Professional Documents
Culture Documents
ON
A STUDY OF INVESTORS PRCEPTION TOWARD DERIVATIVES AT
KMBL
FOR
KOTAK MAHINDRA BANK, RAJKOT
Submitted to
Marwadi Education Foundations Group Of Institutions
In partial fulfillment of the requirement of the award for the degree of
Master Of Business Administration
Under
Gujarat Technological University
Under the guidance of
Faculty Guide:
Company Guide:
July 2016
COLLEGE CERTIFICATE
COMPANY CERTIFICATE
STUDENT DECLARATION
I Vardhani Aanchal Maheshkumar hereby declare that the report for Summer
Training Project entitled A Study Of Derivative Market is a result of my own
work and my indebtedness to other work publications, references, if any, have
been duly acknowledged.
Place : Rajkot
Student Signature:
Vardhani Aanchal Maheshkumar
EXECUTIVE SUMMARY
The service industry is one of the fastest growing sectors in India today. The
upcoming sectors, which are really showing the graph towards upwards, are
Telecom, Banking, and Insurance. These sectors really have a lot of
responsibility towards the economy. Main focus of this report is based on the
DERIVATIVE MARKET. Kotak Mahindra Bank Ltd is one of Indias leading
financial institutions, offering complete financial solutions that encompasses
every sphere of life. From commercial banking, to stock broking, to mutual
funds, to life insurance, to investment banking, the group caters to the
financial needs of individuals and corporate. The project report gives an
insight about the benefits that Kotak Mahindra Bank Ltd provides to the
people who deal in Derivative Market and throws the lights upon the SWOT (
Strengths, Weakness, Opportunities, Threats) analysis of bank.
ACKNOWLEDGMENT
Words put on paper are mere ink marks, but when they have a purpose there
exists a thought behind them. I too have a purpose to express my gratitude
towards those individuals without whose guidance the project would not have
been possible.
I am also thankful to Mr. Parth Dhagat and Mr. Shailesh Gondalia and other
members of the organization for their support and providing the required
information.
I also take this opportunity to express a great sense of gratitude towards our
Dean, Dr. Sunnet Saxena and internal project guide Mr. Ruturaj Doshi for
providing me vital inputs to co-relate the present project work and hence
provide a sound base to the report structure. A special word of thanks also
goes to all the teaching and non teaching staff of my institute and my Friends.
Vardhani Aanchal Maheshkumar.
Particulars
Sr No
1
5
6
7
8
9
10
INDEX
PART 1
Page.N
o.
9
16
17
21
25
31
35
42
45
64
66
67
68
70
71
72
73
74
75
75
76
86
87
88
89
90
91
GENERAL INFORMATION
1. Industry Overview
1.1 History
The earliest form of money was bones on which marks were made to
distinguish between values. Metals then began to be used the most popular
being gold, silver and bronze. Symbols, sizes and signs on these differed from
time to time and from country to country, as men began to travel from country
to country to exchange goods and to trade, banking was born.
9
The term money is derived from the temple of Juno Moneta which was used
by the Romans as a mint for their coins.
Banking
The term bank is derived from the Italian word banco which means bench.
The early bankers, the Jews of Lombard, transacted their business at
benches in the market place and later in inns and taverns. In those days if a
banker failed, his banco or bench was broken, hence the term bankrupt.
Another opinion is that the term bank evolved from the German word back
meaning a joint stock fund which was Italianised into banco. As many of
these inns/taverns were known by the signs they had such as eagle, crossed
swords etc.
Banking in India originated in the first decade of 18 th century. The first banks
were The General Bank of India, which started in 1786, and Bank of
10
Hindustan both of which are now defunct. The oldest bank in existence in
India is the State Bank of India, which originated in the The Bank of Bengal
in Calcutta in June 1806. This was one of the three presidency banks, the
other two being the Bank of Bombay and the Bank of Madras. The presidency
banks were established under charters from the British East India Company.
They merged in 1925 to form the Imperial Bank of India, which, upon Indias
independence , became the State Bank of India. For many years the
Presidency banks acted as quasi-central banks, as did their successors.
of:
Reserve
Bank
Development Banks
Public Sector Bank
Foreign Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
11
The Reserve Bank of India is the Central Bank of the Country and came into
being by the Reserve Bank of India Act 1934. It was nationalized in 1948.
The bank that issues and regulates the issue of currency in India.
