INTRODUCTION TO INDUSTRY

FOREX CURRENCY TRADING

Currency trading is done in Paris. They follow the International standards organization (ISO),
which has built a code abbreviation. For instance EUR/USD- EURO AND US DOLLAR.
Similarly we have USD/CHF, GBP/USD etc. Thus foreign exchange is the trading of one
currency for another. It is the ratio of one currency as valued for another. While trading the
first currency is known as the base currency and the other is known as the counter of quote
currency. Counter currency is purchased on one unit of the base currency. While selling we are
told how much the counter or quote currency we will receive for every base currency unit.

For simplifying foreign currency trade one mcconetary unit is considered equal to the base
currency. So if we are talking of the base currency i.e. Rupee, Euro, Dollar, it is 1 Rupee, 1
Euro, and 1 Dollar. As the US Dollar is mostly traded with any currency paired with the US
Dollar is known as the direct rate. If the currency is not against the US Dollar it is known as
the cross rate. As the quote currency is lower than the base currency it is converted into smaller
units of the base currency. Foreign currency trading involves many intricacies but once one
gain knowledge and practice it, it soon get easy and attractive.

FOREX CURRENCY TRADING SYSTEM

There are many currencies trading systems.1) Piranha system: this system depends upon
prevailing interest rates. It helps to determine that whether on should play long or short. Smooth
to enter and exit is the core is the core fund of this system. This system has solid profit ground.

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2) Cross bow Swiss trading system: this system is based on entering long on dips and selling
short on rallies, the system is designed to allow online trading, thus allowing online market
information and transactions.

HEDGING IN CURRENCY TRADING

The factor that is involved Risk is everywhere. It is very high in currency trading. With the
currency trading evolving as huge market it is important to cover the risks involved in case of
a huge unexpected downfall.

Hedging is the kind of a transaction where two positions are made to offset each other in case
of price changes. It is the risk covered by those who are desirous of taking it and who are
capable of taking and handling it.

In the currency trading market high amounts are traded with. Hence if there is sudden decline
in prices it can be quite demanding on the investors and the whole economy per say.

CURRENCY TRADING ONLINE

Trading is always given an impetus because of its ability to promote an activity beyond its
current realms. Be it basic trading or online currency trading. It gives the individual a different
feeling. More of one to one basis. It eliminates the need of middlemen and thus reduces cost.
Online currency trading is more dangerous unless you are adapting with its requirements. Some
brokers offer teaching the uses of online trading at a minimal fee.

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Trading currency online gives one the advantage of working from home. If you are in individual
investor you can delineate your commands to your broker from the comfort of your home.
Receive confirmation and check the transfer of funds in your account. On the other hand if you
are an investor you can trade in the main market. Buy on dips and sell on rallies or trade on
whatever system. It’s possible from your home.

Another advantage of trading online is that no special software is required. Connect yourself
to internet and get working. You can get prices 24 hours a day. Through the internet you can
access the latest exchange rates, reports, news and analysis. It is absolutely commission free.
However it depends upon the portal you are using for online currency trading as the charges
differ from company to company.

CURRENCY EXCHANGE

With Indians going global and dealing in international trade, currency exchange is very
common. Indian rupee is exchange is anywhere in the world. However it’s still weak to US
Dollar, GB Pound and EURO, so the exchange rate varies according to vagaries of the day to
day market. For the common trader or professional who wished to invest in currency exchange
the best way to do is through official channels.

Banks, forex institutions, authorized travel agents are the only ones who can exchange the
rupee to any other currency. When a person goes abroad for a holiday or for a business, a
certain slab is reserved for exchange. Any amount of currency cannot be exchanged. Since
there a restrictions some people try to smuggle hard cash in suitcases. Which is an offence, and

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if caught they can be deported or not allowed to leave the country, without giving proper
explanation.

FACTORS DECIDING CURRENCY FLUCTUATION

1. Currency Fluctuation

A market based exchange rate will change whenever the values of either of the two component
currencies change. A currency will tend to become more valuable whenever demand for it is
greater than the available supply. It will become less valuable whenever demand is less then
available supply (this does not mean people no longer want money, it just means they prefer
holding their wealth in some other form, possibly another currency).

Increased demand for a currency is due to either an increased transaction demand for money,
or an increased speculative demand for money. The transaction demand for money is highly
correlated to the country's level of business activity, gross domestic product (GDP), and
employment levels. The more people there are out of work, the less the public as a whole will
spend on goods and services. Central banks typically have little difficulty adjusting the
available money supply to accommodate changes in the demand for money due to business
transactions.

The speculative demand for money is much harder for a central bank to accommodate but they
try to do this by adjusting interest rates. An investor may choose to buy a currency if the return

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(that is the interest rate) is high enough. The higher a countries interest rates, the greater the
demand for that currency.

It has been argued that currency speculation can undermine real economic growth, in particular
since large currency speculators may deliberately create downward pressure on a currency in
order to force that central bank to sell their currency to keep it stable (once this happens, the
speculator can buy the currency back from the bank at a lower price, close out their position,
and thereby take a profit).

In the absence of government intervention, the main driver of currency fluctuations is the
demand for the currency relative to the demand for other currencies. If many people want to
trade dollars for Indian rupees, the value of the rupee will rise and the dollar will fall. This
happens when there is a greater demand for one country's products, denominated in its home
currency, relative to the demand for another country's products. India, I believe, runs a large
trade surplus with the rest of the world, while the U.S., on the other hand,
There are several factors that can influence this dynamic.

A country's central bank can reduce the money supply by issuing bonds and collecting
currency for them. They can increase the required reserve level that banks must hold, therefore
reducing the amount they can lend.

On the other hand, the central bank can buy back bonds, injecting more money into the market,
or they can simply start printing more money and buy things, thus getting it into circulation.
This last tactic usually leads to runaway inflation, since thegovernment often winds up issuing
more money to keep ahead of individuals' perception of its value.
Other governments can also affect the value of a country's currency, which has happened in the
case of the U.S.

Since the U.S. dollar is the world's de facto reserve currency (the one that most international
transactions are done in), it is in the interest of many countries to keep large stocks of U.S,
currency on hand, and to keep the value of the dollar stable. This allows the U.S. to float more
of its debt on world markets without suffering the ill effects of devaluing its currency.

2. SUPPLY&DEMAND
Supply: If countries are inflating their currency, there will be more available on international
markets and it will not be as valuable. This will additionally cause lower interestrates in the

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domestic market.
Demand: If investment opportunities are poor in the domestic economy, currency will not be
as valuable internationally.

3. CURRENCY FLUCTUATION

Currency fluctuation or rather the value of a currency is determined by various factors

depending upon what time frame, we are looking at. Short term values are determined by
immediate supply and demand you may find during pre-election time the rupee will appreciate
because lot of funds from abroad will get converted to Indian currency .In the medium term it
is the country's export /import and capital flows that will determine the value. In the long term
it is the confidence of people in the country's policies, the stability of the system of government,
its credibility etc. which determines the value of a currency. Dollar enjoyed the reserve
currency status because of this factor.

4. VALUE OF LOCAL CURRENCY

The value of a local currency is its value in real terms. i.e., its purchasing power in the
international market. For example what you can buy by, say Rs. 100.If you can buy items worth
US $2 then the value of Rupee is 1/50 American Dollar. Similar is the case with other
currencies.

MARKET PARTICIPANTS

 According to research data

 53% of the forex deals are arranged between dealers or banks;
 33% are between a dealer (a bank) and a fund manager or other non- banking financial
institutions;
 14% involves a dealer and a non-financial company.

BANKS
The largest part of forex market belong to the banks. They cater both to the majority of
commercial turnover and large amounts of speculative trading every day. Daily turnover of one
large bank may reach billions of dollars. And only the small part of trading this trading is
undertaken on behalf of customers. The rest trading banks arrange for their own account.

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Today large banks have moved on to electronic systems such as EBS, the Chicago mercantile
exchange, Bloomberg and Trade book(R).

COMMERCIAL COMPANIES

Commercial companies that seek foreign exchange to pay for goods or services are important
part of forex market. Comparing with banks or speculators, commercial companies trade fairly
small amount. Besides there trade usually have little short term impact on currency’s exchange
rates. But sometimes multinational companies can have unpredictable impact on market rates.
Especially when market participants do not know about very large positions, covered due to
little known exposures.

CENTRAL BANKS

National central banks are one of the most important participants of foreign exchange market.
There purpose is to control money supply, inflation and interest rates. Usually they have official
or unofficial target rates for their currencies. Usually their substantial foreign exchange
reserves as a stabilization market tool. One of the best stabilization strategies, used by central
banks, is to buy while the exchange rate is the loosest and to sell when the rate is high. In such
a way central banks may get a good profit. Nevertheless, central banks are more protected then
other market participants, as they don’t go bankrupt if they make large losses. At the same time
there is no convincing evidence that central banks do not make a profit trading.

