A Summer Internship Project Report

On

A perception of investors towards forex market

Submitted to

Global Institute of Management In partial fulfillment of the Requirement of the award for the degree of
Master of Business Administration
In

Gujarat Technological University

Under The Guidance Of Name of Company Guide MR.Hasmukh prajapati Name of Faculty Guide MR. Dhaval Patel

Submitted by DULAM KOMALA (127940592010)

KODGANTI SANDHYA (127940592018)

MBA SEMESTER II (Batch 2011-2013) --------------------------------------------------------------------------------

Global Institute of Management

Uwarsad Road-Gandhinagar
MBA PROGRAMME
Affiliated to Gujarat Technological University-Ahmedabad

July 2012
--------------------------------------------------------------------------------

PREFACE
As a Part of MBA Program, Student has to pursue a project duly approved by the Faculty of Concerned area. I had the privilege of undertaking the project on Perception of Investors on Currency Market in Indian at Indiainfoline. Main aim of the Project is to find out the factors which impact on Indian economy of currency market of glob & India.

The foreign exchange trading introduced in India since 2008. There are several products traded in forex market. As far as the study is consent the report is mainly focusing on the currency market in India. There are two exchanges MCX-SX and NSE for currency trading in India. There are four main currency pairs been traded in India are USD, EURO, GBP and JPY. There is major four ways to invest in or we can say financial instrument to invest in currency are spot, forward, swap, future and option. There are mainly three factors which impact the currency market are economic, political and market physiology. Foreign exchange reserves in a strict sense are only the foreign currency deposits and bonds held by central banks and monetary authorities. These are assets of the central bank held in different reserve currencies, mostly the US dollar, and to a lesser extent the euro, the UK pound, and the Japanese yen, and used to back its liabilities, the impact on any economy can be measured by analyzing the GDP, GNP, Import and export growth of the country and additionally the foreign reserve of the country. The report contains the market research of currency investors as in-depth interview with questioner. This Project work is divided into following parts which are as under. Objective of the Study Limitations of the Study Research Methodology. To Understand Global Forex Market To Understand Indian Forex Market To Study Indian Economy Data analysis & Interpretation

I.

Acknowledgement
I am thankful to Mr. Hasmukh Prajapti (Branch Manager) and the management of INDIAINFOLINE for permitting me to go through my summer training.

First and for most I would like to thank my company guide Mr. Prakash prajapati ( Sales Manager) for his constant encouragement, guidance and advice at every stage of my training. support. This project would not have been successfully completed without their great

I am very much thankful to Center for Management Studies, Global Institutes for their excellent guidance, support and appreciation and also provided me with this great opportunity to work in such a reputed organization.

I express my sincere thanks to Mr. Dhaval Patel who helped me in understanding the project and the implementation of the same. His suggestions really helped me think on a broad perspective and give me motivation to do my best. I would again like to thank Center for Management, Global Institute for helping and supporting me for my Summer Internship Program at Indiainfoline.

II.

TABLE OF CONTENTS No. 1. TABLE OF CONTENTS Particulars CHAPTER 1 INTRODUCTION 1.1 Introduction of Forex market 1.2 History of Forex market 1.3 An Overview of Forex Market 1.4 Need for Forex Market 1.5 Basic Concept of Forex market 2. CHAPTER 2 STRUCTURE OF FOREX MARKET 2.1 The Organization & Structure of FOREX MARKET 2.2 Main Participants In Foreign Exchange Markets 3. CHAPTER 3 WORKING OF FOREX MARKET 3.1 Function of Forex market 3.2 Procedure for Forex Market 3.3 Advantage of Forex Market 3.4 Trading In Forex market 3.5 Exchange Rate under Floating Rates 4. CHAPTER 4 DEALING IN CURRENCIES 5. CHAPTER 5 INDIA INFOLINE PROFILE 5.1 Introduction of Company 5.2 History of company 5.3 Vision and Mission 46 47 48
4|Page

Page no.

7 9 11 12 13

16 17

25 27 33 36 37 40

6. 7.

5.4 Details of Company 5.5 Features of Company 5.6 Products and services Literature Review CHAPTER 7 RESEARCH METHODOLOGY
7.1 Research objective 7.2 Research design 7.3 Sampling plan 7.4 Data collection plan 7.5 Contact method

49 51 52 55

8. 9. 10. 11.

Recommendation to the company Conclusion Bibliography Annexure

5|Page

6|Page

1.

INTRODUCTION

Forex market is the process of conversion of one currency into another currency. For a country its currency becomes money and legal tender. For a foreign country it becomes the value as a commodity. Since the commodity has a value its relation with the other currency determines the exchange value of one currency with the other. For example, the US dollar in USA is the currency in USA but for India it is just like a commodity, which has a value which varies according to demand and supply. The Forex market market (forex, FX, or currency market) is a global, worldwide decentralized over-the-counter financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The Forex market determines the relative values of different currencies. The primary purpose of the Forex market is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries.

7|Page

The Forex market is unique because of Its huge trading volume, leading to high liquidity Its geographical dispersion Its continuous operation: 24 hours a day except weekends, i.e. Trading from 20:15 gmt on Sunday until 22:00 gmt friday The variety of factors that affect exchange rates The low margins of relative profit compared with other markets of fixed income

8|Page

1.2 HISTORY OF FOREX MARKET:

The foreign exchange market as we know it today originated in 1973. However, money has been around in one form or another since the time of Pharaohs. The Babylonians are credited with the first use of paper bills and receipts, but Middle Eastern moneychangers were the first currency traders who exchanged coins from one culture to another. During the middle ages, the need for another form of currency besides coins emerged as the method of choice. These paper bills represented transferable third-party payments of funds, making foreign currency exchange trading much easier for merchants and traders and causing these regional economies to flourish. From the infantile stages of forex during the Middle Ages to WWI, the forex markets were relatively stable and without much speculative activity. After WWI, the forex markets became very volatile and speculative activity increased tenfold. Speculation in the forex market was not looked on as favorable by most institutions and the public in general. The Great Depression and the removal of the gold standard in 1931 created a serious lull in forex market activity. From 1931 until 1973, the forex market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the forex markets during these times was little, if any.

9|Page

THE BRETTON WOODS ACCORD

The first major transformation, the Bretton Woods Accord, occurred toward the end of World War II. The United States, Great Britain and France met at the United Nations Monetary and Financial Conference in Bretton Woods, N.H. to design a new global economic order. The location was chosen because, at the time, the U.S. was the only country unscathed by war. Most of the major European countries were in shambles. The Bretton Woods Accord was established to create a stable environment by which global economies could restore themselves. The Bretton Woods Accord established the pegging of currencies and the International Monetary Fund (IMF) in hope of stabilizing the global economic situation. Bretton Woods System was a modified version of Gold Exchange Standard. The main features were: 1. 1.The USA undertook to convert the US Dollar freely into gold at a fixed parity of $35 per ounce. 2. Other countries (member countries of IMF) agreed to maintain their currencies at specific parities with US$. 1% variation in this parity 3. (+ or -) was allowed. If the exchange rate of these member countries tended to exceed this 1% limit, then their monetary authorities shall take the necessary measures to restore it. This was supposed to be done by buying or selling dollars. 4. In order, to follow this parity-maintaining obligation, if required, member countries may borrow from IMF. 5. If there is a genuine problem in maintaining parity to a particular member country, then it can change its parity itself by 10%, without consulting IMF. If it desired to exceed 10% limit, it has to inform IMF and seek its consent. Because of this feature, this system was often referred as Adjustable peg system.

