A report Submitted in partial fulfillment of the requirement for the Award of the degree of Master of Business Administration



A report Submitted in partial fulfillment of the requirement for the Award of the degree of Master of Business Administration




This is to certify that Mr. Chandrakanta Panigrahi is a bonafide student of MBA (BA) program of the university in this institute for the year 2008-10. As a part of the University curriculum, the student has completed the project report titled “STUDY OF COMMODITIES MARKET IN INDIA” at ANGEL BROKING. The project report is prepared by the student under the guidance of Dr. Kirti Gupta.

(Teacher Guide) Date: Place:

Program Co-ordinator


Before I get into the depth of the thing, I would like to add a few heartfelt words for the people who at various stages of the project development helped me by their valuable guidance. First and foremost I would like to pay my sincere gratitude which I owe to HEMA MIRZI , and KIRTI GUPTA project guide, for their valued help and guidance which they gave me when I needed it the most. It was only due to their sincere help and efforts that I was able to end up with this project. I owe special thanks to Dr.Nitin Naik, director of “INSTITUTE OF MANAGEMENT & ENTREPRENEURSHIP DEVLOPMENT,”, Pune for his valuable cooperation and guidance in completing the project work. Last but not the least; I would like to pay our gratitude to my parents, without their help and blessing I can’t take a single step in right direction.

C handrakanta Panigrahi
Se at no. :-104410005, MBA (BA)

I Chandrakanta Panigrahi, a student of INSTITUTE OF MANAGEMENT & ENTREPRENEURSHIP DEVLOPMENT, Pune, session (2008-10) bearing Seat no.:– 104410005 and University PRN no.:- 800001258, hereby declare that the project report entitled “Study of commodities market In INDIA (ANGEL BROKING PVT. LTD.) Is the outcome of my own work and the same has not been submitted to any college for the award.

Date: Place: (Chandrakanta Panigrahi)

CONTENTS Chapter No. Title Page No. I Introduction 7 2 3 4 5 6 7 Company profile Objective & Methodology Data analysis & interpretation Finding Conclusion Bibliography 22 27 30 52 54 56 .


Risk is actually the reason exchange trading of the basic agricultural products began. The FMC deals with exchange administration and will seek to inspect the books of brokers only if foul practices are suspected or if the exchanges themselves fail to take action. . and metals. All you need is money for margins payable upfront to exchanges through brokers. The exchanges are regulated by the Forward Markets Commission. In a sense. For example- 1) Where do I need to go to trade in commodity futures? You have three options . which is interchangeable with another product of the same type. Now here we are giving a set of questions to understand the basic concepts of the commodity markets. A commodity exchange is a place where various commodities and derivatives are bought and sold. 2) What is the minimum investment needed? You can have an amount as low as Rs 500. such as food. therefore.the “National Commodity and Derivative Exchange”. the commodity exchanges are more selfregulating than stock exchanges. gold and silver. More generally. this would also include foreign currencies and financial instruments and indexes. All three have electronic trading and settlement systems and a national presence. the percentage remain same but the total amount changes according to the change in market price The prices and trading lots in agricultural commodities vary from exchange to exchange (in kg. A farmer risks the cost of producing a product ready for market at sometime in the future because he doesn't know what the selling price will be.”. the “Multi Commodity Exchange of India Ltd” and The “National Multi Commodity Exchange of India Ltd”. Unlike the equity markets. The price of the commodity is subject to supply and demand. but again the minimum funds required to begin will be approximately Rs 500. usually through futures contracts. This will be useful for the people who are doing trading for the first time in commodity market. and which investors buy or sell. quintals or tones). that is. brokers don't need to register themselves with the regulator. Commodities exchanges usually trade on commodity futures. a product which trades on a commodity exchange. The margins range from 10 per cent of the value of the commodity contract For trading in bullion. grains.CommodityDefinition “A physical substance.

. Brokers also provide research and analysis support. bank account no. These include the procedure of the Know Your Client format that exist in equity trading and terms of conditions of the exchanges and broker. 4) What do I need to start trading in commodity futures? As of now you will need only one bank account. you have to indicate at the time of placing the order that you don't intend to deliver the item.3)Do I have to give delivery or settle in cash? You can do both. Moreover in delivery the commission increases and sales tax is also applicable. All the exchanges have both systems . you need to have the required warehouse receipts. 6) What are the brokerage and transaction charges? The brokerage charges is 0.1% and it is same for all commodities. But the information easiest to access is from websites.50 Ps per 100 Rs. You will need a separate commodity demat account from the Multi-commodity exchange to trade on the MCX just like in stocks. Besides.5 Ps per100 Rs for intraday trading and if you want to take the delivery then you have to pay 0. If you plan to take or make delivery. 7) Where do I look for information on commodities? Daily financial newspapers carry spot prices and relevant news and articles on most commodities.. If you want your contract to be cash settled. For taking the delivery the “TIN NO” and “GIR NO” is required. Though many websites are subscriptionbased. etc. More over if you want to take delivery you have to tell at least before 5 or 6 days before the expiry date so that the proper money can be sent and the required adjustment can be made at the warehouse. You can surf the web and narrow down you search. there are specialized magazines on agricultural commodities and metals available for subscription. Besides you will need to give you details such as PAN no. 5) What are the other requirements at broker level? You will have to enter into a normal account agreements with the broker.The transaction charges are 0..cash and delivery mechanisms. a few also offer information for free. The choice is yours.

10) In which commodities can I trade? Though the government has essentially made almost all commodities eligible for futures trading. These can be explained by a examplee.The FMC deals with exchange administration and will seek to inspect the books of brokers only if foul practices are suspected or if the exchanges themselves fail to take action. the nationwide exchanges have earmarked only a select few for starters.8) Who is the regulator? The exchanges are regulated by the Forward Markets Commission. brokers don't need to register themselves with the regulator. MCX also offers many commodities for futures trading.-suppose a person is working in both markets MCX and NCDEX then he can take the advantage of pricing difference in both the markets and earn his profit. consumer hedgers would want to do the opposite. Arbitrageurs are the person who is taking advantage of prices by working in two market. Producer-hedgers are those who want to mitigate the risk of prices declining by the time they actually produce their commodity for sale in the market. Brokers will intermediate. In a sense. Hedgers are essentially players with an underlying risk in a commodity . speculators and arbitrageurs. therefore. They are those who want to take the advantages of the differences in prices of commodity by doing fluctuation in market. metal and energy commodities. facilitating hedgers and speculators. 9) Who are the players in commodity derivatives? The commodities market will have three broad categories of market participants apart from brokers and the exchange administration . . the commodity exchanges are more self-regulating than stock exchanges. Speculators are the highest risk taking person. has a large number of agriculture.g. the NCDEX.they may be either producers or consumers who want to transfer the price-risk onto the market.hedgers. While the NMCE has most major agricultural commodities and metals under its fold. Unlike the equity markets.

