TRAINING REPORT ON “FINANCIAL SERVICES PROVIDED BY ANAND RATHI”

Submitted to

MAHARSHI DAYANAND UNIVERSITY, ROHTAK
In partial fulfillment of the requirements For the award of the degree of

MASTER OF BUSINESS ADMINISTRATION (INDUSTRY INTEGRATED) (IV Semester)
Submitted by Name: Varsha Wahane Regn.No: 1073901755 Guru Gram Business School ELC CODE: 151012055 Unnati Park Besa, Nagpur-440008 August 2012

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CERTIFICATE
This is to certify that VARSHA WAHANE, a student of Maharishi Dayanand University, Rohtak, has prepared his training report entitled “FINANCIAL SERVICES PROVIDED BY ANAND RATHI” “ANAND RATHI FINANCIAL SERVICES,
NAGPUR,” under my guidance. He has fulfilled all

requirements leading to award of the degree of MBA (industry integrated). This report is the record of bonafide training undertaken by him and no part of it has been submitted to any other University or Educational Institution for award of any other degree/diploma/fellowship or similar titles or prizes. I wish her all success in life.

PROF AJAY PATOLE CO-ORDINATOR (MBA)
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DECLARATION
I hereby declare that the Training Report conducted at ANAND RATHI FINANCIAL SERVICES Under the guidance of

Prof. Ajay Patole
Submitted in Partial fulfillment of the requirements for the

Degree of
MASTER OF BUSINESS ADMINISTRATION
(Industry Integrated)

TO
MAHARSHI DAYANAND UNIVERSITY, ROHTAK

is my original work and the same has not been submitted for the award of any other Degree/Diploma/Fellowship or other similar titles or prizes. Place:-Nagpur Date-___________ Regn.No: 1073901755
Roll no. : 1090210509

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CERTIFICATE This is to certify that Miss Varsha Wahane who is pursuing MBA (Industry Integrated) course of Maharshi Dayanand University, Rohtak, at Guru gram Business School, Nagpur has undergone management training at our organization from 01-08-2011 to PRESENT.

His performance during the period was found to Be very good.

We wish her success future endeavors.

(Assistant Branch Manager)

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ACKNOWLEGEMENT Completing a task is never a one-man effort. It is often the result of valuable contribution of individuals in direct and indirect manner that helps in achieving an objective. It is the indeed a great pleasure and movement of immense satisfaction for me to express my profound gratitude towards my guide Prof. AJAY PATOLE of GURUGRAM BUSINESS SCHOOL, BESA ROAD, NAGPUR , I take pride to thank him for his able guidance and time to time attention that was bestowed on me right for the inception to the successful completion of the project. Also, my heartful thanks to all respondents and friend who directly and indirectly helped me completing this project report. I am also thankful to all such people, the name of who haven’t appeared hears but without their help this project wouldn't have been completed.

Miss. Varsha Wahane

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CONTENTS
CHAPTER: 1 INTRODUCTION………………………………..1 1.1 General introduction about the sector………………….…… 1.2 Industry Profile………………………………………….….. a) Origin and development……………………………………… b) Growth and present status of the industry…………………… c) Future of the industry………………………………………… CHAPTER: 2 PROFILE OF THE ORGANISATION………..... 2.1 Origin of the organization……………………………………… 2.2 Growth and development of the organization…………………. 2.3 Present status of the organization……………………………… 2.4 Functional department of the organization…………………….. 2.5Organisational structure and chart……………………………… 2.6 Service profile of the organization/competitors……………... 2.7 Market profile of the organization……………………………...

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CHAPTER: 3 DISCUSSIONS ON TRAINING………………... 3.1 Students work profile………………………………………… 3.2 Key learning ………………………………………………….

CHAPTER 4: STUDY OF SELECTED RESEARCH PROBLEM............... 4.1 Statement of research problem…………………………………… 4.2 Statement of research objective…..……………………………… 4.3 Research design and methodology…………………………………… CHAPTER 5: ANALYSIS………………………..………………... 5.1 Analysis of data……………..…………………………………… 5.2 Summary of Findings………..…..………………. CHAPTER 6: SUMMARY AND CONCLUSION..………………... 6.1 Summary of Learning Experience………………………………… 6.2 Conclusion and Recommendations………….  APPENDICES
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CHAPTER 1

INTRODUCTION
1.1 General introduction about the sector. 1.2 Industry Profile 1.3 Origin and development. 1.4 Growth and present status of the industry 1.5 Future of the industry.

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CHAPTER 1 INTRODUCTION
ABOUT THE SERVICE SECTOR :

India stands out from other emerging economies because its growth has been led by the service sector rather than labor-intensive manufactures. This column summarizes recent research showing that India has a long history of strength in services, and its service-led development may play to historical strengths rather than hindering its progress. India’s recent spectacular rate of economic growth, combined with the sheer size of its population, means that it is beginning to take its place as one of the key players in the global economy. One way in which India stands out from other Asian economies is in the better performance of its service sector. Whereas other emerging Asian economies, such as China, have experienced growth led by dynamic manufacturing performance, India’s growth has been led by sectors such as business services. This is sometimes used to portray India’s performance as fragile, focusing attention on despite current economic slowdown in European countries and financial upheaval in Greece, on the back of huge debt by Greece government, India scored well in its domestic market in terms of service sector. Only in services has there been an improvement in comparative India/UK labor productivity, from around 15% in the late nineteenth century to around 30% by the end of the twentieth century. Services have thus played a positive role in India’s productivity performance throughout the period, limiting Indian relative decline before 1870 and leading the process of catching-up from the 1970s. The service sector productivity growth is not confined to modern services such as finance – it is also visible in trade and transport..