10 | P a g e

1.3 FOREIGN EXCHANGE MARKET OVERVIEW:

The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the world, with a daily average turnover of US$1.9 trillion 30 times larger than the combined volume of all U.S. equity markets. "Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation. A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night. The FX market is considered an Over the Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.

11 | P a g e

1.4 NEED FOR FOREX MARKET:

Foreign exchange markets represent by far the most important financial markets in the world. Their role is of paramount importance in the system of international payments. In order to play their role effectively, it is necessary that their operations/dealings be reliable. Reliability essentially is concerned with contractual obligations being honored. For instance, if two parties have entered into a forward sale or purchase of a currency, both of them should be willing to honor their side of contract by delivering or taking delivery of the currency, as the case may be. If we want to buy foreign goods or a country wants to invest in other country, companies or individuals first need to buy the currency of that country with which they are going to do the business. There comes the requirement of foreign exchange market or FX market where one can buy and sell currencies. Here, the price of one currency is determined on the price of the other currency. This rate is called exchange rate.

12 | P a g e

1.5

BASIC CONCEPTS OF FOREX MARKET

As per Forex market Act, (Section 2), 1947. Foreign Currency means any currency other than Indian currency. Forex market means includes any instrument drawn, accepted, made or issued under clause (8) of section 17 of the Banking Regulation Act, 1956, all deposits, credits and balance payable in any foreign currency, and any drafts, travelers cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency Financial Markets is a place where Resources/funds are transferred from those having surplus/excess to those having a deficit/shortage. Forex market Markets the market where the commodity traded is Currencies. Price of each currency is determined in term of other currencies. Exchange Rate Exchange Rate is the price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another. E.g. Rs. 48.50 per one USD Major currencies of the World USD EURO YEN POUND STERLING

13 | P a g e

 WHAT IS A FOREX MARKET TRANSACTION? Any financial transaction that involves more than one currency is a Forex market transaction. Most important characteristic of a Forex market transaction is that it involves Forex market Risk. PARTICIPANTS IN THE FOREX MARKET All Scheduled Commercial Banks (Authorized Dealers only). Reserve Bank of India (RBI). Corporate Treasuries. Public Sector/Government. Inter Bank Brokerage Houses. Resident Indians Non Residents Exchange Companies Money Changers

COMPONENTS OF A STANDARD FX TRANSACTION Base Currency (USD/INR) Dealt or Variable Currency Exchange Rate Amount Deal Date Value Date Settlement Instructions

14 | P a g e

15 | P a g e

2.1-The Organization & Structure of FOREX MARKET

Is given in figure below.

Foreign Exchange Market

Wholesale

Retail

Internabank ( Bank accounts or Deposits) Central Bank

Banks Money and Charges( cheques , Currencies, Banknote)

Direct

Indirect ( through Brokers)

Spot

Forward (Outright & Swaps)

Derivatives ( Future & Option )

Non-Merchandise Merchandise (Arbitrage , Hedge,S peculation )

16 | P a g e

2.2 Main Participants In Foreign Exchange Markets

There are four levels of participants in the foreign exchange market At the first level, are tourists, importers, exporters, investors, and so on. These are the immediate users and suppliers of foreign currencies. At the second level, are the commercial banks, which act as clearing houses between users and earners of foreign exchange. At the third level, are foreign exchange brokers through whom the nations commercial banks even out their foreign exchange inflows and outflows among themselves. Finally at the fourth and the highest level is the nations central bank, which acts as the lender or buyer of last resort when the nations total foreign exchange earnings and expenditure are unequal. The central then either draws down its foreign reserves or adds to them.

17 | P a g e

Main Participants in Foreign Exchange Markets

Customers Commercia l Banks Individuals

Exchange Brokers

Commercia l companies

Speculators Non-bank foreign exchange companies

Investment manageme nt firms

1. CUSTOMERS
The customers who are engaged in foreign trade participate in foreign exchange markets by availing of the services of banks. Exporters require converting the dollars into rupee and importers require converting rupee into the dollars as they have to pay in dollars for the goods / services they have imported. Similar types of services may be required for setting any international obligation i.e., payment of technical know-how fees or repayment of foreign debt, etc.

18 | P a g e

2. COMMERCIAL BANKS
They are most active players in the forex market. Commercial banks dealing with international transactions offer services for conversation of one currency into another. These banks are specialised in international trade and other transactions. They have wide network of branches. Generally, commercial banks act as intermediary between exporter and importer who are situated in different countries. Typically banks buy foreign exchange from exporters and sells foreign exchange to the importers of the goods. Similarly, the banks for executing the orders of other customers, who are engaged in international transaction, not necessarily on the account of trade alone, buy and sell foreign exchange. As every time the foreign exchange bought and sold may not be equal banks are left with the overbought or oversold position. If a bank buys more foreign exchange than what it sells, it is said to be in overbought/plus/long position. In case bank sells more foreign exchange than what it buys, it is said to be in oversold/minus/short position. The bank, with open position, in order to avoid risk on account of exchange rate movement, covers its position in the market. If the bank is having oversold position it will buy from the market and if it has overbought position it will sell in the market. This action of bank may trigger a spate of buying and selling of foreign exchange in the market.

19 | P a g e

Commercial banks have following objectives for being active in the foreign exchange market: They render better service by offering competitive rates to their customers engaged in international trade. They are in a better position to manage risks arising out of exchange rate fluctuations. Foreign exchange business is a profitable activity and thus such banks are in a position to generate more profits for themselves. They can manage their integrated treasury in a more efficient manner.

3. EXCHANGE BROKERS
Forex brokers play a very important role in the foreign exchange markets. However the extent to which services of forex brokers are utilized depends on the tradition and practice prevailing at a particular forex market centre. In India dealing is done in interbank market through forex brokers. In India as per FEDAI guidelines the ADs are free to deal directly among themselves without going through brokers. The forex brokers are not allowed to deal on their own account all over the world and also in India. How Exchange Brokers Work? Banks seeking to trade display their bid and offer rates on their respective pages of Reuters screen, but these prices are indicative only. On inquiry from brokers they quote firm prices on telephone. In this way, the brokers can locate the most competitive buying and selling prices, and these prices are immediately broadcast to a large number of banks by means of hotlines/loudspeakers in the banks dealing room/contacts many dealing banks through calling assistants
20 | P a g e

employed by the broking firm. If any bank wants to respond to these prices thus made available, the counter party bank does this by clinching the deal. Brokers do not disclose counter party banks name until the buying and selling banks have concluded the deal. Once the deal is struck the broker exchange the names of the bank who has bought and who has sold. The brokers charge commission for the services rendered. In India brokers commission is fixed by FEDAI.

4. SPECULATORS
Speculators play a very active role in the foreign exchange markets. In fact major chunk of the foreign exchange dealings in forex markets in on account of speculators and speculative activities. The speculators are the major players in the forex markets. Banks dealing are the major speculators in the forex markets with a view to make profit on account of favourable movement in exchange rate, take position i.e., if they feel the rate of particular currency is likely to go up in short term. They buy that currency and sell it as soon as they are able to make a quick profit. Corporations particularly Multinational Corporations and Transnational Corporations having business operations beyond their national frontiers and on account of their cash flows. Being large and in multi-currencies get into foreign exchange exposures. With a view to take advantage of foreign rate movement in their favour they either delay covering exposures or does not cover until cash flow materialize. Sometimes they take position so as to take advantage of the exchange rate movement in their favour and for undertaking this activity, they have state of the art dealing rooms. In India, some of the big corporate are as the exchange control have been loosened, booking and cancelling forward contracts, and a times the same borders on speculative activity.
21 | P a g e

5. INDIVIDUALS
Individuals like share dealings also undertake the activity of buying and selling of foreign exchange for booking short-term profits. They also buy foreign currency stocks, bonds and other assets without covering the foreign exchange exposure risk. This also results in speculations.

