PROJECT REPORT

ON“A STUDY OF STOCK EXCHANGE AND

DERIVATIVES AT VENTURA LTD”

TO

SKN SINHGAD SCHOOL OF BUSINESS MANAGEMENT

Submitted By:

Amit Hatwalne(36)Bhagyashree Shinde(59)Girish Daswani(22)

Under the Guidance Of Manjula Dhulipala

SKN SINHGAD SCHOOL OF BUSINESS MANAGEMENT

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DECLARATION

We the undersigned, hereby declare that the Project Report

entitled “A study on Stock Exchange & Derivative ” written

and submitted by our team, under the guidance of Manjula

dhulipala is my original work and the conclusions drawn therein

are based on the material collected.

Place:

Date : Signature of Student

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ACKNOWLEDGEMENTOur sincere thanks to Prof. Manjula Dhulipala SKNSSBM for her

support and encouragement in execution of our training and preparation of

our report.

This project would have been difficult to complete, but by the

invaluable contribution from some important person. Let us take this

opportunity to thank them.

But firstly, I like to thank Ventura Securities Ltd. for giving me such a

challenging project to work upon. I hope this challenge has brought the best

out of us.

We are greatful to the entire Ventura Securities Ltd. branch of Pune,

Specially Mr. Girish Manani Branch Manager.

We are indebted to our guide Mr. Abhishek Kumar, Sr. Relation Manager for

the direction and purpose he gave to this project through his invaluable

insight, which constantly inspired me to think beyond the obvious. His

encouragement and patience helped me instill a great degree of self-

confidence to deliver a good research work and for taking constructive

interest in my project and (We are also grateful to Mr. Abhishek Kumar, Sr.

Relation Manager, for having taken care of all our problems from the most

threatening to the most trivial, but which nobody else could handle and

saving me from all those worries.)

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EXECUTIVE SUMMARY

We have done our project in the field of Share Market in VENTURA

SECURITIES Ltd. This is one of the most reputed financial services company

with its wide range of financial services and products from securities,

derivatives trading, depositary services, research & advisory services,

insurance, loan against shares and mortgage.

The title of my project is “A study of stock exchange and derivative at

ventura ”. The project required me to study Stock Exchange in details and to

find out various derivatives used in Market and used Fundamental Analysis.

The Project was of significance to me as it helped me to get an insight

into the online share trading relating to future market, market research,

fundamental analysis. It will also help the VENTURA SECURITIES LTD to get

details of the trading strategies used by investors to minimize their risk and to

earn profit.

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INDEX

Sr. No. CHAPTERS PAGE NO.

I. Introduction and Research Methodology

II. Profile of The Organisation

III. Research Design & Methodology

IV. Data Presentation, Analysis & Interpretation

V. Finding , Suggestion and Conclusion

INTRODUCTION 5

A stock market is a market for the trading of company stock, and

derivatives of same; both of these are securities listed on a stock exchange as

well as those only traded private. The term 'the stock market' is a concept for

the mechanism that enables the trading of company stocks (collective shares),

other securities, and derivatives. Bonds are still traditionally traded in an

informal, over-the-counter market known as the bond market. Commodities

are traded in commodities markets, and derivatives are traded in a variety of

markets. The stocks are listed and traded on stock exchanges which are

entities (a corporation or mutual organization) specialized in the business of

bringing buyers and sellers of stocks and securities together. The stock

market in the India includes the trading of all securities listed on the BSE and

NSE, as well as on the many regional exchanges.

Market Phases

1. OPENING 8:45 a.m. to 9:54 am (includes Opening Session & Login Session)

1. OPEN PHASE- 9:55 a.m. to 3:30 pm (Trading Takes Place also called as continues secession)

1. MARKET CLOSE 3:30 p.m. to 4:00 (includes Closing & Post Closing Session)

1. SURCON-Surveillance & Control 4:00. to 6:00 p.m. (also called as Member Query Session)

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The stock market is one of the most important sources for

companies to raise money.

This allows businesses to go public, or raise additional capital for

expansion.

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, gold, etc.

Exchanges also act as the clearing house for each transaction,

meaning that 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 smooth functioning of all these activities facilitates economic

growth in that lower costs and enterprise risks promote the

production of goods and services as well as employment. In this

way the financial system contributes to increased prosperity.

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COMPANY PROFILEVentura Securities Ltd. (Ventura) commenced operations in 1994 as a stock broking house. On its journey from then to now, Ventura has seen the capital

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markets mature and investors' requirements become more diverse. It has kept up with the times and today, it offers a whole range of investment products and services.

