I.

1 Introduction to Derivatives
The emergence of the market for derivatives products most notably forwards
futures and options can be traced stretch out to the willingness of risk-averse
economic agents to guard themselves against uncertainties arising out of fluctuations
in asset prices. By their very nature the financial market are marked by the very high
degree of volatility. Through the user of products its possible to partially or fully
transfer price risks by locking in asset prices. As instruments of risks managements
these generally do not influence the fluctuations in the underlying minimizing the
impacting of fluctuations in asset process of the on the probability and cash flows
situation of risk-averse investors.

I.2 Derivatives Defined

A derivative is a product whose value is derived from the value of one or more
basic variable, called basis (underlying asset, index, or reference rate), in a contractual
manner. The underlying asset can be equity, forex, commodity or any other asset.
For example, wheat farmers may wish to sell their gravest at a future date to
eliminate the risk of a change in prices by that date. Such a transaction is an example
of a derivative is driven by the spot price of wheat, which is the underlying.
Derivatives are financial instruments whose value is derived from its
underlying it may be stock, commodity, gold, index etc. Derivatives give an
opportunity to buy or sell the underlying at a future date but at a pre-specified price
decided at the date of entry of the contract.
A derivative can be defined as a financial instrument whose value depends on
(or derives from) the value of other, more basic underlying variables.
John C.Hull
A derivatives is simple a financial instrument (or even more simple an
agreement between two people) which has a value determined by the price of
something else.
Robert L. Mc Donald

I.3 Types of Derivatives

DERIVATIVES

OPTIONS

PUT OPTION

FUTURES

CALL OPTION

COMMODITY

SWAPS

SECURITY

INREST RATE

I.4 The Three Major Participants in the Derivatives Market

1.

Hedgers

2.

Speculators

3.

Arbitragers

FORWADS

CURRENCY

Different Kinds of Risks Faced by Participants in Derivatives

Markets

Credit risk

Market risk

Liquidity risk

Legal risk

Operational risk

I.5 The Need for a Derivatives Market

The derivatives market performs a number of economic functions:

They help in transferring risks from risk adverse people to risk oriented
people.

They help in the discovery of future as well as current prices.

They catalyze entrepreneurial activity.

i) They increase the volume traded in markets because of participation of
risk adverse people in greater numbers.
ii) They increase savings and investment in the long run.

I.6 Functions of Derivatives

Derivative products allow splitting of economic risks into smaller units and
transfer risk, derivatives thus facilitate the allocation of risk. Derivatives
redistribute the risk between market players and are useful in risk
management. Derivative instrument do not involve any risk on them selves.

Essentially derivative market delivers three basic functions: Hedging,

Speculation and Arbitrage. Hedgers transfer risk to another market participant
Speculators takes un-hedged risk positions so as to exploit information
inefficiencies or take advantage of risk capacity. Arbitrageurs take position
mis-priced instruments in order to earn risk less return.

The economic functions of these activities are quite different.

i) Hedging and speculation generates information about the pricing of risks.
ii) While arbitrages creates a consistent price systems.

I.7 Uses of Derivatives

There can be a variety of uses of derivatives.
Example:
A manufacture has received order for supply of his products after six months.
Price of the product has been fixed. Production of goods will have to start after four
months. He fears that, in case the price of raw material goes up in the meanwhile, he
will suffer a loss on the order. To protect himself against the possible risk, he buys the
raw material in the futures market for delivery and payment after four months at an
agreed price, say,Rs.100 per unit.
Example:
Another person who produces the raw material. He does not have advanced
orders. He knows that his products will be ready after four months. He roughly knows
the estimated cost of his products. He does not know what will be the price of his
products after four months. If the price goes down, he will suffer a loss. To protect
himself against the possible loss, he makes the future sale of his products, at an agreed
price, say, Rs.100 per unit. At the end of four months, he delivers the products and
receives the payment at the rate of Rs.100 per unit of contracted quantity.
The actual price may be more or less than the contracted price at the end of the
contracted period. A businessman may not be interested in such speculative gains or
losses. His main concern is to make profits from his main business and not through
rise and fall of prices.
In the above examples, at the end of the one year, ruling price may be more
than Rs.100 or less than Rs.100. If the price is higher (sayRs.125), the buyers is gainer
for the pays Rs.100 and gets shares worth Rs.125, and the seller is the loser for he gets
Rs.100 for shares worth Rs.125 at the time of delivery. On the other hand, in case the
price is lower (say Rs.75), the purchaser is loser, and the seller is the gainer. There is
the method to cut a part of such loss by buying a futures contract with an option,
on payments of fee. From the above example it is clear that ones gain is anothers
loss. That is why derivatives are a zero sum game. The mechanism helps in
distribution of risks among the market players.

I.8 Factors Affecting Derivatives Markets

1. Macro Economic Factors:
Micro economic factor play an important role in every market and same is the case
with Derivatives Market.

National and international political stability.

Wars

Petroleum Products

Government Policies

Convertibility of Currencies

CLR and SLR rate set by RBI

Monsoons

2. Micro economic Factors

Industry Specific

Industry Turbulence

Competition

I.9 Need and Importance of the Study

Risk is the main factor of investment which is reduced by the hedging
strategies involved in Derivatives Market. So the investors are very much interested in
how to reduce the risk and application of hedging Strategies in Option Market.
The Study is necessary due to the following reasons:

It studies the mechanism of Derivatives Futures and Option segment of

Capital Market.

It gives a clear idea about the strategies that are adopted and applied for
better returns on investments.

I.10 Objectives of the Study

To understand about derivatives market in India.

To study how does a derivative hedge the risk or position.

To know why derivatives is considered safer than cash market.

5

To provide better advice to the clients of Motilal Oswal Securities Ltd. in F

&O

I.11 Scope of the Study

As derivatives is a very vast subject the scope of research is limited to the

financial derivatives viz. futures & options.

Forwards has been kept out of the scope of this study

Since options are widely used for hedging, only the options cases have
been taken into the consideration in my study.

I.12 Research Methodology

Study and observance

Data Collection Methods

Primary: Formal and informal Discussion with Company guide and clients of the
company.
Secondary: The secondary information is mostly taken from websites, books,
newspapers and journals etc.
Study Problem
There are very few ways for hedging price risk or price volatility in equity
markets and derivatives is one of them. My study is to see how derivatives are used
for hedging price risk in equity market.
.
Tools & Techniques of Analysis
The data has been analyzed by using Break Even Analysis and Hedging
Strategies. Tables, graphs and diagrams has also been presented, wherever necessary.

