New A Study On Derivatives - Indiainfoline

INDIA INFOLINE LIMITED HYDERABAD
ABSTRACT
The aim of this project is to understand the derivatives in the share market in India though India Infoline Ltd. Derivatives are defined as financial instruments where share value derived from the prices of one or more other assets such as equity securities, fixed income securities, foreign currencies. Derivative is also a kind of contract between to counter parties to exchange payment to the linked to the parties underlying assets. These National Stock Exchange and Bombay stock exchanges can have relationship with the brokerage securities. These securities can intend to develop the shares of companies by using new technologies and also by visualizing the shares to the share holder. Futures and options are now trade actively on many exchanges. Forward contracts, swaps, and many different types of options are regularly traded outside exchange by financial instruments fund managers, and corporations in what are termed the over -the counter- market. Derivative is also often form part of a bond or stock issue. Very often the variables underlying derivatives are price of a traded asset. A stock option, for example, is derivative whose value is depending on the price of as stock.
TABLE OF CONTENTS
CONTENTS NUMBERS
PAGE
List of tables List of figures
i ii 1-4 5 - 16 17 - 35 36 - 45 46 - 58 59 - 79 80 - 86 87 88 - 91
1. INTRODUCTION 2. REVIEW OF LITERATURE 3. THE COMPANY 4. FUTURES 5. TRADING 6. ANALYSIS 7. SUMMARY AND CONCLUSIONS 8. BIBILIOGRAPHY 9. APPENDICES
INTRODUCTION
INTRODUCTION:
A derivative security is a security whose value depends on the value of together more basic underlying variable. These are also known as contingent claims. Derivatives securities have been very successful in innovation in capital markets. The emergence of the market for derivative products most notably forwards, futures and options can be traced back to the willingness of risk adverse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, financial markets are market by a very high degree of volatility. Though the use of derivative products, it is possible to partially or fully transfer price risks by locking in asset prices. As instrument of risk management these generally dont influence the fluctuations in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash-flow situation of risk-averse investor. Derivatives are risk management instruments which derives their value from an underlying asset. Underlying asset can be Bullion, Index, Share, Currency, Bonds, Interest, etc.
NEED FOR THE STUDY:

The present study on futures is very much appreciable on the grounds that it gives deep insights about the FUTURES market. It would be essential for the perfect way of trading in FUTURES. An investor can choose the fight underlying or portfolio for investment 3which is risk free. The study would explain the various ways to minimize the losses and maximize the profits. The study would help the investors how their profit/loss is reckoned. The study would assist in understanding the FUTURES segment. The study assists in knowing the different factors that cause for the fluctuations in the FUTURES market. The study provides information related to the byelaws of FUTURES trading. The studies elucidate the role of FUTURES in India Financial Markets.
OBJECTIVES OF THE STUDY:

1. To understand the concept of the Financial Derivatives such as Futures and Options. 2. To examine the advantage and the disadvantages of different strategies along with situations. 3. To study the different ways of buying and selling of Options. 4. To present a theoretical framework relating to derivative market in India. 5. To observe the daily price movement of selected stock futures. 6. To identify the buying and selling signals to the selected scripts. 7. To observe the daily price movement of Nifty Index Futures. 8. To offer suggestions based on the findings to the study. 9. To study the various trends in derivatives market
RESEARCH METHODOLOGY:
The type of research adopted is descriptive in nature and the data collected for this study is the secondary data i.e. from Newspapers, Magazines and Internet
SCOPE OF THE STUDY:

The study is limited to Derivatives With special reference to Futures in the Indian context and the India Infoline has been taken as representative sample for the study. The study cannot be said as totally perfect, any alteration may come. The study has only made humble attempt at evaluating Derivatives Markets only in Indian Context. The study is not based on the International perspective of the Derivatives Markets.
SOURCES OF INFORMATION:
The data had been collected through Primary and Secondary sources.
1. Primary sources:
The data had been collected through project guide and staff of the Company.
2. Secondary sources:
The data had been collected through Books, Journals and Websites.
REVIEW OF LITERATURE
DERIVATIVES:
The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked by a very high degree of volatility. Through of derivatives of products, it is possible to partially or fully transfer price risks by locking in asset prices. As instruments of risk management, these generally do not influence the fluctuations underlying prices. However, by locking in asset prices, derivatives products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of riskaverse investors.
DEFINITION:
Understanding the word itself, Derivatives is a key to mastery of the topic. The word originates in mathematics and refers to a variable, which has been derived from another variable. For example, a measure of weight in pound could be derived from a measure of weight in kilograms by multiplying by two. In financial sense, these are contracts that derive their value from some underlying asset. Without the underlying product and market it would have no independent existence. Underlying asset can a Stock, Bond, Currency, Index or a Commodity. Some one may take an interest in the derivative products. Without having an interest in the underlying product market, but the two are always related and may therefore interact with each other. The term Derivative has been defined in Securities Contracts (Regulation) Act 1956, as:
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A. A security derived from a debt instrument, share, loan whether secure or unsecured, risk instrument or contract for differences or any other form of security. B. A contract, which derives its value from the prices, or index of prices, of underlying securities.
PARTICIPANTS:
The following three broad categories of participants in the derivatives market.
HEDGERS:
Hedgers face risk associated with the price of an asset. They use futures or options markets to reduce or eliminate this risk.
SPECULATORS:
Speculators wish to bet on future movements in the price of an asset. Futures and options contracts can give them an extra leverage; that is, they can increase both the potential gains and potential losses in a speculative venture.
ARBITRAGEURS:
Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit.
FUNCTIONS OF DERIVATIVES MARKET:

The following are the various functions that are performed by the derivatives markets. They are: Prices in an organized derivatives market reflect the perception of market participants about the future and lead the prices of underlying to the perceived
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future level. Derivatives market helps to transfer risks from those who have them but may not like them to those who have an appetite for them. Derivative trading acts as a catalyst for new entrepreneurial activity. Derivatives markets help increase savings and investment in the long run.
TYPES OF DERIVATIVES:
The following are the various types of derivatives. They are:
FORWARDS:
A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price
FUTURES:
A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price.
OPTIONS:
Options are of two types - calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.
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WARRANTS:
Options generally have lives of up to one year; the majority of options traded on options exchanges having a maximum maturity of nine months. Longerdated options are called warrants and are generally traded over-the-counter.
LEAPS:
The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of up to three years.
BASKETS:
Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average of a basket of assets. Equity index options are a form of basket options.
SWAPS:
Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are
Interest rate swaps:

These entail swapping only the interest related cash flows between the Parties in the same currency.
Currency swaps:
These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite Direction.
Swaptions:
Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a Swaptions is an option on a forward swap.
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RATIONALE BEHIND THE DEVELOPMENT OF DERIVATIVES:

