“A STUDY ON FOREX MARKET WITH PERSPECTIVE OF

INDIAN TRADERS”

Internship at:
DEALMONEY SECURITIES PRIVATE LTD

Summer Internship and Research Report submitted in partial fulfillment of

the award of degree of Masters in Business Administration

By
Anvitha R Jain
USN:18MBAR0168

Under the Guidance of

Dr. Sireesha Nanduri
Asst. Professor, CMS Business School

No.17, Seshadri Road, Gandhi Nagar, Bangalore Karnataka- 560009

Phone: 080-46840400
2019

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 DECLARATION

I, Anvitha R Jain hereby declare that this Summer Internship Program / Project titled
“A STUDY ON FOREX MARKET WITH PERSPECTIVE OF INDIAN
TRADERS” is prepared by me during the academic year 2018-20 under the guidance
of Dr. SIREESHA NANDURI Assistant Professor (Finance)at CMS BUSINESS
SCHOOL, JAIN UNIVERSITY.

Mr. Ranjan S (External guide) Dealmoney Securities Private Limited, this project is
not based on any previously submitted project for the award of any degree or diploma
offered by any university. It is the result of my own effort.

Anvitha R Jain

SEM 3

18MBAR0168

Date:

Place: Signature

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 ACKNOWLEDGEMENT

This study has taken the company, assistance and valuable time of the respectable
persons. I express my sincere gratitude through this simple acknowledgement to all
those who have contributed directly and indirectly to this study.

First of all, I thank God almighty for giving me all the grace and assistance throughout
my work.

I would like to thank PROF. DR. N CHANDRASEKHAR, DEAN ACADEMICS,

CMS BUSINESS SCHOOL, JAIN UNIVERSITY for providing me this opportunity.

I would like to extend my gratitude to Dr. Sireesha Nanduri, Assistant Professor

(Finance), CMS BUSINESS SCHOOL, JAIN UNIVERSITY, for his valuable
suggestions, advice and encouragement throughout the course of this work.

I would like to extend my gratitude to Mr. Ranjan, for his valuable suggestions, advice
and encouragement throughout the course of this work.

I express my deep gratitude to my Parents, dear friends for their co-operation and helping
hands.

Anvitha R Jain

18MBAR0168

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 TABLE OF CONTENT

Chapter No. Chapter Name Page No.

1. Introduction to internship and project 5-39

including Industry and Company
Profile

2. Work done in the company 40-41

Review of literature
3. 42-46

Research Methodology
4. 47-48

5. Data Analysis & Interpretation 50-62

6. Findings and Recommendations 63-65

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 CHAPTER -1
INTRODUCTION TO INTERNSHIP
&
PROJECT INCLUDING INDUSTRY AND COMPANY PROFILE

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1. INTRODUCTION TO INTERNSHIP AND PROJECT
The Summer Internship work was done at a stock broking company called Dealmoney Securities Pvt.
Ltd who deals with buying and selling of shares on behalf of their investors, as well they are into
commodity trading, currency trading, promoting various companies’ health plans and insurance to its
clients, they also provide consultancy service to its investors before investing.

The work in the company was at clients acquisition centre where in many new customers came and
they got information about the basics of the forex market and they invested on shares, well it was an
challenging job and personally had a good hands on experience and learnt a loads of things regarding
the forex market.

The internship duration was of eight weeks and the project was on “A STUDY ON FOREX
MARKET WITH PERSPECTIVE OF INDIAN TRADERS” basically Dealmoney also deals with
currency trading and also provide services to the traders which was newly introduced by the company.

This study was conducted just to know what are the risks faced by the clients, what are techniques or
strategies used by them to reduce the risk involved in the foreign exchange, and also what kind of
services clients are expecting from other brokers other than the regular services.

The main motive of this project is to know the gap created by the Dealmoney with its clients and try to
bridge them and makes satisfy its clients, therefore this in turn would increase the growth of the number
of clients.

The project was on “A STUDY ON FOREX MARKET WITH PERSPECTIVE OF INDIAN

TRADERS” which found out the impact of forex trading in India and it also dealt with people’s
preference on considering the factors while they invest in forex market. It includes different types of
Technical analysis used by people while investing in a particular currency or commodity.

This project throws light on the evolution of stock broking industry and forex trading industry in India.
It also includes various key players in forex trading such as Government, hedgers, speculators etc.

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INDUSTRY PROFILE

INTRODUCTION

Being the main force driving the global economic market, currency is no doubt an essential element
for a country. However, in order for all the countries with different currencies to trade with one
another, a system of exchange rate between their currencies is needed; this system is formally known
as foreign exchange or currency exchange. In the early days, the system of currency exchange is
supported solely by the gold amount held in the vault of a country. However, this system is no longer
appropriate now due to inflation and hence, the value of one’s currency nowadays is determined
through the market forces alone. In order to determine the value of a currency’s exchange rate, two
main types of system is used which is floating currency and pegged currency. For floating exchange
rate, its value is determined by the supply and demand of the global market where the supply and
demand is bound by all these factors such as foreign investment, inflation and ratios of import and
export. Normally, this system is adopted by most of the advance countries like for example UK, US
and Canada. All of these countries have a similarity where their market is well developed and stable
in economic terms. These countries choose to practice this system due to the reason where floating
exchange rate is proven to be much more efficient compared to the pegged exchange rate. The reason
behind this is because for floating exchange rate, the market itself will re-adjust the exchange rate
real-time in order to portray the actual inflation and other economic forces. However, every system
has its own flaw and so does the floating exchange rate system. For instance, if a country suffers
from economic instability due to various reasons such as political issues, a floating exchange rate
system will certainly discourage investment due to the high risk of suffering from

inflationary disaster or sudden slum in exchange rate. Another form of exchange rate is known as
pegged exchange rate. This is a system where the value of the exchange rate is fixed by the
government of a country and not the supply and demand of the market. This system is called pegged
exchange rate because the value of a country’s currency is fixed to another country’s currency. As a
result, the value of the pegged currency will not fluctuate unlike the floating currency. The working
principle behind this system is slightly complicated where the government of a country will fixed the
exchange rate of their currency and when there is a demand for a certain currency resulting a rise in
the exchange rate, the government will have to release enough of that currency into the market in

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order to meet that demand. However, there is a fatal flaw in this system where if the pegged
exchange rate is not controlled properly, panics may arise within the country and as a result of that,
people will be rushing to exchange their money into a more stable currency. When that happens, the
sudden overflow of that country’s currency into the market will decrease the value of their exchange
rate and in the end, their currency will be worthless. Due to this reason, only those underdeveloped or
developing countries will practice this method as a form to control the inflation rate.

However, the truth is, most of the countries do not fully practice the floating exchange rate or the
pegged exchange rate method in reality. Instead, they use a hybrid system known as floating peg.
Floating peg is the combination of the two main systems where one country will normally fixed their
exchange rate to the US Dollars and after that, they will constantly review their peg rate in order to
stay in line with the actual market value. The Foreign exchange market, or commonly known as
FOREX, is the largest and most prolific financial market because each day, more than 1 trillion worth
of currency exchange takes place between investors, speculators and countries. From this, we can
deduce that the actual mechanism behind the world of foreign exchange is far more complicated than
what we may already know, and that, the information mentioned earlier is just the tip of an iceberg.

 What is forex market?

The forex market is the market in which participants can buy, sell, exchange, and speculate on
currencies. The forex market is made up of banks, commercial companies, central banks, investment
management firms, hedge funds, and retail forex brokers and investors. The currency market is
considered to be the largest financial market with over $5 trillion in daily transactions, which is more
than the futures and equity markets combined.

Basics of Forex Market

The foreign exchange market is not dominated by a single market exchange, but a global network of
computers and brokers from around the world. Forex brokers act as market makers as well, and may
post bid and as prices for a currency pair that differs from the most competitive bid in the market.

The forex market is made up of two levels; the interbank market and the over-the-counter (OTC)
market. The interbank market is where large banks trade currencies for purposes such as hedging,

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balance sheet adjustments, and on behalf of clients. The OTC market is where individuals trade
through online platforms and brokers.

Operating hours

From Monday morning in Asia to Friday afternoon in New York, the forex market is a 24-hour
market, meaning it does not close overnight. This differs from markets such as equities, bonds, and
commodities, which all close for a period of time, generally in the

New York late afternoon. However, as with most things there are exceptions. Some emerging market
currencies closing for a period of time during the trading day.

The Big Players

The US dollar is by far the most traded currency, making up close to 85 percent of all trades. Second
is the euro, which is part of 39 percent of all currency trades, and third is the Japanese yen at 19
percent. (Note: these figures do not total 100 percent because there are two sides to every FX
transaction).

