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TRADING STRATEGY OF INVESTORS IN VOLATILE STOCK MARKET
IN PARTIAL FULFILLMENT OF SUMMER TRAINING IN 2 YEAR MBA PROGRAMME OF GUJARAT UNIVERSITY
SUBMITTED TO GUJARAT TECHNOLOGICAL UNIVERSITY (YEAR 2011-2013)
SUBMITTED BY ENROLLMENT NUMBER: (117140592057) (Nirav shah) (117140592050) (Bhavik parekh) Guided By: Prof.Amish Soni
GLS Institute of Computer Technology (GLSICT – MBA)
This is to certify that Mr. Nirav shah and Mr. Bhavik parekh Enrolment No. 107140592057 and 1,7140592050 students of GLS Institute of Computer Technology (GLSICT-MBA) has successfully completed his Summer internship Project on “Trading strategies of investors in volatile stock market” in partial fulfillment of the requirements of MBA programme of Gujarat Technological University. This is his original work and has not been submitted elsewhere.
Dr. Hitesh Ruparel (Director)
Prof. Amish Soni. (Assistant Professor & Project Guide)
Date: _____________________________ Place: _____________________________
training acts as a bridge between theoretical knowledge and practical implementation of the knowledge. which has helped me to gain both practical as well as theoretical knowledge.PREFACE In today’s fast moving economy only theoretical knowledge is not sufficient for an individual to perform sufficiently. Thus. And for this purpose this Summer Internship Project is carried out. practical training enables students in understanding the administration and functions of a corporate entity. To fill up the gap between theory and practical we must have enough theoretical as well as practical knowledge regarding business environment. it helps an individual to know the actual uses and implications of the theoretical knowledge acquired in the classroom. Practical training helps an individual to develop managerial abilities. 4 . Practical training is one of the vital aspects of management field. Thus. Hence.
He provided all the essential information for preparing a good project report.ACKNOWLEDGEMENT Every work in the world is done with the help of some or other. Amish Soni as he guided me for selecting the project. Sunil Shah (Vice President. According to a famous saying we should thank the one that have helped you in our work. He or she may directly or indirectly involve in that work. 5 . Arcadia Shares) and all their staff members for co-operating with us. So here in this part I am doing the work of thanking all those people who helped me in making this report. I am very much grateful to DR.Hitesh ruparelia and Prof. I am also thankful to Mr.
6 . Fundamentals of the company is most influencing factor in the cash market. So from the study it can be found that in what situation investors will do trading accordingly.arbitrading and speculation in this segment. Investors prefer speculations in this segment. Investors will do hedging . Generally investors interested to trade in the intraday trading. They will hold their position in this segment. This report is taken for the purpose of knowing the different trading strategies of investors in volatile stock market. In cash segment there are two forms. In the derivative segment there are mainly two forms. EXECUTIVE SUMMARY This project Report contains the topic in ―TRADING STRATEGIES OF INVESTORS IN VOLATILE STOCK MARKET‖. These are the following objective of the research. the research interviewed the respondents with the help of well-structured questionnaires. Investors will book their partial profit if the trade goes in their favor in cash market. Investors will not square up their position in this segment. Primary Objectives: To study the trading strategies of investors in volatile market To study the factors influencing investors in their investment To study the behavior of investors in different market situation We have selected the exploratory as well as descriptive research design with non probability sampling in which convenience sampling was used in the study and the research take 200 respondents for carrying out the study. Investors mostly trusting CNBC TV-18 in all channels. From the study it was found that majority investors would prefer both segment cash and derivatives. Delivery form and intraday form. futures and options.
1. Data Collection Sources Primary Data: Questionnaire Secondary Data: Books. 5. Problem Statement ―Trading strategies of investors in volatile stock market‖ to know the strategies of the investors in volatile stock market. newspaper. websites. 7 . what are the different stragies of the investors in different situation in the volatile stock market can be mean. Here. Objectives Of The Study To study the trading strategies of investors in volatile market To study the factors influencing investors in their investment To study the behavior of investors in different market situation 3. Research Design Exploratory as well as descriptive research design. magazines. We have to study the perception of financial advisors and for studying the perception of anyone. 2. journals. 4. exploration is necessary. We will use descriptive research by using secondary data and by describing the insights related to the mutual fund industry and other financial products. Theoretical Framework ―Trading strategies of investors in volatile stock market‖.
Research Plan We have prepared questionnaire that will be filled up by the respondents and then the data analysis & interpretation will be done on that. 7. 9. This survey research will help to know the different perception about the investment.Research Approach We have followed Survey research approach.Research Instrument For the study we have used questionnaire as a research instrument that contains various types of questions. We conducted survey of investor’s perception about the different investment products. 8. Sampling technique: Probability sampling will be used in which convenience sampling method will be used. Sample size: 200 respondents.Sampling Method Population: Retail investors in Rajkot city.6. 8 .
This report has not been previously submitted to any other university or any institution for examination or any other purpose. Ahmedabad. Date: Place: Rajkot 9 . Semester 3 hereby declare that the project presented is my own work and has been carried out under the guidance of Prof. Amish Soni of GLS.DECLARATION I undersigned Nirav Shah and Bhavik parekh the student of MBA.
