ASUMMER INTERNSHIP PROJECTONSTUDY ON THE EFFECT OF INTERNATIONALCOMMODITY MARKET ON INDIAN COMMODITY MARKETSubmitted toS.R. LUTHRAINSTITUTE OF MANAGEMENT IN PARTIAL FULFILLMENT OF THEREQUIREMENT OFTHE AWARD FOR THE DEGREE OFMASTER OF BUSINESS ADMINISTRATION
InGujarat Technological UniversityUNDER THE GUIDANCE OF
Faculty Guide: Company Guide:Mr. Pratiksinh S. VaghelaMr. PareshBhalani Assistant Professor, Sub broker, (Angel Broking Pvt.Ltd.)Submitted by
Mr. BRIJESH V. MARAVIYA [Batch No. 2013-15, EnrollmentNo.138050592047]{Mo no. 8866447610}
MBA SEMESTER III
S.R. LUTHRA INSTITUTE OF MANAGEMENT 805MBA PROGRAMMEAffiliatedto Gujarat Technological UniversityAhmedabadAugust, 2014StudentsDeclaration
I, Brijesh V. Maraviya undersigned, a student of S.R. LUTHRAInstitute of Management, Surat, declare that the project reportentitled Study on the effect of international commodity market onIndian commodity market. AT ANJEL Broking Pvt. Ltd. prepared andsubmitted to Mr. Pratiksinh S. Vaghela, Asst. Professor of S.R.LUTHRA Institute of Management, Surat.This is my own work& thereport prepared there in is based on my study and experience duringthe tenure of my study at ANJEL Broking Pvt. Ltd..I will not usethis project report in future and will not submit the same to anyother university or institute or any other publisher withoutwritten permission of my guide.I further declare that the result ofmy findings and research in the subject is original in nature andhas not been previously submitted either in part or in whole to anyother institute or university for any degree. If it is found; Ishall be only responsible for its consequences.
Place: Surat
Date: _____________
__________________(Brijesh V. Maraviya)
Institutes Certificate
Certified that this Summer Internship Project Report TitledStudy on the effect of international commodity market on Indiancommodity market is the bonafide work of Mr. Brijesh V. Maraviya(Enrollment No. 138050592047), who has carried out the researchunder my supervision. I also certify further, that to the best ofmy knowledge the work reported herein does not form part of anyother project report or dissertation on the basis of which a degreeor award was conferred on an earlier occasion on this or any othercandidate.
Place: SuratDate: ________________
___________________(Pratiksinh S. Vaghela) AssistantProfessor,
___________________(J. M. Kapadia)I/C Director
PREFACE
It is a great opportunity for management students of GTU to getexposure to the stock market industry as a part of in summerinternship project (SIP) academic curriculum of MBA and get wideexposure to the real world during industrial project.
This project has been real challenging for me. It realizedduring training period of six weeks that stock market industry isdrastically different than what I learn in theories. Thus,practical exposure to this industry is valuable for me as amanagement student. My practical knowledge has improved very wellthrough meeting people and offers them an invested in commoditymarket.
This report gives information about commodity market linkagebetween Indian and international commodity market i.e. Study on theeffect of international commodity market on Indian commoditymarket
Acknowledgement I take this opportunity to express my sinceregratitude to the following personalities without whose help andguidance successful completion of my project work would have beenremained dream. I wish to extend my sincere gratitude to, Mr.PareshP. Bhalani, Sub broker of the Angel Broking Pvt. Ltd., forproviding me with all the facilities to carry on this project workefficiently. The entire team at Angel Broking Pvt. Ltd, for theirco-operation and last but not the least the employees at AngelBroking Pvt. Ltd for their support and encouragement in fulfillmentof this report. I would like to thanks Mr. J. M. Kapadia, I/CDirector, S.R. Luthara Institute of Management, Surat for makingavailable all facilities in fulfilling the requirement my projectreport.
The project would have been possible throughout the experience,guidance and supervision of Mr. Pratiksinh S. Vaghela haspotentially and critically gone through the subject matter. Herconstructive criticism helped me lot in presenting the project inconcrete form. Finally, I would like to thank to all these peoplewho are directly or indirectly contributed to my project work.
Executive Summery
This summer project report is prepared at ANGEL broking Pvt.Ltd. on Study on the effect of international commodity market onIndian commodity market as a part of curriculum of the MBA program.Indian futures commodities market i.e. MCX and NCDEX, and worldfutures commodities market i.e. CBOT US, COMEX US, LME UK AND NYMEXUS. The technical analysis method widely used in relation of mostlyshow the daily changing price of two markets.The first part of theproject includes stock market industry profile, introduction of theANGEL broking Pvt. Ltd., product profile of the company andintroduction of commodity market, introduction of commodityexchange of India.In this project the descriptive research is used.I have used Excel for statistical analysis Correlation andregression is studied to know whether there is a relationshipbetween the international commodities market linkages of the MCXand NCDEX commodity market.For this project study, the main aim ofthis project is to find out correlation and regression betweenIndian commodities market and world commodities market. There is aco-relation between commodities i.e. gold, silver and copper(bullion), crude oil and natural gas (energy), and ncdex marketi.e. soy bean and cotton (agricultural), In world futurescommodities market, cbot i.e. soy bean, comex i.e. gold and silver,lme i.e. copper and nymex i.e. crude oil and natural gas. It foundthat there is no effect of International commodity market on Indiancommodity market.There may be many factors on which a bothcommodities market may depend. Like, government policies, budget,bullion market, inflation, economic and political condition, ofcountry, dollar exchange rate etc this all are variable factors mayeffect on commodities price but for study, have selected only twoindependent i.e. Indian commodities market and world commoditiesmarket.PLAGIARISM REPORTReportDigital signedAuthor: JAY SHREEKRISHNAProcessing date: Sat, 2.8.2014 14:01:28 CESTA total of 423fragments were analysed. As a result 33 fragments (7.8%) were foundin other documents. In the document preview below the fragments aremarked light blue and clickable.Cross reference documentsFollowinglist of found documents is grouped by document titles and orderedby found fragements. 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TABLE OF CONTENTSSr. No.ParticularsPage No.
1.Introduction01
1.1) About Commodity Market01
1.2 ) Indian Commodity Market03
1.2) Multi Commodity Exchange07
2.Industry Profile13
2.1) Global Stock Market13
2.2) Indian Stock Market19
2.2.1) Bombay Stock Exchange25
2.2.2) National Stock Exchange28
2.2.3) Stock Exchanges in India33
2.3) PESTEL Analysis34
3.Company Profile38
3.1) Introduction and History38
3.2) Our Organizational Structure45
3.3) Departmental Study49
3.4) Swot Analysis57
4.Review of Literature59
5.Research Methodology62
5.1) Need For Research62
5.2) Statement of Problem62
5.3) Objective62
5.4) Research Design62
5.5) Data Collection Method63
5.6) Hypotheses63
5.7) Sample Size63
5.8) Tools & Techniques64
5.9) Limitation64
6.Data Collection and Analysis65
6.1) Research Analysis Tools65
6.2) Co-relation between Gold price of MCX AND COMEX (US)68
6.3) Regression between Gold price of MCX AND COMEX69
6.4) Co-relation between silver price of MCX AND COMEX(US)70
6.5) Regression between silver price of MCX AND COMEX71
6.6) Co-relation between copper price of MCX AND LME (UK)72
6.7) Regression between copper price of MCX AND LME (UK)72
6.8) Co-relation between crude oil price of MCX AND NYMEX(US)74
6.9) Regression between crude oil price of MCX AND NYMEX(US)74
6.10) Co-relation between natural gas price of MCX AND NYMEX(US)76
6.11) Regression between natural gas price of MCX AND NYMEX(US)76
6.12) Co-relation between soy bean price of NCDEX AND CBOT(US)78
6.13) Regression between soy bean price of NCDEX AND CBOT(US)78
6.14) Co-relation between cotton price of NCDEX AND CBOT(US)80
6.15) Regression between cotton price of NCDEX AND CBOT(US)80
7.Finding82
8.Conclusion84
Bibliography
Appendix
LIST OF TABLES
Sr. No.ParticularsTable No.Page No.
