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Vipul

Vipul

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Published by heena572003

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Published by: heena572003 on Aug 30, 2012
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08/30/2012

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Introduction to the Project
Derivatives have vital role to play in enhancingshareholder value by ensuring access to the cheapest sourceof funds. Active use of derivatives instruments allows theoverall business risk profile to be modified, thereby providingthe potential to improve earning quality by offsettingundesired risk.Under my project report I have studied varioustrends that comes in the way of Derivatives Market becauseimpression is usually given that losses arose fromderivatives are extremely complex and difficult tounderstand financial strategies. So after interviewing withdifferent brokers, investors and dealers I have tried to give asolution to these complexities.I also find out that what would be the future of derivative market in India on the basis of interviews andobservations of brokers, dealers and investors regardingfuture. I have find out that derivatives can be indeed usedsafely and successfully provided a sensible control andmanagement strategy is established and executed in spite of that more awareness should be done and technical expertiseknowledge should be more expanded.
 
Objectives of the Project
 The main Objectives of my final project report are asfollows:-
 To study the various trends that comes in the way of derivatives market.
 To find out that what would be the future and marketpotential of derivatives market in India.
 To know the awareness & familiarity of investors,dealers and brokers hold regarding derivative markets.
 To know the experience of dealers, investors andbrokers with derivatives till date
 To get knowledge about shortcomings in Indianderivative market.
 
INTRODUCTION TO THE STOCK EXCHANGE
A
Stock exchange
is acorporationormutual organization  which provides "trading" facilities forstock brokersandtraders, to tradestocksand othersecurities. Stock exchanges also provide facilities for the issue andredemption of securities as well as other financialinstruments and capital events including the payment of income anddividends. The securities traded on a stockexchange include:sharesissued by companies,unit trusts  and other pooled investment products andbonds. To be ableto trade a security on a certain stock exchange, it has to belisted there. Usually there is a central location at least forrecord keeping, but trade is less and less linked to such aphysical place, as modern markets areelectronic networks,which gives those advantages of speed and cost otransactions. Trade on an exchange is by members only. Theinitial offering of stocks and bonds toinvestorsis bydefinition done in theprimary marketand subsequenttrading is done in thesecondary market. A stock exchange isoften the most important component of astock market.Supply and demand in stock markets is driven by variousfactors which, as in allfree markets, affect the price of stocks. There is usually no compulsion to issue stock via the stockexchange itself, nor must stock be subsequently traded onthe exchange. Such trading is said to be off exchange orover-the-counter. This is the usual way thatbondsare traded. Increasingly, stock exchanges are part of a globalmarket for securities.
The Securities Contract (Regulation) Act 1956 definesStock Exchange as:
 A body of individuals whether incorporated or not,constituted for the purpose of assisting, regulating or controlling the business of buying, selling & dealing insecurities.” 

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