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8/6/2019 introductionpresentation-101014065336-phpapp01 (1)

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SUMMER TRAINING PRESENTATION

ON

STUDY OF FUTURE OF DERIVATIVES

IN LUDHIANA

Presented by

Jasmeet Kau

(MBA 2c)

Presented to

Mr. Arun Dutta

(Faculty, PCTE)


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Introduction toIntroduction to TamesakTamesak HoldingsHoldings

An Asia investment company Incorporated under theSingapore Companies Act as an investment holdingcompany in 1974.

Owns and commercially manages investments incompanies previously held directly by the SingaporeGovernment.

Invests on commercial principles as an asset owner.

AAA/Aaa by Standard & Poors and Moodysrespectively


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Investment ThemesInvestment Themes

y Transforming Economies

y

Grow

ing Middle Income Populations

y Deepening Comparative Advantages

y Emerging Champions


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Introduction To FullertonIntroduction To Fullerton

Securities & Wealth AdvisorsSecurities & Wealth AdvisorsyWholly owned subsidary of Temasak

Holdings.

y FSWA is a company registered under

Companies Act, 1956 as on 8th

feburary,2008.


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Fullerton VisionFullerton Vision

y To be distinctive financial services entity, providing the

widest range of unbiased financial solutions to customers.

y

Achieved through proprietary distribution netw

ork andbusiness partners.

Top class equity research.

High quality & well trained employees.

Consistent service. Cutting edge technology.

y To provide superior financial planning and wealth advisory.


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Fullerton MissionFullerton Mission

To create superior long term shareholder

value in the financial sector across

emerging markets

Organic growth

Acquire and transform

Improve productivity

Optimize capital

Risk- Reward balance


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Key Value LeadershipKey Value Leadership

y Great LeadershipPassionate

Balanced

Disciplined

Leaders in commercial/sme, mass consumer andmass self employed segments

y Customer centric business models

Relationship v/s product positioning

Enabling management model and culture

Empowered within defined boundaries


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y Deeply embedded in each market

and chosen segment

High market share top 3

Embedded the right values and behaviour

across the organisation.


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Organizational ChartOrganizational Chart

Pallav Sinha

MA & CEO

Ashok

MathurHead,South

Ashwinder

Raj Singh

head.,North& NCR

Punit Gupta

Head,West

Sariq Hoda

Head,EAst

Mr. Ashutosh

Cluster

Head,Punjab

Baljinder

Singh

RM,

Acquistion

Mohit

Singla

Channel

Manager

Jitin Arora

RM, HNI

Munish

Goyal

BDM


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Group CompaniesGroup Companies

y BankDanamon in Indonesia

The second largest private national bank and thefifth largest commercial bank in Indonesia, with a5% share of the domestic system loans and depositsand 1,426 branches.

y Fullerton India Credit Corporation

Established in December 2005, Fullerton Indias business model is community oriented, branchcentric and endeavors to build enduringrelationships with customers.


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DuniaDuniaFFH entered into a strategic

partnership with Mubadala InvestmentCompany PJSC, Waha Capital PJSC(formerly known as Oasis InternationalLeasing Company PJSC), and A.A.AlMoosa Enterprises LLC, with 40%ownership by FFH. Dunia FinanceLLC or Dunia, as it is morecommonly known, was created.


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Various departments Of FSWA,Various departments Of FSWA,

LudhianaLudhianay Wealth

y Securities

y DST(Direct Sales Team)


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Various Services Provided By FSWAVarious Services Provided By FSWA

y Financial Planning

y Mutual Funds

y Equities

y Insurance

y NRI Services


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SWOT Analysis of FSWA,SWOT Analysis of FSWA,

LudhianaLudhiana

Strengths

y Everyday technical and fundamental calls are

mailed to customers before the market opens.

y Every single thing happening in organization ismailed to head within seconds and it encouragesemployees to work.

y Being MNC it has funds are available forexpansion. Therefore, No loan is required.


