Summer Training Project Report (print Out)

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SUMMER TRAINING PROJCT REPORT ON   RESPONSIVENESS OF THE CLIENTS TO THE NEWEST SEGMENT   OF COMMODITY & CURRENCY TRADING   AT

SHAREKHAN LTD. KOLKATA PREPARED BY SUMAN PAUL ENROLLMENT NO.- 08FC116 BATCH- 2008-10 UNDER THE GUIDENCE OF Prof. A.K. MISHRA

SUBHRAJEET MISHRA

(INTERNAL GUIDE)

(EXTERNAL GUIDE)

As a Partial Fulfillment of PGPFC Programme of IMIS

Institute of Management & Information Science Bhubaneswar

TABLE OF CONTENTS 2

TITLE FLY PAGE………………………………………………. . . 2. TITLE PAGE………………………………………………….......... 3. TABLE OF CONTENTS……………………………………………. 4. CERTIFICATE FROM THE ORGANIZATION/GUIDE………………………………………….. 5. DECLARATION…………..……………………………………… 6. ACKNOWLEDGEMENT………………………………………… 7. ABSTRACT………………………………………………………. 8. CHAPTER-1: INTRODUCTION 1.1) OBJECTIVE OF STUDY……………………………… 1.2) SCOPE & LIMITATION OF STUDY…………………………………………….. 1.

9. CHAPTER-2: MAIN TEXT /BODY 2.1) ABOUT PROJECT……………………………………. 2.2) ABOUT SHAREKHAN LTD………………………… 2.3) ABOUT COMMODITY & CURRENCY…………….. 10.

CHAPTER-3: DERIVATIVE………………………………. 3.1) TYPES OF DERIVATIVES: FORWARDS……………………………………… FUTURES………………………………………… OPTIONS…………………………………………. WARRANTS……………………………………… 3.2) THE S&P CNX NIFTY………………………………. 3.3) COMMODITY……………………………………….. 3.4) COMMODITY DERIVATIVES…………………….. a) COMMODITY EXCHANGES………………… b) COMMODITY DERIVATIVES MARKET…… 3.5) COMMODITY MARKET: A PERSPECTIVE……….

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CHAPTER- 4: ELEMENTS OF COMMODITY MARKET…….. 4.1) CASH MARKET…………………………….. 4.2) FORWARDS & FUTURES MARKET……… 4.3) FORWARD CONTRACT…………………… 4.4) FUTURE CONTRACT………………………. 4.5) CONTRACT FORMAT: SOYABIN………… 3

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CHAPTER-5: HISTORY/ BACKGROUND……………………… 5.1) GLOBAL SCENARIO……………………… 5.2) INDIAN SCENARIO……………………….. 5.3) RELEVENT POTENTIAL OF COMMODITY MARKET IN INDIA………………………… CHAPTER-6: PROCESS/MECHANISM……………………….... 13.1) How to earn profit in commodity trading?............................ CURRENCY FEATURES

CHAPTER-7: HISTORY/BACKGROUND……………………… 7.1) THE EVOLUTION & MECHANICS IN CURRENCY FUTURES………………………………………………. 7.2) THE ORIGIN……………………………….… 7.3) THE BASIC…………………………………… 14.

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CHAPTER-8: TYPES OF FUTURES…………………………. 8.1) PARTICIPANTS…………………………… 8.2) PRICING…………………………………… 8.3) CLEARING HOUSE……………………….. 8.4) MARGINS…………………………………. 8.5) SETTLEMENT……………………………. 8.6) CONTRACT FORMAT……………………

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CHAPTER-9: PROCESS/MECHANISM……………………… 9.1) CONTRACT DESIGN…………………….. 9.2) SIZE OF CONTRACT…………………….. 9.3) TENOR OF CONTRACT…………………. 9.4) SETTLEMENT OF CONTRACT…………. 9.5) SETTLEMENT CYCLE……………………

17. CHAPTER-10: 10.1) ELIGIBLE PERTICIPANTS…………… 10.2) UNIQUE IDENTIFICTION NO……….. 10.3) MARKET TIMINGS…………………… 10.4) MEMBERSHIP TYPES………………… 4

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CHAPTER-11: 11.1) GOLD & USD RELATIONSHIP…………. 11.2) STOCK & GOLD RELATIONSHIP………

19. CHAPTER-12: RESEARCH & METHODOLOGY…………………. 12.1) PRIMARY DATA……………………… … 12.2) SECONDARY DATA……………………… 12.3) DATA INTERPRETATION………………… 20. FINDINGS……………………………………………………… 21. CONCLUSIONS………………………………………………. 22.

RECOMMENDATIONS……………………………………….

23. REFERENCES………………………………………………….

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DECLARATION I, SUMAN PAUL student of PGPFC Programme (Batch: 2008-10) of Institute of Management and Information Science have happily declare that I have successfully completed my SUMMER TRAINING Programme form SHAREKHAN LTD. on the project that the company assigned me. The project which I was assigned is “RESPONSIVNESS OF THE CLIENTS TO THE NEWEST SEGMENT OF COMMODITY & CURRENCY TRADING”. This is completely a new segment in India and so it was a different challenge for me to assess & analysis customer reaction to this new concept. But I think I am successfully done my project & write this project report. For the purpose of the project I have taken few appointments of some customer of Sharekhan Ltd., some HNI (High Net worth Individual) and some general customer who has regularly trade in share market. Prior to the election their reaction was very negative, even they were not ready to listen about the share market also. But after the election the picture turn into 180 degree opposite direction. So I have prepared a questionnaire and did a survey on the basis of those questions about the awareness of the customer of commodity and currency. I have taken 200 sample sizes and to make it authentic and concrete I did that survey.

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ACKNOWLEDGEMENT Through out this project I have connected so many personalities, whose are unforgettable from my mind ever. It was great experience from my side to work with them, work under them. With out their contribution & help it was almost impossible for me to do this project. First of all I thank my internal guide Prof. A.K.Mishra, who support me a lot and encourage me through mailing. Second I like to thank MR. NILESH SHAW, (ASSOCIATE VICE PRESIDENT) of SHAREKHAN LTD. who assess this project report & evaluate it and give me the certificate. Third I must thank my external guide MR. SUBHRAJEET MISHRA (HEAD OF THE COMMODITY DEPARTMENT) of the company. Next I like to thank MR. LALIT KEDIA (Group Head, Eastern region), MR. ANKIT RUIA (RELATIONSHIP MANAGER, COMMODITY), MR. SUKUMAR BHARECH (REGIONAL HEAD, EQUITY DEPARTMENT). I like to thank two of my group members Mr. Debasish Das (08FC078) and Mr. Sumanto Chowdhury (08FC031) during the project. These guys also help me a lot. And finally I am thanking to all those customer who help me to do the survey. Thank you.

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ABSTRACT The project which I had done during the summer training programme is completely a marketing research based project. In this group project we introduce, identified and explore a dimension & direction of investment in commodity & currency derivatives. For assessing the reaction of the customer I have done a survey, by preparing a questionnaire. We have taken 200 sample sizes in the survey & conduct them in our project. As a result of that survey we have observed 95% of the sample (investors) not showing any sort of willingness to invest in the share market; they have no interest to at least listen about the commodity & currency derivative. As a reason for their this kind of unwillingness they have produced so many factors. One of those factors is lack of self confidence to reinvest their money after that shocking global turmoil. Rest of those 5% showed some kinds of courage to listen about the upcoming segments- commodity & currency derivatives. We really appreciate their thoughts. They are the true investors not speculators.

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CHAPTER - 1 INTRODUCTION

1.1.

OBJECTIVE OF STUDY: The basic reason or objectives behind this project are

1. To watch the market condition within these few months prior of election & post election period. 2. To watch customer responsiveness to the newest segment of commodity & currency trading. 3. Watch their behavior to invest in those new segments. 4. To study & learn from their motivation & sentiment about investment in commodities & currencies. 1.2.

SCOPE & LIMITATION OF STUDY:

This project has number of scope to study. The main scopes that I find out are: 1. To learn about the reason behind the difference between their interest to invest in share market. 2. To study & sort out those factors which influence a lot to motivate them about invest in the market. 3. To know much more about the process that the company followed year after year how to invest, when & why to invest. 4. To know in which segment they prefer the customer to invest & the reason lying behind that. 5. How the customer react on the upcoming segments. This project has some limitations which I feel to explain. Those are: 1. Time that has been allowed to me is not enough to do the technical analysis over the market condition. 9

2. The survey what we did together result showed a one sided result. 3. Though the market was growing after election but investors were not agree to take initiative to invest in the market, while this the right time to invest. The reason behind this abstract decision has been completely unknown.

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CHAPTER - 2

MAIN TEXT/ BODY 2.1)

ABOUT PROJECT:

The project on which I was assigned is simply marketing oriented project. It is about the customer responsiveness to the newest segments i.e. commodity & currency. Their level of awareness and their confidence in this particular unknown section was my primary object of study of that survey. Commodity concept has came into the market in the year 2003-04. There 60 different types of commodities has been traded in the market. According to the global demand and supply their price has been determined. It has been fluctuated through out the day. So customer response towards this variation is quiet different in the market. 2.2) ABOUT SHAREKHAN LTD. Sharekhan Ltd. is one of the leading broking farm in India. They are being in this field more than 80 years. They are one of the founder member of BSE & NSE index. They basically deals with stock market, commodities, mutual fund, PMS (Portfolio Management Services), IPO. They have a strong research team in Mumbai.  Sharekhan, India’s leading stockbroker is the retail arm of SSKI, an organization with over eight decades of stock market experience. With more than 220 share shops in 90 cities, and India’s premier portal, www.sharekhan.com, we reach out to customers like no one else. Sharekhan offers you trade execution facilities on the BSE and the NSE, for cash as well as derivatives, c, a ,depository services and most importantly, investment advice tempered by 80 years of research and broking experience. 2.3)

ABOUT COMMODITY & CURRENCY:

Before starting about commodity I will say some words about DERIVATIVES. Because commodity & currency both itself is an important part of Derivative Segment. Which I will discussed in the next chapter. It is a vast chapter. All the Commodity & currency trading is a part of derivative market. 11

CHAPTER- 3                              DERIVATIVE    : Derivative is a product whose value is derived from the of one or more basic variables, called underlying. The underlying could be equity, index, Forex, commodity, or any other asset. Derivatives are legal & valid only if such contracts are traded on a recognized stock exchange, therefore, precluding OTC derivatives. 3.1) Types of Derivatives: •

   FORWARDS:    A FORWARD contract is a customized contract

between two entities, where settlement takes place on a specific 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. Futures contracts are special types of contracts in the sense that the former are standardized exchange -traded contracts, such as futures of nifty index.

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  OPTIONS:    An OPTION is a contract, which gives the right, but not an obligation, to buy or sell the underlying at a stated date and a stated price. While buyers of a option pays premium and buy the right to exercise their option, The writer of an option receives the option premium. The writer is, therefore, obliged to sell or buy the asset if the buyer exercises it on the writer. The types of options are Calls and Puts option.

•

  Warrants:    Options generally have lives up to one year. The

majority of options traded on exchanges have the maximum maturity of the nine months, longer dated options are called warrants and are generally traded OTC. 12

Last decade one of the most eventful decades in international markets. On one side, just a few derivatives disasters stories were enough to bring the entire business of derivatives under the limelight, make every one worry about unknown risks associated with derivatives, and elevate derivatives into mysterious ‘something’; while, on the other side, there were people who started to understand the derivatives and used the derivatives for hedging and mitigating risks while adding liquidity to the market.

