A

PROJECT REPORT
ON

“A STUDY ON ONLINE TRADING DERIVATIVES”

A Detailed Study done in

Project Category: GENERAL MANAGEMENT
“FINANCE”
Submitted in partial fulfillment of the requirement for the award of degree of
Master of Management Studies (MMS) under the University of Mumbai
Submitted by
PRIYANKA PRABHAKAR KAND
ROLL NO: 19
BATCH: 2017-2019
Under the guidance of
MRS. MANISHA WAGHMODE
Bharati Vidyapeeth’s
Institute of Management Studies& Research
Navi Mumbai

1
 (I)

ACKNOWLEDGEMENT

The project has been prepared as a part of an internship required during the completion of
MMS from BharatiVidyapeeth’s Institute of Management Studies & Research.

I acknowledge with thanks to my work place and my colleagues for the team work that have
helped me to learn the work effectively. I am very thankful to the Cigna TTK Health
Insurance Co. of my company who provided me opportunity to work in his place.

I am thankful to my industry guides Mr. Kamal Ahuja, who provided me suggestions, ideas
and advices for this project to get it completed effectively. My guide was very helpful to me
in discussions.

I would like to express my deep sense of respect & sincere gratitude to Dr. Anjali Kalse I
/cdirector of BharatiVidyapeeth Institute of Management Studies & Research.

I am thankful to my project guide Prof. Mrs. Alka Dhingra(Mentor) as without her continuous
guidance and enthusiasm the project would have never been materialized in the present form.

Finally I would also like to thanks to those who helped me directly or indirectly for the
completion of this project report.

Signature of the student

PRIYANKA KAND

Roll No. 19

MMS- Finance

2
 (ii)

PLEASE PASTE HERE THE CERTIFICATE FROM THE COMPANY

3
 (iii)

CERTIFICATE

This is to certify that the Summer Project titled “Comparative analysis between Cigna
TTK health insurance co. &Max Bupa health insurance” is successfully done by Ms.
PRIYANKA KAND, a student of Bharati Vidyapeeth’s Institute of Management Studies and
Research, submitted in partial fulfillment of Master of Management Studies under the
University of Mumbai during the academic year 2017-2019from 2nd May to 30th June
2018at Cigna TTK Health Insurance Co. ltd.

Date :___________

_________________ _________________

Prof._____________ Dr. Anjali Kalse

Project Guide I /c Director

BVIMSR BVIMSR

4
 (iv)

EXECUTIVE SUMMARY

The report has been prepared from leanings received in internship program working under
one of the standalone Health Insurance Company, Cigna TTK Health Insurance under the
guidance of Mr. Kamal Ahuja, Business Consultant and Mr. Deepak Chaudhary, Zonal Head.
The broad objective is to study what factors influence adequate health insurance in India. The
main focus is to analyze the how aware people are about the need of health insurance. This
study focuses on the factors that influence the buying decisions of customers. Information
used to prepare this report has been collected from both primary and secondary sources.
Primary information was collected from the direct interactions with the potential clients using
the profiling method provided by the company. The secondary data was collected from
various reports on psychographic segmentation and behavioral segmentation. Various
journals and books were also referred to understand what is profiling and elements to be
included. Different websites were also used for information on the Insurance Industry. The
Insurance Industry has collected Rs.3.78 trillion gross domestic premiums of which the
Health Insurance has contributed Rs. 378.97 billion in gross domestic premiums. The
Insurance sector is growing at a compounded annual growth rate of24.3%. Cigna TTK is one
of the 5 Standalone Health Insurance Companies that work only in the health insurance only.
Cigna TTK is a joint venture of the global Health Insurance Company Cigna Corporation and
Indian conglomerate TTK Group which has expertise in the Indian Pharmaceuticals and
Indian Market. Indian market is a vast market for Insurance. The penetration of Health
Insurance in India is less than4% making it one of the most attractive market for Insurance in
India. Cigna TTK was incorporated in the year 2014. It has now completed 4 years in the
Indian market and currently operates in only 14 cities and is planning to expand in other cities
as well.The project includes the level of awareness of health insurance among the people. It
also states that how important do people consider having a health insurance. The ratios of two
companies are compared and the analysis is shown. It also shows the interpretation of
secondary data collected for the purpose of the project.

5
 (v)

TABLE OF CONTENTS

Chapter Particulars Page No.

No.

Acknowledgement (i)

Certificate (ii)

Executive Summary (iii)

Table of Content (iv)

1. Introduction of the Project

1.1 Concept of the study.

1.2 Need for the study

1.3 Objectives of the study

1.4 Scope of the study

1.5 Literature Review

1.6 Introduction of the topic

(a) Meaning

(b) Why do you need health insurance?