The banker to the government of India and the State governments. It
manages the public debt. It has the obligation to transact the banking
business of the Central Government. It undertakes to accept money on
behalf of the Government and make payment on its behalf.
The bankers bank. Commercial banks maintain their current account
with the Reserve Bank of India.
The bank that manages the volume of credit created by the commercial
banks to ensure price stability.
The bank that manages the volume of credit created by the commercial
banks to ensure price stability.
The bank that manages the external value of the currency.
The lender of Last Resort. It will lend to banks in trouble.
Development Banks
These were set up to give long term finance for the development of the
country. These are the Industrial Finance Corporation of India and the
Industrial Development Bank of India. The Industrial Reconstruction Bank of
India and the National Bank for Agriculture and Rural Development. A former
development bank, the Industrial Credit and Investment Corporation of India
Ltd. By a reverse merger in 2002, became a normal commercial bank. It is
expected that the other development banks, having outlived their utility would
also be either converted to commercial banks or merged with commercial
banks.
12
Foreign Banks
These are branches of banks incorporated outside India.
The larger ones that have been operating in India for many years are
Standard Chartered Bank, Citibank, American Express Bank, ABN Amro, BNP
Paribas and Hong Kong and Shanghai Banking Corporation.
In 1995/96 many other foreign banks opened branches in India. However,
after banking began to become increasingly competitive and margins began
to squeeze coupled with large non-performing assets, many banks closed
their branches. These include Dresdner Bank, Comerz Bank, KBC Bank and
Commercial Bank of Siam.
13
These banks are not government owned or controlled. Their shares are freely
traded in the stock markets. These may be divided into:
Old Private Sector Banks such Federal Bank, Dhanlakshmi Bank,
Catholic Syrian Bank
Cooperative Banks
Cooperative Banks are those that created by a group of individuals to support
either a community or a religious group. They operate in metropolitan, urban
and semi urban centers to cater to the needs of small borrowers.
These are controlled by the RBI and by State Cooperative Acts.
In recent years these have been under a cloud on account as several
(particularly in Gujarat and Andhra Pradesh) collapsed under controversy.
They were used as vehicles by individuals to finance activities which did not
succeed.
Local Area Banks came into existence in 1999 and licences were given for
these banks as it was felt that regular commercial banks were not financial the
rural/agricultural sector adequately. Licences have given to open branches in
three districts. Branches in urban/semi urban areas have granted only after
14
Market Size
There are currently 27 public sector banks in India out of which 19 are
nationalised banks and 6 are SBI and its associate banks, and rest two are
IDBI Bank and Bharatiya Mahila Bank, which are categorised as other public
sector banks. There are total 93 commercial banks in India.
15
1. Allahabad Bank
2. Andhra Bank
3. Bank of Baroda
4. Bank Of India
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. IDBI Bank
11. Indian Bank
12. Indian Overseas Bank
13. Oriental Bank of Commerce
14. Punjab National Bank
16
18
PART 2
COMPANY OVERVIEW
Think big, think fast, think ahead. Ideas are no ones monopoly
DHIRUBHAI AMBANI
19
2.1 History
20
Kotak Mahindra
Bank is an Indian
private sector
banking
headquarterd in
Mumbai,
Type
Pubic Company
Traded as
BSE : 500247
NSE : KOTAKBANK
Maharastra, India.
February 2003,
Reserve Bank of
India (RBI) gave
licence to Kotak
Mahindra Finance
Ltd., the groups
flagship company,
carry on banking
business.
Industry
Founded
Finance Ltd)
In
the
Headquarters
Mumbai, India
Key people
to
Products
Investment Services
Revenue
109.63 billion(2011)
Net Income
15.69 billion(2011)
It offers a wide
Total assets
range of banking
No.
products and
of employees
financial services
Vysya )(2015)
variety of delivery
channels and
specialized subsidiaries in the areas of personal finance, investment banking,
life insurance, and wealth management.
21
before its merger with ING Vysya, had around 29000 employees. In 2014, it
was the fourth largest private bank in India by market capitalization.
Senior Management
Get acquainted with the Board of Directors at the Kotak Mahindra Group and
meet some of the most knowledgeable and recognized names in the financial
world.