INVESTMENT MANGEMENT FIRM

Their main activity is managing large accounts on behalf of customers such as pension funds,
endowments etc. Investment managers usually use the forex market to facilitate transactions in
foreign securities. Especially if an investment management firm is specialized in foreign
equities, it will need to buy and sell foreign currencies in the spot market in order to pay for
purchases. However some investment management firms have speculative specialist currency
overlay units. They manage client's currency exposures with the aim of generating profits as
well as limiting risk. But the number of this type of investment management firms is
comparatively small

It is reasonable to assume that a currency exchange generating high volumes of trade will in
some way deliver tangible benefit to its stakeholders. After all currency exchange imposes
additional costs on participants- membership fees, transaction fees, compliance costs, etc.

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However, what type of benefits does currency exchanges deliver? Who gains and who loses?
How specifically have these institutions functioned in developing countries? Has there been a
notable development impact?

The definition of development is heavily contested and conceptually challenging. There is not
scope to provide a full or adequate account here. Whilst definitions vary widely, development
approaches typically pursue some mixture of two broad goals - poverty reduction and economic
growth.

AIM:

To identify, analyze and assess the impacts made by currency futures exchanges in developing
countries on development.

OBJECTIVES:

Awareness-raising: to build awareness of the solutions that currency exchanges provide, and
the extent of their track record in doing so, among key national, regional and international
stakeholders – including governments, regulators, the private sector, civil society and the
media. Knowledge accumulation: to produce a high-quality report that adds to the existing
knowledge base - it will seek to establish within a coherent framework the enduring social and
economic impacts that currency exchanges have made in key markets over time. Worldwide
applicability: to demonstrate the extent to which exchange success in upgrading currency
sectors and fostering development is part of a worldwide phenomenon.Exchange of
information: to share information, experience and perspectives from across the major
developing country regions.

CURRENCY FUTURES

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 Benefits of Currency Futures

 High Liquidity.
 Extended trading hours - 9 am to 5 pm.
 Opportunities to reap benefits owing to a highly dynamic market.
 Small lot size of only US $1000 with low exchange specified margins.

Currency Futures is best suited for-

 SMEs / Individuals involved in Imports/Exports.

 Corporate/ Institutions involved in Imports/Exports and anybody else who has foreign currency
exposure

RESEARCH

We at Religare believe in providing independent research for clients to make investment

decisions, with strict emphasis on self-regulation, avoiding possible conflict of interest in
objectivity.

Our Research Products

 Fundamental Research
 Technical Research
 Daily Reports
 Intraday trading tech calls
 Intraday Derivative call
 Directional F&O calls

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CURRENCIES AND OTHER FINANCIAL MARKETS

As much as we like to think of the forex market as the be-all and end-all of financial trading
markets, it doesn’t exist in vacuum. There are some markets like gold, oil, stocks, and bo

GOLD

Gold is commonly viewed as a hedge against inflation, an alternative to the U.S. dollar, and as
a store of value in times of economic or political uncertainty. Over the long term, the
relationship is mostly inverse, with a weaker USD generally accompanying a higher gold price,
and a stronger USD coming with a lower gold price. However, in the short run, each market
has its own dynamics and liquidity, which makes short-term trading relationships generally
tenuous.
Overall, the gold market is significantly smaller than the forex market, so if we were gold
traders, we would sooner keep an eye on what’s happening to the dollar, rather than the other
way around. With that noted, extreme movement in gold prices tend to attract currency traders
attention and usually influence the dollar in a mostly inverse fashion.

OIL

A lot of misinformation exists on the internet about the supposed relationship between oil and
the USD or other currencies, such as CAD or JPY. The idea is that, because some countries are
oil producers, their currencies are positively (or negative) affected by increases (or decreases)
in the price of oil. If the country is an importer of oil (and which countries aren’t today?)

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The best way to look at oil is an inflation input and as a limiting factor on overall economic
growth. The higher the price of oil, the higher inflation is likely to be and the slower an
economy is likely to grow. The lower the price of oil, the lower inflationary pressures are likely
(but not necessarily) to be.

STOCKS

Stocks are micro economic securities, rising and falling in response to individual corporate
results and prospects, while currencies are essentially macroeconomic securities, fluctuating in
response to wider- ranging economic and political developments. As such there is a little
intuitive reason that stock markets should be related to currencies. Long term correlation
studies bear this out, with correlation coefficients of essentially zero between the major USD
pairs and U.S. equity markets over the last five years.

The two markets occasionally intersect, though this is usually only at the extremes and for very
short periods.

BONDS

Fixed income or bond markets have a more intuitive connection to the forex market because
they are both heavily influenced by interest rate expectations. However, short term market
dynamics of supply and demand interrupt most attempts to establish a viable link between the
two markets on a short term basis. Sometimes the forex market reacts first and fastest
depending on shifts in interest rate expectations. At other times, the bond market more
accurately reflects changes in interest rate expectations, with the forex market later playing
catch-up

(Because it takes longer to turn a bigger ship around).

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GETTING STARTED WITH THE TRADING ACCOUNT

For newcomers to currency trading, the best way to get handle on what currency trading is all
about is to open a practice account at any online forex brokers. Most online brokers offer
practice accounts to allow you to experience the real- life price action of the forex market.
Practice accounts are funded with “virtual money, so you are able to make trades with no real
money at stake and gain experience in how margin trading works.

Practice accounts give you a great chance to experience the minute-to-minute price movements
of the forex market. You all be able to see how prices change at different times of the day, as
well as how various currency pairs may differ from each other.

How the forex market really moves, you can

 Start trading in real market conditions without any fear of losing money.
 Experiment with different trading strategies to see how they work.
 Gain experience using different orders and managing open positions.

Improve your understanding of how margin trading and leverage work.

DEFINITION OF CURRENCY FUTURES

A futures contract is a standardized contract, traded on an exchange, to buy or sell a certain

underlying asset or an instrument at a certain date in the future, at a specified price. When the
underlying asset is a commodity, e.g. Oil or Wheat, the contract is termed a “commodity futures
contract”. When the underlying is an exchange rate, the contract is termed a “currency futures
contract”.
In other words, it is a contract to exchange one currency for another currency at a specified
date and a specified rate in the future. Therefore, the buyer and the seller lock themselves into
an exchange rate for a specific value or delivery date. Both parties of the futures contract must
fulfil their obligations on the settlement date.
Currency futures can be cash settled or settled by delivering the respective obligation of the
seller and buyer. All settlements however, unlike in the case of OTC markets, go through the
exchange.
Currency futures are a linear product, and calculating profits or losses on Currency Futures will
be similar to calculating profits or losses on Index futures. In determining profits and losses in

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futures trading, it is essential to know both the contract size (the number of currency units being
traded) and also what the tick value is.
A tick is the minimum trading increment or price differential at which traders are able to enter
bids and offers. Tick values differ for different currency pairs and different underlying. For e.g.
in the case of the USD-INR currency futures contract the tick size shall be 0.25paise or 0.0025
Rupees.

FUTURES TERMINOLOGY

SPOT PRICE:
The price at which an asset trades in the spot market. In the case of USDINR, spot value is T
+ 2.
FUTURE PRICE:
The price at which the futures contract trades in the futures market.

CONTRACT CYCLE:
The period over which a contract trades. The currency future contracts on the NSE have one-
month, two-month, three-month up to twelve month expiry cycles. Hence the NSE will have
12 contracts outstanding at any given point of time.

VALUE DATE/FINAL SETTLEMENT DATE:

The last business day of the month will be termed the value date/ final settlement date of each
contract. The last business day would be taken to be the same as that for inter-bank settlement
in Mumbai. The rules for Inter-bank settlements, including those for’ known holidays’ and
‘subsequently declared holiday’ would be those as laid down by FEDAI(Foreign Exchange
Dealers Association of India).

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CONTACT SIZE:
The amount of asset that has to be delivered under one contract. Also called as a lot size.

EXPIRY DATE:
It is the date specified in futures contract. This is the last day on which contract will be traded,
at the end of which it ceases to exist. The last trading day will be two business days prior to the
value date/final settlement date.

BASIS:
In the context of financial futures, basis can be defined as the futures price minus the spot price.
There will be a different basis for each delivery month for each contract. In the normal market,
basis will be positive. This reflects that futures prices normally exceed spot prices.

COST OF CARRY:
The relationship between the spot prices and future prices can be summarized as the cost of
carry. This measures the storage cost plus the interest that is paid to finance or carry the asset
till delivery less the income earned on the asset. For equity derivatives carry cost is the rate of
interest.

