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A

SUMMER PROJECT REPORT


ON

“Awareness among investors regarding commodity trading in India”


IN
Karvy Stock Broking Limited

SUBMITTED IN PARTIAL FULFILLMENT OF


DEGREE OF
MASTERS OF BUSINESS ADMINISTRATION
SESSION (2009-2011)
PAPER CODE-(CP-303)

SUBMITTED BY:
Sandeep kumar
MBA 3rd SEM

University Roll No. 977124

SUBMITTED TO
ICL INSTITUTE OF MANAGEMENT AND TECHNOLOGY
SOUNTLI
(KURUKSHETRA UNIVERSITY, KURUKSHETRA)
DECLARATION

I hereby declare that, the project entitled “Awareness among investors regarding
commodity trading in India” assigned to me for the partial fulfillment of MBA degree
from Kurukshetra University, Kurukshetra. The work is originally completed by me and
the information provided in the study is authentic to the best of my knowledge.

This study has not been submitted to any other institution or university for the award of
any other degree.

Sandeep kumar

MBA 3rd SEM


University Roll No.
ACKNOWLEDGEMENT

“Gratitude is the hardest of emotions to express and one often does not find adequate
words to convey what one feels and trying to express it”

The present project file is an amalgamated of various thoughts and experiences .The
successful completion of this project report would have not been possible without the
help and guidance of number of people and specially to my project guide in the company
Ms.Gurveer kaur,Karvy Stock Broking Limited. I take this opportunity to thank all
those who have directly and indirectly inspired, directed and helped me towards
successful completion of this project report.

I am also immensely indebted to my project guide, Vishu Mehandiratta Lecturer, ICL,


for his illumining observation, encouraging suggestions and constructive criticisms,
which have helped me in completing this research project successfully.

There are several other people who also deserve much more than a mere
acknowledgement at their exemplary help. I also acknowledge with deep sense of
gratitude and wholehearted help and cooperation intended to me by them.

Sandeep kumar
PREFACE

Summer Training is the bridge for a student that takes him from his theoretical
knowledge world to practical industry world. The main purpose of industrial visit is to
expose for industrial and business environment, which cannot be possible in the
classroom.

The advantages of this sort of integration, which promotes guided to corporate culture,
functional, social and norms along with formal teaching are numerous.

1) To bridge the gap between theory and practical.


2) To install the feeling of belongingness and acceptance.
3) To help the student to develop the better understanding of the concept and
questions already raised or to be raised subsequently during their research period.

The present report gives a detailed view of the Awareness among investors regarding
commodity trading in India. The research is definitely going to play an important role in
developing an aptitude for hard self-confidence.
CONTENTS

1) CHAPTER-1 INTRODUCTION TO

 INDUSTRY

 COMPANY

 PROJECT

1) CHAPTER -2
OBJECTIVES

2) CHAPTER-3
RESEARCH METHODOLOGY

3) CHAPTER-4
ANALYSIS AND INTERPRETATION

4) CHAPTER-5
FINDINGS

5) CHAPTER-6
LIMITATIONS

6) CHAPTER-7
RECOMMENDATIONS

7) CHAPTER-8
CONCLUSION

 BIBLIOGRAPHY
 ANNEXURE
INTRODUCTION
STOCK EXCHANGE – Stock Exchange means any body or individuals whether
incorporated or not constituted for purpose of assisting ,regulating or controlling the
business of buying ,selling or dealing in securities.

Stock exchange includes two type of market i.e. PRIMARY MARKET and
SECONDARY MARKET.

PRIMARY MARKET – Company first time issues their securities.

SECONDARY MARKET – Second hand securities are bought and sold.

Functions of Stock exchange-

➢ Deals in 2nd hand securities.

➢ Providing up to date information about prices of securities.

➢ Works for interest of investors.

➢ Providing transparency in dealings.

➢ Providing rating to companies.

➢ Helps in capital formation.

➢ Aids in financing the company.

➢ Attracts foreign direct investment.

INDUSTRY PROFILE

The concept of stock markets came to India in 1875, when Bombay Stock Exchange
(BSE) was established as ‘The Native Share and Stockbrokers Association', a voluntary
non-profit making association. BSE is the oldest in Asia. Presently India has about
10,000 listed companies, the largest number of listed companies in the world. Besides
BSE, India's other major stock exchange is National Stock Exchange (NSE) that was
promoted by leading financial institutions and was established in April 1993. Today,
these global stock exchanges have become premier institutions and are highly efficient,
computerized organizations that have fostered the growth of an open, global securities
market.

Stock Exchanges are an organized marketplace, either corporation or mutual


organization, where members of the organisation gather to trade company stocks and
other securities. The members may act either as agents for their customers, or as
principals for their own accounts.

Stock exchanges also facilitates for the issue and redemption of securities and other
financial instruments including the payment of income and dividends. The record
keeping is central but trade is linked to such physical place because modern markets are
computerized. The trade on an exchange is only by members and stock broker do have a
seat on the exchange. The total number of Stock Exchanges in India is 23.

BOMBAY STOCK EXCHANGE


The origin of the Bombay stock exchange dates back to 1875. It was organized under the
name of “The Native Stock and Share Brokers Association” as a voluntary and non-
profit making association. It was recognized on a permanent basis in 1957. This premier
stock exchange is the oldest stock exchange in Asia.

The objectives of the stock exchange are:

➢ To safeguard the interest of investing public having dealing on the exchange.

➢ To establish and promote honorable and just practices in securities transaction.


➢ To promote, develop and maintain well-regulated market for dealing in securities.

➢ To promote industrial development in the country through efficient resource


mobilization by the way of investment incorporates securities.

The trading system:

In March 1995, the Bombay stock exchange has introduced screen based trading
called BOLT (BSE on-line trading). The Bolt is designed to get best bids and offers from
jobbers'’ book as well the best buy and sell orders from the order book. Slowly the
network is being extended to other cities too. Now the Bolt has a nation wide network.
Trading Work stations are connected with the main computer at Mumbai through Wide
Area Network (WAN). The capacity of the Tandem Hardware of BOLT is 5,00,000
traders per day. After getting specific approval from SEBI, BOLT connections have been
installed in Ahmedabad, Rajkot, Pune, Vadodra and Calcutta.BSE as a brand is
synonymous with capital markets in India. The BSE SENSEX is the benchmark equity
index that reflects the robustness of the economy and finance. At par with international
standards, BSE has been a pioneer in several areas. It has several firsts to its credit even
in an intensely competitive environment.

· First in India to introduce Equity Derivatives

· First in India to launch a Free Float Index

· First in India to launch US$ version of BSE Sensex

· First in India to launch Exchange Enabled Internet Trading Platform

· First in India to obtain ISO certification for Surveillance, Clearing & Settlement

· First to have an exclusive facility for financial training

· Moved from Open Outcry to Electronic Trading within just 50 days

An equally important accomplishment of BSE is the launch of a nationwide investor


awareness campaign - Safe Investing in the Stock Market - under which nationwide
awareness campaigns and dissemination of information through print and electronic
medium was undertaken. BSE also actively promoted the securities market awareness
campaign of the Securities and Exchange Board of India.
In 2002, the name The Stock Exchange, Mumbai, was changed to BSE. BSE, which had
introduced securities trading in India, replaced its open outcry system of trading in 1995,
when the totally automated trading through the BSE Online trading (BOLT) system was
put into practice. The BOLT network was expanded, nationwide, in 1997. BSE with its
long history of capital market development is fully geared to continue its contributions to
further the growth of the securities markets of the country, thus helping India increase its

sphere of influence international financial

NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) of India became operational in the capital market
segment on 3rd November, 1994 in Mumbai. The genesis of the NSE lies in the
recommendations of the Pherwani Committee (1991). Apart from NSE, It had
recommended for the establishment of National Stock Market System also. Committee
pointed out five major defects in the Indian Stock Market.

The defects specified are:

➢ Lack of liquidity in most of the markets in terms of depth and breadth.

➢ Lack of ability to develop markets for debt.

➢ Lack of infrastructure facilities and outdated trading system.

➢ Lack of transparency in the operations that affect investors’ confidence.

➢ Outdated settlement system that are inadequate to cater to the growing volume,
leading to delays.

➢ Lack of single market due to the inability of various stock exchanges to function
cohesively with legal stricture and regulatory frame work. These factors led to the
establishment of NSE.
The main objectives of NSE are as follows:

➢ To establish a nation wide trading facility for equities, debt instruments and
Hybrids.

➢ To ensure equal access to investors all over the country through appropriate
Communication network.

➢ To provide a fair, efficient and transparent securities market to investors. Using


an electronic communication network.

➢ To enable shorter settlement cycle and book entry settlement system.

➢ To meet current international standard of securities market

COMPANY PROFILE

KARVY

The karvy group was formed in 1983 in Hyderabad. Karvy rank


among the top players in almost all the fields it operates.Karvy
computershare limited as India,s largest registrar and a transfer
agent with a client base nearly 500 blue chip corporates, managing
over two crore accounts. Karvy Stock Brokers Ltd.member of
national stock exchange of India and Bombay stock exchange, ranks
among the top 5 stock broker in India.With over 6,00,000 active
accounts, it ranks among the top 5 Depository Participants in India
registered with NSDL and CSDL. Karvy comtrade , member of NSDEX
and MCX ranks among the top 3 commodity brokers in the
country.Karvy insurance brokers is registered as a broker with IRDA
and ranks among the top 5 insurance agent in the
country.Registered with AMFI as a corporate agent, Karvy is also
among the top mutual fund mobilizer with over Rs. 5000 crore under
management.Karvy reality services which started in 2006 has
quickely established itself as a broker who adds value, in the reality
sector. Karvy global offers niche off shoring services to clients in the
U.S.

Karvy has 575 offices over 375 locations across India and overseas
at Dubai and Newyork. Over 9,000 highly qualified people staff
Karvy

Karvy stock broking ltd. (Ambala cantt) inception in feb. 2008. Karvy
have present time till have 1234 demat a/c activate and 9000 pan
card registration.

Highest investment in karvy stock broking 12 lac,s .

➢ Karvy Stock Broking limited.

➢ Karvy Comtrade limited.

➢ Karvy Insurance Broking limited.

➢ Karvy Investors services limited.

