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A PROJECT REPORT ON
CONTENTS
SL.NO
PARTICULARS
1.
Executive Summary
2.
Research Methodology
3.
Company profile
4.
5.
6.
Findings
7.
Suggestions
8.
Conclusion
9.
Bibliography
RESEARCH METHODOLOGY
Sample Area
Belgaum city
Duration of Project:
Ist Phase - December
IInd Phase - January to April (weekly two days)
TOOLS USED FOR ANALYSIS:
1. Graphical Representation of Analysis through SPSS. :
a. Pie charts
DATA COLLECTION APPROACH:
Primary data has been used to carry out the research successfully. The secondary
data has been collected from NDEX and MCX. For the purpose of gathering primary data
a structure and questionnaire was designed to collect data from the derivative investors.
Questionnaire
Secondary Data:
FINDINGS
More than 50% of the Traders in are aware about the commodity future
Market
Hardly 30% traders are invested in the commodity future market
Most of the investors are not ready to invest in commodity future market they feel it
involve high risk.
Returns and the Risk of the commodity are the most critical factors, which
Traders will consider while investing in any commodity
Most of the investors are ready to invest in commodity future market if proper
information is provided
As commodity future market is new and emerging ,many investors and farmers are
not fully aware of this market .as the market helps to trade transparently without
middlemen and agents
While finding the reasons why most of the people are not trading in commodity
market I found that many respondents are not interested at all in this trade this is
because of unanawareness & mythical perception about commodity market.
SUGGESTION
There is need to create awareness about commodity Future Market. Awareness
program has to be conducted by Karvy consultants, because since this was new to the
market .so it can be done through by giving advertisements in local channels,
Newspapers, by sending E-mail to present customers etc
From survey it is found that most of the potential customers are concerned about the
Brokerage charges so Karvy can look upon this. If it can charge moderate brokerage
it will help to attract more and more customers.
More agents and marketing executives should be appointed to educate the customers
because the customers having many myths in there mind
And also create the awareness of electronic commodity trading
Firm should approach people who are already into the business of commodities
.special campaigns / investors meets should be conducted for these people since they
are aware of rate fluctuation ,market trends etc . They have got market idea that
benefits them in price prediction. They will be in high spirits when price risk of them
will be managed.
Company
Overview
And
Information
COMPANY PROFILE
The birth of Karvy was on a modest scale in 1981. It began with the vision and
enterprise of a small group of practicing Chartered Accountants who founded the flagship
company Karvy Consultants Limited. We started with consulting and financial
accounting automation, and carved inroads into the field of registry and share accounting
by 1985. Since then, we have utilized our experience and superlative expertise to go from
strength to strengthto better our services, to provide new ones, to innovate, diversify
and in the process, evolved Karvy as one of Indias premier integrated financial service
enterprise.
Thus over the last 20 years Karvy has traveled the success route, towards building
a reputation as an integrated financial services provider, offering a wide spectrum of
services. And we have made this journey by taking the route of quality service, path
breaking innovations in service, versatility in service and finally totality in services.
Teamwork
None of us is more important than all of us.Each team member is the face of
Karvy. Together we offer diverse services with speed, accuracy and quality to deliver
only one product: excellence. Transparency, co-operation, invaluable individual
contributions for a collective goal, and respecting individual uniqueness within a
corporate whole, is how we deliver again and again.
Responsible Citizenship
A social balance sheet is as rewarding as a business one. As a responsible corporate
citizen, our duty is to foster a better environment in the society where we live and work.
Abiding by its norms, and behaving responsibly towards the environment, is some of our
growing initiatives towards realizing it.
Integrity
Everything else is secondary
Professional and personal ethics are our bedrock. We take pride in an environment that
encourages honesty and the opportunity to learn from failures than camouflage them. We
insist on consistency between works and action
The first securities registry to receive ISO 9002 certification in India. Registered with
SEBI as Category I Registrar, is Number 1 Registrar in the Country. The award of being
Most Admired Registrar is one among many of the acknowledgements we received for
our customer friendly and competent services.
The company, Member of National Stock Exchange (NSE), offers a comprehensive range
of services in the stock market through the benefits of in-depth research on crucial market
dynamics, done by qualified team of experts. Apart from stock broking activities, the
company also provides Depository Participant Services to its corporate and retail
customers.
