INDEX1.INTRODUCTION

1.2OBJECTIVE

1.3METHODOLOGY

1.4REVIEW OF LITERATURE

2.CONCEPTUAL FRAMEWORK

3.EVOLUTION OF INDIAN STOCK EXCHANGE

4.EQUITY MARKETS OF INDIAN STOCK EXCHANGE

4.1DEFINITION

4.2FUNCTIONING

4.3BENEFITS OF INVESTING

4.4ANALYSIS OF EQUITY MARKETS

5.COMMODITY MARKETS OF INDIAN STOCKEXCHANGE

5.1INTRODUCTION

5.2TRADED COMMODITIES

5.3COMMODITIES FUTURES AND ITS BENEFITS

6.CURRENCY MARKETS

6.1INTRODUCTION

6.2UNIQUENESS

6.3FINANCIAL INSTRUMENTS

7.COMPARATIVE STUDY

7.1OBJECTIVES

7.2 TOOLS FOR DATA ANALYSIS

7.3RETURNS

7.4STANDARD DEVIATION

7.5CORRELATION

7.6SUGGESTIONS

8.CONCLUSION

9.BIBLIOGRAPHY

CHAPTER 1INTRODUCTION

1.1 INTRODUCTION TO STOCK EXCHANGES:A stock exchange is a place or organization by whichstock raders(people and companies) can trade stocks. Companies may want to get their stock listed on a stock exchange. Other stocks may be traded "over the counter", that is, through a dealer. A large company will usually have its stock listed on many exchanges across the world. Exchanges may also cover other types of security such as fixed interest securities or interest derivatives.Trade in stock markets means the transfer for money of a stock or security from a seller to a buyer. This requires these two parties to agree on a price. Equities (Stocks or shares) confer an ownership nterest in a particular company.Participants in the stock market range from small individualstock investorsto largertradersinvestors, who can be based anywhere in the world, and may include banks, insurance companies or pension funds, andhedge funds. Their buy or sell orders may be executed on their behalf by a stock exchange trader.Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known asopen outcry. This method is used in some stock exchanges andcommodity exchanges, and involves traders entering oral bids and offers simultaneously. An example of such an exchange is theNew York Stock Exchange. The other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically by traders. An example of such an exchange is theNASDAQ.A potential buyerbidsa specific price for a stock, and a potential sellerasksa specific price for the same stock. Buying or sellingat market means you will acceptanyask price or bid price for the stock, respectively. When the bid and ask prices match, a sale takes place, on a first-come-first-served basis if there are multiple bidders or askers at a given price.The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing amarketplace(virtual or real). The exchanges provide real-time trading information on the listed securities, facilitatingprice discovery.

1.2 OBJECTIVE OF THE STUDY:1. To study the Indian stock exchanges .2. To examine equities, commodities and currency market.3. To find comparison between equity, commodity and currency market.1.3 RESEARCH METHODOLOGY :Secondary method of data collection has been used for the study. The data is collected through books, journals, magazines, newspaper, websites, etc.1.4 REVIEW OF LITERATURE:Fountas and Segredakis (2002)1 studied 18 markets and reported seasonal patterns in returns. The reasons for the January effect in stock returns in most of the developed countries such as US, and UK attributed to the tax loss selling hypothesis, settlement procedures, insider trading information. 1. Fountas, Stilianos and Konstantinos N. Segredakis(2002) Emerging stock markets return seasonalities: the January effect and the tax-loss selling hypothesis, Applied Financial Economics, Vol. 12, pp. 291-299.Keim (1983)2 along with seasonality also studied size effects in stock returns. He found that returns of small firms were significantly higher than large firms in January month and attributed this finding to tax-loss-selling and information hypothesis.Jaffe and Westerfield (1989)3 studied day of the week effect on four international stock markets viz. U.K., Japan, Canada and Australia. They found that lowest returns occurred on Monday in the UK and Canada. However, in Japanese and Australian market, they found lowest return occurred on Tuesday.

2. Keim, D.B.(1983),Size-Related Anomalies and Stock Return Seasonality: Further Empirical Evidence, Journal of Financial Economics, Vol.12, pp.13-32.3. Jaffe, Jeffrey F., and Randolph Westerfield and M. Christopher (1989), A Twist on The Monday Effect in Stock Prices: Evidence from the U.S. and Foreign Stock Markets, Journal of Banking and Finance, Vol. 13, pp. 641-650.Brooks and Persand (2001)4 studied the five southeast Asian stock markets namely Taiwan, South Korea, The Philippines, Malaysia and Thailand. The sample period was from 1989 to 1996. They found that neither South Korea nor the Philippines has significant calendar effects.Choudhary and Choudhary (2008)5 studied 20 stock markets of the world using parametric as well as non-parametric tests. He reported that out of twenty, eighteen markets showed significant positive return on various day other than Monday. The scope of the study is restricted to daysof-the week effect, weekend effect and monthly effect in stock returns of S&P CNX Nifty and select firms.

4. Brooks, Chris, and Gita Persand (2001), Seasonality in Southeast Asian Stock Markets: Some New Evidence on Day-of-the-Week Effects, Applied Economic Letters, Vol. 8, pp. 15558.5. Choudhary, K and Sakshi Choudhary (2008), Day-of-the-Week Effect: Further Empirical Evidence, Asia-Pacific Business Review, Vol. 4, no.3, pp.67-74.Pravakar sahoo and Rajiv Kumar (2009)6 has evaluated that trading in commodity derivatives on exchange platform is an instrument to achieve price discovery, better price risk management besides helping macro economy with better resource allocation.Narender L. Ahuja (2006)7 has analyzed that the Indian economy is witnessing a mini revolution in commodity derivatives and risk management.

6. Pravakar sahoo & rajiv kumar Efficiency and Futures trading- Price Nexus in Indian commodity futures markets journal of global business review july/December 2009 vol.(10) no.2 (187- 201).7. Narender L. Ahuja Commodity Derivatives Market in India: Development, Regulation and Future Prospects International Research Journal of Finance and Economics, ISSN 1450- 2887 Issue 2 (2006).J.N. Dhankar (2007)8 has evaluated that commodity exchanges in India are steadily gaining popularity and provides an understanding on how commodity exchanges can mitigate trading risk. He correlates the relationship between spot price and futures prices in commodity market in the entire risk management process.Sumit Gupta (2008)9 explains the economic functions of the commodity futures market, regulations of the commodity derivative market and the present scheme of regulation in Indian commodity derivatives market and the economic functions of the commodity futures market includes market creation by entering into futures contract.