➢ Karvy Reality (India) limited.

➢ Karvy Computer Share Pvt. Limited.

➢ Karvy Global Services Limited.

➢ Karvy Data Management Services Limited.

➢ Karvy Consultants limited.

Stock Broking Services

It is an undisputed fact that the stock market is unpredictable and yet enjoys
a high success rate as a wealth management and wealth accumulation
option. The difference between unpredictability and a safety anchor in the
market is provided by in-depth knowledge of market functioning and
changing trends, planning with foresight and choosing options with care.
This is what we provide in our Stock Broking services.

We offer services that are beyond just a medium for buying and selling
stocks and shares. Instead we provide services which are multi dimensional
and multi-focused in their scope. There are several advantages in utilizing
our Stock Broking services, which are the reasons why it is one of the best in
the country.

Our Stock Broking services are widely networked across India, with the
number of our trading terminals providing retail stock broking facilities. Our
services have increasingly offered customer oriented convenience, which we
provide to a spectrum of investors, high-networth or otherwise, with equal
dedication and competence. But true to our spirit, this success is not our final
destination, but just a platform to launch further enhanced quality services to
provide you the latest in convenient, customer-friendly stock management.

Over the years we have ensured that the trust of our customers is our
biggest returns. Factors such as our success in the Electronic custody
business has helped build on our tradition of trust even more.
Consequentially our retail client base expanded very fast.
Our foray into commodities broking has been path breaking and we are in
the process of converting existing traders in commodities into the more
organized mainstream of trading in commodity futures, both as a trading and
risk hedging mechanism.

In the future, our focus will be on the emerging businesses and to meet this
objective, we have enhanced our manpower and revitalized our knowledge
base with enhances focus on Futures and Options as well as the commodities
business.

Depository Participants
The onset of the technology revolution in financial services Industry saw the
emergence of Karvy as an electronic custodian registered with National
Securities Depository Ltd (NSDL) and Central Securities Depository
Ltd (CSDL) in 1998. Karvy set standards enabling further comfort to the
investor by promoting paperless trading across the country and emerged as
the top 3 Depository Participants in the country in terms of customer
serviced.

Offering a wide trading platform with a dual membership at both NSDL and
CDSL, we are a powerful medium for trading and settlement of
dematerialized shares. We have established live DPMs, Internet access to
accounts and an easier transaction process in order to offer more
convenience to individual and corporate investors. A team of professional
and the latest technological expertise allocated exclusively to our demat
division including technological enhancements like SPEED-e, make our
response time quick and our delivery impeccable. A wide national network
makes our efficiencies accessible to all.

Distribution of Financial Products

The paradigm shift from pure selling to knowledge based selling drives the
business today. With our wide portfolio offerings, we occupy all segments in
the retail financial services industry.

A 1600 team of highly qualified and dedicated professionals drawn from the
best of academic and professional backgrounds are committed to
maintaining high levels of client service delivery. This has propelled us to a
position among the top distributors for equity and debt issues with an
estimated market share of 15% in terms of applications mobilized, besides
being established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets we


enhanced the scope of our retail brand, Karvy – the Finapolis , thereby
providing planning and advisory services to the mass affluent. Here we
understand the customer needs and lifestyle in the context of present
earnings and provide adequate advisory services that will necessarily help in
creating wealth. Judicious planning that is customized to meet the future
needs of the customer deliver a service that is exemplary. The market-savvy
and the ignorant investors, both find this service very satisfactory. The edge
that we have over competition is our portfolio of offerings and our
professional expertise. The investment planning for each customer is done
with an unbiased attitude so that the service is truly customized.

Our monthly magazine, Finapolis, provides up-dated market information on


market trends, investment options, opinions etc. Thus empowering the
investor to base every financial move on rational thought and prudent
analysis and embark on the path to wealth creation.

Advisory Services

Under our retail brand ‘Karvy – the Finapolis', we deliver advisory services to
a cross-section of customers. The service is backed by a team of dedicated
and expert professionals with varied experience and background in handling
investment portfolios. They are continually engaged in designing the right
investment portfolio for each customer according to individual needs and
budget considerations with a comprehensive support system that focuses on
trading customers' portfolios and providing valuable inputs, monitoring and
managing the portfolio through varied technological initiatives. This is made
possible by the expertise we have gained in the business over the years.
Another venture towards being investor-friendly is the circulation of a
monthly magazine called ‘Karvy - the Finapolis'. Covering the latest of
market news, trends, investment schemes and research-based opinions from
experts in various financial fields.

Private Client Group

This specialized division was set up to cater to the high net worth individuals
and institutional clients keeping in mind that they require a different kind of
financial planning and management that will augment not just existing
finances but their life-style as well. Here we follow a hard-nosed business
approach with the soft touch of dedicated customer care and personalized
attention.

For this purpose we offer a comprehensive and personalized service that


encompasses planning and protection of finances, planning of business
needs and retirement needs and a host of other services, all provided on a
one-to-one basis.
Our research reports have been widely appreciated by this segment. The
delivery and support modules have been fine tuned by giving our clients
access to online portfolio information, constant updates on their portfolios as
well as value-added advise on portfolio churning, sector switches etc. The
investment recommendations given by our research team in the cash market
has enjoyed a high success rate.

To empower the investor further we have made serious efforts to ensure that
our research calls are disseminated systematically to all our stock broking
clients through various delivery channels like email, chat, SMS, phone calls
etc.

Financial Products Distribution Services

The paradigm shift from pure selling to knowledge based selling drives the
business today. With our wide portfolio offerings, we occupy all segments in
the retail financial services industry.

A team of highly qualified and dedicated professionals drawn from the best
of academic and professional backgrounds are committed to maintaining
high levels of client service delivery. This has propelled us to a position
among the top distributors for equity and debt issues with an estimated
market share of 15% in terms of applications mobilized, besides being
established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets we


enhanced the scope of our retail brand, KARVY – the Finapolis, thereby
providing planning and advisory services to the mass affluent. Here we
understand the customer needs and lifestyle in the context of present
earnings and provide adequate advisory services that will necessarily help in
creating wealth. Judicious planning that is customized to meet the future
needs of the customer deliver a service that is exemplary. The market-savvy
and the ignorant investors, both find this service very satisfactory.

The edge that we have over competition is our portfolio of offerings and our
professional expertise. The investment planning for each customer is done
with an unbiased attitude so that the service is truly customized.

Our monthly magazine, Finapolis, provides up-dated market information on


market trends, investment options, opinions etc. Thus empowering the
investor to base every financial move on rational thought and prudent
analysis and embark on the path to wealth creation.

COMMODITY TRADING

“COMMODITIES ARE GOING TO PHASE OUT THE SECURITIES MARKET


IN A YEAR OR SO”

Commodity trading is defined as any bulk good traded on an


exchange on in the cash market & where futures trade is organized &
where trade is routed through one mechanism, allowing
effective competition among buyers and sellers. One of the first forms
of the trade between individual began by what is called the barter
system wherein goods were traded for goods. Flack of a medium for
exchange was the shortcoming of this system. People sold what they
had in excess and brought what they lacked. Commodities include
agricultural products, metal including precious metals, precious
stones, diamonds, petroleum and energy products and all other
commodities.

HISTORY

Trading in commodity is not new in India. The Indian


commodities market had a long history. India has along history of
commodities trading extending over 125 yrs. As country embarked on
economic liberalization policies & signed the GATT agreement in the
early nineties of the Indian population is depended on the agriculture.

The Indian commodities market offers unparallel growth


opportunities & advantages to the participant, traders, corporate,
importers, exporters ect. In other words we can say that commodities
market is lifeline of the national economy.

COMMODITY EXCHANGES

Commodity exchanges are institution, which provide a platform for the


trading in Commodity. Thus they plays critical role in price discovery
where several buyer and seller interact and determine the most
efficient price of the product. Indian Commodity exchanges offer
trading in a number of commodities. Presently, the regular forward
markets commission allows trading in over 120 Commodities.
PAST OF COMMODITY EXCHANGES

Most of the Commodity exchanges, which evict today have their origin
in late 19th and 20th century. The first central exchange was
established in 1848 in Chicago board of trade. At present, there are
major Commodity exchanges all over the world dealing in different
types of the economic purpose of Commodity exchanges as market
place is to enable Commodity producers to sell their products & to
protect against the possible price fall and price increase. The CE
actively encourage of market specialists for Liquidity provides, or
Hedgers and Arbitrageurs who provide depth in liquidity in the system.
This in turn helps the price discovery which ensures continuous and
exit route for any participants at any particular period of time.

MAJOR EXCHANGES

Online commodity trading is done mainly in two exchanges these are:

MCX

Trade with Trust

Multinational commodity exchange (MCX): - is a Independent & de-mutilated


Multi commodity “Exchange. It was established on Nov. 10, 2003 by Mr. Mukesh
Ambani. & R8i permanent Recognition govt of India for facilitating. In first quarter
2006. MCX holds more than 55% market. Share of total trading volume of all domestic
commodity exchanges. MCX currently do trade in 74 commodities. MCX has introduced
a trading system, for the purpose of providing a screen based trading –facility for the
whole territory of India, known as Online Automated Trading System), by setting up a
central workstations through appropriate communication network using a very small
Aperture Terminal (VSAT) Network.. V1CX Launches future Trading in natural gas on
16, July, 2006.
National commodity & derivative exchange (NCDEX) – NCDEX is a
Professionally managed online multi: ommodity exchange promoted by ICICI HANK,
UC, NABARD, NSE. It was incorporated on April 23,2003Under the companies
Act,1956 & commenced its operations on 15December 2003. NCDEX; currently do
trade in 54 commodities. NCDEXHaving 460 centers in country ,500 Members spread
across country with Trading place on over 6000 Terminals.

National Multi-Commodity Exchanges (NMCE) has been set up since 2002,using


modern practices such as electronic trading and clearing

National commodity & derivatives exchange limited (NCDEX) is a professionally


commodity exchange national bank for agriculture and rural development (NABARD)
and national stock exchange (NSE) canara bank CRISIL limited (formerly the credit
rating informatioji5eEY_ices-ofIndia Farmers Fertilizer Cooperative Limited (IFFCO)
and Punjab national bank (PNB) the equity shares have joined the initial promoters as
shareholders of the exchange. N* commodity exchange in the country promoted by
national level institutions. This unique parer offer a bouquet of benefits, which are
currently in short supply in the commodity markets promoters and shareholders of
NCDEX are prominent players in their respective fields anc institutional building
experience, trust, nationwide reach, technology and risk management skills.

