack of awareness
 Very risky / counter party risk

Huge amount of investment

Other

Q8. Which of the following Derivative instruments do you deal in?

Stock Futures

Stock Index Futures

Stock Options

Stock Index Options

Swaps

Currency

Q9. How much percentage of your income you trade in Derivative market?

Don’t trade

Less than 5%

5%-10%

11%-15%

16%-20%

More than 20%

Q10. You participate in Derivative market as?

Hedger

Speculator

Arbitrageur

Others

Q11. Do you use any strategies while trading in Derivatives?

Yes No
Q12. What is the rate of return expected by you from derivative market?

Don’t trade

Less than 5%

5%-10%

14%-17%

18%-23%

More than 23%

Q13. Are you satisfied with the current performance of the derivative market?

Do not trade

Disagree

Neutral

Agree
G.M

A study on 5 triilion economy in India

 Objectives of the study

1. To analyse present economic condition of India
2. To study about the 5 things which India must do to becomea 5 trillion economy
3. To analyse

INTRODUCTION OF THE STUDY

The economy of India is characterised as a developing market economy. It is the

world's fifth-largest economy by nominal GDP and the third-largest by purchasing power
parity (PPP). According to the IMF, on a per capita income basis, India ranked 142nd by
GDP (nominal) and 119th by GDP (PPP) per capita in 2018. From independence in
1947 until 1991, successive governments promoted protectionist economic policies with
extensive state intervention and regulation; the end of the Cold War and an acute balance of
payments crisis in 1991 led to the adoption of a broad program of economic
liberalisation. Since the start of the 21st century, annual average GDP growth has been 6%
to 7%,[43] and from 2014 to 2018, India was the world's fastest growing major
economy, surpassing China. Historically, India was the largest economy in the world for
most of the two millennia from 1st until 19th century.

The long-term growth perspective of the Indian economy remains positive due to its young
population and corresponding low dependency ratio, healthy savings and investment rates,
and is increasing integration into the global economy. The economy slowed in 2017, due to
shocks of "demonetisation" in 2016 and introduction of Goods and Services Tax in
2017. Nearly 60% of India's GDP is driven by domestic private consumption and continues
to remain the world's sixth-largest consumer market. Apart from private consumption, India's
GDP is also fueled by government spending, investment, and exports. In 2018, India was the
world's tenth-largest importer and the nineteenth-largest exporter. India has been a member
of World Trade Organization since 1 January 1995. It ranks 63rd on Ease of doing business
index, 68th on Global Competitiveness Report, and 102nd on Global Hunger Index.[57][58] With
520-million-workers, the Indian labour force is the world's second-largest as of 2019. India
has one of the world's highest number of billionaires and extreme income inequality. Since
India has a vast informal economy, barely 2% of Indians pay income taxes.[61] During
the 2008 global financial crisis the economy faced mild slowdown, India undertook stimulus
measures (both fiscal and monetary) to boost growth and generate demand; in subsequent
years economic growth revived. According to 2017 PricewaterhouseCoopers (PwC) report,
India's GDP at purchasing power parity could overtake that of the United States by
2050. According to World Bank, to achieve sustainable economic development India must
focus on public sector reform, infrastructure, agricultural and rural development, removal
of land and labour regulations, financial inclusion, spur private investment and
exports, education and public health.
5 things India must do to become a $5 trillion
economy
If you look at the last 5 years of India's economy, on an average, India has grown at about
7.5%. Growth in recent times has dipped. But whether it's cyclical or structural is the
question. The challenge for India is really to grow at high rates over a 3-decade period. It's
not just about a $5 trillion economy till 2024, or a $10 trillion economy by 2030. The
challenge for India is to grow at 8% to 9% per annum, year after year, for three decades or
more. Only then can we lift a very, very young population above the poverty line. India's
average age is 29, and rarely has a country not created wealth when it has such light
dependency burdens. Post-World War II, Japan, Korea, Taiwan, and China have all grown at
high rates for long periods of time. What must India do to utilize this light dependency
burden and grow at rapid rates?