1Largest commodities exchanges in the world1.102
2Major Stock Exchanges2.117
3About Bombay Stock Exchange2.225
4About National Stock Exchange2.328
5Traded and delivery of BSE and NSE2.430
6Management of Angel Group3.141
7SWOT Analysis3.257
8Co-relation between Gold price of MCX AND COMEX (US)6.168
9Regression between Gold price of MCX AND COMEX6.269
10ANOVA for Gold price of MCX AND COMEX6.369
11Co-relation between silver price of MCX AND COMEX(US)6.470
12Regression between silver price of MCX AND COMEX6.571
13ANOVA for silver price of MCX AND COMEX6.671
14Co-relation between copper price of MCX AND LME (UK)6.772
15Regression between copper price of MCX AND LME (UK)6.873
16ANOVA for copper price of MCX AND LME (UK)6.973
17Co-relation between crude oil price of MCX AND NYMEX(US)6.1074
18Regression between crude oil price of MCX AND NYMEX(US)6.1175
19ANOVA for crude oil price of MCX AND NYMEX (US)6.1275
20Co-relation between natural gas price of MCX AND NYMEX(US)6.1376
21Regression between natural gas price of MCX AND NYMEX(US)6.1477
22ANOVA for natural gas price of MCX AND NYMEX (US)6.1577
23Co-relation between soy bean price of NCDEX AND CBOT(US)6.1678
24Regression between soy bean price of NCDEX AND CBOT(US)6.1779
25ANOVA for soy bean price of NCDEX AND CBOT (US)6.1879
26Co-relation between cotton price of NCDEX AND CBOT(US)6.1980
27Regression between cotton price of NCDEX AND CBOT(US)6.2081
28ANOVA for cotton price of NCDEX AND CBOT (US)6.2181
29Co-relation between Indian futures commodities market andworld future commodities market7.183
LIST OF FIGURES
Sr. No.ParticularsFigure No.Page No.
1percentage changes in share of derivative trade onexchange1.112
2Market capitalization (USD billions)2.119
LIST OF APPENDIX
Sr. No.ParticularsFigure No.
1Gold price of MCX AND COMEX (US) for the period Apr 01, 2014 toJul 01, 20141.1
2Silver price of MCX AND COMEX (US) for the period Apr 01, 2014to Jul 01, 20141.2
3Copper price of MCX AND LME (UK) for the period Apr 01, 2014 toJul 01, 20141.3
4Crude Oil price of MCX AND NYMEX (US) for the period Apr 01,2014 to Jul 01, 20141.4
5Natural Gas price of MCX AND NYMEX (US) for the period Apr 01,2014 to Jul 01, 20141.5
6Soy Bean price of NCDEX AND CBOT (US) for the period Apr 01,2014 to Jul 01, 20141.6
7Cotton price of NCDEX AND CBOT (US) for the period Apr 01, 2014to Jul 01, 20141.7
INTRODUCTION1. ABOUT COMMODITY MARKET 1. INDIAN COMMODITYMARKET
1. MULTI COMMODITY EXCHANGE
1.1 ABOUT COMMODITIES MARKET:-
What is the commodity market? Commodity market is a place wheretrading in commodities takes place. It is similar to an equitymarket, but instead of buying or selling shares one buys or sellscommodities.
How old are the commodities market? The commodities markets areone of the oldest prevailing markets in the human history. In fact,derivatives trading started off in commodities with the earliestrecords being traced back to the 17th century when rice futureswere traded in Japan.
What are the different types of commodities that are traded inthese markets? World-over one will find that a market exists foralmost all the commodities known to us. These commodities can bebroadly classified into the following: Precious Metals: Gold,Silver, Platinum, etc. Other Metals: Nickel, Aluminum, Copper, etc.Agro-Based Commodities: Wheat, Corn, Cotton, Oils, Oilseeds, etc.Soft Commodities: Coffee, Cocoa, Sugar, etc. Live-Stock: LiveCattle, Pork Bellies, etc. Energy: Crude Oil, Natural Gas,Gasoline, etc.
National Commodity Exchange:- Multi Commodity Exchange of IndiaLimited (MCX) National Commodity & Derivatives Exchange Limited(NCDEX) Indian National Multi-Commodity Exchange (NMCE) CommodityExchange Limited ICEX.
Worlds futures commodity exchange:- Chicago board of trade(CBOT) (COMEX) London metals exchange (LME) New York mercantileexchange (NYMEX)
Largest commodities exchanges in the world:-Exchange
Country Volume per month $M
CME Group USA 19
Tokyo Commodity Exchange Japan -
NYSE Euronext USA -
Dalian Commodity ExchangeChina -
Multi Commodity Exchange
India -
Intercontinental Exchange USA, Canada, China, UK -
TABLES 1.1
How big is the Indian commodity trading market as compared toother Asian markets? The commodity market in India clocks a dailyaverage turnover of Rs 12,000-15,000 crore (Rs 120-150 billion).The accumulative commodities derivatives trade value is estimatedto have reached the equivalent of 66 per cent of the gross domesticproduct and the future will only see the percentage rising, saysICICI direct.com vice-president Kadar Deshpande.
What kind of products can be listed on the commodity market? Allcommodities produced in the agriculture, mineral and fossil sectorshave been sanctioned for futures trading. These include cereals,pulses, ginned cotton, un-ginned Cotton, oilseeds, oils, jute, juteproducts, sugar, gur, potatoes, onions, coffee, tea,petrochemicals, and bullion, among others.
What are the factors that influence the commodity prices in themarket? The commodity market is driven by demand and supply factorsand inventory, when it comes to perishable commodities such asagricultural products and high demand products such as crude oil.Like any market, the demand-supply equation influences theprices.
Variables like weather, social changes, government policies andglobal factors influence the balance.
What is the size of the commodities market as compared to theequity market? In the developed markets the volumes on theexchange-based commodity derivates markets are about five timesmore than that of the equity markets.
1.2 INDIAN COMMODITY MARKET:-
HISTORY:- Commodity futures markets largely remainunderdeveloped in India. This is in spite of the countries longhistory of commodity derivatives trade as compared to the US andUK. A major contributor to this fact is the extensive governmentintervention in the agricultural sector in the post-independenceera. In reality, the production and distribution of severalagricultural commodities is still governed by the state andforwards as well as futures trading have only been selectivelyintroduced with stringent regulatory controls. Free trade in manycommodity items remains restricted under the Essential CommoditiesAct (ECA), 1955, and forwards as well as future contracts arelimited to specific commodity items listed under the ForwardContracts (Regulation) Act (FCRA), 1952.
The evolution of the organized futures market in India commencedin 1875 with the setting up of the Bombay Cotton Trade AssociationLtd. Following widespread discontent among leading cotton millowners and merchants over the functioning of the Bombay CottonTrade Association, a separate association, Bombay Cotton ExchangeLtd., was constituted in 1983. Futures trading in oilseedsoriginated with the setting up of the Gujarati Vyapari Mandali in1900, which carried out futures trading in ground nuts, castorseeds and cotton. The Calcutta Hessian Exchange Ltd. and the EastIndia Jute Association Ltd. were set up in 1919 and 1927respectively for futures trade in raw jute. In 1921, futures incotton were organized in Mumbai under the auspices of East IndiaCotton Association (EICA). Before the Second World War broke out in1939, several futures markets in oilseeds were functioning in thestates of Gujarat and Punjab. Futures markets in Bullion began inMumbai in 1920, and later, similar markets were established inRajkot, Jaipur, Jamnagar, Kanpur, Delhi and Calcutta. In duecourse, several other exchanges were established in the country,facilitating trade in diverse commodities such as pepper, turmeric,potato, sugar and jiggery.
Post independence, the Indian constitution listed the subject ofStock Exchanges and Future Markets under the union list. As aresult, the regulation and development of the commodities futuresmarkets were defined solely as the responsibility of the centralgovernment. A bill on forward contracts was referred to an expertcommittee headed by Prof. A.D. Shroff and selected committees oftwo successive parliaments and finally, in December 1952, theForward Contracts (Regulation) Act was enacted. The ForwardContracts (Regulation) rules were notified by the centralgovernment in 1954. The futures trade in spices was first organizedby the India Pepper and Spices Trade Association (IPSTA) in Cochinin 1957.
Following the introduction of economic reforms in 1991, theGovernment of India appointed an expert committee on forwardmarkets under the chairmanship of Prof. K.N. Kabra in June 1993.The committee submitted its report in September 1994, championingthe reintroduction of futures, which were banned in 1966, andexpanding its coverage to agricultural commodities, along withsilver.
In order to boost the agricultural sector, the NationalAgricultural Policy 2000 envisaged external and domestic marketreforms and dismantling of all controls and regulations in theagricultural commodity markets. It also proposed an expansion ofthe coverage of futures markets to minimize the wide fluctuationsin commodity prices and for hedging the risk arising from extremeprice volatilities.