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INDUSTRY PROFILE FINANCIAL SECTOR
The Indian financial sector is in for an overhaul. Financial sector reforms have long been regarded as an integral part of the overall policy reforms in India. India has recognized that these reforms are imperative for increasing the efficiency of resource mobilization and allocation in the real economy and for the overall macroeconomic stability. The reforms have been driven by a thrust towards liberalization and several initiatives such as liberalization in the interest rate and reserve requirements have been taken on this front. At the same time, The government has emphasized on stronger regulation aimed at strengthening prudential norms, transparency and supervision to mitigate the prospects of systemic risks. Today the Indian financial structure is inherently strong, functionally diverse, efficient and globally competitive. During the last fifteen years, the Indian financial system has been incrementally deregulated and exposed to international financial markets along with the introduction of new instruments and products. Banking Sector The banking sector is the most dominant sector of the financial system in India. Significant progress has been made with respect to the banking sector in the post liberalization period. The financial health of the commercial banks has improved manifolds with respect to capital adequacy, profitability, and asset quality and risk management. Further, deregulation has opened New opportunities for banks to increase revenue by diversifying into investment banking, insurance, credit cards, depository services, mortgage, securitization, etc. Liberalization has created a more competitive environment in the banking sector. The competition has increased within the banking sector (with the emergence of new private banks and foreign banks) as well as from other segments of the financial sector such as mutual funds, Non Banking Finance Companies, post offices and capital markets. Capital Market: India has a long tradition of functioning capital markets. The Bombay stock exchange is over a hundred years old and the volume of activity has increased in the recent years. The process of reform of capital markets started in 1992 and aimed at removing direct government control and replacing it by a regulatory framework based on transparency and disclosure. The first step was taken in 1992 when SEBI was elevated to a full-fledged capital market regulator. An important policy initiative in 1993 was the opening of capital markets for foreign institutional investors and allowing Indian companies to raise capital abroad. FII registrations In the country have gone up significantly over the years. The number of registered FIIs has Gone up significantly. The FIIs have been rewarded well by attractive valuations and increasing returns. The depository and share dematerialization systems have been introduced to enhance the efficiency of the transaction cycle. A number of significant reforms have been implemented in the spot equity and related exchange traded derivatives markets since the early 1990s. For instance, spot prices are mostly market-determined, trading volumes in the derivatives market exceed those in 10

spot markets and market practices such as speed of settlement and dematerialization are close to international best practices.

Insurance Sector:
There exists huge scope of investment in the insurance sector in India. India has an enormous middle-class that can afford to buy life, health and disability and pension plan products. Further, insurance is one of the most important taxes saving instrument in the country. Insurance sector has been opened up for competition from Indian private insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to protect the interests of holder of insurance policy and to regulate, promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private players into the insurance market, which was hitherto the exclusive privilege of public sector insurance companies/ corporations. Under the new dispensation Indian insurance companies in private sector were permitted to operate in India on the fulfillment of certain prerequisites. A large number of public and private players are competing today in both life and general insurance segments. The FDI cap/ Equity in the insurance sector is 26 percent under the automatic route subject to licensing by the insurance regulatory and development authority.

Some of the major private players in the sector are: In Life insurance Sector: • Bajaj Allianz Life Insurance Corporation • Birla Sun Life Insurance Co. Ltd. (BSLI) • HDFC Standard Life Insurance Co. Ltd. (HDFC STD LIFE) • ICICI Prudential Life Insurance Co. Ltd. (ICICI PRU) • ING Vysya Life Insurance Co. Pvt. Ltd. (ING VYSYA) • Max New York Life Insurance Co. Ltd. (MNYL) • MetLife India Insurance Co. Pvt. Ltd. (METLIFE) • Kotak Mahindra Old Mutual Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd. (SBI LIFE) • TATA AIG Life Insurance Co. Ltd. (TATA AIG) • AMP Sanmar Assurance Co. Ltd. (AMP SANMAR) • Aviva Life Insurance Co. Pvt. Ltd. (AVIVA) • Sahara India Life Insurance Co. Ltd. (SAHARA LIFE) • Shriram Life Insurance Co. Ltd In General Insurance sector: • Bajaj Allianz General Insurance Co. Ltd. (BAJAJ ALLIANZ) • ICICI Lombard General Insurance Co. Ltd. (ICICI LOMBARD) 11

• IFFCO Tokyo General Insurance Co. Ltd. (IFFCO TOKIO) • Reliance General Insurance Co. Ltd. (RELIANCE) • Royal Sundaram Alliance Insurance Co. Ltd. • TATA AIG General Insurance Co. Ltd. (TATA AIG) • Cholamandalam MS General Insurance Co. Ltd. • HDFC Chubb General Insurance Co. Ltd. (HDFC CHUBB) Venture Capital India is prime target for venture capital and private equity today, owing to various factors such as fast growing knowledge based industries, favorable investment opportunities, cost competitive workforce, booming stock markets and supportive regulatory environment among others. The sectors where the country attracts venture capital are IT and ITES, software products, banking, PSU disinvestments, entertainment and media, biotechnology, pharmaceuticals, contract manufacturing and retail. An offshore venture capital company may contribute up to 100 percent of the capital of a domestic venture capital fund and may also set up a domestic asset management company to manage the fund. Venture capital funds (VCFs) and venture capital companies (VCC) are permitted up to 40 percent of the paid up corpus of domestic unlisted companies. This ceiling would be subject to relevant equity investment limit in force in relation to areas reserved for SSI. Investment in a single company by a VCF/VCC shall not exceed 5 percent of the paid up corpus of a domestic VCF/VCC. The automatic route is not available.

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GROWTH AND PRESENT STATUS OF THE INDUSTRY
1. The National Statistical Commission (Chairman: Dr. C. Rangarajan) set up by the Government of India, constituted various sub-groups and the sub-group on External and Financial Sector Statistics was one of them. This sub-group decided in turn to set up five committees, viz., i) Trade in Services, ii) E-Commerce and its regulatory mechanism, iii) Insurance Sector Statistics, iv) Informal Financial Sector Statistics and v) Fiscal Sector Statistics, with officials from Government, RBI, and academics as members for an expert analysis of the statistical issues. 2. In pursuance of the above, the Reserve Bank of India had set up the Committee on Informal Financial Sector Statistics with Prof. P. Venkataramiah as Chairman. The main objective of the Committee was to critically examine the current status of statistics on the informal financial sector and recommend a statistical system for instituting/improving collection of statistics on the sector. 3. The terms of reference of the Committee were as under: i) To assess the currently available sources of information in the informal sector; ii) To assess the current systems by which information is being identified and collected in the informal sector both on a regular as well as ad-hoc basis; iii) To assess methods by which the National Accounts Statistics incorporate data relating to informal sector; iv) To obtain information about other country experiences to assess the data gaps in our system; v) To evolve a statistical system for collection of regular or periodic and reliable data on the informal sector. 4. The Committee deliberated on two interrelated issues: (i) the definition of Informal Financial Sector Statistics and (ii) the type of institutions to be covered in this sector. Although there is no accurate definition of ‘informal sector’, the UN System of National Accounts (SNA) had broadly characterized the informal sector as consisting of units engaged in production of goods and services with the primary objective of generating employment and incomes to the persons concerned. 5. Broadly, the Committee identified two purposes for which data are to be collected on various aspects of Informal Financial Sector, viz., (i) to measure the extent of informal credit and to understand the dynamics of informal financial markets and (ii) to facilitate generation of inputs for the compilation of National Accounts. 6. For the purpose of identifying the informal financial sector enterprise, the Committee adopted the criterion of ‘incorporation’ as a guiding factor. That is, those that are so ‘incorporated’ constitute the formal financial sector and those that are not so incorporated constitute the informal financial sector. 7. As per the terms of reference given to the Committee, they deliberated on the status of availability of data in respect of two components, viz., (a) that part of the 13