Holding portfolio of securities is associated with the risk of the possibility that the investor may realize his returns, which would be much lesser than what he expected to get. There are various factors, which affect the returns: 1. Price or dividend (interest). 2. Some are internal to the firm like Industrial policy Management capabilities Consumers preference Labor strike, etc. These forces are to a large extent controllable and are termed as non Systematic risks. An investor can easily manage such non-systematic by having a well diversified portfolio spread across the companies, industries and groups so that a loss in one may easily be compensated with a gain in other. There are yet other types of influences which are external to the firm, cannot be controlled and affect large number of securities. They are termed as systematic risk. They are: 1. Economic 2. Political 3. Sociological changes are sources of systematic risk. For instance, inflation, interest rate, etc. their effect is to cause prices of nearly all individual stocks to move together in the same manner. We therefore quite often find stock prices falling from time to time in spite of companys earnings rising and vice versa. Rationale behind the development of derivatives market is to manage this systematic risk, liquidity and liquidity in the sense of being able to buy and sell relatively large amounts quickly without substantial price concessions.
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In debt market, a large position of the total risk of securities is systematic. Debt instruments are also finite life securities with limited marketability due to their small size relative to many common stocks. Those factors favor for the purpose of both portfolio hedging and speculation, the introduction of a derivative security that is on some broader market rather than an individual security. India has vibrant securities market with strong retail participation that has rolled over the years. It was until recently basically cash market with a facility to carry forward positions in actively traded A group scrips from one settlement to another by paying the required margins and borrowing some money and securities in a separate carry forward session held for this purpose. However, a need was felt to introduce financial products like in other financial markets world over which are characterized with high degree of derivative products in India. Derivative products allow the user to transfer this price risk by looking in the asset price there by minimizing the impact of fluctuations in the asset price on his balance sheet and have assured cash flows. Derivatives are risk management instruments, which derive their value from an underlying asset. The underlying asset can be bullion, index, shares, bonds, currency etc.
ANY EXCHANGE FULFILLING THE DERIVATIVE SEGMENT AT NATIONAL STOCK EXCHANGE:

The derivatives segment on the exchange commenced with S&P CNX Nifty Index futures on June 12, 2000. The F&O segment of NSE provides trading facilities for the following derivative segment: 1. Index Based Futures 2. Index Based Options 3. Individual Stock Options
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4. Individual Stock Futures
REGULATORY FRAMEWORK:
The trading of derivatives is governed by the provisions contained in the SC (R) A, the SEBI Act and the regulations framed there under the rules and byelaws of stock exchanges.
Regulation for Derivative Trading:

SEBI set up a 24 member committed under Chairmanship of Dr.L.C.Gupta develop the appropriate regulatory framework for derivative trading in India. The committee submitted its report in March 1998. On May 11, 1998 SEBI accepted the recommendations of the committee and approved the phased introduction of Derivatives trading in India beginning with Stock Index Futures. SEBI also approved Suggestive bye-laws recommended by the committee for regulation and control of trading and settlement of Derivatives contracts.
The provisions in the SC (R) A govern the trading in the securities. The amendment of the SC (R) A to include DERIVATIVES within the ambit of Securities in the SC (R ) A made trading in Derivatives possible within the framework of the Act.
1. Eligibility criteria as prescribed in the L.C. Gupta committee report may
apply to SEBI for grant of recognition under Section 4 of the SC (R) A, 1956 to start Derivatives Trading. The derivatives exchange/segment should have a separate governing council and representation of trading /
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clearing members shall be limited to maximum of 40% of the total members of the governing council. The exchange shall regulate the sales practices of its members and will obtain approval of SEBI before start of Trading in any derivative contract. 2. The exchange shall have minimum 50 members. 3. The members of an existing segment of the exchange will not automatically become the members of the derivative segment. the L.C.Gupta Committee. 4. The clearing and settlement of derivates trades shall be through a SEBI The members of the derivative segment need to fulfill the eligibility conditions as lay down by
approved Clearing Corporation / Clearing house. Clearing Corporation / Clearing House complying with the eligibility conditions as lay down By the committee have to apply to SEBI for grant of approval. 5. Derivatives broker/dealers and Clearing members are required to seek registration from SEBI. 6. The Minimum contract value shall not be less than Rs.2 Lakh. Exchanges should also submit details of the futures contract they purpose to introduce. 7. The trading members are required to have qualified approved user and sales person who have passed a certification programmed approved by SEBI.
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INDUSTRY PROFILE:
HISTORY OF STOCK EXCHANGE:

The only stock exchanges operating in the 19th century were those of Bombay set up in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non profit-making association of brokers to regulate and protect their
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interests. Before the control on securities trading became central subject under the constitution in 1950, it was a state subject and the Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under this act, the Bombay stock exchange was recognized in 1927 and Ahmedabad in 1937. During the war boom, a number of stock exchanges were organized in Bombay, Ahmedabad and other centers, but they were not recognized. Soon after it became a central subject, central legislation was proposed and a committee headed by A.D. Gorwala went into the bill for securities regulation. On the basis of the committees recommendations and public discussion, the securities contracts (regulation) Act became law in 1956.
DEFINITION OF STOCK EXCHANGE:

Stock exchange means any body or individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. It is an association of member brokers for the purpose of self-regulation and protecting the interests of its members. It can operate only if it is recognized by the Government under the securities contracts (regulation) Act, 1956. The recognition is granted under section 3 of the Act by the central government, Ministry of Finance.
BYLAWS:
Besides the above act, the securities contracts (regulation) rules were also
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made in 1975 to regulative certain matters of trading on the stock exchanges. There are also bylaws of the exchanges, which are concerned with the following subjects. Opening / closing of the stock exchanges, timing of trading, regulation of blank transfers, regulation of Badla or carryover business, control of the settlement and other activities of the stock exchange, fixating of margin, fixation of market prices or making up prices, regulation of taravani business (jobbing), regulation of brokers trading, brokerage chargers, trading rules on the exchange, arbitrage and settlement of disputes, settlement and clearing of the trading etc.
REGULATION OF STOCK EXCHANGES:

The securities contracts (regulation) act is the basis for operations of the stock exchanges in India. No exchange can operate legally without the government permission or recognition. Stock exchanges are given monopoly in certain areas under section 19 of the above Act to ensure that the control and regulation are facilitated. Recognition can be granted to a stock exchange provided certain conditions are satisfied and the necessary information is supplied to the government. Recognition can also be withdrawn, if necessary. Where there are no stock exchanges, the government licenses some of the brokers to perform the functions of a stock exchange in its absence.
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI):

SEBI was set up as an autonomous regulatory authority by the government of India in 1988 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matter connected therewith or incidental thereto. It is empowered by two acts namely the SEBI Act, 1992 and the securities contract (regulation) Act, 1956 to perform the function of protecting investors rights and regulating the capital markets.
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BOMBAY STOCK EXCHANGE:

This stock exchange, Mumbai, popularly known as BSE was established in 1875 as The Native share and stock brokers association, as a voluntary non-profit making association. It has an evolved over the years into its present status as the premiere stock exchange in the country. It may be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo stock exchange, which was founded in 1878. The exchange, while providing an efficient and transparent market for trading in securities, upholds the interests of the investors and ensures redressed of their grievances, whether against the companies or its own member brokers. A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive director is the apex body, which decides is the apex body, which decides the policies and regulates the affairs of the exchange. The Exchange director as the chief executive offices is responsible for the daily today administration of the exchange.
BSE INDICES:
In order to enable the market participants, analysts etc., to track the various ups and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock index called BSE-SENSEX that subsequently became the barometer of the moments of the share prices in the Indian stock market. It is a Market capitalization weighted index of 30 component stocks representing a sample of large, well-established and leading companies. The base year of sensex 1978-79. The Sensex is widely reported in both domestic and international markets through print as well as electronic media. Sensex is calculated using a market capitalization weighted method. As per this methodology the level of the index reflects the total market value of all 30component stocks from different industries related to particular base period. The
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total market value of a company is determined by multiplying the price of its stock by the nu7mber of shared outstanding. Statisticians call index of a set of combined variables (such as price and number of shares) a composite Index. An indexed number is used to represent the results of this calcution in order to make the value easier to go work with and track over a time. It is based on actual valued world over majority of the well-known Indices are constructed using Market capitalization weighted method. In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 30 companies in the index by a number called the Index Divisor. The divisor is the only link to the original base period value of the SENSEX. The Devisor keeps the Index comparable over a period value of time and if the references point for the entire Index maintenance adjustments. SENSEX is widely used to describe the mood in the Indian stock markets. Base year average is changed as per the formula new base year average = old base year average*(new market value / old market value).
NATIONAL STOCK EXCHANGE:

The NSE was incorporated in Nov, 1992 with an equity capital of Rs.25 crs. The international securities consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has prepared the detailed business plans and initialization of hardware and software systems. The promotions for NSE were financial institutions, insurances, companies, banks and SEBI capital market ltd, Infrastructure leasing and financial services ltd and stock holding corporations ltd. It has been set up to strengthen the move towards professionalisation of the capital market as well as provide nation wide securities trading facilities to investors. NSE is not an exchange in the traditional sense where brokers own and manage the exchange. A two tier administrative set up involving a company board and a governing aboard of the exchange is envisaged.
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NSE is a national market for shares PSU bonds, debentures and government securities since infrastructure and trading facilities are provided.
NSE-NIFTY:
The NSE on Apr22, 1996 launched a new equity Index. The NSE-50. The new Index which replaces the existing NSE-100 Index is expected to serve as an appropriate Index for the new segment of future and option. NIFTY mean National Index for fifty stocks. The NSE-50 comprises fifty companies that represent 20 board industry groups with an aggregate market capitalization of around Rs 1, 70,000 crs. All companies included in the Index have a market capitalization in excess of Rs. 500 crs each and should have trade for 85% of trading days at an impact cost of less than 1.5%. The base period for the index is the close of price on Nov 3 1995, which makes one year of completion of operation of NSEs capital market segment. The base value of the index has been set at 1000.
NSE-MIDCAP INDEX:
NSE madcap index or the junior nifty comprises 50 stocks that represent 21 board industry groups and will provide proper representation of the madcap segment of the Indian capital market. All stocks in the Index should have market capitalization of more than Rs.200 crs and should have traded 85% of the trading days at an impact cost of less than 2.5%.The base period for the index is Nov 4 1996, which signifies 2 years for completion of operations of the capital market segment of the operations. The base value of the Index has been set at 1000. Average daily turn over of the present scenario 258212 (Laces) and number of average daily trades 2160(Laces). At present there are 24 stock exchanges recognized under the securities contract (regulation Act, 1956).
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COMPANY PROFILE
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THE INDIA INFOLINE LIMITED: Origin:

India Infoline Ltd. was founded in 1995 by a group of professional with impeccable educational qualifications and professional credentials. Its institutional investors include Intel Capital (world's) leading technology company, CDC (promoted by UK government), ICICI, TDA and Reeshanar. India Infoline group offers the entire gamut of investment products including stock broking, Commodities broking, Mutual Funds, Fixed Deposits, GOI Relief bonds, Post office savings and life Insurance. India Infoline is the leading corporate agent of ICICI Prudential Life Insurance Co. Ltd., which is India' No. 1 Private sector life insurance company. Www.indiainfoline.com has been the only India Website to have been listed by none other than Forbes in it's 'Best of the Web' survey of global website, not just once but three times in a row and counting... A must read for investors in south Asia is how they choose to describe India Infoline. It has been rated as No.l the category of Business News in Asia by Alexia rating. Stock and Commodities broking is offered under the trade name 5paisa. India Infoline Commodities pvt Ltd., a wholly owned subsidiary of India Infoline Ltd., holds membership of MCX and NCDEX
Main Objects of the Company:

Main objects as contained in its Memorandum or Association are: 1. To engage or undertake software and internet based services, data processing IT enabled services, software development services, selling advertisement space on the site, web consulting and related services including web designing and web maintenance, software product development
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and
marketing,
software
supply
services,
computer
consultancy services, E-Commerce of all types including electronic financial intermediation business and E-broking, market research, business and management consultancy.
2. To undertake, conduct, study, carry on, help, promote any kind of research,
probe, investigation, survey, developmental work on economy, industries, corporate business houses, agricultural and mineral, financial institutions, foreign financial institutions, capital market on matters related to investment decisions primary equity market, secondary equity market, debentures, bond, ventures and capital funding proposals.
VISION STATEMENT OF THE COMPANY:

Our vision is to be the most respected company in the financial services space In India. Products: the India Infoline pvt ltd offers the following products A. E-broking. B. Distribution C. Insurance D. PMS E. Mortgages
A. E-Broking:
It refers to Electronic Broking of Equities, Derivatives and Commodities under the brand name of 5paisa 1. Equities 2. Derivatives 3. Commodities
B. Distribution:
1. Mutual funds
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2. Govt of India bonds. 3. Fixed deposits
C. Insurance:
1. Life insurance policies 2. General Insurance 3. Health Insurance Policies
THE CORPORATE STRUCTURE:

The India Infoline group comprises the holding company, India Infoline Ltd, which has 5 wholly-owned subsidiaries, engaged in distinct yet complementary businesses which together offer a whole bouquet of products and services to make your money grow. The corporate structure has evolved to comply with oddities of the regulatory framework but still beautifully help attain synergy and allow flexibility to adapt to dynamics of different businesses. The parent company, India Infoline Ltd owns and managers the web properties www.Indiainfoline.com and www.5paisa.com. It also undertakes research Customized and off-the-shelf. Indian Infoline Securities Pvt. Ltd. is a member of BSE, NSE and DP with NSDL. Its business encompasses securities broking Portfolio Management services. India Infoline.com Distribution Co. Ltd., Mobilizes Mutual Funds and other personal investment products such as bonds, fixed deposits, etc. India Infoline Insurance Services Ltd. is the corporate agent of ICICI Prudential Life Insurance, engaged in selling Life Insurance, General Insurance
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and Health Insurance products. India Infoline Commodities Pvt. Ltd. is a registered commodities broker MCX and offers futures trading in commodities. India Infoline Investment Services Pvt Ltd., is proving margin funding and NBFC services to the customers of India Infoline Ltd.
Management of India Infoline Ltd.:

India Infoline is a professionally managed Company. The promoters who run the company/s day-to-day affairs as executive directors have impeccable academic professional track records. Nirmal Jain, chairman and Managing Director, is a Chartered Accountant, (All India Rank 2); Cost Account, (All India Rank l) and has a post-graduate management degree from IIM Ahmedabad. He had a successful career with Hindustan Lever, where he inter alia handled Commodities trading and export business. Later he was CEO of an equity research organization. R. Venkataraman, Director, is armed with a post- graduate management degree from IIM Bangalore, and an Electronics Engineering degree from IIT, Kharagpur. He spent eight fruitful years in equity research sales and private equity with the cream of financial houses such as ICICI group, Barclays de Zoette and G.E. Capital Satpal khattar -Reeshanar investments, SingaporeThe key management team comprises seasoned and qualified professionals.
Mukesh Sing Seshadri Bharathan