STRUCTURE, CONDUCT & CURRENT STATUS :-
Broadly, the commodities market exists in two distinct formstheover-the-counter (OTC) market and the exchange based market.Further, as in equities, there exists the spot and the derivativessegments. Spot markets are essentially OTC markets andparticipation is restricted to People who are involved with thatcommodity, such as the farmer, processor, wholesaler, etc. Amajority of the derivatives trading takes place through theexchange-based markets with standardized contracts, settlements,etc. The exchange-based markets are essentially derivative marketsand are similar to equity derivatives in their working, that is,everything is standardized and a person can purchase a contract bypaying only a percentage of the contract value. A person can alsogo short on these exchanges. Moreover, even though there is aprovision for delivery, most contracts are squared-off beforeexpiry and are settled in cash. As a result, one can see an activeparticipation by people who are not associated with the commodity.The typical structure of commodity futures markets in India is asfollows:
At present, there are 26 exchanges operating in India andcarrying out futures trading activities in as many as 146 commodityitems. As per the recommendation of the FMC, the Government ofIndia recognized the National Multi Commodity Exchange (NMCE),Ahmadabad; Multi Commodity Exchange (MCX), National Commodity andDerivative Exchange (NCDEX), Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges.
As compared to 59 commodities in January 2005, 94 commoditieswere traded in December 2006 in the commodity futures market. Thesecommodities included major agricultural commodities such as rice,wheat, jute, cotton, coffee, major pulses (such as urad, arahar andchana), edible oilseeds (such as mustard seed, coconut oil,groundnut oil and sunflower), spices (pepper, chillies, cumin seedand turmeric), metals (aluminum, tin, nickel and copper), bullion(gold and silver), crude oil, natural gas and polymers, amongothers. Gold accounted for the largest share of trade in terms ofvalue. A temporary ban was imposed on futures trading in urad andtur dal in January 2007 to ensure orderly market conditions. Anefficient and well-organized commodities futures market isgenerally acknowledged to be helpful in price discovery for tradedcommodities1.3 Multi Commodity Exchange:-
ABOUT US :- Multi Commodity Exchange of India Ltd. (MCX) is astate-of-the-art demutualised multi commodity futures exchange withpermanent recognition from the Government of India to facilitatenationwide online trading, clearing and settlement operations ofcommodities futures. History :- MCX was incorporated on April 19,2002, and on September 26, 2003, it received permanent recognitionfrom the Government to establish a nationwide online multicommodityexchange. MCX was launched on November 10, 2003, following theGovernments initiative to revitalize the commodity exchangeindustry by allowing demutualised, electronic, national commodityexchanges to trade in all permitted commodities. MCX was formallyinaugurated by Mr. Mukesh Ambani, Chairman of Reliance IndustriesLtd, on November 18, 2003. On March 09, 2012, MCX became Indias 1exchange to be listed. India has had a long history of organizedcommodity derivatives. Historically, such a commodity exchange was;established in 1875 with the derivatives market flourishing in thefollowing years. However, it was with the Government of Indian toif ying in April 2003 the permission for futures trading incommodities that opened the entire commodity spectrum for futuretrading. This epoch-making step has allowed online trading,clearing and settlement operations in commodity future contracts.The incorporation of MCX on 19th April 2002 and its permanentrecognition from the government on 26th September 2003 have becomethe real turning points in the area of commodity futures exchange.MCX, promoted by Financial Technologies (India) Limited, enjoys theconfidence of investors from Indian and international financialsectors like Euro next N.V.,State Bank of India and its associates,National Bank for Agriculture and Rural Development(NABARD), SBILife Insurance, Bank of India, Bank of Baroda, Union Bank of India,Corporation Bank, Canara Bank, HDFC Bank, FID Funds(Mauritius),Merrill Lynch and several others on one hand, and has won the hearits of commodities on the other. With an aim to seamlesslyintegrate with the global commodities ecosystem, MCX has forgedstrategic alliances with leading international exchanges. Product:- Today, MCX offers more than 40commodities across varioussegments such as bullion, energy, ferrous and nonferrous metals anda number of agri commodities on its platform. The futures contractsof MCX have demonstrably brought significant benefits to severalsectors, not only for metals and energy but also for smalleragricultural commodities such as cardamom, menthe oil and soya oil.These futures contracts are found to be unique as they also covercurrency risk, which is inherent in internationally-referredcommodities.
As settlement in MCXs futures contracts is allowed in Indianrupee, traders on this platform do not need to hedge separatelyagainst foreign currency risks.
The Exchange offers a trading platform that operatescontinuously for more than their teen hours each day. This helpshedgers, arbitrageurs and others to discover prices of variousinternational commodities. In addition, owing to high positivecorrelation between the commodity futures prices of MCX andinternational markets, it is possible to ascertain rends betweendifferent markets, thus offering arbitrage Opportunities.
MCXs ability to use and apply technology efficiently is a keyfactor in the development of its business. The robust knowledge inrestructure of the Exchange, along with its rapid customization anddeployment capabilities enables it to operate efficiently with fastor de-routing, immediate trade execution, trade repot ting,real-time risk management, market surveillance and market datadissemination.
Market :- In the recent past, brand MCX has taken a giant leapforward. Indias No, 1 commodity exchange is, today, the first andonly Indian exchange to be listed on Indian bourses. In just overtwo years, the phenomenal growth has helped MCX climb the globalranking. From being the No. 6 commodity futures exchange in theworld, in terms of the number of contracts traded, MCX became theNo. 3 global commodity futures exchange at then of calendar year2011.Today MCX is the worlds No. 1 commodity futures exchange ingold and silver, No. 2 in natural gas and No. 3 in crude oil interms of the number of contracts traded (Source: FIA Annual VolumeJan-Dec 2011 and various exchange websites). The Exchange offerstrading across more than 40 products including bullion, energy,ferrous and non-ferrous metals and agri-products. Prominent amongstother commodities are gold and silver and natural gas and crude oilfutures. Over the last few years, Indias commodity futures markethas witnessed tremendous surge in volumes. A number of repot itssuggest that much of this can be attributed to increased marketparticipation and augmented awareness levels that a commodityexchange can be both a portfolio diversifier and a risk managementtool. It is believed that as more commodities are traded, commodityfutures could actually surpass volumes of the stock market. A newwave of impending regulatory reforms will not only help deepen themarket but also bring in professional practices and approach toIndias commodity market. It will open the doors for commodityexchanges to introduce new products and attract myriad participantswith divergent needs to hedge against commodity.
Achievements :- It has been less than ten years since MCX openedits door to futures trading. So it must be an exceptionalachievement that in this brief span of time it has already emergedas the third largest futures exchange in the world and its fastestgrowing. It is even more gratifying to know that in severalindividual commodities it occupies a very premium place. While itsshort t-haul gains are profoundly impressive, the honors of beingthe only commodity exchange in the world to be certified to threeISO standards - ISO9001:2008 for quality management systems,ISO14001:2004 for environmental management systems and ISO27001:2005 for information security management systems is even moresatisfying. part from MCX has several other firsts to itscredit.MCX was the first exchange in India to offer futures tradingin steel, crude oil and several other commodities including carboncredits. The Exchange was the first to introduce indices such asMCX COMDEX (commodities index), MCX Agro (agricultural commoditiesindex), MCX Energy (energy commodities index) and MCX Metal (metalcommodities index). It was the first exchange in India to initiateevening trading sessions that national markets. In March 2011, MCXbe synchronized with the trading hours of global exchanges inLondon, New York and other major intern came Indias first exchangeto report its sustainability performance for the financial year2009/10. The Exchange has also been the first in India to introduceinnovative products such as contracts with smaller lot sizes. Theseinclude mini contracts of metals such as zinc, lead, aluminum,copper and nickel, gold petal (one gram gold contract) and silvermicro (one kilogram silver contract). On 9th March 2012, MCXachieved another feat by becoming the first exchange in India toget listed, thus placing it on par with other listed globalexchanges. To strengthen its back-end operations technologically,MCX has implemented SAPECC 6.0 solutions to automate and integrateits key business processes. It has the distinction of being thefirst commodity futures exchange in India to deploy onlineproprietary technical analysis tools such as MCX ACT and MCX ACTminion its website. This enables market participants to analyze,identify and understand market conditions and behavioral patternsby allowing them to view and customize char its in terms ofduration and time. With continuous improvement, it comes as nosurprise that MCX has been awarded for its pioneering work. InSeptember 2006, MCX Bagged the Best Commodity Exchange awardpresented by His Excellency Datuk Peter China Kui, Minister ofPlantation Industries & Commodities of Malaysia, in Mumbai. Inthe same year it won the Number One Commodity Exchange of the Yearaward presented by the National Agricultural Cooperative MarketingFederation of India (NAFED).
AWARD :-
Recognition as Indias First Green Exchange by PriyadarshiniAcademy and was conferred the Best Bullion Exchange award by theBombay Bullion Association. In the following year, MCX was giventhe Golden Peaco*ck Special Commendation award for Corporate SocialResponsibility, the Sank alp award for Agriculture and RuralInnovation and the Best Commodity Exchange award at the Sixth IndiaInternational Gold Convention.