formal financial sector consisting of incorporated enterprises for which complete data are not collected in the existing statistical system taking note on the institutions covered by the Sub-Group on External and Financial Sector Statistics and (b) the informal financial sector, consisting of ‘unincorporated financial enterprises’, and made recommendations for instituting/ improving collection of statistics on the two components. 8. Before assessing the current status of the availability of data and making recommendations for collection of data from informal financial sector, the Committee made an overview of the studies undertaken in India on Informal sector (Chapter III) and also on the international practices followed on concepts, methods of collection, etc. (Chapter VI); and presented in its report different concepts followed internationally.

FUTURE OF THE INDUSTRY (a) Formal Financial Sector
Under formal financial sector, major data gaps were observed in respect of NonBanking Financial Companies (NBFCs) and capital market related institutions like the Securities & Exchange Board of India (SEBI), the National Stock Exchange (NSE), the Discount and Finance House of India (DFHI), etc. 10. The Non-Banking Financial Companies, a segment of the formal financial sector, covers companies engaged in activities like Equipment Leasing, Hire Purchase Finance, Loans, Investments, Mutual Benefit Finances (Nidhis), Miscellaneous Non-banking (Chit funds), Housing Finance and Residuary Non-banking. 11. Studies on Financial & Investment Companies published annually by RBI in its monthly Bulletin form one source of data. The source provides the statistics on liabilities and assets, income, expenditure and appropriation accounts based on a sample of about 700 companies belonging to different categories of NBFCs stated above. These data relate to annual accounts and are available with a lag of one to one and half years. These data are used to obtain the estimates of saving and investment of NBFCs and these are worked out for the entire segment of the NBFCs sector, through blowing-up procedure, based on the coverage of sample in the population of companies, in terms of paid-up capital. 12. The second source of data is the survey on ‘Growth of deposits with non-banking companies’ conducted by RBI. The survey results are also published annually. The survey collects data on public deposits accepted by them, exempted deposits, net 14

owned funds and other borrowings, from the above category of NBFCs. A few additional details are collected from 1997-98 onwards. These data are utilized to derive the estimates of financial saving of households in the form of deposits with non-banking financial companies. According to the survey for March 1999, total public deposits held with 1547 NBFCs amounted to Rs.20, 429 crore as at the end of March 1999 while their total assets stood at Rs.47, 048 crore. 13. According to the Department of Company Affairs (DCA), there were 65,382 non-banking financial companies as on March 31, 1999. The Reserve Bank made the registration of companies with it compulsory for all non-banking financial companies, in January 1997. As many as 37,274 NBFCs conducting financial business applied for Certificate of Registration (CoR) with RBI as on June 2000. Of these, 14,986 NBFCs were rejected for issue of CoR while the remaining was either issued the CoR or at different stages of scrutiny for registration with RBI. The Reserve Bank had set out certain norms for registration, such as net owned funds of Rs.25 lakh as on January 9, 1997, which had been revised upwards to Rs.2 crore effective from April 21, 1999 for new applicants. The companies, which comply with these norms, are registered with RBI with provision to accept public deposits or to function as finance companies without accepting deposits. The companies, which do not comply with the prescription within a stipulated period, including the extension period, have to close down their business activity. This category of companies is referred to as “rejected” companies. 14. Besides, many companies have been exempted from registration with RBI, which are: (i) engaged in micro-financing activity, (ii) not accepting public deposits, (iii) licensed under Section 25 of the Companies Act and (iv) mutual benefit companies having net owned funds of Rs.10 lakh. Thus, these companies conduct the financial activity without CoR of RBI.

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CHAPTER 2

Profile OF THE ORGANISATION
2.1 Origin of the organization 2.2 Growth and development of the organization 2.3 Present status of the organization. 2.4 Functional department of the organization 2.5 Organizational structure and chart. 2.6 Service profile of the organization/competitors. 2.7 Market profile of the organization.

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CHAPTER: 2 PROFILE OF THE ORGANISATION
Anand Rathi is a leading full service investment bank providing a wide range of financial services to institutions, corporations, wealthy families and individuals. Founded in 1994 by Mr. Anand Rathi and Mr. Pradeep Gupta, the group employees close to 7,000 professionals across India and its international offices. Citigroup Venture Capital currently holds 20% of the group’s equity. VISION:“To Provide Best Value for Money to Investors Through Innovative Products, Trading /Investment Strategies State of the Art Technology And Personalized Service.” BUSINESS PHILOSOPHY:-

“Ethical Practices & Transparency In All Our Dealings Customer Interest above Our Own Always Deliver What We Promise Effective Cost Management.”

To be a shining example as a leader in innovation, and the first choice for clients & employees.

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About Anand Rathi:

Mr. Anand Rathi - Group Chairman Chartered Accountant Past President, BSE Held several Senior Management positions with one of India's largest industrial groups Anand Rathi (AR) set up in 1994, is one of India’s fastest growing full-service securities firm with a presence in more than 350 locations across India and has offices in Dubai & Bangkok. AR provides wealth management services, investment banking, brokerage & distribution services in the areas of equities, commodities, mutual funds and insurance. The group caters to the financial needs of diversified group of clients, which include the well-reputed Corporate Groups, Institutions, Foreign Investors, Individuals as well as wealthy families and was recently ranked by an Asia Money 2006 poll amongst South Asia’s top 5 wealth managers for the ultra-rich. The firm's philosophy is entirely client centric, with a clear focus on providing long term value addition to clients, while maintaining the highest standards of excellence, ethics and professionalism. The entire firm activities are divided across distinct client groups: Individuals, Private Clients, Corporate and Institutions. Milestones 1994: Started activities in consulting and Institutional equity sales with staff of 15 1995: Set up a research desk and empanelled with major institutional investors 1997: Introduced investment banking businesses Retail brokerage services launched 1999: Lead managed first IPO and executed first M & A deal 2001: Initiated Wealth Management Services 2002: Retail business expansion recommences with ownership model 2003: Wealth Management assets cross Rs1500 crores Insurance broking launched Launch of Wealth Management services in Dubai Retail Branch network exceeds 50 2004: Commodities brokerage and real estate services introduced Wealth Management assets cross Rs3000crores Institutional equities business relaunched and senior research team put in place 18

Retail Branch network expands across 100 locations within India 2005: Real Estate Private Equity Fund Launched Retail Branch network expands across 200 locations within India 2006: AR Middle East, WOS acquires membership of Dubai Gold & Commodity Exchange (DGCX) Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia Money 2006 poll Ranked 6th in FY2006 for All India Broker Performance in equity distribution in the High Net worth Individuals (HNI) Category Ranked 9th in the Retail Category having more than 5% market share Completes its presence in all States across the country with offices at 300+ locations within India 2007: Citigroup Venture Capital International picks up 19.9% equity stake. Retail customer base crosses 200 thousand Establishes presence in over 450 locations.