Registered with SEBI as a Category I Merchant Banker and ranked among the top 10
merchant bankers in the country, the company has built a reputation as a professional
advisor in structuring IPOs take over assignments and buy back exercises.
through
well-systematized
trading
platform.
Our technological and infrastructural strengths and especially our street-smart skills make
us an ideal broker. Our service matrix is holistic with a gamut of advantages, the first and
foremost being our legacy of human resources, technology and infrastructure that comes
from being part of the Karvy Group.
Quality Policy:
To achieve and retain leadership, Karvy shall aim for complete customer
satisfaction, by combining its human and technological resources, to provide superior
quality financial services. In the process, Karvy will strive to exceed Customer's
expectations.
About Karvy Comodities Broking Limited:
Commodities market, contrary to the beliefs of many people, has been in existence in
India through the ages. However the recent attempt by the Government to permit Multicommodity National levels exchanges has indeed given it, a shot in the arm. As a result
two exchanges Multi Commodity Exchange (MCX) and National Commodity and
derivatives Exchange (NCDEX) have come into being. These exchanges, by virtue of
their high profile promoters and stakeholders, bundle in themselves, online trading
facilities, robust surveillance measures and a hassle-free settlement system.
KARVY Advantage:
Trade from anywhere in India Karvy, with its network of branches across the length and
breadth of the country, is always within your reach, no matter where you are. This gives
you the facility to trade from anywhere in India.
Reliable research
Karvy has a dedicated team of research analysts who work round the clock to
provide the best research newsletters and advices. We reach your desk daily, weekly and
monthly.
Personalized Services
Karvy, with its wide array of personalized services from registry to stock broking
takes the pleasure of adding one more service, commodities broking with the same
personal touch
.
State of Infrastructure
The strong IT backbone of Karvy helps us to provide customized direct services
through our back office system, nation-wide connectivity and website.
Round the clock operations in commodities trading
Indian commodities market, unlike stock market keeps awake till 11 in the night and
Karvy is all
poised to offer round the clock services through its dedicated team of
professionals.
The account opening forms are available at our branch offices and with our business
associates. You are requested to kindly contact a branch nearby your area and complete
the account opening formalities for commodities trading at the branches.
Also you can take a print out and fill out a simple account opening form from our
website and complete the necessary documentation as per the checklist enclosed in the
form. The form after duly filled up may be deposited at the nearest Karvy Branch or
Associate along with a cheque/DD favouring Karvy Commodities Broking Private
Limited payable at Hyderabad towards initial margin.Please remember the MemberClient agreement has to be executed on a non-judicial stamp paper, as per the applicable
by the Stamp Duty Act of the relevant state.
DepositInitialMargin:
You need to deposit an initial upfront margin as specified by the exchange (usually
between 5-10% of the contract value).The cheque/DD should be in favour of Karvy
Commodities Broking Private Limited
Mark to Market Margin:
In addition to initial margin, you also need to keep a mark to market margin for
taking care of the adverse price movements, if any.
Achievements
Among the top 5 stock brokers in India (4% of NSE volumes)
ORGANISATION CHART
Managing Director
Chief Managing Director
Vice-President
Karvy
Securities Ltd.
Vice-President
Vice-President
Vice-President
Karvy
Karvy
Karvy
Stock Broking Ltd
.
Deputy
General
Manager
SeniorManager
Deputy
General
Manager
Deputy
General
Manager
Senior Manager
Senior Manager
Branch Manager
Deputy
General
Manager
SenoirManager
Introduction to derivatives
The origin of derivatives can be traced back to the need of farmers to protect
themselves against Fluctuations in the price of their crop. From the time it was sown to
the time it was ready for harvest, farmers would face price uncertainty. Through the use
of simple derivative products, it was possible for the farmer to partially or fully transfer
price risks by locking-in asset prices. These were simple contracts developed to meet the
needs of farmers and were basically a means of reducing risk.
A farmer who sowed his crop in June faced uncertainty over the price he would
receive for his harvest in September. In years of scarcity, he would probably obtain
attractive prices. However, during times of oversupply, he would have to dispose off his
harvest at a very low price. Clearly this meant that the farmer and his family were
exposed to a high risk of price uncertainty.
