A REPORT ON

TRADING STRATEGY OF INVESTORS IN VOLATILE STOCK MARKET

IN PARTIAL FULFILLMENT OF SUMMER TRAINING IN 2 YEAR MBA PROGRAMME OF GUJARAT UNIVERSITY

SUBMITTED TO GUJARAT TECHNOLOGICAL UNIVERSITY (YEAR 2011-2013)

SUBMITTED BY ENROLLMENT NUMBER: (117140592057) (Nirav shah) (117140592050) (Bhavik parekh) Guided By: Prof.Amish Soni

GLS Institute of Computer Technology (GLSICT MBA)

Certificate
This is to certify that Mr. Nirav shah and Mr. Bhavik parekh Enrolment No. 107140592057 and 1,7140592050 students of GLS Institute of Computer Technology (GLSICT-MBA) has successfully completed his Summer internship Project on Trading strategies of investors in volatile stock market in partial fulfillment of the requirements of MBA programme of Gujarat Technological University. This is his original work and has not been submitted elsewhere.

Dr. Hitesh Ruparel (Director)

Prof. Amish Soni. (Assistant Professor & Project Guide)

Date: _____________________________ Place: _____________________________

PREFACE
In todays fast moving economy only theoretical knowledge is not sufficient for an individual to perform sufficiently. To fill up the gap between theory and practical we must have enough theoretical as well as practical knowledge regarding business environment. And for this purpose this Summer Internship Project is carried out, which has helped me to gain both practical as well as theoretical knowledge.

Practical training is one of the vital aspects of management field. Thus, practical training enables students in understanding the administration and functions of a corporate entity. Practical training helps an individual to develop managerial abilities. Thus, training acts as a bridge between theoretical knowledge and practical implementation of the knowledge. Hence, it helps an individual to know the actual uses and implications of the theoretical knowledge acquired in the classroom.

ACKNOWLEDGEMENT

Every work in the world is done with the help of some or other. He or she may directly or indirectly involve in that work. According to a famous saying we should thank the one that have helped you in our work. So here in this part I am doing the work of thanking all those people who helped me in making this report.

I am very much grateful to DR.Hitesh ruparelia and Prof. Amish Soni as he guided me for selecting the project. He provided all the essential information for preparing a good project report.

I am also thankful to Mr. Sunil Shah (Vice President, Arcadia Shares) and all their staff members for co-operating with us.

 EXECUTIVE SUMMARY
This project Report contains the topic in TRADING STRATEGIES OF INVESTORS IN VOLATILE STOCK MARKET. This report is taken for the purpose of knowing the different trading strategies of investors in volatile stock market. These are the following objective of the research, Primary Objectives: To study the trading strategies of investors in volatile market To study the factors influencing investors in their investment To study the behavior of investors in different market situation

We have selected the exploratory as well as descriptive research design with non probability sampling in which convenience sampling was used in the study and the research take 200 respondents for carrying out the study, the research interviewed the respondents with the help of well-structured questionnaires.

From the study it was found that majority investors would prefer both segment cash and derivatives. In cash segment there are two forms. Delivery form and intraday form. Generally investors interested to trade in the intraday trading. Investors will book their partial profit if the trade goes in their favor in cash market. Fundamentals of the company is most influencing factor in the cash market. Investors mostly trusting CNBC TV-18 in all channels. In the derivative segment there are mainly two forms, futures and options. Investors prefer speculations in this segment. Investors will not square up their position in this segment. They will hold their position in this segment. Investors will do hedging ,arbitrading and speculation in this segment. So from the study it can be found that in what situation investors will do trading accordingly.

1. Problem Statement Trading strategies of investors in volatile stock market to know the strategies of the investors in volatile stock market. 2. Objectives Of The Study To study the trading strategies of investors in volatile market To study the factors influencing investors in their investment To study the behavior of investors in different market situation

3. Research Design

Exploratory as well as descriptive research design. We have to study the perception of financial advisors and for studying the perception of anyone, exploration is necessary. We will use descriptive research by using secondary data and by describing the insights related to the mutual fund industry and other financial products.

4. Theoretical Framework
Trading strategies of investors in volatile stock market. Here, what are the different stragies of the investors in different situation in the volatile stock market can be mean.

5. Data Collection Sources

Primary Data: Questionnaire

Secondary Data: Books, magazines, journals, newspaper, websites.

6.Sampling Method
Population: Retail investors in Rajkot city. Sample size: 200 respondents. Sampling technique: Probability sampling will be used in which convenience sampling method will be used.

7.Research Approach
We have followed Survey research approach. We conducted survey of investors perception about the different investment products. This survey research will help to know the different perception about the investment.

8.Research Instrument
For the study we have used questionnaire as a research instrument that contains various types of questions.

9.Research Plan
We have prepared questionnaire that will be filled up by the respondents and then the data analysis & interpretation will be done on that.

DECLARATION
I undersigned Nirav Shah and Bhavik parekh the student of MBA, Semester 3 hereby declare that the project presented is my own work and has been carried out under the guidance of Prof. Amish Soni of GLS, Ahmedabad.

This report has not been previously submitted to any other university or any institution for examination or any other purpose.