8. J.N. Dhankar Reducing risk through commodity exchanges journal of ICFAI university press, all rights reserved(2007) (59-68). 9. Sumeet guptaAn insight into the commodity derivative market journal of the icfai university press, all rights reserved (2008) (45-50).CHAPTER 2CONCEPTUAL FRAMEWORK1. STOCK MARKET: Astock marketorequity marketis the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) ofstocks(also called shares); these may includesecuritieslisted on astock exchangeas well as those only traded privately.\2. OPTIONS: An option is a contract that gives the buyer the right, but not the obligation, to buy or sell anunderlyingasset at a specific price on or before a certain date. An option, just like a stock or bond, is asecurity. It is also a binding contract with strictly defined terms and properties.Calls and PutsThe two types of options are calls and puts:1. Acallgives the holder the right to buy an asset at a certain price within a specific period of time. Calls are similar to having along positionon a stock. Buyers of calls hope that the stock will increase substantially before the option expires.2. Aputgives the holder the right to sell an asset at a certain price within a specific period of time. Puts are very similar to having ashort positionon a stock. Buyers of puts hope that the price of the stock will fall before the option expires.3. FUTURES : An auction market in which participants buy and sell commodity/future contracts for delivery on a specified future date. Trading is carried on through open yelling and hand signals in a trading pit.4. DERIVATIVES: The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. 5. BULLISH MARKET: A financial market of a group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used to refer to the stock market, but can be applied to anything that is traded, such as bonds, currencies and commodities.6. BEARISH MARKET: A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows.

CHAPTER 3EVOLUTION OF INDIAN STOCK MARKET3.1 ORIGINThe Indian stock market is not a new concept. It has a history of about 299 years old. It was in early 18th Century, themain institution that is dealing in the trading of shares and stocks is the East India Company. Later by around 1830s the main dealing in the shares and stocks (mainly in bank and cotton) was initiated in Bombay. However, the items in which the trading took place increased tremendously by the end of 1839. There after the concept ofbrokerbusiness was started which show momentum in the mid 18th century. This concept has attracted nm\ember of people to indulge in the trading of items. By 1860, the number of brokers who are dealing in the trading of items goes up to 60 in number. Further, the number of brokers increased from 60 to 250 in around 1862-1863.However, around 1980-61 there is no supply of cotton from America as there was civil war that took place in America. Due to this, there is a concept of Share Mania that took place in India.This is the era of 1980 in which the Indian market had the initial flavor of the trading in items and the concept of Stock market. Thereafter, it has shown significant changes both in the pre-independence era and post independence era.Pre-Independence Era:The concept of stock market place was not a very systematic system. People who needs to trade generally gathered on the streets which was popularly known as theDALAL STREETand the trading and the transaction used to take place from the Dalal street. It was in year 1875 that the first stock exchange was formulated in the name of The Native Share and Stock Brokers Association which is presently known as the Bombay stock exchange. There after it was in year 1908, that the stock exchange in Calcutta was formulated known as The Calcutta Stock Exchange Association. This wind of stock exchange has also shown its pace in madras in 1920 resulting in the formation of the Madras Stock exchange which was started with around 100 brokers who are trading in the madras Stock exchange. It was in 1934 when the Lahore Stock exchange was established. The Uttar Pradesh stock exchange and the Nagpur stock Exchange was established in year 1940. In year 1944,the Hyderabad stock exchange was established. It was not until 1947 that any stock exchange was established in Delhi. It was in year 1947 that the Delhi Stock and Share Broker Association Limited and The Delhi stocks and Shares exchange Limited was established in Delhi.Post-Independence Era:There was shutdown of various stock exchanges in India due to the depression that took place after Independence. It was under the Securities Contracts (Regulations) Act, 1956 that various stock exchanges has got a recognition as a recognized stock exchange such as Bombay, Delhi, Hyderabad, Indore etc. there are several other stock exchanges that were established post independence.Thus, the market of stock exchange in India is tremendous and is growing with leaps and bounds.

3.2 DIFFERENT STOCK EXCHANGES IN INDIA1. AHEMDABAD STOCK EXCHANGE:Ahmedabad Stock ExchangeorASEis the second oldest exchange ofIndialocated in the city ofAhmedabadin the western part of the country. It is recognized bySecurities Contract (Regulations) Act, 1956 as permanentstock exchange. It has adopted aSwastikain its logo which is one of the most auspicious symbols ofHinduismdepicting wealth and prosperity.The stock exchange went live on December 12, 1996. Initially, ASE used a system provided byIBM. Since June 1999, ASE operates on Ahmedabad Stock Exchanges' Online Trading System (ASETS). This system was provided to ASE byTata Consultancy Services Pvt. Ltd.Members of the ASE can also trade on theBombay Stock Exchangethough a system called IBOSS. Today the stock exchange has 333 trading members.

2. ASBA:ASBA(Applications Supported by Blocked Amount) is a process developed by the India's Stock Market RegulatorSEBIfor applying toIPO. In ASBA, an IPO applicant's account doesn't get debited until shares are allotted to them.EarlierQualified Institutional Buyers(QIBs) were not allowed to participate in IPOs through ASBA facility.[1]Currently as per SEBI guidelines, Non-retailinvestorsi.e. Qualified Institutional Buyers and Non-Institutional Investors, making application in public/rights issue shall mandatorily make use of ASBA facility.ASBA process facilitates retail individual investors bidding at a cut-off, with a single option, to apply through Self Certified SyndicateBanks(SCSBs), in which the investors have bank accounts. SCSBs are those banks which satisfy the conditions laid by SEBI. SCSBs would accept the applications, verify the application, block the fund to the extent of bid payment amount, upload the details in the web based bidding system of NSE, unblock once basis of allotment is finalized and transfer the amount for allotted shares to the issuer.ASBA means Applications Supported by Blocked Amount. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

3. BANGALORE STOCK EXCHANGE:Bangalore Stock Exchangeis a publicstock exchangebased inBangalore,India. It was founded in 1963 and currently has 595regionaland non-regional companies listed. In September 2005, the BGSE announced plans to gopublicby divesting at least 51% of its ownership. The stock exchange is managed by a Council of Management, consisting of members appointed by theSecurities and Exchange Board of India. First stock exchange in South India to start electronic trading of securities in 1996.Some of the companies that trade on the BgSE includeInfosys,Wipro, United Breweries and Bharat Electronics Limited.The Bangalore Stock Exchange Limited (BgSE) is a self-regulatory organisation located in the garden city of India. The Exchange is managed by the Governing Board consisting of members nominated by Securities Exchange Board of India (SEBI), Public Representatives, Elected members and an Executive Director. The Exchange has been serving the investor community continuously since its inception in 1963.