At the beginning of the present decade it was felicitated withthe NASSCOM Social Innovation Honors and the FICCI Socio EconomicDevelopment Foundation CSR award. Earlier in 2011, MCX received theFinancial Inclusion award from the SKOCH Foundation, the Indysaward under the category of Best in Corporate Social ResponsibilityPractices.
Opportunity abound :- Financial Technologies promoted MultiCommodity Exchange is a market leader in Indias burgeoningcommodity derivatives market. Its journey of becoming a dominantcommodity exchange with 86% market share has been fascinating.Interestingly, the next largest player has only 10% market share.The domestic commodity derivatives market after being opened up in2003 has witnessed robust 85% CAGR in turnover. MCXs strategicinitiatives of Building a globally referable commodity portfolio,product innovation, global strategic alliances and cutting edgetrading technology helped it garner a dominant market share. Moreimportantly, trading depth/liquidity has substantially improved andremains a cornerstone of its dominance. Aided by increasingturnover and fixed cost leverage, MCXs OPM has seen tremendousexpansion; doubling to 63% over FY0812. With further room forcapacity utilization improvement, margin will most likely besustained at elevated levels. How many percentage changes in shareof derivative trade on exchange?
FIGURES 1.1 Parentage share of derivative trade on exchange, inhighest traded in derivative market is korea exchange i.e. 17% andlowest traded is 3% of Russian exchange in derivative market. McxIndia is 5% traded in derivative market.
INDUSTRY PROFILE GLOBAL STOCK MARKET INDIAN STOCK MARKET BOMBAYSTOCK EXCHANGE NATIONAL STOCK EXCHANGE STOCK EXCHANGE IN INDIAPESTEL ANALYSIS
Global Stock Market:-
What is the Stock Exchange?A stock exchange is a corporation ormutual organization which provides the facilities for stock brokersto trade company stocks and other securities. Stock exchanges alsoprovide facilities for the issue and redemption of securities, aswell as other financial instruments and capital events includingthe payment of income and dividends. The securities traded on astock exchange include shares issued by companies, unit trusts andother pooled investment products as well as bonds. To be able totrade a security on a certain stock exchange, it has to be listedthere.
Usually there is a central location at least for recordkeeping,but trade is less and less linked to such a physical place, asmodern markets are electronic networks, which gives them advantagesof speed and cost of transactions. Trade on an exchange is bymembers only; a stock broker is said to have a seat on theexchange.
A stock exchange is often the most important component of astock market. There is usually no compulsion to issue stock via thestock exchange itself, nor must stock be subsequently traded on theexchange. Such trading is said to be off exchange orover-the-counter. This is the usual way that bonds are traded. Theinitial offering of stocks and bonds to investors is by definitiondone in the primary market and subsequent trading is done in thesecondary market.
Increasingly all stock exchanges are part of a global market forsecurities. Supply and demand in stock markets is driven by variousfactors which, as in all free markets, affect the price of stocks.The French word for stock exchange is bourse.
History of stock exchange:-
In 12th century France the courratiers de change were concernedwith managing and regulating the debts of agricultural communitieson behalf of the banks. As these men also traded in debts, theycould be called the first brokers. In the late 13th centurycommodity traders in Bruges gathered inside the house of a mancalled Van der Burse, and in 1309 they institutionalized this untilnow informal meeting and became the "Bruges Bourse". The ideaspread quickly around Flanders and neighboring counties and"Bourses" soon opened in Ghent and Amsterdam.
In the middle of the 13th century Venetian bankers began totrade in government securities. In 1351 the Venetian Governmentoutlawed spreading rumors intended to lower the price of governmentfunds. There were people in Pisa, Verona, Genoa and Florence whoalso began trading in government securities during the 14thcentury.
This was only possible because these were independent citystates not ruled by a duke but a council of influential citizens.The Dutch later started joint stock companies, which letshareholders invest in business ventures and get a share of theirprofits - or losses. In 1602, the Dutch East India Company issuedthe first shares on the Amsterdam Stock Exchange. It was the firstcompany to issue stocks and bonds.
BRIEF HISTORY OF STOCK:- Do you know that the world's foremostmarketplace New York Stock Exchange (NYSE), started its tradingunder a tree (now known as 68 Wall Street) over 200 years ago?Similarly, India's premier stock exchange Bombay Stock Exchange(BSE) can also trace back its origin to as far as 125 years when itstarted as a voluntary non-profit making association. News on thestock market appears in different media every day. You hear aboutit any time it reaches a new high or a new low, and you hear aboutit daily in statements like 'The BSE Sensitive Index rose 5%today'. Obviously, stocks and stock markets are important. Stocksof public limited companies are bought and sold at a stockexchange. However, what really are stock exchanges? Known also asthe stock market or bourse, a stock exchange is an organizedmarketplace for securities (like stocks, bonds, options) featuredby the centralization of supply and demand for the transaction oforders by member brokers, for institutional and individualinvestors. The exchange makes buying and selling easy. However,where did it all start? The need for stock exchanges developed outof early trading activities in agricultural and other commodities.During the middle Ages, traders found it easier to use credit thatrequired supporting documentation of drafts, notes, and bills ofexchange. The history of the earliest stock exchange, the Frenchstock exchange, may be traced back to 12th century whentransactions occurred in commercial bills of exchange. To controlthis budding market, Phillip, the Fair, of France (1268-1314)created the profession of courtier de change, which was thepredecessor of the French stockbroker. At about the same time, inBruges (a prosperous centre of the low countries of Europe),merchants began gathering in front of the house of the Van DerBuerse family to engage in trading. Soon the name of the familybecame identified with trading and in time, a 'bourse' came tosignify a stock exchange. At the same time, stock exchanges beganto materialize in other trading centre like the Netherlands(Amsterdam Bourse), Frankfurt (the Deutsche Stock Exchange,formerly the Bores) the London Stock Exchange (LSE) in England andMilan (the Boras). In 1773, London stock dealers, who had beenmeeting informally in coffee houses, moved into their own buildingto establish an exchange (see history: London Stock Exchange).Other European exchanges that opened in the 1600s and 1700sincluded those in Belgium, Spain, Portugal, and Sweden. From theearly exchanges for commercial bills and notes, it was an easy andlogical transition to establish stock exchanges for securities.Amsterdam's Bourse was the first to formally begin trading insecurities. Across the Atlantic, in the United States, securitiesmarkets began speculative trading in issues of the new government.By 1791, the nation's first stock exchange was established in thecity of Philadelphia. A year later, in 1792, an exchange was set upin New York City by 24 merchants and brokers, who decided to act asagents for other persons and give preference to each other in theirnegotiations. They did much of their trading under a tree at whatis now 68 Wall Street. That stock exchange grew as the nationbecame industrialized and by 1863, the New York Stock Exchange(NYSE) adopted its present name (see history: New York StockExchange). Today, nearly three thousand companies from all over theworld trade their stocks valued at trillions of dollars here. Atthat time, many stocks that were deemed not well enough for theNYSE were traded outside on the curbs. This so called 'curbtrading' has now become the American Stock Exchange (AMEX) (seehistory: AMEX) . Today, the NYSE and AMEX have been joined by theNASDAQ and hundreds of local and international stock exchanges. Bythe mid-1800s, many countries outside of Europe (including Canadaand Australia) began trading in securities. During the 19th and20th centuries, major exchanges opened in Asia, Eastern Europe, andparts of Africa and Latin America.
Worlds top stock exchanges:-
Major Stock Exchanges: Year ended 31 December 2013
RankStock ExchangeEconomyHeadquartersMarket Capitalization(USDBillions)Year-to-date Trade Value(USD Billions)
1NYSE EuronextUnited States/Europe
New York City14,08512,693
2NASDAQ OMX GroupUnited States/Europe
New York City4,5828,914
3Tokyo Stock ExchangeJapan
Tokyo3,4782,866
4London Stock ExchangeUnited KingdomLondon3,3961,890
5Hong Kong Stock ExchangeHong KongHong Kong2,831913
6Shanghai Stock ExchangeChinaShanghai2,5472,176
7TMX GroupCanadaToronto2,0581,121
8Deutsche BrseGermanyFrankfurt1,4861,101
9Australian Securities ExchangeAustraliaSydney1,386800
10Bombay Stock ExchangeIndiaMumbai1,26393
11National Stock Exchange of IndiaIndiaMumbai1,234442
12SIX Swiss ExchangeSwitzerlandZurich1,233502
13BM&F BovespaBrazilSo Paulo1,227751
14Korea ExchangeSouth KoreaSeoul1,1791,297
15Shenzhen Stock ExchangeChinaShenzhen1,1502,007
16BME Spanish ExchangesSpainMadrid995731
17JSE LimitedSouth AfricaJohannesburg903287
18Moscow ExchangeRussiaMoscow825300
19Singapore ExchangeSingaporeSingapore765215
20Taiwan Stock ExchangeTaiwanTaipei735572
TABLE 2.1
Market capitalization (USD billions) :-
FIGURE 2.1
Asias top 5 Stock Exchange :-1-Hong Kong Exchanges and Clearing(HKEx) 2-Bombay Stock Exchange (India) 3-Tokyo Stock Exchange(Japan) 4-Osaka Securities Exchange (Japan) 5-Karachi StockExchange (Pakistan)
2.2 Indian Stock Market :-
The working of stock exchanges in India started in 1875. BSE isthe oldest stock market in India. The history of Indian stocktrading starts with 318 persons taking membership in Native Shareand Stock Brokers Association, which we now know by the name BombayStock Exchange or BSE in short. In 1965, BSE got permanentrecognition from the Government of India. National Stock Exchangecomes second to BSE in terms of popularity. BSE and NSE representthemselves as synonyms of Indian stock market. The history ofIndian stock market is almost the same as the history of BSE.