I.13 Hypotheses of Study:

H0= The derivatives act as a risk minimizing tool and attract the investor in stock
market.

H1= The derivatives does not act as a risk minimizing tool and attract the investor in
stock market.

I.14 Limitation of the Study

As research required detail information of portfolios of clients, which is

very confidential for the client, a huge difficulty was faced in getting the
data.

Also the data used in the research may suffer from incorrectness.

As the company guide was very busy in his exhausting work schedule,
very less guidance was available

II.1 Introduction to Karvy

Success is a journey, not a destination. If we look for examples to prove this
quote then we can find many but there is none like that of Karvy. Back in the year
1981, five people created history by establishing Karvy and company which is today
known as Karvy, the largest financial service provider of India.

Success sutras of Karvy

The success story of Karvy is driven by 8 success sutras adopted by it namely
trust, integrity, dedication, Commitment, enterprise, handwork and team
play, learning and innovation, empathy and humility. These are the values
that bind success with Karvy.

II.2 Vision
Karvys Vision is

To have a single minded focus on investor servicing

To establish as a household name of financial services.

To establish leadership position in all chosen areas of business.

II.3 Mission
Karvys mission is to be a leading and preferred service provider to their
customers and they aim to achieve this leadership position by building an innovative,
enterprising and technical driven organization which will set the highest standards if
services and business ethics.

II.4 Evolution of KARVY

Karvy was started by a five chartered accountants in 1979. The partners decided
to offer, other than the audit services, value added services like corporate advisory
services to their clients. The first firm in the group, Karvy Consultants Limited was
incorporated on 23rd July, 1983. In a very short period, it becomes the largest Registrar
and Transfer Agent in India. This business was spun off to form a separate joint
venture with Computershare of Australia, in 2005. Karvys foray into stock broking
began with marketing IPOs, in 1993. With in a few years, Karvy began topping the
IPO procurement league tables and it has consistently maintained its position among
top 5.
Karvy was among the first few members of National Stock Exchange, in 1994
and become a member of The Stock Exchange, Mumbai in 2001.Dematerialization of
shares gathered pace in mid-90s and Karvy was in the forefront educating investors
on the advantages of dematerializing their shares. Today Karvy is among the top 5
Depositary Participant in India.
While the registry business is a 50:50 Joint Venture with Computershare of
Australia, we have equity participation by ICICI Venture Limited and Barings Asia
Limited, in Karvy Stock Broking Limited. Karvy has always believed in adding value
to services it offers to clients. A top-notch research team based in Mumbai and
Hyderabad supports its employees to advise clients on their investment needs. With
the information overload today, Karvys team of analysts help investors make the
right calls, be it equities, MF, insurance. On a typical working day Karvy:

Has more than 25,000 investors visiting our 575 offices

Publishes/ broadcasts at least 50 buy/sell calls

Attends to 10,000 + telephone calls

Mails 25,000 envelopes, containing Annual Reports, dividend cheques/

advises, allotment/ refund advises

Executes 150,000+trades on NSE/BSE

Executes 50,000 debit/credit in the depositary accounts

Advises 3,000+clients on the investments in mutual funds

The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among
the top player in almost all the fields it operates. Karvy Computershare Limited is
Indias largest Registrar and Transfer Agent with a clients base of nearly 500 blue chip
corporates, managing over 2 crore accounts. Karvy Stock Brokers Limited, member
of National Stock Exchange of India and the Bombay Stock Exchange, ranks among
the top 5 stock brokers in India. With over 6, 00,000 active accounts, it ranks among
the top 5 Depositary Participant in India, registered with NSDL and CDSL.
Karvy Comtrade, member of NCDEX and MCX ranks among the top 3
commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker
with IRDA and ranks among the top 5 insurance agent in the country. Registered with
AMFI as a corporate Agent, Karvy is also among the top Mutual Fund mobilizer with
over Rs.5, 000 crores under management. Karvy Realty Services, which started on
2006, has quickly established itself as a broker who adds value, in the realty sector.
Karvy Global offers niche off shoring services to clients in the US. Karvy has 575
offices over 375 locations across India and overseas at Dubai and New York. Over
9,000 highly qualified people staff Karvy.
Karvy, is a premier integrated financial services provider, and ranked among
the top five in the country in all its business segments,

services

over 16 million

individual investors in various capacities, and provides investor services to over 300
corporates, comprising the who is who of Corporate India.

II.5 Member-National Stock Exchange and the Bombay Stock

Exchange
Karvy Stock Broking Limited, one of the cornerstones of the Karvy
edifice, flows freely towards attaining diverse goals of the customer through varied
services.

Creating a plethora of opportunities for the customer by opening up

investment vistas backed by research-based advisory services. Here, growth knows no

10

limits and success recognizes no boundaries. Helping the customer create waves in his
portfolio and empowering the investor completely is the ultimate goal.

II.6 Organization Branch Network

State

Total Branches

Andhra Pradesh

38

Assam

Bihar

10

Chandigarh

Chhattisgarh

Goa

Gujarat

26

Haryana

16

Himachal Pradesh

Jammu & Kashmir

Jharkand

Karnataka

50

Kerala

24

Madhya Pradesh

19

Maharashtra

28

Manipur

Meghalaya

New Delhi

11

Orissa

13

Punjab

11

Rajasthan

10

Sikkim

Tamil Nadu

57

Tripura

Union Territory

Uttar Pradesh

37

Uttaranchal

West Bengal

26

11

II.7ORGANIZATION CHART OF KARVY

BOARD OF
DIRECTOR

VICE PRESIDENTS
Finance, accounts &
Audit

Finance

Mail in
charge

Accounts

VICE PRESIDENTS
(Operations country head)

Audit

Account opening
in charge

Branche
s

Trading in
charge

Dealer

Surveillance

Funds in
charge

Fund persons

12

Decisions

Securities
in charge

Divisional
officer

II.8 Board of Directors and Management Team

C Parthasarathy , Chairman
& Managing Director

M Yugandhar,
Managing Director

M S Ramakrishna,
Executive Director
Management Team
K Sridhar
V Mahesh
V Ganesh
S Gopichand
J Ramaswamy
M S Manohar
S Ganapathy Subramanian