According to the 2018 Greenwich Associates study, Citigroup and JPMorgan Chase & Co. were the
two biggest banks in the forex market, combining for more than 30 percent of the global market
share. UBS, Deutsche Bank, and Goldman Sachs made up the remaining places in the top
five. According to CLS, a settlement and processing group, the average daily trading volume in
January 2018 was $1.805 trillion.

 Why the foreign Exchange Market is Unique?

•Its huge trading volume representing the largest asset class in the world leading to high 6 liquidity;

•its geographical dispersion;

•Its continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday
until 22:00 GMT Friday;

•The variety of factors that affect exchange rates;

•The low margins of relative profit compared with other markets of fixed income;

• The use of leverage to enhance profit and loss margins and with respect to account size.
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As such, it has been referred to as the market closest to the ideal of perfect competition,
notwithstanding currency intervention by central banks. According to the Bank for International
Settlements, as of April 2010, average daily turnover in global foreign exchange markets is estimated
at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April
2007. Some firms specializing on foreign exchange market had put the average daily turnover in
excess of US$4 trillion. The $3.98 trillion break-down is as follows: $1.490 trillion in spot
transactions $475 billion in outright forwards $1.765 trillion in foreign exchange swaps $43 billion
currency swaps $207 billion in options and other product.

 Advantages of Forex Market

The biggest financial market in the world is the biggest market because it provides some advantages
to its participants. Some of the major advantages offered are as follows:

1. Flexibility

Forex exchange markets provide traders with a lot of flexibility. This is because there is no restriction
on the amount of money that can be used for trading. Also, there is almost no regulation of the
markets. This combined with the fact that the market operates on a 24 by 7 basis creates a very
flexible scenario for traders. People with regular jobs can also indulge in Forex trading on the
weekends or in the nights. However, they cannot do the same if they are trading in the stock or bond
markets or their own countries! It is for this reason that Forex trading is the trading of choice for part
time traders since it provides a flexible schedule with least interference in their full time jobs.

Transparency: The Forex market is huge in size and operates across several time zones! Despite this,
information regarding Forex markets is easily available. Also, no country or Central Bank has the
ability to single handily corner the market or rig prices for an extended period of time. Short term
advantages may occur to some entities because of the time lag in passing information. However, this
advantage cannot be sustained over time. The size of the Forex market also makes it fair and
efficient!

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2. Trading Options

Forex markets provide traders with a wide variety of trading options. Traders can trade in hundreds
of currency pairs. They also have the choice of entering into spot trade or they could enter into a
future agreement. Futures agreements are also available in different sizes and with different
maturities to meet the needs of the Forex traders. Therefore, Forex market provides an option for
every budget and every investor with a different appetite for risk taking.

Also, one needs to take into account the fact that Forex markets have a massive trading volume. More
trading occurs in the Forex market than anywhere else in the world. It is for this reason that Forex
provides unmatched liquidity to its traders who can enter and exit the market in a matter of seconds
any time they feel lik

3. Transaction Costs

Forex market provides an environment with low transaction costs as compared to other markets.
When compared on a percentage point basis, the transaction costs of trading in Forex are extremely
low as compared to trading in other markets. This is primarily because Forex market is largely
operated by dealers who provide a two way quote after reserving a spread for themselves to cover the
risks. Pure play brokerage is very low in Forex markets.

4. Leverage

Forex markets provide the most leverage amongst all financial asset markets. The arrangements in
the Forex markets provide investors to lever their original investment by as many as 20 to 30 times
and trade in the market! This magnifies both profits and gains. Therefore, even though the
movements in the Forex market are usually small, traders end up gaining or losing a significant
amount of money thanks to leverage!

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 Disadvantages of Forex Market
It would be a biased evaluation of the Forex markets if attention was paid only to the advantages
while ignoring the disadvantages. Therefore, in the interest of full disclosure, some of the
disadvantages have been listed below:

1. Counterparty Risks

Forex market is an international market. Therefore, regulation of the Forex market is a difficult issue
because it pertains to the sovereignty of the currencies of many countries. This creates a scenario
wherein the Forex market is largely unregulated. Therefore, there is no centralized exchange which
guarantees the risk free execution of trades. Therefore, when investors or traders enter into trades,
they also have to be cognizant of the default risk that they are facing i.e. the risk that the counterparty
may not have the intention or the ability to honor the contracts. Forex trading therefore involves
careful assessment of counterparty risks as well as creation of plans to mitigate them.

2. Leverage Risks

Forex markets provide the maximum leverage. The word leverage automatically implies risk and a
gearing ratio of 20 to 30 times implies a lot of risk! Given the fact that there are no limits to the
amount of movement that could happen in the Forex market in a given day, it is possible that a
person may lose all of their investment in a matter of minutes if they placed highly leveraged bets.
Novice investors are more prone to making such mistakes because they do not understand the amount
of risk that leverage brings along!

3. Operational Risks

Forex trading operations are difficult to manage operationally. This is because the Forex market
works all the time whereas humans do not! Therefore, traders have to resort to algorithms to protect
the value of their investments when they are away. Alternatively, multinational firms have trading
desks spread all across the world. However, that can only be done if trading is conducted on a very
large scale.

Therefore, if a person does not have the capital or the know how to manage their positions when they
are away, Forex markets could cause a significant loss of value in the nights or on weekends.

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 The Forex market caters to different types of investors with different risk appetites.

Participants of Foreign Exchange Market

1. Central Banks

Central Banks of all countries participate in the Forex market to some extent. Most of the times, this
participation is official. Although many times Central Banks do participate in the market by covert
means. This is because every Central Bank has a target range within which they would like to see
their currency fluctuate. If the currency falls out of the given range, Central Banks conduct open
market operations to bring it back in range. Also, whenever the currency of a given nation is under
speculative attack, Central Banks participate extensively in the market to defend their currency.
2. Commercial Banks or Market Makers:
Commercial banks are normally taking over the position to support the economy of the country by
carrying over the foreign currency from one period to another, for meeting the future need of the
country. They are also sometime making short sale (agree to sell or actually sell the foreign currency
without any real capacity to sell through or borrow the required currency from others) of foreign
currency to satisfy the need of firms to make payments.
Later on to bring the position in equilibrium, they quote the rates for buying and selling of foreign
currency accordingly. As they are buying the foreign currency from the customer, the rate they quote
for buying the foreign currency is technically named as Bid rate. When they sell the foreign currency
to customer, the rate they quote is technically known as Ask rate
3. Foreign Exchange Brokers:

FE brokers do not buy or sell the foreign currency on their own account, as done by market makers.
They are working as an intermediary between two parties, to satisfy their respective needs. As they
are working as a bridge between buyers and sellers of the foreign currency, they are only earning the
fees in the form of brokerage charges.
4. Corporates and Entrepreneurs:
Corporate are the players in the FE market, to satisfy their need of payment in foreign currency
towards imports of goods, commodities and services. On the opposite way, they need to convert
foreign currency in home currency on account of export of goods, commodities, and services. The

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need of conversion also happens on account of transactions in financial markets across the globe, for
loan disbursement, repayment of loans, receipt and payment of annual charges, etc.
5. Forex Dealers

Forex dealers are amongst the biggest participants in the Forex market. They are also known as
broker dealers. Most Forex dealers in the world are banks. It is for this reason that the market in
which dealers interact with one another is also known as the interbank market. However, there are
some notable non-bank financial institutions also that deal in foreign exchange.
These dealers participate in the Forex markets by providing bid-ask quotes for currency pairs at all
times. All brokers do not participate in all currency pairs. Rather, they may specialize in a specific
currency pair. Alternatively, a lot of dealers also use their own capital to conduct proprietary trading
operations. When both these operations are combined, Forex dealers have a significant participation
in the Forex market.

6. Brokers

The Forex market is largely devoid of brokers. This is because a person need not deal with brokers
necessarily. If they have sufficient knowledge, they can directly call the dealer and obtain a favorable
rate. However, there are brokers in the Forex market. These brokers exist because they add value to
their clients by helping them obtain the best quote. For instance, they may help their clients obtain the
lowest buying price or the highest selling price by making available quotes from several dealers.
Another major reason for using brokers is creating anonymity while trading. Many big investors and
even Forex dealers use the services of brokers who act as henchmen for the trading operations of
these big players.
7. Speculators

Speculators are a class of traders that have no genuine requirement for foreign currency. They only
buy and sell these currencies with the hope of making a profit from it. The number of speculators
increases a lot when the market sentiment is high and everyone seems to be making money in the
Forex markets. Speculators usually do not maintain open positions in any currency for a very long
time. Their positions are transient and are only meant to make a short term profit.

