Analysis of FM & Interest Rate Futures and Currency Rate Futures in India

SUMMER INTERNSHIP PROJECT
AN INTERIM REPORT ON ANALYSIS OF FINANCIAL

MARKETS & INTEREST FUTURES AND CURENCY RATE
FUTURES IN INDIA
Undertaken at
ANAND RATHI SECURITIES LTD.

HYDERABD
Submitted By
C.ASWIN KUMAR
ROLL NO. 09BSHYD1044
Submitted To
Mr. G.K.SRIKANTH
Date of Submission: 16th April 2010
ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 1

STUDENT’S DECLARATION
I, C. Aswin Kumar, student of M.B.A , here by declare that

project entitled “Analysis of Financial markets and Currency
rate and Interest rate futures in India “ submitted in the
partial fulfillment of the degree for Master of Business
Administration to is of my own accurate work.
I further declare that all the facts and figures furnished in

this project report are the outcome of my own intensive
research and findings.
Submitted By
C.Aswinkumar

ACKNOWLEDGEMENT
“Expression of feelings by words makes them less

significant when it comes to make statement of
gratitude”
It gives me pleasure to express my most profound regards and
sense of great indebtedness and sincere gratitude to my Company
Guide Mr. Vivek Vardhan (Head,Equities Anand Rathi Securities
Ltd. Hyderabad).
I would thank to my project guide Mr. G.K.Srikanth for his

guidance in preparing this report.
I would also like to thank my co employees who gave

guidance and support during the completion of the project.
Regards
C.Aswinkumar

TABLE OF CONTENTS

ABSTRACT……………………………………………………………………………….5
MAIN TEXT………………………………………………………………………………7
COMPANY PROFILE……………………………………………………………………7
• ABOUT ANARATHI……………………………………………………………..7
• MILESTONES…………………………………………………………………….8
• AR CORE STRENGTHS………………………………………………………..11
• MANAGEMENT TEAM………………………………………………………..11
INTRODUCTION……………………………………………………………………….14
• BEAR…………………………………………………………………………….15
• BULL…………………………………………………………………………….15
• CONTRACT NOTE……………………………………………………………..15
• ARBITRAGE…………………………………………………………………….16
• MAJOR ENTITES INVOLVED IN STOCK MARKET………………………..16
INTRODUCTION TO BSE-SENSEX…………………………………………………..17
• BSE INDICES…………………………………………………………………...18
• TRANSACTIONS ON INDIAN STOCK EXCHANGE………………………..19
• TRADING TYPES………………………………………………………………20
FUNADMAENTAL ANALYSIS OF BSE SENSEX…………………………………...21

• MILESTONES OF BSE-SENSEX………………………………………………21
• ANALYSIS IN THE YEAR 2000……………………………………………….23
• ANALYISIS IN THE YEAR 2003………………………………………………25
• POSITIVES AND NEGITIVE SOF STOCK MARKET………………………..31
INTRODUCTION TO NIFTY FIFTY INDEX…………………………………………32

• MILESTONES OF NIFTY FIFTY INDEX……………………………………..33
• NIFTY TRADING……………………………………………………………….33
FUNDAMENTAL ANALYSIS OF NIFT FIFTY INDEX……………………………35

• ANALYSIS IN THE YEAR 2000……………………………………………..35
• ANALYSIS IN THE YEAR 2002……………………………………………..36

LIST OF ILLUSTRATIONS…………………………………………………………….19
• TABLE 1.............................................................................................................................19
• TABLE 2……………………………………………………………………………………………………………………….25
• TABLE 3……………………………………………………………………………………………………………………….27
• GRAPH 1………………………………………………………………………………………………………………………24
• GRAPH 2………………………………………………………………………………………………………………………36
FINDINGS AND CONCLUSION………………………………………………………38
LITERATURE RIVIEW………………………………………………………………..39
(REFERENCES)
A LIST OF CONCEPTS REVISITED…………………………………………………..40
REFERENCES………………………………………………………………………….41
ATTACHMENTS………………………………………………………………………44

ABSTRACT
First part(what has done):
The project basically involves an analysis of financial markets and financial Instruments
and measurements of financial risk by various risk analysis factors, by comparing various
types of portfolios & measure the Risk & Return. The returns will be considered based on
the performance of the financial markets and the past ten financial years returns i.e.., (01-
04-2000 to 31-03-2010) has taken for the anlysis.The financial markets which has taken
into the analysis are,
I. Capital Markets (Bse Sensex,Nifty Fifty)

II. Money Market Instruments
III. Commodity Market (Mainly Gold,Silver,Crude Oil,Copper)
IV. Foreign Exchange Market (USD/INR)
Once this was done, and before analyzing the financial performance of the markets,Some
theoretical concepts of Finance were revisited. This includes an understanding of the
objectives of Financial Management , the Risk and Return Factor, Valuation of bonds ,
forecasting the financial performance of the markets ,and understanding the various
concepts like hedging , futures trading , forward trading etc..,
The purpose of this reading was to refresh the concepts learned till now in the MBA
curriculum and to apply these concepts in understanding the firm & markets to analyze its
operations better.
Second part(what has to be done):

Then , a schedule was prepared for understanding the practices and important features
followed in the financial markets , some useful information regarding the managing of
the portfolios , the issues happened in the different capital markets for ups and downs in
the sensex.This information was obtained through sessions with the employees and
through various websites and the news channels etc..,

A brief analysis of the financial markets in comparison with the analysis of these new
instruments such as currency rate futures and interest rate futures which are recently
implemented in the market to ascertain the extent the risk can be minimised through these
instruments, if it is then whether it is for the long term or medium or short term.
In the subsequent stages of the project the relationship between the Gold and the
USD,USD and INR to know whether these relationships are affecting the stock market
and the analysis of these in the previous years .
So that by doing this analysis we can easily find whether the market has to come up with
some new financial instruments or not, if it is required then what can be the instruments
whether in currency or interest rates. For example, what are all the interest rate futures
available in the market whether it is easy to liquidate or not. Since we are not having
corporate papers in the markets so these are the instruments which in turn be used in
determining optimum Financial Instruments in the market for the better returns.
This helps the organisation to suggest which type of financial instruments has to be their,
in their portfolios to increase profits of the wealth clients as well as to increase the wealth
of the organisation.

