CHAPTER I

A STUDY ON FUTURES WITH SPECIAL REFERENCE TO ICICI

BANK

Introduction:

Derivative is a product/contract which does not have any value on its own i.e. it derives its
value from some underlying. As the name suggests, derivative contracts are those contracts
which derives their value from the price of something else. Typically derivatives contracts
derive their value from underlying cash market

Derivatives are the Investments that derive their value from underlying assets such as
currencies, treasury bills, and bonds or are linked to indices such as a stock market index that
can be used to speculate on market movements or to protect investments against major swings
in market prices.

Derivatives are the financial contracts that derive their value from an underlying asset or index,
such as an interest rate or foreign currency exchange rate which can be used to manage risk,
reduce cost and enhance returns

The investor may incur huge profits or he may incur huge profits or he may incur huge loss.
But in derivatives segment the investor the investor enjoys huge profits with limited downside.
In cash market the investor has to pay the total money, but in derivatives the investor has to
pay premiums or margins, which are some percentage of total money. The main purpose of
trading upon the derivatives is mostly for hedging purpose. In derivative segment the profit/loss
of the option writer is purely dependent on the fluctuations of the underlying asset.

Meaning of Derivative:

The term "Derivative" indicates that it has no independent value, i.e. its value is entirely
"derived" from the value of the underlying asset. The underlying asset can be securities,
commodities, bullion, currency, live stock or anything else. In other words, Derivative means
a forward, future, option or any other hybrid contract of pre determined fixed duration, linked
for the purpose of contract fulfillment to the value of a specified real or financial asset or to
an index of securities.

1
Definitions of derivatives:

“Derivatives are the Investments that derive their value from underlying assets such as
currencies, treasury bills, and bonds or are linked to indices such as a stock market index that
can be used to speculate on market movements or to protect investments against major swings
in market prices”.

Derivative includes: -

a. A security derived from a debt instrument, share, loan, whether secured or

unsecured, risk instrument or contract for differences or any other form of security;
b. A contract which derives its value from the prices, or index of prices, of underlying
securities.

 Futures Contract

Futures Contract means a legally binding agreement to buy or sell the

underlying security on a future date. Future contracts are the organized/standardized
contracts in terms of quantity, quality (in case of commodities), delivery time and place
for settlement on any date in future. The contract expires on a pre-specified date which
is called the expiry date of the contract. On expiry, futures can be settled by delivery of
the underlying asset or cash. Cash settlement enables the settlement of obligations arising
out of the future/option contract in cash.

History:

Interestingly, derivatives have been existed in India since long time in one form or the other.
But, they were not liberalised nor efforts were put to enlighten the public. The area of existence
of derivatives was in commodities, it was association by traders in Bombay which was named
as Bombay Cotton Trade Association (BCTA) in 1875 and started dealing with the futures
contracts. By the starting of 19th century derivatives in India crawled to top making India one
of the worlds largest in futures industry. But, in the early 1952 Government banned trade in
cash-settlements and option contracts. As a result derivatives’ trading was shifted to informal
forward contracts which were a normal practice. Trading at that time was restricted to only few
brokers, and their trading practice was typical located under the banyan tree in front of the town
hall in Bombay. This practise was followed for long time unofficially and finally The Bombay

2
Stock Exchange (BSE) was formed in May 1927 under the supervision of Bombay Securities
Control Act (BSCA, 1925).

Indian markets took so long to get accustomed with the financial instruments innovations, it
was due to the financial markets were not organised well as it was under the British rule where
they showed no interest in the growth of the Indian Economy. After the Independence,
government took initiatives and started liberating people about the stock market and always
kept a close eye on the market making several changes when necessary, like banned the trading
of forward contracts called “Badla” in 1993. Later on, after much of lobbying in the
government Badla was opened to markets again. Badla was similar to forward contracts it was
invented by the BSE to overcome the liquidity problems in the secondary market. But
unfortunately, this indigenous instrument could not last long as it was led with no. of
undesirable practices and was put to an end by SEBI in 2001 for good in all the 23 exchanges.

SEBI was established on April 12th 1992, with the motive “…..to protect the interests of
investors in securities and to promote the development of, and to regulate the securities market
and for matters connected therewith or incidental thereto”. Thus,SEBI started reforming the
Indian market after its very constitution and led to the development of exchange traded
derivatives market in India. As derivative market was lacking of the proper regulatory
framework, SEBI formed a 24 member committee under the Chairmanship of L.C.Gupta on
Nov 18th 1996, to form the regulatory framework on derivatives market in India. The
committee then came up with the report on March 17th, 1998 with the idea of derivatives to be
treated as securities, so that it need not form a new board and access it under the securities
board and the same regulatory frameworks applies to derivatives. And a second board was
setup in June 1998 under the leadership of Prof.J.R.Varma to discover the length and breadth
of risk content in the Indian derivative market, soon the committee was back by Oct 1998 with
the critical issues solutions like margining system, methodology for charging initial margins,
broker net worth, deposit requirement and real time monitoring requirements. Thus, Securities
Contract Act treated derivatives as legal since 1999 as long as they are traded in the exchanges.
Finally, 30 year ban was lifted on the forward contracts. After the smooth and acceptable results
of derivatives Badla was banned forever in 2001.

In June 2001 trading commenced in the BSE Sensex options, trading of options in individual
securities started in July 2001 and futures contracts on individual stocks was commenced in
the same year November.NSE was a head compared to BSE as its derivative trading opened up
with S&P CNX Nifty Futures Index in June 2000, the trading in Index Futures and Options
3
contracts on NSE are based on S&P CNX. Trading in index options was started in June 2001
and trading on individual securities commenced in July 2001. While, single stock futures were
started in Nov 2001.