The 30 stock sensitive index or Sensex was first compiled in1986. The Sensex is compiled based on the performance of the stocksof 30 financially sound benchmark companies. In 1990 the BSEcrossed the 1000 mark for the first time. It crossed 2000, 3000 and4000 figures in 1992. The reason for such huge surge in the stockmarket was the liberal financial policies announced by the thenfinancial minister Dr. Man Mohan Singh.
The up-beat mood of the market was suddenly lost with HarshadMehta scam. It came to public knowledge that Mr. Mehta, also knownas the big-bull of Indian stock market diverted huge funds frombanks through fraudulent means. He played with 270 million sharesof about 90 companies. Millions of small-scale investors becamevictims to the fraud as the Sensex fell flat shedding 570points.
To prevent such frauds, the Government formed The Securities andExchange Board of India, through an Act in 1992. SEBI is thestatutory body that controls and regulates the functioning of stockexchanges, brokers, sub-brokers, portfolio managers investmentadvisors etc. SEBI oblige several rigid measures to protect theinterest of investors. Now with the inception of online trading anddaily settlements the chances for a fraud is nil, says topofficials of SEBI.
Sensex crossed the 5000 mark in 1999 and the 6000 mark in 2000.The 7000 mark was crossed in June and the 8000 mark on September 8in 2005. Many foreign institutional investors (FII) are investingin Indian stock markets on a very large scale. The liberal economicpolicies pursued by successive Governments attracted foreigninstitutional investors to a large scale. Experts now believe theSensex can soar past 14000 marks before 2010.
The unpredictable behavior of the market gave it a tag avolatile market. The factors that affected the market in the pastwere good monsoon, Bharatiya Janatha Partys rise to power etc. Theresult of a cricket match between India and Pakistan alsoaffected.NDA was voted out of power and the Sensex recorded thebiggest fall in a day amidst fears that the Congress-Communistcoalition would stall economic reforms. Later prime minister ManMohan Singhs assurance of reforms with a human face cast off thefears and market reacted sharply to touch the highest ever mark of8500.
India, after United States hosts the largest number of listedcompanies. Global investors now ardently seek India as theirpreferred location for investment. Once viewed with skepticism,stock market now appeals to middle class Indians also. Many Indiansworking in foreign countries now divert their savings to stocks.This recent phenomenon is the result of opening up of onlinetrading and diminished interest rates from banks. The stockbrokersbased in India are opening offices in different countries mainly tocater the needs of Non Resident Indians. The time factor also worksfor the NRIs. They can buy or sell stock online after returningfrom their work places.
The recent incidents that led to growing interest among Indianmiddle class are the initial public offers announced by TataConsultancy Services, Maruti Udyog Limited, ONGC and big names likethat. Good monsoons always raise the market sentiments. A goodmonsoon means improved agricultural produce and more spendingcapacity among rural folk.The bullish run of the stock market canbe associated with a steady growth of around 6% in GDP, the growthof Indian companies to MNCs, large potential of growth in thefields of telecommunication, mass media, education, tourism and ITsectors backed by economic reforms ensure that Indian stock marketcontinues its bull runStock markets refer to a market place whereinvestors can buy and sell stocks. The price at which each buyingand selling transaction takes is determined by the market forces(i.e. demand and supply for a particular stock.
Let us take an example for a better understanding of how marketforces determine stock prices. ABC Co. Ltd. enjoys high investorconfidence and there is an anticipation of an upward movement inits stock price. Therefore, buyers will have to bid a higher pricefor this stock to match the ask price from the seller which willincrease the stock price of ABC Co. Ltd. On the contrary, if thereare more sellers than buyers (i.e. high supply and low demand) forthe stock of ABC Co. Ltd. in the market, its price will falldown.In earlier times, buyers and sellers used to assemble at stockexchanges to make a transaction but now with the dawn of IT, mostof the operations are done electronically and the stock marketshave become almost paperless. Now investors dont have to gather atthe Exchanges, and can trade freely from their home or office overthe phone or through Internet.
One of the oldest stock markets in Asia, the Indian StockMarkets has a 200 years old history.
ACHIEVEMENTS AND MILESTONES:- 1874 With the rapidly developingshare trading business, brokers used to gather at a street (nowwell known as "Dalal Street") for the purpose of transactingbusiness. 1875 "The Native Share and Stock Brokers' Association"(also known as "The Bombay Stock Exchange") was established inBombay 1880's Development of cotton mills industry and set up ofmany others 1894 Establishment of "The Ahmadabad Share and StockBrokers' Association" 1880 - 90's Sharp increase in share prices ofjute industries in 1870's was followed by a boom in tea stocks andcoal 1908 "The Calcutta Stock Exchange Association" was formed 1920Madras witnessed boom and business at "The Madras Stock Exchange"was transacted with 100 brokers. 1923 When recession followed,number of brokers came down to 3 and the Exchange was closed down1934 Establishment of the Lahore Stock Exchange 1936 Merger of theLahore Stock Exchange with the Punjab Stock Exchange 1937Re-organization and set up of the Madras Stock Exchange Limited(Pvt.) Limited led by improvement in stock market activities inSouth India with establishment of new textile mills and plantationcompanies 1940 Uttar Pradesh Stock Exchange Limited and NagpurStock Exchange Limited was established 1944 Establishment of "TheHyderabad Stock Exchange Limited" 1947 "Delhi Stock and ShareBrokers' Association Limited" and "The Delhi Stocks and SharesExchange Limited" were established and later on merged into "TheDelhi Stock Exchange Association Limited"
Post Independence Scenario:-The depression witnessed after theIndependence led to closure of a lot of exchanges in the country.Lahore Stock Exchange was closed down after the partition of India,and later on merged with the Delhi Stock Exchange. Bangalore StockExchange Limited was registered in 1957 and got recognition only by1963. Most of the other Exchanges were in a miserable state till1957 when they applied for recognition under Securities Contracts(Regulations) Act, 1956. The Exchanges that were recognized underthe Act were:1. Bombay2. Calcutta3. Madras4. Ahmadabad5. Delhi6.Hyderabad7. Bangalore8. Bombay9. Calcutta10. Madras11. Ahmadabad12.Delhi13. Hyderabad14. Bangalore15. Indore The stock trading historyin India is obscured in the mists of time. Historical records, asand where they exist, rarely speak about business and speculativeactivity except in passing. However, the origin of stock broking inthe country may go back to a time, when shares, debentures, andbonds representing titles to property were first issued on thecondition of transfer from one person to another and the earliestrecord of dealings in securities in India is the East IndiaCompany's loan securities, back in the 18th century. The firststock exchange in India, Bombay Stock Exchange was established in1875 as 'The Native Share and Stockbrokers Association' and hasevolved over the years into its present status as the premier stockexchange in the country. It may be noted that BSE is the oldeststock exchange in Asia, even older than the Tokyo Stock Exchange,which was founded in 1878. The country's second stock exchange wasestablished in Ahmadabad in 1894, followed by the Calcutta StockExchange (CSE). CSE can also trace its origin back to 19th century.From a get together under a 'neem tree' way back in the 1830s, theCSE was formally established in May 1908. India's other major stockexchange National Stock Exchange (NSE), promoted by leadingfinancial institutions, and was established in April 1993. Over theyears, several stock exchanges have been established in the majorcities of India. There are now 23 recognized stock exchanges Mumbai(BSE, NSE and OTC), Calcutta, Delhi, Chennai, Ahmadabad, Bangalore,Bhubhaneswar, Coimbatore, Guwahati, Hyderabad, Jaipur, Kochi,Kanpur, Ludhiana, Mangalore, Patna, Pune, Rajkot, Vadodara, Indoreand Meerut.
