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SYNOPSYS

Submitted by

K.NARESH STREAM: FINANCE


ROLL NUMBER: 11951E0023
COLLEGE NAME: INSTITUTE OF AEROUNATICALENGINEERING COLLEGE

Title of the Project: STUDY OF INSTITUTIONAL MARKETS


ORGANIZATION: VENTURA SECURITIES

INTRODUCTION

Financial Institutions
Financial institutions serve as intermediaries by channeling thesavingsofindividuals,businesses, and governments into loans or investments. They are majorplayers in the financial marketplace, with more than $12 trillion of financialassets under their control. They often serve as the main source of funds for businessesand individuals. Some financial institutions accept customers savingsdeposits and lend this money to other customers or to firms. In fact, many firms rely heavily on loans from institutions for their financial support. Financial institutionsare required by the government to operate within established regulatoryguidelines. Financial markets are crucial for firms and investors because they facilitate thetransfer of funds between the investors who wish to invest and firms that need toobtain funds. Second, they can accommodate the needs of firms that temporarilyhave excess funds and wish to invest those funds. Third, they can accommodatethe needs of investors who wish to liquidate their investments in order to spendthe proceeds or invest them in alternative investments.

MAJOR FINANCIAL INSTITUTIONS


Institutions Description: COMMERCIAL BANK: Accepts both demand (checking) and time (savings) deposits. Offers interest-earning savings accounts (NOW accounts) against whichchecks can be written. Offers money market deposit accounts, whichpay interest at rates competitive with other short-term investment vehicles. Makes loans directly to borrowers or through the financial markets. MUTUAL FUND: Pools funds of savers and makes them available to business andgovernment demanders. Obtains funds through sales of shares anduses proceeds to acquire bonds and stocks. Creates a diversifiedand professionally managed portfolio of securities to achieve aspecified investment objective. Thousands of funds, with a varietyof investment objectives, exist. Money market mutual funds providecompetitive returns with very high liquidity. SECURITIES FIRM: Provides investment banking services by helping firms to obtain funds. Provides brokerage services to facilitate the sales of existing securities.

INSURANCE COMPANY: The largest type of financial intermediary handling individual savings. Receives premium payments and places these funds in loansor investments to cover future benefit payments. Lends funds toindividuals, businesses, and governments or channels them throughthe financial markets. PENSION FUND: Accumulates payments (contributions) from employees of firms or government units, and often from employers, in order to provideretirement income. Money is sometimes transferred directly toborrowers, but the majority is lent or invested via the financial markets. SAVINGS INSTITUTION: Similar to a commercial bank except that it may not hold demand (checking) deposits. Obtains funds from savings, NOW, and moneymarket deposits. Also raises capital through the sale of securitiesin the financial markets. Lends funds primarily to individuals andbusinesses or real estate mortgage loans. Channels some funds intoinvestments in the financial markets. SAVINGS BANK: Similar to a savings institution in that it holds savings, NOW, and money market deposit accounts. Makes residential real estate loans to individuals. FINANCE COMPANY: Obtains funds by issuing securities and lends funds to individuals and small businesses. CREDIT UNION :Deals primarily in transfer of funds between consumers. Membership is generally based on some common bond, such as working for agiven employer. Accepts members savings deposits, NOW accountdeposits, and money market accounts.

MONEY MARKET SECURITIES Treasury bills are short-term debt securities issued in maturities of 13 weeks, 26 weeks, and oneyear by the U.S. Treasury. Their par value (principal to be paid at maturity) is a minimum of $10,000 and they are sold at a discount from the par value. Commercial paper is a short-term debt security issued by well-known, creditworthy firms that serves as an alternative to a short-term loan from a bank. Like Treasury bills, it is sold at a discount from par; unlike Treasury bills, investors are subject to default risk on their investment so the required return on commercial paper is slightly higher than on Treasury bills. Negotiable certificates of deposits (NCDs) are short-term debt securities issued by financial

