Posts
CONTENTS
| SL.NO | PARTICULARS | PAGE NUMBER |
| 1 | Introduction | 2 |
| 2 | Profile of the Company | 3 |
| 3 | Problem of the Case Study | 7 |
| 4 | Findings | 10 |
| 5 | Suggestion | 11 |
| 6 | Conclusion | 12 |
INTRODUCTION:
Asit C. Mehta Investment Intermediates Ltd. (ACMIIL) was established in the year 1986 with a view to offer a one stop solution to Indian entities for their needs in financial services. Over the last two decades it has achieved the distinction of being amongst the most trusted and reputed brokerage houses in India
the Company is jointly promoted by noted stock market professionals, Mr. Asit C. Mehta and Mrs. Deena A. Mehta, and is a part of the Mumbai-based Nucleus Group of Companies. The other group companies are engaged in IT and IT related services such as development of databases, back-office applications for banks, corporate document management solutions and geographical information systems (GIS). Vision, Mission & Quality Envisioned to be the “Trusted Financial Intermediary”, the group has etched out a very specific corporate purpose – “To reach appropriate financial products, services and solutions to every Indian entity.” Our Belief
the Company is jointly promoted by noted stock market professionals, Mr. Asit C. Mehta and Mrs. Deena A. Mehta, and is a part of the Mumbai-based Nucleus Group of Companies. The other group companies are engaged in IT and IT related services such as development of databases, back-office applications for banks, corporate document management solutions and geographical information systems (GIS). Vision, Mission & Quality Envisioned to be the “Trusted Financial Intermediary”, the group has etched out a very specific corporate purpose – “To reach appropriate financial products, services and solutions to every Indian entity.” Our Belief
ü That every household can, should, and will need to participate in the financial markets directly or indirectly to protect their financial interests
ü That regulatory/legal compliance ensures economic sustainability.
ü That transparency and fairness are the cornerstones of all dealings.
ü That knowledge rather than capital is the key driver of this business.
ü That product, process, and technology led innovations are necessary preconditions for continuously adding value for all our constituents.
ü That given the environment every person will realise her/ his potential.
ü That people are driven by causes.
The FIRSTS to our credit:
Ø First limited liability Company to acquire membership on Bombay Stock Exchange.
Ø First multiple seat holder and multiple exchange members.
Ø First private VSAT network user.
Ø First to utilize the franchisee business model for sub-brokers.
Ø First to achieve the ISO quality certification for business processes.
PROFILE OF THE COMPANY:
Mr. Asit C. Mehta and Mrs. Deena A. Mehta, and is a part of the Mumbai-based Nucleus Group of Companies. The other group companies are engaged in IT and IT related services such as development of databases, back-office applications for banks, corporate document management solutions and geographical information systems (GIS). We are the first brokerage house to be certified under ISO 9001:2000 for the Equity and Debt segments. We are also first stock brokerage house to be graded under the Broker Grading service by Credit Rating & Information Services of India Ltd. (CRISIL) for our quality of operations and services provided to clients. Our Services
v Equity and Derivatives Trading:
Equity trading is offered to retail clients through different channels in the Bombay Stock Exchange (BSE) & the National Stock Exchange of India (NSE), for the cash and the derivatives segments. Investors are serviced through a PAN India network of over 650 associates / locations comprising of 585 franchisee and 65 company branches. (As on July 2009)
v Online Trading
Investmentz.com is our trading portal that offers online trading to retail investors in the BSE and NSE cash and derivatives segments. The investors can do their own trading through a browser-based interface as well as a streamer-based solution called live exchange. This service is also available through an Interactive Voice Response (IVR) facility for those clients who are unable to access the Internet service at any time. The company has tied up with leading nationalized, private and co-operative banks to offer share trading services to the banks' customers. A seamless gateway has been established between the banking and depository soft ware’s of the bank.
v Institutional Desk:
Equity trade execution services are provided to institutional investors both domestic and FII by our institutional desk. Research and market information is provided to mutual funds and banks to support them in making investment decisions. These services are provided with seamless connectivity to custodians.
