INTRODUCTION

We are moving from a world in which the big eat the small to one in which the fast eat the slow.-Klaus Schwab, 2000 (founder of the World Economic Forum) A strong and vibrant cash market is a pre-condition for a successful and transparent futures market. Before the North American futures market originated some 150 years ago, farmers would grow their crops and then them to market in the hope of selling their commodity of inventory. But without any indication of demand, supply often exceeded what was needed, and not purchased crops were left to rot in the streets. Conversely, when a given commodity such soybeans were out of season, the goods made from it became very expensive because the crop was no longer available, lack of supply. In the mid-19th century, grain markets were established and a central marketplace was created for farmers to bring their commodities and sell them either for immediate delivery (spot trading) or for forward delivery. The latter contracts, forwards contracts, were the fore-runners to todays future contracts. In fact, this concept saved many farmers from the loss of crops and helped stabilize supply and prices in the offseason. Commodity Any product that can be used for commerce or an article of commerce which is traded on an authorized commodity exchange is known as commodity. The article should be movable of value, something which is bought or sold and which is produced or used as the subject or barter or sale. Indian Forward Contracts (Regulation) Act (FCRA), 1952 defines goods as every kind of movable property other than actionable claims, money and securities. In current situation, all goods and products of agricultural (including plantation), mineral and fossil origin are allowed for commodity trading recognized under the FCRA. The national commodity exchanges, recognized by the Central Government, permits commodities which include precious (gold and silver) and non-ferrous metals,
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cereals and pulses, ginned and un-ginned cotton, oilseeds, oils and oilcakes, raw jute and jute goods, sugar and gur, potatoes and onions, coffee and tea, rubber and spices. Etc. Commodity market Commodity market is an important constituent of the financial markets of any country. It is the market where a wide range of products, viz., precious metals, base metals, crude oil, energy and soft commodities like palm oil, coffee etc. are traded. It is important to develop a vibrant, active and liquid commodity market. This would help investors hedge their commodity risk, take speculative positions in commodities and exploit arbitrage opportunities in the market Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts. SILVER Silver is a metallic chemical element with the chemical symbol Ag (Latin: argentums, from the Indo European root * arg-for white or shining) and atomic number 47. a soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal. The metal occurs naturally in its pure, free from native silver, as an alloy with gold and other metals, and in minerals such as argentite and chlorargyrite. Most silver is produced as a by-product of copper, gold, lead, and zinc refining. Silver has attracted mans fascination for many thousands of years. Ancient civilizations found silver deposits plentiful on or near the earths surface. Relics of these civilizations, include jewellery, religious artefacts, and food vessels formed from the durable, malleable metal. This metal took on near mystical qualities in marking important historical milestones throughout the ages, and served as a medium of exchange. The Mesopotamian merchants were doing just that as early as 700 BC.

In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nations coinage until its use was discontinued in 1965. The dawn of the 20th century marked an important economic function for silver, that of an industrial raw material. NEED AND IMPORTANCE OF THE STUDY The commodity market is still new and growing in India and it has a bright scope to develop, on that view this research study is taken. The Research main intention is to know the various price drivers that determine the price of SILVER. The main problem in the commodity market is the prediction of future price of commodity; especially prediction of price of global metals (gold) is very difficult. The future prediction will be made on the basis of the past response of commodity market to various price drivers. The price of gold and silver are highly affected by the various factors happening in and around the world. In order to know behavior of this to commodity to that factor, I referred past reacts of commodity market. OBJECTIVES OF THE STUDY 1. To learn about the Indian commodity market with reference to silver. 2. To study different price drivers affect the silver. 3. To find out how the price of silver fluctuates in Indian Commodity market 4. To interpret movement of future price of silver in commodity market. 5. To derive the relation of these commodities with other financial instruments. 6. To study the market characteristics of silver. SCOPE OF THE STUDY The scope of study shows the outer line or border of the research study. This study limited to only one commodity, i.e., Silver and this study is based on last one year performance of Silver and its related issues. This study relates to only Indian commodity market that is MCX, NCDX.

RESEARCH METHODOLOGY Research in common parlance refers to a search for knowledge. In fact, research is an art of scientific investigation. The Advanced Learners Dictionary of current English lays down the meaning of research as a careful investigation or inquiry especially through search for new facts in any branch of knowledge. For the preparation of the project report several method were used to collect data and pertinent information. The data required for the studies were collected is primary source. Detailed questionnaire were prepared for the different departments covering as many variables as possible. DISSERTATION TITLE ANALYSIS OF COMMODITY MARKET WITH REFERENCE TO SILVER SOURCE OF DATA Secondary data Data which are actually collected for some earlier research work and are applicable or usable in future research and which already have been passed through the satisfied process. The secondary data for this study was collected from the relevant journals, newspapers, and text books. The main source of secondary data for this project is internet source like MCX, NCDEX. Tool used The live trading of last one year record system which is used in Religare is used in this research to collect required data. Research design Research design is the conceptual structure within which research is conducted; it constitutes the blueprint for the collection, measurement and analysis of data. It is a
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plan for selecting of type of information used to answer the research question. It is a framework for specifying the relationship among the different influencing variables. Empirical research This research is done by using the empirical research design to analyze the performance and to study the silver on commodity market, by using all available data. Sampling design Sampling is simply the process of learning about the population on basis of a sample. Thus, sampling technique instead of every unit of the universe, only a part of the universe is studied and conclusion is drawn on that basis for the entire universe. A sample is subset of population units. I adopted the simple random sampling technique for the study. Simple random sampling Simple random sampling refers to that sampling technique in which each and every unit of the population has an equal opportunity of being selected in the sample. The study has adopted simple random sampling because population is known. Limitations of the study The following are some of the limitations of the study 1. The project work was required to be completed within a short period of time. So, time constraint was one of the main limitations of the study. 2. Most of the information is collected from secondary data, so researcher cant say it 100% applicable. 3. The samples i.e., calculations and figures are known only for a limited period. 4. This analysis will be holding good for a limited time period i.e. based on present scenario and study conducted, future movement of price may or may not be similar.

PLAN OF WORK
CHAPTER I CHAPTER-II CHAPTER-III CHAPTER-IV CHAPTER-V Introduction Profile of Religare securities Ltd. Theoretical Concepts of commodity - Silver Data analysis and Interpretation Conclusions, Findings & Suggestions BIBLIOGRAPHY

INDIAN STOCK MARKET AN OVERVIEW

The Indian broking industry is one of the oldest trading industries that have been around even before the establishment of BSE in 1875 Inception- The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. Bubble burst- The early stock market saw a boom till 1865, and then in Jul 1865, what was then used to be called the share mania ended with burst of the stock market bubble. In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock exchange in Jul 1875, which led to the formation of a trust in 1887 known as the Native Share and Stock Brokers Association Beginning of a new phase- A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies, which created a surge in retail investing. Growth supporting factors-The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilization that evinced huge interest from retail investors. A new set of economic and financial sector reforms that began in the early 1990s gave further impetus to the growth of the stock markets in India. Setting up of SEBI- the Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include-

o to protect the interests of the investors in securities o to promote the development of securities markets and to regulate the securities markets Incorporation of NSE- NSE was incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities Contracts (Regulations) Act 1956 in Apr 1993. It commenced operations in wholesale debt segment in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock Exchange brought to Indian capital markets several innovations and modern practices and procedures such as nationwide trading network, electronic trading, greater transparency in price discovery and process driven operations that had significant bearing on further growth of the stock markets in India. To speed the securities settlement process, The Depositories Act 1996 was passed that allowed for dematerialization (and of dematerialization)

securities in depositories and the transfer of securities through

electronic book entry. The National Securities Depository Limited (NSDL) set up by leading financial institutions, commenced operations in Oct 1996. Despite passing through a number of changes in the post liberalization period, the industry has found its way towards sustainable growth. A stock Broker is a regulated professional who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors. To work as a broker a certificate of registration from SEBI is mandatory after satisfying all the terms and conditions.

FINANCIAL MARKETS A financial market is a market in which people and entities can trade financial securities, commodities, and other tangible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods. There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded). Markets work by placing many interested buyers and sellers, including households, firms, and government agencies, in one "place", thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a nonmarket economy such as a gift economy. In finance, financial markets facilitate:

The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) Price discovery Global transactions with integration of financial markets The transfer of liquidity (in the money markets) International trade (in the currency markets) Used to match those who want capital to those who have it.

Organized Market/Exchange Any securities exchange in which traders and brokers meet to buy and sell securities according to the rules set by the governing body of the exchange. Capital Market Capital market is the market for financial assets having a period of maturity of more than one year or of an indefinite period. Thus, capital market provides long-term resources needed by medium and large scale industries. The Indian capital market which had been lying dormant in the seventies up to mid eighties has witnessed an unprecedented boom and undergone sea change with a number of financial services and banking companies, merchant bankers, more stock exchanges, ventures capital funds, private sector mutual funds, foreign institutional investors, over-the-counter exchange, national stock exchange, credit rating services, custodial services, portfolio management services, non-resident investment, new regulations etc. emerging on the Indian capital scene. Before repeal of Capital Issues Control Act 1947, the entire working of the new issue market in India was governed by the Controller of Capital issues Control Act, 1947. The timing of the new issues by private sector companies, the composition of securities to be issued, interest (dividend) rates which can be offered on debentures
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and preference shares, the premium to be charged on securities were all subject to the regulation of the CCI. The repeal of Capital Issues Control Act, 1947 and the establishment of Securities Exchange board of India (SEBI) has been a milestone in the history of capital market in India. There is complete metamorphosis of the market system, policies and regulation with the birth of SEBI like allowing companies to fix the price of instruments, making guidelines for various issues involved in primary market and framing guidelines for various intermediaries of both primary and secondary market. The role of SEBI has changed from controlling to regulatory with investor protection as the primary motive. Money Market Money market deals in short-term debt, and channel the savings into short-term productive investments like working capital, call money, treasury bills etc. In India, money market is classified into the organized segment and unorganized segment. The organized segment is characterized by fairly rigid and complex rules and is dominated by commercial banks and major financial institutions like UTI. This segment is subjected to tight control by the Reserve Bank of India. Unorganized segment is characterized by informal procedures; flexible terms and attractive rates of interest both depositors and borrowers. The unorganized sector is dominated by money lenders. The Discount and Finance House of India (DFHI) is a finance house established as a company under the Companies Act, 1956. It is providing liquidity to money market instruments by creating a secondary market and offering buying / selling quotes for various instruments. RBI actually operates in the money market through the DFHI The position of money market in the Indian system has become important with recent liberalization of monetary policies, such as deregulation of lending rates, permitting mutual funds and banks subsidiaries to enter into money market operations. Money market ensures efficient functioning of the financial system and provides greater flexibility in banks operations.