INITIAL MARGIN:

The amount that must be deposited in the margin account at the time a futures contract is first
entered into is known as initial margin.

MARK TO MARKET:
In the futures market, at the end of each trading day, the margin account is adjusted to reflect
the investor’s gain or loss depending upon the futures closing price. This is called as marking-
to-market.

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MAINTENCE MARGIN:
This is somewhat lower than the initial margin. This is set to assure that the balance in the
margin account never becomes negative. If the balance in the margin account falls below the
maintenance margin, the investor receives a margin call and is expected to top up margin
account to the initial margin level before trading commences on the next day.

GETTING TO KNOW THE MAJOR CURRENCY PAIRS

Thecurrencypairsaccountforabouttwo-thirdsofdailytrading
volumeinthemarketandarethemostwatchedbarometersoftheoverallforex
market.Whenyouhearaboutthedollarriseandfalling,it’susuallyreferringtothe
dollaragainsttheseothercurrencies.

Eventhoughthesefourpairsareroutinelygroupedtogetherasthemajorcurrency pairs, each currency pair

represents an individual economic and political
relationship.It’simportanttounderstandofhowdifferentpairsratesmove.Most
currencytradingisveryshort-terminnature,typicallyfromafewminutestofew
days.Thismakesunderstandingacurrencypair’spriceactionakeycomponentof any tradingstrategy

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INTRODUCTION TO COMPANY

Building wealth is a topic that sparks heated debate, promotes quirky "get rich quick" schemes
and drives people to pursue transactions they might otherwise never consider. It is hard to
convince an individual to invest their money for long which will give them higher returns in
future. MotilalOswal as a financial company provides various products which creates wealth
for the investors and follows the rule:

“Instead you working for Money,Let the Money work for you”

Every Investor needs a fundamentals base which can help people rely on and have the faith and
trust to invest. That is the way this project is worked upon as to the different ways an investor
or trader can create wealth by various instrument available with the company whose motto is:

“Solid Research, Solid Advice”

The project is also about in how various products and services are made for trader and investors
as per their need and wants. The Advisors keeps on informing about the benefits and the ways
it will increase the business volume of the franchise.

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services with group
companies providing services such as Private Wealth Management, Retail Broking and
Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity,
Commodity Broking, Currency Broking, Principal Strategies & Home Finance. MotilalOswal

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Securities is a group company of Motilal Oswal Financial. Service Limited which started as a
stock broking company and has blossomed into well diversified firm offering a range of
financial products and services.

It has a diversified client base that includes retail customers (including High Net worth
Individuals), mutual funds, foreign institutional investors, financial institutions and corporate
clients.The core purpose is to be well respected and preferred global financial services
organization enabling wealth creation for all customers. Research is the solid foundation on
which MotilalOswal Securities, advice is based on.

They give utmost importance to research and use cutting-edge technology to disseminate it to
our customers. The research has received wide media coverage and consistently won awards,
showcasing their strong research capabilities.

This includes being awarded 'Best Performing National Financial Advisor -Equity Broker' for
four years in a row at the UTI-CNBC TV18 Financial Advisor Awards. As a retail broking
customer anyone can trade in Equity, Derivatives, Commodities, Currencies, Mutual Funds,
IPOs, Bonds, and Insurance through them.

Products and Services in Wealth Creation:

Products:

Equity

Derivatives

Commodities

Currency Market

Mutual Funds

Portfolio Management Service (PMS)

Insurance

IPO

Services:

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 Wealth Management

Retail Broking and Distribution

Institutional Broking

Asset Management

Private Equity

Investment Banking

Commodity Broking

Home Finance

Core business:

Motilal Oswal is the leader in many of its services and products. The research papers prepared
by the analyst are wanted in the market by many other companies. Below is the pie chart which
explains the revenue from each service:

These services are divided into the department and accordingly the services are provided to the
investor/trader and management looks after the whole department.

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 VISION OF MOSL:

MOSL Guiding Principles & Core Values

 Customer interest is paramount.

 Ethical and transparent business practices.
 Respect for professionals, associates and business partners.
 Research based value investing.
 Cutting edge technology to ensure world- class customer services.

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 INTRODUCTION TO TOPIC

FOREX TRADING

WHAT IS CURRENCY TRADING?

Trading is about speculating on the value of one currency versus another. The key words in the
last sentence are speculating and currency. We think that looking at currency trading from two
angles- or two dimensions. On the other hand, its speculation, pure and simple, just like buying
an individual stock, or any other financial security, in hope that it will make a profitable return.
On the other hand, the securities you are speculating with are the currencies of various
countries. Viewed separately, that means that currency trading is both about dynamics of
market speculation, or trading, and the factors that affect the value of currencies. If we put them
together we can get the largest, most dynamic and exciting financial market in the world.

SPECULATING AS AN ENTERPRISE

Speculating is all about taking on financial risk in the hope of making a profit. But it’s not
gambling and it’s not investing. Gambling is about playing with money even when you know
the odds are stacked against you. Investing is about minimizing risk and maximizing return,
usually over a long time period. Speculating, or active trading, is about taking calculated
financial risks to attempt to realize a profitable return, usually over a very short time horizon.

be a successful trader in any market requires

 Dedication ( in terms of both time and energy)

 Resources ( technological and financial)
 Decisiveness
 Perseverance
 Knowledge

CURRENCY AS THE TRADING VEHICLE

The forex market is the largest financial market in the world, at least in terms of daily trading
volumes. The forex market is unique in many respects. The volumes are indeed, huge, which
means that liquidity is ever present. It also operates around the clock six days a week, giving
traders access to market any time they need it.

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Few trading restrictions exist- no trading limits up or down, no restrictions on position sizes,
and no requirements on selling a currency pair short. Selling a currency pair short means you
are expecting the price to decline. Because of the way currencies are quoted and because
currency rates move up and down all the time, going short is as common as being long.

Most of the action takes place in the major currency pairs, which pit the US dollar (USD)
against the currencies of the EUROZONE (the European countries that have adopted the euro
as their currency), Japan, Great Britain, and Switzerland. There’s also plenty of trading
opportunities in the minor pairs, which see the U.S. dollar traded against the Canadian,
Australian, and New Zealand dollars.

On the top of that, there’s cross- currency trading, which directly pits two non- USD
currencies, against each other, such as the Swiss franc against the Japanese yen. Altogether,
there are anywhere from 15 to 20 different currency pairs, depending on which forex brokerage
you deal with.

Most individual traders trade currencies via the internet through a brokerage firm. Online
currency trading is typically done on a margin basis, which allows individual traders to trade
in larger amounts by leveraging the amount of margin on deposit.

The leverage, or margin trading ratios, can be very high, sometimes as much as 200:1 or greater,
meaning a margin deposit of $ 1,000 could control a position size of $ 200,000. But trading on
margin carries its own rules and requirements and is backdrop against which all your trading
will take place. Leverage is a two- edged sword, amplifying gains and losses equally, which
makes risk management the key to any successful trading strategy.

Before you ever start trading, in any market, make sure you are only risking money that you
can afford to lose, what’s commonly called risk capital. Risk management is the key to any
successful trading plan. Without a risk- aware strategy, margin trading can be an extremely
short- lived endeavour. With a proper risk plan in place, you stand a much better chance of
surviving losing trades and making winning ones.

WHAT AFFECTS CURRENCY RATES?

In a word- information. Information is what drives every financial market, but the forex market
has its own unique roster of information inputs. Many different cross- currencies are at play in
the currency market at any given movement. After all, the forex market is setting the value of

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 one currency relative to another, so at the minimum, you are looking at the themes affecting
two major international economies.

FUNDAMENTALS DRIVE THE CURRENCY MARKET

Fundamentals are the broad grouping of news and information that reflects the macroeconomic
and political fortunes of the countries whose currencies are traded. Most of the time when you
hear someone talking about the fundamentals of a currency, he’s referring to the economic
fundamentals. Economic fundamentals are based on:

 Economic data reports

 Interest rate levels
 Monetary policy
 International trade flows
 International investment flows

There are also political and geopolitical fundamentals. An essential element of any currency’s
value is the faith or confidence that the market places in the value of the currency. If political
events, such as an election or scandal, are seen to be undermining the confidence in a nation’s
leadership, the value of its currency may be negatively reflected.

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Gathering and interpreting all this information is just part of a currency trader’s daily routine,
which is one reason why we put dedication at the top of our list of successful trader attributes.

UNLESS IT’S THE TECHNICALS THAT ARE DRIVING THE

CURRENCY MARKET

The term technical refers to technical analysis, a form of market analysis most commonly
involving chart analysis, trend- line analysis, and mathematical studies of price behaviour, such
as momentum or moving averages.

We don’t know of too many traders who don’t follow some form of technical analysis in their
trading. Even the stereotypical seat-of- the-pants, trade-your-gut-traders are likely to at least
be aware of technical price levels identified by others.

