Study on future of derivatives(summer training project)


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Study on future of derivatives(summer training project)

  1. 1. SUMMER TRAINING PRESENTATION<br /> ON <br /> “STUDY OF FUTURE OF DERIVATIVES<br /> IN LUDHIANA”<br />Presented to<br />Mr. ArunDutta<br />(Faculty, PCTE)<br />Presented by<br />JasmeetKaur<br />(MBA 2c)<br />
  2. 2. Introduction to Tamesak Holdings<br /><ul><li>An Asia investment company Incorporated under the Singapore Companies Act as an investment holding company in 1974.
  3. 3. Owns and commercially manages investments in companies previously held directly by the Singapore Government.
  4. 4. Invests on commercial principles as an asset owner.
  5. 5. AAA/Aaa by Standard & Poor’s and Moody’s respectively </li></li></ul><li>Investment Themes<br />Transforming Economies <br />Growing Middle Income Populations <br /> <br />Deepening Comparative Advantages <br /> <br />Emerging Champions <br />
  6. 6. Introduction To Fullerton Securities & Wealth Advisors<br />Wholly owned subsidary of Temasak Holdings.<br />FSWA is a company registered under Companies Act, 1956 as on 8th feburary,2008.<br />
  7. 7. Fullerton Vision<br />To be distinctive financial services entity, providing the widest range of unbiased financial solutions to customers.<br />Achieved through proprietary distribution network and business partners.<br />Top class equity research.<br />High quality & well –trained employees.<br />Consistent service.<br />Cutting edge technology.<br />To provide superior financial planning and wealth advisory.<br />
  8. 8. Fullerton Mission<br /><ul><li> To create superior long term shareholder value in the financial sector across emerging markets
  9. 9. Organic growth
  10. 10. Acquire and transform
  11. 11. Improve productivity
  12. 12. Optimize capital
  13. 13. Risk- Reward balance</li></li></ul><li>Key Value Leadership<br />Great Leadership<br /> Passionate<br /> Balanced <br /> Disciplined<br /> Leaders in commercial/sme, mass consumer and mass self employed segments<br />Customer – centric business models<br />Relationship v/s product positioning<br />Enabling management model and culture <br /> Empowered within defined boundaries<br />
  14. 14. Deeply embedded in each market and chosen segmentHigh market share – top 3Embedded the right values and behaviour across the organisation.<br />
  15. 15. Board Of directors<br />
  16. 16.
  17. 17. Organizational Chart<br />PallavSinha<br />MA & CEO <br />Ashwinder Raj Singh<br />head.,North & NCR<br />Ashok Mathur<br />Head,South<br />Punit Gupta<br />Head, West <br />SariqHoda<br />Head,EAst<br />Mr. Ashutosh<br />Cluster Head,Punjab<br />Baljinder Singh <br />RM, Acquistion<br />MohitSingla<br />Channel Manager<br />JitinArora<br />RM, HNI<br />MunishGoyal<br />BDM<br />
  18. 18. Group Companies<br />Bank Danamon in Indonesia<br /> The second largest private national bank and the fifth largest commercial bank in Indonesia, with a 5% share of the domestic system loans and deposits and 1,426 branches.<br />Fullerton India Credit Corporation<br />Established in December 2005, Fullerton India’s business model is community oriented, branch centric and endeavors to build enduring relationships with customers. <br />
  19. 19. <ul><li>Dunia</li></ul>FFH entered into a strategic partnership with Mubadala Investment Company PJSC, Waha Capital PJSC (formerly known as Oasis International Leasing Company PJSC), and A.A.AlMoosa Enterprises LLC, with 40% ownership by FFH. “Dunia Finance LLC” or “Dunia”, as it is more commonly known, was created. <br />
  20. 20. Various departments Of FSWA, Ludhiana<br />Wealth<br />Securities<br />DST(Direct Sales Team)<br />
  21. 21. Various Services Provided By FSWA <br />Financial Planning<br />Mutual Funds<br />Equities<br />Insurance<br />NRI Services<br />
  22. 22. SWOT Analysis of FSWA, Ludhiana<br />Strengths<br /> Everyday technical and fundamental calls are mailed to customers before the market opens.<br /> Every single thing happening in organization is mailed to head within seconds and it encourages employees to work.<br />Being MNC it has funds are available for expansion. Therefore, No loan is required.<br />