6. COMMERCIAL COMPANIES
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.

7. INVESTMENT MANAGEMENT FIRMS

Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases. Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.

22 | P a g e

8. NON-BANK FOREIGN EXCHANGE COMPANIES

Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but rather currency exchange with payments. It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.

23 | P a g e

24 | P a g e

3. WORKING OF FOREX MARKET

There is no central location of this market. However, there are three major centers that handle the majority of transactions: United States, United Kingdom and Japan. The remaining transactions in the market are controlled from Singapore, Switzerland, Hong Kong, Germany, France and Australia.

3.1 Functions of Foreign Exchange Market

The foreign exchange market is a market in which foreign exchange transactions take place. In other words, it is a market in which national currencies are bought and sold against one another. A foreign exchange market performs three important functions:

PROVISION OF HEDGING FACILITIES

TRANSFER OF PURCHASING POWER

PROVISION FOR CREDIT

25 | P a g e

Transfer of Purchasing Power: The primary function of a foreign exchange market is the transfer of purchasing power from one country to another and from one currency to another. The international clearing function performed by foreign exchange markets plays a very important role in facilitating international trade and capital movements.

Provision for Credit: The credit function performed by foreign exchange markets also plays a very important role in the growth of foreign trade, for international trade depends to a great extent on credit facilities. Exporters may get pre-shipment and post-shipment credit. Credit facilities are available also for importers. The Euro-dollar market has emerged as a major international credit market.

Provision of Hedging Facilities: The other important function of the foreign exchange market is to provide hedging facilities. Hedging refers to covering of export risks, and it provides a mechanism to exporters and importers to guard themselves against losses arising from fluctuations in exchange rates.

26 | P a g e

3.2 How to make purchase in forex ?

1.Choose your currency pair 2.Decide on your deal volume 3.Set your loss limits 4.Check again and place your order 5.Set your profit goals 6.Get confirmation 7.Close your position

27 | P a g e

1. Choose your currency pair Analyze the market and select a currency pair that you want to trade. Decide which currency you think will go up, and which one will go down.
Currency pair and indicator value

28 | P a g e

2. Decide on your deal volume Choose the amount of currency you want to trade. The more volume you trade, the more you can earn or lose. If you're a beginner, it recommends that you have to make small trades.

3. Set your profit goals When you make a trade, you should set a profit target. When this target is reached, your position will be closed automatically, and your profit and original stake will be transferred to your account.

29 | P a g e

4. Set your loss limits Similarly, you need to decide how much you're willing to lose. Set this and once again your position will be closed automatically once the price reaches this limit. Your remaining stake will be transferred to your account. Remember not to risk all your money.

5. Check again and place your order Look at the parameters you've just selected. Make any changes that are needed. Confirm that the price you wanted is still available; the price is only available for a short time and may have changed. If it has changed, decide if you still want to trade. If you do place your orders.

30 | P a g e

6. Get confirmation

As soon as you enter your order, the data is sent to our servers. It checks the details and executes your order right away. Once the deal is made, it sends you a confirmation, and your open position appears on your trading terminal. Click OK to confirm an order

31 | P a g e

7. Close your position Once the price reaches a point where you want to sell, close you position and it will transfer the money to your account. Note that your account balance does not reflect your profit or loss until you do this. Your position will be closed automatically if the price reaches the profit or loss limits you set. Click on the yellow button to close the position.

32 | P a g e

3.3 Advantages of Forex Market

Although the forex market is by far the largest and most liquid in the world, day traders have up to now focus on seeking profits in mainly stock and futures markets. This is mainly due to the restrictive nature of bank-offered forex trading services. Advanced Currency Markets (ACM) offers both online and traditional phone forex-trading services to the small investor with minimum account opening values starting at 5000 USD. There are many advantages to trading spot foreign exchange as opposed to trading stocks and futures. Below are listed those main advantages. 1. Commissions: a. ACM offers foreign exchange trading commission free. This is in sharp contrast to (once again) what stock and futures brokers offer. A stock trade can cost anywhere between USD 5 and 30 per trade with online brokers and typically up to USD 150 with full service brokers. Futures brokers can charge commissions anywhere between USD 10 and 30 on a round turn basis. 2. Margins requirements: a. ACM offers a foreign exchange trading with a 1% margin. In layman's terms that means a trader can control a position of a value of USD 1'000'000 with a mere USD 10'000 in his account. By comparison, futures margins are not only constantly changing but are also often quite sizeable. Stocks are generally traded on a non-margined basis and when they are, it can be as restrictive as 50% or so.

33 | P a g e

3. 24 Hour market:
a. Foreign exchange market trading occurs over a 24 hour period picking up in Asia around 24:00 CET Sunday evening and coming to an end in the United States on Friday around 23:00 CET. Although ECNs (electronic communications networks) exist for stock markets and futures markets (like Globex) that supply after hours trading, liquidity is often low and prices offered can often be uncompetitive.

4. No Limit up / limit down: a. Futures markets contain certain constraints that limit the number and type of transactions a trader can make under certain price conditions. When the price of a certain currency rises or falls beyond a certain pre-determined daily level traders are restricted from initiating new positions and are limited only to liquidating existing positions if they so desire. b. This mechanism is meant to control daily price volatility but in effect since the futures currency market follows the spot market anyway, the following day the futures market may undergo what is called a 'gap' or in other words the futures price will re-adjust to the spot price the next day. In the OTC market no such trading constraints exist permitting the trader to truly implement his trading strategy to the fullest extent. Since a trader can protect his position from large unexpected price movements with stop-loss orders the high volatility in the spot market can be fully controlled.

34 | P a g e

5. Sell before you buy:

a. Equity brokers offer very restrictive short-selling margin requirements to customers. This means that a customer does not possess the liquidity to be able to sell stock before he buys it. Margin wise, a trader has exactly the same capacity when initiating a selling or buying position in the spot market. In spot trading when you're selling one currency, you're necessarily buying another.

35 | P a g e

3.4

Why Trade In Foreign Exchange?

Foreign Exchange is the prime market in the world. Take a look at any

market trading through the civilized world and you will see that everything is valued in terms of money. Fast becoming recognized as the world's premier trading venue by all styles of traders, foreign exchange (forex) is the world's largest financial market with more than US$2 trillion traded daily. Forex is a great market for the trader and it's where "big boys" trade for large profit potential as well as commensurate risk for speculators. Forex used to be the exclusive domain of the world's largest banks and corporate establishments. For the first time in history, it's barrier-free offering an equal playing-field for the emerging number of traders eager to trade the world's largest, most liquid and accessible market, 24 hours a day. Trading forex can be done with many different methods and there are many types of traders - from fundamental traders speculating on mid-to-long term positions to the technical trader watching for breakout patterns in consolidating markets.

36 | P a g e

3.5

Exchange Rates under Fixed and Floating Regimes

With floating exchange rates, changes in market demand and market supply of a currency cause a change in value. In the diagram below we see the effects of a rise in the demand for sterling (perhaps caused by a rise in exports or an increase in the speculative demand for sterling). This causes an appreciation in the value of the pound. Changes in currency supply also have an effect. In the diagram below there is an increase in currency supply (S1-S2) which puts downward pressure on the market value of the exchange rate. A currency can operate under one of four main types of exchange rate system.