Table of Content Ch. No A B C D 1 2 3 4 5 6 Preface Acknowledgement Executive summary Declaration Research Methodology Introduction Topic Page No 4 5 6 9 11 20 37 56 63 65 Data analysis and Interpretation Hypothesis testing Findings Conclusion References Bibliography Appendix 10 .
enable the clients to transfer their financial risks to he financial service companies. thus. they have to face risks due to fluctuations in the exchange rates.Research Methodology Literature review HISTORY OF DERIVATIVES With the opening of the economy to multinationals and the adoption of the liberalized economic policies. interest rate risk. Deregulation of interest rate cause interest risks. With the integration of the financial markets and free mobility of capital. economic and political condition prevailing in the country and so on. It may be due to certain inherent factors and external factors like the market condition. future. For instance. swaps etc. options. the economy is driven more towards the free market economy. Thus. risk management becomes a must for survival since there is a high volatility in the present f inancial markets. It exposes the clients. In the present state of the economy. This really protects the clients from unforeseen risks and helps them to get there 11 . Apart from it. Government’s policy. In this context. there is an imperative need of the corporate clients to protect there operating profits by shifting some of the uncontrollable financial risks to those who are able to bear and manage them. economic risk and political risk. when countries adopt floating exchange rates. risks also multiplied. the financial service companies can play a very dynamic role in dealing with such risks. derivatives occupy an important place as risk reducing machinery. Derivatives are useful to reduce many of the risks discussed above. Again. Derivatives. In fact. particularly corporate clients to various risks such as exchange rate risk. They can ensure that the above risks are hedged by using derivatives like forwards. The complex nature of financial structuring itself involves the utilization of multi currency transactions. securitization has brought with it the risk of default or counter party risk. every asset—whether commodity or metal or share or currency—is subject to depreciation in its value.
derivatives are absolutely essential. 12 .due operating profits or to keep the project well within the budget costs. To hedge the various risks that one faces in the financial market today.
But. 13 . Sodhani.P. It is easier to introduce derivatives in forex market because most of these products are OTC products (Over-the-counter) and they are highly flexible. the necessary groundwork for the introduction of derivatives in forex market was prepared by a high-level expert committee appointed by the RBI. In the forex market. one can use them to insulate his equity portfolio against the vagaries of the market. The players in the derivative market should have a sound financial base for dealing in derivative transactions. Index options and index futures are basically derivate tools based on stock index. However. a few derivative products such as interest rate swaps. Now. Brokers must also be trained in the intricacies of the derivative-transactions. training of financial intermediaries and the provision of well-established indices. all attempts are being made to introduce derivative instruments in the capital market. Committee’s report was already submitted to the Government in 1995. Since derivates are permitted legally. It was headed by Mr. there should be proper legislations for the effective implementation of derivative contracts. there are brighter chances of introducing derivatives on a large scale. What is more important for the success of derivatives is the prescription of proper capital adequacy norms. As it is. it has not yet received the necessary permission from the securities and Exchange Board of India. They are really the risk management tools. only when.DERIVATIVES IN INDIA In India. Infact. O. coupon swaps. The utility of derivatives through Hedging can be derived. there is transparency with honest dealings.7 to 10 corers cover is proposed for members who wish to enroll for such trading. derivatives have been introduced in the Indian Market in the form of index options and index futures. The National Stock Exchange has been planning to introduce index-based futures. These are always between two parties and one among them is always a financial intermediary. A stiff net worth criteria of Rs. currency swaps and fixed rate agreements are available on a limited scale.
Hence. 14 . Hence. Daily trading volume on this forward market is around $500 million a day.Every investor in the financial area is affected by index fluctuations. Moreover. investors would be more interested in using index-based derivative products rather than security based derivative products. However. derivatives available in India in foreign exchange area are also highly beneficial to the users. India has a strong dollar. Indian users of hedging services are allowed to buy derivatives involving other currencies on foreign markets. Portfolio risk is dominated by the market risk.rupee forward market with contracts being traded for one to six month expiration. There are no derivatives based on interest rates in India today. risk management using index derivatives is of far more importance than risk management using individual security options. Hence. regardless of the composition of the portfolio.
. And Ø Stock options introduced in July 2001. The market wide limit for index products in NIL. The natures of derivative contracts permitted are: Ø Index Futures contracts introduced in June. if any should be rounded of to next higher multiple of 100. 2001. 10% of the free float in terms of number of shares of a company. But.2 lakhs. For stock specific products it is of open positions. there are market wide limits also. there is a stipulation for the lot size of a derivative contract. i. The lot size of the underlying individual security should be in multiples of 100 and tractions. The lot size refers to number of underlying securities in one contract. 2000. Or 10% of the number of shares held by non-promoters. The minimum contract size of a derivative contract is Rs.RECENT DEVELOPMENTS At present Derivative Trading has been permitted by the SEBI on derivative segment of the BSE and the F&0 segment of the NSE.e. for option and futures the following wide limits have been fixed. Ø Index options introduced in June. 15 . Apart from the above. 30 times the average number of shares traded daily. Besides the minimum contract size. during the previous calendar month in the cash segment of the exchange.
