A REPORT ON COMPARISON BETWEEN EQUITY MARKET AND COMMODITY MARKET By SOMAK DAS ISB/10/KOL/034 FINANCE

The report is submitted as partial fulfilment of the requirement of PGDM Program of ISB-K

RELIGARE SECURITIES LIMITED

Date of Submission 8/07/2011

Indismart Leadership Centre EN-34, Salt Lake Electronics Complex Sector- 5, Kolkata-700091

Page | 1

CERTIFICATE FROM THE FACULTY GUIDE

This is to certify that Summer Internship Project on Comparison between Equity market and Commodity market was done by Somak Das, Roll No.ISB/10/KOL/034, student of International School Of Business, Kolkata-700091 in partial fulfillment of the requirement for award of Post Graduate Diploma in Management and that the Project was carried out under my guidance.

Place: Kolkata Date: 07/07/2011

JAIDEEP GUPTA Faculty Guide, ISB, Kolkata

Page | 2

DECLARATION BY THE STUDENT

I hereby declare that the Summer Internship Project titled Comparison between Equity market and Commodity market being submitted for award of Post Graduate Diploma in Management was done independently by me under the guidance of Mr.Alok Chiraniya of Religare Securities Limited and Mr. Jaideep Gupta of International School of Business, Kolkata-700091. I also declare that this project has not formed the basis for award of any other Degree, Diploma, Associate or other similar title. Dated: 8th July 2011 Kolkata SOMAK DAS Roll No.: ISB/10/KOL/034 ISB, Kolkata

Page | 3

ACKNOWLEDGEMENT

First and foremost, I would like to thank and express my gratitude to Religare Securities Limited which is a leading organization in Stock, Commodity and Currency trading, for giving me an opportunity to work in their esteemed organization. During my tenure, I undertook Market Research & Cross selling and gained hands on knowledge about the actual stock market scenario. My special obligation lies to my corporate guide Mr. Alok Chiraniya (Equity-Manager) who has directed me all through. I extend my sincere thanks to Mr. Jaideep Gupta (Faculty Guide) for his help and valuable suggestions in undertaking this project. He helped me move ahead in a systematic manner with my project. I thank them for their constant encouragement, warm response and for filling every gap with valuable ideas that has made this project meaningful. I also like to thank Mr. Subarna Saha (Branch Manager) & Mr. Joydeep Ghosh (AVP), of Religare Securities Limited for helping me and providing me useful & necessary information related to the project. I would take this opportunity to thank all senior executives and every associates of Religare Securities Limited without their cooperation I would not be able to complete this project. I would also like to thank our faculties who have taught me and have shared their experience with me which has helped me in doing my project.

Page | 4

CONTENTS
Chapters Page no.

Executive Summary.1 Introduction Equity market (NSE&BSE).....2 Sensex..............................................................................................3 Commodity market.................................................................................4 Objective of the project.......5 Company Profile.............................................................................................................6 Services offered..................................................................................8 Group of Companies.........................................................................11 Organization structure...12 Competitors .................................................................................................................13 Methodology...14 Advantages and Importance of Equity market...................16-19 Advantages and Importance of commodity market..20-22 Equity vs. Commodity...23 Top 3 stocks of Equity market................................24 Top 3 commodities in Commodity market..28 Macro-Economic views for the year 2011...................................................................31 Research design and Analysis......................................................................................32 Findings...44 Recommendations..45 Conclusion...46 Limitations..47 Bibliography...48 Annexure.....49

Page | 5

LIST OF ILLUSTRATIONS
1) Movement of Sensex and Nifty from April 2010 to May 2011...2 2) Movement of Sensex from 1998 to 2010...4 3) Figure showing various services provided by Religare...8 4) Organization chart of Religare.12 5) INFOSYS price graph for last 5 years...........................................................25 6) SBI price graph for last 5 years26 7) L&T price graph for last 5 years......27 8) Graph showing Gold future trends..28 9) Graph showing Silver future trends.29 10) Graph showing Crude oil future trends...30 11) Column graph showing occupation of investors.....32 12) Pie chart showing awareness about Religare......33 13) Pie chart showing type of investment preferred by investors34 14) Column graph showing portfolio size of investors..35 15) Column graph showing preference of market by investors...36 16) Pie chart showing stocks preferred in Equity market37 17) Pie chart showing stocks preferred in Commodity market...38 18) Column graph showing source of information of investors...39 19) Bar graph showing type of trading preferred by investors40 20) Pie chart showing knowledge about Hedging among investors.41 21) Pie chart showing preference of broking firm.42 Page | 6

22) Column graph showing services expected by investors..43

Page | 7

EXECUTIVE SUMMARY
SIP is an opportunity for us to face real corporate world coming out of the books of theories. It also provides us the opportunity to satisfy my curiosity about the real market. The entire SIP was a great learning experience for me. As per the fulfillment of my SIP I have to undergone 8 weeks summer training from Religare Securities Limited during 25th April to 24th June. This report mainly deals with the comparison between the Indian Equity market and Commodity market. In India there is a misconception regarding trading of equities and commodities. This project deals with the benefits and importance of stock market and commodity market. Most of the people feel that investing in stock market leads to huge losses. Both the markets individually have some advantages and benefits.But the fact is if we invest in stocks and commodities by making a bit of research and study about the stocks we can enjoy profit in most of the cases. It also shows the top three stocks and commodities in both these markets. In order to invest in a stock or commodity of a particular company the investor must have the knowledge about the stocks which they intend to make an investment. For knowing the awareness of the people about equity and commodity market I have undergone a survey in Salt lake, Sector-5. This survey helped me to understand the preference of the customer in both these markets and their knowledge about the market and also their awareness about Religare Securities. I also came to know about the services expected by the investors from a good broking firm.

