INTRODUCTION

1.1 A STUDY ON DERIVATIVES: The only stock exchanges operating in the 19 the 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 interests. Before the control on securities trading became a 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 even 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 committee's recommendations and public discussion, the securities contracts (regulation) Act became law in 1956.

1.1.1 OBJECTIVES OF STUDY: 1. To study various trends in derivative market. 2. Comparison of the profits/losses in cash market and derivative market. 3. To find out profit/losses position of the option writer and option holder. 4. To study in detail the role of the future and options. 5. To study the role of derivatives in Indian financial market. 2

6. To study various trends in derivative market. 7. Comparison of the profits/losses in cash market and derivative market. 8. To find out profit/losses position of the option writer and option holder. 9. To study in detail the role of the future and options. 10. To study the role of derivatives in Indian financial market.

1.1.2 NEED OF THE STUDY

Different investment avenues are available investors. Stock market also offers good investment opportunities to the investor alike all investments, they also carry certain risks. The investor should compare the risk and expected yields after adjustment off tax on various instruments while talking investment decision the investor may seek advice from expartry and consultancy include stock brokers and analysts while making investment decisions. The objective here is to make the investor aware of the functioning of the derivatives. Derivatives act as a risk hedging tool for the investors. The objective if to help the investor in selecting the appropriate derivates instrument to the attain maximum risk and to construct the portfolio in such a manner to meet the investor should decide how best to reach the goals from the securities available. To identity investor objective constraints and performance, which help formulate the investment policy? The develop and improvement strategies in the with investment policy formulated. They will help the selection of asset classes and securities in each class depending up on their risk return attributes. 3

1.1.3 SCOPE OF THE STUDY The study is limited to Derivatives with special reference to futures and options in the Indian context; the study is not based on the international perspective of derivative markets. The study is limited to the analysis made for types of instruments of derivates each strategy is analyzed according to its risk and return characteristics and derivatives performance against the profit and policies of the company. 1.1.4 LIMITATION OF THE STUDY The subject of derivates if vast it requires extensive study and research to understand the dept of the various instrument operating in the market only a recent plenomore. But various international examples have also been added to make the study more comfortable. There are various other factors also which define the risk and return preferences of an investor how ever the study was only contained towards the risk maximization and profit maximization objective of the investor. The derivative market is a dynamic one premiums, contract rates strike price fluctuate on demand and supply basis. Therefore data related to last few trading months was only consider and interpreted.

1.2 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 made in 1957 to regulate 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, fixation of margins, fixation of market prices or making up prices, regulation of taravani business (jobbing), etc., regulation of brokers trading, brokerage charges, trading rules 5

on the exchange, arbitration and settlement of disputes, settlement and clearing of the trading etc.

1.2.1 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 can license some of the brokers to perform the functions of a stock exchange in its absence.

1.2.2 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 matters 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 investor's rights and regulating the capital markets.

1.2.3 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. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor education programmes. A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive director is the apex body, which decides the policies and regulates the affairs of the exchange. The Executive director as the chief executive officer is responsible for the day today administration of the exchange. The average daily turnover of the exchange during the year 2000-01(April-March) was Rs 3984.19 crs and average number of daily trades 5.69 laces. However the average daily turnover of the exchange during the year 2001-02 has declined to Rs. 1244.10 crs and number of average daily trades during the period to 5.17 laces.The average daily turn over of the exchange during the year 2002-03 has declined and number of average daily trades during the period is also decreased. The Ban on all deferral products like BLESS AND ALBM in the Indian capital markets by SEBI i.e. July 2, 2001, abolition of account Period settlements, introduction of compulsory rolling settlements in all scrips traded on the exchanges i.e. Dec 31,2001, etc., have adversely impacted the liquidity and consequently there is a considerable decline in the daily turn over at the exchange. The average daily turn over of the exchange present scenario is 110363 (Laces) and number of average daily trades 1057(Laces) 7

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. base year of Sensex is 1978-79. It is a "Market capitalization-weighted" index of 30 The Sensex is widely reported in both domestic and component stocks representing a sample of large, well-established and leading companies. The 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 30-component stocks from different industries related to particular base period. The total market value of a company is determined by multiplying the price of its stock by the number of shares outstanding. Statisticians call an 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 calculation in order to make the value easier to work with and track over a time. It is much easier to graph a chart based on Indexed values than one based on actual values 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 Divisor keeps the Index comparable over a period of time and if the reference 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)

1.2.4 NATIONAL STOCK EXCHANGE 8

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 installation 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 corporation 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. 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 April 22, 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 futures and options. Nifty " means National Index for Fifty Stocks. The NSE-50 comprises 50 companies that represent 20 broad 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 traded for 85% of trading days at an impact cost of less than 1.5%. The base period for the index is the close of prices 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:

The NSE midcap Index or the Junior Nifty comprises 50 stocks that represents 21 board Industry groups and will provide proper representation of the midcap segment of the Indian capital Market. All stocks in the Index should have market capitalization of greater than Rs. 200 crs and should have traded 85% of the trading days at an impact cost of less 2.5%. The base period for the index is Nov 4, 1996, which signifies two 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 (Lacs) and number of average daily trades 2160 (Lacs). At present, there are 24 stock exchanges recognized under the securities contract (regulation) Act, 1956. They are List of Stock Exchanges recognized under the securities contract (regulation) Act, 1956 NAME OF THE STOCK EXCHANGE Bombay stock exchange, Ahmedabad share and stock brokers association Calcutta stock exchange association Ltd, Delhi stock exchange association Ltd, Madras stock exchange association Ltd, Indoor stock brokers association, Bangalore stock exchange, Hyderabad stock exchange, Cochin stock exchange, Pune stock exchange Ltd, 10 1875 1957 1957 1957 1957 1958 1963 1943 1978 YEAR

U.P stock exchange association Ltd, Ludhiana stock exchange association Ltd, Jaipur stock exchange Ltd, Gauhathi stock exchange Ltd, Mangalore stock exchange Ltd, Maghad stock exchange Ltd, Patna, Bhubaneshwar stock exchange association Ltd, Over the counter exchange of India, Bombay, Saurasthra kutch stock exchange Ltd, Vsdodara stock exchange Ltd, Coimbatore stock exchange Ltd, The meerut stock exchange Ltd, 1National stock exchange Ltd, Integrated stock exchange,

1982 1982 1983 1983-84 1984 1985 1986 1989 1989 1990 1991 1991 1991 1991,1999

1.3 DERIVATIVES MEANING: 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 11

themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, the financial markets are marked very high degree of volatility. Through the use of derivative 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 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 investors. Derivatives are risk management instruments, which derive their value from an underlying asset. The underlying asset can be bullion, index, share, bonds, currency, interest etc. Annual turnover of the derivatives is increasing each year from 1986 onwards, Year 1986 1992 1998 2002 & 2003 Annual turnover 146 millions 453 millions 1329 millions it has reached to equivalent stage of cash market

Derivatives are used by banks, securities firms, companies and investors to hedge risks, to gain access to cheaper money and to make profits Derivatives are likely to grow even at a faster rate in future they are first of all cheaper to world have met the increasing volume of products tailored to the needs of particular customers, trading in derivatives has increased even in the over the counter markets. In Britain unit trusts allowed to invest in futures & options .The capital adequacy norms for banks in the European Economic Community demand less capital to hedge or speculate through derivatives than to carry underlying assets. Derivatives are weighted lightly than other assets that appear on bank balance sheets. The size of these off-balance sheet assets that include 12

derivatives is more than seven times as large as balance sheet items at some American banks causing concern to regulators

1.3.1 DEFINITION: Derivative is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. In the Indian context the Securities Contracts (Regulation) Act, 1956 (SC(R) A) defines derivative to include1. A security derived from a debt instrument, share, and loan whether secured or unsecured, risk instrument or contract for differences or any other form of security. 2. A contract, which derives its value from the prices, or index of prices, of underlying securities. Derivatives are the securities under the SC(R)A and hence the trading of derivatives is governed by the regulatory framework under the SC(R)A.

1.3.2 PARTICIPANTS IN THE DERIVATIVES MARKET The following three broad categories of participants who trade in the derivatives market: 1. Hedgers 2. Speculators and 3. Arbitrageurs Hedgers: Hedgers face risk associated with the price of an asset. They use futures or options markets to reduce or eliminate this risk. Speculators: 13

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. 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. 1.3.4 FUNCTIONS OF THE DERIVATIVES MARKET: The derivatives market performs a number of economic functions. They are: 1. Prices in an organized derivatives market reflect the perception of market participants about the future and lead the prices of underlying to the perceived future level. 2. Derivatives, due to their inherent nature, are linked to the underlying cash markets. With the introduction of derivatives, the underlying market witnesses higher trading volumes because of participation by more players who would not otherwise participate for lack of an arrangement to transfer risk. 3. Speculative trades shift to a more controlled environment of derivatives market. In the absence of an organized derivatives market, speculators trade in the underlying cash markets. 4. An important incidental benefit that flows from derivatives trading is that it acts as a catalyst for new entrepreneurial activity. 5. Derivatives markets help increase savings and investment in the long run. Transfer of risk enables market participants to expand their volume of activity.

1.3.5 TYPES OF DERIVATIVES The most commonly used derivatives contracts are forwards, futures and options. Here various derivatives contracts that have come to be used are given briefly: 14

1. Forwards 2. Futures 3. Options 4. Warrants 5. LEAPS 6. Baskets 7. Swaps 8. Swaptions 1. Forwards: A forward contract is customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price 2. 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. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts. 3. 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.

4. Warrants: 15

Options generally have two lives of up to one year, the majority of options traded on options exchanges having a minimum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. 5. Leaps: The acronym LEAPS means Long-term Equity Anticipation Securities. These are options having a maturity of up to three years. 6. 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. 7. 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. 1. Swaptions: Swaptions are options to buy or sell that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions markets has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an option to pay fixed and receive floating.

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1.3.6 DERIVATIVES INSTRUMENTS IN INDIA The first derivative product to be introduced in the Indian securities market is going to be "INDEX FUTURES". In the world, first index futures were traded in U.S. on Kansas City Board of Trade (KCBT) on Value Line Arithmetic Index (VLAI) in 1982. Organized exchanges began trading options on equities in 1973, where as exchange traded debt options did not appear until 1982, on the other hand fixed income futures began trading in 1975, but equity related futures did not begin until 1982.

1.3.7 DERIVATIVES SEGMENT IN BSE & NSE On June 9,2000 BSE & NSE became the first exchanges in India to introduce trading in exchange traded derivative product with the launch of index futures on sense and Nifty futures respectively. Index futures was follows by launch of index options in June 2001, stock options in July 2001 and stock futures in Nov 2001.Presently stock futures and options available on 41 wellcapitalized and actively traded scripts mandated by SEBI. Nifty is the underlying asset of the Index Futures at the Futures & Options segment of NSE with a market lot of 200 and the BSE 30 Sensex is the underlying stock index with the market lot of 50. This difference of market lot arises due to a minimum specification of a contract value of Rs. 2 lakhs by Securities Exchange Board of India. A contract value is contracting Index laid by its market lot. For e.g. If Sensex is 4730 then the contract value of a futures Index having Sensex as underlying asset will Be 50 x 4730 = Rs. 2,36,500. Similarly if Nifty is 1462.7, its futures contract value will be 200 x 1462.7 = Rs.2, 92,540/-. Every transaction shall be in multiple of market lot. Thus, Index futures at NSE shall be traded in multiples of 200 and at BSE in multiples of 50

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1.3.8 CONTRACT PERIODS: At any point of time there will always be available near three months contract periods. For e.g. in the month of June 2009 one can enter into either June Futures contract or July Futures contract or August Futures Contract. The last Thursday of the month specified in the contract shall be the final settlement date for that contract at both NSE as well BSE. Thus June 29, July 27 and August 31 shall be the last trading day or the final settlement date for June Futures contract, July Futures Contract and August Futures Contract respectively. When one futures contract gets expired, a new futures contract will get introduced automatically. For instance, on 30th June, June futures contract becomes invalidated and a September Futures Contract gets activated.

1.3.9 SETTLEMENT: Settlement of all Derivatives trades is in cash mode. There is Daily as well as Final Settlement. Outstanding positions of a contract can remain open till the last Thursday of that month. As long as the position is open, the same will be marked to Market at the Daily Settlement Price, the difference will be credited or debited accordingly and the position shall be brought forward to the next day at the daily settlement price. Any position which remains open at the end of the final settlement day (i.e., last Thursday) shall be closed out by the Exchange at the Final Settlement Price which will be the closing spot value of the underlying (Nifty or Sensex, or respective stocks as the case may be).