such as currency forwards. the price in the cash market is usually less than its price in the futures market. transactions involving futures are conducted exclusively on exchanges. One of the characteristics that sets the cash market apart from a futures market is this immediate satisfaction and transfer of ownership. are bought and sold for cash and delivered immediately. In a cash market. the seller relinquishes all claims to the property and bestows ownership upon the buyer. as the goods are received by the buyer upon rendering a cash payment for the products. In the equities section shares and mutual funds can be traded. such as storage and insurance. while forward transactions. such as grain. While both approaches are capable of 16 . involved in holding a commodity until it can be delivered at some point in the future." Explains 'Cash Market' Cash market transactions can take place either on a regulated exchange or over-the-counter (OTC). crude oil. the exchange of goods and money between the seller and the buyer takes place in the present. the equities and the debt securities sections. On the cash market trading is conducted in two sections. the investor immediately assumes ownership and is free to do with the commodity or security as he or she wishes. With a cash market. together with the compensation note as a special security. or RAM chips. In contrast. The securities traded in the debt securities section include: government debt securities (treasury bills and government bonds). Also known as the spot market. as opposed to the futures market where such an exchange takes place on a specified future date. since such transactions are settled "on the spot. For a specific commodity. corporate bonds and mortgage bonds.Cash market Definition of 'Cash Market' The marketplace for immediate settlement of transactions involving commodities and securities. Upon the receipt of the payment. also called spot market. are generally executed on the OTC market. In a sense. The cash market is a buying strategy in which the buyer makes an immediate payment that is equal to the current market price for commodities and other types of securities. gold. This is because there are carrying costs. any type of retail transaction such as the purchase of groceries could be considered a cash market. A market in which commodities. Futures markets involve a longer period for the transaction to be considered complete.
We will use descriptive research by using secondary data and by describing the insights related to the mutual fund industry and other financial products.To study the trading strategies of investors in volatile market . It can also immediately separate the suitability of instruments.‖ 3. We have to study the perception of financial advisors and for studying the perception of anyone.To study the behavior of investors in different market situation. or alterations to. 17 . the cash market approach may offer a level of speed and excitement that will attract investors who prefer to be constantly on the move with the investment portfolio. 2.helping an investor realize a return on an investment. strategies. PROBLEM STATEMENT: ―Trading strategies of investors in volatile stock market.To study the factors influencing investors in their investment . Objectives: . and tactics into some action groups. the inherent risk exposure relative to a commonly understood reference point. positions. Exploratory as well as descriptive research design. exploration is necessary. Risk management in Cash market It can objectively evaluate and express the acceptability of the inherent risk exposure and can explicitly state their intent regarding the continued acceptance of.
Here. magazines. journals. We will use descriptive research by using secondary data and by describing the insights related to the mutual fund industry and other financial products. Research Design Exploratory as well as descriptive research design. newspaper. exploration is necessary. 18 .4. Data Collection Sources Primary Data: Questionnaire Books. websites.. Sampling technique: Probability sampling will be used in which convenience sampling method will be used. We have to study the perception of financial advisors and for studying the perception of anyone. 5. Sample size: 200 respondents.Theoretical Framework ―Trading strategies of investors in volatile stock market‖. what are the different stragies of the investors in different situation in the volatile stock market can be mean. 6. Sampling Method Population: Retail investors in Rajkot city. Secondary Data: 7.
19 .Research Plan We have prepared questionnaire that will be filled up by the respondents and then the data analysis & interpretation will be done on that. 10.Research Approach We have followed Survey research approach.Research Instrument For the study we have used questionnaire as a research instrument that contains various types of questions. This survey research will help to know the different perception about the investment. We conducted survey of investor’s perception about the different investment products.8.. 9.
Working with the leading stock exchanges and noted financial institutions has drilled in us the importance of real-time information and use of analytical tools in investment decisions. Today Arcadia has accumulated acknowledged leadership in execution and clearing services on exchange-traded derivatives and cash-market products. Traditionally. our operation was concentrated in fast-moving capital market of Western India. But sensing great potential. Arcadia has steadily shaped into a leading financial service provider.INTRODUCTION ARCADIA SHARES AND STOCK BROKERS PVT LTD. with memberships in: NATIONAL STOCK EXCHANGE OF INDIA (NSE) BOMBAY STOCK EXCHANGE (BSE) MULTI COMMODITY EXCHANGE (MCX) NATIONAL COMMODITY & DERIVATIVES EXCHANGE (NCDEX) DEPOSITORY PARTICIPANT OF CDSL. ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI). Today. right on the wave of a post-liberalization market economy. As financial services became a major contributor to economic growth. Arcadia came to life in 1995. 20 . we have a market presence across the country. we were a small company with just 5 employees. with over 275 branches & franchisee outlets. This systematic presence-building and efficient delivery of service has put Arcadia among the fastest growing retail broking houses in the country. We have established a strong retail network not only in metros but also in tier two and tier three cities. In 1995. we have launched strong expansion plans in the North and the South.
ANTONY SEQUEIRA. Clients also have constant access to their account information via internet. NR.RAJENDRA PRASAD ROAD.Practicing this over the years has made us experts in understanding investor requirements. DR. NITIN BRAHMBHATT.SUNIL C. (DIRECTOR) 3.PANCHNATH MANDIR. TOP MANAGEMENT: 1. MR. PANCHNATH PLOT CORNER. Arcadia's integrated and innovative use of technology provides clients with the ability to trade offline & online. RAJKOT-360001 21 .SHAH (VICE-PRESIDENT) ADDRESS: 11. (FOUNDER AND MANAGING DIRECTOR) 2. MR.