4. BHUBANESHWAR STOCK EXCHANGE:Bhubaneswar Stock ExchangeAssociation Ltd, (BhSE) is a stock exchange located inBhubaneswar,Odisha,India. It was incorporated on 17 April 1989, and granted recognition to the Stock Exchange on 5 June 1989, by the Ministry of Finance, Govt. of India. It is one among the 21 odd regional stock exchanges in India.

5. BOMBAY STOCK EXCHANGE:The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to 1855, when four Gujarati and one Parsi stockbroker would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as "The Native Share & Stock Brokers Association".On 31 August 1957, the BSE became the first stock exchange to be recognized by theIndian Governmentunder the Securities Contracts Regulation Act. In 1980, the exchange moved to thePhiroze Jeejeebhoy TowersatDalal Street,Fort area. In 1986, it developed theBSE SENSEXindex, giving the BSE a means to measure overall performance of the exchange. In 2000, the BSE used this index to open its derivatives market, trading SENSEX futures contracts. The development of SENSEX options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform.Historically an open outcry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system developed by CMC Ltd in 1995. It took the exchange only fifty days to make this transition. This automated,screen-based tradingplatform called BSE On-line trading (BOLT) had a capacity of 8 million orders per day. The BSE has also introduced a centralized exchange-based internet trading system, BSEWEBx.co.into enable investors anywhere in the world to trade on the BSE platform.

6. CALCUTTA STOCK EXCHANGE:Calcutta Stock Exchange, also abbreviated toCSE, (Bengali: di kyalkata stk ekschenj) located at the Lyons Range,Kolkata,India, is the oldest stock exchange inSouth Asia. It was incorporated in 1908 and is the second largest bourse in India. In 1830, the bourse activities in Kolkata used to conducted under aneemtree.[2]The earliest record of dealings in securities in India is theBritish East India Companys loan securities. In 1908, the stock exchange was incorporated and consisted of 150 members. The present building at the Lyons Range was constructed in 1928. The Calcutta Stock Exchange Ltd was granted permanent recognition by theGovernment of Indiawith effect from April 14, 1980 under the relevant provisions of the Securities Contracts (Regulation) Act, 1956. The Calcutta Stock Exchange followed the familiar outcry system for stock trading up until 1997, when it was replaced by an electronic (eTrading) system known as C-STAR (CSE Screen Based Trading And Reporting).[3]The full form of CSE is Calcutta Stock Exchange.

7. COCHIN STOCK EXCHANGE:Cochin Stock ExchangeLimited is a capital stock market inKochi,KeralainIndia. Incorporated in 1978,[1]it has now over 350[2]Indian companies listed. Cochin Stock Brokers Limited (CSBL), a wholly owned subsidiary of CSE is a member ofNSEandBSE.During the 1990s, it was the fourth largest exchange in India by turnover, with a daily turnover of70100crore(equivalent to301crore or US$46million in 2015). The exchange stopped trading in 2005, and was in the final stages of closure by May 2014. Computerized trading was introduced in 1997. The major back office system software used are NESS and BOSS respectively for NSE and BSE. The trading software used in CSBL is Multex. Traders are provided Meta Stock and ERS software, trading terminals and optical fiber connections.[5]DP holdings are maintained by demat services like CDSL.The new millennium saw the stock exchange building being shifted from the old structure in downtown Cochin to a brand new building in the Kaloor area in northern Kochi.Trading hours historically used to begin late in the afternoon enabling access to traders from other regions of the state. Base Minimum Capital required to be maintained is Rs. 2 lakhs.The securities scam of the early nineties led the SEBI regulations on stock exchanges requires separation of ownership and trading rights and made it mandatory for majority ownership rests with the public, those without any trading rights.

8. COIMBATORE STOCK EXCHANGE:Coimbatore Stock ExchangeLimited, (CSX) is a defunct stock exchange inCoimbatore,India. It was granted recognition as astock exchangeby theSecurities and Exchange Board of India(SEBI) in 1991.In 1997, the exchange had refrained from restraining its members from furnishing unlimited personal guarantee to other exchanges.[2]The Exchange had failed to renew its licence with the SEBI in 2006, and in 2009, it made a formal request to the board to exit the trading business in 2009.[1]Prior to it becoming defunct, 170 companies were listed on the exchange.[3]The exchange became dormant in the early 2000s due to the advent of online trading on larger stock exchanges.

9. DELHI STOCK EXCHANGE ASSOCIATION:Delhi Stock Exchange(DSE) is located inNew Delhi, India. It was incorporated on 25 June 1947. The exchange is an amalgamation of Delhi Stock and Share Brokers' Association Limited and the Delhi Stocks and Shares Exchange Limited. It is India's fifth exchange. The exchange is one of the premier stock exchanges in India. The Delhi Stock Exchange is well connected to 50 cities with terminals inNorth India.The exchange has over 3,000 listed companies. It has received the market regulator's permission fromBSEand has become a member. Now it facilitates the DSE members to trade on the BSE terminals. The exchange is also considered the same fromNSE.

10. GUWAHATI STOCK EXCHANGE:Guwahati Stock Exchange(GSE) is locate inGuwahati,Assam,India. It was incorporated on 29 November 1983 and it was recognised by theGovernment of Indiaon 1 May 1984. The GSE is limited by guarantee by the member-brokers.By 1999-2000, theexchangehad a total of 206brokers, out of which 5 were corporate brokers. Among 206 brokers, it was further classifies as 200 proprietor broker, 1 partnership broker and 5 corporate broker. Then, there was only 4 sub-brokers registered. Currently there are 290 companies listed in the GSE.

11. HYDERABAD STOCK EXCHANGE:In November 1941, some leading bankers and brokers formed the share and stock Brokers Association. In 1942, Mr. Gulab Mohammed, theFinance Minister, formed a committee for the purpose of constituting rules and regulations of the Stock Exchange. Sri Purushothamdas Thakurdas, president and founding member of the Hyderabad Stock Exchange performed the opening ceremony of the exchange on November 14, 1943 under Hyderabad Companies Act. Mr. Kamal Yar Jung Bahadur was the first president of the exchange. The HSE started functioning under Hyderabad Securities Contract Act of No. 21 of 1352 under H.E.H.Nizams government as a company limited by guarantee. It was the 6th Stock Exchange recognized under Securities Contract Act,Ahmedabad,Bombay,Calcutta,Madras, and Bangalore Stock Exchange. All deliveries were completed every Monday or the next working day.The HSE was first recognized by the Government of India on 29 September 1958 as Securities Regulation Act was made applicable to twin cities of Hyderabad andSecunderabadfrom that date. In view of substantial growth in trading activities, and for the yeoman services rendered by the exchange, the exchange was bestowed with permanent recognition with effect from 29 September 1983.

