New Face of The Commodity Market

New Face of The Commodity Market
A PROJECT REPORT ON NEW FACE OF THE COMMODITY MARKET A detailed study done in ARDELLA BROKING PVT.LTD
Project Submitted in fulfillment of MMS
Submitted by RAKESH PATIL ROLL NO: M1036 BATCH: MMS (2010-12)
Under the guidance of Prof. Mahalakshmi Subramanian
Chanakya Institute of Management Studies& Research, C.D.Barfiwala Marg, Andheri (West), Mumbai-400 058
Declaration
I, Rakesh Patil solemnly declare that the project work entitled New Face of The Commodity Market, is my original work, it is neither copied from any earlier submitted work elsewhere or not merely copied, this is specifically prepared as a part of MMS curriculum, to be conducted in Year 2011.
Signature of the student: ________________________ Name of the Student: Rakesh Patil
Acknowledgement
Milestones achieved in the journey of life are never achieved alone, and this is no exception. As I complete this enlightening journey, I would like to acknowledge and thank my Guide and Companions, who helped me, put my best foot forward and made this story a success. I am very grateful to my Company Guide, Mr Pravin B.Singh who inspired me to work well on the topic and seeing to it that my performance is up to the mark. He not only helped me on the topics but also helped me to understand the Nuances of Commodity market. I am highly indebted to my Mother for her moral support and encouragement. Also I thank my source of inspiration, my teachers and professors. I would also like to express my gratitude to my office colleagues who have been support in my effort to explore this area of study. All the above mentioned people have left a mark on this project and I will always remain indebted to them.
Rakesh Patil, Chanakya Institute of Management Studies & Research.
Certificate
This is to certify that the project titled New Face of The Commodity Market has been successfully and satisfactorily completed and submitted by Mr. Rakesh Patil bearing a roll M number, M1036 as a student of Chanakya Institute of Management Studies & Research as Prescribed by AICTE in fulfillment of the requirement for MMS during the year 2010 12.
Internal Guide
Director
Ms. Mahalakshmi Subramanian
Mr.Biswa B. Das
Executive Summary
There are two major types of analysis for predicting the performance of the companys stock fundamental and technical. The latter looks for peaks, bottom, trends, patterns and other factors affecting the stocks prices movements and then making a buy or sell decision based on those factors it is a techniques many people attempt, through very few are true successful. Today, the world of technical analysts is huge. There are literally hundreds of different patterns and indicators investors claimed to be successful. The study of the technical analysis is mainly concerned with market indicators. This technical indicators look at the trends of price indexes and individual securities. The theory underlining these indicators is that once a trend is set in motion it will continue in that direction. Moving average and Relative Strength Index are the method used for the analysis. For the purpose of analyzing the trading (daily trading) one indicator is used namely moving average method to know the variations of different commodity such as GOLD and SILVER in commodity market. The technical analyst will also use his analysis to stay away from a market or a security there is a good amount of protection in place, Technical analysis is the examination of past price movements to fore most future price movements. Technical analysis is the examination of past price movements to forecast future price movements. Technical analysts are sometimes referred to as chartists because they rely almost exclusively on charts for their analyses. Technical analysis is applicable to stocks, indices, commodities, future or any tradable instrument where the price is influenced by the forces of supply and demand .Price refers to any combination of the open, high, low or closes for a given security over a specific time frame. The time frame can be based on intraday, daily, weekly, monthly or yearly. In addition, some technical analysts include volume or open interest figure with their study of price action.
Table of Contents
NO. 1 2 3 4 5 6 7 8 9 10 TOPIC INTRODUCTION COMPANY PROFILE PRODUCT PROFILE PROJECT DETAIL PROJECT METHODOLOGY LITERATURE REVIEW DATA ANALYSIS AND INTERPRETATION CONCLUSION RECOMMENDATION BIBILOGRAPHY PAGEE NO. 1 2 5 29 30 31 33 38 39 40
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1. COMPANY PROFILE
ARDELLA BROKING PVT.LTD ARDELLA BROKING PVT..LTD Which Was in corporate in the year 2005 The manager of business development is Mr. Pravin B.Singh. The company which was taken the franchise from the Kedial broking in the same year 2005 And work as the channel partner from the lasr 6 yr. Ardella provides a breadth of financial and advisory services including wealth management through Kedia Broking Pvt. Ltd . The Complete Financial Portal for Indian Commodity, Share and Investment Market - KEDIA COMMODITIES is another venture of the prestigious KEDIA GROUP. With our well established presence from last 22 years in the multifarious facets of the modern Financial services industry from stock broking, Insurance, to portfolio management services, it is indeed a pleasure for us to make foray into the commodities market which opens yet another door for us to deliver our service to our customers. With our expertise in financial services, and an enviable technological edge, we are all set to bring to you, the pleasure of investing in this growing market of Commodity, which can touch upon the lives of a vast majority of the population from the farmer, trader, and investor to the corporate alike. We are confident that the commodity futures can be a good value addition to your portfolio. The company provides investment, advisory and brokerage services in Commodities Markets. And most importantly, we offer a wide reach through Internet network across all part of country and cities. Commodities market has an existence since the trade begins in World. However the recent attempt by the Government to permit Multi-commodity National levels exchanges has indeed given it, a shot in the arm. As a result three exchanges Multi Commodity Exchange (MCX), National Spot Exchange ltd. and National Commodity and derivatives Exchange (NCDEX) have come into being.
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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. The futures contracts available on a wide spectrum of commodities like Gold, Silver, Crude, Mentholoil, Ref-Soya oil, Guar seed, Channa, Kapas khalli etc., provide excellent opportunities for hedging the risks of the farmers, importers, exporters, traders and large scale consumers. They also make open an avenue for quality investments in precious metals. The commodities market, as it is not affected by the movements of the stock market or debt market provides tremendous opportunities for better diversification of risk. Realizing this fact, even mutual funds are contemplating of entering into this market. Commodities market trading volume in commodity markets has risen more than seven-fold from levels seen just two years ago, and the rupees value of futures contracts traded in commodity markets currently exceeds many times the rupee value of common stocks traded on all Indian stock exchanges. The leverage in trading commodity markets is impressive. Typically the margin requirement will be as little as 4-8% of the total cash value of the contract. It is this leverage which is simultaneously the biggest advantage and greatest danger in futures trading, and is the reason why many otherwise successful investors have difficulty in mastering these markets for mastering this market also we are at your service. OUR OBJECTIVE: To be the most preferred consulting firm in the field Commodity Segment and to provide high quality professional consulting services to Investors /Brokers / Jobbers / Traders to understanding of the business and market realities. CONSULTING: WHAT WE DO? KEDIA STOCKS AND COMMODITIES RESEARCH PVT. LTD is an information service provider in Bullion, Metals, Agriculture, Food Processing, Social Development and allied sectors. Started in March 2004, KSCR provides services in Commodity Research, Equity Research, Currency Research, Commodity Trading, Equity Trading, Currency Trading, outsourcing solutions for Commodity and Equity Brokers. KSCR Consulting team provides Market News and Research papers to Investors /Brokers / Jobbers / Traders so they can sustain and make profit in this uncertain market.
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MARKET RESEARCH
Commodity Research
Equity Research
Currency Research
Daily Report
Daily Report
Daily Report
Weekly Report
Weekly Report
Weekly Report
Additional/ Special Report`
Special Report`
Additional/ Special Report`
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2. Introduction of NSEL e-series product