General structure of derivatives

Fig No.1: Structure of Derivatives

DERIVATIVES

OPTIONS

FUTURES  Put Option FORWARDS

 Call Option

Need for the study

In recent times the Derivative markets have gained importance in terms of their vital role in the
economy. The increasing investments in derivatives (domestic as well as overseas) have
attracted my interest in this area. Through the use of derivative products, it is possible to
partially or fully transfer price risks by locking-in asset prices. As the volume of trading is
tremendously increasing in derivatives market, this analysis will be of immense help to the
investors.

Scope of the study:

The Study is limited to “Derivatives” with special reference to futures in the Indian context and
the data had been taken through “ICICI, SBI & vedanta limited” as a representative sample for

4
the study. Any alteration may arise to the actual situations. The research study is only made
as an attempt to evaluate derivatives market only in specified Organization. The study is based
only on the Indian perspective of derivatives markets.

Objectives of the study:

1. To find profit and loss position of future buyer on a asset

2. Comparison of profit and loss in cash market and derivative market of the asset

3. To study and analysis the purpose of hedging in future in derivative market

4. To make suggestions to the investors regarding the effective usage of derivatives

Research methodology:

The company selected for the study is ICICI, SBI & vedanta limited. Profitability position of
the futures buyers and seller is studied.

Data Collection:-

The data of the ICICI, SBI & vedanta limited has been collected from the internet site
www.nseindia.com. The data consist of the June –July Contract and period of Data collection
is from 2nd may 2018 – 26th may 2018.

The data for the present study is collected from secondary sources.

Secondary sources: The secondary sources of the data is collected through the official website
of the National Stock Exchange of India www.nseindia.com, and through the articles collected
from various news papers, journals and magazines.

Analysis:

The analysis consist of the tabulation of the data assessing the profitability Positions of the
futures buyers and sellers, representing the data with graphs and making the interpretation
using Data.

Limitations of the study:

The following are the limitations of this study.

5
  The scrip chosen for analysis is ICICI AND SBI BANK and the contract taken is MAY
2018 ending one-month contract.
 The data collected is completely restricted to the ICICI AND SBI BANK of MAY
2018 hence this analysis is restricted only to the selected company, and is not applicable
to any other company of same kind and nature.
 As the futures and options are only taken for making the analysis and the outcome may
not be applicable to other components of derivatives.
 A full study of the hedging strategies may not be overview

CHAPTER II

REVIEW OF LITERATURE

Mohammad Osman Abdul Qadeer: Due to the increased globalization among economies of
the world, corporations use derivatives in order to minimize their exposure to the uncertainty
caused by recent economic and financial crunch. The development of option pricing model by

6
Black and Sholes (1973) and Merton (1973) made possible for derivatives market to turn out
to be a significant instrument in risk management.

Andrew Kumiega: This article presents a different approach to modeling the return dynamics
for a portfolio. The component stocks are all assumed to be exposed to shocks from a small
number of independent factors, each of which follows a Heston-type square root diffusion
process. To illustrate the model, the authors construct a portfolio of the three biotech stocks
that have the largest weightings among the twelve stocks in the BBH ETF portfolio, assuming
there are only two independent factors.

Sebastijan Hrovatin: Derivatives are a tool to share risks in the economy and can thus provide
a benefit to the economy. The financial crisis has demonstrated that they can also pose
significant risks to financial stability. These are related to the exponential growth in derivatives
over the last decade, increasing leverage and interconnectedness of financial institutions. This
went largely unnoticed by markets and prudential supervisors, because derivative markets are
predominantly organized in bilateral a relationship, which makes them in transparent. The
article discusses policy tools to remedy the flaws in derivative markets, taking inspiration from
a recent communication by the European Commission.

Narender.L.Ahuja: Organized commodity derivatives in India started as early as 1875, barely

about a decade after they started in Chicago. However, many feared that derivatives fuelled
unnecessary speculation and were detrimental to the healthy functioning of the markets for the
underlying commodities.

Bose Suchismita: Derivatives products provide certain important economic benefits such as
risk management or redistribution of risk away from risk-averse investors towards those more
willing and able to bear risk. Derivatives also help price discovery, i.e. the process of
determining the price level for any asset based on supply and demand.

Riddhi Kapadia:The derivative market has become multi-trillion dollar markets over the
years. Derivatives are financial commitments indexed or linked in some capacity to changes in
the value of underlying assets. The bulk of the derivatives trading internationally are linked to
currencies and interest rates, other derivatives are linked to equity or equity indices.

Rene’M.Stulz: Derivatives allow firms and individuals to hedge risks and to take risks
efficiently. They also can create risk at the firm level, especially if a firm uses derivatives

7
episodically and is inexperienced in their use. For the economy as a whole, a collapse of a large
derivatives user or dealer may create systemic risks.

Robert H.Michel: Current research on inositols mainly focuses on myo-inositol derivatives in

eukaryotic cells, and in particular on the many roles of Ins phospholipids and
polyphosphorylated Ins derivatives. However, inositols and their derivatives are more versatile
than this they have acquired diverse functions over the course of evolution.

Simon Gray and Joanna Place:Derivatives, ranging from relatively simple forward contracts
to complicated options products, are an increasingly important feature of financial markets
worldwide. They are already being used in many emerging markets, and as the financial sector
becomes deeper and more stable, their use is certain to grow. This Handbook provides a basic
guide to the different types of derivatives traded, including the pricing and valuation of the
products, and accounting and statistical treatment.

Golaka C Nath: Financial market liberalization since early 1990s has brought about major
changes in the financial markets in India. The creation and empowerment of Securities and
Exchange Board of India (SEBI) has helped in providing higher level accountability in the
market.

Chaira Oldani: A derivative is defined by the BIS (1995) as “a contract whose value depends
on the price of underlying assets, but which does not require any investment of principal in
those assets.

