A STUDY ON

“RETAIL INVESTORS AWARENESS TOWARDS

CAPITAL MARKET”

GEOJIT BNP PARIBAS

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 ABSTRACT
The Capital market is a market for financial assets which have a long or indefinite
maturity. Generally, it deals with long term securities which have a maturity period of above one year.
Capital market may be further divided into three types Industrial securities market, Government
securities market and Long term loans market. Industrial securities market is further divided into two
types primary market or new issue market and secondary market or stock exchange. Government
securities market is also called as Gilt-Edged securities market. It is the market where Government
securities are traded. Long term loans market is divided into three types Term loans market, Mortgages
market and Financial guarantees market.
Absence of capital market instruments acts as a deterrent to capital formation and economic
growth. Resources would remain idle if finances are not funneled through the capital market.
a) The capital market instruments serves as an important source for the productive use of the
economy’s savings. It mobilizes the savings of the peoples for further investment and thus avoids
their wastage in unproductive uses.
b) It provides incentives to saving and facilitates capital formation by offering suitable rates of
interest as the price of capital.
c) It provides an avenue for investors, particularly the household sector to invest in financial assets
which are more productive than physical assets.
d) It facilitates increase in production and productivity in the economy and thus, enhances the
economic welfare of the society. Thus, it facilitates “the movement of stream of command over
capital to the point of highest yield” .
e) A healthy capital market instrument consisting of expert intermediaries promotes stability in
values of securities representing capital funds.

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 INDEX
CH. NO. PARTICULARS PAGE NO.

CHAPTER -1 INTRODUCTION

OBJECTIVES OF THE STUDY

NEED &IMPORTANT OF THE STUDY

SCOPE OF THE STUDY

RESEARCH METHODOLOGY

LIMITATIONS OF THE STUDY

CHAPTER -2
REVIEW OF LETERATURE
CHAPTER -3 INDUSTRY PROFILE
COMPANY PROFILE
CHAPTER-4
ANALYSIS & INTERRETATION OF THE
STUDY
CHAPTER -5
FINDINGS
SUGGESTIONS
CONCLUSIONS
CHAPTER-6 BIBLIOGRAPHY

CHAPTER-7 APPENDIX

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 CHAPTER 1
INTRODUCTION

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 INTRODUCTION TO CAPITAL MARKETS

Capital markets in the United States provide the lifeblood of capitalism. Companies turn
to them to raise funds needed to finance the building of factories, office buildings, airplanes,
trains, ships, telephone lines, and other assets; to conduct research and development; and to
support a host of other essential corporate activities. Much of the money comes from such major
institutions as pension funds, insurance companies, banks , foundations, and colleges and
universities. Increasingly, it comes from individuals as well. As noted in chapter 3, more than 40
percent of U.S. families owned common stock in the mid-1990s.

Very few investors would be willing to buy shares in a company unless they knew
they could sell them later if they needed the funds for some other purpose. The stock market and
other capital markets allow investors to buy and sell stocks continuously.

The markets play several other roles in the American economy as well. They are a
source of income for investors. When stocks or other financial assets rise in value, investors
become wealthier; often they spend some of this additional wealth, bolstering sales and
promoting economic growth. Moreover, because investors buy and sell shares daily on the basis
of their expectations for how profitable companies will be in the future, stock prices provide
instant feedback to corporate executives about how investors judge their performance.
Stock values reflect investor reactions to government policy as we<,/ll. If the government adopts
policies that investors believe will hurt the economy and company profits, the market declines; if
investors believe policies will help the economy, the market rises. Critics have sometimes
suggested that American investors focus too much on short-term profits; often, these analysts
say, companies or policy-makers are discouraged from taking steps that will prove beneficial in
the long run because they may require short-term adjustments that will depress stock prices.
Because the market reflects the sum of millions of decisions by millions of investors, there is no
good way to test this theory.
In any event, Americans pride themselves on the efficiency of their stock market and
other capital markets, which enable vast numbers of sellers and buyers to engage in millions of
transactions each day. These markets owe their success in part to computers, but they also
depend on tradition and trust -- the trust of one broker for another and the trust of both in the

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good faith of the customers they represent to deliver securities after a sale or to pay for
purchases. Occasionally, this trust is abused. But during the last half century, the federal
government has played an increasingly important role in ensuring honest and equitable dealing.
As a result, markets have thrived as continuing sources of investment funds that keep the
economy growing and as devices for letting many Americans share in the nation's wealth.

To work effectively, markets require the free flow of information. Without it, investors
cannot keep abreast of developments or gauge, to the best of their ability, the true value of
stocks. Numerous sources of information enable investors to follow the fortunes of the market
daily, hourly, or even minute-by-minute. Companies are required by law to issue quarterly
earnings reports, more elaborate annual reports, and proxy statements to tell stockholders how
they are doing. In addition, investors can read the market pages of daily newspapers to find out
the price at which particular stocks were traded during the previous trading session. They can
review a variety of indexes that measure the overall pace of market activity; the most notable of
these is the Dow Jones Industrial Average (DJIA), which tracks 30 prominent stocks. Investors
also can turn to magazines and newsletters devoted to analyzing particular stocks and markets.
Certain cable television programs provide a constant flow of news about movements in stock
prices. And now, investors can use the Internet to get up-to-the-minute information about
individual stocks and even to arrange stock transactions.

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 NEED FOR THE STUDY

One of the single best things you can do to further your education in trading commodities is to keep
thorough records of your trades. Maintaining good records requires discipline, just like good trading.
Unfortunately, many commodity traders don’t take the time to track their trading history, which can
offer a wealth of information to improve their odds of success most professional traders, and those
who consistently make money from trading commodities, keep diligent records of their trading
activity. The same cannot be said for the masses that consistently lose at trading commodities.
Losing commodity traders are either too lazy to keep records or they can’t stomach to look at their
miserable results. You have to be able to face your problems and start working on some solutions if
you want to be a successful commodities trader. If you can’t look at your mistakes and put in the
work necessary to learn from them, you probably shouldn’t be trading commodities.

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 OBJECTIVE OF THE STUDY

 To know why the companies go to new issue market.

 To know how the primary market intermediaries communicate companies and investors.
To know how the primary market activities used by the companies in their new issue shares.
 To know how the companies listed in the stock exchanges.
 To know how trading activity is to be done.
 To know the complete awareness of secondary market (stock exchanges like NSE, BSE, EMKAY
GLOBAL Securities limited

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 SCOPE OF THE STUDY

 ‘Investor can assess the company financial strength and factors that affect the company.
Scope of the study is limited. We can say that 70% of the analysis is proved good for the
investor, but the 30% depends upon market sentiment.

 The topic is selected to analyses the factors that affect the future EPS of a company based on
fundamentals of the company.

 The market standing of the company studied in the order to give a better scope to the
Analysis is helpful to the investors, share holders, creditors for the rating of the company.

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  METHODOLOGY

The data collection methods include both the Primary and Secondary Collection methods.

1. Primary Collection Methods:

This method includes the data collected from the personal discussions with the authorized
clerks and members of the Exchange and EMKAY GLOBAL Securities.

2. Secondary Collection Methods:

The Secondary Collection Methods includes the lectures of the superintend of the Department
of Market Operations, EDP etc, and also the data collected from the News, Magazines of the NSE, HSE
and different books issuof this study

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 LIMITATIONS OF THE STUDY

- Time constraint was a major limiting factor. Forty five days were insufficient to even grasp the
theoretical concepts.
- Several other strategies that could have been studied were not done.
- Lack of knowledge with the brokers.
- Difference of theory from practice.
- Absence of required knowledge and technology.

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 CHAPTER-2
REVIEW OF LITERATURE

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 REVIEW OF LITERATURE
CAPITAL MARKETS

The market where investment funds like bonds, equities and mortgages are traded is known as the capital
market. The primal role of the capital market is to channelize investments from investors who have
surplus funds to the ones who are running a deficit. The capital market offers both long term and
overnight funds. Capital market is the barometer of the economy and represents the macroeconomic
affairs of the country. Capital market discounts the future and it is reflection of future of the economy. In
the long run it is a true measure of the health of any economy.

In the capitalistic economy, the capital market plays a pivotal role by bring the common investor to invest
in corporate securities. The global trend is that even the socialist countries like China and Russia are
moving towards capitalistic economy by inviting the private investments into the industry.
Among the instruments, mutual funds, bonds and derivative instruments are more active which have
grasped a substantial share in resource mobilization giving a challenge to traditional monetary assets such
as bank deposits. Similarly, instruments like deep discount bonds, zero coupon bonds and other bonds
with very long maturity period compete with traditional term saving instruments.

The Capital Markets are relatively for long-term (greater than one year maturity) financial instruments
(e.g. bonds and stocks). Their role can be summarized as follows:
 The Capital Market is the indicator of the inherent strength of the economy.
 It is the largest source of funds with long and indefinite maturity for companies and thereby enhanced
the capital information in the country.
 It helps in channeling the savings pool in the economy towards optimal allocation of capital in the
country.

STRUCTURE AND SIZE OF THE MARKET:

Today India has two national exchanges, the Bombay Stock Exchanges (BSE) and the National Stock
Exchange (NSE). Each has fully electronic trading platforms with around 9400 participating broking
outfits. Foreign brokers account for 29 of these. There are some 9600 companies listed on the respective
exchanges with a combined market capitalization near $125.5bn. Any market that has

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 experienced this sort of growth has an equally substantial demand for highly efficient settlement
procedures, In India 99.9% of the trades, according to the National Securities Depository, are settled in
dematerialized form in a T+2 rolling settlement environment. In addition, trades are guaranteed by the
National Clearing Corporation of India Ltd (NSCCL) and Bank of India Shareholding Ltd (BOISL),
Clearing Corporation houses of NSE and BSE respectively.

GLOBALISATION IN CAPITAL MARKET:

With the sweeping economic changes witnessed globally towards more market-oriented economies, the
government of India too has embarked upon radical economic policy measures to revitalize its economy.
The Indian Capital Markets, which have attained a remarkably high degree of growth in the last decade,
are poised for a further leap forward over the next ten years With the opening of the economy to
multinational and the adoption of more liberal economic policies, the economy is more driven more
towards the free market economy. Two major reasons why Indian securities are now increasingly
regarded as attractive to international investors are the relatively high returns compared with more
developed global markets as well as the low correlation with world markets. However until the early 90s,
the foreign investor’s only way of accessing the Indian Capital markets was through listed country funds.
498 Foreign Institutional Investors who hold 1325 sub-accounts with a net investment of approximately
$15bn.
At present the stock market consists of 23 regional stock exchanges and two National Stock Exchanges
known as NSE and OTCET (Over the Counter Exchange of India).
SCENARIO OF INDIA CAPITAL MARKET:

Reforms in the securities market, particularly the establishment and empowerment of SEBI, market
determined allocation of resources, screen based national wide trading, dematerialization and electronic
transfer of securities, rolling settlement and ban on deferral products, sophisticated risk management and
derivatives trading, have greatly improved the regulatory frame work and efficiency of trading and
settlement. Indian market is now comparable to many developed market in terms of a number of
qualitative parameters.
Securities market are markets in financial assets or instruments. Business organizations, corporate units
and the Governments, Central or state issues these Public sector undertakings also issue these securities.
These are thus sources of funds to the issuers.

Securities are the claims on money and are like promissory notes. Securities are sources of fund for
companies, Govt. etc. The external sources of funds of the companies are as follows:

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 Long term funds:
 Ownership capital-equity and preference capital.
 Debt capital-debentures and long term borrowings in the form of deposits from public or
credit limits or advances from banks and financial institutions.

 Short term funds:

 Borrowings from banks.
 Trade credits and supplier’s credits.

The Securities Market can again be classified into:

 PRIMARY MARKET: A primary market is a market is a where securities are issued to the
public for the first time. New issues are dealt within this market.
 The new issues has three functions to perform origination, underwriting and distribution. There
are three ways by which a company may raise capital in primary market.

 Public issue
 Right issue
 Private Placement

Intermediate in the Primary market are merchant bankers, collecting bankers, registrants and transfer
agents, broker underwriters, advertising agencies, printers, stock-brokers and solicitors and mailing
agents.

 SECONDARY MARKET: Secondary market is a market where securities, which have already
issued in the primary market, are traded. This market consists of all stock exchanges recognized by the
Govt. of India, and is regulated under the securities contract(regulation) act1956.The BSE is principal
stock exchange in India, which sets the other stock markets.

Intermediate in the Secondary market are brokers, jobbers, dealers, arbitrators, investment advisors,
portfolio managers and sub-brokers.

EVOLUTION OF INDIAN SECURITIES MARKET:

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The origination of the Indian Securities Market may be traced back to 1875, when 22enterprising brokers
under a Banyan tree established the Bombay Stock Exchange (BSE). Over the last 125years, the Indian
securities markets in Asia. Today, India markets conform to international standards both in terms of
structure and in terms of operating efficiency.

