2114_cksvim_yakubkhan_sip.pdf

7/27/2019 2114_cksvim_yakubkhan_sip.pdf

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A

PROJECT REPORT

ON

INVESTMENT BEHAVIOR OF THE CLIENT OF THE

SHARE KHAN LTD TOWARDS EQUITY DERIVATIVE

MARKET.

UNDERTAKEN AT

SHAREKHAN LTD, BARODA

Submitted By:

MR.YAKUBKHAN KARAMATI

Guided By:

MRS. KUNJAL SINHA

ENROL.NO:1107050592114

MBA (2012-13)

C.K.S.V.I.M INSTITUTE OF MANAGEMENTS


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DECLARATION

I here by declare that the summer project report titled Investment

behavior of the clients of the SHAREKHAN LTD. Towards equity derivative market is

based on original piece of work done by me for the fulfillment of degree of Master of

Business Administration and whatever information has been taken from any sources had

been duly acknowledge.

I further declare that the personal data & information received from any

respondent during survey has not been shared with any one and is used for academic

purpose only.

Date: Yakubkhan karamati

Place: Enrol.no:117050592114


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PREFACE

For a management student training plays an important role during his/her

study. Training provides a corporate or real world platform to learn practically. MBA

degree without any training or corporate world experience is just like life without oxygen.

So industrial training provides a great learning experience about management concepts

and its applications.

This training provides us an opportunity to know the current market. To

know the current market situations, prevailing competitions, behavioral environment of

different people etc. It provides us a platform whereby we can apply our theoretical

knowledge and we can solve many practical problems. And hence it can help us to be asuccessful manager in future.

Thanks to all those who directly or indirectly help me to complete this

project within a short time limit . For preparation of this report I would like to thanks to

faculty members of our college and staff members of SHARE KHAN LTD. I would like

to specially thanks to Mr. Nirav Patel {Branch manager}, Mr.Anish vaidhya {Assistant

Branch Manager} who were become so helpful me during my summer project.

Mr. Yakubkhan


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A C K N O W L E D G E M E N T

There is a fact that none of the human being in this world is 100%

perfect and in order to gain some perfectness in itself an individual surely needs a helping

hand. The same was with me with respect to the project that I was undergoing during this

session of 2 months. As I too was illiterate with this research topic that I selected for my

research at the initial stages, I got acquainted with it slowly and steadily through efforts

and surely from various intelligent and helpful personalities. I would like to extend my

heartily thanks to all of them through this acknowledgement.

To start with, I would like to thanks to Mr. Nirav Patelbranch manager

and MR. Anish Vaidhya (Assistant Branch Manager) of SHAREKHAN LTD,

BARODA who have been source of constant inspiration and encouragement to me who

have from time to time offered valuable suggestion and ideas.

I would also like to thanks to Mr. Nilesh Solanki and Mr. Samir

Chaudhry (Assistant manager)for giving me necessary guidelines.

I personally would like to thanks my training coordinator Mr. Ankit

Shah our Faculty for assisting me throughout the project period, guiding me and assisting

at various stages and thus sharing his valuable knowledge with me to enhance my

knowledge and helping me in preparing a project.

I would also like to thanks all the Faculty members, who directly or

indirectly help me to successfully complete my project.

I would also like to extend my thanks to all the respondents who spared

their valuable time and helped me in filling up the questionnaire by providing the needed

information.


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EXECUTIVE SUMMARY

Days were gone when people only invest their money in post or in banks. Today

people have several choices for the investment. One of the most emerging choices is to

invest in shares (equities). To get good return on investment people are ready to take

risks. For that they now gradually are starting to invest in equities. To start investment in

equities people need Demat, Trading and bank account. As one can open his / her Demat

account, he/she also can access trading account as both are collectively used for trading in

equities.

After trading in derivative market investors getting loss more than profit. so it become

risky to invest in cash market. So transferring the risk , to hedge the risk, and forspeculating derivative market come into picture in 1970s. they accounted for about two

third of total transaction in derivative product. In recent years the market for financial

derivatives has grown tremendously in terms of variety of instrument available , their

complexity and also turnover . In the class of equity derivatives the world over futures

and options on stock indices have gained more popularity than on individual stocks,

especially among institutional investors , who are major users of the index linked

derivatives. Even small investors find their useful due to high correlation of the popular

indexes with various portfolio and ease of use.

If the investors are trading in derivative market than what criteria they consider while

they are investing in derivative market? What is the objective of the investors while they

are trading in derivative market? What is their preference? What is the preference in

terms of trading? How company can utilize various aspects like which criteria customers

prefer, their needs and wants, which parameters of services they prefer as important etc.

Such information is used to satisfy customers needs and wants and also to switch non

users to users. Also here I have try to know the level of satisfaction of Share khans

clients and their suggestions. So that Share khan can serve its clients effectively.

So I conduct the survey to know the behavior of the client of the share khan ltd. So

share khan ltd can provide effective service to their customers.


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TABLE OF CONTENTS

Sr. No. TOPIC Page

No.

1.0 INTRODUCTION

1.1 Company Profile

1.2 Literature Review

1.3 Conceptual framework

2.0 RESEARCH METHODOLOGY

2.1 Problem Statement

2.2 Research Objectives

2.3 Research Methodology

2.4 Research Design

2.5 Data Collection method

2.6 Sampling Design

2.7 Statistical Tests to be used

2.8 How to conduct Statistical test

3.0 ABOUT DERIVATIEVS

4.0 DATA ANALYSIS & INTERPRETATION

5.0 FINDINGS

6.0 RECOMMANDATIONS

BIBLIOGRAPHY

APPENDIX


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1.1: SHARE BROKING SERVICE SECTOR PROFILE:

There are several national as well as local players in stock trading services which are

providing various services to their customers like online trading, portfolio management

system, stock broking etc. Among them several national level players.

KEY PLAYERS:

5Paisa.com- Online trading, live stock quotes and market research

Advani Share Brokers- Share broking and market research services

Anand Rathi Securities- Portfolio management, corporate finance, equity & fixed

income brokerage services

Brescon Group- Advisory and broking services

CIL Securities- Stock broking & merchant banking services

CRN India- Trends of stock market, trading tips, chat etc

Churiwala Securities- Stock trading, quotes and market analysis

DSP Merrill Lynch - Investment banking and brokerage services

Dalmia Securities- Stock broking & depository services

EquityTrade- Stock trading, company news & market research

Gandhi Securities- Stock broking and investment services

Gogia Capital Services- Stock broking and market analysis

Hasmukh Lalbhai- Stock trading services

Idafa Investments- Stock broking services India Market Access - Offers stock broking, portfolio management and

investment banking services

Investsmart India- Personal finance advisory & online brokerage services

Kisan Ratilal Choksey Shares- Stock broking and e-trading services

Kotak Securities- Brokerage services & retail distributor of financial securities

Manubhai Mangaldas Securities- Stock broking and market analysis

Moneypore- Investment and broking services

Motilal Oswal- Online trading, live BSE and NSE quotes

Navia Markets- Stock broking, IPO and mutual funds services

Parag Parikh- Stock broking and portfolio management

Parsoli Corporation- Investment management & stock trading services

Pratibhuti Viniyog- Stock broking services

Prudential- Investment management services

Quantum Securities- Offers broking and portfolio management services.

