A PROJECT

ON

RISK & VOLATILITY OF EQUITY MARKET”

AT

IDBI CAPITAL MARKET SERVICES LTD.

BHUBANESHWAR
( Submitted in partial fulfilment of the requirement of
Bachelor of Business Administration programme under Utkal University)

PREPARED BY
SHAGUN AGARWAL
ROLL NO.-66317UT08002
BATCH 2008-11

Under the guidance of

Faculty guide CORPORATE GUIDE

MRS.. GAYATRI SINGH MR. MANOJ K SAMAL
Lect. ASBM INSTITUTE OF BBA (BRANCH IN CHARGE,IDBI
CAPITAL MARKET SERVICES LTD.)
 TO WHOM IT MAY CONCERN

This is to certify that Mr. Shagun Agarwal,Roll No.66317UT08002,a student of 2008-2011

Session, has undergone his Summer Training Programme at IDBI CAPITAL MARKET
SERVICES LTD.,BHUBANESWAR under my guidance. This is for the partial fulfilment of
BBA programme at ASBM INSTITUTE OF BBA and is a work of his own.

I recommend the same may be accepted for the above purpose.

Prof. Gayatri Singh

ASBM INSTITUTE OF BBA BHUBANESHWAR
IDBI Capital Market Services
Ltd.

TO WHOM IT MAY CONCERN

This is to certify that Mr. Shagun Agarwal, a 5th Semester student of ASBM Institute of Bba ,
Bhubaneswar has undergone 1 months summer training in our organization. His Project title is
“Risk & Volatility of Equity Market”

He has successfully completed the training and during this his conduct was found to be
satisfactory from all side.

I wish him all the success in life.

MR.MANOJ KUMAR SAMAL

BRANCH IN-CHARGE
IDBI CAPITAL MARKET SERVICES LTD.
BBSR
 Declaration

I hereby declare that the project entitled “Risk & Volatility of Equity Market”
submitted by me in partial fulfillment of BBA from ASBM Institute of ,Bba
Bhubaneshwar & has not been submitted to any institute or published anywhere
before.

This is the work which is done by me under the guidance and supervision of my
company guide Mr. Manoj Kumar Samal, Branch in-charge, IDBI Capital
Market Services Ltd., Bhubaneswar Branch.

Shagun Agarwal
 Acknowledgement
It is my proud privilege to express my gratitude to the several people who have helped me
directly or indirectly to conduct this project work.

I do hereby take this opportunity to acknowledge with my sincere and deep sense of reverence to
Mr.Manoj kumar Samal, Branch in-charge, IDBI Capital Market Services Ltd.,
Bhubaneswar under whom I completed my training. He spared his valuable time and paid more
due attention to my work.

I am grateful to Prof. Biswaranjan Parida chief Co-ordinator (Summer intership

programme) for giving me an opportunity to train in IDBI Capital Market Services Ltd.,
Bhubaneswar.

I am greatly indebted and will remain ever obliged to my concerned faculty Prof. Gayatri
Singh, for guiding me to complete the project work.

I would also like to extend my sincere thanks to the entire branch of IDBI Capital Market
Services Ltd., for extending necessary help to me when required.

Last but not least I would like to thank my near and dear one who has helped me during my
project.
Chapter-1

Introduction

1.1 Review of Literature

1.2 Meaning of the study
1.3 Objectives of the study
1.4 Significance of the study
1.5 Methodology
1.6 Sources of data collection
1.7 Limitation of the study

Chapter-2

Company Profile

2.1 Brief history of the company

2.2 Vision, Mission and objective of the company
2.3 Organization structure & style of work of company

Chapter- 3

Research Methodology
3.1 Sampling Design
3.2 Methods of data collection
3.3 Tool or technique used

Chapter-4
Data analysis & interpretation
4.1 Data analysis
4.2 Data interpretation

Chapter-5
Conclusion
5.1 Findings
5.2 Suggestions
5.3 Conclusion
 CHAPTER- 1
INTRODUCTION
 1.1 REVIEW OF LITERATURE

WHAT IS TRADING RISK?

The uncertainties associated with risk elements impact the net cash flow of any business or
investment. Under the impact of uncertainties, variations in net cash flow take place. This could
be favorable or un-favorable.
Risk is the probability that the realized return would be different from the anticipated/expected
return on investment. Risk is a measure of likelihood of a bad financial outcome. All other things
being equal risk will be avoided. All other things are however not equal and that a reduction in
risk is accompanied by a reduction in expected return.
The trading book includes all the assets that are held with intention of trading that are
marketable. They are normally held for a short duration and positions are liquidated in the
market. Trading Book assets include investment held under ‘Held for Trading’ category. They
are subjected to Market Risk and are marked to market.

ALLOCATION OF RISK
Virtually all real assets involve some risk. Financial markets and the diverse financial
instruments traded on markets allow investors with the greatest taste for risk to bear that risk
while other less-risk-tolerant individuals can, to a great extent, stay on sidelines.
The stockholders bear most of the business risk, but reap potentially higher rewards. Thus the
capital markets allow the risk that is inherent to all investments to be borne by the investors most
willing to bear that risk. This allocation of risk also benefits the firms that need to raise capital to
finance their investments. When investor can self-select into security types with risk-return
characteristics that best suit their preferences, each security can be sold for the best possible
price.

EQUITY

Equity investment generally refers to the buying and holding of shares of stock on a stock market
by individuals and funds in anticipation of income from dividends and capital gain as the value
of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation
in a private (unlisted) company or a startup (a company being created or newly created). When
the investment is in infant companies, it is referred to as venture capital investing and is
generally understood to be higher risk than investment in listed going-concern situations.

The Indian Equity Market is also the other name for Indian share market or Indian stock market.
The forces of the market depend on monsoons, global fundings flowing into equities in the
market and the performance of various companies. The Indian market of equities is transacted on
the basis of two major stock indices, National Stock Exchange of India Ltd. (NSE) and The
Bombay Stock Exchange (BSE), the trading being carried on in a dematerialized form. The
physical stocks are in liquid form and cannot be sold by the investors in any market. Two types
of funds are there in the Indian Equity Market, Venture Capital Funds and Private Equity Funds.

The equity indexes are correlated beyond the boundaries of different countries with their
exposure to common calamities like monsoon which would affect both India and Bangladesh or
trade integration policies and close connection with the foreign investors. From 1995 onwards,
both in terms of trade integration and FIIs India has made an advance. All these have established
a close relationship between the stock market indexes of India stock market and those of other
countries. The Stock derivatives adds up all futures and options on all individual stocks. This
stock index derivatives was found to have gone up from 12 % of NSE derivatives turnover in
2002 to 35 % in 2004. the Indian Equity Market also comprise of the Debt Market, dominated by
primary dealers, banks and wholesale investors.

Indian Equity Market at present is a lucrative field for the investors and investing in Indian
stocks are profitable for not only the long and medium-term investors, but also the position
traders, short-term swing traders and also very short term intra-day traders. In terms of market
capitalization, there are over 2500 companies in the BSE chart list with the Reliance Industries
Limited at the top. The SENSEX today has rose from 1000 levels to 8000 levels providing a
profitable business to all those who had been investing in the Indian Equity Market. There are
about 22 stock exchanges in India which regulates the market trends of different stocks.
Generally the bigger companies are listed with the NSE and the BSE, but there is the OTCEI or
the Over the Counter Exchange of India, which lists the medium and small sized companies.
There is the SEBI or the Securities and Exchange Board of India which supervises the
functioning of the stock markets in India.

In the Indian market scenario, the large FMCG companies reached the top line with a double-
digit growth, with their shares being attractive for investing in the Indian stock market. Such
companies like the Tata Tea, Britannia, to name a few, has been providing a bustling business for
the Indian share market. Other leading houses offering equally beneficial stocks for investing in
Indian Equity Market, of the SENSEX chart are the two-wheeler and three-wheeler maker Bajaj
Auto and second largest software exporter Infosys Technologies.

Other than some restricted industries, foreign investment in general enjoys a majority share in
the Indian Equity Market. Foreign Institutional Investors (FII) need to register themselves with
the SEBI and the RBI for operating in Indian stock exchanges. In fact from the Indian stock
market analysis it is known that in some specific industries foreigners can have even 100%
shares. In the last few years with the facility of the Online Stock Market Trading in India, it has
been very convenient for the FIIs to trade in the Indian stock market. From an analysis on the
Indian Equity Market it can be said that the increase in the foreign investments over the years no
doubt have accentuated the dynamism of the Indian market of equities. Foreign investors are
allowed to buy Indian equity for the purpose of converting the equity into ADR or GDR.
Thus, the growing financial capital markets of India being encouraged by domestic and foreign
investments is becoming a profitable business more with each day. If all the economic
parameters are unchanged Indian Equity Market will be conducive for the growth of private
equities and this will lead to an overall improvement in the Indian economy.

DERIVATIVES

Derivatives are financial contracts, or financial instruments, whose values are derived from the
value of something else (known as the underlying). The underlying value on which a derivative
is based can be an asset (e.g., commodities, equities (stocks), residential mortgages, commercial
real estate, loans, bonds), an index (e.g., interest rates, exchange rates, stock market indices,
consumer price index (CPI) — see inflation derivatives), weather conditions, or other items.
Credit derivatives are based on loans, bonds or other forms of credit.

The main types of derivatives are forwards, futures, options, and swaps.

Derivatives can be used to mitigate the risk of economic loss arising from changes in the value of
the underlying. This activity is known as hedging. Alternatively, derivatives can be used by
investors to increase the profit arising if the value of the underlying moves in the direction they
expect. This activity is known as speculation.

Because the value of a derivative is contingent on the value of the underlying, the notional value
of derivatives is recorded off the balance sheet of an institution, although the market value of
derivatives is recorded on the balance sheet.

