summer internship report on derivatives and its strategies

1. 1
Summer Internship Project
A STUDY OF DERIVATIVES
&
ITS VARIOUS STRATEGIES
Submitted in partial fulfillment of PGDM Program
Batch 2015-17
Submitted by
AJAY PANDEY
23/081
Corporate Mentor Faculty Mentor
Mr. R. K. Arora Dr Divya Jindal
CEO, Smart Equity Brokers Pvt. Ltd. Assistant professor
Apeejay School of Management, New Delhi
June 2016

2. 2
CERTIFICATE
This is to certify that the project work done on “A study of Derivatives and its various
Strategies Submitted to Apeejay School of Management, Dwarka by AJAY PANDEY
in partial fulfillment of the requirement for the award of PG Diploma in Business
Management, is to the best of my knowledge a bona fide work carried out by him/her
under my supervision and guidance. This work has not been submitted anywhere else
for any other degree/diploma. The original work was carried out during 4th April to
10th June in Smart Equity Brokers Pvt. Ltd.
Date:
Seal/Stamp of the Organization
Signature
Name of the Corporate Mentor

3. 3
CERTIFICATE
This is to certify that I AJAY PANDEY Roll No. 23/081 have carried out my Summer
internship in Smart Equity Brokers Pvt. Ltd. in the area A study of Derivatives and its
various strategies.
It is also certified that the work done by me is original with due references of sources,
and has not been submitted elsewhere for the award of any diploma or degree.
_____________________
Signature
Name of the Student
Date : _________________________
Countersigned by Faculty Mentor

4. 4
Acknowledgement
The success and final outcome of this project required a lot of guidance and assistance
from many people and I am extremely fortunate to have got this all along the
completion of my project work. Whatever I have done is only due to such guidance
and assistance and I would not forget to thank them.
I respect and thank Mr. R. K. Arora, for giving me an opportunity to do the project
work in Smart Equity Brokers Pvt. Ltd. and providing us all support and guidance
which made me complete the project on time . I am extremely grateful to him for
providing such a nice support and guidance though he had busy schedule managing
the company affairs.
Last but not the least me thanks to all those who were knowingly or unknowingly
with me specially Mr. Rahisuddin Khan, Mr. Aahish Mishra during the project tenure.
I heartily thank our internal project guide, DR Divya Jindal assistant professor ASM,
for his guidance and suggestions during this project work.
AJAY PANDEY

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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY 9
2. CHAPTER-1: THE AREA OF INTERNSHIP AND LEARNING OBJECTIVES
1.1 INTRODUCTION 13
1.2 A STUDY ON DERIVATIVES 13
1.3 NEED OF THE STUDY 14
1.4 LITERATURE REVIEW 14
1.5 OBJECTIVES OF THE STUDY 15
1.6 SCOPE OF THE PROJECT 16
1.7 RESARCH METHODOLOGY 16
1.8 LIMITAITONS OF STUDY 19
3. CHAPTER-2: PROFILE OF THE ORGANIZATION
2.1 INDUSTRY DETAIL 22
2.2 COMPANY PROFILE 22
2.3 VALUES 23
2.4 MISSION 23
2.5 MARKETING STRATEGIES 23
2.6 COMPETITORS 24
2.7 PRODUCT LINE 24
2.8 ORGANIZTIONAL STRUCTURE 24
2.9 HR SYSTEM 25
2.10 OFFERING OF THE COMPANY 28
2.11 EXCHANGE CHARGES 29
4. CHAPTER 3: JOB DESCRIPTION AND FUNCTIONAL PROFILE
3.1 MY JOB DESCRIPTION 32
3.2 TASKS ASSIGNED TO ME 33
5. CHAPTER 4: LEARNING EXPERIENCE AND INSIGHTS GAINED.
4.1 DERIATIVES 35
4.2 PARTICIPANTS IN THE DERIVATIVES MARKET 36
FUNCTIONS OF THE DERIVATIVES MARKET

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4.3 TYPES OF DERIVATIVES 38
4.4 ONLINE TRADING 43
4.5 DEMATERLIZATION 49
4.6 TOTAL NUMBER OF EXCHANGES IN INDIA 53
4.7 DERIVATIVES INSTRUMENTS IN INDIA 54
4.7.1 DERIVATIVES SEGMENT IN BSE & NSE 54
4.8 DIFFERENCE BETWEEN FUTURES & OPTION 57
6. CHAPTER-5: RECOMMENDATIONS AND CONCLUSION
5.1 SUGGESTION 62
5.2 CONCLUSION 64
7. BIBLIOGRAPHY 65

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EXECUTIVE SUMMARY
With over 45 million shareholders, India has the third largest investor base in the
world after USA and Japan. Over 8000 companies are listed on the Indian stock
exchanges (more than the number of companies listed in developed markets of Japan,
UK, Germany, France, Australia, Switzerland, Canada and Hong Kong capital market
is significant in terms of the degree of development, volume of trading, transparency
and its tremendous growth potential. India’s market capitalization was the highest
among the emerging markets.
Total market capitalization of The Bombay Stock Exchange (BSE), which, as on
July31, 1997, was US$ 175 billion has grown and was over 28,25,71,761 as on June,
2016 Bombay Stock Exchanges (BSE), one of the oldest in the world, accounts for
the largest number of listed companies transacting their shares on a nationwide online
trading system. (www.bseindia.com)
The two major exchanges namely the National Stock Exchange (NSE) and the
Bombay Stock Exchange (BSE) ranked no. 3 & 5 in the world, calculated by the
number of daily transactions done on the exchanges. Till 20/06/16 Rs
123622255471.50 rupees are invested in stock the Sensex has posted
excellent returns in the recent years. On 17 June 2016 the Sensex closed at highest
ever 26625.91 points
Derivatives trading in the stock market have been a subject of enthusiasm
of research in the field of finance the most desired instruments that allow market
participants to manage risk in the modern securities trading are known asderivatives.
The derivatives are defined as the future contracts whose valuedepends upon the
underlying assets. If derivatives are introduced in the stock market, the underlying
asset may be anything as component of stock market like,
stock prices or market indices, interest rates, etc. The main logic behindderivatives
trading is that derivatives reduce the risk by providing an additional channel to invest
with lower trading cost and it facilitates the investors to extend their settlement
through the future contracts. It provides extra liquidity in the stock market.

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For example, a dollar forward is a derivative contract, which gives the buyer aright &
an obligation to buy dollars at some future date. The prices of the derivatives are
driven by the spot prices of these underlying assets. However, the most important use
of derivatives is in transferring market risk, called Hedging this is a protection against
losses resulting from unforeseen price or volatility changes. Thus, derivatives are a
very important tool of risk management.
There are various derivative products traded such as Forward, Futures, Options and
Swaps .
“A Forward Contract is a transaction in which the buyer and the seller agree
upon a delivery of a specific quality and quantity of asset usually a commodity at a
specified future date. The price may beagreed onin advance orin future.” “
A Future contract is a firm contractual agreement between a buyer and seller for
a specified as on a fixed date in future. The contract price will vary according to the
market place but it is fixed when the trade is made. The contract also has a standard
specification sobothparties know exactly what is being done”.
An Options contract Confers the right but not the obligation to buy (call option)or
sell (put option) a specified underlying instrument or asset at a specified price – the
Strike or Exercised price up until or an specified future date – the
Expiry date. The Price is called Premium and is paid by buyer of the option to the
seller orwriter of the option.”
A call option gives the holder the right to buy an underlying asset by a certain date for
a certain price. The seller is under an obligation to fulfill the contract and is paid a
price of this, which is called "the call option premium or call option price”. A
put option, on the other hand gives the holder the right to sell an underlying asset by a
certain date for a certain price. The buyer is under an obligation to fulfill the contract
and is paid a price for this, which is called "the put option premium or put option
price".

