Project report on BASICS equity shares and derivatives market

PREPARED BY:MANISH KHARELXC

A PROJECT REPORT ON BASICS OF EQUITY SHARES AND DERIVATIVES MARKET

PREPARED BY:

MANISH KHAREL

STATEMENT OF PROBLEMS None of the business firms are having adequate capital. If any company wants

diversify, they need huge capital. For which they have to sell their ownership to public as shares.

As inflation is eating up the value of money year by year, people either wants to invest for beating inflation or prefer present consumption.

Equity and derivatives are the major financial instruments for investments which will help to earn returns that will beat inflation rate.

Peoples also have different perception towards investments. so, this study is done in peerless to understand basics of equity shares and derivatives market, trading of equity and derivatives and to analyse perception of peoples towards investments.

OBJECTIVES OF THE SUDY To understand the basics of equity and derivatives. To know the procedure for firms to be listed on stock exchange. To understand the trading of equity and derivatives. To practically analyze the movement of price of shares. To know factors affecting investors for the purchase of shares. To understand the mechanisms of financial analysts. To understand the mechanisms of stock broking house. To understand the methods for trading of shares. To find out the perceptions of investment in general public.

INTRODUCTION TO FINANCIAL MARKET

MARKET SEGMENTS

Wholesale debt market

capital market

futue and options segment

currency derivatives market

HOW SHARES COME TO MARKET Firstly, the form should be filled that SEBI will provide. SEBI will check all the activities of the company. Like profitability, operations,

performance, audit, etc. Then, it will either approve or disapprove the request of the company to issue

shares and collect the capital. If SEBI approves the request then company can offer the shares to public through

IPO (Initial Public Offering). For IPO, SEBI will fix dates to issue shares and price of at the first.

Certain dates are fixed by SEBI for investors to book the shares, Listing of shares are done by SEBI at certain price which may be either in lower,

higher or equal price than previous price. Now, the shares will be can be traded in electronic form which is known as equity

shares.

INITIAL PUBLIC OFFERING It refers as public offering

It is the first sale of stock by a private company to public

It is often issued by smaller and younger companies seeking for capital to expand the business but it can also be done by largely privately owned companies looking to become publicly traded.

MEANING OF EQUITY SHARES An equity share is a unit of ownership in a company. Every company issues a certain number of shares to its promoters,

i.e., those who participate in its formation. The company issues additional shares to the public, when it raises

money by way of an Initial Public Offer (IPO). Hence, in addition to the promoters, the public to become

shareholders of the company. So, if you hold 100 shares of a company which has issued 10,000

shares, you own 1 per cent of the company.

FEATURES OF EQUITY SHARES

OWNED CAPITAL FIXED OR NOMINAL VALUE DISTINCTIVE NUMBER ATTACHED RIGHTS RETURN ON SHARES TRANSFER OF SHARES BENEFIT OF RIGHT ISSUE BENEFIT OF BONUS SHARES

TRADING OF EQUITY SHARES

Trad

ing Margin/Intra

day

Delivery

DERIVATIVES Derivative is a product whose value is derived from the value of one

or more basic variables, called bases (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 harvest 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. The price of this derivative is driven by the spot price of wheat which is the "underlying".

TRADING OF DERIVATIVES

Derivatives

Options

CallPut

Futures

SURVEY CONDUCTED TO ANALYSE PERCEPTION OF INVESTORS

METHODOLOGY OF SURVEY Type of sampling used: NON-PROBABLITY SAMPLING. Type of non-probability sampling used: Convenience sampling. Sample size: 50 respondents. Location of sample: Gangtok, Sikkim. Target sample: Especially government offices.

FINDINGS OF THE SURVEY

FINDINGS THROUGH FACE TO FACE INTERVIEW

Through face-face interview I have analysed that: Most of the people are not covered with Mediclaim/ health insurance. Still, some people prefer Post Office saving rather than banks. Many of them are afraid of rumor that is spread by lack of reimbursement of sum

guaranteed by insurance. Peoples are not investing in mutual funds and share market due to lack of knowledge. Many of them are afraid to invest in share market because they think that market is very

risky. There are several opportunities for selling health insurance and mutual funds. As, most of

the people don’t have. Risk of market volatility is one of the reason which is suppressing the wants of people to

invest in market as, they don’t have proper knowledge. Most of people are unhappy with the services provided by their agents or financial advisor.

RECOMMENDATIONS Peerless have to open one branch here in Gangtok so that people can trust more.

This is because many people said that they are not comfortable to invest from peerless which is operating in siliguri, if there is branch in Gangtok then they will think about it.

Peerless should conduct some financial awareness program in Gangtok. If they do so, people will get knowledge and indirectly marketing will be done which will attract lot of investors.

A well trained agent should be recruited for gang6tok as there is no one to look after market of Gangtok.

Proper marketing is not done by peerless in Gangtok. Many of them told that they are unaware about the company.

Some people have negative perception about peerless because peerless stopped its services and their business was down before 10 years. So, peerless should adopt some strategies to change the perception of people.

Findings through data evaluation Still, 26% of people are not covered with insurance. There is a scope for insurance in Gangtok. Only 20% of people have term plan other are having traditional plan. Many of respondents have heard about mutual funds but only 8% of people have invested in

mutual funds. There are still some of them, who have not heard about mutual fund till date. People have trust in saving a/c than other type of investments. Data also shows that. 92% of

people are keeping money in savings account. Reasons might be: unawareness of inflation, lack of risk, higher liquidity, etc.

Still, there are some of them who actually trust Post Office savings. 14% of people are still saving money in Post Office.

Only, 22% of peoples are investing in share market. That means, there is a huge scope for companies to sell Demat account.

Only, 42% of people have taken financial advice from a certified financial advisor. This shows that, there is a huge scope for financial advisor also.

60% of people are not satisfied with the service or advice provided by an advisor.

THANK YOU FOR YOUR PATIENCE………….