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 8. Arbitrageurs

Arbitrageurs are traders that take advantage of the price discrepancy in different markets to make a
profit. Arbitrageurs serve an important function in the foreign exchange market. It is their operations
that ensure that a market as large, as decentralized and as diffused as the Forex market functions
efficiently and provides uniform price quotations all over the world. Whenever arbitrageurs find a
price discrepancy in the market, they start buying in one place and selling in another till the
discrepancy disappears.

9. Other financial institutions invoved in forex market

Firms
Companies
Private individuals
Private individuals

CHARACTERISTICS OF FOREIGN CURRENCY EXCHANGE MARKET

1. LOWER TRADING COST

In the forex market, the lower trading cost has made it possible for even small, individual investors to
make the decent profits from trading. With lower costs, the possible losses are much lower. You will
discover that forex trading has no commission fees unlike in other investments. The forex trading
cost is limited to the spread or the difference between the buying and selling prices for a
particular currency pair.

2. 24 HOUR TRADING OPPORTUNITY 5 DAYS A WEEK

You have plenty of opportunities to execute trades and sufficient time to make adjustments whenever
and where ever such opportunities present themselves.

Trading the foreign currency exchange market opening on Monday, 8 am Australian time (which is 5
pm Sunday New York time). It continues nonstop until Friday, 4 pm New York time.

3. HIGHLY LEVERAGED MARKET

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You are allowed to trade on margins or technically on borrowed money with forex. You get more
value for your money as the returns can be magnified a hundredfold. However, always remember that
there always two sides of the coin when it comes to leverage meaning it can also increase your losses.

4. EXCELLENT TRANSPARENCY
Forex trading is a transparent process because the forex trader has full access to market data and
information that are necessary to achieve successful transactions. The excellent transparency that
traders have more control over investments and decide what to do based on the available information.

5. ACCESS ADVANTAGE IN FOREX

You can access the foreign currency exchange market and your trading account from anywhere using
internet connection without difficulty and trade from anywhere you may happen to be. With other
financial markets, you need to be physically present to execute a trade.

6. SUPERIOR LIQUIDITY
In a forex market, traders are free to buy and sell currencies of their choosing. The superior liquidity
of the forex market allows traders to easily exchange currencies without affecting the prices of
currencies being traded.

Whether you trade a thousand dollars or millions, you can be assured of same currency prices during
the time an order was placed and executed. The forex market’s superior liquidity allows you to get
the profits you expect at the time you made the trade.

Types Of Foreign Exchange Rates

a. Floating Exchange Rate

 A floating exchange rate is one that is determined by supply and demand on the open market.
 A floating exchange rate doesn't mean countries don't try to intervene and manipulate their
currency's price, since governments and central banks regularly attempt to keep their currency
price favorable for international trade.
 A fixed exchange is another currency model, and this is where a currency is pegged or held at
the same value relative to another currency.
 Floating exchange rates became more popular after the failure of the gold standard and the
Bretton Woods agreement.

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 b. Fixed Exchange Rate
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime in
which a currency's value is fixed or pegged by a monetary authority against the value of another
currency, a basket of other currencies, or another measure of value, such as gold.

There are benefits and risks to using a fixed exchange rate system. A fixed exchange rate is typically
used to stabilize the value of a currency by directly fixing its value in a predetermined ratio to a
different, more stable, or more internationally prevalent currency (or currencies) to which the value is
pegged. In doing so, the exchange rate between the currency and its peg does not change based on
market conditions, unlike in a floating (flexible) exchange regime. This makes trade and investments
between the two currency areas easier and more predictable and is especially useful for small
economies that borrow primarily in foreign currency and in which external trade forms a large part of
their GDP.

A fixed exchange rate system can also be used to control the behavior of a currency, such as by
limiting rates of inflation. However, in doing so, the pegged currency is then controlled by its
reference value. As such, when the reference value rises or falls, it then follows that the value(s) of
any currencies pegged to it will also rise and fall in relation to other currencies and commodities with
which the pegged currency can be traded. In other words, a pegged currency is dependent on its
reference value to dictate how its current worth is defined at any given time. In addition, according to
the Mundell–Fleming model, with perfect capital mobility, a fixed exchange rate prevents a
government from using domestic monetary policy to achieve macroeconomic stability.
c. Pegged Exchange Rate
A pegged exchange rate, also known as a fixed exchange rate, is a type of exchange rate in which a
currency's value is fixed against either the value of another country's currency or another measure of
value, such as gold.
Generally, there are two ways in which countries can value their currency in the world market. They
can either fix (or peg) their currency to gold or to another major currency, like the U.S. dollar or the
euro. Alternatively, they can allow their currency float in the world market.

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If the exchange rate is pegged, the country’s central bank, or an equivalent institution, will set and
maintain an official exchange rate. To keep this local exchange rate tied to the pegged currency, the
bank will buy and sell its own currency on the foreign exchange market to balance supply and
demand.

Key Factors that Affect Foreign Exchange Rates

1. Inflation Rates
Changes in market inflation cause changes in currency exchange rates. A country with a lower
inflation rate than another's will see an appreciation in the value of its currency. The prices of goods
and services increase at a slower rate where the inflation is low. A country with a consistently lower
inflation rate exhibits a rising currency value while a country with higher inflation typically sees
depreciation in its currency and is usually accompanied by higher interest rates

2. Interest Rates
Changes in interest rate affect currency value and dollar exchange rate. Forex rates, interest rates, and
inflation are all correlated. Increases in interest rates cause a country's currency to appreciate because
higher interest rates provide higher rates to lenders, thereby attracting more foreign capital, which
causes a rise in exchange rates

3. Country’s Current Account / Balance of Payments

A country’s current account reflects balance of trade and earnings on foreign investment. It consists
of total number of transactions including its exports, imports, debt, etc. A deficit in current account
due to spending more of its currency on importing products than it is earning through sale of exports
causes depreciation. Balance of payments fluctuates exchange rate of its domestic currency.

4. Government Debt
Government debt is public debt or national debt owned by the central government. A country with
government debt is less likely to acquire foreign capital, leading to inflation. Foreign investors will
sell their bonds in the open market if the market predicts government debt within a certain country.
As a result, a decrease in the value of its exchange rate will follow.

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5. Terms of Trade
Related to current accounts and balance of payments, the terms of trade is the ratio of export prices to
import prices. A country's terms of trade improves if its exports prices rise at a greater rate than its
imports prices. This results in higher revenue, which causes a higher demand for the country's
currency and an increase in its currency's value. This results in an appreciation of exchange rate.

6. Political Stability & Performance

A country's political state and economic performance can affect its currency strength. A country with
less risk for political turmoil is more attractive to foreign investors, as a result, drawing investment
away from other countries with more political and economic stability. Increase in foreign capital, in
turn, leads to an appreciation in the value of its domestic currency. A country with sound financial
and trade policy does not give any room for uncertainty in value of its currency. But, a country prone
to political confusions may see a depreciation in exchange rates.

7. Recession
When a country experiences a recession, its interest rates are likely to fall, decreasing its chances to
acquire foreign capital. As a result, its currency weakens in comparison to that of other countries,
therefore lowering the exchange rate.

8. Speculation
If a country's currency value is expected to rise, investors will demand more of that currency in order
to make a profit in the near future. As a result, the value of the currency will rise due to the increase
in demand. With this increase in currency value comes a rise in the exchange rate as well.

FOREIGN EXCHANGE RISK

Foreign Exchange Risk refers to the risk of an unfavorable change in the settlement value of a
transaction entered in a currency other than the base currency (domestic currency). This risk arises as
a result of movement in the base currency rates or the denominated currency rates and is also
called exchange rate risk or FX risk or currency risk.

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TYPES OF FOREIGN EXCHANGE RISK
1. TRANSACTION RISK:
Where the business transactions are entered in a currency other than the home currency of the
organization, then there is a risk of change in the currency rates in the adverse direction from the date
of entering the transaction to the date of settlement. This type of foreign exchange risk is known
as transaction risk. This risk arises on the actual and probable import and export transactions.

2. OPEN POSITION RISK:

Exchange control guidelines in India requires banks to maintain at the close of every working day a

square position in currencies.

(a) Practically, it is not possible to maintain a square position as the aggregate customer transactions

will not result in marketable lots.

(b) Some open position, either overbought or oversold is unavoidable in the very nature of foreign

exchange operations.

(c) Exchange control does not altogether prohibit banks keeping positions during the course of a day.

(d) It may happen that a dealer may be expecting the dollar to weaken during the day might square

the deal later.

(e) The banks make profit out of such open positions which is a deliberate attempt. But, such

uncovered positions may result into a loss.

(f) Measures to mitigate open position risk.

(g) Limits on intra-day open positions in each currency.:

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(h) Limits on overnight open positions in each currency.