1.

FREE FLOATING
Value of the currency is determined solely by market demand for and supply of the currency in the foreign exchange market. Trade flows and capital flows are the main factors affecting the exchange rate In the long run it is the macro economic performance of the economy (including trends in competitiveness) that drives the value of the currency. No pre-determined official target for the exchange rate is set by the Government. The government and/or monetary authorities can set interest rates for domestic economic purposes rather than to achieve a given exchange rate target.

37 | P a g e

It is rare for pure free floating exchange rates to exist - most governments at one time or another seek to "manage" the value of their currency through changes in interest rates and other controls.

2.

MANAGED FLOATING EXCHANGE RATES

Value of the pound determined by market demand for and supply of the currency with no pre-determined target for the exchange rate is set by the Government

Governments normally engage in managed floating if not part of a fixed exchange rate system.

3.

SEMI-FIXED EXCHANGE RATES

Exchange rate is given a specific target Currency can move between permitted bands of fluctuation Exchange rate is dominant target of economic policy-making (interest rates are set to meet the target) Bank of England may have to intervene to maintain the value of the currency within the set targets Re-valuations possible but seen as last resort.

4.

FULLY-FIXED EXCHANGE RATES

Commitment to a single fixed exchange rate Achieves exchange rate stability but perhaps at the expense of domestic economic stability

38 | P a g e

39 | P a g e

4. DEALING IN CURRENCIES
The transactions on exchange markets are carried out among banks. Rates are quoted round the clock. Every few seconds, quotations are updated. Quotations start in the dealing room of Australia and Japan (Tokyo) and they pass on to the markets of Hong Kong, Singapore, Bahrain, Frankfurt, Zurich, Paris, London, New York, San Francisco and Los Angeles, before restarting. In terms of convertibility, there are mainly three kinds of currencies. The first kind is fully convertible in that it can be freely converted into other currencies; the second kind is only partly convertible for non-residents, while the third kind is not convertible at all. The last holds true for currencies of a large number of developing countries. It is the convertible currencies, which are mainly quoted on the foreign exchange markets. The most traded currencies are US dollar, Deutschmark, Japanese Yen, Pound Sterling, Swiss franc, French franc and Canadian dollar. Currencies of developing countries such as India are not yet in much demand internationally. The rates of such currencies are quoted but their traded volumes are insignificant.

40 | P a g e

4.1 METHODS OF QUOTING EXCHANGE RATES

There are two methods of quoting exchange rates-

7. Direct method:
For change in exchange rate, if foreign currency is kept constant and home currency is kept variable, then the rates are stated be expressed in Direct Method E.g. US $1 = Rs. 49.3400.

8. Indirect method:
For change in exchange rate, if home currency is kept constant and foreign currency is kept variable, then the rates are stated be expressed in Indirect Method. E.g. Rs. 100 = US $ 2.0268 In India, with the effect from August 2, 1993, all the exchange rates are quoted in direct method, i.e. US $1 = Rs. 49.3400 GBP1 = Rs. 69.8700

41 | P a g e

4.2 THE ADVANTAGE OF TWO-WAY QUOTE:

The market continuously makes available price for buyers and sellers. 9. Two-way price limits the profit margin of the quoting bank and comparison of one quote with another quote can be done instantaneously. 10.As it is not necessary any player in the market to indicate whether he intends to buy of sell foreign currency, this ensures that the quoting bank cannot take advantage by manipulating the prices. 11.It automatically ensures alignment of rates with market rates. 12.Two-way quotes lend depth and liquidity to the market, which is so very essential for efficient.

42 | P a g e

4.3 A PERFECT PROCEDURE FOR TRADING IN FOREX:

If you interested in learning to trade forex successfully then the most common path for an aspiring trader these days is to search the internet for information to apply immediately to their live forex trading account. The problem is that their search often leads them to destinations where there are plenty of false promises, bad ideas, negativity and an obsession with indicators. Learning How to Trade In Forex in Just Seven Simple Steps:

13.

Understand Your Place In The Forex Market

This is very important you must understand that you are very small fish in a big ocean. In the Foreign Exchange Market the majority of the liquidity is coming from big banks and experienced institutional traders. These are the big fish. The big fish will happily enjoy you as a little snack. You are only fooling yourself if you think it will be easy to take money off these big forex traders You have to learn to swim alongside these big fish and catch the same currents they do. Swimming against them just marks you as prey and sooner or later you will be eaten.

14. Learn to read the Forex Charts and Understand the Foreign Exchange Market
The major forex players are using simple, but proven technical analysis techniques most commonly horizontal support/resistance, identification of trading ranges, these are the coupled with fundamental themes. Begin by accepting that the other major participants are highly experienced in the market and they make money because of experience and by a complete understanding of the core skills and not because they hold a holy grail of secret indicators.

43 | P a g e

1. Money Management
a. It is crucial that you understand as a novice forex trader the emphasis is not on how much you can make from forex trading but on how you manage what you have. b. This is the most common downfall of all novice traders. It is common place to see a starting trader risk the majority of their account on one or two positions.

2. Focus on the Market

a. Many novice forex traders open their forex charting software and activate their latest hot indicator or tool and proceed to place their trades as per the tools recommendations. This style of forex trading is unlikely to have much long term success. b. When these indicators fail to generate the required profits then these traders then move rapidly on to another set of indicators. c. You must focus on the forex market and understand what the indicators are telling you so that you can pick the forex trades which have the best probability of being winners.

3. Plan your trade and trade your plan.

a. This is a common saying that seems to get lost on novice traders. It should be every trader's goal to make pips on each forex trade as per their trading plan. Forex Traders must treat each trade as a business decision by calculating their risk and defining their entries and exits points, those that do not open themselves to big losses when a trade goes bad.

44 | P a g e

4. Your mind is your strongest asset and weakest link. First you must understand the role psychology plays in trading. You must learn to understand your personality traits and how they might affect your trading style. Second you must make it your aim to never stop learning. You cannot get yourself to a certain level and then become complacent. Every day is a learning experience in some way or other and you must be prepared to learn lessons and invest time in improving your skills and experience. The day you stop learning is the day you should stop trading. 5. Understand The Forex Market is always right or Expect the Unexpected. The forex market is an interesting place, but there is one thing every trader needs to learn. Always expect the unexpected and do not get wrapped up in past successes. No matter what your charts or indicators tell you; sometimes the forex market will just do the opposite. Whatever happens in the market you must maintain an objective outlook on your strategy and the forex market and ensure that bubbles and crashes do not derail you in the long term. By following these steps and learning to become a forex trader rather than just trading the forex market, you will put you on the path to ultimate success as a profitable forex trader. This is something that 90% of all novice traders fail to achieve.