Date: Place: Rajkot

Table of Content

Ch. No
A B C D 1 2 3 4 5 6 Preface Acknowledgement Executive summary Declaration Research Methodology Introduction

Topic

Page No
4 5 6 9 11 20 37 56 63 65

Data analysis and Interpretation Hypothesis testing Findings Conclusion References Bibliography Appendix

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Research Methodology

Literature review
HISTORY OF DERIVATIVES With the opening of the economy to multinationals and the adoption of the liberalized economic policies, the economy is driven more towards the free market economy. The complex nature of financial structuring itself involves the utilization of multi currency transactions. It exposes the clients, particularly corporate clients to various risks such as exchange rate risk, interest rate risk, economic risk and political risk. With the integration of the financial markets and free mobility of capital, risks also multiplied. For instance, when countries adopt floating exchange rates, they have to face risks due to fluctuations in the exchange rates. Deregulation of interest rate cause interest risks. Again, securitization has brought with it the risk of default or counter party risk. Apart from it, every assetwhether commodity or metal or share or currencyis subject to depreciation in its value. It may be due to certain inherent factors and external factors like the market condition, Governments policy, economic and political condition prevailing in the country and so on.

In the present state of the economy, there is an imperative need of the corporate clients to protect there operating profits by shifting some of the uncontrollable financial risks to those who are able to bear and manage them. Thus, risk management becomes a must for survival since there is a high volatility in the present f inancial markets.

In this context, derivatives occupy an important place as risk reducing machinery. Derivatives are useful to reduce many of the risks discussed above. In fact, the financial service companies can play a very dynamic role in dealing with such risks. They can ensure that the above risks are hedged by using derivatives like forwards, future, options, swaps etc. Derivatives, thus, enable the clients to transfer their financial risks to he financial service companies. This really protects the clients from unforeseen risks and helps them to get there 11

due operating profits or to keep the project well within the budget costs. To hedge the various risks that one faces in the financial market today, derivatives are absolutely essential.

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DERIVATIVES IN INDIA

In India, all attempts are being made to introduce derivative instruments in the capital market. The National Stock Exchange has been planning to introduce index-based futures. A stiff net worth criteria of Rs.7 to 10 corers cover is proposed for members who wish to enroll for such trading. But, it has not yet received the necessary permission from the securities and Exchange Board of India.

In the forex market, there are brighter chances of introducing derivatives on a large scale. Infact, the necessary groundwork for the introduction of derivatives in forex market was prepared by a high-level expert committee appointed by the RBI. It was headed by Mr. O.P. Sodhani. Committees report was already submitted to the Government in 1995. As it is, a few derivative products such as interest rate swaps, coupon swaps, currency swaps and fixed rate agreements are available on a limited scale. It is easier to introduce derivatives in forex market because most of these products are OTC products (Over-the-counter) and they are highly flexible. These are always between two parties and one among them is always a financial intermediary.

However, there should be proper legislations for the effective implementation of derivative contracts. The utility of derivatives through Hedging can be derived, only when, there is transparency with honest dealings. The players in the derivative market should have a sound financial base for dealing in derivative transactions. What is more important for the success of derivatives is the prescription of proper capital adequacy norms, training of financial intermediaries and the provision of well-established indices. Brokers must also be trained in the intricacies of the derivative-transactions.

Now, derivatives have been introduced in the Indian Market in the form of index options and index futures. Index options and index futures are basically derivate tools based on stock index. They are really the risk management tools. Since derivates are permitted legally, one can use them to insulate his equity portfolio against the vagaries of the market. 13

Every investor in the financial area is affected by index fluctuations. Hence, risk management using index derivatives is of far more importance than risk management using individual security options. Moreover, Portfolio risk is dominated by the market risk, regardless of the composition of the portfolio. Hence, investors would be more interested in using index-based derivative products rather than security based derivative products. There are no derivatives based on interest rates in India today. However, Indian users of hedging services are allowed to buy derivatives involving other currencies on foreign markets. India has a strong dollar- rupee forward market with contracts being traded for one to six month expiration. Daily trading volume on this forward market is around $500 million a day. Hence, derivatives available in India in foreign exchange area are also highly beneficial to the users.

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RECENT DEVELOPMENTS At present Derivative Trading has been permitted by the SEBI on derivative segment of the BSE and the F&0 segment of the NSE. The natures of derivative contracts permitted are:

Index Futures contracts introduced in June, 2000,

Index options introduced in June, 2001, And

Stock options introduced in July 2001.

The minimum contract size of a derivative contract is Rs.2 lakhs. Besides the minimum contract size, there is a stipulation for the lot size of a derivative contract. The lot size refers to number of underlying securities in one contract. The lot size of the underlying individual security should be in multiples of 100 and tractions, if any should be rounded of to next higher multiple of 100. Apart from the above, there are market wide limits also. The market wide limit for index products in NIL. For stock specific products it is of open positions. But, for option and futures the following wide limits have been fixed.

30 times the average number of shares traded daily, during the previous calendar month in the cash segment of the exchange.

Or

10% of the number of shares held by non-promoters, i.e., 10% of the free float in terms of number of shares of a company.