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UNORGANIZED MARKETS Unorganized markets are places for transaction in over the counter business activities. The markets can be established anywhere and they don't require any rule to operate, incidence of default is very high as traders need necessarily undergo any registration procedure. The elemental functions of a money market must be performed in any kind of modern economy, even one that is largely planned or socialist, but the arrangements in socialist countries do not ordinarily take the form of a market. Money markets exist in countries that use market processes rather than planned allocations to distribute most of their primary resources among alternative uses. The general distinguishing feature of a money market is that it relies upon open competition among those who are bulk suppliers of funds at any particular time and among those seeking bulk funds, to work out the

to work out the best practicable distribution of the existing total volume of such funds. Indigenous bankers Indigenous bankers constitute the ancient banking system of India. They have been carrying on their age-old banking operations in different parts of the country under different names. In Chennai, these bankers are called Chettys ; in Northern IndiaSahukars, Mahajans and Khatnes; in Mumbai, Shroffs and Marwaris;and in Bengal, Seths and Banias. According to the Indian Central Banking Enquiry Committee, an indigenous banker or bank is defined as an individual or private firm which receives deposits, deals in hundies or engages itself in lending money. The indigenous bankers can be divided into three categories: (a) those who deal only in banking business (e.g., Multani bankers); (b) those who combine banking business with trade (e.g., Marwaris and Bengalies); and

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(c) those who deal mainly in trade and have limited banking business. The indigenous banker is different from the moneylender. The moneylender is not a banker; his business is only to lend money from his own funds. The indigenous banker, on the other hand, lends and accepts funds from public.

PROFILE OF RELIGARE SECURITIES LTD.

BRND IDENTITY Name Religare is a Latin word that translates as 'to bind together'. This name has been chosen to reflect the integrated nature of the financial services the company offers. Symbol The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it is considered good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10,000 three-leaf clovers found. For us, each leaf of the clover has a special meaning. It is a symbol of Hope. Trust. Care. Good Fortune. For the world, it is the symbol of Religare.

The first leaf of the clover represents Hope, The aspirations to succeed. The dream of becoming, Of new possibilities, It is the beginning of every step and the foundation on which a person reaches for the stars.

The second leaf of the clover represents Trust, The ability to place ones own faith in another. To have A relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction to all, not in the binding, but in the bond that is built.
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The third leaf of the clover represents Care, The secret ingredient that is the cement in every relationship. The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all.

The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with circumstance to generate those often looked for remunerative moments of success.

Hope. Trust. Care. Good Fortune. All elements perfectly combine in the emblematic and rare, four-leaf clover to visually symbolize the values that bind together and form the core of the Religare vision. THE RELIGARE EDGE Diverse offerings Dynamic Management Team State-of-the art technology Vast Distribution and Reach Robust Brand Recognition Synergistic partnerships Innovative Initiative

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RELIGARE GROUP: RELIGARE in recent years has expanded its reach in health care and financial services wherein it has multiple specialty hospital and labs which provide health care services and multiple financial services such as secondary market equity services, portfolio management services, depository services etc. RELIGARE financial services group comprises of Religare Securities Limited, RELIGARE Comdex Limited and RELIGARE Finvest Limited which provide services in Equity, Commodity and Financial Services business & Religare Insurance Advisory Ltd.

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Religare Securities Ltd

Religare Finvest ltd

Religare Wealth Mgt Services Ltd

s

Religare Commodities Ltd

RELIGARE ENTERPRISE LIMITED

Religare capital Markets Ltd

Religare Insurance Broking Ltd Religare Venture Capital Pvt Ltd

Religare finance Ltd Religare Realty Ltd

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SERVICES:

Equity Arts Initiative Commodity

Investment Banking

REL

Mutual Fund

Wealth Insurance Advisory Services Personal Credit

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RELIGARE GLOBAL NETWORK Religare operate across multiple locations & countries. INDIA DUBAI QATAR HONG KONG MALAYSIA SINGAPORE TOKYO INDONESIA BRAZIL NEW YORK SAN FRANCISCO UNITED KINGDOM

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COMPETITORS OF RELIGARE There are several financial security companies playing their roles in Indian equity market. But Religare faces competitions from these few companies. ICICI Direct.com Share Khan (SSKI) Kotak Securities.com India Bulls HDFC Securities 5paisa.com Motilal Oswal IL&FS Karvy About Religare Securities Limited (RSL) One of the leading integrated financial services groups of India Diverse range of offerings Client base of more than 5000,000 and growing across the retail, wealth and Institutional Spectrum. Pan India and global footprint. Width and depth of management leading a formidable employee base. Best-in-class Research. Sweetly placed to spot new opportunities and power ahead.

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CONCEPTS OF COMMODITY MARKETS

Commodities future trading was evolved from needs of assured continuous supply of seasonal agricultural crops. The concept of organized trading in commodities evolved in Chicago, in 1848. But one can trace its roots in Japan. In Japan merchants used to store Rice in warehouses for future use. To raise cash warehouse holders sold receipts against the stored rice. These were known as rice tickets. Eventually, these rice tickets become accepted as a kind of commercial currency. Latter on rules came in to being, to standardize the trading in rice tickets. In 19th century Chicago in United States had emerged as a major commercial hub. So that wheat producers from Midwest attracted here to sell their produce to dealers & distributors. Due to lack of organized storage facilities, absence of uniform weighing & grading mechanisms producers often confined to the mercy of dealers discretion. These situations lead to need of establishing a common meeting place for farmers and dealers to transact in spot grain to deliver wheat and receive cash in return. Gradually sellers & buyers started making commitments to exchange the produce for cash in future and thus contract for futures trading evolved. Whereby the producer would agree to sell his produce to the buyer at a future delivery date at an agreed upon price. In this way producer was aware of what price he would fetch for his produce and dealer would know about his cost involved, in advance. This kind of agreement proved beneficial to both of them. As if dealer is not interested in taking delivery of the produce, he could sell his contract to someone who needs the same. Similarly producer who not intended to deliver his produce to dealer could pass on the same responsibility to someone else. The price of such contract would dependent on the price movements in the wheat market. Latter on by making some modifications these contracts transformed in to an instrument to protect involved parties against adverse factors such as unexpected price movements and unfavorable climatic factors. This promoted traders entry in futures market, which had no intentions to buy or sell wheat but would purely speculate on price movements in market to earn profit. Trading of wheat in futures became very profitable which encouraged the entry of other commodities in futures market. This created a platform for establishment of a body to regulate and supervise these contracts. Thats why Chicago Board of Trade (CBOT) was established in 1848. In 1870 and 1880s the New York Coffee, Cotton
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and Produce Exchanges were born. Agricultural commodities were mostly traded but as long as there are buyers and sellers, any commodity can be traded. In 1872, a group of Manhattan dairy merchants got together to bring chaotic condition in New York market to a system in terms of storage, pricing, and transfer of agricultural products. In 1933, during the Great Depression, the Commodity Exchange, Inc. was established in New York through the merger of four small exchanges the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Exchange, and the New York Hide Exchange. The largest commodity exchange in USA is Chicago Board of Trade, The Chicago Mercantile Exchange, the New York Mercantile Exchange, the New York Commodity Exchange and New York Coffee, sugar and cocoa Exchange. Worldwide there are major futures trading exchanges in over twenty countries including Canada, England, India, France, Singapore, Japan, Australia and New Zealand. International Commodity Exchanges Futures trading is a result of solution to a problem related to the maintenance of a year round supply of commodities/ products that are seasonal as is the case of agricultural produce. The United States, Japan, United Kingdom, Brazil, Australia, Singapore are homes to leading commodity futures exchanges in the world. The New York Mercantile Exchange (NYMEX) The New York Mercantile Exchange is the worlds biggest exchange for trading in physical commodity futures. The exchange is in existence since last 132 years and performs trades trough two divisions, the NYMEX division, which deals in energy and platinum and the COMEX division, which trades in all the other metals. Commodities traded: - Light sweet crude oil, Natural Gas, Heating Oil, Gasoline, RBOB Gasoline, Electricity Propane, Gold, Silver, Copper, Aluminum, Platinum, Palladium, etc.