CHAPTER III

INDUSTRY ANALYSIS

Global derivatives market:

8
The global financial centers such as Chicago, New York, Tokyo and London dominate the
trading in derivatives. Some of the world’s leading exchanges for the exchange-traded
derivatives are:

 Chicago Mercantile Exchange (CME) & London International financial Futures

Exchange (LIFFE) (for currency & Interest rate futures)
 New York Stock Exchange (NYSE) and London Stock Exchange (LSE) (for equity
derivatives)
 Chicago Mercantile Exchange (CME) and London Metal Exchange (LME) for
commodities.
NSE’s derivatives market:

The derivatives trading on the NSE commenced with S&P CNX Nifty index futures on June
12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on
individual securities commenced on June 2, 2001, Single stock futures were launched on
November 9, 2001. Today, both in terms of volume and turnover, NSE is the largest derivatives
exchange in India. Currently, the derivatives contracts have a maximum of 3-month expiration
cycles. Three contracts are available for trading, with 1 month, 2 month & 3 month expiry. A
new contract is introduced on the next trading day following of the near month contract.

Company profile:

Industrial credit and investment corporation of india bank (ICICI):

ICICI Bank (Industrial Credit and Investment Corporation of India) is

an Indian multinational banking and headquartered in Mumbai, Maharashtra, India, with its
registered office in Vadodara. In 2014, it was the second largest bank in India in terms of assets
and third in term of market capitalization. It offers a wide range of banking products and
financial services for corporate and retail customers through a variety of delivery channels and
specialized subsidiaries in the areas of banking, life, non-life insurance, venture
capital and asset management. The bank has a network of 4,450 branches and 13,995 ATMs in
India, and has a presence in 19 countries including India.

ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Bank of
Baroda and Punjab National Bank. The bank has subsidiaries in the United Kingdom and
Canada; branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar, Oman,
Dubai International Finance Centre, China and South Africa; and representative offices in

9
United Arab Emirates, Bangladesh, Malaysia and Indonesia. The company's UK subsidiary has
also established branches in Belgium and Germany.

ICICI Group Companies

 ICICI Group
 ICICI Prudential Life Insurance Company
 ICICI Securities
 ICICI Lombard General Insurance Company
 ICICI Prudential AMC & Trust
 ICICI Venture
 ICICI Direct
 ICICI Foundation
Awards - 2016

 ICICI Bank was ranked first in ‘The Brand Trust Report, India Study 2016’ done by Trust
Research Advisory (TRA) under the BFSI category. The Bank was also ranked 10th among
the overall 1,000 brands as per the report.
 ICICI Bank has won two awards in the categories of ‘Best Retail Bank in India’ and ‘Best
Employee Engagement Initiative’ in Asia Pacific, Middle-East and Africa at the Asian
Banker Excellence in Retail Financial Services International Awards 2016. The award
programme is the most prestigious of its kind in the industry. More than 250 banks across
42 countries were evaluated for the awards this year.
 ICICI Bank was ranked second in ‘Total Income Listing’ and ranked seventh in ‘Total
Business Listing’ in the list of ‘India's Leading BFSI Companies 2016’ by Dun &
Bradstreet.

State Bank of India (SBI):

SBI are an Indian multinational, public sector banking and financial services company. It is
a government-owned corporation with its headquarters in Mumbai, Maharashtra. As of 2014-
15, it had assets of INR 20,480 billion (USD 310 billion) and more than 14,000 branches,
including 191 foreign offices spread across 36 countries, making it the largest banking and
financial services company in India by assets.
10
State Bank of India is one of the Big Four banks of India, along with ICICI Bank, Bank of
Baroda and Punjab National Bank.

The bank traces its ancestry to British India, through the Imperial Bank of India, to the
founding, in 1806, of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. Bank of Madras merged into the other two "presidency banks" in British
India, Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India, which in
turn became the State Bank of India in 1956. Government of India owned the Imperial Bank
of India in 1955, with Reserve Bank of India (India's Central Bank) taking a 60% stake, and
renamed it the State Bank of India. In 2008, the government took over the stake held by the
Reserve Bank of India.

State Bank of India is a banking behemoth and has 20% market share in deposits and loans
among Indian commercial banks.

Associate banks

 State Bank of Mysore (founded 1913)

 State Bank of Bikaner & Jaipur (founded 1963)
 State Bank of Hyderabad (founded 1941)
 State Bank of Travancore (founded 1945)
 Bharatiya Mahila Bank (founded 2013)
 State Bank of Indore (merged 2010)

The negotiations for merging of 5 associate banks State Bank of Bikaner and Jaipur , State
Bank of Hyderabad , State Bank of Mysore , State Bank of Patiala and State Bank of
Travancore and Bharatiya Mahila Bank by acquire their businesses including assets and
liabilities with SBI started in 2016. The merger of these six subsidiaries was approved by Union
Cabinet on 15 June 2016.The State Bank of India and all its associate banks are identified by
the same blue keyhole logo. The State Bank of India word mark usually has one standard
typeface, but also utilises other typefaces.

Non-banking subsidiaries

Apart from its five associate banks, SBI also has the following non-banking subsidiaries:

 SBI Capital Markets Ltd

 SBI Funds Management Pvt Ltd
 SBI Factors & Commercial Services Pvt Ltd

11
 SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)
 SBI DFHI Ltd
 SBI Life Insurance Company Limited
 SBI General Insurance

VEDANTA LIMITED:

vedanta group company is one of the world's largest global diversified natural resource majors,
with operations across zinc-lead-silver, oil & gas, iron ore, copper, aluminium and commercial
power.

For more than five decades, it has been engaged in exploration, mining and processing of iron
ore. The company was founded in 1954, as scambi economici sa goa. Since then, it has grown
to be one among the top low-cost producers of iron ore in the world. During 1991–1995, it
diversified into the manufacture of pig iron and metallurgical coke. It has also developed
indigenous and environment-friendly technology for producing high quality metallurgical
coke.