13

II.9 Head office

"KARVY STOCK BROKING"
46, Avenue 4, Street No.1,
Banjara Hills, Hyderabad - 500 034,
Tel

: +91-40-23312454

Fax : +91-40-23311968
Email: mailmanager@karvy.com

II.10 Achievements

Among the top 5 stock brokers in India (4% of NSE volumes)

India's No. 1 Registrar & Securities Transfer Agents

Among the top 3 Depository Participants
Largest Network of Branches & Business Associates
ISO 9002 certified operations by DNV
Among top 10 Investment bankers
Largest Distributor of Financial Products
Adjudged as one of the top 50 IT uses in India by MIS Asia

II.11 Karvys Competitive Edge

Human Resource

Training

Technology

Soft ware

Mail room

II.12 Karvys Philosophy

Karvys core activities provide insights into the reasons for its consistent, positive
performance.
14

Assistance beyond service

Leadership through Quality

Innovation and Market creation

Relationship building

Integrity and transparency

II.13 Milestones

1979- Inception

1985- Corporate Registry Service

1990- Stock Broking Service

1993- Financial Products Distribution Services

1995- Corporate Finance Service

1997-Depository services

2000- IT enabled Services

2001- Personal Finance Advisory Services

2003- Debt Market Services

2004- Karvy Computershares, Insurance Broking

2005- Karvy Global Services, Karvy inc., Commodities Broking Services

2006- Realty & Services

II.14 Major Competitors

1- J M Morgan Stanley
2- Prabhudas Leeladhar Securities Ltd.
3- Motilal Oswal Securities.
4- LKP Securities.
5- CIL Securities.
6- Kotak Securities.

Personalized Services

15

Karvy, with its wide array of personalized services from registry to stock
broking takes the pleasure of adding one more service, commodities broking with the
same personal touch.
II.15 Quality Policy
To achieve and retain leadership, Karvy shall aim for complete customer satisfaction,
by combining its human and technological resources, to provide superior quality
financial services. In the process, Karvy will strive to exceed Customer's expectations.
Quality Objectives
As per the Quality Policy, Karvy will:

Build in-house processes that will ensure transparent and harmonious

relationships with its clients and investors to provide high quality of
services.

Establish a partner relationship with its investor service agents and vendors
that will help in keeping up its commitments to the customers.

Provide high quality of work life for all its employees and equip them with
adequate knowledge & skills so as to respond to customer's needs.

Continue to uphold the values of honesty & integrity and strive to establish
unparalleled standards in business ethics.

Use state-of-the art information technology in developing new and

innovative financial products and services to meet the changing needs of
investors and clients.

Strive to be a reliable source of value-added financial products and

services and constantly guide the individuals and institutions in making
a judicious choice of same.

Strive to keep all stake-holders (shareholders, clients, investors,

employees, suppliers and regulatory authorities) proud and satisfied.

16

II.16
The Karvy Credo

Our Client Our Focus:

Clients are the reason for our being personalized service, professional care,

pro-activeness in the values that help us nurture enduring relationships with our
clients.

Respect for the Individuals:

Each and every Individual is an essential building block of our organization.

We are the kiln that hones individuals to perfection. Be they our employees,
shareholders or investors. We do so by up holding their dignity and pride,
inculcating trust and achieving a sensitive balance of their professional and
personal lives.

Team Work
None of us is more important than all of us.

Each team member is the face to Karvy Together we offer diverse services with
speed, accuracy and quality to deliver only one product. Excellence,
Transparency, Co-operation, invaluable individual contribution for a collective
goals and respecting individual uniqueness with in a corporate whole, are how we
deliver.

II.17 Karvy Research Initiative

In order to improve market efficiency further and to set investors benchmarks
in the securities industry, Karvy Research Initiative with a view to develop
information base and a better insight into the working of securities market to
investors. Karvy supports research initiatives on issues that have a bearing on
securities market in India to the investors.

17

Karvy has a dedicated team of research analysts who work

clock to provide the best

research newsletters

round

and advices. They

the
reach

investors desk daily, weekly and monthly.

II.18 Broad Areas of Research

Market Micro-structure and Design

Market Efficiency

Derivatives

Fixed Income and Government Securities Market

Investor Protection

Risk Measurement and Management

State of Infrastructure
The strong IT backbone of Karvy helps us to provide customized direct
services through our back office system, nation-wide connectivity and website.

Round the Clock Operations in Commodities Trading

Indian commodities market, unlike stock market keeps awake till 11 in the night
and Karvy is all poised to offer round the clock services through its dedicated team of
professionals.

II.19 Karvy covers the entire spectrum of financial services such as

Stock broking,

Depository Participants,

Distribution of Financial Products

Advisory Services

Private Client Group

18

Insurance Broking Ltd.

III.1 Indian Derivatives Markets

1. Exchange-Traded and Over-the-Counter Derivative Instruments
OTC (over-the-counter) contracts, such as forwards and swaps, are bilaterally
negotiated between two parties. The terms of an OTC contract are flexible, and are
often customized to fit the specific requirements of the user. OTC contracts have
substantial credit risk, which is the risk that the counterparty that owes money defaults
on the payment. In India, OTC derivatives are generally prohibited with some
exceptions: those that are specifically allowed by the Reserve Bank of India (RBI) or,
in the case of commodities (which are regulated by the Forward Markets
Commission), those that trade informally in havala or forwards markets.
An exchange-traded contract, such as a futures contract, has a standardized
format that specifies the underlying asset to be delivered, the size of the contract, and
the logistics of delivery. They trade on organized exchanges with prices determined
by the interaction of many buyers and sellers.
In India, two exchanges offer derivatives trading

The Bombay Stock Exchange (BSE)

The National Stock Exchange (NSE).