2.2.1 Bombay Stock Exchange:
(Source: Bombay Stock Exchange) OwnerBombay Stock ExchangeLimited
Keypeople Rajnikant Patel (CEO)
Currency INR
No.oflistings 4,800
MarketCapUS$ 1.61 trillion (2006) Volume US$ 980 billion(2006)
IndexesBSE sensex
TABLES 2.2The Bombay Stock Exchange Limited is the oldest stockexchange in Asia. It is also the biggest stock exchange in theworld in terms of listed companies with 4,800 listed companies asof August 2007. It is located at Dalal Street, Mumbai, India. On 31December 2007, the equity market capitalization of the companieslisted on the BSE was US$ 1.79 trillion, making it the largeststock exchange in South Asia and the tenth largest in the world.The Bombay Stock Exchange was established in 1875. Around 4,800Indian companies list on the stock exchange, and it has asignificant trading volume. The BSE SENSEX (SENSitive indEX), alsocalled the "BSE 30", is a widely used market index in India andAsia. Though many other exchanges exist, BSE and the National StockExchange of India account for most of the trading in shares inIndia.The BSE Broadcast is a large ticker on the wall of the BSE,which continuously displays the latest stock quotes from themarket. It also displays on what is described as India's and SouthAsia's largest video screen one of the leading business-newschannels in India: NDTV Profit.This new system was unveiled onDecember 15, 2006, when Dr Prannoy Roy, the Managing Director ofNew Delhi Television (NDTV) Ltd, struck the BSE's opening bell. Mr.Damodaran, the Chairman of the Securities and Exchange Board ofIndia (SEBI), said that the ticker would provide information andanalysis of the financial world. The Stock Exchange, Mumbai,popularly known as "BSE" was established in 1875 as "The NativeShare and Stock Brokers Association". It is the oldest one in Asia,even older than the Tokyo Stock Exchange, which was established in1878. It is a voluntary non-profit making Association of Persons(AOP) and is currently engaged in the process of converting itselfinto demutualised and corporate entity.
The Exchange, while providing an efficient and transparentmarket for trading in securities, debt, and derivatives upholds theinterests of the Investors and ensures redressed of theirgrievances whether against the Companies or its own member-brokers.It also strives to educate and enlighten the investors byconducting investor education programmed and making available tothem necessary informative inputs. A Governing Board having 20directors is the apex body, which decides the policies andregulates the affairs of the Exchange.
The Executive Director as the Chief Executive Officer isresponsible for the day-to-day administration of the Exchange andhe is assisted by the Chief Operating Officer and other Heads ofDepartments. The Exchange has inserted new Rule No.126 A in itsRules, Bye-laws & Regulations pertaining to constitution of theExecutive Committee of the Exchange. Accordingly, an ExecutiveCommittee, consisting of three elected directors, three SEBInominees, or public representatives, Executive Director & CEOand Chief Operating Officer has been constituted. The Committeeconsiders judicial & quasi matters in which the Governing Boardhas powers as an Appellate Authority, matters regarding annulmentof transactions, admission, continuance and suspension ofmember-brokers, declaration of a member-broker as defaulter, norms,procedures and other matters relating to arbitration, fees,deposits, margins and other monies payable by the member-brokers tothe Exchange, etc.
Turnover on the Exchange The average daily turnover of theExchange during the financial year 2000-2001 (April-March), wasRs.3984.19 crores and the average number of daily trades was 5.69lakhs. The average daily turnover of the Exchange in the subsequenttwo financial years, i.e., 2001-02 & 2002-03, has declinedconsiderably to Rs. 1248.15 crores and Rs. 1251.29 croresrespectively. The average number of daily trades recorded during2001-02 and 2002-03 numbered 5.17 lakhs and 5.63 lakhsrespectively. The average daily turnover and average number ofdaily trades during the quarter April-June 2003 were Rs. 1101.05crores and 5.70 lakhs respectively. The ban on all deferralproducts like Borrowing & Lending of Securities Scheme (BLESS)and Automated Lending & Borrowing Mechanism (ALBM) in theIndian capital markets by SEBI w.e.f. July 2, 2001, abolition ofaccount period settlements, introduction of Compulsory RollingSettlements in all scrips traded on the Exchanges w.e.f. December31, 2001, etc. have adversely impacted the liquidity in the marketand consequently there is a considerable decline in the averagedaily turnover at the Exchange as reflected in above statistics
2.2.2 National Stock Exchange:
(Source: National Stock Exchange) TypeStock Exchange
LocationMumbai, India
OwnerNational Stock Exchange of India Limited
KeypeopleAbhinay dutta Managing Director
CurrencyINR
No.oflistings1587
MarketCapUS$ 1.46 trillion (2006)
IndexesS&P CNX NiftyCNX Nifty JuniorS&P CNX 500
Websitewww.nse-india.com
TABLES 2.3
The National Stock Exchange of India Limited (NSE), is aMumbai-based stock exchange. It is the largest stock exchange inIndia in terms of daily turnover and number of trades, for bothequities and derivative trading. Though a number of other exchangesexist, NSE and the Bombay Stock Exchange are the two mostsignificant stock exchanges in India, and between them areresponsible for the vast majority of share transactions. The NSE'skey index is the S&P CNX Nifty, known as the Nifty, an index offifty major stocks weighted by market capitalization.NSE ismutually-owned by a set of leading financial institutions, banks,insurance companies and other financial intermediaries in India butit* ownership and management operate as separate entities. As of2006, the NSE VSAT terminals, 2799 in total, cover more than 1500cities across India. In October 2007, the equity marketcapitalization of the companies listed on the NSE was US$ 1.46trillion, making it the second largest stock exchange in SouthAsia. NSE is the third largest Stock Exchange in the world in termsof the number of trades in equities. It is the second fastestgrowing stock exchange in the world with a recorded growth of16.6%. The National Stock Exchange of India (NSE), located inBombay, is Indias first debt market. NSE was promoted by leadingfinancial institutions at the behalf of the government of India andwas incorporate in November 1992 as a tax- paying company. In April1993, it was recognized as a stock exchange under the securitiescontracts (regulation) Act, 1956. The NSE of India becomesoperational in capital market segment on 3rd November 1994 inMumbai. Largest in India by daily turnover and number of trades,for both equities and derivatives trading. NSE has a marketcapitalization of around US$ 1.59 trillion and over 1,552 listingsas if December 2010. The NSE vast terminals, 2799 in total, covermore than 1500 cities across India; NSE is the third largest StockExchange in the world in term of the number of treads inequities.
NSE Indices: S&P CNX NIFTY S&P CNX DEFTY S&P CNX 500NIFTY Mid-Cap 50 CNX NIFTY JUNIOR CNX MIDCAP CNX IT CNX 100 BANKNIFTY
Traded and delivery of BSE and NSE:-
TABLE 2.4
Technology at NSE and BSE:-
NSETata Consultancy Services, a division of Tata Sons Ltd., wasselected as the prime contractor and system integrator by the NSEto provide a total turnkey solution for the money market andcapital market's floorless trading system. The aim was to enableNSE to provide nation-wide electronic trading with highesttransparency in the market place. Using the client-serverarchitecture, fault-tolerant computing and in-memory database, TataConsultancy Services' solution gave NSE high visibility and impact.BSEBOLT i.e., BSE's online trading system, is designed anddeveloped by CMC LTD, now a Tata Group company. This screen-basedtrading system replaced the manual out-cry method of trading in thering and went live on March 1995.This enabled BSE to providefloorless and fully automated screen-based trading facilities incapital market (CM) instruments with equal access to investors allover the country.Currently, BSE with around 685 members has seen anaverage daily turnover of Rs 1,162 crore in July 2002. For furtherexpansion of its activities, BSE decided to provide web-basedtrading facility to the members as it was felt that Internettrading would fundamentally change the way exchange and brokersinteract with their customers. Tata Consultancy Services developedthe system (BSE WebX) with the objective of enabling the exchangeto service its members and the customers of the members in anefficient and cost-effective manner using the Internet..
The importance of BSE and NSE to Mumbai All over the world, inmost major industrial cities where businesses were starting up,requiring investment capital to grow and thrive, stock exchangesact as the interface between suppliers and consumers of capital.Mumbai being a major industrial centre is no exception, and the BSEhas made a major contribution to the industrial and economicdevelopment of Mumbai. The impacts the exchanges have had on Mumbaiare:-1. Taxes and other statutory charges paid by NSE and BSE aresubstantial and make a sizeable contribution to the exchequer. Forexample, transactions on the stock exchanges are subject to stampduty, which is paid to the Government of Maharashtra. The annualrevenue from this ranges from Rs 75-100 crore.