Sivan Securities- offers services related investment banking & stock broking with

a focus on South India.
http://www.searchindia.com/cgi-bin/search/index.cgi?ID=966377344http://www.searchindia.com/cgi-bin/search/index.cgi?ID=966377344http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1016666638http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1016666638http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955747502http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955747502http://www.searchindia.com/cgi-bin/search/index.cgi?ID=973785596http://www.searchindia.com/cgi-bin/search/index.cgi?ID=973785596http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947985327http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947985327http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956950423http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956950423http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687249http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687249http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365968http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365968http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955888141http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955888141http://www.searchindia.com/cgi-bin/search/index.cgi?ID=964445292http://www.searchindia.com/cgi-bin/search/index.cgi?ID=964445292http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687084http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687084http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930095925http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930095925http://www.searchindia.com/cgi-bin/search/index.cgi?ID=993560917http://www.searchindia.com/cgi-bin/search/index.cgi?ID=993560917http://www.searchindia.com/cgi-bin/search/index.cgi?ID=978734958http://www.searchindia.com/cgi-bin/search/index.cgi?ID=978734958http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930088159http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930088159http://www.searchindia.com/cgi-bin/search/index.cgi?ID=952057582http://www.searchindia.com/cgi-bin/search/index.cgi?ID=952057582http://www.searchindia.com/cgi-bin/search/index.cgi?ID=979347867http://www.searchindia.com/cgi-bin/search/index.cgi?ID=979347867http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365119http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365119http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687737http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687737http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1000747099http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1000747099http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089255http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089255http://www.searchindia.com/cgi-bin/search/index.cgi?ID=968327356http://www.searchindia.com/cgi-bin/search/index.cgi?ID=968327356http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269124http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269124http://www.searchindia.com/cgi-bin/search/index.cgi?ID=959008817http://www.searchindia.com/cgi-bin/search/index.cgi?ID=959008817http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269269http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269269http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089345http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089345http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089426http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089426http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089783http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089783http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089783http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089426http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089345http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269269http://www.searchindia.com/cgi-bin/search/index.cgi?ID=959008817http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269124http://www.searchindia.com/cgi-bin/search/index.cgi?ID=968327356http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089255http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1000747099http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687737http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365119http://www.searchindia.com/cgi-bin/search/index.cgi?ID=979347867http://www.searchindia.com/cgi-bin/search/index.cgi?ID=952057582http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930088159http://www.searchindia.com/cgi-bin/search/index.cgi?ID=978734958http://www.searchindia.com/cgi-bin/search/index.cgi?ID=993560917http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930095925http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687084http://www.searchindia.com/cgi-bin/search/index.cgi?ID=964445292http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955888141http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365968http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687249http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956950423http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947985327http://www.searchindia.com/cgi-bin/search/index.cgi?ID=973785596http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955747502http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1016666638http://www.searchindia.com/cgi-bin/search/index.cgi?ID=966377344


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1.2: COMPANY PROFILE:

SSKI HISTORY

Founded in 1922, it is one of Indias oldest brokerage houses having over Eighty

years of broking experience.

Founding member of the Stock Exchange, Mumbai and pioneer institutional

broker.

SSKI is the only domestic player in a market crowded by 44 multinational

securities firm.

Foray into institutional broking and corporate finance 20 years ago. SSKI group

also comprises Institutional broking division caters to the largest domestic and

foreign institutional investors, the corporate finance division focuses on niche

areas such as infrastructure, telecom and media. SSKI holds a sizeable portion of

the market in each of these segments.

Forerunner of investment research in the Indian market, SSKI provide the best

research coverage amongst broking houses in India. The companys research team

was set up in December 1992 and is rated as one of the best in the country. Votedfour times as the top domestic brokerage house by Asia money survey, SSKI is

consistently ranked amongst the top domestic brokerage houses in India.

Retail broking started in 1985.

Research group was set up in December 1992.

It acts as a pioneer if investment research in the Indian market aimed at generating

quick investment ideas.

Group interest Investment Banking, Institutional Broking and Retail Broking.

It occupies 65% of business share from foreign institutional investors.

SSKI named its online division as Sharekhan on February 8, 2000 coinciding

with the launch of its website.


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COMPANY PROFILE

Share khan is a share broking and retail broking arm of SSKI, an organization with more

than 80 years of trust and credibility in the stock market. Retail Distribution Started In1998. SSKI is a veteran equities solutions company with over 8 decades of experience in

the Indian stock markets. It helps the customers/people to make informed decisions and

simplifies investing in stocks. Sharekhan brings to you a user- friendly online trading

facility, coupled with a wealth of content that will help you stalk the right shares. SSKI

named its online division as a Sharekhan and it is into retail broking. The business of the

company overhauled 6 years ago on February 8, 2000. It acts as a discount brokerage

house to a full service investment solution provider. It has specialized research product

for the smallinvestors and day traders. Sharekhan has a shop in 137 cities across India.

Though the portal sharekhan.com, have been providing investors a powerful

online trading platform, the latest news, research and other knowledge-based tools for

over five years now.

We have decided teams for fundamental and technical research so that you

get all the information you need to take the right investment decisions.

With branches and outlets across the country, our ground network is one of

the biggest in India!

They have talent pool of experienced professionals specially designated toguide you when you need assistance, which is why investigating with us is bound to be

a hassle-free experience for you!

The Sharekhan provides its customers First Step program, built specifically

for new investors, is testament to our commitment to being your guide throughout your

investing lifecycle

They have 640 share shops across 280 cities in India to get a host of trading

related servicesour friendly customer service staff will also help you with any account

related queries you may have.


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ABOUT SHAREKHAN

SSKI named its online division as SHAREKHAN and it is into retail broking.

The business of the company overhauled 6 years ago on February 8, 2000.

It acts as a discount brokerage house to a full service investment solutions

provider.

It has specialized research product for the small investors and day traders.

Largest chain of share shops, 310 shares, shops in 137 cities across India.

The site was also launched on February 8, 2000 and named it as

www.sharekhan.com.

The Speed Trade account of Sharekhan is the next generation technology product

launched on April 17, 2002.

It offers its customers with the trade execution facilities on the NSE and BSE, for

cash as well as derivatives, depository services.

Ensures convenience in Trading Experience: Sharekhans trading services are

designed to offer an easy, hassle free trading experience, whether trading is donedaily or occasionally. The customer will be entitled to a host of value added

services in the investment process depending on his investing style and frequency

offers a suite of products and services, providing the customers with a multi-

channel access to the stock markets.

It gives advice based on extensive research to its customers and provides them

with relevant and updated information to help him make informed about his

investment decisions.

Sharekhan offers its customers the convenience of a broker-DP.

It helps the customers meet his pay in obligations on time thereby reducing the

possibility of auctions. The company believes in flexibility and therefore allows

accepting late instructions without any extra charge. And execute the instruction

immediately on receiving it and thereafter the customer can view his updated

account statement on Internet.
http://www.sharekhan.com/http://www.sharekhan.com/http://www.sharekhan.com/


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Sharekhan depository services offer Demat services to individual and corporate

investors. It has a team of professionals and the latest technological expertise

dedicated exclusively to their Demat department. A customer can avail of Demat,

repurchase and transmission facilities at any of the Sharekhan branches and

business partners outlets.

BRAND NAME

The company as a whole in its offline business has named itself as SSKI Securities

Private LimitedSevaklal Sevantil al Kanti lal I shwar lal Secur iti es Pri vate L imi ted. The

company has preferred to name themselves under a blanket family name.