Ventura has a 25,000 sq ft head office a Vikhroli, Mumbai which houses its corporate office and all operations.

Our registered office is strategically situated in the Central Business District of Mumbai

We have set up branches in select metros and have business partners across the length and breadth of the country

We have been appointed as a national level distributor for all mutual funds

We have been enlisted as a corporate agency for life insuranceWe are a corporate member of both the BSE and the NSE. This enables

us to trade in equities, derivatives, currency products and offer depository services

Ventura Commodities Pvt. Ltd., an associate company, is a trading member of MCX and NCDEX

We have in-house, customized and ready to use software to enable seamless processes and flawless execution

We adhere to a well-defined risk management system and settlement mechanism thereby enabling fully compliant operations.

Ventura Mission

To build relationships and strive towards customer delight, through constant innovation on a strong foundation of dedicated and trained resources.

.DirectorsSajid Malik, Director is a member of the Institute of Chartered Accountants of India. He has more than fifteen years of varied experience in corporate

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advisory structured finance and private equity transaction. He has an international exposure to developed markets in Europe, US and the Far East and has been personally involved in international equity offerings and cross border acquisitions. He is the CEO of Genesys International Limited, a company focused on outsourcing of GIS and engineering design services. He is a non-executive director of Ventura Securities Limited.Hemant Majethia, Director is a member of the Institute of Chartered Accountants of India. He has more than fifteen years of experience in capital markets intermediation, equity research. Mr. Majethia is the CEO of Ventura Securities Limited and is responsible for the day to day operations and is responsible for creating an all India network of sub-brokers and creating the distribution strength of Ventura Securities Limited. He has been instrumental in establishing broking centers and branches for Ventura Securities Limited across the country. It was his vision to create an all India network of brokers’ relationship and build the distribution strength of Ventura.Juzer Gabajiwala, Director is a member of the Institute of Chartered Accountants of India and The Institute of Company Secretaries of India. He has more than fifteen years experience in the field of finance and investment, having exposure to the industrial segment prior to entering the capital markets. Mr. Gabajiwala is responsible for setting up the entire Mutual Fund distribution business at Ventura and a network for PAN India operation. Mr. Gabajiwala is also responsible for setting up the wealth management business and the NRI desk.

DERIVATIVES

At Ventura, we strive to value add to our clients on the basis of their objective of leveraged trade opportunity and risk appetite by dealing in DERIVATIVES.

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Keeping this in mind, at Ventura we are fully geared to meet the all

Requirements of derivative clients through a fully equipped Derivatives Trading Desk.

We have dedicated & experienced team of derivatives experts and offer an integrated seamless service to our clients from the stage of making derivative strategy stage to confirmation of derivative trade. Understanding the need for flow of information at the best possible speed, all the calls & confirmation are routed through SMS alerts.

At the idea / call generation stage, we have people with proven capabilities both in Technical Aspects of stocks movement and having good pulse of the market mood.

Our advisors take good care in profiling and ascertaining the clients trading objectives & risk appetite and accordingly suggest the strategies of Futures & Options, having optimum risk-reward ratio. Our strategies range from pure opportunistic calls for clients with higher risk appetite to Covered Calls for clients with moderate risk profile to pure hedging calls

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RESEARCH DESIGN AND METHODOLOGY

RESEARCH METHODOLOGY

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Research in common parlance refers to a search for common knowledge. Once

can also define research as a scientific and systematic search for pertinent

information on a specific topic. Research is an academic activity and as such

the term should be used in term should be used in a technical sense.

Objective of the Research:

The entire project is based on the Analytical and Quantitative method. The

project is concern with the Stock Market. The topic selected for research is “To

understand and study Market Research”.

Data Collection:

The task of data collection begins after a research problem has been defined

and plan chalked out. There are two types of data viz. Primary data, Secondary

data. The Primary data those which are collected afresh and for the first time,

and thus happen to be original in character. The Secondary data , on the other

hand, are those which have already been collected by some one else and

which have been passed through the statistical process.

In research data is divided into two major parts i.e. Primary Data & Secondary

Data.

There different sources and methods of data collection follows:

Primary data collection:

The primary data is collected through Personal interview and information

provided by the company.

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SECONDARY DATA COLLECTION

The secondary data collected in project through Manuals, Internet, books, and newspapers etc.