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“Swaps are transactions which obligates the two parties to the contract to exchange a
series of cash flows at specified intervals known as payment or settlement dates. They
can be regarded as portfolios of forward's contracts. Contract whereby two parties
agree to exchange (swap) payments, based on some notional principle amount is
called as a ‘SWAP’. In case of swap, only the payment flows are exchanged and not
the principle amount”
There are broadly three types of participants in the derivatives market - hedgers,
traders (also called speculators) and arbitrageurs. An individual may play different
roles in different market circumstances such as
Hedgers face risk associated with the prices of underlying assets and use derivatives
to reduce their risk. Corporations, investing institutions and banks all use derivative
products to hedge or reduce their exposures to market variables such as interest rates,
share values, bond prices, currency exchange rates and commodity prices.
Speculators/Traders predict the future movements in prices of underlying assets and
based on the view, take positions in derivative contracts. Derivatives are preferred
over underlying asset for trading purpose, as they offer leverage, are less expensive
(cost of transaction is generally lower than that of the underlying) and are faster to
execute in size (high volumes market). Arbitrageurs Arbitrage is a deal that produces
profit by exploiting a price difference in a product in two different markets. Arbitrage
originates when a trader purchases an asset cheaply in one location and
simultaneously arranges to sell it at a higher price in another location. Such
opportunities are unlikely to persist for very long, since arbitrageurs would rush in to
these transactions, thus closing the price gap at different locations.
There are also various different option strategies used by investor
Which help them to benefit from their views
Some common examples are as follows
Writing a Covered Call. In case of writing a covered call we can hold the underlying
shares and sell a Call Option with An objective to earn Call premium. In Protective
Put. We hold the underlying shares and buy a Put Option to provide protection
against fall in the value of the underlying shares in case of Bull Spread . Where we
buy one call option at a low strike price and sell another call. In option at a higher

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strike price (on the same underlying) and want to benefit in a limited manner from
bullish view we could also do this through put options.
Bear Spread . Where we buy one call option with a high strike price and sell another
call option with a lower strike price (on the same underlying) and want to benefit in a
limited Manner from bearish view but we can also do this through put options.
In case of Straddle we sell a call option and a put option at the same strike price (or
Alternatively buy a call option and a put option at the same strike price) (these are
also Called Jhota / Duranga in the Indian markets) In Strangle. Where we sell a call
option and a put option at different strike prices on the same underlying (or
alternatively buy a call option and a put option at different strike prices)
Combinations. Other strategies involving a put and a call (also called fatak in Indian
markets)

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CHAPTER1:
THE AREA OF INTERNSHIP
AND LEARNING OBJECTIVES

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1.1 INTRODUCTION
A derivative is a security with a price that is dependent upon or derived from one or
more underlying assets. The derivative itself is a contract between two or more parties
based upon the asset or assets. 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.
1.2 A STUDY ON DERIVATIVES:
BSE created history on June 9, 2000 by launching the first Exchange-traded Index
Derivative Contract in India i.e. futures on the capital market benchmark index - the
BSE Sensex. The inauguration of trading was done by Prof. J.R. Varma, member of
SEBI and Chairman of the committee which formulated the risk containment
measures for the derivatives market.
In sequence of product innovation, BSE commenced trading in Index Options on
Sensex on June 1, 2001, Stock Options were introduced on 31 stocks on July 9, 2001
and Single Stock Futures were launched on November 9, 2002.
FUTURE: - In this Buying and selling both is possible. But turnover is much more
and much risky as well.
OPTION: - This is three way markets; you may earn profit from 3 different ways.
This is less Risky in comparison of Future.
DERIVATIVES
FUTURE OPTION
This start from year 2001Nifty Future start from year 2000
Turnover is more and high risky Turnover is less and less risky

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1.3 NEED OF THE STUDY
Different investment avenues are available to investors. Stock markets offer good
investment opportunities to the investor like all investments, they also carry certain
risks. The investor should compare the risk and expected yields after adjustment off
tax on various instruments while talking investment decision the investor may seek
advice from ex-party and consultancy include stock brokers and analysts while
making investment decisions. The objective here is to make the investor aware of the
functioning of the derivatives.
Derivatives act as a risk hedging tool for the investors. The objective is to help the
investor in selecting the appropriate derivatives instrument to attain maximum risk
and to construct the portfolio in such a manner to meet the investor should decide how
best to reach the goals from the securities available.
The development and improvement strategies in the with investment policy
formulated. They will help the selection of asset classes and securities in each class
depending up on their risk return attributes.
1.4 LITERATURE REVIEW
The emergence of the market for derivative products, most notably forwards, futures
and options, can be traced back to the willingness of risk-averse economic agents to
guard themselves against uncertainties arising out of fluctuations in asset prices.
By their very nature, the financial markets a remarked by a very high degree of
volatility. Through the use of derivative products, it is possible to partially or fully
transfer price risks by locking-in asset prices. As instruments of risk management,
these generally do not influence the fluctuations in the underlying asset prices.
However, by locking-in asset prices, derivative products minimize the impact of
fluctuations in asset prices on the profitability and cash flow situation of risk-averse
investors.

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Derivative products initially emerged, as hedging devices against fluctuations in
commodity prices and commodity-linked derivatives remained the sole form of such
products for almost three hundred years. The financial derivatives came into
spotlight in post-1970 period due to growing instability in the financial markets.
However, since their emergence, these products have become very popular and by
1990s, they accounted for about two-thirds of total transactions in derivative products.
In recent years, the market for financial derivatives has grown tremendously both
in terms of variety of instruments available, their complexity and also turnover. In the
class of equity derivatives, futures and options on stock indices have gained more
popularity than on individual stocks, especially among institutional investors, who are
major users of index-linked derivatives.
Even small investors find these useful due to high correlation of the popular indices
with various portfolios and ease of use.
The lower costs associated with index derivatives vis-vis derivative products based on
individual securities is another reason for their growing use. As in the present
scenario, Derivative Trading is fast gaining momentum, I have chosen this topic.
1.5 OBJECTIVES OF THE STUDY
To study various trends in derivative market- through this we can know about the
various up and down of the market which help in analyzing the condition of the for
the trading or investment in particular stocks or commodity.
To study in detail the role of the future and options. - In future and option there are
many strategies used by investor to earn maximum profit and also to reduce losses .
To study the role of derivatives in Indian financial market- The derivatives market
helps to transfer risks from those who have them but may not like them to those who
have an appetite for them. Derivatives markets help increase savings and
Investment in the long run. Transfer of risk enables market participants to expand
their volume of activity.

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1.6 SCOPE OF THE PROJECT
The project covers the derivatives market and its instruments. For better
understanding various strategies with different situations and actions have been given.
It includes the data collected in the recent years and also the market in the derivatives
in the recent years. This study extends to the trading of derivatives done in the
National Stock Markets.
1.7 RESARCH METHODOLOGY
Data collection:
It is the data which has already been collected by someone or an organization for
some other purpose or research study. The data for study has been collected from
various sources Books, Journals, Magazines, Internet sources. The duration for data
collection is 3 month. Statistical Tools used are Simple tools like bar graphs,
tabulation, line diagrams for showing the trends of the nifty companies in a particular
duration of time.
P/E ,P/B and Dividend yield ratio of nifty fifty companies as on March 30
YEAR P/E P/B YIELD RATIO
2006 20.35 5.17 1.32
2007 18.4 4.87 1.25
2008 20.63 5.09 1.06
2009 14.08 2.46 1.88
2010 22.39 3.71 0.94
2011 21.97 3.67 1.08
2012 18.71 3.01 1.5
2013 17.57 3.01 1.46
2014 18.86 3.23 1.37
2015 22.7 3.65 1.28
TOTAL 195.66 37.87 13.14
AVERAGE 19.566 3.787 1.314

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P/E ,P/B and Dividend yield ratio of nifty fifty companies as on JULY 30
P/E ,P/B and Dividend yield ratio of nifty fifty companies as on November 30
YEAR P/E P/B
YIELD
RATIO
2006 21.18 5.08 1.22
2007 25.21 6.05 0.93
2008 12.08 2.32 2.05
2009 22.37 3.56 0.98
2010 23.39 3.69 1.06
2011 17.49 2.89 1.56
2012 18.59 3.12 1.4
2013 18.38 2.93 1.51
2014 21.94 3.63 1.23
2015 21.45 3.19 1.43
TOTAL 202.08 36.46 13.37
AVERAGE 20.208 3.646 1.337
YEAR P/E P/B
YIELD
RATIO
2006 17.64 4.29 1.58
2007 20.49 5.31 1.07
2008 18.22 3.99 1.28
2009 20.68 3.73 1.11
2010 22.31 3.78 1.02
2011 19.76 3.4 1.29
2012 17.09 2.96 1.54
2013 17.05 2.84 1.47
2014 20.56 3.48 1.3
2015 23.53 3.5 1.41
TOTAL 197.33 37.28 13.07
AVERAGE 19.733 3.728 1.307