TRADITIONAL TRADING SYSTEM:

The traditional system of trading involved lots of hue and cry. The traders of the share used to shout in
the trading arena and the buyer used to shout and quote his rates.
If the rates matched the deal was prepared for the buyer and the seller and one for the exchange. By the
end of the day the broker gets the daily volume sheet consisting of the list of all the transactions entered
into by member. Any discrepancies were reported to the exchange. The client did the confirmation at the
end of the day. The whole scene made a common man scared of the stock market and due to its
uncertainities it was considered as highly risky and high-risk takers only used to invest their money in the
share bazaar.

PRESENT TRADING MECHANISM:

The National Stock Market System provides a single, nation wide securities. It enables an investor in one
part of the country to trade at the best quotes with an investor located in other part of the country through
the members of the stock exchanges and subsequently clear and settle the trade in an efficient and cost
effective manner. The primary objective of the stock market is to provide clear opportunity to the
investors throughout the country to trade any security irrespective of the size of the order or the broker
through whom the order is routed. This provides the facility to execute the buy order at the lowest price
in the stock market located anywhere in the country without any-extra cost to the investors.
There will be no trading floor in the exchange. Instead, each trading member will have a computer at his
own office any where in India which will be connected to the central computer system at the NSE
through leased lines or VSATS(Very small Aperture Terminals), for an interim transition period of six
months and subsequently by satellite link. VSAT s are very relatively smaller dishes similar to dish
antenna for cable TV and have the benefit of not being very expensive. This mode of trading is known as
“ ONLINE TRADING “.

OBJECTIVES OF PRESENT TRADING SYSTEM:

To reduce and eliminate operational inefficiencies inherent in manual systems to increased trading
capacity in stock exchange.
Improve market transparency, eliminate unmatched trades and delayed reporting.
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Provide for on line & off-line monitoring, control & surveillance of the market.
Promote fairness & speedy matching.
Smooth market operations using technology while retaining the flexibility of conventional trading
practices.
Set up various limitations, rules and controls centrally.
Consolidate the trades data on electronic media to interface with the brokers back office system.
Provide public information on scrip prices, indices for all users of the system.
Provide analytical data for use of stock exchange.

THE MECHANISM:

The broker of stock trading gets the membership at the stock exchange after full filling a set of
conditions. The broker is connected on line with the stock exchange. On the system he constantly gets the
real quotes in the market, there position, the demand and supply rates, number of buyers and sellers at
various rates.
The customer drops in the office of the broker or gives him a call regarding the sale or purchase of the
particular number of shares. The broker takes his order and inputs that in his online system. If a proper
match regarding that price is available in the market that is if both the buy and sale rates match, then it
implies that the deal is stuck. If the suitable match is not found the order gets stacked in the system till a
suitable counter order emerges and the transaction is closed at that point of time.

RECOGNIZED STOCK EXCHANGES:

There are 22 stock exchanges in India. These were founded at different times, in different places, under
different laws. However, all of them have been recognizedand regulated under single law, namely the
securities contracts (Regulation) Act, 1956. No person is, in principle, allowed to organized stock
exchanges other than the recognized once [section 19(1) of the SC(R) Act, 1956].

INDIAN CAPITAL MARKET

The Indian Capital Market is one of the oldest capital markets in Asia which evolved around 200 years
ago.

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Chronology of the Indian capital markets:

1830s: Trading of corporate shares and stocks in Bank and cotton Presses in Bombay.

1850s: Sharp increase in the capital market brokers owing to the rapid development of
commercial enterprise.
1860-61: Outbreak of the American Civil War and ' Share Mania ' in India.

1894: Formation of the Ahmadabad Shares and Stock Brokers Association.

1908: Formation of the Calcutta Stock Exchange Association.

Capital Market Instruments

The capital markets are relatively for long term (greater than one year maturity) financial nstruments e.g
bonds and stocks). It is the largest source of funds with long and indefinite maturity for companies are
there by enhances the capital formation in the country. It offers a investment avenues to investors. The
capital market instruments are the vehicles between the companies and the investors. The financial
instruments that have short or medium term maturity periods are dealt in the money market whereas the
financial instruments that have long maturity periods are dealt in the capital market. The different types
of financial instruments that are traded in the capital markets are equity instruments, credit market
instruments, insurance instruments, foreign exchange instruments, hybrid instruments and derivative
instrument Stock market is the capital and SEBI is the driver. These instruments are of two types

 Primary market

 Secondary market

A part from derivative instruments, the following is the major mediums of approaching

capital markets:

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 Equity shares

 Preference shares

 Debentures/ bonds

 American Depository Receipts (ADR)

 Global Depository Receipts (GDR)

 Derivatives

 Employee stock option plan.

[A] EQUITY SHARES:

They are also called as common stock. The common stock holders of a company are its real owners, the
own the company and assume the ultimate risk associate with ownership.
Their liability, how ever is restricted to the amount of their investment in the event of liquidation, these
stock holders have a residual claim on the assets of the company after the claims of all creditors and
preferred stock holders,are settled in full. Common stock like preferred stock, as no maturity date.NSE
started trading in the equities segment (Capital Market segment) on November 3, 1994 and within a short
span of 1 year became the largest exchange in India in terms of volumes transacted.Trading volumes in
the equity segment have grown rapidly with average daily turnover increasing from Rs.17 crores during
1994-95 to Rs.14,148 corers during FY 2007-08. During the year 2007- o8,NSE reported a turnover of
Rs.3,551,038 crores in the equities segment.The Equities section provides you with an insight into the
equities segment of NSE and also provides real-time quotes and statistics of the equities market. In-depth
information regarding listing of securities, trading systems & processes,clearing and settlement, risk
management, trading statistics etc are available here.

AUTHORIZED, ISSUED AND OUTSTANDING SHARES:

An authorized shares is the maximum no. of shares that the articles of association (AOA) of the company
permit it to issue in the market. A company can however amend its AOA to increase the number. The
number of shares that the company has actually issued out these authorized shares is called as issued
shares. A company usually likes to have a number of shares that a authorized but un-issued. These un-
issued allow flexibility in granting stock options, pursuing merger targets and splitting the stock.
Outstanding shares refer to the number of shares issued and actually held by public. The corporation can
buy back part of its issued stock and hold it as a treasury stock.Par value , book value and liquidating
value :The par value of a share of stock is merely a recorded figure in the corporate charter and is of little
economic significance. A company should not, however, issue common stock at a price less than par
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value, because any discount from par value ( amount by which the issuing price is less than the par
value) is considered a contingent liability of the own wrest to the creditors of the company. In the event
of liquidation, the share holders would be legally liable to creditors of any discount from par value.
Example: suppose that xyz inc. is ready to start business for the first time and sold 10000 shares rupees
10 each . the share holders equity portion of the balance sheet would be common stock @ 10 each at par
value:10000 shares issued and outstanding RS100000 Total shares holders equity RS100000.The book
value per share of common stock is the shareholders equity – total assets minus liabilities and preferred
stocks as listed on the balance sheet- dividing by the number of shares outstanding .suppose that xyz is
now 1 year old has generated RS 500000 after- tax profits, but pays number dividing. Thus, retained
earnings are RS 50000. the share holders equity is now RS 100000+ RS 50000 =150000 and the book
value per share is rs 1500000/10000=RS 25.Although one might expect the book value per share of stock
to correspond to the liquidating value (per share) of the company, most frequently does not. Often assts
are sold for less than their values, particularly when liquidating costs are involved.

Market value
Market value per share is the current price at which the stock is traded. For actively traded stocks,
market price quotations are readily available. For the many in active stocks that have thin markets,
price are difficult to obtain. Even when obtainable, the information may reflect only the sale of a few
shares of stock of common stock and not typify the market value of the firm as the whole. The market
value of a share of common stock will usually differs from its book value and its liquidating value.
Market value per share of common stock is a function of the current and expected future dividends of the
company and the perceived risk of the stock on the part of investors.

Rights of common share holders:

1.Rights of income:

If the company fails to pay contractual interest and principle and

payments to creditors, the creditors are able to take legal action to insure that principle payments are
made of company is liquidated.

Common share holders, on the other hand, have legal recourse to a company for not distributing profits.
Only if management, the board of directors, or both engaged in fraud may share holders take their case
to court and possibly force the company to pay dividends.

1. voting rights:

The common shares of a company are its owners and they are entitled to elect a board of
directors. In a large corporations shares holders usually exercise only indirect control through the board
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of directors they elect. The board, in turn, select the management, and the management actually controls
the operations of the company. In a sole proprietorship, partnership, or small corporation, the owners
usually control the operation of the business directly.

2. proxies and proxy contests:

common share holders are entitled to one vote for each share of stock that they own . it is
usually difficult, both physically and financially, for the most share holders to attend a corporations
annual meetings. Because of this, many share holders vote of means of a proxy, a legal document by
which share holders assign their right to vote to another person.

3. voting procedures:

Depending on the corporate charter, the board of directors is elected under either majority
rule voting system or a cumulative voting system. Under the majority rule system, stock holders have one
for each share of stock that they own, and they must vote for each director position that is open. Under
cumulating voting system, a stock holder is able to accumulate votes and cast them for less than the total
number of directors being elected. The total number of votes of each share holders is equal to the number
of shares the stock holder times the number of directors being elected.

ISSUE MECHNISM:

The success of an issue depends, partly, on the Issue Mechanism.

The methods by, which new issues are made of

1. public issue through prospectus.

2. Offer for sale.

3. Placement.

4. Rights issue.

1. Public Issue Through Prospectus :

Under this method, the issuing companies themselves offer directly to general public a fixed
number of shares at a stated price, which in the case of new companies is invariably the face value of the
securities, and in the case of existing companies, it may something include a underwritten to ensure

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arising out of unsatisfactory public response. Transparency and wide distributions of shares are its
important and advantages.

The foundation of the public issue method is a prospectus, the minimum contents of which are
prescribed by the Companies Act 1956. It also provides both civil and criminal liability for any
misstatement in the prospectus. Additional disclosure requirements are also mandated by the SEBI.

The content of the prospectus, inter aria, include:

 Name and registered office of the issuing company.

 Existing and proposed activities.

 Board of directors.

 Location of the industry.

 Authorized, subscribed and proposed issued of capital to public.

 Dates of opening and closing of subscription list.

 Names of broker, underwriter, and other from whom application forms along with copies of
prospectus can be obtained.
 Minimum subscription.
 Names of underwriter , if any, along with a statement that in the opinion of the directors, the
resources of the underwriter are sufficient to meet the underwriting obligation.
 A statement that the company will make an application stock exchange for the permission to deal in
or for a quotation of its and so on.

2. offer for sale:

Broker to their own client of securities which have been previously purchased or subscribed”.
Under this method, securities are acquired by the issue houses, as in offer for sale method, but instead of
being subsequently offered to the public, they are placed with the client of the issue houses, both
individual and institutional investors. Each issue house has a prepared to subscribe to any securities
which are issued in this manner. Its procedure is the same with the only difference of ultimate investors.
In this method, no formal underwriting of the issue is required as the placement itself amount to
underwriting since the houses agree to place the issue with their clients.The main advantages of placing,
as a method issuing new securities, is its relative cheapness. There is a cost cutting on account of
underwriting commission, expense relating to applications, allotment of shares and the stock exchange

22
requirements relating to contents of the prospectus and its advertisement. This method is generally
adopted by small companies with unsatisfactory financial performances.
Its weakness arises from the point of distribution of securities. As the securities are
offered only to a select group of investors, it may lead to the concentration of shares in to a few hands
that may create artificial scarcity of scripts in times of hectic dealings in such shares in the market.

3.Rights Issue :
Only the existing companies can use this method. In the case of companies whose shares are
already listed and widely-held , shares can be offered to the existing shareholders. This is called right
issue. Under this method, the existing shareholders. Are offered the right to subscribed to new shares in
proportion to the number of shares they already hold. This is made by circular to existing shareholders
only.
In India, section 81 of the companies act 1956 provides that where a company increases
its subscribed capital by the issue of new shares, either after two years of its formation or after one year
of first issue of shares whichever is earlier, these have to be first offered to the existing shareholders with
this requirement by passing a special resolution to the same effect. The chief merit of rights issues is that
it is an inexpensive method.
Sweat equity shares :
Under section 9Aof the companies Act , 1956, a company can issue sweat equity shares to its employees
or directors at discount or for consideration other than cash for providing know-how making available
rights in the nature of intellectual property rights or value additions etc on the following.

conditions:
1. The issue of sweat equity share is authorized by a special resolution passed by the company in the
general meeting.

2. The resolution specifies the number of shares, current market,

Price, resolution, if any, and the class or classes of directors Or employees to whom such equity shares
are to be issued.

3. The company is entitled to issue sweat equity shares after completion of one year from the date of
Commencement Of business.

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4. The equity shares of the company must be listed on a recognized stock exchange.

