Nirmal Bang Securities Private Limited, a retail broking house, provides an online share trading platform to customers to trade on equities, derivatives, commodities, currency derivatives, insurance, depository services, and subscription to initial public offerings and mutual funds in India. The company offers daily and company reports, stock ideas, and sector updates. It also provides franchising opportunities to individual to use its infrastructure by being its channel partners. Nirmal Bang Securities was founded in 1986 and is based in Mumbai, India.
Nirmal Bang Group is one of the largest retail broking house in India, providing the investors state of art services in capital markets in the country. The Group has memberships of Bombay Exchange Limited, National Stock of India Limited, Multi Commodity Exchange of India Limited, National Commodity and Derivatives Exchange Limited and is also a depository participant of NSDL and CDS (I) L, the depositories of the country. They started in 1986 under Late Shri Nirmal Bang as sub brokers but have grown steadily and progressively since then. Their clients had contributed tremendously to their growth they recognize and applaud that, they value their relationship with the customers and for their convenience had all investing avenues under one roof.
NIRMAL BANG consultant As the flagship company of the NIRMAL BANG Group, NIRMAL BANG Private Limited has always remained at the helm of organizational affairs, pioneering business policies, work ethic and channels of progress. NIRMAL BANG believe that they were best positioned to venture into that activity as a Depository Participant. They were one of the early entrants registered as Depository Participant with NSDL (National Securities Depository Limited), the first Depository in the country and then with CDSL (Central Depository Services Limited). Today, It service over 1Lac customer accounts in this business spread across over 350 cities/towns in India and are ranked amongst the largest Depository Participants in the country. With a growing secondary market presence.
Business Focus:- The focus of the business is the Customer Customer service, Customer education, Customer support, Customer relations and last but not the least Customer acquisition. Trade execution transparency, timely settlements, risk monitoring and superior service shall have topmost priority, in the best interests of all concerned.
VISION STATEMENT
TO CREATE VALUABLE RELATI ONSHI P AND PROVI DE THE BEST FI NANCI AL SERVI CES MOST PROFESSI ONALLY
MISSION STATEMENT
TO WORK TOGETHER WI TH I NTEGRI TY & MAKE OUR CUSTOMER FEEL VALUED
CORE VALUE
RESPECT OUR COLLEAGUE AND THE BUSINESS ITSELF
NIRMAL BANGs CORE SERVICES:-
NIRMAL BANG is one of Indias leading broking houses providing a complete life-cycle of investment solution.
THEORETICAL ASPECT
INTRODUCTION: According to dictionary, derivative means something which is derived from another source. Therefore, derivative is not primary, and hence not independent. In financial terms, derivative is a product whose value is derived from the value of one or more basic variables. These basic variable are called bases, which may be value of EQUITIES DERIVATIVES COMMODITIES
Research Based Investment Advice Investment and Trading Services Integrated Demat Facility Technology Based Investment Tools Training and Seminars underlying asset, a reference rate etc. the underlying asset can be equity, foreign exchange, commodity or any asset.
For example: - the value of any asset, say share of any company, at a future date depends upon the shares current price. Here, the share is underlying asset, the current price of the share is the bases and the future value of the share is the derivative. Similarly, the future rate of the foreign exchange depends upon its spot rate of exchange. In this case, the future exchange rate is the derivative and the spot exchange rate is the base.
Derivatives are contract for future delivery of assets at price agreed at the time of the contract. The quantity and quality of the asset is specified in the contract. The buyer of the asset will make the cash payment at the time of delivery.
Meaning: Derivatives are the financial contracts whose value/price is dependent on the behavior of the price of one or more basic underlying assets (often simply known as the underlying). These contracts are legally binding agreements, made on the trading screen of stock exchanges, to buy or sell an asset in future. The asset can be a share, index, interest rate, bond, rupee dollar exchange rate, sugar, crude oil, soybean, cotton, coffee etc.
In the Indian Context the Security Contracts (Regulation) Act, 1956 (SC(R) A) defines derivative to include A security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or other form of security. A contract, which derives its value from the prices, or index of prices of underlying securities.
In financial terms derivatives is a broad term for any instrumental whose value is derived from the value of one more underlying assets such as commodities, forex, precious metal, bonds, loans, stocks, stock indices, etc. Derivatives were developed primarily to manage offset, or hedge against risk but some were developed primarily to provide potential for high returns. In the context of equity markets, derivatives permit corporations and institutional
Investors to effectively manage their portfolios of assets and liabilities through instrument like stock index futures.
While derivatives can be used to help manage risks involved in investments, they also have risks of their own. However, the risks involved in
derivatives trading are neither new nor unique they are the same kind of risks associated with traditional bond or equity instruments.
Market Risk Derivatives exhibit price sensitivity to change in market condition, such as fluctuation in interest rates or currency exchange rates. The market risk of leveraged derivatives may be considerable, depending on the degree of leverage and the nature of the security.
Liquidity Risk Most derivatives are customized instrument and could exhibit substantial liquidity risk implying they may not be sold at a reasonable price within a reasonable period. Liquidity may decrease or evaporate entirely during unfavorable markets.
Credit Risk Derivatives not traded on exchange are traded in the over-the-counter (OTC) market. OTC instrument are subject to the risk of counter party defaults.
Hedging Risk Several types of derivatives, including futures, options and forward are used as hedges to reduce specific risks. If the anticipated risks do not develop, the hedge may limit the funds total return.