(c) How Does Health Insurance Work?

(d) Types

(e) Advantages

1.7 Regulatory or Legal aspects related to the topic

6
2. Introduction to the Industry

2.1 Introduction to health industry.

2.2 Industry Overview.

2.3 Current Scenario

2.5 Future Trends.

3. Introduction to the company

(i) CignaTTK Health Insurance Company Limited

3.1. Organization Profile

3.2Awards and Recognitions

3.3 Mission Statement

3.4 CIGNA TTK Management Team

3.5 SWOT ANALYSIS

3.6 Claim Process of CIGNA TTK

3.7 Product

(ii)Max Bupa Health Insurance Company Limited

3.1 Organization profile.

3.2 Awards and Recognitions

3.3 Claim Process Of Max Bupa

3.4 Product

4. Research Methodology

5. Data analysis & Interpretation

5.1 Comparison between products of CIGNA TTK and MAX

7
 BUPA

5.2 Ratios

(a)Meaning of Ratio

(b) Ratio Analysis

(c) Advantage of Ratio Analysis

(d) Limitations of Ratio Analysis

(e) Classification of ratios

(f) Annual Statements (includes Profit & Loss A/C, Revenue
Statement, Balance Sheet)

(g) Calculation of Ratios& Interpretation

5.3 Data Analysis

6. Conclusion & Suggestions

7. Learning experience from SIP

8. Bibliography

8
CHAPTER 1: INTRODUCTION OF THE PROJECT

1.1 CONCEPT OF THE STUDY

It is very well known that the Indian capital market has witnessed a major transformation and
structural change from the past one decade as a result of ongoing financial sector reforms. Dr.
L.C.Gupta (2002) has rightly pointed out that improving market efficiency, enhancing
transparency, checking unfair trade practices and bringing the Indian capital market up to a
certain international standard are some of the major objectives of these reforms. Due to such
reforming process, one of the important step taken in the secondary market is the introduction
of derivative products in two major Indian stock exchanges (viz. NSE and BSE) with a view
to provide tools for risk management to investors and also to improve the informational
efficiency of the cash market. Many emerging and transition economies had started
introducing derivative contracts since 1865 when the commodity futures were first introduced
on the Chicago Board of Trade. The Indian capital markets have experienced the launching of
derivative products on June 9, 2000 in BSE and on June 12, 2000 in NSE by the introduction
of index futures. Just after one year, index options were also introduced to facilitate the
investors in managing their risks. Later stock options and stock futures on underlying stocks
were also launched in July 2001 and Nov. 2001 respectively.

In India, derivatives were mainly introduced with view to curb the increasing volatility of the
asset prices in financial markets and to introduce sophisticated risk management tools leading
to higher returns by reducing risk and transaction costs as compared to individual financial
assets. Though the onset of derivative trading has significantly altered the movement of stock
prices in Indian spot market, it is yet to be proved whether the derivative products has served
the purpose as claimed by the Indian regulators. In an efficient capital market where all
available information is fully and instantaneously utilized to determine the market price of
securities, prices in the futures and spot market should move simultaneously without any
delay.

However, due to market frictions such as transaction cost, capital market microstructure
effects etc., significant lead-lag relationship between the two markets has been observed. As
far as developed markets, such as USA, UK, Japan etc., are concerned, a number of important
and in-depth studies have been carried out to examine the lead-lag relationship between the

9
spot and derivative, viz. futures market and also to provide the possible explanations behind
such relation and its changes over time.

1.2 Need for the study

The study can help in the following ways:

 Provide complete knowledge of future and option.

 Usage of future and option as a tool of hedging.
 Motivate investors to use this tool by asking some questions regarding it.

1.3 Objective of the study

2 To study the process of Derivative Market
3 To make comparative study with Cash Market.
4 To analyze risk and benefit of Derivative Market.

1.4 Scope of study

1 In the today’s volatile market nobody can predict to which way market will move i.e.
either upward or downward. So it is considered as an enigma by the small investors and
they try to be away from the market due to fear of losses.
2 Focus of study is to identify the interrelationship of both the equity and derivative
markets and tell the usage of derivative market for the purpose of hedging, so that the risk
can be minimized.
But why are derivatives such a big hit in Indian market?

 The derivatives products – index futures, index options, stock futures and stock options
provide a carry forward facility for investors to take a position (bullish or bearish) on an
index or a particular stock for a period ranging from one to three months.
 The current daily settlement in the cash market has left no room for speculation. The
cash market has turned into a day market, leading to increasing attention to derivatives.
 Unlike the cash market of full payment or delivery, you don’t need many funds to buy
derivatives products. By paying a small margin, one can take a position in stocks or
market index. The derivatives volume is also picking up in anticipation of reduction of
contract size from the current Rs.200000 to Rs.100000. Everything works in a rising
market.