Types of derivatives
Broadly speaking there are two distinct groups of derivative contracts, which are distinguished
by the way they are traded in market:

 Over-the-counter (OTC) derivatives are contracts that are traded (and privately
negotiated) directly between two parties, without going through an exchange or other
intermediary. Products such as swaps, forward rate agreements, and exotic options are
almost always traded in this way. The OTC derivative market is the largest market for
derivatives, and is largely unregulated with respect to disclosure of information between
the parties, since the OTC market is made up of banks and other highly sophisticated
parties, such as hedge funds. Reporting of OTC amounts are difficult because trades can
occur in private, without activity being visible on any exchange. According to the Bank
for International Settlements, the total outstanding notional amount is $684 trillion (as of
June 2008)[2]. Of this total notional amount, 67% are interest rate contracts, 8% are credit
default swaps (CDS), 9% are foreign exchange contracts, 2% are commodity contracts,
1% are equity contracts, and 12% are other. Because OTC derivatives are not traded on
an exchange, there is no central counterparty. Therefore, they are subject to counterparty
risk, like an ordinary contract, since each counterparty relies on the other to perform.

 Exchange-traded derivatives (ETD) are those derivatives products that are traded via
specialized derivatives exchanges or other exchanges. A derivatives exchange acts as an
intermediary to all related transactions, and takes Initial margin from both sides of the
trade to act as a guarantee. The world's largest [3] derivatives exchanges (by number of
transactions) are the Korea Exchange (which lists KOSPI Index Futures & Options),
Eurex (which lists a wide range of European products such as interest rate & index
products), and CME Group (made up of the 2007 merger of the Chicago Mercantile
Exchange and the Chicago Board of Trade and the 2008 acquisition of the New York
Mercantile Exchange). According to BIS, the combined turnover in the world's
derivatives exchanges totalled USD 344 trillion during Q4 2005. Some types of
derivative instruments also may trade on traditional exchanges. For instance, hybrid
instruments such as convertible bonds and/or convertible preferred may be listed on stock
or bond exchanges. Also, warrants (or "rights") may be listed on equity exchanges.
Performance Rights, Cash xPRTs and various other instruments that essentially consist of
 a complex set of options bundled into a simple package are routinely listed on equity
exchanges. Like other derivatives, these publicly traded derivatives provide investors
access to risk/reward and volatility characteristics that, while related to an underlying
commodity, nonetheless are distinctive.

Common derivative contract types

There are three major classes of derivatives:

1. Futures/Forwards are contracts to buy or sell an asset on or before a future date at a

price specified today. A futures contract differs from a forward contract in that the futures
contract is a standardized contract written by a clearing house that operates an exchange
where the contract can be bought and sold, while a forward contract is a non-standardized
contract written by the parties themselves.
2. Options are contracts that give the owner the right, but not the obligation, to buy (in the
case of a call option) or sell (in the case of a put option) an asset. The price at which the
sale takes place is known as the strike price, and is specified at the time the parties enter
into the option. The option contract also specifies a maturity date. In the case of a
European option, the owner has the right to require the sale to take place on (but not
before) the maturity date; in the case of an American option, the owner can require the
sale to take place at any time up to the maturity date. If the owner of the contract
exercises this right, the counterparty has the obligation to carry out the transaction.
3. Swaps are contracts to exchange cash (flows) on or before a specified future date based
on the underlying value of currencies/exchange rates, bonds/interest rates, commodities,
stocks or other assets.
FUTURE

In finance, a futures contract is a standardized contract, to buy or sell a specified commodity of

standardized quality at a certain date in the future, at a market determined price (the futures
price). The contracts are traded on a futures exchange. Futures Contracts are not "direct"
securities like stocks, bonds, rights or warrants as outlined by the Uniform Securities Act. They
are still securities however, though they are type of derivative contract.

The price is determined by the instantaneous equilibrium between the forces of supply and
demand among competing buy and sell orders on the exchange at the time of the purchase or sale
of the contract.

A futures contract gives the holder the obligation to make or take delivery under the terms of the
contract, whereas an option grants the buyer the right, but not the obligation, to establish a
position previously held by the seller of the option. In other words, the owner of an options
contract may exercise the contract, but both parties of a "futures contract" must fulfill the
contract on the settlement date. The seller delivers the underlying asset to the buyer, or, if it is a
cash-settled futures contract, then cash is transferred from the futures trader who sustained a loss
to the one who made a profit. To exit the commitment prior to the settlement date, the holder of a
futures position has to offset his/her position by either selling a long position or buying back
(covering) a short position, effectively closing out the futures position and its contract
obligations.

OPTIONS

Options trading has been around since 1973 but really didn't take off until the last 10 years or so.
During that period the number of options contracts traded on U.S. exchanges increased by more
than 600 percent. What accounts for this increase in the popularity of options trading?
One major factor is that options are now understood better than they previously were. Because
options have many variations it is quite easy to misunderstand how they work, and as a result
many investors - or their brokers - had bad experiences when they first tried them.
The influence of the internet has also been a significant factor. Not only has the internet provided
the means for low cost options trading, but it has been a tremendous source of valuable
information.
This has served to demystify the options trading process to a great degree. Prospective options
traders can draw on the experience and advice of countless numbers of people who have
successfully engaged in trading, learned its ins and outs, and developed a sophisticated
understanding of the activity.
One commonly held view about options trading is that it is risky - mostly because it is relatively
difficult to understand and the new investor will usually be uncertain about the best strategy to
employ.

One of the simplest strategies to understand, and one that can actually be used to reduce risk is
the use of a put option as a hedge against dramatic declines in a stock's market value.
The traditional way stock traders protect themselves against such losses is to place a "stop-loss
order" on a particular stock they hold. When it trades at or below the limit specified in the stop-
loss order, the stop-loss order automatically becomes a market order to sell.
This procedure has some serious shortcomings. When a stock starts fluctuating in price a stop-
loss order virtually guarantees that it will be sold for a loss because it will be sold as soon as it
dips to or below the stop order price.
More importantly when a stock worth, say, $50 at closing opens in the morning at $30 it will
automatically be sold at that price. This serves to lock in some pretty significant losses.
Purchasing a put option, on the other hand, lets you purchase the right to sell a specific stock at a
predetermined price (the "strike price") for a specified period of time. So if you suspect a certain
stock is going to decline in value you can purchase a put option for a quantity of that stock. If its
market price goes below the predetermined strike price you have the option of selling it at the
strike price.
The right, but not the obligation, to buy or sell a specified quantity of the underlying asset at a
fixed price (called exercise price), on or before the expiration date. There are two kinds of
options.
1. Call option: the right to buy a specified quality of the underlying asset at a fixed
exercise price on or before the expiry date.
 2. Put option: the right to sell a specified quality of the underlying asset at a fixed
exercise price on or before the expiry date.

An option gives you the right to buy or sell the underlying asset but not any obligation.

A call option gives you right to buy the underlying asset while a put option gives you the right to
sell.
An option contract specifies the strike price, that is, the price at which you can buy or sell the
underlying and the expiry date after which the option is no longer valid. In other words, the
expiry is the last day on which a contract expires or ends. In Indian markets, expiry is the last
Thursday of every month.

In many cases, options are traded on futures, sometimes called simply "futures options". A put is
the option to sell a futures contract, and a call is the option to buy a futures contract. For both,
the option strike price is the specified futures price at which the future is traded if the option is
exercised. See the Black-Scholes model, which is the most popular method for pricing these
option contracts.

1.2 MEANING OF THE STUDY

A project report on stock market is being prepared in attempts to interpret in-depth study of
volatility in Indian stock market. This report helps us to understand various terminologies in
stock market. This report gave me opportunity to have complete idea about volatility in stock
market. This gave me idea about technical and fundamental analysis in stock market and how
trading is being done in stock market.

This project report helps in following aspects,

 Build understanding of central ideas and theories of stock market.
 Develop familiarity with the analysis of stock market.
 Furnish institutional material relevant for understanding the environment in which
trading decisions are taken.
1.3 OBJECTIVE OF THE STUDY

 To study volatility in Indian stock market while taking SENSEX of Bombay

stock exchange as a source of secondary data which broadly represent
Indian stock market along with NIFTY of National stock exchange.
 To study the factors which are making Indian stock market volatile.
 To furnish institutional material relevant for understanding the
environment in which stock market fluctuation are occurring. Like
 Demand for money
 Level of Government borrowings
 Supply of money
 Inflation rate
 The Reserve Bank of India and the Government policies
 To find out about the trading risk. It includes:

1. Understanding trading risk.

Risk is exposure to the uncertain market value of a portfolio.It is the risk that the value of
this portfolio may decline over a given period of time simply because of economic
changes or other events that impact the market.

2. Types of risks
Risk can be split into two parts. They are systematic and unsystematic risk. A detailed
description is given below.
 3. Risk minimization

Risk factor cannot be eliminated completely. We have already seen that the unsystematic risk
part of the total risk can be reduced. Here I would like to explain two such methods. They
are:

1. Diversification
2. Hedging
3. Speculations

4. Reading investors mind

5. Generally investors prefer investments with higher rate of return and lower standard
deviations. According to the economic principle of diminishing margin utility, as a person gets
more and more wealth his utility for additional wealth increases at a declining rate.

1.4 SIGNIFICANCE OF THE STUDY

This study can be used by investors ,traders and other professionals as a supplement to their own
research.

Hypothesis

This is the exploratory research which tries to shows the factors which are making stock market
volatile.

 Any fluctuation in foreign market has more effect on Indian stock market than that of domestic
market.
 In the given volatile economic conditions,the market is efficient to any news and information.

1.5 METHODOLOGY
The most critical step in the survey can be the conversion of the raw data into the required
database. The raw data that is been collected should be converted into the necessary database
required for the study. The data that is collected should be collected for the study is processed for
the final result.

The key parameters for the analysis are:-

1. Relatives Strength index

2. Rate of change of prices
3. Exponential moving average
4. Mutual Fund Cash ratio
5. Short Interest ratio

Statistical tools like moving average, simple average and graphs, charts will be used to process
the data and convert it into useful information that can be used for the study.