A new form of commodities investment: Initiative of NSEL with E-Series Products for the first time in India, National Spot Exchange (NSEL) has introduced E-Series products in commodities. Retail investors can now trade and investment in commodities like they invest in the equities. This is a unique market segment, which functions just like cash segment in equities, but offering commodities like gold, silver and copper in the demat form in smaller denominations Systemic investments in e-series products promotes savings in a secured way offering ease of transaction and flexibility of trade timings. This instrument provides ample opportunity to the mass as secured investment in their product basket diversification.NSEL has launched its first product under the ESeries as E-Gold on Wednesday, the 17th March, 2010. NSEL has made necessary arrangements with National Securities Depository Limited (NSDL) and Central Services Depository (India) Ltd. (CDSL) as the depository for holding commodity units in the electronic form. Other e-series product e-silver e-zinc e-lead e-copper
E- Series investment products for retail investors-: E-series consist of series of investment products in commodities, which are designed for retail investor. E-series products, innovated by national spot exchange enable investors to invest their funds into commodities in smaller denomination and hold it in demat form .it is available on the pan India electronic trading platform set-up by NSEL ,which can accessed through members
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of NSEL or their franchise it provide opportunity to buy, accumulate, hold &liquidate commodities and convert into physical delivery into seamless manner. Promoters Financial Technologies India Ltd (FTIL) A global leader in offering technology IP (Intellectual Property) and domain expertise to create and trade on next generation, technology-centric financial markets that are transparent, efficient and liquid. These markets support all major asset classes including equities, commodities, currencies, energy, fixed income/bonds and emerging asset classes such as IRD, IRS, CDR and CFD, among others on regulated exchange platform Operates one of the worlds largest network of 10 exchanges connecting fast-growing economies of Africa, Middle East, India and South East Asia Has five ecosystem ventures to address upstream and downstream opportunities around exchanges, including clearing, depository, information vending and payment gateway among others National Agricultural Co-operative Marketing Federation of India Ltd The largest national level farmers co-operative having large number of farmers societies spread across the country as its members A nodal agency appointed by the Central Government for carrying out MSP operation in pulses, oilseed and cotton A leading entity, engaged in procurement, sell, import, export, distribution and storage of agricultural commodities Registered under the Multi State Co-operative Societies Act and setup with an objective to promote cooperative marketing of Agricultural Produce for the benefit of farmers.
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3. SALIENT FEATURES OF E-SERIES INSTRUMENTS