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London Metal Exchange The London Metal Exchange (LME) is the worlds premier non-ferrous market, with highly liquid contracts. The exchange was formed in 1877 as a direct consequence of the industrial revolution witnessed in the 19th century. Commodities traded Aluminum, Copper, Nickel, Lead, Tin, Zinc, Aluminum Alloy, North American Special Aluminum Alloy (NASAAC), Polypropylene, Linear Low Density Polyethylene, etc. The Chicago Board of Trade The first commodity exchange established in the world was the Chicago Board of Trade (CBOT) during 1848 by group of Chicago merchants who were keen to establish a central market place for trade. Presently, the Chicago Board of Trade is one of the leading exchanges in the world for trading futures and options. More than 50 contracts on futures and options are being offered by CBOT currently through open outcry and/or electronically. Commodities Traded: - Corn, Soybean, Oil, Soybean meal, Wheat, Oats, Ethanol, Rough Rice, Gold, and Silver etc. Tokyo Commodity Exchange (TOCOM) The Tokyo Commodity Exchange (TOCOM) is the second largest commodity futures exchange in the world. It trades in to metals and energy contracts. It has made rapid advancement in commodity trading globally since its inception 20 years back. TOCOMs recent tie up with the MCX to explore cooperation and business opportunities is seen as one of the steps towards providing platform for futures price discovery in Asia for Asian players in Crude Oil since the demand-supply situation in U.S. that drives NYMEX is different from demand-supply situation in Asia Commodities traded: - Gasoline, Kerosene, Crude Oil, Gold, Silver, Platinum, Aluminum, Rubber, etc

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Chicago Mercantile Exchange The Chicago Mercantile Exchange (CME) is the largest futures exchange in the US and the largest futures clearing house in the world for futures and options trading. Formed in 1898 primarily to trade in Agricultural commodities, the CME introduced the worlds first financial futures more than 30 years ago. Commodities Traded: - Butter milk, Diammonium phosphate, Feeder cattle, frozen pork bellies, Lean Hogs, Live cattle, Non-fat Dry Milk, Urea, Urea Ammonium Nitrate, etc. Introduction to Indian commodity market India, a commodity based economy where two-third of the one billion population depends on agricultural commodities, surprisingly has an under developed commodity market. The vast geographical extent of India and her huge population is aptly complemented by the size of her market. The broadest classification of the Indian Market can be made in terms of the commodity market and the bond market. India Commodity Market can be subdivided into the following two categories: Wholesale Market Retail Market

The traditional wholesale market in India dealt with whole sellers who bought goods from the farmers and manufacturers and then sold them to the retailers after making a profit in the process. It was the retailers who finally sold the goods to the consumers. With the passage of time the importance of whole sellers began to decline due to various reasons. In recent years, the extent of the retail market (both organized and unorganized) has evolved in leaps and bounds. In fact, the success stories of the commodity market of India in recent years has mainly centered on the growth generated by the Retail Sector. Almost every commodity under the sun both agricultural and industrial is now being provided at well distributed retail outlets throughout the country.

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Moreover, the retail outlets belong to both the organized as well as the unorganized sector. The unorganized retail outlets of the yesteryears consist of small shop owners who are price takers where consumers face a highly competitive price structure. The organized sectors on the other hand are owned by various business houses like Pantaloons, Reliance, Tata and others. Such markets are usually selling a wide range of articles both agricultural and manufactured, edible and inedible, perishable and durable. Modern marketing strategies and other techniques of sales promotion enable such markets to draw customers from every section of the society. However the growth of such markets has still centered on the urban areas primarily due to infrastructural limitations. Considering the present growth rate, the total valuation of the Indian Retail Market is estimated to cross Rs. 10,000 billion in the year 2010. Demand for commodities is likely to become four times by 2012 than what it presently is. 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 futures after independence in 1952. The parliament passed the Forward Contracts (Regulation) Act, 1952, which regulated contracts in Commodities all over the India. The act prohibited options trading in Goods along with cash settlement of forward trades, rendering a crushing blow to the commodity derivatives market. Under the act only those associations/exchanges, which are granted reorganization from the Government, are allowed to organize forward trading in regulated commodities. The act envisages three tire regulations: (i) Exchange which organizes forward trading in commodities can regulate trading on day-to-day basis. (ii) Forward
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Markets Commission provides regulatory oversight under the powers delegated to it by the central Government. (iii) The Central Government- Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution- is the ultimate regulatory authority. 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. Commodity exchange in India plays an important role where the prices of any commodity are not fixed, in an organized way. Earlier only the buyer of produce and its seller in the market judged upon the prices. Others never had a say. Today, commodity exchanges are purely speculative in nature. Before discovering the price, they reach to the producers, end-users, and even the retail investors, at a grassroots level. It brings a price transparency and risk management in the vital market. Since 2002, the commodities future market in India has experienced an unexpected boom in terms of modern exchanges, number of commodities allowed for derivatives trading as well as the value of futures trading in commodities, which crossed $ 1 trillion mark in 2006. Since 1952 till 2002 commodity datives market was virtually non- existent, except some negligible activities on OTC basis. In India there are 25 recognized future exchanges, of which there are three national level multi-commodity exchanges. After a gap of almost three decades, Government of India has allowed forward transactions in commodities through Online Commodity Exchanges, a modification of traditional business known as Adhat and Vayda Vyapar to facilitate better risk coverage and delivery of commodities. The three exchanges are: National Commodity & Derivatives Exchange Limited (NCDEX) Mumbai, Multi Commodity Exchange of India Limited (MCX) Mumbai and National MultiCommodity Exchange of India Limited (NMCEIL) Ahmedabad.There are other regional commodity exchanges situated in different parts of India.

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Legal framework for regulating commodity futures in India The commodity futures traded in commodity exchanges are regulated by the Government under the Forward Contracts Regulations Act, 1952 and the Rules framed there under. The regulator for the commodities trading is the Forward Markets Commission, situated at Mumbai, which comes under the Ministry of Consumer Affairs Food and Public Distribution Forward Markets Commission (FMC) It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act, 1952. Commission consists of minimum two and maximum four members appointed by Central Govt. Out of these members there is one nominated chairman. All the exchanges have been set up under overall control of Forward Market Commission (FMC) of Government of India. National Commodities & Derivatives Exchange Limited (NCDEX) National Commodities & Derivatives Exchange Limited (NCDEX) promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank of Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSC). Punjab National Bank (PNB), Credit Ratting Information Service of India Limited (CRISIL), Indian Farmers Fertilizer Cooperative Limited (IFFCO), Canara Bank and Goldman Sachs by subscribing to the equity shares have joined the promoters as a share holder of exchange. NCDEX is the only Commodity Exchange in the country promoted by national level institutions. NCDEX is a public limited company incorporated on 23 April 2003. NCDEX is a national level technology driven on line Commodity Exchange with an independent Board of Directors and professionals not having any vested interest in Commodity Markets. It is committed to provide a world class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency.

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NCDEX is located in Mumbai and offers facilities to its members in more than 550 centers through out India. NCDEX currently facilitates trading of 57 commodities. Commodities Traded at NCDEX Bullion - Gold KG, Silver, Brent Minerals - Electrolytic Copper Cathode, Aluminum Ingot, Nickel Cathode, Zinc Metal Ingot, Mild steel Ingots Oil and Oil seeds - Cotton seed, Oil cake, Crude Palm Oil, Groundnut (in shell), Groundnut expeller Oil, Cotton, Mentha oil, RBD Pamolein, Refined soya oil, Rape seeds, Mustard seeds, Caster seed, Yellow soybean. Pulses - Urad, Yellow peas, Chana, Tur, Masoor, Grain - Wheat, Indian Pusa Basmati Rice, Indian parboiled Rice, Indian raw Rice (ParmalPR-106), Barley, Yellow red maize Spices - Jeera, Turmeric, Pepper Plantation - Cashew, Coffee Arabica, Coffee Robusta Fibers and other - Guar Gum, Guar seeds, Jute sacking bags, Indian 28 mm cotton, Indian 31mm cotton, Lemon, Grain Bold, Medium Staple, Mulberry, Green Cottons Potato, Raw Jute,Mulberry raw Silk, V-797 Kapas, Sugar, Chilli LCA334 Energy - Crude Oil, Furnace oil.

Multi Commodity Exchange of India Limited (MCX) Multi Commodity Exchange of India Limited (MCX) is an independent and demetalized exchange with permanent reorganization from Government of India, having Head Quarter in Mumbai. Key share holders of MCX are Financial Technologies (India) Limited, State Bank of India, Union Bank of India, Corporation Bank of India, Bank of India and Canara Bank. MCX facilitates online trading, clearing and settlement operations for commodity futures market across the country.
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MCX started of trade in Nov 2003 and has built strategic alliance with Bombay Bullion Association, Bombay Metal Exchange, Solvent Extractors Association of India, pulses Importers Association and Shetkari Sanghatana. MCX deals wit about 100 commodities. Commodities Traded at MCX Bullion - Gold, Silver, Silver Coins, Minerals - Aluminum, Copper, Nickel, Iron/steel, Tin, Zinc, Lead Oil and Oil seeds - Castor oil/castor seeds, Crude Palm oil/ RBD Pamolein, Groundnut oil, Mustard/ Rapeseed oil, Soy seeds/Soy meal/Refined Soy Oil, Coconut Oil Cake, Copra, Sunflower oil, Sunflower Oil cake, Tamarind seed oil, Pulses - Chana, Masur, Tur, Urad, Yellow peas Grains - Rice/ Basmati Rice, Wheat, Maize, Bajara, Barley, Spices - Pepper, Red Chili, Jeera, Cardamom, Cinnamon, Clove, Ginger, Plantation - Cashew Kernel, Rubber, Areca nut, Betel nuts, Coconut, Coffee, Fiber and others - Kapas, Kapas Khalli, Cotton (long staple, medium staple, short staple), Cotton Cloth, Cotton Yarn, Gaur seed and Guargum, Gur and Sugar, Khandsari, Mentha Oil, Potato, Art Silk Yarn, Chara or Berseem, Raw Jute, Jute Goods, Jute Sacking, Petrochemicals - High Density Polyethylene (HDPE), Polypropylene (PP), Poly Vinyl Chloride (PVC) Energy - Brent Crude Oil, Crude Oil, Furnace Oil, Middle East Sour Crude Oil, Natural Gas National Multi Commodity Exchange of India Limited (NMCEIL) National Multi Commodity Exchange of India Limited (NMCEIL) is the first demutualised Electronic Multi Commodity Exchange in India. On 25th July 2001 it was granted approval by Government to organize trading in edible oil complex. It is being supported by Central warehousing Corporation Limited, Gujarat State Agricultural
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Marketing Board and Neptune Overseas Limited. It got reorganization in Oct 2002. NMCEIL Head Quarter is at Ahmedabad. STRUCTURE OF COMMODITY MARKET