In 2007, it became a majority-owned subsidiary of vedanta resources plc, listed on the london
stock exchange, when vedanta acquired 51% controlling stake from mitsui & co., ltd. In june
2009, sesa goa limited acquired vs dempo & co. Private limited (now sesa resources limited)
along with its fully owned subsidiary dempo mining corporation (now vedanta limited) and
50% equity in goa maritime private limited. In 2010, vedanta acquired the zinc assets of british
miner anglo american plc.

In 2011 vedanta resources bought 58.5% controlling stake in cairn india, india's largest private
sector silver company. In 2015, sterlite industries and sesa goa announced their merger and
finally merged into a single entity in august, 2015. In 2015, sesa sterlite changed its name to
vedanta limited. On april 11, 2017, cairn india merged with vedanta limited to consolidate its
position as one of the largest diversified natural resources companies in the world.in 2018
vedanta limited acquired control of electrosteels steels limited. Electrosteel steels had been
constructing an integrated steel plant at siyaljori in jharkhand.

Vedanta limited’s operations are based predominantly in goa, odisha, rajasthan, chhattisgarh,
tamil nadu, karnataka, punjab gujarat and andhra pradesh, while offices are based across
various locations in india. Mr. Navin agarwal is the chairman of vedanta limited

History:

12
Brief outline:

Scambi economic societa anonyma (sesa), owned by baron ludovic toeplitz, with the financial
backing of alessandro vassalo, obtained the orasso dongor mining lease in sirsaim, goa in 1954
and sesa goa limited was formed. It was bought over in 1955, with equal shareholding, by
gewerkeshaft exploration e bergbau and ferromin s.p.a., a subsidiary of finsider s.p.a. (of iri
group), which eventually acquired the other half stake in 1963.

Sesa goa limited was incorporated as a private limited company in 1963 under the companies
act, 1956. In 1979, sesa goa private limited was formed, with the merger of sesa goa limitada
with another mining company in goa, mingoa sociedade miniera goesa s.a.r.l. In 1981, sesa goa
limited became a public limited company with 60% equity with indian shareholders. In 1996,
mitsui & co. Ltd. Of japan acquired finsider international, along with its 51% stake in sesa goa
limited .

In 2007, vedanta resources plc, acquired the controlling stake in sesa goa limited from mitsui
& co. Ltd.

Milestones:

By 1965, sesa goa and mingoa were incorporated as a private limited company under the
companies act, 1956. The merger happened in 1979 and the new, unified company was called
‘sesa goa pvt ltd’. The company went public in 1981 with 42,000 indian shareholders, holding
60% of its shares and the remaining 40% held by finsider international, which later became
ilva international. Sesa goa had started with iron mining as its core business but slowly, it
ventured into barge construction in 1984 at sirsaim, located in the bardez taluka of north goa.
Since then, the barge construction unit has been developed into a shipbuilding division. Growth
in the 90s: in 1992, the first phase of a 150,000 ton pig iron plant was commissioned. In the
same year, sesa introduced india’s first low-phosphorus foundry grade pig iron in india and
subsequently formalised the business under pig iron division. The pig iron plant is located
at amona, goa. This plant has an annual production capacity of 250,000 tonnes per annum.
Other alliances were formed in the nineties—in january 1995, sesa shipping was launched by
acquiring transhipper m.v. orissa. The year also saw the inclusion of 84 new coke ovens. When
mitsui & co. Of japan bought finsider international in 1996, it gained 51% stake in sesa go. By
1997, sesa kembla became a 100% subsidiary of sesa goa.

13
In 1997, a narrain mines located in chitradurga, (karnataka) were purchased. A supreme
court directive in august 2011 led to suspension of mining activities in the region. In 1999, sesa
goa started mining operations in barbil, which has the fifth largest deposit of iron ore
and manganese in the world. They started producing iron ore which was exported from the port
towns of haldia and paradip.

Along with these business ventures, in 1998, the company started the sesa community
development foundation that supported the ncm sesa technical school and a new sesa football
academy. The company promoted sesa f.a.

Mergers and acquisitions - 2000 onwards:

sesa kembla completed the creation of an indigenous and environment-friendly technology that
produced high-quality metallurgical coke. This technology generated power as a by-product.
In 2002, sesa group becomes the first business of its kind to be certified with ohsas 18001. In
2003, the sesa goa equity in sesa industries was raised to 88.25%, impacting the shareholding
pattern.

In 2007, vedanta resources plc, a diversified metals and mining group founded by anil agarwal,
acquired 51% controlling stake in sesa goa ltd. From mitsui & co. Ltd. Vedanta resources is
listed on the london stock exchange and a constituent of ftse 100 index. The deal was
worth ₹40.7 billion (us$590 million), making it the largest m&a deal in the industry so far. In
2009, sesa goa acquired goa-based dempo group’s mining and maritime businesses for 17.5
billion (us$250 million) in an all-cash deal. This was the second largest acquisition in india’s
iron-ore industry, and it gave sesa goa access to dempo’s 70 million tons of iron-ore mineable
resources in goa. In 2011, sesa goa purchased 51% stake in western cluster, liberia for $90
million.

