Transcript of Chat with Mr. Jitendra Panda ( Asst. Vice President - Derivatives, Motilal Oswal Securities ) - Indian Derivative Market - A closer look (18/01/2002)
[04:29:33 PM] => Myiris : Welcome to myiris chatmasala
[04:29:46 PM] => DISCLAIMER
[04:30:16 PM] => Mr. Jitendra Panda is the Asst. Vice President - Derivatives, Motilal Oswal Securities . At the time of this conversation / chat, Mr. Panda may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Panda is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Panda, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:30:28 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:30:39 PM] => Lastly the views expressed by Mr. Panda have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com.
[04:30:54 PM] => Myiris : Welcome to the chat session Mr. Panda.
[04:34:22 PM] => jkgoyal21: What are the future for IT scrips, and what will be the effect of budget on it?
[04:34:51 PM] => JP : The leading IT scrips are given their guidance of sustainable to flat growth in the coming quarters, inspite of the downturn in US and other countries. This is a healthy sign for the IT scrips.
[04:37:16 PM] => gop20012001: Is it the right time to enter the markets or should I wait?
[04:37:27 PM] => JP : Select a sector like cement and pharma. Look good and you can invest in these sectors.
[04:39:20 PM] => B-reddy : What is the scene on derivatives on BSE, NSE?
[04:39:32 PM] => JP : Volumes have been picking up and has touched 1,200 crores at NSE in a span of 4 months. BSE has yet to pick up. Investors are enthusiastic about futures as its close to our badla product.
[04:40:43 PM] => Sachin_Bas : Sir,What do I do to apply for derivatives trading? Can you help me out?
[04:41:00 PM] => JP : You need to select a broker and understand the product. Thereafter after paying the necessary margins and signing the agreement you can commence trading.
[04:41:50 PM] => SS12 : Are futures contracts available for individual scrips?
[04:41:59 PM] => JP : There are selected 31 scrips on which the future contracts are traded.
[04:43:18 PM] => Raj K : Sir, Which index futures series are available right now?
[04:43:38 PM] => JP : Index futures for 1-month, 2-months and 3-months are available.
[04:44:08 PM] => Amit_G : Please advice me on Reliance Petro?
[04:44:17 PM] => JP : Lets stick to derivatives.
[04:44:53 PM] => Sudha Kashyap : Where do you see the sensex at the end of the month?
[04:45:01 PM] => JP : Market undertone is bullish.
[04:46:55 PM] => NG65 : Can you tell me the difference between futures and options?
[04:47:11 PM] => JP : Futures are contracts wherein the positions are carried forward with market risk, similar to badla. In case of options, investors have the risk/cost defined at the time of investing. Options also allow investors to exercise their positions if in favour after market hours.
[04:47:42 PM] => Jay : What was the overall derivatives trading volume at the BSE last month?
[04:47:54 PM] => JP : Average volume of Rs 5-6 crore only.
[04:48:16 PM] => AnandM : Is Polaris Soft a good buy right now?
[04:48:25 PM] => JP : No comments.
[04:48:33 PM] => Ganesh : What do you think of Digital Eqps?
[04:48:46 PM] => JP : No comments.
[04:49:56 PM] => Ramgopal : Is derivatives trading a better way to make money?!
[04:50:05 PM] => JP : Derivatives trading in options reduce risk as investors are aware of the maximum loss. It has no guarantee of making profits.
[04:51:34 PM] => JP : Derivatives trading in options reduce risk as investors are aware of the maximum loss. It has no guarantee of making profits.
[04:51:47 PM] => Reji Joseph : Don't you think derivatives will aid speculation? Is it a good thing?
[04:52:02 PM] => JP : Speculation is always healthy for capital markets as it aids in determining the right price for a scrip. With derivatives investors can hedge their portfolio. And that�s a good thing.
[04:53:05 PM] => K Nair : Whats your outlook on the derivatives market in India? Will they take off?
[04:53:15 PM] => JP : It has already taken off in a small way and certainly looks to beat the cash markets in the near future once MFs and FIs start active participation.
[04:53:49 PM] => SW19 : Does cement look attractive?
[04:53:59 PM] => JP : Yes, the sector looks attractive.
[04:56:47 PM] => kindal : As far as derivatives are concerned would you say that there has to exist a view on the part of the investor on the markets before he shorts a call/put buys a call/ put or will an investor make money safely if he just uses arbitrage opportunity to make money between the cash and the derivative market. What is the true essence of derivative trading any way?
[04:57:09 PM] => JP : Derivatives trading involve speculators, hedgers and arbitragers. Each has their own essence. And derivatives support them to make money with the inherent risk. In case of buying or selling call/put you need to have a view of the market.
[04:58:26 PM] => Manish : Are the operators back instead of Badla they seem to be using the future to pull up the markets - when is the investor ever going to learn?
[04:58:38 PM] => JP : Futures can be used by speculators but involves strict margining and huge exposures. Investors need to certainly take care before investing/trading in this segment.
[04:59:30 PM] => krantiv : Do you offer derivative trading on the net yet. If yes, how are the volumes and what is the brokerage , margin etc.
[04:59:40 PM] => JP : Regulations do not permit derivatives trading on the net.