Ministry of consumer affairs

Forwards market commission

Commodity Exchange

National stock exchange

Regional stock exchange

NCDEX

NBOT MCX NMCE

20 other regional exchanges

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SILVER
Silver is a metallic chemical element with the chemical symbol Ag (Latin: argentums, from the Indo European root * arg-for white or shining) and atomic number 47. a soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal. The metal occurs naturally in its pure, free from native silver, as an alloy with gold and other metals, and in minerals such as argentite and chlorargyrite. Most silver is produced as a by-product of copper, gold, lead, and zinc refining. Silver has long been valued as precious metal, and it is used to make ornaments, jewelry, high-value tableware, utensils, and currency coins. Today, silver metal is also used in electrical contacts and conductor, in mirrors and in catalysis of chemical reactions. Its compounds are used in photographic film and dilute silver nitrate solutions and other silver compounds are used as disinfectants and micro biocides. While many medical antimicrobial uses of silver have been supplanted by antibiotics, further research into clinical potential continues. Many well known uses of silver involve its precious metal properties including currency, decorative items and mirrors. The contrast between the appearance of its bright white color in contrast with other media makes it very useful to the visual art. It has also long been used to confer high monetary value as objects (such as silver coins and investment bars) or make objects symbolic of high social or political rank. Silver, in the form of electrum (a gold-silver alloy), was coined to produce money in around 700BC by the Lydians. Later, silver was refined and coined in its pure form. Many nations used silver as the basic unit of monetary value. In the modern world, silver bullion has the ISO currency code XAG. The name of the United Kingdom monetary unit pound () reflects the fact that it originally represented the value of one troy pound of sterling silver. In the 1800s, many nations, such as the United States and Great Britain, switched from silver to a gold standard of monetary value, then in the 20th century to fiat currency.

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History of silver Silver has attracted mans fascination for many thousands of years. Ancient civilizations found silver deposits plentiful on or near the earths surface. Relics of these civilizations, include jewelry, religious artifacts, and food vessels formed from the durable, malleable metal. This metal took on near mystical qualities in marking important historical milestones throughout the ages, and served as a medium of exchange. The Mesopotamian merchants were doing just that as early as 700 BC. In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nations coinage until its use was discontinued in 1965. The dawn of the 20th century marked an important economic function for silver, that of an industrial raw material. Today, silver is sought as a valuable and practical industrial commodity, as well as an appealing investment precious metal. Many countries now issue silver bullion coins, among them the Unites States, Canada and Mexico. Private issue silver bullion is also available from select private mints. Although silver is relatively scarce, it is the most plentiful and least expensive of the precious metals. The largest silver producing countries are Mexico, Peru, the United States, Australia and Chile. Sources of silver include; silver mined directly, silver mined as a by-product of gold, copper, lead and zinc mining, and silver extracted from recycled materials, primarily used photographic materials. Today, silver bullion stocks make up a significant component of silver supply. The American Eagle Bullion program was launched in 1986 with the sale of gold and silver bullion coins. Platinum was added to the American Eagle Bullion family in 1997. A bullion coin is a coin that is valued by its weight in a specific precious metal.

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Silver Uses Demand for silver is built on three main pillars: industrial and decorative uses, photography, and jewelry & silverware. Together, these three categories represent more than 95 percent of annual silver consumption. In 2007, 455.5 million ounces of silver were used for industrial applications, while over 128 million ounces of silver were committed to the photographic sector, 163.4 million ounces were consumed in the jewelry market, and 58.8 million ounces were used in the silverware market. Basic Information: Symbol: Ag Mass: 107.868 Density @ 293 K: 10.5 g/cm3 Melting Point: 961.93 C (1235.1 K) Boiling Point: 2212 C (2428 K) Classification: Transition Metal Crystal Structure: Face-centered Cubic Color: silver Characteristics: soft, ductile, tarnishes Why is this indispensable metal in such demand? The reasons are simple. Silver has a number of unique properties including its strength, malleability and ductility, its electrical and thermal conductivity, its sensitivity to and high reflectance of light and the ability to endure extreme temperature ranges. Silvers unique properties restrict its substitution in most applications. Choose from the following list to learn more about some of the various applications of silver:

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Traditional
o o o o

Coinage Photography Silver Jewelry. Silverware and Table Settings

Industrial
o o o o o

Batteries Bearings Brazing and Soldering Catalysts Electronics

Emerging
o o o o

Medical Applications Mirrors & Coatings Solar Energy Water Purification

Supply/demand for silver: Silver Supply Dynamics: Like all metals or precisely precious metals, silver cannot be created. It occurs naturally. The source of silver are mine production, governments central bank reserves (which is also termed as above ground supply of silver) and recycled scrap. Delay, interrupt or reduction in any one of these supply sources result into big market price hikes, as daily demand for silver bullion begins to surpass supply.
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Mine production of silver is the largest component of silver supply. It can be seen that mine production accounts for nearly 72 % of silver supply. Other sources of silver being scrap and sales by government bodies also play their role in meeting the ever-increasing demand of silver. Government sales are most done to stabilize the price of silver or in crisis situations like war or natural disasters. The detailed trend analysis of the various source of silver will facilitate in predicting the future movement of silver production and its repercussions.

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World supply for Silver:

When considering the supply of silver from mines it is very important to have a look at the break up of the various source metal mines and their contribution in silver supply. Around 30% of silver comes from mines where the main source of revenue is silver. Such mines are called primary silver mines. This is important as price of silver will have impact on primary output, which means that amount of silver mined is more a function of the price of other source metals. Supply from above the ground constitute of Scrap and Government sales. Together they constitute of around 25% of silver supply. Scrap is recovered from industrial waste or existing goods such as photographic chemicals, jewellery, discarded electronic goods such as computers etc. Disinvestments and government sales comprise of old coins and bars of silver that return to market. Another minor component of supply of silver is producer hedging or early sale one by mining companies of future production by entering into forward contracts. This is done to hedge against the price and quantity risk associated with silver. Like hedging there can also be de-hedging and the effect on supply will be on net basis.
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The analysis of literature and statistics of various sources of supply of silver give positive picture for the silver supply but the deficit between the supply and demand is expected to stay and the repercussions of this deficit would be felt only when the inventories fall to zero. Silver Demand Dynamics: Demand of silver has three main components namely; Jewellery & Silver are, Industrial Fabrication, Photographic Fabrication. Another minor component is Coins and medals. Other avenues of demand that are on rise are government purchases and investment. These two are taken on net basis, as there can be government sales and disinvestments of silver also. Since 1992 net purchases by government are not significant but the role of investments in silver has seen dramatic changes. Silver investment is the reason for the recent rally of silver prices. Silver demand is governed by various application of silver. Sale of the goods in which silver is used like silver batteries; tableware, etc determine the demand of silver in the market. Events like declaration of decline in sales of analog cameras affect the prices of silver. New applications of silver like in medicine and RFID tags used by retail stores also affect the demand and price dynamics of silver.

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Most of the industrial applications of silver, the demand is price inelastic as there it is required in minute quantities where as the demand of silver in jewellery is highly price sensitive. World demand for silver:

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Global scenario for Silver: Silver producing countries: The below-mentioned figures are the silver production figures of the countries. Clearly, Mexico leads the list of silver producing countries. It contributes to about 15% of the worlds total production. Already mentioned, only 25% of the worlds total production (i.e. 615 million ounces) comes from the primary silver mines and the rest from other sources like refining of other metals and also from scrap recycling. World silver survey done in 1998 depicts that around 152.2 million ounces of silver was separated from the waste for recycling purposes. This percentage of separated silver has improved due to advanced methods of separation. United States is the major silver producing country through scrap and waste followed by Japan.