12. INNER CONNECTED STOCK EXCHANGE OF INDIA:Inter-connected Stock Exchange Ltd.(ISE) started its operation in 1998[1]inVashi,Mumbai.[2]It is a national-levelstock exchange, providingtrading,clearing,settlement,risk managementand surveillance support to its trading members. It has 841 trading members, who are located in 18 cities. These intermediaries are administratively supported through the regional offices at Delhi, Kolkata,Patna,Ahmedabad, besides Mumbai.The ISE is promoted by 12[4]regional stock exchanges namely atBangalore,Bhubaneshwar,Chennai,Cochin,Coimbatore,Guwahati,Indore,Jaipur,Kanpur,Mangalore,MagadhandVadodara.[5]The participating exchanges of ISE have 4,500[6]members and listed securities. It is a stock exchange of stock exchanges,[7]members of the stock exchanges being traders on the ISE.

13. INTREX TRADE STOCK EXCHANGE:Intrex Trade Exchange Ltdis India's first ever Cash Trade Exchange, based inMumbai,Maharashtra.[3][4]formerly known as Intrex India Ltd, is a public limited company incorporated in Year 2000 byEssel Group.[5]The Trade exchange, comprising both a cash and a cashless exchange, offers Indian businesses an integrated platform for their finance, marketing and sourcing requirements

14. JAIPUR STOCK EXCHANGE:Jaipur Stock Exchange(JSE) is located inJaipurRajasthanit was founded and was recognized in 1989. JSE is the third largest exchange in India in terms of membership. It was established in the year 1989. In the same year, the exchange was granted recognition in the month of January and the commencement of business took place from the month August, 1989. Dr. J N Dhankhar started as the Executive Director of JSE in September 1989. Its license from SEBI is valid up to January 8, 2011.Within seven years of its incorporation, i.e. by January 1996, the exchange managed to attract 750 companies who were listed on the exchange. Then the volume of the daily turnover rose to an average of Rs.80 million.Jaipur Stock Exchange was one of the 15 regional Stock Exchanges which promoted the Inter-connected Stock Exchange of India Ltd. by paying the Initial Capital of Rs.1 crore (Rs.5 lakhs as admission fee and Rs.95 lakhs as infrastructure fee).

15. LUDHIANA STOCK EXCHANGE ASSOCIATION:Ludhiana Stock Exchange AssociationLimited (LSE) was established in the year 1983. By 1999-2000, the exchange had a total of 284 brokers, out of which 79 were corporate brokers. Among 284 brokers, it was further classified as 212 proprietor broker, 2 partnership broker and 70 corporate broker. Then, there was only 23 sub-brokers registered.Ludhiana Stock Exchange became the second bourse in India to introduce modified carryforward system after BSE on April 6, 1998. On the same date, LSE also introduced a settlement guarantee fund (SGF). The SGF guarantees settlement of transactions and the carryforward facility provides liquidity to the market.LSE became the first in India to start LSE Securities Ltd., a 100% owned subsidiary of the exchange. The LSE Securities got the ticket as sub-broker of the NSE. In 1998, the exchange also got permission to start derivative trading.For the settlement of dematerialised securities, the Ludhiana Stock Exchange has also been linked up with National Securities Depository Ltd. (NSDL).

16. MADHYA PRADESH STOCK EXCHANGE:Madhya Pradesh Stock Exchange(MPSE) is located atIndore,Madhya Pradesh,Indiais the 3rd Oldest Stock Exchange in the Country & a leading Stock Exchange under outcry system. MPSE is aSEBIrecognized Permanent Stock Exchange.MPSEL was originally set up as an association in 1919, with around 150 broking members. It was granted permanent recognition under the provisions of the Securities Contract (Regulation) Act, 1956 (SCRA), by the Government of India in 1988. MPSEL currently has 185 broker members, including some of the leading brokering houses in India. Around 315 companies, including some of the leading corporates of the country are listed on MPSEL.

17. MADRAS STOCK EXCHANGE:Madras Stock Exchange(MSE) is astock exchangeinChennai,India. The MSE is the fourth stock exchange to be established in the country and the first inSouth India.[1]It had a turnover (2001) of3,090crore($ 950 million), but is a fraction (below 3.5 per cent) of the turnover generated by theBombay Stock ExchangeandNational Stock Exchange of India.The turnover of the stock exchange was 19,907Croreas of the financial year 2012.[2][3][4]It is one of the four stock exchanges in India to have permanent recognition by market regulatorSEBI.[5]

18. MAGADH STOCK EXCHANGE ASSOCIATION:The Magadh Stock Exchange had a total of 199 brokers, out of which 15 were corporate brokers. Among 199 brokers, it was further classified as 183 proprietor brokers, 1 partnership broker and 5 corporate brokers. Then, there were only 2 sub-brokers registered.In September 2005, the Magadh Stock Exchange was corporatised and demutualised in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956.On 17 August 2000, the Magadh Stock Exchange became the onlyregional stock exchange in the countryto trade on theNational Stock Exchange of India(NSE), theBombay Stock Exchange(BSE),Calcutta Stock Exchange(CSE) and theInterconnected Stock Exchange(ISE) when the exchange finally got connected to the NSE throughISE.

19. MANGLORE STOCK EXCHANGE:Mangalore stock exchangeLimited (MGSE), is located inMangalore,Karnataka,India. It was incorporated on 31 July 1984 as a public limited company. The Exchange was recognised by the Central Government for an initial period of 5 years on 9 September 1985 under section 4 of the Securities Contracts (Regulation) Act, 1956 and later on the period of recognition was extended by one year, from 9 September 1990 to 8 September 1991. The last recognition was valid up to September 8, 2003. On August 31, 2004,SEBIdecided to derecognize the Mangalore Stock Exchange.[1]Chief MinisterS.M. Krishnalaid the foundation stone for the new building of the Mangalore Stock Exchange (MgSE) at Kulur on Sept 28, 2001. The MgSE has been granted 3 acres (12,000m2) of land by the state government.