Page | 8

INTRODUCTION

EQUITY MARKET
A stock market or equity market is a public entity for the trading of company stock (shares) and derivatives at an agreed price these are securities listed on a stock exchange as well as those only traded privately. The stock market in India does business with two types of fund namely private equity fund and venture capital fund. It also deals in transactions which are based on the two major indices - Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE).The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. The Indian market has 22 stock exchanges. The companies are enlisted with BSE and NSE. The larger companies are enlisted with BSE and NSE. The smaller and medium companies are listed with OTCEI (Over The counter Exchange of India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange Board of India).

Fig1: Movement of Sensex and Nifty for the period April 2010 to May2011

Page | 9

Bombay Stock Exchange (BSE) is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was US$1.63 trillion as of December 2010, making it the 4th largest stock exchange in Asia and the 8th largest in the world. The BSE has the largest number of listed companies in the world. As of December 2010, there are over 5,034 listed Indian companies and over 7700 scripts on the stock exchange, the Bombay Stock Exchange has a significant trading volume. The BSE SENSEX, also called "BSE 30", is a widely used market index in India and Asia. Though many other exchanges exist, BSE and the National Stock Exchange of India account for the majority of the equity trading in India. While both have similar total market capitalization (about USD 1.6 trillion), share volume in NSE is typically two times that of BSE. National Stock Exchange (NSE) is a stock exchange located at Mumbai, India. It is the 9th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around US$1.59 trillion and over 1,552 listings as of December 2010. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India, and are responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalisation.

SENSEX
Sensex first compiled in 1986, was calculated on a "Market Capitalization-Weighted" methodology of 30 component stocks representing large, well-established and financially sound companies across key sectors. The base year of SENSEX was taken as 1978-79. SENSEX today is widely reported in both domestic and international markets through print as well as electronic media. It is scientifically designed and is based on globally accepted construction and review methodology.

Page | 10

Fig2: Movement of Sensex for the period 1998 to 2010

COMMODITY MARKET
Commodity markets have organized traders' exchanges in which standardized, graded products

are bought and sold. Worldwide, there are 48 major commodity exchanges that trade over 96 commodities, ranging from wheat and cotton to silver and oil. Most trading is done in futures contracts, that is, agreements to deliver goods at a set time in the future for a price established at the time of the agreement. Most people are of the opinion that commodity markets are very complex and difficult to understand. Actually they are not. A commodity future market or exchange is, in simple terms, nothing more or less than a public market place where commodities are contracted for purchase or sell at an agreed price for delivery at specified date. These commodities are traded in future markets like LME, COMEX, NYMEX and CBOT outside India and MCX and NCDEX in India.

Page | 11

OBJECTIVE

A survey was done on the investors of the equity and the commodities market. The survey was directed at certain target and the main objectives of the survey are as follows: 1) To clearly identify the awareness level among people about Religare Securities Ltd. 2) To find out the consumer perception about equity and commodity market. 3) To clearly identify the awareness level about the functioning of the equity and commodities market. 4) To find out the expectations of the investors regarding the service provided by a broking firm. 5) To determine whether equity or commodity market is a better place to invest.

Page | 12

COMPANY PROFILE
Religare Enterprises Limited (A Ranbaxy Promoter Group Company)through Religare Securities Limited, Religare Finvest Limited, Religare Commodities Limited and Religare Insurance Advisory Services Limited provides integrated financial solutions to its corporate, retail and wealth management clients. Today, It provides various financial services which include Investment Banking, Corporate Finance, Portfolio Management Services, Equity & Commodity Broking, Insurance and Mutual Funds. Plus, etc. Religare in recent years has expanded its reach in health care and financial services wherein it has multiple specialty hospital and labs which provide health care services and multiple financial services such as secondary market equity services, portfolio management services, depository services etc. Religare financial services group comprises of Religare Securities Limited, Religare Commodities Limited and Religare Finvest Limited which provide services in Equity, Commodity and Financial Services business & Religare Insurance Advisory Ltd. RELIGARE was founded with the vision of providing integrated financial care driven by the relationship of trust. The bouquet of services offered by RELIGARE includes Broking (Stocks and Commodities), Depository Participant Service, Advisory on Mutual Fund Investments and Portfolio Management Services. Religare is a pioneer in the concept of partnership to reach multiple locations in order to effectively service its large base of individual clients. Besides the reach of Religare, the clients of the company greatly benefit by its strong research capability, which encompasses fundamentals as well as technical knowledge.