in commodities also there is a system of initial margin and mark-to-market margin. maintain settlement guarantee funds. 12) What happens if there is any default? Both the exchanges.5 Ps per 100 Rs. The exchanges have a penalty clause in case of any default by any member. NCDEX and MCX. If the trade is squared off no sales tax is applicable. 13) Are any additional margin/brokerage/charges imposed in case I want to take delivery of goods? Yes. the stamp duty will be applicable according to the prescribed laws of the state the investor trades in. The price of any commodity that fluctuates either way beyond its limit will mimed ..50 Ps per 100 Rs 14) Is stamp duty levied in commodity contracts? What are the stamp duty rates? In case of delivery. The filters vary from commodity to commodity but the maximum individual commodity circuit filter is 5 %. The sales tax is applicable at the place of delivery. 16) Are there circuit filters? Yes the exchanges have circuit filters in place. but if it results into delivery then the broking charges is 0. Those who are willing to take physical delivery need to have sales tax registration number. 15)How much margin is applicable in the commodities market? The margin money is generally 10% of contract valve. Normally the broking charges is 0. Just like in equities. The margin keeps changing depending on the change in price and volatility. The sales tax is applicable only in case of trade resulting into delivery. margin is different for each commodity.Moreover once you open an account you have to do some trading otherwise the demat charges will be applicable that is normally 320 RS. This is applicable in similar fashion as in stock market.11) Do I have to pay sales tax on all trades? Is registration mandatory? No.

traders can profit from arbitrage opportunities occurring due to price differences between two exchanges. Mumbai .. Reasons for trading in Commodity Exchanges: Hedging: Commodities are subject to constant and extreme price fluctuations. by a matching profit from the hedging instrument. which provides guarantee for all futures dealings. Markets are granted liquidity by speculators and it is hard to conceive of a futures market devoid of speculators. Forward contracts have come to their rescue. Speculators trade on commodities and derivatives by undertaking risks in order to maximize profits. Such contracts are traded on an exchange. Speculating: Speculators are people who are prepared to bear risks in anticipation of earning profits. any loss on the previous investment will be hedged.. the risk has been transferred to the buyer of the contract. Bhatinda Om & Oil Exchange Ltd. 2. Information: Exchanges produce huge volumes of data that are intensely scrutinized and monitored by a wide cross-section of people as the data provides gainful insights about the prevailing economic conditions. and parties can "hedge" at suitable levels. Shifting of Risk: The minute a trader finalizes a deal and secures a price. At this point. or compensated. A forward contract requires a buyer and a seller to take and make a delivery of a definite quantity of a particular commodity at a future specified date. Bhatinda. Hedging lessens risk since it involves the purchase or sale of a commodity with the intention of counterbalancing the profit or loss of another investment. Thus. The Bombay Commodity Exchange Ltd. he is no longer concerned by unfavorable price shifts. if a seller trades a specific contract for $ 450 and soon after the price comes down to $440. For example. Therefore. Commodities exchanges usually trade on commodity futures. there has been an unfavorable price shift but the seller has made a profit of $10. Arbitrage: Arbitrage involves buying a commodity at a low price and instantly selling it for a higher price in another market. List of Exchanges in India1. Traders are the worst sufferers of the price risk.COMMODITIES EXCHANGES IN INDIAA commodity exchange is a place where various commodities and derivatives are bought and sold.

Hapur 13.. 8. Delhi 11. Multi Commodity Exchange of India Ltd 23. Meerut 6.. 16.3. Bangalore 19. Muzaffarnagar 9. Rajdhani Oils and Oilseeds Exchange Ltd. The Meerut Agro Commodities Exchange Co. Bikaner 18. The East India Jute & Hessian Exchange Ltd. First Commodity Exchange of India Ltd. The Chamber Of Commerce.. Gwalior 15. India Pepper & Spice Trade Association. Indore 12. Bikaner Commodity Exchange Ltd. National Multi Commodity Exchange of India Limited 21. Kanpur 5. National Board of Trade. Mumbai 14. Vijay Beopar Chamber Ltd. National Commodity & Derivatives Exchange Ltd . The Spices and Oilseeds Exchange Ltd.. The Central India Commercial Exchange Ltd.. The Rajkot Seeds oil & Bullion Merchants` Association Ltd 4. Esugarindia Limited 20. Ltd. Kochi 10. Kochi 17. 7. Ahmadabad Commodity Exchange Ltd. The East India Cotton Association. Surendranagar Cotton oil & Oilseeds Association Ltd 22. The Coffee Futures Exchange India Ltd.. The Kanpur Commodity Exchange Ltd.

online exchange dealing in numerous commodities. Haryana Commodities Ltd. Regulated by the Forward Market Commission with reference to futures trading in commodities. is a public limited company incorporated on 23rd April 2003.. MCX COMDEX is India's foremost and sole composite commodity futures price index National Commodity & Derivatives Exchange of India Ltd (NCDEX) located in Mumbai. it is promoted and run by:  Central Warehousing Corporation  National Agricultural Cooperative Marketing Federation of India Limited  Gujarat Agro Industries Corporation Limited  National Institute of Agricultural Marketing  Gujarat State Agricultural Marketing Board  Neptune Overseas Limited The Commodity Exchanges with their extensive reach embrace new participants. The NCDEX is covered under:  Companies Act  Stamp Act  Contracts Act  Forward Commission (Regulation) Act National Multi-Commodity Exchange of India Limited (NMCEIL) is considered the first demetalized. Incorporated on 20th December 2001. e-Commodities Ltd Of these 25 commodities exchanges the MCX. 2003. Multi commodity exchange of India Ltd . NCDEX and NMCEIL are the major Commodity Exchanges.MCX is an independent and de-mutualised exchange based in Mumbai. Hissar 25. it trades in various commodities online. . Recognized by the Government of India it deals in numerous commodities and carries out online trading.24. it is the third largest bullion exchange and fourth largest energy exchange in the world. clearing and settlement processes for commodities future market countrywide. Promoted by national level establishments it is run by professional management. Established on 10 November. resulting in a powerful price discovery process.

and which investors buy or sell. Risk is actually the reason exchange trading of the basic agricultural products began.000 dollars.000 dollars to leverage 10.1.5 CommodityDefinition ”A physical substance. Winnipeg Commodities Exchange (WCE) and the New York Mercantile Exchange (NYMEX). More generally. The futures markets are so crucial to the well being of our nation. their prices are not set by a single individual or entity. where you might have to invest 10. and metals. a commodities futures price is determined primarily by the supply and demand for the commodity in the market. grains. Commodities also give the investor the ability to participate in virtually all sectors of the world economy and have the potential to produce returns that tend to be independent of other markets. Unlike the stock market. which is interchangeable with another product of the same type. A farmer risks the cost of producing a product ready for market at sometime in the future because he doesn't know what the selling price will be. commodities are traded via futures contracts.Since commodities are traded on exchanges. These contracts obligate the holder to buy or sell a commodity at a predetermined price on a delivery date in the future. . usually through futures contracts. Not all futures contracts are the same their specifics will differ depending on the respective commodity being traded. that the government established the Commodity Futures Trading Commission (CFTC) to oversee the industry. The price of the commodity is subject to supply and demand. the National Futures Association (NFA) who monitor the activities of all futures market to ensure the integrity of the futures markets. Also unlike stocks. this would also include foreign currencies and financial instruments and indexes. commodities have intrinsic value and will not go bankrupt. a product which trades on a commodity exchange. There is also a self-regulatory body.”. As with equity securities. In fact portfolios that add commodity investments can actually lower the overall portfolio risk by diversification. such as food. Who sets the price of commodities? Commodities are traded constantly on commodity exchanges around the world such as the Chicago Mercantile Exchange. A commodity trader can leverage tens of thousands of dollars worth of a commodity for pennies on the dollar. On the exchanges. Why invest in commodities? For example- Leverage is very important to the commodities markets. The market price of a commodity that is quoted in the news is often the market futures price for that respective commodity.