20. MCX STOCK EXCHANGE:Metropolitan Stock Exchange of India Limited (MSEI), formerly known as MCX Stock Exchange Limited (MCX-SX), is Indias youngest and one of the three stock exchanges recognized by countrys securities market regulator - Securities and Exchange Board of India (SEBI). It offers an electronic, transparent and hi-tech platform for trading in Capital Market, Futures & Options, Currency Derivatives, Interest Rate Futures (IRF) and Debt Market segments.The exchange was founded with commitment to financial literacy, social inclusion and market development guided by the philosophy of Information, Innovation, Education and Research as the four cornerstones. Since inception, we have worked aggressively in spreading awareness, providing good competition to established exchanges and bringing market innovation to the market to cater to the financial needs of the hedgers, traders and investors. Investors at the MSEI include top domestic banks and financial institutions.MSEI has a large pan-India presence across cities and towns with 950 registered members and they constitute the diversified market participants.

21. NATIONAL STOCK EXCHANGE OF INDIA:TheNational Stock Exchange of India Limited(NSE) is the leadingstock exchangeof India, located inMumbai. NSE was established in 1992 as the first demutualized electronic exchange in the country. NSE was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered easy trading facility to the investors spread across the length and breadth of the country.NSE has amarket capitalizationof more thanUS$1.65 trillion, making itthe worlds 12th-largest stock exchangeas of 23 January 2015.[1]NSE's flagship index, theCNX Nifty,the 50 stock index, is used extensively by investors in India and around the world as a barometer of the Indian capital markets.NSE was set up by a group of leading Indian financial institutions at the behest of the government of India to bring transparency to the Indian capital market. Based on the recommendations laid out by the government committee, NSE has been established with a diversified shareholding comprising domestic and global investors. The key domestic investors includeLife Insurance Corporation of India,State Bank of India,IFCILimitedIDFCLimited andStock Holding Corporation of India Limited. And the key global investors are Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited and PI Opportunities Fund I.[2]NSE offers trading, clearing and settlement services in equity, equity derivatives, debt and currency derivatives segments. It is the first exchange in India to introduce electronic trading facility thus connecting together the investor base of the entire country. NSE has 2500 VSATs and 3000 leased lines spread over more than 2000 cities across India.

22. OTC STOCK EXCHANGE:TheOTC Exchange Of India (OTCEI), also known as the Over-the-Counter Exchange of India, is based inMumbai,Maharashtra. It is India's firstexchange for small companies,[3]as well as the first screen-based nationwide stock exchange in India.[4]OTCEI was set up to access high-technology enterprising promoters in raising finance for new product development in a cost-effective manner and to provide a transparent and efficient trading system to investors.[5]OTCEI is promoted by theUnit Trust of India, theIndustrial Credit and Investment Corporation of India, theIndustrial Development Bank of India, theIndustrial Finance Corporation of India, and other institutions, and is a recognised stock exchange under the SCR Act.

23. PUNE STOCK EXCHANGE:Pune Stock Exchange(PSE) was established in 1982.

24. SAURASHTRA KUTCH STOCK EXCHANGE:Saurashtra Kutch Stock Exchange Limited(Gujarati: , popularly calledStock Exchange, orSKSE) is one of threestock exchangeinGujarat. It is located atSadar Bazaar,Rajkot,India. Saurashtra Kutch Stock Exchange Ltd was incorporated in the month of July 1989 and got recognition from theGovernment of India. The recognition have been renewed from time to time by the Central Government andSEBI.

25. SECURITIES TRANSACTION TAX:Securities Transaction Tax(STT) is a tax payable inIndiaon the value of securities (excluding commodities and currency) transacted through a recognized stock exchange. The tax is not applicable on off-market transactions or on commodity or currency transactions. The original tax rate was set at 0.125% for a delivery-based equity transaction and 0.025% on an intra-day transaction. The rate was set at 0.017% on allFutures and Optionstransactions. STT was originally introduced in 2004 by the then Finance Minister, P. Chidambaram to stop tax avoidance of capital gains tax. The government reduced this tax in the 2013 budget after a lot of protests for years by the brokers and the trading community. The revised STT for delivery-based equity trading is 0.1% on the turnover. For Futures, the tax has been reduced to 0.01% on the sell-side only. The rest of the tax structure remains as is.[1]Securities transaction tax is a direct tax.Securities Transaction Tax is levied and collected by the union government of India.

26. UNITED STOCK EXCHANGE OF INDIA:TheUnited Stock Exchange of India(USE) is an Indianstock exchange. It is the 4th pan India exchange launched for trading financial instruments inIndia. USE represents the commitment of 21 Indian public sector banks,private banks, international banks (Standard Chartered) and corporate houses to build an institution of repute.Public Sector Banks that are stakeholders of USE includeAllahabad Bank,Corporation Bank,Punjab National Bank,Andhra Bank,Dena Bank,State Bank of India,Bank of Baroda,IDBI Bank,Syndicate Bank,Bank of India,Indian Bank,UCO Bank,Bank of Maharashtra,Indian Overseas Bank,Union Bank of India,Canara Bank,Oriental Bank of Commerce,United Bank of India,Central Bank of India,Punjab and Sind Bank,Vijaya Bank.Private Sector Banks likeAxis Bank,Federal Bank,J & K Bank,HDFC BankandICICI Bankare also stakeholders in USE. Corporate Institutions such asRiddhi Siddhi Bullions Limited,MMTCand India Potash are also associated with United Stock Exchange.

27. UNIVERSAL COMMODITY EXCHANGE:Universal Commodity Exchange(UCX) is Indias sixth national levelcommodity exchange.[4][5]It went live in 2012 but was shut down by the regulator in 2014 as a result of suspected fraud.[6]It was promoted by IT Professional Ketan Sheth from Commex technology Ltd (40%) and institutions such asIDBI Bank(10%),IFFCO(15%),National Bank for Agriculture and Rural Development(16%),Rural Electrification Corporation(16%) are shareholders in the bourse.[7][8][9]It received Ministry approval and Government certification on August 30, 2012. UCX started its operations on April 19, 2013 with 11 contracts in 9 commodities under the leadership of Praveen Pillai as UCX Managing director and CEO.[

28. UP STOCK EXCHANGE:UP Stock ExchangeLimited (Formerly known as The U.P.Stock Exchange Association Ltd., Kanpur), is a Kanpur-based stock exchange.It occupies one of the prominent place among the Stock Exchanges in India. The Exchange was inaugurated on 27 August 1982 by the then Finance Minister Shri Pranab Mukherjee. It plays an important role in the development of the capital market of North India. Initially, it had only 350 members which has grown up to 540 at present. UPSE is the only Stock Exchange in whole of Uttar Pradesh and the membership of this Stock Exchange is not restricted to the territories of Uttar Pradesh only. Members living outside Kanpur has contributed a lot by creating the equity cult in whole of the Uttar Pradesh.