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Cash market
Definition of 'Cash Market' The marketplace for immediate settlement of transactions involving commodities and securities. In a cash market, the exchange of goods and money between the seller and the buyer takes place in the present, as opposed to the futures market where such an exchange takes place on a specified future date. Also known as the spot market, since such transactions are settled "on the spot." Explains 'Cash Market' Cash market transactions can take place either on a regulated exchange or over-the-counter (OTC). In contrast, transactions involving futures are conducted exclusively on exchanges, while forward transactions, such as currency forwards, are generally executed on the OTC market. For a specific commodity, the price in the cash market is usually less than its price in the futures market. This is because there are carrying costs, such as storage and insurance, involved in holding a commodity until it can be delivered at some point in the future.
On the cash market trading is conducted in two sections, the equities and the debt securities sections. In the equities section shares and mutual funds can be traded, together with the compensation note as a special security. The securities traded in the debt securities section include: government debt securities (treasury bills and government bonds), corporate bonds and mortgage bonds.

A market in which commodities, such as grain, gold, crude oil, or RAM chips, are bought and sold for cash and delivered immediately. also called spot market.
The cash market is a buying strategy in which the buyer makes an immediate payment that is equal to the current market price for commodities and other types of securities. Upon the receipt of the payment, the seller relinquishes all claims to the property and bestows ownership upon the buyer. In a sense, any type of retail transaction such as the purchase of groceries could be considered a cash market, as the goods are received by the buyer upon rendering a cash payment for the products. One of the characteristics that sets the cash market apart from a futures market is this immediate satisfaction and transfer of ownership. Futures markets involve a longer period for the transaction to be considered complete. With a cash market, the investor immediately assumes ownership and is free to do with the commodity or security as he or she wishes. While both approaches are capable of

16

helping an investor realize a return on an investment, the cash market approach may offer a level of speed and excitement that will attract investors who prefer to be constantly on the move with the investment portfolio.

Risk management in Cash market It can objectively evaluate and express the acceptability of the inherent risk exposure and can explicitly state their intent regarding the continued acceptance of, or alterations to, the inherent risk exposure relative to a commonly understood reference point. It can also immediately separate the suitability of instruments, positions, strategies, and tactics into some action groups.

Exploratory as well as descriptive research design. We have to study the perception of financial advisors and for studying the perception of anyone, exploration is necessary. We will use descriptive research by using secondary data and by describing the insights related to the mutual fund industry and other financial products.

2. PROBLEM STATEMENT: Trading strategies of investors in

volatile stock market.

3. Objectives:

- To study the trading strategies of investors in volatile market - To study the factors influencing investors in their investment - To study the behavior of investors in different market situation.

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4. Research Design
Exploratory as well as descriptive research design. We have to study the perception of financial advisors and for studying the perception of anyone, exploration is necessary. We will use descriptive research by using secondary data and by describing the insights related to the mutual fund industry and other financial products.

5..Theoretical Framework Trading strategies of investors in volatile stock market. Here, what are the different stragies of the investors in different situation in the volatile stock market can be mean.

6. Data Collection Sources

Primary Data:
Questionnaire Books, magazines, journals, newspaper, websites.

Secondary Data:

7. Sampling Method
Population: Retail investors in Rajkot city. Sample size: 200 respondents. Sampling technique: Probability sampling will be used in which convenience sampling method will be used.

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8.Research Approach
We have followed Survey research approach. We conducted survey of investors perception about the different investment products. This survey research will help to know the different perception about the investment.

9.Research Instrument
For the study we have used questionnaire as a research instrument that contains various types of questions.

10..Research Plan
We have prepared questionnaire that will be filled up by the respondents and then the data analysis & interpretation will be done on that.

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INTRODUCTION

ARCADIA SHARES AND STOCK BROKERS PVT LTD.

Arcadia came to life in 1995, right on the wave of a post-liberalization market economy. As financial services became a major contributor to economic growth, Arcadia has steadily shaped into a leading financial service provider. In 1995, we were a small company with just 5 employees. Today, we have a market presence across the country, with over 275 branches & franchisee outlets. We have established a strong retail network not only in metros but also in tier two and tier three cities.

Traditionally, our operation was concentrated in fast-moving capital market of Western India. But sensing great potential, we have launched strong expansion plans in the North and the South. This systematic presence-building and efficient delivery of service has put Arcadia among the fastest growing retail broking houses in the country, with memberships in:

NATIONAL STOCK EXCHANGE OF INDIA (NSE) BOMBAY STOCK EXCHANGE (BSE) MULTI COMMODITY EXCHANGE (MCX) NATIONAL COMMODITY & DERIVATIVES EXCHANGE (NCDEX) DEPOSITORY PARTICIPANT OF CDSL. ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI).

Today Arcadia has accumulated acknowledged leadership in execution and clearing services on exchange-traded derivatives and cash-market products. Working with the leading stock exchanges and noted financial institutions has drilled in us the importance of real-time information and use of analytical tools in investment decisions.

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Practicing this over the years has made us experts in understanding investor requirements. Arcadia's integrated and innovative use of technology provides clients with the ability to trade offline & online. Clients also have constant access to their account information via internet.