They subsequently enter long or short futures positions depending on which direction they believe supply and demand will move.000 minds and market actions for the Daily price pattern. There are many economic factors that will have an effect on the price of a commodity.000 minds making 100.000 minds making 500.000 market actions. Conversely. many traders use commodity futures to speculate on future price movements. it is advisable that you consider seeing the bigger and more accurate picture of market direction by using the Weekly commodity chart. but 5. or because most end up trading at that time level that this has become popular. Let's look at oil. Although commodities are traded using futures contracts and futures prices. In contrast. If the weather in a certain region is going to affect the supply of a commodity. if the demand for oil increases. Maybe out of habit. Charts: Most traders when asked say that they generally use Daily Commodity price charts.000 for the same amount of space on the Weekly chart. As with other securities. that 1 inch of market patterns is representing 1. and was also affected by the likelihood that Saddam Hussein would be able to retain control of Iraq. For the sake of example only. These investors analyze various events in the market to speculate on future supply and demand. If the supply of oil increases. which often happens during the summer. Because most traders focus on the Daily or Intraday Commodity charts by a much larger margin than the Weekly or higher time frames. a single Weekly price bar then would represent 500. When you consider the word 'Mass' which has more of it? The Weekly chart of course If you find yourself spending more time using the Daily charts to analyze the commodity markets for trading. the price of that commodity will be affected directly.000.For example. The price of oil constantly changed in respect to what was going on in the war. Now. The Weekly chart is a much more concentrated look of mass psychology as opposed to the Daily chart. if you consider that 1 inch of a price chart may hold about 10 price bars. the price of oil will increase.000. This can be seen in the volatility of oil prices during the Gulf War in Iraq. That would mean that each price Daily price bar represents the mass psychology of 100.000 market actions. say each day brings 100. Commodity Investment Strategies:- . For other commodities such as crops.000 traders to the market and each only makes one trading act per day. weather plays an extremely significant role in price changes. and you are not day trading. the price of one barrel of oil will decrease. events that occur now will affect the futures prices.

Market Risk:Market risk is the risk which is not diversifiable risk that affects the industry as whole. CREDIT RISK 2.  Price Risk: Volatility in the price of the commodity could submit the lender to price risk in the event receivable from the commodity sales are insufficient to cover the amount due to under the financing. a herd of cattle or a bushel of wheat is of course. Another advantage is that commodity indexes themselves have existed for decades. liquidity. so investors have tended to look for commodity exposure either by purchasing commodity related equities or through actively managed futures accounts. It is a not controllable risk. Investing in physical commodities such as a barrel of oil. quite impractical. providing ample historic data for asset allocation studies and research. Instead. Investment vehicles that track commodity futures indices are not the same as actively managed futures accounts. RISK INVOLVED IN COMMODITY MARKET:1. leverage. This is a largely factor of financial statement of the company and determined by the parameters like net worth. free cash flow and other related factors. commodity index returns provide passive exposure to a broad range of commodities. The onset of investment vehicles that track commodity futures indices has provided investors with another option for gaining exposure to commodities that may offer better potential to capture the full benefits of the asset class. One advantage of commodity exposure that tracks a broad index is that commodities are not highly correlated with each other and index returns should be less volatile than the returns on an individual commodity. MARKET RISK Credit Risk:Credit risk means that risk in which obligators are disabling to meet with the financial obligations on the due date.  Quality Risk: . Market risk involves the following risks.Capturing the full benefits of commodity exposure has been a challenge in the past.

hence not being able to realize the value of the underlying commodities. Another major criticism is that the farm gate price is very low when compared to the price paid by the consumer. insurance. . While Oil constitutes 50 percent of merchandise exports of the oil exporting countries. That is why future trading is banned in food grains. Disadvantages of commodity markets: Globally commodity markets are criticized for their part in indulging in speculation and thus increasing the prices. non oil primary products constitute 80 percent of exports of the non oil exporting countries. 3)Efficient spot price can be discovered and disseminated. Advantages of commodity markets: 1) The commodity markets try to integrate the fragmented rural markets. Hence price volatility in commodity markets affects these countries very much.oil exporting countries and non oil exporting countries of Sub-Saharan Africa. Small producers have no say in the market and traders dominate. 2)Multiple commodities can be procured at one centre. Why commodities • • • Commodities are in a bull run Commodities normally have trend/ cycle for medium/ long term. Commodity future volumes are soaring Benefits: • Additional Investment opportunity • Diversification of Portfolio • Low cost business: • No Transportation. storage. Within developing countries there are two groups.  Liquidity Risk In case of default not finding enough ready buyers in the spot market. security Charges • Low Margins – High leverage • Domain knowledge Impact on economies: The development of commodities market. has a positive impact on the economies.Quality of underlying assets is not represented by the obligator and presents insufficient values as collateral to the facilities. particularly exports.

Cooperatives. Headquartered in Mumbai. Multi-Commodity Exchange of India Limited (MCX)MCX an independent and de-mutilated multi commodity exchange has permanent recognition from Government of India for facilitating online trading. Oils & Oilseeds. clearing and settlement operations for commodity futures markets across the country.Importers. Through the integration of dedicated resources. Solvent Extractors' Association of India. robust technology and scalable infrastructure. MCX is led by an expert management team with deep domain knowledge of the commodity futures markets. Pulses. Corporate. NABARD. Today MCX is offering spectacular growth opportunities and advantages to a large cross section of the participants including Producers / Processors. State Bank of Indore. Metals. offering multiple commodities for trading with wide reach and penetration and robust infrastructure. Pulses Importers Association. Reliance Industries Ltd. NSE. United Planters Association of India and India Pepper and Spice Trade Association . SBI Life Insurance Co. Industry Associations. Corporation Bank . Bank Of India. State Bank of Saurashtra. since inception MCX has recorded many first to its credit. Spices and other soft commodities. Shetkari Sanghatana. Bank Of Baroda. State Bank of Hyderabad. 5)Transportation and warehousing facilities would be increased. Key shareholders of MCX are Financial Technologies (India) Ltd.4)The bargaining power of the farmers would be increased. Energy. MCX offers futures trading in the following commodity categories: Agri -Commodities. Exporters. Ltd. Union Bank of India. Chairman & Managing Director. Bombay Metal Exchange. Plantations. Canara Bank. HDFC Bank. Traders. amongst others MCX being nation-wide commodity exchange. Regional Trading Centers .Ferrous & Non-ferrous. is well placed to tap this vast potential . Bombay Bullion Association.. Bullion. namely. 6)There would be guarantees for trade and also payments.. Inaugurated in November 2003 by Shri Mukesh Ambani.State Bank of India.MCX has built strategic alliances with some of the largest players in commodities eco-system.

National Commodity & Derivatives Exchange Limited (NCDEX)National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally managed online multi commodity exchange promoted by ICICI Bank Limited (ICICI Bank). Stamp Act. Mulberry Green Cocoons. Rubber. Guar Seeds. Life Insurance Corporation of India (LIC). Tur. Cotton. Chana. Pepper. Cotton Seed Oilcake. Indian Farmers Fertilizer Cooperative Limited(IFFCO) and Canara Bank by subscribing to the equity shares have joined the initial promoters as shareholders of the Exchange. NCDEX is a nation-level. National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). which are currently in short supply in the commodity markets. Soy Bean. NCDEX is located in Mumbai and offers facilities to its members in more than 390 centers throughout India. Wheat. Punjab National Bank (PNB). NCDEX currently facilitates trading of thirty six commodities . professionalism and transparency. Turmeric. 2003.Mustard Seed . Besides. NCDEX is regulated by Forward Market Commission in respect of futures trading in commodities. The reach will gradually be expanded to more centers. Sesame Seeds. Forward Commission (Regulation) Act and various other legislations. RBD Palmolein. The institutional promoters of NCDEX are prominent players in their respective fields and bring with them institutional building experience. Silk. 2003. Rapeseed . Rice. Expeller Mustard Oil. Gold. 2003 under the Companies Act. trust. It has commenced its operations on December 15. Crude Palm Oil. NCDEX is the only commodity exchange in the country promoted by national level institutions. Coffee. Silver. This unique parentage enables it to offer a bouquet of benefits. Castor Seed.Cashew. Refined Soy Oil. Sugar. Yellow . Jute sacking bags. Mild Steel Ingot. Chilli. nationwide reach. NCDEX is a public limited company incorporated on April 23. 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. Gur. which impinge on its working. technology driven de-mutualized on-line commodity exchange with an independent Board of Directors and professionals not having any vested interest in commodity markets. NCDEX is subjected to various laws of the land like the Companies Act. CRISIL Limited (formerly the Credit Rating Information Services of India Limited). technology and risk management skills.Raw Jute. It obtained its Certificate for Commencement of Business on May 9. Contracts Act. Guar gum. Jeera. Urad (Black Matpe). 1956.

