Commodity n Currency

8/13/2019 Commodity n Currency

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An insight into

Commodity & CurrencyMarkets



Agenda

Introduction to Commodity Markets

Introduction to Currency Markets

Services offered by Acmiil

Risk Management

Report & its Uses

Trading Basics

Operational Modalities



Understanding Commodity Market





Why should one look at commodities?

One of the biggest markets in the world

Smaller number of commodities traded than number of companies listed in

equities

Easier to understand, since price movements are based on basic economicprinciples of demand and supply

Lower margins required

Low correlation with equity markets, hence a perfect hedging option against

stock market volatility

Help diversify investment, with decent returns on a lower risk scale



Factors Influencing Prices

• Agri – Commodities

– Weather at all the producing centers

– Import and Exports Policy.

– The Supply – Demand situation in specific commodity

– Government policies and regulation.

– World Demands and Supply.

– Acreages & arrivals in Mandis.

– Exports orders from other countries.

• Metals & Energy

– Geopolitical

– Global Inflation & interest Rate

– Weather Watch

– Currency fluctuation

– World Supply & Demand Disruption.



Turning point – NCDEX and MCX

Logic behind launching commodity exchanges:-• Fair Price Indicator

• Hedging and Arbitrage

• Bulky Traders

• Investment opportunities

At the Commodity exchanges, only futures trading is permitted.

Like any other future contract, Commodity Futures are agreements to buysell something at a later date and at a price that has been fixed earlier by thebuyer and seller. Commodity futures contracts have to specify the quality ofgoods being traded. The commodity exchanges guarantee that the buyers andsellers will stick to the terms of the agreement.



Commodities Traded

Category Commodity

Bullion Gold, Silver

Energy Crude Oil, Natural Gas

Metals Copper, Zinc, Lead, Nickel, Aluminum, Steel

Spices Pepper, Red Chilli, Jeera, Turmeric, Cardamom

Pulses Channa, Tur

Others Refined Soy Oil, Mentha Oil, Rubber, Guarseed, Guar gum, Soy seeds etc



Important Terms

•

Initial margin: The up-front money that must be entered by a customer at a timeof entering into a contract.

• Exposure margin: The margin money charged by the exchange to ensure thatthe initial margin does not go below a particular level.

• Additional margin: In case of sudden higher-than-expected volatility, theexchange calls for additional margin, which is a preemptive move to prevent abreakdown.

• Mark-to-Market (MTM): At the end of each trading day, the margin account isadjusted to reflect the trader's gain or loss. This is known as marking to marketthe account of each trader.