It promotes savings and investment leading to preservation of wealth The contribution of electronic Exchanges to the society should be to promote savings and investment. Savings ratio of Indians being 32%, the average Indian wants a product ensuring preservation of wealth. Commodity Exchanges, in their present form, provide good instruments for trading, hedging, price risk management, speculation or jobbing, but they do not provide instruments for investment, wealth creation or wealth preservation. Leveraged trading may be good for traders, but it may be detrimental to the interests of general mass, who may burn their fingers due to price volatility. ESeries promotes savings and investment by creating an investment product for small investors. It is a drive towards Financial Inclusion Simplicity, accessibility and affordability are the basic ingredients to achieve Financial Inclusion. E-Series has been designed exactly to ensure the same. It is simple, because
commodities are simple to understand compared to plethora of financial products and derivatives. Compared to 120 crore Indian population, the number of demat account in stock market for both the depositories combined is around 1.65 crores, while at least 25 crore Indians hold gold and silver and other commodities in one form or the other. Gold is already a household name in lakh of villages, where stock market has no penetration. Further, pricing of E-Gold tracks current physical market price (which is easily understood), rather than NAV of the fund in case of Gold ETFs It is accessible, because of pan India presence of NSEL together with the large num e number of trading terminals of its members. Investors can buy it by making telephone calls to their members or by trading on line any time during 10.00 am to 11.30 pm. With this product, we expect that within 3 years time span, the network of Exchange members and depository participants (DPs) will reach out to 1 lakh centres across the country catering to 6 lakh villages of India.
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This will ensure Financial Inclusion in real sense. It is affordable, as it is available in smaller denominations (1 gram in case of E-Gold), which is within the reach of rural Bharat. While lower income group can use this product to park their paltry savings and accumulate wealth over a period of time, HNIs and institutional investors can use it for diversifying and balancing their investment portfolio Transparent pricing
E-Series is available on the order driven electronic trading platform, where investors are also allowed to quote their own buying and selling price. The same price is available across the country and so, the buyers and sellers from anywhere in the country can buy and sell at this price. The impact cost (difference between buy and sale quote) is as low as Re 1. The price quoted on the screen is actionable price at which investors can buy or sell. This ensures transparency, credibility and authenticity of pricing. Uniform pan India pricing
E-Series provides the benchmark uniform price for commodities valid for the entire country. In physical market, the price varies from place to place and even though the price is relatively cheaper at some location, investors from other regions do not have access to buy at that price. E-Series removes such regional bias, disparities and ambiguity and provides a uniform price for the entire country. Hence, E-Series is the first instrument in the country to implement the doctrine of Common Indian Market.
No custodial or storage charges and very low transaction charges
The cost of holding E-Series units in demat account have been waived w.e.f 1st Aug, 2010. Hence, the holding cost or recurring cost or annual maintenance cost in respect of E Gold and E Silver contracts is Zero, while in the case of Gold ETFs the same is around 1 2.25 % per annum
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Key feature Promotes Systemic investment and savings Invest in smaller denomination (1 gm gold and 100 gm Silver) Transparent and uniform pan India pricing Convenient and secure online buying and selling No storage or holding costs Physical delivery of accumulated demat units at multiple centers available Extending trading hours from 10 am to 11.30 pm.
E-Gold is a new incarnation of gold, innovated by National Spot Exchange (NSEL), which enables investors to invest their funds into gold in smaller denomination and hold it in demat form. It is available on the pan India electronic trading platform set-up by National Spot Exchange, which can be accessed through members of NSEL or their franchises. It provided an unique opportunity to buy, accumulate, hold and liquidate "Electronic Gold (E-Gold)" as well as to convert the same into physical gold coin/ bar in a seamless manner.
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Contract Specifications of E-GOLD (Demat Gold Units)
Commodity Details Commodity Contract Symbol Daily contract Trading Related Parameters Trading period Trading session Trading unit Price Quote/Base Value Tick size (minimum price movement) Daily Price Range Maximum order size Margin parameters Initial Margin Delivery Margin Special Margin 5% 10% In case of additional volatility, a special margin of such percentage, as deemed fit, will be imposed immediately on both buy and sale side in respect of all outstanding position, which will remain in force for the same trading day. 5% 10000 units Mondays through Fridays (except Exchange specified holidays) 10:00 AM to 11:30 PM 1 unit of E-GOLD, which is equivalent to 1 gram of Gold Per 1 gram Gold of 995 purity 10 paise per unit E-GOLD (Demat Gold units) E-GOLD Daily contract for trading in Demat E-GOLD units
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Demat Parameters ICIN Market description Settlement cycle Delivery Related Parameters Delivery unit 1 unit and multiple thereof. Delivery shall be accepted only in demat form. Quality Specifications Grade: 995 and Fineness: 995 Only dematerialized units of E-GOLD are eligible for trading and delivery in this contract. Tender and Delivery day Delivery Logic T+2 (2 working day from the date of transaction) Compulsory delivery. All open positions (buy and Sell trades) must result into compulsory delivery in demat form on the designated delivery day. Other conditions applicable a. Only such clients/ members shall create sale position in this contract, who are holding demat E-GOLD units in their account. Persons holding gold bars/ coins in physical form must not create any sale position in this contract, as it is compulsory demat settlement contract. b. Before creating any buy position in this contract, the client must open his beneficiary account for NSEL trading. c. Intra day trading and netting is permitted, but short sale is not allowed. In case of short sale, the position will be settled by buying in auction of undelivered position. INC200000007 T+2 T+2
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4. Why Invest In NSEL E-Gold