2. The employment generation is significant. Brokers used toemploy a large number of Mumbai's citizens in their offices,especially for settlement work as large quantities of sharecertificates and other documents had to be physically counted,stored, sorted and delivered. Before electronic trading, a numberof sub-brokers executed orders on the trading floor and hordes ofinvestors used to visit the exchange.
3. Another example of employment generation is the evolution ofsimple homegrown service providers, like the Angadia service, (acourier service peculiar to Mumbai and Gujarat), which was inexistence decades before the advent of the modern-day courierservice. Stockbrokers routinely utilize (yes this is very much invogue even today).
4. Considering the primary importance of Mumbai, both theleading stock exchanges are headquartered in the city. The nation'sregulatory body, the Securities and Exchange Board of India (Sebi),modeled on the lines of the SEC in the USA, is also headquarteredin Mumbai. Both the National Securities Depository Ltd (NSDL) andthe Central Securities Depository Ltd. (CDSL) have their headoffices in Mumbai.
5.
With the opening up of the financial markets to foreigninvestors, a number of foreign investors and brokers haveestablished a sizeable presence in the city of Mumbai, contributingsignificantly to its economic development.
2.2.3 Stock Exchanges in India :-The list maintained by theSecurities and Exchange Board of India (SEBI) is not current as of2010. Bombay Stock Exchange (BSE) National Stock Exchange of India(NSE) United Stock Exchange of India (USE) Multi Commodity Exchange(MCX) MCX Stock Exchange (MCX-SX) Over the Counter Exchange ofIndia (OTCEI) Inter-connected Stock Exchange of India (ISE) MadrasStock Exchange (MSE) Ahmadabad Stock Exchange (ASE) BhubaneswarStock Exchange (BhSE) Cochin Stock Exchange (CSE) Hyderabad StockExchange (HSE) Calcutta Stock Exchange (CSE) Delhi Stock Exchange(DSE) Bangalore Stock Exchange Madhya Pradesh Stock Exchange,Indore Jaipur Stock Exchange (JSE) Magadha Stock Exchange, Patna UPStock Exchange (UPSE)
2.3 PESTEL ANALYSIS:- PESTEL analysis stands for "Political,Economic, Social, Technological, Environmental and Legal analysis"and describes a framework of macro-environmental factors used inthe environmental scanning component of strategic management. It isa part of the external analysis when conducting a strategicanalysis or doing market research, and gives an overview of thedifferent macro environmental factors that the company has to takeinto consideration. It is a useful strategic tool for understandingmarket growth or decline, business position, potential anddirection for operations.
PESTLE analysis in order to see the bigger picture, can be asimple or a rather complex task, depending on how much detail isgathered and also how many people are involved as people see thingsdifferently. The six elements form detailed below form a helpfultool for firms for example HR can use this when reviewing astrategy.
The PESTLE analysis can be used for business planning,organisational changes, strategic decision making or marketingpurposes from a departmental or an individual perspective to assistorganisations to identify trends, in potential opportunities andthreats before their competitors or to simply ensure that the basicfactors are not overlooked.
Political factors:- Political factors are how and to what degreea government intervenes in the economy. Specifically, politicalfactors include areas such as tax policy, labour law, environmentallaw, trade restrictions, tariffs, and political stability. Thegovernment plays a big part within the operation of financialservices in terms of specific policy formulation,regulation/legislation and decisions on government spending. Thetax changes have caused concern in the private equity businesswithin that these changes will drive investors out of the marketand reduce the competitiveness and attractiveness of the market forthe private equity investor. The tax has been deferred due tohigher inflation but when the changes take place at a later stagethis will have a knock on effect on terms of increased costs likeVAT, corporation tax and national insurance tax. There is also thethreat of challenge from the Conservative party and if they beatLabour in the next election. This would question the effect theirpolicies would have on the anagal broking for example like theirplan to improve maternity and paternity pay for individuals, whichwill increase company costs. Economic factors:- Economic factorsinclude economic growth, interest rates, exchange rates and theinflation rate. These factors have major impacts on how businessesoperate and make decisions. For example, interest rates affect afirm's cost of capital and therefore to what extent a businessgrows and expands. A stable financial system plays a key role for ahealthy and successful economy. The current turmoil in thefinancial sector is significant to the period immediately beforethe Great Depression of the 1930s. Unemployment is at an all timehigh which should in theory make it easier for to recruit butinstead people in the city do not want to leave their currentpositions to move elsewhere which has a knock on effect forrecruitment. review budgets and some departments have felt arecruitment freeze and others are forced to downsize. Howeverdownsizing may not be the short term answer, they may need toconsider developing their current workforce and increase retentionrates. Social factors:- Social factors include the cultural aspectsand include health consciousness, population growth rate, agedistribution, career attitudes and emphasis on safety. Trends insocial factors affect the demand for a company's products and howthat company operates. Having such schemes in place may incuradditional costs but there are long term benefits which includehigher productivity, raised morale, motivation, engagement andachieving strategic objectives. The work life balance is also animportant issue as many find that work demands get in the way ofother commitments so being aware of different demands on time andenergy has become increasingly difficult to manage within the HRfunction. It has become increasingly important to have familyfriendly policies and flexible work patterns to help employees withother commitments such as community commitments or studying.Technological factors:- Technological factors include technologicalaspects such as R&D activity, automation, technology incentivesand the rate of technological change. They can determine barriersto entry, minimum efficient production level and influenceoutsourcing decisions. Furthermore, technological shifts can affectcosts, quality and lead to innovation. As Internet usage becomesmore widespread, this has encouraged to support the introduction ofa new Human Resources Information System (HRIS) and an onlineportal particularly used for recording CPD. There is a selection ofvideos, pod casts and questionnaires available to enhance theskills of employees which in turn increases productivity. HRmonitor the usage and approach staff who have not accessed theportal in order to encourage them to maximise their potentialwithout much resistance to change. Legal operate within a complexlegal and regulatory environment in which they aim to adhere tobest practice at all times. They seek to maintain the highestbusiness and ethical standards and to mitigate and risks to theirstakeholders. To help them carry out this policy, they have aframework in place to monitor and report risk throughout thecompany. Environmental factors:- Environmental factors includeecological and environmental aspects such as weather, climate, andclimate change, which may especially affect industries such astourism, farming, and insurance. People in general are much moreaware of environmental issues and want to make sure that companiesthat they work for are ethical. Therefore they need to haveincreased measures in place such as CSR policies to satisfyemployee needs. Legal factors:- Legal factors includediscrimination law, consumer law, antitrust law, employment law,and health and safety law.
COMPANY PROFILE INTROUCTION AND HISTORY OUR ORAGANIZATIONALSTRUCTURE DEPARTMENTAL STUDY SWOT ANALYSIS
INTRODUCTION AND HISTORY :-
Angel Broking is the retail broking arm of SSKI, an organizationwith more than eight decades of trust & credibility in thestock market. It is India's leading retail financial ServicesCompany with We have over 250 share shops across 115 cities inIndia.
While our size and strong balance sheet allow us to provide youwith varied products and services at very attractive prices, ourover 750 Client Relationship Managers are dedicated to serving yourunique needs.
Angel Broking is lead by a highly regarded management team thathas invested crores of rupees into a world class Infrastructurethat provides our clients with real-time service & 24/7 accessto all information and products.
Our flagship Angel Broking Professional Network offers real-timeprices, detailed data and news, intelligent analytics, andelectronic trading capabilities, right at your fingertips. Thispowerful technology complemented by our knowledgeable and customerfocused Relationship Managers. We are creating a world of SmartInvestor.
Angel Broking offers a full range of financial services andproducts ranging from Equities to Derivatives enhance your wealthand hence, achieve your financial goals. Angel Broking' ClientRelationship Managers are available to you to help with yourfinancial planning and investment needs. To provide the highestpossible quality of service, Angel Broking provides full access toall our products and services through multi-channels.
INTRODUCTION TO ANGEL
In a shot span of 22 years since inception, the Angel Group hasemerged as one of the top five retail stock broking houses inIndia, having membership of BSE, NSE and the two leading CommodityExchanges in the country i.e. NCDEX & MCX. Angel Broking isalso registered as a Depository Participant with CDSL. The group ispromoted by Mr. Dinesh Thakkar, who started this business as asub-broker in 1987 with a team of 3. Today the angel group ismanaged by a team of 1937 direct employees and has a nationwidenetwork comprising of 21 Regional hubs, 124 branches and 6810 subbrokers & business associates. Angel is 100% focused on retailstock broking business unlike any other larger national brokinghouse. The group currently services more than 5.9 thousand retailclients. Angel habitually generates value added features withoutthe cost burden being passed on to the clients as they stronglybelieve that better understanding of clients needs and wants istheir top priority. Their e-broking facility is one such effort,which gives the client a platform to access state of the arttrading facility at the click of a button. Angel has always strivedfor delivering customer delight and developing strong long termbonds with its clients as well as channel partners. Angel thriveson a vision to introduce new and innovative products and servicesconstantly. Moreover, Angel has been among the pioneers tointroduce the latest technological innovations and integrate themefficiently within its business.