(i) A limit on aggregate open position for all currencies taken together,

(j) A turnover limit on a total daily transaction volume for all currencies.

3. Mismatch Maturity Risks:

Risk that, due to differences in maturities of the long and positions in a cross hedge, the value of the

risk offsetting positions will fail to move in concert.In case a customer has booked a forward contract

for USD 5000 maturing on 13th Sept 2009, the bank would ideally again go for interbank forward

borrowing for USD 5000 maturing on 13/09/2009.

a. It is possible that no seller/counterparty might be available.

b. The bank has the problem of first finding out the seller who will agree to sell the required forex at

the required rate on the agreed date.

c. If the cover date available is 25/09/09, the bank here will run the risk of overdrawing its account

abroad for 12 days.

d. If the rate of overdraft is costlier than the rate payable to customer, the bank incurs a loss.

e. Alternatively, the bank may undertake a swap – buy for delivery on 13th September and sell for

delivery 25/09/09. If rates move against the bank, it would incur a loss.

Measures to Mitigate the Risks:

a. A monthly gap limit for each currency,

b. A cumulative gap limit for each currency and

c. A cumulative gap limit for all currencies taken together.

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 4. Credit or Settlement Risks:
I. Can arise when a counterparty whether a customer or a bank, fails to meet his obligation and the

resulting open position has to be covered at the going rate. If the rates have moved against the bank, a

loss can result.

II. Can arise if a bank has discounted the bills under L/C of ABC Ban. On the maturity, the L/C

opening bank fails. The Bank incurs a loss.

e.g. – IA bank has sold USD 5000 to a customer @ Rs. 43 per dollar. Before the contract matures, the

customer fails and is unable to pay the rupee at the contracted rate. The bank now faces the problem

of having to dispose off the forex in the market at the going rate. If the going rate is 42 per dollar, the

bank incurs a loss of Rs. 5000.

5. Sovereign Risk:

Arises if a country suddenly suspends or imposes a moratorium on foreign payments because of

balance of payments or other problems.

a. Arises when banks deal with other banks in other countries.

b. Also arises on account of large exposures on any country which is in some trouble – then the bank

that has exposure may incur a huge loss.

Measures to Mitigate Sovereign Risk:

1. Depending on the status, past record, economic conditions and other factors, a country limit is

stipulated by banks to reduce risk element.

2. Also, cross-country exposures limit may be laid down.

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 6. Operational Risks:
Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal

procedures, people and systems, or from external events.

Operational risk for foreign exchange, in particular, involves problems with processing, product

pricing, and valuation. These problems can result from a variety of causes, including natural

disasters, which can cause the loss of a primary trading site or a change in the financial details of the

trade or settlement instructions on a Forex transaction. Operational risk may also emanate from poor

planning and procedures, inadequate systems, failure to properly supervise staff defective controls,

fraud, and human error.

Failure to adequately manage operational risk, in turn, can decrease a firm’s profitability. Incorrect

settlement of Forex transactions, for example, can have direct costs in improper payments and

receipts. The trade processing and settlement errors can lead to indirect costs, such as compensation

payments to counterparts for failed settlements or the development of large losses in a firm’s

portfolio as a result of managing the wrong position.

Investigating problems and negotiating a resolution with counterparty may carry additional costs.

Failure to manage operational risk may also harm a firm’s reputation and contribute to a loss of

business.

Operational risk is very difficult to quantify. An institution can measure some of the losses associated

with operational errors or losses that result from the failure of the operational process to catch errors

made by sales and trading areas. Determining expected losses, however, given the uncertainty

surrounding those losses, is much more complicated for operational risks than for other risk

categories.

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Evolution of foreign exchange market in India

The Indian forex market owes its origin to the important step that RBI took in 1978 to allow banks to
undertake intra-day trading in foreign exchange. As a consequence, the stipulation of maintaining
“square” or “near square” position was to be complied with only at the close of business each day.
During the period 1975-1992, the exchange rate of rupee was officially determined by the RBI in
terms of a weighted basket of currencies of India’s major trading partners and there were significant
restrictions on the current account transactions. The initiation of economic reforms in July 1991 saw
significant two-step downward adjustment in the exchange rate of the rupee on July 1 and 3, 1991
with a view to placing it at an appropriate level in line with the inflation differential to maintain the
competitiveness of exports. Subsequently, following the recommendations of the High Level
Committee on Balance of Payments (Chairman:Dr C. Rangarajan) the Liberalised Exchange Rate
Management System(LERMS) involving dual exchange rate mechanism was instituted in March
1992 which was followed by the ultimate convergence of the dual rates effective from March 1,
1993(christened modified LERMS). The unification of the exchange rate of the rupee marks the
beginning of the era of market determined exchange rate regime of rupee, based on demand and
supply in the forex market. It is also an important step in the progress towards current account
convertibility, which was finally achieved in August 1994 by accepting Article VIII of the Articles of
Agreement of the International Monetary Fund. The appointment of an Expert Group on Foreign
Exchange (popularly known as Sodhani Committee) in November 1994 is a landmark in the design
of foreign exchange market in India. The Group studied the market in great detail and came up with
far reaching recommendations to develop, deepen and widen the forex market. In the process of
development of forex markets, banks have been accorded significant initiative and freedom to
operate in the market. To quote a few important measures relating to market development and
liberalisation, banks were allowed freedom to fix their trading limits, permitted to borrow and invest
funds in the overseas markets up to specified limits, accorded freedom to determine interest rates on
FCNR deposits within ceilings and allowed to use derivative products for asset-liability management
purposes. Similarly, corporates were given flexibility to book forward cover based on past turnover
and allowed to use a variety of instruments like interest rates and currency swaps, caps/collars and
forward rate agreements in the international forex market. Rupee-foreign currency swap market for

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hedging longer term exposure has developed substantially in the last few years. BIS Review 49/2004
1 Market profile The Indian forex market is predominantly a transaction based market with the
existence of underlying forex exposure generally being an essential requirement for market users.

Similarly, regulations in most cases require end users to repatriate and surrender foreign exchange in
the Indian forex market. All forex transactions of Government of India are routed through the market
except for aid transactions. The forex market is made up of Authorised Dealers (generally banks),
some intermediaries with limited authorisation and end users viz., individuals, corporates,
institutional investors and others. Market making banks (generally foreign banks and new private
sector banks) account for a significant percentage of the overall turnover in the market. The average
monthly turnover in the merchant segment of the forex market increased to US$ 40.5 billion in 2003-
2004 from US$ 27.0 billion in 2002-2003. In the interbank segment, the turnover has moved up from
US$ 103 billion in 2002-2003 to US$ 134.2 billion in 2003-2004.

Consequently, the average monthly total turnover increased sharply to US$ 174.7 billion in 2003-
2004 from US$ 130 billion in the previous year. The inter-bank to merchant turnover ratio hovered in
the range of 2.9 –3.9 during the year. Trade and financial liberalisation There is large empirical
literature suggesting that trade integration benefits a larger number and helps promote economic
growth. In contrast, recent empirical research is unable to establish a clear link between financial
integration and growth. There is therefore now a consensus among academicians and policy makers
that trade liberalisation should take precedence over financial liberalisation. The RBI approach makes
a distinction among the different participants in order to assess, on an ongoing basis, the gains as well
as the vulnerabilities of foreign currency exposures to the system. In the capital account, apart from
the Government’s, there are three balance sheets that we take into account whether for residents or
for non-residents : the balance sheet of the households, the corporates and the financial
intermediaries. Although in theory, everything may be integrated, in our phase of development,
definitely these three are distinct in terms of their immediate reactions to market forces. In particular,
this approach recognises the need to put in place appropriate prudential regulation in regard to the
financial intermediaries in so far as foreign currency transactions are concerned. There is virtual
unanimity that the currency mismatches of financial intermediaries is a major source of risks of
financial integration which has to be mitigated by monitoring and regulations and furthermore, that
currency mismatches in the corporate sector can also be a source of risk to the financial sector. Hence

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the advice to banks to monitor unhedged exposures of borrowers. I would rejig your memory a bit -
at the Ninth Forex Assembly at Goa, the then Deputy Governor Dr.S.S. Tarapore had alluded to these
risks saying “banks and FIs cannot distance themselves from the risks taken by corporates as these
risks can involuntarily devolve on the banks as their lendings to corporates can easily turn into
NPAs”. Prudential regulations in the financial sector should not therefore be construed as capital
controls. This approach has been reflected in the recent liberalisation of the policy on external
commercial borrowings. The whole process of permitting such external debt may be either through
the automatic route or non-automatic route, but slowly the automatic route is being expanded and the
non-automatic route reduced. The recent External Commercial Borrowing (ECB) policy makes clear
distinction between corporates and financial intermediaries. Therefore, while corporate have been
given freedom to borrow under automatic route up to $500 million per year subject to certain
conditions, a different approach has been adopted for financial intermediaries in the interest of
financial stability by regulating access to overseas borrowings and issue of guarantees. Another
example is in regard to overseas investments. To enable corporate to become global companies
overseas investments up to their net worth is permitted under the automatic route. They can also
access ECBs under automatic route to invest overseas. In regard to resident individuals, in order to
provide a hassle-free facility to make remittances overseas to meet both current and capital account
requirements, they have been allowed to remit on an annual basis US$ 25000/- on a mere declaration
of the purpose. 2 BIS Review 49/2004 Disclosure and transparency.