Yellow Red Maize & Yellow Soybean Meal.Peas. . At subsequent phases trading in more commodities would be facilitated.

1.Today Angel has emerged as one of the most respected stock broking and wealth management company in India. With its unique retail focused stock trading business model angel is succeeded in providing real valve money to its .1Company ProfileAngel broking trust with customer relation since 1987.

3)More than 6. 3)Portfolio Management Services. 3)Angel Commodities Broking Ltd. Angel Group 1)Angel Broking Ltd.5 lakh clients. 2)Over 7850 sub-brokers and business associates. 2)Angel capital & Debt Market Ltd.clients. Company presences1)National-wide presences of 21 regional hubs present in 124 cities.And the leading commodity exchange in India(MCX & NCDEX) Company Bussiness- 1)Equity trading. 8)Depository Services. 4)Mutual Funds. 7)IPO. 6)Personal Loans.NSE. 2)Commodities. 5)Life Insurance. The Angel group is the member of the Bombay stock Exchange. . 9)Investment Advisory.

Core Valves of Company1)MottoTo have complete harmony between quality in process and continuous improvement to deliver exceptional service that will delight our customer and client. 3)Business Phisilophy – 1) Ethical practice & transparency in our all dealing. But commodities are easy to understand as far as fundamentals of demand and supply are concerned. this wouldn't have made sense. He is not an interruption in our work but a part of it. We are not doing him favors by serving it but he is doing favors on us by giving an oppournity to serve him. bonds and real estate. This was nearly impossible in commodities except for gold and silver as there was practically no retail avenue for putting in commodities. 4) Effective cost management. commodities are the best option.4)Angel Securities Ltd. He is not dependent on us but we are dependent on him. Till some months ago. For those who want to diversify their portfolios beyond shares. arbitrageurs and speculators. with the setting up of three multi-commodity exchanges in the country. 4)Quality Assurance PolicyWe are committed to provide the world-class services which exceed the expectation of our customers achieved by team-work and by a process of continuous improvement. 2)CRM Policy-Customer is kingCustomer is the most important person in our premises. who claim to understand the equity markets may find commodities an unreliable market. 2) Customer interest is above all. For retail investors could have done very little to actually invest in commodities such as gold and silver -. Historically. However.or oilseeds in the futures market. retail investors can now trade in commodity futures without having physical stocks! Commodities actually offer immense potential to become a separate asset class for market-savvy investors. pricing . Indian markets have recently thrown open a new avenue for retail investors and traders to participate commodity derivatives. Retail investors. Retail investors should understand the risks and advantages of trading in commodities futures before taking a leap. 3) Always deliver for what we have promise.

thus providing an efficient portfolio diversification option. intermediaries. The market mediates between buyers and sellers of commodities. it has powers for: • Regulating the business in stock exchanges and any other securities markets • Registering and regulating the working of stock brokers. conducting inquiries and audits of the stock exchanges. SEBI The Securities and Exchange Board of India (SEBI) is the regulatory authority in India established under Section 3 of SEBI Act. In the process. the one for commodity futures plays a valuable role in information pooling and risk sharing. they make the underlying market more liquid. SEBI Act. Like any other market. sub–broker etc. Its regulatory jurisdiction extends over corporate in the issuance of capital and transfer of securities. the size of the commodities as a whole of the industry segment in India is also quite a significant industry. in addition to all intermediary rise and persons associated with securities market. Transfer of resources from those with idle resources to others who have a productive need for them is most efficiently achieved through the securities market. and facilitates decisions related to storage and consumption of commodities. self – . CONCEPT OF SHARE TRADING IN INDIA:Trading in shares is old phenomena its regulation had been started when securities contract act had been formed in 1956. undertaking inspection. which constitutes about 58 per cent of the GDP. In fact. SEBI has been obligated to perform the aforesaid functions by such measures as it thinks fit. It provides a channel for reallocation of savings to investments. 1992. In particular. 1992 provides for establishment of Securities and Exchange Board of India (SEBI) with statutory powers for (a) protecting the interests of investors in securities (b) promoting the development of the securities market and (c) regulating the securities market. • Promoting and regulating self-regulatory organizations • Prohibiting fraudulent and unfair trade practices • Calling for information from.in commodities futures has been less volatile compared with equity and bonds.

The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. It recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994.regulatory organizations. NSE The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. Based on the recommendations. it has become the first national level stock exchange to launch its website in Gujarati and Hindi. NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. mutual funds and other persons associated with the securities market. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act. now spanning three centuries in its 133 years of existence. BSE Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage. BSE continues to innovate. BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. 1956 in April 1993. What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875. In recent times. .


3 SECONDARY DATA: Secondary data are those data. 2) DATA COLLECTION METHOD. SOURCES OF DATA: In this study I have collect both the primary and secondary data.Objective The objective of my project is to bring awareness among the investors who are interested for share market but don’t know the procedure to invest in share market. 3) SAMPLING DESIGN. I have collected the secondary data here in following ways: • • • Web resources Company journals Trade Magazines . Primary data are obtained from the opinion of the clients of commodity traders.2 PRIMARY DATA: Primary data is a first handed collected data. 2. Methodology In order to achieve the objectives. the research method includes following steps: 1) SOURCES OF DATA. which have been collected and compiled earlier for some other purpose by various sources. 2. I have collected this primary data here by taking the opinion of the commodity trader.

2. 2. I was able to meet 15 to 20 clients personally in my training period because they were the only active clients for my firm. I have taken a personal interview of commodity clients to collect the data to know the latest trend prevailing in the commodity market.4 DATA COLLECTION METHOD: In marketing research. field survey is commonly is used to collect primary data from the respondents. This itself involved extensive efforts.5 METHODS OF DATA COLLECTION There are two types of data -: 1) Primary data 2) Secondary data .


safe and cheap supply system with good delivery standards are some of the prerequisites for smooth functioning of a bullion exchange. On these occasions. Greater consistency of performance leads to a desirable outcome — an investor whose expectations are met. Liberalization in 1991 saw efforts to slowly revive the gold market in the country with the other sectors of economy. . by way of customs and sales tariffs. most asset classes (including traditional diversifiers such as bonds and alternative assets) all move together in the same direction. Why to invest in Gold:- Gold responds when you need it most:Recent independent studies have revealed that traditional diversifiers often fall during times of market stress or instability. There is no “cushioning” effect of a diversified portfolio — leaving investors disappointed. regular. Thus. a small allocation of gold has been proven to significantly improve the consistency of portfolio performance. for which there is a need to develop an efficient spot and forwards market. The recent decision of the International Monetary Fund & other central bankers against selling gold for the next five years signifies the faith placed in this metal by the leading economies of the world. since 1991. during both stable and unstable financial periods. sufficient liquidity. demand for gold has been increasingly met by official imports.Gold Overview:India is the largest consumer of gold in the world. The results are obvious in the form of reduced smuggling. Gold will continue to play a decisive role in world economy in the next millennium. unofficial premiums and enhanced government revenue. The increasing gold trade deserves an efficient bullion exchange in India. However.