10
 CHAPTER 2: INTRODUCTION TO INDUSTRY

(A) INTRODUCTION OF INDUSTRY.

Capital market
Segment

Cash Segment Derivative Segment

Futures Interest rate

Options

Stock Index
Call Put

Capital market:
Capital market is an organized mechanism for effective and efficient transfer of money
capital of financial resources form the investing class i.e., a body of individual or institutional
savers, to the entrepreneur class i.e., a body of individual or institutions engage in industry,
business or service in the private and public sectors of the economy.

Cash Market Segment:

Spot trading takes place in this market with no forward transactions. Buying and selling of
scripts is done with various motives like investments, speculation and hedging. The
settlement cycle in this segment is T + 2 days for payment and receipt of funds and delivery.

11
STOCK EXCHANGE
The stock exchange of secondary market is a highly organized market for the purchase and
the sale of second hand quoted of listed securities. The securities contracts (Regulation) Act
1956 defines a stock exchange as “an association, organization or not, established for the
purpose of assisting, regulating and controlling business in buying, selling and dealing in
securities”. Of all the modern service institution, stock exchange plays a crucial agents and
facilitators of entrepreneurial progress. After the industrial resolution, as the size of the
business enterprises grew, it was no longer possible for individual person or even
partnerships to raise such huge amount for undertaking these ventures. Such huge
requirements of capital can be met only by large number of individuals.

BOMBAY STOCK EXCHANGE AND SENSEX: BSE is the first stock exchange in the
country which obtained permanent recognition (in 1956) from the Government of India under
the Securities Contracts (Regulation) Act 1956. BSE's pivotal and pre-eminent role in the
development of the Indian capital market is widely recognized. It migrated from the open
outcry system to an online screen-based order driven trading system in 1995B. The BSE
Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and is
tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is
constructed on a 'free-float' methodology, and is sensitive to market sentiments and market
realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral indices.
NATIONAL STOCK EXCHANGE:
The Organisation
The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges, which recommended promotion of
a National Stock Exchange by financial institutions (FIs) to provide access to investors from
all across the country on an equal footing. Based on the recommendations, NSE was
promoted by leading Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the
country. On its recognition as a stock exchange under the Securities Contracts (Regulation)
Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000.
NIFTY: The National stock exchange has an index called the Nifty( officially called S&P
CNX nifty). This name can be credited to the 50 stocks that comprise its index.
12
DERIVATIVE:

(A) MEANING :

In our present day economy, finance is defined as the provision of money at the time when it is
required. Every enterprise, whether big, medium or small, needs finance to carry on its operations and
to achieve its targets in fact; finance is so indispensable today that it is rightly said that it is the
lifeblood of an enterprise. The term ‘ownership securities’ also known as ‘capital stock ‘ represents
shares. Shares are the most universal forms of raising long-term funds from the market. Every
company, except a company limited by guarantee, has a statutory right to issued shares.

The capital of a company is divided into a number of equal parts known as shares. According to
Farewell .j, a share is, “the interest of a shareholder in the company, measured by a sum of money, for
the purpose of liability in the first place, and if interest in the second, but also consisting a series of
mutual covenants entered into by all the shareholders interest’. Section 2(46) of the companies act,
1956 defines it as “ a share in the share capital of a company, and includes stock except where a
distinction between stock and shares expressed or implied.

Share market is of two types. They are cash market and derivative market.

Cash markets are the secondary markets where trading in existing securities is done. Listing of new
issues for investment and disinvestments by savers/investors takes place. It imparts liquidity or
encash ability to stocks and shares. Stock exchange is a market in which securities are bought and
sold and it is an essential component of a developed capital markets.

The securities contracts (Regulation) Act, 1956, defines Stock Exchange as follows: “It is an
association, organization or body of individuals, whether incorporated or not, established for the
purpose of assisting, regulating and controlling of business in buying, selling and dealing in
securities”. A stock exchange, thus imparts marketability and liquidity to securities, encourage
investments in securities and assists corporate growth. Stock exchanges are organized and regulated
markets for various securities issued by corporate sector and other institutions.

Derivatives are 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, fore ex. 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.

In the last 20 years derivatives have become notably important in the world of finance. Futures and
options are now globally traded on many exchanges. Forward contracts, Swaps and many different

13
types of options are regularly conducted by outside exchanges by financial institutions, fund managers
and corporate treasurers in what is termed the over the counter market. Derivatives are also sometimes
added to a bond or stock issue. Further, the very nature of volatility in the financial markets, the use of
derivative products, it is possible to partially or fully transfer price risks by locking in asset prices. But
these instruments of risk management are generally do not influence the fluctuations in the underlying
asset prices. However, by locking asset prices, the derivative products minimize the fluctuations in
the asset prices on the profitability and cash flow situations on risk to the investor.