Mr. Sunil Godhwani Chairman and Managing Director, Religare Enterprises Limited Mr. Shachindra Nath Group CEO, Religare Enterprises Limited Mr. Anil Saxena Chief Financial Officer, Religare Enterprises Limited

Page | 13

Fig3:Religare has a presence in 11 countries of the world

RELIGARE SECURITIES LIMITED

RELIGARE Securities Ltd. (RSL) is a wholly owned subsidiary of RELIGARE Financial Services Ltd. (RFSL), a Company promoted by the late Dr.Parvinder Singh, Ex-CMD of Ranbaxy Laboratories Ltd. Religare Securities Ltd. (RSL), a wholly owned subsidiary of Religare Enterprises Limited (REL), an emerging markets financial services group is one of the market leading securities firm in India. The company offers equity & currency broking services to more than 7,50,000 clients using both, offline and online platforms and also offers depository participant services. RSL is a member of the NSE, BSE, NCDEX, MCX-SX and a depository participant with NSDL and CDSL. RSL employs more than 4800 employees and has a wide distribution reach that spans across more than 2092 locations across 500 cities in India.

Page | 14

SERVICES:

Equity Arts Initiative Commodity

Investment Banking Wealth Advisory Services

RELIGARE

Mutual Fund

Insurance Personal Credit

Fig4: Diversification of services provided by RELIGARE EQUITY AND DERIVATIVES

Trading platform for equities and equity derivatives on NSE and BSE- the Company has a reach of over 46 sub-regional branches at 2092 locations in the India to cater to retail and high net worth individuals. The branches constitute of self-owned hubs and franchise/ remissers/ sub broker through whom the business is sourced.

COMMODITIES
Trading platform for commodities on NCDEX and MCX- Commodity trading facility is provided to all the clients at all the centers and location. The company is planning to establish itself as a leading research center for commodities market in the country.

Page | 15

DISTRIBUTION
Distribution of retail finance products Mutual Funds and IPOs. The group is empanelled with all the Fund Houses in the country to sell their Mutual Fund and NFOs using the retail network. IPOs selling is undertaking from all the branches of the company

FINANCIAL ADVISORY SERVICES

Investment and trading advisory services to its clients based on technical, fundamental and market research- The Company has one of the best fundamental research and technical analysis teams in the company. We release reports based on fundamental research of industries, sectors, companies and individual stock to our clients on a basis. The technical research team gives the clients recommendations using charting tools like Falcon and Meta stock. Comprehensive reports on volume breakouts, delivery reports and F&O open interest positions are given to all the clients. Religare Capital offers you extensive range of Investment Banking Services for equity related products and instruments. Our team advises you on transactions like business Structuring and capital raising opportunities based on your corporate needs and state of capital markets. Services we specialize in include Management of:

1) Initial Public Offering(IPOs) 2) Follow-on Offerings 3) Qualified Institutional Placements(QIPs) 4) Buyback, Delisting of Equities 5) Open Offers

Page | 16

CORPORATE FINANCE ADVISORY

Religare Capital focuses on all dynamic sectors in which rapid growth is changing industry structures rapidly. To capitalize on a given sector's robust demand, external capital often becomes a catalyst to achieving market leadership. Religare Capital focus in this process is to assist companies in raising the necessary capital to meet their growth objectives.

DEBT ADVISORY & SYNDICATION

Religare Capital has a dedicated team focused on associating with companies pan India to understand their requirement of funds and syndicate them at the most competitive rates. We understand the companys business model, the nature of requirement and the requisite terms which would best serve their specific needs. This may entail customizing structured products or syndicating funds for a projector expansion programme.

The array of products available to meet the specific end-use of our clients include: Domestic Loan/Foreign Currency Loan

Project Financing Equipment Financing Securitization

Debt Swap &Loan Restructuring Short Term Corporate Loan Working Capital(Cash Credit, LCs&Bank Guarantee)

Inter Corporate Deposits(ICDs) Promoter funding/Loan Against Shares

Bonds & Debentures

Page | 17

GROUP OF COMPANIES:-

Page | 18

ORGANIZATION STRUCTURE

Page | 19

COMPETITORS OF RELIGARE:There are several financial security companies playing their roles in Indian equity market. But Religare faces competitions from these few companies.

ICICI Direct.com

Edelwiss

Share Khan

Kotak Securities.com

India Bulls

HDFC Securities

Motilal Oswal

India Infoline

Page | 20

METHODOLOGY

The criteria question was that whether the individual was already investing in either equity or commodities market. Personal interviews and informal discussions were held with only the positive respondents. Further applying simple statistical techniques, the collected data will be processed.

Sampling size: A sample of hundred was chosen for the purpose of the survey. Sample
consisted of both small and large investors.

Field Study: Directly approached respondents (businessmen, physical commodities traders

and general people).

Collection of primary data through questionnaires:The data collected for the study purpose is through questionnaires. One hundred investors were selected randomly for the study purpose and then the information revealed from the customers is analyzed and interpreted in the study. For the purpose of the study 100 customers were picked up at random and their views solicited on different parameters. The methodology adopted includes Criteria question Questionnaire Random sample survey of customers Discussions with the concerned The criteria question was that whether the individual was already investing in either equity or commodities market. Personal interviews and informal discussions were held with only the positive respondents. Further applying simple statistical techniques, the collected data are processed.

Page | 21

SAMPLING PLAN
Population: 100 investors in Salt lake sector-5 were taken as population sample.. Sampling size: A sample of hundred was chosen for the purpose of the study. Sample consisted of both small and large investors. Sampling Methods: Probability sampling requires complete knowledge about all sampling units in the universe. Due to time constraint non-probability sampling was chosen for the study. Sampling procedure: From large number of investors, sample lot were randomly picked up by me. Field Study: Directly approached respondents (businessmen, small shopkeepers, physical commodities traders and service class people).