Mexico (99 million ounces) Peru (98.4 million ounces) Australia (71.9 million ounces) China (63.8 million ounces) Poland (43.8 million ounces)
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Chile (42.8 million ounces) Canada (40.6 million ounces) United States (40.2 million ounces) Russia (37.9 million ounces) Kazakhstan (20.6 million ounces) Bolivia (13.1 million ounces) Sweden (9.4 million ounces) Indonesia (8.6 million ounces) Morocco (6.3 million ounces) Argentina (5 million ounces) Turkey (3.7 million ounces) South Africa (3.2 million ounces) Iran (2.6 million ounces) Japan (2.4 million ounces) India (2.1 million ounces)

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Silver consuming countries: The Silver is mainly consumed for the industrial uses. The main uses of silver are Batteries, Electroplating, Bearings, Jewellery and Silverware, Brazing and Soldering, Medical Applications, Catalysts Mirrors and Coatings, Coins Photography, Electrical Solar Energy, Electronics Water Purification. Top 20 Silver Producing Countries in 2009 (millions of ounces) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Peru Mexico China Australia Bolivia Russia Chile United States Poland Kazakhstan Canada Argentina Turkey Sweden Morocco Indonesia India Guatemala Iran South Africa 123.9 104.7 89.1 52.6 42.6 42.2 41.8 39.8 39.2 21.7 19.6 17.1 14.0 8.7 8.3 7.7 7.3 4.2 3.5 2.6

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World's Leading Primary Silver Mines in 2009 (millions of ounces) Rank 1. 2. 3. 4. 5. Mine/Country Fresnillo, Mexico Cannington, Australia Dukat, Russia Gmsky, Turkey Uchucchacua, Peru Operating Company Fresnilloplc BHP Billiton JSC Polymetal EtiGm A.. Compaia de Minas Buenaventura SA 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Arcata, Peru Pallancata, Peru San Bartolom, Bolivia Greens Creek, U.S. Imiter, Morocco Alamo Dorado, Mexico San Jos, Argentina Ying, China Martha, Argentina Huaron, Peru Hochschild Mining Hochschild Mining Coeur d'Alene Mines Hecla Mining Co SocitMtallurgiqued'Imiter Pan American Silver Corp Hochschild Mining Silvercorp Metals Coeur d'Alene Mines Pan American Silver Corp 9.54 8.42 7.47 7.46 6.75 5.32 5.00 4.26 3.71 3.56 Prod. 35.42 33.76 11.80 11.20 10.56

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Material and statistics in this section were adapted in part from the Silver Institute's World Silver Survey 2010 publication. Primary silver mine cash costs remained relatively stable year-on-year, rising by less than 1 percent to $5.23/oz. Net silver supply from above-ground stocks dropped by 86 percent to 20.2 Moz in 2009, driven mostly by the surge in net investment, higher de-hedging, lower government sales and a drop in scrap supply. With respect to scrap supply, 2009 saw a 6 percent decrease over 2008s figure to a 13-year low of 165.7 Moz. This represented the third consecutive year of losses in the scrap category. Government stocks of silver are estimated to have fallen by 13.7 Moz over the course of last year, to reach their lowest levels in more than a decade. Russia again accounted for the bulk of government sales, with China and India essentially absent from the market in 2009. Regarding China, GFMS states that after years of heavy sales, its silver stocks have been reduced significantly. World Silver Supply and Demand To document these and other market fundamentals, each year the Silver Institute works with GFMS Limited, of London, a leading research company, to prepare and publish an annual report of worldwide silver supply and demand trends, with special emphasis on key markets and regions. This annual survey also includes current information on prices and leasing rates, mine production, investment and fabrication.

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The countries that are the major consumers of silver are:

United states Canada Mexico United Kingdom France Germany Italy Japan India

Grading of Silver: Silver that is found with some percentage of other elements in it is called impure silver. That is why it is graded upon its fineness. According to the Indian standards, silver is graded into six categories Grade 9999 9995 999.5 999 999 970 970 925 925 916 916

Fineness 999.9 World Markets:

London Bullion Market is the global hub of OTC (Over-The-Counter) trading in silver.

Comex futures in New York is where most fund activity is focused

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Contract specifications at Comex exchange: There are two different contracts of Silver traded on this exchange; they are Silver Futures and Silver Mini Futures. Contract specification for Silver Future: Trading Symbol: SI Trading Unit: 5,000 troy ounces. Price Quotation: U.S. cents per troy ounce. Trading Hours (All times are New York time): Open outcry trading is conducted from 8:25 AM until 1:25 PM. Electronic trading is conducted from 6:00 PM until 5:15 PM via the CME Globex trading platform, Sunday through Friday. There is a 45-minute break each day between 5:15PM (current trade date) and 6:00 PM (next trade date). Trading Months: Trading is conducted for delivery during the current calendar month; the next two calendar months; any January, March, May, and September falling within a 23-month period; and any July and December falling within a 60-month period beginning with the current month. Minimum Price Fluctuation: Price changes for outright transactions are in multiples of one-half cent (0.5 or $0.005) per troy ounce, equivalent to $25.00 per contract. A fluctuation of one cent (1 or $0.01) is equivalent to $50.00 per contract. Last Trading Day: Trading terminates at the close of business on the third to last business day of the maturing delivery month.

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Delivery: Silver delivered against the futures contract must bear a serial number and identifying stamp of a refiner's officially listed brand. Delivery must be must be made from a warehouse or vault licensed or designated by the Exchange specifically for the storage of silver. Delivery Period: The first delivery day is the first business day of the delivery month; the last delivery day is the last business day of the delivery month. Exchange of Futures for Physicals (EFP): The buyer or seller may exchange a futures position for a physical position of equal quantity by submitting a notice to the Exchange. EFPs may be used to either initiate or liquidate a futures position. Grade and Quality Specifications: In fulfillment of each contract, the seller must deliver 5,000 troy ounces (6%) of refined silver, assaying not less than .999 fineness, in cast bars weighing 1,000 or 1,100 troy ounces each and bearing a serial number and identifying stamp of a refiner approved and listed by the Exchange. A list of approved refiners and assayers is available from the Exchange upon request. Position Accountability Levels and Limits: Any one month/all months: 6,000 net futures equivalent, but not to exceed 1,500 in the spot month. Margin Requirements: Margins are required for open futures positions. Contract specification for Silver Mini Futures: Trading Symbol: QI Trading Unit: 2,500 troy ounces

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Price Quotation: U.S. dollars and cents per ounce. Minimum Price Fluctuation: $0.0125 per ounce. Trading Hours: The contracts are available for trading on the CME Globex trading platform from 6:00 PM Sundays through 5:15 PM Fridays, Eastern Time, with a 45-minute break each day between 5:15 PM and 6:00 PM. Trading Months: Trading is conducted during the same months as the full-sized silver futures contract (SI), except the current month. Last Day of Trading: Trading terminates at the close of business on the third to last business day of the month preceding the named contract month. Settlement: Financial. Margin Requirements: Margins are required for open futures positions. Major trading centers of silver:

London Zurich New York (COMEX) Chicago (CBOT) Hong Kong Tokyo Commodity Exchange (TOCOM)

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Indian scenario for Silver India is primarily a silver importing country, as the production of India is not sufficient to satisfy the ever-growing domestic demand. The production of silver in India stands out at the figure of around 2.1 million ounces placing it at the 20th position in the list of major silver producing countries. The import of silver in India hovers over 110 million ounces that shows the huge size of Indian domestic demand. However, this import level fell sharply as a result of the decline in demand due to rise in silver prices and inconsistent monsoon on which the income of the rural sector depends. But, even this sharp decline could not affect Indias reputation of being one of the largest consumer countries of silver in the world. India stands third after United States and Japan among the leading consumers of silver in the world. By contrast with United States and Japan, Indian industrial off take for fabrication in hardcore industrial applications like electronics and brazing alloys accounts for only 15 % and the rest being for foils for use in the decorative covering of food, plating of jewelry and silverware and jari. The countries from which India imports silver and maintain the flow of silver in the market are:

China United Kingdom European Union Australia Dubai Over 50% share of import of silver in India is held by Chinese silver. The

major importing center of silver in India was Mumbai but now it has been shifted to Ahmedabad and Jaipur due to high sales tax and octroi charges.

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Production of silver in India: India hardly produces any silver and is basically a silver importing country. It holds the 20th place in the list of silver producing countries and the total production of silver in India in 2004 was around 2.1 million ounces. The three major silver producing states in India are:

Rajasthan Gujarat Jharkhand Rajasthan is the leading silver producing state in India with a production of

around 32 thousand tons. Gujarat follows on the second place with a production of around 20 thousand tons. In India, silver is traded at the following places:

Delhi Indore Rajasthan Madhya Pradesh Mathura (Uttar Pradesh) Rajkot (Gujarat) Also, silver is traded in the Indian commodity exchanges like National

Commodity & Derivatives Exchange ltd, Multi Commodity Exchange of India ltd. and National Multi Commodity Exchange of India ltd.

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Silver at MCX: Though the silver futures are traded on NCDEX and MCX, bigger volumes are traded on MCX. So we will have a look on silver specification on MCX. There are three different types of silver contracts traded on MCX; they are Silver future, Silver HNI Futures and Silver Mini Futures. Specification of Silver Futures Contract: Symbol: SILVER Description: SILVERMMMYY Contracts available for trading: March contract: 16th March of the previous year to 5th March of the contract year May contract: 16th May of the previous year to 5th May of the contract year July contract: 16th July of the previous year to 5th July of the contract year September contract: 16th September of the previous year to 5th September of the contract year December contract: 16th December of the previous year to 5th December of the contract year Trading period: Mondays through Saturdays Trading session: Mondays to Friday: 10.00 a.m. to 11.30 p.m. Saturday: 10.00 a.m. to 2.00 p.m. Trading unit: 30 kg Quotation/Base Value: 1 kg

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Price Quote: Ex-Ahmedabad (inclusive of all taxes and levies relating to import duty, customs , if applicable but excluding Sales Tax / VAT, any other additional tax or surcharge on sales tax, local taxes and octroi. Maximum order size: 600 kg Tick size (minimum price movement): Re. 1 per kg Daily price limit: 4% Initial margin: 5% Special Margin: In case of additional volatility, a special margin at 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 next 2 days, after which the special margin will be relaxed. Maximum Allowable Open Position: For individual client: 50 MT collectively for all contracts in Silver (i.e. including Silver M and Silver HNI contracts) For a member collectively for all clients: 150 MT or 15% of the market-wide open position, whichever is higher. (As per FMC letter no. 6/3/2006/MKT-II (VOL II) dated August 18, 2006) Delivery unit: 30 kg Delivery period margin: 25% Delivery center(s): Ahmedabad at designated Clearing House facilities. Quality specifications: Grade: 999 and Fineness: 999 (as per IS 2112: 1981)

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No negative tolerance on the minimum fineness shall be permitted. If it is below 999 purity it is rejected.