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1.3.10 Regulation for Derivatives Trading SEBI set up a 24-member committee under Chairmanship of Dr.L.C. Gupta to develop the appropriate regulatory framework for derivatives 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 the 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 and the regulatory framework developed there under govern trading in 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. Any exchange fulfilling the 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 trading derivatives. The derivatives exchange/segment should have a separate governing council and representation of trading / 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 derivative segment. The members of the derivative segment need to fulfill the eligibility conditions as laid down by the L C Gupta committee. 4. The clearing and settlement of derivatives trades shall be through a SEBI approved clearing corporation / house. Clearing corporation / houses complying with the eligibility conditions as laid down by the committee have to apply to SEBI for grant of approval. 5. Derivative brokers/dealers and clearing members are required to seek registration from SEBI.

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6. The minimum contract value shall not be less than Rs. 2 Lakh. Exchanges should also submit details of the futures contract they propose to introduce.
7. The trading members are required to have qualified approved user and sales person who

have passed a certification programme approved by SEBI.

While from the purely regulatory angle, a separate exchange for trading would be a better arrangement. Considering the constraints in infrastructure facilities, the existing stock (cash) exchanges may also be permitted to trade derivatives subject to the following conditions.

I. Trading should take place through an on-line screen based trading system. II.An independent clearing corporation should do the clearing of the derivative market. III.The exchange must have an online surveillance capability, which monitors positions, price and volumes in real time so as to deter market manipulation price and position limits should be used for improving market quality. IV.Information about trades quantities, and quotes should be disseminated by the exchange in the real time over at least two information-vending networks, which are accessible to investors in the country. V.The exchange should have at least 50 members to start derivatives trading. VI.The derivatives trading should be done in a separate segment with separate membership; That is, all members of the cash market would not automatically become members of the derivatives market. VII.The derivatives market should have a separate governing council which should not have representation of trading by clearing members beyond whatever percentage SEBI may prescribe after reviewing the working of the present governance system of exchanges. VIII.The chairman of the governing council of the derivative division / exchange should be a member of the governing council. If the chairman is broker / dealer, then he should not carry on any broking or dealing on any exchange during his tenure. IX.No trading/clearing member should be allowed simultaneously to be on the governing council both derivatives market and cash market. 20

FUTURES

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2.1 FUTURES Futures contract is a firm legal commitment between a buyer & seller in which they agree to exchange something at a specified price at the end of a designated period of time. The buyer agrees to take delivery of something and the seller agrees to make delivery.

2.2 STOCK INDEX FUTURES Stock Index futures are the most popular financial futures, which have been used to hedge or manage the systematic risk by the investors of Stock Market. They are called hedgers who own portfolio of securities and are exposed to the systematic risk. Stock Index is the apt hedging asset since the rise or fall due to systematic risk is accurately shown in the Stock Index. Stock index futures contract is an agreement to buy or sell a specified amount of an underlying stock index traded on a regulated futures exchange for a specified price for settlement at a specified time future. Stock index futures will require lower capital adequacy and margin requirements as compared to margins on carry forward of individual scrips. The brokerage costs on index futures will be much lower. Savings in cost is possible through reduced bid-ask spreads where stocks are traded in packaged forms. The impact cost will be much lower in case of stock index futures as opposed to dealing in individual scrips. The market is conditioned to think in terms of the index and therefore would prefer to trade in stock index futures. Further, the chances of manipulation are much lesser.

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The Stock index futures are expected to be extremely liquid given the speculative nature of our markets and the overwhelming retail participation expected to be fairly high. In the near future, stock index futures will definitely see incredible volumes in India. It will be a blockbuster product and is pitched to become the most liquid contract in the world in terms of number of contracts traded if not in terms of notional value. The advantage to the equity or cash market is in the fact that they would become less volatile as most of the speculative activity would shift to stock index futures. The stock index futures market should ideally have more depth, volumes and act as a stabilizing factor for the cash market. However, it is too early to base any conclusions on the volume or to form any firm trend. The difference between stock index futures and most other financial futures contracts is that settlement is made at the value of the index at maturity of the contract.

2.3 FUTURES TERMINOLOGY Contract Size The value of the contract at a specific level of Index. It is Index level * Multiplier. Multiplier It is a pre-determined value, used to arrive at the contract size. It is the price per index point. Tick Size It is the minimum price difference between two quotes of similar nature. Contract Month The month in which the contract will expire. Expiry Day 23

The last day on which the contract is available for trading. Open interest Total outstanding long or short positions in the market at any specific point in time. As total long positions for market would be equal to total short positions, for calculation of open Interest, only one side of the contracts is counted.

Volume No. Of contracts traded during a specific period of time. During a day, during a

week or during a month. Long position Outstanding/unsettled purchase position at any point of time. Short position Outstanding/ unsettled sales position at any point of time. Open position Outstanding/unsettled long or short position at any point of time. Physical delivery Open position at the expiry of the contract is settled through delivery of the underlying. In futures market, delivery is low. Cash settlement Open position at the expiry of the contract is settled in cash. These contracts Alternative Delivery Procedure (ADP) - Open position at the expiry of the contract is settled by two parties - one buyer and one seller, at the terms other than defined by the exchange. World wide a significant portion of the energy and energy related contracts (crude oil, heating and gasoline oil) are settled through Alternative Delivery Procedure.

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2.4 Pay off for futures: A Pay off is the likely profit/loss that would accrue to a market participant with change in the price of the underlying asset. Futures contracts have linear payoffs. In simple words, it means that the losses as well as profits, for the buyer and the seller of futures contracts, are unlimited.

Pay off for Buyer of futures: (Long futures) The pay offs for a person who buys a futures contract is similar to the pay off for a

person who holds an asset. He has potentially unlimited upside as well as downside. Take the case of a speculator who buys a two-month Nifty index futures contract when the Nifty stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves up, the long futures position starts making profits and when the index moves down it starts making losses . Pay off for seller of futures: (short futures) The pay offs for a person who sells a futures contract is similar to the pay off for a person who shorts an asset. He has potentially unlimited upside as well as downside. Take the case of a speculator who sells a two-month Nifty index futures contract when the Nifty stands at 1220. The underlying asset in this case is the Nifty portfolio. When the index moves down, the short futures position starts making profits and when the index moves up it starts making losses. 25

OPTIONS

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3.1 OPTIONS

An option agreement is a contract in which the writer of the option grants the buyer of the option the right to purchase from or sell to the writer a designated instrument at a specific price within a specified period of time. Certain options are shorterm in nature and are issued by investors another group of options are long-term in nature and are issued by companies.

3.2 OPTIONS TERMINOLOGY:

Call option: A call is an option contract giving the buyer the right to purchase the stock.

Put option: A put is an option contract giving the buyer the right to sell the stock.

Expiration date: It is the date on which the option contract expires.

Strike price:

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It is the price at which the buyer of a option contract can purchase or sell the stock during the life of the option Premium: Is the price the buyer pays the writer for an option contract. Writer: The term writer is synonymous to the seller of the option contract. Holder: The term holder is synonymous to the buyer of the option contract.

Straddle: A straddle is combination of put and calls giving the buyer the right to either buy or sell stock at the exercise price.

Strip: A strip is two puts and one call at the same period.

Strap: A strap is two calls and one put at the same strike price for the same period.

Spread: A spread consists of a put and a call option on the same security for the same time

period at different exercise prices. The option holder will exercise his option when doing so provides him a benefit over buying or selling the underlying asset from the market at the prevailing price. These are three possibilities.
1.

In the money:

An option is said to be in the money when it is

advantageous to exercise it.

2. Out of the money: The option is out of money if it not advantageous to exercise it.

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3. At the money: IF the option holder does not lose or gain whether he exercises his option or buys or sells the asset from the market, the option is said to be at the money. The exchanges initially created three expiration cycles for all listed options and each issue was assigned to one of these three cycles. January, April, July, October. February, March, August, November. March, June, September, and December.

In India, all the F and O contracts whether on indices or individual stocks are available for one or two or three months series and they expire on the Thursday of the concerned month.

3.3 CALL OPTION: An option that grants the buyer the right to purchase a designated instrument is called a call option. A call option is a contract that gives its owner the right, but not the obligation, to buy a specified price on or before a specified date. An American call option can be exercised on or before the specified date only. European options can be exercised on the specified date only. 3.4 PUT OPTION: An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares. A put becomes more valuable as the price of the underlying stock depreciates relative to the strike price. For example, if you have one Mar 09 Taser 10 put, you have the right to sell 100 shares of Taser at $10 until March 2008 (usually the third Friday of the month). If shares of Taser fall to $5 and you exercise the option, you can purchase 100 shares of Taser for $5 in the market and sell the shares to the option's writer for $10 each, which means you make $500 (100 x ($10-$5)) on the put option. Note that the maximum amount of potential proft in this example ignores the premium paid to obtain the put option.

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3.5 FACTORS DETERMINIG OPTION VALUE:

Stock price Strike price Time to expiration Volatility Risk free interest rate Dividend

3.6 DIFFERENCE BETWEEN FUTURES & OPTION:

30

FUTURES 1) Both the parties are obligated to perform. 2) With futures premium is paid by either party. 3) The parties to futures contracts must perform obligated to perform before that date.

OPTIONS 1) Only the seller (writer) is obligated to perform. 2) With options, the buyer pays the seller a premium.

at the settlement date only. They are not 3) The buyer of an options contract can exercise any time prior to expiration date.

4) The holder of the contract is exposed to the 4) The buyer limits the downside risk to the option entire spectrum of downside risk and had the potential for all upside return. 5) In futures margins to be paid. They are approximate 15-20% on the current stock price. premium but retain the upside potential. 5) In options premiums to be paid. But they are very less as compared to the margins.

3.7 Advantages of option trading:

Risk management: put option allow investors holding shares to hedge against a possible fall in their value. This can be considered similar to taking out insurance against a fall in the share price.

Time to decide: By taking a call option the purchase price for the shares is locked in. This gives the call option holder until the Expiry day to decide whether or exercised the option and buys the shares. Likewise the taker of a put option has time to decide whether or not to sell the shares.

31

Speculations: The ease of trading in and out of option position makes it possible to trade options with no intention of ever exercising them. If investor expects the market to rise, they may decide to buy call options. If expecting a fall, they may decide to buy put options. Either way the holder can sell the option prior to expiry to take a profit or limit a loss. Trading options has a lower cost than shares, as there is no stamp duty payable unless and until options are exercised.

Leverage: Leverage provides the potential to make a higher return from a smaller initial outlay than investing directly however leverage usually involves more risks than a direct investment in the underlying share. Trading in options can allow investors to benefit from a change in the price of the share without having to pay of the share.

3.8 Summary of options Call option buyer Pays premium Right to exercise and buy the share Profits from rising prices Limited losses, potentially unlimited Call option writer (seller) Receives premium Obligation to sell shares if exercised Profits from falling prices or remaining neutral Potentially unlimited losses, limited gain Put option writer (seller) Receives premium Obligation to buy shares if exercised Profits from rising prices or remaining neutral Potentially unlimited losses, limited gain

gain Put option buyer Pays premium Right to exercise and sell shares Profits from falling prices Limited losses, potentially unlimited gain

32

ABOUT SHAREKHAN

33

4.1 SHAREKHAN
Sharekhan is one of India's largest and leading financial services companies. It is an online stock trading company of SSKI Group (S.S. Kantilal Ishwarlal Securities Limited) which has been a provider of India-based investment banking and corporate finance service for over 80 years. SSKI caters to most of the prominent financial institutions, foreign and domestic, investing in Indian equities. It has been valued for its strong research-led investment ideas, superior client servicing track record and exceptional execution skills. The key features of sharekhan are as follows: You get freedom from paperwork. There are instant credit and money transfer facilities. You can trade from any net enabled PC. After hour orders facilities. You can go for online orders over the phone. Timely advice and research reports Real-time Portfolio tracking. Information and Price alerts. Sharekhan provides assistance and the advice like no one else could. It has created special information tools to help answer any queries. Sharekhans first step program, built specifically for new investors, is testament to of its commitment to being your guide throughout your investing life cycle. 34

4.2 SHAREKHAN SERVICES: The tag line of Sharekhan says that it is your guide to the financial jungle. As per the tag line there are many amazing services that Sharekhan offers like technical research, fundamental research, share shops, portfolio management, dial-n-trade, commodities trade, online services, depository services, equity and derivatives trading (including currency trading). With Sharekhans online trading account, you can buy and sell shares at anytime and from anywhere you like. With a physical presence in over 300 cities of India through more than 800 "Share Shops" with more than 3000 employees, and an online presence through Sharekhan.com, India's premier, it reaches out to more than 8, 00,000 trading customers. A Sharekhan outlet online destination offers the following services: Online BSE and NSE executions (through BOLT & NEAT terminals) Free access to investment advice from Sharekhan's Research team Sharekhan Value Line (a monthly publication with reviews of recommendations, stocks to watch out for etc) Daily research reports and market review (High Noon & Eagle Eye) Pre-market Report (Morning Cuppa) Daily trading calls based on Technical Analysis Cool trading products (Daring Derivatives and Market Strategy) Personalized Advice Live Market Information

35

 Depository Services: Demat Transactions

Derivatives Trading (Futures and Options) Commodities Trading IPOs & Mutual Funds Distribution Internet-based Online Trading: Speed Trade Sharekhan has one of the best state-of-art web portals providing fundamental and statistical information across equity, mutual funds and IPOs. Surfing can be done across 5,500 companies for in-depth information, details about more than 1,500 mutual fund schemes and IPO data. Other market related details such as board meetings, result announcements, FII transactions, buying/selling by mutual funds and much more can also be accessed. It provides a complete life-cycle of investment solution in Equities, Derivatives, Commodities, IPO, Mutual Funds, Depository Services, Portfolio Management Services and Insurance. It also offers personalized wealth management services for High Net worth individuals. 4.3 ONLINE SERVICES The online trading account can be chosen as per trading habits and preferences, that is the classic account for most investors and speed trade for active day traders. Sharekhan also provides a free software called Trade tiger to all its account holders. The Classic Account enables you to trade online for investing in Equities and Derivatives on the NSE via sharekhan.com; it gives access to all the research content and also comes with a free Dial-n-Trade service enabling to buy shares using the telephone.