UDAY KOTAK
Executive Vice Chairman and Managing
Director Kotak Mahindra Bank Ltd
As a young 26-year old entrepreneur in 1985,
Uday Kotak started Kotak Capital Management
Finance Ltd. (which later became Kotak
Mahindra Finance Ltd). The vision was to
eventually become a banking company. Private
Indian banks were not even a speck on the
horizon at that time. On 22nd March 2003, Kotak
Mahindra Finance Ltd. Became the first nonbanking financial company (NBFC) in Indias
corporate history to be converted into a bank.
Kotak Mahindra Bank Ltd. (KMBL) is regarded as one of the most efficient
and high performing banks in India, built on the principles of simplicity and
prudence. Uday remains unfazed by market euphoria and his basics of
banking approach has ensured that the loan book is of high quality an the
bank is well capitalized in a journey spanning nearly three decades, Uday has
not only helped the company grow to this scale but also earn respect.
22
the first CEO. He was also responsible for setting up the retail businesses
post the conversion into a Bank.
MILESTONE
Kotak Mahindra Finance Ltd. Commences bill discounting
business
Enters lease and hire purchase business
Starts auto finance division for financing passenger car
Establishes investment banking division
Joint venture with Goldman Sachs Group Inc for investment
banking incorporation of Kotak Mahindra Capital Company
1996
(KMCC)
Auto finance is hived off into a separate company Kotak
Mahindra Primus Limited (now known as Kotak Mahindra Prime
Limited), a joint venture with Ford Creit to finance non Ford
vehicles.
Kotak Mahindra takes a significant stake in Ford Creit Kotak
1998
2001
2003
Ltd.
Kotak Mahindra Finance Ltd. (KMFL), the groups flagship
company, receives banking licence from the Reserve Bank of
India (RBI). With this, KMFL becomes the first non-banking
finance company in India to be converted into a commercial bank
24
2004
2005
2006
2008
2009
2014
2015
Insurance business.
Reserve Bank of India (RBI) approves merger of ING Vysya Bank
with Kotak Mahindra Bank effective April 1, 2015.
25
Management category
Sanjay Tibrewala, CFO, Phoenix ARC, in the Cost Management
category
Bhargesh Ojha recognised in the Top GC Power List (February - March
2016) by Legal Era magazine
Prakash Nayak, EVP, Corporate Banking was awarded Outstanding
Manager Award 2015 by Ahmedabad Management Association (AMA)
Kulin Thaker & Arif Khan won CIO & Leader Business Impact Award
2015 by 9.9 Mediaworx
Kulin Thaker & Arif Khan won DataQuest Business Technology Award
2015 by Data Quest magazine
Agnelo Dsouza & Jaypaul Reddy won CSO Next 2015 Award by 9.9
Media
Arif Khan recognised as India's Future CIO at Next100 2015 Awards by
IT Next
Kulin Thaker & Ashok Singh recognised by EMC Corporation as:
EMC Outstanding Customer Award 2015
EMC Transformer Award 2015
Kulin Thaker & Arif Khan recognised by Citrix Technologies for Best
Desktop Virtualization Implementation
Mumbai Marathon 2016:
Second Highest Fundraising corporate in the Corporate Challenge
27
Market Outperformer
Global Outperformer
Kotak Securities
Kotak Securities Ltd., a strategic Joint Venture
between Kotak Mahindra Bank Limited and the
Goldman Sachs Group, LLP.is one of India's largest brokerage and
securities distribution house in India. Over the years Kotak Securities has
been one of the leading investment broking houses catering to the needs
of both institutional and retails investor categories with presence all over
the country through franchisees and co - coordinators. Kotak Street - the
retail arm of Kotak Securities Ltd., offers online (through
www.kotakstreet.com) and offline services well researched expertise and
financial products to the retail investors.
Kotak Mahindra Prime
Kotak Mahindra Primus Limited (KMP), is a
Joint Venture Between Kotak Mahindra Bank
Ltd and Ford Credit International Inc., (USA),
formed to finance all non-Ford passenger vehicles. KMP is one of the
country's leading players in car finance and is focused to financing and
supporting automotive and automotive related manufacturers, dealers and
retail customers.
Kotak Mahindra Old Mutual Life Insurance Limited
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint
venture between Kotak Mahindra Bank Ltd. and Old
Mutual plc. Kotak Life Insurance helps customers to take important financial
decisions at every in life by offering them a wide range of innovative life
insurance products, to make them financially independent.
Kotak Mahindra
appointed as one of six fund managers to manage pension funds under the
New Pension Scheme (NPS).