But in its online division started since 1997, the company preferred to name itself as

SHAREKHAN. The Brand name SHAREKHAN itself suggests the bus iness in

which the company is dealing so that the customer could easily identify the product or

service category.

CORE SERVICES OF SHAREKHAN

1. Equity and Derivative Trading on BSE and NSE.

2. Depository Services.

3. Online Trading.4. IPO Services.

5. Commodities Trading on MCX and NSDEX.

6. Portfolio Management Services.


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SERVICES PROVIDED BY SHAREKHAN

Online Services

Offline Services

Depository Services

Equity and Derivatives Trading

Fundamental Research

Technical Research


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Portfolio Management

Commodities Trading

Dial-n-trade

Share shop

1. Online Services:

Mutual Funds

Commodity Futures

PMS

Technical PMS

Demat Services

Share shops

2. Offline Services:

Trading with the help of Dealer Trading without credit

By calling to the Share shops

Credit facility (Only in Delivery-based)

T+2 facility

Special website for Offline Clients: www.mysharekhan.com

Physical contract notes

Types of Account

Classic A/c

Speed-trade


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Classic A/c:

Features of Classic A/c:

Online trading account for investing in Equities and Derivatives

via sharekhan.com.

Integration of: Online trading + Bank + Demat account.

Instant cash transferfacility against purchase & sale of shares.

Make IPO bookings.

You get Instant order and trade confirmations by e-mail

Streaming Quotes.

Personalized Market Scan with your own customized stock ticker.

Single screen interface for cash and derivatives.

Speed-trade:

Features of Speed-trade:

Instant order Execution & Confirmation

Single screen trading terminal

Real-time streaming quotes, tic-by-tic charts

Market summary (most traded scrip, highest value and lots of other

relevant statistics)

Hot keys similar to a brokers terminal

Alerts and reminders Back-up facility to place trades on Direct Phone lines

Single screen interface for cash and derivatives

Dial-n-trade:

Features of Dial-n-trade:

Two dedicated numbers for placing your orders with your cell phone or

landline. Toll free number: 1-800-22-7050. For people with difficulty in

accessing the toll-free number, we also have a Reliance number30307600

which is charged at Rs. 1.50 per minute for STD calls.

Automatic funds transfer with phone banking (for Citibank and HDFC

bank customers).


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Simple and Secure Interactive Voice Response based system for

authentication.

No waiting time. Enter your TPIN to be transferred to our telebrokers.

You also get the trusted, professional advice of our teleprocess.

After hours order placement facility between 8.00 am and 9.30 am

(timings to be extended soon.

SHARE KHAN LTD. AFFILIATED WITH BANKS

Share khan has affiliation with 14 banks, which allows its customers to enjoy the facility

of instant credit and transfer of funds from his savings bank account to his Sharekhan

trading account. The Affiliated banks are as follows:

HDFC BANK

UTI BANK

CITI BANKORIENTAL BANK OF COMMERCE

IDBI BANK

UBI BANK

CORPORATION BANK

STATE BANK OF INDIA

AXIS BANK

YES BANK

ICICI BANK

INDIAN OVERSEAS BANK

DEUTSCHE BANK

BANK OF INDIA


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PROMOTION TOOLS AND ADVERTISEMENT OF SHAREKHAN

1. Promotion

Online share trading is totally a new concept in Indian market. Generally investor

doesnt like to come from conventional way of share trading. Sharekhan has

introduced this product in the concept and products are still new in the market.

Therefore the company has undertaken extensive promotion campaign to create

awareness about the product. Sharekhan adopts the following tools for promoting the

product.

Internet

Tele Marketing

Retail Share Shops

Franchisee Owners

Sales Force

2. Advertising

Company advertises its product through TV media on channels like CNBC,

Print Media-in leading dailies and outdoors media. It advertises itself as an

innovative brand with a cartoon of tiger-called SHERU. Besides attractive and

colorful brochures as well as posters are used giving full details about the product.

Mails are sent to people togging on to sites like moneycontrol.com and rediff.com.


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SWOT ANALYSIS

STRENGTHS

Online Trading Facility

Largest Chain of Retail Share Shops in India

80 years of Experience in securities market

Dedicated and responsive workforce/staff

Value added service for HNI client

Research Center

Membership of NSE & BSE

Trading option like Future & Option and Commodities

Volume based differentiated product.

WEAKNESSES

Less informative website

Does not have slab rate brokerage which is provided by competitors

Problems due to network crash

Unawareness Among Investors

OPPORTUNITY

Collaboration with international financial institution

To tap the Untapped market

To capture the market lost to its Competitors.

To focus on developing a superior and powerful portal

To spread awareness of its Brand Name.

THREATS

Follow government laws

Severe Competition

Competitors develops

Prolonged depression and high volatility in the market

New Entrants.


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LITERATURE REVIEW

Literature review helps to understand the topic thoroughly. It provides valuable insight in

the topic. It helps for decision making about the problem. The information collected for

the literature review should be relevant and valid as well as reliable. Literature review

helps in removing the gaps between theory and the existing study. So in short to clean the

rosy picture and to identify the clear cut solution literature review is helpful.


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CONCEPTUAL FRAMEWORK

As the research report is made on derivatives, it is essential to know about the Financial

Derivatives and commodity derivatives. So, this chapter give brief idea about the

essential element or basics of derivatives, based on which entire trading in market is

done.

However there are many types of financial derivatives like forward, futures, option,

swap, swaptions warrants etc., the futures and option are more famous and widely used

in equity and commodity derivatives. So, this chapter cover only concept of future and

option. But it is essential to know about forward contract to make clear understanding of

future and option, so this chapter also include the concept of the forward contract.

In India, as per Section 19 of Forward Contract Regulation Act, 1952, option contracts

in commodities are presently prohibited. Thus, presently the trading in commodities is

done through only future contract in India. So, this chapter elaborates detail description

on future contracts.

In this chapter it also mentions the detail description of the risk management techniques

used by various governing bodies (SEBI & FMC) and the general investors.

Moreover, in the end of this chapter brief idea about commodity derivatives and

difference between commodity derivatives and financial derivatives is given.


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2) RESEARCH METHODOLOGY:

2.1 RESERCH PROBLEM:

INVESTMENT BEHAVIOUR OF THE CLIENTS OF THE SHARE KHAN LTD.

TOWARDS EQUITY DERIVATIVE MARKET.

2.2 RESEARCH OBJECTIVE:

Primary objective:

To know the investment behaviour of the client of the share khan ltd. Towards equity

derivative market.

:Secondary Objective:

To know the investment pattern of the investors towards derivative market.

To find out the preference level of the investors towards equity derivative market.

To know the risk and return expectation of the investors from the derivative

market.

2.3 RESEARCH DESIGN:

I have used the descriptive research design for the purpose of the survey as it will enable

me to describe the characteristics of a particular individual & their tendency towards

equity derivative market.

2.4 SAMPLING METHOD:

I have used the non probability convenience sampling method.

2.5 SAMPLE SIZE :

It would be better to have a sample of 200 people so that the population is properly

presented & to cope up with the time limitation.


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2.6 DATA COLLECTION METHOD :

Primary Data collection :- Primary Data collection by the questionier.

Secondary data collection:

1. CIS {customer information system of the share khan ltd.

2. VALUELINE magazine of the share khan ltd.

2.7 DATA ANALYSIS:

DATA analysis will be done using SPSS {Statistical Package for Social Science}this

will be used because it gives us accurate & quick result.also multiple features of SPSS

will help in applying various tests to reach to accurate conclusion.