Contract Information

COMMODITY LOT SIZE PRICE QUOTE CLOSING PRICE MARGIN IN % MARGIN VALUE ONTRACT VALUE OFIT / LOSS Per

ALUMINI 1MT 1KG 108.60 5.00 5,430.00 108,600.00 1,000.00

ALUMINIUM 5MT 1KG 108.60 5.00 27,150.00 543,000.00 5,000.00CARDAMOM 100KG 1KG 583.20 80.00 46,656.00 58,320.00 100.00

COPPER 1MT 1KG 420.05 5.00 21,002.50 420,050.00 1,000.00

COPPERM 250KG 1KG 420.05 5.00 5,250.63 105,012.50 250.00

COTTON 25BLS 1BLS 19,650.00 5.00 24,562.50 491,250.00 25.00

CPO 10MT 10KG 501.30 5.00 25,065.00 501,300.00 1,000.00

CRUDEOIL 100 BARREL 1 BARREL 6,357.00 5.58 35,472.06 635,700.00 100.00

GOLD 1KG 10GM 26,743.00 4.20 112,320.60 2,674,300.00 100.00

GOLDGUINEA 8GRAM 8GRAM 21,335.00 4.00 853.40 21,335.00 1.00

GOLDM 100GM 10GM 26,758.00 4.15 11,104.57 267,580.00 10.00

GOLDPETAL 1GM 1GM 2,671.00 4.00 106.84 2,671.00 1.00

GUARGUM 1MT 100 KGS 20,401.00 48.00 97,924.80 204,010.00 10.00

GUARSEED 1MT 100 KGS 7,109.00 38.00 27,014.20 71,090.00 10.00

KAPAS 900.00 20KG 993.00 5.00 9,930.00 198,600.00 200.00

LEAD 5MT 1KG 123.80 5.00 30,950.00 619,000.00 5,000.00

LEADMINI 1MT 1KG 123.80 5.00 6,190.00 123,800.00 1,000.00

MENTHAOIL 360KG 1KG 944.20 17.33 58,906.75 339,912.00 360.00

NATURALGAS 1,250.00 1 MMBTU 218.90 6.63 18,141.34 273,625.00 1,250.00

NICKEL 250KG 1KG 823.20 6.00 12,348.00 205,800.00 250.00

NICKELM 100KG 1 KG 823.20 6.00 4,939.20 82,320.00 100.00

POTATO 300MT 100KG 726.50 45.41 98,971.10 217,950.00 300.00

SILVER 30KG 1KG 41,480.00 6.53 81,259.32 1,244,400.00 30.00

SILVER1000 1KG 1KG 41,262.00 5.05 2,083.73 41,262.00 1.00



Market Timings

Monday to Friday,

Agricultural Commodities

10:00 am - 5:00 pm

Bullion (Gold, Silver) ,Crude Oil , Metals10:00 am - 11:55 pm

Saturday

All Commodities10:00 am – 2:00 pm



Types of Clients

User of commodities (Hedgers)

Commodity Trader(Speculator)

Investor – Retail & HNI (Investor)

Client Type



Precious Metals





1.International currency

2.Safe commodity

3.Brings liquidity to market

4.Portfolio Diversification

5.Hedge against inflation

Characteristics of Gold



Gold returns

YEAR GOLD PRICES RS 10 gms Return(%)

2007 10598

2008 13630 28.61%

2009 16686 22.42%

2010 20728 24.22%

2011 29433 41.99%

2012 32464 10.29%



Total Fabrication demand forecast to be around 10% higher year-on-

year in 2010.

Industrial off take expected to recover by more than 65 Moz for full year

2010, or 18% in 2011

Photographic demand continues to contract, mainly due to ongoing

substitution by digital technology.

Jewelry & Silverware demand combined will decline marginally year-on-

year. (Jewelry actually up a little basis substitution gains at gold expense)

Coin demand continues to rise

Demand for Silver



Industrial and decorative uses, photography and jewellery &

silverware.

Electrical and Electronics

Solar Energy

Medical Applications

Uses of Silver



Cost effective for retail clients (e.g. at CMP Rs. 53400/-Margindeposit required is Rs. 2670/-Only)

Can be used as portfolio diversification tool for retail clients

having exposure to other assets

Kind of SIP investment in commodity market for clients who want

to start investing mainly in silver

Silver Micro Right Product For Retail investor



Silver Returns and Volatality

YEAR SILVER PRICES RS 10 gms Return(%)

2007 19463

2008 18355 -5.69%

2009 26771 45.85%

2010 46217 72.64%

2011 73600 59.25%

2012 65723 -10.70%



Price Comparision



Why Crude Oil?

Crude Oil is also known as Black Gold

Dark, sticky liquid found in earth's crust

Scientifically known as hydrocarbon as it a compound

of hydrogen and carbon

Key factor in each and every economy of the world

Major cause of Inflation and Recession



Understanding Currency Market



Market Structure

Reserve Bank of India

MCX NSE USE

SEBI BANKS FEDAI

FX BROKERS



Why should one look at currencies?

Its the largest financial market in the world

4 currency pair traded on the exchange making it easier to trade

Low risk product as highly regulated

Lower margins required



Factors Influencing Prices

Macro Economic Factors

Monetary Action/Policy

RBI intervention

Dollar Liquidity

Economic and Political Scenario

Micro Economic Factors

Global Sentiments

Performance of Other Currencies

Geo Political SituationsCommodity Price Movements



Contract Information

CURRENCY LOT SIZE PRICE QUOTE CLOSING PRICE MARGIN IN % MARGIN VALUECONTRACT VALUE PROFIT /LOSS Per Rs

EURINR 1,000.00 1.00 78.31 2.50 1,957.75 78,310.00 1000

GBPINR 1,000.00 1.00 90.61 2.50 2,265.25 90,610.00 1000

JPYINR 1,000.00 100.00 60.45 2.50 1,511.25 60,450.00 1000

USDINR 1,000.00 1.00 60.10 7.00 4,207.00 60,100.00 1000

Above chart is the daily FDMR also available on RC log in,updated on a daily basis