FUNCTION OF DERIVATIVES MARKET:- The derivative market performs a number of economic functions:-
Prices in an organized derivatives market reflect the perception of market participants about the future and lead the prices of underlying to the perceived future level. The prices of derivative converge with the prices of the underlying at the expiration of the derivative contract. Thus, derivatives help in discovery of future as well as current prices. The derivatives market helps to transfer risks from those who have them but may not like them to those who have an appetite for them. Derivatives, due to their inherent nature, are linked to the underlying cash market. With the introduction of the derivatives, the underlying market witnesses higher trading volumes because of the participation by more players who would not otherwise participate for lack of arrangement to transfer risk.
Speculative trades shift to a more controlled environment of derivatives market. In the absence of an organized derivative market, speculators trade in the underlying cash market. An important incidental benefit that flows from derivatives trading is that it acts as a catalyst for new entrepreneurial activity.
The derivatives have a history of attracting many bright, creative, well-educated people with an entrepreneurial attitude. They often energize others to create new businesses, new products and new employment opportunities, the benefit of which are immense. Derivatives markets help increase savings and investment in the end. Transfer of risk enables market participants to expand their volumes of activity.
RESEARCH METHODOLOGY:-
Problem Statement: The topic, which is selected for the study, is DERIVATIVE MARKET in the firm so the problem statement for this study will be, AWARENESS ABOUT THE DERIVATIVE AND ITS COMPARISION WITH EQUITY.
Objective of the Study: 1. To know the awareness of the Derivative Market in Surat City. 2. To know which one is beneficial for the investor. 3. To find what proportion of the population are investing in such derivatives along with their investment pattern and product preferences.
Research Design: The research design specifies the methods and procedures for conducting a particular study. The type of research design applied here are DESCRIPTIVE as the objective is to check the position of the Derivative Market in Surat city. The objectives of the study have restricted the choice of research design up to descriptive research design. This survey will help the firm to know how the investors invest in the derivative segment & which factors affect their investing behavior.
Scope of the Study: The scope of the study will include the analysis of the survey, which is being conducted to know the awareness of the Derivative Market in the city & also doing comparison of derivatives with equity.
Research Source of Data:- There are two types of sources of data which is being used for the studies:-
Primary Source of Data: Preparing a Questionnaire is collecting the primary source of data & it was collected by interviewing the investors.
Secondary Source of Data: For having the detailed study about this topic, it is necessary to have some of the secondary information, which is collected from the following:-Books. Magazines & Journals. Websites. Newspapers, etc.
Methods of Data Collection:- The study to be conducted is about the awareness of the Derivative Market in the Surat City so the method of data collection used id SURVEY METHOD.
APPENDIX Questionnaire
Myself Saurav.P.Gohil student of B.B.A studying at Vivekanand College for B.B.A, Surat. I had prepared this questionnaire for project work meant for educational purpose only. On Awareness about Derivatives and Its Comparison with Equity.
No personal information will be disclosed in any form at anywhere.
1. ARE YOU INVESTING IN DERIVATIVE MARKET?
YES
NO
2. REASON FOR NOT INVESTING IN DERIVATIVE MARKET. {GIVE THE RANK}
LACK OF KNOWLEDGE LACK OF AWARENESS
HIGH RISKY HUGE AMOUNT OF INVESTMENT
OTHER
3. WHAT ARE THE OBJECTIVES OF THE INVESTING IN DERIVATIVES MARKET?
4. WHAT ARE THE CRITERIA DO YOU TAKEN IN THE CONSIDERATION WHILE INVESTING IN DERIVATIVE MARKET?
SCALE 5 4 3 2 1 INSTRUMENT MOST PREFERED SOMEWHAT PREFERED NUTRAL SOMEWHAT NOT PREFERED NOT AT ALL PREFERED HIGH RETURN HEDGE THE RISK
MORE RELIABLE
SAFE TO INVEST IN DERIVATIVE MARKET
MORE LIQUID SCALE 5 4 3 2 1 INSTRUME NT MOST PREFERE D SOMEWH AT PREFERE D NUTRAL SOMEWH AT NOT PREFERE D NOT AT ALL PREFERE D FLEXIBILIT Y
EASE IN TRANSAC TION
LESS COSTLY
AVALABILI TY OF DIFFEREN T CONTRAC T
MARGIN MONEY
5. GIVE YOUR PREFERENCE OF INVESTMENT IN DERIVATIVE INSTRUMENT.
SCALE 5 4 3 2 1 INSTRUME NT MOST PREFERE D SOME HOW PREFERE D NEUTRAL SOMEWH AT NOT PREFERE D NOT AT ALL PREFERE D INDEX FUTURE
STOCK FUTURE
INDEX OPTION
STOCK OPTION
6. GIVE YOUR PREFERENCE IN TERMS OF INVESTMENT DERIVATIVE MARKET.
SCALE 5 4 3 2 1 TERMS MOST PREFER SOMEWHA T PREFER NEATRUL SOMEWHA T NOT PREFER NOT AT ALL PREFER SHORT TERM
MEDIUM TERM
LONG TERM
7. HOW MUCH PERCERNTAGE OF YOUR INCOME YOU INVEST IN DERIVATIVE MARKET?
LESS THAN 5% 5% TO 10%
11% TO 15% 16% TO 20%
MORE THAN 20%
8. WHAT IS THE RATE OF RETURN EXPECTED BY YOU FROM DERIVATIVE MARKET?
5 % TO 9.5% 10% TO 13.5%
14 % TO 17% 18% TO 23%
ABOVE 23%
9. YOU ARE SATISFIED WITH THE CURRENT PERFORMANCE OF THE DERIVATIVE IN TERMS OF EXPECTED RETURN.