2.8 STATESTICAL TESTS TO BE USED:

One sample T-Test:

The One sample T-Test used to test whether the mean of a single variable

differs from a specified constant. The average difference between each data value and the

hypothesized test value, a ttest that tests this difference is 0, and a confidence level forthis test may either 95% or 90 %. One sample t-test is used when the type of data are

intervalin nature .


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3) History of derivatives

The history of derivatives is surprisingly longer than what most people think. Some texts

even find the existence of the characteristics of derivative contracts in incidents ofMahabharata. Traces of derivative contracts can even be found in incidents that date back

to the ages before Jesus Christ.

However, the advent of modern day derivative contracts is attributed to the need for

farmers to protect themselves from any decline in the price of their crops due to delayed

monsoon, or overproduction.

The first 'futures' contracts can be traced to the Yodoya rice market in Osaka, Japan

around 1650. These were evidently standardised contracts, which made them much like

today's futures.

The Chicago Board of Trade (CBOT), the largest derivative exchange in the world, was

established in 1848 where forward contracts on various commodities were standardised

around 1865. From then on, futures contracts have remained more or less in the same

form, as we know them today.

Exchange traded financial derivatives were introduced in India in 12, June 2000 at the

two major stock exchanges, NSE and BSE. There are various contracts currently traded

on these exchanges.

National Commodity & Derivatives Exchange Limited (NCDEX) started its operations in

December 2003, to provide a platform for commodities trading.

The derivatives market in India has grown exponentially, especially at NSE. Stock

Futures are the most highly traded contracts on NSE accounting for around 55% of the

total turnover of derivatives at NSE, as on April 13, 2005.


23/81

3.1) WHAT ARE DERIVATIVES?

Derivatives are instruments that derive their value from an underlying asset. The

underlying can be a financial instrument, currency, or a commodity. Derivatives are

financial contracts whose value/price is dependent on the behaviour of the price of one

or more basic underlying assets (often simply known as the underlying).

These contracts are legally binding agreements, made on the trading screen of stock

exchanges, to buy or sell an asset in future. The asset can be a share, index, interest rate,

bond, rupee dollar exchange rate, sugar, crude oil, soyabean, cotton, coffee and what

have you.

The largest appeal of derivatives is that they offer some degree of leverage. Leverage isa financial term that refers to the multiplication that happens when a small amount of

money is used to control an item of much larger value. A mortgage is the most common

form of leverage.

Derivatives offer the same sort of leverage or multiplication as a mortgage. For a small

amount of money, the investor can control a much larger value of company stock then

would be possible without use of derivatives.

This can work both ways, though. If the investor purchasing the derivative is correct,

then more money can be made than if the investment had been made directly into the

company itself. However, if the investor is wrong, the losses are multiplied instead.

DERIVATIVE MARKETS

Derivative Markets are broadly classified into two types namely,

Financial Derivatives and

Commodity Derivatives


24/81

3.2) FINANCIAL DERIVATIVES

The derivatives traded on the Indian stock Exchange are Financial Derivatives, where

the underlying is the index or the individual stock. They are traded in the Futures &

Option (F&O) segment of National Stock Exchange (NSE) and The Stock Exchange,

Mumbai (BSE). The derivatives markets is regulated by Securities and Exchange Board

of India (SEBI).

India has also been trading derivatives contracts in silver, gold, spices, coffee, cotton and

oil etc for decades in the gray market. Trading derivatives contracts in organized market

was legal before Morarji Desais government banned forward contracts.

Derivatives on stocks were traded in the form of Teji and Mandi in unorganized markets.Recently futures contract in various commodities were allowed to trade on exchanges.

For example, now cotton and oil futures trade in Mumbai, soybean futures trade in

Bhopal, pepper futures in Kochi, coffee futures in Bangalore etc.

Currently, there are 41 stocks that are taken as the underlying for Futures & Option in

the National Stock Exchange(NSE). The NSE Nifty Index also can be assumed as any

other stock for the purpose of Future or Option trading. These stocks have various

market lots depending on their prices. The minimum contract size is Rs. 200000. The

various market lots were decided on the basis that the contracts meet the minimum size

criterion.

33..33)) TTYYPPEESS OOFF DDEERRIIVVAATTIIVVEESS MMAARRKKEETT

Derivative contracts are of different types. The four important types of derivatives are:

1. Forward contract

2. Futures

3. Options

4. Swap

5. Swaptions

6. Warrants

7. Baskets


25/81

The difference between a share and derivative is that shares/securities are an asset while

derivative instrument is a contract.

Futures and options can be traded on stock exchanges. Let us discuss each of these in

greater depth. However as mentioned earlier, for understanding future contract, it isnecessary to understand about forward contract. So, first of all we discussed about the

forward contracts.

3.3.1) Forward Contract

A forward contract is an agreement in which two parties agree to undertake an

exchange of the underlying asset at some future date at a pre-determined price.

A forward contract is a customized contract between two parties, where settlement takes

place on a specific date and at a price agreed in advance.So, a forward contract is the simplest mode of a derivative transaction. It is an agreement

to buy or sell an asset (of a specified quantity) at a certain future time for a certain price.

No cash is exchanged when the contract is entered into.

Illustration 1:

Mr. A wants to buy an A.C., which costs Rs 10,000 but he has no cash to buy it outright.

He can only buy it 3 months hence. He, however, fears that prices of televisions will rise

3 months from now. So in order to protect himself from the rise in prices Mr. A enters

into a contract with the A.C. dealer that 3 months from now he will buy the A.C. for Rs

10,000. What Mr. A is doing is that he is locking the current price of an A.C. for aforward contract. The forward contract is settled at maturity. The dealer will deliver the

asset to Mr. A at the end of three months and Mr. A in turn will pay cash equivalent to

the A.C. price on delivery.

The salient features of forward contracts are:

1. They are bilateral contracts and hence exposed to counter party risk.

2. Each contract is custom designed, and hence is unique in terms of contract size,

expiration date and the asset type and quality.

3. The contract price is generally not available in public domain.4. On the expiration date, the contract has to be settled by delivery of the asset.

5. If the party wishes to reverse the contract, it has to compulsorily go to the same

counter-party, which often results in high prices being charged.


26/81

However forward contracts in certain markets have become very standardized, as in the

case of foreign exchange, thereby reducing transaction costs and increasing transactions

volume. This process of standardization reaches its limit in the organized futures market.

Limitations of forward markets

Forward markets world-wide are affected by several problems:

Lack of centralization of trading

Illiquidity

Counterpart risk

3.3.2) Futures Contracts

Futures markets were designed to solve the problems that exist in forward markets.

A futures contract is an agreement between two parties to buy or sell an asset at acertain time in the future at a certain price. But unlike forward contracts, the

futures contracts are standardized and exchange traded.

To facilitate liquidity in the futures contracts, the exchange specifies certain standard

features of the contract. It is a standardized contract with standard underlying

instrument, a standard quantity and quality of the underlying instrument that can be

delivered, (or which can be used for reference purposes in settlement) and a standard

timing of such settlement. A futures contract may be offset prior to maturity by entering

into an equal and opposite transaction. More than 99% of futures transactions are offset

this way. (Detail of the future contract is explained in next section of this chapter i.e.3.6)

The standardized items in a futures contract are:

Quality of the underlying

Quantity of the underlying

The date and the month of delivery

The units of price quotation and minimum price change

Location of settlementDistinction between futures and forwards contracts

Forward contracts are often confused with futures contracts. The confusion is primarily

because both serve essentially the same economic functions of allocating risk in the

presence of future price uncertainty. However futures are a significant improvement over

the forward contracts as they eliminate counterparty risk and offer more liquidity.