COMPANY PROFILE
Organization History:
¾ Company Profile
¾ Milestones
¾ AR Core Strengths
¾ Management Team
I. About AnandRathi
AnandRathi (AR) is a leading full service securities firm providing the entire gamut of
financial services. The firm, founded in 1994 by Mr. AnandRathi, today has a pan India
presence as well as an international presence through offices in Dubai and Bangkok. AR
provides a breadth of financial and advisory services including wealth management,
investment banking, corporate advisory, brokerage & distribution of equities,
commodities, mutual funds and insurance, structured products - all of which are
supported by powerful research teams.
The firm's philosophy is entirely client centric, with a clear focus on providing long term
value addition to clients, while maintaining the highest standards of excellence, ethics
and professionalism. The entire firm activities are divided across distinct client groups:
Individuals, Private Clients, Corporate and Institutions and was recently ranked by Asia
Money 2006 poll amongst South Asia's top 5 wealth managers for the ultra-rich.
In year 2007 Citigroup Venture Capital International joined the group as a financial
partner.
Equity & Derivatives Brokerage

AnandRathi provides end-to-end equity solutions to institutional and individual investors.

Consistent delivery of high quality advice on individual stocks, sector trends and
investment strategy has established us a competent and reliable research unit across the
country.
Clients can trade through us online on BSE and NSE for both equities and derivatives.
They are supported by dedicated sales & trading teams in our trading desks across the
country. Research and investment ideas can be accessed by clients either through their
designated dealers, email, web or SMS
II. Milestones:
1994:
Started activities in consulting and Institutional equity sales with staff of 15
1995:
Set up a research desk and empanelled with major institutional investors
1997:
Introduced investment banking businesses
Retail brokerage services launched
1999:
Lead managed first IPO and executed first M & A deal
2001:
Initiated Wealth Management Services
2002:
Retail business expansion recommences with ownership model
2003:

Wealth Management assets cross Rs1500 crores
Insurance broking launched
Launch of Wealth Management services in Dubai
Retail Branch network exceeds 50
2004:
Commodities brokerage and real estate services introduced
Wealth Management assets cross Rs3000crores
Institutional equities business re-launched and senior research team put in

place
Retail Branch network expands across 100 locations within India
2005:
Real Estate Private Equity Fund Launched
Retail Branch network expands across 200 locations within India
2006:
AR Middle East, WOS acquires membership of Dubai Gold & Commodity

Exchange (DGCX)
Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by
Asia Money 2006 poll
Ranked 6th in FY2006 for All India Broker Performance in equity

distribution in the High Net worth Individuals (HNI) Category
Ranked 9th in the Retail Category having more than 5% market share
Completes its presence in all States across the country with offices at 300+
locations within India
2007:

Citigroup Venture Capital International picks up 19.9% equity stake
Retail customer base crosses 100 thousand
Establishes presence in over 350 locations
2008:
2009:

III. AR Core Strengths:
Breadth of Services: In line with its client-centric philosophy, the firm offers to its clients
the entire spectrum of financial services ranging from brokerage services in equities and
commodities, distribution of mutual funds, IPO’s and insurance products, real estate,
investment banking, merger and acquisitions, corporate finance and corporate advisory.
Clients deal with a relationship manager who leverages and brings together the product
specialists from across the firm to create an optimum solution to the client needs.
IV. Management Team:
AR brings together a highly professional core management team that comprises of

individuals with extensive business as well as industry experience.
In-Depth Research: Our research expertise is at the core of the value proposition that we
offer to our clients. Research teams across the firm continuously track various markets
and products. The aim is however common - to go far deeper than others, to deliver
incisive insights and ideas and be accountable for results. The senior Management
comprises a diverse talent pool that brings together rich experience from across industry
as well as financial services.
Mr. Anand Rathi - Group Chairman
Chartered Accountant
Past President, BSE
Held several Senior Management positions with one of India's largest
industrial groups
Mr. Pradeep Gupta - Vice Chairman

Plus 17 years of experience in Financial Services
Mr. Amit Rathi - Managing Director

Chartered Accountant & MBA

Plus 11 years of experience in Financial Services
ACQUISITION:
ANZ Grind lays : $ 1.34 bn from August 2000.
Hong Kong Consumer Bank : $ 1.32 bn
Thailand Nakornthan Bank : $ 320 million
Indonesians Bank Per-Mata : $ 366 million from Oct. 2004.
Korea First Bank : $ 3.3 bn from Apr. 2005.
Standard Chartered PLC is listed on both the London Stock Exchange and the Stock
Exchange of Hong Kong and is in the top 25 FTSE-100 companies, by market
capitalization.. Offices of ANANDRATHI are in 197 cities across 28 states & it has also
branches in Dubai & Bangkok with more than 44000 employees. It has daily turnover in
excess of Rs.4bn. It has 1, 00,000+ clients nationwide. It is also leading distributor of
IPO’s. In India where ANANDRATHI is present in 21 STATES:
Andhra Pradesh
Assam
Bihar
Chhattisgarh
Delhi
Goa
Gujrat
Haryana
Jammu & Kashmir
Jharkhand
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
Uttaranchal

West Bengal
LIST OF PRODUCTS :
¾ Demat Accounts
¾ Mutual Funds
¾ Derivatives
¾ Commodities
¾ Bonds
¾ Trading Account
¾ Insurance
VISION:
To be a Shining Example As a Leader in Innovation and the First

choice for Clients and Employees.

INTRODUCTION
The Main objective of the project is mainly based on “ Analysis of Financial markets” is
to understand the various markets, and Stock market is mechanism that allows people to
buy and sell securities , commodities , and fungible items of value at low transaction
costs and at prices that reflects the efficient market hypothesis. Markets work by placing
many interested buyers and sellers in one "place", then it will be easier for them to find
each other. A market which relies primarily on interactions between buyers and sellers to
allocate resources is known as a market economy.
Financial markets are their to facilitate,
¾ The Raising of capital

¾ The transfer of Risk
¾ International Trade
The capital Market is mainly divided into Primary Market and Secondary market, where
the Primary Market is mainly it is where the issuers access the prospective
customers/investors directly for funds required by them either for expansion or for
meeting the working capital needs. This Process is disintermediation where the funds
flow directly from investors to issuers.
Activities of Primary Market :
9 Appointment of merchant bankers
9 Pricing of securities being issued
9 Communication/ Marketing of the issue
9 Information on credit risk

9 Making public issues
9 Collection of money
9 Minimum subscription
9 Listing on the stock exchange(s)
9 Allotment of securities in demat / physical mode
9 Record keeping
Secondary Market is where investors buy/sell securities through Stock Exchanges.

