commodity market pdf

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CHAPTER- I

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INTRODUCTION

1.1 History of Commodity Market in India

The history of organized commodity derivatives in India goes back to the nineteenth

century when Cotton Trade Association started futures trading in 1875, about a decade

after they started in Chicago. Over the time datives market developed in several

commodities in India. Following Cotton, derivatives trading started in oilseed in Bombay

(1900), raw jute and jute goods in Calcutta (1912), wheat in hapur (1913) and Bullion in

Bombay (1920).

However many feared that derivatives fuelled unnecessary speculation and were

detrimental to the healthy functioning of the market for the underlying commodities,

resulting in to banning of commodity options trading and cash settlement of commodities

future after independence in 1952. The parliament passed the Forward contracts

(Regulations) Act, 1952, which regulated contracts in commodities all over the India.

The commodities future market remained dismantled and remained dormant for about

four decades until the new millennium when the government, in a complete change in a

policy, started actively encouraging commodity market. After Liberalization and

Globalization in 1990, the government set up a committee (1993) to examine the role of

futures trading.

Types of commodities market:

Majorly there are two types

Ø Whole sale Market

Ø Retail Market

Commodity definition

“A physical substance, such as food , grain and metals, which is interchangeable with

another product of the same type and which investors buy or sell, usually through future

contracts.” The price of the commodity is subject to supply and demand. Risk is actually

the reason exchange trading of the basic agricultural products began.

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For example – A farmer risk the cost of producing a product ready for market at

sometimes in the future because he doesn’t know what the selling price will be. More

generally, a product which trades on a commodity exchange; this would also include

foreign currencies and financial instruments and indexes. A commodity exchange is a

place where various commodities and derivatives are bought and sold. Commodities

exchanges usually trade on commodity futures. Now here we are giving a set of questions

to understand the basic concepts of the commodity markets. This will be useful for the

people who are doing trading for the first time in commodity market. The exchanges are

regulated themselves with the regulator. The FMC deals wit exchange administration and

will seek to inspect the books of brokers only if foul practices are suspected or if the

exchange themselves fail to take action. Ina sense, therefore, the commodity exchanges

are more self – regulating than stock exchanges.

For conducting trade in commodity futures there are three options – the “National

Commodity and Derivative Exchange” , the Multi Commodity Exchange of India Ltd”

and the “ National Multi Commodity Exchange of India Ltd” . All three have electronic

trading and settlement systems and a national presence. The minimum investment needed

is an amount as low as Rs.500. All that needed is money for margins payable upfront to

exchanges through brokers. The margins range from 10 percent of the value of the

commodity contracts. For trading in bullion, i.e , gold and silver , the percentage remain

same but the total amount charges according to the change in market price . The prices

and trading lots in agricultural commodities vary from exchange to exchange (in kg,

quintals or tones) , but again the minimum funds required to begin will be approximately

Rs 500.

All the exchange has both cash and delivery mechanisms. If the investors want the

contract to be cash settled, he has to indicate at the time of placing the order that he don’t

intend to deliver the item. If the investors plan to take or make delivery, he needs to have

the required ware houses receipts.

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More over if he wants to take delivery to tell at least before 5 or 6 days before the expiry

date so that the proper money can be sent and the required adjustments can be made at

the warehouse. For taking the delivery the “TIN NO” and “GIR NO” is required.

Moreover in the delivery the commission increases and the sales tax is also applicable.

For starting trading in commodity futures the investors need only one bank account and a

separate commodity demand account from the Multi- commodity exchange to trade on

the MCX just like its stock. The other requirements that are needed at broker level are the

customers will have to enter into a normal account agreements with the broker. These

include the procedure of the Know Your Client format that exist in equity trading and

terms of conditions of the exchange and broker. Besides the investors will need to give

the details such as PAN no., bank account no, etc.

The brokerage charges are 0.5 Ps per 100 Rs for intraday trading and if investors want to

take the delivery then he has to pay 0.50Ps per 100 Rs. The transaction charges are 0.1%

and it is same for all commodities.

The information on commodities can be seen in daily financial newspapers which carry

spot prices and relevant news and articles on most commodities. Besides, there are

specialized magazines on agricultural commodities and metals available for subscription.