Unit holder is interested to take physical delivery of Gold bar/coin, against his E-GOLD units; he can surrender such units to the Exchange and get physical delivery, at any point of time at his discretion, subject to the conditions specified by the Exchange. Delivery of physical gold bar/ coin will be offered in specified lots/ denominations and at specified locations only, where NSEL has made vaulting and delivery arrangements. Therefore, an investor can opt for physical delivery of gold, only if he has such number of units to his credit (or multiples thereof), as specified herein. Initially Gold will be made available in multiples of 8 grams, 10 grams, 100 grams and 1 Kg and any combination thereof. What makes gold special? 1. 2. 3. 4. 5. Timeless and Very Timely Investment Gold is an effective diversifier Gold is the ideal gif Gold is highly liquid Gold responds when you need it most
Market Characteristics 1. The gold market is highly liquid. Gold held by central banks, other major institutions, and retail
jewellery is reinvested in market. 2. Due to large stock of gold, against its demand, it is argued that the core driver of the real price
of gold is stock equilibrium rather than flow equilibrium. 3. Effective portfolio diversifier: This phrase summarizes the usefulness of gold in terms of
Modern Portfolio Theory, a strategy used by many investment managers today. Using this approach, gold can be used as a portfolio diversifier to improve investment performance.
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4.
Effective diversification during stress periods: Traditional method of portfolio diversification
often fails when they are most needed, that is during financial stress (instability). On these occasions, the correlations and volatilities of return for most asset class (including traditional diversifiers, such as bond and alternative assets) increase, thus reducing the intended cushioning effect of the diversified portfolio.
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5. Comparison of different way of investment into gold
Parameter
Jeweler
Bank (bars / coins)
Gold ETF
NSEL e - gold
Purchase & Sale
Physical Form
Physical Form
Dematerialized Form
Dematerialized Form
Pricing
May differ from jeweler to jeweler
May differ from bank to bank
Linked to international gold prices
Linked to Indian Gold Prices
Buying premium above gold price
Likely to be High
Likely to be very High
Likely to be Low
Likely to be Low
Making Charges
Are involved
Are Involved
Not involved
Not involved
Impurity Risk
May exist
May exist
Cannot exist
Cannot exist
Annual Recurring Expenses (Storage, Insurance and AMC) High High 1 2.25 % Free
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Request for Physical Gold