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Marketing Strategies:-

Focus on the consumers who prefer almost all investment activities at same place by

providing number of various financial services. At India Ventura securities a person can

purchase or sell shares, debentures etc. and at the same place also demat it. India

Ventura also provides other investment option to the same person at same place like

Role of marketing research

The task of marketing research is to provide management with relevant, accurate, reliable, valid, and current information. Competitive marketing environment and the ever-increasing costs attributed to poor decision making require that marketing research provide sound information. Sound decisions are not based on gut feeling, intuition, or even pure judgment.

Marketing managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion, and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers. Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information,

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consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers; this information enhances the effectiveness of decisions made by marketing managers. Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the "DECIDE" model:

Ventura Securities Ltd

India bulls Sharekhan India Info

ChargesDemat A/CTrading A/CAMC

NILRs. 450/-Next Year 400 + Tax

Rs 1000/-Rs. 1750/- (4+5)NIL

Rs. 1000/-Rs.1000/-Rs. 300/-

NIL Rs. 500/- Rs. 250/-

BrokerageDelivery TradeIntra day TradeF & O Trade

0.02 paisa0.15 paisa0.02 paisa

Rs.50 paisaRs.05 paisaRs.05 paisa

50 paisa06 paisa08 paisa

0.25 paisa0.07 paisa0.06 paisa

Initial Amount NA 300/5000 25OO/5000

Software YES YES YES YES

Investment Idea

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The trend of globalization has attracted many local and foreign investors to dive into the stock market arena. Presently, options investing drawing lots of investors towards it and all of them are grabbing good results. The field of investing is profitable field and highly competitive. The stock market never cares whether you are an experienced person or a newbie.

Presently, the World Wide Web is offering different types of methods on options investing. This is a unique platform for everyone those who are willing to earn money and to run successful stock trading. Well, there are always risk in stock trading and you have to be ready to accept loss. At the lifetime of bond, you may get the interest payments, as well as when bond matures, and you repay the principle. Generally, bonds have the fixed rate of interest, and they are traded like stocks. However, this gives place for the money, which is accessible than the bonds and CDs when accruing interest. Also, you will have more control at this in case you select to have the savings account online.

The stock market is volatile and no one knows when bad time will come. If you are a newcomer to this field, then you have to be highly cautious and must plan everything correctly. Well, for options investing there are lots of tips and rules that you can follow.

Literature Review

Derivatives

Forward

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Futures

Option

Derivative is a product whose value is derived from the value of one or more basic

variables, called bases (underlying assets, index) in a contractual manner. The

underlying assets can be Equity, Forex, commodity, Bullion or any other assets.

The emergence of the market for derivative products, most notably Forwards,

Futures and Option, can be traced back to the willingness of risk adverse 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 derivatives products, it is possible to partially or

fully transfer price risks by locking in asset price.

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 derivative. The price of this derivative is driven by the spot price of wheat, which

is the “underlying”.

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

third of total transactions in the derivatives products.

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In recent years, the market for financial derivatives has grown tremendously both in

terms of variety of instruments available, their complexity and also turnover.

The factors generally attributed as the major driving force behind growth of financial

derivatives are:

a) Increased volatility in asset prices in financial markets.

b) Increased integration of national financial markets with the

international markets.

c) Marked improvement in communication facilities and

sharp decline in their costs.

d) Development of more sophisticated risk management tools,

providing economic agents a wider choice of risk management strategies.

e) Innovations in the derivatives markets, which optimally

combine the risks and returns over a large number of financial assets, lead-

ing to higher returns, reduced risks as well as financial costs as compared to

individual financial assets.

Participants:-The following three broad categories of participants hedgers,

speculators and arbitrageurs trade in the derivatives market.

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1. Hedgers- face risk associated with the price of an asset. They use futures and

options market to reduce or eliminate this risk.

2. Speculators – wish to bet on future movements in the price of an asset. Future

and Option contracts can give them an extra leverage, that 19s they can in-

crease both the potential gains and potential losses in a speculative venture.

3. Arbitrageurs – are in business to take advantage of a discrepancy between

prices in two different markets. If, for instance they see the future 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.

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Types of Derivatives: - The most commonly used derivatives contracts are

forwards, futures and options. Here I took a brief look at various derivatives

contracts that have come to be used:-

Forwards: - A forward contract is a customized contract between two entities,

where settlement takes place on a specified date in the future at today’s pre-agreed

price.

Futures: - A future contract is an agreement between two parties to buy or sell an

asset at a certain time in the future at a certain price. Future contracts are special

type’s forward contracts in the sense that the former are standardized exchange

traded contracts.