On the other hand, a merchant with an ongoing requirement of grains too would
face a price risk that of having to pay exorbitant prices during dearth, although
favorable prices could be obtained during periods of oversupply. Under such
circumstances, it clearly made sense for the farmer and the merchant to come together
and enter into a contract whereby the price of the grain to be delivered in September
could be decided earlier. What they would then negotiate happened to be a futures-type
contract, which would enable both parties to eliminate the price risk. In 1848, the
Chicago Board of Trade, or CBOT, was established to bring farmers and merchants
together. A group of traders got together and created the `to arrive contract that permitted
farmers to lock in to price upfront and deliver the grain later. These to-arrive contracts
proved useful as a device for hedging and speculation on price changes. These were
eventually standardized, and in 1925 the First futures clearing house came into existence.
The OTC derivatives markets have the following features compared to exchangetraded derivatives:
1. The management of counter-party (credit) risk is decentralized and located within
individual Institutions.
2. There are no formal centralized limits on individual positions, leverage, or margining.
3. There are no formal rules for risk and burden sharing.
4. There are no formal rules or mechanisms for ensuring market stability and integrity,
and for
Safeguarding the collective interests of market participants.
5. The OTC contracts are generally not regulated by a regulatory authority and the
exchange's self-regulatory organization, although they are affected indirectly by national
legal systems, banking supervision and market surveillance.
The OTC derivatives markets have witnessed rather sharp growth over the last few years,
which has accompanied the modernization of commercial and investment banking and
globalization of financial activities. The recent developments in information technology
have contributed to a great extent to these developments. While both exchange-traded and
OTC derivative Contracts offer many benefits, the former have rigid structures compared
to the latter. The largest OTC derivative market is the interbank foreign exchange market.
Commodity derivatives the world over are typically exchange traded and not OTC in
nature.
Exchange traded versus OTC derivatives
Derivatives have probably been around for as long as people have been trading with one
another. Forward contracting dates back at least to the 12th century, and may well have
been around before then. These contracts were typically OTC kind of contracts. Over the
The OTC derivatives markets have the following features compared to exchangetraded derivatives:
1. The management of counter-party (credit) risk is decentralized and located within
individual Institutions.
2. There are no formal centralized limits on individual positions, leverage, or margining.
3. There are no formal rules for risk and burden sharing.
4. There are no formal rules or mechanisms for ensuring market stability and integrity,
and for
Safeguarding the collective interests of market participants.
5. The OTC contracts are generally not regulated by a regulatory authority and the
exchange's self-regulatory organization, although they are affected indirectly by national
legal systems, banking supervision and market surveillance.
The OTC derivatives markets have witnessed rather sharp growth over the last
few years, which has accompanied the modernization of commercial and investment
banking and globalization of financial activities. The recent developments in information
technology have contributed to a great extent to these developments. While both
exchange-traded and OTC derivative Contracts offer many benefits, the former have rigid
structures compared to the latter. The largest OTC derivative market is the interbank
The commodity market has evolved significantly from the days when farmers hauled
bushels of wheat and corn to the local market. In the 1800s, demand for standardized
contracts for trading agricultural products led to the development of commodity futures
exchanges. Today, futures and options contracts on a huge array of agricultural products,
metals, energy products and soft commodities can be traded on exchanges all over the
world.
Commodities have also evolved as an asset class with the development of commodity
futures indexes and, more recently, the introduction of investment vehicles that track
commodity indexes.
Commodity prices have been driven higher by a number of factors, including increased
demand from China, India and other emerging countries that need oil, steel and other
commodities to support manufacturing and infrastructure development. The commodity
supply chain has also suffered from a lack of investment, creating bottlenecks and adding
an insurance premium and/or a convenience yield to the returns of many commodity
futures. Over the long term, these economic factors are likely to support continued gains
in commodity index returns.
The potential for attractive returns is probably the most obvious reason for increased
investor interest in commodities, but it isn't the only factor. Commodities may offer
investors other significant benefits, including portfolio diversification and a hedge against
inflation and risk.
Commodities are real assets, unlike stocks and bonds, which are financial assets.
Commodities, therefore, tend to react to changing economic conditions in different ways
than traditional financial assets. For example, commodities are one of the few asset
The futures markets are so crucial to the well being of our nation, that the government
established the Commodity Futures Trading Commission (CFTC) to oversee the industry.