TOP MANAGEMENT:

1. MR.ANTONY SEQUEIRA. (FOUNDER AND MANAGING DIRECTOR)

2. NITIN BRAHMBHATT. (DIRECTOR)

3. MR.SUNIL C.SHAH (VICE-PRESIDENT)

ADDRESS: 11, PANCHNATH PLOT CORNER, NR.PANCHNATH MANDIR, DR.RAJENDRA PRASAD ROAD, RAJKOT-360001

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About us Company information

Name:

Arcadia Shares and Stock Brokers Pvt. LTD

Registered Office:

328, Ninad, Building no. 7, Service road, Nr Bhavishya Nidhi Bhavan Bandra (East) Mumbai 400051

Head Office:

As above

Regional Office:

11, Panchanath plot corner, Nr. Panchnath mandir, Dr. Rajendra Prasad road Rajkot 360001

Founder:

Mr. Antony Sequera

Director:

Mr. Nitin Brahmbhatt

Regional Head:

Mr. Akhil Shah

Contact no.:

+91 22 67739999

Dealing Room: Toll free: Fax:

+91 22 26478888 1800 22 1555 +91 22 26478988

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E-mail: Website:

info@arcadiashare.com www.arcadiastock.com

Membership NSE (Cash and Derivatives) : INB/F_230778238 BSE (Cash) : INB010778232 CDSL DP : IN225 MCX : 10950 NCDEX : 00374

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Services
1. Equity Investment Looking for an easy and convenient way to invest in equity and take positions in the futures and options market using our research and tools. To start trading in Equity, all you need to do is open an online trading account. You can get help opening the account and get guidance on how to trade in Equity.

2. Commodity Trading (MCX - NCDEX) spaced dynamic marketwith excellent liquidity can NOW trade in Commodity Futures Market. The Commodity Exchange is a Public market forum and anyone can play in these vital Commodity Markets. ARCADIA COMMODITIES AND TRADING can certainly be your point of entry to the commodity markets. ARCADIA is registered trading cum clearing member of NCDEX and MCX. Participation is not difficult.All you need is to open an account with us. We shall offer you advice and research on investments.

3. Derivatives Trading Futures and options are derivatives, which use equity as their underlying. Hence their Equity Advisory Group (EAG), which is highly qualified, will also act as your advisors and help you take informed decisions while trading in these derivative instruments.

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4. Internet Trading Making the right trade at the right time! Welcome tour E-Broking service which brings you an experience of online buying and selling of shares with just a click.

5. Mutual Fund Advisory Transact in a wide range of Mutual Funds. Mutual funds are an attractive means of saving taxes and diversifying your investment portfolio. So if you are looking to invest in mutual funds, ARCADIA offers you a host of mutual fund choices under one roof; backed by indepth information and research to help you invest smartly

6. IPO Distribution IPO or Initial Public Offer presents good opportunities for netting high returns on your investments in a relatively short period of time if you invest early. Get information on IPO news, forthcoming IPOs and lot more.

7. Demat Services (CDSL) In the times of T+2 having a Demat account linked to your trading account becomes more convenient. The no-trading members can also avail of our Depository services. You receive regular account reports and an efficient service at all times. ARCADIA is a member of CDSL.

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DEPARTMENTS

KYC Risk Management Admin Banking DP Back-off Relationship Management Billing IT Sales Feedback Compliance & Legal

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SWOT ANALYSIS
During my training at Arcadia share and stock, I came to know the strengths, weaknesses, opportunities and threats for the company. It will be very useful for the company to analyze them and for that purpose the SWOT analysis of the company is presented here.

STRENGTHS Well maintained infrastructure Dedicated, intelligent and loyal staff Competitive brokerage The best investment advice through dedicated research and reports. Wide product range to enable the clients to choose the best alternative One of the best DPs in India A positive image in existing clients

WEAKNESSES Time consuming process for account opening, resolving the problems of the customers, etc. Company is present in only one business, i.e. Stock Broking, so there is no scope for cross-selling

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OPPORTUNITIES Slope of stock market towards delivery based transactions Open interest of the people to enter in stock market for investing Attract the customer who are dissatisfied with other brokers An indirect opportunity generated by the stock market due to its current situation Online trading a/c market has vast potential Derivatives and Commodities markets are growing so, there is enormous potential for these market

THREATS Increasing competition from existing as well as new players A threat of loosing clients for any kind of weakness of the company Indirect threat from instable stock market, i.e. low/no profit of Angels clients would lead them to go for other broker New multinational and national players are coming with competitive products

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IMPORTANCE OF RESEARCH
In this modern era, for every organization service quality is having great importance. Therefore every organization it is necessary to study the rate of satisfaction of their clients. The basic need for studying the satisfaction of the clients is to find out their view about the services provide by Arcadia Shares and Stock PVT. LTD The research study on satisfaction provides necessary information to the company. This helps the company take action to improve the service quality. Study of Service Quality helps the company to maintain a standard and increase productivity by improving service.

This study tells us how much the employees are capable and their interest at work place. They will care about the quality of their work.

They will create and deliver superior value to the client.

They are more committed to the organization.

Their works are more productive.

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OBJECTIVE OF STUDY

The broad objective of this study is to know the satisfaction level of clients for services provide by Arcadia. The specific purposes of this study are:

RESEARCH OBJECTIVES:
To study the trading strategies of investors in volatile market To study the factors influencing investors in their investment To study the behavior of investors in different market situation. To study stock market and understand its market segment. To know the awareness level regarding cash & derivatives segment in stock market. To study the annual investment level of investors in stock market. To know investment behavior of people in stock market. To study the indicators that investors take into consideration while

trading in cash and derivative market.

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SCOPE OF THE STUDY

The study has the scope of including the most important organ of the organization that is the client. The study is to provide information to better understand how client think and feel as member of the organization.

The study is limited to the 100 investors trading in stock market who are above the age of 20 trading in various brokerage houses of Rajkot.

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RESEARCH DESIGN

What is Research Design?