To achieve my research objective of this project I have used some formulae of risk management.
I would like to state them here:

FORMULAE:

E(Re) = (P1 * R1e) + (P2 * R2e) + (P3 * R3e)

E(Rt) = (P1 * R1t) + (P2 * R2t) + (P3 * R3t)
E(Rp) = We * E(Re) + Wt * E(Rt)
Ve = P1(R1e – E(Re))2 + P2(R2e – E(Re))2 + P3(R3e – E(Re))2
Vt = P1(R1t – E(Rt))2 + P2(R2t – E(Rt))2 + P3(R3t – E(Rt))2
SDe = square root of Ve
SDt = square root of Vt
Covariance (cov) = P1(R1e – E(Re)) * (R1t – E(Rt)) + P2(R2e – E(Re)) * (R2t – E(Rt))+
P3(R3e – E(Re)) * (R3t – E(Rt))
Vp = Ve2 * We2 + Vt2 * Wt2 + 2 * We * Wt * cov
Vp variance for the portfolio
Standard deviation of the portfolio = square root of ‘cov’
E(Re)  expected return from educompeq
E(Rt)  expected return from tatachemeq
E(Rp)  expected return from portfolio
R1 return from the security when condition is good
R2 return from the security when condition is bad
R3 return from the security when condition is normal
P1 probability of return when the condition is good
P2 probability of return when the condition is bad
P3 probability of return when the condition is normal
We weight of security
Wt weight of security
Ve variance
Vt variance
SDe standard deviation
SDt standard deviation
Subscript ‘e’ EDUCOMPEQ
Subscript ‘t’ TATACHEMEQ
Subscript ‘p’ PORTFOLIO

1.6 SOURCES OF DATA COLLECTION

Data used in this study is of secondary in nature. Sensex and Nifty is taken as a source of
information which widely describes Indian stock market. Here monthly prices of both
indexes are taken for the study purpose.
A. Define the problem and research objective:

The problem is to study the Volatility & Risk of stocks in equity market. The research objectives
are determined and based on them the primary data is collected. The research is carried with this
data.

(I). Defining the problem and research objective:

The first step towards finding a solution or launching a research study focuses on understanding
the nature of a situation. To help researchers identify the specific reasons of any problem through
research.

(II) Developing the research plan:

Once the problem is identified and the research objective clearly stated, the next step is to
prepare a plan for getting the information needed for research. The approach to be taken for
gathering data depends upon the type of hypothesis being investigated

The study is based on the primary data as well as secondary data. The principal sources of
primary data are various branch offices in the form of opinion through interview method. In
some cases group discussion were held with terminal operators, investors.

Information (in numerical term) is also collected from the web site of www.nseindia.com. For
interpretation of data some statistical methods & charts are used.

Sources of information:

Books, www.nseindia.com and Publications.

1.7 LIMITATIONS OF THE STUDY

1. The primary data collected has its own limitation. The same has been
incorporated in the basis after proper scrutiny.

2. The study is confined to a limited number of stocks.

3. The time period allowed for the study is quite insufficient to catch all the
aspects.

4. In the study more importance has been given to technical analysis only.

5. Finally the cost factor has also added some limitation to the study.

Confidentiality of information was the biggest limitation that corporate people

were not willing to share their information with us.
 CHAPTER- 2
COMPANY PROFILE
HISTORY OF COMPANY

Industrial Development Bank of India (IDBI) is the tenth largest bank in the world in terms of
development. The National Stock Exchange (NSE), The National Securities Depository Services
Ltd. (NSDL), Stock Holding Corporation of India (SHCIL) is some of the institutions which
have . IDBI is a strategic investor in a plethora of institutions which have
revolutionized the Indian Financial Markets.

IDBI Bank, promoted by IDBI Group started in November 1995 with a branch at Indore with an
equiY capital base of Rs. 1000 million.

BUSINESS PROFILE OF IDBI Ltd. TODAY:

IDBI Ltd has three wholly owned subsideries of its own:

 1. IDBI Capital market Services Ltd. (ICMS): It was set up in December 1993 to
offer abroad range of capital market related services, including bond trading, retail
distribution, mutual fund distribution, equity broking, client asset management,
depository services, merchant banking, etc. It is a leading primary dealer of the
country.
2. IDBI Home Finance Ltd.(IHFL): In order to make a foray into retail financing, the
erstwhile IDBI acquired the entire shareholding of Tata Fianance Limited in Tata
Home Finance Ltd. The housing finance company has since been named as IDBI
Home finance Ltd.
3. IDBI Intech Ltd. (Intech): It was setup in March 2000 to undertake information
technology(IT) related activities. However, as IT is not a permissible business for
banking companies under section 19 of the Banking Regulation Act, 1949, IDBI Ltd.
Is in the process of winding up the operations of Intech./

IDBI Capital market Services Ltd. (ICMS):

IDBI Capital Market Services Ltd. is a leading Fund Manager in the country for
Provident, Pension and Retirement Benefit Funds. The Company is a SEBI registered
Portfolio Manager and manage its Client’s assets under both discretionary and non-
discretionary mandates. These services are provided to various public and private sector
undertakings and their provident, pension, retirement benefit and surplus funds. The
Company’s client base includes leading pension and provident funds in the country.

IDBI capital has been advising institutions, banks and corporates for their investment in
Debt, Mutual Funds and Equities over several years. Its services include managing
Client Assets--Pension & Provident Funds, Surplus fund Management, Equity Portfolio
Management and Mutual Fund Advisory. The funds have continuously yielded superior
returns, which are significantly higher than the benchmark.

Regulatory Approval
IDBI Capital is a registered Portfolio Manager with Securities and Exchange Board of India
(SEBI) since 1998 and is authorized to undertake Funds Management activities (Debt & Equity)
for clients. These activities would be governed by Securities and Exchange Board of India
(Portfolio Managers) Rules and Regulations, 1993. SEBI Registration No. of IDBI Capital is
INP000000209, valid till the year 2010.

Infrastructure

 Experienced Fund Management Team : The Fund Management

team comprises of experienced professionals (experience ranges between 2 years to 15
years) in Portfolio Management with requisite exposure in the fixed income and equity
segment and qualifications
 Experienced Back-Office: The Clearing and Settlement Operations are
manned by experienced personnel with requisite exposure to capital market and
particularly debt market. The process is standardized as per the regulatory and other
specific norms and mainly technology driven in most areas.
 Accounting: Real time accounting of Remittances, Investments, Interest and
Redemption proceeds ensures accurate reconciliation.
 Professional Custodian: Member of NSDL for demat services and offers
Constituent SGL Account facility for Government securities through IDBI Gilts Ltd.
 Functional Separation of Front and Back Office: Separate
personnel handle the front and back office functions to ensure transparency and complete
regulatory compliance
 Internal Controls: Adequate Risk Management systems in place to ensure
complete regulatory compliance
 Audit Systems: Audit of all transactions and reports by an independent firm of
chartered accountants. The accounts and transactions are also subject to CAG audit and
other regulators
 Belongs to IDBI Group: IDBI is a leading bank, classified under ‘Other
 Public Sector Bank’. Established in 1964 by Government of India under an Act of
Parliament, IDBI has essayed a significant role in the country’s industrial and economic
progress for over 40 years – first as apex Development Financial Institution (DFI) and
now as a full service commercial bank.

FINANCIAL MARKET

The economic development of any country in any country depends upon the existence of a well-
organized financial system. It is the financial system, which supplies the necessary financial
inputs for the production of goods, and services, which in turn promote the well being and
standard of living of the people of a country. Thus, the ‘financial system’ is a broader term,
which brings under its fold the financial markets and the financial institutions, which support the
system. The responsibility of the financial system is to mobilize the savings in the form of
money and monetary assets and invest them to productive ventures. An efficient functioning of a
financial system facilitates the free flow of funds to more productive activities and thus
promotes investment. Thus, the financial system provides the intermediations between savers
and investors and promotes faster economic development.

Functions of the financial system

 Provision of liquidity
The major function of the financial system is the provision of money and monetary assets for the
production of goods and services. There should not be any shortage of money for productive
ventures. In financial language, the money and monetary assets are referred to as liquidity.
Mobilization of savings
Another important activity of the financial system is to mobilize savings and channelize them
into productive activities. The financial system should offer appropriate incentives to attract
savings and make them available for more productive ventures. Thus the financial system
facilitates the transformation of saving into investment and consumption. The financial
intermediaries have to play a dominant role in this activity.

Financial assets
In any financial transaction there should be creation or transfer of financial asset. Hence the
basic product of any financial system is the financial asset. A financial asset is one, which is
used for production or consumption or for further creation of assets. For instance, A buys equity
shares and these shares are financial assets since they are income in future.
These assets are basically of two types:
 Marketable assets
 Non-marketable assets

Shares of the listed company are marketable assets, which can be easily transferred from one
person to another without many hindrances.
Furthermore these are stock assets, which are issued by the business organization for the purpose
of raising fixed capital. There are two types of stocks namely equity and preference. Equity
shareholders are the real owners of the business and they enjoy the fruits of ownership and at the
same time they bear the risk as well. Preference shareholders on the other hand get fixed rate of
dividend and at the same time they retain some characteristics of equity.
IDBI Capital is a financial intermediary, which facilitates financial transactions of individual
and corporate customers. Thus, it refers to all kinds of such financial institutes. They may be
organized or un-organized sectors and are classified into capital and any money market
intermediaries.
Generally speaking there is no specific place or location to indicate the financial market.
Financial markets are pervasive in nature since financial transactions are themselves very
pervasive throughout the economic system. For instance issue of equity shares deposit of money
into banks, sale of shares and so on.
This financial market is of both organized and unorganized type. In organized market there are
standardized rules and regulations governing their financial dealings. There is also a high degree
of institutionalization and instrumentalization. These markets are subject to strict supervision
and control by the RBI or other regulatory bodies.
These organized markets can be further classified into two. They are:
 Capital market
 Money market

CAPITAL MARKET

The capital market is the market for securities, where companies and governments can raise
long term funds. It is a market in which money is lent for periods longer than a year. The capital
market includes the stock market and the bond market. Financial regulators, such as the U.S.
Securities and Exchange Commission (SEC), oversee the capital markets in their designated
countries to ensure that investors are protected against fraud.