Services provided by Anand Rathi to customers 1. Mr. Anand Rathi - Group Chairman, Chartered Accountant, Past President, BSE; Held several Senior Management positions with one of India's largest industrial groups. 2. Mr. Pradeep Gupta - Vice Chairman; Plus 17 years of experience in Financial Services. 3. Mr. Amit Rathi - Managing Director; Chartered Accountant & MBA; Plus 11 years of experience in Financial Service.

Equity &Derivatives Brokerage: Anand Rathi provides end-to-end equity solutions to institutional and individual investors. Consistent delivery of high quality advice on individual stocks, sector trends and investment strategy has established a competent and reliable research unit across the country. Clients can trade through online on BSE and NSE for both equities and derivatives. They are supported by dedicated sales & trading teams in trading desks across the country. Research and investment ideas can be accessed by clients either through their designated dealers, email, web or SMS.

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Mutual Funds: AR is one of India's top mutual fund distribution houses. Their success lies in their philosophy of providing consistently superior, independent and unbiased advice to their clients backed by in-depth research. They firmly believe in the importance of selecting appropriate asset allocations based on the client's risk profile. AR have a dedicated mutual fund research cell for mutual funds that consistently churns out superior investment ideas, picking best performing funds across asset classes and providing insights into performances of select funds. Depository Services: AR Depository Services provides with a secure and convenient way for holding your securities on both CDSL and NSDL. AR depository services include settlement, clearing and custody of securities, registration of shares and dematerialization. Also offer daily updated internet access to holding statement and transaction summary. Commodities: AR commodities broking services include online futures trading through NCDEX and MCX and depository services through CDSL. Commodities broking is supported by a dedicated research cell that provides both technical as well as fundamental research. Our research covers a broad range of traded commodities including precious and base metals, Oils and Oilseeds, agri-commodities such as wheat, chana, guar, guar gum and spices such as sugar, jeera and cotton. In addition to transaction execution, we provide our clients customized advice on hedging strategies, investment ideas and arbitrage opportunities. Insurance Broking: As an insurance broker, AR provide to his clients comprehensive risk management techniques, both within the business as well as on the personal front. Risk management includes identification, measurement and assessment of the risk and handling of the risk, of which insurance is an integral part. The firm deals with both life insurance and general insurance products across all insurance companies. Our services : Risk Management Due diligence and research on policies available Recommendation on a comprehensive insurance cover based on clients needs Maintain proper records of client policies Assist client in paying premiums Continuous monitoring of client account Assist client in claim negotiation and settlement IPO’s: AR is a leading primary market distributor across the country. Our strong performance in IPOs has been a result of our vast experience in the Primary Market, a wide network of branches across India, strong distribution capabilities and a dedicated research team. Our IPO research team provides clients with in-depth overviews of forthcoming 20

IPOs as well as investment recommendations. Online filling of forms is also available. Major Departments Equity Commodity Life Insurance General Insurance Mutual Fund Depository Internet Broking Information Technology Client Acquisition Finance Compliance Settlement Accounts Operations HR/Administration Clients of Anand Rathi Corporate and Institutional treasuries need ever more sophisticated advice that is backed by serious and credible research. AR IWM provides its institutional clients integrated wealth management solutions across global markets, which are backed by proprietary global economic & investment research. We understand that your needs could range from finding short-term surplus management strategies to higher yielding and long term investments. The IWM team brings together the highly-rated AR research across fixed income, currencies and equities markets to provide investment solutions that meet your complex needs - from simple money-market mutual funds to complex arbitrage strategy ACC. Bayer Century Textiles Clariant CRISIL Crompton Greaves Dabur Datamatics GE Shipping Godrej Good lass Nerolac Grasim Gujarat Abuja Cements Gujarat Pipavav Port Heinz India Hindalco Hindustan Lever H&R Johnson IDFC Indian Rayon 21

Jindal Group Larsen & Toubro Mastek Mahindra & Mahindra Raymonds Sterlite Group Syngenta Tata Iron & Steel Trent VSNL Wartsila

2.2 GROWTH AND DEVELOPMENT OF THE ORGANISATION

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2.3 PRESENT STATUS OF THE ORGANISATION
Client Testimony
We have been ranked thrice in a row as the #1 Private Bank - Domestic and #2 Private Bank - Overall BY OUR CLIENTS in an international Private Banking Poll (2009, 2010 & 2011) conducted by the Asia money publication. Asia money Polls is a unique survey run by Asia's regional financial publication that surveys the end-user i.e. our clients. It is the leading and definitive industry survey in the region. We believe that this honor would not have come our way without the goodwill, support and patronage of our clients and the trust they placed in us and our advisory. Client-centric Ethos Our belief is that there is a spark in every person that distinguishes him as an individual, and defines his aspirations and goals. A Wealth Management solution for every individual is therefore unique. You deserve a customized solution for managing your wealth that is specific to your needs and not a generic template – based offering.