About the Angel Angel Bookings tryst with excellence in customerrelations began more than 20 years ago. Angel Group has emerged asone of the top 3 retail broking houses in India and incorporated in1987. Today, Angel has emerged as a premium Indian stock-brokingand wealth management house, with an absolute focus on retailbusiness and a commitment to provide "Real Value for Money" to allits clients. It has memberships on BSE, NSE and the leadingcommodity exchanges in India NCDEX & MCX. Angel is alsoregistered as a depository participant with CDSL.Angel GroupCompanies
Angel Broking Ltd. Member on the BSE and Depository Participantwith CDSL
Angel Capital & Debt Market Ltd. Membership on the NSE Cashand Futures & Options Segment
Angel Commodities Broking Ltd.Member on the NCDEX & MCX
Angel Securities Ltd.Member on the BSE
Incorporated:1997 BSE Membership:1997 NSE membership:1998 Memberof NCDEX and MCX Depository Participants with CDSL
Angels presence :-
Nation- wide network of 21 regional hubs Presence 124 cities6800 + sub brokers & business associates 5.9 lakh + clients
Management S.No Name Designation & Department
1. Mr. Dinesh Thakkar :Founder Chairman & ManagingDirector
2. Mr. Lalit Thakkar : Director Research
3. Mr. Amit Majumdar :Executive Director Strategy andFinance
4. Mr. Rajiv Phadke :Executive Director HR & Corp
5. Mr. Vinay Agrawal :Executive Director Equity Broking
6. Mr. Nikhil Daxini :Executive Director - Sales andMarketing
7 Mr. Hitungshu Debnath :Executive Director - Distribution &Wealth Management
8. Mr. Mudit Kulshreshtha : Executive Director Operations
TABLE 3.1 Milestones:- Awarded with 'Broking House with LargestDistribution Network' and 'Best Retail Broking House' at Dun &Bred street Equity Broking Awards 2009 August, 2008 Crossed 500000trading accounts November, 2007 Major Volume Driver for 2007December, 2006 Created 2500 business associates October, 2006 MajorVolume Driver award for 2006 September, 2006 Launched Mutual Fundand IPO business July, 2006 Launched the PMS function October, 2005Major Volume Driver award for 2005 September, 2004 Launched OnlineTrading Platform April, 2004 Initiated Commodities Broking divisionApril, 2003 First published research report November, 2002 Angelsfirst investor seminar March, 2002 Developed web-enabled backoffice software November, 1998 Angel Capital and Debt Market Ltd.Incorporated December, 1997 Angel Broking Ltd. Incorporated
ANGELS LOGO
ANGELS VISIONTop of FormBottom of Form
ANGELS BUSINESS PHILOSOPHY
3.2 OUR ORGANIZATIONAL STRUCTURE:-
Products of Angel Broking1. Online Trading 2. Commodities 3. DPServices4. PMS (Portfolio Management Services)5. Insurance6. IPOAdvisory7. Mutual Fund8. Personal loans9. Quality assurance Online-Trading
Specially designed for the net savvy traders and investors whoprefer operating from their home or office through the internet.The investor can access state of the art Technology with threedifferent e-broking products and voila trading on BSE, NSE, F &O, MCX and NCDEX. ANGEL DIET Application based product for Traders.Application based ideal for traders. Multiple exchanges on singlescreen Online fund transfer facility User friendly & simplenavigation BSC, NSC, F&O, MCX & NCDEX ANGEL ANYWHEREApplication based product for Traders with Charts.Application-based platform for day traders Intra-day/historicalcharts with various indicators Online fund transfer facility BSC,NSC, Cash & Derivatives
ANGELTRADE Browser based product for Active Investors. Browserbased for investor No installation required Advantage of mobilityTrading as simple as internet surfing BSC, NSC, F&O, MCX &NCDEX
ANGEL INVESTOR User-friendly browser for investors Easy onlinetrading platform Works in proxy and firewall system set upIntegrated Back office: Access account information anytime,anywhere Streaming quotes Refresh static rates when requiredMultiple exchanges on single screen Online fund transfer facilityInvestment Advisory Services To derive optimum returns from equityas an asset class requires professional guidance and advice.Professional assistance will always be beneficial in wealthcreation. Investment decisions without expert advice would be liketreating ailment without the help of a doctor. Expert Advice: Theirexpert investment advisors are based at various branches acrossIndia to provide assistance in designing and monitoring portfolios.Timely Entry & Exit: Their advisors will regularly monitorcustomers investments and guide customers to book timely profits.They will also guide them in adopting switching techniques from onestock to another during various market conditions. De-RiskingPortfolio: A diversified portfolio of stocks is always better thanconcentration in a single stock. Based on their research, Theydiversify the portfolio in growth oriented sectors and stocks tominimize the risk and optimize the returns.
Commodities A commodity is a basic good representing a monetaryvalue. Commodities are most often used as inputs in the productionof other goods or services. With the advent of new online exchange,commodities can now be traded in futures markets. When they aretraded on an exchange, Commodities must also meet specified minimumstandards known as basic grade. Types of Commodities PreciousMetals: Gold and Silver Base Metals: Copper, Zinc , Steel andAluminum Energy: Crude Oil, Brent Crude and Natural Gas Pulses:Chana , Urad and Tur Spices : Black Pepper, Jeera, Turmeric , RedChili Others : Guar Complex, Soy Complex, Wheat and Sugar
Benefits at Angel Three different online products tailored fortraders & investors. Single Screen customized market-watch forMCX / NCDEX with BSE / NSE. Streaming Quotes and real time Rates.Intra-day trading calls. Research on 25 Agro Commodities, Preciousand Base Metals, Energy products and Polymers. An array of daily,weekly and special research reports. Highly skilled analysts withprofessional industry experience. Active relationship managementdesk. Seminars, workshops and investment camps for investorsDepositary Participant Services Angel Broking Ltd. is a DP servicesprovider though CDSL. We offer depository services to create aseamless transaction platform to execute trades through Angel groupof companies and settle these transactions through Angel Depositoryservices. Wide branch coverage Personalized/attentive services oftrained a dedicated staff Centralized billing & accountingAcceptance & execution of instruction on fax Daily statement oftransaction & holdings statement on e-mail No charges for extratransaction statement & holdings statement3.3 DEPARTMENT STUDYPRODUCT & SERVICE DETAILS AND PORTFOLIO REPORTS : MarketOutlook at 9:15 a.m. Technical Report at 6:00 p.m. DerivativeAnalysis Report at 9:15 a.m.
FUNDAMENTAL RESEARCH SERVICES: The Sunday Weekly Report :Thisweekly report is the ace of all reports. It offers a comprehensivemarket overview and likely trends in the week ahead. It alsopresents few top picks based on an in-depth analysis of technicaland fundamental factors. It gives short term and long term outlookon these scrips, their price targets and trading strategies.Another unique feature of this report is that it provides anupdated view of about 70 prominent stocks on an ongoing basis TheIndustry Watch :This report provides an in-depth analysis ofspecific industries which are likely to outperform others in theeconomy. It analyzes their strengths and weaknesses and ascertainstheir future outlook. The final view is arrived at after thoroughinteraction with industry experts. Also comparative performances ofvarious companies in the sector are evaluated and top picks arerecommended. Stock Analysis :Angels stock research has performedvery well over the past few years and the Angel Model Portfolio hasconsistently outperformed the benchmark indices. The fundamentalsof select scrip are thoroughly analyzed and an actionable advice isprovided along with investment rationale for each scrip. Flash News:Key developments and significant news announcements that arelikely to have an impact on markets / scrip are flashed live ontrading terminals. Flash news keeps the market participants updatedon an online basis and helps them to reshuffle on theirholdings.
TECHNICAL RESEARCH SERVICE :
Nifty Tracker :Nifty Futures is the most traded instrument withhighest volumes in F & O and excellent liquidity. The teamtracks the Nifty Future and generates calls based on unique tradingsystem which is a result of their focused research over the pastfew years. The objective is to generate positive returns fortraders who are looking for a high risk / high reward product.Online Chart :An online forum to help clients, specifically daytraders in judging the directions of the market and stocks whichare in the limelight. Intraday Calls :For day traders, Angelprovides intra-day calls with entry, exit and stop loss levelsduring market hours. These calls are flashed on their terminals.Their analysts continuously track the calls and providerecommendations according to the market movements Position Calls:Angels Position Trading Calls are based on thorough analysis ofthe price movement in select scrips. These calls are for a 10-15day time
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