The capital markets consist of the primary market and the secondary market. The primary
markets are where new stock and bonds issues are sold (underwriting) to investors. The
secondary markets are where existing securities are sold and bought from one investor or
speculator to another, usually on an exchange (e.g. the New York Stock Exchange)

INDIAN CAPITAL MARKET

Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years
ago. The earliest records of security dealings in India are meagre and obscure. The East India
Company was the dominant institution in those days and business in its loan securities used to be
transacted towards the close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in
Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers
recognized by banks and merchants during 1840 and 1850.

The 1850's witnessed a rapid development of commercial enterprise and brokerage business
attracted many men into the field and by 1860 the number of brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United States of Europe
was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about
200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began
(for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a
place in a street (now appropriately called as Dalal Street) where they would conveniently
assemble and transact business. In 1887, they formally established in Bombay, the "Native Share
and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange "). In
1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899.
Thus, the Stock Exchange at Bombay was consolidated.

Other leading cities in stock market operations

Ahmedabad gained importance next to Bombay with respect to cotton textile industry. After
1880, many mills originated from Ahmedabad and rapidly forged ahead. As new mills were
floated, the need for a Stock Exchange at Ahmedabad was realized and in 1894 the brokers
formed "The Ahmedabad Share and Stock Brokers' Association".

What the cotton textile industry was to Bombay and Ahmedabad, the jute industry was to
Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta. After
the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares, which was
followed by a boom in tea shares in the 1880's and 1890's; and a coal boom between 1904 and
1908. On June 1908, some leading brokers formed "The Calcutta Stock Exchange Association".
In the beginning of the twentieth century, the industrial revolution was on the way in India with
the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel Company Limited
in 1907, an important stage in industrial advancement under Indian enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies generally
enjoyed phenomenal prosperity, due to the First World War.

In 1920, the then demure city of Madras had the maiden thrill of a stock exchange functioning in
its midst, under the name and style of "The Madras Stock Exchange" with 100 members.
However, when boom faded, the number of members stood reduced from 100 to 3, by 1923, and
so it went out of existence.

Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange was
closed during partition of the country and later migrated to Delhi and merged with Delhi Stock
Exchange.

Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.

Most of the other exchanges languished till 1957 when they applied to the Central Government
for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta,
Madras, Ahmedabad, Delhi, Hyderabad and Indore, the well established exchanges, were
recognized under the Act. Some of the members of the other Associations were required to be
admitted by the recognized stock exchanges on a concessional basis, but acting on the principle
of unitary control, all these pseudo stock exchanges were refused recognition by the Government
of India and they thereupon ceased to function.

Thus, during early sixties there were eight recognized stock exchanges in India (mentioned
above). The number virtually remained unchanged, for nearly two decades. During eighties,
however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar Pradesh
Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited
(1982), Ludhiana Stock Exchange Association Limited (1983), Guwahati Stock Exchange
Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange
Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock
Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot,
1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently established exchanges -
Coimbatore and Meerut. Thus, at present, there are totally twenty one recognized stock
exchanges in India excluding the Over The Counter Exchange of India Limited (OTCEI) and the
National Stock Exchange of India Limited (NSEIL).

Trading Pattern of the Indian Stock Market

Trading in Indian stock exchanges is limited to listed securities of public limited companies.
They are broadly divided into two categories, namely, specified securities (forward list) and non-
specified securities (cash list). Equity shares of dividend paying, growth-oriented companies
with a paid-up capital of at least Rs.50 million and a market capitalization of at least Rs.100
million and having more than 20,000 shareholders are, normally, put in the specified group and
the balance in non-specified group.

Two types of transactions can be carried out on the Indian stock exchanges: (a) spot delivery
transactions "for delivery and payment within the time or on the date stipulated when entering
into the contract which shall not be more than 14 days following the date of the contract": and
(b) forward transactions "delivery and payment can be extended by further period of 14 days
each so that the overall period does not exceed 90 days from the date of the contract". The latter
is permitted only in the case of specified shares. The brokers who carry over the outstanding pay
carry over charges (cantango or backwardation) which are usually determined by the rates of
interest prevailing.

A member broker in an Indian stock exchange can act as an agent, buy and sell securities for his
clients on a commission basis and also can act as a trader or dealer as a principal, buy and sell
securities on his own account and risk, in contrast with the practice prevailing on New York and
London Stock Exchanges, where a member can act as a jobber or a broker only.

The nature of trading on Indian Stock Exchanges are that of age old conventional style of face-
to-face trading with bids and offers being made by open outcry. However, there is a great amount
of effort to modernize the Indian stock exchanges in the very recent times.
We also know the presence of two kinds of capital market. They are primary market and
secondary market.

PRIMARY MARKET

The primary market is that part of the capital markets that deals with the issuance of new
securities. Companies, governments or public sector institutions can obtain funding through the
sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers.
The process of selling new issues to investors is called underwriting. In the case of a new stock
issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the
price of the security offering, though it can be found in the prospectus.

Features of primary markets are:

 This is the market for new long term capital. The primary market is the market where the
securities are sold for the first time. Therefore it is also called the new issue market
(NIM).
 In a primary issue, the securities are issued by the company directly to investors.
 The company receives the money and issues new security certificates to the investors.
 Primary issues are used by companies for the purpose of setting up new business or for
expanding or modernizing the existing business.
 The primary market performs the crucial function of facilitating capital formation in the
economy.
 The new issue market does not include certain other sources of new long term external
finance, such as loans from financial institutions. Borrowers in the new issue market may
be raising capital for converting private capital into public capital; this is known as
"going public."
 The financial assets sold can only be redeemed by the original holder.

Methods of issuing securities in the primary market are:

 Initial public offering;

 Rights issue (for existing companies);
  Preferential issue.

SECONDARY MARKET

The secondary market, also known as the aftermarket, is the financial market where
previously issued securities and financial instruments such as stock, bonds, options, and futures
are bought and sold. The term "secondary market" is also used refer to the market for any used
goods or assets, or an alternative use for an existing product or asset where the customer base is
the second market (for example, corn has been traditionally used primarily for food production
and feedstock, but a second- or third- market has developed for use in ethanol production).

With primary issuances of securities or financial instruments, or the primary market, investors
purchase these securities directly from issuers such as corporations issuing shares in an IPO or
private placement, or directly from the federal government in the case of treasuries. After the
initial issuance, investors can purchase from other investors in the secondary market.

The secondary market for a variety of assets can vary from fragmented to centralized, and from
illiquid to very liquid. The major stock exchanges are the most visible example of liquid
secondary markets - in this case, for stocks of publicly traded companies. Exchanges such as the
New York Stock Exchange, NASDAQ and the American Stock Exchange provide a centralized,
liquid secondary market for the investors who own stocks that trade on those exchanges. Most
bonds and structured products trade “over the counter,” or by phoning the bond desk of one’s
broker-dealer.
SECURITIES AND EXCHANGE BOARD OF INDIA

SEBI is the Regulator for the Securities Market in India. Originally set up by the Government
of India in 1988, it acquired statutory form in 1992 with SEBI Act 1992 being passed by the
Indian Parliament. Chaired by C B Bhave, SEBI is headquartered in the popular business
district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and
Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad.
SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and
successively (e.g. the quick movement towards making the markets electronic and paperless
rolling settlement on T+2 bases). SEBI has been active in setting up the regulations as required
under law. It is the regulating body.
The Securities and Exchange Board of India is perhaps the most important regulatory body.
Similar to the Securities Exchange Commission in the US, it is the authority that has to always
be on its toes. More so, when the markets are doing well and there are a spate of IPOs (initial
public offerings) or FPOs (follow-on public offerings) like now.
Its main mandate is to protect the interest of investors in the securities markets and to promote
the development of and to regulate the securities markets so as to establish a dynamic and
efficient securities market.
When investors have complaints against listed companies or registered intermediaries, SEBI acts
as the nodal agency for addressing these complaints only if they are not solved directly between
the parties concerned, or if the investor is not happy with the response.
SEBI has listed certain categories of grievances for which investors can file complaints with it.
These include:

 Non-receipt of refund order or allotment advice in case of investment in IPO's, FPO's and
rights issues
 Non-receipt of dividend from listed companies
 Non-receipt of share certificates after transfer from listed companies
 Non-receipt of debentures after transfer or non-receipt of interest or principal on
redemption and non-receipt of interest on delayed repayment
 Non-receipt of rights offer letter
Functions and Responsibilities
SEBI has to be responsive to the needs of three groups, which constitute the market:

 the issuers of securities

 the investors
 the market intermediaries.

SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-
executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its judicial
capacity. Though this makes it very powerful, there is an appeals process to create
accountability. There is a Securities Appellate Tribunal which is a three member tribunal and is
presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second
appeal lies directly to the Supreme Court.

SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and
successively (e.g. the quick movement towards making the markets electronic and paperless
rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required.

In India trading is done mainly in two exchanges or we can also say that these two exchanges are
the pillar of Indian stock market. They are NSE and BSE.

NSE

With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock
market trading system on par with the international standards. On the basis of the
recommendations of high powered Pherwani Committee, the National Stock Exchange was
incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment
Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations,
selected commercial banks and others.

National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third
largest Stock Exchange in terms of transactions. Located in Mumbai, NSE was promoted by
leading Financial Institutions at the behest of the Government of India, and was incorporated in
November 1992 as a tax-paying company. In April 1993, NSE was recognized as a Stock
exchange under the Securities Contracts (Regulation) Act-1956. NSE commenced operations in
the Wholesale Debt Market (WDM) segment in June 1994. Capital Market (Equities) segment of
the NSE commenced operations in November 1994, while operations in the Derivatives segment
commenced in June 2000. NSE has played a catalytic role in reforming Indian securities market
in terms of microstructure, market practices and trading volumes. NSE has set up its trading
system as a nation-wide, fully automated screen based trading system. It has written for itself the
mandate to create World-class Stock Exchange and use it as an instrument of change for the
industry as a whole through competitive pressure. NSE is set up on a demutualised model
wherein the ownership, management and trading rights are in the hands of three different sets of
people. This has completely eliminated any conflict of interest.
NSE was set up with the objectives of:

 Establishing nationwide trading facility for all types of securities

 Ensuring equal access to investors all over the country through an appropriate
telecommunication network
 Providing fair, efficient & transparent securities market using electronic trading system
 Enabling shorter settlement cycles and book entry settlements
 Meeting International benchmarks and standards

Within a very short span of time, NSE has been able to achieve its objectives for which it was set
up. Indian Capital Markets are a far cry from what they were 12 years back in terms of market
practices, infrastructure, technology, risk management, clearing and settlement and investor
service. To ensure continuity of business, NSE has built a full fledged BCP site operational for
last 7 years.