institutions. Like commercial paper, the required returns on NCDs are slightly above the return on Treasury bills. Unlike Treasury bills and commercial paper, NCDs provide interest payments and are not sold at a discount. Firms and investors can also use foreign money markets to borrow or invest funds for short-term periods, perhaps enjoying lower financing costs or higher investment returns than comparable U.S. investments. CAPITAL MARKET SECURITIES Bonds are long-term debt securities issued by firms and governments to raise large amounts of long-term funds. 1. Treasury bonds are issued with typical maturities of 10 to 30 years by the U.S. Treasury and generally pay interest every six months. They are often referred to as risk-free investments since they are backed by the federal government. There is a very active primary and secondary market in the trading of Treasury bonds. 2. Municipal bonds are issued by municipalities to support their expenditures and can be either general obligation bonds (backed by the municipalitys ability to tax) or revenue bonds (with repayment made from the funds generated by the project financed). The interest paid on municipal bonds is exempt from federal income taxes so the cost of funds to the municipalities and the pre-tax return to investors are lower than other bonds. Interest is paid on a semiannual basis. 3. Corporate bonds are issued by corporations to finance their investment in long-term assets, such as building or machinery. Typical maturities are from 10 to 30 years, and interest is paid semiannually. Common stock represents units of ownership interest, or equity, in a corporation. Common stockholders expect to earn a return by receiving dividends, by realizing gains through the increases in share prices, or both. Preferred stock is a special form of ownership. Preferred stockholders are paid a fixed periodic dividend before any dividends can be paid to common stockholders. Preferred stock thus has a preference over common stock, much like bonds.

OBJECTIVE OF THE STUDY

To analyze the impact of the investment made by FIIs on exchange rate of Indian rupee.

To study the scope and trading mechanism of Foreign Institutional investors in India.

Impact can be seen in term of volatility of the exchange rate.

To find the relationship between the FIIs equity investment pattern and Exchange rates.

Volatility of the exchange rate denotes to the ups & down in the exchange rate due to fluctuation of the FIIs.

Volatility of the exchange rate is an unavoidable situation which is bound to happen over a period of time.

Calculate the volatility in term of standard deviation.

SCOPE AND NEED OF STUDY

Scope of the study is very broader and covers the impact of foreign institutional investors on exchange rates . But, study is only going to cover Net foreign investments and exchange rates in form of equity. The study will provide a very clear picture of the impact of foreign institutional investors on Exchange rates. It will also describe the market trends due to FIIs inflow and outflow. The study would be helpful for further descriptive studies on the ideas that will be explored. Moreover, it would be beneficial to gain knowledge regarding foreign institutional investments, their process of registration and their impact of foreign institutional investors on exchange rates and value of Indian national rupee in terms of volatility.

RESEARCH METHODOLOGY
To analyze the impact of investment made by Foreign Institutional Investors (FII) on the Exchange rate of Indian Rupee. FII make investment India what is its effect on Exchange Rate it can be increase or decrease.

Primary Data:
The primary data was collected mainly through interactions and discussions with the companys executives.

Secondary Data:
Secondary data is data that is neither collected directly by the user nor specifically for the user; often under conditions not known to the user Secondary data is cheaper and more quickly available than primary data, but likely to need processing before it is useful. The secondary data was collected from the website and employee of the company about the company and its products. The data was collected to know about the Capital Investment banking equities in India. This data was collected to know about the Capital Investment Decisions India and its origin, growth, function, role. Secondary was also collected from the news paper and magazines

REVIEW OF LITERATURE
The evolution of Indias foreign exchange market may be viewed in line with the shifts in Indias exchange rate policies over the last few decades from a par value system to a basket-peg and further to a managed float exchange rate system. During the period from 1947 to 1971, India followed the per value system of exchange rate. Initially the rupees external per value was fixed at 4.15 grains of fine gold. The Reserve Bank maintained the per value of the rupee within the permitted margin of =1 percent using pound sterling as the intervention currency. Since the sterling dollar exchange rate was kept stable by the US monetary authority, the exchange rates of rupee in terms of gold as well as the dollar and other currencies were indirectly kept stable. The devaluation of rupee in September 1949 and June 1966 in terms of gold resulted in the reduction of the per value or rupee in terms of gold to 2.88 and 1.83 grains of fine gold, respectively. The exchange rate of the rupee remained unchanged between 1966 and 1971.

Given the fixed exchanged regime during this period, the foreign exchange market for all practical purpose was defunct. Bank were required to undertake only cover operations and maintain a square or near square position at all times. The objective of exchange controls was primarily to regulate the demand for foreign exchange for various purposes, within the limit set by the available supply. The Foreign Exchange Regulation Act initially enacted in 1947 was placed on a permanent basis in 1957. In terms of the provisions of the Act, the Reserve Bank, and in certain cases, the central Government controlled and regulated the dealings in foreign exchange payments outside India, export and import of currency notes and bullion, transfers of securities between residents and non-residents, acquisition of foreign securities, etc.