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Structure of Indian Foreign Exchange Market

The foreign exchange market in India marked its beginning towards the end of the 1970s. During the
start of foreign exchange market in India banks in India were allowed to undertake intra-day trade in
foreign exchange. Major changes in the Indian foreign exchange market began in the 1990s that shift
in the currency regime in India from partially float to full float. Before 1992, the exchange rate was
under strict regulation of Indian Government. After 1992, the exchange rate became more and more
market determined as Government of India realised the need for reducing the control. All this leads to
current account convertibility which means buy or sell of foreign currency on specific activities were
relaxed such as foreign travel, medical treatment, study fees, receipt/payment related to import-
export, receipt/payment of interest, investment in foreign securities, business travel related expenses
etc.

Prior to 1992, the exchange rate of the rupee was officially determined in terms of a weighted basket
of currencies of India’s major trading partners. During this period, authorized dealers use to buy and
sell foreign currency at the daily rate announced by RBI. Hence the exchange rate was allowed to
fluctuate but within a certain range. Prime

Intention of RBI was to manage the exchange rate in a way which primarily facilitates imports to
India. In order to manage exchange rate, regulations were framed and implemented from time to
time.

The brief of regulations is discussed in the following subheads:

A. Foreign exchange regulation act (FERA), 1973.

The Foreign Exchange Regulation Act (FERA) enacted in 1973, strictly controlled all activities related to
foreign exchange. FERA was introduced in 1973, to make available necessary foreign exchange required for
payment of increasing import bills due to the import of capital goods, crude oil & petrol products. As per
FERA, all Forex earnings by companies and residents have to reported and surrendered (immediately after
receiving) to RBI (Reserve Bank of India) at a rate which was mandated by RBI. Any violation of FERA was a
criminal offence liable to imprisonment. The Act also specified dealers and money changers who were
authorised to deal in foreign exchange.

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 B. Foreign Exchange Management Act (FEMA) 2000:
Foreign Exchange Management Act (FEMA) 2000 was introduced as the government realised the need to
liberalise the foreign exchange policy. The list of activities in which a person/company can undertake forex
transactions were expanded under FEMA. Through FEMA, the government liberalised the export-import
policy, limits of foreign direct investment (FDI) & foreign institutional investments (FII) and repatriations,
cross-border mergers and acquisitions (M&A) and fundraising activities. Under FEMA, the restrictions on
withdrawal of foreign exchange for the purpose of current account transactions has been removed.
However, the Central Government may, in public interest in consultation with the Reserve Bank impose such
reasonable restrictions for current account transactions as may be prescribed. The presumptions of Mens
Rea and abatement assumed under FERA have been excluded in FEMA. The definition of "Resident", under
FERA was different from that under Income Tax Act. However, under FEMA, it is consistent with Income Tax
Act. Now the criteria of 182 days to make a person resident in India has been brought under FEMA. The
monetary penalty payable under FERA was nearly five times the amount involved. Under FEMA the quantum
of penalty has been considerably decreased to three times the amount involved

COMPANY PROFILE:
Dealmoney Securities Pvt Ltd was established in 2006, is one of the leading full-service financial
organizations in the country today. At Dealmoney every sound relationship is based on trust. From
humble beginnings they have come this far, it is only because the client’s trust they have done in the
past. The satisfaction expressed by their customers bears testimony to this fact. Their ultimate
objective is – To create maximum value for their clients & stakeholders. The ambition and acumen of
their visionary top management continue to inspire them towards delivering customer value &
delight. Despite the numerous market challenges and synchronized growth, there is no compromise
when it comes to the values and principles laid down by the legendary promoters New Silk Route.
With manpower strength of over 1000 dedicated employees present in 20+ states, they are large
enough to deliver value but flexible enough to provide with a highly personalized service Leadership.
Dealmoney Securities is led by Mr. Dishant Sagwaria. He has over 25 years of experience in the
financial sector. Some key points about them:
1. Stop Paying even 20 per trade
2. Aadhar Enabled "Instant Online Account Opening" Facility
3. Enjoy Seamless Single Window trading access to Top
4 Indian Exchanges - NSE, BSE, MCX & NCDEX 4. Trade across Equity, F&O, Commodities,
Currencies, Gold & Mutual Fund segments

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Why Dealmoney?

Led by people with high acumen and ambition, Dealmoney believes that strong relationships are
based on trust. We aim to be not just an advisor, but a comrade to our clients in the financial world.
With over 450 dedicated employees working for your cause, Dealmoney is the ideal stop for all your
financial needs.

Our Philosophy

Driven by knowledge and the will to be the ‘Most Preferred’ brokerage organization, Dealmoney
aims to face all financial challenges of our clients and be the best. With a goal to deliver maximum
customer value and delight, we never compromise with the values and principles laid down by our
legendary past and present promoters.

Insight

Equipped with our knowledge and experience in the financial world, we work with our clients to
develop insights and answer tricky questions about their financial challenges. We provide our clients
with analytical insights through rigorous, data-intensive analysis and by using our World Class
Proprietary Research Tools to identify key stocks and quantify the impact of our recommendations.
We also develop strategic insights by sharing our best practices using Technical Charting Tools to
identify value investing opportunities.

We, at Dealmoney, also aim to understand our clients’ specific investment needs, their tendency to
take financial risks, and how we can create a plan specific to everything that the clients expect from
financial transactions. Trust is the foundation of any sound relationship, and we aim to not only be
the financial guides for our clients in the financial world, but also their comrades in a volatile,
uncertain environment.

Vision

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 o To build a world-class, customer-centric financial service entity that accomplishes the
financial needs of 'Middle-Class India' with global processes

o To focus on profitable growth

o To unlock potential across four dimensions: Individual, Team, Customer and Marketplace

o To foster strong, trustworthy relationships with our clients which are beyond finances

o To not only grow for our clients, but also grow with them

o To deliver the best possible results as per our clients’ needs

o To not only merely advise our clients about their investment plans, but also to educate them

Impact

In the financial world, bigger profits can only be obtained if the solutions offered to the clients are
impactful in nature. Dealmoney strives to deliver financial solutions with impact. Our clients expect
us to identify and recommend investment opportunities, and to work collaboratively with them to
deliver results which help them achieve financial goals which help us improve our customer
experience with us.We provide customized investment solutions to our clients which make sure that
their money is invested in the best of the places, thereby maximizing profit margins. We consider it
as our duty to provide clients with a feeling of security, while we carefully invest their hard-earned
finances in the right kind of places.

Mission

 To forge strong, sustained relationships with our clients by creating value for them
 To get a thorough insight into our clients’ financial needs and goals & offer
customized solutions
 Uphold clients’ trust in our products & services
 Strive to protect & increase clients’ capitals
 Enable transparent and knowledge based investment process & systems
 Maximize profits and minimize risks for our clients
 Fostering a secured, welcoming financial environment

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  Equipping our clients with the right kind of knowledge for attaining their financial
goals
PRODUCTS/SERVICE PROFILE:

Dealmoney Securities is a renowned well established, dynamic broking house in India. It is known
for its state-of-the-art systems and innovative processes, Dealmoney has been offering a single
window advantage to its investors, clients for all capital and money market related requirements.
Dealmoney is a one store like shop which will cater all your financial requirements & caters a wide
spectrum of services that includes

Equity Broking in Cash and Derivatives Internet based trading

 The company provides services for dematerialization

 The company has a wonderful research providing services
 Company deals with money market and debt market broking
 Company helps in serving merchant banking
 Currency exchange services
 Caters and provides loans for investing shares and for funding of margin
Also helps in any merging and acquiring of companies.

 Dealmoney provides trading of commodities.