45 | P a g e

5.1

Introduction of Indiainfoline company

The IIFL Group is a leading financial services company in India, promoted by first generation entrepreneurs. They have a diversified business model that includes credit and finance, wealth management, financial product distribution, asset management, capital market advisory and investment banking. They have a largely retail focused model, servicing over 2 million customers, including several lakh first-time customers for mutual funds, insurance and consumer credit. This has been achieved due to our extensive distribution reach of close to 4,000 business locations and also innovative methods like seminar sales and use of mobile vans for marketing in smaller areas. Their evolution from an entrepreneurial start-up to a market leadership position is a story of steady growth by adapting to the changing environment, without losing the focus on our core domain of financial services. Their NBFC and lending business accounts for 68% of our consolidated income in FY13 and has a diversified product portfolio rather than remaining a mono-line NBFC. They are a leader in distribution of life insurance and mutual funds among non-bank entities. Although the share of equity broking in total income was only 13% in FY13, IIFL continues to remain a leading player in both, retail and institutional space.
46 | P a g e

5.2 History of company ( Indiainfoline) The India Infoline (IIFL) group, comprising the holding company, India Infoline and its subsidiaries, is one of the leading players in the Indian financial services space. IIFL offers advice and execution platform for the entire range of financial services covering products ranging from Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, Gold bonds and other small savings instruments. IIFL recently received an in-principle approval for Securities Trading and Clearing memberships from Singapore Exchange (SGX) paving the way for IIFL to become the first Indian brokerage to get a membership of the SGX. IIFL also received membership of the Colombo Stock Exchange becoming the first foreign broker to enter Sri Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of India?s leading online destinations for personal finance, stock markets, economy and business. The company has been awarded the ??Best Broker, India? by FinanceAsia and the ??Most improved brokerage, India? in the AsiaMoney polls. India Infoline was also adjudged as ??Fastest Growing Equity Broking House - Large firms? by Dun & Bradstreet.

A network of over 2,500 business locations spread over more than 500 cities and towns across India facilitates the smooth acquisition and servicing of a large customer base. All our offices are connected with the corporate office in Mumbai with cutting edge networking technology. The group caters to a customer base of about a million customers, over a variety of mediums viz. online, over the phone and at our branches.
47 | P a g e

5.3 Vision and mission of company Vision

To become the most respected company in the financial services space in India Values

Values are IIFL are summarized in one acronym: GIFTS Growth with focused team of dynamic professionals Integrity in all aspects of business no compromise in any situation Fairness in all our dealings employees, customers, vendors and shareholders all included Transparency in what they do and in how and why they do it Service orientation is our core value, imbibed by all sales as well as support teams Business strategy

Steady growth by adapting to the changing environment, without losing the focus on our core domain of financial services De-risked business through multiple products and diversified revenue stream Knowledge is the key to power superior financial decisions Keep costs low and continuously strive for innovation Customer strategy

Remain largely a retail focused organization, driving stickiness through knowledge and quality service Cater to untapped areas in semi-urban and rural areas, which is relatively safe from cut-throat competition Target the micro, small and medium enterprises mushrooming across the country through a cluster approach for lending business Use wide multi-modal network serving as one-stop shop to customers People strategy

Attract the best talent and driven people Ensure conducive merit environment Liberal ownership-sharing
48 | P a g e

5.4 Details about Indiainfoline

Location Corporate office Registered office

Mumbai IIFL Centre, Lower Parle IIFL House, Sun InfoTech Park, Road No. 16V, Plot No. B-23, Thane Industrial Area, Waggle Estate, Thane, Maharashtra 400604 1995 Financial Services Credit & Finance, Wealth Management, Financial Product Distribution, Capital Market Related 14,000+ Around 4,000 locations in 900 cities and towns Sri Lanka, Singapore, Dubai, New York, Mauritius, UK, Hong Kong, NSE, BSE 17 May, 2005

Year of incorporation Industry Key businesses

Employees Business locations Global reach

Listings Listing date

49 | P a g e

Registrars Short term debt rating Long term debt rating Domains

Link Intime India Pvt. Ltd. CRISIL A1+ & ICRA (A1+) ICRA(AA-) & CRISIL AA-/Stable www.indiainfoline.com, www.iiflfinance.com, www.ttweb.indiainfoline.com, www.flame.org.in.

ISIN code Bloomberg code Reuters code

INE530B01024 IIFL IN EQUITY IIFL.BO

50 | P a g e

5.5 Features of indiainfoline

Retail

Equity, Commidities Mutual funds Insurance distribustion Loans

Corporate

Investment banking Corporate debt

Institutional equities Derivatives

Institutional

Affluent

Wealth managemnt Financial advisory Financing

51 | P a g e

5.6 Products and Services

India Infoline provides a gamut of financial products and services. The company offers broking services in the Cash and Derivatives segments of the NSE and BSE. India Infoline Media and Research Services- This company offers content support to India Infoline in area of broking, commodities, mutual fund and portfolio management services. India Infoline Commodities- This company is engaged in broking services for commodities segment. India Infoline Marketing & Services- This is holding company of India Infoline Insurance Services and India Infoline Insurance Brokers. The company is the largest Corporate Agent for ICICI Prudential Life Insurance Company. It is also engaged in insurance broking. India Infoline Investment Services- This subsidiary is engaged in business such as loans against securities, SME financing, distribution of retail loan products, consumer finance business and housing finance business. IIFL (Asia) Pte- This subsidiary is engaged in carrying out financial sector activities in other Asian markets.

52 | P a g e

Awards
India Infoline has been awarded the ??Best Broker in India? by Finance Asia. Company?s Rs. 5 billion short-term debt programme has received an A1+ rating from ICRA. This reflects highest -credit-quality of short-term debt instruments.

Milestones

1995: Commenced operations as an Equity Research firm 1997: Launched research products of leading Indian companies, key sectors and the economy Client included leading FIIs, banks and companies. 1999: Launched www.indiainfoline.com 2000: Launched online trading through www.5paisa.com Started distribution of life insurance and mutual fund 2003: Launched proprietary trading platform Trader Terminal for retail customers 2004: Acquired commodities broking license 2004: Launched Portfolio Management Service 2005: Maiden IPO and listed on NSE, BSE 2006: Acquired membership of DGCX 2006: Commenced the lendin 2007: Commenced institutional equity

53 | P a g e

54 | P a g e

 A Literature Review For forex market

A Study on foreign exchange market movements(1982):

A NEW LOOK Syed A. Hyat, Ph.D. Associate Professor of Finance Central Connecticut State University Abstract: The literature relevant to the efficient market hypothesis in the foreign

exchange market has been examined primarily from the premise that the exchange rates incorporate all available information regarding exchange rate expectations and that it should not be possible to predict one exchange rate as a function of another.
The importance of the random walk model in explaining financial asset price behavior should be noted. Because of its inherent simplicity, the random walk model has an intuitive appeal. In its simplest form, the random walk model suggests that the price of any financial asset moves through time as a random process with uncorrelated changes. Consequently, the best estimate of the one-period ahead asset price is the current asset price (Garbade, 1982).

Guest editorial A STUDY ON FOREIGN EXCHANGE MARKETS(1996):

Two decades ago exchange-rate economics seemed to be in total shambles. That, however, did not last long. Science proceeds by successive approximations and in the intervening years the foreign exchange market became one of the most heavily researched areas in economics. The first wave of findings to come out of this new research concerned the centuries-old theoretical construct of purchasing power parity, and elatedly, the behavior of real exchange rates. Here the consensus gradually shifted from the widespread view that PPP had collapsed to the view that it was, in fact, a useful empirical first empirical approximation in the long-run, as Lothian and Taylor (1996) put it.

55 | P a g e

 The study on effectiveness of foreign exchange intervention in emerging market countries (2003) Piti Disyatat and Gabriele Galati
This paper was written while Piti Disyatat was a Visiting Fellow at the BIS. We would like to thank Marian Micu for excellent research assistance, Claudio Borio, Martin Perina, Camilo tovar and Philip Turner for helpful comments on an earlier version, and John Cairns for kindly providing us the IDEA data on intervention by Asian central banks that is perceived by market participants. All remaining errors are our sole responsibility. The views expressed are our own and do not necessarily reflect those of the Bank of Thailand or the Bank for International Settlements. A discussion of intervention objectives in the emerging market context can be found in the Moreno paper in this volume and in Canales-Kriljenko et al (2003). King (2003) offers a more general discussion based on experiences of advanced countries. A survey of empirical studies on the determinants of intervention can be found in Almekinders (1995) and Sarno and Taylor (2001). See also Ho and McCauley (2003).