NCDEX is a public limited company incorporated on April 23, 2003 under the
companies act, 1956. it obtained commencement of business on May 9, 2003. It
commenced its operations on December 15, 2003. NCDEX is a nation-level, technology
driven de-mutualised on-line commodity exchange with an indepndent board.
professional management – both not having any vested interest in commodity. It is
committed to pro∧

commodity exchange platform for market participants to trade in a wide spectrum of


commodity derivatives daw practices, professionalism and transparency.
NCDEX is regulated by forward markets commission, NCDEX is subjected to various
laws of the land like the I (regulation) act, companied act, stamp act, contract act and
various other legislations. NCDEX is located in Mumbai and offers facilities to its
members about 550 centres throughout India. The reach expanded to more centers,
NCDEX currently facilitates trading of 57 commodities.

Agriculture

Barley, cashew, castor seed, chana, chilli, coffee – arabica, coffee – robusta, crude palm
oil, cotton seed oilcake, ex groundnut (in shell), groundnut expeller oil, guar gum, guar
seeds, gur, jeera, jute sacking bags, Indian parboiled basmati rice, Indian traditional
basmati rice, Indian raw rice, Indian 28.5 mm cotton, Indian 31 mm cotton, w
mediumstaple cotton, mentha oil , mulberry green cocoons, mulberry raw silk, mustard
seed, pepper, potato, ra\ mustard seed oilcake, RBD palmolein, refined soy oil, rubber,
sesame seeds, soyabean, sugar, yellow soybean mt urad, V-797 kapas, wheat, yellow
peas, yellow red

Maize-

Aluminium ingot, electrolytic copper cathode, gold, mild steel ingots, nickel cathode,
silver, sponge iron, zinc ingot.

Energy –
Brent crude oil, furnace oil.

At subsequent phases trading in more commodities would be facilitated.

INTRODUCTION OF LSE COMMODITIES

TRADING SERVICES LTD


Registered office of the company will be situated in the UNION TERRITORY of
CHANDIGARH. LSE commodity trading services limited was formed with a view to
provide trading rights/facilities in the area of commodities to the investors in this region.
The company has got the corporate membership of the multi commodity exchange
(MCX & NCDEX).

TRADING IN COMMODITIES
The Indian commodities markets offer unparalleled growth opportunities and
advantages to a large section to society including producers, traders, corporate, regional
trading centers and the industry association etc.

The underlying economic purposes of commodity exchange as a market place is


to enable commodity producers and consumers to sell and buy their produces in advance
to protect against the possible price fall or rise and to avoid supply chain risk.

The commodity exchange actively encourage the participants of market


specialists for liquidity provides, or hedgers and arbitrageurs who provide depth in
liquidity in the system. This in turn helps in price discovery which ensures continuous
and exit route for any participants at any particular period of time.

MARKET POTENTIAL

Business getting handsome turnover in commodities market, because of large agriculture


base as well as host of industrial activities. Agriculture producers, industrial houses,
traders, arbitrageurs and importers and exporters would benefit trading opportunities in a
controlled and protected environment where all trades shall be guaranteed and quality

delivery of commodities.

EVOLUTION OF COMMODITY EXCHANGES

Most of the commodity exchanges, which exit today, have their origin in the late 19 th and
20th century. The first central exchange was established in 1848 in Chicago under the
Chicago board of trade. The emergence of the derivatives market as the efficient risk
management tools in 1970s and 1980s has resulted in the rapid creation of new
commodity exchanges and expansion of the existing ones. At present, there are major
commodity exchanges all over the world dealing in different types of commodities.

COMMODITY EXCHANGES

Commodity exchanges are defined as centers where futures trade is Organized in a


wider sense, it is taken to include any organized market place where trade is routed
through one mechanism, allowing effective competition among buyers and sellers – this
would include auction type exchanges, but not wholesale markets, where trade is
localized, but effectively takes place through many non-related individual transactions
between different permutations of buyers and sellers.

ROLE OF COMMODITY EXCHANGES


Exchange can concentrate on the trade futures and options contracts, or they could
primarily function as centers for facilitating physical trade. They act as a focal point for
trade transaction, and increase the security of these transactions.Well-organized
commodity exchanges form natural reference points for physical trade, and in this way,
they help the price discovery process. If a commodity exchange manages to link different
warehouses in the country, this allows trade to take place more efficiently.The creation of
exchanges goes back to the late with the development of national and international
market places. The main rational was the reduction of transaction costs, the major
potential it lying in organizing a market place, where buyers and sellers could be sure of
finding market.Exchange in Argentina, founded in 1854, is one of the oldest in the
world.We’re now seeing the of a phase in the evolution of commodity exchanges, driven
by technology. Established traditional

exchanges seem convinced that the internet is providing them with unprecedented
opportunities.This is equally true for commodity exchanges in developing countries.
Technology has made it possible for them to offer new products at a lower cost. They
now need to grasp these possibilities-
ON LINE COMMODITY TRADING IN INDIA

Introduction
Online commodity trading is more popular everywhere and it is done everywhere. It is
recent achievement & reform in the Indian commodity market after the reform of screen
based trading in capital market, now concept of screen based on line commodity trading
is the new addition in the Indian commodity market. Online commodity trading means
trading is done by the buyer and seller on sitting on their computer, laptop. It has taken
the success of Indian commodity market at the top of the top. India will be second
country in the world where online commodity trading is done on T+1 basis.

SPOT TRADING: it is that type of trading which take place between the buyer and
seller to buy and sell a specified quantity of an underlying commodity on the spot.

DERIVATIVES TRADING: it is an agreement to buy & sell a specified quantity


of an underlying commodity for a future date at a price agreed between the buyer &
seller. It is done everywhere.

MAJOR EXCHANGES
Online commodity trading is done mainly in two exchanges these are:

Multinational commodity exchange.

(MCX):- MCX is introduced a trading system, for the purpose of providing a screen
based trading facility for the whole territory of India, known as online automated trading
system (hereinafter referred as MCX system). MCX though its MCX system has
established trading facilities in the whole territory of India by setting up a central trading
system at Mumbai connected to the trading-cum-clearing members workstations through
appropriate communication network using a very small aperture terminal (VSAT)
network. The trading-cum-clearing members will be connected to the central trading
system through the hub of the VSAT network. National & derivatives exchange
(NCDEX)

REGULATDRYODY

The regulatory bodies of online commodity trading are as follow:-

A}FORWARD MARKETS COMMISSION (FMC): the forward markets commission


(FMC) regulates commodity futures trading in India. It is a statutory body set up under
the ministry of consumer affairs and pubic distribution in 1953 under the forward
contracts (regulation) act, 1952.

FUNTIONS OF FMC
As per the forward contracts (Regulation) act, 1952, The functions of the FMC

are:-

• To advice the central government in respect of the recognition of or the


withdrawal of recognition from any association or in respect of any other matter
arising out of the administration of the act.

• To keep forward markets under observation and to take such action in relation to
them, as it may consider necessary , in exercise of the powers assigned to it under
this act.
• To collect and whenever commission thinks it necessary, publish information
regarding the conditions in respect of good to which any of the act is made
available, including information regarding supply, demand and prices, and to
submit to the central government periodical reports on the operation of this act
and on the working of forward markets relating to such goods.
• To make recommendations generally with a view to improving the organization
and working of forward market.
PARTICIPATION
EXCHANGE: - trading on the exchange shall be allowed only through approved
workstation(s) located at approved locations for the office(s) of a member. The main
exchange is MCX & NCDEX. The entire trading operation at MCX shall be conducted
under the automated screen based trading system, which is called as ‘MCX trading
system’.

BROKER: - broker plng. They do the trading on the behalf of sub-broker. The will
provide such automated trading facility in all contracts permitted to MCX by FMC. The
brokers are the all regional exchanges which are working MXC & NCDEX.

SUB-BROKER: - sub-broker are those broker who work under the brokers, as the
name suggest. So they work under the brokers by having ticket of that exchange and with
submission of marnitially, the margin is Rs. 50000/- or above according to trade be
made. After the submission of margin, they are provided by a unique identification
number which shall be provided by the exchange and which shall be used to log on (sign
on) to the system for trade.

Client: - clients are those persons who actually book their orders and sub-brokers do
the sale & purchase on behalf of clients. There can be only seven clients under one sub-
broker.
PARAMETERS

The common trading parameters will be as follows

(a) Base Price: At the time of making a contract available for trading on the system,
the Exchange will decide its Base price, which will be a notional price based on the spot
market price of that commodity on the previous day and a notional carrying cost.
However, this is done only on the fist day of commencement of trading in a contract. For
all subsequent days, the base price of is taken as equal to official closing price of a
contract for the previous trading session.
(b) Closing price: After end of a trading session, the system calculates the closing price
of each and every contract traded on the system .The logic for calculation of closing
price is as follows:
i. Closing price is equal to weighted average price of all trades done
during last 30 minutes of a trading session.
ii. If the number of trades during last 30 minutes are less then 5, then it is
based on weighted average price of last 5trades executed during the day.
iii. If the number of trades done during the day are less then 5, then it is
taken as weighted average of all trades executed during the day.
iv. If no trades have been executed in a contract on a day, then the official
v. Closing price of the last session is taken as the official closing price.
Provided that in such cases, the exchange will have the right to modify the closing price
for the purpose of marking to market and making the open positions closure to the
market.
Dissemination of Opening, closing, highest and lowest rates: During the trading session,
the Exchange will continuously disseminate opening, closing, highest and lowest rates
through its trading system, which will be on real time basis.
(c) Life of the futures contract: the life of a contract shall mean the period when the
contract will be available for futures trading i.e., the period between the start of trading
and the day it expires. This period may also be known as the trading cycle of the
contract.
(d) Expiry date: each futures contract shall expire on the close of trading on 15 th or if 15th
happens to be a holiday on the immediate previous working day of the delivery month
prescribed for the contract. Provided that if the preceding day is suddenly declared as
holiday, then the contract shall expire on the succeeding working day. Provided that the
above expiry day shall apply in all such cases where the contract specification of a
commodity specified by the exchange does not lay down any other expiry day, as in such
cases the expiry day of all contracts in that commodity will be the date as
Specified in that contract.