Brokers also provide research and analysis support. But the information easiest to access

is from websites. Though many websites are subscription- based, a few also offer

information for free. Anybody can surf the web and narrow down you search. The

exchanges are regulated by the Forward Markets Commission. Unlike the equity markets,

brokers don’t need to register themselves with the regulator.

The commodities market will have three broad categories of market participants apart

from brokers and the exchange administration – hedgers, speculators, and arbitrageurs.

Brokers will intermediate, facilitating hedgers and speculators. Hedgers are essentially

players with an underlying risk in a commodity- they may be either producers or

consumers who want to transfer the price- risk onto the market. Producer- hedgers are

those who want mitigate the risk of prices declining by the time they actually produce

their commodity for sale in the market.

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1.2 Industry Profile

Multi Commodity Exchange (MCX)

Overview

The Multi Commodity Exchange of India limited (MCX), India’s first listed exchange, is

a state of the art , commodity futures exchange that facilitates online trading , and

clearing and settlement of commodity future transaction, thereby providing a platform for

risk management. The Exchange, which started operations in November 2003, operates

within the regulatory framework of the Forward Contracts (Regulation) act 1952.

MCX offers trading in varied commodity futures contracts across segments including

Bullion, Ferrous and Non-Ferrous metals, energy and agricultural commodities. The

Exchange focuses on providing commodity value chain participant’s wit neutral, secure

and transport trade mechanism, and formulating quality parameters and trade regulations,

in conformity with the regulatory frameworks. The Exchange has an extensive nation

reach, with over 2000 members, operations through more than 468,000 trading terminals

(including CTCL), spanning over 1900 cities and towns across India. MCX is India’s

leading commodity futures exchange with a market share of 81% in terms of the value of

commodity futures contracts traded in Q1 Financial year 2015-2016.

MCX’s ability to use and apply technology efficiently is a key factor in the development

of its business. The exchange’s technology framework is designed to provide high

availability for all critical components, which guarantees continuous availability of

trading facilities. The robust technology infrastructure of the exchange, along with its

with rapid customization and development capabilities enables it to operate efficiency

with fast order routing, immediate trade execution, trade reporting, real time risk

management, market surveillance and market data dissemination.

MCX has been continuously raising the bar through effective research and product

development, intelligent use of information technology, innovative, thought leadership

and ethical business conduct.

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VISION & MISSION

Vision

We envision a unified Indian commodity market that is driven by market forces and

continually provides a level playfield for all stakeholders ranging from the primary

producer to the end-consumer, corrects historical aberrations in the system; leverages

technology to achieve exceptional efficiencies and ultimately lead to a common world

market. We also envision a brand image for MCX that identifies it as the Exchange of

choice not only by direct participants in the commodity ecosystem but also by the general

public.

Mission

MCX shall accomplish the above vision by relentlessly endeavoring to enhance

awareness and understanding to exchange enabled trade in commodity derivatives. The

exchange will continue to minimize the adverse effects of price volatilities; providing

commodity ecosystem participants with neutral, secure and transparent trade

mechanisms; formulating quality parameters and trade regulations in conjunction with the

regulatory authority. Moreover, it will continue to enforce a zero tolerance policy towards

unethical trade practices-attempted or real by any participants; and invest in the all-round

development of the commodity ecosystem.

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1.3 Five Different Commodities with Their Fluctuations Regarding Few Years

1.3.1 GOLD

It is the oldest precious metal know to man and for thousands of years it has been valued

as a global currency, a commodity, an investment and simply an object of beauty.

Introduction

• Gold is primarily a monetary asset and partly a commodity.

• Gold is the world’s oldest international currency.

• Gold is an important element of global monetary reserves.

• Less than one-third of gold’s total accumulated holdings are used as “commodity” for

jeweler in the western markets and industry

Demand and Supply

• World investment amounted to 2345 MT in 2013, broadly flat year on year, but the

approximate value of this demand reached a new record of almost $87 billion.

• In 2013, the gold mine production increased by 25MT to 3012 MT and combined

demand for bars and coins dropped from 1515 MT to 1256 MT.

Indian Scenario

• India, world’s largest market for gold jewellery and a key driver of the global gold

demand.

• The domestic drivers of gold demand are largely independent of outside forces. Indian

households hold the largest stock of world in India.

• Two-third of the Indian demand for gold comes from the rural parts of the country.