27/81

Distinction between futures and forwards

FUTURES FORWARDS

Trade on an organized Exchange OTC in nature

Standardized contract terms Customized contract terms

More liquid Less liquid

Requires margin payments No margin payment

Follows daily settlement Settlement happens at end of period.

In the India, as per the regulation of Forward Market Commission, the trading in

commodities is allowed through future contract only. So, we will discuss about future

contract in detail in next section of this chapters.

3.3. Option

This is the best form of derivative, which is interesting as well as rewarding, as proper

understanding of this instrument can help us in fetching very attractive returns. Some

people remain puzzled by options. The truth is that most people have been using options

for some time, because options are built into everything from mortgages to insurance.

An option is a contract, which gives the buyer the right, but not the obligation to

buy or sell shares of the underlying security at a specific price on or before a

specific date. Option, as the word suggests, is a choice given to the investor to

either honour the contract; or if he chooses not to walk away from the contract. So,

an option buyer has the right to buy or sell, but not an obligation to do so.

There are two types of options:


28/81

A Call Option is an option to buy a stock at a specific price on or before a certain

date. In this way, Call options are like security deposits.

If, for example, you wanted to rent a certain property, and left a security deposit for it,

the money would be used to insure that you could, in fact, rent that property at the price

agreed upon when you returned. If you never returned, you would give up your security

deposit, but you would have no other liability. Call options usually increase in value as

the value of the underlying instrument rises.

When you buy a Call option, the price you pay for it, called the option premium, secures

your right to buy that certain stock at a specified price called the strike price. If you

decide not to use the option to buy the stock, and you are not obligated to, your only cost

is the option premium.

Put Options are options to sell a stock at a specific price on or before a certain date.

In this way, Put options are like insurance policies

If you buy a new car, and then buy auto insurance on the car, you pay a premium andare, hence, protected if the asset is damaged in an accident. If this happens, you can use

your policy to regain the insured value of the car. In this way, the put option gains in

value as the value of the underlying instrument decreases. If all goes well and the

insurance is not needed, the insurance company keeps your premium in return for taking

on the risk.

With a Put Option, you can "insure" a stock by fixing a selling price. If something

happens which causes the stock price to fall, and thus, "damages" your asset, you can

exercise your option and sell it at its "insured" price level. If the price of your stock goes

up, and there is no "damage," then you do not need to use the insurance, and, once again,your only cost is the premium. This is the primary function of listed options, to allow

investors ways to manage risk.

Thus, In case of call option, if prices go up after you have bought those options then you

earn profit and if prices go down you loose to the extent of premium amount only. In

case of put option, if prices go down after your purchase then you benefit whereas if

prices go up then you loose to the extent of premium amount.


29/81

Based on above discussion, we can summarize feature of the option contract as under.

BUYER OF THE OPTION

CONTRACT

(LONG POSITION)

SELLER/WRITER OF THE

OPTION CONTRACT

(SHORT POSITION)

Call Option Right to buy assets Obligation to sell assets

Put Option Right to sell assets Obligation to buy assets

Technically, an option is a contract between two parties. The buyer receives a privilege

for which he pays a premium. The seller accepts an obligation for which he receives a

fee.

Both the types of options can be sold or bought. Selling an option, which is also known

as option writing should be done very carefully. However option buying is a simplerproposition and also rewarding at the same time.

An option which can only be exercised on the expiry date is called a EUROPEAN style

option. Whereas the one which can be exercised at any time before the expiry is called

an AMERICAN styled option. However after buying any of these options, if you feel

like selling or buying them you can do that as they are freely traded on the stock

exchanges. Sensex Index Options are European styled Option whereas options in 31

scripts are American Options.

3.3.4) Swaps

Swap is an agreement between two parties to exchange different stream of cash flows in

future according to predetermined formula.

Swaps are private agreements 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 :

I nterest rate swaps: These entail swapping only the interest related cash flows between

the parties in the same currency.

Cur rency swaps: These entail swapping both principal and interest between the parties,

with the cash flows in one direction being in a different currency than those in the

opposite direction.


30/81

3.3.5) Swaptions

Swaptions are options to buy or sell a swap that will become operative at the expiry of the

options. Thus a swaption is an option on a forward swap.

3.3.6) Warrants

Options generally have lives of up to one year, the majority of options exchanges having

a maximum maturity of nine months. Longer-dated options are called warrants and are

generally traded over-the-counter.

3.3.7) Basket

Basket options are options on portfolios of underlying assets are usually a moving

average of a basket of assets. Equity index options are a form of basket options.

3.5) COMMODITY DERIVATIVES

A commodity is an undifferentiated product whosevaluearises from the owner's right to

sell rather than the right to use.

A commodity includes all kinds of goods. FCRA defines goods as every kind of

movable property other than actionable claim, money and securities.

Derivatives as a tool for managing risk first originated in the commodities markets. They

were then found useful as a hedging tool in financial markets as well. In India, trading in

commodity futures has been in existence from the nineteenth century with organized

trading in cotton through the establishment of Cotton Trade Association in 1875. Over aperiod of time, other commodities were permitted to be traded in futures exchanges.

Regulatory constraints in 1960s resulted in virtual dismantling of the commodities future

markets. It is only in the last decade that commodity future exchanges have been

actively encouraged. However, the markets have been thin with poor liquidity and have

not grown to any significant level.
http://en.wikipedia.org/wiki/Value_%28economics%29http://en.wikipedia.org/wiki/Value_%28economics%29http://en.wikipedia.org/wiki/Value_%28economics%29http://en.wikipedia.org/wiki/Value_%28economics%29


31/81

DATA ANALYSIS AND

INTERPRETATION:

Q.1 ARE YOU TRADING IN DERIVATIVE MARKET?

Objective: To know that whether the investors are trading in derivative market or not.

Frequency

Graph:

Frequencies Percentage

Yes 74 37.0

No 126 63.0

Total 200 100.0


Yes 74 37.0

No 126 63.0

Total 200 100.0


Yes 74 37.0

No 126 63.0

Total 200 100.0


32/81

Inference: from the above graph out of 200 investors, only 37% investors means 74

respondent are trading in derivative market and 63% means 126 respondents are not

trading in derivative market.

Q.2 Reasons for not investing in derivative market. {Give the rank}

Objective: To know the reason why investors are not trading in trading in derivative

market.

Frequency

Trading

74

126

37

63

0

20

40

60

80

100

120

140

Yes No

Trading

percent/frequen

cy

Frequencies

Percentage

Reasons Frequency Percent

Lack of knowledge 26 20.6

Lack of awareness 19 15.1

High risky 62 49.2

Huge amount of

investment

17 13.5

Other 2 1.6

Total 126 100.0


33/81

Graph:

Inference: From the above graphical representation you can see that 20.6% investors

dont have the knowledge of the derivative market ,15.1% investors are not aware fromthe derivative market,49.2% investors think that trading in derivative is high risky.13.5%

investors says that derivative require huge amount for trading in derivative market.

whereas 1.6% investors dont have specify their reasons for not trading in derivative

market.