Strong Research Capabilities Our Advisory process is rooted in the strength of our research team, giving us expertise across various asset classes. Our Economic Research team has been ranked among the top 20 in Asia by Institutional Investor and is one among the only 2 teams from India to feature in this list. Philosophy--Wealth Management needs to be far more holistic than just investment advisory We believe that separation of advisory from product manufacturing is critical to offering a conflict-free and truly objective advice to our clients. We therefore offer only third-party products and do not manufacture any in-house products. As an extension to this philosophy, we do not hold any proprietary stake in the markets 2.4 FUNCTIONAL DEPARTMENT OF ANAND RATHI CLIENT RALATION DEPARTMENT The client relation department assists the client or customer top open an account in Hedge equity (p) Ltd securities. This department is also known as the front office. A client has to open two types of accounts to trade and own securities in the NSE & BSE. They are: 23

FINANCE DEPARTMENT Thus a department, to organize financial activities may be created under the direct controlof the board of directors. Finance manager will decide the major financial policy methods. Lower levels can delegate the other routine activities. MARKETING DEPARTMENT The major functions of marketing department are: Business associate development: The company takes up the marketing activities of the various branches. It ensures an efficient marketing arena at its various branches. The company encourages better relations in its branches and promotes for the development of various marketing strategies. Brand promotion: An important function of marketing department is to promote the name of the company. HEDGE EQUITIES (P) LTD does it through the different promotional activities. The name of HEDGE EQUITIES (P) LTD as a stock broking firm is made known to the outside world. Investment promotion: The main clients of HEDGE EQUITIES (P) LTD were its investors. Hence the marketing department tries to capture as many investors as possible to encourage them to invest. Delivery promotion: Intraday trading is not always profitable and might involve a lot of risk hence HEDGE EQUITIES (P) LTD promotes for delivery were the shares are kept to be sold for a later date analyzing the profitability factors. SYSTEMS DEPARTMENT The systems department is playing a vital role in the day operations of the company. It is through the systems department that the clients can avail the facilities of Internet trading. Optic fiber cables and high bandwidth connections from the HEDGE EQUITIES (P) LTD office to the ISP,a dedicated server and back-up ISDN connections were maintained directly by the systems department. For the purpose of trading they have made use of two software namely ODIN (Open Dealers Integrated Network) HUMAN RESOURCES DEPARTMENT Human resource is often considered as the back bone of an organization even in this age of advanced automation and mechanization. Since virtual organizations are not very much popular in our part of the world, it is very important to any organization to have a HR department. The presence of an excellent HR department increases the efficiency of an organization considerably. Human resource management is defined as asset of practices, policies and programmers designed to maximize both personal and organizational goals. a. Training and induction The selected employees will undergo three days continuous induction. During this period, he willundergo training with all the department of HEDGE EQUITIES (P) LTD Securities (India) Pvt. Ltd. There will also be classroom induction also within 3 months. b. Wages and Salary Administration 24

The wages and salaries of the employees were fixed and granted by the HR department with consent of the finance department. c. Performance Appraisal It was human resources department which gives the promotion to all employees, making transfers and taking disciplinary actions if needed. d. Grievance Handling The grievance of employees were received only through proper channels i.e., through the particular department heads. The HR department will make solutions to th complaints as per the rules and regulations of the company. TRADING DEPARTMENT The department deals with the trading related activities of the company. The trading refers to the buying and selling of shares. This department is the most important part of the organization. There are two types of trading. Online Trading: These are the trading terminal of the organization. The each computer of the department is termed as the trading terminal. The each terminal is assigned with NCFM certified dealers; who is in charge of each portal will do the trade according to the client request. The terminal is managed by either NEAT (National Exchange for Automated Trading) software or ODIN (Open Dealers Integrated Network) software. The client can also place his through written request or through the telephone, in this the order will be place d by the dealer. InternetTrading: The internet trading is a facility provides by the company in order to trade the securities from his convenient place like his office, home etc. the order will be placed by the client itself, and he can make changes before the trade is done for changing the price, cancellation of the order. DELIVERY AND DEPOSITORY DEPARTMENT Delivery refers to the share that bought on particular day are not sold on that day itself and holding of the share for an appreciation in the value of the security and to trade it on a future date. Deliver Instruction Slip: it is a slip the client should fill and gave to the dealer regarding the purchase of the share. There are two procedures to move the share namely Power of attorney this is which the client signs at the time of opening a trading account and depository participant account. If the client has given the power of attorney, HEDGE EQUITIES (P) LTD will have the power to transact the clients stock without pay ±in slips. b. Easiest It is secured internet enabled service which means Electronic Access to Securities information and Execution of Secured Transaction. This is facility wherein the clients can give delivery instructions via internet. Easiest is a facility provided by CDSL. The activities related with the depository department.

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Depository function Dematerialization Pledging EQUITY RESEARCH DEPARTMENT The function of the department is to study the details regarding the share or securities and to make prediction regarding the future performance of the company. The following types of approaches done through this department: a) Fundamental analysis b) Technical analysis 2.5 Structure and chart of Anand Rathi A Mutual Fund is a trust that pools the savings of a number of Investors who share a common financial goal. The money thus Collected is then invested in capital market instruments such as Shares, debentures and other securities. The income earned through These investments and the capital appreciation realized is shared by Its unit holders in proportion to the number of units owned by Them. Thus a Mutual Fund is the most suitable investment for the Common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual Fund. The structure of Mutual Funds in India is governed by SEBI (Mutual Fund) Regulations, 1996. It is mandatory to have a three tier structure of Sponsor – Trustee – Asset Management Company. The trust is established by a Sponsor or more than one sponsor who is like a promoter of a company. He appoints the Trustees who are responsible to the investors of the fund. The Trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI is the business face of the mutual fund as it manages all the affairs of the fund by making The structure of Mutual Funds in India is governed by SEBI (Mutual Fund) Regulations, 1996. It is mandatory to have a three tier structure of Sponsor – Trustee – Asset Management Company. The trust is established by a Sponsor or more than one sponsor who is like a promoter of a company. He appoints the Trustees who are responsible to the investors of the fund. The Trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI is the business face of the mutual fund as it manages all the affairs of the fund by making investments in various types of securities.

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2.5 ORGANISATIONAL STRUCTURE AND ORGANISATION CHART ORGANISATION FLOW CHART:2.5 Structure and chart of AnandRathi A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through These investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual Fund.

