A PROJECT REPORT

OF
STUDY ON
DERIVATIVES
(FUTURES & OPTIONS)
AT
SHAREKHAN STOCKBROKING CO. LTD.

Project report submitted in

Partial fulfillment for the award of

MASTER OF BUSINESS ADMINISTRATION

Submitted by:
SHAIK YASIN
Bearing Roll No : 2129-17-672-047

AURORA PG COLLEGE
MOOSARAMBAGH-HYDERABAD

(Affiliated to Osmania University)

HYDERABAD
 INTRODUCTION

The emergence of the market for derivatives products, most notably forwards,
futures and options, can be tracked 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 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 product minimizes the impact of
fluctuations in asset prices on the profitability and cash flow situation of risk-averse
investors

Derivatives are risk management instruments, which derive their value from
an underlying asset. The underlying asset can be bullion, index, share, bonds,
currency, interest, etc.. Banks, Securities firms, companies and investors to hedge
risks, to gain access to cheaper money and to make profit, use derivatives. Derivatives
are likely to grow even at a faster rate in future.
 OBJECTIVES OF THE STUDY

The main objectives of my final project report are as follows:-

 To study various trends in derivative market.

 Comparison of the profits/losses in cash market and derivative market.
 To find out profit/losses position of the option writer and option holder.
 To study in detail the role of the future and options.
 To study the role of derivatives in Indian financial market.
 To find out that what would be the future and market potential of
derivative market in India.
 To know the awareness & familiarity of investors, dealers and brokers
hold regarding derivatives market.
 To know the experience of dealers, investors and brokers with derivatives
till date.
 To get knowledge about shortcomings in Indian derivative market.
 NEED OF THE STUDY

 Different investment avenues are available for the investors. Stock market
also offers good investment opportunities to the investor alike all
investments, they also carry certain risks. The investor should compare
the risk and expected yields after adjustment of tax on various
instruments. While taking an investment decision the investor may seek
advice from an expert and consultancy including stock brokers and
analysts. 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 the maximum return and to construct the portfolio in such a manner
to meet the investor needs and to decide how best to reach the goals from
the securities available.
 To identify the investor objective constraints and performance, which
help formulate the investment policy?
 To develop and improve the strategies in the investment policy
formulated.
 Stockbrokers will help in the selection of asset classes and securities in
each class depending upon their risk and return attributes.
 SCOPE OF THE STUDY

The study is limited to “Derivatives” with special references to

futures and options in the Indian context and the Inter-Connected Stock Exchange has
been taken as a representative sample for the study. The study can’t be said as totally
perfect. Any alteration may come. The study has only made a humble attempt at
evaluation derivatives market only in India context. The study is not based on the
international perspective of derivatives markets, which exists in NASDAQ, CBOT etc.

The study has only made humble attempt at evaluating derivatives only
in Indian markets.
 RESEARCH METHODOLOGY

The data for the study of derivatives market in India has been collected
from both, the primary source and the secondary source. In the first stage the
data was collected from published work of National Stock Exchange (NSE),
Bombay Stock Exchange (BSE) and Securities and Exchange Board of India
(SEBI) and other data available in the libraries, books and journals, and on the
internet. In the second stage, the primary data was collected by way of
designing questionnaires for investors and intermediaries, informal discussions
and interviews etc.

Data has been collected in two ways. These are:

PRIMARY DATA

 Data from brokers.

SECONDARY DATA

 Data from various books.

 Data from internet.
 Data from news papers & magazines.
 LIMITATIONS OF THE STUDY

The following are the limitations of the study:

 The Scrip chosen for analysis is Nifty’50 and the contract taken in
December 2010 is a 45 days contract ending in January.
 The data collected is completely restricted to the NIFTY ’50 hence this
analysis cannot be taken universally.
 The data collected is basically confined to secondary sources, with very
little amount of primary data associated with the project.
 There is a constraint with regard to time allocated for the research study.
 The availability of information in the form of annual reports & price
fluctuations of the companies is a big constraint to the study.
 The subject of derivatives is vast. It requires extensive study and research
to understand the depth of the various instruments operating in the
market.
 The derivative market is a dynamic one .premiums, contract rates, strike
price fluctuates on demand and supply basis. Therefore data related to last
few trading months was only considered and interpreted.
 CHAPTER PLAN

S.NO PARTICULARS

1 INTRODUCTION

2 OBJECTIVES OF THE STUDY

3 NEED OF THE STUDY

4 SCOPE OF THE STUDY

5 RESEARCH METHODOLOGY

6 LIMITATIONS OF THE STUDY

7 CHAPTER PLAN

8 BIBLIOGRAPHY
 CHAPTER PLAN

S.NO. CHAPTER NAME

1 1.1 INTRODUCTION

1.2 OBJECTIVES

1.3 NEED OF THE STUDY

1.4 SCOPE OF THE STUDY

1.5 METHODOLOGY

II LITERATURE REVIEW

2.1 INDUSTRY PROFILE

2.2 THEORETICAL FRAMEWORK

III COMPANY PROFILE

IV DATA ANALYSIS
&
INTERPRETATION

V FINDINGS,SUGGESTIONS & CONCLUSIONS

VI BIBLIOGRAPHY
 CHAPTER PLAN

S.NO. CHAPTER NAME

1 INTRODUCTION

OBJECTIVES

NEED OF THE STUDY

SCOPE OF THE STUDY

METHODOLOGY

II LITERATURE REVIEW

INDUSTRY PROFILE

THEORETICAL FRAMEWORK

III COMPANY PROFILE

IV DATA ANALYSIS
&
INTERPRETATION

V FINDINGS,SUGGESTIONS & CONCLUSIONS

VI BIBLIOGRAPHY
 BIBLIOGRAPHY

BOOKS

Websites:

www.derivatives.com

www.nseindia.com

www.moneycontrol.com

www.money.rediff.com

www.bseindia.com

www.sharekhan.com

www.sebi.gov.in