3.2) The S&P CNX Nifty: The S&P CNX Nifty is an market capitalization index based upon solid economic research. It was designed not only as a barometer of market movement but also to be a foundation of the new world of financial products based on the index like index futures, index options and index funds. A trillion calculations were expended to evolve the rules inside the S&P CNX Nifty index. The results of this work are remarkably simple: (a) the correct size to use is 50, (b) stocks considered for the S&P CNX Nifty must be liquid by the ‘impact cost’ criterion, (c) the largest 50 stocks that meet the criterion go into the index. S&P CNX Nifty is a contrast to the ad hoc methods that have gone into index construction in the preceding years, where indexes were made out of intuition and lacked a scientific basis. The research that led up to S&P CNX Nifty is well-respected internationally as a pioneering effort in better understanding how to make a stock market index. The Nifty is uniquely equipped as an index for the index derivatives market owing to its (a) low market impact cost and (b) high hedging effectiveness. The good diversification of Nifty generates low initial margin requirement. Finally, Nifty is calculated using NSE prices, the most liquid exchange in India, thus making it easier to do arbitrage for index derivatives.

  3.3) COMMODITY: A commodity is a product that has commercial value, which can be produced, bought, sold, and consumed. Commodities are basically the products of the primary sector of an economy. The primary sector of an economy is concerned 13

with agriculture and extraction of raw materials such as metals, energy (crude oil, natural gas), etc., which serve as basic inputs for the secondary sector of the economy. FCRA Forward Contracts (Regulation) Act, 1952 defines goods are every kind of movable property other than actionable claims, money and securities. Future trading is organized in such goods or commodities that are permitted by central govt. At present, all goods and products of agricultural, including plantation, mineral, and fossil origin are allowed for futures trading under the auspices of the commodity exchanges recognized under the FCRA. To qualify as a commodity for futures trading, an article or a product has to meet some basic characteristics: 1. The product must not have gone through any complicated manufacturing activity, except for certain basic processing such as mining, cropping, etc. In other words, the product must be in a basic, raw, unprocessed state. There are of course some exceptions to this rule. For example, metals, which are refined from metal ores, and sugar, which is processed from sugarcane. 2. The product has to be fairly standardized, which means that there cannot be much differentiation in a product based on its quality. For example, there are different varieties of crude oil. Though these different varieties of crude oil can be treated as different commodities and traded as separate contracts, there can be a standardization of the commodities for futures contract based on the largest traded variety of crude oil. This would ensure a fair representation of the commodity for futures trading. This would also ensure adequate liquidity for the commodity futures being traded, thus ensuring price discovery mechanism. 3. A major consideration while buying the product is its price. Fundamental forces of market demand and supply for the commodity determine the commodity prices. 4. Usually, many competing sellers of the product will be there in the market. Their presence is required to ensure widespread trading activity in the physical commodity market. 5. The product should have adequate shelf life since the delivery of a commodity through a futures contract is usually deferred to a later date (also known as expiry of the futures contract).

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    3.4) COMMODITY DERIVATIVES: a) COMMODITY EXCHANGE: A Commodity Exchange is an organization, such as stock exchange, organizing futures trading in commodities. The main commodity exchanges in India are the NCDEX and Multi Commodity Exchange of India Ltd. (MCX) both of which online trading facility. b) COMMODITY DERIVATIVES MARKET: Commodity Derivatives market trade contracts for which the underlying asset is commodity. It can be agriculture commodity such as wheat, soybeans, rapeseed, cotton or precious metal like gold and silver.

3.5) Commodity Market: A Perspective A market where commodities are traded is referred to as a commodity market. These commodities include bullion (gold, silver), non-ferrous (base) metals such as copper, zinc, nickel, lead, aluminum, tin, energy (crude oil, natural gas, etc.), agricultural commodities such as Soya oil, palm oil, coffee, pepper, cashew, etc. Existence of a vibrant, active, and liquid commodity market is normally considered as a healthy sign of development of a country’s economy. Growth of a transparent commodity market is a sign of development of an economy. It is therefore important to have active commodity markets functioning in a country. Markets have existed for centuries worldwide for selling and buying of goods and services. The concept of market started with agricultural products and hence it is as old as the agricultural products or the business of farming itself. Traditionally, farmers used to bring their products to a central marketplace (called mandi / bazaar) in a town/village where grain merchants/ traders would also come and buy the products and transport, distribute and sell them to other markets.

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In a traditional market, agricultural products would be brought and kept in the market and the potential buyers would come and see the quality of the products and negotiate with the farmers directly on the price that they would be willing to pay and the quantity that they would like to buy. Deals were struck once mutual agreement was reached on the price and the quantity to be bought/ sold. In traditional markets, shortage of a commodity in a given season would lead to increase in price for the commodity. On the other hand, oversupply of a commodity on even a single day could result in decline in price—sometimes below the cost of production. Neither farmers nor merchants were happy with this situation since they could not predict what the prices would be on a given day or in a given season. As a result, farmers often returned from the market with their products since they failed to fetch their expected price and since there were no storage facilities available close to the marketplace. It was in this context that farmers and food grain merchants in Chicago started negotiating for future supplies of grains in exchange of cash at a mutually agreeable price. This type of agreement was acceptable to both parties since the farmer would know how much he would be paid for his products, and the dealer would know his cost of procurement in advance. This effectively started the system of commodity market forward contracts, which subsequently led to futures market too.

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CHAPTER- 4 ELEMENTS OF COMMODITY MARKET

4.1. Cash Market Cash transaction results in immediate delivery of a commodity for a particular consideration between the buyer and the seller. A marketplace that facilitates cash transaction is referred to as the cash market and the transaction price is usually referred to as the cash price. Buyers and sellers meet face to face and deals are struck. These are traditional markets. Example of a cash market is a mandi where food grains are sold in bulk. Farmers would bring their products to this market and merchants/traders would immediately purchase the products, and they settle the deal in cash and take or give delivery immediately. Cash markets thus call for immediate delivery of commodities against actual payment.

4.2 Forwards and Futures Markets In this case, the agreements are normally made to receive the commodities at a later date in future for a pre-determined consideration based on agreed upon terms and conditions. Forwards and Futures reduce the risks by allowing the trader to decide a price today for goods to be delivered on a particular future date. Forwards and Futures markets allow delivery at some time in the future, unlike cash markets that call for immediate delivery. These advance sales help both buyers and sellers with long-term planning. Forward contracts laid the groundwork for futures contracts. The main difference between these two contracts is the way in which they are negotiated.

For forward contracts, terms like quantity, quality, delivery date, and price are

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discussed in person between the buyer and the seller. Each contract is thus unique and not standardized since it takes into account the needs of a particular seller and a particular buyer only. On the other hand, in futures contracts, all terms (quantity, quality, and delivery date) are standardized. The transaction price is discovered through the interaction of supply and demand in a centralized marketplace or exchange. Forward contracts help in arranging long-term transactions between buyers and sellers but could not deal with the financial (credit) risk that occurred with unforeseen price changes resulting from crop failures, inadequate storage or bottlenecks in transportation, factors beyond human control (floods, natural calamities, etc.), or other economic factors that may result in unexpected changes, and hence counterparty default risks for parties involved. This in turn led to the development of futures market. As mentioned above, since futures are standardized contracts that are traded through an exchange, they can be used to minimize price risk by means of hedging techniques. Since the exchange standardizes the quality and quantity parameters and offers complete transparency by using risk management techniques (such as margining system with mark-to-market settlement on a real-time basis with daily settlement), the counterparty default risk has been greatly minimized. There are many commodity exchanges worldwide. They deal in many commodities. In India, there are 24 commodity derivatives exchanges, including three at the national level. Together, these exchanges deal in commodity futures for approximately 80+ commodities. It is interesting and also necessary to know more about the historical evolution of commodity markets, commodity exchanges and their operations globally as well as in India.

 

Forward & futures contracts

In the Commodity market, there are two types of contracts.

  4.3)  FORWARD CONTRACTS:            A Forward contract is traded in the over the counter (OTC)

market, usually between two financial institutions and a client. One of the parties 18

assumes a long position and agrees to buy the underlying asset on certain specified future date for a certain specified price. The other party assumes a short position and agrees to sell the asset on the same date for the same price. The price in a Forward contract is known as the delivery price.  

  4.4)  FUTURE CONTRACTS:     Future contracts have evolved out of forward contracts and are exchange-traded versions of forward contracts. The futures contract, there is an agreement to buy or sell a specified quantity of financial instrument/ commodity is a designated future month at a agreed price determine by both buyer & seller. The contracts have certain standardized specifications with the date and time expiry of the contract. The following table shows an example of a future contract specification at NCDEX.                             4.5) Contract: Soya Bean Future Contract Trading System Trading hour Unit of trading Quotation / Base value Tick Size Delivery unit Quantity version Quality Specification

Delivery Centre Number of active contracts Opening of contracts

Specification NCDEX trading system Monday to Friday 10.00 am to 4.00 pm 10 quintal = 1 mega tonne (MT) Rupees per quintal Rs. 0.05 100 quintal = 10 MT +/- 2% • Moisture : Maximum 10 percent • Sand/ silica : Maximum 2 percent • Damaged : Maximum 2 percent • Green seed : Maximum 7 percent Indore Three concurrent months contracts. Trading in any month will open on the 21st day of the month, three months prior to the contract month, for e.g. a 19

Due date Closing of contract Price band

Position limits

December 2006 contract opens on 21st September 2006. 20th day of the delivery month. If 20th day happens to be a holiday then the due date is the previous working day. All open positions will be settled according to general and product specific regulations. Limit 10 percent or as specified by an exchange from time to time. Limits will not apply if the limit reached during final 30 minutes of trading. • MEMBER-WISE: Maximum Rs. 40 crores, 15 % of open interest. • CLIENT WISE : Maximum Rs. 20 crores, 10 % of open interest.

CHAPTER- 5 20

HISTORY/ BACKGROUND 5.1)

Global Scenario

It is widely believed that the futures trade first started about approximately 6,000 years ago in China with rice as the commodity. Futures trade first started in Japan in the 17th century. In ancient Greece, Aristotle described the use of call options by Thales of Miletus on the capacity of olive oil presses. The first organized futures market was the Osaka Rice Exchange, in 1730. Historically, organized trading in futures began in the US in the mid-19th century with maize contracts at the Chicago Board of Trade (CBOT) and a bit later, cotton contracts in New York. In the first few years of CBOT, weeks could go by without any transaction taking place and even the provision of a daily free lunch did not entice exchange members to actually come to the exchange! Trade took off only in 1856, when new management decided that the mere provision of a trading floor was not sufficient and invested in the establishment of grades and standards as well as a nation-wide price information system. CBOT preceded futures exchanges in Europe. In the 1840s, Chicago had become a commercial centre since it had good railroad and telegraph lines connecting it with the East. Around this same time, good agriculture technologies were developed in the area, which led to higher wheat production. Midwest farmers, therefore, used to come to Chicago to sell their wheat to dealers who, in turn, transported it all over the country. Farmers usually brought their wheat to Chicago hoping to sell it at a good price. The city had very limited storage facilities and hence, the farmers were often left at the mercy of the dealers. The situation changed for the better in 1848 when a central marketplace was opened where farmers and dealers could meet to deal in "cash" grain—that is, to exchange cash for immediate delivery of wheat. Farmers (sellers) and dealers (buyers) slowly started entering into contract for forward exchanges of grain for cash at some particular future date so that farmers could avoid taking the trouble of transporting and storing wheat (at 21

very high costs) if the price was not acceptable. This system was suitable to farmers as well as dealers. The farmer knew how much he would be paid for his wheat, and the dealer knew his costs of procurement well in advance. Such forward contracts became common and were even used subsequently as collateral for bank loans. The contracts slowly got “standardized” on quantity and quality of commodities being traded. They also began to change hands before the delivery date. If the dealer decided he didn't want the wheat, he would sell the contract to someone who needed it. Also, if the farmer didn't want to deliver his wheat, he could pass on his contractual obligation to another farmer. The price of the contract would go up and down depending on what was happening in the wheat market. If the weather was bad, supply of wheat would be less and the people who had contracted to sell wheat would hold on to more valuable contracts expecting to fetch better price; if the harvest was bigger than expected, the seller's contract would become less valuable since the supply of wheat would be more. Slowly, even those individuals who had no intention of ever buying or selling wheat began trading in these contracts expecting to make some profits based on their knowledge of the situation in the market for wheat. They were called speculators. They hoped to buy (long position) contracts at low price and sell them at high price or sell (short position) the contracts in advance for high price and buy later at a low price. This is how the futures market in commodities developed in the US. The hedgers began to efficiently transfer their market risk of holding physical commodity to these speculators by trading in futures exchanges. A comparison of the derivatives markets, over last few years among various countries given rise to an interesting pattern. The exchanges of the developed markets have shown robust growth and maintain their leadership position since last 5 years; at the same time developing/ emerging markets exchanges have gained a position of eminence of strong growth trends. It is an evident from the presented in the tables below that Indian market has emerged forth strongly along with markets in Korea, Spain & Israel. TABLE- 1 TOP FIVE EXCHANGES 22