Options: - Options are of two types- Calls and Puts. Call gives the buyer the right

but not the obligation to buy a given quantity of the underlying assets, at a given

price on or before a given future date. Put gives the buyer (holder) 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.

Leaps: - The acronyms LEAPS means Long term Equity Anticipation Securities.

These are options having a maturity of up to three years.

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Warrants: - Option generally has lives of up to one year, the majority of options

traded on options exchanges having maximum maturity of nine months. Longer-

dated options are called warrants and are generally traded over the counter.

Baskets: - Baskets options are option on portfolios of underlying assets. The

underlying asset is usually a moving average or a basket of assets.

Swaps: - Swaps are private agreement 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;-

a) Interest Rate Swaps

b) Currency Swaps

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DATA COLLECTION AND DATA ANALYSIS

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DERIVATIVES STRATEGIES

What are Strategies?

Strategies are specific game plans created by you based on your idea of how

the market will move. Strategies are generally combinations of various

products – futures, calls and puts and enable you to realize unlimited profits,

limited profits, unlimited losses or limited losses depending on your profit

appetite and risk appetite.

How are Strategies formulated?

The simplest starting point of a Strategy could be having a clear view about

the market or a script. There could be strategies of an advanced nature that

are independent of views, but it would be correct to say that most investors

create strategies based on views.

What views could be handled through Strategies?

There could be four simple views: bullish view, bearish view, volatile view and

neutral view. Bullish and bearish views are simple enough to comprehend.

Volatile view is where you believe that the market or scrip could move

rapidly, but you are not clear of the direction (whether up or down). You are

however sure that the movement will be significant in one direction or the

other. Neutral view is the reverse of the Volatile view where you believe that

the market or scrip in question will not move much in any direction.

1. Bullish Strategies

Various bullish strategies possible

Buy a Future

Buy a Call Option

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Sell a Put Option

Create a Bull Spread using Calls

Create a Bull Spread using Puts

Let us discuss each of these using some examples.

Buy a Futures Contract

If you buy a Futures Contract, you will need to invest a small margin

(generally 15 to 30% of the Contract value). If the underlying index or scrip

moves up, the associated Futures will also move up. You can then gain the

entire upward movement at the investment of a small margin. For example, if

you buy Nifty Futures at a price of Rs 1,100 that moves up to 1,150 in say 10

days time you gain 50 points. Now if you have invested only 20%, i.e. 220,

your gain is over 22% in 10 days time, which works out an annualized return

of over 700%.

The danger of the Futures value falling is very important. You should have a

clear stop loss strategy and if your Nifty Futures in the above example were to

fall from 1,100 to say 1,080, you should sell out and book your losses before

they mount.

The graph of a Buy Futures Strategy appears below:

Buy a Call Option

If you buy a Call Option, your Option Premium is your cost which you will pay

on the day of entering into the transaction. This is also the maximum loss that

you can ever incur. If you buy a Cipla May 260 Call Option for Rs 21, the

maximum loss is Rs 21. If Cipla closes above Rs 260 on the expiry day, you will

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be paid the difference between the closing price and the strike price of Rs 260.

For example, if Cipla closes at Rs 300, you will get Rs 40. After setting off the

cost of Rs 21, your net profit is Rs 19.

The Call buyer has a limited loss, unlimited profit profile. No margins are

applicable on the buyer. The premium will be paid in cash upfront. If the scrip

moves nowhere, the buyer is adversely impacted. As time passes, the value of

the Option will fall. Thus if Cipla is currently at around Rs 260 and remains

around that price till the end of May, the value of the Option which is currently

Rs 21 would have fallen to nearly zero by that time. Thus time affects the Call

buyer adversely.

The graph of a Buy Call position appears below:

Sell a Put Option

Another bullish strategy is to sell a Put Option. As a Put Seller, you will

receive Premium. For example, if you sell a Reliance May 300 Put Option for

Rs 18, you will earn an Income of Rs 18 on the day of the transaction. You will

however face a risk that you might have to pay the difference between 300

and the closing price of Reliance scrip on the last Thursday of May. For

example, if Reliance were to close on that day at Rs 275, you will be asked to

pay Rs 25. After setting of the Premium received of Rs 18, the net loss will be

Rs 7. If on the other hand, Reliance closes above Rs 300 (as per your bullish

view), the entire income of Rs 18 would belong to you.