If you have been an active trader in other financial markets, chances are, you have been engaged
in some technical analysis or at least heard of it.

Technical analysis is especially important in the forex market because of the amount of
fundamental information hitting the market at any given time. Currency traders regularly apply
various forms of technical analysis to define and refine their trading strategies, with many
people trading on technical indicators alone.

There are also political and geopolitical fundamentals. An essential element of any currency’s
value is the faith or confidence that the market places in the value of the currency. If political
events, such as an election or scandal, are seen to be undermining the confidence in a nation’s
leadership, the value of its currency may be negatively reflected.

FINDING YOUR TRADING STYLE

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What do you mean by trading style? Basically it boils down to how you approach currency
trading in terms of:

 Trade timeframe: how long you hold a position? Are you looking at short- term trade
opportunities (day trading), trying to capture more significant shifts in currency prices over
days or weeks, or something in between?
 Currency pair election: are you interested in trading in all the different currency pairs, or are
you inclined to specialize in only one or two?
 Trade rationale: are you fundamentally or technically inclined? Are you considering
creating a systematic trading model? Are you a trend follower or a breakout trader?
 Risk appetite: how much are you prepared to risk and what are your return expectations?

PLANNING THE TRADE

Whatever trading style, you ultimately choose to follow, you won’t get very far if you don’t
establish a concrete trading plan and stick to it. Trading plans are what keep small bad trades
from becoming big bad trades and what can turn small winners. More than anything, though,
they are your road map, helping you to navigate the market after the adrenaline and emotions
start pumping, no matter what the market throws your way.

We are not telling you that trading is any easier than any other financial market speculation.
But we can tell you that trading with a plan will greatly improve your chances of being a
successful in the forex market over time. Most important, we want to caution you that trading
without plan is a surf ire recipe for disaster.

EXECUTING THE TRADE PLAN FROM START TO FINISH

The start of ant trade comes when you step into the market and open up a position. How you
enter your position, how you execute the first step of your trading plan, can be as important as
the trade opportunity itself. After all, if you never enter the position, the trade opportunity will
never be exploited. And probably nothing is more frustrating as a trader than having pinpointed
a trade opportunity, having it go the way you expected, but having nothing to show for it
because you never put the trade on.

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The effort and resources you invest in researching, monitoring, and analysing the market come
to a concrete result when you open a trade. You are now exposed to price fluctuations and your
trading account will register a profit or loss as a result. But that’s just the beginning of it.

Active trade management is also critical to keeping more of what you make in the market. In
our experience, making money in the forex market is not necessarily the hard part. More often
than not, keeping what you have made is the really hard part.

Exiting each trade is the culmination of the entire process and you are either going to be pleased
with a profit or disappointed with a loss. Every trade ends in either a profit or a loss (unless
you get out at the entry price); it’s just the way the market works. While you trade is still active,
however, you are still in control and you can choose to exit.

Whatever trading style, you ultimately choose to follow, you won’t get very far if you don’t
establish a concrete trading plan and stick to it. Trading plans are what keep small bad trades
from becoming big bad trades and what can turn small winners. More than anything, though,
they are your road map, helping you to navigate the market after the adrenaline and emotions
start pumping, no matter what the market throws your way.

WHO TRADES CURRENCIES?

UNDERSTANDING CURRENCY PRICES

Now we are getting down to the brass tasks of actually making trades in the forex market.
Before we get ahead of ourselves, though, it’s critical to understand exactly how currency
prices work and what they mean to you as a trader. Keep in mind that different online forex
brokers use different formats to display prices on their trading platforms.

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 A thorough picture of what the prices mean will allow you to navigate different broker’s
platforms and know what you are looking at.

BIDS AND OFFERS

When you are in the front of your screen and looking at an online forex broker’s trading
platform, you will see two prices for each company pair. The price on the left-hand side is
called the bid and the price on the right hand side is called the offer (some call this theask).
Some brokers display the prices above and below each other, with the bid o the bottom and the
offer on the top. The easy way to tell the difference is that the bid price will always be lower
than the offer price.

SPREADS

A spread is the difference between the bid price and the offer price. Most online brokers utilize
spread- based trading platforms for individual traders. In one see you can look at the spread as
the commission that the online brokers charge for executing your trades. So even if they say
you are commission free, they may be earning difference when one trader sells at the bid price
and another trader buys at the offer price.

Another way to look at the spread is that it’s the compensation the broker receives for being
the market-maker and providing a regular two-way market.

EXECUTING A TRADE

There are two main ways of executing trades in the FX market: live trades and orders. If you
are an adrenaline junkie, don’t focus only on the “live dealing” section- the orders section gives
you a plenty of juice to keep you going, too.

TRADING ONLINE

Clicking and dealing, Most forex brokers provide live streaming prices that you can deal on
with a simple click of your computer mouse. On these platforms to execute a trade

1. Specify the amount of the trade you want to make.

2. Click on the buy or sell button to execute the trade you want.

The forex trading platform will respond back, usually within second or two, to let you know
whether the trade went through:

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If the trade went through, you will see the trade and your new position appear in your platform’s
list of trades.

If the trade failed because of a price change, you need to start again from the top.

If the trade failed because the trade was too large based on your margin, you need to reduce
the size of the trade.

When the trade goes through, you have a position in the market and you will see your unrealized
P&L, begin updating according to market price fluctuations.

HERE ARE THE PARAMETERS THAT YOU CAN USUALLY SET UP

IN ADVANCE:

Present trade amounts

Automatic stop-loss orders at a predetermined distance from the trade- entry price.

Square buttons

Some online brokers advertise narrower trading spreads as a way to attract traders. If you click-
and-deal trade attempts frequently fail, and the platform then asks if you would like to make
the trade at a worse price, you are probably being re-quoted.

PHONE TRADING

Placing live trades over the phone is available from most online forex brokers. You need to
find from your broker whether it offers this service and exactly what its procedures are before
you can ready to use it.

To place a trade over the phone, you will need to:

1. Call the telephone number at your broker for placing a trade.

2. When you are connected to a representative, identity yourself by name and give your trading
account number.
3. Ask what the current price is for the currency pair you are trading.
4. If you don’t want the price, say, “NO, thank you”.
5. If you want the price, specify exactly what trade you would like to make.
6. Confirm with your broker exactly what trade you just made.

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7. Get the name of the broker’s representative you just made the trade with in case you have
to call back.

ORDERS

Currency traders use orders to catch market movements when they are not in front of their
screens. The forex market is open 24hours a day. A market move is just as likely to happen
while you are asleep or in the shower as it is while you are watching your screen. If you are not
a full-time trader, then you have to probably get a full-time job that requires your attention
when you are at work- at least your boss hopes he has your attention.

EXPERIENCED CURRENCY TRADERS ALSO ROUTINELY USE

ORDERS TO:

 Implement a trade strategy from entry to exit.

 Capture sharp, short-term price fluctuations.
 Limit risk in volatile or uncertain markets.
 Preserve trading capital from unwanted losses.
 Maintain trading discipline.
 Protect profits and minimize losses.

TYPES OF ORDERS

1. TAKE –PROFIT ORDERS

An order used by currency traders specifying the exact rate or number of pips from the current
price point where to close out their current position for a profit. The rate deemed to be the level
where the trader wants to take a profit is sometimes referred to as the "take-profit point".

As the name suggests, take-profit orders are used to lock in profits in the event the rate moves
in a favourable direction. For example, if you are long a currency pair position and believe the
price will rise to a certain level, but are unsure what it will do beyond that level, placing a take-
profit order at that point will automatically close out your position allowing you to lock in
profit.

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 2. LIMIT ORDERS

To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place
a limit order rather than a market order. A limit order is an order to buy or sell a security at a
specific price. A buy limit order can only be executed at the limit price or lower, and a sell
limit order can only be executed at the limit price or higher. When you place a market order,
you can't control the price at which your order will be filled.

For example, if you want to buy the stock of a "hot" IPO that was initially offered at $9, but
don't want to end up paying more than $20 for the stock, you can place a limit order to buy the
stock at any price up to $20. By entering a limit order rather than a market order, you will not
be caught buying the stock at $90 and then suffering immediate losses if the stock drops later
in the day or the weeks ahead.

A stop loss is an order to buy (or sell) a security once the price of the security climbed above
(or dropped below) a specified stop price. When the specified stop price is reached, the stop
order is entered as a market order (no limit) or a limit order (fixed or pre-determined price).

With a stop order, the trader does not have to actively monitor how a stock is performing.
However because the order is triggered automatically when the stop price is reached, the stop
price could be activated by a short-term fluctuation in a security's price. Once the stop price is
reached, the stop order becomes a market order or a limit order.