29. VADODRA STOCK EXCHANGE:From a humble beginning in 1986 with the Vadodara Stock Brokers' Association having 150 members, it was incorporated on January 22, 1990 as Vadodara Stock Exchange Limited. By 1999, the exchange had a total of 321 brokers, of which 65 were corporate brokers, 253 were proprietor brokers, and 3 were partnership brokers. Then, there were only 85 sub-brokers registered.

CHAPTER 4EQUITY MARKETS OF INDIAN STOCK EXCHANGE:4.1 DEFINITION OF EQUITY MARKETS:The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance. 4.2 FUNCTIONING OF EQUITY MARKETS: In the equity market, investors bid for stocks by offering a certain price, and sellers ask for a specific price. When these two prices match, a sale occurs. Often, there are many investors bidding on the same stock. When this occurs, the first investor to place the bid is the first to get the stock. When a buyer will pay any price for the stock, he or she is buying at market value; similarly, when a seller will take any price for the stock, he or she is selling at market value.Companies sell stocks in order to get capital to grow their businesses. When a company offers stocks on the market, it means the company is publicly traded, and each stock represents a piece of ownership. This appeals to investors, and when a company does well, its investors are rewarded as the value of their stocks rise. The risk comes when a company is not doing well, and its stock value may fall. Stocks can be bought and sold easily and quickly, and the activity surrounding a certain stock impacts its value. For example, when there is high demand to invest in the company, the price of the stock tends to rise, and when many investors want to sell their stocks, the value goes down.This market can be split into two main sectors: the primary and secondary market. The primary market is where new issues are first offered, and stocks and bonds are issued directly from the company. Any subsequent trading takes place in the secondary market, in which proceeds from the stock go to the investors, not the company directly.

4.3 BENEFITS OF INVESTING IN EQUITY MARKETS:1. Easy Liquidity:It is the very first benefits of investing, Inequity market, shares and securities are traded in very high volume which make it a volatile market so there is very easy liquidity inequity market, like if you want to turn your investment inequity market into cash then you can do that very easily.2. Flexibility:Investing in equity market is very flexible like the market have ups and downs in prices at every trade session, price of equity market moves with the rapidity and flexibility of this market.3.RegulatoryFramework:Equity Market works under some regulatory framework to protect and safeguard all its investors. For example: In India the Securities andExchangeBoard of Indie (SEBI) works as aRegulatoryFramework Body to safeguard all investors.4. Maximum Returns:According to the long term perspective it is found that Investing in Equity Market gives maximum returns. For example: 1 Lakh INR (Indian Rupees) invested in stock market in the year 1992 (when SENSEX was 2020 INR) is now near about 9 Lakh 50 Thousand INR (Indian Rupees) (today SENSEX is 18,900 INR)5. Business Taste:Well, According to me it is the best benefits of investing in equity market you can ever have, here from Business Taste I mean that when a person trades or invest in equity market everything is here works like a business amodern style business.6. Sole Proprietorship:If you invest in equity market then you are starting your own business where your investment is your capital, like the more your trade is in profit the more your business grows and you are the only person to run this business that is why investing in equity market is yoursole proprietorship business.

4.4: ANALYSIS OF EQUITY MARKETS IN INDIA: LIST OF A FEW NIFTY STOCKS AND THERE RETURNS OVER THE PAST 3 YEARS.

ANALYSIS OF INDIAN EQUITY INVESTMENTS

CHAPTER 5COMMODITY MARKETS OF INDIAN STOCK EXCHANGE:5.1 INTRODUCTION:A 'commodity market' is a market that trades in primary rather than manufactured products. Soft commodities are agricultural products such as wheat, coffee, cocoa and sugar. Hard commodities are mined, such as gold and oil. Investors access about 50 major commodity markets worldwide with purely financial transactions increasingly outnumbering physical trades in which goods are delivered. Futures contracts are the oldest way of investing in commodities. Futures are secured by physical assets. Commodity markets can include physical trading and derivatives trading using spot prices, forwards, futures, and options on futures. Farmers have used a simple form of derivative trading in the commodity market for centuries for price risk management.

5.2 TRADED COMMODITY CLASSES OR CLASSIFIED TYPES IN INDIAN MARKETS:

1.Bhatinda Om & Oil Exchange Ltd., Batinda.Gur

2.The Bombay Commodity Exchange Ltd.MumbaiRBD Pamolein, Groundnut Oil, Sunflower Oil, CottonSeed, Safflower, Groundnut, Castor oil-Int'l, Castorseed, Cottonseed oil, Sesamum oil, Sesamum OilCake, Safflower, OilCake, Rice Bran, Rice Bran Oil, Rice Bran OilCake, Safflower Oil, Crude Palm Oil

3.The Rajkot Seeds oil & Bullion Merchants` Association LtdGroundnut Oil, Castorseed

4.The Meerut Agro Commodities Exchange Co. Ltd., MeerutGur

5.The Spices and Oilseeds Exchange Ltd.Turmeric

6.Ahmedabad Commodity Exchange Ltd.CottonSeedCastorseed

7.Vijay Beopar Chamber Ltd.,MuzaffarnagarGurMustard Seed

8.India Pepper & Spice Trade Association.KochiPepper Domestic-MG1Pepper Domestic-500g/lBlack Pepper Int'l-MLS ASTABlack Pepper Int'l-VB ASTABlack pepper Int'l FAQPepper 550 G/LRubber RSS4

9.Rajdhani Oils and Oilseeds Exchange Ltd.DelhiGurRapeseed/Mustardseed

10.National Board of Trade. Indore.Rapeseed/MustardseedRapeseed/Mustardseed OilRapeseed/Mustardseed oil-CakeSoy beanSoy MealSoy OilCrude Palm Oil

11.The Chamber Of Commerce.,HapurGurRapeseed/Mustardseed

12.The East India Cotton Association Mumbai.Indian Cotton

13.The Central India Commercial Exchange Ltd, GwaliarGurRapeseed/Mustardseed

14.The East India Jute & Hessian Exchange Ltd,HessianSacking

15.First Commodity Exchange of India Ltd, KochiCopraCoconut oilCopra cake

16.Bikaner Commodity Exchange Ltd.,BikanerRapeseed/MustardseedRapeseed/Mustardseed OilRapeseed/Mustardseed oil-CakeGuarseedGramGuarGum