• In 2013, gold’s role as an inflation hedge bolstered its appeal in India.

• India imported around 1100 metric tonne (MT) of gold in 2013.

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Factors Influencing the Market

• Above ground supply of gold from central bank’s sale, reclaimed scarp, and official gold

loans.

• Hedging interest of producers / miners.

• World macroeconomics factors such as the US dollars, interest rates and economic

events.

• In India, the gold demand is also determined to a large extent by its price level and

volatility.

1.3.2 SILVER

Introduction

• Silver is a brilliant grey-white metal that is soft and malleable.

• Silver’s unique properties include its strength, malleability, ductility, electrical and

thermal conductivity and reactivity.

• The main source of silver is lead ore, although it can also be found associated with

copper, zinc, and gold produce as a by-product of base metal mining activities.

• Secondary silver sources include coin melt, scrap recovery, and dis-hoarding from

countries where export is restricted.

Demand and Supply

• In 2013, the worldwide silver fabrication demand was 876.6 million ounces (Moz)-down

by 1.5% from the value in 2012, but still reaching its second highest level since 2000.

• Globally, in 2014 the physical silver bar investment grew by 67% to 95.7 Moz, while

fabrication of coins and medals rose by almost 19% to an all-time high of 118.2 Moz.

• The world silver mine production increased by 1.4% to a new record level of 761.6 Moz

in 2014, as compared to previous year.

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Indian Scenario

• The average annual demand for silver in India is about 2500 metric tone (MT) per year.

• In 2014, the country’s production was around 342.13 MT.

• Nearly 60% of India’s silver demand comes from framers and rural India, who store their

savings in the form of silver bangles and coins.


• Economic events such as India’s industrial growth, the global financial crisis, recession

and inflation affect metal prices.

• Commodity-specific events such as the construction of new production facilities or

processes, unexpected mine or plant closure, or industry restructuring affect the market.

• A faster growth in demand against supply often leads to a drop in stocks with the

government and investors.

• In India, silver demand is also determined to a large extent by its price level and

volatility.

1.3.3 CRUDE OIL

Introduction

• Crude oil is a complex mixture of various hydrocarbons found in the upper layers of the

earths crust.

• Crude oil is often attributed as the “Mother of all Commodities” because of its

importance in the manufacturing of a wide variety of materials.

• Crude oil accounts for 35% of the world’s primary energy consumption.

• Crude oil is used to produce fuel for cars, trucks, airplanes, boats and train.

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Indian Scenario

• Oil accounts for 29% of India’s total energy consumption and there seems to be no

possibility of scaling down the dependence of these fuels.

• Crude oil production during the period April-march 2013 (provisional) was 38.19 million

metric tone (MMT), as compared with 37.71 MMT during the corresponding period last

year.

• India’s refining capacity stood at 193.39 MMTPA on January 1, 2013of which 116.89

MMT is in the public sector, 6.00 MMT in joint ventures, and the balance 70.50 MMTPA

in the private sector.

Price Moving Factor

• OPEC output, supply and spare capacities.

• Increased demand from emerging and developing countries; geopolitics.

• US crude and products inventories data.

• Currency fluctuations.

• Weather conditions.

• Speculative buying and selling.

1.3.4 NICKEL

Introduction

• Nickel is a metal with a bright future as it is the main alloying metal needed in the

production of certain types of stainless steel.

• The strength and life span of products manufactured using stainless steel are superior to

the one’s produced using non-stainless steels.

Demand and Supply

• World production of primary Nickel during 2014 was 1.612 million metric tone (MMT),

up by 11.53% as compared with 1.446 MMT in 2012. Whereas, the world’s consumption

during 2013was at 1.608 MMY vis-à-vis 1.465 MMT in 2012, up by 9.76%.

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Indian Scenario

• The annual demand for nickel in India is around 40,000 MT and its market in India is

totally dependent on imports.


• Nickel prices in India are fixed on the basis of the rates that rule on the international spot

market, and Indian rupee and US dollar exchange rates.

• Economic events such as national industrial growth, global financial crisis, recession and

inflation effect metal prices.

• Trade policy set by government affect supply as they regulate material flow.

• As societies develop, their demand for metal increases based on their current economics

position, which could also be referred as ‘National Economic Growth Factor’.