(BY NUMBER OF STOCK INDEX FUTURE CONTRACT TRADED) EXCHANGES Eurex NSE-India Osaka-SE Euronext.liffe Singapore Exchange

No. of contracts traded in 2008* 371,504,525 141,261,516 90,965,674 76,525,955 45,256,382

No. of contracts traded in 2003 155,988,661 10,557,224 13,231,287 56,898,050 8,609,973

% change 138.16 % 1238.08 % 587.50 % 34.50 % 425.63%

Source: World Federation Organization. * January to October 2008. TABLE- 2 TOP 5 EXCHANGES (BY NUMBER OF STOCK INDEX OPTION CONTRACT TRADED) EXCHANGES Korea Exchange Chicago Board Options Exchanges Eurex NSE-India Taifex

No. of contracts traded in 2008* 2,011,059,741 435,860,762

No. of contracts traded in 2003 3 110,822,096

% change

371,155,699 89,099,694 77,154,336

108,504,304 1,332,417 21,720,084

242.07 % 6587.07 % 255.22 %

Source: World Federation Organization. # = very large due to very small base. * = January to October 2008. TABLE- 3 TOP 5 EXCHANGES 23

# 293.30 %

(BY NUMBER OF SINGLE STOCK FUTURE CONTRACT TRADED) EXCHANGES

No. of contracts traded in 2008* JSE 307,836,600 NSE INDIA 165,706,741 EUREX 121,656,741 EURONEXT.LIFFE 94,223,989 BME Spanish 35,301,142 Exchange

No. of contracts traded in 2003 4,585,919 25,572,505 7,004,235 N.A 12,492,568

% change 6,612.65 % 547.99 % 1636.90 % N.A 182.58 %

Note: The 2003 data pertains to that of Euronext. TABLE- 4 TOP 5 EXCHANGES (BY NUMBER OF SINGLE STOCK OPTIONS CONTRACT TRADED) EXCHANGES International Securities Exchanges Chicago Board Options Exchange Philadelphia SE EUREX Sao Paulo SE NSE India

5.2)

No. of contracts traded in 2008* 767,805,138

No. of contracts traded in 2003 220,988,837

% change

463,710,159

173,033,965

167.99 %

409,010,094 276,165,919 260,696,612 8,009,365

89,458,901 188,239,823 175,622,679 5,607,990

357.20 % 46.71 % 48.44 % 42.82 %

247.44 %

Indian Scenario

History of trading in commodities in India dates back to several centuries. But organized futures market in India emerged in 1875 when the Bombay Cotton 24

Trade Association was established. The futures trading in oilseeds started in 1900 when Gujarati Vyapari Mandali (today’s National Multi Commodity Exchange, Ahmedabad) was established. The futures trading in gold began in Mumbai in 1920. During the first half of the 20th century, there were many commodity futures exchanges, including the Calcutta Hessian Exchange Ltd. that was established in 1927. Those exchanges traded in jute, pepper, potatoes, sugar, turmeric, etc. However, India’s history of commodity futures market has been turbulent. Options were banned in cotton in 1939 by the Government of Bombay to curb widespread speculation. In mid-1940s, trading in forwards and futures became difficult as a result of price controls by the government. The Forward Contract Regulation Act was passed in 1952. This put in place the regulatory guidelines on forward trading. In late 1960s, the Government of India suspended forward trading in several commodities like jute, edible oil seeds, cotton, etc. due to fears of increase in commodity prices. However, the government offered to buy agricultural products at Minimum Support Price (MSP) to ensure that the farmer benefited. The Government also managed storage, transportation, and distribution of agriculture products. These measures weakened the agricultural commodity markets in India. The government appointed four different committees (Shroff Committee in 1950, Dantwala Committee in 1966, Khusro Committee in 1979 and Kabra Committee in 1993) to go into the regulatory aspects of forward and futures trading in India. In 1996, the World Bank in association with United Nations Conference on Trade and Development (UNCTAD) conducted a study of Indian commodities markets. In the post-liberalization ear of the Indian economy, It was the Kabra Committee and the World Bank–UNCTAD study that finally assessed the scope for forward and futures trading in commodities markets in India and recommended steps to revitalize futures trading.

5.3) Relevance and Potential of Commodity Markets in

India Majority of commodities traded on global commodity exchanges are agrobased. Commodity markets therefore are of great importance and hold a great 25

potential in case of economies like India, where more than 65% of the population are dependent on agriculture. There is a huge domestic market for commodities in India since India consumes a major portion of its agricultural produce locally. Indian commodities market has an excellent growth potential and has created good opportunities for market players. India is the world’s leading producer of more than 15 agricultural commodities and is also the world’s largest consumer of edible oils and gold. It has major markets in regions of urban conglomeration (cities and towns) and nearly 7,500+ Agricultural Produce Marketing Cooperative (APMC) mandis. To add to this, there is a network of over 27,000+ haats (rural bazaars) that are seasonal marketplaces of various commodities. These marketplaces play host to a variety of commodities everyday. The commodity trade segment employs nearly five million plus traders. The potential of the sector has been well identified by the Central government and the state governments and they have invested substantial sources to boost production of agricultural commodities. Many of these commodities would be traded on the futures markets as food-processing industry grows at a phenomenal pace. The government also has recognized three national level commodity exchanges, which are trading in more than 85 commodities at present, and the list continues to expand. According to the experts in the commodities markets, global trends indicate that the volume in futures trading tends to be 5-7 times the size of commodities' spot trading in the country (Internationally, the multiple for physical versus derivatives is much higher at 15 to 20 times). Many nationalized and private sector banks have announced plans to disburse substantial amounts to finance commodity-trading business. The Government of India has initiated several measures to stimulate active trading interest in commodities. Steps like lifting the ban on futures trading in commodities, approving new exchanges, developing exchanges with modern infrastructure and systems such as online trading, and removing legal hurdles to attract more participants have increased the scope of commodities derivatives trading in India. This has boosted both the spot market and the futures market in India. The trading volumes are increasing as the list of commodities traded on national commodity exchanges also continues to expand. The volumes are likely to surge further as a result of the increased interest from the international 26

participants in Indian commodity markets. If these international participants are allowed to participate in commodity markets (like in case of capital markets), the growth in commodity futures can be expected to be phenomenal. It is expected that foreign institutional investors (FIIs), mutual funds, and banks may be able to participate in commodity derivatives markets in the near future. The launch of options trading on commodity futures is also expected after the amendments to the Forward Contract Regulation Act (1952). Commodity trading and commodity financing are going to be a rapidly growing business in the coming years in India. With the liberalization of the Indian economy in 1991, the Commodity prices (especially International commodities such as base metals and energy) have been subject to price volatility in international markets, since India is largely a net importer of such commodities. Commodity derivatives exchanges have been established with a view to minimize risks associated with such price volatility. It is well known fact that ‘derivatives’ are well traded in Indian market, as private contracts, long before of introduction of exchange traded contract. Being private contracts these contracts faced the usual problems associated with such contracts. The pathway for exchange-traded, cleared and settled derivatives contracts was laid out with removal of prohibition of options on securities vide Securities laws (Amendments) Ordinance, 1995. Subsequently, SEBI set up a committee under the chairmanship of L.C.Gupta to recommend the appropriate regulatory framework for derivative trading in India. The committee submitted its reporting October 1998 giving operational details of managing system, methodology for charging initial margins, broker net worth, deposit requirement, and real time monitoring requirement. In December, 1999, amendment of SCR(A) was notified , making way for derivatives trading in INDIA. In June, 2000, future contracts on Nifty & Sensex were launched, followed by Options contracts on nifty and Sensex (European Style), Options contracts on stocks (American style) and Future contracts on stocks on June, July and November 2001, respectively. The number of underlying stocks and indexes has increased over 10 years.

27

In the Indian market the index option contracts are cash settled European style options. Stock options are also cash settled American style Contracts. Interest rate derivatives are based on national 10 year bond and 91days T-bill. All exchange-traded equity derivative contracts are cash settled contracts. TABLE- 5 F& O Contracts traded in NSE & BSE Financial year NSE-stocks 2001-02 12002-03 2003-04 2004-05 2005-06 2006-07 2007-08

31 41 53 52 117 155 265

NSEIndex(es) 1 1 2 2 3 3 7

BSE-Stocks

BSE-Index(es)

31 38 42 46 76 89 126

1 1 1 1 7 7 7

Source : NSE & BSE. Turnover in the derivative segments since inception is presented in the table below. During 2001-02, turnover on NSE was Rs. 101,925 crores and during 2007-08 it was Rs. 13,090, 478 crores. Likewise the turnover on BSE was Rs. 1,917 crores & during 2007-08 it was 242,308 crores. Turnover on BSE increased till 2004-05 but there was a noticeable decrease in turnover. The turnover on BSE has started increasing since 2006-07.

TABLE- 6 Total derivatives since inception (Rs. in Crores) # Period

NSE

BSE 28

Total

2001-02 101,925 2002-03 439,865 2003-04 2,130,447 2004-05 2,547,053 2005-06 4,824,245 2006-07 7,356,271 2007-08 13,090,478 04/2008 to 5,963,894 09/2008 # excluding currency derivatives Source = NSE & BSE.

1,917 2,475 12,074 16,112 9 59,007 242,307 11,491

103, 842 442,340 2,142,521 2,563,165 4,824,254 7,415,278 13,332,786 5,975,385

total derivatives since inception

Rs. in Crores

30,000,000 25,000,000 20,000,000

Total 103, 842

15,000,000

BSE 1,917

10,000,000

101,925

5,000,000 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 04/2008 to 09/2008 year

At NSE, during the period April 2001 to September 2008, turnover was highest for the month of October 2007, i.e. Rs. 1,833,633 crores At BSE, practically no trading took place in the period May, 2005 to January, 2006. However since November has started increasing. Over the given time period, maximum turnover was in the month of October, 2007 (Rs. 23,985 crore).