Kotak Private Equity Group
Kotak Private Equity Group helps nurture
emerging businesses and mid-size
enterprises to evolve into tomorrow's industry
leaders. With a proven track record of helping build companies, KPEG also
offers expertise with a combination of equity capital, strategic support and
value added services. What differentiates KPEG is not merely funding
companies, but also having a close involvement in their growth as board
members, advisors, strategists and fund-raisers.
Kotak Realty Fund
31
Kotak
32
designed
to
ensure
that
the
2. Current Accounts
Kotak Mahindra Bank offers unparalleled advantages with its three
Current Account offerings. Whether a person has a small/ mid
size business or have an enterprise
spread across multiple locations in the
country, they would find a Current
Account
that's
just
designed
for
Car loan
Personal loan
Home loan
Education loan
5 loan against property
Loan against securities
34
Gold loan
Bank
Ltd
offers
life
insurance policies of Kotak Mahindra Old Mutual Life Insurance Ltd to its
customers. These policies offer you protection from lifes uncertainties and
avenues to save for your long term financial goal.
5. NRI Account
Non Resident External Term Deposit is a tax free and fully
repairable Indian Rupee deposit account
opened by NRIs / PIOs to earn safe and
secured return from the income earned
through foreign sources.
Get Kotak NRE / NRO Term Deposits
and earn attractive returns.
Minimum amount required for booking
NRE
and
NRO
is Rs.50,000/- only.
Auto renewal of term deposits on maturity.
6. Working capital finance
35
Term
Deposit
Channel Finance
Every business needs appropriate finance options for growth and sustenance.
We, understanding this core need, provide end-to-end solutions for channel
partners/vendors of credible corporate dealing in FMCG, Healthcare,
Pharmaceuticals & Medical equipment, Industrial equipment, Textiles, IT,
Electronics, Engineering Goods and many more. Funding is provided to
channel partners to meet their Working Capital requirement of the goods
purchased from corporate
7. Convenience banking
Net Banking
SMS Banking
Kotak Payment Gateway
Mobile Banking
Immediate Payment Service
Unstructured Supplementary Service
Data (USSD)
Alerts
ATM Network
Phone Banking
Cash Deposit Machine
Cheque Deposit
8. Trade Services
36
Bank Guarantee
Experienced trade finance team that focuses on client requirements
Reduces your risks
InternationalImports
Tailor-made solutions to suit all your import needs
Experienced trade finance team that focuses on client requirements
Leverage our global network of correspondent banks
Domestic
Extensive range of trade-related services
Experienced trade finance team that focuses on client requirements
Tailor-made solutions to suit all your trading needs
InternationalExports
Tailor-made solutions to suit all your export needs
Experienced trade finance team that focuses on client requirements
Leverage our global network of correspondent banks
TREASURY PRODUCTS
At Kotak Mahindra Bank they understand the challenges and complexities
faced by corporations in managing cash flows.
Foreign Exchange
Kotak Mahindra Bank Ltd. have a state-of-the-art dealing room situated at
BKC, Mumbai. The dealing room handles inter-bank transactions and
corporate foreign exchange flows generated by the various branches.
37
Key Features
Products
business days)
Inward/outward remittances
Derivatives such as Options, Future Contracts, etc.
Services
Active dealings in the inter-bank market for major currencies, spot and
forwards
Quick and competitive dealing in prices in major currencies
Customised solutions for specific client exposures
Trading recommendations based on technical analysis
Regular fundamental analysis
Established correspondent banking relationships
FX Live is Kotak Mahindra Banks web-based foreign exchange trading
platform.
Money Market
Kotak Mahindra Bank Ltd. Money Market and Fixed Income Desk is an active
player in the Rupee markets and caters to the treasury requirements of clients
across the Inter-Bank, Co-operative bank, Corporate, Pension Fund and Trust
sectors.
With an active sales force in Mumbai, Delhi, Kolkata, Chennai, Bangalore and
Ahmedabad, banks are equipped to meet client requirements across the
country. Bank also offer the entire spectrum of services involved in the
origination and placement of corporate debt.
Key Features
38
Bank cater to the treasury requirements of clients across the InterBank, Co-operative bank, Corporate, Pension Fund and Trust sectors.