The derivatives are becoming increasingly important in world of markets as a tool for risk
management. Derivative instruments can be used to minimize risk. Derivatives are used to separate
the risks and transfer them to parties willing to bear these risks. The kind of hedging that can be
obtained by using derivatives is cheaper and more convenient than what could be obtained by using
cash instruments. It is so because, when we use derivatives for hedging, actual delivery of the
underlying asset is not at all essential for settlement purposes. The profit or loss on derivative deal
alone is adjusted in the derivative market.

Derivative contracts have several variants. The most common variants are forwards, futures, options
and swaps. The following three broad categories of participants – hedgers, speculators, and
arbitrageurs trade in the derivatives market. Hedgers face risk associated with the price of an asset.
They use futures or options markets to reduce or eliminate this risk. Speculators wish to bet on future
movements in the price of an asset. Futures and options contracts can give them an extra leverage;
that is, they can increase both the potential gains and potential losses in a speculative venture.
Arbitrageurs and in business to take advantage of a discrepancy between prices in two different
markets. If, for example, they see the futures price of an asset getting out of line with the cash price,
they will take offsetting positions in the two markets to lock in a profit. Derivative products initially
emerged as hedging devices against fluctuations in commodity prices, and commodity-linked
derivatives remained the sole form for such products for almost three hundred years. Financial
derivatives came into spotlight in the post-1970 period due to growing instability in the financial
markets. However, since their emergence, these products have become very popular and by 1990s,
they accounted for about two-thirds of total transactions in derivative products. In recent years, the
market for financial derivatives has grown tremendously in terms of variety of instruments available,
their complexity and also turnover.

In the class of equity derivatives the world over, futures and options on stock indices have gained
more popularity than on individual stocks, especially among institutional investors, who are major
users of index-linked derivatives. Even small investors find these useful due to high correlation of the
popular indexes with various portfolios and ease of use. The lower costs associated with various

14
portfolios and ease of use. The lower costs associated with index derivatives vis-à-vis derivative
products based on individual securities is another reason for their growing use.

The first step towards introduction of derivatives trading in India was the promulgation of the
Securities Laws (Amendment) Ordinance, 1995, which withdrew the prohibition on option in
securities. The market for derivatives, however, did not take off, as there was no regulatory
framework to govern trading of derivatives. SEBI set up a 24-member committee under the
Chairmanship of Dr. L. C. Gupta. on November 18,1996 to develop appropriate regulatory framework
for derivatives trading in India.

The committee submitted its report on March 17,1998 prescribing necessary pre-conditions for
introduction of derivatives trading in India. The committee recommended that derivatives should be
declared as ‘securities’ so that regulatory framework applicable to trading of ‘securities’ could also
govern trading of securities. SEBI also set up a group in June 1998 under the Chairmanship of Prof. J.
R. Varma., to recommend measures for risk containment in derivatives market in India. These
instruments can be used to speculate or to manage risk in the equity markets.

Derivatives are products whose values are derived from one of more basic variables called bases.
These bases can be underlying assets such as foreign currency, stock or commodity, bases or
reference rates such as LIBOR or US Treasury Rate etc. For example, an Indian exporter in
anticipation of the receipt of dollar-denominated export proceeds may wish to sell dollars at a future
date to eliminate the risk of exchange rate volatility by the date. Such transactions are called
derivatives, with the spot price of dollar being the underlying asset. Derivatives thus have no value of
their own but derive it from the asset that is being dealt with under the derivative contract. For
instance, look at an ashtray. It has no value of its own but gains its importance only when one smokes
and gain if one wants to collect that ash at one place instead of dirtying the whole room with cigarette
ash and its stubs. A smoker can hedge against the risk of stewing the cigarette stubs and ash all
around the room.

Similarly a financial manager can hedge himself from the risk of a loss in the price of a commodity or
stock by buying a derivative contract. Thus derivative contracts acquire their value from the spot
prices of the assets that are concerned by the contract.

The primary purpose of a derivative contract is to transfer “risk” from one party to another i.e. risk in
a financial sense in transferred from a party that wants to get rid of it to another party that is willing to
take it on. Here, the risk that is being dealt with is that of price risk. The transfer of such a risk can
therefore be speculative in nature or act as a hedge against price movement in a current or anticipate
physical position.