(e) Contractual liability termination members can extinguish their contractual liabilities
by either entering into an deal or by delivery.
(f) Invalidation of a traded contract: the exchange may invalidate a matched contract if
according to the exchange, a number has attempted to conclude the transaction in
violation of the bye-laws of the exchange or with an intention of price manipulation,
price rigging or price distortion.
(g) Settlement guarantee: the exchange shall guarantee the settlement of the net
settlement liability of the clearing members for all the trades done on the exchange in
accordance with the bye-laws of the exchange. The settlement guarantee of the exchange
is confined only to the extent of settlement liability in terms of daily pay in and pay out
as well as the final settlement as per the due date rate.
(h) Governing law/ jurisdiction: every futures contract transacted as per bye-laws of the
exchange shall take effect as a contract made in Mumbai in the state of Maharashtra and
shall be governed by Indian laws under the jurisdiction of the high court, Mumbai.
(i) Due date rate: the due date rate with respect to a contract means the average of the
closing prices of the last 5 trading days of the contract maturity or the average of last 5
days closing price in spot market (of the market / place which is the basis of that
contract), whichever is higher. Provided that the exchange shall have the power to alter
or modify such due date rate on the basis of upcountry prices, if it is expedient to do so.
(k) force-majeure: in case import of specified commodities (which are substantially
dependent upon import from outside) under open general license (OGL) is
banned/canalized during the trading session and the official announcement is made about
the same, then the outstanding contracts will be settled on the basis of preceding day’s
closing price. If however the official announcement regarding banning/canalizing of
imported specified commodities is made after the closing of trading then the outstanding
contracts will be settled on the basis of the current day’s closing price. Any fluctuation /
change in import duty structure is on sellers’ account. In case of any natural calamity like
flood, earthquake, strikes etc., which has such a substantial bearing on the physical
market of that commodity that the availability of the commodity in the country is
expected to reduce at least by 50%, making delivery of the commodity virtually
impossible, then the board will have the power to settle the contract before maturity, as
per the official closing price, subject to FMC approval. In case of system related
problems, while the exchange will attempt to rectify the problem at the earliest, thought
it will not be responsible for the consequential losses, If any.

(1) Contract Specifications: the contract specification in respect of each underlying


commodity in which futures trading has to commence will be notified in advance by the
exchange specifying full details of the quality standards, delivery procedure and other
trading and settlement parameters relating to tick size, unit of trading, unit of delivery,
delivery centers, minimum maximum order size and the basis in terms of quality, etc. all
such contract specifications will be notified as an annexure to these business rules, which
will form an integral part of these rules and shall be binding on all members, traders,
clients and constituents trading on the exchange.

(m) any contract entered into in violation of these norms or not confirming to the
specification laid down by the exchange shall be considered as void.

ORDER MANAGEMENT

(a) Order Types: - The exchange members will be able to submit the following types
of orders:
• Limit order, specifying the pi ice at (or better than) which the trade should be
executed.
• Market order, which should be executed at whatever be the prevailing price on or
after submission of such order. If there is no market at that point of time, it takes the last
traded price and remains in the system.
• Day orders are available for execution during the current trading session until
executed or cancelled. All day orders will get cancelled at the end of the day during
which such orders were submitted.
• Good till date, which should be available for execution till end of the date indicated
in the order or till the last trading day of that contract month, whichever is earlier.
• Good till cancel, which is available for execution till maturity of the contract, or till
it is cancelled, whichever is earlier.
• Stop loss orders. Which are kept by the system in suspended or abeyance mode and
are activated only on trigger of a price, as defined by the member.
• Immediate or cancel (IOC) orders will get cancelled if not executed on submission of
such an order. Such orders will not remain in the order book.
• Modification or cancellation of orders : - A Member shall be permitted to modify
or cancel his orders. The order can be modified by effecting changes in the order input
parameters. Time priority on order modification will not change for an order due to
decrease in its quantity or decrease in disclosed quantity, otherwise the time priority of
the order will change.
(c) Order Validation : - Orders entered into the Trading System by the members
shall be subjects to various validation requirements as prescribed by the exchange
including price and quantity restrictions as may have been decided by the exchange.
Orders that do not meet the validation checks will not be accepted by the trading system.

• The exchange may specify the minimum disclosed quantity for orders will be
allowed.
• The exchange may specify the number of days after which good till cancelled orders
will be cancelled by the system.
• The exchange shall specify the lot size in which orders can be placed for a contract
traded on the exchange.
• The exchange shall specify from time to time price steps (tick size) in which orders
shall be entered on (he trading system of (he exchange
BANKACCOUNTS
1} Settlement Account or Clearing account: - In which the members will not have
cheque book facility for issuing cheque to any outsiders. He can only issue cheque from
this account for transfer of money from this account to this Client Account. Apart from
such transfer, only the exchange will have power to withdraw money from this account
by way of direct debit instructions. In respect of all pay in. margins, changes and other
dues payable to the exchange, the exchange will send direct debit instructions to the
bank

2} Client Account: - In which the members can deposit all cheques, cash etc. received
from the client and from this account he should issue cheque to his clients towards their
receivable amount. The member will have cheque book facility in this account and he
will also be entitled to issue transfer instructions to the bank for transferring money from
this account to the settlment account to meet his pay in or margin obligations.

MARGIN SYSTEM
(a) The initial security deposit paid by a member will be considered as his initial
margin deposit for the purpose of allowable exposure limit. Initially, every member is
allowed to take exposure up to the level permissible on the basis of such initial deposit.
However, if a member wishes to create more exposure, he has to pay additional deposit.
(b) If there is a surplus deposit lying with the exchange towards margin, it is not
refunded to the member, unless a written request is received from the member for refund.
However, the member continues to get additional exposure limit on account of such
additional / surplus deposit. In case of receipt of written request for refund of additional
deposit, the same may be returned within 7 working days.
(c) Different types of margins collected by the exchange are as follows:
(i) Ordinary (Initial) Margin: Ordinary margin requirement is calculated by
applying the margin percentage applicable for a contract on the value of the open
position of a member in that contract. If a member has net position in various contracts
of the same commodity running concurrently, he is required to pay margin separately on
ech of these contracts. Similarly, if a member has open position in various commodities,
the total amount required is calculated as sum total margin required in respective of each
commodities and contracts separately. The computation methodology in respect of
ordinary margin is as follows: -
• Intra day – During the trading session, the margin is calculated on the absolute
difference between total sales in value in terms and total buy in value terms in respect of
all transactions executed in a during the day in addition to previous day’s open position
carried forward at the official closing price of previous day.
• End of day – At end of the trading session, the margin amount is computed on net
position in a contract in quantitative terms multiplied by the official closing price.
(ii) Special Margin: - In case the price fluctuation in a contract during the trading
session is more than 50% of the circuit filter limit applicable on that contract compared
to the base price of the day, a special margin equivalent to 50% of the circuit filter limit
is applied. Such special margin amount is immediately blocked out of available margin
deposits of the members having outstanding position in that contract and in case the
available margin of a member is not sufficient to cover such special margin required to
be remitted by the member immdediately. In such case, since the available deposit is
already exhausted, he is suspended from trading and such suspension continues during
such trading session till collection of required margin amount is completed. If the prie
volatility reaches 100% of the circuit filter limit, orders will be accepted by the system
only up to the price level equivalent to such circuit filter.

(i) Delivery Period Margin: - When a contract enters into delivery period towards the
end of its life cycle, d ell very period margin is imposed. Such margin is applicable on
both outstanding buy and sales side, v/ which continues up to the settlement of delivery
obligation or expiry of the contract, whichever is earlier. The delivery period margin is
calculated at the rate specified for respective commodity multiplied by the net open
position held by a member in the expiring contract. When a seller submits delivery
documens alnong with surveyor’s certificate, his position is trated as settled and his
delivery period margin to such extent is reduced. When a buyer pays money for the
delivery allocated to him, his delivery period margin is reduced on such quantity for
which he has paid the amount. If delivery does not happen with respect to certain open
position and is finally settled by way of difference as per the due date rate, the delivery
period margin margin is released only after final settlement of difference arising out of
such closing out as per the due date rate.
In case a member submits documentary evidence so as to prove that the position held by
him in a futures contract is totally hedge position, based on physical stock in his custody,
or based on his export or import obligation, he can claim exemption from payment of
special margin, if any, imposed on such contract. Provided that such exemption is
allowed only in case it is proved beyond doubt to the satisfaction of the exchange of the
exchange that it is totally a hedge position.In case of any failure in fulfillment of
obligations on the part of a member, the exchange is entitled to forfeit or utilize the
margin deposits lying with the exchange for meeting such obligations and in such a case,
the total margin deposit of that member all stand reduced to such extent.

DELIVERY MECHANISM

Delivery mechanism starts after the is having dematted account. The demat account is
opened in the following manners: -

It is mandatory to open an electronic (Demat) account with both the depositories I .e.
National securities depository limited (NSDl) and central depository services (India)
limited (CDSL) for taking delivery of commodities while trading thought MCX/NCDEX
system since the pay-out may be received at either of the depositories and currently there
is no provision for inter-depository transfers. The demat account is required to hold (at
designated depository participants) the commodity balance representing the commodities
lying at the exchange accredited warehouses/ vaults. There are only two types of
account:
Beneficiary account: - A beneficiary account is a Demat account in the name of an
individual (single or jointly). Such an account could also be in the name of a corporate, a
partnership firm, a society and a trust. It is similar to a bank account

Pool Account: - A member pool account is a Demat account opened by trading members
and / or clearing members of MCX/NCDEX. This account is opened to facilitate the pay-
in and pay-out process. Process of commodity deposit and credit in the Demat account

• Deliveries on the exchange platform are possible only in the electronic form.

• The client desirous commodities and holding the warehouse receipts in an electronic
form should arrange to move the commodities to a warehouse which has been
accredited by MCX/NCDEX. The list of all accredited warehouses by MCX/NCDEX
along with their contact details and indicative charges is given on web site
www.ncdex.com on the home page under the heading Settlement and Delivery.