1.3.5 COPPER

Introduction

• Copper is a malleable and ductile metallic element that is an excellent conductor of heat

and electricity. It is also corrosion resistant and antimicrobial.

• It stands at the third place after steel and aluminium, in the context of consumption.

• Copper is an important contributor to the national economies of mature, newly developed

and developing countries.

• Copper is one of the most recycled of all metals. It is our ability to recycle metals over

again that makes them material of choice.

Demand and Supply

• In 2014, world’s copper mine production continued to underperform with respect to

capacity, and remained at the 2013 level of 16.005 million metric tone (MMY).

• In 2014, the global refined copper production was 19.630 MMT, up from 18.998 MMT in

2013.

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• The global refined copper consumption was 19.988 MMT compared with 19.375 MMT

in the previous year.

Indian Scenario

• In 2014, India’s production of refined copper is 689,312 MT, which is around 4% of the

total world production.

• Electric and electronic products industry has become India’s largest copper consuming

sector, accounting for 36% of the total Indian copper consumption.


• Copper price in India are fixed on the basis of the rates that rule in the international spot

market, and Indian rupee and US dollar exchange rates.

• Economic events such as the national industrial growth, global financial crisis, recession

and inflation metal prices.

• Geopolitical events involving governments or economic paradigms and armed conflict

can cause major changes.

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CHAPTER-II

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OBJECTIVES OF THE STUDY

2.1 Primary

Ø To study the people (educated and investors) Perception towards the commodity

market.

Ø To analyze the Investors Investment patterns due to fluctuations in commodities

market.

Ø To identify the specified product in the commodities market which was

performing a leading position when compared to five products chosen.

Ø To analyze the various factors which influence the performance of commodities

market?

Ø To understand Investors pattern at various duration of the year.

Ø To understand the behavior of the trader while selecting a commodity to invest

and how he is deciding that the selected commodity will give the expected return.

Ø To offer suggestions based on the study.

2.2 Secondary

Ø To know the different age groups opinion about commodity market

Ø To know the type of investment in which they are trading

Ø To know the main factor that influences the consumer to trade in commodity

market

2.3 Need for the Study

Study of customer’s perception towards commodity market wants to be performed to

know that what a trader was expecting from the commodity market and to understand the

trader behavior in decision making while selecting a particular commodity for his

investment in the commodity market. To find out the customers selection process and

what the steps are he was following to reduce the risks, The study will be helpful to

classify the people according their participation in the commodity market with respect to

their risk bearing capacity and also to identify what are the factors that influence the

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trader to participate actively in this commodity market. This study is also carried out to

bring out a specific product from all other products in this commodity market which was

highly prescribed by the trader and to know the factors that influencing the trader to

select that particular commodity.

It also concentrates to get a clear understanding about the commodity market to know

what is going on, what are the factors affecting the trader to invest in the commodity

market and also from where the investor getting advices regarding their investment.

Limitations of the Study

As customers are very busy and unable to share their opinions on modern company

services, thus the survey demand more times but the survey is restricted to less time.

The data is collected from the customers, some people are not showing interest to express

their ideas and feelings regarding the commodity market and also trading process.

Ø The information provided by the respondents on which all the results were drawn cannot

be denied that here was always a possibility of response error.

Ø The study was conducted within a time frame work of one two duration.

Ø The respondents feel reluctant about the survey conducted.

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CHAPTER-III

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RESEARCH METHODLOGY

Research can be defined as a systematic search for information on a particular topic.

Research is an academic activity and such the term should be used in a technical sense. A

design a specification of methods and procedures for acquiring the information needed,

structurally to solve the problems. Research design must be described as a series of

advance decisions that are taken together, from a model for the conduct of investigation

.For the study there should be a research design, so that the study is carried on

systematically.

3.1 Methodology

The purpose of any research is to find conclusion of a problem in systematic manner in

view of various types of employees or respondents. The research methodology includes

the following.

a) Source’s of data

b) Sampling

3.2 Sources of Data

Data is collected from two types of sources – primary and secondary data. Primary data is

which is collected for first time and without any reference. The data collected from past

record is known as secondary data. Both sources are used for collection of data.

Primary Data

This is collected through discussions and by interviewing the personnel concerned with

the brokers of the stock markets.

Secondary Data

This secondary data collected through the website www.MCXindia.com .