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PE RATIO
In this figure PE ratio of three month was taken i.e. March July and November on 30
of ten years from 2006 to 2015 and as we can see that in November 2008 there was a
recession in world economy therefore PE RATIO of all the nifty companies is down.
And from 2008 it started to grow continuously up to 2015.
PB RATIO
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
5
10
15
20
25
30
march
july
november
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
1
2
3
4
5
6
7
march
july
november

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In PB RATIO we have taken a data of march November and July and we can see that
Pb ratio in 2006 is between 4to 5.5 which is good sign for a company and in 2007 it is
at very good position but in November 2008 fall in the market is very high as we can
see from the figure and, In July 2009 also downfall because of the recession in the
world market but after that it started to increase .
YIELD RATIO
As we can see from the graph that in November 2008,and march 2009 hike in the
yield ratio due the economic crises happing in the world economy which leads to hike
in the yield ratio.
1.8 LIMITAITONS OF STUDY
The subject of derivatives if vast it requires extensive study and research to
understand the depth of the various instrument operating in the market only a recent
scenario.
There are various other factors also which define the risk and return preferences of an
investor however the study was only contained towards the risk maximization and
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
0.5
1
1.5
2
2.5
march
july
november

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profit maximization objective of the investor. The derivative market is a dynamic one
premiums, contract rates strike price fluctuate on demand and supply basis. Therefore
data related to last few trading months was only consider and interpreted. As a time
available to conduct the study was only 3 month so it is not possible to cover the
entire topic. Limited resources are available to collect the information about the
commodity trading. As India has a bright future in the commodity market but due to
the lack of knowledge and awareness among the people commodity market is limited
to only few no of people.
Share market is so much volatile and it is difficult to forecast anything about it
whether you trade through online or offline so we need to study according to that and
get updated from time to time to understand the market trends and track the condition
of the volatile market.
Due to the lack of time and resources some aspect are not covered in my report.

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CHAPTER 2:
PROFILE OF THE ORGANIZATION

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2.1 INDUSTRY DETAIL
Securities market has essentially three categories of participants namely the issuer of
securities, investors in securities and the intermediaries and two categories of
products, the services of the intermediaries the securities including derivatives.
The securities market has two interdependent and inseparable segments the new issue
(primary market) and the stock (secondary market). The primary market provides the
channel for sale of new securities while the secondary market deals in securities
previously issued.
2.2 COMPANY PROFILE:
Smart Equity Brokers Pvt. Ltd. Pvt. Ltd. Brokers Pvt. Ltd. & Smart Commodity
Brokers Pvt. Ltd. was established on 1st May 2006 as Smart Equity Brokers Pvt.
Ltd. Brokers Pvt. Ltd., by a young Chartered Accountant, Mr. Arun Khera having
a rich experience & exposure to capital, derivative & commodity market. The
Company acquired the membership of:
 Bombay Stock Exchange (BSE) in 2006
 National Stock Exchange [NSE] in 2006
 National Commodity & Derivative Exchange [NCDEX] in 2003
 Multi Commodity Exchange [MCX] in 2006
 Derivatives Segment [NSE] , Clearing Member in 2006
Smart is a full service brokerage house providing comprehensive advisory services to
its clients under one roof, enabling you to manage all your financial needs. We have
expertise in advisory services in both cash and derivatives sides of the capital markets.
Smart also provides commodity trading through its group subsidiaries, and is a
member of the MCX and NCDEX. The services are offered under total confidentiality
and integrity with the sole purpose of maximizing returns to.

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OUR CLIENTS:
Our customer base is a mix of institutional, high net worth, and retail investors. This
diversified base of customers, together with our wide gamut of services, provides us
with the necessary stability and strength to weather the volatility much better than that
of the competitors and also maintain high standards of customer service levels
throughout. Smart meets the support needs of this investor base through execution
skills driven by an experienced sales team and research-backed advice generated by a
team of experienced analysts.
Smart advisory services range from investing, trading, research, financial planning
and portfolio management, which are offered, to a large number of high net worth
individuals and corporate.
2.3 OUR VALUES:
To be fair, empathetic and responsive in serving our customers.
To respect and reinforce our fellow employees and the power of teamwork.
To strive relentlessly to improve what we do and how we do it.
To always earn and be worthy to our customer's trust.
2.4 OUR MISSION:
To provide research-driven, unbiased investment advice with the objective of
achieving sustainable superior investment returns for our clients.
To provide flawless execution support to meet diverse client needs on a platform of
professionalism and integrity.
2.5 MARKETING STRATEGIES:
 We conduct Seminars, Workshop in colleges and companies.
 We use both Pull and Push Marketing Strategies.
 We do not believe in advertising much, rather in Word of Mouth.

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2.6 COMPETITORS:
 Angel Broking
 Karvy
 SMC
 Religare enterprises Limited (REL)
 Sharekhan
2.7 PRODUCT LINE:
Products and services of the company:-
 Equity
 Derivatives
 Depositary
 Commodities
 Systematic trading
 Internet trading
 IPO -Initial Public Offerings
 Mutual fund
2.8 ORGANIZTIONAL STRUCTURE
`

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- Accounts - Sales Team
- Depository - Relationship Manager
- Mutual Fund
- Risk Management System
2.9 HR System:
This document provides additional guidelines / clarifications to employees regarding
specific areas under Code of Conduct. It is expected that each employee is aware of
the various facets of the conduct and understands its applicability in local context.
Compliance with the law - All employees is expected to know the applicable laws
with respect to their area of operation /role. In case of any clarification / further
information, please contact the concerned HOD. Ignorance / negligence will not be
acceptable.
1) A candidate selected must have following original documents:-
a) Pancard
b) Addressproof
c) Adharcard
d) Last salary slip ( if not a fresher )
e) Bank proof with last salary credited
2) Candidate must be graduate passed.
Finance
ITMarketing

25. 25
3) Selected employees will be allowed 12 privilege leaves and 0. Sick leaves. &
if not availed will be reimbursed if he is in continuous employment of min 9
months and no employee is allowed to take more than 3 leaves at a time
4) Salary will be credited to employee’s bank account on or before …10th. Day
of the month.
5) Salary slip will be mailed to employee’s mail address by …10th … of the
month.
6) Attendance data will be picking up from biometric attendance machine. If
employee is not attending duty in office due to official work allocated
elsewhere must have prior approval by his senior by official mail, otherwise
will be marked absent only.
7) 15 minutes grace period will be allowed to attend office in morning, beyond
that half day absent will be marked.
8) Employees are not allowed to attend office in casual wear, except Saturdays.
9) If an employee resigns, she has to serve 15 days’ notice. In same fashion, if
company will ask any employee to resign, will provide 15 days grace
period.
10) No employee is allowed to trade in future & option market or day trading in
equity cash market.
11) No employee is allowed to use printed stationary of the company, until and
unless authorized by management for a specific task.
12) Use and protection of company property – Data and documents is also
company property. Each one of us shall protect and preserve the same around
us.
13) Handling information, Data Protection – No sharing and passing reference of
data / info is permissible even to own family members.
14) Good business practice, Conflicts of interest – In case of a potential situation
which may draw possible attention under conflict of interest either at
individual or group level, the documentation and due approval’s should be
well captured for future reference.