• The Exchange keeps this list updated for each commodity from time to time.

• Clients should contact the warehouse in advance for availability of space before
initiating any process for deposit.

• The client should also contact the assayer approved by MCX/NCDEX for assaying the
quality of the commodities. Their contact details are provided on the Exchange
websites of various exchanges.

• The quality of commodities being lodged into the exchange accredited warehouses has
to conform to the specifications as given by MCX/NCDEX for the different
commodities Assayer shall be considered final and binding on all the parties.

• Once the client deposits the commodities duly certified by the approved assayer at the
warehouse, the warehouse will issue a confirmation of receipt of commodity to the
client.

• Once the assayer gives a report of the quality of the commodities and this conforms to
the specifications as given by MCX/NCDEX, the client has to fill up the commodity
deposit form (CDF), the same to the warehouse along with the assayers report. The
commodity deposit form will be available with the warehouse.

• While filling up the CDF the client has ensure the following:

Fill up all the details in the form i.e. name, commodity, being deposited, quantity of the
commodity, details of thee demat account i.e. DP ID and client Id. Incase the client is
holding account in NSDL then BO account number is to be provided in the CDF form
and not the pool account number. In case of CDSL both accounts will do.

• The client will have to bear all the initial charges such as initial storage charges till the
date of Demat credit (being levied by warehouse for a minimum period of 5 days),
loading/unloading charged, weighing, sampling, charges etc. These charges will be
payable directly to the warehouse and after the credit is received in the demat account;
the applicable DP charges will have to be paid to the DP.

• The warehouse will accept the commodities from the client and initiate the process for
credit of electronic balance into the client’s account.The warehouse will enter the
details of the commodity and the client details in the MCX/NCDEX deposit module on
the website.

• The details will be electronically transmitted to the depository i.e. NSDL/CDSL and
register i.e. Karvy Consultant Ltd. etc.

• The details will be verified at the registrar and depository end and on successful
verification the credit will be given the Demat account of the client in the appropriate
IS1N. (Commodity Identification Number) on the same day and details will be
electronically transmitted to the depository participant.

• The client should check with its DP for the credit in its Demat account and also request
for a holding/transaction statement which will reflect the balances in the Demat
account of the client normally the gap between the time of deposit of the commodity at
the warehouse and receiving the credit in the account with the DP is not reflected
within this time frame, the exchange may please be informed immediately for
corrective action.
• The following are the important points to note in the

• Holding/Transaction

• Statement received from the DP.

• Name of account holder


• ISIN code

• Quantity as weighed in at the warehouse (less allowance for spillage etc., if any)

• Validity date

• Expiry date

• The client has to check the grade allotted from the ISIN description in his holding
statement received from Depository and in case of any difficulty he should contact the
DP.

• If there is any discrepancy in the grade allocation as per the credit balance as shown in
the holding statement, the client should immediately contact the warehouse.

• For the difference in grades of the commodities there are premiums and discounts,
hence the confirmation of the correct grade is critical.

• The client has to ensure that validity date as specified by the Assayer is after the
settlement date in which he intents to deliver this would enable him to deliver the
commodity on the exchange on the settlement date for which he intents to deliver.

All commodities when deposited for the first time will have an expiry date, which he
intends to deliver.

All commodities when deposited for the first time will have an expiry date, which will be
than val validity date. The expiry date will be the period till

which thee commodity can be revalidated. This is the maximum time the commodity can
be revalidated. After this period the commodity needs to be compulsorily taken out of the
warehouse. However it should be noted that the expiry date is just an indicative date and
there is no mandatory requirement for the assayer to extend the validity even if it has not
reached the expiry date.

4. Process of Remat of warehouse receipts


As and when the client wants to take the physical delivery of the commodities, he can do
so by making a request in prescribed form to the DP with whom he holds his Demat
account. The physical delivery request form

(also known as Remat request form or RRF)

Will be issued by the DPs to their clients. The steps involved are as under:

(I) Clients fills in the RRF and hands it over to the DP;

(ii) DP verifies the signature of the client and the qty mentioned in the form with the
holding in the Demat account and keys-in the information to the DP module and
generates the Remat Request Number (REIN);

(iii) DP gives the acknowledgement copy of the rrf to the client and sends the delivery
instruction electronically to the warehouse thought the depository and registrar

(iv) Client or his agent will have to call the warehouse informing them of the request for
delivery and requesting them of delivery and requesting them to keep the delivery ready;

(v) Client or his agent approaches the warehouse along with following documents:

(a) Original acknowledgement slip issued by the DP on which RRN number is


written;

(b) Authority letter from the client authority the agent to take the physical delivery
on his behalf (if the client has appointed an agent to take the delivery),

(c) proof of identity of the person taking the delivery establishing his identity.

(vi) On receiving the above documents the warehouse will verify the authenticity with
the authorization in the system;

If the authentication is successful then they will give the physical delivery. In case the
warehouse refuses to accept the instruction for delivery the beneficiary may contact the
MCX/NCDEX customer service group for assistance
5. Charges

• All charge which are incidental to the physical delivery are to be borne by
the recipient and paid upfront at the time of delivery. borne by the d borne by the
depositor (seller) and after the pay-out is completed, the charges have to be borne by the
buyer. Am charge and costs payable to the warehouse towards delivery of the commodity
including sampling, weighing, handling charges, initial storage charges etc up to demat
credit (levied for the minimum holding period as decided by the exchange) from the date
of receipt into designated warehouse up to the date of pay-in and settlement shall be paid
by the seller. The indicative charges and minimum billing period is available on the site
under the heading settlement & delivery. The charges are payable by cash/ DD.

• Generally, the warehouse facilitates above activities, these are purely


value added services from the warehouse and as may be negotiated by the recipient with
the warehouse. Exchange does not accept any liability/ responsibility towards these
activities.

• All charges and costs associated with delivery and including storage,
handing etc after the pay-out shall be borne by the buyer. –

• Warehouse storage charges after credit is received :n thed emat account


will be charged to the client by the respective dps.

• The assayer charges for testing and quality certification should be paid to
the assayer directly location by the client.

6, Process of delivery for sellers option, compulsory delivery & intention matching –

1) Submission of delivery request

• Members who wish to take delivery have to submit delivery requests to

the Exchange.

• Submission of delivery requests can be done with in the stipulated


period (presently 5 days ) prior to expiry of the near month contract, (subject to change
from time by the exchange ). Requests once marked cannot be altered or cancelled.
• The delivery request is submitted by the clearing member on the trader
workstation by selecting the commodity on the market watch screen and pressing the
key Control + F4.

• The following details are to be entered:

Buy/Sell indicator

Quantity

Client Code

Location where delivery is to be given/received

Dematerialized /Deposited in warehouse Flag (If the commodities have been deposited in
the accredited warehouse and/or credit has been received in the Demat account of the
client this flag has to be selected by the member)

2) Rejection of delivery request:

The rejection of delivery requests will happen under the following circumstances:

• Non availability of open position to the extent of the delivery request.

The request will be valid only to the extent of the open position for the member at client
level in the respective contract. Any additional delivery request will be rejected.

• The delivery request can also be rejected in case the warehouse capacity of the
commodity is exceeded or for such other reasons that the exchange may deem fit.

3) Delivery matching:

• Contract with Sellers’s right to deliver

Sell request: A valid sell delivery request would result in delivery on the exchange for
those contracts which have seller’s right to deliver.
Buy Request; For contracts with seller’s right to deliver, delivery obligation would be
created for all valid sell request received by the exchange and allocation would be done
to the buyers with open positions on a random basis whether or not the buy request has
been submitted. Such buyers will be bound to take delivery. However, while allocating
the deliveries, preference would be given to those buyers who have submitted buy
requests.

• For contracts with compulsory delivery all sellers & buyers with open position on
expiry of the contract will have to mandatory give/take delivery on the Exchange.

Delivery information

In order to allocate deliveries in the optimum location for clients, the members will give
delivery information for preferred location.

a) Submission of one-time warehouse preference for a member will be allowed to


submit multiple warehouse preferences for various symbols. The same will be sent by the
members through a excel file. This will be applicable for all outstanding long and short
client position in that commodity. If the member does not mark any specific location the
default preference will be applied for all open position. This information will be
submitted in the manner as prescribed by the exchange. Members can change the
default location preference any day except the last 5 days before the expiry of the
contract.

b) Default location members who do not submit the preference of the default location,
will be marked delivery in the base location specified for the commodity. Members can
submit specific delivery requests for their clients for other locations than base center by
invoking the delivery request window in the trading front-end.

Matching
Matching of preferred location submitted by the buyer members will be done
to the maximum extent. If the member does not give any delivery request for that expiry,
the one-time location preference given by the member in the commodity will be
considered while matching. In case of mismatches in locations between ‘Sellers and
Buyers’, the Sellers’ choice of location will be given preference over the Buyers’ while
allocating deliveries.

• Intention Matching Contracts: - On expiry day Exchange matches buy & sell
request. Upon successful matching of request with respect to commodity and
warehouse location results in delivery on settlement day.
4). Query of delivery request already submitted

• The delivery requests can be queried using the Ctrl + F4 key on the MCX/NCDEX
trader workstation. The list of delivery requests submitted for the current expiry period
will be displayed.
5). Reading delivery information files

• Members who have submitted delivery requests can obtain the status of the requests
and the delivery allocation if any with the following files
• RS03-Request Status Report
• AL02-Delivery Allocation Report
6). Settlement calendar The Settlement Calendar is issued by the exchange to inform
members about the schedule of various activities that are to be carried out for physical
settlement of different commodities. These activities are broadly classified as
commodities settlement, Supplemental settlement for premium/discounts as well as
closing outs and sales tax settlement cycles.

7). Delivery process

• The client who wants to deliver the commodity should transfer the credit balances from
his account to the clearing member pool account before the pay-in (Settlement) date
• specified by the exchange by filling up the Account Transfer Form. This form will be
provided by the DP.
• While filling up the Account Transfer form the client should take care that all the
details as mentioned below have been correctly entered and all the holders have signed
the form.
ISIN: This will be available from your Demat Holding/Transaction statement

Quantity: This is the quantity mentioned against the commodity in your Demat
statement and should be less than or equal to the quantity you have sold and mentioned
in the statement.