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3.3 Sampling Method

Questionnaire was used to collect primary data from the 50 respondents. Well balanced

and structural questionnaire was used as a tool for the present study. Convenience

sampling has been adopted for the present study. The questionnaires with questions of

general to specific aspects on Multi Commodities Exchange are used to get the relevant

information from the respondents.

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3.4QUESTIONNAIRE

Name:

Age:

Phone number:

1) What is your occupation?

a) Government employee b) private employee c) student d) business man

e) Others

2) What is your annual income?

a) Below 50000 b) 50000 to 100000 c) 100000 to 300000 d) above 300000

3) Do you know about commodity market?

a) Yes b) no

4) if yes, how long you are trading in ?

a) Below one year b) 1-2 years c) 2- 3 years

5) If no, then why are you not trading in commodity market?

a) No proper information b) being risky c) not interested d) any other

6) Your opinion about commodity market

a) Risky b) less risky c) high risky

7) From whom you will get investment advice

a) Friends b) family c) consultant d) others

8) You prefer which type of investment

a) Long term b) short term c) medium term

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9) Which commodity has more value/ power?

a) Gold b) copper c) silver d) nickel

10) Why commodity prices are fluctuating

a) Government conditions b) supply of commodity

c) Demand of product d) all of the above

11) Is one commodity fluctuation affects other one

a) Yes b) no

12) In whole commodities which one you prefer more to trade

a) Gold b) silver c) nickel d) copper

13) Why crude oil prices fluctuates very often

a) Tax problem b) government policies c) demand for oil d)all of the above

14) Up to now how much profits/losses you gain

A) High b) medium c) low d) very low

15) Is there any common phenomenon is there between all commodities to fluctuations

a) Price changes b) demand of products c) market conditions d) supply is more

16) Many are prefer gold is there any reason

a) It is precious metal b)cost is high c)supply is high d) low demand

17) Main factor which influences gold prices

a) Inflation b) interest rates c) global crisis d) value of us dollar

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18) Commodity market is controlled by

a) SEBI b) forward market commission

19) What made consumers to trade in commodity market

a) Profit b) speculation c) less risky d) any others

20) Tell me your opinion about commodity market ___________

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CHAPTER-IV

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DATA ANALYSIS & INTERPRETATION

Table.4.1

S. No Particulars

Percentage

Government

Employee

Private

Employee Student Businessmen

1 Occupation 10 18 50 22

Interpretation

In the total respondents 50% major share is occupied by students, followed by22%

businessmen, 18%private employee and 10%government employee by this we can

understandthatstudent’sawarenessaboutthecommoditymarketisveryhigh.

10%18%

50%

22%

Fig.4.1OCCUPATION

percentagegovernamentemployee

percentageprivateemployee

percentagestudent

percentagebusinessmen

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Table.4.2

S. No Particulars

Percentage

Below

50000

50000 to

100000

100000 to

300000

Above

300000

1 Annual Income 20 21 46 13

Interpretation

46%of the respondents are in the annual income slabbetween1,00,000 to 3,00,000

followedby21%respondentsareintheannualincomeslabof50,000to1,00,000,20%

of the respondents are in the annual income slab below 50,000 , 13% of the

respondents are in the annual income slab above 3,00,000. So the people of annual

income between 1,00,000 to 3,00,000 plays amajor role in terms of awareness and

tradingincommoditymarket.

20%

21%46%

13%

Fig.4.2ANNUALINCOME

percentagebelow50000 percentage50000to100000

percentage100000to300000 percentageabove300000

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Table.4.3

S. No

Particulars

Percentage

Yes No

1 Awareness 100 0

Interpretation

From the above table it reveals that 100% of the respondents are clearly known about

commodity markets.

100%

0%

Fig.4.3AWARENESS

percentageYES percentageNO

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Table.4.4

S. No Particulars Percentage

Below One Year 1 to 2 Years 2 to 3 Years

1 Term Of Trading 21 18 11

Interpretation

Here the total respondents are 50 members so it is equaled for 100%.from the above table

it reveals that 42% of the respondents are trading below 1 year, followed by 36 % trading

in between 1 to 2 years and 22% are trading between 2 to 3 years . so finally from this the

more number of respondents are trading below 1 year.