Calendar Year 2002 2003 2004 2005 2006

INDEX FUTURE No. of value of contracts (in contracts cr.) 1641779 34322 10557024 296736 23354782 813026 47375214 1233364 70286227 2330311

29

INDEX OPTION No. of value of contracts (in contracts cr.) 314478 6633 1332417 34940 2812109 99488 10140239 264612 18702248 638077

2007 01/2008 to 09/2008

2002 2003 2004 2005 2006 2007 01/2008 to 09/2008

138794235

3381599

141261516 3164560 STOCK OPTION No. of value of contracts (in contracts cr.) 2773524 77279 5607990 194296 4874958 175332 5224485 177484 5214191 201146 9048495 348409 8009365

186147

52707150

1284499

89099694 2051669 SINGLE STOCK FUTURE No. of value of contracts (in contracts cr.) 8557332 227207 25573756 904968 44051780 1498892 68911754 2251384 100285737 3877131 179324970 6925970 165706741

3735830

Source: NSE Future on Interest rate priced off at zero-coupon yield curve was introduced in June 2003. Futures and options contract on sectoral Indexes were introduced in Indian derivative market in August 2003. This was followed by permission for introduction of future contracts on a basket of GoI securities in January 2004. However, this segment has seen very little activity. The introduction of new products based on the interim recommendation of this committee has resulted in market activity. For example, mini contracts and longer dated options have shown their specific segments of markets have specific interest.

CHAPTER-6

PROCESS / MECHANISM

30

The commodity part in Investment is one of the major important part. In Equity we invest in a number of shares such as 100 or 1000 no. of equities, but in commodity the investment has been done in a lot size. For every commodity there is a lot size has been specified. Like in gold there is three different types have been classified according to their size i.e. GOLD GUIENE (8 grams), GOLD MINI (100 grams) & PURE GOLD (1 K.g.). If anyone wants to invest his or her money he has to invest that amount in either 1 K.G. or 100 grams or 8 grams lot size. Today the lot price has been around Rs. 14557/ 100 gram. So if a person wants to invest his money in 1 K.G. gold he has to pay Rs. 1, 45,570. Investors can invest their money also in Nickel, Coffey, Zinc, Crude oil, Copper, Aluminum, Lead, Silver, Tin, Palm oil, Cashew etc. – they also been traded here. But maximum trade has been done on GOLD. Because of it’s trustworthiness and just like share market it doesn’t fluctuate every time. It gives a steady return which is very important for the investors. For investment purpose the investor has to open a commodity account along with an equity account. And they have to maintain certain % amount as margin money just like in case of gold 5% margin money has to maintain in their own account. For example, Mr. Roy purchase 1 k.g. gold today @ Rs. 14577 per 100 gram. So the total amount has been traded is Rs. 145770, of which Rs. 7288.5 amount he has to keep in his own account every time. The price of the gold goes up & down every time. But it does not effect that margin money. Suppose the gold price has been goes down by Rs. 14500 per 100 gram. So for 1 k.g. lot the price will be Rs. 145000, which means the margin money should be 5% of that Rs. 145000. i.e. Rs.7250. But Mr. Roy has to keep the amount of Rs. 7288.5 as per rule.

6.1.) How to get the profit? Suppose the price goes up by Rs. 200, so the Changes for every Re. 1 , the profit should be multiple of 100 grams or 1 k.g. whatever the lot size. 31

For 100 grams profit will be Rs. (200 * 100) i.e. Rs. 20000. This amount has been added to customer account after deducting the brokerage. In the same way if the value goes down the margin money will remain same but no profit will be added with it. For online trading the company provides the customer a software name TRADE TIGER through which he can directly trade in a terminal. He can trade in offline also. But for every commodity account there should be an equity account exist. This is the way that the company trade. Brokerage charge is minimum 5 paise for intraday trading & 50 paise on delivery.

CHAPTER-7

CURRENCY FEATURE

32

HISTORY/ BACKGROUND: 7.1) The Evolution and Mechanics of Currency Futures: 7.2)

The Origin

The origin of futures can be traced back to 1851 when the Chicago Board of Trade (CBOT) introduced standardized forward contracts which were being traded in nonstandard bilateral form for the preceding three years. In comparison, the birth of currency futures is of a recent origin and was a sequel to the breakdown of the Bretton Woods system. The resultant currency volatility provided a business opportunity for launching futures contracts in foreign currencies. The Chicago Mercantile Exchange (CME) first conceived the idea of a currency futures exchange and it launched the same in 1972 amidst considerable skepticism, since traditionally futures market had traded agricultural commodities and not financial instruments. The CME commissioned Professor Milton Friedman to write a paper on currency futures in order to gain credibility in the market. Prof. Milton Friedman stated: “Changes in the international financial structure will create a great expansion in the demand for foreign cover. It is highly desirable that this demand be met by as broad, as deep, as resilient a futures market in foreign currencies as possible in order to facilitate foreign trade and investment. Such a wider market is almost certain to develop in response to the demand. The major open question is where. The U.S. is a natural place and it is very much in the interests of the U.S. that it should develop here.” The CBOT saw this as a competitive challenge, as also an opportunity to launch other financial futures and proposed trading options and futures on stocks.

7.3)

The Basic

33

A futures contract is a standardized contract, traded on an exchange, to buy or sell a certain underlying asset or an instrument at a certain date in the future, at a specified price. Where the underlying asset happens to be a commodity, the futures contract is termed as ‘commodity futures’ whereas in cases where the underlying happens to be a financial asset or instrument, the resultant futures contract is referred to as ‘financial futures’. A currency futures contract, also called an FX future, is a type of financial futures contract where the underlying is an exchange rate. In other words, it is a futures contract to exchange one currency for another at a specified date in the future at a price (exchange rate) that is fixed on the last trading date. The buyer or seller in a futures market locks into an exchange rate for a specific value date or delivery date. In other words, currency futures are used primarily as a price setting mechanism rather than for physical exchange of currencies. The future date is called the delivery date or final settlement date. The pre-set price is termed as future price, while the price of the underlying asset on the delivery date is termed as the settlement price. The future price normally converges towards the spot price on the settlement date. The futures contract gives the holder the right to buy or sell, in contrast to the option contract which gives the holder the right, but not the obligation to buy or sell the underlying. Thus, both the parties of the futures contract must fulfill their contractual obligations on the settlement date. However, such contracts do provide options to deliver the underlying asset or settle the difference in cash. The holder of a contract could exit from his commitment prior to the settlement date by either selling a long position or buying back a short position (offset or reverse trade). The futures contracts are exchange traded derivatives and the exchange’s clearing house acts as counterparty to all contracts, sets margin requirements, etc.

CHAPTER- 8 34

                      Types of Futures Many types of futures contracts, mirroring the underlying assets – Forex, bonds, interest rates, index, stocks, commodities, etc are available in exchanges. While trading in commodities began in the 18th century, the contracts on financial instruments were introduced in the 70’s.

8.1) Participants Traditionally, the futures market meets the needs of the three distinct sets of market users - those who wish to discover price information, those who wish to speculate and those who wish to hedge. Though speculation may not be a socially useful activity, the three types of users contribute to price discovery and hedging as well as add to liquidity. A speculator is a trader who enters the futures market, with no initial risk in pursuit of profit, thereby accepting an increase in risk. A hedger is a trader with a preexisting risk who enters the futures market to reduce or eliminate his currency exposure. There is a category of speculators called scalpers who have an extremely short horizon view – ranging from a few seconds to a few minutes. Since they are not looking for huge profits, they manage to generate a large volume of trades and contribute to increase in liquidity. Day traders take a far sighted approach to the market attempting to profit from the price movements that may take place over the course of a trading day. Position trader maintains positions overnight, weeks or months.

8.2) Pricing In the foreign exchange market, every price or exchange rate is a relative price. Fundamental factors influence the exchange rates between two currencies. Interest rate parity theorem explains how the forward/ futures exchange rate is essentially determined on the cost of carry model. In addition in the long run the exchange rates are expected to follow Purchasing Power Parity (PPP). In the futures market, there are situations where the price of a currency for future delivery may be higher than the spot price, which is known as contango and where the future price is lower than the spot price, the phenomenon is known as backwardation. 35

Theoretically, if risk neutral speculators are available in sufficient numbers, their profit seeking activity will drive the futures price toward equality with the expected future spot price. The same process is expected to occur in the forward segment of Forex markets. The linkages among interest rates, exchange rates, expected inflation rates emphasize the fundamental relationship between futures and forward prices on one hand and the expected future currency value on the other. The efficiency of Forex futures markets has been researched and found to be generally poor. The same also applies to the forward market. The existence of premium in forward or futures market exist due to several possible reasons such as non-stationary risk premia, bias in regression coefficients arising from systematic error components due to nonrational response, microstructure and behavioral issues. Ideally in the futures market, the difference between the spot and future prices reflect the covered interest rate arbitrage, which fosters interest rates in the two relevant countries. However, imperfections in the market, regulatory restrictions, capital controls, etc, may prevent the arbitrage activity from operating efficiently. In such a scenario, futures price may reflect more of a consensus forecast of prospective exchange rates rather than classical arbitrage pricing theory.

8.3) Clearing House The margin system functions through a hierarchy of market participants that links the clearing house with the individual trader. The members of an exchange may be classified as clearing members or non clearing members. A clearing member is a member of the exchange and the clearing house. The clearing house deals with clearing members only. Any non clearing member has to clear his transactions through a clearing member. The clearing house collects margin deposits from clearing members to cover all futures positions that are on account of the particular member. For e.g., if a bank is a member of the clearing house, it has to maintain margins on account of all the trades executed though it. In turn the clearing member would insist on receiving margins from all traders whose trade handles and thus the margin requirements travel down the chain to brokers hand actual traders.

36

The clearing house does not take any active positions on the exchange, but interposes itself between two parties to a trade. The number of contracts bought in a futures market must therefore be exactly equal to the number of contracts sold. Without the clearing house, it would have been difficult for two totally unknown parties separated geographically to trust each other and trade. Because of the clearing house, the two parties to the trade are only concerned with the financial soundness of the clearing house. The clearing house is invariably a large well capitalized financial institution. In the history of futures, there has never been a known failure of the clearing house. There are four identifiable tiers in the futures market – the broker, the exchange and clearing house, a self regulatory body and the government agency. The KYC of the customer is the broker’s responsibility. He is also responsible to the clearing house for all accounts handled by him directly or indirectly. Any restrictions on specific types of trades or limits on positions etc laid down for smooth functioning and free determination of price have to be implemented through brokers. A broker has a duty to report any violation or attempt at price manipulation to the exchange. A code of conduct for brokers framed by the exchange, regulator or a self regulatory agency is generally put in place. The futures exchange and the clearing house are themselves self regulated entities. They prescribe and enforce rules for trading and clearing on the exchange. Exchange rules inter alia prohibit fictitious trading, rumour mongering, disclosure of customer positions, false declarations and statements, etc. by members. Any attempt at price manipulation by pre-arranged trades is strictly forbidden. Brokers are also forbidden from a practice called front running where a broker trades on his own account to the detriment of the customer. Futures exchanges can also set daily price limits, position limits and margin requirements. These will be within the framework of any limits set by the higher level regulator. Often the various futures exchanges in a market form a self regulatory association. This helps promote just and equitable principles of trade, remove impediments to free and open futures trading and generally protect public interest. Such associations undertake the tasks of screening and testing applicants for membership, prescribe record keeping and disclosure standards, etc. The ultimate regulator is the one with powers derived from statute, e.g. the 37

Commodity Futures Trading Commission (CFTC) in USA. The ultimate regulator can lay down rules relating to trading, daily permitted price fluctuations, rules for delivery process, etc. It has powers to intervene by suspending trading if warranted by price manipulation. It can also prescribe competency standards for brokers, members, etc.

8.4) Margins The credit risk in futures market is assumed by the exchange. In order to minimize the credit risk to the exchange, traders are required to post margins, typically in the range of 5 per cent – 15 per cent of the contracts’ value. In some jurisdictions, different margin regimes are followed for hedgers and speculators. There are three types of margins initial margin, maintenance margin and the variation margin. The initial deposit called the initial margin is the amount a trader (buyer and seller), must deposit before trading in any futures. This normally is approximately taken as the maximum daily price fluctuation permitted for the contract being traded. The initial margin can be kept so small because of the safeguard built into the system of daily mark to market. Whenever the position held on the exchange shows a loss on mark to market, the same is deducted from the margin deposited. When this drops below a threshold level called the maintenance margin, established by the exchange, a margin call is made on the trader to replenish the margin and the additional amount deposited is called the variation margin.