Trading of securities on stock exchange results in exchange of money and securities
between the investors. Secondary market provides liquidity to the securities on the
exchange and this activity commences subsequent to the original issue. For example,
customer subscribed to the securities of a company, if one wishes to sell the same, it can
be done through the secondary market. Similarly one can also buy the securities of a
company from the secondary market.
a) Bear:
A stock market operator who expects share prices to fall in the immediate future and
keeps selling with the intention to pick up the shares later at a lower price for actual
delivery causing selling pressure and lowering the prices further.
b) Bull:
A stock market operator who expects share prices to rise and keeps buying to sell the
shares later at higher price causing buying pressure and increasing the prices further.
c) Contract note:
Contract Note is a document given by the stockbroker to his clients giving particulars of
the securities bought / sold, rate and date of transaction and the broker’s commission. The
broker sends the contract note after executing the client’s order as an agreement. The
contract note must be carefully preserved. It also serves as an evidence to income tax
authorities.

d) Arbitrage :
It means buying shares on one stock exchange at a lower rate and selling the same on
other stock exchange at a higher price.
Activities in the Secondary market:
9 Trading of securities
9 Risk management
9 Clearing and settlement of trades
9 Delivery of securities and funds
e) Major Entities Involved in the Stock Market:
¾ SEBI (Securities Exchange Board of India)

¾ Stock Exchanges
¾ Clearing Corporations
¾ Depository Participants
¾ Custodians
¾ Stock Brokers and Sub brokers
¾ Mutual Funds
¾ Merchant Bankers
¾ Credit rating agencies
¾ Financial Institutions
¾ Foreign Institutional Investors
¾ Non banking Institutions
¾ Issuers/registrar and transfer agents
¾ Investors

INTRODUCTION TO BSE SENSEX

The stock market is one of the most important sources for companies to raise money.
This allows businesses to be publicly traded, or raise additional capital for expansion by
selling shares of ownership of the company in a public market. The liquidity that an
exchange provides affords investors the ability to quickly and easily sell securities. This
is an attractive feature of investing in stocks, compared to other less liquid investments
such as real estate etc..,
The Prices of shares and the other assets is an important of the dynamics of the economic
activity and can influence of social mood, where the stock market is raise is considered to
be an upcoming economy. In fact, the stock market is often considered the primary
indicator of a country's economic strength and development. Rising share prices, for
instance, tend to be associated with increased business investment and vice versa. Share
prices also affect the wealth of households and their consumption. Therefore, central
banks tend to keep an eye on the control and behavior of the stock market and in general,
on the smooth operation of financial system functions. Financial stability is the main
reason for central banks.
Exchanges also act as the clearinghouse for each transaction, it means they collect and
deliver the shares, and guarantee payment to the seller of a security, this eliminates the
risk to an individual buyer or seller that the counterparty could default on the transaction.
The behavior of the stock market may be
¾ Rational
¾ Irrational
¾ Crashes
These Share prices of equities is listed on the Stock Exchanges in parallel with the
various economic factors, this is the one main reason of stock market crashes and also
due to panic and investing public’s loss of confidence also stock market crashes end
speculative economic bubbles . For Example , the New york Stock Exchange circuit
breakers are like

TABLE 1:
Percentage Drop Timing of Drop Trading closes
10% drop Before 2pm One hour halt
10% drop 2pm to 2.30 pm Half an hour halt
10% drop After 2.30.pm Market stays open
20% drop Before 1 pm Halt for two hours
20% drop 1pm to 2 pm Halt for one hour
20% drop After 2pm Close for the day
30% drop Any time during day Close for the day
New York stock Exchange Circuit Breakers

So based on the above example crashing of stock market is mainly based on the
Economic Indicators and the Investors mind set etc..,
i. BSE Indices:
BSE in 1986 came out with stock index sense that subsequently became the barometer of
the Indian Market. All BSE Indices are reviewed periodically by the BSE Index
Committee. This Committee which comprises eminent independent finance professionals
frames the broad policy guidelines for the development and maintenance of all BSE
indices. The BSE Index Cell carries out the day-to-day maintenance of all indices and
conducts research on development of new indices. The values of all BSE indices are
updated on real time basis during market hours and displayed through the BOLT system,
BSE website and news wire agencies.
BSE displays the information based on Price Earning Ratio, the prices to Book Value
Ratio and the Dividend Yield Percentage on day to day basis of all its major indices. The
various indices are,

¾ BSE 100 INDEX

¾ BSE 200 INDEX
¾ BSE 500 INDEX
¾ BSE IPO INDEX
¾ BSE TECK INDEX
¾ DOLLEX SERIES OF BSE INDICES
¾ BSE PSU INDEX
¾ BSE MID-CAP AND SMALL-CAP INDEX
¾ SECTORIAL INDICES
ii. Transactions on Indian Stock Exchanges:

There are two types of transactions that can be carried out in the Indian Stock Exchanges
are,
1. Spot Delivery Transactions
2. Forward Transactions
Spot delivery transactions that require delivery and payment within the stipulated time
period at the time of entering the contract, this period shall not be more than 14 days
following the date of the contract.
Forward transactions in which delivery and the payments both can be extended by further
period of 14 days each ,the overall period should not 90 days from the days of the
contract, these transactions can be permitted in case of specified shares .
iii. Trading types :

Share Market Trading can be classified into either so these categories,
a) Day Trading
b) Swing Trading

c) Position trading
Day trading requires the most intense approach to stock market trading, to be on top of
the fluctuations in stock prices, day traders spend hours together in monitoring the
market. Day traders could make dozens of trades any day, sometimes in a matter of
minutes hoping to grab the wave of price change. They avoid the risks of long term buy
and hold. Day trading could be exciting, the fast pace attracting risk takers. Yet this
strategy for stock market trading is only effective for day traders, who apply analysis
rather then emotion to trading decision. Savvy day traders could turn profits quick.
Emotional traders usually lose fast and leave disenchanted.
Swing trading uses a slightly longer time horizon than day trading, watching a stock for
weeks or months before trading. This type of stock market trading depends on careful
monitoring of fundamental and technical analysis. Swing traders has to be specialize in a
certain business or industry so that they become experts in the movement within those
stocks. They also have more time to study the company financial reports and industry
forecasts. Since swing trading does not require hours of daily monitoring, it is a good
strategy for the trader who wants to make money from stock market trading without
turning it into a full time job. Even the study of reports could be done during the daily
commute or lunch hour so that the swing trader should be well informed.
Position trading helps well for investors who want to be involved in the stock market
trading, but run short of time. Stocks are being held for months awaiting any changes in
the trend. Position traders keep up with the fundamental and technical analysis as well as
news events but apply a long term strategy to their stock market trading.