AMFI registered all India Mutual Fund Distributors

 IPO (New Issue) distribution

 Life Insurance distribution Value Added Services
 Research and Advisory Services
 Technology that guarantees seamless connectivity for trading
 Flexibility of a local broking house and sophistication of corporate brokerage
 A dedicated Relationship Manager to help in sales and other business related queries

24x7 Online Back-office systems for the Partner as well as all their customers. Dealmoney
views its clients or investors has its king , since years the company has been respecting the feedbacks
and the expectations of its clients, Dealmoney has been bridging the gap created by its competitors

31 | P a g e
and have been catering the services which is expected and a requirement for its clients, the
company’s main motive is to bridge the gap and satisfy all the investors needs. In order to be prompt
in providing good consultancy service it has formed a most sophisticated research department where
in advanced techniques are used to predict and assume the future rates and its trends which shall have
an accurate results. Therefore Dealmoney has a good competitive edge.

COMPETITORS INFORMATION

• VLS FINANCE LTD:

When compared to any other stock broking company VLS FINANCE LTD holds a good position of
market capitalization of up to rupees 177.07 crores which is really huge and great when compared to
others, the company has been successful in making a sales worth rupees 896.82 crores which is again
a big value compared to its competitors, VLS holds a huge place and are reputed in the market, it has
also been providing a wide classic products like any other stock brokers, and not only that though it
has a very good sales worth the net profit is comparatively less that is it has made a net profit of
worth rupees 1.76 crores when compared to BNK, and many other stock broking companies.

• BNK SECURITIES PRIVATE LTD:

BNK SECURITIES PVT LTD is one of the best stock broking and a competitor for the Dealmoney,
by holding the market capitalization of rupees 48.85 crores and has made sales worth rupees 0.74
crores . the company has a wide range of services just like any other stock broker who provides
insurance, health plans, provides consultancy services for its clients and also help many new firms for
the issue management, the company has hold the membership in BSE and NSE exchanges, the
company has a capacity to earn a net profit of rupees 2.71 crores. Therefore it is one of the tough
competitors for all the stock brokers.

• GEOJIT BNP PARIBAS:

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 GEOJIT BNP PARIBAS is one of the competitors and has the market capitalization of
rupees 869.44 crores. The company deals and caters with a line of products like mutual funds, life
and general insurance and also deals with the commodity, derivatives and online trading services to
its clients. The company has earned a profit of rupees 17.65 crores in last year end quarter in 2014,
the company is been one of the best stock broker acquiring the clients and has increased its volume of
number of customers by making a presence in all over 130 cities in INDIA.

• R K GLOBAL SHARES & SECURITIES LTD:

R.K GLOBAL SHARES AND SECURITIES LTD is one of the INDIAN based stock broking who
caters products like commodities, currencies, derivaties, shares, mutual funds, and also provides
services for the new firms for issuing IPOs . the company is been presented almost all over 150 cities
in INDIA, the company was established during 2004 and from then started growing enormously, the
company is been successfully running.

• ZERODHA:

ZERODH caters a wide range of services like stock broking, currency derivatives, trading in
commodity markets and also provide online trading services, the company charges only 0.01% on the
trades happening or usually the company charge rupees 20 per transaction irrespective to number of
shares bought by the investors, more over the company has been successful in increasing the volume
of number of customers and its growth.

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DEALMONEY’S PROSPECTS AND ITS FUTURE GROWTH:-

In this globalized and a competitive world one has to be different from others and unique in order to
survive in this market and that is what Dealmoney believes in now the company has planned to come
up with so many unique ideas that might increase the future and growth level of the company the
company has been planning to come up with so many seminars, workshops, regarding the both stock
market and forex market to the college youths since the youth population in INDIA is 65% this will
in turn make positive growth to market as well to the company.

 Value-based proactive Portfolio Management Services (PMS) to Resident and Non-

Resident Indians.
 Significant market-share in Commodities Futures Trading Segment in India
 Value based Global Portfolio and Asset Allocation access to Resident Indians.
 Clearing, execution and custodian services for Non-Resident Indians, Foreign
Investors and Overseas Corporate Bodies.

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 WORK FLOW MODEL DEALMONEY SECURITIES BENGALURU
(Branch Office)

CUSTOMERS LKP SECURITIES LTD

DMAT ACCOUNT

DERIVATIVES COMODITIES
EQUITY

DEPOSITORY PARTICIPANTS

NSE
CUSTOMERS PLACING ORDERS

BSE

CONFIRMATION

SELLING / BUYING TRADING ACCOUNT

DR OR CR OF CUSTOMERS

35 | P a g e
7S FRAME WORK MODEL OF MCKENSY

For any company it will have its own goal and objectives to be met to meet these objectives the
company has to find out its own strengths and weakness in its own organization hence this 7s frame
work is done, this will help the company to revamp its seven s which is the most required for any
company to survive in the market and obtain a competitive edge. Basically this concept was created
in the early years of 1980s.

• SYSTEM OF DEALMONEY:
DEALMONEY has a team leadership style that is each and every message or information or the plan
which is to executed has to flow vertically from the top level management to the bottom level of the
management so everything happens in a process to avoid the ambiguity, and not only that the
employee will receive only commands from his head therefore we can see a clear cut efficiency in the
process.

• STRUCTURE OF DEALMONEY:
DEALMONEY has a clear cut organization structure which prevents from ambiguity and avoids the
miscommunication from the top level management to the bottom level management. Here in
DEALMONEY we can see a formal relationship between the employees, the structure of the
organization is developed in such a way that each and every department as a link , and has a good
support between the departments this will improvise the effectiveness of the work carried on.

• STYLE OF DEALMONEY:
Here style refers to how the DEALMONEY work effectively and are carried on by the top level
management people, actually the important decisions related to the organization is decided only by
the top level executives, lower level executives are not consulted while take important decisions of
the organization, similarly any disputes or any decisions related to between the departments are
solved and decided only by the department heads that kind of freedom is given to the department

36 | P a g e
heads in order to maintain a good relationship, therefore the style adopted by the Dealmoney is
viable.

• STAFF IN DEALMONEY:
For any companies staffs are the most important and complex asset to be handled in that case staffs in
DEALMONEY are very friendly and supportive in nature, more over staffs are expected to obtain a
self responsibility in growing the firm which in turn the employees will be well treated and rewarded
with reasonable rewards and bonus DEALMONEY views its staffs as an big strength and an valuable
asset to the company simultaneously staffs are recognized with the work done by them.

• SKILLS EXPECTED IN DEALMONEY:

Skills of employees are supposed to be the greater strengths for any organization that might obtain
an competitive edge, here company expects for a good analytical, logical, and should have a good
communicational skills this things can alone sell the products of the organization and that is
whatDEALMONEY believes in. At the same time they are soft enough in teaching you these kinds of
skills if any of the employees lack in any of the skills.

• STRATEGIES ADOPTED BY THE DEALMONEY:

For any organization strategies plays an important role in attracting the clients and make a positive
relationship with the clients, here DEALMONEY does a wonderful job in that case, for these people
investors are the kings, the company tries to bridge the gap which was created by its competitors, the
company initially fixes an appointment and then explain the basics of the stock market which is not
done by any other company. Not only that DEALMONEY provides frequent updates expected by the
clients this is what the strategy adopted by the company in increasing the number of clients.

• SHARED VALUES:

Here shared values refers to the feed backs given by the clients to the company, company usually
give values to the feedbacks which will improvise the company. More over company takes feedbacks

37 | P a g e
as their objectives and take it as an challenge in solving the gap created by them this in turn will
make the clients to retain from switching over to the other brokers, similarly the company respects its
employees feedbacks and make sure that it is solved and both the employees and clients are satisfied
with the service provided by DEALMONEY

Dealmoney Offices

With our footprints in over 800 locations with 20 branches throughout India, Dealmoney understands
the varied nature of needs from people around the country. We not only provide you value, but also
provide you with a highly personalized service.

SWOT ANALYSIS

STRENGTHS:

 Company provides a superior customer service.

 DEALMONEY’s having an innovative range of financial products.
 DEALMONEY is known for transparent functioning.
 Emphasis on building stronger bond with customers by a company.
 Company with well diversified portfolio.
 DEALMONEY has a good chain of insurance companies tied up.
 DEALMONEY charges very minimal amount of brokerage to its clients.
 DEALMONEY gives frequent updates to its clients which are expected by each and every
client.
WEAKNESS:

 DEALMONEY’s having limited sales executives.

 Low advertisements from the company.
 DEALMONEY does not have any segments, or target customers.

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 DEALMONEY does not give any seminar to investors prior to investing.