Execution Date: It is the date before the pay-in on which the instruction will be
executed.

Market Type and Settlement No. : This is made available in the circular issued by the
exchange and/ or from your broker.

CM BP ID /CM Name: These details will be available from the respective clearing
members. The client should submit the form to the DP and take an acknowledgement
from the DP for the same.

• The DP will enter instruction in its DP module and on the execution date the balances
will be transferred from the client account to the member pool account.
• The member also has ensure that it has received all the deliveries from the clients
before the pay-in to the exchange.
• On the pay-in day the balances will be delivered to the exchange and on pay-out will be
given to the buying brokers pool account.
8) Pay-in process at NSDL:

• To effect settlement pay-ins NSDL has adopted instruction based approach. This means
that a clearing member (CM) needs to specifically instruct his DP to make a delivery
request known as Delivery-out instruction for a given market type-settlement number
combination before settlement date. This is similar to issuing a cheque to transfer funds
from one bank account to another. This form will be provided by the DP.
• CM needs to be sure of executing all delivery-out instructions before settlement date so
as to complete this obligation fully. Delivery-out instruction can be of 2 types and it
can be given any time before settlement date, they are: Irreversible delivery-out and
reversible delivery-out. Irreversible delivery-out is considered as confirmed pay-in for
a given settlement and cannot be reversed before settlement date whereas delivery-out
can be reversed anytime by a CM before execution date. The payout process is done on
Settlement day.
• If the commodity received in any settlement is not shifted from the pool account to the
beneficiary account and if they need to payin towards the next settlement then the
member needs to give an intersettlement instruction to the DP for delivery on the
Exchange platform.
9) Pay-in process at CDSL

The pay-in process at CDSL is different from NSDL. In CDSL, CM, need not give a
delivery-out instructions to his DP, but he has to ensure that valid balances are available
in the pool account at the time of pay-in otherwise it would be treated as default.

• CM needs communicate settlement date his clients to all his clients so as to ensure that
all ISIN balances are moved to his CM Pool A/c before settlement date. If the balances
are not available in the CM pool account at the time of pay-in it will be treated as
default.
• On a scheduled settlement date, CDSL will provide a balances file to MCX/NCDEX
clearing house (NSCCL) having ISIN wise balances for each Clearing Member Pool
Account (CM-Pool A/c).
• NSCCL based on settlement obligation of a given Clearing Member (CMID),
will generate a response to CDSL to effect transfers in NCDEX-NSDL Settlement
account from which credit will be given to respective buyers’ CM Pool A/c. Thus, in
NSDL a delivery-out instruction needs to be submitted and only valid balances should be
lying in the members pools account.

10) Early Pay-in Process

1}. Time of early pay-in

• At MCX/NCDEX, Early Pay-in (EPI) is accepted once the delivery obligations are
finalized and communicated to CMs i.e. from the expiry date of the contract till the
pay-in (Settlement) date.
2} Merits of early pay-in
• One of the major benefits of Early Pay-in is that, on receipt of Early Pay-in, all
delivery margins collected towards physical settlement are released.
• It also saves the hassles of not able to deliver on time for a CM. As mentioned in the
pay-in processes above, at NSDL if delivery-out is not issued for a settlement, delivery
is not affected automatically and CM runs the risk of default due to non delivery.
3} Early Pay-in process

The process of early pay-in is different at NSDL and CDSL as mentioned below:

• Availing the EPI facility through NSDL – A CM needs to give irreversible


Delivery out instruction using the Delivery-Out Instruction Form for a given
Settlement in which the electronic balances is to be settled, through his DP. If a
reversible Delivery Out instruction is given, then this shall not be treated as early
pay-in.

• Availing the EPI facility through CDSL


• Members intending to do early pay in must open Early pay in account with the
Depository. They need to get in touch with their DP’s for the same.
• The clearing member who wants to make an early pay-in shall fill in the instruction slip
for early pay-in and deliver the same to his DP.
• The slip shall mention the early pay-in account of the member as specified by NSDL.
The details required are NSDL ID, Source Account No., Settlement Information (Type
& Number), CM-ID, ISIN, Quantity and Early Pay-in Account No.
• Based on the instruction slip received by the DP, the DP shall enter the same in the
CDSL DP front end through the early pay-in screen in the settlement menu.
Immediately on entry of the said instruction, the balances would be transferred
from the concerned account to the early pay-in account mentioned in the said instruction.
• In case, there is insufficient balance, the said transfer will fail.
• Indication of wrong settlement type shall lead to delivery failure.
• Members can contact their respective DP’s for further details.
PROBLEMS

Every delivery mechanism has certain limitations, problems, drawbacks, weaknesses or


shortages. Clients, brokers and exchange have different problems or same problems from
their own vies points which should be overcome so as to make delivery mechanism
better. There are problems faced in two areas:-

(A)PROBLEMS IN EXISTING TRADING MECHANISM: -


The existing trading mechanism is suffered by so many problems such as follows: -

Margin system: - Now-a-days commodity exchange market is linked with international


market. It has raised its level by joining itself and coming in contact with international
market. It has to move according to this market but the problem arises because the
margins are fixed on the basis of opening and closing prices of the last day and more and
more, upper or down freezes in a day margin is increased heavily. Heavy fluctuations
affect the margin badly. So it becomes very difficult for brokers and exchange to arrange,
to assemble or to collect the margin from respective clients. So, they suffer huge losses.

For an instance: - This very case really happened in commodity exchange market on
19th April 06, Friday. There were market fluctuations after 6p.m. An existing margin on
silver was 5%, But by 9 p.m, margin increased to 15%. So, at that time no bank was
opened and therefore clients were not able to make the money available at that time. In
turn, brokers and exchange came in trouble and suffered losses Banking system-
secondly, the problem of banking system is faced by the clients in this market. As the
timings of the commodity, exchange market is from 10 a.m to 11:30 p.m in order to keep
in contact with the international for the banking system in India is 10 a.m to 5 p.m. So, if
there are any fluctuations after p.m, it becomes very deficit by the clients to pay money
and do trade. No trade can take place as there is no money available that time by the
banks and sometimes they suffer heavy losses. So, is a major drawback?

Internet: - Online trading takes place through internet sometimes in the periods of heavy
fluctuations, the network becomes very busy. There is lot of congestion in internet due to
which there is breaking down of internet and it is disconnected, which again creates
problem for the clients and brokers as they cannot trade then. So, market fluctuations
create problem by making internet very busy and its breaking down.

and B. Person A purchased a lot of lkg of gold @ Rs. 8800. Now A wants to sell the
same at Rs. 9000 and if A sells it at Rs. 9000, he can make a profit of Rs. 200 per 10
grams i.e. Rs. 20000 per lot. But suppose there is no buyer to buy at this price. Then if A
has the password and ID of B, he can place the under in his terminal for sale at Rs. 9000
and simultaneously he misuses the ID of B and place an order to buy at Rs. 9000. It
means by hacking, trade will take place at Rs. 9000. A will earn a profit of Rs. 20000
whereas B will suffer a loss of Rs. 20000; that means B’s funds have been transferred to
A.

Above are the basic drawbacks and problems in existing trading mechanism. As much as
possible steps should be taken in order to modify the existing trading mechanism.

(B) PROBLEMS IN ENTIRE MECHANISM: -

There are certain problems in entire mechanism also which are as follows:

1-Warehousing: - Warehousing means storing of goods. It is the place where goods are
stored and from where buyer and seller pick the goods for buying and selling. This is one
of the problem because the locations of warehouses are not proper or very far away.
Warehouses should be located near to each other and at little distance. For e.g.: - If a
farmer of any village in Gujrat wants to buy wheat from a seller and the seller’s
warehouse is in Ahmedabad then it is a problem for the farmer because the goods from
Ahmedabad will give him lot of transportation cost and lead to wastage of time. So, this
transportation cost should be minimized as much as possible by solving he warehousing
problems.

2-Matching of Delivery : - The problem faced is regarding matching of delivery.


Suppose, there are two persons A and B. A is the seller and B is the buyer. Now if B
wants to buy something and A wants to sell the same thing. They both want to trade.
Person A belongs to Luchiana and person B belongs to some other city or state and the
warehouse of the seller i.e. A is situated at Khanna from where b has to pick goods then
it becomes very difficult for him and trade becomes almost impossible or very difficult
and very costly. A has delivered 50 kg but due to long distance, may be some amount
gets lost B gets, say only 45kg. So, delivery is mismatched whereas matching of delivery
is required.
3) Sampling and Quanlity: - Quality is not properly checked sometimes. In random
sampling by buyer only few bags are checked either he checks from the beginning or
from the last, but the quality is not the same in all the lots which is left, but quality is not
the same in all the lots which is left unchecked and later they suffer losses in respect to
quality. No proper sampling techniques are followed in order to check the lots regarding
quality and seller does not provide same quality in all the lots when the goods are
purchased in bulk which becomes a problem for a buyer again.

Lot Size: - The problem is regarding the lot size i.e. the quantity of the material bought.
Just like the quality, quantity is also left unchecked as when the meterial is bought in
bulk, it is not possible to check all the lots and sometimes it is incomplete. But if gold is
purchased it can be checked easily because it covers less space but if wheat or maize is
purchased in bulk then it is ver difficult to check these lots and ultimately losses are
incurred. So, somecriteria should be fixed in order to reduce and avoid losses.

Text Structure: - Tax structure is again another problem faced in trading among
different states because the rules and regulations are different. For e.g. VAT is applicable
in Punjab buy in Gujrat instead of VAT, sales tax is applicable due to which prices of
goods and services differ, which ultimately becomes a problem for buyer and seller both
for trading. These above problems are faced in day-to-day trade and many more are
expected to arise in future. Before that happens, steps should be taken to control and to
arise in future. Before that happens, steps should be taken to control and avoid these
problems.
TECHNICAL ANALYSIS

OF

FEW COMMODITIES

Kapas

Important Developments

 Domestic season-to-date arrivals of cotton were at 24,74(3,000 bales (170-kg each),


registering a 15.5 percent year-on-year growth.
 Cotton prices in Pakistan remained firm on the back of a poor crop and good
buying demand from millers and spinners.
 India’s cotton textile exports expected to decline during the current fis cal due to
strengthing of the rupee, and may end up below the target of US$ 6.2 billion in
value terms.
 For the first time, monthly cotton yarn production has surpassed 240,000 tonnes, a
17.1 percent increase year-on-year.
 Indian rupee rose to a fresh nine year high against the doller in April.
 Cotton imports by china reached 259,846 tonnes in March, representing a 48
percent decrease as compared with imports in the same period of last year.
 China’s imports from India increased by 81.6 percent at 145,363 tonnes in March.
 Cotton exports by state-owned Cotton Corporation of India were down 25 percent
at 150,000 bales in the first six months of the 2006-07
Cotton-marketing year.