42%

36%

22%

Fig.4.4TERMOFTRADING

percentageBELOWONEYEAR percentage1TO2YEARS

percentage2TO3YEARS

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Table.4.5


No Proper Information Being Risky Not

Interested Any Other

1 Reasons For Not Trading 7 26 15 2

Interpretation

Here the total respondents are 50 members so it is equaled for 100%.From the above

table it reveals that 52% of the respondents are not trading because it is risky , followed

by 30% of the respondents are not interested, followed by 14% of the respondents have

no proper information and 4% of the respondents have other reasons.

14%

52%

30%

4%

Fig.4.5REASONSFORNOTTRADING

PERCENTAGENOPROPERINFORMATION

PERCENTAGEBEINGRISKY

PERCENTAGENOTINTERESTED

PERCENTAGEANYOTHER

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Table.4.6


Risky Less Risky High Risky

1 Opinion About

Commodity 27 35 38

Interpretation

from the above table 38%of the respondents thinks that commodity market is highly risk,

followed by 35%of the respondents thinks that commodity market is low risky and 27%

of the respondents thinks that commodity market is normal risky.

27%

35%

38%

Fig.4.6OPINIONABOUTCOMMODITY

PERCENTAGErisky PERCENTAGElessrisky PERCENTAGEhighrisky

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Table.4.7


Friends Family Consultants Others

7 Investment

Advice 15 29 50 6

Interpretation

From the above table 50%of the respondent’s takes investment advice from consultants,

followed by 29%of the respondents takes it from family, 15%of the respondents takes it

from friends and 6%of the respondents takes it from others.

15%

29%50%

6%

Fig.4.7INVESTMENTADVICE

PERCENTAGEfriends PERCENTAGEfamily

PERCENTAGEconsultants PERCENTAGEothers

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Table.4.8


Long Term Short Term Medium Term

1 Term Of

Investment 22 40 38

Interpretation

From the above table 40%of the respondents investments are long term, 38%of the

respondents investments are medium term and 22% of the respondents are short term.

22%

40%

38%

Fig.4.8TERMOFINVESTMENT

PERCENTAGElongterm PERCENTAGEshortterm

PERCENTAGEmediumterm

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Table.4.9


Gold Copper Silver Nickel

9 Commodity Of More Value 36 31 31 2

Interpretation

From the above table we can know that 36% of the respondents prefer gold, followed by

31% of the respondents prefer silver, followed by 31% of the respondents prefer copper,

2% of the respondents prefer nickel.

36%

31%

31%

2%

Fig.4.9COMMODITYOFMOREVALUE

PERCENTAGEgold PERCENTAGEcopper

PERCENTAGEsilver PERCENTAGEnickel

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Table.4.10

S. No Particulars

Percentage

Government Conditions

Supply Of Commodity

Demand Of Product

All Of The Above

1 Reasons For

Commodity Price Fluctuations

4 33 5 58

Interpretation

From the above table we can know that 58% of the respondents think that commodity

prices fluctuate due to government conditions, supply of the commodity, demand of the

product, followed by 33% of the respondents thinks that it is due to supply of the

commodity. 5% of respondents think that it is due to demand of the product, 4% of the

respondent’s thinks that it is due to government conditions.

4%33%

5%

58%

Fig.4.10REASONSFORCOMMODITYPRICEFLUCTUATIONS

PERCENTAGEgovernamentcondi\ons

PERCENTAGEsupplyofcommodity

PERCENTAGEdemandofproduct

PERCENTAGEalloftheabove

33

Table.4.11

S.No ParticularsPercentage

Yes No

1DoesOneCommodity

EffectsOther39 61

Interpretation

From the above table we can know that 61% of the respondents think that one commodity

affects another and 39% of the respondents think that it doesn’t affect.

39%

61%

Fig.4.11DOESONECOMMODITYAFFECTSOTHER

PERCENTAGEyes PERCENTAGEno

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Table.4.12


Gold Silver Nickel Copper

1 CommodityYouPrefer 39 15 45 1

Interpretation

From the above table we can know that 45% of the respondents prefer nickel to trade,

followed by 39% of the respondents prefer gold ,followed by 15% of the respondents

prefer silver and remaining 1 % prefer copper.