Derivative Solutions
Hedging Needs: Market maker in the Rupee interest rate swap market
in tenors tenure uptoup to 5 years
Benchmark PLR
The 'Benchmark PLR' of the Bank is 18.25% with effect from October
05, 2015
Base Rate of Kotak Mahindra Bank Ltd with effect from October 05,
2015: 9.50%
39
40
STRENGTHS
Innovative financial products of diverse categories
Kotak Mahindra Finance Ltd. is the first company in the Indian banking
history to convert to a bank
Comprehensive Cash Management System
Has over 20,000 employees
Customer account base of over 2.7 million
WEAKNESSES
Lesser penetration as being late entrants
41
42
PART 2
RESEARCH WORK
Derivative Defined
A derivative is a product whose value is derived from the value of one or more
underlying variables or assets in a contractual manner. The underlying asset
can be equity, forex, commodity or any other asset.
Types Of Derivatives
44
I.
FORWARD CONTRACT
contract size, expiration date and the asset type and quality.
The contract price is generally not available in public domain.
On the expiration date, the contract has to be settled by delivery of the
asset.
If the party wishes to reverse the contract, it has to compulsory go to
the same counter-party, which often results in high prices being
charged.
46
II.
FUTURE CONTRACT
buy back his short position, effectively closing out the futures position and its
contract obligations. Futures contracts are exchange traded derivatives. The
exchange acts as a counterparty on all contracts, sets margin requirements,
etc.
1. STANDADIZATION
Future contracts ensure their liquidity by being highly standardized, usually by
specifying:
The underlying. This can be anything from a barrel of sweet crude oil to
48
not only the quality of the underlying goods but also the manner and
2. Margin
Although the value of a contract at time of trading should be zero, its price
constantly fluctutates. This renders the owner liable to adverse changes in
value, and creates a credit risk to the exchange, who always acts as
counterparty. To minimize the risk, the exchange demands that contract
owners post a form of collateral, commonly known as Margin requirements
are waived or reduced in some cases for hedgers who have physical
ownership of the covered commodity or spread traders who have offsetting
contracts balancing the position.
Initial Margin: is paid by both buyer and seller. It represents the loss on that
contract, as determined by historical price changes, which is not likely to be
exceeded on a usual days trading. It may be 5% or 10% of total contract
price.
Mark to market Margin: Because a series of adverse price changes may
exhaust the initial margin, a further margin, usually called variation or
maintenance margin, is required by the exchange. This is calculated by the
futures contract, i.e. agreeing on a price at the end of each day, called the
settlement or mark-to-market price of the contract.
To understand the original practice, consider that a futures trader, when taking
a position, deposits money with the exchange, called a margin. This is
intended to protect the exchange against loss. At the end of every trading day,
the contract is marked to its present market value. If the trader is on the
winning side of a deal, his contract has increased in value that day, and the
exchange pays this profit into his account. On the other hand, if he is on the
losing side, the exchange will debit his account. If he cannot pay, then the
margin is used as the collateral from which the loss is paid.
3. Settlement
49
Settlement is the act of consummating the contract, and can be done in one of
two ways, as specified per type of futures contract:
Expiry is the time when the final prices of the future are determined. For
many equity index and interest rate future contracts, this happens on the
Last Thursday of certain trading month. On this day the t+2 futures
contract becomes the t forward contract.
50
FORWARD CONTRACT
Traded directly between
FUTURE CONTRACT
Traded on the
Mechanism
exchanges.
Contact specification
the exchanges).
Differ from trade to trade.
Contract are
Exists.
standardized contracts.
Exists. However,
Price discovery
settlement.
High, as contracts are
standardized exchange
traded contract.
the parties.
Not efficient, as markets
are scattered.
Examples
OPTIONS
51
A derivative transaction that gives the option holder the right but not the
obligation to buy or sell the underlying asset at a price, called the strike price,
during a period or on a specific date in exchange for payment of a premium is
known as option. Underlying asset refers to any asset that is traded. The
price at which the underlying is traded is called the strike price.
There are two types of options i.e., CALL OPTION & PUT OPTION.
CALL OPTION
A contract that gives its owner the right but not the obligation to buy an
underlying asset-stock or any financial asset, at a specified price on or before
a specified date is known as a Call option. The owner makes a profit
provided he sells at a higher current price and buys at a lower future price.
PUT OPTION
A contract that gives its owner the right but not the obligation to sell an
underlying asset-stock or any financial asset, at a specified price on or before
a specified date is known as a Put Option. The owner makes a profit he buys
at a lower current price and sells at a higher future price. Hence, no option will
be exercised if the future price does not increase.