15
A derivative is an instrument whose value is derived from the value of one or more underlying which
can either in the form of commodities, precious meat, currencies, bonds, stock and stock indices”. As
the price of the wheat derivatives would be determined or based on the prices of wheat itself. Given
the fast change and growth in the scenario of the economic and financial sector have brought a much
broader impact on derivatives instrument. As the name signifies, the value of this product is derived
of based on the prices of currencies, interest rate (i.e. bonds), share and share indices, commodities,
etc. Not going into very back, financial derivatives just came into existence in the early 1980’s. Here
the principal instruments, clubbed under the general term derivatives, include

Futures & Forwards

Options,

Swaps

Warrants

Exotic and are the modern tools of financial risk management.

All pricing of derivatives is done by arbitrage, and by arbitrage alone. Here, there is a relationship
between the price of the spot and the price in the futures. If this relationship is violate, then an
arbitrage opportunity is available, and we people exploit this opportunity, the price reverts back to its
economic value. Therefore, arbitrage is the basic requirement for pricing. The role of liquidity i.e. the
low transaction costs is in making arbitrage check up and convenient. Derivative markets in Brazil
are some of the largest markets in the world even first derivative dealing were started in USA. We
can even know that as the prices of the forward contacts are based on future therefore it can even be
termed as derivative instrument.

(B)Types Of Derivatives

Broadly speaking there are two distinct groups of derivative contracts, which are distinguished by the
way that they are traded in market:

Over-the-counter (OTC) derivatives: Over the counter derivatives are contracts that are traded
directly between two parties, without going through an exchange or other intermediary. Products such
as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC
derivatives market is huge. According to the Bank for International Settlements, the total outstanding
national amount is USD 248 trillion at the end of December 2004.

Exchange-traded derivatives: Exchange-traded derivatives are those derivatives products that are
traded via derivatives exchanges. A derivatives exchange acts as an intermediary to all transactions,

16
and takes initial margin from both sides of the trade to act as a guarantee. The world's largest
derivatives exchanges (by number of transactions) are the Korea Exchange (which lists KOSPI Index
Futures & Options), Eurex (which lists a wide range of European products such as interest rate &
index products), Chicago Mercantile Exchange and the Chicago Board of Trade

Importance:

 Provide enhanced yield on assets.

 Reduce finding costs by borrowers

 Modify payment structure of assets to correspond to investors market views,

 Reflects the perception of market participants about future price of assets.

 Increase trading volumes by increasing confidence of investors

 Speculative trade's shifts to a more controlled environment.

 Acts as a catalyst for new entrepreneurial activity.

 Helps to increase savings and investment in the long run and promotes economic
development as it depends on the rate of savings and investment.

 Helps to transfer the market risk i.e. called hedging which is a protection against losses
resulting from unforeseen price and volatility changes. Thus derivatives are a very important
tool of risk management.

Participants in the Derivative Market

 Hedgers - Hedgers are participants who face risk associated with the price of an asset. They
use the futures or options markets to reduce or eliminate this risk.
 Speculators - Speculators are participants who wish to bet on future movements in the price
of an asset. Futures and options contracts can give them leverage; that is, by putting in small
amounts of money upfront, they can take large positions on the market. As a result of this
leveraged speculative position, they increase the potential for large gains as well as large
losses.
 Arbitragers - Arbitragers work at making profits by taking advantage of discrepancy
between prices of the same product across different markets. If, for example, they see the
futures price of an asset getting out of line with the cash price, they would take offsetting
positions in the two markets to lock in the profit.

17
Derivative contracts have several variants. The most common variants are forwards, futures, options
and swaps. Brief notes on the various derivatives that are used are as follows:

Forwards - A forward contract is a customized contract between two entities, where settlement takes
place on a specific date in future at today’ pre agreed price.

Futures - A future contract is an agreement between two parties to buy or sell an asset at a certain
time in the future at a certain price. Future contracts are special types of forward contracts means that
the former are standardized exchange

Options - Options are of two types,

Calls option - Calls give the buyer the right but not the obligation to buy a given quantity of the
underlying asset, at a given price on or before a given future date.

Puts Option - Puts Option give the buyer the right, but not obligation to sell a given quantity of the
underlying asset at a given price on or before a given date.

Warrants - Longer dated options are called warrants and are generally

Swaps - Swaps are private agreements between two parties to exchange cash flows in the future
according to a pre- arranged formula. They can be regarded as portfolios of forward contracts