Building no. Dr. Service road. Panchanath plot corner. Panchnath mandir. Nr.About us Company information Name: Arcadia Shares and Stock Brokers Pvt. Antony Sequera Director: Mr. LTD Registered Office: 328.: +91 22 67739999 Dealing Room: Toll free: Fax: +91 22 26478888 1800 22 1555 +91 22 26478988 22 . Rajendra Prasad road Rajkot – 360001 Founder: Mr. Ninad. Akhil Shah Contact no. 7. Nitin Brahmbhatt Regional Head: Mr. Nr Bhavishya Nidhi Bhavan Bandra (East) Mumbai – 400051 Head Office: As above Regional Office: 11.
Membership NSE (Cash and Derivatives) : INB/F_230778238 BSE (Cash) : INB010778232 CDSL DP : IN225 MCX : 10950 NCDEX : 00374
1. Equity Investment Looking for an easy and convenient way to invest in equity and take positions in the futures and options market using our research and tools. To start trading in Equity, all you need to do is open an online trading account. You can get help opening the account and get guidance on how to trade in Equity.
2. Commodity Trading (MCX - NCDEX) spaced dynamic marketwith excellent liquidity can NOW trade in Commodity Futures Market. The Commodity Exchange is a Public market forum and anyone can play in these vital Commodity Markets. ARCADIA COMMODITIES AND TRADING can certainly be your point of entry to the commodity markets. ARCADIA is registered trading – cum – clearing member of NCDEX and MCX. Participation is not difficult.All you need is to open an account with us. We shall offer you advice and research on investments.
3. Derivatives Trading Futures and options are derivatives, which use equity as their underlying. Hence their Equity Advisory Group (EAG), which is highly qualified, will also act as your advisors and help you take informed decisions while trading in these derivative instruments.
4. Internet Trading Making the right trade at the right time! Welcome tour E-Broking service which brings you an experience of online buying and selling of shares with just a click.
5. Mutual Fund Advisory Transact in a wide range of Mutual Funds. Mutual funds are an attractive means of saving taxes and diversifying your investment portfolio. So if you are looking to invest in mutual funds, ARCADIA offers you a host of mutual fund choices under one roof; backed by indepth information and research to help you invest smartly
6. IPO Distribution IPO or Initial Public Offer presents good opportunities for netting high returns on your investments in a relatively short period of time – if you invest early. Get information on IPO news, forthcoming IPOs and lot more.
7. Demat Services (CDSL) In the times of T+2 having a Demat account linked to your trading account becomes more convenient. The no-trading members can also avail of our Depository services. You receive regular account reports and an efficient service at all times. ARCADIA is a member of CDSL.
DEPARTMENTS KYC Risk Management Admin Banking DP Back-off Relationship Management Billing IT Sales Feedback Compliance & Legal 26 .
so there is no scope for cross-selling 27 . i. weaknesses. Wide product range to enable the clients to choose the best alternative One of the best DPs in India A positive image in existing clients WEAKNESSES Time consuming process for account opening. opportunities and threats for the company. It will be very useful for the company to analyze them and for that purpose the SWOT analysis of the company is presented here. intelligent and loyal staff Competitive brokerage The best investment advice through dedicated research and reports.e. Stock Broking. resolving the problems of the customers. etc. STRENGTHS Well maintained infrastructure Dedicated. I came to know the strengths. Company is present in only one business.SWOT – ANALYSIS During my training at Arcadia share and stock.
there is enormous potential for these market THREATS Increasing competition from existing as well as new players A threat of loosing clients for any kind of weakness of the company Indirect threat from instable stock market.e. i.OPPORTUNITIES Slope of stock market towards delivery based transactions Open interest of the people to enter in stock market for investing Attract the customer who are dissatisfied with other brokers An indirect opportunity generated by the stock market due to its current situation Online trading a/c market has vast potential Derivatives and Commodities markets are growing so. low/no profit of Angel’s clients would lead them to go for other broker New multinational and national players are coming with competitive products 28 .
for every organization service quality is having great importance. This helps the company take action to improve the service quality. Their works are more productive. This study tells us how much the employees are capable and their interest at work place. Therefore every organization it is necessary to study the rate of satisfaction of their clients. They are more committed to the organization. They will care about the quality of their work. 29 . The basic need for studying the satisfaction of the clients is to find out their view about the services provide by Arcadia Shares and Stock PVT.IMPORTANCE OF RESEARCH In this modern era. LTD The research study on satisfaction provides necessary information to the company. Study of ―Service Quality‖ helps the company to maintain a standard and increase productivity by improving service. They will create and deliver superior value to the client.
30 . To know the awareness level regarding cash & derivatives segment in stock market. To study the indicators that investors take into consideration while trading in cash and derivative market.OBJECTIVE OF STUDY The broad objective of this study is to know the satisfaction level of clients for services provide by Arcadia. To study the annual investment level of investors in stock market. To study stock market and understand its market segment. The specific purposes of this study are: RESEARCH OBJECTIVES: To study the trading strategies of investors in volatile market To study the factors influencing investors in their investment To study the behavior of investors in different market situation. To know investment behavior of people in stock market.
SCOPE OF THE STUDY The study has the scope of including the most important organ of the organization that is the client. The study is limited to the 100 investors trading in stock market who are above the age of 20 trading in various brokerage houses of Rajkot. 31 . The study is to provide information to better understand how client think and feel as member of the organization.