Combat Dollar Instability: Gold is frequently used as a convenient flight against dollar fluctuations. in large denominations and at narrow spreads. including stocks of the world’s largest corporations. Avoiding Inflation: Although the purchasing capability of various currencies has largely fallen due to price hikes that of gold has stayed amazingly steady. investors look to safeguard their capital by shifting it into assets deemed to be a reliable depository of value. .Gold is highly liquid:Gold can be readily bought or sold 24 hours a day. So. This cannot be said of most other investments. and again during the 1997/98 Asian debt crisis. whether for margin calls or other needs Sanctuary : In unstable times. Gold provides a security against the capricious nature of paper currency. Handling Risk: A portfolio containing assets with minimal instability reduces risk and has a positive bearing on anticipated returns. Portfolios comprising gold are reliable and secure. Assorted Portfolio : A portfolio that holds widely varied investments is protected against market decline. gold is considered useful in guarding against dollar instability. Demand and supply: The demand for gold has constantly exceeded supply mainly due to extended lead times that occur in gold mining and growing income levels in major gold markets. A rise in dollar value leads to a drop in the gold price and a decrease in the dollar value results in an increase in the gold price. Gold is less susceptible to change and is hence a good investment. Therefore. gold is purchased to offset the consequences of price increases and currency instability. Gold proved to be the most effective means of raising cash during the 1987 stock market crash. The future gold scenario looks bright and positive. So holding a portion of portfolio in gold can be invaluable in moments when cash is essential.

Indian Gold Market:India was the worlds’ largest gold market with Mumbai as the main trading center prior to 1962. Consumption III. Only licensed dealers were allowed to deal in pure gold bars and coins. One tola is equal to 11.64 grams. Hence a 10-tola bar weighs 116. The important feature of this 10-tola bar is that they don’t have serial number. This led to the corruption and shortages resulting in profiteering by the businesses. Gold was smuggled into India in the size of 10-tola bars (called a TT bar in trade parlance). which killed the official gold market and a large unofficial market for gold sprung up dealing in cash only. During 50’s and 80’s. a name derived from the Sanskrit word “tula” for scale or balance. unlike almost all other cast bars available on the international market. It was this legislation. Investment IV.664 grams. giving rise to a massive black market. the government had a controlled economy wherein all the factors of production and resources were controlled and licensed. Subsequently India embarked upon the path of economic liberalization. This made ten-tola bar the gold currency of choice. The gold was smuggled in and sold through the unofficial channel wherein many jewelers and bullion traders traded in smuggled gold leading to the development of huge black market for gold. The government enacted the Gold Control Act in 1962 prohibiting the citizens of India from holding pure gold bars and coins due to loss of gold reserves during the Indo-China war in 1962. Demand Supply factors . the Indian government pledged 40 tons of gold from their gold reserves with the Bank of England to save the day. SUPPLY AND DEMAND DYNAMICS:I. The traditional Indian measure for gold is “tola”. Production II. It was in 1990 when India had a major foreign exchange problem. especially from 1947-1992 when India strictly regulated gold imports.

about 65-70% of the gold purchases are from rural India. The main reason for such high rural demand for gold is non-taxation of agricultural income.2 tons. consumers prefer new designs with the change in fashion trends. Most of the demand for gold appears to be for jewellery fabrication. estimated at 10 to 15 percent. The recent figures of World Gold Council exhibit that Indian demand for gold in 2006 was 843. The demand for jewelry mainly comes from rural sector. which comprises 26. In the rural areas. Hence the middle-aged rural Male invests more of their savings in gold so that womenfolk can encase their wealth without any legal hassles. the womenfolk especially have a low level of education. Demand for Gold: Demand for Jewellery: Rural India India has highest demand for gold in the world and more than 90% of this gold is acquired in the form of jewelers. Since agriculture is highly dependent on the rains. and the rest. is possibly meant to meet demand on account of investment and Industrial and dental processes. If the agricultural income were taxed.Demand for Gold:India is the largest consumer of gold in the world. This is sure to surprise many whlen India is considered a very poor country with one of the lowest per capita incomes in the world. hence a good year for agriculture assures higher demand for gold. the disposal income would substantially reduce resulting in lower gold demand.2 % of the total world demand. the rural disposable income depends upon weather. The bulk of the Indian jewelers buying is still rooted in tradition and jewellerry is sold in traditional designs. hence they sell off their jewelry when they become out of fashion . In south India. which live upon agriculture for their livelihood.

2 million-oz) in some years. The lure of spending on these modern gadgets has taken precedence over the older virtue of saving. Urban India Exposure to western influences and the media have spawned a consumerist culture.000 or more gold dealers spread across India. cell phones and white goods has grabbed away a part of the urban Indian’s disposable income. investment in Internet industries. In north India. In effect. The figures of the past few years show that Indian demand for gold has consistently been hovering around 25% of total world demand. new purchases are done only when the ornaments are broken and in some extreme cases. while In northern and western designs are inspired by the meenakari (enameling) and kundan (setting of precious and semi-precious stones in gold) styles to just give a few examples. rice grains. It was also augmented in 1998 when over 40 tons (1.3 million-oz) of gold from bonds originally issued by the RBI were restituted to the public. There was physical investment in smuggled ten tola bars. melon and cucumber seeds. and a wide range of consumer goods. About 95% of purchases are done by women . etc. gold is competing with the stock market. The entry of modern gadgetry like laptops. although it is hard to segregate true investment from stocks held by the 16. especially during the mid-1990s. Adding to it. has increased substantially. the urban Indian has been exposed to alternate forms of savings like equities and bonds via mutual funds. investment in small bars. dampening the urban demand for gold. making the style unique to each region. when the local rupee price increased steadily. The passion for gold between the urban and the rural Indian has widened.The demand for gold in north India increases during festivals (mainly Diwali) and marriage season. April and May constitute the main marriage season and also have a large number of festivals. The months from October to January. Certainly gold has been used to conceal wealth. In south India demand is more or less uniform throughout the year as salaried people form the major chunk of purchasers who invest their savings regularly in gold purchases. while in the cities. Hence demand for gold is very strong during these months. GFMS estimate that investment has exceeded 100 tons (3. both imported ten tolas and locally made small bars. Gold investment essentially was in 22-carat jewellery. but it was limited and often amounted to keeping a few bars ready to be made into jewelers. Demand for Investment:Private Holding of Gold bars in India was forbidden until 1990 due to Gold Control Act. which have proliferated from local refineries. Jewelers designs vary in different regions of India. In south India the designs are inspired by nature .paisley motif of the mango. which have diminished their desire for gold.exchange for new jewelry.In the rural areas 22carat jewellery remains the basic investment. . Since 1990 (after Gold control Act was abolished).