There is also a self-regulatory body, the National Futures Association (NFA), who
monitor the activities of all futures market professionals to ensure the integrity of the
futures markets.
Commodities also give the investor the ability to participate in virtually all sectors of the
world economy and have the potential to produce returns that tend to be independent of
other markets. In fact portfolios that add commodity investments can actually lower the
overall portfolio risk by diversification.
What is the difference between hedging and speculating?
Just about every product that you consume would likely cost dramatically more without
the commodities futures markets. Because of the intrinsic risks associated to being in
business, lacking the ability to shift risk, a manufacturer/producer of goods or services
The person willingly accepting a risk does so because of the opportunity to profit from
price movements, this is known as speculating. The cotton in your shirt, the orange juice,
cereal and coffee you had for breakfast, the lumber, copper and mortgage for your home,
the gas or ethanol that you put in your car all would be priced many times higher without
the participation of speculators in the futures markets. Through supply and demand
market forces, equilibrium prices are reached in an orderly and equitable manner within
the exchanges, and world economies, and you, benefit tremendously from futures trading.
In futures market, speculators play a role in providing liquidity to the markets and
may sometimes benefit from price movements, but do not have a systematic causal
influence on prices. An effective architecture for regulation of trading and for
ensuring transparency as well as timely flow of information to the market
participants would enhance the utility of commodity exchanges in efficient price
discovery and minimize price shocks triggered by unanticipated supply demand
mismatches.
Participants of Commodity Market:
The participants who trade in the commodity derivatives markets can be classified as
follows;
Hedgers: Hedgers are participants who use commodity derivative instruments to hedge /
eliminate the price risk associated with the underlying commodity asset held them.
or
another
deal
in
the
underlying
cash
commodity.
Take an example: A Hedger pay more to the farmer or dealer of a produce if its prices go
up. For protection against higher prices of the produce, he hedges the risk exposure by
buying enough future contracts of the produce to cover the amount of produce he expects
to buy. Since cash and futures prices do tend to move in tandem, the futures position will
profit if the price of the produce rise enough to offset cash loss on the produce.
Speculators: Speculators are participants who bet on future movements in the price of
an asset i.e. I commodity to make short term gain from the price movements.
Commodity future s gives theme the leverage so to take risks on nominal margin
payments and thereby increasing for bigger gains or losses. Speculators are some what
like a middle man. They are never interested in actual owing the commodity. They will
just buy from one end and sell it to the other in anticipation of future price movements.
They actually bet on the future movement in the price of an asset.
They are the second major group of futures players. These participants include
independent floor traders and investors. They handle trades for their personal clients or
brokerage firms.
The two exchanges (NCEDX&MCX) have seen tremendous growth in less than two
years . the daily average on these two exchanges put together has now grown to a
At NCDEX the contracts expire on 20th day of each month .if 20th happens to be a holiday
the expiry day will be the previous working day.
At MCE the expiry day is 15th of every month .if 15th happens to be a holiday the expiry
day will be the previous day. The expiry day differs for different commodities in both the
exchanges.
Generally commodity futures require an initial margin between 5-10% of the contract
value. The exchanges levy higher additional margin in case of excess volatility. The
margin amount varies between exchanges and commodities. Therefore they provide great
benefits of leverage in comparison to the stock and index futures trade on the stock
exchanges. The exchange also requires the daily profits and losses to be paid in/out on
open positions (mark to Market or MTM) so that the buyers and sellers do not carry a risk
of not more than one day.