36

Its features are:

Streaming quotes (using the applet based system) Multiple watch lists Integrated Banking, demat and digital contracts Instant credit and transfer Real-time portfolio tracking with price alerts and, of course, the assurance of secure

transactions The Trade Tiger is a next-generation online trading product that brings the power of the broker's terminal to your PC. It's the perfect trading platform for active day traders. Its features are:
A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX,

NCDEX, Mutual Funds, IPOs

Multiple Market Watch available on Single Screen Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with

various Studies
Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD, RSI,

etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines User can save his own defined screen as well as graph template, that is, saving the

layout for future use

User-defined alert settings on an input Stock Price trigger

37

 Tools available to gauge market such as Tick Query, Ticker, Market Summary,

Action Watch, Option Premium Calculator, Span Calculator

Shortcut key for FAST access to order placements & reports Online fund transfer activated with 12 Banks Sharekhan provides you the facility to trade in Commodities through Sharekhan

Commodities Pvt. Ltd. a wholly owned subsidiary of its parent SSKI. It trades on two major commodity exchanges of the country:
Multi Commodity Exchange of India Ltd, Mumbai (MCX) and National Commodity and Derivative Exchange, Mumbai (NCDEX).

For trading in any commodity, initial margin of around 10% on any commodity is to be maintained. Sharekhan has launched its own commodity derivatives micro-site. The site is available through the Sharekhan home page www.sharekhan.com. Along with the site Sharekhan has launched several commodity derivatives products (both research and trading) too. The products have been listed below:
Commodities Buzz: a daily view on precious metals and agro commodities. Commodities Beat: a summary of the days trading activity. Traders Corner: Under commodity trading calls, there are two types of trading calls:

Rapid Fire: (short-term calls for 1 day to 5 days updated daily) Medium-term Plays: (medium-term calls for 1 month to 3 months updated weekly or in between if needed)

Sharekhan Xclusive: the commodity research reports and analyses (periodical). Market Scan: the daily commodity market data and statistics (end of day).

38

 All these products are both e-mailed as newsletters and published on the commodity derivatives site

DATA ANALYSIS & INFERENCE

39

GMR INFRASTRUCTURE

40

5.1 GMR Infrastructure

5.1.1 GMR INFRA PROFILE GMR Group is a Bangalore headquartered global infrastructure major with interests in the Airports, Energy, Highways and Urban infrastructure (including SEZ). In addition, the other focus area of the Group is the Agri-business with Sugar as its main productline. The Group is also actively engaged in the areas of Education, Health, Hygiene and Sanitation, Empowerment & Livelihoods and Community-Based Programmes under its Foundation wing, reaffirming its grass root presence as change agents of society in the field of Corporate Social Responsibility. A dedicated division, the GMR Varalakshmi Foundation, manned by committed professionals, oversees and manages these projects across India. With its foray into the Airports sector, the Group has established itself as a front runner and pioneer in the core infrastructure areas of the country. Going forward, the Group will actively seek opportunities in core areas of the countrys infrastructure development including Transportation and Property Development. All these would be driven by a single minded path of translating the vision of the Group by building entrepreneurial organisations that make a difference to society through creation of value.

GMR International GMR Group seeks aggressive growth opportunities, by expanding its business bandwidth and presence in the global market place in the areas of Energy, Airports and property development around airports. International forays will help GMR improve earnings from new opportunities, access international talent and raise international capital at cheaper rates. GMR International - a separate division was formed to harness these opportunities with its head quarters at London. GMR International will embrace the companys Values and Beliefs and will build on its strengths to meet global standards of entrepreneurship, flexibility and effectiveness. It will be a dedicated international organisation with responsibility for investments and operations. As an owner, developer and operator building internationally competitive skills in procurement, operations and maintenance it will leverage GMRs existing strengths in bidding, financing, project management, and partnership development. GMR International manages the Groups maiden foray into the global infrastructure market

41

Projects: The Sabiha Gokcen International Airport InterGen Island Power Airports Delhi International Airport (P) Limited GMR Hyderabad International Airport Limited Istanbul Sabiha Gokcen International Airport Highways Tambaram - Tindivanam Tuni - Anakapalli Ambala - Chandigarh Adloor - Gundla Pochanpalli Tindivanam - Ulunderpet Farukhnagar - Jadcherla Hyderabad-Vijaywada Chennai Outer Ring Road Agri Business Sankili Sugar Plant Ramdurg Sugar Complex Haliyal Sugar Complex Global Presence Projects Having proven its credentials as a leading infrastructure conglomerate in India, GMR is expanding its operations globally. It now has presence in the following countries. Nepal 42

Upper Karnali - Hydro Power Project (300 MW) Himtal - Hydro Power Project (250 MW)

United Kingdom InterGen - Energy Netherlands InterGen - Energy Philippines InterGen - Energy Australia InterGen - Energy Mexico InterGen - Energy Istanbul, Turkey Sabiha Gokcen International Airport - Airports Singapore Island Power Company Information GMR Infrastructure Limited was originally incorporated on May 10, 1996 as a public limited company called Varalakshmi Vasavi Power Projects Limited in the State of Andhra Pradesh. On May 23, 1996 we received our certificate of commencement of business. On May 31, 1999 we changed our name to GMR Vasavi Infrastructure Finance Limited. On July 24, 2000 we changed our name to GMR Infrastructure Limited (GIL). On October 4, 2004 we shifted our registered office from the State of Andhra Pradesh to the State of Karnataka. The Company is an infrastructure holding company formed to fund the capital requirements of the GMR Groups initiatives in the infrastructure sector. GIL is engaged in development of

43

various infrastructure projects in power and transportation sectors through several special purpose vehicles.

44

45

46

47

48

49

5.1.2 GMR INFRA MAY MONTH ANALYSIS GMR INFRA MAY EQUITY TABLE:Sym bol S er ie s E Q E Q E Q Date Pre v Clo se 113 Ope n Pric e 118 Hig h Pric e 119 Low Pric e Last Pric e Clo se Pric e 116. 6 119. 35 115. 25 Aver age Price Total Trade d Quanti ty 496664 1 755351 3 632656 5 Turnover in Lacs

GMR INFR A GMR INFR A GMR INFR A

4May09 5May09 6May09

115

116. 35 118. 85 116. 4

117.2 7 119.7 1 119.3 6

5824.5184 09 9042.4897 16 7551.3378 26

116. 6 119. 35

117. 5 120. 8

122. 4 122. 9

115

113. 35

50

GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR INFR A GMR

E Q E Q E Q E Q E Q E Q E Q E Q E Q E Q E Q E Q E Q E Q E

7May09 8May09 11May09 12May09 13May09 14May09 15May09 18May09 19May09 20May09 21May09 22May09 25May09 26May09 27-

115. 25 116. 15 117. 1 111. 9 115. 95 111. 3 112. 4 113. 4 137. 3 152. 95 158. 45 170. 25 168. 65 164. 9 157.

116. 7 117

118. 45 117. 7 119. 65 117

114. 15 112. 1 111

116. 55 117. 1 111. 15 115. 85 110. 55 112. 25 112. 5 134. 7 149. 3 159. 7 172. 2 168. 15 164. 2 158. 5 163.

116. 15 117. 1 111. 9 115. 95 111. 3 112. 4 113. 4 137. 3 152. 95 158. 45 170. 25 168. 65 164. 9 157. 45 163.

116.0 6 115.6 1 113.6 7 114.1 5 114.2 4 110.8 3 115.0 6 135.0 8 145.6 6 159.5 2 167.9 6 167.6 6 165.1 9 166.2 6 164.2

508929 1 390000 0 331668 2 416160 4 469616 5 360509 2 446219 3 62439

5906.8781 62 4508.9094 04 3770.0693 77 4750.4670 4 5364.9803 09 3995.4697 67 5134.1648 22 84.340472

118. 75 112. 9 117

110. 55 110. 15 105. 6 112. 25 122. 9 121. 65 142. 35 158

117. 8 112. 95 117. 7 147

110. 5 113. 65 122. 9 145

157. 95 165. 95 173

210689 86 113644 57 182016 27 116479 61 593748 6 124119 87 109494

30689.753 92 18129.001 69 30570.930 59 19528.544 52 9808.2482 22 20636.719 93 17987.069

148

158

171

173. 65 171. 45 172. 4 167.

161. 15 162. 3 155. 25 161.

170

168

161.

51

INFR A GMR INFR A GMR INFR A

Q E Q E Q

May09 28May09 29May09

45 163. 7 162. 4

1 164

3 168

1 160. 85 162

6 163. 45 162. 9

7 162. 4 164. 55

7 163.6 5 166.6 1

61 100025 96 127918 95

52 16368.876 23 21312.623 56

165

169. 4

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=118 On 4th May 09 Low Price=110.15 On 13th May 09 High Price=173.65 On 22nd May 09 Close price=164.55 On 29th May 09 52

In the above graph I calculate Breakeven point for GMRINFRA Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (173.65+110.15)/2 = 141.5 Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =118-141.5 =-23.5 So here margin of safety is negative value. So here investor gets more Loss and shorts. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =173.65-141.5 =32.15 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profis. (3) Margin of safety (mos) =LOW share value BEP =110.15-141.5 =-31.35 So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

53

GMRINFRA MAY CALL OPTION TABLE(Strike price=135) Instrum ent Symbol Op tio n Date Expiry Stri ke Pric e 135 135 135 135 135 135 135 135 135 Cl os e 8. 05 8. 05 2 2 2 1 1 0. 65 0. Settle Price Turnove r in Lacs

OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK

GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA

4-May09 5-May09 6-May09 7-May09 8-May09 11May-09 12May-09 13May-09 14-

28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May-

3.1 3.55 2 2.2 2.1 1 1.45 0.65 0.65

0 0 6.85 0 0 6.8 0 6.78 0

54

RA OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA GMRINF CA RA

May-09 15May-09 18May-09 19May-09 20May-09 21May-09 22May-09 25May-09 26May-09 27May-09 28May-09

09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 135 135 135 135 135 135 135 135 135 135

65 0. 65 0. 65 3 3 3 3 3 3 3 3 0.6 11.15 3 25.9 36.2 34.35 30.1 22.65 28.75 0 0 0 21.4 0 0 0 0 0 0 0

55

OBSERVATIONS AND FINDINGS MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 135 paid 3.1 Premium Per Share. Settlement Price is 163.75 Spot price 163.75 Strike price 135.00 Amount 28.75 Premium Paid (-) 3.1 Net Profit 25.65*1250=32062.5 Buyer Profit = Rs 32062.5(Net Amount) Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases. 56

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases. Strike price Spot price 135.00 163.75

Amount -28.75 Premium Received Loss Seller loss = 3.1 -25.65*1250=-32062.5 Rs -32062.5(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.

GMRINFRA MAY PUT OPTION TABLE(Strike price=135):-

57

OBSERVATIONS AND FINDINGS MAY PUT OPTION

58

BUYERS PAY OFF:

Those who have purchased put option at a strike price 135, the premium payable is 21.1. On the expiry date the spot market price enclosed at 155.95. Strike Price 135 Spot price 155.95 Net Pay Off -20.95*1250=-26187.5 Already Premium paid is 21.1 So, he get loss up to Rs 26187.5 Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit. Spot Price 155.95 Strike Price 135 Net Pay off 20.95*1250=26187.5 Already Premium Received 21.1 So, he can get profit up to Rs 26187.5 Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

From the above graph You can see that there is a drastic increase in share price of GMRINFRA due to QIP issue $500 million on May 14th 09. So that is the reason share price of GMRINFRA has increased drastically.