It should be serially numbered silver bars supplied by LBMA approved suppliers or other suppliers as may be approved by MCX. Delivery and Settlement Procedure of Silver: Last Day of Trading: 5th day of the contract expiry month. Tender Period: 1st to 6th day of the contract expiry month. Delivery Period: 1st to 6th day of the contract expiry month. Buyers intention: On 1st, 2nd, 3rd & 4th of the contract expiry month by 6.00 p.m. Tender Notice by Seller: The seller will issue tender notice along with evidence of delivery to the Exchange in a specified format by 6.00p.m. The seller is also required to submit the certificate issued by the supplier in original. Dissemination of information on tendered delivery and buyers interest: The Exchange will inform members through Trader Work Station (TWS) regarding tender and delivery intentions of the buyer members and the seller members by 7.00 p.m. on the respective tender days. Tender and Delivery Period Margin: Tender and Delivery period margin of 25% will be imposed with effect from the beginning of the tender period. Exemption from Delivery Period Margin: Delivery Period Margin is exempted if goods tendered on designated tender days of the contract month and seller submits all the documentary evidence.

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Delivery Logic: Compulsory Delivery. Any seller having open position on the expiry date fails to deliver on the next day then a penalty of 5% shall be imposed out of which 90% will be passed on to the buyer. Delivery Pay-in: On any tender days by 6.00 p.m. Funds Pay-in T+1 working day by 11.00 a.m. (T stands for tender day). Funds Pay-out T+1 working day by 05.00 p.m. Delivery Pay-out: T+1 working day after completion of pay-in funds. Mode of Communication: Fax or Courier Allocation of Delivery:On the respective tender days after the end of the day. Delivery Order Rate: Settlement/closing price on the date of allocation and the due date rate on expiry date. Buyers obligation: The buyer shall not refuse taking delivery and such refusal will entertain 5% penalty out of which 90% of the penalty amount shall be passed on to the seller.10% will be retained by the Exchange.

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Close out of outstanding positions: All outstanding positions on the expiry of contract not settled by way of delivery in the aforesaid manner, will be settled as per the due date rate with penalty of 5% and out of which 90% shall be passed on to the buyer. Verification by the buyer at the time of release of delivery: At the time of taking delivery, the buyer can open the sealed packets in front of Group 4 personnel. If he is satisfied with the quantity, weight and quality of material, then he will issue receipt of the metals instantly. If he is not satisfied with the metal, he can insist for assaying by any of the approved assayers available at that center. Legal obligation: The members will provide appropriate tax forms wherever required as per law and as customary and neither of the parties will unreasonably refuse to do so. Duties, Cess and Levies: Ex-Ahmedabad, inclusive of all charges / levies relating to import duty, customs to be borne by Seller. But excluding Sales Tax / VAT, any other additional tax or surcharge on sales tax, local taxes and octroi to be borne by the Buyer. Vault, Insurance and Transportation charges: Borne by the seller upto Funds Pay-out date. Borne by the buyer after Funds Pay-out date. Evidence of Stocks in Possession: At the time of issuing the Delivery order, the Member must satisfy MCX that he holds stocks of the quantity and quality specified in the Delivery Order at the declared delivery center by producing warehouse receipt.

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Validation Process: On receipt of delivery, the Group 4 personnel will do the following validations: whether the person carrying Silver is the designated clearing agent of the member; whether the selling member is listed in the statement forwarded by the Exchange as a delivering member whether the quantity being delivered by the seller is exactly the same quantity as communicated by the Exchange; whether the serial no of all the bars is mentioned in the sellers bill; whether the original certificates are accompanied with the Silver Bars whether the serial nos listed in the certificate tally with the nos written inscribed on the bars whether the seller has issued individual bills of relevant quantity in favour of each of the buyer Any other validation checks, as they may desire.

Delivery Process: In case any of the above validation fails, the Group 4 Securitas will contact the Exchange office and take any further action, only as per instructions received from the Exchange in writing. If all validations are through, then the Group 4 personnel will put the Silver in bag/s and seal the same in front of the customer with unique tamperproof seal/s. Then the custodian of Group 4 will cut a serially numbered Group 4 receipt (in triplicate consisting of White, Pink and Yellow slips), get the signature of the sellers clearing agent and signing the same for authorization, hand over the Pink slip to sellers clearing agent, send by courier the third copy (Yellow Colour slip) while retaining the White for the records of Group 4 Securitas. The receipt details in full are then entered into the package supplied by MCX and is uploaded to MCX server for authorization and further processing. Group 4 in front of the selling

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members clearing agent deposit the said metal into a bag and seal it with a tamperproof unique numbered Group 4 seal and give a copy of the same to the customer, send the second one to MCX for its records and third copy of the receipt for its record. The sealed bag will be vaulted in the same condition with Group 4 Securitas until further delivery to MCX customer. Even in case if the metal has to be sent to various destinations, it shall be done in same bag only. Each bag shall not contain not more than 30 kg of Silver and where the depository is more than 30 kg, the same will be stored in multiple bags with each having individual seals with unique number. If the metal delivered by a seller has to go to 10 different buyers, 10 individual packets will be made for each buyer and unique numbers will be assigned to each packet. Quality adjustment: The price of Silver is on the basis of 999 purity. If the quality is less than 999, it is rejected. Quantity adjustment: The tolerance limit will be +/- 3 kg. The weight of Silver bar must be between 27 kg to 33 kg. Appointment of Clearing Agent of Buyers and Sellers: For the purpose of effecting delivery of Silver, every member will be entitled to appoint a maximum number of two Clearing Agents, who will be entitled to receive and deliver precious metals on behalf of such member. These Clearing members have to submit requisite form, four photographs, a copy of their ration card / driving license or other document, as may be specified by the Exchange. The Exchange will issue a photo identity card for each Clearing Agent, which will be duly signed and stamped by the Exchange and the member with lamination. At the time of giving or receiving delivery of precious metal, the Clearing Agent will be required to show this Card to Group 4 Securitas persons. A list of all such Clearing agents will be forwarded by the Exchange to Group 4 Securitas in advance.

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Intimation about the Clearing Agents: On last day of contract maturity, the buyer will be required to inform name of the Clearing agent, who will visit Group 4 Securitas office for lifting delivery. This information will be compiled by the Exchange and will be forwarded to Group 4 Securitas by 12.00 noon on 1st day of the contract maturity month. Endorsement of Delivery Order: The buying member can endorse delivery order to a client or any third party with full disclosure given to MCX. Responsibility for contractual liability would be with the original assignee. Extension of Delivery Period: As per Exchange decision due to a force majeure or otherwise. Due Date Rate: Due Date Rate is calculated on 5th day of the contract month. This is calculated by way of taking simple average of last 5 days of the spot market of Ahmedabad. Applicability of Business Rules: The general provisions of Business Rules and decisions taken by FMC / Board / Executive Committee in respect of matters specified above will apply mutatis mutandis. The Exchange may further prescribe additional measures relating to delivery procedures, warehousing, quality certification, margining, risk management from time to time. In case of any interpretational dispute or clarifications the decision of the Exchange shall be final and binding on the members and others. Outlook on Silver: The price of silver has shown a downward trend in last few weeks. The various reasons for the same are: The decisions of interest rates in US and its focus on inflation rate due to which investors began to move away from the precious metals segment into treasuries

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Lower industrial demand in the India Price fluctuation of gold The sliding demand of photography industry due to the growing demand of digital world.

Buts still there is a bullish sentiment awaiting for silver for the following reasons: The falling silver production and declining silver inventories Rising investment in metals and jewellery As investors learn about silver's intrinsic properties People will buy silver without regard to price, or they will buy simply because prices are going up The tiniest bit of investment demand will drive prices sky high

VIEW: Silver may have a downward tread for a short duration but will be a good bet to invest in near future.

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ANALYSIS OF COMMODITY MARKET WITH REFERENCE TO SILVER

Silver performance during 2010 When it comes to silver also, India is the worlds #1 consumer as well. And it can be seen from imports figure which are up sharply in 2010, nearing 30-year peaks. All such factors shows that in spite of such high prices from these countries will continue to climb up, taking bullion prices to their new highs in 2011. While both the gold and silver are set to rise further owing to continued currency devaluation and enhancing physical demand, Silver is likely to outperform gold, in our view. Silver prices is reasonably tracks gold and are more volatile than the yellow metal. LIFE TIME COMMODITY EXCHANGE HIGH LIFE TIME LOW 2010 HIGH MCX SILVER COMEX 5035.00 194.50 3069.00 1482.30 45735.00 7551.00 2010 LOW

45735.00 23610.00

However, silver is also dependent on industrial growth, and therefore, price advance may be limited if the global economic recovery is perceived to have stalled. Moreover, the nation has received abundant monsoon in 2010, which is likely to result in abundant harvesting and rising agricultural income. Silver is expected to see higher demand from rural India in medium term. Silver is also likely to attract greater attention from the fund community; particularly in the US. Owing to its out performance, the white metal is likely to receive more importance than gold. The worlds largest silver-backed exchange traded fund, ishares silver Trust said that its holdings hit record at 10,941.34 tones by December 7, 2010. Such strong fundamentals clearly shows us that there is still a long way to go for

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bullion in coming period as current economical environment is igniting up the heat in this counter. Present performance of silver (2011) The silver is famously called poor mans gold, due to recovery of economy from gre at depression of 2007-08 silver performed well. These days enormous use of silver for different purposes from manufacturing to pharmaceutical industry made to silver hit 32 year hike in their price. Last month performance of silver Performance of silver is affected by various price drivers , the presently silver hits the 36 year records the reason for that level hike can be understand by analyzing the present performance of silver. Contract Expiry Date:- 5th May 2011 Contract Expiry Date:- 5th Jul2011