Functions of an Exchange
Agri commodities
Soya bean
Soya oil
Rapeseed/Mustard
Seed Rapeseed/
Mustard Seed Oil
Crude Palm oil
RBD Palmolein
40 Commodities introduced in Phase II
Rubber
Jute
Pepper
Chana (Gram)
Guar
Wheat
Abbreviation
Location
Product Types
BMF
Brazil
CME Group
CME
Chicago
Chicago
Emissions
HedgeStreet Exchange
California
Intercontinental Exchange
ICE
Energy, Emissions
Memphis
Agricultural
Agricultural
Mercado a Termino de
Buenos Aires
MATba
Argentina
Minneapolis Grain
Exchange
MGEX
Minneapolis Agricultural
New York
Agricultural, Biofuels
NYMEX
New York
USFE
Chicago
Energy
Winnipeg Commodity
Exchange
WCE
Winnipeg
Agricultural
Asia
Exchange
Bursa Malaysia
Abbreviation Location
MDEX
Product Types
Malaysia Biofuels
Nagoya
DCE
China
Agricultural, Plastics
Dubai
Energy
Dubai
Precious Metals
Kansai Commodities
Exchange
Osaka
Agricultural
India
National Commodity
Exchange Limited
Karachi
Mumbai
All
Dalian Commodity
Exchange
KANEX
NCDEX
Singapore Commodity
Exchange
SICOM
Tokyo
TGE
Tokyo
Agricultural
CZCE
China
Agricultural
Europe
Exchange
Climex
Abbreviation Location
CLIMEX
Product Types
Amsterdam Emissions
Europe
Agricultural
Europe
Emissions
London
Hanover
Agricultural
LME
Sydney
Agricultural
MCX allows trading on a host of commodities ranging from bullion to grains. Please
check the Commodities traded menu. MCX has become the first exchange in the world
to launch futures on steel. Recently on 11th August 2004, MCX crossed a peak daily
turnover of Rs.950 Crores.
NCDEX is promoted by an elite group of financial institutions including NSE,
LIC, SBI, UBI etc., NCDEX also allows trading of futures on a host of commodities.
National Commodities and Derivatives Exchange, NCDEX At Karvy Commodities, we
are focused on taking commodities trading to new dimensions of reliability and
All contracts settling in cash will be settled on the following day after the
contract expiry date. Commodity trading follows a T + 1 settlement system, where the
settlement date is the next working day after expiry. However, in case of delivery-based
traders, settlement takes place five to seven days after expiry
Commodities like chana, urad, soya bean oil, guar gum, sugar, pepper, wheat,
jeera, gold, silver and crude oil have found fancy with Indian Investors. Expecting the
turnover on the three online commodity exchanges to spurt to more than Rs.15000 crores
per day, banks are keen to tap the commodity trade-financing front. Commercial banks
are chasing the commodity industry with attractive lending rates between 8% and 8.5% as
against the normal lending rate between 11% and 14%.
Commodity exchanges in India will contribute significantly towards the
development of Indian economy as a whole. Commodity market is undergoing some
breakthrough changes like demat, trading of commodities like crude oil and plastics, also
GOI is contemplating of implenting Options trading.
Wholesale Market
Retail Market
Let us now take a look at what the present scenario of each of the above markets is like.
The traditional wholesale market in India dealt with whole sellers who bought
goods from the farmers and manufacturers and then sold them to the retailers after
making a profit in the process. It was the retailers who finally sold the goods to the
consumers. With the passage of time the importance of whole sellers began to fade out
for the following reasons:
The whole sellers in most situations, acted as mere parasites who did not add any
value to the product but raised its price which was eventually faced by the
consumers.
The improvement in transport facilities made the retailers directly interact with
the producers and hence the need for whole sellers was not felt.
In recent years, the extent of the retail market (both organized and unorganized)
has evolved in leaps and bounds. In fact, the success stories of the commodity market of
India in recent years has mainly centered around the growth generated by the Retail
Sector. Almost every commodity under the sun both agricultural and industrial is now
being provided at well distributed retail outlets throughout the country.
High Leverage The margins in the commodity futures market are less than the
F&O section of the equity market.
Diversification The returns from commodities market are free from the direct
influence of the equity and debt market, which means that they are capable of being used
as effective hedging instruments providing better diversification.
If you are an importer or an exporter, commodities futures can help you in the following
ways
Lock-in the price for your produce If you are a farmer, there is every chance that
the price of your produce may come down drastically at the time of harvest. By taking
positions in commodity futures you can effectively lock-in the price at which you wish to
sell your produce
Assured demand Any glut in the market can make you wait unendingly for a
buyer. Selling commodity futures contract can give you assured demand at the time of
harvest.
If you are a large scale consumer of a product, here is how this market can help you:
Control your cost If you are an industrialist, the raw material cost dictates the final
price of your output. Any sudden rise in the price of raw materials can compel you to pass
on the hike to your customers and make your products unattractive in the market. By
buying commodity futures, you can fix the price of your raw material.