59

From the above news investors can buy call options to book profits in future. So in the above graph we can see that the GMRINFRA call prices has been increased from 14th may onwards .So its in the money for buyers who buy the call option. Its out of the money for the sellers of the call option. By above graph we can get that Put Price is reverse to the Spot price. If the Spot price increases then put prices get decreases and if the spot price decreases then put prices starts increasing, So these both are inversely proportional to each other.

GMRINFRA MAY FUTURE ANALYSIS:The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA. The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 4-05-2009 to 2805-2009. Inst rum ent FUT STK FUT STK FUT STK Sym bol Date Expir y 28May09 28May09 28May09 Op en 11 4.8 11 5.6 11 9 Hi gh 11 7. 45 12 2 12 2. 25 Lo w 11 3.9 11 5.6 11 2.2 Clos e 115. 85 119 LTP Settl e Price 115.8 5 119 No. of contr acts 1349 Turnove r in acs 7819.73 Open Int 137750 00 142900 00 138650 00

GMRI 4NFRA May09 GMRI 5NFRA May09 GMRI 6NFRA May09

115. 35 118. 35 115. 55

2680

15975.6 9 13944.9 5

114. 6

114.6

2351

60

FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT

GMRI 7NFRA May09 GMRI 8NFRA May09 GMRI 11NFRA May09 GMRI 12NFRA May09 GMRI 13NFRA May09 GMRI 14NFRA May09 GMRI 15NFRA May09 GMRI 18NFRA May09 GMRI 19NFRA May09 GMRI 20NFRA May09 GMRI 21NFRA May09 GMRI 22NFRA May09 GMRI 25NFRA May09 GMRI 26NFRA May09 GMRI 27-

28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28-

11 6 11 6.4 11 7.5 11 2.5 11 6.2 5 10 8 11 3.5 13 0 14 4 15 0.5 5 16 0 17 1.8 17 0.7 16 5 16

11 7. 5 11 7 11 8. 7 11 6. 5 11 7. 5 11 2. 9 11 7. 3 13 7. 9 15 6 16 5. 8 17 4. 1 17 4 17 2 17 2. 75 16

11 3.2 11 1.1 11 0.2 11 0.2 11 0.3 5 10 6.7 11 2.2 5 12 6.2 12 1 14 9.9 15 9 16 1.7 16 2.8 15 5.2 5 16

115. 7 116. 25 111. 35 115. 85 111

116. 4 116. 2 110. 6 115. 8 111. 05 112. 45 112. 4 133. 85 150

115.7

1331

7675.46

144100 00 139800 00 140100 00 146050 00 146600 00 148350 00 146500 00 145900 00 131300 00 103800 00 130000 00 122900 00 107750 00 876000 0 707500

116.2 5 111.3 5 115.8 5 111

1505

8628.95

1129

6389.69

1521

8651.9

1614

9199.92

112. 35 113. 25 133. 65 152. 95 159. 55 171. 95 169. 7 165. 5 157. 65 164.

112.3 5 113.2 5 133.6 5 152.9 5 159.5 5 171.9 5 169.7

1210

6685.31

1281

7353.81

56

372.71

5193

37561.1 5 29226.0 9 64043.8 1 39911.7 4 18036.0 4 39076.7 9 20823.3

161. 35 173. 4 169. 2 164. 95 158. 95 164.

3652

7575

4733

165.5

2175

157.6 5 164.0

4685

2533

61

STK FUT STK

NFRA May09 GMRI 28NFRA May09

May09 28May09

2.9 16 4.0 5

7 16 8. 4

2.1 5 16 0.9 5

05 162. 4

5 162. 4

5 162.4 2779

1 22805.6 9

0 232000 0

Future Market BUYER

12/05/09(buying) 28/05/09(Closing Period) 115.85 162.4 Profit = 46.55 Profit 46.55*1250=58187 115.85 162.4 Loss = 46.55 Loss 46.55*1250=58187

SELLER

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of GMRINFRA at the end of contract period is 162.4 and this is considered as settlement price.

5.1.3 GMR INFRA JUNE MONTH ANALYSIS GMRINFRA JUNE EQUITY:Symb ol Se rie s Date Prev Close Ope n Pric High Price Low Price Last Pric Clos e Pric Aver age Total Traded Quantit Turnover in Lacs

62

e GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA EQ 1Jun09 2Jun09 3Jun09 4Jun09 5Jun09 8Jun09 9Jun09 10Jun09 11Jun09 12Jun09 15Jun09 164. 55 175. 1 172. 9 172. 75 177. 75 170. 55 160. 2 166. 55 162. 55 138 167 176. 4 180. 85 177. 35 179. 9 183. 5 174. 9 170 162. 55 168. 1 167. 15 172

e 175. 2 172. 2 171. 95 178

e 175. 1 172. 9 172. 75 177. 75 170. 55 160. 2 166. 55 162. 55 138

Price 171. 15 173. 62 173. 15 177. 94 177. 04 165. 28 161. 3 165. 35 147. 29 158. 88 150. 89

y 199500 76 158222 76 112340 59 167066 77 175780 54 162109 21 196342 78 123690 00 142314 41 235398 10 132105 38 34144.1 5905 27470.6 5369 19451.9 1789 29728.1 1388 31120.9 5275 26793.3 1401 31670.4 7058 20452.4 7894 22669.0 3497 37400.1 7848 19933.3 2656

EQ

178. 9 176. 9 172. 1 180

EQ

EQ

EQ

169. 05 156. 7 149. 05 158

170. 45 157. 75 167. 35 162. 9 137. 45 158. 8 148. 05

EQ

174. 9 159. 8 169

EQ

EQ

172

EQ

163. 4 157

145. 36 163. 2 157

136

EQ

152. 4 146

159. 45 147. 65

EQ

159. 45

155

63

GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA GMRI NFRA

EQ

16Jun09 17Jun09 18Jun09 19Jun09 22Jun09 23Jun09 24Jun09 25Jun09 26Jun09 29Jun09 30Jun09

147. 65 151. 35 143. 95 143. 15 147. 3 139. 75 138. 6 139. 2 134. 75 136. 75 155. 15

145. 1 151

153

142. 1 142. 1 137. 2 141. 8 138. 65 134. 45 135. 7 133. 25 134. 1 138. 15 140. 1

150. 6 143. 95 143. 85 147. 95 139

151. 35 143. 95 143. 15 147. 3 139. 75 138. 6 139. 2 134. 75 136. 75 155. 15 141. 85

149. 6 148. 91 142

115534 37 107454 34 115851 08 896783 1 112181 77 147180 34 114905 18 139606 18 937246 7 434326 66 235333 14

17284.0 867 16001.4 9497 16450.6 2817 13093.1 6327 16237.9 7072 20464.8 8749 16022.9 6305 19108.9 9344 12850.2 9593 65915.8 5738 34256.2 9143

EQ

154

EQ

145

146. 8 148. 9 151

EQ

145. 05 149. 9 135. 1 140

146

EQ

144. 75 139. 05 139. 45 136. 88 137. 11 151. 77 145. 57

EQ

142. 7 142. 3 141. 5 139. 55 157. 25 157. 25

138. 25 139. 15 135. 45 137. 35 154. 35 141. 35

EQ

EQ

140. 35 137

EQ

EQ

138. 15 155. 9

EQ

64

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=167 On 1st June 09 Low Price=133.25 On 5th June 09 High Price=183.5 On 25th June 09 Close price=141 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June Month. Break Even Point(BEP) = (High Price + Low Price)/2 = (183.5+133.25)/2 65

= 158.37

Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =167-158 =9 So here margin of safety is Positive value. So here investor gets more profits and longs. Investor can buy call options to get more profits. Investors should not go for put options at this point (2) Margin of safety (mos) =high share price BEP =183-158 =25 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profits. (3) Margin of safety (mos) =Low share value BEP =133.25-158 =-24.75 So here margin of safety is negative. So here investor gets more losses and shorts. Investor can sell their Put Option at this point to incur more profits.

66

GMRINFRA JUNE CALL OPTION TABLE(Strike Price=155) :Instrum ent OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol Optio n CA CA CA CA CA CA CA CA CA CA CA Date Expiry Strik e Price 155 155 155 155 155 155 155 155 155 155 155 Settle Price 29.4 27.05 26.2 29.3 23.55 15.85 19.45 16.15 12.4 12.95 6.1

GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA

1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10-Jun09 11-Jun09 12-Jun09 15-Jun09 67

25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09

OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK

GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA GMRINF RA

CA CA CA CA CA CA CA CA

16-Jun09 17-Jun09 18-Jun09 19-Jun09 22-Jun09 23-Jun09 24-Jun09 25-Jun09

25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09

155 155 155 155 155 155 155 155

7.05 3.75 2.85 3.6 0.55 0.15 0.05 0

68

OBSERVATIONS AND FINDINGS JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of GMRINFRA that is 1250 those who buy for 155 paid 29.4 Premium Per Share. Taken Spot price on 11th june 09 is 138.Such as Call option is sold on 11th June Spot price 138.00 Strike price 155.00 Amount -17 Net Loss -17*1250=-21250 Buyer Loss = Rs 21250(Net Amount) Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases. Strike price Spot price 155.00 138.00

Amount 17 Profit 17*1250=21250 Seller Profit = Rs 21250(Profit) Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

69

GMRINFRA JUNE PUT OPTION TABLE(Strike Price=155):-

Instrument OPTSTK OPTSTK OPTSTK PTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK

Symbol GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR

Option PA PA PA PA PA PA PA PA PA PA PA PA PA PA

Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09

Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09

Strike Price 155 155 155 155 155 155 155 155 155 155 155 155 155 155

Settle Price 8.9 8.75 8.05 6.2 7.65 10.4 7.6 8.35 9.8 8.25 13.3 10.55 14.65 14.6

10-Jun-09 25-Jun-09 11-Jun-09 25-Jun-09 12-Jun-09 25-Jun-09 15-Jun-09 25-Jun-09 16-Jun-09 25-Jun-09 17-Jun-09 25-Jun-09 18-Jun-09 25-Jun-09 70

A OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK GMRINFR A GMRINFR A GMRINFR A GMRINFR A GMRINFR A PA PA PA PA PA 19-Jun-09 25-Jun-09 22-Jun-09 25-Jun-09 23-Jun-09 25-Jun-09 24-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 155 155 155 155 155 11.2 15.75 16.55 15.8 0

OBSERVATIONS AND FINDINGS

71

JUNE PUT OPTION BUYERS PAY OFF:

Those who have purchase put option at a strike price 135, the premium payable is 8.9. On the expiry date the spot market price enclosed at 155.95. Strike Price Spot price Amount Premium Paid(-) Profit 155 139.2 15.8 8.9 6.9*1250=8625

So, he got profit up to Rs 8625 Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss. Spot Price 139.2 Strike Price 155 Amount -15.8 Premium received (+) 8.9 Loss -6.9*1250=-8625 Already Premium Received So, he can get Loss up to Rs 8625

Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

GMRINFRA JUNE FUTURE ANALYSIS:-

72

The Objective of this analysis is to evaluate the profit/loss position futures . This analysis is based on sample data taken of GMR INFRA scrip. This analysis considered the May Contract on GMRINFRA. The lot size of GMRINFRA is 1250,the time period in which this analysis done is from 106-2009 to 25-06-09 Inst rum ent FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK Symbol Date Expi ry O pe n 16 7. 8 17 7. 9 17 5. 3 17 1. 9 18 1 17 4 15 7 16 8 16 3. Hi gh Lo w Clo se LTP Settl No. of e contra Pric cts e 176. 05 173. 5 173. 4 178. 3 171. 35 158. 3 166. 05 162. 05 157. 55 9497 Turno ver in lacs 81453. 39 58547. 98 45511. 33 65900. 83 55215. 25 44171. 44 62709. 57 38265. 41 35463. 05 Open Int

GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA

1Jun09 2Jun09 3Jun09 4Jun09 5Jun09 8Jun09 9Jun09 10Jun09 11Jun-

25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun-

17 7. 4 17 8. 75 17 7. 75 10 .5 18 3. 65 17 4 16 8. 3 17 0. 75 16 4.

16 2 16 8. 2 16 7. 3 17 1. 9 17 0 15 5. 1 14 8. 65 15 7. 15 15 5.