Role of stock exchanges
Raising capital Mobilizing resources Company growth Redistribution of wealth Investment opportunities Corporate governance Barometer of economy Govt. project development

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2.6 PRODUCT AND SERVICE PROFILE
Commodities Equity Insurance Services

Products
            Equities I Bonds I Mutual Funds I Derivatives Managed Investment Services / PMS Commodities FX Trading Life Insurance General Insurance Alternative Assets - Private Equity Funds - Structured Products - Real Estate Opportunities Fund Special Situation Opportunities Offshore Structures & Global Investments

Services
       Creation of a customized financial strategy Diversification of assets based on a formal process of asset allocation Active tracking, monitoring and review of portfolios Creation of private trusts Tax planning Estate planning Structuring of family wealth   Online Trading

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Equity & Derivatives Brokerage: Anand Rathi provides end-to-end equity solutions to institutional and individual investors. Consistent delivery of high quality advice on individual stocks, sector trends and investment strategy has established a competent and reliable research unit across the country. Clients can trade through online on BSE and NSE for both equities and derivatives. They are supported by dedicated sales & trading teams in trading desks across the country. Research and investment ideas can be accessed by clients either through their designated dealers, email, web or Sms. Mutual Funds: AR is one of India's top mutual fund distribution houses. Their success lies in their philosophy of providing consistently superior, independent and unbiased advice to their clients backed by in-depth research. They firmly believe in the importance of selecting appropriate asset allocations based on the client's risk profile. AR have a dedicated mutual fund research cell for mutual funds that consistently churns out superior investment ideas, picking best performing funds across asset classes and providing insights into performances of select funds. Depository Services: AR Depository Services provides with a secure and convenient way for holding your securities on both CDSL and NSDL. AR depository services include settlement, clearing and custody of securities, registration of shares and dematerialization. Also offer daily updated internet access to holding statement and transaction summary. Commodities: AR commodities broking services include online futures trading through NCDEX and MCX and depository services through CDSL. Commodities broking is supported by a dedicated research cell that provides both technical as well as fundamental research. Our research covers a broad range of traded commodities including precious and base metals, Oils and Oilseeds, agri-commodities such as wheat, chana, guar, guar gum and spices such as sugar, jeera and cotton. In addition to transaction execution, we provide our clients customized advice on hedging strategies, investment ideas and arbitrage opportunities. Insurance Broking: As an insurance broker, AR provide to his clients comprehensive risk management techniques, both within the business as well as on the personal front. Risk management includes identification, measurement and assessment of the risk and handling of the risk, of which insurance is an integral part. The firm deals with both life insurance and general insurance products across all insurance companies. Their guiding philosophy is to manage the clients' entire risk set by providing the optimal level of cover at the least possible cost. The entire sales process and product selection is research oriented and customized to the client's needs. They lay strong emphasis on timely claim settlement and post sales services.

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OUR SERVICES Risk Management Due diligence and research on policies available Recommendation on a comprehensive insurance cover based on clients needs Maintain proper records of client policies Assist client in paying premiums Continuous monitoring of client account Assist client in claim negotiation and settlement

IPO’s: AR is a leading primary market distributor across the country. Our strong performance in IPOs has been a result of our vast experience in the Primary Market, a wide network of branches across India, strong distribution capabilities and a dedicated research team. Our IPO research team provides clients with in-depth overviews of forthcoming IPOs.

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2.3 SERVICES: Top quality Research & Advisory Services  Fundamental Research Services  Technical Research Services  Investment Advisory Desk       Portfolio Management Services Mutual Fund And IPO Advisory Online Trading Commodities DP Services Funding

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MARKET PROFILE OF THE ORGANISATION
CLIENTS Individual Institutional NRIs Retail Investors

All segments are available in Anand Rathi:  Equity a) BSE/NSE  Commodities a) MCX/NCDEX  CDS a) USD b) EURO c) YEN d) GBP (Global Britain Pound)

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CHAPTER 3
DISCUSSION ON TRAINING
MY WORK PROFILE;                  Fill up the different types of financial forms. Tele calling to the clients. Sales coordination. Counseling to the client for different financial products. Follow up the customer. Lead generation. Login the form in the system. As a sales co-ordinator. All work handled in daily transaction with financial product and services. Proper reporting with client details. Portfolio management. Demat entry with CRM format log in process. Mutual fund/FD/SIP/BONDs/NCDs entry. Activate account opening with clients. Maintaining of party's ledgers. Verification of bills and documentation. Maintaining of bank accounts with reconciliation. Branch accounts and profitability statements.

KEY LEARNINGS:  Knew about different financial product and services.  Improved communication skill  Understood working in organizational environment.  Learned about call generation.  Effective way of motivating clients. To learn the tactics to control the cost.  To apply my theoretical knowledge into real world environment and how to behave in professional manner.  To increase analytical skill.  To handle the different type of parties and how should we behave in different situations.  To know what is the role of finance department in the organization. 33

CHAPTER 4

Study of selected research problem 4.1 Statement of research problem 4.2 Statement of research objectives 4.3 Research design and methodology

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STATEMENT OF RESEARCH PROBLEM
STUDY BEHIND EVERY SUCCESSFUL INVESTORS :  BSE/NSE  COMMODITIES  DEMAT SERVICES  IPO’s  INSURANCE  MUTUAL FUNDs  BSE/NSE A bit about history of stock exchange they say it was under a tree that it all started in 1875.Bombay Stock Exchange (BSE) was the major exchange in India till 1994.National Stock Exchange (NSE) started operations in 1994.

NSE was floated by major banks and financial institutions. It came as a result of Harshad Mehta scam of 1992. NSE was the first to introduce electronic screen based trading. BSE was forced to follow suit. The present day trading platform is transparent and gives investors prices on a real time basis. With the introduction of depository and 35

mandatory dematerialization of shares chances of fraud reduced further. The trading screen gives you top 5 buy and sell quotes on every scrip.

A typical trading day starts at 10 ending at 3.30. Monday to Friday. BSE has 30 stocks which make up the Sensex .NSE has 50 stocks in its index called Nifty. FII s Banks, financial institutions mutual funds are biggest players in the market. Then there are the retail investors and speculators.

COMMODITIES AR commodities broking services include online futures trading through NCDEX and MCX and depository services through CDSL. Commodities broking is supported by a dedicated research cell that provides both technical as well as fundamental research. Our research covers a broad range of traded commodities including precious and base metals, Oils and Oilseeds, agri-commodities such as wheat, chana, guar, guar gum and spices such as sugar, jeera and cotton. In addition to transaction execution, we provide our clients customized advice on hedging strategies, investment ideas and arbitrage opportunities. Commodity Futures are contracts to buy specific quantity of a particular commodity at a future date. It is similar to the index futures and stock futures but the underlying happens to be commodities instead of stocks and indices. Participants of Commodities Market: The participants who trade in the commodity derivatives markets can be classified as follows; (a) Hedgers: 36

Hedgers are the traders who wish to eliminate the risk of price change to which they are already exposed. It is a mechanism by which the participants in the physical/ cash markets can cover their price risk. Hedgers are those persons who don’t want to take the risk therefore they hedge their risk while taking position in the contract. Speculators : Speculators are participants who bet on future movements in the price of an asset i.e. I commodity to make short term gain from the price movements. Commodity future s give theme the leverage so to take risks on nominal margin payments and thereby increasing for bigger gains or losses. (b)