8.5) Settlement Settlement of futures contract can take place through physical delivery or cash Settlement. Under physical delivery, the amount specified of the underlying is delivered by the seller to the buyer. Physical delivery is common in commodities and bonds. Under the cash settlement system, a cash payment is made based on the underlying reference rate at the time of expiry.

8.6) The Contract format The contract specifications are summarized below in tabular form: Category

Description

Underlying

Rate of exchange between one US 38

dollar and INR USD 1000 12 near calendar months Last business day of the month 0.25 paisa or INR 0.0025 Cash settled in INR based on Reserve Bank reference rate of expiry date As specified by the clearing corporation

Contract Size Contract Months Expiration Date and time Minimum Price fluctuation Settlement

Margins

39

                                         C HAPTER- 9

PROCESS/ MECHANISM Just like commodities the calculation has been done in currency trading. The difference is lying between them is in commodity the trade has been done in cash or by using future option but in currency trading the trade has taken place in exchange of Euro, Dollar, Yen etc. The margin in currency trading is 5-5.2%. Today dollar value is around equal to Rs. 47-48. This means if tomorrow this value goes up, FII will come in, dollar value automatically goes up, the GDP will grow up.

9.1) Contract design The Group pondered as to whether the contract design should be left to the exchanges or the regulator should pre-specify the availability of uniform contracts across various exchanges. It was concluded that while attracting liquidity through product innovation is a feature of the competitive markets, in the initial phase, a standardized product across various exchanges (in terms of contract size, final settlement dates, settlement procedure of contracts, tenors of contracts, etc) would invite greater participation and add to the liquidity of futures markets.

9.2) Size of the contract The Group acknowledged that since the currency futures segment is meant to provide non-institutional market participants a means to hedge their currency exposures in a transparent and price-efficient manner, the size of the currency futures contract may not be unduly large. Large institutional and corporate customers are able to manage beneficial rates even in the OTC segment. The price discovery function of the exchanges is significant for the individuals and SMEs. Further, price discovery should be such that the individuals and SMEs 40

are able to trade on the same prices as are available to the large customers. If the price discovery is done for a large size lot, the individuals and SMEs may not be able to capture the fineness of that rate for their small-sized lots. This is the bane of the OTC markets. Hence, it is important that the contract size be kept at such a level that it facilitates price discovery as well as trading, particularly for retail segment of the market. The retail focus of the contract should not in any manner disenchant the institutional clients since in the era of electronic trading, the cost efficiency is not compromised at all even if multiple contracts have to be purchased. A single contract would also ensure that market frictions are avoided, which could occur in case of multiple contracts. Hence, the Group recommends that a single contract of notional value USD 1,000 may be introduced.

9.3) Tenors of contracts There is likely to be adequate interest in currency futures contracts beyond the first three months as is the case with the OTC forwards contract. Moreover, certain segments of the market expressed a desire for introduction of contracts with maturity of two years and beyond as currently such currency exposures cannot be hedged in the OTC market. The Group debated extensively on the issue and felt that while certain segments of the market may stand to benefit through introduction of long tenor currency futures contract, the liquidity in such contracts in the absence of an underlying OTC market of corresponding tenor is by no means assured. The Group recommends that, initially, the tenors of the contract may largely replicate the tenors of the currency forwards and to this end, the currency futures maturing in the first 12 calendar months may be offered.

9.4) Settlement of contracts As has been argued, a section of the participants in the currency futures segment may not have underlying currency exposures at all while a few participants may have economic exposures to exchange rate movements. In the absence of underlying flows, settlement based on delivery may impede participation from such segments of the market. While delivery based settlement provide tight cash – derivatives linkage, given the complications that delivery based settlement entail, and the fact that Indian Rupee is not fully convertible on capital account, the Group recommends that in the initial phase, 41

settlement only on cash basis, based on spot Reserve Bank reference rate on the expiry date, may be permitted. Cash settlement would also ensure convergence between regulations in respect of OTC markets and currency futures market, since cancellation of a forward contract on the date of maturity is akin to cash settlement.

9.5) Settlement Cycle Certain sections of the market participants felt that the settlement cycle of the currency futures contract should be co-terminus with the settlement of month end forward contracts. They argued that settlement at the month-end would enable SMEs and individuals to benchmark the prices available in the futures market with the OTC prices. The experiences of the equity markets also suggest that settlement cycle of similar underlying across various exchanges eventually converge. However, FEDAI and some large banks opined that separating the maturity of forward contracts and currency futures contracts may be better for effective management of liquidity. The Group felt that the futures contracts settling in the mid month may allow the banks to transfer/ seek exposure on the futures segment. After taking into account the market feedback on the draft proposals, and the expert views of the TAC, the Group recommends that the futures settlement cycle may be co-terminus with the settlement of month end forward contracts.

42

CHAPTER-10

10.1) Eligible Participants The Group agreed that the requirement of an underlying exposure to trade in OTC foreign exchange market is very difficult to implement in an exchangetraded regime. The international experience in this regard also supports the Group's views. Currently, resident individuals are allowed to hedge their underlying or anticipated exposures up to USD 100,000 in the OTC market without going through complex documentation formalities. Similarly, the SMEs which have direct and indirect exposure to foreign exchange have also been provided flexibility in hedging their exposures without going through the rigors of complex documentation formalities. All other categories of residents in India are permitted to access the OTC markets only if they have an underlying exposure or under the past performance window. As to whether any exposure limit need to be placed on the residents, the participation of residents in currency futures even in countries with capital controls, as is the case with India, has been generally unconstrained. Moreover, residents in the Indian context represent an amorphous group –day traders with limited capital and virtually no underlying exposure to foreign exchange to multinational corporate, relatively unconstrained by margin requirements and with fairly sizeable balance sheet foreign exchange exposures. We may also take note of the fact that in major markets and increasingly in certain emerging markets, management of foreign exchange rate risk in respect of cash flow, balance sheet and economic exposures through forwards and futures involve a dynamic combination of hedging, unhedged and speculative positions with a motive to either reduce hedging cost or gain from exchange rate movements, within a proper risk management framework. This approach needs to be adopted/facilitated in India as well, if the real sector in India are to be able to face competition both at home and abroad vis-à-vis their competitors overseas. In view of the foregoing, the Group recommends that no quantitative restrictions may be imposed on residents to trade in currency futures. This is likely to ensure greater liquidity and wider participation and 43

would be in line with usual policy where liberalization is done first for residents. As regards non residents, the participation may be permitted in a gradual and phased manner. The Group is of the view that at the inception, the participation in the futures market may be restricted to residents alone in the interest of financial stability. This is suggested purely from the perspective of evaluating the robustness of various systems such as surveillance, monitoring, reporting, etc. Once it is established that the systems are working properly, the participation of Foreign Institutional Investors (FIIs) and Non Resident Indians (NRIs), as hedgers, may be considered. Currently, in the OTC market, FIIs have been permitted to hedge their underlying exposures with flexibility for canceling and rebooking only up to 2 per cent of the underlying exposure. This stipulation cannot be replicated in the exchange format. However, it may be noted that allowing the FIIs, without any limits, in the futures market would mark a quantum leap for FIIs since effectively they would be able to dynamically hedge (freely cancel and rebook contracts) their entire portfolios, something that they are not permitted to do in OTC segment. This could possibly result in increase in volatility in the foreign exchange market but at the same time enhance liquidity in the currency futures market. Keeping in mind the current stipulation of participation of FIIs in OTC markets, the Group recommends that once the currency futures market systems established, including execution procedures, risk management framework and surveillance mechanism, FIIs may be allowed as hedgers with suitable position limits on their exposures in the futures market. In order to ensure adherence to the limits stipulated, the FII trades in currency futures may only be routed through the designated Authorized Dealers. Currently, the NRIs are allowed to hedge their exposures to the extent of their underlying exposures. Further, balances in the NRO account are repatriable up to USD 1 million per financial year. The Group, therefore, proposes that in line with the stipulation for FIIs, after establishing the effective functioning of all systems, the NRIs may be allowed to hedge their exposures in the futures market with suitable position limits. The transactions by the NRIs may also be routed through the designated AD banks. Given the current regulations in the OTC market, the categories excluded from the futures market, in the initial stages, are not being disadvantaged.

10.2) Unique Identification Number 44

In order to distinguish across various classes of participants in the futures exchanges, allotment of unique client identification numbers, preferably the PAN, as practiced in futures exchanges in other jurisdictions, may be considered.

10.3) Market Timings The spot markets operate between 9 am – 5 pm every day. The OTC forward market too is bound by similar timings. Hence, the currency futures market may also operate between 9 am – 5 pm on every working day.

10.4)Membership Type The participation in the exchange can be for two reasons, viz., hedging and speculation. While in the equity markets such nomenclature is given as per the underlying transactions based on declaration by the participants, in the context of currency futures, whether the same format may be followed or certain participants can participate only as hedgers need to be resolved. While the former regime gives the flexibility to the participants, enabling participation of the non residents only to hedge their underlying INR exposure makes their participation, by definition, as hedgers only. It is appreciated that the segregation of the participants as hedgers and speculators and fixing differential margin is difficult to administer, as the Exchanges would be depending on declarations. It is also difficult to segregate and monitor the positions since the requirement of underlying is not extended to the futures Exchanges. Further, only non-residents are envisaged as pure hedgers in the market and suitable safeguards have been proposed for their participation in the futures market. Detailed study needs to be undertaken on the feasibility of segmenting the participants and fixing differential margins.

Gold and USD Relationship The U.S. dollar has lost his value against the euro by 50 %. Due to this central banks, large institutions, and investors are starting to move away from the US dollar. The Federal Reserve Bank has started to stimulate the dollar market by lowering interest rates, which how ever consequently reduces the value of the 45

dollar.19 At this point investors at that point are starting to look to alternatives to dollar based stock, bond, and mutual funds markets. “Gold has long been regarded by investors as good protection against depreciation in a currency's value, both internally (i.e. against inflation) and externally (against other currencies). In the latter case, gold is widely considered to be a particularly effective hedge against fluctuations in the US dollar, the world's main trading currency.”20 Historically the correlation between US dollar and gold has been moderate.21 This means that gold is an effective regarding USD risks. Since the dissolution of the Bretton Woods system, the value of the US dollar has fluctuated against the price of gold. The reason why dollar couldn’t be tied to gold any longer was simply due to the U.S. dollars overvaluation against the fixed price of gold. U.S. president Nixon had no other choice but to abandon the Bretton Woods’s system. The dollar was now free. The cost of the Vietnamese War, increased inflation and led to the overvaluation of U.S. dollar as a base currency. This is also indicated in the following graph, which shows a declining dollar until the early 1980’s as gold moves in the opposite direction.

During the mid 1980s the US economy had overcome high inflation and dollar against gold was strong. On Black Monday in 1987 the dollar fell and gold prices gained momentum. The price of gold stayed strong against the dollar with small ups and downs till 1998 Asian stock crisis, whereas South-Korea sells 300 tons of gold against dollar in order to mitigate a foreign exchange rate crisis.23 The value of the dollar then strengthened against the price of gold. In 2003, the price of gold started to move up in respect to the dollar. The confidence in the US economy floundered after the announcement regarding a record high trade deficit. Since then the dollar has been in constant decline against gold. “Gold is not only a potent hedge against risk attached to the US dollar compared with other commodities, but also provides protection when 46

most needed i.e. when the dollar is losing value, with relatively little loss upside during periods of USD appreciation.”