Unit holder is interested to take physical delivery of Gold bar/coin, against his E-GOLD units, he can surrender such units to the Exchange and get physical delivery, at any point of time at his discretion, subject to the conditions specified by the Exchange. Delivery of physical gold bar/ coin will be offered in specified lots/ denominations and at specified locations only, where NSEL has made vaulting and delivery arrangements. Therefore, an investor can opt for physical delivery of gold, only if he has such number of units to his credit (or multiples thereof), as specified herein. Initially Gold will be made available in multiples of 8 grams, 10 grams, 100 grams and 1 Kg and any combination thereof. Delivery of physical Gold will be made available at Ahmadabad, Mumbai and Delhi. The Exchange will keep on expanding the number of centers in future to offer physical delivery. If a client opts for physical delivery, he can get the same from any center of his choice out of such specified centers. Delivery of physical Gold will be made available at Ahmadabad, Mumbai and Delhi. The Exchange will keep on expanding the number of centers in future to offer physical delivery. If a client opts for physical delivery, he can get the same from any center of his choice out of such specified centers. Below are the Charges which will be charged by Exchange in respect of transactions, delivery, settlement and holding of this instrument.
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Charges
Below are the Charges which will be charged by Exchange in respect of transactions, delivery, settlement and holding of this instrument:
Transaction charges
The Exchange shall levy the turnover charges Rs. 20 per lakh of turnover to both buyer and seller member on monthly basis. This shall be applicable on all executed transactions.
Dematerialization / Corporate action Charges
The Authorized Dealer will be charged at such rate as may be levied by NSDL from time to time towards such Corporate action.
Storage charges
Storage charges shall be levied by the Exchange on monthly basis @ 60 paisa per Unit per month. Such charges will be computed based on the holding in the respective accounts on the last Saturday of every month. The person holding demat commodities on that day will be required to pay holding charges for the entire month, irrespective of the number of days for which he holds demat credit. However, an investor holding demat commodities on any day or number of days during such month, but not holding the same on the last Saturday of the month (because he has already sold and transferred it prior to last Saturday), then he shall not be required to pay any holding charges. On receipt of the details of client wise holding from the DP, the Exchange will compute the storage charges based on number of units held by the respective account holder on the last Saturday of every month and intimate the same to the concerned DPs, The DP thereafter shall raise bill on the respective beneficiary account holders. DPs shall recover such charges within 15 days from the date of such intimation.
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Profit through gold Gold Graph from 2008 to 24 May 2011
Initial Margin Delivery Margin
5% 10%
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6. E-GOLD
Gold is a unique asset based on few basic characteristics. First, it is primarily a monetary asset, and partly a commodity. As much as two thirds of golds total accumulated holdings relate to store of value considerations. Holdings in this category include the central bank reserves, private investments, and high-caratage jewellery bought primarily in developing countries as a vehicle for savings. Thus, gold is primarily a monetary asset. Less than one third of golds total accumulated holdings can be considered a commodity, the jewellery bought in Western markets for adornment, and gold used in industry. The distinction between gold and commodities is important. Gold has maintained its value in afterinflation terms over the long run, while commodities have declined. Some analysts like to think of gold as a currency without a country. It is an internationally recognized asset that is not dependent upon any governments promise to pay. This is an important feature when comparing gold to conventional diversifiers like T-bills or bonds, which unlike gold, do have counter-party risk. Demand and supply China produced 276 metric tons of gold last year, equal to about 9.7 million ounces, said London precious metals consultancy GFMS Ltd. That's up 12% from the year-ago and represented just over one-tenth of the world's supply. The ranking pushes South Africa into second place, the first time the gold giant has lost its top ranking since 1905. South Africa, whose late
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ADVANTAGES OF E-GOLD
There are certain inherent advantages of E-gold in comparison with physical gold. They are: Purity This is one of the most important factors why one should go in for E-gold. While buying physical gold, the buyer can never be 100% sure about the purity of the gold being offered. There is always a risk of cheating, mixing, physical and chemical impurities, etc. In case of E-gold, the problem of quality concern does not arise because the gold is in its purest form. There are banks that offer certified gold, but the banks charge a premium of nearly 10% for the coins they sell. In contrast, in E-Gold investors will be paid the market value for the pure Gold accumulated in their demat account on the date of redemption. Storage The most important concern for the buyer of physical gold is storage. The first and foremost thing to do is to search the right place to store the purchased gold. It usually is a person's home or a bank locker. But the risk of theft always looms large. But in case of E-gold, since the gold is stored electronically, there is no need to worry about the theft of gold. Ease in quantity purchase It is not always practically possible to buy small quantities of gold, say 1 gram from the physical market. But with the advent of E-gold, buying gold in quantities as small as 1 gram is possible. Investment in E- gold allows the investor to buy more units when the price of physical gold is low and lesser units when the price is high. Hence, over a period of time, there is huge accumulation of units with different prices each month and hence the average cost of acquiring each unit of E-gold gets considerably reduced in the long term. In contrast, buying physical gold each month for a small amount may not be possible practically. Liquidity In the Liquidity aspect, both physical Gold and E Gold could not be treated at par as E-gold can be sold in the market at any time during 10.00 am to 11.30 pm while physical gold can be sold
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only between 10.00 am to 7.00 pm. However, selling physical gold in the market may involve burden of wastage charges of around 10 % to 15% arises on account of re-moulding to be borne by the seller. e gold has got not no such impediments. Demographic Variations The pricing of gold tends to vary from vendor to vendor and place to place. But with E-gold, there is uniformity in pricing across the country. It might be very difficult to change the fixed perception and fixation of Indians to buy gold in the physical form as they have been doing it for centuries together. But when something so simple and safe option for investment in gold is available in the market, it is worth investing in the E-Gold and see the wonders it has to offer. E-gold can change the way gold is bought and sold in India and it makes perfect sense to capitalize on it as soon as possible to build up a huge corpus in the long run. NSEL to offer conversion of e-gold into jewellery National Spot Exchange will launch a facility for the investor to convert his e-gold holdings into jewellery. At present, physical delivery is possible only in gold bars, medallions and coins. NSEL will have around 10,000 jewellers in its empanelled list from whom the investor would be able to buy the jewellery equivalent to the e-gold holdings .The scheme will be launched in March this year. We are currently talking to leading jewellers in each city. The jewellers included in the list will be those selling hallmarked jewellery, said Anjani Sinha, MD and CEO of National Spot Exchange .The jewellery equivalent to the e-gold units, depending upon the current price and caratage, can be bought from the jeweller. The making or wastage charges will have to be paid separately
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What are the key factors in favour of e-series products over other products?
With the launch of e-series products, an electronic cash market in commodities has been created in the country. This product functions like the cash segment in equities and has lots of advantages like availability in small denominations, transparent and pan-India pricing, seamless trading and zero holding cost. Unlike derivative products, there are no hassles of mark-to-market, pay-in and pay-out and rollover issues for investors. Investors have the freedom to accumulate e-Series units in their demat accounts and also have the option to convert these units into physical delivery whenever they so desire. Moreover, there is no risk of commodity custody, thefts or corrosion of the real asset. In terms of return for investors, how these e-series have performed? NSEL's e-Series products have been doing extremely well since their introduction in March 2010. The daily turnover recorded by NSEL in these products is around R1,000 crore. It is safe to assume that the turnover will increase substantially in next 2-3 years. Are the returns on e-series comparable with other commodity investment products? According to NSEL, since the time of their launch, the annualised return in case of e-Gold comes to 24.49%, in case of e-Silver, it is. 106.84% and for e-Copper it is 51.77%. If we compare the performance of Gold ETF and e-Gold during the same period, it is observed that e-Gold has performed better that Gold ETF, the reason being that in case of Gold ETF, there is an annual maintenance charges, while in case of e-Gold, there is no such cost. How to trade in e-series products? One can buy and sell e-series product in demat form just like shares in equity market. In order to trade and invest in E-Series, an investor has to enroll with a member of NSEL and open a demat account with a depository participants empanelled with NSEL. If buyer wants to take delivery in the physical form, he has to put in a request. The client has to give his choice of delivery locations and the denominations. Settlement is done on the within three days. All open positions
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at the close of market result into delivery. Any failure on buyer or seller towards delivery obligation goes for auction. NSEL does not allow short sale or carry forward of positions. Any short sale position is settled by way of auction.
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E-Gold & E-Silver: Investment Returns