Ensure continuous supply Any shortfall in the supply of raw materials can stall
your production and make you default on your sale obligations. You can avoid this risk
by buying a commodity futures contract by which you are assured of supply of a fixed
quantity of materials at a pre-decided price at the appointed time.
The effective mechanism of settlement and delivery procedures adopted and
employed by MCX has once again undergone rigorous tests and have come out extremely
successful. This is signified with the surging trading volume in bullion contracts and high
open interest entering the settlement period resulting in healthy quantities getting
physically delivered. This whole process underscores the efficacy & transparency of the
complete trading, settlement and delivery process employed by MCX.
The complete delivery procedure right from getting the possession of the precious
metal from the sellers, necessary quality certifications, consignment movement, handing
over the precious metal to the buyers, etc was completed in flat 5 days period. The
restrictions on the free movement of commodities in the physical form under the
Essential Commodities Act, APMC Act, Licensing restrictions, etc.
Hence, the
3.
commodities backed by warehouse receipt system can help eliminate the quality risk
and price risk. It will facilitate seamless nation wide spot market for commodities.
4.
5.
7.
There are no uniform contract specifications for the same commodity traded on
various exchanges. As a result, there is no proper mechanism to assess price of the
same commodity across various exchanges, as price depends on the contract
specification.
8.
Online trading at the national level is mandatory only in respect of National level
multi commodity exchanges, while such a compulsion is not applicable to the
regional ones. Hence transparency suffers.
9.
10.
Residents in India, engaged in import and export trade, may hedge the price risk
of commodities in the international commodity exchanges/markets. Applications for
commodity hedging are to be forwarded to RBI. A one-time approval will be given
by RBI along with the guidelines for undertaking this activity. The Reserve Bank of
India, which is considering a proposal to grant blanket approval to Indian companies
The players in capital markets must acquire the required expertise for trading in
commodity markets and vice versa to have an integrated view of all markets.
d. The Regulator:
Super Markets
Large retailers
Local Retail
Stores
Ration/Fair
Price Shops
Sub Wholesaler
Food Corporation of
India
Wholesaler
Market Yard
Village level
Consolidation
Small & Marginal
Farmers
The emergence of organized sector retail chain stores and a rise in competition is likely to
The trading system on the NCDEX provides a fully automated screen based trading for
futures on commodities on a nationwide basis as well as an online monitoring and
surveillance mechanism. It supports an order driven market and provides complete
transparency of trading operations. The trade timings of the NCDEX are 10.00 a.m. to
4.00 p.m. After hours trading has also been proposed for implementation at a later stage.
The NCDEX system supports an order driven market, where orders match automatically.
Order matching is essentially on the basis of commodity, its price, time and quantity. All
occupation
Valid
business
profession
govt service
private service
others
Total
Frequency
24
13
37
25
1
100
Percent
24.0
13.0
37.0
25.0
1.0
100.0
Valid Percent
24.0
13.0
37.0
25.0
1.0
100.0
Cumulative
Percent
24.0
37.0
74.0
99.0
100.0
occupation
others
1.0%
private service
25.0%
business
24.0%
profession
13.0%
govt service
37.0%
Annual
income
Aannual
income
Valid
below 50000
5000-100000
10001-200000
200001-400000
more than 400001
Total