Foreign Exchange Market Organization in Selected Developing and Transit Economies :( January 2004 ) Evidence from a Survey
IMF Working Paper Monetary and Financial Systems Department Prepared by Jorge Ivn Canales-Kriljenko Authorized for distribution by Shogo Ishii

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. The foreign exchange market microstructures in developing and transition economies are characterized by the results from the IMFs 2001 Survey on Foreign Exchange Market Organization. The survey found that these markets are usually unified onshore spot markets for U.S. dollars, where transactions are concentrated at the bank-customer level. The trading mechanisms are usually dealer or mixed dealer/auction markets; the degree of transparency is often low; settlement systems remain risky; and the scope for price discovery is variable.

56 | P a g e

57 | P a g e

7.1 RESEARCH OBJECTIVE

MAIN OBJECTIVE To know the perception of investors towards forex market. SUB OBJECTIVE To know Most traded currency pair by value in different country. To know that which currency most traded by value in different economy To know the awareness of forex market. To find out the No. of people investing in the market. To know the area in which people are investing. To understand the investment objective. To search the effective factors for forex market. To know the percentage of investment has been invested in the forex market. To know the how much riskier is currency market and how much return is people expecting. To know people are satisfying with services of company. To search which sources is most effective for information and guidance. How to trade in currency with forex with companys software learning trading different types of currency pair.

58 | P a g e

7.2. Research Design

A research design is frame work or blue print for conducting the marketing research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and solve marketing research problems. 1.Deciding the subject of Research Initially we had a lot of ideas for survey-based project. Then it was mutually decided that the survey sample should be huge. So we decided to take a subject in which we can get wide range of sample size. In order to face perception of people towards forex market in wide range foreign exchange. In this context resource are for forex are now a days easily available. So that people are excited and encouraged to invest in forex market. So finally our research topic is A perception of investors people towards Forex market.

59 | P a g e

2. Framing appropriate Questionnaires The initial steps of our project was to frame a less complicated questionnaire so that our sample have a clear idea what is being required from them and save their precious time. The questionnaire was constructed to mirror many of the queries that have been asked in previous studies of Forex market. We have covered area which belongs to Stock market. We have also covered all age of people who are investing in the forex market. We have included all type of question which covers our research appropriately. We have also included the question which shows the satisfaction of investors towards company and brokerage agents.

60 | P a g e

3. Space boundaries Space boundary means the area that we have covered for the survey. In this research, the scope for the survey was Ahmadabad and Gandhinagar. This aspect founds that female are also interested in the market. Perception of people is currency investment is safe and long time investment. It may be riskier for short time. Its need potential to generate more return and good knowledge for currency.

61 | P a g e

7.3 Sampling Plan

We have undertaken target -oriented method for sampling. Our target research included Stock Broking Company, agents, and High profile people. Sample size Our sample is 100. We surveyed 100 samples, which were bifurcated into 73 are male and 27 are female. In which 69 are aware about market and only 57 are investing in the market. Sample space The sample space of study consisted of 100 men, women,

belonging to different occupations.

62 | P a g e

7.4 DATA COLLECTION PLAN

Basically there are two types of data: 1) Primary data 2) Secondary data 1) Primary data:
The methodology used is to study currency trading and its usage and utility, hedging and arbitrage in currency trading. To study about factors deciding currency fluctuation. What are the instruments to project losses from currency fluctuation? How currency trading is done. Currency trading in India! What are the initiatives taken by Indian government for currency trading? Who are major participants in currency trading?

Primary data are those data which are collected for the first time, taking a sample, representing a population. It is not a published data, it is problem specific data collected by the researcher, and it becomes the secondary data for everybody, other than the researcher. It can be collected in five ways:

1. Observational research 2. Focus groups research 3. Survey research 4. Behavioral data

63 | P a g e

 For this project we used primary data only. We adopted the survey method to collect the primary data. Once the decision of collecting primary data is taken, one has to decide about mode of collection. We took the help of a structure questionnaire to collect the information from the readers.

2) Secondary data:
To keep with pace with the existing market I seek to consult various existing data also in the related company products so that a comparative study is formulated. The sources to be used includes internet, friends working in other companies, faculty members, books. Secondary data are those data, which are already published. It may be useful for many other persons than the researcher who published it. There are various sources of secondary data collection. They are: 1. Government sources 2. Commercial sources 3. Industry sources 4. Miscellaneous sources

As our subject is based on psychology of the people, we do not have any secondary data.

64 | P a g e

7.5 DATA COLLECTION METHODS ( Contact method)

A market researcher has a choice of three main research instruments in collecting data namely: 1. Questionnaires 2. Qualitative measures Tools of techniques

Chart Capture from software mete trader We have chosen questionnaires as the research instrument. A questionnaire consists of a set of questions presented to respondents. Because of its flexibility, the questionnaire is by far the most common instrument used to collect the primary data. Questionnaires need to be carefully developed and tested before they are administrated on a large scale. In preparing questionnaire, a researcher carefully chooses the questions, their formation and working sequence. The formation of questions can influence the response. Market researcher distinguishes between close-end and open end questions. Close-end questions specify all the possible answers and provide answers that are easier to interpret. Whereas open-end questions allow respondents to answers in their own words and often reveal more about how people think. They are useful in exploratory research, where the researcher is looking into how people think rather than measuring how many people think in a certain way.

65 | P a g e

7.6. Limitation of project

Study is limited for following factors:

Currency trading and its usage and utility. Currency exchange and factor deciding currency fluctuations.

Forex exchange and how forex trading is done. Forex brokers.

Owing to the dynamic nature of the global economy in particular, the finding of the report will not be applicable after appoint of time. No practical access to global market exchanges.

Time constraint.

66 | P a g e

67 | P a g e

 Analysis of Study and Interpretation of Questionnaire Demographic questions Gender Male Female No. of responds 73 27

GENDER
80 70 60 50 40 30 20 10 0 MALE FEMALE 27 GENDER2 73

Interpretation: Form the above depicted chart we can interpret that male gender are more interested in currency market than the female. The number of male gender is 73 which cover large market. Only 27 numbers of women invest in currency market that is a positive sign that the women are also taking interest in the currency market. This shows the increasing education level of female & awareness of this money market in female.
68 | P a g e

 Age ( years) No. of responds 20-30 30-40 40-50 Above 50 31 43 16 10

Age (years)
50 45 40 35 30 25 20 15 10 5 0 20-30 30-40 40-50 Above 50 16 10 Age (years) 31 43

Interpretation: The chart reflects age vise division of currency investor; we can see that the number of people having between 30 to 40 years is more interested in currency market. The awareness of currency market is more in this age group & risk taking aptitude is more than other age group, any broking firm can target this age group and can get benefits, at second age between 20 to 30 years are invest more in currency market.
69 | P a g e

 EDUCATIONAL QUALIFICATION Education Qualification H.S.C Graduate Post Graduate Other No. of responds 9 54 32 5

60 50 40

54

32 30 20 10 0 H.S.C Graduate Post Graduate Other 9 5 Education Qualification

Interpretation: The above graph shows the education level of investor. There is 54 of the respondent were graduate & 32 of the respondents were post graduate. The graduates are more interested to invest in currency market. Majority of the investor in currency market are graduates. The majority investors are graduate & taking much interest in currency market these education criteria investors can be targeted to get benefit to attract by broking firm.
70 | P a g e

 OCCUPATION Occupation Government employees Private sectors Professional Self employed House wife No. of response 7 28 47 14 4

Occupation
50 45 40 35 30 25 20 15 10 5 0 47

28 14 7 4 Government employees Private sectors Professional (Businessmen) Self employed House wife

Interpretation: The First of the investors were having business & on second investors are having service awareness of currency market. The awareness of currency market. The majority of the business men were having business of import & export. The main object of their investment in currency was hedging.
71 | P a g e

 Monthly income (Rupees) Monthly income(Rupees) 10,000 10,000-20,000 20,000-30,000 30,000-40,000 Above 50,000 No. of response 8 16 23 27 26

Monthly income(Rupees)
30 25 20 16 15 10 5 0 10,000 10,000-20,000 20,000-30,000 30,000-40,000 Above 50,000 8 Monthly income(Rupees) 23 27 26

Interpretation: The income criteria of the investors were of the investor are having income of between 300000 to 400000 Rs. And on second position 26 of investors were having income between Above 50,000. The income of the investor in the main influencing factor of inflow for the currency market.