However, NSE now accounts for virtually all exchange-traded derivatives in

India, accounting for more than 99% of volume in 2003-2004. Contract performance
is guaranteed by a clearinghouse, which is a wholly owned subsidiary of the NSE.
Margin requirements and daily marking-to-market of futures positions substantially
reduce the credit risk of exchange-traded contracts, relative to OTC contracts.
2. Development of Derivative Markets in India

19

Derivatives markets have been in existence in India in some form or other for
a long time. In the area of commodities, the Bombay Cotton Trade Association started
futures trading in 1875 and, by the early 1900s India had one of the worlds largest
futures industries. In 1952 the government banned cash settlement and options trading
and derivatives trading shifted to informal forwards markets. In recent years,
government policy has changed, allowing for an increased role for market-based
pricing and less suspicion of derivatives trading. The ban on futures trading of many
commodities was lifted starting in the early 2000s, and national electronic commodity
exchanges were created.
In the equity markets, a system of trading called badla involving some
elements of forwards trading had been in existence for decades. However, the system
led to a number of undesirable practices and it was prohibited off and on till the
Securities and Derivatives.
Volatility is measured as the yearly standard deviation of the daily exchange
rate series. Exchange Board of India (SEBI) banned it for good in 2001. A series of
reforms of the stock market between 1993 and 1996 paved the way for the
development of exchange-traded equity derivatives markets in India. In 1993, the
government created the NSE in collaboration with state-owned financial institutions.
NSE improved the efficiency and transparency of the stock markets by
offering a fully automated screen-based trading system and real-time price
dissemination. In 1995, a prohibition on trading options was lifted. In 1996, the NSE
sent a proposal to SEBI for listing exchange-traded derivatives. The report of the L.
C. Gupta Committee, set up by SEBI, recommended a phased introduction of
derivative products, and bi-level regulation (i.e., self-regulation by exchanges with
SEBI providing a supervisory and advisory role). Another report, by the J. R. Varma
Committee in 1998, worked out various operational details such as the margining
systems.
In 1999, the Securities Contracts (Regulation) Act of 1956, or SC(R)A, was
amended so that derivatives could be declared securities. This allowed the
regulatory framework for trading securities to be extended to derivatives. The Act
considers derivatives to be legal and valid, but only if they are traded on exchanges.
Finally, a 30-year ban on forward trading was also lifted in 1999.
20

The economic liberalization of the early nineties facilitated the introduction of

derivatives based on interest rates and foreign exchange. A system of marketdetermined exchange rates was adopted by India in March 1993. In August
1994, the rupee was made fully convertible on current account. These reforms
allowed increased integration between domestic and international markets, and
created a need to manage currency risk.

3. Derivatives Instruments Traded in India

In the exchange-traded market, the biggest success story has been derivatives
on equity products. Index futures were introduced in June 2000, followed by index
options in June 2001, and options and futures on individual securities in July 2001
and November 2001, respectively. As of 2005, the NSE trades futures and options on
118 individual stocks and Derivatives.

Settlement represents the exchange of a security and its payment.

Nifty is an index of 50 stocks comprising 60% of NSEs total market

capitalization as of March 31 2005.

In an interest rate swap, a company may receive a floating rate (linked to a

benchmark rate) and pay a fixed rate. A forward rate agreement allows a
company to lock in a particular interest rate.

3 stock indices. All these derivative contracts are settled by cash payment and
do not involve physical delivery of the underlying product (which may be
costly).
Derivatives on stock indexes and individual stocks have grown rapidly since

inception. In particular, single stock futures have become hugely popular; accounting
for about half of NSEs traded value in October 2005. In fact, NSE has the highest
volume (i.e. number of contracts traded) in the single stock futures globally, enabling
it to rank 16 among world exchanges in the first half of 2005. Single stock options are
less popular than futures. Index futures are increasingly popular, and accounted for
close to 40% of traded value in October 2005.

21

NSE launched interest rate futures in June 2003 but, in contrast to equity
derivatives, there has been little trading in them. One problem with these instruments
was faulty contract specifications, resulting in the underlying interest rate deviating
erratically from the reference rate used by market participants. Institutional investors
have preferred to trade in the OTC markets, where instruments such as interest rate
swaps and forward rate agreements are thriving. As interest rates in India have fallen,
companies have swapped their fixed rate borrowings into floating rates to reduce
funding costs.10 Activity in OTC markets dwarfs that of the entire exchange-traded
markets, with daily value of trading estimated to be Rs. 30 billion in 2004 (Fitch
Ratings, 2004).
Foreign exchange derivatives are less active than interest rate derivatives in
India, even though they have been around for longer. OTC instruments in currency
forwards and swaps are the most popular. Importers, exporters and banks use the
rupee forward market Derivatives.
Under RBI directive, banks direct or indirect (through mutual funds) exposure
to capital markets instruments is limited to 5% of total outstanding advances as of the
previous year-end. Some banks may have further equity exposure on account of
equities collaterals held against loans in default. To hedge their foreign currency
exposure. Turnover and liquidity in this market has been increasing, although trading
is mainly in shorter maturity contracts of one year or less (Gambhir and Goel, 2003).
In a currency swap, banks and corporations may swap its rupee denominated debt into
another currency (typically the US dollar or Japanese yen), or vice versa. Trading in
OTC currency options is still muted. There are no exchange-traded currency
derivatives in India.
Exchange-traded commodity derivatives have been trading only since 2000,
and the growth in this market has been uneven. The number of commodities eligible
for futures trading has increased from 8 in 2000 to 80 in 2004, while the value of
trading has increased almost four times in the same period (Nair, 2004). However,
many contracts barely trade and, of those that are active, trading is fragmented over
multiple market venues, including central and regional exchanges, brokerages, and

22

unregulated forwards markets. Total volume of commodity derivatives is still small,

less than half the size of equity derivatives (Gorham et al, 2005).
4. Derivatives Users in India
The use of derivatives varies by type of institution. Financial institutions, such
as banks, have assets and liabilities of different maturities and in different currencies,
and are exposed to different risks of default from their borrowers. Thus, they are
likely to use derivatives on interest rates and currencies, and derivatives to manage
credit risk. Non-financial institutions are regulated differently from financial
institutions, and this affects their incentives to use derivatives. Indian insurance
regulators, for example, are yet to issue guidelines relating to the use of derivatives by
insurance companies.
In India, financial institutions have not been heavy users of exchange-traded
derivatives so far, with their contribution to total value of NSE trades being less than
8% in October 2005. However, market insiders feel that this may be changing, as
indicated by the growing share of index derivatives (which are used more by
institutions than by retail investors). In contrast to the exchange-traded markets,
domestic financial institutions and mutual funds have shown great interest in OTC
fixed income instruments. Transactions between banks dominate the market for
interest rate derivatives, while state-owned banks remain a small presence (Chitale,
2003). Corporations are active in the currency forwards and swaps markets, buying
these instruments from banks.
Some institutions such as banks and mutual funds are only allowed to use
derivatives to hedge their existing positions in the spot market, or to rebalance their
existing portfolios. Since banks have little exposure to equity markets due to banking
regulations, they have little incentive to trade equity derivatives. Foreign investors
must register as foreign institutional investors (FII) to trade exchange-traded
derivatives, and be subject to position limits as specified by SEBI. Alternatively, they
can incorporate locally as Derivatives. In practice, some foreign investors also invest
in Indian markets by issuing Participatory Notes to an off-shore investor.
Among exchange-traded derivative markets in Asia, India was ranked second
behind S. Korea for the first quarter of 2005. China is preparing to develop its
derivatives markets rapidly. It has recently entered into joint ventures with the leading
23