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Competitive position in the market:
As per the market, trading firms never get rating from any regulator, but according to
Smart Equity Brokers Pvt. Ltd. management they are among top three broking firms
in Delhi NCR.
Financial and profitability position:
According to Smart Equity Brokers Pvt. Ltd. management they are not supposed to
disclose their financial and profitability position to us.
Current challenges:
Lack of Awareness and Education:
As compared to Developed economy like U.S., more than 80% people invest their
money in stock market because people there are more educated and aware about the
market. But in India less than 5% of people invest in stock market as they have a fear
of losing their money. They treat it as investment but want to get rich instantly. It is
happening as people are not aware and educated about it. Another reason is that
people in India have a misconception that invest in the market is similar to gambling.
Future prospects:
India has a huge potential in stock market .Indian government is also playing an
important role in increasing awareness in general public. They are provided subsidies
and grants to CA firms, broking firms, brokers to arrange seminars to increase
awareness.
Smart Equity Brokers Pvt. Ltd. also arranges many seminars every year as a result of
which they have increased their number of investors and they have targeted to
increase the number of clients by double in next three years.
They organize investors meet for potential and existing investors who come up and
share views and experiences that helps in encouraging investors to invest in the stock
market

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2.10 OFFERING OF THE COMPANY
 Smart Equity provides 3 in 1 account.
1 1. De-mat a/c
2 2. Trading a/c [for cash calculation]
3 3. Dial and Trade [for offline trading/for query relating trading]
FOR OPENING AN ACCOUNT:
 2 passport size photograph
 Identity proof (PAN card is compulsory)
 Residence proof
 Cheque ( Min Rs.10,000 margin balance)
Proofs of Identity
Customer can submit a photo copy of any one of the following
 Voter ID
 Passport
 PAN Card
 Driving License
 Photo I card issued by Employer registered under MAPIN
 Copy of Ration card
Address Proof
Customer can submit a photo copy of any one of the following
 Voter ID Card
 Driving License
 Passport
 Ration Card
 Telephone Bill
 Electricity Bill
 Leave-License
 Bank Passbook
 Latest Bank Statement

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[2] Trading Account:
It is an electronic account which enables customers to trade in share through internet
without help to broker.
1) NSE/BSE/F&O/Commodity terminal live screen:-
Provides online fluctuations rate on computer screen
2) Online Daily Tips:-
 Smart Equity is providing tips through mails
 Smart Equity is provide tips through SMS
3) IPO/MF Online :-
Smart Equity provides IPO and MF facility for the customer.
[3] Dial-N-Trade:-
Smart Equity provides Dial-N-Trade facility to the customer.
2.11 Exchange Charges
BSE
PER CRORE
Total Turnover 350 0.0035
Stamp Duty On Duty 1000 0.01
Stamp Duty On Intra Day 200 0.002
Security transaction tax trading 2500 Selling side 0.025
Security transaction tax delivery 12500 0.125
SEBI Fees 1000 0.01
Service tax – cess on brokerage and
transaction charges
10.30
Total tax on Jobbing 1800 per core
Total tax on Delivery 13800 per crore

29. 29
NSE
PER CRORE
Total Turnover 400 0.004
Stamp Duty On Duty 1000 0.01
Stamp Duty On Intra Day 200 0.002
Security transaction tax trading 2500 Selling side 0.025
Security transaction tax Delivery 12500 0.125
SEBI Fees 1000 0.01
Service tax – cess on bbrok and
transaction charges
10.30
Total tax on Jobbing 1850 per crore
Total tax on Delivery 13900 per crore
Future and Option
PER CRORE
Turnover Charges in Option On
Premium
6000 0.06
Total Turnover 200 0.002
Stamp Duty/Same in Option 200 0.002
Security transaction tax trading Future 1000 Selling side 0.01
Security transaction tax Option Premium 1000 Selling side 0.01
Security transaction tax on Option
Contract (exercised)
12500 0.125
SEBI Fees 20 0.0002
Service tax – cess on brokerage and
transaction charges
12.36
If buy position than Security transaction tax will charged
If sell position then Security transaction tax will not chargeable

30. 30
CHAPTER 3:
JOB DESCRIPTION
AND
FUNCTIONAL PROFILE

31. 31
My job description and functional profile include:
 To assist senior brokers in taking calls for clients.
 To be alert and have qualities such as presence of mind, stamina and dedication to
satisfy his clients with good service.
 To see the market movement and try to draw conclusions from them. Tips and
suggestions given to clients need to be backed by strong fundamental as well as
technical research, and I received training in the field of stock research from my
mentor.
 The job profile includes technical and fundamental analysis after gaining basic
knowledge of stock broking. With technical analysis which involves study of
technical charts, we give support and resistance points to the traders. Fundamental
analysis is essential for clients who are looking for long-term investments.
 In many brokerage houses, stockbrokers work in a research team which concentrates
on select sector and stocks. Finance, banking, information technology, metals, oil and
gas, aviation, pharmaceuticals are the sectors in which stockbrokers generally show a
lot of interest.
 Trainee stock brokers initially work as assistant portfolio managers and aid wealth
managers in preparing client portfolios by taking into consideration their risk profiles.
Trainee stockbrokers learn how to manage client portfolios by exiting from under
performing stocks and adding cheap stocks, to give maximum returns to their clients.
 Face to face client interaction is also one of the most vital parts of the job. It is only
after meeting clients that the brokers would be able to choose investment options and
stocks for them.

32. 32
Tasks assigned to me:
 To track some shares, based on our analysis check verify the results whether a share
will go up or down.
 P/E Ratio P/B Ratio and Dividend Yield Ratio
 To do the telecalling and take appointments
 To collect the data of the doctors, CA’S, Property dealers.
 To convince the clients for the account opening.
 To convince the clients for the attending the seminar related to stock markets.
 To attend the appointment on prescribed time.
 To tell the client about the company and its products.
 To tell the client about the advantages of opening a demat account with Smart Equity.
 To convince the clients to do Online Trading.
 To calculate the pivot point, support and resistance level of a particular stock.
 To explain him the terms and conditions of the product.
 To convince the client to open Demat account at Smart Equity.
 To give a live demo of how the online terminal works.
 By means of presentation explaining them how to trade online.
 To take signatures of the client on the KYC (know your customer) form.
 To collect the documents required to open a demat account.
 To fill up the KYC form for the customer.
 To install the software in the client`s computer.
 To make the client trade.
 Weekly report of work done

33. 33
CHAPTER 4:
LEARNING EXPERIENCE
AND
INSIGHTS GAINED

34. 34
DERIVATIVES
MEANING:
The emergence of the market for derivative products, most notably forwards,
futures and options, can be traced back to the willingness of risk-averse economic
agents to guard themselves against uncertainties arising out of fluctuations in asset
prices. By their very nature, the financial markets are marked very high degree of
volatility. Through the use of derivative products, it is possible to partially or fully
transfer price risks by locking-in asset prices. As instruments of risk management,
these generally do not influence the fluctuations in the underlying asset prices.
However, by locking-in asset prices, derivative products minimize the impact of
fluctuations in asset prices on the profitability and cash flow situation of risk-averse
investors.
Derivatives are used by banks, securities firms, companies and investors to hedge
risks, to gain access to cheaper money and to make profits Derivatives are likely to
grow even at a faster rate in future they are first of all cheaper to world have met the
increasing volume of products tailored to the needs of particular customers, trading in
derivatives has increased even in the over the counter markets.
In Britain unit trusts allowed to invest in futures & options .The capital adequacy
norms for banks in the European Economic Community demand less capital to hedge
or speculate through derivatives than to carry underlying assets. Derivatives are
weighted lightly than other assets that appear on bank balance sheets. The size of
these off-balance sheet assets that include derivatives is more than seven times as
large as balance sheet items at some American banks causing concern to regulators.