Sources of secondary data:As is the case in primary research, secondary data can be obtained from two different research strands. The sources of secondary data are:1) Website 2) Journals 3) News paper 4) Magazines

EQUITY MARKET
Page | 22

A market that exists between companies and financial institutions that is used to raise equity capital for the companies. Some activities that companies operate in the equity capital markets include: overall marketing, distribution and allocation of new issues; initial public offerings, special warrants, and private placements. Along with stocks, the equity capital markets deal with derivative instruments such as futures, options.The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together.

IMPORTANCE OF STOCK MARKET

The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional financial capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate. . An economy where the stock market is on the rise is considered to be an up-and-coming economy. In fact, the stock market is often considered the primary indicator of a country's economic strength and development. Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.

ADVANTAGES OF INDIAN STOCK MARKET:

1) Potential for high investment returns. Page | 23

2) Tax free investment options. 3) Long term investment possible. 4) Flexible investment options.

KEY STRENGTHS OF THE INDIA STOCK/EQUITY MARKET

The India stock market boasts of a fully automated trading system on all stock exchanges, provides a wide range of products. It is an integrated platform to trade in both cash and derivatives and has a host of around 4,000 corporate brokers all across India. The stock market of India has made considerable progress following its international peers and the modern market mechanisms have helped them create a niche for themselves. The market regular, Securities and Exchange Board of India (SEBI) plays an important role in the management of the stock exchanges in India. The regulatory methods are sound - in terms of intermediaries, trading mechanism, settlement cycles, risk management, derivative trading. The usage of Information technology is to a large extent responsible for the outstanding performance of the stock markets in India. The two main players of the India stock market NSE and BSE have outshone all the other exchanges and majority of the stocks are listed on these two exchanges. The market participants are ever increasing, the volume of securities has been growing, transaction costs are getting reduced, and there is significant improvement in efficiency, transparency and safety.

Important elements of India stock market

Investors Page | 24

Issuers Intermediaries Regulators

There are two types of trading in the Equity market - Intraday and Delivery based trading.

BENEFITS OF INTRADAY TRADING: Leverage

By law, day traders who maintain a minimum balance of $25,000 in their brokerage account get access to quadruple leverage by their broker. The Financial Industry Regulatory Authority (FINRA) set this rule, which greatly benefits those who trade on margin. Margin is a common brokerage feature where traders may buy twice as many shares as their cash would allow. While margin offers double leverage, day traders double this leverage even further. However, the rule requires that the stock be sold on the same day it is purchased.

Overnight Risks
Anyone who follows the stock market knows that prices can open up the following morning at substantially lower levels from where they closed the previous day. Overnight risks can be significant. If major economic or government events occur outside normal trading hours, this could severely affect the stock market's reaction the following day. Intraday traders usually sell all or most of their positions by the close of a day's trading session. Thus they are not at risk when unforeseen events influence the market overnight. They start the next day with no position.

Daily Income
Day traders who have developed a successful trading strategy can rely on it for their primary income. Many work from home and aim to make earnings comparable to

Page | 25

salaried jobs. This contrasts with long-term investing, where daily or monthly profits are not usually expected. The returns from long-term investing are not often treated as ordinary income by most investors, and they maintain jobs independent of their stock market trading. Day traders are a special class of worker who generate consistent income from trading as their primary job.

Rewards
Perhaps the most significant benefit to day trading is the potential for huge returns.

Successful traders who have spent years of experience developing an understanding of the intraday markets can make extraordinary earnings. This is rare, however. Many successful day traders earn modest livings. But the potential for wealth is always present.

ADVANTAGES OF DELIVERY BASED TRADING:

The biggest advantage of delivery of delivery based trading is that you are not bound with time for selling the stock. Youcan hold the stocks for long as you want. So you can always hold a stock until you are getting a significant profit from the investment. Therefore with delivery based trading you can always take your time to take decision and reduce the risk of losses.With delivery based trading, you can always hold a stock till it reaches the expected price. The long term investment can always get you dividend. You can also benefit from split shares, bonus stocks and other benefits that the company announces

INDIAN COMMODITY MARKET

Page | 26

Investment in India has traditionally meant property, gold and bank deposits. The more risktaking investors choose equity trading. But commodity trading forms a part of conventional investment instruments. As a matter of fact, future trading in commodities was banned in India in mid-1960 due to excessive speculation. In February 2003, the government revoked the ban and threw open futures trading in 54 commodities in bullion and agriculture. It gave the go-ahead to four exchanges (The National Commodity and Derivative Exchange (NCDEX), The Multi Commodity Exchange of India (MCX), The National Multi Commodity Exchange of India (NMCE) and The National Board of Trading in Derivatives (NBOT)) to offer online trading in commodity derivatives products. The commodities market is one of the fastest-growing areas in the investment world. And it offers some major advantages over stocks that you might not have considered before. . In the Indian commodity market there are so many verities of products including agricultural products like rice, wheat, cattle etc; energy products like coal, petroleum, kerosene, gasoline; metals like copper, gold, silver, aluminum and many more. There are some delicate commodities also such as sugar, cocoa, and coffee, which is perishable, so cannot be put in stock for long time.