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(c) Arbitrageurs: Arbitrageurs work at making profits by taking advantaged of existence of difference in prices of the same product across different markets (MCX and NCDEX). (d) Investors: Investors are participants having a longer term view as compared to speculators when they enter into trade in the commodities market. Eg. Farmers, Producers, consumers etc. Commodity Derivatives: A commodity derivative derives its value from an underlying asset which is necessarily a commodity. To understand the commodity derivatives markets it’s necessary to clear about ‘commodities’. Commodities, in simple words are any goods that are common and unbranded. Gold, silver, rubber, pepper, jute, wheat, sugar, cotton etc., are some of the common commodities. For e.g. apple juice can be a commodity whereas the ‘Real’ apple juice cannot be called a commodity. You may be surprised to know that in the US commodities markets there are futures available even on cattle. Another feature of commodities is that they are commonly available. Commodity markets represent the formal system for the interplay of demand for and supply of commodities. These markets can be broadly classified into spot market and futures market. Commodities for immediate delivery are traded through the spot market. The players in the spot market are the actual producers and the consumers of the commodities. Investors are those who participate in the market for profits and are ready to face the risk involved in the market. An investor can be anyone from an individual who has a small surplus income to the treasury desks of banks and corporate. Most commonly traded derivatives around the world are futures, options and option futures. Some of the most popular commodity exchanges in the world are listed below:  London Metals Exchange, London  New York Mercantile Exchange, New York  Chicago Mercantile Exchange, Chicago  Chicago Board of Trade, Chicago  London International Financial Futures and Options Exchange (LIFFE), London  Tokyo Commodity Exchange, Tokyo  Winnipeg Commodity Exchange, Canada Major Commodity Exchanges: The Government of India permitted establishment of National-level Multi-Commodity exchanges in the year 2002 and accordingly three exchanges have come into picture.  Multi-Commodity Exchange of India Ltd, Mumbai.(MCX).  National Commodity and Derivative Exchange of India, Mumbai(NCDEX). 38

 National Multi Commodity Exchange, Ahemdabad(NMCE). However there are regional commodity exchanges functioning all over the country. AR commodities Broking Pvt. Ltd has got membership of both the premier commodity exchanges i.e. MCX and NCDEX. The two exchanges (NCEDX&MCX) have seen tremendous growth in less than two years. The daily average on these two exchanges put together has now grown to a healthy Rs.7800 Crores. It has been believed by experts that the volumes on these exchanges would the stock market in the days to come. Commodity exchanges are regulated by Forwards Market Commission (FMC); Forwards Market Commission works under the purview of the ministry of Food, Agriculture and Public Distribution. At NCDEX the contracts expire on 20th day of each month .if 20th happens to be a holiday the expiry day will be the previous working day. Commodities traded in MCX.  Gold, Gold M, Gold HNI, Silver, Silver M, Silver HNI  Castor Seeds, Soy Seeds, Castor Oil, Refined Soy Oil, Soymeal, RBD Palmolein, Crude Palm Oil, Groundnut Oil, Mustard Seed, Mustard Seed Oil, Cottonseed Oilcake, Cottonseed  Pepper, Red Chilli, Jeera, Turmeric  Steel Long, Steel Flat, Copper, Nickel, Tin  Kapas, Long Staple Cotton, Medium Staple Cotton  Chana, Urad, Yellow Peas, Tur  Rice, Basmati Rice, Wheat, Maize, Sarbati Rice  Crude Oil  Rubber, Guar Seed, Gur, Guargum Bandhani, Guargum, Cashew Kernel, Guarseed Bandhani Commodities traded in NCDEX.  Agro Products  Arabica Coffee Cashew  Castor Seed Chana  Chilli Common Raw Rice  Common Parboiled Rice Crude Palm Oil  Cotton Seed Oilcake Expeller Mustard Oil  Grade A Parboiled Rice Grade A Raw Rice  Guar gum Guar Seeds  Gur Jeera  Jute sacking bags Lemon Tur  Long Staple Cotton Maharashtra Lal Tur  Medium Staple Cotton Mulberry Green Cocoons  Mulberry Raw Silk Mustard Seed  Pepper Raw Jute  RBD Palmolein Refined Soy Oil 39

           

Robusta Coffee Rubber Sesame Seeds Soyabean Yellow Soybean Meal Sugar Turmeric Urad Wheat Yellow Peas Yellow Red Maize Base Metals Mild Steel Ingots Precious Metals Gold Silver IPO’s: AR is a leading primary market distributor across the country. Our strong performance in IPOs has been a result of our vast experience in the Primary Market, a wide network of branches across India, strong distribution capabilities and a dedicated research team. Our IPO research team provides clients with in-depth overviews of forthcoming IPOs as well as investment recommendations. Online filling of forms is also available. As an insurance broker, AR provide to his clients comprehensive risk management techniques, both within the business as well as on the personal front. Risk management includes identification, measurement and assessment of the risk and handling of the risk, of which insurance is an integral part. The firm deals with both life insurance and general insurance products across all insurance companies.

 INSURANCE Their guiding philosophy is to manage the clients' entire risk set by providing the optimal level of cover at the least possible cost. The entire sales process and product selection is research oriented and customized to the client's needs. They lay strong emphasis on timely claim settlement and post sales services. Our services :
      

Risk Management Due diligence and research on policies available Recommendation on a comprehensive insurance cover based on clients needs Maintain proper records of client policies Assist client in paying premiums Continuous monitoring of client account Assist client in claim negotiation and settlement

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Mutual Funds: AR is one of India's top mutual fund distribution houses. Their success lies in their philosophy of providing consistently superior, independent and unbiased advice to their clients backed by in-depth research. They firmly believe in the importance of selecting appropriate asset allocations based on the client's risk profile. AR have a dedicated mutual fund research cell for mutual funds that consistently churns out superior investment ideas, picking best performing funds across asset classes and providing insights into performances of select funds.

4.1 Statement of every successful investor problem: Investors are those who participate in the market for profits and are ready to face the risk involved in the market. An investor can be anyone from an individual who has a small surplus income to the treasury desks of banks and corporate. Most commonly traded derivatives around the world are futures, options and option futures. Some of the most popular commodity exchanges in the world are listed below:  London Metals Exchange, London  New York Mercantile Exchange, New York  Chicago Mercantile Exchange, Chicago  Chicago Board of Trade, Chicago  London International Financial Futures and Options Exchange (LIFFE), London  Tokyo Commodity Exchange, Tokyo  Winnipeg Commodity Exchange, Canada

Statement of every successful investor objectives:

Primary Objectives
     To construct portfolio and analyses the risk return relationship. To hedge the most profitable portfolio. To construct a diversified portfolio and risk reduction by using index futures.