U.S. futures exchanges. It has taken steps to loosen currency controls, and the Central
Bank has allowed domestic and foreign banks to trade yuan forward and swaps
contracts on behalf of clients. However, unlike India, China has not fully implemented
necessary reforms of its stock markets, which is likely to hamper growth of its
derivatives markets.
FIIs have a small but increasing presence in the equity derivatives markets.
They have no incentive to trade interest rate derivatives since they have little
investments in the domestic bond markets (Chitale, 2003). It is possible that
unregistered foreign investors and hedge funds trade indirectly, using a local
proprietary trader as a front (Lee, 2004).
Retail investors (including small brokerages trading for themselves) are the major
participants in equity derivatives, accounting for about 60% of turnover in October
2005, according to NSE. The success of single stock futures in India is unique, as this
instrument has generally failed in most other countries. One reason for this success
may be retail investors prior familiarity with badla trades which shared some
features of derivatives trading. Another reason may be the small size of the futures
contracts, compared to similar contracts in other countries. Retail investors also
dominate the markets for commodity derivatives, due in part to their long-standing
expertise in trading in the havala or forwards markets.

III.2 Chronology of Derivatives Market in India

14 Dec 1995

NSE asked SEBI for permission to trade index futures

18 Nov, 1996

Formed L.C.Gupta committee to design a policy framework for

index futures.

7 July, 1999

RBI gave permission for OTC forward rate agreements (FRA)

interest rate swaps

24 May, 2000

SIMEX choose NIFTY for trading futures and options on an

Indian Index

25 May, 2000

SEBI gave permission to NSE and BSE to do index future trading

24

9 June, 2000

Trading of BSE Sensex futures commenced at BSE

12 June, 2000

Trading of NIFTY futures commenced at NSE

25Sep, 2000

NIFTY futures trading commenced at SGX

June, 2001

Index options introduced

July, 2001

Stock options introduced

Nov, 2001

Stock futures introduced

III.3 Introduction to Futures

Futures markets were designed to solve the problems that exist in forward
markets. A futures contract is an agreement between two parties to buy or sell an
asset at a certain time in the future at a certain price. But unlike forward contracts
the futures contracts are standardized and exchange traded. To facilitate liquidity
in the futures contracts, the exchange specifies certain standard features of the
contract. It is a standardized contract with standard underlying instrument, a
standard quantity and quality of the underlying instrument that can be delivered,
(or which can be used for reference purposes in settlement) and a standard timing
of such settlement. A futures contract may be offset prior to maturity by entering
into an equal and opposite transaction. More than 99% of futures transactions are
offset this way.
The standardized items in a futures contract are:

Quantity of the underlying

Quality of the underlying

The date and the month of delivery

The units of price quotation and minimum price change

Location of settlement

III.4 Definition Future

A futures contract is an agreement between two parties to buy or sell an asset at
25

a certain time in the future at a certain price. Futures contracts are special types
of forward contracts in the sense that the former are standardized exchange
-traded contracts.

Features

Trade on an organized exchange

Standardized contract terms

More liquid

Requires margin payments

Follows daily settlement

III.5 Futures Terminology

Spot price: The price at which an asset trades in the spot market.
Futures price: The price at which the futures contract trades in the futures
market.

Contract cycle: The period over which a contract trades. The index futures
contracts on the NSE have one- month, two-month and three months expiry
cycles which expire on the last Thursday of the month. Thus a January
expiration contract expires on the last Thursday of January and a February
expiration contract ceases trading on the last Thursday of February. On the
Friday following the last Thursday, a new contract having a three- month
expiry is introduced for trading.

Expiry date: It is the date specified in the futures contract. This is the last day
on which the contract will be traded, at the end of which it will cease to exist.

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

III.6 Types of Futures

On the basis of the underlying asset they derive, the futures are divided into two
types.

Stock futures
26

Index futures

1) Stock future: the stock futures are having the underlying asset as the
individual securities. The settlement of stock futures are of cash settlement and
the settlement price of the future is the closing price of the underling security.
2) Index futures: index futures are having the underlying asset as an index. The
indeed future is also cash settled. The settlement price of the index futures
shall become the closing value of the underlying index on the expiry date of
the contract.

III.7 Margins
Margins are the deposits, which reduce counter party risk, arise in a future
contract.
There are three types of margins have been allowed.
1) Initial margin
2) Market margin
3) Maintenance margin
Initial margin
Whenever a futures contract is signed, both buyer and seller are required to
post initial margin. Both the buyer and seller are required to make security deposits
initial that are intended to guarantee that they will be able to fulfill their obligation.
These deposits are initial margins and they are often referred as performance margins.
The amount of margin is roughly 5% to 20% of total purchase price of futures
contract.
Marking to market margin
The process of adjusting the equity in an investors account in order to reflect
the change in the settlement price of futures contract is known as MTM margin.
Maintenance margin
The investor must keep the futures account equity equal to or greater than
certain percentage of the amount deposited as initial margin. If the equity goes less

27

than percentage of the amount deposited as initial margin > if the equity goes less
than percentage of initial margin, the investor receives a call for an additional deposit
of cash known as maintenance margin to bring the equity up to the initial margin.

III.8 Calculation methodology

For example:
Settlement price of Wipro Rs. 540
Lot size 600
Initial margin @20%
Maintenance margin @15%
Hence the initial margin and maintenance is as follows:
Settlement price * lot size* concept margin
Settlement price * lot size * maintenance margin
Initial margin = 540*600*20% = 64800
Maintenance margin = 540*600*15% = 48600

III.9 Introduction to Options

An option is a contract written by a seller that conveys to the buyer the right

28

 but not the obligation to buy (in the case of a call option) or to sell (in the case
of a put option) a particular asset, at a particular price (Strike price / Exercise price) in
future. In return for granting the option, the seller collects a payment (the premium)
from the buyer. Exchange- traded options form an important class of options which
have standardized contract features and trade on public exchanges, facilitating trading
among large number of investors. They provide settlement guarantee by the Clearing
Corporation thereby reducing counterparty risk. Options can be used for hedging,
taking a view on the future direction of the market, for arbitrage or for implementing
strategies which can help in generating income for investors under various market
conditions.