2. The increase in the irrigation. Scrap gold. legal and illegal imports. 6. When there is an increase in general price level. it reduces the real return on gold. Black money originating in the services sector. like real estate and public sector. the weighted return on these alternative assets can be considered as another influencing factor. Sources of Supply:The supply of Gold in India arises mainly from domestic production. Hence income generated in these service sector can be treated as a determining variable 4. The government thought it more prudent to allow free imports and earn the taxes rather than to lose it all to unofficial trade -surprisingly a very pragmatic view. the demand for gold as a store of value can be expected to rise. the total gold stock in the country was about 7656 tons at the end of 1991. With incremental income of non-wage earners. Unofficial imports of Gold flourished after the ban on import of gold. Illegal imports continued to take place at growing rates thereafter. The movement of gold prices is one of the important variables determining demand for gold. The official imports gradually grew from the year 1992 with the official imports peaking at 663 tons at the end of the decade. 5. It has depressing effect on the component of demand in both ways. 1. etc are alternative avenues for investing savings. it has two effects: first it reduces the purchasing power available for acquisition of jewellery and secondly. Mutual funds. which is not an additional supply. small savings. 3.Factors Influencing Demand for Gold Following are the factors influencing the demand for gold. Since bank deposits. has contributed to gold as store of value. This expanded the gold market while reducing the quantum of trade and the profit margins in the unofficial channel. If the gold stock of Reserve Bank Of India is also included. supports the market requirements. have generated large marketable surplus and a highly skewed rural income distribution is another factors contributing to additional demand for gold. unit trust of India. Demand for gold also depends upon prices of other commodities. Inflation redistributes incomes in favour of non-wage income earners. . The gold market also benefited because the government abolished the 1962 Gold Control Act in 1992 and liberalized gold import into India on payment of a duty of Rs 250 per 10 grams (presently Rs 100 per 10 grams). leading to more skewed income distribution. technological change in agriculture (through mechanization and high yielding varieties). Supply of Gold:The main economic effects that arise from the changes in the supply of gold can be seen against the quantum of gold that is already in existence in the economy.

14 banks and institutions are active in the import of gold –  MMTC Ltd  Handicraft And Handloom Export Corporation  State Trading Corporation Of India  The State Bank Of India  Allahabad Bank  Bank Of India  Canara Bank  Indian Overseas Bank  Bank Of Nova Scotia  HSBC  Abn-Amro Bank  Standard Chartered Bank  Corporation Bank and  Dena Bank. Initially. previous experience in this area.Domestic production:The main producers of Gold are Hutti Gold Mines and Bharat Gold mines Limited. seven banks were selected for this purpose on the basis of certain specified criteria like minimum capital adequacy. Imports Domestic production being minuscule practically the entire demand is met by imports and recycling of previously accumulated stock and scrap generated from it. which annually produce about two tons. Before resuming the rising trend.Direct flow (official) and Indirect flow (unofficial flows). a number of different routes. The trade routes are complex but can be classified into two broad categories . Direct flows include shipments. A major step in the development of gold markets in India was the authorization in July 1997 by the RBI to commercial banks to import gold for sale or loan to jewelers and exporters. estimated consumption was more than twice the level recorded in 1990 and nearly 70% higher than in 1992. risk management expertise. There are no known gold reserves in India worth mentioning. South Africa and Australia. Imports through direct flows are done in three ways . Corresponding to that in India was about 842 tons with imports occupying major chunk of 650 tons. There was a big spurt in the consumption following the Liberalization of gold imports in 1992. This has been the case from the past two decades. Channels for Import of Gold:Gold enters India via. The quantum of gold imported through these banks has been in the range of 500 tons per year. At present. Consumption seems to remain around 400-425 tons in the next couple of years. which mainly come from the refining centers of Europe. profitability. World demand for gold was about 3200 tons in 2008. domestic production 2 tons and remaining being recycled gold. etc.

Smuggling which gradually came down when the duty was reduced to Rs 250 per ten grams on April 2001 and subsequently to Rs 100 Per ten grams. Tariff Structure:The import duty on Gold was Rs. Factors Influencing the Supply of Gold:The following are few of the factors that influence gold supply. Sri Lanka and Dubai in the first instance. thus this can be treated as one of the important factor influencing supply of gold. As a result. It may also be noted that the Indian consumer of gold has been spared of huge transaction costs amounting to thousands crores of rupees on account of the existence of the unofficial sector in the past.000 crores (Rs 60 billion) of foreign exchange. • Supply of gold follows the demand for gold hence the demand for gold is one of the important variables determining supply for gold. The elimination of large unofficial market in forex has improved the policy effectiveness. The liberalized gold policy has brought most of the unofficial sector trade to official sector. 1. • The differentials between domestic and international prices for gold acts as inducement for smuggling with the objective of earning large rupee income.1. Import of gold through Special Import License (SIL) and NRI route has been negligible after gold import through banks was permitted. India lost an estimated Rs 6. this led to increased gold smuggling. . The amount of duty released from gold imports indicates an annual figure varying from Rs.after which it was increased to Rs 400 per ten grams. 2.000 crore per annum since 1997. Authorized banks and institutions.000 to Rs.220 per ten grams up to January 1999. Non-resident Indians 3. Special import licenses 2. Indirect flows (unofficial) occurs place through two entry ports of Singapore.

to 11.CONTRACT SPECIFICATIONS: Gold Trading system Trading hours Unit of trading Delivery unit Quotation/Base Value Quality specification Quantity Variation No.com None At any date.m. January 2004 contract opens on 21st October 2003 20th day of the delivery month.m.55 a. 3 concurrent month contracts will be active.15 p.9.e. List of approved refiners will be available with the Exchange and also on its web site: www. of active contracts Delivery center Opening Date Due date Premium / Discount MCX's Trading System Trade timings on all trading days: Trading Hours : 09. 100 gm 1 kg Rs per 10 gm of Gold with 999.m.m. 3 months prior to the contract month i.9) *Settlement price .9 fineness will be calculated as: (Actual fineness / 999. There will be a total of twelve month contracts in a year Mumbai Trading in any contract month will open on the 21st day of the month. Single Call Market (Closing session) for determination of Closing Price:11.55 p. 11.30 p. if 20th happens to be a holiday then previous working day The discount will be given for the fineness below 999. The settlement price for less than 999.mcx.9 fineness (called “Pure Gold“ in trade circles) Not less than 995 fineness bearing a serial number and identifying stamp of a refiner approved by MCX.

30 pm 2)Now generally we can do three types of tradinga)Daily trading b)Delivery trading c)Short trading 3)Now the minimum quantity we can take is of 100 Gm.55pm to 11.9 8)The delivery centre for collection of gold is generally in Mumbai. . Without paying of the margin money we can not do trading.In one lot we can take maximum 1 kg.Explanation of the contract specializationGold1)The first parameter of the contract deals with that the gold is a commodity that is traded on MCX markets from 9. 5)Generally the fineness provided is 999. 6)Generally three month future contract is done in MCX Markets.after 1 kg the lot changes and the second lot come in face.9 fineness and the gold must bear the mark of recognized refiner approved by MCX . It is mandatory to pay the margin money. 4)Now the margin money generally we have to give is 10% and by giving the margin we can start trading. 7)Any kind of discount may be provided if the fineness is less than 999.