[05:00:46 PM] => msry : On which Exchange the focus on derivatives is going to be? Right now NSE seems to running away with the lead?
[05:02:18 PM] => JP : Obviously NSE has the lead and shall continue as more and more investors start trading there.
[05:02:24 PM] => msry : Can we calculate the volatility in shallow markets such as India?
[05:02:34 PM] => JP : Volatility is a function of price difference. The 31 scrips chosen for derivatives have sufficient volumes to determine the volatility.
[05:03:52 PM] => Klopa : What is your view on the Index ... will I see the BSE index come down to 2600 (I believe that the Nasdaq is headed towards 1350-1500 levels once again). Should I sell the 3 month future at this stage ... How should (in case I short) hedge myself to minimise the risk?
[05:04:11 PM] => JP : If you are bearish you certainly can sell the 3-month index future and cover the risk by buying a call option for the 3-month expiry.
[05:06:01 PM] => manrag : How is pricing done in the options markets in India?
[05:06:09 PM] => JP : Options premium are priced based on intrinsic value, time to expiry and the volatility of the scrip.
[05:08:05 PM] => Gagan : Given that the Composition of the Indices keep on changing how would that be adjusted in the Index future ... is that reflected in the price of the security post the change or does the investor/trader have to pay the price e.g. Wipro's inclusion in the NIFTY
[05:08:15 PM] => JP : Any inclusions in the Nifty is done with the same weightage of the exiting scrip and hence investors do not lose in the bargain.
[05:11:05 PM] => K Barua : With the minimum contract size of Rs 2 lacs for the futures do you think the retail market would ever fancy it?
[05:11:15 PM] => JP : Market has already started taking off with this size. Any lowering of size will see phenomenal increase in volume in this segment.
[05:14:09 PM] => madhukau : What`s is a strike price?
[05:14:21 PM] => JP : Strike price are fixed by the exchange for each scrip based on their price band. Investors can invest at this strike prices only.
[05:14:30 PM] => madhukau : How's the option price calculated?
[05:14:39 PM] => JP : Already explained.
[05:15:55 PM] => P Neeraj : Would a Fund like the Benchmark Fund be a better bet for the small investor or any Index fund listed on the stock exchange for that matter than speculating in the derivative market?
[05:16:03 PM] => JP : Small investors should avoid derivatives segment as the contract size in this segment is Rs 2 lakhs and above.
[05:18:15 PM] => D. Ganesh : What should I do with Satyam. I bought the stock at 210 should I now hedge my investment by shorting the future and probably minimise my downside notional profit or do I buy a put?
[05:18:28 PM] => JP : If you have bought/possess 1200 shares of Satyam, which is the lot size, in futures market, you can sell futures to limit your losses when price of Satyam moves below Rs 210.
[05:19:40 PM] => Ayan : After looking at downturn of Infosys and Satyam, do you advise to buy call option for both scripts? At current prices your best call and put trades?
[05:19:50 PM] => JP : If you are bullish on Infy and Styam from this levels then certainly buying calls will benefit you.
[05:20:08 PM] => Jassi 210 : Sir, I want to invest my money in equity can you suggest some good share for short term? What about NIIT?
[05:20:16 PM] => JP : No comments.
[05:22:18 PM] => Avinash : How do I arrive at a decision of choosing the right broker for derivative trading?
[05:22:31 PM] => JP : A broker who has credibility in the market and does not speculate or manipulate scrip prices should be considered. Additionally, you need to look at his financial strength and how long he has been in practice.
[05:24:41 PM] => Ayan : Do you think I�ll making money if I buy call for Reliance tomorrow?
[05:24:54 PM] => JP : You need to consider your market view and if you are bullish on Reliance, buying a call option will make you money.
[05:26:40 PM] => Avinash Kumar : Sir, are futures more lucrative than options?
[05:27:01 PM] => JP : Futures have more risk than options. Presently there are huge volumes in futures market and hence look lucarative.
[05:28:43 PM] => Ayan : Fom current index level of 3375 what advise would you give to all here to buy or sell index future to achieve 5 % return with stop-loss of around 3%?
[05:28:51 PM] => JP : The undertone of the market is bullish and hence you need to consider buying index futures with adequate stop-loss.
[05:30:45 PM] => Avinash : Can you suggest on what basis should I look upon the research reports which the brokers come out with for accurate analysis?
[05:30:57 PM] => JP : Research reports are prepared with lot of efforts and keeping the best interest of the investors . You need to certainly read them and judge the content.
[05:32:15 PM] => Manoj_ 702 : What features should I look into the research reports generated by the brokers for accurately interpreting the data?
[05:32:23 PM] => JP : Refer to the earlier query.
[05:33:19 PM] => Myiris : Thats the end of the chat session for today.
[05:33:38 PM] => Myiris : We thank you all for your participation.
[05:34:19 PM] => Myiris : We thank Mr. Jitendra Panda for his valuable inputs, making this a lively session.
[05:35:17 PM] => Myiris : Our next chat wil be on January 21st with Mr. Sanjiv Shah, Exec.Director of Benchmark Mutual Fund.
[05:35:50 PM] => Myiris : Till then bye from us and have a nice weekend!!