Major objectives and the goals of NSE include:

 Real-time position computation and violation detection

 Ability to handle high load of over one million client positions
 Management of information for positions & risk values about each trading member
 Information structure based on a tree of security, settlement, trading member
  Handle on-line collateral and securities early pay-in
 Total fault tolerance with minimum downtime
 Achieve 4000 violation checks per second

Experts say that NSE enjoys an edge in derivatives business because of its efficient clearing
system and high liquidity driven by large retail participation. NSE commands almost 99%
market share in the equity derivatives market in India. In March 2009, retail investors constituted
56.47% of the gross traded value in the derivatives segment compared to institutional investors'
share of just 12.66%.

Currently, NSE facilitates trading in eight indices and futures contract are available on 233
stocks. The average daily volumes were on the lower side of around Rs 44,000 crore during
2008-09. But it witnessed a record number of trades in the futures and options segment on
January 7, 2009, which stood at 18.74 lakh traded contracts.

"NSE has delivered a stable and robust trading platform to its members by offering well designed
products backed by strong risk management back-end coupled with efficient operations
processes, thereby allowing the market to scale up significantly in terms of traded volumes. By
constantly taking suggestions and feedback from market participants on product development
and operational enhancements it has been successful in its endeavour to gain a pre-eminent
position," said, Nikhil Johari, vice-president, Edelweiss Securities Ltd.

BSE

The Bombay/Mumbai Stock Exchange Limited (formerly, The Stock Exchange, Mumbai;
popularly called The Bombay/Mumbai Stock Exchange, or BSE) has the greatest number of listed
companies in the world, with 4700 listed as of August 2007.It is located at Dalal Street, Mumbai,
India. On 31 December 2007, the equity market capitalization of the companies listed on the
BSE was US$ 1.79 trillion, making it the largest stock exchange in South Asia and the 12th
largest in the world.

Around 6,000 Indian companies list on the stock exchange, and it has a significant trading
volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used
market index in India and Asia. Though many other exchanges exist, BSE and the National
Stock Exchange of India account for most of the trading in shares in India.

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning
three centuries in its 133 years of existence. What is now popularly known as BSE was
established as "The Native Share & Stock Brokers' Association" in 1875.

BSE is the first stock exchange in the country which obtained permanent recognition (in 1956)
from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's
pivotal and pre-eminent role in the development of the Indian capital market is widely
recognized. It migrated from the open outcry system to an online screen-based order driven
trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised and
demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to
the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and
Exchange Board of India (SEBI). With demutualisation, BSE has two of world's best exchanges,
Deutsche Börse and Singapore Exchange, as its strategic partners.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by
providing it with an efficient access to resources. There is perhaps no major corporate in India
which has not sourced BSE's services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed companies and
the world's 5th in transaction numbers. The market capitalization as on December 31, 2007 stood
at USD 1.79 trillion . An investor can choose from more than 4,700 listed companies, which for
easy reference, are classified into A, B, S, T,TS and Z groups.

The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and is
tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is
constructed on a 'free-float' methodology, and is sensitive to market sentiments and market
realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral indices. BSE has
entered into an index cooperation agreement with Deutsche Börse. This agreement has made
SENSEX and other BSE indices available to investors in Europe and America. Moreover,
Barclays Global Investors (BGI), the global leader in ETFs through its iShares® brand, has
created the 'iShares® BSE SENSEX India Tracker' which tracks the SENSEX. The ETF
enables investors in Hong Kong to take an exposure to the Indian equity market.

The first Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed on BSE. It brings
to the investors a trading tool that can be easily used for the purposes of investment, trading,
hedging and arbitrage. SPICE allows small investors to take a long-term view of the market.

BSE provides an efficient and transparent market for trading in equity, debt instruments and
derivatives. It has a nation-wide reach with a presence in more than 359 cities and towns of
India. BSE has always been at par with the international standards.

Awards

 The World Council of Corporate Governance has awarded the Golden Peacock Global
CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR).
 The Annual Reports and Accounts of BSE for the year ended March 31, 2006 and March
31 2007 have been awarded the ICAI awards for excellence in financial reporting.
 The Human Resource Management at BSE has won the Asia - Pacific HRM awards for
its efforts in employer branding through talent management at work, health management
at work and excellence in HR through technology.

IDBI Capital Market Services, Ltd. provides investment banking and financial services. The
company’s services include stock broking, distribution of financial products, investment
banking, merchant banking, corporate advisory, debt arranging and underwriting, managing
client assets, research, and online investing services. It offers mergers and acquisitions services,
including business valuations, feasibility studies, and partnering and joint venture alliances
services, as well as assists in raising of private equity and venture capital by corporates. The
company serves individual, institutional, and corporate clients. It has a strategic alliance with
Union Bank of India. The company was founded in 1995 and is headquartered in Mumbai, India.
IDBI Capital Market Services, Ltd. operates as a subsidiary of Industrial Development Bank of
India, Ltd.

TIE UPS AND AWARDS

IDBI Capital ties up with Union Bank of India
IDBI Capital Market Services Ltd., a leading provider of financial services in India, and Union
Bank of India, a leading nationalised bank in the country, today announced their strategic tie-up
to offer IDBI’s internet trading services platform to the bank’s customers.

IDBI Capital ties up with Oriental Bank of Commerce.

IDBI Capital ties up with Oriental Bank of Commerce to offer world class e-trading services
through www.idbipaisabuilder.in to the privileged customers of Oriental Bank of Commerce.

IDBI Capital ties up with Punjab National Bank

To offer world class e-trading services through www.IDBIpaisabuilder.in to the privileged PNB
customers.

IDBI Capital ties up with Bank of Rajasthan

To offer world class e-trading services through www.IDBIpaisabuilder.in to the privileged Bank
of Rajasthan customers.
IDBI Capital bags CNBC TV18’s prestigious National
Financial Advisor Award
IDBI Capital Market Services Ltd. has been awarded the ‘Best National Financial Advisor-
Institutional' in India at the prestigious ‘CNBC TV18 Financial Advisor Awards 2007’. This is
the 2nd consecutive year in which IDBI Capital has walked away with this award.

IDBI Capital offers retail investors safety net scheme

Usher Agro Ltd, an agri processing company, in its draft prospectus filed with the Securities
and Exchange Board of India (SEBI) for its proposed public issue of equity shares has offered
retail investors a safety net scheme. The scheme is being offered by the IDBI Capital Market
Services Ltd which is also the sole lead manager to the proposed issue, a company release here
today said.
2.2 VISION MISSION& OBJECTIVES OF THE COMPANY

VISION
To be the trusted partner in the progress by leveraging quality human capital and setting global
standards of excellence to build the most valued financial conglomerate

MISSION

1. OUR RELATIONSHIPS ARE WELL ESTABLISHED.

2. We work towards your objectives as our goals.
3. You will get our best advice.
4. We full leverage our execution, distribution, structuring, and regulatory expertise in
your advantage.
5. We standby you towards a continued relationship.
6. A long term player belonging to Idbi group one is the largest financial conglomerates
India.

Objectives

IDBI is vested with the responsibility of co-coordinating the working of institutions engaged in
financing, promoting and developing industries. It has evolved an appropriate mechanism for this
purpose. IDBI also undertakes/supports wide-ranging promotional activities including
entrepreneurship development programmes for new entrepreneurs, provision of consultancy
services for small and medium enterprises, up gradation of technology and programmes for
economic upliftment of the underprivileged.

IDBI's role as a catalyst

IDBI's role as a catalyst to industrial development encompasses a wide spectrum of activities.
IDBI can finance all types of industrial concerns covered under the provisions of the IDBI Act.
With over three decades of service to the Indian industry, IDBI has grown substantially in terms
of size of operations and portfolio.

Developmental Activities of IDBI

Promotional activities

In fulfillment of its developmental role, the Bank continues to perform a wide range of
promotional activities relating to developmental programmes for new entrepreneurs, consultancy
services for small and medium enterprises and programmes designed for accredited voluntary
agencies for the economic upliftment of the underprivileged. These include entrepreneurship
development, self-employment and wage employment in the industrial sector for the weaker
sections of society through voluntary agencies, support to Science and Technology
Entrepreneurs' Parks, Energy Conservation, Common Quality Testing Centers for small
industries.

Technical Consultancy Organizations

With a view to making available at a reasonable cost, consultancy and advisory services to
entrepreneurs, particularly to new and small entrepreneurs, IDBI, in collaboration with other All-
India Financial Institutions, has set up a network of Technical Consultancy Organizations
(TCOs) covering the entire country. TCOs offer diversified services to small and medium
enterprises in the selection, formulation and appraisal of projects, their implementation and
review.

2.3 Organisational Structure & Style Of Work

An integrated 3 in 1 account removes all hassles after placing order. Money/shares get debited/
credited automatically on pay in/pay out days.
Trading is made easy by following steps:
 Visit to the website available anytime.
 Place orders even after market hours.
 Get order status anytime. Even modified or cancelled order anytime even if order lies
unexecuted.
 Get contract note online.
More about 3 in 1 account:
 IDBI integrates client’s bank, demat and broking account.
If one purchases/sells shares, the funds are automatically debited/credited from/to client’s
account and shares are automatically debited/credited to/from client’s demat account respectively
on the settlement date.
 This therefore completely eliminates the hassle of writing cheques TIFDs / chasing brokers
etc.
 And brings convenience to client’s share trading.
CHART OF PRODUCT CATEGORY
SWOT ANALYSIS OF IDBI CAPITAL LTD:

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. Broadly speaking,
Strengths and Weaknesses often relate to internal factors dealing with core competences and
resources that are under your control. Opportunities and Threats are often external factors outside
of your immediate control. I have used the SWOT technique as my benchmark in a variety of
areas: making major decisions, recommending a strategy for a client, or even simply
understanding a company’s operation. In a business context it can often offer valuable guidance
and insight. Its goal as we addressed each specific quadrant was to openly and honestly address
each of the four areas:

Strengths
(Internal):
-What does the company do well?
- What are its assets?
- What advantages does the company have over its competitors?