Stock and gold relationship Investors like to have different kinds of comparisons. One of this is the relationship between stock price and gold price. As the graph Long Term Dow/ Gold Ratio shows gold price and stock price have historically had a solid inverse price correlation. The first peak for Dow Jones to gold price 18.4 ensued in a ratio before the Great Depression in 1929 in the USA. Although the price of gold was fixed to $20.67 per ounce at that time, the analysis of the graph shows that uncertainty and crisis situations tend to appreciate the value of gold against stock values. The ratio dropped in 3 years to a low of 2.0, while stocks were still recovering from the Great Depression. Shortly after, the fixed gold price was pegged to $35 per Oz. The cyclical ratio climbs upwards to the peak of Dow in 1966 with a ratio of 27.9 and starts to fall after the re-opening of the London Gold Market in 1968, which meant that gold prices were no more fixed. The ratio drops to a long time low of 3.1 as a result of the stock marker crisis between 1973 and 1974 and gold prices jump from the 1973 average of $97 to the 1974 average of $158, which was due to increasing oil prices, world -wide double digit inflation and the stock crisis. By 1976, gold is making price corrections and stocks adjust to their usual path. The largest gap between stock and gold prices occur in 1980, when gold hits its record price of 875 against the US dollar. After gold price outbursts and after inflation is under control people start believing in stocks again. The ratio did a short upset in 1987, during Black Monday on the stock market. The ratio is 3.6 at that moment. From 1987 till 2000 and 2001, the ratio climbed up till its peak of 43.2, when the dot-com bubble burst and the 2001 events of September 11th. The ratio then started its downfall pattern again

47

. To conclude, according to the relationship between gold prices and stocks as presented in this thesis, during the times of uncertainty in the stock market, gold prices rise, the reason being that investors start to look for alternatives.

48

                                                           CHAPTER-11 Research & methodology: The research has been developed on the basis of the survey. Research is something which gives at the end of the day the analyzed and a concrete result of the report. Concrete means some research which is supported by some authentic proof. In this report we produce a survey which is a questionnaire prepared by the company itself, developed on the basis of responsiveness of the clients towards the commodity & currency segments. Basically a research consists with primary data & secondary data. In this report survey was the primary data, while the encrypted format of those primary data to the excel sheets was the secondary data. To determine the positive/negative responsiveness of the customer we did a survey in combine. We had been provided a questionnaire format which includes various segment or option where the customer has an opportunity to invest where he had already invest their money or looking for investment.

PRIMARY DATA: A Primary data usually been collected on the basis of conducted survey. It is the raw form of the research. As it is a research oriented survey, so the primary data should be mentioned while the report is writing. On the basis of those primary data we will get a collective result, that could be analyzed. In the questionnaire format we set up some reasonable queries about customer responsiveness towards the newest segment of commodity. 1. 2. 3. 4. 5. 6.

If he/she is a Sharekhan customer or not? If yes, is it online or offline account? In which segment does he trade with Sharekhan? Is he/she is aware about the trading product offer by Sharekhan or not? Is he /she interested about commodity & currency? what is the time that they prefer to take the appointments? 49

So, the customer response to this survey we saw that they were not aware about these upcoming segments. Their general awareness about Equity cash or Equity Future & Option is very high while about commodity & currency their knowledge base is very poor. It came in figure when we put them into numerical. The questionnaire which was provided to us for survey purpose, is given below: Questionnaire for a study on  “Responsiveness of clients to the newest segment Commodity & Currency Derivative Trading”   a) Are you a Client of Sharekhan? Ans. 1) Yes □ Will think later

2) No □

□

3) Thinking About it

□

4) 

b) If yes, then Online or Offline with Customer ID/Client Code? Ans. c) In which Segment you trade with Sharekhan? □

Ans.  1) Equity Cash Commodity □ 4) Currency

2) Equity F & O

□

3) 

□

d) Are you aware about the following trading products offered by  Sharekhan? □

Ans. 1) Equity Cash □ 4) Currency

2) Equity F & O

□

3) Commodity

□

e) Which of the segments you know or aware of? Ans.  1) Equity Cash Commodity □ 4) Currency

□

2) Equity F & O

□

f) Which of the segments you would like to know about?

50

□

3) 

Ans.  1) Equity Cash Commodity □

□

2) Equity F & O

□

3) 

□

4) Currency

g) Are you interested to trade in Commodity or Currency Futures? Ans.  1) Yes □ 2) No 4) Will think later □

□

3) Thinking About it

□

h) What will be your convenient time to meet? Ans. 

1) Morning (10­12 AM)

3) Evening (04­06 PM)

□

2) Afternoon (12­04 PM)

□

□

4) After 6 PM (Specify)

□

SEONDARY DATA: Secondary data means when those primary data has been put in a encrypted format so that those data can be framed in Excel sheet. In excel sheet we can do some graphical presentation to obtain the percentage of population aware about Equity Cash or Equity Future & Option or commodity or currency. We put them in Excel sheet from word document. The secondary data has been provided in a table format given below. Name : Affiliation : Email ID : Tel/Mobile No : Location of Training : Branch : Sl. No.

Name

Clien t/No n Clien t

On lin e/ Off lin e

Client Code

Existin g Segmen t

Aware ness of Tradin g Produ cts

Aware ness of segme nts

Furthe r segme nt interes t

Interest on Commo dity/Cur rency Futures

Appoi ntment Given

Remar ks

1

Purabi Chakraborty Ms. Anjum Ara

no

no

n.a. IN300513 17212876

Equity cash Equity cash

curren cy Equity cash

After 6 p.m. After 6 p.m.

n.i

Anindita Majumdar

no

On lin e no

Equity Cash Equity cash

no

yes

Equity Cash Equity cash

na

n.a.

n.a.

Equity cash

Equity cash

no

After 6 p.m.

n.i

2 3

51

no

n.i

4

yes

yes 297998

5

Tridib kumar Bala A. Alam

yes

yes n.a

6

Sumita Kedia

yes

yes 45135

7

Ajay kr. Agarwal

yes

yes 505530

8

Joydeep Ghosh

yes

yes n.a

9

Sankar Pramanik

yes

yes n.a

10

Mithali Roy Chowdhury Jollybasu Ghosh Indra Deo Garg

yes

no

n.a

yes

no

n.a

no

no

n.a

yes

yes n.a

14

Runa Roychoudhury Amit Kumar

yes

yes 51617

15

Sampa Baruah

yes

yes 185466

16

Achintya Bain

yes

yes 365333

17

no

no

18

Subrata Mukherjee Atanu Paul

yes

yes n.a

19

Shivtosh Nath

yes

yes n.a

20

Saket Agarwal

yes

yes 141223

21

Monoj Kr. Sharma Santanu Chatterjee

yes

yes n.a

no

no

23

Kunal Basu

no

24

Samir kr. Basu

no

11 12 13

22

Equity cash Equity cash

Equity Cash Equity cash

Equity cash Equity cash

comm odity Equity cash

no

commo dity Equity cash

Equity cash Equity cash

comm odity Equity cash

Equity cash comm odity

no

Equity cash Equity cash

Equity cash Equity cash

Equity cash Equity cash

comm odity comm odity

no

Equity cash Equity cash n.a.

Equity cash Equity cash n.a

Equity cash Equity cash Equity cash

Comm odity comm odity curren cy

no

Equity cash Equity cash

Equity cash Equity cash

Equity cash Equity cash

comm odity comm odity

no

Equity cash Equity cash

Equity cash Equity cash

Equity cash Equity cash

comm odity Equity cash

yes

n.a

n.a Equity F&O Equity cash

Equity cash Equity F&O comm odity

no

Equity F&O Equity cash

Equity cash Equity F&O Equity cash

Equity cash comm odity Equity cash

Equity cash comm odity Equity cash

Equity F&O comm odity comm odity

no

n.a.

Equity cash commo dity n.a

no

n.a.

n.a

Equity cash

Equity cash

Equity cash

no

no

n.a.

n.a

Equity cash

Equity cash

Equity F&O

no

n.a

52

no

no

no

no no

no

no

no no

yes no

After 6 p.m After 12-04 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 12-04 p.m After 6 p.m. After 12-04 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 12-04 p.m. After 12-04

n.i n.i n.i n.i n.i n.i. n.i n.i n.i. n.i n.i. n.i n.i n.i n.i n.i n.i i n.i n.i n.i.

25

Rama Batra

no

no

na

n.a

Equity cash Equity F&O Equity cash Equity cash Equity cash Equity cash

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash

Equity F&O Equity F&O Equity F&O Equity cash Equity F&O Equity F&O

no

26

Kantra Tewari

no

no

n.a.

n.a

27

Amit Sengupta

no

no

n.a.

n.a

28

J. Mitra

no

no

na

n.a

29

Satadal Saha

no

no

na

n.a

30

Mahendra Chowdhury

no

no

na

n.a

31

no

no

n.a.

no

no

n.a.

Equity cash n.a

no

no

n.a.

n.a

34

Animesh Nashkar Gopi Krishna Rathi Sanjib Kr. Singh Sudipta Mitra

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash

Equity F&O Equity F&O comm odity comm odity comm odity comm odity Equity cash

no

yes

no

n.a.

35

N.K. Nandi

no

no

n.a.

Equity cash n.a.

36

Kalyan kr. Ghosh Om Prakash Chamaria

no

no

n.a.

n.a

no

no

n.a.

n.a

38

Ajit kr. Singh

yes

no

n.a

Equity cash Equity cash Equity cash

Equity cash Equity cash Equity cash

Equity cash Equity cash Equity cash

comm odity comm odity comm odity

no

39

Debasish Mallick Debasish Chatterjee

yes

no

n.a.

yes

no

n.a.

41

Harendra nath Sarkar

no

no

n.a.

n.a

Equity cash

Equity cash

Equity F&O

no

42

Vinod Saha

no

no

n.a.

n.a

no

n.a.

n.a.

Equity cash Equity cash

Equity F&O comm odity

no

no

Equity cash Equity cash

43

Ajit Pandey

44

Swarup Biswas

no

no

n.a.

n.a

Equity cash

Equity F&O

comm odity

no

45

Manindranath Bag

no

no

n.a

n.a

Equity cash

Equity cash

Equity F&O

no

46

Debdas Khanna

No

No

Na

n.a

Equity

Equity

Comm

No

32 33

37

40

53

no no no no no

no yes yes no no no

no no

no

p.m. After 6 p.m. After 6 p.m After 6 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 6 p.m. After 6 p.m. After 6 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 6 p.m. After 6 p.m. After 12-04 p.m. After 12-04 p.m. After 6 p.m. After 12-04 p.m. After 12-04 p.m. After 04-06 p.m. 4-6

n.i n.i n.i n.i n.i n.i. n.i n.i. I I n.i n.i n.i n.i n.i n.i n.i n.i n.i n.i n.i NI

47

Nasiruddin Ansari Aniruddha Bhattacharya Ramesh Ch. Sharma Tapan kr. Banerjee Kalyani Panda

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

53

Uma shankar Agarwal Puspa Agarwal

Na

Na

Na

Na

54

Mira Beriwal

Na

Na

Na

Na

55

Rabi Kiran Bala

Na

Na

Na

Na

56

Ram Chandra singh Goutam Biswas

Na

Na

Na

Na

Na

Na

Na

Na

Dipak Mukherjee Goutam Mukherjee Bhaskar Sengupta Asit Baran Chatterjee Sanjay Sarkar