BENEFITS OF COMMODITY TRADING Leverage

Commodity futures operate on margin, meaning that to take a position only a fraction of the total value needs to be available in cash in the trading account.

Commission Costs
It is a lot cheaper to buy/sell one futures contract than to buy/sell the underlying

instrument. For example, one full size S&P500 contract is currently worth in excess off $250,000 and could be bought/sold for as little as $20.

Liquidity
The involvement of speculators means that futures contracts are reasonably liquid. Page | 27

However, how liquid depends on the actual contract being traded. Electronically traded contracts, such as the e-minis tend to be the most liquid whereas the pit traded commodities like corn, orange juice etc are not so readily available to the retail trader and are more expensive to trade in terms of commission and spread.

Ability to go short
Futures contracts can be sold as easily as they are bought enabling a speculator to

profit from falling markets as well as rising ones. There is no uptick rule for example like there is with stocks. No Time Decay. Options suffer from time decay because the closer they come to expiry the less time there is for the option to come into the money. Commodity futures do not suffer from this as they are not anticipating a particular strike price at expiry.

Reduced Risks
As an investor your chances of risks are very less if you choose to invest in commodity. Therefore the gains from commodity investing will be helpful for you to balance other losses due to other financial instruments in your portfolio. The chances of risks are lower because commodity investing primarily deals with diverse items. Moreover when the contracts are entered for a future date at the current time you can exercise reasonable care and see to it that the chances of risks are reduced or nil.

Commodity Price Moves Are More Predictable

Price movements in the commodity markets - whether up or down - are much more predictable and methodical. This is because when we don't have so many sources spewing out conflicting data, we get a better handle on the moves.

PARTICIPANTS IN COMMODITY FUTURES:- Farmers/ Producers Page | 28

Merchandisers/ Traders Importers Exporters Consumers/ Industry Commodity Financers

DIFFERENT TYPES OF COMMODITIES TRADING

Spot trading
Spot trading is any transaction where delivery either takes place immediately, or with a minimum lag between the trade and delivery due to technical constraints. Commodity markets require the existence of agreed standards so that trades can be made without visual inspection.

Forward contracts
A forward contract is an agreement between two parties to exchange at some fixed future date a given quantity of a commodity for a price defined today. The fixed price today is known as the forward price.

Futures contracts
A futures contract has the same general features as a forward contract but is transacted through a futures exchange.

Hedging
Hedging, a common and sometimes mandatory practice of farming cooperatives insures against a poor harvest by purchasing futures contracts in the same commodity.

EQUITY VS COMMODITY MARKET

Page | 29

Features
Type of Trading Regulator

Equity
Cash/Delivery Trading SEBI(Securities Exchange board of India Bombay Stock Exchange, National Stock Exchange Applicable Cash settlement Both delivery and intraday brokerage is charged Low risk 9.15 A.M. to 3.30 P.M. No date for expiry Short selling not available

Commodity
Futures Trading FMC(Forward Market Commission) Multi Commodity Exchange, National Commodity and derivative Exchange Not Applicable Physical/cash settlement Only intraday brokerage is charged High risk due to future market 10 A.M. to 11.30 P.M. Last Thursday of every Month Availability of short selling and profit from falling prices

Exchanges Sales Tax Settlement Brokerage Risk Involved Timing Expiry Short selling

TOP 3 STOCKS OF EQUITY MARKET

INFOSYS LIMITED, formerly Infosys Technologies Limited,(BSE: 500209, NSE: INFOSYSTCH, NASDAQ: INFY) is a global technology services company headquartered in Page | 30

Bengaluru (Bangalore), India. Infosys is the second largest IT Company in India with 130,820 employees (including subsidiaries) as of March 2011. Infosys is ranked 28th globally, in the list of IT services providing firms. It has offices in 33 countries and development centres in India, China, Australia, UK, Canada, Brazil and Japan. The company offers software products for the banking industry and business process management services also provide end-to-end business solutions. Infosys went public in 1993. Interestingly, Infosys IPO was under subscribed but it was bailed out by US investment bank Morgan Stanley which picked up 13% of equity at the offer price of Rs. 95 per share. The share price surged to Rs. 8,100 by 1999. By the year 2000 Infosys's shares touched Rs. 310. This, before the catastrophic incident of September 11th, which caused share prices to suddenly fall. Infosys was ranked Indias Most Admired Company' in The Wall Street Journal Asia 200, a listing of Asia's leading companies in 2010. Infosys has achieved this distinction for nine years in a row. Infosys is the leader among IT service providers, according to global retailers in the 2010 RIS IT Services Leader board survey. Infosys is among the top ten value creators in technology and telecommunications, according to the 2010 Value Creators Report of The Boston Consulting Group.

Page | 31

STATE BANK OF INDIA (SBI) (NSE: SBIN, BSE: 500112, LSE: SBID) is the largest Indian banking and financial services company (by turnover and total assets) with its headquarters in Mumbai, India..The government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India.SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. It also has around 130 branches overseas. With an asset base of $352 billion and $285 billion in

Page | 32

deposits, it is a regional banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans.