Research design can be thought of as the structure of research it is the glue that holds all of the elements in a research project together. A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combined relevance to the research purpose with economy in procedure.

Generally there are mainly four type of research design:

1. Sampling

2. Observation

3. Statistical

4. Operational

As per this research sampling design method is very useful for the survey on the service quality of the Arcadia.

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SOURCES OF DATA

As we all know that there are mainly two sources of data i.e. Primary Secondary

Primary Data:

The data, which is collected directly from the respondents, is called primary data.

The normal procedure is to interview some people individually to get a sense of how people feel about the derivatives & commodities segment.

So far as our research is concerned, primary data is the main source of information. We have collected data through Questionnaire.

Secondary Data:
Data collected for some purpose other than the problem at hand are called as secondary data.

We have used following secondary data sources.

1. Library Research

I have searched many books and materials like Philip kotler to understand the research methodology.

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2. Business Magazines
Many business magazines are referred to gather data about various trading strategies.

3. Internet Surfing
There are many search engines which provides us the data for variety of topics such as Google Search, Yahoo Search etc. we have used both of the search engines for gathering the data. We have also used various financial portals such as moneycontrol.com, bseindia.com, nseindia.com, etc. we have also taken the help of arcadiastock.com in order to fulfill our requirement.

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RESEARCH INSTRUMENT
The research instrument used for primary data collection is questionnaire. The questionnaire has close ended questions. (Questionnaire is attached as Annexure) The questionnaire is supposed to be given to an individual to fill up on his own.

Importance and Benefits:

The research would help to understand the trading behavior of people in various market situation and it would also help to find out the various trading strategies in cash as well as derivative market segment. This research would also help to find out various indicators that people take into consideration while trading in different market segments.

Method of Data Collection

Primary data-in order to collect direct information from investors we have designed a questionnaire. We have approached investors of different broking houses and income groups.

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LIMITATION OF THE STUDY

The limitations of this study are as follows:

Personal Bias:
People may have personal bias towards particular investment option so they may not give correct information and due to which conclusion may be derived.

Time Limit:
The time duration of the research is short thats why the information is not covered fully.

Sample Area:
The area was limited to Rajkot city only.

Sample Size:

The last limitation is Sample size, taken by us is of 100 only; due to which we might not get the
proper results.

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Data Analysis and Interpretation

Investors trading strategy in volatile stock market

(1) Name of Trading Segment

Trading Segment

8% 9% Cash Derivative Both 83%

Out of 100 respondents, 83 trades in both segment while 8 respondents trades in only cash segment and 9 respondents trades in only derivatives market.

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(2) Annual Investment in share market

Investment
14%

below 1 lakh 52% 34% 100000 - 500000 beyond 500000

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(3) What factors do you consider while investing in cash & Future market?

Factors
7% 1%

20%

Fundamenta analysis Technical Ananlysis Tips 55% Global Markets Broker

12% 5%

Others

Majority of the respondents follow Fundamental Analysis while some of the respondents also follow the global cues and minor numbers of respondents follow Tips, Brokers, and Technical Analysis. So we can conclude that people are still unaware about the Technical analysis which can be termed as new trend in market.

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(4) Which T.V. channels do you watch regularly for getting updates about the stock market?

TV Channels
1% 6% 4% CNBC TV 18 Times now Zee Business CNN IBN Others 7%

82%

From the above data we can analyze that majority of the respondents regularly watch CNBC TV18 as CNBC Awaaz while few of the investors prefer the other news channels like Zee Business, Times Now, etc.

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Analysis of Cash Market Segment

(1) What is your motive while trading in cash market?

2%

8%

Intra-day Delivery Based Depends

90%

From the above data we can analyze that majority of the respondents goes with market conditions while few respondents trades specifically Intra-day or Delivery Based.

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(2) Which of the following trading strategies you generally prefer?

a) Trading with stop loss b) Trading without stop loss c) Hedging with target price d) Trading without target price e) Hedging in options market f) Buy at lower price / sell at higher price

Out of 100 respondents, 31 respondents prefer stop loss and target price. 28 respondents follow only target price without any stop loss. 21 respondents prefer to buy on dips while 9 respondents prefer to sell on hike. 26 respondents prefer trading with target price while 16 respondents doesnt follow any fixed target price.

35 31 30 25 21 20 16 15 10 5 0 stop loss and target price only target hedging in price without options market stop loss sell on hike trade on target don't follow any price target price 9 28 26

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(3) If the trade goes in your favor then which strategy do you prefer?

14%

9% 43%

Book partial profit Book full profit Increase overall position Reverse overall position Wait and watch

12%

22%

From the above pie chart, 43% of the respondents prefer to book partial profit if the trade goes in their favor, while 22% of respondents prefer to book their full profit. While 14% respondents prefer to remain neutral. While few respondents prefer to Increase/Reverse their overall position.

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(4) If the trade goes against your favor then which strategy you prefer?

9% 2% 21% Book partial loss Book full loss Make an average 35% Reverse overall position Wait and watch 33%

Out of the 100 respondents, 35% prefers to make an average when the trade goes against their favor. So majority of respondents prefer to increase their position. While 33% of respondent prefer to book full loss and 21% prefer to book partial loss. Few of respondents like to remain neutral while only 2% wants to reverse their overall position.