The importance of this very useful metal was identified and it was so extensively used that the respective era of history is named as The Bronze Age (2500BC-600BC). The earliest instance found of copper being used as a currency was in the form of lumps in the 6th century BC by the people of Italy. chalcopyrite. Since then. Egypt and Jordan at that time. and bornite. A copper locket had been found in Iraq that is around 8500 BC old. the metal was getting popular in the east mainly in China and India. technology and medicine and is still used extensively. azurite. one of the processes that is used to refine copper. culture. hammers and axes. in 1990 by 4%. The shape of copper lumps were molded to coins with the invention of new copper alloys. China started the process of hydrometallurgy in which a metal is separated from its alloys. The origination of this oldest known metal. . The people in Egypt discovered that by adding tin to copper. use to have this copper guarding. from the island of Cyprus) is believed to have been mined for over 5. This metal was also used to make weapons. It occasionally occurs natively. and consumption patterns shifted towards the rapidly developing Asian countries HistoryThe name copper is derived from the Greek word ‘chalkos’. Copper coins have also played an important role in the history as a medium of currency. Until the mid-50s copper consumption kept in pace with the production. It was found that copper is a corrosion free substance and then it marked the invention of a new use of copperin plumbing systems and protecting wooden ships from algae. is not exactly known to the human race but it is estimated that it was discovered in around 9000BC in the middle east. The inventions of new technologies in the east were adopted by whole of the world. With time. In fact it ranks third after steel and aluminum. dates back to around 4500BC and the smelting sites were located in the areas of present day Israel. more and more new uses and new techniques to extract copper were invented. Ships of Christopher Columbus too. Smelting. Indian people made various other crafts by using alloys of copper like icons and lamps. malachite. This shows that copper has ever been a prominent contributor to the all of the various aspects of history.000 years. the casting of the metal becomes easier. Rulers like Julius Caesar and Octavian us use to have their own coins having their own symbols. copper.Copper An Overview:Copper (Latin cuprum. It is also related to the Greek mythology as it is said that it was associated with the goddess Venus. Copper is amongst the largest consumed metal in the world. the global copper consumption has steadily outgrown the production. and is found in many minerals such as cuprites.

the region has emerged as biggest consumer due to growing industrialization and population growth. India’s industrial activity continues to report stronger growth during the last four quarters. . copper is obtained by smelting. No doubting fact that US and European economies. China now accounts for 20% of world consumption of copper sheet and strip. The most important copper ores are the sulfides. Zaire. As a result. It is expected to grow 10% per year for the rest of this decade. Major Producer Copper is considered to be a native of America. and Canada apart from African countries such as Zambia. and by electrolysis. and usage in cable. and pick up in industrial activity is likely to help generate demand for copper lately. production capacity for refined has increased almost meeting the demand for refined copper. In fact. Large copper ore deposits are found in the US. being industrial economies. Sterlite Industries have witnessed increase in production. the strengthening of Asian economy led by China and other Asian countries. which includes development of power sector. The scenario remained subdued for most of FY04 due to lack of demand.Global scenario Global economy coming out of recession is seen lending impetus to metals demand currently. Chile. However. Hindalco and Sterlite Industries have evinced interest in overseas acquisition in order to meet growing demand. wire. India scenario Indian copper industry is dominated by three major players namely Hindalco. and carbonates. While the US and the European economies are still reeling under pressure. leaching. Sterlite Industries and Hindustan Copper. Major copper producing countries are Chile (24% of the global mine production) and the United States (19%). Governments increasing thrust on infrastructure development. China's copper industry continues to astonish. From these. Peru. are the largest copper consumer. the domestic mineral production recorded a 3. During the last decade. tube and pipe. with consumption rising by 15% last year. Asian economy has been doing well. China’s economy has been growing at a phenomenal rate and the country is consuming everything from scrap to concentrate to cathode to feed its rapidly building downstream industry.3% growth in June 2004 as compared to that of the corresponding month of previous year. Hindalco. leading copper manufacturers such as Hindustan Copper. the oxides.

2004 due to increased pick-up from countries like China.000/ per ton mark on March 1. Availability of copper had suffered due to lower mining activity around the globe. Revival in the global economy. Domestic copper prices closely follow movement in international prices. and drop in exchange stock are expected . Copper cash prices crossed US$3. fuelled by strong Chines demand. GENERAL PRICE TREND OF COPPER Price Outlook:Surge in demand has been driving copper prices at record high in the last few quarters.Price Trend:Copper prices on the London Metal Exchange have taken off late 2003.

Major trading centre in copperCopper is an important commodity that is traded mainly in • London Metals Exchange (London) • New York Mercantile Exchange (New York) • Shanghai Futures Exchange (China) Market Influencing Factor• • • Price fluctuations of copper in London Metal Exchange Production level of copper in the world Growth prospects of the major copper consuming countries of the world CONTRACT SPECIFICATION • COPPER MCX's Trading System Trade timings on all trading days: Trading system Trading hours . which will ensure constant supply and hence could cap sudden spurt in prices. World mining activity has seen tremendous improvement in the recent past.to keep prices afloat.

m. Last date of every month. 11.m.15 p. It was probably the only precious metal the demand for which was influenced by . This made silver one of the most widely sought-after amongst all the precious metals.m.55 p. for trade. to 11.m.e 1st January to 31st March. i. Then the next contract in the month of March i. Single Call Market (Closing session) for determination of Closing Price:11.Unit of trading Delivery unit Symbol Opening date Due Date Margin Requirement Trading Hours : 09. 3)The delivery unit of it is 1 MT 4)The margin requirement is generally 10%. 2)The quantity which we have to take is 1000 kg. 30th April. 6)Depending upon no of lot the margin changes. 1000 Kg 1 MT COPPER 1st date of every month but the month must be in odd sequence i.e 28th February. 5)In one lot we can take only 1000 kg if we have more than 1000 kg then we have two lot.55 a. 10% Explanation of the contract specialization of copper1)It is traded on MCX and NCDEX markets. 7)For the collection of copper different copper centre is given by MCX Markets Silver Overview:Silver has been used for thousands of years as ornaments and utensils.e 1st March to 31st May.30 p. and as the basis for many monetary systems.

the metals demand was also influenced from its treasury importance. Having said that. However. Though the demand for silver has showed a declining trend.both its availability and usage. coins. Increased usage necessitated higher silver production. as far as silver usage is concerned there is remarkable difference vis-à-vis global pattern.During the last century. have grown during the last 10 years. but it is in conformity with the global economy. This led to boom in industrial usage of silver. Technological advancement and reconstruction of war-torn European/Asian regions.89% over the last five years.1% in 2003. In India close to 90% of Silver consumption is in jewelry making. This explains high correlation between silver demand and growth in economy. silver can be an effective means of diversifying investment assets and preserving wealth against the ravages of inflation. Demand and Supply:World silver demand and supply. Its superior electric conductivity made it one of important ingredient in industrial and electronic usage. In the early last century.8% in 2000 to just 1. Silver finds extensive usage in films. However. one cannot forget that the share of recycling or above ground supply in total supply continues to be in high twenties. Peru and Australia are the top three silver producing countries in the world during 2003 followed by China and Poland. Indian Scenario:In case of India the demand and consumption continues to remain upbeat. the large part of silver production is relatively insensitive to the price of silver. on a CAGR basis demand shrunk by 0. consumer durables etc. Other factors influencing demand and supply:For the average investor. . in absolute terms. Silver demand growth rate slowed down from 5. the global economy has fared below its potential. Interestingly. Silver can be an important store of value. Since 2000. Global Scenario:US Treasury dominated global silver scenario during the last century. Major producing countries Mexico. world economy started its upward move. development of technology led to increase in Silver usage. CAGR have tapered down marginally due to development of alternatives.

Price Outlook:For centuries.800 tons. above-ground stocks of silver etc. to large extent. CONTRACT SPECIFICATIONS: .Export/Import Scenario:Total global demand for silver is around 29. but the demonetization of both metals in much of the world has weakened the link. the price of silver has been closely linked with the price of gold. Above factors. help determining prices. The rural demand is crucial to the total demand for silver in India. Several factors influence Silver prices such as number of Silver ounces required for buying an ounce of Gold. investment demand. Indian demand for silver is around 3. Indian market is price sensitive and is dependent on the monsoon.000 tons.