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

65

Tapan Bhattacharya Tapan Chatterjee Sadhan Patra

Na

Na

Na

Na

66

Maitri Sen

Na

Na

Na

Na

67

Naba kr Shaw

Na

Na

Na

Na

68

Tapti Mondal

Na

Na

Na

Na

69

Gopi kishan Rathi Surendra Das

Na

Na

Na

Na

Na

Na

Na

Na

Sagarmal Agarwal

Na

Na

Na

Na

48 49 50 51 52

57 58 59 60 61 62 63 64

70 71

cash Equtiy cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Na Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash 54

cash Equity cash Equity cash Equity cash Equity cash Equity F&O Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash

odity Equity F&O Comm odity Equity F&O Equity F&O Comm odtiy Equity cash Equity cash Equity cash Comm odity Equity F&O Comm odity Curren cy Comm odity Equity cash Equity F&o Equity cash Equity F&O Equity F&O Equity F&O Equity F&O Comm odity Equity cash Equity cash Comm odity Comm odity

No

12-4

NI

No

12-4

NI

No

10-12

NI

No

4-6

NI

No

4-6

NI

No

4-6

Ni

No

4-6

NI

No

4-6

NI

No

4-6

Ni

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

12-4

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

72

Surjit Chandra

Na

Na

Na

Na

73

Deb kr Mukherjee R.L. Das

Na

Na

Na

Na

Na

Na

Na

Na

Aparna Bhattacharya Asit Samanta

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

80

Subhasis Chatterjee Barunava choudhury Kalyan Dutta Roy Basudeb Adak

Na

Na

Na

Na

81

Amitabh Guha

Na

Na

Na

Na

82

Bijoy dutta Ray

Na

Na

Na

Na

83

Pranab Mukherjee Mohindra singh

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

92

Subhabrata dutta Uma kant sharma Radha shyam Agarwal Jyoti ranjan Banik Ram kishor Gupta Deori nandan Agarwal Subhojit Roychudhury Kamal Sarkar

Na

Na

Na

Na

93

Kripa nath Das

Na

Na

Na

Na

94

Mrityunjoy Das

Na

Na

Na

Na

95

Na

Na

Na

Na

96

Sushil kanti Paul Subhasis Paul

Na

Na

Na

Na

97

Swapan kr. Das

Na

Na

Na

Na

74 75 76 77 78 79

84 85 86 87 88 89 90 91

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity 55

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity

Equity F&O Comm odtiy Equity F&O Equity F&O Comm odity Equity F&O Comm odity Comm odity Comm odity Equity F&O Equity F&O Equity F&O Comm odity Equity F&O Comm odity Equity F&O Curren cy Comm odity Comm odity Equity F&O Comm odity Equity F&O Equity F&O Comm odity Equity F&O Comm

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

NO

4-6

NI

No

4-6

NI

No

4-6

NI

NO

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

NO

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

98

Mrityunjoy Ghosh Sahadeb Majhi

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

102

Debabarata Bhattacharya Chanchal Sarkar Vinod Shah

Na

Na

Na

Na

103

Bharat Jaiswal

Na

Na

Na

Na

104

Pradip Kapoor

Na

Na

Na

Na

105

Sriram Bajoria

Na

Na

Na

Na

106

M.K. Markand

Na

Na

Na

Na

107

Swapan Biswas

Na

Na

Na

NA

108

Dinkar Betai

Na

Na

Na

Na

109

Na

Na

Na

Na

Na

Na

Na

Na

111

Chandan Bhattacharya Ashok Chakraborty Prosit Ghosh

Na

Na

Na

Na

112

Ajit Pandey

Na

Na

Na

Na

113

Na

Na

Na

Na

114

Subhas Mukherjee Tapan Kr. Basu

Na

Na

Na

Na

115

Subhas Agarwal Na

Na

Na

Na

116

Pravin Agarwal

Na

Na

Na

Na

117

Ram niwas Agarwal Asadullah

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

120

Sisir kr. Banerjee Anita saha

Yes

Na

na

121

Chandrajit Saha

Yes

Na

Na

122

Pankaj Tebriwala

Na

Na

Na

Equity cash Equity cash Na

99 100 101

110

118 119

56

cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash

cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity F&O Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity F&O

odity Equity F&O Comm odity Equity F&O Comm odity Curren cy Equity F&O Comm odity Comm odity Comm odity Comm odity Equity F&O Comm odity Equity cash Comm odity Equity F&O Comm odity Equity F&O Comm odity Equity F&O Comm odity Comm odity Comm odity Equity F&O Equity F&O Comm odity

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

Na

4-6

NI

Na

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

10-12

NI

No

4-6

NI

No

10-12

NI

123

Kanika Dutta

Yes

Na

Na

124

Sahana Ali

Yes

Na

Na

125

Na

Na

Na

126

Manju Devi Singhania Mina Guha

Equity cash Equity cash Na

Na

Na

Na

Na

127

Arobindo Sen

Na

Na

Na

Na

128

Sant Kaskar

Na

Na

Na

Na

Equity cash Equity cash Equity cash Equity cash Equity cash Na

129

Vikas Prasad Parasramka Hansha Goenka

Na

Na

Na

Na

Na

Yes

Na

Na

Yes

Na

Na

132

Rina Chakraborty Suman Jana

Yes

Na

Na

133

Surinder Kumar

Yes

Na

Na

134

Babu Paul

Yes

Na

Na

135

Sangita Chaudhury Mukesh Damani Montu Dutta

Yes

Na

Na

Yes

Na

Na

Yes

Na

Na

Soumya Shankar Mitra Prodyot Ranjan

Yes

Na

Na

Yes

Na

Na

Srotaswati Na Panda Kusum Agarwal Yes

Na

Na

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Na

Na

Na

Yes

Na

Na

143

Shiv shankar Agarwal Rupak Roy

Yes

Na

Na

145

Ashraful Islam

Yes

Na

Na

146

Aditi Barh

Yes

Na

Na

147

Tapas Banerjee

Yes

Na

Na

148

Ramprit Sharma Yes

Na

Na

149

Mr. Sudarshan

Na

Na

Equity cash Equity F&O Equity cash Equity cash Equity cash Equity cash Equity F&O Equity F&O Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity F&O Equity

130 131

136 137 138 139 140 141 142

Na

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Na 57

Equity F&O Equity F&O Equity F&O Equity F&O Equity F&O Equity cash Equity cash Equity F&O Equity F&O Equity F&O Equity F&O Equity cash Equity cash Equity F&O Equity cash Equity cash Equity cash Equity F&O Equity F&O Equity F&O Equity F&O Equity F&O Equity F&O Equity cash Equity F&O Equity

Comm odity Comm odity Comm odity Comm odity Curren cy Equity cash Comm odity Comm odity Comm odity Equity F&O Curren cy Equity F&O Equity F&O Curren cy Equity F&O Equity F&O Equity F&O Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Equity F&O Comm odity Comm

No

4-6

NI

No

10-12

NI

NO

4-6

NI

No

10-12

NI

NO

10-12

NI

No

10-12

NI

No

4-6

NI

Na

4-6

NI

No

4-6

NI

No

10-12

NI

No

10-12

NI

No

10-12

NI

No

10-12

NI

No

4-6

NI

No

4-6

NI

No

10-12

NI

No

10-12

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

10-12

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

150

Leela Sharma

Yes

Na

Na

151

Shankar Prasad Das Syeed Aseef Iqbal Amal Kanti Chakraborty Simanta Chatterjee Somen Chatterjee Tapan kr. Chatterjee Tarun kr. Chatterjee Amal Kr. Chaoudhury Ahin Choudhury Amalendu Choudhury Aniruddha Choudhury Arun Choudhury Vijay Kr. Chirimar Anil kr. Das

Yes

Na

Na

Yes

Na

Na

Na

Na

Na

Equity cash Equity cash Equity cash Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Yes

Na

Na

Na

Na

Na

Equity cash Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

166

Jai narayan Shaw Amit Goswami

Na

Na

Na

Na

167

Kamal Ahmed

Na

Na

Na

Na

168

Na

Na

Na

Na

Na

Na

Na

Na

170

Shrigopal Agarwal Tanushree Sarkar & Dilip Paul Santanu Roy

Na

Na

Na

Na

171

Khokon Rong

Na

Na

Na

Na

172

Sujit Chatterjee

Na

Na

Na

Na

173

Raghunath Sen

Na

Na

Na

Na

174

Ranjan

Na

Na

Na

Na

152 153 154 155 156 157 158 159 160 161 162 163 164 165

169

58

F&O Equity cash Equity cash Equity cash Na Equity cash Equity cash Equity cash Equity F&O Equity cash Equity cash Equity F&O Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash

cash Equity F&O Equity F&O Equity cash Equity cash Equity F&O Equity F&O Equity cash Comm odity Equity F&O Equity F&O Equity cash Equity cash Equity F&O Equity cash Equity cash Equity F&O Equity F&O Equity F&O Equity cash Equity cash

odity Curren cy Comm odity Equity F&O Comm odity Comm odity Equity F&O Equity F&O Curren cy Comm odity Equity F&O Curren cy Equity F&O Equity cash Equity cash Equity cash Curren cy Equity F&O Comm odity Equity F&O Equity F&O

Equity cash Equity cash Equity cash Equity cash Equity

Equity cash Comm odity Equity cash Equity F&O Equity

Equity F&O Equity F&O Equity F&O Comm odity Equity

No

4-6

NI

No

4-6

NI

No

4-6

NI

Na

4-6

NI

No

4-6

NI

No

10-12

NI

No

10-12

NI

No

10-12

NI

No

4-6

NI

No

4-6

NI

No

10-12

NI

No

10-12

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

4-6

NI

No

12-4

NI

No

4-6

NI

No

12-4

NI

No

10-12

NI

No

10-12

NI

No

10-12

NI

No

4-6

NI

No

10-12

NI

No

4-6

NI

175

Chakraborty Ratna Mitra

cash Equity cash Equity cash Equity cash Equity cash

cash Equity cash Equity cash Equity cash Equity cash

F&O Comm odity Comm odtiy Comm odity Comm odity

Equity cash Equity cash Equity cash

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash

Na

Na

Na

Na

Arun kr. Rastogi Chandan Choudhury Debudutt Khetawal

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

180

Mahasweta Bhattacharya Soumen Saha

Na

Na

Na

Na

181

Navin Puri

Yes

Na

Na

Equity cash

182

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

189

S.N. Bhiwaniwals Benu gopal Menon Hirak Jyoti Mukherjee Kingshuk Banerjee Narayan Das Mohta Kalyan Mukherjee Anupam Chatterjee Mihir kr. Saha

Na

Na

Na

Na

190

Yawar Gazi

Na

Na

Na

Na

191

Shakti pada Acharya Goutam Majumdar Abhishek Choudhury Tapas Chakraborty Ranendra kr. Sen Soumitra Kundu Rabindra Ch. Dutta Shraboni Banerjee

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Equity cash Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Na

Equity cash Equity cash

176 177 178 179

183 184 185 186 187 188

192 193 194 195 196 197 198

59

No

12-4

NI

No

12-4

NI

No

10-12

NI

No

4-6

NI

Comm odity Comm odity Comm odity

No

12-4

NI

No

12-4

NI

No

4-6

Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Comm odity Equity cash

No

4-6

New custom er NI

No

12-4

NI

No

12-4

NI

No

4-6

NI

No

4-6

NI

No

10-12

NI

No

4-6

NI

No

12-4

NI

No

12-4

NI

No

12-4

NI

No

12-4

NI

No

4-6

NI

No

12-4

NI

No

4-6

NI

No

4-6

NI

No

12-4

NI

No

12-4

NI

199

Bipul Saha

Na

Na

Na

Na

200

Ajay kr. Banerjee

Na

Na

Na

Na

Equity cash Equity cash

Equity cash Equity cash

Comm odity Equity cash

No

12-4

NI

No

4-6

NI

The above table shows customer response towards the market. The above sample size of 200 gives a small practical picture of the investors response to the market.

DATA INTERPRTATION: We put these data in excel sheet, as we see that the project what we conduct is not assist to use some statistical tools like hypothesis testing or regression analysis by using spss software, hence it is better to use some graphical form of the survey report.