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Weakness

y Employees sometimes use phones for personalcalling which doesnt come into notice and itmay increase expenses of company.

Opportunitiesy Future expansion plans:- right now company

has only 2 offices in Punjab , its plan is to open15 new branches in Punjab by the end of this

financial year.

y To tap untapped market by providing properknowledge to potential customers.


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Threats

y Existing brokerage firms in market.

y Being an MNC people dont know about this

company, so people may prefer visiting anothercompany and opening account.


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History Of DerivativesHistory Of Derivatives

y The first organized commodity exchange came

into existence in the early 1700s in Japan.

y U. S. futures markets, was the creation of theChicago Board of Trade in 1848.

y In 1865, CBOT listed the first exchange traded

derivatives contract.


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y In 1865, CBOT listed the first exchange traded

derivatives contract.

y The Chicago Mercantile Exchange (CME), was

formed in 1919, though it did exist before in

1874 under the names of Chicago ProduceExchange (CPE) and Chicago Egg and Butter

Board (CEBB).

y The first financial futures to emerge were the

currency in 1972 in the US.


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y The first foreign currency futures were traded on

May 16, 1972, on International Monetary Market

(IMM), a division of CME.

y The first call and put options were invented by an

American financier,R

ussell Sage, in 1872.


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1991 Liberalisation process initiated

14 December

1995

NSE asked SEBI for permission to trade index futures.

18 November

1996

SEBI setup L.C.Gupta Committee to draft a policy framework for

index futures.

11 May 1998 L.C.Gupta Committee submitted report.

7 July 1999 RBI gave permission forOTC forward rate agreements (FRAs) and

interest rate swaps.

Indian Derivative MarketIndian Derivative Market


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24 May 2000 SIMEX chose Nifty for trading futures and options on an

Indian index.

25 May 2000 SEBI gave permission to NSE and BSE to do index

futures trading.

9 June 2000 Trading of BSE Sensex futures commenced at BSE.

12 June 2000 Trading of Nifty futures commenced at NSE.

25 September

2000

Nifty futures trading commenced at SGX.

2 June 2001 Individual StockOptions & Derivatives


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Derivative instruments are defined by

Securities Contract (Regulation) Act

include:-

y A security derived from debt instruments,shares, secured / unsecured loan, risk

instruments or contracts for differences, or anyother form of security.

y A contract that derives its value from the prices

/ index of prices underlying securities.


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Categories Of

Participants

Hedgers Speculators Arbitrageur


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Types Of Derivative ContractsTypes Of Derivative Contracts

Futures O ptions For wards

Swaps


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Futures ContractFutures Contract

y A futures contract gives the holder the

right and the obligation to buy or sell, an

Asste at a certain time in future , it

follows daily settlement


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OptionsOptions

y A contract that gives the option holder the

right but not the obligation to buy or sell

the underlying asset at a price, called the

strike price, during a period or on aspecific date in exchange for payment of a

premium is known as option.

Two Types Of Optionsy Call Options

y Put Options


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SwapsSwaps

y Swaps are contracts to exchange cash

(flows) on or before a specified future

date based on the underlying value of

currencies/exchange rates, bonds/interestrates, commodities, stocks or other assets.

Two Types OfSwaps

y Interest Rate Swapsy Currency Swaps


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Factors Contributing ToFactors Contributing To

Growth Of DerivativesGrowth Of Derivatives

y Price Volatility

y

Globalization of Market

y Technological advances

y Advances in financial theories


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Title Of The StudyTitle Of The Study

A Study on Future OfDerivativesA Study on Future OfDerivativesin Ludhiana.in Ludhiana.


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Objectives Of StudyObjectives Of Study

y To study brokers experience in regard to

derivatives.

y To study investors perception towards

derivatives.y To study the risk involved in derivative

instruments.