The Key strengths of IDBI capital Market Services in the

areas of Debt Fund Management are:

1. Fund Management experience of 10 years

2. Expertise in managing large corpus
3. Expertise in both Debt & Equity Market
4. IDBI Capital is the only Portfolio Manager in the Country to achieve ISO 9001: 2000
Standard for Quality Management Systems in Fund Management operations, with
certification from TUV NORD an accredited German standards firm
 5. Substantial Returns Over Benchmark
6. IDBI Capital is a SEBI registered Portfolio Manager
7. Minimum Idle Days
8. Our fund management skill covers Portfolio Analysis that includes ALM, Asset
Allocation, Risk Analysis, Maturity Analysis and Yield Analysis
9. Transparency of Operations
10. Strict adherence to Compliance Procedures
11. Highly Rated Debt Research
12. Presence in All Segment/ Asset of the Financial Services: IDBI Capital deals in Equity
and Equity related products and is one of the highly rated Mutual Fund Distributor (won
two consecutive CNBC TV18 Institutional Financial Advisor Award). In Investment
Banking and Debt Capital Market- Rated in Top 15 by Prime Database
13. Group Strength in Debt Market: IDBI Capital is one of the leading players in debt market
with presence in primary dealership since July 2007. The current operations of primary
dealership is conducted by a group company, IDBI Gilts.

Weaknesses
(Internal):
- Why is the company for sale?
- What is done badly?
- What is it losing money?
- How might a change in ownership affect the staff?

Weakness in heavyweights weigh on Sensex

 The market was news-driven with buying interest in selective counters. However, weakness
in select stocks brought the benchmark indices down to end the day in the negative territory.
 The BSE Sensitive Index was down 12.26 points at 2980.74 as against the previous close of
2993 while the slightly broad based S&P CNX Nifty recorded a decline of 2.4 points to
949.45.
 IDBI seeking to convert Rs 2,130 crore bonds IDBI Capital Market Services, dwelling on an
issue that is obviously baffling a lot of people these days.
 What has changed so as to create this negative sentiment on the equity front

The market is in a correction mode. Other factors like rising interest rates in the US and views on
crude oil prices must be mentioned. These affect our market from time to time. The recent
correction of over 200 points has been driven mainly by the weaknesses spotted in foreign
economies (mainly US) and the lower-than-expected results/guidance by the IT bellwether and
certain other technology companies. A bounce-back can be expected once good results start
pouring in.

AFTER nearly a decade of reforms and furious efforts by policy-makers to put in place
international best practices, the Indian capital market presents a dismal picture. With a series of
scams over the decade, the stock market is in doldrums, lacking in d epth and transparency.
There is a pervading sense of despair and frustration among investors with the drastic erosion of
shareholder wealth, running into several thousands of crores of rupees. The broking community
has been hit hard with declining volume s. And, with the new issues market is virtually dead.
Also, the Governments plans to shed its equity in public sector enterprises through
disinvestments have suffered a serious setback.

Primary market scandal

Serious initiatives to reform the capital market began after the 1992 securities scam, better
known as the Harshad Mehta scandal. The Securities and Exchange Board of India (SEBI), set
up in 1998, was given statutory powers in 1992, which were reinforced in 1995. Before the
reforms, under the Capital Issues (Control) Act, firms were required to obtain approval from the
Controller of Capital Issues (CCI) for raising capital and fixing the premium on the issue price.
This Act was repealed in 1992 and stat utory control on floatation and pricing of issues was
abolished, subject only to certain disclosure requirements. While SEBI enacted certain disclosure
requirements, events have shown that it was not able to enforce them. There have been too many
cases o f price rigging by companies before public issues, managing often to fix exorbitant
premia and take the investors for a ride.

The abolition of the CCI and the boom conditions in the market in the wake of the entry of
foreign institutional investors (FIIs), saw an unprecedented wave of initial public offerings
(IPOs). The absence of a proper regulatory framework and the failure of SEBI to monitor and
supervise the flood of IPOs, led to a massive scam in the primary market.

Reform measures
The major weaknesses of the secondary market, pre-reform, included lack of transparency,
speculative excesses and scant regard for the interests of small investors. Large volumes of trade
were executed outside the exchanges after the trading hours; broke rs did not distinguish between
personal and client accounts; deals were not time-stamped; brokers contracts did not clearly
separate price, commission and carry-forward charges. There was a significant amount of
insider-trading.

With a view to removing the prevailing weaknesses in the market, reform measures were
initiated at a hectic pace, often without even bothering to create the essential infrastructure and
institutional framework. The National Stock Exchange (NSE) was established with the explicit
aim of moving rapidly to nation-wide screen-based trading. The NSE began operations in 1994
and soon acquired a reputation for transparency. Competition from the NSE induced the BSE
also to adopt screen-based trading. In October 1995, an ordinance was passed providing for the
establishment of one or more depositories to take away the arbitrary power of company
managements to block the transfer of shares.

Opportunities
(External):
- What has the competition missed?
- What are the emerging needs of the customer?
- What should this company be doing better?
 The opportunity looked almost too good to be true. For sale: a stable company with along-
standing reputation and a competent and experienced senior staff

IDBI CAPITAL has so many opportunities in various sectors. They are as following.
 Union Bank tie up with IDBI Capital
 Through this strategic alliance, customers of Union Bank will have the opportunity to
invest in equities, mutual funds and initial public offers using the online trading platform
of IDBI Capital
 Making investing an ‘easy’ and ‘informed’ experience through www.idbipaisabuilder.in.
 Mumbai, 13th March 2008: IDBI Capital Market Services Ltd., a leading provider of
financial services in the country and Union Bank of India, a leading nationalised Bank in
the country, have today announced their strategic tie-up to offer IDBI Capital’s internet
trading services platform to the Bank’s customers.
 It already has similar tie ups with Punjab National Bank, IDBI, Oriental Bank of
Commerce, Bank of Rajasthan and Karur Vysya Bank ,Union Bank of India, with its
network, ethos and customer-centric approach plan, is attempting to address the fast-
growing phenomenon of internet trading and seamlessly cater to the convenience and
value-seeking, cash-rich and time-poor new-age consumers.
 The integrated portal IDBIpaisabuilder.in will allow customers of the bank to
seamlessly execute their transactions as per their needs and demands.
 Any customer of Union Bank of India at any of its CBS branches can use this online
trading platform from any place having an internet connection. When the customer
indicates an intention to purchase any security, his account is earmarked with the amount.
The amount is debited from his account only when the transaction is put through and his
demat account is credited in due course.
 Similarly when he desires to sell securities, lien is marked on the securities. When the
transaction is concluded his demat account is debited and his account is credited in due
course
 This new alliance is in line with IDBI Capital’s strategy of increasing its reach and
penetration across the country.
 This also facilitates the creation of new business opportunities and seamless customer
centricity by leveraging the core competencies of both the organisations. Both
organisations will work closely and leverage each other’s strengths to eventually ensure
“customer delight
 Commenting on the tie up with IDBI Capital, Mr MV Nair, Chairman & Managing
Director, Union Bank of India, said, This tie up takes Union Bank one step closer towards
its vision of becoming a one stop shop for financial services offering technology
technology based products for its customers
 An advanced online trading portal, IDBIpaisabuilder.in is built with a core objective to
provide easy and informed investing experience to investors.
 This association will provide customers of the bank with a world class online investing
platform with the backing of two very reputed and established financial institutions of the
country.
 This strong alliance will help us to expand our services to the consumers on a larger
platform; IDBIpaisabuilder.in is targeted mainly at the retail investors.
 The site will enable the investors to make an informed decision by minimising risk
involved in equity investment support the investor throughout the entire investment
process including faster trade executions
 IDBIpaisabuilder.in is a portal designed to empower the common investor with the
information and analytical tools needed to take charge of their investing needs.
 The portal enables online investing in Equities, Mutual Funds and IPO’s.
 IDBIpaisabuilder.in helps investors make the right investment decisions by providing
them with pertinent news, information and analysis along with company specific
fundamental analysis. Facilities of investing online in Equity (NSE & BSE), Mutual
Funds (including SIP facility) and IPOs, portfolio tracker, choice of equity trading
platforms and custom stock screener are some of the other unique features, apart from the
comprehensive information and analytical tools that are showcased on
IDBIpaisabuilder.in.
 The portal has been designed keeping a retail investor in mind for easier comprehension
and very easy navigation within the site
  IDBI Capital Market Services Ltd. is a leading provider of financial services and is a
100% subsidiary of Industrial Development Bank of India (IDBI) with the objective of
catering to specific financial requirements of financial institutions, banks, mutual funds
and corporate houses
 IDBI Capital provides a complete range of financial products and services that includes
Stock Broking for Institutional and Retail clients, Depository Services, distribution of
Financial Products, Investment Banking, Investment Advisory (Mutual Funds / Portfolio
Management services), Corporate Advisory services, Debt arranging and underwriting,
PF/Pension Fund Management, Client Asset Management, and Research Services.
IDBI Capital was recently adjudged the ‘Best National Financial Advisor – Institutional’ at the
CNBC-TV18 Financial Awards 2008, for the second consecutive year

Threats
(External):
- Are the company’s competitors getting stronger?
- Will a change in ownership be perceived negatively by vendors and customers?
- Does the company have cash to fund research and development?
- Will it be possible to retain key employees after the sale?
1. IDBI Capital Market Services Ltd. (ICMS) is a leading Fund Manager in the country for
Provident, Pension and Retirement Benefit Funds.
2. The Company is a SEBI registered Portfolio Manager and manage its Client’s assets
under both discretionary and non-discretionary mandates.
3. These services are provided to various public and private sector undertakings and their
provident, pension, retirement benefit and surplus funds.
4. The Company’s client base includes leading pension and provident funds in the country.
5. IDBI capital has been advising institutions, banks and corporates for their investment in
Debt, Mutual Funds and Equities over several years.
Its services include managing Client Assets--Pension & Provident Funds, Surplus fund
Management, Equity Portfolio Management and Mutual Fund Advisory.
The funds have continuously yielded superior returns, which are significantly higher than the
benchmark.
 CHAPTER -3

RESEARCH METHODOLOGY.