Product Specification

Daily settlement

• Closing price of each contract – last 30 minutes weighted average

• T + 1

•Through your clearing member

• Paid or received in cash

Final settlement

•

RBI fixing price at 12 noon on last trading day• Net settled in cash



Market Timings

Monday to Friday

NSE Currency Derivatives

09:00 am - 5:00 pm

Saturday

Non Working



Types of Clients

User of currency (Hedgers)

Currency Trader(Speculator)

Investor – Retail & HNI

Client Type



MARKET ACTIVITY

Hedging

Banks

Importers & Exporters

Corporate

Trading Speculation

View on appreciation or depreciation of USD,EUR,GBP,JPY against INR

Arbitrage

Inter market (OTC forwards and NSE - futures)

Inter exchange ( NSE and MCX-SX, NSE and DGCX)



OTC vs Exchange traded futures

OTC Market Exchange Traded Future

Price transparency High; online real time screen

Liquidity Subject to credit limits Margins equate all participants

Settlement Full notional, unless cancelled Net settled in INR

Credit Exposure

Execution Only banks

Margins / MTM

Low; bilateral contracts withbanks

Exposure to your counterparty(bank)

Clearing corporation guaranteesall trades

500+ trading members,including banks

Margins usually not required, noMTM

Margins and MTM aremandatory



Services offered by ACMIIL



Services Offered

• Daily technical calls:- Profit from daily trading ideas based on proven technicalexpertise provided through SMS.

• Positional/Medium technical call report: Short-term ( weekly) view-based

fundamental and technical calls of select currency/commodity.

• Focused currency/commodity report:In-depth study of fundamental andtechnical aspects of select currencies.

• Daily margin report: Report on daily margins as specified by exchanges

.



Risk Management





Web Reports & its Usage



End User of Reports

Clients

www.investmentz.com

BA

www.asitmehta.com

Branch

www.asitmehta.com



Clients

Net Positions

It gives the net position of the client with expenses incurred for a specific time period.

Trade Confirmation

Trade confirmation number along with brokerage can be viewed here for specific time period.

Bills

Bills generated for a specific time period can be viewed for traded squared positions.

Ledger

Complete ledger can be viewed by client for a specific time period.

DR/CR Balance

Gives information on debit or credit in clients account.

Margin Statement

Margin utilised on current positions can be viewed.

Daily Activity Statement

Client can view information for a specific time period of all the activity done his account like quantity

bought,buy & sell rate,confirmation number etc.

Process:investmentz.com->log in->Commodity



Business Associate/Branches

BA/Branches can check all the information discussed for clients for each client.

Pay in and Pay out instruction and status can also be checked.

Process:asitmehta.com->log in->commodity->Account Report

Web Reports

Process:asitmehta.com->log in->equity & derivatives->web reports

Various reports on clients functioning at BA's/Branches end,his performance &

information on brokerage,collection etc available

Helps BA's/Branches to understand and derive valuable information to streamline

functioning

-Contract notes & Bills

-Transaction Register

-Outstanding Position

-Portfolio Tracker

-Margin reports



Trading Basics



Why Asit C. Mehta?

• We believe in creating value for each individual who relies on us for his/hercommodity market needs.

• We advise our clients to trade depending on the opportunity, as opposed totrading to generate brokerage.

• We pay more importance to the quality rather than the quantity of calls wegenerate.

• We provide intra-day as well as positional calls.

• We professionally advise clients on their positions individually.

• We operate a research desk that is well-equipped to cater to your needs.

• We undertake risk management on a real-time basis.

•

We are launching an updated website with online web-based trading servicesshortly.



Risks to be considered

Understand the concept of Leverage.

Know the amount of gain or loss that will result from any given change in thefutures price of the particular futures contract that you are trading.

If you are uncomfortable with huge losses, always put a stop loss in thecontract/commodity that you are trading.



Get Started..

2 Photograph

Pan card xerox(Self Attested)

Address Proof(Self Attested)

Last 6 months Bank Statement(Self Attested)

Cheque in favour of Asit C Mehta Commodity Services Ltd.(For Commodity)

Cheque in favour of Asit C Mehta Investment Interrmediates Ltd.(For Currency)



Operational Modalities



C t t D t il



Contact Details

For Operational Support

[email protected]

[email protected]

For Business Support

[email protected]

mailto:[email protected]









THANK YOU

Documents

Commodity n Currency