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Limitations Of StudyLimitations Of Study

y Limited time:- The time available to conduct

the study was only 2 months. It being a wide

topic had a limited time.

y Aspect coverage:- Some of the aspects may not

be covered in my study.

y Accuracy:- Some investors have filled forms

just for filling them. This may lead to less

accuracy in research.


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Research MethodologyResearch Methodology

y Research methodology means the way in

which the data has been collected for the

research project and the way we would

complete our prospected task.


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Research designResearch design

y Research design is the structure within which

research is conducted; it contains the blueprint

for the collection, measurement and analysis of

data.

y Descriptive research design has been used as

in this research the perception of brokers and

investors in regard to derivatives has beenstudied.


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y Universe- All the people who are dealing inderivatives and were interested to deal in

derivatives.

y Population-

(i) All the brokers dealing in derivatives in

Ludhiana.(ii) All the people dealing in derivatives or

interested in dealing, in Ludhiana.

y Sampling Unit Every single person visitingAnsal plaza and Feroz Gandhi market and everybroker of Ludhiana Stock Exchange is sample unitin the report


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y Sampling Frame - It represents the

elements of the target population.Ludhiana City is the sampling frame for

this project.

y Sample size- Sample size used in the

project is 50 (25 brokers and 25 investors).

y Sampling Technique- Non Probability

technique i.e convenience sampling has

been used for collecting data.


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y Data collection

Primary DataSecondary Data


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Data Analysis And InterpretationData Analysis And Interpretation

PART I

To Study The Brokers experience in regard

to Derivatives

(T bl 4 1)(T bl 4 1) P fP f


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(Table 4a.1)(Table 4a.1) Percentage ofPercentage of

clients dealing in derivativesclients dealing in derivatives

(N=25)(N=25)Percentage Of

Clients

Brokers response Percentage

0-20 14 56

20-40 7 28

40-60 2 8

60 & above 2 8

Total 25 100

(G h 4 2)(G h 4 2) BB d fd f


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(Graph 4a.2)(Graph 4a.2) BBetter mode ofetter mode of

Investing keeping in accountInvesting keeping in account

profitabilityprofitability


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(Table 4a.3)(Table 4a.3) Most preferred ModeMost preferred Mode

for investingfor investing

(n=30)(n=30)

Options Number of

responses

Percentage

Index futures 11 36.67

Stock futures 12 40

Index options 3 10

Stock options 4 13.33

Total 30 100


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(Table 4a.4)(Table 4a.4) Risk Perception ofRisk Perception of

brokers towards derivativesbrokers towards derivatives

Risk Perception Number of

responses

Percentage

Highly Risky 22 88

Moderate Risk 3 12

Less Risky 0 0

Total 25 100

(T bl 4 5)(T bl 4 5) Hi h i kHi h i k


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(Table 4a.5)(Table 4a.5) Highest riskHighest risk

carrying derivativecarrying derivative

(n=29)(n=29)Types of derivatives Number Of

responses

Percentage

Equity Derivative 5 17.24

Commodity

derivative

22 75.86

Currency derivative 1 3.45

Interest rate

derivative

1 3.45

Total 29 100


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(G h 4 7)(G h 4 7) R tR t


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(Graph 4a.7)(Graph 4a.7) Returns onReturns on

derivatives if compared withderivatives if compared with

Real Estate ReturnsReal Estate Returns(N=25)(N=25)


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(Graph 4a.8)

(N=25)


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(Graph 4.9)

(N=25)


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PART II

To Study Investors Perception Towards

Derivatives.