#1. Increase ease of business and ease of living to enable the private sector to create wealth
over a long period of time. Over the last four years, the government has scrapped a number of
laws; over 1,300 to be precise. We've done away with a lot of procedures, rules and
regulations. We've tried to digitize the Indian economy. We've tried to see that every single
department of the government speaks to its applicants digitally. Through a series of reforms,
India has jumped up 65 positions in The World Bank Ease of Doing Business. No other large
country has been able to do this. We've jumped up 65 positions, but our challenge is that in
the next two years we must reach the top 50 and in the next five years reach the top 25. India
is a very, very large country. It's bigger than 24 countries of Europe, plus another 30,000
kilometers. The challenge is making it easy and simple at the state level and getting them to
compete with each other in the spirit of competitive federalism. The first year we did this, on
hundred outcomes of ease of doing business, Gujarat was No. 1. The next year, Andhra
Pradesh, and the third year, Telangana. Backward states like Jharkhand and Chhattisgarh did
massive reforms, huge reforms across labor, across a range of sectors to come fourth and
fifth. And my belief is that if the eastern part of India becomes extremely reformist and has
the zeal to change, then India on a consistent basis will grow at high rates. This spirit of
competitive federalism - ease of doing business to health, education; and ranking states
accordingly helps to make good governance as good politics, and puts out the data in public
domain. This is something which we will continue to do unabated in the days to come. There
are about 115 districts of India which remain backward in parameters such as education,
health, maternity, infant mortality, skill, agriculture and nutrition. Many of them are in the
eastern part of India. We call them the aspirational districts of India and make them compete
on a real-time basis. That is, we capture their data on a real-time basis, and we make them
compete on 49 indicators across education, health, nutrition, skill. And we rank them, we put
their ranking in public domain on a dashboard called ChampionsofChange.gov.in. We
capture their performance on incremental performance, on delta, how it's changing every
month, every day. We give awards to districts that do well; every month we give them Rs 10
crores of untied fund and we've seen a huge improvement by just making them compete and
putting out real-time data in the public domain. Policy decisions can be based on that real-
time data. And that is driving change today. By lifting these 115 districts above poverty line,
India will automatically grow. #2. The process of urbanization has been a very major driver
of growth across the world. Cities account for just 3% – just 3% of the earth land mass, but
they account for 82% of the global GDP. The process of cities is important because cities are
centers of growth, they are centers of dynamism, they are centers of innovation, and they
bring in a spirit of economic growth. The process of urbanization has ended across America.
It's ended across Europe. It's nearing its completion in China. But the process of urbanization
has just begun in India. In the next 5 decades, India will see more urbanization than what
we've done in the last 500 years. And therefore, if you go by the latest McKinsey study, every
minute as I speak here today, there are 30 Indians moving from rural areas to urban areas and
Mumbai is a great example of that. And by 2050, you will have 700 million Indians getting
into the process of urbanization. Therefore, the challenge for India is really to create two-and-
a-half Americas, two-and-a-half Americans in a far more innovative and sustainable manner.
When America urbanized land gas water were cheaply available. America had the luxury of
living in New Jersey travelling to New York guzzling gas. It had the luxury to create cities
like Atlanta where 99% of the people travel by car, nobody cycles, nobody walks, but that's
not possible anymore. Many of the lessons of good urbanization come from Singapore which
recycles its water – almost 12% of recycled water is used for human consumption. It comes
from a city called Yokohama where almost 42% of the waste was reduced by a lady Mayor
because she was able to do household segregation. It comes from a city called Kitakyushu in
Japan which became – where Dokai Bay on which it was based became absolutely yellow
from the Blue River. It became yellow and the women of Kitakyushu rose in revolt against
the administration of Kitakyushu. And the Ministry of Trade and Industry METI of Japan,
which is the most powerful ministry in Japan, worked in partnership with the women of
Kitakyushu to create the most recycling and the smartest city and everything is recycled in
Kitakyushu today. The challenge in India is that we must plan and urbanize. How do we
recycle our water? How do we recycle our waste? How do we ensure that we do innovative
and sustainable urbanization for tomorrow? These are key challenges because cities will
create growth, cities will be the key driver of India's growth, they will be the engines of
taking India forward, and this is important to understand.

#3. India cannot be speaking in lieu of protectionism. We cannot keep looking at the
domestic market. We need to penetrate global markets. We exist in a globalized world. In a
globalized world, we work on value chains. Vast number of countries have grown and
prospered because of globalization. Globalization has enabled large sections of population to
be lifted above the poverty line. Poverty would not have been eliminated in China but for
globalization. China has grown on the back of exports. It would not have happened in Japan;
it would not have happened in Korea. All these countries have benefited from globalization
by penetrating the American markets. They've all penetrated American and European markets
on the basis of exports. India must learn the art of size and scale, of manufacturing to size of
scale and to penetrating. India's share in global export is less than 2%. The mindset of most
Indians is that we have a large domestic market, therefore, whatever I produce will be sold
here. But at whatever price you sell in the domestic market, when you export, you get 10x.
So, the real unit value realization comes from exports. Therefore, the size and scale of
manufacturing has to be pushed. India needs to create 5 or 6 large autonomous economic
zones where there is no labour law, no land law and allow people to produce to large size and
scale without restraining them in any manner. The second is our ability to push out goods for
exports in very fast time. So, the cost of logistics must fall sharply and there, technology must
come into play. The cost of logistic in India is still high, which we must bring down. One of
the key things we've done is to open up our economy to foreign direct investment. In the last
5 years, we opened up our economy to a range of areas from real estate, to defense, to
insurance, to pension funds. Every single sector of the economy we opened up. In the last
five years, India's FDI has grown by 66%, at a point of time where FDI across the world has
fallen by 13%. This will enable the Indian economy to benefit from forces of globalization.

#4. Participation of women in the workforce is a key driver of India's growth. India cannot
grow at high rates over a 3-decade period without gender parity. In India, only 26% of the
women work; the worldwide average is 48%. If such a major chunk of the population is not
working and we consciously don't put women into positions of power, it will be very difficult
for India to grow. We must give more opportunity to women consciously. And each one of us
must ensure that women are put into position of power, so that India becomes a nation of
gender parity. Without that, India will not grow. It's not possible. And if India was to reach
that worldwide average of 48%, you will add $700 billion to your economy.

#5. Reforms in Agriculture. It's not possible to grow over long periods of time without some
very major structural reforms in the agriculture sector because that's where close to 58% of
India lives. You can't keep growing on subsidies, you can't keep going on just giving
assistance to farmers without ensuring better markets, without putting technology, without
contract farming and so on. Agriculture sector reforms are critical.