study on derivative markets mba presentation

7/31/2019 Study on Derivative Markets Mba Presentation

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Project Reporton

STUDY ON DERIVATIVE MARKETS


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INTRODUCTION

A Derivative is a contract whose value isderived from the value of another assetwhich could be share, stock exchange

index, interest rate or currency.


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Objectives:

To understand the concept of the FinancialDerivatives such as Futures and Options.

Functioning of Derivative markets and how

they are used in reducing the risk.

Research Methodology:

The type of research adopted is descriptivein nature and the data collected for thisstudy is the secondary data i.e. fromNewspapers, Magazines and Internet.


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INDIA INFOLINE PROFILE

VISION: Our vision is to be the mostrespected company in the financial servicesspace in India.

IndiaInfoline is a member of BSE, NSE and DPwith NSDL and also in MCX & NCDEX.

Products offered:

E-Broking Distribution

Insurance


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Players in Derivative Market

Hedgers

Speculators

Arbitrageurs

Members of F&O segment:

There are three types of members in the futures andoptions segment.

Trading members,

trading cum clearing member and

professional clearing members.


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Risks involved in Derivatives

Credit risk

Market risk

Liquidity risk Legal risk


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FUTURES

Organized form of Forwards

Clearing House

Standardization

Spot price, Futures price, Expiry date,Contract size.

OPTIONS

Call Option Put Option


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SWAPS

Swaps are private agreementsbetween two parties to exchangecash flows in the future.

Broadly classified in to

Interest rate swaps

Currency rate swaps


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DATA ANALYSIS

Average daily traded value inderivatives market is 4776.07 crores

Average daily contracts traded1,61,764


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8/19/2008 v isit us at www.nseindia.com 5

Growth comparison

Futures Exchange Jan-Mar '02 Jan-Mar '03 % change

S&P 500 CME 5387572 5685962 5.54%

E-mini S&P 500 CME 14878369 42035201 182.53%

NASDAQ 100 CME 1184132 1149677 -2.91%Emini NASDAQ CME 11020125 15569208 41.28%

S&P CNX Nifty NSE 337073 822057 143.88%

Options

S&P 100 CBOE 2320684 3582147 54.36%

S&P 500 CBOE 5905102 9106542 54.21%

Dow Jones Industrial ICBOE 2384482 3059166 28.29%

S&P 500 CME 999386 1295581 29.64%

KOSPI 200 Korea 336512365 657981013 95.53%

S&P CNX Nifty NSE 49127 176890 260.07%


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CONCLUSION

Derivatives market in India is growingrapidly unlike equity markets. Trading inderivatives require more than average

understanding of finance. Being new tomarkets maximum number of investorshave not yet understood the fullimplications of the trading in derivatives.

SEBI should take actions to createawareness in investors about the derivativemarket.


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Suggestions to Investors

The investors can minimize risk by investing inderivatives

Though the use of derivatives does not completelyeliminate the risk, but it certainly lessens the risk.

It is advisable to the investor to invest in thederivatives market because of the greater amount ofliquidity offered by the financial derivatives and thelower transactions costs associated with the trading offinancial derivatives.

these instruments act as a powerful instrument forknowledgeable traders to expose them to the properlycalculated and well understood risks in pursuit ofreward i.e. profit.


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THANK YOU

study on derivative markets mba presentation

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