Market Commentary
Domestic cotton prices gradually decline in the second half of april on the back of lack of
exports and absence of demand from demestic mills. After having witnessed some
upward movements in the first forlight. The bearish trend is due to a rising rupee against
the dollar coupled with domestic mills putting on hold their buying programme.
Domestic mills are staying away as they are fully covered and it is also becoming
difficult to export cotton, with domestic prices being at par with those in the US. Also,
traders reported that southern Indian cotton mills have imported around 2,00,000 bales
and this adding to the pressure on domestic prices. In fact, more than 24 million bales of
cotton have already reached the markets since October out of the total expected
production of 25-27 million bales. At present, daily average arrivals have declined
approximately 17,000 bales.

Crop Weather
Favorable conditions for cotton planting prevail across the irrigated crop regions of
northern India following the recent intermittent winter rains. Planting will begin later in
the rainfed crop region of central and southern India.

Gold

Important Developments

 Gold production in Peru, the world’s fifth-biggest producer, fell to a four-year low in
February because of declining output at the Yanacocha mine, the world’s second
largest. Production fell for the eighth straight month, dropping by 25 percent from a
year earlier to 12,522 kg.
 China is now the third biggest consumer of gold, with total sales of gold and
jewellery being over 1,400 billion yuan ($181 billion), and exports being valued at $
5.49 billion during 2006.
 The China Gold Association has pegged domestic output in 2006 at 240.08 tonnes up
from 181 tonnes in 2001.
 China is seeking to diversify its reserves to gold and other assets in an effort to
broaden the investment channels for its huge foreign exchange reserves. China
currently has $350 billion in US treasuries.
 National Bank Financial of Toronto has revised its average gold price forecasts
upwards from $650/oz to $675/oz in 2007 and from $625/oz to $675/oz in 2008.
 ECB banks sold over 76 tonnes of gold in the five-week period starting mid-March as
compared to 112 months in the preceding six months.
 Morgan Stanley has forecast an average gold price of $680/oz for 2007
backed by production constraints and buoyant physical and ETF related demand in Asia
 Comex warehouse stocks rose marginally higher to 7.68 million troy ounces in late
April against 7.58 million troy ounces at the end of the first quarter.
 Peru’s largest miners union, comprising 74 mining unions, is going on a nationwide
strike from April 30.
Market Commentary

Gold prices remained range bound for most part of the month following last month’s
sharp correction on the MCX. Globally, gold ruled mostly firm on the back of a
weakening dollar and rising crude oil prices before seeing some correction on easing
geopolitical tensions and improved supplies from papua mine. On NYMEX, June gikd
surged from lows of $661.7/ ounce to around $697.7 late this month, but it failed to
breach the psychological levels of $700 an ounce. On the MCX, the gains were not that
much and the correction there was sharper than that on the NYMEX because of the sharp
appreciation in the rupee. June gold on the MCX dipped from highs of Rs 9.596 per 10
gm to Rs 9,052.

Silver

Important Developments

 Kazakhstan produced 181,561 kg of refined silver in the first quarter of 2007, down
6.4 percent as compared the same period last year.
 London-based researcher GFMS Ltd predicted a 6 percent growth rate in industrial
applications of silver in 2007.
 A nationwide miners strike in Peru, the world’s second largest silver producer,
caused concern in the market.
 A nationwide miners’ strike in Peru, the one-month forecast for silver to $14.30 an
ounce from $15.20 previously, and pushed down its three month fore cast to $15.50
and ounce from %16.50 an ounce.
 Above ground availability of silver is depleting at a brisk pace. In 1900, there were
12 billion ounces off silver in the world. By 1990, that figure had been reduced to
around 2.2 billion ounces of silver, according to commodities research firm CPM
Group. Today that figure has fallen to about 300 million ounces in above ground-
refined silver. It is estimated that 95 percent of silver ever minded has been
consumed by the global photography, technology, medical, defence and electronic
industries.
 Comex warehouse stocks of silver supplies again bounced higher to 130 million troy
ounces in late April, against 120.4 million troy in March. Stocks stood at 111.1
million troy ounces in December 2006.
 Endeavour Silver Corp reported record quarterly production of 490,986 ounces in
2007 from its Guanacevi Mines project located in Durango, Mexico-up 63 percent
from that in Q1, 2006.
Market Commentary

Silver traded firm during the first half of April on the back of improved investment
demand from funds and strong fundamentals. However, prices plunged sharply thereafter
on easing supply concerns in Indonesia’s Grasberg mine and easing geopolitical tensions
over Iran’s nuclear issue, which pressured the prices of yellow metal and copper as well.
The correction continued till late this month taking the May silver futures at MCX to
lows of Rs 18m080 per kg. On NYMEX, prices surged from $13.02 an ounce t $14.16 an
ounce before futher dipping to $13.175 late this month. The prices on MCX showed very
small reaction to the surge in NYMEX prices, and the month-end correction was deeper
that that in international markets, mainly on account of the strong rupee. Geopolitical
tensions over the thwarted attack on Soudi oil facilities and supply concerns in Peru
underpinned prices towards the end of the moth.
Guar

Important Developments

 Bumper production of 70-75 lakh bags (100 kg) during 2006-07 against last year’s
50-55 lakh bags. Total availability during 2006-07 is placed at 95 lakh bags
(including a carryover stock of 20 lakh).
 Expectations of higher exports order of 220,000-230,000 tonnes of guar gum during
current season against earlier estimate of 210,000 tonnes and the last year’s exports
of 186,718.4 tonnes following good demand from China, the US, Japan and Europe.
 Bumper production of 17-18 lakh bags during 2006-07 in Pakistan com pared to 12
lakh bags of 2005-06. (1 bag = 100kg =quantal)
 Lifting of entry tax and VAT on guar in Pakistan.
Market Commentary

Between mid-March and mid-April 2007, prices of guar seed touched a new high both in
the spot and futures markets amidst good domestic and overseas demand coupled with
expectation of higher export order during the current season. However, prices declined
sharply thereafter on the back of the forecast of normal rains by several foreign agencies
as also the sharp escalation in the value of the rupee vis-à-vis the dollar. Forecast of
normal rains had a negative effect as these are seen aiding production of guar seed this
year. This led to traders offloading their inventories and this is weighing heavily on
prices. However, the prediction of 95 percent normal monsoon by the Indian
Metrological Department (IMD) is likely to strengthen market sentiments. Export
activity is seen becoming sluggish due to the continuing weakness of the dollar, which is
inhibiting trade. Consequently, arrivals declined in the major markets of Rajasthan on
lack of buying support from millers and exporters. Total arrivals reportedly stood at
4,000-5,000 bags.

Crop Weather
Midly conflicting weather reports from IMD and foreign agencies. IMD sees 5 percent
lower rains, while others see normal or excess rains. However, due to good rains in
February and early March, sowing of new guar crop started earlier.

Jeera
Important Developments
 Domestic production is estimated to have declined by around 33-40 percent during
the current year
 Export demand has declined as most of the consuming countries are believed to have
procured their stock
 Recent rainfall in Syria and Turkey, key jeera producers in the world, has adversely
affected sowing of the crop and raised concerns of lower
output

 Domestic jeera prices havee risen by more than 5 percent month on month

Market Commentary
Jeera markets in India continued to remain volatile in the first month of the current fiscal.
After rallying sharply at he beginning of the month, jeera prices eased as demand dried
up at the higher price level. News of rainfall in key jeera producing nations-Syria and
Turkey-led to a sharp rise in domestic spot prices in the first fortnight of April.
Moreover, domestic fundamentals continue to remain supportive of the markets.
However, lack of buying interest was seen at higher price levels and this dampened the
price trend thereafter. Poor overseas demand added to the weakness. Prices eased
considerably from their highs, but managed to remain than the month-ago period, as
thinning arrivals provided some element of support.

Crop Weather
In most of the cumin growing areas, harvesting is complete. Expected isolated dust
storms/ thundershowers may help prevent grain shattering due to excessive temperature.
Chana

Important Developments

 Total pulses production for the 2006-07 crop year is revised to 14.10 mil lion tones
from 14.52 million tones, according to third advance estimates. Chickpeas production
has been revised from 6.16 million tones to 5.97 million tones for rabi 2006-07.
 Acreage under rabi pulses increased to 14.22 million hectares as compared to 13.76
million hectares against 7.7 million hectares last year.
 Looking at the shortage in domestic supply of pulses, the government decided to
import additional 15 lakh tones during the current financial year to soften process.
Public sector agencies will qualify for import subsidy not exceeding 15 percent. STC,
MMTC, NAFED and PEC have been asked to import 15 lakh tones of pulses for
public distribution.
 MMTC issued a tender for the import of 5,000 tonnes of pulses on April 23, which
includes 1,000 tonnes of urad, tur, masoor, moong and chana.
 PEC floated a tender for sale of 3,600 tonnes of tur and urad, which closed on april
30, on as is where is basis in lots of 100 tonnes or more of each item at Chennai and
Mumbai, respectively.
 CACP has recommended sharp increase in the Minimum Support Price for the 2007-
08 pulses corp. it has suggested an MSP of Rs 1,550 per quintal for tur (arhar or
pigeonpea) and Rs 1,700 per quintal for moong (green gram), against the
corresponding Rs 1,410 and Rs 1,520 per quintal level in 2006-07.
Market Commentary

Chana prices fell by 6-8 percent during the month. The initial firmness at the beginning
of the month was short lived. In Delhi, spot rates of MP origin Channa dropped from Rs
2,450 levels to Rs 2,250, whereas Rajasthan origin Channa was around Rs 2,200 per qtl.
The weakness in urad, tur and masoor is also supporting the downtrend in the chana
market. Currently, arrivals are mainly coming from Rajasthan, as harvesting has been
completed in MP and Maharashtra. When arrivals from Rajasthan start declining, some
firmness in price is expected. Besides, low priced spot chana is finding its way into the
exchange godowns, due to arbitrage opportunities.
Crop Weather

Harvesting of chana is in progress in Rajasthan and is likely to continue till mid May.
The expected dry weather conditions will be supportive for harvesting in Rajasthan.
OBJECTIVES

The main objects of the final reports are as following:-

➢ To study about the concept of online commodity trading.