TRADING STOP LOSS ORDERS

A stop loss is an order that is sold automatically if the currency trading venture you invest in
reaches a certain price, preventing more losses to occur. When you place a stop order, you need
to set an exit point, to happen if the trade losses a specific value. The stop order is basically
what it sounds like, it stops your losses and lowers your risks, and so even if the trading in
foreign currency fails to make a profit, your investment is relatively safe.

OUR SCHEMES:

MONARQUE:

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At Religare, we understand ‘those who reign’ have truly inimitable needs and objectives and
deserve an equivalently matchless partner to provide your wealth the care it deserves to grow
and be preserved. Monarque is a portfolio structured to provide higher returns by taking
aggressive positions across sectors and market capitalizations. Monarque is ideally suitable for
investors with "High Risk High Return appetite.

PANTHER:

The Panther portfolio aims to achieve higher returns by taking aggressive positions across
sectors and market capitalizations. It is suitable for the “High Risk High Return” investor with
a strategy to invest across sectors and take advantage of various market conditions.

TORTOISE:
The Tortoise portfolio aims to achieve growth in the portfolio value over a period of time by
way of careful and judicious investment in fundamentally sound companies having good
prospects. The scheme is suitable for the “Medium Risk Medium Return” investor with a
strategy to invest in companies which have consistency in earnings, growth and financial
performance.

ELEPHANT:

The Elephant portfolio aims to generate steady returns over a longer period by investing in
Securities selected only from BSE 100 and NSE 100 index. This plan is suitable for theLow
Risk Low Return” investor with a strategy to invest in blue chip companies, as these companies
have steady performance and reduce liquidity risk in themarket

CATERPILLER:

The Caterpillar portfolio aims to achieve capital appreciation over a long period of time by
investing in a diversified portfolio. This scheme is suitable for investors with ahigh risk
appetite. The investment strategy would be to invest in scrip’s which are poised to get a re-
rating either because of change in business, potential fancy for a particular sector in the coming
years/months, business diversification leading to a better operating performance, stocks in their
early stages of an upturn or for those which are in sectors currently ignored by the market.

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LEO:

Leo is aimed at retail customers and structured to provide medium to long-term capital
appreciation by investing in stocks across the market capitalization range. This scheme is a mix
of moderate and aggressive investment strategies. Its aim is to have a balanced portfolio
comprising selected investments from both Tortoise and Panther. Exposure to Derivatives is
taken within permissible regulatory limits.

THE RELIGARE EDGE:

We serve you with a diligent, transparent & process driven approach and ensure that your
money gets the care it deserves.

No experts, only expertise. PMS brought to you by Refigure with its solid reputation of an
ethical and scientific approach to financial management. While we offer you the services of a
dedicated Relationship Manager who is at your service 24x7, we do not depend on individual
expertise alone. For you, this means lower risk, higher dependability and unhindered
continuity. Moreover, you are not limited by a particular individual’s investment style.

No hidden profits. We ensure that a part of the broking at Refigure Portfolio Management
Services is through external broking houses. This means that your portfolio is not churned
needlessly. Using more broking firms gives us access to a larger number of reports and analysis,
enabling us to make better, more informed decisions. Furthermore, your portfolio is customized
to suit your investment objectives.

Daily disclosures. Refigure Portfolio Management Services gives you daily updates on your
investment. You can pinpoint where your money is being invested, 24x7, instead of waiting till
the end of the month to keep track.

No charge till you profit*.So sure are we of our approach to Portfolio Management that we
do not charge you for our services, until your investments start showing profit. With
customized investment options Refigure Portfolio Management Services invites you to invest
across five broad portfolios to suit your investment needs.

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LITERATURE REVIEW

INTRODUCTION

Review of related literature serves as the base for any researcher to understand his or her
research problem clearly and to design the methodology by which the study is to be conducted.
Various studies conducted earlier on the topics related to the current research problem are
included in the literature. It gives an idea for the researcher to determine the research problem
and to frame the objectives. It also enables the researcher for the smooth conduct of the present
study. The literature includes books, journals, magazines, Ph.D. theses, reports, etc .

Shanmugam (1990) studied a group of 90 investors to examine the factors affecting

investment decisions. The study focused its analysis on investment objectives and the extent
of awareness of factors affecting investment decisions. The study concluded that the investors
were high risk takers, then interested in capital gains and current dividend income. Investors
possessed adequate knowledge of govt. regulations, monetary and fiscal policy.

Gupta L.C. (1991) argues that designing portfolio for a client is much more than merely
picking up securities for investment. The portfolio manager needs to understand the psyche of
his client while designing his portfolio. According to Gupta, investors in India regard equity,
debentures and company deposits as being in more or less the same risk category and consider
including all mutual funds, including all equity funds, almost as safe as bank deposits.

Sitkin and Pablo (1992), defined risk perception as risk assessment in uncertainty and it
depends on the familiarity with organizational and management system. The authors also
developed a model of determinants of risk behaviour and identified personal risk preferences
and past experiences are the important risk factors and social influence also affects the
individual’s perception.

Ippolito (1992) reported that fund selection by investors is based on past performance of the
funds and money flows into winning funds more rapidly than they flow out of losing funds.

Goetzman (1993) studied the ability of investors to select funds and found evidence to support
selection ability among active fund investors.

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Pandurangan G (1993) concluded that the investors rate this mode of investment as excellent
and they want only capital appreciation and dividend and for this they are ready to take
calculated risk also. This mode of investment is urban oriented till today.

Noel Capon (1994) in a study “Affluent investors and mutual fund purchases” stated that there
are many evidences that supports in spite of risk and return other factors also effect on mutual
fund selection, for example a consumer survey 1990 on mutual fund it was founded that past
performance and level of risk are two aggregate important factors but other factors also effect
like management fee, amount of sales charges, reputation of fund family, funds already owned
in family, recommendation from magazine and newsletter and clarity of accounting statements.

Marcel Fafchamps and John Pender (1997) in their paper investigated the extent to which
poor households are discouraged from making a non- divisible but profitable investment. Using
data on irrigation wells in India, we estimate the parameters of a structural model of irreversible
investment. Results shows that poor farmers fail to undertake a profitable investment that they
could, in principle, self- finance because the non- divisibility of the investment puts it out of
their reach. Irreversibility constitutes an additional disincentive to invest. Simulations show
that the availability of credit can dramatically increase investment in irrigation and that interest
rate subsidization has little impact.

Anjan Chakarabarti and Harsh Rungta (2000) stressed the importance of brand effect in
determining the competitive position of the AMCs. Their study reveals that brand image factor,
though cannot be easily captured by computable performance measures, influences the
investor’s perception and hence his fund/scheme selection.

Singh and Vanita (2002) have examined the investors' preferences and perception towards
MF investments by conducted a survey of 150 respondents in the city of Delhi. The findings
of the study were that the investors' preferred to invest in public sector MFs with an investment
objective of getting tax exemptions and stayed invested for a period of 3-5 years and the
investors evaluated past performance. The study further concludes by stating that majority of
the investors were dissatisfied with the performance of their MFs and belonged to the category
who held growth schemes.

Gupta and Gupta (2004)in the paper "Performance Evaluation of Select Indian Mutual Fund
Schemes: An Empirical Study", have studied the performance of 57 growth schemes using the
Net Asset Values for the period April 1999 to March 2003. The paper used performance

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evaluation measures of Sharpe, Jensen, Trey nor and Fame to arrive at the finding that some
funds performed better than the market because only few managers had the stock selection
skills and as a result the funds were exposed to large diversifiable risk.

Ramamurthy and Reddy S (2005) conducted a study to analyse recent trends in the MF
industry and draw a conclusion that the main benefits for small investors‟ due to efficient
management, diversification of investment, easy administration, nice return potential, liquidity,
transparency, flexibility, affordability, wide range of choices and a proper regulation governed
by SEBI.

Ravi Kiran (2009) highlighted that volatility influencing stock market movements. The article
revealed that mutual funds are most preferred financial avenue but needs some innovation and
added quality dimensions in existing services

Singh (2012) conducted an empirical study of Indian investors and observed that most of the
respondents do not have much awareness about the various function of mutual funds and they
are bit confused regarding investment in mutual funds. The study found that some demographic
factors like gender, income and level of education have their significant impact over the attitude
towards mutual funds.

On the contrary age and occupation have not been found influencing the investor’s attitude.
The study noticed that return potential and liquidity have been perceived to be most lucrative
benefits of investment in mutual funds and the same are followed by flexibility, transparency
and affordability.

Kousalya P R and Gurusamy P (2012) observed in their study on „Women Investors ‘Perception
towards Investments’ that there is no significant relationship between age of the women
investors and level of awareness on investment. They have also concluded that the educational
level of women investors does not influence the level of awareness.

