Project report on BASICS equity shares and derivatives
1. Project report on BASICS
equity shares and
derivatives market
PREPARED BY:
MANISH
KHARELXC
A PROJECT REPORT ON BASICS OF
EQUITY SHARES AND DERIVATIVES
MARKET
PREPARED BY:
MANISH KHAREL
2. STATEMENT OF PROBLEMS
None of the business firms are having adequate capital. If any company wants diversify, they
need huge capital. For which they have to sell their ownership to public as shares.
As inflation is eating up the value of money year by year, people either wants to invest for
beating inflation or prefer present consumption.
Equity and derivatives are the major financial instruments for investments which will help to
earn returns that will beat inflation rate.
Peoples also have different perception towards investments.
so, this study is done in peerless to understand basics of equity shares and derivatives market,
trading of equity and derivatives and to analyse perception of peoples towards investments.
3. OBJECTIVES OF THE SUDY
To understand the basics of equity and derivatives.
To know the procedure for firms to be listed on stock exchange.
To understand the trading of equity and derivatives.
To practically analyze the movement of price of shares.
To know factors affecting investors for the purchase of shares.
To understand the mechanisms of financial analysts.
To understand the mechanisms of stock broking house.
To understand the methods for trading of shares.
To find out the perceptions of investment in general public.
6. HOW SHARES COME TO MARKET
Firstly, the form should be filled that SEBI will provide.
SEBI will check all the activities of the company. Like profitability, operations, performance,
audit, etc.
Then, it will either approve or disapprove the request of the company to issue shares and
collect the capital.
If SEBI approves the request then company can offer the shares to public through IPO (Initial
Public Offering). For IPO, SEBI will fix dates to issue shares and price of at the first.
Certain dates are fixed by SEBI for investors to book the shares,
Listing of shares are done by SEBI at certain price which may be either in lower, higher or equal
price than previous price.
Now, the shares will be can be traded in electronic form which is known as equity shares.
7. INITIAL PUBLIC OFFERING
It refers as public offering
It is the first sale of stock by a private company to public
It is often issued by smaller and younger companies seeking for capital to
expand the business but it can also be done by largely privately owned
companies looking to become publicly traded.
8. MEANING OF EQUITY SHARES
An equity share is a unit of ownership in a company.
Every company issues a certain number of shares to its promoters, i.e., those
who participate in its formation.
The company issues additional shares to the public, when it raises money by
way of an Initial Public Offer (IPO).
Hence, in addition to the promoters, the public to become shareholders of the
company.
So, if you hold 100 shares of a company which has issued 10,000 shares, you
own 1 per cent of the company.
9. FEATURES OF EQUITY SHARES
OWNED CAPITAL
FIXED OR NOMINAL VALUE
DISTINCTIVE NUMBER
ATTACHED RIGHTS
RETURN ON SHARES
TRANSFER OF SHARES
BENEFIT OF RIGHT ISSUE
BENEFIT OF BONUS SHARES
11. DERIVATIVES
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.
For example, wheat farmers may wish to sell their harvest at a future date to
eliminate the risk of a change in prices by that date.
Such a transaction is an example of a derivative. The price of this derivative is
driven by the spot price of wheat which is the "underlying".
14. METHODOLOGY OF SURVEY
Type of sampling used: NON-PROBABLITY SAMPLING.
Type of non-probability sampling used: Convenience sampling.
Sample size: 50 respondents.
Location of sample: Gangtok, Sikkim.
Target sample: Especially government offices.
16. FINDINGS THROUGH FACE TO FACE
INTERVIEW
Through face-face interview I have analysed that:
Most of the people are not covered with Mediclaim/ health insurance.
Still, some people prefer Post Office saving rather than banks.
Many of them are afraid of rumor that is spread by lack of reimbursement of sum guaranteed by
insurance.
Peoples are not investing in mutual funds and share market due to lack of knowledge.
Many of them are afraid to invest in share market because they think that market is very risky.
There are several opportunities for selling health insurance and mutual funds. As, most of the people don’t
have.
Risk of market volatility is one of the reason which is suppressing the wants of people to invest in market
as, they don’t have proper knowledge.
Most of people are unhappy with the services provided by their agents or financial advisor.
17. RECOMMENDATIONS
Peerless have to open one branch here in Gangtok so that people can trust more. This is
because many people said that they are not comfortable to invest from peerless which is
operating in siliguri, if there is branch in Gangtok then they will think about it.
Peerless should conduct some financial awareness program in Gangtok. If they do so, people
will get knowledge and indirectly marketing will be done which will attract lot of investors.
A well trained agent should be recruited for gang6tok as there is no one to look after market of
Gangtok.
Proper marketing is not done by peerless in Gangtok. Many of them told that they are unaware
about the company.
Some people have negative perception about peerless because peerless stopped its services
and their business was down before 10 years. So, peerless should adopt some strategies to
change the perception of people.
18. Findings through data evaluation
Still, 26% of people are not covered with insurance. There is a scope for insurance in Gangtok.
Only 20% of people have term plan other are having traditional plan.
Many of respondents have heard about mutual funds but only 8% of people have invested in mutual
funds. There are still some of them, who have not heard about mutual fund till date.
People have trust in saving a/c than other type of investments. Data also shows that. 92% of people are
keeping money in savings account. Reasons might be: unawareness of inflation, lack of risk, higher
liquidity, etc.
Still, there are some of them who actually trust Post Office savings. 14% of people are still saving money
in Post Office.
Only, 22% of peoples are investing in share market. That means, there is a huge scope for companies to
sell Demat account.
Only, 42% of people have taken financial advice from a certified financial advisor. This shows that, there is
a huge scope for financial advisor also.
60% of people are not satisfied with the service or advice provided by an advisor.