Statistical 4.RESEARCH DESIGN What is Research Design? Research design can be thought of as the structure of research – it is the ―glue‖ that holds all of the elements in a research project together. Operational As per this research sampling design method is very useful for the survey on the service quality of the Arcadia. ―A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combined relevance to the research purpose with economy in procedure. 32 . Observation 3. Sampling 2.‖ Generally there are mainly four type of research design: 1.
33 . We have collected data through Questionnaire. We have used following secondary data sources. is called primary data. The normal procedure is to interview some people individually to get a sense of how people feel about the derivatives & commodities segment. which is collected directly from the respondents.e. Secondary Data: Data collected for some purpose other than the problem at hand are called as secondary data.SOURCES OF DATA As we all know that there are mainly two sources of data i. Primary Secondary Primary Data: The data. Library Research I have searched many books and materials like Philip kotler to understand the research methodology. 1. primary data is the main source of information. So far as our research is concerned.
bseindia. We have also used various financial portals such as moneycontrol. etc. we have used both of the search engines for gathering the data.2. Internet Surfing There are many search engines which provides us the data for variety of topics such as Google Search. 3. 34 .com. we have also taken the help of arcadiastock.com.com in order to fulfill our requirement. nseindia.com. Yahoo Search etc. Business Magazines Many business magazines are referred to gather data about various trading strategies.
(Questionnaire is attached as Annexure) The questionnaire is supposed to be given to an individual to fill up on his own. 35 .RESEARCH INSTRUMENT The research instrument used for primary data collection is questionnaire. Importance and Benefits: The research would help to understand the trading behavior of people in various market situation and it would also help to find out the various trading strategies in cash as well as derivative market segment. The questionnaire has close ended questions. This research would also help to find out various indicators that people take into consideration while trading in different market segments. We have approached investors of different broking houses and income groups. Method of Data Collection Primary data-in order to collect direct information from investors we have designed a questionnaire.
36 . due to which we might not get the proper results. Sample Area: The area was limited to Rajkot city only. Sample Size: The last limitation is Sample size. Time Limit: The time duration of the research is short that’s why the information is not covered fully. taken by us is of 100 only.LIMITATION OF THE STUDY The limitations of this study are as follows: Personal Bias: People may have personal bias towards particular investment option so they may not give correct information and due to which conclusion may be derived.
83 trades in both segment while 8 respondents trades in only cash segment and 9 respondents trades in only derivatives market.Data Analysis and Interpretation Investor’s trading strategy in volatile stock market (1) Name of Trading Segment Trading Segment 8% 9% Cash Derivative Both 83% Out of 100 respondents. 37 .
(2) Annual Investment in share market Investment 14% below 1 lakh 52% 34% 100000 .500000 beyond 500000 38 .
39 .(3) What factors do you consider while investing in cash & Future market? Factors 7% 1% 20% Fundamenta analysis Technical Ananlysis Tips 55% Global Markets Broker 12% 5% Others Majority of the respondents follow Fundamental Analysis while some of the respondents also follow the global cues and minor numbers of respondents follow Tips. Brokers. So we can conclude that people are still unaware about the Technical analysis which can be termed as new trend in market. and Technical Analysis.
40 .(4) Which T. etc. Times Now.V. channels do you watch regularly for getting updates about the stock market? TV Channels 1% 6% 4% CNBC TV 18 Times now Zee Business CNN IBN Others 7% 82% From the above data we can analyze that majority of the respondents regularly watch CNBC TV18 as CNBC Awaaz while few of the investors prefer the other news channels like Zee Business.
41 .Analysis of Cash Market Segment (1) What is your motive while trading in cash market? 2% 8% Intra-day Delivery Based Depends 90% From the above data we can analyze that majority of the respondents goes with market conditions while few respondents trades specifically Intra-day or Delivery Based.
31 respondents prefer stop loss and target price. 26 respondents prefer trading with target price while 16 respondents doesn’t follow any fixed target price. 35 31 30 25 21 20 16 15 10 5 0 stop loss and target price only target hedging in price without options market stop loss sell on hike trade on target don't follow any price target price 9 28 26 42 . 21 respondents prefer to buy on dips while 9 respondents prefer to sell on hike. 28 respondents follow only target price without any stop loss.(2) Which of the following trading strategies you generally prefer? a) Trading with stop loss b) Trading without stop loss c) Hedging with target price d) Trading without target price e) Hedging in options market f) Buy at lower price / sell at higher price Out of 100 respondents.
(3) If the trade goes in your favor then which strategy do you prefer? 14% 9% 43% Book partial profit Book full profit Increase overall position Reverse overall position Wait and watch 12% 22% From the above pie chart. 43% of the respondents prefer to book partial profit if the trade goes in their favor. While few respondents prefer to Increase/Reverse their overall position. 43 . While 14% respondents prefer to remain neutral. while 22% of respondents prefer to book their full profit.
44 . So majority of respondents prefer to increase their position.(4) If the trade goes against your favor then which strategy you prefer? 9% 2% 21% Book partial loss Book full loss Make an average 35% Reverse overall position Wait and watch 33% Out of the 100 respondents. Few of respondents like to remain neutral while only 2% wants to reverse their overall position. While 33% of respondent prefer to book full loss and 21% prefer to book partial loss. 35% prefers to make an average when the trade goes against their favor.