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RESEARCH METHODOLOGY

3.1Meaning of Research:

The word research is composed of two syllables “Re” and “Search”.

“Re” is the prefix meaning ‘Again or over again or a new’ and “Search” is the latter meaning
‘to examine closely and carefully’ or ‘to test and try’.

Together they form, Search for knowledge

 Systematic and scientific search for getting relevant answers on any taken up topic.
 Scientific enquiry into a subject.
 Research is a movement from the unknown to the known.
It is the voyage of discovery

Acc. to Bulmer-“Research is primarily committed to establishing systematic, reliable and valid

knowledge about the social world”

Acc. To Clifford Woody-Research comprises of

 Defining and redefining problems.

 Formulating hypothesis (basic idea)
 Collecting
 Organizing
 Evaluating data
 Making decisions
 Suggesting solutions
 Reaching conclusions
 Finally, carefully testing the conclusions.

3.2 OBJECTIVE OF THE PROJECT

Each research study has its own specific purpose. It is like to discover to Question through
the application of scientific procedure. But the main aim of our research to find out the truth
that is hidden and which has not been discovered as yet. Our research study has following
objectives like to know the concept of forex trading, schemes offered by the different

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 companies and their margins, depth about currency, spot, margin etc. ,awareness towards
stock brokers and share market, competitive position of Motilal Oswal Securities.

3.3 SCOPE OF THE PROJECT

The study of the Portfolio Management Services is helpful in the following

areas.

 In today's complex financial environment, investors have unique needs which are derived
from their risk appetite and financial goals. But regardless of this, every investor seeks to
maximize his returns on investments without capital erosion. Forex trading analysis
recognize this, and manage the investments professionally to achieve specific investment
objectives, and not to forget, relieving the investors from the day to day hassles which
investment require.
 It is offers professional management of equity investment of the investor with an aim to
deliver consistent return with an eye on risk.
 Identify the key Stock in each portfolio.
 To look out for new prospective customers who are willing to invest in forex market.
 To find out the Motilal Oswal Securities Limited, PMS services effectiveness in the current
situation.
 It also covers the scenario of the Investment Philosophy of a Fund Manager.

3.4 RESEARCH DESIGN OF THE STUDY

This report is based on primary as well secondary data, however primary data collection was
given more importance since it is overhearing factor in attitude studies. One of the most
important users of research methodology is that it helps in identifying the problem, collecting,
analysing the required information data and providing an alternative solution to the problem .It
also helps in collecting the vital information that is required by the top management to assist
them for the better decision making both day to day decision and critical ones.
The study consists of analysis about Investors Perception about the forex trading analysis of
Motilal Oswal Securities Limited. For the purpose of the study 100 customers were picked up
at random and their views solicited on different parameters.

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The methodology adopted includes:

 Questionnaire
 Random sample survey of customers
 Discussions with the concerned

3.5 SOURCES OF DATA COLLECTION

 Primary data: Questionnaire

 Secondary data: Published materials of Motilal Oswal Securities Limited. Such as

periodicals, journals, News Papers, and website.

3.6 SAMPLING TECHNIQUE

 Sampling:
Since Motilal Oswal Securities Limited has many segments I selected Forex trading
analysis segment as per my profile to do market research. 100% coverage was difficult
within the limited period of time. Hence sampling survey method was adopted for the
purpose of the study.

 Population:
(Universe) customers & non consumers of Motilal Oswal Securities Limited.

 Sampling size:
A sample of (100) hundred was chosen for the purpose of the study. Sample consisted of
Investor as based on their Income and Profession as well as Educational Background.

 Sampling Methods:
Probability sampling requires complete knowledge about all sampling units in the
universe. Due to time constraint non-probability sampling was chosen for the study.

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 Sampling procedure:
From large number of customers & non consumers sample lot were randomly picked up
by me.

3.7 FIELD STUDY:

Approached respondents by the following strategies
 Tele-calling
 Personal Visits
 Clients References
 Promotional Activities
 Database provided by the Motilal Oswal Securities Limited.
3.8 TOOLS OF DATA ANALYSIS:
Questionnaire is the method of data collection, which is very much popular, particularly in
big cities. Different modes of questions are put up on the paper and the particular universe,
on which the research is conducted, are asked to fill their responses.
The Secondary source includes data collection through:

 Magazines, Journals, Books, Newspapers etc.

 Company Website.

SWOT analysis is a foundational assessment models that measures what an organization can
and cannot do, and its potential opportunities and threats.

3.9LIMITATION OF THE PROJECT

 As only PANIPAT was dealt in the survey so it does not represent the view of the total
Indian market.
 The sample size was restricted with hundred respondents.
 There was lack of time on the part of respondents.
 The survey was carried through questionnaire and the questions were based on
perception.
 There may be biasness in information by market participant.
 Complete data was not available due to company privacy and secrecy.
Some people were not willing to disclose the investment profile

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 4.1SWOT ANALYSIS:
SWOT analysis or SWOT matrix is a framework used to evaluate a company’s
competitive position by identifying its strength, weakness, opportunity and threats.
Basically, SWOT analysis is a fundamental assessment model that measures what an
organisation can and cannot do, and its potential opportunities and threats.

SWOT ANALYSIS
STRENGHTS:

STRENGTH WEAKNESS

OPPURTUNITY THREAT

 Wide range o f financial product s and focus on premium t raders.

 E mphasis is on efficient execut ion o f t rades.
 St rong Pr ivat e Equit y Operat io ns
 Have over 1500 offices in I ndia
 Solid Research
 Solid Advice
 Solid Techno log y
 Financia l product s and ser vices such as Wealt h Management , Broking &
Dist r ibut io n, Co mmodit y Broking, Port fo lio Management Ser vices,
Inst it ut ional Equ it ies, Pr ivat e Equit y, I nvest ment Bank ing Ser vice.
 Core competencies in key areas

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 Adequate financial resources
 Well-thought-of by buyers
 Access to economies of scale
 Insulated (at least somewhat) from strong competitive pressures.
 Proprietary technology
 Cost advantages
 Better advertising campaigns
 Product innovation skills
 Proven management
 Ahead of the experience curve
 Better manufacturing capability
 Other

WEAKNESS:

 Less Penet rat ion in developing

 Lack of advert is ing cause
 No clear strategic direction
 Obsolete facilities
 Sub-par profitability because
 Lack of managerial depth and talent
 Missing some key skills or competencies
 Poor track record in implementing strategy
 Plagued with internal operating problems
 Falling behind in R&D
 Too narrow a product line
 Weak market image
 Weak distribution network
 Below-average marketing skills
 Unable to finance needed changes in strategy
 Higher overall unit costs relative to key competitors
 Others low awareness amo ngst invest ors

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 OPPORTUNITY:

 Growing Rural Market

 Earning Ur ban Yout h looking for invest ment s
 Ability to serve additional customer groups or expand into new markets or segments
 Ways to expand product line to meet broader range of customer needs
 Ability to transfer skills or technological know-how to new products or businesses
 Falling trade barriers in attractive foreign markets
 Integrating forward or backward
 Complacency among rival firms
 Ability to grow rapidly because of strength increases in market demand
 Emerging new technologies

THREATS:

 St ringent Economic Measures by Gover nment and RBI

 Ent r y o f foreign finance fir ms in I ndia
 Entry of lower-cost foreign competitors.
 Rising sales of substitute products.
 Slower market growth.
 Adverse shifts in foreign exchange rates and trade policies of foreign governments
 Costly regulatory requirements.
 Vulnerability to recession and business cycle.
 Growing bargaining power of customers and suppliers.
 Changing buyer needs and tastes.
 Adverse demographic changes.
 Other

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4.2 PEST ANALYSIS:
PEST Analysis is a simple, useful and widely-used tool that helps to understand the “big
picture” of Political, Economic, Socio-Cultural and Technological environment that influence
any industry. Such factors are
usually beyond the company’s control but can often influence the company. These factors
always present themselves either as opportunities or threats to an industry.

As with any investment, the general economic condition of the country plays an important role
in establishing the futures market sentiment. A booming economy is the basis for
expectation of price rise. Futures traders may opt to go long in a flourishing economy to make
profits when prices rise in future. Political stability or uncertainty can have a major impact on
futures prices as these directly affect the economy of the country. The growth prospects for a
particular sector of the economy should also be a consideration before making an investment
in futures. Index and single stock futures are influenced by many of the same factors as the
delivery based stock market. High interest rates, changes in taxation policies, market sentiment,
GDP growth rate, etc. affect the prices of these futures. Single Stock Futures move largely in
line with the current price movement of that stock in the market, with some premium or
discount based on the expected direction that the stock price will movein.
Commodities form an important segment of the futures markets. Any factors affecting the
supply or cost of production of a particular commodity affects its futures contracts. For
example, unfavourable weather can have a major effect on the futures of an agricultural
commodity. Traders will expect supply to dry up in coming months causing the price to go up.
Most of the traders will want to go long on the commodity, expecting price to rise. This will
push the price up for futures of the commodity.