18
 2.2CURRENT SCENARIO

BUSINESS GROWTH IN DERIVATIVES SEGMENT FROM 2014-2019

Year Index Futur Stock Futur Index Optio Stock Option Total
es es ns

No. of Turno No. of Turno No. of Premi No. of Premi No. Turno
contra ver contra ver contra um contra um of ver*
cts ( cts ( cts Turno cts Turno contr (
cr.) cr.) ver** ver** acts cr.)
( cr.) ( cr.)
2018- 54330 44787 20183 13003 19308 51112 14121 158069 23306 18545
19 981 15.64 8153 755.83 80197 2.10 4253 .32 4 0716.2
4376 7
2017- 57674 48104 21475 15597 15150 46065 12641 148217 19138 16498
18 584 54.34 8366 519.71 34222 3.71 1376 .50 78548 4859.0
5
2016- 66535 43359 17386 11129 10672 35002 92106 95570. 13997 94370
17 070 40.78 0130 587.14 44916 1.53 012 09 46129 301.61
2015- 14053 45571 23424 78286 16235 35122 10029 61118. 20986 64825
16 8674 13.64 3967 06.00 28486 1.01 9174 39 10395 834.30
2014- 12930 41072 23760 82917 13786 26531 91479 61732. 18370 55606
15 3044 15.20 4741 66.27 42863 5.63 209 59 41131 453.39

CHAPTER 3: INTRODCUTION TO THE COMPANY

CHAPTER4:RESEARCH METHODOLOGY

This study is based on comparative analysis between Cigna TTK Health Insurance Co. &
Max Bupa Health Insurance Co. The study is also been carried out to know the level of
awareness of health insurance among the people. The data has been compiled in the
following ways. They are:

19
(a) Primary data: Primary research involves the collection of original primary
data. Information has been collected from primary data with the help of questionnaire.

(b) Secondary data: It is secondary in nature i.e. already collected information. Information
collected from the secondary data with the help of the internet and various website which are
related to the companies. This can be collected through company's Annual Report &
interpretation of

1. Balance Sheet
2. Profit & Loss A/C
3. Annual reports.

(I) Research design

The study is intended to find the level of awareness of health insurance among the people and
to analyze the ratios and comparison of different companies. The study design is descriptive
in nature. A Research design is purely and simply the framework of plan for a study that
guides the collection and analysis of data.

(II) TYPE OF RESEARCH

Descriptive Research:
As per the Objective defines that this Research will map the comparison of two companies.
Also it analyses the awareness among the customers & analysis financial position of Cigna

20
TTK health insurance co. Thus, this research can be termed as a Descriptive type of research.
It is the simplest type of research and is more specific.

(iii) Data Collection tools: Questionnaires

(a) Sampling unit

Sampling may be defined as the selection of some part of an aggregate or totality on the basis
of which a judgment or inference is made about the aggregate or totality. It is the process of
obtaining information about an entire population by examining a part of it.

(b) Sample Size:

 The size of the sample for the study is 50.

(C) Data analysis technique:

The data collected are analyzed with the help of the statistical tools like ratios analysis and
graphical analysis.

21
ANALYSIS AND INTERPRETATION

The present analysis is done on 50 clients of share khan Ltd in Hyderabad.

The objective of the analysis is to find out the awareness and utilization of derivative
products namely future and Option by the clients.

Future and Options have been ruling the stock markets as far as the
turnover is concerned. But unlike many other broking companies there is a lesser upraise in
the F & O segment in Share khan Limited. Hence the study makes an attempt to find out the
reasons for the above by an investor survey.

AGE GROUPS:

AGE LESSTHEN 21-30 31-40 41-50 50-Above TOTAL

Particulars

20 YEARS

No. Of NIL
responses
11 22 14 3 50

Percentage NIL 22% 44% 28% 6% 100%

22
 45
40
no of responses

35
30
25
20
15
10
5
0
less than 21-30 31-40 41-50 more than
20 yerars years years years 50 years

no of responses percentage

Age of the traders play an important role in their trading decision and outlook. Most of the
traders lie in the middle-age between 31-40 and 41-50, which is 44% and 28% respectively.
The market improves if the awareness is created well among the age group 21-30, the
market may improve due to rapid speculation of that age grouped people.

1. Educational Background:

Particulars Arts Commerce Science Total Percentage

Non-graduates 2 0 0 2 4%

Graduates 8 13 10 31 62%

Post Graduates 5 6 6 17 34%

Total 15 19 16 50 100%

23
 20

15
Non-graduates
10 Graduates
Post Graduates

5 Total

0
Arts Commerce Science

Educational backgrounds of the traders play an important role in there trading decision.
96% of the traders are graduates and post graduates of whom 38% are commerce
background with B.Com and M.B.A. The large percentages of traders from Science and Arts
stream 32% and 30% show that even without basic formal training in commerce it is easy
to operate in the stock markets through learning and experience. Though the educational
background helps one to react as per the conditions, sometimes that may not workout.
Many a time experience workout and sometimes the knowledge works out where one can
follow the media (CNBC TV est.) and grab the present situation of the market.