LARSEN & TOUBRO LIMITED (L&T) (NSE: LT, BSE: 500510) is an Indian multinational conglomerate company headquartered in Mumbai, India. The company has four main business sectors: technology, engineering, construction and manufacturing. L&T has an international presence, with a global spread of offices and factories, further supplemented by a comprehensive marketing and distribution network. The firm has more than 60 units in

Page | 33

some 25 countries. The name is derived from its two founders, Danish citizens who settled down in India. The evolution of L&T into the country's largest engineering and construction organizations is among the more remarkable success stories in Indian industry. The company was founded in (Mumbai) in 1938 by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro - both of whom were strongly committed to developing India's engineering talent and enabling it to meet the demands of industry. Beginning with the import of cement machinery from Europe, L&T rapidly took on engineering and construction assignments of increasing sophistication Domestic business within India dominates, but the company is steadily growing its global operations with a focus on China and the Middle East. In January 2011, it was reported that the company will be restructured into nine virtual companies. Each will be called an independent company, and will have a CEO, CFO and HR head, its own profit and loss account, and a board of directors with at least three independent directors. Each board will not have any legal or statutory standing, but will merely advise management. This is similar in organization to the Mitsubishi Group with which L&T has close partnerships. Larsen & Toubro Limited is India's largest engineering and construction conglomerate, with diverse interests such as construction, hydraulic equipment, electrical and electronic power services, fertilizer projects, medical electronics and information technology.

TOP 3 COMMODITIES IN THE COMMODITY MARKET

Page | 34

GOLD
Gold is valued in India as a savings and investment vehicle and is the second preferred investment after bank deposits. India is the world's largest consumer of gold in jewellery as investment. In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to jewellers and exporters. At present, 13 banks are active in the import of gold. This reduced the disparity between international and domestic prices of gold from 57 percent during 1986 to 1991 to 8.5 percent in 2001. India is the largest consumer of Gold in the world accounting for nearly 25% of the total gold consumption in the world.

Factors influencing prices of gold: Rise in Investor demand. Geo-political concerns US dollar movement against other currencies Indian rupee movement against the US dollar Fall in Supply

SILVER
Silver is found in native form, as an alloy with gold, and in ores. Silver imports into India for domestic consumption in 2002 was 3,400 tons down 25 % from record 4,540 tons in 2001. Page | 35

Around 50% of India's silver requirements last year were met through imports of Chinese silver and other important sources of supply being UK, CIS, Australia and Dubai. Indian industrial demand in 2002 is estimated at 1375 tons down by 13 % from 1,579 tons in 2001. In spite of this fall, India is still one of the largest users of silver in the world, ranking alongside Industrial giants like Japan and the United States. Indian Silver market is majorly Silver import market.

Factors influencing prices of silver: Rise in Investor demand Robust Jewelry off take. Geo-political concerns Central Banks diversifying into bullion Central Bank Sales Slowing and Massive De-Hedging Low supply from Scrap sector

CRUDE OIL
India ranks among the top 10 largest oil-consuming countries. Oil accounts for about 30 per cent of India's total energy consumption. The country's total oil consumption is about 2.2 million barrels per day. India imports about 70 per cent of its total oil consumption and it Page | 36

makes no exports. India faces a large supply deficit, as domestic oil production is unlikely to keep pace with demand. India's rough production was only 0.8 million barrels per day.The NCDEX WTI Crude contract is based on the ICE WTI contract. The Final Settlement Price (FSP) in Indian Rupees (INR) is determined by the Exchange on maturity of the contract. The exchange rate to be used as the conversion factor shall be the RBI reference spot exchange rate on that day i.e. Expiry day of contract (as obtained from Reserve Bank of India website. There are three months contracts available for trading at any given point of time. The Lot Size is 100 barrels and the contract is an Intention Matching. Indian government in 2002 officially ended the Administered Pricing Mechanism (APM). Now crude price is having a high correlation with the international market price.

Factors influencing prices of Crude oil: Geopolitical Situation, particularly in the Middle East and Africa Economic data / indicators of USA, China and other big consuming nations Natural factors like Hurricanes Transportation / Logistical issues like Destruction of Pipelines, Shipping issues etc.

MACRO-ECONOMIC VIEWS FOR THE YEAR 2011

Indian policy makers have been boosting growth at the cost of macro stability risks, reflected in high inflation, a widening current account deficit and tight inter-bank liquidity due to low deposit growth.WPI headline inflation and non-food inflation have moderated to 7.5 percent YoY and 7.9 percent YoY in November 2010 from the peaks of 11 percent YoY and 8.9 Page | 37

percent YoY (in April 2010) respectively. Monthly trade deficit narrowed to 7.1 percent of GDP, annualised in November, from the peak of 10.8 percent of GDP, annualised in August 2010. Inter-bank liquidity should also improve over the next three months as recent aggressive deposit rate hikes will help improve deposit growth. Private sector capex has been accelerating over the last 10 months and it will soon begin to reflect in the form of commissioned capacity. At the same time, monetary tightening as reflected in the 300 bps rise in short-term rates over the last eight months is beginning to help reduce the above macro stability risks. Overall macro conditions will remain vulnerable over the next 4-5 months. Inflation, while moderating, will remain above the RBIs comfort zone; while we believe the current account deficit will also stay relatively high. Recent optimism in the developed world growth outlook has increased the risk of a potential rise in crude oil prices to $110-120/bbl. Similarly, there is additional risk of pass through of agricultural and commodity prices. Relative valuations are on the richer side and hence we expect moderation in index returns for 2011 (in the 10- 15 percent zone from current levels).We remain in a structural bull market so any dip will enhance returns and provide an opportunity to buy equities. The market is likely to consolidate in its current range in the near term and then a steady but not spectacular rise for the rest of 2011. We expect style rotation in 2011.Indias policy favours a change in mix of growth from consumption to capital spending. An improving global growth environment could be the trigger for higher-than anticipated capex.