Q.3 what is the objective of trading in derivative market?

Objective: To know that why they are trading in derivative market.

High return:

Frequency

Frequency Percent

Dont trade 126 63.0

Not at all preferred 2 1.0

Neutral 2 1.0

Some how preferred 5 2.5

Most preferred 65 32.5

Total 200 100

0

2619

62

17

20

20.615.1

49.2

13.5

1.6

0

10

20

3040

50

60

70

Reasons Lack ofknowledge

Lack ofawareness

High risky Huge amountof investment

Other

percent/freq

uency

reasons

Reason

Series1

Series2

Series3


34/81

Graph:

Inference: From the above graph we can say that 63% means 126 respondents are not

trading in derivative market. While from the 200 only 74 are trading in derivative market.

And from the 74 respondent 4 respondent means 2% respondent are neutral for the high

return in derivative market. 2.5% investors are some how preferred High Return.

One Sample T-Test:

Null Hypothesis (HO): There is no significant difference between calculated mean and

hypothesized mean (1.79). In other words, we hypothesize that the most of the investors

are some how not preferred high return as their objective of investing in derivative.

i.e. Ho : x = = 1.79

Alternative Hypothesis (H1): There is significant difference between calculated mean

and hypothesized mean. In other words we hypothesize that the most of the investors are

some how preferred high return as their objective of investing in derivative.

i.e. H1: x , i.e. H1: x 1.79

Statistical Test: one sample t-test is chosen because the measurement of data is interval

in nature.

Significance level: 0.05

One-Sample Statistics

High Return

126

2 2 5

6563

1 1 2.5

32.5

0

20

40

60

80

100

120

140

Dont trade Not at all

preferred

Neutral Some how

preferred

Most preferred

preferred

percent/frequen

cy

Frequency

Percent


35/81

N Mean Std.

Deviation

Std. Error

Mean

HI.RTN 200 1.79 2.36 .17

One-Sample Test

Test Value = 2

t d Sig. (2-

tailed)

Mean

Differenc

e

95%

Confidenc

e Interval

of the

Differenc

e

Lower Upper

HI.RTN -1.291 199 .198 -.22 -.54 .11

Inference:

Here the test is performed at 95% significance level and the t-value comes out as

.198 which is grater than 0.05, it means that the null hypothesis H0 is accepted and

alternative hypothesis is rejected and it can be said that there is no significant difference

between calculated mean and hypothesized mean.

Hedge the risk:

Frequency

Frequency Percent

Valid Dont trade 126 63.0

Not at all preferred 1 .5

Some how not preferred 3 1.5

Neutral 13 6.5

Some how preferred 43 21.5Most preferred 14 7.0

Total 200 100.0


36/81

Graph:

Inference: from the above graph we can see that out of the 200 respondent 63% are not

trading in derivative market. Where out of the 37% means 74 respondent are trading in

the derivative market from the

37% investors 0.5 % investors are not at all preferred the hedge the risk objective , 1.5%

investors are somehow preferred this objective, whereas 6.5% investors are neutral at

hedge the risk and 7% investors are most referred hedge the risk objective while they are

trading in derivative market.

T-Test:


hypothesized mean (.000). In other words, we hypothesize that the most of the investors

are some how not preferred high risk as their objective of investing in derivative.

i.e. Ho : x = = 1.44



some how preferred high risk as their objective of investing in derivative.

i.e. H1: x , i.e. H1: x 1.44


in nature.


Hedge the risk

126

1 313

43

14

63

0.5 1.5 6.521.5

7

020406080

100120140

Dont

trade

Not at all

preferred

Some

how not

preferred

Neutral Some

how

preferred

Most

preferred

preferrred

percentage/f

requency

Frequency

Percent


37/81

One Sample statics

One Sample T-Test:

Test Value =

2

t d Sig. (2-

tailed)

Mean

Difference

95%

Confidence

Interval o

the

Difference

Lower Upper

Hedge the

risk

-4.071 199 .000 -.56 -.83 -.29

Inference:


.000 which is less than 0.05, it means that the null hypothesis H0 is rejected and

alternative hypothesis is accepted and it can be said that there is significant differencebetween calculated mean and hypothesized mean. And again investors invest in

derivatives with objective of hedging risk only.

Funding:

FREQUENCY

Frequency Percent

Dont trade 126 63.0

Not at all preferred 2 1.0Neutral 18 9.0



Total 200 100.0

N Mean Std.

Deviation

Std. Error

Mean

Hedge the

risk

200 1.44 1.95 .14


38/81

Graph:

Inference: from the above graph we can see that out of the 200 respondent 63% are not

trading in derivative market, whereas out of the 37% only 1% are not at all preferred the

funding option, 9% are the neutral, 11%some how preferred the funding option where as

the 16% are chosen the funding option for the trading in derivative market.

The mean of the funding is the 1.52; therefore we can say that most of the investors are

chosen the funding while investing in the derivative market.

T-test:



are some how not preferred funding as their objective of investing in derivative.

i.e. Ho : x = = 0.001


and hypothesized mean. In other words we hypothesize that the most of the investors aresome how preferred funding as their objective of investing in derivative.

i.e. H1: x , i.e. H1: x 0.001

Funding

126

218 22

32

63

19 11

16

0

20

40

60

80

100

120

140


preferred

Neutral Some how

preferred

Most

preferred

preferred

percentage/frequency

Frequency

Percent


39/81

One Sample T-Test:


in nature.



N Mean Std.

Deviation

Std. Error

Mean

Funding 200 1.52 2.07 .15

ONE-SAMPLE TESTTest

Value = 2

t d Sig. (2-

tailed)

Mean

Differenc

e

95%

Confidenc

e Interval

of the

Differenc

e

Lower Upper

-3.277 199 .001 -.48 -.77 -.19

Inference:


.001 which is less than 0.05, it means that the null hypothesis H0 is rejected and

alternative hypothesis is accepted and it can be said that there is significant difference

between calculated mean and hypothesized mean. And again investors invest in

derivatives with objective of funding only.


40/81

Short position:

Frequency

Frequency Percent

Dont trade 126 63.0



Neutral 24 12.0



Total 200 100.0

Graph:

Inference: as we can se from the above graph that out of the 200 respondent 63%

investors are not trading in the derivative market. while out of the 37% respondent 2.5 %

of the investor are not at all preferred the short position, same as 2.5% are the some how

preferred the short position , when only 1.2 % are the neutral , while the 12.5 % are somehow preferred the short position while 7.5% are the most preferred the short position.

Short position

126

5 5

24 2515

63

2.5 2.512 12.5 7.5

0

20

40

60

80

100

120

140


preferred

Some how

not

preferred

Neutral Some how

preferred

Most

preferred

preferred

pe

rcentage/frequency

Frequency

Percent


41/81

T-Test:



are some how not preferred short position as their objective of investing in derivative.

i.e. Ho : x = = 1.31



some how preferred short position as their objective of investing in derivative.

i.e. H1: x , i.e. H1: x 1.31

One Sample t-test

N Mean Std.

Deviation

Std. Error

Mean

Short

position

200 1.31 1.84 .13

Test Value

= 2

t d Sig. (2-

tailed)

Mean

Difference

95%

Confidenc

e Interval

of the

Difference

Lower Upper

-5.307 199 .000 -.69 -.95 -.43

Inference: Here the test is performed at 95% significance level and the t-value comes out

as .000 which is less than 0.05, it means that the null hypothesis H0 is rejected and

alternative hypothesis is accepted and it can be said that there is significant differencebetween calculated mean and hypothesized mean. And again investors invest in

derivatives with objective of short position only.