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(5) What are the indicators you refer while trading in cash market? (Give ranks)

Indicators
8 7 6 5 4 3 2 1 0 7 6 5 4 3 2 1

From 100 respondents, majority of respondents prefer to go with Fundamentals of company, Volume and percentage change in price as an important indicator in order to trade in cash market, while they give less importance to other indicators like Technical Levels, Circuit Filters, Average Trade price. Hence they consider Fundamental of company and volume as ideal indicator.

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Analysis of Derivative Market Segment

(1) Name of Trading Segment in Derivative Market

22%

2%

Future Market Segment Option Market Segment Both of above

76%

From the above chart we analyze that about 76% of the respondents deals in both the segment while 22% respondents prefer only Future Market and the rest of respondents deals in only Option Market Segment. Hence we can conclude that people are not much aware about Option Market Segment.

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(2) What is your intention while trading in Derivative Market?

13%

39% Intra-day trading Position Trading Depends

48%

From the above data, we analyze that 48% of respondents prefer Position Trading that means they are ready to take risk and they also prefer more profit/loss. While 39% of respondent like to have Intra-day trading which shows that they are ready to carry forward their position and they prefer small gain/loss, while 13%of respondents are indecisive about their trading strategy.

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(3) Which of the following applies to you while dealing in derivative market?

9%

2%

Speculation] Hedging Arbitration

89%

From the above data, we can conclude that most of respondents are speculators which mean that they are willing to enormous risk. While only 9 % of the respondents are hedgers who likes to hedge their positions in the option markets and only 2 % of the respondents are arbitragers. So we can say that most of the respondents are risk takers in the markets.

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(4) Which of the following trading strategy you generally prefer?

a) Trading with stop loss b) Trading without stop loss c) Trading with target price d) Trading without target price e) Hedging n options market f) Buy at lower price/sell at higher price g) Others (please specify) _____________________

Out of 100 respondents, 56 respondents prefer to have stop loss and target price while 62 respondents prefer to trade with out stop loss and without target price and 49 respondents prefer to trade with stop loss and without target price. 42 respondents prefer to hedge in Option Market while 38 respondents prefer to buy on dips/sell on hike. So we can conclude that majority of respondents gives importance to stop loss and target price.

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(5) If the trade goes in your favor then which strategy do you prefer?

Book partial profit 13% 4% 3% 7% 38% Book full profit Increase your overall position Reverse your overall position Hedging your position 35% Wait and watch

From the above data, we analyze that 38% of respondents book partial profit if the trade goes in their favor. So they are not ready to take much risk while 35% of respondents book their full profit in their favorable situation. So they are considered as safe players. While 13 % of respondents remain neutral in such situation and 7% of respondents are more risk taker who increases their overall position in favorable situation. Few respondents are hedging their position and few respondents reverse their overall position according to market scenario.

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(6) If the trade goes against your favor which strategy do you prefer?

15% 24% 2% 3%

Book partial loss Book full loss Make an average Reverse your overall position

29% 27%

Hedging your position Wait and watch

From above data, we can analyze that 29% of respondents makes an average if trade goes against their favor which indicates that they are ready to take further risk in the market and they are ready to bear further loss. 27% of respondents book their full loss which indicates that they are not ready to bear further loss and square-up their position. While 24% of respondents book partial loss which shows that they are not ready to take more risk. 15% of respondents remain neutral in such situation while rest of respondents like to hedge their position or reverse their overall position.

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(7) What are the indicators you refer while trading in derivative market?

Indicators
8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 Volume Percentage change in price Global Market Top Open Interest Gainer/Loser Technical Levels Other

From the above data, we analyze that people considers open interest, Volume, Global Markets as the most important indicators while trading in derivative market. Here Open Interest indicates net outstanding contracts in derivative market which people consider most important. While people prefer to give less priority to technical level, top gainer/loser, percentage change in price. Hence we conclude that global market, open interest, volume are the major indicators which people prefer.

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(8) What strategy would you prefer in cash/derivative if the market opens in a positive zone?

14%

1% 8%

Buy at current market price Short sell at current market price 23% Buy at lower price Sell at higher price

32% Wait and watch 22% Other

From the above data, we analyze that 32% of respondents prefer to sell at higher price which means that they assume the market to slightly correct. While 23% of respondents prefer to short sell at current market price which indicates that they expect the market to fall sharply from the current level. 22% of respondents prefer to buy on dips which shows that they are hopeful about the market to remain in a positive zone and 14% of respondents remains neutral and remaining respondents prefer to buy at current market price which shows that they are very optimistic about the market. 1% of respondents prefer to book profit at stop loss level and continue their position.

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(9) What strategy would you prefer in cash/derivative market if the market opens in negative zone?

11%

1% 28%

Buy at current market price Short sell at current market price Buy at further lower price Sell at market recovery Wait and watch

15%

23%

22%

Other

From the above data, we conclude that 28% of respondents prefer to buy at current market price which shows that they are confident about the market to move up while 23% of respondents prefer to buy at further lower level which shows that they expect the market to fall further but in the overall scenario they are very optimistic about the market. While 22% of respondents prefer to short sell at current market price and 15% of respondents likes to sell on hike which shows that they expect the market to fall sharply in the near term. And 11% of respondents remains neutral. While 1% of respondents prefer to book loss at stop loss level and continue their overall position.
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(10) What will be your trading strategy on the happening of any major events like Union Budget, Election, Natural Calamities, etc.?