39%

15%

45%

1%

Fig.4.12commodityyoupreferPERCENTAGEgold PERCENTAGEsilver

PERCENTAGEnickel PERCENTAGEcopper

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Table.4.13

S. No Particulars

Percentage

tax problems government policies

demand for oil

all of the above

1 Fluctuations 2 53 18 27

Interpretation

From the above table we can know that 53 % of the respondents thinks that fluctuations

in crude oil prices is due to government policies, followed by 27% of respondents think

that it is due to all the factors, followed by 18% of respondents thinks that it is due to

demand for oil and remaining 2% of the respondents thinks that it is due to tax problems.

2%

53%18%

27%

Fig.4.13REASONSFORFLUCTUATIONSINCRUDEOIL

PERCENTAGEtaxproblems PERCENTAGEgovernamentpolicies

PERCENTAGEdemandforoil PERCENTAGEalltheabove

36

Table.4.14


High Medium Low VeryLow

1 LevelOfProfits 2 12 20 16

Interpretation

Here the total respondents are 50 members so it is equaled for 100%. From the above

table we can know that 40% of the repondents gains less profits,followed by 32% of the

respondents gains very low profits, followed by 24% of respondnts gains medium profits

and remaining 4% of the respondents gains high profits.

4%

24%

40%

32%

Fig.4.14LEVELOFPROFITS

PERCENTAGEhigh

PERCENTAGEmedium

PERCENTAGElow

PERCENTAGEverylow

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Table.4.15

S. No Particulars

Percentage

Price Changes

Demand Of Products

Market Condition

s

Supply Is More

1 Common

Phenomenon For All Fluctuations

8 36 52 4

Interpretation

From the above table we can know that 52% of the respondents thinks that common

phenomenon for all commodities to fluctuate is market conditions, followed by 36% of

the respondents thinks that it is due to demand of products, followed by 8% of the

respondents thinks that it is due to price changes, and remaining 4% of the respondents

thinks that it is more supply.

8%

36%52%

4%

Fig.4.15COMMONPHENOMENONFORALLFLUCTUATIONS

PERCENTAGEpricechanges PERCENTAGEdemandofproducts

PERCENTAGEmarketcondi\ons PERCENTAGEsupplyismore

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Table 16

Interpretation

Fromtheabovetablewecanknowthat58%oftherespondentsprefergoldduetoits

cost, followed by 32% of the respondents thinks that it is due to precious nature,

followed by 6% of the respondents thinks that it is due to high supply and 4%of the

respondentsthinksthatitisduetolowdemand.

32%

58%

6% 4%

Fig.4.16WHYYOUPREFERGOLD

PERCENTAGEitispreciousmetal PERCENTAGEcostishigh

PERCENTAGEsupplyishigh PERCENTAGElowdemand

S. No Particulars

Percentage

It Is Precious Metal Cost Is

High

Supply Is

High

Low

Demand

1 Why You Prefer Gold 32 58 6 4

39

Table.4.17

S.No Particulars

Percentage

InflationInterest

Rates

Global

Crisis

ValueOfUs

Dollar

17 FactorsInfluencingGoldPrices 2 19 59 20

Interpretation

From the above table we can know that 59% of the respondents thinks that global crisis

affects gold prices, followed by 20% of the respondents thinks that it is due to value of

the dollar, followed by 19% of the respondents thinks that it is due to interest rates, 2% of

the respondents thinks that it is due to inflation.

2%

19%

59%

20%

Fig.4.17FACTORSINFLUENCINGGOLDPRICES

PERCENTAGEinfla\on PERCENTAGEinterestrates

PERCENTAGEglobalcrisis PERCENTAGEvalueofusdollar

40

Table.4.18

S.No Particulars

Percentage

SEBIForwardMarket

Commission

1 ControlOfCommodityMarket 17 83

Interpretation

From the above table we can know that 83% of respondents thinks that commodity

market is controlled by forward market commission and remains 13% of respondents

thinks that it is controlled by SEBI.

17%

83%

Fig.4.18.CONTROLOFCOMMODITYMARKETPERCENTAGEsebi PERCENTAGEforwardmarketcommision

41

Table.4.19


Profit Speculation lessrisky AnyOthers

1 ReasonsForTrade 36 29 22 13

Interpretation

From the above table we can know that 36% of the respondents opines that profit made

consumers to trade in commodity market, followed by 29% of the respondents thinks that

it is due to speculation, followed by 22% of the respondents thinks that it is due to less

risky and remaining 13% of the respondents thinks that it is due to all of them.