MORE LIQUID :


42/81

Frequency

Frequency Percent

Dont trade 126 63.0



Neutral 24 12.0



Total 200 100.0

Graph:

Inference: as we can se from the above graph that out of the 200 respondent 63%

investors are not trading in the derivative market. wshile out of the 37% respondent 2.5 %

of the investor are not at all preferred the more liquid as the objective, same as 2.5% are

the some how preferred the more liquid , when 12 % are the neutral , while the 12.5 %

are some how preferred the more liquid while 7.5% are the most preferred the more

liquid option.

T-Test:



are some how not preferred more liquid as their objective of investing in derivative.

i.e. Ho : x = = 1.31

More liquid

126

5 524 25

15

63

2.5 2.512 12.5 7.5

0

20

40

6080

100

120

140


preferred

Some how

not

preferred

Neutral Some how

preferred

Most

preferred

preferred

percentage/frequen

cy

Frequency

Percent


43/81



some how preferred more liquid as their objective of investing in derivative.

i.e. H1: x , i.e. H1: x 1.31


N Mean Std. Deviation Std. Error Mean

more liquid 200 .91 1.47 .10

One-Sample Test

Test Value = 1

T DfSig. (2-

tailed)

Mean

Difference

95% Confidence Interval of the

Difference

Lower Upper

more

liquid

-

.915199 .361 -9.50E-02 -.30 .11

Inference:

Here the test is performed at 95% significance level and the t-value comes out as .000

which is less than 0.05, it means that the null hypothesis H0 is rejected and alternative

hypothesis is accepted and it can be said that there is significant difference between

calculated mean and hypothesized mean. And again investors invest in derivatives with

objective of more liquid .

Q .4what are the criteria do you taken in the consideration while investing in

derivative market?

Ans: Objective: from this question we can come to know that which criteria are consider

by the investors while they are investing in derivative market. Which criteria are most

important for them whether derivatives are ease in transaction, less costly, or available of

different contract or for the margin money.


44/81

Ease in transaction

Frequency

Frequency Percent

Dont trade 126 63.0



Neutral 16 8.0



Total 200 100.0

Graph:

Inference: from the above graph we can conclude that out of the 200 investors 63% are

already not trading in derivative market whereas out of the 37% investors 1% respondentare not not at all preferred the ease in transaction ,2% are the some how not preferred the

ease in transaction , when the 8% are the neutral when the 11.5 % are some how preferred

the ease in transaction when 14.5% are the most preferred the option of ease in

transaction while investing in the derivative market.

Ease in transaction

126

2 416 23

29

63

1 2 811.5 14.5

0

20

4060

80

100

120

140

Dont

trade

Not at all

preferred

Some

how not

preferred

Neutral Some

how

preferred

Most

preferred

preferred

percentag

e/frequency

Frequency

Percent


45/81

T-Test:



are some how not preferred more liquid as their objective of investing in derivative.

i.e. Ho : x = = 1.48



some how preferred more liquid as their objective of investing in derivative.

i.e. H1: x , i.e. H1: x 1.31

One sample T-Test:



ease in transaction 200 1.48 2.03 .14

One-Sample Test

Test Value = 2

T DfSig. (2-

tailed)

Mean

Difference

95% Confidence Interval of

the Difference

Lower Upper

ease in

transaction

-

3.658199 .000 -.52 -.81 -.24

Inference: Here the test is performed at 95% significance level and the t-value comes outas .000 which is less than 0.05, it means that the null hypothesis H0 is rejected and



derivatives with criteria of the ease in transaction.


46/81

LESS COSTLY

Frequency

Preferred Frequency Percent

Dont trade 126 63.0



Neutral 17 8.5



Total 200 100.0

Graph:

Inference: from the above graph we can see that 5.5% investors are not at all preferred

the less costly criteria while they are investing in derivative market, another 5.5 %investors some how not preferred ,8.5%are neutral,11.5% investors are some how

preferred while only 6% investors are most preferred the less costly criteria while they

are trading in the derivative market.


Less costly

126

11 11 1723

12

63

5.5 5.5 8.5 11.5 6

0

20

4060

80

100

120

140

Dont

trade

Not at all

preferred

Some how

not

preferred

Neutral Some how

preferred

Most

preferred

preferred


Frequency

Percent


47/81


are some how not preferred less costly as their objective of investing in derivative.

i.e. Ho : x = = 1.18



some how preferred less costly as their criteria of trading in derivative.i.e. H1: x , i.e. H1: x 1.18.

One sample T-Test:



less costly 200 1.18 1.73 .12

One-Sample Test

Test Value = 1

T DfSig. (2-

tailed)

Mean

Difference


Difference

Lower Upper

lesscostly

1.469 199 .143 .18 -6.16E-02 .42


as .143 which is less than 0.05, it means that the null hypothesis H0 is accepted and



derivative market they some how not preferred the criteria of less costly.

Available different contract:


48/81

Frequency

Frequency Percent

Dont trade 126 63.0



Neutral 22 11.0



Total 200 100.0

Graph:

Inference: from the above graph we can say that at the criteria of the available different

contract 1.5 % investors are not at all preferred ,2.5% are some how not preferred ,11%

investors are the neutral,16.5% are the some how preferred whereas only 5.5% investors

are most preferred the available different contract.

avl of different contract

126

3 522

33

11

63

1.5 2.511 16.5 5.5

0

20

40

60

80

100

120

140


preferred

Some how

not

preferred

Neutral Some how

preferred

Most

preferred

preferrred


Frequency

Percent


49/81

T-Test:



are not at all preferred available different contract as their criteria of investing in

derivative.i.e. Ho : x = = 1.33



most preferred as their criteria of available different contract while trading in derivative.

i.e. H1: x , i.e. H1: x 1.33.

One sample T-Test:



availability of different contract 200 1.33 1.84 .13

One-Sample Test

Test Value = 1

t dfSig. (2-

tailed)

Mean

Difference

95% Confidence Interval

of the Difference

Lower Upper

availability of

different contract2.543 199 .012 .33 7.41E-02 .59

Inference: Here the test is performed at 95% significance level and the t-value comes

out as .012 which is grater than 0.05, it means that the null hypothesis H0 is accepted and



derivative market they some how not preferred the criteria of available of different

contract.


50/81

Margin money:

Frequency

Frequency Percent

Dont trade 126 63.0

Not at all preferred 26 13.0Some how not preferred 14 7.0

Neutral 7 3.5



Total 200 100.0

Graph:

Inference: From the above graph you can see that 13% investors are not at all preferred

the margin money as their trading criteria ,7% investors are some how not preferred

,3.5% investors are neutral ,8 % investors are some how preferred whereas only 5.5%

investors are most preferred the margin money as their criteria while they are trading in

derivative market.

T-Test:


hypothesized mean (.97). In other words, we hypothesize that the most of the investors

are not at all preferred as their criteria of margin money while trading in derivative.

i.e. Ho : x = = .97

Margin money

126

2614

716 11

63

13 7 3.5 8 5.5

0

20

40

60

80

100

120

140


preferred

Some how

not

preferred

Neutral Some how

preferred

Most

preferred

preferred


Frequency

Percent


51/81



most preferred the margin money as their criteria of trading in derivative.