Single Call Market (Closing session) for determination of Closing Price:11. 30 kg List of approved refiners will be available with the Exchange and also on its web site: www.SILVER Trading system Trading hours Delivery unit Quality specification Quantity Variation No.m.e. 20th day of the delivery month. Mumbai Trading in any contract month will open on the 21st day of the month.com None At any date.55 a. There will be a total of twelve month contracts in a year. MarchMay. 3 months prior to the contract month. 3 concurrent month contracts will be active. 11.30 p. i. 3 months prior to the contract month. 5 kg List of approved refiners will be available with the Exchange and also on its web site: www. to 11.5% SILVER MINI Trading system Trading hours Delivery unit Quality specification Quantity Variation No.55 p.e. to 11.mcx.July.m. if 20th happens to be a holiday . 11. 3 concurrent month contracts will be active.30 p. of active contracts Delivery center Opening Date Due date MCX's Trading System Trade timings on all trading days: Trading Hours : 09.55 p. if 20th happens to be a holiday then previous working day 6.m.m.m.m.15 p. i.55 a. MarchMay.com None At any date. Single Call Market (Closing session) for determination of Closing Price:11.m. Mumbai Trading in any contract month will open on the 21st day of the month. 20th day of the delivery month.mcx.July. There will be a total of twelve month contracts in a year. of active contracts Delivery center Opening Date Due date Margin MCX's Trading System Trade timings on all trading days: Trading Hours : 09.m.15 p.

The number of commodities allowed for derivative trading have increased.Margin then previous working day 6. but the objectives of setting up commodity derivative exchange may not be achieved and the growth rates witnessed may not be sustainable unless these real issue are sorted out as soon as possible. Further independent labs or . it does not allow him to reap the benefit of an increases in prices. It is necessary to have a sophisticated. The warehousing and standardizationFor commodity derivative market to work efficiently. No doubt there is an immediate need to bring about the necessary legal and regulatory changes to introduce commodity options trading in the country.5% Problem related to having successful commodity marketEven though the commodity derivatives market has good progress in the last few years.reliable and convenient warehousing system in the country. Some of the main unresolved issue are as followsCommodity options Trading in commodity options contracts has been banned since 1952. the volume and the valve of business has zoomed. Both futures and options are necessary for the healthy growth of the market. The matter is said to be under the active consideration of the option trading may be introduced in the near future. the real issue facing the futures of the market have not been resolved.costeffective.The market for commodity derivatives cannot be called complete without the presences of this important derivative. While futures contracts help a participants (say a farmer)to hedge against downside price movement.

most contracts are settled in cash but before maturity. Tax and bottlenecks- .SEBI. Though over 80 commodities are allowed for derivatives trading. It would also help in resolving some of the issues concerning regulating authorities such as reserve bank of india.Again. It is imperative that the govt should grant more powers to the ‘FMC’ to ensure an orderly development of the commodity markets.To resolve this issue a gramin bhandaran yojana has been introduced to construct new and expand the existing rural godowns. Warehouses also need to be conveniently located.in practice.FMC. It is felt that convergences of these derivatives markets would bring in economies of scale and scope without having to duplicate the efforts. The SEBI and FMC also need to work closely with each other due to the inter-relationship between the two markets. the forward markets commission is under the dept of consumer affairs and depends on it for funds. grade and quantity of commodities so that they are appropriately standardized and there are no shocks waiting for the ultimate buyer who takes the physical delivery. The RegulatoryAs the market activity pick-up and the volumes rise. thereby giving a boost to the growth of commodity derivatives market.and the dept of company affairs. A particular difficult problem in cash settlement of commodity derivative contract is that at present under the forward contract regulation at 1952. The Govt of India has announced its intention to integrate the two markets. In other words . This is obviously not adequate for a vast country . in practice derivative are popular for only a few commodities. Cash versus physical settlement It is probably due to the inefficiencies in the present warehousing system that only about 1% to 5% of the total commodity derivatives trade in the country are settled in physical delivery. This problem can possibly be addressed by consolidating some exchanges. To avoid this. Therefore the ware housing problem obvious have to be handle urgently has a good delivery system is the back bone of any commodity trade. Unlike SEBI which is an independent body. similar to the ‘SEBI’ that regulates the securities markets. All this splits volumes and makes some exchanges unviable.4million tones. participants square off their positions before maturity. Lack of economy of scale There are too many(3 national level and 21 regional) commodity exchanges.quality testing centers should be set up in each region to certify the quality.most of the trade takes place only on a few exchanges. cash settlement of outstanding contracts at maturing is not allowed. in practice derivative trading.all outstanding contracts at maturity should be settled in physical delivery. Central warehousing corporation of India is operating 500 Warehouses across the country with a storage capacity of 10. So . the market will definitely need a strong and independent regular.Large scale privatization of state warehouses is also being examined.

These need to be removed so that a truly national market could develop for commodities and derivatives. although certain nittygritty’s are still to be worked out.There are at present restrictions on the movement of certain goods from one state to another. .regulatory changes are required to bring about uniformity in octroi and sales tax. Post April 2010 after implementation of uniform GST regime and almost total abolition of octroi in all the states and union territories this problem might be addressed.Also.


They trade on both side i.   These markets are also very useful to jewelry traders.  Generally the people who do not have money to take the delivery they do the role of arbitersury to gain the profit by trading in two markets. on their shop and in MCX markets to settle down their profits or loss. Farmers settle down their profits by doing trading in MCX markets.  Commodity market not totally based on the “Demand & Supply” forces prevailing in the market and day traders still have the power to manipulate the daily trading somewhat.  I also found that If there is no speculation in the market then nobody is interested to participate in the trading. .RESULTS & FINDINGS-  Commodity market is still in the nascent stages in India as it is an emerging market.  The business in the commodity market is a very risky in nature mainly due to above stated reason of real motive being the speculation. The player (Speculators) creates the bull and bear situation in the commodity market based on money power and profit booking motives. as the real motive still is the speculation. Although I personally feel that the maturity to the market will come only of the market is used by large number of players to hedge..e.  Generally the role of hedgers is done by farmers. But with the development of technology and general awareness the farmers and general public have started gaining profit from these markets  The commodity market is currently only concerned with the future contracts of 1 month and 3 month maturity and this should further be expanded. Although it may not be happening to that extent.  Initially Farmers and general people are not that much aware about the commodity market.


 In commodity market. .   General people and framers are not that much aware about the commodity market. today the commodity market not only limited to the particular country but it also spread across the world. Only the contracts are taking place. so the speculators and the gamblers are taking the advantage of commodity market. This should act as a major lesson for the policy makers in developing countries that pricing and price risk management should be left to the market forces rather than try to achieve these through administered price mechanisms.  Large traders (e.  India is the second largest market in the world after the China.India is one of the top producers of a large number of commodities and also has a long history of trading in commodity and related derivatives. The market has made enormous progress in terms of technology. MNC’s) maintain large stock of the quantity and play speculation in the market. Transparency and trading activity. there is no delivery based market activity. In short I want to say that. Interestingly this have happen only after the govt protection was removed from the number of commodity and market forces were allowed to play their role. The management of price risk is going to assume even greater importance in future with the promotion of free trade. The “Holding Capacity” of participating traders is very strong.g.


R. 2nd edition.com www.bseindia.angelbroking.com . KOTHARI.scribd.sebiindia. WEBSITE www.com www.google.com www.BIBLOGRAPHY Books • Research Methodology by C.com www.mcx.com www.

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