3.1 METHODS OF DATA COLLECTION

Conducting a market survey is collecting primary data required to carryout the study. A survey
on the behaviours of the investors towards technical analysis has conducted in some of the Direct
Business Catalysts (DBC). The sample was randomly picked. The research tool used to conduct
the survey is questionnaire.

Research depends on two kinds of data primary and secondary. Primary data consists of
observing phenomena and subsequently surveying respondents. The study requires primary data
for learning the investor’s perception about Technical Analysis. The company supplies the
database required for the study.

Primary data collection involves the following steps:

Meeting the clients as per the information provided by the database, scheduling the appointment
from customers through call convenience and trying to know investors perception towards
Technical Analysis.

Secondary data marks the beginning of the research process. Information is gathered from both
internal and external sources. Secondary data is required to gain an insight into the Technical
Analysis. Secondary data is gathered through journals, magazines, brochures and websites.

Sources of information:

Books, www.nseindia.com and Publications

 3.2 TOOLS OR TECHNIQUE USED

All of the technical analysis tools discussed up to this point were calculated using a security’s
price (e.g., high, low, close, volume, etc). There is another group of technical analysis tools
designed to help you gauge changes in all securities within a specific market. These indicators
are usually referred to as “market indicators,” because they gauge an entire market, not just an
individual security. Market indicators typically analyze the stock market, although they can be
used for other markets (e.g., futures).

While the data fields available for an individual security are limited to its open, high, low, close
there are numerous data items available for the overall stock market. For example, the number of
stocks that made new highs for the day, the number of stocks that increased in price, etc. Market
indicators cannot be calculated for an individual security because the required data is not
available.

Market indicators add significant depth to technical analysis, because they contain much more
information than price and volume. A typical approach is to use market indicators to determine
where the overall market is headed and then use price/volume indicators to determine when to
buy or sell an individual security. The analogy being “all boats rise in a rising tide,” it is
therefore much less risky to own stocks when the stock market is rising.

MOVING AVERAGE:

The market does not rise r fall in straight line. The up moves and down moves are interrupted by
counter moves. Quite often, these counter moves are quite volatile making it difficult for the
analyst to gauge the underlying trend of the market. In such situation, one way to gauge the
underlying trend is to smooth the data which can be done with the help of moving averages.
There are three types of moving averages that are commonly used by the analyst- the simple
moving average, exponential moving average and the weighted moving average. The moving
average system of share trading is also known as trend following system as here the analyst
would be trading along the trend after it has been established.
CALCULATION:

In calculating various types of moving averages, one must first decide the price on which it will
be calculated. Generally it is calculated from the closing prices out the other prices i.e., high,
low, open and close. Moving average can be calculated from all four of these but as the closing
prices are the most popular, we shall use them in calculating the averages. Again moving
averages can be calculated with the help of the daily or weekly or monthly closing prices.It is of
3 types:

1. Simple moving average

2. Exponential moving average
3. Weighted moving average

Simple Moving Average:

Here if one need to calculate the price of five days instead of 6 days, the body of the data
consists of only five days of data but as we move ahead in time the recent data is added and the
first data is omitted so as to include the most recent prices.

To calculate a five day average, one has to add the five days closing prices and divided the total
by five. The result obtained is a five day simple moving average.

Exponential Moving Average:

The exponential moving average the formula is: Exp. Avg. = (current closing – previous Exp.
Avg.) * Previous exp. Average. Where factor = 2/n+1. And n = no. of days for which the avg. is
to be calculated. As the exponential average of first day so the closing price is used on the first
day as the exponential average on day on and proceeds with the calculations. If one is calculating
the exponential average of five days, the correct five day exponential average will be available
from the sixth day onwards and so on.
Weighted Moving Average:

In this system, weights are attached to the closing prices. Commonly used weights are 1 for day
one, 2 for day two and so on. In this case, one has to multiply the closing prices with the weights
and add the weighted closing price. Divide this total with the sum of the weights to get the
weighted moving average. Thus, if one has to calculate the five day weight moving average, one
would use the weights 1 to 5 and the total of the weights would be 15.

INTERPRETATION:

While discussing the interpretation of moving averages, greater emphasis will be laid on the
interpretation of the simple moving average as statistically it has been proved that the simple
moving average give better buy and sell signal in the long run when compared to either the
exponential or the weighted moving average. The next preferred after the simple moving average
are the exponential moving averages. The weighted moving averages are the least preferred
moving averages.

Hence, most of the time, one finds that analysts use either the simple moving average or the
exponential moving average.

As the moving average is expected to reflect the underlying trend in scrip, intersection of a
moving average is often taken as the first sign of trend reversal. Also, the moving average
provides the support and resistance points. This means that if the scrip is above the moving
average, it can be expressed to encounter support as the moving average, it can be expected to
encounter resistance at the moving average and fall. In other words the moving average can be
treated as the curved trend line, which provides support and resistance. Thus, the moving average
serves three purposes – it gives an indication of the trend, its violation indicates the possibility of
trend reversal and it provides the support and resistance level.
It is even clear that:

 Downward penetration of a rising average would amount to penetration of a

support level, indicating the possibility of a further fall.
 Upward penetration of a falling average would amount to violation of a resistance
level, indicating the possibility of a further rise.
 As the average represents the underlying trend, its violation may signal trend
reversal.
 In a bullish trend, the scrip can be expected to encounter support near the rising
moving average and move upwards. In other words, if the scrip encounters
support near the average and starts moving upwards, one may buy into the scrip.
 In a bearish trend, the scrip can be expected to encounter resistance near the
falling moving average and move downwards. In other words, if the scrip
encounters resistance near about the falling moving average and moves
downwards, one may sell the scrip.

PRICE RATE OF CHANGE:

The price rate-of change (“ROC”) indicator displays the difference between the current price and
the price x-time periods ago. The difference can be displayed in either points or as a percentage.
The momentum indicator displays the same information, but expresses it as a ratio.

It is well recognized phenomenon that security prices surge ahead and retract in a cyclical wave-
like motion. This cyclical action is the result of the changing expectations as bulls and bears
struggle to control prices.

The ROC displays the wave-like motion in an oscillator format by measuring the amount that
prices have changed over a given time period. As prices increase, the ROC rises; as prices fall,
the ROC falls. The greater the change in prices, the greater the change in the ROC.
The time period used to calculated the ROC may range from 1-day (which results in a volatile
chart showing the daily price change) to 200-days (or longer). The most popular time periods are
the 12- and 25-day ROC for short to intermediate-term trading.

The higher the ROC, the more likely a rally. However, as with all overbought/ overbought may
remain overbought for the market to begin to correct (i.e., turn up and down) before placing your
trade. A market that appears overbought may remain overbought for some time. In fact,
extremely overbought/oversold readings usually imply a continuation of the current trend.

The 12-day ROC tends to be very cyclical, oscillating back and forth in a fairly regular cycle.
Often, price changes can be anticipated by studying the previous cycles of the ROC and relating
the previous cycles to the current market.

INTERPRETATION:

Almost every significant chart formation (e.g., tops, bottoms, breakouts, etc) is accompanied by
a sharp increase in volume. The volume ROC shows the speed at which volume is changing.

Additional information on the interpretation of volume trends can be found n the discussions on
volume and volume oscillator.

CALCULATION:

The volume rate-of-change indicator is calculated by dividing the amount that volume has
changed over the last n-periods ago. The result is the percentage that the volume has changed in
the last n-periods. If the volume is higher today than n-periods ago, the ROC will be be a positive
number. If the volume is lower today than n-periods ago, the ROC will be a negative number.

ROI = (volume – volume n-periods ago/volume n-periods ago)

TRENDING PRICES VERSUS TRADING PRICES:

Several trading system and indicators have been developed that determine if prices are trending
(i.e., moving strongly in one direction) or trading (i.e., moving sideways in a back-and-forth
pattern). The intended approach is that you should use lagging indicators during trending markets
and leading indicators during trading markets. This approach is sound, with one caveat: although
it is relatively easy to determine if prices are trending or trading, it is extremely difficult to know
if prices will trend or trade in the future.
 CHAPTER-4

DATA ANALYSIS & INTERPRETATION

4.1 DATA ANALYSIS
There are lots of stocks in NSE and BSE.But I have taken only few stocks to analyze how to
minimize risk of the stocks.Here I have taken four stocks to make my technical analysis.

L&T

EXPONENTIAL MOVING AVERAGE:

I have taken prices of one month( 20 working days) and the exponential average calculation is as
follows: Factor = 2/n+1=1.4, N = 5

DATE CLOSING PRICE EMA

3-May-10 1,591.90 1591.9000
4-May-10 1,549.35 1577.7167
5-May-10 1,538.85 1564.7611
6-May-10 1,526.90 1552.1407
7-May-10 1,517.35 1540.5438
10-May-10 1,546.80 1542.6292
11-May-10 1,544.25 1543.1695
12-May-10 1,563.90 1550.0797
13-May-10 1,571.00 1557.0531
14-May-10 1,529.35 1547.8187
17-May-10 1,606.90 1567.5125
18-May-10 1,661.05 1598.6917
19-May-10 1,633.60 1610.3278
20-May-10 1,642.10 1620.9185
21-May-10 1,608.55 1616.7957
24-May-10 1,631.40 1621.6638
25-May-10 1,558.50 1600.6092
26-May-10 1,607.75 1602.9895
27-May-10 1,628.85 1611.6096
28-May-10 1,626.55 1616.5898
31-May-10 1,631.35 1621.5098

L&T

PRICE RATE OF CHANGE

Here I have taken 5 days change of closing prices.