As a Put Seller, you are required to put up Margins. These margins are

calculated by the exchange using a software program called Span. The margins

are likely to be between 20 to 35% of the Contract Value. As a Put Seller, you

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have a limited profit, unlimited loss profile which is a high risk strategy. If

time passes and Reliance remains wherever it is (say Rs 300), you will be very

happy. Passage of time helps the Sellers as value of the Option declines over

time.

The profile of the Put Seller would appear as under:

Bull Spreads

First of all, Spreads are strategies, which combine two or more Calls (or

alternatively two or more Puts). Another series of Strategies goes by the name

Combinations where Calls and Puts are combined.

Bull Spreads are those class of strategies that enable you benefit from a bullish

phase on the index or scrip in question. Bull spreads allow you to create a

limited profit limited loss model of payoff, which you might be very

comfortable with.

Bull Spread using Calls/ Puts

Bull spreads can be created using Calls or using Puts. You need to buy one Call

with a lower strike price and sell another Call with a higher strike price and a

spread position is created. Interestingly, you can also buy a Put with a lower

strike price and sell another with a higher strike price to achieve a similar

payoff profile.

2. Bearish Strategies

Various bearish strategies possible

Sell Scrip Futures

Sell Index Futures

Buy Put Option

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Sell Call Option

Bear Spreads

Combinations of Options and Futures .

How to decide the volume of the underlying to trade?

This is based on delta of the option at that point in time. For example, if a Cipla

240 call option with 20 days to expire and Cipla itself quoting at Rs 240 is

priced at Rs 12, the implied volatility is 51% (you can derive this from a Black

Scholes calculator). The historical volatility is say 41%. Thus, the option is

expensive and hence you sell the option.

You will look up the Delta of the option, which happens to be 0.54. One

contract of Cipla is 1,200 Units. You have a positive Delta which means that

with Cipla going up the price of the Call will move up (Rs 0.54 for every

upward movement of Re 1.00 in Cipla) and will move down correspondingly.

You do not want to bet on this directional movement. You will therefore buy

Cipla futures to the tune of 1,200 x 0.54 i.e. 648 Futures. This will neutralize

the impact in such a manner that whether Cipla moves up or down, the

changes in Futures price will offset the changes in the Option price.

For example, if Cipla moves up to Rs 245 tomorrow, you will find that the

Option price has moved up to Rs 14.54. In case you wonder why, the

background is with a Delta of 0.54, the Option price should go up by Rs 2.70

(0.54 x Rs 5 upward movement in Cipla ). As one day has passed, the time

factor will impact Option prices downward – say by Rs 0.16. Thus, the net

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Option price will tend to go up by Rs 14.54 (derived from the Black Scholes

calculator).

You will have lost Rs 3,048 on the Call. You will find that you have gained

3,240 on the Futures, thus generating a net gain of Rs 152.

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Dematerialization -

Indian economy has been globalize and the capital market has been linked to

the international Financial market. Foreign individuals and institutional

investors have encouraged participating into it. So, there is a need for raising

the Indian Capital market in to the international standards in terms of

efficiency and transparency. One such measure is the passing out of the

Depository Act during the year 1996.

Dematerialization of securities and under this system is one of the major steps

aimed at improving and modernizing the capital market and enhancing the

levels of investor’s protection measures which aims at eliminating the bad

deliveries and forgery of shares and expediting the transfer of shares.

The draw back of the old system and the pool proof measures sought to

improve efficiency in transfer and transparency standards prompted to

evaluate the functioning of the dematerialization process and to focus on the 8

developments of the depository system in the Indian capital market.

The study showed that there is a growth in the shares included in the

Dematerialization process both in terms of volume of shares and value of

shares. 30

ANALYSIS

Dematerialization-

Learning about dematerialization

How to convert your security to demat form

Process of conversion of securities into the demat form

Securities specified as being eligible for dematerialization by the depository in

its bye laws and as under the SEBI (Depositories and Participants)

Regulations, 1996 (the Regulations) can be converted or issued in a

dematerialized form. The process of conversion of securities into a

dematerialized form or the issuance of the same in a dematerialized form can

be explained thus:

1.Firstly, the issuer company, whose securities are eligible for

dematerialization, has to enter into an agreement with a depository for

dematerialization of securities already issued, or proposed to be issued to the

public or existing shareholders.

2. The investor is given an option to hold the securities in a dematerialized

form and it is his prerogative to exercise the option to hold the securities in

that manner.

3. The depository enters into an agreement with the participants who are the

agents of the depository and co-functionaries in the process of

dematerialization of securities.