III.10 Definition
option is a legal contract in which the writer of the option grants to the
buyer, the right to purchase from or sell to the writer a designated
instrument or a script at a specified price with in a specified period of
time.
III.11 Parties Involved
1. Buyer of the asset
2. Exchange
3. Seller of the asset

III.12 Option Terminology

Index options: These options have the index as the underlying. Some options
are European while others are American. Like index futures contracts, index
options contracts are also cash settled.

Stock options: Stock options are options on individual stocks. Options

currently trade on over 500 stocks in the United States. A contract gives the
holder the right to buy or sell shares at the specified price.

Buyer of an option: The buyer of an option is the one who by paying the
option premium buys the right but not the obligation to exercise his option on
the seller/writer.

Writer of an option: The writer of a call/put option is the one who receives
the option premium and is thereby obliged to sell/buy the asset if the buyer

29

exercises on him. There are two basic types of options, call options and put
options.

Call option: A call option gives the holder the right but not the obligation to
buy an asset by a certain date for a certain price.

Put option: A put option gives the holder the right but not the obligation to
sell an asset by a certain date for a certain price.

Option price/premium: Option price is the price which the option buyer pays
to the option seller. It is also referred to as the option premium.

Expiration date: The date specified in the options contract is known as the
expiration date, the exercise date, the strike date or the maturity.

Strike price: The price specified in the options contract is known as the strike
price or the exercise price.

American options: American options are options that can be exercised at any
time up to the expiration date. Most exchange-traded options are American.

European options: European options are options that can be exercised only
on the expiration date itself. European options are easier to analyze than
American options, and properties of an American option are frequently
deduced from those of its European counterpart.

In-the-money option: An in-the-money (ITM) option is an option that would

lead to a positive cash flow to the holder if it were exercised immediately. A
call option on the index is said to be in-the-money when the current index
stands at a level higher than the strike price (i.e. spot price > strike price). If
the index is much higher than the strike price, the call is said to be deep ITM.
In the case of a put, the put is ITM if the index is below the strike price.

At-the-money option: An at-the-money (ATM) option is an option that would

lead to zero cash flow if it were exercised immediately. An option on the index
is at-the-money when the current index equals the strike price (i.e. spot price =
strike price).

Out-of-the-money option: An out-of-the-money (OTM) option is an option

that would lead to a negative cash flow if it were exercised immediately. A call
option on the index is out-of-the-money when the current index stands at a
level which is less than the strike price (i.e. spot price < strike price). If the
30

index is much lower than the strike price, the call is said to be deep OTM. In
the case of a put, the put is OTM if the index is above the strike price.

Intrinsic value of an option: The option premium can be broken down into
two components - intrinsic value and time value. The intrinsic value of a call
is the amount the option is ITM, if it is ITM. If the call is OTM, its intrinsic
value is zero. Putting it another way, the intrinsic value of a call is Max [0, (St
K)] which means the intrinsic value of a call is the greater of 0 or (St K).
Similarly, the intrinsic value of a put is Max [0, K St], i.e. the greater of 0
or (K St). K is the strike price and St is the spot price.

Time value of an option: The time value of an option is the difference

between its premium and its intrinsic value. Both calls and puts have time
value. An option that is OTM or ATM has only time value. Usually, the
maximum time value exists when the option is ATM. The longer the time to
expiration, the greater is an option's time value, all else equal. At expiration,
an option should have no time value.

III.13 Option Strategies

Since hedging is mostly done by means of option nowadays. There are
certain Strategies which are considered before hedging the positions or risks
by the investor:
Long Call: A long call can be an ideal tool for an investors who wishes to participate
profitably from a upward price movement in the underlying stock.
Long put: A long put can be an ideal tool for an investor who wishes to participate
profitably from a downward price movement in the underlying stock.
Married put: An investor purchasing a put while at the same time purchasing an
equivalent number of shares of the underlying stock is establishing a Married put
position- a hedging strategy with a name form an old IRS ruling.
Protective Put: An investor who purchases a put option while holding shares of the
underlying stock from a previous purchase is employing a Protective Put.
Covered call: The covered call is a strategy in which an investor writes a call option
contract while at the same time owning an equivalent number of shares of the
underlying stock. If this stock is purchased simultaneously with writing the call

31

contract, the strategy is commonly referred to as a buy-write. If the shares are

already held from a previous purchase, it is commonly referred to an overwrite.
Cash secured Put: According to the terms of a put contract, a put writer is obligated
to purchase an equivalent number of underlying shares at the puts strike price is
assigned an exercise notice on the written contract. Many investors write puts because
they are willing to be assigned and acquire shares of the underlying stock in exchange
for the premium received from the puts sales. For this discussion, a put writers
position will be considered as cash-secured if he has on deposit with his brokerage
firm a cash amount (or equivalent) sufficient to cover such a purchase of all option
contract.
Bull Call spread: establishing a bull call spread involves the purchase of a call
option on a particular underlying stock, while simultaneously writing a call option on
the same underlying stock with the same expiration month, at a higher strike price.
Both the buy and the sell sides of this spread are opening transaction, and are always
the same number of contracts.
Bear Put Spread:

Establishing a bear put spread involves the purchase of a put

option on a particular underlying stock, while simultaneously writing a put option on

the same underlying stock with the same underlying stock with the same expiration
month, but with a lower strike price. Both the buy and the sell sides of this spread are
opening transactions, and are always the same number of contracts.
Caller:

A collar can be established by holding shares of an underlying stock,

purchasing a protective put and writing a covered call on that stock. The option
portions of this strategy are referred to as a combination. Generally, the put and the
call are both out-of-the-money when this combination is established, and have the
same expiration month.