PEST Analysis: A conceptual framework

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The main objective of this chapter is to identify the key factors affecting the futures market in
India. For this purpose a framework of PEST is used, which divides the factors in four
categories, namely Political, Economic, Social and Technological. The study considered
following variables in each factor category.

Description of PEST Analysis

S.No. Factor Variables

1. Political Political Events
2. Economic Inflation, Interest rate, Exchange rate,
Economic growth rate
3. Social Demographic variables
4. Technological Internet and banking system

POLITICAL FACTOR:
Political factors have a huge influence on the regulation of the futures market in India. Since
the market is relatively new, the government tries to watch it closely. Before 1991, Indian
economy was conservative in nature but after globalization, more and more foreign investors
have shown interest in different sectors of India. Very soon India emerged as a fast growing
economy in the world.

The following shows the Foreign Institutional Investors’ (FII’s) participation in India. The
capital market of India is very vulnerable. India has been politically unstable in the past but it
is somewhat politically stable now-a- days. Political events in the past have affected the stock
prices due to which the trading volume. The political instability of India has a very strong
impact on the capital market. The inflow and out flow of capital depends on the political and
economic condition of the country. It also causes excessive fluctuation in stock market (Nishat,
2000). Sidra, et al. (2009) found that political events affect the stock price due to which the
trading volume and stock return fluctuate positively or negatively as per the intensity of the
event. The SENSEX and NIFTY goes up and down with any kind of small and big political
news. The following table-5.2 shows some big rise and fall due to some political news or some
policy announcement by the government. The political stability of the country is very important
for the performance and growth of capital market in India. The political balance of the country
is the major factor in deciding the capital market of India. Index Futures are directly related to
their corresponding indices. In case of Single Stock Futures, it is also directly correlated with
market indices, but there may be some exceptional cases.

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ECONOMIC FACTOR:

The economic measures taken by the government of India have a very strong relationship with
the capital markets. The announcement of economic policies by the government in the annual
budget gets reflected in the conduct and mood of the capital market. If the policies are
supportive to the companies then the capital market takes it positively by moving up and if
there is any policy that is not supportive then it tends to bring the capital market down. The
economic factors which have more influence on futures market are as Economic growth,
Inflation rate, Exchange rates and Interest rates.

 ECONOMIC GROWTH:

The economic factors in India are improving continuously. The GDP (Gross Domestic Products),
the GDP- per Capita, the GDP- real growth rate and also other economic factors have been shown
in the table-5.4, which indicates a tremendous economic growth story. By going through the data
it may be inferred that the GDP numbers influence the Indian futures market in a positive way. It
builds the confidence of the FIIs as well as domestic investors towards the Indian futures market

 INTEREST RATE:

The benchmark interest rate (reverse repo) in India was last reported at 5.25 percent in
December 2010. In India, interest rate decisions are taken by the Reserve Bank of India's
Central Board of Directors. The official interest rate is the benchmark repurchase rate.
From 2000 to 2010, India's average interest rate was 5.82 percent reaching an historical
high of 14.50 percent in August 2000 and a record low of 3.25 percent in April 2009. To
control the inflation RBI keeps changing the interest rate and as a result, too much
fluctuation is being shown in futures prices. Ultimately it becomes difficult for the retail
investors to manage their futures contracts. Fluctuations give opportunities also but only
to few experienced and large investors, whereas small retail investors usually lose their
money in uncertain market fluctuations.

SOCIAL FACTORS:

India is a country of social diversities having different cultures, sub-cultures, languages,

customs, religions, castes, etc. With more than one billion inhabitants, India ranks second only
to China among the world's most populous countries. Its people are culturally diverse, and

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religion plays an important role in the life of its people. According to Census-2001 about 80.5%
of the Indians practice Hinduism, a religion that originated in India. Another 13.4% of the
population is Muslims. India also has Christians (2.3%), Sikhs (2%), Buddhists (0.8%), Jains
(0.4%), etc.

Around 45% of the Indian population belongs to the age group 25- 65 years (2009 estimation).
While it is found that investors starts trading at the age of around 25 years and continue till
retirements (63 presently).

With improvement in education of both males and females, Indian market is open to a lot more
participation. Although the burgeoning population does pose a challenge; but perhaps that too
can be managed by imparting education and creating opportunities for employment. It may be
concluded thus, that literacy rate and saving per-capita of Indians are increasing which directly
or indirectly will contribute to the growth of Indian forex market.

TECHNOLOGICAL FACTOR:

 INTERNET TRADING:

The advancement of information and communication technology is changing the

competitive environment in the futures market. The internet is an absolutely revolutionary
concept in the financial services area. The new trading method through internet has
become a required distribution channel, pushing the investors away from the traditional
one. The advantages of trading via internet are quite visible. The cost of making a trade
has plummeted. Many on-line Indian brokerage firms charge as low as 0.01 % of the
futures transactions in the form of brokerage and the competition is still very intense
among the brokerage houses. They are charging low brokerage to attract more investors.
Electronic trading system is helping a lot to the futures traders. They can obtain real-time
quotes, place orders, and receive related market data, news, and services anytime
anywhere. These developments bring futures trading to every doorstep, easily available on
aclick. Trading through electronic media gives investors full control to their futures trading
activities. They make their own trading strategy and take all decisions. For investors who
are not seeking personal investment advice, online trading can be very useful. If one can
trade without the help of a professional broker, browser based trading is an ideal trading
tool for them. On-line investors are using the internet to their advantage, and the entire

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 structure of futures market is changing as aresult . However trading through internet and
cellular phones is an additional support to the Indian futures markets. India is growing fast
in the field of information technology which is a good sign for Indian futures markets as
well.

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4.2QUESTIONNAIRE:

Q1. How many currencies you are dealing with?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)

1-2 50 41.66%

MORE THAN 2 30 25%

2-4 20 16.66%

MORE THAN 4 20 16.66%

17%
1to2
42%
more than 2
17%
2to4
more than 4
25%

INTERPRETATION:

The above diagram shows that 42% of the respondents are dealing in between 1-2 currency,
25% of the respondents are dealing in more than 2 currency, 16.66% the respondents are
dealing in between 2-4 currency and 16.66% the respondents are dealing in more than currency.

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Q2. Do you invest in Forex market?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)

YES 50 42%

NO 70 58%

42%

58%

yes no

INTERPRETATION:

The above diagram shows that 42% of respondents are invest in forex market, 58% of
respondent do not invest in forex market.

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Q3. How frequently you invest in the market?

NO. OF RESPONDENTS PERCENTAGE OF

FEEDBACK RESPONDENTS (N=80)
MONTHLY 18 15%

HALF YEARLY 20 16.66%

QUATERLY 32 26.66%

YEARLY 52 43.33%

INVESTING

15%

43%
17%

27%

MONTHLY HALF YEARLY QUATERLY YEARLY

INTERPRETATION:

The above diagram shows that 15% of the respondents are invest in monthly basis, 17% of the
respondents are invest in half yearly , 27% of the respondents are invest in quarterly and 43%
of the respondents are invest in yearly.

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Q4. Do you use hedging for currency risk?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)
YES 102 85%

NO 18 15%

8%

85%

yes no

INTERPRETATION:

The above diagram shows that 85% of respondents use hedging for currency risk, 15% of
respondents do not use hedging for currency risk.

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Q5. What all are the hedging tools which you use as hedging?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)
DERIVATIVES 36 30%
FUTURE CONTRACT 18 15%
FORWARD CONTRACT 24 20%
SPECULATION 12 10%
ARBITRAGE 18 15%
OPTION 6 05%
OTHERS 6 05%

HEDGING TOOLS
0%
5%
5%
30%
15%

10%

15%
20%

DERIVATIVE CONTRACT FUTURE CONTRACT FORWARD CONTRACT

SPECULATION ARBITRAGE OPTION
OTHERS

INTERPRETATION:

The above diagram shows that 30% of respondent use derivative as a hedging tool, 15%
respondents use future contract as hedging tool, 20% of respondent use forward contract as
hedging tool, 10% of respondent use speculation a hedging tool, 15% of respondent use
arbitrage as hedging tool, 05% of respondent use option as a hedging tool and 05% use others
tools for hedging currency risk.

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Q6. How frequently do you use these tools, please rate them on 1-5 scale? 5-most frequent,
1-less frequent.