E-Series Return since last week % E-Gold E-Silver -0.68 -1.33 0.74 -18.21 6.85 12.08 30.74 93.48 21.40 84.12 Return Since Last Month % Return since last Quarter % One Year Return % Return since Launch%
Sensex Value % Growth Jan. 2001 Jan. 2002 Jan. 2003 Jan. 2004 Jan. 2005 Jan. 2006 Jan. 2007 Jan. 2008 Jan. 2009 Jan. 2010 Jan. 2011 Apr.2011 3990 3126 3001 6249 6602 9390 13667 17605 9586 16911 20531 19650 -21.65 -4.00 108.23 5.65 42.23 45.55 28.81 -45.55 76.41 21.41 -4.29
Gold Value % Growth 4089 5453 5260 6092 7120 7457 9073 11265 13476 16390 20740 21170 33.36 -3.54 15.82 16.87 4.73 21.67 24.16 19.63 21.62 26.54 2.07
Silver Value % Growth
4162 5550 7400 8700 9500 12700 18300 18700 17700 25300 46250 57800 33.35 33.33 17.57 9.20 33.68 44.09 2.19 -5.35 42.94 82.81 24.97
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Systematic Investment Plan in E-Series

E-Series products of NSEL redefined the investment with an option to include commodities in the portfolio conveniently and in seamless manner. Taking it forward the exchange has now introduced systematic investment plan (SIP) scheme enabling investors to keep investing in the same way as they do in equity market. Introducing SIP is aimed to cultivate a regular savings habit among investors to accumulate commodity in small amount. The idea is to provide a mechanism to retail investors to set apart a sum every month or quarter as per choice, and use that to buy E-series units, regardless of its price. The E-Series products SIP offer is a convenient way to diversify investment portfolio and reap the returns of gold, silver and other commodities from a long-term perspective. The investment objective of the scheme is to provide returns that correspond to the returns in physical commodity. Investors can directly subscribe/redeem E- series units on all business days through the physical mode at the various designated centers across the country, thereby, making it easily accessible and convenient. Why to choose SIP in E- series:1-Regular saving habit: Perhaps the best benefit of setting up an ESeries SIP is that it forces one to set apart some money every month and enforces saving discipline. One may argue that this can be done without a SIP also but just that automation enforces a little more rigor. 2- Protects from timing the market: If one has already committed money to a SIP in E-Series - he will most likely continue to invest regardless of a big fall or huge gains in the price. This in turn will enable to invest regularly rather than try to time the market, which not many small investors can do successfully. 3-SIP lea to building wealth Good saving and investing habits are more likely to help to accumulate wealth in the long run. Benefits of E-Series SIP:

SIP Styled Investments. Diversified investment with Compounding effect. Option to Invest in Gold, silver, copper, lead, zinc etc.
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Option to purchase Gold/silver Bars/Coins at the time of redemption of E-Gold/silver units.
Wide Array of Portfolio Selections. The Investor holds his investment in a Demat Account. Investment amount starts as low as Rs. 150 in the case of E-Zinc to Rs 5500 in the case of E-
silver. Example of SIP: Suppose one like to invest Rs.5000 per month in the e gold. If he opts for SIP he will have more unit by the end of one year rather than saving cash every month and purchasing after one year. Through above table we decipher that total units purchased in one year through SIP comes out to be 31.15. While the same amount of money he invests on 1st March we will get only 28.04 units. Major benefit of SIP in E-Gold and E-Silver Buying gold and silver as SIP through E-Series serves the purpose of savings for a household and investment requirement of investors as well. Investors holding the E-series products in demat has option to get the physical delivery of the same. It is useful for who saves money for purchase of gold for children's marriage. Instead of savings money for purchase in the future, purchase of Gold units will enable fetch more gold units from the same amount of money and these gold units converted into physical jewellery when required. Investing in E-Gold/silver and other E-Series products through SIP give all the advantages of investing in gold and silver while eliminating drawbacks of physical gold/silver - cost of storage, liquidity and purity. E-gold/silver allows investment in gold and silver in small denominations, which makes it easy on the wallet. With the rising Gold and silver prices globally, investors have benefited by investing in this asset class. Gold has got demand from individuals for jewellery, as investment options for retail and institutional investors and as a currency by the central banks of different countries. So in general Gold as a commodity is valued in multiple ways. There have been several innovations in Gold based savings and investment instruments all across the globe. India being the largest consumer and importer of gold is at forefront on such innovation. Investors are always looking for the investment options which are very easy and risk free. National Spot Exchange Limited looking at the various
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needs of gold buyer has come out with E-Gold; the exchange traded products which are available in demat form.
Launch of E- gold by NSEL has made investment in physical bullion easy. These are called E-series products which get accumulated in the demat account of the investors. E-series has various other advantages when compared to direct holding of physical gold for the investment purpose. In the last one year, E-Gold have emerged as one of the best investment instrument for the retail investors as it has provided return of nearly 18.75% to the investors which closely corresponding to the returns provided by physical Gold. For those wanting to own physical gold without storing it, E-Gold is great alternative. The basic premise behind E-gold launch is to give investors a quick, easy, and low cost way to place a bet on investment in real gold. E-gold is structured in a way that allows them to offer very low transaction costs to investors and this is one of their most attractive characteristics. Because E- gold is traded on exchanges it also allows investors who would not easily have access to certain
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Monthly turnover of e-Series (Rs lakh) Date ECopper Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 (till Jan 20) Grand total 307293.81 364997.32 1079595.02 46661.15 1798547.3 ---112161.7 144429.18 9823.27 19938.17 50702.90 138788.49 152010.7 9977.99 45996.76 44436.67 315418.71 583787.9 --124413.67 -46661.15 19801.26 65934.93 219553.25 566368.9 926888.9 E-Gold E-Silver E-Zinc Total
Note: Turnover of e-Zinc has not been included as it was launched only on January 14, 2011
FOW Awards for Innovation 2010: Exchanges National Spot Exchange - The winner of Best innovation by an exchange in the field of product design South and Southeast Asia and Australasia The system enables farmers in remote regions to sell their products on an electronic market and collect their money on the same day, giving them the same price assurance mechanisms as large corporate growers
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Objectives of the Study