FUNDAMENTAL ANALYSIS OF BSE SENSEX

The BSE Sensex is value weighted Index composed of over 4000 stocks with the Base
April 1979 = 100.It consists of 30 largest and most actively traded stocks, representative
of various factors on the BSE . These companies account for around one-fifth of the
market capitalization of the BSE.
The Base value Sensex is 100 on April 1,1979 , and the base year of BSE-Sensex is
1978-1979
The stock market has grown by over ten times from June 1990 to today. Using
information from April 1979 onwards, the long-run rate of return on the BSE Sensex can
be estimated to be 0.52% per week (continuously compounded) with a standard deviation
of 3.67%. This translates to 27% per annum, which translates to roughly 18% per annum
after compensating for inflation.
1. Milestones of BSE Sensex :
Here is a timeline on the Raise of the Sensex through Indian Stock Market History,
¾ 1000, July 25, 1990 - On July 25, 1990, the Sensex touched the four-digit figure for
the first time and closed at 1,001 in the wake of a good monsoon and excellent
corporate results.
¾ 2000, January 15, 1992 - On January 15, 1992, the Sensex crossed the 2,000-mark
and closed at 2,020 followed by the liberal economic policy initiatives undertaken by
the then finance minister and current Prime Minister Dr Manmohan Singh.
¾ 3000, February 29, 1992 - On February 29, 1992, the Sensex surged past the 3000
mark in the wake of the market-friendly Budget announced by Manmohan Singh.
¾ 4000, March 30, 1992 - On March 30, 1992, the Sensex crossed the 4,000-mark and
closed at 4,091 on the expectations of a liberal export-import policy. It was then that
the Harshad Mehta scam hit the markets and Sensex witnessed unabated selling.

¾ 5000, October 11, 1999 - On October 8, 1999, the Sensex crossed the 5,000-mark as
the Bharatiya Janata Party-led coalition won the majority in the 13th Lok Sabha
election.
¾ 6000, February 11, 2000 - On February 11, 2000, the information technology boom
helped the Sensex to cross the 6,000-mark and hit and all time high of 6,006.
¾ 7000, June 21, 2005 - On June 20, 2005, the news of the settlement between the
Ambani brothers boosted investor sentiments and the scripts of RIL, Reliance Energy,
Reliance Capital and IPCL made huge gains. This helped the Sensex crossed 7,000
points for the first time.
¾ 8000, September 8, 2005 - On September 8, 2005, the Bombay Stock Exchange's
benchmark 30-share index – the Sensex - crossed the 8000 level following brisk
buying by foreign and domestic funds in early trading.
¾ 9000, December 9, 2005 - The Sensex on November 28, 2005 crossed 9000 to touch
9000.32 points during mid-session at the Bombay Stock Exchange on the back of
frantic buying spree by foreign institutional investors and well supported by local
operators as well as retail investors.
¾ 10,000, February 7, 2006 - The Sensex on February 6, 2006 touched 10,003 points
during mid-session. The Sensex finally closed above the 10,000-mark on February 7,
2006.
¾ 11,000, March 27, 2006 - The Sensex on March 21, 2006 crossed 11,000 and
touched a peak of 11,001 points during mid-session at the Bombay Stock Exchange
for the first time. However, it was on March 27, 2006 that the Sensex first closed at
over 11,000 points.
¾ 12,000, April 20, 2006 - The Sensex on April 20, 2006 crossed 12,000 and touched a
peak of 12,004 points during mid-session at the Bombay Stock Exchange for the first
time.
¾ 13,000, October 30, 2006 - The Sensex on October 30, 2006 crossed 13,000 for the
first time. It touched a peak of 13,039.36 and finally closed at 13,024.26.
¾ 14000, December 5, 2006 - The Sensex on December 5, 2006 crossed 14,000.
¾ 15,000, July 6, 2007 - The Sensex on July 6, 2007 crossed 15,000 mark.

SUMME
ER INTERNS
NSHIP PROJE
ECT
¾ 16,000, Septeember 19, 2007

2 - The Sensex
S on Seeptember 19,, 2007 crosseed the 16,0000
m
mark.
¾ 17,000, Septeember 26, 2007
2 - The Sensex
S on Seeptember 26,, 2007 crosseed the 17,0000
m
mark for the first
f time.
¾ 18,000, Octo
ober 9, 20077 - The Senssex on Octobber 9, 2007 crossed the 18,000 marrk
foor the first time.
¾ 19,000, October 15, 20077 - The Senssex on Octobber 15, 20077 crossed thee 19,000 marrk
¾ 20,000, October 29, 20077 - The Senssex on Octobber 29, 20077 crossed thee 20,000 marrk
¾ 21,000, Jan 08, 2008 - The Sensexx on Januaryy 8, 2008 touched
t all time peak of
o
21078 before closing at 20873.
2
¾ On
O May 18, 2009, the sensex
s surgeed 2110.79 points from
m the previouus closing of
o
122174.42 thiss leading to the suspensiion of trade for the whole day.This event createed
history in Daalal Street, byy being the first ever tim
me that tradee had been suspended
s foor
ann increase in
n value. Thiss rally is priimarily due to
t the victorry of the UPA in the 15tth
G
General electtions.
18
8000
16
6000
14
4000
12
2000
10
0000 OPENING PRICE
8
8000
HIGH
6
6000
LOW
4
4000
2
2000 CLOSING PRICE
0
GRAP
PH 1 :Trend
d Analysis off the BSE-SE
ENSEX from the year 2000-2010
ANALYSIS OF FIN
NANCIAL MA
ARKETS, CUR
RRENCY & IN
NTEREST RATE FUTURESS INDIA 2
24
In the Year 2000:
The BSE Sensex ended Year 2000 with a loss of 26%. The loss was fueled by the TMT
(Technology, Media and Telecom) sector. To underscore the impact on the Sensex it
needs to be highlighted that the TMT stocks lost 46% of their market value during the
period under study.
The petrochemical and energy sectors on the other hand logged an increase in an
otherwise falling market. Attractive valuations and improving fundamentals attracted
investors to these sectors. The sector leader, Reliance Industries, gained an impressive
34%. Among others, ITC (the tobacco major) and Nestle (a foods company) gained a
remarkable 25% and 22% respectively. On the other hand, FMCG giant HLL lost 14% of
its market value due to concerns regarding top line growth.
In the year 2002:
Many investors, one would imagine, are disillusioned by the stock market performance
over the past ten years. Stock markets, as acquaintances put it, is where they made their
millions. If that is the way it really happened, wave it off as the graciousness of lady luck.
Many, in their pursuit to beat the street, have burnt their fingers.
TABLE 2:
Year Jan-91 Jan- Jan- Jan- Jan- Jan-96 Jan- Jan- Jan-99 Jan- Jan-01 Jan-02
92 93 94 95 97 98 00
% Returns 27.6 95.9 29.8 36.5 13.5 -20.5 4.2 13.3 -17.2 75.6 -26.4 -17.9
Investment 10,000 - - - - - - - - - - -
Profit/Loss 2,762 9,588 2,975 3,647 1,345 (2,045) 424 1,331 (1,717) 7,564 (2,642) (1,792)
Stock market yields from past ten years
Incremental Cash flow-21,440
Analysis:
Starting 1990, had a participant invested Rs 10,000 in an equity portfolio replicating the
index, and kept that amount invested in every succeeding year i.e. booking any profit or
loss, he would have earned a compounded return of 10% year to date . Being invested in
the market would have yielded positive returns. However, on a comparative basis, for