  23. 23. Weakness<br />Employees sometimes use phones for personal calling which doesn’t come into notice and it may increase expenses of company.<br /> <br />Opportunities <br /> Future expansion plans:- right now company has only 2 offices in Punjab , its plan is to open 15 new branches in Punjab by the end of this financial year.<br /> To tap untapped market by providing proper knowledge to potential customers.<br />
  24. 24. Threats<br />Existing brokerage firms in market.<br />Being an MNC people don’t know about this company, so people may prefer visiting another company and opening account.<br />
  25. 25. History Of Derivatives<br />The first organized commodity exchange came into existence in the early 1700’s in Japan.<br />U. S. futures markets, was the creation of the Chicago Board of Trade in 1848.<br />In 1865, CBOT listed the first ‘exchange traded’ derivatives contract.<br />
  26. 26. In 1865, CBOT listed the first ‘exchange traded’ derivatives contract.<br />The Chicago Mercantile Exchange (CME), was formed in 1919, though it did exist before in 1874 under the names of ‘Chicago Produce Exchange’ (CPE) and ‘Chicago Egg and Butter Board’ (CEBB).<br />The first financial futures to emerge were the currency in 1972 in the US.<br />
  27. 27. The first foreign currency futures were traded on May 16, 1972, on International Monetary Market (IMM), a division of CME.<br />The first call and put options were invented by an American financier, Russell Sage, in 1872.<br />
  28. 28. Indian Derivative Market<br />
  29. 29.
  30. 30. Derivative instruments are defined by<br />Securities Contract (Regulation) Act<br />include:-<br />A security derived from debt instruments, shares, secured / unsecured loan, risk instruments or contracts for differences, or any other form of security.<br /> A contract that derives its value from the prices / index of prices underlying securities.<br /> <br /> <br /> <br />
  31. 31. Categories Of Participants<br /> <br />Hedgers<br /> <br />Speculators<br />Arbitrageur <br /> <br />
  32. 32. Types Of Derivative Contracts<br />
  33. 33. Forward Contract<br />A forward contract is a customized contract between the buyer and the seller where settlement takes place on a specific date in future at a price agreed today.<br />
  34. 34. Futures Contract<br />A futures contract gives the holder the right and the obligation to buy or sell, an Asste at a certain time in future , it follows daily settlement<br />
  35. 35. Options<br />A contract that gives the option holder the right but not the obligation to buy or sell the underlying asset at a price, called the strike price, during a period or on a specific date in exchange for payment of a premium is known as ‘option’.<br /> Two Types Of Options<br />Call Options<br />Put Options<br />
  36. 36. Swaps<br />Swaps are contracts to exchange cash (flows) on or before a specified future date based on the underlying value of currencies/exchange rates, bonds/interest rates, commodities, stocks or other assets.<br />Two Types Of Swaps<br />Interest Rate Swaps<br /> Currency Swaps<br />
  37. 37. Factors Contributing To Growth Of Derivatives<br />Price Volatility<br />Globalization of Market<br />Technological advances<br />Advances in financial theories<br />
  38. 38. Title Of The StudyA Study on Future Of Derivatives in Ludhiana. <br />
  39. 39. Objectives Of Study<br />To study brokers experience in regard to derivatives.<br />To study investors perception towards derivatives.<br />To study the risk involved in derivative instruments.<br />
  40. 40. Limitations Of Study <br />Limited time:- The time available to conduct the study was only 2 months. It being a wide topic had a limited time.<br />Aspect coverage:- Some of the aspects may not be covered in my study.<br />Accuracy:- Some investors have filled forms just for filling them. This may lead to less accuracy in research.<br />
  41. 41. Research Methodology<br />Research methodology means the way in which the data has been collected for the research project and the way we would complete our prospected task. <br />
  42. 42. Research design<br />Research design is the structure within which research is conducted; it contains the blueprint for the collection, measurement and analysis of data.<br />Descriptive research design has been used as in this research the perception of brokers and investors in regard to derivatives has been studied. <br />
  43. 43.