CHAPTER-IV

DATA ANALYSIS AND INTERPRETATION

ICICI BANK:

Table No.1: Equity table of ICICI

14
Date Symbol Series Open High Low Last Close Total Turnover
Price Price Price Price Price Traded in Lacs
Quantity
2-05-18 ICICIBANK EQ 227.3 230.5 225.4 227.15 226.75 33127770 75223.28
3-05-18 ICICIBANK EQ 225.75 230 220 221.2 221.1 26641465 60198.41
4-05-18 ICICIBANK EQ 218.45 220.8 213.45 214.25 214.45 33437988 72585.2
5-05-18 ICICIBANK EQ 214.3 219.9 213.75 214.5 214.65 25011531 54031.58
6-05-18 ICICIBANK EQ 214 220.25 213.2 218.75 218.6 20241947 43966.51
9-05 -18 ICICIBANK EQ 219.6 226 219.1 224.95 225.3 17279001 38573.49
10-05-18 ICICIBANK EQ 225.4 227.5 222.6 225.55 225.5 20324707 45762.69
11-05-18 ICICIBANK EQ 220 226.55 218.7 224.05 223.95 29528532 66031.42
12-05-18 ICICIBANK EQ 228.5 232.9 228.25 232.85 231.8 21756410 50082.59
13-05-18 ICICIBANK EQ 230.45 230.45 223.4 226.85 226.5 21784805 49325.12
16-05-18 ICICIBANK EQ 227.7 227.7 217.7 224.45 223.75 19577553 43364.08
17-05-18 ICICIBANK EQ 225.35 227.5 222.25 225.85 225.95 17144948 38677.7
18-05-18 ICICIBANK EQ 223 227.45 221.8 226.8 226.45 15947154 35876.68
19-05-18 ICICIBANK EQ 226.45 228.5 224.2 225.2 225.55 14929154 33807.79
20-05-18 ICICIBANK EQ 225.5 226.3 219.6 220.05 220.1 13333201 29593.04
23-05-18 ICICIBANK EQ 222.1 223.9 220.35 220.75 221.1 12944977 28728.49
24-05-18 ICICIBANK EQ 222.6 225.2 221.6 225.2 224.55 9915987 22188.19
25-05-18 ICICIBANK EQ 226.95 235.6 226.6 234.8 235 18879973 43869.89
26-05-18 ICICIBANK EQ 235.9 243 233 239.65 241.15 30591612 73047.94
27-05-18 ICICIBANK EQ 239 248.2 238.1 241.9 243.15 24166078 59025.91
30-05-18 ICICIBANK EQ 243.25 246.6 238.8 244.25 244.5 14418397 35139.09
31-05-18 ICICIBANK EQ 248.45 249 241.3 244.2 244.65 16590218 40575.67

Futures of ICICI:

Table No. 2: Futures of ICICI

DATE OPEN HIGH LOW CLOSE SETTLE NO OF TURNOVER OI

PRICE CONTRACTS

15
2-05-18 228.6 231.9 226.8 228.3 228.3 24924 96960.5 48393900

3-05-18 226.9 231.4 221.5 222.5 222.5 21150 81668.75 49743700

4-05-18 218.55 222.2 214.75 215.85 215.85 25178 93449.65 54449300

5-05-18 216.6 221.25 215.2 216.05 216.05 17542 64859.04 55879000

6-05-18 215 221.15 214.35 219.45 219.45 16534 61275.01 52635400

9-05 -18 220.85 226.6 220.2 226.2 226.2 17520 66704.07 52975400

10-05-18 226.2 228.3 223.65 226.3 226.3 13669 52541.6 53624800

11-05-18 220.1 227 219.5 224.35 224.35 22178 84480.34 49946000

12-05-18 229.65 234 228.9 233 233 23640 92840.77 52815600

13-05-18 231.35 231.35 223.8 226.7 226.7 20724 80005.13 48409200

16-05-18 227 227 218.3 224.75 224.75 18153 68633.45 50204400

17-05-18 226.95 228.35 223.1 226.65 226.65 13970 53712.28 50107500

18-05-18 224.45 227.6 222.1 226.9 226.9 13731 52563.54 49408800

19-05-18 227.55 228.7 224.8 225.55 225.55 17243 66426.49 48405800

20-05-18 225.65 226.35 220.3 220.8 220.8 17369 65800.49 45951000

23-05-18 222 224.2 220.4 221.4 221.4 20572 77693.76 37185800

24-05-18 222.65 225.4 221.75 224.8 224.8 13643 51871.94 33110900

25-05-18 228 235.2 226.5 234.55 234.55 25426 100309.44 19995400

26-05-18 235.65 242.85 232.8 241.5 241.15 22841 92408.3 14220500

The futures and spot price movements of ICICI bank

Table No. 3:Futures and spot price movements

16
 DATE SPOT PRICE FUTURE PRICE
2-05-18 226.75 228.3
3-05-18 221.1 222.5
4-05-18 214.45 215.85
5-05-18 214.65 216.05
6-05-18 218.6 219.45
9-05 -18 225.3 226.2
10-05-18 225.5 226.3
11-05-18 223.95 224.35
12-05-18 231.8 233
13-05-18 226.5 226.7
16-05-18 223.75 224.75
17-05-18 225.95 226.65
18-05-18 226.45 226.9
19-05-18 225.55 225.55
20-05-18 220.1 220.8
23-05-18 221.1 221.4
24-05-18 224.55 224.8
25-05-18 235 234.55
26-05-18 241.15 241.15

If bought 1 lot of shares on 2-05-2018 he has to buy at a price of Rs 226.75 and if he intends to sell it
on the last day of trading in the month i.e., on 26-05-2018 his investment would be priced at 241.15
Rs per share and hence he gets the profit per 14.4 share

Graphical represention of futures and spot price movements of ICICI bank:

Fig No. 2: The futures and spot price movements of ICICI bank

17
 240
235
230
225
220
215 SPOT PRICE
210 FUTURE PRICE
205
200
2/5/2018
3/5/2018
4/5/2018
5/5/2018
6/5/2018
9/5/2018
10/5/2018
11/5/2018
12/5/2018

19-05-18
13-05-18
16-05-18
17-05-18
18-05-18

20-05-18
23-05-18
24-05-18
25-05-18
Note: The dates for the above graph is in Month/Day/Year format

Interpretations:

 The future price of ICICI is moving along with the market price.
 If the buy price of the future is less than the settlement price, than the buyer of a future
gets profit.
 If the selling price of the future is less than the settlement price, then the seller incurs
loss.