The OTC derivatives markes have witnessed rather sharp growth over the last
few years, which has accompanied the modernization of commercial and
investment banking and globalization of financial activities. The recent
developments in information technology have contributed to agreta extent to
these developments. While both exchange-traded and OTC derivatives
contracts offer many benefits, the former have rigid structures compare to the
latter. It is known that highly leveraged institutions and their OTC derivative
positions were the main cause of turbulence in financial markets in 1998.
These episodes of turbulence revealed the risks posed to market stability
originating in features of OTC derivative instruments and markets.
The OTC derivatives markets have the following features compared to
exchange-traded derivatives:
or margining.
There are no formal rules for risk and burden-sharing.
There are no formal rules or mechanisms for ensuring market stability
and integrity, and for safeguarding the collective interests of market
participants, and
The OTC contracts are generally not regulated by a regulatory
authority and the exchanges self-regulatory authority and the
exchanges self-regulaoty organization, although they are affecte
indirectly by national legal systems, banking supervision and market
survellience.
BENEFITS OF DERIVATIVES
53
Risk Management
Price Discovery
Operaional Advantages
Market Efficiency
Ease of Speculation
54
HOW IT WORKS
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L/C & BG
Letters of Credit
Backed by the strong trade finance set-up, we offer import financing services
through Letters of Credit (L/C), which are well accepted globally. Our trade
team is equipped to structure the solutions for a variety of purchase
requirements.
Bank Guarantees
To facilitate growth in trade and commerce and promote project exports, we
offer wide range of guarantees (both inland and foreign), that addresses
varying client requirements and risk profiles.
These include
Performance guarantee
Financial guarantees
Bid bonds
56
Key Features
Export Services
Our export products/services facilitate hassle-free handling of transactions
and faster turn-around time for effective utilisation of funds.
Products & Services Offered
EEFC Accounts
Key Features
57
Exim Pro /
Classic
Inward Remittance
FIRC
FREE
FREE
59
QTP USD
250 K
Exim Ace
FREE
FREE
BRC
Exports - Collection Bills (LC/NonLC)
FREE
Rs. 400 per bill
Swift Charges
Courier Charges
Registered Post Charges
Export LC Advising
FREE
FREE
FREE
FREE
GR Release
FREE
Rs. 300 per
FREE
Rs. 200
bill
Rs. 300 per
per bill
Rs. 200
bill
Rs. 300 per
per bill
Rs. 200
bill
Rs. 300 per
per bill
Rs. 200
bill
Rs. 300 per
per bill
Rs. 200
bill
per bill
Rs. 200
bill
per bill
FREE
FREE
FREE
FREE
Rs. 300 per
FREE
FREE
FREE
FREE
Rs. 200
bill
per bill
Rs. 3000
Rs. 5000
Rs. 1500
60
61
62
63
Derivative
Trading",
Global
64
Journal
of
Finance
and
65
The global liberalization and integration of financial markets have created new
investment opportunities, which in turn require the development of new
instruments that are more efficient to deal with increased risks. The most of
desired instruments that allow market participants to manage risk in the
modern securities trading are derivative instruments. The main logic behind
trading is that derivatives reduce risk by providing additional channel to invest
with lower trading cost and it facilitates the investors to extend their settlement
through the future contracts. They provide extra liquidity. In India, exchange
traded financial derivatives were introduced in the year 2000. But even after
16 years the institutional investors are actively engaged in this market. Only
limited IMPORTERS - EXPORTER trade actively in this market.
66
67
The project covers the derivatives market and its instruments. For
better understanding various strategies with different situations and
actions have been given. It includes the data collected primarily.
There is not much awareness of the derivative concept in the market.
Many investors dont use the instrument as they find it quite risky.
The data analysis further shown proves that FUTURE & FORWARD
CONTRACTS are mostly dealt with rather than OPTIONS as it reduces
the burden of paying premium.
4 RESEARCH METHODOLOGY
68
69
The research design refers to the overall strategy that you choose to
integrate the different components of the study in a coherent and logical way,
thereby, ensuring you will effectively address the research problem; it
constitutes the blueprint for the collection, measurement, and analysis of data.
In research design I collected data from people who are dealing core into
IMPORTS & EXPORTS.
Design types and sub-types
70
71
72
Primary data
Through structured questionnaire
Secondary data
Websites
Published articles
Journals
Through internet, various official sites of the Bank.
Data used for study is primary sources of data as in this study data are
collected with the help of questionnaire by the respondents.