32

IV.1 Hedging
Hedging in a mechanism to reduce or control risks involved in capital
market. Various Risks involved in capital market:
a) Price Risk
b) Liquidity Risk
c) Operational Risk
Hedging plays an important role to combat these risks.
Hedging does not mean to maximize return. It so happens that sometime
despite imposing hedging inventers may fetch unlimited profit in that case hedging
does not bear fruit. Hedging shows its colour only of losses by limiting it.
In a simple example, a miler may buy wheat that is to be converted into flour.
At the same time, the miller will contract to sell an equal amount of wheat, which the
miller does not presently own, to another trader. The miller agrees to deliver the
second lot of wheat at the time the flour is ready for market and at the price current at
the time of the agreement. If the price of wheat declines during the period between the
millers purchase of the grain and the flours entrance on to the market, there will also
be a resulting drop in the price of flour. That loss must be sustained by the miller.
However, since the miller has a contract to sell wheat at the older, higher price, the
miller makes up for this loss on the flour sale by the gain on the wheat sales.

Terms in Hedging

33

Long Hedge
Long hedge is the transaction when we hedge our position in cash market by
going long in derivatives market.
For example, let us assume that we are going to receive funds in the near
future and we want to invest it into the capital market. Also we expect the market to
go up in the near future, which is not desirable for us as we would have to invest more
money. The risk can be hedged by making use of derivatives such ad F & O.

Short Hedge
Short hedge in the hedge accomplished by going short in the derivatives market.
For example, we have a portfolio which we want to liquidate in the near
future. Meanwhile prices of the script may go down, which is not favorable for us.
Thus to protect our portfolio value we can go short in the derivative market.
Cross hedge
When derivatives of underlying assets we have, are not available, we use
derivatives on any other related underlying, that are available. This is called a s cross
hedge.
For Example, derivatives on Jet fuel are not available in the market, for
hedging against prices of it we may use crude oil derivatives which are related with
the Jet prices.

34

Analysis and Interpretation

Case I
Mr. Bhandari bought 675 shares of Tisco few days before the budget @
Rs. 350/- per share, as general expectation from the budget was that it will
be an infrastructure of development focused budget, He was also bullish
on Tisco.
However Mr. Bhandari wanted to hedge against any downward
movement of Tisco in the market.

Solution
There are following Alternatives for Mr. Bhandari to hedge his position
i)

Long put strategy

ii)

Protection put strategy

iii)

Bear put spread strategy

35

Since Mr. Bhandari has to protect his 675 shares of Tisco so in this case, to
hedge against any downward movement of Tisco, Mr. Bhandari will opt protective put
strategy. So he should buy 1 lot of put option of Rs. 350/- strike price @ Rs. 10/premium at the same time.
Now the total cost of Bhandari is:Bought Tisco @Rs.350/- share

= 2, 36,250/-

Cost of 1 lot of Tisco put option @Rs.10/-

6,750/________
2,43,000/-

Analysis
Sl.No.

Stock

Stock

Put Value

Cost of

Return

1
2
3
4
5
6
7
8
9

Price
320
330
340
350
360
370
380
390
400

Value
2,16,000
2,22,750
2,29,500
2,36,250
2,43,000
2,49,750
2,56,500
2,63,250
2,70,000

20,250
13,500
6,750
0
0
0
0
0
0

Premium
6,750
6,750
6750
6,750
6,750
6,750
6,750
6,750
6,750

(6,750)
(6,750)
(6,750)
(6,750)
Nil
6,750
13,500
20,250
27,000

36

Interpretation
1) The stock value is arrived at as (stock value x 675 shares)
2) If the stock price is below Rs.350/- in the spot market, the put option will be
executed. Thus put value is arrived at as
(Strike price-stock price) x 675
3) If the stock price goes below from Rs. 360/- loss is limited to the extent of its
premium amount (Rs.10/-), or Rs. 6750/-.
4) If the stock price goes up from Rs. 360/- it can fetch unlimited profit as stock
price keeps going up.

Case II
Mr. Bhalgat was mildly bullish on Bank of India. He already got 1900 shares
of Bank of India @ Rs. 110/- shares few days back. Though Mr, Bhalgat, bullish on
Bank of India, wanted to hedge against any downside movement of Bank of India due
to budget related volatility.

Solution
That time Bank of India was trading around Rs.120-130 range.
There are following Alternatives for Mr. Bhalgat to hedge his position
i) Long put strategy
ii) Protection put strategy
iii) Bear call spread strategy
Since Mr. Bhalgat is mildly bullish on Bank of India, he will opt Bull call
spread strategy as the best strategy, following things might be suggesteda) Buy a July Call option of Bank of India for 1 lot of strike price Rs.120/shares, at a premium of Rs.12/- share.
b) Sell a July call option for one lot of Bank of India Rs.140/- strike price at a
premium of Rs.2/- shares.
Costs

37

Buying 1 lot of call option of Bank of India

(1900x12)

=22,800/-

( - ) selling 1 lot of call option of Bank of India

(1900x2)

= 3,800/________
19,000/-.

Analysis
S.No.

1
2
3
4
5
6
7
8

Stock

Stock

Bought

Sold

Cost of

Price

Value

Call

Call

Premium

1,71,000
1,90,000
2,09,000
2,28,000
2,47,000
2,66,000
2,85,000
3,04,000

Value
0
0
0
0
19,000
38,000
57,000
76,000

Value
0
0
0
0
0
0
19,000
38,000

90
100
110
120
130
140
150
160

19,000
19,000
19,000
19,000
19,000
19,000
19,000
19,000

Interpretation
1) Stock price is arrived at as (stock price x 1900)
2) At any price above Rs.120/- shares bought call value is arrived at as
(stock price-20)x1900
3) At any price above Rs.140/- share, sold call value is arrived at as
38

Return

(19,000)
(19,000)
(19,000)
Nil
(19,000)
38,000
38,000
38,000

(Stock price- 20) x1900

4) Return is maximum loss Rs.19000 and maximum profit Rs.38,000.

CASE III
Mr. Sonagra is a regular mid to l9ong term investor. In the beginning of the
month of the July he had not enough money in hand to invest in shares. He was
supposed to get money at the end of the month.
However he was bearish on Titan. He wants to buy Titan but not after few
days as it could lead to a loss of thousands.

Solution
Since Mr. Sonagra has not sufficient amount to invest in shares, he will adopt
only Long call strategy to hedge his position.
In such circumstance Mr.Sonagra will buy one lot (800 shares) of call option
at a premium of Rs.10/- per share the strike price of which is Rs.510/-.
Sl. No.