OPPORTUNITY:
 Growing consumer awareness about equity related product
 Positive outlook of people towards financial products
 Growing rural market is the best opportunity for the company

THREATS:
 Uncertainty of the market volatility and fluctuations in the stock prices
 Threat from new entrants into the field of stock broking
 Stringent economic measures by Government and RBI
 Banks entering to stock broking industry

39 | P a g e
 CHAPTER –2
WORK DONE IN THE COMPANY

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 I got an opportunity to work with one of leading service provider Company in the field of trading and
other merchant banking services.
Activities carried out by me-
i. We got to know about the products and services offered by the company such as:-
 It offers its trading services to customers across segments like Equity, Equity Derivatives,
Commodity Derivatives & Currency Derivatives.
 For Equity & Equity Derivatives, Dealmoney is Trading member of National Stock Exchange
(NSE) and Bombay Stock Exchange (BSE).
 For Commodity Derivatives, Destimoney is trading member of National Commodity &
Derivative Exchange Ltd. (NCDEX) and Multi-Commodity Exchange (MCX).

ii. We received one month’s training on forex trading by creating a demo account on GRAND
BLOOM MT5. Here we traded in virtual money. The currencies that we used to trade usually
are: - USD/JPY, USD/GBP etc. Some commodities that we trade on were Gold, Silver etc.
iii. After one month, we were placed in Customer support service, where we used to call our clients
and inform them about our product and services.
iv. We also helped them in creating Demat account.

EXPECTATIONS BY THE COMPANY

The company expected us to be punctual and maintain regularity in our work. The company asked us
to open minimum 5 Demat accounts in a day.
LEARNING EXPERIENCE:
The opportunity of undergoing an in plant training for eight weeks duration is being capitalized by
me for increasing my knowledge base by working at DEALMONEY Securities Ltd. I am privileged
to highlight some of the learning experience got from this training. It helped to link the theories,
techniques and practices of management with different activities of the organization in trading
operations. It increased my conceptual understanding of the subject security analysis and its trading
and tools.

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 CHAPTER -3
Review of Literature

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(Edwards, 2000)
In this Article it was investigated the dynamic association between exchange rate regimes, capital
flows and currency crises in emerging economies. The study draws on lessons learned during
the1990s, and deals with some of the most important policy controversies that emerged after the
Mexican, East Asian, Russian and Brazilian crises. He concludes that under the appropriate
conditions and policies, floating exchange rates can be effective and efficient.

(Irwin, 2004)
It found consistent evidence that simple technical trading strategies were profitable in a variety of
speculative markets at least until the early 1990s. But however, most previous studies are subject to
various problems in their testing procedures. Future research must address these problems in testing
before conclusive evidence on the profitability of technical trading strategies is provided.

(Menkhoff, 2006)
This Article it concludes that research conducted in most of the major foreign exchange markets
during the last decade or so reveals clearly that the use of technical analysis is an important and
persistent phenomenon which is highly influential in the decision making of foreign exchange
professionals. A similar situation emerges with respect to the profitability of technical analysis. The
most satisfying explanation concerning the continued use of technical analysis seems to be position
four, whereby technical analysis is seen as an instrument informing trader about non- fundamental
price determinants. These forces are more important in the shorter-run, so for a full understanding of
exchange rate dynamics, professionals need a combination of several tools, in particular, both
technical and fundamental analysis. This position also fits well with the stylised fact on the higher
profitability of technical analysis in flexible exchange rate markets, as there is some indication that
these markets may be characterized by a degree of volatility that is hard to explain by fundamentals
alone.

(hatty, 2008)
This Article provides details on currency futures report presented by Reserve Bank of India (RBI)
and Securities Exchange Board of India(SEBI) in issues related to exchange traded currency futures
introduction into stock exchanges. It also discuss on the guidelines on trading of currency futures in
the stock exchanges.

(Anand & Kaushik, 2008)

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Management Motivations for Use of Foreign Currency Derivatives in India‟, examines the
management motivation of foreign currency derivatives usage in corporate India. For this study 640
companies are selected having using currency derivatives or documented foreign exchange risk
management practices at their companies. It is found that management of the studied companies find
currency future derivative is critical for their risk exposure in the foreign trade and volatility of price
movement in the foreign market trade. They find currency future as hedging instrument.

(Guru, 2009)
It shows the view on Forex derivative market development from early period of currency system till
the currency trade in national stock exchanges in India. It presents about the trade activities at NSE.
Further more studies also available on currency derivative but not specific on currency future at
National Stock of India (NSE). Based on this study is being initiated to find out the facts of trade
practices at NSE and MCX-SX.

(Menon, 2009)
It very clearly shows that technical analysis is profitable in currency trading in the forex spot market,
and this is proved by the fact that all the four currency pairs, six time frames, and ten indicators have
yielded trading profits in the forex spot market. Among the four currency pairs taken for analysis
EUR/USD has yielded maximum profit.

(Kapil, 2010)
The recent expansion of Indian commodity market has not been very structured. The market has
expanded with the expansion in demand for commodities both in spot and derivative market. There
have been constraints through policy restrictions and at the same time there has been an effort for
liberalization of the commodity market to bring them at par with international commodity market. Of
late, the Indian equity market has been very volatile. Participation of CTAs will provide much
required downside protection to traditional portfolios and they will also provide the expertise in
commodity derivative trading to participants and help build the commodity inclusive portfolios with
better return and lesser risk.

(Vandana, 2013)
Indian currency markets present a good investment opportunity. However, investors should
participate only after a thorough understanding of how they work. From last three months we can see
that, due to external & internal factors Indian currency market is more volatile and sensitive market
compare to other countries.

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(Lashkari) (2013)
In their research, explain that traders have to continue to move in one direction in the exchange rate
over time, called a trend. And also explain that trends have three directions; sideways, down and up.
Trend indicators level variable rate data to produce a mix of market direction. There are some Trend
Indicators, for example, Moving Averages (MA), MACD, P-SAR, and Trend lines.
They also talk about the effectiveness of the MACD indicator for four pair currencies; EURUSD,
GBPUSD, USDCHF, and USDJPY based on the profitability of the buy and sell signals have been
evaluated. Traders can only trade one of the four pair currencies which are EUR/USD, GBP/USD,
USD/JPY and USD/CHF. MACD had better results with trading with EURUSD. The most effective
combination of MACD-Currency regarding generation of profit has been identified to be
MACDEURUSD with considering the assumptions of this study. MACD performed not bad with
EURUSD as it has created $8,068.53 cash at the end of ten years period of trading.

(CHONG, 25 SEPTEMBER 2013)

The results indicate that the hedging decision of non-financial firms is influenced by their assertive
level toward the market and regulators and also how flexible they are for derivative instruments. The
intellectual capability that firms acquire to perform hedging strategies is also vital in influencing
them to make hedging decision.

(PATHAK, 31 AUGUST 2015)

The results indicate that the returns during Monday to Wednesday are positive and higher than the
returns on Thursday and Friday which show negative returns. The returns during January are found to
be higher than the returns during rest of the year. Further, all currencies exhibit significant DOW and
January effects in pre-crisis period, however, post-crisis; these effects disappear for all currencies
indicating that the markets have become more efficient in the later time. The findings can be further
attributed to the increased intervention in the forex markets by the Reserve Bank of India after the
crisis.

(UNCTAD, 5 JUNE 2015)

The major findings in this article were laid on the functioning of commodity markets and the flow of
information that affect the trading decisions. The paper also summarizes the recent developments and
trends in fundaments on both the demand and supply side. They have urged that due to increase in the
number of investors in commodity market who do not base their trading purely on the basis of
demand and supply has lead to misleading price signals in the market . Another finding in this paper
was that investors want to diversify their portfolio which is playing an important role for them to
invest in commodity market rather than understanding the fundamentals for investment.

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(SHASTRI, 6 JUNE 2016)
The study finds long-run relationship among interest rate, rupee– dollar exchange rate, capital flows,
intervention, inflation differential, money supply differentials, output differentials and trade-balance
differentials. However, the interest rate does not explain movements in the exchange rate, directly
and indirectly, via capital flows. Intervention by the Central Banks to stabilize exchange rate does not
have implications for movements in interest rate.

(Arvind, 2017)
The major findings in this articles was the interrelationship between currency market volatility and
stock market volatility will create abundant trading opportunities to the investors irrespective of
whether the return of one market is moving up or down. This research work intended to examine how
the exchange rate volatility between Indian rupee and foreign currencies, such as US dollar, euro,
Japanese yen and British pound, can influence the return and volatility of the Indian stock market.

(Chakravarthy, 2018)
Forex markets, which are also known as currency markets, are the most active trading futures
markets both in terms of volume and amount of money. With a daily volume of over $2 trillion,
trading Forex is done mostly between central banks, commercial banks and large companies. Forex
markets are unique because then aren't traded at futures exchanges; they are traded directly between
investors in such trading centers as London, New York and Tokyo. Forex currency trading for
beginners can seem very different from the stock market. Forex markets have different regulations
and terminology but the same overall principles apply.