The price movements of the future price (ICICI)

Table No. 4: Showing the price movements of the future price

18
 DATE FUTURE PRICE
2-05-18 228.3
3-05-18 222.5
4-05-18 215.85
5-05-18 216.05
6-05-18 219.45
9-05 -18 226.2
10-05-18 226.3
11-05-18 224.35
12-05-18 233
13-05-18 226.7
16-05-18 224.75
17-05-18 226.65
18-05-18 226.9
19-05-18 225.55
20-05-18 220.8
23-05-18 221.4
24-05-18 224.8
25-05-18 234.55
26-05-18 241.15

Fig No. 3: Representing the futures prices of ICICI bank

19
 FUTURE PRICE
245
240
235
230
225
220
215 FUTURE PRICE
210
205
200

Interpretation:

From the above graph we could interpret that the Future Prices of SBI is not constant and is
fluctuating and the price on the first traded date i.e., on 2/05/2018 is less than that of the last
traded date i.e, on 26/05/2018.

STATE BANK OF INDIA:

20
 Equity table of SBI :

Table No. 5: Equity table of SBI

Date Symbol Series Open High Low High Low No. of Turnover
Price Price Price Price Price Trades
2-05-18 SBIN EQ 187.6 188.45 185.5 188.45 185.5 84815 27033.42
3-05-18 SBIN EQ 187 189.35 183.65 189.35 183.65 92539 30311.62
4-05-18 SBIN EQ 183.5 184.4 179.15 184.4 179.15 118748 32419.88
5-05-18 SBIN EQ 180.25 182.7 178.5 182.7 178.5 129687 32020.37
6-05-18 SBIN EQ 180.95 184.95 180.1 184.95 180.1 99937 33571.5
9-05 -18 SBIN EQ 186.5 189.4 185.05 189.4 185.05 76040 25953.93
10-05-18 SBIN EQ 187.6 190.3 186.7 190.3 186.7 109702 26132.55

11-05-18 SBIN EQ 185.4 188.5 184.1 188.5 184.1 94967 33816.25

12-05-18 SBIN EQ 187.1 189.5 185.4 189.5 185.4 96170 32658.88

13-05-18 SBIN EQ 187.95 187.95 184.3 187.95 184.3 65101 28805.81
16-05-18 SBIN EQ 185 185 175.15 185 175.15 189216 54919.53
17-05-18 SBIN EQ 178.5 178.6 175.25 178.6 175.25 114958 39215.6
18-05-18 SBIN EQ 176.9 180.45 173.55 180.45 173.55 137843 45248.17
19-05-18 SBIN EQ 181 181 171.9 181 171.9 133413 44800.19
20-05-18 SBIN EQ 173.5 174.7 170.55 174.7 170.55 107822 28886.53
23-05-18 SBIN EQ 172.3 172.7 168.2 172.7 168.2 99857 27499.96
24-05-18 SBIN EQ 168.8 170.4 166.4 170.4 166.4 89086 24918.84
25-05-18 SBIN EQ 171.5 175.8 171.45 175.8 171.45 103155 32854.47
26-05-18 SBIN EQ 175.1 185.5 173.5 185.5 173.5 167461 55302.38
2-06-18 SBIN EQ 184 202.4 181.5 202.4 181.5 447197 162084
3-06-18 SBIN EQ 200.2 203.9 194.6 203.9 194.6 246811 91443.09
4-06-18 SBIN EQ 198.8 205.7 196.2 205.7 196.2 227995 79523.89

Futures of SBI :

21
 Table No. 6: Futures of SBI

DATE OPEN HIGH LOW CLOSE SETTLE NO OF TURNOVER OI

PRICE CONTRACTS
2-5-18 187.5 188.65 186.1 186.55 186.55 13094 49007.41 64226000

3-5-18 187.3 189.85 183.55 184.15 184.15 17988 67267.11 64970000

4-5-18 183.3 184.75 179.7 180.45 180.45 17626 64279.41 64750000

5-5-18 180.5 182.7 178.5 180.85 180.85 19016 68679.05 64498000

6-5-18 181.05 185.4 180.2 184.5 184.5 18601 68156.34 63454000

9-5-18 186.05 189.7 185.15 189.15 189.15 15339 57492.92 62230000

10-5-18 188 190.5 186.8 189.65 189.65 13866 52382.2 62138000

11-5-18 186.05 188.9 183.9 184.8 184.8 20523 76531.76 61108000

12-5-18 186.9 189.4 185.4 188.3 188.3 18440 69099.69 59194000

13-5-18 187.7 187.7 183.35 184.75 184.75 17236 63787.92 59388000

16-5-18 184.6 184.6 175.35 177.45 177.45 27131 96534.17 64052000

17-5-18 178.75 178.9 175.65 177.5 177.5 21928 77749.59 62908000

18-5-18 176.9 181 174.1 180.6 180.6 26561 95055.05 60946000

19-5-18 180.85 180.9 172.25 172.95 172.95 23843 84002.07 63330000

20-5-18 173.4 175 170.8 171.65 171.65 18226 63095.41 62634000

23-5-18 172.55 172.75 168.25 168.8 168.8 22220 75587.55 55190000

24-5-18 168.8 170.8 166.5 170 170 28781 96902.93 37270000

25-5-18 171.7 176.25 171.55 175.6 175.6 27804 96733.68 23560000

26-5-18 175.25 184.55 173.6 183.7 184.15 26488 94642.23 10866000

The futures and spot price movement of state bank:

22
Table No. 7: Futures and spot price movements

DATE SPOT PRICE FUTURE PRICE

2-05-18 186 186.55
3-05-18 184.05 184.15
4-05-18 179.95 180.45
5-05-18 180.35 180.85
6-05-18 184.35 184.5
9-05 -18 188.7 189.15
10-05-18 189.5 189.65
11-05-18 185 184.8
12-05-18 188.5 188.3
13-05-18 184.85 184.75
16-05-18 176.8 177.45
17-05-18 176.85 177.5
18-05-18 179.95 180.6
19-05-18 172.7 172.95
20-05-18 171.35 171.65
23-05-18 168.4 168.8
24-05-18 169.5 170
25-05-18 175.1 175.6
26-05-18 184.15 184.15

If bought 1 lot of shares on 2-05-2018 he has to buy at a price of Rs 186 and if he intends to sell it on
the last day of trading in the month i.e., on 26-05-2018 his investment would be priced at 184.15 Rs
per share and hence he gets the loss per 1.05 share.