35. 35
DEFINITION:
Derivative is a product whose value is derived from the value of one or more
basic variables, called bases (underlying asset, index, or reference rate), in a
contractual manner. The underlying asset can be equity, forex, commodity or any
other asset.
In the Indian context the Securities Contracts (Regulation) Act, 1956 defines
“derivative” to include-
1. A security derived from a debt instrument, share, and loan whether secured or
unsecured, risk instrument or contract for differences or any other form of security.
2. A contract, which derives its value from the prices, or index of prices, of
underlying securities.
(www.investopedia.com/terms/d/derivative.asp)
4.6.1 PARTICIPANTS IN THE DERIVATIVES MARKET
The following three broad categories of participants who trade in the derivatives
market:
1. Hedgers
2. Speculators and
3. Arbitrageurs
Hedgers:
Hedgers face risk associated with the price of an asset. They use futures or options
markets to reduce or eliminate this risk.
Speculators:
Speculators wish to bet on future movements in the price of an asset. Futures and
Options contracts can give them an extra leverage; that is, they can increase both the
potential gains and potential losses in a speculative venture.
Arbitrageurs:

36. 36
Arbitrageurs are in business to take advantage of a discrepancy between prices in two
different markets.
For example, they see the futures price of an asset getting out of line with the cash
price; they will take offsetting positions in the two markets to lock in a profit.
4.6.2 FUNCTIONS OF THE DERIVATIVES MARKET:
The derivatives market performs a number of economic functions. They are:
1. Prices in an organized derivatives market reflect the perception of market
participants about the future and lead the prices of underlying to the perceived future
level.
2. Derivatives, due to their inherent nature, are linked to the underlying cash
markets. With the introduction of derivatives, the underlying market witnesses higher
trading volumes because of participation by more players who would not otherwise
participate for lack of an arrangement to transfer risk.
3. Speculative trades shift to a more controlled environment of derivatives
market. In the absence of an organized derivatives market, speculators trade in the
underlying cash markets.
4. An important incidental benefit that flows from derivatives trading is that it
acts as a catalyst for new entrepreneurial activity.
5. Derivatives markets help increase savings and investment in the long run.
Transfer of risk enables market participants to expand their volume of activity.
4.6.3 TYPES OF DERIVATIVES
The most commonly used derivatives contracts are forwards, futures and options.
Here various derivatives contracts that have come to be used are given briefly:

37. 37
1. Forwards
2. Futures
3. Options
4. Swaps
Forwards-A forward contract is customized contract between two entities,
where settlement takes place on a specific date in the future at today’s pre-agreed
price
Futures: A futures contract is an agreement between two parties to buy or sell
an asset at a certain time in the future at a certain price. Futures contracts are special
types of forward contracts in the sense that the former are standardized exchange-
traded contracts.
Options: Options are of two types – calls and puts
Calls give the buyer the right but not the obligation to buy a given quantity of the
underlying asset, at a given price on or before. A given future date.
Puts give the buyer the right, but not the obligation to sell a given quantity of the
Underlying asset at a given price on or before a given date.
Swaps: Swaps are private agreements between two parties to exchange cash
flows in the future according to a prearranged formula. They can be regarded as
portfolios of forward contracts. The two commonly used swaps are:
• Interest rate swaps: These entail swapping only the interest related cash flows
between the parties in the same currency.
• Currency swaps: These entail swapping both principal and interest between
the parties, with the cash flows in one direction being in a different currency than
those in the opposite direction.
Option terminology
FUTURES TERMINOLOGY

38. 38
 Contract Size
The value of the contract at a specific level of Index. It is
Index level * Multiplier.
 Multiplier
It is a pre-determined value, used to arrive at the contract size. It is the price per
index point.
 Tick Size
It is the minimum price difference between two quotes of similar nature.
 Contract Month
The month in which the contract will expire.
 Expiry Day
The last day on which the contract is available for trading.
 Open interest Total outstanding long or short positions in the market at any specific
point in time. As total long positions for market would be equal to total short positions,
for calculation of open Interest, only one side of the contracts is counted.
 Volume
No. Of contracts traded during a specific period of time. During a day, during a week
or during a month.
 Long position
Outstanding/unsettled purchase position at any point of time.
 Short position
Outstanding/ unsettled sales position at any point of time.

39. 39
 Open position
Outstanding/unsettled long or short position at any point of time.
 Physical delivery
Open position at the expiry of the contract is settled through delivery of the
underlying. In futures market, delivery is low.
 Cash settlement
Open position at the expiry of the contract is settled in cash. These contracts
Alternative Delivery Procedure (ADP) - Open position at the expiry of the contract is
settled by two parties - one buyer and one seller, at the terms other than defined by the
exchange. World wide a significant portion of the energy and energy related contracts
(crude oil, heating and gasoline oil) are settled through Alternative Delivery
Procedure.
(www.investopedia.com/terms/i/indiafutures.asp)
OPTIONS
An option agreement is a contract in which the writer of the option grants the buyer of
the option the right to purchase from or sell to the writer a designated instrument at a
specific price within a specified period of time.
Certain options are shorter in nature and are issued by investors another group of
options are long-term in nature and are issued by companies.
OPTIONS TERMINOLOGY:
 Call option:
A call is an option contract giving the buyer the right to purchase the stock.
 Put option:
A put is an option contract giving the buyer the right to sell the stock.

40. 40
 Expiration date:
It is the date on which the option contract expires.
 Strike price:
It is the price at which the buyer of an option contract can purchase or sell the
stock during the life of the option
 Premium:
Is the price the buyer pays the writer for an option contract?
 Writer:
The term writer is synonymous to the seller of the option contract.
 Holder:
The term holder is synonymous to the buyer of the option contract.
The option holder will exercise his option when doing so provides him a benefit
over buying or selling the underlying asset from the market at the prevailing
price.
These are three possibilities.
1. In the money: An option is said to be in the money when it is
advantageous to exercise it.
2. Out of the money: The option is out of money if it not advantageous to
exercise it.
3. At the money: IF the option holder does not lose or gain whether he exercises
his option or buys or sells the asset from the market, the option is said to be at the
money. The exchanges initially created three expiration cycles for all listed options
and each issue was assigned to one of these three cycles.
 January, April, July, October.
 February, March, August, November.
 March, June, September, and December.
In India, all the F and O contracts whether on indices or individual stocks are
available for one or two or three months series and they expire on the Thursday of the
concerned month.

41. 41
CALL OPTION:
An option that grants the buyer the right to purchase a designated instrument is called
a call option. A call option is a contract that gives its owner the right, but not the
obligation, to buy a specified price on or before a specified date.
An American call option can be exercised on or before the specified date only.
European options can be exercised on the specified date only.
PUT OPTION:
An option contract giving the owner the right, but not the obligation, to sell a
specified amount of an underlying security at a specified price within a specified time.
This is the opposite of a call option, which gives the holder the right to buy shares.
A put becomes more valuable as the price of the underlying stock depreciates relative
to the strike price. For example, if you have one Mar 09 Taser 10 put, you have the
right to sell 100 shares of Taser at $10 until March 2008 (usually the third Friday of
the month). If shares of Taser fall to $5 and you exercise the option, you can purchase
100 shares of Taser for $5 in the market and sell the shares to the option's writer for
$10 each, which means you make $500 (100 x ($10-$5)) on the put option. Note that
the maximum amount of potential profit in this example ignores the premium paid to
obtain the put option.
ONLINE TRADING:
The net is used as a medium of trading in online trading. Orders are communicated to
the stock exchange through website. Internet trading started in India on 1st April 2000
with 79 members seeking permission for online trading. The SEBI committees on
internet based securities trading services has allowed the net to be used as an Order
Routing System (ORS) through registered stock brokers on behalf of their clients for
execution of transaction. Under the Order Routing System the client enters his
requirements (security, quantity, price, and buy/sell) in broker’s site. They are
checked electronically against the clients account and routed electronically to the
appropriate exchange for execution by the broker. The client receives a confirmation

42. 42
on execution of the order. The customer’s portfolio and ledger accounts get updated to
reflect the transaction. The user should have the user id and password to enter into the
electronic ring. He should also have demat account and bank account. The system
permits only a registered client to log in using user id and password. Order can be
placed using place order window of the website.
Objectives: Online trading is expected to
• Increase transparency in the markets,
• Enhance market quality through improved liquidity, by increasing quote continuity
and market depth,
• Reduce settlement risks due to open trades, by elimination of mismatches,
• Provide management information system,
• Introduce flexibility in system, so as to handle growing volumes easily and to
support nationwide expansion of market activity.
Requirements for net trading:
For investors:
1. Installation of a computer with required specification
2. Installation of a modem
3. Telephone connection
4. Registration for on-line trading with broker
5. A bank account
6. Depository account
7. Compliance with SEBI guidelines for net trading
The following should be produced to get a Demat account and online trading
account:

43. 43
As identity proof & address proof any one of the following:
1) Voter ID card
2) Driving license
3) PAN card
4) Ration card
5) Bank pass book
6) Telephone bill other requirements, which are necessary
• First page of the bank pass book and last 6 months statement.
• Bank manager’s signature along with bank’s seal, manager registration code on
photograph.
For stock brokers:
1. Permission from stock exchange for net trading
2. Net worth of Rs. 50 lac
3. Adequate back-up system
4. Secured and reliable software system
5. Adequate, experienced and trained staff
6. Communication of order (trade confirmation to investor by e-mail)
7. Use of authentication technologies
8. Issue of contract notes within 24 hours of the trade execution
9. Setting up a website.
Some of the websites also offer:

44. 44
•News and research report
•BSE and NSE movements
•Stock analysis
•IPO and mutual fund centers
Step by step procedure in online trading:
Following steps explain the step by step approach to on-line trading:
1) Log on to the stock brokers website
2) Register as client/investor
3) Fill the application form and client broker agreement form on the requisite value
stamp paper
4) Obtain user ID and pass word
5) Log on to the broker’s site using secure user ID and password
6) Market watch page will show real time on-line market data
7) Trade shares directly by entering the symbol or number of the security
8) Brokers server will check your limit in the on-line account and Demat account for
the number of shares and execute the trade
9) Order is executed instantly (10-30 seconds) and confirmation can be obtained.
10) Confirmation is e-mailed to investor by broker
11) Contract note is printed and mailed in 24 hours
12) Settlement will take place automatically on the settlement day
13) Demat account and the bank account will get debited and credited by electronic
means.

45. 45
ONLINE TRADING HAS LED TO ADDITIONAL FEATURES SUCH AS:
1) Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for
this leeway facility since one need to hold a price.
2) Market orders: orders can be filled at unexpected prices, but this type is much more
risky, since you have to buy stock at the given price.
3) Cash account: where funds have to be available prior to placing the order.
4) Margin account: where orders can be placed against stocks, to increase Purchasing
power.
ADVANTAGES OF ONLINE TRADING:
1) Online trading has made it possible for anyone to have easy and efficient access to
more reports and charts than it was previously possible if one went to any broker’s
office. Thus we have access to a lot more information online.
2) Online trading has let room for smaller organizations to compete with
multinational organizations since it is no longer a leg it issue. Being online does not
identify the size of any particular organization, therefore, this additional power to the
underdogs.
3) Online trading has allowed companies to locate themselves where they want as
physical location is not an issue anymore. Companies can establish themselves
according to their gains and losses, for instance where tax (sales and value added
taxes) is best suited to them.
4) Online trading gives control to individuals and they can exercise it over accounts
thus comprehend what is going on when they trade. It is like going back to school and
re-educating oneself on how to trade online.

46. 46
5) Individuals’ benefit by saving comparatively a lot more when trading online as the
cost per trade is less.
6) Individuals can invest in a variety of products, unlike earlier when people bought
bonds, mutual funds, and stock for long-term basis and sat on them. Now they can
invest in stocks, stock and index options mutual funds, government, and even
insurance.
Two trading software’s we learned is:
1.ODIN also known as Open Dealer Integrated Network which has been designed and
developed for the broking industry to facilitate complete trade automation using
extensive risk management techniques. Following are the keys along with the
functions they perform:
F1 it is use for buying
F2 it is use for selling
F3 is used to watch pending bids
F4/F6 it display best 5 bids
Shift+f7 gives information about the Annual General Meeting, dividend to be give ,
face value etc
Shift +F2 is use to modify bid
F3+F3 shows all bids
F3+F3+Control C: This is use to know bid of a particular client.
2 .Neat – CDS: This is currency derivative trading system of NSE called National
Exchange for Automated Trading- Currency Derivative Segment. Following are the
functional keys used:
F11: Market Inquiry
Control +F10 : This is use to view latest news and circular
Control+F10+F : Total order check and client information

47. 47
F8: This is use for taking trade in currency
Alt+F7 : Backup
Shift+F10+Enter: Market Movement
Shift +F9: Offline order entry
Shift+F7: Security List
SMART EQUITY provided an insight into how Finance professionals trade
securities, apply finance strategies and focus on wealth creation and covered the
following topics:
Equity Markets and Futures and Options
a. Introduction to Equity, Shares and Listed Securities
b. Introduction to Futures and Options
c. Trading software for Capital Markets
d. Introduction to market watch
e. Buy, Sell and create Stop Loss
f. Concept of Technical and Fundamental Analysis with pros and cons.
Smart provided platform to learn about trading software’s and how to keep a watch on
a particular share using various technical patterns and fundamental analyses.
4.3 DEMATERLIZATION:
Dematerialization is the process by which physical certificates of an investor are
converted to an equipment number of securities in electronic from and credited in the
investor account with his DP. In order to dematerialize the certificates, an investor has
to first open an account with a DP and then request for the Dematerialization Request
Form, which is DP and submit the same along with the share certificates. The investor
has to ensure that he marks “Submitted for Dematerialization” on the certificates
before the shares are handed over to the DP for demat.

48. 48
Dematerialization can only be done to those certificates, which are already registered
in your name and belong to the list of securities admitted for Dematerialization at
NSDL. Most of the active scrip’s in the market including all the scrip’s of S&P CNX
NIFTY and BSE SENSEX have already joined NSDL. This list is steadily increasing.
Briefly, the process is as follows: after completion of transfer, the investor gets the
option to dematerialize such shares.
Investor’s willing to exercise this option sends a Demat request along with the option
letter sent by the company to his DP. The company or its R&T agent would confirm
the Demat request on its receipt from the DP to reduce risk of loss in transit.
Dematerialized shares do not have any distinctive or certificate numbers. These shares
are fungible-which means that 100 shares of a security are the same as any other 100
shares of the security. Odd lot shares certificates can also be dematerialized.
Dematerialization normally takes about fifteen to thirty days. To get back
dematerialized securities in the physical form, request DP for Dematerialization of the
same is made. dematerialization is the process of converting electronic shares in to
physical shares.
Benefits of Demat:
 It reduces the risk of bad deliveries, in turn saving the cost and wastage of time
associated with follow up for rectification. This has lead to reduction in brokerage to
the extent of 0.5% by quite a few brokerage firms.
 In case of transfer of electronic shares, you save 0.5% in stamp duty. You avoid the
cost of courier / notarization.
 You can receive your bonuses and rights issues into your DA as a direct credit, this
eliminating risk of loss in transit.
 You can also expect a lower interest charge for loans taken against Demat shares as
compared to loans against physical shares.
 There is no lost in transit, thus the overheads of getting a duplicate copy in such
circumstances is reduced.

49. 49
I worked with SMART EQUITY with a profile of finance and Sales trainee. This
profile offers me to understand the need of customer and provide them the best deal
possible with maximization of the profit, both for the company as well as for the
customer. The most important aspect for the role of trainee is trust. For fulfillment of
the targets one needs to:
• Capitalize on the old and loyal clientage which can be building slowly by advising
people in the best possible way.
• Generation of leads: Since I was new in the field so I had to start from scratch and
generate new leads to sustain in the market. Cold calling is one of the trusted ways of
getting to the customers without meeting them. Although the rate of conversion
remained very less, for cold calling the quality and accent remains a very important
criterion. This activity gave me mixed result.
I often got success and generated many leads through it but it also landed me in
awkward position where the customer were in different mood and made us hear words
for which a marketer should be always prepared to hear.
LIMITATIONS:
Cold Calling: As in case of cold calling voice and accent plays major role to influence
the clients and the chances of success rate increases as a person have good knowledge
about the product offering to the clients that is from the point of view of the clients.
The right time to call a customer cannot be decided, as the customer may in a
different mood at the time of calling so an individual might have to face some bad
experience as because a person does not know about the mood of the clients while
calling.
Cold calling is also very time consuming process as because sometime clients may
not free so a person has to call again and again after that clients give appointment to
meet so it’s a very Time consuming process.
In cold calling the chances of success is very Less because people more influence in
face to face talking due to trust factor because people does not trust on phone call so
the chances of success rate is very less.