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 CHAPTER-4

RESEARCH METHODOLOGY

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 Objectives:

1. To study the strategies or the tools used to down size the risks or the exposures which affects the forex
market.
2. To study the tools or the techniques available for foreseeing the future foreign exchange rates.
3. To study the process followed by the, stock brokers and the traders in exporting and importing
4. To find out the expectations of traders from stock brokers, other than their regular Forex trading
5. To find out the legal rules and regulations created by the government in the forex market

Methodology

Type of Methodology: Analytical Research.

Data Collection used in the study:

Primary Data:

The primary data where collected from two sources that is for collection of foreign rates were from
the internet and few of the data such as like clients information were collected from both the
questionnaire and from the company’s clients records books.

Secondary Data:

The secondary data such as like rules and regulations, foreign trade regulations, and the basic theories
were collected from the internet.

Scope of the Study

This study will give an basic information to all the traders and also which will reduce the exposures or risks
through the stock brokers.Not only that this study will further guide the traders in knowing the steps, legal rules
and regulations involved in the forex market and how far these things would affect the smooth working of the
trade.This study will help the DEALMONEY securities (ltd) to know what the clients expect from them, so that

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they can bridge the gap and meet their client’s expectations. And not only that the Dealmoney can increase their
number of client’s growth.

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 CHAPTER 5-
DATA INTERPRETATION AND ANALYSIS

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  This survey is conducted to knowA Study on foreign exchange market with
a view of Indian traders
Sample size is 50

1. Analysis of investor’s Gender

Gender Male female Total

Number of 29 21 50
people

Interpretation
 This analysis shows that 55% of people are Female and 45% of people are Male who are
aware of foreign exchange market.

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 2. Analysis of investor’s Age group

age 15-20 25-30 40-50 Above 55

years years years years
Number of 0 29 17 4
people

Interpretation
 15-20 years age of people was least interested in forex trading.
 This analysis shows that most of the people who are aware of Forex trading are in the
age group of 25-30 years.
 34%of people are in the age group of 40-50years.
 8% of people are Above 55 years.

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 3. Analysis of investor’s field of knowledge

Field of commerce science arts other

knowledge
Number of 19 17 12 2
people

Interpretation
 The analysis shoes that 38% of the people was form the commerce and 34% from
the arts and 24% from the science.

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 4. Analysis of investor’s Occupation.

Occupation Business Self- Services Student Housewife

employment
Number of 17 21 5 4 3
people

Interpretation

 The above chat shows that the 34% people are from the business and 42% from
self-employed so major set of people was from business and self-employment.
 10% from services who was aware of forex trading.
 8% of students and 6% who was in interested in trading in forex market.

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 5. Analysis of investor’s Annual Income.

Annual Less than Rs.200000- Rs.350000- More than

income Rs.200000 Rs.350000 Rs.500000 Rs.500000
Number of 3 10 22 15
people

Interpretation
This analysis shows that most annual income falls into Rs350000 to 500000 30%
of more than 5000000 and 20% of people’s monthly income is around Rs200000-
350000.

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6. Analysis of investor’s Preference towards savings and investment.

Preference Yes no maybe

towards savings
and investment
Number of 34 16 0
people

Interpretation

This analysis shows most of people have investments and savings and 32% of the
people may or may not be interested in savings and investments.

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7. Analysis of investor’s Purpose behind savings and investments.

savings and wealth Earn Tax To meet

investments creation returns savings up the
future
investment
No. of 8 17 10 15
people
prefrence

Interpretation
After analyzing the above data of the clients most of the investors are keen in
earning of more returns and also meet up the future investment as present today
many investors are towards the market trading based upon the risk return trade
off and their ability to take risk, some of the investors are keen investing in tax
saving avenues as the data collected it is around
20%.

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 8. Analysis of investor’s in which currency do they prefer to invest.

currency USD EURO JPY GBP

No. of 7 18 13 12
people
Preference
to
currency

Interpretation
The analysis shows that there are many investors who invest in EURO currency , based upon
the fundamental and technical analysis , its acceptance in the global market is increasing by the
day , hence the demand is high, and there is also a rapid changes in the economy due to
European union market. Thus there is a highly demand for euro currency.

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 9. Analysis of investor’s time duration in investing currency.

Time Intraday Less 1-2 2-3 More

duration than 1 month months than 3
month months
Trades 5 15 18 10 2

Any investment needs time, to make returns even possible. The respondents suggest that
investing for close to a month or more will reap profits for the longer run. High risk means
higher rewards and this means time to be taken for investment should also be higher.

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 10. Analysis of investor’s percentage of money they invest from there income

Percentage Less than 11%-20% 21%-30% 31%

of money 10%
investment
Trades 9 23 13 4

INTERPRETATION
Most of the investors who invest In the stock market are highly net worth individuals the
minimum investments start from 500000 thus the return is based upon the individual risk
ability and the returns is based on the currencies fundamental and technical analysis of
individual stock as per the above data the Investment is around 11%-20%.

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 11. Analysis of investor’sreturn they expect in currency market.

(Rated from 1 to 5 where 1 is the low return expected to 5 is the highest return)
INTERPRETATION
My sample suggests that there is moderate returns from the market. This can be contrary to
the common belief that it is highly rewarding. This can be explained by the fact that returns
viewed by respondents may be net returns over a period of time, i.e., netting off all losses and
calculating the net profits. This netting off is due to the fact that the risk in this market is really
high, and the chances of making losses is quite high for each investment.

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 12. Analysis of investor’s risk in currency market

Rated from 1 to 5

(Rated from 1 to 5 where 1 is the low risk to 5 is the highest risk)

Majority of the responders feel that the currency market either has moderate or high risk. This
can be backed with the various experiences of those who invest with the hopes of making
profits, but due to inadequate knowledge, end up making losses. The volatility of the market
usually scares even an avid investor, who has moderate experience. One wrong call, and the
entire capital base could be wiped out.

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 CHAPTER-6
FINDINGS AND RECOMMENDATIONS

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 FINDINGS
 The Analysis shows that most people are aware of the Forex Trading in India.
 It shows that people who are interested in investing in forex market are most of
them are male.
 Most of the people are high net worth who invest in the forex trading.
 Analysis shows that the trading in currency market is more risk `
 Most of the people trade for a long term than the short term as the risk is more the
returns are more.

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RECOMMENDATIONS
 The Forex market operational environment is becoming more competitive. Hence, the impact of
emerging competition on investor behavior/behavioral changes needs to be studied further.
 Developments in technology influence the behavior of investors. Hence, the impact of technology
on financial behavior is another potential area for close study.
 Since the industry is still struggling to win the investors„ confidence, in-depth analysis into
investor’s expectations from Forex market, its performance, management, service and other
related areas could be done.
 This study reveals that Forex market investors feel that currently the two major benefits, which
Commodity market claim to offer, namely, Diversification and Safety are not
satisfactorily delivered. In spite of this, Forex market industry is growing and we attribute this to
investor behavior and other macroeconomic factors. Further research can be done to understand the
reasons for growing popularity on one side and the struggle to win investor’s confidence on the other
side.
• As we have seen from this study that Forex market is on a rise in terms of value, so a study
can be conducted further to understand the untapped market.

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 Appendix
1. Gender

o Male
o Female

2. Age

o 15-20 years
o 25-30 years
o 40-50 years
o Above 55 years

3. field of knowledge
o commerce
o science
o arts

4. occupation
o Business
o Self employed
o Services
o Student
o House wife

5. Annual Income
o less than 2,00,000
o 200000-350000
o 350000-500000
o more than 500000

6. preference towards savings and investment

o yes
o no
o may be

7. purpose behind savings and investments

o wealth creation
o Earn returns
o Tax savings
o To meet up the future investment

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 8. In which currency do you prefer invest?
o USD
o EURO
o JPY
o GPY

9. What is the time duration you invest in currency?

o Intraday
o Less than 1 months
o 1-2 month
o 2-3 months
o more than 3 months

10. How many percentage of money do you invest in currency from your Income?
o less than 10%
o 11% - 20%
o 21% - 30%
o 31% and above

11. Type of return you expect in currency market?

(Least 1 to the highest 5)

12. How much riskier is currency market?

(Least 1 to the highest 5)

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BIBILOGRAHY

1. https://www.dealmoneyonline.com/
2. https://www.learntotradethemarket.com/forex-university
3. http://www.forex-market-history.com/complete-overview-history-forex-market.html
4. https://in.tradingview.com/markets/currencies/rates-major/
5. http://www.yourarticlelibrary.com/forex-management/4-main-participants-of-foreign-
exchange-market/98272
6. http://learntotradefxmarkets.com/forex-currency-markets/6-characteristics-of-foreign-
currency-exchange-market/

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