2. Membership:

Particulars No. Of responses Percentage

Members 16 32%

Client 34 68%

Total 50 100%

24
 Members Client

Sharekhanltd. has many shareholders who also trade in the sock markets. But the number
of clients who are not members is close to two-thirds i.e., 68%. In 2000 Share khan got
approved as a Depository Participant of National Security Depository Limited, subsidiary of
National Stock Exchange of India Ltd. Having this

facility, they have grater advantage to the valuable customers. Very few Trading members
are having this facility as a one-stop service provider.

3. Exchange:

Particulars N0. Of Responses Percentage

NSE 24 48%

25
 BSE 7 14%

NSE & BSE 19 38%

Total 50 100%

19 24
7

NSE BSE NSE & BSE

The percentages of investors investing in NSE is 48% while that of BSE is only 14%, which
shows the growing popularity of the NSE since its inception and its advantage of being the
national stock exchange. The popularity and fame of the stock exchanges play a vital role.
Here most of the investors are towards NSE than BSE. The reason may be all the derivative
strategies are followed by the organization are NSE’s.

4. Segment:

26
 Particulars No. Of Responses Percentage

Cash Segment 21 42%

F & O Segment 10 20%

Both Cash and F & O 19 38%

Segment

Total 50 100%

25

20 Cash Segment

15
F & O Segment

10
Both Cash and F & O
Segment
5

Trading in cash segment is relatively more than the F&O segment and is also more popular
because of its simplicity. This can be seen from the fact that 42% of traders trade in the
cash segment while only 20% of traders trade in the F&O segment. Hence there is a need to
increase awareness about derivatives, which is relatively a new concept with advanced
strategies.

27
 5. Other Broking companies:

Particulars No. Of responses Percentage

Came from other broking 11 22%

company to trade Hear

Trading Started in SCSL 39 78%

Total 50 100%

45
40
35 Came from other
30 broking company
to trade Hear
25
20
Trading Started in
15 SCSL
10
5
0

The percentage of traders, who have already traded through some other brokers before
shifting to is 22% which shows that the services provided by Share khan lid., are superior
to the previous brokers. Moreover there are 78% of traders, who have started their trading
activities by ShareKhanLtd with ., which speaks of its reputation as the best broker in
Hyderabad.

28
 6. Experience of Investors:

Particulars No. Of responses Percentage

Less than 1 year 6 12%

1-5 years 19 38%

6-10 years 18 36%

More than 10 years 7 14%

Total 50 100%

no of responses

20
18
16
14
12
10 Series1
8
6
4
2
0
Less than 1 1-5 years 6-10 years More than
year 10 years

The study reveals the only 12 % of its clients have joined in the past 1 year. Hence the
marketing activities of the company have to be more aggressive to widen its clients in the
wake of new brokers and sub brokers coming up in the city. Aggressive publicity has to be
done in order to stand against the new coming brokers.

29
 7. Basis for selection of scrips:

Particulars No. Of responses Percentage

Earning Per Share 4 8%

Company Image 10 20%

Profitability 11 22%

All Three 7 14%

Profitability and 5 10%

Company Image

Earnings Per Share 7 14%

And Image

Earnings Per Share and 3 6%

Profitability

P/E Ratio 3 6%

Total 50 100%

30
 basis for selection of scrips

12
10
8
6 Series1
4
2
0

Share and…
Earnings Per
Earning Per

Profitability

Profitability
and…
Share

The study reveals that investors use varied parameters to make their
investment decisions, profitability and image of the company are the two prominent
parameters used by most investors. The investors also use a combination of more than one
parameter. Mostly one can rely on company image along with profitability but in order to be
updated with the latest information once has to follow the media, which gives the exact
information time to time.

31
 8. Sources of Information:

Particulars No. Of Responses Percentage

News Papers 16 32%

Annual Reports 14 28%

Share khan review 5 10%

All three 7 14%

News Paper & 5 10%

Annual Reports

News Channels 3 6%

Total 50 100%

10% 0% 6%
32%
14%

10%
28%

News Papers Annual Reports Share khan review All three

News Paper & Annual Reports News Channels

In combination with other sources of information by Share khan, the study reveals that
newspapers and annual reports are the most popular sources of information. Both of which
used by 76% of the investors whither independently reviews and technical analysis from
various web sites are also popular sources of information used by 26% of traders. Thought

32
he newspapers give the information and the status, the Share khan reviews and the
websites analysis along with the follow of media gives the running information.