CUSTOMER RESPONSE TO THE EXISTENCE    SEGMENT:      Customer response to existence segments in this particular area is absolutely shocking. Out of 200 population only 46 invest in equity cash, 1 in equity F & O, 2 in commodity, no one in currency and rest 151 people is not interested at all to invest in the current market, though the market is growing. existing segment NA.

160 140 120 100 80 60

existing segment equity cash

40 20 0 existing segment

equity F & O

commodity

currency

equity cash equity F & O

commodity

currency

NA.

2

0

151

46

1

60

The above picture shows that 23 % people are interested in equity cash, .05 % in Equity F & O, 1 % in commodity & rest 75.5 % are interested in other segment like, FD or Insurance.

Awareness of trading product: If we see about the awareness of the trading product offer by Sharekhan ltd. itself, we will see out of 200, 181 people was aware about Equity cash, 9 people was aware about Equity F & O, only 1 in commodity, no one in currency and only about 9 people we have no news. In a pie chart I have shown the percentage of their awareness.

0%

AWARENESS OF TRADING PRODUCT

1% 4%

5% equity cash equity F & O commodity currency NA. 90%

     AWARENESS of SEGMENTS:   If we see the about the awareness of the population to segments we will see that out of 200 population, 164 are aware about equity cash only, which means they are not aware about the market at all. 32 was aware about Equity F & O and rest 4 people was aware about commodity a little bit only. So the graph if we observe we see

61

AWARENESS of SEGMENTS

NA.

0

currency

0

commodity

4

equity F & O

AWARENESS of SEGMENTS 32

equity cash

164 0

50

100

150

200

We see that 82 % in Equity cash, 16% in equity F & O, & 2 % in commodity has been find out.        

FURTHER SEGMENTS INTEREST: This time the related figure has shown a different direction, a different response of the customer towards showing interest in other segments. Out of 200 population only 11 in equity cash, 63 in equity F & O, 114 in commodity and rest 12 people in currency has shown their awareness. In graphical presentation I have shown their status. FURTHER SEGMENTS INTEREST 114

120 100 80

63

FURTHER SEGMENTS INTEREST

60 40 20

12

11

0

0 equity cash

equity F & O

commodity

currency

62

NA.

FURTHER SEGMENTS INTEREST

6%

0%

6% 32%

equity cash equity F & O commodity currency NA.

56%

The above table has shown the percentage position of the investment opportunity of the customer.

INTERESTED IN COMMODITY & CURRENCY: Though we have seen a lot of huge response from the customer about awareness in commodity and currency a little bit. But about interest in commodity and currency we got a heartbreaking response only 4 out of 200 population gave a little response to listen about commodity. And rest 98 % was not interested at all. In below in a pie chart I have described it. INTERESTED IN COMMODITY & CURRENCY

2%

YES NO

98%

                             findings: 63

To assess the customer responsiveness towards investment in commodity & Currency trading we have done a survey. We have provided a questionnaire from Mumbai head office. Then we modified the format of that questionnaire. There we met lot people who regularly invest in the market or keep in touch with the market condition. Some of those people conversation I have put in my project report Customer 1: Name: Mr. N. K. Nandi Address: Jadavpur, Kolkata. Age: 65-66 years. Profession: Ex-Investor. Mr. Nandi had been involved in the share market more than 30 years. He had invested regularly in the market. But he hasn’t heard ever investment in commodity or currency trading. So we introduce himself about this new segment. He understood, he confirm us to invest in these two segment later. His Son is also a regular investors in the market. Customer 2 : Name: Jolly Basu Ghosh Add: Tollygunj. Kolkata. Age: 31 years. Profession: housewife. Mrs. Ghosh has invested in the market since last 5-6 years. She is an existing customer of SHAREKHAN LTD but it is a local franchisee. But she hasn’t heard about commodity & currency trading. So we tell her about this matter. She was convinced about it. She assured us that she will invest in the month of September. Customer 3: Name: Office Add:

Debasish Chatterjee Nilpur Marketing Pvt. Ltd. Dalhausi Square, Kolkata. Age: 36 years Profession: Chief Operating Officer of the company.

Mr. Chatterjee has not get in touch with the market last 1 year. He is an existing customer of Sharekhan ltd. He has some shares of TATA TELE 64

SERVICES for a long time, he hold those shares. At that time the prices of those share was around Rs. 550. Mr. Chatterjee always invested in equity cash, nothing else. He never invests in commodity or currency either. So we told him about it. He asked for a broacher. We gave him that. And he asked for some times to analysis all those factors. Customer 4: Name: Debasish Mallick. Add: Ballygaunge Circular Road, Kolkata. Age: 40 years. Profession: Tax Officer. When I took his appointment in the telephone, the response from his side was quite different. He had not asked me about the type of investment or where to invest like others did. It seemed to me that he was waiting for some investment offer from any broking farm and I am the first person who catch him at time. When we met him, told him about our product, he asked us some question: 1. How I invest? In which particular commodity do you prefer to invest & why? 2. How it is profitable to me? Do I will get my profit in cash or can I en cash my profit into liquidity? 3. Do I get any tax advantage while invest in commodity or in currency? This sort of question we faced while in our conversation. I realize that commodity is completely a new segment and people become more conscious, conservative and serious in investing in a new segment rather in those segments where he is familiar. But we appreciate his thinking power and his market knowledge. He hasn’t lost his temper for a second, while we saw in the others case.

Customer 5: Name: Add:

Arun Rasthogi. Pretoria Street, Kolkata. 65

Age: 52 years. Profession: Officer. Mr. Arun Rasthogi has been investing in the market since 1998. In his voice we found out that he is not quite surprise for the major downfall of economy last year. But he is hopeful that the market will be grow again and will reach that position where it has lost. He has tracking the market regularly. But he hasn’t decide to invest in commodity right now. So during the project I have learnt a lot of their investment thought & motivation. They prefer the market will grow again while they themselves made the obstacles. They are waiting when the market will reach at the top level, they will start to invest. While at time when I am writing this report UPA govt. has already taking the charge of our country. Mr. Pranab Mukherjee becomes our Finance Minister. So it is a factor of reason that the market is smoothly growing. This is the right time to parking their money, not only in commodity or in currency, but also in equity, mutual fund or insurance.

CONCLUSION: If we see the record of last 2 years of commodity movement in the market, we will see that prior to economic downfall when the market was getting the ultimate speed, Sensex was moving around 18000-18400 points, commodity & currency was also gave the same response. But after the eco-quack and its aftershock has completely demolished their i.e. investor’s confidence for an uncertain time. Though the market is growing smartly as maintain the theoretical concept but the investors participation has been down, their response towards the market is so pathetic to explain. For an example the hypothesis testing that I did, approved that customer responsiveness towards investment object is completely nullifying. Most of the people is so scare to invest, that many of them just cut their phone line while we were going to peach them about commodity & currency derivative trading. Many of them not ready to listen the term Investment. It became like an nightmare for them. So for the common people who has lost their money. But for the HNI who are literally true investors, can’t 66

find out any logical reason why they are stay back. In this paper we integrated two streams of research in order to improve the insight into the viability of commodity futures contracts. First, we elaborated on the non-subject level that is concerned with the technical aspects of the commodity and the contract. It appears that hedging effectiveness has an important influence on volume. The market is taking not only basis risk into account, but also market depth risk, the latter seems particular important in small commodity markets as well as new futures markets. As a result, measuring the hedging effectiveness with an extended version of the Ederington measure, taking market depth risk into account, yielded in a stronger relationship between hedging performance and volume than when market depth risk was not taken into account. Second, we elaborated on the subject-hedger level that is concerned with owner managers’ characteristics that influence their use of futures contracts. In contrast to previous research regarding the use of futures contracts by managers of large 28 cooperation, we acknowledge the fact that our owner-managers operate firms where all functional departments are combined. Perceptions and psychometric constructs influence the owner-manager’s decision process. In our empirical study it was found that the owner-manager’s decision unit, owner-manager’s level of market orientation and entrepreneurial freedom were influencing (at least for a particular segment of owner managers) the use of futures contracts, something not found in previous research. Owner managers are not homogenous regarding the factors influencing their use of futures. For different segments, different factors were found such as the debt-to-asset ratio, risk attitude and perceived risk exposure.

RECOMMENDATION: One of the major indicator in Indian economy and is SENSEX. Foreign investors like FIIs FDIs in Indian economy has made it very strong participator. But last year the global economic crisis did a major shock shake the entire world economy that still alive in the investors’ mind, for them it is like a nightmare. But we hope after every darkness over there will be a beautiful morning is waiting for us. But still don’t know when that moment will come to us. But right now some important initiative steps we should take to bring back 67

the confidence of investors as well as market. No doubt the market is growing right now, especially after election result. But most of those investors must be aware about that making investment in market is not like preparing food and grab it. Investment in the market is an analytical object. While without study or analyze it making investment is not a right decision. Indian market is high volatile by nature of investment. Investment in such kinds of market is very risky. When this kind of market is growing, first of all the big & blue chip companies share value goes up, then the middle size company and finally the small size companies share goes up. It is a slow but steady process. For an example of building a pyramid, which consist with millions of bricks, cements, sands etc. It takes time to be completed. But when it has been completed it becomes one of the seventh wonder. But if an earth quack happens the entire pyramid will annihilate and collapsed with its glory and fame. Similarly if one of the foreign company collapsed that shocking wave will also affect the domestic company and it was happened in India also. But there is a good news that Indian economy is growing. The share prices is increasing. So overall it’s a good time for investment. They have numerous options as reason of investment. In brief I will explain.

RECOMMENDATION FOR INVESTORS: • Investor should opt for long term investment. Because, Short term investment will not give constant high return, while long tem investment is a reasonable option for investment. • Commodity & Currency market is an upcoming market. As I say that this market is low volatility by nature. Because, this market does not fluctuate regularly, specially, investment in GOLD is always give steady return and Because of it’s trustworthiness. • Keep trust on the voice of market expert, they always give correct advice. • Keep in touch with market regularly.

RECOMMENDATION FOR COMPANIES: I have few words for the company itself as my own recommendation. Though I know there lots of expert is sitting there regularly and trade 68

on behalf their customers as a guide. Lots of responsibilities has been imposed on their shoulder. Some of those recommendation should be like as below I have written: a. Company has recently started online trading system, which absolutely unknown to many customer around the city, so make them aware about it is necessary. b. During the training session I observe only 5 or 6 person came to the office regularly and trade by themselves and rest of those customer do the same thing through telecommunication. I want all those people should come regularly into the office & learn from those expert about the trading process. I mean to say that our customer should be independently educated about the trading process and trade time, it is crucial as well as important also. c. Company should provide proper guidance to their customer and let them allow to gather knowledge from different websites and books. d. Company should arrange some seminar for the investors, like it is happening in every management colleges today. e. Company should publish their own magazine as investor’s guide, at least to helps them.

REFERENCE WEBSITES: 1. 2. 3. 4. 5. 6. 7. 8. 9.

www.mcxindia.com www.ncdex.com www.sharekhan.com www.nmce.com www.indiamart.com www.fxstreet.com www.forexindia.com www.bloomberg.com www.cnnmoney.com. 69

MAGAZINE & BOOKS : 1. 2. 3.

SHAREKHAN COMMODITES DIGEST. COMMODITY MAGAZINE. SECURITY ANALYSIS & PORTFOLIO MANAGEMENT BY PRASANNA CHANDRA. 4. SHAREKHAN COMMODITIES DIGEST. 5. SECURITIES MARKET & PRODUCTS by TAXMAN PUBLICATION. 6. RESEARCH METHODOLOGY BY DIPAK KUMAR BHATTACHARYA.

70