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)
1 40 33.33%
2 36 30%
3 24 20%
4 18 15%
5 02 1.66%

FREQUENTLY USE TOOLS

INTERPRETATION:
2%

15%

33%

20%

30%

1 2 3 4 5

The above diagram shows that 33% of the respondents are most frequently use these tools for
hedging, 30% of the respondents are neutral (equally) use these tools for hedging, 20% of the
respondents are frequently use these tools for hedging, 15% of the respondents are frequently
use these tools for hedging, 2% of the respondents are less frequently use these tools for
hedging,

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Q7. What is the most important factor you consider at the time of Investment in forex
market?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)
RISK 18 15%
RETURN 36 30%
BOTH 66 55%

FACTORS
INTERPRETATION: 0

15%

55%
30%

RISK RETURN BOTH

As the above analysis gives the clear idea that most of the Investors considered the market
factor as around 15% for Risk and 30% Return, but most important common things in all are
that they are even ready for taking both Risk and Return in around 55% investor.

Moreover, the Market is fluctuating now days, so as it also getting improvement. So, Investor
are looking for Investment in long term and Short-term.

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Q8. What is the basic purpose of your Investments in forex market?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)
LIQUIDITY 36 30%
RETURN 30 25%
CAPITAL APPRECIATION 12 10%
TAX BENIFIT 24 20%
RISK COVERING 06 5%
OTHERS 12 10%

PURPOSE OF INVESTMENT
10%

5%
30%

20%

10%
25%

LIQUIDITY RETURN
CAPITAL APPRECIATION TAX BENEFIT
RISK COVERING OTHERS

INTERPRETATION:

As with the above analysis, it is found 75% people are interested in liquidity, returns and tax
benefits. And remaining 25% are interested in capital appreciations, risk covering, and others.
In the entire respondent it is common that this time everyone is looking for minimizing the risk
and maximizing their profit with the short time of period.

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Q9. How do you manage your forex trading?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=100)
ITSELF 66 55%
DEPONDS ON THE 54 45%
COMPANY

MANAGING

43%

57%

ITSELF DEPOND ON THE COMPANY

INTERPRETATION:

About 55% of the respondents say they themselves manage their trading and 45% of the
respondents say they depends on the security company for Forex trading. 45% of the
respondents prefer management of the company because they don’t have to keep a close eye
on their investment; they get all the information time to time from their Fund Manager.

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Q10. How much you carry the expectation in Rise of your Income from Investment in
forex?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=100)
UP TO 15% 54 45%
15-25% 42 35%

25%-30% 18 15%
MORE THAN 35% 06 05%

EXPECTATION IN RISE IN INCOME

5%

15%

45%

35%

UP TO 15% 15-25% 25-30% MORE THAN 35%

INTERPRETATION:

The optimism is shown in the attitude of the respondents. The confidence was appreciable with
which they are looking forward to a rise in their investments. Major part of the sample feels
that the rise would be of around 12%. Only 8% of the respondents were confident enough to
expect a rise of upto 35%.

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Q11. If you invested in Forex Market, what has been your experience?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)
SATISFACTORY 24 20%
STRONGLY 12 10%
SATISFACTORY
NEUTRAL 30 25%
UNSATISFACTORY 18 15%
STRONGLY 36 30%
UNSATISFACTORY

experience

20%

34%

8%

15%
13%

satisfactory strongly satisfactory neutral unsatisfactory strongly dissatisfactory

INTERPRETATION:

The above diagram shows that 20% of respondent was satisfy by investing in forex
market,10% are strongly satisfy, more than 45% of respondent was dissatisfy by investing in
forex market.

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Q12. If, you trade with Motilal oswal securities limited then why?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)
RESEARCH 42 35%
SERVICES 30 25%
BROKERAGE 36 30%
INVESTMENT TIPS ARE 12 10%
GOOD

15%

35%

28%

22%

RESEARCH SERVICES BROKERAGE INVESTMET TIPS ARE GOOD

INTERPRETATION:

As the above research shows the reasons and the parameters on which investor lie on Motilal
oswal securities and they do the trade among hundred respondents 35% respondents do the
trade with the company due to its research Report, 25% based on Brokerage Rate whereas 30%
are happy with its Services. Last but not the least, 10% respondents are depends upon the tips
of Motilal oswal securities which gives them idea where to invest and when to invest.

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Q13. How was your experience about Forex trading Management services of Motilal
Oswal Securities Limited ?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF RESPONDENTS

(N=80)
GOOD 36 30%

BAD 18 15%

NEUTRAL 66 55%

TRADING EXPERIENCE

22%
30%

GOOD
BAD
NEUTRAL

48%

INTERPRETATION:

In the above analysis it is clear that the Investor have the good and the bad experience both
with the Motilal oswal securities services. In this current scenario 55% of the Investor earned,
whereas around 15% have to suffer losses in the market. Similarly 30% of the Respondents are
there in Breakeven Point (BEP), where no loss and no profit.

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Q14. Does Motilal Oswal Securities Limited keep it forex trading process Transparent?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)

YES 78 65%

NO 42 35%

% OF RESPONDENTS

YES NO

Interpretation

The above analysis is talking about the MotilalOswal Securities Transparency of their PMS
services. In hundred respondents 65% said that they get all the information about their scrip
buying and selling information day by day, where as 35% of respondents are not satisfied with
the PMS information and Transparency because they don’t get any type of extra services in
PMS as they were saying.

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Q15.Do you recommend Motilal Oswal Securities Limited to others?

FEEDBACK NO. OF RESPONDENTS PERCENTAGE OF

RESPONDENTS (N=80)

YES 102 85%

NO 18 15%

% OF RESPONDENTS

yes 2nd Qtr

INTERPRETATION:

The above analysis shows the Investor perception toward the Motilal oswal securities as on the
basis of their good and bad experience with Motilal oswal securities limited. Among hundred
respondents 85% respondents were agree to recommend forex trading of Motilal oswal
Securities their peers , relatives etc.

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5.1 FINDINGS AND SUGGESTION

 More than 65% investor are deal in 2 or more than 2 currency, as per analysis more than
35% respondent are invest in more than 4 currency.
 Around 42% investor invest in forex market because of risky market.
 As based on experience 32%respondent invest in currency market on monthly and half
yearly basis and 68% respondent invest quarterly and yearly basis.
 Around 85% investors use hedging tools to cover the risk.
 More than 50% peoples use derivatives, forward contract, options as hedging tools and
around 50% peoples use future contracts, speculations, arbitrage for hedging currency risk.
 More than 75% Investors are investing their money for Liquidity, Return and Tax benefits.
 At the time of investment the Investors basically considered the both Risk and Return in
more % age around 55%.
 Around 55% residents manage their Forex trading through the different company whereas
45% Investor manage their forex trading themselves.
 As expected return from the Market more than 55% respondents expect the rise in Income
more than 15%, As the experience from the Market more than 34% Investor had lose their
money during the concerned year, whereas 20% respondents have got satisfied return.
 The most important reasons for doing trade with Motilal oswal securities limited is Motilal
oswal securities Research Department than its Brokerage rate Structure.
 About 30% of respondent have good experience earned through motilaloswal securities
limited, whereas 15% respondent faced losses too, they had bad experience.
 As based on good and bad experienced with Motilal oswal securities limited around 85%
are ready to recommend the forex trading of Motilal oswal securities to their peers,
relatives etc.

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 5.2 Conclusion

During this project work I have tried my best to touch each and every aspect which would
affect the business process of the company.

All exchanges generate impacts in the core functions of price discovery, price risk
management and as a venue for investment. Each exchange offers liquid markets, a central
counter party to all but eliminate counter party risk, market data that is freely and
transparently disseminated and futures markets that are well-correlated with spot markets to
enable effective price risk management.

Only two positive impacts were opposed on the basis of experience in the featured markets
to date- that a currency exchange can enable hedging against inflation and quality
improvements generated by the exchange can reduce dependence on imports.

The parameters that decide the price of currency in different exchanges are:

 Volume of currency being traded.

 Demand and supply forces.
 Worldwide demand and supply of a given currency.

The area of facilitating currency is perhaps the area where there is greatest scope for exchanges
to learn from each other's experience.

These are the main aspects which could be concluded from the responses. On the basis of these
observations some recommendations could be provided to the companies about which I will be
discussing in the next part.

During my training period the work which I have done, has helped me a lot. I understood to
reach any heights you have to start from the scratch. I understand that if you want to be best in
any organization then you have to do your work with full dedication and sincerity.

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 5.3 Recommendations to the Company
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:

 The company should also organize seminars and similar activities to enhance the
knowledge of prospective and existing customers, so that they feel more comfortable while
investing in the stock market.
 Investors must feel safe about their money invested.
 Investor’s accounts must be more transparent as compared to other companies.
 Motilal oswal securities limited must try to promote more its Currency trading
Management Services through Advertisements.
 Motilal oswal securities needs to improve more it’s Customer Services

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