10 . Favorable scrip’s for investment:

Particulars No. Of responses Percentage

INFOSYS 12 24%

NTPC 5 10%

TISCO 7 14%

RIL 10 20%

Andhra Bank 5 10%

Miscellaneous 11 22%

Total 50 100%

12

10
INFOSYS
8 NTPC
TISCO
6
RIL
4 Andhra Bank
Miscellaneous
2

According to their own personal judgments and investment objectives investors have varied
views regarding the most favorable scrip for investment. But Infosys, Reliance Industries

33
Limited, NTPC and TISCO are considered to be a profitable investment by majority of the
investors.

11.Purpose of Use:

Particulars No. Of responses Percentages

Speculation 26 52%

Hedging 18 36%

Arbitrage 6 12%

Total 50 100%

30

25

20 Speculation

15 Hedging
Arbitrage
10

34
 Derivatives are primarily used for speculation, hedging and arbitraged. The most
popular use of derivatives is speculation with more than 52% of the traders speculating in
the markets using futures and options. While only 36% of the traders used derivatives for
hedging their risk of cash market and 12% traders using it for arbitrage to profit from the
different market segments. Due to lack of knowledge in arbitrage people are not able to
participate actively. Though the hedging is bit better, that also as very little people who does
hedging. In order to in these areas there should be some classes conducted by
sharekhanltd., so that the people are aware of what they are doing and what they have to
do.

12.Category of Derivatives:

Particulars No. Of responses Percentage

Futures 23 30%

Options 27 70%

Total 50 100%

27

26

25
Futures
24 Options

23

22

21

35
 Options are less risky than futures because the maximum loss is limited to the
premium paid and the profit potential is unlimited. This is supported by the study which
reveals that 70% of the investor trade is more in options than in futures. As futures are
100% risk, people are not going for futures though it ahs 100% profit, as risk involved is
more. Options are encouraged much. In the same way if futures are also encouraged then
improvement of it can be seen. But some changes he to make as the risk involved in this is
very high.

13.Category of contract:

Particulars No. Of responses Percentages

1 Month Contract 38 76%

2 Months Contract 7 14%

3 Months Contract 5 10%

Total 50 100%

36
 40

30

20
Series1
10

0
1 Month Contract 2 Months 3 Months
Contract Contract

Trading in futures and options is done in contracts with three different expiry dates. Out of
which trading in one-month contracts is more popular because of the relatively predictable
fluctuations of the near future. It is very difficult to speculate on prices two months and
three months later, which accounts for the low percentages of trades of 14% and 10% in
these contracts. One-month contracts works out well here as everything closes in one will
know their status in that particular area. So, one-month contracts are in well used. Two
month and Three month are also good but risk is involved which most of the clients do not
want to face.

14.Knowledge of strategies:

Particulars No. Of responses Percentage

No knowledge 0 0%

Yes (only basic Strategies) 36 72%

Yes (advances Strategies 14 28%

Also)

Total 50 100%

37
 40
35
30
25
20
15
10
5
0
No knowledge Yes(only basic Strategies) Yes (advances Strategies also

Knowledge of trading strategies of futures and options is very important for profitable
trading in this segment. 72% people have knowledge on only the basic strategies, which are
easy to understand, and implement of which 28% have the knowledge of the more complex
and advanced trading strategies. With the basic knowledge people are speculating well, if
they are given a better training classes by Share khan for the advanced strategies they will
go in deep further strategies.

15.Investor rating:

Particulars No. Of responses Percentage

Good 28 56%

Better 9 18%

Best 13 26%

38
Total 50 100%

30
25
20
15 Series1
10
5
0
Good Better Best

People are Very happy with the performance of Share khan. They say it is good at most of
the times and best at times. If Share khan follows some new strategies like maintenance of
the people which means the operator should have not more 4-5 people so that every one
can involve easily in speculation. And some new counters where the clients can take the
help in the areas they are uneducated. New counters to explain and understand the
strategies etc.

16.Reasons for trading in Share khan:

Particulars No. Of responses Percentage

39
Low Brokerage 12 24%

Good facilities and 15 30%

Service

Cooperative & Disciplined 11 22%

Mgt.

Regular Trading 2 4%

Information

Low Delivery Commission 1 2%

Good Office Maintenance 1 2%

Did not respond 8 16%

Total 50 100%

16

14

12

10

S eries1
6

0
Low B rokerage G ood facilities and C ooperative & R egular Trading Low D elivery G ood O ffice D id not respond
S ervice D isciplined M gt. Inform ation C om m ission M aintenance

40
The study reveals the reasons for which Share khan limited is rated as one of the best
broking firms in Hyderabad. The company charges low brokerage and is prompt in pay-in
and payout of shares and funds. It provides good facilities and services to its clients and the
management is very disciplined and co-operative. It provides regular trading information to
its client’s trough Share khan and guides the clients in their trading activities.

CHAPTER 6.CONCLUSION AND SUGGESTIONS

1.1 Findings:

1.2 Conclusion

1.3 Recommendations:
1.

41
Annexure

1.
42
Chapter 8:BIBILOGRAPHY

43
44