5. The issue of sweat equity shares must be listed on a accordance with the regulations made by the
SEBI in the behalf.

6. An unlisted company can issue sweat equity shares in accordance with the prescribed guidelines
made for this purpose.

7. All the limitations, restrictions and provision relating to equity shares shall be applicable to sweat
equity shares.

[B] PREFERENCE SHARES:

Preference shares are a hybrid security because it has both ordinary shares and bonds. Preference
shareholders have preferential rights in respect of assets and dividends. In the event of winding up the
preference share holders have a claim on available assets before the ordinary shareholders. In addition,
preference shareholders get their stated dividend before equity shareholders can receive any
dividends.

TYPES OF PREFERENCE SHARES:

1. Cumulative and Non-cumulative preference shares:

The cumulative preference gives rights to demand the unpaid dividends of any year, during
the subsequent ears when the profits and ample. All preference dividends arrears must be paid before
any dividends can be paid to equity shareholders. The non cumulative preference share carry a right to a
fixed dividend out of the profits to any year. In case profits are not available in a year, the holders get
nothing, nor can they claim unpaid dividends in subsequent years.
2. Cumulative convertible preference shares:
The cumulative convertible preference (CCP) share is an instruments that embraces features of both
equity shares and shares and preference shares, but which essentially is a preference shares. Since the
CCP shares capital would constitute a class of shares, distinct from purely equity and purely
preferences share capital, the rights of the instrument holders must be stated either in a general body
resolution or in the articles or in the terms of issues inhe offer documents viz., prospectus /letter of offer.
3. Participating and non participating preference shares:

Participating preference shares are those shares which are entitled to a fixed
preferential dividend and . in addition , carry a right to participate in the surplus profits along with
equity shares holders after dividend at a certain rate has been paid to equity share holders.

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Again in the event of winding up, if after paying back both preference and equity share holders, there is
still any surplus left, then the participating preference share holders get additional shares in the surplus
assets of the company. Unless expressly provided, preference share holders get only the fixed preference
dividends and return on capital in the event of winding up out of realized values of assets after meeting
all external liabilities and nothing more. The rights to participate may be given either in the memorandum
or articles or by virtue of terms of issue.

4. Redeemable and Irredeemable preference shares:

Subjects to an authority in the articles of association, a public limited company may

issue redeemable preference shares to be redeemed either at a fixed date or after a certain period of time
during the life time of the company. The companies act, 1956 prohibits the issue of any preference share
which is irredeemable or is redeemable after the expiry of a period of twenty years from the date issue.

Power to Issue Redeemable Preference Shares:

Section 80 of the companies act 1956 permits a company to issue

redeemable preference shares if:
 The company is limited by shares.
 Its article of association authoriese the issue of redeemable preference shares.
 Those shares are redeemable at the option of the company.

A company is allowed to issue redeemable preference shares in the following circumstances:

 Such preference shares shall be redeemed only out of profits of the company, which would
otherwise be available for dividend.
 Such redemption can also be made out of the proceeded of fresh issues of shares made of the
purpose of redemption.
 Before redemption, such shares must be fully paid up.The premium on redemption shall be
provided out of profits of the company or out of securities premium account, before the share are
redeemed.
 Where shares are redeemed out of profits to a separate account called ‘capital
 The redemption of preference shares under this section shall not be taken as reducing the
authorized capital of the company.
 The capital redemption reserve account may used for issue of fully paid bonus shares.Companies
are not allowed to issued irredeemable preference shares or preference shares which are redeemable
after the expire of a period of 20 years from the date of its issue.In case of default, the company and

25
every officer of the company who is indefault shall be punishable with a fine which may extend to Rs
10000.
Deferred/ Founders shares:
A private company any issue what are known as deferred or founder’s shares.
Such shares are normally held by promoters and directors of the company. That is why they are usually
called of a smaller denomination, say on rupee each. How ever they are generally given. equal voting
rights with equity shares, which may be of higher denomination, say Rs10 each. Thus, by investing
relatively lower amounts, the promoter may gain control over the management of the company. As
regards the payment of dividends have been declared on the preference and equity shares. It is because of
this deferment of the dividend payment that these shares are also called deferred shares. The promoters,
founders and directors tend to have direct interest in the success of the company they will receive
dividends on these shares only if the profits are high enough to leave a balance of after paying dividends
to preference an equity shareholders. Besides greater the profits of the company , the higher will be
dividends paid on these shares.

Issued share at a premium:

When a company issues shares at a premium, whether or cash or consideration

other than cash, the premium collected on those shares shall be transferred to a separate account called
‘securities premium account’.The provision of the act relating reduction of shares capital shall also apply
to the securities premium account may be applied by the company in the following ways:
In paying up un issued shares of the company to be issued to members of the company as fully paid

up shares.

1. In writing off the preliminary expenses of the company.

2. In writing off the expenses of, or the commission paid or discount allowed on, any issue of shares

debentures of the company.

3. In providing for the premium payable on redemption of any preference shares or debentures.

Issued share at a Discount:

The issued of shares at a discount must be of a class of shares issued by the company.
1. The issue of shares at a discount must be authorized by a resolution passed in the general meeting
and sanctioned by the central government.
2. The resolution shall specify the maximum rate of Discount at which the shares are to be issued.
3. The maximum rate of discount must not exceed 10% unless the central government is of the
opinion that higher percentage of discount may be allowed in special circumstances.

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 4. The shares must be issued within two months from the date of sanction by the or within such
extended time as the central government may allow.

5. The issue of shares at a discount can be done by a company only a year after the commencement
of the business by the company.
6. In case of revival and rehabilitation of sick industry companies under chapter VIA, the issue of
shares at discount shall be sanctioned by the ‘Tribunal’ instead of ‘central government’.
7. Every prospectus relating to issue of shares shall contain the details of discount allowed on the
issue of shares or the unwritten off amount f discount at the date of issue of prospectus.
8. In case of default , the company and every officer of the company who is in default shall be
punishable with fine which may extend to Rs.500.Shares issued for consideration other than cash
9. To the underwriters of shares and promoters by way of payment remuneration or for expenses
incurred.
10. To the vendor from whom the running business is purchased, as purchase price or
consideration.
11. Issued of bonus shares out of the reserves to the existing shareholders of the company

Global Depository Receipt (GDR):

With the growth in international equity issuance, together with growth in the underlying secondary
market investment, an increasing need has been felt for better fungibility. The investors demand stocks
that trade freely on an international basis without restrictions. The depository receipts have be used as a
partial solution to this problem. American depository receiptshave been the favored forms of investments
by US investors in foreign equities. A number of international equity offers, particularly some Asian
markets have increasingly used global depository receipts (GDR),particularly where legal restrictions
and closed markets have prevented the world wide circulation of underlying security on a freely trade
basis. The GDRs continue to have value in liquid or restricted markets and are frequently used by
project companies to raise equity funds.

CHARACTERISTICS OF A GDR:

 Depository receipts are negotiable certificates with publicly traded equity of the issuer as
underlying security.
 An issue of depository receipts would involve the issuer, issuing agent to a foreign depository.
 The depository, in turn, issues GDRs evidencing their rights as share holders.
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  Depository receipts are denominated in foreign currency and are listed of international exchange
such as London or Luxembourg.
 GDRs enable investors trade a dollar denominated instrument on an international stock exchange
and yet have rights in foreign shares.
 The principle purpose of the GDR is to provide international investors with local settlement.
 The issuer issuing the shares has to pay dividends to the depository in the domestic currency.

 The depository has to then convert the domestic currency into dollars for onward payment to
receipt holders. GDRs bear no risk of capital repayment.

DERIVATIVES:
It is a contract whose value depends on or value depends on or derives from the value of an underlying asset
[say a share, forex, commodity or an index]. In its broadest sense a derivative attempts to hedge against the
variability of any economic variable. Thus exposures or perceived risks to a firm arising from the variation
in interest rates, exchange rates, commodity prices and equity prices can be hedged through an appropriate
derivative structure. Such a derivative structure covers a wide variety of financial contracts viz. futures,
forwards, options, swaps and different variations thereof. These contracts can be traded on the various
exchanges in a standardized manner or by custom designed for individual requirements. The history of
derivatives can be traced to the middle ages when farmers and traders in grains and other agricultural
products used certain specific types of futures and forwards to hedge, the risks.
Essentially the farmer wants to ensure that he receives a reasonable price for the grain that he would harvest
[say] three to four months later. An over supply hurt him badly. For the grain merchant, the opposite is true.
A fall in the agricultural product will push up the prices. It made sense therefore both of them to fix a price
for the future.
These was how the future market first developed in agricultural commodities such as cotton, coffee,
petroleum, soya bean, sugar and then to financial products such at interest rates, foreign exchange and
shares. In 1995 the Chicago board of trade commenced trading derivatives. For the derivatives market to
develop three kinds of participants are necessary .They are the hedgers, the speculators and the arbitrageurs.
All three must co-exist.

Participation Hedger:
A hedger is a risk averse. Typically in India he may be a treasurer in a public sector company who wants to
know with certainty his interest costs for the year 2002. therefore based on current information he would
enter into a future contracts and lock up his interest rate four years hence But in doing so he consciously
ignores what is called the upside potential-here the possibility that the interest rate may be lower in the year
2002 than what he had contract four years earlier. A hedger plays it safe. For a hedging transaction to be

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completed there must be another person willing to take advantage of the price movements. That is the
speculator.
Speculators:
Contrary to the hedger who avoids uncertainties the speculator thrives on them. The Speculator may lose
plenty of money if his forecast goes wrong but stands to gain enormously if he is proved correct. The risk
taking associated with speculation is an integral part of a derivatives market.

ARBITRAGEUR:

The third category of participant is the arbitrageur, who looks at risk less profit by simultaneously buying and
selling the same or similar financial products in different markets. Markets are seldom perfect and there is a
possibility to take advantage of time or space differentials that exits. Arbitrage evens out the price variation
with the government of India permitting futures trading in several commodities and with futures trading have
arrived in the stock markets, index based derivative trading has finally arrived in India. For smooth
functioning of derivative trading the government of India has commenced the process of dematerialization of
shares, short sale facility, electronic fund transfer facility and rolling settlements in stock markets. This will
hopefully bring transparency in the process of price discovery of the derivative and also attract a board
spectrum of the hedgers and speculators from out of professionally managed corporate that not only must
have a good balance sheet but also significant trading and risk management skills. The stock holding
corporation of India has commenced discussions with the premier stock exchanges of India about setting up a
clearing house for derivatives transactions.

Futures:
A futures contract is an exchange – traded agreements between two parties to buy or sell an asset at a
specified time in the futures at the agreed price. In the case of stock index futures contracts the underlying
asset is the specified stock index. To facilitate n the futures contracts, the exchange specifies certain standard
features of the contracts the standards contracts once bought can be sold at any time to square off the position
till the date of expiry of the contract. Similarly, once a futures contract issold, it can be bought back at any
time to square off the position. Thus a futures contract may be off set prior to maturity by entering into an
equal and opposite transaction. More than 99% of futures transactions are off set this way.
FURTURE TERMINOLOGY:

SPOT PRICE:

The price at which an asset trades in the spot market.

FURTURE PRICE:

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The price at which the future contract trades in –the futures market.

CONTRACT CYCLE:

The period over which a contract trades. The index futures contracts on the NSE as well as BSE
have one-month and two-months and three-months expiry cycles, which expire on last Thursday of the
month. Thus a July expiration contract would expire on the last Thursday of July. On the Friday following the
last Thursday, a new contract having a three - months expiry would be introduced for trading. More generally
we can say, on the first trading day after the day of the expiry of the month’s future contract a new contract
having a three - months expiry would be introduced for trading.

EXPIRY DATE:

It is the date specified in the future contract. This is the last day on which the contract will be traded. I will
cease to exist by the end of that day.

CONTRACT SIZE:

The amount of asset that has to be delivered under one contract. The contract size of the stock index futures
on NSE nifty is 200 and the contract size of the stock index futures on BSE Sensex is 50.

BASIS:

Basis is usually defined as the spot price minus the futures price. There will be a different basis for each
delivery month for same asset at any point in time. On 19th June 2001 nifty closed at 1096.65.

August 2001 nifty futures closed at 1098.90. Therefore the basis for the August nifty futures is -2.25 index
points. In a normal market, basis will be negative. This reflects the fact that the underlying asset is to be
carried at a cost for delivery in the future.

COST OF CARRY:

The relationship between futures prices can be summarized in terms of what is known as the cost of carry.
This measures the Storage cost plus the interest that is paid to finance the asset less the income earned on the
asset. In the case of stocks, dividend will be the income earned on the asset.

INITIAL MARGIN:

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The amount that must be deposited in the margin account kept with the broker at the time a futures contract is
first entered into is known as initial margin. Margins are to be strictly collected in the future and options
markets by brokers as per the exchange regulations. Otherwise the exchange cannot guarantee the trades to
all participants in the market.

MARKING TO MARKET
In the futures market, at the end of each trading day, the margin account is a adjusted to reflect the investor’s
gain or loss depending upon the futures closing price or settlement price. This is called Marking-to-Market.