DATE CLOSING PRICE RATE OF CHANGE

3-May-10 1,591.90
4-May-10 1,549.35
5-May-10 1,538.85
6-May-10 1,526.90
7-May-10 1,517.35
10-May-10 1,546.80 99.9717
11-May-10 1,544.25 99.9967
12-May-10 1,563.90 100.0163
13-May-10 1,571.00 100.0289
14-May-10 1,529.35 100.0079
17-May-10 1,606.90 100.0389
18-May-10 1,661.05 100.0756
19-May-10 1,633.60 100.0446
20-May-10 1,642.10 100.0453
21-May-10 1,608.55 100.0518
24-May-10 1,631.40 100.0152
25-May-10 1,558.50 99.9383
26-May-10 1,607.75 99.9842
27-May-10 1,628.85 99.9919
28-May-10 1,626.55 100.0112
31-May-10 1,631.35 100.0000

After putting these into graph we can predict average price of the security. I have taken 5 days
rate of change. [No. of working days=21days].
RIL

EXPONENTIAL MOVING AVERAGE

We have taken prices of one month(all working days) and the exponential moving average
calculation is as follows:

DATE CLOSING PRICE RATE OF CHANGE

3-May-10 1,023.75 1023.7500
4-May-10 1,021.15 1022.8833
5-May-10 1,020.65 1022.1389
6-May-10 1,007.85 1017.3759
7-May-10 1,032.80 1022.5173
10-May-10 1,079.40 1041.4782
11-May-10 1,067.80 1050.2521
12-May-10 1,082.95 1061.1514
13-May-10 1,071.80 1064.7009
14-May-10 1,043.65 1057.6840
17-May-10 1,016.55 1043.9726
18-May-10 1,020.60 1036.1818
19-May-10 998.65 1023.6712
20-May-10 999.95 1015.7641
21-May-10 995.55 1009.0261
 24-May-10 1,022.65 1013.5674
25-May-10 985.65 1004.2616
26-May-10 1,008.05 1005.5244
27-May-10 1,022.25 1011.0996
28-May-10 1,036.65 1019.6164
31-May-10 1,045.60 1028.2776

Factor= 2/n+1=0.33, n=5

Take n as 5, mean 5 days moving average. After calculating all these moving averages we have
to put it into a graph to know the fluctuation and average price.

PRICE RATE OF CHANGE

We have taken prices of one month (all working days) and the rate of change calculation is as
follows-

DATE CLOSING PRICE RATE OF CHANGE

3-May-10 1,023.75
4-May-10 1,021.15
5-May-10 1,020.65
6-May-10 1,007.85
7-May-10 1,032.80
10-May-10 1,079.40 100.0544
11-May-10 1,067.80 100.0457
12-May-10 1,082.95 100.0610
13-May-10 1,071.80 100.0635
14-May-10 1,043.65 100.0105
17-May-10 1,016.55 99.9418
18-May-10 1,020.60 99.9558
19-May-10 998.65 99.9222
20-May-10 999.95 99.9330
21-May-10 995.55 99.9539
24-May-10 1,022.65 100.0060
25-May-10 985.65 99.9658
26-May-10 1,008.05 100.0094
27-May-10 1,022.25 100.0223
28-May-10 1,036.65 100.0413
31-May-10 1,045.60 100.0224

Here we have taken 5 days change of closing prices. After putting these into graph we can
predict average price of the security.
4.2 DATA INTERPRETATION

A: FROM the above graph of larsen and tourbo it is clear that he company stock did not fluctuate

much in the month of may 2010.The price of the share remained between 1590-1650 .The
companyeven announced dividend to its share holder in the month of May @625%

B: the stock of RIL was arround 1000-1050 .There was not much fluctuation seen int the
stock of reliance industries limited.The Q1 results was historic point of view for the company
since its incorporation as it nhas achieved best turnover int he quarter and its net profit was also
increased by 20 % compared to the last quartertly resuls. The company had even announced
dividend @70% in April 2010.

Conducting a market survey is collecting primary data required to carryout the study. A survey
on the behaviours of the investors towards technical analysis has conducted in some of the Direct
Business Catalysts (DBC). The sample was randomly picked. The research tool used to conduct
the survey is questionnaire.

Research depends on two kinds of data primary and secondary. Primary data consists of
observing phenomena and subsequently surveying respondents. The study requires primary data
for learning the investor’s perception about Technical Analysis. The company supplies the
database required for the study.

Primary data collection involves the following steps:

Meeting the clients as per the information provided by the database, scheduling the appointment
from customers through call convenience and trying to know investors perception towards
Technical Analysis.

Secondary data marks the beginning of the research process. Information is gathered from both
internal and external sources. Secondary data is required to gain an insight into the Technical
Analysis.
CHAPTER-5
CONCLUSION
5.1 FINDINGs

1.In comparison with other analysis, technical found as the best analysis for indicating the

market.

2.Though it is based on the past performance of the prices but it indicates the market.

3.Stocks price fluctuations are a product of human emotion. Stocks move irrationally as
investors over buy or over sell. Technical analysis is the study of such irrationalities

4.The share prices of different companies vary but the prices indicate the relative strength and
the average price of the stock.

5.The market prices are highly volatile and depend on the sentiments of investor.

6.All indicators show the same thing when to buy and sell the security and the over sold
position of the stock.

7.The support and resistance level of the stock is the vital factor, which is found from the
study that it indicates the line above and below which the price generally not fluctuate.

5.2 SUGGESTION

The followings are the suggestion required to be taken into consideration drawn through
the survey done.
1.All the investor using technical should have adequate knowledge to study the graphs and
charts.

2.As technical analysis is the most important for any investment decision, the company should
keep some awareness programmers to make understand the pros and cons of the technical to the
investors who are unaware of this analysis.

3.Many of the investors have a fear how to analyze and how to choose the security to get the best
output of that, the securities to be choose from proper analysis.

4.The prices taken for the analysis should be genuine and from proper source.

5.Study of support and resistance should be given more importance to know the average price.
Lastly I would like to conclude by telling in short some ways to manage our trading risk.

Attention to losses is a sign of market experience. Attention to profit is a sign of market

immaturity. Professional traders show a willingness to forgo marginal positions and wait for the
really good ones. They also keep one eye on the downside at all times so they understand the
cost of being wrong.

Newer traders focus their attention on making money, but this is a big mistake. Risk determines
profitability in our modern markets. The profit chase undermines the timing that's necessary to
get into the market at the most advantageous prices. This often coincides with buying when
others are rushing to sell, and selling when others are running to buy.

A razor-like concentration on risk marks the boundary between a trading professional and an
amateur. Of course, risk isn't nearly as sexy as throwing money at a hot stock. But we all need to
examine our priorities when it comes to the trading game. Are you interested in the adrenaline
rush, or do you want to survive and prosper over the long haul?

Risk management starts with the acute realization that the market is a very dangerous place.
Once we recognize this fact of life, the actions we need to survive become intuitive. Here are 10
ways to approach this formidable challenge:

1. Visualize the loss. Ask yourself what you can lose on each trade before you take a
position. You'll be amazed how this simple question opens the door to new opportunities
you can't see when you're focused on profit. Many times a marginal pattern becomes a
great trade, because there's almost no risk in jumping on board.
2. Know your pain threshold. Determine the exact dollar figure that represents the
maximum loss you're willing to take on a trade. Then do the math and make sure your
exposure doesn't exceed this number at any time. If it does, stand aside and wait for less
risk, or reduce your position size.
3. Take free trades. Start with a small position when you're not sure what kind of risk
you're taking on. Add to it after you get that small piece to move in your favor. Then
 concentrate on keeping the total position as a "free trade," regardless of the original
pattern or setup. Great things can happen when you're in a trade in which there's no
money to lose.
4. Shift your timing. Take your profit early or late, but never in between. You get your
move and are looking for a big winner. Then the market stalls and threatens to reverse.
Take your money right away or sit on your hands through the pullback. The worst thing
you can do is to panic on the way down and sell the low, just before the position recovers.
5. Turn off the time and sales. Most traders want validation for their ideas, so they wait to
see what other traders are doing before they act. This is a great way to become the bag-
holder on every trade. Turn down the volume by turning off the time and sales ticker.
Then focus your undivided attention on the trigger numbers where you should be in or
out of the position.
6. Know your bottom line. You may think you're making money when you're not. Leave
your ego at the door and compile all of your accounts into a single spreadsheet. Then see
how profitable you really are. You could be patting yourself on the back for a few good
day trades while your long-term account is going to hell.
7. Develop a basket mentality. Your capacity for risk increases dramatically when you
manage your positions as a group, rather than fretting over individual winners and losers.
Start the day by considering how much exposure you want to take on or eliminate. Then
take required action across all positions and accounts to meet this objective.

Settle for less. Make targets in the ideal world but trade in the real world. It's easy to destroy a
good position by asking too much of it. Profit targets should be abandoned when market
conditions change. It makes no sense to risk your hard-earned dollars trying to squeeze a few
pennies out of a winner.]
BIBLIOGRAPHY

1 .Websites

a) www.idbi.com

b) www.idbipaisabuilder.in

c) www.indianbusiness.nic.in/india-profile/banking.htm

e) www.investopedia.com/terms/d/covariance
f) www.investopedia.com/terms/d/risk premium

2. Books

a) FINANCIAL MANAGEMENT – I.M. PANDEY, ninth edition, vikas

publishing house pvt. Ltd.

b) INVESTMENTS – ZVI BODIE, ALEX KANE, ALAN MARKUS, PITABAS

MOHANTY, sixth edition, Tata McGraw-Hill Publishing Company limited.

c) DEALING WITH FINANCIAL RISK – DAVIS SHIRREFF, fifth South Asian

edition, published by profile.
THANK YOU