1. 2. 3. 4. 5. The basic purpose of undertaking this project was: To understand the benefits of NSEL e-series product To create awareness among customers regarding NSEL e-series Gold To make a strategy to create trust among customers regarding NSEL e-series product To understand customer psychology toward investment into gold OR e-gold
Purpose of the Project

1. To understand the customers outlook toward NSEL e-series Gold product 2. To educate the customers regarding NSEL e-series product
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Research Methodology
The data required for the study has been collected mainly through primary and secondary sources. The secondary data is collected from the existing sources that are newspapers, Magazines, journals and from various websites. Primary data is collected through personal interaction with the traders & professional experts who are really experienced in this market. The method adopted for collection of data is according to the convenience of mine COMMODITY: A commodity is a product that has commercial value, which can be produced, bought, sold, and consumed. Commodities are basically the products of the primary sectoof an economy. The primary sector of an economy is concerned with agriculture and
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Literature review
Gold in Demat form Ashish Gupta, ET Bureau Apr 4, 2010, Gold has been a traditional investment avenue, one that is universally - accepted. Holding gold physically, although desirable and satisfying, is also prone to risks. Now, you can hold gold in demat form, just like equity shares or mutual fund units. The National Spot Exchange, an electronic spot market, has launched e-gold. E-gold is an investment product that permits holding gold in demat form. The segment is on the lines of the cash segment in equity, and offers commodities in the demat form in smaller denominations like one to three gm etc. I-gold is a platform which facilitates intelligent investments in gold with an option of physical or demat holding. The advantages of e-gold include: Transparent pricing Assured quality and purity Option of demat conversion No risk of storage Simple process It is an ideal platform for systematic investments in gold. There is a transparent screen-based price at par with the prevailing spot price. The investor has the options of loan against demat gold from banks and financial institutions. You have the convenience of buying gold at your discretion. Also, there is assured quality and purity - 24 K, 995 and 999 fineness gold bars imported from LBMA-approved suppliers. Just like equity trading the settlements are done on trading plus two days basis. Gold in one gm and its multiples can be traded on the exchange. All outstanding positions at the end of the trade NSDL is the clearing agent. The exchange has joined hands with all leading participants in the equity markets to create depository participants, thereby reaching out to the individual investors. Investors have to open a separate demat account with any of the six designated depository participants - Globe Capital, Religare, Karvy, Goldmine, IL&FS , Monarch Capital, SMC and SSD Securities. The exchange will add another 25 in the next 10-15 days.
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Investors can take physical delivery of gold in bars and coins paying Rs 200 per 10 gm at the accredited centres in Ahmadabad, Mumbai and Delhi. NSEL is also in the process of expanding its delivery facilities to other locations. While gold exchange-traded funds (ETFs) charge up to four percent for various expenses including AMC, vault charges and insurance etc, NSEL has curtailed the cost to just 0.4 per cent. While opening a demat account is free, investors have to pay a transaction fee of 30 paise a gm and brokerage charge as prescribed by the broking firm. The exchange had ensured the entire cost is restricted to Re 1 a gram. The exchange has managed to bring down the costs partially by restricting the delivery charges only to those who want to take physical delivery The spot exchange expects it to be a big hit among the individual investors. On the first day of its launch, the contract recorded a unit volume of 43,438, valued at Rs 7.4 crore
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Market Research Survey