72 | P a g e

Q.1 Are you aware about forex market? Answer Yes No

69 31

Awarness
80 60 40 20 0 Yes No 31 Awarness 69

Interpretation: Awareness about forex market is increasing day to day. So gives positive responses of 69. 31 are still not interested due to less knowledge or risk factor.

73 | P a g e

Q.2 Do you invest on Forex market?

Answer Yes No

57 43

Investment
60 50 43 40 30 20 10 0 Yes No 57

Investment

Interpretation: In forex market 57 people are investing which increases the transaction foreign currencies. 43 people are not investing due to risk factor or less knowledge about forex market.

74 | P a g e

Q.3 what is investment an area which you are presently investing? Equity Initial public offering SIP Currency Mutual fund Bonds Commodity Insurance 41 10 10 57 08 01 14 10

60 50 40 30 20 10 0 10 10 41

Area to invest 57

8 1

14

10

Area TO invest

Interpretation: The graph reflects the investment avenues of the respondent. This all respondents are investing in currency and also invest in several avenues. The 41 respondents are investing in equity. On second 14 respondents are investing in commodity. The ipo, mutual fund, insurance, sip, & bonds are not so popular to invest in. the much number of equity investors also use to invest in currency market. The awareness of currency market is very less in India but as a view of future its a developing market.

75 | P a g e

Q.4 in which currency do you prefer to invest?

TYPE OF CURRENCY USD EURO GBP JPM

27 15 11 03

Currency
30 25 20 15 15 11 10 5 0 USD EURO GBP JPM 3 Currency 27

Interpretation: The survey I have carried out in which 27 of the respondent are invest in USD. There is more trading volume in USD. The EURO is on second position to be traded. The 15 of the respondent prefer to invest in EURO. 11 of the respondent prefer to invest in GBP. The more respondent prefer to invest in USD. The volume USD in currency market is higher than the other currencies.

76 | P a g e

Q. 5. What is the primary objective of your investment in forex (currency) markets?

Hedging Volatility Speculation Arbitrage

27 18 09 03

Investment objective
30 25 20 15 10 5 0 Hedging Volatility Speculation Arbitrage 9 18 27

Investment objective

Interpretation The table reflects that there are 27 of the respondents are investing in currency for their hedging purpose. Main and primary object to invest in currency is hedging and on second stage speculation is also a one object to invest in currency market. The investor of currency was having business of import & export. They get benefit from the currency by hedging. The broking firm can target the importer or exporter for new customers.

77 | P a g e

Q. 6. What is the time duration you invest in currency (forex) market? Intraday 1 month 1-2 months 2-3 months 3 months 7 29 15 4 2

Investment duration
35 30 25 20 15 15 10 5 0 Intraday 1 month 1-2 months 2-3 months 3 months 7 4 2 Investment duration 29

Interpretation The time period for holding currency by the investor is less than 1 month, the 29 of the respondent hold investment f or less than 1 month and the 15 of respondent were hold for 1 to 2 months in currency. There are only 7 of respondent do intraday trading in currency market.

78 | P a g e

Q. 7. What factors do you determine at the time of investing in currency? Economy Political Industrial Export-import Infrastructure 27 05 10 12 03

Factors
30 25 20 15 10 10 5 5 0 Economy Political Industrial Export-import Infrastructure 3 27

12

Factors

Interpretation As pre the survey 27 of the respondent determines economic factors before investing in currency and 12 of the respondent determine the export & import position of the country before investing in currency market. The 10 of the respondent were determining industrial factors before investing. The main factors affect the currency rates are economic factors and the export-imports of the country.

79 | P a g e

Q. 8. How many percentage of money do you invest in currency from your income? 10 % 11% -20% 21%- 30% 31% 13 30 09 05

Pecentage of investing
35 30 30 25 20 15 10 5 0 10 % 11% -20% 21%- 30% 31% 13 9 5 Pecentage of investing

Interpretation:

The criteria for investing money from the income are 30 of respondent investing 11 to
20% of money and the second position is 13 of respondent invest less than 10% of money from income in currency market.

80 | P a g e

Q.9. which currency do you most depend (rely) on? USD EURO GBP JPM 25 16 11 05

Currency
30 25 25 20 16 15 11 10 5 5 0 USD EURO GBP JPM Currency

Interpretation

Form the above mention graph we can analyze the greater market share is covered by
USD for future investment there are grater no. of investor to invest in USD, the 25 of the respondent are relay on the USD 16 of respondent are relay on EURO. 11 of the respondent think that GBP will rise in future. But as per my opinion the chances of USD & EURO are higher in future.

81 | P a g e

Q. 10. Type of return you expect in currency market? Low 1 2 2 6 3 21 4 24 5 04 High

Return expected
30 25 20 15 10 5 2 0 1 2 3 4 5 6 4 21

24

Return expected

Interpretation: In the survey I have used like r scale, a 5 point scale to measure the return from the currency market. As per the respondents response 21 of respondent were neutral and 24 of respondent think currency market gains high return. But 4 of respond think they gain very good return in currency market. The rates of the currency dont vary much in a day. Currency market is future market. The investor can earn a handsome profit from this investment with long term investment.

82 | P a g e

Q.11. How much riskier is currency market? Low 1 01 2 03 3 12 4 16 5 25 High

Riskier
30 25 20 15 12 10 5 3 0 1 1 2 3 4 5 16 Riskier 25

Interpretation: The risk in currency market is very low only because of the currency rates were not so volatile. As per the respondents statement there are 12 of respondent were neutral & 16 of respondent think that currency market is less risky in nature but the 12 of respondent were answered that currency market is high risky. As far as my opinion the currency rates were less volatile & the similarly less speculate. Currency market is a good opt ion to invest rather than investing in equity or commodity.

83 | P a g e

Q.12. which service of broker you give highest weight age? 1 3 2 10 3 1 4 2

Research and advisory based call Less margin 1 Law brokerage 1 Good trading 4 software

8 5 4

4 0 4

0 3 7

12 10 10 8 8 7 Research and advisory based call Less margin 6 4 4 3 2 2 1 1 0 0 1 2 3 4 1 0 3 5 4 4 4 low brokrage Good trading software

Interpretation: Here, in the chart less margin and good trading software are the most important factor. Less margin gets more response. While low brokerage gets law response because if bad service or risk to lose money.