176 .05 173 .5 173 .4 178 .3 171 .35 158 .3 166 .05 162 .05 157 .55

175.9 5 173.0 5 172.3 5 178.5

2363500 0 2264000 0 2239500 0 2200000 0 2228000 0 2165500 0 2500500 0 2532000 0 2647500 0

6734

5241

7396

170.7 5 156

6208

5362

166.8

7813

162.9 5 157.6

4651

4445

73

09 FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA GMRIN FRA 12Jun09 15Jun09 16Jun09 17Jun09 18Jun09 19Jun09 22Jun09 23Jun09 24Jun09 25Jun09

09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09

1 15 9 15 7. 4 14 3 15 0. 7 14 3 14 5 14 8. 5 13 6. 9 14 0. 3 14 1. 3

25 16 3. 65 15 7. 4 15 3. 35 15 4. 15 14 6. 45 14 8. 4 15 0. 55 14 2. 8 14 2. 7 14 1. 8

5 15 2. 15 14 5. 2 14 2. 25 14 0. 35 13 6. 65 14 1. 25 13 8. 8 13 5. 1 13 6 13 3. 4 159 .4 147 .35 151 .55 143 .1 142 .8 146 .8 139 .9 139 .35 139 .75 134 .7 159.2 5 147.5 159. 4 147. 35 151. 55 143. 1 142. 8 146. 8 139. 9 139. 35 139. 75 134. 75 11438 90979. 06 40518. 95 31211. 01 32499. 43 38053. 13 32290. 93 38225. 04 40174. 64 35670. 08 24630. 91 3038000 0 2960000 0 2944000 0 2837000 0 2549000 0 2335000 0 1982000 0 1619000 0 1001000 0 3890000

5372

150.7

4175

143.1 5 144

4368

5375

147.6

4437

139.3

5283

138.8

5754

139.6 5 134.7

5100

3570

74

Future Market BUYER

12/06/09(buying) 26/06/09(Closing Period) 159.4 134.7 Loss = 24.7 Loss 24.7*1250=30875 159.4 134.7 Profit = 24.7 Profit 24.7*1250=30875

SELLER

Because buyer Future price will decreases so, loss also increases. Seller Future price decreases so he can get profit. Incase seller Future will increases, he can get Loss. The closing Price of GMRINFRA at the end of contract period is 134.7 and this is considered as settlement price.

75

PUNJAB NATIONAL BANK

5.2 PUNJAB NATIONAL BANK

5.2.1 PROFILE
With over 38 million satisfied customers and 4668 offices, PNB has continued to retain its leadership position among the nationalized banks. The bank enjoys strong fundamentals, large franchise value and good brand image. Besides being ranked as one of India's top service brands, PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart from offering banking products, the bank has also entered the credit card & debit card business; bullion business; life and non-life insurance business; Gold coins & asset management business, etc. Since its humble beginning in 1895 with the distinction of being the first Indian bank to have been started with Indian capital, PNB has achieved significant growth in business which at the end of March 2009 amounted to Rs 3,64,463 crore. Today, with assets of more than Rs 2,46,900 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) 76

and has the 2nd largest network of branches (4668 including 238 extension counters and 3 overseas offices).During the FY 2008-09, with 39% share of low cost deposits, the bank achieved a net profit of Rs 3,091 crore, maintaining its number ONE position amongst nationalized banks. Bank has a strong capital base with capital adequacy ratio as per Basel II at 14.03% with Tier I and Tier II capital ratio at 8.98% and 5.05% respectively as on March09. As on March09, the Bank has the Gross and Net NPA ratio of only 1.77% and 0.17% respectively. During the FY 2008-09, its ratio of priority sector credit to adjusted net bank credit at 41.53% & agriculture credit to adjusted net bank credit at 19.72% was also higher than the respective national goals of 40% & 18%. PNB has always looked at technology as a key facilitator to provide better customer service and ensured that its IT strategy follows the Business strategy so as to arrive at Best Fit. The bank has made rapid strides in this direction. Alongwith the achievement of 100% branch computerization, one of the major achievements of the Bank is covering all the branches of the Bank under Core Banking Solution (CBS), thus covering 100% of its business and providing Anytime Anywhere banking facility to all customers including customers of more than 2000 rural branches. The bank has also been offering Internet banking services to the customers of CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets etc Towards developing a cost effective alternative channels of delivery, the bank with more than 2150 ATMs has the largest ATM network amongst Nationalized Banks. With the help of advanced technology, the Bank has been a frontrunner in the industry so far as the initiatives for Financial Inclusion is concerned. With its policy of inclusive growth in the Indo-Gangetic belt, the Banks mission is Banking for Unbanked. The Bank has launched a drive for biometric smart card based technology enabled Financial Inclusion with the help of Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile customer. The BC/BF will address the outreach issue while technology will provide cost effective and transparent services. The Bank has started several innovative initiatives for marginal groups like rickshaw pullers, vegetable vendors, diary farmers, construction workers, etc. The Bank has already achieved 100% financial inclusion in 21,408 villages. Backed by strong domestic performance, the bank is planning to realize its global aspirations. In order to increase its international presence, the Bank continues its selective foray in international markets with presence in Hongkong, Dubai, Kazakhstan, UK, Shanghai, Singapore, Kabul and Norway. A second branch in Hongkong at Kowloon was opened in the first week of April09. Bank is also in the process of establishing its presence in China, Bhutan, DIFC Dubai, Canada and Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal. Under the long term vision, Bank proposes to start its operation in Fiji Island, Australia and Indonesia. Bank continues with its goal to become a household brand with global expertise. Amongst Top 1000 Banks in the World, The Banker listed PNB at 250th place. Further, PNB is at the 1166th position among 48 Indian firms making it to a list of the worlds biggest companies compiled by the US magazine Forbes.

77

Financial Performance:
Punjab National Bank continues to maintain its frontline position in the Indian banking industry. In particular, the bank has retained its NUMBER ONE position among the nationalized banks in terms of number of branches, Deposit, Advances, total Business, operating and net profit in the year 2008-09. The impressive operational and financial performance has been brought about by Banks focus on customer based business with thrust on SME, Agriculture, more inclusive approach to banking; better asset liability management; improved margin management, thrust on recovery and increased efficiency in core operations of the Bank. The performance highlights of the bank in terms of business and profit are shown below: Parameters Operating Profit* Net Profit* Deposit Advance Total Business Mar'07 3617 1540 139860 96597 236456 Mar'08 4006 2049 166457 119502 285959 Mar'09 5744 3091 209760 154703 364463 CRAR 26.02 41.67 22.47 26.55 24.15

78

79

80

81

82

83

84

85

86

87

5.2.2 PNB MAY MONTH ANALYSIS

PNB MAY EQUITY TABLE:-

88

Sy mb ol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB

Seri es EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ

Date

4May09 5May09 6May09 7May09 8May09 11May09 12May09 13May09 14May09 15May09 18May09 19May09 20May09 21May09

Pre v Clos e 477. 9 503. 3 503. 85 506. 1 524. 75 528. 75 522. 15 550. 1 562. 75 562. 25 574. 75 662. 8 689. 4 676. 65

Ope n Pric e 494. 4 509. 9 506 510 520. 2 526. 2 522. 15 550. 3 555 565 620 700 689 689

Hig h Pric e 506. 5 520 519. 8 530 532 534. 7 553. 5 574. 5 571. 55 589 680 725 708. 5 697

Lo w Pric e 485 .55 492 .4 503 .65 508 .35 512 .1 512 515 .1 545 .35 540 .55 561 .6 620 665 666 .15 663 .1

Las t Pric e 504 502 .5 506 .55 529 .3 528 521 550 .45 565 563 577 665 695 679 665

Clos e Pric e 503. 3 503. 85 506. 1 524. 75 528. 75 522. 15 550. 1 562. 75 562. 25 574. 75 662. 8 689. 4 676. 65 668. 75

Aver age Price 497.7 7 506.7 4 510.5 1 520.1 7 522.0 1 522.4 4 539.3 1 562.0 7 563 572.5 3 651.8 3 694.1 4 689.3 3 685.5 7

Total Traded Quantity 2609220 1981817 1732069 1153700 1181648 1209101 2309184 2296752 2503026 2465576 33068 3124143 1865804 1894595

Turnover in Lacs 12987.888 04 10042.755 86 8842.3855 04 6001.2560 74 6168.3109 54 6316.8753 69 12453.748 27 12909.269 84 14092.030 63 14116.181 89 215.54841 1 21685.980 96 12861.637 09 12988.771 85

89

PNB PNB PNB PNB PNB PNB

EQ EQ EQ EQ EQ EQ

22May09 25May09 26May09 27May09 28May09 29May09

668. 75 663. 15 658. 7 642. 85 639. 65 664. 3

670 671. 5 625. 7 643 661 670. 1

683 671. 5 668. 9 669 666 676

645 .6 637 .8 625 .7 635 650 662

659 .85 643 .05 668 .1 636 657 670 .1

663. 15 642. 85 664. 3 639. 65 658. 7 670. 8

665.8 4 647.5 4 661.5 649.9 9 659.2 8 669.6 4

1137015 1350731 597170 679608 745123 690021

7570.6478 07 8746.5429 45 3950.2536 05 4417.4009 63 4912.4816 4620.6794 15

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=494 On 4th May 09 Low Price=485 On 4th May 09 90

High Price=725 On 19nd May 09 Close price=670 On 29th May 09

In the above graph I calculate Breakeven point for GMRINFRA Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (725+485)/2 = 605 Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =494-605 =-111 So here margin of safety is negative value. So here investor gets more Loss and shorts. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =725-605 =120 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profis. (3) Margin of safety (mos) =LOW share value BEP =485-605 =-120

91

So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

PNB MAY CALL OPTION TABLE(Strike Price=580):Instrume OPTSTK nt OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symb PNB ol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Optio CA n CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA Date 4-May-09 5-May-09 6-May-09 7-May-09 8-May-09 11-May12-May09 13-May09 14-May09 15-May09 18-May09 19-May09 20-May09 21-May09 22-May09 25-May09 26-May09 27-May09 09 Expiry 28-May28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 09 Strike 580 Price 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 580 Settle 19.15 Price 17.35 16.1 20.7 20.1 14.45 23.85 27.45 25.05 22.5 89.7 115.5 102.5 93.85 87.25 65 59.75 78.8

92

OPTSTK

PNB

CA

28-May09

28-May09

580

OBSERVATIONS AND FINDINGS MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 580 paid 19.15 Premium Per Share. Settlement Price is 639.65 Spot price Strike price Amount Premium Paid (-) Net Profit 639.65 580.00 59.65 19.15 40.5*300=12150 93

Buyer Profit =

Rs 12150(Net Amount)

Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases. Strike price Spot price 580.00 639.65

Amount -59.65 Premium Received Loss Seller loss = 19.15 -40.5*300=-12150 Rs -12150(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.
PNB MAY PUT OPTION TABLE(Strike Price=580):Instrum OPTSTK ent OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Sym PNB bol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Opti PA on PA PA PA PA PA PA PA PA PA PA PA PA Date 4-May5-May09 6-May09 7-May09 8-May09 11-May09 12-May09 13-May09 14-May09 15-May09 18-May09 19-May09 20-May09 09 Expiry 28-May28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 28-May09 09 Strike 580 Price 580 580 580 580 580 580 580 580 580 580 580 580 Clo 84. se 84. 9 84. 9 84. 9 84. 9 84. 9 84. 9 84. 9 84. 9 84. 9 84. 9 84. 9 84. 9 9 Sett 94.1 le 91.7 88.5 5 74.6 5 70.0 71.2 5 52.7 43.7 5 41.8 33.5 5 11.3 5 5.5 5.35

94

OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK

PNB PNB PNB PNB PNB PNB

PA PA PA PA PA PA

21-May22-May09 25-May09 26-May09 27-May09 28-May09 09

28-May28-May09 28-May09 28-May09 28-May09 28-May09 09

580 580 580 580 580 580

84. 84. 9 84. 9 84. 9 84. 9 84. 9 9

4.65 3.75 2 0.9 0.05 0

OBSERVATIONS AND FINDINGS MAY PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 580, the premium payable is 94.1 On 18th May 09 the spot price enclosed is 662.8 .here this put option sold on 18th may 09. 95

Strike Price 580 Spot price 662.8 Net Pay Off -82.8*300=-24840 Already Premium paid is 94.1 So, he get loss up to Rs 24840 Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit. Spot Price 662.8 Strike Price 580 Net Pay off 82.8*300=24840 Already Premium Received 94.1 So, he can get profit up to Rs 24840 Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

Punjab national bank minting money On 12th may 09 so its volumes are increasing. On 12 may 09 Punjab touched an intraday high of Rs 549.50 and an intraday low of Rs 508.40. At 1:45 pm, the share was quoting at Rs 547.20, up Rs 28.10, or 5.41%. So from may 12th Onwards there is a drastic increase in Share price of PNB. So that the call option values also starts increasing and put option values decreased from 12th may onwards.
th

On 12th May there is drastic increase in total turnover in lacs from 6316.87 on 11th May 09 to 12456.74 on 12th May 09. Traded quantity increased from 12,09,101 on may 11th 09 to 23,09,184 on 12th may 09. So the share price of PNB started increasing from 12th may 09. 96

On 20th may 09 PNB announced it will disinvest 26% stake in PNB Housing Finance to Dawnay Day. So the share price decreased from 20th may onwards. Then call option values started decreasing, put options values started increasing.