36%

29%

22%

13%

Fig.4.19REASONSFORTRADE

PERCENTAGEPROFIT PERCENTAGESPECULATION

PERCENTAGELESSRISKY PERCENTAGEANYOTHERS

42

CHAPTER-V

43

FINDINGS

1. Risk taking capacity is high in this commodities market because fluctuations

are as compared to other markets.

2. More number of people following the advices of consultant’s i.e. 50% and

getting suggestions which commodity is profitable.

3. In the commodity market large amount of commodities can be purchased by

having limited resources to invest.

4. Person between ages 20-35 years are more active players in the commodities

trading.

5. The commodity futures markets are experiencing a good growth in the recent

years and also giving good results

6. People are interested to invest in long term as it has 40%, to earn high income

with facing less risk.

7. More perception has been seen that 38% of respondents are feeling that very

risky with their investment in the commodity market.

8. According to survey most of the respondents feels that commodity prices are

fluctuated by so many factors

9. Most of the investors who occupies a major share of 42% are trading below

one year

10. Students are mostly attracted to commodity markets as they occupies major

share of 50% in awareness about commodity market

11. More number of people nearly 52% of respondents do not trade in

commodity market due to its nature of risk

12. Most of the people says gold has more value of power/value

13. According to our survey most of the people prefer nickel to trade followed by

gold

14. Most of the people has opinion that common phenomenon for all commodities

fluctuate is market condition

15. More than half of the respondents prefer gold because of its cost

44

CHAPTER-VI

45

SUGGESTIONS

1. Especially in gold and silver they should invest a minimum lump-sum amount

which is not affordable to small investors so if minimum investment is reduced to

some extent that might help to more people invest in commodities.

2. As commodity market growing so all groups of people must be asked to invest in

commodity futures.

3. If the minimum investment is reduced, this might induce more people to invest in

commodity future.

4. One should take better position with the help of fundamental and technical

analysis and get good profits.

5. It is better to invest in long term than in the short term, because in long term the

profits are high.

6. Take the suggestions from your source while investing to get better investment

advices.

7. In this commodity market the risk taking capacity is high so check again while

making investment in it.

8. High returns will come in commodities market so invest in this market.

9. Take medium risk while investing in this commodity market.

10. All the people who are investing in bullion market it is better to invest in energy

also, why because it is the emerging area in commodity market.

46

CHAPTER-VII

47

CONCLUSION

This study concludes that more number of investors is satisfied with the service of India

commodity market and making their investment on them. Commodities market is a future

growing market so make your investment in this market.

India is one of the top producers of a large number of commodities and also has a long

history of trading in commodity and related derivatives. The market has made enormous

progress in terms of technology, transparency and trading activity. Interestingly this have

happen only after the government protection was removed from the number of

commodity and market forces were allowed to play their role.

Organization should have to improve the services to retain more number of investors.

Commodity market provides various opportunities to various participants to get benefits

as per their objectives.

Ø The “Holding Capacity” of participating traders is very strong.

Ø More investors are interested to invest in gold and nickel

48

CHAPTER-VIII

49

FUTURE ENHANCEMENTS

The project has a very vast scope in future. This project can be implemented on data

analysis about fluctuations in commodity market in future and when requirement for the

same arises as it is very flexible in terms of expansion .this project can also be

implemented in stock market.

The following are the future scope for the project

Ø This project can be implemented on technical analysis of commodity market to

know about price fluctuations

Ø This project can be extended to hedging where with the help of this project

investor behavior about hedging the commodity can be seen

Ø This project will be seen as a great fortune for investors. If it is extended in

financial derivative and commodity market derivatives

Ø This project can be useful to eliminate minor factors that causes fluctuations in

get the major factor by doing survey in major trade areas

Ø This can be useful to know about major type of investment which get us profit in

future

50

CHAPTER-IX

51

RECOMMENDATIONS

1. I recommend investors to take the advice of the consultants to invest in more

profitable commodity.

2. I recommend investors to prefer long term of investment.

3. I recommend that investor should keenly observe present market conditions that

affect fluctuations in price.

4. Students can start investing in commodity market to bring awareness about

commodity market and can bring revolutionary change.

5. I recommend the investors to invest in nickel and silver to reduce their risk.

Education

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