84 | P a g e

Q.13 Do you use any consistent source of information to make trade decision? IF , yes than following option Professional trading advisory services General media Financial publication Cash commodity paper NO.(doesnt use any sources 8 5 24 7 13

Information sources
30 25 20 15 10 5 0 Profesional trading advisory services General media Financial publication Cash commodity paper NO. 8 5 7 13 Information sources 24

Interpretation: Most of people use financial publication because of they have knowledge of market and they are operate it 24 hrs.

85 | P a g e

After doing Research we have found some effective way to encourage investors. We found that people avoiding currency market due to risk and high investment. Acc. To research 69 Male and 31 Female are aware about Forex market. This shows increasing no.of female are interested in the market and also shows that women are a comparing with step by step with global world. 57 % people are properly aware about market and remaining are not interested due to risk factor. 43 % of Age group belong to 30 yrs -40 yrs is more investing in the forex market due to more knowledge and maturity level of understanding about financial management. Most of graduate people are investing in forex market because they have knowledge of common market also. Post graduate people are less investing next to graduate people. 14 % and 47 % People having Business and professional occupation is more dealing with forex trading. So company has to target these people for investing in the company. It also happens due to import and export with foreign countries. The main object of their investment in currency was hedging. 27 % People With income of 30,000rs to 40,000rs are more investing in the forex market due to proper financial planning and awareness about forex

86 | P a g e

market. Inflow from currency market is also effective factor for the investment. Acc to research we have found that investment area like equity, sip, and mutual fund are more convening because of small budget. Investors are more preferring with USD currency because of more transaction and it is most used at international level. In our research 47 % people prefer USD currency. While 26 % are dealing with EURO. 48 % people are investing in the forex market due to hedging purpose. It gives benefit in import and export. Time duration of less than 1 month is more preferable for forex market. It covers 50 % by investors. 47 % of Economic factor is most affected on investors due boom, recession, inflation, deflation. While import and export factor is also impacted on investors view.

53 % of people are investing 11%- 20 % of income. This shows people are taking more interest in international market. While 23 % people are investing 10 % of income. Currency market is future market. The investor can earn a handsome profit from this investment with long term investment.

At level of return people are going with 3rd scale of return and at the level of risk they believe that currency market is more risk market. In case of services people believe in less margin and good trading software. While sources for information are financial publication is well known source for investor.

Thus, our research is finally found that investors are more preferring USD currency due hedging benefit and useful in export import.
87 | P a g e

 After such observations and some conclusions made on the basis of that I would like to recommend some important points, upon which company should focus and try to grow its business by tapping the market through making new customers. In this recommendation part of this project work I am suggesting these points. First thing which I would like to suggest is the company should focus on its promotional forces, so that it would be able to convey the product features to the common people. Once the features will be exposed then only it can make new customers. Through the survey responses we knew that advertisements are the most affective medium of creating awareness. So to differentiate our product and to expose our exclusive benefits we need to take it out in front of the people. To create awareness about the product we can take several steps such as: Arranging various kinds of activities at public gathering. Placing the customer facilitating desks at various places.

Approach to the various offices to get new leads or customer contacts.

88 | P a g e

In a universe with a single currency, there would be no foreign exchange market, no foreign exchange rates, and no foreign exchange. But in our world of mainly national currencies, the foreign exchange market plays the indispensable role of providing the essential machinery for making payments across borders, transferring funds and purchasing power from one currency to another, and determining that singularly important price, the exchange rate. Over the past twenty-five years, the way the market has performed those tasks has changed enormously. Foreign exchange market plays a vital role in integrating the global economy. It is a 24-hour in over the counter market made up of many different types of players each with it set of rules, practice & disciplines. Nevertheless the market operates on professional bases & this professionalism is held together by the integrity of the players. The Indian foreign exchange market is no expectation to this international market requirement. With the liberalization, privatization & globalization instituted in India. Indian foreign exchange markets have been reasonably liberated to play there efficiently. However much more need to be done to make over market vibrant, deep in liquid.

89 | P a g e

 BIBILIOGRAPHY
BOOKS

Candlesticks For Support And Resistance

The basics of trading with candlesticks charts by John H. Forman

The NYSE Tick Index And Candlesticks by Tim Ord The Six Forces of Forex by Scott Owens. A small e-book covering the basic and the main problems of Forex trading. The Way to Trade Forex a 1st chapter of the book that will show you not only Forex basics but also some unusual techniques and strategies that can work for the newbie traders, by Jay Lakhani.

90 | P a g e

 ONLINE DATA

Introduction OF FOREX MARKET, History, Market analysis , Market tools http://www.forex-market-history.com/calculators-in-a-forex.html www.forex.com /introduction/593

Online trading Software process www.babypips.com To know the competitors view www.youtradefx.com http://www.forex-market-history.com/calculators-in-a-forex.html

TO Know the company detail India Infoline http://www.indiainfoline.com/Aboutus/

To understand the return and risk of forex market http://profit.ndtv.com/stock/india-infoline-ltd_indiainfo/reports To understand the return and risk of forex market http://profit.ndtv.com/stock/india-infoline-ltd_indiainfo/reports

91 | P a g e

ANNEXURE

QUESTIONNAIRE
Dear sir / Madam, We are students of Global institute of management, Gandhinagar. As part of our curriculum, we are supposed to conduct a survey. So kindly co-operate with us to fill up this questionnaire. It is a part of research study. Our project title is A STUDY ON INVESTORS PERCEPTION TOWARDS FOREX MARKET. The information provides by you, will be used for study purpose only and will be kept confidential.

PERSONAL DETAILS
NAME: _______________________________________________________________________ ADDERESS: ___________________________________________________________________ CONTACT NO. : (R) _________________________ (M) ___________________________

EMAIL ID: ___________________________________________________________________

Gender Age

Male 20-30 40-50 H.S.C Post graduate

Female 30-40 Above 50 Graduate IF ,Other specify

Educational Qualification

Occupation

Government employee Professional House wife

Private sector employee Self employed IF other, please specify... 30,000-40,000 40,000-50,000 Above 50,000

Monthly Family income (Rs.)

Below 10,000 10,000-20,000 20,000-30,000

92 | P a g e

(Questionnaire details) 1. Are you aware about forex (currency) market? Yes No 2. Do you invest in currency market? Yes No 3. What is investment an area which you are presently investing? Equity IPO SIP Currency Mutual Fund Bonds Commodity Insurance

4. In which currency do you prefer to invest? USD EURO GBP JPM

5. What is the primary objective of your investment in forex (currency) markets? Hedging Speculation volatility Arbitrage

6. What is the time duration you invest in currency (forex) market? Intraday < 1-2 month 2-3 month > 3 month

7. What factors do you determine at the time of investing in currency? Economy Export-import Industrial political Infrastructure

8. How many percentage of money do you invest in currency from your income? 10% 21%- 30% 11% - 20% 31%

9. Which currency do you most depend (rely) on? USD GBP EURO JPM 93 | P a g e

10. Type of return you expect in currency market? Low 1 2 3 4 5 High

11. How much riskier is currency market? Low 1 2 3 4 5 High

12. Which service of broker you give highest weight age? (Rate among 1 to 4) Particular Research and Advisory based call Less margin Law brokerage Good trading soft ware 13. Do you use any consistent source of information to make trade decision? Yes No , If yes _____________ Professionally trading advisory services financial publication General media Cash commodity paper 14. Please rank the following (give rank 1 to 5 ) Company Name India Info line Angel broking Service Cost( brokerage +Other charges) Research Technology Safety Rank

Sharekhan

15. Any suggestion for India Info line in improvement in services.(Feedback) ______________________________________________________________________________

94 | P a g e