50. 50
Corporate: Contacts with higher authorities play a major role Description of live
experience: I was supposed to use the database provided by the company to make cold
calls or by directly meeting people to get new leads.
While making cold calls, we need to have:
• Good Communication Skills (Voice quality is clear and articulate) which helps in
dealing with clients easier and helps in influencing properly to increase success rate.
• Persistent and able to bounce back from rejection – one must be persistent and able
to bounce back as if he had a bad experience with previous clients.
• Good organizational skills- one must have good organizational skill so that one can
organize the things in a better way
• Ability to project a telephone personality (Enthusiasm, friendliness)
• Flexibility: can adapt to different types of clients and new situations.
Using a good database is very essential. “Eighty percent of our business comes from
20 percent of our customers" is a frequent statement at any sales convention. There's
hardly a sales executive who is not aware of the 80/20 rule”. While talking to
customers, I analyze their needs. Whether they want to go for investment purpose or
insurance or both. Suggest them the plan that best suits them. If they agree to it than
either we send across the agents to close the deal or close it themselves.
Problems faced while selling products:
• Customer dissatisfied with the services.
• People fear that Smart Equity Being a Private company and a new entrant may be
able to sustain or not.
• Past experience, word of mouth.

51. 51
• Lack of knowledge and less awareness about demat account.
• People risk appetite is very low, so they are afraid of Stock Market
Total Number of Exchanges In India:
Sr.
No.
Name of the Exchange Valid Upto
1 Ace Derivatives and Commodity Exchange Limited,
Mumbai (#)
Address: Rawat-ni-wadi, Nr.Central Bank of India, Gandhi
Road, Ahmedabad-380001
PERMANENT
2 Ahmedabad Stock Exchange Ltd.
Address: Kamdhenu Complex Opp, Sahajanand College,
Panjarapole, Ambawadi, Ahmedabad - 380001
PERMANENT
3 BSE Ltd.
Address: P J Tower, Dalal Street, Mumbai 400023
PERMANENT
4 Bombay Commodity Exchange Ltd., Vashi (#)
Address: Jenabai Building (Gaya Bldg.) 109, Yusuf
Meherali Road, P.B. No. 13009, Masijid Bunder, Mumbai
– 400 003
PERMANENT
5 Calcutta Stock Exchange Ltd.
Address: 7, Lyons Range, Kolkata – 700001
PERMANENT
6 Chamber Of Commerce, Hapur (#)
Address: Chandi Road. Dist.Ghaziabad, Hapur-245101
28-FEB-2018
7 Cotton Association of India, Mumbai (#)
Address: 2nd floor, Cotton Exchange Building, Cotton
Green, Sewari, Mumbai-400033
PERMANENT
8 Delhi Stock Exchange Ltd. The
Address: DSE House, 3/1, Asaf Ali Road, New Delhi –
110002
PERMANENT
9 India Pepper & Spice Trade Association., Kochi (#)
Address: VI/150, Jew Town, Mattancherry, Kochi-682002
PERMANENT
10 Indian Commodity Exchange Limited, New Delhi (#) PERMANENT

52. 52
Address: 2nd Floor, 3rd Wing, G-Block, DAKC, Opp:
Koperkhairane Railway Station, Navi Mumbai – 400 709
11 Magadh Stock Exchange Ltd.
"SEBI vide order dated September 3, 2007 refused to
renew the recognition granted to Magadh Stock Exchange
Ltd."
12 Metropolitan Stock Exchange of India Ltd.
4th Floor, Vibgyor Tower, Plot No C 62, G Block, Bandra
Kurla Complex (BKC), Bandra (E), Mumbai – 400051
15-SEP-2016
13 Multi Commodity Exchange of India Ltd., Mumbai (#)
Address: Exchange Square, CST No.225, Suren Road,
Andheri (E), Mumbai-400093
PERMANENT
14 National Commodity & Derivatives Exchange Ltd.,
Mumbai (#)
Address: Akruti Corporate Park,1st Floor, Near
G.E.Garden , L.B.S. Marg, Kanjurmarg(West), Mumbai -
400 078.
PERMANENT
15 National Multi Commodity Exchange of India
Limited., Ahmedabad (#)
Address: 5,4th Floor,H.K. House, B/h
JivabhaiChambers,Ashram Road, Ahmedabad.-380009
PERMANENT
16 National Stock Exchange of India Ltd.
Address: Bandra Kurla Complex, Bandra (East) Mumbai
400051
PERMANENT
17 Rajkot Commodity Exchange Ltd., Rajkot (#)
Address: 38/39,Commercial Chamber, Satta Bazar,
Danapith, Rajkot-360001
31-MAR-2018
18 Spices and Oilseeds Exchange Ltd., Sangli (#)
Address: Mahajan Hall, Wakhar Bhag, Post bag no.2,
Sangli-416416
PERMANENT
19 Universal Commodity Exchange Ltd., Navi Mumbai
(#)
Address: Exchange House, Millennium Business Park,
Mahape, Navi Mumbai 400 710
PERMANENT

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Major stock exchanges are as follows:
1. National stock exchange and Bombay stock exchange
2.Multi commodity exchange : is an independent commodity exchange based in
India. It was established in 2003 and is based in Mumbai. It has an average daily
turnover of around US$1.55 billion.
It deals in Commodity Market.
NSE BSE
EQUITY
(Cash Market)
DEREVATIVE
(Future Market)
MCX
Crude oilCopper Silver Gold

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3. National Commodity & Derivatives Exchange Limited (NCDEX): is an online
commodity exchange based in India. It was incorporated as a private limited company
incorporated on April 23, 2003 under the Companies Act, 1956
4.Metropolitan Stock Exchange of India Ltd. (MSEI), formerly known as MCX
Stock Exchange Ltd. (MCX-SX), is India’s youngest and one of the three stock
exchanges recognized by country’s securities market regulator - Securities and
Exchange Board of India (SEBI). It offers an electronic, transparent and hi-tech
platform for trading in Capital Market, Futures & Options, Currency Derivatives,
Interest Rate Futures (IRF) and Debt Market segments
It deals in Currency.
5. Delhi Stock Exchange (DSE) is located in New Delhi, India. It was incorporated on
25 June 1947. The exchange is an amalgamation of Delhi Stock and Share Brokers'
Association Limited and the Delhi Stocks and Shares Exchange Limited. It is India's
fifth exchange. The exchange is one of the premier stock exchanges in India. The
Delhi Stock Exchange is well connected to 50 cities with terminals in north India.
NCDECK
Agro Commodity
MCX SX
Euro
Dollar
Pound

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DERIVATIVES INSTRUMENTS IN INDIA
First derivative product introduced in the Indian securities market was "INDEX
FUTURES". In the world, first index futures were traded in U.S. on Kansas City
Board of Trade (KCBT) on Value Line Arithmetic Index (VLAI) in 1982.
Organized exchanges began trading options on equities in 1973, whereas exchange
traded debt options did not appear until 1982, on the other hand fixed income futures
began trading in 1975, but equity related futures did not begin until 1982.
4.7.1 DERIVATIVES SEGMENT IN BSE & NSE
BSE & NSE became the first exchanges in India to introduce trading in exchange
traded derivative product with the launch of index futures on Sensex and Nifty futures
respectively on June 9, 2000.
Index futures were followed by launch of index options in June 2001, stock options in
July 2001 and stock futures in Nov 2001. Nifty is the underlying asset of the Index
Futures at the Futures & Options segment of NSE with a market lot of 100 and the
BSE 30. Sensex is the underlying stock index with the market lot of 50.
DSE
Delhi Stock Exchange