MAINTENANCE MARGIN:
If the balance in the margin account falls below the maintenance margin, the investor receives a margin call
and is expected to top up the margin account to the initial margin level before trading commences on the next
day.

BETA:

Beta is a concept to be used futures and options for hedging. Beta measures the sensitivity of a share or a
portfolio to that of the index. Beta of a share is found out by relating the daily price changes of a share to the
daily changes in a stock price index. If a graph is drawn with daily changes of the share price on y axis and
daily changes in the index on x axis the slope of the straight line fitted will be the value of beta.
mathematically it is found by regression method. If the beta of Tisco is found to bel.23,it implies if the index
increases by 10% in a period, price of Tisco will increase by 12.3%. Beta of the portfolios is found by
weighted average of the betas of the shares in the portfolios. For example, an investor’s portfolio has equal
value in Tisco and Infosys. Tisco has a beta of 1.23 and Infosys has a beta 1.37. the portfolio beta is the
average of 1.23 and 1.37 which is 1.3.NSE website is providing values of beta for a large number of shares.

SPECULATORS AND HEDGERS IN FUTURES:

Speculators buy and sell derivatives to make profit, while hedgers buy and sell derivatives to reduce risk.
Speculators are vital to derivatives markets. They facilitate hedging and provide liquidity. It is highly
unlikely that hedger wishing to buy futures will precisely match hedgers selling futures in terms of contracts
to be traded. If hedgers are net sellers there will be tendency for futures prices to fall. Speculators will buy
such under period futures. Such purchases by speculators allow net sales on the part of hedgers. In so doing,
they tend to maintain price stability since they are buying into a falling market. Proper speculation thus
provides stability to prices in markets.In a liquid market, hedgers can make their transactions with ease and

31
with little impact costs. Speculative transactions add to market liquidity. speculators by definition do a lot of
information search and processing to forecast future behavior of prices. Therefore they make markets more
information ally efficient. In the stock index futures markets speculators have two alternative strategies. If
they are bullish on the index they can go long on index Futures. If the spot prices go up, future prices follow
them along with their carry premiums and the speculators make the profits.If the speculator is bearish he can
go short on the index futures. If the spot Index goes down, futures price also will go down and speculator
makes a profit. The two speculative strategies can be summarized as:

Bullish market, long index futures

Bearish market, short index futures

ARBITRAGE IN FUTURE AND SPOT MARKET:

Future prices and spot prices are tightly linked by the fair price formula. Also on the day of the expiry, the
final settlement price of the future is made equal to the spot index price. thus at the end , the spot and futures
prices converge. Any deviation between the fair price and actual price of a future can be utilized for earning
risk less profits by agents who are willing to buy in the spot market and deliver in future at expiry. Such
operations are called as arbitrage operations.
Buying in the spot and delivering in the future market is resorted to when actual futures price in the market is
higher than the fair price. if the actual future price is lower than the fair, then futures are bought and shares
are sold in the spot market to carry out the arbitrage operations.

Introduction to options:
Options give the holder or buyer of the option the right to do something. If the option is called option, the
buyer or holder has the right to buy the number of shares mentioned in the contract at the agreed strike price.
if the option is a put option, the buyer of the option has the right to sell the number of shares mentioned in the
contract at the agreed strike price. the holder or the buyer does not have to exercise this right. Thus on the
expiry of day of the contract the option may or may not be exercised by the buyer. In the contrast, in a futures
contract, the two parties to the contract have committed themselves to doing something at future date. To
have this privilege of doing the transaction at a future only if it is profitable, the buyer of options has to a
premium to the seller of options.

HISTORY OF OPTIONS:
In 1983 trading on stock index options contracts started. Since 1983, trading on options of individual options
decreased as most of the trading shifted to index options. One of the reasons is that volatilities of the

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individual scripts is high and therefore premiums on individual scripts is also high. In India stock index
options were introduced in june 2001.

OPTION TERMINOLOGY:
INDEX OPTION:
An option having the index as the underlying asset. Like index futures contracts, index option contract are
also called cash settled.

STOCK OPTIONS:
Stock options are options on individual stocks. A contract gives the holder the right to buy or sell shares at
the specified price.

AMERICAN OPTIONS:
American options are options that can be exercised any time up to the expiration date. This name is only a
classification and does not imply that they are available only in America.

EUROPEAN OPTIONS:
European options are options that can be exercised only on the expiration date. European options areeasier to
analyze than American options, and properties of American options are frequently deducted from those of its
European counter part.

CALL OPTIONS:
A call option gives the holder the right but not the obligation to buy an asset by a certain date for a certain
price.

PUT OPTIONS:
A put option gives the holder the right but not the obligation to sell an asset by a certain date for a certain
price.

BUYER OF OPTIONS:
The buyer of the option, either call or put, pay the premium and buys the right but not the obligation to
exercise his option on the seller/writer.

WRITER OF AN OPTION:
The writer of a call/put option is the one who receives the option premium and is thereby obliged to sell/buy
the asset if the buyer exercises on him. Option writer is the seller of the option contract.

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STRIKE PRICE:
The price specified in the option contract at which buying or selling will take place is known as the
strikeprice or the exercise price.

OPTIONS PRICE:
Option price is the premium, which the option buyer pays to the option seller or writer. Black and scholes
formula is widely used for determining the fair value of share.

EXPIRATION DATE:
It is the date on which the European option is exercised. It is also called as exercise date, strike date or
maturity date.

INTRINSIC VALUE OF AN OPTION:

The option premium cab be broken down into two components- intrinsic value and time value.The intrinsic
value of an option is the amount, which the holder will get by exercising his option and immediately selling
or buying the acquired shares in the spot market. For example, if the strike price of a call option on Reliance
shares is Rs.325 and current market price is Rs.350. The holder of
the option can buy the Reliance share at Rs.325 by exercising the option and can make a profit of Rs.25 by
immediately selling them in the market. In this case the intrinsic value of the call option is Rs.25.

TIME VALUE OF THE OPTIONS:

The time value of an option is the difference between its premium and its intrinsic value.

AT-THE-MONEY:
An option is called at-the-money option when the strike price equals, or nearly equals, the spot price of the
share. For example, if the strike price of stock index option on Nifty index is also at 1080, the option is called
at-the-money option.
SPOT PRICE > STRIKE PRICE
IN-THE-MONEY:
A call option is in the money when the underlying asset price is greater than the strike price. for example, if
the strike price in the case of Nifty stock index option is 1050 and Nifty is at 1080, the option is in-the-money
option.

SPOT PRICE = STRIKE PRICE

OUT-OF-THE-MONEY:

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A call option is out-of-the-money if the strike price is greater than the underlying asset price. For example, if
the strike price in the case of Nifty stock index option is 1100 and Nifty is at 1080, the option is out-of-the-
money option.

SPOT PRICE < STRIKE PRICE

USES OF OPTIONS:
Like futures options are also used for hedging and speculations. Arbitrageurs can look for miss Pricing
between spot, option and futures markets and do transactions whenever they find miss pricing.

TRADING OR SPECULATING WITH OPTIONS:

Options provide multiple opportunities for trading. Options premiums are determined by volatility of the
underlying asset, time to expiration of the option and the risk free interest rate .Changes in any of these
variables changes option premiums even though the price of the underlying asset remains constant. Thus a
speculator who analyses multiple dimensions has a lot more opportunity in options to strategize and act.

ARBITRAGE WITH OPTIONS:

Arbitrage involves making risk less profits from miss pricing; relatively under priced options are bought and
relatively overpriced are sold. Pure arbitrage requires that none of the arbitragers own capital is used. He
should be able to borrow all the capital required. If the arbitrager uses his own capital, the process is called
quasi-arbitrage. There will be number of situations providing arbitrage opportunity as three markets, spot,
futures and options are involved

SUMMING UP:
Options are used by hedgers and speculators. Options provide a variety of ways in which they can be used to
attain the hedging and speculative objectives. Thus trading interest comes from different participants with
different motives. Arbitrageurs will have opportunities whenever option premiums are out of line with the
fair prices. A fully developed option market provides a good market for traders to display their trading
expertise and hedgers an alternative-hedging medium.

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FORWARD CONTRACTS:
In order to avoid this risk one way could be that the farmer may sell his crop at an agreed-upon rate now with
a promise to deliver the asset, i.e., crop at a pre-determined date in future. This will at least ensure to the
farmer the input cost and a reasonable profit. Thus, the farmer would sell wheat forward to secure himself
against a possible loss in future. It is true that by this way he is also foreclosing upon him the possibility of a
bumper profit in the event of wheat prices going up steeply. But the, more important is that the farmer has
played safe and insured himself against any eventuality of closing down his source of livelihood altogether.
The transaction which the farmer has entered into is called a forward transaction and the contract which
covers such a transaction is called a forward contract.

QUICK AND LOW COST TRANSACTIONS:

Futures contracts can be created quickly at low cost to facilitate exchange of money for goods be delivered at
future date. Since these low cost instruments lead to a specified delivery of goods at a specified price on a
specified date, it becomes easy for the finance managers to take optimal decisions in regard to production,
consumption and inventory. The costs involved in entering into future contracts in significant as compared to
the value of commodities being traded underlying these contracts.

Price discovery function:

The price of futures contracts incorporates a set of information based on which the producers and the
consumers can get a fair idea of the future demand and supply position of the commodity and consequently
the futures spot price. this is known as the ‘price discovery’ function of futures.

Advantage of informed individuals:

Individuals who have superior information in regard to factors like commodity demand supply, market
behavior, technology changes etc., can operate in futures markets and impart efficiency to the commodity’s
price determination process. This in turn leads to a more efficient allocation of resources.

Hedging Advantage:

Adverse price changes, which may lead to losses, can be adequately and efficiently hedged against
through futures contracts.An individual who is exposed to the risk of an adverse change while holding a
position, either long or short a commodity will need to enter into a transaction which could protect him in the
event of such an adverse change. For example a trader who has imported a consignment of copper and the
shipment is to reach within a fortnight may sell copper futures if he foresees fall in copper prices. In case

36
copper prices actually fall, the trader will lose on sale of copper but will recoup through futures. On the
contrary if copper prices rise, the trader will honour the delivery of the futures contract through the imported
copper stocks already available with him.

[G] Employee stock option plans:

“Employees stock options means the options given to the whole-time directors, officers or employees of
acompany, which gives such directors, officers or employees the benefit or right to purchase or subscribe at a
future date, the securities offered by the company at a pre-determined price”. Stock option is defined as the
“right to buy a designated stock at an option of the holder at any time within a specified period at a
determinable price. it can also represents the right to sell designated stockwithin an agreed period at a
determinable price.

Benefits of ESOPs:

The ESOPs will benefit the organization in the following ways:

 It is used as a HRD tool by the management in connection with restriction of higher turnover of the
employees and retaining the best talents with the organization.
 The plan is used as a technique of corporate financing modernization, expansion, spin-off a division,
acquisition etc.
 Issuing share, alternative to cash, have no immediate effect until they are converted into cash
affecting new monetary supply into the real company.
 Employees stock ownership plans in USA is used to avoid hostile takeover.

 Without any financial strains the employees are rewarded by printing of share certificated only.
Studies undertaken in USA on ESOPs suggest that they tend to out perform their traditionally organized
counterparts in variety of ways, better survival rates, higher productivity, a better employment and sales
growth and higher net operating margins
List of Bond:
1. Zero Interest Bond:
It refers to those bonds which are sold at a discount from their eventually maturity value and have zero
interest rate. These certificates are sold to the investors for discount the difference between the face value of
the certificates and the acquisition cost is the gain to the investors. The investors are not entitled to any
interest and are entitled to only repayment of principle sum of the maturity period. The individual prefers
ZIB because of lower investment cost and low rate of conversion to equity if ZIBs are fully or partly
convertible bonds. This is also a means of tax planning because the

37
bond don’t carry any interest, which otherwise taxable. Company also find ZIB quite attractive because there
is no immediate commitment. On maturity the bond can be converted into equity share or convertible
debentures depending on the requirement of capital structure of a company.

2. Deep Discount Bond( DDB):

The IDBI for the first time issued DDB for a deep discount price of Rs 2700/- an investor gets bond with
a face value of Rs 100000/-. The DDB appreciates to its face value over the maturity period of 25 Years. The
unique advantage of DDB is the elimination of investment risk. It allows an investor to lock in the yield to
maturity or keep on withdrawing from the scheme periodically after 5 years by returning the certificate.The
main advantage of DDB is that the difference between the sell price and the original cost of acquisition will
be treated as Capital gain, if the investor sends the bonds on stock exchange.The DDB is safe, solid and
liquid instrument. Investors can take advantage of these new instruments in balancing their mix of securities
to minimize the risk and maximize returns.

