Executive Summary

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 year’s returns i.e.., (01-04-2000 to
31-03-2010) has taken for the analysis. 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.

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 to 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.