45 . Volume and percentage change in price as an important indicator in order to trade in cash market.(5) What are the indicators you refer while trading in cash market? (Give ranks) Indicators 8 7 6 5 4 3 2 1 0 7 6 5 4 3 2 1 From 100 respondents. majority of respondents prefer to go with Fundamentals of company. while they give less importance to other indicators like Technical Levels. Hence they consider Fundamental of company and volume as ideal indicator. Circuit Filters. Average Trade price.
Analysis of Derivative Market Segment (1) Name of Trading Segment in Derivative Market 22% 2% Future Market Segment Option Market Segment Both of above 76% From the above chart we analyze that about 76% of the respondents deals in both the segment while 22% respondents prefer only Future Market and the rest of respondents deals in only Option Market Segment. 46 . Hence we can conclude that people are not much aware about Option Market Segment.
while 13%of respondents are indecisive about their trading strategy. we analyze that 48% of respondents prefer Position Trading that means they are ready to take risk and they also prefer more profit/loss. 47 .(2) What is your intention while trading in Derivative Market? 13% 39% Intra-day trading Position Trading Depends 48% From the above data. While 39% of respondent like to have Intra-day trading which shows that they are ready to carry forward their position and they prefer small gain/loss.
(3) Which of the following applies to you while dealing in derivative market? 9% 2% Speculation] Hedging Arbitration 89% From the above data. While only 9 % of the respondents are hedgers who likes to hedge their positions in the option markets and only 2 % of the respondents are arbitragers. we can conclude that most of respondents are speculators which mean that they are willing to enormous risk. So we can say that most of the respondents are risk takers in the markets. 48 .
So we can conclude that majority of respondents gives importance to stop loss and target price.(4) Which of the following trading strategy you generally prefer? a) Trading with stop loss b) Trading without stop loss c) Trading with target price d) Trading without target price e) Hedging n options market f) Buy at lower price/sell at higher price g) Others (please specify) _____________________ Out of 100 respondents. 42 respondents prefer to hedge in Option Market while 38 respondents prefer to buy on dips/sell on hike. 49 . 56 respondents prefer to have stop loss and target price while 62 respondents prefer to trade with out stop loss and without target price and 49 respondents prefer to trade with stop loss and without target price.
So they are not ready to take much risk while 35% of respondents book their full profit in their favorable situation. 50 . While 13 % of respondents remain neutral in such situation and 7% of respondents are more risk taker who increases their overall position in favorable situation. Few respondents are hedging their position and few respondents reverse their overall position according to market scenario.(5) If the trade goes in your favor then which strategy do you prefer? Book partial profit 13% 4% 3% 7% 38% Book full profit Increase your overall position Reverse your overall position Hedging your position 35% Wait and watch From the above data. we analyze that 38% of respondents book partial profit if the trade goes in their favor. So they are considered as safe players.
While 24% of respondents book partial loss which shows that they are not ready to take more risk. we can analyze that 29% of respondents makes an average if trade goes against their favor which indicates that they are ready to take further risk in the market and they are ready to bear further loss. 51 . 27% of respondents book their full loss which indicates that they are not ready to bear further loss and square-up their position.(6) If the trade goes against your favor which strategy do you prefer? 15% 24% 2% 3% Book partial loss Book full loss Make an average Reverse your overall position 29% 27% Hedging your position Wait and watch From above data. 15% of respondents remain neutral in such situation while rest of respondents like to hedge their position or reverse their overall position.
open interest. Volume. Hence we conclude that global market. While people prefer to give less priority to technical level.(7) What are the indicators you refer while trading in derivative market? Indicators 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 Volume Percentage change in price Global Market Top Open Interest Gainer/Loser Technical Levels Other From the above data. 52 . volume are the major indicators which people prefer. Global Markets as the most important indicators while trading in derivative market. percentage change in price. top gainer/loser. we analyze that people considers open interest. Here Open Interest indicates net outstanding contracts in derivative market which people consider most important.
1% of respondents prefer to book profit at stop loss level and continue their position. 53 .(8) What strategy would you prefer in cash/derivative if the market opens in a positive zone? 14% 1% 8% Buy at current market price Short sell at current market price 23% Buy at lower price Sell at higher price 32% Wait and watch 22% Other From the above data. While 23% of respondents prefer to short sell at current market price which indicates that they expect the market to fall sharply from the current level. we analyze that 32% of respondents prefer to sell at higher price which means that they assume the market to slightly correct. 22% of respondents prefer to buy on dips which shows that they are hopeful about the market to remain in a positive zone and 14% of respondents remains neutral and remaining respondents prefer to buy at current market price which shows that they are very optimistic about the market.
And 11% of respondents remains neutral. 54 .(9) What strategy would you prefer in cash/derivative market if the market opens in negative zone? 11% 1% 28% Buy at current market price Short sell at current market price Buy at further lower price Sell at market recovery Wait and watch 15% 23% 22% Other From the above data. While 1% of respondents prefer to book loss at stop loss level and continue their overall position. While 22% of respondents prefer to short sell at current market price and 15% of respondents likes to sell on hike which shows that they expect the market to fall sharply in the near term. we conclude that 28% of respondents prefer to buy at current market price which shows that they are confident about the market to move up while 23% of respondents prefer to buy at further lower level which shows that they expect the market to fall further but in the overall scenario they are very optimistic about the market.