RESEARCH DESIGN AND ANALYSIS

For the purpose of analysis a survey was made taking 100 investors of share market in Salt lake,Sector-5. were selected randomly and a survey was done. Q) What is your means of occupation? a)Business 52% b) Service 31% c)Profession 17%

Page | 38

INTERPRETATION: On the basis of survey conducted on 100 investors it was found that there were 52 businessmen, 31 service persons and 17 were professionals. This shows that the majority of investors in stock market are businessmen rather than professionals or servicemen.

Q) Are you aware of Religare Securities? a) Yes 69% b) No 31%

Page | 39

INTERPRETATION:Out of the 100 investors surveyed 69% investors were aware of the company Religare and 31% of investors did not know about Religare.So the company should try to improve upon its brand awareness among the investors.

Q) Which type of investment do you prefer? a) Stock market b)Mutual funds 30% 10% c)Bank 45% d)Business 15%

Page | 40

INTERPRETATION: On the basis of survey conducted on 100 investors it was found that 45% were prefer in making Bank investments,15% preferred investing in their business,10% prefer mutual funds and 30% prefer to invest in stock market besides the other investment options. So there is scope for increasing the customer base of Share market investors.

Q) What is your investment amount? a) <50000 b) 50001 to 100000 33% 43% c) 100000 to 200000 d) >200000 18% 6%

Page | 41

INTERPRETATION: As per the survey done on randomly picked 100 investors the survey 33 has a portfolio of less than Rs.50000,43 investors has portfolio of Rs.50000 to 100000, 18 investors has portfolio of Rs.100000 to 200000, 6 investors has portfolio of greater than Rs.200000.

Q) In which market do you invest? a) Only equity b) Only commodities 53% 27% c) Currency d) Equity and commodity 7% 13%

Page | 42

INTERPRETATION: On the basis of survey it was found that out of 100 investors 53 were interested in only equity trading,27 were interested in only commodity trading,7 were interested in currency trading and remaining 13 were interested in both equity and commodity trading.

Q) If you trade in equity market, then where do you invest? a) Banking & IT b) IT & Automobile e) All 22% 11% 9% c) Automobile & Banking d) Power&Banking 42% 16%

Page | 43

INTERPRETATION:On the basis of survey it was found that 42% investors prefer investing in automobile and banking sector,22% prefer investing in Banking and IT sector,11% prefer IT and Automobile sector,16%prefer Power and Banking sector and the remaining 9% prefer to invest in all the three sectors.

Q) If you trade in commodities market, then where do you invest? a) Metals b) Energy products 36% 12% c) Agro based products d) Metals & Agro 29% 23%

Page | 44

INTERPRETATION: As per the survey conducted investors of commodity 36% are prefer investing in the metals,12% prefer investing in Energy,29% invest in Agro-based products and remaining 23% like to invest in both Metals and Agro products. This shows that investors of commodity market have a strong belief and liking for investing in Metal and Agro products.

Q) What type of source do you prefer for updating yourself about market? a) Television& Newspaper c)Business Magazine 53% 11% b) Internet 36%

Page | 45

INTERPRETATION: According to the survey made on 100 investors of stock market 53 gained knowledge about the market and the recent trends of different stocks and commodities through television and newspaper, 36 use internet as means of information and 11 get information through business magazine.

Q) What type of trading do you prefer? a)Intraday 35% b)Delivery 47% c)Futures 18%

Page | 46

INTERPRETATION: As per the survey conducted on 100 investors it was found 35% prefer to do intraday trading,47% have chosen delivery based trading as their choice and 18% investors like to do futures trading. This shows that the people have more faith in delivery trading than intraday or future trading. They believe that investing in long term increases their chances of earning profit.

Q) Are you aware of the concept of hedging in equity and commodities market? a) Yes 38% b)No 62%

Page | 47

INTERPRETATION: On the basis of survey conducted on 100 investors it was found that 62% of the investors are unaware of the concept of Hedging and 32% know the concept. The company should try to approach the clients by informing them about Hedging in details so that they find more interest in stock and commodity market investment.

Q) Through which broking firm do you invest? a) Religare securities b) Kotak Mahindra e) ICICI Securities 22% 18% 7% c) Sharekhan d) Edelweiss e) Others 18% 14% 30%

Page | 48

INTERPRETATION: As per the survey conducted on 100 investors 22% investors prefer trading through Religare securities,7% prefer ICICI securities,18% prefer Kotak Mahindra,9% prefer Sharekhan,14% prefer Edelweiss and the remaining 30% prefer other broking firms which include India Infoline, Nirmal Bang, HDFC securities, etc. This shows that there is space for increasing the customer base of Religare.

Q) What are the services that you expect from a good broking firm? a)Calls b)Brokerage 33% 17% c)Research d)All 12% 38%

Page | 49

INTERPRETATION: On the basis of survey conducted it was found that 33% investors expect good calls from the company,17% expect low brokerage,12% think that the company should have a good research team and the remaining 38% prefer all the three. They said that the combination of good research, low brokerage and appropriate calls can help them earn profit and this will also increase the goodwill of the company.