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1. Buy & Sell 1. This is 3 way Market.
(Both is possible) 2. You may earn Profit in
2. Now days Intraday this in different ways
Trades are more. 3. We play in Call & Put
3. In this Margin Amount in the case of Option.
Is vary from 20% to 50%. 4. We get Leverage in
4. This Margin is changed by this, we do trade of
SEBI on daily Basis. 1lakh in around 40000
5. This Margin is taken just or in 10000 as well.
for covering loss if happened.
CONTRACT PERIODS:
At any point of time there will always be available near three months contract
periods. For e.g. in the month of June 2014 one can enter into either June Futures
contract or July Futures contract or August Futures Contract. The last Thursday of the
month specified in the contract shall be the final settlement date for that contract at
both NSE as well BSE. Thus June 29, July 27 and August 31 shall be the last trading
day or the final settlement date for June Futures contract, July Futures Contract and
August Futures Contract respectively.
When one futures contract gets expired, a new futures contract will get introduced
automatically. For instance, on 30th June, June futures contract becomes invalidated
and a September Futures Contract gets activated.
DERIVATIVES
Future Option

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SETTLEMENT:
Settlement of all Derivatives trades is in cash mode. There is Daily as well as Final
Settlement. Outstanding positions of a contract can remain open till the last Thursday
of that month. As long as the position is open, the same will be marked to Market at
the Daily Settlement Price, the difference will be credited or debited accordingly and
the position shall be brought forward to the next day at the daily settlement price. Any
position which remains open at the end of the final settlement day (i.e., last Thursday)
shall be closed out by the Exchange at the Final Settlement Price which will be the
closing spot value of the underlying (Nifty or Sensex, or respective stocks as the case
may be).
FUTURES
Futures contract is a firm legal commitment between a buyer & seller in which they
agree to exchange something at a specified price at the end of a designated period of
time. The buyer agrees to take delivery of something and the seller agrees to make
delivery.
FACTORS DETERMINIG OPTION VALUE:
 Stock price
 Strike price
 Time to expiration
 Volatility
 Risk free interest rate
 Dividend
4.8 DIFFERENCE BETWEEN FUTURES & OPTION:
FUTURES
1) Both the parties are obligated to
perform.
OPTIONS
1) Only the seller (writer) is
obligated to perform.

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2) With futures premium is paid by
either party.
3) The parties to futures contracts
must perform at the settlement date
only. They are not obligated to
perform before that date.
4) The holder of the contract is
exposed to the entire spectrum of
downside risk and had the
potential for all upside return.
5) In futures margins to be paid.
They are approximate 15-20% on
the current stock price.
2) With options, the buyer pays the
seller a premium.
3) The buyer of an options contract
can exercise any time prior to
expiration date.
4) The buyer limits the downside
risk to the option premium but retain
the upside potential.
5) In options premiums to be paid.
But they are very less as compared
to the margins.
Advantages of option trading:
 Risk management: put option allow investors holding shares to hedge against
a possible fall in their value. This can be considered similar to taking out
insurance against a fall in the share price.
 Time to decide: By taking a call option the purchase price for the shares is
locked in. This gives the call option holder until the Expiry day to decide
whether or exercised the option and buys the shares. Likewise the taker of a
put option has time to decide whether or not to sell the shares.
 Speculations: The ease of trading in and out of option position makes it
possible to trade options with no intention of ever exercising them. If investor
expects the market to rise, they may decide to buy call options. If expecting a
fall, they may decide to buy put options. Either way the holder can sell the
option prior to expiry to take a profit or limit a loss. Trading options has a
lower cost than shares, as there is no stamp duty payable unless and until
options are exercised.
 Leverage: Leverage provides the potential to make a higher return from a
smaller initial outlay than investing directly however leverage usually involves

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more risks than a direct investment in the underlying share. Trading in options
can allow investors to benefit from a change in the price of the share without
having to pay of the share
Summary of options
Call option buyer Call option writer (seller)
 Pays premium
 Right to exercise and buy the
share
 Profits from rising prices
 Limited losses, potentially
unlimited gain
 Receives premium
 Obligation to sell shares if exercised
 Profits from falling prices or
remaining neutral
 Potentially unlimited losses, limited
gain
Put option buyer Put option writer (seller)
 Pays premium
 Right to exercise and sell shares
 Profits from falling prices
 Limited losses, potentially
unlimited gain
 Receives premium
 Obligation to buy shares if exercised
 Profits from rising prices or remaining
neutral
 Potentially unlimited losses, limited
gain
LIMITATIONS:
Due to bad market conditions people are becoming more and more pessimistic about
investing in the share market. So when we approach investors they tell us how much
they used to trade in shares and how much money they have lost in the share market.
While telecalling sometimes the clients do not give positive response, may be because
they are really busy or may be not interested in the demat accounts.

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While cold calling when we met the owners of big shops. They said that if they had
spare money they will invest it in their shops and not in the share market. They don`t
want to take risk.

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CHAPTER 5:
Recommendations and Conclusion

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SUGGESTIONS:
1. TIPS TO CUSTOMER– Provide continuous tips to clients, How to trade and on which
different script that is by giving them right information about the market which helps
in making more and more profit and also reduces the chance of losses because due to
the lack of knowledge of market an individual generally invest in the stocks which
leads to heavy losses so through tips customer can earn more profit as compared to
previous .
2. LINK-BANK A/Cs – A must link there company demat account to the respective
bank account so that client get convenience in transferring fund to their demat account
or there bank account because clearance of cheque contain more time which can be
improved by linking bank account with Demat account.
3. NEW BANKS – company should try to tie up with major banks like SBI, Allahabad
Bank, Bank of Baroda so that more and more client can be tracked which help in
making the client more easier because people trust more to the banks as compared to
the other firms.
4. SEMINARS Seminars should be held frequently and free and on regular basis in
different parts of the city so that more and more people know about the firm because
in many places in Delhi people does not know about the company so by organizing
seminars people get to know about the company which help in increasing the
popularity and preference of the company. and providing information to prospective
and present customers also.
5. AWARENESS Some promotional activities should be done for the awareness of
the customers because many people think that stock market is nothing but just
gambling as in India only 5% people invest in the stock market and a country like
USA investment done by people is 80 % this is only because of awareness among
them and have a good knowledge of market trends.

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6. MORE BRANCHES – Company should try to open more branches in different part
of country to reach to the maximum no of investors to grab maximum investment
which helps the company in getting more brokerage out of investment leads
profitability of the company as many company such as angel broking has about 5000
branches in different part of the country so our company also opens more branches to
be a topper in market because it has a low distribution network.
7. INVOLVEMENT People at young age should be encouraged to invest in stock
market because many young age people getting a pocket money they just spend in
various activities such as alcohol or cegrates which is also harmphul for the health so
by encouraging youngsters that continuous investment of a small amount of money in
financial market and keep it for long duration helps in gaining higher return which
helps the people in getting good amount of return on investment after certain period of
time.
In order to increase the derivatives market in India, SEBI should revise some of their
regulations like contract size, participation of FII in the derivatives market.

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CONCLUSION
Every organization has various departments for them working together to achieve
common goal of making customer happy with the on-time performances. The
organization has to have a deep sense of coordination between various departments
for proper functioning of the organization so in the same manner at Smart Equity,
there are various departments like customer service, operations, sales and marketing,
finance and administration, credit control and human resource department which work
together for customer satisfaction.
On the basis of the study it is found that Smart Equity is better services provider than
the other stockbrokers. Smart Equity provides the facility of Online Trading. It also
provides the information through the internet and mobile alerts that what IPO’s are
coming in the market. It also organizes seminars to make aware about the market
trends to the new investors and existing investors.so that they get maximum profit
from the investment done as this stock market has huge potential which help an
investor to grow very fast as comparison to other business or investment.
In recent times the Derivative markets have gained importance in terms of their vital
role in the economy. The increasing investments in derivatives (domestic as well as
overseas) have attracted my interest in this area. Through the use of derivative
products, it is possible to partially or fully transfer price risks by locking-in asset
prices. As the volume of trading is tremendously increasing in derivatives market, this
analysis will be of immense help to the investors.
Study also concludes that people are not much aware of commodity market and while
it could be biggest market in India.

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BIBLIOGRAPHY
.
Websites: Most of the secondary data has been taken from websites. Various
websites referred are below:
1. www.derivativesindia.com
2. www.bseindia.com
3. www.nseindia.com
4. www.moneycontrol.com
5. www.smartequity.in
6. www.5paisa.com
7. www.forex.com
8. www.wikipedia.com
9. www.investopedia.com
10. www.optionstradingpedia.com
11. www.stock-made-easy.com
12. www.bettermanagenow.com