lower risk, an investor could have earned as much if not more by investing in fixed
income avenues. Interest rates have been declining only in the past couple of years. Over
a ten year period -- the previous decade -- a similar strategy would have yielded a
Compounded Return of 13.6%.
If an investor did not book his profit or loss and exited at the start of 2000 the
Compounded returns earned would be 21.2%. But if he held on till start of the current
year the returns would have dwindled to 12.6% annually. Considering a similar
investment pattern over the preceding ten years (from 1992 onwards), the annual returns
fall to an even lower 5.3%. It does look like the markets have completed a cycle and
investors are back at the start line. But if one adopted a more disciplined methodology,
not wanting to time the market, the strategy offers a systematic plan.
In the Year 2003:

While investors who believed in fundamentals were hardly questioning the fact that the
stock markets were poised for a upward correction the same time last year, it is for sure
that the extent of the rally has caught many by surprise. Just to put things in perspective,
the Sensex has gained 67% in the last one year (till December 24, 2003).
During the same time last year, stock market was mired by the Iraq crisis, which had
infused significant uncertainty in the minds of investors. This lasted till a large part of
Fourth quarter financial year and as a result, overall sentiment was that of caution even
though select stocks from power, engineering, banking and auto sectors gaining ground.
While Iraq concern was easing, Infosys announced its Fourth quarter financial year 03
performance and its guidance for FY04. While Infosys expected revenues to grow 24%,
EPS guidance was lower at 12% for FY04, which came as a shock for the stock market.
On the same day, the market corrected down by 3% with Infosys falling by more than
20%.
Key macro factors that typically lead to a upward correction like favorable interest rates,
manageable inflation, promising long-term growth prospects and improving margins
were all in place in April 2003, Starting late May, initial reports on monsoon started to
flow in. The Indian Meteorological Department also announced that monsoons were

likely to be normal and well distributed, and this acted as a fillip for the stock markets.
Most of the economic research organizations like CMIE (Centre for Monitoring Indian
Economy) revised GDP growth estimates upwards, the RBI topping with expectations of
6.5% to 7% GDP growth in the mid-term monetary policy.
In the Year 2004 :

In this year the effects that politics have on the stock market is measured, the post
labialization phase has considered to analyze the stock market , we have considered the
years 1991, 1996, 1998, 1999 ..,
TABLE 3:
Years January December Change (%) GDP Growth
(%)
1991 982 1,909 94.4 5.6
1996 3,049 3,085 1.2 7.3
1998 3,720 2,963 -20.3 4.8
1999 3,060 5,006 63.6 6.6
Stock market performance in the month of January and December
From the table below, we notice that for two of the years i.e. 1991 and 1999, the stocks
markets rallied.
Of course, liberalization in early 1990s and tech mania in early 1999 were also reasons
for robust stock markets. The performance in the other two years has been rather dismal.
Interestingly 1991 and 1999 were the two years in which the population voted in a
government , which had a clear majority to rule the country for the next five years.
The investor may be tempted to conclude that during years when the population voted for
stable governments at the Centre, the stock markets rallied. A stable government is not
the beginning and the end of it. Inspite strong economic growth in the last few years of
the Congress tenure between 1995-96, the party was voted out of power in 1996. For the
next two years, the country was plagued by political uncertainty and the economic
condition was also mixed. While the real GDP growth in FY97 was over 8%, one of the
highest ever in the history of the country, it fell to 4.3% in the succeeding year.

Upto certain extent, be observed that political uncertainty has a bigger impact on the
stock markets than the performance of the economy. This is because, for any economy to
grow and prosper, it needs to implement policies and reform measures that may bring
fruit only over the long term. So, while the stock market participants may factor in the
benefits of a stable government very early, it will take some time to reflect on broader
economic parameters like per capita income, interest rates, inflation and so on.
In 1991, when the economy was liberalized, it was more so out of compulsion than out of
choice. In the Indian context, while the economic liberalization was gradual, results
started to show in the latter years of the Congress rule of 1991-96. The stock markets
rewarded this performance in the period between 1991 and 1996 by way of a huge 210%
rise in the Sensex levels. This directly corroborates the argument that a stable government
at the Centre is of significance for the stock markets. Without taking political sides, we
observe similar performance in the stock market in the period since 1999 and now. Even
if one were to discount the 2000 stock market rally, which may have been an anomaly, on
a point-to-point basis (1999-04), the Sensex has gained 94%.As is evident, during period
of a stable government rule early 1990s and in the last five years, more number of steps
seems to have been taken as far as economic policies are concerned. All these reforms
carried out over the period of the last 14 years have managed to make India Inc. more
competitive in the global scenario. The investing community, recognizing this
improvement and potential of Indian companies, has shown its confidence in the stock
market.
In the year 2008:
2008 was a mixed year for most of us, but also like to remember it for the hard lessons it
taught us.
• Fall of financial Berlin Wall:
15th September 2008 was the day Lehman Brothers filed for bankruptcy. An era
ended on Wall Street. This 158-year old institution, which had earlier survived the
two world wars and the Great Depression, was finally liquidated on this day.
None of the other financial firms was willing to acquire Lehman considering the
magnitude of its potential losses.
• Global recession :