I had done market research survey for Ardella Broking Pvt .Ltd commodity and promote NSEL Product as well. In this research survey we visited existing Customers as well as New Customers and ask them about their research if they have and convince them to go for New Commodity Market i.e. NSEL ( E-GOLD, E-SILVER). To understand the customer outlook I used to take appointment of each customer& To fixed up the appointment with him or her Following are the few list of customer to whom I had interacted regarding NSEL e-series product SR NO 1 2 3 4 5 6 7 8 9 10 DATE 17/5/2011 17/5/2011 18/5/2011 20/5/2011 22/5/2011 NAME OF CUSTOMERS RAMESH KUMAR VENKATESH K GANESH GOYAL FARUKH KHAN KAVIN SARODE STATUS NOT INTERESTED NSEL OPEN A/C Prefer gold etf Prefer direct investment
NOT INTERESTED NOT Iinterested HE WILL CALL NSEL OPEN A/C NSEL OPEN A/C NOT INTERESTED
23/05/2011 HITESH GAJWANI 24/05/2011 SWAMI.K 25/05/2011 25/05/2011 25/05/2011 BHIMASHANKAR.V ANIL JEPH SMITA KAMBLE
11 12
26/05/2011 26/05/2011
LAVENIYA.BHOJWANI PREM JOSHI
NSEL OPEN A/C NEXT MONTH CONFIRM
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13 14 15 16 17 18 19 20 21 22 23 24 25
28/05/2011 28/05/2011 29/05/2011 30/05/2011 1/06/2011 1/06/2011 2/06/2011 2/06/2011 3/06/2011 5/06/2011 6/06/2011 6/06/2011 8/06/2011
B K CHOUDHRY H T CHENNETI HARESH PUNJWANI S S GADODIYA MEHUL SHAH AMIT WAGHMARE M.S. PAGARIA/ADITYA P. BHUR KAL SATISH KAPOOR JAYKANT SAWANT PREMLATA YADAV SONAM TAMHANE BHASKAR BHARAMBE
CALL AFTER FEW DAYS CALL TOMMOORW CALL AFTER TWO DAYS Not interested Given appointment HE WILL CALL AFTER 7 DAYS TOOK APPOINTMENT NOT INTERESTED NSEL OPEN A/C ENGAGED CALL TOMMOORW NOT INTERESTED CUMING ON SATURDAY IN OFFICE ALREADY OPEN ACCNT NOT INTERESTED
26
10/06/62011 12/06/2011 16/06/2011
SATISH TAWANI RAMESH CHOUDHRY SHAILENDRA VINAYAK PRADHAN BHUR MAL
27 28
29
16/06/2011
Given APPOINTMENT HE WILL DO IN NEXT MONTH
30
23/06/2011
HARESH PUNJWANI
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31 32 33 34 35 36 37 38 39 40
23/06/2011 23/06/2011 23/06/2011 23/06/2011 23/06/2011 23/06/2011 23/06/2011 23/06/2011 23/06/2011 23/06/2011
VEENADEVI BORIA SHARAD MANDHANE PRAKASH BIJLANI HEENA JAIN SUVERNA MANIYAR SONI SAID AHMED SIDDIQUE HEMANT JERE/6241 VIJAY CHOUDHRI RAJENDRA DUGGAL ASHOK GHOSH
TOOK APPOINTMENT AFTER 7 DAYS CALL AFTER SOME TIME WANTS TO CLOSE AC TOOK APPOINTMENT ENGAGED WANT INFO THRU MAIL NSEL OPEN A/C ENGAGED NOT INTERESTED WILL MEET ON SATURDAY ONLY RINGING CALL NEXT WEEK RINGING NOT REACHABLE ENGAGED TOOK APPOINTMENT HE WILL CUM AT EVE NSEL OPEN A/C RINGING
41
23/06/2011
SAGAR TAWANI
42 43 44 45 46 47 48 49 50
24/06/2011 24/06/2011 24/06/2011 24/06/2011 24/06/2011 24/06/2011 24/06/2011 24/06/2011 27/06/2010
KOMAL AHUJA SURENDRA RAJE KIRIT KHANDELWAL RAJIV VERMA JAIN JITENDRA HASMUKH VORA ABHISHEK MISHRA AVINASH KOOKERE HARESH PUNJWANI
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Data Analysis & Interpretation
Q.1 Are you aware about the Commodity Market?
Q.2 Do you see bullion as an investment opportunity?
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Q.3 From where do you buy/invest in gold?
Q.4 Are you interested in NSEL E-series Gold Product?
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CONCLUSION
After almost two years that commodity trading is finding favor with Indian Investors and is been seen as a separate asset class with good growth opportunities. The commodity Market is poised to play an important role of price discovery and risk management. Regime makes it all the more urgent to develop these markets to enable our economy. There are no silver ETFs right now, so this is an alternative if one is looking to invest in silver Investing in egold and e-silver are seen as safer options today since they are not affected by inflation and other economic risks. Since gold is an excellent hedge against inflation, it is always best to buy gold as a short or long term investment. E-gold and e-silver investment gives better returns as compared to ETFs since the fund houses charge additional costs like AMC, vault charges which are comparatively lower here. National Spot Exchange charges 0.4 % annually while it is 2.5 % for ETFs. Transparent pricing, seamless trading, no holding cost are some of the advantages of e-gold and esilver trading. Hassle free buying and selling of commodity is possible demat gold and silver. It is emerging as a better alternative to ETF, which is like any other mutual fund. Though the product serves the purpose of common man of accumulating gold in small-small quantities over a period of time, not many people are aware of this product. To make it a success NSEL will have to create awareness about this product through various investor education channels, so that people realize for the benefits of this product. How they go about doing this remains to be seen.
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SUGGESTION AND RECOMMONDATIONS
1. NSEL E-Series Gold is a good product into the market now you can buy a gold into demat form & also you can buy gold from 1gm that also into demat form
2. NSEL has to conduct customer awareness programme so customer can come Forward in this way we can create trust among the customer so that without hassle they can Invest in e-series Gold product
3. Most of the customers are new to the commodity market so before telling them About eseries gold product we have to educate the customers with everything Regarding NSEL OR Commodity market
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BIBLIOGRAPHY
www.nseindia.com www.bseindia.com www.nationalspotexchange.com www.mcxsx.com www.investopedia.com http://www.cbot.com www.mcxindia.com www.ncdex.com www.commodityindia.com
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New Face of The Commodity Market

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New Face of The Commodity Market

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New Face of The Commodity Market

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Submitted by RAKESH PATIL ROLL NO: M1036 BATCH: MMS (2010-12)

Under the guidance of Prof. Mahalakshmi Subramanian