PNB MAY FUTURES:Inst rum ent FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK Sy mb ol PN B PN B PN B PN B PN B PN B PN B PN B PN B Date Expiry Op en 484 .9 499 503 .3 509 .85 523 .8 525 .5 515 .8 548 543 Hig h 502. 9 518 514. 45 523 527. 45 528. 6 549. 95 568. 8 563. 8 Lo w 48 1.5 48 9.3 49 8 50 7.2 5 50 6.5 50 5.4 51 2.2 54 2 53 6 Clo se 498. 85 499. 75 502. 75 519. 85 523. 2 515. 45 547. 25 554. 75 556. 7 LT P 49 7.1 5 50 0 50 4.7 52 2.2 5 52 5 51 6.4 54 7.3 55 1.0 5 55 6.5 Settle Price 498.85 499.75 502.75 519.85 523.2 515.45 547.25 554.75 556.7 No. of contr acts 2947 3119 3276 2423 3050 2597 3899 3816 3215 Turnov er in lacs 8725.53 9415.69 9949.45 7491.64 9465.21 8045.32 12452.4 7 12752.8 9 10710.8 Open Int 1602000 1594800 1744200 1746000 1978800 2088600 2382600 2509800 2779200

4May09 5May09 6May09 7May09 8May09 11May09 12May09 13May09 14May-

28May-09 28May-09 28May-09 28May-09 28May-09 28May-09 28May-09 28May-09 28May-09

97

FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK

PN B PN B PN B PN B PN B PN B PN B PN B PN B PN B

09 15May09 18May09 19May09 20May09 21May09 22May09 25May09 26May09 27May09 28May09

28May-09 28May-09 28May-09 28May-09 28May-09 28May-09 28May-09 28May-09 28May-09 28May-09

558 .1 658 .9 719 .7 680 680 655 .25 664 648 648 661

582. 9 687 747 710 698 680. 7 666 659. 5 664 668. 4

55 5.2 65 8.9 67 4 67 0.2 66 3.2 64 7.2 5 63 8.1 5 63 0 64 5.3 65 3.6

572. 95 682. 5 689. 3 680. 5 668. 4 663. 1 644. 05 634. 4 661. 5 664. 5

57 5.7 68 5.0 5 68 6.2 68 3.1 66 3.2 66 0.8 64 2.1 63 3.2 5 66 0 66 4.5

572.95 682.5 689.3 680.5 668.4 663.1 644.05 634.4 661.5 664.3

3595 38 4601 2683 3335 3158 3350 2059 1941 1999

12325.3 154.26 19195.6 6 11095.0 9 13711.6 6 12590.1 7 13020.4 7 8012.99 7661.76 7934.09

2811000 2803800 2431800 2452200 2196600 1813200 1587000 1307400 1109400 663000

Future Market BUYER

12/05/09(buying) 28/05/09(Closing Period) 547.25 664.5 Profit = 117.25 547.25 664.5 Loss =117.25 98

SELLER

Profit 145.2*300=35175

Loss 117.25*300=35175

Because buyer Future price will increase so, profit also increases.Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of PNB at the end of contract period is 664.5 and this is considered as settlement price.

5.2.3 PNB JUNE MONTH ANALYSIS PNB JUNE EQUITY TABLE:Sym bol PNB PNB PNB PNB PNB PNB PNB Se rie s EQ EQ EQ EQ EQ EQ EQ Date Prev Close 670.8 663.5 646.3 657.2 661.65 654.25 606.45 Open Price 684.4 674 650.1 649.8 666 650 601.05 High Price 684.4 674.4 664.4 5 665 670 659.8 5 624.9 Low Price 658.5 5 633.3 641 623.3 5 648.3 595.3 5 590.1 Last Price 667 648.3 658 Close Price 663.5 646.3 657.2 Averag e Price 668.62 648.03 651.67 647.62 661 618.81 612.97

1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun-

660.9 661.65 652.0 654.25 5 598 606.45 615.1 610.85

99

09 PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ 10-Jun09 11-Jun09 12-Jun09 15-Jun09 16-Jun09 17-Jun09 18-Jun09 19-Jun09 22-Jun09 23-Jun09 24-Jun09 25-Jun09 26-Jun09 29-Jun09 30-Jun09 615.1 636 612.65 593 611.4 630.85 600 617.2 642.05 648.7 625.15 623.7 631.45 655.2 680.05 612 638 614 583 605 634.85 618.7 639.7 646.85 635 628 640 633.15 655.55 683 638.5 638 632 617.9 634.8 5 647 640 645.8 5 659.8 647 631.8 647.7 667 689.9 694 612 606 590.2 583 598.2 605 612 624.0 5 645 620.3 620.1 626 620.7 655 673.5 632.1 636 628.5 615.23 602.32 606.93 625.96 633.88 627.16 634.12 652.44 630.16 626.18 633.5 646.17 675.28 684.69

614 612.65 592.9 613.9 5 593 611.4

629.8 630.85 612 619 600 617.2

645 642.05 645 648.7

621 625.15 623 623.7

631 631.45 649 655.2

676.9 680.05 5 679 677.75

100

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=684 On 1st June 09 Low Price=583 On 15th June 09 High Price= 694 On 30th June 09 Close price=677 On 30th June 09

In the above graph I calculated Break Even point for GMRINFRA Stock for June Month. Break Even Point(BEP) = (High Price + Low Price)/2 = (694+583)/2 = 638

101

Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP =684-638 =46 So here margin of safety is Positive value. So here investor gets more profits and longs. (2) Margin of safety (mos) =high share price BEP =694-638 =56 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profits. (3) Margin of safety (mos) =Low share value BEP =583-638 =-55 So here margin of safety is negative. So here investor gets more losses and shorts. Investor can sell their Put Option at this point to incur more profits.

102

PNB JUNE PUT OPTION(Strike Price=640):Instrum OPTSTK ent OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Sym PNB bol PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Opti PA on PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA Date 1-Jun2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10-Jun09 11-Jun09 12-Jun09 15-Jun09 16-Jun09 17-Jun09 18-Jun09 19-Jun09 22-Jun09 23-Jun09 24-Jun09 25-Jun09 09 Expiry 25-Jun25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 09 Strike 640 Price 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 Settle Price 37.85 43.1 36.4 33.7 34.45 58.95 54.1 41.05 50.25 61.4 45.5 32.6 39.95 36.25 21.1 11.4 21.15 19 0

103

OBSERVATIONS AND FINDINGS JUNE PUT OPTION BUYERS PAY OFF:

Those who have purchase put option at a strike price 640, the premium payable is 37.85. On 17th spot market price enclosed at 636 Strike Price 640.00 Spot price 600.05 Amount 39.95 Premium Paid(-) 37.85 Profit 2.1*300=630 So, he got profit up to Rs 630 Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level. 104

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss. Spot Price 600.05 Strike Price 640.00 Amount -39.95 Premium received (+) 37.85 Loss -2.1*300=--630 Already Premium Received So, he can get Loss up to Rs 630

Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium. PNB JUNE CALL OPTION(Strike Price=640):Instrum OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symb PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Optio CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun-09 11-Jun-09 12-Jun-09 15-Jun-09 16-Jun-09 17-Jun-09 18-Jun-09 19-Jun-09 22-Jun-09 23-Jun-09 24-Jun-09 25-Jun-09 Expiry 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 25-Jun-09 Strike 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 640 Settle 63 51 55.2 56.85 50.15 26.6 26.1 14 23.9 15.3 17.6 24.05 15.35 13.95 23.55 20.3 6.45 2.75 0

105

OBSERVATIONS AND FINDINGS JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of PNB that is 300 those who buy for 640 paid 51 Premium Per Share. Taken Spot price on 9th june 09 is 615.1.Such as Call option is sold on 9th June Spot price 615.1 Strike price 640.0 Amount -24.9 Net Loss -24.9*300=-7470 Buyer Loss = Rs 7470(Net Amount) Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases. 106

SELLERS PAY OFF:

It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases. Strike price Spot price 640.00 615.1

Amount 24.9 Profit 24.9*300=7470 Seller Profit = Rs 7470(Profit) Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

PNB declines 6.7% On June 8th 09, PNB touched an intraday high of Rs 662 and an intraday low of Rs 608.15. At 2:59 pm, the share was quoting at Rs 609.05, down Rs 43.65, or 6.69%. It was trading with volumes of 124,992 shares. On 6th June the share closed down 0.90% or Rs 5.90 at Rs 652.70. so that put option started increasing and call option tend to decrease from 6th June 09 onwards. PNB was the top gainer at the Nifty on June 18th 09 so it touched an intraday high of Rs 639 and an intraday low of Rs 612. The share was quoting at Rs 638.35, up Rs 23.50, or 3.82%. So that the share value increased on June 18th 09 hence call price also rise and put option prices tend to decrease. PNB Minting money on 15th June 09 so it touched an intraday high of Rs 617.90 and an intraday low of Rs 583. At 2:22 p.m the share was quoting at Rs 613.50, up Rs 20.50, or 3.46%. It was trading with volumes of 635,040 shares. On 11th June the share closed down 3.21% or Rs 19.65 at Rs 593. 107

PNB JUNE FUTURES:Instrume Symb nt ol FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB PNB Date 1-Jun-09 2-Jun-09 3-Jun-09 4-Jun-09 5-Jun-09 8-Jun-09 9-Jun-09 10-Jun09 11-Jun09 12-Jun09 15-JunExpiry 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-JunOpen 660 650.9 5 632.6 630 659.9 5 651.4 595 623.6 634 613.3 589.2 High 663 653 638.8 657.9 5 664.8 652.1 624.7 5 638.7 5 636.8 5 619.4 616.2 Low 641.1 5 609.8 5 618 625.1 5 649.3 5 595 588.5 621 602.5 5 590.0 5 582.6 Close LTP 646.6 625.6 5 632.0 5 655.3 654.1 5 605.8 613.2 633.5 612 593.6 610.1 650.7 629 630.7 653.5 653.3 5 595 618.8 634.8 5 610.1 594.4 614 Settle Price 646.6 625.65 632.05 655.3 654.15 605.8 613.2 633.5 612 593.6 610.1

108

09 FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK FUTSTK PNB PNB PNB PNB PNB PNB PNB PNB 16-Jun09 17-Jun09 18-Jun09 19-Jun09 22-Jun09 23-Jun09 24-Jun09 25-Jun09

09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 25-Jun09 602 632 608 624 650.9 5 633.5 5 627.1 630.3 5

5 633 643.5 635.7 5 647.4 5 659 647 631.8 5 643 602 603.1 608 621.4 643 619.1 621 626.6 630.2 5 607.9 5 616.8 5 643.6 5 646.6 626.7 5 625.3 5 631.7 5 627.8 5 606 619 646.4 643.5 622 626.2 5 631.7 5 630.25 607.95 616.85 643.65 646.6 626.75 625.35 631.45

Future Market BUYER

12/06/09(buying) 25/06/09(Closing Period) 593.6 631.45 Profit = 37.85 593.6 631.45 Loss = 37.25 109

SELLER

Profit 37.05*300=11355

Loss 37.25*300=11355

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of PNB at the end of contract period is 630.35 and this is considered as settlement price.

HINDUSTAN UNILEVER

110

5.3 Hindustan Unilever:5.3.1 Introduction Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs.13,718 crores. The mission that inspires HUL's over 15,000 employees is to "add vitality to life". With 35 Power Brands, HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the equity. A Fortune 500 transnational, Unilever sells Foods and Home and Personal Care brands in about 100 countries worldwide.

Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. Brands 111

Lux Lifebuoy Liril Hamam

Breeze Dove Pears Rexona

Surf Excel Rin Wheel Sunlight

Fair & Lovely Pond's Vaseline Aviance

Sunsilk Naturals Clinic

Pepsodent Closeup

Axe Rexona

Lakme

Ayush 112

Brooke Bond Lipton

Brooke Bond Bru

Kissan Annapurna Knorr

Kwality Wall's

113

114

115

Merging company

Merged with

Appointe Effectiv Date of d date e date allotment

Share ratio

Value of fraction (Rs.) 7.00 35.25 35.25 Not applicable

Kothari General Brooke Bond Foods India Ltd. Corporation Ltd. Tea Estates India Brooke Bond Ltd. India Ltd. Doom Dooma India Ltd. Kissan Products Ltd. Brooke Bond India Ltd. Brooke Bond India Ltd.