2% Square-up your position 33% Holding your position 39% Reverse your overall position Wait and watch Other 15% 11%

From the above data, we analyze that 39% of respondents prefer wait and watch strategy because they expect the market to be very volatile in the Coming days so they wait for market to stabilize and thus will enter after the happening of the event. While 33% of respondents prefer to square-up their position as they does not want to take risk.15 % of respondents prefer to hold their position and want to take further risk and 11% of respondents like to reverse up their overall position according to their prediction.

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(11) What will be your reaction in panic situation in the stock market?

Follow rumors 36% 34% Follow Expert Opinion Follow Media Other (please specify).

17%

13%

From the above data, we analyze that 34% of respondents follow market rumors which shows that they are very sensitive in their trading while 17% of respondents follow media such as CNBC TV18, Zee business, etc and takes their decision accordingly. 13% of respondents follow expert opinions and behave accordingly. Majority of respondents behaves in different ways like some of them rely on their own experience, some remains neutral while some of them are ready to take further risk.

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Hypothesis:

1. Ho: maximum people are involved in only one trading segment. H1: maximum people are not involved in one trading segment only.
Active in trading segment Frequency Valid cash market derivative market both markets Total 16 18 166 200 Percent 8.0 9.0 83.0 100.0 Valid Percent 8.0 9.0 83.0 100.0 Cumulative Percent 8.0 17.0 100.0

H1 accepted:
Here, H1 hypothesis is accepted.so maximum people are not involved in one trading segment only.

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2. H0: There is significant relation between intention and strategy in trading in cash market. H1: There is no significant relation between intention and strategy in trading in cash market.

Chi-Square Testsi Value Pearson Chi-Square Continuity Correction Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases 42.366 200 1 .000
b

df
a

Asymp. Sig. (2-sided) 1 1 1 .000 .000 .000

Exact Sig. (2-sided)

Exact Sig. (1-sided)

42.579

38.913 43.183

.000

.000

a. 1 cells (25.0%) have expected count less than 5. The minimum expected count is 4.64. b. Computed only for a 2x2 table

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Ho is rejected:
Here, Ho is rejected and H1 is accepted.so, there is no significant relation between intension and strategy in trading in cash market. Ho is rejected as from the chi-square test the value of Ho is 0.0 which is less than 0.05.so Ho is rejected.

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3. H0: There is significance relation between intraday trading and trading with target. H1: There is no significance relation between intraday trading and trading with target.

Chi-Square Tests Value Pearson Chi-Square Continuity Correctionb Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases 42.366 200 1 .000 42.579
a

df 1 1 1

Asymp. Sig. (2-sided) .000 .000 .000

Exact Sig. (2-sided)

Exact Sig. (1-sided)

38.913 43.183

.000

.000

a. 1 cells (25.0%) have expected count less than 5. The minimum expected count is 4.64. b. Computed only for a 2x2 table

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Ho rejected: Here, Ho is rejected and H1 is accepted.so, there is no significant relation between intraday trading and trading with target. Ho is rejected as from the chi-square test, Ho is 0.0 which is Less than 0.05. so Ho is rejected.

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4. Ho: There is significant relation between intension and strategy in future market segment trading in derivative market. H1: There is no significant relation between intension and strategy in future market segment trading in derivative market.
Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 200.000
a

Df 10 10 1

Asymp. Sig. (2-sided) .515 .000 .000

220.432 93.610 200

a. 7 cells (38.9%) have expected count less than 5. The minimum expected count is .16.

Ho accepted:
Here, there is a significant relation between intension and strategy seems in future market segment trading in derivative market. Ho is accepted as from the chi-square test, Ho is 0.515 which is More than 0.05. so Ho is accepted. 62

5. Ho :people prefer to stay in if trade goes in their favor in derivative market H1: people prefer to book their profit in if trade goes in their favor in derivative market
Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 103.047
a

df 10 10 1

Asymp. Sig. (2-sided) .000 .000 .000

120.399 41.203 200

a. 10 cells (55.6%) have expected count less than 5. The minimum expected count is .12.

H1 accepted: Here, Ho is rejected and H1 is accepted as people prefer to book their profit if the trade goes in favor in the derivative market. Ho is rejected as from the chi-square test it can be found that Ho is 0.00 which is less than 0.05.so it is rejected.

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FINDINGS
Majority of respondents trades in both cash as well as derivative market segment. Majority of respondents gives more importance to fundamental analysis and global market while investing in cash and derivative market segment. Majority of respondents prefer to watch CNBC TV18 as their market guide. Majority of respondents like to trade with stop loss and with target price in cash market segment. Majority of respondents like to book partial profit if the trade goes in their favor in cash market segment. Majority of respondents prefer to make an average if the trade goes against their favor in cash market segment. Majority of respondents give more importance to fundamental of company and volume in cash market segment. Majority of respondents prefer to trade in both Future and Option Market Segment. Majority of respondents prefer to have position trading in Derivative Market Segment with an intention to speculate in the market. Majority of respondents like to book partial profit if the trade goes in their favor in case of derivative market segment. Majority of respondents prefer to make an average if the trade goes against their favor in case of derivative market segment. Majority of respondents give more priority to open interest, volume, global market in order to trade in derivative market segment. Majority of respondents like to sell on hike if the market opens in a positive zone. Majority of respondents like to buy at current market price if the market opens in a negative zone. Majority of respondents prefer wait and watch strategy on the happening of any major event. Majority of respondents follow rumors as well as uses their own experience in case of any panic situation in stock market. 64

65

CONCLUSION
In case of Cash Market Segment, we can conclude that people generally trade with stop loss and with target price. So in case of Cash Market Segment people are not more risk takers. And they give more priority to the Fundamentals, Volume and Percentage change in price in cash market segment and there is a mixed pattern of trading between intra-day and delivery based trading.