3. Callable Bonds:

. A callable bonds is a bond which the issuer has the right to call in and payoff at a price
stipulated in the bond contract. The price the issuer must pay to retire a callable bond when it is called is
termed as call price. The main advantage in callable bond is the issuers have an incentive to call their existing
bonds if the current interest rate in the market is sufficiently lower than the bonds coupon rate. Usually the
issuer cannot call the bond for a certain period after issue

4. option tender bonds:

The option tender bonds are bonds with put option which give the bond holders the right to
sell back their bonds to the issuers normally at par. Issuers with put are aimed both at investors who are
pessimistic about the ability of interest rates to decline over the long term and at those who simply prefer to
take cautious approach to their bond buying.

5. Guaranteed Debentures :
Some businesses are able to raise long term money because their debts are
guaranteed, usually by theirparents companies. In some instances the state governments guaranteed the
bonds issued by the state government undertaking and corporation like electricity supply board, irrigation
corporation etc.

6. subordinated debentures:

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 A subordinated debenture is an unsecured debt, which is junior to all other debts i.e.. other
debt holders must be fully paid before the subordinated debenture holders receive anything. This type of debt
will have a higher interest rate than more senior debt and will frequently have rights of conversion into
ordinary shares. Subordinated debt is often called mezzanine finance because it ranks between equity and
standard debt.

7. Floating rate bond:

The interest paid to the floating Rate bondholders changes periodically depending on the market rate of
Interest payable on thegilt-edged securities these bonds are called adjustable interest bond or variable rate
bonds.

8. Junk bond:
Junk bonds are a high yield security which because a widely used source of finance in take overs and
leveraged buyouts. Firms with low credit ratings willing to pay 3 to 5 % more than the high grade corporate
debt to compensate for the greater risk.

9. Indexed bonds;
Fixed income are fixed sum repayments are uneconomic in times of rapid inflation. Indexed bond is
financial instrument which retain the security and fixed income of the debenture but which also provides
some safeguard against inflation.

10. Inflation adjusted bond:

IABs are bonds which promise to repay both the principal and interest, by floating both these
amounts upwards in line with the movements in the value of the specific index of commodity prices.

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ADVANTAGES OF DEMAT:
Transaction the depository way has several advantages over the traditional system of share certificates:
 Trading in demat segment completely eliminates the risk of bad deliveries, which in turn all cost and
wastage of time associated with follow up for rectification. This reduction in risk associated with bad
delivery has lead to reduction in clearing member age to the extent of 0.5% by many clearing
member age firms.
 Cost of delay/ courier/ neutralization/ the need for further follow up with the clearing member for
shares returned focompany’s objection, which happens only in case of physical securities can be
avoided.
 The investor can also the expense of applying for duplicated certificates in case of loss mutilation of
certificates. The investor can also receive your bonuses and rightd in to your depository account as a
direct credit, thus eliminating risk of loss in transit.
 RBI has increased the limit of loans against dematerialized securities as collateral to Rs 20 lakh
borrower against Rs10 lakh per borrower in case of loan against physical securities.
 RBI also reduced the minimum margin to 25% for loan against dematerialized securities as against
50% for loan against physical securities.
 Facilitation of cash corporate action such as dividends.
 NSDL provides details of beneficial owners as on a given day (the record date) to the issuer
company/ registrar so as to enable the company to calculate the benefits arising out of these holdings.
The company’s registrar and transfer agent forward the cash benefits to the investor directly.

 Lending and borrowing of securities. A client having a beneficiary account with the DP can lend or
borrow securities in electronic form through an approval intermediary,who has opened a special
intermediary account with DP.
 Transmission of securities NSDL facilities transmission of securities balance of any client due to
death, lunacy, bankruptcy, insolvency or by any other lawful means other transfer . in case where the
deceased was one of the joint holders in the client account. In case where the deceased was a sole
holder of the client account, his legal heirs, or the legal representatives shall be the only person
recognized by NSDLas having any title to the security balance in that sole client account.

TRADING, CLEARING AND SETTLEMENT OF DEMATERILISED SECURITIES.

1. TRADING:
Trading of dematerialized securities is currently available at national stock exchange(NSE),the Mumbai stock
exchange (BSE)and Calcutta stock exchange (CSE). At NSE, dematerialization securities are traded two

40
separate segments called “AE segment” and :BE segment” which are in addition to the segment for trading in
securities in the physical form called “ EQ segment”.In case of AE segment, dematerialized securities are
traded only in the market lot, where as in BE segment these can be traded in multiples of one share. At BSE
and CSE, dematerialized are traded in a separate segment called Demat segment and physical securities are
traded in unified segment.For trading in physical securities, the sub-brokers collect the orders from their
client and place these order with the main brokers for execution in the market. The main broker enter the
details of each trade against each sub-broker in a separate kept for each sub-broker. After execution of the
trade, the main broker issues the contract note in the name of sub-broker who in turn issues separate
purchases /sale note to his clients. There are only few cases in which the main broker issues the contract note
in the name of the clients directly.Even in the case of dematerialized securities the same system can be
followed.
However in this case since the fear of bad delivery is less, the brokers directly issue the contract note in the
name of clients, who is in edition t, facilitate the cost effective settlement with a clean audit trail.Trading in
dematerialized securities is very similar to trading in physical securities except that physical segment follows
account period settlements and demat segment follow rolling settlement.
In rolling settlement, all trades executed on a particular day will be settled on the following 3 rd working day.
This means trades executed on Monday will be settled on Thursday.

2. TRADES:

All the traders executed at the exchanges are settled by the clearing members(CM), as in the case of
securities in the physical form. To settle traders in demat segment each CM should open one clearing a/c with
any of the DP.

The procedures for opening clearing accounts are:

 Approach a DP.

 Fill up an account opening form.

 Sign on an agreement with the DP.

 Application is forwarded NSDL by DP.

 NSDL allots a number identified as CM – BP – ID.

 DP opens account and an account number is provided along with CM – BP – ID to the

clearing member.

The clearing account consists of three parts:

41
 Pool account

 Delivery account

 Receipt account

Clearing account (CC/HH):

Delivery Pool account Receipt

Account

Selling
client Buying
client

Pool Account:

It has two roles to play in clearing of securities. Before pay in the selling client of the CM transfers
ecurities from his client account to the CM pool Account. The CM transfers the securities from his pool
Account to the account of the buying client.

Delivery Account:

The CM transfers the securities in, from the pool Account to the delivery Account before pay in at the
time of pay-in NSDL flushes out the securities in the delivery Account and transfers the same to the CC/HH.
Receipt Account:

On pay- out day, the CC/HH transfers securities to the pool account through the receipt account. CM has
to ensure that before book closure or record date of any company the securities are moved from CM pool
Account to a beneficiary account as holding in pool Account for longer period is not allowed.

42
3. SETTLEMENT:

CM Client client client client

DP1 NSDL DP2

Pool Client Client Client Client

A/C A A/C B A/C C A/C D A/C

In the depository system, any trade that is cleared and settled through the clearing corporation (CC/HH) is
called market trade.

Procedures for pay-in of securities:

 Give receipt instruction to the DP for transfer of securities from client

account to the pool account or give a standing instruction for the same.

 Delivery to CC/HH instruction for the transfer of securities from pool

account to delivery account for pay-in.

clearing Delivery pool Account

Account

Both pay-in and pay-out happens to be on 5 th working day after the trading and the instructions to transfer the
securities from the pool account to delivery account must be given before pay-in such that this transfer is
43
effected before pay-in. the transfer instruction is taken as an authority to transfer the security irrespective of
when the client gives the delivery instruction, the securities will be parked in the delivery account till final
pay-in and the facility of multiple instructions from the pool account to the delivery account is also provided
to the investors.In case of excess transfer of shares to the delivery account or excess delivery to CC/HH. The
instruction slip can be cancelled and issued new one or the CC/HH will return the securities at the time of
payout respectively.
Procedure for payout of securities:

Transfer of securities from CC/HH to pool account through receipt in account

Clearing Receipt Pool

Delivery instruction to transfer from pool account to client account on pay-out Client

CM client client client client

DP1 NSDL DP2

Pool Client Client Client Client

A/C AA/C BA/C CA/C A/C DA/C AA/C

On the delivery of the instruction form the client’s name, client’s Dp ID and DP name of the client must be
mentioned and ensure that receipt instruction given by client to receive the securities bears the same
execution date as given in the delivery instruction. However, the broker can hold the securities in the pool
account until the client meets his obligation but before the closure of books, the balances must be transferred
as the balances in the pool account which are not entitled for any corporate benefits.

44
INTER DEPOSITORY TRANSFERS:

Transfer of securities from an account in one depository to an account in another depository is termed as an a
inter depository transfer. This facility is quite similar to the account transfer with in NSDL.It can be done
only for securities that are available for dematerialization on both the depositories.The account in NSDL of
can be either a clearing account or a beneficiary account.For debiting the clearing account or the beneficial
account with NSDL, the form for “ Inter depository delivery instructions ” is required to be submitted by the
clearing member/beneficial owner to its DP.For crediting the clearing account or the beneficial account, the
standing instruction given for automatically crediting the account is applicable. In case the standing
instruction are not given, then the form for “ Inter Depository Receipt Instruction “ is required to be
submitted by the clearing member/ beneficial owner to its DP.As both the depositories are connected to each
another, the batches to effect inter depository transfers are presently exchanged twice on each working
day.The issuer/registrar and transfers agent is informed about the transfer by both the depositories and it
amends its accordingly. Government securities cannot be transferred from one depository to another using
this facility.
REMATERIALIZATION OF SHARES:

Rematerialization is the term used for converting electronic holdings back into physical certificates.

The DP will forward the investors request NSDL after verifying that the investors have the handle
certificates. necessary balances NSDL in turn will intimate the registrar who will print the certificates and
dispatch the sale to investors. In this process NSDL doesn’t directly.

MATERIALIZATION OF SHARES:

Materialization is the term used for converting electronic holdings back into physical certificates.The DP will
forward the investors request to NSDL after verifying that the investors have the necessary balance NSDL in
turn will intimate the registrar who will print the certificates and dispatch the same to investors in this process
NSDL doesn’t directly handle certificates.

Steps involved in materialization:

45
 Clients sends RRF (Remat request form) to DP

1. DP sends the remat order to NSDL through system.

2. DP sends the RRF and RRN to the issuer/RTA.

3. NSDL then sends the remat request to issuer/ RTA.

4. The issuer/ RTA intimates the confirmation /rejection status to NSDL.

5. The NSDL in turn intimates this to DP.

6. The issuer/ RTA sends the printed certificates to the client.

NATIONAL SECURITIES DEPOSITORY LIMITED:

NSDL was inaugurated in November 1996, as the first depository in the country to avoid the myriad
problems in settlement.In depository system, securities are held in securities accounts. Which more or less
similar to holding funds in bank accounts. Transfer of ownership is done through simple account transfer.
This method does away with all the risks and hassles normally associated with paper work. Consequently, the
cost of transaction in depository environment lower as compared to transaction in physical
certificates.Trading in dematerialized securities is quit similar to trading in physical securities. The major
difference is that at the time of settlement, instead of delivery/receipt of securities in the physical form, the
same is effected through account transfer. Currently dematerialized trading is available at NSE, BSE,
CSE.Exclusive demat segment follow rolling settlement (T+3) cycle and the unified segment follows account
46
period settlement cycle. All investors, other than the institutional investors, can deliver securities either in the
physical or dematerialized form in the market. From January 4, 1999, all categories of investors ran deliver
only in dematerialized form with respect to a select list of securities. However, initially this was applicable
only at those exchanges, which have joined the depository, but SEBI has also specified that this list is to be
expanded in a phased manner.The settlement of trades in the stock exchanges is undertaken by the clearing
corporation (CC)/ clearinghouse (CH) of the corresponding stock exchanges. While settlement of
dematerialized securities are effected through NSDL, the funds settlement is effected through the clearing
banks. The physical securities are settled by the clearing members directly with the CC/CH.

47
 CHAPTER-3
Company profile
Industry profile

48
 COMPANY PROFILE

Emkay Global Financial Services Ltd. is a leader in the financial services sector, actively

creating wealth for our clients for nearly two decades.

Founded in 1995 with a clear goal of offering sound, research-backed financial advice, we have

successfully served a wide variety of highly distinguished clientele around the world; including

foreign institutional investors (FIIs), domestic mutual funds, hedge funds, banks, insurance

companies, private equity firms, corporate houses, small and medium-sized enterprises and high net

worth individuals (HNIs).

Management:
A blend of experience and knowledge, our leaders help Emkay attain excellence in the world of finance. Be it
research, markets, technology or even day-to-day operations, the captains that sheer the Emkay ship are
pioneers in their own right. Meet our team of Business Leaders, who infuse speed and flexibility in decision-
making and implementation, empowering our business in the financial markets.