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(Graph 4b.1)(Graph 4b.1) Annual IncomeAnnual Income

range of respondentsrange of respondents

(N=25)(N=25)

(G h 4b 2)(G h 4b 2) I t tI t t


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(Graph 4b.2)(Graph 4b.2) InvestmentInvestment

Options used by respondentsOptions used by respondents

(n=50)(n=50)


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(Graph 4b.3)

(N=25)


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(Graph 4b.4)(Graph 4b.4) Frequency inFrequency in

dealing with derivativesdealing with derivatives

(n=9)(n=9)

(Table 4b 5)(Table 4b 5) Purpose forPurpose for


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(Table 4b.5)(Table 4b.5) Purpose forPurpose for

undertaking derivativeundertaking derivative

ContractContract(n=11)(n=11)

Purpose Number of

responses

Percentage

Hedging 7 63.64

Speculation 2 18.18

Risk Management 2 18.18

Arbitrage 0 0

Total 11 100


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(Graph 4b.6)(Graph 4b.6) Most preferredMost preferred

derivativesderivatives

(n=13)(n=13)


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(Graph 4b.7)(Graph 4b.7) PercentagePercentage

Income invested in derivativesIncome invested in derivatives

(n=9)(n=9)


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(Table 4b.8)(Table 4b.8) Perception ofPerception of

investors regarding Profitsinvestors regarding Profits

(n=9)(n=9)Options Number of

responses

Percentage

Mean=Total/Total

no. ofrespondents

0/9=0

Highly Profitable

+2

0 0

Profitable

+1

3 3

Neutral

0

4 0

Loss Making

-1

1 -1

Highly Loss

Making -2

1 -2

Total 9 0

(Table4b 9)(Table4b 9) Investors riskInvestors risk


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(Table4b.9)(Table4b.9) Investor s riskInvestor s risk

Perception for derivativesPerception for derivatives

(n=9)(n=9)Risk Factor Number of

responses

Percentage

Highly Risky 6 66.67

Moderate Risk 3 33.33

Less risky 0 0

Total 9 100


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(Graph 4b.10)

(n=9)

(Graph 4b 11)(Graph 4b 11) Reasons for notReasons for not


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(Graph 4b.11)(Graph 4b.11) Reasons for notReasons for not

increasing investment inincreasing investment in

derivativesderivatives(n=4)(n=4)

(Graph 4b 12)(Graph 4b 12) SuggestingSuggesting


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(Graph 4b.12)(Graph 4b.12) SuggestingSuggesting

others put their money inothers put their money in

derivativesderivatives(n=5)(n=5)


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(Graph 4b.13)

(n=16)


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(Table 4b.13)(Table 4b.13) Reason for notReason for not

dealing in derivativesdealing in derivatives

(n=9)(n=9)


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PART-III

Analyzing Average Daily Turnover At NSE

(Graph 4c 1)(Graph 4c 1)Business GrowthBusiness Growth


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(Graph 4c.1)(Graph 4c.1)Business GrowthBusiness Growth

in Derivatives segment Sincein Derivatives segment Since

20002000--20102010


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FindingsFindings

y

Main factor that led to growth of derivatives arehigher return.

y Stock Futures are most preferred for investing inderivatives.

y Derivatives carry high risk factor and amongst thatcommodity derivatives are the most risky to trade

due to high fluctuations.

y Money invested in real estate would fetch higherreturn compared to derivatives and would carryless risk.


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y Maximum people use derivative as Hedgingtool.

y People already investing money throughderivatives would like to increase their

investments because they find it highlyprofitable.

y Some people would prefer to invest their

money through derivatives if they areprovided with knowledge and a reliablebroker.


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SuggestionsSuggestionsy People with low investment and less knowledge

should not enter derivatives market.

y SEBI should be more vigilant to check the volatilitytriggered by operators.

y One should invest for long term and that too only inblue chip companies.

y

One should always invest their money and shouldnot speculate because speculation can cause heavylosses.

y If one wants to make money in stock market he

should invest gradually in cash segment.


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ConclusionConclusiony

According to responses given by brokers andinvestors a conclusion can be attained that there isgreat market ahead for derivatives in future.

y As fifty percent of people are ready to take

knowledge and invest their money in derivatives,existing investors are ready to increase theirinvestments which is healthy sign for the markets.

y

Even average turnover at NSE has increased overlast 10 years which shows us trend that in futurethere will be rise in derivatives trading.


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Thank youThank you

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