FINDINGS:
From the project and the survey few of my important findings are
The level of awareness among the investors about Religare can be increased. Most of the investors are businessman, the tendency of investing is much high among

the businessmen than those involved in service or professionals.

Page | 50

 Most of the investors are inclined towards the equity market and some are interested

about investing in the commodities and few are interested in investing in currency market.
The most popular source of information about the market among the investors is

television and newspaper followed by internet and business magazines. The level of awareness among the investors about the working of the commodities market is very low. Also very few investors are aware of the concept of hedging. The investors provided valuable suggestions about better service of a broking firm. The most popular suggestions are

Good tips and calls. Less brokerage. Regular research reports. Educating the clients about the market.

RECOMMENDATIONS:
Keeping in mind the problems and suggestions of the investors I would like to provide some suggestion which may help Religare to provide better service to its existing clients and also to attract new clients

Page | 51

 Improve the brand awareness of Religare by increasing advertisements and

promotional activities like performing campaigning programs. This will improve the brand of Religare which will help to attract more clients.
Introduce some programs which will help to attract more of office going clients. Most

of the investors are businessmen, and very few of the servicemen invest in these markets. The investors do not have much knowledge about the commodities market and the various concepts like hedging and present in these markets. The first priority should be to educate the investors about the market and the various techniques to invest in these markets which will enable the investors to extract better return from these markets. The investors mainly follow the television and the newspapers to update themselves about the market so it will be beneficial for Religare if they come out with weekly article in the leading newspapers regarding market research and present market condition.
Providing the clients better guidance to diversify their portfolio to minimize the risk

involved. The service of the company can be improved keeping in mind the suggestions provided by the investors.

CONCLUSION
The two months summer internship project has been a learning experience for me. My first on job experience at Religare will always serve me as a guiding map for the rest of my career. In these two months Ive learnt that both equity and commodity markets play a vital role in the economic development of a nation and needs such markets for meeting planned economic Page | 52

growth in the near future. The commodity markets are set for an exceptional growth in the future with the adoption of technology and thereby bringing in transparency, ensuring quality standards. The equity are sources of earning quick money through intraday or delivery trading. Since the Indian markets are again gaining momentum it has a bright future for making investment. Government institutions and market participants have to work towards increasing the awareness regarding equity and commodity futures among the general inhabitants. For diversification of portfolio beyond shares, fixed deposits and mutual funds, commodity trading offers a good option for long-term investors and arbitrageurs and speculators. So trading in commodity futures could be another investment heaven for investors. And, now, with daily global volumes in commodity trading touching three times that of equities, Indian investors cannot ignore trading in commodities. Their entry will deepen and broad base the commodity futures market. As a matter of fact, derivative instruments, such as futures, can help India become a global trading hub for select commodities. The SIP at Religare was a perfect blend of corporate and market exposure coupled with hands on experience which will serve as an important ingredient in the recipe of success in all future endeavors.

LIMITATIONS
Since sample size is only 100, this is not a true representation of the population as a whole. Level of accuracy of the results of research is restricted to the accuracy level with which the customers have given their answers and the accuracy level of the answers cannot be predicted.

Page | 53

 As the survey was conducted in a particular area it might not match against the whole population of investors.
The time period of survey i.e. 7 days is also a constraint towards appropriate answer.

BIBLIOGRAPHY

FOR WEB SUPPORT: 1) www.religare.com

2) www.mcxindia.com
Page | 54

3) www.answers.com 4) www.ncdex.com
5) 6)

www.businessstandard.com www.wikipedia.com

7) www.askme.com
8) 9)

www.bloombergutv.com www.nseindia.com

10) www.wikipedia.com 11)www.economictimes.indiatimes.com

ANNEXURE

QUESTIONNAIRE
Name: Address:

Page | 55

1) What is your means of occupation? a) Business b) Service

c)Profession

d)Others

2) Are you aware of Religare Securities? a) Yes b) No

3) Which type of investment do you prefer? a)Stock market b)Mutual funds

c)Bank

d)Business

4) Are you interested in stock market investment? a) Yes b) No

5) What is your investment amount? a)<50000 b)50001 to 100000 d)>200000

c)100000 to 200000

6) In which market do you invest? a)Only equity b)Only commodities

c) Currency

d)Others

7)If you trade in commodities market, then where do you invest? a) Metals b) Energy products c)Agro based products

8)If you trade in equity market, then where do you invest? a) Banking sector b) IT sector c) Automobile sector

d)Power

9) What type of source do you prefer for updating yourself about market? a)Television b)Newspaper c)Internet d)Business magazine

Page | 56

10) What type of trading do you prefer? a) Intraday b) Delivery

c) Futures

11)Are you aware of the concept of hedging in equity and commodities market? a) Yes b) No

12) Through which broking firm do you invest? a)Religare securities b)Kotak Mahindra d)Edelweiss e)ICICI securities

c)Sharekhan f) Others

13) What are the services that you expect from a good broking firm? a) Calls b) Brokerage c) Education

d) Research

14) From your point of view which is more risky in nature? a) Equity market b) Commodity market

c) Both

15) Do you invest in equity market futures? a) Yes b) No

Page | 57