4. Any person can then enter into an agreement, through the participant, with

the depository for availing the services provided by the depository. 31

5. Upon the entering into such agreement with the depository, the person has

to surrender the certificate pertaining to the securities sought to be

dematerialized to the issuer. This surrender is affected in the following

manner.

(I) The person (beneficial owner) who has entered into an agreement with

the participant for dematerialization of the securities has to inform the

participant about the details of the certificate of such securities.

(ii) The beneficial owner has to then surrender the said certificate to the

participant.

(iii) The participant informs the depository about the particulars of the

securities to be dematerialized and the agreement entered into between

him and the beneficial owner.

(iv) The participant then transfers the certificate pertaining to the said

securities to the issuer along with the details and particulars of the

securities.

(v) These certificates are mutilated upon receipt by the issuer and

substituted in the records against the name of the depository, who is the

registered owner of the said securities. A certificate to this effect is sent to

the depository and all stock exchanges where the security is listed.

(vi) Subsequent to this, the depository enters the name of the person who

has surrendered the certificate of security as the beneficial owner of the

dematerialized securities.

(vii) The depository also enters the name of the participant through whom

the process has been carried out and sends an intimation of the same to the

said participant.

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Once the aforesaid process of dematerialization is carried out, the

depository has the responsibility to maintain all the records pertaining to

the securities that have been dematerialized.

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Benefits of Depository System

In the depository system, the ownership and transfer of securities takes

place by means of electronic book entries. At the outset, this system rids the

capital market of the dangers related to handling of paper. NSDL provides

numerous direct and indirect benefits, like:

Elimination of bad deliveries

In the depository environment, once holdings of an investor are

dematerialized, the question of bad delivery does not arise i.e. they cannot be

held "under objection". In the physical environment, buyer was required to

take the risk of transfer and face uncertainty of the quality of assets

purchased. In a depository environment good money certainly begets good

quality of assets.

Elimination of all risks associated with physical certificates

Dealing in physical securities have associated security risks of theft of stocks,

mutilation of certificates, loss of certificates during movements through and

from the registrars, thus exposing the investor to the cost of obtaining

duplicate certificates and advertisements, etc. This problem does not arise in

the depository environment.

No stamp duty

For transfer of any kind of securities in the depository. This waiver extends to

equity shares, debt instruments and units of mutual funds.

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Immediate transfer and registration of securities

In the depository environment, once the securities are credited to the

investors account on pay out, he becomes the legal owner of the securities.

There is no further need to send it to the company's registrar for registration.

Having purchased securities in the physical environment, the investor has to

send it to the company's registrar so that the change of ownership can be

registered. This process usually takes around three to four months and is

rarely completed within the statutory framework of two months thus

exposing the investor to opportunity cost of delay in transfer and to risk of

loss in transit. To overcome this, the normally accepted practice is to hold the

securities in street names i.e. not to register the change of ownership.

However, if the investors miss a book closure the securities are not good for

delivery and the investor would also stand to loose his corporate entitlements.

Faster settlement cycle

The exclusive demat segments follow rolling settlement cycle of T+2 i.e. the

settlement of trades will be on the 2nd working day from the trade day. This

will enable faster turnover of stock and more liquidity with the investor.

Faster disbursement of non-cash corporate benefits like rights, bonus,

etc.

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NSDL provides for direct credit of non-cash corporate entitlements to an

investors account, thereby ensuring faster disbursement and avoiding risk of

loss of certificates in transit.

Reduction in brokerage by many brokers for trading in dematerialized

securities

Brokers provide this benefit to investors as dealing in dematerialized

securities reduces their back office cost of handling paper and also eliminates

the risk of being the introducing broker.

Elimination of problems related to change of address of investor,

transmission, etc

In case of change of address or transmission of demat shares, investors are

saved from undergoing the entire change procedure with each company or

registrar. Investors have to only inform their DP with all relevant documents

and the required changes are effected in the database of all the companies,

where the investor is a registered holder of securities.

Elimination of problems related to selling securities on behalf of a minor

A natural guardian is not required to take court approval for selling demat

securities on behalf of a minor.

Ease in portfolio monitoring

36

Since statement of account gives a consolidated position of investments in all

instruments.

37

Disadvantages of Dematerialization

The disadvantages of dematerialization of securities can be summarized as

follows:

A. Trading in securities may become uncontrolled in case of dematerialized

securities.

B. It is incumbent upon the capital market regulator to keep a close watch

on the trading in dematerialized securities and see to it that trading does

not act as a detriment to investors. The role of key market players in case

of dematerialized securities, such as stock-brokers, needs to be supervised

as they have the capability of manipulating the market.