v Portfolio Advisory Service:
ACMIIL holds a portfolio management license issued by SEBI. It service is available to Resident Indian and Non-Resident India (NRI), for managing their equity & mutual fund portfolio.
v Investment Banking:
ACMIIL has been granted a Category I Merchant Banking license by SEBI. It offers services in mergers, amalgamations, private equity, public offerings and a full gamut of investment banking services.
v Commodity trading service
It is provided through our associate, Asit C. Mehta Commodity Services Pvt. Ltd. The company is member of India’s premier commodity exchanges, namely, the Multi Commodity Exchange of India Ltd. (MCX), the National Commodity & Derivatives Exchange, India (NCDEX) and the East India Cotton Exchange Association (EICA). The online trading portal also provides facility to trade on NCDEX. One of the group companies is a member of Dubai Gold & Commodity Exchange (DGCX).
v Mutual Fund and IPO distribution service
They are providing to retail investors directly and indirectly through our Branch/Business Associate network. Seminars are conducted regularly to highlight the importance of investment in mutual funds, especially through Systemic Income Plans (SIP). Advice is provided on initial public offerings and only public issues that have merit are marketed to retail investors.
v Debt Market Desk:
We are members of the Wholesale Debt Market (WDM) segment of the National Stock Exchange of India (NSE). The service involves providing quotes and executing trades in government securities (G-Sec), treasury bills and other state-guaranteed bonds. We are empanelled with most nationalized, foreign, private and major co-operative banks. We are also empanelled with most primary dealers, mutual funds, insurance companies and institutions for trading in debt market instruments.
v Inter-bank Forex Desk:
Our associate company, Asit C Mehta Forex Pvt. Ltd., undertakes inter-bank forex order execution. Accredited by the Foreign Exchange Dealers’ Association of India (FEDAI), the company is empanelled with approximately 60 banks and has a reasonable presence in the market.
v Research:
Investors are provided with extensive information on markets and companies through hourly market reviews, periodic market commentary and recommendations, which enable them to make informed decisions. The company firmly believes that providing continuous and accurate decision making tools can add substantial value to its investors.
v Advisory services
They are providing as a value-added service to all retail and institutional clients. This service is delivered through the hourly, daily, weekly, fortnightly and monthly publication of fundamental and technical research. Calls are made through broadcast services on our private VSAT network, SMS and e-mail.
v Accounts information
It is to the retail clients are provided through access on our website. This assists clients in knowing details about their trading accounts and their resultant obligations through various reports like Bill, Contract, Financial Ledger, Transaction Register, Stock Register, Portfolio Tracker, Stock holding position, etc. E-contracts are generated for investors giving trade details.
Potential Growth Areas India is amongst the least affected countries in the 2008 global meltdown. May 2009 general election in the country provided a fairly stable government. We see great potential for the country in general and financial market in particular in the years to come. Investor participation, product innovations, volume growth is likely to be in exponential proportion. Our company is well poised to build a great institution in India to service the Indian and global investors for their financial services needs.
Products and Services
- Equity – Initial Public Offering (IPO)
- Equity – Secondary trading (cash and derivative)
- Equity – PMS
- Equity – Online Trading
- Equity – Depository Services
- Equity – Investment Advisory (fundamental and technical)
- Equity – Mutual Fund
- Equity - Arbitrage
- Commodity - Derivatives
- Debt – Government Securities
- Debt – Primary Placements
- Debt – Advisory
- Debt – Mutual Funds
- Debt – Relief bonds, etc.