The realization that economies, especially those in the developed world are in a
stage of stagnation and decline finally set in during 2008. The National Bureau of
Economic Research (NBER) confirmed the ‘recession’, twelve months after it
actually began in the US. This late realization was in spite of the increasing
unemployment rates, lower consumer spending and the slowdown in real estate
and auto industries.
• Lot of bubbles burst :
There have been bull runs aplenty in the past. But never have they been as
coordinated as the one that has preceded the current bear market. Coordinated
because virtually every asset class, right from stocks and commodities, to real
estate went up in perfect synchronization. And investors made merry while the
fun lasted., leaving them with no place to hide. Almost a year into the carnage,
most stocks and commodities are now trading at their multi year lows, with the
very same people who did not hesitate to invest in crude at US$ 147, shying away
from the commodity at US$ 40 a barrel. While US$ 147 may prove to be an
extreme in hindsight, few years from now, US$ 40 might also prove to be the
same.
• Myth of a Decoupled India broken :
While the Indian economy is domestically driven and as a result rather insulated
from the world, Indian financial markets have very strong global linkages. This is
the age of electronic capital flows. And it glides across the world with great ease.
If foreign money drove the Sensex to the heydays of 21,000, its flight out of India
also plugged the rug under its (Sensex) feet. No one will speak of the decoupling
of financial markets for a long time to come.
• Inflation goes for a toss :
Wholesale Price Index (WPI) which is the metric on which inflation is commonly
measured in India trooped dangerously close to its decade highs. The final months
of 2008 although offering some notional relief on the inflation number, failed to
kick the consumption demand. The onset of 2009 is expected to do most of that.
• Bailouts flying thick and fast, liquidity crunch, real estate crash :

While the subprime crisis reared its ugly head in 2007, the crisis escalated in 2008
and the demise of Lehman Brothers only aggravated the situation further.
Governments all over the world went on an overdrive to announce bailout
packages to ensure that the financial community and economies did not collapse
under the strain of the crisis. With the era of investment banking coming to an
end, liquidity suddenly dried up as banks (also hit hard in this crisis) became vary
of lending to one another.
• From irrationality to sheer panic :
At the start of the year, speculation was the name of the game .The financial crisis
translated to a significant amount of panic seeping into sentiments. This led to
steady sell-off at the bourses throughout the year by both domestic and overseas
investors. The global crisis put the Indian stocks under the heat as overseas
investors pulled out nearly US$ 13 bn during the year. This is the highest amount
of net outflow in 15 years. Also, this is the first time in 11 years that there has
been a net outflow of FII money from India. FIIs invested nearly US$ 17 bn in the
markets during 2008.
• Rupee appreciates, depreciates, then appreciates, and then depreciates again:
The rupee’s movement in the past two years was highly volatile keeping those
relying heavily on exports and imports on their toes. The sharp appreciation of the
rupee against the US dollar in 2007 had adversely restricted the revenue of
companies in sectors like software, textiles and pharmaceuticals as these largely
depend upon exports for business. However, given that India imports nearly 70%
of the oil that it consumes, oil companies benefited to some extent from the rise in
the rupee although crude prices remained firm. The situation reversed completely
in 2008. The intensity of the financial crisis led many to question the safety of
emerging nations including India, thereby driving down the value of the rupee.
While this was expected to be a major boon for the software and pharma sectors,
it ended up being only a consolation prize. With the global economy slowing
down, software sector had more serious issues to deal with. For pharma, the rupee
depreciation only aggravated forex losses as many companies had foreign debt on
their books which were marked-to-market. For oil companies, it was a double

whammy till the middle of the year at least, as oil prices escalated to a record high
and the rupee deteriorated sharply.
• Investors dealt with dirty lies :
In India, while investors did not have to contend with losses of such magnitude,
there was awe and fear with which promoters treated minority shareholders.
While minority shareholders were dealt a poor hand by Reliance Infrastructure
and Sterlite, it was Satyam Computers that took the cake. The last few days of the
year saw a spate of asatya (lie) fall out of the baggage of Satyam, India’s fourth
largest software services company and the most prominent in corporate
governance malpractices. After a failed “funds transfer to promoters” scheme, the
promoters have tried hands at damage control without much success.
• FCCBs… not convertible anymore :
When markets were in their boom phase, FCCBs (foreign currency convertible
bonds), the new financial instrument, were the easiest way for cash strapped
companies to raise capital. It offered companies the advantage of almost nil
interest rates and equity dilution that was a comfortable 3-4 years away. In fact,
companies never thought of FCCBs as debt, always thinking of it as an equity
infusion, which was not to require any cash outlay. suddenly, the holders of
FCCBs who are strapped for cash themselves do not want any conversion to
equity. Instead, they are looking at calling back their debt instead. For companies
that are already substantially leveraged, this would mean a huge cash outflow.
And there aren’t enough avenues to replace the current one. If they go for equity
financing, it would mean huge dilution for promoters at current depressed prices
and if they go for debt financing, it may well prove very costly at current interest
rates.

Positives About Stock market :
¾ It assists the economic development by providing a body of interesting investors.

¾ It uploads the position of superior enterprises assist them in raising further funds
¾ It encourages capital formation.
¾ Government can undertake projects of national importance and social value
raising funds through the sale of its on stock exchange.
¾ It is the stock exchanges that central bank of a country can control credit by
undertaking open market operations.
Negatives of a Stock Market :
¾ Many beginners underestimate the difficulty of trading and overestimate their

ability as a beginner, also they have a lot of expectations. Therefore, most of them
lose money and infect some degree of psychological damage upon themselves.
¾ Traders can't achieve to their expectations, a conflict created between their beliefs
about how things should be and the actual conditions that don't match their
beliefs. This conflict causes stress, fear, anxiety, confusion and so on.
¾ Money must often be left untouched long-term.
¾ May be minimum deposit requirements
¾ May be high charges which reduce earnings from investment returns
¾ Risk of losing your money
¾ No guarantee of returns
¾ very steep learning curve in the beginning.
¾ It is not that easy to control your emotion.
¾ you can end up broker if you do things wrong.