C. Multiple regulatory frameworks have to be confirmed to, including the

Depositories Act, Regulations and the various Bye Laws of various

depositories. Additionally, agreements are entered at various levels in the

process of dematerialization. These may cause anxiety to the investor

desirous of simplicity in terms of transactions in dematerialized securities.

However, the advantages of dematerialization outweigh its disadvantages

and the changes ushered in by SEBI and the Central Government in terms

of compulsory dematerialization of securities are important for developing

the securities market to a degree of advancement. Freely traded securities

are an essential component of such an advanced market and

dematerialization addresses such issues and is a step towards the

advancement of the market.

38

Depository System (working model)

NSDL carries out its activities through various functionaries called business

partners who include Depository Participants (DPs), Issuing companies and

their Registrars and Share Transfer Agents, Clearing corporations/ Clearing

Houses of Stock Exchanges. NSDL is electronically linked to each of these

business partners via a satellite link through Very Small Aperture Terminals

(VSATs) or through Leased land lines. The entire integrated system (including

the electronic links and the software at NSDL and each business partner's

end) is called the "NEST" [National Electronic Settlement & Transfer] syst

Ifs and Buts of Indian online share trading

You have some money to dabble with. Trading shares on BSE/NSE has always

been your dream. When will you ever find the time? And besides, the hassle of

finding a broker is not easy.

Realizing there is untapped market of investors who want to be able to

execute their own trades when it suits them, brokers have taken their trading

rooms to the Internet. Known as online brokers, they allow you to buy and sell

shares via Internet.

There are 2 types of online trading service: discount brokers and full service

online broker. Discount online brokers allow you to trade via Internet at

reduced rates. Some provide quality research, other don’t. Full service online

brokerage is linked to existing brokerages. These brokers allow their clients to 39

place online orders with the option of talking/ chatting to brokers if advice is

needed. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com,

IndiaBulls.com, Sharekhan.com, Geojit securities.com, HDFCsec.com,

Tatatdw.com, Kotakstreet.com are some of the online broking sites in India.

There are currently close to 50 online brokerages in India with ICICI Direct,

Home Trade, Kotak Street, Sharekhan, Motilal Oswal, IndiaBulls and 5Paisa

being some major players. However, due to limited volumes, no online

brokerage is currently making money and a shakeout is imminent in the near

future. The going is expected to get tougher with the advent of capital account

convertibility. Players such as TD Waterhouse have already entered the Indian

market, while others such as Schwab are expected shortly. On an average, Rs

40 crore per day (Rs 1,000 crore per month) is likely to be the threshold

breakeven for online brokerages. However Hiren Gada, senior VP, Home

Trade is not unduly perturbed. “We at Home Trade believe there is scope for

multiple players as the entire segment is in a growth stage. Hence,

notwithstanding the current sentiment in the market, potential for online

trading is still immense in India.” Says Manish Shukla, VP, Internet broking,

Motilal Oswal, “By mid-2002 we should be able to see substantial volumes in

the domestic market for Internet-based stock trading. In the next 18 months a

lot of players will get in, the market will change form and shape, and many

people will get out. You will have the survivors and stable volumes.”

40

.1. Which brand gives the more customer value?

Customer value analysis.

Customer costs = Price + Other Costs (Acquisition costs, Usage costs,

Maintenance costs, Ownership costs, Disposal costs)

Q. 2. How customer rating the brands. 1)

SHARE KHAN INDIAINFOLINE VENTURA

Accounting charges

Rs750 Rs750 Rs 700

Brokerage 0.50% 0.50%0.50%

Service tax 10.20% 10.20%10.20%

STT 0.01% 0.01%0.01%

41

Customer Value = Customer Benefits – Customer Costs

2)

CASH MANAGEMNET

SHARE KHAN INDIAINFOLINE VENTURA

Delivery trade N.A N.A 0.08%

Non-delivery trade N.A N.A 0.15%

Min.order N.A Rs500 Rs500

Min.brokerage 10 Paisa N.A N.A

Brokerage N.A 0.05 N.A

Jobbing 3.15 pm N.A 3.15pm

42

3)

Spot management

SHARE KHAN INDIAINFOLINE VENTURA

Min.

Trade

N.A Rs500 Rs500

Max.

Trade

N.A N.A No limit

Broker

age

0.05% N.A N.A

43

4)

Margin Segment

SHARE KHAN INDIAINFOLINE VENTURA

Max.

Trade

N.A Rs500 Rs500

Max.