One-Sample Test

Test Value = 1

t dfSig. (2-

tailed)

Mean

Difference


the Difference

Lower Upper

margin

money

-

.271199 .787 -3.00E-02 -.25 .19

Inference: Here the test is performed at 95% significance level and the t-value comes

out as .787 which is grater than 0.05, it means that the null hypothesis H0 is accepted and



derivative market they not at all preferred the criteria of the margin money.



margin money 200 .97 1.57 .11


52/81

Q-5 Give your preference of trading in derivative instrument.

Ans: Objective: To know the preference of the investors while they are trading in

derivative market.

INDEX FUTURE:Frequency

Frequency Percent

Dont trade 126 63.0


Some how not preferred 1 .5

Neutral 15 7.5



Total 200 100.0

Graph:

Inference: From the above graph we can see that only 0.5% investors are not at all

preferred the index future, 0.5 % investors are some how not preferred ,7.5% investors

are some how preferred 21.5% are most preferred as the preference of their trading in

derivative market.

Index future

126

1 115 14

4363

0.5 0.5 7.5 721.5

0

20406080

100120140


preferred

Some how

not

preferred

Neutral Some how

preferred

Most

preferred

preferred

pe

rcent/frequency

Frequency

Percent


53/81

T-Test:



are not at all preferred as their criteria of margin money while trading in derivative.

i.e. Ho : x = = 1.60

Alternative Hypothesis (H1): There is significant difference between calculated meanand hypothesized mean. In other words we hypothesize that the most of the investors are

most preferred the margin money as their criteria of trading in derivative.

i.e. H1: x , i.e. H1: x 1.60

One sample T-Test:



index future 200 1.60 2.16 .15

One-Sample Test

Test Value = 1

t dfSig. (2-

tailed)

Mean

Difference


Difference

Lower Upper

index

future3.892 199 .000 .60 .29 .90

Inference: Here the test is performed at 95% significance level and the t-value comes outas .000 which is less than 0.05, it means that the null hypothesis H0 is rejected and



derivative market they some how not preferred the preference of the index future.


54/81

STOCK FUTURE

Frequency

Frequency Percent

Dont trade 126 63.0



Neutral 16 8.0



Total 200 100.0

Graph:

Inference: From the above graph you can see that only 0.5% investors are not at all

preferred,0.5% investors are some how not preferred, 8% investors are neutral

21.5%investors are some how preferred and 6.5% investors are most preferred the stockfuture .

Stock future

126

1 116

43

13

63

0.5 0.5 821.5

6.5

020406080

100120140

Dont

tradeNot at allpreferred

Somehow not

preferred

Neutral Somehow

preferred

Mostpreferred

preferrred

p

ercentage/frequency

Frequency

Percent


55/81

T-Test:



are not at all preferred as their preference of stock future.

i.e. Ho : x = = 1.44Alternative Hypothesis (H1): There is significant difference between calculated mean


most preferred the stock future as their criteria of trading in derivative.

i.e. H1: x , i.e. H1: x 1.44

One sample T-Test:



Stock future 200 1.44 1.9378 .1370

One-Sample Test

Test Value = 2

t dfSig. (2-

tailed)

Mean

Difference


the Difference

Lower Upper

Stock

futures

-

4.087199 .000 -.5600 -.8302 -.2898


as .000 which is less than 0.05, it means that the null hypothesis H0 is rejected andalternative hypothesis is accepted and it can be said that there is significant difference


derivative market they some how preferred the preference of the stock future


56/81

INDEX OPTION

Frequency

Frequency PercentDont trade 126 63



Neutral 26 13.0



Total 200 100

Total 200 100.0

Graph:

Inference: From the above graph you can see that only 1% investors are not at all

preferred the index option,2% investors are some how not preferred,13% investors are

neutral,6.5% investors are some how preferred whereas 14.5% investors are most

preferred the index option.

Index option

126

2 4

2613

29

63

1 213 6.5

14.5

0

20

40

60

80

100

120

140

Dont

trade

Not at all

preferred

Some

how not

preferred

Neutral Some

how

preferred

Most

preferred

preferred

pe

rcentage/frequency

Frequency

Percent


57/81

T-Test:



are not at all preferred index option as their preference while they are trading in

derivative market.

i.e. Ho : x = = 1.43



most preferred the index option as their preference of trading in derivative.

i.e. H1: x , i.e. H1: x 1.43

One sample T-Test:



index option 199 1.43 1.98 .14

One-Sample Test

Test Value = 2

t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of theDifference

index

option-4.044 198 .000

-

.57-.84 -.29


as .000 which is less than 0.05, it means that the null hypothesis H0 is rejected and



derivative market they some how preferred the preference of the index option.


58/81

STOCK OPTION

Frequency

Frequency Percent

Dont trade 126 63.0Not at all preferred 9 4.5


Neutral 11 5.5



Total 200 100.0

Graph:

Inference: From the above graph we can see that 63% investors are not trading in

derivative market whereas out of 37% ,4.5% investors are not at all preferred the stock

option,6% investors are some how not preferred when 5.5% are neutral ,12.5% investors

are some how preferred and 8.5 % investors are most preferred the stock option.

Stock option

126

9 12 1125 17

63

4.5 6 5.5 12.5 8.5

0

20

40

60

80

100

120

140

Dont

trade

Notatall

preferred

Some

h

ow

not

preferred

Neutral

Some

how

preferred

Most

preferred

preferred


Frequency

Percent


59/81

T-Test:


hypothesized mean (1.25)other words, we hypothesize that the most of the investors are

not at all preferred stock option as their preference to trade in derivative market.

i.e. Ho : x = = 1.25



most preferred the stock option as their option to trade in derivative market.

i.e. H1: x , i.e. H1: x 1.25



stock option 200 1.25 1.83 .13

One-Sample Test

Test Value = 1

t df Sig. (2-tailed)

MeanDifference


Difference

Lower Upper

stock

option1.971 199 .050 .25 -8.87E-05 .51


as .050 which is grater than 0.05, it means that the null hypothesis H0 is accepted and

alternative hypothesis is rejected and it can be said that there is no significant differencebetween calculated mean and hypothesized mean. And investors invest in derivative

market they some how not preferred the preference of the stock option.


60/81

Q-6 Give your preference in term of trading in derivative market?

Objective: To know the preference of the investors in term of trading in derivative

market.

Intraday:

Frequency

Frequency Percent

Dont trade 126 63.0



Neutral 5 2.5



Total 200 100.0

Graph:

Inference: From the above graph we can see that 63% investors are not trading in

derivative market.63% investors are not trading in derivative market.2% investors are notat all preferred the intraday ,5 % investors are some how not preferred ,2.5% investors are

neutral,5% investors are some how preferred whereas 27% investors are most preferred

the intraday trading.

Intraday

0

126

4 1 5 10

54

0

63

2 0.5 2.5 5

27

020

406080

100120140

Dont

trade

Notatall

preferred

Some

how

not

preferred

Neutral

Some

how

preferred

Most

preferred

preferred

Freque

ncy/percentage

frequency

percentage


61/81

One sample T-Test:


hypothesized mean (1.66) in other words that the most of the investors are not at all

preferred some not preferred the intraday to trade in derivative market.

i.e. Ho : x = = 1.66



most preferred the intraday as their preference to trade in derivative market.

i.e. H1: x , i.e. H1: x 1.66


N M

2114_cksvim_yakubkhan_sip.pdf

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