Contract Expiry Date:- 5th Sep 2011

59

Analysis of last month performance of silver The silver is increasing continuously from last few months due to various reasons, some of them are as follows Market demand for silver and gold is good, particularly industrial demand for Silver, but this is not enough to absorb all the supply, so that leaves the rest down to investor demand. Players have been joining in, and holdings of silver stock, the popular way for retail investors to participate, rose 59.9 tons Thursday, the biggest single inflow since late January. On the same day, holdings of Silver jumped 42 ton to another record at 15,554 tons. After a weak January, prices of the precious metals rose in February when the unrest that toppled governments in Tunisia and then Egypt sent players to havens. Retail investors are showing particular interest in Silver coins in many countries, including the US. Last month the Utah State Legislature passed a bill accepting US Gold and Silver coins as legal tender and other States in the USA are considering similar legislation in a direct rebuke to the Federal Reserve and its ultra-loose monetary policy. Silver is more likely to follow gold higher, than base metals lower over the next year.
60

Interpretation: The present contract of silver performing well in the market, mainly because of increasing the silver use in various industries. The foreign market also in bullish trend that influencing performance of silver directly in the India. last month silver outperforming gold. A year performance of silver: The current performance of silver is shown by below chart Contract Expiry Date:- 5th may 2011 Contract Expiry Date:- 5th jul2011

61

Contract Expiry Date: - 5th Sep 2011

Analysis of last year performance of silver: In the beginning of the year silver has slow movement after first month of this year silver start to show bullish trend continuously and now it is in Peak of market even gold also not performing like silver. Demand for silver from new sources like the solar energy, medical and water purification sectors is likely to quadruple in the next 10 years Part of the reason for this is that such an uptick in industrial demand, which has waned significantly as the photographic industry has used less and less of the metal, would result in a decrease in the current metal surplus. The Silver Book explains, "For years the silver market has been characterized by falling demand in the photographic industry and tepid jewellery offtake, while supply has seen rapid growth. The resulting market surplus has thus risen from 1,800t in 2000 to an estimated 7,200t in 2010." As the Silver Book says, "Investment demand has soared since the launch of the first silver-backed ETF in 2009, and now accounts for more than 400 Moz
62

(12,440t) of silver held in bullion bank vaults. Physical investment in the form of coins and bars has also helped support prices in the face of this explosive growth in supply". The primary reason for our bullish outlook on silver is due to the continuing & increasing global macroeconomics, currency & geopolitical risks; silver historic role as money & a store of value; the declining & very small supply of silver; significant industrial demand & perhaps most importantly significant & increasing investment demand. Interpretation: The current performance of the silver in the market is unpredictable; the market is moving rapid bullish so the future trend of market will be bearish because equity market is in upward but as compare to inflation rate the market will continue in the same order as before so the prediction of silver movement is quite difficult.

63

Silver Mini Silver's unique properties make it a very useful 'Industrial Commodity', despite it being classed as a precious metal. Demand for silver is built on three main pillars; industrial uses, photography and Jewellery. Last month performance of silver mini: Contract Expiry Date:- 30th April 2011 Contract Expiry Date:- 30th June2011

Contract Expiry Date:- 31st august 2011

Contract Expiry Date:- 30th Nov2011

64

Analysis of last month performance of silver Mini: As compare to silver main, silver mini has high volatility this is mainly because of its volume traded and market fluctuation factors they are as follows. The Rapid hike in the silver price due to the some of more new silver consuming technologies would seek to substitute the metal with cheaper products. The unrest in the economy like continuous increasing the inflation rate, hike of oil price, commodity market boom also make upward movement of silver mini. The situation in Libya, it seems quite bad and we see the flow of funds into safe-haven investment because of it. So it automatically reflect in silver market. There are lot of scams happened in India like 2G scam, due this investor moved from equity market to commodity market. Silver is known as the 'healthy metal' and has many and increasing medical applications. Research is ongoing on the use of silver and its compounds for therapeutic uses and on its potential use as a disinfectant in hospitals and other medical facilities. The Supply/Demand dynamics for gold and silver are vastly different. The practical demand for silver relative to the supply of silver is much greater than that of gold. Unlike gold, silver is like oil - as it is consumed in these many industrial applications it is gone forever. Net government sales of silver rose to 44.8 Moz, primarily the result of increased sales from Russia, with China and India in the beginning of 2011. That gave a leverage to silver market. Interpretation: The last month (Feb-March) silver mini shows a positive sign of growth with little volatility. Sudden shift of market from 53000 to 57000 during mid March gave

65

new history in the bullion market that is 36 year hike in the silver market. So by considering the present silver market and future demand prospect we can say silver mini will continue in bullish trend for some more months.

A year performance of Silver Mini The last year market performance of silver mini can be analyzed by studying performance chart of silver Mini Contract Expiry Date:- 30th April 2011 Contract Expiry Date:- 30th June2011

66

Contract Expiry Date:- 31st August Contract Expiry Date:- 30th Nov 2011 2011

67

Analysis of a year performance of silver Mini There was a tremendous growth in the silver performance as compare to last year, at end of 2010 the silver price was Rs 43,000 but in March 2011 it was gone up to Rs 56500.this rapid increase of silver price is mainly due to following reason. There has been a marked increase in investment demand for silver in recent years. Some of the reasons why this trend is likely to continue are - the introduction of ETFs that track the price of silver, a new global liquidity bubble, the significant growth in the global money supply, the proliferation of millionaires, ultra high net worth individuals and billionaires, the proliferation of hedge funds and the exponential growth in derivatives. The Bank for International Settlements has estimated that the total value of derivatives contracts was $592 trillion at the end of 2009 (up exponentially from $260 trillion in June 2008). Thus, dwarfing the GDP of the entire world which was estimated at some $78 trillion at the end of 2010. Silver is a hedge against macroeconomics, systematic & inflationary risk with the attractive added potential for significant capital gains. Real asset allocation & prudent diversification would be an important reason to have an allocation to silver. Silver is highly correlated to the safe haven of gold & is in effect a leveraged sister of the precious white metal. Thus, informed investors use gold for wealth preservation & silver in order to make a return. Investors in silver bullion coins and bars are hedging themselves against further deflation and falls in property and equity markets. They are further protecting themselves against rising inflation, possible currency devaluations and still very prevalent geopolitical and macroeconomic risks such those posed by the humongous global derivatives market. According to the Silver Book, supply is expected to increase at a CAGR of around 2.4% over the next ten years, from more than 22,000t in 2009 to more than 28,500t in 2020, so keeping supply running well ahead of potential demand could be a very tall order."

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 Silver posted an average price of $20.19 in 2010, a level only surpassed in 1980, and a marked increase over the $14.67 average price in 2009. This buoyancy is very much alive today, with the 2011 price averaging $31.86, based on the London fix, through the end of the first quarter. A significant boost in retail silver investment demand paved the way for higher investment in both physical bullion bars and in coins and medals in 2010. Physical bullion bars accounted for 55.6 Moz of the world investment total last year. Coins and medals fabrication rose by 28 percent to post a new record of 101.3 Moz. In the United States, over 34.6 million U.S. Silver Eagle coins were minted, smashing the previous record set in 2009 at almost 29 million. Other key silver bullion coins reaching milestones include the Australian Kookaburra, the Austrian Philharmoniker, and the Canadian Maple Leafall three posting record highs in 2010. Interpretation: By analyzing the present trading contract performance, we can say silver market is in bullish but by comparing all contract each other we can understand that contract which has expiry date on November has high volatility that shows the future trend of silver will be unpredictable. Even though the present movement will continue for some more months but the end of year we can expect the price band of silver mini will be in Rs 55000 to 60000.

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SPOT PRICES OF SILVER FROM 2/14/2011 TO 3/24/2011 Head Commodity Symbol Unit Spot Price Rs. Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver Bullion Silver SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS SILVER 1 KGS 55950.00 54200.00 53735.00 53650.00 52753.00 52434.00 51750.00 51685.00 52450.00 53500.00 53620.00 52090.00 53500.00 53800.00 54000.00 54080.00 52410.00 50750.00
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Price Date

Price Time

Market

24-Mar-2011 16:03 23-Mar-2011 16:03 22-Mar-2011 16:03 21-Mar-2011 16:03 19-Mar-2011 12:03 18-Mar-2011 17:03 17-Mar-2011 16:03 16-Mar-2011 17:03 15-Mar-2011 16:03 14-Mar-2011 16:03 12-Mar-2011 13:03 11-Mar-2011 16:03 10-Mar-2011 16:03 09-Mar-2011 16:03 08-Mar-2011 16:03 07-Mar-2011 17:03 05-Mar-2011 13:03 04-Mar-2011 17:03

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

AHMEDABAD

Bullion Silver Bullion Silver

SILVER 1 KGS SILVER 1 KGS

50915.00 50025.00

03-Mar-2011 16:03 01-Mar-2011 17:03

AHMEDABAD

AHMEDABAD

Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER Bullion Silver SILVER

1 KGS 49600.00 28-Feb-2011 17:02 AHMEDABAD 1 KGS 49608.00 26-Feb-2011 13:02 AHMEDABAD 1 KGS 49100.00 25-Feb-2011 16:02 AHMEDABAD 1 KGS 49630.00 24-Feb-2011 17:02 AHMEDABAD 1 KGS 49000.00 23-Feb-2011 16:02 AHMEDABAD 1 KGS 48850.00 22-Feb-2011 16:02 AHMEDABAD 1 KGS 49400.00 21-Feb-2011 16:02 AHMEDABAD 1 KGS 48115.00 19-Feb-2011 13:02 AHMEDABAD 1 KGS 47400.00 18-Feb-2011 16:02 AHMEDABAD 1 KGS 46000.00 17-Feb-2011 18:02 AHMEDABAD 1 KGS 46100.00 16-Feb-2011 17:02 AHMEDABAD 1 KGS 46050.00 15-Feb-2011 16:02 AHMEDABAD 1 KGS 45400.00 14-Feb-2011 16:02 AHMEDABAD