Board Of Directors

Krishna Kumar Karwa

Managing Director

Prakash Kacholia

49
 Emkay's Mission

To provide our clients with secure, customised & comprehensive financial solutions to achieve sustained
growth.
The client base is a blend of institutional high total assets and retail financial specialists. These broadened
base of client together with its wide extent of administrations, gives us the important steadiness and quality to
climate the instability much better then that of the contenders and furthermore keep up elevated requirements
of client benefit levels all through. Emkay meets the help needs of this speculator base through execution
aptitudes driven by an accomplished deals group and research supported guidance created by a group of
experienced experts.
Emkay warning administration go from contributing, exchanging, explore, money related and arranging the
portfolio administration which are offered to an extensive number of high total assets people and corporate.
The vast majority of these administrations are customized to address the issues of HNI's and corporate in
accordance with their speculation objective.
Auxiliaries:
VISION:
Handing over the responsibility for your finances involves immense trust. At Emkay, we go to great lengths
to ensure we hold true to your expectations right from ensuring that every person from Emkay meets the set
value proposition. And, also recall Emkay’s mission to be achieved collectively without forgoing values that

the company lives by .

50
 Emkay balance top restricted is an auxiliary of our organization with 85% offers held by our
organization. EFL was framed as a privately owned business on sixteenth may 2005 for carrying on offer
financing exercises and has been changed over to open restricted organization on Feb. 14, 2006.
Emkay exchange restricted is a backup of our organization our organization holds 100% offers held of ECL.
The organization was shaped on fifth Jan 2006 and proposes to bear on item broking business. It proposes to
put resources into the enrollment of two product trades in particular:
1. MCX product trade
2. NCDX product trade
MISSION
• To furnish inquire about driven fair guidance with the goal economical unrivaled venture returns for
our customers.
• To give impeccable execution support to meet differing customer needs on a stage of polished
methodology and honesty.
Qualities
• To be reasonable, compassionate and responsive in serving our clients.

• To regard and fortify our kindred representatives and the intensity of cooperation.

• To endeavor determinedly to enhance what we do and how we do it.

• To dependably acquire and be deserving of our client's trust.

Real occasions:

Executed first exchange Sensex fates advertise on BSE 2000

Executed first Sensex choices exchange 2000

The Top10 residential financier houses are evaluated by Asia cash survey 2004 of reserve directors 2005.

Directorate:
Mr. G.P. GUPTA, Chairman, has 35 years' involvement being developed saving money. He was in the past
the executive and overseeing chief of modern improvement bank of India and director of UTI. Moreover,
being a past executive of Bharat overwhelming electrical constrained, National Aluminum Co. Constrained,
Hindustan Aeronautics Ltd.

51
Mr. KRISHNA KUMAR KARWA, MD, is a CA and has 17 years' involvement in the share trading system
crosswise over research, managing and execution with uncommon spotlight on the portion of the capital
markets. He additionally coordinates the riches administration administrations business, or, in other words
giving portfolio warning and hazard administration.
Mr. PRAKASH KACHOLIA, MD is a CA and has 15 years' involvement in offer broking exercises. He
drives the organization subordinates business producing exchanging methodologies and distinguishing
market openings. He has served the BSE in the limit of an overseeing load up part and on the subsidiaries
board of trustees of SEBI at the season of the dispatch of subordinates in the Indian market. He is right now
on the leading group of BSE restricted and CDSL
–
The modern securities advertise alludes to the market which bargains in values and debentures of the
corporate. It is additionally separated into essential market and optional market.
• Primary advertise (new issue showcase):-
Manages 'new securities', that is, securities which were not beforehand accessible and are offered to the
contributing open out of the blue. It is the market for bringing crisp capital up in the type of offers and
debentures. It gives the issuing organization extra assets for beginning another venture or for either extension
or expansion of a current one, and in this manner its commitment to organization financing is immediate. The
new contributions by the organizations are made either as a first sale of stock (IPO) or rights issue.
Highlights:
 Primary showcase give the channel to offer of new securities
 Primary showcase give chance to guarantors of securities
 Government and additionally corporate to raise assets to meet their prerequisite of speculation and
release some commitment
• Secondary advertise/securities exchange (old issues market or stock trade):-

It is the market for purchasing and offering securities of the current organizations. Under this, securities are
exchanged in the wake of being at first offered to the general population in the essential market as well as
recorded on the stock trade. The stock trades are the elite community's for exchanging of securities. It is a
delicate gauge and mirrors the patterns in the economy through changes in the costs of different securities. It
been characterized as, "a collection of people, regardless of whether fused or not, comprised to assist,
directing and controlling the matter of purchasing, offering and managing in securities". Posting on stock
trades empowers the investors to screen the development of the offer costs in a successful way. This helps
those to take judicious choices on whether to hold their possessions or auction or even aggregate further.
Notwithstanding, to list the securities on a stock trade, the issuing organization needs to experience set
standards and strategies.

52
II. GOVERNMENT SECURITIES MARKET –
It is otherwise called Gilt Edged Market. The plated edged market alludes to the market for Government and
semi-government securities, supported by the Reserve Bank of India (RBI). Government securities are
tradable obligation instruments issued by the Government for meeting its budgetary prerequisites. The term
plated edged signifies 'of the best quality'. This is on the grounds that the Government securities don't
experience the ill effects of danger of default and are very fluid (as they can be effectively sold in the market
at their current cost). The open market activities of the RBI are likewise directed in such securities.
It incorporates:
Emkay’s Private Wealth Management practice offers you a diverse bouquet of investment solutions

straddling both the traditional options and newer, bolder avenues. From Equities to Mutual Funds, Debt,

Bonds & Fixed Deposits to IPOs, Treasury Management, Retirement Planning, Online Broking to Depository

Services; your money will be spoilt for investment choices.

So far, piecemeal updates from different fund houses and instruments you put your money in have been the

reality of most investors’ lives. The onerous task of collecting all this information and collating it into a

single resource remains a deal breaker. Emkay takes the drudgery out of financial planning, investments, and

fund management. Our Portfolio Tracker service offers a unified view of all your investments (with Emkay

and otherwise) in one place. The tool empowers you to be as hands-on or hands-off as you desire. Design,

maintain, track and adjust your entire portfolio at will with this powerful tool.

Track the Market in Real-time

Financial markets are volatile places. Predictions that have held true for decades can change in a moment’s

time. At Emkay, we recognize this fundamental behavior of financial markets and make sure you’re always

prepared. Our timely market updates and news flashes offer you in-depth information about Indian stock

market outlook, market movements, important announcements, new policies and more.

Access to investment insights and perspectives by our research experts

Emkay ensures that your financial decision making is grounded in real, reliable data. Our large team of

financial experts, research analysts and is dedicated to gathering stock market insights, analyzing it and

generating actionable research reports that inform investment decisions. Direct access to this exclusive

53
reporting takes the guess-work out of financial forecasts and ensures that your money works doubly hard for

One of our key differentiators is imparting indepth sector, macro, markets knowledge with the multi media

approach. A popular way many clients access our data is via expert videos. These simple one-on-one videos

give clients a quick overview of sectoral, market and economy-related changes in a language that is easy to

understand and tips that are easily implementable even by laypersons without any financial training.

MANAGEMENT

Name Designation
B M Raul Co. Secretary & Compl. Officer
B M Raul Secretary
Bharat Kumar Singh Additional Director
Dhananjay Sinha Head
Divya Gandhi Head
G C Vasudeo Director
Kenin Jain Head
Krishna Kumar Karwa CEO
Krishna Kumar Karwa Managing Director
Manish VermaHead
Prakash Kacholia Managing Director
Preeti Kacholia Woman Director
R K Krishnamurthi Director
Rahul Rege Business Head
Rajesh Sharma Chief Operating Officer
S Hariharan Head
S K Saboo Director
Sachin Shah Manager
Saket Agrawal Chief Financial Officer
Sandeep Sharma Head
Satish Ugrankar Director
Sharanabasappa Jade Head - Human Resource
Shishir Dhulla Chief Technology Officer
Suveer Chainani Chief Executive Officer

54
 INDUSTRY PROFILE
FINANCIAL MARKETS
Finance is the pre-requisite for modern business and financial institutions play a vital role in the economic

system. It is through financial markets and institutions that the financial system of an economy works.

Financial markets refer to the institutional arrangements for dealing in financial assets and credit instruments

of different types such as currency, cheques, bank deposits, bills, bonds, equities, etc.

Financial market is a broad term describing any marketplace where buyers and sellers participate in the trade

of assets such as equities, bonds, currencies and derivatives. They are typically defined by having transparent

pricing, basic regulations on trading, costs and fees and market forces determining the prices of securities that

trade.

Generally, there is no specific place or location to indicate a financial market. Wherever a financial

transaction takes place, it is deemed to have taken place in the financial market. Hence financial markets are

pervasive in nature since financial transactions are themselves very pervasive throughout the economic

system. For instance, issue of equity shares, granting of loan by term lending institutions, deposit of money

into a bank, purchase of debentures, sale of shares and so on.

In a nutshell, financial markets are the credit markets catering to the various needs of the individuals, firms

and institutions by facilitating buying and selling of financial assets, claims and services.

55
CLASSIFICATION OF FINANCIAL MARKETS

56
 Financial
markets

Organized Unorganized
markets markets

Money Lenders,
Capital Markets Money Markets Indigenuos
Bankers

Industrial
Call Money
Securities
Market
Market

Commercial Bill
Primary Market
Market

Secondary Treasury Bill

market Market

Government
Securities
Market

Long-term loan
market
Capital
Market
The capital market is a market for financial assets which have a long or indefinite maturity. Generally, it

deals with long term securities which have a period of above one year. In the widest sense, it consists of a

series of channels through which the savings of the community are made available for industrial and

commercial enterprises and public authorities. As a whole, capital market facilitates raising of capital.

The major functions performed by a capital market are:

1. Mobilization of financial resources on a nation-wide scale.

2. Securing the foreign capital and know-how to fill up deficit in the required resources for economic

growth at a faster rate.

3. Effective allocation of the mobilized financial resources, by directing the same to projects yielding

highest yield or to the projects needed to promote balanced economic development.

Capital market consists of primary market and secondary market.

57
Primary market: Primary market is a market for new issues or new financial claims. Hence it is also called as

New Issue Market. It basically deals with those securities which are issued to the public for the first time. The

market, therefore, makes available a new block of securities for public subscription. In other words, it deals

with raising of fresh capital by companies either for cash or for consideration other than cash. The best

example could be Initial Public Offering (IPO) where a firm offers shares to the public for the first time.

Secondary market: Secondary market is a market where existing securities are traded. In other words,

securities which have already passed through new issue market are traded in this market. Generally, such

securities are quoted in the stock exchange and it provides a continuous and regular market for buying and

selling of securities. This market consists of all stock exchanges recognized by the government of India.

Money Market

Money markets: are the markets for short-term, highly liquid debt securities. Money market securities are

generally very safe investments which return relatively low interest rate that is most appropriate for

temporary cash storage or short term time needs. It consists of a number of sub-markets which collectively

constitute the money market namely call money market, commercial bills market, acceptance market, and

Treasury bill market.

Derivatives Market

The derivatives market is the financial market for derivatives, financial instruments like futures contracts

or options, which are derived from other forms of assets. A derivative is a security whose price is dependent

upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or

more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying

assets include stocks, bonds, commodities, currencies, interest rates and market indexes. The important

financial derivatives are the following:

 Forwards: Forwards are the oldest of all the derivatives. A forward contract refers to an

agreement between two parties to exchange an agreed quantity of an asset for cash at a

certain date in future at a predetermined price specified in that agreement. The promised

asset may be currency, commodity, instrument etc.

58
 Futures: Future contract is very similar to a forward contract in all respects excepting the

fact that it is completely a standardized one. It is nothing but a standardized forward contract which

is legally enforceable and always traded on an organized exchange.

Options: A financial derivative that represents a contract sold by one party (option writer) to

another party (option holder). The contract offers the buyer the right, but not the obligation, to buy
(call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during
a certain period of time or on a specific date (exercise).

Call options give the option to buy at certain price, so the buyer would want the stock to go up. Put
options give the option to sell at a certain price, so the buyer would want the stock to go down.

 Swaps: It is yet another exciting trading instrument. Infact, it is the combination of forwards
by two counterparties. It is arranged to reap the benefits arising from the fluctuations in the market –
either currency market or interest rate market or any other market for that matter.

It is a market in which participants are able to buy, sell, exchange and speculate on

currencies.  Foreign exchange markets are made up of banks, commercial companies, central banks,

investment management firms, hedge funds, and retail forex brokers and investors. The forex market

is considered to be the largest financial market in the world. It is a worldwide decentralized over-

the-counter financial market for the trading of currencies. Because the currency markets are large

and liquid, they are believed to be the most efficient financial markets. It is important to realize that

the foreign exchange market is not a single exchange, but is constructed of a global network

of computers that connects participants from all parts of the world.