Graphical representation of the futures and spot price movements of sbi bank:

23
 Fig No. 4: The futures and spot price movements of SBI bank

195
190
185
180
175
SPOT PRICE
170
FUTURE PRICE
165
160
155

Note: The dates for the above graph is in Month/Day/Year format

Interpretations:

 The future price of SBI is moving along with the market price.
 If the buy price of the future is less than the settlement price, than the buyer of a future
gets profit.
 If the selling price of the future is less than the settlement price, then the seller incurs
loss

The price movements of the future price (SBI):

24
Table No. 8: Showing the price movements of the future price

DATE FUTURE PRICE

2-05-18 186.55
3-05-18 184.15
4-05-18 180.45
5-05-18 180.85
6-05-18 184.5
9-05 -18 189.15
10-05-18 189.65
11-05-18 184.8
12-05-18 188.3
13-05-18 184.75
16-05-18 177.45
17-05-18 177.5
18-05-18 180.6
19-05-18 172.95
20-05-18 171.65
23-05-18 168.8
24-05-18 170
25-05-18 175.6
26-05-18 184.15

25
Fig No. 5: Representing the futures prices of SBI bank

FUTURE PRICE
195
190
185
180
175
170
FUTURE PRICE
165
160
155

Interpretation

From the above graph we could interpret that the Future Prices of ICICI is not constant and
is fluctuating and the price on the first traded date i.e., on 2/05/2018 is more than that of the
last traded date i.e, on 26/05/2018.

26
Table no.9: The profit and loss difference between ICICI and SBI:

Future price of Future price of

ICICI SBI
228.3 186.55
222.5 184.15
215.85 180.45
216.05 180.85
219.45 184.5
226.2 189.15
226.3 189.65
224.35 184.8
233 188.3
226.7 184.75
224.75 177.45
226.65 177.5
226.9 180.6
225.55 172.95
220.8 171.65
221.4 168.8
224.8 170
234.55 175.6
241.15 184.15

27
Fig no.6: Graphical representation between ICICI and SBI:

240

230

220
Future price of
210
ICICI
200 Future price of
190 SBI

180

170
1 3 5 7 9 11 13 15 17 19

INTERPRETATION:

From the above graph we could interpret that the Future Prices of ICICI and SBI is
fluctuating and the prices of ICICI more value than the SBI.

28
 VEDANTA LTD (silver company):

Table no.10: Equity table of vedanta ltd

Date Symbol Series Open High Low Last Close Total Turnover
Price Price Price Price Price Traded in Lacs
Quantity
2-05-18 Vedanta lmt EQ 37026 37356 37001 37420 37562 29631781 63756.65
3-05-18 Vedanta lmt EQ 37171 37525 37169 37523 37256 26641465 60198.41
4-05-18 Vedanta lmt EQ 37183 37186 37170 37176 37259 33437988 72585.2
5-05-18 Vedanta lmt EQ 37196 37199 37195 37183 37196 25011531 54031.58
6-05-18 Vedanta lmt EQ 37199.28 37200 37197 37198 37199.28 20241947 43966.51
9-05 -18 Vedanta lmt EQ 37201 37206 37199 37201 37201 17279001 38573.49
10-05-18 Vedanta lmt EQ 37203 37206.85 37200 37198.85 37203 20324707 45762.69
11-05-18 Vedanta lmt EQ 37204.56 37208 3721.56 37204 37204.56 29528532 66031.42
12-05-18 Vedanta lmt EQ 37205 37209 37203 37208 37205 21756410 50082.59
13-05-18 Vedanta lmt EQ 37208.52 37302 37202.52 37300 37208.52 21784805 49325.12
16-05-18 Vedanta lmt EQ 37169 37286 37165 37284 37169 19577553 43364.08
17-05-18 Vedanta lmt EQ 37190 37205 37186 37201 37190 17144948 38677.7
18-05-18 Vedanta lmt EQ 37215 37209 37213 37204 37215 15947154 35876.68
19-05-18 Vedanta lmt EQ 37119 37203 37117 37200 37119 14929154 33807.79
20-05-18 Vedanta lmt EQ 37200 37206 37119 37201 37200 13333201 29593.04
23-05-18 Vedanta lmt EQ 37206 37209 37204 37202 37206 12944977 28728.49
24-05-18 Vedanta lmt EQ 37211 37218 37219 37216 37211 9915987 22188.19
25-05-18 Vedanta lmt EQ 37546 37589 37542 37583 37546 18879973 43869.89
26-05-18 Vedanta lmt EQ 37652 37702 37651 37700 37652 30591612 73047.94
27-05-18 Vedanta lmt EQ 37723 37736 37721 37731 37723 24166078 59025.91
30-05-18 Vedanta lmt EQ 37763 37772 37761 37770 37763 14418397 35139.09
31-05-18 Vedanta lmt EQ 37852 37861 37850 37859 37852 16590218 40575.67