➢ To study about awareness among investors regarding online commodity trading

➢ To study the various trends and future market potential of commodity trading in
India.

➢ To study the brokers perceptions regarding commodity market.

➢ To know the various factors that could develop the commodity market
effectively.

➢ To know the future perspective of commodity market.


RESEARCH METHODOLOGY

The present study was undertaken “To study of commodity market in light of MCX and NCDEX
with special reference to Ludhiana”. This portion give4s as the research design data collection
methods, sampling techniques, field work carried out, analysis and interpretation, limitations
inherent in the project and finally coverage of research work.

Research Design

The research design is the pattern or an outline of a research project working. It is a statement of
only the essentials of a study being conducts follows a descriptive search design.

Sampling Plan

Sampling is an effective step in collection of primary data and has a great influence on a quality
of results. The sampling plan includes the population sample size and sampling design.

Population

Population of our study is:

Brokers of LSE, Master Trust Ltd, India Bulls, Leader Capital Services Ltd.

India info-line

Professionals (Professor, C.A., C.S. etc.) General investor,

Marketing Executives and Management Trainees.


Sample Size

Sample size for Research was 40 Brokers (20 form LSE and from others),other proportionately.

Data Analysis and Interpretations

For the purpose of analyzing, raw data was summarized in to a master table and from this table
the results have been derived. The questions, which have alternative choices, were analyzed by
taking percentage. In case open end question, the general suggestion were summarized and it is
presented through pie diagrams.

Assumptions

The research is based on the following assumptions:

The methodology used for this purpose is survey and questionnaire method. It is assumed that
this method is more suitable for collection data. It is assumed that the respondents have filled
right and correct option according to their views.
ANALYSIS AND INTERPRETATION
Q1. WHICH SOURCES OF COMMODITY MARKET DOES THE
COMPANY ADOPT MOST?

Source External Internal


Number of Respondents 18 32
Percentage 36 64

From the above chart it is concluded that most of the employees are in the favor of the
internal source of the organization. They don’t rely on the external sources of the
commodity trading. In the organization itself the employee referral is one of the major
sources of the commodity trading at all the levels in the organization. There are
promotions and transfers also that are used in the organization. The internal sources
increase the sense of the belongingness of the employees towards the organization

Q2. SECTORS WHICH ARE VERY HOT FOR INVESTMENT NOW A


DAY:

From this observation we conclude according to Broker’s there are maximum invest by
investors in Banking sector with 40% investment, then 20% in Real sector, then 7% in
Automobile sector and rest in other sectors.

Q3. WHICH TYPE OF INVESTORS GROUP INVESTS ON LARGE


SCALE IN COMMODITY MARKET?
we analysis’s the group of investors those invest maximum in commodity market. According to
survey 60% investors are belong to Business Class. 23% invest by companies in stock market.15
% invest by Individuals Firm and 2% invest by Salaried Group.

Q4. DO YOU TRY TO INVEST INVESTORS MONEY IN COMMODITY


TRADING FROM WHICH YOU GET MAXIMUM BENEFIT?

the view of Brokers on investment of those funds from which Brokers get maximum benefit.
Then 100% Brokers say no.

Q5. HOW MUCH FEELS SAFE IN COMMODITY MARKET?

analysis the safety feel by investors in commodity market. 10% Investors feel 20% safe in
commodity Market, 15% Investors feel 40% safe in commodity Market, 45% Investors feel 60%
safe in commodity market, 25% Investors feel 15% safe in commodity Market and 5% Investors
feel 100% safe in commodity market.

Q6. WHY THE INVESTORS INVEST IN COMMODITY MARKET?


we analysis the view on investors and reason of investors for invest in Commodity Market. The
70% investors invest in Commodity Market for make money, 20% Investors concern on savings
and 10% Investors try his luck in Commodity market.

Q7. WHERE YOU INVEST IN PRIMARY MARKET OR SECONDARY


MARKET?

the view of Investors investment in the primary market or secondary market. Then 80%
Investors says that we invest in Both Primary market and as well as Secondary Market, 15%
Investors says that we Invest in Secondary Market and only 5% says that we invest in primary
market.

Q8. DO YOU THINK THAT EFFECTIVE COMMODITY TRADING


PROCESS LEAD TO HIGH RETENTION OF EMPLOYEES?

Response Strongly Agree Disagree Strongly


Agree Disagree
No of 22 14 8 6
respondents
Percentage 44 28 16 12

As per the chart shows that most of the employees in the organization think that the effective
commodity trading process leads to high retention of employees in the organization only few
people don’t understand that the commodity process leads to employee’s high retention in the
organization.

Q9. WHAT IS YOUR REASON TO JOIN THIS COMPANY?

Criteria Response Percentage


Reputation of the company 12 24
Salary Package 18 36
Working Conditions 9 18
Location of the company 3 6
Career growth opportunity 5 10
Job Prospects 3 6

As per the chart tell that most of the people join karvy Stock broking Ltd. For their high salary
package and because of the reputation of the company and good working conditions rather some
people understand that it is good for their career growth and for job prospects.

Q10. How much the broker provides security to investors on their capital?

Brokers provide less security on the capital of investors. According to survey, 20% of Brokers
provide 10% security on the capital, 60% Brokers provide 20% security on the investors capital.
15% brokers provide 35% security on the Investors capital and 5% brokers provide 40% security
on the investor’s capital. It means that maximum brokers take risk on capital is 20%.
FINDINGS AND SUGGESTION

From all the above contents Researcher Find that some findings and suggestions. These
are:

➢ How Brokers convince the Investors for specific deal: From Brokers point of view:
The Brokers convince the Investors by Trust and Better Performance in Commodity
Market. If they have long experience in Commodity market and they are capable to make
huge Earning with less capital than they easily convince to the customer. From Investors
point of view: Investors says that broker convey us for a specific deal by Analysis
Report, Balance Sheet of the company. Then Brokers give some personnel tips and
provide analysis report on the companies deal.

➢ How Brokers make money for Investors: The Brokers have technical searchers those
search the opportunity and new trend in commodity market. Brokers says that the money
earning generally depend on the Investors investing account such as same day
investment, Short term Investment and Long term investment and News base investment.

➢ How much risk face in Commodity market: Brokers says that there are no limit of risk
in commodity market, if you have good day then you earn more than exceptions and if
you have bad luck than you lost your capital in same day.

➢ Image of famous companies in stock Market: In the Stock market those companies
declare health dividend has good image, but generally Armani Group has record of
fraud in Stock market and Tata Group is one of the company which has white image in
Stock market.

➢ Security: From Brokers point of view: 60% Brokers provide only 20% Security on the
Investors capital but from Investors point of view: Only 10% Investors are agree on this
statement and 45% Investors view that Brokers give assurance to provide 60% safety on
his capital.
LIMITATIONS

➢ Lack of sufficient time.

➢ Unwillingness of responders to reveals the information.

➢ Lack of awareness above commodity market among many respondent.

➢ Restriction on the entry of girls in the broker’s chamber.

➢ All the data is collected through interviews so if any one has provided me the wrong
information then if don’t have any technique to the accuracy of information.

➢ Inability of respondents to answer open end question.


RECOMMENDATIONS

To create awareness about the commodity market there is a dire need to have more and more
awareness programs.Government of India (GOI) is committed to strengthening the commodity
markets, commodity exchange and the regulatory authority through training and modernization.
GOI will proceed cautiously. It wants to encourage multi-commodity exchange.Futures exchange
must gain the confidence of not only the users but also the agriculturist, the manufacturers, the
consumers and the public at large, through functional transparency and viability Clearing,
guarantee and settlement procedures are important commodity exchange are bound to succeed
over time with well designed contracts, appropriate technology and marketing of their
services.Regulations is an integral part of futures markets. Monitoring and surveillance are
extremely important functions. The regulatory authority must be strong, but not over-intrusive.
The commodity exchanges should provide first level of regulations on a day-to-day basis. Banks
have a critical role to play in the development of commodity futures. They need to provide not
only the money but also services. With some initial promotion the investments made and
services provided cannot be economically viable but also profit sharing. For this the banks would
need to acquire appropriate skills. Information need of commodity futures markets is not
fulfilled. Even though government collects useful information, it is not timely. There is an also
good business prospect for the private sector timely and relevant information. Training for all
those connected with commodity futures is absolutely essential. Training needs for every level
have to be identified. The levels of training needs for every level have to be identified. The levels
of training may have to be imparted in stages. The commodity exchanges outside India which
have adopted “online trading” or “screen based trading” have made impressive gains in their
turnover as also in their ranking in the commodity exchange having the highest volumes of
trading and liquidity of contracts. Considering this aspect, the transparency in trading and facility
of direct trading to outstations members/clients, the Indian commodity exchanges also stress on
development of online system prevailing now days. The delivery costs in the MCX and NCDEX
are very costly so that government must from a platform for it to be economical for general
investor.
CONCLUSION

From all the above discussion Researcher conclude on the topic in the following point:

➢ Brokers play important role in the commodity market. It analysis and research on market
and then produce analytical report to Investors which help investors to invest in good
companies.

➢ Commodity Market is Dynamic and influenced the Country’s economy.

➢ Commodity market is very risk able place nobody secured in stock market.

➢ Investors check proper company’s balance sheet before investing.

➢ Investors invest more than one company.

➢ At last before investing in commodity market Investors proper analysis the Government
policies and market flow before investment.

➢ Commodity Market develop the economy of a Country.


BIBLIOGRAPHY

➢ Websites

➢ http://www.ncdex.com

➢ http://www.mcx.com

➢ http://www.fmc.gov.in

➢ http://www.yahoo.com

➢ http://www.google.com

➢ http://www.wikipedia.com