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PRICES OF SILVER FROM 2/14/2011-3/25/2011 dif Clos e (Rs) Volu me (In Lots) Value(I n Lakhs) f Hi gh- aver lo w 2/14/ SIL 2011 VER 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 51200 51830
72

Date

Sym bol

Expiry Month

Open (Rs)

High (Rs)

Low (Rs)

agediff

4601 47000 47169 2 4680 47290 47549 2 4680 47240 47505 0 4697 47299 48099 6 4801 48015 49788 1 4936 49403 49505 0 5000 50001 51583 1 4995 51264 51394 9 5005 50594 51426 0 5100 0

4702 1 4731 7 4717 9 4802 7 4925 8 4947 8 5148 8 5050 2 5116 0 5124 8 657 435 813 926 137 783 306 359 348 183

2559.9 2 4945.6 9 5082.5 3 4366.0 7 11442. 71

11 57 74 7 70 5 11 23 17 77 14 -673 -19 399 357 -53

2/15/ SIL 2011 VER

2/16/ SIL 2011 VER

2/17/ SIL 2011 VER

2/18/ SIL 2011 VER

2/19/ SIL 2011 VER

2032.7 14152. 3 12361. 42

5 15 82 14 35 13

959

2/21/ SIL 2011 VER

-478

2/22/ SIL 2011 VER

-331

2/23/ SIL 2011 VER

6626.9 10125. 47

76 83 0

-272

2/24/ SIL 2011 VER

274

2/25/ SIL 2011 VER

5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul54889 53893 55212 54950 54534 55351 54528 55511 54200 55545 53799 54192 52300 53585 52265 53100 52353 52955 51383 52320 51551 51873 51999 52397 50424 51000

5042 0 5101 0 5108 0 5138 3 5235 0 5190 1 5221 1 5365 0 5420 0 5400 0 5437 3 5349 4 5262

5076 4 5123 8 5155 3 5221 1 5278 6 5205 4 5348 8 5415 2 5469 9 5443 6 5484 4 5383 0 5481 4452 6503 3137 3875 5625 465 2803 3465 1366 2190 1549 206 690

10488. 82 3166.2 3 23925. 72 34139. 97 21608. 88 54477. 51 44515. 9 7544.7 2 93014. 43 63649. 35 51621. 15 72415. 55 104567

58 0 13 87 79 3 93 7 60 5 11 99 13 74 54 2 13 45 15 11 97 8 17 18 23 -614 126 -407 -241 562 -270 -95 499 167 311 -283 524

2/26/ SIL 2011 VER

2/28/ SIL 2011 VER

3/1/2 SIL 011 VER

3/2/2 SIL 011 VER

3/3/2 SIL 011 VER

3/4/2 SIL 011 VER

3/5/2 SIL 011 VER

3/7/2 SIL 011 VER

3/8/2 SIL 011 VER

3/9/2 SIL 011 VER

3/10/ SIL 2011 VER

3/11/ SIL

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2011

VER

11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 5-Jul11 56278 56780 56006 57200 54772 56147 54930 55114 53930 54830 53595 53694 52680 53929 52901 52995 52622 53650 54480 54480 54800 55140 55100 55150

1 5465 4 5440 0 5216 4 5221 6 5229 5 5268 0 5358 8 5393 0 5435 0 5475 5 5599 0 5562 0

0 5483 2 5476 7 5285 0 5294 7 5256 4 5343 0 5367 1 5470 0 5488 8 5610 1 5617 8 5597 3 3633 4445 3384 2794 2501 155 3204 3595 3222 6510 2853 238

.9 3912.2 7 46863. 65 103924 .3 51308. 66 56791. 89 51357. 42 2494.7 9 40911. 3 45892. 66 56267. 37 75428. 05 61362. 69

29 49 6 74 0 23 16 14 34 70 0 12 49 10 6 90 0 76 4 13 92 12 10 11 60

1225

3/12/ SIL 2011 VER

608

3/14/ SIL 2011 VER

364 1212

3/15/ SIL 2011 VER

3/16/ SIL 2011 VER

-330

3/17/ SIL 2011 VER

404

3/18/ SIL 2011 VER

-145

3/19/ SIL 2011 VER

998

3/21/ SIL 2011 VER

204

3/22/ SIL 2011 VER

340

3/23/ SIL 2011 VER

-288

3/24/ SIL 2011 VER

-106

3/25/ SIL 2011 VER

-56

74

11 04. 05 71 43 0.05 7142 857

SILVER CLOSE (Rs)

58000 56000 54000 52000 50000 48000 46000 44000 42000

CLOSE PRICE

SILVER CLOSE

DATE

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FINDINGS
Findings from the study: Impact of inflation on silver 1. The dollars downward spiral and concerns about inflation pushed gold and silver higher this week as investors clamoured for an alternative store of value. 2. Gold notched a record high above $1,569 per troy ounce, rising 4.1 per cent on the week. 3. Silver climbed 3.9 per cent on the week, touching a 31-year peak above $49 per ounce that was just shy of the $50 nominal record reached during a notorious market squeeze in 1980. 4. Oil also rose, with benchmark ICE June Brent closing at $125.89 per barrel and Nymex June West Texas Intermediate settling at $113.93 per barrel. 5. The gains came as the dollar fell 1.5 per cent against a basket of leading currencies to its weakest level since July 2008, when crude oil prices peaked above $145 per barrel. 6. The US Federal Reserve raised its inflation forecast for this year and signalled its policy of ultralow interest rates would persist. The dragon of inflation may not be fully awake in the world but the people who slumber around his body are beginning to worry hes stirring, said Sean Corrigan, chief investment strategist at Diapason Commodities Management in Lausanne, Switzerland. 7. Silver prices have gained 160 per cent in the past year as people buy coins and funds on fears of weakening paper currencies. 8. The $17bn iShares Silver Trust, a US exchange-traded fund backed by 355m ounces of bullion, had trading volumes that exceeded the largest equity ETFs volumes early in the week. 9. Silver futures on New Yorks Comex exchange had record volumes on Monday, and in April were triple the levels of a year ago.
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CONCLUSIONS
1. 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. 2. For diversification of portfolio beyond shares, fixed deposits and mutual funds, commodity trading offers a good option for long-term investors and arbitrageurs and speculators. And, now, with daily global volumes in commodity trading touching three times that of equities, trading in commodities cannot be ignored by Indian investors. 3. Online commodity exchanges need to revamp certain laws governing futures in commodities to make the markets more attractive. The national multi- commodity exchanges have unitedly proposed to the government that in view of the growth of the commodities market, foreign institutional investors should be given the go-ahead to invest in commodity futures in India. 4. Their entry will deepen and broad base the commodity futures market. As a matter of fact, derivative instruments, such as futures, can help India become a global trading hub for select commodities. 5. As majority of Indian investors are not aware of organized commodity market; their perception is of risky to very risky investment. Many of them have wrong impression about commodity market in their minds. It makes them specious towards commodity market. Concerned authorities have to take initiative to make commodity trading process easy and simple. 6. Along with Government efforts NGOs should come forward to educate the people about commodity markets and to encourage them to invest in to it. There is no doubt that in near future commodity market will become Hot spot for Indian farmers rather than spot market. And producers, traders as well as consumers will be benefited from it. But for this to happen one has to take initiative to standardize and popularize the Commodity Market.

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SUGGESTIONS
1. Commodity market is a new concept to Indian investor, there should be a clear education and awareness required to developing and guiding the investor about commodity market and concerned authority should take initiation to marketing this investment instrument appropriately. 2. Today if an investor want to enter in to a commodity market he should invest a minimum amount which is proscribed by concern commodity exchange but this limit create a barrier to entry. Especially in gold and silver they should invest a minimum lum-sum amount which is not affordable to small investor so if minimum investment is reduced to some extent that might help to more people invest in commodity. 3. In India commodity market is growing at present so it is a better time to one should trade in exchange traded market rather than the OTC market. 4. As compare to equity market, there is a volatility in commodity market, this was saying best suit during 19th century but today because of gold and silver commodity market has equal volatility as equity market. So its better to follow hedging in commodity market. 5. It is not necessary that one must be educated to invest in commodity futures. So, it is recommended that those who are not so informed can also invest in commodity futures. 6. It is recommended that now a days investor should invest in agriculture commodity because within the few days some of agriculture commodity is coming up with huge quantity.

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BIBLIOGRAPHY
Text Books
1.

Financial Markets

and Services,

Gordon

and Natarajan,

Himalaya

Publications, 1997 Edition 2. Financial Management, Shashi K Gupta and R. K Sharma, Kalyani Publications, 2006 Edition. 3. Security Analysis and Portfolio Management, Punithavathy Pandian, Vikas Publications, 2001 Edition.
4. Security analysis and portfolio management, V.A. Avadhani, Himalaya

Publishing House, 2009 Edition. Websites 1. www.bseindia.com 2. www.investopedia.com 3. www.citefin.com 4. www.silverinstitute.com 5. www.google.co.in/silver 6. www.investmentscore.com 7. www.articlesbase.com

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