Introduction To Nifty Fifty Index

Capital market reforms in India and the launch of the Securities and Exchange
Board of India accelerated the incorporation of the second Indian stock exchange called
the National Stock Exchange in 1992. After a few years of operations, the NSE has
become the largest stock exchange in India. Three segments of the NSE trading platform
were established one after another. The Wholesale Debt Market commenced operations
in June 1994 and the Capital Market segment was opened at the end of 1994. Finally, the
Futures and Options segment began operating in 2000. Today the NSE takes the 14th
position in the top 40 futures exchanges in the world.
In 1996, the National Stock Exchange of India launched Standard& Poor CRISIL NSE
INDEX Nifty and CNX Junior Indices that make up 100 most liquid stocks in India.
CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The
Indices are owned and managed by India Index Services and Products Ltd that has a
consulting and licensing agreement with Standard & Poor's. In 1998, the National Stock
Exchange of India launched its web-site and was the first exchange in India that started
trading stock on the Internet in 2000. The NSE has also proved its leadership in the
Indian financial market by gaining many awards such as 'Best IT Usage Award' by
Computer Society in India in 1996 and 1997 and CHIP Web Award by CHIP magazine
1999.
NSE S&P CNX Nifty 50 is the prime stock index in India. The NIFTY index is made of
top 50 listed companies in the national stock exchange. These companies are selected on
the basis of market capitalization and the 50 stocks that have made the NIFTY account
for about 58.64% of the total market capitalization. In fact these stocks are the most
actively traded stocks in the national stock exchange and NIFTY stocks make about 50%
of the total trading volume in NSE. The companies that are listed in the NIFTY index are
selected from 21 different sectors and they represent the leading companies in the
country. Therefore, NIFTY is a profitable investment proposition for any investor who is

looking forward to invest in the index. In fact the growth of the NIFTY index in the
recent years have attracted retail investors, institutional investors and foreign investors to
invest in the NIFTY either directly or through the index funds.
MILESTONES OF NIFTY INDEX:
April 1993: Recognition of a Stock Exchange
November 1994: Capital Market Equities Segment goes live
October 1995: Become largest stock exchange in the country
April 1996: Launch of S&P CNX Nifty
June 2000: Commencement of Derivatives Trading
June 2001: Commencement of trading in Index Options
July 2001: Commencement of trading in options on Individual Securities
November 2001: Commencement of trading in futures on Individual securities
August 2003: Launch of futures & options in CNXIT Index
June 2005: Launch of futures & options in BANK Nifty Index
December 2006: Derivative Exchange of the year by Asia risk Magazine
March 2007: NSE, CRISIL announce of IndiaBondWatch.com
How to enter in nifty and make good profit out of Nifty trading?
There are primarily two ways to invest in the NIFTY – one is the derivative trading on
the index and other is the index funds that are operated by the mutual fund companies.
Derivative trading is a unique financial product that is based on the underlying instrument
that may be a stock or index. In national stock exchange derivative trading was first
introduced in the year 2000. For trading in the NIFTY index directly we have to
derivative instruments – Nifty Future and Nifty Option. In both the cases the value of the
derivative is determined by the position of the index. The Future and the Option are
basically a contract between the buyer and the seller. Like any other derivative trading
the NIFTY is also traded in a lot.
A Future contract is an agreement between the buyer and the seller for buying or selling a
lot of NIFTY on a future date. For buying a Nifty Future we have to pay the margin
amount of about 15% of the total price of the lot. But this margin amount most likely
changes every day depending on the variation of the price in the market that is called the

mark to market. When traders will gain on the Future contract according to this settled
price you will earn the difference and if the index goes down you can wait till the
settlement date. But whatever is the price of the lot on the date of settlement we have to
close the deal on that very day irrespective of the profit or loss.
In an option contract the contract is between the buyer and the seller for buying or selling
one more lots of Nifty on a future date and at a specific price. The buyer of the option
pays a premium for owning the option contract and this premium depends on the current
position of Nifty and the specific option that the buyer is buying. Though the buyer of the
option contract is not liable to honor the option contract the seller of course is obliged to
honor the contract if the buyer is exercising the contract.
These are the two most popular ways to do derivative trading on the NIFTY index. One
of the leading indices in the Indian stock market, the Nifty is preferred by so many
investors from all round the globe along with domestic investors. But if trader a beginner
in stock market investment then the derivative trading mechanics might seem to you bit
difficult, as little difference in the index has great influence on the Future and Option
contracts, it is also too risky to invest in the derivative trading, especially who have little
fund and do not want to take chances. For them the most viable solution for entering
Nifty is the index funds. These are basically mutual funds that invest in the indices and
there are so many profit making Nifty funds that are worth to invest.
Why Trade NSE Nifty 50 & CNX IT Stock Index Futures?
It is difficult for most investors to select and invest only in the top performing stocks,
investing in products that track stock indices, which provide exposure to the whole
market rather a few individual stocks has become increasing popular. The advantage of
indexing is available in mutual funds and exchange-traded funds. A trader should
consider stock index futures instead for two main reasons:
• Flexibility
• Leverage.
So this helps the investors to gain maximum returns in their portfolio ,and it will be very
easy to trade CNX IT Stock Index Futures.

SUMME
ER INTERNS
NSHIP PROJE
ECT
F
Fundam
mental Analyssis of Nifty Fiffty Indeex
60
000
50
000
40
000
OPENING PRICE
30
000
HIGH PRICE
20
000
LOW P
PRICE
10
000 CLOSEEPRICE
0
Grapph 2: Trend analysis

a of nifty
n fifty Stocck Index for the year20000-2010
In Th
he year 2000
0-2002:
While in the past three-four quarters, coompanies haave improvedd profitabiliity with som
me
belt-ttightening; th
his strategy did not pay off this quarrter, though it may have helped avoiid
furtheer strain. Th
he rise in exxpenditure surpassed
s thaat of sales. Operating expenses
e rosse
1.02 per
p cent agaainst sales growth of justt 0.44 per cennt.
Operating profitss fell 3.10 peer cent and operating
o proofit margins 13.57 per ceent compareed
to 14.07 per centt in the correesponding prrevious quarrter. Despite a moderate 4.44 per cennt
rise inn `other inco
ome', the PB
BDIT marginn fell by 1.655 per cent. Though
T cost--cutting coulld
add to
t the botto
om line onlyy to a certaain extent, the continuoous focus on
o improvinng
efficiiency should
d pay off in the
t long run.. This also suuggests that only a genuuine growth in
i
top line
l would improve future
f prosppects and the
t earningss performannce of thesse
comppanies.
Intereest costs deeclined 5.08 per cent inn the Decem
mber 2001 quarter com
mpared to thhe
previious quarter, thanks to thhe two perceentage point cut in intereest rates. Buut, this did noot
proviide the much
h-needed puush to the boottom line. Though a fuurther 50-1000 percentagge
pointt cut can be expected inn the near future,
f this might
m not have much im
mpact on thhe
ANALYSIS OF FIN
NANCIAL MA
ARKETS, CUR
RRENCY & IN
NTEREST RATE FUTURESS INDIA 3
36
profitability of these companies as suggested by the numbers in the December 2001

quarter.
Taxes and extraordinary income: The significant rise in taxes and provisions was due
to the deferred taxation requirement introduced this year. A 12.67 per cent rise in tax
liabilities led to a one percentage point rise in the effective taxation rate to 38.69 per cent.
Even the substantial increase in extraordinary income did not provide the required
impetus to the bottom line.
Sectorial performance and outlook: FMCG companies suffered continued pressure on
top line due to lower rural demand. Companies such as HLL reported modest top- and
bottom-line growth. As for technology stocks, lower growth rates continued. The growth
for most companies was modest compared to the last two years. NIIT suffered the most
as its education business declined sharply.
Cement companies, however, performed better in comparison, thanks to the pick-up in
volumes and prices. Two-wheeler makers such as Bajaj Auto and Hero Honda, however,
were upbeat on the back of rising volumes. Two-wheelers witnessed good demand
growth the past few months and this is likely to be sustained in the near future.
As for other sectors, one can only wait and watch if the demand picks up in the near
future. Though the farm sector has just started showing some signs of a pick-up, it could
take a while for the manufacturing sector to get going. Till then, sluggish topline growth
would continue to cast a shadow on profitability.