Frequency
6
37
38
14
5
100
Percent
6.0
37.0
38.0
14.0
5.0
100.0
Valid Percent
6.0
37.0
38.0
14.0
5.0
100.0
Cumulative
Percent
6.0
43.0
81.0
95.0
100.0
below 50000
6.0%
14.0%
50000-100000
37.0%
10001-200000
38.0%
Interpretation: above graph depicts that most of the investors income lies between
10001-200000 followed by 38%,37% investors income lies between 50000-100000,14%
of the investors lies between 20001-400000,6% of the investors lies below 50000 & 5%
of the investors lies more than 400000
Valid
Bank deposit
Real estate
stocks
commodity future market
mutual fund
life insurance
derivitive market
bonds
Total
Frequency
10
4
32
7
5
8
32
2
100
Percent
10.0
4.0
32.0
7.0
5.0
8.0
32.0
2.0
100.0
Valid Percent
10.0
4.0
32.0
7.0
5.0
8.0
32.0
2.0
100.0
Cumulative
Percent
10.0
14.0
46.0
53.0
58.0
66.0
98.0
100.0
10.0%
Real estate
4.0%
derivitive market
32.0%
stocks
32.0%
lif e insurance
8.0%
mutual fund
5.0%
Interpretation: From this chart it is known that 32% of the respondents prefer to invest
in derivative and stocks,
insurance & commodity market ,5% in mutual fund ,4% in real estate & 2% in bonds
Valid
yes
Frequency
100
Percent
100.0
Valid Percent
100.0
Cumulative
Percent
100.0
yes
100.0%
Valid
yes
Frequency
100
Percent
100.0
Valid Percent
100.0
Cumulative
Percent
100.0
yes
100.0%
Valid
price
risk
return
demand & supply
Total
Frequency
9
39
45
7
100
Percent
9.0
39.0
45.0
7.0
100.0
Valid Percent
9.0
39.0
45.0
7.0
100.0
Cumulative
Percent
9.0
48.0
93.0
100.0
price
7.0%
9.0%
risk
return
39.0%
45.0%
Valid
yes
no
Total
Frequency
64
36
100
Percent
64.0
36.0
100.0
Valid Percent
64.0
36.0
100.0
Cumulative
Percent
64.0
100.0
yes
64.0%
Interpretation: The above pie chart depicts that 64% of the trader aware about the
Commodity Future market and 36% of them are not aware about Commodity Future
Market. So there is a need to create awareness about the commodity future market and its
benefits. There is a lot of potential is there to create customer and influence them to
invest in Commodity Future market
Valid
yes
no
Total
Frequency
39
61
100
Percent
39.0
61.0
100.0
Valid Percent
39.0
61.0
100.0
Cumulative
Percent
39.0
100.0
yes
39.0%
no
61.0%
Interpretation: From the above diagram we can say that out of 100 traders only 39%
have invested in commodity market 61% have not invested in commodity market so even
though the most of the traders are aware about Commodity Future market they are not
trading in Future market traders feel there is a high risk involved in the future market.
Valid
not attempted
frnds/colleauges
bill boards/advt/brochure
agents
Total
Frequency
61
12
9
18
100
Percent
61.0
12.0
9.0
18.0
100.0
Valid Percent
61.0
12.0
9.0
18.0
100.0
Cumulative
Percent
61.0
73.0
82.0
100.0
bill boards/advt/bro
9.0%
not attempted
frnds/colleauges
61.0%
12.0%
Interpretation: most of the investors came to know about the commodity by agents the
respondents who have invested in commodity market from them 18% of the people came
to know by agents ,9% from the bill boards /advertisement/brochure &12% people came
to know by there friends and colleagues. Here not attempted indicates the people who
have not invested in commodity market have not attempted this question.
Valid
not attempted
Agro products
Base metals
Precious metals
Energy products
Total
Frequency
64
10
5
16
5
100
Percent
64.0
10.0
5.0
16.0
5.0
100.0
Valid Percent
64.0
10.0
5.0
16.0
5.0
100.0
Cumulative
Percent
64.0
74.0
79.0
95.0
100.0
Base metals
5.0%
Agro products
not attempted
10.0%
64.0%
Interpretation: among the persons who have invested in commodity in them 10% prefer
to trade in agro products, 5% in base metals, 16% in precious metals & 5 % in energy
products .here not attempted indicates the people who have not invested in commodity
market have not attempted this question.