1-Jan-92 1-Jan-93 1-Jan-93 1-Apr-93

1-Jan-92 30-Jun-92 21:1 1-Jun-93 1-Jun-93 24-Aug93 24-Aug93 10:12 10:11

20-Jan22-Jan-94 1:100 94

Lipton India Ltd. Brooke Bond India Ltd. [name changed to 1-Jul-93 Brooke Bond Lipton India Ltd. (BBLIL)] The Tata Oil Mills Company Ltd. BBLIL Pond's (India) Ltd. Industrial Perfumes Ltd. International Bestfoods Ltd. Hindustan Lever Ltd. 1-Apr-93

9-Mar94

16-May94

10:9

48.99

28-Dec94

5-Apr-95 15:2 20:9

38.86 52.82 525.00 Not applicable 73.84

Hindustan Lever 1-Jan-96 Ltd. Hindustan Lever Ltd. 1-Jan-98

21-Mar- 16-May97 97 15-Oct98

3-Mar-99 4:3

Hindustan Lever 1-Jan-99 Ltd. Hindustan Lever 1-Jun-01 Ltd.

9-Feb-00 23-Feb-00 5:2 26-Sep01 25-Sep01 1-Dec05 20-Oct-01 3:2*

Hindustan Lever Aviance Limited 1-Jun-01 Ltd. Demerger from 1-Apr-05 Tea Estates India Hindustan Lever Ltd. (Formerly Limited 116

Not Not Not Applicabl Applicabl Applicabl e e e 02-Dec-05 ^ Not Applicabl e

known asThiashola Tea Company Limited) (TEI) Doom Dooma Tea Company Ltd (Formerly Demerger from known as Hindustan Lever 1-Apr-05 Daverashola Tea Limited Company Limited) (DDT) Lever India Exports Limited Lipton India Exports Limited Merryweather Food Products Limited TOC Disinfectants Limited Hindustan Lever 1-Apr-05 Ltd. Hindustan Lever 1-Jan-05 Limited Hindustan Lever 1-Jan-05 Limited Hindustan Lever 1-Apr-05 Limited

1-Dec05

02-Dec-05 ^^

Not Applicabl e

Not Not Not 30-DecApplicabl Applicabl Applicabl 05 e e e Not Not Not 30-DecApplicabl Applicabl Applicabl 05 e e e Not Not Not 30-DecApplicabl Applicabl Applicabl 05 e e e 30-Dec26-Apr-06 500:1 ** 05 30-Dec26-Apr-06 1:1*** 05 28-Feb06 10-Apr-06 10:1**** Not Applicabl e Not Applicabl e 28.00

International Hindustan Lever 1-Jan-05 Fisheries Limited Limited Vashisti Detergents Limited Hindustan Lever 1-Jul-05 Limited

Modern Food Industries (India) Limited & Hindustan Lever Modern Food 1-Oct-06 Limited and Nutrition Industries Limited Shamnagar Estates Private Limited, Jamnagar Demerger of certain Units from Hindustan Lever Limited 1-Nov-06

Not Not Not 30-MarApplicabl Applicabl Applicabl 07 e e e

29-Mar- Not Not Not 07 Applicabl Applicabl Applicabl e e e

117

Properties Private Limited and Hindustan Kwality Walls Foods Private Limited (now known as Daverashola Estates Private Limited) Notes : *Swap based on Rs. 10 share of International Bestfoods Ltd. for Re. 1 share of Hindustan Lever. ** Swap based on Rs.5/- share of TOC Disinfectants Limited (TOC) for Re.1/- share of Hindustan Lever Limited *** Swap based on Rs.100/- share of International Fisheries Limited (IFL) for Re.1/- share of Hindustan Lever Limited **** Swap based on Rs.10/- share of Vashisti Detergents Limited (VDL) for Re.1/- share of Hindustan Lever Limited ^ 49,50,000 Equity Shares of Rs.10/- each and 10,00,000 Preference Shares of Rs.100/- each were allotted to HLL pursuant to the demerger by TEI ^^ 4,88,000 Equity Shares of Rs.100/- each and 10,00,000 Preference Shares of Rs.100/- each were allotted to HLL pursuant to the demerger by DDT

118

5.3.2 HUL MAY MONTH ANALYSIS Hindustan Unilever May Equity Table:-

119

Symbol

Se rie s EQ EQ EQ EQ EQ EQ

Date

Pre v Clos e 234. 75 239. 9 238. 35 234. 6 230. 65 233. 05 227. 15 225. 1 220. 8 224. 85 224. 3 239. 6 229. 5 233. 45 230. 4

Ope n Pric e 236 240 239. 9 234. 5 230. 75 235. 25 227. 6 225. 1 222

Hig h Pric e 242

Lo w Pri ce

Las t Pri ce 239 .6 237 .2 233 .5 230 .3 233 .5 226 .2 225 .2 220 .8 225

Clos e Pric e 239. 9 238. 35 234. 6 230. 65 233. 05 227. 15 225. 1 221. 95 224. 85 224. 3 239. 6 229. 5 233. 45 230. 4 232

Aver age Price 237.3 8 238.9 4 234.9 9 233.2 3 233.1 5 228.2 2 223.9 9 223.5 8 220.9 1 224.8 3 247.9 2 228.6 6 228.9 2 229.9 2 231.5 8

Total Traded Quantit y 4896016 2813418 5167053 5075534 5443176 7025750

Turnover in Lacs

HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R HINDUNILV R

EQ

EQ

EQ

EQ

EQ

EQ

EQ

EQ

EQ

4-May09 5-May09 6-May09 7-May09 8-May09 11May09 12May09 13May09 14May09 15May09 18May09 19May09 20May09 21May09 22May-

233 .1 241. 235 5 .5 240. 232 85 .2 238 229 .35 234. 230 15 236. 226 5 227. 221 85 .8 227. 221 2 .1 225. 218 65 .1 227. 223 4 .65 264. 228 4 251 224

11622.204 62 6722.3630 85 12141.973 28 11837.503 89 12691.001 79 16034.239 65 18390.498 32 7042.1356 18 16553.856 09 5506.2330 1 127.71452 65 31256.896 58 23212.548 73 6243.8551 65 5537.4622 76

8210288

3149690

7493434

226

224 .55 239

2449088

244. 95 245

51515

230

1366954 5 1014004 5 2715676

234. 9 233. 2 231

235. 225 85 235 226 .55

232 .95 230 .05 232 .8

234. 228 3 .1

2391122

120

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=236 On 4th May 09 Low Price=218 On 14th May 09 High Price=264 On 18th May 09 Close price=1230 On 29th May 09

In the above graph I calculate Breakeven point for HUL Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (264+218)/2 = 241 Again I found margin of safety (MOS)

121

(1) Margin of safety (mos) = opening share value BEP =236-241 =-5 So here margin of safety is negative value. So here investor gets more Loss and shorts. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =264-241 =23 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profis. (3) Margin of safety (mos) =LOW share value BEP =218-241 =-23 So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

122

HUL MAY MONTH CALL OPTION TABLE(Strike Price=230):Instru ment OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K Symbol Opt ion Date 4-May09 5-May09 6-May09 7-May09 8-May09 11May09 12May09 13May09 14May09 15May09 18May09 Expiry 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 Strike Price 230 Clo se 14. 05 14. 5 12. 95 9.3 Settle Price 14.05 Turnover in Lacs 87.32

HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR

230

14.5

19.62

230

12.95

4.85

230

9.3

95.84

230

10

10

62.45

230

6.8

6.8

218.24

230

6.0 5 4.8 5 5.7 5 5.3

6.05

393.6

230

4.85

315.39

230

5.75

500.32

230

5.3

289.54

230

8.5 5

8.55

7.22

123

OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K

HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR HINDUNI CA LVR

19May09 20May09 21May09 22May09 25May09 26May09 27May09 28May09

28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09

230

6.9 5 8

6.95

428.93

230

395.65

230

6.1 5 5.9 5 5.8 5 3.2 5 2.5 5 0.8

6.15

355.92

230

5.95

332.6

230

5.85

188.92

230

3.25

218.34

230

2.55

230.15

230

383.37

124

OBSERVATIONS AND FINDINGS MAY CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of HUL that is 1000 those who buy for 230 paid 14.03 Premium Per Share. Spot price taken on 13th may 09 is 220.8, such as call option sold on 13th may 09. Spot price 220.8 Strike price 230.00 Amount -9.2 Net Loss -9.2*1000=-9200 Buyer Loss = Rs 11500(Net Amount) Because it is negative it is OUT OF THE MONEY contract, hence buyer will get more Loss, incase spot price decreases buyer Loss also increases.

SELLERS PAY OFF:

125

 It is OUT OF THE MONEY for the buyer, so it is IN THE MONEY for seller , hence his Profit increases. Strike price Spot price 220.8 230.00

Amount 9.2 Profit 9.2*1000=9200 Seller Profit = Rs 9200(Profit) Because it is positive so it is IN THE MONEY, hence seller will get more profit, incase spot price increases in above strike price, seller get loss in premium level.

HUL MAY MONTH PUT OPTION TABLE(Strike Price=230):Instru ment OPTST K OPTST K OPTST K OPTST K OPTST K OPTST Symbo l HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN Opt ion PA Date Expir y 28May09 28May09 28May09 28May09 28May09 28Strike Price 230 Cl os e Settle Price Turno ver in Lacs 98.76 Open Int 60000

PA

PA

PA

PA

PA

4May09 5May09 6May09 7May09 8May09 11-

4.9 4.9

230

5.0 5.05 5 6.1 6.15 5 7.7 7.75 5 6.4 6.4

108.0 1 108.6

88000

230

99000

230

189.2 1 35.45

118000

230

126000

230

9.8 9.85

105.1

115000

126

K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K OPTST K

ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR HINDUN ILVR PA

PA

PA

PA

PA

PA

PA

PA

PA

PA

PA

PA

PA

May09 12May09 13May09 14May09 15May09 18May09 19May09 20May09 21May09 22May09 25May09 26May09 27May09 28May09

May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09

5 230 10. 10.35 35 12. 12.45 45 9.9 9.95 5 10. 10.3 3 10. 3.45 3 6.2 6.25 5 4.6 4.65 5 5.8 5.85 5 3.9 3.95 5 2.6 2.65 5 3.1 3.15 5 1.9 1.9

8 52.99 114000

230

41

106000

230

21.89

108000

230

57.45

99000

230

99000

230

42.65

97000

230

65.84

94000

230

37.72

92000

230

86.76

96000

230

74.5

94000

230

97.53

90000

230

78.98

100000

230

0.1 0

115.4 1

110000

127

OBSERVATIONS AND FINDINGS MAY PUT OPTION BUYERS PAY OFF:

Those who have purchase put option at a strike price 230, the premium payable is 8.9. On 12th may the spot market price enclosed at . Strike Price Spot price Amount Premium Paid(-) Profit 230 215.65 -14.35 8.9 5.45*1000=5450

So, he got profit up to Rs 5450 Because it is positive, IN THE MONEY contract, hence buyer gets profit, incase spot price increases above strike price, buyer get loss in premium level. 128

SELLERS PAY OFF:

As seller is entitled only for premium so,if buyer is in profit and also seller has to get total loss. Spot Price 230 Strike Price 215.65 Amount -14.35 Premium received (+) 8.9 Loss -5.45*1000=-5450 Already Premium Received So, he can get Loss up to Rs 5450

Because it is Loss, OUT OF THE MONEY Contract, hence seller gets more Loss , incase Spot price increases above strike price seller can get profit in premium.

On 7th may 09 HUL lost market shares to rivals in March ended quarter. so that share value decreased slightly. On 11th may 09 HUL has announced its numbers for the quarter ended January-March 2009. Its net profit increased 3.7% to Rs 394.99 crore from Rs 380.9 crore. Its operating profit margin (OPM) went up 302 bps at 13.77% versus 10.75% and adjusted profit after tax (APAT) rose 32.67% to Rs 502.08 crore versus Rs 378.43 crore. The company's net sales advanced 5.1% to Rs 3,988.33 crore as against Rs 3,793.9 crore. HUL has reported exceptional loss of Rs 107.09 crore versus gain of Rs 2.5 crore.Its Exports Sales down 44.7% at Rs 220.47 crore versus Rs 398.93 crore EBIT margins up 208bps at Rs 6.5% versus 4.4%

129

130

Instr umen t

Symbo l

Date

Expir y

O pe n

Hi gh

Lo w

Clo se

LT P

Set tle Pri ce 24 0 23 8.4 23 5.6 5 23 0.8 23 3.1 22 6.7 22 6 22 1.9 22 5.5 22 5.2 5 23 8.3 23 0.7 23 3.4

No. of con trac ts 415 4 250 9 328 6 390 7 332 7 330 3 282 0 359 0 366 6 195 3 66

Turn over in lacs 9921. 02 6000. 31 7757. 95 9129. 2 7762. 84 7542. 72 6337. 17 8030. 4 8142. 34 4406. 49 157.0 3 1796 6.62 1000 3.06

Open Int

Cha nge in OI

FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K FUTST K

HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR

4May09 5May09 6May09 7May09 8May09 11May09 12May09 13May09 14May09 15May09 18May09 19May09 20May-

28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May09 28May-

23 7. 8 23 8 23 7. 5 23 6 23 0. 65 23 4 22 8 22 6 22 0 22 6. 95 23 8 24 2. 2 22 8.