  44. 44. Universe- All the people who are dealing in derivatives and were interested to deal in derivatives.<br />Population-<br /> (i) All the brokers dealing in derivatives in Ludhiana.<br /> (ii) All the people dealing in derivatives or interested in dealing, in Ludhiana. <br />Sampling Unit – Every single person visiting Ansal plaza and Feroz Gandhi market and every broker of Ludhiana Stock Exchange is sample unit in the report<br /> <br />
  45. 45. Sampling Frame - It represents the elements of the target population. Ludhiana City is the sampling frame for this project. <br />Sample size- Sample size used in the project is 50 (25 brokers and 25 investors).<br />Sampling Technique-Non Probability technique i.econvenience sampling has been used forcollecting data.<br />
  46. 46. Data collection<br />Primary Data<br /> Secondary Data<br />
  47. 47. Data Analysis And Interpretation<br />PART – I <br /> To Study The Brokers experience in regard to Derivatives<br />
  48. 48. (Table 4a.1) Percentage of clients dealing in derivatives (N=25)<br />
  49. 49. (Graph 4a.2) Better mode of Investing keeping in account profitability<br />
  50. 50. (Table 4a.3) Most preferred Mode for investing(n=30)<br />
  51. 51. (Table 4a.4) Risk Perception of broker’s towards derivatives<br />
  52. 52. (Table 4a.5) Highest risk carrying derivative (n=29) <br />
  53. 53. (Graph 4a.6)<br /> ( N=25)<br />
  54. 54. (Graph 4a.7) Returns on derivatives if compared with Real Estate Returns(N=25)<br />
  55. 55. (Graph 4a.8)<br />(N=25)<br />
  56. 56. (Graph 4.9) <br />(N=25) <br />
  57. 57. PART – II<br />To Study Investor’s Perception Towards Derivatives.<br />
  58. 58. (Graph 4b.1) Annual Income range of respondents (N=25)<br />
  59. 59. (Graph 4b.2) Investment Options used by respondents (n=50)<br />
  60. 60. (Graph 4b.3)<br /> (N=25)<br />
  61. 61. (Graph 4b.4) Frequency in dealing with derivatives (n=9)<br />
  62. 62. (Table 4b.5) Purpose for undertaking derivative Contract(n=11)<br />
  63. 63. (Graph 4b.6)Most preferred derivatives(n=13)<br />
  64. 64. (Graph 4b.7) Percentage Income invested in derivatives(n=9)<br />
  65. 65. (Table 4b.8) Perception of investor’s regarding Profits(n=9)<br />
  66. 66. (Table4b.9) Investor’s risk Perception for derivatives(n=9)<br />
  67. 67. (Graph 4b.10)<br />(n=9)<br />
  68. 68. (Graph 4b.11) Reasons for not increasing investment in derivatives(n=4)<br />
  69. 69. (Graph 4b.12) Suggesting others put their money in derivatives(n=5)<br />
  70. 70. (Graph 4b.13)<br />(n=16)<br />
  71. 71. (Table 4b.13) Reason for not dealing in derivatives(n=9)<br />
  72. 72. PART-III<br />Analyzing Average Daily Turnover At NSE<br />
  73. 73. (Graph 4c.1)Business Growth in Derivatives segment Since 2000-2010<br />
  74. 74. Findings<br />Main factor that led to growth of derivatives are higher return.<br />Stock Futures are most preferred for investing in derivatives.<br />Derivatives carry high risk factor and amongst that commodity derivatives are the most risky to trade due to high fluctuations.<br />Money invested in real estate would fetch higher return compared to derivatives and would carry less risk.<br />
  75. 75. Maximum people use derivative as Hedging tool.<br />People already investing money through derivatives would like to increase their investments because they find it highly profitable.<br />Some people would prefer to invest their money through derivatives if they are provided with knowledge and a reliable broker.<br />
  76. 76. Suggestions<br />People with low investment and less knowledge should not enter derivatives market.<br />SEBI should be more vigilant to check the volatility triggered by operators.<br />One should invest for long term and that too only in blue chip companies.<br />One should always invest their money and should not speculate because speculation can cause heavy losses.<br />If one wants to make money in stock market he should invest gradually in cash segment.<br />
  77. 77. Conclusion<br />According to responses given by brokers and investors a conclusion can be attained that there is great market ahead for derivatives in future. <br />As fifty percent of people are ready to take knowledge and invest their money in derivatives, existing investors are ready to increase their investments which is healthy sign for the markets.<br />Even average turnover at NSE has increased over last 10 years which shows us trend that in future there will be rise in derivatives trading. <br /> <br />
  78. 78. Thank you<br />
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