73
74
75
5
ANAYSIS &
INTERPRETATION OF DATA
Analysis and Interpretation.
The process by which sense
and meaning are made of the
data gathered in qualitative
research, and by which the
emergent knowledge is applied
to clients' problems.
76
Response
24
15
6
32
3
4
5
6
2
8
7
4
6
5
7
RESPONSE
RESPONSE
5
4
2
3
7
6
6
6
32
15
24
77
NO OF RESPONSES
26
32
4
18
9
Response
Response
Any Other
GT
CC / OD
18
4
Saving
32
Current
26
INTERPRETATION
The survey which i conducted shows the trend that people are still more
dealing more into current a/c. There is a very less knowledge of Global Trade
a/c within the city.
OPTIONS
YES
NO
RESPONSE
43
21
RESPONSE
NO; 33%
YES; 67%
Interpretation
With the 90 surveys done, only 64 people knew about derivatives of out of
which approx 67% are people dealing with the instrument.
79
OPTIONS
Lack of knowledge
Lack of awareness
Very risky / counter party risk
Huge amount of investment
Other
RESPONSE
2
3
9
5
2
Response
10
9
8
7
6
5
4
3
2
1
0
Response
Interpretation
The people who are no dealing with the instrument say they ound it more
risky to be in the contract. And, many parties are dealing without
derivatives on mutual relations.
RESPONSE
16
9
80
Stock Options
Swaps
14
4
Reponse
Swaps; 9%
Future; 37%
Stock Option; 33%
Forward; 21%
Interpretation
Its clear from the graph that people are more into Future Contracts as they
can save themselves from paying off premiums, if they deal in options.
RESPONSE
21
9
15
13
81
Agree
Strongly Agree
10
22
Response
Response
22
21
15
13
10
Interpretation
The results are very neutral. Though the scenario is changing and people are
much trending towards dealing in derivatives.
RESPONSE
30
34
82
Reponse
35
34
33
32
31
30
29
28
YES
NO
Interpretation
We are all aware with the reputed name KOTAK MAHINDRA BANK and its
emerging as one of the best. And , many importers exporters are dealing
with the HEDGING instrument through KMBL.
RESPONSE
52
38
83
60
52
50
38
40
30
20
10
0
YES
No
Response
Interpretation
The respondents are very much aware with the benefits Kotak Bank is
providing.
RESPONSE
21
17
18
12
22
84
25
22
21
20
17
18
15
12
10
5
0
Response
Definitely would switch
Definetely wouldnt
Might switch
Interpretation
Due to the huge cut throat competitions amongst banking, responses of
switching to KOTAK BANK are more sound. Due to recent merger of ING
KOTAK, KMBL is growing with a good pace.
After analyzing data it is clear that the main factors that are driving the
growth of Derivative Market are Market improvement in communication
facilities as well as long term saving & investment is also possible
through entering into Derivative Contract. So these factors encourage
the Derivative Market in India.
It encourages entrepreneurship in India. It encourages the investor to
take more risk & earn more return. So in this way it helps the Indian
Economy by developing entrepreneurship. Derivative Market is more
regulated & standardized so in this way it provides a more controlled
environment. In the nutshell, we can say that the rule of High Risk &
High Return apply in Derivatives. If we are able to take more risk then
we can earn more profit under derivatives.
86
Market is so much volatile and it is difficult to forecast any thing about it.
4. Aspects Coverage
Some of the aspects may not be covered in my study.
10 Bibliography
BOOK REFERRED
John C. Hull (May 2016) (9 th Edition) Options, Futures & Other
Derivatives , Wiley India Pvt Ltd
Websites
www.kotak.com
www.derivativesindia.com
www.investopedia.com
www.economictimes.com
89
JOURNALS
Management
Pasha, D. S. (2013) Retail Investors Percption On Financial
ANNEXURE
QUESTIONNAIRE ON DERIVATIVE INSTRUMENT USED BY
1 Basic Information
Name:
Name of the firm:
Type of firm:
Contact no.
2 Which bank are you currently associated with?
a.
b.
Other.
Current account
Saving account
CC/OD account
Demat account
Global Trade account
Loan account
Trinity Account
Any Other
91
Description
Definetely
Probably
Might
Probably
Definetely
would
would
switch
wouldnt
wouldnt
switch
switch
switch
switch
92
93
94
95
96
97
98
99
100
101
102
103
104