17.Esugarindia Limited.Sugar Grade - MSugar Grade S

18.National Multi Commodity Exchange of India Limited.GurRBD PamoleinGroundnut OilSunflower OilRapeseed/MustardseedRapeseed/Mustardseed OilRapeseed/Mustardseed oil-CakeSoy beanSoy OilCopraCottonSeedSafflowerGroundnutSugarSackingCoffee-Robusta Cherry ABCoconut oilCastorseedCastor-oilGroundnut oilCackCottonseed oilSesamum (Til or Jiljili)Sesamum oilSesamum OilCakeSafflower OilCakeRice Bran OilSafflower OilSanflower OilCakeSunflower SeedPepperCrude Palm OilGuarseedCastorOil CakeCottonseed - OilcakeAluminium IngotsNickelVanaspatiSoybean OilcakeRubberCopperZincLeadTinLinseedLinseed OilLinseed OilcakeCoconut OilcakeGramGoldSilverRiceWheatCardamomKilo - GoldMasoorUradTur / ArharMoongRapeseed - 42Raw JuteCoffee-Arabica Plantation A

19.Surendranagar Cotton oil & Oilseeds Association Ltd,KapasCottonSeedCottonbales

20.Multi Commodity Exchange of India Ltd.GurRBD PamoleinGroundnut OilRapeseed/Mustardseed OilPepper Domestic-MG1Soy beanKapasSoy MealCottonSeedTurmericCastorseedCastor-oilCrude Palm OilGuarseedCottonseed - OilcakeNickelRubberCopperTinGramSugar Grade - MSugar Grade - SGoldSilverGold-MRiceWheatRef Soya oil - IndoreUradTur / ArharGuarGumCastorseed-5Silver-MSteel - FlatSteel - LongYellow PeasLong Staple CottonMedium Stapple CottonCastorseed - DisaMustard SeedGuarseed BandhaniGold - HNISilver - HNIRed ChillyMaizeGuar Gum BandhaniCASHEW KERNEL W320Basmati RiceJeeraMustard Seed JaipurCrude OilSarbati RiceSesame Seed ( Natural 99.1)Cotton Long KadiCotton Med AboharCotton Short StapleSteel Long BhavnagarMentha Oil

21.National Commodity & Derivatives Exchange Ltd.S06 L S Cotton AhmedabadJ34 M S Cotton BhatindaCrude Palm oil - KandlaRBD P'Olein - KakinadaEXP R/M oil - JaipurRape/Mustard seed - JaipurRef Soya oil - IndoreSoy bean - IndorePure Gold - MumbaiPure Silver - New DelhiPure Gold - Mumbai - 1 KgPure Silver - New Delhi - 30 Kg (Mega)Rubber - KottayamPepper - KochiGram(Chana) - New DelhiGuarseed - JodhpurJute (B twill-665 Gms) - KollataTurmeric - NizamabadCastorseed - DisaRaw Jute - KolkataGuarGum - JodhpurSugar M Grade - MuzaffarnagarUrad - MumbaiSugar S Grade - VashiYellow Peas - MumbaiWheat - New Delhi SMQSoy Meal - IndoreSONA995MUMCHANDIDELCottonKadiCottonAboharGur-chaku - MuzaffarnagarYellow Red Maize - NizamabadGrade A Raw Rice DelhiGrade A Parboiled Rice DelhiCommon Raw Rice DelhiCommon Parboiled Rice DelhiMulberry Raw SilkMulberry Green CocoonsJeera UnjhaChilli (Paala) GunturMild Steel Ingots - GhaziabadCashews W-320-KollamWhitish Sesame Seed - RajkotCotton Seed Oilcake - AkolaLemon Tur - MumbaiMaharashtra Lal Tur - AkolaArabica Coffee - HassanRobusta Coffee Kushalnagar

22.Haryana Commodities Ltd., HissarRapeseed/MustardseedRapeseed/Mustardseed Oil

23.The Bullion Association Limited

24.e-Commodities Ltd

5.3 COMMODITIES FUTURE AND ITS BENEFITS:Commodities future

Commodity future is a derivative instrument for the future delivery of a commodity on a fixed date at a particular price. The underlying in this case is a particular commodity.If an investor purchases an oil future, he is entering into a contract to buy a fixed quantity of oil at a future date. The future date is called the contract expiry date. The fixed quantity is called the contract size. These futures can be bought and sold on the commodity exchanges.The commodities include agricultural commodities like wheat, rice, tea, jute, spices soya, groundnut, coffee, rubber, cotton, etc, precious metals - gold and silver, base metals - iron ore, lead, aluminium, nickel, zinc etc, and energy commodities - crude oil and coal.The number of retail investors participating in the market is increasing gradually after the introduction of commodities futures. The expected growth rate of commodity market is 40 percent annually over the next five years.

Benefits of Commodities Futures:

To producer:A producer of a commodity can sell the futures of the commodity, thereby ensuring that he can sell a particular quantity of his commodity at a particular price at a particular date.To investors:An investor has alternative investment instruments where he can take a position as to future price and the spot price at a particular date in future and buys and sells options. He is not interested in taking deliveries of the commodities.To commodity trader: A commodity trader can use these to ensure that he is protected against any adverse changes in the prices. He can enter into a futures contract for purchase of a certain quantity of the underlying at a particular price on a particular date, or he can enter into a futures contract for sale of a particular quantity on a particular date at a particular price and be assured of the margins because both his purchase price as well as the sale price are fixed. Traders do a good arbitrage in Gold and Silver. Whenever they find Gold moving up, they short silver and similarly whenever they find silver moving up and gold likely to move down, they hedge.To exporters: Future trading is very useful to the exporters as it provides an advance indication of the price likely to prevail and thereby help the exporter in quoting a realistic price and thereby secure export contract in a competitive market. Having entered into an export contract, it enables him to hedge his risk by operating in futures market.Option trading in commodity is, however presently prohibited.