With the breakdown of the Bretton Woods System in 1971 and the floatation of major currencies, the conduct of exchange rate policy posed a serious challenge to all central banks world wide as currency fluctuations opened up tremendous opportunities for market players to trade in currencies in a borderless market. In December 1971, the rupee was linked with pound sterling. Since sterling was fixed in terms of US dollar under the Smithsonian Agreement of 1971, the rupee also remained stable against dollar.

In order to overcome the weaknesses associated with a single currency peg and to ensure stability of the exchange rate, the rupee, with effect from September 1975, was pegged to a basket of currencies. The currency selection and weights assigned were left to the discretion of the Reserve Bank. The currencies included in the basket as well as their relative weights were kept confidential in order to discourage speculation. It was around this time that banks in India became interested in trading in foreign exchange.

COMPANY PROFILE

1. Ventura Securities Ltd., is a leading stock broking organization 2. Promoted and managed by professionals having exceptional knowledge of Capital Market. 3. Ventura believes in philosophy that the key to their business is service which will result in total satisfaction to the clients.

Ventura PROMOTERS
Sajid Malik, Director, is a member of the Institute of Chartered Accountants of India.He has nearly fifteen years of varied experience in corporate advisory structured finance and private equity transaction. He has an international exposure to developed markets in Europe, US and the Far East and has been personally involved in international equity offerings and cross border acquisitions. He is the CEO of Genesys International, a company focused on outsourcing of GIS and engineering design services. He is a non-executive director of Ventura Securities. Hemant Majethia, Director is member of the Institute of Chartered Accountant of India. He has nearly fifteen years of rich experience in the capital markets intermediation, equity research and has a wide cross section of market relationships. Mr. Majethia is the CEO of Ventura Securities. It was his vision to create an all India network of brokers relationship and build the distribution strength of Ventura.

Company's Goal
We aim to add value and provide our clients with an unrivalled and specialized service which reflects the expertise and efficiency of our dedicated support teams.

History

FOUNDATION OF VENTURA 1. Founded in 1994 by Chartered Accountants Sajid Malik and Hemant Majethia. They are the first generation entrepreneurs and are the principal promoters of Ventura. 2. A dedicated and efficient team of senior managers assists Mr. Majethia the CEO of the company. 3. Ventura is a full-service domestic brokerage house providing value-based advisory services to Institutions (Foreign and Domestic), High Net Worth and Retail Investors with its core area of operations being stock-broking. 4. Ventura have considerable strength and domain knowledge in the booming derivatives market. 5. Ventura has achieved a reputation for innovative and unbiased research along with excellent technical analysis and execution capabilities. Not only has Ventura provided value-added services to the gamut of India-based funds, it has also developed the advice-driven business of high net worth and corporate clients.

Why Ventura?
1. Venturas services are offered under total confidentiality and integrity with the sole purpose of maximizing returns for their clients. 2. Equity Broking - Corporate Member of The Stock Exchange, Mumbai (BSE) and National Stock Exchange of India Ltd. (NSE). 3. Pan India reach - 380 terminals spread across 75 different locations, in semi urban, urban and metropolitan areas. 4. More than 100,000 retail clients serviced from the above locations 5. Ventura have heavily invested in technology (customized and ready to use software)

involving front and back end operations offering seamless process and flawless execution and raising our service levels.

6. Ventura operate on an alert and well-defined system in risk management and settlement mechanism

OFFERINGS

Research competency
1. Market Outlooks and Strategy Analysis Market research at Ventura is structured to meet a wide variety of customer needs. 2. Services in this area range from the intra-day analysis of the most recent fundamental and technical developments affecting pricing to longer-term strategic research of supply, demand, and inventory trends. 3. Along with its price forecasting capability, the Team undertakes analytical research on hedging and trading strategies. 4. The Team also publishes monographs on topics of broad interest to its customers, such as the impact of changing accounting standards, developments in risk management, and current hedge activities and strategic thought in the various sectors of the market.

BIBLIOGRAPHY
Book References:-

Statistical Methods Berry Research Methodology - C.R.Kothari. Foreign Exchange Management-D.Shivanandan

Official Websites:-

National Stock Exchange (www.nseindia.com) Reserve Bank of India (www.rbi.org.in) Security and Exchange Board of India (www.sebi.gov.in) Ministry of Finance (www.financeministry.gov.in) www.google.com