1
2
3
4
5
6
7
8

Stock Price

480
490
500
510
520
530
540
550

Stock Value Cost

3,84,000
3,92,000
4,00,000
4,08,000
4,16,000
4,24,000
4,32,000
4,40,000

39

of Value of

Premium

Call

8000
8000
8000
8000
8000
8000
8000
8000

Options
0
0
0
0
10
20
30
40

Interpretation
i)

Though Mr.Sonagra bought a call option of a strike price of Rs.150/-, he

expects that stock price will go up.

ii)

No matter how much stock price goes up stock price goes up more he can
fetch profit more, became he can purchase at a fix stock price of Rs.510/-.

iii)

If the stock price goes down, call option will not be executed, because
purchasing a lot 1 Rs.510/- in downward movement does not sound
reasonable.

iv)

In downward movement his loss will be limit to the extent of premium

amount (Rs. 8,000).

v)

While in upward movement his profit will be unlimited as the price goes
up deducting (premium + strike price).

40

Case IV
Mr. Pandit was holding 550 shares of Reliance Energy Ltd.(REL), which he
had purchased @ Rs.620. Due to market sentiments and his personal study he was
bearish on REL. In the fear of losing he wanted to hedge against downfall in the
prices of REL. (Lot size=550)

Solution
There are following Alternatives for Mr. Pandit to hedge his position
i)

Long put strategy

ii)

Protection put strategy

iii)

Bear put spread strategy

Since Mr. Pandit has to protect his 550 shares of REL, In such circumstance Mr.
Pandit will prefer to buy 1 lot of put option at a premium of lets assume Rs.10/- per
share, strike price of which is Rs.620.

Now the total cost of Mr. Pandit will be: Buying of 550 shares of REL @Rs.620/(550 x 620)

=3,41,000/-

(+) Buying of 1 lot of put option @Rs.10/- share

(10x550)

5,500/-

_________
3,46,500/-

41

Analysis
Sl.No.
1
2
3
4
5
6
7
8
9

Stock Price Stock Value Bought Put

590
600
610
620
630
640
650
660
670

Value
16,500
11,000
5,500
0
0
0
0
0
0

3,24,500
3,30,000
3,35,500
3,41,000
3,46,500
3,52,000
3,57,500
3,63,000
3,68,500

Cost of
Premium
5,500
5,500
5,500
5,500
5,500
5,500
5,500
5,500
5,500

Return
(5,500)
(5,500)
(5,500)
(5,500)
Nil
5,500
11,000
16,500
22,000

Interpretation
i)

Stock value is arrived at as (stock price x550 shares.)

ii)

If the stock price goes below from Rs.620/- put option is executed. The put
value is arrived at as
(Strike price-stock price) x550

iii)

If the stock price goes below from Rs.630/- (cost price) the loss is limit to
the extent of its premium means Rs.5, 500/-

iv)

If the stock price goes up from Rs.630/- it can fetch unlimited profit a
stock price keeps going up and put option will not be executed.

Findings

42

Case I
i)

As the stock price goes down value of pit option increases.

ii)

Break Even Point (B.E.P) for Mr. Bhandari in Rs.360/-share or

Rs.2,43,000/-

iii)

Loss in limit to the extent of its premium.

iv)

As the stock price goes up value of put option loses its significance.

v)

If the put option is not executed till its expiration period it will
automatically repudiate.

Case II
i)

As the value of stock price goes up from strike price the bought call value
and sold call value increases.

ii)

Rs.120/- share or Rs.2, 28,000/- is the Break Even Point (B.E.P) for
Mr.Bhalgat.

iii)

Mr.Bhalgat made limit his profit and loss by buying and selling 1 lot of
call option simultaneously.

iv)

As the stock price goes down from its strike price the value of call option
loses its significance.

Case III
i)

Mr. Sonagra should be quite sure that the value of stock price will increase
in coming future.

ii)

He will fetch profit when market will be at bullish by purchasing the

shares @ Rs.510/- share and selling it in more that Rs.520/- in spot market.

iii)

Mr. Sonagra has been given right but not obligation to buy shares@
Rs.510/- in lieu of Rs.10/- per share as premium whatever market
condition may be.

iv)

The value of call option become insignificant if stock price goes below
from Rs.510/-

Case IV
i)

As the stock price decreases the value of bought put option increases.
43

ii)

Rs.630/- share of Rs.3, 46,500/- is the Break Even Point for Mr. Pandit.

iii)

As the stock price goes up from its strike price put option become
insignificant.

iv)

Here loss is limit to the extent of its premium amount.

v)

If the put option is not executed till its expiration period it in automatically
repudiated.

Suggestion
Case I

44

i)

Mr. Bhandari should be very conscious about premium rate and expiration
period before opting put option.

ii)

If the stock price starts to decline he should not execute his put option
immediately because in any low cases he will lose Rs.6, 750/- while he
may fetch profit in going up of stock price after downward movement.

Case II
i)

Mr. Bhalgat should adopt this strategy only in that case, when he is quite
sure that profit is not possible after a certain extent.

Case III
i)

Mr. Sonagra should buy September call option instead of July call option,
because during this gap stock must go up.

ii)

When stock price reaches up to its highest level he should execute his call
option.

Case IV
i)

Mr. Pandit should be very conscious about premium rate and expiration
period of option.

ii)

If the stock price starts to decline, he should not execute his put option
immediately, because in any low case he will lose Rs.5, 500/- while he
may fetch profit in going up of stock price after downward movement.

General Suggestion
It is humbly suggested to all the clients of Motilal Oswal Securities Ahmednagar that
they develop their knowledge in future & option market because it is only the way by
dint of which risk or position and they should always consider the rolling settlement
of period.

Conclusion
i)

Derivative is the best tool for hedging the position or risk.

45

ii)

Hedging is basically done in option market.

iii)

Purchaser of a call option always hopes that the stock price will go up.

iv)

Purchaser of the put option always hopes that stock price will go down.

v)

Strike price and expiration period plays important role in hedging.

vi)

Fund managers use basically use index option to hedge their position.

vii)

Individuals use generally stock option to hedge risks.

viii)

Individuals use option in speculative manner.

ix)

There is a wide scope of derivatives markets.

Websites

www.the-finapolis.com
www.Karvy.com

46

www.mutualfundsindia.com
www.valueresearchonline.com
Www.moneycontrol.com
www.morningstar.com
www.yahoofinance.com
www.theeconomictimes.com
www.rediffmoney.com
www.bseinda.com
www.nseindia.com
www.investopedia.com

Journals & Other references

Karvy-the finapolis
Karvy-business associates manual
The Economic Times
Business Standard
The Telegraph
Business India
Fact sheet and statements of various fund houses.

47