In case of Derivative Market Segment, we can conclude that people generally use both the segment but they generally use the Option Segment for hedging purpose and not for trading purpose. So we can conclude that people are less aware about the Option Segment as compared to Future Market Segment. People generally trade with stop loss and uses hedging option in derivative market segment and they give more priority to Open Interest, Volume and Global Market for trading purpose.

Generally, in volatile market people tends to make an average or book partial profit/loss in both the segment.

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Bibliography

www.bseindia.com www.moneycontrol.com www.nseindia.com www.arcadiastock.com

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APPENDIX

QUESTIONNAIRE

Our purpose for this survey is just to study and analyze trading strategy of investors in volatile market. Investors are ensured that their filled up questionnaire will be kept private & confidential.

(1) Name :- _______________________________

(2) Occupation :- ___________________________

(3) Qualification :- __________________________

(4) Annual Income :- ___ < 2 lakhs ___ 2 - 5 lakhs ___ 5 - 10 lakhs ___ > 10 lakhs

(5) Name of Broking House :- _________________

(6) No. of years dealing in share market :- ________

(7) Name of trading segment :-

___ Cash Market

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___ Derivative Market ___ Both of the above

(8) Annual Investment in share market :- _________

(9) What factors do you consider while investing in cash & Future market? Fundamental Analysis Global Markets Technical analysis Broker Tips Others

(10) Which T.V. Channels do you watch regularly? ___ CNBC TV 18 ___ Times Now ___ Zee Business ___CNN IBN ___ Others Cash Market Segment (1) What is your intention while trading in cash market ?

___ Intra-day trading ___ Delivery based Investment ___ Depends upon market scenario

(2) Which of the following trading strategies you generally prefer ?

___ Trading with stop loss ___ Trading with out stop loss
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___ Trading with target price ___ Trading without target price ___ Buy on lower price ___ Sell on higher price ___ Others (please specify)

(3) If the trade goes in your favor then which strategy do you prefer ?

___ Book partial profit ___ Book full profit ___ Increase your overall position ___ Reverse your overall position ___ Wait and watch

(4) If the trade goes against your favor then which strategy do you prefer ?

___ Book partial loss ___ Book full loss ___ Make an average ___ Reverse your overall position ___ Wait and watch

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(5) What are the indicators you refer to while trading in cash market ? (Give ranks 1 to 7)

___ Volume ___ Percentage change in price ___ Average Trade Price ___ Top Gainers / Losers ___ Fundamentals of company ___ Technical Levels ___ Circuit Filter

Derivative Market Segment

(1) Name of trading segment in derivative market :- ___ Future Market Segment ___ Options Market Segment ___ Both of the above

(2) What is your intention while trading in Derivative Market ?

___ Intra-day trading ___ Position trading ___ Depends upon market scenario

(3) Which of the following applies to you while dealing in Derivative Market ?

___ Speculation ___ Hedging

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___ Arbitration

(4) Which of the following trading strategies you generally prefer ?

___ Trading with stop loss ___ Trading with out stop loss ___ Trading with target price ___ Trading without target price ___ Hedging in option market ___ Buy at lower price / sell at higher price ___ Other (please specify) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) If the trade goes in your favor then which strategy do you prefer ?

___ Book partial profit ___ Book full profit ___ Increase your overall position ___ Reverse your overall position ___ Hedging your position ___ Wait and watch

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(6) If the trade goes against your favor then which strategy do you prefer?

___ Book partial loss ___ Book full loss ___ Make an average ___ Reverse your overall position ___ Hedging your position ___ Wait and watch

(7) What are the indicators you refer to while trading in derivative market? (Give ranks 1 to 6)

___ Open Interest ___ Volume ___ Percentage change in price ___ Top Gainers / Losers ___ Technical Levels ___ Global Markets

(8) What strategy would you prefer in cash/derivative market if the market opens in a Positive Zone ?

___ Buy at current market price ___ Short sell at current market price ___ Buy at lower price
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___ Sell at higher price ___ Wait and watch ___ Other (please specify) . . . . . . . . . . . . . . . . . . . . . . . .

(9) What strategy would you prefer in cash/derivative market if the market opens in a Negative Zone ?

___ Buy at current market price ___ Short sell at current market price ___ Buy at further lower price ___ Sell at market recovery ___ Wait and watch ___ Other (please specify) . . . . . . . . . . . . . . . . . . . . . . .

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(10) What will be your trading strategy on the happening of any major events like Union Budget, Election, Natural Calamities, etc. ?

___ Square-up your partial position ___ Square-up your position ___ Holding your position ___ Reverse your overall position ___ Wait and watch ___ Other (please specify) . . . . . . . . . . . . . . . . . . . . . . . .

(11) What will be your reaction in panic situation in the stock market?

___ Follow rumors ___ Follow Expert Opinion ...

___ Follow Media ___ Other (please specify). . . . . . . . . .

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