FINDINGS AND CONCLUSION
Findings:
¾ Impact of politics on Stock Markets

¾ Impact of commodity market in the stock market
¾ Impact of economic conditions on the stock market
¾ Reasons why the stock market impact on the other countries
¾ How to hedge the stock index futures?
¾ How to trade in intra day markets?
¾ What are risk factors has to consider while trading in stock market?
¾ Falling of stock market at the time of panic conditions
¾ Analysis for the bearish market
¾ Analysis for the bullish market
Conclusion:
Investors at this stage need to realize that a stable political situation at the Centre is
always beneficial for the investor. Since economic conditions touches each of our lives in
one way or the other, it becomes important that the investment decision has to be depends
on to whom should be voted in to power., one needs to exercise higher weightage to the
overall direction of a economic conditions and the people who are likely to make
decisions on behalf of clients or on behalf of them selves has to take carefully.
“Prevention is better than cure

Pre-emption is better than
Redemption
Proactive planning is better than
Reactive address”

Literature review
S.NO. Research paper Author Objectives Learning’s

Title
1 Capital markets John.j.murphy Fundamental Analysis of
analysis financial markets
2 Impact of FIIS on Ravi kumar Fundamental Analysis of
Sensex analysis financial markets
3 Introduction to Alen anderson Fundamental Analysis of
financial markets analysis financial markets
4 Corporate finance katharinalawellen Fundamental Analysis of
analysis financial markets
5 Technical analysis of John murphy Technical
financial markets analysis
6 Sensex the year 2000 Analysis of
financial markets
7 Capital markets National stock Analysis of
exchange financial markets
8 How the stock market Fundamental Analysis of
works? analysis financial markets
9 Capital markets Bombay stock Fundamental Analysis of
exchange analysis financial markets

A LIST OF THEORITICAL CONCEPTS REVISITED
1. An overview of financial markets

2. Risk and Return : Basics
3. Stocks and their valuation
4. Investment banking :Basics
5. Forecasting of stock values and demand
6. Cash management
7. Business cycles
8. Basics of Share Market
9. Features of Index
10. Trading types
11. Sensex Index
12. Volataility of the market
13. Technical analysis of Market indices :Basics
Note: These were some of the theoretical concepts that were studied till date. The
purpose of this reading is to refresh the concepts learnt till now in the MBA
curriculum and to apply these concepts in understanding the firm and to analyze its
operations better .

REFERENCES
1. http://www.rathionline.com/ (Accessed in April 12th)

2. http://www.equitymaster.com (Accesses in April 13th)
3. http://www.investopedia.com
4. http://www.bseindia.com
5. http://www.icharts.com
6. http://www.stockta.com
7. http://www.myiris.com
8. http://www.indiastockmarket.com
9. http://www.bullishindian.com/
10. http://www.marketguru.com/
11. http://www.stockpickr.com/
12. http://www.bseindia.com

Note: Harvard Style Referencing has been used



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SUMMER INTERNSHIP PROJECT

AN INTERIM REPORT ON ANALYSIS OF FINANCIAL

ANAND RATHI SECURITIES LTD.

Date of Submission: 16th April 2010

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 1

I, C. Aswin Kumar, student of M.B.A , here by declare that

I further declare that all the facts and figures furnished in

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 2

“Expression of feelings by words makes them less

I would thank to my project guide Mr. G.K.Srikanth for his

I would also like to thank my co employees who gave

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 3

FUNADMAENTAL ANALYSIS OF BSE SENSEX…………………………………...21

INTRODUCTION TO NIFTY FIFTY INDEX…………………………………………32

FUNDAMENTAL ANALYSIS OF NIFT FIFTY INDEX……………………………35

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 4

FINDINGS AND CONCLUSION………………………………………………………38

A LIST OF CONCEPTS REVISITED…………………………………………………..40

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 5

I. Capital Markets (Bse Sensex,Nifty Fifty)

Second part(what has to be done):

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 6

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 7

Equity & Derivatives Brokerage

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 8

AnandRathi provides end-to-end equity solutions to institutional and individual investors.

Started activities in consulting and Institutional equity sales with staff of 15

Set up a research desk and empanelled with major institutional investors

Introduced investment banking businesses

Retail brokerage services launched

Lead managed first IPO and executed first M & A deal

Initiated Wealth Management Services

Retail business expansion recommences with ownership model

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 9

Wealth Management assets cross Rs1500 crores

Insurance broking launched

Launch of Wealth Management services in Dubai

Retail Branch network exceeds 50

Commodities brokerage and real estate services introduced

Wealth Management assets cross Rs3000crores

Institutional equities business re-launched and senior research team put in

Retail Branch network expands across 100 locations within India

Real Estate Private Equity Fund Launched

Retail Branch network expands across 200 locations within India

AR Middle East, WOS acquires membership of Dubai Gold & Commodity

Ranked 6th in FY2006 for All India Broker Performance in equity

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 10

Citigroup Venture Capital International picks up 19.9% equity stake

Retail customer base crosses 100 thousand

Establishes presence in over 350 locations

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 11

AR brings together a highly professional core management team that comprises of

Mr. Anand Rathi - Group Chairman

Mr. Pradeep Gupta - Vice Chairman

Mr. Amit Rathi - Managing Director

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 12

Plus 11 years of experience in Financial Services

Hong Kong Consumer Bank : $ 1.32 bn

Thailand Nakornthan Bank : $ 320 million

Indonesians Bank Per-Mata : $ 366 million from Oct. 2004.

Korea First Bank : $ 3.3 bn from Apr. 2005.

ANALYSIS OF FINANCIAL MARKETS, CURRENCY & INTEREST RATE FUTURES INDIA 13