59
 CHAPTER-IV
DATA ANALYSIS AND INTERPRETATION

60
 STOCK MARKET

Company :STATE BANK OF INDIA 500112

Period: 02-Dec-2018 to 20-Jan-2017
No.
No.
of  Total
Date Open High Low Close WAP of 
Trade Turnover
Shares
s
1,826.0 1,853.0 1,813.0 1,822.6 1,834.0 3,04,45 55,84,00,20
2/12/18 18,565
0 0 5 5 8 8 8
1,812.2 1,829.4 1,804.8 1,814.3 1,815.9 2,25,61 40,96,92,56
3/12/18 12,998
0 0 0 5 3 0 0
1,805.0 1,834.7 1,796.4 1,819.7 1,815.4 2,70,79 49,16,24,55
4/12/18 15,326
0 0 0 0 7 8 3
1,861.3 1,880.0 1,845.1 1,853.7 1,860.2 3,05,63 56,85,50,67
5/12/18 18,876
0 0 0 0 2 6 0
1,853.7 1,867.9 1,845.8 1,861.8 1,858.5 1,92,75 35,82,46,84
6/12/18 11,740
0 0 5 0 7 4 4
1,913.0 1,920.9 1,882.2 1,889.2 1,898.2 2,91,56 55,34,44,10
9/12/18 16,623
0 0 0 0 0 2 3
10/12/1 1,899.4 1,899.4 1,839.1 1,844.5 1,858.8 2,32,41 43,20,21,28
13,206
8 0 0 0 5 3 6 9
11/12/1 1,840.0 1,840.0 1,782.1 1,796.7 1,806.1 3,58,98 64,83,77,46
21,398
8 0 0 0 0 5 4 5
12/12/1 1,793.9 1,798.2 1,773.0 1,778.4 1,786.8 2,39,69 42,83,00,91
14,888
8 0 5 0 0 4 7 3
13/12/1 1,759.6 1,769.8 1,740.5 1,743.5 1,751.6 2,50,02 43,79,49,31
17,139
8 0 5 0 5 3 4 1
16/12/1 1,734.4 1,760.9 1,730.0 1,732.8 1,742.1 2,27,53 39,64,03,94
14,122
8 0 5 0 5 7 5 9
17/12/1 1,753.7 1,753.7 1,715.1 1,718.9 1,727.1 3,03,60 52,43,60,83
19,145
8 0 0 0 5 2 5 7
18/12/1 1,718.9 1,779.3 1,716.0 1,764.9 1,757.0 4,53,46 79,67,65,38
25,136
8 5 0 0 0 5 7 9
19/12/1 1,773.1 1,776.8 1,716.1 1,730.4 1,732.5 2,99,82 51,94,69,92
19,133
8 0 0 0 5 8 4 2
20/12/1 1,728.0 1,758.0 1,720.9 1,751.8 1,740.1 2,71,17 47,18,80,77
16,281
8 0 0 5 5 6 1 0
23/12/1 1,749.9 1,773.0 1,748.0 1,757.5 1,762.9 1,84,85 32,58,79,42
10,692
8 0 0 0 5 4 0 9
24/12/1 1,765.0 1,772.0 1,752.1 1,759.1 1,762.5 1,78,69 31,49,67,38
11,444
8 0 0 0 5 7 8 8
26/12/1 1,755.0 1,770.0 1,747.0 1,754.2 1,760.3 1,82,73 32,16,91,44
9,602
8 0 0 0 0 9 9 9
27/12/1 1,757.0 1,781.5 1,757.0 1,769.9 1,772.7 1,79,71 31,85,85,36
10,589
8 0 0 0 0 2 6 4
30/12/1 1,780.0 1,789.6 1,755.4 1,763.4 1,768.2 1,98,89 35,17,03,48
11,691
8 0 0 0 0 8 6 4
31/12/1 1,763.4 1,773.4 1,751.6 1,765.5 1,762.3 1,69,44 29,86,19,47
10,327
8 0 0 0 0 3 6 9
61
 1,774.0 1,774.0 1,761.0 1,765.3 1,767.6 17,42,86,98
1/01/17 98,601 6,670
0 0 0 0 0 1
1,766.9 1,805.8 1,733.0 1,742.5 1,777.5 4,04,04 71,82,05,11
2/01/17 22,624
0 0 0 0 6 1 3
1,730.0 1,735.9 1,710.4 1,716.1 1,719.9 2,37,23 40,80,32,29
3/01/17 14,504
0 5 0 0 4 6 6
1,720.0 1,721.5 1,681.0 1,687.6 1,694.7 2,20,81 37,42,16,95
6/01/17 14,947
0 0 0 5 4 1 4
1,695.0 1,702.0 1,653.1 1,659.7 1,671.1 3,05,08 50,98,33,89
7/01/17 20,016
0 0 5 5 0 9 1
1,665.0 1,675.9 1,650.0 1,655.4 1,664.4 2,64,67 44,05,35,90
8/01/17 15,845
0 5 0 0 7 0 4
1,654.9 1,662.7 1,630.5 1,639.1 1,642.1 2,59,57 42,62,51,03
9/01/17 21,589
0 0 0 0 1 5 1
10/01/1 1,639.9 1,656.6 1,600.0 1,608.8 1,631.4 3,40,85 55,60,63,56
27,524
7 0 5 0 5 0 1 3
13/01/1 1,614.0 1,647.1 1,611.7 1,641.9 1,630.6 2,37,66 38,75,52,68
15,422
7 0 0 5 5 6 6 3
14/01/1 1,634.0 1,648.5 1,622.0 1,626.9 1,636.1 1,71,53 28,06,48,98
11,910
7 0 0 5 0 5 0 9
15/01/1 1,635.0 1,658.0 1,633.2 1,643.5 1,646.0 2,45,32 40,38,11,89
16,217
7 0 0 5 5 0 9 0
16/01/1 1,645.0 1,650.5 1,634.0 1,637.0 1,640.5 1,24,70 20,45,88,25
8,542
7 0 5 0 0 5 7 9
17/01/1 1,632.6 1,644.9 1,618.2 1,622.0 1,628.6 1,73,49 28,25,66,23
11,964
7 5 0 5 5 4 8 3
20/01/1 1,622.9 1,645.9 1,617.0 1,641.0 1,633.9 1,51,78 24,80,14,16
9,757
7 5 0 0 0 5 8 9

No. of  Trades

30,000

25,000

20,000

No. of  Trades

15,000

10,000

5,000

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

62
INTERPRETATION:
On open value risen from 1826.00 to 1622.95 than compare to higher value of EPS 1853.00 to
1645.90. Then coming to lower price from 1813.05 to 1617.00. Wholly the conclusion is 1822.65 to
1641.00 raised.
The comings to the volume on the same dates or days volumes are increased. Because on this
session STATE BANK OF INDIA value is raised i.e. percentage of 17.36 %.

63
Company :ICICI BANK LTD. 532174
Period: 02-Dec-2018 to 20-Jan-2017

No. No.
of  of  Total
Date Open High Low Close WAP
Share Trade Turnover
s s

1,068.2 1,101.0 1,068.2 1,088.9 1,092.6 2,88,99 31,57,69,39

2/12/18 11,360
0 0 0 0 5 4 9

1,086.0 1,098.8 1,078.4 1,086.1 1,089.5 3,38,88 36,92,46,93

3/12/18 10,050
0 0 5 0 8 9 2

1,076.6 1,078.0 1,058.2 1,065.1 1,066.0 4,44,73 47,41,32,67

4/12/18 11,391
5 0 0 5 9 9 9

1,100.5 1,139.9 1,100.5 1,136.1 1,130.2 7,94,90 89,84,56,64

5/12/18 31,193
5 0 5 0 7 5 0

1,132.4 1,145.2 1,122.8 1,142.7 1,137.9 5,01,74 57,09,68,70

6/12/18 12,484
0 0 0 5 6 9 4

1,197.5 1,206.2 1,191.5 1,201.7 1,200.0 7,65,09 91,81,23,80

9/12/18 26,451
0 0 0 5 2 1 5

10/12/1 1,200.0 1,203.0 1,154.0 1,159.7 1,166.9 5,32,17 62,10,34,46

22,682
8 0 0 5 5 7 9 0

11/12/1 1,151.0 1,172.7 1,141.3 1,159.4 1,150.2 3,36,63 38,71,95,37

9,617
8 0 0 5 5 0 4 3

12/12/1 1,158.2 1,158.2 1,128.0 1,132.0 1,141.6 2,43,91 27,84,76,95

8,419
8 0 0 0 5 8 9 1

13/12/1 1,116.0 1,119.9 1,080.2 1,085.4 1,093.2 5,03,30 55,02,28,24

24,750
8 0 0 0 5 3 7 0

16/12/1 1,087.0 1,104.0 1,086.0 1,097.4 1,097.2 1,85,87 20,39,48,88

7,885
8 0 0 0 0 1 9 7

64
17/12/1 1,111.0 1,121.8 1,090.0 1,098.2 1,109.1 2,50,67 27,80,33,36
8,467
8 0 5 0 5 6 0 5

18/12/1 1,087.3 1,134.0 1,082.3 1,096.8 1,106.1 5,94,34 65,73,99,65

15,615
8 5 0 0 0 0 0 2

19/12/1 1,106.0 1,112.0 1,058.3 1,063.7 1,069.1 4,80,96 51,42,20,99

19,633
8 0 0 0 0 5 1 0

20/12/1 1,065.5 1,089.9 1,065.5 1,087.2 1,080.4 2,90,62 31,40,06,06

9,970
8 0 0 0 5 5 6 7

23/12/1 1,085.0 1,107.0 1,085.0 1,096.6 1,099.8 2,41,14 26,52,25,76

7,108
8 5 0 5 5 6 4 9

24/12/1 1,102.0 1,105.7 1,088.5 1,098.3 1,098.6 2,18,13 23,96,62,40

6,458
8 0 5 0 0 8 7 7

26/12/1 1,098.0 1,103.6 1,092.2 1,098.2 1,097.4 1,75,49 19,26,05,42

5,401
8 0 0 0 5 9 7 2

27/12/1 1,107.0 1,114.0 1,000.0 1,107.9 1,108.2 1,68,40 18,66,30,43

5,871
8 0 0 0 0 3 4 1

30/12/1 1,109.0 1,123.4 1,092.5 1,095.4 1,101.2 1,28,56 14,15,82,00

5,037
8 0 0 5 0 7 3 5

31/12/1 1,100.0 1,108.0 1,094.9 1,098.4 1,098.9 1,29,52 14,23,39,20

4,449
8 0 0 5 5 6 2 8

1,102.0 1,105.9 1,092.3 1,097.4 1,097.4

1/01/17 83,230 2,909 9,13,43,985
0 0 5 0 9

1,097.0 1,118.0 1,070.0 1,075.1 1,099.0 3,27,31 35,97,36,39

2/01/17 11,597
0 0 0 0 5 7 8

1,063.0 1,074.8 1,046.0 1,067.0 1,060.0 3,62,80 38,46,08,56

3/01/17 12,961
0 0 0 0 9 8 9

1,066.0 1,066.4 1,035.0 1,040.7 1,044.1 3,50,40 36,58,64,02

6/01/17 9,950
0 0 0 0 2 3 5

1,044.9 1,059.1 1,025.1 1,049.9 1,041.9 3,73,95 38,96,58,46

7/01/17 12,229
0 0 0 5 8 8 7

65
 1,059.0 1,063.0 1,042.6 1,054.0 1,054.6 2,12,35 22,39,62,24
8/01/17 7,582
0 0 0 5 4 8 8

1,060.0 1,065.2 1,042.8 1,051.5 1,057.1 3,69,87 39,10,25,16

9/01/17 5,994
0 5 0 0 8 4 8

10/01/1 1,050.7 1,055.0 1,015.0 1,024.5 1,034.7 2,73,73 28,32,46,72

9,928
7 5 0 0 5 7 0 8

13/01/1 1,028.8 1,062.4 1,027.0 1,056.2 1,048.1 2,18,15 22,86,69,90

7,677
7 5 5 0 0 9 7 8

14/01/1 1,054.9 1,060.4 1,027.0 1,037.5 1,045.1 1,79,31 18,74,12,21

6,164
7 0 0 0 5 7 3 8

15/01/1 1,041.5 1,068.4 1,041.5 1,058.3 1,058.8 3,14,79 33,33,11,82

10,226
7 0 5 0 5 3 2 4

16/01/1 1,068.0 1,075.8 1,048.9 1,060.8 1,056.8 2,96,52 31,33,92,39

7,082
7 0 5 0 5 9 2 7

17/01/1 1,050.1 1,061.9 1,032.0 1,035.0 1,045.4 3,33,18 34,83,37,80

8,757
7 0 0 0 0 8 6 9

20/01/1 1,035.0 1,047.5 1,028.0 1,044.1 1,040.1 1,56,88 16,31,85,31

5,361
7 0 0 0 0 6 5 7

No. of  Trades

35,000

30,000

25,000

20,000
No. of  Trades
15,000

10,000

5,000

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

66
 INTERPRETATION:
On open value has increased from 1068.20to 1035.00. Then compare to higher value of EPS
1101.00 to 1047.50. Then coming to lower price from 1068.20 to 1028.00. Wholly the conclusion is
1088.90 to 1044.10 increased.
Then coming to the volume on the same dates or days volumes are increased. Because totally
this session ICICI LIMITED. EPS value is increased i.e. percentage of 10.87%.