Valid
not attempted
price
season
risk
return
Total
Frequency
65
3
8
13
11
100
Percent
65.0
3.0
8.0
13.0
11.0
100.0
Valid Percent
65.0
3.0
8.0
13.0
11.0
100.0
Cumulative
Percent
65.0
68.0
76.0
89.0
100.0
season
8.0%
price
not attempted
65.0%
3.0%
Valid
not attemted
strongly agree
agree
neutral
disagree
Total
Frequency
62
9
10
18
1
100
Percent
62.0
9.0
10.0
18.0
1.0
100.0
Valid Percent
62.0
9.0
10.0
18.0
1.0
100.0
Cumulative
Percent
62.0
71.0
81.0
99.0
100.0
agree
10.0%
not attemted
strongly agree
62.0%
9.0%
Interpretation: most of the investors say it is in neutral position & some who are
benefited lot they will go for factors like agree & strongly agree & percentage of
disagree is very less among invested people
Valid
Frequency
39
5
10
7
33
6
100
Percent
39.0
5.0
10.0
7.0
33.0
6.0
100.0
Valid Percent
39.0
5.0
10.0
7.0
33.0
6.0
100.0
Cumulative
Percent
39.0
44.0
54.0
61.0
94.0
100.0
those w ho hv investe
complex understandin
39.0%
33.0%
high investment
7.0%
Not intersted
5.0%
Inf o non availabilit
10.0%
Interpretation: The above pie chart shows that most of the traders are not interested to
invest in Commodity Future Market due to complex understanding involved in it around
33% of the traders are given this reason and 5% of them are not interested in investing in
Valid
yes
no
Total
Frequency
67
33
100
Percent
67.0
33.0
100.0
Valid Percent
67.0
33.0
100.0
Cumulative
Percent
67.0
100.0
yes
67.0%
Interpretation: From the above graph we conclude that most of the traders are interested
to invest in Commodity Future Market if proper awareness is created among them and
Findings
More than 50% of the Traders in are aware about the commodity future
Market
Hardly 30% traders are invested in the commodity future market
Most of the investors are not ready to invest in commodity future market they feel it
involve high risk.
Returns and the Risk of the commodity are the most critical factors, which
Traders will consider while investing in any commodity
Most of the investors are ready to invest in commodity future market if proper
information is provided
As commodity future market is new and emerging ,many investors and farmers are
not fully aware of this market .as the market helps to trade transparently without
middlemen and agents
While finding the reasons why most of the people are not trading in commodity
market I found that many respondents are not interested at all in this trade this is
because of unawareness & mythical perception about commodity market.
Most of the respondents are were from government service & business men
Suggestion
There is need to create awareness about commodity Future Market. Awareness
program has to be conducted by Karvy consultants, because since this was new to the
market .so it can be done through by giving advertisements in local channels,
Newspapers, by sending E-mail to present customers etc
From survey it is found that most of the potential customers are concerned about the
Brokerage charges so Karvy can look upon this. If it can charge moderate brokerage
it will help to attract more and more customers.
More agents and marketing executives should be appointed to educate the customers
because the customers having many myths in there mind
And also create the awareness of electronic commodity trading
Firm should approach people who are already into the business of commodities
.special campaigns / investors meets should be conducted for these people since they
are aware of rate fluctuation ,market trends etc . They have got market idea that
benefits them in price prediction. They will be in high spirits when price risk of them
will be managed.
CONCLUSION
Commodity futures markets are new and emerging market. The awareness of the market
is very less among the investors who can use this trade to sell there products without the
middlemen or agents it also help the actual buyers too. Here trader also can transfer his
risk to some other who can handle it or can appetite the risk through hedging techniques
Compared to capital market commodity market is less risky in
volatility context here the prices do not change within a fraction of second .significantly,
minimum margin ready physical possession, no manipulation & fraud, maximum
profitability is available over here since the commodity market helps all such as farmers,
industries and individuals investors it is growing at a faster rate in global outlook.
BIBLOGRAPHY
News Papers;
Business Line
Economic times
Times of India
Web site
www.moneycontrol.com
www.google.com
www.MCX.com
QUESTIONNAIRE
NAME
: __________________________________
AGE
: __________________________________
ADDRESS
: __________________________________
CONTACT NO: __________________________________
1) Which of the following will best describe your occupation
(Note: please tick below the option you want to choose)
Business
Profession
Govt.services
Private service
Others specify
50000-100000
100001-200000 200001-400000
Mutual fund
Life insurance
Stocks
Derivative market
Bonds
No
No
Risk
Return
No
No
Billboards
/advt/brochure
Agents/ brokers
Other specify
Base metals
(aluminum, nickel)
Precious
metals(gold/
Silver)
Energy
Products(crude
oil
Ferrous
metals
(iron, steel)
11) Which factor do you normally consider while trading in commodity market?
total
Season
Risk
Return
Disagree
Strongly dis
agree
Info non
availability
High
investment
Complex
understanding
High risk
14) Are you planning for investing &trading in commodity future market in future?
Yes
No
Respondent signature
Thank you