- Forex – Interbank broking
- Merchant Banking – Amalgamation & Mergers
PROBLEM OF THE COMPANY:
Mr.Rangarajan is an active spot market trader in the Asit C. Mehta Investment Intermediates Ltd, with the help of trading member’s advice and also through his experience in the market for past 3 years. but he did not have any experience in derivative trading, the trading member suggest that to buy 5 different sectors option contract and also nifty contract on January 28th Friday for February month contract. the trading member thought that there will be big volatility will happen in spot market because of budget announcement in the February last week, so we can sell the option contract in the bullish trend like that, but the market was moving in the bearish trend in the last four contract days. So that Mr.Rangarajan faced huge losses in the first attempt it in the derivative trading. due to this he feel afraid to entering in derivative trading, and also he decreased the volume of trade even in equity market also, this is indirectly affecting the earnings for the company, the main asset for the broking company is active clients, because of this kind of misguiding by the trading members they are losing active clients and its slowly affecting the company’s earnings and growth also.
Contracts bought by Mr.Rangarajan on 28.1.2011 for February month contract
1) Nifty option contract
Spot market-5635
Strike price-5610
Call premium-40
Lot size-50
Total lot bought-5
Nifty option contract sold on February 24
Spot price on last contract day was 5437, so the loss is 10,000 (rs).
2) HDFC option contract
Spot market-1950
Strike price-1925
Call premium-60
Lot size-125
Total lot bought-4
HDFC option contract sold on February 24
Spot price on last contract day was 1954, so the loss is 30,000 (rs).
3) RELIANCE INFRA option contract
Spot market-235
Strike price-230
Call premium-10
Lot size-250
Total lot bought-4
Reliance infra option contract sold on February 24
Spot price on last contract day was 250, so the profit is 10,000 (rs).
4) Tata motors option contract
Spot market-220
Strike price-210
Call premium-22
Lot size-250
Total lot bought-4
Tata motors option contract sold on February 24
Spot price on last contract day was 209, so the loss is 22,000 (rs).
5) Infosys option contract
Spot market-2804
Strike price-2750
Call premium-80
Lot size-125
Total lot bought-4
Infosys option contract sold on February 24
Spot price on last contract day was 2765, so the loss is 40000 (rs).
FINDINGS:
Total investments in different contracts by Mr.Rangaragan
Nifty -10,000
HDFC -30,000
Reliance infra-10,000
Tata motors-22,000
Infosys-40,000
Total investments-1,12,000(rs), profit by excising reliance infra was 10,000, so total loss=1,02,000(rs)
1) Nifty option contract
Spot price on last contract day was 5437, so the loss is 10,000 (rs)
2) HDFC option contract
Spot price on last contract day was 1954, so the loss is 30,000 (rs).
3) RELIANCE INFRA option contract
Spot price on last contract day was 250, so the profit is 10,000 (rs).
4) Tata motors option contract
Spot price on last contract day was 209, so the loss is 22,000 (rs).
5) Infosys option contract
Spot price on last contract day was 2765, so the loss is 40000 (rs).
SUGGESTION:
Ø Hedging is necessary when we take positions in options, especially in the month of budget announcement we need to take both the positions and we need to hedge by buying different individual contracts, and also taking long and short positions.
Ø When there is a chance for more volatility means we have to take both the positions, hedging is necessary in that time.
Ø Suppose if there is a bearish trend means we have to buy call option and sell put option.
Ø Incase of bearish trend one needs to sell call option and buy put options.
Ø Going short is more dangerous there is huge risk involved in that position, loss is unlimited in short position and profit is only premium.
Ø Trading members has to give right information to their clients; he has to protect even the losses of their clients by giving clear cut information regarding market movements.
Ø If u really finds the trend means you can enter in to options by taking favourable position, but without finding out don’t enter by taking one position, especially short position.
Ø Don’t take positions in the middle of the contract days, the opportunity is very low.
Ø If it is new person to derivatives mean don’t enter in the contract by taking one side contract with huge investments.
Ø Hedging is essential for to minimise the loss in the options.
Ø While entering in to this kind of risky investments one needs to be aware and they have to protect by taking different strategies.
CONCLUSION:
The responsibility of share Broking Company is to trade on behalf of clients and get some profits for the clients by effectively monitoring the market. The responsibility of the trading member is to protect the losses of their clients, and to guide the clients properly. To avoid these kinds of problems they have to take some serious steps (which are mentioned in the suggestion side) in future.