5.4 SOME IMAGES DESCRIBING THE CURRENT COMMODITY MARKETS IN INDIA:

CHAPTER 6CURRENCY MARKETS OF INDIAN STOCK EXCHANGE:6.1 INTRODUCTION:Theforeign exchange market(forex,FX, orcurrency market) is a globaldecentralizedmarket for the trading ofcurrencies. In terms of volume of trading, it is by far the largest market in the world.The main participants in this market are thelarger international banks.Financial centresaround the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.The foreign exchange market works throughfinancial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as dealers, who are actively involved in large quantities of foreign exchange trading. Most foreign exchange de,alers are banks, so this behind-the-scenes market is sometimes called the interbank market, although a few insurance companies and other kinds of financial firms are involved. Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. Because of the sovereignty issue when involving two currencies, forex has little (if any) supervisory entity regulating its actions.The foreign exchange market assists international trade and investments by enabling currency conversion. For example, it permits a business in theUnited Statesto import goods fromEuropean Unionmember states, especiallyEurozonemembers, and payEuros, even though its income is inUnited States dollars. It also supports direct speculation and evaluation relative to the value of currencies, and thecarry trade, speculation based on the interest rate differential between two currencies.In a typical foreign exchange transaction, a party purchases some quantity of one currency by paying with some quantity of another currency. The modern foreign exchange market began forming during the 1970s after three decades of government restrictions on foreign exchange transactions (theBretton Woods systemof monetary management established the rules for commercial and financial relations among the world's major industrial states afterWorld War II), when countries gradually switched tofloating exchange ratesfrom the previousexchange rate regime, which remainedfixedas per the Bretton Woods system.

6.2 UNIQUENESS:The foreign exchange market is unique because of the following characteristics: Its huge trading volume representing the largest asset class in the world leading to highliquidity; Its geographical dispersion; Its continuous operation: 24 hours a day except weekends, i.e., trading from 22:00GMTon Sunday (Sydney) until 22:00 GMT Friday (New York); The variety of factors that affectexchange rates; The low margins of relative profit compared with other markets of fixed income; and The use of leverage to enhance profit and loss margins and with respect to account size.

6.3 FINANCIAL INSTRUMENTS OF INDIAN CURRENCY MARKETS:1. SPOT: A spot transaction is a two-day delivery transaction (except in the case of trades between the US dollar, Canadian dollar, Turkish lira, euro and Russian ruble, which settle the next business day), as opposed to the futures contracts, which are usually three months. This trade represents a direct exchange between two currencies, has the shortest time frame, involves cash rather than a contract, and interest is not included in the agreed-upon transaction. Spot trading is one of the most common types of Forex Trading. Often, a forex broker will charge a small fee to the client to roll-over the expiring transaction into a new identical transaction for a continuum of the trade. This roll-over fee is known as the "Swap" fee.

2. FORWARD:One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be one day, a few days, months or years. Usually the date is decided by both parties. Then the forward contract is negotiated and agreed upon by both parties.

3. SWAP:The most common type of forward transaction is the foreign exchange swap. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange. A deposit is often required in order to hold the position open until the transaction is completed.

4. FUTURES:Futures are standardized forward contracts and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts.

Currency futures contracts are contracts specifying a standard volume of a particular currency to be exchanged on a specific settlement date. Thus the currency futures contracts are similar to forward contracts in terms of their obligation, but differ from forward contracts in the way they are traded. They are commonly used by MNCs to hedge their currency positions. In addition they are traded by speculators who hope to capitalize on their expectations of exchange rate movements.

5. OPTION:A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. The FX options market is the deepest, largest and most liquid market for options of any kind in the world.

6.4 CURRENCY MARKETS GRAPHICAL REPRESENTATION VIA EXAMPLES:

CHAPTER 7COMPARATIVE STUDY OF EQUITY, COMMODITY AND CURRENCY MARKETS:7.1 OBJECTIVES OF THE STUDY:1. To analyse the risk and return towards the future trends of Equity Derivatives.2. To analyze the risk and return towards the future trends of Commodity Derivatives.3. To analyze the risk and return towards the future trends of Currency Derivatives.7.2 TOOLS FOR DATA ANALYSIS:1. RETURNS2. STANDARD DEVIATION3. CORRELATION

7.3 RETURNS:A major purpose of investment is to set a return of income on the funds invested. On a bond an investor expects to receive interest. On a stock, dividends may be anticipated. The investor may expect capital gains from some investments and rental income from house property. Rj,t = Pj,t - Pj,t-1/Pj,t Where; Pj,t= The yearly Price of stocks j at the year t; Pj,t-1 = The yearly price of the stock j at the month t-1.Comparative Risk Premium of Commodity, Stock, and Currency Diagram The Comparative Return of Commodity, Stock, and Currency of the returns on financial returns often deviate from a normal distribution, display skewness, and have fat tails.Comparative Return of Commodity, Stock, and Currency COMMODITYSTOCKS CURRENCY

AVERAGE0.890.930.64

STANDARD DEVIATION3.474.272.45

SKEWNESS0.71-0.340.37

Inference: It is understood from the table Commodity (0.89) and Stocks (0.93) have about the nearest average return, but the currency (0.64) have medium return yield. The return distribution of equities has negative skewness, while the distribution of commodity and currency returnshas positive skewness.7.4 STANDARD DEVIATION: Standard deviation is applied to the annual rate of return of an investment to measure theinvestment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. Standard deviation is a statistical measurement that sheds light on historical volatility .A measure of the dispersion of a set ofdata from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance.COMMODITYSTOCKSCURRENCY

AVERAGE5.235.652.22

STANDARD DEVIATION12.114.858.47

T-STATISTIC2.922.571.77

SHARPE RATIO0.430.380.26

Inference: It is understood from the table historical risk premium of Commodity (5.23) is about equal to the risk premium of Stocks (5.65), and is more than double the risk premium of Currency (2.22). The t-statistic measures the confidence that the average risk premium is different from zero.7.5 CORRELATION:Correlation (R) The correlation is one of the most common and most useful statistics. A correlation is a Single number that describes the degree of relationship between two variables. The Correlation Coefficient measures the nature and extent of relationship between the stock Market index Return and the Stock Return in a particular period. COMMODITYSTOCKSCURRENCY

MONTHLY0.05-0.140.01

QUARTERLY-0.06-0.270.14

1-YEAR-0.10-0.300.29

5-YEAR-0.42-0.250.45

Inference: It is understood from the table negative correlation of Commodity tends to increase with holding period. The negative correlation of Stocks tends to increase with holding period. And the positive correlation of Currency tends to increase with the holding period.7.6 FINDINGS OF THE STUDY:The study has revealed the following important findings. The risk premium of equity (5.65) is essentially the same as commodity (5.23) and double the currency (2.22). The return of equity (0.93) is essentially the same as commodity (0.89) and single time high in currency (0.64). Holding period more than five years the return of equity (-0.25) and commodity (-0.42) is negatively correlated but currency (0.45) is positively correlated.7.7 SUGGESTIONS: The risk premium of equity (5.65) more high compare with commodity (5.23) and currency (2.22) so it is suggested that the risk avoiders may invest in different equity, commodity, and currency derivatives combinations. The investor should try to make more investment in derivative market since the fluctuation is normal for risk and return on holding period less than one month.

CHAPTER 8 CONCLUSION