Trade

N.A Rs15 N.A

Brerag

e

0.05% 0.05% N.A

5)

Derivative Segment SHARE KHAN INDIAINFOLINE VENTURA

Service tax 10.20% 10.20% 10.20%

STT 0.01% 0.01% 0.01%

Min.Balance N.A Rs500 N.A

6)

44

Bank Fee SHARE KHAN INDIAINFOLINE VENTURA

Min.Balance N.A Rs 5000 N.A

Penalty NIL NIL N.A

Account Charges NIL NIL N.A

Custody Charges N.A N.A N.A

Transaction to-buy Free NIL N.A

Transaction to –sell Free 0.01% N.A

Stamp charges 0.01% N.A N.A

7)

Demat Account SHARE KHAN INDIAINFOLINE VENTURA

Rejection or Fails N.A NIL Rs 20

Remat charges N.A N.A Rs 15

Pledge 0.02% Rs 10per% 0.02%

Demat charges N.A Rs 3 per% N.A

45

8)

Depositary Participant

SHARE KHAN INDIAINFOLINE VENTURA

Advance amount N.A Rs2500 N.A

Thresh hold amount

N.A Rs1000 N.A

Funding Yes Yes 21%

IPO Yes Yes Yes

Research report 86% N.A 80%

Exposure 4 times 4-7 times 6 times

46

FINDINGS

47

. FINDINGS During the Market Research business class people show positive

attitude in Share Trading

Those who have Interest in share trading most of them were aware of Ventura Securities.

Mostly Investors show their first preference for share Trading in Ventura Securities Ltd.

As per the survey results all Ventura Securities brokers and frenchancy in Pune area show positive attitude in share Trading

In some areas especially Ventura Securities in Pune, Mumbai, Chennai, Hyderabad etc. a big part of Investors were found to be Interested in Commodity Market

In survey few clients expressed full satisfaction for the products of Ventura Securities Mostly For PVS.

(power Ventura Securities)

48

LIMITATION

49

During the project the following limitations are found:

The major limitation of the project was time span i.e. only 1 month. So it

was difficult to go in depth study in the respective subject.

It is very difficult to collect the financial data relating to the Market

Research & Fundamental or company, because it comes under business

secrecy.

The project was undertaken in the Pune City, which is relatively a big

city, and so that the clients very huge in number.

Many of the clients were not able to define the strategies used by them.

50

SUGGESTIONS

51

SUGGESTIONS

Following suggestion have been drawn after doing this project –

The concept of Market Research is not very simple. An investor should

therefore have sound knowledge of technical terms in Equity,

Derivatives before dealing in Future market.

Even though, the concept of derivatives is though. But it is becomes easy

to understand once the person starts trading in it.

The investor should also note that the price of future contracts depends

on many factors which are uncontrollable. Therefore he should take

care of such factors.

Ventura Securities is a service firm so company should apply

Ventura securities may go through “Investment Mela”

Ventura Securities should come up with NCDEX

52

Ventura Securities should conduct some kind of mock

classes for new Investors who even don’t know

about share market

There should be employee ID-Card for them so that

when they go on it shows good impression and

Identity of employee

53

CONCLUSION

54

Conclusion

Although Ventura Securities is the largest shareholder in the market, the next

To follow is Leadership which is gearing up for expansion in all over India and

Various nearer cities like Pune, Nasik, Mumbai, etc. with the spreading of

Business in these cities and further developing on the key areas in Pune and

All big Cities. Ventura Securities is all set up to become “The Company of the

Future”

55

BIBLIOGRAPHY

56

Bibliography

SReference Book :- National Certificate Financial Market

NCDM Module – Derivatives Market (Dealer ) Module

NCCM Module – Commodities Market Module

Websites:

www.ventura1.com

www.venturasecurities.com

www.bseindia.com

www.nseindia.com

www.derivativesindia.com

Manuals:

Ventura Securities Ltd. – Company Manager Manu

57

Annexure

S

58

QUESTIONNAIRE

1. Name:

2. Address:

3. Do you invest in share market?

Yes No

4. If Yes then which type of investment tool do you use (invest in)?

59

Equities

Commodities

Mutual Funds

Insurance

Currencies

Gold

5. Do you use Derivatives?(for Equity/Currency)

Yes No

6. Are you aware of call and put options of future?

Yes No

7. Which strategies do you use for Hedging?

Long Call / Put

Strategy

Married Put Option

Strategy

Protective Strategy

Bear Call Put

Spread Strategy

Covered Call

Strategy

Caller Strategy.

60