24 2.5 24 1.5 5 24 0.3 5 23 7.8 5 23 4.4 23 6 22 8 22 7 22 6 22 7 24 1.5 24 3.9 23 5.5

23 4.6 23 6.2 23 3.2 5 22 9.0 5 23 0.6 5 22 6.1 22 2.7 5 22 1.0 5 21 8.7 5 22 4.6 23 0.0 5 22 5.5 22 6.1

24 0 23 8.4 23 5.6 5 23 0.8 23 3.1 22 6.7 22 6 22 1.9 22 5.5 22 5.2 5 23 8.3 23 0.7 23 3.4

23 9.8 23 7.8 23 4.8 23 0.6 23 2.9 5 22 6.1 5 22 6.2 22 1.5 22 5.9 22 5.5 24 0 22 9.5 23 3

943100 0 909500 0 968000 0 917700 0 926800 0 947800 0 100060 00 106590 00 104730 00 107670 00 107330 00 112890 00 107330 00

2040 00 3360 00 5850 00 5030 00 9100 0 2100 00 5280 00 6530 00 1860 00 2940 00 3400 0 5560 00 5560

780 3 435 7

131

Future Market BUYER

12/05/09(buying) 28/05/09(Closing Period) 226 221 Profit = 5 Profit 5*1000=5000 226 221 Loss = 5 Loss 5*1000=5000

SELLER

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so, he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of HUL at the end of contract period is 221 and this is considered as settlement price.

HUL JUNE MONTH ANALYSIS

132

Symbol

Se ri es EQ

Date

Pre v Clos e 230. 8 232. 65 233. 75 239. 7 249. 5 252

Ope n Pric e 228. 55 233. 1 235

Hig h Pric e 233. 45 235. 15 241

Lo w Pri ce 228 .55 232 .55 233 .45 236 .5 246 .2 245 .35 248 .25 256

Las t Pri ce 232 .2 233 .5 238

Clos e Pric e 232. 65 233. 75 239. 7 249. 5 252

Aver age Price 231.9 3 233.5 1 236.7

Total Traded Quantity 2701891

Turnover in Lacs

HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR HINDUNIL VR

EQ

EQ

EQ

EQ

EQ

EQ

EQ

EQ

EQ

EQ

EQ

EQ

1Jun09 2Jun09 3Jun09 4Jun09 5Jun09 8Jun09 9Jun09 10Jun09 11Jun09 12Jun09 15Jun09 16Jun09 17Jun09

6266.587392

3417724

7980.572611

4986667

11803.6118

236. 5 250. 25 252

251

249 .3 252

247.7 5 252.9 1 249.2 7 253.5 5 263.9 9 260.9 2 255.5 2 258.7 7 260.0 6 261.1

4636344

11486.59379

257. 7 253. 5 259

4499129

11378.87204

252 .15 257

252. 25 256. 75 264. 35 259. 95 255. 75 259. 15 268. 4 261. 6

2847980

7099.03176

252. 25 256. 75 264. 35 259. 95 255. 75 259. 15 268. 4

252

2932775

7436.116014

257

269. 9 264. 9 258. 5 262. 85 265. 75 267

263 .6 260 .2 256 .05 262 .75 265 .35 261 .95

6277803

16573.06262

264

258 .5 252

3587460

9360.251865

257

4793781

12249.10305

257. 9 258

252 .15 257 .7 256 .4

4900720

12681.51215

2197923

5716.010496

267

2993196

7815.193043

133

Interpretation:This analysis is useful to know where to buy and sell the options such as Call and Puts. Open Price=228 On 1st June 09 Low Price=228 On 2nd june 09 High Price=271 On 30th june 09 Close price=267 On 30th june 09

In the above graph I calculate Breakeven point for GMRINFRA Stock. Break Even Point(BEP) = (High Price + Low Price)/2 = (228+271)/2 = 249 Again I found margin of safety (MOS) (1) Margin of safety (mos) = opening share value BEP 134

=228-249 =-13 So here margin of safety is negative value. So here investor gets more Loss and longs. Here investor can buy put options to get more profits. Investors should not go for call options at this point (2) Margin of safety (mos) =high share value BEP =271-249 =22 So here margin of safety is Positive value. So here investor gets more profits and longs. So at this point investor can sell their Call options to get more profits. (3) Margin of safety (mos) =LOW share value BEP =228-249 =-13 So here margin of safety is negative. so here investor gets more losses and more shorts. Investor can sell their Put Option at this point to incur more profits.

135

HUL JUNE MONTH CALL TABLE(Strike Price=250):Instru ment OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK Symbol HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR Opti on CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA Date 1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10Jun-09 11Jun-09 12Jun-09 15Jun-09 16Jun-09 17Jun-09 18Jun-09 19Jun-09 22Jun-09 23Jun-09 Expir y 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 Strike Price 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 Clo se 2.9 3 4.1 7.6 5 7.7 7.8 5 9.7 15. 35 11. 25 10. 25 13. 9 15. 85 13. 45 11. 3 14. 2 10. 4 10. 4 Settle Price 2.9 3 4.1 7.65 7.7 7.85 9.7 15.35 11.25 10.25 13.9 15.85 13.45 11.3 14.2 10.4 10.4 Turnover in Lacs 192.03 131.49 768.74 1426.62 1060.57 510.86 866.42 513.23 151.99 140.24 125.75 39.6 55.23 52.88 26.31 31.28 33.95

136

OPTSTK OPTSTK

HINDUNI LVR HINDUNI LVR

CA CA

24Jun-09 25Jun-09

25Jun-09 25Jun-09

250 250

13. 5 10. 95

13.5 0

15.82 20.78

OBSERVATIONS AND FINDINGS JUNE CALL OPTIONS

Buyers Pay OFF:

As brought 1 Lot of HUL that is 1000 those who buy for 250 paid 2.9 Premium Per Share. Settlement Price is 263.5 Spot price Strike price Amount 263.5 250.00 13.5 137

Premium Paid (-) 2.9 Net Profit 10.6*1000=10600 Buyer Profit = Rs 10600(Net Amount) Because it is positive it is IN THE MONEY contract, hence buyer will get more profit, incase spot price increase buyer profit also increases.

SELLERS PAY OFF:

It is in the money for the buyer, so it is n out of the money for seller , hence his loss is also increases. Strike price Spot price 263.5 250.00

Amount -13.5 Premium Received Loss Seller loss = 2.9 -10.6*1000=-10600 Rs -10600(Loss)

Because it is negative it is out of the money, hence seller will get more loss, incase spot price decreases in below strike price, seller get profit in premium level.

HUL JUNE MONTH PUT OPTION TABLE:-

138

Instru ment OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK OPTSTK

Symbol HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR HINDUNI LVR

Opti on PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA PA

Date 1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10Jun-09 11Jun-09 12Jun-09 15Jun-09 16Jun-09 17Jun-09 18Jun-09 19Jun-09 22Jun-09 23Jun-09 24Jun-09 25Jun-09

Expiry Strike Price 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 25Jun-09 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250

Clo se 21. 35 21. 35 21. 35 10. 85 9.2 9 6.1 5 3.8 5 5 4.5 5 2.8 5 1.5 5 1.8 5 1.5 5 1 0.8 5 0.5 5 0.1 5 0.0 5

Settle Price 20.25 19.1 14.95 10.85 9.2 9 6.15 3.85 5 4.55 2.85 1.55 1.85 1.55 1 0.85 0.55 0.15 0

Turnover in Lacs 0 0 0 28.73 114 57.24 380.16 449.25 249.56 135.03 220.52 153.75 125.93 125.77 160.81 60.18 77.79 22.52 20.01

139

OBSERVATIONS AND FINDINGS JUNE PUT OPTION

BUYERS PAY OFF:

Those who have purchase put option at a strike price 250, the premium payable is 21.1. On 17th june 09 taken as spot market price enclosed at 268.4 Strike Price 250 Spot price 268.4 Net Pay Off -18.4*1000=-18400 Already Premium paid is 20.25 So, he get loss up to Rs 18400 Because it is negative, out of the money contract, hence buyer gets more loss, incase spot price decrease in below strike price, buyer get profit in premium level.

140

SELLERS PAY OFF:

As seller is entitled only for premium so,if he is in profit and also seller has to get total profit. Spot Price 268.5 Strike Price 250.0 Net Pay off 18.4*1000=18400 Already Premium Received 20.25 So, he can get profit up to Rs 18400 Because it is positive, in the money Contract, hence seller gets more profit, incase Spot price decrease in below strike price seller can get loss in premium.

, HUL was among major gainers on the Sensex on 4th june 09. It was trading with volumes of 478,620 shares. So the share value increased drastically on 4th june 09. Hindustan Unilever has added 3.7 lakh shares in open interest. Rollovers are strong into this month so positive traction seen in HUL in June month. HUL plans to sell 49% stake in BPO arm by 2010 reported by ET on june 9th 09.Tthere is decrease in share value due to this news. HUL is up nearly Rs 10 with a build up of nearly 13 lakh shares in OI which is around 10% in a single trading session On 10th june 09. Which lifted up the share value.

141

HUL JUNE MONTH FUTURES TABLE:Inst rum ent Symb ol Date Expi ry Op en Hi gh Lo w Clo se LT P Settl e Price No . of co ntr act s 25 60 21 96 47 20 55 99 48 40 26 59 26 24 57 05 25 73 Turn over in lacs Open Int Chang e in OI

FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK

HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR

1-Jun09 2-Jun09 3-Jun09 4-Jun09 5-Jun09 8-Jun09 9-Jun09 10Jun09 11Jun-

25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun-

22 8.5 23 0 23 1.4 23 6.2 5 24 5.3 24 8.2 24 6.5 5 25 4 26 1.1

23 0. 45 23 1. 3 23 7. 45 24 7. 45 25 5 24 9. 65 25 4. 2 26 6. 65 26 1.

22 7 22 9.1 23 0.5 23 5.5 24 2.5 24 2.5 5 24 6.3 25 4 25 5

23 0 23 0.3 23 6.1 5 24 6.3 5 24 8.4 5 24 8.6 5 25 2.9 5 26 1.5 25 6.6

23 0.2 23 0.0 5 23 5 24 6.2 5 24 9.2 5 24 8.7 25 2.8 26 1.2 5 25 7.2

230

5857.9 6 5051.8 2 11042. 89 13653. 05 12053. 52 6544.3 9 6570.0 9 14884. 37 6637.5 5

95370 00 94630 00 95050 00 90160 00 85330 00 88010 00 89550 00 94950 00 89490 00

102000

230.3

-74000

236.1 5 246.3 5 248.4 5 248.6 5 252.9 5 261.5

42000

-489000

-483000

268000

154000

540000

256.6 5

-546000

142

FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK FUT STK

HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR HINDU NILVR

09 12Jun09 15Jun09 16Jun09 17Jun09 18Jun09 19Jun09 22Jun09 23Jun09 24Jun09 25Jun09

09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09 25Jun09

25 7.2 25 7.5 26 0 26 4 26 1.2 26 0.9 26 1.1 5 25 9.9 26 2.7 26 2.9

95 25 7. 5 26 2. 9 26 6. 35 26 4 26 5. 8 26 3. 8 26 3. 4 26 2. 3 26 4. 1 26 4

25 2.2 5 25 2.5 25 7.8 25 9.3 5 25 8.4 25 9.3 5 25 7.6 5 25 5.5 5 25 8.2 5 25 8.1

5 25 5.7 26 0.4 5 26 4 26 1.3 5 26 0.6 26 2.0 5 25 9.6 5 26 0 26 3.4 25 8.9

25 6.5 26 2.1 5 26 4 26 1.0 5 26 1.1 5 26 1.8 25 9 25 9.9 5 26 3.2 25 8.9

255.7

30 87 25 19 25 74 50 23 56 77 33 80 41 74 37 18 23 52 33 28

7878.3 3 6500.2 2 6717.6 6 13111. 94 14897. 88 8830.2 1 10881. 56 9652.0 7 6145.2 2 8646.9

84660 00 87290 00 88400 00 83480 00 78560 00 72200 00 55640 00 51940 00 48240 00 40460 00

-483000

260.4 5 264

263000

111000

261.3 5 260.6

-492000

-492000

262.0 5 259.6 5 260

-636000

165600 0 -370000

263.4

-370000

258.9 5

-778000

Future Market BUYER

143

SELLER

12/06/09(buying) 29/06/09(Closing Period)

255.7 258.95 Profit = 3.25

255.7 258.95 Loss =3.25 Loss 3.25*1000=3250

Profit 3.25*1000=3250

Because buyer Future price will increase so, profit also increases. Seller Future price also increases so he can get loss. Incase seller Future will decreases, he can get profit. The closing Price of HUL at the end of contract period is 258.95 and this is considered as settlement price.

144