55 . etc. we analyze that 39% of respondents prefer wait and watch strategy because they expect the market to be very volatile in the Coming days so they wait for market to stabilize and thus will enter after the happening of the event.? 2% Square-up your position 33% Holding your position 39% Reverse your overall position Wait and watch Other 15% 11% From the above data. Natural Calamities. Election.15 % of respondents prefer to hold their position and want to take further risk and 11% of respondents like to reverse up their overall position according to their prediction. While 33% of respondents prefer to square-up their position as they does not want to take risk.(10) What will be your trading strategy on the happening of any major events like Union Budget.
17% 13% From the above data. we analyze that 34% of respondents follow market rumors which shows that they are very sensitive in their trading while 17% of respondents follow media such as CNBC TV18. 13% of respondents follow expert opinions and behave accordingly. Majority of respondents behaves in different ways like some of them rely on their own experience. etc and takes their decision accordingly. Zee business. 56 . some remains neutral while some of them are ready to take further risk.(11) What will be your reaction in panic situation in the stock market? Follow rumors 36% 34% Follow Expert Opinion Follow Media Other (please specify).
0 H1 accepted: Here.0 Cumulative Percent 8.0 100.0 100. 57 .0 Valid Percent 8. Active in trading segment Frequency Valid cash market derivative market both markets Total 16 18 166 200 Percent 8.0 83. H1 hypothesis is accepted.Hypothesis: 1.so maximum people are not involved in one trading segment only.0 9. H1: maximum people are not involved in one trading segment only.0 100.0 17.0 83.0 9. Ho: maximum people are involved in only one trading segment.
The minimum expected count is 4. (1-sided) 42.0%) have expected count less than 5. H1: There is no significant relation between intention and strategy in trading in cash market. Chi-Square Testsi Value Pearson Chi-Square Continuity Correction Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases 42. 1 cells (25.000 . Computed only for a 2x2 table 58 .000 a.183 .000 .000 Exact Sig. Sig.579 38. b.913 43.000 b df a Asymp.2.64. (2-sided) 1 1 1 . (2-sided) Exact Sig.000 .366 200 1 . H0: There is significant relation between intention and strategy in trading in cash market.
0 which is less than 0. there is no significant relation between intension and strategy in trading in cash market.so. Ho is rejected and H1 is accepted.05.Ho is rejected: Here. Ho is rejected as from the chi-square test the value of Ho is 0.so Ho is rejected. 59 .
3.000 .0%) have expected count less than 5. (2-sided) . Chi-Square Tests Value Pearson Chi-Square Continuity Correctionb Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases 42. Computed only for a 2x2 table 60 .000 a. 1 cells (25. b.366 200 1 .579 a df 1 1 1 Asymp. H0: There is significance relation between intraday trading and trading with target.000 42.000 Exact Sig. (2-sided) Exact Sig.000 . The minimum expected count is 4.64.913 43. Sig. (1-sided) 38.000 .183 . H1: There is no significance relation between intraday trading and trading with target.
so. there is no significant relation between intraday trading and trading with target. Ho is 0. so Ho is rejected.0 which is Less than 0. Ho is rejected and H1 is accepted.05. Ho is rejected as from the chi-square test.Ho rejected: Here. 61 .
16. Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 200.610 200 a. Ho accepted: Here.515 . Sig. Ho is 0.515 which is More than 0. 7 cells (38. H1: There is no significant relation between intension and strategy in future market segment trading in derivative market.000 a Df 10 10 1 Asymp. so Ho is accepted.000 . 62 .05. (2-sided) .000 220. Ho is accepted as from the chi-square test.9%) have expected count less than 5. there is a significant relation between intension and strategy seems in future market segment trading in derivative market.4.432 93. The minimum expected count is . Ho: There is significant relation between intension and strategy in future market segment trading in derivative market.
Ho :people prefer to stay in if trade goes in their favor in derivative market H1: people prefer to book their profit in if trade goes in their favor in derivative market Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 103. Ho is rejected and H1 is accepted as people prefer to book their profit if the trade goes in favor in the derivative market.05.so it is rejected. (2-sided) .203 200 a. 63 . Sig.399 41. H1 accepted: Here. Ho is rejected as from the chi-square test it can be found that Ho is 0.5.000 .000 .12.6%) have expected count less than 5. 10 cells (55. The minimum expected count is .047 a df 10 10 1 Asymp.000 120.00 which is less than 0.
Majority of respondents prefer to make an average if the trade goes against their favor in cash market segment. Majority of respondents prefer to watch CNBC TV18 as their market guide. Majority of respondents prefer to trade in both Future and Option Market Segment. Majority of respondents like to book partial profit if the trade goes in their favor in case of derivative market segment. Majority of respondents prefer to have position trading in Derivative Market Segment with an intention to speculate in the market. Majority of respondents prefer wait and watch strategy on the happening of any major event. 64 . Majority of respondents prefer to make an average if the trade goes against their favor in case of derivative market segment.FINDINGS Majority of respondents trades in both cash as well as derivative market segment. Majority of respondents like to trade with stop loss and with target price in cash market segment. volume. Majority of respondents gives more importance to fundamental analysis and global market while investing in cash and derivative market segment. Majority of respondents give more importance to fundamental of company and volume in cash market segment. Majority of respondents like to buy at current market price if the market opens in a negative zone. Majority of respondents like to book partial profit if the trade goes in their favor in cash market segment. Majority of respondents give more priority to open interest. Majority of respondents follow rumors as well as uses their own experience in case of any panic situation in stock market. global market in order to trade in derivative market segment. Majority of respondents like to sell on hike if the market opens in a positive zone.