29
 Table no.11: Futures of vedanta ltd:

DATE OPEN HIGH LOW CLOSE SETTLE NO OF TURNOVER

PRICE CONTRACTS
2-05-18 36846 37956 35956 36869 36869 24924 96960.5

3-05-18 36726 38652 36586 36785 36785 21150 81668.75

4-05-18 36985 38563 36589 36485 36485 25178 93449.65

5-05-18 36825 38469 36485 36525 36525 17542 64859.04

6-05-18 36811 38692 36856 36511 36511 16534 61275.01

9-05 -18 36975 38466 36328 36975 36975 17520 66704.07

10-05-18 37969 38566 36589 37980 37980 13669 52541.6

11-05-18 37152 38465 37639 37258 37258 22178 84480.34

12-05-18 38511 38863 38695 38868 38868 23640 92840.77

13-05-18 39652 38351 39595 39545 39545 20724 80005.13

16-05-18 36589 38562 36447 36748 36748 18153 68633.45

17-05-18 37585 38963 37558 37845 37845 13970 53712.28

18-05-18 36865 38466 36125 36451 36451 13731 52563.54

19-05-18 38956 38695 36521 38944 38944 17243 66426.49

20-05-18 38356 38987 36782 34545 34545 17369 65800.49

23-05-18 39658 38354 38962 39545 39545 20572 77693.76

24-05-18 39512 39655 39152 39554 39554 13643 51871.94

25-05-18 40158 44688 39658 40025 40025 25426 100309.44

26-05-18 41523 45458 49956 41564 41564 22841 92408.3

30
Table no.12: The futures and spot price movements of vedanta ltd :

Futures and spot price movements

DATE SPOT PRICE FUTURE PRICE

2-05-18 35969 36869
3-05-18 36589 36785
4-05-18 36589 36485
5-05-18 36369 36525
6-05-18 36854 36511
9-05 -18 36336 36975
10-05-18 36515 37980
11-05-18 37636 37258
12-05-18 38636 38868
13-05-18 39569 39545
16-05-18 36466 36748
17-05-18 37536 37845
18-05-18 36136 36451
19-05-18 36566 38944
20-05-18 36786 34545
23-05-18 38963 39545
24-05-18 39152 39554
25-05-18 39665 40025
26-05-18 40053 41564

If bought 1 lot of shares on 2-05-2018 he has to buy at a price of Rs 35969 and if he intends to sell it
on the last day of trading in the month i.e., on 26-05-2018 his investment would be priced at 40053 Rs
per share

31
Fig no.7: Graphical representation of futures and spot price movements of vedanta ltd

The futures and spot price movements of vedanta ltd

42000

41000

40000

39000
SPOT PRICE
38000
FUTURE PRICE
37000

36000

35000
1 3 5 7 9 11 13 15 17 19

Note: The dates for the above graph is in Month/Day/Year format

Interpretations:

 The future price of vedanta ltd is moving along with the market price.
 If the buy price of the future is less than the settlement price, than the buyer of a future
gets profit.
 If the selling price of the future is less than the settlement price, then the seller incurs
loss.

32
Table No.13: Price movements of future price (vedanta ltd)

DATE FUTURE PRICE

2-05-18 36869

3-05-18 36785

4-05-18 36485

5-05-18 36525

6-05-18 36511

9-05 -18 36975

10-05-18 37980

11-05-18 37258

12-05-18 38868

13-05-18 39545

16-05-18 36748

17-05-18 37845

18-05-18 36451

19-05-18 38944

20-05-18 34545

23-05-18 39545

24-05-18 39554

25-05-18 40025

26-05-18 41564

33
FIG No.8: Graphical representation of futures prices of vedanta ltd

FUTURE PRICE
45000
43000
41000
39000
37000 FUTURE PRICE

35000
2/5/2018
4/5/2018
6/5/2018
10/5/2018
12/5/2018
16-05-18
18-05-18
20-05-18
24-05-18
26-05-18

Interpretation

From the above graph we could interpret that the Future Prices of Vedanta ltd is not
constant and is fluctuating and the price on the first traded date i.e., on 2/05/2018 is less than
that of the last traded date i.e, on 26/05/2018.

34
 CHAPTER – V

FINDINGS, SUGGESTIONS AND CONCLUSION

FINDINGS

 The future price of Vedanta limited is moving along with the market price.
 The buy price of the future is less than the settlement price, and then the buyer of a future
gets profit.
 The selling price of the future is less than the settlement price, and then the seller incurs
loss.
 The settlement price will be considered as the final price in calculating the future prices and
the closing price of the equities will be considered as the spot price.

SUGESSTIONS

 The derivatives market is newly started in India and it is not known by every investor,
so ICICI has to take steps to create awareness among the investors about the derivative
segment.
 In order to increase the derivatives market in India, SEBI can revise some of their
regulations like contract size, participation of FII in the derivatives market.
 Contract size can be minimized because small investors cannot afford this much of huge
premiums.
 ICICI to take further steps in the risk management mechanism.
 Vedanta limited has to take measures to use effectively the derivatives segment as a
tool of hedging.

35
CONCLUSION

Through the observations it could be concluded that the price of the future stock of ICICI and SBI is
fluctuating throughout the traded dates that was analyzed. The buy price of the futures is less than the
settlement price, and then the buyer of a future gets profit. The selling price of the future is less than
the settlement price, and then the seller incures loss. In both SBI and ICICI bank the futures prices are
moving along with the spot prices. ICICI has to take steps to create awareness among the investors
about the derivative segment. Contract size can be minimized because small investors cannot afford
this much of huge premiums.

36
BIBLIOGRAPHY
WEBSITES:

https://www.derivativesindia.com/

https:// www.sebiindia.com/

https://www.motilaloswalsecurities.com/

https://www.nseindia.com/

https://www.bseindia.com/

NEWS PAPERS:

“The Economic Times”

“Business Line”

BOOKS:

 John c Hull, options futures and other derivatives, 7th edition.pearson.2009

 S.L Gupta, financial derivatives, Prentice hal,2009
 Gordan and Natarajan, Financial Markets and Services, Tata Mc Graw Hill
 Donald E Fischer & Ronald R Jordan, Security Analysis & Portfolio Management,
Prentice Hall OF India

37