Secondary objective
To find out extent to which loss can be reduced by applying hedging strategies. To determine whether the hedger enjoys better returns from the use of hedgers. 41

 

To identify how much reduction in risk is possible. To find out the extend of loss due to misjudgment on index movements.

4.3 Commodity Market design with all products and methodology: The methodology of data collection pertains to information to how the data is collected i.e. either from primary sources or secondary sources. It explains the methods utilized and the instruments used in data collection. SOURCES OF DATA The sources of data can be classified in two categories:  Primary sources  Secondary sources PRIMARY SOURCES The primary data are collected by the detailed discussion was conducted with the Branch Manager of AR Ltd and Intractions was carried with the Commodities investors (customers).And the discussion was carried out with the college internal guide, who helped in developing the objectives and validating their conformance to the ethical framework of the project. SECONDARY SOURCES I used secondary sources also for collecting the data. They are:  Information from the text sources  Information from the internet sources  Information from the materials provided by the concern SAMPLING DESIGN  Sampling unit :Questionnaire  Sampling Size :50 units   Sampling procedure : Direct STATISTICAL TOOLS AND TECHNIQUES To analysis the data we used bar graphs periodically.

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CHAPTER 5

ANALYSIS
5.1 Analysis of data 5.2 Summary of findings

CHAPTER 5
ANALYSIS OF DATA
Securities analysts determine a company's profitability by looking at its returns. A return is the amount an investment earns as a percentage of the price paid to own it. It is the sum of income an investment makes over time, plus its capital gains. Analysts not only look at the securities historical market returns, they also look at a company’s return on investment (income divided by stock and debt), return on assets (income divided by total assets) and return on equity (additional earnings made from reinvesting profits).

5.2 FINDINGS The following findings are made on the basis of data analysis from the previous Chapter.

The study reveals the effectiveness of risk reduction using hedging strategies. It has found out that risk cannot be avoided. But can only be minimized. 43

Through the study. it has found out that, the hedging provides a safe position on an underlying security. The loss gets shifted to a counter party. Thus the hedging covers the loss and risk. Sometimes, the market performs against the expectation. This will trigger losses. so the hedger should be a strategic and positive thinker.

The anticipation of the hedger regarding the trend of the movement in the prices of the underlying security plays a key role in the result of the strategy applied.

It has been found that, all the strategies applied on historical data of the period of the study were able to reduce the loss that arose from price risk substantially.

If the trader is not sure about the direction of the movement of the profits of the current position, he can counter position in the future contract and reduces the level of risks.

The trader can effectively use the strategy for return enhancement provided he has the correct market anticipation.

In general, the anticipation of the strategies purely for return enhancement is a risky affair, because, if the anticipation about the performance of the market and the underlying goes wrong, the position taker would end up in higher losses.

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CHAPTER 6
SUMMARY OF LEARNING EXPERIENCE
The International College of Financial Planning has equipped me with necessary education and confidence to face my next career challenge. When graduating from International College of Financial Planning, you are not walking away with just another program but also the experiences of an established network of exceptional educators and a network of 7500 professionals Lack of Investor Awareness about the Derivatives Market & its Trading. Strategies are basically more applicable for HNI Clients whose margin Amount is more. Derivatives Market basically trades depending upon the Underlying Securities. So small fluctuations in the security results in changes in strategies for that particular Derivative. For arbitrageurs · Take positions in the cash and derivatives market simultaneously. · Take short position in the market, which is overvalued. · Take long position in the market, which is undervalue

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CONCLUSIONS AND RECOMMENDATION

Cost Efficiency:Options have great leveraging power. An investor can obtain an option position that will mimic a stock position almost identically, but at a huge cost savings. For example, in order to purchase 200 shares of an $80 stock, an investor must pay out $16,000. However, if the investor were to purchase two $20 calls (with each contract representing 100 shares), the total outlay would be only $4,000 (2 contracts X 100 shares/contract X $20 market price). The investor would then have an additional $12,000 to use at his or her discretion. Obviously, it is not quite as simple as that. However, this strategy, known as stock replacement, is not only viable but also practical and cost efficient. Less Risky - Depending on How You Use Them There are situations in which buying options is riskier than owning equities, but there are also times when options can be used to reduce risk. It really depends on how you use them. Options can be less risky for investors because they require less financial commitment than equities, and they can also be less risky due to their relative imperviousness to the potentially catastrophic effects of gap openings. Options are the most dependable form of hedge, and this also makes them safer than stocks. When an investor purchases stock, a stop-loss order is frequently placed to protect the position. The stop order is designed to "stop" losses below a predetermined price identified by the investor. The problem with these orders lies in the nature of the order itself. Higher Potential Returns:You don't need a calculator to figure out that if you spend much less money and make almost the same profit, then you have a higher percentage return. When they pay off, that's what options typically offer to investors. More Strategic Alternatives:The final major advantage of options is that they offer more investment alternatives. Options are a very flexible tool. There are many ways to use options to recreate other positions. We call these positions synthetics. Synthetic positions present investors with multiple ways to attain the same investment goals, and this can be very, very useful. While synthetic positions are considered an advanced option topic, there are many other examples of how options offer strategic alternatives. For example, many investors use brokers that charge a margin when an investor wants to short a stock. The cost of this margin requirement can be quite prohibitive. Other investors use brokers that simply do 46

not allow for the shorting of stocks, period. The inability to play the downside when needed virtually handcuffs investors and forces them into a black and white world while the market trades in color.

Recommendations: Avoiding wrong perception of the investors  Investors think that, Derivative trading is more risky than equity trading; it is a betting etc. their views are not cleared about derivative market. These wrong perceptions of the investors should be avoided by giving proper suggestions to the clients.  Suggest the Derivatives trading to the investors on the basis of – Income, Risk  Suggest the derivative trading to their clients who has currently invested in equity market. On the basis of their income capacity, risk bearing capacity of the investor.  Introducing strategies to the Investors  Introducing derivative strategies to the existing clients who are already invested in derivative segment.  Diversify the portfolio of investors  Diversify the investment portfolio of the clients who do not want to take a more risk in derivative market trading.

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APPENDICES
BIBLIOGRAPHY 1. INTERNET 2. AGENCY SOURCES 3. GOOGLE 4. NEWS PAPERS 5. COMPANY WEBSITES.

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