in volatile market people tends to make an average or book partial profit/loss in both the segment. we can conclude that people generally use both the segment but they generally use the Option Segment for hedging purpose and not for trading purpose. So in case of Cash Market Segment people are not more risk takers. Volume and Percentage change in price in cash market segment and there is a mixed pattern of trading between intra-day and delivery based trading. Generally. Volume and Global Market for trading purpose. And they give more priority to the Fundamentals. we can conclude that people generally trade with stop loss and with target price. 66 .CONCLUSION In case of Cash Market Segment. People generally trade with stop loss and uses hedging option in derivative market segment and they give more priority to Open Interest. In case of Derivative Market Segment. So we can conclude that people are less aware about the Option Segment as compared to Future Market Segment.
arcadiastock.com www.bseindia.com 67 .com www.nseindia.com www.moneycontrol.Bibliography www.
___ < 2 lakhs ___ 2 .10 lakhs ___ > 10 lakhs (5) Name of Broking House :.APPENDIX QUESTIONNAIRE Our purpose for this survey is just to study and analyze trading strategy of investors in volatile market._________________ (6) No.5 lakhs ___ 5 .________ (7) Name of trading segment :- ___ Cash Market 68 . of years dealing in share market :.___________________________ (3) Qualification :. (1) Name :. Investors are ensured that their filled up questionnaire will be kept private & confidential.__________________________ (4) Annual Income :._______________________________ (2) Occupation :.
V._________ (9) What factors do you consider while investing in cash & Future market? Fundamental Analysis Global Markets Technical analysis Broker Tips Others ………………………… (10) Which T. Channels do you watch regularly? ___ CNBC TV 18 ___ Times Now ___ Zee Business ___CNN IBN ___ Others Cash Market Segment (1) What is your intention while trading in cash market ? ___ Intra-day trading ___ Delivery based Investment ___ Depends upon market scenario (2) Which of the following trading strategies you generally prefer ? ___ Trading with stop loss ___ Trading with out stop loss 69 .___ Derivative Market ___ Both of the above (8) Annual Investment in share market :.
___ Trading with target price ___ Trading without target price ___ Buy on lower price ___ Sell on higher price ___ Others (please specify) (3) If the trade goes in your favor then which strategy do you prefer ? ___ Book partial profit ___ Book full profit ___ Increase your overall position ___ Reverse your overall position ___ Wait and watch (4) If the trade goes against your favor then which strategy do you prefer ? ___ Book partial loss ___ Book full loss ___ Make an average ___ Reverse your overall position ___ Wait and watch 70 .
___ Future Market Segment ___ Options Market Segment ___ Both of the above (2) What is your intention while trading in Derivative Market ? ___ Intra-day trading ___ Position trading ___ Depends upon market scenario (3) Which of the following applies to you while dealing in Derivative Market ? ___ Speculation ___ Hedging 71 .(5) What are the indicators you refer to while trading in cash market ? (Give ranks 1 to 7) ___ Volume ___ Percentage change in price ___ Average Trade Price ___ Top Gainers / Losers ___ Fundamentals of company ___ Technical Levels ___ Circuit Filter Derivative Market Segment (1) Name of trading segment in derivative market :.
. . . . . . . . . (5) If the trade goes in your favor then which strategy do you prefer ? ___ Book partial profit ___ Book full profit ___ Increase your overall position ___ Reverse your overall position ___ Hedging your position ___ Wait and watch 72 . . . . . . . .___ Arbitration (4) Which of the following trading strategies you generally prefer ? ___ Trading with stop loss ___ Trading with out stop loss ___ Trading with target price ___ Trading without target price ___ Hedging in option market ___ Buy at lower price / sell at higher price ___ Other (please specify) . . . . . . . . . . . . . . . . . . .
(6) If the trade goes against your favor then which strategy do you prefer? ___ Book partial loss ___ Book full loss ___ Make an average ___ Reverse your overall position ___ Hedging your position ___ Wait and watch (7) What are the indicators you refer to while trading in derivative market? (Give ranks 1 to 6) ___ Open Interest ___ Volume ___ Percentage change in price ___ Top Gainers / Losers ___ Technical Levels ___ Global Markets (8) What strategy would you prefer in cash/derivative market if the market opens in a Positive Zone ? ___ Buy at current market price ___ Short sell at current market price ___ Buy at lower price 73 .
. . . . . (9) What strategy would you prefer in cash/derivative market if the market opens in a Negative Zone ? ___ Buy at current market price ___ Short sell at current market price ___ Buy at further lower price ___ Sell at market recovery ___ Wait and watch ___ Other (please specify) . . . . . . . . . . . . . . . . . . 74 . . . . . . . . . . . . . . . . .___ Sell at higher price ___ Wait and watch ___ Other (please specify) . . . . . . . .
. . . . . . Natural Calamities. . Election. . .. . . . .(10) What will be your trading strategy on the happening of any major events like Union Budget. . . . . . ? ___ Square-up your partial position ___ Square-up your position ___ Holding your position ___ Reverse your overall position ___ Wait and watch ___ Other (please specify) . . . . . . etc. . . . . (11) What will be your reaction in panic situation in the stock market? ___ Follow rumors ___ Follow Expert Opinion . . ___ Follow Media ___ Other (please specify).. . . . 75 . .
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