Company :HDFC 500180
Period: 02-Dec-2018 to 20-Jan-2017

No. of  No. of  Total

Date Open High Low Close WAP
Shares Trades Turnover
2/12/18 661.00 665.00 659.00 661.05 661.15 2,44,432 3,174 16,16,06,158
3/12/18 655.00 662.00 653.05 657.15 657.14 3,57,347 5,085 23,48,25,716
4/12/18 657.00 659.35 652.00 658.00 656.96 2,03,970 5,868 13,40,00,857
5/12/18 670.00 690.00 670.00 687.75 685.46 5,87,747 12,871 40,28,74,969
6/12/18 688.00 689.95 678.90 682.30 682.00 1,77,713 3,223 12,11,99,886
9/12/18 704.70 714.80 693.00 696.10 703.45 6,97,655 7,866 49,07,63,474
10/12/18 693.50 701.60 689.75 696.45 694.05 4,45,239 5,277 30,90,17,237
11/12/18 691.00 701.05 687.00 698.20 692.60 2,41,932 2,715 16,75,61,819
12/12/18 694.00 699.90 691.00 695.20 694.80 2,27,659 3,452 15,81,77,181
13/12/18 693.00 698.00 685.00 690.35 692.36 1,77,493 3,266 12,28,88,723
16/12/18 685.00 690.00 680.20 682.65 685.38 1,47,502 3,115 10,10,95,181
17/12/18 675.05 675.05 655.10 658.45 661.99 3,62,332 7,988 23,98,61,327
18/12/18 653.00 680.75 650.00 667.45 664.92 2,94,983 6,933 19,61,39,902
19/12/18 680.00 681.00 651.30 653.00 661.03 1,37,543 3,244 9,09,19,526
20/12/18 655.00 668.00 650.60 665.15 659.09 69,129 2,336 4,55,62,219
23/12/18 665.00 671.50 659.00 665.40 667.22 1,34,772 4,291 8,99,22,469
24/12/18 665.00 665.55 655.75 657.55 660.01 52,276 1,701 3,45,02,928
26/12/18 659.00 672.00 657.55 669.60 664.43 1,00,114 2,618 6,65,18,856
27/12/18 669.80 675.00 665.70 669.30 670.26 70,054 1,787 4,69,54,333
30/12/18 678.00 678.00 665.15 669.65 670.15 1,99,284 2,669 13,35,50,340
31/12/18 667.80 672.00 660.10 665.75 664.33 3,29,896 2,291 21,91,59,040
1/01/17 666.75 670.00 662.60 665.05 665.96 53,254 1,297 3,54,64,949
2/01/17 669.90 674.10 653.90 656.85 666.23 88,813 2,501 5,91,69,506
3/01/17 655.00 665.95 651.05 663.35 661.02 1,84,386 2,962 12,18,83,670
6/01/17 664.00 664.00 657.35 662.00 660.59 5,04,829 3,376 33,34,83,465
7/01/17 670.00 670.00 654.00 664.75 660.31 2,03,763 2,661 13,45,47,406
8/01/17 664.05 667.20 661.00 664.65 664.90 2,51,642 3,983 16,73,17,870
9/01/17 665.00 665.85 657.15 663.05 662.43 1,15,332 1,690 7,63,99,334
10/01/17 663.05 674.85 656.80 662.15 667.06 1,23,361 7,832 8,22,89,569
13/01/17 662.00 676.00 657.30 672.75 670.19 83,139 2,565 5,57,18,766
14/01/17 673.40 676.00 668.90 672.15 673.30 39,863 1,170 2,68,39,924
15/01/17 674.00 682.60 670.15 680.35 677.55 61,422 2,085 4,16,16,295
16/01/17 685.00 685.00 671.10 673.95 677.72 1,45,224 2,568 9,84,20,511

67
17/01/17 676.50 678.40 659.20 668.30 667.90 4,17,310 6,993 27,87,19,844
20/01/17 665.00 676.90 665.00 669.85 671.98 98,701 3,576 6,63,25,362

No. of  Trades

14,000
12,000
10,000
8,000 No. of  Trades
6,000
4,000
2,000
0
1 3 5 7 9 1 1 1 3 1 5 17 19 21 23 2 5 2 7 2 9 3 1 33 3 5

INTERPRETATION:
On open value has risen from 661.00 to 665.00. Then compare to higher value of EPS 665.00 to
676.90. Then coming to lower price from 659.00 to 665.00. Wholly the conclusion is 661.05 to 669.85
raised.
Then coming to the volume on the same dates or days volumes are increased. Because totally
this session HDFC EPS value is increased i.e. percentage of 6.71%.

68
Company :SYNDICATE BANK 532276
Period: 02-Dec-2018 to 20-Jan-2017

No. of  No. of  Total

Date Open High Low Close WAP
Shares Trades Turnover

2/12/18 89.95 90.60 88.40 88.85 89.68 2,57,442 2,216 2,30,87,514

3/12/18 89.40 89.90 88.10 88.75 88.86 1,60,873 1,947 1,42,94,720

4/12/18 88.50 89.55 87.50 87.75 88.36 1,61,956 1,718 1,43,10,756

5/12/18 88.70 91.00 88.70 89.55 89.92 1,92,385 2,255 1,72,99,621

6/12/18 89.95 91.25 88.60 90.40 90.26 2,47,116 2,972 2,23,05,818

9/12/18 93.00 95.00 92.00 92.55 93.42 3,93,718 3,791 3,67,82,548

10/12/18 93.30 93.45 90.00 91.20 91.15 2,20,660 2,244 2,01,12,361

11/12/18 90.90 91.50 89.90 90.85 90.67 1,28,802 1,488 1,16,78,458

12/12/18 90.50 90.90 89.15 89.50 90.03 1,21,446 1,226 1,09,34,169

13/12/18 88.50 89.00 86.95 87.40 87.74 1,87,456 1,942 1,64,47,993

16/12/18 87.70 88.00 86.10 86.95 87.17 1,31,501 1,173 1,14,62,985

17/12/18 86.20 87.90 84.00 84.70 85.68 1,62,370 1,581 1,39,11,795

18/12/18 84.20 89.20 84.20 88.65 87.52 2,67,423 2,896 2,34,05,558

19/12/18 89.50 91.90 85.65 86.10 86.77 1,94,702 2,069 1,68,94,397

20/12/18 87.00 89.20 86.10 88.65 87.63 1,59,353 2,637 1,39,64,236

23/12/18 89.50 93.35 89.00 92.05 91.75 2,81,651 6,193 2,58,41,491

24/12/18 92.15 93.25 90.30 92.10 91.62 1,27,638 1,364 1,16,94,361

26/12/18 92.10 94.70 92.10 93.60 93.74 2,16,029 2,136 2,02,50,448

27/12/18 94.50 98.30 93.90 95.10 96.29 3,64,909 3,143 3,51,36,488

30/12/18 95.50 96.00 93.20 93.40 93.99 1,22,807 1,152 1,15,42,804

31/12/18 94.00 94.90 92.35 94.60 94.08 1,47,957 1,558 1,39,19,516

1/01/17 95.50 96.90 94.25 96.05 95.32 1,85,543 1,555 1,76,85,799

2/01/17 96.25 100.70 93.10 93.75 97.59 5,66,628 4,525 5,52,95,448

3/01/17 93.70 95.75 91.95 95.35 94.17 2,21,783 2,403 2,08,85,770

6/01/17 95.30 95.60 92.85 93.40 93.92 1,27,485 1,871 1,19,73,173

69
7/01/17 93.55 94.25 90.90 92.05 92.19 2,05,571 2,138 1,89,51,717

8/01/17 92.50 100.05 92.50 99.40 97.70 8,26,365 7,428 8,07,36,791

9/01/17 99.50 101.45 95.55 96.15 98.23 4,66,603 4,175 4,58,36,581

10/01/17 97.00 98.30 92.70 93.15 95.65 5,08,172 10,138 4,86,06,147

13/01/17 93.30 94.90 92.30 93.55 93.57 2,48,083 2,272 2,32,13,584

14/01/17 94.20 95.30 93.50 94.05 94.20 1,95,932 2,122 1,84,57,164

15/01/17 94.80 97.10 94.35 96.70 95.87 2,82,943 2,631 2,71,24,795

16/01/17 97.45 97.85 95.00 95.85 96.22 2,36,020 2,299 2,27,08,821

17/01/17 95.90 96.20 94.20 94.85 95.06 1,20,882 1,176 1,14,90,715

20/01/17 93.20 94.00 92.00 93.30 93.12 1,17,649 1,355 1,09,55,934

No. of  Trades

12,000
10,000
8,000
6,000 No. of  Trades
4,000
2,000
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

INTERPRETATION:
On open value risen from 89.95 to 93.20 than compare to higher value of EPS 90.60 to 94.00. Then
coming to lower price from 88.40 to 92.00. Wholly the conclusion is 88.85 to 93.30 raised.
The comings to the volume on the same dates or days volumes are increased. Because on this
session SYNDICATE BANK value is raised i.e. percentage of 9.21%.

70
 CHAPTER-5
FINDINGS, SUGGESTIONS, CONCLUSIONS

71
 FINDINGS

 The volume on the same dates or days volumes are increased. Because on this session STATE
BANK OF INDIA value is raised i.e. percentage of 17.36 %.
 The volume on the same dates or days volumes are increased. Because totally this session ICICI
LIMITED. EPS value is increased i.e. percentage of 10.87%.
 The volume on the same dates or days volumes are increased. Because totally this session HOUSING
DEVELOPMENT FINANCE CORP.LTD. EPS value is increased i.e. percentage of 6.71%.
 The volume on the same dates or day’s volumes are increased. Because on this session SYNDICATE
BANK value is raised i.e. percentage of 9.21%.

72
SUGGESTIONS

 There must be prohibition on disposal of promoters share holding, and also restrictions and the
expansion without prior approval of the financial institutions for declaration of higher amount/ rate.
 The availability of derivative products in eluding index futures, index options, individual stock
futures and individual stock options re-enforces the overall attractiveness of this market to foreign
and domestic investors.
 Volume of paper work is small but it is very complicated to maintain data in system so tries to
reduce that by regular audit and updating data.
 Most of the DPs do not have the necessary infrastructure to handle the high work load of
transactions leading to may error by DPs, so by giving full infrastructure information to every DO
can avoid this problem.
 The pool account doesn’t know the true owner of the share and hence dividends are paid to the
broker instead of owners by this the broker can do any manipulation or any fraud with the owner,
for this the owner can loose his dividend.
 If the shares are fake/forged which delivery by the broker the share holder can loose that shares an
have to receive another lot of issued shares from the broker in 21 days, this system stands abused.
 So minimize that waiting days are deliver the issued shares to the share holder as soon a Possible.

73
 CONCLUSION
Capital market is an innovation to cash market. Approximately its daily turnover reaches to the equal
stage of cash market. The average daily turnover of the NSE derivative segments. In cash market the
profit/loss of the investor depend the market price of the underlying asset. The investor may incur huge
profits or he may incur huge profits or he may incur huge loss. But in derivatives segment the investor
the investor enjoys huge profits with limited downside. In cash market the investor has to pay the total
money, but in derivatives the investor has to pay premiums or margins, which are some percentage of
total money. Derivatives are mostly used for hedging purpose. In derivative segment the profit/loss of
the option writer is purely depend on the fluctuations of the underlying asset.

 The comprehensive study of capital market instrument at Inter Connected stock exchange has
been an enlightening experience stressing on the positive aspects on Dematerialization.
 And settlement of shares, derivative market and capital instrumentshas done in whole lot of good
to the issuer, investor companies and country.
 The depository systems has reduced the lag in delivery and settlement of securities but also
supported the cause of providing more liquidity to the security holder, the need for setting up of a
depository paper less trading.
 Through online trading system and settlement became inevitable and unavoidable for the smooth
and the efficient functioning of the capital market.
 Now there is a proposal that the settlement will be done within T+1days in near future which is
in it an indication of a boon in the system of demat and capital market instruments.
 It has been fairly long since derivative trading started off on the Indian Indexes.
 Actively has failed to really take off with low figures being transacted in terms of value and
volumes.
 The introduction of derivative trading was hailed by the punters in the capital markets but has not
really brought about a wave so as to speak.
 There are several factors, which impede the growth of the derivative markets in India.
 Of these factors the absence of clear guidelines on tax-related issues and the high cost of
transactions are the most prominent.

74
BIBLIOGRAPHY

Web sites Referred:

 EMKAY GLOBAL.COM

 Sebi.com

 Nseindia.com

 BSE.COM

 Economywatch.com

Referred Text Book:

V.K. Balla “Financial Investment”

Gordon & Natarajan “Financial Markets and Services”

www.emkay globalsecutities.com
www.capitalmarketindia.com
www.moneycontrol.com

75