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Director, India Infoline Securities Pvt Ltd. Director, India Infoline.Com
Distribution Co Ltd S SriramSandeepa Vig Arora Toral MunshiPinkesh Soni Vice President, Technology Vice President, Portfolio Management services Vice President, Research Financial controlleHarshad Apte Chief Marketing Officer Financials of India Infoline Ltd., As per the latest results India Infoline limited's Net Sales for the 3 months period ending 31-MAR 2010 is Rs.2317.53 Mn and its PAT is Rs 647.17 Mn figures Financials Component Quarter ending (months) Net sales Other income Total income Total expenses Gross profit (OPBDIT) Depreciation Operating profit (OPBIT) Interest OPBT Extraordinary income / exp
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Dharmesh Pandya- Vice President, Alternate Channel Anil Mascarenhas- Chief Editor
in Mn Current Quarter 31MAR2010 (3) 2317.53 81.13 2398.66 0 2398.66 23.96 2374.7 0 2374.7 0
QoQ Previous Quarter 30-OCT2009 (3) 1191.12 118.83 1309.95 543.41 766.53 51.16 715.38 32.71 682.66 0 Difference (%) 94.57 -31.73 83.11 -100 212.92 -53.16 231.95 -100 247.86 N.A
YoY Last Year's Quarter 31MAR09 2317.53 81.13 2398.66 0 2398.66 23.96 2374.7 0 2374.7 0 Difference (%) 0 0 0 N.A 0 0 0 N.A 0 N.A
Prior
period 0 682.66 227.28 455.38 455.38 0.33 64.35 60.06 57.31 533.55 N.A 247.86 44.81 349.2 349.2 -58.37 60.83 70.61 78.78 0.06 0 2374.7 329.13 2045.57 2045.57 0.14 103.5 102.47 102.47 533.88 N.A 0 0 0 0 0 0 0 0 0
adjustments 0 PBT 2374.7 Tax provision 329.13 Net profit (PAT) 2045.57 Adjusted PAT 2045.57 Average tax rate GPM (%) OPM (%) NPM (%) Equity Capital 0.14 103.5 102.47 102.47 533.88
Its growth figures for last 5 quarters

Growth Margins -
Quarterly Quarte 31-MAR-2010 r ending (month

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( Difference between successive quarters ) 30-DEC2009 (3) 30-SEP-2009 (3) 31-JUN-2009 (3)
in % 31-MAR-2009 (3)
(3)
s) Differ Compo nent GPM OPM ence Value (%) 103.5 102.4 7 102.4 NPM 7 78.78 60.83 70.61 Val ue 64.3 5 60.0 6 57.3 1 Differ ence (%) 71.04 90.59 Valu e 37.63 31.51 Differ ence (%) 71.04 90.59 303.0 5 0 Valu e 0 0 Differ ence (%) 71.04 90.59 303.0 5 0 -303.05 e 0 0 Differe Valu nce (%) 71.04 90.59
303.05 28.23
View the line graphs below for the Sales & Pat growth pattern over last 5 quarters:
Sales & PAT Peer Group Comparison Figured in Mn
Company name India Infoline Limited

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Sales Rank PAT 2697.80 1 521.22
Rank Market Cap Rank 2 68283.17 3
India bulls Financial Services
2611.70 Limited Edelweiss Capital Limited 576.38 Motilal Oswal Financial 107.48 Services Limited Religare Enterprises Limited 25.91
2 3 4 5
1531.03 1 261.97 14.88 119.72 3 5 4
179464.07 75670.97 41271.01 40454.70
1 2 4 5
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FUTURES
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DEFINITION:
A Futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. To facilitate liquidity in the futures contract, the exchange specifies certain standard features of the contract. The standardized items on a futures contract are: Quantity of the underlying Quality of the underlying The date and the month of delivery The units of price quotations and minimum price change Locations of settlement
Types of futures:
On the basis of the underlying asset they derive, the futures are divided into two types:
Stock futures:
The stock futures are the futures that have the underlying asset as the individual securities. The settlement of the stock futures is of cash settlement and the settlement price of the future is the closing price of the underlying security.
Index futures:
Index futures are the futures, which have the underlying asset as an Index. The Index futures are also cash settled. The settlement price of the Index futures shall be the closing value of the underlying index on the expiry date of the contract.
PARTIES IN THE FUTURES CONTRACT:

There are two parties in a future contract, the Buyer and the Seller. The buyer of the futures contract is one who is LONG on the futures contract and the seller of the futures contract is one who is SHORT on the futures contract. The pay off for the buyer and the seller of the futures contract are as follows.
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PAYOFF FOR A BUYER OF FUTURES:
PROFIT
LOSS
CASE 1:
The buyer bought the future contract at (F); E1 then the buyer gets the profit of (FP). if the futures price goes to
CASE 2:
The buyer gets loss when the future price goes less than (F), if the futures price goes to E2 then the buyer gets the loss of (FL).
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PAYOFF FOR A SELLER OF FUTURES:
P PROFIT
E E
F LOSS L
F FUTURES PRICE E1, E2 SETTLEMENT PRICE.
CASE 1:
The Seller sold the future contract at (f); if the futures price goes to E1 then the Seller gets the profit of (FP).
CASE 2:
The Seller gets loss when the future price goes greater than (F), if the futures price goes to E2 then the Seller gets the loss of (FL).
MARGINS:
Margins are the deposits, which reduce counter party risk, arise in a futures
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contract. These margins are collected in order to eliminate the counter party risk. There are three types of margins:
INITIAL MARGIN:
Whenever a futures contract is signed, both buyer and seller are required to post initial margin. Both buyer and seller are required to make security deposits that are intended to guarantee that they will infact be able to fulfill their obligation. These deposits are Initial margins and they are often referred as performance margins. The amount of margin is roughly 5% to 15% of total purchase price of futures contract.
MARKING TO MARKET MARGIN:

The process of adjusting the equity in an investors account in order to reflect the change in the settlement price of futures contract is known as MTM Margin.
MAINTENANCE MARGIN:
The investor must keep the futures account equity equal to or greater than certain percentage of the amount deposited as Initial Margin. If the equity goes less than that percentage of Initial margin, then the investor receives a call for an additional deposit of cash known as Maintenance Margin to bring the equity up to the Initial margin.
ROLE OF MARGINS:
The role of margins in the futures contract is explained in the following example. S sold a Satyam June futures contract to B at Rs.300; the following table shows the effect of margins on the contract. The contract size of Satyam is 1200. The initial margin amount is say Rs.20000, the maintenance margin is 65% of
38
Initial margin.
DAY
PRICE OF SATYAM
EFFECT BUYER (B) MTM P/L
ON EFFECT SELLER (S) MTM P/L Bal. in Margin
ON REMARKS
Bal. in Margin 1 300.00
Contract entered deposited.
is and
initial margin is 2 311(price increased) +13,200 -13,200 +13,200 B got profit and S got loss, S deposited maintenance margin. B got loss and 3 287 -28,800 +15,400 +28,800 deposited maintenance margin. B got profit, S got
39
loss.
305
+21,600
-21,600
Contract settled at 305, totally B got profit and S got loss.
Pricing the Futures:

The fair value of the futures contract is derived from a model known as the Cost of Carry model. This model gives the fair value of the futures contract.
Cost of Carry Model:
F=S (1+r-q) t
Where
F Futures Price
40
S Spot price of the Underlying r Cost of Financing q Expected Dividend Yield

T Holding Period.
Futures terminology: Spot price:

The price at which an asset trades in the spot market.
Futures price:
The price at which the futures contract trades in the futures market.
Contract cycle:
The period over which a contract trades. The index futures contracts on the NSE have one-month, two-months and three-month expiry cycles which expire on the last Thursday of the month. Thus a January expiration contract expires on the last Thursday of January and a February expiration contract ceases trading on the last Thursday of February. On the Friday following the last Thursday, a new contract having a three-month expiry is introduced for trading.
Expiry date:
It is the date specified in the futures contract. This is the last day on which the contract will be traded, at the end of which it will cease to exist.
Contract size:
The amount of asset that has to be delivered less than one contract. For instance, the contract size on NSEs futures market is 200 Nifties.
Basis:
In the context of financial futures, basis can be defined as the futures price
41
minus the spot price. There will be a different basis for each delivery month for each contract. In a normal market, basis will be positive. This reflects that futures prices normally exceed spot prices.
Cost of carry:
The relationship between futures prices and spot prices can be summarized in terms of what is known as the cost of carry. This measures the storage cost plus the interest that is paid to finance the asset less the income earned on the asset.
Open Interest:
Total outstanding long or short positions in the market at any specific time. As total long positions for market would be equal to short positions, for calculation of open interest, only one side of the contract is counted.
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TRADING
TRADING INTRODUCTION:
The futures & Options trading system of NSE, called NEAT-F&O trading system, provides a fully automated screen-based trading for Nifty futures & options and stock futures & Options on a nationwide basis as well as an online monitoring and surveillance mechanism. It supports an order driven market and provides complete transparency of trading operations. It is similar to that of trading of equities in the cash market segment. The software for the F&O market has been developed to facilitate efficient and transparent trading in futures and options instruments. Keeping in view the familiarity of trading members with the current capital market trading system, modifications have been performed in the existing capital market trading system
43
so as to make it suitable for trading futures and options. On starting NEAT (National Exchange for Automatic Trading) Application, the log on (Pass Word) Screen Appears with the Following Details. 1) User ID 2) Trading Member ID 3) Password NEAT CM (default Pass word) 4) New Pass Word
Note: - 1) User ID is a Unique

2) Trading Member ID is Unique & Function; it is Common for all user of the Trading Member 3) New password Minimum 6 Characteristic, Maximum 8 characteristics only 3 attempts are accepted by the user to enter the password to open the Screen 4) If password is forgotten the User required informing the Exchange in writing to reset the Password.
TRADING SYSTEM:
Nation wide-online-fully Automated Screen Based Trading System (SBTS) 1 Price priority 2 Time Priority Note: - 1) NEAT system provides open electronic consolidated limit orders book (OECLOB) 2) Limit order means: Stated Quantity and stated price
44
Before Opening the market:

User allowed to set Up 1) Market Watch Screen 2) Inquiry Screens Only
Open phase (Open Period):

User allowed to 1) Enquiry 2) Order Entry 3) Order Modification 4) Order Cancellation 5) Order Matching
Market closing period:

User Allowed only for inquiries
Surcon period:
(Surveillance & Control period) The System process the Date, for making the system, for the Next Trading day.
Log of the Screen (Before Surcon Period):

The screen shows :1) Permanent sign off 2) Temporary sign off and 3) Exit Order Placing Not allowed inquiry
Permanent sign off: - market not updates. Temporary sign off: - market up date (temporary sign off, after 5 minutes
Automatically Activate)
Local Database:
Local Database is used for all inquiries made by the user for Own Order/Trades Information. It is used for corporate manger/ Branch Manager Makes inquiries for orders/ trades of any branch manager /dealer of the trading firm, and then the inquiry is Serviced By the host. The local database also includes message of security information.
45
Ticker Window:
The ticker window displays information of All Trades in the system. The user has the option of Selecting the Security, which should be appearing in the ticker window.
Market watch Window:

Title Bar: Title Bar Shows: NEAT, Date & Time. Market watch window felicitate to set only 500 Scrips, But the User set up a Maximum of 30 Securities in one Page.
MBP (Market by Price):

MBP (F6) Screen shows Total Out standing Orders of a particular security, in the Market, Aggregate at each price in order of Best 5 prices. It Shows: RL Order (Regular Lot Order) SL Order (Stop Loss Order) ST Order (Special Term Orders) Buy Back Order with * Symbol P = indicate Pre Open Position S = Indicate Security Suspend
Report Selection Window:

It facilitates to print each copy of report at any time. These Reports are
1) Open order report :- For details of out standing orders 2) Order log report:-For details of orders placed, modified & cancelled 3) Trade Done-today report :- For details of orders traded
4)Market Statistics report: - For details of all securities traded Information in a Day
Internet Broking:
1) NSE introduced internet trading system from February 2000 2) Client place the order through brokers on order routing system
46
WAP (Wireless Application Protocol):

1) NSE.IT Launches the from November 2000
2) 1st Step-getting the permission from exchange for WAP 1) 2nd step-Approved by the SEBI(SEBI Approved only for SEBI registered
Members)
X.25 Address check:

X.25 Address check, is performed in the NEAT system, when the user log on into the NEAT, system & during report down load request.
FTP (File Transfer protocol):

1) NSE Provide for each member a separate directory (File) to know their trading DATA, clear DATA, bill trade Report. 2) NSE Provide in Addition a Common directory also, to know circulars, NCFM & Bhava Copy information. 3) FTP is connected to each member through VSAT, leased line and internet. 4) VSAT (FROM 4:15PM to 9:30AM), Internet (24 Hours).
Snap Shot Data Base:

Snap shot data base provides Snap shot of the limit order book at many time points in a day.
Index Data Base:

Index Data Base provides information about stock market indexes.
Trade Data Base:

Trade Data Base provides a data base of every single traded order, take place in exchange.
BASKET TRADING SYSTEM:

1) Taking advantage for easy arbitration between future market and & cash market
47
difference, NSE introduce basket trading system by off setting positions through off line-order-entry facility. 2) Orders are created for a selected portfolio to the ratio of their market Capitalization from 1 lake to 30 corers.
3)
Offline-order-entry facility: - generate order file in as specified format
out side the system & up load the order file in to the system by invoking this facility in Basket trading system.
TRADING NETWORK:
48
HUB ANTENNA
SATELLITE
NSE MAIN FRAME

BROKERS PREMISES
49
Holding of Shares (Voting Right) disclosing obligation:

1) Any person or Director or officer or the company 2) More than 5% share or voting Right
3) With in 4th day inform to company is necessary 4) Company inform with in 5th day to stock exchange is compulsory
First Started:
Future trading: Chicago Board of Trading 1848 Financial Future Trading: CME (Chicago Mercantile Exchange 1919) Stock Index Futures: Kansas City Board of trade Option First Trade: Holland - Tulip Balabmania
BROKER (Trading Member):

(Broker means a member in recognized stock exchange) Eligibility: 21 tears, graduation, 2 years experience in stock market relative Affairs and 1 30 Lakhs paid up capital 2 100 lakhs net worth 3 125 lakhs interest free security deposit 4 25 lakhs collatery security deposit 5 1 lakh annual business subscription
BROKER & CLIENT RELATION SHIP:

1) Fill the client Registration Application form (for all details of clients).
2) Agreement on non-judicial form (Specified by SEBI that form) 3) PAN, Pass Port, Driving License or voter Identity card (SEBI Registration
Number in case of FIIs) - Pan Cards is must to future and option trading. 4) And than Allot-Unique client code 5) Take copy of instruction in writing before placing order, cancellation &
50
modification. 6) If order values exceed 1 lakh maintain the client record for 7 years. 7) On conformation any order, issue contract note within 24 hours. 8) Collect margin of 50,000 & multiple with 10,000. NOTE: - PAN is compulsory if the transaction cost exceed Rs.1 lakh. 9) Issuing the know your client form is must.
For Continuing Membership-Trading Member Fulfill the following documents:

1) Audited two important Financial Statements (profit & Loss account, balance Sheet) 2) Net worth certificate (Certificate by CA) 3) Details of Directors, share holders (certificate by CA) 4) Renewal insurance covering proof.
SUB BROKER:
1) Eligibility: - 21 years, 10+2 qualification and paid up capital 5 lakhs.
2) Not convicted involving fraud and dishonesty. 3) Not debarred by SEBI previously. 4) 51% of shares as dominant promoters his/her and his/her spouse. 5) First application to stock exchange-Stock exchange send his application to SEBI-SEBI satisfied issued Certificate Registration. 6) A registered sub-broker, holding registration, granted by SEBI on the Recommendations of a trading member, can transact through the member (broker) who had recommend his application for registration. 7) Maximum Brokerage Commission 2%. 8) Purchase note and sales note issued by the sub broker with 24 hours.
Investor protection Fund:

1) Investor protection fund setup under Bombay public trust Act 1950.
51
2) IPF maintained by NSE Exact name of this fund is NSE Investors Protection Fund Trust. 3) Any Member defaulted the IPF paid maximum 10 lakhs only to each investor. 4) Client against default member, customer have right to apply within 3 months from the date of Publishing notice by a widely circulated minimum one daily News paper.
Demat of the Shares:

1) Agreement with depository by security holder (at the time opening the demat account) 2) Surrender the security certificates to issuer (Company)for cancellation 3) Issuer (company) informs the depository about the transfer of the shares. 4) Participant (Company) informs the depository about the transfer of the shares. 5) Depository records the transferee name as beneficial owner in book entry form in his records. 6) Each custodian/clearing member is requiring maintaining a Clear pool account with depositaries. 7) The investor has no restriction and has full right to open many (number of) depository accounts
8) Shares or securities are transferred from one account to another account only
on the instruction of the beneficial owner.
ISIN (International Securities Identification Number):

1 Any company going to foe dematerialized with shares that company get this ISIN for demat shares. 2 ISIN is assigned by SEBI. 3 ISIN is allotted by NSDL.
Main Objectives of Demat Trading:

52
1) Freely transferability 2) Dematerialized in depository mode 3) Maintenance of ownership records in book entry form
ANALYSIS
53
LOT SIZE OF SELECTED COMPANIES FOR ANALYSIS:

CODE BHEL ONGC LOT SIZES 75 225 COMPANY NAME Bharath Heavy Electrical Ltd. Oil& Natural Corporation REL Capital TATA Steel 550 382 Reliance Capital Ltd TATA Company Ltd. Gas
The following tables explain about the trades that took place in futures between 19/02/09 to 25/02/09. The table has various columns, which explain various factors involved in Derivations trading. 1 Date the day on which trading took place 2 Closing Premium Premium for that day 3 Open interest No. Options that did not get exercised 4 Traded quantity No of F&O traded on bourses on that day. 5 N.O.C No of Contracts traded on that day 6 Closing Price The price of the Futures at the end of the trading day.
54
FUTURES OF BHEL:
Date Dd\mm\yy 19-02-10 20-02-10 21-02-10 22-02-10 25-02-10 Open Rs. 2250.00 2201.00 2150.00 2040.10 2048.00 High Rs. 2260.00 2201.00 2170.00 2062.50 2104.00 Low Rs. 2205.00 2092.35 2041.25 2027.00 2037.05 Close Rs. 2217.30 2117.95 2086.80 2043.20 2092.10 Open Int(000) 1616 1649 1664 1584 1431 N.O.C 4392 5691 7067 3998 8710
Interpretation:
Opening price is decreased in compare to the five days. The stock Market open price interest is decreased in five days. From 1616 to 1431.
Closing Price Movements of BHEL The stock market price of the N.O.C is increased by the price of 4392 to
2217.3
2250 8710 in last five days. 2200 2150 Price 2100 2050 2000 1950 55 19/2/2010 20/2/2010 21/2/2010 Date Close Price 22/2/2010 25/2/2010
2117.95 2086.8 2043.2
2092.1
Interpretation:
The stock price curve shows a decreasing trend during first Five days.

Compare to the five days stock price was decreased from 2217.3 to 2092. The stock price is increased in last day 48.8 as compare to the other days.
56
Open int(000) 1700 1650 1600 1550 Price 1500 1450 1400 1350 1300 19/2/10 20/2/10 21/2/10
Date
22/2/10
25/2/10
Open Int(000)
Interpretation:
The stock price Bar shows a decreasing trend during first Five days. Compare to the five days stock price was increased 1616 to1664 in first three days. And the last two days decreased from 1584 to1431.
57
No. of. contracts Traded per day
10000 8000 6000 Price 4000 2000 19/2/2010

0
20/2/2010
21/2/2010
Date
22/2/2010
25/2/2010
N.O.C
58
Interpretation:
The stock price Of Area Chart shows an Increasing trend during first Five days. Compare to the five days stock price was increased 4392 to 7067 in first three days.
The fourth day the price was decreased from 7067 to3998
Fifth day the price was increased. from 3998 to 8710
59
FINDINGS:
1 The price rise from 2250.00 on first day to 19 th February, where it stood at
2260.00 as high. As the players in the market with an intention to short or correct the market, the players showed a bearish attitude for the next day where the price fell to 2092.35 and immediately rise to 2117.95. Later being the last trading day of the week again the players became bears as to keep a negative for the next week, which surge the price to 2043.20 for the last day of the trading week 2 In the trading week most of the players closed up their contracts to make profit. As the price was low, the open interest was low and the no. of contracts traded declined to 3998. 3 There always exist an impact of price movements on open interest and contracts traded. The futures market is also influenced by cash market, NIFTY index future, and news related to the underlying assed or sector (industry), FIIS involvement, national and international affairs etc.
FUTURES OF OIL & NATURAL GAS CORPORATION:

Date dd\mm\yy 19-02-10 20-02-10 21-02-10 22-02-10 25-02-10 Open Rs. 1030.25 989.40 1005.00 972.35 994.80 High Rs. 1049.60 1007.90 1015.10 996.00 1022.75 Low Rs. 1002.90 974.10 975.00 972.35 994.80 Close Rs. 1008.45 989.40 996.20 990.10 1016.40 Open Int(000) 5645 6162 5310 4707 4161 N.O.C 4211 8179 6555 5697 9328
60
Interpretation:
FUTURES OF OIL & NATURAL GAS CORPORATION the comparison of the five days the market in the open price was decreased in first two days 1030.25 to 989.40 and third day was increased fourth day to fifth day the price was to be decreased from 972.35 to 994.80.
The open interest price is decreased in last five days.
FUTURES OF OIL & NATURAL GAS CORPORATION the N.O.C is increased in compare to the other than prices
Closing Price Movements of ONGC 1015 1010 1005 1000 995 990 985 980 975
61 1020 1016.4 1008.45 996.2 989.4 990.1
19/2/10
20/2/10
21/2/10
Date
22/2/10
25/2/2010
Close
Rs.
Interpretation:
The stock price curve shows a decreasing trend during first Five days. Open Int(000) Closing Price Movements of ONGC. 7000 The price was decreased in first two days decreased and the other day is 6000 increased and the last day also increased 5000 4000finally the price was increased in Closing Price Movements So 3000 2000 1000 0 19/2/10
62 Open Int(000)
20/2/10
21/2/10
Date
22/2/10
25/2/10
Interpretation:
Open Int(000) price of the market in bar chart comparison of the five days. was decreased.
In the first two days the price was increased for the last four days the price The finally market price was decreased in the last five days
No.of.Contracts traded per day
10000 8000 6000 4000 2000 0 19/2/10

63
20/2/10
21/2/10
Date
22/2/10
25/2/10
N.O.C
Interpretation:
The stock price Of Area Chart shows an Increasing trend during first Five days
The first two days price was decreased and the last fifth day the price was increased to more than the compare to the first two days.
FINDINGS:
1 After the market is quite relieved by the fall in the discount on the NIFT in the futures segment, which was used by players to short the market. The market showed a positive upward movement in F&O segment and cash market during the first day of the week.
2 The future of ONGC had shown a bears way till 25 th day of the week whose 64
impact shown on the open interest and contracts traded. 3 The market for ONGC on the day of the trading week showed a decline in the closing price when compare with the weeks high price. The open interest closed at 4161 with lowest 9328 contracts on the last trading day of the week
FUTURES OF REL CAPITAL:

Date dd\mm\yy 19-02-10 20-02-10 21-02-10 22-02-10 25-02-10 Open Rs. 2109.00 2139.00 2036.85 1950.00 1925.30 High Rs. 2194.85 2169.90 2078.00 1966.00 1955.00 Low Rs. 2038.50 1986.80 1940.00 1882.20 1862.25 Close Rs. 2165.25 2006.30 2005.50 1906.35 1940.00 Open Int(000) 2635 2790 2756 2754 2685 N.O.C 14314 15728 15513 10661 9197
Interpretation:
FUTURES OF REL CAPITAL the comparison of the five days the market open price was increased in first day 2109.00 to 2139.00 and d Third ay to fifth day the price was to be decreased from 2036.85 to 1925.30
The open interest price is increased in last five days. Closing Price Movements of REL CAP The N.O.C is Decreased in compare to the first three days was increased
and the last two days the price was decreased. 2200 2165.25 2100 2000 1900 1800 1700
65
2006.3
2005.5 1906.35 1940
19/2/2010 20/2/2010 21/2/2010 22/2/2010 25/2/10 Date Close Rs.
Interpretation:
Closing Price Movements of REL CAP the price was decreased in last five days.
The last one day was increased in the closing price.
Open Int(000)
2850 2800 2750 2700 2650 2600 2550 19/2/2010 20/2/2010 21/2/2010 22/2/2010 25/2/2010
Date 66
Open Int(000)
Interpretation:
In the open interest price is the increased in the first two days. From 2109.00 to 2139.00.
The last three days the price had been decreased 2036.85 to 2036.85. So the price was slightly increased in compare to five days. No.of.Contracts traded per day
18000 16000 14000 12000 10000 8000 6000 4000 2000 0 19/2/2010
67
20/2/2010
21/2/2010
Date
22/2/2010 25/2/2010
N.O.C
Interpretation:
The area chart of the N.O.C price in last five days price had been decreased to the market price. First three days price had been increased
Last two days price was decreased. From 10661 to 9197
FINDINGS:
1 The trading week showed a high and low strike prices or exercising prices
for the REL Capital futures. 2 The open interests shown bears market because of the huge correction done
68
by the FII (Foreign Institutional investors) in flows. 3 The number of contracts traded high at 15728 and low at 9197
FUTURES OF TATA STEEL: Date Dd\mm\yy 19-02-10 20-02-10 21-02-10 22-02-10 25-02-10 Open Rs. 830.15 809.90 782.00 793.10 806.30 High Rs. 839.50 819.60 814.00 819.50 813.90 Low Rs. 812.00 765.15 780.00 793.10 778.15 Close Rs. 815.15 772.30 808.65 807.00 810.35 Open Int(000) 8716 8176 8172 7528 7441 N.O.C 10948 13655 13997 16197 14646
Interpretation:
FUTURES OF TATA STEEL market prices compared of these open price, high price, low price, close price, open interest and N.O.C The price had been decreased by the price calculated to the five prices had been decreased. N.O.C had been increased from the first day to last day.
69
Closing Price Movements of TATA ST 820 800

Price
780 760 740 19/2/2010 20/2/2010 21/2/2010 22/2/2010 25/2/2010 Date
Close
Rs.
Open Int (000) of TATA
Interpretation:
Closing Price Movements of TATA ST had been first one day it was
decreased by the price from 830.15 to 809.90 9000 The last three days the market price had been increased by the price782.00 8000806.30 to The Price 7000 market price is increased in the last three days 60001 19/2/2010 20/2/2010 21/2/2010 22/2/2010 Date 25/2/2010
70
Open Int(000)
Interpretation:
Open Int (000) of TATA Price had been decreased in last five days. Price slightly reduced by the day to day.
No.of.Contracts traded per day 20000

Price
15000 10000 5000 0 19/2/2010

71
20/2/2010
21/2/2010 Date N.O.C
22/2/2010
25/2/2010
Interpretation:
No.of.Contracts traded per day in the slightly increased by the end of the day. N.O.C the market price had been to increase slightly in every day to day.
In first two days and last two days the price had been increased so high in the market price compare to other days..
FINDINGS:
1 The price gradually rises from 782.00 on the day to 21st, where it stood at
808.65 as high. As the players in the market with an intention to short or correct the market, the players showed a bullish attitude for the next day the price rise to 810.35. 2 The market was recovered faster from the bear market to bulls market for the next week. The total price is rise to 839.00 in the week. 3 The open interest of the tata steel was stood decline where the total week of interest is ups and down where from 8716 to 7441
72
SUMMARY AND CONCLUSIONS
73
CONCLUSIONS AND RECOMMENDATIONS:

1 The above analysis of Futures of B.H.E.L, O.N.G.C,REL CAPITAL, and
TATA STEEL had shown a Flat market in the week. 2 The major factors that influence the F&O market are the cash market, Full involvement, News related to the underlying asset, National and International markets, Researchers view etc. 3 In bearish market it is suggested to an investor option for put option in order to minimize losses. 4 In a bullish market it is suggested to investors to option for call option in order to maximize profit. 5 In cash market the profit/loss is limited but where in F& O an investor can enjoy unlimited profits/loss. 6 It is recommended that SEBI should take measures in improving awareness about the F&O market as it is launched very recently. 7 It is suggested to an investor to keep in mind the time or expiry duration of F&O contract before trading. The lengthy the time, the risk is low and profit making. The fewer time may be high risk and chances of loss making. 8 At present scenario the Derivatives market is increased to a great position. Its daily turnover teaches to the equal stage of cash market. 9 The derivatives are mainly used for hedging purpose. 10 In cash market the investor has to pay the total money, but in derivatives the investor has to pay premiums or margins, which are some percentage of total money. 11 In derivative segment the profit/loss of the option holder/option writer is purely depended on the fluctuations of the underlying asset.
74
LIMITATIONS OF THE STUDY:

1 The study is confined to only one week trading of feb month contract
2 The sample size chosen is limited to futures of B.H.E.L, O.N.G.C, REL
CAPITAL, and TATA STEEL Underlying Scrips. 3 The study does not take any Nifty Index Futures and Options and International Markets into the consideration. 4 This is a study conducted within a period of 45 days. 5 During this limited period of study, the study may not be a detailed, Full fledged and utilitarian one in all aspects. 6 The study contains some assumptions based on the demands of the analysis. 7 The study does not provide any predictions or forecast of the selected scripts. 8 The opening premium and closing spot price of the week are taken for calculating option holder / writer profit / loss position.
75
SUMMARY
Derivatives - Derivatives are instruments that derive their value and payoff from another asset, called underlying asset. Call Option the option to buy an asset is known as a call option Put option the option to an asset is called a put option. Exercise Prices The price at which option can be exercised is called an exercise price or a strike price. European option Where an option is allowed to be exercised only on the maturity date, it is called a European option American option When the option can be exercised any time before its maturity, it is called an American Option. In-the-money option A put or a call option is said to in-the-option when it is advantageous for the investor to exercise it. In the case of in-the-money call option, the exercise price is less than the current value of the underlying asset, while in the case of the in-the-money put options; the exercise price is higher than the current value of stage underlying asset. Out-of-the money option A put or call option is out-of-the-money if it is not advantageous for the investor to exercise it. In the case of the out-of-the-money call option, the exercise price is less than the current value of the underlying asset, while in the case of the out of-the-money put option, the exer4cise price is lower than the current value of the underlying asset. At-the-option When the holder of a put or a call option does not lose of gain whether of not he exercises his option, the option is said to be at-the-money. In the
76
case of the out-of-the-money option the exercise price is equal to the current value of the underlying asset. Straddle The investor can also create a portfolio of a call and a put with the same exercise price. This is called a straddle. Spread If call and put with different exercise price are combined, it is called a spread. Strip A strips is a combination of two puts and one call with the same exercise price and the expiration date. Strap A strap, on the other hand, entails combing two calls and one put. SWAPS Swaps are similar to futures and forwards contracts in providing hedge against financial risk. A swap is an agreement between two parties, called counterparties, to trade cash flows over a period of time. Currency Swaps Currency swaps involves an exchange of payments in one currency for cash payments in another currency. Butterfly Spread A long butterfly spread involves buying a call with a low exercise4 price, buying a call with a high exercise price and selling tow calls with an exercise price in between the two. A short butterfly spread involves the opposite position; that is selling call with low exercise price, selling a call with a high exercise price and buying two calls with an exercise price in between the two. Collars A collars involves a strategy of limiting a portfolios value between to bounds. Bullish spread An investor may be expecting the price of an underlying share to rise. But he may not like to take higher risk. Bearish Spread An investor, who is expecting a share of index to0 fall, may sell the higher-*priced option and buy the lower-price option. Index options Index options are call or put options on the stock markets indices. In India, there are options on the Bombay Stock Exchange, Sensex and the national Stock Exchange, Nifty. Premium The price of an option contract, determined on the exchange which
77
the buyer of the option pays to the options writer for the fights to the option contract. Futures Futures is a financial contract which derives its value for the underlying asset. Financial Futures Futures are traded in a wide variety of commodities: wheat, sugar, gold, silver, copper, oranges, coco, oil soybean etc. Forward In a forward contract, two parties agree to buy or sell some underlying asset on some future date at a stated price and quantity. Index futures Index futures is one of the most successful financial innovation of the financial market. In 1982, the stock index future was introduced. Margin Depending upon the nature of the buyer and seller the margin requirement to deposit with the stock exchange is fixed. Market to Market A process of valuing an open position on a futures market against the ruling price of the contract at that time, in order to determine the size of the margin call. Badla Badla is a part of the cash market. It provided the facility of borrowing and lending of shares and funds. Hedging Hedging is the term used for reducing risk by using derivatives. Nifty Nifty has been selected as the base for the stock index futures. Nifty contains a well-diversified portfolio of 50 stocks.
78
BIBLIOGRAPHY
BIBLIOGRAPHY:
Books:79
1 Derivatives Dealers Module Work Book - NCFM

2 Financial Febket and Services - GORDAN & NATRAJAN
3 Financial Management - PRASANNA CHANDRA
News Papers: THE FINANCIAL EXPRESS BUSINESSWORLD ECONOMIC TIMES
WEB SITES:WWW.indiainfoline.com WWW.hseindia.org WWW.nseindia.com WWW.bseindia.Com WWW.derivatives.com
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APPENDICES
ORGANISATION STRUCTURE OF INDIA INFOLINE:

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India Infoline Ltd:

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients trading in the equities market. It has recently launched its Investment banking and Institutional Broking business.
India Infoline Media and Research Services Limited:

The content services represent a strong support that drives the broking, commodities, mutual fund and portfolio management services businesses. Revenue generation is through the sale of content to financial and media houses, Indian as well as global. It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the Web' and 'a must read for investors in Asia'. India Infoline's research is available not just over the internet but also on international
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wire services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where India Infoline is amongst the most read Indian Brokers.
India Infoline Commodities Limited:

India Infoline Commodities Pvt Limited is engaged in the business of commodities broking. Our experience in securities broking empowered us with the requisite skills and technologies to allow us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DGCX. We have a multi-channel delivery model, making it among the select few to offer online as well as offline trading facilities.
India Infoline Marketing & Services:

India Infoline Marketing and Services Limited is the holding company of India Infoline Insurance Services Limited and India Infoline Insurance Brokers Limited. a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Limited, which is India's largest private Life Insurance Company. India Infoline was the first corporate agent to get licensed by IRDA in early 2001.
b) India Infoline Insurance Brokers Limited India Infoline Insurance Brokers
Limited is a newly formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for the insurance broking license and the clearance for the same is awaited. Post the grant of license, we propose to also commence the general insurance distribution business.
India Infoline Investment Services Limited:

Consolidated shareholdings of all the subsidiary companies engaged in loans and financing activities under one subsidiary. Recently, Orient Global, a Singapore-based investment institution invested USD 76.7 million for a 22.5% stake in India Infoline Investment Services. This will help focused expansion and capital raising in the said subsidiaries for various lending businesses like loans
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against securities, SME financing, distribution of retail loan products, consumer finance business and housing finance business. India Infoline Investment Services Private Limited consists of the following step-down subsidiaries. a) India Infoline Distribution Company Limited (distribution of retail loan products) b) Moneyline Credit Limited (consumer finance) c) India Infoline Housing Finance Limited (housing finance)
IIFL (Asia) Pte Limited:

IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in Singapore to pursue financial sector activities in other Asian markets. Further to obtaining the necessary regulatory approvals, the company has been initially capitalized at 1 million Singapore dollars.
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INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

List of tables List of figures

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

NEED FOR THE STUDY:

INDIA INFOLINE LIMITED HYDERABAD

OBJECTIVES OF THE STUDY:

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

SCOPE OF THE STUDY:

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

FUNCTIONS OF DERIVATIVES MARKET:

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

Interest rate swaps:

INDIA INFOLINE LIMITED HYDERABAD

RATIONALE BEHIND THE DEVELOPMENT OF DERIVATIVES:

INDIA INFOLINE LIMITED HYDERABAD

ANY EXCHANGE FULFILLING THE DERIVATIVE SEGMENT AT NATIONAL STOCK EXCHANGE:

INDIA INFOLINE LIMITED HYDERABAD

4. Individual Stock Futures

Regulation for Derivative Trading:

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

HISTORY OF STOCK EXCHANGE:

INDIA INFOLINE LIMITED HYDERABAD

DEFINITION OF STOCK EXCHANGE:

INDIA INFOLINE LIMITED HYDERABAD

REGULATION OF STOCK EXCHANGES:

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI):

INDIA INFOLINE LIMITED HYDERABAD

BOMBAY STOCK EXCHANGE:

INDIA INFOLINE LIMITED HYDERABAD

NATIONAL STOCK EXCHANGE:

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

THE INDIA INFOLINE LIMITED: Origin:

Main Objects of the Company:

INDIA INFOLINE LIMITED HYDERABAD

VISION STATEMENT OF THE COMPANY:

INDIA INFOLINE LIMITED HYDERABAD

2. Govt of India bonds. 3. Fixed deposits

THE CORPORATE STRUCTURE:

INDIA INFOLINE LIMITED HYDERABAD

Management of India Infoline Ltd.:

Mukesh Sing Seshadri Bharathan

Director, India Infoline Securities Pvt Ltd. Director, India Infoline.Com

INDIA INFOLINE LIMITED HYDERABAD

INDIA INFOLINE LIMITED HYDERABAD

Its growth figures for last 5 quarters

Quarterly Quarte 31-MAR-2010 r ending (month

INDIA INFOLINE LIMITED HYDERABAD

Sales & PAT Peer Group Comparison Figured in Mn

Company name India Infoline Limited

Sales Rank PAT 2697.80 1 521.22

Rank Market Cap Rank 2 68283.17 3